RE: Financing..............I guess that is why Taylor is a journalist rather than an investment portfolio manager.
He sites the following: "... Bombardier's loan portfolio from continuing operations-its core businesses-had jumped
from $5.8 billion to $7.1 billion. The aircraft portion had grown by $750 million."
So that would be an increase of 1.3 billion, of which 750 million is from aircraft. I don't see the problem. That would alot 58% of the increase to the aerospace division; I don't know about anyone else but the last time I looked 70% of revenue came from this division. That says to me that they are loaning more to the other divisions, mainly rail which is normally gov't backed debt, than they are to aircraft at this time. Seems reasonable.
"More important,
Bombardier's allowance for bad debt-its own estimate of likely loan losses-had climbed from $133
million at the beginning of the fiscal year to $314 million."
And would that be the total portfolio or the aerospace division alone. I wish that he would be more explicite rather than the stirring fear into an already unsure market. And is it not reasonable/responsible, in hard economic times, to increase the distressed loan allowance and should this come as a suprise to anyone other than Fabrice.
"A sale on credit will boost income, but it does not generate cash until the
loan is paid."
I personally have to thank him for that one, lol.
The last late breaking flash would be: "For the nine months ended Oct. 31, the company burned through a total of $2 billion from
operations. It's not unusual for a growing company to be cash-flow negative for a few years, but that
was more than twice the burn rate of the same period a year before."
I wonder how that could have happened? Could it be because the company built a new plant to expand production before the planes hit the buildings and now are forced to cover costs or could it be from the purchase of OMC. I guess he believes that the integration of such things should be cash flow positive.
Balanced reporting? You decide.
Good luck to all