Every public company has to report its progress every quarter and every public company goes through the same motions. The executive team presents to the world or press on how the business is doing to outsiders and questions are asked about the past and future performance. When the results are positive and operations are moving in the correct direction, the meetings go much easier. When there are concerns the issue is how does the company address the problems. The better the results, the higher the expectations each quarter and what happens if the company does not meet expectations?

In an article by Jack Ewing of the New York Times News Service, two of the companies which have the highest expectations every quarter are Appple and Tesla. The later reported it would build a factory in Mexico to build lower cost Tesla models which was a good thing. The issue is Tesla has been one of the world’s dominant maker of electric vehicles, how does it keep its dominant position?

The company offered a seminar on its manufacturing processes, supply chain organization and software. The message was that Tesla is eons ahead of other automakers in technology and efficiency. Tesla wishes to double its production of vehicles, but the analysts were wondering how?

For a number of years, Tesla had the market to themselves, but the competition both at the higher end models and less expensive models every year is heating up, how will Tesla do? Does investor day exceed expectations?

Linking to dividend paying stocks, every quarter public companies have an investor day to tell their story and if you are an investor the sessions are worth listening or reading about. From the dividend paying perspective after the company has said it made a profit and can pay a dividend, ideally raising the payment, you will want to know how will it continue to execute on its strategy. If you like the answers, you can do nothing, if you begin to see holes in the strategy, you will want to seek alternatives.

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

In the marketplace there are consumers, but consumers come in all shapes and sizes, they also can be segmented into individuals or institutional. If a business caters to institutional investors, they should have money to spend no matter what cycle the economy is in. If a business caters to the mass public, there will be more competition and people have to know the brand and the cost structure. Why would a typical consumer wish to do business with the company. The individual market and the institutional market are two very different markets and generally, depending on the company which division did the President and past President rise from, will tell you if the company is institutional or retail orientated. Sometimes companies want to do both.

In an article by Saeed Azhar and Lananh Nguyen of Reuters, Goldman Sachs held an investor day and if any company is considered institutional in nature, Goldman Sachs is one of them. The company makes money from its trading, advising governments and large companies around the world. For the past few years, it has wanted to gain access in the consumer business, but it loses money. According to David Solomon, the CEO, the bank is considering strategic alternatives for its consumer business after stumbles led to billions of dollars in losses.

The bank deals with high net value individuals and thought a consumer business was something they could do and gain market share in. The consumer division would be another leg in the Goldman business segments. The reality is in the credit card business, companies such as Capital One issue millions of cards to people, Goldman was not doing that.

Some of the consumer units have been merged into the asset and wealth management. The company said sometimes we fall short, sometimes we do not execute. But we always learn and adapt..

Dan Dees, co-head of global banking and markets, said the division was targeting returns in the mid-teens. One of its priorities is financing across equities, fixed income, currency and commodities. The share of financing has already grown to 22% of revenue last year from 12% in 2013.

The bank expects a return on tangible equity of 15 -17% throughout the cycle with room to grow.

Linking to dividend paying stocks, when companies make money, they think they examine their competition to see why they make money and duplicate it. Sometimes they can, sometimes they cannot for example the big New York banks have branches which bring in low-cost deposits. Lending the money at higher rate as long as loan losses are kept to a minimal amount will make profits for the bank. It is hard to duplicate the success without access to many branches in a reasonably stable part of the economy of the country. The strength the company has it makes money and can try many strategies, some will work, some will not. Institutional players should stick to institutional clients because the decision-making process is different than catering to the mass markets. If one of your investments is moving to different segments ask why?

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

When a company manages to be successful, the public has a distinct image about the company. If markets shift on the company and the company while still successful is not successful in way the public perceives it, the company must reeducate its investors and the public on what it does. One method is to change the logo. In the world of marketing the colour combination matters, the font matters, the look matters. Years ago, the author worked for a company which changed its logo, but not the rest of the company after a couple years later the biggest shareholder led a shareholder revolt to sack the President because the logo was changed but little else and the company revert back to the old logo.

