Research Recap

Blockbuster Woes Symptomatic of Dwindling DVD Market

Peter Tulupman, Director of Communications at NCR Corporation provides the following statement:

I believe there is some confusion regarding the reporting of NCR and Blockbuster’s role in the roll-out of the Blockbuster Express kiosks. The Blockbuster Express kiosks are owned and operated by NCR. We have a revenue sharing agreement with Blockbuster(BBI). The way your article is written, it appears as though BBI is driving the Blockbuster Express kiosks and that the revenue generated from this business will go to BBI to help that company, versus go to NCR, who owns and operates the boxes. I write this because in your story its stated:

The challenge is that NetFlix (NFLX) is synonymous with home delivery and RedBox’s $1 pricing is hard for Blockbuster to match without foregoing the revenue it needs to maintain its liquidity. Blockbuster has powerful allies in the movie studios who are worried that RedBox’s pricing model is wreaking havoc in the DVD market. Still, they may not succeed in forcing higher pricing on RedBox, or it may come too late to help Blockbuster

Even though we have not publicly stated what our revenue sharing agreement is with Blockbuster, I want to be clear that this business is NCR’s business and we are moving forward with deployment of Blockbuster Express kiosks, as evidenced by an announcement this week to roll out kiosks in Publix Super Markets www.ncr.com/about_ncr/....

NCR, as a global leader in self-service solutions, is applying its expertise to the entertainment industry to offer consumers a fast, easy and convenient way to access entertainment. The company sees entertainment as a very large opportunity and the Blockbuster Express kiosks is a key factor in driving that business. It is the company’s goal to become the leading provider of self-service entertainment solutions.

Unemployment Casts a Long Shadow over Economic Recovery

Thanks for the good discussion and feedback. Another discouraging statistic for economic resurgence is the continued shortening of the average workweek. Employers generally will expand the workweek before taking on new employees.

Another Look at Foreclosure Threat to Housing Recovery

It's only a glimmer! There are strong factors working against loan modification (eg, loan servicers not holding the loans that need modifying, fear that modification is only putting of the inevitable) it won't have much impact without strong government intervention.
Probably requires a reduction of the principal to really work.


On Jul 29 06:21 PM Karen Consumer wrote:

> "A glimmer of hope: according to emii, Bank of America (seekingalpha.com/symbo...)
> has kicked off its foreclosure relief program for borrowers from
> its recently acquired Countrywide with a letter of notification regarding
> eligibility. BoA says up to $150 million has been allocated nationally
> for Countrywide borrowers in 40 states as part of a settlement with
> state attorneys general."
>
> Using mr. calculator here, that breaks down to 3.75 million per state
> for foreclosure relief. If you assume a median home price of $150,000,
> that's a whopping 25 houses per state. I don't think that's going
> to help.

U.S. Housing Nearing Bottom, But Foreclosures Worrying

Mark Zandi tells me that housing valuation is determined based on the house price-to-income ratio and the house price-to-effective apartment rent ratio. He uses the Case Shiller indices for house prices. "If the price-to-income and price-to-rent ratios are both well above their long-run pre-bubble average (1980-2003) then it is classified as being significantly overvalued. If one of the ratios is above its long-run average then it is overvalued. If both ratios are near their long-run average it is correctly valued. If both ratios are below their long-run average it is undervalued. These are crude measures of valuation, but informative."

And for what it's worth, economy.com is an independent unit of Moody's and not part of the ratings division.



On Jul 28 01:49 PM Bigman16 wrote:

> Are Moody's values based on the Median Home Price in the first exhibit?
> And what are they comparing that to - average household income?

Fitch Expects Slower than Usual Recovery of Housing Sector

Thanks for your comments. At Research Recap we strive to accurately convey the key findings of the research we feature. Therefore, this is not RR's view, but a summary of Fitch's views.
The role of the ratings agencies in the financial crisis is well known, so readers will no doubt make their own judgments about how much store to place in their research.


On Jul 17 02:36 PM WAKEUP wrote:

> "With major new home metrics leveling off from fresh lows, the long-awaited
> bottom in U.S. housing may finally be in sight, according to Fitch
> Ratings." ENGLISH TRANSLATION: The "new" metrics have come to rest
> (for now) at some really bad levels. We (Research Recap) are (arbitrarily)
> taking the view that these really bad levels are about as bad as
> it is going to get, even if we have to distort Fitch's actual report
> to do so. Furthermore, we (Research Recap) are telling you, gentle
> readers, that this skewed interpretation of Fitch's report means
> that the bottom in U.S. housing MAY BE IN SIGHT. How far ahead?,
> you ask. Well, we're not really all that sure, about THAT. What we
> ARE sure of, though, is that we are trying ANYTHING AND EVERYTHING
> we can think of to make it SEEM as though the bottom is getting closer;
> we are selecting our words toward that end, because we liked things
> a lot better, when real estate was rosy, and we want things to return
> to that condition, as soon as we can cause this to happen.

