levin70

Huron Consulting's Spectacular Blow Up

Its a Staff Accounting Bulletin 5T Issue, in which the Company should have recorded an expense for principal shareholders paying expenses on behalf of the Company. In this case, using some of the stock received and giving it to its employees to boost their comp based on results. So the stock issued as contigent earnouts was recorded as a purchase price adjustment (balance sheet) instead of as compensation expense. Somehow the CEO and CFO knew, were consulted, etc and they did nothing or they actively participated is what I am guessing, but not really sure.

In regards to PWC - they aren't clairvoyant. To expect them to find out about private transactions between the selling stockholders and certain employees is beyond the scope of any typical FS audit.

Regards

Has Housing Bottomed Yet?

Has housing bottomed?

Depends on the market segment you are talking about. For houses within 2x and 3x median income, generally between $100K and $150K, there is some solidity to the concept that prices and sales have firmed to the point where the bottom, if not here already is definately forming. Go anywhere near $500K and up, and the answer is definately NO. Whereas inventory (outside of pending foreclosures) is trending down nicely at the $100K to $150K level, its still ballooning at $500K and up.

Hope this helps

Huron Consulting Group (HURN -68%) gets hit with a slew of downgrades following Friday's disclosure that it will need to restate its 2006-2008 earnings due to accounting errors, leading to an SEC probe and the resignation of its CEO/CFO. It's a mess for sure, but Notable Calls thinks it falls short of fraud.

Straight out of SEC Staff Accounting Bulletin 5T. If the CEO/CFO decided on a policy of don't ask don't tell then it sort of skirts the fraud issue, but it would then lead to issues of not doing their jobs. Why they decided to quit first I would assume.

Regards

More on Capital Ratios of U.S. Banks

Zach

My only comment to your comment is that the big 19 banks don't really hold much commercial exposure. The real exposure and real danger is to the medium and larger regionals. While they didn't play the residential subprime game, they most certainly played the commercial subprime game. And that is where they are hurting.

Regards

On Aug 02 09:45 PM Zachary Scheidt wrote:

> One of the biggest dangers to the capitalization rates (and ultimately
> to the banks survival) is the commercial real estate market. Many
> loans to developers and builders on the commercial side have not
> taken the hit that residential mortgages have. But the losses could
> simply be the next step of this ugly economic cycle.
>
> If losses begin to mount on the commercial real estate portfolios
> the capitalization rates could evaporate and it wouldn't surprise
> me to see TARP #2 (or #3). This would be very troublesome for not
> only the banking industry but for the overall economy (and ultimately
> the broader equities market). Risk control is still necessary although
> the current market would lull many investors to a false sense of
> security.
>
> Zach
> zachstocks.com

More on Capital Ratios of U.S. Banks

The article is slightly misleading.

If we include the exchange by C for its trust preferreds into common, we note that its TCE doubles from the first quarter measure. If we also include the asset sales by Citi, its TCE comes out almost triple what it was as of Q1.

This would raise the TCE of the Top 4 from the article presented 4.4% percent to over 6% (its a simple average weighting so if one increases by 3x its not hard to move the average)

This shouldn't imply in any way that I believe those to be adequate measures - for smaller banks a TCE between 6-7% is just fine really. But for banks that have grown to well over a Trillion in assets, the risk model should be adjusted (severly I might add, in such as way as some might consider it a penalty in fact) such that systemic protection is at a paramount

Regards

The Downside of Profits

Here's an idea guys

For everyone here reccomending that the gov't take over heath care, raise your Federal tax rate to 86%. You want it, you pay for it.

We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America

Last time I checked having the US gov't take over all health care decision making in the US wasn't part of the reason for the US gov't

Nuff said

'Blue-Dogging' Health Care

To the OP

There is a reason that private companies spend on G&A. They spend significant sums on fraud detection and prevention. They happen to do a much, much better job at it than medicare does. Not only that, but you introduce a medicare type system that mandates reimbursement at lower rates than what the system charges those in private policies, and those private policies go away. What's the problem with that - well then, 20% of the hospitals and 20% of the doctors go away with them. They don't want to make less than what they are making now and having to work twice as hard to get reimbursed 300 days later than private paying suppliers.

Imagine a gov't run program to devlier healthcare that turns into the DMV.

Yeah, because thats exactly what I want.

One Big Problem with Private Health Insurance

To the OP

You make a generalization of how the entire system is a failure based on one specific problem area. Also, you seem to suggest that recisission is only problematic for those that purchase individual polcies, wheras more than 80% of private healthcare is delivered through employer or other group type polcieis.

Btw - since public heath care systems are so much better - what is the survival rate in britain for breast cancer vs that in the US?

