Logo of Groupon (Photo credit: Wikipedia)
Groupon Inc. (Nasdaq:GRPN) announced some better results and encouraged the market to keep believing. Investor relations is subtly promoting the classic buy and hold lets us do the work approach to investing. OK so a new tech company out of the chute should be showing improvement that’s what investors have bought into, a rapidly improving story. Emphasis on “rapidly”.
In reading the conference call transcript I was struck by a comment made by Andrew Mason CEO on the second page. He announced Groupon had kicked off their first major global technology integration initiative. According the Andrew Mason there will be some foundational rebuilding in the short-term, but he believes that over the long-term, this project will allow Groupon to move much faster and more easily apply technology.
Err excuse me. What does this all mean? Just what is a global technology integration initiative. You are a brand new tech company with a lot of answers supposedly. Everyone anticipated a global approach. Given that you are so brand new what has happened that you need a global integration initiative. What did or did not happen to your platforms. Class action lawyers need to review the underwriting documents. Was this requirement identified.
At this point no mention of costs but Groupon does have the ability to say “As previously disclosed”. This gives them some wiggle room in the Reg FD challenged space. Not one analyst picked up on the point in the conference call. So we have no explanation as to the true scope and nature. Groupon can rightfully say we mentioned it in the conference call but no one wanted to talk about it.
Well Groupon in the interest of clarity and visibility why don’t you add more colour on that point. if it is important enough to mention from the CEO’s lips than it must have big costs and big impact. How can investors feel well-informed without understanding the scope, scale and costs.
George Gutowski writes from a caveat emptor perspective.
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Boeing (NYSE:BA) is arguing with Air India and the Indian government over late fees that may be applicable over the much delayed but finally flying 787 Dreamliner. The Indian Government is asking for $1 Billion. Boeing is offering $500 million. Depending on the options package this amounts to about one free dreamliner.
Boeing is not arguing the late fee rationale. They are just negotiating the size of the delay fee. The Dreamliner program is much delayed and Boeing may be looking at billions in late fees. Currently the Indians are asking for 10% of Boeing’s cash on hand. Boeing has countered with 5%. Thats just India. Would it be too racist to accuse them of a nickel and dime mentality? What about side deals and special arrangements which Boeing is only too happy to make. Why do you need to press for the big cash?
There has been no attempt at financial guidance from Boeing for late fees. Looking at it from the profit and loss viewpoint. The $1 Billion Indian position is equal to 25% of last years $4 Billion net profit. Note to regulator check for short sales position ultimately controlled by Indian Government or associated cronies. Note to other regulator review disclosure in the context of REG FD and determine when Boeing splained that this big number and perhaps other big numbers may become detrimental to Boeing’s shareholders in the very near future.
The entire quandary is becoming a gaming theory conundrum. Play poker with the Indian government. Do not alarm shareholders in real-time. Ignore the regulator now while you jaw down a major client who is also a sovereign country. Extraterritoriality is a nice touch. So far Prashant Sukul, joint secretary of the country’s aviation ministry told reporters that they have asked for more. Boeing has not said a thing. So perhaps they can argue that until the negotiations are a done deal they did not have the basis for accurate material disclosure. So Thank You to the Indian government who has taken this out into the public domain.
George Gutowski writes from a caveat emptor persepctive.
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Google (GOOG) and Microsoft (MSFT) appears to have violated Reg FD. In todays Dealbook Andrew Ross Sorkin calls out the two technology giants with recent breaches.
Microsoft on Oct 18 which was a Monday published its quarterlies on the Microsoft website at 16:15. The 8K was filed with the SEC at 16:28. A press release letting the world know about the existence of material new information was issued at 16:44. Any beginner student in compliance can tell you this is ass backward. I cannot believe a lawyer(s) said this is OK. I cannot believe the Securities and Exchange Commission (SEC) is letting this one get by.
Google has started doing the same this summer publishing financial results on its website first at 16:00 Reuters could not get a headline off until 16:21.
In both cases the financials were released after market close. But after hours trading was a factor. Does the SEC regulate the after hours markets? Both firms lay claim to letting the internet do the dissemination claiming anyone who wants has a RSS feed. Both firms have huge vested interests in search engine technology. Are they trying to enhance their own search engines?
No word on how quickly Google Finance and MSN Money were updated. The question now becomes why. The markets knew the releases where coming. The dates are announced weeks in advance. But why take the risk of a SEC investigation? Why take the risk of class action lawsuits? Why take the risk of looking stupid and annoying investors?
The two firms are starting to mimic each other. No one is impressed. Investor relations does not use these instances as best practice examples. Hubris and arrogance because they are big. The market needs one rule for all issuers. the rules are there for the investors not the reporting companies.
Suggested SEC action. Have the Boards of Directors explain their oversight of fundamental no brainer compliance issues. they are ultimately responsible. While we are at it lets check some trading records. Hey didn’t that Microsoft guy Steve Ballmer just sell a ton of his holdings. Hmm There are no accidents some will say.
Disclosure: George Gutowski writes from a caveat emptor perspective. I hold no positions in stocks mentioned in this post.