Transportation Department demanding the proof-Toyota Motors (TM)

Now the Transportation department is demanding that Toytota (TM) provide detailed documents as to when they knew about the problems with the floor mats and accelerators. They have 30-60 days to respond. The longer they waited the more the unknown. We also don't know if they knew about the issue before they produced the vehicles or gambled on no one figuring it out. Maybe they figured it wasn't that big of deal. Who know's at this point but this much I do know: Markets hate the unknown.

Consumer advocacy groups have already attacked the Transportation Secretary Ray LaHood on not dealing with the issue sooner. We know that the Senate Commerce, Science and Transportation Committee has called for hearings on March 2. Toyota has responded by flying in workers from the plants in an effort to lobby for the company.

The problems come down to who knew what and when. Then what did they do when they knew. The Government will do everything they can to take no blame on this issue and if they have documentation from Toyota showing they knew even while they are in production that spells big trouble for TM and gets LaHood off the hook if they can prove that. All the focus will shift on Toyota.

Reminds me of what happened to Brown and Williamson when Dr. Jeffrey Wigand went on 60 minutes and testified in Mississippi uncovered the lies the Tobacco companies put forward for so many years and blew the whistle. I'm not saying that Toyota has done the same thing since I have no idea however given the foot dragging that has gone on with this issue it would point that someone at Toyota knew about this issue some time ago. 

Either way this as I've said before is just starting. The Dominoes have not yet fallen.
























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Toyota Motors (TM)-More problems ahead

Toyota's (TM) spokesman Mike Goss confirmed today that they will suspend production for 3 additional days in addition to it's scheduled production breaks during the weeks of March 15 and April 12. The Kentucky and San Antonio plants will be affected. The Kentucky plant produces the Avalon, Camry and Venza while the Texas plant makes the Tundra truck.

Dealers have been dealing with the recall issue in relation to the gas pedal, breaks and floor mats. The workers will be kept on the payroll and paid during this additional unscheduled production lapse.

Obviously they have inventory building up since they stopped selling the vehicles and how many people are willing to buy a Toyota with the ongoing investigation still under way is to be seen. From past experiences the automakers typically
underestimate the fallout from such issues.

Federal regulators have now received 34 complainants of deaths attributable to unintended acceleration. That number is surely to move higher. As more people become aware of the issue's I have to believe that many will join the class action lawsuits that the attorneys have already started to advertise about.

Toyota estimated today that they have repaired 500,000 of the 2.3 million vehicles that it's recalling.

I would keep a close eye on this situation and any opportunity for Ford in this matter. We have already seen that Hyundai is experiencing an increase in sales as a result of the Toyota issues.

Toyota will have be to aggressive in it's public relations and marketing to attract people back to the brand. In some cases people may avoid the manufacturer completely. We are talking about people's safety and if you have a family why take a chance?

I have to figure that when March sales come out in a few weeks we will see the "Toyota affect" on Ford. I haven't seen any of the analysts February sales estimates increase based on the Toyota problems so this may be an opportunity to get a nice bump in Ford in the coming weeks.

If anyone has information or has seen anything in relation to an increase in sales estimates please comment about this or feel free to email me it and I will be sure to post it for everyone.

Marc Roth


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Ronald Graves asked about Flowserve Corp. (FLS)

Flowserve Corp. (FLS) manufactures industrial seals, pumps and valves for flow service management of oil, gas, chemicals, and water. This is a well diversified company that sells it product worldwide.

The industry is growing and that's reflected in sales which is th4ee last two years grew over 18% on Revenue of $4.4+ Billion. They continue to shrink their long term debt now down to a little over 28% of Capitalization from over 48% ten years ago. Net income has been strong and they just adjusted the 2009 figures above consensus estimates. 2010 looks even better as they continue to curb costs. They pay a dividend of 1.14% and have $300 million buy back program in place that they are about half way through. I would rather have seen an increase in the dividend however it does show the strength of the cash flow of this company and it's ability to grow in what is a solid market.

What you have is a strong company in a growing business. They have already said that their EPS figures need to be adjusted upward that the consensus estimates. Long term this is a company to own.






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This research is being provided to you for informational purposes only.