Tuesday, August 20, 2013

Facebook's new initiative to connect people

I think this is really great move that could help Facebook to achieve adding many more millions of people in its network in coming years.

Facebook is the latest entrant into the line of companies that are trying to improve the internet access facility to the people in the developing countries. The New York Times reported that on Wednesday Facebook is expected to announce an initiative that cuts the cost of accessing basic internet services in the developing countries. The intention was to make the mobile users to access internet on their handheld devices at lower cost. The mission is partnered with other tech companies like Samsung, Nokia, Ericsson and Qualcomm.These partner companies would work on optimizing the speed of the chips on mobile handsets so that dealing with more data would be lot easier with lesser power consumption.

Probably this could be viewed as a great step by the company towards its mission of adding another billion users within next few years. It is estimated that around 4 billion people in the world have no access to the internet but almost all of them have a mobile phone.

Other tech giants like Google and Twitter have also been trying to offer a free access to their services via mobile and cheaper internet access. All these steps by these companies reveal one thing clearly - future of these tech giants lies in developing countries!

Monday, August 19, 2013

Sensex on a free fall, but do we need to worry?

Every investor looks grim now as the Sensex started its free fall on Friday. Sensex was down by almost 280 points when writing this article on Monday too. It has lost 1000 points in two days, all out of the panic from foreign investors about India's state of economy. The rupee also touched its all-time low reaching just under 62. There are various factors that could be said as reasons for this fear among investors including slower growth, inflation, corruption, falling rupee, widening current account deficit, etc.

So the investors are looking for safe havens like gold or the developed economies (e.g US) to better put their money rather in a slow growth, muddled state of economy.

Sectors like mining and manufacturing are also not gaining much from the depreciating currency as they are not performing well. It could have been a little relief for the whole economic scenario here if these sectors are doing better. Also, as India imports oil and computers in dollar dominated trade, the prices of these goods went up around 40% in last couple of years, in turn, pushing the prices essential goods across the board, ending up in higher inflation.

Raising interest rates by the RBI also didn't help much in containing the free fall of the rupee as it is considered as a 'late move'.

Meeting the current account deficit (exports-imports in negative) is also seems to be a humongous task in front of the government now, coupled with the slow growth in the range of 5%. Waning investors' confidence and falling currency should certainly be the top priority for the government to think about now. Experts think that it would be tough to contain if this situation falls into a vicious cycle.

Hope our economy will be back with a bang soon and our best wishes will always be there!

Tuesday, July 9, 2013

Falling Rupee and You

This must be a time to be frenzy about many travel plans that you may have in your calendar especially if it's for abroad! Yes, the free fall that our currency is facing is a real concern for almost all types of people in the country. Today it crossed the magical mark of 61 (experts believed that rupee would not cross this mark) and expected to do further sliding in coming weeks. So what should we think about and what it means to us? Here are some thing that may be of worth reading.

1. Be ready to shell out more for fuel - since India imports a lot of oil, depreciating rupee would have its own effect on the prices that we pay for fuels like gas, diesel and petrol. Expect more hikes in this area in coming months.

2. Think twice about your foreign trips - Travel agencies are already witnessing weak demand for foreign tour packages as you may need to spend more to buy dollars. Consequently, domestic tourism is expected to pick up in coming months. So any plans for abroad tourism? You are recommended to be patient till rupee recovers to a comfort level. Same theory could be applicable to foreign education as well. Students who have plans for this year academic courses in abroad may feel the pinch.

3. Your wallet may cry as you may spend more on FMCG and consumer durables - Your soaps, shampoos, deodorants and detergents may get dearer in coming weeks as manufacturers of these products may wish to pass on the input costs burden to consumers. Note that crude oil is one of the major ingredients for these products. Electronic gadgets like laptops, TVs, mobile phone and ACs may also become more costlier as importing raw materials for these products would be more expensive for the manufacturers in India.

We may expect some remedy if the government takes some appropriate measures here and this would be a challenging situation for the government as the country faces general elections next year.

