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Tuesday, April 29, 2008

Flextronics - That Merger with Solectron Will Cost You!

Flextronics recent acquisition and merger with competitor Solectron was the cause of a loss reported in the close of the recent quarter.  The merger which will help Flextronics continue to increase its substantial manufacturing marketshare did not come without its costs.

FLEX 10.36, +0.20, +2.0%) lost 11 cents a share on revenue of $7.78 billion. During the same period a year ago, the company earned $121 million, or 20 cents a share, on $4.68 billion in sales.

However, the results included more than $300 million in charges related to the Solectron acquisition, as well as stock-based compensation. Excluding those one-time items, Flextronics would have earned $215 million, or 22 cents a share.

Analysts surveyed by FactSet Research had forecast Flextronics to earn 22 cents a share on revenue of $7.78 billion.

Flextronics' profit falls on acquisition charges - MarketWatch

Stockholders hoping to skate past rough times in the transition may have to tighten up the strings in their skate shoes as Flextronics learns how to operate as a larger entity and pull Solectron into its own culture.  That and some cut backs in redundancies (layoffs), consolidations of partners (new contracts) and sale of some non-performing assets (get rid of obsolete equipment and redundantly located real estate). 

That all points to a slow year for Flextronics as industries in general work to deal with a US recession, higher energy costs, more expensive natural resources and possibly inflation.

Sunday, April 27, 2008

The Logistics of River Taxis

IMG_1923 

This weekend I traveled to Laughlin Nevada for the Laughlin River Run.  It is one of the oldest biker rallies in the country and I was there to cover the event and some of the concerts for a different site.

IMG_2010I was struck however by the efficiency of the water taxi service offered by the casinos.  Casinos of course have every motivation to insure that their guests are getting to and fro as fast and efficiently as possible.  If people have to walk to far or ride to slow in a car that means they have less time to potentially drop money on the tables or in the slot machines.  Time is money for almost all organizations from contractors to fast food to insurance agents trying to write up an life insurance quote.  Casinos definitely internalize this perspective possibly better than anyone outside of Wal-Mart.

The challenge in Laughlin is that the population explodes for this event over a 4 day period and traffic can slow to a crawl on the strip.  That's not good for business.  One of the primary bottle necks is the bridge that crosses the Colorado River giving people access to Laughlin. 

It also happens to be the primary route used by truck drivers detoured away from the Hoover Damn since 911.

For the potential gamblers, and casino employees the Riverside Hotel and Casino offers a river taxi system (for free).  Its a collection of pontoon boats with seating for about 15-20 people that goes back and forth from a parking lot on one side of the river to the Casino doors on the other.

The boats are timed to pick people up immediately after the previous boat leaves, getting people to the Casino as efficiently and quickly as possible and decreasing the strain on the bridge for those that don't have the option of taking the boat and everyone in general.

Sunday, April 20, 2008

Its the Melting Down Economy Stupid

Its the melting down economy stupid.  That just might be the slogan for this election cycle in 2008.  Oil prices are pushing $117 a barrel on their way up to hundred and $25 a barrel.  Gas prices are pushing for dollars and $4.50 a gallon for your average consumer and five dollars a gallon for truck drivers.

Airlines are merging to avoid bankruptcy yet again, and broken companies like Blockbuster and Circuit City are also trying to find ways to merge their businesses and systems that don't fit in a 2.0 society.

Other retailers are folding relatively quickly as well from CompUSA to Linen and things.  Apparently they weren't smart enough to consider the Circuit City/Blockbuster model and combine a computer store with a linen store possibly selling down comforters with flash drives or something crazy like that.

Unfortunately none of the political candidates are actually talking about anything that would fix the economy.  John McCain is talking about a tax credit that would essentially give a few bucks to people that drive on the road when gas credits are temporarily removed.  Other than that no one is talking about good ways to fix the economy and doing it quickly and that's largely in part to the fact that they won't have power until this time next year.

That means if you look at it from a cynical perspective that no politician in power right now really wants to fix anything this year when they can get credit for it.  It's almost a classic tale of accountability and responsibility.  The Bush administration is currently accountable and anybody that fixes the problem will only be helping the Bush administration.  That's not what Democrats want to do, and even many Republicans in power don't necessarily want to help the President fixes image as they need to help themselves get reelected this next cycle.

