Jim Breyer Swan Dive. Venture Capitalists as Board Directors. Not a Good Fit. $FB $WMT $DELL $NWS

Jim Breyer of Accel Partners has resigned his board seat on Facebook, Wal-Mart and Dell. Will the other shoe drop for his seat on News Corp? (Nasdaq:FB) (NYSE:WMT) (Nasdaq:DELL) and (Nasdaq:NWS)

Officially he is citing time management issues. In other words he does not have time for these three maybe four corporations. Glad to hear that. What was he thinking as he was recruited, considered and then accepted the positions.

The resignation begs a few questions. Was the mix of board duties too onerous. Facebook with an infamous IPO and now trying to substantiate ridiculous PE rations. Wal-Mart with corruption and bribery scandals plus a not so good-looking expansion attempt into India. Dell with a problematic take-over with daily blow-by-blow updates. News Corp with its wiretapping scandals in London.

Well lets put it this way he must have had round after round of extremely interesting board meetings. Like write a book buddy it’ll sell big.

The real question is are venture capitalists suited to be directors of boards of large corporations. Facebook became a whale from seed capital in a very short time so they are excluded. But Wal-Mart, Dell and News Corp are all big players who need substantial time involvement. No one said it would be a breeze when he signed on.

Is something happening at Dell that makes him want to get off? Probably just a convenient co-incident. But clearly as a venture capitalist you need time to assess new opportunities and you need time to nurture the seeds that have been planted. But that is nothing new if you are a venture capitalist.

Will other Accel Partners and senior contributors also cut back on other board memberships.

In August, 2010, Fortune Magazine named Breyer one of the 10 smartest people in technology, and the smartest investor in technology. On September 2, 2011, it was announced that Breyer had been nominated to serve on the board of News Corporation In October 2011, he was elected with over 98% of the shareholder vote.

In April 2013, a lobbying group called FWD.us (aimed at lobbying for immigration and improvements to education) was launched, with Jim Breyer listed as one of the founders. Go figure just a few weeks ago he became political. Maybe that’s its. But then again it was started by Mark Zuckerberg of Facebook fame. Seems a bit coordinated but the choreography is free form for now.

He is a minority owner of the Boston Celtics. Sits on a variety of philanthropic boards, supporting both Harvard and Stanford. At Wal-Mart he was the lead independent director so the resignation is big stuff.

The man is 51 and still has energy, owns a piece of an iconic basketball team and is in the time management problem of a life time. Oh well so what is next for Jim Breyer.

Careful about appointing venture capitalists onto boards of companies which need time but are not venture capital. Could it be the time value return on a per hour basis was insufficient.

Stay tuned this one has not fully played out.

George Gutowski writes from a caveat emptor perspective.

JP Morgan Executives Emergency Life Boat Drills $JPM

JP Morgan (NYSE:JPM) and Jamie Dimon are trying to pretend the recent departure of Frank J. Bisignano, co-chief operating officer is like no big deal. Frank Bisignano is moving on to become chief executive of the payment processing firm First Data Corporation.

You should not have games of revolving chairs with a settled executive suite. The co-chief operating set up was just agreed to. So someone did not believe for the time being and pushed the right buttons to get himself another better job. JP Morgan is supposed to be a prestige large money center bank. Top jobs should make you very wealthy.

Frank Bisignano looked at the lay of the land and determined JP Morgan is a discard. I’m sure he had his reasons. He is not a stupid man. But the final analysis concludes JP Morgan is the place to leave.

Ignore the press releases and other blandishments. The departure speaks volumes of Jamie Dimon and JP Morgan. Smart people do not get off a rising rocket.

George Gutowski writes from a caveat emptor perspective.

Las Vegas Sands $LVS Now Smoking But Where is Fire? Lots Accountants on Board of Directors.

Las Vegas Sands (NYSE:LVS) is looking for a new auditor. PwC (PricewaterhouseCooper) has had a very long running relationship of 25-year with Sands Chief Executive Sheldon Adelson finally threw in the towel in the nicest way possible.

The all important year-end audit is complete and they were working on Q1 which will be completed. But the new firm will have the rest of the year to find its feet and give the all important sign-off.

So why does a large reputable accounting firm resign from almost $9 million in audit, tax and other  fees. Las Vegas Sands had been subject to increasing regulatory scrutiny for money laundering and bribes.

