NHLD did not eliminate its most profitable business, according to its CEO
Read the last sentence of this quote from a corrected version of the 1Q2015 Earnings Call transcript. The CEO says he expects sales of its alternative products offerings to rebound.
"As disclosed in our earning release last week, October was a very good month financially; however on October 29th one of our major issuer of alternative investment products made a series of announcements that introduced questions about their accounting practices. Accordingly in November, we immediately suspended the availability of the issuer’s products on our platform, which actions negatively affected revenue and net income for the quarter. We believe this decision and action to suspend availability of these products made in the best interest of our customers, our retail branch network as well as our shareholders was a correct decision for us to make. Looking forward we remain hopeful that with the additional information that's now available regarding the issuer and the resumption of availability of a certain select group of their products together with a much expanded array of alternative products that are now being offered throughout our network, that we will see sales of alternatives rebound in our current successive quarters to access for 2015."
Also, while litigation is a risk, it was also addressed. Specifically, "NHLD followed accounting literature (as weak as it is) when it accrued the probable and reasonably estimable amount of less than a million dollars. NHLD also beefed up its 1Q2015 10-Q litigation language to be consistent with other parts of its recent 10-K, which were already incorporated into the 10-Q anyway."
Does this sound reasonable?
