12/18/04 One Week Until Christmas
Overstock reported sales for the holiday season peaked yesterday. That was a full week later than in previous years, and mentioned Thursday the 16th was the largest day in the company’s history. Patrick Byrne, Overstock’s president, observed the trend is significant. “Sales historically peak around Dec. 10th and taper off from there… The fact that business has continued to swell so late in the month suggests to me that last-minute shoppers, who have traditionally flocked to the malls in the last few days before Christmas, are increasingly going online. This phenomenon may be the reason why some market tracking firms have recently increased projections for online holiday spending this year.” Consumers are able to buy later online this year. Companies, such as Wal-Mart.com, are providing guaranteed delivery by the 24th if purchasing by the 20th. Blue Nile is going a step further. They are providing free FedEx shipping to attract late holiday shoppers. This new market trend of last-minute shoppers going online is not a one-season phenomenon. Next year it will be bigger. This spells trouble for companies like Kmart and Sears. In my view, that merger will be the vision for shoppers living in the dark ages when online offerings and comparative pricing were not available to the consumer.
The Bush Administration predicted a 3.5% growth rate for the economy in 2005 and an inflation rate of 2%. They are predicting that the economy will add about 175,000 jobs in 2005. The question is how many revisions will be made to this forecast in the coming months?
The Schwartzenegger (remember him?) Administration stated California’s budget deficit for the coming year has grown to $8.1 billion, more than $1 billion higher than previously forecast. How many upward revisions will be made in the coming months?
The Treasury Department reported that the Alternative Minimum Tax currently applies to 3 million taxpayers and that it will strike 30 million Americans by 2010. Bush wants to eliminate the AMT, which brings $1 trillion in revenue to the Treasury. How will this be accomplished? The proposal is to end the deduction for state and local taxes, which generate $900 billion in revenue.
According to SEMI, the November book-to-bill ratio was 1.00. “Total orders for semiconductor equipment have declined about 16% from the peak observed in June of this year,” stated SEMI.
The news on Celebrex created a market cap loss of close to $30 billion for Pfizer shareholders. Astra Zeneca’s marketing suspension of its cancer drug was a blow to its stockholders. As I have stated over the years, more research needs to be done on drug interaction as well as the size of dosages prescribed to patients with cancer, heart disease, and other leading causes of death.
Blinkx TV is a search engine now in beta. I think readers will appreciate its ability to “capture and index video streams across news, sports, and entertainment programming from 22 channels, including Fox News, ESPN, and Biography.” In sum, it is the first search engine to make TV programs searchable on demand.
The WSJ reports that Excelon is in talks to acquire PSEG in a $12 billion stock deal.
American Express will cut 2,000 jobs. Danaher Tool will close its Springfield, Mass plant and idle 335 workers. The average wage at the facility is $14 per hour.
The BLS reported that real average weekly earnings fell by 0.4% from October to November after seasonal adjustment. A 0.1% increase in average hourly earnings was more than offset by a 0.3% decline in average weekly hours and a 0.2% increase in the CPI for urban wage earners and clerical workers. Earnings of both full-time and part-time workers holding production or non-supervisory jobs are included. Average weekly earnings rose by 2.1%, seasonally adjusted, from November 2003 to November 2004. Adjusted for the CPI, average weekly earnings decreased by 1.6%. GDP growth absent an increase in real average weekly earnings is a formula for a dwindling quality of life. This has been the dour landscape throughout the Bush years. There will be a steep payment.
Oil rose 14% this past week to $46.28 a barrel. Gold also had a better week and closed at $442.90 per ounce
AirAsia will buy 40 Airbus A320s for $2.5 billion and phase out its all-Boeing fleet. Boeing is in discussions with All Nippon Airways to sell several 7E7s.
The Department of Energy in its December 2004 Short-Term Energy Outlook forecast a 34% increase in the average Northeasterner’s heating costs, for a total of $1,279, up from $953 last year.
Mexico’s Finance Secretary Francisco Gil Diaz: “Public foreign debt today is just 12.7% of GDP versus 32.4% in 1995. In 1994, we had almost $19 billion dollars worth of internal debt that was indexed to the dollar. Today we have no indexed debt, no short-term debt, and we’re raising the necessary resources to pay debts in 2006. We’ve already financed 2005 debt.”
In this Saturday’s weekly sales update, Wal-Mart maintained its expectations for a 1% to 3% increase in December sales at its U.S. stores open at least one year. The company mentioned that sales of general merchandise and winter items improved in the latest week. Food sales were strong but the star performer was gift sales which were “up significantly over last week.” Customer traffic continued to drive sales this week.
Before the holiday season shopping season began, I predicted that the major growth would be in online shopping and gift cards. It appears that these two areas will be even stronger than I had anticipated, and for mainstream retailing, as a generalization, the results will be mixed and not very promising.
Friday, December 17, 2004
12/17/04 Surprises In Store
As previously mentioned, there are two additional shopping days this season compared with a year ago. Many retail analysts have suggested that may be one reason shoppers are waiting longer to make their holiday purchases. It’s also possible that traditional shopping venues will see less traffic and that this may be the new trend that gains traction. For several years I have written about increased online shopping. This holiday period has been the mother lode. Business is off the charts, and significantly above pre-holiday forecasts. According to comScore Networks, online holiday shopping had been projected to rise 25% this season to $15 billion. ComScore now predicts the figure will exceed $20 billion, up 63% from the 2003 holiday season. Some of the major beneficiaries have been Blockbuster.com, BestBuy.com, Wal-Mart.com, and Target.com.
Combine online sales with the growth in gift card purchases, and one can expect many surprises in store for the traditional retailer. A growing percentage will be disappointed by their results--- even with two more shopping days. This Saturday and Sunday and next Friday, the 24th, will be key days for the malls and free-standing retailers. They need to start moving their winter apparel inventory. Meanwhile, shoppers will find whether late holiday season shopping found more markdowns and bargains. With many online retailers offering free shipping and/or low cost shipping, more shoppers have found their way conveniently to bargains through comparative pricing on the Internet. It sure beats fighting the crowds.
Yesterday, the U.S. National Weather Service predicted that temperatures in the East, Southeast, much of the Midwest extending east from Kansas and Texas, the Pacific Northwest, Idaho, and Wyoming would be below normal for the next six to ten days. This cold snap might spell trouble for near-term heating oil and natural gas prices.
According to Nielsen/NetRatings, online consumers spent $919 million on travel in November 2004, up 11% from November 2003. In fact, 23% of Americans flocked to online travel destinations during this November. That amounted to 68 million people compared with 60 million in the comparable month of 2003, and “during this November, much of online travel spending stemmed from lower to upper middle class households.”
Wal-Mart quietly launched a new house consumer electronics brand named iLo. You might find that brand on DVD recorders, flat-panel TVs, plasma-screen TVs, and portable DVD players. Not all stores will carry the iLo brand. Prices represent significant savings from those found at other consumer electronics stores, such as, Best Buy. You will be seeing more iLo products in the future. That’s good news for Wal-Mart’s customers where over 52% make less than $45,000 a year compared to 29% at Best Buy, according to the NPD Group.
According to AMR, over the next six years, 15% of IT jobs required by U.S. companies will be done in India. The new report estimates that the Indian IT labor force will be larger than 3 million by 2010, and half of the workers will be performing jobs for U.S. companies.
