[ --Part Two-- Sunbeam Corporation (Symbol: SOC) ]
In connection with Part One:
exchange2000.com
Now, continuing with our analysis of Sunbeam's financial statements,
I refer you to the recent 10-K filed on March 6, 1997. This was
accessible to anyone and everyone, including the professionals. One
had nine trading days to act on the public information before the
price began the first stage of its collapse. The filing can be found
at:
fe.freeedgar.com
(The form is the 10-K405, which is dated 3/6/98)
Please examine the following taken from the 10-K:
12/29/96 12/28/97 % Change
Sales(in millions) $ 1,168.2 $ 984.2 18.70%
Receivables(in thousands) $ 213,438.0 $ 295,550.0 38.47%
Inventories (in thousands) $ 162,252.0 $ 256,180.0 57.89%
Note how both Receivables and Inventories grew at rates far greater
than that of Sales! That spelled trouble, and within two weeks, the
first symptoms of trouble began to develop:
On 3/19/98, the company announced that first quarter sales would fall
short of estimates. The shortfall resulted from fewer orders for
appliances and other products from key retailers who were attempting
to reduce their already overstocked inventories. SOC fell $4 11/16
to $45 3/8 upon this announcement.
Two weeks later, more symptoms: on April 3, 1998, the company again
warned that sales would be lower, this time, about 5% below 1997
levels .
On that fateful day, SOC closed at $34 3/8, down 32%, nearly one
month after the date of the 10-K filing. As of today's close, the
price sits slightly above $25.00.
That's disappointing that no concerns were aired about these
troubling developments at Sunbeam before the collapse. With
Chainsaw Al Dunlap having a reputation for rather drastic
turnarounds, one might wonder if he would pressure his company to go
to extraordinary lengths to make a turnaround appear more apparent.
Perhaps that should have been the first cautionary sign...
Regards,
Rainier |
