Category: Business

GM Deathwatch: 07 Tahoe Sales

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Robert Farago:

This is a tale of two Tahoes. The first is a wildly successful SUV that’s flying off the lots at full price: a Hail Mary pass that will put General Motors back in the end zone, saving them from the unthinkable humiliation of bankruptcy, with only moments to spare. The second is a gas-guzzling truck that’s being swept out to sea by the vast receding tide of SUV buyers: a four-wheeled indictment of GM’s inability to build what America wants to drive at a price that makes the company enough money to stay in business. For the time being, which vehicle you see depends entirely on which one you want to see.

The Chevy Tahoe is built in Janesville.

Blodget on Amazon’s Music Strategy

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Henry Blodget:

The WSJ reported Amazon’s plans to offer an Amazon-branded iPod competitor and digital music download store. I haven’t done much work in this area yet, so please weigh in, but this strikes me as a startlingly bad move.

First, Amazon’s entry into this business is shockingly and annoyingly late. As with the Netflix DVD business, Amazon could have owned this category, but in the name of moving deliberately (or of trying to become all things to all people), it allowed other competitors to build a dominant market position. No matter what the company says, winning significant market share in digital music is going to be much harder now than it would have been three years ago.

A Chat with Mattel’s Bob Eckhert

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Marketplace:

The toy industry’s big trade show gets down to business in New York this weekend. Meanwhile, in our new series “Conversations from the Corner Office,” Kai talks with Mattel’s CEO Bob Eckert about the perks and responsibilities of running the world’s biggest toymaker.

Eckert is a former Oscar Meyer CEO.

Seven Sins of Fund Management

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Barry Ritholtz:

There is a terrific PDF (warning — its 105 pages) on the Seven Sins of Fund Management. It is a behavioural critique by James Montier, the Global Equity Strategist of Dresdner Kleinwort Wasserstein, and its full of all sorts of smart observations, backed up with data and charts.

I haven’t read prior work of Mr. Montier — but this PDF made me interested in his book, "Behavioural Finance: A User’s Guide."

I may be  referencing parts of the PDF in the future, but if you want an overview, here are the 7 Deadly Sins: 

Sin 1 Forecasting
The folly of forecasting: Ignore all economists, strategists & analysts
Do analysts understand value: who is the greater fool?

Consumer Debt Growth

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Barry Ritholtz:

The facts are indisputable – the consumer has grown increasingly levered just when interest rates are rising and the large amount of mortgages based on teaser rates are about to be reset.

The facts speak for themselves:

  • Non-discretionary consumer spending (for items like food, energy, medical expenses and interest payments) which vacillated in the 44% to 47% range until 2000 has now risen to 54%.
  • Household debt/household assets is at an all-time record high (up from 14% six years ago to nearly 19% today).

Death of Blockbuster, Part IV

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Chris Anderson pens and charts his way to the conclusion that:

Bottom line: even in Hollywood, the home of the blockbuster, hits are losing their power. It’s not nearly as dire as in music, but it’s trending in the same direction. Does this mean the end of movies? Not at all–there have never been more films made, just as there has never been more music available than today, despite the fact that the bestsellers sell less.

It’s not that people aren’t watching films and listening to music, it’s that they’re watching different films and different music–we’re just not following the herd to the same hits the way we used to. I’d guess that most of the decline in box office is due to the rise of the DVD, not a loss of interest in movies.

The Gladwell Effect

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Rachel Donadio:

“PEOPLE are experience rich and theory poor,” the writer Malcolm Gladwell said recently. “People who are busy doing things — as opposed to people who are busy sitting around, like me, reading and having coffee in coffee shops — don’t have opportunities to kind of collect and organize their experiences and make sense of them.”

[mp3 audio]

Small Dairyman Shakes Up Milk Industry

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Ilan Brat:

The milk fight, which is being watched in the industry from coast to coast, started because Mr. Hettinga runs a rare hybrid operation. Most dairy businesses either only produce milk, or only process it. He does both. As a result, he falls into a protected class that isn’t bound by an arcane system of Depression-era federal rules. Under it, milk processors selling into specific geographical areas, which cover most of the country, must all pay into that area’s pool for subsidizing milk prices. But so-called producer-distributors have always been exempt.

Shopping in 1975

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Alex Tabarrok via a Sears Catalog:

Sears’ lowest-priced 10-inch table saw: 52.35 hours of work required in 1975; 7.34 hours of work required in 2006.

Sears’ lowest-priced gasoline-powered lawn mower: 13.14 hours of work required in 1975 (to buy a lawn-mower that cuts a 20-inch swathe); 8.56 hours of work required in 2006 (to buy a lawn-mower that cuts a 22-inch swathe. Sears no longer sells a power mower that cuts a swathe smaller than 22 inches.)