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

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

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?

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

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?

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

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?

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?

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

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

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

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

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....

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?

Read more: Talbots Revamps Its Image - 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.

Is Gold Fields Ltd Mining Fools Gold?

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

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

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

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

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.

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"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

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?

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

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?

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.

Is GE Tokyo's new Godzilla?

Fear-mongering is spreading like the bubonic plague through the financial markets — quicker than the tsunami that hit Japan last Friday. Breathe slowly: General Electric ($18.95) hasn’t been bitten by any radioactive fleas!

Most of the financial exposure at Fukushima rests with GE’s joint-venture partner, Hitachi (HIT). The Japanese electronics giant owns 80 percent of the joint venture in Japan, while GE has a majority stake only in the U.S. nuclear market (60%) and certain other overseas markets, according to regulatory filings.

Read More 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.

Can Eni SpA Grow Production Without Libya?

Libya is Eni SpA’s (E-$49.22) largest source of oil and gas, accounting for approximately 244,000 barrels of oil equivalent a day. With Qaddafi loyalists battling anti-government forces town-to-town, most of Libya’s aggregate production of 1.6 million barrels a day has been shut-in, according to Bloomberg and other news sources. Estimates are that about 50 percent of Eni’s Libyan production has been curtailed, too.

From Ecuador and Ghana, to China and Indonesia — the Italian energy conglomerate has its fingerprints on a balanced mix of potentially lucrative discoveries across the globe. By leveraging organic growth in the Americas, Western Africa and Central Asia, Eni expects to deliver more than 2.5 percent compounded average growth in production through 2014 — under a Brent scenario at $70 per barrel.

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.

McMoran ExplorationDoubles Down in Gulf Waters

McMoran Exploration’s (MMR-$17.58) drilling strategy is focused on extracting reserves thought to exist below the “salt weld” — specifically, hydrocarbon-bearing sands in the “deep gas plays” (depths of 15,000 to 25,000 feet) and “ultra-deep gas plays” below 25,000 feet.

Management believes its successful strike at Flatrock — discovered in mid-2007 and brought online the following year — demonstrates the validity of its “deep gas” model.

Drilling almost four miles down, producing wells pumped out, on average, 272 MMcfe/d gross in the fourth quarter of 2009 ( 25 percent working interest). But by December 2010, production from prolific Flatrock gas field operations had fallen to 165 MMcfe/d (31MMcfe/d net to McMoran), due to persistent wellbore and remedial work-over issues.

In a recent interview with Oil & Gas Financial Journal, John Schiller, CEO of minority partner XX I (EXXI-$32.25), downplayed technological complexities involved in spudding sights like Blackbeard or Davy Jones, preferring to focus on reservoir potentials, improvements in seismic imaging and assessment tools, and past successes, such as Flatrock. He admitted, nonetheless, that ultra-deep drilling wasn’t for the “faint-hearted” and was capital-intensive.

Read More at BNET….

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.

Food Costs Go "BOO!" to Chipotle

Despite evidence presented to the contrary, Chipotle’s (CMG-$223.67) CFO Jack Hartung told analysts on the third-quarter 2010 earnings call that the company is planning operations this year with “overall food-cost inflation in the low-to- mid-single digit range.” Additionally, the company planned to be patient with pricing strategy, and would monitor competitor traffic patterns in response to their menu price hikes.

Hartung remained resolute in his belief that Chipotle had more “pricing power” than some of its competitors; all stores are company-owned, and it could more readily absorb higher food costs than franchise-operated chains (which pay royalties to the parent companies).

“Wait-and-See”? Yes – or No? Read More at CBSi > > >

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.