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Can Nardelli and Cerberus possibly make money with Chrysler?

Sometimes, it's hard to determine if major investors are being overly optimistic, outright daffy, or are simply seeing something that the rest of us just don't see.

In my view, the current course of events at Chrysler Corp. is one of those difficult to determine situations. On its face, it looks like it could be a case of basic business logic in action. But on closer examination, it just doesn't make sense, at least not to me.

Declaring a payoff horizon of ten years, Cerberus Capital Management has placed a great deal of faith in Chrysler, the American auto manufacturer which is best described these days as an also ran. The kicker is, the Cerberus ten year plan is being initiated at a time when auto industry profitability is near impossible. Consider also the fact that current Chrysler management openly admits that the company isn't in any condition to go it alone.

And there's more trouble in the mix. Cerberus said in a New York Times story that Chrysler is meeting "every financial metric." But Cerberus considers the world's current economic turmoil to be a temporary problem, not the economic world change that it actually is. Meanwhile, Chrysler CEO Bob Nardelli is smiling because Cerberus has given Chrysler lots of money, and he gets to cut heads.

Continue reading Can Nardelli and Cerberus possibly make money with Chrysler?

Company nicknames: NBC's peacock stands for much more than just 'living color'

This post is one in a series on prominent company nicknames. See all 25, and share your thoughts and memories about the Peacock Network below in the comments.

Perhaps more visually recognizable than any other television symbol today, NBC's colorful peacock logo and nickname encompass far more depth and history than simply having been a tool of recognition for NBC Television, subsidiary of General Electric Co. (NYSE: GE). Beyond simply identifying network programs in the age when NBC and CBS began applying the color palette to broadcast television, NBC's peacock was charged with the awesome task of informing and convincing the parents of the baby boomer generation that color television had arrived, it was good, and they wanted it. The peacock was assigned the monumental task of engaging the public. Indeed, it has performed that job to perfection.

I grew up fully addicted to television, and NBC's peacock long heralded the appearance of many of my favorite shows. Bonanza, NBC's first serious success in color broadcast television, was a weekly treat for me, as it was for millions of other enchanted TV viewers. Accordingly, by the time color television promotion had begun to move consumers to purchase the new color television sets, which sold for approximately $1,000 initially, the NBC peacock, which had begun its glorious life as a simple static image, learned how to fan its tail feathers in a motion indicative of the sweeping changes the television age would come to initiate.

Until man orbited the earth, television was perhaps the single greatest technological achievement since Henry Ford had put automobiles into mass production. Since the coming of color television in 1956, the NBC peacock has been a television communications fixture, and NBC television is respectfully referred to as "The Peacock Network" by people and publications throughout the industry. It can be said that very few other company logos have stood as representative for changes that have affected so many people, so very deeply, for such a long time.

Company nicknames: The lingering effects of the Home Despot

This post is one in a series on prominent company nicknames. See all 25, and share your thoughts and memories about Home Despot below in the comments.

One of the most unfortunate of company nicknames that I have ever been witness to, is the distasteful tag of homage that has been bestowed upon Home Depot Inc. (NYSE: HD). Even more disconcerting than the nickname itself, is the fact that it was bestowed on the company not from outside sources, but from within the company's own hierarchy. "Home Despot" is a name that shall long remain the legacy of one well-jettisoned corporate executive. Home Despot is the name that distinctly belongs to Bob Nardelli, a man who took his own personal neuroses and bound a great corporation with them.

I could feel the effects of the Home Despot when I entered one of the company's retail locations in my neighborhood. Though the store was always tidy and quiet, it had a tight and smothering feel to it. Associates were always available to show me where specific merchandise was, but they were never friendly or engaging. They always seemed afraid to get involved. It was quite a stark contrast to the Menard's store where I definitely preferred to shop. At that store I always felt welcome, and it always felt like things were going on.

I have moved away from the Home Depot store since then, so I can't say if the effects of the Home Despot still linger there. I can however, say that the name itself still does. It's an unfortunate reality that negative nicknames often have a tendency to hang around far longer than the good ones do. I can only hope that the man who gave spawn to the concepts that deserved that nasty title, took with him all the negative sentiment such a name entails. Home Depot never deserved such a negative association, and I think that Bob Nardelli never deserved Home Depot.

Company nicknames: IBM, Big Blue is true blue

This post is one in a series on prominent company nicknames. See all 25, and share your thoughts and memories about Big Blue below in the comments.

Although there shall probably always remain unanswered speculation as to exactly how the nickname came to be, most people in business or industry today know, when you mention Big Blue, you're talking about IBM, International Business Machines Corp. (NYSE: IBM). It's a name that invokes a respect of power, much in the same way that motorists pull aside for a fire engine or stop for a moving train. As reflected in the three letter company logo, Big Blue is solid and steady, yet quite on the move.

