Goldman Sachs Omerta

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Todays DealB%k refers to a NYT Sunday Magazine interview of Abby Joseph Cohen. She of course works for Goldman Sachs (GS) as Chief strategist but does not speak publicly that much.

Deborah Soloman asked the question do you have a Facebook page. Abby Joseph Cohn responds no and then declares the law of omerta has been invoked at Goldman Sachs about Facebook. Dealbook quote “I don’t think we should talk about this. No one here is supposed to be talking about Facebook.”

So if the law of omerta has been invoked what is Goldman Sachs afraid of. usually when you score the big deal you get bragging rights. Look forward to the next Q report. how transparent will Goldman be in discussing earnings and or corporate governance issues relating to the Facebook deal. Lawsuits a brewing.

Disclosure” George Gutowski” writes from a “caveat emptor perspective”. I hold no positions in stocks mentioned in this post. I have no plans to initiate new positions within the next 72 hours.

JB Hunt Curious Fuel Charge

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JB Hunt (JBHT) reported Q4 numbers and watched their stock sell off on a down market day. Scan the income statement and spend some time trying to understand the fuel surcharge dynamic. On an annual basis they increased the fuel charge 2010 over 2009 by $116 million. The actual coast of fuel and fuel taxes increased by $70 million. Therefore on this line item they have net profits of $116 million. But net earnings are up $32 million.

The fuel charge is hiding a lot of operating cost increases. The shareholder is not participating adequately. Customers and competitors are sure to exploit this vulnerability.

Disclosure: “George Gutowski” writes from a “caveat emptor perspective”. I hold no positions in stocks mentioned in this post. I will not be initiating new positions within the next 72 hours.

Suez Will Not Close

Southern exit of the Suez Canal; Port Suez.

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Guggenhein Shipping ETF (SEA) popped Friday because of the Egypt thing. The media wants investors to be scared and stay tuned. CNN keeps speculating that the Suez Canal may shut down. Here is the prediction.

The Suez Canal will stay open.

The revolt is from the street not from Al Queda/Extremist Islamic Groups which seeks to harm the west. Look at Iraq. Warfare, suicide bombers and every imaginable form of violence. They continue to pump oil because it generates cash every day. Same thing with the Suez Canal.  

They will fight, riot and even loot a little. but they will not be allowed to fool around with the money.

Disclosure: “George Gutowski” writes from a “caveat emptor perspective”. I hold no positions in stocks mentioned in this post. I do not intend to establish new positions within the next 72 hours.

Stanley Black & Decker Big Dog Promise

Medieval Black & Decker

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Stanley Black & Decker (SWK) made investors happy and pushed the stock to a 52 week high. They have been successful in achieving cost synergies through the merger of both Stanley and Black & Decker. They delighted investors with this quote from the press release

Today, management is updating this estimate and now believes the company will achieve $425 million in cost synergies by the end of 2012. ……The overwhelming majority of this $75 million excess over the original $350 million target is projected to fall to the bottom line.

The quote is not attributed to a specific executive but it is integral to the press release. Several other quotes were made such as

“Stanley Black & Decker’s President and CEO, John F. Lundgren, commented, 2010 was a landmark year for Stanley Black & Decker, driven largely by the significant progress we made in integrating Black & Decker. Notably, we were able to achieve 7% organic growth for the year on a pro forma basis amid an uncertain economic environment while continuing the integration in a manner that allowed us to exceed our original cost synergy targets.”

and

“Executive Vice President and Chief Operating Officer, James M. Loree, commented, “We are thankful to our associates for executing this major integration smoothly and effectively thus far. We are excited that we could today raise our merger-related cost savings targets to $425 million, $75 million above our original estimate, and at the same time, introduce a commitment of between $300 and $400 million for revenue synergies”

Revenue synergies is an interesting word. Most executives say growth. Time will tell. Yes they have managed costs very well. But you will need to grow revenue through new and enhanced products. I hear no talk about upcoming products that will drive shareholder value.

Disclosure: “George Gutowski” writes from a “caveat emptor perspective” . I hold no positions in stocks mentioned in this post. I do not intend to open up a new position in the next 72 hours.

 

 

Boeings Wild Card Cost Issues

BOEING Logo

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Boeing (BA) investors have died a death of a thousand cuts. 787 delays and problems continue to be vexatious. I am sure that on a technical level they are diligently working to fix it. Management is trying to sooth investors by claiming that late delivery fees are within expectations. But the margins for 2011 787 and 747-8 deliveries are nill. Boeing worked for free. Not good.

On a certain level you need to get costs behind you. Short term pain long-term gain has always made sense. The two wild cards in margins and profitability are unexpected costs and further cancellation or delay fees.

The fixes that Boeing is looking to will continue to be expensive. The engineers have a mandate to fix not save nickels. The near term desperation will adversely affect margins. Also while Boeing may be managing cancellation and late fees ona cash basis we have no idea what they are promising for future prices allowing customers to average down. This is further risk of the pricing compression variety.

Disclosure: “George Gutowski” writes from a “caveat emptor perspective”. I hold no positions in stocks mentioned in this post. I do not intend to initiate any in the next 72 hours.   

