Glenn Alperin

Ackman and Target: Another Battle Brewing

HardwoodFlooring, given the market downfall recently, can you blame Ackman? He's just trying to cash in while the share price is relatively low, like any stock trader, so he can sell when the share price goes high again.

I supported his proxy fight battle. (See my previous article about Target on SeekingAlpha here: seekingalpha.com/artic... ) Granted, it would have failed miserably in light of the recent economic mess we are in now, but all the more reason he should go with the REIT idea now. (No pun intended.) Real estate has practically bottomed out. Recent economic trends I have read suggest that a recovery will be slow, but it will occur, at least on a commercial level. Consumers can forget about any recovery until there is sufficient economic incentive for them to go out and buy (I believe the words for that is "economically sustainable jobs", which is an interesting dialectic given Wall Street's pension for clapping every time people are laid off of work, and rewarding companies only for bottom line profits at the expense of future economic gains from a sustainable consumer base), but commercial real estate is likely to come back a little sooner.

So a REIT would have been a bad idea at its inception, but we only know that given recent economic trends. I still think it would be a good idea NOW, where the commercial real estate market is likely to be headed on the upswing sooner than the consumer real estate market will.

Ackman Aims at Target's Bulls Eye: Right on Time

Larry, the idea of the walkie-talkies is to make the shopping experience for guests more pleasant. I'm sorry they were turned up louder than perhaps they should have been. Outside, when pushing carts, I had to turn mine up obnoxiously loud to hear anything, but inside, I had it turned up to about half that volume. I found them very useful as a team member, and I know that most guests appreciated the fact that they could get quick answers to questions if the person they were asking was unable to provide the answer right away.

But you are right about one thing: Most of the employees really don't care. That was my chief frustration with working there. One can ask why they don't care, and I think the answer is because Target ultimately doesn't care about them either. Corporate caring goes both ways. If Target would care about its employees, perhaps its employees would care more about it. Coincidentally, Walmart is not much better in this regard. Both companies make huge profits by paying their employees wages which they are unable to achieve long-term economic stability.

As for merchandise, its a bit of a corporate myth that Target and Walmart are competitors. Walmart seeks out a clientele of a slightly lower socio-economic scale. "Always low prices" is great marketing for people with fewer dollars in their pocket. I've rarely set foot in a Walmart store, but when I have, the merchandise has been fairly comparable even if the presentation of that merchandise was a bit different. Different geographic locations will have different merchandise (how many pair of snow skis do you think they sell in Florida, for example?) and different store locations will require being in tune with the economics and social issues of the area the store is built in.

User, I agree with you too, but that is precisely why I think NOW is the time for Ackman to take charge, and why a year ago, I was NOT convinced of Ackman's ideas. Real estate has tanked to historic lows. Now would be the time to invest in it. As far as demographic migration, do you think corporations don't look at that when deciding where to build stores? Do you think Ackman, as a profit-driven investor, isn't aware of these details? I think Ackman is very much aware of the intrinsic value of Target, and he wants to make that intrinsic value greater. I think now would be the perfect time to give him that chance.

One thing I like about Ackman, while sometimes being frustrated with it, is his proposing of "solutions" to companies which appear to have put their head in the sand. He doesn't always win his fights, but the fact that he voices his concerns is usually enough to get corporations to take a serious look at his motivations, which on the whole they are usually in agreement with even if they differ on strategy for achieving it. Given that he himself is an investor, its not hard to see where those motivations lie.

$6M Suit: Target, Amazon Must Make Web More Accessible to Blind

Let's be honest here. For those who are not blind or deaf, having such disabilities is very socially challenging, at best, and can have very serious consequences if people do not take such matters into account. Imagine dispensing medication to a person who is blind. This is a real world problem with real world consequences which has actually already been solved. Such solutions for a website are even easier (speaking as a web developer myself) and easily should have been a high priority on ANYBODY'S website design list. My personal website is accessible, and there shouldn't be any website out there designed for public viewing which isn't.

Jala, deaf people CAN enjoy radio, especially talk radio and news reports, which is the whole point of having transcripts available. They can even enjoy music, though in a very different way from the rest of us.

Honestly, Target, with it's community focus efforts, really should have known better. Somebody at Target really dropped the ball by approving the Amazon website without due consideration. Somebody, and I don't know who, really screwed up, and at the very least, should lose their own job over it. Target has better things to do with its money than lose lawsuits over stupid easily preventable mistakes. As both a shareholder and a person who cares deeply about disability issues, I would expect better from Target.

