At noon at participating Starbucks you’ll be able to get a sample of their new Pike Place coffee. It’s part of Starbuck’s plan to get people excited about their coffee again and liven up sales.

How does it taste? A Chicago Starbucks ran out of coffee and started selling Pike Place early. The Chicago Tribune’s Monica Eng gave us a review:

So here’s the scoop: Pike Place delivers a pretty great cup of joe. It’s got a light fruity and nutty aroma, a smooth feel on the tongue but nice body and no wimpy finish. This lighter roast (clearly a response to widespread complaints about Starbucks’s penchant for over-roasting) allows a broader spectrum of flavors and aromatics to emerge, things that can sometimes be burnt away in a darker roast. Starbucks might not like this, but it kind of reminds me of Dunkin’ Donuts’ house coffee.

“Starbucks’ New Pike Place Roast Drips Out Early in Gold Coast” [via Starbucks Gossip]

A private equity firm has gotten into the act of shoring up a firm hit by the housing crisis. Texas Pacific Group, TPG will inject $5 billion into Washington Mutual (WM):

Washington Mutual, the country’s largest savings and loan, is poised to receive a $5 billion investment from TPG, a big buyout firm, and several other investors, people briefed on the situation said Monday.

Details of the transaction are still being sorted out, but a deal could be announced as early as Tuesday.

The injection of capital will help Washington Mutual shore up its balance sheet, which has been hurt badly by a drumbeat of losses amid the current housing crisis. Federal banking regulators have stepped up scrutiny of the big mortgage lender, concerned that its financial health was deteriorating.

But some Wall Street analysts said Monday that it remained unclear whether the new investment, more than half of its $9 billion market value on Friday, would be enough to ensure the 119-year old institution remains independent.

Private equity groups don’t invest unless they expect big paydays. Their investment puts them in a position to take the company private to later take it public or reap big profits from a WaMu buyout.

In getting out of this burst bubble firms and capital will be reallocated. Like Bear Sterns companies will dies and others will be transformed. The changes will be painful, but their needed to get the economy back on a more sound foundation.

“$5 Billion Said to Be Near for WaMu”

[Cross-posted on The American Mind.]

In light of the recent turmoil in the housing and financial markets Treasury Secretary Henry Paulson will release a proposal for revamping the regulatory agencies monitoring the U.S. financial system:

Mr. Paulson’s plan will include merging some agencies, such as the Securities and Exchange Commission with the Commodity Futures Trading Commission, while broadening the authority of others, such as the Federal Reserve, which appears to be a winner under the proposal. Mr. Paulson is expected to recommend that the central bank play a greater role as a “market stability regulator,” with broader authority over all financial market participants.

Mr. Paulson is also expected to call for the Office of Thrift Supervision, which regulates federal thrifts, to be phased out within two years and merged with the Office of the Comptroller of the Currency, which regulates national banks. One reason is that there is very little difference these days between federal thrifts and national banks.

The Treasury plan has been in the works since last year but has taken on greater prominence since the onset of the housing crisis and ensuing credit crunch. Critics have blamed lax regulation at both the state and federal level for exacerbating the crisis.

This proposal is merely a step towards changes. The Democratic Congress has ideas of their own.

“Sweeping Changes in Paulson Plan“

Miller and Coors will merge their North American brewing operations:

Miller Brewing Co. and Coors Brewing Co., the nation’s second- and third-largest brewers, are combining their operations, creating a bigger challenger to Anheuser-Busch Cos. - but also raising the possibility of future job cuts at Miller’s Milwaukee headquarters.

For now, longtime Coors executive Leo Kiely will be running the newly merged operations of Miller Brewing and Coors Brewing.

But Miller President Tom Long is Kiely’s heir apparent, and Miller owner SABMiller Plc will be picking the MillerCoors chief when Kiely retires - perhaps within a few years.

Those facts emerged from this morning’s Webcast presentation to analysts about the agreement to combine Miller and Coors.

