Category Archives: Investing

Nutritional supplements business continues to thrive and grow despite economic gloom

It takes indeed something special to have an industry that is thriving and growing even in times of economic difficulties. While many sections of business have encountered serious losses and huge setbacks sectors like beauty products and nutritional supplements seem to have registered an upswing during the difficult financial times.

An analysis of this trend might be more psychological and anthropological in nature than fiscal, but it clearly showcases what the preferences of the human society are. Healthy living and good looks really seem to be a must no matter what, for most of us!

The nutritional supplements market has seen 31.7 percent up in its sales in the last 3 years and that trend would mean markets across the planet will see a growth which will rope in over $1.15 billion by the end of 2012.

That figure is said to further rise in the next few years thanks to various factors. One of the biggest reasons for this is the growing health consciousness in people, which is largely driven not just by a simple desire for healthier lifestyle, but is being determined by the high and at times, inaccessible health sector costs.

High medical bills and exponential increase in cost of health services has meant that most individuals are now taking great care of their own health as they believe that ‘prevention is indeed better than the cure’ as it is simply a lot cheaper! This has seen public across all demographics take up nutritional supplements a lot more. Add to this the specific advantages offered by various select supplements and natural products like Biocare, which seem to do away with harmful chemical components and supplements have become a lot more accepted across the entire spectrum.

Current predictions put the market value at $15.5 billion by 2017 and that is taking into account the downward trend in the 18 to 29 demographic, which seems to be not too high on the usage of nutritional supplements. If firms could sort out and cater to their specific needs as well, then the final numbers could be a lot higher.

IBM Buys Software Firm

 

NEW YORK – IBM Corp will buy Kenexa Corp for about 1.300 million dollars to enter the software market human resources administration, in a move that could increase competition with Oracle Corp and SAP AG.

Oracle Corp and SAP AG last year bought Kenexa rival companies.

The IBM agreement shows the desire of large technology firms position themselves in niche manufacturers web-based software, whose products are less vulnerable to the recession because they face upfront costs for software licenses or installation.

Acquisitions are expected in the area of human resources to fill gaps in the companies in their product offerings to businesses.

Germany’s SAP to buy SuccessFactors competitor Kenexa 3.400 billion in cash in December, while Oracle acquired Taleo Corp for about 1.900 million in February.

The two companies made purchases from companies other cloud storage services, including RightNow Technologies and Ariba Inc.

The offer of $ 46 per share represents a premium of 42.5% over the closing values Kenexa Friday.

Shares of Kenexa jumped nearly 42% to 45.92 U.S. dollars on Monday in New York Stock Exchange. Shares of Cornerstone OnDemand Inc couple climbed 7% to 26.82 dollars in afternoon trading.

“The acquisition of Kenexa complement IBM’s business and leadership in human resources services to companies,” IBM said.

The transaction, which is expected to close in the fourth quarter, suggesting that IBM is ready to enter the fierce market competition production business applications over the Internet.

That puts the company face to face with his colleague and rival SAP Oracle and Salesforce.com Inc, the leading manufacturer of software in a highly populated.

As large companies, there are several private producers of software for human resources management, such as Silicon Valley Workday, presenting for an initial public offering recently.

IBM is expanding in the growing field of business applications via the web, as its new CEO, Ginni Rometty, looking print your label to the company 100 years of history, considered one of the most conservative technology firms in the world.

IBM has focused its highly profitable software division in emails, databases, operating systems and “middleware”-programs that are responsible for the installation of computer networks. Instead, it has prevented the sale of software applications such as human resource management.

Kenexa has more than 8,900 clients including financial services firms, pharmaceutical, retail and consumer industry.

 

Importing Cars Down to 33.7%

 

MEXICO CITY – Although the import of used cars from the United States declined 33.7% during the first five months of the year, compared to the same period last year, it still represented 45% of total vehicle sales.

The director of governmental and institutional relations of the Mexican Association of Automobile Dealers (AMDA), Guillermo Rosales, said that from January to May 2012, the introduction of used vehicles was 172,816 compared to 260,556 in the previous year, although the level this year was higher than the same period of January-May 2010 when they entered the country with 167,304 units.

The import of these units only in May was 34,739 vehicles, and around 54,866 units against the same month last year, which is a reduction of 36.7%.

In relation to the month of April, more vehicles were imported in the fifth month of the year against the fourth month, which the figure rose to 32.037 units.

Although the trend is going down on the importation of vehicles, the representative of the AMDA said the percentage of 45% compared to domestic sales of new vehicles in the country remains high, as this influences the distortion Car Market.

