FedEx Becomes Un-Kinkoed

FedEx announced it will be getting rid of the Kinko's part of its name with the added cost of $696 million.

FedEx, the big boys of Memphis, figured out that it just wasn't a good idea to merge the two brands. They're going in a new direction now. But isn't that a lot of money to pay out for a 'brand name divorce'?

Their new direction will come with the new name FedEx Office and will target large business clients. Basically these guys are getting sick of trying to catch the little fish in the small office space.

When FedEx and Kinko's began working together back in 2004, there were only 1,200 locations. Since that time they have expanded to 1,900 stores. Not very impressive when you realize FedEx paid $2.4 million to open just 700 stores in over 4 years. For a company that size, those are some small potatoes.

Get ready for the "all-out" marketing campaign that will soon follow to brand the new - FedEx Office (Remember these are guys who branded the hell out of the movie Castaway). According to an article in Bloomberg about the 'divorce', that campaign may have already begun:

"The name FedEx Office more accurately represents our broader role of providing superior information and services,'' Brian Philips, the unit's chief executive officer, said in the statement. "We are a back office for small businesses and a branch office for medium to large businesses and mobile professionals.''

It would have been great if Philips then unnecessarily added,

"And, needless to say, we're also a front office for the people who actually work at that particular FedEx Office store. We also enjoy NBC's hit television comedy, 'The Office', which is based on a similarly named British comedy, 'The Office'. . . FedEx Office is totally gonna rule! Anyway, I'm going to 'office-cially' wrap up this press release now, I've gotta head back to THE OFFICE!"

Bloomberg: FedEx to Rename Kinko's, Record $696 Million in Costs, June 3, 2008

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Porn Business Branches Out To Christian Dating

AND

Penthouse Media Group has realized that porn magazines and websites may be a dying business model, but Christian dating is the future!

According to an article in this week's issue of Newsweek magazine:

"If you're looking for adult content today, there are so many more places and many other ways to do that," says David Miller, an industry analyst and managing director at Los Angeles-based Sanders Morris Harris Group. "You can get it over the Internet for free."

"Penthouse is just another Web site. We are in the social-networking business. We are not in the business of Penthouse," said Marc Bell, the entrepreneur who acquired Penthouse in 2004.

And since social-networking is the highly lucrative buzz word that got MySpace a multi-billion dollar deal from Rupert Murdoch and Facebook a similar one from Microsoft, that's exactly the route Penthouse will go.

Any good financial adviser will inform you that diversifying one's portfolio is the best way to gain alpha on your investments. Penthouse takes that advice to new levels and now owns AdultFriendFinder.com (one of the most trafficked sites on the internet worldwide with 18 million members) along with Bondage.com, LikeMyNudePhoto.com, and BigChurch.com.

BigChurch, with its bible-verse search library and innocent Christian-seeking-Christian testimonials, seems oddly out of place in the bunch.

I wonder if any of those Christians using the site are aware of their host? And maybe the better question, does it really matter?

As we reported on last week, Playboy is falling on some tough times too. The Playboy brand itself is changing into more of a lifestyle brand by marketing television and apparel lines, rather than a focused publication business. All of these changes seem to be spurred on by the vast array of free internet pornography.

Free internet porn has made a lot of people do some crazy things, but starting a Christian dating service might be one of the strangest.



Newsweek: Penthouse Gets Pious, week of May 15 2008

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Cablevision Buys Newsday, Banks Step Up Again

Rupert Murdoch got beat on this one: Cablevision of NY buys Long Island's Newsday newspaper.

You might be asking what the big deal is about a New York cable company buying out a lesser-known suburban New York newspaper. Let's take a look at the players:

Rupert Murdoch - The Fox / Newscorp media mogul currently owns the uber-popular New York tabloid, the New York Post, and also recently acquired the Wall Street Journal after a lot of discussion. He was very interested in adding one other big jewel to his NY media crown with Newsday.

Tribune - The previous owners of Newsday are currently sitting at the #2 spot behind Gannett as the largest newspaper publishers in the country. Not for long. After selling Newsday for $650 million to Cablevision, the company will drop to the #3 spot behind McClatchy, but will still have a 3% stake in the Cablevision's new Newsday venture.

Cablevision - Obviously the big winners in the deal. But it's still not completely clear what they plan on doing with this otherwise dying newspaper. Cablevision already owns the The New York Rangers, the Knicks, and Madison Square Garden, so maybe they're looking to leverage their monopoly on sports coverage?

