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 Aug 6th 2008 2:35PM by Brian White
Filed under: Launches, Best Buy (BBY)
Best Buy, Inc. (NYSE:
BBY) is looking to expand faster and more furiously than previously thought in the United Kingdom. Best Buy, which
joined up with Britain's Carphone Warehouse in a 50% ownership venture earlier this year, wants to take England by storm and is wasting little time in the effort.
The largest consumer electronics chain in the U.S. said that it would eventually roll out more than 200 stores in the UK over the long term, which is quite a bit more than had been expected. Best Buy wants to dominate that market just as it has conquered the U.S. market, and an aggressive international expansion like this cements Best Buy's goal of becoming a global retail player in consumer electronics.
But some are concerned that Best Buy's $2.1 billion chunk of Carphone Warehouse -- which is 50% of the company -- may be used to expand the Best Buy brand at the expense of the Carphone Warehouse brand. Best Buy wanted an immediate presence in the UK market by partnering with a leader there, and now it has that.
Continue reading Best Buy (BBY) planning more aggressive UK expansion
Posted Aug 6th 2008 1:15PM by Brian White
Filed under: Products and services, Ford Motor (F), Marketing and advertising
When you sell something as a "limited edition," you better mean it. But it turns out that a recent limited edition of the
Ford (NYSE:
F) Mustang was not that limited after all. And now a group of angry Mustang buyers are taking legal action against the troubled automaker.
Ford claimed that only 100 of the 2007 Roush Stage 3 BlackJack Mustangs would be made in 2007, and fans snatched them up as they went on sale. The car,
which cost $59,000, was continued in 2008 and another 100 were made by Ford and Roush Performance Products. That fact didn't sit well with those who had purchased the 2007 model. (I remember the Chevy Camaro and Ford Mustang fanatics of the 70s and 80s -- and fans of both can be quite intense and still dote on their treasured vehicles to this day.)
in the end, though, "limited" doesn't really mean anything -- the number can refer to 10 or 1,000. The lawsuit states that the value of each of the 2007 Mustangs was harmed by the additional 100 cars made in 2008. But is this what true fans are really worried about? I doubt it -- it's hard to think of these vehicles as long-term investments. Their attraction comes more from being something unique. Perhaps it's a bit of both. The lawsuit, though, is claiming more than $12 million in damages. Doing the math, 100 vehicles times $59,000 equals just over $5.9 million. Multiply that by two and you get something
close to $12 million. Apparently, the entire value of all 200 Mustangs from 2007 and 2008 are at issue here.
Could it really be just about money? Or is it more a matter of bruised egos? Either way, it could be expensive for Ford, which can't afford to lose another penny.
Posted Jul 30th 2008 3:50PM by Brian White
Filed under: Competitive strategy, eBay (EBAY)
When
eBay, Inc. (NASDAQ:
EBAY) recently began focusing on being more of a retail storefront than an online auction site, many saw it as the nail in the coffin of what was once an internet darling. Higher fees, angry sellers and a multitude of changes at eBay in recent years have many writing the company off as progress peaked in 2004 and has been falling ever since. Even former CEO Meg Whitman did not waste a chance on going over her self-imposed 10-year stint as the company's leader, having now left the company as of last year.
To add insult to injury, free
classified listings are popping up all over the web to take over for what made eBay so powerful: connecting buyers and sellers for a transaction outside of the normal retail landscape. This grassroots commerce is what made eBay what it is. Its customers -- buyers and sellers -- did not want a normal retail transaction; they wanted a flea market and that is what eBay became. Except, that "flea" became an 800-pound gorilla.
Free classified providers like Oodle are winning business all over the web for niche audiences like those at
MySpace.com and
Walmart.com, two of Oodle's larger customers. Even localized free classified websites like Oklahoma City's
OK4Free.com are getting in on the action. These are free websites to list items on -- unlike eBay. And they could be eating eBay's lunch soon if not already. To some who think eBay is turning into an also-ran in the online classified business, the welcome (albeit, smaller) competition is a good thing. Now, if someone could build a directory of all these free classified sites, customer defection from eBay could be quite a bit more rapid.
