Circuit City Stores Inc. (NYSE: CC) is joining competitor Best Buy Stores, Inc. (NYSE: BBY) in trying to pump up the slumbering Blu-ray disc format by introducing many titles at up to half off. The latest promo puts many Blu-ray movie titles at $14.99, a discount figure of up to 40%. The main reason: Blu-ray movie titles aren't exactly flying off the shelves these days, regardless of the high-definition resolution that fanatics claim make movies way more enjoyable.
Last week, I wrote about Best Buy's Blu-ray disc player price drop from $399.99 to $349.99, which was a complete non-event. The hardware manufacturers must _MUST_ get Blu-ray hardware players down to under $200 or Blu-ray will never become mainstream. Of course, the manufacturers and retailers are trying to milk the early period with profits, which is a standard exercise. Promoting Blu-ray movie titles to $15 (and even $20) is a great way to drum up interest in the format. Circuit City's move here, while great, still won't make up for the fact that the hardware is still too expensive for mass appeal.
Toshiba (OTC: TOSBF), the company that lost out in the high-definition disc format war to Sony Corp.'s (NYSE: SNE) Blu-ray, even rolled out a new upconverting standard DVD player so that consumers could watch existing DVDs in near-HD format if they didn't want to invest in Blu-ray's expensive hardware prices just yet. So far, the retailers championing the Blu-ray format are promoting the format well, but it will need much more before becoming a mass format like DVD has become. Is standard DVD good enough for you? Sound off in comments below and let me know.
TheStreet.com's Jim Cramer says with gas coming down further, the coming rally could be broad and fierce.
The great hurricane fakeout leaves us with oil much lower than it began, having launched itself from $112. Now that the $110 level's been breached and natural gas has gone as low as $7.50, we can begin to put together a holiday scenario that might -- just might -- explain the incredible run in retail that's been going on.
The presumption in retail, if you use Wal-Mart (NYSE: WMT) (Cramer's Take) as retail, was that once the stimulus wore off, presumably last month, the stocks would get hammered. On Aug. 7, Wal-Mart as much as told you that, and the stock dropped to $57 from $60.90.
Ever since then, it has been creeping up. Kohl's (NYSE: KSS) (Cramer's Take) dropped a point from that warning, going from $45 to $44. It is now at $49. Macy's (NYSE: M) (Cramer's Take) went from $19.80 to $18.90 before bouncing to $20.82. Jones (NYSE: JNY) (Cramer's Take) went from $17.40 to $17.20 before roaring to $19.80. Ralph Lauren (NYSE: RL) (Cramer's Take), because of a great quarter, didn't even get hurt, rallying from $67 to $75.
It's cool fun sometimes to look at under-$10 stocks and see if there are any worth investing in. TiVo (NASDAQ: TIVO), famous maker of digital-video-recorder technology, is currently trading under $10 a share, and it reported its Q2 numbers on Wednesday. I can't say, though, that I'm ready to buy just yet, even though some of the stats presented in the release described a nice improvement in year-over-year comparisons.
The bottom line, in fact, improved substantially. Earnings per diluted share came in at 3 cents. Last year, TiVo saw a loss of 18 cents per diluted share. According to Earnings.com, analysts were looking for a loss of 2 cents per share during the quarter, so estimates were certainly beat.
Cash flow from operations also jumped in a very nice way. The company generated over $10 million over the last six months. During the similar time period in 2007, TiVo needed to use almost three times that amount to keep operations going. Cash flow is an important metric for investors to look at, so that was good to see.
Best Buy, Inc. (NYSE: BBY) has lowered the price of a Sharp Blu-ray disc player this week to $349.99 from $399.99. Why is that so significant? It isn't. While most buyers in the U.S. sit and wait until Blu-ray player prices reach the $199.99 level, there is a looming problem even with that.
The problem is this: standard DVDs are good enough for most of us, and with upconverting players sitting in all retailers for $50 to $75, will another upgrade cycle to another format be foisted on the buying public? This one will be much harder than the transition from VHS tape to DVD a decade ago.
