billddrummer's Comments

Coinstar: Standing Up to Continued Challenges from Hollywood

Fri, 20 Nov 2009 19:23:30 -0500

I agree with the article.

I work at BBY, and we've seen our DVD sell-through shrink significantly for both new release and catalog titles. Even a DIS executive stated recently that consumers weren't building their libraries like they had in the past.

The BBI business model is on its way out, and consumers are seeking more convenient ways to get their entertainment fix. BBI used to be a standard stop on the way home from the grocery store. Now, with a Redbox vending machine in the grocery store, Mom and the kids don't have to make a separate stop.

Look for this trend to accelerate in the next year. CSTR plans on installing another 10,000 machines by the end of 2010, a reach that BBI won't be able to match, no matter how many kiosks they plan on opening next year.

Cramer's Mad Money - You Can Buy Pretty Much Everything (11/16/09)

Wed, 18 Nov 2009 15:14:31 -0500

The stock market is the only one I know of where people buy when prices are rising and sell when prices are falling.

Doesn't make any sense to me.

Home Depot: A Quick Lesson in How to Beat EPS Estimates

Tue, 17 Nov 2009 19:53:26 -0500

Looks like SPAM to me.

Why GM Is Repaying Bailout Money

Tue, 17 Nov 2009 17:21:20 -0500

On Nov 17 12:47 PM Jgib wrote:

> Somebody said GM has a great balance sheet. Where can I find one,
> as a stockholder. that is?

Are you a stockholder of the 'old' GM, the one with all the bad assets? That's the only one that has published financial statements and traded stock.

The 'new' GM isn't publicly traded yet. They plan on an IPO next year.

Blockbuster (BBI): Q3 EPS of -$0.20 misses by $0.09. Revenue of $910.5M (-21%) vs. $1B. (PR)

Thu, 12 Nov 2009 18:20:26 -0500

Redbox is testing tiered pricing for some movies--up to $2.50 in a few cases--and already rents games for $2/night.

But the instructive thing is that Redbox is evolving in the face of streaming video content, and BBI isn't.

Google Redefines GPS Navigation Landscape

Thu, 29 Oct 2009 01:56:38 -0400

Let's hope the search engine is better than Google Maps. I used it today for some property research, and not only did the program put the building in the wrong location (fully a city block north of where it actually sits), but the direction function didn't capture an access road built 18 months ago, that cuts 10 minutes from the directions to the property.

Since 40% of my job is property research, I expect flawless performance. I was frankly surprised at the errors from Google Maps, which I use consistently because of its (perceived) accuracy.

Perhaps I need to look for another mapping function.

U.S. Generational Shift is Key to Future Consumer Spending

Thu, 29 Oct 2009 01:48:25 -0400

And I agree with the conclusions of the article that the WMT, HOG and GMs of the world will continue to lag behind companies that recognize and respond to the generational shifts that are evident.

U.S. Generational Shift is Key to Future Consumer Spending

Thu, 29 Oct 2009 01:46:12 -0400

I agree, it's a good article.

I work for BBY in the Home Life department (TVs, appliances, gaming systems and media). I've noticed that the boomer generation has vanished from the store, and been replaced by Gen X and Gen Y folks who have bought their first home, and empty nesters who are upgrading their computer systems, TVs, and appliances.

It's almost as if Middle America isn't shopping anymore.

Homebuyer Tax Credit: Update

Thu, 29 Oct 2009 01:41:44 -0400

I'll reiterate what I said on a local real estate thread:

If this passes the way it's proposed, it will prop up the prices of higher priced homes and reduce the availability of lower priced homes--exactly the opposite of what the government says it wants to happen.

Case in point--if you buy a $150,000 house, the credit will be $7,290. If you buy a $700,000 house, the credit will be $7,290.

Extend and Pretend: The Growing Divide Between Delinquencies and Foreclosures

Thu, 29 Oct 2009 01:34:11 -0400

Something occurred to me today as I was trying to figure out how to cover my oldest daughter's 2nd semester tuition at NYU:

"Why is college so expensive anyway?"

If she successfully completes her studies and graduates, she will have more than $100,000 in student loans to repay--just from her undergraduate studies.

How much will she need to earn to pay off those loans? And if she doesn't pursue an advanced degree, what are the chances that she'll never earn enough money to pay them off?

I didn't graduate from college. I had to work. But it's unfortunate that we have saddled our children with onerous debts that may never be repaid, in the name of 'furthering their education.'

Not a ringing endorsement of the American educational system.

Consumer Confidence Crumbles

Wed, 28 Oct 2009 11:59:09 -0400

To bigbear4511,

And none of them are on medication.

