Filed under: Deals, Rumors, Competitive strategy, Google (GOOG)

Two recent news reports suggest Google Inc. (NASDAQ: GOOG) continues laying the foundation for world domination.

The first, from Commsday.com, claims that Google is partnering with other carriers to lay a new multi-terabit communications cable on the floor of the Pacific Ocean, connecting the Americas with the Far East. The “Unity Cable” would compete with another new cable in development by Telekom Maylasia, the Asia America Gateway cable. According to the article, a proprietary cable could provide Google a large cost advantage over competitors such as Yahoo! Inc. (NASDAQ: YHOO), although a Level 3 executive recently expressed a concern that the rapid growth in cable networks might result in a “capacity bubble.”

The second report, from The Guardian, suggests that Google is prepared to bid for a portion of the U.K.’s mobile phone radio spectrum if the government follows through on plans to reclaim these frequencies from Vodafone Group PLC (NYSE: VOD) and Telefonica SA’s (NYSE: TEF) O2 network. Those who are convinced that Google is planning its own Googaphone will see this, as well as the company’s interest in a similar upcoming U.S. frequency auction, as evidence that the phone is part of an overall strategy to dominate the coming ubiquitous wireless internet world.

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Filed under: Good news, Products and services, Interviews, Marketing and advertising, iPhone

I am very pleased to have been given the opportunity to interview Dave Chalmers, Chief Operating Officer of Validas Inc. Validas is a startup company that is assertively carving out a niche for itself in the realm of wireless telecommunications billing processes. Mr Chalmers explained that Validas is built by a team that hails from companies such as Research In Motion (NASDAQ: RIMM) and Verizon (NYSE: VZ) Wireless, and he made clear that Validas presents its offerings supported upon the following premise: “Simplicity defines our service and detail defines our mission.” In reflection of his company’s declared intent, I found Mr. Chalmers to be both to the point and clearly definitive with his answers.

Dave Chalmers revealed to me that there’s an extremely unique quality to the service offering that Validas puts forward in that Validas is thoughtfully positioned to benefit both wireless service consumers and wireless communications providers alike. Simply put, the focus of Validas is to save each and every wireless customer time and money by providing them with nearly instant clarity of their wireless communications bills, and then by giving the customer clear and concise input on how to best tailor their wireless service usage to more closely suit their particular needs and budget. The customer may then approach their service provider with a clearer definition of their needs and expectations, and the information needed to follow through on those expectations. Dave summed it up by telling me that above all else, “we are 100% focused on how we can help consumers and small businesses with our service.”

Continue reading Interview: Dave Chalmers, COO, Validas Inc.

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Filed under: Law, Starbucks (SBUX), Employees, Scandals

Starbucks Corp.’s (NASDAQ: SBUX) reputation as one of the good guys of corporate America may be in jeopardy. The National Labor Relations Board has accused the coffee company of illegal anti-union activity at a store in Michigan, the second such charge it has received in the past month. The company is also on trial in New York on charges of similar union-busting efforts involving the International Workers of the World.

Business Week takes a look at the labor woes circling around Starbucks, and even makes a comparison to Wal-Mart (NYSE: WMT), America’s bad boy of labor relations.

And that may be the most damaging thing to come out of this. Starbucks’ wild popularity is as much a function of its atmosphere and reputation as it is a function of the quality of its products. Will people want to patronize a store when the newspapers sold there are reporting on labor violations?

Wal-Mart’s sales may be suffering from its reputation but, based on the demographic Starbucks appeals to, I would expect that this publicity could be far more damaging.

Starbucks shareholders will want to monitor these stories closely. While the legal costs to the company may not be material, the intangible damage could be very material.

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Filed under: Forecasts, General Motors (GM), Employees

In an interview in Barron’s this week, Chris Ceraso of First Boston says that General Motors (NYSE: GM) stock will move to $40, if it gets a “reasonably good deal” from the UAW.

