Posts related to ‘Accounting’

The Mr. Dumas Accounting Award: Fuqi International (FUQI, MOV, JADE, ZLC)

Fuqi International Inc. (NASDAQ: FUQI) got killed last night and things are not looking bright this morning.  The Chinese jewelry designer found “accounting errors” which led to overstated profits for the first three quarters in 2009.  And for the quarter, its revenue and earnings were short of estimates.  The good news is that the range taken off earnings for the three quarters was listed as a range of $0.15 to $0.19 off of the $1.66 for that combined period.  The bad news is that the bad news looks more recent than farther back: fourth quarter earnings range was put at $0.24 to $0.28 EPS versus a prior range of $0.55 to $0.60; revenue was put in a range of $175 to $180 million versus a previous range of $182 to $191 million.

This came on the same day that Movado Group Inc. (NYSE: MOV) was hit on a poor outlook and it also seemed to at least have some after-hours impact on LJ International Inc. (NASDAQ: JADE).  Too bad that Zale Corporation (NYSE: ZLC) didn’t help lift any of these companies as its stock continued to recover with big additional gains yesterday.

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Posted on: March 17, 2010 – 6:32 am in Accounting, China, Consumer Goods, Earnings, Earnings Warning, Emerging Markets, Luxury, Restatements, , , ,

When Freddie & Fannie Spend $200 Billion on Delinquent Mortgages… (FNM, FRE)

The government is slowly winding down its added liquidity additions via mortgage and securities purchases from banks and lenders.  Sort of.  Ben Bernanke’s outline of how to exit the end of free money and zero-rates only indicated that the end of the policy would ultimately come.  But on Wednesday came word that Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) would repurchase up to $200 billion in delinquent mortgage loans.  Surprise, surprise.  Many wanted to know why Uncle Sam hasn’t just gone from a conservatorship to just foreclosing on the GSE mortgage lenders.  Simple, our government can’t absorb this as a direct balance sheet item…. It takes a little while figure out just what the $200 billion really means to the delinquent mortgage market.  Expect a lot of new mortgage-backed security prepayments are coming… some at losses.
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Posted on: February 11, 2010 – 6:31 am in Accounting, Banking, Bonds, Cult Stock, Economy, Housing, Politics, ,

AIG Discloses 2008 Troubled Derivatives Hand (AIG, BAC, GS, UBS, BCS)

American International Group Inc. (NYSE: AIG) has released more information on many of the troubled Maiden Lane III derivatives transactions.  These are those contracts that helped to knock the company down from a financial giant to a controversial company that could not service without the Uncle Sam Bail Out.  This shows the counterparties in the filing as well, with some of those being Bank of America Corp. (NYSE: BAC), Goldman Sachs Group Inc. (NYSE: GS), UBS AG (NYSE: UBS), Barclays plc (NYSE: BCS) and others… Wachovia, George Quay, SOCGEN, Goldman Sachs (listed as GSI and GSCM), CALYON, BGI, Bank of America, Merrill Lynch, RBS, HSBC BANK USA, Rabobank, CORAL Purchasing (Ireland) Limited, Deutsche Bank, REMO FINANCE INC-Dresdner, UBS, Barclays, and BMO.
Before you see the figures, keep in mind that this disclosure is over the 2008 derivatives along with counterparties… some of which no longer exist. Read More »

Posted on: January 29, 2010 – 3:43 pm in Accounting, Banking, Financial Stocks, Regulation, Restatements, SEC

Cablevision Value Watch: Madison Square Garden Spin-Off (CVC, MSGNV, MSG, GBL)

Cablevision Systems Corporation (NYSE: CVC) has approved the spin off of Madison Square Garden to Cablevision shareholders.  Madison Square Garden is the home venue of the New York Knicks and Rangers, but is also home to concerts, boxing events, tennis, and other events.  You have to be a holder of Cablevision to receive the shares, at least that is the case before the regular trading takes place.  Cablevision said tonight that the share distribution will take place on February 9, 2010, and that distribution will be made to Cablevision’s shareholders of record as of the close of business on January 25, 2010 (i.e. settlement date on or before).

