Tuesday, September 24, 2013
Friday, September 13, 2013
Lenovo screws up a good thing
In January 2006 Jeff Matthews wrote a blog post titled "Dell Screws Up a Good Thing". It was a tale of woe about service/build quality at Dell which presaged a major decline in Dell market share and profitability.
Jeff's experience resonated with me (and it seems with hundreds of his readers). I purchased one of Dell's laptops - an XPS 13** that had a well known and well documented problem with the cooling for their graphics chip. The repair guy Dell eventually sent out to fix it knew what it was before he even opened the box (they all had that problem) and yet at the time the Dell management seemed to be denying their problems.
Cognitive dissonance is never a good thing in a consumer-facing company.
I became - seemingly irrevocably - a Lenovo guy. The ThinkPads might be ugly but they had great keyboards and they worked.
Well now I am reconsidering. I purchased an E31 - a mondo-grunt desktop marketed as a low-end "workstation" and configured it to be robust. All the discs were RAID (ie the discs all duplicated) and I chose all the other features that made it bombproof.
It arrived broken.
Lenovo kindly offered me a replacement machine - their "dead-on-arrival" service.
I should have taken that offer. Lord knows I should have taken the offer.
The DOA service was going to take seven or eight days and I wanted the machine faster than that - so - presumably with lower cost to Lenovo - they sent someone out to fix my machine. They replaced the motherboard.
The machine worked OK then provided I used the onboard graphics card. The graphics card though was stuffed - and so they were going to send me a replacement which I would happily put in myself.
A week later and no graphics card. No phone call from Lenovo either.
So I rang them.
An hour on the phone, dropped calls, blood pressure rising. And eventually they discovered they were out-of-stock of requested graphics card so their solution was to do nothing. No need to tell the client. Just let them stew it out. Michael Dell - even your company was better than that!
I think I spent over two hours on the phone sorting this out - and eventually got some satisfaction. A graphics card one step upgraded arrived in the mail, and when inserted the machine worked.
I was relieved and thought my bad experience was a one-off - the sort of thing that all companies have - a glitch sent to try me.
Then, after three days work, the computer wouldn't start at all. It could not find the boot mechanism.
So - more in sorrow than in anger I rang the Lenovo support team again. The woman I spoke to was patronizing, rude. She was just appalling. At this point I was furious and asked to speak to someone else. The phone call was dropped and I am not sure whether it was deliberate or not. This was service worthy of Dell at its worst.
In resignation I rang again and this time I hit the jackpot, a calm, competent woman called Danya who talked me through a range of problems. It appears that the new motherboard installed earlier had the wrong BIOS on it. (This sort of thing happens and I am guessing the system was not consistent with the RAID that was set up. At least that seems to be what happened but I am not sure. Ultimately I suspect Danya was as clueless at fixing the problem as me.)
Whatever, Danya walked me through the process of flashing the right BIOS. For some reason we could not solve this from a dead machine - and without any acrimony I was offered the DOA service.
Its a month now - and I don't have a machine fit for purpose. But I am not outright angry. I will probably send the old machine back minus the hard drives (they have financial institution data on them now so I can't reasonably give them back) and - at least in the end - I did not find the cognitive dissonance that led to the total reputation trashing at Dell.
But it was not a good experience. And it was hardly profitable for Lenovo costing them a few hours of service time, an extra machine plus an extra graphics card and motherboard.
Maybe the next machine will be a Dell.
Michael Dell it seems may have got a very good deal regardless of my skepticism of this industry.
As for Hewlett Packard - well Meg Whitman is being given a golden opportunity to take share in a declining industry. Ebay under Meg Whitman was hardly known for its shining customer service - but it was better than Dell - and better than everyone at Lenovo except the wonderful Danya.
I have been skeptical of HP for a long time now... but the best bull case I have heard is that the competition are so much worse. That is not a great bull case - but for HP it is an improvement.
John
Jeff's experience resonated with me (and it seems with hundreds of his readers). I purchased one of Dell's laptops - an XPS 13** that had a well known and well documented problem with the cooling for their graphics chip. The repair guy Dell eventually sent out to fix it knew what it was before he even opened the box (they all had that problem) and yet at the time the Dell management seemed to be denying their problems.
Cognitive dissonance is never a good thing in a consumer-facing company.
I became - seemingly irrevocably - a Lenovo guy. The ThinkPads might be ugly but they had great keyboards and they worked.
Well now I am reconsidering. I purchased an E31 - a mondo-grunt desktop marketed as a low-end "workstation" and configured it to be robust. All the discs were RAID (ie the discs all duplicated) and I chose all the other features that made it bombproof.