If Best Buy really wants to make the next-generation optical disc format truly a best seller, the pricing will have to come down by a mile. This really won't be the responsibility of the retailer, but the manufacturer. But Best Buy can do this: guarantee an X amount of sales if the price moves to a certain price point. It's the only retailer outside Wal-Mart Stores, Inc. (NYSE: WMT) that could possibly guarantee a certain amount of sales in order to get newer consumer electronics format into the mass population. So, will Best Buy take the lead and get Blu-ray into the mainstream?
Toshiba Corp. is rolling out its own upconverting standard DVD player specifically targeted to those buyers who don't yet want to invest in the expensive Blu-ray format. This is a good move, although there are tons of competing products already on the market. Although Sony Corp. (NYSE: SNE) won a major victory in the Blu-ray format, convincing customers to buy the expensive hardware and movie software is still a major challenge. Perhaps a major Blu-ray partnership between Best Buy and Sony should be on the way?
Proof comes in the form of Best Buy's registration of the Future Shop trademark in Russia. The Future Shop trademark is the name for Best Buy's Canadian subsidiary. It filed the license for trademark a few years ago and has been granted the trademark recently. Would Best Buy really try to enter a country where recent political strife has caused growing international concern? Sure -- if profits are to be made.
With Best Buy on record saying that it wants to achieve $80 billion in annual sales within five years, much of that growth won't be sitting inside its U.S. stores, but from international sales. Of course, the retailer continues to open stores inside the U.S. and won't stop that type of expansion as long as it makes business sense. For the last 18 months, Best Buy has ramped up its dominance in retail electronics and has crushed former rival Circuit City stores, Inc. (NYSE: CC). It's showing no signs of slowing down anytime soon.
TheStreet.com's Jim Cramer says that as consumers try to stretch their dining dollar, Darden, Yum! and McDonald's will benefit.
We all know we are overstored in this country and over-restauranted. There are tons of players -- so many that the competition got too hard. Now they collapse. That Uno might miss a payment, that Bennigan's and Steak & Ale are going away, that Bakers Square and Village Inn have filed for bankruptcy: All say the industry is in big trouble.
We read all of these horrible articles every day about restaurants, and yet we see that the stocks of Yum! and Darden hang in great, particularly the first, which gave hideous guidance and yet is now higher than it was before it told people commodity costs were hurting it. McDonald's? How many stocks just hit their 52-week high?
Apple (NASDAQ: AAPL) wants to get beyond AT&T (NYSE: T) outlets to sell its new iPhone. So, it will turn to consumer electronics giant Best Buy (NASDAQ: BBY).
The new distribution deal has significant risk. Part of the iPhone's appeal is that it is not as "easy" to get as other handsets. Apple and AT&T are the only sources for the device. To some extent, that makes it "special" in the consumer's mind.
Putting the iPhone into a large chain of stores that sell hundreds of devices including a large number of cellular handsets turns the iPhone into a bit of a commodity. While it may help sales some, it may take away part of the product's luster and its image as a superior handset product.
Broad distribution worked for the iPod. Whether it will be good for the iPhone's branding remains to be seen.
Douglas A. McIntyre is an editor at 247wallst.com.
U.S. stock futures were mixed Wednesday ahead of retail sales, import price data and oil inventories reports. Analysts expect retail sales, to be reported at 8:30 a.m., rose 0.5% in July. Futures may find direction after the report. Meanwhile, oil futures rose ahead of the inventory report due out at 10:35 a.m., the dollar fell against some currencies and gold futures rose. [Update: Following a decline in retail sales in July, futures turned lower.]
Deere & Co. (NYSE: DE) has just reported quarterly results and shares sank 6.1% in premarket trade. The world's largest maker of farm machinery, said earnings in the latest quarter rose 7% and revenue increased 17% as soaring crop prices boosted global demand for its agricultural equipment. The company, however, missed on earnings and gave forecast that was lower than estimations.
Earnings are still due from Macy's (NYSE: M), among others.
