billddrummer

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    • Circuit City Falls Further: 'Bring Out Your Dead' [view article]
      Phil

      Remember--women and children first to the rafts!!!       Oct 06 07:28 PM
    • We'd Better Brace for Massive Layoffs [view article]
      This is too depressing for me. Oct 06 03:36 PM
    • Consumers And Construction Workers Feel It's A Recession [view article]
      Hi Judy,

      Excellent compilation, thanks!

      I take issue with the construction unemployment rate. As most people know, there are a vast number of undocumented construction workers who move from job site to job site, not unlike migrant workers during the Great Depression, who traveled from farm to farm for work. Those people don't go to the unemployment office, because they never entered the system in the first place. Jobless rates for those workers are probably triple the official rate, but no one knows, because the workers aren't counted.

      There have been stories of ethnic businesses suffering deep drops in sales because of lower employment for these workers. It's happening here in Northern NV. The 'official' unemployment rate in the construction industry here is around 20%. But the 'unofficial' rate may be as high as 40% if undocumented workers are included in the pool.

      Wondering if other regions are seeing the same trends.

      As usual, a pleasure reading this invaluable resource!

      Bill

      Oct 06 03:33 PM
    • Gadget Stock Watch: Blu-Ray Checkmate, Wii Fit, More [view article]
      Wii stays out of stock because of strict manufacturing rules. The bad news? It's hard to find them. The good news? The failure rate is less than 1%, nearly unheard of in the digital gaming realm. Oct 06 03:25 PM
    • Circuit City Falls Further: 'Bring Out Your Dead' [view article]
      To phil,

      Well put. Noticing the relationship between stock prices and mundane stuff like dollar store prices is a great analogy.

      Happened to get a look at a blank avialiblity schedule for CC. All employees are expected to be available for work all weekend. That's not unusual, but the schedule had the phrase "All hands on deck!" in the Black Friday-Sunday period.

      All hands on deck. Spare me the references to ships. Just stay away from the rail because your bow is already flooded, and the engines and electricity just quit. Wait--is this the Titanic?
      Oct 06 03:20 PM
    • Circuit City Falls Further: 'Bring Out Your Dead' [view article]
      The link above contained an error.

      www.twice.com/blog/170...

      This is the correct one.       Oct 03 07:21 PM
    • Circuit City Falls Further: 'Bring Out Your Dead' [view article]
      To phil,

      Thanks again. I love to hate the store too, but when you want to buy something cheap, it's the place to go.

      Example: I ran out of lighter fluid for my BBQ grill and went to the local Save-mart to find some. They wanted $3.59 for a 28 oz. bottle. The local WMT (less than a mile away) had quarts for $2.44. Guess where I bought it?

      WMT has already thrown down the Christmas gauntlet. The company has cut prices on selected toys effective 10/1. They want to be known as the low-price leader this holiday season.

      www.twice.com/blog/170...

      Toys R Us, Kohls, Penneys and Sears should be quaking in their boots.
      Oct 03 07:04 PM
    • Circuit City Falls Further: 'Bring Out Your Dead' [view article]
      To phil,

      Good pun. And I agree with you that execution spells the difference between success and failure.

      Look at WMT. Whatever you want to say about the company (exploitative, drives out local competition, inflexible, anti-community), it consistently produces above average returns to investors, which is all that counts in the final analysis.

      And why is that? Because it consistently executes its strategic plan successfully.


      Oct 03 03:59 PM
    • Sell Signal of the Day, Greenspan Edition [view article]
      To raising4daughters,

      I feel half your pain--I'm raising just two.

      What if the handle is broken after the $700 billion gets injected to the markets?

      I don't know that $700 billion is enough money.

      If the typical leverage on a mortgage backed security is 10:1, then for every $100 million outstanding there would be $1 trillion in counterparty and swap risk.

      I don't know what the typical leverage is, though, Does anyone?       Oct 03 02:01 PM
    • Circuit City Falls Further: 'Bring Out Your Dead' [view article]
      To CanadaD,

      Depends. If there isn't much competition in the market segment, the RS idea could work.

      What if CC sells the brand name too? That way store branding would remain in place and it wouldn't be as confusing.

      I believe there is a place for small footprint accessory stores in good locations. The ultimate in 'grab and go'--cabling, parts, batteries--even though inventory management is a nightmare (try sorting 50 different kinds of batteries when your shipments arrive).

      And from your comment, it doesn't seem likely that the existing network could be converted to boutique style stores without major capital infusions--and there's no guarantee it would pay off,

      RSH has done reasonably well in the US, although they were starting from a big hole. If they stay focused on the accessory side, the company should be fine. But I've noticed a trend toward stocking more full-product items (TVs,GPS units) which erode margins 2 ways: They carry lower margins to start with, and higher average selling prices. And with products like those, it helps to have staff that knows something about them. I get the impression that RSH stores don't have staff that's knowledgeable about those items. Many of them are really good at parts and accessory recommendations, though.

      Interesting to see what becomes of all of this.

