What Is a map worth?

Maps and geo location services are worth plenty according to a study commissioned by Google (GOOG). According to the study we could be saving up to $1.6 trillion dollars mainly due to more efficient uses of resources like transportation, time and search. The industry is growing rapidly at around 30% per annum. Depending on the situation benefits can be life saving or time saving.

 

As can be seen in the chart above there are numerous benefits, maps services are great for outdoors but I get lost indoors as well! Well luckily for me GOOG has uploaded floor plans for over 10,000 indoor locations to GOOG maps. It's not yet available in Australia but for users in Belgium, Canada, Denmark, France, Japan, the United Kingdom, the U.S., Sweden, and Switzerland they can finally find a bathroom in the shopping mall. It is a great idea by Google but is not available on Apples (AAPL) iPhone 5 and is only available to Android users. The eco-system war between GOOG Android and AAPL iOS system has definately stepped up. It is all about the apps and maps.

If you have a mansion unfortunately you cannot show off and upload it, GOOG allows uploads of only public buildings.

This video gives a pretty good overview of what to expect.

Geo location services are extremely valuable this will only increase with the addition of indoor plans. One priceless service is no more getting lost with your partner no upside down map reading here. For me that is plenty of value add there, though I'm sure with the introduction of indoor maps I'll end up spending more effecienty (which means more) at the local shopping mall.

Jason

http://www.decisiveassetmanagement.com/

Disclosure: Decisive is long GOOG

The material in this article is for informational purposes only and in no way constitutes a solicitation of business or investment advice. The material has been prepared without regard to any client's or other person's investment objectives. Before making an investment decision you should consider the assistance of a financial adviser and whether any investment or service is appropriate in light of your particular investment needs.

Outfitt this

Urban Outfitters (URBN) is known for selling hip, funky fashion and household products. URBN has also been known to be somewhat controversial as the images below of Paddy's day specials suggests.
 
 

Source: Urban Outfitters

 

He's back
URBN has stumbled the past few years by missing key fashion trends in apparel. URBN has had to offer signficant discounts to sell their clothes impacting company margins. URBN moved so far off path that the 64 year old founder Richard Hayne (owner of nearly 19% in stock) has taken back the CEO role with a $1 salary, he also brought out the broom. In the past year the CEO, CFO and brand managers of URBN have been removed.
 
Omni-channel done right
Richard has brought back with him a vision that 50% of URBN sales will be from online within 5 years. A realistic target given that online was 30% of overall sales during the most recent holiday period. Staff are now able to access mobile and iPad points of sale so they can see all the inventory that's available to fulfil an order if it isn't in the store. Other initiatives include iPads replacing registers allowing for a more personal interaction between sales and customers. It also works well financially with a fully loaded iPad costing $1,000 versus a regsiter for $5,000.
 
URBN is a big believer in melding the benefits of a retail store with the benefits of the pure play online retailers. The main takeaway from the pure play online businesses in the chart below is that with online URBN can expand their product range.

Source: Urban Outfitters 

Selling through the web allows URBN to broaden their product range for extra sizes or colours that might not make sense with restricted space in a store. It can also sell products that are not profitable if sold in store. The product range can increase tremendously because instead of paying retail $40 a square foot URBN is paying warehouse rates of $4 a square foot. So they can justify more products and sell web exclusive products. URBN is also able to ship from stores not just distribution centres to fulfil internet orders. 
  
Back to growth
URBN wants to be a growth company but total comparable same store sales were a negative 1%. That's no growth. Digging deeper this number is impacted as internet orders can be returned to stores which are charged against store sales. Excluding these returns comparable sales would have been low single digit positive.

Even though URBN has been around since GAP and Limited Brands were founded it is still an American based brand with 90% of sales. There is the potential to roll out more stores in line with Richard's goal of getting back to 20% revenue growth. URBN has around 430 stores they believe they can grow to to 850 not including Asia. URBN has the luck of the Irish!
 
