Is Spotify REALLY Worth $4B Against Pandora and Sirius?

The world around venture capital sometimes creates some very interesting reading when you look at private company valuations versus public company valuations. In this case, it is in the online streaming music service of Spotify. It is hard to know what the valuation should be without having access to the books, but a $4 billion valuation should catch the eyes of Pandora Media Inc. (NYSE: P) and also of Sirius XM Satellite Holdings Inc. (NASDAQ: SIRI).

Reuters, the Wall Street Journal, and others have thrown some figures out showing that a $250 million capital raise gave Spotify a value of more than $4 billion. When currencies are translated, we have seen that Spotify generated revenue of close to $570 million in 2012 with what may be a loss of about $77 million. Spotify is also shown to have 24 million active users and 6 million who pay for a premium service. So how does this add in a relative value basis?

Pandora Media Inc. (NYSE: P) recently released its earnings and disclosed that it had 70.9 million active users and it said it is on track to generate roughly $660 million in revenue this year after having generated $427 million in 2012. Pandora just became profitable on normalized operations this year. Its market cap is $5.1 billion, but keep in mind that shares have tripled off their lows this year.

Sirius XM Holdings Inc. (NASDAQ: SIRI) is in a different class because it is almost all subscriber-generated. It is the big kahuna with a market cap of over $22 billion and its latest press release showed has that it has 25.6 million subscribers. Sirius is also profitable, and sales were $3.4 billion in 2012 and expected to be almost $3.8 billion in 2013.

Again, a problem in analyzing the current value is not knowing the current financial expectations of Spotify. That being said, Spotify is valued at close to $166 per active user versus close to $72 per active user of Pandora. We do not truly want to do the direct comparison for Sirius XM due to its subscriber only model, but that would be worth about $882 per subscriber in case you really had to know.

On Pandora, we would also point out that in the first nine months of 2013, some $85.2 million of the revenue came from subscribers versus its $463 million in total revenue. We do not have any comparable breakdowns for Spotify.

Here is where the rub comes in on valuing a company like Spotify at $4 billion. We cannot use a Sirius XM comparison as of now, but Pandora’s $5.1 billion is after its shares tripled this year. We will have to wait to see final sales and income numbers before making any final verdict here. Just keep in mind that for a venture-backer to pay a $4 billion valuation today it means they expect the value to be $5 billion, $6 billion, or far more when it comes time to sell or go public tomorrow.

Van Damme’s Volvo split gone viral

Movie star Jean-Claude Van Damme doing an improbable-looking split -- with each leg set on a truck that is driving backwards.

A cute kid in a Darth Vader outfit using "special powers" to unlock car doors.

A group of adorable babies dancing with adult versions of themselves.

These ads have millions of views on YouTube, tons of buzz on social media and have likely have been conversation topics at dinner tables, lunchrooms and cocktail parties.

But do these popular videos from Volvo, Evian and Volkswagen -- as well as ads gone viral from other brands -- actually help the company?

Absolutely, say marketing experts.

In the case of the new Van Damme ad, which has nearly 7.7 million YouTube views, the publicity will not only aid the overarching Volvo brand, but it could also sell more trucks, says Mediapost.com advertising columnist Barbara Lippert.

"This is completely unique. It's an incredible human way to show the equilibrium of the steering of the truck," she says, adding that "anyone who knows anyone who drives a truck or owns a truck will mention it to them. People love this stuff."

Reaching those current truck drivers and owners was a big part of the marketing strategy, says Volvo spokesman Anders Vilhelmsson.

In using social media rather than a traditional TV ad, Volvo also hoped to boost brand awareness with young people who could be "future truck drivers," he says.

Volvo scored big with this ad, but in reality, most marketers don't come close to garnering this type of digital attention.

"Everybody wants their ads to go viral," says Ted Marzilli, CEO of consumer perception research firm BrandIndex. "But if there was a playbook to do that, you would just follow the recipe and your ad would go viral."

And while garnering views - and positive reviews -- is admirable, it doesn't guarantee brand success. Sometimes, those who make it big have a big problem: folks remember the ad, but not the product it's touting.

"It only help! s the advertiser if people make the connection between the content and the brand," says Toby Southgate, CEO Americas at branding agency Brand Union.

Otherwise, the viewer may recall the actors, the music or the stunts in isolation, he says.

Another issue: consumers giving creative kudos to the wrong brand. For instance, folks often get messages from Visa and MasterCard mixed up, says Marzilli.

But for marketers who get it right -- and successfully link their brand to a much-viewed video -- the payoff can be immense.

"A viral ad can generate 30 million views," says Jonathan Symonds, executive vice president of marketing at advertising analytics firm Ace Metrix. The cost can stretch into the millions of dollars to buy that type of reach on TV, he says.

And many people are not only open to receiving buzzed-about videos from those who pass them on, but they also seek them out themselves.

"Consumers are choosing that content," he says.

As for the Volvo video, ad columnist Lippert sees only one potential downfall, "I can't see any negative at all except if it is proven to be fake," she says.

Volvo's spokesman Vilhelmsson says the action is indeed real.

"There was a safety line" attached to Van Damme that is not visible in the ad, he says, but the actor did do the split between the moving trucks.

"There were rehearsals for several days," he says. "But what you see in the film that is one take without any breaks."

FX Energy, MeetMe Both Make Good on Their Potential (MEET, FXEN)

I hate to be the one to say I told you so, but, I told you so. Within the past week I suggested both FX Energy, Inc. (NASDAQ:FXEN) and MeetMe Inc. (NYSEMKT:MEET) were on the verge of breakouts, and sure enough, both are making good on that promise today; FXEN is up 5%, and MEET shares are higher by nearly 13%. Granted, the market's bullish tide is helping... a little. But, with both of these stocks outpacing the market's gain today, odds are that we would have seen these breakout moves anyway.

And don't worry if you didn't get into either trade when I first put them on the table. Although MeetMe and FX Energy are both up sharply today, the reason I'm bringing them up at all again now is to let you know there's still plenty of room - and some time - to wade into either one of them.

The last time I looked at MeetMe Inc. was back on October 23rd. At the time I was excited about the way MEET shares has not only pushed their way above the key 200-day moving average line (for the first time in a long time), but had also pushed its way above a less-organized horizontal resistance line right around $2.00. Volume was growing on the way up too. The only fault I could find with the breakout effort from MeetMe at the time was that the move above the 200-day line (green) was new, and not yet cemented into place. That's changed today.

