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Msg  11851 of 11950  at  1/5/2017 11:20:03 PM  by

mo_strategist


 In response to msg 11846 by  Korynd
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Re: Another Wells report

Why can no one just state a simple truth and leave it at that? PMI has not struggled "with other challenges" to its profit growth. They have had strong consistent local currency profit growth every single year since they were spun off from MO in 2008, with the past five years being no different in that regard.  The only significant difference in the past five years has been negative currency, not some additional other vague "challenges".
Well, after many decades of increasing, global cigarette consumption/sales (stick volume) peaked in 2012 and has actually been decreasing (albeit slowly) since then.    Along those lines, PM's own stick sales volume has been trending downwards too.    Ever-increasing global restriction on marketing is another challenge, perhaps related to above. 
 
These are not necessarily insurmountable "challenges". . .as you point out, PM has been doing relatively well regardless. . .but I think they are challenges. 
 
 Given its success in Japan, PM may have increased confidence that IQOS could be that runaway hit in the US as well, and feel the stock market is not adequately reflecting that in MO's share price.  But here is the rub. MO obviously now knows that IQOS could be a runaway hit in the US as well, and can't and won't just give up its rights to sell the product here without being adequately compensated for whatever they think they are worth.
Yes, I basically think this is the only scenario where a PM purchase of PMUSA might make sense. . . and I don't buy it either.
 
One thing I will say, though.  With increasing penetration into various marketplaces, I think PM is going to be getting increasing public attention over the next year.  PMUSA/MO would too, if it does introduce this product into the marketplace. 


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