In Walt Bettinger's six years at the helm of Schwab (SCHW +0.6%), total client assets have doubled to $2.4T, surpassing what once was the world's largest retail broker - Merrill Lynch Wealth Management. Maybe more importantly, he has transformed Schwab from its roots as a discount broker making money on trades to one in the business of offering fee-based financial advice and wealth management.
Transactional fees make up just 13% of revenue today, down from 24% in 2009. That's lower than not just traditional rivals like E*Trade and TD Ameritrade, but also full-service shops like UBS and Edward Jones. Bettinger now sees Schwab's main competitors as the Morgan Stanleys, BlackRocks, and Wells Fargos of the world.
Schwab has a long history of disrupting financial services, and next up could be the 401(k) market dominated by Fidelity with $1.1T in 401(k) AUM (Schwab is ranked #15 with $115B in assets). The fact that 84% of the $3.7T in defined-contribution assets are in high-cost mutual funds gets Bettinger's blood up as most won't beat or even keep up with lower-cost index funds. "This idea of beating the market does not need to be a part of 401(k) plans."
YELP has acquired Restaurant-kritik, a leading German restaurant reviews site, for an undisclosed sum. Restaurant-kritik claims 330K+ reviews for 94K+ restaurants.
Meanwhile, the parent company of popular Japanese restaurant review/guide site Tabelog has disclosed Yelp offered to buy Tabelog, and was turned down. Tabelog claims 5.82M reviews of nearly 790K Japanese restaurants.
News of both moves come in the wake of a post-earnings selloff caused by light Q4 guidance and slowing unique visitor growth. On its Q3 CC (transcript), Yelp noted international growth was affected by softer Google traffic, and suggested (when asked about slowing unique growth) the mobile shift was affecting PC traffic.
International monthly uniques totaled 30M in Q3, +40% Y/Y but -3% Q/Q. U.S. uniques totaled 109M, +22% Y/Y and +2% Q/Q. Mobile uniques still rose 46% Y/Y to 73M.
"Google obviously continues to make changes on their side both competitively and algorithmically," observed CEO Jeremy Stoppelman. Yelp has been one of several firms to harshly criticize Google's integration of its own content within search results, as well as an EU settlement that requires Google to prominently show content from rival sites, but doesn't stop it from also showing its own content. Eric Schmidt recently defended Google's policies.
Labor issues and a shortage of trucking equipment at the critical port complex in the Long Beach, California region threaten to disrupt shipments of holiday products to retailers.
Delays are running up to two or three weeks, according to port officials.
What to watch: Retailers potentially impacted by the port turmoil include Wal-Mart (NYSE:WMT), Macy's (NYSE:M), Kohl's (NYSE:KSS), J.C. Penney (NYSE:JCP), Ralph Lauren (NYSE:RL), American Eagles Outfitter (NYSE:AEO), Nordstrom (NYSE:JWN), and Carter's (NYSE:CRI).
Thanks in large part to a 41% increase in taxes, America Movil's (AMX -0.9%) Q3 net income fell 39% Y/Y to 10.1B pesos ($746M). EBITDA (adjusted for the Telekom Austria deal) rose 0.4% to 69.2B pesos ($5.1B).
On an adjusted basis, service revenue rose 3.8% to 198.6B pesos ($14.6B), a slight improvement from Q2's 3.6% growth. Equipment revenue rose 6.2% to 22.2B pesos ($1.6B), and costs/expenses 5.8% to 151.7B pesos ($11.2B).
Total wireless lines +0.1% Q/Q and +0.5% Y/Y to 286.8M. Mexican lines fell 1.1% Q/Q to 70.5M amid regulatory pressure, but Brazilian lines rose 1.3% to 69.6M, and U.S. lines (via TracFone's prepaid services)1.5% to 25.9M.
Wireline revenue-generating units (RGUs) rose 1.8% Q/Q and 6.8% Y/Y to 77.6M. Mexican RGUs fell 0.1% Q/Q to 22.2M, while Brazilian RGUs rose 3.1% to 35.6M (~46% of total RGUs).
