Starbucks stock (SBUX) and the CEO’s memo

Howard Schultz, the Starbucks chairman, hurt his own company’s stock with a memo about Starbucks losing its way. There’s no doubt that Starbucks is no longer unique but that’s the normal progression of things.

According to Seth Godin’s Purple Cow reasoning. When you create something original and it becomes popular (and Starbucks started off as basically the only place to go for fancy coffee) you then cash in. By cashing in you make it less original. But you make more money and making money is something the unoriginal Starbucks has been very good at doing.

Perhaps that’s why David Gardner recommends SBUX:

First mover: A head start that might be insurmountable.
Best in big market: A top dog in a red-hot industry.
No escape: A brand worming its way into our culture.
Killer product: A product that blows away all rivals.
These four should more than get you started. And naturally, there will be some overlap among them, but any company demonstrating even one of these traits is worth digging into. For now, take a hard look at these classic Rule Breakers.

Electronic Arts
Federal Express
Starbucks (if you don’t already own it).

If you’re looking for a more speculative play, consider Akamai in the Net space or PDL Biopharma in biotech. And, by all means, keep an eye on the new direction and turnaround at TiVo. All three face challenges ahead but all could still prove to be speculative Rule Breakers.

Akamai
PDL Biopharma
ISRG

I don’t own Starbucks. Perhaps I should; the CEOs worries seem pointless to me.

One Response to “Starbucks stock (SBUX) and the CEO’s memo”

  1. “I am following LipidLabs (LPDL.PK), I understand there is a stellar report due out soon from Beacon. Does anyone have information about this company.”