Thursday, May 04, 2006

Royal Group Maneuvers

Royal Group's (NYSE:RYG) former audit committee chairman Mr. Greg Sorbara is trying to remove his name from search warrants police executed. On Mr. Sorbara's watch two now controversial property deals were entered into between Royal Group and Sorbara Group (Sorbara family private company). Everyone denies everything. Many observers feel shareholders were disenfranchised. Prosecutors allege Mr. Sorbara did not inform the company's external auditors of the transactions. Mr. Sorbara resigned from Royal's board in 2003 when he became Minister of Finance for the Province of Ontario. When the scandal broke he resigned his cabinet position.

RIM Redux or Deja-vu

RIM is in hot water again. Another patent dispute with too much deja-vu. Last time they settled paying out hundreds of millions of shareholder's cash. The dispute could have been settled early on for a measly ten million. Is RIM a serial offender and what else is there? Should an independent board committee be investigating potential patent infringements? No company should have to pay out mega-buck settlements every few years. Management characterizes the patent fights as nuisance legal battles. What is the board of directors doing to ensure RIM is not a sand castle of intellectual property?

Wednesday, May 03, 2006

World Press Freedom Day

Today is World Press Freedom Day. While normally focused on political issues just think about how we need to maintain transparency in financial markets to ensure our financial freedoms. Check out

Guess at Guess? Inc (NYSE:GES)

Guess announces a delay in reporting Q1 earnings. They blame an April 27 SEC comment letter questioning their 2005 10K. In the same press release they provide substantial short term guidance on Q1 2006. Guidance is usually about future earnings. The release constitutes passive aggressive behavior against the SEC. The SEC comments relate to acquisition cost treatment dating back to Q1 2005. While Guess makes it to be a small problem, when you have to delay your earnings release, I see it as major.

UnitedHealth Group Suspect Judgment

The shareholder revolt may have succeeded in forcing some governance changes. Much like the keystone cops chasing the get-a-way perhaps a deterrent has been established. Mr McGuire was quoted by Reuters as saying that they should have moved sooner to make the changes. The comment is rich given that Mr.McGuire was the prime beneficiary of the suspect compensation program. The board's judgment is suspect. The stock is trading close to its 52 week lows. Will this stock reward shareholders or just a select few option holders. What other errors in judgment are embedded? My prediction is a rough ride. Classaction lawsuit if there was ever one.

Tuesday, May 02, 2006

Molson Coors (NYSE:TAP) Reports Loss

Molson Coors (NYSE:TAP) reports losses primarily due to restructuring costs almost everywhere. They make a strange reference to establishing a corporate center to transfer costs from operating segments and make investments to support the global enterprise. What is that? In a quarter when you are coming clean why not explain yourself completely?

Royal Group Probed by US Justice

Royal Group (NYSE:RYG) is being probed by US Dep't of Justice. Royal Group has figured prominently in this blog's weekend follies which identifies companies issuing substantive press releases at odd-ball hours. Royal Group is already under investigation by a number of securities regulators and law enforcement entities. The issues under investigation relate to accounting improprities and fraud. No allegations have been proven. Royal Group spokesman Richard Wertheim indicates that its not uncommon for DOJ to be called in by the SEC. Royal Group has just released its annual 2005 results one month late. Huge losses were reported. While the investigative practices may not be uncommon, management has clearly run the ship aground.

Monday, May 01, 2006

UnitedHealth Group Controversy

UnitedHealth Group is under fire for its very controversial awards of stock options to William McGuire the CEO and Chairman. The big shoot out may occur at Tuesday's annual meeting. CALPERs has asked for a special meeting before. Clearly they are not happy. Governance experts are recommended withholding votes for members of the compensation committee. When the problem gets this far and is this messy how can you have confidence in the boss? What will he try next?

Harley Davidson hides Dividend Announcement

Saturday Harley (NYSE:HDI) announces the results of its annual meeting. Included in the mundane is a very sweet dividend increase that could easily be missed and should not be jumbled in with corporate housekeeping.

Weekend follies (April 29-30)

Weekend follies attempts to expose companies which release substantive press releases at odd-ball hours over the weekend when investors are not looking. Seven culprits are included in this round up. One Nasdaq listing Matav-Cable (MATV) and six NYSE listings Harley Davidson (HDI), Tamsa (TAM), Banco Santander (SAN), Masisa (MYS), ICICI Bank (IBN) and Sprint/Nextel (S). This blog feels that these companies require additional caveat-emptor