Brian White
Oklahoma City, OK - http://
Brian White is a strong advocate of value investing and index funds, but has known to hold an equity or two from time to time. Financially speaking, he's covered the Fortune 500 for six years in various reporting and writing positions and currently owns a business consulting company. Additionally, Mr. White holds BA and MBA degrees.
Posted Aug 21st 2008 3:46PM by Brian White
Filed under: Bad news, Products and services
Nintendo Co., Ltd. (ADR) (OTC:
NTDOY)'s Wii game console continuet to burn up the sales charts, selling
hundreds of thousands every month. In fact, the lower-priced and graphically-inferior Wii has blown through almost every sales expectation since its release nearly two years ago. Last month, the Wii was responsible for 49% of all game consoles, and it's sold nearly 30 million since its November 2006 launch.
Wow.
But, with success comes a large target on the back. Nintendo has been named in a patent lawsuit claiming the Japanese gaming company. Hillcrest Technologies says that Nintendo has violated various patents it holds dealing with the wireless, dimension-aware gaming controller that ships with every Wii console.
The "Wiimote," as it has been dubbed, uses gyroscopes, Bluetooth wireless technology, and is incredibly simplistic on the surface (there are a minimum of buttons, unlike the competition). But inside the Wiimote, the technology making it possible to swing it like a tennis racket is quite complex. Hillcrest's claim rests primarily on wireless technology it invented to
allow the physical motion of a controller to select items on a viewing monitor. Hillcrest has already licensed its technology to several gaming companies, but the question remains: why did it take almost two years to bring the lawsuit against Nintendo? Something smells here.
Posted Aug 21st 2008 3:20PM by Brian White
Filed under: Good news, Google (GOOG), Apple Inc (AAPL), Marketing and advertising
Google, Inc. (NASDAQ:
GOOG) and
Apple, Inc. (NASDAQ:
AAPL) were named as two of the top companies in customer satisfaction recently by an ACSI index released out of the University of Michigan. This is the same study that
pounded U.S. automakers in favor of foreign auto brands.
In the index that measured e-business companies, two of the most powerful brands in technology rose to the top. It's no surprise Apple made the top of the list, with its capability to mesmerize iPod, iTunes and iPhone customers. The company is also selling more Macintosh computers than ever -- and customers are
buying them as fast as Apple can make them.
It's also hard to think that any web company can catch Google. The world's largest internet search company has such a large first-mover advantage that it's next to inconceivable that any competitor will be able to offer a better product in such a way that Google will lose a decent chunk of market share. It, along with Apple, has an extremely high customer satisfaction rating. Even if there are better products, perception is reality -- and the perception is that Google offers the information as fast as it can and connects the searcher with the information they need, and with quality.
At least two U.S. brands top their respective list, while U.S. automakers slide further down the pile of irrelevancy in a changed age of fuel efficiency and the perception of better foreign brand auto quality.
Posted Aug 20th 2008 1:28PM by Brian White
Filed under: General Motors (GM), Marketing and advertising
General Motors Corp. (NYSE:
GM) is in such dire straights that it said Tuesday it is
bringing back "employee pricing" to almost its entire 2008 auto lineup. We're not talking a few Chevy models here, but all GM models save a few truck ones.
Like Doug mentioned this morning, the automaker is in a deep funk and it's doubtful that any incentive like the previous employee pricing ruse will help.
So, what's an alternative? If it costs the automaker more to have bloated, non-moving inventory sitting on dealer lots, how about forgoing the
employee pricing schtick and giving away slow-selling models at cost? Not invoice, but cost? Sounds audacious, but these are audacious times in the auto industry. GM is even giving away employee pricing on a handful of 2009 models. That's great, but 2008 models need more extreme measures. Customers, after all,
don't exactly have the best perception of U.S.-made cars this year.
In general, employee pricing is 10% less than the invoice price of a vehicle. GM will need to cut deeper than that to reach out and get its glut out of dealer hands and into the hands of customers. Nothing speaks to the average American consumer like a cheap price --
nothing. The employee pricing incentive was very popular in 2005 when it was offered to all consumers, and it even caused the competition to roll out similar pricing. This time, GM needs to get innovative and unveil a new, better concept if it's serious about moving inventory -- even SUV inventory.
Posted Aug 20th 2008 9:45AM by Brian White
Filed under: Earnings reports, Dell (DELL), Hewlett-Packard (HPQ)
Hewlett-Packard Corp. (NYSE:
HPQ) reported
very decent quarterly results Tuesday after the market close. The world's currently-largest PC maker reported a net profit gain of $2.03 billion, up from the year-ago period gain of $1.78 billion on the back of a $28 billion quarter in sales.
