Coca Cola Enterprises Guidance Imperfection

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Coca Cola Enterprises (CCE) announced new guidance and watched their stock sell off. John F. Brock, chairman and chief executive officer is quoted as saying “We operate in markets with proven growth profiles and excellent potential for the short and long-term.”

Bottling is a capital-intensive business. The money is in the syrup. Guidance was issued without a balance sheet forecast or comment. When they leave out the balance sheet …. well I’ll let investors come to their own conclusions about how the cost of capital is to be recovered.

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

Related Articles

• Coca-Cola Enterprises sticks to 2010 view (marketwatch.com)

Microsoft Stinks Up The Joint

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Microsoft (MSFT) stunk up the joint today with a double-barreled press release.

Firstly, their board elected Reed Hastings, founder, chairman and CEO of Netflix Inc.,as the lead independent director. Netflix is revolutionizing the movie business. Where will this guy’s heart and mind be as he tries to be independent on Microsoft issues? Not a good fit as a board member in the first place. Just remember how well Eric Schmidt from Google (GOOG) worked out on the Apple (AAPL) board. Time bomb ticks very loudly.

Secondly, the board will no longer use a wire service to disseminate financial information. They will now use an RSS feed from the investors relations component to their website. This will disadvantage the concept of wide dissemination. You have to be digitally tracking. The entire manner of explaining information to the market place is quickly changing. Investors will most likely not benefit.

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

Related Articles

• Microsoft Declares Quarterly Dividend and Appoints New Lead Independent Director (prnewswire.com)

DuPont Manages Expectations

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DuPont (DD) Chair and CEO Ellen Kullman set up investor expectations until 2015 when she promised Topline growth of 7% and EPS growth of 12%. That of course is classic operation’s leverage as described in most biz schools in one of their introductory courses.

The stock sits at its 52 week high and management needs a way for it to break out. Ellen Kullman was of course speaking at the Bank of America Merrill Lynch Global Industries Conference. The devil will be in the details and every investor call will now listened to in this context.

She has positioned the company as a science-based products and services company. The question becomes is this an industrial company or a high-tech enterprise commanding higher multiples. No discussion or comment about markets. Just a focus on products. I always get worried when the inventors speak to the product and not the solution.

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

National Semiconductor Bribes Shareholders

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National Semiconductor (NSM) announced a dividend of ten cents per share while announcing something called an inventory adjustment within its distribution chain. Gross margins also declined, never a good sign for fundamentals. The dividend smells like a bribe. 

Don Macleod, National’s chief executive officer while explaining himself also added  “…we saw, in aggregate, slower demand from mobile phone customers than we typically see in this seasonally strong, pre-holiday season..” Don that’s not good.

No discussion of markets, products or the real future other than we invest to make tomorrow better. Cat must have managements tongue.

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

Amazon Private Equity Vulture?

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Amazon (AMZN) currently sits with some $6.3 billion in cash and near cash. I recently blogged about Vorando Realty tag teaming with Pershing Square to “unlock real estate values” at JC Penney. (JCP) When will Amazon join in to take over the digital properties of retailers and merchandisers to unlock their value. you gotta believe Amazon can run a merchandising web site better than bricks and mortar retailers.

Just thinking out loud. Jeff Bezos this is something to ponder. 

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

Related Articles

• Amazon: Still a Buy? (bloggingstocks.com)
• J.C. Penney Shares Surge After Pershing Square Buys 16.5% Stake (dailyfinance.com)
• Autumn activist planting season (money.cnn.com)
• Amazon: Here’s Why We’re Not Hypocrites For Selling WikiLeaks Book (AMZN) (businessinsider.com)
• Amazon.com’s Best Selling Items (AMZN, AAPL, WMT, TGT, BBY, JCP) (247wallst.com)

J.C. Penney Private Equity Feast

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J.C Penney (JCP) is working to free itself from the sweet embrace of Pershing Square and Vorando Realty which disclosed on Oct 8, 2010 respective holdings of 16.5% and 9.9%. The two private equity companies are working to unlock value. This is were Vorando Realty comes into play. They want to realize the full value of JC Penney’s real estate.

JC Penney sits on top of billions of dollars worth of land and buildings. The narrative states JC Penney does not know how to manage real estate. Vorando knows better. JC Penney needs real estate as an inexpensive cost input. Real estate is where they display their inventory until consumers come in with cash. What will Vorando do for the JC Penney shareholder in the long term? Higher rents and occupancy costs as real estate value is unlocked. 

