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 27th 2008 1:20PM by Brian White
Filed under: Products and services, Ford Motor (F)
Ford Motor Co. (NYSE:
F) will refit an existing truck plant in Michigan to manufacture smaller cars. Cost: $75 million. This comes on the heels of one of the worst years ever for large American automakers, which still can't cope with rapidly changing consumer desires for fuel-efficient transportation instead of gas guzzling SUVs and large trucks.
As
Georges indicated recently, Ford will need massive plant retooling to get its bottom line back in shape as it produces the product mix consumers are looking for. This is a good step for Ford, even though it will be costly. The $75 million price is minor considering the cost of doing nothing.
Ford says the production of newer, fuel-efficient cars at the Michigan plant will begin in a few months, with completion sometime in 2010. It's also moving 1,000 of the employees from that plant to another one in Wayne, Michigan to increase production of the 4-cylinder Ford Focus sedan. Since Ford spent $300 million just three years ago to build the plant to be flexible, this should speed the conversion, according to the automaker.
It's just too bad that Ford can't unveil more small car production in November instead of just starting to convert a plant for a few years down the road.
Posted Aug 27th 2008 12:20PM by Brian White
Filed under: Products and services, Launches, Google (GOOG)
Google, Inc. (NASDAQ:
GOOG) unveiled its Ad Manager advertising management platform this week after a beta release in June. This platform allows website operators to manage advertising inventory, tracking and ROI. And the price is right -- there is none -- which fits into Google's history of giving away some key products for free.
Google's Ad Manager public release is significant because it will allow almost anyone to set up and use both direct and network-based advertising to help eliminate costs and pump up revenue -- even if the ads aren't from Google's massively popular AdSense or AdWords program.
However, Google is making it super easy for website publishers to integrate its AdSense platform directly into its Ad Manager product. This was pretty obvious from day one as Google continues to recruit more ad customers into its universe to grow its own ad revenue. Ad revenue, still, is the biggest single component of Google's income.
Continue reading Google unveils Ad Manager system for use by anyone
Posted Aug 26th 2008 12:14PM by Brian White
Filed under: Products and services, Best Buy (BBY)
Best Buy, Inc. (NYSE:
BBY) has
lowered the price of a Sharp Blu-ray disc player this week to $349.99 from $399.99. Why is that so significant? It isn't. While most buyers in the U.S. sit and wait until Blu-ray player prices reach the $199.99 level, there is a looming problem even with that.
The problem is this:
standard DVDs are good enough for most of us, and with
upconverting players sitting in all retailers for $50 to $75, will another upgrade cycle to another format be foisted on the buying public? This one will be much harder than the transition from VHS tape to DVD a decade ago.
If Best Buy really wants to make the next-generation optical disc format truly a best seller, the pricing will have to come down by a mile. This really won't be the responsibility of the retailer, but the manufacturer. But Best Buy can do this: guarantee an X amount of sales if the price moves to a certain price point. It's the only retailer outside
Wal-Mart Stores, Inc. (NYSE:
WMT) that could possibly guarantee a certain amount of sales in order to get newer consumer electronics format into the mass population. So, will Best Buy take the lead and get Blu-ray into the mainstream?
Toshiba Corp. is rolling out its own upconverting standard DVD player specifically targeted to those buyers who don't yet want to invest in the expensive Blu-ray format. This is a good move, although there are tons of competing products already on the market. Although
Sony Corp. (NYSE:
SNE) won a major victory in the Blu-ray format, convincing customers to buy the expensive hardware and movie software is still a major challenge. Perhaps a major Blu-ray partnership between Best Buy and Sony should be on the way?
Posted Aug 26th 2008 11:23AM by Brian White
Filed under: Industry
Chrysler, owned by
Cerberus Capital Management, has
begun production of several hybrid vehicles as of last week, according to the troubled automaker.
Like its larger U.S. competitors, Chrysler is desperately trying to shift its product mix into more fuel-efficient cars, trucks and SUVs as buyers look for the best fuel economy possible while not giving up the creature comforts of gas guzzlers.
Chrysler is now building the Dodge Durango and Chrysler Aspen SUVs with hybrid capability in its Newark, Delaware plant and the company says both will be available on dealer showrooms soon. "Soon" can't come soon enough and it'll be interesting to see what gas mileage these SUVs have, even after undergoing a hybrid transformation.
Chrysler desperately needs a hit here, but this sounds like a "me too" approach similar to
General Motors Corp. (NYSE:
GM)'s Tahoe hybrid and other vehicles. Yes, the fuel economy moves into the V6 level with these hybrid SUVs. Will that make customers buy them at a time when 4-cylinder vehicles are blowing off dealer lots, though?
