Archive for March 12th, 2008
Filed under: Bad news, Products and services, Small business
A few days ago, I wrote a little post about Saks (NYSE: SKS) and Neiman Marcus, in which I suggested that stores that focus on high-end luxury items were apt to be the first victims in a recession. The reasoning for this is simple: when consumers have less money to spend, they are unlikely to waste it on costly prestige buys. As Sharper Image sorts out the details of its closure, and luxury retailers try to figure out how to deal with the evaporation of their consumer base, small stores are starting to experience major problems.
On February 16, Wilson’s Leather announced that it intends to close 160 of its 260 mall stores. Having worked at Wilson’s for a brief period in the early 1990’s, I can attest that this is definitely not the first time that the retailer has had problems; in fact, store closings are practically a stock-in-trade for the company. However, Wilson’s is merely highlighting what many analysts believe is going to become a trend among American businesses: the closure of small retailers.
Wilson’s, of course, has always been particularly vulnerable. As a specialty leather retailer, they only sell one type of item, and the popularity of that item is closely tied to the seasons. With the exception of motorcyclists and fetishists, most people aren’t particularly interested in buying a leather jacket in July. Moreover, Wilson’s stock is specifically targeted to middle-income consumers: sturdily constructed and priced at a discount, Wilson’s jackets are also somewhat boxy and not particularly sleek. Unfortunately, middle-income consumers are among those most directly affected by the rising costs of gas, food, and consumer products.
While Wilson’s might be among the first companies to feel the crunch of the recession (or, if you like, “reduced consumer confidence and, incidentally, reduced spending”), it will probably not be the last. Specialty stores and boutiques are probably looking at a tough year. “Mall” stores like Ann Taylor (NYSE: ANN), American Eagle (NYSE: AEO), Sephora, The Gap (NYSE: GPS), and PacSun (NASDAQ: PSUN) tend to pay premium prices for their spaces, have a rather limited range of stock, and charge more money for their products. All of this adds up to a vulnerable position when it comes to reduced consumer spending. Add in the fact that, ever since the late 1990’s, malls have been declining as centers of commerce, and you’ve got a recipe for disaster. In fact, some analysts are predicting that retail bankruptcies this year could reach the highest level since 1991.
As for the next domino, if the current trends in mall shopping and small business problems continue, I’d watch out for a major downturn among Mall property management companies.
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Filed under: Products and services, Consumer experience, Apple Inc (AAPL), iPhone
 After a day where Apple Inc. Apple Inc. (NASDAQ: AAPL) shares climbed 6.43% to $127.39, today the shares were almost flat most of the session despite the plethora of news surrounding the company.
First, we found out that Japan is investigating a possible defect in the iPod nano after “the digital music players reportedly shot out sparks while recharging.” These kind of potential problems with lithium-ion batteries are not new; throughout 2006-2007 consumers experienced many recalls of mostly laptops — including Macs — equipped with such batteries. But the question this time around is whether Apple had knowledge of the problem and delayed reporting it, as Apple’s filing with the ministry came two months after the reported incident in Japan.
Mind you, Engadget has been reporting on such incidents for quite a while, all relating to the same model. Almost a year ago, a first generation iPod nano was reported by an Australian to go up in flames, then in October of last year an iPod spewed chest-high flames from trousers, and earlier this month an iPod sparked a bedroom fire. So the problem was known, the question is what Apple plans to do about it now, if anything?
But there was some good news this day as well.
Apple announced “that more than 100,000 iPhone developers have downloaded the beta iPhone Software Development Kit (SDK) in the first four days since its launch on March 6.” With the SDK, developers can create iPhone and iPod Touch tools and applications. Apple reported on quite a few companies that have downloaded and are already working on applications, many of which are gaming developers like Electronic Arts, Sega and PAC_MAN, but not just, like Salesforce.com and Netsuite.
This is good news as it will only serve to spruce up demand for the iPhone, especially as Apple tries to market the device to the business clientele.
Alas, in late trading Apple shares have gained momentum to the downside, looking about to shut around $125.84, or 1.2% lower.
