The board of directors of Bristol-Myers Squibb, (NYSE: BMY) the New York based drug maker, has authorized the repurchase of $3 billion of its common stock. The decisioin reflects a cash-healthy balance sheet.
Also, at Bristol-Myers' annual meeting yesterday, two dissident shareholder proposals were soundly defeated.
Also Tuesday, stockholders at Bristol-Myers' annual meeting overwhelmingly rejected a couple of shareholder proposals. A total of 90 percent voted against a proposal that would require the company to identify, in any future proxy statements, every executive whose compensation exceeds $500,000 a year. A total of 75 percent voted against a proposal that would require Bristol-Myers to increase its public reporting on its use of animals in research and product testing, as well as on its efforts and future goals toward eliminating use of research animals.
There wasn't much market movement on any of this news, presumably because the rest of the market was taking such a beating yesterday that even a slight rise (which BMY did manage) constitutes an accomplishment.
BMY, or its precursor firms, have an impressive history, dating back to 1858, when Edward Robinson Squibb (1819-1900) started his own pharmaceutical laboratory in Brooklyn, New York. During the US civil war, Squibb invented the pannier -- a compact wooden chest that battlefield medics could use for easily carrying around the medicines used to treat casulaties.
Separately, William Bristol and John Myers formed a company in Clinton, New York in 1887.
Those two companies merged in 1989.
In 2002, BMY was involved in an accounting scandal. They were apparently "channel stuffing" and had to restate their results three years back. They agreed to pay $150 million to settle the matter, while neither admitting nor denying guilt.
Onward!
Showing posts with label channel stuffing. Show all posts
Showing posts with label channel stuffing. Show all posts
Wednesday, May 5, 2010
Monday, September 22, 2008
More on IRF, accounting troubles
It was almost a year and a half ago -- April 2007 -- that IRF announced it was investigating accounting irregularities at one of its foreign subsidiaries. It didn't say which one, though the Japan subsidiary seems the best guess.
And the irregularity may have been a form of old-fashioned channel stuffing.
At any rate, this announcement didn't have any very dramatic immediate effect on the stock price.
But what did have an impact a few weeks later (on July 1) was the news that IRF had fired its chief financial officer, Michael P. McGee. The announcement was quite tersely worded. There was none of the common face-saving stuff. The world wasn't told that Mr. McGee had decided to "pursue other opportunities," or to spend more time with his family.
It said he had been "terminated," full stop. Then it praised his replacement, Linda Pahl, for her qualifications.
Deep into that announcement, the company reminded its investors that "an internal investigation of accounting irregularities ... continues." It drew no explciit connection between those irregularities and Mr. McGee.
Mr. Market can add though, and gets to "four" quickly enough when companies lay out the 2 plus the other 2. IRF's stock price entered the month of July 2007 at $37.50. It fell nearly to $30 before that month was out. Though it soon made a partial recovery, this was the start of a continuing slide. A year after Mr. McGee's sudden departure, IRF was selling for $17.50 a sure.
It has come off of those lows since, and largely as a result of, Vishay's interest in an acquisition.
As my readers may rightly infer from the tentative quality of these last two posts, I'm still feeling my way into this company, its history, and the proxy fight. I'll seek to lessen my own ignorance in the weeks to come.
And the irregularity may have been a form of old-fashioned channel stuffing.
At any rate, this announcement didn't have any very dramatic immediate effect on the stock price.
But what did have an impact a few weeks later (on July 1) was the news that IRF had fired its chief financial officer, Michael P. McGee. The announcement was quite tersely worded. There was none of the common face-saving stuff. The world wasn't told that Mr. McGee had decided to "pursue other opportunities," or to spend more time with his family.
It said he had been "terminated," full stop. Then it praised his replacement, Linda Pahl, for her qualifications.
Deep into that announcement, the company reminded its investors that "an internal investigation of accounting irregularities ... continues." It drew no explciit connection between those irregularities and Mr. McGee.
Mr. Market can add though, and gets to "four" quickly enough when companies lay out the 2 plus the other 2. IRF's stock price entered the month of July 2007 at $37.50. It fell nearly to $30 before that month was out. Though it soon made a partial recovery, this was the start of a continuing slide. A year after Mr. McGee's sudden departure, IRF was selling for $17.50 a sure.