 
Jason 

http://www.decisiveassetmanagement.com/

Disclosure: Decisive is long URBN

The material in this article is for informational purposes only and in no way constitutes a solicitation of business or investment advice. The material has been prepared without regard to any client's or other person's investment objectives. Before making an investment decision you should consider the assistance of a financial adviser and whether any investment or service is appropriate in light of your particular investment needs.

Time to check in with OpenTable?

Making restaurant reservations is a pain. The phones are hardly ever answered and the best restaurants always seem to be full. The pain feels even worse when you are hungry! Luckily for you OpenTable (OPEN) will help quell those hunger pains. OPEN is North America's largest restaurant reservation booking service with 26,000 restaurants waiting to be booked.

Are you being served?
For a small technology company OPEN has great brand awareness. Unlike most e-commerce companies OPEN is not heavily reliant on third parties for traffic such as Google. 90-95% of users go direct to OPEN sites. Its mobile app and websites are the leading destinations for consumers to review, select, read menus and make a confirmed reservation.

Source: OpenTable

Everyone wins
One of the best aspects of the business is that OPEN receives the same amount per booking on mobile and desktop averaging 70 cents. No mobile monetisation issues here! Mobile is approximately 1/3 of bookings in North America. OPEN is a massive beneficiary of the trend to last minute location based bookings. 

The pay for performance booking model is favourable for restaurants as the average check brings in $42. A lot better result then traditional advertising where there is no guarantee of a booking.
OPEN tends to make around $600 per restaurant per month including a $200 subscription fee. OPEN software is compatible with the Ipad and a cloud based system is now available. This system called Connect has no subscription fee but reservations are higher at $2.50 a booking.

No stomach churn here
Some technology companies annoyingly tend not to disclose churn in their subscription base. OPEN is happy to disclose this number because churn rates are low, they tend to be around 1% a month. A decent rate considering a lot of restaurants unfortunately go out of business. 

OPEN has an interesting opportunity to be more involved in the field of data analytics. OPEN has a database of users dinning histories and preferences which can help restaurants to personalise the dining experience. This is a great opportunity as this data will help the OPEN system be more sticky and useful for the restaurants. There is also the possibility of a recommendation engine suggesting restaurants based on past data and in integration with Facebook where friends like to eat.

Source: OpenTable


OPEN is still only booking 12% of diners in North America. The highest booking rate at 31% is by the technology savvy area that is San Francisco. Penetration will most likely fall somewhere just under San Francisco's 31% so there is still ample room for domestic growth. There is also growth internationally with a major growth push underway in London. OPEN has 80% of the Michelin rated restaurants in London on board. They are also adjusting the service for locals so they can search by tube stop. 

Cake anyone?
OPEN is one of the best beneficiaries of the trend towards mobile usage. It is a service that is location based, sales are incremental as they are last minute and they monetize the same on mobile as desktop. Investors can have their cake and eat/book it too!

Jason

http://www.decisiveassetmanagement.com/

Disclosure: Decisive is long OPEN

The material in this article is for informational purposes only and in no way constitutes a solicitation of business or investment advice. The material has been prepared without regard to any client's or other person's investment objectives. Before making an investment decision you should consider the assistance of a financial adviser and whether any investment or service is appropriate in light of your particular investment needs.

When was the last time you visited a branch?

If you are like everyone else probably quite a while.

The trend to online banking is reaching the tipping point. Consumers have adopted the habit of buying online and are now becoming more comfortable managing their money online. Enabling technology such as mobile has opened up the market for internet only banks by solving the problem of depositing cheques. With a mobile phone customers can take a picture of the cheque which is then remotely deposited into their online banking account. This technology now allows the internet banks to chase more corporate business.

Source: Everbank investor presentation

We believe the best way to play this growth trend is through BofI, the owner of Bank of Internet USA. 

BOFI is based in San Diego and its portfolio is concentrated in the region consisting mainly of single family housing. BOFI has total assets of $2.6 billion. The business outlook is strong with $180 million in pending applications.

No branches = Less fees

BOFI is a branchless bank, because it does not have the cost base of a regular bank BOFI is able to cut fees by an average of 30-35% . The lack of branches leads to a near 50% cost advantage. 

