Chapter 4 & 5 Market Signals & Competitive Moves
Market signals can be analyzed from the quarterly or annual report or the queries during conference calls from the financial analysts. For high tech industry, the announcement of technology breakthrough can be further validated by the filed patents and technical papers being published. From a company’s historical traits and the leadership characteristics it’s easy to distinguish the real intention or just bluffs from the announcement. It is less likely that a prestigious company targets for high margin, high quality segment business will switch over to high growth, high competitive and low margin business in short period of time, unless there is a dramatically change on the leadership. The most common announcement we observed is the stock buyback plan as the company dealing with an unreasonable stock price correction. This action in general is to mitigate the shock to the investors and bring back confidence of the financial institution. Ironically In general stock buyback plan will only state the amount of buyback but no execution timeline.
The strategy of competitive moves is an interesting topic. The author stated that if all the competitive cooperate they all can make a reasonable profit while retaliate vigorously will just kill each others. I cannot fully agree author’s view since now Federal Trade Commission from US or European will further investigate the case of monopoly or antitrust if there is any under-table agreement under among competitors. The cases of Samsung, LG and other manufactures conspire to fix, raise and maintain the price of DRAMs & LCDs eventually got over 100 million fine from the federal litigations. In addition, some of the top management executives were prosecuted. To me the way to make a successfully competitive move is when only few competitors in the market and the dominate one with financial advantage that can react promptly to threat to make the others yield.
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