After moving sideways for a little while after my look at the chart last week, well-rested MEET has gotten back on its proverbial horse. Shares are hitting new multi-week highs again today, and they're doing so on huge volume. But isn't MeetMe Inc. overbought as a result? Yes, a little, but remember, the stock's still in the shadow of a nasty pullback - from more than $4.00 to just a tad above $1.00 - suffered over the course of the first half of the year. Point being, there's plenty of room for this rally to keep rolling.

As for FX Energy, Inc., I took a technical look at it back on Friday, October 25th. It hadn't yet moved above its 200-day moving average line, or any key resistance level for that matter. But, between the continued pressure FXEN was putting on its 200-day moving average line (as a ceiling) and a string of higher lows fueled by a solid rising support line, I figured it was only a matter of time before all that brewing pressure was unleashed in a bullish direction.

That time is today. As the chart of FXEN below shows, shares have popped above the 200-day line, and done so on huge volume. After weeks of buildup though, it's unlikely this move from FX Energy is a one-day wonder. Also, and like MeetMe, there's a ton of upside left to tap into before hitting any major headwinds.

Bottom line? Well, aside from the obvious one of becoming an SCN community member, signing up to "follow me", and becoming a subscriber to the free SCN newsletter, the more immediate take-away is to simply take on positions in FX Energy and MeetMe. Both are now off and running.

If you'd like to receive more trading ideas and insights like this one, you want to subscribe to the free daily SmallCap Network e-newsletter.

Wal-Mart to Offer Cheaper iPhones (WMT)

In an effort to edge out other retailers, Wal-Mart (WMT) has announced that it will be offering the new iPhone products at a discounted price.

The iPhone 5S and 5C are set to run for $199 and $99, respectively; Wal-Mart has knocked the prices down to $189 and $79. The deal requires a contract to obtain the discounted price. There is no word yet on how the company will be able to maintain these figures, especially considering that they will be undercutting Apple (AAPL) itself.

The deal could do well for the retailer, but investors should note that Apple usually reserves the majority of its shipments for its own retail locations, meaning that there will be high demand and little supply at Wal-Mart locations.

Wal-Mart shares were down 14 cents, or 0.2%, at Thursday’s close. The stock is up just over 8% YTD.

Americans Pulling Money Out of Banks

Alamy By Jeff Cox American bank accounts have gotten noticeably smaller this year as mom-and-pop investors have begun to embrace risk. Deposit balances in insured banks have fallen by $51 billion-a small amount relatively speaking, to be sure, but notable in that it reverses a six-year pattern, according to Market Rates Insight. The drop in deposit balances poses a vexing problem to banks, which are under regulatory pressure to cut leverage and increase their percentage of cash on hand. "The overall decline in deposits balances in the second quarter of 2013 is an indication that interest rates on deposits are likely to start climbing up in the near future" Dan Geller, executive vice president at Market Rates Insight, said in a statement. "Financial institutions will need to start increasing interest rates on deposits in order to maintain current deposits levels and to increase liquidity ratio as mandated by Basel III," he added, referring to the international guidelines for bank capital requirements. But the surge in balances over the past six years had been completely counter-intuitive from a return standpoint, in that deposit rates tumbled from 3.28 percent in July 2007 all the way down to 0.28 percent. From the early stages of the financial crisis in mid-2007, deposit balances increased some 40 percent, from $6.7 trillion to $9.4 trillion. That trend had come, though, as jittery investors yanked money from riskier mutual funds and poured their savings into plain-vanilla checking and savings accounts as well as money market funds. And money markets continue to attract cash. After seeing net redemptions in the first quarter, money markets drew $50 billion, or 1.1 percent of total assets, in the second quarter, Market Rates Insight said. The year has featured an overall change in where retail investors have moved money. Bond mutual funds have seen dramatic outflows, with the biggest beneficiary nondomestic mutual funds-European equity funds have taken in $12 billion over just the last two months-and blended funds that offer exposure to stocks and bonds. U.S.-based funds, meanwhile, have been only modest beneficiaries of what some experts predicted would be a "Great Rotation" from bonds to stocks. If the trend out of deposit accounts continues, it could pose a further dilemma for the Federal Reserve, which has been repressing interest rates in hopes of stimulating economic development and investor risk-taking. Rates have surged since the central bank began indicating that it likely will curtail its $85 billion a month bond-buying program. While the Fed itself has not raised its targeted policy rate, the market has pushed yields higher on its own, and could continue to do so if banks have to raise deposit rates. That would make its hopes to begin pulling back on quantitative easing more complicated, and pose a whole new set of dynamics for financial markets.

Don't Get Too Worked Up Over Eaton Vance's Earnings

Although business headlines still tout earnings numbers, many investors have moved past net earnings as a measure of a company's economic output. That's because earnings are very often less trustworthy than cash flow, since earnings are more open to manipulation based on dubious judgment calls.

Earnings' unreliability is one of the reasons Foolish investors often flip straight past the income statement to check the cash flow statement. In general, by taking a close look at the cash moving in and out of the business, you can better understand whether the last batch of earnings brought money into the company, or merely disguised a cash gusher with a pretty headline.

Calling all cash flows
When you are trying to buy the market's best stocks, it's worth checking up on your companies' free cash flow once a quarter or so, to see whether it bears any relationship to the net income in the headlines. That's what we do with this series. Today, we're checking in on Eaton Vance (NYSE: EV  ) , whose recent revenue and earnings are plotted below.

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. FCF = free cash flow. FY = fiscal year. TTM = trailing 12 months.

Over the past 12 months, Eaton Vance generated $74.5 million cash while it booked net income of $216.8 million. That means it turned 5.9% of its revenue into FCF. That sounds OK. However, FCF is less than net income. Ideally, we'd like to see the opposite.

All cash is not equal
Unfortunately, the cash flow statement isn't immune from nonsense, either. That's why it pays to take a close look at the components of cash flow from operations, to make sure that the cash flows are of high quality. What does that mean? To me, it means they need to be real and replicable in the upcoming quarters, rather than being offset by continual cash outflows that don't appear on the income statement (such as major capital expenditures).