According to the CBO, Social Security represents about 4.4% of our GDP and Medicare accounts for 12% of the Federal Budget.
Yesterday, volatility again returned to the Treasury market, and the 10-year increased in yield from 4.07% to 4.19% and the spread between the 10-year and the 2-year widened a bit to 1.19% from 1.13%. The increase in yields was connected to the dollar and to U.S. weekly jobless claims falling by 43,000. That decline could only be explained by the possible hiring of 43,000 Santa Clauses and/or a combination of increased military troops and/or a combination of double-counting of part-time seasonal jobs. For me, the number of 43,000 is fantasy and akin to wishful market thinking for the new Gillette women’s vibrating.razor.
Cirrus Logic is cutting 100 jobs. Kewaunee Scientific is cutting its workforce by 18% or 100 positions.
Housing starts plummeted 13.1% in November; however, housing permits only declined 1.5%.
In the third quarter, the U.S. current account deficit widened to a record $164.71 billion.
According to Wal-Mart, the average wage for their U.S. employees is $10 an hour. According to Costco, the wage at Costco starts at $10 an hour.
As previously mentioned, there are two additional shopping days this season compared with a year ago. Many retail analysts have suggested that may be one reason shoppers are waiting longer to make their holiday purchases. It’s also possible that traditional shopping venues will see less traffic and that this may be the new trend that gains traction. For several years I have written about increased online shopping. This holiday period has been the mother lode. Business is off the charts, and significantly above pre-holiday forecasts. According to comScore Networks, online holiday shopping had been projected to rise 25% this season to $15 billion. ComScore now predicts the figure will exceed $20 billion, up 63% from the 2003 holiday season. Some of the major beneficiaries have been Blockbuster.com, BestBuy.com, Wal-Mart.com, and Target.com.
Combine online sales with the growth in gift card purchases, and one can expect many surprises in store for the traditional retailer. A growing percentage will be disappointed by their results--- even with two more shopping days. This Saturday and Sunday and next Friday, the 24th, will be key days for the malls and free-standing retailers. They need to start moving their winter apparel inventory. Meanwhile, shoppers will find whether late holiday season shopping found more markdowns and bargains. With many online retailers offering free shipping and/or low cost shipping, more shoppers have found their way conveniently to bargains through comparative pricing on the Internet. It sure beats fighting the crowds.
Yesterday, the U.S. National Weather Service predicted that temperatures in the East, Southeast, much of the Midwest extending east from Kansas and Texas, the Pacific Northwest, Idaho, and Wyoming would be below normal for the next six to ten days. This cold snap might spell trouble for near-term heating oil and natural gas prices.
According to Nielsen/NetRatings, online consumers spent $919 million on travel in November 2004, up 11% from November 2003. In fact, 23% of Americans flocked to online travel destinations during this November. That amounted to 68 million people compared with 60 million in the comparable month of 2003, and “during this November, much of online travel spending stemmed from lower to upper middle class households.”
Wal-Mart quietly launched a new house consumer electronics brand named iLo. You might find that brand on DVD recorders, flat-panel TVs, plasma-screen TVs, and portable DVD players. Not all stores will carry the iLo brand. Prices represent significant savings from those found at other consumer electronics stores, such as, Best Buy. You will be seeing more iLo products in the future. That’s good news for Wal-Mart’s customers where over 52% make less than $45,000 a year compared to 29% at Best Buy, according to the NPD Group.
According to AMR, over the next six years, 15% of IT jobs required by U.S. companies will be done in India. The new report estimates that the Indian IT labor force will be larger than 3 million by 2010, and half of the workers will be performing jobs for U.S. companies.
According to the CBO, Social Security represents about 4.4% of our GDP and Medicare accounts for 12% of the Federal Budget.
Yesterday, volatility again returned to the Treasury market, and the 10-year increased in yield from 4.07% to 4.19% and the spread between the 10-year and the 2-year widened a bit to 1.19% from 1.13%. The increase in yields was connected to the dollar and to U.S. weekly jobless claims falling by 43,000. That decline could only be explained by the possible hiring of 43,000 Santa Clauses and/or a combination of increased military troops and/or a combination of double-counting of part-time seasonal jobs. For me, the number of 43,000 is fantasy and akin to wishful market thinking for the new Gillette women’s vibrating.razor.
Cirrus Logic is cutting 100 jobs. Kewaunee Scientific is cutting its workforce by 18% or 100 positions.
Housing starts plummeted 13.1% in November; however, housing permits only declined 1.5%.
In the third quarter, the U.S. current account deficit widened to a record $164.71 billion.
According to Wal-Mart, the average wage for their U.S. employees is $10 an hour. According to Costco, the wage at Costco starts at $10 an hour.
Thursday, December 16, 2004
12/16/04 The Math Is Undeniable
Our October net capital inflows dropped to $48.1 billion, the lowest in a year. In the same month, the trade deficit was $55.1 billion and that does not include the budget gap or the unfunded liabilities for Medicare and Social Security. At the present rate, we will not meet this generation’s obligations--- never mind the obligations being discussed at the so-called two-day economic conference in DC. As I have stated repeatedly, nations vote with their money. Nations around the globe are expressing a growing no-confidence vote in our economic policies. Meanwhile, by comparison, fixed asset investment in China’s urban areas rose 24.9% in November from year earlier levels. Their economic growth will amount to 9% in 2004 and is projected at 8.5% in 2005.
United Airlines employs more than 6,000 people at its Denver hub. United forecasts an $804 million operating loss in 2004 and a $725 million operating loss in 2005. According to a lending agreement, United must maintain a cash balance of at least $750 million. In early May, the airline anticipates its cash balance will drop below that figure.
ABN Amro, the Dutch bank, will cut 2,850 jobs. Some of the global shared services positions to be cut will be in the U.S. The company did not specify how many. Intermet Corp. intends to close its two Sturtevant, Wisc. plants, and this will result in a loss of 603 jobs.
Yesterday Larry Ellison sent a letter to all PeopleSoft employees and stated “we have agreed to target January 14th to communicate the organizational structure of the combined organization. We will inform all affected employees of their roles by this time wherever possible… we need to understand the need to provide clarity as soon as practicable to all employees.” In a month’s time, the thousands of PeopleSoft employees will learn how many will lose their jobs.
Yesterday, the yield curve became a little flatter with the 10-year Treasury yield dropping to a 6-week low yield of 4.07% and the 2-year closing at 2.94%. Meanwhile,
with inflation supposedly under control, crude, heating oil, and unleaded gas futures closed at their highest levels in two weeks and jumped between 4.7% and 6.4%. The markets realized that the winter months do produce cold weather, and the latter impacts stocks of heating oil.
Who would have thought that a shortage of iPods could take place during the holiday season? Apple didn’t.
Accounting disagreements can take its toll. In the case of Fannie Mae it meant restating various earnings releases. It wasn’t a big deal--- only the creation of a $9 billion loss on derivatives, and that eliminated 38% of its reported income since 2001.
Over the course of decades, it has been proven that only a very small percentage of large mergers work out successfully. Hopefully, JNJ’s $25 billion acquisition of Guidant, the $35 billion merger between Sprint and Nextel, and Symantec’s $13.5 billion purchase of Veritas will prove exceptions. First, government approvals must be forthcoming.
