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 Jul 3rd 2008 12:55PM by Brian White
Filed under: Products and services, Launches, Wal-Mart (WMT)
When
Wal-Mart Stores, Inc. (NYSE:
WMT) releases a new line of jeans next month from Levi Strauss, the eyes of the apparel industry will be tightly fixed on the world's largest retailer. The new denim jeans, which will be from the "Totally Slimming" line of Strauss's "Signature" line of jeans made specially for Wal-Mart, will promise to be comfortable yet produce a tummy-tightening fit for you ladies out there.
Now, these type of jeans have been available from department stores for a premium price for a while now. They're designed to automatically change that figure (no lipo required) while not feeling like a 19th-century corset. Wal-Mart's contribution to the process will, of course, be it's
sub-$20 pricetag. Expect these jeans to fly off the shelves, literally. Even in the face of an economic downturn in the U.S., Wal-Mart has plodded along just fine. Products like these -- with prices like these -- will only reinforce the retailer's staying power in uncertain times
Levi's new product is designed to hold in thighs and lift the butt, among other things. As usual in full-service discounters, you can buy all the ice cream and potato chips that will bulk up the cellulite, then find the clothing solution to hide that nastiness right in the next aisle. Wal-Mart's new Totally Slimming product was
tested by Wal-Mart women shoppers last November and proved a large success. For $20 a pair, these will draw even more women into Wal-Mart stores. If the retailer is smart, it'll build a large ad campaign around this product.
Posted Jul 3rd 2008 11:19AM by Brian White
Filed under: Good news, Rumors, Sprint Nextel Corp (S)
Much has been written about
Sprint Nextel Corp.'s (NYSE:
S) follies in recent quarters. The third-largest wireless carrier in the U.S. has lost millions of customers to larger and more successful competitors like Verizon Wireless and
AT&T, Inc. (NYSE:
T). But, with the launch of an
extremely successful iPhone competitor (among other things), the company is showing signs of stemming its huge customer defections from past quarters.
The word of support initially came from Verizon Wireless President Denny Strigl , who told investors that Sprint's performance had picked up in the last months -- although Verizon still didn't consider Sprint to be a threat to Verizon Wireless' current results. Still, any improvement for Sprint is a good thing. Sprint CEO Dan Hesse, a wireless industry veteran with a largely successful track record, is the right person to be leading Sprint as well. So, are all the cards lined up for Sprint to become a resurgent force in the U.S. wireless industry?
It's stock has rebounded in a decent way, closing up from mid-March's $6/share to $8.91 recently (it closed yesterday at $8.94/share). Although Sprint lost over a million customers in the first quarter of 2008, the numbers should not be that bad in the second quarter. Sprint also won't be sold any time soon. Verizon Wireless,
which just bought Alltel from its private owners, is the only company that could have made a merger work in buying Sprint Nextel. It would be disastrous to have another company come in and try to emulate what Sprint attempted with Nextel back in 2005, which has turned out to be a complete disaster and has led to tens of billions in write-offs (do you hear me now,
Deutsche Telekom?).
Sprint has the chops to turn itself around in 2009 with some solid management and good decisions, but it still won't be easy. Spinning off the Nextel network (oops, I mean selling the spectrum off) and migrating all those customers to Sprint's network -- along with heavy retention incentives -- may be Hesse's biggest bet yet. That is, if he has the cahones to do it.
Posted Jul 2nd 2008 6:33PM by Brian White
Filed under: Products and services, Launches, Google (GOOG)
When
Google, Inc. (NASDAQ:
GOOG) purchased wireless software development company Android years ago, its founder asked Google's co-founder Larry Page, "Is this interesting to Google?" It sure turned out to be, although the mobile phone operating system environment was announced almost a year ago and nothing concrete has shipped in a customer device yet. My bet is that Google isn't delaying development to fine-tune its software -- it's had years to do that and the money to boot.
The problem is the wireless environment in the U.S., for starters. The competitive landscape is so tightly controlled that Google's mantra of "open access" just won't sit well with wireless carriers used to telling customers what they can and cannot do with their phones. If you think U.S. consumers have control over their wireless lifestyles, a quick trip to Europe will dispel that notion pretty fast.
