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Author: markoose Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 10413  
Subject: Stupid or Crooked? (Tom9) Date: 10/3/2002 12:56 PM
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Just a couple thoughts...


1.) I'm barely familiar with the company, but is their business back-ended? If a good chunk of their revenue/profit comes from the last couple weeks of the quarter, then perhaps they really didn't know until the quarter officially closed.


2.) FWIW... a couple weeks back I was watching some CEO interview on TV. The CEO, who's been pretty successful in his industry for almost 20 years, stated that he has never experienced such a drop, so severe, so quickly, in business. It's become so bad that they no longer bother trying to forecast (or at least put much faith in their own numbers) for the year ahead, the quarter ahead -- or even the month ahead, for that matter. They are simply taking it week by week.

Anyway, my point? It happens, and sometimes rather quickly.
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Author: MSHH Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 7956 of 10413
Subject: Re: Stupid or Crooked? (Tom9) Date: 10/3/2002 1:20 PM
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Or both? One doesn't neccesarily preclude the other and after seeing this kind of thing happen time and again in the last few years I can only conclude that there is plenty of both to go around in the senior management and the boardrooms of these companies.

Little wonder that people are extremely reluctant to commit new funds to this game. Yes, ARM looks cheap now on the numbers but if you can't trust the management to have any better grasp of what is going on in their own business not cheap enough. And that's putting the charitable spin on what happened.

Really enjoyed the article, Tom. Sorry you got tagged this time.

Mike

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Author: TMFTom9 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 7958 of 10413
Subject: Re: Stupid or Crooked? (Tom9) Date: 10/3/2002 2:23 PM
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Thanks MSHH, great to hear from you. By the way, management an hour ago responded to my last night email, so we added their comments to the site a half hour ago. Here they are, with my comment at the end:

"'The entire industry had been anticipating an economic recovery in the second half of 2002 and unfortunately, this hasn't materialised. As this recovery has evaporated, we have experienced an increase in the back-end loading of our quarters. Furthermore, Q3 is a quarter that includes two 'holiday' months, making it effectively a one-month quarter -- this means we didn't expect to see significant bookings until September.

While our sales pipeline and backlog of signed contracts give us reasonable visibility in our business, the persistent difficult market conditions mean that the timing of the close of licensing deals is unpredictable. We were still working up to Monday to close deals, some of which have slipped into Q4. We do fully expect to close these deals, although there is still a possibility that other Q4 deals may slip to Q1 2003.'

Subpar lawyering again. Deal timing is an issue every quarter, and Q3 is vacation time every year. How gullible do they think we are?"


There is no way around the fact that their July press release is at the very least at odds with their current explanations and at worst -- well, you know. Shareholders have been played.

Buffett or bust! LOL.

Thanks again, and best wishes to all, and Fool on,
Tom9




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Author: 1971simon Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 7961 of 10413
Subject: Re: Stupid or Crooked? (Tom9) Date: 10/3/2002 2:56 PM
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Tom9,

Sorry to hear this happened to you, but if it is crooked what happens now?

I know nothing about ARM (except what I gleaned today) but will the SEC automatically step in or do they need someone to complain?

If they need someone to complain I would be very interested in you complaining and then reporting about the process. If not, you'll probably follow along anyway and I'd still be interested in hearing about it.

Might as well learn something now that the hit has already occurred.

Simon

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Author: TMFTom9 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 7970 of 10413
Subject: Re: Stupid or Crooked? (Tom9) Date: 10/7/2002 11:32 AM
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Hey 1971Simon:

First off, and in general to posters here, I've edited the piece to reflect that the debate over insider and instituional ownership percnetages doesn't change the point.

On whether and where to report: There is nothing to report in the U.S., because the company is not subject to the same SEC reporting requirements on insider trades as are U.S. based corps, to my knowledge. I don't know the British rules, but I'll bet others are looking there.

My point is that mgmt.'s statements in July and now raise serious questions because they either don't know their business or are lying about it. We edited the article at 1:45 last Thursday, and it said among other inane things, that it happened in part because there are two vacation months in Q3. Uh, excuse me, but was that new this year? I think not.

Also, there's a Bloomberg UK interview where Saxbe takes harder hits from British journalists and doesn't address the inconsistency of company statements. Amazing.

I'm sure that if there are any legal problems here, there will be a flood of people ahead of any of us. If it is just lousy management, well, the stock will reflect that over time. I just want them to say, "we were overly enthusiastic in July. We should never have made those kind of projections. we'll spend less time predicting the course of our business, and more managing it and reporting the realities."

A guy can dream, can't he? ;-)

Best wishes, and Fool on,
Tom9

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Author: jeff456 Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 7971 of 10413
Subject: Re: Stupid or Crooked? (Tom9) Date: 10/7/2002 11:42 AM
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Tom9

ARM prepare accounts according to both UK and US accounting rules and present both in their reporting.

I understand ARM are subject to SEC regulations - if only because of that perksy Nasdaq listing.

Insider trading rules in the UK are at least as strict as the US :-)

There are restrictions on insiders trading with the knowledge of announcements likely to affect the share price - I rather think last week's qualified in that regard.

Still no reply from ARM Investor Relations on my substntial holdings question. Still, she only got back from holiday today and may be a little swamped.

Jeff

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Author: TMFTom9 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 7974 of 10413
Subject: Re: Stupid or Crooked? (Tom9) Date: 10/8/2002 10:46 AM
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Hey jeff--

Nope, being listed on a U.S. exchange does not mean that a foreign corp is subject to SEC reporting requirements on the same level as all other U.S. based corps. If you trade ADRs, as ARMHY does, on the exchange, then it's very different. If you check any free online source for ARMHY's SEC filings, such as freedgar.com or sec.gov, you'll see what I mean. There's a world of difference between filing 6F and 20Fs, and filing 10Q and 10Ks, 8Ks, etc.

Anyway, I edited the column yesterday to take out the 62%/12%, because it's irrelevant to my thesis, and I finally realized that. And I added a link to a Bloomberg audio in which Saxbe further avoids the questions.

Best wishes, and thanks for your help,
Tom9



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Author: jeff456 Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 7979 of 10413
Subject: Re: Stupid or Crooked? (Tom9) Date: 10/8/2002 12:55 PM
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Tom,

Hmm, you're right. Interesting.

Closed my short yesterday. All done with ARM for a while - still think a decline to $1.40 or so is feasible - that's pretty close to the 28.5p IPO price. Means most of the brokers would still be massively in profit even at that price, just less massively than in the past.

Thanks

Jeff

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