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"Someone is holding the bag, but we don't know who." — John Edwards, chief economist at HSBC in Sydney, on the growing unease about which institutions are going to disclose major losses from the subprime crisis, as reported by The New York Times

To prepare for his freshman year at Georgetown University, Arjun Mehta packed the basics: clothes, a basketball, a 32-inch LCD TV, and an Xbox 360. A quick game of Halo, he explains, makes for a perfect study break. A few floors down, freshman Molly Henningsen's room is color-coordinated (aqua and green) and outfitted with a laptop, printer, digital camera, flat-screen TV, Wi-Fi router, and compact fridge. "I wanted everything to be really bright and really functional," she says, BlackBerry in hand.

Gone are the days when going to college meant picking up a calculator, shower tote, and the cinder blocks and boards for a bookshelf. The National Retail Federation predicts that back-to-college sales will increase 9% over last fall, to $956.93 per student or $47.3 billion overall—the most since the organization began tracking such spending in 2003. Small wonder then that the back-to-school season now ranks second only to the holidays in sales volume for many retailers—and appears just as recession-proof. "It's one of those life events that the traditional swings in the economy don't get in the way of," says Michael Brown, a strategist at consultants Kurt Salmon Associates.

Driving the trend: This generation's predilection for the latest technology and dorm decor, and the rationalization among many boomer parents that splurging on the latest gadgets and gear is an "investment" in their children's education. And just as merchants now put Christmas decorations up by Halloween, retailers like Staples (SPLS) and Circuit City (CC) began aggressive back-to-school ad campaigns in mid-July. "School ends, there's a couple weeks' break, and then it's right back to school shopping," notes Circuit City spokesman Bill Cimino.

And many now target their marketing not at parents, but at the teens who are the true arbiters of what's in. Apple (AAPL) has been giving free iPod nanos to Mac buyers, while J.C. Penney (JCP)launched an online reality-based "webisode" starring four teens to showcase its new fashions.

Retailers' success also stems from their ability to reposition yesterday's luxuries as today's essentials—items such as portable grills, "gaming chairs," memory-foam mattresses, and countertop dishwashers. School tech extends beyond PCs to digital voice recorders, Webcams, TiVo (TIVO)s, and even GPS systems. "These products are seen as necessary, rather than discretionary," notes Marie Driscoll, an analyst at Standard & Poor's (MHP) (which, like BusinessWeek, is a unit of The McGraw-Hill Companies (MHP)).

The investment plays here aren't lost on Driscoll and her team. S&P currently rates 11 retail stocks, including Best Buy (BBY) and Staples, that it expects to benefit from strong back-to-school sales as "buys" or "strong buys." If parents invest now, perhaps they'll generate returns strong enough to cover next year's back-to-school bill.

These days, back to school means plenty of gear. Parents often rationalize the big spurge as "investment" in education In an echo of the tech bubble, once-iconic Internet analysts Henry Blodget and Mary Meeker are battling it out again over stock valuations. But this little rivalry involves estimates of how much Google (GOOG) can make by overlaying ads on videos viewed at its popular YouTube site. In an Aug. 22 post to his Silicon Alley Insider blog, ex-Merrill Lynch (MER) analyst Blodget, who is barred from Wall Street for hyping stocks that he privately dissed, argued that the ads could bring in as little as $12 million or as much as $360 million in gross annual revenues.

Then Meeker, the Morgan Stanley (MS) analyst dubbed the "Queen of the Net" before her name became synonymous with the excesses of the bubble, quickly released estimates that the ads could bring in $4.8 billion over the coming year.

Blodget called out his former rival by noting that Meeker had made a critical math error: In estimating how much YouTube could make for every 1,000 video ads shown, Meeker's team neglected to divide by 1,000. By her math, Blodget mused, the YouTube revenue would amount to only $4.8 million.

Meeker, whose firm co-underwrote two of Google's stock offerings, promptly corrected her error. But first she revised upward some of her original assumptions to still argue that YouTube could bring in $504 million to $1.26 billion. Meeker was on vacation and unavailable to comment. Blodget declined comment, but on his blog he joked that Meeker's move was another example of the Wall Street practice of "backing into the numbers."

Ethiopia is an unlikely proving ground for a startup automaker, what with average annual income of just 9,000 birr (roughly $1,000) and lenders that routinely require downpayments of 70%. But that isn't deterring Tadesse Tessema. With the help of a grant from the Dutch government (where he worked as an engineer), Tessema has opened the first assembly plant in his native country, building his Holland brand sedans for the local market, including high ground clearance to help avoid damage from ever-present potholes. He's betting that his 75-employee enterprise, which uses parts from Turkey and Europe to build a variation of the 1970s-era Fiat 131, stands a chance because of low labor costs and stiff tariffs that can easily double the price of an imported car. As a result, Tessema is able to sell his Holland Doccs for the equivalent of $13,000—less than half what a new Toyota (TM) Corolla costs in that market.

