Europe: Just For The Record

You don’t need to be a genius to see the global economy slowing. While the US is one homogenous retail market, Europe is quite the opposite, making it tougher to quantify the sales trajectory. Check out the comp charts below. Let’s also see how different management teams have changed their tone towards Europe…

"I can sit here and talk about the upside of Western Europe here for quite some time if you want me to, but I'm pretty excited about it because we put a lot of work into that and I think it just goes to show you we have a good handle on what it takes to fix some of these markets and what we need to do. Sometimes it may take a little longer than others, but at the end of the day I think we've demonstrated our ability to get these things turned around and get them back on a growth schedule again." - Charlie Denson President of Nike Brand, Sept. 20, 2007

JJB Sports - "The worst retail recession I have ever known" Sept. 26, 2008

Adidas - Sales declined "exclusively as a result of continued declines in the UK" Aug 5, 2008

Polo Ralph Lauren - "There is talk that maybe England would begin to catch some of the cold we have" Aug. 06, 2008

VFC - Beginning to see weakness. July 15, 2008

Marks and Spencer - "Ireland specifically is suffering probably more than the UK at the moment." Oct. 2, 2008

Inditex - "Spain is slightly below the average"
Analyst response: "That seems to imply that Spanish like for likes are probably down 3% to 4%." "That's a bit more than slightly below average." Sept. 17, 2008

Q1 2008 (Sept. 20, 2007) "Spain and Portugal had a fantastic quarter"
Q1 2009 (Sept 24, 2008) "Probably the biggest challenge right now in Spain and Portugal"

Quiksilver - "Southern Europe has been hit harder than others." Spain was the example. Sept. 4, 2008

Polo Ralph Lauren - "Spain is feeling a pull back in what had been a very robust business" "There is some concern in Spain" Aug. 06, 2008

VFC - Beginning to see weakness in the 2nd consecutive quarter. July 15, 2008

Nike - France has been difficult for Nike since Q1 2008
1Q 09: "We are seeing some tough economic conditions in Spain, Italy, and France"
"The softness is really along the Mediterranean, Iberia, Southern France, Italy …"

Nike – Softness and tough economic conditions in Italy. Sept. 24, 2008
VFC - Beginning to see weakness in the 2nd consecutive quarter. July 15, 2008

Adidas - Double digit increases and higher growth in 2008
"We are making progress in several markets from Italy to Central Europe" Aug 5, 2008

BMY weak - Tobin's comments... short and to the point.

I like the CEOs quote here. It looks like BMY wont raise their bid.

Thomas Tobin
Managing Director


"Bristol-Myers Squibb Comments on Eli Lilly as New Erbitux Marketing Partner"
Will Receive $1 Billion Upon Completion of Transaction
PRINCETON, N.J., Oct 06, 2008 (BUSINESS WIRE) -- Eli Lilly and Company (NYSE: LLY) announced today that it will acquire ImClone Systems (NASDAQ:IMCL) for $70 per share, or approximately $6.5 billion. Bristol-Myers Squibb currently owns approximately 16.6 percent of all outstanding shares of ImClone. Based on Bristol-Myers Squibb's ownership of 14.4 million shares of ImClone, the transaction will be worth approximately $1 billion in cash to Bristol-Myers Squibb.
"We are pleased to have initiated a process that has resulted in the substantial increase of ImClone's value for all of its stockholders," said James M. Cornelius, Chairman and Chief Executive Officer, Bristol-Myers Squibb. "We are also proud to have contributed to this creation of value by providing commercial and R&D support to the company over the course of our relationship, which will continue now with Eli Lilly, a well-respected research organization.
"From the beginning, we had viewed our potential acquisition of ImClone as a strategically and financially sound add-on to our oncology business, consolidating a successful relationship that has extended over seven years. We felt it was in the best interest of Bristol-Myers Squibb shareholders not to raise our previous $62/share all cash offer, exercising discipline and evaluating this potential investment within the context of other alternatives open to the company.
"Looking ahead, we will work closely with Eli Lilly and Company, a company I know well, to continue to bring to patients not only ERBITUX(R), the important cancer therapy we co-commercialize in the U.S. and Canada with ImClone, and co-develop in Japan with Merck KGaA and ImClone, but other compounds, including IMC-11F8, under development by ImClone to which Bristol-Myers Squibb holds long-term marketing rights."
About Bristol-Myers Squibb
Bristol-Myers Squibb is a global biopharmaceutical company whose mission is to extend and enhance human life.
SOURCE: Bristol-Myers Squibb
Bristol-Myers Squibb
Tracy Furey,
Brian Henry,
Investor Relations:
John Elicker,
Copyright Business Wire 2008


US Market Update: Still Buying...

