Blackberry Rattles Markets. Look Before You Leap $BBRY Bad can be Good!

Blackberry (Nasdaq:BBRY) rattled the market with a loss when a profit was expected. Big sell off in pre-market trading. Long weekend in Canada and July 4 in US means shortened attention spans and therefore opportunity for the nimble and adroit. Yes its a shock but take this into consideration.

  1. They cleaned up a mess in Venezuela. Would have been nice if they could have been more transparent about it earlier. But so be it. Operations in banana republics go like that.
  2. Revenues are up. Cash is up. Customers counts are up. These are all positive metrics.
  3. If you believe Blackberry should be sold off than consider the Venezuelan write-offs necessary adjustment. a reasonably savvy buyer would not give you value for the problem.

You can question the investor relations savvy of the management team by releasing information on the last day of the quarter causing funds to respond in panic mode. I would manage the cycle differently.

George Gutowski writes from a caveat emptor perspective.

The Hypocrisy that is Apple $AAPL Manic Depressive Behavioural Finance at its best.

Apple (Nasdaq:AAPL) continues to drop. A coldly calculating stock market that loves profit is pretending to not own it. End of June is quarter end. Reports get printed. Financial press and naïve investors look at stock holdings. Apple has dropped from $700 and everyone must appear to not own this dog. so as we get closer to June end the market dumps and grumps.

Classic case of behavioural investing. Don’t look at the enormous cash position. Don’t look at the history of innovative world-beating products. Don’t look at an attractive dividend yield. Don’t look at an attractive PE ratio. Don’t look at one of the strongest balance sheets in the history of capitalism.

Unfortunately professional money managers who know better but know their clients aren’t thinking are playing the shell game of now you see it and now you don’t.

In the meantime if you have some dry powder and patience this is a good time to pick up some assets because of the manic-depressive character of the stock market

George Gutowski writes from a caveat emptor perspective.

Carnival the Cruise People Crucify CEO. What about Board of Director Culpability $CCL

Carnival Corporation (NYSE:CCL) CEO Micky Arison aged 63 and a director since 1987 and chairman since 1990 has suddenly resigned. No successor immediately apparent. In case you do not read the news Carnival has had a spate of embarrassing problems such as engine room fires, cruises ships sinking killing 22 lives and steadily declining profits for the past three years. That will do it.

Carnival knows when to pour a fresh drink at the bar but it does not know how to refresh its leadership. Micky Arison was the head honcho for 23 years and left after several disasters. The board of directors is also long in the tooth and probably has not challenged anything from management for a long time. There are only two directors who came on after 2010. Everyone else is shall we say established.

The most recent board appointment is a politically correct female. Debra J Kelly-ennis 56. She was President and Chief Executive Officer of Diageo Canada, Inc., a subsidiary of Diageo plc, a global spirits, wine and beer company, from 2008 to June 2012. So the consumer goods background makes sense. She of course knows nothing about ship engines or seamanship.

The appointment immediately prior was in 2010 for Sir Jonathon Band, age 63. Sir Jonathon Band served in the British Navy from 1967 until his retirement in 2009, having served as First Sea Lord and Chief of Naval Staff, the most senior officer position in the British Navy, until 2009. He has been a non-executive director of Lockheed Martin UK Limited since May 2010. I get the Lockheed Martin appointment. Senior military officer upon retirement steps into the arms business. Resume wise a very good fit for both. Was Carnival doing someone a favour and giving sir Jonathan Band a supposed easy one. The skill level of a warrior sailor is not what a cruise ship line needs. How embarrassing for a career sailor to watch one of his ships sink and the captain turn tail and get off the boat first. Not exactly Royal Navy was it.

The remaining directors have been there much too long and if Micky Arison needs to go they should also. So the first order of business is to recruit a new credible CEO and to rebuild the team. that should include large scale changes at the board level. Net money flow and up tick/down tick are slightly negative. Short position is 2.82% of float with a very small cover bias. Dividend is 2.86% BTW Micky Arison has been a net seller all this calendar year so his heart has not been in it.

Nominations are now open. Need someone from the travel business who knows how to build. but in the mean time watch for a caretaker financial engineer who will test the waters for a leverage buyout.

 

 

 

 

Harvest Natural Resources $HNR Fires PricewatershouseCoopers. Are They in Play? or Just Screwed Up?

Harvest Natural Resources (NYSE:HNR) announced that they have fired their auditors PricewaterhouseCoopers after announcing that the valuation on some of their properties has broken and they are facing a very large restatement of income. stock has tumbled. A potential sale of Venezuelan assets to Indonesia concerns has fallen through.

They have hired UHL LLP. Under the circumstances they probably did not have an adequate time to review a list of suitable candidates.

OK assume the accounting firm was totally incompetent. It still comes back to the management. who knew what and when. Only 5 Independent directors. No one with less than five years on this particular board. Some of the board members have pretty good resumes.

