10Q Detective

Best Buy No Longer for ex-CEO Dunn

noreply@blogger.com (David J. Phillips) — Thu, 12 Apr 2012 04:59:00 +0000

Best Buy (BBY-$21.96) disclosed that terms of former chief executive officer Brian Dunn’s resignation were still being finalized. Assuming alleged “personal misconduct” doesn’t include fraud or similar financial malfeasance, SEC documents do suggest that Dunn’s severance package will still be worth more than an 80-inch big screen television.

In 2011 and 2010, Dunn’s total compensation package (including salary, cash bonuses, and stock awards) approximated $5.03 million and $10.23 million. However, more than half of this pay was issued in the form of stock-based incentive awards, which are now mostly worthless (out-of-the money).

According to regulatory filings, Brian Dunn isn’t guaranteed any cash (future wage payments) for a “voluntary termination.” Further, as Best Buy doesn’t have an employment agreement (or “arrangement”) with its erstwhile CEO, at best (theoretically), Dunn can expect to walk away with only $1.15 million of in-the-money stock options. However, as the share price of the consumer electronics chain has declined by more than 50 percent in the last two years, much of this wealth has evaporated. The 10Q Detective found about 30,000 shares in incentive-based option awards that were in-the-money, worth an estimated gain of some $81,000.

Nonetheless, the Board, at its discretion, can negotiate additional severance with Dunn. That said, given the poor financial performance of Best Buy under his leadership in recent years – and the specious manner to which he left – it’s unlikely Dunn will be in a favorable position to negotiate an egregious exit package windfall, save for that flat-screen.

David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Out to Lunch

noreply@blogger.com (David J. Phillips) — Fri, 23 Mar 2012 02:06:00 +0000

The 10Q Detective is taking a creative break from the diurnal drudgery of digging through dusty and dry SEC filings. Hope to see you after lunch!

SEC Filings Topping Santa's Naughty List in 2011, Part II

noreply@blogger.com (David J. Phillips) — Fri, 23 Dec 2011 18:03:00 +0000

Yahoo’s (YHOO-$15.50) online search ranking in the U.S. continued its slide this year – falling to an all-time low in September: Digital intelligence researcher comScore reported that Yahoo’s share of the overall market fell to 15.5% (compared to Google’s leading 65.3% share), down from 18.9% in June 2010.

Even after the messy firing of embattled CEO Carol Baratz in September and other management shuffles, criticism of the board’s recognized inability to engineer a strategic turnaround continued. Third Point, a hedge fund run by Daniel Loeb, disclosed a 5.1% stake in the online media company last fall and called for the resignation of co-founder Jerry Yang and other board members: “From the failed Microsoft (NASDQ:MSFT) sale negotiations [rebuffed $44.6 billion, or $31 a share, buyout offer in 2008], to a subsequent bungled and disappointing search deal with Microsoft, through a series of misguided CEO selections… this Board’s failures have destroyed value for all Yahoo stakeholders,” excoriated Loeb in a letter addressed to the board on September 8. “Instead, a reconstituted Board with new Directors who will bring fresh eyes, relevant industry expertise and increased investor alignment to the table is immediately necessary.”

Loeb opined further that Yahoo was an iconic asset, which led by a reconstituted board and management team could result in a rapidly appreciating stock to a targeted value of up to $23 a share. Notwithstanding all the noise generated by Loeb, given the fractured board’s inability to ever reach consensus on a unified business strategy – such as, spinning off its 43 percent stake in Chinese internet provider Alibaba or rebooting its advertising and online shopping businesses – Yahoo’s long-suffering stockholders won’t find much deal-making value in their stockings come Christmas.

Read more: the "SEC’s Naughty list" at 24/7 Wall Street

David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

SEC Filings Topping Santa's Naughty List in 2011, Part I

noreply@blogger.com (David J. Phillips) — Wed, 21 Dec 2011 14:13:00 +0000

In straightforward fashion, News Corp. (NWS-$17.83) reported that the company faced criminal investigations regarding the well-publicized phone hacking scandal and “inappropriate payments” (bribes) to British police made by higher-ups at the media company’s erstwhile publication, News of the World. “It is also possible that these proceedings could damage our reputation and impair our ability to conduct our business,” declared the 10K filing. You think? In July, the media conglomerate withdrew its $12.4 billion takeover bid for British pay-tv satellite broadcaster British Sky Broadcasting (BSkyB), following pressure from the government.

