More tension appeared in the news this week between the founder of Canadian retail success story Lululemon Chip Wilson and the management team that now runs his company. Wilson issued a public statement this week criticizing the company’s leadership calling them “uninspiring at best”. He highlighted what he felt was a serious problem for Lululemon in the competitive landscape as he feels they are losing market share to Nike and Under Armour. The letter was public because the board denied him the right to speak to shareholders directly. Wilson still owns 14.2 percent of the company but has not formal role. Lululemon is doing well in investor’s eyes despite the feelings of its founder. The article highlights that the share price is up about 10 percent from last year and analysts are predicting a 15 percent rise in revenue from last year. I predict that in a few years, Lululemon will dip a bit and Mr. Wilson will tell everyone he was right. This is true as company stock has two directions so at some point he will be right. Some day it will go down. It could go up 10 more percent first or it could double, but Mr. Wilson will leave that out of his “I told you so” I suspect.
A privately held medical technology company Theranos has been on a shocking downward slide for over a year now. The company that everyone thought to be revolutionizing the blood testing industry now has a founder who has a net worth of zero according to Forbes. This is an incredible prediction as last year Forbes estimated her personal net worth at $4.5 billion. Theranos is under serious investigations by the government for allegations that their product does not work as the company says it does and that the company was well aware of that. Forbes calculated that the estimated net worth of the company last year to be $9 billion and this year to be $800,000 million. The CEO and founder, Elizabeth Holmes, owns a 50 percent stake so her net worth has clearly fallen. Forbes states (the company declines to comment) that due to the type of shares the company issued, many investors can recoup some of their investment dollars which is how the net worth Ms. Holmes works out to zero. Now the company was on an upswing a couple of years ago but it has been around since 2003 so it is not a fly by night company. I would also be surprised if the results were always fake as the structure of the company would lead most people to believe that Ms. Holmes wanted to make the most long term. If it was a scam the whole time, a sensible person would have not owned as much as she did in the structure she did. I would be surprised if Theranos survives these allegations. Even if they come out as just wrong and not illegal, no one would invest in it nowand having no cash in that space would kill the company quickly.
Finally some good news for many people connected directly to the energy space in Alberta. Calgary based Husky announced that they will be resuming some oil production in the Fort McMurray region that was shut due to fire risk. This means that the fire risk has decreased and also that people can head back to work. Unemployment has increased with he large drop in oil over the last year and this news will hopefully help as the region attempts to return to normal. Husky also alluded to bringing back their dividend. A dividend coming back is not just about increasing revenues but also price stability. Oil has been trading close to $50 per barrel for a number of weeks and that brings more certainty to the company. Husky has also been selling asset to lighten its debt load and become a leaner company. They have sold $2.8 billion in assets so far in 2016 which has improved their cash position significantly.