What separates extra-ordinary business from ordinary ones

Most businesses realise less than 10% of their potential while others rise to extraordinary heights. What separate an ordinary business from an extra-ordinary business is not the quantitative aspects rather the qualitative points.

Here we are going to discuss those qualitative factors that will have a long-term bearing on the business.

A. Financial Management �

� The management should encourage effective Balance Sheet management involving sufficient cash balances and relevant Working Capital management.

� The management should also encourage giving due regard to conservative accounting treatment.

� The finance department should ensure that sufficient transparency is maintained as suggested by accounting guidelines prescribed by ICAI and IFRS in future.

� The most commonly abused accounting practice is about related party transactions. The accounts and audit department should ensure that there is due compliance of Related Party Transactions in spirit and not just by the letter of law.

� The Balance sheet shall contain everything that shareholders should know for proper assessment of the company.

B. Strategic Management �

� The organization should define the vision and mission clearly. The business targets should be fixed and should be divided with parts delegated across the organization structure.
� Any new development in the industry and strategies of the competitors should be evaluated pro-actively rather than reactively and management should be ready with the corresponding counter-strategies.

C. General Principles �

� The organisation should be due compliant with the provisions and regulation of various statutes and should ensure timely payments of all the tax liabilities.

� If it is a listed entity the responsibility increases many fold. In listed companies, the shareholders wealth creation should be regarded as prime objective as they have invested their hard-earned money. Other stake holders such as creditors, debtors and lenders should also be regarded in organisation goal-setting.

� Proper public relations should be developed for constant communication with media to avoid contradictory views.

Extraordinary business is synonymous with business success.

Understanding that a business derives its revenues as part of a larger system � getting value from and contributing to that system � is what history has shown separates ordinary businesses from extraordinary ones. For last three decades India has produced several extra-ordinary businesses such as Infosys, Bharti etc which truly can be differentiated from ordinary ones

 

Wolverine Posts Strong 2Q Earnings - Analyst Blog

Wolverine World Wide Inc. (WWW) posted strong second-quarter 2013 results, owing to the robust performance of its newly acquired brands. Wolverine's quarterly earnings of 46 cents a share zoomed past the company's previous guidance range of 31 cents to 35 cents and handily surpassed the Zacks Consensus Estimate of 34 cents. Moreover, the quarterly earnings jumped 12.2% year over year.

Including one-time items, the company reported earnings of 36 cents a share compared with 42 cents in the year-ago quarter.

Benefiting largely from the acquisition of Collective Brands' Performance + Lifestyle Group (PLG) group, Wolverine, which competes with Deckers Outdoor Corporation (DECK), reported net sales of $587.8 million. Net sales surged 88% year over year but fell short of the Zacks Consensus Estimate of $591 million. However, on a pro-forma basis, revenue increased 5.5% during the quarter.

Wolverine acquired PLG unit for $1.25 billion. The PLG unit sells footwear and related products, both wholesale and retail, for children and adults under popular brands including Stride Rite, Sperry Top-Sider, Saucony and Keds.

Coming to the operating groups, revenue at its Lifestyle group came in at $255.2 million, signifying a massive rise from $28.5 million in the year-ago quarter. Performance group's revenue jumped 33.8% to $199.7 million, while Heritage group's revenue declined 0.8% to $110.6 million. Revenue derived from the company's other brands decreased 4.7% to $22.3 million during the quarter.

On account of the top-line improvement, the company's gross profit more than doubled to $241.1 million, while gross margin expanded 320 basis points to 41%, reflecting increased contribution of high margin consumer direct operations.

Operating profit came in at $37 million, rising 62.3% year over year. However, operating margin contracted 100 basis points to 6.3%.

Other Financial Aspects

Wolverine ended the quarter with cash and cash equivalents o! f $171 million and reduced its net debt by $159 million. Net debt now stands at $1,014 million, while shareholder equity was $704.6 million.

