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Monthly Archives: May 2011

$BX Blackstone $GRR Asian Tigers Very Very Good for Blackstone

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Geographical Subregions of Asia:

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Blackstone  (NYSE:BX) reported results for The Asia Tigers Fund  (NYSE:GRR).The report is useless but a statutory requirement. Fund values fluctuate daily driven by underlying stock valuations. The report does not discuss any strategy or investment thinking. It merely refers to a long-term goal of capital gains. The fund is under $100 million but it does pay Blackstone a lucrative management fee of 2.24%.

Investors will note that the fund is well diversified throughout Asia and is also well diversified across several industry segments. You have to wonder about the efficiency of intellectual capital. The fund is small and 2.24% will not carry the expertise necessary to understand all of Asia sliced and diced into several different industries.

Not a bad annuity machine for Blackstone. The investors need to think about the rationale on this one.

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.

RIM Disclosure Under Investigation. Class Action Soon?

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Holzer Holzer & Fistel LLC an Atlanta-based law firm issued a promotional press release regarding Research in Motion (NASDAQ:RIMM)  read the snip

“….is investigating potential violations of the federal securities laws by Research In Motion Limited (“RIM” or the “Company”) (NASDAQ: RIMM). The investigation focuses on whether a series of statements made between December 16, 2010 and April 28, 2011, inclusive, regarding RIM’s business, its prospects and its operations were materially false and misleading at the time they were made. Specifically, the investigation focuses on, among other things, whether the Company knew but failed to adequately disclose that it was experiencing problems associated with an aging product line which were negatively impacting RIM’s business and margins. “

RIM countered and said they would vigorously defend. What else would RIM say? At this point. Until all the facts come to light it will be hard to come to a definitive conclusion. In the meantime Holzer wants investors who “purchased RIM common between December 16, 2010 and April 28, 2011, inclusive and have questions concerning your legal rights, you are encouraged to contact Holzer Holzer & Fistel, LLC and its attorneys Michael I. Fistel Jr., Esq. or Marshall P. Dees, Esq. via email at mfistel@holzerlaw.com, or mdees@holzerlaw.com, or via toll-free telephone at (888) 508-6832.”

The investigation will be interesting in the nuances. You have a technology company operating in a cut-throat environment. Product life cycles have a habit of declining quickly at best of times. Surely investors must know this generically. In this context did executives know the product death cycle was accelerating more quickly than normal and then fail to disclose.

Lawyers and investor relations professionals will watch this one closely.

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. Also I did not buy or sell any positions in RIM during the time frames indicated.  

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Einhorn vs Ballmer The Art of Corporate Bitch Slap

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David Einhorn President of Greenlight Capital is growing desperate. He is touted to be a long-term holder of Microsoft (Nasdaq:MSFT) . Many a simplistic analyst overlays Steve Ballmer‘s ten-year tenure as CEO with a ten-year stock chart showing no capital growth. David Einhorn as he dabbles with buying into the New York Met’s is trying to talk up Microsoft stock from the outside.

Greenlight is a long-short hedge fund that seems to have had a very good run. The problem is to continue serving up excellent results. So trying to displace Steve Ballmer seems like the best course of action to David Einhorn. Continuing to hold the stock and publicly criticizing the leadership is schizophrenic.

It is very easy to find fault and fire someone. But who does David Einhorn suggest replace Steve Ballmer? A public execution at David Einhorn’s behest would traumatized Microsoft and create more harm then good. CEO’s set courses of action which cannot be changed over night. That’s probably why the New York Mets look attractive. The roster is very small. Just hire a few good players and away you go. Simple isn’t it. Just look at the fantasy leagues and how well sports fans are doing.

David may soon find out that running an operating company such as Microsoft is much more complicated than the fantasy of a professional sports franchise.

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.

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Salesforce is the Biggest Cloud But Cash Drops $CRM #salesforce

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“Salesforce.com has become the first enterprise cloud computing company to reach a $2.0 billion annual revenue run rate,” said Marc Benioff, Chairman and CEO. “We are delighted to see our revenue growth rate continue to accelerate.”

