Wow, did that PR trigger overuse of my ignore button.
After a quick read, I note:
This did not involve MBlock at all, it was all inside accounty error and some revenue recognition regarding royalties on kcups (does this mean the SEC is happy now?)
No fraud or manipulation found.
Company internal controls were weak and to be upgraded.
PriceWaterhouse still on board and approved the news.
Total impact over 3 year and 3 quarters was a total of FOUR TO FIVE CENTS. Ok, they thought 3 cents earlier, but they certainly have gone through everything with fine tooth comb now. Given the earnings numbers GMCR was putting up, I don't think a penny or so per year is significant!!!
If you read the fine print, they are getting an extension until Dec 9 to file 10k, so I guess CC won't be until right before that.
Great news indeed. Unfortunately for myself, after a 6% drop I sold off my small position about 3 weeks due to my split personality that errors on the side of caution. Am I kicking myself right about now "YUP", However, my other side that wants to buy in at even smaller position than before Monday says "wait" I smell a big pump, them a sale off Tueday. Maybe I'm over thinking this........any thoughts
I would try to buy in the pre-market. I see the runup continue on Monday as the realization sinks in and spreads that GMCR is back on track.
My scenario - the price continues upwards on Monday as the whales enter the picture again on the buy side and the shorts scramble to cover. Selloff on Tues? Maybe, but not to these levels. (IMO)
Don't know how this will play out in all the class action lawsuits, but I expect we will have to pay off the lawyers (80%) and stockholders (20%)for any weak handed stockholders who sold after the stock dropped.
all de minimus compared to skyrocketing growth and profits to come.
GLT all longs who kept the faith.
The fact that they do not have to apply the 5-6 cent re-statement to the Sept quarter is also good news.
Now we can get a clean number (save for all the legal expenses) for the quarter just completed.
Salt, have you lived in the public company world as a CFO? It is no reflection on her integrity or hard work when she was probably underpaid and overworked. BUT, GMCR institutional investors will expect an upgrade in the position. Fran was underqualified for her current responsibilities, IMO. Mr Market demands some human sacrifices on a regular basis. Possibly the auditors and Audit Committee also dropped the ball.
Now, the good news is they said there was no intentional fraud or some words to that effect. I am pretty sure fran and her staff are well intentioned and hard working. I hope they will get all the stock options they have earned. Reality is now we are in the bigger leagues and GMCR must step up and satisfy the big investors.
This too will pass.
This company as been growing rapidly, both organically and through acquisitions. Each acquisition requires the accounting systems to be integrated.
My concern is that the CFO seems not to be qualified for the role now that GMCR has grown so much. Maybe she was effective a year or two ago, but, the requirements of the job seem to have gone beyond her capabilities.
Couple misc replies to several comments:
First, you idiot shorts who say more bad news is coming b/c this does not address the M-BLock issue must not be able to read. The PR plainly states: "In addition, none of the financial statement errors are related to the Company’s relationship with M.Block & Sons, the fulfillment vendor through which the Company makes a majority of the at-home orders for the Keurig business unit’s single-cup business sold to retailers." Was that sentence too hard for you to read??
As to CFO resigning or being fired--I hope neither happens. This was a nickle mistake spread over 3.75 years!! No fraud, no manipulation, nothing intentional. Nothing that benefited her. Plus, the audit committee missed it and did not have enough safeguards in place, and the outside auditors missed it too. If she resigns, it looks like she did something worthy of a resignation. Same thing on firing her--GMCR seems to be a great employer and the largest private employer in the state. Why fire someone for a minor mistake, that I am not even sure can be laid totally on her shoulders. I think a resignation or a firing sends the wrong message, I would prefer a statement of support in light of the minimal nature of the error. Heck, your stock jumped 10% b/c it is only a minor issue (about 1 cents a year on a company growing and reporting big revenue and earnings money) and some of you want to fire someone when the news could have been bad but wasn't bad. Sorry, I don't get that thinking.
GLTA--especially the CFO--LOL
Stock will probably jump another $1 when they announce the CFO has resigned ...and another $1 when they announce a qualified replacement. Maybe a few of the audit committee will be recycled. Glad to see PwC approved the restatements. They may get fired too if BOD believes in shoot the messenger.
All in all a matter of a rapid growth company going through growing pains. This is a good thing (Martha Stewart).
It would be a real shot to the stern to the shorts,( I think you know what I mean ) if GMCR would come out monday pre-market and announce earning after the close on monday. It would the most fun we've had in about 18 months..
Whenever it happens, it still will be fun to watch...
Stealth, we treaded on each other, like thoughts.
I posted while trading was halted and I viewed news as positive.
Apparently the market agrees, up almost 10% after hours to $33.07 (up $2.77). So, I was wrong today in lightening up more on some IRA holdings, but you do what you do. Plus, may buy back Monday just to increase short pressure--LOL
The shorts here could be very screwed. The error involves no fraud or manipulation and the accountants agree. It is about one cent (plus a little) per year over 3.75 years. Also, SEC thing has been open for 60 days--my guess is this restatement resolves the SEC matter also.
So they restate when they thought they did not have to earlier--this takes care of the nickle problem once and for all. Mgmt did not have skilled enough people in accounting positions as they grew--so they have to fix it--hire some qualified bodies and do some training. Growing pains are not fraud. Our market leading company is intact and moving forward.
Bottom line--they made a mistake. I wish it had not occurred, but mistakes happen. It is not fraud, it is a "nickle" deal over 3.75 years. Those shorts hoping for manipulation and fraud should be worried, very worried.