A decision hasn’t been made yet on where the MillerCoors headquarters will be located once the merger is completed in 2008. None of Miller’s six breweries, or the two breweries operated by Coors, will be closed as the result of the merger, said Pete Marino, Miller spokesman.

But administrative jobs in Milwaukee, and at the Coors offices in Golden, Colo., will be analyzed as the merged company looks to reduce costs, he said.

“It’s safe to assume there will be some reductions,” Marino said. But it’s too early to estimate the extent of those job cuts, and where they will occur, he said. MillerCoors will maintain a presence in both Milwaukee and Golden, Marino said.

Miller has 1,700 employees in Milwaukee, with 800 employees in the corporate offices and 900 brewery workers.

Miller itself is the result of the merger of South African Breweries and Miller Brewing while Coors is the mashup of Molson and Coors.

A changing alcohol market means new business arrangements are needed. The Milwaukee Journal Sentinel story notes that this new company hopes to be in a better position to compete with wine and spirits makers as well as Anheuser-Busch, the world’s largest beer maker.

We now have a truly pressing question: the names of the baseball stadiums in Denver and Milwaukee. I propose the Colorado Rockies play in CoorsMiller Field while the Brewers get MillerCoors Field.

“Miller, Coors to Combine U.S. Operations”

Popular Science interviews SkyBus CEO Bill Diffenderffer. Some may see SkyBus’ strategy of offering cheap plane tickets but charging for everything to be nickle-and-diming the customer. Diffenderffer counters:

Q: Your business model also requires passengers to pay for any extras—drinks, blankets—piecemeal. Will consumers go for that?
A: They were paying for it before! Those were never free. Why should you be made to pay for all those sodas and blankets that other people use that you don’t?

Q: You’re even charging for checked luggage, $5 a bag.
A: If you don’t check a bag, why should you pay for those who do? We make our prices very clear, so we’ve had very few complaints. If you pay $80 for a Skybus flight instead of $180 for the competitor’s flight, and you pay $5 for a bag and $2 for a soda, that’s $87 versus $180. America can do that much math.

“Flying à la Carte: Q&A with Skybus’s CEO” [via Instapundit]

The private equity boom hit Milwaukee. For fans of an independent Midwest Airlines (MEH) this is a good thing. TPG Capital agreed to pay Midwest shareholders $16/share cash to take the airline private.

An interesting wrinkle is Northwest Airlines, the number two carrier out of Milwaukee’s Mitchell International Airport is putting in some money. Rick Esenberg observes, “AirTran had argued that they would actually increase service to Milwaukee by making it a second hub. Northwest must have believed it.” Or else why did get in the deal? That somewhat disparages the theory going around that Air Tran would reduce service to and from Milwaukee.

TPG/NWA won for a simple reason: they offered something better than Air Tran. The Orlando-based airline offered $15.75/share in a combination of cash and stock. TPG/NWA went with all cash. Cash’s liquidity is less risky than Air Tran’s stock. That’s understandable. The only airline to consistently earn a profit since the airline depression following the Sep. 11 attacks has been Southwest. Few think Air Tran is on par with the king of lost-cost flying.

The question now is what will be Midwest’s path to continued profitability? The Milwaukee Journal Sentinel reports TPG will let Midwest continue with its current plan of moderate growth including adding more seats to its signature two-by-two configuration. How that fits with TPG thinking there’s a market for higher-end travel I don’t know. The industry trend is towards low-cost with added bonuses. JetBlue offers all passengers satellite tv and radio, and Southwest offers its quirky style. We all know about JetBlue’s basic problems of getting people on and off their planes so the market may want an airline with a higher price that better ensures passengers get where they want to go. If so Midwest is in a good position. TPG is banking on it.

“What’s in the Cards?”