Posted Jul 29th 2008 8:31AM by Brian White
Filed under: Earnings reports, Sony Corp ADR (SNE)
The financial news at
Sony Corp. (NYSE:
SNE) just won't stop raining red. The world's second-largest consumer electronics company
reported a 47.4% drop in profit for its first quarter. The disappointing quarter was partially blamed on lower cellular handset sales from its part in the Sony Ericsson joint venture, but there's more here.
Sony's CEO, Sir Howard Stringer, continues to be someone who just doesn't get it. Sure, he's made smaller cultural changes at the electronics maker, but it's being eaten alive in the flat-panel television segment by competitors like Samsung and Vizio. Sony did say that flat-panel TV sales were down in China, although it did not comment about other regions that may have seen a dip.
With the economy in the U.S. in a precarious position, it would be interesting to see what flat-panel TV makers were selling more TVs than Sony beyond the above-mentioned brands that seem to have better marketing and lower prices than the Japanese icon. In terms of portable electronics, Sony's grasp on maintaining proprietary storage formats on its digital cameras and others make it a laughing stock in the tech consumer world.
And then Stringer tells the world that the
Nintendo Ltd. (OTC:
NTDOY) Wii is a "
niche gaming device." Is Stringer completely out to lunch? The Sony Playstation 3 is a niche device that just happens to have a Blu-ray disc player in it (which is the unit's saving grace among non-gamers). The Wii continues pummeling the Playstation 3 in monthly sales, which could not be done by a "niche" device. Sony will continue to be marginalized in certain product segments if its head honcho and corporate culture continue seeing the competition in such menial terms.
Posted Jul 28th 2008 11:50AM by Brian White
Filed under: Management, Apple Inc (AAPL), Dell (DELL), Hewlett-Packard (HPQ)
Dell, Inc. (NASDAQ:
DELL) made quite a few changes in 2007. Its founder, Michael Dell, came back to lead the company, it entered the retail market in the U.S. in a large way and it began introducing more appealing laptop PC designs to cater to the consumers who love choice. As a result of all these changes, CEO Michael Dell is now predicting a
strong second half for Dell in 2008.
Dell mentioned that the company he founded would "have a big second half" based on numbers so far in 2008. Dell's consumer business sales rose 20% for the Q1 period ended on May 2, and Dell is predicting even stronger growth for the current quarter and the Q3 period as well.
Based on all the strong moves Dell made in 2007 and into the last fiscal period, he could be right. Dell's retail partnering in the U.S. and with
Gome in China is going to mean some wicked business the rest of this year. However, competitor
Hewlett-Packard Corp. (NYSE:
HPQ) recently unveiled one of the
largest product refreshes in its history and
Apple, Inc. (NASDAQ:
AAPL) just moved past Taiwan's Acer to take the
third spot in U.S. PC sales. It won't be a simple task for Dell to keep this segment growing like it has predicted.
And that's just the consumer PC business. Dell's efforts in the large market area that includes Russia, China, India and others grew at a 58% pace in the company's Q1 period, and a grouping of emerging markets accounted for 12% of Dell's sales in the Q1 period as well. Add that to its push into a huge "cloud computing" marketing towards customers who order hundreds or even thousands of servers at a time, and Dell has many tricks up its sleeve to keep things growing at a decent pace.
Posted Jul 28th 2008 9:30AM by Brian White
Filed under: Wal-Mart (WMT), Columns, Best Buy (BBY)
Welcome to the 70th 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.
This week, I'm pitting Wal-Mart Stores Inc. (NYSE: WMT) against Best Buy, Inc. (NYSE: BBY) in terms of one nice and profitable category of product: consumer electronics. Although many would argue that consumer electronics have a slender profit margin, the fact is that consumers can't get enough gadgets.
They keep buying and buying and buying. Flat-panel televisions, iPods, cellphones, PCs -- you name it. With the insatiable appetite U.S. consumers have for these products, Wal-Mart has really upped the product presentation game recently within stores I've seen in my area. My guess is that it will only get more intense as Wal-Mart tries to strike at the heart of Best Buy.
