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Georges Yared
- http://www.georgesyared.com

I began my career at Dean Witter Reynolds (now, Morgan Stanley) in 1979 as a broker. In the ensuing 11 years I went from a branch manager, to Midwest regional manager in charge of 1,200 broker in 11 states, to president and CEO of Dean Witter Canada. When we sold the firm to a large Canadian bank in 1990, I joined Wessels, Arnold and Henderson and was in charge of European sales. I worked with over 100 portfolio managers on their US stock holdings. I have also worked with over 150 world class research analysts and have advised and traveled with over 200 growth company managements. I joined ThinkEquity Partners in 2003 as senior partner, again in charge of European sales. I understand and love growth investing and growth stocks. I have authored two fun, easy-to-read insightful books, "Stop Losing Money Today" and "Baby Boomer Investing ... Where do we go from here?" I REFUSE TO WRITE DRY, BORING INVESTMENT BOOKS!! These are full of real-world examples and stories. I am also a financial columnist for Eons.com. For more info about me or my books, please visit my Web site: http://www.georgesyared.com. You can also find the books on Amazon.com.

Georges Yared
- http://www.georgesyared.com

I began my career at Dean Witter Reynolds (now, Morgan Stanley) in 1979 as a broker. In the ensuing 11 years I went from a branch manager, to Midwest regional manager in charge of 1,200 broker in 11 states, to president and CEO of Dean Witter Canada. When we sold the firm to a large Canadian bank in 1990, I joined Wessels, Arnold and Henderson and was in charge of European sales. I worked with over 100 portfolio managers on their US stock holdings. I have also worked with over 150 world class research analysts and have advised and traveled with over 200 growth company managements. I joined ThinkEquity Partners in 2003 as senior partner, again in charge of European sales. I understand and love growth investing and growth stocks. I have authored two fun, easy-to-read insightful books, "Stop Losing Money Today" and "Baby Boomer Investing ... Where do we go from here?" I REFUSE TO WRITE DRY, BORING INVESTMENT BOOKS!! These are full of real-world examples and stories. I am also a financial columnist for Eons.com. For more info about me or my books, please visit my Web site: http://www.georgesyared.com. You can also find the books on Amazon.com.

Starbucks' (NASDAQ: SBUX) Howard Schultz came back to the CEO role in late 2007 to hopefully rescue the once great concept he has so passionately developed since the 1980s. Fair enough. Could this be the second coming of Steve Jobs of Apple (NASDAQ: AAPL) or would it resemble the mediocre return of Michael Dell of Dell (NASDAQ: DELL)? The jury is out and time will tell.

For now, I have one major bone to pick. Howard, let's take some time here to review the store closures. I am sure a mid-level vice president made the geographical decisions. But I hope you really scoured the list carefully.

Let's take an example: Minnetonka, Minnesota. Howard, I'm sure it may not mean much to you. After all, you were raised in New York and currently live in Seattle, so Minnesota may be flyover country. Minnetonka is a western suburb of Minneapolis sporting a growing population of about 52,000. Minnetonka is a fairly upscale suburb with near full employment. Just for your information, Minnetonka is also the world headquarters for the biggest private company in the world; probably one of your suppliers. The company is called Cargill -- just in case your VP missed it.

It's on the Starbucks hit list. You are closing the Minnetonka store. Are you nuts?!! I have written in the past that this store should serve as one of your models on how to do it right. Sure, economics eventually have to make sense. This store is about three years old and the growth of traffic has been steady. Used to be one person in line at 10:30 am, now it's common to see a continuous stream of 7-8 people in that off -hour line. Early mornings are very busy.

I'll admit the headline is a bit deceptive. On one hand McDonald's (NYSE: MCD) has seen a resurgence in its business and frankly, the shares have done very well. In fact since McDonald's went through its own set of problems five years ago, the stock has since tripled in value.

The parallels between Starbucks (NASDAQ: SBUX) and McDonald's are very eerie. Starbucks has hit the proverbial wall after a successful ride from 1992 to 2007 as one of the premier GameChanger stocks around. Starbucks, like McDonald's over-expanded its store base in the United States and began to cannibalize its own revenues. Starbucks, like McDonald's, lost its principle focus and did not tend to 'what got them there".

