Market Quickie: Sky TV Worth Watching

I have given Sky Network Television [SKT.NZ] a very wide birth over the years, I have never really understood a company that spent more than 10 years losing money and has only been making it for the last 3 or 4.

I guess they were building up a business?

I don't like its business model; a company that relies on continuous large amounts of capital to keep competition at bay doesn't make for a good long term return.

Sky is also at the mercy of Government regulation, currency fluctuation, product quality and large capital depreciation.

What I do like though (I am such a negative bugger) is that it is a virtual monopoly-in Pay TV terms -but even that is under threat by new technology (which SKY is trying to take a punt on) via the Internet and satellite TV and product.

It hasn't done well over the last year, with a more than 16% drop in profit to just over $NZ42 million in the half year to 31 Dec 2008 on higher revenue of nearly $350 million. This is due to higher capital costs, which I outlined above.

Why the hell then do I mention the company today if I see little redeeming about it in its day to day operations?

I kinda like its share price.

The shares are well off their low of $3.15 during the last 52 weeks but the corollary to that is that they are off their 52 week high of $5.10 and well off their all-time high of $6.75 in late 2006 (see 5 year chart above)

I reckon this company is worth a good short-term to medium term punt.



Sky Network Television @ Share Investor

Watching Sky Television
Market Quickie: Sky TV Worth Watching

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Buy Toughen Up: What I've Learned About Surviving Tough Times



Toughen Up - Fishpond.co.nz

c Share Investor 2009

Get me a Mogadon already, I'm over-stimulated

I wasn't going to write anything else about the state of the economy, In April I was getting bored with the relentless bad news; stockmarket plunges, company collapses and endless Government "stimulation" plans to resurrect economies all around the world and I thought I would devote my writing to getting down to the day to day business of the operation of the stockmarket and company performance.

Oh how things have changed.

Gee, now that the economy is improving, I thought I would have another go at telling you what I think about our economic situation and the apparent green shoots that are now starting to turn into large bamboo poles.

All the signs are that a large number of global economies are improving, economic indicators are up, banks are doing better, company profits are consistent with forecasts, manufacturing looks like it might have reached bottom, more cars are being sold (mmm), all is rosy with the world and Elvis and Michael Jackson are recording a duet in a Burger King somewhere in Kentucky.

This may indeed all be happening, but if you ask yourself why, then you might find yourself uncovering more questions than you answer.

This apparent lazerous turnaround in our collective economic fortunes -it isn't even a very strong one but people are behaving like it is-is linked to one thing and one thing only, the shit load of money that Barrack Obama and his progressive mates the world over have dumped into their economies.

But that is a good thing and its real right?

Well, no is the answer to both of those questions.

I have pointed this out before but this money is being printed by various central banks worldwide and some of it is borrowed and eventually it is going to have to be paid back.

That means higher taxes for those that are working, the middle classes primarily, and more wealth used to service debt and less productivity, in other words another recession sometime in the future or a continuation of the current one.

Socialism doesn't work, borrowing money to give to people to buy cars, shoes, computers, purchase imaginary carbon credits and flat screen TVs may seem like a paradise that keeps the wheels of commerce greased but what it actually does is put off the inevitable.

I really hate to be a pessimistic little bastard but we should all be very skeptical of these signs of economic recovery because they hide the fact that it is based on a lie and is not sustainable in the long run.

I know we have been stimulated to the point of a straight jacketed stupor but we really should ditch the over-priced Starbucks, cigarettes and borrowed moola and wake up.

Dont get me wrong, economically things are going to get better and business is doing OK, we just have to "get on and do it". But its time for careful rethink when it comes to the signs that things are all rosy again.

They are not, and we should learn not to get carried away with it all as some of us are currently doing -the big bounce in global stockmarkets is evidence of that.

Cautious optimism is needed.

Back to stocks again tomorrow.


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Questions for Sky City Entertainment Group CEO Nigel Morrison

Read the Interview

After being emailed yesterday by Nigel Morrison, CEO of Sky City Entertainment Group [SKC.NZ] over a piece that I wrote last week about Bruce Sheppard's take on the company's debt levels, he ended the email asking if there is anything he could do to help out.

I sent back an email thanking him, then it occurred to me that there was something I wanted from him.

An interview!

So I emailed him back asking if he would answer some questions from myself, other Sky City shareholders and other readers of this blog and he kindly answered in the affirmative.

So, now is the chance dear readers to put some questions to Nigel.

You can submit them at the Share Investor Forum here or email them to me here and I will submit the best ones to Nigel.

The interview will come out after the company Full Year result that is now coming out early, on Wednesday 19 Aug instead of the following week. It will be published here sometime in early September as I will be away for a couple of weeks in Bangkok soon, so it will take some time to put together.

Read the Interview

Disclosure: I own SKC shares in the Share Investor Portfolio

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A Closer look: Domino's Pizza Enterprises Ltd

I have always been a big fan of fast food, as a consumer and as an investor.

I used to have a stake in Restaurant Brands Ltd [RBD.NZX], the New Zealand franchisee of Pizza Hut, KFC and Starbucks.

As business these sorts of companies are excellent ones to own, if they are well managed, cost and service levels kept on top of and food quality maintained.

If none of these things are adhered to they can be a license to go out of business. RBD has struggled for years with the operation of its Pizza Hut franchisee, finally relenting and selling the business to owner operators.

Domino's Pizza Enterprises Ltd [DMP.ASX] is the Australian listed pizza chain franchisee that runs over 750 Domino's pizza outlets in Australia, New Zealand, France, Belgium, The Netherlands and the Principality of Monaco of all places and like most other fast food chains is currently doing well, with a huge rise of profit forecast that is to be announced 19 August because of the switch from going out to eat to punching the keypad and settling down on the couch with a pizza and Coke.

Company Profile | Success Factors | Corporate Governance

Webcast Q2 2009 Domino's Inc.[DPZ.NYSE] Earnings Conference Call (Replay) 07/22/09 at 11:00 a.m. ET

To be fair Domino's has been growing outlets, sales and profit for a few years before the current boom and it is a very well operated business, with a focus on the bottomline and customer satisfaction the two main keys to its success and it has ambitious plans to keep growing. It has grown quickly by purchases of other pizza brands, adding sub-franchisees and good old-fashioned organic growth through efficiencies and great marketing.

But beware the fast food business or any food business for that matter can be a fickle one. Pizza, more than any other slice of this market seems to have very big swings in business cycles from boom to bust and they operate on wafer thin margins and high throughput, with constant competition from mum and dad pizza stores to the other large and smaller chains.

Domino's does have an edge though. It specializes in one thing and does it well and its owner operators are the secret to the Australian Franchisor success (Domino's OZ is itself a Franchisee of big daddy Domino's Inc [DPZ.NYSE] in the USA but in turn has franchisees that own and operate individual stores that provide a percentage of their store turnover which is Domino's OZ main form of income-apart from sales from its company owned stores ) driving the Domino's brand, literally, to become the worlds largest Pizza Delivery and sales company.

Domino's Australia seems to be near the top of their current growth phase but having said that there will be more boom times to come and lets hope their good management gets them through the troughs to come.

The ASX listed stock seems fully priced at current levels and is worth adding to your portfolio during its down cycles.

Domino's @ Share Investor

Domino's Australia dominant in Australasia
The Dots get the Hots

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Domino's Pizza Enterprises - Corporate Website | Investor Relations


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