Brian White
Oklahoma City, OK - http://
Brian White is a strong advocate of value investing and index funds, but has known to hold an equity or two from time to time. Financially speaking, he's covered the Fortune 500 for six years in various reporting and writing positions and currently owns a business consulting company. Additionally, Mr. White holds BA and MBA degrees.
Posted Dec 3rd 2008 1:40PM by Brian White
Filed under: Rumors, Products and services, Yahoo! (YHOO)
When
Michael reported yesterday that former AOL head Jon Miller was hoping to buy Yahoo! for over $20 per share, I did a double take.
Yahoo! Inc. (NASDAQ:
YHOO) has been floundering for the better part of 2008, and has seen its stock price plummet and its founder step down as CEO after a disastrous run that included the rejection of a $45+ billion takeover offer from
Microsoft Corp. (NASDAQ:
MSFT). One would think Yahoo! is a company without direction or drive, even with its huge, world-leading global eyeball audience.
The fact that Yahoo! has one of the top web audiences on the entire planet but can't seem to monetize it properly is a case study for future business courses. But the real question is why anyone would still want to buy such a directionless company? Enter former AOL head Jon Miller, who is reportedly trying to raise over $28 billion to buy the company for a huge premium over its closing price of $11.15 yesterday. Although Miller is an excellent high-tech leader who could probably do better than most in improving Yahoo!'s fortunes, are backers going to fund him to the tune of $28 billion?
Can Yahoo! ever regain even a piece of its former glory? Highly doubtful -- and it's incredibly hard to see financiers following Miller's logic in this economic environment and shelling out tens of billions to buy the company. Will any of them even be able to issue debt in this environment?
Cowen's Jim Friedland indicated to Barron's that "the company will continue to lose share in search and that user engagement with its portal will decline over time." And that, folks, is the killer. If Yahoo! starts losing engagement over time, the game is over. This decline began a few years ago and will likely gain steam in the next two years.
Posted Dec 3rd 2008 11:30AM by Brian White
Filed under: Industry
Buy.com led the Cyber Monday charge this year, having the
best sales day in its history. While predictions for this year's retail holiday season have been pretty dire, it would seem more holiday gift buyers have the "shop in your shorts" mentality, taking advantage of free shipping and no sales tax to ramp up online holiday retail sales.
Buy.com, which competes with larger retailer
Amazon.com (NASDAQ:
AMZN), has been around for over 10 years and features retailer categories just as diverse as its larger competitor. Some of the folks I've talked to say that, for the first time, they are doing the majority of their shopping online this year, mostly due to the deals they receive, the lack of local sales tax and with the majority of goods being offered with free shipping.
In other words,
we're all value shoppers this holiday season. Once the Black Friday novelty wore off last weekend and prices returned to normal, shoppers kept lining up at the virtual doors of online merchants and will continue to do so until the end of the Christmas holiday. When one of the largest online retailers has its best sales day in its history despite the bleakest economy in its history, perhaps that is a signal of a paradigm shift. For many of us, it happened a long time ago. For the others, the gravy train of online shopping is becoming a clearer picture every day.
Posted Dec 2nd 2008 2:12PM by Brian White
Filed under: Products and services, Hewlett-Packard (HPQ), Best Buy (BBY), Black Friday
Dell Inc. (NASDAQ:
DELL) came in second to global PC sales leader
Hewlett-Packard Co. (NYSE:
HPQ) during the Black Friday shopping frenzy and the ensuing weekend, according to analyst firm Thomas Weisel Partners. The report, however, analyzed sales only at a single retailer,
Best Buy Co. (NYSE:
BBY).
Thomas Weisel analyst Doug Reid indicated that holiday PC buyers were preferring Hewlett-Packard's PC five to one over Dell's PCs at the largest consumer electronics retailer in the U.S. While
Reid's survey only looked at 35 stores, that's enough to generate a statistically legitmate finding. Reid went on to say that "Dell has significant work to do . . . the only negative comments in our survey with respect to brand were aimed at Dell, with survey respondents noting potential quality issues.''
Is Dell's retail strategy working as well as founder Michael Dell had hoped when he aggressively launched his retail strategy in the summer of 2007? Doubtful, and competitor HP has not stood still since that moment, and has actually increased its market share in retail with stylish designs, many configurations and aggressive pricing that keeps a large thumb on Dell's retail efforts. From looking at some of the top retailers this past three-day shopping holiday, HP's laptop offerings were certainly more numerous than Dell's. If that presence translates to more shelf space, then there you go.
