Winners & Losers February 12, 2015

Michael Kors in Decline, the Future of News



A loser this week: Pandora. Q4 revenue missed expectations and the stock has been cut 65% this year. Analysts say the culprit is a pullback in mobile advertising but the likely culprit is a pullback in advertising on Pandora. Two-thirds of global mobile revenue is now going to Facebook or Google.

Facebook, a big winner on several dimensions. Revenues soared past $12 billion in 2014 and profits doubled almost $3 billion. However, there is a huge discrepancy in user monetization between North America and the rest of the world. Almost 6 in 7 new users in 2014 came from outside North America or Europe. One of two things is happening here: either huge upside for monetization potential outside of western Europe and the U.S. or Facebook and Asia is not doing its job.

Loser this week: Michael Kors. Has the most successful fashion company of the last year grown too fast? Over 200 stores opened in the last 12 months versus ecommerce where they just recently took it in house from Neiman Marcus. They entered the quarter with a 65% increase in inventory and also a decline in Google search traffic of 22%. The stock is off 25% in the last 12 months.

Another loser this week: the media who is obsessed with the media; Brian Williams stepping down as if it is a big story. Nobody cares. The bigger story that the media doesn't seem to be focused on is the fact that the president, kicking off his seventh year, decided to do an interview with Vox and Buzzfeed, not NBC. Personally I get a great deal of value from the nightly news as I've been able to self-diagnose my restless leg syndrome and figure out that Abilify not only helps with my Schizophrenia but eases my chapped lips.

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