Spacing Out Thanks to the FAA, Will France Say Adieu to $10 Billion? True or False: $59 Fares

Cleared for liftoff…

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Sir Richard Branson and his impending fantastic space voyage are good to go as far as the Federal Aviation Authority (FAA) is concerned. Virgin Galactic, co-owned by Branson and Abu Dhabi’s Aabar Investments mapped out an agreement with the FAA over how the intergalactic adventure will work with US airspace. It hopes to launch its first flight on SpaceShipTwo by the end of 2014. Hundreds of people have already signed up for a flight that only sets them back about $250,000 – and is, of course, payable via super-cool and super un-regulated bitcoins.

Au revoir, BNP?

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France’s biggest bank, BNP Paribas, is already in some tres hot water over violating US sanctions against unpleasant countries like Iran and Sudan. The Justice Department has been conducting its investigation for quite a while and feels the time has come for BNP Paribas to finally pay for its wrongdoings to the hefty sum of $10 billion. What’s so special about this figure, besides its enormity is that it would be the biggest fine ever imposed on a misbehaving bank –by fives times as much. BNP, however, feels it should only have to pay around $8 billion. But Attorney General Eric Holder has even bigger plans as he is eager to remind the banking industry that none of them are “too big to jail.” He wants to bar BNP from even trading assets ( or as it’s called on The Street, dollar clearing) besides throwing the responsible individuals into the less than illustrious ranks of the unemployed.

Southwest. Oops. They did it again. And Again…

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Southwest was in a whole heap of trouble yesterday and had to pay some embarrassing and avoidable fines (hey, just like BNP will likely do, almost). The trouble began when Southwest posted $59 fares on its website flying from Atlanta to LA, Chicago and New York. Of course those fares were too good to be true. Would be travelers were told that those fares were not available and were a mistake and never meant to be part of the sale even though they were heavily advertised. Hmmm. The US Department of Transportation didn’t care for this show of false advertising and let them know it. Lucky, for the airline it only had to pony up $300,000 which is probably what it earns in the time it takes you to read this paragraph. Despite its questionable sales tactics, shares of the airline have gone up over 40% this year. Another hmmm.

Ballmer a Baller? The British Are Coming…To Make Bourbon! Costco Goes Hip But Still Misses a Couple of Cents

Clipped…

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Steve Ballmer wants to become an official baller. Well sort of. The former Microsoft CEO just inked a deal to take over the LA Clippers to the tune of $2 billion. He outbid a few groups to earn the position of the team’s newest owner, wresting it from the hands of embattled owner/alleged racist Donald Sterling and his estranged wife, Shelly. It’s a record price paid for an NBA team which was originally purchased by Sterling back in 1981 for a little over $12.5 million. Oprah Winfrey and David Geffen were at one point also considering buying the Clippers but dropped out of the bidding. The league still needs to approve the sale. However, Sterling, who swears he’s not a racist despite the numerous racist comments he made during an audio recording, has plans to make the sale difficult.

Bourbon State….

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The British are coming to Kentucky but I suspect the state will welcome this latest invasion. Diageo, the London-based liquor company whose brands include perennial favorites Johnnie Walker, Smirnoff and Ciroc has plans to build a 300 acre, 1.8 million proof gallon (yeah, I know you like the sound of that) distillery in Shelby County. The $115 million project will create thirty new jobs and lots and lots of bourbon. Fun fact: Bourbon is the fastest growing beverage in the spirits category. How very spirited! Kentucky is a very gracious home to the growing Bourbon industry. Naturally, local government officials will need to provide approval.  I’ll bet a bottle of bourbon that permission will be spiritedly granted.

A cooler, hipper Costco?

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Costco (COST), unfortunately, is not having as good a day as Kentucky. Or Steve Ballmer. Net income for the company was $473 million and revenue climbed over 7% to about $28 billion with a special thanks to higher sales and more membership fees. The warehouse wholesaler to the masses posted earnings of $1.07 per share but that just wasn’t enough for those fancy Wall Street analysts who were hoping for $1.09 per share. Those two cents really put a downer on things. The chain, which currently operates 655 warehouses worldwide, is trying to attract a younger demographic. It’s hoping a partnership with Google (GOOG) offering same day delivery and adding more hipper categories and products will achieve the desired effect. I just hope they crank out some more of their tiramisu cakes, which always seem to be in short supply at my local Costco.

 

Dr. Dre Takes A Bite Out of Apple, Amazon/Hachette Smackdown and I Said Jet-Set Not Jetsons!

