Opening Bell: 8.9.06

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News Corp. profit rises 19 percent (Reuters)
News Corp. gets a lot of credit these days for plunging head first into the new media pool, with its acquisition of MySpace (hey, did you hear? They just sold the search rights to Google for a cool $1 bln!), and its potential acquisition of any number of other profit-less web startups. But don't let that fool you. how cool can a company called "News Corp.", quite arguably the most boring name ever for a company (though close second goes to the Corporate Executive Board), actually be? So when its profits surged yesterday, it wasn't due to MySpace, or even its edgy cable channel Fox News. It was mainly due to Ice Age: The Meltdown, the kids movie. If you're a parent and you had to take your kid to it 6 times, sorry about that, but at least you contributed to solid returns. Of course, even this wasn't enough to really excite shareholders, who really just want to see the company launch a Fox Finance channel. Or maybe we're just projecting.
No Smoke, No Foul? Critics Disagree (NYT)
Perhaps we were a little early, but we've been predicting a rise in smokeless tobacco for a few years now. Let's weigh the evidence. First of all, you can't smoke in bars anymore (well, in the bars you go to). Second, even if you aren't in a bar, you're likely to be in the presence of some busybody who tells you "um, you're interfering with my right to breathe". Smokeless tobacco solves this problem, unless someone claims the right not to look at someone spitting. Also, there's still the whole hipster/trucker hat fad, which has admittedly died down a bit, but if those guys had any guts at all, they'd all be packing Skoal. In fact, it was the absence of Skoal (or Kodiak) that tipped us off those guys were just frauds. But, perhaps the reason it hasn't taken off is that Big Tobacco hadn't gone on the path to becoming Big Smokeless Tobacco yet, something that's changing. The companies are increasingly marketing new variants of the product, including a teabag-like packet that doesn't require spitting! Innovation at its finest. And because this form of the product doesn't make you puff out your cheek and spit, we'll take even money that it becomes popular among women, though currently 92% of the customers are male. It'll be Williamsburg hipsteresses that lead the way on this trend.
RUN ANGELO RUN (New York Post)
You can run, but you can't run forever. The Feds believe they are closing in on fugitive hedge fund manager, Angelo Haligiannis, who cheated investors out of $78 million. Haligiannis was found guilty, and had the guts to flee the country on the night before he would likely have been sentenced to 10 years in prison. He's believed to be living in luxury on $15 million that he stashed away in foreign accounts. Though law enforcement claim to getting closer, they must not be totally confident that they'll find the guy, since they're urging anyone who knows of his whereabouts to call 1-877-WANTED2.
Found what you're looking for? U2 inspire Irish ire by avoiding tax (The Guardian)
In light of the stake that Bono's Elevation Partners has taken in Forbes magazine, there's been a sudden increase in interest in the band's finances. In fact, they're running into some of the same problems seen by hedge funds and Texas' Wyly brothers; they're taking flak for where they store their money so as to avoid taxation. It's funny that once Ireland itself was considered a low-tax zone in Europe, and now Irish authorities are complaining that Bono & Co. keep much of the band's finances in the low-low tax Netherlands. The band also has some interesting real estate interests. A massive construction project known as the U2 Tower is being built in a relatively undeveloped area in Dublin, angering many residents who see it as a blight. The tower will house, among other things, the bands recording studios. It's not clear, however, how much financial interest the band actually has in the eponymously named office building.


Aramark Going Private, Again (Forbes)
The company to blame for all sports stadium food being bland and the same is going private. Aramark, the concessionaire, is being bought out by a group of investors led by its current CEO. At least officially there doesn't seem to be much of a case for going private, other than 'it seemed like something to do', as there's unlikely to be any major management or operational changes. Also, the Philadelphia company hasn't endeared itself to the residents of Philadelphia. Because of its exclusive contract with the baseball stadium there, fans can't get an decent cheesesteak at the park; sure there's a stand with the Geno's brand (a local cheesesteak powerhouse), but they're compelled to use Aramark ingredients. At least one local fan was definitely "underwhelmed".
Flavor and fragrance oligopoly (Oligopoly Watch)
Shh... don't tell the anti-trust crowd about this, else they'll have a fit. Oligopoly Watch, which is the best place on the 'net to read about oligopolies, has the dirt on the flavor and fragrance oligopoly. Turns out that 43% of the flavor and fragrance business is concentrated into just 4 companies. As Oligopoly Watch puts it, "This is by any terms an oligopoly." So far it hasn't seemed to have been much of a problem, as any strolling tour through New York will confirm an abundance of tastes and flavors all competing for your money. But certainly to some, the idea that a few companies would control this market, would certainly be galling. "Imagine," they'd say, "if there were an oligopoly on color". It's true, that would definitely bite. Still, we're sure the real money is in the long tail (oh isn't it always?) of flavor and fragrances.
A Bank for Every Block (NYT)
We're really into the high prevalence of ATMs in New York, particularly if they're associated with our bank and don't charge a fee. Of course, everywhere we go takes the card, and it's really nice to get the miles. And though this author still gets physical checks in the mail each month, more and more of our banking is, obviously, done online. So it always seemed a little bizarre that every street must be littered with expensive, employee-intensive retail banking outlets. Again, it's convenient, but is it really necessary? Apparently, the answer is increasingly no, as the big retail banks are tiring of the extensive buildout, and the attendant capex. Furthermore, they realize they're going against the grain, and that physical branch banking is not what it once was. Now that every block has a couple of banks, the expansion is nearing its end. And if we had to bet, quite a few of these branches will shut down over the next few years.
Toll Brothers Cuts Estimate For 4th-Period Home Deliveries (WSJ)
Toll Brothers, "The McMansion Co.", announced that they would slash their forward estimates based on soft demand for the company's brand of incredibly dull luxury homes. So either the number of millionaires buying new homes has decreased, or the millionaire demographic suddenly got an injection of taste, and is looking to buy elsewhere. Based on its backlog, the company said it will sell significantly fewer homes in its forth quarter, while actual signed sales were way down.
Why Wal-Mart wants to sell ethanol (Fortune)
Some quick answers: subsidies, the appearance of being 'Green', putting more pressure on local gas stations to engage in the big capital investments necessary to sell E85, patriotism, etc. That's why Wal-Mart wants to sell ethanol. Though if you're looking for the 2,000 word answer, you can click the Fortune article above.

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