Appdate with Comscore

Comscore (SCOR) is the leader in measuring where we go on the internet. They have great insights on how we spend our time. Their most recent app update shows that Facebook and Google owned apps continue to dominate with 8 out of the top 10 apps.

Source: Comscore insights

Apple now has over 1.4 million apps. The bad news is that it's very hard to get your app to stand out as usage is very concentrated (see below). 40% of the time spent on your phone is social networking and games.

Comscore's own update
Getting an app out there is competitive and so is the general battle for eyeballs. Time spent on devices is moving to mobile and more television viewing is shifting online. We think a business that measures these changes is a better way to participate in this growth. SCOR has the opportunity to leverage its online measurement to measure TV viewing across device and as it moves online. The increasing adoption of internet TV and watching on mobile devices means that traditional TV measurement no longer makes sense.

Measurement less exciting but with more potential
Media companies are voicing concern that current measurement systems (mainly Nielsen) are not making enough changes to measurement when viewing habits have changed. Given the measurement limitations they are leaving precious advertising revenue on the table when online viewing is not included. Nearly every media conference call involves some comment or complaint about television measurement in an internet world. This change creates an opportunity for someone to crack the cross media device code.

Source: Comscore 4Q presentation

Doing what your customers want
Customers are asking SCOR for a solution. They believe they can accomplish cross-measurement best in a recently announced strategic alliance with Kantar (see above). Kantar is the leader in TV measurement outside the US and is owned by WPP. This alliance will aid SCOR's expansion overseas combining Kantar's overseas TV assets and SCOR's digital measurement business providing a world class cross media measurement system. Everyone is watching media on TV, phones, tablets and desktops, media companies are asking for it and now we have someone to measure it.

Jason

http://www.decisiveassetmanagement.com/

Disclosure: Decisive has a long position in Comscore (SCOR) stock.

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.

Hasbro playing well with Disney

The toymaker Hasbro (HAS) has got game. Their brands reported record earnings last week, raising their dividend and announcing a $500 million stock buyback. Lately they have had plenty of good news to share. Late last year Disney Princess ditched Mattel for HAS. Starting in 2016 Disney Princesses will be hanging out with the team at HAS ending a nearly 20 year partnership with Mattel. HAS has traditionally been strong in boys but with Frozen and Disney princess HAS will have a massive legup against its rival Barbie and Mattel.

Playing with Disney
Disney Princess is a 2016 story but this year the boys will be kept busy with Disney movie releases. In addition to Disney princess HAS has the rights for Marvel and Star Wars. It's a big year for boys toys as Avengers 2 comes out in May, Ant Man, Fantastic Four and the big one Star Wars comes out December 18. The last Star Wars film in 2005 helped sell $494 million of HAS toys. HAS are looking to up their game working on light sabers that kids can customize. It's like lego for light sabers (see below).

Source: http://kotaku.com/star-wars-bladebuilders-let-you-craft-your-own-impracti-1685846217

Monopoly is a monopoly
HAS revenues are split between licensed brands from the likes of Disney and Sesame Street and their fully owned brands. HAS owned brands have seen a renaissance by combining media and play (see below). The main driver has been movies and TV with Transformers benefiting the most. HAS has made sure that their brands are well represented on TV commenting that kids are consuming 12 hours of media within 8 hours. Kids are multi-tasking just like the rest of us doing two things at once, playing and listening to music etc at the same time.

Source: Hasbro investor day 

Entertainment and story telling has been a driver of HAS success. According to NPD entertainment based toys grew at a 7% compound annual growth rate while non-entertainment toys were flat from 2012-2014. Great stories and characters are attracting kids to their toys.

The most interesting thing about HAS is that Disney has given them their vote of confidence. HAS already has the biggest boy brands in Marvel and Star Wars, starting 2016 they will also have Frozen and Disney Princess. HAS toys will greatly benefit from Disney's film schedule. An investment in HAS is a bet on Disney's story telling success.

Jason

http://www.decisiveassetmanagement.com/

Disclosure: Decisive has no position in Hasbro (HAS) stock but is long Disney (DIS).

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.

Visa and Mastercard insights to the consumer

Consumer stocks have been the biggest beneficiaries of the drop in oil and gas prices reporting some of the best results from earnings season. Visa (V) and Mastercard (MA) were also standouts and gave a great insight into the spending habits of consumers. The drop in gas prices is like a tax cut in an improving economy, with more jobs consumers should be able to save more and spend more. So far the read through is that consumers are still cautious but both of these companies are expecting this to change.

From Charles Scharf the CEO of Visa. "This drop amounts to approximately $60 per month for the average consumer. According to our surveys, approximately 50% of the savings consumers are seeing is being saved. 25% is being used to pay down debt, and approximately 25% is being spent in other discretionary categories. These categories include grocery, clothing, and restaurants. This is consistent with what we've seen in our own spend data. As we look forward, we would anticipate the savings will accumulate, and ultimately we would see more spent in the discretionary categories, including higher ticket items such as home improvement, electronics, and travel and entertainment."

