How they boost income: 31-July-08
Sourav Mitra -
Thursday, July 31, 2008 7:40 PM
Tribune Co., media group comprising eight newspapers, more than 50 Web sites, 25 television stations, the Chicago Cubs baseball team and real estate and other holdings, unsettled by companies abandoning newspaper ads at an accelerating pace because of a souring economy and cheaper alternatives online:
1. It will build up its broadcasting and Internet groups
2. It redesigned its six smallest dailies to make them more attractive to advertisers.
3. It started placing calls to big advertisers. It is offering new types of ads, including ones in the middle of stories. It is offering advertisers the opportunity to buy space on delivery trucks and printing plants.
4. It has doubled the number of hours of local news on Tribune's stations as local newscasts are the most lucrative programs, with 100% of the ad revenue flowing to the station, without middlemen from networks or syndicates.
5. It is planning a 24-hour breaking news center in Chicago to provide content for television, radio, cell phones, and newspapers.
[Click here for full story at Businessweek.com]
Focusing on profitable businesses + making media products more attractive for advertisers + increasing revenue streams that do not involve any sharing + adding new service = more income likely
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BASF SE, the world's biggest chemical producer:
1. It has spent more than $8 billion on acquisitions to focus on less-cyclical markets.
2. It will move toward higher-margin plastics and away from materials such as polystyrene, used in packaging.
3. It bought Engelhard, the U.S.-based inventor of the catalytic converter, for $4.8 billion.
4. It has considered three potential acquisitions - U.S. chemical maker W.R. Grace & Co, Rockwood Holdings Inc. and Germany's Cognis GmbH.
5. It raised prices for chemicals in cosmetics and paper by as much as 20 percent.
6. It has filed a case with the European Court in Luxembourg saying the European Commission failed to act towards an approval for its engineered Amflora potato, depriving BASF of as much as 30 million euros a year in license income.
[Click here for full story at Bloomberg.com]
Acquisitions + higher margin businesses + raising prices + registering claims for loss of income = scope for higher income
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Apple, converging technology company:
1. It preserves its flexibility by maintaining a strong balance sheet with $20.8 billion in cash and short-term investments it has saved. It adds about $1 billion in cash each quarter.
2. It charges carriers $500 to $600 per iPhone for the right to charge users lucrative service fees. (In comparison carriers charge customers $200 for the entry-level model)
3. It collects this iPhone money upfront when customers buy the phone but it books the income over the duration of the subscription contract between the customers and carriers, in effect earning interest on advances from accounts receivables.
[Click here for full story at Businessweek.com]
Flexibility to tweak the business in new directions + obtaining premiums for allowing lucrative income streams to business partners + collecting accounts receivables in advance = more income
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Metro AG, Germany's largest retailer:
It added foreign stores to capitalize on stronger economic growth. It will expand the chains further by opening more Turkish and Russian stores this year and the first outlet in Luxembourg and Ukraine.
[Click here for full story at Bloomberg.com]
Expanding in growing markets = more income