It looks like things are starting early today. In what seems like one of the best cross promotional schemes of late, the Newsday website is filling its Business Section with stories about the Cablevision network expansion and potential backlash from loyal Newsday reader.

No matter what Cablevision now does with its new find, things are not looking good for the newspaper business in general. Newsday, in particular, is big on using their classified ads section to gain revenue, but it's a dying section of the paper. With free postings on Craigslist that are viewed with much more frequency, why would anyone want to advertise their moldy couch in a paper anymore?

Here's another real promising tidbit for investors. A big part of the purchase is being funded by Bank of America. Do ya hear that? A big bank grew a pair! After the banks have been sitting on the sidelines/licking their wounds/biding their time (and whichever other overused Street clichés you'd care to use) for the past quarter+(with some exceptions like Countrywide), things might be looking positive again for them.

If they're able to step out into deals again, then perhaps the financial industry as a whole isn't the black hole it's being chastised as?



AP: Cablevision buys Newsday from Tribune, May 12, 2008

TheStreet: Cablevision Buys Long Island's Newsday, May 12, 2008

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Playboy Starts To Sag

Playboy stock is beginning to go the way of so many soiled and discarded issues.

The stock dropped from 8.25 yesterday to 7.39 today. All of this comes after news last night that Playboy had a particularly sucky first quarter this year. The Playboy brand, which includes print publication, pay-per-views specials, and internet download as main sources of revenue, announced it would be seeing a fall in revenue from $85.4 million to a very disappointing $78.5 million this quarter.

According to Christie Hefner, the Playboy CEO and Hugh Hefner's daughter, these...

results reflected the dual challenges of structural transformation in our traditional media business and a difficult U.S. economy. Our publishing and domestic entertainment businesses continue to face unprecedented change in the way consumers access and use media content.

I'm not really sure if the Playboy company is only realizing this now, but the Internet has become a dumpster of free pornographic content for users. Getting customers to purchase $30's worth of pay-per-view specials is going to be a difficult sell.

However, according to the same MarketWatch report, subscription sales and revenue increased slightly in this past quarter. This does show that there is value to the flagship magazine product that started the whole franchise.

Maybe the age old 'I'm just reading it for the articles' excuse is coming to fruition. Playboy was one of the first magazines to feature online content back in 1994 and continues to push development in mobile distribution. This has added much of the value to Playboy's modern content.

However in times of economic distress and high fuel costs, where is much of the disposable income going to get crunched? I would assume subscriptions to pornography, no matter how cutting edge and inspired they may be, wouldn't fall under the necessities list. Especially with the availability of 'cheaper thrills' out there on the interwebs.

But Playboy has managed to stay afloat in rougher seas than this. It's a powerful brand, and the Playboy mansions continues to be an American institution. Playboy even saw the value behind reality TV with its E! Channel show The Girls Next Door, which garners an audience of 2.17 million viewers for each new episode.

In other news, Playboy just got soccer game streaker Tiffany May to sign a contract for a nude pictorial in an upcoming issue.

Does anyone expect the Playboy brand to come up with new ways to add value, or could this be the end of the line for the bunny ears? Let us know in the comments section.



MarketWatch: Playboy swings to loss on revenue skid, May 6, 2008

Worldscreen: Playboy's Christie Hefner

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200 Economists Say 'Gas-Tax Holiday' Sucks

When economists believe in something this strongly, their posse rolls deep.

The Gas-Tax Holiday, proposed by John McCain, was an attempt to make one super-wealthy candidate seem like a guy concerned about the average citizens' problems. Instead, it's getting blasted as the worst idea imaginable.

Both Hillary Clinton and John McCain agree in unison that something needs to be done to help out the little guy. Maybe a lifting of the gas-tax will drop prices enough so that people could enjoy a little cruise to start their summer? And maybe, in doing that, those people will repay that brave politician by voting for them in fall. Not a terrible idea in theory...wait, apparently yes it was. Bloomberg reports that:

The moratorium would mostly benefit oil companies while increasing the federal budget deficit and reducing funding for the government highway maintenance trust fund, the economists said.

Over 200 economists from around the country, including 4 Nobel prize winners, have signed and circulated a petition rejecting the gas-tax holiday proposals. And they are being pretty vocal about it. Alice Rivlin, herself a Clinton supporter, continued by saying that if anything, we should raise the gas-tax to perhaps curb gasoline usage entirely.

