AAPL vs MSFT

When I bought my first Mac in February 2002, I was a blacksheep.  Nobody really bought Apple or paid much attention to it.  Microsoft was the big kid on the block, and Apple was a scrappy punk.  Times have changed.  Thanks to several big splashes over the years, Apple's market capitalization is now more than Microsoft's.

How did this happen?  Simple.  The OS wars were a red herring.  It's the hardware, stupid.  It was the iPod that saved Apple, not OS X.  But OS X was very successful in further destroying Microsoft's reputation.  Just think back to the "Get a mac" ads.  Sony has also fallen by the wayside.  Even its venerable Walkman brand is dead.

In 10 years, who will be #1?  Any thoughts?  My guess would be a firm like Samsung.

Studios last ditch power grab

Warner Bros is forcing Netflix customers to wait 28 days before renting movies that the studio produces.  I think this is ridiculous, and it won't last for long.  People are not going to rush out and buy DVD's.

Very few people feel the need to own movies, with the exceptions for movies that are watched often.  In my case, this may be 3-5 total movies.  With music, people can listen to a song multiple times a day, so ownership makes sense.  But the public has made it pretty clear that they are content to rent movies, and Netflix has come out on top.

I predict that customers are going to complain big time to Netflix and possibly the studios.  With the only option to buy the movie (its not like you can walk into a Blockbuster anymore, with most of them closed) or wait 28 days, I'll wait 28 days.

In Defense of Mackey: Whole Foods and Healthcare

There are many calls on the left to boycott Whole Foods over this op-ed by CEO John Mackey.

The argument is that Whole Foods is a very liberal store with liberal customers, and the CEO himself needs to have a liberal viewpoint to cater to them. I disagree with this stance.

Whole Foods does a lot of good, whether it is by providing its non-union employees with better than union benefits or promoting the "buy local" movement. It should not matter what the owner of the store's views are, especially since the alternative shopping choices are so bleak.

In any case, while I support President Obama's healthcare initiatives, Mackey does offer some good points that we should keep in mind. He actually lists 8 points, but these are the ones that I feel should be part of any healthcare reform:

1. Remove obstacles to HSAs. I have one, you probably should too. It is simply the best plan available for most people.
2. Allow individuals to write off the cost of health insurance premiums.
3. Tort reform. Doctors are sued way too much, for way too much

Five Hour Energy not all its cracked up to be?

Interesting article on the ubiquitous energy drink available at just about any gas station in the country. Bottom line: it may or may not work better than coffee, and the safety is not clear.

Third Party iTunes synching

With Palm and Apple trading press releases over iTunes synching, thought I'd throw my hat into the ring.

From how I understand it, the Pre syncs with iTunes by telling iTunes that it is an iPod. I am not sure which model it identifies itself as, but I assume it is one of the older models.

For Apple to break this, they would likely have to (at least temporarily) break access for many iPods too. I really don't see what Apple's problem is, since this actually helps their iTunes store business model. I guess they want people to buy iPods and iPhones, but this could be construed as monopolistic.

I've said it to many already: Palm is the new Apple. Apple is the new Microsoft. And Microsoft is the new IBM. IBM has now exited the biz.

Pre Numbers in Northern VA

The Best Buys all had 12 or less Pres in stock.  These are definitely all sold out now.

I was told by someone at the Fair Lakes Best Buy that they were sold out before the store was opened, at about 9:30.

My experience in at the Chantilly Sprint Store was that they were not sold out immediately, but within the first hour of the store opening.  They had about 40 in stock.

Heard through a source that the store in Reston sold out of their stock of 80 Pres by noon.  Overall, pretty strong sale numbers, as long as Northern VA is representative.

Cramer on Index Funds

Cramer owned this guy today, and he's absolutely right.  The S&P has been pretty much flat over the last 10 years.

About those AIG bonuses

Those bonuses AIG paid to execs after it got bailed out were called "retention" bonuses. Seems that many of those paid are not being retained: they quit.

But now senator Schumer wants to tax these bonuses more than other income. I disagree with this approach. It was very stupid for AIG to pay these out (they claim they were legally obligated, which could be true but likely is not in all cases). It is a PR nightmare. But the execs should not be punished, and we should not pass an unconsitutional bill of attainder against these guys.

In Cramer I (Still) Trust

Say what you want about the actual interview, but Jim Cramer had a lot of balls to step on the set of the today show.  Jon Stewart was a complete bully for the entire interview.  It is evident that he and other who criticize Jim have never watched the show.

