Filed under: Industry, Presidential elections, Housing, Technology

In another strange pastime of mine, I happen to really enjoy reading books about urban planning, touched off by what I felt to be a groundbreaking book by Jane Jacobs, Death and Life of Great American Cities.

The book describes in dry, yet powerful detail, how Jacobs’ felt about modernist planners who “destroy communities and innovative economies by creating isolated, unnatural urban spaces.” Instead, Jacobs argued for a dense and mixed-use urban aesthetic that would preserve the uniqueness inherent in individual — like certain neighborhoods in New York City.

Whether or not you agree with Jacobs, suburbia did provide many families with clean surroundings and bigger houses and amenities (not to mention a longer commute). Today’s New York Times looks at ways to take the best of suburbia and try to reinvent the concept.

In an article called “Can we uninvent suburbia?” Andrew Revkin looks at what a variety of different voices are saying about the matter, including:

• The End of Suburbia, an award-winning 2006 documentary, provides a fascinating overview of how the sprawled lifestyle evolved, the hidden — and not so hidden — costs, and what lies ahead.
• An article in the Sunday version of the Times that calculates the environmental costs of suburbia.
• A great link to a website that follows “dead malls” as part of a process Revkin calls “retrofitting.”

As elections are getting closer and closer, it will be interesting to see what vision of America the American voters stand behind.

Zack Miller is the managing editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund.

Permalink | Email this | Comments

Share This

Filed under: Forecasts, Apple Inc (AAPL), Bank of America (BAC)

Which is the better investment, Apple Inc. (NASDAQ: AAPL) or Bank of America Corp. (NYSE: BAC)? Most investors would take Apple’s side. Even though there is some concern about the softness of iPod sales, almost no company has been more innovative over the last year in producing hot-selling new products. Unit growth prospects for the Mac and iPhone are the envy of the computer and handset industries.

Bank of America, on the other hand, is part of an industry where write-offs cannot seem to find a bottom. With housing and consumer credit getting worse, it is hard to predict how much more money center banks may have to show as losses in 2008.

But, among the 20 most widely held stocks, so far this year, Bank of America has done the best, up 2.2%. Apple has done the worst, down 36.7 %.

The lesson here may be that the companies with the best commercial prospects may not aways do the best in the market, especially when they sport high valuations. A look at Apple’s shares over the last year shows that they peaked in late December, up over 130% for the period. It did not take much in terms of a modestly weak forecast for the current quarter to start a bloody sell-off. Expectation had simply become too great.

At Bank of America, a look at the last year showed the stock had dropped almost 35% in mid-January. The shares are still way down for the period but the percentage drop is only 20% now. Wall Street seems willing to believe that most of the big write-offs are behind the bank and that bad news this year will be modest.

Apple may be asking itself if its actually good to be the company everyone thinks will do well.

Douglas A. McIntyre is an editor at 247wallst.com.

Permalink | Email this | Comments

Share This

Filed under: Deals, Rumors, Internet, Oracle Corp (ORCL), salesforce.com inc (CRM), Technology

Ah, rumors. The stuff that makes stocks go up and down. At least juicy rumors keep things interesting.

There is some chatter in the blogosphere emanating from SiliconValleyWatcher that enterprise database vendor, Oracle Corp. (NASDAQ: ORCL) may be in the process of scooping up upstart Salesforce.com (NYSE: CRM). Not only is SVW hearing this from a reliable source but it appears the buyout may come at a very large premium — 50% over CRM’s share price today.

I feel like this tie-up has been telegraphed from the inception of Salesforce.com as an organization. Salesforce.com plays in the SaaS (Software as a Service) space, effectively letting both large and small sales organizations rent the software that manages their sales pipelines.

I’ve written about SaaS vendors previously and how they harbinge the future of the software industry. Combine a pay-as-you-go model that addresses the long tail of small businesses with the sales prowess of an Oracle at the Fortune 500 level and you have an extremely interesting M&A.

As SiliconValleyWatcher posits, it’s going to come down to numbers. Salesforce’s effervescent (understatement) CEO, Mark Benioff, came out of Oracle and could play the role of Larry Ellison’s successor. Benioff knows he has some great assets and is looking to best capture their value.