In an article by Supantha Mukherjee of Reuters, the Finnish company Nokia which a number of years ago was one of the world leaders in mobile phones and the public was aware of the company changed its logo. The company’s share of the mobile phone market was about 1%, which meant under the leadership of Chief Executive Pekka Lundmark a new strategy of reset, accelerate and scale was started. The company reviewed its assets and potential growth markets under the reset stage and determined the company is now a business technology company.

Nokia still produces smartphones, but its emphasis will be selling equipment to telecom companies. Telecom companies were buying equipment from China companies including Huawei, and with many in the intelligence sector believing Chinese companies products send information to China, a space has opened up to compete against Chinese companies.

At the same time of the analysis of reset stage came a new logo to change the public’s and investors perception of the company and use different measurement data to analyze the company.

Linking to dividend paying companies, all companies go through the reset, accelerate and scale process when their high margin core business changes. If a company has high margins, there will be others who want to sell in the same space and if the company is in the low margin business, there is always another company which can lower costs to compete on cost. Hopefully for your investments, there is a very good reason why the high margins are maintained which allows the company to make profits and pay dividends. Logo changes are a sign of changes in the marketplace, if your investment companies are changing logos, do you like them and have you examined the reasons for the change?

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

If you think about a small entrepreneur, there are many tasks he/she has to do well, but the entrepreneur is not expected to do everything inhouse. It is normal to use multiple suppliers to ensure customer satisfaction is high and sales are repeated. As the company grows to become medium sized and perhaps into a large company, while the tasks still have to be done well, the company is more dependent upon its partners. Most companies do not do everything themselves; most companies use partners or suppliers to do the bulk of the work, the companies provide the end result. You will hear or read about discussions should the company do in house or external supplier and there are multiple variations. There are benefits to doing projects inhouse and using suppliers, the reality is if you look at the insides of a company, they are using many suppliers.

In an article by Foo Yun Chee and Stephen Nellis of Reuters, one of the biggest software companies Microsoft is trying to enhance its gaming division with a purchase of Activision. The deal is being held up by regulators in Europe and the US. To ensure more users have access to Microsoft games, Microsoft is partnering with Nvidia, best known for making silicon chips to ensure computers run faster and smoothly. Nvidia has a division called GeForce Now which is a streaming service for gamers and has over 25 million users in 100 countries. The partnership with GeForce Now, according to Phil Eisler, VP and GM titles such as Microsoft’s games such as Minecraft will be available right away. Games from Activision such as Call of Duty will have to wait until the completion of the deal between Activision and Microsoft. The deal is for 10 years.

Nvidia’s GeForce Now supports the Microsoft acquisition of Activision. Microsoft by signing up partners hopes to both put pressure and show the regulators Microsoft is willing to open up Activision games to a wider audience. While the regulators have concerns over less competition in the gaming industry, Microsoft is open to greater co-operation for at least 10 years. Microsoft sees buying Activision as growth in the mobile and cloud gaming segments.

Linking to dividend paying stocks, if you read stories about the early days of manufacturing automobiles for example Ford, most of the operations were done in-house in the Rouge plant. Mr. Ford liked it that way and for a long time he was successful. Over the decades, auto companies asked why are they doing everything? why not just put things together and sell the finished product. The growth of supplier auto parts companies grew and few customers realized the auto companies did not make everything. The growth of supplier parts lead to globalization of parts, to both lessen the costs and let others specialize in the parts. Now we are in the midst of some changes to the model, and it is important to know how your company investments are filling in the dots. What is the relationship? how does the model work or is working?

