John Chambers Jeff Bezos Bart Becht Warren Buffett Jim Balsillie Mike
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P2BW088017-0-W02300-1--------XA 34 BARRON'S March 29, 2010 March 29, 2010 BARRON'S 23 BLACK Jim Balsillie Bart Becht Jeff Bezos Mike Lazaridis Reckitt Benckiser, CEO since ‘99 Amazon.com, CEO since ‘94 D.C. Current Why: Runs Europe’s best house- Why: His Kindle is rewriting the Research in Motion, CEOs since ‘92 hold-products company. way we read. Why: Started the BlackBerry obses- either Reckitt Benckiser nor eff Bezos has always been in- sion, now tangling with Apple. its CEO, Bart Becht, has a terested in anything that can N J 03/29/2010 he smartphone business is a high profile in the U.S., but the be revolutionized by computers.” T no-limit poker game, with company has been cleaning up That sentence is from Ama- huge pots at stake and every here—and around the world—for zon.com’s own biography of its player just one bad decision away Annualized Total Return many years. From Woolite and Annualized Total Return founder and CEO. He used com- Annualized Total Return from folding. No one plays it bet- One Year 72.5% Lysol to Air Wick air fresheners One Year 46.0% puters to change the way we One Year 85.9% Health-Care Law No Palliative for Portfolios EE,EU,MW,NL,SW,WE ter than Research in Motion’s Bal- While CEO 29.1% While CEO 22.5% While CEO 41.7% S&P 500 0.3% and Clearasil acne cream, its S&P 500 -0.5% buy books, and now he is in the S&P 500 4.3% sillie and Lazaridis. Palm is strug- 2010 P/E 14.5 brands are anything but obscure. 2010 P/E 18.3 process of physically changing 2010 P/E 44.8 gling to survive. Motorola, after 5-Yr. Profit Growth 53.0% Reckitt shareholders certainly 5-Yr. Profit Growth 19.8% books themselves—again, 5-Yr. Profit Growth 26.0% by Jim McTague falling nearly to the point of no know who Becht is. He’s the CEO through the power of comput- $150 $200 £40 AMZN / Nasdaq WHEN PRESIDENT OBAMA SIGNED THE come,” says Robert Willens, a Wall Street veteran who return, has staked its turnaround RIMM / Nasdaq who has led the company to year RB / UK ers. Amazon’s Kindle e-reader is 120 health-care reform bill last week, he effec- runs a New York tax-advisory firm. on Google’s Android operating 150 after year of profit-margin and 35 the game-changer in 21st-cen- $73 $134 tively cut the take-home pay of all Ameri- Yet, widespread demand for munis could depress yields system. Sony Ericsson can’t figure dividend increases. Earnings have tury book publishing. Bezos is 90 100 30 cans. The bill will raise taxes for some, on these instruments, “perhaps below the tax-effective out how to make a dent in the in- shot up from 200 million British £36 sure to face stiff competition 60 while forcing others to buy insurance poli- yield on taxable instruments,” Willens says. dustry. Dell and Hewlett-Packard 50 pounds in 1999 to £1.4 billion 25 from Steve Jobs’ upcoming iPad, cies they might not want. As for MLPs, “the excess of the amount of the distribu- are nonentities. Almost every 0 (US$2.07 billion) last year. Along 20 but the Kindle remains the first 30 ’08 ’09 ’10 This reduction in disposable per- tion over the portion that is includable in gross income player fears Apple and its mighty ’08 ’09 ’10 the way, Becht has earned a repu- 08 ’09 ’10 truly popular e-book reader. sonal income could well become a drag on the stock operates to reduce the partner’s [tax] basis” in the partner- iPhone, which has forced a re- tation for innovation and a savvy grasp of consumer needs. Not content to rest on his laurels, Bezos is leveraging his market, especially in view of significantly higher taxes ship, he wrote in an e-mail. “Accordingly, the excluded thinking of hardware design and application distribution. Becht is running a mini-Procter & Gamble; Reckitt makes company’s core computer expertise to change the way com- on dividends and capital gains that it imposes on the amount is taxed, but only later, when the reduced-basis But RIM’s BlackBerry phones are still cranking out remark- everything from household and toiletry products to foods to panies run their technology departments. Amazon is already P2BW088017-0-W02300-1--------XA “rich,” defined in the bill as individuals who earn at partnership interest is sold.” able growth, thanks in part to steadfastly loyal corporate cus- pharmaceuticals. The big challenge right now is in the pharma the leading provider of cloud services—computing power least $200,000 