Continue reading The Wal-Mart Weekly: Speedily gaining traction on Best Buy
Posted Jul 27th 2008 9:10AM by Brian White
Filed under: Products and services, Wal-Mart (WMT), Employees, Target Corp. (TGT), Best Buy (BBY), Circuit City Stores (CC)
When Best Buy Inc. (NYSE: BBY), Circuit City Stores Inc. (NYSE: CC) and Wal-Mart Stores Inc. (NYSE: WMT) are all stacked up together, which one comes out on top? Well, it depends on how you phrase the question: Are we talking solely prices here, or customer service? The pricing angle can be debated all day long. When it comes to service though, my experience is very similar to the conclusion that this article states: Best Buy is king.
Target Corp. (NYSE: TGT), although a much cleaner and brighter location in which to shop, seems to have a weak schedule in the consumer electronics department. Most weeks, I roam into many retail chain locations just to walk around and observe. In many cases, Target seems well-stocked when it comes to checkout personnel, but not if you have questions about a flat-panel television. At Circuit City, its tarnished reputation is well-deserved: It's hard to just find anyone to help you.
And Wal-Mart? The world's largest retailer has made strides to really improve the consumer electronics sections in its stores. The customer service, however, is a completely separate story. If I step into a Best Buy, there's a 99% chance that I will be greeted by a security guard manning the front door, and will be asked at least four times within five minutes if I need help.
While Wal-Mart may have slightly better prices on many consumer electronics items, is that all that matters? Of course not. I give Wal-Mart props for making large strides in product presentation, though. Chris Denove of J.D. Power and Associates says that "Across many industries, we've seen that the retailers that grow customer-service ratings the fastest have greater sales growth." If Wal-Mart wants to try and really compete with Best Buy's winning combination of price and service, it best listen to that advice. Target -- it's also time to step it up on your end. What are you waiting for?
Posted Jul 24th 2008 10:44AM by Brian White
Filed under: Earnings reports, Washington Mutual (WM)
Joining the likes of other larger financial institutions and banks, mortgage giant
Washington Mutual Inc. (NYSE:
WM) joined the billion-dollar loss club. The company's quarterly results reflected a $3.33 billion loss, bringing its
total loss reserve to $8 billion due to bad loans in its portfolio.
Similar to what kindergarteners face, the mortgage industry's "monkey see, monkey do" attitude just keeps the billion-dollar losses coming quarter after quarter. WaMu did say that it would be trimming up to $1 billion in costs by the end of next year. Ah, how nice! If you're a WaMu shareholder, does that statement give you any comfort? Probably not.
To go from an $830 million profit in 2007 to a $3.3 billion loss in 2008 is unspeakable, but it's almost the norm these days with mortgage-involved entities floating at the top of the fishbowl. Even though WaMu reflected a capital raise in April in its loss, the company still lost $3.34 per share even at that. Writeoffs totaled $2.17 billion and the company changed the time period from three years down to a year in which to evaluate defaults in its prime mortgage portfolio. As of this morning, WM shares are
down over 20% from before Tuesday's report, and down over 57% for this year as well.
Posted Jul 24th 2008 9:26AM by Brian White
Filed under: Bad news, Ford Motor (F), General Motors (GM)
General Motors Corp. (NYSE:
GM) is not the only auto company in a world of hurt. Its vendors are as well. One of its larger suppliers,
American Axle and Manufacturing Holdings, Inc. (NYSE:
AXL) will likely be handing out
buyout offers to a reported 2,000 U.S. workers. the official word will probably come tomorrow, when American Axlereports its Q2 earnings.
Expect more of this. As GM and other automakers like
Ford Motor Co. (NYSE:
F) reduce auto shipments, rearrange their product mixes and re-evaluate global strategies, the larger suppliers to those companies will see various levels of hits against them. Unfortunately, the U.S. auto industry is in for more hits throughout the remainder of 2008.
American Axle has an estimated 3,650 hourly workers in the U.S. -- so giving buyout offers to over half of them is a pretty significant step. In addition to that, between 200 and 350 U.S. salaried jobs with American Axle are being eliminated. The company also announced that it was reducing its average labor-hour cost down from above the $73 level to somewhere in the $40 range, saving it in the neighborhood of $300 million per year.
