Friday Finance Weekly 88th Edition

Greetings folks and a warm welcome to the 88TH Edition of Friday Finance Weekly.  With the tragedy in the Philippines, I feel compelled to ask you to consider supporting the relief efforts there. Please consider Doctors without Borders http://www.doctorswithoutborders.ca/ or the Red Cross http://www.redcross.ca/

As usual let’s start with a dose of technology:

  • Sony’s new gaming console officially launched in North America today. Most stores were open at midnight to satisfy the cravings of eager gamers. They expect to sell at least 3 million units by the end of the year, so it’s big business for Sony. In terms of corporate strategy, Sony played it extremely well. PS4’s specifications were announced after the XBOX One (Microsoft’s new gaming console), yet the console itself is coming out a week ahead of the XBOX One. Sony was able to ride negative publicity generated by the XBOX One in relation to Digital Rights Management (DRM). Originally the XBOX One was to have always-on DRM, meaning that games wouldn’t work without an internet connection. This was primarily to prevent sharing of old games. Based on the public backlash, Microsoft later backtracked on it the DRM issues, but keep in mind that the PS4 is a $100 cheaper as well. Well done Sony, it’s been a while since you got things right. This is also reflected in the stock market as their shares are up 11.29% for the week and currently trade at $18.62. Now all they have to do is stop making unprofitable TVs, bad movies and questionable cellphones. (Source: Gizmodo, Google Finance)
  • Twitter’s IPO has led to a renaissance of tech IPO’s. Zulily, the daily deals site targeted at mothers, opened on the NASDAQ this morning under the symbol ZU. Things are going well since the company priced 11.5 million shares at $22 late last night, as shares jumped to a high of $41.32 this morning and presently stand at $38.20. I don’t think this party will last and daily deal companies have no real competitive advantage. I will save you from one of my Groupon rants, but suffice to say their shares are down 58.87% since inception (less than 2 years ago). On a macro-level however, I do feel that online services targeted to new mothers will be a growth area. Mothers are busy and with the new PS4 coming out their husbands will be busy for the foreseeable future. (Source: Techcrunch, Google Finance)

Suffering from a debt hangover, a pickup in borrowing will give the world’s biggest economy (yes it is still America) a much-needed boost next year as federal government austerity pinches growth. Workers will be more willing to take out loans as the lowest unemployment rate in almost five years bolsters job security, while banks will be more likely to lend after cleaning up their own balance sheets. The resulting gains in personal spending will help counter the effects of federal-budget cuts that are weighing on the expansion, according to Ben Garber, an economist at Moody’s Capital Markets Research Inc. in New York.  Falling foreclosures, bankruptcies and defaults on consumer loans all point to improved balance sheets as the economy continues to expand. Home-foreclosure filings fell to about 129,000 in August, down 65 percent from a peak of about 367,000 in March 2010, according to data from Realty Trac Inc. Combining this with the fact that the IPO market is picking up gives us a positive outlook for 2014. (Source: Moody’s)

People With Too Much Money: In April (2008) the Swiss watchmaker Romain Jerome (which the year before created a watch made from remnants of the Titanic) introduced the “Day&Night” watch, which unfortunately does not provide a reading of the hour or the minute. Though it retails for about $300,000, it only tells whether it is “day” or “night” (using a complex measurement of the Earth’s gravity). CEO Yvan Arpa said studies show that two-thirds of rich people “don’t (use) their watch to tell what time it is,” anyway. Anyone can buy a watch that tells time, he told a Reuters reporter, but only a “truly discerning customer” will buy one that doesn’t. (Source: Wall St Journal)

Have a fantastic weekend and for my American readers, Happy Thanksgiving! Please don’t hesitate to forward this newsletter.

Many thanks,

Sam

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