Monthly ArchiveDecember 2006



Shopping 29 Dec 2006 07:00 pm

Online Sales Grow this Christmas

"Online Sales Up" with snowman

Lots of people this Christmas shopped with their mice boosting online sales:

Online retailers rang up $23.11 billion in holiday sales so far this year, a 26 percent increase over 2005, according to data released Thursday by comScore Networks.

U.S. Web spending during the work week before Christmas grew 38 percent to $2.25 billion from last year. Holiday shopping as measured by the Reston, Va.-based research group doesn’t include travel, auctions, or large corporate purchases.

The brisk last-minute gift business prompted comScore to raise its forecast for the full year by $100 million to $24.7 billion, 26 percent above 2005.

Amazon.com (AMZN) was the big winner. But Chris at the Varien eCommerce Blog notes, “brick-and-mortars are making a strong charge” with Wal-Mart’s, Ticketmaster’s, and Best Buy’s online divisions growing 50%.

Amazon.com’s biggest sellers included iPods, Jim Collins’ business bestseller Good to Great, Senseo Douwe Egberts Dark Roast Coffee Pods, and Levi’s 501 jeans.

Gian Fulgoni, comScore’s chairman, said, “Consumers making purchases in those final days expressed both their faith in retailers ability to pick and pack their orders in a timely fashion and shippers ability to drop them on recipients doorsteps in time for Christmas.” Not in all cases. Amazon.com lost one customer for not shipping gifts in time. The good news about Christmas sales won’t help Amazon.com’s stock price for 2006.

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Real Estate 28 Dec 2006 07:37 am

New-Home Sales Up…Maybe…Sort Of…Not So Sure

Man shrugging

Data that November new-home sales went up did enough to affect the bond and currency markets. But the government isn’t even sure they got the numbers right:

The government cautions that its housing data are subject to large sampling and other statistical errors. Large revisions are common.

The standard error is so high, in fact, that the government cannot be sure that sales increased at all in November.

It can take up to six months for a trend in sales to emerge.

That didn’t stop Bear Sterns economists from spouting,

Although no doubt this report was boosted by the mild weather in parts of the country, the pickup in sales and decline in the number of homes for sale provide further tentative evidence that the housing market is stabilizing.

Economists’ reputations continue to improve.

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Ecommerce & Shopping 27 Dec 2006 10:58 pm

iTunes Store Hit with Post-Christmas Rush

iTunes gift card

The theoretical beauty of an online store is you don’t have to worry about crowds getting in the way. People come with a click of the mouse, with a few more clicks and a credit card they purchase some bits, then wander off to enjoy their purchase. That’s the theory of friction-free shopping. In the real world a popular thing–you know, made of atoms–like the iPod can cause a mighty tech company to shudder under the strain:

Swarms of online shoppers armed with new iPods and iTunes gift cards apparently overwhelmed the Apple’s iTunes music store over the holiday, prompting error messages and slowdowns of 20 minutes or more for downloads of a single song.
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Frazzled users began posting urgent help messages Monday and Tuesday on Apple’s technical forum for iTunes, complaining they were either not allowed into the store or were told the system couldn’t process their request to download songs and videos.

It was not immediately clear how many people were affected by the slowdowns, and Apple Computer Inc. would not immediately comment Wednesday on what caused the slowdown and whether it had been fixed.

Blame the schools for being so generous as to give kids a Christmas vacation and parents who didn’t think it was all-important to shop the day after Christmas.

Popularity that leads to increased revenues is good. Being popular with federal prosecutors isn’t good.

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Media & Mergers and Acquisitions & Private Equity 26 Dec 2006 05:50 pm

Star Tribune Sold To Private Equity Firm

Avista Capital Group logo

The McClatchy Company which earlier this year bought Knight Ridder for $4.5 billion sold the Minneapolis Star Tribune to, you guessed it, a private equity firm for $530 million. Avista Capital Partners is the firm of the moment. In a press release McClatchy said Avista tried snagging the two Philadelphia newspapers earlier this year. McClatchy will use the cash to pay off debt from the Knight Ridder deal.

paidContent.org notes the “sale price is much less than the $1.2 billion McClatchy paid to buy the Star Tribune from Cowles Media Co. in 1998.” At $530 million the paper is a better growth prospect than at $1.2 billion. We’ll all wait and see how they’ll get growth out of rapidly-changing business.

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Shopping 26 Dec 2006 03:27 pm

Post-Christmas Appraisal

Christmas shopping

Visa is disappointed with Christmas shopping numbers. They failed to meet even their reduced expectations:

Nevertheless, holiday spending is on track to post an increase of about 6.5%, Best said. That’s even weaker than [Visa USA's chief economist, Wayne] Best had suspected earlier this month, when Visa said holiday sales would likely fall short of its original projection for a 7.5% gain. Holiday sales had increased 8.3% a year earlier, according to Visa’s data, which tracks purchases made with its credit cards – roughly 17 cents out of every dollar spent in the U.S.

