If you look around in the community you travel through often times there is a large employer which affects the area. Sometimes that is educational such as college or university; sometimes that is a service center of government – state or regional government; and sometimes a manufacturing facilities and every combination of the above. It is often thought the longer a company is operating the more stability they provide for the area and the better the stability of the economy. One large manufacturing company is Boeing.

In an article by Rajesh Kumar Singh and Allison Lampert of Reuters, Boeing is one of the large institutional manufacturers and because it has a duopoly with Airbus, it can be taken for granted it will continue to operate the way it always has.

Boeing is the largest US exporter and employs nearly 150,000 people domestically. It supports millions more through a supply chain that includes thousands of business big and small around the world.

Economist Joseph Brusuelas estimates it contributes $1 trillion a year to the US economy and supports more than 5 million jobs.

A door fell off in flight in mid January, the plane landed safely. The fallout meant a slowdown in deliveries of Max 737. One of the fallouts is Southwest Airlines was expecting to replace planes in their fleet with Max 737s, the planes are slowly coming and Southwest had to adjust their flights by cancelling some and slowing pilot hiring.

Boeing expects to get back to a Max production of 38 a month in the back half of the year. This year Boeing delivered 175 jets in the first half of 2024, which is down 34% from a year ago. The slowdown ripples to suppliers such as GE Aerospace which has slow downed engine production as most supply lines are just in time to save money on inventory costs.

Similar to a person buy a new vehicle and there are fewer costs to run it, airlines which depend on Boeing to continually upgrade their planes are flying on older planes with a higher costs to run which affects their bottom line. Allegiant Air says that amounts to $30 million a year. Southwest the number is larger because it was expecting 85 new planes and have only received 20 planes. Fewer planes translates into less routes and greater concentration on profitable routes, which means some smaller airports lose flights.

Linking to dividend paying stocks, often times when you purchase these stocks you expect the stock to be slow and steady and that often wins the race in the long run. The companies can face the changes economies and cycles bring and as a shareholder you are better off for being a shareholder. We are seeing that a small event can cascade in bigger implications which is why after you read the slogans of the company, ask are they doing it?

There are more questions than answers, till the next time – to raising questions.

It is the rare exception that people do not use social media and many of us are on more than one app. There are many wonderful reasons to be on social media including to be social. After you have used it, the reality is it still exists is to sell advertising. The marketing dollars of companies are in search to find a willing buyer who actually spend money and they use social media for that purpose.

At the start of the internet age the focus was on clicks and a company called AOL sent millions of dics for people to download and they did. The prevailing sentiment was this is great and the people which ran Time Warner thought they had bought a bargain in AOL. The merger did not go well for lots of reasons, but people found out rather quickly just because there were viewers, it does not translate in buyers of consumer goods.

The internet evolved and a company called Google after inventing the best search engine invented ad words to take advantage of print dollars moving to the internet.

The next breakthrough was Facebook, connecting people but still using a similar model taking ad dollars from print. Facebook.is very good at it and has one of the best analytics departments in the industry.

Technology continues to evolve with the introduction of the smartphones and soon people were doing different things with their phones besides using it to phone someone. In a book called How to Turn Down a billion dollars – The Snapchat story by Billy Gallagher, published by St. Martin’s Press, New York, 2018, the story of the rise of the video sharing company.

For the social media, how to evaluate it has always been an issue. The CEO of Snapchat Evan Spiegel talked to an expert in the name of Anthony Noto, for a while a co-head of Goldman Sach’s Global Tech, Media and Telecom Investment Division and an expert in how Wall Street valued social media companies. Mr. Noto explained Facebook ad impressions had declined year over year but were offset by revenue per impression increasing. The reason was the shift from desktops to smartphones.

Mr. Noto explained that although ad impressions were declining, mobile ads were earning more than desktop ads. This was primarily due to higher prices per click (the amount an advertiser pays when a user taps on an ad) or higher clickthrough rates (the rate at which users actually tap on the said ad). This was a crucial difference because the issue is whether advertisers were spending in a manner that was likely to continue and be long term or were they merely trying a new ad format and then abandoning it? In the 2014, mobile was potentially a bigger market and Snapchat was only a mobile app. The other issue was Snapchat was an addicting, high frequency app, which potentially advertisers would love to be a part of.

It is said the big guys have the advantage and besides greater access to credit, they can have greater advantage to data. For example, in 2013, Facebook bought Onavo. It creates a log of user’s actions on Facebook servers. Facebook product information teams examine the data for example how frequently and how long are people using specific apps. Apple and Google do the same thing because they own iOS and Android.