Does Cramer make stock picks?  Absolutely.  Does he jump up and down and talk to CEOs?  Sure.  

But he also warns you to do your homework and not blindly follow his advice.  The main point of the show is to teach people how to research individual stocks and sectors.  He gives a good overview of market sentiment, but at no time does he even say that he knows all.  He gets things wrong all the time, and admits it when he does.

Cramer has also done a lot of help level the playing field for the individual investor, and he is by no means a conservative shill:

• He is a strong proponent of re-instating the uptick rule
• He has blasted the SEC countless times for not enforcing existing laws that are there to prevent abuses of the system
• He's criticized the past two Treasury Secretaries, under both Obama and Bush

If you enjoy having a financial planner that you pay manage your portfolio, go ahead and use them.  But if you want to get into money management yourself, I strongly recommend that you read some of Cramer's books, where he delves into personal finance issues in an accessible way, without talking down to you.

Boo-yah.

Madoff pleads guilty

Bernard Madoff has pled guilty and been sent to jail for operating one of the largest ponzi schemes in history.

What should be done with the people he swindled money out of?  I personally do not think that they should get a penny back.  I've lost money in the market too, but I'm not running to the government asking for a handout.  He took advantage of them, so what?  That doesn't mean the taxpayers should support them.  Eugene Robinson goes so far as to call them his accomplices.  

His investors were Idiots with a capital I.  Someone who gives you a 10% return for many, many years is lying to you.  We should not reward ignorance.

Forbes richest #701

Made me laugh, but it is true and not a spoof.

Circuit City sells its last TV

The once huge retailer of electronics, founder of Carmax, and setting of the 40 year old Virgin, Circuit City closed its doors today.  I did not buy anything at the liquidation sale, since Amazon still offered better deals (and no tax).  

Quite possibly the worst job in America

Calling people whose family has died and collecting on debts... just so you know, you don't have to pay them.  But apparently, many do.

Eat what I say, not what I sell

The founder of Papa John's encourages people to limit the consumption of pizza.  Smart business move.  What's next, is he going to tell you to buy Dominos instead?

A Tale of Two Restaurants

Today, Starbucks reported that it missed earnings and will be cutting jobs, closing stores.

Two days ago, McDonald's said it will be opening 1,000 new stores.

In the past couple of years, Starbucks has lost billions of dollars in value, with McDonald's gaining. Is one's loss the other's gain? While it would appear so, I suspect not.

I have to confess, I like both restaurants. McDonald's is not as good as Burger King, Arby's or others, but it feeds you on the cheap. However, if I want a cup of coffee, I'll go to Starbucks and get some Pike. Other places make their coffee much to weak for me. I'm also a big fan of the Doubleshot, iced or in a can, or even +energy.

The problem is that Starbucks exploded. They went from being a small chain of Seattle shops to opening thousands of stores per year. There are so many Starbucks near me that two of them are within a 5 minute walk.

Starbucks thought it could emulate its cool, hip, yuppie, liberal formula (which fits me perfect) in the middle of America. I'm telling you, Starbucks in Oklahoma cannot be very popular.

Here's what I see as the endgame. Right now Starbucks is introducing breakfast foods. McDonald's is introducing coffee. While they will each be relatively popular, imagine if a Starbucks could sell an Egg McMuffin, or a McDonalds sold cups of Pike and Doubleshots.

Within 3 years, Starbucks will be a subsidiary of McDonalds. They will still have some standalone stores (that sell McDonald's breakfast products), but by and large, they cannot stay independent.

There's always Caribou.

The UAW's big, fat, pickle

The UAW is getting ready to make concessions so that Ford, GM, and Chrysler survive.  These changes include:

• Eliminating the JOBS bank, which pays workers to not work.  This will immediately get rid of 3,600 people who are getting money to sit on their asses.
• Delaying payment into a fund that will take care of healthcare costs for retirees.
• They have already given lower level benefits and pay to entry level workers.

Overall, these changes will spur the end of unionized auto labor in the United States.  With these cuts in benefits, newly hired UAW workers will be making effectively the same amount of money as non-union workers in places like Alabama and Texas who work for Toyota and Hyundai.  What incentive is there to keep a union, when this is the case?  Also, the employees of the Asian automakers are eligible for bonuses, something the UAW workers are not.