In November, Michigan’s unemployment rate rose to 7%.
The BLS reported that the average employer costs for employee wages, salaries, and benefits amounted to $25.36 per hour, of which wages and salaries were 70.8% and benefits were $7.40 for the remaining 29.2%. With those costs, it’s difficult to compete with China, India, and other low-cost countries.
According to the Defense Department, more than 5,500 personnel have deserted since the Iraq war began. They acknowledge that the Army National Guard is short 5,000 new citizen-soldiers. Ivan Eland, national security analyst at the Independent Institute, stated “when you are risking your life on the battlefield, the importance of knowing why you are doing so cannot be underestimated. If soldiers don’t know why they are fighting there or believe they’ve been hoodwinked, we may see the same phenomenon happen in Iraq as occurred in Vietnam.”
The EU will delay the Jan. 1 removal of trade sanctions against the U.S. because our country continues to provide Boeing with tax credits amounting to more than $150 million annually.
October represented the strongest month for net purchases of foreign equities and foreign fixed income instruments by U.S. investors since July 2000.
Gateway cautioned that its first quarter revenue could fall 15% or more from fourth quarter levels.
Paul Samuelson: “Politicians like to tell people what they want to hear--- and what they want to hear is what won’t happen.”
Our October net capital inflows dropped to $48.1 billion, the lowest in a year. In the same month, the trade deficit was $55.1 billion and that does not include the budget gap or the unfunded liabilities for Medicare and Social Security. At the present rate, we will not meet this generation’s obligations--- never mind the obligations being discussed at the so-called two-day economic conference in DC. As I have stated repeatedly, nations vote with their money. Nations around the globe are expressing a growing no-confidence vote in our economic policies. Meanwhile, by comparison, fixed asset investment in China’s urban areas rose 24.9% in November from year earlier levels. Their economic growth will amount to 9% in 2004 and is projected at 8.5% in 2005.
United Airlines employs more than 6,000 people at its Denver hub. United forecasts an $804 million operating loss in 2004 and a $725 million operating loss in 2005. According to a lending agreement, United must maintain a cash balance of at least $750 million. In early May, the airline anticipates its cash balance will drop below that figure.
ABN Amro, the Dutch bank, will cut 2,850 jobs. Some of the global shared services positions to be cut will be in the U.S. The company did not specify how many. Intermet Corp. intends to close its two Sturtevant, Wisc. plants, and this will result in a loss of 603 jobs.
Yesterday Larry Ellison sent a letter to all PeopleSoft employees and stated “we have agreed to target January 14th to communicate the organizational structure of the combined organization. We will inform all affected employees of their roles by this time wherever possible… we need to understand the need to provide clarity as soon as practicable to all employees.” In a month’s time, the thousands of PeopleSoft employees will learn how many will lose their jobs.
Yesterday, the yield curve became a little flatter with the 10-year Treasury yield dropping to a 6-week low yield of 4.07% and the 2-year closing at 2.94%. Meanwhile,
with inflation supposedly under control, crude, heating oil, and unleaded gas futures closed at their highest levels in two weeks and jumped between 4.7% and 6.4%. The markets realized that the winter months do produce cold weather, and the latter impacts stocks of heating oil.
Who would have thought that a shortage of iPods could take place during the holiday season? Apple didn’t.
Accounting disagreements can take its toll. In the case of Fannie Mae it meant restating various earnings releases. It wasn’t a big deal--- only the creation of a $9 billion loss on derivatives, and that eliminated 38% of its reported income since 2001.
Over the course of decades, it has been proven that only a very small percentage of large mergers work out successfully. Hopefully, JNJ’s $25 billion acquisition of Guidant, the $35 billion merger between Sprint and Nextel, and Symantec’s $13.5 billion purchase of Veritas will prove exceptions. First, government approvals must be forthcoming.
In November, Michigan’s unemployment rate rose to 7%.
The BLS reported that the average employer costs for employee wages, salaries, and benefits amounted to $25.36 per hour, of which wages and salaries were 70.8% and benefits were $7.40 for the remaining 29.2%. With those costs, it’s difficult to compete with China, India, and other low-cost countries.
According to the Defense Department, more than 5,500 personnel have deserted since the Iraq war began. They acknowledge that the Army National Guard is short 5,000 new citizen-soldiers. Ivan Eland, national security analyst at the Independent Institute, stated “when you are risking your life on the battlefield, the importance of knowing why you are doing so cannot be underestimated. If soldiers don’t know why they are fighting there or believe they’ve been hoodwinked, we may see the same phenomenon happen in Iraq as occurred in Vietnam.”
The EU will delay the Jan. 1 removal of trade sanctions against the U.S. because our country continues to provide Boeing with tax credits amounting to more than $150 million annually.
October represented the strongest month for net purchases of foreign equities and foreign fixed income instruments by U.S. investors since July 2000.
Gateway cautioned that its first quarter revenue could fall 15% or more from fourth quarter levels.
Paul Samuelson: “Politicians like to tell people what they want to hear--- and what they want to hear is what won’t happen.”
Wednesday, December 15, 2004
12/15/04 Appropriations And Supplementals
Back in June, only six months ago, the CBO estimated that the 2005 supplemental for Iraq and Afghanistan would be between $55 and $60 billion. This is a non-partisan office; however, being non-partisan is not a pathway leading to accurate forecasting. According to the Pentagon and White House officials, the administration’s funding request for Iraq and Afghanistan will be raised close to $100 billion, and this is on top of the three special budget requests that have provided $152.6 billion through December 31, 2004. As one military think tank member suggested, “I think we’re probably getting up to $2 billion a week fairly soon.”
Abraham Lincoln: “You cannot keep out of trouble by spending more than your income.”
Cold weather provides relief from pests and bugs and fleas but not from spenders in our nation’s capitol.
For the first 10 months of 2004, the trade deficit amounted to $500.5 billion, and exceeded the record gap for all of 2003. The October trade deficit of $55.5 billion placed our nation’s annualized trade deficit rate at $666 billion. You can see that a declining dollar has not been of assistance. As long as we import about 50% more goods and services than we export, this trade gap problem will persist and grow in cancerous proportions.
Charles Jaffe: “It’s not your salary that makes you rich, it’s your spending habits.”
The U.S. trade deficit with China was $16.8 billion in October, and this year’s deficit with China is expected to reach $160 billion by year-end. In the first ten months of 2004, foreign direct investment in China amounted to $53 billion. Their foreign exchange earnings are approaching $515 billion, almost $100 billion greater than the comparable period a year ago. It is not surprising that China’s money supply is growing 17 to 20% annually and that inflation exceeds a 5% rate.
The Reserve Bank of India reported that, in the week ended Dec. 3, the country’s flow of funds from other countries grew by $3.79 billion. India’s foreign exchange reserves now stand at a record-high of $130.72 billion.
Not everyone is excited about Oracle’s acquisition of PeopleSoft. In June 2003, J.D. Edwards agreed to merge with PeopleSoft. J.D. Edwards is the largest sofware company in Denver with 2,000 workers. Many of these workers will be cut by Oracle. During the 18 months that Oracle battled to acquire PeopleSoft, Oracle threatened to layoff 6,000 of PeopleSoft’s workers. The final figure may not be 6,000, but it will be a large number. David Duffield, founder of PeopleSoft, wrote the employees and stated “I offer my sincere apologies for not figuring out a different conclusion to our 18-month saga."