Posted Jul 23rd 2008 5:25PM by Brian White
Filed under: Products and services, Wal-Mart (WMT)
Not too long ago, I wrote about
Wal-Mart Stores, Inc. (NYSE:
WMT) and the entrance of the world's largest retailer more heavily
into locally-grown fresh produce. As a way of differentiating itself, Wal-Mart is really on the right track here. Partnering with local merchants near each community it serves could help repair the rift between small-town merchants and the retailing behemoth that has steadily grown for the last two decades.
The retailer may finally be heeding the advice of many critics. That is, when it does good, it needs to actively market and promote that effort as much as possible. Last week, one of the retailer's locations in Manteca, California along with local growers, put the positive word out about how Wal-Mart is
joining with the local merchants to ensure customers can buy produce with confidence. This is great -- but Wal-Mart needs these "workshops" at every location where it has a significant and growing relationship with local food suppliers.
Tiffany Moffatt, Wal-Mart's corporate affairs director for the western U.S. region, stated that "In the (West Sacramento, Calif.) store, we carry more than 120 locally grown products .. our partnerships with local farmers have grown by 50% over the last two years." This is great PR, and Wal-Mart needs even more of it moving forward. When you have local food suppliers describing Wal-Mart as a "
a demanding but loyal customer," then one has to guess that Wal-Mart is indeed sowing the seeds to forming new relationships with communities outside its rather boring big-box store presence. Alerting the buying public is the next phase in Wal-Mart's efforts -- and it can't happen soon enough.
Posted Jul 23rd 2008 10:36AM by Brian White
Filed under: Forecasts, Wal-Mart (WMT), Costco Wholesale (COST)
Costco Wholesale Corp. (NASDAQ:
COST) warned Tuesday that
profit for the quarter ending in August would be "well below expectations." That statement comes as a surprise. The company that should be benefiting greatly from customers buying in bulk and "trading down" to lower-priced goods, issues lower guidance in the thick of a depressed U.S. economy.
The wholesaler said that analyst estimates of a $1 per share profit would not be met, and then quickly talked about how rising energy prices would be to blame. Costco kept its prices steady even as its own costs have risen. It also experienced diminished profit in gasoline sales. The good news is that Costco's same-store sales have not trended downward recently. The company is still making a healthy profit, but the question is why it is holding many prices steady even as costs and transportation backend prices rise?
One answer is
Wal-Mart Stores, Inc. (NYSE:
WMT) and its Sam's Club operations. While in a Sam's Club just this past weekend to check out prices, I was amazed to see that once inside the store, any semblance to a credit, mortgage and credit crisis was gone. Prices were lower than ever on many items, and Wal-Mart faces the same kind of financial cost pressures as its competitors. It can afford to keep prices lower even through tough times, though. Costco has to keep up, and as a result, its profits will take a hit.
Posted Jul 23rd 2008 9:09AM by Brian White
Filed under: Deals, Rumors, Google (GOOG)
Yesterday on the
tech news site TechCrunch, it was reported that
Google, Inc. (NASDAQ:
GOOG) may be buying social news website Digg.com for up to $200 million. Now, Digg.com has come under acquisition rumors so far, but this is the most serious one. Google stands to keep its iron fist over the controlled flow of information with the purchase if, in fact, it is officially announced.
Digg.com, which has propelled itself into the limelight by having its members and readers publish links to news stories from around the globe and vote on them to let its customers choose "headlines," is no small potato.
Although Google was rumored to have been in the chase for the company back in March, it should go ahead and just make the announcement official. Integration of Digg.com into Google News (which is already an excellent product) would take Google's news aggregation product to the next level and would assist it solidifying its daily news position against the likes of
Microsoft Corp. (NASDAQ:
MSFT) and
Yahoo, Inc. (NASDAQ:
YHOO).
Digg.com would not be a good fit for Microsoft, however. While Microsoft continues to roll out web-based properties and products, many of its actions seem to be compelled by a "me too" attitude more than a corporate strategy, regardless of what the company says. Google, right now, has the cachet and the product breadth to continue steamrolling much of the competition -- and a Digg.com purchase would just make it stronger.
