Inflexion Point after Alibaba Deal. Is Yahoo Brain Dead and Does Yahoo Thrive or Become a Trust Baby Coupon Clipper. $YHOO, $BABA

OK the big Alibaba deal is done and the market is digesting. Yahoo has reached an inflexion point where the Alibaba component is now fully valued. Yahoo needs to quickly turn on the jets and prove to shareholders that there is gas in the tank.

We need to see some clever acquisitions and more than one hundred million dollar deal. A steady barrage of acquisitions would be preferable. As it would signal a technology focus and start to define Yahoo as a leader and not an also ran.

With this amount of cash there must be room for a dividend. Buy and hold investors will accumulate and build a shareholder base which is woefully lacking. Declaring a dividend has not hurt high tech.

If in the next few months there are no significant announcements than Management is brain dead and has no clue for the future.

George Gutowski writes from a caveat emptor perspective.

Is Advice from Accenture a Value Proposition $ACN

Much of Accenture’s cash flow comes from foreign sources. Foreign exchange risk abounds as currencies re-align often suddenly.

IT services is highly competitive. Many other consultancies are able to offer excellent value as well. Quite frankly it’s a bare knuckles brawl. Accenture must win the majority of street fights and skirmishes to stay on top.

References are critical. What have you done is key. Poor client outcomes regardless of client ineptitude will reflect on Accenture.

George Gutowski writes from a caveat emptor perspective.

 

Consulting Bull Case Scenario Reason for Optimism at Accenture $ACN

Accenture consults to the world’s largest corporations. They are uniquely positioned to understand global trends and unique opportunities which further helps them leverage their corporate connections. Early insights are particularly valuable.

Accenture creates substantial cash flow. Their fixed costs are limited. Their brains are mobile. Shareholder distributions should be substantial in the near future.

IT spending and Cloud driven propositions will generate many fees in the near future.

George Gutowski writes from a caveat emptor perspective.

 

Bear Case Scenario Why Alibaba is over hyped. $BABA

The Chinese market is huge. Other savvy well capitalized players are and will expand into China. Alibaba does not have all the answers.

Alibaba is Chinese and to a great extent beholden to Beijing. There will be subtle pressure from the Emperor’s court. The pressure only works if the Emperor’s court has much power globally.

Despite its domestic dominance in China it will be necessary to expand globally. This will be new battle ground without the normal advantages but much prestige will be involved. Alibaba will not automatically thrive in new markets.

Alibaba has and will invest in offerings within its eco system. This will distract management as it fights side battles and loses focus on the main goal.

George Gutowski writes from a caveat emptor perspective.

 

Big Hype Bull Case Scenario for Alibaba. Can it last forever? $BABA

Alibaba has only 20% of active buyers in China. Growth potential seems arithmetically simple. The first 20% is the hardest incrementally profits will continue as scale is realized.

Approximately 70% of Chinese internet shoppers born in the 1990s consider Taobao as their first online shopping destination. Loyalty and user habit may suggest a lifetime of potential transactions ahead.

Alibaba is structurally well positioned to profit from B2B to C2C. This will be revolutionary as the Chinese economy grows and matures.

George Gutowski writes from a caveat emptor perspective.

 

Ambev May go Flat. Spilled Suds Maybe. Bear Case Scenario Probably. $ABEV

Canada is a disaster zone. Margins and growth are poor and show no signs of improving. Curious that a supposed strong beer brand cannot make adequate inroads in a strong beer market. Do you realize how much beer Canadians drink while watching hockey. Second fact: Canadians watch more than just hockey.

Ambev distributes Pepsi products in Latin America including Brazil and Argentina. Coca-Cola is very strong in these markets. Ambev will need a miracle to become dominant in these lines.

Governments are looking for more ways to tax. Public health frowns on profitable beer consumption. There can be significant regulatory head winds impeding Ambev growth.

George Gutowski writes from a caveat emptor perspective

 

Ambev Enjoys Heady Foam Bull Case Scenario for Cold Beer. $ABEV

Ambev enjoys profit margins above 40% which is higher than even the largest competitors. They clearly are doing a lot of things right. This dominant financially pleasing fact is because of huge concentrated market share. Brazil has the highest margins of all markets.

Large sporting events from FIFA cups to tiddly winks drive beer consumption. You just have to show up at the right time. Ambev has done that.

Per capita consumption in Brazil and Argentina are much lower than supposed mature markets for beer. This bodes well for the domestic olde school portion of the business.

George Gutowski writes from a caveat emptor perspective.