It appears that the “good deal” may be just around the corner. As GM and the UAW prepare for the next set of bargaining sessions. a large number of media outlets, including MarketWatch, say that the agreement to move GM’s $55 billion liability for worker health care into a fund controlled by the union is nearly done. The new arrangement would also save GM about $5 billion in annual expenses.

The open issue in moving the fund is how much GM will have to pay into the new pool. The number could certainly be above $30 billion, which means GM might have to raise some of the money. Or, a portion of the dollars could go in as GM stock.

In many ways the deal is better for the UAW than it is for GM. Once the new health benefit pool is set up, the union needs to run it prudently to make sure that it can handle worker benefits for the years to come. But, no matter which GM’s costs will have been cut, it still has to reverse the market share decline that it has suffered in the U.S. at the hands of Japanese car markers. Lower costs-per-vehicle may help, but can’t make up entirely for ongoing drops in sales.

First Boston may be right, GM’s shares my go to $40, but, If revenue keeps slipping, it won’t be there for long.

Douglas A. McIntyre is a partner at 24/7 Wall St.

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Filed under: Deals, Private equity, First Data (FDC)

KKR is known as a tough negotiator. After all, the firm walked from its $8 billion deal for Harman International (NYSE: HAR), which crushed the stock by 24% on Friday.

But, as for the First Data Corp. (NYSE: FDC) transaction, KKR is certainly jazzed. Despite talk that financing had dried up, it now looks like the debt offering is oversubscribed — at least for a $5 billion tranche (this is according to a story in Bloomberg.com). Although, to generate more demand, there was a 4% discount on the notes.

But for the most part, it looks like things should pan out and based on the stock price of First Data, Wall Street also agrees.

Does this mean things will get easier for other deals? To some degree, I think the answer is yes. Liquidity is coming back into the system and fear is dissipating.

However, I think there will still be some carnage, especially for those deals that may not have the strong fundamentals of First Data or that were aggressively priced and structured.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates DealProfiles.com.

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Filed under: Personal finance, Housing

You have to love academia. With the subprime meltdown in full swing and Americans with ARM and/or pay-option mortgages finding their homes in jeopardy, Tomasz Piskorski of Columbia Business School and Alexei Tchistyi of New York University’s Stern School of Business have come out with a 65-page paper full of equations to demonstrate that no, actually these so-called toxic mortgages are the best ones out there.

The authors of the study argue that, in a perfect world, these mortgages are great — sounds a little bit like what some people say about communism. Pay-option ARMs work great if people behave rationally — act in the own best interests, behave with self-discipline, and pay more than the minimum whenever possible.

That sounds like most of the subprime borrowers you know? Yeah, that’s what I thought. The professors say that, with proper education, these loans could be attractive. According to Piskorski:

“Obviously people are to some extent irrational. But if you want to ban this type of contract, you should really weigh the benefits and the costs. How much could you educate people? Make people understand them. Provide them with software. Make a federal law that requires the lender to reveal what this contract is about.”

But most people know shockingly little about finances. According to a Jump$tart survey, “Only 14.2% [of high school students] felt stocks are likely to have higher average returns than savings bonds, savings accounts, and checking accounts over the next 18 years in spite of the fact that there has never been an 18 years period when this was not true.”

So educating people about pay-option ARMs seems a little ambitious.

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Filed under: Consumer experience, Rants and raves, Entrepreneurs

It’s been a week since our Money Face-Off posts ran here on BloggingStocks and less than a week since the Money Face-Offs were featured on the AOL welcome page, and the response has been terrific. Many of the face-off polls have more than 50,000 votes thus far, and some of the match-ups are very close.

The closest of all is the face-off of CNBC anchors Erin Burnett and Maria Bartiromo: 50/50 with more than 61,000 votes so far. And the post has garnered 39 comments so far. The commenters have strong opinions, whether defending Bartiromo or Burnett, wishing other anchors had been included, complaining about the photos, or even questioning the Money Face-Off feature itself. Be sure to check it out.

The face-off between the former and current New York City mayors, Rudy Giuliani and Michael Bloomberg, garnered more than 67,000 votes. While Bloomberg has his defenders, presidential candidate Giuliani currently has a small lead in this match-up, with a little over half the votes. Can he hold on to that lead, though?

