Filed under: Bad news, Products and services, Consumer experience, Oil, Recession

It has definitely been a tough week for airlines, and yesterday Skybus became the third airline to stop operating.

Once again, the main culprits are rising fuel costs and the slowing economy, making it almost impossible for small, low-cost airline companies to compete in the current market. Skybus decided that it would be shutting down all operations as of yesterday, and plans to file for bankruptcy over the course of the next week.

Skybus has not been around for too long. The company started up about a year ago and operated around 75 flights a day. The company had 350 employees working out of Columbus, Ohio, and 100 in Greensboro, N.C.

Similar to what we saw earlier this week with the ATA Airline closure, the writing had been on the wall for a while now at Skybus. A couple of weeks ago, the company’s CEO stepped down in order to pursue a book-writing career, and over the course of the past weeks the airline had already begun to cancel flights and destinations in reaction to rapidly rising fuel costs.

In addition to Skybus and ATA Airline shutting down and planning to file for bankruptcy, earlier in the week we also go that the news that Aloha Airlines had been forced to ground all of its flights.

Skybus announced on its official website that anyone holding Skybus tickets for future flights should contact their credit card companies as soon as possible to work out a refund, and to look for alternative flights to handle their travel needs.

I would like to state that this isn’t a trend that we should anticipate to see continue, but with oil prices still trading at near record highs you really have to wonder how many more stories like this we’re going to be hearing over the upcoming weeks and months.

Michael Fowlkes has worked as a stock trader for seven years and spent the last four years working as an analyst for the online investment advisory service Investor’s Observer.

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Filed under: Products and services, Target Corp. (TGT)

Target Corp. (NYSE: TGT) is a retailer that’s been known to find and feed customer niches better than any other discount retailer. From its bright store colors to trendy and chic items in several departments, the retailer has shown Wal-Mart Stores, Inc. (NYSE: WMT) that it can indeed compete. And, very well.

One of the more interesting product niches that’s been explored recently has been higher-end women’s cosmetics. When six beauty products rack up a retail bill of more than $200, you know there’s something to be celebrated. No longer are Dillard’s Inc. (NYSE: DDS) and Macy’s Inc. (NYSE: M) the exclusive way many women purchase those extremely lucrative cosmetic products with the hefty profit margins. Nope, Target’s moving into the arena aggressively from all appearances.

Target is now stocking upper-end cosmetic brands like Clarins, Kiehl’s, Origins, Bare Escentuals and Bumble and Bumble. Although the retailer’s move was studied this past Tuesday, it certainly was no April Fool’s joke. But do these brands care that the positioning Target will provide will undermine the premium brand luxury awareness and hefty prices at department store partners?

Many of these brands state they have no relationship with Target; therefore, Target’s source may be the gray market. They’re free to do that, but perhaps Target is just testing the waters of luxury cosmetics before making an official plunge in most of its national stores. Not so strangely, the experiment could easily work with Target’s unique position in the market.

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Filed under: Products and services, Competitive strategy, Apple Inc (AAPL), Wal-Mart (WMT)

The days of music distribution have changed. They’re not changing, they’ve already changed. Nothing indicates this more easily than a leaked report from research brain trust NPD Group that indicates Apple, Inc. (NASDAQ: AAPL) has surpassed longtime #1 music retailer Wal-Mart Stores, Inc. (NYSE: WMT) as the world’s largest music seller.

Here’s the kicker — Apple does not sell a single physical piece of music. It’s all digital. The company’s iTunes digital music store sells music, videos, television shows and movies to all those bazillions of iPod users around the world. Now, it just took out the world’s largest retailer in terms of selling the most music. This even though Wal-Mart sells more CDs than anyone in addition to its very sizable music download service as well.

Apple passed Ideal Purchase Inc. (NYSE: BBY) as the second-largest music retailer just recently, and now it’s on top. All by using the mighty download as its car of choice to get content to its customers. Is the music industry a different world than it was just five years ago? I’d say more like a different universe. Movies and television shows — you could be next. In fact, the transition might already be far, far underway.

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Filed under: International markets, Bad news, Products and services, Management, Consumer experience, Competitive strategy, Apple Inc (AAPL), Motorola (MOT), Marketing and advertising, Employees, Nokia Corp. (NOK), iPhone

Last night, handset maker Motorola Inc. (NYSE: MOT) announced that it would be slashing another 2,600 jobs as the company continues to battle lower sales. The current job cuts represent approximately 4% of its total job force as of the end of 2007 of 66,000 employees.