a year and couples who make at least tomers. For the year ended February 2010, RIM is expected to division: a loss of up to 80% of the revenue from Suboxone, a that is off-site from the user. Just as it did with bookselling, $250,000. According to economic texts, when a govern- History suggests that health-care stocks could be report revenue growth of 37%. BlackBerries have become pop- key heroin-dependency drug that’s recently gone through Amazon is stripping out costs; that makes it harder for chief ment taxes anything, there generally is less of it. In big winners under the new law. According to Bespoke ular with consumers, too,and RIM has huge room for growth patent expiration. Still, Becht has been predicting another 5% technology officers everywhere to justify owning their own this case, that could mean less money for stocks—but Investment Group, the Standard & Poor’s Health Care outside North America. Its next big move: revising its core soft- rise in revenue this year, and a 10% jump in earnings. History computers. Bezos may be a huge retailer, but he’s also one of more, perhaps, for tax-free municipal bonds. sector drifted lower in 1965 from the time the Social ware to better compete with the iPhone. —Eric J. Savitz suggests Becht’s hints are a good bet. —Vito J. Racanelli the very best computer visionaries. —Mark Veverka The capital-gains and dividend levies will jump to Security amendments establishing the government’s 20% next year from 15% for the aforementioned wealthy, Medicaid and Medicare programs were introduced in as the Bush administration’s tax cuts are allowed to Congress until they became law. The sector rallied 25% Warren Buffett John Chambers Jamie Dimon expire. Then, in 2013, the well-heeled will start paying in the six months after passage. Berkshire Hathaway, CEO since ‘65 Cisco Systems, CEO since ‘95 JPMorgan Chase, CEO since ’06 an additional 3.8% Medicare surtax on unearned income This time around, government meddling in the health- Why: The fabled investor feasted Why: Finding new ways to keep a Why: While Citi sleeps, Dimon deliv- to help fund health-care reform. The total increase of 8.8 care market is much more extensive and potentially on the crisis. giant growing. ers. percentage points, or 58.6%, isn’t small potatoes, and is damaging. Moreover, the health-care stocks have gone P2BW088017-0-W02300-1------- t a time in life when most ohn Chambers doesn’t sit still. n Jan. 1, 2006, in flush likely to diminish the allure of stocks with juicy dividend almost straight up since the market bottomed in March BLACK A CEOs are deep into retire- J A devoted runner and habit- O times for the economy and yields, relative to growth stocks 2009. But the group remains well below its 2008 high, ment, Warren Buffett, 79 years ual consumer of Diet Coke, he the markets, Jamie Dimon as- with no dividends. Tax-advantaged and more gains could be in store. old, is at the top of his game. first built Cisco into the undis- sumed the CEO title of JPMorgan Investors in real-estate investment investments such David Kelly, the chief market strategist for JPMor- Berkshire Hathaway is coming puted champ in networking gear, Chase, one of the five largest U.S. trusts, which distribute both rental in- as municipal gan Funds, says that a continued stock-market rally off its best year ever, thanks in Annualized Total Return then branched into a bunch of re- Annualized Total Return banks. Annualized Total Return come and dividends, could be hit hard. bonds and master could offset any negative impact from higher tax rates. part to more than $20 billion of One Year 44.3% lated businesses to keep the com- One Year 61.1% Of the four others, one— One Year 75.1% A spokesman for the National Associa- limited partner- Kelly predicts that stocks will return 10% annually, in- While CEO 21.9% While CEO 18.6% While CEO 4.8% shrewd investments made by Buf- S&P 500 9.3% pany firmly in the “growth” col- S&P 500 8.0% Wachovia—is gone, sold under S&P 500 -0.2% tion of Real Estate Investment Trusts ships could gain cluding dividends, in the next five years, assuming a fett during the financial crisis. One 2010 P/E 22.7 umn. 2010 P/E 16.3 stress to another, Wells Fargo. 2010 P/E 14.4 says that many REIT investors may in popularity as a gradual drop in unemployment to the 5% to 6% range. great buy: $5 billion of juicy 10% 5-Yr. Profit Growth 12.0% He has made big bets on con- 5-Yr. Profit Growth 10.0% Citigroup answers to Uncle Sam, 5-Yr.