People have attributed the company nickname to a past company dress code, when employees were required to wear white shirts and most of them wore blue suits. That theory seems a bit shallow to me. Besides, that policy was done away with in the 1990s by CEO, Lou Gerstner. Since that time, I haven't noticed anyone calling IBM, Big Business Casual.

A second theory about the company moniker follows a more logical theme. It relies on the fact that IBM uses blue for its company logo and equipment, blue being a color that denotes strength. People also naturally associate blue with largeness, similar to the sky, the oceans, and even outer space. When used in context, people just know what big company you're talking about when you use the name. For instance, if I asked my step-mom; "How are you and Big Blue doing?" she'd immediately know I was referring to one of her independent engineering contracts with IBM.

Continue reading Company nicknames: IBM, Big Blue is true blue

The changing face of short selling

questionA lot was said this past week in regard to the SEC attack on rumor mongering and willful misrepresentation of facts for the benefit of naked short sellers. One point that I'd like to make perfectly clear is this: The SEC's indicated desire to quash the spreading of false negative information by, and for the benefit of, manipulative short sellers, is nothing even remotely akin to a First Amendment issue. The First Amendment does not give protection to slanderers, liars, and sabotage artists. I'd also like to make clear my opinion that honest short selling is a positive, healthy, and necessary practice. I believe it helps to define and benchmark real value within the markets.

The Los Angels Times reported that SEC Chairman Christopher Cox may have his hands full in the wake of a measure that protects nearly two dozen large financial firms from naked short selling. The measure requires "anyone effecting a short sale in these securities (to) arrange beforehand to borrow the securities and deliver them at settlement." It's a rule that is long over due for enforcement and that shall most probably, at least temporarily, lay to rest some serious market abuses.

Continue reading The changing face of short selling

One great way to free America from foreign oil

logoPark Falls Wisconsin is just like any of the hundreds of other bustling small towns across America. At least, it was until Monday July 14, 2008. That was the day when it was announced that the Department of Energy had awarded a $30 million grant for the construction and operation of a bio-refinery at the existing Flambeau River Papers, pulp and paper mill. The project shall be a show piece, and the first of it's kind.

The Park Falls Herald reported that, when in full operation, the bio-refinery is expected to produce a minimum of six million gallons of sulfur-free diesel fuel annually from nonfood-based, timber and agricultural waste materials. Additionally, the bio-refinery is expected to generate at least one trillion BTUs of process heat annually, which will be sold directly to the paper mill. That exchange is expected to make Flambeau River Papers the first integrated pulp and paper mill in North America essentially free of fossil fuel usage.

The project is expected to reach operational status by 2010, and is also expected to garner the close attention of alternative energy investors and governments world wide. The project is, in part, a response to the current presidential administration's nationwide call for increased energy independence without additional pressure being placed upon the food supply. It is widely hoped that these types of refinery operations shall soon be considered for development in other suitable locations across the country.

Eleme cuts the fat with $18 million of new venture capital

Eleme Medical plans to take its laser and light energy cellulite zapping technology into commercial application after receiving $18 million of investment capital and the backing of a couple big names. Hambrecht & Quist Capital Management has joined forces with L Capital Partners in backing Eleme in its efforts to smooth the thighs and buttocks of the world.

The new system is called the SmoothShapes cellulite treatment, and the FDA has given it aapproval. The company's website however, sheds little light on how the device actually works. It would seem that the SmoothShapes laser and light energy system, in combination with suction and kneading of the tissue, causes restoration of certain skin cells which are important in the restructuring and maintenance of a smooth butt.

If you ask me, the whole thing sounds like a 3 a.m. Thigh Master commercial tucked in between episodes of Murder She Wrote. But if venture capitalists choose to place their bets on the possibility that there really is a new and effective method for enhancing the appearance of cellulite, who am I to question it? If the device has true potential, the venture partners might think about getting a celebrity to use it and endorse it. Then, all that will be needed is for Eleme to convince the insurance industry that cellulite maintenance treatments are a necessary medical procedure. Oh yes, one can just hear the cash registers ringing at the thought.

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

Harley Davidson museum aims to be one big biker rally

logoIn keeping with its typical marketing flavor, Harley Davidson Inc., (NYSE: HOG) wants its newly opened Harley Davidson museum to be more about the rider's experience than just the ride. The company wants its museum to be a lifestyle exploration adventure, rather than a commercial presentation. While the new attraction indeeds feature hundreds of motorcycles, reams of vintage Harley Davidson advertising and other Harley memorabilia, in an article published by Business Week, museum director, Stacey Schiesl is quoted as stating: "It's not just about what's inside."