The company's EPS was 86 cents, beating analyst estimates of 84 cents. In news that was not shocking, 68% of HP's sales were from overseas markets, although that was a drop of 2% from the Q2 period. HP, like many manufacturers, has its wings spread out so far in global markets that it was able to weather the U.S. market downturn.
HP guided its Q4 sales at over $30.2 billion, although CEO Mark Hurd indicated that his company's introduction of sleep laptop designs was making a splash worldwide. "You've got a lot of places around the planet where the only access to the digital content out there is through a notebook and a wireless card ... we have a significant opportunity.''
He's right. How many households are transforming to a multi-notebook, wireless environment without a desktop in sight? In addition to that, HP's global finesse and product mix is continuing to beat competitor
Dell, Inc. (NASDAQ:
DELL), even though
Dell wants to change that.
Posted Aug 19th 2008 2:44PM by Brian White
Filed under: Google (GOOG), Marketing and advertising
Google, Inc. (NASDAQ:
GOOG) has finally started trying to monetize its YouTube service through video ads, and now the world's largest internet search service is toying with advertising at its mobile video website as well. So far,
Google is only testing display advertising (small banners) on its
mobile website and only on select pages for U.S. and Japanese visitors.
For now, this is only a "test" for YouTube. Google's Christine Tsai indicated that there are "millions of people who visit YouTube every day" on their phones. Google CEO Eric Schmidt has repeatedly said that Google's mobile presence is the key to the future, since there are a disproportionately larger number of internet-capable cellphones in use globally than PCs.
Schmidt has even called finding the right advertising model on YouTube the "
holy grail." He's right -- but the only problem is that Google still has not found a mass advertising model for YouTube (mobile or not) that works when deployed property-wide. While Google continues to seek other revenue sources outside text advertising -- currently its only real cash cow -- YouTube probably presents the next best revenue source for the online search leader. That is, if it can make the YouTube ad model as unobtrusive as the search advertising model.
Posted Aug 19th 2008 11:11AM by Brian White
Filed under: Competitive strategy, Apple Inc (AAPL), Dell (DELL)
A recent
article about one of
Apple, Inc.'s (NASDAQ:
AAPL) former engineering executives left me laughing quite a bit. Tim Bucher, who recently left Apple for
Dell, Inc. (NASDAQ:
DELL) after being accused by Apple CEO of being "manic depressive," is trying to throw a spear at his former company by trying to find a challenger to Apple's iTunes service with a quite-ambitious plan at Dell.
Instead of trying to create yet another online music and video ecosystem that syncs seamlessly with another round of boring Dell music devices, he's trying to create an industry-wide team of competitors to seriously challenge Apple's dominance in the iPod/iTunes marketplace. Notice I did not say "MP3/Music service" marketplace. Right now, it's all Apple in the digital music scene and has been for some time.
Consultant Rob Enderle says that Apple "locks you in" while Dell "locks you into choice." While opening up choice is great for consumers, history says that products and services become so fragmented and hard to use that they never reach critical mass. What Apple did with the iPod was to make the service that goes with it -- iTunes -- so easy to use that it quickly became the market leader. One brand, one service, simple to use.
It's true that many customers want freedom and choice in their music players and music download services so they can "mix and match" to their heart's content. Everyone else (yes, the majority) wants a solution as simple as a light switch. Flip it, and everything "
just works." Good luck, Bucher and Dell, but to even come close to challenging Apple, your solution better be out of this world.
Posted Aug 18th 2008 3:39PM by Brian White
Filed under: Wal-Mart (WMT), Columns
Welcome to the 72nd 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 to a very hot topic these days: Wal-Mart.
This week, I'll be delving into Wal-Mart Stores Inc. (NYSE: WMT)'s decision earlier this year to jettison many hundreds of magazines from its shelves in order to thin out its reading offerings inside its stores. But, more importantly, what's going on regarding magazines in its Asda division in the UK? Is Wal-Mart trying to extend its reach just a bit too far? It tried similar tactics back in January -- so why again in August?
Wal-Mart's influence has grown immensely powerful
Ever since the 1990s, Wal-Mart has been a powerful force in American retailing as the Supercenter concept starting taking root in metro areas throughout the U.S. As the retailer became the dominant discounter, it brushed aside the competition just dirt under a rug.
Of course, along with powerful growth comes powerful opposition. I like to draw comparisons to Microsoft Corporation (NASDAQ: MSFT), when it comes to Wal-Mart. Microsoft has its operating system that has standardized a complete personal computer industry under one umbrella and became the de-facto standard that, more than anything, revolutionized the computer industry. For Wal-Mart, its relentless pursuit of finding lower prices and passing those savings on to the consumer made it become the largest retailer in the world.