Merck will cut another 700 jobs, bringing the total layoffs to 5,100. Charles Craft Inc. will close its last two remaining textile plants in North Carolina early in 2005, laying off more than 300 people. As of November, Carolina’s textile industry employed 76,600 people, less than half the industry’s 1993 levels. Eaton Corp. announced it will close down part of its automotive components plant in Roxboro, NC and layoff 150 workers or about one-third of its workforce there.
Anew survey of large private employers by the Kaiser Family Foundation and Hewitt Associates found a typical worker under age 65 who retired in 2004 would pay $2,244 annually in premiums--- $4,644 with spousal coverage--- a 27% increase over the cost for a similar worker who retired in 2003. A typical worker 65 or older, and thus eligible for Medicare health coverage, would pay $1,212 annually in premiums--- $2,508 with spousal coverage--- this year, up 24% from 2003.
Kaiser Family Foundation President Drew E. Altman: “The prospects for retiree health coverage are slowly disappearing for America’s workers.” Given the trend towards aging of our population, this is a massive problem. Overall, about 85% of employers expect to raise premiums for retirees next year, and 75% expect to raise them on retirees’ dependents. More than 50% expect to raise co-insurance or co-payments.
In the first seven days on retail shelves, there were 5 million DVD and VHS units sold of “The Bourne Supremacy.” By comparison, the movie grossed $176 million domestically.
Since June, the Fed has raised interest rates five times from 1% to 2.25%. Meanwhile, during this time, the difference between two-year and 10-year Treasury note yields have narrowed from about 2.8 percentage points to roughly 1.2 percentage points. I doubt very much whether the Fed had anticipated the 10-year declining in yield from 4.7% to 4.15% in six months. With more anticipated Fed rate increases in 2005, it’s possible an inverted yield curve might occur.
Veritas is the leader in backup and archiving storage software. It would be an excellent acquisition for Symantec, but it would also be quite a plus for other companies, particularly EMC.
Back in June, only six months ago, the CBO estimated that the 2005 supplemental for Iraq and Afghanistan would be between $55 and $60 billion. This is a non-partisan office; however, being non-partisan is not a pathway leading to accurate forecasting. According to the Pentagon and White House officials, the administration’s funding request for Iraq and Afghanistan will be raised close to $100 billion, and this is on top of the three special budget requests that have provided $152.6 billion through December 31, 2004. As one military think tank member suggested, “I think we’re probably getting up to $2 billion a week fairly soon.”
Abraham Lincoln: “You cannot keep out of trouble by spending more than your income.”
Cold weather provides relief from pests and bugs and fleas but not from spenders in our nation’s capitol.
For the first 10 months of 2004, the trade deficit amounted to $500.5 billion, and exceeded the record gap for all of 2003. The October trade deficit of $55.5 billion placed our nation’s annualized trade deficit rate at $666 billion. You can see that a declining dollar has not been of assistance. As long as we import about 50% more goods and services than we export, this trade gap problem will persist and grow in cancerous proportions.
Charles Jaffe: “It’s not your salary that makes you rich, it’s your spending habits.”
The U.S. trade deficit with China was $16.8 billion in October, and this year’s deficit with China is expected to reach $160 billion by year-end. In the first ten months of 2004, foreign direct investment in China amounted to $53 billion. Their foreign exchange earnings are approaching $515 billion, almost $100 billion greater than the comparable period a year ago. It is not surprising that China’s money supply is growing 17 to 20% annually and that inflation exceeds a 5% rate.
The Reserve Bank of India reported that, in the week ended Dec. 3, the country’s flow of funds from other countries grew by $3.79 billion. India’s foreign exchange reserves now stand at a record-high of $130.72 billion.
Not everyone is excited about Oracle’s acquisition of PeopleSoft. In June 2003, J.D. Edwards agreed to merge with PeopleSoft. J.D. Edwards is the largest sofware company in Denver with 2,000 workers. Many of these workers will be cut by Oracle. During the 18 months that Oracle battled to acquire PeopleSoft, Oracle threatened to layoff 6,000 of PeopleSoft’s workers. The final figure may not be 6,000, but it will be a large number. David Duffield, founder of PeopleSoft, wrote the employees and stated “I offer my sincere apologies for not figuring out a different conclusion to our 18-month saga."
Merck will cut another 700 jobs, bringing the total layoffs to 5,100. Charles Craft Inc. will close its last two remaining textile plants in North Carolina early in 2005, laying off more than 300 people. As of November, Carolina’s textile industry employed 76,600 people, less than half the industry’s 1993 levels. Eaton Corp. announced it will close down part of its automotive components plant in Roxboro, NC and layoff 150 workers or about one-third of its workforce there.
Anew survey of large private employers by the Kaiser Family Foundation and Hewitt Associates found a typical worker under age 65 who retired in 2004 would pay $2,244 annually in premiums--- $4,644 with spousal coverage--- a 27% increase over the cost for a similar worker who retired in 2003. A typical worker 65 or older, and thus eligible for Medicare health coverage, would pay $1,212 annually in premiums--- $2,508 with spousal coverage--- this year, up 24% from 2003.
Kaiser Family Foundation President Drew E. Altman: “The prospects for retiree health coverage are slowly disappearing for America’s workers.” Given the trend towards aging of our population, this is a massive problem. Overall, about 85% of employers expect to raise premiums for retirees next year, and 75% expect to raise them on retirees’ dependents. More than 50% expect to raise co-insurance or co-payments.
In the first seven days on retail shelves, there were 5 million DVD and VHS units sold of “The Bourne Supremacy.” By comparison, the movie grossed $176 million domestically.
Since June, the Fed has raised interest rates five times from 1% to 2.25%. Meanwhile, during this time, the difference between two-year and 10-year Treasury note yields have narrowed from about 2.8 percentage points to roughly 1.2 percentage points. I doubt very much whether the Fed had anticipated the 10-year declining in yield from 4.7% to 4.15% in six months. With more anticipated Fed rate increases in 2005, it’s possible an inverted yield curve might occur.
Veritas is the leader in backup and archiving storage software. It would be an excellent acquisition for Symantec, but it would also be quite a plus for other companies, particularly EMC.
Tuesday, December 14, 2004
12/14/04 Buy And Hold
Generalizations generally do not have much meaning. Examples are often provided about the long-term advances in stock prices that lead to a successful buy and hold strategy. Studies upon studies have been done on this subject. Let’s take some varying examples. Yesterday was a big up-day for stock indices. The S&P 500 rallied up to the 1198 level, up 50% from the low of about 800 reached in early 2003; however, the present near-1200 level has only rallied back to the mid-2001 area. Hence, the success of the buy and hold strategy is highly dependent on your entry point. Here's another example, and one that illustrates my stupidity. On a split-adjusted basis, in 2000, I purchased Krispy Kreme stock at $10. Recently, the stock has been in a major down-draft. Rather than sell it or reduce my holdings, I continue to own the stock and it is back to $10. My substantial profit has disappeared, but the doughnuts still taste great.
