Friday, March 19, 2010

Palm Analyst Hypocrisy

Palm (PALM) has started the final death rattle. The market was fooled a little bit in the past week and suckers bought in. The main culprits at this point are the analysts who are hastily cutting recommendations. This is like closing the barn door after the horse has bolted.

If you are a Palm analyst and only just now adjusted your forecast downwards you are either incompetent or a fraud. SEC should investigate your in-eptitude. Lawyers should be suing you and your sponsor firms. The law suits will drag out but will serve as a penaly for the sponsor firms for allowing investors to be misled.

Bottom line if the analyst could not figure it out they are losers who should not be listened to. List pending.

Thursday, March 18, 2010

Guess? Inc Real Estate Wannabe!

Guess? Inc (GES) reported improved results and Paul Marciano, CEO waxed eloquently about prospects. Very positive comments. Focus on this one and ponder the future of Guess? and how the risk profile will probably change.

“This year, we will reignite our plans for growth and invest in retail expansion, both in North America and Europe. We will also continue building our infrastructure....”

Guess is a fashion apparel company. When it starts to strategically move into infrastructure, bricks and mortar either owned or leased the cost model changes. Also existing retailers faced with competition for the exact same item from a suppliers store will not be that happy.

If the infrastructure expansion becomes significant there will be more to worry about other than how sexy the models are.

Think about it.

Wednesday, March 17, 2010

Financial Skeptic Disclosure

Just thought I would point out my standard disclosure that I do not own positions in the securities that I blog about for three trading days before and three trading days after the date of the blog post.

CIT Bad Start with Disclosure

CIT Financial (CIT) led by Chairman and CEO John A. Thain announced they finished off 2009 and it was good riddance to bad rubbish. They mentioned something about Fresh Start Accounting (FSA). The conference call was announced and very little other substantive information was provided in the earnings release. To the point where the earnings release is Reg FD challenged. There is much to discuss and understand with CIT. The CEO needs to start considering his shareholders who are not always able to listen to a conference call.

Bad start John.

Blockbuster Shame and Hypocrisy

Blockbuster (BBI) is contemplating bankruptcy. Go figure look at the stock price in the past year and see what the market has been forecasting. Yet the board and senior executives have been making these positive noises about the future.

I am always shocked and appalled that board members resign just before the boat sinks. Take for example that Jackie Clegg tendered her resignation from the Company's Board of Directors, effective March 5, 2010. The press release went on to say “In tendering her resignation, Clegg, who has served as an independent member of the Blockbuster Board of Directors for the past six and a half years, stated that her decision was difficult and based on personal decisions to pursue other business and public service opportunities. She also stated that she has no doubt the Blockbuster Board of Directors will take advantage of opportunities that are presented and the Company will flourish in the future.”

Lady you sat on the board and watched the boat sink. Shareholder wealth has been destroyed in large part because of your poor stewardship. You were in good company, you do not have sole responsibility but never the less this is a catastrophic failure. Will shareholders sue under director and officer liability insurance? How will Carl Icahn’s role be viewed as? He got off the boat just recently.

Tuesday, March 16, 2010

Sony (Japan) Loves Jacko

Sony (SNE) loves Jacko. Japan has long loved Michael Jackson. So when Sony makes a deal with the estate it makes strategic sense for the Japanese consumer. In fact you may even conclude that the estate has been ripped off. Sony has been able to keep away from the unseemly side and exploit the creative. $250 million sounds like a lot of money but it really isn't.

Is Sony exposed to lawsuits? Depends on what jurisdiction signed the agreements. Sony Japan or Sony US.

Will Alibaba Buy Yahoo?

Alibaba (1688.HK) reported 49% increase in net profits. Cannot find anything ugly with that. That’s following a year of investment. So therefore management has made the correct moves. The China economy continues to be a powerhouse even with a potential slow down. Yahoo (YHOO) owns 39% and can only be happy with the trend line.

Google (GOOG) is in a snit with China. The Chinese are smack talking Google challenging them to like make up their mind about following the rules. Google next move will not resonate well.

Organic growth in Alibaba is encouraging but they clearly are looking for acquisitions. The Chinese have a great deal of pride. So why not buy Yahoo. Yahoo shareholders are lost children in a big forest crying out for help and rescue. Microsoft says it will not buy Yahoo. The western world cannot keep expanding into China without Chinese entities buying into Western companies.

Is Yahoo strategic? If Obama wants to avert a stupid trade war he will allow the purchase.

Speculation sure. But don’t for a second think a strategic thinker in Beijing has not gamed this one out. The Beijing power elite would be most pleased to see this one come together.

Monday, March 15, 2010

Pepsi Bribes Itself

Pepsi (PEP) announces a dividend increase (good) and a substantial share buy back program (bad; very bad) The $15 Billion buy back officially signals that management believes the shares are under-valued and should be taken out of the game. The share buy back is approximately 15% of Pepsi’s market cap. Pepsi is involved in a global struggle for dominance in beverages. The struggle requires huge capital to avoid having someone eat your lunch.

By announcing the share buy back, the back handed comment is “our shares are under valued and the market place is not truly rewarding us for our efforts. “ Why is the market under valuing the shares and what are you doing directly with the enterprise value to maximize shareholder wealth.

Today the announcement is about the financial engineering. Tomorrow we will need to be concerned about effective capital allocation and how they sourced the $15 Billion. Did they steal from the cash position or are they leveraging with interest sensitive debt that will affect EPS for a long time.