Convincing local buyers that Made in Ethiopia is a good investment hasn't been easy: In his first nine months, Tessema has sold just 50 cars, and the recent influx of Chinese autos into Africa presents a new threat. But if his venture flops, Tessema can go back to his old sideline—importing used European cars for sale to taxi drivers.

http://calculatedrisk.blogspot.com/

Most housing and mortgage blogs these days read like the obits—a dry chronicle of the latest builders and lenders to fail, without any behind-the-scenes insights into how this mess happened in the first place.

But Calculated Risk, written by a retired—and anonymous—executive of a public company and an ex-bank officer who goes by the name "Tanta," provides analysis of the mortgage business as only insiders can. The duo's posts not only offer running commentary on the news but also break down the economics of the mortgage game. (The mercurial Tanta doesn't suffer fools lightly.) Some of the commentary can be a slog, but no other site offers this level of analysis.

The do not call registry created by Congress in 2003 was supposed to spare consumers of calls from aluminum siding salesmen and their ilk. But four years in, the reality is that many telemarketers have gotten crafty at finding loopholes that let them keep dialing for dollars.

Marketers are conducting bogus opinion polls and consumer research studies (which all end, conveniently, with a pitch for their product). Old-fashioned sweepstakes are back in vogue, since each signed entry form creates a "business relationship" that allows the marketer to call for the next three months. Time-share operator Bluegreen (BXG) says it now harvests up to 4.5 million names and numbers a year via sweepstakes and the Internet. "[The fine print] is there," says Bluegreen executive David Bidgood. "They should read it, but most people don't."

Legal? Probably, but annoying nonetheless. The FTC last year received more than 3 million complaints, up fivefold from 2003. And enforcement seems to be spotty. Since 2003, the FTC has brought fewer than 30 lawsuits against telemarketers—in part because many calls consumers report prove to be legal. Which suggests Caller ID may still be your best defense.

Do baby boomers really want to be reminded of their age? Some entrepreneurs think so and are bankrolling a bevy of new magazines and Web sites targeting aging baby boomers—a demographic now known as "abbies." The newest entrants: eldr, a magazine aimed at active sixtysomethings, with articles on yoga and osteoporosis, and Tee Bee Dee tbd.com), a social networking site that launches on Sept. 17. They join Grand ("the official magazine of grandparents"), networking site Eons.com, and GeezerJock, a magazine for aging athletes. But experts think the odds are against these new ventures. "People don't want to be referred to by their age," says University of Mississippi journalism professor Samir Husni.

All it took was a guitar pick, a $10 soldering iron, and a little knowhow about software code for a New Jersey teen to become a tech icon overnight. But will George Hotz, the 17-year-old who became the first known person to "unlock" an Apple (AAPL) iPhone so it works on many other cellular networks, now need a lawyer?

Apple and AT&T (T)—which Apple contracted to be the exclusive network for the iPhone—have since unleashed their attorneys on other hackers for selling unlocking software, but experts believe that any legal assault by the giants could backfire. The companies are likely to cite the Digital Millennium Copyright Act, which bars individuals from circumventing "access control" measures that protect digital content—in this case, by selling either already-hacked cell phones or the software so that others can do so themselves.

But some scholars say Congress never intended to protect cell-phone carriers. "This law was written for DVDs and video games," says Columbia Law School professor Jane Ginsburg. These experts believe hackers could win by citing the roadblocks automakers created when they built their dashboards so that only their own radios would fit; eventually, the courts ended that practice. "If Apple and AT&T push too hard, they might see a revision of [the Copyright Act]," says tech market consultant Richard Doherty—and it won't be in their favor.

Think you're a tough-as-nails negotiator? Perhaps not. A new study conducted by professors at two leading MBA programs suggests that most negotiators don't realize how much they're leaving on the bargaining table. The researchers, Richard Larrick of Duke University and George Wu of the University of Chicago, divided 266 Chicago MBA students into either buyers representing a motorcycle maker, or sales reps for a parts supplier.

After three separate negotiations lasting 45 minutes apiece, Larrick and Wu compared the deal that both buyers and sellers had accepted against the price both parties had decided in advance was going to be their limit. The professors discovered that each side underestimated how much the other was willing to bend, with the result that each party reckoned it got the better end of the negotiation. The buyers, for instance, thought they had hit the sellers' bottom figure, when in fact they still "overpaid" by a wide margin.

Larrick and Wu recommend leading with an aggressive opening bid, and giving ground only grudgingly. Sure, you may offend the other side and lose the deal, but "the cost is more than outweighed by the possible benefit," they conclude.


Toyota's Hydrogen Man
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