From Onavo’s data, Facebook saw that What’s App was installed on 99% of the phones in Spain.this helps explain one of the reason Facebbok bought What’s App.

In 2014, everyone was comparing themselves to China because of very few landlines, people had cell phones. However WeChat was the most popular and people did everything on one app. IN North America people were using iOS and A ndroid or Apple and Google.

in 2016, brand advertising was estimated to be a $578 billion business. For an app that concentrated on young people and was additive to the app staying for long period of times, brand advertising was interested.The downside is Snapchat was seen as fun and a lightweight to spend time. Snapchat came up with Stories and Live. People doing their own videos and posting it.

Linking to dividend paying stocks, every company needs to make money and every investor has to know how the money is made. Sometimes the answer is simple, sometimes it is more complex and everything in-between. As an investor you have to also understand how Wall Street values the company and that way you can decide to hold the company or look for alternatives. If you decide to hold, when you examine the company, then when the company tells you how it is doing every quarter, you will be able to say how long will that continue? Perhaps the answer is a lifetime, then you do not have to do anything. Bringing the company to simple, allows you flexibility to do something or nothing.

There are more questions than answers, till the next time – to raising questions.

When you think about the economy your first thought is your situation, then the country where you live in and finally other countries around the world. The 2 biggest economies in the world are the US and China. If both of those countries are doing well, then the world is considered to be doing well.

In an article from Reuters, China’s economy grew much slower than expected in the 2nd quarter as protracted property downturn and job insecurity knocked the wind out of a fragile recovery. There is increasing speculation Beijing will need to add more stimulus to the economy.

China’s economy grew at 4.7%, the slowest since 2023. China’s government is aiming for growth over 5% which is low considering what it once was. The retail sector sales growth has slowed to a 18-month low as deflationary pressures forced businesses to slash prices.

Lynn Song, chief economist for Greater China for ING noted the road to hitting the 5% target growth remains challenging.

Among those reporting slower sales is Swatch Group, the world’s largest watchmaker, it reported a steep drop in sales and earnings amid weak demand in China.

New home prices continue to fall, battering consumer confidence and constraining debt-laden governments’ ability to generate fresh funds through land sales.

Linking to dividend paying stocks, as every country around the world moves from resources to low level manufacturing to higher level manufacturing to services, the nature of the economy does not change. This means the solutions offered by the government tend to be similar or what works in China also works in the US also works in many countries in Europe. As an investor you believe that your companies are best for you and they are different, but the reality is many similarities exist for other companies and countries. The simple phrase of profits = revenues – expenses is universal and owning a profitable company is always a good thing. Making profits and the ability to pay dividends is even better.

There are more questions than answers, till the next time – to raising questions.

If you think back to the invention of the telephone, the Bell system evolved, and AT&T became the monopoly for Americans using the phone. That system was changed in 1984 when the government of the day broke up the company to what was known as baby bells and over the past number of years the phone giants which we have today exist. As technology evolved many people moved from landlines to cell phones and today that is the dominate way of using the phone. All companies compete for business, but sometimes have a long record of being in business counts for customers.

In an article by Michelle Chapman of the Associated Press, AT&T reported that in April data of nearly all the customers of AT&T cellphone service was downloaded from a 3rd party platform in a security breach. The data mostly involved data from 2022. AT&T is a large company which means more than 109 million customers were affected. The timeframe affected is May 1, 2022 and October 31, 2022 of more calls and texts. The data was held in the cloud by Snowflake Inc.

Snowflake and AT&T have been working with the FBI and Department of Justice. The DOJ noted the breach met the security standard for a delayed filing aby AT&T with the US Securities and Exchange Commission. The filing made the report public. The US Federal Communications Commission which regulates the phone industry has an ongoing investigation.

Linking to dividend paying stocks, while it is important in this case AT&T is working with all the agencies and boards of the government, the question for all the customers is what is AT&T doing for them? In the past we have seen companies offer free monitoring of your credit report because generally people that steal what money from the individual or company. We will see what happens, but what would your company do if there was a breach in security?

There are more questions than answers, till the next time – to raising questions.

When prices increase more than normal, all politicians talk about the disastrous effects of inflation and on an individual basis it can be. If you work for someone else, you want to increase your income at least what inflation is. However, what is good for the individual is not great for the economy because if the majority do it, inflation continues to rise. The government’s role is to try to find methods to decrease inflation and what is good for the majority is good for the individual.