Source: BOFI investor presentation

Some of these benefits are passed onto the consumer through initiatives such as no overdraft fees. The average account age tends to be relatively sticky at 3-4 years. BOFI does not have its own ATM network but happily refunds any fees charged by other banks. Its ATM footprint ends up being the entire network!

How do they make loans?

Its always a good measure of a company to see who they are doing business with and here BOFI stands out. BOFI has an affiliation agreement with Costco for mortgages. Members of Costco can apply for a loan at great rates. Costco consumers trust the Costco brand to deliver value and with its cost structure BOFI is able to fit the bill.

Insiders own around 16% of the bank, we are banking alongside mangement that this trend to online banking will continue.

Jason

http://www.decisiveassetmanagement.com/

Disclosure: Decisive is long BOFI

The material in this article is for informational purposes only and in no way constitutes a solicitation of business or investment advice. The material has been prepared without regard to any client's or other person's investment objectives. Before making an investment decision you should consider the assistance of a financial adviser and whether any investment or service is appropriate in light of your particular investment needs.

Romance + Revelry = Mobile hotel bookings?

E-commerce used to be a desktop only activity however the rise of the smart phone has given consumers the ability to make last minute and/or spontaneous purchases. One industry that is benefiting from this trend is the online travel agencies. They are benefiting as bookings not advertising drive their revenues. A typical problem for most companies is that while mobile drives extra traffic it tends to be at lower average sales levels due to the smaller advertising and screen. This is a problem these agencies tend not to have as their money is made when a room is booked and because they are last minute purchases the revenue tends to be incremental and does not cannibalise desktop revenues.

This is backed up by the CEO of Expedia (EXPE) Dara Khosrowshahi, "most of our sites are seeing 20 percent or more of their transactions coming from mobile, it’s by far our fastest-growing channel.” Note mobile includes tablets. "Approximately 70% of our mobile hotel bookings occur within 24 hours of stay furthering our belief that mobile represents an incremental opportunity," said Expedia spokeswoman Mallory Seubert.  This is great news for the online travel agencies as last minute bookings tend to go direct to the hotels, now users can use apps on their phone to compare prices based on their current location at the last minute.

The major beneficiaries are EXPE the owner of Expedia, hotel.com and Hotwire and Priceline (PCLN) the owner of Booking.com and Agoda. The main difference between the two is that EXPE is a more US centric business while PCLN is more dominant in Europe. The trend to mobile has pushed PCLN into action acquiring Kayak for $1.8 billion due to Kayak's expertise and growth in mobile downloads and the ability to grow Kayak internationally.

Source: Priceline

EXPE has released the most interesting study teaming up with Harris to commission a study into the trend.Their findings suggested that mobile usage tends to spike around holidays late at night such as New Years.

The most common reasons to book a room was necessity, they had too many drinks and could not find a way home.

“The next most common reason was personal, they had found love (or believed they had) and choose to explore those emotions immediately, in a nearby hotel room. “(Wording straight from the Harris study.)

The study went further onto say that their busiest periods were Valentine’s day, St. Patricks Day and the weekend after New Years Eve suggesting that romance and revelry were the key ingredient to mobile bookings. Here’s to hoping a mobile booking for all on New Years Eve!

Jason

http://www.decisiveassetmanagement.com/

Disclosure: Decisive is long PCLN

The material in this article is for informational purposes only and in no way constitutes a solicitation of business or investment advice. The material has been prepared without regard to any client's or other person's investment objectives. Before making an investment decision you should consider the assistance of a financial adviser and whether any investment or service is appropriate in light of your particular investment needs.

Investor christmas wishlist

It’s now December and Christmas present wish lists are front and centre for households. It's a dangerous time for parents if the deadline is not fulfilled with the potential for anxious and upset family members, this is sounding just like the fiscal cliff!

Our household wishlist consists of some of the products from the table below. These companies are better known for their brands. It’s a handy table for parents to know where their money is going. It also begs the question can I make some money back from these companies?