It wasn’t that long ago that Motorola was a major force in the world of mobile phones, but over the past two years the company has definitely fallen from grace among consumers. Two years ago the company was the world’s second largest handset maker, but that status is no more, and the company is currently sitting in the fourth spot overall.

Analysts have blamed the company’s drop due to lack of innovation, and some have gone so far as to predict that the company’s handset business is doomed if Motorola can not pick up the pace and start to pump out new and fresh ideas for consumers to gobble up.

At its peak, the company was able to rely on sales of its highly popular Razr phone line (which I admit, I still have myself), but the popularity of the Razr phones has fallen, and competitors such as Nokia (NYSE: NOK) and Samsung have been able to leave Motorola behind with their newer models. While last year’s launch of the iPhone, by Apple Inc. (NASDAQ: AAPL) was by no means enough to push Apple ahead of Motorola, the iPhone definitely stole customers away from Motorola and has added pressure on the company to step up the development process.

The company recently announced that it was going to separate out this ailing portion of its business, and analysts hope that by giving the handset unit its autonomy that it will be able to attract higher profile executives who can help turn things around. Time will tell how this will play out.

Michael Fowlkes has worked as a stock trader for seven years and spent the last four years working as an analyst for the online investment advisory service Investor’s Observer.

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Filed under: Major movement, Products and services, Consumer experience, Middle East, Politics, Commodities, Oil

With the recent surge in oil prices, it should come as no surprise that we are getting hit hard at the gas pumps, and according to AAA, prices moved to a new record high last night of $3.303 for a gallon of regular unleaded.

This is the second day in a row that gas prices have set new highs, after jumping more than a penny overnight. At these current levels, prices are now a large 22% higher than they were this time last year.

Congress has been trying to get to the bottom of the situation, and earlier this week they heard testimony from executives of 5 of the world’s largest oil companies regarding the current price explosion. Some analysts are predicting that Congress may have to step in to take some action to help combat the record-high prices by making the buy of high-risk oil contracts tougher to do, which could lead to lower prices. Whether or not that takes place remains to be seen.

Oil companies are defending the current run up in prices, blaming it completely on the current record high oil prices. Currently oil is trading at slightly above the $105 mark. A little lower than the $110 oil we saw last month, but not enough lower to really impact the future of gas prices.

The hardest hit says are, as usual, California and Hawaii. California drivers can anticipate to pay on average $3.679 for their gasoline, and Hawaii residents are also facing prices above the $3.60 mark. So where is the cheap gas? Well, if you take into account $3.046 a gallon cheap, then that honor goes to resident of New Jersey, which is the only state in the country to show gasoline prices below the $3.10 mark.

For those of you driving diesel powered automobiles, your gas bill is even more extreme, with the average price of a gallon of diesel running at $4.023.

I wish I could predict that prices would be retreating in the months to come, but I cannot. With the high-demand summer driving months right around the corner, it isn’t looking as though we’ll see much relief over the next few months. So, if you are planning on doing any heavy driving this summer, you might want to begin saving now, because barring any sort of miracle, these high prices are here to stay.

What are you seeing in your area? I am always curious to hear from our readers regarding prices in their neck of the woods. Let us know where you are from, and what prices you’re seeing at your local gas stations.

Michael Fowlkes has worked as a stock trader for seven years and spent the last four years working as an analyst for the on the internet investment advisory service Investor’s Observer.

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Filed under: Products and services, Launches, Consumer experience, Competitive strategy, Microsoft (MSFT), Apple Inc (AAPL)

Microsoft (NASDAQ: MSFT) states it will sell its older OS Windows XP for another two years. The company announced that “the extension is designed only for ultra-inexpensive desktop and laptop Personal computers too limited to run the Windows Vista system,” according to The Wall Street Journal. XP was supposed to go away because it is old.

The explanation sounds bogus. Microsoft’s new OS Vista has had reasonable sales, but reviews of the software say that it is full of bugs and does not help Personal computers work well with other devices like printers. Apple (NASDAQ: AAPL) has been pushing its OS not just for Macs but directly into the Computer market. The company claims that its product works superior than Vista and it appears that some consumers are buying into that claim.

There have also been reports that some corporations don’t want to upgrade to Vista and will keep the old Microsoft OS running until a version after Vista is produced.

