Robert's Blog

Tesla announced its first ever quarterly profits of 26.2 million, but the company did not adhere to the GAAP principles when it released its financial statements. Under the GAAP, “Tesla Motors lost 30.5 million this past quarter.” This discrepancy occurs from Tesla’s loan scheme. The buyer takes out a loan and pays Tesla upfront, and the buyer owes the bank. Tesla takes a prospective stance by saying the car is sold, while GAAP states they are leasing the cars. Personally speaking, Tesla’s accounting principles are too speculative as Tesla’s loan contract also gives buyers the option to sell their car back after three years. This “buyback period” also artificially raises Tesla’s profits as they place a guaranteed value on their cars, increasing assets by 146.8 million. This number inflates the company as Tesla states they own the resale value of the car, even though the decision to sell the car belongs to the owner. Tesla’s accounting practices assume an unachievable scenario for the company, but the numbers have greatly improved consumer confidence, causing the stock to rise by 13%. In the long term, this trend will likely continue as currently Tesla cannot keep up with demand for its vehicles.

Source: http://www.theglobeandmail.com/globe-investor/investment-ideas/tesla-financials-a-peak-under-the-hood/article14668932/

Companies such as Indochino and Frank & Oak are able to appeal to customers by offering vast customization and style recommendations which are personalized to customer preferences. Having personally used Indochino, I found that the website’s clean interface and filtering of choices made it simple to find my desired product. Customization and convenient accessibility is why Canada’s e-commerce market is expected to grow from 24.25 billion to 37.87 billion by 2017. This predicted growth stems from the operation of a Direct Business Model. By cutting out the middlemen, these companies are able to go directly to the consumer. This is a more efficient process, which translate to lower costs for consumers. Customization provides a much needed benefit of personal touch, as these entirely internet-based companies lack human interaction.Customization builds customer loyalty and trust – after all it is much more satisfying for customers to own something they played a role in creating, rather than buying a mass produced product. Customers will feel a sense of brand loyalty, which will also result in lower return rates. These companies have provided a new medium to shop, and technology will only continue to improve which decreases costs and increases the ease of accessibility.

Sources:

1. http://business.financialpost.com/2013/10/06/how-canadian-startups-are-changing-the-way-men-shop/

Blackberry and camera companies have much in common; they were both once industry giants who have fallen due to new entrants and the threat of substitutes. In the past, camera companies never viewed smartphones as a threat as their quality was far superior to the smartphone. However, due to technological advances, the barriers of entry have been greatly lowered. The production of a high quality camera became much cheaper, and now smartphones dictate the industry. It is no longer about the hardware behind the camera, but the software. Smartphone software makes it easier to take pictures, which is a major competitive advantage over cameras. The industry has already adapted to smartphones, through apps such as Instagram which provides tremendous social presence and customization to users. Cameras are becoming obsolete, with global shipments of cameras falling by 36.2% in the second quarter of 2013 alone. The practicality and various features of a smartphone is enough to deter the average consumer away from cameras. As technology and support for smartphones will only continue to improve, it is inevitable that the camera will soon have only a niche market for professionals and true enthusiasts.

Sources:

1. http://business.financialpost.com/2013/10/05/point-shoot-collapse-why-big-camera-companies-are-the-next-blackberry/?__lsa=5844-f0be
2. http://www.nikon.com/about/ir/ir_library/ar/pdf/ar2013/13annual_e.pdf
3. http://www.quickmba.com/strategy/porter.shtml