Posted Aug 25th 2008 3:20PM by Brian White
Filed under: Wal-Mart (WMT), Columns
Welcome to the 73rd 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'll be taking a look at whether Wal-Mart Stores Inc.'s (NYSE: WMT) earlier decision to bring its store managers together and tell them about the possible repercussions of a Democratic president violated federal election laws. Since presumptive Democratic Presidential candidate Barack Obama has now chosen veteran politician Joe Biden as his running mate, is Wal-Mart chewing its corporate fingernails off?
The Democratic National Convention begins today, so it will be interesting to see what comes out of it. Did Wal-Mart violate federal campaign election laws by having an "education session" with the leaders (and in turn, employees) of its national store locations? Let's see what national labor unions think. Read on.
Continue reading The Wal-Mart Weekly: Violating federal election laws?
Posted Aug 22nd 2008 2:16PM by Brian White
Filed under: Launches, Microsoft (MSFT)
Microsoft Corp. (NASDAQ:
MSFT) will be building its fourth data center in Des Moines, Iowa at a cost of $500 million, the software maker said yesterday. The reasons give for Iowa as the site for such a large project were tax breaks as well as low energy costs. The data center will be located on a 42-acre plot of land just outside Des Moines. Fifty to 75 workers are expected at the new data center, with an average salary of $70,000 annually.
Microsoft must think adding large data centers will help its online efforts compete against
Google, Inc. (NASDAQ:
GOOG). Perhaps the company is right -- because right now, no company can touch Google's online search market. However, there are more Microsoft Hotmail and
Yahoo! Inc. (NASDAQ:
YHOO) Mail users than Google Gmail users. Google's market share lead doesn't extend into all its online product offerings, but don't think for a second that the Mountain View-based company doesn't want to steal as many users away from Microsoft's Hotmail as possible -- plus grab customers of other Microsoft online services.
The new data center will take a year to 18 months to compete, although company officials were mum on how many servers would reside there, as the company is still designing the data center. It did say that its data center servers would be contained in shipping containers instead of the standard server rack to allow more transport and setup flexibility. The state of Iowa is expected to give
combined tax breaks to Ole' Softie of about $3 million per year. Not to be outdone, though, Google is
building a $600 million data center just 122 miles west of Des Moines. At last, two of the largest forces in computing will be neighbors soon.
Posted Aug 22nd 2008 1:26PM by Brian White
Filed under: Products and services, Dell (DELL)
Dell Inc. (NASDAQ:
DELL) has turned on the heat within the computer server market, taking first place in server growth in the latest quarter according to Gartner. Dell's server sales climbed 15% during the April-Jun quarter, outpacing an 11.5% gain at
IBM Corp. (NYSE:
IBM) and a 2.9% increase at
Hewlett-Packard Corp. (NYSE:
HPQ). How did Dell run so much farther ahead of HP and IBM last quarter?
Although an economic pinch in the U.S. is affecting about every industry, computer server shipments worldwide rose 12% during the latest quarter, reaching 2.34 million units and $13.8 billion in sales. Although IBM still held onto the top spot with 31.2% market share, HP saw a small drop to 27.6% from 28.4% market share while Dell upped its market share a single percentage point to 13%. HP still delivered more server units than Dell for the quarter, however.
Does this point to a long-term trend in Dell's server sales success? Hardly. But, the Texas company has concentrated hard in the last few quarters in consumer retail exposure and svelte laptop PC designs as well as server systems -- and both
efforts are making an impact. Dell's road to gaining the foothold it once held is easily underway, but it will continue needing more overseas growth as the U.S. market withers until sometime in 2009.
Posted Aug 21st 2008 3:46PM by Brian White
Filed under: Bad news, Products and services
Nintendo Co., Ltd. (ADR) (OTC:
NTDOY)'s Wii game console continuet to burn up the sales charts, selling
hundreds of thousands every month. In fact, the lower-priced and graphically-inferior Wii has blown through almost every sales expectation since its release nearly two years ago. Last month, the Wii was responsible for 49% of all game consoles, and it's sold nearly 30 million since its November 2006 launch.
Wow.
But, with success comes a large target on the back. Nintendo has been named in a patent lawsuit claiming the Japanese gaming company. Hillcrest Technologies says that Nintendo has violated various patents it holds dealing with the wireless, dimension-aware gaming controller that ships with every Wii console.