Sony really, really needs to crank up Playstation 3 sales. Video games are a huge money-maker to begin with. Plus, the company needs to get more Blu-ray high-def video players on the market to win the war over HD-DVD. Nintendo’s Wii has been outselling Playstation 3 almost two-to-one. Sony decided to spur demand with a price cut:

Sony Corp. slashed the price of its current PlayStation 3 by $100, or 16.7 percent, and introduced a high-capacity model in an effort to spur sales of the struggling video game console.

Starting Monday, the current 60 gigabyte model will cost $499, down from $599.

The Japanese electronics maker also said it is introducing a new version of the PlayStation 3 with a bigger hard drive for storing downloaded content such as video games and high-definition movies.

The new PS3 increases the system’s storage capacity to 80 gigabytes from 60 gigabytes and also includes a retail copy of the online racing title “MotorStorm,” a company spokesman said. It will be priced at $599.

Sony’s production cycle probably isn’t at that point where it’s making money off the consoles. This price cut will cut into the company’s margins. But not extending its video game dominance for another generation is something the company doesn’t want to ignore.

“Sony Cuts PS3 Price by 16.7 Percent”

Today marks the end of Midwest Airlines as an independent, Wisconsin company. At the company’s stockholders meeting today it’s expected that three director candidates backed by AirTran will be voted onto the board:

The election will be the highlight of today’s 10 a.m. shareholders meeting. Midwest Air shareholders will choose between a slate of incumbent directors John Bergstrom, James Boris and Frederick Stratton, or challengers John Albertine, Jeffrey Erickson and Charles Kalmbach.

AirTran announced Monday that 59.5% of Midwest Air’s shares have been tendered to the takeover offer, which was extended to Aug. 10. Given that level of support, AirTran executives expect to see their three nominees elected to the board. Analysts also believe that outcome is likely.

The importance of the election is that Albertine, Erickson and Kalmbach “will bring a fresh perspective to the debate” on whether Midwest Air should enter into sale talks with AirTran, said Kevin Healy, AirTran vice president of planning.

Midwest lost a lot of sympathy when they annouced they were replaced a good portion of their two-across seating for typical three-across in order to increase revenues. They’ve not created two classes of seating making the airline little different from potential buyer AirTran. Romantic notions of “saving the cookie” lose their punch when Midwest ditches their primary market distinction.

AirTran has taken a slow and steady approach in its bid to acquire Midwest. Slowly but surely they are winning over stockholders who see a combined company in a better position to compete. Midwest reinforced that notion Tuesday when they announced they wouldn’t meet analysts’ expectations. Their growth strategy isn’t going as well as Midwest hoped.

When AirTran does buy Midwest the state will lose a good corporate citizen. I hope we gain more flights to more locations at a better price.

“Midwest Board Vote Today”

The Manhattan Saks Fifth Avenue (SKS) store got the U.S. Postal Service to help them with a publicity stunt. The department store announced their newly-remodeled shoe department will be so big and important it deserves its own zip code:

The quintessential Manhattan store is revamping its shoe department, and when it moves from the fourth floor to the eighth floor in August customers will be able to send mail to 10022-SHOE.

“We believe it’s such a big move for us it deserves its own ZIP code,” Saks spokeswoman Lesley Langsam Kennedy said Thursday. “We wanted to make it a destination.”

But the four-letter addition is meaningless:

Only the last four characters, which aren’t necessary when you’re mailing something, are specialized, and they won’t be read by sorting machines.

Read

Ben Bernanke’s Federal Reserve wants to make credit card statements easier to understand and give consumers more time before their terms are changed:

To help, the Fed’s proposal would call for a table summarizing the changes to appear on the statement above the list of the consumers’ transactions. That’s where people are most likely to notice the changes, the Fed said.

From solicitations to monthly statements, the Fed’s proposal would require key information appear in larger print, with rates and fees in an easier-to-see boldface. The proposal also aims to make language easier for people to understand.

“The purpose is to avoid those ‘gotcha’ moments,” said Fed Governor Kevin Warsh.

Read