Guidance Remains Strong

This Zacks Rank #2 (Buy) company raised its earnings guidance. Earnings per share are now expected to be in the range of $2.60 – $2.75, up from its earlier guidance range of $2.50 – $2.65, and reflecting year-over-year growth of 13.5% to 20.1%.

Revenue is expected in the range of $2.7 – $2.775 billion, up 6% to 8.9% year over year on a pro-forma basis.

Wolverine expects gross margin to improve moderately in 2013 due to the product mix shift toward high margin consumer direct business and lower markdowns. However, operating margin is projected to remain marginally low when compared with the prior year. Capital expenditure is projected to be in the range of $40 million – $50 million.

Other Stocks to Consider

Besides Wolverine, other stocks in the consumer discretionary sector worth considering include Brown Shoe Co. Inc. (BWS) and Big 5 Sporting Goods Corp. (BGFV), both carrying a Zacks Rank #1 (Strong Buy).

How Good is the Q2 Earnings Season? - Ahead of Wall Street

Thursday, July 18, 2013

Another day of Bernanke testimony and a slew of earnings reports provide the backdrop for today's action. The Fed Chairman was largely reassuring in his Wednesday outing and will likely do the same in today's session. On the earnings front, we are seeing a repeat of what we saw in Q1 – no growth outside of Finance, a predominance of negative revenue surprises, and weak guidance. There may not be much earnings growth, but the overall level of total earnings remains fairly high, with Q2 on track to surpass Q1's all-time record quarterly earnings total.

Bernanke reiterated the Fed's position in his House testimony yesterday that the 'Taper' decision was data-dependent, not on some 'pre-set' timetable, and that the overall tone of monetary policy will need to remain accommodative for a very long time. We will likely see a replay of that position in his Senate testimony today.

The stock market appears to have reconciled to the higher interest rates resulting from the 'Taper' talk as long as they reflect an improved economic outlook along the lines of consensus expectations. The consensus view is that U.S. GDP growth will be better in the second half of the year from the first half and next year will be better than this year. The question is what happens to the stock market if the second half of the year turns to be no better than the first half in a backdrop of no Fed QE.

This better second-half expectation is reflected in earnings estimates as well, with consensus expectations for the back half of the year reflecting a material ramp up in the growth pace. We will know more about the second half earnings outlook as more companies provide guidance for Q3 and beyond in the ongoing Q2 earnings season. But the results we are seeing thus far don't inspire much confidence that current expectations for the second half of the year will hold up.

Q2 Earnings Season Update

Including this morning's reports from Verizon (VZ)! , Morgan Stanley (MS), UnitedHealth (UNH) and others, we now have 2013 Q2 reports from 76 S&P 500 companies that combined account for 23% of the index's total market capitalization. The Finance sector is heavily represented in these early reports, with Q2 results from 48.5% of the sector's total market capitalization already known.

Finance sector results have been very good, but the performance outside of Finance isn't that bad either. Looking at the results for the 23% of market capitalization that have come out as of this morning, a couple of things stand out. First, as was the case in Q1, revenues are weak, with few companies beating on the top lines. Second, the overall tone of management guidance remains on the weak side at this admittedly early stage, which means that estimates for Q3 (currently at +4.6%) will need to come down. Third, the overall level of earnings is on track to surpass 2013 Q1's all-time record; we may not have much growth, but total earnings remain at record levels.

In terms of Q2 Scorecard, total earnings for the 76 S&P 500 companies that have reported results as of this morning are up +11.8% from the same period last year, with 63.2% beating earnings expectations. On the revenue side, we have a growth rate of +5% and 40.8% of the companies are coming ahead of top-line expectations. The earnings and revenue growth rates seen thus far are broadly in-line with what we have seen from the same group of 76 companies in recent quarters, though the revenue beat ratio is running a bit weaker than the first quarter's very low level.

