Well the Neiman site lists NMGB as a symbol but it does not come up on finance.yahoo but results are available on their website and they do fille with the SEC. I will try to unravel this conundrum this week.  Meanwhile you might check out the article on NM in the Sunday DMN Business Section.  I will discuss it in intermed class and fin statements since it involves the income statement and extreme leverage using junk debt.  In the meantime you can shop for upscale at  the NM Site.

B/W sat down thei MSFT CEO Steve Ballmer and got his take on the Google purchase of You Tube.

He makes several good points among them that there is not business plan for You Tube, will this be a hot commodity ten years from now, and that there are only about four companies that can do billion dollar deals. 

Here is the story on the 29 years old fine arts major who
founded You Tube just 19 months ago.  Notice that he obtained $11.5 M in start up capital. Okay, what do you suppose he had to do to get that money?  He certainly did not borrow it from a bank, more likely he went to a hedge fund or venture capital fund.  What we are studying in intermed acct adn mangerial acct would be a lot of help. He needed a plan, a budget, proforma statements, and proof the market existed.  Would you be able to make such a presentation to a hedge fund and answer all their questions?  Well not without a thorough understanding of business, I suspect Hurley learned that on the job at E Bay.

DLE

Yahoo Finance Well I just found a beter site than the CNN site about money and investing.  Not surprisingly it is on yahoo.  Click on the hyper link at the start of this post.  And it has an excellent glossary.  For example, Under Investing 101, click on Bonds.  There is one of the best explanations on bonds I have seen, I wish I could have clicked there in 1983 when I was teaching myself all about them.

I suggest you work your way through this site, you will learn more practical down to earth facts than you could learn from the typical college finance text in a semester.

DLE

We all know the drill, companies talk about how open they are to ideas, until of course you suggest one.  I know from your papers that most big box retailers and franchises are not interested in innovatinon. Apparently that is not the case with BMW, one of  the most profitable car companies around.  Deming talked and preached TQM and quality circles but far too few actually embrace the concept.  This link to the Business Week  article will be good for the next few days.  It details how BMW got their latest Z 4 to market in just 17 months, Ross Perot reported that GM required 5 years, longer Ross noted that it took us to win WWII!  And as Deming predicted, BMW gets results, owners hardly ever switch to another brand, what company wouldn’t jump for that kind of brand loyalty?

The article also mentions that BMW does the impossible of customizing most cars with specific accessories specified by the owner, something most manufacturers find near impossible to do.  This requires worker involvement, something  most companies have a hard time with. 

Another reason for the blog is to highlight companies that do it right.  The article mentions that Toyota sends execs to Germany to study how BMW does it, so why don’t they all do it this way?  That is the most important question in business I think.  Albertsons can walk into an HEB and see everything that goes on.  Why can’t they duplicate that at Albertsons, after all it is all out in the open for everyone to see, no secrets.  Yet Albertsons is closing stores and leaving Texas, which just goes to show that success is harder to duplicate than one might think.

DLE

Here are some Design Favorites  from Fast Company .  Okay sound off gang, what are your favorite things, that sport coat that fits just right, a kitchen gadget, a tool in the garage, a camera, is there one great cell phone, what? 

You will notice I have been talking about design and its importance, the fact that Fast Company continues to emphasize it suggests that we are on to something here.

Here is an article by Peter Lawrence  that defines the whole design idea.

DLE

Well the GM Renault deal is dead if it ever had a chance.  Jerry Flint  didnt’ think so and has an interesting analysis of why auto mergers often fail.  And frankly that is true of most mergers.  Mergers tend to happen at stock market highs when folks are happy and inclusionary.  They almost never happen at stock market bottoms when such companies can be bought for a fraction those prices.  For example, Kinder Morgan energy was recently bought at a sky high price using leverage.  Ditto for Neiman Marcus and as I noted in a previous post, right out of the box, N-M lost money.  How will it do if the economy slows down?  Studying accounting allows one to understand the ramifications of buying high, and wishing you hadn’t!

There is a front page article in Saturday 10/7 WSJ,  about Jerome  York quitting the board. The stock dropped 6% in one day.  Why?  Again, studying accounting offers the answers and allows us to understand such takeover deals.  I think you will find the article interesting.

In her post about the Logan, Michelle wishes that the Smart Car would come to America. Well Michelle, your wish is granted!  Yep, Smart Car  is coming to the USA.  It will first be sold in California.  But did you know that it has been a money loser for its maker, Mercedes?  Read Jerry Flint’s comments  on the Smart Car and his evaluation at this link. 