The union is caught in a catch-22.  Make no concessions, the carmakers go under, the union is gone.  Make concessions, reduce the need for the union, the union is gone.  

Automakers bring different strategies, needs

Today was quite interesting and telling when it comes to the current states of GM, Ford, and Chrysler.  

First the bad news.  The bailout goes way above the initial $25B, it could easily top $40B.

Chrysler: Want something around $7-8B.  No real plans other than that.  There are some vague mentions of electric vehicles, but Chrysler's bottom line is that its bottom line is quite bad.  It will only have $2.5B at the end of the year.  They feel if they do not receive the loan by Jan 1, they may go under.  Their CEO, Robert Nardelli, supposedly already makes $1* a year.

GM: Want up to $18B, but at least $12B, with $4B by the end of the year.  GM wants to kill Saab, Saturn, and possibly Pontiac, though Pontiac may be refocused as a "performance brand", whatever that means.  Cheap, fast cars?  I agree with dumping all three.  Saab is kind of interesting, but nobody buys them.  Saturn was interesting until a few years ago when GM closed the TN plant and turned Saturn into copies of other vehicles.  GM's plan also calls for dealer reductions, $1* a year pay to Rick Wagoner, and UAW renegotiations.  And how exactly can they renegotiate with the UAW when they have all that cash?

Ford: Ford is asking for access to a $9B loan that they hope not to use.  They predict a return to profitability in 2011, although a long recession or a bankruptcy by GM or Chrysler would hurt them and could turn that $9B maybe into a $14B bailout.  At least they seem to be willing to go it on their own.  They plan to convert many of their truck/SUV factories to make small cars.  They plan on cutting their dealer network, and also raising their fuel economies by up to 36% in a few years.  If they take the assistance, their CEO Alan Mulally will take a $1* salary.

*Plus stock options

Amazon's demand pricing

Amazon has an interest pricing scheme. I have seen glimpses of it here and there, since certain products tend to get cheaper at certain times of the year. But today I have a concrete example.

Take this item, for instance. A nice decorative bowl, that I am purchasing for a family member. I added it to my cart yesterday, noting that there were 2 left. The price was about $17.50, give or take a few cents. I added a few things to my cart last night and left it there. This evening, I opened up the cart to make final changes and purchase everything in bulk (to get free shipping). Amazon notified me that the price had fallen to $15.64 (possibly because I had kept it there for a while?). I ended up buying it, leaving 1 left in stock. Amazon promptly raised the price on the 1 remaining bowl to $32.58 where it remains now.

The likely reason for this, is that Amazon wants to make sure there is sufficient demand in order to justify purchasing more of these, which may be a somewhat obsure item.

"Black" Friday no more

This past Friday is traditionally known as "black" Friday, in which retailers who have been operating at a loss (in the red) for the year have big sales and manage to get into profitable (or black) territory.  

Likely not the story this year, per current reports.  It seems that shoppers did go out but that they did not purchase very much outside of the super deals that are likely loss leaders.  

I went shopping on Friday.  I went to Macy's but did not see anything worth buying at the time, and I bought a firewire cable at Best Buy to use one-time and then return.  I went back to Macy's on Saturday and bought a bed comforter for $75, but the normal price was $200.  All in all, I did not buy much.

Maybe "cyber Monday" will be better.  That's tomorrow, when all the workers return and buy things online.  I plan on doing most of my Christmas shopping on Amazon this year, but I still wouldn't touch that stock.

Speaking of stocks, with this news, that there was no good surprise in holiday sales, I expect the market to drop on Monday.  May be a good time to pickup a few stocks.  That's been my plan for the past week.

Mark Cuban and the SEC

Mark Cuban was charged with insider trading today by the SEC.  He cannot and will not go to jail, as this is a civil charge, not a criminal.  He stands to lose about $1.5M.  I am rather skeptical of this charge, since Cuban is known as being an upfront, albeit pompous, guy.  His official statement:

“I am disappointed that the Commission chose to bring this case based upon its Enforcement staff’s win-at-any-cost ambitions. The staff’s process was result-oriented, facts be damned. The government’s claims are false and they will be proven to be so.”

We shall see what happens.  But we should remember the last time the SEC went after a celebrity: Martha Stewart.  And that was quite the miscarriage of justice.  For more on that, I'd suggest you read Reason's article entitled: St Martha: Why Martha Stewart should go to heaven and the SEC should go to hell.

For what it's worth, Mark can count on my support.