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Varchild2008 (84.87)

Market Share Gains versus Profitability (FORD)



March 02, 2010 – Comments (4) | RELATED TICKERS: F

Question:  If you I told you that a certain Mobile Phone Company's had increased their market share by 3% in February versus February of 2009, and furthermore sales of their phones increased by 43% then what would you see as the more important figure?

A) You like the 3% Market Share gain best...

B)  You like the 43% increase in sale of their phones best...

Varchild's Answer?     A.

It is not that I don't like B... It is that A is better than B for understanding how this company is shaping up this year and for speculating on their future.

The first dying signs of any brand name shoe company is to see quarter after quarter of market share loss against other brand name shoes.....and it does not matter what the total sales figures are because market share loss will eventually eat away at the total sales figures.

A company can always SELL MORE even if they are LOSING market share for awhile....... But eventually the loss in market share will reduce the total sales figures so Sales Gains turns into Sales Losses....  Revenue Gains.... become Revenue Losses....

So.. let's for example look at another way regarding this....that will add another dimension to the argument..

I have a stock that is getting massively pummeled by Stock Investors (GAME).

What is the problem with GAME?    Speculation!  It's pure speculation....

GAME is suffering under a 10-15%  perhaps its worse.... projected loss in revenue Q1 2010 mostly because their main MMORPG video game (MIR II) is no longer earning as much revenue as before.

In simple terms.....  Video Gamers may still be playing MIR II.... but they aren't spending $$$$s in the Premium Item Shop.

Varchild did the smart thing after earnings report in downloading MIR II and getting to know the video game up close....  If I just play the game and never spend $$$$$ in the premium shop then GAMEPOT  (The USA version of MIR II) receives ZILCH!!!!! from me....  They earn NOTHING....

This is a unique business methodolgy....versus going Subscriber Based where you HAVE to pay SOMETHING in order to even PLAY the game.

So.. Some are speculating that there is a massive  MARKET SHARE loss going on versus NETEASE's  World of Warcraft and CYOU + Other competitor's online offerings.

So if Varchild is saying he cares so much about Market Share then why is he sitting bleeding to death with his shares of (GAME)......refusing to sell????  Take the loss and run?

Because in this particular case.... I am speculating that Shanda Games over the long haul will eventually figure out that they need to go Subscriber Based in order to produce a more consistent and less volatile revenue stream.

If that was my only reason I'd be the dumbest investor in the world....

But alas.... I also like their latest acquisition in MOCHI MEDIA for the fact that it adds a brand new much more stable... much more consistent revenue stream to their bottom line.   It will not add much initially this year and is not obviously a game changer for their earnings for 2010...

But, this is a sign that GAME is willing to try new ways to diversify revenue streams and try new business models to get back to GROWTH.....rather than experience extreme UPS and DOWNs.

I see (GAME) just as I saw (HANS) Hansen Natural Corp.    It is a company that has grown soooo big sooooo quickly that they have hit a WALL......  And while hitting a WALL should spook virtually 99.99999% of all investors for good reason.... It does not spook me when I strongly believe that (GAME) has a turn-a-round strategy to tear down the WALL they've hit.

So... fine.... MARK IT ZERO.....err....well...  .0001..  I won't give up on GAME for loss of Market Share...

But Varchild will DUMP  (F) Ford  if they lose market share....    I do not agree with Ford's CFO that "Market Share is not important.. Profitability is." 

Wrong... Market Share TRUMPS profitability...    FORD got itself into the mess they got into in the first place because of Market Share!!!   Japanese Auto Company's excelled in increasing market share and eventually out selling their U.S. counterparts into bankruptcy.

DISCLOSURE:  I own 564 shares of F  and 376 shares of GAME

4 Comments – Post Your Own

#1) On March 02, 2010 at 4:25 PM, outoffocus (24.09) wrote:

On GAME:  

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#2) On March 02, 2010 at 4:28 PM, outoffocus (24.09) wrote:

Ok let me try that again: 

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#3) On March 02, 2010 at 4:32 PM, Varchild2008 (84.87) wrote:

I can not get your link to work... :-\

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#4) On March 02, 2010 at 4:45 PM, Varchild2008 (84.87) wrote:




I am just pointing out several quarters.... several earnings reports ago....  in which Hansen Natural Corp first got acquired by (KO) and experienced Inventory / Distribution problems.

That was the sorta "wall" they hit in which their excessive growth needed to be managed better...

HANS has obviously managed their business distribution processes much better and like wise... they tore down the WALL and are marching towards GROWTH.

So I am saying (GAME) could do the same...  This could be the same type of moment HANS experienced when first acquired by (KO).   It could take 2 or more Quarters.. 2 or more earnings reports... but I suspect at some point this year we will see the company get back to a more consistent revenue stream with less volatility.

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