Friday Finance Weekly 87th Edition

Greetings folks and a warm welcome to the 87TH Edition of Friday Finance Weekly. It’s been a while since I last wrote, but the last several weeks have been very hectic. Okay let’s get down to business.

Let’s start up by getting caught up on some technology news:

  • Biggest piece of news is the IPO of Twitter. The initial list price of the stock was $26/share, but it soon spiked to $50/share. Now it is around $42.53/share, giving the company a market cap of around $23B. I still don’t understand Twitter and more importantly it’s not making any money right now. The market sentiment is that one day they will figure out how to monetize Twitter. Let’s hope it doesn’t follow Facebook’s IPO where they started at $38/share and gradually fell to as low as $17.55/share. The biggest issue I have with Twitter is that I don’t see a lot of applications for it. Facebook for example can data mine your entire life and sell it to corporations. Posts (or tweets) on Twitter are random and are often re-tweets. How much information can you get for re-tweets of re-tweets? (Source: Reuters)
  • Google is in the news again as they are releasing their latest Google Nexus 5 phone. There is only one word to describe this phone: unreal. Let’s put this into perspective. A 32GB Google Nexus 5 costs $399, iPhone 5s $819, Samsung S4 $699. I will let you do the math, but suffice to say that Google has a clear pricing advantage. Even in terms of functionality the Nexus 5 easily competes with the iPhone. The Google news keeps on rolling as they announced details on their mysterious barges that are appearing on the waters of coastal cities such as San Francisco. Yes you read that right, there are opening up floating interactive spaces where people can learn about their technology. Is that cool or what? Shares have performed extremely well over the last 30 days as there was a gain of 18.99%. Currently the shares are trading at $1,015.80/share. For the love for Christ, Google, please do a stock split! (Source: Google Finance, Gizmodo, BBC)
  • The Alibaba Group out of China is about to go through an IPO and this is one worth getting in on. For those of us in North America, Alibaba is a Groupon, Amazon, eBay and PayPal all combined in one. Company is offering $18B – $25B with a projected market valuation of $110B. Expected IPO in late January to mid-February. Company has a healthy gross margin of around 74% and is very profitable. All I can say is ‘Open Sesame’. (Source: Privco)

Things in the US economy appear to be picking up. Home prices posted the largest annual gain since housing bubble days in August, although the month-over-month gain slowed for the fourth straight month.  The closely watched S&P/Case-Shiller home price index increased 12.8% from a year earlier, the biggest 12-month gain since February 2006. But with mortgage rates significantly higher in recent months, the pace of increases is slowing. The 1.3% rise compared to July is only half the monthly increase posted in April when mortgage rates were near a record low. Still, the recovery in the housing market continues to be strong, helped by a drop in foreclosures that were weighing on overall prices. A drop in the unemployment rate is also helping to support the housing recovery. If the US government can keep the tea party militants at bay, things may continue to improve. (Source: CNN Money)

A quick retail snapshot:

  • Walmart is promoting 25,000 employees in the fourth quarter as it wraps up a year-long campaign highlighting opportunities for career development and financial stability at the company.  The world’s largest retailer and the nation’s largest private employer kicked off the on-the-spot surprise promotions at ceremonies in its Secaucus, N.J., store and about 15 other markets including Atlanta and Denver. It’s dispatching top executives to stores nationwide for similar events for the rest of its fiscal year, which ends in late January.  The mostly hourly workers will be promoted to different jobs – some to store management positions – and will receive higher pay and increased responsibility. The promotions are going to employees who have already applied and interviewed for the positions, says spokesman Kory Lundberg. This is basically a publicity stunt and I wonder if they simply reallocated their marketing budget. Regardless, I am happy that 25,000 employees will be getting a salary bump. Shares this week have barely moved and the stock is up 0.71%. (Source: USA Today)
  • The Container Store, long a favorite of crafters and obsessive organizers, now appears to be a hit with investors as well.  In the company’s first day trading on public markets last week, its share price has already doubled. Container Store packaged its IPO late on Oct. 31, selling 12.5 million shares for $18 each, the high-end of its expected range. The deal valued the retailer at $828 million, slightly more than its $707 million in sales last year.  But even at that price, Container Store, which is headquartered in Coppell, Tex., near Dallas, appears to have left quite a bit of money on the table, given the swift doubling of the IPO price. I am always amazed by the simple philosophy of doing one thing really well. These guys only sell boxes and bins! (Source: Business Week)

While Congress struggled recently to pass a budget or an increase to the national debt limit, one program made it through rather easily, according to a September New York Times report: farm subsidies for inactive “farmers.” The subsidies were renewed, based on a 2008 law, virtually assuring that more than 18,000 in-name-only farmers (who received $24 million last year) will not be cut off. Included, according to a 2012 Government Accountability Office report, were recipients at 2,300 “farms” that had not grown a single crop in five years (including 622 without a crop in 10 years). (Source: NY Times)

Have a fantastic long-weekend folks and please don’t hesitate to forward this newsletter. I will do my best to keep up the Friday newsletters.

