Filed under: Press releases, Products and services, Consumer experience, Competitive strategy, Microsoft (MSFT), Apple Inc (AAPL), Amazon.com (AMZN), Marketing and advertising, Sony Corp ADR (SNE)

Amazon.com (NASDAQ: AMZN) and Sony BMG, a joint venture of Sony Corp. (NYSE: SNE) and Germany’s Bertelsmann Media Group, announced yesterday that Amazon’s new MP3 store will soon carry the label’s entire catalog. This move makes Amazon.com’s MP3 store the only digital store to offer consumer’s Digital Rights Management-free MP3 tracks from all four major labels, with Sony BMG joining privately-held EMI Group, Warner Music Group (NYSE: WMG), and Vivendi (OTC: VIVEF)’s Universal Music Group.

Previously, Sony had announced a new promotion of album cards, which would grant listeners to download DRM-free MP3s, but it was limited to only about three dozen albums. The new agreement brings the entire catalog to Amazon.

The major point here’s that Amazon’s store now offers tracks that are playable on virtually any platform or device, from Microsoft (NASDAQ: MSFT)’s Zune and Apple (NASDAQ: AAPL)’s iPod to various off-brand players. In a press release given to Ellen Livshin of OutCast Communications, Amazon.com Vice President for Digital Music Bill Carr revealed this very fact: “Our Amazon MP3 customers will be able to select from a full selection of DRM-free music downloads from all four major labels and over 33,000 independents that they have the ability to play on virtually any music-capable device.” U.S. Sales head for Sony Thomas Hesse echoed these sentiments and added that the label is “excited to be working with Amazon as they continue to build new markets for digital music.”

I’ve remarked before that the Amazon.com MP3 store would increase competition and drive the digital market forward, and with this announcement it seems that many predictions about the on the internet music realm are being realized, albeit much earlier than expected. Many had pointed to mid-year as the time when DRM technology would disappear absolutely, but as we have the ability to now see, that timeline will be January, at least for one store.

The move is also a potentially devastating blow to Apple’s iTunes Store, which had headed up the move away from DRM but has not great success, managing to score only the EMI catalog early last summer. Whatever the case may be, the Amazon.com move will increase the competition and hopefully start the revitalization process the music industry needs. All they’ve to do is promote it and get consumers interested.

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Filed under: Rumors, Products and services, Hewlett-Packard (HPQ), Technology

Although computer giant Hewlett-Packard Corp. (NYSE: HPQ) has had its neck in the home entertainment arena for quite some time, the world’s largest tech company wants to throw its past in the bucket and really ramp up home products. This is based on what the company unveiled at this week’s Consumer Electronics Show in Las Vegas. My only question is this: haven’t we seen all this before?

The bridge that connects the internet to the home theater environment is so far from being a mainstream process that one would think many manufacturers would have abandoned the idea already. Microsoft (NASDAQ: MSFT) has pitched this idea for nearly a decade, and even Apple (NASDAQ: AAPL), which released the AppleTV to bridge this divide, has seen middling success at ideal.

What can Hewlett-Packard do to re-ignite this field — if it even exists in consumers’ minds? Microsoft’s Home Server, meant to shuttle content from anywhere in the home to anywhere, isn’t exactly burning up the sales charts.

The niche of home entertainment, so far, does not seem compatible with the Personal computer industry’s idea of extending Computer functionality to the living room flat-screen. From viewing HP’s lackluster plans that don’t seem solidly planted in reality, I’d guess this incompatibility will sit on the horizon for many years to come.

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Filed under: Press releases, Products and services, Consumer experience, Competitive strategy, Microsoft (MSFT), Apple Inc (AAPL), Amazon.com (AMZN), Marketing and advertising, Sony Corp ADR (SNE)

Amazon.com (NASDAQ: AMZN) and Sony BMG, a joint venture of Sony Corp. (NYSE: SNE) and Germany’s Bertelsmann Media Group, announced yesterday that Amazon’s new MP3 store will soon carry the label’s entire catalog. This move makes Amazon.com’s MP3 store the only digital store to offer consumer’s Digital Rights Management-free MP3 tracks from all four major labels, with Sony BMG joining privately-held EMI Group, Warner Music Group (NYSE: WMG), and Vivendi (OTC: VIVEF)’s Universal Music Group.

