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 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.
Posted Nov 21st 2008 11:11AM by Brian White
Filed under: Products and services, Launches, Research in Motion (RIMM)
Research In Motion Ltd. (NASDAQ:
RIMM) launched the newest BlackBerry "do everything" wireless phone this week to much fanfare. While some pundits has argued whether this was the reel first "iPhone killer" to come to market, most of the universe eagerly waited to test an actual unit and see if what the specifications looked like matched reality. Add to that the fanatical user base the BlackBerry has -- just as nutty as iPhone worshippers -- and it was a classic showdown. Would the new BlackBerry Storm hold its own against
Apple, Inc.'s (NASDAQ:
AAPL) offering?
Being released today on the second-largest wireless network in the U.S. -- Verizon Wireless -- the newest BlackBerry offering is the first without a real, tactile keyboard. However, the touchscreen does have actual, tactile feedback. In other words, it can be "pressed" instead of just hovered over or lightly tapped. After having scanned an
in-depth review over at Engadget, there may be some major adjustment to this all-new way of inputting information into a phone, just like when Apple released the original iPhone and touchscreens were the new "it."
The gamble RIM takes here is if the real "tough" screen will get customers who require some kind of tactile feedback when using phones to become BlackBerry customers over the iPhone. From a phone standpoint, this is a good comparison. But when looking at the complete multimedia package of the iPhone from top to bottom, I'm unsure the Storm is even in the same league.
As a phone and email device, you bet -- the Storm is every bit as good as the iPhone on paper (feel free to disagree). Since Verizon told Apple to take a hike when the iPhone was originally offered to it, it's now 18 months later and the company finally has an answer. However, the question and answer may have already been asked and answered by
AT&T, Inc. (NYSE:
T), who Apple chose to partner with when Verizon Wireless declined.
Posted Nov 20th 2008 12:57PM by Brian White
Filed under: Target Corp. (TGT), Best Buy (BBY), Costco Wholesale (COST), Black Friday
As Black Friday approaches just over a week from today, you may be wondering where some of the best deals will be had. Sure, the usual suspects like
Costco Wholesale Corp. (NASDAQ:
COST),
Best Buy, Inc. (NYSE:
BBY) and
Target Corp. (NYSE:
TGT) will be offering huge discounts on the largest shopping retail day of the year. This year is different: the U.S. is in the midst of a full-blown economic funk. Consumers are not spending, retail prices are way down and layoffs are increasing. Will you be spending like a drunken sailor this holiday season?
Regardless of the precarious economic climate the U.S. and much of the world is in, retailers are not closing up shop for winter. There are
still some great bargains to be had and people will shop for gifts this year, just at a much lower rate than in the past. Just how low a rate remains to be seen, but let's chew on some deals to whet the whistle: Best Buy if offering an eMachines desktop PC with 18.5" LCD monitor and printer for $299 and a Canon Powershot 10 Megapixel digital camera for $199, Target is offering men's cotton sweaters (your choice of neck style) for $10 and a Garmin nuvi 200 GPS system for $119, and CostCo is offering a VTech 3-handset cordless phone system for $39 and a Western Digital portable backup hard drive for $89.
Compared with normal pricing on all those items, there are
savings to be had this year. Will you be out in your car early in the morning hours of Friday morning to snag one of these deals or perhaps another one? Human nature tells us that there will be those of you brave enough to trade time and patience for dollars. If you do take in some bargains this coming Friday, you'll be in a select group, as many of us will be reigning in purchases and will be spending extra wisely. The retailers will thank you, and hopefully their bottom line numbers will show your effort this season.
Posted Nov 20th 2008 12:12PM by Brian White
Filed under: Deals, Apple Inc (AAPL), Wal-Mart (WMT)
It was just a matter of time. It looks like the
Apple, Inc. (NASDAQ:
AAPL) iPhone 3G
will be coming to Wal-Mart sometime before the end of the year, but probably after Christmas. According to the
Boy Genius Report, which claims its sources are reliable and to have come across some internal Wal-Mart correspondence, the iPhone 3G will be sold in 2,500 Wal-Mart locations in about a month from now.
