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  • Coca-Cola's Decade-Long Struggle To Fix Its Declining CSD Business [View article]
    wyostocks - I never made a comment on GAAP reporting...this is something you must have erroneously inferred. I am very aware GAAP reporting isn't in constant currency, but solely in local currency. Non-GAAP CC revenues are itemized in the press releases of most global corporations (even quarterly) because they are more indicative of actual performance, which is true. That's all I said, and was drawing attention to the fact that KO's business did indeed grow y/y. Please spare me the accounting lesson.
    Apr 7, 2014. 04:46 PM | 7 Likes Like |Link to Comment
  • Coca-Cola's Decade-Long Struggle To Fix Its Declining CSD Business [View article]
    Your currency reply is just silly. Every company also reports revenues in constant currency as it is obviously a more accurate representation of true business performance. But since you don't get that I'll just state the exact same thing another way...KO 2013 global volume growth was +2%. The business grew YOY where you wanted your reader to believe it contracted. That's important and true due diligence (and fair reporting) would have clearly stated that point. And your petty reply (where mine was obviously justified) indicates further ignorance (comparing actual CC reporting to statistical seasonal adjustments is akin to comparing apples to oranges) or purposeful misdirection.
    Apr 7, 2014. 03:36 PM | 8 Likes Like |Link to Comment
  • Coca-Cola's Decade-Long Struggle To Fix Its Declining CSD Business [View article]
    Keurig Cold will offer the same value proposition as the successful SodaStream products, just with Coca-Cola exclusivity. It'll offer much more than only Coca-Cola products. But I think SodaStream's success bodes well for consumers who may take a look at the system. Either way, GMCR has much more riding on the platform than KO.

    2013 Coca-Cola revenues increased 3% constant currency. I think it is very misleading to state "revenues declined" without including such a relevant footnote. It's either purposefully misleading, or accompanied by a lack of due diligence, which would then lead one to question the other points raised in the article.
    Apr 7, 2014. 02:14 PM | 6 Likes Like |Link to Comment
  • McDonald's: Get Back To The Mission [View article]
    Completely agree. These are MCD lifers and they're completely unaware they're over-complicating their restaurants? To me it's completely inexcusable. It would be like going to Google and not finding the search page.
    Feb 11, 2014. 04:39 PM | 1 Like Like |Link to Comment
  • Wal-Mart: Still Room To Grow [View article]
    You didn't give any reason why Wal-Mart will be successful in China. You pretty much say it's been a slow go for 15 years, but it's going to be a huge success. The burden of proof is on Wal-Mart. China today isn't the nascent US landscape once available to accompany Wal-Mart's tremendous success domestically.
    Feb 11, 2014. 04:19 PM | Likes Like |Link to Comment
  • Bitcoin For Wal-Mart And Target [View article]
    I agree with your entire comment...the benefits of this payment system accrue primarily to the unbanked & underbanked, where today they bear the marginal costs. So/but the innovation has the potential to enable the unbanked to be better off in the future than they are today...increasing their likelihood of owning financial assets at some point in the future. To own financial assets, you need an account at a financial institution. Therefore, imo, this payment system is more likely to enable the unbanked to become banked (and once banked eligible for loans, i.e. purchasing a house), not make the banked unbanked. I see banks as winners, not losers.
    Feb 7, 2014. 03:43 PM | 1 Like Like |Link to Comment
  • Bitcoin For Wal-Mart And Target [View article]
    IMO...the bitcoin system is more about USD processing than about bitcoin processing, even if the payment system is capable of be divorced from the currency...because someone has to hold the currency...and the incentive is to gain more of that currency. As Marc Andreessen communicated in his op-ed, he foresees consumers walking into a Wal-Mart with USD that is instantly converted to bitcoin to facilitate the transaction and instantly converted back to USD (in and out, not within). So this is really about a payment processing innovation between any 2 entities, right? And a debit transaction at that because credit is not accrued, right? So the real value is in the processing capabilities. Frictionless, instant, secure, ledgered, etc...which increases the attractiveness of the fiat currency.

    My comments on loans/deposits are relevant because it doesn't undercut banks. You asked, "Why ever open a bank account?" But if you you view Bitcoin as "a PayPaled version of the existing Bitoin payment system that is an adjunct to the existing fiat system" it becomes rather evident that everyone will still need bank accounts to participate in the financial system because deposits don't go away, and also some chartered entity will still have to extend credit. So unless USD leaves the banking system through the methods I wrote above (or a central government takes over banking responsibilities) deposit accounts at banks/financial institutions will necessarily grow in a growing economy. So banks stand to benefit with productivity, by definition. Card processors (MA, V, AXP) will also be hard to out because someone has to work with the financial institutions to extend credit. cards don't work as well as Walbucks, but Walbucks don't work as well as USD.

    Agree that the system has big benefits over PayPal. But as far as WMT's implementation of your proposal I don't see how you overcome the discount to USD given the lack of "moneyness" of Walbucks in relation to USD. Eventually the idea of Walbucks is to convert them back into USD. You can't pay taxes with Walbucks.