It's always been that way with Harley Davidson. In strong years and lean years, the company had always taken the experience of its enthusiasts very seriously. That is why the museum was designed and constructed to be enjoyed in a manner that stimulates what Harley owners like most about their bikes. It's a feeling of camaraderie. It's a sharing of an experience. It's good will and good times on a piece of open road. Architects designed the site to reflect and embody a feeling of Main Street Americana, with accommodations for up to 15,000 bikes at any given time.

The Harley Davidson Museum is a testimonial to 105 years of American made motorcycle greatness. Even in the face of tough times, with the company forecasting slowed earnings and reduced production, it's good to see that it has maintained its successful focus: to create both a visual and a tangible motorcycling lifestyle experience for all motorcycle enthusiasts to enjoy.

eBay shifts focus more to online stores...

eBay Inc. (NASDAQ: EBAY)'s growth decline started nearly two years ago. Now, as reported by The New York Times, the final spike has been driven into the very heart of what eBay once was. In a Johnny-come-lately effort to revive a growth curve which eBay's top brass blindly shackled ten years before its due, the company is shifting its focus from the tried and true, mom-n-pop auction strategy to a business model of "stock the shelves with all the discount crap that you can, and don't charge for the benefit."

It's okay though, anyone who can achieve eBay's new "diamond power-sellers status" will be qualified for the same discount perks that eBay has negotiated with Buy.com. It's just too bad that the eBay stuffed shirts never figured out that eBay's sellers were its buyers also.

The discount store concept might have worked for eBay, if it had been tried as a parallel effort, while leaving the original working eBay alone. But of course, they had to tinker with the formula. I tried to warn you. Honestly.

If you got out in time, I applaud you.

Gary Sattler is a freelance blogger. He holds no position in eBay. His wife does still operate an active eBay store.

Commodities may be your last best bet

upIf you're hearing whispers that the dollar might be creeping up in value and that this might put downward pressure on commodities, then let me tell you: Don't you believe it. Although some upward adjustment might occur for the dollar, it's my opinion that this won't, by itself, reduce commodity prices. To think so is just too limited an economic scope.

First, we can believe that the platform of oil prices is going to hold solid. I do think that the price of oil will eventually recede, but it's not going to be soon and it's not going to be much. It'll be a couple years before we see any real decline, if we ever do. That reality gives us a good launching point for some speculation. Alternative fueling for motor vehicles will keep upward pressure on oils other than petroleum. Consider commodity soybeans, soybean oil, and palm oil as possible hedges. There's also potential in propane, and to me, natural gas is still artificially under valued. You might not think there's a relationship between these commodities and petroleum. Believe me though, there is. Also, like the high volume traded commodities, other vegetable oils, such as sunflower oil and cottonseed oil, are worth looking into.

Continue reading Commodities may be your last best bet

Big company, small town: Oshkosh B'Gosh, Oshkosh, Wisconsin

This post is part of our Big Company, Small Town series, featuring large companies and the small towns in which they are headquartered.

Oshkosh B'Gosh, the well-known children's clothing manufacturer, was founded in Oshkosh, Wisconsin, in 1895. As are most of the cities in Wisconsin's Fox River Valley, Oshkosh was incubated first on the fur trade in the early 1800s, then was built upon the railroads and the lumber industry, and finally, it rests on light and medium manufacturing and the pursuit of higher education and culture. Currently, Oshkosh has a population in the neighborhood of 65,000, and it covers more than 24 square miles.

Oshkosh B'Gosh is probably the best-known namesake of its home city. Though the company's manufacturing operations have been moved away, it still maintains its corporate headquarters there. The company began as a manufacturer of sturdy clothes for working people, most especially its trademark overalls. It wasn't until the mail-order company Miles Kimball featured Oshkosh B'Gosh overalls in one of its catalogs that the company moved its products into retail stores. At that time, Oshkosh B'Gosh expanded its children's clothing line, which would eventually become the company's mainstay.

Two other companies have carried the name Oshkosh to great heights in the business world. One is Oshkosh Corporation (NYSE: OSK), formerly called Oshkosh Truck, and the other was Chief Oshkosh Beer. However, perhaps the most renowned feature of Oshkosh is the yearly Experimental Aircraft Association Airventure air show (EAA). During that annual event, Wittman Regional Airport in Oshkosh, becomes the busiest airport in the world.

Continue reading Big company, small town: Oshkosh B'Gosh, Oshkosh, Wisconsin

Big company, small town: Crayola, Easton, Pennsylvania

This post is part of our Big Company, Small Town series, featuring large companies and the small towns in which they are headquartered.

How long does it take to manufacture 100 billion crayons? Well, if you're the developer and foremost manufacturer of the colorful little cylindrical beauties, it takes exactly 93 years, as evidenced by the successful history of Crayola Crayons.

