Archive for September 8th, 2010

Mission Accomplished at GM? … We’ll bet ‘under’ (with a caveat).

September 8, 2010

GM is rushing to IPO before the mid-term election to “prove” the wisdom of the bailout.

Pundits are saying that the company’s politically motivated IPO could jeopardize taxpayer ”investment.”

Here’s why:

  • Taxpayers have somewhere between $40 billion to $60 billion “invested” in Gov’t Motors
  • For taxpayers to come out whole, the Treasury’s 304 million of the company’s 500 million common shares would need to average $131 to $197 per share
  • That would put GM’s implied valuation at somewhere between $65 billion to $98 billion.
  • Ford has a market value of only $40 billion.
  • Ford’s near-yerm earnings are expected to be six times those of GM.
  • If investors valued both companies the same …  taxpayers would incur a 50% loss.
  • And, oh yeah, the market isn’t looking all that good these days.

Ken’s Bet: Watch the Administration to rush the IPO and then strong-arm Goldman et. al. to buy up GM shares at inflated prices and either push the share on clients (think CDOs) or eat them in their proprietary accounts.

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Post inspired by: Obama’s ‘Mission Accomplished’ Moment At GM, 08.30.10
http://www.forbes.com/2010/08/30/general-motors-ipo-elections-opinions-columnists-shikha-dalmia.html?boxes=opinionschannellatest

You Can’t Just “Shrink It and Pink It”

September 8, 2010

TakeAway: Eight years ago, sportswear maker Under Armour learned that making smaller, pinker versions of its male apparel wouldn’t simply translate to women. 

Women buy because a piece fits well and promises to help keep them cooler or drier. 

Under Armour’s founder believes women’s apparel will one day surpass its men’s apparel, so learning what women wanted was key…the consumer always comes first! 

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Excerpted from New York Times, “Under Armour Wants to Dress Athletic Young Women” By Elizabeth Olson, August 31, 2010

Under Armour is aiming at the “team girl,” which Adrienne Lofton, head of Under Armour’s women’s apparel, defines as a female who is competitive and confident and who plays on high school or college sports teams, or who, after college, continues to work out regularly.  “The team girl is tough, intense and passionate, and she creates her own style.”

In 2003, Under Armour began marketing a line of women’s wear designed by women. Even so, women’s apparel represents only about 25 percent of the company’s nearly $800 million in annual revenue, and it wants more.  It is the only sports apparel sector where sales are forecast to grow, according to Marshal Cohen, an analyst for NPD Group, a market research group.  Part of that is due to the marketing of active wear as street wear.

Under Armour’s newly designed line, with compression shorts, a sports bra, shorts, footwear and other training gear, is being introduced Wednesday with a campaign called “Protect This House I Will,” which builds on the company’s successful we’ll-tough-it-out-together theme that it started for its men’s gear.  

Perhaps surprisingly, the 60-second television and digital spot anchoring the campaign features both male and female athletes — a choice, Mr. Battista said, shaped by focus-group research among high school and college women playing on sports teams.  Women wanted to see themselves on par with men – as athletes, not “female athletes.” 

For the campaign’s digital marketing, Under Armour is placing two- and three-minute segments it filmed of the three female athletes on a new Facebook site for women (which is not yet active) and on each athlete’s Web site.  The digital portion of the campaign will appear on MTV.com, Facebook and other teenage-oriented outlets, video sites like Hulu and CW and the high school sports site MaxPreps.  “We have been shifting more to digital,” the company’s Vice President for Brands said. “It is now 80 or 90 percent digital. Our customers are telling us they like to receive information online and prefer to shop online.”

Edit by AMW

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Full Article:
http://www.nytimes.com/2010/09/01/business/media/01adco.html?ref=media

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Orzag says “extend the Bush tax cuts” …

September 8, 2010

Yesterday we posted that the looming decision on the Bush tax cuts put the Dems in a political pickle: let some or all or them expire and jeopardize the prospects of an economic recovery … extend them and implicitly concede that Bush’s tax plan was right.  Oh, what a dilemma.

Peter Orzag – Obama’s budget director who jumped ship last month – fueled the debate with an op-ed in the NY Times (link below).

Orzag opined:

What to do about the Bush-era tax cuts scheduled to expire at the end of the year?

,,, the best approach is a compromise: extend the (Bush) tax cuts for two years and then end them altogether.

Ideally only the middle-class tax cuts would be continued for now. Getting a deal in Congress, though, may require keeping the high-income tax cuts, too. And that would still be worth it.

Higher taxes now would crimp consumer spending, further depressing the already inadequate demand for what firms are capable of producing at full tilt.

And since financial markets don’t seem at the moment to view the budget deficit as a problem — take a look at the remarkably low 10-year Treasury bond yield — there is little reason not to extend the tax cuts temporarily.

Hmmmm …. wonder why the guy decided to leave the Obama economic team ?

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The op-ed made me smile until Orzag pushed one of my hot-buttons:

Many conservatives (would) make the tax cuts permanent for the likes of Warren Buffett, even though he’d prefer they didn’t.

First, Billionaire Buffet doesn’t speak for everybody making more than $200,000.

Second, if Warren wants to pay more taxes, then why doesn’t he just write a fat check to the Feds and shut the (expletive deleted) up already ?

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Full Op-ed: New York Times, One Nation, Two Deficits, PETER ORSZAG, September 6, 2010
http://www.nytimes.com/2010/09/07/opinion/07orszag.html?_r=1&ref=opinion