Continue reading The Wal-Mart Weekly: Wal-Mart needs more profits from the magazine aisle
Posted Aug 18th 2008 2:16PM by Brian White
Filed under: Rants and raves, Marketing and advertising, Circuit City Stores (CC)
While vultures continue to circle around the body of consumer electronics retailer
Circuit City Stores, Inc. (NYSE:
CC), the company is at least trying to look alive even though much of the world has left it for dead. Circuit City's latest travail is offering "back to school tips" to concerned parents, who, after reading Circuit City's
tips-as-a-marketing-press-release, must think the retailer is on its last leg.
Apparently, many retailers believe the majority of the American public are seasonal procrastinators. The "rush to back to school" is not really a rush more than a shopping highlight for many retailers from apparel to computers to shoes to notebooks (the paper kind).
Circuit City's latest effort states some statistics as a lead-in for customers to come into their local Circuit City and shop for PCs and all the related garb that goes with them. As in, printers and ink and thumb drives ...
oh my.
Circuit City's parting shot in its "back to school" montage was the mentioning of a gift card. In fact, you can email a gift card from your PC to your college student! Wow, how 2001-ish! I'm just confused on why Circuit City even participated in a "duh" survey like this to drum up a
rather lackluster press release from a company that couldn't manage itself out of a shoebox.
Posted Aug 18th 2008 1:05PM by Brian White
Filed under: Products and services, Best Buy (BBY)
Best Buy, Inc. (NYSE:
BBY), after announcing it was going to
come on strong in the United Kingdom, is now
setting its sights on Russia to further its international expansion plans. This according to scattered media reports about the largest consumer electronics retailer in the U.S.
Proof comes in the form of Best Buy's registration of the Future Shop trademark in Russia. The Future Shop trademark is the name for Best Buy's Canadian subsidiary. It filed the license for trademark a few years ago and has been granted the trademark recently. Would Best Buy really try to enter a country where recent political strife has caused
growing international concern? Sure -- if profits are to be made.
With Best Buy on record saying that it wants to achieve $80 billion in annual sales within five years, much of that growth won't be sitting inside its U.S. stores, but from international sales. Of course, the retailer continues to open stores inside the U.S. and won't stop that type of expansion as long as it makes business sense. For the last 18 months, Best Buy has ramped up its dominance in retail electronics and has crushed former rival
Circuit City stores, Inc. (NYSE:
CC). It's showing no signs of slowing down anytime soon.
Posted Aug 15th 2008 5:08PM by Brian White
Filed under: Deals, Bad news, Microsoft (MSFT), Yahoo! (YHOO)
As if the getting-older-by-the-minute
Yahoo Inc. (NASDAQ:
YHOO) didn't need another mark against it, the internet pioneer and stubborn company recently provided information on the costs it incurred in fending off a successful
Microsoft Corporation (NASDAQ:
MSFT) bid this summer. The final tab: $36 million.
Much of this tab was with advisory and law firms that helped the company deal with Microsoft along with a proxy battle by Carl Icahn that was settled just a few weeks ago with the
installment of some Icahn puppets as board directors.
As a Yahoo! investor, are you pleased with the way Yahoo! has defended itself? Would the company be better suited for long-term success as a Microsoft division, or going at it alone as it has been?
How about the company taking $36 million from its cash pile to pay for all those consultants and attorneys? Was all the effort and expense in the best interest of the Yahoo! shareholder? Oil billionaire T. Boone Pickens
doesn't think so -- but what about you?
Posted Aug 15th 2008 4:37PM by Brian White
Filed under: Products and services, Dell (DELL)
Since returning in January 2007 to the company he founded in 1984, Michael Dell has set many things straight with
Dell, Inc. (NASDAQ:
DELL). It's widely known that some of the best stewards of public companies are the founders, and this is certainly the case with Dell himself. Entering retail in a large way, busting out plenty of new designs, and concentrating on laptop sales have given Dell an edge to use against PC market leader
Hewlett-Packard Corporation (NYSE:
HPQ), which wrestled the
world's largest PC maker crown from Dell in 2006.
Dell is now saying that his company will see more sales growth in 2008 than the overall PC market as a whole. No, this isn't just due to being more in retail with colorful laptops in the U.S. market. Most of the demand that will allow Dell to
outpace the industry growth rate will come from strong demand in emerging markets like India and China.
Dell recently said ''The emerging markets are a big part of our growth ... 'Dell will continue to grow faster than the rest of the industry, certainly for the remainder of this year.'' Those are pretty strong words, but it's not surprising. In many instances, companies are pinning their hopes on international sales growth to balance out tepid waters in the U.S. market. Even up until recent times, the red-hot U.S. market was comfortable.
But that's
not so much now as gas prices and a bombing mortgage market has turned off the consumer flame. The auto industry is the most lucidly aware of having a balanced product mix globally, and PC makers are there as well. Dell beat HP's shipment growth 21% to 17% in the quarter ended in June, so it's hitting on more cylinders every quarter.
