Toyota - Soon to be the Worlds Biggest Car Maker?

Toyota’s strategy of shifting their focus to emerging markets seems to be paying off as they are now expected to surpass GM in annual sales by the end of 2008 making them the world’s largest automaker.

According to an article by Martin Foster in the New York times.

"While sales declined in North America, they increased in Asia, especially in Indonesia and Thailand, and in other regions including South and Central America, Africa and Oceania.

In the nine months through December, less than half of Toyota sales came from its showrooms in North America.

Sales to North America slid to 44 percent from 57 percent a year earlier, while Asian sales rose to 25 percent from 15 percent."

As a consumer it’s no surprise that GM is about to be bumped from the #1 spot. I am by no means a picky shopper but for me it’s basically at the point that when I’m car shopping I don’t even bother looking at North American cars anymore. My reason for this is simple…I want to own a car that isn’t going to break down and from experience and the experiences of people I know GM can’t seem to meet my single criteria.

200 Hundredth Post

I just realized that yesterday marked the 200th post here at Middle Class Millionaire so I just wanted to take today’s post to thank the readers of this blog for their continued support and readership. I would also like to thank the regular commenters who not only keep me honest but also provide some added depth and perspective to many of the posts.

Cheers,
MCM

Portfolio Update as of April 1, 2008

-no change from last month
-up 0% in 2008
-CDN 65.8%
-U.S. 31.6%
-International 2.6%

TRP - 4.14%
CSH.UN - 4.02%
GWO - 4.36%
PFE - 4.78%
POW - 3.79%
WAG - 3.66%
L - 2.66%
UNS - 2.25%
GZ - 2.65%
TD - 12.30%
EIT.UN - 2.61%
JNJ - 5.89%
MMM - 3.67%
C - 3.41%
ATD.B - 2.91%
BCE - 5.14%
IIC - 2.63%
O'Shaughnessy’s Global Fund - 2.57%
American Growth Fund - 0.90%
CDN Value Fund - 2.95%
Small Cap Growth Fund - 3.73%
Chou Associates Fund - 9.30%
Money Market Fund - 9.68%

There were no changes to my portfolio over the last month – no buys, no sells.

Yellow Pages - YLO.UN

When I invest in companies I invest for the long haul. Ideally, I would like to hold a company indefinitely so one of the first criteria I look at before adding something to my portfolio is the sustainability of the business model, and I just don’t see YLO.UN existing long term using their current model. That being said, I certainly don’t consider them a dead company and they are making steps in the right direction by transitioning online. However, unless they can completely transform themselves into a dominant online advertiser it’s my opinion that they will not exist at some point in the future.

I do like and use some of their online services such as canada411 and autotrader and I am positive on their recent agreement with Google to become the first Canadian based reseller of Google AdWords adverts. However, the bulk of their revenue still comes from print and I don’t think print will be around longer term.

Personally, I’m skeptical that even if they did transform themselves into a completely online company that they’d be able to compete longer term in the online world. To date I haven’t seen any competitors that rival the online services that YLO.UN provides but in my opinion any one of the major internet players could be getting ready to launch Yellow Pages death swoop. All it would take is Google adding a phone book and local category search to their main page, or to Google Earth for that matter. Mapquest is already halfway there as they have a category search that in addition to providing the contact information generates a map and direction to get there from your house. I used it instead of canada411 last week to search for directions to all of the Thai restaurants in my part of town.

So although I don’t think that YLO.UN is on deaths door I just can’t see any reason to buy them based on my long term investing style and their current business model. For a short to medium term hold YLO.UN should keep spitting out cash. If they successfully transform themselves into a dominant online advertiser and secure some kind of competitive advantage than I’d certainly be willing to give them another look.

Just to give you the other side of the coin Fellow Blogger the MoneyGardner is a holder of YLO.UN and will be writing up a post on the buy case later this week.

Canadian Tire Scraps its Print Catalog – A Foreshadowing of Yellow Pages Fate?

