Thursday, February 11, 2010

Philip Morris Have Another Drag

Philip Morris (PMI) announced some great results and shareholders took the stock up. When reading the earnings release you realize that the purveyors of Marlborough are only talking about themselves and make no comment about competition. I know, I know they are huge. They are second only to China National Tobacco and probably will never be dominant in the largest most smoker friendly market on the planet. If global economies of scale matter, they will never reach that critical tipping point and may have difficulty maintaining their global reach.

Tobacco (read cigarettes) is one of the most prolific tax revenue generators known to man and bureaucrat. Addicts willingly pay up. Governments rely on smokes to feed their spending addictions. Smoking is a cultural manifestation as much as an addictive behaviour. Pax Americana may wane against China and India. As pride from being on the winning team develops the American Brands will lose their footings. Not today not tomorrow but it will happen. So long term dividend investors, you have something to think about.