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August 2007 Archives
So much for Christmas in July
Things are looking up for the domestic automakers. Or are they? GM and Ford both turned in welcome second quarter profits, but today we get the sales numbers for July. And those don't look so good. Edmunds.com predicts double-digit declines for both carmakers, despite the truckload of incentives they've been offering.
08/01/07 04:27 AM PT Posted on August 1, 2007 4:27 AM PTCustomer service headed to Kenya?
Kenyan entrepreneurs are talking about talking. The first fiber optic cable will be laid in east Africa by the middle of next year and the region hopes it'll be direct a line to opportunities in the $130 billion call center industry. They're banking on being able to offer cheaper labor and easier-to-understand accents as consumers become increasingly frustrated with Indian call centers.
Want to buy an American car? Pleeeease?
A screeching downshift for the Big Three in Detroit. For the first time ever GM, Ford and Chrysler saw their home market share dip below 50 percent. New numbers also show U.S. auto sales hit their slowest pace for July in nine years. Toyota and Honda also saw declining sales but the companies are still winning the market race. Toyota outsold Ford and Honda outsold Chrysler Group.
08/02/07 04:39 AM PT Posted on August 2, 2007 4:39 AM PTYou've heard of a booze cruise
How about a booze train? Amtrak is offering $100 in free alcohol to people who board a new high-end sleeper car service this fall. Tickets for the long-distance trips run about $800 and up.
Some folks have expressed concern that $100 in free drinks might be a bit excessive. But as long as the conductor stays sober...
That's a whole lotta laundry money
This week, 32,000 quarters fell out of an armored car near Madison, Wisconsin because the door wasn't closed right. Apparently the sound of all those coins hitting the pavement didn't get the driver's attention. He was cited for failure to prevent a leaking load. Meanwhile, only half of the coins have been returned, about $4,000 worth, so if somebody walks into a Wisconsin bank with a bag full of quarters...
08/03/07 03:27 AM PT Posted on August 3, 2007 3:27 AM PTAnother one bites the dust
Today, the sagging housing market claims one of its biggest casualties yet: American Home Mortgage plans to close most of its operations and lay off more than 6,000 people. The company will probably have to file for bankruptcy by Monday. Two years ago, American Home's stock traded at nearly $40. Last night it was worth about $1.50. This is also a sign that the scope of the problem is widening. American Home Mortgage was handing out loans to people with decent credit, not the riskiest subprime borrowers.
GTA IV stuck in the shop
Virtual car thieves are in for a long wait. Take-Two Interactive is postponing the release of Grand Theft Auto IV because the video game's just not ready. It was due out in two months, but now the release has been pushed back to Spring '08. Analysts say this could create ripple effects for the entire video game industry during the holiday selling season. The latest edition of the wildly popular series was expected to drive sales of the PlayStation 3 and Xbox 360.
New York Times lite
Today, a slimmer version of the Times hit the stands. The paper cut about two inches off its width, a move that's expected to save about $10 million a year — but there'll be about 10 percent less space for news.
Case of stolen MP3s
Or not as it turns out. A U.S. district judge reversed a $1.5 billion verdict against Microsoft in a patent dispute over MP3 technology. Believe it or not, before every other person had an iPod (or one of those other MP3 players) the music format did not exist. Alcatel co-owns the copyright to the MP3 encoding and claims that Microsoft started using it without paying. Microsoft says it did pay up — not to Alcatel, but to a German research organization which co-owns the patent.
08/07/07 07:03 AM PT Posted on August 7, 2007 7:03 AM PTLook, it's a Virgin America plane!
Passengers today will find out if Virgin America is as super as it promises. The carrier's inaugural flights take off from its hub in San Francisco to New York and L.A. Some of its round-trip cross-country fares will run less than $300, which could put some price pressure on competitors like JetBlue and Southwest. Virgin says it's committed to trying to keep a smile on your face, and it offers some more tangible new extras as well, like free text messaging between passengers and USB, Ethernet and power plugs at every seat.
08/08/07 05:57 AM PT Posted on August 8, 2007 5:57 AM PTOh no you didn't, AT&T
Pearl Jam isn't happy. Portions of the band's set — part of a Lollapalooza concert sponsored by AT&T — were cut for the version broadcast on the Internet because their lyrics talked about President Bush. The company says the censorship was a mistake made by an overly-zealous Web content person. The band believes this points out the need for Net neutrality, so broadband providers don't have so much control over content.