The Microsoft move might have a silver lining. Customers and businesses that want the latest and most powerful Microsoft product can purchase Vista. Those who are concerned about the software can use XP, instead of considering the Apple substitute.

Douglas A. McIntyre is an editor at 247wallst.com.

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Filed under: Products and services, Consumer experience, Competitive strategy, Google (GOOG), Apple Inc (AAPL), News Corp’B’ (NWS)

Bloomberg reported Thursday that News Corp.’s (NYSE: NWS) MySpace asset wants to leverage its mindshare to sell music. Not a huge leap of logic there — MySpace is a touchstone for the online-savvy youth, a group that enjoys consuming songs and going to shows. Only problem is, the MySpace generation also intersects with another club — the iPod generation — and going against Apple (NASDAQ: AAPL) won’t be a easy task for Rupert Murdoch and his social-networking empire.

Bloomberg points out an another interesting issue for MySpace — its buzz appears to be weakening somewhat. I found it very interesting that Facebook is challenging MySpace’s dominance in terms of user growth, and that Google (NASDAQ: GOOG) might not be doing as well with its MySpace deal as perhaps it theoretically should be.

This music initiative, called MySpace Music, is intended to assist top-line sales expansion. Remember the days when MySpace was the undisputed god of the internet? Hey, it’s still a major on the web brand, no question, but I find it funny how, in certain respects, MySpace just isn’t the untouchable social network that it once was. It definitely calls to mind the axiom dictating that the hot domain one year might not be quite the zeitgeist the next; I’ve certainly been hearing more and more about Facebook than I’ve about MySpace these days.

MySpace is nowhere close to death, though, and MySpace Music will come to market with some heavy business partners: Universal Music Group, Sony BMG Music Entertainment, and Warner Music Group (NYSE: WMG). But will it be enough?

Not to sound like Donny Deutsch, but I have to go back to the branding here. Apple and its iTunes franchise is way too powerful at this point to challenge. Does this mean News Corp. shouldn’t try to be a music merchandiser? No, it’s a worthwhile experiment. Taking the crown from Apple isn’t feasible, but I’ll assume News Corp. isn’t really gunning for Apple so much as it is attempting to ensure that MySpace remains a major player in social networking.

That’s the huge challenge. The most influential constant in the formula for success on the web is change, since change is an easy thing in the electronic economy. MySpace has to do all it can to remain cool and attractive to the hipster surfers, and selling them music should help.

Disclosure: I don’t own shares in any of the companies mentioned here; positions can change at any time.

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Filed under: International markets, Other issues, Products and services, Management, Consumer experience, Rants and raves, Competitive strategy, Microsoft (MSFT), Apple Inc (AAPL), Starbucks (SBUX), McDonald’s (MCD), Adobe Systems (ADBE), Serious Money, Commodities

We have seen this play before, and there are two scenarios as to how it could end. Starbucks Corporation (NASDAQ: SBUX) is being challenged like never before, having saturated the market place in some locations it is now facing the challenges of selling costly coffee in a slowing economy.

Would you rather pay $4 for a cup of coffee or a gallon of gas? You can find cheaper coffee but you’ve few options to find cheaper fuel. Amid the already difficult operating environment Starbucks is faced with competition from the largest restaurant chain in the world, McDonald’s Corporation (NYSE: MCD). McDonald’s is looking to steal its morning thunder with competitive offerings at a far lower pricing structure. The threat is very real no matter what spin Starbucks puts on it.

This brings to mind two similar situations both involving Microsoft Corporation (NASDAQ: MSFT) and past competitors. Early on there were two word processing programs that together probably had 90% market share. Those were Wordperfect and Wordstar. Both of them were fine programs offering strong features, and now they’re nowhere. Microsoft displaced both of them with MS-Word integrated with their Office suite of products, and is now king.

McDonalds is attempting to do to Starbucks coffee (and others) what Microsoft did to WordStar. And like MSFT, MCD is packaging it’s coffee with its existing bundle of food products and experiences to gain market share. Besides offering lower prices and one stop shopping, they’re wisely refurbishing stores in a mock-Starbucks motif, softening colors from bright yellow and red to beige and brown. They’ve added new furniture and also started to provide for Wi-Fi Internet access. They’re very good at what they are doing and early signs are that they will be successful and take market share from the specialty coffee houses.