JC Penney can set up their own REIT with someone other than Vorando and unlock the value themselves. Or they can keep their cost inputs down and remain as merchants which is what they really are all about. Pershing talks a great story about governance. Where is the governance of huge rent cheques payable to Vorando Realty?

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

Related Articles

• Vornado Realty Trust Announces Investment in J.C. Penney (eon.businesswire.com)
• J.C. Penney Shares Surge After Pershing Square Buys 16.5% Stake (dailyfinance.com)
• Penney Hires Goldman for Defense Against Ackman (dealbook.blogs.nytimes.com)
• J.C. Penney Parries Ackman With Poison Pill (observer.com)

Lululemon Hidden Challenges

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Lululemon Athletica Inc (LULU) announced blow out Q3 numbers. The stock popped to 52 week highs. The press release begs more questions than provides answers. Yes the increases are dramatic. The question becomes what do you do to sustain the growth. Very little information about the future was provided.

Currently Lululemon relies on their own stores. This is very capital-intensive. To continue growing they will need to make inroads with major retailers and set up either in store boutiques or become another offering. No real discussion of the issues. How do investors look into the future.

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

Related Articles

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• Lululemon Furthers Path to a Monopoly (LULU) (247wallst.com)
• Lululemon beats expectations with 84% profit surge (financialpost.com)
• lululemon athletica Appoints Kathryn Henry as Chief Information Officer (eon.businesswire.com)

Salesforce Swallows Heroku

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Salesforce.com (CRM) acquired Heroku for some $212 million net of cash acquired. Heroku is the leading Ruby application platform-as-a-service, powering more than 105,000 next-generation social and mobile cloud applications. I know this because that is what Salesforce said in their press release. Salesforce.com and its chairman and CEO Marc Benioff like never exaggerate anything.

Heroku was founded in 2007 by Orion Henry, James Lindenbaum and Adam Wiggins. Heroku’s investors include Baseline Ventures, Harrison Metal Capital, Ignition Partners, Redpoint Ventures and Y Combinator. Based in San Francisco, Heroku has about 30 employees. Should be a nice pay-day all around.

The question always becomes who got the better end of the deal. Sure it sounds like a good strategic fit.But with any growth opportunity additional capital will soon be required in great quantities. Were the investors ready to continue backing it and looking at potential dilution? Has salesforce.com taken on a hidden capex liability? No comment about what the future holds other than it will be a wildly successful transaction if you listen to Marc Benioff.

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

Related Articles

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• Salesforce.com Takes a Shot at Oracle with New Database.com (dailyfinance.com)
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• Can Heroku Become the Official Cloud of Facebook Apps? (nytimes.com)
• Can Heroku Become the Official Cloud of Facebook Apps? (gigaom.com)

Talbots Fumbles

Talbots (TLB) announced Q3 results. Margins improved that’s good. Sales are down that’s bad. The big guy  Trudy F. Sullivan, Talbots President and Chief Executive Officer, said, “…. Importantly, during the quarter, we launched our segmentation strategy and store re-image program in addition to our enhanced marketing campaign. All of these key initiatives are designed to generate sales growth and productivity gains over time.”

No real comment about merchandising issues. Sales dropped and that’s it for discussion and analysis. What lines are selling? What regions are doing well? Same store sales? It’s very hard to get your arms around this story. Productivity gains over time are not concrete.

Related Articles

• Talbots Shares Plunged: What You Need to Know (fool.com)
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Kellogg Pantomime

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Kellogg Company (K) announced a new boss. David Mackay advised the board that he plans to retire in what; just a few short weeks. My God that is very short notice. But wait they have a succession plan. John A Bryant who is the current COO and remarkably has sat on the board since July 2011 will be the new boss.

Listen up sports fans the fix was in a long time ago. But were the investors in on the deal and knew what the succession plan was. I suppose when John Bryant was elected to the board that was the “poker tell” and everyone was supposed to guess.  There is a three-month transition where the old guy will help the new guy. Sounds good.

No word on if David Mackay will stay on the board or if he will really be spending time with his family. At the same time Kellogg reaffirmed its guidance. The guidance does not encourage investors, so the pantomime continues.

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

Related Articles

• Kellogg CEO retires; COO to replace him (theglobeandmail.com)
• John A. Bryant to Succeed David Mackay as Kellogg President and CEO; Company Reaffirms Financial Guidance for 2010 and 2011 (prnewswire.com)
• Kellogg CEO to retire, Bryant to assume role (seattletimes.nwsource.com)
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