It’s all in the timing: the Ryan business philosophy; benefits of being in the Apple cart; checking out at Superquinn; firms’ gloomy outlook
Golden Apple's gloss rubs off on PCH
APPLE’S RECORD second quarter results this week, which saw revenues come in at an eye-watering $28.57 billion (€1.99 billion), a cool $4 billion ahead of Wall Street analysts’ expectations, was further evidence of the booming tech sector.
Since 2001’s iPod launch, much has been made of the “halo effect” it and subsequent iconic products such as the iPhone and iPad have had on sales of Apple computers.
But Apple’s stellar run of the last three years has also seen its gloss rub off on suppliers and companies who produce products for the Apple platform. Irishman Liam Casey, the founder and chief executive of PCH International, will have toasted Apple’s success (albeit with a non-alcoholic beverage).
While he’s never confirmed it, Apple is widely believed to be one of the major consumer electronic brands for whom PCH designs, sources and ships products from China. The extent of the relationship may be laid bare if PCH proceeds with a flotation in Hong Kong later this year. Again the canny Corkman has refused to confirm if an IPO is on the cards and says the company is looking at all options.
But a slew of filings by parent vehicle Amekab at the Companies Office this week suggest something may be in the offing.
A flotation would confirm PCH as Ireland’s largest indigenous tech company. Last month it was reported that PCH might be valued at €300 million by the markets. Informed sources suggest, however, the valuation of PCH when it raised $30 million from international investors in early June was closer to $500 million. That’s an awful lot of electronics accessories.
Ryans' lesson in leaping at a sale
IF KNOWING when to sell is the key to making money from your investments, then the Ryan family of aviation fame should give lessons.
About a year ago they sold “a large block” of the 11.2 per cent they held in Tiger Airways, the Asian airline they helped to found in 2004. The talk at the time was of the family raising €30 million from the deal, although the actual figure was kept under wraps.
Almost 12 months on, the prescience of the deal has become particularly clear, in light of a recent bit of bother Tiger Airways has encountered with the Australian Civil Aviation Safety Authority.
At the start of this month, the authority grounded Tiger’s Australian aircraft, citing “a serious and imminent risk to air safety”.
Ouch, you might say, if you hadn’t already liquidated your shareholding in better times. The small glitch for the Ryans is that they didn’t sell out completely, and thus retain a keen interest in goings-on at the now-troubled business.
Unsurprisingly, the grounding, linked to concerns over height safety, didn’t help Tiger’s valuation, which has fallen by nearly 40 per cent this year on the Singapore Stock Exchange.
There appears to be hope, however, with a bump of 14 per cent in Tiger’s shares earlier this week leading to questions from the exchange, which in turn led to a statement from the airline.
This referred to continually reviewing proposals “of a business, financing and other nature” and to holding discussions about its “strategic direction”.
And just to reinforce suggestions of a deal or partnership, it made sure to add there was “no assurance” that any binding agreement will ensue.
In the meantime, Tiger has promised to get its Australian flights in the air again by the end of this month. It has also appointed a new safety adviser, who happens to be a former chief pilot at Qantas.
As if all of this wasn’t enough for the business, it has also this week had to deal with a more minor embarrassment.
This came in the form of Dale Watson, a Texas country and western singer who mounted a very public campaign after Tiger earlier this year lost a box of 120 CDs of his and didn’t immediately compensate him.
The loss led to four months of wrangling, after which Tiger finally repaid the wholesale cost of the items, as well as the excess baggage charge originally incurred.
Alas, the refund did not stop Watson posting a specially penned song on YouTube – Tiger Airways – We Don’t Careways, thus winning plenty of publicity in the Australian media.
Perhaps disgruntled airline customers on this side of the world should take note of the strategy next time their complaints go unanswered.
No silver lining for firms in rain clouds
WASHOUT WEATHER in June meant soft drinks company Britvic endured a damp squib of a trading period between April and July, with the company citing a negative impact on promotional activity for Robinsons that normally takes place around the Wimbledon tennis championship.
Robinsons is not the only brand, however, to depend on something as unreliable as blue skies and sunshine for its sales. Cider manufacturer CC launched Magners in Britain in 2006 as a drink best enjoyed over ice, ideally while residing in a beer garden watching Sven’s boys capitulate to Portugal in the World Cup. It, like Britvic, is likely to have seen sales of Magners subdued by June’s lacklustre temperatures – its next trading update will reveal all.
So how bad has it been? According to the UK Met Office, Britain endured the coldest June since 1991 – payback perhaps for enjoying the warmest spring in over a century. Meanwhile, Met Éireann says many parts of Ireland, including Dublin, recorded the coldest June since 1972, with average temperatures finishing 1 degree below normal.
This poor excuse for a summer may well have been positive for the nation’s shopping centres though. Figures released last week by Experian suggest that after 14 consecutive quarters of declining footfall, the second quarter of 2011 saw the first year-on-year increase in footfall in the Republic’s shopping centres and areas in almost four years.
“The poor summer weather has helped with people visiting shopping centres rather than the beach,” said Experian Ireland’s head of sales Mark Anderson.
Same as most years, then.
Counting blessings over a late escape
SIMON BURKE has two reasons to follow the news closely this week, both of which may be causing him to count his blessings, at least to an extent.
As former executive chairman of Superquinn, Burke will have taken more than a passing interest in the three-day transformation of the company from receivership case to corporate rescue.
Burke, who led the company after its takeover by Select Retail Holdings in 2005 and remains a small investor, will understand more than most how the external obligations of some of its owners acted as a debilitating millstone.
He stepped down as executive chairman late last year, then severing a further tie by removing himself from the chairman’s position in February of this year.
Doubtless any feelings of sadness over how things ended up will have been tempered by a feeling of a late, but still lucky, escape. Remaining as a shareholder may, however, have delivered less comfort.
In any case, Burke has had other distractions to occupy his mind, chiefly his chairmanship of UK pub chain Mitchells Butlers, where he took up the reins in February, just as he exited Superquinn.
This was a shortlived affair, however, with his departure from this role a week ago. It came just before yesterday’s trading update revealed slowing growth and weaker margins.
Burke standing down just five months in did not reflect well on the mildly embattled company, particularly since his decision to move on marked the third loss of a chairman in six months. The name on the chief executive’s door has also changed this year; the post is now held by an interim appointee.
Looming large in the backdrop to the story are two more Irishmen – JP McManus and John Magnier – who own 19 per cent of the company. For some time, the chatter on the street has placed the duo in a takeover position, in conjunction with Joe Lewis, holder of a slightly larger stake.
The matter has remained the stuff of rumour so far, with Burke staying elegantly silent when he said his goodbyes. Hopefully, he is saving the good stuff on both companies for his memoirs.
