Addressing the Billions Underserved

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Why Twitter Needs to Be More Aggressive in Asia

Discussing Twitter’s Asia strategy with John Dawson on Bloomberg Television’s “On The Move Asia.”

Power Play: Investors Are Drawn to Well-Diversified Eaton

Eaton Corporation (NYSE:ETN) is a power management company that provides energy-efficient solutions that help clients effectively manage electrical, hydraulic, and mechanical power. Eaton’s latest quarter was quite impressive, with the company posting good revenue growth, outpacing the industry average of 10.4%. Earnings per share have also improved, although they’re expected to slow some in the next quarter.

Despite the impressive numbers, Eaton trimmed its outlook for 2013 primarily due to the NAFTA Class 8 truck market and the persistent weakness in the hydraulics markets. Investors, however, maintain their upbeat outlook on this company, clearly looking at the long-term potential of Eaton. The sunnier outlook of investors is helping shares gain more than 4% on the earnings day. Investors are looking at Eaton’s 3% organic growth and its 7% increase in bookings. These numbers — along with management’s positive outlook on the end market, raising the forecast from flat to up 3% to 4% in 2014 — may have boosted investors’ confidence to a level that made the lower outlook for 2013 seem like a passing affair.

Fed Tapering May Curb The U.S. Housing Market’s Impressive Rebound

Since 2011, even though U.S. economic growth has been struggling against recession due to the financial crisis of 2008, the housing market is showing impressive signs of a blossoming rebound. Home prices are rising up gradually, while new home sales and building permit activities are on the road to recovery, as well. Quantitative Easing (QE) is an effective monetary policy introduced by the Federal Reserve to stimulate households’ consumption, where low interest rates plus massive amounts of money from the Federal bond-buying program will likely fuel liquidity to the equity markets and inevitably push the asset prices higher. This will not only work to help the economy’s growth rates, but will also stimulate employment, especially within the real estate sector where the asset prices have been lying at the bottom.

Read More…

Immunotherapy Broadens Hope For Patients And Investors

Unintended benefits of novel immunotherapies may have large implications for future treatments, and the companies developing them. While current treatment options for many types of cancer are achieving significant initial success rates in achieving remission, they are not capable of staving off recurrences of the cancer if it turns metastatic.

For this reason the development of immune system boosting therapies, or immunotherapies, hold sincere promise for cancer patients. These treatments boost the production of specific cytotoxic T-cells that can have significant long-term effects on reducing the possibility of the cancer metastasizing after the initial treatment.

Blockbuster drugs like Roche’s (RHHBY) Herceptin, with annual sales over $5 billion, targets HER-2 positive breast and gastrointestinal cancer cells and blocks the HER-2 receptors which, in turn, blocks the cancer cells from growing. It represents a slightly more nuanced approach than just attacking the cells with either a knife or a toxin. Immunotherapy is different in that it boosts the body’s immune system to combat the diseased cells.

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Twitter needs an Asian strategy

twitter asia

Now that Twitter is a public company, investors want to know when the company will be profitable. Wall Street will also be keeping a close eye on its mobile strategy.

All social media companies need to emphasize mobile. Fortunately for Twitter (TWTR), it is already off to a good start: 75% of its users access the service via a mobile device, and mobile advertising accounts for around 55% of its revenue.

Twitter also announced the acquisition of mobile advertising company MoPub in September for a reported $350 million, an indication that the company realizes it needs to be an even bigger player in mobile.

But Twitter has a problem. It is not a major presence in Asia. And according to figures from tech research firm Gartner, the Asia Pacific region is the biggest mobile ad market, with an estimated $4.8 billion in revenues this year.

North America is second, with $3.8 billion in mobile ad sales. So for Twitter to realize its full potential, it will need to infiltrate the Asian market sooner rather than later.

At present, only a fraction of Twitter’s users are based in the Asia-Pacific region. Twitter’s current share of global mobile advertising revenue sits at about 2%, compared to Facebook’s (FB, Fortune 500) 16% and Google’s (GOOG, Fortune 500) 53%.

That’s not great news for Twitter. But if the company can successfully grow its user base in Asia, there is a good chance that Twitter’s total share of global mobile ad sales will increase dramatically.

So what stands in Twitter’s way? Sina’s (SINA) Twitter-like micro-blogging service Weibo, and voice and ‘chat’ messaging services such as Tencent’s WeChat are the biggest obstacles.

Weibo has been successful gaining share in China. Net income in the third quarter for Weibo nearly tripled from a year ago while sales were up 21%.

China’s Weibo a better bet than Twitter?

This growth has been fueled mostly by a strategic partnership with Alibaba, through which Weibo subscribers are able to purchase goods on the site using ‘Alipay’, Alibaba’s third party payment system. In fact, Twitter might want to adopt a similar model in order to help it achieve profitability.

WeChat, on the other hand, has done a strong job of infiltrating the broader market outside of China, building a strong user base in countries such as India, Malaysia and Thailand.

Tencent (TCEHY) also used WeChat to boost sales in China through a collaboration with its own e-commerce website 51buy, and recently made headlines by generating HK$637 million (US$82 million) worth of sales through its service on November 11, which has become the Chinese equivalent of Cyber Monday in the United States.

So for Twitter to effectively grow its audience in Asia, it will be crucial to understand and appreciate the differences in user behavior between that region and the U.S. — especially with regards to China. It may also need to follow some of the strategies that Weibo and WeChat have employed in their own quest for profitability.

Of course, it would help if Twitter figured out a way to be profitable from its existing user base. But expanding into what’s already the world’s largest market for mobile advertising will be key to Twitter’s long-term success.

Peter Pham is director of AlphaVN, an independent research and investment advisory firm. He is also the author of the book “The Big Trade” and runs AlphaVN.com, an investing blog focusing on Vietnam and other markets in Southeast Asia. Magare Banda is an Asian markets analyst focusing on new media. To top of page

 

Peter Pham is a capital market specialist and entrepreneur.  With expertise as a Head of Institutional Sales and Trading he closely watches the market and probes for investment opportunities utilizing a unique blend of quantitative trading experience and macro trend analysis… (read more)

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