Previously, Sony had announced a new promotion of album cards, which would allow listeners to download DRM-free MP3s, but it was limited to only about three dozen albums. The new agreement brings the entire catalog to Amazon.

The major point here is that Amazon’s store now offers tracks that are playable on virtually any platform or device, from Microsoft (NASDAQ: MSFT)’s Zune and Apple (NASDAQ: AAPL)’s iPod to various off-brand players. In a press release given to Ellen Livshin of OutCast Communications, Amazon.com Vice President for Digital Music Bill Carr revealed this very fact: “Our Amazon MP3 customers will be able to choose from a full selection of DRM-free music downloads from all four major labels and over 33,000 independents that they have the ability to play on virtually any music-capable device.” U.S. Sales head for Sony Thomas Hesse echoed these sentiments and added that the label is “excited to be working with Amazon as they continue to build new markets for digital music.”

I’ve remarked before that the Amazon.com MP3 store would increase competition and drive the digital market forward, and with this announcement it seems that many predictions about the online music realm are being realized, albeit much earlier than expected. Many had pointed to mid-year as the time when DRM technology would disappear totally, but as we can now see, that timeline will be January, at least for one store.

The move is also a potentially devastating blow to Apple’s iTunes Store, which had headed up the move away from DRM but has not great success, managing to score only the EMI catalog early last summer. Whatever the case may be, the Amazon.com move will increase the competition and hopefully begin the revitalization process the music industry needs. All they’ve to do is promote it and get consumers interested.

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Filed under: Rumors, Products and services, eBay (EBAY)

Even though eBay, Inc.’s (NASDAQ: EBAY) Skype internet telephone service has has quite a bit of bad press lately, the service is what I would call indispensable to millions of customers who use it each day (myself included). There are reportedly over 250 million registered users of the service, and I regularly see seven to 10 million customers on the web at any given time. Why, then, isn’t the company doing well for eBay?

It is, in all reality. The fact is that eBay overpaid handsomely for the company in the first place, which is now showing up as ROI pressure just a tad over two years after eBay gobbled up the service. So, what can help Skype prove its worth more than just offering Voice-over-IP (VoIP) telephone calling over all those millions of PCs? Try voice calling over mobile handsets.

It makes complete sense for wireless telecom carriers to feel very threatened by Skype, as it should. After all, voice minutes — and the more lucrative data usage — is what keeps the bankrolls full for all wireless carriers. If an application was to be used on any carrier’s handset that would bypass voice minutes and grant for voice conversations using data methods, this is where the threat lies. Have an unlimited amount of data usage on that Windows Mobile phone? If so, why pay for voice minutes when you can use Skype for free? There lies the conundrum.

It’s true what Skype states — its users aren’t always at a computer. More and more, this is true. The “computer” many of us have at all times is the advanced wireless cellphone, though. This fact makes it hard for Skype executives to ignore the mobile market, even with what could be intense opposition from threatened wireless carriers in the near future. If Skype succeeds on the mobile frontier, it has to find a combination for that success that’ll work with handsets and carriers from nearly all global wireless service companies. Talk about a massive challenge.

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Filed under: Rumors, Products and services, Hewlett-Packard (HPQ), Technology

Even though computer giant Hewlett-Packard Corp. (NYSE: HPQ) has had its neck in the home entertainment arena for quite some time, the world’s largest tech company wants to throw its past in the bucket and really ramp up home products. This is based on what the company unveiled at this week’s Consumer Electronics Show in Las Vegas. My only question is this: haven’t we seen all this before?

The bridge that connects the internet to the home theater environment is so far from being a mainstream process that one would think many manufacturers would have abandoned the idea already. Microsoft (NASDAQ: MSFT) has pitched this idea for almost a decade, and even Apple (NASDAQ: AAPL), which released the AppleTV to bridge this divide, has seen middling success at best.

What can Hewlett-Packard do to re-ignite this field — if it even exists in consumers’ minds? Microsoft’s Home Server, meant to shuttle content from anywhere in the home to anywhere, is not exactly burning up the sales charts.

