Filed under: Launches, Consumer experience, Competitive strategy, Time Warner (TWX), Marketing and advertising

It’s no secret that ‘Sex and the City’ has been an overwhelming success. According to Box Office Mojo, the movie grossed $56,848,056 this last weekend. This is almost nothing more than found money for Time Warner Inc. (NYSE: TWX) as it gets to recycle its old content into a fresh new round of content, and it gets to do so at $8 to $10 per ticket. Add in the merchandise sales, future DVD sales, and the redistribution, and you have bonus bucks for the company.

So what’s next? Seems pretty obvious to me.

‘The Sopranos’ was a monster success for Time Warner’s HBO. As I noted last year before the finale of the Sopranos, “….it’s hard to imagine “truly” killing off a major franchise….”

Tony lived at the end of the series, but it looked like a showdown over a bust or bloody restaurant shootout was imminent as the “leave you hanging” point for future releases.

The series has the same winning formula for success as Sex and the City: Characters that get talked about beyond the show, trend-setting themes, extreme audience loyalty, and so on.

Yep, this all points to Tony and whoever really is alive from the end of the season finale to head next to the big screen.

For Time Warner, the money is just too big and you don’t have to be a mobster to do that math. Plus, this will be a movie that guys won’t want to skip either. Don’t fuggedaboutit…

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The government’s tax rebates, aimed at reinvigorating consumer spending to jump-start the sluggish economy are headed straight to the tank, credit card companies and dinner table instead.  While politicians hoped that consumers would head to the malls to hep the sluggish economy the rebates are being quickly consumed by rising debt and ballooning energy and food prices.

Not that this was difficult to see coming.  The crush of mortgage resets, frozen equity lines of credit, declining home prices and maxed out credit cards are only exacerbated by the inflationary pressures seen on everyday necessities for life and work - gas and food.  Combine the lack of credit and a decline in spending power and you get a recipe for personal economic disaster.

From the New York Times on the rebate’s failed promise:

Between late April and the end of last week, the Treasury handed out more than $50 billion of the $100 billion in tax rebates it plans to distribute to 132 million households. But only once in the last six weeks have chain stores registered an increase in sales, according to the International Council of Shopping Centers, whose weekly sales survey is a widely watched barometer.

“The initial sense is that people are not running out to the malls to spend their checks,” said Stuart G. Hoffman, chief economist at the PNC Financial Services Group in Pittsburgh. “It’s not quite proving to be a hot potato that’s burning a hole in people’s pockets.”

Here in Miami, where the economy remains stuck in the orbit of plummeting real estate prices, Guillermo Gonzalez is one of those using their tax rebates to dig out of debt.

A wine salesman who makes about $60,000 a year, Mr. Gonzalez received $1,033 via direct deposit. He understood the implicit invitation to spend it on a new gadget or a family vacation, but he was behind on his house payments, he said. As gasoline costs have doubled in recent months, and as grocery prices have spiraled higher, he has been struggling to pay the bills. With a click of the mouse, he sent the whole rebate to the mortgage company.

“They think they give you a check to go out and spend some money, but it’s not enough,” said Mr. Gonzalez. “The dollar doesn’t buy anything anymore. The way the economy is going, people are too scared to spend.”

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Source [blownmortgage]

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Filed under: Earnings reports, Google (GOOG), Dell (DELL), Starbucks (SBUX), Tiffany and Co (TIF), Sears Holdings (SHLD), Costco Wholesale (COST), Novell Inc (NOVL), Marvell Technology Group (MRVL), salesforce.com inc (CRM)

Here are some highlights from this past week’s earnings coverage from BloggingStocks:

