Frontier Communications (FTR): A New Stock?

When I last updated my E*TRADE stock portfolio in Microsoft Money, I was surprised to find that a new stock had been added to my portfolio. I was now the owner of 48 shares of Frontier Communications (NYSE: FTR) that I didn't purchase. E*TRADE is not in the habit of giving away free stock, so I figured that there must be another reason. I turns out that this stock is due to the spin off on July 2, 2010 of Frontier shares from Verizon Communications (NYSE: VZ) which I own.


I usually don't get too excited about spin offs because they require me to re-calculate the tax basis of the stock shares that I own. In this case, I need to find the cost basis for both the Verizon and Frontier shares that I now own. Also when I finally sell the stock, I will be charged two sets of commissions -- one for Verizon (VZ) and another one for Frontier (FTR). Thankfully, I was able to find a tax-basis document on the Verizon investor relations website that can help with the tax basis calculations.

The gist of the document is that an owner of Verizon shares prior to the spinoff would allocate 93.7989% of the cost basis to Verizon shares. And 6.2011% of the cost basis would be allocated to shares of Frontier. There is also a small portion of the cost basis that may be paid out as "cash in lieu" (CIL) of fractional shares. If you received case in lieu, you would subtract that amount from the portion that is allocated to Frontier.

Using my own case as an example, I own 200 shares of Verizon. My original cost basis for the 200 shares of Verizon was $6705.00 (including commissions). This works out to $33.53 per share. So after the spinoff, 93.7989% of that amount or $6289.22 is attributed to the 200 shares of Verizon that I own (the new cost basis is $31.45 per share). The portion that is allocated to the 48 shares of Frontier is 6.2011% or $415.78. However, I did receive $0.06 (6 cents) of cash-in-lieu, so I would decrease my Frontier basis by that amount. My cost basis works out to $8.66 per share of Frontier. I have updated these values in MS Money, and will use these as the basis for whenever I decide to sell my shares.

Note that I did notice a few minor errors in the document provided by Verizon investor relations. I plan to contact them about these errors. But for the most part, these errors would not affect your calculations. So, is this explanation as clear as mud?

See Also: Trade Triangle: Frontier Communications (FTR)

NOTE: For more information about the Frontier spin off see also: Update on Verizon Frontier Spin Off

UPDATE: I did contact Verizon investor relations about errors in their document. I have an early version that had some calculation errors and several typos. After Verizon received my message, they updated the PDF document on their website, giving it a new name: "VZ-FTR Cost Basis_V3.pdf". Presumably this is "version 3" of the document. I have updated the links in my post to link to the most current Verizon document.

For reference, I am also including a link to the older cost-basis document without a "V3" in the name. If you examine the second page of this document, you will find that the text refers to an incorrect cost-basis for Frontier of $7.501. Another typo in the second paragraph of the example is that it ends with the term "Frontier sock." This should read as "Frontier stock."

Disclaimer: The example provided here is for illustrative purposes only. I am not providing tax advice, and I encourages readers to consult with a tax adviser if they have specific questions about cost basis calculation.

PFS

Wesabe to Shutdown

A while ago, I put up a poll on the sidebar of PFStock.com that asks readers "Which financial account management website do you use?" Readers are asked to vote among financial aggregation sites such as Wesabe, Mint, and Yodlee. After not receiving any votes for Wesabe, I wrote a post asking if anybody uses Wesabe? I didn't know anybody who actually did use Wesabe at the time. But again, I didn't get any affirmative responses.

Now, I have been informed that Wesabe would be discontinued by the end of July. Here is a message that was posted on the Wesabe website (I have kept the original links intact).

Dear Wesabeans,

I am deeply unhappy to have to announce that Wesabe will be discontinuing our Accounts tab, and all of the related personal finance tools we offer, as of July 31st, 2010. The Groups tab, which hosts discussions on personal finance topics, will remain online indefinitely. A FAQ about this shutdown is available.

You will be able to download all of your data from now until July 31st by visiting our export page. After that date, we will delete all data and all credentials we hold for security and privacy reasons. If you prefer, you may delete your membership immediately or at any time before July 31st.

We are planning to offer additional tools for export and use of your data. Future blog posts will go into more detail as we have it ready.