It arrived broken.
Lenovo kindly offered me a replacement machine - their "dead-on-arrival" service.
I should have taken that offer. Lord knows I should have taken the offer.
The DOA service was going to take seven or eight days and I wanted the machine faster than that - so - presumably with lower cost to Lenovo - they sent someone out to fix my machine. They replaced the motherboard.
The machine worked OK then provided I used the onboard graphics card. The graphics card though was stuffed - and so they were going to send me a replacement which I would happily put in myself.
A week later and no graphics card. No phone call from Lenovo either.
So I rang them.
An hour on the phone, dropped calls, blood pressure rising. And eventually they discovered they were out-of-stock of requested graphics card so their solution was to do nothing. No need to tell the client. Just let them stew it out. Michael Dell - even your company was better than that!
I think I spent over two hours on the phone sorting this out - and eventually got some satisfaction. A graphics card one step upgraded arrived in the mail, and when inserted the machine worked.
I was relieved and thought my bad experience was a one-off - the sort of thing that all companies have - a glitch sent to try me.
Then, after three days work, the computer wouldn't start at all. It could not find the boot mechanism.
So - more in sorrow than in anger I rang the Lenovo support team again. The woman I spoke to was patronizing, rude. She was just appalling. At this point I was furious and asked to speak to someone else. The phone call was dropped and I am not sure whether it was deliberate or not. This was service worthy of Dell at its worst.
In resignation I rang again and this time I hit the jackpot, a calm, competent woman called Danya who talked me through a range of problems. It appears that the new motherboard installed earlier had the wrong BIOS on it. (This sort of thing happens and I am guessing the system was not consistent with the RAID that was set up. At least that seems to be what happened but I am not sure. Ultimately I suspect Danya was as clueless at fixing the problem as me.)
Whatever, Danya walked me through the process of flashing the right BIOS. For some reason we could not solve this from a dead machine - and without any acrimony I was offered the DOA service.
Its a month now - and I don't have a machine fit for purpose. But I am not outright angry. I will probably send the old machine back minus the hard drives (they have financial institution data on them now so I can't reasonably give them back) and - at least in the end - I did not find the cognitive dissonance that led to the total reputation trashing at Dell.
But it was not a good experience. And it was hardly profitable for Lenovo costing them a few hours of service time, an extra machine plus an extra graphics card and motherboard.
Maybe the next machine will be a Dell.
Michael Dell it seems may have got a very good deal regardless of my skepticism of this industry.
As for Hewlett Packard - well Meg Whitman is being given a golden opportunity to take share in a declining industry. Ebay under Meg Whitman was hardly known for its shining customer service - but it was better than Dell - and better than everyone at Lenovo except the wonderful Danya.
I have been skeptical of HP for a long time now... but the best bull case I have heard is that the competition are so much worse. That is not a great bull case - but for HP it is an improvement.
John
An open letter to Alma Morales Riojas
MANA, an establishment National Latina organization wrote an open letter to the Federal Trade Commission requesting that they investigate Herbalife.
This is my open letter to the author of that letter, Alma Morales Riojas.
----
Dear Alma Morales Riojas
You recently wrote a letter to the Federal Trade Commission suggesting they investigate Herbalife as exploitative of Latinas.
May I suggest you visit an Herbalife club (ask the company for the address of six or seven) and turn up unannounced in the morning 7.30 am and sit there till about 10 am.
The business model is exploitative (in that the people at the top do disproportionately well vis people at the bottom) but your letter is factually incorrect in several ways and patronizing to many of your constituents.
I am an Australian. I do not speak Spanish but I took a Spanish speaking Korean guy with me. We saw about 60 people drop by the club and mostly chat. This was a social community. They had before and after photos on the wall and most members had lost considerable weight.
The couple who owned the club were a husband-and-wife. They had both gone from morbidly obese to merely modestly overweight. The wife had gone from a three insulin shot a day diabetic to a half insulin shot a day diabetic. Herbalife had probably saved her life.
Moreover every single member of the club was also signed up as a distributor. They all earned precisely no income. They signed up as distributors so they could buy Herbalife product for home use at a discount - in the same way as a young woman might sign herself up as an Avon or Oriflame distributor to buy cheaper cosmetics. [This is the 88 percent of participants that receive no payment from the company that you disparagingly and ignorantly refer to in your letter.]
Your letter - well written as it is - is quite in contrast to what I saw when I visited the club. And I believe you have been played by a billionaire hedge fund manager. I guess getting cosy with billionaires is good for your funding...
