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detecting a sinking public corp?

Was wondering if anyone any tips for recognizing a corporation that's in trouble - specifically a public corp.  If you've worked in a public corp, you'll know that rank & filers know about as much as the stockholders.

How much importance should these things hold:
* stock price tanked
* restating earnings (voluntary, non-criminal)
* reverse split announcements
* low trade volumes

.
Monday, June 14, 2004

Watch to see if they are losing their customer base. Are complaints up? Find out if deliverables are up or down vs past years. The backlog of future shipments is important. Is it shrinking or expanding? Check whether they are paying their bills on time. If creditors are being "stretched" beyond the standard 30-net, there's cash flow problem. See if any executives have suddenly fled or been purged. If the number of company memos insisting everything is fine has increased significantly, then it ain't.

old_timer
Monday, June 14, 2004

Add to the list:
* Heads of the company cashing out stock
* Change in # of stores or other business locations within a given time period
* Change in business focus
* Change in # of employees through layoffs or hirings within a given time period

Vault.com can help you assess a company's health, although not directly.

Nearly Nameless
Monday, June 14, 2004

Also examine other companies in that sector....how are they doing? 

Yo
Monday, June 14, 2004

Also add: increased numbers of bizarre all-company memos about such things as use of paperclips, cessation of free coffee, requirement to take public transportation to and from the airport on business trips, etc.

Ron
Monday, June 14, 2004

Also you won't see the senior executives around much, and you will start to see mysterious visitors arrive.

They'll be creditors demanding payment or settlement arrangements. No-one will want to talk about it.

.
Monday, June 14, 2004

http://www.f%75ckedcompany.com/

Celebrating 1 year of not working for one.
Monday, June 14, 2004

Found it interesting that RedHat's CFO just left the company, days before a quarterly report.  That is very often -- but not always -- the sign of an impending (ahem) issue with the financials.

http://badblue.com/blog
Monday, June 14, 2004

What does that link lead me to

http://www.fuckedcompany.comom/

what's .comom and how did it get there?

www.MarkTAW.com
Tuesday, June 15, 2004

In my experience senior managers having impromptu meetings in the stairwell, which are held in the hushed tones of minor Shakespearean villains and break up as soon as another member of staff appears, are a bit of a give-away. 

a cynic writes...
Tuesday, June 15, 2004

It looks like a weird buffer bug in IE Mark - I'm bored, so I checked what was going on with a proxy...  The browser requests /redirect.asp?http://www.f%75ckedcompany.com/ from discuss.fogcreek.com which replies with a HTTP/302 redirect to http://www.f%75ckedcompany.com/.  The browser then seems to unescape the characters from the URL but not alter it's length so we end up with part of the old URL on the end.  If you try this url I'll think you'll see it happen even more:-  http://www.f%75%75%75%75%75company.com

FireFox doesn't have that bug but it doesn't unescape the URL so it can't get to the website either.

(Can anyone tell exactly how bored I am today?)

R1ch
Tuesday, June 15, 2004


1) Cessation of Bonus Program for staff.  It may actually get larger for managers ...

2) The difference between excellence and medocrity is about a 1% higher merit increase.

3) Rapid increase in number of managers and creation of management layers.

4) "You just don't get the big picture" (TM) attitude about why some decisions are made.

5) "Eating the seed corn" - Penny-Pinching that fosters low morale and turnover.

6) Annual Financial statements consistently indicate declining revenues but increases profits, though "Agressive cost controls and streamlined processes"

7) Executives start talking a language you don't understand.  Something about synergizing the enterprise ...


--> Basically, there's a big difference between the people that want to create a highly profitable, successful company and the peoplke that want to work for one.

When you stop attracting the first set of people and attract the second, you're in trouble ...

Regards,

Matt H.
Tuesday, June 15, 2004

* stock price tanked
* restating earnings (voluntary, non-criminal)
* reverse split announcements
* low trade volumes

In answer to the original post:

Normally the stock will not decline steeply in the absence of news, so I pay attention to the news more than the price. Earnings restatement is very common for large corporations, so there it's not as worrisome. For a small company, I would be more concerned. A reverse split usually comes during the death throes, so hopefully you figured out that the company was headed into the abyss long before that. On the issue of volume, I would say that there are plenty of going concerns that only trade in volume a few times a month, so I don't think you can make a general rule from that criterion. I believe insider sales hold much more promise as a forecaster than anything else. The trick is figuring out if the CEO is selling because the company is in trouble, or because it's spring, and he needs to get his 50-footer refitted for the boating season...

Rob VH
Tuesday, June 15, 2004

-->The trick is figuring out if the CEO is selling because the company is in trouble, or because it's spring, and he needs to get his 50-footer refitted for the boating season... <--

One of the RedHat executives had to sell a bunch of stock just after the dot-crash.  It seems that the bank called in the construction loan on his multi-million-dollar mansion, and he needed the cash to pay them.

So, just because you see an effect (exec sells a boatload of stock), doesn't mean that the obvious cause (company in trouble) was the true reason behind it (banker got nervous).  Do your research.


Tuesday, June 15, 2004

You guys rule.

.
Tuesday, June 15, 2004

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