Professor Elam

The Oct 18 WSJ reports that in a role reversal, parts supplier Collins and Aikman cut off parts supplies to Ford, forcing Ford to shut down an assembly line.  Note to Ford, one cannot push on a string of wet spaghetti and get results.  C and A is already in Chapter 11, this is a sign that thinking there will be more cost cutting from suppliers is a lost hope.

My Space users climbed 170% from a year ago, Google is up 25%, Yahoo is up 6%.  Yet another article explains that NBC is on a massive cost cutting adventure.  Do you see the connection?  With other choices of things to watch people continue to abandon network tv, indeed, You Tube is now a sort of free Tivo for television. How can network tv compete with someone that offers up just what you want when you want it?

Blockbuster rentals continue to fall and Netflix readies for downloading movies instead of using snail mail to deliver them.  More content delivery wars….

We study  the calculation of E/S and its effect on P/E ratios.  Last Thursday Apple reported that financial results were preliminary, a 27% increase in Fourth quarter profit, and might be significantly adjusted because of a likely restatement of past financial results.  The company sold 8.7 million iPods in the last quarter.  But backdating stock option grants may result in some restatements.  Okay, how would this leave you as an Apple investor or analyst?   The stock moved up 4% in after hours trading. Do you see how all these stories have a common thread?  Apple is successful because the iPod offers users exactly the content they want when they want it in video or music.  That is exactly the problem at network tv that offers commercial laden shows when they want to show them to you.

Just when you thought they were dead, H P re gained the number one spot in the world in numbers of personal computers.  This is an example of what one observer calls SWIRL, the fast changing environment of the modern business world. I quoted an Eastwood interview in cost class yesterday where he mentioned it was never good to keep doing the same thing, playing it safe never results in anything new. He mentioned that at 76 he was still challenging himself with new takes on movie making.  Failing to see the return to store fronts by Apple and H P led to slowing sales for Dell.

Speaking of a mature life product cycle, WMT employees could now fill every Major League Stadium in the US.  With upscale fashions not taking off as previously mentioned here, looks like they are more of a reflection of the economy itself than a growth engine anymore.

Mortgage delinquencies are the highest since the end of 2003.  Wall Street has boosted the DOW to a new high while ignoring the collapse in the housing market, how long can that go on?

Part of my motivation for this Blog is to try to tie events together.  As a business major you need to learn to connect the dots to try to get a better sense of the bigger picture-ie, what is going to happen next.  One good way to do that is to learn more about accounting and financial reporting so that you can understand just what makes a company tick!

DLE