Opening Bell: 1.25.07

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Ford loses $12.7 billion in 2006 (Detroit Free Press)
Let it sink in, Ford lost $12.7 billion in 2006. Consider what that means. After all of the effort and production and sales of cars, the company ended up with significantly less than they started with. In theory, if the company had just frozen time, and just ceased operations and halted all payments they would have performed far better than they did. Granted, that's impossible, but even if they had just halted time in the final quarter of the year (again, rather difficult, we'll concede), the company would have saved itself nearly $6 billion. And it's probably not going to get any better any time soon. The company anticipates "further deterioration" in 2007, with many plants to close and many employees to be shown the curb. There is one bit of good news: the company has unveiled a new hydrogen-powered, rechargeable car.
EBay Shares Jump on European Growth, Profit Forecast (Bloomberg)
Tech earnings seasons is shaping up to be some sort of version of "Revenge of the Nerds" where all of the picked-on companies do well, while all of the popular companies take it on the chin. Apple got hit after its earnings, so did AMD. Yahoo and SUN rose after theirs, and now eBay has turned in positive numbers, meaning that perhaps CEO Meg Whitman gets a reprieve on termination, as has been anticipated in the media for some time. Much of the company's growth came from Europe, with particularly strong results in the UK.
Incomes and Inequality: What the Numbers Don’t Tell Us (NYT)
Tyler Cowen probably is risking his tenure as a NYT econ columnist with a piece questioning the conventional wisdom on income inequality. After all, the Times is nothing but conventional wisdom on many of these issues (on CEO pay, the paper might even be called "radically conventional"). Cowen makes a few simple points, such as the fact that growth in income inequality can be partly explained by the again population -- disparity is greater among the elderly, who have had more time to diverge. It's also greater among the educated, who tend to have a wider range of paths (e.g. some choose to be financial bloggers, while others actually choose to work in finance). Other apparent disparities can be chalked up to tax and accounting issues, which isn't nearly as sexy as saying the game is rigged.
Norway Deems iTunes As Illegal, Based on Non-Operability With Other Devices (PaidContent)
Ah, those high-minded Europeans with their crazy ideals about technology, freedom and interoperability. Looks like Apple's iTunes may have to pull out of the Norwegian market (too bad), because the government there doesn't like the fact that your tracks bought of iTunes won't play on a Zune. Granted, the fracturing of music does really blow -- then again, it shouldn't be illegal to blow.


McDonald's 4Q profit doubles (AP)
For big stalwarts like McDonalds there's probably not much room to grow in the US, but like others which have relied upon siphoning dollars from overseas and then importing them back here (wait, isn't that what other economies do to ours), the company hit a solid double in its latest report. It was also helped immensely by the spinoff of Chipotle, its burrito chain, which has captivated the nation with giant, inauthentic burritos, that apparently taste really good. As for its growth strategy going forward, give yourself a good star if you guesses that it has the word 'China' in it.
Selling state lotteries (Ideoblog)
We mentioned earlier this week that the state of Illinois has decided to put its lottery on the block, taking $10 billion in cash now, in exchange for permanently transferring the organization to private hands. As Larry Ribstein notes, the real question for private buyers is whether the state can be trusted to stay out of the Lottery game in the future. They've promised monopoly status to the buyer, but what's binding the state to that promise? Ultimately, very little ever binds the state. It might even be worth expanding this question to the current craze among banks for buying formerly state-owned assets and other monopolies, like toll roads and airports. How far can you trust the state in not getting back into the game?
Yahoo at $29? (Crossing Wall Street)
Ok, so Yahoo is going to release Panama, it's new platform or something or other that's supposed to help it compete with Google. But that doesn't mean it is Google. As Eddy Elfenbein notes, the stock is trading at a richer valuation than Google, and until proven otherwise, Yahoo still appears to play the Dan Quayle to Google's JFK.
Best Buy to Open New Stores in China (AP)
Apparently, you can assemble electronics in China, take them out of the country to be rebranded by either a Korean or Japanese manufacturer and then hand them over to a US retailer that will then sell them back in China. Contrary to what you might think, the whole process really works. Soon after opening up its first store in China, Best Buy says the store will become one of its top 10 worldwide. And because of that it's set to open more there, as the country becomes an important part of its growth strategy.

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