Mark Hurd career killing letter. Why did the letter surface during a slow news cycle. $HPQ $ORCL

Mark Hurd

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Mark Hurd’s career killing letter finally bubbled to the surface. You remember Mark Hurd, he used to be so in charge at Hewlett-Packard (NYSE:HPQ) and then found very decent work at Oracle (Nasdaq:ORCL). There is nothing new here. Investors are not going to change their mind or try to unwind trades from like six months ago.

The two sides of the battle male and female must have known its contents so there is no shock value. No one can change their statements. Parts of the career killing letter have been previously repudiated but lets run it through the cycle again.

Lets run the whole story through the cycle again.

Its sad, very sad when the media gets bored.

Its suspicious, very suspicious when secret letters are suddenly revealed.

Gold is probably cratering. No one trusts financials. Europe continues to shake, rattle and roll. Mitt Romney leads in Iowa caucuses and the US Government is hitting the debt ceiling again. But no, its the Mark Hurd thing, like again. Do you see the book deal coming.

So here is the one unifying theme to investment and finance. Sex sells. It does not create value but man it sells big time. Somehow we can’t help ourselves.

George Gutowski writes from a caveat emptor perspective.

Goldman Sachs continues its slippery ways. Results and maybe riots on Jan 18 $GS

goldman sachsGoldman Sachs (NYSE:GS) will release Q4 and year-end results on Jan 18, 2012 at 08:00 ET by way of press release. When the market opens at 09:30 ET they will start their conference call. Lots of companies do it this way. You have a precious 90 minutes to digest information and take a crap shoot on what management may or may not say on the conference call.

At the same time there may be a traffic jam around the front door of fortress Goldman Sachs as various activist groups may take the opportunity to yet again show pathetic ineptitude. Personally I am concerned for the squids in the January weather.

We all know the market is off and Europe just smells bad. The real issue will be the impact of government regulators on how Goldman Sachs conducts its business and cranks out profits. These are all back room machinations not in public view. Goldman Sachs may throw a bone with a few market comments, but will not address the real issues.

What will Goldman Sachs look like in a few years? What will Goldman Sachs look like with a second term Obama presidency? Investors will still have to read between the lines and just plain guess at it.

George Gutowski writes from a caveat emptor perspective.

Toronto Stock Exchange buys into Bermuda Stock Exchange possible pincer encircling move around NYSE $TMX.X $NYX

Toronto Stock Exchange

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The Toronto Stock Exchange (TMX.X) announced that it has acquired 16% of the Bermuda Stock Exchange (BSX). Bermuda is an interesting jurisdiction with lots of specialty products which are financially engineered. Long known as an insurance haven Canadian investors can now easily invest in BSX offerings without offshore tax implications. The tax laws have also changed to the advantage of Canadian investors.

Watch for Canadian domiciled subsidiaries of US companies investing in Bermuda Stock exchange listed offerings. Gets around a lot of Reg FD problems. Gets around a lot of regulatory issues. Becomes quite the back door for a lot of Wall Street specialized structures if you know what I mean. Problems or opportunity for the New York Stock Exchange (NYSE:NYX)

Watch out Wall Street!  

George Gutowski writes from a caveat emptor perspective.

$CVS Big Promises but read and listen to the fine print/talk that goes with it. Political not financial.

CVS/pharmacy

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CVS Caremark (NYSE:CVS) confirmed 2011 guidance and issued 2012. In the context of a 30% dividend increase the executive team was sounding very positive. Also cash flow is improving and billions of dollars will be spent buying back shares and financially engineering higher EPS. But just read this verbiage from President and CEO Larry Merlo

CVS Caremark will continue to deliver innovative solutions that lower costs for payors and provide increased access, lower costs and better health outcomes for patients.”

That basically is all things to all men. Very hard to do. Many will claim impossible. So why promise this nonsense to investors who most likely know better? Healthcare is highly politicized. Drug costs really do not go down. Larry Merlo is positioning himself and CVS in front of politicians. CVS most likely has pharmacies in every congressional district. He simply has to look good and curry favour from both sides of the house.

When investing in CVS Caremark investors need to remember the political wild card risks.

George Gutowski writes from a caveat emptor perspective.

$ITW confused about Euro operations. But everything else should be stable they think! Reg FD Challenges

Illinois Tool Works

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Illinois Tool Works (NYSE:ITW) announced quarterly numbers and mashed up some headlines to make it look good. Revenues are up 10% as a result of acquisitions but organic growth is only 4%. No real word in the press release about the all important bottom line.

ITW bills itself as a company that has been around for almost 100 years. After a 100 years it’s about the bottom line. ITW you are not a high-tech fast growth eat your babies grab at the brass ring. Investors expect regular profits.

Management threw out a warm and fuzzy with this line “In November, the Company continued to see generally stable demand in a number of worldwide end markets and geographies. Europe, however, continued to be challenging.”

No break down on a geographical basis. Europe is challenging for everyone. That is not exactly a deep dive into the numbers. ITW your press release is highly inadequate when held against Reg FD. 