Many point out that Mr. Adelson’s challenging demeanor and demands on the auditors led to a deterioration in the relationship. It sounds like Mr. Adelson has been difficult to deal with.

PwC finally got into the life boat and is rowing away. It also should be pointed out that Mr. Adelson has been vigorously financing his political views which may not have been appreciated in the current White House.

Lets take a quick look at the board. 8 independent directors. The average age of the board is 67 and average tenure is 7 years. There is an old guard who has been on the board along with Mr Adelson from 2004 some nine years ago.

The board has two individuals who have a background in accounting.

Irwin Siegel CPA and was the Partner in charge of Deloitte Touche specializing in the hospitality industry. Wow that guy should have a very good sense of what is going on. Chairman of Audit Committee

George Koo is currently a special advisor to the China Services Group of Deloitte Touche. He also headed the group up from 1999-2008. Hey he should also have a very good sense of what is going on.

Irwin Chafetz is an old loyalist former vice-president of Las Vegas Sands with background in Interface-Group and Comdex. Big factor in Mr Adelson’s past.

Charles Koppleman has been with EMI and Martha Stewart Omnimedia. He gets entertainment but probably not a heavy weight in accounting.

Victor Chaltiel who is a Franco-American business person who in 2011 ran for Mayor of Las Vegas. Conservative standard-bearer.

Charles Forman has a substantial background in trade shows and Comdex which is Las Vegas is important. Again a former connection with Mr. Adelson.

Jeffrey Schwartz who heads up Global Logistic Properties which trades on the Singapore Exchange. They are the largest platform of logistical facilities in Asia. Sits on Audit Committee. Las Vegas Sands won an important license for a casino in Singapore.

Jason Ader is the founder and CEO of Ader Investment a NYC based investment advisor and merchant bank specializing in hospitality and real estate. Formerly senior managing director of Bear Stearns and before that a vice-president at Smith Barney. (remember those guys they earned your business the old-fashioned way) He sits on the Audit Committee.

So who knew what and when. Victor Chaltiel is too new. The two Deloitte Touche Alum’s got some splaining to do.

Mr Adelson is reputed to be very wealthy. The value of Las Vegas Sands shares has fluctuated but Forbes had him down as the third richest man in the US and the sixteenth richest man on earth. The stock market does fluctuate.

Bottom line: Although board is saying there seem to be some improprieties it should not have reached the point where auditors are resigning and walking away from huge professional fees. Money talks and PricewaterhouseCooper took a walk.

The board is not strong enough and it came to an auditor resignation.

George Gutowski writes from a caveat emptor perspective.

Apple Investors and Heroin Addicts. Whats the Difference? $AAPL

Investors interested in Apple (Nasdaq:AAPL) are seeing a behavioural economic clash. Traditionally Apple has titillated the markets with stunning announcements. New and very sexy products. Increasing market share. Wildly increasing cash balances. Apple mentions in media were at orgasmically high rates. Frenzy frenzy frenzy. Normally associated with smaller names but this was Apple. Safety oriented pension plans were big investors.

Investors were hooked on the frenetic energy of constantly improving news which made the metrics look damn fine. Investors became anchored: emotionally, psychologically, addictively to the feed back loop. Buy more because more good news is coming. You’ll see.

Apple is a highly successful business not a perpetual money-making machine. Competition found its feet. Unsustainable metrics collapsed. The huge cash position is now being used to woo back the investor with dividends, huge share buy backs sometimes financed by debt (which currently is cheap)

But when you analyze the media and investment commentary there is one common unifying theme. It is the lament of a heavy drug user who is finding the drug losing its potency. Traders relying on a long Apple short something else now have to think for a living. Some seem to be incapable of thinking.

Apple has dropped obviously. They still have enormous cash positions and enormous abilities to raise debt at very cheap levels. The products while facing more competition are still in high demand. The applications eco-system is still enormously tilted in favour of Apple.

Apple is considered the new Sony. Sony never had the enormous cash position that Apple enjoys. Apple has not lost its ability to innovate. It does have more effective competition.

Apple does have one enormous advantage over Google and Android driven offerings. They have not pissed off the Chinese with search engine politics. The Chinese market is huge. Even if it does slow down it will still be huge. Samsung will always be treated with suspicion in China. Apple is the only entity which can bridge the cultural divide and create shareholders wealth.

Apple is relying on financial engineering for now. Investors are being enticed with dividend yield and share buy backs. Hard core Apple investors   traders do not understand how to deal with a dividend stock. The dividend stabilizes and allows you to become patient. Get paid while you wait.

