I am planning on shorting or buying puts on Toyota. What do you guys think?
Key stats and ratios
Q3 (Sep '09) 2009
Net profit margin 1.79% -2.45%
Operating margin 1.28% -2.25%
EBITD margin - 5.04%
Return on average assets 1.12% -1.64%
Return on average equity 0.87% -3.98%
Employees 322,650
Company website:
http://www.toyota.com/
Tomorrow is their conference call
Reason why I am thinking about shorting is
Toyota Motor Corporation To Recall Seven Models In Mexico For Gas Pedal Revision-DJ9:42am EST
Dow Jones reported that the Mexican unit of Toyota Motor Corporation will begin next week calling in seven models for revision of gas pedals that have led the Japanese auto maker to recall cars in U.S., Canada, China and Europe. In a statement late, Toyota Motor Corporation said that so far in Mexico it hasn't had any reports of sticky accelerator pedals, but will conduct the revision on recent models of the RAV4, Matrix, Camry, Highlander, Tundra, Sequoia and Corolla. Toyota Mexico said it will begin contacting customers on February 8 to bring their vehicles in for revision, and where necessary will replace a pedal part. Toyota Motor Corporation said that based on its investigations and reports from other countries, in the worst case the pedal returns slowly to its original position and that there have been no cases of sudden acceleration.
Toyota Motor Corporation Asked To Probe Possible Brake Defect In Prius-WSJ
6:22am EST
The Wall Street Journal reported that Japan's transport ministry asked Toyota Motor Corporation to investigate 14 complaints it had received related to the newest Prius hybrid model. In Japan, the transport ministry confirmed there was an accident last July in Chiba prefecture, just outside of Tokyo, in which a Prius with allegedly faulty brakes rear-ended a car stopped at a red light, which in turn rear-ended two other
Toyota Motor Corporation's Toyota South Africa Says May Be Included In Vehicle Recall-DJ
2:02am EST
Dow Jones reported that the South African arm of Toyota Motor Corporation said some of the vehicles it has sold may be involved in the expanded recall of its parent company. Toyota this week said it intended to expand a recall of vehicles in the U.S. to other areas of the world. The U.S. recall relates to the accelerator pedal which may be slow to turn to the idle position or remain open.
Chesley Files Class Action In Ohio Against Toyota Motor Corporation
Tuesday, 2 Feb 2010 07:55pm EST
Stanley M. Chesley from the Cincinnati, Ohio-based law firm of Waite, Schneider, Bayless & Chesley Co., L.P.A. announced that it has filed a major class action lawsuit against Toyota Motor Corporation and other Toyota affiliates. The case is based on the sudden acceleration defect in millions of Toyota automobiles that has caused injuries and deaths. The lawsuit was filed in the Hamilton County Court of Common Pleas in Cincinnati, Ohio. It alleges fraudulent concealment, breach of warranties, and breach of contracts. Chesley alleges that Toyota misrepresented the problem as being caused by floormats and has still not corrected it. In addition to seeking compensatory and punitive damages, Chesley requested and obtained a Temporary Restraining Order to prevent Toyota's concealment or destruction of records based in part on an admission by a Toyota attorney that Toyota hid records in a number of cases involving injuries and deaths from rollovers. Chesley's co-counsel, Robert Steinberg, stated that their expert advised them Toyota failed to utilize fail safe mechanisms used by most manufacturers to prevent sudden acceleration. Until the problem is completely fixed, Chesley says Toyota should compensate its customers, who now have to carry the burden of the lost value, by making their loan and lease payments.
http://www.reuters.com/finance/stock...20100203112200
Toyota Crisis Mounts as U.S. Steps Up Pressure to Fix Vehicles
Feb. 3 (Bloomberg) -- U.S. Transportation Secretary Ray LaHood stepped up pressure on Toyota Motor Co. to fix defects that have caused the recall of millions of vehicles because they may suddenly accelerate, causing drivers to lose control.
