UPS Security Foil

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United Parcel Service (UPS) experienced some security incidents and identified several suspicious packages that all came from the same address in Yemen. If you understand anything about the parcel business and the bomb making business loose wires are clear danger signals. The packages seemed to be cleared as non threatening and life goes on.

UPS could have stayed quiet. Not every security incident is front page news. So why let this out?

The message is to the terrorists who are doing their market research. They need to believe that the systems work.

Disclosure: George Gutowski writes from a caveat emptor perspective. I do not hold any positions in stocks mentioned in this post.

ITT Slides One By

ITT Corporation (ITT) announce Q3 results and played some word games with the headlines. In the earnings release bullets they claim net income of $0.78 @ share. In the lead off sentence or two they come clean and let investors know that continuing operations provided only $0.07. You can fit the grand Canyon between the two. ITT has fit a Financial Grand Canyon between the two. The press release is integrity challenged.

Steve Loranger, ITT’s chairman, president and chief executive officer quickly jumps in and says the order book is looking good. Tomorrow Tomorrow Tomorrow.

Exxon Dividend Signal Uncertainty

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Exxon (XOM) hit a home run and reported great quarterlies. Fantastic quarterlies when you think about it. But pay attention to Chairman Rex W Tillerson. the only qualitative comment he made about a vast and extraordinarily complex company was “Despite continuing economic uncertainty, we had strong quarterly results and continued to advance our robust investment opportunities.” Thanks Rex that really helps out with the analysis and stuff.

They bought up a ton of shares and then increased the dividend payout ever so slightly. The dividend signal is that management is uncertain.

Barnes & Noble Nook Razzle Dazzle

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Barnes & Noble (BKS) rolled out the new Nook reader claiming that the inclusion of colour and aiming it partially at kids will be a marketing win. The price point does not skim the bottom of the barrel. The inclusion of colour is only a temporary advantage and will be easily matched by upgrades from competing products. Advertisers will want color to ensure their messages are more compelling.

The children’s market is compelling. You do spend money for the little ones. But it is the parent that spends. No information on how the parent is being engaged. So the children’s market may become an unfulfilled dream.

Barnes and Noble is huge in college and university text books. Students have to buy the material. The value proposition of digitizing learning materials is huge. University students will adopt technology. University students will look to save money. When will the nook play here? Significantly that is.

This is not the compelling e-reader move. So what if the heads of education in the five largest states get together and mandate digitized e-reader style text books and learning materials. The volume would compel text-book purveyors to re-purpose their material and lower costs.

William Lynch, Chief Executive Officer of Barnes & Noble said “reading anything and everything in brilliant color is the killer app…”

Disclosure: George Gutowski writes from a caveat emptor perspective. I hold no positions in stocks mentioned in this post.

Google Death Kiss

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Google (GOOG) covets ITA Software and wants to buy it for around $700 million. Microsoft (MSFT) and the travel business are not so sure. They fear Google’s entry into the travel business. Travel is one of the big horseman of on-line e-commerce. People buy tickets, holidays, hotel reservations and the rest of it. Google playing the fox in the hen-house claims they will just improve the people’s choices.

Google has aroused the suspicion of regulators around the world. Every time they make a major move they are subject to intense scrutiny. ITA may want to sell. ITA may like the price. ITA shareholders probably are ecstatic about liquefying their investment. But if Google keeps running afoul of regulators when will companies starting shunning their embrace. Who wants a long controversial closings which distract from the business at hand.

Do no evil” is in danger of becoming a death kiss.

Disclosure: George Gutowski writes from a caveat emptor perspective. I hold no positions in stocks mentioned in this post.

Ford Net Debt Fallacy

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Ford (F) announced stellar Q3 results. The street has become excited about the possibility of a Zero net Debt position in the next quarter. While it is an important milestone will this be enough to secure the future. Assuming approximately $24 billion Ford now has a negative spread on its cash of approximately $480 million per annum. That’s half of your quarter’s improvement from last year. 

“This was another strong quarter and we continue to gain momentum with our One Ford plan,” said Ford President and CEO Alan Mulally.Yes they are generating cash which is a refreshing change for a major American automotive company. When will the market trust management to use the cash in operations?

Disclosure: George Gutowski writes from a caveat emptor perspective. I do not hold positions in any stocks mentioned in this post.

Office Depot Disclosure Challenged?

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Office Depot (ODP) fired the chairman of their board and CEO, Steve Odland. It was the only plausible action available after the Securities and Exchange Commission found him personally guilty of breaking Reg FD. Watch for the shareholder rights lawsuits to come.

The press release sounded like a tearful farewell. you know the board did not have their heart in it. Therefore what compliance culture will they have in the future? To distract investors from executive malfeasance or what could be described as very bad judgement in the executive suite, the board signalled earnings and just came out and said we will beat expectations. Desperate tactic so that the stock does not drop. Actually they got a nice initial bounce north of $5.00 and then watched the stock slide off.

It is about the culture. Steve Odland was the head man for a long time. You have to believe his value system permeated the executive suite. Has all the cancer truly been removed? The competition is just licking its chops savouring an extra big lunch soon. Private Equity Capital is considering a take over because management is not that smart and needs a shake up.

Heidrick and Struggles is doing the executive search for a permanent replacement. If they call you do you really want to go to lunch?

Disclosure: George Gutowski writes from a caveat emptor perspective. I hold no positions in stocks mentioned in this post.