Thursday, July 10, 2008

Financial Relations Board Impressed Itself

Could not resist this one as earnings season starts up. The Financial Relations Board (FBR) which is part of Interpublic Group of Companies (IPG) announced that during the first six months of 2008 they advised on more than $12 billion of M&A. This is impressive because they have already surpassed the volumes they did in the entire last year.

These guys are financial communications specialists. They are part of a publicly traded company. Their web site claims that they have helped their client’s share prices rise higher than major stock market indices. But when they talk about themselves they do not say how much money they have made in these endeavours. The major i-banks who are in the business of M&A advice usually keep track of fees and let the world know how profitable they are.

Perhaps the good folks at the Financial Relations Board should look to some congruence and report numbers about themselves that investors would find useful.

Wednesday, July 09, 2008

International Speedway Liquidity Problems? Yellow Flag Caution

International Speedway Corporation (ISCA) announced their Q2 results. The purveyors of NASCAR racing experienced higher net profits on lower revenues. Always a good sign but it does cause you to look closely at the financials. The press release deals with the financials well after some promotional messages from the President Lesa France Kennedy who espoused on the strength of NASCAR offerings.

She also went on the say “"Supported by ISC's strong breadth of assets and solid financial footing, we remain well positioned to successfully execute our long-term strategic initiatives."

Let’s look at these two points:

Firstly the long term debt suddenly has a huge and I mean huge slug of debt that is now short term and needs to be repaid or rolled over. $150 million needs to be taken care of and not one comment from management about what is to be done.

Secondly let’s take a look at accounts receivable which has grown to approximately $72 million which is 57% larger than same period last year. Yet revenues are down . Accounts receivable are 20% of the first six months of revenues whereas last year is was in the 13% range which still seems small. Again not one word from management about this major change.

Long term positioning comments seem suspect and needs more clarity.

Tuesday, July 08, 2008

Why Does Microsoft Need Icahn For?

Microsoft (MSFT) still covets Yahoo (YHOO). They made an offer and Yahoo fumbled the ball spooking their own long suffering investors. Google (GOOG) may do some alliances but anti trust issues will most likely rule. Everyone seems to favour a new board so that the Microsoft offer will work.

Some interesting corporate governance issues are at play. Sure Microsoft wants a new board in place so that their deal is accepted. But is that really the role of a board? Should investors elect board members knowing that there is a built in bias?

The role of a board is to represent the shareholders who own shares now. They do not represent a potential takeover offer which will probably come in soon. If investors are currently dissatisfied with the incumbents, and why wouldn’t they be, then elect shareholders who will discharge their responsibilities properly.

There are many large institutional investors with huge vested interests in Yahoo. If they are truly interested in maximizing their valuations they should have been attempting to recall the board a long time ago. Instead they are letting Icahn run interference for Microsoft and put the fix in.

Monday, July 07, 2008

UBS July 4 Announcement

UBS (UBS) issued a press release early July 4 letting the world know that they did not think their losses would be really bad. Rather it would just be bad and they would not have to resort to other capital fund raising actions. On Monday when US markets open the stock drop about 8% by mid day. Investors trading in Europe had the opportunity to trade on Friday.

Given that most financial institutions are now treated with suspicion you just have to look at the timing of the announcement and wonder who leveraged what. The substance of the press release would have been known the day before the announcement and could have been released at that point. Or make the announcement on the weekend when everyone is off.

There are enough issues about timing of press releases when stocks trade in different time zones. Using a stat holiday as prominent as July 4 looks incredibly suspicious.

Arbitrage anyone!