Interesting thread lots of valid points for and against
Seems like The Intelligent Investor Newsletter had a change of heart on the 22nd of August with an article cruelly titled "The Billabong wipeout"
Snippet:
"On 7 Jul 10 in 'Billabong positioned for prosperity' (Long Term Buy - $8.57) we discussed why the companys future might be rosier than the current price suggests and laid out a road map to gauge the companys progress.
The latest results and managements reaction to them suggest a company on a bumpy track with a dirty windscreen and uncertain destination. The road map is redundant, the facts have changed and so has our recommendation."
The article goes on to outline a few relevant issues
Key Points:
2011 earnings were much weaker than expected
A capital raising has become a real risk
With better opportunities elsewhere, its time to cut losses
Deterioration in consumer sentiment
Profit downgrades have become a regular occurrence
Artificially low tax rate helped the company achieve a result close to net profit guidance
Debt levels are becoming uncomfortably large
Our original 2012 forecasts now appear hopelessly optimistic
Billabong will probably achieve some EBITDA growth in 2012 but the companys financial position has become precarious. If retail conditions continue to deteriorate, shareholders should brace for a cancellation of the dividend (another cut will arrive in 2012 whatever the case) and a possible dilutive capital raising.
Risks increasing insufficient upside
Reco take loss and sell
You need to take the free trial but
Full article is available at
http://www.intelligentinvestor.com.au/articles/Billabong-International-BBG/The-Billabong-wipeout.cfm
PS: My last pair of shorts purchased were Quicksilver my decision made based on no writing/advertising all over them like Billabong even though both were of similar high quality
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