The Latest Economic Fad: Cloud Stuffing

Tyler Durden's picture




 

At first we were quite impressed by the following major revenue and EPS beat by Boeing announced earlier today: 

  • *BOEING 1Q EPS $1.22 ON 11C REDUCTION IN RESERVE, EST. 93C
  • *BOEING 1Q REV. $19.38B, EST. $18.31B :BA US

 ...until courtesy of Sean Corrigan we found out that Boeing is merely the latest company to discover what GM recently discovered as have so many now defunct other companies. That when in doubt - stuff.

 

The lower pane shows the 100% rise in Inventory relative to Sales from the previous decade's average level!!


 

Chart: Bloomberg and Diapason Commodities

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Wed, 04/25/2012 - 11:30 | 2373532 maxmad
maxmad's picture

Hopium hates details!

Wed, 04/25/2012 - 11:41 | 2373578 Eclipse89
Eclipse89's picture

Well, they will need to build some kind of a HUGE hangar to store them all... Ultra mega bullish as construction spending soars!

Wed, 04/25/2012 - 11:54 | 2373626 Global Hunter
Global Hunter's picture

has "shovel ready jobs" written all over it

Wed, 04/25/2012 - 12:18 | 2373730 JPM Hater001
JPM Hater001's picture

All that poor mal-investment.

#Fail

Wed, 04/25/2012 - 12:27 | 2373767 valley chick
valley chick's picture

stuffing these "birds" with taxpayer money?

Wed, 04/25/2012 - 12:31 | 2373777 hedgeless_horseman
hedgeless_horseman's picture

 

 

Maybe they need more inventory, now, because the number of impulse buyers for a $400,000,000 jet airliner has increased?

Wed, 04/25/2012 - 13:45 | 2374141 Smiddywesson
Smiddywesson's picture

Yeah, I hear John Corzine just picked out four of them.

($400m X 4 = $1.6b vanished funds)

Wed, 04/25/2012 - 12:27 | 2373765 donsluck
Wed, 04/25/2012 - 12:45 | 2373843 Jena
Jena's picture

Any copper wiring? The tweakers in the desert will catch on eventually.

Wed, 04/25/2012 - 17:50 | 2375019 neidermeyer
neidermeyer's picture

No such luck ,, they'll just park then in Arizona or at the leasing companies fields...

Wed, 04/25/2012 - 12:16 | 2373721 battle axe
battle axe's picture

Memo from Boeing: Do not read the fine print.

Wed, 04/25/2012 - 12:31 | 2373780 LongSoupLine
LongSoupLine's picture

 

 

Algo's know only headlines, and all that remains in this "market" are algos.  Changing the game to fit the desired outcome.

Wed, 04/25/2012 - 11:31 | 2373535 CClarity
CClarity's picture

CNBC lemmings don't care.  All they respond to is Pavlovian USA USA, we're okay, buy buy buy.

Wed, 04/25/2012 - 11:31 | 2373537 truont
truont's picture

If you build them, they will come, eh, BA?

Wed, 04/25/2012 - 11:35 | 2373555 LouisDega
LouisDega's picture

Shoeless Joe Bitchezzzz

Wed, 04/25/2012 - 11:40 | 2373573 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

That means I will be able to buy my own 747 for a few $100,000 during liquidation?

Wed, 04/25/2012 - 11:49 | 2373599 buzzsaw99
buzzsaw99's picture

Silly Vamp. You will get nothing and like it. [/judge smails] The banks will buy them for $1 for a mile-high cocaine and hookers party then sell them to the fed for half a trill. Try to keep up.

Wed, 04/25/2012 - 18:12 | 2375072 mkkby
mkkby's picture

After the hyperinflation you'll get the plane for 1 gold eagle.  You keep up.

Wed, 04/25/2012 - 12:17 | 2373723 MaggieL
MaggieL's picture

Maybe, but you won't be able to afford enough Jet-A to taxi to the hold line. 

Wed, 04/25/2012 - 13:03 | 2373943 Element
Element's picture

No silly, they're being converted to 'dumb'-bombers to drop sticks of HE on to anyone who doesn't like the petro-buck.