If Google really wants to make Android the ubiquitous, free and open mobile operating system it wants it to be, what are the
alternatives to having partnerships with mobile carriers who will, of course, be afraid of Google? Google has bid on wireless airwaves before (only to have the goal of allowing open devices accessible to closed networks), but this time, I see it going down the
mobile virtual network operator route, plain and simple. Although the MVNO model
has largely failed in the U.S., Google doesn't have a national wireless network to operate. But with its large pockets, it sure can buy wholesale from the existing carriers and place its Android customers with service -- and then, give them anything they want. Like, mobile search results with ads next to them.
Posted Jul 2nd 2008 12:55PM by Brian White
Filed under: Products and services, Competitive strategy, Apple Inc (AAPL), Verizon Communications (VZ)
Sometimes a major CEO seems like a foolish child more than a competitive leader. And sometimes the head of
Verizon Communications, Inc. (NYSE:
VZ), Ivan Seidenberg, has said things that make many of us scratch our collective heads. With
Apple, Inc.'s (NASDAQ:
AAPL) 3G iPhone about to hit the street (but not the Verizon network), Seidenberg must have been driven by jealousy to say something silly.
In response to the impending release of the 3G iPhone, Seidenberg
said: "There goes the conspiracy again. You're declaring them a winner before they've earned it on the field." This in response to a reporter's question about the new iPhone achieving mass market appeal due to the lower entry price of $199. The iPhone does not have a huge market share when all sold phones are considered, but the new $199 price tag could sure put the Cupertino company in a position to ramp up that share pretty fast. This apparently concerns Seidenberg.
Sometimes
waiting out the competition is a strategy that doesn't involve much R&D. Seidenberg went on to say, "Steve Jobs eventually will get old . . . I like our chances." Instead of trying to find some innovation to provide to the Verizon customer, maybe Verizon (along with all the other wireless carriers) will just try to wait out Apple's wireless offerings until Steve Jobs retires. Doesn't sound like a recipe for success to me. But then again, Seidenberg has said some
pretty clueless things before. Maybe this is just another example of a corporate leader who's out of touch with his industry.
Posted Jul 1st 2008 4:17PM by Brian White
Filed under: Products and services, Apple Inc (AAPL), Garmin Ltd (GRMN)
You would think that companies making standalone GPS devices would be making bank right now. The devices that never let you get lost when driving are important to many travelers, especially when you don't want to fumble with maps, let alone get lost and waste a bunch of expensive gas getting back on track.
Garmin Ltd. (NASDAQ:
GRMN), one of the leading GPS makers, though, has seen tough times recently. Its shares have declined 56% recently. Why I'm not sure. I do know that it has nothing to do with
Apple, Inc. (NASDAQ:
AAPL)'s iPhone that's about to be released in a few weeks.
Apple's new 3G iPhone will have embedded GPS, which will make the gadget all the more useful. Regardless, though, will consumers be using their iPhones as replacements for full GPS devices in all those vehicles? Unless there is a decent vehicle mount kit available, it's hard to believe so. The iPhone does have the best chance at displacing more units from Garmin and other GPS makers like TomTom in the car navigation arena, but the entire GPS experience is what some folks probably forget about.
If you've ever used a GPS navigation program installed on a normal cellphone or smartphone, does it works seamlessly like a standalone product? Can you take and make calls while the GPS continues working in the background, giving you all those voice directions? What makes standalone GPS devices so valuable is that they work even when we're multitasking with phone calls. That's the kicker: the first time you miss a direction by voice because you're busy chatting on the phone, a GPS solution on top of a cellphone -- at least for driving purposes -- would become useless to the average consumer. I doubt
Apple's upcoming solution will be this drab, but I continue to see a bright future for standalone GPS device manufacturers (although profits will continue to dwindle). Apple, as always, is not the only game in town. It will still be big for non-driving GPS uses, though.
Posted Jul 1st 2008 11:30AM by Brian White
Filed under: Good news, Products and services, Sprint Nextel Corp (S), Smartphones
Doug
pointed out recently that the new Samsung Instinct most likely could not save
Sprint Nextel Corp. (NYSE:
S) from its current financial and customer woes. He's right -- one phone does not resurrect a company. However, the Instinct -- which looks and functions very similar to an
Apple, Inc. (NASDAQ:
AAPL) iPhone -- is still selling like hotcakes. My guess? It's all due to Apple, not Sprint.