In late 2002 McDonald's stock had just finished a 4 year run of losing 70% of its value. The company was becoming a hodgepodge of different menu items, culminating with the disastrous release of the McLean Deluxe, which was not even all beef! Advertising and marketing programs were a mish-mash of geographical themes yielding no consistency whatsoever. McDonald's even posted, for the first time in its illustrious history, an operating loss in 2002, and experienced negative same store sales for the first time, as well.

Then CEO Jim Cantalupo said enough was enough. McDonald's closed 700 unproductive stores (sound familiar?) and re-focused its menu and advertising campaign.

This post is part of my series featuring established companies and the smaller, more aggressive or innovative rivals that may eventually succeed them.

Who would have thought that privately held, 2002 upstart Vizio could upset the LCD TV market and knock giant Sony (NYSE: SNE) off of its perch?

The world of televisions is transforming itself to flat-panel, high-definition and big screens. Vizio was founded in 2002 and is taking major market share from Sony and former second fiddle Samsung. Vizio's promise to its customers is simple -- small is big. The company has only 85 employees, mostly in sales and marketing, and outsources the manufacturing to other suppliers. The key to the Vizio story is getting the product through as many retail doors as possible.

The company has signed up a couple of big wigs in the retail sales channel: Wal-Mart (NYSE: WMT) and Costco (NASDAQ: COST), to go along with Sears (NASDAQ: SHLD) and Circuit City (NYSE: CC). Vizio is also available from Dell Computers e-commerce web site (NASDAQ: DELL). Vizio understands it's all about distribution, distribution, distribution.

Vizio has taken the marketing position that television decisions typically are the domain of the male of a household and, as such, has partnered up with the NFL. Football and big screen TVs are synonymous. Vizio has signed All-Pro running back LaDainian Tomlinson of the San Diego Chargers to be its spokesperson. Tomlinson is regarded as both a fine gentleman and perhaps the greatest running back since Barry Sanders. His wholesome image is magical to Vizio's marketing program.

This post is part of my series featuring established companies and the smaller, more aggressive or innovative rivals that may eventually succeed them.

Applebee's is the largest casual dining restaurant chain in the United States, with nearly 2,000 units spread out over 49 states. Applebee's changed its formal name back in 1986 to Applebee's Neighborhood Bar and Grill to give it a local appeal. In November 2007, International House of Pancakes -- IHOP -- now formally known as DineEquity, (NYSE: DIN) bought out Applebee's for $2.1 billion. It's hard to imagine Applebee's and IHOP as DineEquity!

The casual dining sector is embracing a newer player with aspirations of a national roll out. That player is BJ's Restaurant and Brewery (NASDAQ: BJRI) based in Huntington Beach, California. BJ's offers an on-site brewery with its own beer recipes or a trusted third party's recipe.The chain serves gourmet salads, steaks, chops, fish, poultry and several other popular dishes. It also makes superb deep-dish pizza for both in-house dining and carry out.

BJ's has 72 units in the chain spread over 13 states with enormous room to grow. Being a California-based company, BJ's stronghold is California, but the concept has become popular in key restaurant markets like Florida and Arizona. The casual nature of the chain has an appeal in many large markets not yet penetrated. BJ's has yet to open a unit in New York, Pennsylvania, Illinois, Georgia or Tennessee.

This post is part of my series featuring established companies and the smaller, more aggressive or innovative rivals that may eventually succeed them.

San Francisco-based Gap Inc. (NYSE: GPS) has seen its fair share of hits or misses. The original Gap Stores was an overwhelming success in the 1980s and 1990s, but ran into the proverbial wall as the century was ending. The Gap missed the fashion changes and has re-tooled and re-engineered itself more than Joan Rivers! The concept has never been quite the same or attained its cache in the minds of discerning consumers. Other concepts within the Gap system have fared better, such as the Banana Republic, and Old Navy still remains popular in the deep discount segment.

Zara offers a fresh approach to fashion with a range of price points appealing to all levels of consumers. Zara is based in Spain and is part of the huge distribution company Inditex, which trades on the Spanish exchange. Zara is just beginning to make some serious inroads into the United States. With only 154 stores in the U.S., Zara has the room to five-fold its base within the next decade. The Zara concept has over 1,400 stores spread out over 50 countries, with plans to double that base. The U.S. is fertile ground for Zara as the international cache appeals to American consumers.

