Monday, April 28, 2008

Cooper Tire & Rubber Company Blows A Tire

Cooper Tire & Rubber (CTB) announced very late on Friday April 25 after market closed that they are not doing very well. Further and complete details will be provided on May 7, 2008. Anxiety now and full disclosure a full eight trading days later.

The stock dropped almost $1.50 in late Friday afternoon trading but miraculously recovered the entire loss by the close of trading. Then on Monday the laws of financial gravity came into play and the stock does seem to be headed for a loss. After all you have to believe management that the results are going to be bad.

Someone let the cat out of the bag on Friday. Someone bid the stock back up so the closing price does not look too bad. Now we have to wait one and a half weeks to get the sordid details.

Management comments are more generic than useful. They claim headwinds and macroeconomic challenges are causing people to drive less and therefore not buy as many tires. They also mention that liability claims seem to be higher and have eroded profitability.

The announcement and events surrounding it are Reg FD challenged. At the very least management needs to make inquiries to ensure its governance practices are still solid. If there is a rogue culprit measures need to be taken.