Friday, October 28, 2016
The hated bounce: Elementis edition
Elementis is a specialty chemical company which makes rheology modifiers (go on - look it up).
The company has two customer groups that are problematic - oil drillers and ship painters.
They provide additives for oil drilling mud to allow difficult drilling. And they supply additives to paints to change their technical characteristics - which have their most profitable use in painting ships.
Both shipping and oil drilling have been difficult.
The company has had six straight profit warnings. Elementis never became unprofitable - just less profitable.
Today Elementis put out an utterly uneventful trading update.
And the stock rose ten percent.
When you have had six profit warnings no news is good news.
Thursday, October 13, 2016
Measuring how bad Twitter is
But the best thing sent to me was a financial history of Facebook. The first copy came from Twitter.
Here are the numbers.
Year Ended December 31,
(in millions, except per share data)
Consolidated Statements of Income Data:
Total costs and expenses(1)
Income from operations
Income before provision for income taxes
Net income attributable to Class A and Class B common stockholders
Earnings per share attributable to Class A and Class B common stockholders (2):
Total costs and expenses include $1.84 billion, $906 million, $1.57 billion, $217 million, and $20 million of share-based compensation for the years ended December 31, 2014, 2013, 2012, 2011, and 2010, respectively.
See Note 3 of the notes to our consolidated financial statements for a description of our computation of basic and diluted earnings per share attributable to Class A and Class B common stockholders.
When Facebook had $1.974 billion of revenue it had $1.008 billion of income before taxes.
Twitter is kind of different.
Year Ended December 31,
(In thousands, except per share data)
Consolidated Statement of Operations Data:
Costs and expenses(1)
Cost of revenue
Research and development
Sales and marketing
General and administrative
Total costs and expenses
Loss from operations
Other income (expense), net
Loss before income taxes
Provision (benefit) for income taxes
When Twitter had $450 million of operating losses and $533 million of losses before tax.
There was about $1.5 in difference in costs.
Facebook does more, had more growth runway and had much lower costs.
I received a lot of anecdotes and wild parties and profligate spending, and the plural of anecdote is data - but few things are as convincing as the raw numbers.
The conclusion is inescapable. Jack Dorsey - the Twitter CEO - should be fired.
This should happen regardless of whether Twitter is bought or not. He simply does not deserve the job.
PS. Twitter staff - I am not exaggerating. Look at the young man on your left and the young woman on your right. Only one of you three will keep your job.
Don't worry. It should be worse in the C-Suite.
The content contained in this blog represents the opinions of Mr. Hempton. You should assume Mr. Hempton and his affiliates have positions in the securities discussed in this blog, and such beneficial ownership can create a conflict of interest regarding the objectivity of this blog. Statements in the blog are not guarantees of future performance and are subject to certain risks, uncertainties and other factors. Certain information in this blog concerning economic trends and performance is based on or derived from information provided by third-party sources. Mr. Hempton does not guarantee the accuracy of such information and has not independently verified the accuracy or completeness of such information or the assumptions on which such information is based. Such information may change after it is posted and Mr. Hempton is not obligated to, and may not, update it. The commentary in this blog in no way constitutes a solicitation of business, an offer of a security or a solicitation to purchase a security, or investment advice. In fact, it should not be relied upon in making investment decisions, ever. It is intended solely for the entertainment of the reader, and the author. In particular this blog is not directed for investment purposes at US Persons.