Cheers,

Sam

Friday Finance Weekly 82ND Edition

Greetings folks and a warm welcome to the 82ND Edition of Friday Finance Weekly.

For this week, I want to try a new format and give you a quick dose of the most important finance news (3 positive and 3 negative). This is a summary from the Zero Hedge website, so I can’t take too much credit for it.

  • Positives –
    • Yahoo acquired Tumblr for $1.1B. Not sure if this is a good idea, Yahoo’s shares are flat for a week (0.72% decrease). Honestly I still don’t know what Tumblr does.
    • Average new home prices soar, unfortunately real income does not. I guess this is bitter sweet, loss of income is offset by increase in home values. Wait, there is no way this has happened before right?
    • Foreign banks have plenty of cash (thanks to the Fed). Basically the Fed is also supporting foreign banks operating in the US by depositing their cash. Translation you can bank anywhere.
    • Negatives –
      • Target misses Q1 significantly, YoY Revenue down $199MM, YoY EPS down $.27. This will change with their entry to Canada and the crazy new ‘Nice to meet you, neighbor’ campaign.
      • Student loan delinquency continues to climb. Here’s a though: maybe they should just make school cheaper.
      • Apple meets the “Fairness Doctorine”, as offshore cash gets scrutinized. Basically the IRS will take an opinion on whether the taxes paid were fair. Given their mountain of cash, I am sure Apple can bury the IRS with paperwork, but this will be precedent setting nevertheless.

(Source: Zero Hedge)

Google Inc. launched a paid streaming music service in the United States that will compete with the likes of Pandora and Spotify.  Google Play Music All Access will cost $9.99 per month, though the search advertising giant was offering 30-day free trials and a $7.99 monthly fee for those consumers who sign up before June 30. Consumers can access the service via Android mobile devices and PCs. The announcement came at Google’s annual developer conference in San Francisco.  As of Jan. 31, Pandora had 65.6 million active users-those who had accessed a Pandora account within the last 30 days-according to its annual report.  Spotify is a private company that claims 6 million paying subscribers and more than 24 million active users. Overall it’s a smart move by Google, but I wonder if they are too late to the game. Apple, for example, still hasn’t launched this service but while most think that this is due to negotiation issues with the labels – it just may not be that profitable. Streaming services need a point of differentiation and so far nothing comes close to a truly social music experience. (Source: Internet Retailer)

Approval rates on business loans from big banks (those with over $10 billion in assets) have improved dramatically over the past year, according to the Small Business Lending Index from Biz2Credit.  The index, which has been tracking bank approval rates since January 2011, compiles data from companies applying for loans from $25,000 to $3 million.  The index shows that big bank approval leapt in September 2012, and since then it has been steadily increasing. In April, big bank approval rates for small business loans reached a record high, peaking at 16.8%. In a year-to-year comparison, approvals at big banks are up over 50%. This is truly a positive sign as small business is where you see overall economic improvement and serious impacts on unemployment. That being said, I hope small business lending isn’t up because of government influence. If that was the case the underwriting standards would be impacts and write-offs would precipitate.  I guess it doesn’t matter, since the government will fund banking losses. (Source: The Financial Brand)

Okay, I rarely put links in this blog, but you have to check this out:

http://wapo.st/10YEXM8

Its title is, ‘These 31 charts will destroy your faith in humanity’. Topics include, trends by armed conflict type, human slavery, and some hilarious ones such as water consumption during showers. (Source: Washington Post)

Eliel Santos fishes the grates of New York City seven days a week, reeling in enough bounty to sustain him for the last eight years, he told the New York Post in April. The “fishing line” Santos, 38, uses is dental floss, with electrician’s tape and Blue-Touch mouse glue — equipment that “he controls with the precision of an archer,” the Post reported. His biggest catch ever was a $1,800 (pawned value) gold and diamond bracelet, but the most popular current items are iPhones, which texting-on-the-move pedestrians apparently have trouble hanging onto. Okay so since this is essentially a donation, people who have their stuff found by Santos should be eligible for a tax receipt, right? (Source: New York Post)

Have a fantastic weekend and for my American friends I hope you have a good long weekend. Don’t hesitate to forward this newsletter. Many thanks,

Sam

Friday Finance Weekly 74TH Edition

Greetings folks and a warm welcome to the 74TH Edition of Friday Finance Weekly. Hope you didn’t miss me too much. My apologies for the 2 week absence as I was travelling a fair bit.

