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Filed under: Good news, Products and services, Competitive strategy, Marketing and advertising
 Despite criticism by Irish band U2’s manager Paul McGuinness over Radiohead’s method for releasing In Rainbows last October, U2’s lead singer Bono has published an open letter in NME disagreeing and applauding Radiohead for the album and how it was released. McGuinness told the BBC in early June that the method was “a failure and backfired” because “it still resulted in over 60%-70% of listeners acquiring the album through illegal channels.”
Bono’s letter to NME, printed in last week’s issue, takes a sharp left turn from his manager’s thought, calling Radiohead “courageous and imaginative in trying to figure out some new relationship with their audience.” Bono also remarked how “blessed” he feels “to be around at the same time” as “a sacred talent” like Radiohead. U2 have recently taken steps to reach their audience, joining forces with Live Nation Inc. (NYSE: LYV) in a deal that will market their music and concerts with related products from one location.
U2 is still signed to Universal Music Group for the band’s record releases, which may have been one reason McGuinness came out against the method Radiohead used last year. Neverthless, the disagreement between manager and lead singer is insignificant compared to the applaud Radiohead continue to receive from fellow artists. Trent Reznor of Nine Inch Nails, a band that was also signed to Universal Music Group, has also come out in support of Radiohead’s method, although he, too, took issue with some aspects of it. Reznor has since released two NIN albums the same way.
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Filed under: International markets, Industry, Economic data
As if investors do not have enough to worry about, along comes another problem. There’s a growing movement to grant, perhaps eventually require, American companies and foreign companies trading in ADRs, to keep their books according to International Financial Reporting Standards, IFRS, instead of the venerable GAAP method we all know and love.
The move to IFRS makes a fair amount of sense given the global nature of capital markets. American investors will simply have to learn to read a balance sheet constructed using different rules. The problem looming on the horizon is, who will construct the IFRS balance sheets?
Currently, record-keeping degree programs in the U.S. are defined by the requirements for the CPA exam, which does not require familiarity with IFRS. American accounting faculty, overall an older group, instruct from textbooks geared towards the CPA exam. Unless and until the SEC actually publicly says a date by which U.S. companies can or must shift to IFRS, nothing will move. Potential accountants will not be exposed to IFRS as part of the curriculum. The CPA exam will not require familiarity with IFRS. Present accounting faculty won’t change their course syllabi or textbooks to include IFRS. Many might opt to retire rather than retrain and redesign their courses. Lead time for publishing a new textbook is at least two years, often longer. Who will write the new textbooks?
Conservatively, the SEC is looking at a five year lag once it finally establishes a date for the switch. At least we’ll all have plenty of time to get used to the idea.
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Filed under: Microsoft (MSFT), eBay (EBAY), Starbucks (SBUX), Ford Motor (F), General Motors (GM), XM Satellite Radio (XMSR), Sirius Satellite Radio (SIRI), Money and Finance This day, Anheuser-Busch Cos (BUD), Countrywide Financial (CFC), United Parcel’B’ (UPS)
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Filed under: Forecasts, Consumer experience, Competitive strategy, Google (GOOG), Apple Inc (AAPL), Motorola (MOT), AT and T (T), Nokia Corp. (NOK), Research in Motion (RIMM)
 This post is part of my series featuring established companies and the smaller, more aggressive or innovative rivals that might eventually succeed them.
Apple (NASDAQ: AAPL) is one of the great stories of corporate America and the stock market. Under the leadership and genius of Steven Jobs, Apple is emerging as the premier technology growth company of this decade and the next. In the past five years the stock has rocketed from $9 to the current $175, and yet the story is actually stronger than ever before.
Apple has three major legs of growth in its arsenal and a distribution system that is second to none. The products of Apple are both cool and revolutionary. The 2002 introduction of the iPod defined the MP3 player space. Apple has sold over 150 million units as of March 2008 and commands over 70% of the market share. Many iPod owners are on their 3rd and 4th units, so the actual penetration of addressable customers has been barely scratched. The newer versions include touch screen and of course can store up to 20,000 songs and numerous movies and pictures.
The Mac computer has been re-engineered these past couple of years and is now the rage of the personal computer market. The new Mac is beginning to enter the traditional enterprise sector while maintaining its dominance in the consumer sector. The Leopard operating system became available in mid-2007 to rave reviews. Apple is taking market share in the competitive PC sector while maintaining its pricing structure. The company doesn’t compete on price but offers such better functionality that buyers do not mind paying full retail price. The attendant software programs are also seeing a resurgence and also carry high margins.
