Wednesday, June 30, 2010

Monsanto Balance Sheet Worsens!

Monsanto’s (MON) balance sheet worsened. The cash position has decreased substantially. Trade receivables are up significantly. Short term debt including current portion of long term debt has sky rocketed. Long term debt itself has increased.

Management also mentions that much of their R&D pipeline is in the latter stages; which means substantial cash investment before commercial applications are available to the marketplace. The R&D spend will no longer be a percentage of revenues, but will be whatever it takes to get the project done. Valiant words. Very tough on cash flow.

Guidance is not sufficient to understand when the corporate model corrects itself and becomes the shareholder wealth creation machine that it should be.

Disclosure: No position in any stocks mentioned in this post.