Despite mounting legal problems, it was another profitable year for anyone named Murdoch at the family-controlled holding: Chairman and CEO Rupert Murdoch took home total compensation of $33.3 million, up from $22.7 million in 2010; his son James, deputy chief operating officer, pocketed $17.9 million, a 70 percent increase over the prior year. It looks like the financial messes resulting from the newspaper scandal didn’t damage the Murdochs’ ability to conduct business.

Read the rest of the “Worst of the Bad - Part I" regulatory filings of 2011 at 24/7 Wall Street…

David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Hiding Losses at Chicos?

noreply@blogger.com (David J. Phillips) — Wed, 14 Dec 2011 17:31:00 +0000

Notwithstanding its namesake brand, average dollar sales and transaction counts are supposed to be up across all other brands at Chicos FAS (CHS-$10.50), according to management. Why, then, will the company not break out segment profit and loss (P&L) statements?

Looking to extend customer’s experience to intimate apparel, a $13.5 billion market (led by Victoria’s Secret’s commanding 25% share), Chico’s has grown the Soma label from 10 stores in 2005 to more than 200. Given the company’s ambitions are no longer “a secret,” why should the brand’s contribution to P&L still be considered such — unless discount pricing is driving sales growth — and eating into profits?

Read more at 24/7 Wall Street: Fashion and Financial Failures at Chicos

David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Significant Upside to Dendreon Stock in a Buyout

noreply@blogger.com (David J. Phillips) — Tue, 22 Nov 2011 10:36:00 +0000

Acquiring Dendreon (DNDN-$7.50) offers a better-capitalized pharmaceutical company an opportunity to buy control of a potential blockbuster drug (on the cheap); mitigate revenue shortfalls going forward from patent expirations in their own portfolios; gain access to a lucrative new technology platform (targeted immune-cellular therapy could have applications beyond current labeling); and, cost-efficiently broaden existing oncology portfolio pipeline.

What is the manufacturer of the prostate cancer vaccine Provenge worth in a buyout?

Read more at 24/7 Wall Street: Dendreon Buyout, How Imminent?

Notwithstanding Bristol-Myers Squibb, David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Is "The Sky Falling" at Dendreon?

noreply@blogger.com (David J. Phillips) — Thu, 17 Nov 2011 05:33:00 +0000

Dendreon’s (DNDN-$7.50) balance sheet shows the strain of what happens when it takes 15 years to bring a novel, first-in-class cancer treatment like Provenge to market: An accumulated deficit of $1.6 billion and paltry working capital of just $74.7 million. Problematic – given forecasts of continued flat sales through mid-2012.

"Come," said Chicken Little,
"We've sad news to bring,
The sky will fall,
Killing all,
And we must tell the King!”

Digging deeper into regulatory filings, however, the 10Q Detective believes Chicken Little running around the company and pointing skyward is premature – the sky “is not falling” at the Seattle-based biotechnology company – at least not yet.

Read more at 24/7 Wall Street: Dendreon - Not Running Out Of Cash

David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

MF Global Stakeholders Trusted Corzine, Lose Everything

noreply@blogger.com (David J. Phillips) — Fri, 04 Nov 2011 05:42:00 +0000

Highly leveraged, with limited liquidity, MF Global was unable to meet margin calls or the demands from regulators to boost capital reserves. An eleventh-hour attempt last weekend to raise more funds or find deeper pockets (a buyer for the entire company) failed, leaving protection under bankruptcy the only viable option.

Despite decimating the company, had CEO Jon Corzine succeeded in selling the derivatives broker-dealer to a third-party, he would have been entitled to a $12.1 million severance package, according to the terms of his employment contract. Ironically, thanks to the last Republican in the White House, George W. Bush, Corzine is unlikely to receive any going-away gifts.

Can the former Governor and Senator from New Jersey count on Democratic allies in the White House to bail him out of this debacle?

Read more at 24/7 Wall Street: MF Global and Corzine’s Folly

David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Ben & Jerry's: Out to Serve and Protect?

noreply@blogger.com (David J. Phillips) — Mon, 31 Oct 2011 06:57:00 +0000

Unilever (UL-$34.16) has remained reticent as senior management of wholly-owned Ben & Jerry’s announced “deep admiration” for those protesters involved with the “Occupy Wall Street” movement. Against a spreading backdrop of violence and teargas – from New York to Oakland – one wonders how much longer before the global consumer goods conglomerate tells its Vermont-based ice-cream subsidiary to mind to its own business.

