Seppuku looking like an attractive alternative to doing nothing

I am not asking for a ritual Seppuku that originated from Japanese Samurai Swordsmen and is still practiced occasionally by shamed Japanese CEO's today but bloody hell I would like at least an attempt at showing responsibility and least some sense of shame when our business leaders do wrong. (gee I have been writing some negative stuff over the last few days - I will be back to stocks next column, I promise)

New Zealand leaders, especially the CEOs of our listed companies are renown for not taking responsibility for making mistakes and costing shareholders precious dollars and company reputations, in fact some have made an art of the practice.

Our company and cultural history is unfortunately littered with a very long list of them.

I have one such man in my sights for special attention, John Bongard from Fisher & Paykel Appliances [FPA.NZ]

When the company announced a few days back the appointment of two new board members from their largest shareholder and recent savior of the company from collapse Haier, one might have expected JB to take a running leap off a short board table and announce he would be taking early retirement from his CEO position.

It seems that it s not to be but that is not unusual in these days of avoidance of responsibility

John Bongard borrowed too much money too quickly to move the New Zealand domiciled and created company to overseas manufacturing bases and buying an overpriced European appliance maker a few years ago with borrowed money certainly didn't help -sure expand, but do so in a financially prudent and methodical manner without putting your company and your shareholder's moola at risk.

The thing is you eventually have to pay the money back or default on your loans as FPA did.

Go on, while I'm having a bitch I should be having a go at the rest of the board as well because they voted along with JB.

Lets hope the two Chinese gentlemen that have just put their feet under the board table can sort out the bottom drawers from the top loaders.

The company will simply limp along in the same hopeless direction they have under Bongard if they don't.


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Fisher & Paykel Appliance's profit downgrade continues fine tradition

Today's poor trading update announcement for Fisher & Paykel Appliances [FPA.NZ] was really of no surprise to the market as a whole and to those insiders who traded the stock down over the last week because they knew this announcement was due soon.

There will be more bad sales updates to follow methinks because today's indication only covers the last few months of trading since the previous profit announcement at the end of 2008.

I wrote back in May 2007 the main reason why I see the company having problems and it ain't the recession or the exchange rate:

While the left of Lenin media and every two-bit polly and union rep have a go with their own wide of the mark opinion, blaming the F & P move on a high dollar and high costs the fact is that F & P have never been competitive but are now being forced to by the market reality of cheap well constructed and better designed appliances coming from the very places that Fishers are now moving to...Share Investor Blog 2007

I see today that John Bongard, Company CEO, is still blaming outside influences beyond his control. Sales are down but that shouldn't account for a halving in profit.

It is bad management of costs, poor product at high costs and a siege mentality to selling that still lingers from the days when the company wouldn't allow any other brands in a store if they sold their product.

Bongard continues that tradition accepting today that he wouldn't say no to a taxpayer handout if it was offered one.

Bongard needs to fall on his sword for poor management over his tenure and now would be a good time.

I wrote on January 21 that the company was "looking fair value" at $1.32 but countered that with a warning that appliance makers were going to be hit hard.

This is clearly going to continue for sometime and likely to get worse before it gets better and there could be another profit downgrade before the company profit announcement in May.

The opportunity presents itself now for savvy investors to buy a stake in the company for less than half the price it was less than a month ago.

Fisher & Paykel are contemplating a capital raising on a pro-rata basis which means that any existing shareholder will have a right to purchase x amount of securities when it begins so if you are looking to get a stake a dilutionary effect on the share price will likely happen so you could well get shares for less than today's closing price of NZ $0.65c , down 35c on the day.

Fisher & Paykel Appliances @ Share Investor

Fisher & Paykel Appliances looking fair value
Fisher & Paykel: A Tale of Two Companies
Fisher & Paykel Appliances: In a spin over nothing

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