Loblaws Still Looking for Joe Fresh Value. No Arithmetic on Fifth Ave. $L-CA

Loblaw Great Food Logo.

Loblaw Great Food Logo. (Photo credit: Wikipedia)

Loblaws (TSX-L) is still looking for ways to score on Joe Fresh. Days before a hurricane was to shut down NYC the Fifth Ave store is selling decent rain jackets at $19. No sense of supply and demand. Rain jackets are now very important in NYC. Not to mention you will never cover Fifth Ave rents by selling $19.00 items.

Arithmetic not there. Wall of worry seems very high on this one.

George Gutowski writes from a caveat emptor perspective. Join him on twitter@financialskepti

Best Buy Best Suited to Best Takeover $BBY $GOOG $MSFT $AAPL

Image representing Best Buy as depicted in Cru...

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Best Buy (NYSE:BBY) continues to lurch forward and attempt to revitalize itself. New C level officers are in place. They have decided to ramp up on-line activities. (Hey that sounds fresh) They have dwindling cash resources which is disturbing.

Do we smell a take-over. Because we do smell something.

Best Buy leading retail problem is consumers doing physical browsing and then placing on-line orders somewhere else. OK so they have a tremendous strength that they cannot leverage. In the mean time Google, Apple, Samsung and Microsoft (think games and maybe phones) all have a vested interest in selling hardware and devices. Best Buy still generates huge foot traffic and satisfies any tactile pre-purchase needs.

As a mass market retailer Best Buy has its faults which are well documented in the market place. But to someone wishing to dominate distribution channels Best Buy offers some near monopolistic advantages.

So like someone should buy them, feature their own products and kick competitors in the groin area.

Market cap of around $5 Billion and dropping. An expensive dividend yield of 4.45% and an approximately short interest position of around 10% of public float, the under 5 trailing PE ratio has got to make an acquisition look good.

Maybe go the private equity route and disguise any anti-trust issues through the chop-house process but the bits and pieces will give strategic advantage to key players. Given the huge cash balances of some tech players this is entirely doable.

Remember its a double play gambit. Enhance your own product line and torpedo some or all your competitors.

Count down?

George Gutowski writes from a caveat emptor perspective. Follow him on twitter@financialskepti

Netflix gets a fuzzy picture $NFLX Big Dogs have no skin in the game.

Image representing Netflix as depicted in Crun...

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Netflix (Nasdaq:NFLX) has a leadership team with very little skin in the game. CEO Reed Hastings salary doesn’t depend on Netflix’s business performance.  Netflix has taken the unusual move of granting its named executive officers only fully vested stock options. Who runs the compensation committee?

Reed Hastings makes $500K per annum. His stock options were cut back in 2011 but he made $43 million that year by exercising 190,500 of stock options earned in times past. He and his henchmen probably do not have fire in the belly.

The stock is around a 34 trailing PE and has a short interest of 28.87% of the public float. Money flow is an anemic 1.04.

It looks like the boys do not have their eye on the ball.

George Gutowski writes from a caveat emptor perspective. Follow him on twitter@financialskepti

Proctor & Gamble firewworks about to go off. $PG

Go! Go! Ackman

Go! Go! Ackman (Photo credit: Wikipedia)

Proctor & Gamble (NYSE:PG) fireworks may soon be going off. Long considered a marketing machine from which all others emulated or just copied they have attracted the attention of activist hedge fund owner Bill Ackman of Pershing Square. As in $2 billion dollars of interest. With his track record many already view P&G suspiciously.

Lets take a look at a few issues that probably attracted Pershing Squares attention.

Five members of the board (out of ten) are active serving CEO’s of major companies. It is highly unlikely that they have the time to really scrutinize P&G. Also serving CEO’s are unlikely to rock the boat and undertake lobbying campaigns to proactively change issues. They also fill nine of fifteen committee memberships on the board’s three key standing committees

Since Robert McDonald became CEO of P&G in July 2009, operating income has collapsed 12% from $15.2 billion in 2009 to $12.3 billion in 2012 EPS is also collapsing have fallen from $4.49 to $3.82 (down 15%) over the same time period. Clearly this is not creating wealth. Robert McDonald has announced a major restructuring and cost cutting program. but you have to wonder why it took so long.

