Filed under: Bad news, Industry, Consumer experience, Competitive strategy, Wal-Mart (WMT), Target Corp. (TGT)

Early reports are that U.S. holiday sales this year were up only 3.6% over 2006 sales. According to The Wall Street Journal, “Factoring out spending on gasoline — which soared thanks to a 27% average price increase since this time last year — retail sales increased a lackluster 2.4%.” To make matters worse, research firm ShopperTrak RCT stated that consumers waited for discounts to deepen before making massive purchases, which would hurt retail margins.

The single biggest loser of the holiday season may have been Target (NYSE: TGT), the country’s No. 2 retailer. The company said sales would be close to flat for December. Just over a month ago, the chain stated sales would rise 3% to 5%.

Not many on Wall Street are surprised that overall retail sales were weak; analysts had been predicting that for some time. But Target was a surprise. Its skill with picking merchandise had kept its same-store sales ahead of rival Wal-Mart (NYSE: WMT) for some time. For most of the second half of 2007, Target’s stock had outperformed its bigger rival by a significant amount.

It isn’t entirely clear what happened to Target, but there are some clues. The retailer moved a bit upscale from Wal-Mart and pushed into sales to the middle class. Its stores become trendy and fashionable. Customers who might have been uncomfortable going to Wal-Mart found Target to be a more acceptable substitute.

The strategy worked until the U.S. consumer got cheap — pinched by a tough real estate market, high credit card balances, and rising fuel prices. Going down-market suddenly became attractive.

As the economy turned, Target may have been cornered by its own success.

Douglas A. McIntyre is an editor at 247wallst.com.

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Filed under: Before the bell, Competitive strategy, Google (GOOG), Microsoft (MSFT), Yahoo! (YHOO), Apple Inc (AAPL), Time Warner (TWX), Amazon.com (AMZN), Ford Motor (F), General Motors (GM), Walt Disney (DIS), IAC/InterActiveCorp (IACI), FedEx Corp (FDX)

Before the bell: Will stocks continue Friday’s trend?

If people still had any doubt about the inroads Apple’s (NASDAQ: AAPL) laptops are making, they just had to look at Amazon’s (NASDAQ: AMZN) list of bestselling personal this Christmas eve. Somehow, despites often being more pricey and offering less features than PCs, the Macs oversold their counterparts, taking three of the top ten spots, including the top one. As the new Apple commercial says: You superior watch out… Oh, right, it was a Christmas carol, not a warning to Computers — or was it?

The IRS has challenged FedEx Corp.’s (NYSE: FDX) business model for contracting with independent drivers, the company stated Friday. The company might have to pay tax and penalties of $319 million plus interest for 2002, while the IRS is reviewing similar issues for calendar years 2004 through 2006.

Following as strong performance last week with I Am Legend, movies continued to show decent numbers this weekend. Walt Disney’s (NYSE: DIS) National Treasure: Book of Secrets with Nicolas Cage opened as the weekend’s No. 1 movie with $45.5 million. This is a sequel to National Treasure, which debuted with $35.1 million on its way to a $173 million total.

Following the energy bill that was signed last week, mandating tougher fuel-economy standards, many analysts now expect a change in the automakers’ industry. As car makers will try to make vehicles lighter, lightweight materials such as aluminum, carbon fiber and other could see increased demand while steel could see less.

On Friday, comScore released November U.S. search engine rankings. Not a lot of surprises there: Number one, of course, was Google (NASDAQ: GOOG) where its sites share of core searches inched higher to 58.6%, compared to 58.4% in October. Second place was Yahoo! (NASDAQ: YHOO) with its sites’ share of searches inching down to 22.4% from 22.8%. The remaining three in the opening five were, Microsoft (NASDAQ: MSFT), Ask Network (NASDAQ: IACI) and Time Warner Network (NYSE: TWX) with the highest share point gain during the month to 4.5%.