The New York Times reports that Symantec of Cupertino is in merger talks to acquire Veritas of Mountain View. Symantec has a market cap of $21 billion and Veritas’ is $11 billion. Here is another example of buy and hold. As you know, I recommended that readers consider the purchase of Veritas stock in July at $18. The stock languished for some weeks and even dropped down close to $16. In my view, the company has good management and superior technology. The stock is back up to $25, but still a long ways from the lofty levels reached some years ago. Should the merger be effectuated, some long-term holders in Veritas may still experience a loss. It will depend on their entry point. Should you decide that a buy and hold strategy is right for you, then it is necessary to be prepared for periods of disappointment that require substantial patience.
Talking about potential mergers, the Wall Street Journal suggests that Vodafone and its U.S. partner Verizon are considering bidding for Sprint, the company supposedly in merger talks with Nextel.
Cardinal Health is the second-largest distributor of pharmaceuticals and other medical supplies and equipment in the U.S. The company announced it would cut 4,200 jobs, or 7% of its workforce and close 25 facilities. Corixa, a maker of cancer drugs, will cut 43% of its workforce, or 160 jobs.
Google will digitize millions of books.
According to the Holiday eSpending Report, 27% of online consumers are reported to have finished their holiday shopping, compared to 31% during the same time-frame in 2003. So far this season, the latest weekly report showed consumers have spent $12.7 billion online to date, excluding travel. Online holiday shopping peaks this week as the free shipping deadline for Dec. 24 delivery arrives in mid-December. In fact, today is the biggest online shopping day of the year.
Yesterday was the peak holiday shipping day for FedEx. The company expected to deliver 7.7 million packages. UPS expects to deliver 20 million packages on its peak day of Dec. 21.
PricewaterhouseCoopers’ “Trendsetter Barometer” interviewed CEOs of 355 privately held product and service companies identified as the fastest growing U.S. businesses over the last five years. The survey revealed that fewer CEOs of America’s fastest-growing companies are optimistic about the U.S. economy’s prospects over the next 12 months, and concern is increasing about weak market demand.
CareerBuilder.com released the findings from its latest survey. Forty-three percent of workers want to change jobs in 2005. The top five areas hiring managers plan to recruit for in 2005 include customer service, sales, healthcare, retail, and accounting/finance. Fifty percent of hiring managers plan to hire temporary workers. Nearly half of hiring managers say that hourly workers will make up to 50% or more of their new hires. Eighty-eight percent of hiring managers will add recent college grads to their staffs and 52% plan to recruit high school students. Next year’s hiring appears to be a continuation of 2004--- more temps and more hourly lower-paying jobs, a lousy landscape for the consumer and the potential saver.
A market-basket survey taken by Prudential Equity Group revealed that Wal-Mart lowered prices on only 23 of 160 items on Dec. 6 compared with late October. A separate report by FTN Midwest Research in Cleveland showed that Wal-Mart, Sears, JC Penney, and other retailers had raised prices on select items after the holiday season started on November 26. In my view, shoppers are not stupid. The Internet makes comparative shopping a great deal easier. Consumers are waiting for prices to be cut. C. Britt Beemer, chairman of America’s Research Group, stated “there are more consumers waiting to finish their holiday shopping on Dec. 24 than any other time in the last five years.”
Philip Arestis of the Cambridge Centre for Economic and Public Policy at the University of Cambridge in England opined “the rate of growth of profits, industrial production, and job creation is slowing. While consumers’ spending continues to grow, their incomes are rising less rapidly, calling into question the sustainability of their purchasing power.”
According to Pittiglio Rabin Todd & McGrath, during the past four years, the 20 largest U.S. and foreign companies in 15 capital-intensive industries reduced their capital expenditures by 17.9 percent. The decline in spending came despite a 9% increase in revenue for the group during the same period.
According to the NY Fed, private sector productivity growth should average 2.6% over the next 10 years. They don’t know what productivity will be next year much less 10 years from now.
India’s exports are up 24% so far in 2004. The U.S. imports 80% of its footwear and toys from China.
Fred Bergsten, director of the Institute for International Economics: “The U.S. already must borrow $5 billion from the rest of the world every working day to finance America’s own foreign investments as well as the trade imbalance.”
As of Jan. 1, 2005, Blockbuster is eliminating late fees.
I am quite enthusiastic about the research conducted by Dr. Vladimir Makarov, founder and CSO of Rubicon Genomics, and his staff at this Ann Arbor, Michigan company. They invented a more effective technology for the diagnosis and prognosis of cancer compared to what hospitals and reference labs use today. Specifically, their methylplex microarray profiling will analyze the methylation patterns from patients in an effort to detect prostate and esophageal cancer. Rubicon hopes to soon prepare for an FDA filing.
Generalizations generally do not have much meaning. Examples are often provided about the long-term advances in stock prices that lead to a successful buy and hold strategy. Studies upon studies have been done on this subject. Let’s take some varying examples. Yesterday was a big up-day for stock indices. The S&P 500 rallied up to the 1198 level, up 50% from the low of about 800 reached in early 2003; however, the present near-1200 level has only rallied back to the mid-2001 area. Hence, the success of the buy and hold strategy is highly dependent on your entry point. Here's another example, and one that illustrates my stupidity. On a split-adjusted basis, in 2000, I purchased Krispy Kreme stock at $10. Recently, the stock has been in a major down-draft. Rather than sell it or reduce my holdings, I continue to own the stock and it is back to $10. My substantial profit has disappeared, but the doughnuts still taste great.
The New York Times reports that Symantec of Cupertino is in merger talks to acquire Veritas of Mountain View. Symantec has a market cap of $21 billion and Veritas’ is $11 billion. Here is another example of buy and hold. As you know, I recommended that readers consider the purchase of Veritas stock in July at $18. The stock languished for some weeks and even dropped down close to $16. In my view, the company has good management and superior technology. The stock is back up to $25, but still a long ways from the lofty levels reached some years ago. Should the merger be effectuated, some long-term holders in Veritas may still experience a loss. It will depend on their entry point. Should you decide that a buy and hold strategy is right for you, then it is necessary to be prepared for periods of disappointment that require substantial patience.
Talking about potential mergers, the Wall Street Journal suggests that Vodafone and its U.S. partner Verizon are considering bidding for Sprint, the company supposedly in merger talks with Nextel.
Cardinal Health is the second-largest distributor of pharmaceuticals and other medical supplies and equipment in the U.S. The company announced it would cut 4,200 jobs, or 7% of its workforce and close 25 facilities. Corixa, a maker of cancer drugs, will cut 43% of its workforce, or 160 jobs.
Google will digitize millions of books.
According to the Holiday eSpending Report, 27% of online consumers are reported to have finished their holiday shopping, compared to 31% during the same time-frame in 2003. So far this season, the latest weekly report showed consumers have spent $12.7 billion online to date, excluding travel. Online holiday shopping peaks this week as the free shipping deadline for Dec. 24 delivery arrives in mid-December. In fact, today is the biggest online shopping day of the year.
Yesterday was the peak holiday shipping day for FedEx. The company expected to deliver 7.7 million packages. UPS expects to deliver 20 million packages on its peak day of Dec. 21.