The billionaire hedge fund manager playing white-man's burden to protect those poor, helpless Latinas is comical. But you - a Latina leader signing up to help him - that reminds me of little more than the countless Indian Princes and petty rulers who sided with British Rule in India. They, like you, took the white-mans' burden on themselves. They, like you, formed a sycophantic and patronizing elite.
Bluntly, in the case I saw Herbalife had probably saved the life of one owner of the club - and I find it hard to get too angry about that.
Your view may differ. [You may not value your constituent's life or you may have another explanation.]
Either way go to a club. Sit there for a few hours and listen to your constituents. Or sit in your Princess's Palace sucking up to the white billionaires. You too can share the white mans' burden.
John Hempton
This is my open letter to the author of that letter, Alma Morales Riojas.
----
Dear Alma Morales Riojas
You recently wrote a letter to the Federal Trade Commission suggesting they investigate Herbalife as exploitative of Latinas.
May I suggest you visit an Herbalife club (ask the company for the address of six or seven) and turn up unannounced in the morning 7.30 am and sit there till about 10 am.
The business model is exploitative (in that the people at the top do disproportionately well vis people at the bottom) but your letter is factually incorrect in several ways and patronizing to many of your constituents.
I am an Australian. I do not speak Spanish but I took a Spanish speaking Korean guy with me. We saw about 60 people drop by the club and mostly chat. This was a social community. They had before and after photos on the wall and most members had lost considerable weight.
The couple who owned the club were a husband-and-wife. They had both gone from morbidly obese to merely modestly overweight. The wife had gone from a three insulin shot a day diabetic to a half insulin shot a day diabetic. Herbalife had probably saved her life.
Moreover every single member of the club was also signed up as a distributor. They all earned precisely no income. They signed up as distributors so they could buy Herbalife product for home use at a discount - in the same way as a young woman might sign herself up as an Avon or Oriflame distributor to buy cheaper cosmetics. [This is the 88 percent of participants that receive no payment from the company that you disparagingly and ignorantly refer to in your letter.]
Your letter - well written as it is - is quite in contrast to what I saw when I visited the club. And I believe you have been played by a billionaire hedge fund manager. I guess getting cosy with billionaires is good for your funding...
The billionaire hedge fund manager playing white-man's burden to protect those poor, helpless Latinas is comical. But you - a Latina leader signing up to help him - that reminds me of little more than the countless Indian Princes and petty rulers who sided with British Rule in India. They, like you, took the white-mans' burden on themselves. They, like you, formed a sycophantic and patronizing elite.
Bluntly, in the case I saw Herbalife had probably saved the life of one owner of the club - and I find it hard to get too angry about that.
Your view may differ. [You may not value your constituent's life or you may have another explanation.]
Either way go to a club. Sit there for a few hours and listen to your constituents. Or sit in your Princess's Palace sucking up to the white billionaires. You too can share the white mans' burden.
John Hempton
Tuesday, September 10, 2013
A quick comment on Gabriel Resources
At Bronte we have been short Gabriel Resources for some time. Gabriel (a Canadian company) owns a potential gold mine in Romania. The biggest investor is John Paulson of "greatest trade in history" and later Sino Forest fame.
The deposit has been known since antiquity and was worked by the Romans (presumably using slaves) and later by the foreign-exchange starved communists using the modern equivalent of slaves (which the commies called "workers" or the owners of the revolution).
Slaves have a habit of removing most high-grade ore...
The mine was closed as uneconomic (loss-making) after the iron curtain fell. It just wasn't a very good gold mine - at least it wasn't after the slaves had picked over the ore body.
The company used to have a multi-billion dollar market cap based on an old deposit with no working mine - and which was only recently deemed not worth even running...
This was unusual and warranted further attention.
And we gave it more-than-the-usual amount of attention.
We paid a law student in Romania to pull the Communist Party archives to work out what the commies thought the grades of the mine were and to compare them to the (seemingly optimistic) statements of the company. [Yes - you know a hedge fund does original research when it is poking about in the Romanian Communist Party archives...]
The reported grades were lower than claimed by the company (enough reason to be short) but the difference was only about 20 percent - not that dramatic. Indeed this could be a genuine sampling error and there is little reason to assume that the difference is deliberate.
If there had been a dramatic difference in grades we would have taken a much larger position and danced about in joy. We are short sellers at heart - and investigative stock picking is fun.
With minor grade differences and more than a few environmental doubts about the mine we maintained a modest short position.
This worked well. The Romanian Prime Minister Mr Victor Ponta - after mass protests - has decided to advise Parliament to reject approval for the mine. This is hardly surprising as the company proposed an environmentally nasty - indeed toxic - method for extracting the gold.
