Filed under: Bad news, Target Corp. (TGT)

Target (NYSE: TGT) generally is not in the spot of releasing depressing news, but it does happen occasionally. The Wal-Mart (NYSE: WMT) competitor, who is flashier and trendier despite selling much of the same merchandise (but marketed much better) said this week holiday shopping began slower than it had expected, and that Q4 profits might fall “well short” of analyst expectations.

Them’s fightin’ words, and as such, Target shares slid about 7% on the news yesterday. Target shares, which closed above $60 Wednesday, saw a slip to below $54 yesterday and has recovered a bit to over $55 this morning. Is this the end? Of course not, but when a holier-than-thou retailer with a rosy amount of Wall Street cred announces a downfall in guidance and disappointing holiday sales (at least, at the start), things are sure to happen. And happen they did.

Although Target execs said that sales the two days after Thanksgiving met its expectations, sales during the final week of November were soft in hot holiday categories such as toys, holiday merchandise and home and apparel goods. In addition, same-store sales rose just 1.1% when adjusted for an unusual full week that existed this year after Thanksgiving. Are customers really pulling back on holiday spending this year as Target’s results would seem to indicate? Outside of the Black Friday and Cyber Monday shopping days, maybe that’s the case. We won’t know real details until December’s conclusion, though.

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Filed under: Other issues, Employees, Economic data, Housing, Federal Reserve

November’s 94,000 added jobs statistic is likely to tip the scales in favor of a quarter-point cut in short-term interest rates instead of a half-point cut, economists and analysts say.

“The November job creation number, while not outstanding, is more than enough to quell the half-point hawks,” economist Steve Affinito told BloggingStocks Friday. “The Fed will cut interest rates by one-quarter point next week.”

Affinito said the November 2007 jobs report was “the sole bright spot” after a string of negative economic data recently reported for the U.S. economy. That data points to a slow-growing U.S. economy (or possibly worse) through Q1 2008, many economists agree.

“If we can register 2% GDP growth in the first quarter of next year, that would be acceptable at this point, and I would take it,” Affinito said, adding that Q1 could conceivably show a contraction. For Q4 2007 Affinito estimates that the economy will have slowed to 2.3-2.6% growth.

Continue reading U.S. November job gains seen easing pressure on Fed

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Filed under: Good news, Products and services, Apple Inc (AAPL), Marketing and advertising, Research in Motion (RIMM), iPhone

Although the media and Apple (NASDAQ: AAPL) have pushed the iPhone as a consumer device, apparently some business users are finding out that they like it too. Staunch business customers who are tech-savvy, complain about the lack of email flexibility that the iPhone provides, citing Microsoft Exchange and RIM BlackBerry Server functionality being absent. To some business customers who need mobility in the first place, though, the device is still easier to use than a Windows Mobile device or a BlackBerry.

SAP, the German computer software giant, allows the use the iPhone for business, even letting employees to work on their iPhones outside the office. Salesforce.com (NYSE: CRM) is another company that sees the usefulness of the combination iPod/cellphone as a business tool, regardless of how it’s always been marketed — as a consumer device. So, the large question is this: could Apple’s iPhone eat into the huge portable email and web browsing market share Research In Motion (NASDAQ: RIMM) now has with its BlackBerry device line?

When a senior executive from SAP states that “It’s fun … it’s so popular,” one has to wonder if teenage peer-pressure vernacular and groupthink carries over from Apple’s marketing overlords into the business world. After all, Apple is more successful at marketing than anything — and that’s what’s responsible for its huge success in recent years. Business users, however, demand logic and ROI, not marketing fluff. The iPhone is the real deal, combining both functionality and marketing. With a real web browser and forthcoming applications, it could indeed become a business tool of choice. Once the iPhone becomes compatible with RIM or Microsoft corporate email systems, watch for sales to become even hotter. Don’t think Apple doesn’t have this functionality waiting in the wings once a 3G iPhone arrives next year.