In an article by Brendan O’Boyle of Reuters, one country which has been wrestling with inflation is Argentina. The country elected President Javier Milel partly on the basis on fighting inflation to the mat and it appears he is on his way. President Milel made a number of cuts to government and government programs which did not help his popularity but inflation has fallen from 25% in December to presently 4.2% in June. For the economy in general that is a very good thing.

In countries such as Argentina, they have their own currency the peso, but in reality the American dollar is the still the currency of choice or comparison. The government is always concerned about currency rates between the two. The Economy Minister Luis Caputo announced a strategy to continue to fight inflation.

Argentina’s central bank started to sell US dollars in the country’s parallel foreign exchange market in an effort to fight inflation and freeze the country’s money supply. The bank issues pesos to buy US dollars on the formal exchange market, then the bank will selling an equivalent amount on the parallel CCL exchange market. The Economy Minister believes this process will be a knockout to inflation.

In the middle of July, the official exchange rate traded at pesos per dollar was 919.5, the so called CCL rate was 1.416.2 which the widely used black market was 1.500.

Linking to dividend paying stocks, all governments do not like inflation because other markets develop and become normal as people deal with inflation. In all industries there are always alternatives but most of the time the alternatives are the normal, however people quickly learn and use them. For your investments do you know about the alternative markets? what keeps your senior executives from getting a good sleep?

There are more questions than answers, till the next time – to raising questions.

When a CEO is appointed, for some companies due to market share or a seemingly monopoly it is often considered the person has won the lottery because they will be well compensated and for the most part the company can run by itself. In a normal decade the CEO will be changed, and little has happened. This could be very good because the company remained profitable and paid dividends. Sometimes the opposite is the case, the CEO makes decisions which dramatically affects the company for the better.

In an article by Karen Weise and Cde Metz of the New York Times News Service, one of these cases is Satya Nadella of Microsoft. In the past 2 years, Microsoft has spent billions on AI and the stock is up 70% and the company is worth more than $3.3 trillion.

Mr. Nadella sees the AI boom as an all-in moment for his company and the rest of the tech industry. Mr. Nadella aims to ensure Microsoft which was slow to the dot-com boom (even though they used a Rolling Stone’s song in one of their advertisements) and missed the smartphones (Apple and Android dominate), Microsoft wants to dominate this new technology using AI.

Mr. Nadella has made billion-dollar acquisitions before including $69 billion to acquire video game publisher Activision Blizzard to add to Xbox. (people spend more money on gaming than they do to watch movies or entertainment).

Mr. Nadella pushed Microsoft to embrace cloud computing and open-source software that Microsoft that customers could freely adapt. Every company has a tradition of either doing it themselves or with the help of others. Microsoft was a company that want most of the work done in house. Open source means any software developer can add on ideas. That decision helped Microsoft become the number 2 market share behind Amazon or AWS in cloud computing.

In 2018, Mr. Nadella made a final decision after a 20 minutes meeting with other senior leaders at an annual executive retreat at the Suncadia Resort in the Cascade Mountains to buy GitHub. After spending years debating whether to link with GitHub, a decision was made to go forward and within weeks, Microsoft bought GitHub for $7.5 billion.

To make Microsoft’s cloud more sophisticated, Mr. Nadella made a $1 billion investment in OpenAI. The investment allowed for rights to OpenAI’s products and the innovative cloud customers. The main reason for the investment was Mr. Nadella believed OpenAI was doing something fundamentally different and better than Microsoft. (doing your homework never stops). After acquiring the rights, Microsoft went into the metaverse products but they did not sell well. The next product was GitHub Copilot, a tool for software developers to automate code writing. It was very well received and Mr. Nadella was all in for AI products.

Linking to dividend paying stocks, sometimes who is the CEO is extremely important for they can change the company for the better in the eyes of shareholders. Companies spend a great deal of time and effort, particularly at the Board level of who will lead the company. At the Board level there is a committee to examine the senior management and their performances and decide on their futures. You will often hear the President talk about the quality of the people and the bench strength. For your investments, do you have confidence in the next level of senior management? Is there someone who you expect to make changes to the company?

There are more questions than answers, till the next time – to raising questions.

If you think back to the moving of the supply system from the US to China and other countries around the world, there were many reasons given. The people worked hard, but accepted lower pay rates. The supply system transportation had greatly improved, and it is always amazing to walk around stores such as Walmart, the items made in China, put in a container, placed on a ship, go across the seas to a port then either put on rail or a truck and eventually to go to a store at a very low price. How does the company make money? From a consumer point of view, it does not matter. One of the reasons why the system worked, was the low union rate in China and other countries. But every once in a while, unions actually exist in other countries.

