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Company valuation, stock prices, portfolio asset allocation, ROE and BlackBerry?

In June 2011 I made a presentation to a CEO of a global company in Asia on the state of the the coming change of ecosystems and how some leaders would collapse in the next 18 months plus of the microprocessor cycle (Moore’s Law).  For reasons understood I cannot include all the slides from the presentation as this was a closed door conversation.

These two slides from the presentation on the business models and how they were impacting their Cash Conversion Cycles, Inventory Stock Turns, Gross Margins & P&L and thus the very value and continuity of these companies was obvious. This during the presentation brought out the company valuation, stock prices, portfolio asset allocation and business models and why some of them were imploding and fast.

These are just two sample slides from the presentation shows clearly where most companies are based on fundamentals. News like this are just the examples of what is to come and they are quite a few companies out there and share price is not a reflection of fundamentals of a company in terms of value. It just reflects how people are “behaving” towards the company and thus the stock price.

BlackBerry plans deep job cuts as new phone launches: report

http://www.reuters.com/article/2013/09/18/us-blackberry-layoffs-idUSBRE98H0WF20130918

Screen Shot 2013-09-20 at 8.43.44 AM                     Screen Shot 2013-09-13 at 9.59.11 AM

 

Clearly fundamentals matter and the rest is fashion. I understand a few things only and definitely supplychain is my core. From this I have learnt how to build a company, run a business, work on board, invest in a startup, mentor startups or build a investing framework that can capture and model the value of a business, irrespective of the industry.

Must read the Rule of 3 and why it really matters.

BCG Classics Revisited: The Rule of Three and Four
https://www.bcgperspectives.com/content/articles/business_unit_strategy_the_rule_of_three_and_four_bcg_classics_revisited/

COMPETITIVE MARKETS AND THE RULE OF THREE 
by Jagdish N. Sheth and Rajendra S. Sisodia
Strategy | 

Next week I have a mentoring session with a director of a lab at an ivy league school on how to create a valuation model from the word go. The goal is to understand how to allocate capital, resources and execute a business around fundamentals.  End of the day, basics don’t change, only fashion does, but unfortunately it comes back in cycles!

Where would you allocate your capital? You can call me and we can have a Disruptive Coffee discussion.

 

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