Trefis Week In Review

by Trefis Team
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The Week in Review

Below is a summary of the activity on Trefis during the past week that we thought you would find interesting.

Insights from the Week

Technology Media & Telecom

This deal provides Microsoft with an opportunity to gain market share in both the smartphone operating system market and the search advertising market as it leverages Nokia’s large global presence across the globe …

The move to offer cheaper iPhones should help Apple gain smartphone market share, but this could come alongside lower average pricing and reduced profit margins …

Through the Nokia partnership, Microsoft not only stands to gain licensing revenues for its operating system, but also search advertising market share …

A hypothetical scenario in which Motorola Solutions’ revenue from enterprise sales increases at rate of 10% to reach $4 billion by the end of our forecast period (vs. our $3 billion estimate) would imply 5% upside to our $35.49 price estimate for Motorola Solutions …

We estimate that enterprise segment constitutes around 8% of AT&T’s price estimate and is thus not a great value contributor …

There is still hope for Nokia in the long-term, as the initiative will allow Nokia to concentrate on its hardware products post-transition and cut costs currently spent on software development …

Juniper has a smaller presence in this market vs. other markets it competes in like edge and core  routers, and we think this might be its biggest opportunity to grow …

The reduction in brick-and-mortar distribution points for magazines is likely to drive publishers further into the arms of Apple and Google which are offering up their growing smartphone and tablet platform bases as potential salvation for the publishing industry …

Patch.com attracted around 3 million unique visitors during December 2010, which is about 80 times the number recorded a year earlier …

ESPN is Disney’s most valuable product segment, by our estimates, accounting for an estimated 28% of the company’s stock value …

In a hypothetical scenario in which 1 million users register at the $10 per month web-only fee, it would imply $120 million in incremental annual revenues …

While no immediate plans exist in this regard, Time Warner has expressed interest in ultimately bringing its offering to Apple’s gadgets …

Toptable.com generated about $3.1 million in revenues for OpenTable in Q4 2010 – more than 10% of the company’s total revenue of $30.7 million for the quarter …

There is pricing pressure on the portfolio and that raises the question of whether Cisco will be able to sustain a successful product transition without sacrificing on pricing or profit margins too much …

We believe the risk of customers switching to another service provider is limited, but the risk of losing revenue from NFL Sunday Ticket subscriptions looms …

It is clear that new customers are leaning towards smartphones, but older customers are upgrading as well, as evidenced by Verizon’s aggressive smartphone penetration targets for the coming year …

We estimate that Dell will be able to capture a modest 5% market share of Android based tablets in 2011 behind competitors like Samsung and Motorola selling close to 700,000 units during the year …

However, if Sprint can achieve its network improvements prior to 2015, and its spending levels subsequently drop, the company’s value could get a significant lift …

Symantec stock stands to gain if the mobile security market does indeed become a meaningful portion of the overall security software market …

(Trefis Pro Exclusive) Consumer, Retail & Automotive


Estee Lauder draws over 40% of its sales from skin care and recorded 15% growth in revenues from this segment during 2010 due in part to improved market share …

McDonald’s encouraging comparable store sales performance has been driven by both increased average spend per customer visit as well as a rise in customer traffic at its restaurants …

American Eagle’s growth trends have been lagging behind competitors like Gap, A&F and Aeropostale in December and January, as well as for the full fiscal 2010 …

Colgate’s strong balance sheet could allow Unilever or another suitor to raise debt against Colgate’s assets in the event of a takeover …

While shifting production to new regions might help Coach cut down on production costs going forward, the initial expenditure required to set-up production capabilities or establish ties with manufactures could pose a near-term headwind to profit margins …

After GM sold its majority stake in Ally financial, GM’s vehicle lease business contributed only 5% to GM’s total valuation, but we expect GM’s vehicle leasing business to grow and become increasingly more valuable following the acquisition of AmeriCredit …

Lower sales volumes in Europe were driven by Ford’s focus on maintaining profit margins and its decision to reduce its participation in certain low margin businesses …

Kraft has lowered its earnings forecasts for 2011 and expects revenue growth to be driven more by higher prices than higher volumes …

Apart from this, the spending needs to cover cost of initial implementation of the technology as well as ongoing security fixes could weigh on Starbucks …

Wal-Mart is already a source of significant income for studios by selling their DVDs and has massive scale to be competitive in electronic sell-through as well …

(Trefis Pro Exclusive) Energy & Financial Services

We estimate that MetLife’s share of international insurance market will grow to about 0.3% by 2013 after the successful integration of operations …

With more and more online brokerage firms trying to provide end-to-end financial services to their customers with facilities like online bill payment and debit card services, E-Trade has managed to remain a front-runner in this sector and consistently attract new customers …

What differentiates American Express from MasterCard and Visa is its relatively more affluent customer base, which it maintains by offering generous benefits and reward programs …

First Solar was the first company to reduce manufacturing cost per watt below $1, making it comparable to power generated by other conventional means …

The deal provides clues about Goldman’s private equity strategy in the wake of the Volker regulations, a part of the Dodd-Frank financial reform bill that puts a cap on the amount of proprietary capital that banks can use to make investments …

Although the expansion is a positive for Chevron, natural gas production constitutes only 9% of the company’s stock value by our estimates, so upside from this segment is limited …

As net interest return is dependent on the investments undertaken by the firm, the value of this return is highly dependent on the efforts of the research arm …

Despite optimism following strong top line growth and a decline in net charge-offs during Q4 2010, we believe that non-interest expenses still pose a concern for Wells Fargo’s outlook …

NYSE Euronext and Deutsche Boerse AG anticipate that the business merger could generate 300 million euros ($450 million) in cost savings principally from economies of scale in information technology, clearing operations, market operations and corporate center functions …

The increasing popularity of an MMDA over normal savings account among clients due to the higher interest offered is also a significant advantage for Ameritrade …

In its Q4 2010 results, Wells Fargo reported a significant improvement in the performance of its loan portfolio including both loans and mortgages as lending increased, driven by strong loan demand and decreased net charge-offs …

With the number of US uninsured households at a 50-year record high, more companies are coming up with similar products, which may improve sales …

Lower volumes and liquidity due to volatile macro economic conditions in the short term and increased regulations on proprietary trading in the long run will contribute to this lower yield …

A weak economic recovery has resulted in a decline in average interest earning deposits and presents a potential concern for the multinational bank …

We believe that the decision to discontinue financial planning services could increase the Consumer Banking division’s profitability from our current forecast of just under 24% by the end of our forecast period …

Summaries of Trefis Members’ Recent Forecasts

MasterCard is trying to offer domestic solutions in various countries and these centers will bring the costs down and help MasterCard to lower its connectivity fee …

With growing fragmentation of younger audience between cable, the Internet and other media, MTV’s market penetration translates into stronger pricing power for ad slots …

We expect Suntech’s PV module sales to keep growing driven by environmental concerns that will spur adoption of solar energy systems and continued government subsidies that will keep prices affordable for consumers …

If there is a shift toward gasoline-oriented vehicles, European refiners will have a tough time producing enough to meet European demand as well as maintaining the level of exports required by the US market …

Internet penetration in international markets has been growing at a substantially greater pace than in the United States and offers Priceline a larger addressable market to increase its hotel bookings …

These are signs that the notebook market is being increasingly commoditized, which has resulted in intense competition among notebook makers, in turn causing price erosion …

Coach’s retail and factory square footage has grown at an average annualized rate of over 15% in both North America and Japan …

ALICO Accelerates MetLife’s International Growth

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