Net debt fell by $2.3B during the quarter to $36.2B.
AMX used its Q3 CC to state its isn't currently talking to anyone about a T-Mobile USA (TMUS +1.3%) acquisition. A German magazine speculated yesterday (while reporting Deutsche Telekom is still open to a T-Mobile sale) AMX could bid for T-Mobile.
Re/code reports Larry Page has signed off on a reorg that puts respected Android/Chrome/Google Apps chief Sundar Pichai in charge of Google's (NASDAQ:GOOG) core products.
Pichai will reportedly "have purview over research, search, maps, Google+, commerce and ads and infrastructure," in addition to his current responsibilities. The six execs responsible for the aforementioned product areas will now report to Pichai instead of Page. However, YouTube chief Susan Wojcicki will keep reporting to Page.
Page's decision is said to be driven by a wish to spend more time on the "bigger picture," and by concerns Google will become less innovative/agile as it ages. The co-founder/CEO will still be directly in charge of business and operations, as well as Nest, Calico, Google X, and a few other areas.
"Investor pessimism doesn’t seem to dampen [Jeff] Bezos’s appetite for risk. Employees unsettled by Amazon’s (AMZN -8.2%) steadily depreciating stock price are probably the only thing that can force Bezos to slow down," writes BloombergBusinessweek's Brad Stone in the wake of Amazon's Q3 miss and soft guidance.
Stone, who wrote a popular book on Bezos and Amazon, notes declining employee stock grant values caused by investor angst over Amazon's losses could increase employee turnover, something management is unlikely to ignore. Thus, curbing spending (with the goal of boosting Amazon's shares) could go hand-in-hand with keeping needed employees happy.
How much could lower spending boost profits? In a much-discussed September post, Benedict Evans estimated Amazon's trailing free cash flow would be around $4B (rather than a current $1.08B) if its capex/sales ratio remained at 2009 levels.
Nonetheless, Evans defended Bezos' strategy: "Amazon has perhaps 1% of the US retail market by value ... Jeff Bezos’s view is pretty clear: keep investing, because to take profit out of the business would be to waste the opportunity ... The question to ask isn’t whether Amazon is some profitless ponzi scheme, but whether you believe Bezos can capture the future."
The sell-side was in a less forgiving mood today: Two downgrades arrived (from Cowen and Janney), as did a slew of target cuts. Notably, analysts often expressed more concerns about Amazon's top-line growth slowdown (particularly for media and international sales) than its bottom-line pressures.
A Brazilian site has reported acquisition-hungry Alibaba (BABA +1.4%) is looking for local M&A targets. Latin American e-commerce giant MercadoLibre (MELI +4.4%), which gets a large chunk of its revenue from Brazil, rallied today.
Alibaba already has a sizable Brazilian presence courtesy of its AliExpress site, which sells Chinese goods at wholesale prices to non-Chinese consumers. An estimated 12M+ Brazilians visited AliExpress (available in Portuguese) in July. Steep local prices for various consumer goods has boosted Alibaba's appeal.
Altogether, Alibaba's international commerce revenue rose 31% Y/Y in calendar Q2 to $237M, and made up 9% of total revenue.
Earlier: Alibaba thinking of buying 37% stake in Lion's Gate
The WSJ reports H-P (HPQ -0.1%) wants to sell at least 51% of H3C Technologies, a Chinese subsidiary that has grown to become the country's top enterprise switch/router vendor. A source thinks the unit could fetch $5B in a full sale. P-E firms are reportedly being contacted.
H3C has over 5K employees. It was originally formed as a JV between 3Com and Chinese IT giant Huawei. 3Com bought out Huawei's stake for $882M in 2006, and was in turn acquired by H-P in 2010.
In addition to switches and routers, H3C sells Wi-Fi access points/controllers, firewalls, and cloud and network management software. A fair amount of overlap exists with H-P's core networking unit.
Networking has been a relative bright spot for H-P: Sales rose 4% Y/Y in the July quarter. But the company has hinted it wants to streamline ahead of its planned split. It might also be nervous about growing Chinese government pressure on U.S. tech companies following last year's NSA spying uproar.