Canadian Tire announced yesterday that they will be phasing out the print edition of their catalogue and replacing it with an online edition.

“all of our research was indicating that readership levels were decreasing and more and more people are on line,” Canadian Tire spokeswoman Lisa Gibson said in a telephone interview Thursday. “So that's why we decided to let people know on line and not make a big production.”
-Quoted from an article by John Partridge of the Globe and Mail

In my mind the above quote could easily apply to the print edition of Yellow Pages. Shares of YLO.UN have slid 30% over the last 3 months and as the yield creeps higher I’m increasingly being asked if I think now is a good time to buy YLO.UN. My short answer is that if you’re a long term investor I don’t think there is a good time to buy. In my next post I’ll explain my rational behind my don’t buy recommendation.

Some Recent Dividend Increases

With all the negative press over the last month I thought it might be a little refreshing to hear a little good news. So here’s a little summary of some of the recent Canadian dividend increases over the last month.

-T.D. Bank (TD) Annual div increased 3.5% to $2.36
-TECSYS Inc (TCS) Declared first dividend of $0.02
-Canadian Tire (CTC.A) Annual dividend increased by 13.5% to $0.84
-Constellation Software (CSU) Annual dividend increased by 20% to $0.18
-Stella-Jones Inc (SJ) Annual dividend increased by 14.3% to $0.32
-Transcontinental (TCL.A) Annual dividend increased by 14% to $0.32
-Aecon Group Inc (ARE) Annual dividend increased by 42.9% to $0.20
-Bonterra Energy Income Fnd (BNE.UN) Annual distribution increased by 4.5% to $2.76
-CCL Industries Inc (CCL.B) Annual dividend increased by 16.7% to $0.56
-Guardian Capital Group (GCG.A) Annual dividend increased by 11.1% to $0.15
-SNC-Lavalin Group (SNC) Annual dividend increased by 33.3% to $0.48
-Superior Plus Income Fund (SPF.UN) Annual distribution increased by 3.8% to $1.62
-AGF Management (AGF.B) Annual dividend increased by 25% to $1.00
-North West Company Fund (NWF.UN) Annual distribution increased by 18.5% to $1.28

If I’ve left any out that should be mentioned just leave them in the comments section.

Facebook Worth 15 Billion?

For those of you who haven’t heard of Facebook here is an extract from the “about” section of Facebooks website.

About Facebook
Facebook is a social utility that connects people with friends and others who work, study and live around them. People use Facebook to keep up with friends, upload an unlimited number of photos, share links and videos, and learn more about the people they meet.

Anyone can join Facebook
All that's needed to join Facebook is a valid email address. To connect with coworkers or classmates, use your school or work email address to register. Once you register, join a regional network to connect with the people in your area.

Discover the people around you
Facebook is made up of many networks, each based around a company, region, or school. Join the networks that reflect your real-life communities to learn more about the people who work, live, or study around you.”

Microsoft recently invested $240 million for a 1.6% stake in facebook while Hong Kong billionaire Li Ka-shing invested $60 million for a 0.4% stake. Using those figures, would value the company at a whopping $15 billion. I have little doubt that the 4 year old company and its 23 year old founder are brilliant but are they worth $15 billion? Just to put this into perspective here are the market capitalizations of some popular Canadian large caps.

Telus – $7.7 billion
Shoppers Drug Mart – $11 billion
Tim Hortons – $7.4 billion
Loblaws – $7.9 billion
Bombardier – $10 billion

Although there is no denying the popularity or marketing potential of Facebook I would have reservations about investing in an online “social utility” that is valued the same as Tim Hortons and Telus combined. The valuation may be appropriate if its current growth were to continue indefinitely however, personally I think there is a chance that Facebook has the potential to become a “flavour of the month”. Anyone remember geocities? Of course there is a chance that it may stick around however, if I had $15 billion to invest I think I would rather take my chances and buy both Telus and Tim Horton than gamble on Facebook. Which would you rather own?