Green Mountain’s stock has performed well, but the company’s prospects may not be as good as some people think, Einhorn said at the 7th annual Value Investing Congress.Calling his presentation “GAAP-uccino,” Einhorn said that using one of Green Mountain’s products which offer single serve cups “is a very expensive way to drink coffee at home,” while going through some 110 powerpoint slides.He called on the company to improve its disclosures, and warned that the market for its products is smaller than people who like the stock think.Einhorn’s stock picks are closely watched ever since he was among the first to raise doubts about accounting practices at now bankrupt investment bank Lehman Brothers.While Einhorn is worried about Green Mountain’s accounting and shipping practices, the company has been a favorite with hedge fund managers such as John Thaler of JAT Capital, in part because of the rapid growth of its Keurig single-cup coffee machines. Some people have referred to Green Mountain’s single-cup brew as the iPod of the coffee industry.”Between the high cost of the machine and high cost of the coffee, this is a luxury item,” said Einhorn, listing the arguments on why the share price should be trading closer to $3.50 — not roughly $9 where it is now.Einhorn said that capital spending is rising quickly but the company is not detailing exactly where the money is going.He also said that an inquiry by regulators, launched a year ago, into the company’s relationship with a fulfillment vendor who helps sell the products to others, has not been closed.Green Mountain shares were down 11 percent at $82.07 on the New York Stock Exchange.Greenlight Capital, which has about $8 billion under management, is down a little more than 5 percent for the year.
* Incivek is Vertex’s recently launched hepatitis C drugBy Toni ClarkeOct. 13 (Reuters) - IMS Health, which provides prescription
data and other services to the pharmaceutical industry, said it
is revising estimates of the number of prescriptions written in
late September for Vertex Pharmaceuticals Inc’s
hepatitis C drug Incivek, sending its shares up nearly 7
percent.Cambridge, Massachusetts-based Vertex’s shares had fallen
more than 20 percent since Sept. 21 amid concern that
prescriptions for Incivek, its key drug, were growing more
slowly than expected.”A significant portion of Incivek mail data was not
reported to IMS beginning with data week ending 9/23/11 through
data week ending 9/30/11,” IMS said in a statement to
subscribers after the market closed on Wednesday. “This
interruption should be resolved for the week ending 10/7/11.”A spokesman for Vertex declined immediate comment. However,
Geoffrey Porges, an analyst at Sanford Bernstein, said that in
his conversations with the company, Vertex said revised data
“seems likely to align the IMS data with their internal
impressions of the market,” namely, continued solid growth.Vertex will report sales from the first full quarter of the
drug in the United States when the biotechnology company
reports its quarterly earnings later this month.Incivek is one of two recently-launched hepatitis C drugs.
It competes with Victrelis, made by Merck & Co . Both
drugs promise a higher cure rate for the disease, which infects
the liver and can lead eventually to cirrhosis and liver
failure.Investors are closely watching the competition between the
two drugs to see which will gain greater market share, and are
sensitive to any indication that one or the other could be
flagging. The initial prescription data from IMS seemed to
indicate Incivek prescriptions were flattening, but IMS now
appears to have underreported the data.”This is the nature of any drug launch, and no
pharmaceutical or biotechnology company marketing analyst with
any measure of experience would make judgments about the
performance of a launch, and a product’s long-term potential,
based on one, two or even three weeks of market audit data,”
said Porges, who earlier questioned the validity of the initial
IMS data. “We trust that the investment community will be
discouraged from doing the same after this correction.”Vertex shares rose nearly 7 percent to $43 in mid-morning
trading on Nasdaq.
