Daily Archives: June 3, 2007

Airlines: Just When It Was Safe To Go Back In The Water

With airlines like Northwest and Delta coming out of bankruptcy, it would appear that the US airline industry may finally have a period of modest profitability.

According to Reuters, that may not happen. Unions have given up so much on behalf of their memberships to help to keep the airlines alive that they are beginning to think it is their turn. "I think you will see people getting more and more aggressive with their companies and their management," said Patricia Friend, international president of the Association of Flight Attendants.

With fuel costs rising again, any move by the union to claw back wages and benefits could make life very tough on investors.

Concerns about fuel have dropped shares in American’s parent AMR (AMR) by 15% over the last three months. At US Airways (LCC), the stock is down over 30% for the same period.

While Wall St. might debate whether labor can get much from the airlines in terms of better pay and benefits, improved financial results at the companies will almost certainly set off a tug-of-war between management and employees.

Concessions or unrests. Investors lose either way.

Douglas A. McIntyre

Posted on: June 3, 2007 – 3:55 pm in Uncategorized

Yahoo! (YHOO) And Microsoft (MSFT) Nightmare: Google’s Tech Gets Better

Search engines users may not think about it, but Google (GOOG) is improving its core search product all of the time. According to a piece in The New York Times, the company has legions of engineers who do nothing but fine tune and improve the Google search functions. As the newspaper writes, quoting one expert: “Their secret sauce is how these guys are doing it all in aggregate. There are 1,000 little tunings they do.”

Google has an almost 50% share of the search business in the US, and, by some measures, more worldwide. While Yahoo! (YHOO) and Microsoft (MSFT) clearly have large numbers of engineers working on their products, they have a double disadvantage. First, the typical internet user thinks Google’s results continue to work better than any competitor’s. And, second, Google’s share of market is already close to double Yahoo!’s.

With Google’s recent purchases of FeedBurner and DoubleClick, it is building a tremendous lead in delivering targets online advertising across a number of venues. It intelligent work putting together these assets is only compounded by superiority in it central business.

Google is in one of the few industries where the competition has literally run out of good strategic alternatives.

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

Posted on: June 3, 2007 – 3:41 pm in Uncategorized

Home Depot (HD) and Lowe’s (LOW) Losers For Online Customer Satisfaction

Home Depot (HD) and Lowe’s (LOW) were big losers when ForeSee Results polled 20,000 people to ask about their satisfaction with online retail sites. On a scale where 100 is the highest rank, Home Depot scored a 69 and Lowe’s a 70. Several computer e-tailing sites including Gateway (GTW) also did very poorly.

SonyStyle.com (SNE) received an unusually poor score of 70.

At the other end of the scale, Amazon (AMZ), and Apple (AAPL) did extremely well. Maybe that is why their stock prices are so high.

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

Posted on: June 3, 2007 – 12:55 pm in Uncategorized

Could Toyota (TM) Outsell GM (GM) In The US?

As expected, Toyota (TM) has passed Ford (F) in terms of monthly US vehicle sales. In May, Ford sold 250,000 vehicles in its domestic market. Toyota sold 269,00 taking its US market share to 17.3%.

In May, GM (GM) sold 371,000 vehicles giving it a share of 23.9%. At this point Toyota is not longer very far behind.

A look at sales of individual models makes a fairly strong case the the US sales gap between the two companies will continue to narrow. GM’s top seller is the Chevy Silverado pick-up, which was the No.1 selling vehicile in the US during May at nearly 64,000 units. High gas prices could certainly make it difficult for the truck to do as well in the second half of the year.

Three of the top 10 selling vehicles during May were Toyotas. The Camry sold 50,000 units, up 12%. The Corolla sold 45,000, up 5%, and the Prius sold 24,000 units, up 185%.

If oil and gas prices stay high, clearly these Toyota models are helped.

GM now faces the prospect of not only becoming the No.2 car company worldwide, but also losing its place in the pecking order here. All of this makes GM’s efforts in China and India more critical. At least in those markets it does not have the burden of high labor costs.

Halliburton moved its headquarters to Dubai. Perhaps GM should relocate its to Shanghai. At least it would have a chance to be No.1 in its new home market.

Douglas A. McIntyre

Posted on: June 3, 2007 – 9:40 am in Uncategorized

AT&T (T) And Verizon (VZ): The Threat Of Mobile VoIP

Verizon (VZ) and AT&T (T) have a problem.Mobile VoIP is coming, with a vengeance. New higher speed wireless technologies like WiMax and CDMA EVDO REV A are being built out. One of the consequences of this is that a wireless connection will be able to support quality VoIP applications.

For the big cellular service providers, VoIP could undermine rates plans just as it did with landlines service starting about three years ago. First there was free Skype, and then Vonage (VG) with a price point of about $25 a month. The cable companies including Comcast (CMSCA) and Time Warner Cable (TWC) climbed on and the the phone companies were under siege.

Part of what has been offsetting falling line-line revenue for the big phone companies is their success with cellular. Verizon Wireless and AT&T Wireless lock customers in with long-term rate plans and cheap handsets. Consumers pay a big month price tag. A bill of $80 for a 30-day period is nothing. Heavy users pay much more.

