Brands, Valuing of Brands, and weird Malaysians.

Let's talk about Brands. There's all this talk nowadays about Malaysia's 30 most valuable brands award. Which I find I totally disagree with, since the judging was based on outlandish and abstract concepts. The problem seems to be that a lot of Managers and CEOs in Malaysia are morons, and do not understand how brands are supposed to work.

Which is ridiculous of them, since you can just look at "Kopitiam" and "Kluand" and "penang" and "ipoh" and "station" being placed in numerous eatery names. You see, even these small time (small compared to KLSE top 10 coys) fellas recognize the power of brand name recognition!

The only proper way to value a brand, in my opinion:
Try to estimate how much damage would be caused if that brand name was taken away, eg some patent lawsuit or similiar barring use of the brand name for 3 years.

Would AirAsia suffer much loss in revenue if they had to call themselves FernandezAirways? ... I think it would cause maybe 1month of lower revenue, but things would recover immediately.

Would Digi suffer much loss in revenue if they had to rename themselves to SmartPhones? ... IMHO, they would suffer VERY badly.

Would Coca-Cola suffer badly if they were forced to rename themselves Cola-Coca? ... It is common knowledge that losing that brand name would be a DISASTER.

Would Proton lose much sales if they were forced to rename themselves as Malaysian Motors? ... Actually, I think their revenue might GROW... lol.

As for Petronas, they could name themselves Barisan Oil Bank and I am pretty sure that their revenue, sales, and profit would remain pretty much unchanged. The big players out there don't really care much about your brand name, your advertising policy, your corporate vision, logo, etc etc. They just look at whether it's profitable to do business with you. Anyhow most of their revenue is just arranged directly by our government.

Compare that to say, Polo Ralph Lauren or Louis Vitton. If you carefully remove off the label from their product and slap on a generic brand name, the product becomes PRACTICALLY WORTHLESS.

To me, that is the ultimate test of whether a brand has value. Try to estimate the results of "with the brand" vs "without the brand"... ceterus parabus style.

A lot of companies have very very valuable brand names. If you replace their label with a generic name, they would lose hundreds of millions in sales. In this case, I would just directly say: this brand name is currently worth $100 million a year.

No ranking, no subjectiveness. After all, even the "contest" calls itself "most VALUABLE brands". And for a company, value is measured in MONEY / dollar/ ringgit terms... not based on whatever weird aesthetic or semi-mystical intrinsic things.
Heck... buying a brand creates an entry in the account books called "goodwill". (IIRC. My accounting can be shaky at times)

I'm not 100% certain, but I think that in developed nations, it is pretty much possible to find some high level financial whizzes who will be able to calculate for you how much each Brand in a company should be valued at, in dollar terms.

They should have someone do that in Malaysia too.

Michael Lewis interviews.

http://money.cnn.com/video/#/video/news/2008/11/26/news.michaellewis.112608.cnnmoney

FYI, it's the Liar's Poker guy again.

I tend to agree with him, actually.

Watch the video. More comments later. (and edits)

Citigroup bailout is an outrage!

http://www.thestreet.com/story/10449706/1/todays-outrage-citis-not-worth-45-billion.html

"Now Citi's the latest bailout story, with the U.S. government donating $20 billion to the cause. That's on top of the $25 billion in taxpayer funds Citi received last month.
So why doesn't the government own all of Citi now? For $45 billion, it should -- the bank was only worth about $20 billion at Friday's closing share price of $3.77. (For what it's worth, Wachovia's trading above $4.) "

Yup... even at the price of $6, citi is still worth less than $45 billion.

GEEZ. The American government is psychotic. GM is set to be next.

The GM bailout is looking like it's going to be using 10 billion to bailout a company worth 2 billion.

Yeah, they're talking about potential earnings, and damage, and blah blah blah.

Imagine if your rich, fat, lazy, neighbour got a loan for RM50 million from the government, at 5% interest. Your neighbours job? He's the kampung moneylender. Oh, and BTW, his enforcers just came by your house yesterday to inform you that you now have 1 month to pay back your loans (at 25% annual interest)

Yeah, no wonder Americans are really angry with the rubbish going on there right now.

