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*Part 2* AHL Claims This Column's Analysis Is 'Flawed'

AHL takes issue with this column's accounting. Also, TCI's Satellite flies.

Short Positions

AHL's Response:

Monday's item on

AHL Services


, suggested the company was boosting its earnings, in part, by reducing its reserves as a percent of revenue. That prompted CFO David Gamsey, who didn't return calls Friday from either me or my associate,

Mark Martinez

, to leave a voice mail that said, in part:

The company views workers' comp as a percentage of payroll, not revenue, and I should, too. (Understood, but revenue doesn't go up if payroll doesn't go up. And payroll is rapidly rising.)

Gamsey says critics of the company's workers' comp reserve haven't taken into consideration a shift in AHL's business mix as well as the company's rapidly changing international mix. He says that 36% of the company's business is now done in Europe, and "there's no workers' compensation in Europe." What's more, he says the company's business mix has shifted more into marketing services, "where workers' comp is substantially less" than the company's traditional lines of biz.

Herb's Latest: Join the discussion on

TSC message boards.

Every quarter, financial analysis and consulting firm

Marsh & McLennan

(MMC) - Get Report

does an actuarial calculation to determine what the company's workers' compensation reserve should be; it uses the same calculation AHL's auditors use.

The company's biz

, whose Web site is little more than an advertisement, will this year do $8.5 million of fulfillment for e-commerce companies. He says that business is "quite large" relative to such competitors as

TheStreet Recommends


, a division of

Hanover Direct



Federated Department Stores'


division. "It's pure e-fulfillment and it's growing rapidly," he says.

He adds, "We think your analysis is flawed for all the reasons I've outlined."

Which, of course, is why I always say it pays to return my calls. Can't tell you the number of times I've scrapped a column after hearing back from a company.

Outer Space:

An item here

last May said that while normally this column ignores bulletin board stocks, an exception was the stock of a company run by ex-cable mogul John Malone.

TCI Satellite Entertainment


, at the time, had just zoomed in less than a month from 50 cents to 4. Speculation was that Malone might use the company as a vehicle for a new venture. Seems like that wasn't far off the mark, and yesterday

Credit Lyonnais

launched coverage with a buy. Stock lifted 4 3/4, or 46%, to 15 1/8. (Thanks to reader

Lewis Goodwin

for passing along the update; it had fallen off my radar!)

Time for Grades

Don't forget to join me tomorrow for this column's semi-annual report card.

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.