Zara is a vertically integrated concept. From designing men's, women's and children's fashions to manufacturing to distribution, Zara controls the entire process. The stores are all company-owned, to complete the vertical integration. Zara has captured the cache that the Gap Stores once had. Zara's appeal ranges from casual wear to business attire, while maintaining reasonable price points.

This post is part of my series featuring established companies and the smaller, more aggressive or innovative rivals that may eventually succeed them.

With over 4,000 stores in the United States ranging from warehouse-concept Sam's Club to discount retail stores to supercenters, Wal-Mart (NYSE: WMT) is by far the largest retailer in the U.S. -- and the world. So where does Wal-Mart go from here? International expansion has become the true growth engine for Wal-Mart as it dots the landscapes of other nations. The company has embarked on a series of initiatives these past 15 months to spruce up the stores, install better lighting and offer a more competitive brand of consumer goods. Recent same-store sales have validated these improvements.

Wal-Mart has been the beneficiary of a more cost-conscious consumer in this economic slowdown. Yet it can only squeeze so much growth out of its existing locations. And if it opens more stores, it risks cannibalizing the revenues of its existing stores.

Enter Fred's (NASDAQ: FRED). This quiet, regional concept has been around since 1947. Fred's is headquartered in Memphis, Tennessee, and has its base in 15 Southeastern states. Fred's has 659 discount stores and 280 pharmacies in its system -- with room to grow. Fred's has 24 franchisees, which is a quicker way to expand the concept while not draining the corporate coffers.

Fred's offers a full range of apparel, food, sporting goods and other general merchandise in its system. The company's philosophy is: quality merchandise at a discount price. The stores are well lit, organized and make for a pleasant shopping experience.

This post is part of my series featuring established companies and the smaller, more aggressive or innovative rivals that may eventually succeed them.

I remember way, way back to November 2006 when Wall Street was stunned that Google (NASDAQ:GOOG) was paying the ungodly sum of $1.65 billion for privately held YouTube. How were they to monetize this goofy, home video web site? Since November 2006, it appears that Google got a bargain when compared to other social networking web sites.

Facebook has over 80 million users including a new Facebook profile for Democratic presidential nominee Barack Obama. Facebook attained Wall Street relevancy last year when Microsoft (NASDAQ: MSFT) agreed to pay the unheard of $246 million for a 1.6% ownership stake. That October 24, 2007, Microsoft investment valued Facebook at nearly $10 billion in the private equity world. As of yet, there is no filed Facebook IPO, but investors bet the company will file an IPO before the end of 2009.

The new player capturing headlines in the social networking world is LinkedIn. The company is designed for the business and professional world. The more than 23 million registered users represent over 150 different industries. It's a place to swap ideas, best practices and other opportunities.

This post is part of my series featuring established companies and the smaller, more aggressive or innovative rivals that may eventually succeed them.

The most impressive game-changer story in the fast food industry over the past 50 years is indisputably McDonald's (NYSE: MCD). Founder Ray Kroc was a visionary and pioneer in serving customers hot fast food at a reasonable price. Thirty thousand units later, McDonald's is still a growth story. But the better growth story is Chipotle Mexican Grill (NYSE: CMG), so much so, in fact, that McDonald's was an early investor in Chipotle! (McDonald's no longer owns shares of Chipotle.)

McDonald's went through some execution issues in the mid-1990s through 2003. The fast food industry was taking some hits from nutritionists, and the quality of food was suspect. McDonald's re-tooled its entire operation from store front to menu offerings. The standard hamburgers and those delicious french fries are still on the menu, but McDonald's has added a variety of salads, wraps and other healthier options. In the past five years the stock has nearly tripled in value, validating McDonald's make-over.

Chipotle, founded in 1993, has not had to re-tool or redefine itself. The freshest of ingredients, naturally raised poultry and beef are highlights of the limited, but superb menu. Chipotle is a favorite of almost every demographic group, from teenagers to the elderly. Chipotle has succeeded in offering the finest fresh Mexican food, but not at the cheapest price. The average ticket at Chipotle comes in near $9. The company recently raised prices at different levels depending on geography. Sales have not slowed a bit in spite of the price increases.

This post is part of my series featuring established companies and the smaller, more aggressive or innovative rivals that may eventually succeed them.