Posted Aug 14th 2008 1:32PM by Brian White
Filed under: Rumors, Launches, Google (GOOG)
Google, Inc. (NASDAQ:
GOOG) has been touting its Android mobile operating system platform for over a year. Still without a product to showcase its efforts, many are beginning to wonder if Google has classified Android as "vaporware." Even though the company is itself not making a single piece of hardware, a mobile handset is the product the customer will use. So, Google, where is it?
Apple, Inc.'s (NASDAQ:
AAPL) iPhone 3G, which admittedly
has a few issues, but is still selling like hotcakes, is stealing any thunder Android would have created. T-Mobile USA, the fourth-largest mobile operator in the U.S., may have an Android phone on the market sometime in September,
according to TMoNews. Still, is it too late for Android to make a huge splash in the mobile pool?
Continue reading Google Android phone here next month?
Posted Aug 14th 2008 9:55AM by Brian White
Filed under: Earnings reports, Wal-Mart (WMT)
Wal-Mart Stores, Inc. (NYSE:
WMT) blasted
past quarterly expectations this morning when it
reported 87 cents profit per share before the market opened this morning. The consensus had been $0.83 per share with $101.6 billion in revenue. Final figures came in at $102.67 in revenue for the retailer's second quarter -- almost $10 billion over the year-ago quarterly figure of $93 billion.
It's another example of how many Americans are hiding out at Wal-Mart day after day looking for cheaper prices on just about everything they buy. But that's not all -- international sales skyrocketed as well, seeing a 17% lift over the year-ago quarter compared to an 8.5% lift in the U.S. In addition, international profit spiked to 16.5% as well.
So, add up Wal-Mart's tagline
Save Money. Live Better, the federal tax stimulus checks and the rising gas and food prices and there you have it -- Wal-Mart benefits from all. Although gas prices have trended downward in recent weeks, fuel is still expensive.
With Wal-Mart's failed attempt to lure more higher-spending (on higher-margin goods) customers, the company is falling back on its strength: low prices. The timing has been perfect for the retailer. But one has to ask: is fuel and commodity prices ever go back down to 2006 levels (yeah, right!), will customers return to their pseudo-affluent lifestyles and move out of Wal-Mart?
Posted Aug 13th 2008 11:40AM by Brian White
Filed under: Products and services, General Motors (GM)
General Motors Corp. (NYSE: GM), which is closing plants as it suffers some of the largest quarterly losses in the history of the company, is going to pour nearly half a billion into a new diesel plant in Thailand.
The Detroit automaker said it will invest $445 million into the Thai plant to ensure it can meet growing demand in the Asian market at the same time the U.S. market is tanking. Putting your eggs in more than one basket is always a good thing -- although GM should have done this years ago to help soften the blow from the currently anemic U.S. economy.
The new Thai plant is scheduled to open in 2010, with an engine building capacity of 100,000 engines per year. The engine types will be 2.5L and 2.8L diesel engines to serve the Southeast Asia market, little of which has a need for larger V6 or V8 engines like you'll currently find sitting abandoned in larger trucks and SUVs all over used car lots in the U.S.
Continue reading General Motors (GM) invests $445 million in Thailand diesel factory
Posted Aug 13th 2008 10:48AM by Brian White
Filed under: Earnings reports, Wal-Mart (WMT)
Wal-Mart Stores Inc. (NYSE:
WMT), the retailer that keeps on
chugging along nicely in the U.S. economic downturn, is set to release its Q2 numbers Thursday. Expectations are for a profit of 83 cents per share on sales of $101.6 billion, an increase from the year-ago quarter earnings of 76 cents per share and sales of $93 billion.
As I've been saying since 2006, Wal-Mart's effort to draw more affluent and middle-class customers through its doors was no match for its continued message of
low prices. Customers, now more than ever, are lining up all day (and night) at the local Wal-Mart to buy everything from cheaper gas to low-priced milk, bread, processed foods and flat-panel televisions.
When U.S. sales chief Eduardo Castro-Wright announced that the retailer was going to partially abandon its
Always Low Prices moniker and
go after shoppers who purchase
higher margin goods, I had a feeling that Wal-Mart's entire history of competing only on price would win the day, regardless of the strategy change. Then the housing crisis hit, gas prices went nuts, the auto industry saw a huge sales downturn -- particularly in large trucks and SUVs -- and 'staycation' became part of the language.
Wal-Mart changed its tune last year and now sports a new logo and tagline that reads
Save Money. Live Better -- and that's pretty direct in its meaning. Wal-Mart is helping the average American family save money on all purchases so it can spend the savings elsewhere, like gas and school supplies. Is Wal-Mart your friend? That's the image it wants to present, and when it releases its Q2 numbers, it should easily meet financial expectations as it goes for half a trillion in annual sales in the next few years.
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