Interesting thread lots of valid points for and againstSeems...

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

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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