Archive for February 16th, 2008
Filed under: Law, Scandals
Last April I posted on a Federal gun law that had been violated when Virginia Tech mass murderer Seung-Hui Cho obtained the guns that he used to kill his victims. Well it looks like the Northern Illinois University (NIU) shooter obtained his murder weapons after violating the same law.
What law? As Newsweek revealed last year, the 1968 federal gun law that blocks convicted criminals from buying firearms (passed after the assassinations of Martin Luther King Jr. and Robert F. Kennedy) also prohibits gun purchases by those who have a history of mental illness. Cho had been committed to a mental institution and lied on his gun application.
And The Associated Press reports that Steven Kazmierczak, the NIU killer, also had mental health problems. It reports that a former employee at the Thresholds-Mary Hill House, a Chicago psychiatric treatment center, said Kazmierczak had been placed there for more than a year after high school by his parents. He used to cut himself and had resisted taking his medications.
Continue reading NIU and Virginia Tech mass murderers both obtained their guns illegally
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Filed under: Products and services, Launches, Consumer experience, Competitive strategy, Apple Inc (AAPL), Amazon.com (AMZN), Marketing and advertising
British-based Play.com, a privately-based retailer, has launched a new download store in direct competition with Apple Inc.’s (NASDAQ: AAPL) iTunes Store in the United Kingdom. PlayDigitial will offer tracks without digital rights management (DRM) technology from privately-held EMI Group and independent labels, in a move that looks similar to iTunes current offering of DRM-free tracks at lower prices. The store will still offer DRM tracks at higher prices than the DRM-free tracks and is in talks with other labels to bring more DRM-free tracks into the store.
Play.com’s new store comes in advance of Amazon.com Inc.’s (NASDAQ: AMZN) sister store in the UK, Amazon.co.uk, opening a similar store with DRM-free tracks. The U.S. store recently opened its own MP3 store in full with DRM-free tracks from all the major labels, not simply limited to one major and independents. According to Billboard, the UK version of iTunes controls 70% of the market there and the store is also being forced to bring prices down to common prices with other European nations. PlayDigital and the eventual Amazon download store in the UK will work against that control and price drops.
It seems odd that the “fight” against digital rights management continues, considering that it has essentially been over in the United States since last month when Amazon’s MP3 store gained access to tracks from all the major labels without the technology. Obviously different laws exist for agreements with companies in different countries, but until DRM is dropped completely, moves like this are going to continue to occur. Unfortunately for Apple and the iTunes Store, the drive against DRM technology that was started about a year ago is no longer under the company’s control, with stores like Play.com and Amazon.com taking the lead and gaining better deals with the music labels.
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Filed under: Blackstone Group L.P (BX)
Blackstone Group (NYSE: BX) head Stephen Schwarzman’s 60th birthday party quickly became a symbol of the excesses of the private equity bubble, corporate greed, the frailty of man, etc., etc., etc.
Equally symbolic of the credit crunch, his 61st birthday — which fell on Valentine’s Day, another symbol of something — was a more modest affair. True, he and his wife weren’t exactly drinking store-brand apple juice out of plastic cups and smacking around dollar-store pinatas, but it was a definite let-down for observers looking forward to the private equity party of the year. He ate at a Four Seasons restaurant, drank pink champagne, and then had what Forbes called a “low-key gathering” with close friends and family at his home that night.
Perhaps he has good reason to scrimp: shares of Blackstone have declined more than 50% since the IPO, knocking billions off his net worth.
If things keep going like this, next year’s birthday party could be at Chuck E. Cheese.
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Filed under: Deals, Microsoft (MSFT), Yahoo! (YHOO), China
Alibaba, the big Chinese e-commerce company is 39% owned by Yahoo! Inc. (NASDAQ: YHOO). That has been OK for Alibaba; Yahoo! has not taken any role in running the company. But, the firm and the Chinese government are a little worried that Microsoft Corp. (NASDAQ: MSFT) will not see it that way if it buys Yahoo!
According to The Wall Street Journal (subscription required), “Alibaba has already been contacted by Chinese regulators seeking information on how it could be affected by a Microsoft purchase.” The concern is perverse for two reasons.
China thinks nothing of allowing its sovereign funds to put capital into U.S. financial companies. Congress has already begun to worry in public that the Chinese might exert unwanted pressure on the managements of some of Wall Street’s biggest companies. The Chinese cannot have it both ways, buying into American businesses while setting limitations on investments in its country.
What is even more obvious is that one solution is to have Microsoft simply enter into a legal agreement that makes its shares in Alibaba non-voting. This allows the big software company the advantage of an investment that will probably grow in value, and one that it will probably eventually sell back to Alibaba or even to the Chinese government.
Why make the issue more complicated than it really is?
Douglas A. McIntyre is an editor at 247wallst.com.
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Filed under: Earnings reports, Coca-Cola (KO), Dean Foods (DF), Abercrombie and Fitch (ANF), Deere and Co (DE), Qwest Communications Intl (Q), Goodyear Tire and Rubber (GT), Zoltek Co (ZOLT), Taser Intl Inc (TASR)
Here are a few highlights of this past week’s earnings coverage from BloggingStocks:
Upcoming results to watch for include Wal-Mart (NYSE: WMT), Hewlett-Packard (NYSE: HPQ), OfficeMax (NYSE: OMX), Whole Foods (NASDAQ: WFMI), MGM Mirage (NYSE: MGM), JCPenney (NYSE: JCP), and Safeway (NYSE: SWY).
Visit AOL Money & Finance for more earnings coverage.