08/09/07 04:56 AM PT Posted on August 9, 2007 4:56 AM PTAnother subprime shoe drops
Fallout from the subprime mortgage mess has hit Europe. The biggest bank in France, BNP Paribas, won't let investors from take money out of three funds with holdings in U.S. subprime loans. The bank's having trouble determining what these funds are worth. At the end of last month, they were valued at nearly $3 billion. Just last week BNP Paribas said it would be virtually untouched by subprime problems. Now it's 'Katie bar the door.' Overnight bank lending rates in Europe have taken a big jump, and that's likely to spell trouble for Wall Street.
You'll still have to go out for fresh donuts but...
Dunkin' Donuts thinks there's a hole in the retail coffee market and it has the perfect filling. Dunkin' has struck a deal with Procter & Gamble, that'll put its packaged java in Wal-Mart, Kroger and CVS stores. The move coincides with Dunkin's expansion into the West and South. The company plans to triple stores in the US to 15,000 by 2020.
08/13/07 04:52 AM PT Posted on August 13, 2007 4:52 AM PTAirTran, Midwest merger cookie crumbles
AirTran's $431 million takeover bid for Midwest Airlines — beloved by regular passengers for its Signature Service that includes chocolate chip cookies baked fresh onboard — has expired. No doubt good news for the folks over at Save the Cookie, a campaign that rose to petition the takeover attempt. And Midwest already has other plans cooking. The company said instead it's going to move ahead with an all-cash offer from TPG Capital. The private equity firm formerly known as Texas Pacific Group is offering $16 per share for Midwest.
Milk's glass is half-full
The USDA reports milk prices hit a record last month with consumers paying an average of $3.80 a gallon. That's up about 50 cents from January. Greater demand for more dairy in Asia where chains like McDonald's and Starbucks are introducing cheeseburgers and lattes to new tastebuds is part of the reason for the price hike. Rising costs for animal feed, shrinking European production, and droughts in Australia and New Zealand are also factors.
08/13/07 06:49 AM PT Posted on August 13, 2007 6:49 AM PTSinging the Big Box blues
We got some numbers from Wal-Mart and Home Depot this morning that say a lot about the U.S. economy. Wal-Mart turned in smaller-than-expected profits for the second quarter — and cut its profit forecast for the year. CEO Lee Scott blamed economic pressure on his customer base, saying it's no secret people are running out of money toward the end of each month. And Home Depot reported a 15 percent drop in quarterly profits. Just two words explain that one: housing market.
08/14/07 06:21 AM PT Posted on August 14, 2007 6:21 AM PTContaminated in China
Made in China has never sounded so ominous. Yesterday, Mattel announced a second recall of nearly 20 million Chinese-made toys, many with magnets inside and some with too much lead paint. It turns out China may have known about the magnet issue as far back as March. Someone with the China Toy Association confirmed today that the group has known about the potential dangers for several months, but she didn't explain why it took so long to do something about it. Mattel says with further testing, more recalls could be on the way.
And today there's a new kid staple to add to the list: baby bibs. The New York Times reports some brands of vinyl bibs sold at Toys"R"Us appear to be contaminated with lead. The Consumer Product Safety Commission says their own tests of baby bibs found any lead present was low enough that it wouldn't harm a kid chewing on or rubbing the vinyl. There is a potential risk of lead exposure if babies swallow pieces of cracked vinyl used on the bibs, but the agency hasn't pushed for a recall.
Latest Tinseltown deal: Terminated
Yet another casualty of the clampdown on credit: Hollywood. Goldman Sachs and Deutsche Bank were working on a deal with MGM to finance movies — up to a billion dollars. They were talking about backing a new Terminator film and maybe the next James Bond flick, but the Financial Times reports the banks have pulled out.
08/16/07 05:08 AM PT Posted on August 16, 2007 5:08 AM PTWholesome, nutritious and for sale
Kraft Foods is munching on the idea of putting its Post cereals division on the block. The Wall Street Journal reports Kraft could milk as much as $3 billion from a sale. The Post brand has names like Grape Nuts and Shredded Wheat. PepsiCo, owner of breakfast classics Life and Cap'n Crunch, is being tossed out as a potential bidder.