The Greatest Depression Is Coming

Wed, 21 Oct 2009 22:34:37 -0400

On Oct 17 01:59 PM KirbyJF1 wrote:

> You must have been CHICKEN LITTLE in a previous life. What a bunch
> of boulder dash.
>
> Kirby

That would be balderdash.

I haven't read all the comments, but the article makes some excellent points. I tend to think that most middle class Americans have come to grips with the grim reality that their children's futures will be materially worse than theirs--the first time in American history that parents expect their children to achieve less than they did.

A new study finds a disconcerting trend in bankruptcy filings: More than 50% of small business bankruptcy filers were current with one or more of their lenders when they threw in the towel. The speed and silence with which they're going under is deeply worrying to lenders, who historically have managed default risk by closely monitoring delinquencies.

Mon, 19 Oct 2009 13:03:14 -0400

That's happening in personal bankruptcy cases as well. I'm familiar with one case in which the debtor was current on all his debts, yet filed bankruptcy and discharged $98,000 of unsecured loans and credit cards.

None of the lenders had any inkling because everything was current.

Progressive Surpasses Estimates

Thu, 15 Oct 2009 11:22:41 -0400

I recently received quotes from PGR and ALL for car and rental insurance.

ALL was 40% lower than PGR.

Now, I like the ads, but I vote with my wallet.

This Recession Ain’t Over

Sun, 04 Oct 2009 01:37:47 -0400

Thank you for the excellent article, and the succinct and reasonable analysis.

Why aren't people like you, John Lounsbury, and others in this forum sitting in Washington sharing your views?

Because nobody wants to acknowledge that the emperor has no clothes.

The Death of U.S. Consumers: Not Yet, But Soon

Fri, 02 Oct 2009 18:04:51 -0400

To Old Trader,

You're right, retailers seemed unusually strident this back to school season compared with previous years. I work in specialty retail (BBY) and the pressure was on to grab market share in computers, dorm furnishings and anything else we sell.

I think the American consumer is exhausted.

Welcome to the New Normal

Wed, 30 Sep 2009 18:20:01 -0400

Excellent article, Mr. Mauldin.

Thank you for providing hard data for what is turning out to be a seemingly intractable problem--how to put enough people to work to pull the economy out of its doldrums, yet not bankrupt the Treasury in the process?

It seems clear that only massive government intervention will make a material difference in the job count, yet no one wants that (including me). I contend that the government is already far too intrusive, and more powers begat more intrusiveness.

But for private industry, the only reason to hire is that the new employee will produce more work than his or her cost to hire. Until profit margins recover, hiring workers will continue to be an expensive proposition.

And without top-line revenue growth, there's little incentive to hire. Yet without expanding employment, top-line growth will languish.

An economic conundrum: Companies won't hire because they see no revenue growth, but unemployed workers can't spend because they aren't working. And that reinforces the companies' stand against hiring.

Again, thank you for the article, and the lively discussion it spawned.

Liz Ann Sonders: Job Gains Possible by Year-End

Tue, 29 Sep 2009 18:50:20 -0400

Liz Ann Sonders: Job Gains Possible by Year-End

Tue, 29 Sep 2009 18:50:15 -0400

Jobs Picture Improving, But Continuing Claims Still Blurry

Sat, 26 Sep 2009 21:32:40 -0400

To Mark Bern,

There's still a ton (no pun intended) of unused shipping capacity floating off the coast of Hong Kong.

As long as there's unused tonnage floating, the BDI won't rise.

Durable Goods News: Heartening, But Just One Step Toward Recovery

Sat, 26 Sep 2009 21:28:30 -0400

July's durable goods number was affected by the cash for clunkers program that kicked off at the end of the month. The number will show a big increase in August as a result of that program, but the gains won't be sustainable through the 4th quarter.

I'm taking a wait and see on durable goods orders.

New Home Sales Are Not Constructive

Sat, 26 Sep 2009 21:25:42 -0400

To LilBob,

Good points about the boomer generation. The desire to live in lower-maintenance housing may provide support for condo and co-op prices, which continue to swoon nationwide.

And to John,

Thanks for continuing to provide excellent commentary with spinless conclusions.

CGTS STOCK FOCUS: BESTBUY

Thu, 24 Sep 2009 11:54:33 -0400

I work for BBY and own stock through the company's ESPP. Earlier this year there was a chain-wide restructuring initiative that cut back on supervisory positions and higher paid senior sales associate slots. Many of those people elected to take severance packages rather than pay cuts.

I believe the company is still a strong player, but growth will probably come from its international initiatives before traction is restored in the US chain.