• Big Lots Inc. (NYSE: BIG) Q1 earnings rose 20%, driven by cash-strapped bargain hunters.
• Borders Group Inc. (NYSE: BGP) narrowed its loss in the first quarter though same-store sales fell.
• Costco Wholesale Corp. (NASDAQ: COST) Q3 profits climbed 32%, beating analysts’ estimates.
• Dell Inc. (NASDAQ: DELL) posted solid Q1 results that beat analysts’ expectations (see the transcript).
• DSW Inc. (NYSE: DSW) Q1 earnings declined, hurt by weak same-store sales.
• H.J. Heinz Co. (NYSE: HNZ) better-than-expected Q4 results sent the stock to a 52-week high.
• Integra LifeSciences Holdings Corp. (NASDAQ: IART) beat Q4 estimates and offered Q1 guidance.
• J. Crew Group Inc. (NYSE: JCG) lowered its full-year forecast, leading to analyst downgrades.
• Joy Global Inc. (NASDAQ: JOYG) Q2 results beat expectations, and it raised its full-year guidance.
• Lions Gate Entertainment Corp. (NYSE: LGF) posted record Q4 revenues but a bigger-than-expected loss.
• Marvell Technology Group (NASDAQ: MRVL) Q1 profits beat estimates and led to analyst upgrades.
• Medtronic Inc. (NYSE: MDT) beat Q4 estimates and offered full-year guidance.
• Novell Inc. (NASDAQ: NOVL) swung to a profit that was in line with analysts estimates.
• Salesforce.com Inc. (NYSE: CRM) Q1 revenues surged on new customers and demand in Asia.

• Sears Holdings Corp. (NASDAQ: SHLD) swung to a Q1 loss as same-store sales declined.
• Semtech Corp. (NASDAQ: SMTC) beat Q1 expectations with record revenues and raises its outlook.
• Shoe Carnival Inc. (NASDAQ: SCVL) Q1 profit fell due to softer-than-expected seasonal sales.
• Tiffany & Co. (NYSE: TIF) easily beat Q1 expectations and raised its full-year guidance.
• TiVo Inc. (NASDAQ: TIVO) Q1 earnings quadrupled, but it expects a loss in the current quarter.

Also earnings of Google (NASDAQ: GOOG), Starbucks (NASDAQ: SBUX), and 400 other companies were affected by write downs of auction-rate securities.

Upcoming results to watch for include Toll Brothers (NYSE: TOL), Hovnanian Enterprises (NYSE: HOV), Ciena (NASDAQ: CIEN), Bob Evans Farms (NASDAQ: BOBE), Williams-Sonoma (NYSE: WSM), Del Monte (NYSE: DLM), National Semiconductor (NYSE: NSM), Smithfield Foods (NYSE: SFD), and Lululemon Athletica (NASDAQ: LULU).

Visit AOL Money & Finance for more earnings coverage.

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The Wachovia board ousted CEO Kennedy Thompson, blaming him for write-downs that have cost the company half its market value over the last year. Thompson was the lead architect on the purchase of World Savings (a/k/a Golden West) which was a leading Option ARM lender in California right at the peak of the housing bubble. When that deal went down any sane person had to wonder what was he thinking. From Bloomberg on Thompson’s removal:

Wachovia Corp. ousted Kennedy Thompson as chief executive officer of the fourth-largest U.S. bank after the board blamed him for losses that cost the lender more than half its market value in the past year. The stock fell as much as 4.5 percent.

Chairman Lanty Smith was appointed interim CEO, the Charlotte, North Carolina-based company said today in a statement that cited “a series of previously disclosed disappointments and setbacks” for the change.

Separately, Washington Mutual Inc. said its CEO will step down as chairman.

Wachovia stripped Thompson, 57, of the chairman’s title on May 6 after shareholders — incensed by the company’s first quarterly loss since 2001 — demanded his removal at April’s annual meeting.

A four-member search committee headed by Smith will seek a replacement to deal with fallout from rising mortgage defaults and writedowns tied to subprime home loans.

“This company was run under Ken Thompson without very good controls,” Gerard Cassidy, an RBC Capital Markets analyst, said in a Bloomberg TV interview. Chances are even that Wachovia will seek a new CEO from outside the bank because there isn’t a clearly designated successor, Cassidy said.

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Source [blownmortgage]

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Filed under: Deals, Google (GOOG), Microsoft (MSFT), Yahoo! (YHOO), Blockbuster Inc ‘A’ (BBI), Circuit City Stores (CC)

Yahoo! Inc. (NASDAQ: YHOO) Chief Executive Jerry Yang is bound to cry “uncle” sooner rather than later.