What Went Wrong with Economics

Thanks for your comments. With an economics background I am frequently reminded of the limitations of the field, whether you consider it a science or not. The use of "scientific calculations" can give economic forecasts an overstated sense of accuracy and validity, especially given the prevalence of assumptions. The Economist piece provides a valuable service in prompting discussion, whether you agree with it or not.


On Jul 18 01:50 PM Teutonic Knight wrote:

> To Research Recap -
>
> There is nothing "wrong" with the field of economics itself per se.
> The word "science" in the definition of economics as a "social science"
> is perhaps a misnomer, in my opinion, just as in "political science".
> No offense of mine to those who majored in political science in their
> BA.
>
> Granted, I know political science is a very popular major in American
> colleges. But to a lowly stoic engineer as myself, how could politics
> be categorized as a science? A science or an engineering discipline
> by defintion is predicated on the application of proven nature principles
> with predictable and measurable outcomes. Is politics predictable?
>
>
> The problem of most of today's economists is corruption of power.
> The following excerpt from the Wikipedia sums it well : -
>
> "...Economics per se, as a social science, is independent of the
> political acts of any government or other decision-making organization,
> however, many policymakers or individuals holding highly ranked positions
> that can influence other people's lives are known for arbitrarily
> using a plethora of economic concepts and rhetoric as vehicles to
> legitimize agendas and value systems, and do not limit their remarks
> to matters relevant to their responsibilities. The close relation
> of economic theory and practice with politics is a focus of contention
> that may shade or distort the most unpretentious original tenets
> of economics, and is often confused with specific social agendas
> and value systems.
>
> Amen.
> TK

U.S. Commercial Real Estate Prices Down 7.6% in May

Glad it was helpful. Based on typical lag of commercial real estate compared with residential, bottom may not be reached for another year or more.


On Jul 21 01:21 PM Respirate wrote:

> Useful blurb, thanks. It's worth looking for the bottom in commercial
> real estate for purposes of investment portfolio diversification.
> Real Estate ETFs and trusts can counter balance equity holdings in
> a portfolio and throw off cash for above average yields.

U.S. Commercial Real Estate Bust Threatens Regional Banks

It's certainly not the only issue. See this earlier post on commercial loans.
www.researchrecap.com/.../


On Jul 14 10:51 PM Mark54 wrote:

> First CMBS is the NOT real issue here. For the most part banks and
> insurance cos hold AAA 30% credit enhanced senior classes. (Please
> don't confuse these with 5% credit enhanced residential MBS.) While
> there is a distinct risk of a near term downgrade there is a smaller
> risk of principal loss in the next 12 months.
>
> The real issue is commercial loans and construction and development
> loans held on balance sheet. These are the loans that are going
> to have the largest impact. There is no credit support here and
> there is no secondary market to blow these out to. Loss severities
> have ranged from 20% to 60% and only look to get worse.
>
> The only saving grace is that large (equity rich) investors are circling
> like vultures for prime properties.

A Good Reputation Is More Valuable than Money: AIG, JNJ, KFT, UPS, GM, FDX

3M was number 12. Click on the Reputation Institute 2009 index link above for the top 25.

Independent Oil Refiners Face Hard Times in 2009 and Beyond

Our aim is simply to pass on interesting research whether it is positive or negative. Angus Robertson, Editor

News Goes from Bad to Worse for Newspapers

This article was written by Angus Robertson, Editor of Research Recap.

Moody's Is Acting on Private Mortgage Insurers

Thanks Mary. We inadvertently included part of an old report in this post. Moody's on Friday placed Radian on review for possible downgrade, similar to the other insurers. The original post at researchrecap.com has been corrected.

US Corporate Debt Default Rate Could Top 23% by 2010

I agree the headline is misleading, though not deliberately so. In trying to make the headline fit the meaning was changed. Thanks for your comments. It has been changed on the original item at Research Recap.
www.researchrecap.com/.../

Angus Robertson

Forensic Analysis of Lehman Problems

northnode: click on the Chairman's Corner link to see full article.