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.

Qualcomm Are They Kissing Their Sister or is it A Bear Case Scenario $QCOM, $MSI, $CSCO, $ERIC, $AMD

Qualcomm is about to release earnings. See if they are kissing their sister, developing into a Bear Case Scenario or something else:

Qualcomm chip business in wireless will see pricing pressure as comptition develops and expands beyond current beach-heads.

Licensing revenue has faltered due to foreign currency mix, product mix and other factors. Just not as strong as they used to be.

4G phones will be backward-compatible with CDMA technologies  in 3G networks. However a small portion of phones may emerge as 4G only and Qualcomm may earn lower royalty income on the sale of such devices. Strange but true.

George Gutowski writes from a caveat emptor perspective.


Safeway Groceries Turn Into Bear Case Scenario with a side of Black Swan $SWY, $TSCDF, $WFASF, $WOLWY, $WMT

Safeway Inc is about to report earnings and let us know how the grocery business is doing. everyone has to eat right? So it’s should be OK right? Well read on and see if you can still afford some of the better stuff:

Wal-Mart is trying to kick their ass big time. And in certain cases they are beatin the crap out of Safeway.  Wal-mart is large and mean. Very mean.

Returns on capital have been in an uncomfortable decline and will continue to be since the Lifestyle remodel investment failed to provide enough of a sustained revenue lift to generate the anticipated rate of return. Translation. Management got it wrong and there is no clear Plan B.

High end consumers are happy with Whole Foods and others and are not coming back.

Low end consumers are sticking with discounters and are not coming back.

Safeway is like the middle class. Shrunk and hollowed out.

George Gutowski writes from a caveat emptor perspective.

Motorola Solutions Hello Is There Someone Home? Yup its the Bear Case Scenario $MSI, $CSCO, $ERIC, $QCOM

Motorola solutions is about to release earning. Is there someone home or is it the Bear Case Scenario.

Driving operating leverage via spending restraint in research and development could be dangerous, especially since the company plans for 5%-8% revenue growth in coming years.

All technologies are subject to disruption and innovation. Motorola has a large target on its back.

Motorola’s cash flow is subject to budget risk from governments and large corporates.

George Gutowski writes from a caveat emptor perspective.

F5 Network Danger Signs or Bear Case Scenario $FFIV, $MSFT, $ORCL, $VMW, $CA, $CTXS, $JNPR

F5 Network is about to release earnings. Ponder the danger signs and see if a Bear Case Scenario is coming up.

Cisco’s partnership with Citrix could make Citrix a more formidable competitor over time.

Technology disruption is an ever-present threat. New methods for steering data traffic, such as software-defined networking technologies, could obviate the need for traditional appliance-based ADCs for certain applications.

Riverbed’s recent acquisition of Zeus gives the firm a strong technology to attack the virtual ADC market. Juniper’s recent decision to license and integrate Riverbed’s ADC technology could validate Riverbed’s ADC technology as a viable alternative to F5.

George Gutowski writes from a caveat emptor perspective.