"And just keep in mind a little bit, the average of $60 a month, $60 a month in its own right

doesn't change – it's unlikely that people change their behavior. I mean, if you boil it down to people filling up their tanks once a week, right, at that point you're down to $15 a week. How are you going to go spend differently? So the places that we're seeing it, which I mentioned are the grocery stores, quick service restaurants especially, are the types of places where you would see that kind of additional dollar amount. But as I said from our surveys, we know that 50% of it is being saved. That amount of money accumulates, people start to see that they have additional money, and then over a period of time will potentially buy higher-ticket items is what we would anticipate."

From the MA CEO Ajay Banga. "I think about the fact that it's $800 a month (I think he meant year, Jason), or whatever it is to a middle-class family, the gas prices are down 12% over this same time the previous year, and that's not a small number here. So, when we put all that into context, you would've thought it'd flow through. But the way, I think about it, I was in Davos, we've talked to so many other fields about this, I just feel that maybe it is that it's going to take three months or four months for the U.S. consumer to feel that this is something that's going to be with them for a little while. If you have a longer-term perspective of the price of gas, not going back to $100, but maybe settling in at $75, $80, that's where we're thinking. I don't think the U.S. consumer knows whether to expect this to be sticking around or not, so I think there's some degree of, let's say, the desire to see that through before they really start spending that kind of money. So, if you were to ask my opinion and my guess, I would say, we're probably a month or two or three away, if this price stays where it is, for them saying, you know what? I do have $800 a month more in my pocket, and I could afford to go and buy X. I think that's kind of what I think about it".

Source: Visa investor day

Both companies were impacted by the decline in gas prices reducing revenue growth by 1%. However this was offset by the trend to e-commerce. The great thing about e-commerce is that cash does not work in the online world and it is growing nearly three times the rate of retail spend. Cash is still the number one competitor for these companies and luckily for them cash can't be accepted online. Also while V and MA are big marketers cash can't advertise. Both companies are in a great position when their main competitor (cash) cannot advertise back! 

Jason

http://www.decisiveassetmanagement.com/

Disclosure: Decisive has a long position in Visa (V) stock.

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.

China Hurun

The Hurun Report recently released their Best of the Best Awards for 2015. Hurun is famous for releasing China's equivalent of the Forbes 500, a magazine targeted towards China's richest. Their survey saw Apple voted as the top gift brand for both men and women. In China Apple is the luxury brand iPhones are now officially more valuable than handbags (see below). The corruption crackdown is still having an effect on gift giving down 5% year on year on top of the 25% fall last year.

Source: http://www.hurun.net/en/ArticleShow.aspx?nid=9604

Australia was the preferred international travel destination with Qantas voted as having the best year on year performance for business class meals. In what should be good news for the Aussie economy travel and retail go hand in hand 7 out of 10 luxury purchases are bought overseas.

Source: http://www.hurun.net/en/ArticleShow.aspx?nid=9604

Jason

http://www.decisiveassetmanagement.com/

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.

Apple largest quarterly profit in corporate history

Expectations for Apple's (APPL) Christmas quarter were high but AAPL still blew them away. The introduction of a bigger screen lead to a record 74.5 million units blowing away expectations of 64.9 million with unit sales up 46% on last year. That's 35,000 phones sold for every hour of the past quarter. AAPL is bullish going forward they believe only a small fraction (mid-teens) of the current base of iPhone users have upgraded. The bigger screen attracted the highest number of new customers to the iPhone than any other launch. AAPL now has $177.96 billion in cash and securities.

The only disappointment was the iPad, a new thinner version didn't stop the decline in sales. It seems like the bigger screen iPhone is cannibalising iPad sales and that the replacement cycle for an Ipad is similar to the PC rather than phone. While its not material to profits 20-30% of users who buy the new iPhones have activated Apple pay.

Unlike most electronics the price of iPhones continues to go up bigger screens and more storage means we are paying $687 per phone up from $637 last year. Typically we normally see declines! China iPhone sales doubled during the quarter on a geographic basis sales were up 70%.

Source: Apple 10Q

The watch is coming. AAPL confirmed that their watches will be released in April. They reclassified segment reporting ahead of the launch to make the sale numbers more difficult to calculate. It will be interesting to see what apps and use cases developers come up with.

Source: http://www.apple.com/pr/products/apple-watch/Apple-Watch.html

Jason

http://www.decisiveassetmanagement.com/

Disclosure: Decisive does not have a long position in Apple (AAPL) stock.

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.

Domino's delivering performance

Domino's Pizza (DPZ) has been one of the best performing restaurant stocks over the last couple of years posting record same store sales and share price performance. DPZ recently held an investor day where the major theme was why their outperformance (see below) can continue.