Now that doesn't really sound like a good idea either. If the only solution to high gas prices is to use less gas, do you think anyone would go along with it?

But none of that matters to Hillary. She doesn't want to hear about all these economists spending too much time thinking and not enough time caring for the middle-class.

Clinton yesterday dismissed economists' objections to the plan.

``I'm not going to put my lot in with economists,'' she said in an interview on ABC's This Week with George Stephanopoulos. ``We would design it in such a way that it would be implemented effectively.''

Basically Clinton doesn't care that the very theory of temporarily suspending gas-taxes doesn't work, that's hogwash. She's going to implement it so it does work. Is that too hard to understand, egghead economists?

That having been said, can we really trust a group of 200 economists that hang out together? Do they really get out much. I'm imagining a bunch of nerds drinking tea and riding these around campus:




Bloomberg: Economists Criticize Clinton, McCain Gas-Tax Plans. May 5, 2008

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Hyped TV Series Is A Fake

A major ad-campaign on the web, TV and billboards for a fake TV show turns out to be a big ad for new LG flat-screen televisions.

The ads for 'Scarlet' were popping up on Gawker, Variety, and E!, and they all featured smokin' hot model-actress Natassia Malthe kicking-ass and blowing stuff up. Even the website, plugged in the ads, didn't give any inkling that this wasn't really a new TV series, but actually a 'series of new TVs'.

According to the Associated Press (AP), it was all revealed to a group of insider-Hollywood-types last night at 'the premiere' at the Pacific Design Center. Even Lindsay Lohan got all dolled up and attended the premiere. But it doesn't sound like the press in attendance were happy about being duped. As the ploy of a clever marketing campaign, many were disappointed and not amused by the deception.

The series was also hyped as being a new creation by director David Nutter, the man behind 'The Sopranos" and "Smallville", which probably increased the attention given to it.

The strange part about the whole campaign is that there is no reference or depiction of a new product in the ads. The website promoting the new series features trailers, behind the scenes videos, and interviews with the director and cast. Once you're aware of the rouse, going back and watching the promotional clips is bizarre. There are all these tongue in cheek references to 'this new TV star', 'nothing we've seen before', 'will change the face of TV as we know it'.

It's kind of like all those cool secret websites and finds for stuff like Lost and Cloverfield. But the guys at LG capitalized on all that hype and inserted a fake TV show to promote a new product.

I'm a little disappointed, because surprisingly 'the show' looked pretty cool. Reminded me a lot of that crappy 'Elektra' move with Jennifer Garner, but might have been worth a viewing.

When interviewing Tim Alessi, LG director of product development and advertising, the AP reports:

The company won't say how much they've spent on the global campaign, although Alessi confirms it was millions more than a typical product launch in the U.S.

Well was it all really worth it? I hope David Nutter got paid a huge amount, because I don't know if anyone can take him seriously after this. Once you go over that edge, what will your fans think?

On LG's end, it's pretty brilliant. They got all this attention on both ends. Hype leading up the fake launch, and then on the other end with backlash (meaning: more hype) on the product after the big reveal.

Can't wait to see what sales are like on this thing. Let us know what you think of this campaign in the comments section.



AP: 'Secret' of 'Scarlet' revealed, April 29, 2008

Pocket-lint: LG tricks press with 'Scarlet' TV series premier, April 29, 2008

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The WB Network Lives Again

The defunct worst basic television station will now become the worst online video website.

The WB network, first created in 1995, as combination of bad ideas and the eventual home for Dawson's Creek, was banished from the airwaves in 2006. Well, not so much banished, as it was purposely ignored into oblivion by viewers.

The old WB and UPN (which would be equally horrible if it weren't for that lovable comedy, Girlfriends) merged to form the CW in early 2006.

A bunch of television executives got together over the weekend and found out about the internet. That's where the new idea for a WB Network website, where you can watch all your favorite Gilmore Girls episodes, came from.

According to the New York Times article announcing the new site, they're in really good hands:

“My 20-year-old daughter and her friends are watching ‘One Tree Hill’ and ‘Pushing Daisies,’ but not on television,” Bruce Rosenblum, the president of the Warner television group, said. “They’re watching on laptops and cellphones. Here’s the interesting part — to them, that is television.”