If you can't buyem today, when can you?

I am now at 84% Cash, 3% Gold, 13% Stocks.

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GS and MS: Tricksy and Wiksy...

Morgan Stanley and Goldman Sachs are making amends, kind of...

One of the 12 steps that every recovering addict must make, according to the Alcoholics Anonymous program, is to make amends to every person that they harmed while they were under the influence. Accordingly, Morgan Stanley and Goldman Sachs have released a flood of update filings with the SEC over the past few weeks covering some of the hundreds of structured products that they have jammed through their retail distribution networks over the years. The reason for this sudden flurry of paper is that, in the wake of Lehman’s failure, all of the retail investors who bought the products (typically notes linked to the performance of equities, indices or commodities that were packaged as “principal protected”) have suddenly panicked at the thought that they have credit exposure to the issuing bank.

Morgan Stanley and Goldman (along with Lehman and Bear) were such prolific issuers of these exotic retail products that they were given a special filing status by the SEC: “Well Known Seasoned Issuer” or “WKSI” (pronounced Wiksy). This allowed them to issue structured notes to the public with a 2 or 3 page summary instead of filing a full blown prospectus.

Now that they have filed these updates on those streamlined filings, everyone who, for example, purchased one of Morgan Stanley’s “Buffered Return Enhanced Notes” which were “designed for investors who seek a return of twice the appreciation of the Asian Equity Index Basket” can find the updated term sheet at the SEC’s site and Google what the implications of owning “Senior unsecured obligations of Morgan Stanley” are.

Having their own brokerage force sell their proprietary debt to unsophisticated retail investors at terms advantageous to themselves in the guise of “risk free” investments was a great business for the banks while it lasted. Now, in the cold light of sobriety, the potential for self dealing and misstatement of risk all looks rather different.

I wish I could write this from the pure perspective of an outraged observer but, truth be told: I sold tons of this type of stuff through the retail systems of banks I worked at in my 20’s.

Andrew Barber


I write this as I jet toward Hong Kong on route to my final destination, Macau. This needs to be short because I’m in a bad mood. I’m too tall for coach, especially on a 17 hour flight, yet as a partner I need to set a good example. I’ll be sending around a petition to ban reclining seats in coach, please sign. Two hours into the flight and my knees, neck, and computer are all breaking down. Maybe one leg of the flight will be example enough.

My itinerary is top notch, set up by my Macau consultants who are also top notch. These will not be the run of the mill Macau investor meetings. I’ve got junket operators, mid-level casino employees, government officials, development guys, and of course corporate and casino management on the schedule.

This may be a bit unorthodox but I’d like to invite clients to send me questions you would like answered. I will do my best to find concrete answers to those questions and post them for you on my portal. Please email all questions to:

Stay grounded. Flying sucks.


It was a glorious time. The Red Sox and Yankees were both on their way to the playoffs and the New York football Giants had just wrapped up the preseason before their Super Bowl season. Jets fans still had a clean slate in front of them and oh yeah, the stock market was on an upward trajectory toward the October 2007 high. August 2007 was also the last month the riverboat gaming markets generated positive same store sales.

I use win per day per gaming position (WPD) as a proxy for same store gaming sales as shown on a trailing twelve month basis in the chart. We’ve now had 12 straight months of declines in WPD and 19 out of the last 20. Ouch. As bad as that looks, it was even uglier in 1. WPD declined 13 straight months, averaging 17% down per month. Now that was pain.

Regional gaming stocks got crushed beginning in mid-1996. It’s probably no coincidence that my first day covering the gaming sector was also in mid-1996. Maybe that’s why I’ve always been good on the short side. But stocks rebounded strongly beginning in late 1998 and lasting a decade, interrupted only by 9/11.

So why shouldn’t we be loading up on regional gamers? Valuations are 5-6x, in-line with those prevailing in the mid to late 1990s and WPD trends are similar if not better. Let’s go to the video tape, actually the chart, to answer this question. The difference between now and then is that while WPD declined in 1, total revenues increased dramatically. Markets were still growing. The pie was getting bigger. New casinos were just cutting the slices smaller, temporarily. Fast forward to present time and we see that the markets are contracting along with WPD. Gaming is cyclical after all.

Unlike the late 90s, the market is not growing

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