When Buybacks Are Bad

I really don't understand the logic about why stock options are supposed to be good for a company. I understand that it makes it more attractive to keep supposedly qualified and profit-driven executives, but since when should those executives get to keep the milk money from a cash cow when they are not rewarding their employees adequately for a job well done? I worked in retail for about 7 years, and if management didn't have us underlings to actually do the grunt work, there is no way the companies I worked for would have made the money they made to be able to afford to pay the management at the top so excessively, whether that is in cash or stock options. I'm all in favor of returning that money to the stock holders by way of dividends, but here is an even better idea? Why not return it to the hourly employees who worked their butts off in the first place? It sure would be a marvelous tool for keeping at bay one of the biggest expenses in running a retail business: employee turnover.

Right. Time to get my head out of my ass again and return to reality. Management doesn't care about employees as anything other than a line which they would prefer to be dispensable on the expense reports. For the most part, they don't care about their stockholders either. I wish you luck trying to change the corporate culture of such companies. You'll need it.

The ATM at the Airlines

BlueDog, thats part of my point. If I go and do my research on finding an airline to get me from point A to point B, and only later discover I could have flown for less net dollars on another airline not charging such fees or charging less fees because I couldn't read the 2 point font that says I was going to be charged such a fee, I would have surely flown a different airline. I'm not in the business of wanting to pay more for an equal level of service I can get elsewhere.

As a customer, I don't like the idea of fees attached that are not included in bold faced font on any contract I agree to sign, including one that guarantees me a spot on an airline (or compensation in case of overbooking) when I pay for a ticket. I don't like the current fuel surcharges, but I do realize that is a necessity for airline survival in these difficult times, but I wouldn't even mind paying a higher fuel surcharge because at least that isn't going to effect my ticket price when I get to the airport. As a customer, I think I should have the ability to make easy comparisons of price points between airlines. I can do that with banks, because banks are required to list all of their fees in a fee table or some other mechanism for my review, and I can do that with ATMs because laws require that if there is a fee attached to such a transaction, it must be either posted or clearly laid out in the process of my agreeing to withdraw money from somebody's ATM machine. Why can't I do that with airlines so easily? Do airlines enjoy making the process complicated for customers? If they do, surely, that will effect customer opinion of their business, and ultimately, airline passengers will likely take their hard earned dollars somewhere else where such fees are not the norm, or at the very least, are not laid out in a font size so small that it is impossible to read or decipher their amount before purchasing a ticket.

BioInvestor, I happen to disagree with your assertion that "Individual experiences while traveling are interesting, but not really useful when analyzing companies." If enough individuals complain, a company will either change it's policy to keep those customers, or will lose at least some portion of their customer base who will go elsewhere instead. In the event that they lose customers, that will invariably effect the bottom line of an airline, and if history is any guide, such effects on the bottom line are usually reflected in stock price per share over time. Very few airlines are currently operating in the black right now, and it shows from their stock prices. (I've been very tempted to buy a few airline stocks, but don't think the bleeding is done yet.) Those doing the best appear to be airlines serving international routes. British Airways, for example, continues to put forth some stellar numbers. Domestic airlines and international airlines are, I realize, completely different ballgames economically speaking, but the principles of customer service apply across the industry pretty much the same. As one wise business person I once spoke to said to me, "If you please one customer, they MIGHT tell another customer about the good experience, but if you screw up and don't make proper amends for it (and sometimes there are no proper amends) you can be sure that a thousand potential customers will hear about it, and choose to shop elsewhere accordingly."

So again, if airlines are making it very difficult for their customers to determine how much it is really going to cost them, and customers get upset, they will go elsewhere, and some airlines will suffer even more than they are now because of that, and those holding such airline company's stock will suffer with them.

That was the thesis I was trying to make with this article. Perhaps I didn't do that as effectively as I would have liked.

The ATM at the Airlines

BlueDog, thats part of my point. If I go and do my research on finding an airline to get me from point A to point B, and only later discover I could have flown for less net dollars on another airline not charging such fees or charging less fees because I couldn't read the 2 point font that says I was going to be charged such a fee, I would have surely flown a different airline. I'm not in the business of wanting to pay more for an equal level of service I can get elsewhere.

As a customer, I don't like the idea of fees attached that are not included in bold faced font on any contract I agree to sign, including one that guarantees me a spot on an airline (or compensation in case of overbooking) when I pay for a ticket. I don't like the current fuel surcharges, but I do realize that is a necessity for airline survival in these difficult times, but I wouldn't even mind paying a higher fuel surcharge because at least that isn't going to effect my ticket price when I get to the airport. As a customer, I think I should have the ability to make easy comparisons of price points between airlines. I can do that with banks, because banks are required to list all of their fees in a fee table or some other mechanism for my review, and I can do that with ATMs because laws require that if there is a fee attached to such a transaction, it must be either posted or clearly laid out in the process of my agreeing to withdraw money from somebody's ATM machine. Why can't I do that with airlines so easily? Do airlines enjoy making the process complicated for customers? If they do, surely, that will effect customer opinion of their business, and ultimately, airline passengers will likely take their hard earned dollars somewhere else where such fees are not the norm, or at the very least, are not laid out in a font size so small that it is impossible to read or decipher their amount before purchasing a ticket.

