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Bryce_in_TX

Bryce_in_TX
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  • Elon Musk's Statement On Chinese Scalpers Contradict Tesla Spokesman [View article]
    "Then you go on to contradict that precise principle by criticising non-GAAP which assumes 100% of operating leases will become revenues - which at least is a 99.99% reliable assumption and backed up by money in the bank and known trend data on market values that would have to change materially to make that assumption false."

    I don't argue with the "principle" you are talking about, but not accruing for returns seems unreasonable, and there are accountants who agree with me on that. In addition, you conveniently ignore the fact that non-GAAP takes out stock based compensation. That is not credible. You only use arguments which favor your position, but leave out those legitimate items which discredit non-GAAP and your position. What does that say about your arguments in context of your quote below?

    "I have to say this speaks far more to the heart and character of critic than to the criticised. "
    Mar 30, 2015. 06:12 AM | 1 Like Like |Link to Comment
  • Elon Musk's Statement On Chinese Scalpers Contradict Tesla Spokesman [View article]
    "Then you go on to contradict that precise principle by criticising non-GAAP"

    Yes, I criticize non-GAAP because Tesla CLEARLY AND UNMISTAKENLY is still emphasizing it over GAAP. The SEC requirement is that companies must give "equal or greater prominence" to GAAP numbers when presenting financial results. If GAAP and non-GAAP are presented together, GAAP should be reported before non-GAAP. Here are examples of properly giving GAAP the prominence as intended by the SEC.

    Annaly's earnings release. Notice they announce GAAP first even though core earnings are more meaningful?

    http://bit.ly/19zslpj

    Here is another company following the SEC rule, Realty Income Trust. The Net Income available to shareholders is GAAP. Notice it is first, before more valid measures of FFO and AFFO?

    http://bit.ly/19zsmd4

    Now look at Tesla's earnings release in their shareholder newsletter. No mention of GAAP results in the headlines. When GAAP and non-GAAP results are presented, it is always non-GAAP first. So, I ask you, Cecil, what SEC law gives Tesla the right to put non-GAAP first, before GAAP?

    http://bit.ly/1bICx0A

    "I have to say this speaks far more to the heart and character of critic than to the criticised. "

    My conscience is clear. No apologies for speaking what I consider the truth.
    Mar 30, 2015. 05:57 AM | 1 Like Like |Link to Comment
  • Elon Musk's Statement On Chinese Scalpers Contradict Tesla Spokesman [View article]
    @Cecil,

    "It could actually be interested in letting the bears talk the stock down in preparation for exercising its right to settle $600+ million of bonds in cash with the minimum both cost and hue and cry."

    You are misinterpreting the convertible notes (debt). It is the holders of the notes who have the right to convert the notes into cash and common stock or cash, not Tesla. If any of the note holders wanted to exercise their right, they probably already have. Saying using the bears to talk the stock down before they settle (Tesla has no right to settle the notes) the notes is just nonsense.
    Mar 30, 2015. 04:53 AM | 1 Like Like |Link to Comment
  • Elon Musk's Statement On Chinese Scalpers Contradict Tesla Spokesman [View article]
    @Peter,

    "Yes Bryce, and the cars WERE in transit until customers/scalpers cancelled their orders, at which point the cars became inventory available for immediate sale."

    But, there was no disclosure of the cancellations in the SEC reports. I am saying this was a material item that was not disclosed in the SEC reports. The cancellations showing up as excess inventory is not disclosure. This should have been openly disclosed in the SEC reports. Instead Tesla chose to hide the problem from financial statement users (the notes being an integral and necessary part of them).
    Mar 30, 2015. 04:43 AM | 1 Like Like |Link to Comment
  • Elon Musk's Statement On Chinese Scalpers Contradict Tesla Spokesman [View article]
    @Cecil,

    I am saying that the "non disclosure" of a material item such as this is not being transparent and that such a material item, if disclosed, might make a difference to an investor and to other users of financial statements (the notes to such statements being an integral part thereof).

    If you want to argue about the cancellation rate being a material item, then you are talking about accounting for the China sales under a different accounting method than GAAP. That is cool as long as that is noted as one of the "critical accounting policies" in Tesla's SEC reports. It's not, is it? So, again, under your hypothetical situation, there is non-disclosure of a material item.

    On the non-GAAP issue, Tesla has been notified by the SEC to stop emphasizing non-GAAP or GAAP but the emphasis is still there in the shareholder newsletters, and it is obvious.
    Mar 30, 2015. 04:37 AM | 1 Like Like |Link to Comment
  • Tesla: Forget Range Anxiety, What About Investor Anxiety? [View article]
    "Why not try debunking #1 ...' no profits'

    Tesla has had no profits in any year since inception in 2003.

