eldavojohn writes “Consumer groups are asking for a ‘do not track’ registry to be implemented, similar to the successful and popular ‘do not call’ registry. Tracking companies are asking for examples where tracking has caused harm, and would rather the industry stay self-regulated. ‘In December, the FTC approved Google’s buy of advertising rival DoubleClick over the objections of some privacy groups. At the same time, the bureau urged advertisers to let personal users bar advertisers from collecting information on them, to provide “reasonable security” for any data and to collect data on health conditions or other sensitive issues only with the consumer’s express consent.’”

Read more of this story at Slashdot.

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Filed under: Bad news, Housing

Hussman Funds recommends that we’re in the early innings of the mortgage meltdown. I’d say we’re in the second inning. I agree with Hussman because of his chart that shows only about 25% of the cumulative mortgage resets have occurred. As Adjustable Rate Mortgages (ARMs) reset upwards, that means the mortgage holders will either have to cough up more money each month to pay a higher mortgage rate or they’ll default on the mortgage and throw their home into foreclosure.

Either outcome puts greater strain on the financial system, which will draw out the mortgage meltdown further. If homeowners keep paying the mortgage after it adjusts upward, that homeowner is squeezed since median incomes are flat. With 70% of GDP growth coming from consumer spending, this means a slower economy.

A slower economy means that people will get laid off, which will result in more homeowners who can’t pay their mortgages - thus throwing more houses on the market and making the mortgage meltdown worse. If people default on the resets, that immediately throws more houses on the market.

Either way, more people who can’t pay their mortgages leads to less demand for homes and more supply thrown on the market. This means that the mortgage meltdown has much further to go. We’ll get to the ninth inning when home prices drop so much and incomes rise enough that demand exceeds supply.

I’d say we’re in the second inning and that the worst is yet to come. What do you think?

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.

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Filed under: Bad news, Economic data, Housing, Recession

U.S. housing starts plunged in March as builders continued to cut back construction in the face of the nation’s worst housing slump in more than a decade.

Housing starts totaled a 947,000 annual rate, the U.S. Commerce Department announced Wednesday (pdf) - - the lowest annualized rate since March 1991. The February housing begin statistic was revised to a 1.075-million-unit annual rate.

Economists surveyed by Bloomberg News had expected housing starts to total a 1.02 million annualized rate.

Meanwhile, building permits, a measure of future construction, fell to a 927,000 annualized rate in March from 984,000 in February.

Single-family home permits dropped 5.7% to a 680,000 pace. Construction of multifamily homes, which includes townhouses and apartment buildings, plummeted 25% to an annual rate of 247,000 in March 2008.

Economist Glen Langan told BloggingStocks Wednesday many potential homebuyers are doing what you’d anticipate them to do in a sluggish housing sector, and builders are responding accordingly. “Potential home buyers are simply delaying their home purchase, if they aren’t putting it off entirely, until the market stabilizes,” Langan said. “And builders are following that signal. They’re slicing back construction in the face of these huge home inventories.”

Langan added that he anticipates the nation’s supply of unsold homes, currently about a 9.5- to 10-month supply at present sales rates, to increase to about an 11-month supply by the summer 2008, before inventories start to work-off. A healthy home sale market typically has a 3-4 month supply of homes on the market.

Economist Glen Langan told BloggingStocks Wednesday many potential homebuyers are doing what you’d anticipate them to do in a sluggish housing sector, and builders are responding accordingly. “Potential home buyers are simply delaying their home purchase, if they aren’t putting it off entirely, until the market stabilizes,” Langan stated. “And builders are following that signal. They’re cutting back construction in the face of these large home inventories.”

Langan added that he anticipates the nation’s supply of unsold homes, currently about a 9.5- to 10-month supply at present sales rates, to increase to about an 11-month supply by the summer 2008, before inventories start to work-off. A healthy home sale market typically has a 3-4 month supply of homes on the market.

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Filed under: Products and services, Apple Inc (AAPL), International Business Machines (IBM), Technology

According to Fox News, scientists at International Business Machines Corp. (NYSE: IBM) have found “a new type of digital storage which would enable a device such as an MP3 player to store about half a million songs and cost far less to produce.” The development was first published in last week’s Science magazine and if implemented would grant for devices that could last more than the “standard” service we see now. The technology, called “racetrack memory” is currently only “exploratory”, but IBM hopes to have it in devices within ten years time.