Wed, 04/25/2012 - 11:31 | 2373538 buzzsaw99
buzzsaw99's picture

This low mileage beauty was previously owned by a little old lady who only drove it to church on Sundays. lulz

Wed, 04/25/2012 - 11:38 | 2373569 Dr. Richard Head
Dr. Richard Head's picture

My neighbor works for a company that works  on interiors of private jets, generally the Embraer models.  I love the stories of the planes that come in for upgrades to the interior only to be left in their hanger as the bill can't be paid.  The repo stories are fun to hear too.

Wed, 04/25/2012 - 13:31 | 2374068 Nobody For President
Nobody For President's picture

I get the phrasing, but it's about hours, not mileage. TT = Total time (hours) on airframe. SMOH = Hours since last major overhaul. Like that.

How about a nice Falcon 100?

http://www.barnstormers.com/ 

 

Wed, 04/25/2012 - 11:33 | 2373548 the not so migh...
the not so mighty maximiza's picture

Cash for clunkers needed,  FAA style.

Wed, 04/25/2012 - 11:35 | 2373554 Cursive
Cursive's picture

So it's about as reliable as cloud computing, then?

Wed, 04/25/2012 - 11:36 | 2373560 Dr. Richard Head
Dr. Richard Head's picture

So GM and Boeing now acting like middle school girls giddly stuffing their bras.  Sounds like an investment opportunity to me.....GM and Boeing stock I mean.

Wed, 04/25/2012 - 11:38 | 2373564 monopoly
monopoly's picture

And we are decoupled from the rest of the planet. Yup, soon to run right off the track into the abyss.

Wed, 04/25/2012 - 11:38 | 2373565 rosiescenario
rosiescenario's picture

Perhaps something similar is going on with HOG?

 

Given the current economy and the fact that many of their dealers are out of business, this channel stuffing may explain their dramatic sales gain as reported today?????

Wed, 04/25/2012 - 11:45 | 2373581 SheepDog-One
SheepDog-One's picture

FUCK Harley Davidson, theyre moving their production to India! Same with GM now that theyve taken all the taxpayer rescue bailouts, theyre moving to China!

Cue up on iTunes 'Aint that America'

Wed, 04/25/2012 - 12:29 | 2373772 donsluck
donsluck's picture

God I hate those things. Roaring around saying fuck you to everyone. Try roaring back at them (vocally) and see the reaction. Yeah I'm crazy.

Wed, 04/25/2012 - 12:48 | 2373854 HarryM
HarryM's picture

The whole image of Harley - Big , excessive, loud , wasteful - in other words , every thing  the USA stands for.

Moving production out of the USA would be like Bud being made in Vietnam.

 

Wed, 04/25/2012 - 13:53 | 2374195 mick_richfield
mick_richfield's picture

That would make for a really cool "Beer Hunter" commercial, though....

 

Wed, 04/25/2012 - 16:51 | 2374883 Marginal Call
Marginal Call's picture

The might as well brew bud in Nam, they make it out of rice.

Wed, 04/25/2012 - 11:41 | 2373582 monopoly
monopoly's picture

Agree with you rosie....And they are back to the same old shit. Low down payment and borrow to ride. I guess Harley does not care how many bikes they take back. The two Harley dealers here are selling on credit, not on growth.

Wed, 04/25/2012 - 12:10 | 2373692 rosiescenario
rosiescenario's picture

Its puzzling.....folks are still buying $15,000 to $20,000 toys?

 

And insiders are only selling......but the analysts are all recommending....

Wed, 04/25/2012 - 14:27 | 2374400 Metalredneck
Metalredneck's picture

Exactly why I build my own rat-bikes.  $50grand & 50 miles don't make a biker.

Wed, 04/25/2012 - 11:44 | 2373568 carbonmutant
carbonmutant's picture

Hey, it's working for China... so far.

Wed, 04/25/2012 - 11:40 | 2373575 Dr. Engali
Dr. Engali's picture

Soon we will see lines of Dreamliners occupying fields like we did with GM right before bankruptcy. They were channel stuffing so many cars that they had to store them in off site facilities.

Wed, 04/25/2012 - 11:44 | 2373589 SheepDog-One
SheepDog-One's picture

Yes, lets count inventory as sales profits! Hey, isnt that ILLEGAL? Nah....get with the times man, nothings illegal anymore....EXCEPT telling the truth about anything re Egan Jones.

Wed, 04/25/2012 - 11:45 | 2373591 bob_dabolina
Wed, 04/25/2012 - 11:46 | 2373594 SheepDog-One
SheepDog-One's picture

You just swipe yo EBT card!