An Apple a day…

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Dr. Dre must be in a very good mood now that Apple (AAPL) is forking over $3 billion to him and his fellow Beats Electronics co-founder Jimmy Iovine. After weeks of talk and rumor, the deal is official. Some feel that the deal might have happened sooner had Dre not bragged about becoming hip-hop’s first billionaire in a leaked video. Apparently Apple wasn’t down with that move. But hey, better late than never. Apple, however, was definitely down with the way Beats music subscribers paid for the service which they previously received for free. So next time you find yourself in an Apple store with a few hundred dollars lounging around in your pocket, take comfort in the knowledge that you just might be able to purchase some tricked out headphones that last year pulled in over a billion dollars in revenue.

Oh no you didn’t!

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The latest drama to play out in the corporate school yard is brought to you by Amazon and book publisher Hachette. So whose side are you going to take? Well let’s see now. How do you feel about Robert Galbraith aka JK Rowling? And just how eager are you to read that author’s new novel, The Silkworm? If you were thinking about buying the title from Amazon you might want to look elsewhere since it’s a Hachette book. Pre-ordering the title from Amazon isn’t an option (anymore). Amazon and Hachette were trying to negotiate how much to charge for Hachette’s books. Amazon wanted Hachette to reduce its prices. They couldn’t agree. Btw, Hachette pulled in $3 billion in revenue for 2013. Amazon pulled in $75 billion. Gee, I wonder who has the upper hand here?

Jetting off with Michael Kors…

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Michael Kors earnings flew way past Wall Street predictions by almost $100 million, which does little to explain why its stock was going all over the place today. Though investors would argue that they aren’t enthusiastic about its gross margins as the company goes forward. In a corporate conference call the term Jet Set was used. A lot. Apparently “Jet-Set” is way cooler and more cost-benefitting than saying “luxury” or “ultimate” or whatever…No doubt a marketing firm was paid handsomely to come up with this theory. Anyways, the self-proclaimed “jet-set” company pulled in over $900 million in revenue and overall had more than a 50% increase over last year. The company might want to send a thank you note to Europeans who are totally getting behind the Michael Kors label/brand and helped increase revenue there by a very jet-setting, luxurious, ultimate 125%. So I guess that gives it leeway to call itself whatever it wants.

Who’re You Calling Chicken? “X” Marks the $10 Million Spot and Burgers and Lattes and Beer, Oh My

Appetizing mergers…

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There’s been a lot of talk of pilgrims today even though Thanksgiving is still six months away. That’s because food corporation Pilgrim’s Pride, a Colorado based company that sells chicken products made a very meaty offer to buy Hillshire Farms for about $6 billion. Just a couple of weeks ago, Hillshire Farms, the company behind Jimmy Dean Sausages and the ubiquitously advertised Ball Park hot dogs announced similar plans of its own to buy Pinnacle Foods from Blackstone Group LLP. But my how the (dinner) tables have turned and Pilgrim’s Pride said that unless Hillshire chucks its plans to buy Pinnacle, then it can keep its sausages. However, if Hillshire does indeed decide to go ahead and eat up Pilgrim’s Pride offer, then the poultry product producer will fork over $163 million to pay Pinnacle Foods’ termination fee.

Ahoy Amazon…

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If you thought buried treasure is just for movies these days, then you might want to check out Amazon (after you finish reading this blog, of course). Tonight 1,400 19th century coins are being auctioned off on the site. The coins were discovered by a couple who were out walking their dog on their own property. While there was no “X” marking any spot, there was a suspicious looking canister making its way out of the ground. All the coins of $5, $10 and $20 denominations are, at face value, worth about $28,000. But because the coins, dated from 1847-1890 are rare, old and in “mint” condition –  the coins are set to fetch about $10 million. And no you can’t go digging in other people’s property.

Lattes and burgers? Be still my beating heart…

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If you’re jonesing for a burger to complement your mocha chai latte ( I don’t even know if that’s a real thing) then Starbucks might just have the solution. The Seattle based coffee mega chain is buzzing with plans to open a La Boulange eatery in Los Angeles. Starbucks picked up the bakery chain almost a year ago for $100 million. The last time Starbucks tried to enter the gourmet food arena, customers weren’t exactly eating it up. This particular establishment, however, set to open June 11, lets customers build their own burgers and it’s offering alcohol. Sounds like a win-win to me.

The GameStop’s Here, Uber Excitement and HP Is Shrinking

Dropping Up…

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There’s nothing like a price drop to get consumers to open up their wallets a little quicker. Microsoft may not be all that thrilled to have dropped the price for its Xbox One, but a move like that sure has a way of creating greater demand for the product. But the real winner here is GameStop (GME). Greater demand for the hardware creates greater demand for  the software. Good thing GameStop supplies both. Isn’t that convenient. Revenue for the quarter ending May 3 was $2 billion with a hefty $68 million profit.  Other companies digging the price drop are Take Two and Ubisoft, makers of the highly educational and extremely informative video games, Assassin’s Creed and Grand Theft Auto.