The earnings release starts with a very frothy quote from uber-promoter Marc Benioff  leader of Tribe Salesforce (NYSE:CRM)

This is important for why Marc? An investment is there to create shareholder wealth. Being big is not always profitable. Me thinks that with your stock at your 52 week high you are looking to create a breakout and manage your options. Puffy statements tend to vaporize and then the stock drops when the substance cannot back it up.

A lot of investors would become more comfortable if Marc Benioff could focus on the business fundamentals instead of interesting sound bits.

Speaking of fundamentals serious investors should notice a decreasing cash position. Here is the snip from the earnings release:  

“Cash: Cash generated from operations for the fiscal first quarter was $140 million, a decrease of 3% on a year-over-year basis. Total cash, cash equivalents and marketable securities finished the year at approximately $1.5 billion, a decrease of approximately $379 million from the prior year.”

If you beat the drum and focus investors on record high revenues, a balanced management discussion would also explain why cash is a negative story and what is being done about it.

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.

 

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$AIG Pricing – Gov’t Duplicity – Do We Know the Truth?

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Uncle sam no

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AIG (NYSE:AIG) will price today after market close. The major seller is Uncle Sam who rightfully wants some of his cash back. Uncle Sam is even in worse shape than AIG was when they created TARP. Here is the real issue. Disclosure. Uncle Sam was both the largest shareholder and the regulator. Politically Uncle Sam needs the TARP funding to be successfully repaid and then reap the political credit for a good move.

Uncle Sam needs the deal to close more than the investors need a new investment. AIG is in the business of insurance. also called risk management. They are also in a number of business which even many sophisticated Wall Streeters do not understand. While there are the usual “Caveat Emptor” clauses investors are relying on the regulators. Regulators are not perfect. Businesses are difficult to manage. Who protects against bad regulators who may have gotten it wrong?

It will be very interesting to watch the tone and timber of management voices change as Uncle Sam decreases his investment.  When will management candor become acceptable within the marketplace?

Nothing is perfect. Business is a package of risks. Who holds the package today?

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. 

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Sony Tipping Point or Self-Delusional $SNE #playstation

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Sony (NYSE:SNE) announced that it will not be profitable after all. Earthquake, Tsunami and Security Breaches are all Headline risks for Sony. They have been in a general slide for years having lost their cool a long time ago. To be cool and market dominant takes adequate financial resources. Of course there will be writes offs and lost profits. But will the financial engineering that is now underway in Sony’s boardroom be enough to set up the next cycle or are we just watching Sony executives put their finger into the holes in the financial dike.

The Earthquake and Tsunami are tragic but understandable. The security breach shows they were asleep on the bridge. Seven (7) count them seven directors are over 65. Another four (4) are between 60 and 65. The reinforcements do not look encouraging.

But will the grey hairs manage the write-offs to create capital efficiency or will they merely perform accounting duties and report on how bad Sony’s financial position really is. If they cannot dig their way out this time they will become a has been player trying to catch a falling knife.

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.

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Yahoo/Alibaba Treachery or Incompetence or Theft $YHOO #alibaba

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Jack Ma, Founder of Alibaba Group

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Yahoo (NASDAQ:YHOO) shareholders are screaming. Alibaba (XHKG:01688 ) has transferred a valuable epay style subsidiary to something under the control of well not Alibaba. There is much sound and fury over the governance issue but what about Alibaba shareholders other than Yahoo? Why are they being screwed?

Yahoo may or may not have been properly informed. Yahoo executives in general, Jerry Yang in particular, may have been asleep in Alibaba Board meetings.  Alibaba Group spokesman John Spelich said in a statement.”The Alibaba Group board discussed at numerous board meetings over the past three years the impending imposition of new regulatory requirements on the online payment industry, including ownership structures,”

Yahoo may not understand China strangely enough. Jack Ma does not work for Yahoo but somehow he feels entitled to pull off this maneuver.

But if key assets can be taken out of Alibaba without compensating shareholders than Alibaba has screwed its own shareholders. Yahoo just happens to be in the crowd. Whatever the regulatory framework that Alibaba thought it was under, it should have disclosed and it certainly should pay.

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. 

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