The match-up of supermodels turned businesswomen, Tyra Banks vs. Heidi Klum, also has more than 50,000 votes so far. In this case, it’s Klum in the lead with about 55 percent of the vote. Only one reader, a Tyra Banks fan, has commented so far. Feel free to add your thoughts about which former supermodel you think is more successful.

Continue reading Money Face-Off recap: The ‘Money Honey’ catfight, and Giuliani’s slim lead here too

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Filed under: Major movement, International markets, Forecasts, Boeing Co (BA), Personal finance, Politics, POSCO (PKX)

Ben Bernanke’s buyout bailout is helping push the dollar to record lows. While this will make your travel outside the U.S. shockingly expensive, the Washington Post offers some ways you can invest to ease some of that pain:

• Buy foreign stocks. The U.S. investor converts dollars into the currency needed to buy the stocks, whether euros, pounds, yen or something else. Then, if the share price holds and the dollar falls, the investor gains when he sells the stock and converts the money back into dollars. If the share price has risen, the profit is even greater. Of course, if the dollar appreciates in the interim, the process works in reverse. As Barry Summerlin notes, my recommendation of Posco (NYSE: PKX) has gone up significantly since August, probably due in part to this effect.
• Buy U.S. companies with overseas earnings. buy the stocks of big, multinational U.S. companies that benefit from the weaker currency. A lower dollar helps boost U.S. exports by making them relatively cheap on world markets The Boeing Company (NYSE: BA) is among the beneficiaries of this trend.
• Buy CDs, mutual funds and exchange-traded funds packed with various currencies or linked to baskets of foreign exchange. More than $2.7 billion was invested in open-end currency funds by the end of July, up from $36 million at the end of July 2000, according to estimates by Lipper. So far, the falling dollar fund is the better bet: It is up 7.91% for the year, as of Thursday. The rising dollar fund is down 2.66%.

Continue reading Profiting from the dollar’s decline

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Filed under: Competitive strategy, Google (GOOG), Yahoo! (YHOO), eBay (EBAY), Amazon.com (AMZN), Marketing and advertising, Small business

In a recent piece in BusinessWeek, there’s an in-depth look at the revamp of eBay’s (NASDAQ: EBAY) website. That is, the company is trying to bring back buyers - who have been moving to rivals like Google (NASDAQ: GOOG), Amazon (NASDAQ: AMZN), and Yahoo! (NASDAQ: YHOO).

It’s a smart move and I also think it shows the importance of a key concept: the lifetime value (LTV) of customers.

Generally, LTV involves the following: the profit per unit sold times the average units sold minus the costs of customer acquisition. This should be calculated over a period of time - say 24 to 36 months.

“We actually look at bookings just as much as revenue when we look at the LTV equation,” said Jason Blessing, who is a general manager at Taleo (NASDAQ: TLEO). “We feel this gives us a clearer picture of what we are spending to get new year bookings. We feel that we are operating at peak performance if we are getting $2+ in new bookings for every $1 we spend on sales and marketing.”

Continue reading Entrepreneur’s Journal: eBay’s site revamp and the lifetime value of customers

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Filed under: Entrepreneurs, Housing

According to The Wall Street Journal, New York real estate mogul Harry Macklowe’s real estate empire is in serious trouble. After purchasing seven New York buildings from Equity Office Properties Trust for $6.8 billion, Macklowe’s company, Macklowe Properties, has $5.1 billion in debt that must be paid off by February.

The state of the credit markets is making refinancing very difficult, and because of the tiny down payment ($50 million), the properties are not generating positive cash flow.

Macklowe’s people are, of course, expressing confidence, and many observers believe that Macklowe will pull through. But maybe Macklowe has nothing to worry about, even if it does end badly. After all, wiped out real estate moguls don’t disappear, they just …

Get their own reality shows, have epic feuds with Rose O’Donnell, sell real estate seminars through late-night infomercials, and have their own brands of water.

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