Opening Bell: 2.8.07

Publish date:

Unilever's Sales Growth Misses Analysts' Estimates (Bloomberg)
Food giant Unilever missed earnings estimates as demand slumped in Europe. And here we thought that a company like Unilever was supposed to be immune from things like slumping demand. What, were people less hungry this last quarter than they have been in the past? Or maybe it was that they weren't washing their clothes as much, hitting the company's detergent lines. Actually, that was the case the UK, and in France, people spent less on hair care products -- something we don't even want to think about.
Blackstone lands Equity (Chicago Tribune)
A lot of reports are calling the Blackstone to be the winner of the bidding for Equity Office, as Vornado officially gave up. Just a suggestion, perhaps "winner" should be in quotes, since the firm's now $39 billion poorer, far more than it originally intended to be. This could become the classic case of the so-called "winner's curse", the phenomenon found in bidding games, which explains why the winner typically overpays.
Waiting List Gone, Incentives Are Coming for Prius (NYT)
April promises to be a watershed moment for US culture. For the first time, Toyota is going to start advertising -- and offering incentives -- for its iconic Prius hybrid car. In the beginning, of course, you had to either get on a waiting list or be Larry David to get your hands on one. But it's core market of enviro-conscious yuppies may be a bit saturated. There are no waiting lists any more, sales are flat, and now it's going to try selling them to the proverbial Joe Sixpack. Lease prices may be as low as $219 a month. But what's the point when it's not exclusive anymore? It's a bit like when you got a Gmail account, but you were bummed, cause you weren't in the beta phase. There's no rolling back time, you'll never be among the first Prius drivers.
HSBC Reports Rise in Loan Losses (Dealbook)
If the housing market has already turned around, you'd never guess it today. HSBC announced that its loan losses came in 20% higher than anticipated, with loan losses coming in at more than $10 billion for 2006. Long story short, rising interest rates made it harder for people to make their mortgage bills. Meanwhile, homebuilder Toll Brothers saw its results fall as customer cancellations piled up. Just imagine the gall of those people. They come in and promise to buy a new home, and then they call up saying "yeah, about that house... not so much." Furthermore, the company will have to do a major writedown in the value of its land holdings, since without houses to build and sell on the land, the land itself isn't worth so much.

For productivity, vigorous quarter ended sluggish year (AP)
One could argue that in the end, productivity is the only measure that matters. The one thing you hope to see, when you look at a company, or a worker, or an economy is how productive it is -- how much it can produce with in a finite amount of time with a finite set of inputs. That's not to say that actual measurements of productivity are all that accurate. Like most economic indicators, you have to take the numbers with the requisite grains of salt. But if you put any stock in official indicators this last quarter was a solid one on this front. Productivity jumped 3% in the final three months of the year, although ominously, wage pressure grew by 3.2% percent, meaning the house got a .2% edge.
Goodbye TradeSports-InTrade (Midas Oracle)
Those of you reading this probably have fairly traditional tastes in trading -- stocks, bonds, options, etc. But for those can't be bothered with such pedestrian securities, there's prediction markets, where you can trade Barack Obama futures while making bets on the the exact month that the US launches an invasion of Iran. Unfortunately, with the crackdown on gambling -- and for some reason this activity might fall more on the gambling side of things than the investing side of things in the eyes of US regulators -- this market is drying up. It's getting harder to fund accounts on sites like TradeSports, and it's particularly hard to do things like arbitrage between two different sites, again due to restrictions on money transfer. Oh well, no doubts something will spring up. Maybe the local OTB will start taking bets on these types of things.
Disrupting the ink jet oligopoly (Oligopoly Watch)
Earlier this week, Kodak announced its entry into the inkjet printing market, and its hope of selling low-cost ink that will threaten HP's lucrative business in the stuff. Oligopoly Watch offers a nice breakdown of the state of the market, which highlights HP's outright dominance. Furthermore it notes that while HP may own the market, it's far from the only player. So if Kodak starts to gain some traction by selling the stuff cheap, it's easy to imagine competitors like Canon and Lexmark following suit.
Zell steps into Tribune fray (Chicago Tribune)
One of the follow-on effects of the Equity Office deal is that it may hasten the sale of the Chicago Tribune. EOP's founder, Sam Zell, now a bit richer, is said to be interested in his hometown paper, which has been the subject of much sales speculation. According to those in the know, Zell is interested in a deal that would include taking out a lot of debt to give shareholders a fat one-time dividend -- sort of a token of appreciation.
Retailers Release Post-Holiday Sales Amid Likely Boost From Cold Snap (WSJ)
The recent cold weather that's gripped much of the nation -- and causing much irritation to the fellow bringing us roast pork with broccoli for lunch every day -- is turning into a mini-boon for retailers that had been struggling of late. It's nothing major, but at least stores are clearing out their winter clothes, inventory that had piled up during the "Al Gore Summer" we had been experiencing through mid-January.