This from the Yahoo Board courtesy of T. Seltzer.
BTW, Chanos and friends have been losing big on TYC and SFP lately as both have been rising on great earnings and bullish projections. Could it be that the 'hedge-fund' that these guys run is in such bad shape that they are bringing out these old arguments again to try and cover their short position on THQI and hope to live another day?
Seems pretty desperate. Also, if having this BS placed on the TSC can only impact the stock by less than a $1.00 on less than stellar volume, we must be seeing a bottom.
Brian
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Herb Blew It - Here's Why
by: TSeltzer (36/M/Los Angeles)
1/27/00 11:28 am
Msg: 30472 of 30487
Herb just plain screwed up the receivables issue. He just didn't understand what was happening. It looks
like he just listened to whatever the anonymous short was telling him without checking the facts. That's
pretty sloppy journalism, but we're stuck with it.
It's pretty easy to demonstrate. Here's what Herb said:
<In the third quarter, THQ's reserves fell to 36% of accounts receivable from 54% in the prior quarter.
Interestingly, in the same quarter, Acclaim's (AKLM:Nasdaq) reserve rose to 40% from 32%.>
First, he's wrong about the "same quarter." THQ and AKLM don't report on a same quarter basis.
Acclaim's numbers are from August 31, 1999 (their 10-K) while THQ's are from September 30, 1999
(their 10Q for 3Q). Be that as it may, let's give Herb the benefit of the doubt on that one.
Second, Herb just screwed up the numbers. How does he get to 40% for Acclaim? Here's how:
Page 43 of Acclaim's 10-K includes a table called "Accounts Receivable." I'm sorry if the numbers don't
line up exactly, but here's what you find for August 31, 1999 for Acclaim:
Receivables assigned to factor . . . . .$98,470
Advances from factor . . . . . . . . . . . . 26,410
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Due from factor . . . . . . . . . . . . . . . . 72,060
Unfactored accounts receivable . . . . 10,599
Foreign accounts receivable . . . . . . . 37,461
Other receivables . . . . . . . . . . . . . . . . 3,924
Allowances for returns and discounts (39,614)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $84,430
Now, how does Herb get to his 40% for Acclaim? He divides the "Allowances" figure of $39 million by
the "Receivables Assigned to Factor" figure of $98 million. That gets you 40%. The only problem is, that
is not Acclaim's receivables. Those are just the receivables that Acclaim's factor would accept (most
likely the easiest to collect). The short who gave this info to Herb forgot to add back in the "Unfactored
Receivables," "Foreign Accounts Receivable" and "Other Receivables." There's $51 million right there.
Add that to the $98 million assigned to the factor, and you have $149 million. What's $39 divided by
$149? It's 26%.
So Herb, if you look at the correct numbers, here's what your statement should have read:
<In the third quarter, THQ's reserves were 36% of accounts receivable. Interestingly, in the period
ending August 31, 1999, one month earlier, Acclaim's (AKLM:Nasdaq) reserve was 26% of accounts
receivable.>
Shazam! Will you look at that! A full 10% better than Acclaim!
Unfortunately, guys, that's what happens when journalists get lazy and simply rely on shorts with an
agenda. Herb didn't check the facts. It's very sloppy reporting, and we've lost alot of money because of
his mistake.
I'll check around and see if some of my sources can figure out who gave Herb that information. If it was
Chanos, we really should report him to the SEC for this one.
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