Posted Dec 2nd 2008 10:55AM by Brian White
Filed under: Bad news, Industry, Ford Motor (F), General Motors (GM)
Tom Libby with J.D. Power and Associates indicated Monday that November automobile sales in the U.S. will
probably fall sharply due to the sagging economy and the state of all three U.S. automakers (possible bankruptcies or other maladies). In fact, the
CEOs of the big three are on Capitol Hill today to try again for a $25 billion aid package lest they fail and fall hard.
But the November sales hit won't just be affecting the three U.S.-based automakers. The Japanese automakers are also set to see a sales shortfall due to tighter credit standards and lower consumer confidence in the economy. Libby indicated that sales at all the major automakers would fall at least 10% in November. During December and the end of the model year, expect to see the best bargains yet if you're planning an auto purchase.
Bloomberg News' survey of 26 analysts and economists also indicated that a seasonally adjusted sales rate of just 11 million automobiles were sold in November, down a full 32% from the same month in November when gas prices were much higher but the perception of the U.S. economy was not in the toilet yet. Have you bought a car -- any car -- recently? What kind of deal or incentive did the exasperated dealer give you to move anything out of inventory? Let me know in comments below.
Posted Dec 1st 2008 1:21PM by Brian White
Filed under: Rants and raves, Black Friday
As Peter Cohan
wrote this weekend, sadly, some folks were killed over the holiday weekend due to what could be easily argued as Black Friday madness. In the zeal for saving a few dollars on cheaply-made, bargain-basement disposable consumer goods, one man was trampled to death as he opened the doors of a
Wal-Mart Stores, Inc. (NYSE:
WMT) store, while two other people were shot to death outside a Toys R Us store. Joy to the world, the materialism has won.
Although I enjoy covering the Black Friday event every year, the industry-made madness has become such an event that actually dumps respect for human beings into the garbage disposal, so that those crazy souls wanting to save 30% on shoes or a flat-screen television can get their fix.
I mean,
is this what the holidays have come down to?
The New York Times has a decent perspective on this. But, of course, America has always been about materialism and consumerism. Those are the factors that have made the U.S. the reigning economy worldwide. It's a free country for anyone to do as they wish, from billion-dollar companies to consumers with change in their pockets purchasing power. If we're all trained like Pavlov's dogs come the day after Thanksgiving -- credit cards in hand at 5:00am -- then it's no surprise some folks will die for the self-indulging greed of other human beings. Fa la la la la, la la la la.
Posted Dec 1st 2008 11:45AM by Brian White
Filed under: Industry, Ford Motor (F), General Motors (GM)
When the CEOs of
General Motors Corp. (NYSE:
GM),
Ford Motor Company (NYSE:
F) and Chrysler again
take the steps up to the U.S Congress tomorrow, they will again try to convince U.S. lawmakers that a $25 billion injection into all three companies will somehow stave off their collective death along with over a million U.S. jobs that would be lost if the three automakers cease to exist.
GM's Rick Wagoner, Ford's Alan Mulally and Chrysler's Bob Nardelli -- all of whom flew to the last meeting with Congress on expensive private jets -- will be back in action tomorrow to try for the second time to siphon $25 billion from the federal government. Oops, I mean, the U.S. taxpayer. A few weeks ago, the trio were labeled as unprepared and failed to convince the majority of Congress that $25 billion would allow all three companies to somehow retool their complete efforts pretty fast.
If Wagoner, Mulally and Nardelli can't make their vision compelling with facts, future plans, some kind of competitive strategy and a five-year layout on changes they will make, along with being held accountable to each of them, then the end of the American auto manufacturing triumvirate as we all know it may be the end.
Of course, like many pundits, I sincerely believe that this is all for show and that a structured bankruptcy is the "way out" for at least Ford and GM at this point.
Speaking of leaders, Ford's Mulally -- who has shown some excellent chops at trying to rescue Ford in his two plus years there -- may be the only CEO that needs to stay. Wagoner needs to go (actually, years ago), and why on earth Chrysler nabbed Home Depot shenanigan master Nardelli is beyond comprehension.
