Filed under: Forecasts, Press releases, Consumer experience, Money and Finance Today, Personal finance, Housing

Every dark cloud has a distress sale. That’s the old saying, isn’t it? Well, perhaps things look pretty bad for the mortgage industry, but I can guarantee you one thing. Real estate investors are eagerly awaiting for the dust to settle so they can pounce on distressed properties which will need to be liquidated for pennies on the dollar. I can hear them drooling from here.

Correct me if I’m wrong, but last time I checked, commercial banks aren’t especially fond of holding title to single family dwellings. Given the possibility that nearly 2 million homes are slated for foreclosure in the next year, that could make for a lot of motivated selling. Many of those distressed homes are in highly desirable areas and I’m sure that there will be plenty of duplexes and quad unit apartment buildings caught up in the fray. The board rooms of large real estate holding companies must feel like war rooms right about now.

If you would like to get a feel for our government’s official position on the matter, have a look at The Real Estate Realist. You will find insight there into what has been officially declared by the Joint Economic Committee as its position on the matter. The committee press release, peppered with words such as loss, destroyed and catastrophe, does little to ease national concerns about a real estate scene in flux. In fact, what I read of the release could be characterized as an astounding declaration of the obvious. I will concede however that the report did make nice use of a tsunami metaphor.

If you have a lump of cash that you’d like to invest in something that you can set your feet on, now is the time to begin your research. It’s time to begin surveying the field but don’t be too eager to move in for the kill just yet. The massive real estate devaluation that seems to be impending has not yet gotten up to speed. I have a feeling that there will be absolutely astounding regional real estate bargains beginning to surface going into the second quarter of 2008 as cash strapped banks scramble to unload real estate they have no desire to hold on to.

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Filed under: Bad news, Competitive strategy, Wal-Mart (WMT)

Wal-Mart Stores (NYSE: WMT) announced this year that it would be partnering with Indian retail company Bharti to establish itself in that booming market in the wake of international failures in both South Korea and Germany in 2006.

India and China are two markets where the world’s largest retailer needs an instant presence apparently, and instead of going it alone this time, the retail giant is partnering with established, in-country players to ensure its success.

But if it’s instant success the retailer wants, it won’t come in the way of profits. Bharti’s chairman this week noted that high rental costs in India will likely force the Wal-Mart partnership to post losses for the first four to five years in that country — probably not something Wal-Mart needed to hear. It’s hard to imagine commercial rental prices being high enough to damp profits on a burgeoning venture like a Wal-Mart partnership, but according to Bharti that is precisely what will happen, as the rental situation is being described as a “dilemma.”

However, it’s not that Wal-Mart is opening stores on every corner in India or anything — the retailer plans to open 15 facilities over the next seven years in the 50:50 retail joint venture, with sizes ranging in the 4,500 square meters to 9,000 square meter space. That’s tiny compared to existing U.S. Supercenters, so Wal-Mart’s strategy here is apparently to start small and grow like the dickens at the most appropriate time. If Wal-Mart hoped to make up for slowing sales in the U.S. with sales from its Indian venture, that probably won’t cut it. My perception is that China is the larger short-term opportunity here.

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Filed under: Forecasts, Press releases, Consumer experience, Money and Finance Today, Personal finance, Housing

Every dark cloud has a distress sale. That’s the old saying, isn’t it? Well, perhaps things look pretty bad for the mortgage industry, but I can guarantee you one thing. Real estate investors are eagerly awaiting for the dust to settle so they can pounce on distressed properties which will need to be liquidated for pennies on the dollar. I can hear them drooling from here.

Correct me if I’m wrong, but last time I checked, commercial banks aren’t especially fond of holding title to single family dwellings. Given the possibility that nearly 2 million homes are slated for foreclosure in the next year, that could make for a lot of motivated selling. Many of those distressed homes are in highly desirable areas and I’m sure that there will be plenty of duplexes and quad unit apartment buildings caught up in the fray. The board rooms of large real estate holding companies must feel like war rooms right about now.

If you would like to get a feel for our government’s official position on the matter, have a look at The Real Estate Realist. You will find insight there into what has been officially declared by the Joint Economic Committee as its position on the matter. The committee press release, peppered with words such as loss, destroyed and catastrophe, does little to ease national concerns about a real estate scene in flux. In fact, what I read of the release could be characterized as an astounding declaration of the obvious. I will concede however that the report did make nice use of a tsunami metaphor.