Heroin addicts looking for the next rush are not anchored in the same fashion. Therefore we will have a rotation within the shareholder base.

George Gutowski writes from a caveat emptor perspective.

Which entry point for Facebook. $FB None just slit your wrists.

Every once in a while I can’t resist and look at the senior Black Swan in the market place. Facebook (Nasdaq:FB) So the investors buying today at around $26.23 and a 1222 PE ratio based on trailing 12 months; are they smarter than the investors of yesterday at around $24.75 and a 1221 trailing 12 month PE. Or is it the other way around.

Its close. Really close.

George Gutowski writes from a caveat emptor perspective.

Coach The Dividend is the Black Swan $COH China China so much China

2 4 6 8 who do we appreciate Coach, Coach Yeah Coach. (NYSE:COH) Supposed classic financial metrics. Increasing revenues, increasing margins, negligible debt, strong cash position and a hot product line. Customers line up to get into the store.

If there is any one validating signal that tells investors all is well is an increased dividend. They did it.They increased the dividend. Yield is still around 2.5%; but that’s not bad for a luxury retailer.

OK so where are the Black Swans. Where is the long tail risk that can make all of this come tumbling down.

The big growth is in Asia. Specifically in China. Growth will continue to be high as China’s emerging business class continues to pamper itself. The risk is social. Currently it’s chic to acquire western brands to show you have arrived. Coach is riding the wave.

Tastes change. If your biggest market suddenly decides it’s not very cool and they want something more local, Coach will have a problem. Not saying it’s going to happen  tomorrow or when. But it does.

As America grew more economically powerful it developed its own fashion Geist. Coach needs to position itself so that when that change occurs its on the right side of the trend line.

The composition of the board will be critical. Currently they have seven independent directors. Average age is 59 years. One 48-year-old really skews that average. Average tenure is coming up to ten years. No Asians who can offer thought leadership in China and elsewhere. Still a very much euro-centric oriented bunch of dudes and dudettes with classical MBA’s.

Ivan Menzes currently heading up Diageo a premium drinks company runs the same game as Coach. Premium western brands selling into growing foreign markets. He might be the secret Achilles heel.

Irene Miller is the lead independent director is a finance/investment type. Started off as an investment banker with Morgan Stanley, became Vice chairman and CFO of Barnes & Noble and now runs her own investment firm Akim.

Michael Murphy is also a finance guy and alumnus from Sara Lee. American baked goods for the consumer masses.

Susan Kropf was President and COO of Avon Products who has exported their business model globally sometimes with surprisingly poor results in new markets.

Gary Loveman who is Chairman, CEO and President of Caesars and formerly was a Harvard B School professor. Casinos have a unique view of the Asian gambler. but catering to established vices is not the same process as engaging with fashion conscious customers.

Jide Zeitlin former partner with Goldman Sachs. He seems to be the young guy on the board but is another finance guy. I’m sure he knows about the stock market but is this what Coach really needs. He has been on for seven years.

Stephanie Tilenius is the newest independent board member. Her CV is encouraging. Currently executive in residence at Kleiner Perkins Caufield Byers. Previously was a Google VP for global commerce and payment. Previous to that she ultimately was SVP for ebay.com and global products. Female understanding e-commerce and the internet.

Now what you need is some depth in the Asian market.

George Gutowski writes from a caveat emptor perspective.

Caterpillar What Up? We all saw it coming! $CAT

Caterpillar (NYSE:CAT) missed expectations by some 45%. The noise and fury from the financial press is impressive. A blue chip missed. The China play is broken. commodities are so over. So its panic stations or is this the value play entry point.

The stock is close to the 52 week low. So like the market has sold off because none of the points being raised are new news. China has slowed down. Commodities are cooling. The western world is not catching fire.

The stock yields some 2.51% and they are making noises about more stock repurchases. Well if you must go ahead and lower the float, increase EPS and shrink the pie go ahead.

Here is the silver lining in your cloud of doom. Normally dealers buy inventory as they prepare for the busy season. This time the dealers did a 180 and reduced inventories.This will revert itself. The classic squeeze is setting up.

If you follow commodities and understand cycles. Take a long cold sober look and then keep watching. When media gets negative reach for your spread sheet and start crunching the numbers.

Buy low sell high. Buy ugly sell pretty.

George Gutowski writes from a caveat emptor perspective.