International expansion spurred by F.T.C. proposed regulations

Implications: - The F.T.C.' s proposed regulations on the "pyramid" selling dynamic has been re-energized by investors shorting the stocks of companies who rely on this marketing approach.

- The proposed legislation is not yet outlined in it's final iteration for the initiation of the legislative process.

Analysis: - With over 70% of Avon's (AVP) revenue stream derived from off shore sales the legislation should not hurt the company as profoundly as other multilevel marketers. (i.e. Amway)

-AVP's global penetration, positively positions the company's exposure to the investment community's shorting of the other companies reliant on this marketing strategy. Current percentages (higher) of the other large multilevel marketing companies outstanding shares that are shorted (in relationship to AVP's %) may be the result of the money managers recognizing the diminished opportunity in their approach to this opportunity with regard to AVP.

- The enactment of this legislation, if passed, is projected to be 18 to 24 months away.

- With the predicted continuation of the shorting of multi tiered marketing companies, investors may find their results more lucrative in implementing this strategy with the companies that rely heavier on their revenue streams derived from the U.S. channels of distribution. Investors should determine the metrics when implementing this particular strategy to ensure maximizing their efforts.

- As seen on the news wires the increase in the % of outstanding shares shorted in multilevel marketing companies has risen sharply in the past 6 months. More players will most likely look at this same strategy given the renewed exposure in the press which could swing the pendulum with new regulations written to regulate the shorting of shares.

- This will give special interest groups and their lobbyist's plenty to fight over. They will be the biggest winners regardless of the final regulations enacted or not.