As nice as it sounds, it’s hard to see manufacturers or production companies seeking to use technology that would allow for devices that “run on a single battery charge for ‘weeks at a time,’ and last for decades.” Apple Inc. (NASDAQ: AAPL)’s most spacious iPod has a 160 gigabyte hard drive and can store 40,000 songs. If the new technology was used it would mean more than a 10-fold increase in songs but that’s still less than the current iPod’s more than “32 times the amount of storage the first iPod had when it debuted in late 2001.”

The new memory is reportedly also a major improvement over flash, “the most advanced type of memory for small devices”, since it has no moving parts, can write data very fast, and won’t “wear out” after countless uses. Stuart Parkin, the lead researcher for IBM, also hinted that “the promise of racetrack memory could unleash creativity leading to devices and applications that nobody has imagined yet.” In ten more years maybe we can look back and think about the next step, but until then the prospect of many more small numerous portable devices is exciting and distressing.

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Filed under: Products and services, Apple Inc (AAPL), Starbucks (SBUX), Marketing and advertising

Starbucks Corporation (NASDAQ: SBUX) and Apple Inc. (NASDAQ: AAPL)’s iTunes Store are teaming up again to promote “Song of the Day” cards for free downloads from the on the internet music store. The first time the two companies worked together was last October when the iTunes WiFi Music Store was launched and featured promotion through the coffee chain. With the renewal, the promotion will follow a more “traditional” music release with new songs released each week on a Tuesday as the “Pick of the Week“. The first program resulted in more than 6 million downloads and the new program is hoped to reach a significantly lower figure: 1.5 million downloads.

More than 7,000 Starbucks locations will take part in the program that’ll also promote videos in addition to songs. It started this week with the new song “Washington Square” from the Counting Crows and future songs will be pulled from a massive cache of artists, including Starbucks’ own Hear Music label artists’ Carly Simon and Hilary McRae.

As it was last fall, this program is a nice promotion for artists and on the internet music. Starbucks’ Hilary McRae’s first single was one of the tracks in the “Song of the Day” promotion which indicates it is also a nice place for the coffee chain to promote its own label and the CDs that are typicaly on sale in the stores. We have the ability to only hope that the program is as successful as its predecessor and that the 1.5 million figure mark is overtaken quickly.

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Filed under: Good news, Products and services, Management, Consumer experience, Competitive strategy, Starbucks (SBUX), Marketing and advertising, Battle of the Brands

The idea of serving customer needs and desires is rooted in the age-old notion of listening to the customer. One company taking consumer input to a whole new level is our favorite specialty coffee vendor, Starbucks Corp. (NASDAQ: SBUX).

How about ice cubes made from Starbucks’ own coffee, so you can cool that java without diluting the savory stuff? That’s what one customer recommended. What do you think? Another thoughtful consumer thinks that Starbucks customers might like shelves in the restrooms to rest their coffee on while “taking care of business.” A nice idea perhaps, but I believe that the practice of taking consumables into restrooms is discouraged in most instances.

At least one Starbucks customer request has already had a major effect. Reusable “splash sticks” have been introduced by the company to reduce coffee splash through the sipping lid of its sturdy cups.

The entire focus of this new Starbucks business model is summed up by CEO Howard Schultz, who was quoted in BusinessWeek as saying that he wanted “to open up a dialogue with customers and build up this muscle inside our company.” Mr. Schultz would like to make response to the consumer a cornerstone of company tradition.

So, what do you think? Should Starbucks initiate valet parking? Should it have barristas on roller skates cruising its parking lots? Maybe it should offer complimentary mocha caramel biscuits for the dogs that accompany its customers? What about individual caffeine packets so coffee addicts could personally customize their morning buzz?

One thing’s for sure, Starbucks’ says it’s listening. Now is your chance to prove that you’re a marketing genius. Howard Schultz wants to return the company to its former glory. Give him a piece of your mind, would ya?

Gary Sattler is a freelance blogger. He does not knowingly hold interest in the companies mentioned in this blog post.

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Filed under: Products and services, Apple Inc (AAPL)

A company called Psystar has announced that it is selling a $400 personal that can run Apple’s Leopard operating system. Psystar is referring to the machine as the Open Personal (a change from the original name, Open Mac) and claiming that it is “The Smart Alternative to an Apple.”

I doubt that Apple is very happy with this development, and I suspect that Psystar probably has a few messages from Apple’s lawyers on its answering machine. As Wired’s blog points out, Apple’s end user agreement says that its software can be used only on Apple hardware. Apple has a long and rocky history with clone hardware producers, and has aggressively sought to maintain its monopoly on both its excellent software and the sleek machines it builds to run it.