For instance, cash flow based on cash net income and adjustments for non-cash income-statement expenses (like depreciation) is generally favorable. An increase in cash flow based on stiffing your suppliers (by increasing accounts payable for the short term) or shortchanging Uncle Sam on taxes will come back to bite investors later. The same goes for decreasing accounts receivable; this is good to see, but it's ordinary in recessionary times, and you can only increase collections so much. Finally, adding stock-based compensation expense back to cash flows is questionable when a company hands out a lot of equity to employees and uses cash in later periods to buy back those shares.

So how does the cash flow at Eaton Vance look? Take a peek at the chart below, which flags questionable cash flow sources with a red bar.

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. TTM = trailing 12 months.

When I say "questionable cash flow sources," I mean items such as changes in taxes payable, tax benefits from stock options, and asset sales, among others. That's not to say that companies booking these as sources of cash flow are weak, or are engaging in any sort of wrongdoing, or that everything that comes up questionable in my graph is automatically bad news. But whenever a company is getting more than, say, 10% of its cash from operations from these dubious sources, investors ought to make sure to refer to the filings and dig in.

With 23.7% of operating cash flow coming from questionable sources, Eaton Vance investors should take a closer look at the underlying numbers. Within the questionable cash flow figure plotted in the TTM period above, stock-based compensation and related tax benefits provided the biggest boost, at 68.4% of cash flow from operations. Overall, the biggest drag on FCF came from changes in accounts receivable, which represented 23.1% of cash from operations.

A Foolish final thought
Most investors don't keep tabs on their companies' cash flow. I think that's a mistake. If you take the time to read past the headlines and crack a filing now and then, you're in a much better position to spot potential trouble early. Better yet, you'll improve your odds of finding the underappreciated home-run stocks that provide the market's best returns.

Can your retirement portfolio provide you with enough income to last? You'll need more than Eaton Vance. Learn about crafting a smarter retirement plan in "The Shocking Can't-Miss Truth About Your Retirement." Click here for instant access to this free report.

We can help you keep tabs on your companies with My Watchlist, our free, personalized stock tracking service.

Add Eaton Vance to My Watchlist.

Why ePlus inc's Earnings May Not Be So Hot

Although business headlines still tout earnings numbers, many investors have moved past net earnings as a measure of a company's economic output. That's because earnings are very often less trustworthy than cash flow, since earnings are more open to manipulation based on dubious judgment calls.

Earnings' unreliability is one of the reasons Foolish investors often flip straight past the income statement to check the cash flow statement. In general, by taking a close look at the cash moving in and out of the business, you can better understand whether the last batch of earnings brought money into the company, or merely disguised a cash gusher with a pretty headline.

Calling all cash flows
When you are trying to buy the market's best stocks, it's worth checking up on your companies' free cash flow once a quarter or so, to see whether it bears any relationship to the net income in the headlines. That's what we do with this series. Today, we're checking in on ePlus inc. (Nasdaq: PLUS  ) , whose recent revenue and earnings are plotted below.

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. FCF = free cash flow. FY = fiscal year. TTM = trailing 12 months.

Over the past 12 months, ePlus inc. generated $25.7 million cash while it booked net income of $34.8 million. That means it turned 2.6% of its revenue into FCF. That doesn't sound so great. FCF is less than net income. Ideally, we'd like to see the opposite.

All cash is not equal
Unfortunately, the cash flow statement isn't immune from nonsense, either. That's why it pays to take a close look at the components of cash flow from operations, to make sure that the cash flows are of high quality. What does that mean? To me, it means they need to be real and replicable in the upcoming quarters, rather than being offset by continual cash outflows that don't appear on the income statement (such as major capital expenditures).

For instance, cash flow based on cash net income and adjustments for non-cash income-statement expenses (like depreciation) is generally favorable. An increase in cash flow based on stiffing your suppliers (by increasing accounts payable for the short term) or shortchanging Uncle Sam on taxes will come back to bite investors later. The same goes for decreasing accounts receivable; this is good to see, but it's ordinary in recessionary times, and you can only increase collections so much. Finally, adding stock-based compensation expense back to cash flows is questionable when a company hands out a lot of equity to employees and uses cash in later periods to buy back those shares.

So how does the cash flow at ePlus inc. look? Take a peek at the chart below, which flags questionable cash flow sources with a red bar.

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. TTM = trailing 12 months.

When I say "questionable cash flow sources," I mean items such as changes in taxes payable, tax benefits from stock options, and asset sales, among others. That's not to say that companies booking these as sources of cash flow are weak, or are engaging in any sort of wrongdoing, or that everything that comes up questionable in my graph is automatically bad news. But whenever a company is getting more than, say, 10% of its cash from operations from these dubious sources, investors ought to make sure to refer to the filings and dig in.

ePlus inc's issue isn't questionable cash flow boosts, but items in that suspect group that reduced cash flow. Within the questionable cash flow figure -- here a negative-- plotted in the TTM period above, other operating activities (which can include deferred income taxes, pension charges, and other one-off items) constituted the biggest reversal. Overall, the biggest drag on FCF came from changes in accounts receivable, which represented 43.2% of cash from operations.

A Foolish final thought
Most investors don't keep tabs on their companies' cash flow. I think that's a mistake. If you take the time to read past the headlines and crack a filing now and then, you're in a much better position to spot potential trouble early. Better yet, you'll improve your odds of finding the underappreciated home-run stocks that provide the market's best returns.

Software and computerized services are being consumed in radically different ways, on new and increasingly mobile devices. Many old leaders will be left behind. Whether or not ePlus inc. makes the coming cut, you should check out the company that Motley Fool analysts expect to lead the pack in "The Next Trillion-dollar Revolution." Click here for instant access to this free report.

We can help you keep tabs on your companies with My Watchlist, our free, personalized stock tracking service.

Add ePlus inc. to My Watchlist.

1 Thing to Watch at Omnicom Group

Although business headlines still tout earnings numbers, many investors have moved past net earnings as a measure of a company's economic output. That's because earnings are very often less trustworthy than cash flow, since earnings are more open to manipulation based on dubious judgment calls.

Earnings' unreliability is one of the reasons Foolish investors often flip straight past the income statement to check the cash flow statement. In general, by taking a close look at the cash moving in and out of the business, you can better understand whether the last batch of earnings brought money into the company, or merely disguised a cash gusher with a pretty headline.

