Fadi El-Eter

I settled in Canada (Montreal) back in 2005 – the first thing I installed in my apartment was a high speed internet connection from Bell, a major nationwide internet provider. Back then I had 5 Mbps download speed and 1 Mbps upload speed with unlimited bandwidth and I was paying around $80. I thought it was good, until internet video became mainstream and I had to upgrade my connection, and so I did, twice, last time being last year, where I upgraded to 15 Mbps download / 10 Mbps upload with a bandwidth cap of 75 GB and for a cost of nearly $85. As you can see, the price has increased, and the service provided is lower (now I have a capped connection).

Now, back in the good days (early 2000’s), Canada was ranked one of the most advanced technological countries when it comes to the internet (and pretty much everything else) – fast forward to now, and Canada ranks #33 in the world when it comes to internet connection, just after Aland Islands, a country that may or may not exist in the real world. So, what happened?

I think what happened is that the government has given leeway to national ISPs and allowed them to determine how much bandwidth and speed we, as Canadians, should have. This might have been a wise decision, but not that wise if the choice of companies ranges from Bell to Rogers, which are corporate moguls that care only about the money, and not about advancing the technological infrastructure in the country.

So, why should the residents of Canada pay $10 for 100 MB 3G bandwidth? Why should the residents of Canada pay $80 for a relatively slow internet connection? Why should the residents of Canada settle for less when the infrastructure supports more?

I think the government has a few solutions to address this problem:

• Open the technological market to real competition: How about luring a Japanese/Finnish/Icelandic ISP to create some real competition? This will ensure that prices are lower and internet speed and bandwidth is higher for subscribers.
• Set technological standards each year: For example, create a law that in 2013, the minimum internet connection speed should be 50 Mbps and the minimum bandwidth should be 500 GB.
• Discourage alliances between major companies: Anyone who’s anyone in Canada knows that there is a secret (or not so-secret) alliance between the major companies to maintain the inflated price levels charged and the low service provided. If the government forbids such alliances, then I guess we can have a better service.

I think the future of the internet in Canada can be better if the government keeps those ISPs and mobile providers on their toes by adopting one or more of the above solutions. Until then, we have to tolerate those high monthly invoices and this terrible service.

This article (as well as all other articles on this website) is an intellectual property and copyright of Fadi El-Eter and can only appear on fadi.el-eter.com.

I live in downtown Montreal – my place is just a few blocks away from Apple’s main store in Montreal (I don’t know whether there’s another retail store on the island) and nearly every week, I walk by the store at least 3 times…

I remember that a couple of years ago, I used to see constant lineups in front of the store, and, in the case where there is no lineup, I used to see the stores crowded with customers (it was even hard to walk inside the store because the whole place was crammed). Now, I don’t see these lineups anymore – not only that – I see more people with blue shirts (Apple employee wear blue shirts) than others…

Now, the dramatic drop in the number of walk-in clients is normal, and is the result of a failed iPhone5 and the lack of innovation for the past couple of years (since Steve Jobs was no longer involved in decision making). But, I was thinking, what about those people with the blue shirts? How long will Apple, as a company seeking profit over anything else, tolerate its retail staff when it’s no longer having the same retail volume?

In my opinion, not for long. Apple has an infamous history when dealing with its staff, especially its retail staff: long working hours, minimum pay, and no benefits. Apple thinks of its retail staff as “lucky” just for working for Apple, and as such they take them for granted – which means that, once the decision is made – they will not hesitate for a second to fire a lot of its retail workforce.

But, how many will they fire? I think they will fire about 50% of the retail workforce, as a start. If sales continue to drop then they will start closing unprofitable stores – the same way >FutureShop did beginning of last month month.

Note: This post is speculative and it contains my personal opinion. I might be wrong, but there is no doubt, there is a noticeable drop in walk-in clients to Apple stores, which may potentially lead to a staff reduction.

This article (as well as all other articles on this website) is an intellectual property and copyright of Fadi El-Eter and can only appear on fadi.el-eter.com.

In case you don’t know – WhatsApp is the mobile app that has literally killed SMS (and MMS) – especially international SMS (which traffic has been reduced by 80% to 90% according to conservative reports because of WhatsApp). WhatsApp also made the BlackBerry Messenger service (BBM) obsolete because it really did everything that this service was doing – and more!

With WhatsApp, you can send your family members/friends/colleagues (who are also on WhatsApp) text messages, movies, images, etc… There is no limit to how many things that you can send/day and the app is super cheap for $1 (everytime my subscription is about to expire, they renew it for free, which is odd, because I have no problem at all paying a dollar for such a wonderful app).