Let’s get the party started:

  • There is a lot of Google related news and I think I can dedicate the entire posting to these guys. I’ll keep it short though. This week Google officially launched their own internet services called Google Fiber. No big deal right, but wait its 1Gbps. Let’s put that into perspective it is 5x – 10x faster than your home internet. You think they would launch in a large urban area but instead they picked Kansas Also there are reports that Google is planning to provide wireless services to the rest of the US by partnering with the Dish Network. And if that wasn’t enough, Google has completely sold out of their phone the Nexus 4. Even with all this positive news Google is down 2.2% for the week and is trading at $647.67/share. That being said the market in general has been very unstable. In my opinion the biggest boost in terms of value will probably be with the Dish Network. Their shares are down 1.39% for the week and presently trade at $35.36/share. If an official announcement is made, Dish Network will get a boost. In case you are wondering big brother is already watching and it’s too late to stop now. I for one don’t care as long as my Netflix speeds increases. (Source: CNN, Techcrunch, Boy Genius Report, Google Finance)
  • Nokia has lost about half of its market value since the beginning of the year. Presently it is trading at $2.77/share. Most analysts are convinced that they are following Nortel to extinction, but I think they may become a force in the future. Windows 8 phones are only now coming into the market and Nokia did a good job of aligning themselves with Microsoft. This had the added benefit of automatically making them an acquisition target. On top of that, they are looking to capitalize on the Apple’s map debacle by launching a new mapping service called Here. You can try it out at www.here.net. After playing with for a bit, I am excited about its future prospects. This isn’t well publicized, but Nokia purchased a mapping company called Navteq. No big deal right? Except that they supply over 80% of the data for all in-car mapping systems. Cars are becoming increasingly connected and I see a future for Nokia. That being said this fantasy may end if Apple produces the iCar. (Source: Gizmodo, Google Finance)
  • Priceline.com Inc., the most valuable online-travel agency, is buying Kayak Software Corp. for $1.8 billion, adding profitable search tools to its services that helps consumers book flights and hotels online.  Shareholders of Kayak, which held an initial public offering in July, will receive $40 a share, the companies said in a statement. That represents a 29 percent premium over Nov. 8th’s closing price at $31.04 in New York, and includes about $500 million in cash as well as $1.3 billion in equity and assumed stock options. The deal is the biggest to date for Priceline, which has been using acquisitions to add customers as it works to increase sales and fend off competition.  Kayak, which raised $91 million in the July IPO by selling 3.5 million shares at $26 apiece, processed 302 million queries across its Web and mobile products in the third quarter, up 31 percent from a year earlier. William Shatner will need a new tagline for Kayak and maybe it will be ‘beaming you up for less than you think’. Not my best joke. (Source: Bloomberg)
  • Amazon launched a wine marketplace on its website, with more than 1,000 domestic brands available.  For now, wines will be shipped only to a dozen states, including California, and to Washington, D.C. Bottle prices range from less than $10 to more than $100; shipping costs $9.99 for up to six bottles of the same wine. Amazon has been making moves on several fronts lately to expand its dominance as the country’s largest online retailer and has been interested in getting into the wine business for years, analysts said. Winemakers and industry groups cheered the news, saying Amazon’s reputation and scale would help get the word out about buying wine online. Currently, only about 2% of wine purchases are made via the Internet, said Rich Bergsund, Chief Executive of wine e-tailer, Wine.com.  Because the wines will be shipped from individual wineries, consumers won’t be able to combine bottles from different labels to save on delivery costs. Wonder if an increase to online liquor sales will translate to an increase in underage drinking? Hey at least they will be getting the best deal. (Source: LA Times)

Retail news (don’t worry I will keep this section short):