PricewaterhouseCoopers’ “Trendsetter Barometer” interviewed CEOs of 355 privately held product and service companies identified as the fastest growing U.S. businesses over the last five years. The survey revealed that fewer CEOs of America’s fastest-growing companies are optimistic about the U.S. economy’s prospects over the next 12 months, and concern is increasing about weak market demand.
CareerBuilder.com released the findings from its latest survey. Forty-three percent of workers want to change jobs in 2005. The top five areas hiring managers plan to recruit for in 2005 include customer service, sales, healthcare, retail, and accounting/finance. Fifty percent of hiring managers plan to hire temporary workers. Nearly half of hiring managers say that hourly workers will make up to 50% or more of their new hires. Eighty-eight percent of hiring managers will add recent college grads to their staffs and 52% plan to recruit high school students. Next year’s hiring appears to be a continuation of 2004--- more temps and more hourly lower-paying jobs, a lousy landscape for the consumer and the potential saver.
A market-basket survey taken by Prudential Equity Group revealed that Wal-Mart lowered prices on only 23 of 160 items on Dec. 6 compared with late October. A separate report by FTN Midwest Research in Cleveland showed that Wal-Mart, Sears, JC Penney, and other retailers had raised prices on select items after the holiday season started on November 26. In my view, shoppers are not stupid. The Internet makes comparative shopping a great deal easier. Consumers are waiting for prices to be cut. C. Britt Beemer, chairman of America’s Research Group, stated “there are more consumers waiting to finish their holiday shopping on Dec. 24 than any other time in the last five years.”
Philip Arestis of the Cambridge Centre for Economic and Public Policy at the University of Cambridge in England opined “the rate of growth of profits, industrial production, and job creation is slowing. While consumers’ spending continues to grow, their incomes are rising less rapidly, calling into question the sustainability of their purchasing power.”
According to Pittiglio Rabin Todd & McGrath, during the past four years, the 20 largest U.S. and foreign companies in 15 capital-intensive industries reduced their capital expenditures by 17.9 percent. The decline in spending came despite a 9% increase in revenue for the group during the same period.
According to the NY Fed, private sector productivity growth should average 2.6% over the next 10 years. They don’t know what productivity will be next year much less 10 years from now.
India’s exports are up 24% so far in 2004. The U.S. imports 80% of its footwear and toys from China.
Fred Bergsten, director of the Institute for International Economics: “The U.S. already must borrow $5 billion from the rest of the world every working day to finance America’s own foreign investments as well as the trade imbalance.”
As of Jan. 1, 2005, Blockbuster is eliminating late fees.
I am quite enthusiastic about the research conducted by Dr. Vladimir Makarov, founder and CSO of Rubicon Genomics, and his staff at this Ann Arbor, Michigan company. They invented a more effective technology for the diagnosis and prognosis of cancer compared to what hospitals and reference labs use today. Specifically, their methylplex microarray profiling will analyze the methylation patterns from patients in an effort to detect prostate and esophageal cancer. Rubicon hopes to soon prepare for an FDA filing.
Monday, December 13, 2004
12/13/04 Setting The Record Straight
According to a report released today by the University of Massachusetts and Harvard University school’s of Law and Public Health, 48% of the 19,000 or so Massachusetts workers in construction are misclassified as independent workers. Misclassifications enable employers to avoid payroll taxes, unemployment insurance, and workers’ compensation insurance. Utilizing the state Division of Unemployment Assistance insurance tax audits, researchers discovered that, between 2001 and 2003, 36,531 Massachusetts employers misclassified up to 248,000 workers, robbing the state of $152 million in uncollected income tax revenue. In addition, $35.1 million in unemployment insurance taxes were lost. Often employees will sign waivers absolving the employer from paying unemployment benefits or workers’ comp insurance. Why? That may be a condition to getting hired or not being fired. As medical and workers’ comp premiums continue to increase, you can expect this growing trend towards independent contractors to continue. Misclassifications may also explain some of the differences between the household and non-farm payroll employment surveys.
N.Y and London crude oil futures closed Friday below their average price for the past 52 weeks for the first time that has occurred in a year.
Over the weekend, at least 8 Marines were killed in Iraq. Approximately 1,300 members of the U.S. military have died since the beginning of the Iraq war in March 2003. If there have been nine wounded for every combat death, that would equate to close to 12,000 wounded soldiers.
Oracle announced that it signed a definitive agreement to acquire PeopleSoft for $26.50 per share. Larry Ellison stated “we intend to enhance PeopleSoft 8 and develop PeopleSoft 9 and enhance a JD Edwards 5 and develop a JD Edwards 6. We intend to immediately extend and improve support for existing JD Edwards and PeopleSoft customers worldwide.” In July 2003 Oracle made an offer to acquire PeopleSoft for $16 a share. They objected to the PeopleSoft and JD Edwards merger and stated they would fire 7,500 PeopleSoft employees and deep-six the applications business for PeopleSoft and JD Edwards, thus only leaving the offerings made by Oracle. It reminds me of the movie Pretty Woman where Richard Gere wants to buy Ralph Bellamy’s shipbuilding company and dismantle it, but in the end acquires the company and builds more boats. Maybe Ellison thinks this is a $10.3 billion movie script.
About 800 employees of Swift & Co.’s Greeley, Colorado meatpacking plant will lose their jobs five days before Christmas. Swift stated they have been impacted by restrictions imposed on the export of beef due to the mad cow scare. It has had to supply Asian countries through its plants in Australia. I thought the America public was informed that our beef was safe. I guess foreign countries don’t believe our ag officials.
The Kansas City Board of Trade began overnight electronic trading of wheat futures contracts. It is part of the game plan to make risk-management products available around the clock.
This should be an eventful week. We can expect to read about capital flows, the Fed raising rates, a widening U.S. trade deficit, a slowing rate of U.S. industrial production, Bush’s economic plans for his second term, and the November Treasury budget. With such a backdrop of non-enthusiastic news, I guess the markets will rally. After all, it’s December, the best month for the stock market. That far outweighs five steps and stumble. After all, the market totally ignored three steps and stumble.
U.S. October demand for machine tools plunged in all regions of the nation, declining between about 32% and 52% in the five regions surveyed by the AMTDA and the AMT. Overall, October demand was 38.9% lower than September’s numbers, which had the highest monthly total demand in nearly four years. Unless extended, the administration’s tax relief bill provided for a 50% expensing allowance for machine tools.
According to a report released today by the University of Massachusetts and Harvard University school’s of Law and Public Health, 48% of the 19,000 or so Massachusetts workers in construction are misclassified as independent workers. Misclassifications enable employers to avoid payroll taxes, unemployment insurance, and workers’ compensation insurance. Utilizing the state Division of Unemployment Assistance insurance tax audits, researchers discovered that, between 2001 and 2003, 36,531 Massachusetts employers misclassified up to 248,000 workers, robbing the state of $152 million in uncollected income tax revenue. In addition, $35.1 million in unemployment insurance taxes were lost. Often employees will sign waivers absolving the employer from paying unemployment benefits or workers’ comp insurance. Why? That may be a condition to getting hired or not being fired. As medical and workers’ comp premiums continue to increase, you can expect this growing trend towards independent contractors to continue. Misclassifications may also explain some of the differences between the household and non-farm payroll employment surveys.
N.Y and London crude oil futures closed Friday below their average price for the past 52 weeks for the first time that has occurred in a year.
