Opening Bell: 5.12.06

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Arcelor to go ahead with 5 bln euro buyback plan (Reuters)
Arcelor is doing everything in its power to stave off the Mittal hostile takeover. Yesterday it sued Mittal for a patent violation -- yes, a patent violation for a steel product. Today it confirmed a buyback plan. This has Oracle, Peoplesoft written all over it, though we all know how that turned out. If Lakshmi Mittal really wants to lower the boom, and get the Arcelor shareholder panicking, he needs to lower the offered price, and then lower it by $100,000 every half an hour until management agrees. That'll be like the tactic that hostage take in the movies, in which they kill a random hostage every hour. Works every time; it's just devastating to the psychology.
Yahoo CEO laments not buying Google (CNET)
Uh, yeah, that one should be pretty obvious. When your rival is crushing you at every turn, stealing market share, and completely changing the game -- yeah, his regret is understandable. That being said, Yahoo's track record isn't good when it comes to nurturing products. They often build them, and then let them rot, failing to keep pushing them forward. It's not hard to see this same fate having happened to Google; the world should be thankful that it never happened.
Wal-Mart Eyes Organic Foods (NYT)
Wal-Mart is really making its pitch for the Hank Paulsens of the world. They're going upscale, and now they're going organic. Will they be able to overcome their image to get the shoppers of organic foods into the doors? We wouldn't be surprise (at all) to see some lobbying of the FTC to prevent the company from selling organics, as people claim that it's unfair to small organic retailers for a big company like Wal-Mart to also sell organic products. That being said, all this might reveal something pretty important with the company. All these moves about going upscale could be a pretty strong admission that growth in their core markets is over. Supposedly they see little slowdown in new store openings, but realistically it seems otherwise. Overhauling stores, adding sushi bars and organics are all risky things. They wouldn't be doing them if their bread and butter still had its groove on. Another angle, is that this is probably a mixed blessing for the organic farmers in America. It equals more volume, sure, but at the cost of dealing with the most powerful monopsony in the world, a buyer that has almost total pricing power. Good luck


Is GM's Turnaround Temporary? (BusinessWeek)
It doesn't take much to get labeled as a turnaround these days, huh? If you need a memory refresher, a few days ago GM announced an accounting trick that magically (and yes, it was magic) turned their last quarter into a profitable one. Again, pure accounting. The quarter wasn't reflective on anything, least of all their ability to be a money making enterprise, yet BusinessWeek is already calling it a turnaround. It doesn't matter that they ask if it's temporary. The problem with GM is not accounting, it's unresolved problems, none of which have yet to be resolved. When they start gaining back market share, cutting their labor costs, and focusing on something other than gas-guzzling SUVS, we'll be happy to start talking turnaround.
As the world turns at Time Inc.'s Fortune (Marketwatch)
It's hard to know how to a respond to an article claiming that Fortune is America's most under appreciated magazine. That's the take of Marketwatch's Jon Friedman though. Funny, here we always thought that Worth deserved more respect.
Disney regaining its magic touch? (MSN Money)
There always seems to be a problem when writers discuss media companies. They look at some TV shows, judge how those are doing at the box (or in the Nielsens) and then try measuring the company's health from that. Of course most people don't invest based on the coming summer's box office for good reason, such things really don't show anything at all about the health of the company. It's like buying GE every four years when they have the summer Olympics. Granted, it's not easy to figure how a company is really doing when they're product is subject to such a wide variation in outcomes, as is the case with the movie business. But still, this kind of hunting and pecking for a few datapoints won't get us very far. If anything, Disney feels familiar to HP after Carly left. You always get a nice bounce after a bad CEO leaves, but over the long term it doesn't mean much.
Televisa Enlists Equity Funds For Univision Bid (WSJ)
Here's an interesting question for all you anti-trust wonks out there (granted, there probably aren't many of you reading this). Does the size of the market depend on the niche? In other words, is Univision considered a TV station, just like NBC, ABC, CBS, or are they specifically a Spanish-language TV station, whose status as an independent company is important for the market. Please comment if you know.
In Our Post-PC Era, Apple's Device Model Beats the PC Way (WSJ)
Everyone is starting to catch on that something is happening in the PC industry. The old grey boxes are giving way to the supremacy of a well-designed device. It's probably too early to call the grey boxes dead, but it seems clear, that people want features. They don't just wanted commodity guts and software, as they got on their desktops. At the moment, it explains why the Apple model continues on overdrive, while the Dell model sputters. Still, Apple is subject to the vagaries of people's fashion tastes, while Dell boxes will keep getting replaced in workforces all over the world, so it's not clear that one is objectively better than the other. Still, the old assumptions about how to win the computer business need to be questioned.

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