Great quarter-greatquarter-greatquarter ... GUYS!!!:

That was pretty much the way it was on



conference call Thursday after the company (known best for the George Foreman Grill) reported yet another record quarter. Sales of Foreman grills, alone, were up 98% last year.

So, why gripe?

Because here's a company that has been boasting every quarter about how it can't produce enough grills to meet demand, and now CEO Leonhard Dreimann (in passing, as if it's no big deal) says that sales of the Foreman grills at some department stores "are flat and in some cases down 20%."

Flat to down 20%!

As if that's something to brag about?

Dreimann explained that the sales slowdown was the result of an expansion of Foreman products into an additional 5,000 stores "that didn't exist in the March quarter of last year." He quickly added that sales at some discounters like


(TGT) - Get Report



(S) - Get Report

were up more than 20%.

Up 20%


Pretty impressive until you take a closer look: Last quarter Foreman products accounted for 50% of sales, up from around 35% (based on what the company has said in earlier quarters). Translated, that means sales of non-Foreman products have only grown around 6% from a year earlier, and the company is relying more than ever on a product that appears to be cresting. How can anybody say a product whose sales last quarter grew 98% is cresting? With most hot retail products the first sign of a cooldown is when prices start falling and/or the products start showing up at deep discounters, like


(COST) - Get Report

. Salton doesn't allow discounting on the most popular Foreman grills, but it's troubling when distribution has been expanded to every nook-and-cranny (including the corner drug store -- seriously!) because it suggests the company is pulling out all stops to keep the momentum going.

However (and this is the important point), at the same time sales at what had been its core selling points -- department stores -- are falling.

Dreimann even gave a head's up of sorts about what the company's excuse will be if it's forced to disclose that biz isn't booming: "It's an election year," he said, "and we don't know what the consumer will do if the stock market doesn't continue to perform ... or if interest rates ... these are uncertainties that hang over everybody's forecast."

Finally, he gave the ultimate clue that he may be worried: He publicly picked a fight with short-sellers, who have been haranguing the company since the stock has been much lower. "This month ... leads us to the 10-month anniversary since the company's shares have experienced significant short activity, and after 10 months there are only two months for shorts to qualify for capital gains losses." (Badda-bing, badda-bang!)

Salton, for its part, touts an impressive list of new products, including the Ultravection, a convection-like oven that it swears could very well be the replacement for microwave ovens -- so much so that the company believes the Ultravection could wind up becoming generic. And as for this column's concerns that falling department store sales could be a sign of trouble? According to a statement in response to my question: "Sales are not down. Sellthrough at certain customers may be down, but sales of the grill are not down. The decrease in sellthrough at certain accounts, that is a direct result of the fact that the grills are being more widely distributed."


From the "one that got away" department:

This column does lots of work looking into lots of companies and every now and then one that should've been printed falls through the cracks. Never makes it into print. And at some point in the future we're red-faced that it didn't. Such was the case with

J.D. Edwards


, a B2B software company. Two weeks ago I put


(as in Mark, my associate) on the trail of looking into why there had been so much insider selling at the company


as it was doing a buyback. Seemed fishy, so Mark called the business-to-business software company and got this: "We announced the buyback because we felt the shares were undervalued. But we are also doing the buyback to protect our shareholders from the potential dilution that could take place as a result of insiders selling their shares. As those options got exercised we wanted to protect our shareholders, to protect them from dilution."

But the selling also came at a time when J.D. Edwards announced that its CEO was stepping down. "Doug Masingill," Mark says, "was thought to be the man who would help J.D. Edwards move heavily onto the Internet. A look at revenue over the last few quarters indicates that he may not have succeeded." To which a spokeswoman responded: "Doug just didn't work out. Doug will stay on for awhile and do some strategic things."

Then I took a few days off, got busy when I came back and, well, frankly, forgot about it.

Then came this, yesterday: The company

warned that it would report a loss rather than a profit for the second quarter.

Would've been helpful in advance (believe me, I know!) but lessons from stories like these can also help in spotting red flags in the future.

Gotta love it:


Charles & Colvard

(CTHR) - Get Report

, formerly known as C3, which sells a fake diamond better known as Moissanite? In its recent earnings it warned that, "Gross margins are expected to vary over the next few quarters as the yield of salable jewels from each crystal fluctuates and as the company's average selling price per carat decreases due to the volume discounts offered to the company's large distributors."

Volume discounts to large distributors? If the product is so hot, why discount? Company officials didn't return our call.

Don't Forget:

Check back later for Part

Two .

Herb Greenberg writes daily for In keeping with TSC's editorial policy, he doesn't own or short individual stocks, though he owns stock in He also doesn't invest in hedge funds or other private investment partnerships. He welcomes your feedback at Greenberg also writes a monthly column for Fortune.

Mark Martinez assisted with the reporting of this column.