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

In every public company, mergers and acquisitions are a normal part of the business. Some companies are always growing externally, some companies try to do many items themselves or organically, there are multiple variations. The companies which are growing externally, tend to have a core group of people who make the decisions of which companies to buy as the company grows in size and market share. How the company ensures the synergies expected or how the logistics flow to the bottom line is a different skill set, but often a CEO will be on the search for companies to buy or people they want in the firm.

In an article by Julie Zhu and Xie Yu of Reuters, one of the more prominent deal makers in the Chinese banking sectors is Bao Fan of China Renaissance. In the world of China, if the government likes what you are doing, they encourage you, if they do not like you, you are removed for a period of time. In the case of China Renaissance, Bao Fan is the founder, chairman and CEO of the bank. In China at the moment, the government is trying to slow down the corruption and it was decided that Mr. Fan was part of the problem or linked to the former President Cong Lin and had to be detained.

While Mr. Fan was the dealmaker and is absent, co-founder Kevin Xie and the head of investment banking Wang Lixing are running the bank. The firm was started in 2005 to match capital-hungry startups to venture capitalists and private equity investors. The firm expanded into services including underwriting, sales and trading.

Linking to dividend paying stocks, although every person is important, the market tends to rely on a few people who are the face of the company and present the highlights of the public company on investor days. When one of the people the market knows either retires, moves firms, or leaves, the market needs to learn to know another person. It is natural for a a company for a smooth transition to not be affected by the news, but a company without a smooth transition the stock will tend to fall. It will be senior management to reassure the market as they get to know them and then the stock can move up again. If the transition in your company is not smooth, you should seek out alternatives.

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

In the world of inventions, often it is easier to invent an existing method to do something better. If you invent a better mousetrap then the issue of logistics comes into play. This statement means a better mousetrap needs to be produced, shipped and sold and they may or may not be the same distribution channels. A better mousetrap might be educating the public or those that will buy the product to why it is a better product, you may see all the reasons but does the buying public?

In the world of electric vehicles, the success of Tesla has allowed it to open charging stations next to malls and other locations where the mythical average Tesla buyer travels. Elon Musk for years has said Tesla charging stations are for Tesla owners. We are the standard, let others adapt to us.

In an article by Matthew Daly of the Associated Press, Elon Musk has changed his mind and thanks to an agreement with the White House. The changing of Mr. Musk comes with federal funding or part of the infrastructure funding from the Whie House and for higher priced electric vehicles to be eligible for rebates. For the White House, they will receive access to Tesla charging systems, the way it will work, all EV drivers will be able to access the stations using the Tesla app or website.

One of the reasons the White House needed Tesla charging systems is the requirement that 55% of the components used to make EV stations must be made-in-America. The EV industry, said that is a good idea, but it will slow growth of EV stations if you wish 50% of new US auto sales to be electric by 2030.

Linking to dividend paying stocks, with many of these companies there are existing infrastructure requirements that the profitable company fits into very well. For a competitor it is not just inventing a better mousetrap but disrupting or changing the entire ecosystem. While it is possible, it does require great amounts of capital, which most start-up companies do no have. There are some industries which changing the ecosystem is easier, but the timeframe is something people in the industry can view. For the companies you have an investment in, do you have an easy method to monitor the industry?

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

In every business in the world always needs to ensure revenues are higher than expenses to survive. It is a simple formula but when times are good, there is always a call for more costs for the company to bear. The cycle is never ending and many companies try to strike some sort of balance. It is one of the prime reasons company’s pension plans have moved from defined benefit to defined contribution. The first the emphasis is on the employer to have the pension funded, the second the emphasis is on the employee. There are strengths and weaknesses to both, but achieving a balance is important.

In Europe, they have a history of electing governments who wish to give the people full pensions earlier in life. For a long time that was a good thing, The normal life expectancy was less than 70 years of age and lowering full government pension from 64 to 62 meant more votes from older people. The problem with the system is people are living longer and there are fewer young people paying into the system. What should the government do as people live longer?