According to Google Play, WhatsApp has more than a 100,000,000 users (that’s a hundred million) – I suspect the number to be between 200 to 300 million users. Anyone who used/is using SMS is now using/will be using WhatsApp.

Now, assuming that WhatsApp has 200 million users as of March 2013, how much is WhatsApp worth?

Well, let’s see – they are charging $1/year for every user (which is an excellent strategy – reduce your price and sell more, much more!) so this means that for 200 million users (assuming additional subscriptions will make up for churn) they will make $200 million/year. Since it’s a technology company, then I think 5 x EBIDTA is a reasonable price for this company, which is $1 billion.

Now, the number above is very conservative. For example, I think that LinkedIn is worth about a billion, but it’s currently valued at $20 billion.

I do think that WhatsApp is there to be sold to someone (or some company) and I am confident that they’re not making money at the moment (they just want more users so that they can be of a higher value when they are sold). I do not think they’ll wait for more than a year to sell their business.

Let’s see…

Note 1: WhatsApp is not a public company – and if they go public, then most likely it’ll be the dawn of public listing of mobile apps, which will highly inflate this whole market…

Note 2: WhatsApp claims that it will never run ads on the app – which is great, but I’m not confident that whoever buys their company will have the same feeling about putting ads there somewhere. Sure, it’ll be insulting to see ads on a paid app – but everyone is doing it and that app only costs a dollar.

This article (as well as all other articles on this website) is an intellectual property and copyright of Fadi El-Eter and can only appear on fadi.el-eter.com.

“Let’s make an iWatch, no let’s give crazy dividends, or maybe we should create low cost iPhones, or perhaps we should lower the prices for all iPhones across the board? You know what, let’s do all that, and see if the stock goes up again.”

The above, as you probably have guessed, is a not-so-imaginative conversation taking place in Cupertino between top Apple executives. The problem is, none of these strategies can salvage Apple’s stock, because none of them addresses the real problem: “Apple, after Steve Jobs, is no longer innovative!”

I remember when I used to believe in Apple back in 2010, I saw a video of Steve Jobs when he was talking about the Antennagate issue, he said something along these lines: “We don’t want those shareholders who care if the stock goes up $5 or goes down $5. We want long term shareholders.” Back then, it was Apple (and Steve Jobs) that used to determine Apple’s strategy – fast forward 3 years from then, and most of Apple’s shareholders are the exact type that Steve Jobs did not want, and those shareholders are dictating the future of Apple (the roles are reversed), which no longer looks bright…

In the movie The Illusionist, the Crown Prince Leopold said the following:

“There are thousands of voices screaming to be heard – and nothing – nothing is getting done!”

The above line, in my opinion, defines what Apple is going through at the moment. Apple, that was once guided by one vision, is now guided by many visions, that may or may not be coherent.

Apple, in order to salvage itself, doesn’t need crazy products that only die hard Apple fans will buy, such an iWatch (would a real man buy an iWatch?) or increase dividends and reduce its cash hoard (that everybody, for some reason, is now complaining about). Apple needs to be creative again, and for it to be creative again, Apple must find another Steve Jobs (one man – one vision) and then get rid of its current board (all of them, especially Tim Cook). The price is painful though, AAPL will fall to below $200 in case they do that, but that’ll be only temporary. Investors forget fast and a single vision will lure them back into AAPL.

The question is, can the above be done?

This article (as well as all other articles on this website) is an intellectual property and copyright of Fadi El-Eter and can only appear on fadi.el-eter.com.

The publicly traded company Best Buy, has decided, all of a sudden, to close my favorite Futureshop. It was the one in the Pepsi Forum west of Montreal’s downtown. I usually go there every week there to see what’s new when it comes to technology – but today, when I went there (I was busy for the past 2 weeks so I didn’t go), I was surprised to see a big message written in French on a banner in front of what used to be the Future Shop: “Ce magazin Future Shop est maintenant fermé” – which translates to: “This Future Shop is now closed.”

I thought they were doing renovation or something, but when I re-read the message I understood that they really mean it’s closed – like closed forever. It’s sad.

I felt as if I lost something – something that was part of my life for many years now. I bought my first TV from there – I nearly bought every technological or electrical thing that I have from there – and now it’s not there anymore. I used to go there and stroll as if it were my own property – sometimes spending an hour or two if I didn’t have anything (yes, I do love technology) – examining every new thing that they have, talking to employees (most of them were by far the friendliest and most knowledgeable/skilled employees I’ve ever met), asking them about the latest stuff and what they thought of it.