It has come off of those lows since, and largely as a result of, Vishay's interest in an acquisition.
As my readers may rightly infer from the tentative quality of these last two posts, I'm still feeling my way into this company, its history, and the proxy fight. I'll seek to lessen my own ignorance in the weeks to come.
Sunday, July 6, 2008
Coca-Cola settlement
Eight years ago, a group of investors sued Coca-Cola, alleging that it had been forcing some of its bottlers to buy millions of dollars of excess beverage concentrate.
Why would it do that?
This allegation involves a faux-accounting practice known as "channel stuffing." Wherever there is a "channel" between the seller of a product and the ultimate buyer, there is a temptation on the part of the seller to push more product into that channel than there is any good reason to believe the ultimate buyers will accept. The whole of the amount pushed into the chanel is then credited as sold on the books, listed as part of the asset known as "accounts receivable."
Why would a seller do that? Because dressing up the accounts receivable in this way makes the books look good, making the company seem more valuable to credulous investors, helping thereby to boost the value of the stock.
There are a range of reasons why a company wants to see higher prices of its stock, but I'll assume here that explanation is unnecessary.
The key point here is that channel stuffing is a self-defeating strategy. The retailers can't sell all the product that has been sent them and generally return it to the wholesaler/manucaturer, who eventually has to readjust his accounts receivable, bursting whatever stock-price bubble the tactic might have created. It is tempting chiefly to managements who aren't looking that far ahead, and accordingly the (alleged) prevalence of the practice is often cited as evidence of the obsession of contemporary corporate managers with quarter-by-quarter numbers, with meeting their projects for THIS quarter and damned be the consequences.
Anyway, the institutional investor, Carpenters Health & Welfare, was the lead plaintiff in the lawsuit against Coca-Cola filed in October 2000. The company has made no admission, either pursuant to this settlement or pursuant to the settlement of a civil enforcement action brought by the SEC, settled three years ago.
Frankly, I don't think that short sightedness is the besetting sin of contemporary managements. They do have sins, but that one wouldn't be high on my list thereof. Accordingly, I suspect that the practice of channel stuffing isn't all that prevalent. That's probably why this is the first time I've mentioned the practice, or even allegations thereof, in this blog.
Still, I suspect I'll have reason to mention them -- such allegations -- again.
Why would it do that?
This allegation involves a faux-accounting practice known as "channel stuffing." Wherever there is a "channel" between the seller of a product and the ultimate buyer, there is a temptation on the part of the seller to push more product into that channel than there is any good reason to believe the ultimate buyers will accept. The whole of the amount pushed into the chanel is then credited as sold on the books, listed as part of the asset known as "accounts receivable."
Why would a seller do that? Because dressing up the accounts receivable in this way makes the books look good, making the company seem more valuable to credulous investors, helping thereby to boost the value of the stock.
There are a range of reasons why a company wants to see higher prices of its stock, but I'll assume here that explanation is unnecessary.
The key point here is that channel stuffing is a self-defeating strategy. The retailers can't sell all the product that has been sent them and generally return it to the wholesaler/manucaturer, who eventually has to readjust his accounts receivable, bursting whatever stock-price bubble the tactic might have created. It is tempting chiefly to managements who aren't looking that far ahead, and accordingly the (alleged) prevalence of the practice is often cited as evidence of the obsession of contemporary corporate managers with quarter-by-quarter numbers, with meeting their projects for THIS quarter and damned be the consequences.
Anyway, the institutional investor, Carpenters Health & Welfare, was the lead plaintiff in the lawsuit against Coca-Cola filed in October 2000. The company has made no admission, either pursuant to this settlement or pursuant to the settlement of a civil enforcement action brought by the SEC, settled three years ago.
Frankly, I don't think that short sightedness is the besetting sin of contemporary managements. They do have sins, but that one wouldn't be high on my list thereof. Accordingly, I suspect that the practice of channel stuffing isn't all that prevalent. That's probably why this is the first time I've mentioned the practice, or even allegations thereof, in this blog.
Still, I suspect I'll have reason to mention them -- such allegations -- again.
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