In this regard, he recalled that the “junk” cars still enter the Mexican market in over 80% with legal protections, undermine the value of pre-owned vehicles sold in the country, delaying the decision to renew vehicles by consumers.

So, he insisted that the authorities must bring the case of the granting of injunctions against the presidential decrees that regulate the importation of used cars, to prevent further distorting the market and supply chain work better.

 

 

EMI Sells Division to Sony for $2.2 Million

 

LOS ANGELES – A group led by Sony acquired the British EMI Music Publishing to Citigroup by 2.200 million in a deal that would create the largest intellectual property rights of music in the world with a catalog that includes hits of Motown, the Beatles, Jay-Z and Norah Jones.

Now, all that remains of the British label is its recorded music division that Vivendi’s Universal Music Group has offered to buy 1.900 million.

This agreement is subject to a review of European and U.S. regulators. If approved, at some point this year the biggest labels in the world will increase from four to three.

Record companies have argued they need to add their resources to survive in an industry affected by piracy and a time when digital distribution of music is still a fledgling business.

But publishing and rights management business remains strong, despite the advent of the Internet and falling record sales.

By acquiring the division of EMI, Sony/ATV, a company owned equally by Sony and the estate of Michael Jackson, control over two million songs registered with copyright. The entity will receive nearly one third of net use of copyrighted material in the world.

The amount does not necessarily give the company the ability to use the domain to boost revenue, because royalty fees are jealously controlled by the laws in various countries.

The approval was given by the Federal Trade Commission, whcih means that regulators agreed that the new entity will have market power to raise rates on their own or to coordinate a change similar others, which could have affected the price of the songs.

The conclusion of the FTC, without objection after an investigation, was the last obstacle before the deal was closed hours later.

“We walk across the rainbow and found the pot of gold,” said the CEO of Sony/ATV Marty Bandier, paraphrasing a line from a song from “The Wizard of Oz”, which incidentally is part of the EMI catalog.

Bandier was unit director and managing publishing rights of EMI for 17 years.

Last year, publishing companies and music rights management generated about 3.900 million dollars in revenue, a figure that has not changed much in recent years, according to Simon Dyson, editor of Music & Copyright, a news publishing industry.

The collection of rights management has had a better result than the production side because there are more sources of income that are not linked to the decline in CD sales.

Publishers and composers share a payout of about 8 or 9 cents per download for 99 cents online vendors, like Apple’s iTunes .

They also earn money from music played on radio stations, Internet transmissions and the inclusion of music in movies, TV shows and commercials.

The participation of 11.7% of Sony/ATV and EMI of 19.3%, mean that the new company will control about 31% world market share of copyright in music, surpassing the 22.2% of Universal Music Publishing Group, said Dyson.

The third largest is Warner Music Group Corp with 14.1%.

The independent music publishers have a share of 32.6% in total.

Coca Cola is Investing More in India

 

NEW DELHI – Coca-Cola announced Tuesday an increase of 3.000 million in investments in India over the next eight years, a market in which the leading manufacturer of soft drinks in the world, trying to compete with its rival, Pepsi.

Investments of Coca-Cola and its bottlers, which add to the 2 million dollars over the five years announced in November, are likely to be received favorably by the Indian government, and anxious to restore investor confidence after the growth country’s minimum play in nine years in the first quarter.

The Coca-Cola ad comes just days after the Swedish retailer, IKEA, the world’s largest manufacturer of furniture, said it would invest 1.500 billion euros to open 25 stores.

“We have increased our investment here because we believe there is potential to stay ahead,” said President and CEO of Coca-Cola, Muhtar Kent. Kent told reporters in the Indian capital.

Coca-Cola has lagged behind PepsiCo’s Pepsi brand in India, where the soft drink market reaches 10.000 billion. The company is aggressively trying to strengthen its market share by cutting the price in the summer season.

Kent said Coca-Cola, which also sells brands like Minute Maid juice and Nestea, was on track to meet its target of doubling its business in a decade with global investments in its bottlers of 30.000 million dollars over the next five years.

 

Evernote, the “Secret” of Silicon Valley

 

In a destination like Silicon Valley, California, where there are hundreds of different kinds of digital ventures, few of which survive to market needs.

Evernote, a company founded in 2007, is one of these companies, because of its CEO, Phil Libin, who “risked everything”. Evernote now has more than 30 million users worldwide.

“I remember in 2008, I was about to close the company. I only had money for the next two weeks. Just the night before this decision, I received a call from a Swedish investor who invested just over $500,000 in us. I’m sure that if he had not invested, the company would not exist,” said Libin, in an exclusive interview with Hot Searches.

Evernote with its namesake application, works simple: from your smartphone, computer or tablet , imagine you have a digital notebook where you can write any thought, save a picture or record a voice message. As you do, all the devices you have are automatically synchronized with the information, allowing you to handle it better.