No way?! Really? I would like to have been in the room when Bruce came up with that realization. But the problem I think he and the other executives fail to comprehend is... those shows suck. And maybe the reason the WB did so poorly toward the end is that the content wasn't worth watching.

It doesn't sound like the new content will be any better:

Warner hopes to attract users with made-for-Internet video series, including ones spearheaded by McG, who is best known for directing the “Charlie’s Angels” films and whose real name is Joseph McGinty Nichol, and Josh Schwartz, the executive producer of “The OC” and “Gossip Girl.”

I don't think I could come up with a worse cast of characters to launch a bad idea of a website with. I really think there are just a bunch of aging executives sitting in an office quietly, then a young hotshot walks in firing off a few buzz words like 'online streaming content' and 'social networking sites'. Pretty soon the execs are in a tizzy of excitement, but months later nothing to show for it except a crappy website.

I really hope I'm wrong though, it would be great to see that dancing frog again.

New York Times: WB Network Returns as a Web Site, April 28, 2008

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Biz Babes: Brazilian Business News

Not sure what these lovely ladies are saying in this business report, but apparently my stocks are up.


Portuguese Business News - Watch more free videos

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The Winners and Losers Roundup

Which stocks should you be drooling over and which should you jump the hell out of?

After a big week of 1st quarter (Jan - March) profit announcements we here at WSF help you make sense of all the big winners and losers.


Wendy's - After Dave Thomas's company publicly dissed the idea of an Arby's merger, the deal was finalized this morning. Although, both Wendy's and Arby's will remain seperate companies, the new owners (Triarc Cos.) are notorious for making big changes to increase efficiency. Stay tuned for some possible big changes at Wendy's in the coming year. All Wendy's shareholders will receive 4.25 shares of Triarc for each Wendy's share they own.

Ford - The American motor company has been pegged as dead for quite some time now, but stunned many people today when it announced it had earned $100 million this past quarter. This is remarkable compared to the $282 million loss this time last year. This is good news if you're a shareholder, but bad news if you work for the company. Most of these increased profits came as a result of selling off major divisions of Jaguar and Land Rover and cutting jobs.

Bristol-Myer's Squibb - This big pharmaceutical company announced a 4.2% loss last quarter due to generic brands crampin' its style on blood-clotting and cancer medications. B-MS is also lightening the load like a damaged ship by selling off its medical imaging, wound-care, and nutritionals businesses. Herpes medication is in big demand, they should probably play off that angle a little more.

Apple - The Apple Kings say 'What recession?', as they boast a 36% increase in Mac computer sales since a year ago. It seems that 'halo effect' of people liking iPods and iPhones and then switching to Mac computers is finally coming around. Downside for consumers: Get ready for another smart ass remark from 'Mac' in the next annoying 'Mac vs. PC' commercial.

Motorola - The pioneers of the wireless phone industry have been taking a beating lately. Their stocks fell to below 2003 levels this morning after news that some of its senior officers were leaving, profit losses were increasing, and those trendy Europeans don't think their phones are cool enough.

The Euro - (I know, not a stock, but this is encouraging) The American dollar gained a little on the European currency today because reports were released that showed French, German, Belgian 'business morale' has fallen. Most of these feelings of sadness come from fears that the European Central Bank will raise interest rates. Wipe those tears, ladies.

Is there anyone we missed? Or are you looking at these 'losers' as good opportunities to buy? Let us know in the comments section.



MarketWatch: Wendy's to be acquired by Arby's parent, April 24, 2008

New York Times: In Surprise, Ford Swings to Profit, April 24, 2008

Wall Street Journal: Bristol Myer's Net Falls 4.2%, April 24, 2008

MarketWatch - Mac and iPhone sales lead growth, April 24, 2008

MarketWatch - Motorola posts wider loss, April 24, 2008

International Herald Tribune: German and French business morale falls sharply, April 24, 2008

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Rice Riot Fears Hit the U.S.

Why are you wasting valuable time at home? You need to go out and get some rice before it's all gone!

Over the past few months, the rising cost of rice around the world has caused hoarding and riots to break out throughout Asia.

Come on, I can understand Montreal Canadiens's fans rioting in the streets after an unimpressive first-round NHL playoff win, but starving people wanting rice? Now, you're just pulling my leg.

It's true though, and in an ironic response to the very excesses they profit from, Sam's Club and Costco were the first to sound the alarm here on the home front. These discount warehouse stores are now limiting sales to 4 bags of rice per person per visit. Both stores have also seen increased demand for flour and oil, but as yet, have not imposed limits on those items.