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Filed under: Law, Scandals
The 2005 collapse of Refco, one of the largest commodities brokers in the world, was fast and furious. One day it was a high-flying IPO perfect for those who missed out on the CME Group (NYSE: CME) run-up (that ended up continuing). Then it went bankrupt after disclosing hidden losses and concealed debt. The whole mess unraveled in about a week.
On Friday, 59-year old former chairman and CEO Phillip Bennett pleaded guilty to a 20-count indictment including charges of conspiracy to commit securities fraud, wire fraud, bank fraud, money laundering, and making false filings to the Securities and Exchange Commission.
He is likely to spend the rest of his life in prison and also has to turn over $2.4 billion in assets to the government, which could make it tough for him to afford granola bars at the prison canteen. In 2006, the company’s art collection was sold by Christie’s to raise money for the creditors.
Mr. Bennett is currently confined to his New Jersey home while he awaits sentencing.
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Filed under: Deals, Industry, Southwest Airlines (LUV), AMR Corp (AMR), Contl Airlines’B’ (CAL), UAL Corp (UAUA), Delta Air Lines (DAL)
In the airline industry, it seems that any deal will due. Northwest Airlines Corp. (NYSE: NWA) is already fairly far along in discussions about merging with Delta Air Lines Inc. (NYSE: DAL). Now UAL Corp.’s (NASDAQ: UAUA) United Airlines is talking with Continental Airlines Inc. (NYSE: CAL). But one set of negotiations in not enough for Continental. It is also talking to AMR Corp.’s (NYSE: AMR) American Airlines, according to The Wall Street Journal (subscription required). The paper reports “the talks were exploratory, and it isn’t clear they will go further.”
Airlines are seeking mergers under the premise that combining companies saves costs. While that is true to some extent, the marriages also hurt customer service — badly. Putting together incompatible reservations and service operations can take years and be extremely complex, which can make it hell for consumers who just want to take an airplane ride from here to there. Bad customer service is a sure way to drive off fliers, and that is not good for revenue.
The savings in a merger also might not be as great as imagined. Fuel costs stay the same. The number of pilots and crews may drop some, but that can also cause labor disputes and strikes that interrupt service. The number of people needed to handle customer support and processing of reservations probably cannot be cut by much, especially if retaining revenue with unhappy fliers is important.
In an industry where mergers and Chapter 11 filings have been part of the landscape for decades, combining airlines may be no panacea. It is good to remember that the two most successful carriers in the United States, American and Southwest Airlines Corp. (NYSE: LUV) have never been much enamored of merging.
Douglas A. McIntyre is an editor at 247wallst.com.
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Filed under: Consumer experience, Wal-Mart (WMT), Columns, Target Corp. (TGT)
 Welcome to the 49th 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 down to a very hot topic these days: Wal-Mart.
In the last edition of The Wal-Mart Weekly, I peered into the customer returns process at the world’s largest retailer. This week, Wal-Mart will go on hiatus for a week while I perform the same experiment on its closest competitor, Target Corp. (NYSE: TGT). As such, Target is my special guest on this week’s Wal-Mart Weekly.
Although it seemed to me that there was a process breakdown and too much of a liberal take on returning several items to Wal-Mart in last week’s column, it was a little different at Target. At least the packages were looked into this week, but there was more to it as well.
Continue reading The Wal-Mart Weekly: Target becomes a guest in the customer returns process
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Filed under: Management, Morgan Stanley (MS)
Give Morgan Stanley (NYSE: MS) CEO John Mack credit for honesty and character in the wake of a tough year for the company. Mr. Mack received a salary of just $800,000 for fiscal 2007 (WSJ subscription required), and no bonus — at his own request. Since setting a high over more than $75 in April, shares of the investment bank have declined to $42, their lowest level since 2005, on large subprime write-downs.
Mr. Mack is to be commended for his character, but investors shouldn’t lose sight of the real issue: paying $800,000 for an executive whose company lost more than $25 billion in market value in one year is hardly a bargain.
But it’s good news compared to the CFO who took home an $11.7 million package for a year that was an abysmal failure. Politically, Mr. Mack’s decision is a good one. It will assuage disgruntled investors and should keep him from joining the cadre of executives hauled before Congress to explain their huge pay packages that came right after huge write-downs.
Hopefully more executives will follow his lead. Even if it’s largely a symbolic gesture, taking responsibility is nice to see, and has been tragically rare at the subprime-decimated investment banks.
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Filed under: Pfizer (PFE), Coca-Cola (KO), Citigroup Inc. (C), Johnson and Johnson (JNJ), Bank of America (BAC), Federal Natl Mtge (FNM), KB HOME (KBH), Wachovia Corp (WB), Washington Mutual (WM), Merck and Co (MRK), Toll Brothers (TOL), Wells Fargo (WFC), Comfort Zone Investing
 Ted Allrich is the founder of The Online Investor and author of the just released book: Comfort Zone Investing: Build Wealth And Sleep Well At Night. In this weekly column, he’ll offer advice to investors who are just getting started.
With certain sectors of the market collapsed, many smart investors are starting to do more than homework. They’re buying stocks in small amounts, building positions for a time when the economy is once again in a growth mode. Make no mistake: the economy will recover. It has ever since 1776. What is unknown is when. If you want to see what some of the “smart” money is buying, check out these stocks.
The one common element they all share: compelling valuations, either in an absolute sense, meaning their prices are the lowest in years or a relative one, meaning they’re selling for valuations that are the cheapest they’ve been in some time. Some have P/E ratios not seen in a decade. Others are selling well below book value.
Continue reading Comfort Zone Investing: Stocks worth considering
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