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Bryce_in_TX

Bryce_in_TX
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  • Are Herbalife Revenues Materially Overstated? [View article]
    Brand new policy? How old is the policy?

    "Product returns and buybacks were approximately 0.1% of product sales for the three and six months ended June 30, 2014, as compared to 0.2% and 0.3% for the same periods in 2013."

    Looks like they have at least a year and a half of historical data to go on. NOt a lot, but it doesn't appear the policy is "brand new". If the return rates change materially, a change in accrual would be necessary, but not until then. At present the returns appear to be immaterial, meaning that SFAS 48 would not apply to the returns or reimbursements. There is some historical data to go on for 2014. 2013 may be another issue, if the policies were instituted in 2013 or late 2012.

    This looks to me like a pretty black and white issue. I'd be surprised if the auditors got it wrong.
    Jul 30 02:07 PM | 6 Likes Like |Link to Comment
  • Are Herbalife Revenues Materially Overstated? [View article]
    Forgot to include a link to SFAS 48

    http://bit.ly/1AzgIbM
    Jul 30 01:39 PM | 3 Likes Like |Link to Comment
  • Are Herbalife Revenues Materially Overstated? [View article]
    bobabouey said: "From the latest 10Q: 'Allowances for product returns, primarily in connection with our buyback program, are provided at the time the sale is recorded. This accrual is based upon historical return rates for each country and the relevant return pattern, which reflects anticipated returns to be received over a period of up to 12 months following the original sale. Historically, product returns and buybacks have not been significant. Product returns and buybacks were approximately 0.1% of product sales for the three and six months ended June 30, 2014, as compared to 0.2% and 0.3% for the same periods in 2013.'

    It appears that accruals for product returns are being made based on historical return rates, and most importantly, those return rates are immaterial for both product returns and membership pack reimbursements.

    As SFAS 48 states on page 7: "The provisions of this Statement need not be applied to immaterial items."

    IMO, the important factor is the Materiality of the returns and membership pack reimbursements, not so much the guaranteed buyback of these items.

    The 10-Q makes it clear that the product returns and membership pack reimbursements are Immaterial to the revenues and net income or loss of Herbalife. That means that the revenues and net income or loss can not be materially wrong due to this issue. It is a non-issue as far as I understand it, and per SFAS 48.

    I think PWC would agree with that. That's why they have audited the financials, and, I assume, issued an unqualifed opinion on the same.

    I agree with bobabouey.
    Jul 30 01:35 PM | 4 Likes Like |Link to Comment
  • Tesla: 4 Reality Checks For Bulls To Consider [View article]
    "If it was a big problem there would be a recall or a lot of people raising hell about it. "

    I didn't say "big", I said it "may be" a "material" problem for Tesla, and I specified how "small" that "material" might be. Recalls are when a company doesn't proactively fix the problems, isn't it? Not the case here.

    There seem to be " a lot" of replacements. What's gonna happen when the warranty expires? There "may be" "a lot" of people raising hell about it then, when they have to pay for the replacements themselves.

    Keep in mind, these are not your average car owners. These are Tesla believers, beta testers. Even in a snow storm, in sub freezing weather, driving at 55 mph, with no heat and heavy clothes on these folks swear by the car. The LAST THING they want to do is admit this isn't LUXURY or complain. No sir, they believe in the technology. Why would they raise hell about the car? But, when they have to pay for the repairs, reality may set in and it may turn out to be a different story.
    Jul 29 10:51 PM | 1 Like Like |Link to Comment
  • Tesla: 4 Reality Checks For Bulls To Consider [View article]
    "I already know the number is small cause I've seen plenty of comments from TSLA customers."

    Tell me the percentage then. No, you don't know.

    "You're the one searching out the problems and then complaining the problem is a large one when it is not."

    I think it may be material, not necessarily "large". Material can be as small as 5% of the total population.

    "How about you stop commenting about TSLA altogether until you go do the research to back up your nonsense."

    Surely you know better.

    "You're backtracking now. Go read your posts. You make the problems sound like it's a bigger problem than it is."

    Here is where I have qualified my statements:
    (1) "However, the weight of the car, the very significant torque on the drivetrain, as well as the stress the deceleration of the vehicle places on the drivetrain makes me think that the premature wearing out of the drivetrain may be a problem Tesla has to address and a potential reason for the resale value not holding up at the end of 3 years of use."