Over the weekend, at least 8 Marines were killed in Iraq. Approximately 1,300 members of the U.S. military have died since the beginning of the Iraq war in March 2003. If there have been nine wounded for every combat death, that would equate to close to 12,000 wounded soldiers.
Oracle announced that it signed a definitive agreement to acquire PeopleSoft for $26.50 per share. Larry Ellison stated “we intend to enhance PeopleSoft 8 and develop PeopleSoft 9 and enhance a JD Edwards 5 and develop a JD Edwards 6. We intend to immediately extend and improve support for existing JD Edwards and PeopleSoft customers worldwide.” In July 2003 Oracle made an offer to acquire PeopleSoft for $16 a share. They objected to the PeopleSoft and JD Edwards merger and stated they would fire 7,500 PeopleSoft employees and deep-six the applications business for PeopleSoft and JD Edwards, thus only leaving the offerings made by Oracle. It reminds me of the movie Pretty Woman where Richard Gere wants to buy Ralph Bellamy’s shipbuilding company and dismantle it, but in the end acquires the company and builds more boats. Maybe Ellison thinks this is a $10.3 billion movie script.
About 800 employees of Swift & Co.’s Greeley, Colorado meatpacking plant will lose their jobs five days before Christmas. Swift stated they have been impacted by restrictions imposed on the export of beef due to the mad cow scare. It has had to supply Asian countries through its plants in Australia. I thought the America public was informed that our beef was safe. I guess foreign countries don’t believe our ag officials.
The Kansas City Board of Trade began overnight electronic trading of wheat futures contracts. It is part of the game plan to make risk-management products available around the clock.
This should be an eventful week. We can expect to read about capital flows, the Fed raising rates, a widening U.S. trade deficit, a slowing rate of U.S. industrial production, Bush’s economic plans for his second term, and the November Treasury budget. With such a backdrop of non-enthusiastic news, I guess the markets will rally. After all, it’s December, the best month for the stock market. That far outweighs five steps and stumble. After all, the market totally ignored three steps and stumble.
U.S. October demand for machine tools plunged in all regions of the nation, declining between about 32% and 52% in the five regions surveyed by the AMTDA and the AMT. Overall, October demand was 38.9% lower than September’s numbers, which had the highest monthly total demand in nearly four years. Unless extended, the administration’s tax relief bill provided for a 50% expensing allowance for machine tools.
Sunday, December 12, 2004
12/12/04 Chocolate Candy, Social Security, And Medicaid
Cocoa beans contain flavonoids, an antioxidant that some maintain can protect the heart. Walnuts contain omega-3 fatty acids, and studies have linked them to lowering the risk of heart disease. Apricots have healthful beta carotene. Putting all these ingredients together, it is not surprising that St. Louis- based Bissinger’s Handcrafted Chocolatier advertises to their customers to “treat yourself to good health.” The packaging states the candies contain ingredients “linked to improved cardiovascular health, lowered risk for certain types of cancer, a reduction in body weight and a lowing of the aging process.” Bonnie Liebman is the director of nutrition at the Center for Science in the Public Interest and stated “the claims that these candies can help you lose weight, fight cancer, or improve your short-term memory are not supported by good evidence. The bottom line is they’re trying to trick people into thinking these chocolates are good for them.” At a cost of more than $2 each, I know they’re not good for the pocket book.
Yesterday, Bush’s radio address to the nation was on Social Security. He mentioned that “in the 1950s, there were about 16 workers paying for every Social Security beneficiary. Today there are about three…In the year 2018, for the first time ever, Social Security will pay out more in benefits than the government collects in payroll taxes…By the time today’s workers in their mid 20s begin to retire, the system will be bankrupt, unless we act to save it.” The measures taken to save it will be good for you. “Saving Social Security for future generations will not be easy.” It will be hard work. You will be told that the government is trying to trick people into thinking the changes will be good for them. “Nothing will change for those who are receiving Social Security and for those who are near retirement. We must not increase payroll taxes. We must tap into the power of compound interest” and the latter would be accomplished through private accounts giving workers a “better rate of return.” In addition, Bush’s plan will also include shifting the calculation of benefits from the current system of wage indexing (which according to the Heritage Foundation usually rises about 1 to 1.5% faster than the price index) to one that relies on price indexing, and this change will cut benefits by 6.2% for someone turning 65 in the year 2022, stated the Heritage Foundation, while those with a private account would earn 4.7%, plus inflation. If nothing is done, that same person in 2022 would see benefits cut by 10.7% unless the Social Security system cashed in trust funds to offset the shortfall, suggests the Heritage Foundation, a conservative think tank. In sum, the diet of private accounts and re-indexing of benefits will be good for your health. You will now be able to breathe comfortably and exhale without worry. Fortunately, I have been eating a lot of chocolates and my memory is still alive and well. It was in a 2000 presidential debate that Bush stated that he would pay for the overhaul of Social Security by using half of the budget surplus. So much for that plan. You can’t fault the president. After all, about two out of three Americans are overweight (Bush said he has been eating too many doughnuts) and about two out of every three Americans spend and consume too much (Bush is a healthy discretionary spender).
Congress gave the states $10 billion t help cover the costs of Medicaid in 2003. In 2004, no federal funds were forthcoming. Medicaid is the health safety-net program for 52 million disabled and poor Americans. According to the National Council of State Legislatures (NCSL), sixteen states are already over budget and will have to find more money this fiscal year for Medicaid. Michigan, Nebraska, and New Hampshire report that they may run out of money, and will have to find a way to fill the gaps. In sum, spiraling health care costs and less federal aid will mean another year of belt-tightening with budget cuts on the way. Whereas Social Security does not represent a problem in 2005, Medicaid and health matters represent serious hurdles for our states.
Several years ago, Dave Winer and Adam Curry devised the software for blogging. Ever since, I have been posting on a daily basis. I have greatly appreciated their efforts. Blogging has gained tremendous traction, and it has revolutionized written communication. Dave and Adam have turned their attention to audio. They have developed software for the creation of personalized media channels. It is called “podcasting” that delivers audio programming created on a PC, and the latter is distributed via RSS to an iPod or other MP3 device. You can subscribe to the podcast as the software enables the automatic transfer of the RSS feed from the user’s computer to their MP3 device for on-demand listening. Aspiring DJs will now have podcasting, and just as there are hundreds of thousands of blogs, there will be tens of thousands of new radio programs and radio stations. Naturally, you don’t need FCC permission to podcast. There will be talk and there will be music. Adam Curry ventures there are 33 million MPs players and 600 million cell phones with MP3 capability and they have a network connection. Next stop? Incorporating video into podcasting and delivering it to MP3 equipped cell phone screens, thereby creating your personalized broadcast television channel. It may not be a large screen, but it will contain your content of choice.
Yesterday, Wal-Mart reaffirmed their estimate for December U.S. comp sales to rise by 1 to 3%. They “continue to see strength in food sales while general merchandise sales were not as strong. Sales for winter related items are below expectations. Average ticket drove the comp sales this week.” In other words, despite advertising sales, traffic did not drive sales.