    ROFL"

    By US GAAP, you are correct. But US GAAP distorts the actual economic reality for a number of industries, real estate being one, and master limited partnerships which use derivatives to hedge their oil and gas production being two. It's my opinion that GAAP distorts Tesla's R&D expenditures, as well as probably distorts Tesla's sales with the resale value guarantee. Adjusting for those two items, Tesla was well in the black for 2013.

    "6)Unreliable cars with "average" reliability according to Consumer Reports"

    Consumer Reports has given an average reliability score. I don't consider that "unreliable".
    Mar 30, 2015. 03:59 AM | 2 Likes Like |Link to Comment
  • Tesla's: Marketing Machine Continues To Deflect Demand Discussion [View article]
    " There are reasons behind the GAAP approach just as there are reasons for the international standards. Neither is wrong, they are simply different standards."

    Here I don't agree, and other accountants don't either. Conceptually the reason for R&D is for future positive returns. Thus, the reason R&D is undertaken is to generate revenue in future accounting periods beyond the current year. US GAAP has taken a simple approach to a very complex accounting issue. International standards recognize the value of development costs and have created a standard that attempts to measure those costs which benefit future periods. US GAAP agrees that R&D benefits future periods, but says it's too difficult to account for the expenditures and decides to just expense it all, despite the fact that conceptually some of the costs benefit future periods.

    " There would be more cause to complain about GAAP if Tesla was making long term R+D investments, but their own 10-K indicates that they are not doing so in any significant way. "

    I don't agree here, either. The simplest reason to understand Tesla's development costs benefit future periods is to take the Model X, as an example. We don't know the development costs involved with developing it, but I think it is safe to say those costs are substantial. Those development costs should be amortized over an estimated useful life of the production of the Model X, and not all expensed in the current period. Then the Model S just began production in the middle of 2012. Development costs for it should be amortized over an estimated production life for it, as well. So, I don't agree that Tesla is not making long term R&D investments. They are. R&D is an ongoing investment of an auto manufacturer, recurring every year to benefit future years, as evidenced by the percentage of R&D capitalized by companies such as VW (33% of R&D was capitalized for 2014) and BMW (35% of R&D was capitalized in 2014) and Porsche (52% of R&D was capitalized for 2013).
    Mar 30, 2015. 03:27 AM | 1 Like Like |Link to Comment
  • Tesla's: Marketing Machine Continues To Deflect Demand Discussion [View article]
    @GoAirForce,

    I have presented authoritative concepts from accrual accounting. The R&D for Tesla, net income or loss, and the operating and investing cash flows are distorted under GAAP. I have explained these concepts based upon my own understanding, backed up by support from the accounting profession. IMO, what I have presented is not misleading, rather provides a clearer picture of economic reality, as it relates to Tesla, than GAAP unadjusted.
    Mar 29, 2015. 04:48 PM | Likes Like |Link to Comment
  • Elon Musk's Statement On Chinese Scalpers Contradict Tesla Spokesman [View article]
    @Peter,

    You need to re-read my post just above. The 10-Q, 2nd and 3rd Qtr clearly stated the finished goods inventory was comprised of cars in transit for delivery to specific customers. (Build to order, remember?) I quoted the 10-Q, read it. It's not reasonable for those cars not to show up in revenue the next quarter. It doesn't take that long for the cars to be shipped and delivered. Yes, there is the evidence. Read the 10-Qs.

    Not to be transparent about this, the analyst telling him about scalpers and Musk pretending not to know, the emphasis of non-GAAP over GAAP, the tweet about ending range anxiety, all speak to the heart and character of the man.

    It's looking more and more like there are cockroaches under Tesla's hood.

    http://bit.ly/1EmkR6U
    Mar 29, 2015. 04:23 PM | 3 Likes Like |Link to Comment
  • Elon Musk's Statement On Chinese Scalpers Contradict Tesla Spokesman [View article]
    "So you made a false assumption reading a 10-Q and now you imagine others did that and felt mislead."