In another ironic twist, this all comes the day after Earth Day. Many analysts claim that the newfound interest in 'going green' and being 'eco-friendly' has inadvertently caused the rice shortages. As global food trends change to accommodate the demand for more food being used as alternative fuels, less people will have the food to eat. Also, the major drought in Australia has added to rice shortage problems.

Similar to a stock sell-off or a bank-run, when people get worried something will run out, they go out and buy more than they need of it, causing even greater supply problem. According to an article from The Times Online things are particularly troubling in the Philippines:

Any farmer in the Philippines caught hoarding rice risks spending the rest of his life in jail for the crime of “economic sabotage”.

Scary stuff. But I don't think most Americans realize how important rice is in these countries. There are 3 billion people in the world who rely on solely rice as a staple food. In both Thailand and the Philippines there has been a 40% increase in the price of rice since January. That's kind of like increasing the cost of sunshine in Florida by 40%. Or the price of a subway fare in New York City by 40%. Or even worse, increasing the price of the pleasure derived from quiet conversation and rustic landscapes in Montana.

But seriously, has anyone noticed any grain hoarding or increased lines at Costco recently?


The Times Online: Fears of rice riots as demand as surge in demand hits nations across the Far East, April 8, 2008

Reuters: Sam's Club limiting sales of rice, April 23, 2008

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Craigslist vs. eBay: The Ultimate Online Auction Catfight

The giants of online auction are battling, but it sounds a lot like name-calling.

eBay sued Craigslist.org yesterday for 'diluting' its 28% shareholder ownership of the company. Craigslist then fired back with some pointed blog postings and claimed the bad guys over at eBay were acting "unethically."

Most of the real details are confidential in these court hearings, but let's break down all the legal jargon we have heard into something more understandable:

eBay: Yo, we wanna hostile takeover you guys.

Craigslist: WTF?! No way.

eBay: Yes, way. You liberal hippies aren't making any money for us. It's time to start generating some profit from all those 'trannies seeking trannies' personal ads, or whatever the hell else you nerds do.

Craigslist: Remember how you thought you had 28% of us? Now make it 18%. Who's hostile now?

eBay: That's it, you're getting sued!... in Delaware!

Craigslist: Why in Delaware? We're both near San Francisco.

eBay: because you're bitches, that's why! whatevs.

Craigslist: Oh snap, I'm soooo writing a nasty post on my blog about you guys. Right above a picture of my dead cat!

eBay: bitch all you want, we're coming for you. And that lame ".org" makes you look fat!

Craigslist: OMG NOO!!!



AP: EBay sues Craigslist over ownership stake, April 22, 2008

AP: Craigslist fires back, blasts eBay actions as unethical, April 23, 2008

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Airlines Get Nasty and Charge For Second Bag

Maybe leave that extra corpse at home? New extra fees for a second bag might make you rethink your packing choices.

5 of the 6 major airlines are mandating a $25 extra bag fee for a second piece of checked luggage.

The new fees imposed by Delta, Northwest, Continental, United, US Airways, and AirTran (which is charging a lower - $10 fee) are being implemented to offset rising fuel costs, and are probably a necessary cash influx in the midst of all the airline mergers and bankruptcy news from last week.

This all means the most inconvenienced passengers will be the non-frequent consumer vacationer or traveler. You guys are going to take most of the hit from this one.
The new mandate will cause other uncomfortable consequences on board too. Fees for checked luggage will just force fliers to attempt to bring more carry-on bags aboard. Pretty soon those overhead luggage bins will look as stuffed as a clown car. And you will probably be the guy who gets the diaper bag spilled all over you when those overheads are opened too hastily.

The New York Times article breaking this news is pandering to the outraged businessman who will be ever-so-slightly inconvenienced by these new fees:

Pete Mitchell, director of business-to-business sales for the luggage manufacturer Samsonite, said he often traveled with one-of-a-kind items he is reluctant to send via a shipping service. “We’ll bring them prototypes and production samples,” Mr. Mitchell said.

This guy is a salesman for Samsonite, the travel luggage company? Is he putting a fancy suitcase prototype inside his second checked bag? This is a perfect example of the type of guy who should be paying these extra fees. Charge this guy 50 bucks for that.

Got any tips for getting around this extra fee? Let us know in the comments section.

