An investor can profit greatly by studying who a particular company partners with. Partnerships provide the means for multiple companies to benefit from pooled resources. One company’s products may enhance or complement the other. Online auctioneer and payments processor eBay Inc (NASDAQ:EBAY), homemade soda system manufacturer Sodastream International Ltd (NASDAQ:SODA), and online television network Netflix, Inc. (NASDAQ:NFLX) represent excellent examples of companies whose partnerships possess the potential for making shareholders rich.
What cash register?
Smartphones loaded with eBay’s PayPal and other mobile payment apps may soon replace the cash register, the pillar of the retailing world for the past century. A number of well-known retailers such as Urban Outfitters, Inc. (NASDAQ:URBN) and Nordstrom, Inc. (NYSE:JWN) will “get rid of registers altogether,” according to an Associated Press article.
eBay Inc (NASDAQ:EBAY)’s growth in payment revenue exceeded growth in its marketplace segment (encompassing its traditional auction business), as the two segments grew 26% and 11%, respectively, in 2012. Realizing the importance of this trend, eBay currently partners with traditional payment processors such as Discover Financial Services (NYSE:DFS), MasterCard Inc. (NYSE:MA), and Visa Inc. (NYSE:V) in order to capitalize.
Discover realizes that customers could refrain from using its credit card in a world dominated by mobile internet commerce, so it partnered with PayPal to offer a safe way to transact in this new paradigm as well as piggybacking on PayPal’s growth. This also helps expand Discover’s presence in the payment transaction business in which the company seriously lags.
Sometimes a partnership can facilitate entry into international markets. eBay’s e-commerce platform subsidiary GSI Commerce partners with integrated technology and service platform provider Fireswirl to provide e-commerce solutions to retailers in the Chinese market.
Other eBay Inc (NASDAQ:EBAY) subsidiaries like StubHub partner with entities such as colleges to make its status as “Fan-to-Fan Ticket Marketplace” for its sports teams’ tickets official.
Who needs TV channels?
Four decades ago, the choices of television were limited to the big three networks: ABC, NBC, and CBS, and maybe a local station that showed off-brand movies and local news. Now with the wonders of modern technology you can stream your favorite television shows and movies through the internet.
Netflix, Inc. (NASDAQ:NFLX), a company that started out as simply an online rental service, now describes itself as an online internet television network with $3.6 billion in revenue and a $10 billion market cap.
Netflix partnerships include an online distribution agreement with The Walt Disney Company (NYSE:DIS) to distribute its animated content starting in 2016. Moreover, Turner and Warnerbroadcasting also partnered with Netflix to stream their content as well. Netflix also agreed to do original animated programming for Dreamworks Animation Skg Inc (NASDAQ:DWA) called Turbo: F.A.S.T based on the movie Turbo. Television stations in addition to DVD makers may want to pay attention to Netflix’s partnership agreements. Who needs television channels and DVD players if you can get your television programming via the internet?
Carbonating the world
Health and environmental concerns compel consumers to make choices for their consumption habits based on calories and factors such as environmental impact from packaging. These trends drive the stock price of Sodastream International Ltd (NASDAQ:SODA). In 2012, SodaStream’s revenue and net income increased 51% and 60%, respectively.
Generally, the taste in healthy foods and drinks pales in comparison to its less than healthy alternatives. SodaStream and its partnership strategy focus on enhancing the flavor of healthier beverages such as juice through carbonation.