The Instinct, which apparently has become Sprint's best-selling 3G phone product ever in a very short time, is an impressive device. Feature-for-feature, it's right there with the upcoming 3G iPhone about to be released in a few weeks. Independent research that counted the movement of Instinct phones at 100 Sprint stores around the country report that it's selling out fast. Sprint contends that the smartphone is the fastest-selling phone in Sprint's history up to this point.
But, to those customers of Sprint (new and old) who just can't see themselves joining
AT&T, Inc. (NYSE:
T) just to get an iPhone, the Instinct is apparently turning out to be a perfect equivalent. If Apple had never released the original iPhone, the Instinct may have never been born. Apple, as usual, has made other hardware companies realize that hardware needs to be elegant, and software needs to be way elegant. The clumsy designs and complex cellphone interfaces may soon be extinct, thanks to Apple. And,
Sprint's sales of the Samsung Instinct will at least owe partial credit to the iPhone maker.
Posted Jun 30th 2008 10:46AM by Brian White
Filed under: Wal-Mart (WMT), Marketing and advertising
Wal-Mart Stores, Inc. (NYSE:
WMT) said yesterday that it would be changing the logo at its U.S. locations by this fall. The current logo, which is simply the company's name with red lines above and below it, has been in use since 1992.
Wal-Mart continues to integrate the slogan "Save Money. Live Better" into everything it does. That saying is the retailer's current tagline, and even the announcement of the logo change mentions this: "This logo update is simply a reflection of the refreshed image of our stores and our renewed sense of purpose of helping people save money so they can live better." If that isn't a pre-scripted message from the corporate underbelly, I don't know what is.
It appears that the hyphen will be going away in the company's name-based logo. The hyphen was replaced a long time ago by the star anyway, so it's a moot point. According to
rumors reported by the WSJ, the new logo will show the retailer's name in white letters on an orange background, followed by a small starburst. I guess orange is less confrontational than blue? Anyway, the image makeover of the retailer's logo comes at a good time. Sometimes breaking the mold and starting over can implant a new image in the mind of the consumer, and if all that is required is a logo change (and the millions of changes on signage it will require), so be it.
Posted Jun 30th 2008 10:10AM by Brian White
Filed under: Industry, Competitive strategy, Marketing and advertising, Entrepreneurs
This post is part of our Big Company, Small Town series, featuring large companies and the small towns in which they are headquartered.
Pilgrim's Pride's home roots in the small town of Pittsburg, Texas, perhaps explain why it is the largest chicken producer in the U.S., even ahead of competitor Tyson Foods, Inc. (NYSE: TSN) in Arkansas. In 1946, Lonnie "Bo" Pilgrim dressed like a standard Pilgrim and tucked a small chicken under his arm when completing orders for customers. He gave away free chicks when he sold chicken feed as a way to expand his market for chicken feed. As of today, Pilgrim's Pride operates chicken processing plants in 13 states and Mexico and processes 44 million chickens per week, resulting in 9 billion pounds of chickens per year and over 528 million chicken eggs per year.
Pilgrim's Pride's operations are almost exclusively located in the U.S. close to its farms, and it has become the second-largest chicken supplier to Mexico as well. It does have processing plants in Mexico and Puerto Rico. Along with such huge chicken-producing numbers come a few problems, as a huge product recall in 2002 due to Lysteria contamination killed seven people and made over 40 customers sick. In 2004, more than 24,000 hens were destroyed after a strain of avian flu was found in Hopkins County, Texas.
Pilgrim's Pride is still based in the same location where it was founded over 60 years ago, but today stands as a completely vertically-integrated company: it owns every process and facility from egg to table, as it says. Wal-Mart Stores Inc. (NYSE: WMT), Publix Super Markets (OTC: PUSH) and KFC, a division of Yum! Brands (NYSE: YUM) ,can be counted as some of Pilgrim's Pride's largest customers.
Be sure to check out more Big Company, Small Town posts.
Posted Jun 28th 2008 12:40PM by Brian White
Filed under: Wal-Mart (WMT), Columns
Welcome to the 66th 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 examining Wal-Mart Stores Inc. (NYSE: WMT) and the reputation the world's largest retailer has. Wal-Mart's roots from the backyard of a small Arkansas town into the world's largest company in less then five decades is nothing short of amazing -- like it or not.