If you have a lump of cash that you’d like to invest in something that you can set your feet on, now is the time to begin your research. It’s time to begin surveying the field but don’t be too eager to move in for the kill just yet. The massive real estate devaluation that seems to be impending has not yet gotten up to speed. I have a feeling that there will be absolutely astounding regional real estate bargains beginning to surface going into the second quarter of 2008 as cash strapped banks scramble to unload real estate they have no desire to hold on to.

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Filed under: Major movement, Good news, Press releases, Indices, Money and Finance Today, Economic data, Headline news, Federal Reserve

The Federal Open Market Committee (FOMC) decided to lower its Federal Funds Rate target by 25 basis points to 4 ½% and to lower the Discount Rate by 25 basis points to 5%. The decision to lower the Fed Funds Rate had one dissent, and the Discount Rate decision was unanimous.

The Fed left open the possibility of additional interest rate cuts but gave no indication of future action. It also mentioned the improvement in core inflation and the equal balance between upside risks to inflation versus the downside risks to growth.

The primary concern with current Fed actions is that Chairman Bernanke will get caught behind the curve since Fed actions can take several months to a year to take effect. The GDP report this morning indicated that the economy may be more resilient than many believe. Core inflation for the moment also appears to be less of a problem.

Continue reading The FOMC Halloween decision: No tricks here

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Filed under: Bad news, Competitive strategy, Wal-Mart (WMT)

Wal-Mart Stores (NYSE: WMT) announced this year that it would be partnering with Indian retail company Bharti to establish itself in that booming market in the wake of international failures in both South Korea and Germany in 2006.

India and China are two markets where the world’s largest retailer needs an instant presence apparently, and instead of going it alone this time, the retail giant is partnering with established, in-country players to ensure its success.

But if it’s instant success the retailer wants, it won’t come in the way of profits. Bharti’s chairman this week noted that high rental costs in India will likely force the Wal-Mart partnership to post losses for the first four to five years in that country — probably not something Wal-Mart needed to hear. It’s hard to imagine commercial rental prices being high enough to damp profits on a burgeoning venture like a Wal-Mart partnership, but according to Bharti that is precisely what will happen, as the rental situation is being described as a “dilemma.”

However, it’s not that Wal-Mart is opening stores on every corner in India or anything — the retailer plans to open 15 facilities over the next seven years in the 50:50 retail joint venture, with sizes ranging in the 4,500 square meters to 9,000 square meter space. That’s tiny compared to existing U.S. Supercenters, so Wal-Mart’s strategy here is apparently to start small and grow like the dickens at the most appropriate time. If Wal-Mart hoped to make up for slowing sales in the U.S. with sales from its Indian venture, that probably won’t cut it. My perception is that China is the larger short-term opportunity here.

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Filed under: Deals, Management

After more than a month of rumors surrounding the possible sale of Quicksilver’s (NYSE: ZQK) Cleveland Golf subsidiary, the deal is done. Quiksilver announced the sale last night, and will collect $132.5 million from SRI Sports, based in Japan.

It’s interesting because it’s roughly double what industry experts were initially estimating the company would sell for. Back in September, GolfWeek wrote that “Industry sources say Quiksilver Inc., which acquired Cleveland in 2005 as part of a deal to buy ski-maker Rossignol, is in the final stages of unloading the golf equipment maker for roughly $60 million to $70 million. Some analysts say the price is a bargain, noting Cleveland likely is worth at least $100 million, but they add an expedient sale even at a discount is in Quiksilver’s best interests.”

Recently, I’ve written about a stock I own called Adams Golf (OTC BB: ADGO), which I believe is very undervalued, in large part because of some corporate governance issues and managerial apathy toward the stock price (which is a good thing in moderation, but Adams may be at the opposite extreme). Using the sale of Cleveland Golf as a guide, I am convinced that Adams shareholders would be rewarded very handsomely if the company’s board explored sale options. Take a look at some of the key stats

Continue reading Quiksilver sells Cleveland Golf — Should Adams Golf be next?

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Filed under: Major movement, Good news, Press releases, Indices, Money and Finance Today, Economic data, Headline news, Federal Reserve

The Federal Open Market Committee (FOMC) decided to lower its Federal Funds Rate target by 25 basis points to 4 ½% and to lower the Discount Rate by 25 basis points to 5%. The decision to lower the Fed Funds Rate had one dissent, and the Discount Rate decision was unanimous.

