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  "docSlug": "9e3d3c9dc613",
  "documentTitle": "Nidec Corp. (6594 JP)",
  "authorId": "51_Muddy_Waters",
  "authorName": "Carson C. Block",
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  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2016-12-13 00:00:00",
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  "notes": "The slide uses financial data to cast doubt on reported margins and supports this with qualitative interview evidence regarding channel stuffing.",
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      "kind": "callout",
      "text": "We have spoken with four former employees of Nidec’s China operation who have provided evidence alleging channel stuffing at quarter and fiscal year ends in the Automotive product group.",
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      "text": "Operating Margin: 13.26%",
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      "text": "The magnitude of the alleged channel stuffing and its potential impact on Nidec's financials is not entirely clear. The allegations we encountered focus on the automotive business. Key points and comments from each of the interviews are below.",
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      "text": "From the above financials, we can see that the supposed 10.24% OP margin in FY 2014 is reasonably close to the data we have. However, the delta between the above numbers and the claimed FY 2015 OP margin of 13.26% is substantial...",
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      "text": "In FY 2015, China accounted for 22.9% of Nidec's overall revenue. We have spoken with four former employees of Nidec's China operation who have provided evidence alleging channel stuffing at quarter and fiscal year ends in the Automotive product group.",
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      "kind": "quote",
      "text": "The former employees often referred to the practice as “pulling forward” sales. — Former Nidec employees",
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      "kind": "source-note",
      "text": "56 Source: S&P Capital IQ. 57 Each former employee had terminated his employment with Nidec at least one year earlier. 58 http://en.nidec-kaiyu.com/about/i=2&comContentId=2.html",
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      "text": "Financial tables for Elesys Japan (Mar-15, Mar-16) and Elesys China (2012-2015) showing Sales, Cost of Sales, Gross Profit, Operating Income, Net Income, Gross Margin, and OP Margin.",
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      "text": "China Automotive Employees Appear to Stuff the Channels",
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