Read More at 24/7 Wall Street: Ben & Jerry’s Occupy Wall Street

David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Overstating Peak Production in Utica Shale?

noreply@blogger.com (David J. Phillips) — Sun, 23 Oct 2011 23:58:00 +0000

Chesapeake Energy (CHK-$27.81) is accelerating drilling on liquids-rich plays in an effort to drive margin expansion and profitability, given near-month contract prices for natural gas languish below $4 per thousand cubic feet — lower than aggregate exploration and recovery costs (including G&A) in most regions. The natural gas provider has focused recent spud activity in the Utica Shale, mostly on leased acreage in eastern Ohio.

Read More at 24/7 Wall Street: Can Utica Shale Discovery Transform Chesapeake Energy?

David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Billions in Federal Aid for No Job Creation at First Solar and SunPower

noreply@blogger.com (David J. Phillips) — Tue, 11 Oct 2011 03:17:00 +0000

SunPower (SPWRA-$8.45) and First Solar (FSLR-$59.78) boast that recently approved utility-scale projects will nourish growth of manufacturing jobs in the United States, especially in the southwest. Both solar panel manufacturers are recipients of billions in federal loan guarantees.

As for expected job creation – think again.

Read More at 24/7 Wall Street: Job Destruction at First Solar and SunPower

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Ralcorp Board's Merger Rejection Doesn't Hold Milk

noreply@blogger.com (David J. Phillips) — Fri, 30 Sep 2011 14:25:00 +0000

St. Louis-based Ralcorp (RAH-$77.00) has repeatedly spurned buyout offers from ConAgra, opining it could best unlock shareholder value by spinning off its Post Foods division - brands like Honey Bunches of Oats, Grape Nuts and Fruity Pebbles - from its private label (store brand) and ready-to-eat foodstuffs.

Considering the $94 a share purchase price was higher than Ralcorp has ever traded at, it is hard to fathom why senior management failed to endorse ConAgra’s offer, especially given the personal payday that awaited each of them under “change-in-control” clauses contained in their respective employee agreements. In a buyout, co-chief executives Kevin Hunt and David Skarie each stood to pocket, at a minimum, $15 million (including $3.7 million in accrued salaries and cash bonuses, and in excess of $6 million in stock awards). Chief financial officer Thomas Granneman left more than $5 million on the table, too (including $3 million in three-years worth of salary and average annual cash bonuses, and more than $2 million in stock awards). Furthermore, actual payouts to named executives would have been significantly higher, as these severance packages were based on the closing price of Ralcorp on September 30, 2010 ($58.48 a share), according to the 2011 proxy statement.

Read more at 24/7 Wall Street: Poor Judgement By Ralcorp's Board

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Donut Holes in Dunkin Brands' Books

noreply@blogger.com (David J. Phillips) — Mon, 19 Sep 2011 04:13:00 +0000

The asset side of Dunkin’ Brands’ (DNKN-$26.86) balance sheet is bloated, with 55% of total assets, or $1.7 billion, nothing more than intangibles (like franchise “rights” and trade names). Additionally, strip out restricted cash of $73.6 million (escrowed for franchisee advertising and gift-card programs), and working capital slips into jelly red by some $60 million.

Read more: Dunkin’ Donuts Problems Rise - 24/7 Wall St.

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Ground Zero: In Flanders Fields Remembered

noreply@blogger.com (David J. Phillips) — Sun, 11 Sep 2011 15:15:00 +0000

In Flanders fields the poppies blow
Between the crosses, row on row,
That mark our place; and in the sky
The larks, still bravely singing, fly
Scarce heard amid the guns below.

We are the Dead. Short days ago
We lived, felt dawn, saw sunset glow,
Loved and were loved, and now we lie
In Flanders fields.

Take up our quarrel with the foe:
To you from failing hands we throw
The torch; be yours to hold it high.
If ye break faith with us who die
We shall not sleep, though poppies grow
In Flanders fields. ~ John McCrae (1872 - 1918)

Image: Courtesy of Christine Morgan Designs

The More Fashions Change at Talbots....

noreply@blogger.com (David J. Phillips) — Wed, 07 Sep 2011 04:27:00 +0000

In yet another reboot, actress Julianne Moore, 51, will be the new face of yet another splashy ad campaign over at The Talbots Inc (TLB-$2.53).