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Posted on: January 12, 2010 – 6:13 pm in Accounting, Activist Investor, Cable Companies, Dividend, Entertainment, IPOs, Media, Mergers and Buy Outs, Private Equity, Value Investing, , , ,

The Biggest Online Winners And Losers For 2009: EBay Traffic Collapse

Some of the largest websites in the country had extraordinary swings in their audiences in 2009. Many of the most well-known web destinations lost large portions of their traffic

Based on data from Hitwise comparing US traffic market share from January to figures from November Ebay (NASDAQ:EBAY) lost 37% of its visitors. Craigslist lost 43% of its traffic, making it the largest loser among the top 25 sites. Neither number is surprising. Ebay’s earnings have been lackluster. Classified postings for apartments and jobs at Craigslist may have been hurt by the recession. Read More »

Posted on: December 16, 2009 – 5:09 am in Accounting, Internet, Research, , , , , , , , ,

Twelve Huge M&A Deals For 2010: The Stuff That Dreams Are Made Of

M&A activity picked up in the second half of 2009 as the market moved up and access to capital for big companies improved. Corporate debt offerings soared and banks began to make capital available for deals such as the proposed Kraft (NYSE:KFT) offer to buy Cadbury. Kraft has already lined up bridge loans for the potential buyout.

Every deal on the 24/7 Wall St. list of mega-mergers for 2010 faces regulatory challenges because of its size and scope. These hurdles would be present in both the US and EU. Antitrust issues are not a part of the calculus for any large deal. The Yahoo! (NASDAQ:YHOO) search partnership with Microsoft (NASDAQ:MSFT) will be reviewed as will almost any deal to buy Cadbury. The Oracle (NASDAQ:ORCL) buyout of Sun (NASDAQ:JAVA) may fall apart due to EU challenges. Exxon’s (NYSE:XOM) $41 billion buy-out of XTO Energy (NYSE:XTO) could draw scrutiny from regulators. Read More »

Posted on: December 14, 2009 – 1:48 pm in Accounting, Mergers and Buy Outs, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

The Ten Brands That Will Disappear In 2010

24/7 Wall St. has prepared its list of the ten brands that will disappear in 2010. This list is based on a review of each firm’s financial situation and other operating data, the current and ongoing value of its brand, and whether the company that controls that brand can sell its assets.

This year a number of famous brands have closed or their parents have announced that they will be shut down shortly. This includes decades-old magazines like Gourmet and famous car brands like Pontiac. The recession took whatever economic value these brands had left and destroyed it.

The brands on the 24/7 list for 2010 include companies that have been in trouble for years. Some have been in slow decline and others were irreparably damaged by the credit crisis. Most of these companies will be bought and the rest will simply be closed.

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Posted on: December 2, 2009 – 12:00 pm in Accounting, Banking, Bankruptcy, Consumer Electronics, Hardware, Mergers and Buy Outs, Old Media, Technology, Telecom, Turnarounds, Wireless, , , , , , , , , , , , , , , , , , , , , , , ,

Sirius XM (SIRI) And CBS (CBS) Pose Greatest Financial Risk Among Media Firms

TVCBS (NYSE:CBS) and Sirius XM (NYSE:SIRI) pose the greatest investment risks among media companies based on a forensic measure of their transparency and the statistical reliability of their financial reporting and governance practices, according to new data from Audit Integrity. The probability for bankruptcy for Sirius is 8.5% and 4.6% for CBS. Both numbers are remarkably low, but still high for major US companies. Audit Integrity’s bankruptcy model achieved 90.9% accuracy in 2008 and 93.8% in 2009.

The safest companies for investors, based on the same measurement are Disney (NYSE:DIS) and  DirecTV (NYSE:DTV). The rest of the firms in the analysis are Time Warner (NYSE:TWX), Viacom (NYSE:VIA), Comcast (NYSE:CMCSA), Cablevision, (NYSE:CVC), GE (NYSE:GE), and Time Warner Cable (NYSE:TWC). Read More »

Posted on: November 12, 2009 – 9:23 pm in Accounting, Media, Old Media, , , , , , , , , ,

Apollo’s Woes (APOL)

Burning Money PicApollo Group Inc. (NASDAQ: APOL) is the clear leader of the private-sector public education companies.  Yet, that leadership position is coming with some severe pain after its earnings.  Apollo reported that its profit fell by some 60% on one-time litigation and write-off charges.  Earnings were $91.5 million, or $0.59 EPS, but outside of items its non-GAAP earnings was listed as being $1.06 EPS. Revenue rose by almost 30% to $1.08 billion.  The consensus estimates from Thomson Reuters were $1.04 EPS (non-GAAP) and $1.03 billion in revenues.  The bomb is here: the Securities and Exchange Commission has launched an informal inquiry over the company’s revenue recognition policy.