Pressure is mounting on the co-founder of the internet portal to do something — anything — to boost Yahoo’s moribund share price. Billionaire activist investor Carl Icahn is leading a mutiny among shareholders disappointed that the company couldn’t figure out a way to reach an agreement on a deal with Microsoft Corp. (NASDAQ: MSFT). Display advertising is coming under pressure as advertisers shift spending to search or demand steep rate cuts. Board member Edward Kozel today announced his resignation, another indication of management’s growing isolation.

Yahoo management is clearly hunkering down. Today, comes word that the company is delaying its annual meeting from July 3 to the end of July. Is that enough time to reach an agreement with Microsoft or a search deal with Google Inc. (NASDAQ: GOOG)? Who knows? But you can bet that the meeting will not occur until there is some “good news” to report.

Meanwhile, Microsoft Chief Executive Steve Ballmer told a technology conference in Moscow that the Yahoo acquisition was not “strategic.” Hmm, then why bother doing it? Clearly, Ballmer is posturing to get a better deal with Yahoo. Having Icahn on his side certainly helps.

As for Icahn’s threatened proxy fight, the key word here is “threat.” The last thing that Icahn wants to do is actually run a company. Operations just aren’t his thing. But as he showed with Blockbuster Inc. (NYSE: BBI), Icahn is not afraid to wage proxy contests and win them. In Blockbuster’s case, he trounced management. Whether that’s a Pyrrhic victory remains to be seen. Shares of Blockbuster have tumbled more than 22% this year and investors are skeptical that buying Circuit City Stores Inc. (NASDAQ: CC) will boost the video-rental firm’s lagging fortunes.

So,Yahoo shareholders should hope that Yahoo figures out a way to make Icahn and his allies happy before things get much worse.

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You may have noticed that gas prices have gone up recently. I’m just taking a wild guess that you’ve heard of this. For those of us in commuting urban areas we are all too familiar with fuel prices. Gas prices always go up during this time of the year right before the […]
Related Posts:
■Zillowed, Disappearing Inventory, and Free Housing: 3 Major Psychological Reasons Why Housing is Still Declining and Living Rent and Mortgage Free.
■Mission Accomplished: 3 Housing Issues: Multiple Bottoms, Declining Dollar, and More Sub-prime and Alt-A Defaults.
■Hope Now Alliance: Not to be confused with Apocalypse Now Mortgages.
■Are you a Debt Slave?
■Mortgage Equity Withdrawal Syndrome. The 3rd Rail of the Housing Led Boom.

You may have noticed that gas prices have gone up recently. I’m just taking a wild guess that you’ve heard of this. For those of us in commuting urban areas we are all too familiar with fuel prices. Gas prices always go up during this time of the year right before the summer driving season. The only difference this time is prices are going up at unprecedented speed and this time, high energy prices might be here for sometime. Most would think that during economic downturns such as the one we are in, you would expect to see falling prices running in line with falling demand or people simply adjusting to a different lifestyle. This isn’t the case.  Housing prices are tanking but you need to remember they were up in the heavens and made no fundamental sense - prices are now only coming down to reality.  Yet other cost of living items are going up and going up fast. If you are planning on sending your kids to the top public institution here in California, the University of California you can except to pay more this upcoming year:

“Despite angry protests from students that led to 16 arrests at UCLA, California’s two public universities took actions Wednesday to charge higher fees for education in the fall.

The trustees of the Cal State University system voted to raise annual undergraduate student fees 10%, or $276. A key committee of the University of California regents approved a 7.4%, or $490, raise per year for undergraduates that is expected to be endorsed by the full Board of Regents today.”

Most of the higher paying jobs in our country such as those in the engineering field require you to have a bachelor’s degree. This isn’t like a high school grad going off to become a mortgage broker and pulling in six-figures just by stuffing people into toxic mortgage products that are now showing their after-effects on our economy. That industry is taking its last few gasps. What happened in the travel industry will happen in housing. Websites like Zillow and Redfin make it fool proof in finding a home and not going with the traditional 6 percent commission. In fact, Zillow now offers an anonymous mortgage quote marketplace were you can remain completely anonymous and let lenders compete for your service. This isn’t like other mortgage online shops where they take all your information and sell it out to marketers; here you have the opportunity to say “I make $150,000, my credit score is 740, and I’m looking for a $500,000 loan. What can you do for me?” Why would you go back to paying for a service that brings so little?  And this coming from someone that was in the industry.

