Soda Popinski

8/8/08

I know that I’ve been hearing that a worsening economy would lead to higher MBA applicants, and the Economist today confirmed the story.  So as corporate America is hurting, another business is thriving (the business of education that is).

With stores like American Apparel and Urban Outfitters profiting off of selling hipster merchandise in a store, they have totally destroyed the fun of shopping at thrift stores.  I remember going to thrift stores as a kid with friends and finding shirts with phrases that seem so out of place at school (but undoubtedly made sense to the previous owner).  But the American Apparels and Urban Outfitters of the world mass produce fake vintage shirts.  I was glad to find a company called Threadless that is a site for artists to design creative shirts and also sell prints of their artwork.  I am sure that I am the last person to have found this site, but I found it through my favorite site Springwise.  My list of frequently visited sites is short, but Springwise is quickly making its way to the top (along with New York Times, The Economist, and The Onion).

-Amit

akooner@brilliont.com

8/4/08

Before coming to intern here at Brilliont for the summer I never considered the ramification of mergers and acquisitions.  I always trusted that due diligence was done prior.  There is obviously more to M&A than just increasing the scope of a company that needs to be taken into account.

Take for example Alcatel-Lucent, the company which was born out of the merger of French company Alcatel and American company Lucent.  (On a side note, I grew up no too far from an Alcatel headquarters which is currently a private high school.)  The merger seemed to make sense since they were both leading telecommunications equipment makers, but since August 2007, the stock has fallen close to 50% and has suffered its sixth straight losing quarter.  Stock prices are all about the current value of a companies future cash performance, and investors and analysts see some big problems.  It mentions in the Economist article I have linked that there were clear synergistic issues between the American and French managers in the company, and now a board restructuring is under order to try to fix the mess.  Who knew the French and Americans could not get along?

-Amit

akooner@brilliont.com

7/24/08

It’s hard enough to compile all of the information needed for our various S&P 500 analyses here at Brilliont and a complete look at the S&P 500 is regularly interrupted when companies buy each other.  (An example is Teva Pharmaceuticals buying Barr Pharmaceuticals)  With so much money being made in pharmaceuticals, and the pending generics that result when the patents run out, an article in the Economist explores the reasons for so many mergers in this industry.

It seems that when companies are jockeying for greater market share in an already over saturated industry, mergers are inevitable.  In generic pharmaceuticals, as in airlines or fast food, prices can only go so low before mergers seem logical for expansion and survival.  I do not feel that setting a goal of $20 billion in revenues by 2012 (double current revenues) by Teva Pharmaceuticals is necessarily a smart move, since synergies between merging companies may be forgone in order to reach such a lofty goal.  Oftentimes companies may expand through M&A instead of organically because it seems easier to do for short term goals to be met.  From the surface, it seems that the pharmaceutical companies are growing in the most logical way in a saturated market.  But with new generics being formed, such as the “biosimilars” mentioned in the article, are there new markets being opened?

-Amit

akooner@brilliont.com