    I see the value in the innovation and its ability to complement fiat currency and the payments system. A frictionless transfer of money between any 2 entities. I don't see it as seignorage.
    Feb 7, 2014. 01:57 PM | Likes Like |Link to Comment
  • Bitcoin For Wal-Mart And Target [View article]
    Enjoyable read...few questions/practicality issues...

    1. Walbucks would be traded at a discount to their face value...much as a check cashing service operates today. If people cash already use USD to buy at Wal-Mart the only reason they'd accept Walbucks is to make additional USD. Walbucks lack the "moneyness" of USD. The employee would see the benefit taxed while the discount acceptor would see their income earned on the transaction taxed. Therefore, the system creates additional taxation on the same amount of income, leading to additional demand a minimum wage increase would add more to aggregate demand and see the wage earner retain a fuller benefit than a Walbucks system...unless each employee is content to spend all their Walbucks at Wal-Mart...which is unlikely.

    2. Your Wal-Mart minimum wage plan works just as well with a gift card or pre-paid card. I know bitcoin brings exciting new capabilities but marrying it to a Wal-Mart like Henry Ford plan seems unnecessary and forced. Wal-Mart doesn't need a bitcoin system to capture an internal payments system. The fraud concern is secondary to the discount concern.

    3. Bitcoin vs banks. Loans create deposits. Apart from negative loan growth, reversal of QE, or draw down into physical currency, deposits do not leave the financial system. You can mine a limited amount of bitcoins or buy them for USD. Someone holds the USD and USD is going to be stored in a US financial institution. Technology can put downward pressure on the fee system (especially the repatriation of money), but to think this undercuts the Well's, BoA's & JPM's is specious. Account fees are a fact of could almost liken it to a negative fed funds on the individual account holder.

    Enjoyed the read...but there are some very real practicalities that limit the benefits you foresee from the full implementation of your plan.
    Feb 7, 2014. 11:36 AM | Likes Like |Link to Comment
  • 3 Reasons To Avoid IBM [View article]
    Respectfully Matt I have to disagree. IBM still develops much internally....They do lead in patents granted year after year after year. IBM has 12 global labs doing nothing but working on new technologies and innovations...They have the largest mathematics department of any public company. Watson was developed internally. And come what may of it that's a pretty significant achievement. The real question is do the acquisitions add value? IBM does bolt ons which scale and add unique IP...not in lieu of R&D. IBM is not HPQ.

    Software - Revenue grew 4% y/y. But dig down to the parts that would earn huge multiples as stand-alone lines: Business Analytics +9% (which did $15.7B in sales last year), Smarter Planet +20%, Cloud +69%, Big Data, Watson is a huge opportunity not contributing meaningfully. While definitely steep 17x operating profit would not be out of the question...but in my opinion these jewels are being overly discounted by being mired in the current negativity of IBM. Sentiment is definitely negative.

    NOV is absolutely a technology leader and their innovation is on par with an elite tech company. No one is closer to the front lines of extracting the oil and gas of today which was once considered inaccessible. Granted, they are the manufacturer of the oil field.
    Feb 5, 2014. 06:05 PM | Likes Like |Link to Comment
  • 3 Reasons To Avoid IBM [View article]
    Matt, when you purchase something you don't have it's an acquisition, not R&D. That's what a capital investment's acquiring something you don't have. It's not fair to call it an accounting quirk. Plus, the context of the language is unfairly applied to IBM while all other companies who do the exact same thing and get a pass. An example of an amazing company who is a serial acquirer is National Oilwell of Varco and it's been a tremendous success and value creator over the years (No Other Vendor). They acquire capabilities to enhance their offerings and distributions, and no one has ever called it a R&D accounting quirk.

    Some of it may be IBM's own fault for the way the talk up their FCF. IBM obviously has a communication problem with the investing public. Their earnings' calls are strictly financial...they should do a better job communicating what IBM is about and what IBM is going to achieve.

    I would argue that IBM has exponentially more upside than downside. IBM trades for 10x earnings, has capabilities and a delivery platform not replicated by anyone in the world. One could argue that their software segment (which earned $11.1B pre-tax in 2013) would be valued above their current market cap if it were a stand alone company.

    Yes 4Q was ugly...but it's mostly a UNIX Chinese hardware problem which is causing the majority of the underperformance. This shouldn't be a surprise to anyone who knows IBM. Services backlog was up 5% y/y. It's always possible that IBM may fail to execute their strategy, but if they can continue to grow software & services through their unmatched capabilities and get a kicker from Watson (which could potentially earn $5B+ in ~5 years)...purchasing IBM at 10x earnings could be the steal of a lifetime.
    Feb 5, 2014. 01:46 PM | 3 Likes Like |Link to Comment
  • 3 Reasons To Avoid IBM [View article]
    IBM's earnings aren't artificially inflated.

    1. As software/service becomes a larger piece of the revenues R&D should not increase as it did when hardware was a larger driver.

    2. Acquisitions are not R&D. They are acquisitions and capitalized as they should be.

    IBM is the only company covered that is criticized in this way. No one says that about Facebook or Google when they explicitly buy only talent.