In recent months Wesabe has been operating on a shoestring budget, with support from some of the developers and operations people who made up our core team. While the site has remained online and we continue to hear from people who find it helpful, we have not been able to provide the support people need to use it for something so central as financial management. I've felt especially terrible that some members have a good initial experience but then hit a problem, often after investing many hours, and aren't able to get help with it. That's obviously a bad experience, and not what we want to offer. Also, because Wesabe stores such highly sensitive data, continuing to operate the service with shoestring operations and security staff is not acceptable, and we do not want to continue accepting new accounts if we cannot guarantee the security level we believe our service requires.

Wesabe Groups is easier to host on a low-cost basis, and one of our customers has agreed to fund its continued service. I have always been amazed by how fantastic the conversations in Groups are -- supportive, constructive, and unique. While many or all of the features of our Accounts tab are now available on other sites, our competitors have either dismissed the value of community, or have not been able to create a community as rich as Wesabe Groups, so I'm very happy we are able to keep that part of the service going.

I have had a wonderful time working on Wesabe and have been gratified by the many messages we get from members telling us how helpful it has been. The past five years have been an amazing ride. Of course I wish things had turned out differently and I would not have needed to write this post, but I've enjoyed my job for these years more than anything before it. The people we worked with, the people who supported us, the reward of helping even some people have better financial lives, all of that is irreplaceable. Thanks to everyone who has made Wesabe possible.

We will answer as many questions as possible about the planned shutdown in this Groups thread and update the FAQ as needed.

Marc Hedlund, CEO, Wesabe

I guess that this pretty much spells the end of Wesabe as a financial management site. What will Wesabe users do? Can anybody compare Wesabe versus Mint? Or Wesabe vs. Yodlee? Do readers have any other opinions?

PFS

Is Amazon Losing It?

A few days ago, I received an Email predicting that Amazon.com (Nasdaq: AMZN) will experience a substantial pull back from its recent high. The Email links to the following video (below).

If you have any trouble with the video, you can Click here to view it.

Do any of my readers own Amazon.com stock, or have opinion on how it will do?

PFS

Does Anybody Use Wesabe?

An article in SmartMoney inspired me to construct the poll "Which financial account management website do you use?" in the sidebar of my blog. Here is a link to the original article at SmartMoney.com: Which Financial Planning Web Site Is Best For You?

The article mentions a website called Wesabe.com, and lists it first among the three sites listed. QuickenOnline.com and Mint.com were the other two sites that they listed. As a history lesson, Quicken bought Mint, and if you try to access Quicken Online, you will end up on the Mint web site. So, the article really only mentions two financial websites.

Anyway, I have had the financial account management website poll up on my blog sidebar for a while now, and so far nobody has responded that they use Wesabe to manage their finances. So, my question to my readers is "Does anybody use Wesabe?" Anybody at all? If so, I would like like to hear what the benefits are.

Personally, I use Yodlee to track my finances, and so do the majority of PFStock.com readers. I usually find very good insights presented in SmartMoney but in this case I find their advice dubious as they didn't even mention Yodlee in their article.

PFS

Bing Cashback Program Will Be Discontinued

Do you use Bing Cashback? I have been using this feature to earn cash back on some of my online purchases. This was a Microsoft service that paid shoppers to search for and purchase items through their Bing search engineg. Microsoft has just announced that they are discontinuing the program. Does anybody have an opinion on this?

Here is the text of the message that they just sent me:

Dear valued cashback customer:

We are writing to notify you that the Bing cashback program will be discontinued, and the last day to earn cash back on your Bing Shopping purchases will be July 30, 2010.

Until July 30, 2010 9:00 pm PST, it's business as usual so continue to take advantage of great offers from your favorite merchants. You can redeem all of your earned cashback savings consistent with the cashback terms and conditions and access the Bing cashback customer support system through July 30, 2011. We encourage you to redeem your cashback savings and to further support redemption, we are waiving the $5 minimum payout effective July 31, 2010. To assist with prompt delivery of your cashback earnings, please visit http://cashbackaccount.bing.com to ensure your account information is current. For more details and answers to your questions, please visit our frequently asked questions page.