  • An eventual bid for Best Buy by founder Richard Schulze could come below his initial proposal of around $8 billion and is now not expected to be made before December, sources familiar with the matter said, in a new twist to the months-long saga at the struggling electronics retailer.  At least three private equity firms – Apollo Global Management, TPG Capital and Leonard Green & Partners – are considering joining Schulze in the bid, the sources said. This news didn’t help the company’s stock price which was down 10% for the week and is trading at $13.75. Based on the level of interest this may be a good time to get into the stock. I don’t get it, the company isn’t mismanaged, it’s in a dying industry; I am not sure how much value a private equity firm can add.  (Source: CNBC)
  • We are officially in the era of pop-up stores. Luxury department store chain Nordstrom Inc. will open six pop-up shops in February stocked with wares from up-and-coming designers.  The shops, including one at the Grove shopping mall in Los Angeles and another in San Francisco, will feature 10 designers who are finalists for the CFDA/Vogue Fashion Fund, which awards $300,000 every year to the winner and is intended to nurture young design talent. Nordstrom has obviously got through the rocky trading week and is up a marginal 0.15%. I really get the sense that Nordstrom has a good pulse on the market place. (Source: LA Times)

America now has about 700 pet “aftercare” facilities, providing funeral services to the nation’s companion animals, according to a September NBC News report. Oakey’s, in Roanoke, Va., performs 800 to 900 pet cremations annually and provides about 20 customers a year with pet caskets, part of the estimated $53 billion America spends on pets (higher than the Gross National Products of more than 100 countries). The basic charge of Heartland Pet Cremation of St Louis is $275 for a private cremation, including a “basic” urn and memorial video slideshow. (For the more upscale, other facilities offer deluxe urns, taxidermy, freeze-drying pets and creating a synthetic diamond out of pet ashes.) Did you read that? Nothing says romance like a diamond ring made from your dead cat.(Source: NBC)

Have a fantastic weekend and please don’t hesitate to forward this newsletter. Many thanks,

Sam

Friday Finance Weekly 73RD Edition

Greetings folks and a warm welcome to the 73RD Edition of Friday Finance Weekly.

Let’s get the party started:

  • Google dropped almost 9% this week as their results were less than market expectations. The shares are trading at $678 and the market cap is $221.66B. On a year to date basis they are up a marginal 4.94%. Most market analysts decreased their outlook, but Barclays increased their price target to $780/share. I agree with Barclays and while I think their target is a little aggressive the company results weren’t that bad. They still earned $2.18B (in spite of the losses attributed to the Motorola acquisition), compared with $2.73B over last year. Also monetizing the mobile space has been a mystery to many companies, but Google generated $8B (on an annualized basis) in revenue in this segment. Come on Google, let’s have a stock split now! (Source: Reuters)
  • US stocks fell broadly as disappointing news came from both Microsoft and GE. Microsoft slid 2.5% after it was reported that there was a 22% drop in Q1 net income. No need to hit the panic button, as people are holding out for Windows 8. In addition, reports have indicated that Microsoft’s tablet, Surface, has completely sold out on online orders. GE lost 2.7% and McDonalds slid 3.9%. I must admit that the markets look grim. That being said the holiday season should boost the economy. In addition more financial assistance to Spain wasn’t discussed by the EU and this impacted the markets. While the above news is disappointing, I am really concerned about the drop in burrito sales! Chipotle Mexican Grill is down 14% as their net-income was below expectations. Honestly I didn’t know that Chipotle was an S&P500 company. Go figure. (Source: Bloomberg)

Retail at its best:

  • This is taking “dressed to kill” to a whole new level.  Massif – a supplier of combat clothes to elite US military units – is launching a mens wear line at Bloomingdale’s.  The details of the items are drawn from the high-tech outfits it makes for SWAT Teams, CIA operatives and war snipers.  That means stylish shirts, sportjackets and trousers are battle-tested for boardrooms and bars – with moisture-wicking technology, stretch fabrics, and stealth pockets in unusual but useful places (great for hiding drugs).  “Snipers can’t be crawling around getting caught on branches and rocks,” said Scott Branscum, Massif’s general merchandise manager, noting the company’s high-tech sniper suits typically hug the wearer’s frame. Wait, don’t we already have this in Spandex? FYI, Bloomingdales is actually owned by Macy’s. (Source: NY Post)
  • Puma will be launching a collection of shoes, apparel and accessories that are either biodegradable or recyclable when consumers return them to Puma’s Bring Me Back Program at the end of their lifecycles. With the Puma InCycle collection, coming into stores in Spring/Summer 2013, Puma takes a first step in addressing the environmental footprint of its consumers’ disposal, helping them to reduce their personal waste generation.  Puma is taking on the challenge of launching an entire line that is either biodegradable or recyclable and 100% Cradle-to-Cradle Basic CertifiedCM. The Puma InCycle collection includes among numerous others the lifestyle sneaker Basket (biodegradable), the legendary Puma Track Jacket (recyclable), shirts (biodegradable) and a backpack (recyclable). I just hope that my clothes don’t start falling off while I am working out. That being said, cardio pole dancing will be interesting. (Source: Sports One Source)