    (Note the words "may be a problem" and "a potential reason")

    http://bit.ly/UJFwg4

    (2) "As I stated, I don't know how big a problem the drivetrain is"

    http://bit.ly/UJFyV3

    (3) "Whether these concerns turn out to be material to Tesla remains to be seen."

    http://bit.ly/UJFyV5

    No, I am not backtracking.

    "You make the problems sound like it's a bigger problem than it is. "

    We don't know how big a problem it is, whether it is material or not. You think you do, but you don't. That's viewing the issue objectively, without bias. No authoritative data exists that we know of to support either side. Yet you claim to know.
    Jul 29 10:14 PM | Likes Like |Link to Comment
  • Tesla: 4 Reality Checks For Bulls To Consider [View article]
    "Now what you should do is figure out what % of cars are having that problem and disclose that as well. "

    You do it. I don't know how. Show me the percentage with problems out of the whole population. Prove your point. I think the reality is, we don't know how big a problem it is. I have repeatedly stated that I don't know if it is a material problem or not, both the tires and the drivetrain. I just see it as a potential material concern for Tesla. I emphasize, potential, not actual. However, you have stated it's not material. So, prove your point. Show some data. A "few people have had issues." How many is a "few". Is it material to Tesla. How do we know?
    Jul 29 03:39 PM | 1 Like Like |Link to Comment
  • Tesla: 4 Reality Checks For Bulls To Consider [View article]
    "I'm gonna go with what Tesla Model S drivers themselves have to say on this issue, and not what a FUDdite says."

    That is exactly what I am doing, seeing Tesla owners report their experiences on the Tesla forum. I didn't make the drivetrain failures and replacements up, nor the problems with the tires.

    To claim to understand my motivation is the ultimate in hubris. After all you called me a short several times. Better look at my posts defending Tesla on the fires and non-GAAP data. It will give you a better view of where I am coming from. Not a Tesla basher. Doing the best I can to interpret the data objectively, as I see it.
    Jul 29 02:29 PM | 2 Likes Like |Link to Comment
  • Tesla: 4 Reality Checks For Bulls To Consider [View article]
    "I own a 4x4 off road vehicle. If I take it off road and drive it like an idiot stuff is going to break. I can see you must by the type of kid that destroys his toys and complains later."

    This is assumption. If you read the Tesla forum, you will find that your assumption is false for some of these folks.
    Jul 29 02:27 PM | 1 Like Like |Link to Comment
  • Tesla: 4 Reality Checks For Bulls To Consider [View article]
    "The shorts just continue to focus on and magnify issues that aren't really issues."

    I doubt that the Tesla owners in the link I provided are shorts. They believe the drivetrain issue is real, as do other owners who have had tire issues at 4K to 10K miles. I regard your statement as Tesla bias.
    Jul 29 02:16 PM | 1 Like Like |Link to Comment
  • Tesla: 4 Reality Checks For Bulls To Consider [View article]
    Not an oil man, though my Dad did own a pulling unit in the 1950s. You misinterpret my motivation.

    10 out of 84 of the polsters in the link below state they have noise but can live with it.

    http://bit.ly/X1v7hB

    6 out of the 84 have experienced drivetrain failures.

    Tesla owners believe in the technology and are willing to be beta testers to get the bugs worked out. A little noise is not gonna deter them.
    Jul 29 01:11 PM | 2 Likes Like |Link to Comment
  • Tesla: 4 Reality Checks For Bulls To Consider [View article]
    "It's a $100k car you don't want on the street from some noise in the drivetrain."

    Why not? After all, having to slow down from 70 or 75 to 50 or 55, with no heat, the radio off, in the dead of winter, and wearing heavy winter clothing, in order to reach the next charging station doesn't deter a Tesla enthusiast from buying a Tesla. So, this $100K car isn't being purchased for its luxury and its performance features. I mean what luxury is there in having to slow down and experience some uncomfortable cold in the dead of winter? So, it is the new technology, more than anything else which is driving the sales. If that doesn't deter one from buying a Tesla, a little noise certainly won't deter them either. I think there is more to the noise than just the sound, itself. It makes no economic sense to go to the expense of replacing the drivetrain if no damage will occur because of it. Doesn't compute to me.
    Jul 29 12:54 PM | 1 Like Like |Link to Comment
  • The Day I Sold Everything [View article]
    I respect your decision to get out of the market. However, I think a better way to navigate it is to buy when everyone else is selling (when there is a good correction), get in at a good price and buy more in increments if the market keeps going down, and stay invested. As long as the markets continue to exist, the averages will gradually continue to rise over time. That means that any dip or correction will be short term and your stocks will gradually increase in value over time, provided you stay invested.

