"Facebook Home (FB) is a play for the international market," argues AllThingsD's Mike Isaac, making the case the UI's poorly-received U.S. launch - 3 days in, Home still has a rating of 2.3/5 stars on Google Play - is less important than its reception in emerging markets where the smartphone will be the primary means of accessing the Web for many users (and where Facebook has has plenty of mobile-only users). In these places, Home's integrated messaging services (with VoIP services perhaps in the cards) could prove crucial to competing against upstarts such as WhatsApp. [View news story]
Not to mention the number of people who have been fired or under fire because of stupid postings on Facebook ... I have stopped using Facebook for a couple of years, and it feels great!
Baidu (BIDU -1.2%) has reportedly taken part in a $57M funding round for its Qunar Chinese online travel unit. Baidu bought a majority stake in Qunar for $306M in 2011. Since then, the business has taken off, with Qunar (according to Baidu, at least) having recently passed Ctrip (CTRP) as China's top airfare bookings site, though it has recently had to contend with a boycott from partners upset about pricing/policy changes. Qunar, believed to be plotting a much-delayed IPO, also competes with Alibaba and eLong (LONG); the latter is backed by Tencent. [View news story]
I don't believe that Qunar is as popular as Ctrip or eLong, particularly for business travel. I still go with Ctrip on my visits to China.
The Italy (EWI -3.7%) and Spain (EWP -3.1%) ETFs lead a now-tumbling Europe (FEZ -1.8%) as - maybe we're being too simplistic here - Eurogroup President Dijsselbloem has more or less told anybody with greater than €100K in deposits at what could be a troubled bank they need to think about getting their money out. Italy's Unicredit and Intesa Sanpaolo are halted down more than 5%. EUFN -2.4%. [View news story]
The morale of the story - the European politicians are a bunch of nincompoops - they cannot solve the crisis for the longest time, and now they come up with such a dumb idea that is bound to cause bank runs.
A Growing Chinese Middle Class: 3 Stocks To Buy, 1 To Avoid [View article]
When I look around in when I travel in China, people carry iPhone (most popular), Samsung and Sony (not as popular, maybe due to the issues Google is facing in China). I rarely see any Nokia products. In fact, I see more Lenovo, Xiaomi (http://www.xiaomi.com) and Meizu (http://www.meizu.com) than Nokia. Not any meaningful statistical study, just some observations.
Shares of Coach (COH) jump 5.5% higher premarket with rumors flying the retailer may be up for sale. The jump could be short-lived though, as the rally appears to be tied to a dealReporter headline which suggests more than what the underlying story does. [View news story]
This would be a very disappointing development ... great businesses like Four Seasons, Bare Essentials, Heinz and the like were all taken away from public shareholders, eliminating the opportunity for ordinary people to make long term value gains.
It is interesting to see that luxury houses like Hermes refuse to be seen as a fashion house. People forget that this space is about craftsmanship more than fashion.
Don't read too much in the share price. The market tend to overreact in both directions. A year ago, Coach was a market darling, but today, it is a value trap. Could so much have changed over a year?
Trendy fashion houses such as Christian Lacroix went belly-up, meanwhile Hermès managed to increase sales by 8.5 percent, including an 11 percent bump in the final quarter and an astonishing 20 percent gain in the Americas. “Hermès isn’t about trendy,” said Bob AChavez, the CEO of Hermès’s American operation to the Luxury Institute. “It isn’t even a fashion house. We are a house of craftsmanship. We are committed to making products that have an enduring quality and are very versatile.”
Here's What Matters For Coach's $66 Valuation [View article]
You are ignoring the fact the household debt in China is only 17% of income, whereas in places like that US, that's 136%. That means that the typical household would have relatively more disposal income. And even it is top 10% of the population, that's 130 million people give or take.