Jakks Pacific suspicious guidance announcement timing. Suspicious like it stinks bad suspicious. $JAKK

Jakks Politoed

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Jakks Pacific (Nasdaq:JAKK) issued updated guidance telling investors that they are having difficulty selling toys. About a week before Christmas Jakks figures out things are going bad so they finally fess up. Hard to believe they did not see the trend lines before. But then again maybe they do not use computers.

It gets worse.

They issue the update well after market close on friday. Hmm bad news issued on a Friday well after trading is over.

Another timing issue. On Nov 22 Jakks announced that its Board of Directors has declared a regular quarterly cash dividend of $0.10 per common share. The dividend will be payable on January 3, 2012 to shareholders of record at the close of business on December 15, 2011.

Of record Dec 15. So on Dec 16 they issue negative guidance. Hey lawyers and regulators lets take a look at trading patterns and the effect of being of record for dividend purposes.

Just doesn’t engender trust in management. By the way not one word on what they are doing to address the fundamental problem of terrible sales.

George Gutowski writes from a caveat emptor perspective.

Broadcom Guidance tip toes past cash and growing debt not to mention dividend issues $BRCM

Broadcom

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Broadcom (Nasdaq:BRCM) issued improved guidance and wants everyone to be happy. Something about its going to be a better world. The guidance is overly focused on EPS and is starting to lose sight of fundamentals. They claim improvements in cash position and then throw in they have a planned debt offering which means operations will not be spinning off the cash.

So as Broadcom is preparing to talk to bond/debt investors you make your earnings look as good as possible. Hmm. No word on why they need to borrow. I’m sure the lenders will ask. It’s a standard question in debt underwriting.

The dividend seems very anemic at well under 1.5% yield. The Broadcom name is not well-known to income oriented investors. With the latest proposed offering it looks like Broadcom debt will climb over the $1 Billion mark. Market cap is only around $15 Billion. $1 Billion of debt is rapidly becoming a new factor. Investors are not used to seeing such huge debt numbers. Interest payments and the eventual repayment are all becoming increasingly important for a high-tech company in a cut throat hyper competitive market. How you going to do that?

The stock is languishing around its 52 week low. What to do? Share buy back at the low-end. Expensive even desperate.

So the guidance thing has left more questions than answers.

George Gutowski writes from a caveat emptor perspective.

Fedex Trojan Horse actions louder than words Cancelled jets trump earnings $FDX $BA

Tail of a FedEx Boeing 727.

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Fedex (NYSE:FDX) reported strong Q2 earnings. They attribute their numbers to stong yield management and home delivery. But at the same time they are cancelling, rejuggling and then placing new orders for different types of Boeing (NYSE:BA)  aircraft. Actions speak louder than words. The aircraft represent huge infrastructure growth. By making such major changes their business model is changing. Connecting the aircraft orders with earnings is a way to hide facts in plan view. Management needs to provide more colour on the meaning of the infrastructure changes where the big money is being made.

George Gutowski writes from a caveat emptor perspective.

Charles River all you can eat earnings guidance OMG it’s going to be so tasty! $CRL

Charles River Laboratories

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Charles River Laboratories International Inc (NYSE:CRL) issued 2012 earnings guidance in an exceptionally short press release. So short in fact that you really need to listen to the webcast and/or read the transcript to get the full or even partial flavour.

I was struck by James C. Foster, Chairman, President and CEO comments when he said  “We made significant progress in 2011 on our four key initiatives, which include operating margin expansion, improved free cash flow, disciplined investment in existing growth businesses, and returning value to shareholders. In 2012, we will maintain our focus on these initiatives and on stimulating sales growth.”

More or less an all you can eat earnings guidance where the CEO is promising to be really good at everything. I mean really really good. At everything and then they will stimulate sales.

Normally this is called doing your job. Guidance should focus on how you are doing your job and most investors usually assume that you are doing your job.

George Gutowski writes from a caveat emptor perspective.

DuPont downgrades guidance according to Chair and CEO Ellen Kullman Posture and Position $DD

English: Ellen J. Kullman, Chief Executive Off...

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DuPont (NYSE:DD) issued a CYA press release and talked out of both sides of their mouth at the same time. They downgraded their own guidance blaming more conservative cash management practices by their customers. That mean revenues are off and are expected to stay off for quite some time

Dupont was very gutsy and attributed this quote to their Chair and CEO Ellen Kullman “We are seeing slower growth in certain segments during the fourth quarter, driven by global economic uncertainty. This uncertainty is contributing to ongoing conservative cash management in some supply chains.”

Thank You Ellen Kullman for blaming the economic slow down. What else you got? You know the press release is CYA when the investor relations and public relations contacts do not appear at the bottom for media or investor follow up. You know the press release is CYA because in the future the CEO has been positioned as warning the market about some nasty things that might happen. Unfortunately DuPont has no game and that is the tragedy.

Kullman was a director of General Motors from 2004-2008 but that’s probably another story.

CYA for those of you who do not know is an acronym for “Cover your ass”

George Gutowski writes from a caveat emptor perspective.