This post is a cliche.
Elementis is a specialty chemical company which makes rheology modifiers (go on - look it up).
The company has two customer groups that are problematic - oil drillers and ship painters.
They provide additives for oil drilling mud to allow difficult drilling. And they supply additives to paints to change their technical characteristics - which have their most profitable use in painting ships.
Both shipping and oil drilling have been difficult.
The company has had six straight profit warnings. Elementis never became unprofitable - just less profitable.
Today Elementis put out an utterly uneventful trading update.
And the stock rose ten percent.
When you have had six profit warnings no news is good news.
John
Friday, October 28, 2016
Thursday, October 13, 2016
Measuring how bad Twitter is
My last blog post (exposing Twitter's excessive costs) prompted horror story emails on Twitter.
But the best thing sent to me was a financial history of Facebook. The first copy came from Twitter.
Here are the numbers.
When Facebook had $1.974 billion of revenue it had $1.008 billion of income before taxes.
Twitter is kind of different.
When Twitter had $450 million of operating losses and $533 million of losses before tax.
There was about $1.5 in difference in costs.
Facebook does more, had more growth runway and had much lower costs.
I received a lot of anecdotes and wild parties and profligate spending, and the plural of anecdote is data - but few things are as convincing as the raw numbers.
The conclusion is inescapable. Jack Dorsey - the Twitter CEO - should be fired.
This should happen regardless of whether Twitter is bought or not. He simply does not deserve the job.
John
PS. Twitter staff - I am not exaggerating. Look at the young man on your left and the young woman on your right. Only one of you three will keep your job.
Don't worry. It should be worse in the C-Suite.
Prepare resumes.
But the best thing sent to me was a financial history of Facebook. The first copy came from Twitter.
Here are the numbers.
Year Ended December 31,
| |||||||||||||||||||
2014
|
2013
|
2012
|
2011
|
2010
| |||||||||||||||
(in millions, except per share data)
| |||||||||||||||||||
Consolidated Statements of Income Data:
| |||||||||||||||||||
Revenue
|
$
|
12,466
|
$
|
7,872
|
$
|
5,089
|
$
|
3,711
|
$
|
1,974
| |||||||||
Total costs and expenses(1)
|
7,472
|
5,068
|
4,551
|
1,955
|
942
| ||||||||||||||
Income from operations
|
4,994
|
2,804
|
538
|
1,756
|
1,032
| ||||||||||||||
Income before provision for income taxes
|
4,910
|
2,754
|
494
|
1,695
|
1,008
| ||||||||||||||
Net income
|
2,940
|
1,500
|
53
|
1,000
|
606
| ||||||||||||||
Net income attributable to Class A and Class B common stockholders
|
2,925
|
1,491
|
32
|
668
|
372
| ||||||||||||||
Earnings per share attributable to Class A and Class B common stockholders (2):
| |||||||||||||||||||
Basic
|
$
|
1.12
|
$
|
0.62
|
$
|
0.02
|
$
|
0.52
|
$
|
0.34
| |||||||||
Diluted
|
$
|
1.10
|
$
|
0.60
|
$
|
0.01
|
$
|
0.46
|
$
|
0.28
| |||||||||
(1)
|
Total costs and expenses include $1.84 billion, $906 million, $1.57 billion, $217 million, and $20 million of share-based compensation for the years ended December 31, 2014, 2013, 2012, 2011, and 2010, respectively.
|
(2)
|
See Note 3 of the notes to our consolidated financial statements for a description of our computation of basic and diluted earnings per share attributable to Class A and Class B common stockholders.
|
When Facebook had $1.974 billion of revenue it had $1.008 billion of income before taxes.
Twitter is kind of different.
Year Ended December 31,
| ||||||||||||||||||||
2015
|
2014
|
2013
|
2012
|
2011
| ||||||||||||||||
(In thousands, except per share data)
| ||||||||||||||||||||
Consolidated Statement of Operations Data:
| ||||||||||||||||||||
Revenue
|
$
|
2,218,032
|
$
|
1,403,002
|
$
|
664,890
|
$
|
316,933
|
$
|
106,313
| ||||||||||
Costs and expenses(1)
| ||||||||||||||||||||
Cost of revenue
|
729,256
|
446,309
|
266,718
|
128,768
|
61,803
| |||||||||||||||
Research and development
|
806,648
|
691,543
|
593,992
|
119,004
|
80,176
| |||||||||||||||
Sales and marketing
|
871,491
|
614,110
|
316,216
|
86,551
|
25,988
| |||||||||||||||
General and administrative
|
260,673
|
189,906
|
123,795
|
59,693
|
65,757
| |||||||||||||||
Total costs and expenses
|
2,668,068
|
1,941,868
|
1,300,721
|
394,016
|
233,724
| |||||||||||||||
Loss from operations
|
(450,036
|
)
|
(538,866
|
)
|
(635,831
|
)
|
(77,083
|
)
|
(127,411
|
)
| ||||||||||
Interest expense
|
(98,178
|
)
|
(35,918
|
)
|
(7,576
|
)
|
(3,255
|
)
|
(1,271
|
)
| ||||||||||
Other income (expense), net
|
14,909
|
(3,567
|
)
|
(3,739
|
)
|
1,168
|
(1,064
|
)
| ||||||||||||
Loss before income taxes
|
(533,305
|
)
|
(578,351
|
)
|
(647,146
|
)
|
(79,170
|
)
|
(129,746
|
)
| ||||||||||
Provision (benefit) for income taxes
|
(12,274
|
)
|
(531
|
)
|
(1,823
|
)
|
229
|
(1,444
|
)
| |||||||||||
Net loss
|
$
|
(521,031
|
)
|
$
|
(577,820
|
)
|
$
|
(645,323
|
)
|
$
|
(79,399
|
)
|
$
|
(128,302
|
)
| |||||
When Twitter had $450 million of operating losses and $533 million of losses before tax.
There was about $1.5 in difference in costs.
Facebook does more, had more growth runway and had much lower costs.
I received a lot of anecdotes and wild parties and profligate spending, and the plural of anecdote is data - but few things are as convincing as the raw numbers.
The conclusion is inescapable. Jack Dorsey - the Twitter CEO - should be fired.
This should happen regardless of whether Twitter is bought or not. He simply does not deserve the job.
John
PS. Twitter staff - I am not exaggerating. Look at the young man on your left and the young woman on your right. Only one of you three will keep your job.
Don't worry. It should be worse in the C-Suite.
Prepare resumes.