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Bryce_in_TX

Bryce_in_TX
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  • Headwinds For New Tesla Financing: Estimates Declining And P/E Multiples At Historic Peak [View article]
    @Davewmart,

    "Self insurance in the fine tradition of Enron and the potential liabilities of 'guaranteed' resale value"

    The self insurance is the same as a product warranty. I know of a host of companies that warranty their products for two years, and in the case of the my window unit air conditioner, it is warranted or "self insured", for seven years. So, I may have mentioned this was like Enron in another post, however, Enron tried to use its own stock as insurance against the value of owning other companys' stock, so I don't think the two are comparable, in hind sight. Enron tried to create a hedge using its own stock, hedging with itself, essentially. Tesla's situation is different, IMO. It basically amounts to a warranty.
    Apr 9, 2015. 04:10 PM | 3 Likes Like |Link to Comment
  • Headwinds For New Tesla Financing: Estimates Declining And P/E Multiples At Historic Peak [View article]
    "Bryce, Sure, GAAP "distorts" the picture for many a company that want to report profits which aren't really there."

    They were there, IMO. I have pointed out why they were there. Just taking a third of R&D and capitalizing it, like VW and BMW under international accounting standards, Tesla would be at break even for 2013. Conceptually, companies spend on R&D for future revenues. US GAAP treats those expenditures as if there is no future benefit to them. US GAAP for R&D was written in 1974, with no updates. It is old and outdated.

    Adding back some of the guaranteed resale value sales, which currently is all deferred and not recognized as revenue in the current year, would put Tesla in the black for 2013. As I stated, the operating cash flow and free cash flow support that.

    "The fact that tesla had those tiny profits for a very brief period doesn't change the story."

    The profits were not "tiny" for 2013, IMO.

    "And in fact, those "resale values" , if they were properly accounted for, would make Tesla even less profitable (or rather, more unprofitable) than they already are and would make the balance sheet look even worse. "

    If you mean they should be treated as US GAAP is treating them and deferring all the revenue on a sale, I would say it depends. It depends on whether the fair market value of the car is worth more or less than the resale value that TEsla has guaranteed, at the end of 3 years. At present, the FMV of the cars is worth more than the guarantee, which means most customers will not turn the cars back into tesla, and the contingent liability that Tesla has booked for these cars is mostly bogus. So, current objective evidence is contrary to your assertion.

    "There are a couple of good articles here on SA dealing with this "guaranteed resale value" topic, just look them up."

    I understand the guarantee very well. As I said, current objective evidence is contrary to your assertion.

    "There are myriads of companies that went down and got bk, even though they posted one or more "profitable quarters" in their history. The fact remains that tesla is light-years away from being a profitable company and this is NOT due to their choice to becoming a big player or remaining a small one."

    I am sure there are many who posted yearly profits that eventually went bankrupt, Kodak and W.T. Grant come to mind.

    I am not a TEsa bull and Tesla is not profitable on a sustainable basis yet. However, in their early stage of growth in such a capital intensive industry it seems unrealistic for them to be profitable at this point.
    Apr 9, 2015. 04:00 PM | 3 Likes Like |Link to Comment
  • Tesla Has Outed The Good News Early, Now What? [View article]
    @WhosSideRUon,

    "The USD is a non-issue for a company this size that happens to be global. Anyone concentrating on the USD is wasting time. "

    The strength of the USD has an impact on Tesla's Gross Margin:
    "Given that the euro has weakened another 7% since the beginning of the year, this impacts our gross margin by about 2 percentage points."

    "In markets where the local currency has declined significantly versus the US dollar, we recently increased prices by only about half that decline. The benefit of this price increase generally begins in Q2 as it applies only to new orders and is not retroactive to the existing book of orders."

    http://bit.ly/1ceGaf1

    You are apparently rejecting objective statements made by Tesla itself. It is useless to debate any longer with you since you reject already established facts.
    Apr 9, 2015. 03:32 PM | 5 Likes Like |Link to Comment
  • Tesla Has Outed The Good News Early, Now What? [View article]
    @WhosSideRUon,

    "When Musk says R&D will rise in 2015 then we can start there"

    From the 4th Qtr shareholder newsletter:
    "Operating expenses are expected to grow roughly 12% to 15% sequentially in Q1, driven mainly by increased engineering and design efforts. "

    http://bit.ly/1ceGaf1

    That is R&D. I suspect Jonas is talking on a friendly basis to Tesla at regular intervals and know a lot more about R&D expenditures than you do.

