Monthly Archives: September 2013

Just as negative sentiments towards the future of Apple start to grow, new Apple CEO Tim Cook has, within a mere weekend, thrust Apple Inc. into another golden age. First weekend iPhone 5C/5S sales astoundingly topped 9 million units, showing that the company is by no means ready to give away its Market Share to Android and Samsung. To put that into perspective, with an estimated profit margin of 40% coupled with a selling price of $627, iPhone has, in three days, posted about 2.8 billion in profits, according to the math done by Forbes’ Tim Worstall.  The results are a testament to the power of Apple in the face of adversity, powering through its first real threat to its mobile phone market share with finesse. As well, you get a glimpse of Apple’s phone consumer base, which appears to be very steadily growing in favor of the phone, despite continued positive sales results from their competitors. In a case like Apple’s, when a product works, all you need is to upgrade its design from year to year to see better results. The real question is of how much longer Apple’s iPhone will keep its growing sales trend, as it can’t last forever… right?

With another Canadian derailment taking place in Saskatchewan this week, safety concerns about rail transportation are becoming a prevalent topic among provincial governments. Companies like Enbridge, with their proposed pipeline to BC, the Northern Gateway, are looking to take advantage of the situation, emphasizing that the alternative to their pipelines will be increased oil transport by rail. Having faced great opposition for their pipelines from activist groups and provincial legislatures, are the recent Canadian derailments the tipping point for the obstacles blocking the creation of new pipes? Ultimately, the alternative to their methods are CN Rail’s movement of oil from Alberta’s sands by rail. Considering the advantage in efficiency of pipelines, alongside the new safety concerns, it appears that the change will be favoring pipelines. As an added point, this places activist organizations in a bad spot, as they can’t keep denying the pipelines if their advantages show them as the best possible method for oil transport; continued resistance could equate to a fight against the Canadian oil production and shipping entirely – a fight that cannot be won. So, if you can’t stop oil, do you face the dangers of the past in rail, or do you try and embrace the speculative future of pipelines? Pick your poison, nation.

Image: Aftermath of recent Lac-Megantic, Quebec derailment.

As NYU Professor Aswath Damodaran remarks on his investment blog, “Musings on Markets”, Tesla Motors is a company with the upper hand of innovation. Their future, according to Aswath, can either be as a power train and battery company, a “first-mover” in the energy vehicle industry, or as a revolution in the automobile industry – potentially dwarfing the business models of their primary competitors.

If you’re optimistic for the future of Tesla Motors like I am, you’re interested in speculating which of these three outcomes Tesla is most likely to end up. Personally, I believe it to fall under the “first-mover” category.

It makes most sense that Tesla continues working towards supplying the immense consumer demand for its Model S sedan. The fivefold increase in company share price over the past year is a clear indicator that consumer’s think Tesla’s ‘S’ is the electric vehicle, as opposed to hybrids or other electric alternatives. So, with that said, Tesla can, and most likely will create its own market share in a new, innovation focused, energy vehicles industry. From that point forward, it becomes a matter of gauging where Tesla’s product lines can go from there.

Tesla Motors Stock Quote

Photo Reference

Taking note of the recent scandal involving Canadian Engineering firm SNC Lavalin, dwelling in the problems of the past doesn’t repair a company’s tarnished reputation, as is noted in a recent article in Global BC. The January allegations of $160 Million in bribes to the Gaddafi regime in Libya for land contracts – a deliberate and obvious betrayal of the ICECB’s fundamental business conduct regulations (pages 14-15 on pdf) – has massively damaged both the consumer and investor side of their reputation.

SNC Lavalin serves as a strong example of how the incentive of unethical business practices shouldn’t supersede the importance of legal profit maximization.Companies following unethical practices, though dependent on scale, can easily find themselves in a similar situation.

In the article, SNC has a simple outlook: “let’s look at the future”, according to Chief Compliance Officer Andreas Pohlmann. The firm effectively starts a new chapter for its organization by being forward-looking. And when it comes to the initial steps of rebuilding their reputation, SNC’s path is easily more potent than attempting to cover up a colossal blemish as it stands.

Click to see the investor-side effect of the scandal

Photo Reference: SNC Lavalin

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