It is only logical that the leading smartphone company (Apple) and the leading AI company (Google) are increasingly designing more of their own silicon which is optimized for each company's respective products and services. Tickers mentioned: AAPL, AMZN, AVGO, GOOG, INTC, QCOM, SWKS Think of the iPhone and Google's Pixel phone. Every feature, every application, … Continue reading Platform Companies Will Increasingly Design Proprietary Silicon
Share buybacks are back above pre-COVID levels. Frequent readers of these pages know that we are generally not in favor of share buybacks. Buyback activity has exploded since 2009 when the Fed began its low interest rate and QE monetary policy to artificially prop up equity and credit markets during the financial crisis. Public companies … Continue reading Share Buybacks Accelerate
Over the weekend Warren Buffett stated that poor leadership is the greatest risk facing companies. Mr. Buffett is preaching to the choir and knows a thing or two about bad leadership having lived through scandal and CEO turnover at Wells Fargo while Berkshire was a large holder. Coca Cola - another Berkshire holding - hasn't … Continue reading CEO Quality Matters. Warren Buffett Agrees.
Technology CEOs who truly value innovation are scarce. It is far easier to give investors near-term profits than to reinvest a significant portion of profits in R&D activities that may not drive long-term ROIC (Yes, risk is involved which requires courage and conviction). The chip business is no exception. New Intel (tkr: INTC), CEO Pat … Continue reading Intel CEO Investing To Drive Innovation
Legacy payments companies still have not fully embraced mobile applications. For example, Global Payments (tkr: GPN) chooses to white label certain mobile payment applications from Apriva rather than fully own its technology stack. All mobile applications are not created equal. The user experience differs dramatically across mobile apps and is primarily a function of the … Continue reading It’s Difficult For Legacy Payments Companies To Learn New Tricks
Read on for our "Tip for Investors" CEOs and CFOs can help spur innovation by creating a culture that values innovation. One such example is tying a portion of variable compensation to new product development (thinking of Tech companies). However, it is the Business Unit leaders and Product Managers ("PMs"), in particular that are responsible … Continue reading Innovation Does Not Happen In The C-Suite
Yesterday Qualcomm (tkr: QCOM) announced that Cristiano Amon - an engineer - would become the company's next CEO in June. Current QCOM CEO Steven Mollenkopf is also an engineer. This contrasts sharply with Intel (tkr: INTC), CEO Bob Swan - a career CFO. If you regularly read these pages and listen to our TEK2day Podcast … Continue reading Technology CEOs Who Lack Technology Chops
It is amazing what institutional investors - especially large holders - put up with. Do Portfolio Managers communicate with CEOs any longer? PMs used to speak with management teams to provide feedback around capital allocation decisions, financial disclosures and more. My sense is that less of this interaction occurs today. Below we cover a few … Continue reading Institutional Investors Forgot They Have A Voice. PLUS – Big Tech Regulation.
Innovation is the name of the game and I am unable to think of a major bank that has innovated or disrupted the market over the past 20-30 years. Goldman probably comes closest. Goldman's biggest "innovation" was attaching itself to Apple's coat tails. JPMorgan has leveraged AI and other advanced technologies internally. However, JPM has … Continue reading Most Banking CEOs Fail To Innovate. New Citi CEO Jane Fraser May Have Better Luck.
A number of companies across industries have done a fine job of protecting profits during the COVID pandemic even as they experienced revenue pressure. We are not as bullish as those who assume that 2021 will see revenue growth rates for most companies return to pre-pandemic levels. Innovation - a difficult phenomenon to master - … Continue reading Innovation Will Lead Companies Out of the Downturn