Calling all cash flows
When you are trying to buy the market's best stocks, it's worth checking up on your companies' free cash flow once a quarter or so, to see whether it bears any relationship to the net income in the headlines. That's what we do with this series. Today, we're checking in on Omnicom Group (NYSE: OMC  ) , whose recent revenue and earnings are plotted below.

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. FCF = free cash flow. FY = fiscal year. TTM = trailing 12 months.

Over the past 12 months, Omnicom Group generated $1,023.2 million cash while it booked net income of $998.8 million. That means it turned 7.1% of its revenue into FCF. That sounds OK.

All cash is not equal
Unfortunately, the cash flow statement isn't immune from nonsense, either. That's why it pays to take a close look at the components of cash flow from operations, to make sure that the cash flows are of high quality. What does that mean? To me, it means they need to be real and replicable in the upcoming quarters, rather than being offset by continual cash outflows that don't appear on the income statement (such as major capital expenditures).

For instance, cash flow based on cash net income and adjustments for non-cash income-statement expenses (like depreciation) is generally favorable. An increase in cash flow based on stiffing your suppliers (by increasing accounts payable for the short term) or shortchanging Uncle Sam on taxes will come back to bite investors later. The same goes for decreasing accounts receivable; this is good to see, but it's ordinary in recessionary times, and you can only increase collections so much. Finally, adding stock-based compensation expense back to cash flows is questionable when a company hands out a lot of equity to employees and uses cash in later periods to buy back those shares.

So how does the cash flow at Omnicom Group look? Take a peek at the chart below, which flags questionable cash flow sources with a red bar.

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. TTM = trailing 12 months.

When I say "questionable cash flow sources," I mean items such as changes in taxes payable, tax benefits from stock options, and asset sales, among others. That's not to say that companies booking these as sources of cash flow are weak, or are engaging in any sort of wrongdoing, or that everything that comes up questionable in my graph is automatically bad news. But whenever a company is getting more than, say, 10% of its cash from operations from these dubious sources, investors ought to make sure to refer to the filings and dig in.

With 10.8% of operating cash flow coming from questionable sources, Omnicom Group investors should take a closer look at the underlying numbers. Within the questionable cash flow figure plotted in the TTM period above, other operating activities (which can include deferred income taxes, pension charges, and other one-off items) provided the biggest boost, at 9.5% of cash flow from operations. Overall, the biggest drag on FCF came from changes in accounts receivable, which represented 37.9% of cash from operations.

A Foolish final thought
Most investors don't keep tabs on their companies' cash flow. I think that's a mistake. If you take the time to read past the headlines and crack a filing now and then, you're in a much better position to spot potential trouble early. Better yet, you'll improve your odds of finding the underappreciated home-run stocks that provide the market's best returns.

Can your retirement portfolio provide you with enough income to last? You'll need more than Omnicom Group. Learn about crafting a smarter retirement plan in "The Shocking Can't-Miss Truth About Your Retirement." Click here for instant access to this free report.

We can help you keep tabs on your companies with My Watchlist, our free, personalized stock tracking service.

Add Omnicom Group to My Watchlist.

How Ultra Petroleum Is Planning Its Turnaround

On Friday, Ultra Petroleum (NYSE: UPL  ) will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

As one of the lowest-cost producers of natural gas, Ultra Petroleum benefited greatly from the energy boom in 2007 and early 2008. But when the bottom fell out of the market, even Ultra's low costs weren't enough to leave it unscathed. Let's take an early look at what's been happening with Ultra Petroleum over the past quarter and what we're likely to see in its quarterly report.

Stats on Ultra Petroleum

Analyst EPS Estimate	$0.27
Change From Year-Ago EPS	(15.6%)
Revenue Estimate	$211.4 million
Change From Year-Ago Revenue	(27%)
Earnings Beats in Past 4 Quarters	3

Source: Yahoo! Finance.

Why Ultra Petroleum's poised to pop this quarter
Analysts have gotten a lot more excited about Ultra Petroleum's earnings prospects in recent months. A $0.04-per-share increase in first-quarter-earnings estimates is a good start, but raising full-year projections by more than $0.50 per share -- an increase of more than half -- shows just how much enthusiasm the company is seeing right now. The stock has also been doing very well, rising 15% since late January.

Ultra has faced a huge challenge recently, as low natural gas prices have crushed its profitability. In February, CEO Michael Watford called 2012 a "train wreck," as the company's concentration on gas worked against it. In particular, as Motley Fool contributor Tyler Crowe noted, even a relatively small drop in nat-gas prices hits Ultra twice: once in outright revenue for gas it produces, and again in forcing the company to downgrade some of its proven reserves, leading to asset writedowns.

But now, natural gas has started to climb, and that same effect should work in reverse to boost Ultra's prospects. Moreover, Ultra has gained a lot of expertise at drilling shale gas wells cheaply, cutting drilling costs by 30% since 2006. Ultra was already among the lowest-cost producers of natural gas, and further efficiency gains will only help increase profits when prices rebound.

Perhaps most importantly, Ultra hasn't made the same mistakes as some of its formerly gas-focused competitors in buying high and selling low. Chesapeake Energy (NYSE: CHK  ) and SandRidge Energy (NYSE: SD  ) largely gave up on gas, seeking to broaden their asset bases further into more lucrative oil and natural gas liquids. Yet as Chesapeake and SandRidge have sold off assets at the least desirable time, Ultra has stayed committed to gas and therefore stands to benefit more from its recent gains.

In Ultra's quarterly report, look for any comments about whether the company is seeking to make any major strategic moves. Some have pegged Ultra as a takeover target in its own right, but a better move could come from Ultra being the aggressor in grabbing up more gas assets on the cheap.

Despite Ultra's attractiveness, energy investors would be hard-pressed to find another company trading at a deeper discount than Chesapeake Energy. Its share price depreciated after negative news surfaced concerning the company's management and spiraling debt picture. While the debt issues still persist, giant steps have been taken to help mitigate the problems. To learn more about Chesapeake and its enormous potential, you're invited to check out The Motley Fool's brand-new premium report on the company. Simply click here now to access your copy.

Click here to add Ultra Petroleum to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Williams Companies Earnings: Do Plunging Earnings Mean You Should Sell?