And so yesterday the stock entered the final-phase of its collapse - it fell a little over 50 percent - but it still has more than a quarter of a billion in market cap! The stock is down to 68 cents.
And the company response. They plan on suing Romania for "multiple breaches of international investment treaties".
But they don't mention what treaties. Indeed I am for the most part unaware of what treaties might pertain. A google search for the term "breaches of international investment treaties" but without the world "Gabriel" produces roughly zero results.
For this reason I suspect Gabriel's legal case is modestly overstated.
Like their gold grades.*
John
*The overstatement of the gold grades is my guess. As stated above the difference in the gold grades was not large. However I believe the grades in the archives for good reason: the Commies did a rather big bulk sample on the mine by actually mining it. It is however not outside the realms of possibility that the Communists were so incompetent at extracting gold that they underestimated the grades in their own mine. In which case Gabriel's estimates may be accurate. I report: you decide.
The deposit has been known since antiquity and was worked by the Romans (presumably using slaves) and later by the foreign-exchange starved communists using the modern equivalent of slaves (which the commies called "workers" or the owners of the revolution).
Slaves have a habit of removing most high-grade ore...
The mine was closed as uneconomic (loss-making) after the iron curtain fell. It just wasn't a very good gold mine - at least it wasn't after the slaves had picked over the ore body.
The company used to have a multi-billion dollar market cap based on an old deposit with no working mine - and which was only recently deemed not worth even running...
This was unusual and warranted further attention.
And we gave it more-than-the-usual amount of attention.
We paid a law student in Romania to pull the Communist Party archives to work out what the commies thought the grades of the mine were and to compare them to the (seemingly optimistic) statements of the company. [Yes - you know a hedge fund does original research when it is poking about in the Romanian Communist Party archives...]
The reported grades were lower than claimed by the company (enough reason to be short) but the difference was only about 20 percent - not that dramatic. Indeed this could be a genuine sampling error and there is little reason to assume that the difference is deliberate.
If there had been a dramatic difference in grades we would have taken a much larger position and danced about in joy. We are short sellers at heart - and investigative stock picking is fun.
With minor grade differences and more than a few environmental doubts about the mine we maintained a modest short position.
This worked well. The Romanian Prime Minister Mr Victor Ponta - after mass protests - has decided to advise Parliament to reject approval for the mine. This is hardly surprising as the company proposed an environmentally nasty - indeed toxic - method for extracting the gold.
And so yesterday the stock entered the final-phase of its collapse - it fell a little over 50 percent - but it still has more than a quarter of a billion in market cap! The stock is down to 68 cents.
And the company response. They plan on suing Romania for "multiple breaches of international investment treaties".
But they don't mention what treaties. Indeed I am for the most part unaware of what treaties might pertain. A google search for the term "breaches of international investment treaties" but without the world "Gabriel" produces roughly zero results.
For this reason I suspect Gabriel's legal case is modestly overstated.
Like their gold grades.*
John
*The overstatement of the gold grades is my guess. As stated above the difference in the gold grades was not large. However I believe the grades in the archives for good reason: the Commies did a rather big bulk sample on the mine by actually mining it. It is however not outside the realms of possibility that the Communists were so incompetent at extracting gold that they underestimated the grades in their own mine. In which case Gabriel's estimates may be accurate. I report: you decide.
Thursday, September 5, 2013
Made up stats
Every year, over $7bn is spent on used retro goods.
Microsoft's purchase of Nokia looks set to double this figure for 2013.
[Disclosure: not original - comes from this Twitter account... (@madeupstats). I just wish I had written it...]
Wednesday, September 4, 2013
We interrupt for a brief Herbalife update
Bill Ackman's huge Herbalife presentation ("Who wants to be a millionaire?") compared Herbalife to other consumer companies that Ackman considered self-evidently legitimate.
One of those companies was Ralcorp as per Slide 305 presented below.
Well William P Stiritz has just filed a 13G disclosing a 5 percent shareholding in Herbalife.
Mr Stiritz would be a good person to make the comparison above because:
And in 2012 he was responsible for buying Premier Nutrition - a maker of - you guessed it - protein shakes.
So here we have it. Bill Ackman thinks this is a pyramid scheme and knowledgeable rich industry insiders are buying huge slabs of stock in their own name.
Be sure to take your seats. Herbalife is turning into a very interesting show.
John
One of those companies was Ralcorp as per Slide 305 presented below.
Well William P Stiritz has just filed a 13G disclosing a 5 percent shareholding in Herbalife.