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DeviceGuru writes “MIT’s Technology Review magazine has just published its annual list of the top ten emerging technologies. Dubbed the TR10, these revolutionary innovations are poised to have a dramatic impact on computing, medicine, nanotechnology, our energy infrastructure, and more, state the magazine’s editors. The TR10 technologies this time around are: cellulolytic enzymes, reality mining, connectomics, offline web apps, graphene transistors, atomic magnetometers, wireless power, nanoradio, probabilistic chips, modeling surprise. More details on the TR10 appear in the March/April edition of Technology Review.”
Read more of this story at Slashdot.
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Riding with Robots writes “Today the robotic Saturn probe Cassini will make its closest buzz ever over the surface of the enigmatic ice moon Enceladus, whose surprising giant water geysers hint at a hidden ocean of liquid water. The spacecraft will fly right through the tops of the geyser plumes in order to sample the material that originated beneath the surface. NASA is offering a video, interactive guide and image gallery in advance of the event.”
Read more of this story at Slashdot.
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Posted by: admin in Today News
UK housing sentiment at 18-year low - BusinessWeek
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Posted by: in Politics News
metalman writes “Wired has a story on a proposal by Home Democrats to ‘establish a national commission — similar to the 9/11 Commission… to find out — and publish — what exactly the nation’s spies were up to during their five-year warrantless, domestic surveillance program.’ The draft bill would also preserve the requirement of court orders and remove ‘retroactive immunity for telecom companies.’ (We’ve discussed various government wiretaps, phone companies, and privacy violations before.) But it seems unlikely that such an substitute on phone immunity would pass both the House and Senate, let alone survive a Presidential veto.”
Read more of this story at Slashdot.
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jonkman sean writes “University researchers conducted research into how they can gain wireless access to pacemakers, hacking them. They’ll be presenting their findings at the “Attacks” session of the 2008 IEEE Symposium on Security and Privacy. Their previous work (PDF) noted that over 250,000 implantable cardiac defibrillators are installed in patients each year. This subject was first raised along with similar issues as a credible security risk in Gadi Evron’s CCC Camp 2007 lecture “hacking the bionic man”.”
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An anonymous reader notes a Time.com profile of Princeton University music theorist Dmitri Tymoczko, who has applied some string-theory math to the study of music and found that all possible chordal music can be represented in a higher-dimensional space. His research was published last year in Science — it was the first paper on music theory they ever ran. The paper and background material, including movies, can be viewed at Tymoczko’s site.
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jerryasher suggests Paul Krugman’s blog at the NYTimes, where he introduces a paper he wrote, The Theory of Interstellar Trade, with tongue very much in cheek. Some packrat academician was kind enough to send him a scan, because “back then academics did their work with typewriters, abacuses, and stone axes.” Abstract: This paper extends interplanetary trade theory to an interstellar setting. It is chiefly concerned with the following question: how should interest rates on goods in transit be computed when the goods travel at close to the speed of light? This is a problem because the time taken in transit will appear less to an observer traveling with the goods than to a stationary observer. A solution is derived from economic theory, and two useless but true theorems are proved… This paper, then, is a serious analysis of a ridiculous subject, which is of course the opposite of what is usual in economics.”
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Posted by: in Housing
Filed under: Bad news, Economic data, Housing
Mortgage applications decreased last week, as an increase in borrowing costs discouraged mortgage refinancing activity, the Mortgage Bankers Association announced Wednesday.
The Mortgage Bankers Association’s composite index of applications declined 1.9% on a seasonally-adjusted basis to 671.7 from last week’s 684.9.
The Refinance Index decreased 4.7% to 2,448.2 from 2569.0 the previous week and the seasonally adjusted Buy Index increased 1.6% to 368.8 from 363.1 one week earlier.
Mortgage rates rise
Meanwhile, the average rate for a 30-year fixed loan rose to 6.37% from 5.98% the prior week; 30-year rates are at five-month high. The average rate for a 15-year fixed mortgage increased to 5.72% from 5.26%.
Also, the share of applications that involved a refinance declined to 50.6% from 52%.
Economic Analysis: A big increase in conventional mortgage rates — the average rate rose about 40 basis points in one week. The U.S. Federal Reserve has cut benchmark, short-term interest rates by 225 basis points, but mortgage rates have not fallen, they’ve risen. That’s a tell-tale sign that banks remain concerned about their portfolios and about sluggish housing market conditions. For the housing sector to regain its sea legs, rates must move toward the lower-end of their 10-year range, which would increase housing demand by lowering monthly payments for purchases.
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