Friday, December 11, 2009

Korn/Ferry -- Look at Doubtful Accounts

Korn/Ferry (KFY) released Q2 results showing an increase from Q1 but a whopping 20% decrease YOY. This was to be expected as managerial overhead is shed the headhunting I mean recruiting I mean Talent Management solutions business is off. They point to a large cash position for liquidity but it has shrunk some $66 million or approximately 25% in the past six months.

A few things to think about. Revenues are down but receivables are up 51% from six months ago. The comparable balance sheet and income statement period do not seem to line up in the selected financial information categories. Quelle suprise!

They also experience bad debts. People actually stiff them after hiring someone. The bad debts are supposedly down from six months ago. $7.5 million is the latest number down from $11.1 million six months ago. So the business is facing tough headwinds.

Receivables jump 51% in absolute dollar amounts. But bad debts are down. This is a very tough conclusion and usually does not hold water in the long run. There is no tangible information offered about bad debts. They do not mention the region or type of client. Receivables now account for some 10 to 15% of the market cap of this stock. Financial institutions report on asset quality. Korn/Ferry needs to do the same.

Who is the auditor here?

Thursday, December 10, 2009

John Wiley -- Questions About Long Term Debt

John Wiley (JW.A;JW.B) reported improved results and the market bid their stock up smartly. Take a look at their balance sheet; in particular the long term debt. The sources and uses of cash is particularly telling. In the current year for the most recently reported six months they have repaid long term debt of some $383 million and then promptly borrowed new long term debt of some $413 million. No information is provided in the earnings release about how they are managing their long term credit facilities.

They are also experiencing huge changes or should we say decreases in their deferred revenues. The management is not providing any public commentary in their earnings release about this point. The press release is not an informative document and leaves more unanswered than explained.

Wednesday, December 09, 2009

AOL Compliance Culpability

AOL (AOL) was finally ejected from the Time Warner (TWX) mother ship. AOL traded down immediately. The amount of compliance grade information on AOL is abysmal. This is a back-handed way of telling investors that the situation is bleak but no one had to make a public comment and be responsible for it. If you are a class action securities lawyer looking to make a case, follow the trail of information or rather lack thereof. Sure they are firing by the thousands and maybe have the occasional content deal that is exciting. But the executive needs to start making a compelling case for wealth creation. If it cannot be done then go back to the Time Warner management for responsibility.

Tuesday, December 08, 2009

Fedex Energizes Guidance Zombies

Fedex (FDX) popped its guidance and drove its stock to a 52 week high. If you are a guidance zombie and just react to any damn thing any damn management says then go ahead and trade your brains out. The press release issued by the corporation is pathetically underpowered. You are expected to rely on the following absolute statements uttered by Alan B. Graf Jr., FedEx Corp. EVP and CFO.

1. Better than expected growth in INTL Priority and Fedex Ground. This establishes the top line growth that the market craves.
2. Cost cutting is still a factor but definitely plays second fiddle to revenue
3. Asia and Latin America are particularly encouraging.

No other detail is provided but stay tuned for the complete earnings release which is scheduled for Dec 17, 2009. The devil is in the details. The guidance increase is just the flashy surface stuff.

Monday, December 07, 2009

Akamai Pre-Guidance Analyst Support

Akamai (AKAM) boosts guidance in a press release issued Dec 7, 2009 at 0630 ET. Akamai is also holding an investor day today and in the press release promised to explain in the presentations the how and why’s of their guidance increase. But if you are unable to attend, just pay attention to the analysts who will figure it out for you. The stock jumped on the open on Monday.

But look at Friday the stock jumped quite nicely on the basis of two analysts issuing very bullish reports one business day in advance of the investor day. How come these two guys are so smart?

Citi Investment Research analyst Mark Mahaney upgraded Akamai to buy from Hold. Oppenheimer analyst Srinivas Anatha boosted Akamai to outperform from perform. They both identify internet video quality and rich mobile data as key drivers. Go figure this is not new news. Wonder if they are attending today’s Financial Analyst Day at The Renaissance Boston Waterfront Hotel in Boston, Massachusetts, If they are how hard are they working at understanding the numbers. Now what about the other analysts? Their employers want to know if they are chopped liver or what?