The Fed left open the possibility of additional interest rate cuts but gave no indication of future action. It also mentioned the improvement in core inflation and the equal balance between upside risks to inflation versus the downside risks to growth.

The primary concern with current Fed actions is that Chairman Bernanke will get caught behind the curve since Fed actions can take several months to a year to take effect. The GDP report this morning indicated that the economy may be more resilient than many believe. Core inflation for the moment also appears to be less of a problem.

Continue reading The FOMC Halloween decision: No tricks here

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Filed under: Rumors, Google (GOOG), Yahoo! (YHOO), Time Warner (TWX)

Valleywag reports that Fortune’s editor, Andrew Serwer, posted a blog entry October 19 about the wedding of Google Inc. (NASDAQ: GOOG) co-founder Larry Page to his girlfriend Lucy Southworth. (Fortune and BloggingStocks share the same corporate parent, Time Warner (NYSE: TWX)).

But when Valleywag wanted to write about the post, it had disappeared from Fortune’s website. When Valleywag went to Google’s cache, the reference to the Page/Southworth wedding was gone. Fortunately for those interested in the details of the post, Yahoo! (NASDAQ: YHOO) had a copy of the original.

By the way, the Serwer post said that Page and Southworth were getting married on December 7, and those attending the blessed event will need passports, which suggests it will be outside the U.S. Valleywag now suggests that the wedding could be held on Richard Branson’s Necker Island. But one question remains unanswered: if you know why Fortune and Google removed this post from their sites, please comment below.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

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Filed under: Deals, Management

After more than a month of rumors surrounding the possible sale of Quicksilver’s (NYSE: ZQK) Cleveland Golf subsidiary, the deal is done. Quiksilver announced the sale last night, and will collect $132.5 million from SRI Sports, based in Japan.

It’s interesting because it’s roughly double what industry experts were initially estimating the company would sell for. Back in September, GolfWeek wrote that “Industry sources say Quiksilver Inc., which acquired Cleveland in 2005 as part of a deal to buy ski-maker Rossignol, is in the final stages of unloading the golf equipment maker for roughly $60 million to $70 million. Some analysts say the price is a bargain, noting Cleveland likely is worth at least $100 million, but they add an expedient sale even at a discount is in Quiksilver’s best interests.”

Recently, I’ve written about a stock I own called Adams Golf (OTC BB: ADGO), which I believe is very undervalued, in large part because of some corporate governance issues and managerial apathy toward the stock price (which is a good thing in moderation, but Adams may be at the opposite extreme). Using the sale of Cleveland Golf as a guide, I am convinced that Adams shareholders would be rewarded very handsomely if the company’s board explored sale options. Take a look at some of the key stats

Continue reading Quiksilver sells Cleveland Golf — Should Adams Golf be next?

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Filed under: Earnings reports, Other issues, Citigroup Inc. (C), Bank of America (BAC), Wachovia Corp (WB), Housing, Federal Reserve

With its quarter-percentage point cut Wednesday in the fed funds rate to 4.50% and the discount rate to 5.00%, the Fed appeared to tilt slightly against another interest rate cut in December.

In its statement, the Fed said “economic growth was solid in the third quarter” and that strains on financial markets had eased somewhat on balance. The Fed added that today’s action “combined with the policy action taken in September, should help forestall some of the adverse effects on the broader economy.”

Fed Analysis: The above suggests that Chairman Ben Bernanke and the Fed are laying the groundwork for an end to the Fed’s brief easing of monetary policy, if in fact the U.S. economy grows at an acceptable rate or inflation accelerates. The economy has slowed through 2007, but on Tuesday Q3 GDP unexpectedly accelerated to 3.9%, the U.S. Commerce Department announced, up from 3.8% in Q2. It’s quite likely Tuesday’s Q3 GDP statistic influenced the Fed — swiping away any notion of a half-percentage-point, or 50 basis point, reduction in short-term rates. Further, while monetary policy doves will argue that the sub-prime mortgage and sluggish housing sector headwinds remain, monetary policy hawks — or those who believe the Fed does not need to cut rates further — can argue that the Fed has two GDP data points, Q2 and Q3, which indicate that the U.S. economy is growing at a sufficient rate, and that the Fed can now keep interest rates where they are, absent new evidence of a slowing economy, in the quarters ahead.

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