by admin | Feb 7, 2014
On September 18, 2013 men’s clothing retailer Jos. A. Bank (ticker JOSB) made a $2.3 billion unsolicited offer to acquire larger rival Men’s Wearhouse (ticker MW). JOSB was seeking to take advantage of MW during a vulnerable time for the company. The MW Board of...
by Tim Delaney | Jan 26, 2014
In our previous post, we talked about how Kodak fell to competition from digital photography and promised to explain why in our next. This post is about why Kodak failed. It’s because of what we call “the incumbent’s dilemma,” which this...
by Tim Delaney | Jan 6, 2014
Kodak dominated mass-market consumer photography for over a century. But it failed to meet the challenge from digital photography and went bankrupt a year ago. How could a company as strong as Kodak fail so badly? This post explains what happened to Kodak. In our next...
by Ron Carleton | Dec 10, 2013
In November 2011, ACCO Brands, a leading manufacturer of office products, and MeadWestvaco Corporation, a leader in packaging, agreed to merge MeadWestvaco’s Consumer & Office Products business into ACCO Brands in a transaction valued at approximately $860...
by Tim Delaney | Nov 22, 2013
We blogged about Tesla just over a year ago, looking at what we called the company’s “liquidity burn.” We thought they only had about a year’s worth of liquidity left. Since then, burning through liquidity hasn’t been Tesla’s biggest problem. Instead, Tesla’s...
by Ron Carleton | Apr 27, 2013
99 Cents Only Stores operates a chain of over 300 “extreme value retail stores” in California, Texas, Arizona and Nevada.The company was founded in 1982, and in January 2012 it was taken private by Los Angeles private equity firm Ares Management and the Canada Pension...
by Tim Delaney | Apr 14, 2013
Suntech isn’t who we think it is The company known as Suntech isn’t simply Suntech at all. It’s a group of 41 different holding companies, intermediate holding companies, and operating subsidiaries tied together by common ownership. Suntech Power Holdings...
by Tim Delaney | Mar 31, 2013
Here comes the sun In 2008, the clouds of pollution that clot the skies over China’s cities had officials there gasping for relief. They were even more troubled by the slowdown in China’s economy. Their solution was to promote solar energy, not only for clean energy...
by Tim Delaney | Feb 24, 2013
Competition Office supply retailing has been a tough business lately. Demand for paper, writing materials, envelopes, and many other products is falling as people do more and more work on line. On-line stores are making big inroads, just as they have done in books,...
by Ron Carleton | Dec 11, 2012
1) I will think like an equity analyst. In order to properly assess the credit risk of a company, you must understand what management is thinking. Since management works for the owners of the company, not its creditors, you must think like an owner. Is there a...
by Tim Delaney | Dec 3, 2012
Risk culture is the way people behave about risk. But people, organizations, and risk are all complex and dynamic. It’s important to have a formal concept of risk culture, but perhaps the best way to explain it is through examples. Dan Sparks at Goldman Sachs In...
by Tim Delaney | Nov 20, 2012
Consider the sad story of UBS. In 2007 it suffered $38 billion in losses on mortgage back securities, requiring a $60 billion capital infusion from the Swiss government to keep from going under. In 2008 it paid out $19 billion to clients it had duped into buying...
by Tim Delaney | Nov 9, 2012
Tesla Motors has drawn a lot of attention for its sleek, high-performing electric cars. Its Roadster has been an enviro-celebrity favorite for several years, and its new Model S sedan is getting great reviews. The company has been trying to scale up to large-scale...
by Ron Carleton | Sep 26, 2012
The Background: I was a vice president at a global bank, responsible for a diverse group of clients in North America. One of my clients was considering a major reorganization of its business and restructuring of its balance sheet, and it hired my bank as financial...
by Tim Delaney | Sep 1, 2012
Last October, David Einhorn, head of Greenlight Capital, a hedge fund famous for taking short positions in Lehman Brothers’ shares before Lehman failed, attacked Green Mountain Coffee Roasters’ in a presentation at an investors’ conference. It was a...
by Tim Delaney | Jun 23, 2012
The shipping industry is in rough waters lately. In many categories, global capacity exceeds demand, and shipping rates and ship values have sunk to near-abyssal lows. Take the VLCC (“very large capacity carrier”) tanker business, for example. Back in 2005...
by Ron Carleton | Mar 30, 2012
We often tell our clients that a company does not file for bankruptcy on a particular day because it has too much leverage, or because it has a bad management team, or because it has a competitive disadvantage. All of these factors may eventually drive a company out...
by Tim Delaney | Mar 10, 2012
Kodak’s cash burn was a big concern among analysts in the last months before the firm’s bankruptcy in January of this year. Cash burn is a term that gets thrown around a lot when companies are in trouble, but it’s hard to find a definition for it in books on...
by Tim Delaney | Feb 26, 2012
At a lunch meeting in July 2011 to go over his concerns about massive, unexplained fees linked to Olympus’ acquisition of Gyrus in 2008, Michael Woodford, the new President and CEO, got the first sign his job was in danger. Chairman Tsuyoshi Kikukawa and Group...
by Tim Delaney | Dec 31, 2011
By the time they grew to $1.5 billion, Michael Roseman, MF Global’s Chief Risk Officer, was concerned about the firm’s positions in bonds of Italy, Spain, Portugal, Ireland and Belgium. He was worried the trade might endanger the entire firm if the financial problems...