Now I can’t…

When I came home, I did a quick research on why that shop was closed, and it’s, as predicted, Best Buy wanted to cut costs, and probably sever non-profitable locations, which, unfortunately, included the one in the forum (they closed 15 stores in one shot!)

The problem is that Best Buy did not tell anyone in advance that they’re about to close these shops (including mine), they just did it! Sure, they did offer employees severance packages, but seeing the way how they closed these locations, I reckon the severance package was not that large.

For those who don’t know, Best Buy bought the then profitable Future Shop back in 2001 for nearly half a billion dollars – it took Best Buy as many as 12 years to turn Future Shop into an overhead.

Thanks for the great work Best Buy! You really made my day – and perhaps the day of about a thousand employees out there. For you it’s all about making money and cutting costs, for us it’s about a Future Shop that we loved and that did not live to tell its story to our children.

Maybe I’m being overly sentimental here – but I just loved that place!

On a side note, BBY is up 43% so far this year, it is trading currently at $17.02. So, it seems that investors are all thinking that Best Buy is making the right decisions – after all, it’s all about that share price, right?

This article (as well as all other articles on this website) is an intellectual property and copyright of Fadi El-Eter and can only appear on fadi.el-eter.com.

Every time I read a story on how bad Sony is doing, I feel there is something fishy happening inside the company at the corporate level (and not at the production level). Sony’s products are by far the best, yet they have been losing money consistently for the past 5 years. This is odd…

It seems that Sony is making the wrong decisions lately, such as:

• Canceling the Z series on the VAIO laptop. If you’re someone who works a lot on a laptop, you’ll know that there’s nothing better than the Z series. It’s also one of the very few laptops that is made in Japan.

• Being hesitant and shy with the tablet market. Now they have some stock of their new xPeria tablet, and now they don’t!

• Producing slick and beautiful phones – but forgetting about making the interface look pretty. I have to say that Sony’s phones, even the high end ones, have (to put it nicely) an antiquated interface.

• Focusing more on lower end TVs, while forgetting that people don’t really care about money when they buy a Sony product. They just want the brand because of its reputation and quality. People love XBRs, they love the HX series. Focus on those!

• Having a very weak marketing plan. Take a look on how they marketed the Sony Google TV, which is an excellent product. What, you’ve never heard of it? Exactly!

I love Sony and I don’t want to see it disappear as a brand! I want it to become a strong company again, even stronger than before. Is that too much hope?

This article (as well as all other articles on this website) is an intellectual property and copyright of Fadi El-Eter and can only appear on fadi.el-eter.com.

As mentioned earlier, I do have two lines of credit from two different banks here in Canada (both are Big 5 banks). Some of the questions people frequently ask me “Are there any fees for lines of credit here in Canada, and if yes, then how much?”

The answer to this question is simple: There are no fees for a line of credit in Canada. The reason for this is that banks do want you to get a line of credit so that they can benefit from the interest that you pay.

But, can there be any fees in the future?

Well, yes – there an be. Lines of credit, especially unsecured lines of credit, have terms that allow banks to change anything in your line of credit, including imposing a fee. In fact, TD Canada Trust imposed a $35 non-usage yearly fee on lines of credit for 2 weeks back in 2009. That decision was to reduce the bank’s risk overhead in the wake of the US financial crisis. When the fee was imposed, thousands canceled their unused lines of credit to avoid the fee, and that’s exactly what the bank wanted. When the bank reached an acceptable risk overhead, it canceled the fee.

PS: This post only applies to lines of credit in Canada. It seems that some banks in the US have something that they call unused fee on lines of credit, which is proportional to the unused portion of the line credit.

This article (as well as all other articles on this website) is an intellectual property and copyright of Fadi El-Eter and can only appear on fadi.el-eter.com.

This is a followup to my post yesterday “How to Get an Unsecured Line of Credit in Canada?“

Currently I have 2 unsecured lines of credit in Canada. Both of them are for the same amount and each is from a different bank. I often get friends asking me: “How did you get those unsecured lines of credit?”

Well, the answer is simple, I just asked my bank for them! In fact, the first time I got an unsecured line of credit I asked my bank if I could have a loan, and they offered the unsecured line of credit (and I took it).

I had a chat lately with a senior staff member at one of the banks I bank in, and I asked him what are the criteria that they take into consideration to give someone a line of credit. Here’s what he told me:

• The client must have a history with the bank

  Unsecured lines of credit are only given to customers who have the bank as their main bank for at least a year, and who have an annual income of at least $50,000.

