Daily Archives: December 2, 2006

Microsoft May Change Zune In Hope Of More Share (MSFT)(AAPL)

Industry analysts are speculating that Microsoft’s Zune player will get some tweaks after the first of the year. It has currently captured 9% of the MP3 market, but Apple’s iPod has 63%.

Microsoft may use the Consumer Electronics Show in January to roll out new features that would be widely available in the Spring.

While it is not unusual for comanies to upgrade features after a launch based on consumer feedback, Microsoft knows that iPod sales indicate that it must have features that buyer prefer. Microsoft’s marketing muscle cannot overcome an undesirable product.

Expect a new version of Zune in the first few months of 2007, and expect Microsoft’s battle with Apple to turn ugly for the world’s largest software company if it does not see a significant share increase by the middle of the year.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com. He does not own securities in companies that he writes about.

Posted on: December 2, 2006 – 5:22 pm in Consumer Electronics

As OPEC Dawdles, Big Oil Waits

Stocks:  (XOM)(COP)(SLB)

Over the weekend, OPEC members sent a signal that they were unsure of what the would do with supply and inventories. Most members favor cuts as US stockpile rise, but it is not certain to what extent an output reduction would impact global oil and gas prices.

In the meantime, signals from the stock market would appear to support the theory that prices will go higher over the near and medium turn. After dropping in Septmeber, shares in Exxon, Conoco, and Schlumberger are up between 5% and 12% over the last 90 days. An excellent return, particularly for stock that have strong yields.

Wall St. could be right. Oil could move up from its current level of about $62 back toward $70 and fatten oil company profits once again. But, if that does not happen, a 15% to 20% correction would not be a surprise.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com. He does not own securities in companies that he writes about.

Posted on: December 2, 2006 – 12:44 pm in Oil & Gas

Interpublic, Takeover Target? (IPG)(PUB)

Interpublic is one of the world’s largest advertising agency holding companies. But it has been beset by accouting problems, bad management and accounting problems. Press reports are saying that Publicis, another large ad agency group may be considering a buy-out of its larger rival. The two companies, if combined, would be the largest ad firm in the world.

Interpublic’s problems are reflected in its stock price. The company’s shares traded for $35 in early 2002. They now change hands at about $12 after falling as low as $7.82 earlier this year.

Publicis has denied the rumors. But, the combination may make a good deal of sense, and public denials from companies involved in takeovers have oftem meant little in the past. Publicis share have been a crowd pleaser on Wall St. rising from $25 five years ago to just below $29 now, handily beating the S&P 500 over the period.

Publicis has a market cap of over $7 billion. Interpublic’s is $5.3 billion, even with its larger revenue.

Ruling the combination out would be a mistake.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com. He does not own securites in companies that he writes about.

Posted on: December 2, 2006 – 11:48 am in Uncategorized

Ford’s Collapse (F)

The Ford Motor Company’s share of the US market dropped to 14.8% in November. It is now behind GM, Toyota and Chrysler. A year ago in November its share was 16.9% according to auto research group Ward’s. Ford executives said that its share could drop to 14%, but not this early. It was assumed that it might hit that level next year before new model sale kicked in and as the company reduced it reliance on low margin fleet sales.

Of course, Ford is in the process of borrowing $18 million with a good portion of the company’s assets as collateral. The sum is on top of the roughly $23 million in cash and short term investments that the company had at the end of the September quarter.

All of this raises a critical question. Did management see a sharper drop in share coming, or was the $18 million needed to run the company at the 14% share level. If management saw the drop over the horizon, it may be that they believe that share could fall to 13% or even 12% next year.

The leaves Wall St. with this puzzle of whether Ford can survive on 12% of the market even with the new money coming in. The answer to that may well be "no", and that management was caught by surprise. If so, 2007 could be very, very ugly.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com. He does not own securities in companies that he writes about.

Posted on: December 2, 2006 – 11:35 am in Autos