New York Times: Airlines to Charge for Second Bag, April 22, 2008

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Older Video Gamers Hurt Sales

Grandpa would sooner die than get sick of playing that same level on Wii Sports.

And so it appears Nintendo's big push to go after non-traditional gamers may have severely bruised game sales.

Months ago, the Nintendo Wii, the company's newest gaming system which uses motion-based controllers, was sitting at the top of the $18-billion-a-year video game industry. They had done the impossible and got moms, dads, grannies, trannies, grandpas and children of all ages to buy a video game system.

The disappointing part has started to trickle-in this month. An article in the New York Times today looked at the cold hard facts behind geriatric wii-ing:

The average Wii owner buys only 3.7 games a year, compared with 4.7 for Xbox 360 owners and 4.6 for PlayStation 3 owners, said a Wedbush Morgan analyst, Michael Pachter. “It reflects the broadening of the demographic,” he said. “Nintendo’s market doesn’t feel the same sense of urgency to buy every game that’s coming out.”

Those are the facts, and it's coming as a pretty big shock to Nintendo. They had all assumed that these Grannies and Grandpas would be lining up at 6am for the newest Super Smash Brothers release.

That game sold great in the first couple of weeks, but analysts attribute that to anticipation from hardcore Smash Bros fans. The rest of the Wii owners sat at home and played Wii Tennis again.

Before the Nintendo crowd lose all their market edge completely, they are rolling out some new games paired with marketing strategies that they're hoping will get older crowds into the closest GameStop ASAP. The first of which will be Wii Fit, an exercise game that will get the biggest budget for marketing in Nintendo's history. Pachter, the analyst from the NYTimes article, added:

The money will not be spent wooing young men. “Wii Fit is just not aimed at hard-core gamers,” Mr. Pachter said. “It’s definitely aimed at the Oprah crowd. I bet they sell a million units a week for every pound that Oprah says she lost on it.”

Wow, so you're saying this game has the potential to sell 500 million units?! I wonder how many teenage kids are going to have to fight off their mom for the controller. And could Oprah potentially start a game-of-the-month club?

New York Times: New Wii Games Find a Big (but Stingy) Audience, April 21, 2008
BusinessWeek: Gaming Trends: The Big Players of 2008, March 24, 2008

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Wendy's Disses Arby's Merger

Big news today that Wendy's has financially bitch-slapped the owners of Arby's by replying with an immediate 'No thanks, bro' to their takeover/merger offers.

Wendy's has been hitting some rocky ground in the past year after a few menu choices flopped. Adding insult to injury, I'm sure the rising cost of wheat coupled with the general economic recession made them a good target for a merger. Or so the big wigs at Trian Partners LP thought.

The Wendy's Board Committee rejected two alternate Trian offers less than 24 hours after receiving them.

Scorned like a jealous lover, the Arby's owners fired back with a public letter to the Wendy's shareholders begging them to put some pressure on the Exec board to accept an offer.

It is now time for Wendy's shareholders to decide the future of their company. We therefore intend to contact our fellow shareholders for the purpose of calling a special meeting of shareholders at which all shareholders will have the opportunity to vote on the future direction of Wendy's.

Did you catch those rapid-fire 'shareholders' references? That's how you play hardball, son!

The guys at Trian have done some good work in the past though. They are known for helping out popular food companies by swooping in and cutting costs, creating more efficient business models. It worked at Cadbury-Schweppes.

But Wendy's is a different story. Read any poster inside that joint and you'll know Dave Thomas was not a fan of cutting corners (hence the square patties). I wouldn't mind seeing an Arby's / Wendy's merger though, it would have some upsides for the consumer. Premium roast beef Baconator, anyone?

Reuters: Trian says Wendy's rejected 2 takeover offers, April 18, 2008
CNN Money: Trian 'very concerned' about Wendy's current direction, April 18, 2008

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Crocs Prove to Be a Bad Idea, Finally

Everyone who prefers comfortable footwear that doesn't make you look like a clown can breathe a sigh of relief, because Wall Street is finally coming to its senses about these ugly shoes.

Although there are plenty of good reasons not to think Crocs are a sensible choice for footwear, the company and it's stock value kept outperforming market expectations over the past two years.

That came to an end this week when the company announced that due to a downturn in consumer spending, it would not meet earnings expectations for the quarter. Before the news broke, the company's (ticker symbol: Crox) stock was worth around $17, and now today it sunk down to just above $10.

