“Growth’s, Even With The Slowdown in World’s Economy Apprehension”

In the personal sphere, it is rude to point out how badly someone else speaks your foreign language, I know.

I benefit daily from the good manners of people who decline to point out how badly I speak theirs, even though they could easily do so.

Still, this earnings release from Brazilian business software house Totvs, which it probably paid a pretty penny to have translated, is painful “English as she is spoke” pretty much all the way through.

I just happened to be contemplating the software shop for some other purpose this morning.

For the ERP segment, Gartner reported in a study published in March 2008 that it should grow annually, on average, by 8% globally between 2007 and 2011, and by 9% in Latin America per annum for the same period. Thus, Latin America’ ERP market, that reached US$747 million in 2007, would achieve US$1.150 million in 2012. The comparison to the previous research, published in September 2007, evidences that the institute raised its growth’s estimates for the segment, even with the slowdown in world’s economy apprehension during the first months of the year.

Brazil: “Telcos Off the Hook During Earnings Season”

Downloadable PowerPoint from Vivo's earnings day today.

Teles restringem discussão de balanços com a imprensa: The Estado de S. Paulo carries this trend story from Táis Fuoco of Reuters. I translate an excerpt.

SÃO PAULO – As operadoras de telecomunicações, em sua maioria de capital aberto, estão cada vez mais “silenciosas” quando se trata de discutir o balanço de desempenho trimestral com a imprensa.

Telecommunications operators, most of them publicly traded, are getting less and less “talkative” when it comes time to discuss their quarterly results with the press.

The pending BrasilTelecom-Oi merger — which has generated a lot of attention from regulators to potential cases of improper disclosure and nondisclosure, and has big strategic ramifications for the entire sector — could explain a lot of this conduct.

O exemplo mais recente desse movimento veio da Vivo, que pela primeira vez em pelo menos sete anos não concedeu entrevista coletiva à imprensa em sua sede na data da divulgação, nesta quarta-feira, resolvendo atender a pedidos individuais de jornalistas.

The most recent example of this is Vivo, which for the first time in at least seven years did not hold a press conference at its headquarters when it released earnings today, opting to answer individual queries from journalists.

A imprensa ficou restrita a uma participação como “ouvinte” na teleconferência da Vivo com analistas, onde os executivos da operadora evitaram comentar perspectivas para o ano.

The press was restricted to participating in “listen only” mode in Vivo’s conference call with analysts, in which executives avoided comment on the company’s prospects for the year.

“Agrenco BDRs Return to Trading”

Agrenco depositary receipts up 20% as trading resumes

• BDRs da Agrenco voltam a ser negociados (O Globo). See also
• Agrenco Shares Still Suspended; CVM Demands Explanation of Noble Offer
• “CVM Builds Barriers to BDRs”
• Will Dreyfus Bail Out Agrenco? Or Just Bail?
• Dreyfus on Agrenco Takeover: “We Won’t Be Ready ‘Til We’re Ready”
• Agrenco-LDC: Disclosure of a Material Non-Event?

A negociação com os ativos da empresa estava suspensa desde a quinta-feira passada, dia 10 de julho, por determinação da própria Bovespa, que aguardava esclarecimentos sobre as propostas de aporte de capital que a companhia já recebeu de três interessados.

Trading in the shares of the company had been suspended since last Thursday, July 10, by determination of the Bovespa, which was waiting for further details of a proposed infusion of capital from three interested parties.

Vale lembrar que as ações da companhia, quem tem sede em Bermudas, quase viraram pó depois que os controladores foram presos em operação da Polícia Federal (PF) realizada em junho.

It should be recalled that shares in the company’, which is domiciled in Bermuda, lost nearly all their value when its controlling shareholders were arrest in a federal police operation in June.

Dreyfus on Agrenco Takeover: “We Won’t Be Ready ‘Til We’re Ready”

A follow-up to today’s Material Event from Agrenco with respect to an anticipated bailoutby Dreyfus. Source: Plantão Empresas. Dreyfus issues the following response to

• Agrenco-LDC: Disclosure of a Material Non-Event?

Com relacao ao comunicado da Agrenco aos mercados datada de 9 de julho de 2008, a LDC, atendendo a expressa solicitacao da Agrenco, informa que continua a envidar seus melhores esforcos, incluindo no que diz respeito ao processo de due diligence, com a mesma elevada intensidade, no sentido de ser capaz de informar a Agrenco quanto a sua intencao de concretizar ou nao a operacao objeto do MOU, antes do prazo nele fixado. A luz das informacoes que se tornaram disponiveis
nesta data, a LDC nao podera precisar quando estara em posicao de prover tal informacao, a qual tambem depende das acoes e diligencias da Agrenco que estao em andamento.”

With respect to Agrenco’s disclosure of a Material Event to the market on July 9, 2008, LDC, at Agrenco’s express request, affirms that it continues to do its utmost to be able to inform Agrenco of whether or not it intends to enter into the tranaction contemplated by the MOU within the time frame contemplated therein. In light of information that has come into its possession to date, LDC cannot state specifically when it will be in a position to provide such information, which also depends on actions by Agrenco and due diligence that are ongoing.