Two of the people said on Thursday a transction was close,
while a third person said that, while talks were ongoing, there
was no guarantee a deal would be struck.The Financial Times had reported a sale of the business
would be announced for as much as $1.5 billion in the coming
week.Genesys, which sits within Alcatel-Lucent’s enterprise
division, sells software for the operation of call centres and
video conferencing and is attractive for high margins.Permira had been in exclusive talks to buy the business
since July, but exclusivity came to an end in September, sending
Alcatel-Lucent stock down and raising doubts about an eventual
deal. [ID:nL6E7161N5}Permira’s proposal was selected because it was seen as
carrying less risk. Industrial players Avaya and Cisco
bowed out earlier in the bidding.Gores Group, a Los Angeles-based private equity firm and
Siemens Enterprise Communication had also been looking.Alcatel-Lucent and Permira both declined to comment.
* Results due after Thursday market closeBy Alexei OreskovicSAN FRANCISCO, Oct 12 (Reuters) - Google Inc’s
plans to acquire Motorola Mobility Holdings Inc and the
health of its advertising business will be in the spotlight
when the Internet search leader reports quarterly results on
Thursday.Analysts expect Google to deliver solid financial results
in the recently ended quarter, with revenue up more than 30
percent year-on-year at $7.21 billion.But the darkening economic picture is raising concerns that
advertisers could pull back on spending in the months ahead,
cutting into revenue and profit margins at Google, which
derived 96 percent of its revenue last year from advertising.”We’ll see some of those concerns if we start to see
pricing come down a little bit,” said Susquehanna Financial
Group analyst Herman Leung, referring to the cost per click
that Google charges advertisers.Still, he noted that Google’s online search advertising
should fare better than other types of ad businesses in a
slowing economy.Analysts polled by Thomson Reuters I/B/E/S expect Google to
post earnings of $8.74 per share, excluding certain items,
during the third quarter.Google has been on a spending spree for the past year,
boosting its headcount and acquiring dozens of companies as it
seeks to counter competitive pressure from the likes of
Facebook and Apple Inc .In August, Google announced plans to acquire mobile phone
vendor Motorola Mobility Holdings for $12.5 billion. The deal,
which Google expects to close late this year or early 2012,
will give it one of the wireless industry’s largest patent
libraries, as well as hardware manufacturing operations that
will allow Google to develop its own line of smartphones.But analysts and investors worry that Google is entering a
low-margin business in which it has no experience. A move to
build its own phones could also jeopardize support for Google’s
free Android mobile software from other phone manufacturers
such as Samsung Electronics and HTC Corp .Google’s stock is down 2.7 percent since mid-August when it
announced plans to acquire Motorola, while the Dow Jones
Industrial Average is up roughly 2.2 percent during that time.Investors are eager for more details about Google’s mobile
strategy, as well as for an update on the health of its mobile
advertising and its online display advertising.Google does not disclose results for either of those
businesses, although it provided investors with a peek in the
third quarter of 2010. The company said at the time that its
mobile business was generating revenue at a $1 billion annual
run rate and that its display business was generating revenue
at a $2.5 billion run rate.Google’s recently launched social networking service,
Google+, is also on investor radars. Its effort to challenge
Facebook’s dominance in the red-hot social networking market
got off to a fast start in June, collecting 10 million users in
the first two weeks.But Google has not provided an update on the service since
then, and some media reports have suggested that user interest
in the service is flagging.Google will report its third-quarter results after the
market closes on Thursday.
