Reading Crazy Eddies remarks regarding an 800k error for a company that does over 1B dollars a year in revenue is a joke. He obviously thinks its still the 1970'.
Any decent accountant could go into an large company today and find accounting errors. There is a big difference between errors and fraud and with large companies merging, dealing with multiple accounting systems and layoffs accounting errors are fairly common. The question is are they material and is the company trying to fix the errors.
Can any of us say for sure that there is or is not accounting fraud going on? The answer is no. I think it is reckless that hedge funds or mutual funds with millions of dollars can make such claims as they are shorting the stock.
The fraud issue in part concerns the shipping to M Block. The shorts this is simply a revenue recognition scheme (book revenue when shipped), with the inventory likely going right back. If so, this could be construed as stock fraud since it gives the impression of better earnings. The SEC is NOT concerned with criminal activity, since that is the domain of the Dept. of Justice. The Commission is concerned with civil issues, and they are certainly dilatory.
Sam E Antar is right on the money with this one, as is the Grumpy Old Accountants (actually accounting professors). I look at it this way: How can you have all this purported growth and negative FCF (CFFO is positive) without a fortune going into R&D? Something isn't right.
learn how to read a cash flow...they spent $75M on capex...fixed assets increased inline with capex...that is where operating cash flow is going back into the business to keep it growing...revenue has doubled from Q4 2010 to Q3 2011...inventory went up 50%...A/R is at less than 24 days of sales ar 3Q11...and it has been dropping...GMCR is going to kill earnings