But, with such rapid growth, how has the company's reputation fared during this journey? Harris Interactive's latest "Reputations of the Most Visible Companies" (PDF download) sheds a little light on this area. Although Wal-Mart is currently experiencing a decent period of sales and profit (due to customers flocking to low prices), the company still has a tarnished image in much of the world. Is it deserved? You be that judge.
Continue reading The Wal-Mart Weekly: Rating Wal-Mart's reputation
Posted Jun 27th 2008 1:04PM by Brian White
Filed under: Management, Google (GOOG)
Google, Inc. (NASDAQ:
GOOG), after months of searching for a new Chief Financial Officer, has just
named a new one as of this week.
Bell Canada (NYSE:
BCE)'s Patrick Pichette will take over for the retiring George Reyes. Reyes, who presided over Google's IPO back in 2004 and was very adept at telling the investor community only what Google wanted the world to know, will be an interesting person to replace indeed.
Pichette will begin with Google on August 1. His recent positions as president of global operations and CFO of Bell Canada no doubt was a large mark on his resume. Google did the right thing here -- searched for, and found, a seasoned global exec to represent the financial communications of the world's hottest internet company.
One area that will be interesting to see develop involves Google's stubborn approach to not laying it all out on the table. As in, giving all the inside guidance and other details analysts crave so that they can push GOOG shares up or down if those targets are hit or missed every quarter. Google has always been a financial communication maverick and has told the market to stick it many times by not coming forward with a bunch of granular detail about future quarters. What will Pichette do? We'll see on Google's Q3 quarterly results call later this year.
Posted Jun 27th 2008 9:45AM by Brian White
Filed under: Deals, Rumors, Ford Motor (F), General Motors (GM)
According to
BusinessWeek, a senior
General Motors Corp. (NYSE:
GM) recently tossed an idea to the troubled automaker: Consider a merger with rival
Ford Motor Co. (NYSE:
F).
The idea, which the magazine says was shot down at a GM meeting, underscores the problems facing the two American auto icons as consumers pinched by high gas prices dump their SUVs and pick-up trucks in favor of smaller cars. The swiftness of that transition caught just about every auto manufacturer off guard, although
Toyota Motor Corp. (NYSE:
TM) was better prepared with its lineup of smaller, more fuel-efficient vehicles.
A possible deal would be a large distraction into both companies while doubling the amount of problems a combined auto colossus would face. A long-term combination may have indeed proved quite fruitful, but are both companies seriously ready to have their empires combined? Maybe in 2013, okay?
Financially, if the deal makes sense for the long term, look for this rumor to surface again in the near future. Combining the incredibly high overhead and capability to weather fickle customer preferences in vehicles would never be a bad thing. right now, the timing is bad -- but it could be better in reach of five years. Is the U.S. ready for a single, publicly-held American auto manufacturer? I'm not sure, and there would be mountains of convincing to do if a merger ever comes up again. My bet is it will.
Posted Jun 26th 2008 3:02PM by Brian White
Filed under: Industry, Competitive strategy
Earlier this year, chic and expensive retailer Sharper Image was purchased by a chop shop of sorts. A mall store with $5,000 massage chairs and insanely expensive geek gifts just didn't cut it in an age of high gas prices and home foreclosures. So the company, which went bankrupt, had its brand bought by Hilco Organization and Gordon Brothers Group. And guess what? You may see the Sharper Image brand again at you local
Best Buy, Inc. (NYSE:
BBY) or
Target Corp. (NYSE:
TGT) store aisles soon.
The Sharper Image brand may soon be pasted onto vacuum cleaners or sunglasses on retail store shelves. As people tend to buy brands as much as actual products, the brand will probably end up being a good investment on the $49 million that was paid to purchase it after the bankruptcy. It's pretty sad that such negative publicity about a single product -- the Ionic Breeze air purifier -- led to Sharper Image's downfall, although I believe there were deeper problems at play. As in, people loved to look at (but not buy) fancy things with grossly inflated prices.
It appears now that we
may yet again see the Sharper Image name on infomercials, web sites and catalogs, as well as on some retail shelves. With an expectation of Sharper Image brand sales hitting an annual pace of $1 billion -- up from 2007's $375 million -- it's pretty easy to see why the owners of the now-defunct brand want to revive it. Customers know the brand, they trust it and they would love to see it on their new vacuum cleaner robot.