You can also use Google Maps with many widgets to find excellent schools, view neighborhoods, and you have a much better sense of what you are looking for. You can pay a real estate attorney a flat fee to review loan docs and the contract, pay an appraiser and title company to review the transaction, throw it in escrow and you are done. Clearly anyone that thinks the days of high YSPs is going to come back is delusional. And why is that? Let me show you a hypothetical case of a colleague that was in the industry that was pulling in $200,000 a year during the good times. On paper and visually he was rich but in reality he was a walking debt zombie. He is flat broke now. Actually, a homeless person is richer since they have zero net worth where he actually had a negative net worth and had to declare bankruptcy. You’ll see why in a few seconds.

In regards to salary, car, and other payments I have a pretty good idea how much he was pulling in since he would gladly show me and tell me. The other items I will fill in (food, etc) based on his typical behavior.

Going Broke on $200,000

First a little information on this guy. I’m sure many of you know one or two of these kinds of people. Generally a good guy but absolutely no idea on how to become wealthy. Whenever I would mention macroeconomic policies he would simply glaze over; he was in for the thrill of making fast money and living a fast life. He had what would seem to be everything. A nice BMW which was leased, he ended up drinking his own Kool-Aid and purchasing a place out in the OC for $700,000 zero down of course on a 2/28 mortgage, and was going out all the time charging everything up. You also need to remember that with a high income and especially being on commission, you are taxed to the max. $200,000 dwindles quickly even before you see your paycheck. So let us now look at the reconstructed budget:

Anyone not from the OC really cannot relate to this so let us go into this a bit further. There is a hidden society of people that seem to fit to a tee the new idea of the brand new rich. That is, these folks seem to unconsciously realize that being rich means driving a luxury foreign car, eating out at certain restaurants, and spending a lot of money on trendy clothes. Your budget can be radically depleted and there are plenty of shopping centers all the willing to take your money (hi Fashion Island!). On the outside, he would seem to be living large but knowing his budget, I knew this guy had zero in any retirement accounts and all of it was going out as quickly as it came in.

He bought a place zero down in the OC for $700,000 on a pathetic 2/28 mortgage. It was okay during the first 2 years but once his rate reset that is when all hell broke loose and his lack of financial knowledge became apparent. The rate on the budget is the adjusted rate when it reset and the mortgage payment reflects that. You’ll also notice the $600 for the BMW lease which of course also carriers higher fuel costs since it recommended 91 octane and also had higher insurance premiums since he was a younger guy. Insurance companies do not like young single guys in fast foreign cars. He would eat out all the time and blew money on lunches practically 2 or 3 times a week. Lunches went from $7 from your Jack in the Box quick lunch to $50 at a sit down restaurant with drinks and tips.

Once his rate reset, it didn’t take long for him to realize things were going to go down fast. Keep in mind this is the peak income from the good times. He also got smacked down once the mortgage market here in the OC went into the abyss. So you have 2 things hitting you squarely in the face:

1. First, your job is dependent on real estate selling and moving fast and with it shutting down and wholesaling collapsing, he was left with half his income in one year.

2. The rate on his home was a time bomb. For two years the balance did nothing except sit. Once the rate reset you had a lower income and a ridiculously higher housing payment.  Plus your home was valued at $100,000 less than what you paid for.
It was game over pretty quickly. Even if he stayed earning $200,000 a year he was running budget deficits. He tried living off credit cards for sometime but he had to throw in the towel. There was no way he was going to sell the house even remotely at that price and his income only kept decreasing as the months went by. When all was said and done, this guy was left with nothing and a bankruptcy.

I would have a little more sympathy for him until he told me, “it will get better. This is only a temporary drop.” I felt like telling him, “no it won’t amigo and I would show you my site and point you to a few hundred essays showing why your industry was a once in a lifetime boom but that wouldn’t change your attitude.” Things will never go back to how they were.  Get used to high energy costs. And when people made $200,000+ a year for many years and have nothing to show for it, you know why this bubble had to burst.  Now the new GSE bills are requiring brokers to have criminal background checks and also licensing.  It was fun while it lasted.