In an article by Jin Yu Young and John Liu of the New York Times News Service, some workers at Samsung electronics went on 3 day strike. The Nationwide Samsung Electronics Union represents more than 31,000 workers or a quarter of the work force at Samsung Electronics.

Samsung is South Korea’s biggest private employer and has been one of the world’s largest maker of memory chips, which helps computers and other electronics equipment store information. The company is also a leading manufacturer of logic chips, which makes computers run. The number manufacturer is Taiwan Semiconductor Manufacturing Co.

For decades, Samsung was known for its aversion to organized labor and unions. Only in the past few years has Samsung allowed unions.

Linking to dividend paying stocks, most companies do not have unions for reasons. When they were founded the founder did not want unions and often when companies are small and medium sized everyone tends to know everyone one. As the companies expand, the linkages fall away and people want a larger share of the pie, assuming the company is profitable or the if the founders are living a lifestyle different than the workers. There are many reasons, however once a union is in place it is up to management to work with the union. For your investments how are labor relations?

There are more questions than answers, till the next time – to raising questions.

If you happen to go for a drive this summer, you will still see many smaller towns with cinemas because after the movies were invented, they needed a place to be seen. All over America, cinemas were built and for generations they were part of the fabric of the community. People went to the movies, had dates, socialized before and after. Then came the internet and changes slowly happened and then fast internet came along and streaming and the whole industry changed.

In an article by Brooks Barnes of the New York Times News Service, one of the premier names of the movie industry recently changed hands. The Studio was founded in 1910 and the owner was consider a Hollywood mogul. For many years, the value of the company increased and the last time Paramount was sold it went for $10 billion in 1994 or about $22 billion in today’s dollars. The company was recently sold to Skydance for $8 billion. The owner of Skydance is David Ellison and Redbird Capital. Mr. Ellison is a movie producer and the son of Oracle founder Larry Ellison who invested $6 billion of the $8 billion. One can expect Paramount to be a client of Oracle.

The assets of Paramount include: Paramount Studios, TV company CBS, 2 streaming services including Paramount Plus, cable networks such as MTV, Nickelodeon, BET, and Comedy Central.

Mr. Ellison and Redbird Capital founder Gerry Cardinale believe they can turn Paramount around using technology, cost efficiencies and synergies. They believe the can use the assets, plus storytelling in movies to increase the value of the company. Paramount has a wonderful library of films and a long history of making films the public would pay to see.

Linking to dividend paying stocks, all great companies have wonderful assets and those assets are constantly leveraged to keep customers and increase the customer base. Just because a company has wonderful assets it does not mean they can be complacent. When you examine the companies you own, what assets do they have and why are they still valuable? and will increase in value?

There are more questions than answers, till the next time – to raising questions.

The first storm of the season, Beryl went through the Caribbean hit Mexico and moved north to Houston and across North America. In Houston, 2 million people lost electricity which in a city known for humidity means no air conditioning for a few days. Companies had warnings and the good folks who restore electricity came from the surrounding areas to get Houston back using electricity. To be sure there were many people who suffer from the hurricane.

In an article by Desmond Tiro of the Associated Press, in another part of the world, the rains have been falling. All plants need water to grow but too much will kill the crop or dramatically reduce the yields. In Keyna the rains have been falling for weeks and small farmers crops are being destroyed.

The rains in Kenya have increased the levels of water behind dams, and led the government to order residents to evacuate flood prone areas and bulldoze the homes to those who do not want to leave.

The government of Kenya has estimated that flooding has destroyed crops on less than 1% of the land, however on much of the land of over 100,000 acres it was small farmers doing the work. The farms provide a livelihood to the families and some extra cash to buy things. The excess rains means greater reliance on the government, if it exists.

Similar to every other country in the world, parts of the country receive too much rain, other parts are not receiving enough and when there is too much rain, the water causes erosion and eventually flows to the oceans. If the soil has not used water conservation methods to allow the water to be absorbed by plants into the soil, the problem tends to get bigger.

Linking to dividend paying stocks, weather patterns change and are changing and governments are slow to react. Many years ago, soil conservation was practiced until the desire for greater efficiency using machines was the answer. The greater efficiency meant greater use of fertilizer to allow the plants to grow and it is seemingly a never-ending cycle. With the land, there is some sort of balance which needs to be done or it will get out of whack. Sometimes efficiencies are great things, sometimes they tend to be short term solutions.

There are more questions than answers, till the next time – to raising questions.