So why has Daimler lost money on the car?  Flint says that there was no a study ahead of time and that break even is 200,000 vehicles and no two seater has ever sold 200,000 vehicles world wide per year.  This observation handily ties into what we are studying in Chapter 6 in the cost class about break even predictions.  I think part of the problem is that  it is built in high cost Germany by Mercedes, perhaps it should be built in Poland at a much lower cost, that might work. 

One saying is that everything old is new again or there is nothing new under the sun.  Did you know this idea has been tried 50 years ago in the US and failed?  Yep the Isetta  was marketed by would you believe, BMW, in the 1950s.  It would never have passed a safety test as the whole front side  was the front door!  Gas was only 35 cents a gallon then and sales were low.  However it did make some money for BMW in Europe.

DLE

Chevy Norwood suggested in her post about N-M that she hoped some of the sales would go to charity.  No Chevy, N-M is NOT a charitable 501c3 organization!  As a matter of fact, click N-M posts loss  and learn that they just lost $42 M!  But sales are up 9% over a year ago!  Egads, how did that happen!  No doubt all of you just assumed that with their high priced goods N-M always makes money.  As you will see when you read the article, they were acquired by Texas Pacific and Warbury Pincus. The buyers used junk bonds to finance the purchase.  This is called a leveraged buyout.  Leverage is the use of debt to finance a purchase.  But one is betting that sales will be high enough to offset the higher interest expense.  Guess what, they weren’t.  What is a junk bond ? Why is it called junk?  Why would someone want something referred to as junk?

James B.  Stewart wrote a great book entitled Den of Theives .  Non fiction but it reads like a fiction thriller.  It is the story of how Mike Miliken created a junk bond phenomenon at Drexel Burnahm that allowed the take over frenzy of the 1980s featuring Boone Pickens and Ivan Boesky.  I highly recommend it for a book report or background in understanding finance.  The character of Gordon Gecko in the movie Wall Street was based on Boesky.

Richard Allen of the Allen Group visited UNT Dallas October 10, 2006.  His company is the prime mover of what is known as the Dallas Logsitics Hub.   This is the largest inland port being constructed in the US at this time.  Ships coming from China are so massive they cannot go through the Panama Canal. It takes 20 trains double stacked to unload one ship.  Sixty five percent of this cargo is headed east of the Mississippi River. Hence there is a need for an Inland Port to handle the freight.  This is being built west of I 45 (route to Houston) south of I 20 (major east west route) and I 35 to Mexico/San Antonio is just to the west.  The Allen Group just purchased some six thousand acres positioning themselves as a major player in this Hub.  For example, another major project is being built just south of the new campus on Houston School Road. 

I urge you to log on and read about what has been described as ‘the best deal announced of 2005’ by the Dallas Business Journal.  I posted a new photo album of pictures of Mr. Allen’s presentation on the Blog.

DLE

You can listen to the the Forbes media analyst  discuss the Google purchase of You Tube at the hyper link.  Here are the facts

You Tube is an on line service that allows folks to exhibit their streaming video clips.
It has only been in business for 1.5 years.
We do not know if or how much money You Tube makes.
Google has only been in business for six years.
Google is acquiring You Tube for $1.65 billion, but wait, that’s $1.65 B in stock, not cash.
Did it really cost Google $1.65 B if they did it in stock?

The Forbes analyst differs this from the dot.com craze by pointing out that You Tube did not go public but was acquired by someone, Google, that is supposedly financially sophisticated. And if it fails, thousands of investors are not hurt, but presumably Google learns a lesson.

Here are some contrary thoughts on the deal from Mark Cuban , owner of the Dallas Mavericks, and someone who has made considerable money from high tech himself.  Another huge issue here is IP or Intellectual Property.  Seems that when one just starts posting any and every video, someone is liable to claim they own the video and want payment.  One reason for this deal is that Google might better be able to protect fledgling You Tube from lawsuits.  Actually as you can see from Cuban’s comments, the whole issue of IP is under attack.

Update-Daniel Henninger is the Deputy Editor of the WSJ Editorial Page, his thoughts on You tube appear here.  He does make the point that Google needs to improve the search engine for You Tube.

What do you think? Is a start up 1.5 yr old company that streams video worth $1.65 B?
If so, why didn’t we think of that?

DLE