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First Trust ISE Glb Engnrg And Const ETF Message Board

  • ecanadian1 ecanadian1 Mar 17, 2003 11:13 AM Flag

    the fact is nobody on this board knows

    where FLM share price will be in a day, week (let alone longer) $0.5 or $5.5 - there are too many uncertainties.

    Without a doubt, the most important factor short term is the renegotiation of the revolving line of credit but there are plenty other wildcards too (e.g. payment terms with suppliers, SEC investigation, cash flow, cost of layoffs and reorg).

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    • It's obvious large multibillion dollar revenue companies with low margins usually dont know if the're really in the black or the red. Too much to account for and often not a good system in place to accurately account. I read a post a couple of nights ago where an employee of flm commented that revenues are discussed not profit. Fruit of the Loom had the same problem. Did alot of business but did'nt know how much it cost to produce their product. To the degree insiders dont know profits or losses we sure cant know. That's why you see Warren Buffet buy high profit margin companies. Low risk and internal growth are safe.

      • 4 Replies to faithjones2003
      • serpentleader_antivenin serpentleader_antivenin Mar 17, 2003 11:48 PM Flag

        BUT, my dear Faithjones2003, when you see the FLASH report...week after week...showing sales (therefore revenue) below forecasted plan, inventories excessively above forecasted plan, etc., etc., you can get a good picture of the picture......

      • What? "Large multibillion dollar revenue companies with low margins usually don't know if the're (sic) really in the black or the red." What?
        Fleming knows if it's making money or not. When you boil it down, it's not that complicated. Sell Price - Cost of Goods = Invoice Margin. Then add up the other income and expense lines and presto - you have a bottom line. Now if someone has "massaged" some lines and have a balance sheet that's not clean, or have taken unauthorized deductions then that's another story. But your opening statement is incomprehensible.
        I believe the earlier email you reference was talking about Fleming's practice of going after sales for sales expense. They often did this, but they knew beforehand whether or not it was profitable. Proformas can read anyway you want, but they knew. The best indicator of this was that the bonus program was based 60% on sales and 40% on profit. I sat in enough planning sessions, period end reviews, and weekly forecast meetings to know, the bottom line was discussed at length.

      • Well, a lot of different areas contribute to the P&L. Not just the price of goods delievered. Grocery requires tight cost controls as cash demands are high and everything from weather, fuel costs, and taxes can affect the bottom line quite a bit. Typically, companies like Fleming are run by old school executives that are OK with waiting for month-end reports that are already dated and it's late to make adjustments.

        I've never understood why a data warehouse isn't in place that presents essentially real-time information at the fingertips showing current financial, warehouse, and buying data.

        Instead, you tend to see data under various owners that isn't timely or in a format that makes it easy to see the weak and strong points of the business.

        Fleming will have to cut costs, take a charge, and consolidate the business into serving areas that are profitable only. At the same time they need to make sure cashflow is available to write the 20-250 mil dollars in A/P checks nightly.

        Without inflation, check float interest, Lifo, the bottom line is tight. I wouldn't be surprised to see wage reductions at somepoint here.


      • faith, you wrote: "Low risk and internal growth are safe." --- hey, no doubt that low risk is safe (or at risk safer)! I could not resist ...

        I agree with most of your comments. Note that if you want to follow Warran Buffet, just invest in Berkshire or their portfolio of investments.

        FLM is quite a gamble right now. I like the odds and I don't blame those who don't. There are lots of other bargains out there (both on long and short side) so no point getting fixated on FLM.

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