Constant brand tinkering has also blurred the “classic” clothing that Talbots is known for, and turned off traditional customers - just look at trailing 12-month operating metrics (ending January 2011): revenue growth was off 1.8% (compared to average gain of 5.9% in apparel industry); gross margin of 29.2% trailed industry average by 630 basis points; and, net operating margin was an anemic (1.0) percent, compared to an apparel industry gain of 3.6 percent, according to Thomson Reuters data.

How much “Bling! Bling!” is left on the apparel retailer's balance sheet?

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Is Gold Fields Ltd Mining Fools Gold?

noreply@blogger.com (David J. Phillips) — Mon, 29 Aug 2011 01:36:00 +0000

Though Gold Fields (GFI-$16.28) has a diverse global growth pipeline, with four major projects in resource development, plans to grow annual production to 5 million ounces by 2015 are underpinned on expanding base load capacity in South Africa, home to its biggest and longer-lived mines. The KDC, Beatrix and South Deep complexes — average mine lives of 18, 13 and 42 years, compared with 5.5 years in Australia or 15 years in Peru — produced in the aggregate 446.6 million ounces of gold, or 51.2% of total processed output in the quarter ended June 30.

However, the richest of these shafts are aging, with some veins from KDC 50 to 75 years old! Ramping up production at these world-class mines requires the miners to dig deeper — more than two miles down in many places — to find more gold. Consequently, total notional costs (extraction, general and administrative and capital expenditures) are rising. Weighted-average total costs at the South African operations have increased to $1,401 per ounce, double the cost of two years ago.

Read More at 24/7 Wall Street….

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Falling Prices Nuke Recovery at ReneSola

noreply@blogger.com (David J. Phillips) — Fri, 19 Aug 2011 21:22:00 +0000

Lower feed-in-tariffs in European markets are masking economic realities pressuring margins at ReneSola (SOL-$3.39). Exacerbating a demand-driven environment is overcapacity, as mainland competitors flood both domestic and global markets with photovoltaic (PV) products, from crystalline wafers to modules. Supply gluts are accelerating the drop in average selling prices (ASP) quicker than previously estimated: The ASP of solar wafers and modules in the quarter dropped to $0.69 per watt and $1.53 per watt, respectively, compared to ASP of $0.87 and $1.72 in the first quarter.

Already one of the lowest-cost wafer suppliers, the company believes it can stabilize margins and mitigate falling end-demand prices through continued efforts at manufacturing cost reductions.

Can the China-based solar manufacturer deliver?

Read More at 24/7 Wall Street....

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Blockbuster's New Return Policy: Surviving

noreply@blogger.com (David J. Phillips) — Fri, 12 Aug 2011 13:18:00 +0000

In a recent interview with the LA Times, Dish Network’s (DISH-$22.72) chief executive Joe Clayton articulated that the $320 million purchase of Blockbuster (BLOAQ - $0.07) last April was integral to transforming the second-largest U.S. satellite TV provider (after DirecTV) from a pay-television service (with about 14 million subscribers) into a bigger player in wireless, broadband and an emerging competitor of streaming, online entertainment content and DVD-by-mail services to industry bellwether Netflix Inc. (NASDAQ: NFLX).

What does this move mean for stockholders of the bankrupt video-rental chain?

Read more at 24/7 Wall Street….

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Dividend Payout Hang-Up Expected at Frontier Communications

noreply@blogger.com (David J. Phillips) — Mon, 08 Aug 2011 19:14:00 +0000

Frontier Communications (FTR-$6.76) paid a total of $186.6 million in cash dividends in the second quarter, which amounted to an outflow of some 77% of free cash. Is the telecom carrier’s juicy 10.4% dividend yield sustainable, especially amid rising capital expenditures and falling earnings?

Read Full Story at 24/7 Wall Street….

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Investors Roast on Earnings at Green Mountain Coffee - Ignore Future Threats

noreply@blogger.com (David J. Phillips) — Fri, 29 Jul 2011 05:20:00 +0000

Shares in Green Mountain Coffee Roasters (GMCR-$102.57) soared more than 16 percent, or $14.46, as investors responded enthusiastically to news of better-than-expected sales and net income for third-quarter 2011.