Apple (NASDAQ: AAPL) is one of the great stories of corporate America and the stock market. Under the leadership and genius of Steven Jobs, Apple is emerging as the premier technology growth company of this decade and the next. In the past five years the stock has rocketed from $9 to the current $175, and yet the story is actually stronger than ever before.

Apple has three major legs of growth in its arsenal and a distribution system that is second to none. The products of Apple are both cool and revolutionary. The 2002 introduction of the iPod defined the MP3 player space. Apple has sold over 150 million units as of March 2008 and commands over 70% of the market share. Many iPod owners are on their 3rd and 4th units, so the actual penetration of addressable customers has been barely scratched. The newer versions include touch screen and of course can store up to 20,000 songs and numerous movies and pictures.

The Mac computer has been re-engineered these past couple of years and is now the rage of the personal computer market. The new Mac is beginning to enter the traditional enterprise sector while maintaining its dominance in the consumer sector. The Leopard operating system became available in mid-2007 to rave reviews. Apple is taking market share in the competitive personal computer sector while maintaining its pricing structure. The company doesn't compete on price but offers such superior functionality that buyers do not mind paying full retail price. The attendant software programs are also seeing a resurgence and also carry high margins.

This post is part of my series featuring established companies and the smaller, more aggressive or innovative rivals that may eventually succeed them.

The expression was good for decades: "Wall Street to Main Street," as Merrill Lynch (NYSE: MER) was indeed the nation's premier brokerage firm to individual investors. That mantle is in serious jeopardy as "Mother Merrill" has encountered a horrible period in its illustrious history. Many wonder if Merrill Lynch will be able to survive as an independent company or be acquired by a larger bank.

Merrill Lynch replaced inept CEO Stanley O'Neal back in October 2007 "after one bad quarter." One rule of investing is there is rarely just one bad quarter for a troubled company and Merrill is proving this. The company actually lost over $10 in earnings per share in 2007, and 2008 will be lucky to break even. The subprime mortgage and other riskier credit strategies have been the undoing of Merrill Lynch.

Coming up fast and preparing to take the title of "Main Street's firm" for individual investors is Charles Schwab (NASDAQ: SCHW). This San Francisco-based firm has stayed true to its business model since its founding in 1971 by Charles Schwab. He firmly believed then and still does, that investors need choices and a low price of execution. Schwab offers several investment products primarily to individual investors and small institutions. The firm has migrated these past 10 years to an outstanding web-based model, allowing investors to access their account information 24/7. Transaction costs are among the lowest and advice is available. The advice is not pressure-packed, but rather informative.

This post is part of my series featuring established companies and the smaller, more aggressive or innovative rivals that may eventually succeed them.

This may be perhaps the most surprising article in this series as few investors realize how huge Toyota Motors (NYSE: TM) is, especially when compared to Ford Motors (NYSE: F). Toyota sports a stock market valuation of $168 billion, 12 times the size of Ford's market cap of $13 billion. In fact, an even more surprising statistic: Toyota is 8 times larger than Ford and General Motors (NYSE: GM) combined!

Toyota has recently surpassed GM in annual unit sales of cars and trucks. Toyota sold over 9.3 million units in 2007 and has 16% market share in the United States. In spite of the difficult environment that all auto makers are facing with the economic slowdown, Toyota is poised for future growth with its cutting-edge line-up of hybrid autos and trucks. But, not too far behind Toyota is Ford. The company has perhaps a much brighter future than its main U.S. competitor GM. Ford has taken the necessary steps these past 21 months under the leadership of CEO Alan Mullaly. He was the president and CEO of Boeing's (NYSE: BA) commercial plane division.

Mullaly brings experience to Ford, but more importantly, he has a fresh approach and ideas from the aerospace industry. He has quickly retooled Ford by closing unproductive plants and expanding manufacturing in expense-friendly nations such as Mexico. Mullaly embraced hybrid technology and has positioned Ford as the American hybrid alternative to Toyota.

This post is part of my series featuring established companies and the smaller, more aggressive or innovative rivals that may eventually succeed them.

"From sea to shining sea" aptly describes the distance between Nike (NYSE: NKE) and Under Armour (NYSE: UA). Nike is headquartered in Beaverton, Oregon, while Under Armour calls Baltimore, Maryland, home. Nike splashed onto the scene locally in Oregon in 1964 and has developed a true international brand. With the likes of Michael Jordan, Joan Benoit Samuelson and Tiger Woods serving as spokesmen for the company, Nike has transcended virtually every sport and every demographic group.