For some reason, South Korea (with about one-sixth the men that America has) is the world’s largest consumer of male cosmetics, with its leading company approaching $1 billion a year in sales. According to a September Bloomberg Business Week dispatch, South Korean males became fascinated with the country’s 2002 World Cup soccer team’s “flower men,” who had smooth, flawless skin, and the craze took off from there. Said a male college student, “Having a clean, neat face makes you look sophisticated and creates an image that you can handle yourself well.” Makeup routines include drawing “thicker, bolder” eyebrows and, of course, expert application of lipstick. Said one admiring woman, “I feel like I have more to talk about with guys who use makeup.” Somebody stop this madness. We should telecast nothing but Expendables 1 and 2 for a whole year! (Source: Bloomberg Business Week).

Have a fantastic weekend and please don’t hesitate to forward this newsletter. Many thanks,

Sam

Friday Finance Weekly 67TH Edition

Greetings folks and a warm welcome to the 67TH Edition of Friday Finance Weekly.

Let’s start with some tech news:

  • RIM has almost wrapped up its strategic review…there were some rumors about Samsung being interested; however, Samsung has publically stated that these rumors are false. That being said, Bloomberg reported that IBM is interested in RIM’s enterprise service. These are the secure servers that run the Blackberry Internet Service (BIS). Basically nobody wants the phone manufacturing division but the BIS system architecture is of value. These reports have resulted in a 16.6% share price gain for the week and RIM is currently trading at $8.15/share. Such a strategic acquisition will place IBM in a firm footing and increase their footprint in the corporate communication market. IBM’s share price hasn’t moved much this week so we’ll have to determine the reception once a formal announcement has been made. Do you know what the iPhone said to the Blackberry..? iWork…(Source: Bloomberg)
  • Google was fined a record $22.5M over privacy violations. The privacy violations pertain to Google recording the activities of Safari users. Of course the settlement meant that they didn’t have to admit blame. Don’t you love the justice system? Google makes around $22.5M every 4 hours, so the fine isn’t an issue. The market didn’t really care either as the shares are down a marginal 0.34% for the week. I was getting annoyed with Google until I found out their employee death benefit.  A deceased employee’s spouse or domestic partner receives 50% of their salary for 10 years, all share options vest immediately and every child gets $1,000/m until the age of 19 or 23 for full-time students…unbelievable to say the least and one can be certain of Google’s long-term viability. (Source: CNN Money, CBC)
  • Not sure if you’ve heard the news about Ouya, the new gaming console that raised funds on Kickstarter. They were only looking for $1M, but ended up with $8.6M. If they can make it work this platform will have 63,000 immediate users and will use the Android platform. There is a lot of promise with this company and given its backers I am sure it’s going to be a hit. But having too much capital may become an issue and the team may lose focus. Major game publisher Square Enix announced that they would publish games for Ouya…this is serious business.  I am a crowd-funding convert and would like you to contribute to the Perera Foundation for the Advancement of Exotic Gins. (Source: PC World)

News in the world of consumer goods:

  • Nike Inc. has released shoes and wristbands this year that allow athletes to track their performance. Now it’s planning to put sensors on soccer balls and other equipment to offer data to players of team sports. The world’s largest sporting-goods maker this week obtained a patent for an invention dubbed “Nike+ TM” that uses a computerized radar system with transmitters placed on a ball and players to evaluate individual statistics, such as the strength of a shot in soccer and how well a team plays together. Nike is up a marginal 0.02% for the week, so the markets haven’t really reacted. While soccer balls with data are cool, I think Nike should make belts that give feedback. Every time your waste expands the belt should zap you. What do you think? (Source: Detroit News)
  • Lowe’s Cos., the world’s No. 2 home improvement chain, wants to spend C$1.8 billion to buy Canadian competitor Rona Inc., but the struggling Canadian retailer publicly rejected the offer and said its own turnaround plan offered a better chance of success.  Rona, Canada’s home-grown answer to Lowe’s and Home Depot Inc., said the C$14.50 a share proposal was not the best deal for its shareholders. Smarting from years of disappointing sales, it wants to close some of its big box stores and focus on smaller outlets which they say their customers prefer.  At stake is both Rona’s long history as an independent company deeply rooted in Quebec, and Lowe’s attempt to kick start its Canadian expansion by acquiring hundreds of stores and a large national distribution network.  Lowe’s said its plan has the support of institutional shareholders with about 15 percent of Rona’s outstanding shares. Its July 8 proposal represents a 36.7 percent premium to the stock’s closing price on July 6. Rona, like your commercials you are doing it wrong! (Source: Reuters)