SEC On “The Issuer Pays”: Ratings Agency Facelift Falls?

SEC Staff Report on Credit Rating Agencies, July 2008

Rating agencies do not appear to take steps to prevent considerations of market share and other business interests from the possibility that they could influence ratings or ratings criteria.

The SEC (PDF) report on the ratings agencies classified as NRSROs — nationally recognized statistical ratings agencies — tells a pretty simple story.

1. The major rating agencies — Fitch, Moody’s and Standard & Poor’s — were told to develop and enforce policies to prevent conflicts of interest from potentially throwing a bias into analyst rating reports.
2. The major ratings agencies developed those polices.
3. But they do not enforce them.

The issue acquires particular poignancy at a time when the public is looking carefully at the performance of these agencies to determine their “failed prognostication rate” (FPR) — which is actualy just a piece of pseudoterminology I made up myself, but you get what I mean, right?

Freedonia sovereign debt is as solid as the Rock of Groucho, they say.

The Rock of Groucho turns out to have feet of clay. Citibank fires 20,000 employees. Goldman Sachs ponders vacating its Death Star building on Pearl Street and decamping for Tony Sopranoland.  The mayor of New York City — who is in the information and numbers business himself, and is actually quite good at it — looks at his tax revenue projections for the next five years and contemplates jumping out the window.

Each of the NRSROs examined uses the “issuer pays” model, in which the arranger or other entity that  issues the security is also seeking the rating, and pays the rating agency for the rating. The conflict of interest inherent in this model is that rating agencies have an interest in generating business from the firms that seek the rating, which could conflict with providing ratings of integrity. The Commission’s rules specify that it is a conflict of interest for an NRSRO being paid by issuers or underwriters to determine credit ratings with respect to securities they issue or underwrite. They are required to establish, maintain and enforce policies and procedures reasonably designed to address and manage conflicts of interest.35 Such policies and procedures are intended to maintain the integrity of the NRSRO’s judgment, and to prevent an NRSRO from being influenced to issue or maintain a more favorable credit rating in order to obtain or retain business of the issuer or underwriter

Net Serviços: The Cable Empire Has No Disclose

In the Bovespa’s Plantão Empresas newswire today (above, click to zoom), Net Participações S.A. informs us “that its financial statements, set forth according to international accounting standards in both Portuguese and English, for the period ending March 31, 2008, along with management’s comments on results for the period, are available on the Bovespa Web site in the menu ‘Companies / For Investors / Listed Companies,’ under ‘Material Information.’”

This is simply not the case.

Consolidated and company financials for the period are available on the Bovespa Web site, but only in Portuguese, and management comments are nowhere to be found:

“Will Ltdas Will Have To Show Their Hand?”

Among other things, increased disclosure is a boon to publishers, such as São Paulo’s Official Diary (above, occupancy and booking figures for two convention facilities, from SPTur’s 2007 Management Report) — and manufacturers of reading eyeglasses needed to squint at all that fine, fine print.

Juntas poderão decidir sobre balanços de limitadas: Valor reports on the prospect of mandatory financial disclosure by the rough Brazilian equivalent of limited liability companies.

Also interesting, on the regulatory front:

• Novo Mercado Mulls Tag-Along, Poison-Pill Reform

A discussão sobre a necessidade de publicação de balanços pelas sociedades limitadas de grande porte pode ser definida nas juntas comerciais. A polêmica, que começou no fim do ano passado com a mudança das regras contábeis para as sociedades anônimas e para as limitadas com alto faturamento, levou a Junta Comercial do Estado de São Paulo (Jucesp) a ouvir juristas para decidir se exigirá ou não a apresentação das publicações para o registro dos atos dessas sociedades.

The debate over required disclosure of a balance sheet by large [private limited liability corporations] may be resolved by state corporation registrars. The controversy, which broke out in late 2007 with a change in accounting rules for public companies and private companies with substantial revenues, led the state Junta Comercial of São Paulo (Jucesp) to consult legal experts on whether it should require the publication of such information as part of its registration of corporate actions by these companies.

A partir da publicação da nova norma – a Lei nº 11.638, de 2007 -, sociedades limitadas com ativos superiores a R$ 240 milhões ou faturamento anual maior que R$ 300 milhões, também chamadas de sociedades de grande porte, ficaram obrigadas aos mesmos procedimentos contábeis das sociedades anônimas. Mas as regras quanto à publicação das demonstrações financeiras dividem opiniões, já que a obrigatoriedade não foi expressa na legislação.

Since the new rule went into effect — Law 11,638 of 2007 — private companies (limitadas) with assets superior to R$240 million or annual revenues greater than R$300 million, known as “large-scale enterprises,” have been required to adopt the same accounting procedures as public companies. But the rules on publication of financial balance sheets still divide opinion, because the law is silent on whether such publication should be mandatory.