    " I'm surprised an accountant would do such a thing. I guess maybe that's why you're a former accountant. Are details getting harder for you to keep track of? "

    He is very knowledgeable in the accounting area, I can attest to. Your ugly comments are out of line and totally baseless.
    Apr 9, 2015. 03:24 PM | 4 Likes Like |Link to Comment
  • Headwinds For New Tesla Financing: Estimates Declining And P/E Multiples At Historic Peak [View article]
    @Bizlike Investing,

    "TSLA has been non-GAAP profitable for two consecutive years. "

    And what governing body sets the standards for non-GAAP accounting?
    Apr 9, 2015. 03:12 PM | 3 Likes Like |Link to Comment
  • Headwinds For New Tesla Financing: Estimates Declining And P/E Multiples At Historic Peak [View article]
    @fxfx,

    "I especially love that "remain" part. As if Tesla had ever been profitable! LOL!
    Hilarious, Cecil, you made my day! :D "

    Tesla was profitable in 2013. GAAP distorts the picture, IMO. Adjust GAAP for Development expense that should be capitalized, plus some of the guaranteed resale value sales, and Tesla shows a bottom line profit for 2013. Positive operating cash flow of $258 million and positive free cash flow of $8 million for that year supports that.

    Any reply comments had better be respectful or I'll report you quicker than you can say "Tesla".
    Apr 9, 2015. 03:00 PM | 5 Likes Like |Link to Comment
  • Tesla Has Outed The Good News Early, Now What? [View article]
    @ToolGrinder,

    "Indeed, the accounting for this company is fascinating. The 10k filing begs answers for these observations:

    - The A/R, comprised mostly of regulatory credit sales, leaping to almost 5X that of a year earlier. As I have never seen an accrual for regulatory credit sales (even in a quarter in which none were reported), what are the accounting rules for how these are booked?"

    Where is your support that most of A/R is regulatory credit sales? The 10-K says:

    "Accounts receivable primarily include amounts related to sales of powertrain systems, receivables from financial institutions and leasing companies offering various financing products to our customers, and regulatory credits to other automotive manufacturers (OEMs)"

    Where is the support, besides speculation, that most of A/R are regulatory credits?

    What you are suggesting on a portion of cost of sales of lightly used vehicles going to marketing expense is that Tesla is committing fraud in recording the transaction and that the auditors are unaware of it or in collusion with it. Where is your support for that?

    I find your entire post "out there" and illogical. The company is audited.
    Apr 9, 2015. 01:44 PM | 3 Likes Like |Link to Comment
  • Headwinds For New Tesla Financing: Estimates Declining And P/E Multiples At Historic Peak [View article]
    @henrytx,

    "Why do naysayers continually emphasize old-fashioned ideas such as "PE" and "earnings"? "

    Old-fashioned ideas? You mean earnings is no longer important? Then why did Enron go under, or MCI Worldcom or any other company that cooked its books because its earnings weren't legitimate? What is your point? What you have said makes no sense.

    AT some point Tesla has to have earnings to reward its investors. Otherwise, any stock price above $ 0.01 is not justified.
    Apr 8, 2015. 12:14 AM | 11 Likes Like |Link to Comment
  • Headwinds For New Tesla Financing: Estimates Declining And P/E Multiples At Historic Peak [View article]
    Shaun H,

    "If you capitalize R&D the company is profitable."

    You can say the same thing about operating expenses.

    Research expenses are not capitalized, ever, under US GAAP or International Accounting Standards (IAS), so you never capitalize all R&D, ever. The question is: how much of R&D should be capitalized? Companies like VW and BMW capitalized about a third of R&D expense in 2013 and 2014. Under that scenario, adding back stock based compensation, which non-GAAP unjustifiably subtracts out, Tesla is still showing a 2014 Net Loss. Using Porsche's capitalization rate of 52%, you would have current year amortization of Development expenses, under that scenario, making Tesla about close to break even, but not quite. Non-GAAP also adds back interest expense on convertible notes, which also makes no sense to me, so I have added it back in the above scenarios, also. It depends on the capitalization rate. But adding back all R&D is a non-starter, not credible.
    Apr 7, 2015. 11:59 PM | 6 Likes Like |Link to Comment
  • Two Scenarios For Tesla's 2015 Unit Sales - 55K Vs. 39K [View article]
    @Market_Lost,

    "I just hope some posters here understand this is just discussing the minutiae, as the rules are strict on what you report, but don't seem to be so strict on where you report it. "

    And I wish some posters here would stop the mud slinging with the name Enron. There is little similarity that I see.
    Apr 6, 2015. 12:25 PM | 2 Likes Like |Link to Comment
  • Two Scenarios For Tesla's 2015 Unit Sales - 55K Vs. 39K [View article]
    @portatopia,

    "I was trying to tell him a company can do made appear to do everything right by the accounting book yes till committing fraud."