Under Armour, founded in 1995, at first appealed to the serious athlete with its moisture-wicking synthetic fibers that help keep sweat and moisture from the skin and help regulate body temperature during strenuous exercise. Under Armour then discovered it was unwittingly creating a fashion statement. Like Nike, Under Armour is also crossing over to various demographic groups and weekend warriors as well.

Nike has the famous Swish as its corporate logo, while Under Armour has branded the bold U over A insignia. Nike has established its brand globally with a dual strategy of major retailers selling its apparel and shoes and its own distribution system. Nike has over 250 NikeTown stores in the United States and over 230 internationally. With the retail store system Nike can control the entire purchase from apparel to shoes to socks to sweatbands. Under Armour has just begun its own retail stores with two prototypes, one in Maryland and one in Illinois. It sells its various products through multiple channels, including its own user-friendly e-commerce web site.

Gene Marcial has been writing the legendary column "Inside Wall Street" for Businessweek for the past 26 years. Gene has taken the collective wisdom and knowledge he has accumulated over the decades and written a brilliant book titled Gene Marcial's 7 Commandments of Stock Investing.

Gene brings the same sense of calm and logic to his book as he does to his weekly column. Having known Gene for a few years, the one characteristic that has always impressed me is his ability to separate the news from the noise. Gene doesn't go with the flow, in fact, as he aptly states in his book, it's when an investor goes contrary to the flow is when the best buying opportunities present themselves.

Gene has spoken with thousands of Wall Street insiders over the decades and has taken the very best of the many he respects. Gene's book is an easy read and full of real world experiences and examples. Investors can relate to real stories versus "theoretical "concepts that begin with company ABC.

General Electric (NYSE: GE) not only disappointed Wall Street investors this past Friday with its horrible results, but shocked investors as CEO Jeffrey Immelt gave the "all is alright" signal in mid-March. He should resign as he has had nearly 7 years to grow this once great company.

GE should also bite the bullet and spin off several segments into separately traded companies. I wrote about this extensively last year for AOL, but now the rationale is abundantly clear. This company--a major conglomerate--cannot deliver decent shareholder returns. Immelt took the reigns of GE on September 7,2001 when the stock was at $40. Nearly 7 years later the shares are at $32 and barely holding on. I find it amusing that some "value" investors think GE is interesting at this level. These were the same investors that found GE interesting and a value-play at $38 last year.

The problem with GE is not that it's too big: the problem is it is too complex. The largest industrial company in the world now is Exxon Mobil (NYSE: XOM) with expected revenues this year of $550 billion. This company however is strictly in the energy sector--it's measurable and quantifiable. GE is a mish-mash of businesses, from light bulbs to jet engines to appliances to consumer loans, whereby some segments are doing well and others horribly. How does any analyst assign a proper PE ratio expectation?

One segment, the infrastructure division grew its revenues by an admirable 23% this past March quarter and its profits by 17%. With this kind of growth and visibility into the next 18-24 months on revenues because of contractual commitments, this division alone could command a 25 + PE ratio. GE as a whole is now trading at 14 X 2008 EPS estimates of $2.20-2.30.

The GE Financial segment was woeful and provided the negative surprise. This segment on its own would trade at a PE ratio of between 9-11 times. The NBC-Universal division showed only 3% year-over-year growth, but cash flowed very well. This segment should command a 15-17 PE multiple.

General Electric (NYSE: GE) was a darling of Wall Street for a couple of decades under the tutelage of legendary CEO Jack Welch. Mr. Welch retired in September 2001 turning the reins over to hand-picked successor Jeffrey Immelt. Give Immelt a break for the first 18 months as he had to guide the company through the 9-11 tragedy and of course the normal honeymoon period. Since that grace period expired in early 2003, GE has severely under performed the market and time has come for Mr. Immelt to hand the reigns over to someone else.

It is very difficult following a "legend" as Jack Welch. Many business schools model a course or two on management based on Welch's methods of letting an executive run a division creatively and freely--just return the expected numbers and all is well. Jack Welch "raised" Jeffrey Immelt in this style and picked him as the CEO to replace himself. The styles however were not transferable. Times and the global landscape have changed since Welch's departure.