Williams Companies (NYSE: WMB  ) has traversed a rocky road over the past year. Its MLP, Williams Partners (NYSE: WPZ  ) , has faced quarter after quarter of declining revenue and has failed to cover its fast-growing distribution. It has also now missed earnings for four quarters in a row. Let's look at this most recent miss to see whether Williams Companies and its MLPs are still worth owning. 

The earnings themselves
Williams Companies was expected to earn $0.19 a share and beat expectations by 5%, reporting $0.20 a share in net income. I should note that S&P Capital IQ has calculated Williams Companies' earnings minus non-recurring charges and thinks the company actually missed earnings by 17%.

Williams Partners, at first glance, appears to have fallen flat on its face. It reported $0.07 a share in earnings, missing analyst expectations of $0.39 a share by a stunning 82%. This quarter's earnings are down an even worse 86.5% from $0.52 a share in last year's third quarter.

Even Access Midstream Partners (NYSE: ACMP  ) , the fast-growing MLP whose remaining general partner rights Williams Companies recently purchased for $6 billion, reported earnings of $0.22, falling 33% short of Wall Street expectations.

Access Midstream's net income was down a stunning 47.3%, while its distributable cash flow, or DCF, declined 30%, resulting in a distribution coverage ratio of 0.82.

At first glance, it seems as if unitholders in Williams Partners and Access Midstream might want to run for the exits. However, when one digs in to the actual results, as well as the company's near-term future outlook, things look far better. 

Drilling into the numbers
Let's start with Williams' seemingly horrific plunge in earnings. Last quarter's $0.52 per share in net income was largely due to a $50 million insurance payout resulting from the business interruption of its Geismar facility in Louisiana. 

Thus, the comparison to last year's quarter isn't valid, since those previous earnings were inflated by a non-business-related credit. However, this year's earnings still missed by a mile, and the two primary reasons were the continued downtime at the Geismar plant (which is scheduled to go back online in November) and continued margin compression in the partnership's NGL segment. 

US Producer Price Index: Natural Gas Liquids and Residue Plant Condensate, Ethane, Mixtures, Other data by YCharts

As this chart shows, NGLs such as ethane are down 30% this year, the result of booming gas production and insufficient NGL pipeline supply. As a result, many producers are rejecting the liquid, and that means choosing to allow the chemical to remain part of natural gas, rather than pay to have it separated out and transported in separate pipelines.

The combination of the offline Geismar plant, lower NGL margins, and $24 million in higher net interest expense knocked earnings down to $217 million. When factoring out the $50 million insurance payment, that means earnings declined by 7.8% compared with last year.

More important than this quarter's earnings is Williams Partners' year-to-date earnings, which clocked in at $801 million, or $0.53 a share. That's down from $899 million for the same time period last year, but when adjusted for the $225 million in insurance payments received for Geismar in 2013, year-to-date earnings were actually up 18.8%.

Similarly, Access Midstream's terrible earnings are just an accounting fluke. This quarter's earnings and DCF plunges were caused by one-time merger-related fees. Factoring those out, DCF (which pays the distribution) rose 42.2%, and the coverage ratio is a rock solid 1.67. This soaring DCF is the reason Access Midstream announced a 15% increase in its quarterly distribution. 

What about Williams Companies, the general partner of these two MLPs? Thanks to the acquisition of Access Midstream, quarterly distributions from its MLPs soared 57% to $521 million. Year-to-date distributions received jumped $1.485 billion, or 34%.

What to watch going forward
Williams Companies' management is optimistic about the future, with several major projects set to go online this quarter. Quoting President and CEO Alan Armstrong:

We expect dramatically higher results for Williams Partners in the fourth quarter and 2015. In November and December, we plan to place several major projects into service, including the expanded Geismar plant, the Gulfstar One facility, and the Keathley Canyon Connector pipeline. All three of these large-scale projects are mechanically complete and are expected to generate nearly $1 billion in 2015 cash flows.

In fact, Williams Companies is predicting full-year distributions from its MLPs of $2.06 billion, $2.488 billion, and $2.896 billion in 2014, 2015, and 2016, respectively. The merger of Access Midstream with Williams Partners is now expected to close sometime during the first quarter -- management is shooting for January. Williams Companies reiterated its earlier guidance of 15% dividend growth through 2017, following the 32% dividend increase management just announced. 

Meanwhile for the soon-to-be-merged Williams and Access Midstream, which will retain the name Williams Partners, management is guiding for $3.65 per unit in annual distributions, which represents a 50% and 30% increase over Access Midstream's 2014's second-quarter and full year guidance. 

Looking forward long-term, management believes that the larger Williams Partners' $30 billion of current and potential backlog can sustain industry-leading 10% to 12% distribution growth through 2017 while maintaining a healthy distribution coverage ratio of 1.1. 

Source: Williams Companies' third-quarter investor presentation.

What should current and prospective Williams investors look for going forward? Simply put, management needs to be able to deliver on its aggressive growth promises and timetables. Geismar's restart was originally scheduled for April and then pushed back to June for enhanced safety features. Now the restart is scheduled for November.

Similarly, the merger was supposed to be completed this quarter but is now scheduled for Q1 of 2015. With management's history of delays, I think it's vitally important for Williams to be able to stick to its guidance schedule if it's to deliver on the promised dividend and distribution growth.

Takeaway
Williams Companies and its MLPs seemingly missed earnings expectations yet again, and in a big way. Yet accounting for one-time charges related to the Geismar accident and Access Midstream/Williams Partners merger, the results are actually very good. With one of the largest backlogs in the industry projected to fuel some of the strongest dividend and distribution growth, Williams Companies and Williams Partners remain a strong income investment -- as long as management can keep its project timelines on track.

 

"As significant as the discovery of oil itself!"
Recent research by the U.S. Energy Information Administration has already tabbed this "Oil Boom 2.0," with a downright staggering current value of $5.8 trillion. The Motley Fool just completed a brand-new investigative report on this significant investment topic and a single, under-the-radar company that's involved with driving force behind this boom. Simply click here for access.