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Posted on: October 27, 2009 – 4:44 pm in Accounting, Earnings, Entertainment, SEC,

The Fannie-Freddie Equity Conundrum (FNM, FRE)

burning-house-image4It is no secret that things could be much better at Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE).  But the last week or so has re-highlighted just how dire the situation is for these government sponsored entities and perhaps more importantly for the common shareholders. Both Freddie Mac and Fannie Mae were forced into federal conservatorship last year by Uncle Sam.

We have taken an in-depth look here at the situation and the past to get a feel for the future of these companies (GSE’s).  If you parse through the data and watch what has been happening in Washington D.C. of late, there is the clear reminder that these emperors have no clothes on.  In the world of Star Trek, these companies stockholders may be facing a Kobayashi Maru scenario.
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Posted on: October 25, 2009 – 7:45 am in Accounting, Bankruptcy, Bonds, Compensation, Corporate Governance, Cult Stock, Editor's Picks, Financial Stocks, Housing, Law, Politics, Regulation, Turnarounds, ,

Financial Junk Acting Independently (CIT, FNM, FRE, ABK, AIG, ETFC)

cit-logoCIT Group, Inc. (NYSE: CIT) is back to looking like its shares the paper they are printed on could be less valuable and less useful than toilet paper.  What is surprising is that this is not killing the other junky actively financial stocks.  CIT is down almost 40% at $1.46 on over 32 million shares on reports that it is close to collapsing, and that is before the market is even open. Common logic would dictate that this relation of one moving the others would be the case.  But junk under one roof is valued differently than junk under another roof.

Right before the open, there are many of the other junky financial stocks that are flat or trading up.  Fannie Mae (NYSE: FNM) is flat at $1.56 on less than 500,000 shares, while Freddie Mac (NYSE: FRE) is down 0.5% at $1.84 also on under 500,000 shares.  Ambac Financial Group, Inc. (NYSE: ABK) is actually up 1% at $1.80 on only 30,000 shares.

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Posted on: September 30, 2009 – 9:30 am in Accounting, Banking, Financial Stocks, Trading Alert, , , , , ,

The Lame Blame on Short-Termism

Bull and Bear ImageThere is a very silly notion being brought to you by the Aspen Institute Business & Society Program’s Corporate Values Strategy Group and what is admittedly a rather impressive list of names joining it. It is a call to end “Short-Termism” in the financial markets.  Imagine a long-term financial utopia where investors did not have to trouble themselves with the day in and day out wranglings of the stock market or the economy.

Imagine if quarterly earnings, monthly same-store-sales, quarterly or annual guidance, key turns in the demand cycle, interruptions or obsolescence of a business model and other issues were just able to be smoothed over.  Now imagine investing in this sort of a climate.  This idea sounds great on paper and probably looks great on economic models and charts that are the basis for the notion because it goes along with the current theme of thinking for the long-haul and doing what is best for everyone else.  The problem is that this is the most silly and perhaps dangerous notion for the public to embrace.  This is a path for investors large and small to get drummed, slapped, duped, discouraged and a few other things we decided not to print.
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Posted on: September 9, 2009 – 12:10 pm in Accounting, Activist Investor, Brokerage Firms, Buffett, Economy, Editor's Picks, Exchange News, Labor & Unions, Regulation, Research, Shareholder Issues, Utilities, Value Investing, , , , , , ,

Barrick Raising & Spending Billions To Drop Hedging (ABX)

Gold ImageBarrick Gold Corporation (NYSE: ABX) is going to be taking an action which has mixed implications for shares of Barrick versus the overall gold play now that the shiny yellow metal is hitting $1,000.00 an ounce.  The company has engaged a large syndicate of underwriters to raise billions in cash.  This is not to make an acquisition, but rather to remove gold hedging contracts.  With gold hitting $1,000.00 today, it seems that management does not want to leave major upside here in case the gold run-up is just starting.
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Posted on: September 8, 2009 – 5:29 pm in Accounting, Commodities, Metals, Secondary Offering, Shareholder Issues,

How Deep Are Buffett’s SEC & Derivative Issues? (BRK-A) (BRK-B)