    No, Tesla made the statement the cars were in transit "for delivery", and that turned out not to be the case because of cancellations. It's like when you order something from Amazon and UPS tracking says it is "out for delivery". You anticipate the item will be delivered soon. Same with Tesla. It is reasonable to expect those deliveries to show up in revenue the next quarter. It's totally unreasonable not to expect that. It is on the onus of Tesla to be transparent and state that turned out NOT TO BE THE CASE in their SEC filings because the number involved is material. (See page 11 of 3rd qtr 10-Q and page 12 of 2nd Qtr 10-Q.) This is a material omission. No false assumption on my part, simply what Tesla said in their SEC Filings.

    "Finished goods primarily include Model S vehicles that were in-transit to our foreign locations for customer delivery. "

    http://1.usa.gov/1zZjvrm

    http://1.usa.gov/1lSKzSQ

    It should be evident from my postings that I am neither a bull or bear. Trying to keep both sides more objective.
    Mar 29, 2015. 11:38 AM | 3 Likes Like |Link to Comment
  • Elon Musk's Statement On Chinese Scalpers Contradict Tesla Spokesman [View article]
    It looks like the bonds, up to the principal amount of them, would be paid in cash if exercised. But since $1000 face value is convertible into 8.0306 shares, any value over the principal amount may be paid in stock or cash, it looks like. So, it looks like Tesla is out some considerable cash here. The hedges offset the dilutive effect of any shares issued, i.e. Tesla has the right to buy its own shares back. But, it looks to me like Tesla is out quite a bit of cash.

    Anyone understand it differently?
    Mar 29, 2015. 08:40 AM | Likes Like |Link to Comment
  • Elon Musk's Statement On Chinese Scalpers Contradict Tesla Spokesman [View article]
    "I am still unclear about the convertible bond thing. Some reports say the conversion is at $450 (not the exact number - I'm recalling from memory). Others say $125 (again, not exactly but something like that). Are there two different conversion traunches? I would have thought a $125 options would have been cashed in already, but maybe there is a date limitation on that."

    $660 million in notes is convertible at $124.52, effective for the 1st Q of 2015, so I would anticipate those have been executed by now. $2.3 billion in notes is executable at about $467.83, but those have not met the requirements whereby they may be converted into stock, yet. See pages 78-80 of the 2014 10-K.

    http://1.usa.gov/1GDd6Jo

    They have hedges set up for the convertible notes, so it's unclear to me exactly how all of this will impact shares outstanding and cash flow.
    Mar 29, 2015. 05:28 AM | 1 Like Like |Link to Comment
  • Elon Musk's Statement On Chinese Scalpers Contradict Tesla Spokesman [View article]
    "No Bryce, cars are not taken out of inventory until delivered."

    Yes I know. What I meant was the 10-Qs gave the impression they would soon show up as sold, but not so now. Musk played up the China connection as being a major sales region. But when it turns out not so, no mention of it in the SEC reports. Only because the unsold inventory came out in public media has he acknowledged it, IMO. An analyst is the one who broke the news that scalpers were buying the cars. Like he didn't know. The guy is not nearly as smart as some think. No mention of China in the SEC reports and no mention of cancellations either. A material omission. SEC needs to start an inquiry. These "cowboys" need to be brought in line and stop pumping the stock price on public stunts and announcements that turn out to be baseless. Musk needs to shut up, close his twitter account, and just execute.
    Mar 28, 2015. 04:30 PM | 5 Likes Like |Link to Comment
  • Elon Musk's Statement On Chinese Scalpers Contradict Tesla Spokesman [View article]
    Cecil,

    2000 believed to be sold cars from prior 10-Qs, now put back in inventory due to cancellations, is about $160 million in inventory and would represent about $215 million in revenue. That is material to revenues, Net Income or Loss, and to cash flow. It was expected that this inventory would result in sales in the near future, last year probably. Now that is not the case. No one said anything about it until it was disclosed through public knowledge.

    It is material if knowing or not knowing would make a difference to an investor or potential investor. Knowing now that this information may not have been disclosed because of unfavorable press or investor sentiment may be a material reason a person would not invest in the company, due to lack of transparency or dishonesty.
    Mar 28, 2015. 12:44 PM | 4 Likes Like |Link to Comment
  • Elon Musk's Statement On Chinese Scalpers Contradict Tesla Spokesman [View article]
    I think an inquiry is warranted at this point. That's all I have to say. I honestly believe they were well aware of what was going on and chose not to report it in the 10-K. An analyst has to tell Musk there are scalpers in China that he is unaware of? Right. Honest opinion, based on prior reads of other companies, like Enron, and personal experience and knowledge of human behavior and greed, as well as watching how Musk has behaved with other situations.
    Mar 28, 2015. 12:13 PM | 5 Likes Like |Link to Comment
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