New York City’s tap water is already widely regarded as world-class, in safety and taste (and subjected to a half-million tests a year by the city’s Department of Environmental Protection). However, two entrepreneurs recently opened the Molecule water bar in the city’s East Village, selling 16-ounce bottles of the same water for $2.50, extra-filtered through their $25,000 machine that applies UV rays, ozone treatment and “reverse osmosis” in a seven-stage process to create what they call “pure H2O.” The owners of Molecule are a restaurateur/art dealer and a “social-justice activist” who is a “former world champion boomerang player,” That is genius! I wonder if boomerang is an Olympic sport? (Source: Wall St Journal)

Have a great weekend and please don’t hesitate to forward this newsletter. Many thanks,

Sam

Friday Finance Weekly 34TH Edition

Greetings folks and a warm welcome to the 34TH Edition of Friday Finance Weekly. If you live in the Greater Vancouver Area I hope the commute into work wasn’t too bad. Especially considering we got a whole 5 centimeters of snow!

Olympus (the company known for making optical devices including camera lenses and medical devices such as endoscopes) is in trouble after Japanese officials claim at least $4.9B is unaccounted for. And you thought only American companies were scandalous. A memo prepared by Japan’s Exchange Surveillance Commission and Tokyo Metropolitan Police Department claim that Olympus worked with organized crime syndicates to hide billions of dollars of losses and then paid excessive amounts of money for their services. Investigators believe that the company used a series of money losing acquisitions to hide investment losses in to the 1990’s. In case you are wondering how it works, when a company is in trouble they will sell a division to an organized crime family and at a later date repurchase a related company (ie related to the organized crime family) at an inflated price. Authorities claim that half of the $4.9B in fees was paid to the Yakuza. On a side note organized crime in Japan is referred to as anti-social forces. When asked about these anti-social forces, Olympus president, Shuichi Takayama, said, “I absolutely do not recognize this.” What does that even mean? Well if he doesn’t recognize it, why did three Olympus directors ‘step down’? Now it all makes sense, those Olympus colon-scopes are actually Yakuza torture devices!  Why else would they have a diameter of a quarter? In case you are wondering, I am speaking from experience. (Source: New York Times)

Warren Buffett is front and center and quasi supports by the Occupy Movement by stating that he should be paying higher taxes. Well then why is his private jet company NetJets suing the Internal Revenue Service (IRS) for $643M in tax payments. The irony is that this is a private jet company. Presently there is a ‘ticket tax’ that is applied to passengers that take commercial aviation. Well since those snobs taking private jets are not like you and me, private aviation doesn’t fall under ‘taxable transportation’. I was never one to buy into the hoopla about the poor paying more taxes than the rich, but come on! The case has been filed in Columbus, OH. Berkshire Hathaway (the company that owns NetJets and is the investment company through which Buffet invests) lost over $500 a share in value over the course of the week. No need to panic though, with the current share price at $111,700 a share, the loss represents 0.46%. One would think that with a market cap of $185B and $34B in cash, Buffett would cut Uncle Sam some slack. In addition to the $643M NetJets is seeking penalties and interest. Buffett is starting to sound a lot of Michael Moore. Attacks capitalism, makes a movie about it, then uses Buena Vista to distribute it and make millions. (Source: Reuters)

Google’s universe continues to expand as they launched a new service called ‘Google Supplier Directory Beta’. It is a new service that connects North American companies with manufacturers in China. I thought they already did this. I checked out the new service and I have a feeling its going to be a huge hit. Companies can be searched on factors such as industries, revenues, audited financial information, export markets, employees and location.  Presently they have only 26 suppliers on the site and the latest audited financial statements are up to date as of 2009, so the service isn’t very practical at the moment. If I was an international sourcing brokerage company this would be a viable threat. The service is expected to expand to other Asian countries in the near future thus making the lives of procurement managers infinitely easier. The stock market hasn’t really paid much attention to this service as the share price barely budged over the week (loss of 0.31%). I am however not sure as to how Google will monetize this asset. Presently it is linked to Adwords, but with company names such as Dongguan Dazhong Electronic Corp it may be intimidating for a North American manager to pick up the phone and call. Perhaps I can sell my branding services back to Chinese companies? I would rename the above mentioned company to Dong Daz E Corp. What do you think? (Source: Techcrunch)

