Category: Articles

Borders posted results last night and ,well, not great, but better than expected in some areas…

Borders posted a loss of 53 cents per share vs a 63 cent loss last year. Same-store sales at Borders U.S. superstores, or sales at stores open at least a year, fell 4.1 percent. Total consolidated sales, at $784.7 million, were down 1.0% over a year ago. At Borders domestic superstores, comparable store sales for the period decreased by 4.1%. Without the impact of music, same-store sales at Borders domestic superstores decreased by 1.7% for the quarter. The music decline was expected as Borders has made the decision to dramatically scale back operations there.

The really encouraging news was that debt was reduced to $591.9 million at the end of the first quarter from $722.8 million at the end of the year-earlier quarter and cash flow improved by $133 million.

“Considering the overall conditions, we were pleased,” said CEO George Jones. “The sales environment was tough. We did a much better job managing inventory, we reduced our debt in the quarter by $131 million, and we had a big increase in cash flow.”

Why not be discouraged?

The new website just went up a started yesterday. It will be a profit center this year and if you have not been there, it has been done very well.

Here is a video of the new site:

Also, the new store concept has only begun to roll out. Initial reports are very encouraging and given the rate at which they are opening new ones, one can only assume that what management is seeing it likes, a lot.

All in all, modest results and pretty much what one should have expected given the retail environment out there. That being said, one must look 2 quarters out for any real confirmation that the plan is working. By that time more new concept stores will be open so we will have additional evidence on them and the website will be functioning for 6 months, enough time to make preliminary observations on its effectiveness.

All this assume the company is still independent by then….. by no means a certainty

Disclosure (“none” means no position):Long BGP

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Two billion dollars is a lot of cash for “general corporate purchases”. Sounds more like it is for a “investment in long term opportunity”.

Archer Daniels Midland Company (ADM) today announced that it plans to offer and sell, subject to market and other conditions, 35,000,000 equity units and to grant the underwriters an option to purchase 5,000,000 additional equity units to cover over-allotments. Each equity unit has a stated amount of $50, for a possible aggregate offering amount of $2 billion if the underwriters exercise their over-allotment option in full.

The equity units will initially consist of a contract to purchase ADM common stock and a 5.0% beneficial ownership interest in a $1,000 principal amount debenture due June 1, 2041. Under the purchase contract, holders are required to purchase ADM common stock no later than on June 1, 2011. ADM intends to use substantially all of the net proceeds from this offering for general corporate purposes, including repayment of short-term indebtedness and investment in long-term growth opportunities.

I have wrote in the past about possible ADM targets, the latest being this one about a possible Cuban investment. ADM has been pretty upfront about its desire to expand it capacity in other nations with lower feedstock costs.

One would have to pretty naive to think that a $2 billion capital raising was for anything but.

What will be really interesting is not the “are they or aren’t they” question but the “where” they decide to do it. My guess is they will be taking a trip south…….. outside of our borders…

Companies like Pacific Ethanol (PEIX) and Verasun (VSE) are not cheap by any means. Given their current predicaments, share price aside I would be shocked if ADM expressed interst. The most diversified of the bunch, The Andersons (ANDE) most likely has no interest in being sold. That leave Cuba and Brazil as the most likely targets…

Just popping into my head….maybe a rail investment? ADM already has extensive rail operations and is a huge user of the industry, maybe buying into it and profiting with it would help?

Either way, gonna be fun…

Disclosure (“none” means no position):Long ADM, None

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Two billion dollars is a lot of cash for “general corporate purchases”. Sounds more like it is for a “investment in long term opportunity”.

Archer Daniels Midland Company (ADM) today announced that it plans to offer and sell, subject to market and other conditions, 35,000,000 equity units and to grant the underwriters an option to purchase 5,000,000 additional equity units to cover over-allotments. Each equity unit has a stated amount of $50, for a possible aggregate offering amount of $2 billion if the underwriters exercise their over-allotment option in full.

The equity units will initially consist of a contract to purchase ADM common stock and a 5.0% beneficial ownership interest in a $1,000 principal amount debenture due June 1, 2041. Under the purchase contract, holders are required to purchase ADM common stock no later than on June 1, 2011. ADM intends to use substantially all of the net proceeds from this offering for general corporate purposes, including repayment of short-term indebtedness and investment in long-term growth opportunities.

I have wrote in the past about possible ADM targets, the latest being this one about a possible Cuban investment. ADM has been pretty upfront about its desire to expand it capacity in other nations with lower feedstock costs.

One would have to pretty naive to think that a $2 billion capital raising was for anything but.

What will be really interesting is not the “are they or aren’t they” question but the “where” they decide to do it. My guess is they will be taking a trip south…….. outside of our borders…

Companies like Pacific Ethanol (PEIX) and Verasun (VSE) are not cheap by any means. Given their current predicaments, share price aside I would be shocked if ADM expressed interst. The most diversified of the bunch, The Andersons (ANDE) most likely has no interest in being sold. That leave Cuba and Brazil as the most likely targets…

Just popping into my head….maybe a rail investment? ADM already has extensive rail operations and is a huge user of the industry, maybe buying into it and profiting with it would help?

Either way, gonna be fun…

Disclosure (“none” means no position):Long ADM, None

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Visit the ValuePlays Bookstore for Great Investing Books