    FCF will grow with time and IBM has an incredible balance sheet. IBM purchased SoftLayer in 2013 which obviously increased your adjusted div/buyback to FCF ratio. But if IBM has ample opportunity to purchase unique IP and capabilities at high ROIC and plug them into their global platform I'd be thrilled if money was shifted from buyback to business opportunities and enhanced capabilities. Any other FCF (plus a bit of gearing) to buyback undervalued shares would just be icing on the cake.
    Feb 4, 2014. 06:54 PM | 1 Like Like |Link to Comment
  • IBM: A Safe 60% Upside [View article]
    Any stock at anytime could have 60% upside. Logically this is absolutely true. What you are saying is stocks aren't safe, which is entirely different.

    You only need a discount of 37.5% to have 60% of upside. Say moving from a 10 P/E to a 16 P/E....doesn't take a lot. Throw in some earnings growth and maybe, just maybe 60% is actually be on the low side.

    Stocks are functions of probabilities. To speak of safe or not safe only in context of a discount/gain is meaningless.
    Feb 4, 2014. 05:50 PM | 4 Likes Like |Link to Comment
  • 3 Reasons To Avoid IBM [View article]
    I don't think you're right to compare Watson to other AI endeavors (which is all they are at this point) from of Silicon Valley companies.

    1. Watson does have a point person. As of January 9th 2014 the new Watson division led by Michael Rhodin reports directly to Rometty

    2. We've already seen how closely teams must work together to integrate Watson into a business or public entity's process. No one else touching AI has this capability. IBM has a unique capability to offer and install Watson across the globe. Google wants better search, robotics, driverless cars, identify objects in Google Glasses etc... Facebook wants to recognize what shirt you're wearing in a page to grow advertising ROI. Watson wants to make your ERP better in all aspects. Even if a silicon valley company wanted to step on IBM's turf it'd take them a decade to replicate the sales force. Even then their installed base of software, services & mainframes would be minimal compared to IBM. IBM is already integrated fundamentally in the way many businesses & entities work. For instance, the financial industry can't exist as it does today without IBM. Bank of America is not going to buy AI from Google unless it helps their search productivity.

    3. So no one is doing Watson work in the way Watson will work. Watson, if successful, will be a key competency of each organization where it's utilized. Combined with IBM's other suite of products there really isn't any competition. Plus, since it's a learning system, it becomes stickier with time. IBM's unmatched capabilities and first mover advantage give Watson every opportunity to change the world.

    4. Software/Service have much opportunities for growth. Big Data, Smarter Planet, Business Analytics, Middleware, Linux based applications all have incredible opportunities for growth long-term. On top of these receiving little credit no bit of Watson is reflected in the current price of IBM. It's the best call option of any company existing today.
    Feb 4, 2014. 05:10 PM | 1 Like Like |Link to Comment
  • 3 Reasons To Avoid IBM [View article]
    Another lazy IBM bear article.

    1. Debt...excluding global financing operations IBM is pretty much in a zero debt debt/cash position (cash on balance sheet approximates corporate debt). If you can't get this right you are not a person of authority to write an article on IBM.

    2. Watson - it's a call option. None of its upside is priced in. IBM is targeting $10B in revenue by 2018 (probably around 80%+ gross margins). Should Watson succeed, and it is more than likely that it will, it will have no competition. It's a learning system which grows and develops with the inputs added. This sort of commercial application is far advanced to what anyone else is developing, plus IBM is the only organization which has a global installed base to develop and install Watson which will breed 3rd party applications. Watson if successful will change the world. They have no problem funding Watson - they've very recently announced increased resources for the newly created division.

    3. R&D - Bears like to claim both of the following: 1. IBM's R&D is stagnant & 2. IBM's FCF is lower than reported because they're capitalizing R&D through increased acquisitions. Which is it? IBM has been the US leader in patents authorized for each of the last 20 years. IBM R&D is doing just fine.

    Very lazy article...any long-term bull should be grateful if the price stagnates for a long long time.
    Feb 3, 2014. 03:11 PM | 11 Likes Like |Link to Comment
  • The Caterpillar Way - Unjustified Optimism [View article]
    Depends on your time horizon - if you believe the world will grow and move forward over the long-term you should own CAT...CAT will grow quicker than global nGDP over the long horizon. It's really pretty simple.

    - World population growing 6.5M people every month
    - By 2023 60% of people projected to live in cities
    - Global GDP/capita will increase from $7,000 in 2010 to $14,000 in 2018
    - Ore grades projected to decrease by 30% by 2018 (will need to move 30% more materials)...Ores are deeper and harder to get to
    - CAGR of ore moved 3.5-4%
    - China commission coal fired power plant per week for next few years
    - Ships more than 158M parts/year. 18k/hour. 300+/minute
    - By 2025, Global construction market is expected to grow by more than 70% to $15 trillion.
    - In the next five years, mining industry revenue is expected to increase at the rate of 8.5% per year to $667.5 billion in 2018. The global mining equipment market will increase from $71.5 billion in 2012 to $117 billion in 2018.
    Feb 3, 2014. 01:48 PM | 1 Like Like |Link to Comment