The "Wiimote," as it has been dubbed, uses gyroscopes, Bluetooth wireless technology, and is incredibly simplistic on the surface (there are a minimum of buttons, unlike the competition). But inside the Wiimote, the technology making it possible to swing it like a tennis racket is quite complex. Hillcrest's claim rests primarily on wireless technology it invented to
allow the physical motion of a controller to select items on a viewing monitor. Hillcrest has already licensed its technology to several gaming companies, but the question remains: why did it take almost two years to bring the lawsuit against Nintendo? Something smells here.
Posted Aug 21st 2008 3:20PM by Brian White
Filed under: Good news, Google (GOOG), Apple Inc (AAPL), Marketing and advertising
Google, Inc. (NASDAQ:
GOOG) and
Apple, Inc. (NASDAQ:
AAPL) were named as two of the top companies in customer satisfaction recently by an ACSI index released out of the University of Michigan. This is the same study that
pounded U.S. automakers in favor of foreign auto brands.
In the index that measured e-business companies, two of the most powerful brands in technology rose to the top. It's no surprise Apple made the top of the list, with its capability to mesmerize iPod, iTunes and iPhone customers. The company is also selling more Macintosh computers than ever -- and customers are
buying them as fast as Apple can make them.
It's also hard to think that any web company can catch Google. The world's largest internet search company has such a large first-mover advantage that it's next to inconceivable that any competitor will be able to offer a better product in such a way that Google will lose a decent chunk of market share. It, along with Apple, has an extremely high customer satisfaction rating. Even if there are better products, perception is reality -- and the perception is that Google offers the information as fast as it can and connects the searcher with the information they need, and with quality.
At least two U.S. brands top their respective list, while U.S. automakers slide further down the pile of irrelevancy in a changed age of fuel efficiency and the perception of better foreign brand auto quality.
Posted Aug 20th 2008 1:28PM by Brian White
Filed under: General Motors (GM), Marketing and advertising
General Motors Corp. (NYSE:
GM) is in such dire straights that it said Tuesday it is
bringing back "employee pricing" to almost its entire 2008 auto lineup. We're not talking a few Chevy models here, but all GM models save a few truck ones.
Like Doug mentioned this morning, the automaker is in a deep funk and it's doubtful that any incentive like the previous employee pricing ruse will help.
So, what's an alternative? If it costs the automaker more to have bloated, non-moving inventory sitting on dealer lots, how about forgoing the
employee pricing schtick and giving away slow-selling models at cost? Not invoice, but cost? Sounds audacious, but these are audacious times in the auto industry. GM is even giving away employee pricing on a handful of 2009 models. That's great, but 2008 models need more extreme measures. Customers, after all,
don't exactly have the best perception of U.S.-made cars this year.
In general, employee pricing is 10% less than the invoice price of a vehicle. GM will need to cut deeper than that to reach out and get its glut out of dealer hands and into the hands of customers. Nothing speaks to the average American consumer like a cheap price --
nothing. The employee pricing incentive was very popular in 2005 when it was offered to all consumers, and it even caused the competition to roll out similar pricing. This time, GM needs to get innovative and unveil a new, better concept if it's serious about moving inventory -- even SUV inventory.
Posted Aug 20th 2008 9:45AM by Brian White
Filed under: Earnings reports, Dell (DELL), Hewlett-Packard (HPQ)
Hewlett-Packard Corp. (NYSE:
HPQ) reported
very decent quarterly results Tuesday after the market close. The world's currently-largest PC maker reported a net profit gain of $2.03 billion, up from the year-ago period gain of $1.78 billion on the back of a $28 billion quarter in sales.
The company's EPS was 86 cents, beating analyst estimates of 84 cents. In news that was not shocking, 68% of HP's sales were from overseas markets, although that was a drop of 2% from the Q2 period. HP, like many manufacturers, has its wings spread out so far in global markets that it was able to weather the U.S. market downturn.
HP guided its Q4 sales at over $30.2 billion, although CEO Mark Hurd indicated that his company's introduction of sleep laptop designs was making a splash worldwide. "You've got a lot of places around the planet where the only access to the digital content out there is through a notebook and a wireless card ... we have a significant opportunity.''
He's right. How many households are transforming to a multi-notebook, wireless environment without a desktop in sight? In addition to that, HP's global finesse and product mix is continuing to beat competitor
Dell, Inc. (NASDAQ:
DELL), even though
Dell wants to change that.
Posted Aug 19th 2008 2:44PM by Brian White
Filed under: Google (GOOG), Marketing and advertising
Google, Inc. (NASDAQ:
GOOG) has finally started trying to monetize its YouTube service through video ads, and now the world's largest internet search service is toying with advertising at its mobile video website as well. So far,
Google is only testing display advertising (small banners) on its
mobile website and only on select pages for U.S. and Japanese visitors.