Easton Pennsylvania, sitting at the confluence of the Delaware and Lehigh rivers, has served as the backdrop for the entire glorious history of Crayola Crayons. A small town, covering just under five square miles, and home to fewer than 30,000 inhabitants, what Easton might lack in girth, it certainly makes up for with history. The partnership of cousins Edwin Binney and C. Harold Smith, creators of the Crayola Crayon, probably were located in Easton to take advantage of the town's former status as a railroad hub, its access to raw materials, and its proximity to both Philadelphia and New York City.

While the partnership of Binney & Smith has grown and flourished, the city of Easton Pennsylvania has had its difficulties. While the Crayola empire has continually sought to enhance its offering and involvement in the creative arts by expanding, experimenting and inviting innovation, Easton has sought to remain true to, and thoughtful of its heritage. However, renewed stimulation of Easton's economy over the past decade has been focused on making the city an attractive getaway destination for visitors. This effort involves a deeply thoughtful utilization of the city's cultural, historical, and natural resources, which are being blended and deployed with strategic local focus.

Continue reading Big company, small town: Crayola, Easton, Pennsylvania

Investing in brain health

brainSpurred by a near epidemic occurrence of brain-degenerating conditions as we age, people of all ages and backgrounds are stepping up their personal efforts to improve and maintain their brain health. According to a story in USA Today, sales of brain fitness software reached nearly $230 million in 2007. USA Today stated, "SharpBrains, (a market research firm) estimates the brain fitness software market will reach $2 billion in 2015 in the United States."

Prudent investment strategy might include a speculative foray into this popular and growing field. In light of this, you may wish to pay heed to blogger Steven Mallas, and read his take on Activision (NASDAQ: ATVI).

First on the list for brain maintenance is physical activity, which probably accounts for the outstanding sales of Nintendo's Wii Fit. from Nintendo Ltd. (OTC: NTDOY). Active lives promote healthy blood circulation, which helps to feed steady amounts of oxygen to the hungry brain. Good hard work, cardiovascular exercise and even regular sexual activity can all help to keep your heart pumping adequate levels of oxygen into your brain.

Continue reading Investing in brain health

Big company, small town: Kohler Co., Kohler, Wisconsin

This post is part of our Big Company, Small Town series, featuring large companies and the small towns in which they are headquartered.

"It is a place where simple things, done well, will never be out of style." Those are the words of Walter Kohler, Sr., as he envisioned the creation of one of the first planned communities to be built in this country. In 1913, Kohler Company initiated its plan to move its manufacturing operations from Sheboygan, Wisconsin, onto a tract of countryside farmland it purchased for its new industrial complex.

The village of Kohler slowly took shape around the company's industrial complex. It featured all the necessities for fulfilling community life. Single and two family homes were constructed, utilizing lumber from the Paine Lumber Company in Oshkosh. The village included a proper school, a village hall and dormitory housing for unmarried workers. During this time, Kohler Company established itself as a world leading supplier of plumbing products.

When Walter Kohler, Sr., was shaping the vision for his company town, he visited garden cities across the globe and incorporated the desire for natural beauty into his plans. Working with the Olmsted Brothers, designers of New York's Central Park, Kohler made a 50-year plan to provide gardens and green spaces within the new company village. Kohler's second 50-year plan for green space was then established under the guidance of The Frank Lloyd Wright Foundation. The result of this careful oversight has been the creation of a village with deep respect for its natural surroundings and which is laced with gardens of beauty.

Continue reading Big company, small town: Kohler Co., Kohler, Wisconsin

When the big company leaves the small town

This post opens our Big Company, Small Town series, featuring large companies and the small towns in which they are headquartered. Watch for more Big Company, Small Town posts coming soon.

All across this great country of ours, small cities, towns, and villages have been built in the shadows of major companies that supply work for their local populations. It can be a wonderful situation that cultivates a special kind of community and a deep-seated local pride. However, it can also be a recipe for civic disaster, if the major supplier of a wage base in a locality goes out of business or leaves town. Such was the near disastrous fate of Park Falls, Wisconsin, not so long ago.

The city of Park Falls, which is Wisconsin's most geographically isolated city, was built around its paper mill. At its height, the mill helped to bring the population of the city to nearly 4,000 inhabitants. However, in 2006 the paper mill, which was operating at reduced capacity under ownership from out of state, was shut down almost without any prior notice. The result was immediate and deeply wrenching turmoil. Not only had the paper mill workers lost an excellent source of income, but the collateral damage was jarringly significant also. Loggers had no local market for their pulp wood. Dozens of family-feeding log trucks were idled. Private contractors who did various types of work for the mill were left with thousands of dollars worth of unpaid invoices. Local vendors, retailers, and support businesses almost immediately went slack.

Continue reading When the big company leaves the small town

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Last updated: August 27, 2008: 10:15 PM

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