 

Monkeys' Behavior Reveals Hidden Threat to Our Wealth

Jupiterimages Your money is threatened by a Trojan horse that comes in the form of a wide grin, a wink and maybe a hug. This threat is like a computer virus. It runs without your awareness, takes hold of your operating system and undermines your intentions. This threat affects nearly everyone -- myself included. I was recently in Las Vegas telling more than 50 NFL athletes how to turn sudden wealth into lasting wealth. In my keynote address, I identified some common threats –- such as divorce, lawsuits and injuries -- but I focused on this hidden threat. It's been said that we are the average of the five people we're closest to. If you're making $40,000 a year, and all of your friends are making $100,000, you tend to to spend more than you can afford to match their lifestyle. You may start to buy the same types of clothes or the same kind of car. You might take up the same expensive hobbies or move into the same neighborhood. Contrary to what most financial advisers suggest, the biggest threat to creating lasting wealth is not your poor friends. It's your rich friends. Such financial creep is hardwired within us. We are social creatures. We are constantly looking at others and learning and modeling from them. It's in our DNA through evolution and natural selection. Our ancestors who saw and learned from others about what worked and what didn't were the ones who survived. Animals do it, too. Going Bananas Over a Grape If you're unable to watch the video, imagine two monkeys in separate cages. A researcher gives the first monkey a slice of cucumber. The monkey grabs this and starts to eat it because monkeys like cucumbers. The researcher then gives a grape to the second monkey. The second monkey devours it because while monkeys enjoy cucumbers, they love grapes. The first monkey is looking but doesn't really think much of it. The researcher then gives another cucumber slice to the first monkey. The first monkey takes it a little more slowly and starts to eat it, but now he's watching the researcher and the other monkey more closely. The researcher then gives another grape to the second monkey. Again the second monkey gobbles it up. If you watch the first monkey, you can tell something is not right. He's trying to figure out why he's getting cucumber slices and his buddy is getting grapes. Finally the researcher gives another cucumber slice to the first monkey. The first monkey takes it, looks at it, looks back at the researcher and throws the cucumber slice through the cage -- and it hits the researcher right on the chest. This monkey is irate. He does not understand why he is stuck with cucumber while his friend gets grapes. Just two minutes before, he was thrilled with his cucumber. And now he is enraged. Why? It's called relative deprivation. We're constantly comparing ourselves to those in our immediate circle and looking for areas where we're not getting what we think we deserve. Unsatisfied by a Dream Car Let me give you a human example. Imagine someone who has worked hard for many years to buy a Porsche 911. He has finally saved enough to throw down $100,000 at the dealership and drive off in a new Porsche 911. The windows are down, the radio is up, and he's cruising. But when he drives into a parking lot, he pulls up next to ... what? A fancier car? A faster car? A more expensive car? He gets out of the Porsche, shuts the door and feels disappointed. It's an internal tug that whatever we have isn't quite good enough -- that maybe we're not good enough. This seriously threatens our finances. You know what's going to happen to the guy with the Porsche. In three months, he's going to sell it at a huge loss and borrow money or lease a car that's much more expensive then he can afford. This virus is almost impossible to delete. The best defense is awareness. The next time you buy something, ask yourself why you want what you are buying. Do you truly want it or are you just buying it so you look better or to assuage an internal battle to feel good enough? The takeaway is to be conscious of how your environment and those around you affect your motives. Use money to create a better, fuller and richer life. Don't use money to attempt to keep up with friends or to mitigate feelings of inequity. It might not be fair that your friends enjoy grapes while you get cucumber, but if you act like the monkey, you'll have neither grapes nor cucumbers to eat. Most of us spend a ton of time researching our options when we first sign up for a plan or policy, then forget all about it and make monthly payments like a robot. But this can cost you.

Why JPMorgan Is Undervalued on Long-Term Earnings Growth Estimates

NEW YORK (TheStreet) –- JPMorgan Chase  (JPM), a bank once proclaimed the "cleanest shirt in a dirty hamper," is no longer invincible.

The infamous London Whale trade, which saw the bank lose more than $6 billion due to complicated maneuvers, is one of many recent examples. That the bank was also tied to Bernie Madoff was another embarrassment -- one that forced it to pay $1.7 billion to settle accusations that it facilitated Madoff's Ponzi scheme by ignoring the warning signs.

The stock closed Friday at $55.80, up less than half of 1%. Shares are down 2.6% on the year to date, trailing both Wells Fargo  (WFC) and the banking sector, which are up 15% and 5.4% year to date.

And with recent concerns about CEO Jamie Dimon, who disclosed he has "curable throat cancer," investors are taking a wait-and-see attitude with both Dimon's and the bank's near-term recovery plans. But all of this combined makes JPMorgan one of the best investments on the market today. From Friday's close of $55.80, the stock is trading at just 8.5 times 2015 estimates, almost 6 points lower than the industry average of 13.88. This is also 11 points below the S&P 500's peer category P/E of 19. This tells me that JPMorgan shares, which are being discounted due to its legal and regulatory exposure, should head toward $70 in the next 12 to 18 months.
[Read: Citigroup Has Edge Over Bank of America in Mortgage Fine Talks] Jamie Dimon won't lose track of the bottom line. The bank's balance sheet remains strong, showing no permanent damage. And investors have been too quick to ignore strong fundamental signs, including the fact that JPMorgan passed the Fed's Comprehensive Capital Analysis and Review (CCAR). Citigroup  (C), on the other hand, didn't. JPMorgan has also raised its quarterly dividend by 5 cents to 30 cents and announced a $15 billion stock repurchase program. Banks in poor financial health don't look for ways to part with their cash. This tells me that management believes in the bank's future. And so should investors. The bank's legal and regulatory woes have already reached their peak. What's more, management is positioning JPMorgan's investment banking business to gain domestic and global share from both Citigroup and Bank of America  (BAC). JPMorgan has become one of the top picks among large multinational companies looking for expertise in areas like fixed income and M&A.
[Read: Bank of America Growth Challenges Go Beyond $17 Billion for Feds] When you combine these bank's improvements in areas like mortgage loan origination and overall loan growth, JPMorgan core business is not shaky as it is sometimes perceived. This means that the bank, which is not as dependent on domestic GDP, can still print money without resorting to risky trading maneuvers. From my vantage point, JPMorgan's reputation can only improve from here, returning its business to a quality level currently enjoyed by Wells Fargo. And it's only a matter of time before all of the legal and regulatory clouds disappear. By then it will be too late. The stock is now one of the best bargains on the market. On the basis of improved/discounted earnings and cash flow growth, the stock will have to trade at its rightful fair market value of around $70. At that point, you'll be kicking yourself for missing out on an expensive dirty shirt. At the time of publication, the author didn't hold any stock in the companies mentioned. Follow @Richard_WSPB This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