Michael Kors: The Stock May Continue To Pop [View article]
I tend to agree with you. KORS has achieved significant growth because 40-50% of its stores are new stores. New stores have a small base, and in the retail world, tend to attract first-time (and often one-time) customers for the first year.
Here's What Matters For Coach's $66 Valuation [View article]
You are correct. I'm pointing out the expecting MK or KS to achieve the same success as COH in China is optimistic. They may well achieve success one day, but there are also significant risks - the question is whether the market is pricing in the associated risks if they are pricing in the opportunity?
Coach - An Attractive Investment Opportunity [View article]
That's correct. But what I am arguing against is that COH is being taken apart by KORS - which I think is not true. KORS's good SSS numbers is not because it is taking apart COH, but because of the reasons I mentioned above.
Here's What Matters For Coach's $66 Valuation [View article]
Frankly, I don't see a lot of Coach bags in mainland China, which is flooded with Gucci, LV, Prada (and their counterfeits). Coach attracts a crowd that chases brands but are still value conscious, i.e., the typical Chinese middle-class. After all, Coach did spin-off from a pound cake manufacturer, which makes me suspect that they have ruthlessly efficient operations. An interesting side note is that Coach is priced at a level that is still considered branded, but not sufficiently high enough to attract counterfeits.
My attraction to Coach is its down-to-earth operations. Luxury brands tend to overspend on marketing and advertising, and in the long run, don't make much real money for its shareholders. Coach seem to operate in a different world where operating efficiency is key. That brings me to my second point, which is the team at Coach is very astute in new market development. In Greater China, the company had its distributor, ImagineX, develop the market for years before finally acquiring them in 2009. I believe a similar strategy was followed in Japan. So if people think that KORS and Kate Spade can simply open a few stores in China and make lots of in roads, they will be in for a rude shock. After many years looking at Chinese business environment, one thing I have learned is that although the market is big, there are many potholes and success is almost never achieved in the first try.
Why It's Time To Sell McDonald's Shares Now And Buy On The Next Major Pullback [View article]
Don't be mistake but I love Burger King burgers over McDonald's any day. However, the key difference between McDonald's and its competitors is profit margin. Why is profit margin important? Simply because these companies are in the fast food (low check size per customer) and they need to pay rent and labor. Rents and labor costs in regions of fast development always rise rapidly, which is why time after time, you see McDonald's squeezing out its competitors, KFC, Pizzahut and Burger King alike. That trend has happened in major Asian cities like Singapore and Hong Kong (where you see McDonald's opening store after store, while its competitors closing store after store).
On the quantitative side, let's take a closer look at Burger King. If you look at the latest 10-Q, you will see that for the company operated restaurants, they generate US$987 in revenue from January 2012 to September 2012, compared to restaurant operating expense of US$876 million (of which two-thirds are labor and rental costs) representing restaurant operating margin of around 11%. For the same period, McDonald's restaurant operating profit is more than 18%, and less than 60% of its restaurant operating cost is from labor and rental costs. You may say that the difference between 11% and 18% isn't too wide, but if you examine the net profit margins of these businesses - mid-single digits, it makes the heck of a difference.
One can argue that competitors can improve margin by increasing their franchise business - but franchisees pay rent and labor too, so rising rents and labor costs will eventually come back and bite them.
So unless a competitor can come close to McDonald's operating efficiency, I'm sticking with McDonald's for the long run.
