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Chanos Sees Cash Flow Declining At HPQ

|Includes:AA, AIXG, BAM, BBRY, FSLR, HP Inc. (HPQ), HUSA, ISNS, MT, NOK, PCP, PMFG, SCIL, SNE, SNMX, SPWR, STRI, SVU, TSTC

originally published at my blog

Today Jim Chanos came out on CNBC TV and highlighted to the world the declining Cash Flow at Hewlett-Packard.

Below are two charts of HPQ's quarterly operating cash flow statistics showing their recent declines.
click to HPQ Stockdiagnostics 20 quarter OPS chart
click to HPQ Stockdiagnostics 20 quarter FCF chart
click to HPQ Stockdiagnostics Long Term OPS & FCF Growth Tables

Chanos from CNBC transcript in video link:
"those acquisitions have enabled them to maintain a revenue base and see a declining cash flow base. those are maintenance capital expenditures or maintenance r & d hidden as acquisitions. and when you value the company, when you begin to look at the fact that this company has purchased its r & d, capitalized it, if you will, r & d is normally expensed, you begin to see a totally different picture. look at the middle of the left table which shows you that the free cash flow four buybacks and dividends, but after cap and acquisitions a much different animal and has turned negative. in addition, the balance sheet has been destroyed here. all right"

A look at today's morning posts at Equities Research with recent Stockdiagnostics Downgrades.

 

 

company ticker date Downgrade $ Close Time % Return
Houston American Energy HUSA 5/23/2011 $17.25 $1.06 14m 94%
First Solar, Inc. FSLR 5/10/2011 $128.51 $14.46 14m 89%
Telestone Technologies TSTC 12/2/2010 $11.10 $1.71 18m 85%
SuperValu, Inc. SVU 1/192009 $13.32 $2.28 30m 83%
Nokia Corporation NOK 8/25/2011 $8.17 $1.69 15m 79%
SunPower Corporation SPWR 5/18/2011 $21.10 $4.42 14m 79%
STR Holdings, Inc. STRI 5/10/2011 $16.35 $4.15 14m 75%
Aixtron S.E. AIXG 3/7/2011 $42.31 $12.91 17m 70%
Research In Motion RIMM 9/26/2011 $21.68 $6.92 10m 68%
Scientific Learning Corp. SCIL 3/16/2011 $3.00 $1.05 16m 65%
Senomyx, Inc. SNMX 5/16/2011 $5.92 $2.18 14m 63%
GrafTech International,Inc. GTI 5/2/2011 $22.57 $8.88 4m 61%
Image Sensing Systems ISNS 4/4/2011 $13.50 $5.25 16M 61%
Sony Corporation SNE 8/24/2010 $28.07 $12.30 23m 56%
PMFG, Inc. PMFG 5/24/2011 $18.00 $8.00 14m 56%
Arcelor Mittal NY Registry MT 5/16/2011 $31.92 $15.06 14m 53%
Alcoa Inc AA 4/25/2011 $16.67 $8.28 17m 50%
Titanium Metal Corporation TIE 5/13/2011 $18.86 $11.09 14m 41%
Stocks: HPQ, HUSA, FSLR, TSTC, SVU, NOK, SPWR, STRI, AIXG, BBRY, SCIL, SNMX, BAM, ISNS, SNE, PMFG, MT, AA, PCP