Starbucks’ Caffeinated Successes, Parker’s Plans For Pens, “Raider or Savior” – Now Playing On Netflix

 

SBUX Refreshers

Starbucks’ Caffeinated Successes: Starbucks’ latest reported earnings (the last quarter was the final quarter in its fiscal year) delivered a well deserved jolt to its stock price. Closer inspection reveals many things to like about Starbucks’ strategy and execution that quarter: increase in same-store revenues (7%), increases of its grocery store packaged products (33% growth!), higher profits for the full fiscal year, higher guidance for next year, etc. More stores will open next year too.

What is specially impressive about this is that others such as McDonald’s and other peers of Starbucks have been hurting in the same time period.

So one of the things I wonder about is – what does this mean specifically for McDonald’s plans to compete head to head with Starbucks with its McCafe formats? Will McD’s amp up its McCafe plans or tone things down? My bet is on the former.

One of the other interesting things about Starbucks is how its been able to leverage LivingSocial in a way that other companies are not able to leverage “daily deals” companies:

Starbucks followed that with an offer on daily deals site LivingSocial in early September that allowed people to redeem a $5 coupon for $10 of products. In less than 24 hours, 1.5 million people bought the coupon, many of them new customers who then signed up for rewards cards and became repeat visitors, Starbucks said.

Starbucks can teach others in the fast-casual restaurant industry a thing or two here. 

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Parker Pen

Handwringing Over The Demise of Handwriting: When I was 6 years old, my parents bought me handwriting “improvement” books that I faithfully used to create my own brand of cursive. 

Today, in the U.S. and the West, at least, writing by hand is something most people do either when writing a check (but electronic checks do away with that need too) or when signing a greeting or birthday card. An interesting article on Fast Company talks about all of this, in the context of Parker Pens: 

A recent survey by Docmail in the U.K. found the average person hadn’t handwritten anything for 41 days and a third hadn’t written in six months.

Naturally, one must ask, what happens to the makers of pens and other “writing instruments”? Will they go quietly or not?

At least in the case of venerable Parker Pens (now owned by Newell Rubbermaid), they are trying to innovate

What Parker is doing is doubling down on its core business, but adapting its pen technology to suit a public that no longer wants to fiddle with ink–in those rare moments when they do choose to write with a pen. And it’s also aiming squarely at the premium market where it can sell fewer products at higher margins to keep its revenues flowing.

and target the developing world where most people still write by hand – calligraphy and penmanship is still valued highly there. But still, I wonder if the writing on the wall spells doom for the pen industry.

Zooming out, this is an example of how entire industries are being changed – for good and bad – because of the breathless and breakneck speed of innovation engendered by the tech industry. In the late 19th century, the buggy industry was wiped out because of automotives. Companies in industries that have cheaper, easier “substitutes” (reference: Porter’s Five Forces) should be on alert and regardless of temporary profitability, need to be thinking of their strategies. 

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Latest Netflix Movie – “Raider or Savior”: News that Carl Icahn took a 10% stake in Netflix caused a stir yesterday.

Shareholders and others that want return on their Netflix investments clearly view Icahn as a savior and sent Netflix’ stock up 20% or so. Icahn, an “activist shareholder” has a history of helping, cajoling or bullying management and boards of directors to clean up, shape up or ship out. In his own words:

While sometimes selling the company is the right approach because of the synergies that come from a takeover, my overall strategy is more complex: it is to force lackluster managements to sustainably improve their performance. This is frequently an arduous and complex process. Simple solutions are rarely obvious…In numerous cases, we have taken board seats to work with existing managements to help build value.

Netflix’s management of course will view this as a very hostile view. Reed Hastings, Netflix’s CEO, is super smart and has clear ideas on how to manage and run things. Things are about to get a bit pricklier because while Icahn now owns ~ 10% of Netflix, Hastings only owns 4.4% of Netflix (what about voting vs non-voting stock, etc.? I don’t know that yet).

He is already telling the world what he (Icahn) thinks should happen:

“Netflix should be consolidated in my opinion,” Icahn said in the interview. “There will be demand for Netflix. There will be buyers who want to buy it, and it’s just a question of corporate governance: Do you do want what shareholders want?”

Good luck to Netflix’s shareholders and its management team.

One Response to “Starbucks’ Caffeinated Successes, Parker’s Plans For Pens, “Raider or Savior” – Now Playing On Netflix”

  1. Srini says:

    Happy with the SBUX earnings today — had some calls that did well :-)
    As with YUM brands, growth in China accounted for the success as well — wonder why CMG crashed with their results (I wasnt a happy camper with the calls there)…guess having the first three letters in common didnt do chipotle any good… :)

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