LaHood told reporters in Washington he planned to call Toyota President Akio Toyoda “and explain to him that this is serious business.” LaHood also told a House panel that drivers should stop driving the recalled vehicles, a comment he later called a misstatement.
The remarks underscore a growing crisis at Toyota that has caused it to lose $29.5 billion in market value since the current recalls began and has tarnished its reputation for quality.
“Up until the last couple days that we had all expected the consumer hit wouldn’t be as serious as the media hit they were taking,” said Wes Brown, an analyst with market research firm Iceology in Los Angeles. “Now things may start to shift that image hit to the consumer side that had been steadfastly loyal. They are really starting to run the risk of escalating things tremendously.”
LaHood told a congressional panel this morning that owners of recalled cars should “stop driving it and take it to a Toyota dealer.”
“What I said in there was obviously a misstatement,” LaHood told reporters later. “If you own one of these cars, take it to the dealer. If you are in doubt, take it to the dealer and have them fix it.”
Toyota said this week it would fix the defect by having dealers install shims in accelerators. LaHood said the government is investigating to see whether an electronic throttle system is the cause, as at least seven lawsuits allege.
Shares Decline
Toyota’s American depositary receipts, each representing two ordinary shares, fell $4.25, or 5.4 percent, to $73.93 at 12:54 p.m. in New York Stock Exchange composite trading. The ADRs tumbled to a 10-month intraday low, touching $71.90, after the remarks to “stop driving” that LaHood later recanted.
Before his testimony, LaHood told reporters in Washington he will phone Toyoda to be certain his agency “pushed them over the line” so that Toyota is doing all it can to resolve defects.
Separately, the Toyota City, Japan-based carmaker has been ordered by Japan’s government to investigate brake-related problems with the latest version of its Prius hybrid car, the nation’s transportation ministry said today.
The ministry said it has received 14 complaints related to Prius brakes. It has also asked other carmakers to look into similar reports. Such requests are “routine,” said Masaya Ota, an official in the ministry’s recall division.
Sticky Pedals
Toyota began shipping steel plates to U.S. dealers on Feb. 1 as a fix for sticky gas pedals that have caused the carmaker to recall about 2.57 million vehicles in the U.S. and Canada.
“We know what the problem is,” Jim Lentz, Toyota’s president of U.S. sales, said in an interview on Bloomberg Television on Feb. 1. “We have the fix.”
The U.S. recall for pedals that stick applies to model years 2009-2010 RAV4, 2010 Highlander and 2008-2010 Sequoia sport-utility vehicles, 2009-2010 Corolla and 2005-2010 Avalon sedans, some 2007-2010 Camry sedans, 2009-2010 Matrix hatchbacks, and 2007-2010 Tundra pickups, according to Toyota.
Toyota also has recalled and plans to fix about 5.6 million Toyota- and Lexus-brand cars and trucks in the U.S. and Canada because of floor mats that might trap gas pedals and cause vehicles to speed out of control. Some Toyota brand vehicles are affected by both types of recalls.
The investigation of the Prius in Japan could undermine sales in Toyota’s home market, where it hasn’t recalled any vehicles due to the sudden-acceleration issue. The model was Japan’s best-selling vehicle in 2009.
Prius the ‘Flagship’
“The Prius is Toyota’s flagship model, its key to the future,” said Ashvin Chotai, managing director of London-based Intelligence Automotive Asia Ltd., a consulting company. “If that model gets tainted, that would suggest Toyota’s crisis has moved on to the next level.”
In the U.S., the National Highway Traffic Safety Administration, part of the Transportation Department, is examining the electronics of automakers including Toyota in response to complaints, LaHood told reporters today. Among the questions is whether electromagnetic interference from power lines could affect the computerized systems that help run today’s vehicles, he said.
“We will continue our investigations into all aspects of these vehicles, including the electronics,” LaHood said. “We’re going to hold Toyota’s feet to the fire.”