    I bought "O" around $38.80 and OHI at $30 and $32. If they should decline below those prices I will be a buyer again. I keep 20% to 30% in cash, ready to buy in on a good correction. I'm a novice at investing, but this is working for me. It worked well during the market crash of 2008-2009. (oil and gas and a balanced mutual fund) I started buying in around 8800 and kept it up as the market declined. Came out smelling like a rose. I will do the same again. I cant time the market. As long as the markets continue to exist, I will be good. I love the monthly and quarterly dividends. It doesn't feel good when the market tanks and so do your stocks, however, I remind myself it's only temporary and it will eventually turn around. As long as the markets continue to exist, that axiom will hold true. If they don't, we are all screwed no matter what we do.

    http://bit.ly/UIBKUa
    Jul 29 11:41 AM | 1 Like Like |Link to Comment
  • The Day I Was Surrounded By Market Timers [View article]
    Thanks, Brad. I got into "O" at about $37.80 around Nov. 2012, based upon one of your articles, and have added a little since. Then I got into OHI based on one of your articles, also, around $30 and $32. I'm lovin' it and in both for the long term. I will be adding to the positions as the share prices allow. Thanks for this article and for your sound advice and wisdom.
    Jul 29 11:27 AM | Likes Like |Link to Comment
  • Tesla: 4 Reality Checks For Bulls To Consider [View article]
    "Can you cite one single case where an unserviced noise in the drive train has led to an actual failure?"

    No. I don't see a way to search for it on the Tesla Forum, no search function whatsoever. In the link I provided above, one owner has a "clunk" and his Model S quit on him. It went in for service but the "clunk" remains after service. However, if the noise is not an indication of possible drivetrain failure, why does Tesla replace it after such noise? Answer: because it may result in a drivetrain failure in the future.

    There are 2 journalists who had to have drivetrains replaced, Edmunds and Motor Trend, and the Model S quit on Edmunds. Then there is another auto journalist, Vincent Everts, whose Model S also quit on him. Three journalists who have had major problems with the Model S. What are the odds such problems experienced by auto journalists are unusual? Low, IMO. It's not the type of advertising a car company wants.

    http://bit.ly/1fYRKKF

    "I am just an EV enthusiast."

    Yeah, and the bias is showing, IMO.

    "So, how can we reconcile the fact that CR says not one single Model S owner reported a problem with the drivetrain, with the various reports of drive unit replacements?"

    I asked you to provide me with proof that no CR owner reported a problem with the drivetrain. You have not provided that proof, just an unsubstantiated statement. I don't believe you without proof.

    "I can only think of one way: That no case of drive unit noise has -ever- presaged an actual failure. Not one."

    That statement is based on an unsubstantiated claim that no CR owner has reported a problem with the drivetrain. Both are without credibility at this point. And besides, the 600 responses is not a scientific survey. The one I presented, where 25% of the drivetrains had to be replaced, is just as scientific as yours.

    "Engine failures for gas guzzlers under warranty are not -that- rare,"

    Show me a Model with multiple failures by multiple owners where the car is less than a year old. I dare ya, EV enthusiast.

    "Now when you presume to speak for "most" buyers and start bashing a company based on speculation rather than facts, you move from legitimate opinion to FUD."

    IT's simply my opinion, still legit for me.

    I am NOT trying to drive the stock price down or be overly negative on Tesla. I have defended Tesla on numerous occassions, including the 3 fires which occurred after the car hit road debris or crashed into a wall at high speed. I've also recently defended Tesla on an article about the car breaking in two at high speed. But, I do see the drivetrain and the excessive tire wear as serious problems. That's just me.
    Jul 29 01:24 AM | 3 Likes Like |Link to Comment
  • The Tesla Fear Mongering Must Stop [View article]
    "All of these are usually not good for a manufacturing company."

    I would agree, if a company doesn't take deposits on its products. In Tesla's case, more finished goods inventory may be an indication of turning more deposits into revenue and sales, since the inventory has already been claimed by purchasers.

    The doubling of inventory maybe a bookkeeping formality. Once the car is picked up or delivered, it would go from finished goods to cost of goods sold. I don't know that the doubling of inventory has any significance whatsoever, except that Tesla has more inventory to immediately turn into sales, since the inventory has been pre ordered.
    Jul 28 10:40 AM | 3 Likes Like |Link to Comment
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