WellPoint Bear Case Scenario $WLP, $UNH, $ESRX, $RET, $HUM, $CI

WellPoint is about to release earnings. Ponder the Bear Case Scenario and see if you still have confidence in the long or is the short starting to look good:

Obamacare and the US Health industry overhaul has built-in huge uncertainty. Markets dislike uncertainty. The rest may just be bad history.

Transparency and competition will pressure pricing and profits for MCOs.

WellPoint has underperformed in the past few years and maybe poised for an upswing. If they stumble and investors lose faith the last diehards will bail and the momo will go wrong.

George Gutowski writes from a caveat emptor perspective.

ADP Bear Case Scenario $ADP, $SGSOY, $MHFI, $EXPGY

ADP is about to release earnings. Ponder the Bear Case Scenario as you contemplate a long or short.

Interest rates are low. Funds captured in float are not yielding much. It will be a while before rates climb high enough so that the float yields nicely. Then when rates go up clients will optimize against the float.

Some 15% according to some estimates of ADP’s revenues comes from the volatile auto dealer business. Cyclical big-ticket issues will not enhance growth.

PEO services while the fastest growing also have the skinniest margin. So fast growth will have little lasting impact. ADP needs to come up with new schtick.

George Gutowski writes from a caveat emptor perspective.

Moody’s Bear Case Scenario $MCO, $MORN, $MHFI, $EXPGY

Moody’s is about to release earnings. Ponder this Bear Case Scenario.

After the mortgage crisis the entire ratings industry took a reputational beating and quite rightfully so. But they survived but hopefully everyone has learnt to read their reports a little bit more closely.

If the market and economy dips Moody’s and others may take a few more slaps in the face which means more lawsuits.

Olde lawsuits are still out standing and it would be nice for shareholders to know they are settled. Just lawyers making fees for no good reason.

What is really left to generate growth. Ratings are ordered up when capital is issued. If deals requiring ratings slow then new fees will wither.

This company will be so easy to sue in the future for the slightest little miscue.

George Gutowski writes from a caveat emptor perspective.

Burger King Worldwide Bear Case Scenario $BKW, $THI, $WEN, $SBUX, $MCD

Burger King will be releasing earnings shortly. Ponder this Bear Case Scenario:

Fast food is an ultra competitive industry. Price competition breaks out at the drop of a hat. Labour and commodity prices are volatile. The minimum wage movement in the US is not helping labour productivity.

Burger King was just recently taken private and reorganized by private equity. Within a very short time it was re IPO’ed and foisted on the market again. not sure what was really changed over. Menu changes and store fixtures can be fixed without going private.

Miami connection makes it plugged in to Latin America. The private equity group was strong on Brazilian and cattle/beef connections. Now they decided to sell instead of having a captive outlet for beef and food commodity.

George Gutowski writes from a caveat emptor perspective.

Starbucks Gives a Twit. Was Zuckerberg Bitch Slapped $SBUX, $TWTR, $FB, #socialmedia

Starbucks has a neat little offer out. They are offering a $5 ecard if you connect your Starbucks account with your Twitter account. Looks like only one $5 ecard to a single friend. So if none of you friends sends you a Starbucks ecard well you now know where you stand with them. In the mean time Starbucks has access through you to all your friends.

Starbucks has long had those cards at the counter which get you a song of the week so this makes sense in their marketing thinking.

But was Zuckerberg Bitch slapped and left out or are they just doing segmented testing and its Twitters turn. What if you are following someone on both Twitter and Facebook. How will that look.

Oh and another thing. How is Lady GaGa going to play this she has like 41 Million followers?

George Gutowski writes from a caveat emptor perspective. He does not have 41 million followers.

Covidien Bear Case Scenario $COV, $BAX, $BDX, $ESLOY, $ILMN

Covidien PLC is about to release earnings. Ponder this Bear Case Scenario and consider if you still like the long case:

The firm’s soft tissue business still struggles due to J&J’s entry into the market.

Group purchasing organizations continue to garner more buying power and therefore put pressure on margins.

Regulators are getting tougher. To avoid or answer regulatory concerns R&D will go up as more and more testing will be required.

 The company’s commodified trocars product line  in the endomechanical business is facing difficult competition from Applied Medical. Growth is at risk.

George Gutowski writes from a caveat emptor perspective.

AptarGroup Bear Case Scenario $APTR, $IP, $RKT, $BLL, $AMCRY

AptarGroup is about to release earnings. Ponder this Bear Case Scenario:

Some pharmaceutical companies have taken drug delivery development in-house. As the trend intensifies, it will result in dropping demand for Aptar’s pharmaceutical products. in the mean time cash flow from this product supports an investment grade rating.

There have been many dispensing innovations in the consumer products fields. Many feel we have reached the peak and not much is left for now. Sop where will the growth come from.

Aerosol Sprays have generated wrath from regulators, environmentalists and consumer advocates. They aren’t finished yet and will continue to attack the spray.

George Gutowski writes from a caveat emptor perspective.


Eli Lilly Bear Case Scenario Holds Hands with a Black Swan $LLY, $JNJ, $NVJ, $RHHBY

Eli Lilly will release earnings shortly. Ponder if the Bear Case Scenario holds hands with a Black Swan.

Lilly has been steadily losing share in the insulin market. Diabetes is reaching epidemic proportions and insulin has a natural growth curve which they are losing. Novo Norsk is better at marketing and its long-lasting products are consider superior.

Lilly generates enough cash flow to cover dividends and capital expenditures until around 2015. The pipeline shrinks right about there and needs a boost immediately if not sooner.

The patent loss on antidepressant drug Cymbalta will have a leveraged impact on the company’s bottom line due to loss of high margins.

George Gutowski writes from a caveat emptor perspective


Starbucks Serves Bear Case Scenario Elegantly Packaged $SBUX, $WEN, $MCD, $BKW, $YUM, $CMPGY, $THI

Starbucks is about to release earnings. Ponder if this Bear Case Scenario is elegantly packaged:

Customers can and do switch easily. If the line is too long you go somewhere else that better suits your time management challenge.

Labour costs and commodity costs are volatile. Productivity is hard to come by. How much faster can a barista pour your dark roast or heat up your breakfast sandwich. Watch for backward integration as Starbucks buys coffee plantations in politically volatile regions. Capital will be at risk.

Starbucks will expand its Brands into new area’s and runs the risk of losing focus as it grapples with new businesses and new dynamics.

Alcohol will change the nature of the business and cause it to be regulated differently.

George Gutowski writes from a caveat emptor perspective.

Microsoft Pudgy Olde Man Bracing for Bear Case Scenario $MSFT, $ORCL, $VMW, $CA, $CTXS, $FFIV

Microsoft prepares to release earnings. Ponder this Bear Case Scenario.

Microsoft in an attempt to become a devices company will spend enormously. There is little to suggest that they have the necessary cool to pull it all off.

Windows OS and related offerings is declining. No engines to growth. I know this because I finally switched to Chrome and damn it all chrome is better. Much better.

Enterprise offerings will continue to survive due to inertia. Until someone offers a game changer and becomes the next Bill Gates.

Microsoft’s DNA is based on compelling products which are overwhelmingly dominant in the marketplace. They are not used to competition as a daily event.

George Gutowski writes from a caveat emptor perspective.