And that’s a shame, because a lot of people would like to buy a Mac but are put off by the price. The most basic Mac Mini is 50% more than the Open Computer, despite being slower and having less memory. Of course, I can’t state for sure that the Open Computer works as well as a real Mac. But I hope that Apple will get the message that there’s demand for cheaper personal that can run its software. It needs to either produce its own cheaper machines — such as the eMac I’m using to type this post but that is no longer available — or allow clone manufacturers to produce on their own. In the long run, it can only help Apple increase its market share.

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Torodung writes “In a current move, Comcast has proposed a ‘P2P Bill of Rights,’ joining the ranks of every great monopoly when threatened by government regulation for alleged misbehavior. They have instead proposed comprehensive industry self-regulation and cooperation with major P2P software vendors as a lesser evil: ‘Comcast is looking to further position itself as proactively — and responsibly — addressing the issue of managing peer-to-peer traffic that traverses its network, announcing Tuesday it will lead an industry-wide effort to create a “P2P Bill of Rights and Responsibilities” for users and World wide web service providers.’”

Read more of this story at Slashdot.

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Filed under: Earnings reports, JPMorgan Chase (JPM), Wells Fargo (WFC), Housing, Recession

There’s nothing quite like the earnings game on Wall Street. And two large banks — JPMorgan Chase & Co. (NYSE: JPM) and Wells Fargo & Co. (NYSE: WFC) both played it very well. Despite falling earnings, investors are celebrating. And that’s because JPMorgan and Wells both beat analysts’ expectations.

Bloomberg News reports that Wells earned 11% less than last year — $2 billion, or 60 cents per share — 5.3% more than the 57 cents that analysts had expected. Wells took in $334 million from its stake in Visa Inc. (NYSE: V) IPO, but it also benefited from a tight credit culture and an aggressive sales force. Nevertheless, its charge-offs for bad credit card and car loans were up 26% — a sign of trouble in consumer loan land.

Meanwhile, AP reports that JPMorgan beat analysts’ expectations by 6.3% despite a 50% decline in its net income. Specifically, JPMorgan profit fell in the first quarter to $2.37 billion after it took a provision of $5.1 billion to strengthen its reserves by $2.5 billion and account for $2.6 billion in losses in its loan portfolio. JPMorgan made 68 cents per share compared with $4.79 billion, or $1.34 per share, a year earlier. That was 4 cents more than the 64 cents that analysts expected.

If both banks can continue to make money in this rocky credit market — investors may want to use this as a time to purchase in. JPMorgan is up 4% and Wells rose 6% in early trading.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He owns Wells Fargo stock and has no financial interest in JPMorgan.

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Filed under: Earnings reports, JPMorgan Chase (JPM), Wells Fargo (WFC), Housing, Recession

There’s nothing quite like the earnings game on Wall Street. And two big banks — JPMorgan Chase & Co. (NYSE: JPM) and Wells Fargo & Co. (NYSE: WFC) both played it very well. Despite falling earnings, investors are celebrating. And that’s because JPMorgan and Wells both beat analysts’ expectations.

Bloomberg News reports that Wells earned 11% less than last year — $2 billion, or 60 cents per share — 5.3% more than the 57 cents that analysts had expected. Wells took in $334 million from its stake in Visa Inc. (NYSE: V) IPO, but it also benefited from a tight credit culture and an aggressive sales force. Nevertheless, its charge-offs for bad credit card and car loans were up 26% — a sign of trouble in consumer loan land.

Meanwhile, AP reports that JPMorgan beat analysts’ expectations by 6.3% despite a 50% decline in its net income. Specifically, JPMorgan profit fell in the first quarter to $2.37 billion after it took a provision of $5.1 billion to strengthen its reserves by $2.5 billion and account for $2.6 billion in losses in its loan portfolio. JPMorgan made 68 cents per share compared with $4.79 billion, or $1.34 per share, a year earlier. That was 4 cents more than the 64 cents that analysts expected.

If both banks can continue to make money in this rocky credit market — investors may want to use this as a time to purchase in. JPMorgan is up 4% and Wells rose 6% in early trading.

Peter Cohan is President of Peter S. Cohan & Associates. He also instructs management at Babson College and edits The Cohan Letter. He owns Wells Fargo stock and has no financial interest in JPMorgan.

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