08/16/07 05:12 AM PT Posted on August 16, 2007 5:12 AM PTAlways blame it on the computer
If you want to go to Cuba, you can't just go online and book a trip. Well, actually for a while, you could do it on Travelocity — only it wasn't legal. The travel website just paid $180,000 in fines to the U.S. government for violating the 45-year-old embargo against Cuba. It booked almost 1,500 trips to the island between 1998 and 2004. Travelocity is the first online travel company to get in trouble over this. A spokesman said the trips went through because of "technical failures."
08/16/07 07:32 AM PT Posted on August 16, 2007 7:32 AM PTWhole Foods gets green light
Grocery chain Whole Foods has been waiting in the check-out line for quite a while now to buy rival Wild Oats. Yesterday, a federal judge gave the $565 million deal his blessing, but the Federal Trade Commission plans to appeal. So, Whole Foods might have to keep reading the tabloids for a bit. It's agreed not to close the deal before noon Monday, per the FTC's request.
08/17/07 06:35 AM PT Posted on August 17, 2007 6:35 AM PTCountrywide swings the axe
Looks like the nation's biggest mortgage lender is getting smaller. The Wall Street Journal reports this morning that Countrywide Financial has started laying people off, citing an internal e-mail sent Friday by a senior official at the company. We don't know yet how many people are losing their jobs, but the cuts are reportedly in the Full Spectrum unit which handles loans between prime and subprime.
08/20/07 06:09 AM PT Posted on August 20, 2007 6:09 AM PTSpeaking of hedge fund managers...
Jim Cramer had a heckuva career in hedge funds. Now, he's jumping up and down and screaming on CNBC's "Mad Money," but today's issue of Barron's says viewers could do a lot better than heed Cramer's stock picks. Sure, they're up 12 percent over the past two years, but they haven't beaten the market. The Dow was up 22 percent, and the S&P 500 is 16 percent higher. Still, the article does note that Cramer's advice is generally smart.
08/20/07 06:42 AM PT Posted on August 20, 2007 6:42 AM PTNot as romantic as old-fashioned stargazing, but...
It's amazing what you can see now without even leaving your computer chair. Like the universe. Today, Google launches a new service called Sky. It's part of Google Earth, only it looks the other way, so you can view stars and constellations and galaxies. Google says the project came up because some of its engineers thought it was cool. To download Sky, you just need the latest version of Google Earth.
08/22/07 04:38 AM PT Posted on August 22, 2007 4:38 AM PTEven the suits are starting to feel it
Wall Street types won't exactly get coal in their stockings this Christmas, but a group that tracks Wall Street bonuses says they'll probably be 5 percent smaller than last year. It's hard to feel too sorry for these folks considering the average bonus last year was $220,000, but some traders will have it a lot worse. The Options Group says one out of every three people who sell mortgage-backed securities could lose their jobs.
08/22/07 04:45 AM PT Posted on August 22, 2007 4:45 AM PTRunning out of real estate
The past decade has been a brilliant time to be a real estate agent, but with home prices plummeting and buyers short on loans, some agents are thinking about a career change. The National Association of Realtors says for the first time since 1997, it's gonna have a drop in membership. About 4 percent. Last year, the group had 1.4 million members, nearly twice as many as a decade ago.
08/22/07 05:29 AM PT Posted on August 22, 2007 5:29 AM PTA knight in banking armor
Bank of America is coming to the rescue of struggling mortgage lender Countrywide Financial.
B of A just made a $2 billion investment in Countrywide, buying non-voting shares that can be converted to common stock. If those shares are converted, B of A would hold more than 15 percent of Countrywide's stock. In other words, Bank of America is now Countrywide's largest shareholder.
Housing jobs disappearing fast
It's been a while since one industry has seen so many job losses, so quickly. In the past week, mortgage lenders have laid off more than 12,000 people. Yesterday, Lehman Brothers closed its subprime business. Accredited Home Lenders shut down 65 branches. HSBC closed an office. For the year, we're talking 40,000 jobs so far, according to Challenger, Gray and Christmas. The last time we saw something like this was after 9/11 when some 100,000 airline employees lost their jobs.
This one goes out to the Big Mac . . .
This week, a new museum opened near Pittsburgh and it's dedicated to a sandwich. The Big Mac and its two all-beef patties, special sauce, lettuce, cheese, pickles, onions on a sesame seed bun is 40 years old. It was created in 1967 by Jim Delligatti, who owned a McDonald's in Uniontown, Pennsylvania. The sandwich cost 45 cents back then. Today, Americans eat 550 million Big Macs a year. That equates to about 300 billion calories.