Hasbro	Mattel	Lego
My little Pony	Barbie	Lego
NERF	Thomas the tank engine	Lego
Transformers	Fisher Price	Lego
GI Joe	Hot Wheels	Lego

Source: Company websites

What about me?

As an investor where is my Christmas wishlist? Looking at the reports from the three rivals above by revenue Lego is the clear standout with revenues growing much faster than peers with a base 3x larger than that of rival Mattel which is slightly larger by revenue than Hasbro. Profits have also grown from 1,028 million Danish Kroner to 4,160 million over the past four years. Not too shabby for such a well known toy brand.

Source: Annual reports/Factset

Lego fan, join the club

On average every person on Earth owns 80 pieces of Lego with all bricks being fully compatible from 1958 to now! (source Lego). Apparently new launches account for 60% of their sales such as new lines like Star Wars and other franchisee or movie tie-ins. The company did not skip a beat during the global financial crisis as Lego was able to grow in the world's largest toy market the US with Lego increasing its market share to 6% by end of 2011 (source Lego Annual Report).

Unfortunately Lego is not listed, its too profitable it doesn't need money from anyone else to grow! While an annual report is available on the website it is still owned by the Kirk Kristianseen family, passed down to a grandchild of the founder.

Who knows how to get to Sesame Street?

Seems like Mattel and Hasbro are left by default. Mattel has added the power brands of Thomas the Tank Engine and Bob the Builder in an acquisition from private equity in the past year. This purchase was motivated by the loss of the Seasame Street license to rival Hasbro 3 years ago. Hasbro starting from 2011 has the right to make Sesame Street merchandise for 10 years after a 15 year agreement with Mattel lapsed. Sesame Street is a nonprofit organisation.

It is a simple analysis but as a growth manager we are going with the faster grower. While not growing anywhere near as fast as Lego Mattel at 9.4% it has a superior growth rate compared to Hasbro 8.2%. Our Santa wishlist has to go with Barbie (Mattel) over Seasame Street as while it is one of the best known brands it is a license and not owned content (Hasbro). Mattel is faster growing and has a better range of more famous and relevant brands for kids.

Santa if I can't buy Lego shares can you please just send a Lego car?

Source http://www.hongkiat.com/blog/35-lego-mega-constructions-you-probably-havent-seen-before/

Jason

http://www.decisiveassetmanagement.com/

Disclosure: Decisive has no position in any of the companies mentioned.

The material in this article is for informational purposes only and in no way constitutes a solicitation of business or investment advice. The material has been prepared without regard to any client's or other person's investment objectives. Before making an investment decision you should consider the assistance of a financial adviser and whether any investment or service is appropriate in light of your particular investment needs.

 

Mobiles, mobiles and mobiles

Kleiner Perkins Caufield & Buyers (KPCB) released their most recent internet trends presentation. Its an 88 slide blockbuster condensed here to 6 key slides. It's more of a chartathon than a blog but a KPCB picture slide is worth a thousand words. Well summed up in four words its mobile, mobiles and mobiles.

 

The great thing about emerging markets is that they can leapfrog developed markets in that they do not have to upgrade exisiting infrastructure, they can start from scratch. No need to buy a desktop computer if you can search through your phone. India mobile usage is already leading desktop and the world. 

 

 

 

 

 Kids Christmas wishlist, out of the top 5 products four are from Apple

 

Those kids that want Apple products above need them so they shop smarter during Black Friday

 



We all know print is structurally challenged as readers but advertisers still have a ways to go

Wintel (combination of Microsoft's software and Intel's hardware) have really been left behind by the move to mobile. By the look of this chart any response might be too late.

 

Smartphones still only 17% penetrated worldwide, stay long the mobile theme!



 

Jason

http://www.decisiveassetmanagement.com/

Disclosure: Decisive is long AAPL

The material in this article is for informational purposes only and in no way constitutes a solicitation of business or investment advice. The material has been prepared without regard to any client's or other person's investment objectives. Before making an investment decision you should consider the assistance of a financial adviser and whether any investment or service is appropriate in light of your particular investment needs.