Source: Domino's Investor Day 2015

The three key reasons for continued out-performance

• Global opportunity
• Re-accelerating US business
• Technology adoption

Their second largest market is India

DPZ is now bigger outside of the US 6,300 out of their 11,250 stores are overseas. They have put together 20 years of consecutive quarterly same store sales a record for an international chain. Their second largest market outside of the US is surprisingly India. DPZ is the largest international foreign food chain in India with twice as many stores as McDonalds. Apparently pizza has plenty in common with local eating habits, they love share plates and food that can be eaten with your hands perfect for pizza. They can also continue to grow domestically as the US pizza industry is very fragmented. Market shares of the pizza majors are still well below that of other industries (see below).

                                                   Source: Domino's Investor Day 2015

The pie is growing and they're getting a larger slice of it
US franchise profitability is at all time highs (see below). This is important as the better the store returns the more units will get built out. DPZ has 11% market share in the US but only 4.5% internationally their edge in technology should help this grow. DPZ's online ordering apps are helping them to gain more share online. Almost a third of pizzas ordered online go to DPZ. This share of the pie still has room to grow as only 20% of purchases are made on the internet and mobile. The great thing about digital is that the customer comes back more often increasing the customer's lifetime value.

                                                   Source: Domino's Investor Day 2015

45% of DPZ's sales are digital. Their global run rate is $4 billion making DPZ one of the largest e-commerce companies. The average digital order internationally is 41%, four markets have digital sales over 50% Australia is one of them. Given DPZ's low market share and its increasing technological edge it looks like they will keep on delivering out performance for both customers and shareholders.

Jason

http://www.decisiveassetmanagement.com/

Disclosure: Decisive has a long position in Domino's Pizza (DPZ) 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.

2015 CES overview

We attended the 2015 Consumer Electronics Show (CES) in Vegas. What goes on in Vegas usually stays in Vegas but around CES some information does get out. A few products lived up to their hype while others might take a little longer to catch on. Our key takeaways are below.

• Virtual reality (VR) the Oculus Rift lived up to the hype.

My first VR experience started off with a Samsung Marvel collaboration it was good but not great. It didn't really convince me that VR was the next big thing (their slogan out at Samsung). However the experience at Oculus Rift was at another level. The demand to see the demo was high I was lucky to wait only an hour and a half for what turned out to be a 6 minute experience. They demonstrated their newest VR version Crescent Bay. It converted me into a VR believer. The demo was made up of ten different scenarios. Ranging from meeting friendly aliens to a T-Rex dinosaur which managed to scare me not once but twice and a battlefield. You know it is not real but the effects were real enough to have a physical reaction or response to something that was happening to you.

Their technology is still in the early stages. Oculus have not released a date for the consumer version but are selling developer kits to help ensure there is good content for users. So far they have included  eyes and ear in the virtual world and are currently working on incorporating your hands and feet. Apparently your hands and legs are the first things we all look for when we put on the headset. I know I did. The last demo was the most amazing you are placed into a slow motion firefight its like something out of the matrix. You would find yourself ducking and weaving through explosions in a battleground including an exploding car which sails above you. You know its not real but you just had to duck. It was well worth the experience and got my adrenalin going for the final day of CES.

Gaming is likely to be the first big VR use but there will be many other uses. It will be amazing to see what will be created for the platform as unlike other digital experience you have a physical response to events. The effects are already real with just the eyes and ear if they can get motion (legs and hands) as well as the inner ear it will be scary how real everything will seem. To get a better idea of the experience you can see IGN's Youtube review below.

• 4K (3D TV without those glasses) will give us a good reason to finally upgrade our TV's

4K TV is fantastic. A number of versions could be seen around the show. The depth and quality of the screens were generally amazing. An ultra 4K HD TV has 4 times the number of pixels compared to normal HD quality TVs. Without the requirement of 3D glasses and more reasonable prices it seems like we finally have an excuse to upgrade our TVs.

• Drones are cool but regulation will make adoption will be difficult

There were some great drone demos (see below) but there are plenty of implementation issues. You know there are problems when an innovative conference like CES cannot let drones fly around the complex. Real word problems like insurance and what happens when a drone falls on someone kept the drones in cages. Also while it is in flux currently a pilots license is needed to commercially use drones. No one can be sure how it will end up but the Federal Aviation Authority's argument is that they need to know air traffic rules and the best way to prove that is to have a pilots license.

• 3D printing capability is increasing but its still too expensive for your average household

3D printing has now evolved to the stage where you can have your own personal vending machine. A collaboration between Hershey and 3D systems showed off their chocolate making system. No prices yet but the chocolate cube took around 15 minutes to make. It made watching a boiling kettle seem fast! XYZPrinting also showed off a food printer making pizza. Its set for a release date of late 2015 but it will be around $2,000. You could try out the pizza but unfortunately not the chocolate. Thankfully for the waistline they are still too expensive for the average consumer. Can't wait to see what they cook up next year.

Jason

http://www.decisiveassetmanagement.com/

Disclosure: Decisive has no positions in any 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.