08/24/07 04:38 AM PT Posted on August 24, 2007 4:38 AM PTBuyout bargain for private equity
For the last couple years, private equity has paid full price for every company it's bought, and banks have been an endless source of credit to leverage those deals. Not anymore. Over the weekend, Home Depot dropped the price of its contractor supply business by almost $2 billion, so the three private equity firms buying it will pay $8.5 billion instead of $10.3 billion — a move that could mark the beginning of a bargain buyout era.
08/27/07 06:00 AM PT Posted on August 27, 2007 6:00 AM PTTime to make the almost-trans-fat-free donuts
Dunkin' Donuts is the latest food chain banking on a new image by reducing trans fat. The donut maker will switch to a new cooking oil by mid-October. It won't be 100 percent trans-fat free but pretty close — it says any trans fat used will fall below half-a-gram per serving. A spokesman for the Center for Science in the Public Interest says "if Dunkin Donuts can do that, anyone can," but he points out, the donuts are still "mostly white flour, sugar and fat." But they're so tasty. . .
Next up: Baskin-Robbins ice cream plans to zap the bad fat by the first of the year.
Who says hacking doesn't pay?
The New Jersey teenager who hacked the iPhone is getting a new sports car for his troubles. And a job. 17-year-old George Hotz struck a deal with a cell phone repair company in Kentucky called Certicell. He gave the company his two unlocked iPhones; They gave him a Nissan 350z. Hotz figured out how to make the iPhone work on cell networks other than AT&T. A spokesman for Certicell says the company has no plans to commercialize Hotz's discovery, but they would like to hire him as a consultant. In the meantime, he's off to the Rochester Institute of Technology.
Yup, it's a buyer's market
We haven't seen home prices drop this much in at least two decades. Standard & Poors said this morning that home prices fell 3.2 percent in the second quarter compared to last year. That's the biggest decline since S&P started tracking the numbers in 1987. Wall Street isn't taking it well.
08/28/07 07:48 AM PT Posted on August 28, 2007 7:48 AM PTEarthLink dropping half its workers
EarthLink is cutting about half its workforce — 900 jobs — and closing four offices in an effort to reduce operating costs. The Internet service provider and its rivals are struggling to generate revenues as more and more dial-up customers sign up for high-speed service from cable and phone companies. Wall Street liked the plan: The announcement shot the company's shares up 7 percent.
08/29/07 05:26 AM PT Posted on August 29, 2007 5:26 AM PTNFL: It's only a few bad seeds
The National Football League hasn't been getting the best press lately. The legal problems of players like Michael Vick and Pacman Jones have dominated the headlines, so today the NFL launches a new ad campaign to highlight its "good apples." Like new Cleveland Browns quarterback Brady Quinn, who just graduated from Notre Dame, talking about how he wants to go to law school someday. Other spots feature Tennessee Titans quarterback Vince Young talking about why he has tattoos and Browns linebacker Willie McGinest telling his mom he loves her.
08/30/07 08:11 AM PT Posted on August 30, 2007 8:11 AM PTBuh-bye free public Wi-Fi?
Last year, it seemed every city was building a Wi-Fi network, free Web surfing for all. But it's turning out not to be so simple. This week, we found out the Wi-Fi projects in San Francisco and Chicago are falling apart, and the one in Houston could be next. The main reason: cost. About 450 cities and counties are trying to build Wi-Fi networks.
08/31/07 07:39 AM PT Posted on August 31, 2007 7:39 AM PTLatest Posts
- Buh-bye free public Wi-Fi?
- NFL: It's only a few bad seeds
- EarthLink dropping half its workers
- Yup, it's a buyer's market
- Who says hacking doesn't pay?
- Time to make the almost-trans-fat-free donuts
- Buyout bargain for private equity
- This one goes out to the Big Mac . . .
- Housing jobs disappearing fast
- A knight in banking armor
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Latest Comments
- Yup, it's a buyer's market (3)
- Chai wrote: The real estate market had gotten way out of hand and I chee... [read]
- Look, it's a Virgin America plane! (1)
- Deborah Marcotte wrote: I'm looking forward to my first flight.... [read]
- You've heard of a booze cruise (1)
- yer ol pal wrote: this is absolutely pathetic..bunch o drunks on a train...a d... [read]
Marketplace Confessional
I've just listened to Mr. Stein's concern for the poor working man. No doubt he drove his Bronco to the station to make his plea for the common man. Honestly, Ben Stein weeping for the common man's fate? After my sides stopped hurting from laughing ...
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