The iPhone is a revolution unto itself. On June 28, 2007, Apple WAS NOT a player in the fiercely competitive cell phone market. On June 29, 2007, Apple became a force to reckon with. The CEO of old traditional global cell phone maker Motorola (NYSE: MOT) stated at a conference, “we have no answer for the iPhone.” (Stunning yet true and, by the way, Motorola is still a “sell” as I wrote last year in BloggingStocks.)
The iPhone will launch its new version with twice the juice and half the price. The $199 retail price, down from $399, won’t mean less revenues for Apple. Carrier partner AT&T (NYSE: T) is subsidizing the difference in exchange for the two-year subscription from the iPhone customer. Apple has sold 5.4 million units of the iPhone as of the end of March 2008. The often-quoted goal of 10 million units sold by year end 2008 should be accomplished by September. Apple will roll out the new iPhone in 70 countries by year end.
The global race for “smart phone” market share will be a three company race: Nokia (NYSE: NOK), Research in Motion (NASDAQ: RIMM), and Apple.
Apple has a brilliant distribution strategy in place with its powerful, globally placed 232 retail Apple stores. Apple is America’s number one retailer in the valuable metric of sales-per-square-foot of selling space. Last year it topped $4,500 per square foot. Apple controls the customer buys from soup to nuts, as customers buy software and other accessories in addition to the Mac, iPod or iPhone.
There is no other story in the technology world like Apple … well, maybe Google, (NASDAQ: GOOG), but that’s another story!
Georges Yared is editor of YaredsGameChangers.com and author of the new report “How to Spot the Next Google.”
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Filed under: Investments
 Like many other financial institutions, investors are worried about the viability of CIT Group Inc. (NYSE: CIT), which is a major business lender. Of course, the stock price has plunged - and there are lots of rumors swirling.
But today there was some good news. That is, CIT has struck $1.8 billion in deals to unload its manufactured housing and home loan units. The stock is up 16% to $7.93.
There were actually two buyers. Private equity firm Lone Star Funds concurred to a $1.5 billion transaction for the home lending division. And Vanderbilt Mortgage and Finance will spend $300 million for the manufactured home segment.
These deals are certainly a massive relief. Basically, CIT can now focus on its core business - and not deal with the headaches of the consumer area.
Actually, CIT has some big-time backing. For example, Goldman Sachs (NYSE: GS) recently made a $3 billion infusion.
Yet there are still many challenges. After all, CIT has had difficulties generating profits and the credit crunch isn’t going away.
Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar On the web Guide to Decoding Financial Statements . He also operates MergerBook.com.
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Filed under: After the bell, Major movement, Earnings reports, Analyst upgrades and downgrades, General Motors (GM), Market matters, Citigroup Inc. (C), Research in Motion (RIMM), Economic data, Oil, Housing
What the fundamentals couldn’t help with, the charts did…. on selling. If you don’t want to blame the charts, you could always point to Goldman Sachs downgrades and a myriad of everything else. The DJIA and S&P 500 Index broke early-year support levels. We even saw oil cross above $140.00 per barrel in electronic trading. Thankfully, there’s no speculation driving up oil, because the speculators buying say they aren’t driving up prices.
Q1 GDP was revised up 0.1% to 1.0%, although the data is now as old as the hills. While existing home sales posted a gain, we saw yet another median housing price drop. If this sounds overly pessimistic, it is simply because this is the sort of day it was. It even feels like Dr. Pangloss took the summer off.
Here are the unofficial closing bell levels:
Citigroup Inc. (NYSE: C) was the first casualty on a Goldman Sachs downgrade accompanies by a note that the company may cut the dividend or need cash. Those shares were down 6% at $17.70 in today’s final minutes.
General Motors Co. (NYSE: GM) was downgraded to the Goldman Sachs CONVICTION SELL LIST. Goldman sure must have conviction because shares went to lows not seen since the 1950s. GM shares were down 11% at $11.37 in the final minutes of the day.
Oshkosh Corporation (NYSE: OSK) warned of a loss on the quarter, and shares tumbled. This one was down 33% at $22.33 in the final minutes this day.
Research-in-Motion Ltd. (NASDAQ: RIMM) fell sharply after earnings guidance failed to live up to estimates ahead. Shares were down by 13% at $123.65 in the final minutes of the day. That’s what happens when momentum peaks after a 200% share run.
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Lennar, KB Home expected to narrow Q2 losses
Filed under: Earnings reports, Forecasts, KB HOME (KBH), Lennar Corp’A’ (LEN), Housing
 Anyone looking for good news in the housing sector will no doubt be keeping an eye on homebuilders Lennar Corp. (NYSE: LEN) and KB Home (NYSE: KBH) when they report second-quarter earnings this week. Both companies are expected by analysts surveyed by Thomson Financial to narrow their losses.