Posted Nov 28th 2008 10:30AM by Brian White
Filed under: Competitive strategy, Wal-Mart (WMT), Columns, Best Buy (BBY), Circuit City Stores (CC), Black Friday
Welcome to the 87th installment of The Wal-Mart Weekly, a column dedicated to bringing you insight, wit, facts, results, opinions, and just a bit of everything else when it comes to a very hot topic these days: Wal-Mart.
Wal-Mart Stores Inc. (NYSE: WMT) was set to, as usual, be one of the most aggressive discounters this holiday season in order to move as much inventory as possible. Nowhere is there a better yardstick for just how aggressive one could be than by looking at the deals offered on Black Friday.
As I sat down Thanksgiving Day to a little football and a slew of Black Friday ads to study, it became pretty clear that Wal-Mart was aggressive in its pricing, but by no means the most aggressive. Since it seems consumer electronics continue to be a focus area when it comes to holiday retailing, I focused in on that product segment. So, let's delve deeper and really see who was the most aggressive, shall we?
Continue reading Wal-Mart Weekly: Taking stock of Wal-Mart's Black Friday offerings
Posted Nov 26th 2008 12:00PM by Brian White
Filed under: Wal-Mart (WMT), Black Friday, Kohl's Corp (KSS)
While
Wal-Mart Stores, Inc. (NYSE:
WMT) keeps racking up sales as the
king of retail in a depression, competitors certainly don't want to lose out on holiday sales. In fact, with such a bleak holiday shopping season predicted by multiple market pundits, some retailers are trying to divert those upcoming Wal-Mart shoppers into their own shoppers. But how?
Kohl's Corp. (NYSE:
KSS) held a three-day Christmas sale that actually ends today -- the day
before Black Friday. The department store-style retailer offered price cuts to the tune of 40% during the last three days in an attempt to steal some of Wal-Mart's customers. You know, the ones who will brave chilly temperatures and 5:00 a.m. waiting lines come Friday morning. The same goes for retailer
Macy's, Inc. (NYSE:
M). Macy's planned its biggest discounts last week, trying to pull in Black Friday shoppers a full week early.
Did the strategy work? This year would be a hard year to measure since not all things are equal. Shoppers are reluctant to pull out the purse or wallet, the stock market is psychotic, home sales are at a standstill, unemployment is rising fast and the economy is circling the average American like a shark.
But then again, this is why competitive pressures have surfaced: retailers are having to fight tooth and nail for every shopper dollar this year, and all the stops must be pulled out. A Gallup poll recently indicated that Americans will spend an average of $616 on gifts this year,
a 29% drop from 2007. When a third of the holiday retail dollars go away, it s bare-knuckled fight among retailers - nothing less.
Posted Nov 26th 2008 11:00AM by Brian White
Filed under: Products and services, Apple Inc (AAPL), Best Buy (BBY)
When
Best Buy, Inc. (NYSE:
BBY) starts discounting the normally
un-discountable Apple, Inc. (NASDAQ:
AAPL) MacBook laptop computer, we know it's a tough selling season. That's just what the largest consumer electronics retailer has done, though, as the cheapest MacBook being sold right now comes in at under $900. Until now, that's an unheard of price from any retailer.
Apple's grip on the MAP (minimum advertised price) for all retailers is strong. It's not known for heavy discounts -- or any discounts at all, actually. Apple's pricing arrogance, though, is part of what makes it so desirable. Talk to any salesperson who sells premium-priced products for a lecture on this if you'd like. Even so, Apple has
had to cool its jets just this week on pricing at its own retail stores.
Then again, this is no normal retail landscape. Holiday retail sales are expected to be very bad and sales will be necessary to keep inventory turns up and product flowing. Sometimes they have to be made at any cost. The older Apple MacBook, which is still being sold even though newer models were just announced and released in October, is now
being sold for $899. That's a full $100 under Apple's suggested list price. While it doesn't sound like a big discount, it is for an Apple system.
You'll notice that usually you don't see iPods or iPhones being discounted more than a dollar or two off Apple's list price. There's a reason for that, but it makes this $100 cut even more interesting. And some of the more pricier MacBooks being sold at Best Buy saw
$100 and even $150 price cuts as well. Even Apple can't maintain its pricing smugness in this economy and keep sell-through where it needs it to be. Yes, there are market and purchasing conditions that can even pinch Apple, folks.