There is not much growth outside of Finance, with the composite Q2 earnings growth rate for the S&P 500 (combining the 76 reports that have come out with the 424 still to come) currently at +1.6%. Excluding Finance, the composite Q2 earnings growth for the S&P 500 drops to a decline -3.5%. The Technology sector is a big drag on earnings growth, with total earnings for the sector expected to be down -7.8%. We! will kno! w more about the sector's earnings picture with today's results from Google (GOOG) and Microsoft (MSFT) after the close, though Wednesday's Intel (INTC) report doesn't provide a reassuring read-through for Microsoft.

Sheraz Mian
Director of Research


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Bezos’ wife MacKenzie criticizes new Amazon book

MacKenzie Bezos, the wife of Amazon.com founder and CEO Jeff Bezos, has written a tough review of a new book about the world's largest Internet retailer.

In the review, posted on Amazon's website Monday, MacKenzie Bezos criticized the book, The Everything Store, saying it has "too many inaccuracies."

She said that near the beginning of the book her husband is described as having read Remains of the Day by famous author Kazuo Ishiguro and was inspired to start Amazon by that book. But she said that Jeff Bezos did not read that book until after he started the company.

"The book is also full of techniques which stretch the boundaries of non-fiction, and the result is a lopsided and misleading portrait of the people and culture at Amazon," she added in the review.

She gave the book one star out of five. She was the only reviewer to give one star, as of Monday afternoon. The book has got 30 five-star reviews, 11 four-star reviews and two three-star reviews so far on Amazon's website.

The book, written by veteran Amazon reporter and Bloomberg Businessweek journalist Brad Stone, is the first in-depth look at a company that grew from a small online bookseller into one of the world's most successful and powerful Internet businesses.

"I talked to 300 people to get a picture of one of the most interesting and secretive companies around," Stone said in an interview with USA TODAY. "I stand by my book. To the extend that I made mistakes I will gladly fix them."

The book describes CEO Bezos as the talented mastermind behind the company's success. But it also describes him as a sometimes tough leader and portrays Amazon as a difficult place to work for some employees.

"Amazon draws extremely divergent perspectives, not only from competitors but from the people who work there," Stone added. "I tried to do justice to the remarkable achievements of the company and to the fact that it hasn't been an easy path from four people in a garage to a company with over 100,000 employe! es."

This is not the first time MacKenzie Bezos has come out publicly in support of her husband's company. Earlier this year, Bezos, who is an author herself, defended Amazon's role in the publishing world in an interview with the Times of London.

Why Today's Dow Gains Aren't Important

The Dow Jones Industrials (DJINDICES: ^DJI  ) got off to a strong start this morning, posting a 106-point gain by 10:55 a.m. EDT based largely on continuing optimism about the pace of the U.S. economic recovery. With Friday's jobs report sending bond yields soaring and bond prices crashing late last week, investors using asset-allocation strategies likely saw the news as mixed for their overall portfolios. Still, the stock market has held up quite well in July, as the Federal Reserve isn't spooking markets about the potential end of its quantitative-easing program nearly as much as it did last month.

Still, investors should take today's gains with a grain of salt, because two major events will soon take the focus off economic data. After the closing bell today, Alcoa will kick off earnings season, and the market has a lot riding on the results it will see in the coming weeks. Secondly, on Wednesday the Fed will release its latest Federal Open Market Committee minutes, which will provide some more context for the June decision that sparked such strong reactions from investors when it was first released.

So while you're waiting to get more big-picture information, focus on company-specific news that can move the stocks in your portfolio. For instance, in the tech sector, Intel (NASDAQ: INTC  ) is the big loser in the Dow today, falling 3.4% after a Wall Street analyst again cited the weak PC sector as hurting Intel's long-term prospects. Even a single-penny reduction in Citi's earnings outlook was enough to prompt the decline, showing how sensitive stocks are to adverse news right now.

Corporate actions will also remain important. Dell (NASDAQ: DELL  ) shares have climbed 2.6% after proxy advisory company Institutional Shareholder Services recommended that the company's shareholders vote to approve the proposed deal from Silver Lake and Michael Dell to take the company private. The buyout certainly offers more certainty for investors than a rival tender-offer proposal from Carl Icahn and Southeastern Asset Management, which could leave shareholders with ongoing stock positions if the tender offer is oversubscribed.

