Google — Unhedged Energy Play?

Image representing Google as depicted in Crunc...

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Google (GOOG) has been criticized for making a lot of deals and acquisitions without any apparent benefit. Cars without drivers just adds a wacky factor to all of it. But you have to become concerned about investors who do not understand Google’s energy read wind power play.

Google uses huge amounts of electricity. They are similar to airlines who live and die on aviation fuel pricing. By investing in wind power they are trying to control and hedge their costs. Airlines merely crash and burn when oil gets too high.

This begs the question. when will Google provide detailed break outs for their energy costs on all those server farms? Will they ever be able to make peace with the Chinese and have access to economically priced local electricity?

Will Google become an unhedged energy play? 

Disclosure: George Gutowski writes from a caveat emptor perspective. He has no position in stocks mentioned in this post.

Safeway Disinflation Magic Trick

Safeway Medallion logo, 1980

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Safeway (SWY) announced Q3 results telling investors revenues are down because the per item sales price is off. That is called disinflation. The EPS was managed upward by reducing the float. This can only go on for so long (usually not long) before investors become disillusioned with the disappearing act.

Top line growth has no substitute. Financial engineering magic tricks are short-term desperate tactics. Safeway is spending four times as much on share buy backs as they are on dividends. Not a sustainable strategy. But listen to what the boss had to say.

“Our third quarter results were in line with our expectations,” said Steve Burd, Chairman, President and CEO”

Disclosure: George Gutowski writes from a caveat emptor perspective. He holds no positions in stocks mentioned in this post.

JPMorgan Graveyard Whistle

The current JPMorgan logo used for company's I...

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JPMorgan (JPM) does not understand macro trumps micro. In the latest earnings release they claim the rate of credit losses and write-offs is improving and therefore they are making more money. We have wholesale moratorium on foreclosure proceedings within the industry. We have stubbornly high unemployment. We have huge over hangs in residential real estate.

JPMorgan admits that their own good customers are still de-leveraging and reducing indebtedness. They also admit to shrinking margins. However Chief Executive James Dimon and Chief Financial Officer Douglas Braunstein said the quarter was a “solid” one.

JPMorgan is using cheap accounting tricks to boost short-term profits. Macro events will overwhelm short-term desperation.

Disclosure: I write from a caveat emptor perspective. I have no positions in stocks mentioned in this post. 

Business Wire vs PR Newswire

Following earnings releases I naturally have a RSS feed from both newswire services. I seems that Business Wire is capable of disseminating 100’s of corporate press and earnings releases and PR Newswire disseminates by the dozen. Business Wire seems to have captured the majority of the earnings release market by a huge margin.

Business Wire (sometimes called Biz Wire) is owned by Berkshire Hathaway (BRK.B) aka Warren Buffett. So he bought into the value play several years ago. Will PR Newswire attempt a credible come back? It’s a war of technology with a securities governance overlay. PR seems to be lost in the dust for now.

Disclosure: I write from a caveat emptor perspective. I have no positions in stocks mentioned in this post. 

National Investor Relations Institute & Capital Market Disconnects

National Investor Relations Institute (NIRI) has identified several capital market disconnects that investors should be keeping their eye on. Jeff Morgan, CAE President & CEO of NIRI after a recent trip to San Francisco identified the following

  • companies are pushed for more transparency by investors and legislators, but investors can hide their identity and fight to avoid transparency.
  • when the comprehensive practice of IR involves so much more than a narrow stock price focus, but then an out of work analyst is hired solely on the ability to dazzle the CEO with a valuation model and a promise to increase the stock price.
  • when institutional investors separate the investing decision from proxy voting as it is handled by two different areas of the organization.
  • retail investors that don’t vote their proxy due to confusion, the perception that their vote doesn’t matter or because they assume someone else will vote for them.
  • when long-term investors are the stalwarts of our capital markets, yet these markets seem to be controlled by those that use the stock markets with short-term interests in mind.

There are other disconnects but you get the message. NIRI’s Mission is dedicated to advancing the practice of investor relations and professional competency and stature of its members.  They are not interested in short-term promotes or deceiving investors. For more info go to the web site or contact the head guy;

Benihana Long Long Road Ahead

The famous Benihana "Tiki Mug" has b...

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Benihana Inc (BNHN) reported radically reduced indebtedness and increased cash. They are still chugging away paying preferred shareholders. While it’s good to see less debt Benihana has another three to four years of debt reduction before they can throw off the chains of financial slavery. The debt is all short term because long term mortgage lenders will not lend on the collateral value of a specialty restaurant chattels. No mention of competition in Japanese restaurants, teppanyaki or sushi categories. Watch for a private buy out that may not maximize shareholder wealth.

Disclosure: No position in any stocks mentioned in this post.

Tiffany Commodity Play Not Retail

Tiffany & Co (TIF) reported an inventory position that equals twice its last quarter’s revenues. Inventory turns are not so good in the jewellery and bauble business. When you consider how much Gold, precious metals and gems make up the inventory number investors will realize that they are investing in a commodity play and not a retailer.

Disclosure: No position in any stocks mentioned in this post.