Posted Nov 25th 2008 12:30PM by Brian White
Filed under: Industry
Hollywood has always loved the DVD. After releasing movies theatrically, the DVD, as a billion-dollar cash generator, has been the film industry's decade-long best friend. That friend may be putting on its coat and about to head for the exit. Global
DVD sales are expected to plunge 7.5% in 2008, meaning there is going to be a revenue problem brewing for some of the movie studios that count on DVD sales and resultant profit as part of their business model.
It's true that the DVD format is an aging medium with the newer advent of Blu-ray, HD-quality movies and television shows that stream from the internet to a PC or a "black box" hooked to that flat-screen set and with other forms of entertainment media taking the place of physical media like DVD. Sales of Blu-ray high-definition discs have partially offset the decline in DVD sales, but they are not growing as fast as DVD is declining, thereby causing a conundrum. Many consumers simply don't see the need to "upgrade" to Blu-ray. Standard DVD is good enough for many. To entice more consumers to buy the devices, Blu-ray needs cheap players (sub $199 pricing) and movies that are priced - at a maximum - 20% over standard DVD movies.
It's all about price for the growth of Blu-ray to supplant standard DVD. Product and picture quality has nothing to do with it, unlike what videophiles would have you believe. A bright light here will be
Wal-Mart Stores, Inc. (NYSE:
WMT)'s introduction of a Blu-ray player for under $130 this Friday. More retailers need to follow suit, though, and slash Blu-ray disc player prices, especially in this economic environment. The also need to add more models for consumers to choose from and only then they will respond and begin switching en masse from regular DVD to Blu-ray.
Posted Nov 25th 2008 10:40AM by Brian White
Filed under: Products and services, Circuit City Stores (CC), Recession
Although retailer
Circuit City Stores, Inc. (OTC:
CCTYQ) just a few weeks ago filed motions for
Chapter 11 bankruptcy protection, you'd think all was well at the retailer. Not so -- the consumer electronics giant's shares closed yesterday at just over $0.21 and it's a ghost town scenario at many stores. After all, would you shop for holiday goods at a retailer "going out of business" in its current form? That's what Chapter 11 says to many consumers, anyway. Perception is reality.
After having visited a few local Circuit City locations yesterday, they were indeed ghost towns. There was nobody (nada, zilch) in one of the locations I visited, and only one other person in the other location. And get this: comparing several general products in several categories, I saw very few sale prices that could compete with the competition -- namely,
Best Buy, Inc. (NYSE:
BBY). In categories like computers and MP3 players, Circuit City's pricing was dead in the water. At least its employees were, for the time being, getting paid to stand around doing nothing.
The struggling retailer has a
decent wealth of information at its website including an
open letter to Circuit City shoppers (PDF File) about the bankruptcy. None of that will cool any heels, though. If Circuit City wants to do any business this holiday season, it has to act like the competition, and that means instant rebates (not mail-in ones) and aggressive price discounts on hot product categories. How about something like "Free MP3 player with purchase!" or something similar? Fly that message on the flagpole and customers will respond. Don't, and you might as well shut the doors until next year.
Posted Nov 24th 2008 3:30PM by Brian White
Filed under: Wal-Mart (WMT), Columns
Welcome to the 86th installment of The Wal-Mart Weekly, a column dedicated to bringing you insight, wit, facts, results, opinions, and just a bit of everything else when it comes to a very hot topic these days: Wal-Mart.
Wal-Mart Stores Inc. (NYSE: WMT) recently unveiled a "fan website" of sorts. You know, the kind where raving customers and ardent fanatics of the world's biggest retailer can tell tales on how Wal-Mart saved their families with low prices and having everything under one roof.
Wal-Mart's critics are much more vocal about the retailer, however. From harping on about low-paying jobs to low-quality goods to employee treatment, it's not a rare event for Wal-Mart to be grilled on something 365 days a year. Regardless of any emotional or logical criticism about the retailer, the end-of-the-day results for Wal-Mart come packaged in how many customers it services consistently come back to shop. Let's take a look at that, shall we?