BioInvestor, I happen to disagree with your assertion that "Individual experiences while traveling are interesting, but not really useful when analyzing companies." If enough individuals complain, a company will either change it's policy to keep those customers, or will lose at least some portion of their customer base who will go elsewhere instead. In the event that they lose customers, that will invariably effect the bottom line of an airline, and if history is any guide, such effects on the bottom line are usually reflected in stock price per share over time. Very few airlines are currently operating in the black right now, and it shows from their stock prices. (I've been very tempted to buy a few airline stocks, but don't think the bleeding is done yet.) Those doing the best appear to be airlines serving international routes. British Airways, for example, continues to put forth some stellar numbers. Domestic airlines and international airlines are, I realize, completely different ballgames economically speaking, but the principles of customer service apply across the industry pretty much the same. As one wise business person I once spoke to said to me, "If you please one customer, they MIGHT tell another customer about the good experience, but if you screw up and don't make proper amends for it (and sometimes there are no proper amends) you can be sure that a thousand potential customers will hear about it, and choose to shop elsewhere accordingly."

So again, if airlines are making it very difficult for their customers to determine how much it is really going to cost them, and customers get upset, they will go elsewhere, and some airlines will suffer even more than they are now because of that, and those holding such airline company's stock will suffer with them.

The ATM at the Airlines

First of all, I'm the author. My "comment name" is Stock Miser.

legalalien, I wasn't suggesting that such services were actually "free". As with anything else, there are business costs associated with all aspects of running a business. My gripe is that these are extra charges imposed by the airlines in an attempt to prop up their sagging bottom line. Why are they penalizing passengers who wish to fly with them? If they raised their ticket costs by $25 per one-way fare, they could make the same amount of money (possibly more) and not, at the same time, leave an unexpected hole in the wallets of their passengers who won't know it if they don't read the fine print (and we all know that most people do not read the fine print, which is how businesses get away with such fees in the first place). Furthermore, they would not be discriminating against people who are unwilling or unable to pack light. When you go on a trip expected to last a week or two, do you expect to wear the same clothes everyday? What about parents with infants, for which is is rather easy to need a significantly greater collection of luggage? It's easy to pack light, but I wouldn't want to be the one sitting next to you on the flight back if you chose to do so to avoid paying an extra service charge.

As for being able to withdraw cash anytime anywhere, do you know it actually costs banks far LESS money per ATM transaction (regardless of whose ATM it is) than it would for a person to go into a bank to see a teller to either cash a check or withdraw money from their account? People do banks a favor by going to the ATM. Banks should do more to reward their customers for helping to keep costs down. I don't consider an ATM service charge a reward. Given that it costs banks MORE money for a bank customer to see a teller in person, why don't they charge fees for that instead of ATM fees? Actually, some banks have tried, and very quickly reneged on the idea after massive protests.

User216242, the idea of "fewer flights + larger (same) planes = more profit" is a good one, but that doesn't effect the passenger experience. Passengers, or for that matter any consumer in any industry, don't like to feel like they are being cheated by way of unscrupulous pricing policies. Lets face it: passengers are paying to get themselves and their luggage to a destination. They shouldn't have to pay a price to get themselves there, and another price to get their baggage there. That just seems really underhanded of the airlines to try to sell two tickets (one for passenger and one for baggage) for the price of one passenger to fly.

Private Equity Should Take Yahoo Private With a $35B Offer

A deal with Microsoft would have been the end of Yahoo, both as a business and as a culture. I can understand why Yang didn't want that. One can argue whether it was good for shareholders for that deal to fail, but I don't honestly think Yang was thinking about the shareholders as much as he was thinking about Yahoo as a business entity. Going private seems like it would be a good idea and very worthy of consideration under the circumstances as it would preserve Yahoo as a business as well as (probably) pacify activist investors who seem to think that money is always more important than principles.

Ten Diamond and Jewelry Stocks

There is another smaller-scale online diamond company out there, Abazias Inc (abza.ob) which I used to own some shares of. However, it's future looks rather clouded as a result of certain (mis)management decisions which I personally wasn't too happy with. The company underwent a reverse split 40:1 and a symbol change, and I got out of it as soon as I was able to make a profit after the split, which took a few months. I had a rather dubious view of the reverse split in the first place as it appeared to be mostly aimed toward rewarding management with the potential for more insider stock option purchases. It is currently trading at more than $3.00 lower per share than when I sold out. I probably would NOT recommend this stock at this time, but it is another player in the specified industry.