Thursday, April 17, 2008

Diesel Prices Pushing up on $4.50 a gallon - Headed to $5

This week the price of crude oil topped $115 per barrel and many analysts feel that its on its way up to at least $120 per barrel.

That is having a severe effect on diesel prices which are well above $4 per gallon and likely headed up to $5 if this trend continues.

image

The coasts are experiencing the worst prices not counting the lower Atlantic and gulf coast.  But with these prices going up and up with no end in sight, lets face it things are not going well.  Its no wonder that inflation is creeping into prices left and right.  Trying to say anything different is like wasting the best wrinkle cream money can buy on a pug.

Saturday, April 12, 2008

Context Discovery Inc. Announces Strategic Partnership with M-Urge to Sell Context Organizer

I have been following the development of a software program called Context Organizer from Context Discovery Inc. for over a year now.  The software is finally coming to market and will be distributed by M-Urge through normal as well as educational channels.

Context Discovery Inc. Announces Strategic Partnership with M-Urge to Sell Context Organizer

The software reads web pages on the internet and summarizes the results contextually.  The general concept is that many web pages are full of text (some that can be seen and some that cannot by the human eye).  The software looks for actual sentences based on the presence of periods and question marks.  Then it gathers up actual sentences and compares the keywords of what a webpage says to determine what the entire page might be about.

The thing that I like about the program is that it allows you to take a summary of results and push them out into a MindManager mind map so that you can look at information from a  webpage visually mapped out.

image So if you're reading a webpage that is about vacationing in the Everglades, the context will come back without throwing in results talking about an advertisement for a hammock chair.

Instead you just get the information that you're looking for about taking a trip to the Everglades.

Friday, April 04, 2008

Delphi Analysts Didn't Need an Oracle to See Trouble

Delphi's emergence from bankruptcy ran into a major road block today and given Delphi's troubled history mixed with the current mood in banking circles it did not take an Oracle to foresee this problem.

Delphi Corp.'s exit from bankruptcy was delayed after its proposed lead investor pulled out, saying the biggest auto-parts supplier to General Motors Corp. failed to meet conditions of their $2.55 billion agreement.

Appaloosa Management LP cited what it said were violations of the accord, including failure to show that Delphi could get $6.1 billion in exit loans. Delphi said in a statement that it has the financing, was ready to close on its plan today and is ``prepared to pursue actions,'' without elaborating.

Bloomberg.com

Delphi was mired in accounting scandals as it headed into bankruptcy and coming out of bankruptcy with something worth saving in a banking climate where no one trusts anyone and where credit is almost an urban legend, it is not surprising that a creditor of Delphi would opt to sneak out in the morning after before Delphi wakes up without even disturbing the bedding.

Tuesday, April 01, 2008

Oil is down from $110 to $101 But the Damage to Trucking is Done

As I write this article, Oil company executives are working to defend their $18 Billion tax breaks that they already receive and that add to their $120 billion cumulative profits over the last 12 months.

Meanwhile freight, trucking firms and truck drivers are bleeding out from Diesel prices in the $4 a gallon range.  We covered this problem 2 weeks ago when loads stopped shipping that didn't pay more than $2 per mile.

Distribution Business Articles: Just-in-Time is Just Breaking Under $4 / Gallon Diesel - $110 / Barrel Oil

Things have only gotten worse for trucking firms as you can see from this report

Now things might spill out in something that is akin to the truckers protest strike of a few years back.  The difference is that back then, the strike was symbolic mostly as it only lasted about a day, like a job walk off.

This time around many truck drivers and trucking firms are being forced to stop work because they literally cannot keep their trucks or drivers on the road with fuel prices at record highs.

2 Reasons Why Higher Prices Are on the Horizon

Plus, things look like they will likely get worse with fuel prices soon

  • The Iraqi Government lost a key battle over control of Basra the key oil producing city in Iraq
  • Farmers will plant less corn this year as they rotate crops to protect their fields in partial reaction to higher fertilizer prices - that means less ethanol

So while the tanned faces of oil executives fresh off of their luxury vacations to the islands adorns capital hill, most Americans are buckling down and buckling under the prices they see at the pumps.