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Filed under: Analyst reports, Industry, Competitive strategy, Wal-Mart (WMT), Circuit City Stores (CC), Costco Wholesale (COST), Economic data

Based on current figures, retailers who offered the ideal discounts may have pulled in the lion’s share of holiday shoppers.

“I have never seen consumers more cautious, more bargain driven, more savings obsessed than I have this year,” Britt Beemer, founder and chairman of American Research Group, told Reuters..

American Research found the most aggressive discounter were Wal-Mart (NYSE: WMT) and Costco (NASDAQ: COST). The companies that might have failed to discount enough included Macy’s (NYSE: M) and Circuit City (NYSE: CC).

The figures may be a tiny misleading. A chain that discounted merchandise 10% more than competitors but brought in only 8% more traffic may not have been better off.

The real advantage for the holiday sales period might go to a firm like Wal-Mart. It has low labor and other operating costs and is big enough to get the best deals at wholesale. Deep discount might have effected its margins less than it would at many other chains.

But, based on numbers from companies tracking shopping activity, the consumer was tight everywhere he went.

Douglas A. McIntyre is an editor at 247wallst.com.

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Filed under: Bad news, Industry, Competitive strategy

I was alarmed to read an article on Bloomberg early this Sunday morning about Texas high school football. While I am a recovering football addict, I still jump at the chance to even watch Pop Warner football on TV at 3 AM. But enough with my issues. There is something really serious going on in Texas and internationally with certain drug-resistant staph bacteria. This bacteria, a type that’s plagued hospitals for decades, has made its way into the general population in recent years.

Without proper treatment, it can spread to internal organs and bones after reaching the bloodstream, causing organ failure. Texas faces a certain type of this bacteria with the acronym, MRSA.

Bloomberg reports that this MRSA has migrated to playing fields in Texas, particularly on artificial turf. Texas has artificial turf at 18 percent of its high school football stadiums. It also has an MRSA infection rate among players that is 16 times higher than the estimated national average, according to three studies by the Texas Department of State Health Services.

Scary, absolutely. What makes this even more troubling is that there doesn’t seem to be an accepted practice by the medical profession to treat MRSA. Physicians have differing opinions as to what drugs to use as first-line treatments. One company that provides such a drug is ViroPharma (NASDAQ: VPHM), a small-cap bio firm with a market cap of around $600 million.

ViroPharma markets Vancocin(R) capsules as “the only antibiotic approved to treat two significant bacterial infections of the lower digestive tract. The product is indicated for oral administration for treatment of enterocolitis caused by Staphylococcus aureus (including methicillin-resistant strains).”

ViroPharma started marketing Vancocin in 2004 and sales of the antibiotic have grown 22% in the first nine months of this year. Stock has gotten pummeled off of disappointing results of clinical trials for a hepatitis C drug and heating up of competition surrounding Vancocin. That stated, ViroPharma has an extremely strong balance sheet with about $300 million of net cash/investments and some nice cash flow.

Let’s hope that the medical community finds a way to treat MRSA. Regardless, ViroPharma seems poised to continue going long in this market.

Zack Miller is the managing editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund. Author doesn’t own shares in VPHM.

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Filed under: Management, Industry, Competitive strategy, Apple Inc (AAPL), Starbucks (SBUX), McDonald’s (MCD)

Over the course of the year, Starbucks (NASDAQ: SBUX) shares fell from $36.61 to $20.60, near their 52-week low. The company’s revenue is still growing about 20% year-over-year. It may be hard to believe that such a strong financial performance would not command a higher price.

But, the Starbucks management team has done an unusually poor job of convincing Wall Street that its plans for the next year are apt to yield stronger same-store growth, especially in the U.S. The company talks about eventually having 40,000 stores worldwide, but has yet to give a convincing explanation of how it will get there.

The large knock against the coffee chain is that it has too many stores in the U.S. That would lead most analysts to believe that the stores actually compete with one another for business. And, with the huge McDonald’s (NYSE: MCD) push into premium coffee, Starbucks is trying to get market share in a field that’s becoming more crowded.