Looks like colleges are going to get that 10 percent more since many are going to need to go back and retool their knowledge base.

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Related Posts:
■Zillowed, Disappearing Inventory, and Free Housing: 3 Major Psychological Reasons Why Housing is Still Declining and Living Rent and Mortgage Free.
■Mission Accomplished: 3 Housing Issues: Multiple Bottoms, Declining Dollar, and More Sub-prime and Alt-A Defaults.
■Hope Now Alliance: Not to be confused with Apocalypse Now Mortgages.
■Are you a Debt Slave?
■Mortgage Equity Withdrawal Syndrome. The 3rd Rail of the Housing Led Boom.

Via [DrHousingBubble]

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Filed under: Earnings reports, Forecasts, Ciena Corp (CIEN), Toll Brothers (TOL), Smithfield Foods (SFD)

Here’s a peek at what analysts surveyed by Thomson Financial are expecting from companies scheduled to report quarterly results in the first week of June, 2008.

The following companies are expected to post earnings growth, compared to the same period in the previous year:

• Take-Two Interactive (NASDAQ: TTWO) up 136.6% (from a loss) to $1.12 per share, on $499.1 million in revenue
• Lululemon Athletica Inc. (NASDAQ: LULU) up 58.3% to 12 cents per share, on $71.8 million in revenue
• Vimpelcom Communications (NYSE: VIP) up 54.2% to 59 cents per share, on $2.1 billion in revenue
• Focus Media Ltd. (NASDAQ: FMCN) up 36.4% to 33 cents per share, on $161.3 million in revenue
• Ciena Corp. (NASDAQ: CIEN) up 29.7% to 37 cents per share, on $238.4 million in revenue
• Greif Inc. (NYSE: GEF) up 24.1% to 87 cents per share, on $839.9 million in revenue
• Vail Resorts Inc. (NYSE: MTN) up 18.4% to $2.44 per share, on $474.8 million in revenue
• Guess? Inc. (NYSE: GES) up 17.4% to 46 cents per share, on $451.6 million in revenue
• Del Monte Foods Co. (NYSE: DLM) up 15.4% to 26 cents per share, on $1.0 billion in revenue
• Cooper Companies Inc. (NYSE: COO) up 14.6% to 48 cents per share, on $256.7 million in revenue
• Jackson Hewitt Tax Service Inc. (NYSE: JTX) up 1.9% to $2.08 per share, on $161.6 million in revenue

Continue reading Earnings expectations: Take-Two, Lululemon, Williams-Sonoma, Toll Bros. and others

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Filed under: Politics, Commodities, Oil

Hedge funds and speculators reduced positions in oil by 80% as prices rose to records and as U.S. regulators started investigating trading, Bloomberg News reported Monday, citing government data.

Net long positions decline to 25,867 contracts on the New York Mercantile Exchange in the week ended May 27, 2008 from a record 127,491 contracts on July 31, 2008 according to a U.S. Commodity Futures Trading Commission report.

Last week, the CFTC, under pressure from Congress, announced that it had expanded an investigation of oil’s price rise and oil futures contracts. Oil has increased about 100% in the past 12 months, and about 480% since 2002. Oil rose $1.50 to $128.50 per barrel in mid-day Monday trading.

Continue reading Hedge funds reduced positions in oil futures as prices rose, probe started

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Filed under: Deals, International Business Machines (IBM)

NetSuite Inc. (NYSE: N), which develops web-based enterprise resource planning (ERP) software, is making its first acquisition as a public company. That is, the firm is shelling out $26 million for OpenAir.

Founded in 1999, the company develops software that helps services companies to manage projects. Of course, the company uses an on-demand model and has some top-notch partners, such as IBM (NYSE: IBM).

Let’s face it, there’s much room for efficiency in the services sector. What’s more, it’s a large market opportunity.

Interestingly enough, NetSuite will invest in the OpenAir software offering for at least the next ten years. No doubt, this will alleviate some of the potential fears of customers.

Although, the acquisition will weigh on future results. NetSuite has increased its 2008 loss estimate from $0.04 per share to $0.04-0.06 per share.

So far in today’s trading, NetSuite’s shares are down 3% to $22.05.

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 MergerBook.com.

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