Is Oracle going to pay up?

Zack Miller is the managing editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund. Author holds no position in the stocks mentioned.

Permalink | Email this | Comments

Share This

Filed under: Competitive strategy, Technology

This week, EarthLink Inc. (NASDAQ: ELNK) announced its Q4 results. There was a loss of $9.5 million, or $0.08 per share, which included a $31.1 million write-off from its wi-fi assets.

And, yes, now the company wants to offload the segment. So what does this mean for EarthLink, as well as the space?

Well, I had a chance to interview Craig Settles, who is the author of After Muni Wireless Comes to Town. According to him:

Probably the most common question this sale generates is, why would anyone want to buy the business? It ultimately depends on how much is the asking price, and what actual assets come with the deal. If you look back at Metricom, who marketed Ricochet, they didn’t get a whole lot when they sold their business out of bankruptcy court.

Continue reading EarthLink puts its wi-fi division on the block

Permalink | Email this | Comments

Share This

Filed under: Forecasts, Economic data, Politics, Recession

The members of the G7 admit that the global economy is in real trouble. Now they are asking themselves whether they can do anything about it.

Officials at the G7 summit did say that interest rates will have to come down. An official from the European Union said that taxes could be cut further. Many in the private sector don’t think this can offset problems in the credit markets. “The problems are going right through all parts of the financial markets and there’s not much the G-7 can do about this,” said Gilles Moec, an economist at Bank of America Corp. (NYSE: BAC), quoted by Bloomberg.

To say that large governments cannot dampen the downturn is cynical. Whether they will act quickly is a very fair question to raise. A sharp cut in personal and corporate tax rates and more drops in interest rates are likely to cause a pick-up in economic activity. It is also almost certain to cause inflation, but that may be the price that must be paid to keep a severe recession at bay.

The slowness of governments is the enemy now. If the G7 countries can’t get tax and rate stimulation packages in place during the current quarter, it will almost certainly be too late.

Douglas A. McIntyre is an editor at 247wallst.com.

Permalink | Email this | Comments

Share This

Filed under: Marketing and advertising, Netflix, Inc. (NFLX)

Netflix Inc. (NASDAQ: NFLX) CEO Reed Hastings has a plan to keep the company relevant given that the DVD-by mail business will become obsolete sooner or later as video content delivery via the internet becomes more widespread.

The company is partnering with LG Electronics to develop a set-top box that will allow you to stream movies from the internet straight to your television — look for it in the second half of this year.

It’s an exciting development and strong evidence that Hastings realizes that company’s current bread and butter, mailing people movies, isn’t the future. But I’m skeptical about whether Netflix shareholders will reap the rewards. The problem is that I can’t figure out what Netflix’s competitive advantage is in entering a new space. Sure, it can invest in new technology — but so can everyone else and a lot of other companies are. Just as Blockbuster’s (NYSE: BBI) brick-and-mortar presence didn’t mean they could make money doing DVDs by mail, I don’t think Netflix will be any better positioned than a lot of other well-funded companies looking to be on the cutting edge of the next generation of movie delivery.

True — the company has a strong library of titles already available for streaming, but other companies willing to spend the money probably will be able to duplicate that.

Continue reading Can Reed Hastings reinvent Netflix?

Permalink | Email this | Comments

Share This

Filed under: Deals, Walt Disney (DIS), Viacom (VIA), CBS Corp ‘B’ (CBS), Recession

The strike by the Writers Guild of America, which has crippled production of TV show and films, is likely to end this week, according to several media sources. The division between the writers and studios over revenue from internet content appears to have been addressed. According to The Wall Street Journal (subscription required), “in discussions between the studios and the Writers Guild, one particular issue was the money a writer makes when a television show is streamed on the Internet with advertising. The writers won a 2% share of a distributor’s gross in the third year of the contract.”

Now Wall Street can turn to the issue of whether the weakness in big media company shares may begin to abate. Stocks of companies with large TV and film revenue may get a boost from the news. That may only be temporary if a recession claims growth in TV ad dollars and studio ticket and DVD sales.