Lennar is expected to report net loss of 45 cents per share, as compared to a loss of 56 cents per share in the previous quarter and a loss of $1.55 per share in the year ago period. While the company hasn’t posted a quarterly profit since the first quarter of 2007, the loss per share in the most current quarter was 51 cents smaller than analysts had expected.
Miami-based Lennar is one of the largest homebuilders in the U.S., and it also provides financial services for home buyers. Even with the housing slump, the company had revenues in the past year of $10.2 billion, but its net loss totaled $1.9 billion. The company’s long-term EPS growth forecast is 11.5%, which is less than the sector average and the S&P 500. The consensus recommendation of analysts remains to hold Lennar.
Shares shut Tuesday at $14.72, up from the 52-week low of $11.98 in January. The share price is down 62.9% from a year ago.
KB Home is expected to report a net loss of 85 cents per share, as compared to a loss of $3.47 cents per share in the previous quarter and a loss of $2.26 per share in the year ago period. KB Home’s losses have been larger than analysts expected in each of the past four quarters.
Los Angeles-based KB Home caters to home buyers in the South and West, and also has branding deals with Martha Stewart and the Walt Disney. In the past year, the company’s revenues were $6.4 billion and its net loss was $976 million. The company’s long-range EPS growth forecast is 12.3%, which is less than the sector average and the S&P 500. The consensus recommendation of analysts remains to hold KB Home.
Shares closed Tuesday at $18.77, up from the 52-week low of $15.76 in January. The share price has fallen 54.6% from a year ago.
Lennar is scheduled to report earnings Thursday morning, KB Home on Friday morning.
For more news that could influence the results, see BloggingStocks’ Lennar and KB Home coverage.
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Filed under: Deals, The Blackstone Group, Blackstone Group L.P (BX)
 Apria Healthcare (NYSE: AHG), a home healthcare services firm, concurred to be acquired by an affiliate of Blackstone Group (NYSE: BX) for approximately $1.6 billion. AHG share holders will receive $21 in cash for each share they own.
AHG closed at $15.82. AHG July option implied volatility of 46 is near its 26-week average according to Track Data, suggesting non-directional risk.
Buyout Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.
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Filed under: Products and services, Industry, Consumer experience
 Drug companies have never liked the FDA. Why should a government bureau tell them whether their drugs are safe or effective? The FDA approval process can be a long one, and often new treatments are turned down.
According to The Wall Street Journal, the head of Schering-Plough (NYSE:SGP) believes that an “intensifying focus on safety and a diminished tolerance for side effects at the Food and Drug Administration have dramatically lowered the odds that the drugs would make it to market — at least not without a lot of extra time and money.”
Perhaps if pharmaceutical companies had a better track record for safety, the process would not to be so long. It is not that long ago that the FDA discovered that anti-depressants could lead to suicidal thoughts. More recently the bureau warned that anemia treatments including Aranesp, Epogen and Procrit increased the danger of strokes and heart attacks.
Drug company earnings may be hurt by a long FDA approval process, but, without the current system there would likely be an increase in deceased patients.
Douglas A. McIntyre is an editor at 247wallst.com.
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Filed under: Competitive strategy, Apple Inc (AAPL), Marketing and advertising
Conceding that Apple Inc. (NASDAQ: AAPL)’s iPod will be the digital music player of choice for the foreseeable future, on the internet music downloading service Rhapsody is rolling out a $50 million marketing effort to convince iPod users currently using iTunes to make the switch to Rhapsody. Partner sites include Yahoo, Verizon Wireless and iLike, and the downloads will be in the mp3 format so they have the ability to be played on iPods.
Rhapsody is a joint venture of Real Networks and Viacom, so it’s one of the few on the internet music providers that has the muscle to compete with Apple. But I doubt that they’ll be able to. In just a few years, Apple has made itself the biggest seller of music in the country, and sales of music downloads grew about 35% in the most recent quarter, according to the company’s 10-Q.
iTunes seems to be pretty entrenched, and I just can’t see anything compelling coming from Rhapsody that would motivate anyone to switch from iTunes. Rhapsody vice president Neil Smith told Reuters that “We’re no longer competing with iPod. We’re embracing it.”
But now they’re competing with iTunes, and consumers seems to have overwhelmingly embraced that. You really have to question Rhapsody’s — and each other also-ran mp3 seller’s — reason for existing.
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