Nvidia (NASDAQ: NVDA) shares rose 7.3% in premarket trading despite reporting a $121 million loss Tuesday. Investors liked that Nvidia announced a stock buyback of $1 billion and predicted margin improvement.
Applied Materials (NASDAQ: AMAT) also rose, up 1.2% in premarket trading after the largest maker of semiconductor-production machinery forecast better-than-estimated orders and CEO Mike Splinter said conditions will improve. Its fiscal third-quarter profit plunged 65%, but sales results beat estimates.
Best Buy, Inc. (NYSE: BBY) continues to be the innovator in the consumer electronics space. The next time you saunter into an airport and plop out your laptop and cellphone, you may see a bright yellow Best Buy Express kiosk nearby.
That's right -- Best Buy is testing a concept to have the most-needed gadgets and accessories available for retail sale at an automated kiosk in your nearest airport terminal. Get ready to whip out that credit card.
If you forgot to charge that cellphone (oh no!) or need a last-minute Christmas gift after you arrive at the airport, you may soon be in luck. Initially, Best Buy is going to have these kiosks available at 12 major international airports in the U.S. to test the concept. The pricing? Very similar to what you'd find in a typical Best Buy retail location (read: cheap). This will be a comfort to those who are tired of paying those over-inflated fees at airport shops.
These kiosks will match the wish list of every gadget-hungry traveler: MP3 players, digital cameras, unlocked cell phones, portable gaming systems and all kinds of chargers for all your electronic toys. Want some headphones for the plane? You'll find those as well. Even Best Buy gift cards will be available -- the one-size-fits-all holiday gift. This is a very innovative approach by Best Buy to grow sales in a captive audience, and should provide a decent lift to upcoming holiday season sales.
The largest consumer electronics chain in the U.S. said that it would eventually roll out more than 200 stores in the UK over the long term, which is quite a bit more than had been expected. Best Buy wants to dominate that market just as it has conquered the U.S. market, and an aggressive international expansion like this cements Best Buy's goal of becoming a global retail player in consumer electronics.
But some are concerned that Best Buy's $2.1 billion chunk of Carphone Warehouse -- which is 50% of the company -- may be used to expand the Best Buy brand at the expense of the Carphone Warehouse brand. Best Buy wanted an immediate presence in the UK market by partnering with a leader there, and now it has that.
Rodman & Renshaw upgraded shares of Amgen (NASDAQ: AMGN) to Outperform from Market Perform following the positive top line results from the FREEDOM study. The firm established an $80 target. Jefferies upgraded shares to Buy from Hold following the positive top-line efficacy and safety results for Denosumab in PMO as they view it as a "big win." The firm raised their target to $71 from $47.
Best Buy (NYSE: BBY) was upgraded to Buy from Neutral at Banc of America.
Rowan Companies (NYSE: RDC) was lifted at JP Morgan to Neutral from Underweight.
Analyst downgrades:
Jesup & Lamont downgraded shares of Moog (NYSE: MOG.A) to Neutral from Buy on concerns of the company's high rate of R&D and its relative valuation. Keefe Bruyette downgraded shares of Federated Investors to Market Perform from Outperform following the company's lower than expected Q2 results and cut their target to $35.
Ryanair (NASDAQ: RYAAY) was cut to Hold from Buy at Citigroup.
Analyst initiations:
Morgan Joseph believes Amgen (NASDAQ: AMGN)'s positive FREEDOM trial results will have a profound and lasting impact on the company's growth but also on its scientific credibility. The firm initiated coverage with a Buy rating and $77 target.
Piper assumed Ctrip.com (NASDAQ: CTRP) with a Neutral rating and Epicor Software (NASDAQ: EPIC) with a Buy rating and $8 target.
Banc of America initiated Britannia Bulk (NYSE: DWT) with a Buy rating and $19 target.
Welcome to the 70th installment of The Wal-Mart Weekly, a column dedicated to bringing you insight, wit, facts, results, opinions, and just a bit of everything else when it comes to a very hot topic these days: Wal-Mart.
