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Keurig Green Mountain, Inc. Message Board

  • caustic_fred caustic_fred Jan 7, 2011 9:51 PM Flag

    Tick tick tick tick ...

     

    When will the next accounting irregularity be revealed?

    This company is supposedly profitable yet it requires a constant infusion of cash to sustain operations. Where does all the cash disappear to? Inventories, accounts receivable, so they say. As long as investors and banks keep the cash flowing, these guys can keep burning. When the music stops, don't be holding shares.

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    • That is the premise behind my small short. I went to the store and am beginning to see other versions of the single cup idea. Love K cups but think big boys will likely begin to pressure margins with competing systems.

      I know K cups were first and dominate the market. So did Playstation for about 5 years until someone decided to get in on a good thing(XBOX). IPADs will have another 2 years or so of near dominance but eventually a valid alternative will arise. That is always the cycle---innovators get a nice run and eventually others crowd in to compete.

      Even if the new upstarts don't win in the end, margins typically suffer as the dominant entrenched player cuts pricing to maintain market share. Like the product but think the stock is too rich here.

    • Chris & Sean: Agree 100%, GMCR is a good little growth company that has "crossed the chasm" of market acceptance and is now working to get to the next level of mainstream public company. I focus on the financial and administrative growing pains where I have a little experience.

      I took a look at the GMCR website and found that only Davis and Mardy have significant financial experience. I don't know if GMCR have bigtime Investment Banking and Legal partners who regularly sit in on BOD meetings. Looking at the VanHoutte acquisition, I noted BoA/Merrill Lynch and CIBC listed as bankers and Ropes Gray as counsel. Ratke (CFO) appears to have solid experience and I'm sure sits in on at least parts of the BOD meetings.

      Except for Daft (ex KO CEO) the rest of the 9 member BOD is heavily weighted toward privately owned/entrepreneurial types (esp Stiller) and mid-level operational and consulting types. Many don't have much stock ownership (except Stiller, of course). He is the source of the spirit of the company but unproven as midcap S&P CEO.

      I love the company, but tick,tick,tick. clam


      The rest of the board has

    • seangorham@rocketmail.com seangorham Jan 8, 2011 5:01 PM Flag

      GMCR has done a good job up to this point. The fast moving single cup business has taken everyone - even the big player - blindly. Couple this with Kraft - with its own issues after buying Cadbury - and coffee being only a small part of Krafts business, along with SBUX (who I think did not give the single cup idea merit) equals a lot a new eyes and ideas looking to slow GMCR, or pass them all together.

      GMCR - 88% of revenue comes from one product, the K-Cup. The amount of money they gross is less than the profit of Nestle's. Now that this market niche has been exposed - the big money players will come in hitting hard - I am not sure the right management is in place for that.

    • You're an idiot and I hope you have a miserable weekend worrying about your short position in GMCR.

      You really should worry, too. Have you followed this company for a long time? Have YOU reviewed the financials? Or are you investing on bad headlines and Cramer's advice?

      You deserve to lose all that you are losing.

      The accounting is not fraudulant, it is weak. Everybondy knows it so if you're investing on that thesis, you're making decisions on something everyone already knows. The accounting and systems will be fixed.

      The cash is being used for acquisitions and capital expenditures to expand K-Cup manufacturing. Demand is doubling every 12 months. The company needs to invest in new capacity, like most growth companies.

      Go buy a Keurig and sample the product. It will be money well spent. Stop listening to Cramer and stop investing on headlines.

      Enjoy your losses from your short position. I just may be the long on the other side of your trade. If so, a sincere thank you.

      • 1 Reply to chrisnd01
      • Obviously these shorts are very worried. There must be reasons for the stock to spike up in a down day and traded close to the high of the day at market close. That's why these characters have come out in droves to rehash the "accounting" issue.
        The action of the stock this week has been great. Ending the week in such a strong manner may signify something significant in store for the co. Next week should be very interesting for longs and devastating for shorts.

 
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