"Facebook Home (FB) is a play for the international market," argues AllThingsD's Mike Isaac, making the case the UI's poorly-received U.S. launch - 3 days in, Home still has a rating of 2.3/5 stars on Google Play - is less important than its reception in emerging markets where the smartphone will be the primary means of accessing the Web for many users (and where Facebook has has plenty of mobile-only users). In these places, Home's integrated messaging services (with VoIP services perhaps in the cards) could prove crucial to competing against upstarts such as WhatsApp. [View news story]
Baidu (BIDU -1.2%) has reportedly taken part in a $57M funding round for its Qunar Chinese online travel unit. Baidu bought a majority stake in Qunar for $306M in 2011. Since then, the business has taken off, with Qunar (according to Baidu, at least) having recently passed Ctrip (CTRP) as China's top airfare bookings site, though it has recently had to contend with a boycott from partners upset about pricing/policy changes. Qunar, believed to be plotting a much-delayed IPO, also competes with Alibaba and eLong (LONG); the latter is backed by Tencent. [View news story]
The Italy (EWI -3.7%) and Spain (EWP -3.1%) ETFs lead a now-tumbling Europe (FEZ -1.8%) as - maybe we're being too simplistic here - Eurogroup President Dijsselbloem has more or less told anybody with greater than €100K in deposits at what could be a troubled bank they need to think about getting their money out. Italy's Unicredit and Intesa Sanpaolo are halted down more than 5%. EUFN -2.4%. [View news story]
A Growing Chinese Middle Class: 3 Stocks To Buy, 1 To Avoid [View article]
Here's What Matters For Coach's $66 Valuation [View article]
Shares of Coach (COH) jump 5.5% higher premarket with rumors flying the retailer may be up for sale. The jump could be short-lived though, as the rally appears to be tied to a dealReporter headline which suggests more than what the underlying story does. [View news story]
Stay Away From Coach For Now [View article]
Don't read too much in the share price. The market tend to overreact in both directions. A year ago, Coach was a market darling, but today, it is a value trap. Could so much have changed over a year?
Stay Away From Coach For Now [View article]
Trendy fashion houses such as Christian Lacroix went belly-up, meanwhile Hermès managed to increase sales by 8.5 percent, including an 11 percent bump in the final quarter and an astonishing 20 percent gain in the Americas. “Hermès isn’t about trendy,” said Bob AChavez, the CEO of Hermès’s American operation to the Luxury Institute. “It isn’t even a fashion house. We are a house of craftsmanship. We are committed to making products that have an enduring quality and are very versatile.”
http://bit.ly/WqapRu
Here's What Matters For Coach's $66 Valuation [View article]
Here's What Matters For Coach's $66 Valuation [View article]
Michael Kors: The Stock May Continue To Pop [View article]
Here's What Matters For Coach's $66 Valuation [View article]
Coach - An Attractive Investment Opportunity [View article]
Here's What Matters For Coach's $66 Valuation [View article]
My attraction to Coach is its down-to-earth operations. Luxury brands tend to overspend on marketing and advertising, and in the long run, don't make much real money for its shareholders. Coach seem to operate in a different world where operating efficiency is key. That brings me to my second point, which is the team at Coach is very astute in new market development. In Greater China, the company had its distributor, ImagineX, develop the market for years before finally acquiring them in 2009. I believe a similar strategy was followed in Japan. So if people think that KORS and Kate Spade can simply open a few stores in China and make lots of in roads, they will be in for a rude shock. After many years looking at Chinese business environment, one thing I have learned is that although the market is big, there are many potholes and success is almost never achieved in the first try.
Why It's Time To Sell McDonald's Shares Now And Buy On The Next Major Pullback [View article]
On the quantitative side, let's take a closer look at Burger King. If you look at the latest 10-Q, you will see that for the company operated restaurants, they generate US$987 in revenue from January 2012 to September 2012, compared to restaurant operating expense of US$876 million (of which two-thirds are labor and rental costs) representing restaurant operating margin of around 11%. For the same period, McDonald's restaurant operating profit is more than 18%, and less than 60% of its restaurant operating cost is from labor and rental costs. You may say that the difference between 11% and 18% isn't too wide, but if you examine the net profit margins of these businesses - mid-single digits, it makes the heck of a difference.
One can argue that competitors can improve margin by increasing their franchise business - but franchisees pay rent and labor too, so rising rents and labor costs will eventually come back and bite them.
So unless a competitor can come close to McDonald's operating efficiency, I'm sticking with McDonald's for the long run.