Disruption (Google, Apple, Facebook, Amazon)

Though somewhat redundant given prior pieces he's written, Benedict Evans doubles-down on why so much disruption is going to come from the Big Four. In a word: scale. In another: mobile distribution. Still, it seems - maybe in light of the recent Russian ad-buying scandal - that people are more focused than ever on the Big Four (Five, if you want to include Microsoft ($MSFT)). Indeed, hereThe New York Times highlights how even massive companies like Snapchat ($SNAP) andUber are struggling to deal with the behemoths. On point, Google, which has previously invested in Uber, announced earlier this week a $1b investment in LyftSnapchat, meanwhile, much to the chagrin of pundits, is marketing an $80 dancing hot dog costume for Halloween. On one hand, it's brilliant to create consumer products based on your digital product. On the other hand, however, when your target market is the millennial, an $80 price point for a Halloween costume strikes as a, uh, a bit rich maybe...?

Mary Meeker's Internet Trends. This is Real Disruption, Summarized

We may have to dedicate more time to this at a later point but for anyone who has some time to kill, we HIGHLY recommend this lauded report by Kleiner Perkins' Mary Meeker. The short version: smartphone growth is flat-lining as is internet growth (in the US, India on the other hand has only 27% internet penetration); 20% of mobile inquiries are via voice now - a mind blowing number (per Google); 25% of Americans own a wearable and 60% of consumers are willing to share their health data (with GoogleMicrosoft, Samsung and Apple best positioned to take advantage of it); US Net Debt to GDP is 77% as of 2016 and trending towards 105% by 2035 (US record surpassing WWII); household debt is back at peak levels last seen in Q3 2008 with student loans +144% and auto loans +44%.

Notable (FTI Consulting, LeEco, Skip Barber Racing School)

Some movement within FTI Capital Advisors. In other news, there is an entity called FTI Capital Advisors.

LeEco is a sinking ship - in the US at least.

Looks like the Skip Barber Racing School had to step on the breaks to park in bankruptcy court. No, we're not proud of this joke...not at all. Our eyes are set on the beach, dudes.

How AppleAlphabetAmazonMicrosoft and Facebook make their money - broken down in chart form.

News for the Week of 3/5/17

  • Coal. Post-reorg players like Arch Coal are now trying to take advantage ofgovernment subsidy (which reeks of buyside "value-realization"): query what this means for alternative energy players who already receive such subsidies and are rumored to be under siege by the Trump administration...?
  • Environment. We wrote a few months ago about Oklahoma and the apparent correlation between wastewater disposal and an uptick in seismic activity. The seismic-hazard warning for Oklahoma in 2017 is "still significantly elevated."
  • Golf & Sexy Time. There's zero correlation: we just thought it was a funny combination. That said, tough times for TaylorMade (owned by Adidas and apparently being shopped by Guggenheim Securities). Meanwhile, Agent Provocateur sold while in UK "administration" to an affiliate of Sports Direct (which also recently surfaced as the stalking horse bidder in Eastern Outfitters). AlixPartners was the administrator.
  • Legal ProfessionShort big firm junior lawyers.
  • Power. This is an odd report on Westinghouse
  • Retail. We're getting a little sick of sounding like a broken record but Best Buy and Target reported numbers this past week and then saw massive stock drops due to weak guidance. And Barnes & Noble got DECIMATED after reporting numbers. The good news is that the coloring fad appears to be over. Meanwhile, the tech barrage shows no signs of abating: GameStop came under pressure this week after Microsoft announced its subscription gaming service. Is GameStop an immediate near term restructuring candidate? No, but part of the value we provide is highlighting for you where future pain points are hiding and without sounding TOO dramatic, this could be the beginning of the end.
  • Retail II. We're nerds and so we found this analysis of when to close retail stores interesting. And we're curious to know if any of our advisory readers agree with this...LET US KNOW. Speaking of closing retail stores, Abercrombie will close 60 storesCrocs will close 160 stores, and looming bankruptcy candidate hhgregg is closing 88 stores (which briefly sent Best Buy's stock north back up, despite earnings). Meanwhile, Neiman Marcus hired Lazard for balance sheet help and Radio Shack 2.0 (aka General Wireless Operations) is rumored to be Radio Shack chapter 22.0.  
  • TechRough week for Uber. Choice quote: "Before too long, Uber's cash will run out. And if Uber hasn't built a viable self-driving car by then, the results won't be pretty."
  • Telecom. Wow, Intelsatbailed out

  • Fast ForwardSeadrill Ltd. noted the possibility of a bankruptcy filing, sending the stock into a tizzy. Still, John Fredriksen quickly highlighted his history of no default. Related, Pacific Drilling also noted in its earnings call that Chapter 11 is possible. 
  • Rewind I: A lot of folks have been sleeping on tech bankruptcies, but NJOY was a hardware bankruptcy from last year that now has a resolution: Mudrick Capital seeks to turn the company around, operating it like a PE-owned company rather than a VC-funded company. Speaking of which, Cirque du Soleil got a workover by TPG Capital (and AlixPartners) and now there's this YouTube promotional video to show for it. Speaking of purchases out of bankruptcy, it seems a Canadian retail player made the first move on Wet Seal only to be outflanked by Gordon Brothers.
  • Rewind IISoundcloud looks increasingly like it will be in the busted tech bankruptcy bucket. IP sale?
  • Chart of the Week
  • Tweet of the Week: This is great because it doubles as a second chart of the week: we're so creative. Anyway, we hate to say we told you so but, effectively,we told you so: we'd love to know why nearly 200 companies felt the need to reference AI in their earnings reports...