Friday, June 27, 2008

even palo alto downtown is dangerous

I always think Palo Alto downtown is safe. But today I am wrong.

I was sitting in Wells Fargo bank on Hamilton Avenue for some account service. suddenly, two men came in and robbed the bank. "everyone put your hand on the table". They yelled. In twenty seconds, they robbed money and ran.

Gosh, is this a CSI scene just happened in real?

Thursday, June 26, 2008

"The Nokia Revolution"

Strongly recommend this book to anyone interested in mobile industry. This made-in-Finland company experienced a long process to evolve into the world-class handset producers in 140 years. Can you believe it was one of the largest toilet paper producer before, and it was also a no-brand OEM houses? With a strong leadership and the insightful vision of the Finish reformers, Nokia has grown up to be a global-competitive company. And is still doing great.

From what I read in the book, only one element can not make a great company. It needs good timing, good leadership, good strategy, good parnters, good government and a lot of other good things to make the great thing happen.

Tuesday, June 17, 2008

Reasons being bullish on China

Here is a fun piece from Jeff Farley, columnist of Seeking Alpha on why he is bullish on China after a two-week ground visit. He is probably more positive on China than I do, such as quote: " I would describe the Chinese government as similar to the parent of a teenager (which is kind of where they are in their economic development). They allow a lot of freedom but there is also supervision, direction and strong decisions made for the good of the country and the masses. The way I look at it is, parents are not violating human rights when they tell you your curfew is midnight, or you must go to school, don't do drugs, cut your hair, you cannot get a tattoo till you are 18, don't drink and drive, you cannot drive the car if you flunk out of school, or you better not get your girlfriend pregnant."

You could see how people change their opinions after being there by themselves. You can also see people's opinions in the 30 comments following this. Anyway, a good read if you want to learn how biases vary.

Friday, June 13, 2008

Google-Yahoo Deal

For Yahoo shareholder, they wanted to get a big watermelon a few months ago; now they only get a small apple.

The big watermelon is that Microsoft to buy Yahoo at a price as high as $37, while the small apple is that Google is going to open its ad service to Yahoo, which will bring a $250 million to $450 million strong cash flow to Yahoo's balance sheet.

Today, Yahoo announced that it ended up talks with Microsoft. However, it said it will partner with Google on opening its searching service to Google's advertising business. Reuters call it as a new model in ad partnership, while I believe that's only an apple to comfort upset yahoo investors.

In addition, Yahoo admits that its ad service based on its searching business is no longer as competitive as Google's. It may get a huge share of revenue from the deal, but the fact is that Yahoo can't do a better job in selling ads by itself.

It's interesting how similar the history looks like, even beyond the border. Over 2000 years ago, there was a small nation in China called Qin. The other five nations were all bigger and stronger than Qin. However, the Emperor of Qin is a very good strategiest. He chose to partner with one or two nations in order to fight with other bigger ones. Qin grew bigger and stronger benefiting the alliance, and finally took control of all the other five nations.

Managing a business is like governing a nation. Alliance is important, but that is not all. Yahoo may see a good deal now, but it will soon fully rely on Google's ad platform. Google will be the one who decide the percentage of revenue Yahoo can get. Yahoo needs more than a partnership to revive its business, without being taken over by anyone including Google and Microsoft.

Thursday, June 05, 2008

The Hong Kong acquisition of China Merchants Bank

The deal cost $4.66 billion, and valued the target at 29 times of the 2007 book value. People call this crazy, and Standard & Poor downgraded China Merchants Bank to Watch Negative, but I will say this is a good move.

S&P quoted the reason of downgrading as "CMB is short of managing practice in Hong Kong", but I will argue that CMB management is already prepared for it. Roughly one year ago, the management of CMB was asked if they want to expand in Hong Kong. A funny quote was "The number of bank branch in Hong Kong is higher than the number of restroom, it will be hard for us to make the progress". To me, the deal of this time represents the CMB's confidence in the future expansion.

Beyond the management confidence, there are still three other reasons for me to pro this acquisition.

First, the origin of CMB. CMB is originated from Shenzhen, a neighbor city of Hong Kong. Considering a lot of Hong Kong citizen residing in Shenzhen, CMB is already familiar with the customer culture in Hong Kong. Plus, CMB is the best in terms of retail banking in China, which will make it competitive in Hong Kong, a retail banking-dominated city.

Second, the RMB service of CMB. Currently, a lot of Hong Kong residents are saving RMB because of the continuous appreciation. CMB can provide a better service based on its RMB reserve from its mainland China branches. This is hard for the other Hong Kong banks because of their limitation in operating in mainland China.

Third, the increasing middle class in China. taking a survey on mainland Chinese who shop in Hong Kong, it will be amazing to see a high percentage of using CMB credit card. It will be much more convenient for them to enjoy a local service if they travel in Hong Kong. I believe this is only the first step for CMB. More and more overseas acquisition will happen because of the demand from Chinese consumers.

All in all, it is a high valuation, but it is a valuation after careful consideration. I look forward to a succesfull integration between CMB and Wing Lung.

Tuesday, June 03, 2008

Blogging buzz by Whole Foods CEO

This is an interesting piece i've read so far. John Mackey, the CEO of Whole Foods, are back to blogging after an investigation of annoymous postings on Yahoo Finance. It makes me think of the grassroot media's impact in the financial world.

Here is a digest from WSJ.

"Whole Foods Market Inc. Chief Executive John Mackey is back in the blogosphere after a months-long investigation that questioned his anonymous postings on Yahoo Finance message boards.

The U.S. Securities and Exchange Commission spent the past 11 months investigating whether Mr. Mackey's roughly 1,400 anonymous messages under the screen name "Rahodeb" had broken any laws. The commission concluded no action needed to be taken against the chief executive or the company.

As a result, Mr. Mackey has returned to the Web with a vengeance, posting a 2,037-word piece on Whole Foods' Web site in which he said he's sorry the investigation put a negative spotlight on the company. He acknowledged making a mistake in judgment, but not ethics, saying he didn't realize posting under a screen name in an online community would cause so much controversy.

"I don't wish to apologize for being highly competitive, because much of my drive and creativity come from this competitiveness," he said. "I don't believe that I ever crossed the line of fair but vigorous debate in these postings." The posting was reported earlier by Silicon Alley Insider."