Opening Bell: 5.25.06

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Why Wasn’t Spitzer Involved in the Milberg Weiss Investigation? (WSJ Law Blog)
Now there's a question we'd love to get an answer to. Why is it that Spitzer, with his Superman quality of being able to show up at any crime at any time, was totally absent from the investigation of class-action law firm Milberg Weiss? Is it because they were big Democratic supporters? Or is it simply because it really didn't come across Spitzer's radar? And even if we give him the benefit of the doubt, that he really never had an opportunity to become involved in the Milberg Weiss investigation, what about now? Why isn't he announcing a new initiative to look into practices and class-action firms? Surely, a case like this should give the impetus to look deeper at the workings of the industry. It's at least as outrageous as how mutual funds time their trades, no? Just curious.
Starbucks and the Bee (Conglomerate)
At some point, Starbucks decided that the coffee business was boring and that it wanted to be a media company, or at least an "editor of culture". They sold CDs there, they reasoned, so why not do more to leverage their physical locations. Perhaps, if you've walked into a Starbucks of late, and the odds are pretty good that you have, you've noticed that they've gotten into film promotion, heavily flogging the film Akeelah and The Bee. Well, in case your curious how Starbucks has done as a film promoter, the answer is 'not good'. Revenue has been disappointing for the film. Though the company claimed that it chose Akeelah and The Bee, in part, due to its positive social message, CEO Howard Schultz smartly didn't 'go there' when asked about it on the conference call. So is Starbucks really a media company or are they a coffee company? Somehow we think it will take them several failed experiments before they see the answer.
Hello, Young Workers: One Way to Reach the Top Is to Start There (NYT)
Have you been on The Street for several years and still aren't making as much as you think you deserve? Still haven't attained the level of professional achievement you expected to by now? It could be due to the job you took when you get out of college. A new study demonstrates that the job people get when they first get out of college goes a long way in dictating career success in other respects. The study looked at the cohort of Stanford University graduates in 1988, coming into the job market right after the crash. Because there were few good banking jobs, their average salary was lower than in surrounding years. 18 years later, people in that group are still making less, on average, than other Stanford graduates around them. One possibility though is that the condition of the time simply pushed these people away from finance and they never got back into it. Still, the advice of the researchers is to do well, and have luck on your side. Of course, that doesn't really help you now, 18 years later.
Dell's Minimalist Stores (BusinessWeek)
Dell's been doing a lot of pride swallowing lately as their stock has cratered, and the company's lost share to HP. First they announced that after years of resistance, they would finally relent to the AMD juggernaut. Now they're bowing to the retail wave, opening up two trial stores. Well, they're not actually stores in the traditional sense, but rather Dell galleries where people can try out products and order new ones. This retail question isn't minor for the company. If they actually decide that having physical locations, pre-fab computers and channel partners is the right way to go, it's going to involve massive restructuring and expense, with no guarantee of success. It'll be interesting to see what the company says about their new locations, which are in Dallas, TX and Nyack, NY. By the way, the Apple stores get a lot of attention, which is fine, but the gallery model can be awesome too. If you work in the area, go check out the Samsung gallery in the Time Warner Center. It makes the Soho Mac store look like a Radio Shack (almost). Anyone up for a road trip to Nyack?


Are You a DISH Customer With a DISH DVR? Good Luck With That Next Month Pal. Thoughts on TiVo's First Quarter Earnings Conference Call (Thomas Hawk)
Tivo has a coherent strategy to survive in the DVR business. Obviously, the concerns over the company are well known, like the fact that competing boxes are subsidized by the cable companies, and that they're industry is commodifying (though the company is clearly trying to prove that it's not). But Tivo's plan is simple and elegant -- use the courts to shut its opponents down. After having won a legal battle against Echostar, the company is actively seeking an injunction against the company, i.e. they're pushing for every box to simply be shut down, sort of like the fate that RIM nearly faced in their patent battles against NTP. SO yeah, if you have a DISH DVR, good luck with that.
Many accept GM buyout, giving stock an 8% boost (Louisville Courier-Journal)
GM certainly has had an impressive run of late. First their accountants managed to conjure up a profit. And now analysts are expecting that the buyout they offered to each employee -- because they want their employees to quit -- may actually be accepted by several of them. This caused an analyst to actually raise his rating to a buy, causing the stock to shoot up. There's probably some interesting game theory at these levels, about what the optimal strategy is for any given employee. For example, let's assume that if no employees accept the buyout, the company goes bankrupt and most lose their jobs. On the other hand, if, say, a third of the employees accept it, than the company survives, and the ones who remain do quite well over the next several years. How do large groups coordinate something like this? What's a dominant strategy from the beginning?
Venezuela Seeks 60% Share in Heavy Oil Joint Ventures (Bloomberg)
Normally, we'd get worked up over something like this, and say that Venezuela will get their comeuppance etc. But now with a little more perspective, and knowing that Alaska engages in the same tactics when the oil cash is flowing, we'll cut 'em a break. This is global politics; this is the game. But this at least puts the number out there, for what Venezuela is demanding of the refigured joint ventures. One positive is that the government will likely allow for an increase in oil production, which should be positive for buyers down the line.
MSN Is in Talks To Buy Provider Of Wireless Ads (WSJ)
In case you didn't realize it, there's been a major shift at Microsoft. Historically, the company has been about homegrown innovation, and it's paid off well for their shareholders. But they've become awfully acquisitive of late. They seem to be announcing a new acquisition every week or so. Many have been in the security space, but also on the advertising front, where they hope to remake themselves as a Google. The other change is that historically Microsoft has been the proverbial picks and pans of tech, letting others go out looking for gold. But now they're been put into the gold business itself, hoping to get its sites in front of as many eyeballs as possible. It's a tough question, and at the moment the company seems to be going about things backwards. They're so concerned about advertising, and getting advertisers (Ballmer even shouted 'advertisers, advertisers, advertisers' at a recent). But all of this push into ads will be meaningless if they don't have publishers and web surfers. Ultimately, if they get the volume of views the advertising will come; no problem. But it won't work to let the tail wag the dog.

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