Posted Jul 22nd 2008 3:50PM by Brian White
Filed under: Industry, Nokia Corp. (NOK)
Sweden's
Ericsson LM TEL Co. (NASDAQ:
ERIC) said this morning that it saw a 70% nosedive in profits for its second quarter due to R&D costs as well as activity related to recent acquisitions. Ericsson also commented that its primary business -- mobile equipment and infrastructure -- will likely experience a "flattish" market in 2008.
That didn't sit well with investors, who
sank the stock over 5% in Stockholm where the company's shares are traded. The company's ADS price as of this afternoon was hovering right over $11.06 per share, even though the company did see a smallish sales gain of 2% year-over-year. The problem is that its profit was down to $320 million for the quarter compared to over $1 billion during the year-ago quarter.
One of the more interesting twists came from Ericsson's joint partnership in Sony Ericsson, the mobile phone handset company that had a great comeback in the 2005 to 2007 time frame but has seen sales drop sharply in 2008. In fact, Sony Ericsson saw a 97% drop in its recent Q2 earnings due to the company's inability to ship lower-end handsets to the hot mobile phone markets. As a result,
Nokia Corp. (NYSE:
NOK), was in all the right places to take the market share Sony Ericsson missed by being absent in that space.
Posted Jul 22nd 2008 3:23PM by Brian White
Filed under: Earnings reports, Google (GOOG), Apple Inc (AAPL)
Apple, Inc. (NASDAQ:
AAPL) reported stellar, above-expectations quarterly results yesterday after market close. One would have thought that this company, in the midst of U.S. economic uncertainty, would have reported a mediocre quarter at best, but that wasn't the case. Apple outpaced expectations by $0.11 per share, shipped more Mac computers than during any quarter in its history, and saw a 38% revenue jump from the year-ago quarter.
As a nice reward for such a stellar quarter, the market took
Apple out behind the woodshed and gave it a sound whipping. The reason? Apple's murky guidance for the fourth quarter. This from a company that almost always shoots low with guidance only to blow the numbers away. Add that to ongoing concern over the health of CEO Steve Jobs and you have a 10% drop in AAPL shares before the market opened this morning.
Is Apple the victim of outsized expectations? You bet. Just like
Google, Inc. (NASDAQ:
GOOG) the other day -- which also reported a fantastic quarter but
saw its shares pummeled right after results were announced -- Apple may be losing the ability to impress. In reality, both companies are doing excellent business in the face of gas and energy price spikes in addition to a six-month string of job losses in the U.S. Yet, the market slapped huge losses on both stocks based on what could be considered shaky speculation for future growth prospects.
On the other hand, Citigroup, Inc. (NYSE: C) saw stock gains after reporting a better-than-expected $2.5 billion dollar quarterly loss last week. Talk about twisted.
Posted Jul 22nd 2008 10:43AM by Brian White
Filed under: Deals, Hewlett-Packard (HPQ), Electronic Data Systems (EDS)
Shareholders of
EDS Corp. (NYSE:
EDS) are starting to fidget in their collective seats now that the a shareholder meeting between the company and suitor
Hewlett-Packard Corp. (NYSE:
HPQ) is scheduled for July 31st. The delay is being brought on by a contingent of shareholders that believes the price H-P will be paying for EDS is, of course, too low.
The shareholders claim that the
$25 per share price is too low in addition to a provision that doesn't allow the EDS board to accept higher offers, should one be brought forth. Dallas-area law firm Baron & Budd said "With increased revenues over the past 12 months and 2008 projections on track, the shareholders are questioning why EDS is accepting what many experts consider to be an undervalued share price." Since EDS is headquartered in Plano, Texas -- just outside Dallas -- perhaps some heavy-handed Texas shareholders don't want to sell out to a west coast firm? Who knows.
EDS continues to believe the acquisition by H-P is still in the best interests of the company. A combined HP-EDS would have more than 200,000 employees with operations in more than 80 countries. The combination would form a large challenge to business services and consulting company
IBM Corp. (NYSE:
IBM) as H-P tries to conquer yet another giant after taking the PC sales leadership crown from
Dell, Inc. (NASDAQ:
DELL) in 2007.
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