Wednesday, July 18, 2012

Chanos Sees Cash Flow Declining at HPQ

Today Jim Chanos came out on CNBC TV and highlighted to the world the declining Cash Flow at Hewlett-Packard.

Below are two charts of HPQ's quarterly operating cash flow statistics showing their recent declines.
click to HPQ Stockdiagnostics 20 quarter OPS chart
click to HPQ Stockdiagnostics 20 quarter FCF chart
click to HPQ Stockdiagnostics Long Term OPS & FCF Growth Tables


Chanos from CNBC transcript in video link:
"those acquisitions have enabled them to maintain a revenue base and see a declining cash flow base. those are maintenance capital expenditures or maintenance r & d hidden as acquisitions. and when you value the company, when you begin to look at the fact that this company has purchased its r & d, capitalized it, if you will, r & d is normally expensed, you begin to see a totally different picture. look at the middle of the left table which shows you that the free cash flow four buybacks and dividends, but after cap and acquisitions a much different animal and has turned negative. in addition, the balance sheet has been destroyed here. all right"


A look at today's morning posts at Equities Research with recent Stockdiagnostics Downgrades.


company
ticker
date
 Downgrade
$ Close
Time
% Return
HUSA
5/23/2011
$17.25
$1.06
14m
94%
FSLR
5/10/2011
$128.51
$14.46
14m
89%
TSTC
12/2/2010
$11.10
$1.71
18m
85%
SVU
1/192009
$13.32
$2.28
30m
83%
NOK
8/25/2011
$8.17
$1.69
15m
79%
SPWR
5/18/2011
$21.10
$4.42
14m
79%
STRI
5/10/2011
$16.35
$4.15
14m
75%
AIXG
3/7/2011
$42.31
$12.91
17m
70%
RIMM
9/26/2011
$21.68
$6.92
10m
68%
SCIL
3/16/2011
$3.00
$1.05
16m
65%
SNMX
5/16/2011
$5.92
$2.18
14m
63%
GrafTech International,Inc.
GTI
5/2/2011
$22.57
$8.88
4m
61%
ISNS
4/4/2011
$13.50
$5.25
16M
61%
SNE
8/24/2010
$28.07
$12.30
23m
56%
PMFG
5/24/2011
$18.00
$8.00
14m
56%
MT
5/16/2011
$31.92
$15.06
14m
53%
AA
4/25/2011
$16.67
$8.28
17m
50%
TIE
5/13/2011
$18.86
$11.09
14m
41%

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