There’s however hope for Starbucks and others because there are other historic models that have resisted Microsoft’s tidal wave. Adobe Software (NASDAQ: ADBE) has maintained 90%+ market share in the graphics world with its suite of products and free World wide web PDF standard. They did this by getting a high quality product to market early, pricing it right, and having free offerings that became a standard. This has proven easier to maintain then $4 coffee will be, so I expect that Starbucks is going to take a large hit to its profit margins, even if it can continue to be a successful growing enterprise.

Another example of success is Apple Inc. (NASDAQ: AAPL), led by Steve Jobs. Apple has created many leading edge products and such a one-of-a-kind culture that it is growing market share and holding it’s margins in numerous areas. It has also grown dramatically over the past few years. Howard Shultz has returned to grab the reigns of Starbucks, but can he reinvigorate the company and hold off the competition a la Steve Jobs? That is a very huge task indeed.

Starbucks needs to expand the strength of experience, offer more competitive products, and remain different enough to matter. They remain with some advantages in that they are suitable to smaller outlets and more one-of-a-kind locations and there are fewer screaming kids to interrupt one when doing homework, or meeting a date. Even though Starbucks is the biggest target for McDonalds and has been receiving the most ink, it is by no means the only one. There is room for more than one player in the market and it might be third and fourth tier chains that suffer much more and perhaps disappear.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of SBUX.

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Filed under: Products and services, Ford Motor (F)

Ford Motor Co. (NYSE: F) has recognized in the last 24 months that it needs to get the kind of vehicles that customers actually want to buy to market much faster. Foreign competitors have been able to do this for a while now, which is a reason Toyota Motor Co. (NYSE: TM) has moved up the chain to become the global automotive heavyweight to beat these days — even ahead of General Motors Co. (NYSE: GM).

In that vein, Ford has sold off some of its niche brands, reorganized focus on its core manufacturing and sales finesse and is now taking another step under “fixit” CEO Alan Mulally. The global automaker is reorganizing its design and engineering centers worldwide to speed product development on a global scale. Not only will this help Ford compete more effectively, but let’s also hope the company knows — in advance — what the majority of customers want to purchase in terms of new automobiles. Unless I’m completely wrong, the large SUV won’t be at the top of those plans for a long while.

It’s been stated that the business world of sellers and buyers takes place in a “global village” — and automakers like Ford are finally realizing that a broader global view makes perfect sense in trying to maintain consistent sales when one market might be down while others are up. It’s no secret that U.S. auto sales have been down for a long while — and the capability of shifting more product mix to non-U.S. markets to deflect slowing sales would seem to have been on Ford’s roadmap much sooner than it actually was. Better late than never, though.

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Filed under: Other issues, Bad news, Press releases, Products and services, Management, Industry, Consumer experience, Competitive strategy, Employees, Southwest Airlines (LUV)

Two years after coming out of bankruptcy, ATA airlines has once again been forced to file for chapter 11. The airline canceled all flights, and has advised travelers to begin to look for alternative travel arrangements.

The airline operated roughly 50 flights a day, and had more than 2,200 employees working. On its website, ATA has issued a formal statement and blamed the final straw for its collapse on the loss of a key military contract. In 2006, the company had won a $335 million dollar contract from the U.S. Air Force for international airlift services.

In its statement, ATA has advised passengers to contact their credit card company, or travel agent to discuss the options to get refunded for their unused tickets.

When looking to rebook your travel plans, you can use this website that lists alternative airlines that fly to the destinations that ATA had been servicing. On the site you can find airline information, website addresses as well as phone numbers for reservation desks.

If you have ATA tickets that you purchased through Southwest Airlines (NYSE: LUV), then you need to contact Southwest directly at the following number: (800) 308-5037.

For the 2,200 employees of the company — they will be receiving official notices this day that their jobs have been eliminated. While it is never a good feeling, hopefully it will not be too much of a shock for the company’s workers. The writing has definitely been on the wall.

Last month the company announced that it would no longer be using Chicago’s Midway Airport (where it has had a hub since 1992), and then just two weeks ago the chief executive of ATA’s parent company resigned under pressure regarding ATA’s profitability.

I am sorry to see the company shut down, and only hope that the challenging environment that airliners are currently facing won’t lead to more repeat stories like this one.

Michael Fowlkes has worked as a stock trader for seven years and spent the last four years working as an analyst for the on the internet investment advisory service Investor’s Observer.

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