In an article by John Irish, Noemie Olive and Ingrid Melander of Reuters, the government of France is trying to save billions of dollars to keep the pension system in positive territory. The government believes by increasing the retirement age from 62 to 64, the payments would yield an addition $25.2 billion in contributions allowing the system to breakeven by 2027. On the negative side, hundreds of thousands of people like or are expecting to like the process of full benefits by age 62 rather than 64. The French spend the largest number of years in retirement among OCED countries and polls show a substantial number of people are reluctant to give it up. The French may like the President, but they like the benefits better.

Linking to dividend paying stocks, when a company is consistently profitable and can pay dividends, there are and will be constant demands on it to do more. As a shareholder, you want your expectations to be meant first, then the company can do what it can or desires to do with its other pieces of the pie. All company must keep an eye on costs both it good times and not so good times, it ensures the company can be consistently profitable. If you think your company is not worrying about costs, it is time to find alternatives.

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

When you think about any country, part of the checklist is the infrastructure in the country, does it work? If the answer is yes, then you can move on to other aspects of government and private industry to determine if you wish to invest in the country or not. Some countries have seemingly natural advantages, but if the infrastructure does not work, it is easier to skip over the country. One country that should have natural advantages is South Africa, however its recent history has made it less desirable.

In an article from Reuters, in mid February, Prime Minister Cyril Ramaphosa declared a natural disaster over his country’s crippling power storages, saying the pose an existential threat to economic and social fabric.

The previous Prime Minister, who is charged with corruption, allowed the Gupta Group to be some sort of middleman at the state electricity company Eskom. The Guptas were allowed to insert a company which invoiced the company at the normal electrical rate and charged consumers a higher rate thus earning millions for the owners of the company which included the son of the Prime Minister. Outside of higher prices for consumers, there was no benefit to them. The millions were not invested in the infrastructure of the Eskom.

At Eskom, the electricity system met delays in building new coal-fired systems, there was corruption in coal contracts, there were many delays setting up solar farms or allowing private providers to tap into the sunny days of the country and the list goes on. The result is rolling blackouts disrupting manufacturing and households to go about their normal activities. Economic growth is expected to decline to 0.3% this year.

People were expecting after the former corrupt Prime Minister, the existing Prime Minister who is worth over a billion dollars would help fix the economy, but it is very slow process.

Linking to dividend paying stocks, it is easy to take making profits for granted and the government wants a bigger piece of the pie for taxation purposes. It is easy to look at utilities and think they can be … whatever. The reality is if money is not constantly being reinvested into the business, the business goes downhill. Those who like dividend stocks tend to like utilities for people need to pay the bills and regulators tend to increase prices to maintain profits and dividends. If the government thinks about the utility as a cash cow, then it is time to quickly find alternatives.

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

A number of years ago, one of the general magazines published a photo of the electrical lights of the world as seen by one of the satellites in space. As one would expect the US and Europe were lit up and there were vast areas where electricity was not to be seen. Where there was mass civilization there were lights, where few people lived there was few lights. Does that always be the norm?

In an article by Frank Jordans of the Associated Press, the International Energy Agency based in Paris, France is forecasting Asia to use half of the world’s electricity by 2025. Much of that usage will be in China which will go from a 25% to over 33%.

China will consume more electricity that the European Union, US, and India combined, said Keisuke Sadamori, the IEA’s director of energy markets and security.

Africa home to nearly 8 billion people will consume just 3% of the world’s electricity in 2025.

Part of the solution is renewable energy including solar and wind and nuclear power. Much of the world is dependent upon good weather for solar and wind. In such a world, the flexibility of the power systems while ensuring security of supply and resilience of networks will be crucial.

Linking to dividend paying stocks, one of the easy investments is to buy utility stocks because the power can be generated, and regulatory agencies tend to raise rates which keeps investors happy. If you buy these types of stocks, it is important to ask how is the company flexible and able to continue to generate electricity which translates to profits and dividends?

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