Daily Archives: September 9, 2007

Barron’s Very Odd “Most Repected” Company List

Barron’s surveyed 95 professional managers and asked them to rank the 100 largest companies in the world based on market cap. Those surveyed were polled about which companies they most respected and which were at the bottom of their lists.

It would not surprise anyone that Bershire Hathaway (BRK.A) (BRK.B) finished first. But, several other companies near the top of the list seem not to belong. Johnson & Johnson (JNJ) finishes second, despite a number of problems at the company and the fact that the firm’s shares are down slightly over the last year. Microsoft (MSFT) is right up their. Its shares have not kept pace with the S&P over the last year.

Wal-Mart is No. 21 out of 100. No way to make sense of that.

Moving to the bottom half of the list, investors will find AT&T (T) at No.69. Its share are up nearly 30% in the last twelve months. And China Mobile (CHL) falls in at No. 87. Those shares have gained about 100% over a one year period.

The results are hardly Barron’s fault, but perhaps the magazine could publish a list of those who were polled so Wall St. can stay clear of them.

Douglas A. McIntrye

Read More »

Posted on: September 9, 2007 – 8:01 pm in Analyst Calls

The Chinese Car Market: Oh Lord, Won’t You Buy Me A Mercedes Benz

The Chinese car market, like many things in the world’s most populated country, does not cease to astonish. China has passed Japan as the No. 2 vehicle market in the world, and is now growing faster than even local experts thought it would.

This year, the market will support nine million car sales. According to Reuters, last year, the number was 7.2 million. US car sales this year should come in just above 16 million. At the rate the Chinese market is growing, it could surpass America as the world’s largest market in three years.

And so, it has become the next great battle ground for market share. Right now, GM (GM) and VW have the advantage of being the share leaders. VW now has 18% of the Chinese market. But, according to the FT, "about 85 per cent of Chinese clients are first-time buyers, which makes establishing a strong brand image an especially important factor in China." That means that powerhouse companies like Toyota (TM) still have a chance of roiling the market with strong products and clever marketing.

The battle is really just being joined. He who profits in China will profit overall.

Douglas A. McIntyre

Posted on: September 9, 2007 – 7:35 pm in Autos, ,

Is Microsoft Falling Behind In The Browser Wars

For Microsoft (MSFT), the Internet Explorer browser is more than another piece of software. It is a strategic element of the company’s effort to build a large online presence to compete with Google (GOOG) and Yahoo! (YHOO).

Microsoft took the browser lead from Netscape almost a decade ago in a series of moves that lead to antitrust suits. Although the legal troubles cause Redmond a headache, it had built such a formidable lead that it could use Internet Explorer to promote its only portal, MSN, and also distribute its Microsoft Live search capability.

As Google has moved into server-based document and spreadsheet software, Internet Explorer gives MSFT a platform to provide it an edge to compete in these businesses.

In a recent poll from TechCruch, the tech site found that 49% of high tech user base use IE competitor Firefox. Internet Explorer finished second with 40%. Granted, this is a very advanced user base.

TechCrunch also points out that 400 million copies of Firefox have been downloaded in three years and the browser has 120 million regular users.

It would be bad news for Microsoft to lose any more ground in the browser business, but it is beginning to look like that is probable.

Douglas A. McIntyre

Posted on: September 9, 2007 – 5:04 pm in Internet, , ,

Wal-Mart Gives Women’s Clothing Another Try, Online

When Wal-Mart (WMT) tried to makeover a number of its stores to attract higher income shoppers, the effort was a failure. Consumers simply could not see the world’s largest retailer at an environment where they wanted to go to buy trendy clothes.

So, Wal-Mart will take the effort online where well-heeled consumers do not have to see its stores or their locations. "Called z.b.d. design, the new clothing line is being tested by the world’s largest retailer only on its Web site," according to Reuters. The new service adds that "Wal-Mart is trying to get its apparel sales back on track after efforts last year to compete with Target Corp and sell hipper clothes, like skinny jeans and velvet blazers, backfired with its shoppers, who were looking for basic, classic and affordable clothing."

Walmart.com is become a bright spot for the company which is otherwise struggling at it US retail unit. If the clothing sales effort is a success it will add to two other notable online "wins" for the company.

Earlier this year, Wal-Mart began a program where customers could order merchandise online and pick it up at their local stores. Buyers avoided paying the shipping charges. But, WMT also found that, when these shoppers came to retrieve their orders, they were likely to buy other merchandise during their visit.

As DVD and CD sales have dropped due to online digital delivery services from companies including Apple (AAPL) and Amazon (AMZN), Walmart.com has set up its own download services. The company has a huge advantage in this business because of traffic to its websites. According to comScore, Wal-Mart has the 21st most visited site in the US with 29.2 million unique visitors in July.

Perhaps WMT can close some of its under-performing stores and try to migrate more purchases online where margins are almost certainly better.

Douglas A. McIntyre

Posted on: September 9, 2007 – 4:44 pm in Retail,

The Trouble Will Not End For Boston Scientific

Boston Scientific (BSX) has been vexed by problems with its stents, one of its largest businesses. There have been several medical research reports which say that the drug coated stents that the company markets can cause severe heart problems.

Now, BSX has been charged with "inadequate record-keeping and reporting following the deaths of five patients implanted with an experimental device to treat a dangerous ballooning of the body’s main artery." The product in question is a stent graft which was designed to treat abdominal aortic aneurysms

Reuters writes that the clinical trials started in 2003 and ended in 2006, after Boston Scientific became aware of fractures in the device and scrapped the program. 

BSX hardly needs more bad PR. It took on billions of dollars in debt when it bought medical device company Guidant. Some analysts are concerned that the company’s falling cash flow cannot cover its debt service.

The news makes the shares of BSX which traded at $28 in December 2005 less likely to recover from their current $13 level.

Douglas A. McIntyre

Posted on: September 9, 2007 – 4:29 pm in Biotech,

FCC May Ban Exclusive Cable Deals, Bad News For Time Warner Cable (TWC), Cablevision (CVC)

From Silicon Alley Insider

The FCC is considering new rules that ban exclusive deals between cable companies and landlords, Reuters reports. This is great news for consumers, expecially in New York City, where almost everyone lives in an apartment building monopolized — officially or unofficially — by one cable company, whether Time Warner Cable (TWC), Cablevision (CVC), or RCN (RCNI). As expected, the biggest champions of the proposed rules are telcos Verizon Communications (VZ) and AT&T (T) continued here…

Posted on: September 9, 2007 – 11:59 am in Uncategorized

OPEC Lands Another Blow

The head of OPEC says that the oil supply is plenty good. It is refining that is the problem. That would put the reason for higher oil prices squarely on the shoulders of the multi-national oil companies.

Even if OPEC’s claim is true, in fact, the cartel knows that the reality of oils prices is strongly related to perception. Is there peace in the Middle East? Are governments in Venezuela and Nigeria stable? Is the rate of consumption in China still racing higher every quarter? Will storms in the Gulf interrupt production.

By moving the responsibility for oil prices to public companies, most of which are based in the US, OPEC is saying it will not make a gesture, even a symbolic one, to bring prices down.

Absent any other news, that means oil prices will continue to rise.

Posted on: September 9, 2007 – 11:52 am in Oil & Gas