To make matters worse, the company cruelly closed a major factory in Quebec:

The footwear company told shift workers Wednesday night that production at the plant would end for good, effective immediately, and then sent them home.

The same scenario was repeated Thursday morning with workers who showed up for their assignments. They were asked to hand in security cards and gather personal belongings. In recent months, 262 workers at the plant have been laid off. The remaining 407 got their pink slips late on Monday.

Jeez, Crocs, you guys are a bunch of heartless bastards. Who would have thought that deep down inside those hideous colorful plastic clogs, there lurked such a callous captain of industry.

Let's use this as a lesson for the future. When a ridiculous product's stock impresses people for a little while and every tool around town is wearing them, don't let it fool you into thinking 'hey, maybe these are a good investment opportunity!'

CBC News: Crocs shoos Quebec City plant workers, April 17, 2008
Motley Fool: While My Crocs Gently Weeps, April 15, 2008

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The Goons Doing the IRS' Dirty Work

The IRS could soon tighten it's strange-hold on taxpayers by allowing more 'hired gun' collectors to harass you for Uncle Sam's cut from your coin.

The House of Reps. is not a big fan of this practice and passed a bill calling for its removal, but that only made fans of the 'goon squads' more persistent on keeping it around.

The bill passed yesterday would ban the IRS from hiring these private 'debt collection firms' to go after those who didn't pay their taxes. This practice has been in place since 2005, and many Senators, who have also come out in opposition to its repeal prior to its debate in the Senate, maintain the program didn't have a chance to work.

Sen. Chuck Grassley, R-Iowa, sent a letter to Sen. Byron Dorgan, D-North Dakota outlining his opposition to the plan."The program is still relatively new. It should have a fair chance to succeed or fail on its merits before Congress rushes to kill it in the cradle," said Grassley.

Wow, that's some morbid imagery there, Chuck.

On the plus side for Chuck and his fellow 'keep the Goons' gang, this bill has a long way to go before becoming law and President Bush hasn't made it any easier by saying he will definitely veto it and keep the private collection firms in place. This is because if this practice is abolished the IRS will lose the $578 million already collected by the firms. Bush likes 'em and may want to expand their power from just contacting delinquents and organizing payments to more sinister threatening tactics. The number of private collectors with IRS hitlists will surely increase, and you may find one stalking your mailbox and voicemail with 'pay now' notices.

The debate over the feasibility of keeping these 'collection goons' in place will continue, but it does sound pretty unsettling to think private companies have been put in charge of hunting down delinquents and demanding money on behalf of the government. Is this really something the IRS can't be doing on its own?

CNN Money: House Approves Bill Banning Private Debt Collection of Taxes, April 15, 2008

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Why Is The Price of Oil So Ridiculous?

Oil prices went loco today because of broken pipelines, bad weather, weak dollaz, and stubborn Saudis.

A new all-time high for oil prices was reached this afternoon on the New York Mercantile Exchange. At $113.93 a barrel, this caused the national average for a gallon of gasoline to become $3.39.

The price jumps are due to the construction of oil pipelines in both Nigeria and the Caspian region being interrupted, along with a halt on Mexican exports in the Gulf Coast because of stormy conditions. Don't these guys know American soccer moms need to drive their kids to practice? Seriously, guys, get back to work.

Prices on oil have risen 18% since the beginning of the year, and it's not even summer yet. As the weather gets warmer and hot chicks start driving cars fast with the top down, the demand for oil, and thus the prices for it, will increase.

Even our own disappointing value of the dollar is sabotaging oil prices. As the dollar declines against the euro, many foreign investors keep betting against it, causing it to fall more. Can't a brotha catch a break?

There is a feeling that a couple of very influential men in the Middle East could do us a major 'solid' by releasing some reserves all over this place. But, that remains to be seen:

On Saturday, Saudi Arabia’s King Abdullah also suggested that new oil discoveries in the kingdom would remain untapped to preserve the nation’s wealth for future generations, according to various wire reports. “Let them remain in the ground for our children and grandchildren who need them,” the king said in a speech, according the official Saudi Press Agency.

This guy is going to feel really dumb when he sees us all using oil-less flying cars and hydrogen jetpacks by then. We will be, right?

New York Times: Oil Prices Surge to a New High, April 15, 2008

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Northwest/Delta Merger Bad For Fliers?

Northwest Airlines and Delta Airlines are getting together to create the world's biggest airline with their merger announced late yesterday.

