Now that's weird.
Yesterday was dividend pay day for Mondelez (MDLZ). We got paid $8.30.
Now remember from my previous post that I expected to be paid $3.41 for 26.2504
@ $0.13/share. Either MDLZ increased their dividend payout (I estimated @
$0.3161/share) or for some reason, they thought we owned 63+ shares of MDLZ. I
know there's an error somewhere and I expect a correction soon.
Now for some news and my opinions:
Lululemon has been on the news lately for having a product recall because
their black Luon yoga pants appeared to be see-thru. As you can imagine, female
customers would be deeply affected by this product defect which resulted in the
recall.
Aside from the embarrassingly bad press, future earnings of LULU are
expected to drop to offset the estimated $67 million in lost revenue as the cost
of the product recall.
Another victim of this product snafu is LULU's Chief Product Officer Sheree
Waterson. LULU announced on April 3 that Ms. Waterson would leave the
company on April 15. It was obvious that this was a move to help stem the drop
of stock price and as the company's atonement for the product recall. Quite
frankly, I wouldn't require someone to lose their job over this and I highly
appreciated LULU's quick and fast response towards the issue. While most
companies would spend months with smoke and mirrors denying any fault or even
flaws with their product, LULU faced this challenge head on. Recalling 17% of
your product was very expensive but the possible loss of trust from loyal
customers was just too high of a price to risk by LULU.
Looking forward, I still think LULU would come back strong and there's
always the possibility for a black Luon shortage which may cause a panic buy
reaction from the customers (which may increase the price of merchandise -
higher margins to offset the loss). Also, customers may continue to stay loyal
to LULU due to the company's fast and effective response and whatever fringe bad
experiences that popped up on the internet are just outliers or isolated
incidents.
If at all, the drop in price is a perfect buying opportunity.
In other news, JC Penny (JCP) fired CEO Ron Johnson after almost 2 years on
the job. Johnson oversaw a disastrous drop in earnings for JCP and the Board
just had enough of it. JCP then hired Johnson's predecessor Myron Ullman
effective immediately.
Who would have thought that Ron Johnson, the executive behind the highly
successful (and profitable) Apple retail stores would fail horribly at
JCP?
Well, it's easy to see now looking back. One of the early interviews Mr.
Johnson made with CBS Morning News, host Gayle King ask Ron if he was wearing a
JC Penny outfit for the interview. He answered and I quote: "No, it's not, but
I will have one on the next time." Oops. Back then, it was easy to laugh this
off and forget about it but now, I realized it was a big marketing disaster.
Can you imagine the late Steve Jobs being caught with an Android phone?
Even Bill Gates was famously quoted for never touching let alone, own an iPod,
iPhone and an iPad. Ron Johnson getting caught with his pants down figuratively
was a sign of him being out of touch with JCP and it's costumers. How would a
CEO know what the customer would want or need if he himself was not a customer?
He ended the promos and coupons and even taken out customer favorite brands. As
a result, Mr. Johnson alienated his loyal customers for the gamble of gaining
new "higher-end" customers. Obviously, discounted jeans and shoes were a
foreign language for Johnson who for the most part of the last decade sold
premium computers, phones and music players.
Would reinstalling Mr. Ullman be good for JCP? Only time will tell.
Finally, we go back to Apple.
In recent weeks, stock analysts such Jim Cramer and tech pundits like Leo
Laporte have expressed their opinions about AAPL. Mr. Cramer was not as bullish
as he was before and may have implied that AAPL lost it's "cool factor". As
recently as last Sunday, This Week In Tech (TWiT)'s Leo Laporte pretty much
waved the white flag for AAPL. He said that the AAPL has ran out of innovation
and that future product releases would pale in comparison to what the
Cupertino-based company released in the past five years. These opinions, for
the untrained eye/ear, would seem the death of Apple and would probably push
some investors to sell their shares of AAPL. But then, I remembered a story
from Jim Cramer's book Confessions of a Street Addict where Mr. Cramer's
Hedge Fund was getting beat on Wall Street in 1998. Cramer wrote in his book
that there was a point during that time that he just gave up on the Market and
even wrote an article for theStreet.com to SELL EVERYTHING. He then said that
was the cue for Mrs. Cramer to start buying for the fund which then saved the
Hedge Fund and Jim Cramer himself. Also, Leo Laporte admitted he was wrong
about Apple in the late '90s when he pretty predicted the death of Apple. This
was before the then newly design iMac, the iPod and iPhone/iPad. So in short,
I'm considering these recent statements by these two people I respect as a sign
that AAPL is at (or near) it's bottom. Plus, Warren Buffet always said: "I buy
when people are fearful and I sell when people are happy/greedy."
I believe AAPL still has a few products up it's sleeve. Recent news about
the iPhone 5s and iPhone 6 being designed by Jobs himself give me confidence and
with iOS/Software under Jon Ive, I'm optimistic that AAPL would wow us within
the next few months. Also, let's not forget that AAPL still has that over $100
Billion in the bank.
Besides, it's nice that our portfolio is no longer dependant on AAPL's
stock price to succeed. And that my friend, is diversification.