* PCCW shares ease 0.34 pct vs market’s 1.04 pct gainBy Lee Chyen Yee and Alison LeungHONG KONG, Oct 12 (Reuters) - Hong Kong’s PCCW Ltd
got the green light from shareholders on Wednesday for its plan
to spin off and list its multi-billion dollar telecoms unit,
paving the way for owner Richard Li to create the media empire
he has long yearned for.But whether Li can become a media tycoon like Rupert Murdoch
remains unclear given the financial constraints of PCCW, stiff
competition in the media industry and regulations in Hong Kong
and China that could tie his hands, analysts and bankers say.Li, the younger son of Hong Kong tycoon Li Ka-shing, is
expected to expand his television business in Hong Kong and
China in what’s left of PCCW, which consists of pay-TV operator
now TV, an information technology solutions business and some
property assets.”As the market stabilises, we will go full steam ahead with
the spinoff and listing plans that will benefit our
shareholders,” Li said during a shareholders’ meeting on
Wednesday.”For ‘now TV’, we are trying to enhance our production
capabilities because we would like to pursue developments in
overseas markets.”He will be keen to delve into media-related business in
China and expand the company’s Hong Kong footprint after PCCW
obtains a free-to-air TV licence, which will help boost its TV
advertising revenue, analysts and bankers say.”Richard Li has always been more interested in media than
the telecoms business,” said a banker in Hong Kong .”In his mind, it’s a valuable business, but whether the
public will look at it the same way will depend on how much cash
he can generate for the business.” The banker declined to be
identified because he is not authorised to talk to the media.TOUGH TARGETThere is no guarantee PCCW will launch the spinoff in the
near future.It has said it will not move ahead with the plan unless it
can raise HK$6.8 billion to HK$10 billion, and fetch a minimum
market capitalisation of HK$28.6 billion ($3.68 billion) for the
trust.PCCW will retain control of the trust by keeping an interest
of 55-70 percent.Analysts say the market capitalisation target set for the
trust seems challenging under current market conditions.”What I think is a problem is the market cap restriction,
because the current share price of PCCW alone would indicate
that it’s not going to happen,” Macquarie analyst Lisa Soh said.PCCW shares ended down 0.34 percent on Wednesday,
taking the company’s market value to HK$21 billion,
substantially lower than the projected market value of its
telecoms asset. That means PCCW will likely wait before
launching the trust spinoff.PCCW has said that if it managed to raise more than HK$7.8
billion, it would use the proceeds to expand its business, apart
from paying down the telecoms unit’s mountain of debt
of more than HK$36 billion.”Li’s focus will be on mainland China because he already has
invested in PPstream, so I think Li is looking at the Hong Kong
and China markets,” said Daiwa Capital Markets analyst Alan Kam.
PPstream is China’s largest video online operator.PATCHY RECORDLi first ventured into the media business in the 1990s and
made a huge splash in one of his early deals.The crew-cut, bespectacled executive started the satellite
network Star TV in the mid-1980s which he sold to media mogul
Murdoch for $950 million in 1995, just before turning 30. He
used the money to set up a company that eventually became PCCW.In 2010, Li joined hands with China’s influential Caijing
magazine to launch a newswire service called Cai Business
Indepth (CBID). But that flopped within months of launching due
to poor market response and high operating costs.In 2000, Li beat Singapore Telecommunications Ltd
in a deal to buy Cable & Wireless HKT for more than $30 billion,
aiming to create a telecoms powerhouse.However, the highly-leveraged deal proved too big for Li
with the telecoms unit, leading to the decision to spin off and
list the unit in the form of trust.The telecoms business generates steady cash flow but its
growth potential is limited as the market is matured.In Hong Kong, Li owns the Chinese-language Hong
Kong Economic Journal and English website www.ejinsight.com,
although he will probably be unable to inject the assets into
PCCW due to local media regulations. Therefore TV will be Li’s
focus.PCCW is among the few TV operators that have already applied
for a licence to provide free-to-air television services in Hong
Kong, which will challenge the dominance of Television
Broadcasts Ltd (TVB) .”Now TV is still very small and the free TV market is about
HK$4 billion in terms of advertising revenue, and it’s dominated
by TVB,” said Standard Chartered analyst Steven Liu.”If three more operators get licences, competition will be
fierce.”There could be more acquisitions in store, although Li will
have to make a good sales pitch to convince PCCW shareholders,
such as China Unicom (Hong Kong) Ltd .In 2006, China Netcom, now owned by China Unicom, objected
to Li’s plan to sell PCCW’s core assets to U.S. buyout firm TPG
and Australia’s Macquarie Group Ltd. .