Finally, look to other markets for guidance. For instance, precious metals bounced off their recent lows, with gold prices climbing $23 per ounce. Key gold-miners are also up sharply, with Barrick Gold (NYSE: ABX  ) rising about 3% and Goldcorp (NYSE: GG  ) up 1.4%. As two of the largest companies in the industry, both Barrick and Goldcorp have the ability to make strategic moves designed to pick up lucrative assets at bargain-basement prices. As weaker junior miners have to consider extraordinary measures to stay afloat, look for Goldcorp and Barrick to take advantage of fire-sale conditions to take their pick of the litter.

Intel and Dell might not have as much influence going forward, as our digital and technological lives are almost entirely shaped by just a handful of other companies. Find out "Who Will Win the War Between the 5 Biggest Tech Stocks?" in The Motley Fool's latest free report, which details the knock-down, drag-out battle being waged by the five kings of tech. Click here to keep reading.

Ericsson to Acquire Red Bee Media

In an effort to broaden its media services offerings, Sweden-based Ericsson (NASDAQ: ERIC  ) intends to acquire U.K.-based Red Bee Media, Ericsson announced this week.

Red Bee Media's 1,500 "highly skilled employees," along with media services and operations facilities in the U.K., France, Germany, Spain and Australia will "further strengthen Ericsson's broadcast services business," according to the company. With 1,240 of Red Bee Media employees based in the U.K., Ericsson's U.K. business would grow to around 4,000 employees if the acquisition goes through, and with more than one-third working in the media services business, the U.K. would become a global media hub for Ericsson.

Ericsson first entered the media services business in 2007, and expanded the unit in 2012 with the acquisition of Technicolor's Broadcast Services Business.

In discussing the decision to acquire Red Bee Media, founded in 2005, Ericsson Executive Vice President and head of business unit global services Magnus Mandersson commented, "Ericsson is making a step change to our business, cementing our commitment to TV and broadcast services and continuing a journey we started in 2007."

Red Bee's media services include media asset management, playout and digital video publishing, metadata services, multilingual access services and creative services to major broadcasters and broadband platforms. It delivers more than 100,000 hours of subtitling per year for leading broadcasters.

The transaction is subject to regulatory approval and customary closing conditions. Financial terms were not disclosed.

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TD Bank Offers Furloughed Workers $1,000 to Tide Them Over

Alamy TD Bank (TD) says it will give a hand to workers put out of work by the ongoing government shutdown, forgiving late fees on credit cards and giving account holders an extra $1,000 to cover expenses. The bank announced Thursday that it was launching TD Cares, a program that will provide a range of benefits for any government worker dealing with a missing paycheck as a result of the shutdown. From Oct. 10 through Nov. 2, TD Bank account holders can overdraft their accounts by as much as $1,000 (or their usual monthly pay, whichever is lower). The overdraft will be fee-free for the duration of the program, but overdrafts that go beyond the resumption of government services (and paychecks) will be subject to fees. The idea is to help government workers who miss a paycheck to cover basic expenses until their jobs are funded again. That's not all. If you've got a TD Bank credit card and have to miss a payment, you'll be forgiven any late fees. And federal workers who have mortgages with the bank will be eligible for mortgage assistance, though it's not clear what form that assistance will take. The move comes after Hyundai announced a similar program that offered to defer car payments for any worker who can't come up with the funds during the shutdown. Both are publicity stunts of sorts, though we imagine TD Bank's gesture will help a wider swath of the population. As with Hyundai, TD is only letting you defer your payments -- once you're back at work with a paycheck, you'll need to get your accounts back in the black and pay off any credit card bills. That shouldn't be a problem if the government comes through with back pay once the crisis is over. But as we noted earlier this week, it's still an open question whether furloughed workers will be paid for the time they were forced to miss.