Continue reading Wal-Mart Weekly: Wal-Mart fights back against opponents
Posted Nov 24th 2008 2:00PM by Brian White
Filed under: Products and services, Dell (DELL), Hewlett-Packard (HPQ), Wal-Mart (WMT), Best Buy (BBY)
When
Dell, Inc. (NASDAQ:
DELL) reported quarterly growth of 9% last week, the market still found ways to disparage the PC maker's progress in cost cutting and gaining on its largest foe,
Hewlett-Packard Corp. (NYSE:
HPQ). Still, Dell's move into retail over a year ago was no more of a semi-brilliant move rather than a desperate survival tactic. It's worked well, as Dell's fortunes have recovered nicely with the large assortment of retail consumer laptops found at all the top retailers in the U.S.
But if you're in the hunt for a laptop this holiday season for yourself or as a gift, where are you headed if you're determined to touch and see that new purchase before buying it? From my experiences lately, you'd be better off hitting
Best Buy, Inc. (NYSE:
BBY) rather than
Wal-Mart Stores, Inc. (NYSE:
WMT). The largest consumer electronics retailer carries a whole slew of Dell laptops in its stores and on its website. Wal-Mart, by comparison, carries just one or two models in most Supercenters in my area, has a meager product selection at its website, and its laptop prices are almost always higher.
Yet, a recent survey found that the number of consumers planning to shop for electronics at Wal-Mart
rose 50% from a year ago, while 14% fewer shoppers said they would go to Best Buy for that new electronics or PC purchase. This is a case of Wal-Mart euphoria: when the pennies need to be saved, consumers will say they'll hit Wal-Mart for anything and everything. Reality is different, as I explained before. If you want significantly better discounts, a significantly larger selection and actual, working units on display, Best Buy has Wal-Mart beat handily. If consumers don't recognize this when shopping this holiday season, I'd be amazed.
Posted Nov 24th 2008 10:12AM by Brian White
Filed under: Target Corp. (TGT), Initial public offerings
Activist investor William Ackman wants
Target Corp. (NYSE:
TGT) to have an IPO to raise roughly $5.1 billion to assist the retailer as it works to pay down debt and obtain cash for new store openings. This proposed
IPO would be for Target's real estate holdings, which would be spun off into a separate entity. It would then lease the land back to the retailer for up to 75 years.
When Ackman originally suggested the REIT spinoff a month ago, Target indicated it had serious concerns about his plan and how it would create any value for shareholders. I'm not sure what Ackman is thinking, but there is one truism here: we can't create more land for anything. There is a finite supply of it. Spinning off Target's vast holdings into an inflation-protected trust that would lease land back, would create, well, something. Let's call it value.
As Target pledged to reduce capital spending by $1 billion in 2009 to help it cope with the economic nightmare that's underway, this spinoff would definitely be in the interest of shareholders. It's hard to think how this would not benefit them. Some folks think diverting attention away from recruiting every last shopper into Target stores to spend money would be foolish. At least Target execs are listening, though.
Posted Nov 21st 2008 3:21PM by Brian White
Filed under: Good news, Google (GOOG), Yahoo! (YHOO), AT and T (T)
With Yahoo, Inc. (NASDAQ: YHOO) stock in the dumper, the CEO spot looking for a newcomer and musings about the future of the company underway, perhaps there is a small bright light for the internet pioneer. Wireless provider T-Mobile will use Yahoo!'s mobile search as the default on all its phones' mobile web browsers.
While that may not be the biggest victory one can think of, it does help. Mobile search and web browsing has been increasing in usage (though still small), and although T-Mobile USA is only the nation's fourth-largest mobile provider, just the fact that Yahoo!'s services will keep the largest wireless providers from using competitive mobile search products is a blessing for Yahoo!
Making money from mobile web search is another matter. Although Yahoo! and T-Mobile said they will share revenue from the new arrangement, the question is this: are any mobile search companies and wireless providers making any significant revenue from mobile search partnering? At this point in time, it's hard to see that just based on skimpy usage. While it may not be that way in the future. T-Mobile International, which replaced Google, Inc. (NASDAQ: GOOG) mobile search with Yahoo!'s solution earlier in 2008 and Yahoo! also has its fingers in mobile search with the largest wireless provider in the U.S., AT&T, Inc. (NYSE: T). Perhaps Yahoo!'s rebirth will be around mobile technology after all. It's just a question of when.
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