New Guru David Abrams' 2 New Stocks and 1 Increase

David Abrams (Trades, Portfolio) of Boston-based Abrams Capital Management is a new guru. He formerly held a position at Seth Klarman (Trades, Portfolio)'s Baupost Group, and since founding his own fund in 1998, has returned about an annualized 15% for his clients. Abrams is a classic value investor who worked in merger arbitrage before his hedge fund days.With a value of $1.26 billion, Abrams' long portfolio holds just 13 stocks. Two positions were new in the first quarter: Microsoft Corp (MSFT) and Barnes & Noble (BKS).Microsoft (MSFT)Abrams purchased 3,420,000 shares of Microsoft in the first quarter, amounting to 11.1% of his portfolio. This makes it the third-largest position in his holdings, behind Western Union (WU) (22.5%) and AIG (AIG) (18.8%).Microsoft's share price averaged $38 in the first quarter, and has moved up 9% since.Microsoft Corp was founded in 1975. It was incorporated in the State of Washington. Microsoft Corp has a market cap of $337.19 billion; its shares were traded at around $40.82 with a P/E ratio of 15.40 and P/S ratio of 4.10. The dividend yield of Microsoft Corp stocks is 2.60%. Microsoft Corp had an annual average earnings growth of 14.80% over the past 10 years. GuruFocus rated Microsoft Corp the business predictability rank of 3.5-star.Barnes & Noble (BKS)Abrams added 2,115,229 shares of Barnes and Noble in the first quarter, equal to 3.54% of the company's shares outstanding and making the company 3.5% of his portfolio.Barnes and Noble had a share price average of $17 per share in the first quarter, and has increased by 14% since.Barnes & Noble Inc. was incorporated in Delaware in 1986. Barnes & Noble Inc. has a market cap of $1.2 billion; its shares were traded at around $20.06 with and P/S ratio of 0.20.Increase – J.C. Penney (JCP)Abrams increased his slight position in J.C. Penn! ey by 50% in the first quarter, adding 500,000 shares at an average price of $7 to his stake started the previous quarter of 1 million shares purchased at an average price of $8. This holding represents 1% of his portfolio after the increase. The price has since moved up to around $8.68 on Wednesday.J. C. Penney Company Inc. was incorporated in Delaware in 2002. J.C. Penney Co. Inc. has a market cap of $2.65 billion; its shares were traded at around $8.69 with a P/S ratio of 0.20.For more David Abrams (Trades, Portfolio) stocks, visit his portfolio here. Not a Premium Member of GuruFocus? Try it free for 7 days here!Also check out: David Abrams Undervalued Stocks David Abrams Top Growth Companies David Abrams High Yield stocks, and Stocks that David Abrams keeps buying

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Money Lessons From My Mom

Getty ImagesMoms often teach their kids some of their earliest money lessons. As a child, my mom always made me feel safe, secure and loved. But she also made it a priority to prepare me for a life of financial stability. She spent a lot of time and effort over the years to set me on the right path. Sometimes she taught by example, and other times it was necessary for me to learn the hard way. These lessons have become a part of my core set of values and impact how I strive to teach my own child as well as my work for a coupon company. Here are some of the key money lessons I learned from my mom. Make your own money: My mom believed I wouldn't truly understand the value of a dollar unless I had to earn it myself. I got my first job at 15 and continued to have a job throughout college. Yes, working for minimum wage while my friends spent lazy days by the pool was hard. But as time went on, I realized I made more responsible decisions when I earned my money. I became a savvy shopper and learned to use coupons and scoured store sales and clearance racks for the best deals. Invest: Sometimes spending less doesn't equal saving more. I remember on one of our shopping trips, I proudly showed my mom a trendy blouse I had fallen in love with and it was only $10! I was sure she couldn't object. Not so fast. After closely eyeing the cheap garment, she asked me how many times I'd be able to wear it before it fell apart or was no longer fashionable. Two times? Three times? This taught me my first lesson in investment shopping: Calculate the per wear price. It didn't seem like such a bargain after all. Sometimes it's worth paying more for high-quality, timeless pieces if I can get more uses and versatility out of them in the long-run. Make it work: As you could probably guess, my mom didn't grow up with a silver spoon in her mouth. There was no extra money to spend on items deemed frivolous, which unfortunately for her meant toys. She became very resourceful with what she had around her. She made flowers by folding old newspapers and caught insects to keep as pets to distract herself from the fact that she didn't have dolls to play with. She reimaged most items into serving more than one purpose. Once when I ran out of glue for a school project, she used some leftover cooked rice from our dinner and mashed together a sticky paste to hold together my artwork. Cash in on the perks: We were fortunate that the company my father worked for paid for annual family vacations, including first class tickets and upgraded hotel accommodations. A very nice perk indeed! However, she would book us in coach and we would stay in more moderately priced lodgings or sometimes even stay home for a staycation. There were times I whined about it, but she would respond that we would have more spending money for shopping and fun activities. She won that argument every time. Let your head rule your heart: This isn't to say my mom doesn't believe in true love or romance. But she felt having financial compatibility with your mate was just as necessary to sustain a happy marriage. It was important that she and my father were on the same page with their spending habits and financial goals. Bad spending of habits of one person in a family causes bad consequences for everyone. Stay organized: She was a firm believer of having a place for everything, and everything in its place. How would I pay my bills if I couldn't find my checkbook, or know when the bills were due if they were scattered around the house? Getting charged my first $25 late fee for a bill I forgot to pay painfully proved this point. Today, there are several mobile apps and websites that make it easy to organize finances and bills online, which I've taken full advantage of because the groundwork was laid years ago. Know when to hold them, know when to fold them: I used to cringe that her relentless bargaining skills could reduce a grown man to tears, but more times than not, she got what she felt was a fair price. She taught me to set a budget beforehand and not to be afraid to ask for a discount to get to that amount. The worse answer I could hear was "no." And if I couldn't close the deal, she taught me to just walk away. At times that was easier said than done, but she felt that agreeing to pay beyond your budget was the same as tossing money in the garbage. That mental picture has stopped me from many last-minute purchases. I'll admit I've faltered from my mom's lessons over the years. Nobody's perfect, after all. But thanks to my mom, when I get financially off-kilter, I have the tools to always get myself back on track. .