NutraCea: Running With the Big Boys

I bought at $1.18. I bought because of the multi-tiered approach to the product mix, and because the product, SRB, was actually being produced and shipped. About a week after I bought, they had an earnings disappointment which, in large part, was due to a significant product return, without which they would have made a profit (some of us do read every line of every SEC filing). So, bad timing on my part. I was expecting it to do much better than that.

The primary problem since seems to be a lack of communication between management and shareholders concerning what management has expected for ongoing sales results. The most recent quarterly came as a surprise to me as I was expecting them, all things being equal, to come close to breaking even. That didn't happen either.

However, when they get their patent issues settled (the annual report indicated they needed a Proof-of-Concept working model), they are going to have intellectual property which, it seems to me, will be essentially a cash cow. They can then either sell SRB directly to companies for ingredients in human or animal food, or they can license the ability for other companies to produce it and make lots of money on the licensing fees. Either way, IF THEY CAN GET THEIR LOGISTICAL HOUSE IN ORDER, it seems to me there is a lot of money to be made. The real question is this: Can they pull it off? I have 500 shares that say they will, but I don't hold a crystal ball. I'm prepared to sit and wait for a long time though to find out.

Warren Buffett didn't make his money chasing stocks. He made it sitting on stocks for a LONG time. *I* think this one is going to be worth waiting for.

Doubling Down on Yahoo Stock: Double Smart, or Double Dumb?

User, the real question is this: CAN Microsoft compete with Google? Obviously, independently, Microsoft doesn't think it can. The days of computing as exclusively desktops and laptops built around an operating system technology that is sub-par at best is all but over. Linux is rapidly gaining market share from Microsoft, and Microsoft is obviously nervous about that. Much of this is stuff Bill Gates as much as said when and before he left the head honcho position of Microsoft in different hands.

As of right now, Microsoft is a software company not capable of extending its position into the new world of technology. Yahoo would clearly help it gain that much needed foothold. For Microsoft, this is basically a sink or swim proposition. If they succeed (and I hope they don't as I'm no fan of their "squelch anything not created by us" philosophy) they will be well positioned for the world of the internet and advertising age. If they fail, they will be left behind in the age of the desktop where the desktop is actually losing out to smaller and more precise technological solutions for everyday problems. (Can you say Blackberry or Palm? Windows CE has tried and failed to compete with both products.)

So yeah, I guess I have to say that Microsoft needs this deal to go through for it to survive as a software company. Microsoft can't afford to lose here.

How about Yahoo? Well, they've struggled a lot over the last few years trying (wrongly, I think) to compete with Google. Yahoo was never really a Search company. Sure, they started life that way, but they gradually grew away from that to be more of a "community building" company. Yahoo Groups, Yahoo Calendar, Yahoo Mail, etc. What does Yahoo have to gain from being taken over by Microsoft? Seems to me not much other than a few extra bucks to Yahoo shareholders. Does Yahoo really want to sell out for that?

So Microsoft isn't going to walk, and Yahoo isn't going to sit there and roll over and play dead. The survival of both companies is collectively at stake. The one who wins this battle may be at the forefront of the future of technological advances. The loser will join the dinosaurs in the land of extinction.

As to the investment by Capitol World Investors, they are obviously hoping that Microsoft will up its ante until Yahoo can't help but say yes. How much would that cost? $30 a share? $50? $100? Seems like a safe bet to me. Microsoft, as I said, can't afford to lose, so betting on Yahoo is probably going to be easy money for them. All Yahoo has to do is say "no" and watch as the offer prices increase, or watch as Microsoft falls flat on its face with a much stronger (hopefully) Yahoo still standing.

Bill Ackman's Brutal Target Losses

I'm always skeptical of investors, even those with deep pockets like Ackman, who invest in companies with the sole purpose of trying to change the business model of companies they invest in. Even if the goal of creating greater long-term profit (and presumably greater shareholder value) is there, why do investors like Ackman think they know more about a company than the company executives?

Having said that, in hindsight, it seems clear that Ackman must have had some inkling of an idea that the credit bubble was about to pop since he had suggested that Target should sell its credit card business as soon as his stake in Target was made public. Target subsequently has sold off at least a portion of it, and probably received a much lower value for doing so than if Target had originally followed suit at the time Ackman had offered the suggestion.

So, was Ackman brilliant (despite current losses), or was Target stupid, or was it something else completely?