Wednesday, December 23, 2009

American Greetings Identifies More Risk Less Opportunity

American Greetings (AM) posted results which looked like improvements. They made money instead of losing it. They did not write off goodwill like they did last time. Yadda Yadda Yadda. Take a look at what they consider to be risk factors which they feel compelled to include in their press release. This is a classic case of anal retentive management who are afraid of lawsuits. Some of the risk factors include such standard business issues such as

1. Can they comply with their financial covenants
2. Will consumers and the market place accept their products
3. The impact of Technology on their core products
4. The company’s ability to achieved the desired accretive effect from share re-purchase programs.

The last one is my favourite.

Tuesday, December 22, 2009

Asensio Critical of Nasdaq over Pegasus

Asensio is quite critical of Nasdaq (NDAQ) and their own disclosure policies. Go to and read todays report on NASDAQ's purported conflicts involving Pegasus and Xu which raise questions about its regulatory reliability.

The report goes on to state

"leaders ignored the warnings about Pegasus from Christopher Byron, who is one of the nation's most respected and experienced investigate journalists with 41 years of professional experience, and who is also a New York Times best-selling author. At the time of the Pegasus incident Mr. Bryon was the author of weekly full page business column in the New York Post."

If we are truly in a post Madoff era Nasdaq needs to get on its horse and fix things before Obama's SEC staff becomes energized on this one. If Obama needs to beat up Wall Street Nasdaq could become the political punching bag of 2010.

Walgreen Dividend Signal Seems Broken

Walgreen Co. (WAG) released excellent results and reported cash positions had tripled. They had an excellent flu season which brought in many new customers. The market cap is approximately $36 Billion; give or take a few tens of millions. The yield is a paltry 1.5%. While dividends sometimes signal earnings in this case the earnings are not sending a dividend signal. Wondering if there is a loose connection? Perhaps in the executive suite?

They spent approximately the same amount buying back their stock as they did on dividends. So what is the management strategy? A higher dividend creates a more loyal buy and hold investor. Stock buy backs juice up prices, engineers EPS and rewards stock option’s. Hmm

Monday, December 21, 2009

Palm Balance Sheet Quicksand

Palm (PALM) reported quarterly results and wants investors to remain enthusiastic. Sequentially shipments dropped by 5%. At this point investors know all they need to know. If a compelling product comes to market sales do not drop 5%.

But just to be complete here are a few other things that keep investors awake at night.

1. The current cash position is equal to one third of market capitalization.
2. Accounts receivable are up but revenues have dropped by two thirds
3. Payables are up by some 70%
4. Something called Series C Derivatives has appeared as a current liability to the tune of approximately $179 million.
5. Long term debt is undented but equal to the cash position of the company.