Killing Two Birds With One Stone
Muhammad is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
As it is, giving conclusive viewpoints on the possible direction of key stocks in the U.S market is an irrefutably uphill task. This is chiefly because of the incertitude imposed by the slowdown in growth of the global economy. This dreadful slowdown has adversely affected 3M (NYSE: MMM). The stock recently recorded a dip in performance.
Despite the recent off-putting performance, I am still surefooted that 3M is still glued to the rail. My outlook is based on its current operations. In person, I am more exclamatory on operations than I am on macroeconomic factors. The latter always tends to fix itself with time.
Enhanced operations on all fronts
Just the other day, the Department of Defense offered 3M an exclusive 2-year provider agreement. The enterprise incentive agreement will enable 3M to expand its stethoscope market (which by the way is swelling by the day) to DOD treatment installations in the Pacific Region, the U.S and Europe. The agreement was made effective on the outset of May 2012.
In my opinion, this will greatly accent the sheer dominance that 3M exhibits in the stethoscope niche. As per now, its stethoscopes are internationally renowned to assume a gold standard. However the catchiest thing about the DOD agreement is that it allows 3M to expand its market. This not only adds up to higher sales but also cushions 3M against the ravaging effects of the global economic slowdown. I am, however, confident that it will uphold tact when Wading into the murky European market.
The 3M cloud library also seems to be growing at an exponential rate. The Books Expo America 2012 that was slated for June 4th to June 7th 2012 has been instrumental in informing readers on the advancements made in the cloud library service.
The revamped cloud lending library service will include four new partnerships with upstanding players in the writing field. The four partners are INscribe Digital, Smashwords, Rowman & Littlefield Publishing Group and National Book Network. All these partners will contribute to the increased offerings of titles in the excess of 200,000 and in the process will pool more than 300 publishers. Smashwords alone extends over 40,000 individual authors.
In my line of thought, I think that 3M’s approach to this matter exclaims its conglomerate disposition. It incontrovertibly knows the right buttons to push- banking on leading publishers will act like a springboard to propel it into a bigger and more reliable market.
Another thing that grasps my attention is the desirable witty approach that 3M takes with regards to industrial networking. 3M has extended a cost-effective and easy to implement package through the new industrial RJ45 modular plug. This plug helps system architects to assemble their network systems in a timely fashion. In addition to that, it greatly cuts back on the unavoidable costs brought about by replacements.
My take: Tactful would be an understatement! In actual sense, 3M is killing two birds- very notorious birds for that matter- with one stone. Firstly, it is aware of the ever-growing need for efficient networking infrastructure in the contemporary industrial space. Secondly, it is sensitive towards the current harsh economical environment. This is clearly demonstrated in its inclination towards cost effectiveness and timeliness. Personally, I think this speaks volumes about the possible future of 3M. Prosperity is not an option, it is almost certain.
Limiting factors
The Cogent purchase wrangles seems to be the limiting factors in this equation. Shareholders lodged their complaints and dissatisfactions with the Cogent acquisition price through a lawsuit. Though 3M denies wrongdoing, it is willing to fork out $1.9 million as settlements. 3M went on to add that it paid the settlements to avoid the expenses and unnecessary implications brought about by lawsuits and extensive litigation.
In my opinion, this shows that 3M is aware of the menacing effects of lawsuits. In addition to that, it is focused on streamlining its activities towards its core goals. For me, that invites a bullish shred into the frame.
Competitors like Avery Dennison Corporation (NYSE: AVY) are also trying to push forward with new innovations. They recently launched a diverse range of products with Staples. The products, designed by Martha Stewart Living Omnimedia, are designed to meet the overlooked needs of a particular demographic in the market. Nonetheless, I believe that these are just a few ripples in the water - nothing big.
Close competitors Johnson & Johnson (NYSE: JNJ) also seems to be caught up in a tug of war with the FDA. This lopsided tug of war has placed Johnson & Johnson in a compromising situation as its Prezista HIV drug recently received a preliminary rejection.
As a round up, I am quite confident in 3M’s future. Its operations seem to be bolstered and its competitors aren’t putting up much of a show.
muhammadbazil has no positions in the stocks mentioned above. The Motley Fool owns shares of Johnson & Johnson. Motley Fool newsletter services recommend 3M Company and Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.