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Filed under: Bad news, Competitive strategy, Ford Motor (F), General Motors (GM)

Big Three automakers General Motors (NYSE: GM), Ford (NYSE: F) and Chrysler plan to decrease production of full-size pickups - - including curtailing production for all or part of January 2008, due to a slowing economy that’s expected to decrease sales, The Wall Street Journal reported Friday.

Earlier this week General Motors announced it will impose a two-week shutdown at its pickup truck plants in January 2008.

Ford said its truck plants would likely reduce overtime or impose temporary shutdowns in January 2008 as part of its Q1 production cutback.

Chrysler LLC said it will stop production at plants in Warren, Mich., and Fenton, Mo., right before Christmas through all of January 2008.

Continue reading Big Three to idle pickup truck plants in January on soft sales

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Filed under: Forecasts, Industry, Motorola (MOT), Nokia Corp. (NOK), Palm Inc (PALM), Options, Technical Analysis

Nokia Corp. (NYSE: NOK) shares are trading higher today after some of its rivals have reported soft outlooks. Motorola (NYSE: MOT) reaffirmed its forecast for fourth-quarter earnings and revenue growth yesterday. MOT expects earnings of 12 cents to 14 cents per share, which is in-line with previous estimates. Palm (NASDAQ: PALM) also cut its outlook yesterday after the close yesterday and analysts are of the opinion that MOT and PALM could be losing market share to companies like Apple (NASDAQ: AAPL), Research in Motion (NASDAQ: RIMM), and Nokia. If you think that NOK won’t fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on NOK.

After hitting a one-year low of $18.87 in January, the stock hit a one-year high of $42.22 in November. NOK opened this morning at $39.45. So far today the stock has hit a low of $39.14 and a high of $39.51. As of 11:05, NOK is trading at $ 39.20, up 21 cents(0.5%). The chart for NOK looks bullish but deteriorating, while S&P gives the stock a negative 2 STARS (out of 5) sell rating.

Continue reading Nokia (NOK) takes market share from Motorola (MOT) and Palm

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Filed under: Private equity, Citigroup Inc. (C)

Lately, a variety of veteran dealmakers - such as Nelson Peltz - have pursued blank check IPOs. Basically, these are shell corporations that raise money to purchase companies.

Well, today there has been another filing: MAFS Acquisition. And, the operator is Ronald Perelman, who wants to raise a cool $500 million.

Perelman got his start on Wall Street in the late 1970s. Since then, he has bought companies such as AlliedBarton Security Services, Harland Clarke, Scantron, Panavision and, of course, Revlon.

As for MAFS, Perelman plans to take an active role, such as with identifying, negotiating and structuring deals. What’s more, he will be focusing on targets that have proven track records, strong free cash flows, and top management teams.

The lead underwriter on the IPO is Citi (NYSE: C).

You can find the prospectus at the SEC website. Also, if you want to find other recent IPO information, visit DealProfiles.com.

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

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Filed under: Industry

Carlos Slim, currently the world’s richest person, may be looking to get rid of even more computer stores from the U.S.-based retailer he owns, CompUSA.

Back in the first quarter of 2007, the struggling retailer announced plans to close half its stores as it was losing business to larger retailers like Best Buy (NYSE: BBY) and Circuit City Stores (NYSE: CC). With CompUSA down to about 100 stores in the U.S., competitors have already been approached about buying existing stores, according to reports.

Slim took his first equity position in the computer and consumer electronics retailer back in 1999, pouring in $2 billion in investment money. Since then, it’s hard to see if Slim has made money on that investment or has become frustrated at the company’s financial performance and wants to get out completely. The first large sign was in March when the retailer said it would be closing the doors on half its stores.

CompUSA responded to competitive threats in recent years by expanding beyond PCs and into home electronics and flat-panel televisions. In perfect timing, the prices for flat-panel televisions went south and the margin CompUSA was looking for evaporated. With CompUSA’s annual revenue shrinking from 2006’s $4+ billion to this year’s $1.5 billion, the chain most likely has limited days in front of it.