“I think we’re having an organic growth. We try to give the best to our customers without major marketing campaigns . Let the product speak for itself,” explained Libin.

This organic growth referred by Libin appears clearly in the results. In June 2011, the firm that had over 10 million users, now has 30 millio. Of that amount, about 1 million users are paying $5 monthly for the Pro version of their app.

With this amount of capital, says Libin, the next step for the company is to start operations in the market that haunts companies like Facebook, Google and Apple.

“We are handling it very discreet and secure, especially on the issue of data privacy. It is certainly a market we want to be, but never compromising the safety of our users,” said Libin, who founded other firms as CoreStreet or Engine 5.

Just this May 3, Evernote confirmed it had received a round of capital by 70 billion, with firms Meritech Capital and CBC as the leaders in this financial transaction.

Libin hopes to keep the creative sense of your company at least three or four years before coming to make an Initial Public Offering.

“Many companies believe that the IPO is the end of their way and to me, is just one more step. I think with the money we have right now, we can keep doing things for our company without such strong scrutiny and increase our customer base significantly,” said the CEO of Evernote.

Evernote began its journey in 2006 with a capital by nearly 6 million dollars, to constitute formally in September 2007, after having received another sum of 3 billion. It currently has over 70 employees in different parts of the world.

Starbucks Plans to Buy La Boulange

 

Starbucks announced this week that it plans to buy Boulange Bakery for 100 million dollars. The cost of the acquisition will dilute earnings by 0.02 cents per share in the second half of 2012, and expects further dilution in the value per share next year.

La Boulange Bakery operates 19 stores in the San Francisco Bay and sells its products to several upscale restaurants, hotels and shops in the region. The acquisition is intended to improve Starbucks baked goods offered in their cafeterias and represents, in our view, a significant risk by Howard Schultz and his team.

This purchase, along with the acquisition of the chain Evolution Fresh juice at the end of last year, it appears from the “multi-channel strategy” applied by Starbucks to introduce a new product through its national network of cafes and then expand the supply in the channel of consumer packaged goods brand once the gain traction. The logic behind this strategy seems to be based on the success of your product VIA, a line of packets of instant coffee. The risk, in the case of products of La Boulange, is that the strategy was successful VIA as a product of Starbucks, but that success may not be transferred to a branded product that is not Starbucks or perhaps may take longer planned for the brand resonates with consumers nationwide.

In terms of timing to launch the new offering from La Boulange, the company reported that only products first appear in Starbucks stores in San Francisco in 2013. The offering will initially focus on pastries and bread.

While we understand the appeal of multi-channel strategy and we can see the potential benefits, assuming that all efforts will be successful, Starbucks is hardly a correct position, if history is any guide. Starbucks is an extraordinary organization for three years and have followed their stock performance. However, the company seems to have entered a phase of investment, and that changes the landscape of their actions. Simultaneously enter into two major initiatives (juices and food) increases the risk of setbacks for action, in terms of earnings per share (EPS), the consequences of any slowdown in income is over the future than in recent years.

Fresh Evolution strategy, although unproven, may be positive in the medium term given the limited capital investment required to bring the product to stores. But to apply the multi-channel strategy to baked goods a greater risk for EPS in the coming years. There is also the additional risk that, by increasing rapidly the product offerings of La Boulange in U.S. stores nationwide, the company can compromise the integrity of La Boulange made a success.

Based on the conference that gave managers on the acquisition, our view is that the strategy of La Boulange likely require a significant capital investment by Starbucks. In the coming weeks more details will be announced, but right now we believe that short-term investment could be significant, while the reward, though possibly substantial but not guaranteed, it could take years to materialize.

These are the main points that left the conference call:

– Currently income food accounts for 1.500 million dollars in national establishments (U.S. only) on company-owned Starbucks, a figure which recorded an increase of 14% during the first two quarters of fiscal 2012. Management expects that this acquisition will help drive growth in the long term, but few details were provided in the conference.

– Management will introduce the first product La Boulange in Starbucks stores in the area of ​​San Francisco, from 2013. Tenders will focus on pasta and bread at first.

– The product prepared in facilities and property management company seeks to build the brand La Boulange on a national presence. Both require a significant investment of capital.

– Once La Boulange brand products are distributed in Starbucks stores nationwide, management wants to promote the brand through the channel of consumer packaged goods.

Volkswagen Accelerates Expansion in China

 

STUTTGART / BERLIN – Volkswagen has improved the status of China in its vast empire and strengthened control of its brands of trucks with a modification of its top management, aiming for a greater market dominance.