For now, this is only a "test" for YouTube. Google's Christine Tsai indicated that there are "millions of people who visit YouTube every day" on their phones. Google CEO Eric Schmidt has repeatedly said that Google's mobile presence is the key to the future, since there are a disproportionately larger number of internet-capable cellphones in use globally than PCs.
Schmidt has even called finding the right advertising model on YouTube the "
holy grail." He's right -- but the only problem is that Google still has not found a mass advertising model for YouTube (mobile or not) that works when deployed property-wide. While Google continues to seek other revenue sources outside text advertising -- currently its only real cash cow -- YouTube probably presents the next best revenue source for the online search leader. That is, if it can make the YouTube ad model as unobtrusive as the search advertising model.
Posted Aug 19th 2008 11:11AM by Brian White
Filed under: Competitive strategy, Apple Inc (AAPL), Dell (DELL)
A recent
article about one of
Apple, Inc.'s (NASDAQ:
AAPL) former engineering executives left me laughing quite a bit. Tim Bucher, who recently left Apple for
Dell, Inc. (NASDAQ:
DELL) after being accused by Apple CEO of being "manic depressive," is trying to throw a spear at his former company by trying to find a challenger to Apple's iTunes service with a quite-ambitious plan at Dell.
Instead of trying to create yet another online music and video ecosystem that syncs seamlessly with another round of boring Dell music devices, he's trying to create an industry-wide team of competitors to seriously challenge Apple's dominance in the iPod/iTunes marketplace. Notice I did not say "MP3/Music service" marketplace. Right now, it's all Apple in the digital music scene and has been for some time.
Consultant Rob Enderle says that Apple "locks you in" while Dell "locks you into choice." While opening up choice is great for consumers, history says that products and services become so fragmented and hard to use that they never reach critical mass. What Apple did with the iPod was to make the service that goes with it -- iTunes -- so easy to use that it quickly became the market leader. One brand, one service, simple to use.
It's true that many customers want freedom and choice in their music players and music download services so they can "mix and match" to their heart's content. Everyone else (yes, the majority) wants a solution as simple as a light switch. Flip it, and everything "
just works." Good luck, Bucher and Dell, but to even come close to challenging Apple, your solution better be out of this world.
Posted Aug 18th 2008 3:39PM by Brian White
Filed under: Wal-Mart (WMT), Columns
Welcome to the 72nd 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'll be delving into Wal-Mart Stores Inc. (NYSE: WMT)'s decision earlier this year to jettison many hundreds of magazines from its shelves in order to thin out its reading offerings inside its stores. But, more importantly, what's going on regarding magazines in its Asda division in the UK? Is Wal-Mart trying to extend its reach just a bit too far? It tried similar tactics back in January -- so why again in August?
Wal-Mart's influence has grown immensely powerful
Ever since the 1990s, Wal-Mart has been a powerful force in American retailing as the Supercenter concept starting taking root in metro areas throughout the U.S. As the retailer became the dominant discounter, it brushed aside the competition just dirt under a rug.
Of course, along with powerful growth comes powerful opposition. I like to draw comparisons to Microsoft Corporation (NASDAQ: MSFT), when it comes to Wal-Mart. Microsoft has its operating system that has standardized a complete personal computer industry under one umbrella and became the de-facto standard that, more than anything, revolutionized the computer industry. For Wal-Mart, its relentless pursuit of finding lower prices and passing those savings on to the consumer made it become the largest retailer in the world.
Continue reading The Wal-Mart Weekly: Wal-Mart needs more profits from the magazine aisle
Posted Aug 18th 2008 2:16PM by Brian White
Filed under: Rants and raves, Marketing and advertising, Circuit City Stores (CC)
While vultures continue to circle around the body of consumer electronics retailer
Circuit City Stores, Inc. (NYSE:
CC), the company is at least trying to look alive even though much of the world has left it for dead. Circuit City's latest travail is offering "back to school tips" to concerned parents, who, after reading Circuit City's
tips-as-a-marketing-press-release, must think the retailer is on its last leg.
Apparently, many retailers believe the majority of the American public are seasonal procrastinators. The "rush to back to school" is not really a rush more than a shopping highlight for many retailers from apparel to computers to shoes to notebooks (the paper kind).
Circuit City's latest effort states some statistics as a lead-in for customers to come into their local Circuit City and shop for PCs and all the related garb that goes with them. As in, printers and ink and thumb drives ...
oh my.
Circuit City's parting shot in its "back to school" montage was the mentioning of a gift card. In fact, you can email a gift card from your PC to your college student! Wow, how 2001-ish! I'm just confused on why Circuit City even participated in a "duh" survey like this to drum up a
rather lackluster press release from a company that couldn't manage itself out of a shoebox.
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