Try harder

United Airlines Shows How Not to Run a Business

Actually, with the new runway that came online in Nov 2008, O'hare isn't the disaster it used to be. Not saying its perfect by any means, but it definately helped, very noticable in fact


On Jul 27 12:10 PM DonFurio wrote:

> I could talk all day about this, but United suffers from several
> problems. Some of their main hubs for connections are Chicago and
> Denver, and that is huge pain for travel due to weather half of the
> year, and just general congestion for Chicago year round. Customer
> service is an issue, as I've noticed that way more of their customer
> service has been outsourced compared to other US domestic carriers.
>
>
> The guy in the article should not have waited so long and, yea bc
> of union work rules, it's not technically their job description to
> lift carry-ons.
>
> I think that the Union work rules combined with years of mismanagement
> have led to United's current woes. I actually do think they are worse
> than American, Us Airways, Continental and Delta.

United Airlines Shows How Not to Run a Business

To the OP

It's absolutely glaring that you have never been in a management position in a mostly union run business.

Union businesses are all about high fixed costs and how you manage volume given those high fixed costs. In addition, its about managing a situation that you are not entirely in control of. Union rules dictate what managers can and can't do, and they are there to protect the union workforce, even when its detrimental to the Company and thus the Union itself. When your revenue drops even 1 or 2 perecent, it can be devastating, having it drop more than 10%, well then it becomes all about who can i let go today to reduce my fixed cost footprint. Because you can't change things, the union work rules prohibit the kind of flexibility you need in that kind of environment. Thus, it becomes about reducing union headcount, because that is pretty much your only tool available. A pretty small toolkit. And one that tends to crush morale. But, unfortunately, thats the only tool available to the managers at UA.

If APPLE had an entirely union workforce and had to manufacture its products in the US under union rules, I don;t think you would be singing the same tune.

Regards

The Mac vs. PC Debate Was Never Clearer

Here's the point you fail to understand. Instead of paying Apple 3,000 for a $1500 computer, go buy an equivalent $1500 computer and pony up $250 for OSX. You have the same as an apple for $1250 less.

This is the difference between PC and MAC users. MAC users are stupid and lazy while high end PC users are the kids making billions on new internet and technology startups



On Jul 24 05:52 PM enkidu21 wrote:

> Here's a common and misguided theme emanating from the Apple haters:
>

The Mac vs. PC Debate Was Never Clearer

The study on the 91% compares sales at US retail storefronts.

The OP and the author of the study make the fundemental flaw in the analysis of this fact. High-end PC buyers don't shop at best buy. They don't.

High end pc buyers shop for components, and build the systems themselves. A few will buy from alienware (dell) or a few highend models from HP or others, but for the most part, sales of high end PC's just are not storefront driven

I can build an exactly comparable pc system for under $1300 that Apple sells for $2499. That's all markup for nothing more than marketing. Great for APPLE, bad for the consumer that buys that MAC.

So when you trumpet that MAC is great because of the brand image, be aware that that is all it is. The machine itself is nothing special.

Regards

The Treasury's TARP Cop-Out

Money is fungible.

If you have $5,000 in cash, put $5,000 more in your checking account from a loan and then spend $3,000 please tell me exactly how much of the $5,000 loan you have spent?

It really isn't that easy and the smart people in the room know it. And as for new lending - who exactly has their hands out for new loans? People who don't meet the definition of a quality borrower. The problem is those quality borrowers aren't asking for loans. So the banks could easily lend out more money - the problem is that they would turn into write-offs six months down the road. Not the way to run a quality bank.

Regards

California's Pension, Education Costs: Out of Control

California teachers are actually the highest paid in the nation. Certain teachers in teh K-12 system earn in excess of $100K annually, before including benefits. Not only that, but teachers have tenure, essentially guaranteeing them lifetime employment. Only should a teacher commit a felony can he/she be fired. Teachers don't have to care one whit about performance, as again they can't be fired.

So adding up all those salary, benefits and lifetime guaranteed employment, there is no wonder that there is an outcry from everyone other than teachers about them being underpaid.


On Jul 12 09:35 AM look closer wrote:

> Teachers are already some of the lowest paid workers in govt service,
> now you want to wipe out their pensions, yea GREAT!!! now we'll have
> to outsource for teachers too. God help the kids, this article was
> written by an idiot.

I Was Wrong About GM Bankruptcy

The only real alternative was the liquidation of the company, which would have yielded very little to the creditors

I've seen this bandied about so many times, but I have yet to see anyone, including the OP, back up this statement with facts.

And as for GM shedding its liabilities, the only liabilities shed were those of the bondholders. Correct me if I am wrong, but the UAW took no cuts in pay or benefits, so GM is still as unprofitable making cars today as it was before bankruptcy. The only difference is a reduction in total losses for $2 billion per year in reduced interest expense. But what;s the real difference between 6 billion annual loss and 8 billion, it;s still losing money on every car it builds.

Regards