The first foreign automaker to enter the Asian country for three decades and two local partners will invest $14.000 billion by 2016 to raise a number of plants nationwide, including one in the impoverished western city of Urumqi, home to a Muslim minority.

The firm has built brands like Scania, MAN, Porsche and Ducati in recent years as part of an effort to overtake General Motors and Toyota in the top of the industry by 2018.

To boost growth, Volkswagen will create a vacancy on the board of directors exclusively dedicated for China (its largest market), to be directed by Jochem Heizmann, member of board that has been in charge of the commercial vehicle business of the group.

“They’re recognizing that China is a single market so that they can not manage it together with other businesses. You need to treat China separately from the rest,” says Christoph Stuermer, an analyst at industry, IHS Automotive.

So far, Karl-Thomas Neumann, former head of auto parts supplier Continental, Volkswagen led operations in China, but not as a member of senior management.

Heizmann previous responsibilities in the directory would be assumed by Leif Oestling, CEO of Scania, which successfully fought a hostile bid from German rival MAN.

As from then, both truck manufacturers have lost their independence at the hands of Volkswagen. The new duties involve Oestling to be in charge of integrating more closely with Scania and MAN.

With operations will be better connected between the former rivals, the company expects 200 million euros a year in additional revenues and profits.

GM Looks to Leave Facebook

General Motors, the largest automaker in the U.S., plans to withdraw ad spending that keeps the pages of the social network, Facebook, because of the limited impact of these ads on their prospects.

According to a note published Tuesday in the electronic version of the The Wall Street Journal, GM executives have “determined that their paid ads have little impact on car-buying consumers.”

The text cited people close to negotiations, without naming. In addition to that, it collected testimony from the director of marketing for General Motors, who agreed to be “definitely re-evaluating their ads on Facebook.”

If realized, the decision would be a blow to Facebook, which will make its first public offering this week and whose titles have generated great interest among investors.

Due to the demand for their actions, Facebook’s value is up at 104.000 million dollars to start trading on the New York Stock Exchange.

GM’s position coincides with that expressed by some critics, who claim that Facebook is overvalued, arguing that the company does not have a clear business plan.

Aluminium Industry Expects Structural Change

The aluminium industry is expecting a neutral to mildly positive change in the next three to five years. The industry will witness a significant change in the structure and this change will be the result of depressed prices and cost pressures in this field.

Based on Fitch Ratings, some aluminium producers are expected to sink, while and some new companies might emerge, especially in Middle East.

The key reasons behind these radical changes are the depressed aluminium prices, rising electricity input costs and changes in the pricing mechanism for alumina. Aluminium smelting is an energy demanding activity and producers require site smelters in low energy cost regions, such as the Middle East or in places like Iceland and Siberian
Russia (also called energy islands).

Due to the high cost of energy and low smelting returns, producers are being forced to close down their smelters. The announcement of Rio Tinto in October 2011 that it would close or sell 13 aluminium and alumina assets, is just one example.

The second factor is the push for a higher proportion of alumina to be sold on a spot/index basis, rather than on contracts. Alumina has been priced as a fairly narrow percentage (generally in the range of 11.5%-13.5%) of the more liquid and transparent aluminium prices.

It is an argument that the contract system did not reflect the true value of alumina but rather that of the end product. If alumina will price as a product in its own right, it is likely to result in more volatile, but structurally higher future prices and margins.

All these details point to the closing and shedding of Western producers and an increase in Middle Eastern producers who have a strong position in terms of energy cost. These new manufacturers may face operational risk from their lack of integration into feedstock but at the same time these new companies will add operational diversity to the industry.

Coty Withdraws Offer for Avon

NEW YORK – Coty Inc. said Monday that they will withdraw its offer of 10.700 million dollars to buy Avon Products Inc., saying that the world’s largest direct seller of cosmetics beat the deadline to begin negotiations.

“Their total lack of involvement with us led us to believe that they are reluctant to negotiate within a reasonable time,” said the president of Coty, Bart Becht, in a letter dated Monday to Avon.

“It is time for Coty Inc. to act and look for other opportunities,” Becht added.

Avon did not immediately return requests for comment.

Avon’s shares closed on Monday was up 77 cents to 20.96 dollars on the NYSE. Coty revealed his decision after the close of markets.

The paper rose after Avon said on Sunday that they would consider the offer to acquire its smaller rival, but may need a week to respond.

Coty, came to Avon for the first time in March, and subsequently announced its offer to acquire the company for 23.25 per share. That offer included the financial backing of Berkshire Hathaway Inc., Warren Buffett.

Although Coty has almost tripled its revenue, Avon faces lower sales at home, as well as research in the U.S. on charges of bribery abroad.