Posted Jun 26th 2008 12:31PM by Brian White
Filed under: Competitive strategy, Best Buy (BBY)
Best Buy Inc.'s (NYSE:
BBY) Chief Operating Officer made a pretty strong pledge this week. Brian Dunn suggested that the largest consumer electronics retailer in the U.S. would double its sales to $80 billion within five years. This has an eerie air about it, as it sounds much like
Dell, Inc. (NASDAQ:
DELL) then-CEO Kevin Rollins many years ago. While
Dell's ambitious goal didn't really pan out nearly as nice, Best Buy has a much better proposition to get to its goal.
Dunn's announcement at the retailer's annual shareholder's meeting this week was backed up by the fact that Best Buy has already doubled in size from 2003 to 2008. Its sales went from $20 billion to $40 billion in that five-year period. Keep in mind that one of Best Buy's chief competitors,
Circuit City Stores, Inc. (NYSE:
CC), is basically on the ropes hanging on for dear life.
Wal-Mart Stores, Inc. (NYSE:
WMT) is Best Buy's largest competitor, but it doesn't carry near the breadth of actual consumer electronic products that Best Buy does. This positioning still leaves Best Buy free to navigate to $80 billion by 2013. But, doubling every five years is no easy task, and especially in the consumer spending environment we're in now.
What is fascinating is that Best Buy apparently controls only about 20% of the consumer electronics market, and about 30% of retail PC sales in the U.S. Combine those low numbers with Best Buy's very aggressive international expansion and partnerships and it's easy to see that $80 billion in annual sales is already being attacked. Will it get there? We'll be checking -- all the way to 2013.
Posted Jun 25th 2008 5:55PM by Brian White
Filed under: Products and services, Launches, Google (GOOG), Marketing and advertising
Google, Inc. (NASDAQ:
GOOG) continues to make transparency about all people and businesses its top priority. In
releasing Trends for Websites this week, the world's largest search information company made it impossible for websites to hide their numbers from all eyes, including consumers and advertisers. Are you a media buyer who wants to know the reach of a prospective website before you even contact them to negotiate? Visit Google's Trend for Websites site and find out instantly.
Google then one-upped itself by announcing the
Ad Planner product for advertisers. This new product will allow media buyers and advertisers to get an immense amount of help on the best web properties in which to spend ad money. In other words, Google is making life easier for its advertisers to find the largest-impact website in which to advertise -- without trial and error. Of course, the new Ad Planner service is free.
Google's unabated quest to become the
world's largest advertising company continues to move forward. Although these two products may not get much attention from the media after this week, these are huge impacts in terms of the business model that keeps Google's entire money chest afloat: advertising revenue. When Google said that "we want to help you figure out where your target audience is" in announcing Ad Manager, it wasn't kidding. The more it makes its ad customers successful, the more business it will bring in. Everyone's happy, and Google remains solidly on top of the new media advertising world.
Posted Jun 25th 2008 9:00AM by Brian White
Filed under: Deals, Rumors, Management, Circuit City Stores (CC)
Circuit City Stores, Inc. (NYSE:
CC) is sitting on the brink of a buyout. The question is who, and how much. The deal with
Blockbuster Inc. (NYSE:
BBI) is still very possible, but investor Mark Wattles of Wattles Capital Management has said to expect a deal within four weeks regardless. With Circuit City shares nearly the bottom -- closing yesterday at $4.35 -- some entity needs to swoop in and just offer cash for the company. As in, now.
It's a foregone conclusion that Circuit City can't compete with other national consumer electronics retailers. The access to its prime real estate locations would be a main reason for the chain to be bought up at such a fire sale price. Wattles said Blockbuster and two unnamed
private equity firms are most likely the three finalists ready to step up and purchase Circuit City.
While all this "due diligence" is going on for buying a retailer at such a low price, shareholders are
getting antsy with good reason. It's hard to imagine any shareholder making out on Circuit City stock -- including Wattles who stands to lose a good chunk of change unless the shares rebound. Circuit City's largest investor, HBK Investments (a 9% stake), probably needs to have a deal done as soon as possible with a sweet premium to the current share price. Who could blame them?
Regardless of who buys Circuit City, this is a company that needs to return shareholder equity back to its shareholders and just fold up and go away. It's not going to get any better.
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