Buy on Rumor; Sell on News

Kevin M. Brett

February 3, 2014

Do You Want Fries With That?

Not So Fast…

• 74 percent of CEOs want graduates with a liberal arts education

• Who can effectively communicate through persuasive writing and presentations

• And Solve Problems

Source: Association of American Colleges and Universities Survey of 320 CEOs

America’s New Investor Class

• 54 percent of Americans own stocks, mutual funds and bonds; 73 percent college graduates; 83 percent post grads

• Internet Trading Tools; IRAs, 401Ks

• Longer life spans; higher health care costs; college tuition

24-Hour Global Markets

• NYSE-NASDAQ; US• FTSE (“Footsie”) UK• DAX (Germany)• CAC-40 (France)• Nikkei (Japan)• Hang Seng (Hong Kong)

24-Hour Financial News

• Wall Street Journal, Financial Times, Investor’s Business Daily

• Fortune, Forbes, Business Week, Barron's• CNBC, Fox Business, Bloomberg TV• The “Money Honey” and “Mad Money”

• AP, Dow Jones, Reuters, Bloomberg, TheStreet.com• Bloggers, Social Media and Chat rooms• PR Newswire, Business Wire, Internet Wire

Introducing the NYSE

• NYSE – Founded 1817• “The Big Board”• $16.6 trillion Market Cap • 2,308 listings• Venerable Companies• Ringing the Bell• Pounding the Gavel

Introducing the NASDAQ

• Founded in 1971

• “Electronic Exchange”

• $4.45 trillion market cap

• 2,709 listings• National Association of Securities Dealers

Automated Quotations (NASDAQ)

SEC Disclosure Rules

• Annual Report to Shareholders (10-K)• Quarterly Earnings Reports (10-Q)• Major Unplanned Announcements (8-K)

– Upside / Downside Guidance Variations– Mergers and Acquisitions– Restructurings

• Annual Meeting of Shareholders• Prospectus for Planned IPO (S-1)

Watching the Ticker

NYSE • MAT• DIS• LNKD• TWTR • NKE• YUM• HOG• BUD• LUV• MCD

NASDAQ• MSFT• AAPL• INTC• CSCO• SBUX• SCHW• GOOG• FB• AMZN • NFLX

Quick Market Definitions

• GAAP: Generally Accepted Accounting Principles

• EPS: Earnings Per Share

• IPO: Initial Public Offering

• Market Capitalization: Share price x Number of Shares Outstanding = Value

• SEC: Securities Exchange Commission

Preferences and Choices

• Non-Profit Communications: $62,275

• Corporate Public Relations: $88,823

,

Preferences and Choices II• Community Relations: $63,437

• Financial Communications: $117,233

Pay Rates for IR/PR Directors

• Investor Relations Director Range

$97,753 to $201,565• Corporate Public Relations Director Range

$86,469 to $167,836

2013 Source: Salary.com

Asking the Obvious Question

“…Sometimes the most obvious question really is the question. In Enron’s case: How do you make money?” – Bethany McLean, Fortune Magazine

How Did ENE Make Money?

How Does AAPL Make Money?

How Does GOOG Make Money?

How Does AMZN Make Money?

How Does MSFT Make Money?

How Does BA Make Money?

How Does LUV Make Money?

How Does SBUX Make Money?

How Does MCD Make Money?

How Does JWN Make Money?

How Does LULU Make Money?

How Does NKE Make Money?

How Does UA Make Money?

How Does TWTR Make Money?

How Does LNKD Make Money?

How Does FB Make Money?

Tale of Two IPOs

Connections

• 200 million subscribers• $25.7 billion Market Cap• $972 million revenues• $21 million profits• Debuted at $45• Now $215.21

Friends

• 1 billion+ subscribers• $158.9 billion Market Cap• $5.0 billion revenues• $32 million profits• Debuted at $38• Now $62.57

Q1 Financial StatementWildcat.com (?: CWU)

• Revenues: $2 million• COGS: $1 million• Gross Margin: $1 million• SG&A: $250,000• R&D: $250,000• Operating Margin: $500,000• Taxes: $200,000• Net Income (Loss): $300,000

Q1 Financial StatementWildcat.com (NYSE: CWU)

• Revenues: $2 million• COGS: $1 million• Gross Margin: $1 million• SG&A: $250,000• R&D: $250,000• Operating Margin: $500,000• Taxes: $200,000• Net Income (Loss): $300,000

Q1 Financial StatementWildcat.com (NYSE: CWU)

• Revenues: $2 million• COGS: $1 million• Gross Margin: $1 million• SG&A: $250,000• R&D: $250,000• Operating Margin: $500,000• Taxes: $200,000• Net Income (Loss): $300,000

Q2 2014 Financial StatementMicrosoft (NASDAQ: MSFT)

• Revenues: $24.51 billion• COGS: $8.28 billion• Gross Margin: $16.23 billion• SG&A: $5.51 billion• R&D: $2.74 billion• Operating Margin: $7.96 billion• Taxes: $1.32 billion• Net Income (Loss): $6.55 billion