CBS (NYSE: CBS), Disney (NYSE: DIS), and Viacom (NYSE: VIA) have all traded down since Christmas, though several large media companies say that they are not seeing slowdowns in their businesses.

But, advertising cannot escape a share slump, so settling the writers strike may do very little for shareholders this year.

Douglas A. McIntyre is an editor at 247wallst.com.

Permalink | Email this | Comments

Share This

Filed under: Google (GOOG), Microsoft (MSFT), Yahoo! (YHOO)

According to the Wall Street Journal [a paid publication], it looks like the Yahoo! (NASDAQ: YHOO) board will reject Microsoft’s $31 buyout offer. Basically, the company wants at least $40 (hey, why not?).

So, now the ball’s in Microsoft’s (NASDAQ: MSFT) court. What to do? There are several options.

Of course, Microsoft can up its bid. But why? After all, who can really compete against Microsoft? In other words, why should Microsoft bid against itself?

The #2 option: go hostile. This means filing a tender offer and waging proxy fight. In other words, shareholders will be able to make up their own minds. And, given that the Yahoo! shareholder base has changed significantly (that is, with lots of money-grubbing hedge funds), I think there will be lots of pressure to get a deal done.

True, the hostile approach may be scary to Yahoo! employees. But, I have to assume they also realize that Microsoft is going to gut headcount anyway.

In fact, I think a hostile approach can actually get to a negotiation — and perhaps a small boost in the offer.

Something else: speed is important. With the election year, it’s not easy to predict who will be in the White House — and how a new regulatory regime may impact the antitrust implications of a Microsoft-Yahoo! combo.

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.

Permalink | Email this | Comments

Share This

Filed under: Industry, Competitive strategy, Ford Motor (F), General Motors (GM), Toyota Motor Corp. (TM)

Chrysler has now decided to cut up to half of its brands and a third of its dealers. According to The Wall Street Journal (subscription required), “over the next three years or so, the now closely held automaker plans to drop as many as half of the approximately 30 vehicles it now produces.”

The decision could cut Chrysler’s sales for some time, so the auto company is betting that savings can more than offset that. If the move works, it will be a template for other U.S. car companies. If its does not, it may go down in business history as one of the most idiotic moves ever made in the industry.

If there is early evidence that Chrysler has gone the right direction, it will certainly catch the eyes of management at Ford (NYSE: F) and General Motors (NYSE: GM). Chrysler has about 12% of the U.S. car market to Ford’s 15% and GM’s 25%. GM, in particular, has dozens of brands, some of which are certainly money-losers.

The question becomes whether U.S. car companies can afford to shrink. Toyota (NYSE: TM) can keep a large brand portfolio here and every sale that domestic car companies give up by dropping a brand could go Toyota and its Japanese rivals. Recovering from that probably won’t be possible.

Douglas A. McIntyre is an editor at 247wallst.com.

Permalink | Email this | Comments

Share This

Filed under: Google (GOOG), Microsoft (MSFT), Yahoo! (YHOO)

According to the Wall Street Journal [a paid publication], it looks like the Yahoo! (NASDAQ: YHOO) board will reject Microsoft’s $31 buyout offer. Basically, the company wants at least $40 (hey, why not?).

So, now the ball’s in Microsoft’s (NASDAQ: MSFT) court. What to do? There are several options.

Of course, Microsoft can up its bid. But why? After all, who can really compete against Microsoft? In other words, why should Microsoft bid against itself?

The #2 option: go hostile. This means filing a tender offer and waging proxy fight. In other words, shareholders will be able to make up their own minds. And, given that the Yahoo! shareholder base has changed significantly (that is, with lots of money-grubbing hedge funds), I think there will be lots of pressure to get a deal done.

True, the hostile approach may be scary to Yahoo! employees. But, I have to assume they also realize that Microsoft is going to gut headcount anyway.

In fact, I think a hostile approach can actually get to a negotiation — and perhaps a small boost in the offer.

Something else: speed is important. With the election year, it’s not easy to predict who will be in the White House — and how a new regulatory regime may impact the antitrust implications of a Microsoft-Yahoo! combo.

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.

Permalink | Email this | Linking Blogs | Comments

Share This