Buffett ImageBerkshire Hathaway Inc.(NYE: BRK-A) (BRK-B) had its earnings and quarterly report last Friday, but the aftermath this week has shown more derivative criticism.  But more importantly, issues over SEC correspondence have been gathering some heightened interest.
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Posted on: August 14, 2009 – 10:18 am in Accounting, Buffett, SEC, ,

Tracking The Value Of The World’s Major Brands

apple
Several companies run annual brand valuations. It is a good business for advertising and marketing firms to be viewed as experts on brands. Brand values are based on the cash flow they create, and there are a number of ways to measure that. The mathematical parts of the formulas are relatively easy. The part that is hard, because it requires skilled forecasting, is what the reputation and value of a brand is likely to be three or four years from the date the values are set. It would have been hard half a decade ago to predict that AIG (AIG), the brand of the world’s largest insurance company, would be virtually worthless today, or that Facebook would be an extremely valuable brand. There is both art and science to determining the future of brands. Read More »

Posted on: August 12, 2009 – 3:21 pm in Accounting, Banking, China, Consumer Electronics, Consumer Goods, Editor's Picks, Financial Stocks, Hardware, PC Companies, Research, Software, Telecom, Tobacco, Wireless, , , , , , , , , , , , , , , , , , , , , , , , ,

Another $10.7 Billion For Fannie Mae (FNM)

bearFor those who want to know how much worse that housing market is getting they need look no further that the quarterly results of Fannie Mae (FNM). The mortgage operation lost $15.2 billion and will need another $10.7 billion from the government to continue.

The primary reason for the loss is that 4% of the loans that Fannie Mae owns or controls were delinquent, up from 1.4% a year ago. Based on that data, the government’s bailout of Fannie Mae and its near-twin Freddie Mac (FRE) is not nearly over. Taxpayers have put $85 billion into the two companies, and that tab is about to go much higher. Read More »

Posted on: August 6, 2009 – 7:28 pm in Accounting, Earnings, Financial Stocks, , ,

GE Gets SEC Issues Behind It (GE)

GE LogoGeneral Electric Company (NYSE: GE) has reached a settlement with the SEC regarding four accounting matters in 2002 and 2003.  Yep, 2002 and 2003.  This has enough of a look-back that it is probably as relevant to shareholders today as gold to a dead man.  This concludes the SEC investigation of these accounting issue, and GE was able to settle these allegations without admitting or denying allegations of any wrongdoing. GE consented to the entry of a judgment that requires the company to pay a civil penalty of $50 million and to comply with the federal securities laws.
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Posted on: August 4, 2009 – 11:10 am in Accounting, Conglomerates, Regulation, SEC,

Does ‘Going Concern’ Removal Change MGM’s Position? (MGM)

MGM LogoLast night we had an interesting volume spike alert in the after-hours trading in shares of MGM Mirage (NYSE: MGM).  It turns out that the spike was because the company’s auditor’s report will no longer include the “Going Concern” note.  This is an obvious huge development, but what we wanted to look at is how much this really changes the operational situation and outlook for MGM Mirage.
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Posted on: June 24, 2009 – 9:31 am in Accounting, Casinos, Entertainment

Two Quests Hit By One Going Concern (QELP, QRCP)

burning-money-picQuest Energy Partners, L.P. (NASDAQ: QELP) got hit hard on fairly innocent trading volume today.  The partnership was formed by Quest Resource Corporation (NASDAQ: QRCP) to acquire, exploit and develop natural gas and oil properties and to acquire, own, and operate related assets.  The partnership was late in filing its annual report and that was finally turned in.  Unfortunately, there are de-listing possibilities by NASDAQ and the auditors gave it a dreaded “going concern” note.
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Posted on: June 17, 2009 – 3:06 pm in Accounting, Annual Report, Oil & Gas, ,

Surprise: The Weakest Companies Are Leading the Rally

bank

Fed Chairman Ben Bernanke believes the green shoots of economic recovery are sprouting, and the market seems to agree: The S&P 500 is up 36 percent since March.

But a closer look reveals plenty of crabgrass on U.S. balance sheets —
enough to choke the rally before long. Balance sheets are the best snapshot of a company’s health. And for about 90 percent of the S&P 500 stocks outside the financial sector, the picture is still worse than a year ago. Read More »

Posted on: June 17, 2009 – 6:34 am in Accounting, Economy, ,