Mr Stiritz would be a good person to make the comparison above because:
WILLIAM P. STIRITZ has served as our [Ralcorp's] chairman of the board of directors and our chief executive officer since February 2012. Mr. Stiritz is a private equity investor and served as the chairman of the board of directors of Ralcorp Holdings, Inc. from 1994 until February 2012.But it is worse than that - Stiritz was appointed CEO of the Ralcorp spin out and cereal company Post Holdings.
And in 2012 he was responsible for buying Premier Nutrition - a maker of - you guessed it - protein shakes.
So here we have it. Bill Ackman thinks this is a pyramid scheme and knowledgeable rich industry insiders are buying huge slabs of stock in their own name.
Be sure to take your seats. Herbalife is turning into a very interesting show.
John
Tuesday, September 3, 2013
Saturday, August 17, 2013
A quick thank you to Bill Ackman
My visit to a Herbalife club in Queens inspired me. If those guys could lose weight on a protein shake meal replacement diet so could I.
So I started mostly with local Australian brand products (but a few Herbalife products, notably the tea). Anyway I am now 9kg (20 pounds) lighter and I can fit into trousers I purchased on a trip to New York in 2004. [They have sat unused in the cupboard for about six years!]
And so the new svelte me (well not really svelte - this is relative) is off to Claudes - a Sydney dining institution - and I suspect I can knock off the evil even that will do to my waistline.
And not just the dining performance that has improved. Going long the stock has rather helped my stock picking performance.
And so Bill Ackman,
Thank you.
John
So I started mostly with local Australian brand products (but a few Herbalife products, notably the tea). Anyway I am now 9kg (20 pounds) lighter and I can fit into trousers I purchased on a trip to New York in 2004. [They have sat unused in the cupboard for about six years!]
And so the new svelte me (well not really svelte - this is relative) is off to Claudes - a Sydney dining institution - and I suspect I can knock off the evil even that will do to my waistline.
And not just the dining performance that has improved. Going long the stock has rather helped my stock picking performance.
And so Bill Ackman,
Thank you.
John
Friday, August 16, 2013
The distinctly cooler Mr Hempton is the Odd Man Out
Nick Hempton (far cooler than your blogger) has a new recording out:
This time he is paired up (for four tracks anyway) with the great Michael Dease on trombone.
I won't repeat the expletives of this review - but it is accurate.
Buy it at Positone - and you too can be up with the hippest jazz.
J
This time he is paired up (for four tracks anyway) with the great Michael Dease on trombone.
I won't repeat the expletives of this review - but it is accurate.
Buy it at Positone - and you too can be up with the hippest jazz.
J
Tuesday, August 13, 2013
Strange stock assessment from a value investor I kind of admire: a note on the transition of Apple into a "value stock"
In my email today I received a missive from a value investor I kind of admire - a peon to the value in Apple shares. To quote:
Value investors must be the only people who assess tech stocks by what the grandmothers like. And they do it without any trace of irony.
Just like the classic Samsung advert but without the humour:
But of course my value friend does have a point. What with increasing longevity Apple will be here for a long time. I am not killing granny off yet - and the trail of some declining tech stock is clearly worth a lot of money.
What is Microsoft worth?
John
(No position in either stock - but generally I want to leave declining tech alone. Someone pitched me Blackberry the other day based on the qualities of their latest phone. You can make a pitch for Blackberry - but it is a patent-installed base pitch, not a pitch on the future...)
My mother-in-law had an Android tablet, and it quickly turned into an expensive paperweight on her kitchen counter. Six months ago she got an iPad mini, and she is inseparable from it. She won’t be buying another non-Apple phone or tablet. There is a lot of bearishness on Apple in the media and blogosphere, but if these headlines start scaring you out of the stock, just visit a few Apple stores and your fears will all go away – the one we dropped in on recently in Denver was swarming with Apple fanatics, while the Microsoft store next door and the Samsung store at Best Buy were almost empty. These folks will be buying whatever comes out of Cupertino for a long, long time.
Value investors must be the only people who assess tech stocks by what the grandmothers like. And they do it without any trace of irony.
Just like the classic Samsung advert but without the humour:
But of course my value friend does have a point. What with increasing longevity Apple will be here for a long time. I am not killing granny off yet - and the trail of some declining tech stock is clearly worth a lot of money.
What is Microsoft worth?
John
(No position in either stock - but generally I want to leave declining tech alone. Someone pitched me Blackberry the other day based on the qualities of their latest phone. You can make a pitch for Blackberry - but it is a patent-installed base pitch, not a pitch on the future...)
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