Nonetheless, the threat of direct competition from Starbucks (SBUX-$39.98) still percolates below the K-cup rim – come 2013, the beverage purveyor loses exclusivity on two key manufacturing/design patents.

Read Full Story at 24/7 Wall Street….

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

10Q Detective Partners with 24/7 Wall St.

noreply@blogger.com (David J. Phillips) — Tue, 26 Jul 2011 10:55:00 +0000

In our continuing effort to offer our readers relevant and timely information from the best and brightest pundits on stock investing, the 10Q Detective is pleased to announce a distribution accord with 24/7 Wall St.

24/7 Wall St. is a financial news and commentary Web site that covers the stock market, industry research and government policy and data baring on the economy. A leading independent financial site, 24/7 Wall St. articles are syndicated by the most influential news sources, including Aol, MSNBC, Yahoo!, Fox Business, The Atlantic, Dow Jones' Marketwatch and The Huffington Post.

"Next week, see what new company 10Q Detective irritates and tousles with: "Tune-in each Monday morning, same 24/7 channel!"

Cancer Not Biggest Problem for Takeda's Actos

noreply@blogger.com (David J. Phillips) — Mon, 20 Jun 2011 15:16:00 +0000

More evidence suggests a disproportionately greater risk of bladder cancer from Takeda Pharmaceuticals’ Actos than with other oral diabetic medications.

Litigation from affected diabetics is to be expected, although a direct link between Actos use and bladder cancer hasn’t been definitively established. Consequently, the company has little to fear monetarily. Management does, however, need to worry about another ticking clock: Aug. 17, 2012, is when Watson Pharmaceuticals (WPI), Mylan (MYL) and Ranbaxy Labs (RBXLF) will launch the first wave of generic competitors to branded Actos in the U.S.

Read More: CBS Interactive ....

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Can Skecher Shape-up Toning Shoe Sales?

noreply@blogger.com (David J. Phillips) — Tue, 26 Apr 2011 18:26:00 +0000

To Skecher USA’s (SKX-$20.50) credit, the shoe manufacturer recognized the willingness of American consumers (mostly women) to purchase footwear products developed to (allegedly) firm-up lower body muscles — and seized first-mover advantage in that niche. However, recent quarterly results suggest that the days of explosive sales and easy profits for its Shape-up product line are over.

Continue Reading at CBS Interactive

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

No Growth Meltdown at Uranium Miner Cameco

noreply@blogger.com (David J. Phillips) — Mon, 21 Mar 2011 18:14:00 +0000

PR problems from the Japanese disaster, nuclear plant phase-out programs in several European countries, and failure of global economic accords to qualify nuclear power for greenhouse gas emission credits — notwithstanding these challenges, long-term fundamentals remain positive for Canadian uranium producer Cameco (CCJ-$30.00).

Investor fears that the more than 100 new nuclear-power stations (net) — planned or now being built worldwide (out to 2020) — would be dumped (killing future demand for uranium fuel) is highly unlikely. With emerging economies running energy deficits, nuclear remains part of any growth equation that looks to diversify away from carbon-based options.

Continue Reading at CBS Interactive....

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

InterMune's Esbriet: Hype or Miracle Drug?

noreply@blogger.com (David J. Phillips) — Fri, 18 Mar 2011 16:50:00 +0000

InterMune’s (ITMN -$44.00) internal forecasts for its new pulmonary fibrosis drug appear even more bullish than Wall Street, with management pegging the market opportunity for Esbriet in the top 10 EU countries as high as $3 billion.

Both internal and Wall Street sales projections could prove too optimistic, however, considering the global idiopathic pulmonary fibrosis market was valued at $88 million in 2009 (nominal sales don’t recognize off-label RX use, but do underscore a market underserved due to a lack of approved products). Nonetheless, even with new growth drivers, such as Esbriet and other novel treatments in development, from LPA1 receptor antagonists to protein inhibitors, the combined U.S. and EU market for IPF is expected to climb no higher than about $462 million by 2017, according to industry analyst BioPortfolio.

As in Greek mythology, where Icarus ignored the warning of his father Daedalus, this unbridled optimism surrounding Esbriet runs significant risk of flying too close to the sun. Is hype outdistancing hope?

Continue Reading at CBS Interactive....

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.