Investors are also not convinced that recent additions of exclusive music releases sold only in its stores and a relationship with Apple (NASDAQ: AAPL) iTunes will bring in more customers.

More than anything else, Starbucks currently suffers from being less than open about its business. How is the new deal with Apple going? How are same-store sales running during the holidays? What’s the firm doing about the rising price of milk, which is an ingredient in many of the company’s drinks?

Wall Street hates lack of news. It often takes silence as a sign of poor performance. Until management steps forward with a cogent plan for improving the company’s domestic sales and some information about how new initiatives are doing, it can anticipate its share price to drift lower.

Douglas A. McIntyre is an editor at 247wallst.com.

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Filed under: Products and services, Television, Competitive strategy, Sony Corp ADR (SNE)

Indicating reduced profitability in the video display market, Fujitsu (OTC: FJTSY) has announced its departure from the production of high end plasma TVs. This news comes via ars technica and is indicative of a major trending pattern. Much is astir among Japanese electronics manufacturers as companies there take a turn for the lean and are engaged in forming manufacturing power alliances.

Much is being affected by the near total domination of liquid crystal display technology within a tightening, yet deepening image display sector. Take further evidence of change by considering Brian White’s post about the exit from rear projection television by Sony Corp. (NYSE: SNE). The LCD field is currently saturated and for it’s improvement it needs to thin out.

Strides are still being made in regard to making LCD displays thinner and engineers are working on reducing power consumption. Tiny can be done however, to improve LCD profitability with so many companies cranking out cheap displays. What’s needed now is for some of the remaining display manufacturers to aggressively address some considerable quality issues.

Gary Sattler does not knowingly hold financial interest in the companies he blogs about.

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Filed under: Text, Windows Mobile, Symbian, Palm, Productivity, Web services, Freeware, BlackBerry, iPhone, web 2.0

At first, it sounds like a texting nightmare from hell, but RSS via SMS has a place in our world through Web-Alerts, a small web experiment that might get lost in the vast world wide web desert that’s web 2.0 failures. The service sends you a text message for every update to a chosen site’s RSS feed.

The service is simple and easy to use. When you first visit the site, it’ll ask your to enter a web address. If it finds an RSS feed for your chosen site, it’ll ask you to enter your cell phone number. Should any updates happen to your chosen feed, a preview of the update will be forwarded to your phone. Removing a subscription is simple enough. “Just open the link in your text message and choose ‘My Alerts’ to remove any alert you’re subscribed to.” Furthermore, you can enter a keyword with your phone number so that you’ll only be forwarded updates via SMS when they contain the keyword.

This could be extremely useful for someone closely watching a specific topic such as a stock broker. It could also become extremely annoying if you find yourself answering your phone each ten minutes to stop the latest SMS from incessantly vibrating in your pocket. Our advice: use wisely.

[via The Boy Genius]

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Filed under: Developer, Internet, Web services, Microsoft

Things are changing over at Microsoft Download Center, as the new beta introduces Microsoft’s take on Flash, Silverlight. That means if you want to check out the beta for yourself, you’ll have to download the Silverlight plug-in in order to actually see the site - which from a usability perspective is never much fun.

Then again, people didn’t really mind downloading Flash. Nitpicks aside, the website, if you can still call it that (”rich interactive application” anyone?), does look a lot prettier from a cosmetic standpoint than its current counterpart. It is also a lot tidier - the width of the experience has been reduced as well as the feeling of claustrophobia you would get from the regular version has been alleviated. All the text and boxes have proper breathing room now, and are quite easy on the eyes.

It does make one wonder if all of this couldn’t have been done with a little bit of CSS instead? Sure you might have to exchange some of the very smooth eyecandy with something slightly more utilitarian - but it could be done. But, of course, Microsoft needs to show off its baby. It’s probably safe to assume that once the final version releases that Microsoft will use it as a staging platform to really push Silverlight and try to take a bite out of Flash market share.

Thanks, George!

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