It's the Debt, Stupid

Thu, 24 Sep 2009 11:48:48 -0400

Mr. Harrison,

Excellent article, thank you for bringing to light a most disturbing truth.

But it appears that the average American 'gets it now,' because of the household deleveraging that is finally taking place. Yes, there is a short-term negative impact on consumer spending (if a consumer pays down debt with a portion of his/her income, that money isn't available for purchasing goods or services).

The impact is magnified when the consumer either chooses not to reborrow (prudent financial management) or is prevented from reborrowing (tightened credit standards).

Nevertheless, a positive becomes a healthier personal balance sheet, with lower debt servicing requirements.

Then, it becomes plausible to suggest that spending will resume, not at the prior level, and not to excess, but only in response to real, rather than perceived, needs.

The Incredible Shrinking Labor Force

Thu, 24 Sep 2009 00:13:21 -0400

I work for a small community bank in northern NV and we get phone calls and walk-ins from people who were laid off from other banks, title companies, mortgage companies, and customers on a regular basis. Our customer base is small business owners, and many of them are turning away would-be employees as well.

The 'official' jobless rate in this area is 12%, but the unofficial rate is probably closer to 20%.

It's Time to Sell Equities and Look to These 3 Areas

Fri, 18 Sep 2009 14:13:56 -0400

No confusion--instead of buying a position in gold in US dollars, buy the position in euros or sterling.

On Sep 18 12:45 PM chap08 wrote:

> With respect, you sound a bit confused. If you own gold, you don't
> own it "in" some currency, USD, Euro, whatever. That - to a large
> degree - is the whole point of owning it.

It's Time to Sell Equities and Look to These 3 Areas

Fri, 18 Sep 2009 12:33:39 -0400

Mr. Harrison,

I tend to agree with you regarding gold, but I think it would be a more profitable bet to own gold in currencies other than the US dollar, such as euros or sterling. In my opinion, there's too much dollar-based gold activity to provide meaningful profit opportunities in the short-term.

Best Buy: Flat Screens and Flattish Shares Make for Good Profits

Fri, 18 Sep 2009 11:34:14 -0400

Excellent writeup, and a good primer for those of us who aren't as astute with option plays.

Thanks.

Are Best Buy's Earnings a Warning?

Wed, 16 Sep 2009 15:39:03 -0400

On Sep 16 03:08 PM Rwong8200 wrote:

> BB has a great deal going against them the balance of the year.
Average
> retail price of all CE laptops, LED Tv, game consoles, navigation
> all falling by 15 to 20%. Digital deadline in June pulled forward
> millions of TV purchases. Cell Phone competition tougher and those
> prices are falling also. Last year $600 stimulus checks a Huge percentage
> were spent on CE. One year from now they should blow away comps.
> We are not seeing the usual nesting boom we have seen in past recessions.
> Finally BB has big presence in states hardest hit by the recession.
> Finally Amazon and internet have taken business on smaller shippable
> products. I sold BB position in August.

Looks like you left money on the table.

Apart from that, good analysis.

Some rejoinders:

BBY is still best in class for CE retailing, with a broad product mix and knowledgeable salespeople.

The GPM has stabilized this quarter, and I expect it to rise as services revenue becomes a larger portion of total sales.

SG & A expense margin increase resulted from a higher cost business model for Best Buy Europe. SG & A expense in the US was flat, despite the comp-sales declines.

Leverage is low, and 16X forward earnings seems a reasonable entry target.

Efficiency is improving, as shown by lower inventory carry despite a higher store count.

Disclosure: Long BBY in its ESPP.

Sept. Reuters/UofMich Consumer Sentiment Index: 70.2 vs. consensus of 67.3, up from 65.7 in August. 12-month outlook jumps to 79 from 69 in August, the highest since Sept. 2007. "Confidence rebounded in early September as consumers increasingly expected the economy to improve despite their reluctant conclusion that their own financial situation would remain quite problematic for some time."

Wed, 16 Sep 2009 15:26:31 -0400

There's nothing much to recommend MSM, is there? I've even stopped watching Bloomberg (I left CNBC several shouting matches ago) because the coverage seems to have less and less relevance to my daily life.

On Sep 11 10:25 AM Karen Consumer wrote:

> This is week 11 of being involuntarily unemployed for me. My friend
> E hit the 1 year mark on September 1. My son's UI just ran out, he's
> now waiting for the paperwork for the federal extension. My friend
> L is 2 weeks into her second bout of unemployment in a year.
>
> I want to know what drugs these Consumers are on, because I would
> very much like some. I am not feeling confident, I am not spending,
> and I am not expecting things to get better. I've completely stopped
> watching the big 4 for national news, I just stick to the local channels
> for local news, because I'm tired of the lies.