      Oct 03 01:56 PM
    • Circuit City Falls Further: 'Bring Out Your Dead' [view article]
      To phil,

      Thanks for the data on InterTAN. I think you're spot on with your view that when CC does go down (.60/share today) and the InterTAN piece is unwound, RSH would love to get it back. That would bode well for RSH, because they could immediately broaden their footprint in North America without having to go to great lengths acquiring sites, negotiating leases, etc.

      That's similar to the deal that BBY did by buying up some CompUSA leases on closed stores that were close to locations already scoped out for new BBY stores. BBY bought 17 leases and will include those stores in the fiscal 2010 store opening strategic plan. Lots cheaper than starting from ground zero.

      Oct 03 01:33 PM
    • Mortgages and Lending In The Subprime Meltdown [Housing Tracker] [view article]
      Hi Judy,

      An interesting take on the home price/mortgage rate equation.

      I have a hypothetical situation to present:

      Suppose you live in LA County, and your mortgage is $475,000, because you bought your house two years ago for $600,000. (Sept 2006 median price).

      Further suppose that you took out two loans to get your home: A $475,000 conforming interest only Option ARM with a 1.5% start rate, and an interest only 2nd for 10% of your purchase price, or $60,000. (Not everyone did this, but many developers promoted this financing scheme to first time homebuyers who were short on their down payment.)

      Do the authors propose to refinance both of these loans into a 5.25% product, knowing that the current value of the home is down to $425,000? And if it only applies to the first mortgage, what's the impact on the holder of the second?

      Another thing: Payments on the Option ARM I mentioned are $593.75/month before the teaser period expires. If you refinance it at 5.25.%, the payment becomes $2,622.97/month. Which is OK if you make $9,368/month (28% debt ratio on the payment). But if you can't afford the fully amortizing payment, what do you do then? How many people would be able to make the new mortgage payment? (It's probably easier to earn that much in LA than in Reno, NV, but you get my drift.)

      I still believe that median incomes are the most reasonable determinants for housing prices. Until prices fall to the point where median household incomes can afford the median price with a conforming mortgage, prices will drop of their own accord.

      Lenders and the government were the primary culprits in unlinking affordability with home prices and mortgage rates. Let's allow the equation to rebalance itself. Painful, disruptive, and protracted, yes. Necessary--yes.

      Great job as always. Thanks!


      Oct 02 08:35 PM
    • Mortgages and Lending In The Subprime Meltdown [Housing Tracker] [view article]
      Hi Judy,

      Great compilation. I appreciate it!

      On your comments about online vs. face to face loan officers:

      Perhaps it's because so many lenders failed over the past two years that the industry is decimated from the people end. Add to that the fact that home values are falling, incomes are flat, and refinance applications fell below the number for purchases, and the industry itself has changed.

      Although I must admit, the link sounds suspiciously like a PR release, complete with an imbedded link to the website featured in the article. The article makes some good points. 1) People are more likely to choose a fixed rate product rather than another type. 2) People can understand fixed products better than others, so they don't 'need' a loan officer to explain it.

      I could counter with the argument that many variable rate products are gone with no chance they'll be back.

      Just a thought...       Oct 02 07:32 PM
    • Circuit City Falls Further: 'Bring Out Your Dead' [view article]
      A followup comment:

      One way this could work is if CC spins off the retail side (store network) as an operating entity but retains the distribution channel. Then, the Canadian operation could manage itself (apparently it did OK on its own) but continue to benefit from the financial backing of a CC-sponsored credit facility and purchasing power, among other things. That would also unlock the value of the land holdings in Ontario. There's a large distribution center that CC has owned for some time. Throw that in, and you've got some hard assets to play with.

      Just a thought.       Oct 02 06:39 PM
    • Circuit City Falls Further: 'Bring Out Your Dead' [view article]
      To CanadaD,

      Thank you for the kind words. I've been watching this slow motion train wreck for nearly two years.

      And I'd give the company almost no chance (less than 20%) that it will be around as it looks today in March.

      The Canadian chain seems to me to be a relatively viable business. The problem I see is twofold: True, sales were up, but margins got killed. You can sell yourself out of business if you don't watch it. The management team applauded the Canadian group for holding up the profit end despite falling gross margins. That's the first thing.

      The second is this: If someone does purchase InterTAN, they won't have access to the buying power that CC does, unless it's a bigger company. (BBY wouldn't be a good fit--the stores are too small and generate too little revenue/location. I've never seen one, but to me it sounds like the units resemble RadioShack.) Limited buying power means higher costs for product, which means lower margins unless you raise your prices. In the current environment, raising prices is exactly the wrong thing to do if you want to maintain your market share. People are voting with their wallets, looking for the cheapest way to meet their needs. (At least here in the US.) If that's happening in Canada as well, an acquirer would need to strike purchasing arrangements with larger players to preserve margins without resorting to raising prices.

      So it's an interesting problem to be sure. I look for a CC with markedly fewer stores and a regional, rather than national, footprint after the holidays.       Oct 02 06:35 PM
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