• The client must have an immaculate history with the bank

  The client must be in good standing with the bank. Meaning he never had a bounced check (on purpose) with the bank, he always paid his dues with the bank, and he never tried to take advantage of the bank in a malicious way.

• The client must know someone from within the bank

  Usually, unsecured lines of credit are not given over the phone by a stranger working at the bank. They are given by someone who knows you well at your branch. That’s why it’s always a good idea to have your own banker.

• The client must have a steady flow of income

  A steady flow of income is critical for the bank to give you an unsecured line of credit. This will assure the bank that one day, you will be able to fully settle your debt and that you’ll be able to meet the minimum monthly payments.

• The client must have a profession

  The client must be either an employee or self-employed. Unemployed clients are not eligible for an unsecured line of credit, even if they have a steady flow of income (that steady flow of income might be government help or wires from the client’s family overseas).

• The client must be of the right age

  There’s an announced age range that is eligible for the unsecured line of credit. A client below or above a certain age may not qualify for an unsecured line of credit.

The senior bank staff member I spoke too also stressed the point that the relationship with someone from within the bank is the most important factor as that person (the banker) might be flexible with some of the conditions in order to give the line of credit to the customer.

I hope that the post above will help someone here in Canada to find if s/he’s eligible for a line of credit, and remember, an unsecured line of credit is a privilege, and not a right, as the bank is mainly giving you money without any guarantee.

This article (as well as all other articles on this website) is an intellectual property and copyright of Fadi El-Eter and can only appear on fadi.el-eter.com.

Unsecured lines of credit are an excellent way to fund a business because of three things:

• Low interest rates: The interest rate on an unsecured line of credit is much lower than the interest rate on a credit card as well as other types of loans (even some commercial loans).

• Flexibility: You can use the line of credit for any purpose that you want. You can even withdraw money in cash from that line of credit, and the interest rate will remain the same (unlike credit cards). Additionally, you can re-withdraw money that you’ve already credited to your line of credit immediately!

• Low monthly payments: Some banks have a special plan where your minimum payment on the unsecured line of credit is the monthly interest. For example, if the interest rate on your unsecured line of credit is 6.5% and you have $10,000 in debt in your line of credit, then your minimum payment is about $55.20 in a 31 day month. Note that most banks have a minimum payment of 3% of your total debt in your line of credit every month. So, in the latter case, for a debt of $10,000 you will have to pay $333.33 every month.

So, what is the current unsecured line of credit interest rate in Canada?

The answer is: it depends. It depends on your profile with the bank, and the risk that you post to the bank. Low risk clients can have a rate as low as 4%! Most clients have a rate of 5.5% to 8.5%. High risk clients can have a rate as high as 10%. So, if your line of credit has an interest rate higher than 10% and you see yourself as a low risk client, then you must start thinking about switching banks!

This article (as well as all other articles on this website) is an intellectual property and copyright of Fadi El-Eter and can only appear on fadi.el-eter.com.

Every since the release of the disappointing iPhone 5, AAPL was sliding in a downhill. Some investors wonder, how low will AAPL go? A few months ago, everyone thought that $600 was an unbreakable support level. A week ago, everyone thought that $500 was an unbreakable support level. So, what’s the deal?

I believe that AAPL will continue to slide, simply because Apple, as a company, is not offering anything new anymore. All its products, including the underlying software, are antiquated. Additionally, competition is increasing and becoming more and more aggressive by the day. Android has surpassed iOS a long time ago as the most used platform for smartphones. Apple’s market share is now dwindling the same way that RIM’s market share was dwindling a few years ago.

More than a year ago, I’ve written a piece on Apple’s demise. At that time, everyone believed in Apple and that the stock will rise to over a $1,000 (I remember some posts mentioning the number $1,333 for some reason) by the end of 2012. Yet it closed the year at nearly half that number ($532).

So, how low can Apple go? I think that by the end of the year, Apple will drop to about $300, simply because hedge funds will start dropping the stock as of April of this year, when the markets start becoming mostly bearish (usually markets perform best in the first 3 months of the year).

Of course, anything can change if Apple surprises us with a new iPhone that exceeds our expectations (and not insult our intelligence with a bigger screen).

I feel bad for Apple – it set the bar (and the expectations) so high even for itself – and now it has to pay.

This article (as well as all other articles on this website) is an intellectual property and copyright of Fadi El-Eter and can only appear on fadi.el-eter.com.