This week, I'm pitting Wal-Mart Stores Inc. (NYSE: WMT) against Best Buy, Inc. (NYSE: BBY) in terms of one nice and profitable category of product: consumer electronics. Although many would argue that consumer electronics have a slender profit margin, the fact is that consumers can't get enough gadgets.
They keep buying and buying and buying. Flat-panel televisions, iPods, cellphones, PCs -- you name it. With the insatiable appetite U.S. consumers have for these products, Wal-Mart has really upped the product presentation game recently within stores I've seen in my area. My guess is that it will only get more intense as Wal-Mart tries to strike at the heart of Best Buy.
When Best Buy Inc. (NYSE: BBY), Circuit City Stores Inc. (NYSE: CC) and Wal-Mart Stores Inc. (NYSE: WMT) are all stacked up together, which one comes out on top? Well, it depends on how you phrase the question: Are we talking solely prices here, or customer service? The pricing angle can be debated all day long. When it comes to service though, my experience is very similar to the conclusion that this article states: Best Buy is king.
Target Corp. (NYSE: TGT), although a much cleaner and brighter location in which to shop, seems to have a weak schedule in the consumer electronics department. Most weeks, I roam into many retail chain locations just to walk around and observe. In many cases, Target seems well-stocked when it comes to checkout personnel, but not if you have questions about a flat-panel television. At Circuit City, its tarnished reputation is well-deserved: It's hard to just find anyone to help you.
And Wal-Mart? The world's largest retailer has made strides to really improve the consumer electronics sections in its stores. The customer service, however, is a completely separate story. If I step into a Best Buy, there's a 99% chance that I will be greeted by a security guard manning the front door, and will be asked at least four times within five minutes if I need help.
While Wal-Mart may have slightly better prices on many consumer electronics items, is that all that matters? Of course not. I give Wal-Mart props for making large strides in product presentation, though. Chris Denove of J.D. Power and Associates says that "Across many industries, we've seen that the retailers that grow customer-service ratings the fastest have greater sales growth." If Wal-Mart wants to try and really compete with Best Buy's winning combination of price and service, it best listen to that advice. Target -- it's also time to step it up on your end. What are you waiting for?
Going into this morning's earnings announcement, analysts had been expecting to see the company show earnings of 26 cents per share, but the company shocked everyone by coming in well above those estimates, with a reported 35 cents per share for the quarter. Wall Street is rewarding the stock nicely this morning, pushing shares up over 14% in early morning trading.(See more of today's earnings news).
While the company was able to show a nice increase in sales, it did caution investors that the current economic condition is challenging, and that it expects this to remain the case for the foreseeable future. It has been tough for RadioShack recently to compete with stronger rivals such as Best Buy (NYSE: BBY), but the company showed good signs of life during the quarter by posting a 6.4% increase in sales. This is a very good sign for the company, which has been struggling the past several quarters.
MOST NOTEWORTHY: The Refining Sector, International Game Tech and Gilead Sciences were today's noteworthy downgrades:
Bernstein downgraded the Refining Sector to Market Weight from Overweight based on the weakening earnings outlook for the group. The firm downgraded Sunoco (NYSE: SUN) and Tesoro (NYSE: TSO) to Market Perform from Outperform.
Citigroup downgraded shares of International Game Tech (NYSE: IGT) to Hold from Buy following the company's lower than expected guidance and removed the stock from their Top Picks Live List. The firm lowered their target to $25 from $45. Shares were also downgraded at Oppenheimer to Perform from Outperform following the company's lower-than-expected results.
Jefferies cut Gilead Sciences (NASDAQ: GILD) to Hold from Buy following the company's Q2 results as they see limited upside catalysts and a matured core HIV drug franchise. The firm maintains a $56 target. BMO Capital downgraded GILD to Market Perform from Outperform based on valuation, flattening HIV sales, Letairis growth below expectations, and increased R&D costs.
OTHER DOWNGRADES:
Best Buy (NYSE: BBY) was downgraded at RBC Capital to Outperform from Top Pick.
Goldman removed Coca-Cola (NYSE: KO) from the Conviction Buy List.
Progressive (NYSE: PGR) was lowered to Neutral from Outperform at Credit Suisse.