Remember that the iPhone 3G must be activated (unlike the original iPhone), so only Wal-Mart locations that can use a specific ordering and activation system can carry the iPhone 3G. Some Sam's Club locations will also carry the iPhone 3G, but they also must use the Wal-Mart ordering and activation system in-house (several Sam's locations use a different wireless activation system). All in all, this will make the iPhone available to just about every American (well, the ones with good credit at least) as more U.S. shoppers have exposure to Wal-Mart than just about any other store.
The question is whether Apple is forsaking the iPhone cool brand allure by offering it at the largest discounter in the world. At this time, no. The iPhone 3G has been out in the world long enough for the iPhone to make its name. Offering it at Wal-Mart now won't impact its reputation nor affect Apple's cred.
Since Apple pretty much dictates pricing to its retail partners, expect the iPhone 3G to sell for a dollar or two less than the standard $199 and $299 pricing levels seen at all other retailers. Say, something like $197.48 and $297.48, as Wal-Mart is into non-standard retail pricing schemes to try and create the illusion of low prices against the competition. The presumed launch date: December 28th. Get ready.
Posted Nov 19th 2008 11:10AM by Brian White
Filed under: Bad news, Amazon.com (AMZN)
Amazon.com Inc. (NASDAQ:
AMZN) hit a 52-week low yesterday, a week after the online retailer saw a previous year low. Worries about this year's retail holiday shopping season have
investors fleeing like rats on a sinking ship. Analyst Matt Nemer with Thomas Weisel lowered his Q4 earnings estimate on the retailer from $0.44 per share to $0.39 per share, while Barclays analyst Douglas Ammuth indicated that Q4 profit margins could shrink as price cuts go into effect.
Still, Amazon.com has one of the best chances to weather the consumer spending slowdown starting, well, yesterday. Almost everyone I know is already shopping for the holidays, and many are shopping online and are definitely searching out bargains. While the management of companies that run shopping malls in my area are considering bankruptcy, standalone retailers with strong brands and good customer perception appear to be doing fine. I'm left wondering how long that can last, though.
Amazon's shares have come back from the stratosphere and have settled into what could be considered a normal range. The company is making money, making profits and is very strong in almost every area in which it operates. It's the world's largest online-only retailer and unlike many other retailers, I've never seen the company say that it makes a huge percentage of its profit in the end-of-year holiday shopping season. All things considered, my guess is that Amazon.com will do fine this season. Not stupendous, but fine.
Posted Nov 19th 2008 8:55AM by Brian White
Filed under: Bad news, Industry, Economic data
Online data measurement company comScore released on Tuesday
October 2008 e-commerce figures, saying it was the slowest growth it has measured since 2001, when it has started tracking the data. After years of solid growth for online retailers (from double digits to single digits recently), October online retail sales grew at a measly 1%. When online retail growth comes to a screeching halt, with all those heavy discounts and free shipping, something's amiss.
Let's take a look at the last five months in online retail sales growth: 11% to 8% to 6% to 5% to 1%. Yikes.
ComScore chairman Gian Fulgoni indicated that rising prices and unemployment rates combined with the psychological impact of the global economic situation has consumers frozen on many of their spending. It will be interesting to see what November's growth figure is like, even with the official start of the holiday shopping season.
ComScore's most significant figure was that spending for households that make below $50,000 per year has dropped off significantly, declining 3% in October compared to the month a year-ago. For households making $50,000 to $100,000, spending increased 1% in October, while households making over $100,000 increased spending to the tune of 14% in October. So,
according to comScore, growth really did come to an almost complete stop for households earning less than $100,000. Will spending recover for this demographic for the next month and a half? Doubtful.
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