The big items were personal electronics, small home furnishings, and appliances.

Frank Barnako reports Amazon.com had its best Christmas ever with lots of iPods going out to customers.

For retails the season isn’t over yet. Until the kids go back to school they will be going to the stores to spend their gift cards while mom and dad bring back returns. Although those returns may be tougher to come by.

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Travel 26 Dec 2006 03:06 pm

Smash Your Passport!

U.S. passport

To those overly paranoid international travelers Wired gives you some advice on how to “fix” those new RFID-tagged passports. Just dig through your toolbox.

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Private Equity 20 Dec 2006 10:28 pm

Blackstone CEO Worries about Income Inequality

Stephen Schwarzman

TAM Money and Finance has written plenty on private equity firms buying everything under the sun. They’re our current Masters of the Universe so it’s not a shock that a newspaper like the Financial Times gives Blackstone chief executive Stephen Schwarzman credence on U.S. income inequality:

“People like to have the American dream: everybody successful. I think Wall Street is doing so well now, it’s certainly not an object of any sympathy for anyone,” he said in an interview for the Financial Times’ “View from the Top” series. “The middle class in the US hasn’t done as well over the last 20 years as people at the high end, and I think part of the compact in America is everybody has got to do better.”

But Mr Schwarzman, a Republican supporter, suggested that political action such as higher taxes for the wealthy was not the best solution. “Better to deal with this by having the middle class do better rather than whacking somebody on either side of that,” he said.

Schwarzman is good at making money by buying and selling companies. He’s not a social scientist. He doesn’t explain why growing income inequality is bad, and his only suggestion is to not tax the rich. Let him stick to what he’s good at.

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Mergers and Acquisitions & Private Equity 19 Dec 2006 11:04 pm

Texas Pacific Gets into Casino Business

Texas Pacific Group logo

Texas Pacific still had a few billion burning a hole in its pocket. The private equity firm strikes again joining Apollo Management to buy Harrah’s for a deal, including debt, worth $27.8 billion. You can do big deals like buying part of Sabre, Qantas, and now Harrah’s if you raised $15 billion in the world’s second-largest buyout fund.

Even with forking over a lot of money they bought the casino group for cheap:

At $90 a share, Texas Pacific and Apollo would be paying less for Harrah’s earnings than what Las Vegas Sands’ or MGM’s profits are worth on the stock market. Harrah’s is being valued at 21.4 times projected 2007 earnings, based on the average estimate of 18 analysts surveyed by Bloomberg. That compares with a 23.1 ratio for MGM Mirage and 51.5 for Las Vegas Sands Corp., according to Bloomberg data.

That’s what I call smart money.

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Personalities 18 Dec 2006 07:53 pm

Capitalist Pig’s Best of 2006

Jonathan Hoenig

Jonathan Hoenig, the Capitalist Pig, trader, and talking head on Fox News’ Saturday morning offers up a list of great people and stuff for 2006. They include ag futures, a book by a dead economist, Time Warner’s stock, and a pricey New York City hotel.

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Media & Mergers and Acquisitions 18 Dec 2006 07:31 pm

Chandlers Want Their Newspaper Back

Tribune Company logo

The family that used to own the LA Times is reported (by the Times no less) to be interested in buying the company that bought their newspaper. Really it’s not as confusing as that sentence sounded:

The Chandlers, who currently own a 20% stake in the company, have been in discussions with billionaire Ron Burkle’s investment firm, Yucaipa Cos., about making a joint offer for some or all of Tribune’s assets, the Los Angeles Times reported on its Web site, citing two unnamed people said to be familiar with their plans. The L.A. Times is owned by Tribune, along with 10 other newspapers including the Chicago Tribune, 26 television stations, and the Chicago Cubs baseball team.

Tribune executives led by Chief Executive Dennis J. FitzSimons are expected to enter a bid of their own in alliance with a consortium of three private investment firms, one of the group’s advisors reportedly said.

The management consortium is said to include Providence Equity Partners of Rhode Island, Apollo Management of New York and Chicago investment firm Madison Dearborn Partners, according to the L.A. Times.

In July, the Chandlers demanded that Tribune take dramatic steps to lift its stock price, which had lost more than half its value since early 2004. The family said that Tribune should sell its broadcasting division, pursue tax-free spin-offs of its newspaper assets or try to sell the company as a whole.

About the only private equity firm not interested in Tribune is Texas Pacific Group, but they blew their wad last week on Sabre and Qantas.

Also interested in buying Tribune are Tribune executives. But “executives are unlikely to lead any buyout effort but could very well have a future management role in the company.” At least they’d keep their jobs.

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