CN Long Ball Dividend Gambit

CN_67402

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CN (CNI) declares a dividend affirming that they have had a good year and expect good things in the future. But when does the dividend become baked into the price. It has been announced so the yield should look better. But the dividend is payable March 31 to shareholders of record at close of trading March 10. Thats a full six weeks in the future. At the same time the new repurchase plan starts in just a few days on Jan 28.

The executive have primed the demand pump as much as possible. This is not a coincidence. You can just see the board of directors consulting their calendars and calculating greatest effect for stock demand. Why not just declare the dividend and pay it out quickly. Nothing like a satisfied investor who just put profits in their pockets.

Luc Jobin, CN executive vice-president and chief financial officer, said: “CN posted strong financial results for 2010 that benefited from the economic recovery and a solid overall corporate performance, with free cash flow exceeding C$1.1 billion. The Company believes it is well positioned to continue its policy of rewarding shareholders by substantially increasing its dividend for 2011 and returning additional cash through a new share buy-back program.”

Luc you can afford it so just do it.

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

Subversive Investor Relations

Careful about what you read and perhaps believe. The editorial persona of Financial Skeptic is to be skeptical. simple business model. I climb the wall of worry. The other day I receive the following emails. Investors need to know that some of the opinions out there are bought and paid for. I leave the reader to follow the subversive logic. This blogger is not interested.

George,

Thanks for the quick response.

We are working with Immunocellular Therapeutics (OTC BB: IMUC) to find qualified research candidates. We are looking for 8 original posts (200 – 300 words each), published on your site, over a 90 day period.

Disclosure, indicating that this is paid, but independent research, would be included with each post. Something along the lines of, “This is part of a paid, but independent research series on Immunocellular Therapeutics [link to all articles in the series]. The views and opinions expressed in this Series are purely my own. I do not own any Immunocellular Therapeutics Securities.”

There is no hard and fast rule regarding compensation, but it is based primarily on your distribution and reach. We have a budget of $800 – $2400 (and potentially more) for the Series. Payment would be made in two trenches.

Could you please provide some details regarding your site traffic, email distribution, etc.? Do you have any minimum compensation requirements? Once this information is gathered, I will consult with the company and get back to you shortly.

Thanks again for your response. I look forward to collaborating on this and future projects.

Best, Doug.

On Tue, Jan 11, 2011 at 1:34 PM, George Gutowski <georgegutowskiebox@hotmail.com> wrote:

Hi Doug
 
I would like to get more information on this opportunity
 
Thanks
 
George

 

 


Date: Mon, 10 Jan 2011 17:44:41 -0500
Subject: Research Coverage

From: dcress@jsdcllc.com
To: dcress@jsdcllc.com

My name is Doug Cress. Apologies if this email reaches you in error.

We are looking to hire an analyst to initiate paid, but independent, research on an emerging biotech company.

The research would consist of +/- 8 blog posts over the course of 90 days (with full disclosure).

Please let me know if this opportunity is of interest and I will follow up with additional details.

Best regards,

__

Doug Cress
JSDCLLC.com

Google Schmidt 2.5 Yachts

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Google (GOOG) announced that Eric Schmidt gets a parting gift of about $100 million. That’s about two and a half yachts if you are Larry Page. At least when he bought the yachts he used his own money. This time Google shareholders are picking up the tab.

The conference call love fest broadcast the message that they needed to speed up decision-making so Eric has to get out of the way. Larry even with the yacht thinks he will be faster. Fast decisions do not automatically mean profits. The decisions need to be quality first. Maybe Eric was smarter than Larry. Maybe Eric was not impressed with the mountain of cash and is in no rush to bet the whole wad.

Watch Larry Page. Does he have a Las Vegas rush and wants to play more hands. We may look back to this inflection point. We will know after a few deals and billions of dollars spent.

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

Intel Dividend Play?

Logo of Intel, Jul 1968 - Dec 2005

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Intel (INTC) announced a dividend increase and ramped up the share buy back program. Why not? They have a lot of cash hanging around. Most dividend increases are just announced by way of press release. But Intel may be feeling a bit insecure as they included a quote from Paul Otellini, Intel president and CEO.

““Today’s announcement signals confidence in our fundamental business strategies both today and looking forward, allowing us to return more cash to shareholders.”

The press release went on to recite how Intel has returned billions in dividends and share buy backs. It sounds as if they are attempting to position the stock as a dividend play for income oriented investors. The projected yield is a snick over 3%. But it trades close to its 52 week high.

Intel is not a disaster story. But they seem to have some fog in the executive suite about what to do next.

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

Google Big Yacht View

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Google’s (GOOG) founder Larry Page sidelined his supposed father figure Eric Schmidt. The market has been growing increasingly critical of the spate of stillborn acquisitions and Eric Schmidt who was Chairman and CEO gets crucified. However as a Wall Street Journal article points out decision making authority was shared. But Eric takes a long walk on a short plank.

Larry Page and Sergei Brin have fired their tutor. That sounds exactly like to view you can have when you are floating around on one of the worlds largest and most luxurious yachts.

Exactly what is an executive chairman when the two founders and huge shareholders hold all the cards? Can you imagine the shareholder lawsuits. This is better or worse depending on your view than holding voting shares and your risk partners hold non voting shares.

I am really waiting for the Eric Schmidt memoirs. The Apple thing. The Google thing. Lots of splaining needs to be done.

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