In 2012, P&G insiders have sold over $38.5 million of shares. In fact, since the beginning of August, insiders have already dumped over $33 million worth of stock. Last year  insider sales at Procter & Gamble totaled less than $3.7 million. Money does talk the loudest.

George Gutowski writes from a caveat emptor perspective. Follow him on twitter@financialskepti

 

Google Diagnosis = Manic Depressive The Revenue Model is Broken. $GOOG $RRD $YHOO

Old RR Donnelley printing building.

Old RR Donnelley printing building. (Photo credit: clarkmaxwell)

Google (Nasdaq:GOOG) had an accident that was not its fault. R.R. Donnelley (Nasdaq:RRD)filed with the SEC before all was ready. Not Google’s fault. RR Donnelley has much explaining to do. Much talk around the water cooler about that. Trading suspended and markets became inefficient except for the lucky few. hope RR Donnelley has lots of insurance.

Onto the fundamentals. Google news is bad. Surprisingly bad. Google has a fundamental problem. It’s all about the desk top computer in whatever form. It’s not strong on mobile devices which is where the market is clearly headed. Wonder if Yahoo (Nasdaq:YHOO) which now has a distinct Google DNA graft will understand that.

Here is the manic-depressive bi-polar factor:

Q3 average cost advertisers paid Google per click fell 15% Y/O/Y, and fell 3% from the prior quarter. Not good this means you have no pricing power and your advertiser customers are beating you up. Now do the flip and ponder this point.

Paid clicks increased 33% from a year earlier and were up 6% from the Q2. This is the insanity. you are generating more demand activity but you cannot charge more for it. Supply demand logic is not working.

Has Google lost control over its business model? Who cares about the RR Donnelley thing, it does not matter.

George Gutowski writes from a caveat emptor perspective. Follow him on twitter@financialskepti

Vestas Wind Systems Needs to Come Clean Toxic #governance problems $SI $SSGQY $GE

Courtesy of Vestas

Courtesy of Vestas (Photo credit: Wikipedia)

Vestas Wind System A/S VWDRY (OTN) needs to come clean in almost all area’s. Recently they terminated the severance agreement with former CFO Henrik Nørremark. Apparently following an audit they found two deals in India that will create losses. The deals were supposedly hidden from CEO Ditlev Engel  as well as the board of directors.

You can only speculate over the sheer stupidity of it all. But the CFO wanted to trick the CEO and board. Sounds like he committed corporate suicide and has some explaining to do. Lawsuits will most likely abound. Somewhere there will be interesting documentation which will shed light.

Usually it’s the marketing guys who become desperate and reach too far. They work on incentives and need to make deals. So you have to wonder why the CFO took it upon himself to sign ultra-vires deals which are screwing his employer err former employer.

The question has been begged.

Take a look at the accounting. Customers are being given extended payment options. Clients now owe some 18% of revenue. Up from 12%. The CEO and sales team have been closing deals quickly in the US to take advantage of expiring tax credits. So how do you drive sales in the future. How do you collect what is owed on tax influenced and therefore distorted deals.

The two issues of CFO deals in India and climbing receivables in the US need to be explained. Most investors will conclude a huge head on collision is about to occur if it has not already happened.

George Gutowski writes from a caveat emptor perspective. Follow him on twitter@financialskepti

Yahoo new CFO, new COO and new other stuff. Which one will misfire? $YHOO $GOOG

Image representing Yahoo! as depicted in Crunc...

Image via CrunchBase

Yahoo (Nasdaq:YHOO) is drafting hard and fast. New chief operating officer De Castro from Google (Nasdaq:GOOG). They in turn will spawn new hires at lower levels as the deck gets shuffled.

The new hires were to be expected. Yahoo has to rejuvenate or die. Marissa Mayer was obviously only the beginning. But as sports fans know all too well when a team rebuilds not every draft, not every trade works out. There will be surprises.

The question will be what does Yahoo do about the duds. How fast do they fix.

In the meantime the market is liking it. The short position dropped by some 26%. Yahoo is no longer the stock you love to hate. The uptick-downtick is 2.7. The dividend is far away as everyone has a very attractive stock option plan. so it`s all about swinging for the fences.

As we all know Babe Ruth struck out a whole lot and so will these guys even if they are Babe Ruth.

George Gutowski writes from a caveat emptor perspective. Follow him on twitter@financialskepti