Toyota has said it ruled out electronics as a cause of sudden acceleration in its cars and trucks.
Lawsuits Filed
At least 15 lawsuits seeking class action status have been filed against Toyota on the acceleration issue, and seven of them claim an electronic throttle system called ETCS-i is at fault instead of the pedals.
In cars with the ETCS-i system, the engine’s throttle is controlled by electronic signals, which are sent from a sensor that detects how far the gas pedal is depressed. The signals are transmitted to a computer module that controls how much the throttle opens.
Lawyers claiming an electronic defect contend that floor mats or stuck pedals don’t explain the sudden-acceleration incidents that triggered their lawsuits.
‘Sitting Dead Still’
In a Texas lawsuit filed on Jan. 29, plaintiff Alfred Pena said his 2008 Toyota Avalon unexpectedly accelerated at a stop sign on Jan. 14, causing a collision. He wasn’t injured, said Robert Hilliard, an attorney representing Pena. Pena’s wife, Sylvia, had a previous episode of unintended acceleration that didn’t result in an accident, Hilliard said.
Sylvia Pena “was sitting dead still,” and the car accelerated as she released the brake before she touched the gas pedal, Hilliard, of Corpus Christi, Texas, said in an interview.
“My belief is that fixed Toyotas with new pedals will still inadvertently accelerate,” Hilliard said.
NHTSA tested throttle electronics last year in response to a petition from a 2007 Lexus ES 350 owner who had experienced sudden acceleration of his vehicle. The agency denied the petition in October after subjecting the same model of car to “multiple electrical signals” and “magnetic fields.”
‘Exhaustive Testing’
Toyota said at the time that the October decision marked the fifth in which the agency had rejected similar requests to investigate company vehicles for defects including electronics related to unintended acceleration.
“In terms of electronics of the vehicle, we’ve done exhaustive testing and we’ve found no issues with the electronics,” Toyota’s Lentz said on a conference call with reporters Feb. 1.
Toyota, as required by law, stopped selling eight vehicles recalled in the U.S. last week. The company said it will begin fixing accelerator pedals, which were supplied by Elkhart, Indiana-based CTS Corp., this week, with some dealerships preparing to do repairs around the clock.
The Transportation Department and its auto safety agency have been called to testify at two congressional hearings on the handling of the Toyota recalls.
House Hearings
A House Oversight and Government Reform Committee panel will hold a hearing on the recalls on Feb. 10, followed by the House Energy and Commerce Committee on Feb. 25.
Representative Bart Stupak, a Michigan Democrat who serves on both committees scheduled to question Toyota, said in a letter to Lentz that his public statements on Feb. 1 were “different than the representations” Toyota officials made to the Energy and Commerce Committee’s staff last week.
Asked whether Toyota “could be certain that floor mat entrapment and sticking accelerator pedals fully explained” the causes of unintended acceleration, company officials said the “causes of unintended acceleration are ‘very, very hard’ to identify,” Stupak said in a letter today to Lentz.
Toyota executives at the meeting also said sticking pedals are “unlikely to be responsible” for reports of drivers losing control as cars accelerated past 60 miles per hour, Stupak said in the letter. He asked Lentz to “clarify” the differing accounts.
--With assistance from Alan Ohnsman in Los Angeles, John Hughes in Washington, Mehul Srivastava in Bangalore and Makiko Kitamura in Tokyo. Editors: Joe Winski, Larry Liebert
To contact the reporters on this story: Angela Greiling Keane in Washington at +1-202-654-1287 or
agreilingkea@bloomberg.net; Margaret Cronin Fisk in Southfield, Michigan, at +1-248-827-2947 or
mcfisk@bloomberg.net.
To contact the editor responsible for this story: Larry Liebert at +1-202-624-1936 or
lliebert@bloomberg.net
http://www.businessweek.com/news/201...-vehicles.html
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