Archive for April 8th, 2009

Chrysler intros a new SUV … these guys have stones!

April 8, 2009

Ken’s Take:

(1) Team Obama says folks want Segway crossover hybreds (see yesterday’s post); but the folks say they want pick-ups and SUVs.  Apparently the folks are too dumb to know what they want … but, they’re allowed to vote.  Go figure.

(2) How dumb is Chrysler making cars that make money instead of ones that lose money … apparently the path to profitability is paved with unprofitable mini-cars.  Go figure that one, too.

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According to CNBC:

Just a week after the White House scolded Chrysler for relying too much on gas guzzlers, the company is unveiling a new SUV.

Chrysler insists the Jeep Grand Cherokee is a crowd favorite: “Customers have told us they want this vehicle and that it’s the right size.”

The White House slammed Chrysler for having a product lineup so heavily weighted with trucks and SUVs. It added that the automaker does not have enough products in the pipeline to meet an expected increase in demand for small cars.

But Chrysler is standing by the Grand Cherokee. It’s profitable, recognizable and the No. 2-selling vehicle in the Jeep lineup. Grand Cherokee

One analyst said: “I think it’s going to be written up as being out of touch, but from a business standpoint, I think it’s the right thing to be doing,”

“It may be hard for Chrysler to please both the government, which is demanding greater fuel efficiency from the Big Three, and its customers, many of whom still demand big cars. It would be far more foolish for Chrysler to abandon its core competencies in the Jeep brand lineup than it is to come out with a new” Grand Cherokee” 

“To some extent, it’s refreshing to me to see them not kowtowing to the government.”

Full article:
http://www.cnbc.com/id/30103625

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Posted in Autos - Travel, Obama Administration | 3 Comments »

From Bad to Worse: New Competitors for Struggling Sirius

April 8, 2009

Excerpted from BusinessWeek, “Serious Threats to Sirius Radio”, by Olga Kharif, March 30, 2009

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Since its inception, satellite radio bragged that unique content represented a key competitive weapon in the crowded digital media market. Just last year, former rivals Sirius and XM spent a combined $446.6 million on programming and content alone. But as Web radio and mobile radio applications flourish, they are beginning to erode the value of Sirius’s pricey content deals.

Companies like the Web radio service Pandora, Foneshow, Stitcher, and Slacker—as well as traditional content providers—are broadcasting portable and mobile content that is cheaper or even free. Moreover, these upstarts can often replicate Sirius programming. One example: On Mar. 30, MLB will release an iPhone mobile application that will stream games live from all 30 teams—which is what Sirius customers get now—and offer video clips and live score updates for $10 for the entire season.

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For Sirius XM, this competition over price and content comes at the worst possible time. The company is looking to monetize its content through mobile phones to complement its traditional outlets. Auto sales, which have fueled Sirius’s subscriber growth for several years, have slowed to a crawl. Ditto for retail store sales now that electronics retailer Circuit City is gone. Even worse, many consumers have slammed their wallets shut amid the recession.

Now, new rivals are making Sirius look overpriced and stodgy.  To find growth, New York-based Sirius must change from a satellite radio company into one that offers pure content through new distribution channels, such as mobile.

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In its latest quarter, Sirius added a net 82,945 subscribers—down from 1.1 million in the same quarter of 2007. Growth could pick up if the radio service were to be bundled with Liberty Media-owned DirecTV. The two satellite companies could also cross-market to each other’s subscribers. Liberty, which has a 40% stake that is convertible to Sirius XM shares, is also working with the company on a business plan aimed at cutting costs, such as Sirius’s talent fees.

Still, it’s hard to fathom Stern taking a huge pay cut when his Sirius XM contract expires at the end of 2010. He has said he may retire then, but he also may shop around for a better offer if Sirius decides not to pay. Stern contributed roughly 2 million of Sirius XM’s 19 million subscribers. While a near-10% customer base is worth plenty, Sirius may well decide it is not worth $100 million annually.

