Thursday, October 23, 2008

Elan Verbage Challenged

Elan (ELN) released quarterly results and immediately went into a wordy explanation of where they stood with what drug. They had a very confusing or very self serving sentence completing the first paragraph.

“Tangible progress will assist in addressing the perceptions of risk and allow volatility of our equity to reduce over time.”

Most companies find that if they execute on their business model they will create shareholder wealth. You do not really have to make obtuse comments in your press release to support the concept. The concern is that the wording of the press release was not well thought out. What does this say about the quality of leadership?

Wednesday, October 22, 2008

Boeing Blames Strike

Boeing (BA) reported earnings and of course blamed the machinist strike for a drop in revenues and of course profitability. This was expected. Boeing needs to wrestle down the high labour costs in the Portland, Seattle and Wichita Plants. The short term pain should be treated as an investment for improved economics in the future. Do not settle until the numbers are good.

However they also keep mentioned supplier problems. Read this quote

For the first nine months, BCA revenues decreased 3 percent to $23.7 billion on
lower deliveries due to the strike and galley shortage.”

And this quote right in the first paragraph of the earnings release:

“and supplier production challenges on customer-furnished galleys for certain wide-body airplanes.”

The third party supplier challenges continue to be vexatious. When will Boeing have the supply chain figured out? They cannot drive on square wheels forever. Part of the machinist strike is about management’s ability to contract out work that was previously done in house. Financially sound, but Boeing may need to step up some operational practices to ensure smooth production in the future.

Tuesday, October 21, 2008

Valeo Read Carefully

Valeo SA SPONS ADR (VLEEY.PK) announced Q3 results with the headline "Good Resistance in a difficult environment". Valeo is a European auto parts concern. The press release was written by someone who speaks very good English but who also comes to English as a second language. Having said that the - press release needs to be read very closely. They are shifting work potentially to French and Polish factories from their German location. They are ramping up their India operations. All this commentary without much qualification.

But here is the kicker as it relates to the Chairman of the Board – you know those guys that represent the shareholders – read this quote

“In addition, the Board of Directors confirmed the eventual compensation to be paid to the Chairman in the event of his departure, as approved by the Annual General Meeting, the Board having taken note of a letter from the Chairman dated October 2, 2008 in which he renounced the application of his employment contract (including the non-competition clause) were he to benefit on his departure from his compensation as a legal representative.”

Just what are they referring to? This is anything but clear. The only viewpoint that I can arrive at is that the chairman does not always have his eye on the Valeo ball. There should be no question that the Chairman is focused on the company that he is leading. This is definitely disclosure and transparency challenged.

GM & Chrysler

General Motors (GM) and Chrysler as they spiral downward are said to be considering a marriage. What will the new name be?

General Chrysler
Chrysler General
Chrysler Motors
Generally Bankrupt
Cadavers R US

Monday, October 20, 2008

Hlth Corp Lets Go Of WebMD

Hlth Corp (HLTH) finally threw in the towel and stopped trying to take over WebMD (WBMD). WebMD understood financial health and had cash at hand. They also did not want to be saddled with debt. Pretty basic if you ask me. Why did it take so long to reach the obvious conclusion? Well you have the problem of the interlocking board members. Here is a partial list of directors on Hlth who also sit or have sat on WebMD - Mark Adler, James Manning, Neil Dimmick. What side is their bread buttered on?

Haliburton Blows Off Convertibles

Haliburton (HAL) under cover of a very good operating quarter announced they have redeemed a convertible debt issue for cash. Costly but probably worth it if you consider they have avoided dilution in the future. What they have not explained is how they will conduct business with radically lower cash balances, very reduced Capex in the past quarter and a noticeable increase in accounts payable.