There was a recent photography auction at Christie’s in New York. This auction resulted in the sale of the world’s most expensive photograph. A beautiful picture of a river, some grass and blueish sky was auctioned for a staggering $4.4M. An unknown, partially crazy, customer purchased the coveted picture. The picture is a massive 6ft x 11ft and is only one picture in a series of 6. Others are in museums around the world. If you simply must see this picture it can be viewed at: http://bit.ly/520TcJ I finally figured out why Kim Kardashian got a divorce. She was only paid $2.5M for her wedding pictures. If a picture of a motionless river got $4.4M, she totally got gypped! (Source: Freakonomics, People Magazine)

Have a fantastic weekend and please don’t hesitate to forward this newsletter. Many thanks,

Sam

Friday Finance Weekly 17TH Edition (Jul 22, 2011)

Greetings folks and a warm welcome to the 17th Edition of Friday Finance Weekly. If you are a fan of golf, hope you enjoy the Canadian Open this weekend.

There has been a surge of foreign investors into Canadian markets and this week it was determined that there was a net $15.4B of new investments last month. This trend is expected to continue especially since the Bank of Canada announced they will gradually increase interest rates, but in a predictably cryptic manner they did not provide details. In contrast, there were more foreign sellers of US securities than buyers last month which is an extremely rare event. The US however has had a net capital outflow of $67.5B which was the first outflow since June 2010. Broadly there is a consensus that US securities are too volatile for some foreign portfolio managers and this capital flight was expected. It does however appear that the day time drama ‘President Obama vs. Republicans vs. Tea Party vs. Democrats’ may be taken off air on a temporary basis as a solution seems to be forming. Guess what it looks like theUSwill temporally refrain from raising taxes and increase the debt ceiling?!? I must admit that the Republican stance on this is baffling. Refrain from increasing taxes to the wealthy (people that earn over $200K) so that they will create more jobs…hmm…These tax cuts have been around since the Bush era and they have not increased employment. Markets haven’t reacted with any enthusiasm this morning, but with a solution in sight to bail outGreecenext week, we may see some action. (Source: National Post)

Curious as to how profitable those little ads all over Google are? Well, Google earned 97% of its revenues from online advertising. With revenues totaling over $33.3B over the last 12 months, we start to get a picture of how lucrative online ads are. The revenue model works on a cost-per-click (CPC) basis and advertisers have to bid to get the top spot. An analysis was conducted on the top 20 key words…here is a summary of the top 10:

  1. Insurance                                                              CPC:      $54.91
  2. Loans                                                                    CPC:      $44.28
  3. Mortgage                                                               CPC:      $47.12
  4. Attorney                                                                 CPC:      $47.07
  5. Credit                                                                     CPC:      $36.06
  6. Lawyer                                                                   CPC:      $42.51
  7. Donate                                                                   CPC:      $42.02
  8. Degree                                                                  CPC:      $40.61
  9. Hosting (as in web hosting)                                  CPC:      $31.91
  10. Claim                                                                     CPC:      $45.51

Basically anytime a user types in insurance and clicks on the top link, it costs advertisers approximately $55! In addition these results are another indication that we are indeed addicted to debt. The astounding cost per click numbers also explains the high interest rates and legal fees that are being charged. Want to stick it to the man? Search “lawyer and insurance provider to obtain a loan, mortgage and credit card”. That search will cost advertisers $188.82! (Source: Word Stream)

Markets are curious about the prospect of Apple purchasing Hulu (online video streaming service similar to Netflix, but focuses on new TV series). Hulu’s revenues are expected to hit $500M this year and they presently have over 875,000 subscribers, so Apple will definitely have to pay up. Analysts are skeptical of the deal and firmly believe that Apple is taking a closer look on how to develop their own video streaming service. With over 225M iTunes users, adding Hulu won’t be of strategic benefit. In other news it looks like others are trying to duplicate Apples’ success in a rather dubious way. InChinaan expat recently noticed a fake Apple store. Yes that’s right, a fake Apple store was spotted in the Southern Province of Yunnan. Everything down to the layout marketing and iconic blue shirts on employees was duplicated. Interestingly, even employees didn’t know that they were working at a fake Apple store. The fake was fairly easy to spot for avid Apple shoppers as the sign outside said “Apple Store” whereas the actual store just has a glowing Apple logo. The world sincerely hopes that while the Chinese are copying the western consumer experience, they don’t copy the western consumer. Otherwise we are going to have an even larger debt problem.  Apple shares are up by 1.69% to $393.76/share (this is the cost of a roundtrip flight fromVancouvertoLos Angeles). (Source: CBC / Bloomberg / NY Times)