Wed, 04/25/2012 - 11:49 | 2373602 junkyardjack
junkyardjack's picture

Bullish

Wed, 04/25/2012 - 11:45 | 2373593 francis_sawyer
francis_sawyer's picture

Well the next thing you know, we'll prolly be hearing about some TEAR OUR WRISTS (Iranians, most likely), that stole a fleet of these and flew them into the USS Enteprise...

~~~

Of course that 'Planet Nibiru' dude will be telling us that they're secretly being refitted to become space shuttles & Harry Stamper is in the process of getting his pilot's license...

Wed, 04/25/2012 - 11:52 | 2373598 Bold Eagle
Bold Eagle's picture

I think it's actually a good business strategy when one is expecting a crash of the fiat system. It's better to have real goods than sit on fiat. Yeah, it may be somewhat difficult to find a barter partner who wants an airplane, but an airplane is still better than a pile of paper.

Wed, 04/25/2012 - 12:00 | 2373652 Global Hunter
Global Hunter's picture

Thank you for thinking ahead and trying to plan strategically however Bold Eagle in the interests of national security I must appropriate your lot of commercial airliners, thank you in advance for your patriotic sacrifices...shared sacrifice!

Wed, 04/25/2012 - 11:52 | 2373614 ptoemmes
ptoemmes's picture

So, when is an aircraft a sale, that is, revenue?

If it's Boeing inventory - implied - then the rules must truly be different or are they inventorying "sold" aircraft for the carriers?

I suppose the same question appleis to GM, but I suspect that may more truly be a sale if the vehicles leave the GM plant and are stuffed to the middelmen or dealers (not that cramming inventory downstream is particlualry fair or even legal)?

Rules - we don't need no stinkin' rules.

 

Pete

Wed, 04/25/2012 - 12:37 | 2373804 hidingfromhelis
hidingfromhelis's picture

Sale equals revenue equals taxable event equals send in your damn quarterly tax estimate like the rest of us peons.  How is this nonsense even remotely acceptable under GAAP?  Oops, I guess the first half of that is "Generally Accepted."  Interesting how the definition of that seems to vary based on the TBTF'ness of an institution.  I fucking well don't accept that!!  Yeah, I know; putting on the reality goggles this am colored my thinking.

Wed, 04/25/2012 - 11:53 | 2373617 yogibear
yogibear's picture

All Boeing has to do is cry like GM. Obama will shower them with bailout cash.

Cash for old planes. Millions in rebates for a new plane brought to you by the taxpayer.

Time to start crying Boeing. A crying economic baby under Obama and Bernanke gets showered in cash.

 

Wed, 04/25/2012 - 12:02 | 2373635 Cognitive Dissonance
Cognitive Dissonance's picture

The thing few understand about the aircraft business as presented by Boeing, Airbus and to a lesser extent the smaller manufacturers, is that their cost and sales accounting is truly bizarre. Their numbers are really whatever they want them to be because the development cost is written off over the expected sales life of the plane. So what they report as "making" on each plane is not real.

So even though the 787 is years behind schedule, they have simply shifted all these extra "costs" out over many more 787's to be sold in the future. When it was first presented to the board of directors, it was expected that the program would break even at plane number 400. It has now been pushed back out to plan 1100. I expect it to be 1400 soon enough.

Since the majority of the purchase cost of each plane is paid upon delivery, and many 787s (and 747-8s) are way (way) behind on deliveries, the jet powered can just gets kicked down the road. If one were to look at Boeing's cash flow the company looks one way. If you were to shake the books and get a peak at all the amortized costs, you would see Boeing in a different, less favorable light.

BTW the reason for the large number of planes not delivered, thus in "Inventory", is because of all the 787s and 747-8s that have been produced while the planes were still in testing. That testing showed that a great deal of rework needed to be done on their large stockpile of already made planes. They are slowly working through that already-built inventory, all of which already have buyers who will pay once delivery is made. Lockheed has the same problem with their F35. Sorry, the tax payer has the same problem.

Finally, Boeing never discloses the steep discounts they offer to those airlines who take the first planes of a new development. But they are substantial. This applies to both the 787 and 747-8. Those two lines of planes won't be making money (except on paper) for many many years.

Wed, 04/25/2012 - 12:03 | 2373666 Global Hunter
Global Hunter's picture

Informative post CD!  F35s might be the fighter jet that is causing the Canadian government a lot of very bad press I will have to look into that.

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