The niche of home entertainment, so far, does not seem compatible with the Personal computer industry’s idea of extending Personal computer functionality to the living room flat-screen. From viewing HP’s lackluster plans that don’t seem solidly planted in reality, I’d guess this incompatibility will sit on the horizon for many years to come.

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Filed under: Rumors, Products and services, eBay (EBAY)

Although eBay, Inc.’s (NASDAQ: EBAY) Skype world wide web telephone service has has quite a bit of bad press lately, the service is what I would call indispensable to millions of customers who use it every day (myself included). There are reportedly over 250 million registered users of the service, and I regularly see seven to 10 million customers online at any given time. Why, then, isn’t the company doing well for eBay?

It is, in all reality. The fact is that eBay overpaid handsomely for the company in the first place, which is now showing up as ROI pressure just a tad over two years after eBay gobbled up the service. So, what can help Skype prove its worth more than just offering Voice-over-IP (VoIP) telephone calling over all those millions of Personal computers? Try voice calling over mobile handsets.

It makes complete sense for wireless telecom carriers to feel very threatened by Skype, as it should. After all, voice minutes — and the more lucrative data usage — is what keeps the bankrolls full for all wireless carriers. If an application was to be used on any carrier’s handset that would bypass voice minutes and grant for voice conversations using data methods, this is where the threat lies. Have an unlimited amount of data usage on that Windows Mobile phone? If so, why pay for voice minutes when you can use Skype for free? There lies the conundrum.

It’s true what Skype states — its users aren’t always at a computer. More and more, this is true. The “computer” many of us have at all times is the advanced wireless cellphone, though. This fact makes it hard for Skype executives to ignore the mobile market, even with what could be intense opposition from threatened wireless carriers in the near future. If Skype succeeds on the mobile frontier, it has to find a combination for that success that’ll work with handsets and carriers from almost all global wireless service companies. Talk about a huge challenge.

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Filed under: Products and services, Marketing and advertising, Politics, Presidential elections

It sounds like a bad dream. You should up to listen to and perhaps ask questions of Mike Huckabee, a leading Republican candidate for President but first … You’ve to sit through a speech about what a great opportunity Amway is. Pass the puke bucket.

But that’s exactly what happened in West Des Moines, according to the Baltimore Sun: “For half an hour, two businessmen paced the stage where Huckabee would soon stump. They never said the name of the company during their talks, but afterward some members of the crowd shared with others the good news of a company called Quixtar Inc.” Earlier this year, parent company Alticor said it was phasing out the Quixtar name and rebuilding its Amway brand which it had dropped in 2000.

Huckabee denies any formal association with the multi-level marketing hucksters, but stated that they were a “great group of people.”

It appears true that Alticor employees and executives haven’t been giving to Huckabee. For whatever reason, company patriarch Richard DeVos has given money to Rudy Giuliani and Mitt Romney. But historically, Alticor has been a large donor to the Republican Celebration.

Maybe Giuliani, Romney, and the GOP as a whole should do some research into the background of the company that has been one of the part’s top donors for years. They could start with this excellent Dateline special.

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Filed under: Deals, Bank of America (BAC), Countrywide Financial (CFC), Housing

The New York Times reports that Bank of America (NYSE: BAC) will buy Countrywide Financial (NYSE: CFC) for $4 billion in stock — or $7.16 a share — $500 million below CFC’s current market value of $7.75 a share, or $4.5 billion. Although this outcome is superior than a bankruptcy filing or a government bailout, Bank of America may be letting its ego get in the way of sound business strategy.

Yesterday I told TheStreet.com that I thought Bank of America — which in August purchased 16% of Countrywide by buying $2 billion in preferred shares yielding 7.25% with an option to purchase 111 million shares of its stock at $18 — was doubling down on a bad bet. Since then, Countrywide’s stock has fallen 63% from $21 to $7.75 — wiping out $1.3 billion worth of that 16% stake’s value. To me this proves that Countrywide’s CEO Angelo Mozillo was wrong when he said last March that the subprime mess would be “great for Countrywide because at the end of the day, all of the irrational competitors will be gone.”

