It’s been a while – much too long – since I posted a From ATX blog post. Well, check off one of my New Year’s resolutions (well, maybe a Chinese New Year resolution at this late date), I’m back in the saddle here in Austin.
To kick things off, I’ve listened in on many 2013 fourth-quarter and full-year earnings call from many leading brands – some I admire, some where I hold shares, and all of them in the news and leaders in their respective categories. In each case, I share some observations and key take-aways.
• Southwest Airlines (NYSE:LUV) the most consistently, high-performing company in America (and in maybe the world) has done it again. It has just completed 41 consecutive years of profit…including 2001. The key? Its people… mentioned throughout the call as the reason for the company’s achievements.
• Apple (NasdaqGS:APPL) – Year after year, the expectations of financial analysts are outrageous in my mind. Apple sets a record for revenue and profit, but it wasn’t good enough, and so its stock price fell. No other company is held to such a high standard for level of performance. In my opinion, Apple delivers.
• Netflix (NasdaqGS:NFLX) is my current favorite company. It is changing the TV industry. As of the end 2013, it counted 44 million members worldwide (33 million in the U.S., up 14% over a year ago) watching what they want, when they want it. Netflix is an entertainment company with its own high-quality content (Millie and I are watching season 2 of “House of Cards,” which won an Emmy) and a technology company able to serve high-speed, on-demand video. If it were a network, it would be the fifth largest – trailing only the 4 majors.
• Google (NasdaqGS:GOOG) is the most powerful company in the world and it worries me. Look at the metrics: 67% of all web searches in the world are on Google, and Google+ members are up to 540 million. They store every search and e-commerce transaction conducted on its platform – it knows everything about your web behavior. For the most part, the company doesn’t use it and doesn’t allow access to it, but what would happen if it did?
• Disney (NYSE:DIS) – The Walt Disney Company has the happiest place on earth and has very happy shareholders. Earnings Per Share grew 32% in Q4. Its parks and resorts worldwide have record attendance, ESPN is still growing, “Frozen” is a smash success on the screen, all while the company is successfully integrating huge acquisitions in Marvel and Lucasfilm. What a great company, and they’ll even teach you how it does it at the Disney Leadership Institute.
• Facebook (NasdaqGS:FB) is a really young company that in the past year transformed itself into one of the biggest mobile marketers. More than 50% of its revenue originated on mobile last quarter. In fact, mobile revenue in Q4 was higher than all its revenue in Q4 of the previous year. Facebook now has 1.23 billion members (increasingly older, which equals bigger spending from those members, thus advertisers). (Note: The WhatsApp purchase came after the earnings call.)
• Twitter (NYSE:TWTR) had its first earnings call and the challenges are obvious: how can the platform get more revenue (GROWTH!) and make a profit from advertises who want to reach Twitter’s 225 million active/engaged users. And how can it do this without changing the basic Twitter user experience. This will be one of the great business stories of 2014 and for the next few years.
• Amazon (NasdaqGS:AMZN) – The everything store set more records in Q4…revenue up 20% to $25.6 billion. How do you describe Amazon today? A retailer, entertainment company (Amazon Instant Video), a tech company (Kindle and Cloud Services)… but maybe more than anything… a big data company! The company knows the purchasing behavior of its 240 million customers so well they may be able to ship you a product you want – even before you order it and you’ll be happy that it did.
• Linkedin (NYSE:LNKD) is both fast growing ($447 million revenue in Q4) and profitable ($111 million in Q4). Maybe the most important business-to-business tool today….connecting, getting a job, hiring, information learning. I use it all day, every day. It is a well-managed company and is unmatched in its scope.
I’m a big fan of these companies. They are transforming marketplace dynamics – literally how we work, play and live – even as they evolve themselves. That’s exciting, and for me, very hopeful about the kind of world we’re becoming – and the businesses and business leaders who are getting us there.
“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”
– Source: Warren Buffet in a Letter to Shareholders, 1989