GM begins talks on death claims in switch cases

General Motors' compensation expert began discussions Friday with five lawyers representing people with claims of deaths or injuries resulting from faulty ignition switches on 2.6 million cars that GM recalled worldwide earlier this year.

Kenneth Feinberg, a compensation expert who GM hired in April, met Friday in Washington, D.C., with Texas lawyer Robert Hilliard and four others.

"I was pleased to meet with Mr. Hilliard and the others," he said. "I would do the same for any other lawyer who called me" with a relevant case.

Feinberg and Hilliard both cast the meeting as preliminary general discussion.

Hilliard, the headliner pursuing cases against GM, represents 53 families who say they lost loved ones due to the GM defect, as well as 273 injury victims, 63 of whom suffered what Hilliard says are "catastrophic injuries."

Feinberg is expected to have a number of meetings with people who have GM claims before proposing any settlements, possibly as soon as the end of the month. He's a veteran compensation expert, having handled high-profile cases including the BP oil spill and the Boston Marathon bombing.

GM spokesman Greg Martin said, "It would be inappropriate to comment while Mr. Feinberg's work is in progress."

No financial details were discussed Friday, but Hilliard says he wants GM to compensate all his clients, regardless of whether their accidents took place before or after GM's Chapter 11 bankruptcy reorganization in July 2009. In fact, he said he understood from the discussion that GM was at least considering that.

That would be a radical move for GM. As part of the 2009 reorganization, GM legally was excused from liability for most "old GM" issues. The automaker is seeking a court decision affirming that it has no liability for cases involving diminished value of the 2003-2011 recalled vehicles.

But GM documents show it knew of the switch problem since 2001, and it apparently was covered up by some within the company. If GM deliberately conc! ealed the switch fault as it went through the Chapter 11 process, it almost surely would lose the liability protection.

"You can't use the shield if there was fraud involved," says Carl Tobias, professor at the University of Richmond law school.

GM's Martin repeated the company's stand: "General Motors has taken responsibility for its actions and will keep doing so. GM has also acknowledged that it has civic and legal obligations relating to injuries that may relate to recalled vehicles, and it has retained Kenneth Feinberg to advise the company what options may be available to deal with those obligations."

When it announced the recall in February, GM acknowledged 12 deaths and 31 accidents in the U.S., and since has added one fatal crash in Canada to the totals. Most happened before the 2009 reorganization.

Nonetheless, Hilliard, says, an "investigation has confirmed that each accident was caused by the ignition defect in the GM vehicle."

Tobias said if the matter gets as far as settlement amounts, the cases will have to be considered one by one: "There are going to be questions about whether you can trace this accident to the faulty switch, and was there bad driving involved."

The specific problem for which GM recalled the Chevrolet Cobalt, Saturn Ion and similar vehicles is that the ignition switch can unexpectedly move out of the run position, shutting off the engine, which kills power assist to the steering and brakes and can disable the front airbags.

GM dealers currently are replacing the switches for free, and GM is paying for rental or loaner cars for owners of the recalled models who don't want to drive them until the repairs are done.

Jeff Ubben on Valeant and Microsoft

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Is Vale's Brazilian Potash Project Just a Pipe Dream?

After disastrous monetary policy caused Vale (NYSE: VALE  ) to abandon its $6 billion potash project in Argentina last year, the mining giant looked to its Brazilian Carnalita potash mine to make up some of the lost volume. The country itself is hoping the operation can help alleviate some of its import demands for the fertilizer component as it currently imports 90% of its potash needs from Russia, Canada, and the Middle East. Carnalita is expected to meet some15% to 20% of the demand.

Potash operations. Source: Vale.

However, two local municipalities greedily eyeing the tax revenues the project will throw off may very well doom the project as Vale now considers selling the mine if a resolution can't be reached.

A tale of two cities
Carnalita straddles the towns of Capela and Japaratuba in the state of Sergipe, and the location of a processing plant has set the two municipalities against one another. The vast majority of the potash deposit, around 70% of it, lays in Capela, but Vale wants to locate the plant in Japaratuba because of "technical criteria," according to an emailed statement from the miner to The Wall Street Journal. If the plant was located on the other side of the border, it's estimated Capela would receive in excess of $80 million in tax revenue, a fivefold increase of its current budget .

Vale is willing to toss the municipality a bone by locating a distribution center in the town, and sell the output from the Capela mine from there, thus giving it sales tax revenues, but that's not enough for the politicians who want more.

The seeds of dissent
As the world's largest coffee, ethanol, orange juice, and sugar producer, Brazil's farms place heavy demand on global fertilizer producers. Vale was looking to replace lost Rio Colorado volume with 2 million tonnes of potash production annually from Carnalita and an additional 3 million to 5 million tonnes annually from its Kronau project in Saskatchewan.

The potash industry was thrown into confusion last year when the Belarusian cartel split apart causing the price of the fertilizer ingredient -- and the producers themselves -- to crater. However, there's been some stabilization in the market as China set a floor of $305 per tonne and Uralkali, one-half of the cartel, seeking a $40 increase to $350 for granular prices for Brazil beginning in March. Many analysts also suspect the cartel will get back together, possibly as early as this year.

Canpotex, the cartel's rival North American potash marketing association, comprised of Mosaic (NYSE: MOS  ) , PotashCorp (NYSE: POT  ) , and Agrium (NYSE: AGU  ) , is a major supplier of potash to Brazil, with some analysts estimating it owns 38% of the market. In years past, Latin America -- primarily the Brazilian market -- has comprised as much as 26% of Canpotex's potash sales.

Fertile fields
Carnalita could be producing by 2017 if the miner reaches an agreement with the municipalities, with the first phase being a $2 billion start-up to produce 1.2 million tonnes annually, followed by an additional second $2 billion phase that raises production to 2.4 million tonnes a year.

That Vale is willing to walk away from yet another project and shed its interest in it shows the level of frustration being experienced. Certainly, it's also part negotiating tactic, since the Brazilian government places just as much importance on the project as the miner does. It just approved low-cost financing to Verde Potash, a Canadian-traded producer, to build a mine in Brazil's Minas Gerais state. Even so, the money-hungry politicos shouldn't dismiss Vale's determination out of hand as it has shown resolve in similar situations before.

Roots of a solution
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