While this deal will end Countrywide’s irrational existence, Bank of America is apt to survive. For Bank of America shareholders, the question is whether the value of Countrywide’s assets — a $1.4 trillion loan servicing portfolio, a bank, an insurance company, a subsidiary that provides borrowers with loan closing services like appraisals and flood certifications; and a broker-dealer that trades securities — exceed the cost of its liabilities.

These include bad loans which will need to be written off and huge legal liabilities. For instance, 7.2% of the loans in Countrywide’s servicing portfolio were delinquent last month, up from 4.6% in December 2006. Foreclosures also more than doubled last month, to 1.44% of unpaid principal balances versus 0.70% in December 2006.

And Countrywide is in the middle of some significant lawsuits. The Wall Street Journal reports that Countrywide is facing borrower suits and investigations by federal and state agencies for alleged lending and loan-servicing abuses, as well as shareholder suits stemming from its financial decline. I’ve no estimate of how much it will cost to settle these suits.

I don’t know how this will play out. The answer depends on how huge the write-downs will be for Bank of America, how much it has to pay to settle lawsuits, and how long it takes for the housing and mortgage markets to recover. I think that Bank of America is betting that the eventual recovery of that mortgage industry will leave it in a dominant position whose economic value will more than offset its $6 billion+ bet on Countrywide.

In pre-market, Countrywide investors are heavily disappointed with the deal — valuing it at $6.72, 13.3% below yesterday’s close and 6% below the deal value. Bank of America shares are down 25 cents in pre-market.

Peter Cohan is president of Peter S. Cohan & Associates. He also instructs management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

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Filed under: Products and services, Adobe Systems (ADBE), Bargain stocks, Chasing Value, Stocks to Buy, Technology, Best Stocks for 2008, Loews Corporation (LTR)

Some companies seem to always be just outside my grasp. They sit on my watch-list for long periods and often never present an opportunity to acquire the stock. Adobe Systems (NASDAQ: ADBE), which closed at $42.93 on December 28, 2007, fits the bill. I nearly included it in my Chasing Value: Final list — 8 stocks for 2008, but alas, I decided I felt more confident in stocks like Loews Corp. (NYSE: LTR), which was the last stock added.

I asked one of the advertising company officers in town how important Adobe software was to their business and he replied, “They couldn’t function without it, they would be out of business.” I’m sure he was exaggerating, but only a tiny.

Adobe is not a monopoly because you can work around it with less robust programs, but no company offers the integrated suite of graphics products that Adobe does, including Photoshop, InDesign, Illustrator, Acrobat and if you’re on the internet much, you must receive multiple PDF files per day.

Generally talking, when I’m looking for value propositions I’m talking about P/E ratios under 10 and higher-than-average dividend yields, but that’s not the case for this “value stock.” The P/E is about 24 and it does not pay any dividend, so where is the value? For starters, the P/E may be high, but it isn’t historically high for this company and Adobe is about 13% off its 52-week high.

As you can see from the five-year chart, like most stocks, Adobe zigs and zags, but the long-term trend is up and many analysts think that trend will continue.

Barron’s (subscription required) has done several positive stories on Adobe, and continues to see it as a $50+ stock. They thought it would be last year, think it should be now and can’t envision why it would not be in 12 months. Yesterday, ADBE shut at $39.46, another 10% less than it would have been had it made my initial list.

Adobe released new software last year, Creative Suite 3, encompassing its compete line of products in a package that’s slowly being adopted by numerous industries, including entertainment, advertising, graphic design, product design, marketing, you name it.

I have reviewed the most current reports by Standard & Poor’s and Reuters, both of which are favorable and I agree with most of their sentiments. This is the stock I am going to make my first new pick of the year outside the basic 8 for 2008, based on quality of product, its even lower stock price, historical P/E, management, and nearly monopolistic market share. It is the first tech stock I have recommended in a long time, and at today’s closing price of $39.25, I think it is a bargain.

Disclosure: I don’t own any ADBE shares as of this date.

To find potential opportunities and verify my track record read Chasing Value or Serious Money.

Sheldon Liber is the CEO of a small private investment company and the design and research principal for an architecture & planning firm.

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