Thank you very much for being a loyal cashback user. We remain committed to delivering great value to our customers, and we are currently working on an exciting new program which you will hear more about from us later this summer.

Sincerely,

Bing cashback team

Is Toddler Toothpaste Useless Junk?

Some readers know that I have a 2-year old daughter, and I will admit that this post is little bit off topic for a personal finance blog. But one thing that I wanted to talk about is toddler toothpaste. These products are sold under such names as Orajel Toddler Training Toothpaste, and Gerber Infant Tooth and Gum Cleanser.

The product claims to be fluoride free and safe to swallow. But, I did my best to switch my daughter over to regular fluoride toothpaste as soon as she turned two years old. I've had issues with toddler toothpaste for a couple of reasons. First of all, toddler toothpaste has no fluoride in it, and this makes me question its usefulness. Toddler toothpastes are not accepted by the American Dental Association (ADA) as being effective in the prevention of cavities. In my view, this makes their intended purpose dubious at best.

About the only real claims that the manufacturers have made is that their product tastes good, and it can be swallowed by your child. Therein lies my problem! My daughter likes the taste, and treats the toothpaste like a food. I've probably gone through a dozen mangled toothbrushes due to my daughter chewing on the toothbrush until the bristles are unrecognizable. Brushing was a constant struggle with my daughter trying to eat the toothbrush, and me trying the extract the brush from her jaws.

After finally switching to a fluoride toothpaste (Kid's Crest), I had to later teach my daughter the exact opposite behavior: not to swallow the toothpaste. Swallowing too much fluoride can cause fluorosis or spots on your child's permanent teeth. Also, it was important to teach her to rinse her teeth thoroughly. This is how the lengthy process of unlearning a behavior went.

In my experience toddler toothpaste has little to no benefits, and in our case only led to struggle, frustration and conflict when brushing my child's teeth. I don't know about other parents, but I would consider such a product to be defective. At this point, if I had it to do over, I would not buy any toddler toothpaste, and just use a toothbrush moistened with water until my child was two years old. Does anybody else share my opinion that toddler toothpastes are useless junk?

PFS

Additional Comments on Yodlee

I was going to write some more of my own comments about Yodlee. It seems that Peter Hazlehurst (Senior Vice President at Yodlee) had left a comment on my previous post about Yodlee, but that comment has since been deleted. Nevertheless, Yodlee's customer service has been mostly responsive to my concerns. They have corrected the problems that I had experienced with my Bank of America and Chase accounts. However, a new problem has cropped up with one of my banks: Discover Bank. My account balance will update, if I manually update Yodlee. But the DiscoverBank balance doesn't update automatically, like all my other accounts. I sent a service request to Yodlee Customer Care a couple of months ago, but the problem has yet to be resolved.

My accounts that were previously unsupported by Yodlee are still unsupported. For example, my 401(k) account at JP Morgan remains unsupported. In my previous post, I mentioned something called Multi-Factor Authentication (MFA) that JP Morgan uses. Some readers are probably not familiar with his technology, so I'll summarize it here. If I try to access my JPMorgan account from a new computer, their website will not recognize me even if I entered the correct username and password. Then their website will prompt me to choose to receive an "Activation Code" via my home phone, text message, or Email message. I then have to enter that code into the website for them to recognize my computer and grant access to my account information. This registration has to be done once for each computer that you use to access your account. It appears that Yodlee doesn't support this JP Morgan account registration system.

However, I also have several Chase bank accounts that use a similar MFA system, and they seem to work fine in Yodlee. Remember that both JP Morgan and Chase are all part of one big company: JPMorgan Chase & Co. (NYSE: JPM). So, I'm thoroughly confused as to why Yoddle would support one but not the other.

Lastly, one reader has asked me how to track stocks on Yodlee that are not held in a brokerage account. For example, one could hold 200 shares of Microsoft (Nasdaq: MSFT) in certificate form. I know that you can setup a manual account on Yodlee where you can put in an estimate of the value of your stocks, but I haven't figured out how to have that updated automatically. Such a feature would also be useful to track the value of gold or silver bullion that one holds in a safety deposit box.

Note: Please also participate in the poll about financial account management websites in the sidebar.

PFS