The US deficit is presently at $14.3T and just to give an idea of how much money this really is…if we were to stack $14.3T worth of one dollar bills, this would be an equivalent distance to the moon and back. I was wondering why they scrapped NASA’s space going capabilities! Now we can find the nearest Federal Reserve and simply climb to the moon. (Source: Freakonomics)

Have a fantastic weekend and please don’t hesitate to forward this email. Many thanks,

Sam

Friday Finance Weekly 14TH Edition (Jul 1, 2011)

Greetings folks and a warm welcome to the 14TH edition of Friday Finance Weekly. For my Canadian readers I hope you are enjoying the Canada Day long weekend.

With the new Royals touring Canada, I wanted to take a look at how much the Monarchy costs Canada and the results are interesting to say the least. Note however, that all results are current as of 2009 and new information will not be available until 2012. The Monarchy costs around a $1.53 per Canadian or $50.1M in total. This is virtually unchanged from the 2004 figures when it was $1.54 on a per capita basis. In real terms after accounting for inflation the cost of the Monarchy has actually decreased, so it appears that we have finally achieved economies of scale. It is interesting to note that the Monarchy costs UK citizens around $1.26 on a per capita basis, so Canadians actually pay more. To add to that, Her Majesty surrendered large amounts of land from the Crown Estate to the British Treasury and these properties generated net revenues of $406M or $6.68 per capita. In essence Canadians pay $1.53 to the Monarchy where the British receive $5.42 (net of costs) per capita. Canadians can be assured that all surplus funds are being spent on preventing Prince Williams’ ever receding hairline from expanding. (Source: Monarchist)

A British restructuring firm (Hilco) agreed to purchase HMV Canada for a total of $3.2M, with a commitment to invest another $25M to expand operations. iTunes has virtually killed the traditional music seller market and is a reflection of changing times. The newly acquired HMV Canada is attempting to grow its online music market, but given large existing incumbents, the success of this strategy is questionable to say the least. Presently there are 121 HMV locations across Canada employing over 2,000 and generating $360M in revenue. Interestingly profits weren’t disclosed. There must be a considerable delay in sharing information across the Atlantic as news of Blockbuster’s collapse has yet to reach Hilco. It almost fees like Déjà vu at this point. Let’s see Blockbuster used to rent out DVDs and was replaced by the ability to stream movies in real-time off the internet. Guess what HMV lets you purchase clunky CD’s whereas iTunes lets download it and store it on multiple portable devices. It’s not difficult to see where HMV Canada is headed, but the bigger problem is to see what will happen with all that wasted space on Robson St. Maybe we can open a highly successful restaurant chain such as Planet Hollywood, oh wait I think they already tried that. (Source: Globe and Mail, CBC)

Just in case you weren’t sick of social media, there is yet another market entrant. This week, Google officially announced their top-secret project aiming to keep them relevant in the new social web, Google+ (“Google Plus”). The focus is on keeping your contacts in relevant circles online the same way you do in real life (family, co-workers, close friends, etc.) as opposed to keeping them all in one bucket. Facebook already lets you do this in groups, but it will be interesting to see how Google is different. The tech community is buzzing and so far it’s very positive. The service has been restricted to a limited field test release and is not yet available to the public. The stock market has responded favouarbly to this news as Google shares increased 2.54% to $519/share, today. Google has however is well known for their failure in the social media space with miss-hits such as Wave, Buzz, Dodgeball (not joke, this was a service that promoted mobile social media) and OpenSocial (sorry not sure what this was about). (Source: Google, Tech Crunch, Gizmodo)

Going through hard economic times, find love of any sort. That basically sums up findings of a study conducted by Match.com. The fourth quarter of 2008 was the busiest since inception (1995). There was a similar spike right after 9/11. June 2008 (one of the largest recorded drops of the Dow Jones industrial average), also resulted in Match.com’s second busiest weekend in history. Incidentally if you can’t find somebody to share your tough times, romance novels can fill the void. Romance novel publisher Harlequin stated 2008 saw a sales increase of 32%. If all else fails you can always find online love on Facebook, Myspace, Google + or Asian Avenue. Hopefully you aren’t on all services at the same time and get caught cheating. Then again, building yourself the ultimate soul mate on Second Life and go on virtual dates. At least you won’t have to pay for dinner and when you get bored you watch TV without getting in trouble. (Source: Yahoo Finance)

Have a fantastic long weekend and please don’t hesitate to forward this email. Happy Canada Day. Many thanks,

Sam