What the FED? TALF Credit Card Bailout is NONSENSE!!!

Excerpts from: http://www.thestreet.com/story/10450220/1/what-the-fed-talf-makes-me-ralph.html

"Treasury and the Federal Reserve on Tuesday said they will provide $200 billion in financing to investors buying a variety of consumer debt, including credit card loans. The program, called the Term Asset-backed Securities Loan Facility, or TALF, is supported by $20 billion in credit protection from the $700 billion Troubled Assets Relief Program, or TARP, approved by Congress last month.
In theory, the TALF program is intended to provide liquidity to the system, allowing big pocketed investors like hedge funds to buy up debt and allow lenders will make more loans. Moreover, the government loans are non-recourse, meaning if anything happens -- if the borrower goes bust -- taxpayers are on the hook.
Not a bad deal for the lenders. They make more loans and collect more interest from borrowers, and the government shoulders the risk. But as the lenders get sweetheart deals from the government, they are playing games with their customers.
Citigroup recently informed customers -- even those in good standing -- that it would jack interest rates from 9.99% to 24.99%, according to a letter one recipient shared with TheStreet.com. The customers can reject the higher interest, but that means they can't charge any more on their cards and must pay off the current card debt.
You'd think a company that just received a $20 billion bailout from the government -- in addition to the coming TALF aid -- might be more mindful of customer service
The TALF loans are for one year, but the Fed said it would extend the term, if necessary. The loans are also not subject to mark-to-market accounting. If you take in collateral without pricing it, you are buying it. Read between the lines -- there is no "lending" happening here.
Wouldn't it be nice if while the Federal Reserve was making all these deals to help our banks and credit card companies they forced them to do a little something for consumers? Couldn't the Fed force the banks to limit the interest rates they are charging? Force them to cap late payment fees?
Yes. The Fed could do all this and more. But the Federal Reserve is not helping taxpayers. The Federal Reserve is helping badly run banks. "

Oh geez, where to start?

This is really really looking to be a big huge RIP-OFF of the American public.
In my opinion, they should freeze Paulson's bank accounts and suspend his travel documents.
I am almost CERTAIN he has been accepting enormous bribes at this point.

The 700 billion bailout was voted YES by congress... to help MORTAGE HOLDERS and the American Public! ... and AS SOON as it was approved, Paulson decided not 1 cent would go to American citizens... he gave half of it to the banks! Who then used it to pay bonuses (until Goldman showed that you COULD refuse to give bonuses and somehow retain your staff, proving the previous claims to be a pack of lies) and also to buy up other ailing banks in a predatory vulture style of behaviour.

Now, this TALF was meant to help out Credit Card debtors (ie 99% of americans), students, and auto loan applicants.
Instead, WTF??? This has turned into a massive gift to credit card companies... and these companies have turned around and basically frozen credit to their existing cardholders, and raised interest rates too???
Hello??? This plan is obviously to enrich credit card companies at the expense of the consumers AND the taxpayers!!!
Let's look at the details of this loan again... it is non-recourse??? In other words, the borrowers can just declare "oh. We are short on cash this month. Therefore we are defaulting. Sorry." and you basically can't do ANYTHING???

Secondly, the loans are non marked to market. NOT MARKED TO MARKET! Yes! That means that even if the credit card debt used as collateral for this deal becomes 100% non-performing loans, ie there is 100 billion worth of loans and ALL of it becomes bad debts... it is still going to show up as 100 billion worth in book value!
Heck, non-marked to market means that you could use an uninsured HOUSE worth USD1million as collateral... and when the house burns down (uninsured), you would still list it as worth USD 1 million even though there is nothing but a pile of burning timbers!

Obviously, this is insanity.

Paulson should go to jail for this. I am not joking. I am not joking whatsoever. There are laws about this sort of thing, go look up the rules about Accounting Practices, Paulson. There are rules about duty and agreements and such, and Paulson has clearly ignored the rulings that Congress made regarding the bailout. This is a travesty.

Update: http://www.nytimes.com/2008/11/26/business/economy/26tarp.html?ref=business

FINALLY, it's time for an AUDIT and OVERSIGHT COMITTEE to go submit a report on the bailout effort thus far.