    Maybe you can cite an example? I know of no company in history whose accounting was correct that later turned out to be fraudulent.

    I find the reference to Enron offensive because, as I have stated, Enron's fraud was in its GAAP financials. This took the collusion of its auditors. It was showing greater and greater earnings to meet analysts' expectations, and hiding loads of debt through various means. I just don't believe that is happening at Tesla. The GAAP financials are showing greater and greater losses, and its cash flow is getting worse. If the auditors are in collusion with Tesla, and Tesla is committing fraud with the GAAP financials, it is an almost certain death sentence for their firm. I simply don't see signs of that.

    So, I would ask you what company that has been convicted of fraud had GAAP financial statements that were not fraudulent also?
    Apr 6, 2015. 10:43 AM | 2 Likes Like |Link to Comment
  • Two Scenarios For Tesla's 2015 Unit Sales - 55K Vs. 39K [View article]
    @MarketLost,

    " I'm going to go out on a limb and say that it may be due to the extended warranty issue that is covered under 90-1. This would definitely be an SG&A expense as it something added on. "

    Just to be clear I did research this before posting. I refer you to page 739 in the newer edition of the book I have:

    "Accrual Basis
    If it is probable that customers will make warranty claims and a company can reasonably estimate the costs involved, the company must use the accrual method. Under the accrual method, companies charge warranty costs to operating expense in the year of sale"

    http://bit.ly/18F9AAD

    I looked at my cost accounting book, where you would think this type of item would be discussed and no reference at all. Go figure. :)
    Apr 6, 2015. 10:31 AM | Likes Like |Link to Comment
  • Two Scenarios For Tesla's 2015 Unit Sales - 55K Vs. 39K [View article]
    Thanks MarketLost for the correction. I looked in my Intermediate Accounting book before replying and it said it was an operating expense, so I concluded it wasn't part of COGS, but as Tesla's SEC report shows, that was wrong. Apparently there are other folks under the same misconception, per the link:

    http://bit.ly/1C9doBr
    Apr 6, 2015. 12:49 AM | Likes Like |Link to Comment
  • Two Scenarios For Tesla's 2015 Unit Sales - 55K Vs. 39K [View article]
    @portatopia,

    "@Bryce_in_TX,
    There is no need to over complicate this. Both Tesla and Enron is fraudulent therefore the similarity.

    The financials are only the symptoms and can look right for many years before the fraud is uncovered (Does Madoff ring any bell?)"

    Oh........My............. lol

    "Because you failed to read the link you have no ground to claim that I failed to show TSLA is a fraud."

    The link is too freaking long. You obviously don't understand what the heck you are saying or you would have provided evidence in your posts, rather than referring me to a link as proof.

    So, ok, let's take one item from the link:

    "Understated (and misallocated) Supercharger expenses. Tesla is only setting aside (deferring) $500 per car to pay for Supercharging. They acknowledge that SGAA also includes some Supercharging expenses - but they don't say how much! Besides, ALL Supercharging expenses should be accounted for at the moment of sale, because Tesla has committed to paying for this forever - just like warranty expense is included in costs of goods sold and not expensed as incurred."

    (1) First, Tesla is not just setting aside $500 to pay for Supercharging. They are deferring revenues received that are a fee for the use of the superchargers.
    (2) Warranty expense is not a cost of goods sold item, it is an operating expense.
    (3) He is assuming the auditors don't have a clue as to how the supercharger expenses should be accounted for. I assure you, they do.

    My conclusion from this is that your link is filled with junk, and not credible, and you have no idea what you are talking about.
    Apr 5, 2015. 11:20 PM | 3 Likes Like |Link to Comment
  • Two Scenarios For Tesla's 2015 Unit Sales - 55K Vs. 39K [View article]
    @portatopia,

    "Do you need a PhD in accountant and JD to convince people that Enron was not a fraud? "

    You have presented nothing to show that Tesla is similar to Enron, nothing. Why you would bring Enron's name into it, I have no clue, other than to sling mud. You can claim Tesla is being fraudulent without mentioning Enron. If you mention Enron, you need to show the similarities. As I have said, there is little similarity, and you have failed to present anything credible in that regard.

    I didn't go through the entire material presented in your link. But I fail to see how it has anything to do with the financials, period. You have failed, as far as I am concerned, to show Tesla is a fraud. The financials look credible to me. Where is the fraud in them?
    Apr 5, 2015. 09:12 PM | 2 Likes Like |Link to Comment
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