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Filed under: Products and services, Apple Inc (AAPL), Wal-Mart (WMT), Amazon.com (AMZN), Technology

Wal-Mart Stores (NYSE: WMT) is reportedly aiming to move the music industry right into the anti-piracy technology-free era itself, threatening several label companies that the retail giant will pull their antiquated files from walmart.com if they do not upgrade. Billboard also reported that Wal-Mart’s 2% share in the digital store arena may not say much, at least in comparison with Apple Inc. (NASDAQ: AAPL)’s iTunes Store, but the chain’s CD sales account for a lot of business in the music industry (Billboard estimates 22%).

That large CD sales market for Wal-Mart is big incentive to see the growth of the music industry in the digital market. As CD sales decline, some have speculated that Wal-Mart may begin to re-size the entertainment department in stores, essentially pushing the market online for consumers. Another interest Billboard notes Wal-Mart may have in the “all-encompassing digital format” is the run against iTunes the company and other digital stores could make, like Amazon.com, Inc. (NASDAQ: AMZN)’s MP3 store. iTunes dominates the digital market, holding 70% of all sales.

It hardly seems “fair” to the record labels and the music industry for retain giants and digital stores to be forcing the change. If these growths and rumors tell us anything, it is that retail chains and digital stores are more attuned to what consumers want than the music industry. This is not a big revelation, but Apple alone has not spearheaded an industry-wide shift away from anti-piracy technology. Apple, Wal-Mart, and Amazon, may not be working together to increase the availability of music, but it appears they have the same goals. They just want sales, and apparently consumers just want easy to access music.

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Filed under: Analyst initiations

MOST NOTEWORTHY: RadNet, ArthroCare and E.W. Scripps were today’s noteworthy initiations:

• Stanford initiated RadNet (NASDAQ:RDNT) with a Hold rating and $10.40 target and believes shares are fairly valued at current levels and that it will take time for the company’s strategy of consolidating market share in select geographic areas to generate meaningful benefits.
• Oppenheimer said ArthroCare’s (NASDAQ:ARTC) technologies improve surgical precision and control, reduce operative time, create less painful and more rapid recoveries, and aid in making more surgeries minimally invasive. The firm started shares with a Buy rating and $70 target.
• E.W. Scripps (NYSE:SSP) was initiated with a Hold rating and $45-$47 target at Jefferies. Jefferies believes the company’s traditional media assets will weigh on operating results and are cautious ahead of company split in Q208.

OTHER INITIATIONS:

• Susquehanna initiated coverage on the biotech sector, starting shares of Ligand Pharmaceuticals (NASDAQ:LGND) and La Jolla Pharmaceutical (NASDAQ:LJPC) with Positive ratings and SuperGen (SUPG) with a Negative rating.
• SunTrust initiated Sonic (NASDAQ:SONC) with a Neutral rating.

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Filed under: Competitive strategy, General Motors (GM), China

General Motors (NYSE: GM), which continues the grapple with Toyota Motor (NYSE: TM) as the world’s largest automaker, said this week that it plans to invest up to $5 billion in China over the next half-decade in order to ensure it grabs the best market share it can in that country’s rapidly growing car market.

Breaking down the $5 billion investment, GM officials said that $1 billion would be spent on engine development, production facilities, support staff and related infrastructure. GM plans on selling more than one million Cadillacs, Buicks, and other models in China next year, which would represent a 150-fold increase from 1998. China seems to be attracting dollars from all major auto manufacturers, which is no surprise given the country’s burgeoning growth.

Global Insight analyst Ashvin Chotai says that “Even with this $1 billion a year, it’ll still be tough to remain No. 1 in China,” referencing that China is far and away becoming the most strategic market in the world. While that is true, is China’s infrastructure ready for a glut of new cars? That’s the question nobody seems to be asking as the world gushes at China’s economic growth. Replacing old models with new ones is a wash (of sorts), but what about new additions to China’s road infrastructure? That’s going unanswered in the mainstream media for some reason.

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