This merger could either cause less available flights and more expensive crowded planes, or everything could be perfect and great like the press release!

Delta is saying there will be no route cancellations or hub closures to worry about. They maintain this will be good for the consumer because a combined fleet will better deal with rising oil prices. Plus, more delicious in-flight meal options will be offered, apparently. (We suggest adding burgers and ribs to the menu.)

But we're not buying all this happy-fun-times nonsense. Delta has major hubs for domestic flights in Cincinnati and Atlanta. But Northwest has them in Detroit and Memphis. These hubs are obviously in very close proximity to their former competitor's. This would lead to plenty of inefficiencies and overlap for one company, making it impossible to keep all those hubs open. As a result, their closures would lead to bigger layoffs and less choice for passengers. Some have even pointed out that, after looking through the Aviation Travel Consumer Reports, Northwest and Delta earned consistently poor ratings for customer satisfaction and a combined effort may create of a vortex of lost baggage and canceled flights.

All of this may be inconsequential though, because Northwest has refused to address the concerns of their pilots' union, which is vehemently opposing the merger. Those pesky mavericks could stop this deal dead in it's tracks.

The newly merged company will be called Delta, but all previous frequent flier miles and rewards from Northwest will be honored under the deal. However, everyone will agree that Northwelta would have been a cooler company name.

New York Times: Delta and Northwest in $3 Billion Deal, April 15, 2008

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CNBC: Why Bad Places To Live Are Great Places To Invest

A front page story on CNBC.com this afternoon heralds the oft-repeated mantra of investing overseas in times of domestic peril. We're not talking just your typical French beret and croissant shops or German beer and pretzel factories though. No, the new wave of investment gains will come from those invested in Brazil, Russia, India, and China (Also known as the BRIC countries). And for the sake of easily fitting acronyms, Mexico, Chile, and Turkey are spelled out as an afterthought.

According to an analyst from Franklin Templeton mutual funds, most investors make an investment in a BRIC country with a 5-10 year goal of staying invested. With that time-line in place, most investors make significant gains at the end of that period.

The cutesy foreign acronyms continue when this advice is offered,

For those looking to invest in China, that means targeting three C's, according to Tony Sagami of Harvest Advisors: Construction, cargo and "Chubbies," which are that nation's version of the young, urban professionals known in the US as "yuppies."

Tony 'the big Salami' Sagami may have pinned the dragon, so to speak, with this insight. But to me "targeting a few Chubbies" sounds a lot like playing the role of the 'wingman' while your friend spends the night with Brazil.

Sagami ventures further out into metaphor land, adding that,

He favors Yum! Brands, the ubiquitous owner of KFC, Pizza Hut, Taco Bell and other fast-food joints. The Chinese, eager to emulate the American dream of a pizza in every oven, are big customers of Yum restaurants.

A pizza in every oven is the American dream? Screw fast cars, 100-inch plasma screens, trophy wives, and diamond-studded grills. I dream of one day owning a modest home with 12 ovens, each cooking at least 3 pizzas.

CNBC: US Stocks Got You Down? Try the Emerging Markets, April 14, 2008

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Blockbuster and Circuit City: Match Made in Heaven or Hell?

Blockbuster officially announced today that it wants to merge with Circuit City. The guys over at Blockie sent a 'let's get it on' request over to Circuit back in February and apparently didn't get the timely response they wanted. It's been 2 months and Blockbuster claims Circuit didn't get their shit together to make this thing happen.

In order to put some extra pressure on Circuit City to finalize the deal, Blockbuster aired all the dirty laundry this morning causing both stocks to go nuts. Block stocks dropped substantially, while Circuit stocks shot up.

It's kind of like if you're a huge nerd in high school, but another equally big nerd asks you on a date and then you turn that sucka down. They suck even more, while you get a little boost for being a prick.

The bottom line is that both companies are not doing well. Blockbuster is closing tons of stores all over the country because Netflix and Apple TV offer better services that don't require driving to the store and paying dumb late fees / now-you-have-to-buy-the-movie fees. Same thing with Circuit City, they've got Best Buy to compete with, and comparing Best Buy to Circuit City is similar to comparing the real Olympics with the special Olympics.

Does anyone think this could actually work? I mean, maybe they go for the merger and "Circuit-buster" becomes a huge success?

New York Times: Blockbuster Makes A Run At Circuit City, April 14, 2008

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