Friday, January 06, 2006

Aviall (NYSE:AVL) takes a flight on Boeing (NYSE:BA)

Aviall (NYSE:AVL) issued a press release announcing they have been selected by Boeing (NYSE:BA) as a partner in their Integrated Materials Management Program. While Boeing probably OK’ed the release it was clearly issued by Aviall. What makes the release interesting is the use of Boeing as a lead in along with Boeing’s stock symbol. This allows Aviall is piggyback on a bigger name. It does not appear to be material to Boeing. If it is material to Aviall then why have they not provided any potential financial details? You have to believe the finance guy’s crunched the numbers and arrived at some kind of conclusion about the deal.

Thursday, January 05, 2006

Death by a thousand cuts. First Data and Eli Lilly Spin

Financial Spin Tactics continue to be employed by companies with less than good news. The sequence usually starts with an announcement of dividend either continued or increased. Several weeks’ later management announces a restructuring charge. At the same time management announces that with their next conference call they will address new earnings guidance.

I loss trust in companies who employ this technique. Firstly when a board announces a dividend this is supposed to be a good temperature reading of financial robustness. Companies who are doing poorly should not pay dividends. Also why was the restructuring charge not discussed or announced during the same board meeting. Both are significant events and closely related. The tactic creates skepticism.

Some examples: First Data Corp (NYSE FDC) announces dividends on Dec 7, 2205. On Dec 16, 2205 significant restructuring charges are announced with a promise of renewed earnings guidance being issued on Jan 26, 2206. Eli Lilly Company (NYSE:LLY) announces a dividend increase on Dec 19, 2205. On Dec 22, 2205 they take an asset impairment charge. They weasel out of their guidance by stating that these charges are excluded from their adjusted earnings.

When information slowly bleeds out investors are suckered. I find it hard to understand how management does not know the full picture during these time frames and yet does not disclose in a timely fashion.

Tuesday, January 03, 2006

Seasonal Follies

Eighteen (18) lumps of coal for investors this year as companies issue substantive press releases during Christmas and New Years Day Statutory Holiday time frames. Skepticism abounds with these stocks. The culprits are

On Amex Globetel Communications (GTE) and Crystallex International Corporation (KRY).

On Nasdaq Teva Pharmaceuticals (TEVA), Partner Communications (PTNR), Durect Corporation (DRRX)

On TSX Paramount Energy Trust PMT.UN

On NYSE Carr America Realty (CRE), Global-Tech appliances Inc (GAI), Salomon Brothers Inflation Management Fund (IMF), Salomon Brothers Municipal Partners fund Inc (MNP), Hecla Mining (HL), Scudder Global Commodities (GCS), United Dominion Realty Trust Inc. (UDR), Scottish Re-Group Limited (SCT), RPM International (RPM), TrustStreet Properties (TSY), Legg Mason (LM), Teppco Partners (TPY).

Caveat emptor in 2006