Next level of Palm: be an international player?

Palm refreshed its image at the CES with a new smart phone and long-wanted OS. Arming with these, it seems turn itself from survival mode to shining mode.
Analysts have become optimistic with the slew of previous Apple employees that re-made Palm. Will optimism last long? We will provide an indicator that Palm is really heading to investors hope it should. This is not from technical point of view (we shouldn't be too soon to surprise ourself given the New Palm is consisting of previous Apple technical staffs) and marketing point of view (only Sprint has signed for the new device, which is not available immediately yet).

We will look at Palm's international brand compared to its competitors.

Apple's iPhone are widely used in the America, Europe, and Asia. It is well branded along with other Apple devices. RIMM's blackberry has strong holds in the America and Europe. Palm, after years in survival mode, doesn't enjoy any of this international recognition. Cell phone business has become a multi-national business as competitions intensed. All major cell phone manufacturers, smart phone and conventional phone manufactures, don't hesitate to invade turfs occupied by others. Through battles, markets are re-structured and more innovative products are introduced. Palm, assuming it doesn't need to worry about its floating for the coming two years, should consider this route too.

Palm is still a weak player in this market. But they have a good timing. Apple has plenty of uncertainty to investors because of Steve Jobs' condition and Apple's future. Regardless what would be said of Mr. Cook, there must be some glitches over the transition. Palm can take advantage on their good relationship with Apple to further strengthen new phone's development. It shouldn't be surprised that Palm would release fancier products than Apple in the future. So, an internation player could be a viable argument for Palm. If so, a $40 Palm seems possible.

In the mid 2009, Plam will release the new phone to the market without disclosure of pricing. Current expectation on Palm is $20 at the year end of 2009.

Boeing's job cuts

Boeing said Jan 9, 2009 that it will cut its Commercial Airplanes work force by about 4,500 people in 2009, largely through layoffs, though the figure also includes attrition.

“Initial 60-day layoff notices will be issued on Feb. 20, and most layoffs will occur in the second quarter of the year,” said Scott Carson, chief executive of Commercial Airplanes in an internal message to employees Jan 9, 2009 morning.

Most of the cuts will be in Washington state, where Boeing employs more than 76,400 people. The vast majority of them are in the Commercial Airplanes unit, so this represents more than a 5 percent work force cut.

In his message, Carson called the move “a difficult and painful decision” made necessary by a dramatic slowdown in airline business and the broader impact of the global recession.

What is this "dramatic slowdown in airline business"? Let's review what happened in 2008. On December 9 2008, the Chinese government requested their airlines to cancel or postpone aircraft deliveries in 2009 to counter weakening travel demand. The slow demand comes from the fact that the Olympic had ended. Existing aircraft demands would be absorbed by selling and leasing. New airlines are stopped to start.

Chinese aircraft orders come both at about 12% for Boeing and AirBus. With such review, it is not hard to predict AirBus will have a hard time ahead (they built a factory in China to break Boeing's monopoly).

Looking out of the macro point of view, many companies freeze traveling in 2009. Airlines and aircraft manufactures are good short sell targets.

International ETF questions

As ETF's (exchange trade-fund) become widely available for sectors, countries, indexes, commodities, they essentially are involved all domain in investment world. Their volumn also has exploded dramatically lately. But there are questions regarding to how they work even tons of documents telling their stories. Now we just focus on international ETF's.

ETF's have pricing and arbitraging machnism to ensure the funds' value matches the NAV (net asset value). The insurance relies heavily on the intra-day intrinsic value (IIV) evaluation so that ETF's market retail price would fluctutate but still match to the NAV. That sounds solid. What if the ETF's are targeting to other countries' industries, e.g., Asian and European companies. Since ETF's are traded in the States while their targeting markets open in different time zones. How the IIV would work? There is no "real-time" arbitraging machnism.

Is there opportunty to be explored? Certainly. We can actually trace some international ETF's performance versus the underline industries and found relationship. For example, let's look at FXI/FXP versus Chinese market. That will reveal close correlation but the most important, it provides ahead indicators. This finding is very valuable and profitable.

Internation investment infrastructures

The enconomy crisis has depressed individual and business expendings. As unemployment rate hikes and more companies out of business, distressed assets are easier to find. The same happens outside the States too. International distress assets, remember many global companies shut their doors starting from overseas, need a platform to be found. So, this is kind of a loop: you need to a cost-sensitive platform to find cheap asset. How do we do that?

The answer is new technologies. Look at innovations in communications and office stuffs would greatly reduce costs. For instance, pay a little bit to Skype ($9.95/mo for unlimited calls to many countries and $30/yr for an online number) you basically can bypass expensive cellphone plans and wirelines. The online number is just like a regular phone but requires Internet connections. You can have unlimited (not really, but a massive 10K minutes per month) talk to foreign companies. It can also send/receive faxes electronically.

You can also find office equipments from torn down companies, e.g., computer and wireless devices so that your office cost is much cheaper.

So look at the downturn at the bright side.