When it comes to my investment history in Research in Motion or RIMM, I have made a zillion mistakes. How is that possible if I bought the stock in 1999 at $8 (adjusted for splits) and it’s presently trading at $88? I purchased the stock because I thought, and continue to think, their Blackberry is a great product. It was introduced in 1999. I let my love of the product close my eyes to the volatility in the stock. I have ridden the stock up and down, up and down, up and down. I have had faith in the long-term growth of the company; however, I should have taken some profits off the table. Taking profits too early is not a sin unless it’s in Berkshire Hathaway stock. So why I am writing about RIMM now? Mark Veverka’s article in Barron’s mentioned RIMM and he stated how folks have been predicting for some time that their “proprietary business model would catch up with the company. The question has been, not if, but when?” Along comes this competitor, Visto, a private company out of Redwood Shores, CA, the town Oracle calls home. Brian Bogosian, chairman and CEO of Visto, proclaims “my belief is that, in the long-term, the Blackberry is toast.” Visto has an open system for wireless email and PIM solutions. I visited Visto in 1999. They had some good venture backers. Since 1999, RIMM has run rings around Visto. Maybe that will change, but I’ll continue to stick with RIMM stock. If owning the stock had interfered with my sleeping, I would have sold long ago. I have seen other competition enter the market, and the market is large enough to accommodate many offerings without toast being served. Visto is but one entry in the wireless email market. An open system does not equate to a market leader.
Cocoa beans contain flavonoids, an antioxidant that some maintain can protect the heart. Walnuts contain omega-3 fatty acids, and studies have linked them to lowering the risk of heart disease. Apricots have healthful beta carotene. Putting all these ingredients together, it is not surprising that St. Louis- based Bissinger’s Handcrafted Chocolatier advertises to their customers to “treat yourself to good health.” The packaging states the candies contain ingredients “linked to improved cardiovascular health, lowered risk for certain types of cancer, a reduction in body weight and a lowing of the aging process.” Bonnie Liebman is the director of nutrition at the Center for Science in the Public Interest and stated “the claims that these candies can help you lose weight, fight cancer, or improve your short-term memory are not supported by good evidence. The bottom line is they’re trying to trick people into thinking these chocolates are good for them.” At a cost of more than $2 each, I know they’re not good for the pocket book.
Yesterday, Bush’s radio address to the nation was on Social Security. He mentioned that “in the 1950s, there were about 16 workers paying for every Social Security beneficiary. Today there are about three…In the year 2018, for the first time ever, Social Security will pay out more in benefits than the government collects in payroll taxes…By the time today’s workers in their mid 20s begin to retire, the system will be bankrupt, unless we act to save it.” The measures taken to save it will be good for you. “Saving Social Security for future generations will not be easy.” It will be hard work. You will be told that the government is trying to trick people into thinking the changes will be good for them. “Nothing will change for those who are receiving Social Security and for those who are near retirement. We must not increase payroll taxes. We must tap into the power of compound interest” and the latter would be accomplished through private accounts giving workers a “better rate of return.” In addition, Bush’s plan will also include shifting the calculation of benefits from the current system of wage indexing (which according to the Heritage Foundation usually rises about 1 to 1.5% faster than the price index) to one that relies on price indexing, and this change will cut benefits by 6.2% for someone turning 65 in the year 2022, stated the Heritage Foundation, while those with a private account would earn 4.7%, plus inflation. If nothing is done, that same person in 2022 would see benefits cut by 10.7% unless the Social Security system cashed in trust funds to offset the shortfall, suggests the Heritage Foundation, a conservative think tank. In sum, the diet of private accounts and re-indexing of benefits will be good for your health. You will now be able to breathe comfortably and exhale without worry. Fortunately, I have been eating a lot of chocolates and my memory is still alive and well. It was in a 2000 presidential debate that Bush stated that he would pay for the overhaul of Social Security by using half of the budget surplus. So much for that plan. You can’t fault the president. After all, about two out of three Americans are overweight (Bush said he has been eating too many doughnuts) and about two out of every three Americans spend and consume too much (Bush is a healthy discretionary spender).
Congress gave the states $10 billion t help cover the costs of Medicaid in 2003. In 2004, no federal funds were forthcoming. Medicaid is the health safety-net program for 52 million disabled and poor Americans. According to the National Council of State Legislatures (NCSL), sixteen states are already over budget and will have to find more money this fiscal year for Medicaid. Michigan, Nebraska, and New Hampshire report that they may run out of money, and will have to find a way to fill the gaps. In sum, spiraling health care costs and less federal aid will mean another year of belt-tightening with budget cuts on the way. Whereas Social Security does not represent a problem in 2005, Medicaid and health matters represent serious hurdles for our states.
Several years ago, Dave Winer and Adam Curry devised the software for blogging. Ever since, I have been posting on a daily basis. I have greatly appreciated their efforts. Blogging has gained tremendous traction, and it has revolutionized written communication. Dave and Adam have turned their attention to audio. They have developed software for the creation of personalized media channels. It is called “podcasting” that delivers audio programming created on a PC, and the latter is distributed via RSS to an iPod or other MP3 device. You can subscribe to the podcast as the software enables the automatic transfer of the RSS feed from the user’s computer to their MP3 device for on-demand listening. Aspiring DJs will now have podcasting, and just as there are hundreds of thousands of blogs, there will be tens of thousands of new radio programs and radio stations. Naturally, you don’t need FCC permission to podcast. There will be talk and there will be music. Adam Curry ventures there are 33 million MPs players and 600 million cell phones with MP3 capability and they have a network connection. Next stop? Incorporating video into podcasting and delivering it to MP3 equipped cell phone screens, thereby creating your personalized broadcast television channel. It may not be a large screen, but it will contain your content of choice.
Yesterday, Wal-Mart reaffirmed their estimate for December U.S. comp sales to rise by 1 to 3%. They “continue to see strength in food sales while general merchandise sales were not as strong. Sales for winter related items are below expectations. Average ticket drove the comp sales this week.” In other words, despite advertising sales, traffic did not drive sales.
When it comes to my investment history in Research in Motion or RIMM, I have made a zillion mistakes. How is that possible if I bought the stock in 1999 at $8 (adjusted for splits) and it’s presently trading at $88? I purchased the stock because I thought, and continue to think, their Blackberry is a great product. It was introduced in 1999. I let my love of the product close my eyes to the volatility in the stock. I have ridden the stock up and down, up and down, up and down. I have had faith in the long-term growth of the company; however, I should have taken some profits off the table. Taking profits too early is not a sin unless it’s in Berkshire Hathaway stock. So why I am writing about RIMM now? Mark Veverka’s article in Barron’s mentioned RIMM and he stated how folks have been predicting for some time that their “proprietary business model would catch up with the company. The question has been, not if, but when?” Along comes this competitor, Visto, a private company out of Redwood Shores, CA, the town Oracle calls home. Brian Bogosian, chairman and CEO of Visto, proclaims “my belief is that, in the long-term, the Blackberry is toast.” Visto has an open system for wireless email and PIM solutions. I visited Visto in 1999. They had some good venture backers. Since 1999, RIMM has run rings around Visto. Maybe that will change, but I’ll continue to stick with RIMM stock. If owning the stock had interfered with my sleeping, I would have sold long ago. I have seen other competition enter the market, and the market is large enough to accommodate many offerings without toast being served. Visto is but one entry in the wireless email market. An open system does not equate to a market leader.
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