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The New Competition:

Some of Sirius’ 69 music channels have already been replicated online. As much as 40% of Slacker’s 1 million monthly listeners come from mobiles. The service is free for those willing to listen to 30 seconds to two minutes of advertising per hour. For $3.99 a month, Slacker has no ads and allows song skipping.

iPhone users can now listen to talk shows through a service called Stitcher, which grabs RSS feeds from online podcasts and allows users to “stitch” together custom radio channels of popular news and talk shows. Stitcher users listen to 5 million minutes of radio a month, up from 1 million last August, and is on track to reach 1 million users by the end of 2009.

Foneshow lets any phone with text messaging capabilities to catch custom talk radio programming.  Whenever a new show segment becomes available, your phone receives a short text message with a link. You hit “Send,” and your phone starts streaming audio, which you can pause, skip or forward to a friend.

This summer, Myine Electronics, begun by two former satellite radio hardware engineers, will launch a device called Abbee. The $250 gadget scans FM stations and records songs onto an internal hard drive while erasing all commercials. The gadget has a cable for use in a car, the domain of satellite radio.

Edit by DAF

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Full article:
http://www.businessweek.com/print/technology/content/mar2009/tc20090327_877363.htm

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Posted in Digital Media, Satellite Radio & TV | Leave a Comment »

Why Zara Stays Strong as Other Retailers Slip

April 8, 2009

Excerpted from WSJ, “Zara Grows as Retail Rivals Struggle” By Cecilie Rohwedder, Mar 26, 2009

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Defying the recession with its cheap-and-chic Zara clothing chain, Spanish retailer Inditex SA posted strong sales gains that show how low prices and a rapid response to fashion trends are enabling it to challenge Gap for top ranking among global clothing vendors.

The improved results highlight how Zara’s formula continues to work even in the economic downturn. The chain specializes in lightning-quick turnarounds of the latest designer trends at prices tailored to the young — about $27 an item.

While apparel chains in the U.S., Europe and Asia are struggling and closing stores, Inditex reported a 10% sales gain and higher gross margin, which already exceeds many rivals. A fast logistics system allows it to get clothes from drawing boards to stores in less than two weeks, compared with an industry average of nine months. Its lean inventory and fast shipments allow it to avoid profit-damaging markdowns.

Revenue hit €10.41 billion ($14 billion) for the fiscal year … up from €9.44 billion in 2007. Annual profit was flat at €1.25 billion, but the company said it expects same-store sales to increase this year. The company’s gross margin rose slightly to 56.8%, reflecting the lean inventories.

In contrast, San Francisco-based Gap, the largest independent clothing retailer by revenue, last month posted a 23% decline in full-year sales … It plans a modest 50 new stores this fiscal year. Gap’s gross margin rose, but to 37.5% …

In recent years, Inditex has become known as a low-priced alternative to designer boutiques. Zara stores sit on some of the world’s glitziest shopping streets — including New York’s Fifth Avenue, near the flagship stores of leading international fashion brands — which make its moderate prices stand out.

“Inditex gives people the most up-to-date fashion at accessible prices, so it is a real alternative to high-end fashion lines … Gap, Benetton and others haven’t been alternatives because they sell more basic styles.”

The chain keeps profits high by avoiding advertising and by building a low-cost perception. That is helping as shoppers trade down from higher priced chains … While competitors are resorting to deep discounting, Inditex isn’t. “We prefer to stick to our commercial policy even in the current environment,” said Marcos Lopez, capital-markets director at Inditex … “The key driver in our stores is the right fashion. Price is important, but it comes second.”

In the short term, Inditex must still weather the uncertainty over how long and how deep the economic slowdown will be in Spain and Western Europe, which together make up 79% of its sales.

Edit by SAC

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Full Article:
http://online.wsj.com/article/SB123801606310041287.html

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