Opening Bell: 7.21.06

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Profit Lags as Microsoft Spends to Meet Competitors (NYT)
It's been awhile since Microsoft had any good news for the street. For years the company's flat-lined as promises of growth always seemed to be one year around the corner. Well, the company still isn't growing on the profit front. Major costs related to the XBOX bit hard into the company's typically fat margins. But revenue was up a solid 16% over the previous quarter, and the company announced huge buybacks over the next several years, which investors always seem to like. For 2007, it pegged its forecast at the high end of analyst expectations. The news was taken well, as the stock rose over 5% after hours.
SEC May Scrap 'Couric' Rule On Pay Disclosure
Those in the entertainment business often align themselves against the evils of big business, though of course most of them are as money-hungry as anyone else. It finally took the SEC to expose this, when it put forth executive disclosure regulation that would have required not only CEOs to disclose their pay, but also high-paid actors and entertainers. This of course infuriated Hollywood, which no doubt resented seeing actors lumped in with CEOs. Companies also claimed that it would be bad for business, to have to expose trade secrets in this way. The rule became known as the Katie Couric rule, as it would have certainly exposed how much money she's making. It appears now that the Katie Couric law will be scrapped, much to the delight of, well, Katie Couric among others. The reason given for the change is that the law is supposed to help investors measure 'pay-for-performance'. But considering how significant the pay of actors is, and how much doubt there is about an actors ability to turn a film into a hit, it would seem this is a legitimate 'pay-for-performance' issue.
Google Piles On Profits (San Jose Mercury News)
While Microsoft showed promise in the same way someone with a broken leg shows promise when they finally go into physical therapy, Google simply continued its sprint. The company blew past expectations yesterday -- almost as expected -- as it continues to take up market share from internet rivals. This of course sent the analyst community into a lather, as they danced all over each other to talk about how great Google was, and how good this quarter was, and how good they expect the next quarter to be, and how they're kicking Yahoo's ass, and how they might kick Microsoft's ass, etc. It was actually a little embarrassing to watch.
Boeing chief shows his caring side (Airline Business)
Typically the two companies are at each other's throats, but given the trouble that Airbus is having, even Boeing is stepping in with some words of encouragement. If we were in Boeing's shoes, we'd of course be gloating. But Boeing veep Alan Mulally said at a press conference, "Don’t give up... New airplanes are hard…we have a lot of compassion with what they’re going through." That's honestly one of the nicer things we've heard in business, and during cold times such as these at Airbus, it has to make them feel a little better.


Toyota shrugs off GM's talk of merger (AP)
There had been talk earlier in the week that Toyota might be interested in getting involved, in some way, with GM. Turns out, not at all surprisingly, that that was largely a false rumor, floated by some reporter to get his name in the paper. There's no reason for Toyota to be particularly fearful of a Renault/GM tie-up. The only reason to step in and support GM was to look like a good guy to US lawmakers, but the rapid growth of Toyota's manufacturing in the US probably takes care of some of that.
DRAM Price Fixing (Oligopoly Watch)
The shadowy, worldwide DRAM oligopoly is a tough one to follow. They lurk at night, trying in vein to squeeze a few more dollars from a product that's always falling in price. Even when they coordinate, they often lose money, though they don't lose enough money to make some people happy. If it seems like there's a never ending string of suits against the DRAM makers, you'd be right. As soon as they settle one, the next round comes out -- the latest being various states which are suing them. Of course, all this litigation just adds to the consumer cost of DRAM, which was the problem we're trying to solve here, right? Either way, Oligopoly Watch has a nice overview of the players in this conspiracy, and what exactly went on. Might be a handy cheat sheet to have on hand when your borough launches a suit against one of them.
Do-It-Yourself Decaf (BusinessWeek)
It's Friday, so we'll take the liberty of linking to this BusinessWeek article about the wonders of human innovation. The magazine reports on a fascinating new technology that lets you stir the caffeine out of a cup of coffee. So suppose you're in a diner somewhere and you ask for decaf (not that we'd know anyone who does this), and all the locals just laugh at you. No worries. Order a regular cup of coffee, and then using a stirrer that looks like a tongue depressor, just suck all the caffeine right out. Brilliant. There has yet to be any third party proof that the technology works, but the implications are larger than at first you might imagine. Restaurants could stop dedicating pots and brew cycles to decaf, instead letting customers do the process at the table. This could be a major cost savings and efficiency booster. Also, the technology could have other uses. The company thinks a similar device could be used in cocktails to eliminated date-rape drugs. That's pretty sharp. Let's hope this doesn't fall into the dustbin of wacky devices that never see the light of day. When was the last time a major breakthrough was made in the world of decaf?
Dell warns, shares tumble (CNN Money)
They may still be the world's number one computer company, and the computer industry may still be growing rapidly, but the pricing pressures hitting everyone else in this space (Intel, AMD) are coming down on Dell. The company warned this morning that it would fail to meet already-lowered expectations for the quarter. Shares are getting slammed in pre-market trading, already down over 10%, to what would be a brand new 52-week low.
Ford says it is open to alliances (AFX)
Ford is apparently feeling a little miffed that it's been left out of all the news about GM and Renault. The company claims it is open to possible alliances, though it won't confirm a story that Bill Ford asked Carlos Ghosn out on a man date. Of course, even if something does materialize between GM and Renault (or Nissan), that doesn't necessarily exclude Ford from the action. If Carlos Ghosn can manage three companies at once, he can probably manage four. What's one more struggling Detroit automaker for a guy like that?

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