Sunday, March 31, 2013

Oddly Relevant Mar-31-2013


Iron ore: how low can they go? Australia’s forecast is $90 a ton over the next 5 years (30%+ lower than today) and the miner stocks are down this year by 1/6 on average. The culprit is the good old excess capacity from the big three miners. [Note: A rich hunting ground for bargins, especially restructuring and spins]…Source: http://www.ft.com/intl/cms/s/3/85a1c9a6-9175-11e2-b839-00144feabdc0.html#axzz2P9lwAZ7v

About Disney’s business: ESPN is probably responsible for 40% of Disney’s operating income, 60% of its free cashflow and as much as half of its share price. ESPN’s moat is based on (1) Disney’s big wallet to snatch big-time sports events and (2) people want to watch sports live. By having exclusive, timely, and well-put together programs, ESPN enjoys extreme pricing power against the cable providers. [Note: absolutely formidable business model that essentially monopolizes key content assets people will willingly pay for. The real threat comes when people don’t care about live sports any more, but will that time ever come? Doubt it]…Source: http://www.economist.com/news/business/21574463-wonderful-world-espn-sports-network-which-outmints-mickey-mouse-real-disney

Outdoor Ads: Lots of Long-Term Potential: the transition into digital billboards (5% of industry’s inventory but 50% of revenue) + advertising rebound could spell well for the operators. Industry researchers are bullish due to billboard’s irreplaceable nature. [Note: The name to look into is LAMR (with REIT concept, but it’s at 52-week high) and the CBS spin-off]…Source: http://investorplace.com/2013/03/outdoor-ads-lots-of-long-term-potential/

How Samsung Became the World's No. 1 Smartphone Maker: Clock-work like execution, very-quick product turnover cycles; but here’s the real catch on how Samsung does it: Once the infrastructure is in place, Samsung begins selling its components to other companies. This gives the company insight into how the industry works. When Samsung decides to expand operations and start competing with the companies it has been supplying, it makes massive investments in plants and technologies, leveraging its foothold into a position that other companies have little chance of matching. Last year, Samsung Electronics devoted $21.5 billion to capital expenditures, more than twice what Apple spent in the same period. “Samsung makes big bets on technologies,” says Newman. “They study the hell out of the problem, and then they bet the farm on it.” [Note: More analysis needed; I’m cautious]…Source: http://www.businessweek.com/articles/2013-03-28/how-samsung-became-the-worlds-no-dot-1-smartphone-maker#p2

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