As Gigaom reported: "In the end, traditional mobile carriers are powerless to protect their voice margins from the threat of VoIP."  The tech web sites adds: "They’ll (AT&T and Verizon) have to invest considerably in improving the network and that will be a losing game as pressure from VoIP will only hasten the pre-existing downward pricing trend."

Creative destruction. The stuff of business school case studies and McKinsey consulting assignments.

Verizon and AT&T are about to get into a double bind. Their land-line business is being undermined by VoIP and they face a future of sharp margin decline and lost customers if wireless VoIP takes off. The leave the "triple play" bundled services programs that will use fiber to offer consumers packages of TV, broadband, and voice. Of course, the cable companies are already owners of many, many of those customers.

The two big phone companies are sporting stocks that are near 62-week highs. Wall St. has to ask how long that will last.

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

Posted on: June 3, 2007 – 7:45 am in Uncategorized

Cellphone TV Gets A Set-Back

There have been several studies that indicate that the market for consumers who want to want long-form video programming on wireless handsets is relatively small. To some extent it makes sense. A one inch by one inch display is not ideal for viewing Spiderman 3.

Amp’d Mobile, a company that provides multimedia and games for its cellular subscribers, filed for Chapter 11.

The company had high hopes. It had raised $360 million from blue chip operations including Viacom (VIA), Univeral Music, Qualcomm (QCOM), and Intel (INTC).

Amp’d Mobile said it had to seek bankruptcy protection because it was growing too fast. That may be the oddest excuse for a Chapter 11 filing ever spoken.

The collapse of the company brings into some question whether Qualcomm’s MediaFlo project for moving video to phones will ultimately work, and whether the Verizon (VZ) investment in bring programming to its handsets has a future.

Who wants to watch video so small that it can’t be seen?

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

Posted on: June 3, 2007 – 5:47 am in Uncategorized

This Week on StockHouse May 28 to June 1

ChuckWoolery posts to StockHouse BullBoards! That story and more appeared in this week’s Top Five (http://www.stockhouse.ca/shfn/article.asp?edtID=19780).

One of the most active BullBoards this week was Tyler Resources (TSX: V.TYS), which boosted the resource estimate at its copper-zinc property in Mexico. Reporter Sean Mason got the lowdown on the reaction (http://www.stockhouse.ca/shfn/article.asp?edtID=19786).

Don Rodgers chose to follow up his prior Trading Discipline column about the Level II tool with another edition comparing different Level II screens (http://www.stockhouse.ca/shfn/article.asp?edtID=19771).

While Danny Deadlock said that investors should measure the value of High Arctic Energy Trust (TSX: T.HWO.UN) as a speculative oil and gas services play (http://www.stockhouse.ca/shfn/article.asp?edtID=19772), rather than as an income trust. He cautioned readers that the company faces a lawsuit over services performed.

With the hullabaloo in the junior mining sector, how should an investor choose a winner? Institutional Research Partners profiled their five favourite names (http://www.stockhouse.ca/shfn/article.asp?edtID=19776) in this week’s Micro-cap Spotlight.

Nominal prices keep rising, and pushing markets higher. This week the S&P 500 closed at is highest level in seven years. But inflation is distorting real price gains (http://www.stockhouse.ca/shfn/article.asp?edtID=19779), said Steven Saville.

One of the often cited reasons for the market’s gains is the recent spate of merger and acquisition activity. Leon Hamerling and J. Paul focused on an acquisition (http://www.stockhouse.ca/shfn/article.asp?edtID=19781) by Genzyme (NASDAQ: GENZ) of a partner firm, and the unusual trading activity in shares of that company prior to the announcement.

The Securities Sleuth, Mark McNair, reported this week that AmerisourceBergen (NYSE: ABC) was in trouble (http://www.stockhouse.ca/shfn/article.asp?edtID=19782) with the Drug Enforcement Agency.

In the second edition of the new Money Savvy column, certified financial planner Lawrence Laderoute advised that some debt (http://www.stockhouse.ca/shfn/article.asp?edtID=19785) is really, really good.

While small-cap stocks have outperformed the S&P 500 since 2000, Don Vialoux said investors should consider taking profits from their Russell 2000 ETFs (http://www.stockhouse.ca/shfn/article.asp?edtID=19787).

And after a lull, the IPO market appears to be enjoying a small revival. Jon Ogg said the EMC (NYSE: EMC) spinoff, VMWare (NYSE: VMW) is the one to watch (http://www.stockhouse.ca/shfn/article.asp?edtID=19788).

Some investors don’t have a lot of time for portfolio research, so Financially Fit’s Nancy Zambell wrote about how to set up a lazy portfolio (http://www.stockhouse.ca/shfn/article.asp?edtID=19793).

Many computer users have benefited from the drop in prices for DRAM (http://www.stockhouse.ca/shfn/article.asp?edtID=19794). The other beneficiaries, write Totally Technology columnists Leon Hamerling and J. Paul, are big PC makers like Dell (NASDAQ: DELL).

STANDUP Advice columnist John J. De Goey compared NHL team owners and mutual fund managers (http://www.stockhouse.ca/shfn/editorial.asp?edtID=19792).

Posted on: June 3, 2007 – 5:32 am in Uncategorized