On the board since 2000 Mr. Hardee is a Senior Vice President-Financial Advisor with RBC Wealth Management, since 1994. From 1991 through 1994, Mr. Hardee was a Senior Vice President with Kidder Peabody. From 1977 through 1991, Mr. Hardee was a Senior Vice President at Rotan Mosle/Paine Webber Inc. Mr. Hardee was named as one of Americas best financial advisors for 2009, 2010, 2011 and 2012 by Barrons financial newspaper and by Reuters AdvicePoint.
 On the board since 2000 in 2007, Mr. Murray retired from Dresser, Inc. He had been the Chairman of the Board and CEO of Dresser since 2004.
On the board since 2005 from September 2006 to December 2011, Mr. Stinson was Chairman of TORP Terminal LP, the U.S. unit of a Norwegian LNG technology company. From 2004 until November of 2009, he served as a director of Enventure Global Technology.
On the board since 2008 Mr. Irelan has over 37 years of experience in the oil and gas industry. He retired from Occidental Petroleum as Executive Vice President of Worldwide Operations in April 2004, having started there in 1998.
On the board since 2008 Dr. Igor Effimoff is founder and principal of a firm which provides upstream and midstream consulting services since 2005. From 2002 until 2005 he was Chief Operating Officer for Teton Petroleum Company. Between 1996 and 2001, he was President of Pennzoil Caspian Corporation, managing their interests in the Caspian Region.
These guys should have been able to smell it. With this level of smarts the auditor should not have been allowed to miss the valuation problems.
Watch out for the class action lawsuits.
When you have problems of this magnitude senior officers also lose their jobs. Within the past year shares traded around $15. Now $3.30. Once you look through the blood and gore a take over perhaps. Short ratio is almost 18%. Insiders control about 5% and institutions control 70%. Yeah baby you’re in play.
George Gutowski writes from a caveat emptor perspective.
George Gutowski writes from a caveat emptor perspective.

Golden Minerals Co $AUMN closes Velardena Mine. Is it Reg FD compliant?

Golden Minerals Co (AMEX:AUMN) announced well after the close of trading on Friday that they would be closing the Velardena Mine to conserve the asset. the workers were told in the afternoon. Reg FD challenged it seems. once announcements are made the information is out there. The stock has been dropping like a stone for the past year. Always suspicious when a major announcement comes out Friday after market close.

George Gutowski writes from a caveat emptor perspective.

Waste Management Dividend gets set for crush and burn $WM Will LBO Steal from Shareholders.

Waste Management Inc. (NYSE:WM) is tap dancing in the market weaving a narrative of improved cost control and enhancing yield. Cost control means people lose their jobs. That can only g on for so long. Enhanced yield means raising prices and that has a limited life. Dividend growth is well in excess or revenue and profitability. We all know where that goes sooner than later. Dividend coverage ratios shrink and yield investor get cold feet.

There must be something about operating a fleet of trucks that attracts certain relations. David P Steiner the CEO sits on the board of directors of FedEx. Also sitting on the Waste Management Board is Thomas H. Weidemeyer the former Chief Operating Officer of United Parcel Service. Both FedEx and UPS are hyper competitive and dividends are taken very seriously.  So its surprising to see the abuse of dividend in this environment.

Money flow is negative and the uptick/downtick is bearish. Short position continues to accumulate. This is all before considering any environmental issues which for a company with over 500 garbage dumps is always bubbling over. The company exhibits no new technology to process garbage.

Can you smell the steal coming. down and out. Dividend metrics poor. Arrange a leveraged buy out and unlock value. Get rid of that pesky dividend. Leverage up some more debt. Sell off some assets and fix the real problems. In the mean time do some cost cutting but no earning growth on some else’s nickel.

Oldest trick in the book.

George Gutowski writes from a caveat emptor perspective.

Wal-Mart wants to Butt Heads with Amazon over #ecommerce $WMT $AMZN Stubborn like an Arkansas Mule

Wal-Mart (NYSE) looking to keep growth alive is looking at building huge warehouses and competing against Amazon in the E-Commerce space. A couple of Black Swan events to think about. Wal-Mart given its rise, does have a master of the universe mentality. Wal-Mart destroyed small downtown neighbourhoods and sanctified big box retail in suburban locations. They offered the cheapest price and turned everything into a commodity. The product line is the me too stuff or block buster products guaranteed to be hot. No real merchandising designed to offer and entice.

Yes Wal-Mart is building large warehouses. But a warehouse is a cement floor, cheap aluminum walls and a roof that hopefully holds up. 66% of the US population lives 5 miles away from a Wal-Mart store. So a fleet of trucks should be able to deliver very easily. Building warehouses and buying trucks is not difficult. Running a mean and lean logistical infrastructure will be difficult. Wal-Mart outsources major components and relies on intimidation to manage vendors. They do not have a holistic self managed culture.

Wal-Mart depends on consumers coming into the store and not remembering the cost of commuting. Cloud e-commerce will need to absorb the cost of delivery. With the lowest price in the land the margin does not have room for further discounting. You will not be able to make much money on cheap toilet paper or cases of heavy soft drinks with razor-thin margins. When you pick up some cheap sweat pants and a few T-shirts you are not interested in a delivery charge. When you buy something fashionable from Amazon the delivery charge is negligible after all the value added.

Amazon meanwhile is leading in e-commerce by offering value added products not the cheapest. The e-commerce business will be driven by software in the cloud. Wal-Mart buys its software and relies on third part developers to keep it fresh and competitive. Wal-Mart has not varied its model from day one.

So if someone is expecting battle between an Arkansas Mule and West Coast Cool my money is on cool. Wal-Mart is not a true innovator.

George Gutowski writes from a caveat emptor perspective. Personal preferences tend to West Coast Cool. I rarely need an Arkansas Mule.