Monday, May 27, 2013

E-commerce in India - What's ahead?

There's a hype in recent months that eCommerce in India is getting punched and can be brought down by the mounting pressure on the eCommerce companies as they struggle to survive. Heat is on these companies as they couldn't turn profitable since they shed lots of money as operating expenses. Venture Capital firms prefer to stay away from investing in any new start-ups in this sector.

Except a handful of companies like Flipkart and Myntra, others are feeling the heat. Even these successful companies are yet to be 'profitable' even after they were successful in raising funds.

One emerging trend we could see in recent months is that eCommerce industry is in a 'consolidation' phase now. Few examples include: Babyoye.com, a baby e-store merged with Hoopos.com, another baby products seller and Buytheprice.com was bought by Tradus.com. So the question is where the market will go?

Experts think that the industry may consolidate further and get stable as more smaller and new companies would be thrown out or sucked in. But considering the internet usage by 2015, the eCommerce market in India still looks promising (it is estimated that more than 300 million people will use the internet by 2015, up from 100 million now).

The eCommerce market may be still has a long way to go in India as people are still have constraints like lower speed internet connections, fear of using credit cards online (e.g identity theft), 3G internet on mobile devices has long way to go as more and more people are still using non-smartphones, lack of efficient payment platforms (gateways), etc. The whole point here is that the younger population may be interested in doing online transactions more than the middle and aged population. This may be due to the cultural shift that's happening now. Hence we could expect that the future has lots of potential for eCommerce market in India and it may take another 5-10 years to see the real value of 'eCommerce' in India.

Wednesday, April 17, 2013

What's happening with the Gold market?

There has been frenzy about the recent price drop of Gold in recent days and all of us wondering what's happening with the commodity and even thinking of putting some investment in the precious metal only for the reason that the price is down by record levels in a year.

I just tried to get to the bottom of the picture only to see what's gone wrong with the yellow metal. From an economist's view one can easily conclude that the demand might have come down triggering the price levels to fall. But is it the reality at the ground? Though an initial high level notion shows that the demand from institutional buyers have declined pushing the prices to lower levels in turn, there are are other global factors that really have had a considerable contribution for this decrease in prices. (see the picture below)

When the article is being written, we could see the Gold prices to recover slightly (was at $1370/ounce), up by around 1%.

The largest consumer of Gold, India, is expected to help the yellow metal's prices to back on track in coming weeks as Akshaya Tritiya is around the corner and wedding season is expected to last till June/July. This would probably boost the consumer demand for the commodity in coming months.

So this could be the right time if you want to make some investments in this high valued commodity!

Tuesday, May 8, 2012

Would you like to invest in Facebook?

This is high time as the most expected IPO in internet businesses history is making its way, yes, Facebook has begun its roadshow for investors towards its IPO on Monday. It seems many Indian investors also might be putting their money in Facebook.

For around 1,000 shares, one may need around Rs.18 lakhs (at a price of $35/share). Facebook's IPO offers around 337 million shares with a price band of $28-35 per share, raising around $14 billion. This puts the valuation of the company at $95 billion.

Facebook will start trading on May 18 on NASDAQ under the ticker, FB.

Facebook claims that it has more than 900 million active monthly users.

Monday, April 23, 2012

Facebook's growth slows down

Ahead of its proposed IPO in May/June this year, Facebook has come up with financial results for the Q1 2012. The results are bit disappointing for investors and potential investors who are thinking of a pie in IPO shares. Revenues crossed the magical $1 billion mark in last quarter, a healthy 55% growth Y-o-Y. But when you look at the bottomline, it was a bit concerning. Net profit for the quarter came down by 12% Y-o-Y, primarily driven by the expense factor. Marketing expenses have nearly tripled.

Facebook might be struggling to keep its revenue and user growth and spending a lot in marketing and ads. The company even cited in its recent filing that it may not sustain the growth level in coming months.

Here's the latest filing: http://sec.gov/Archives/edgar/data/1326801/000119312512175673/d287954ds1a.htm