Uber-drama…

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Uber, the uber-cool ride sharing app is making some tracks today. It’s looking to score $500 million for its latest funding round which could drive its value up to $12 billion. Not bad for an app that’s practically its own middleman. Of course, not everybody is impressed or excited by the technology and they are going to do whatever it takes to make sure Uber knows that. Boston cabbies are part of the opposition as are taxi drivers in Miami. Across the pond Brussels isn’t pleased either. But it’s London’s black-taxi drivers that are taking their dissatisfaction to a whole new level, apparently staging a massive protest. It should be duly noted that these same London drivers already showed their lack of enthusiasm to Uber’s competition, Hailo, by very impolitely (and presumably illegally) vandalizing its offices. But Uber CEO Travis Kalanick is probably thinking more about the $20 million in gross revenue his company pulls in every week.

Crickets crickets crickets…

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It’s going to get awfully quiet at HP (HP). Really really quiet. But not because they’re encouraging napping at work like some of those other (cool) companies. And if you sent your resume there, don’t expect a response. CEO Meg Whitman announced, as part of her five year turn around plan, that she will be cutting even more jobs than what she previously decided to cut. A whole lot more. Between 11,000 and 16,000  employees will be asked to leave their staplers at their desks. Bringing the grand total to about 50,000 people who will be spending their new found free time trolling job boards. The 75 year old, Palo Alto based company is losing ground to smart phones and cloud computing and as a result their pc and printers divisions have been taking regular fiscal punches. In fact they have been getting hit for three years running. Here’s hoping its remaining 317,500 employees can help avoid that in the future.

Sauced Out, Not Exactly the Best-est Buy and Housing Springs Forward

They don’t got the sauce…

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Apparently Unilever (UL) likes their pasta plain. The company just sold their Ragu and Bertolli pasta sauce brands to Japanese food manufacturer Mizkan for $2.15 billion. Despite the fact that Ragu is the best-selling pasta sauce in the United Stated, Unilever, like many other companies are focusing on what they do best  – in this case it’s personal hygiene products. Which is just as well I suppose as the maker of and Axe body spray decided its food products would find a much more loving family in the arms of a 210 year old Japanese company that makes things like mustards and rice wine.

Mediocre Buy…

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Best Buy (BBY) wasn’t looking its best today. Sure it beat expectations earning $0.33 a share instead of the predicted $0.20 a share. But revenue fell and the company isn’t expecting that to change much. The electronics chain reported sales of $9.04 billion. But analysts pegged their hopes for it at $9.22 billion. And like every other company, they are blaming factors outside the company – in this case, the electronics manufacturers. Talk about biting the hand that feeds you. Best Buy said companies need to crank out more products with bigger tricks and maybe then Best Buy sales will improve. Best Buy also spoke of “softness” (which is just another way of saying lousy sales) in the mobile phone market where it says consumers are eagerly awaiting the next best things so they can sleep on a sidewalk  outside a store three days before a product hits the shelves just to have the dubious distinction of being among the first to own a product that will be obsolete in six months.

Housing numbers and housing bummers…

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The economy is looking slightly (remember, I said slightly) less awful today as new numbers are out indicating that the housing market is improving. Slightly. In fact, April was the first time it rose in 2014. While it was a 1.3% increase from March, it still was 7% below April 2013’s numbers. But two good things to note: There are more homes and there are better prices  – not that those two things are always mutually exclusive. The median price of a home was up 5.2% from a year ago to $201,700. But leave it to the Federal Reserve to be the ever reliable buzzkill and remind us that the pace of the housing recovery is still too slow and just isn’t good enough in the grand economic recovery scheme of things. Got all that?

Tiffany: Bling It On, Janet Yellen Graduates and Missed Target

Shine on…

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Tiffany & Co. (TIF)  and its iconic little blue box had a very luxurious quarter. They just might be the only company who didn’t take issue with the particularly infuriating winter. Even if that nasty little season did toy a bit with the company’s northeast stores nobody probably wants to hear about it considering its net income rose about 50%. In fact, not only did it beat the Street’s expectations, it shattered them. Analysts thought the ultra luxury retailer would pull in about $953 million dollars. But oh no. They came in at a whopping $1 billion. Ironically, a much of that success stems from the less-expensive collections. Yes. Tiffany & Co. does believe itself to have a less expensive collection. Now please collect yourself. But to be fair, consumers were also taking a shine to their colored diamonds as well. And well who doesn’t like a diamond no matter what the color?

 Class act…

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Federal Reserve Chairwoman Janet Yellen received her degree. Okay so it was an honorary one from NYU. But it will look awfully pretty next to the one she received from Yale where she earned her PhD in economics many years ago. Before a crowd of graduates and their kvelling families gathered in Yankee Stadium, she delivered an address to the class of 2014 in which she said ability is good but it’s how much grit you have that will ultimately determine your success. “You wont succeed all the time. I hope you can find joy in the lives you choose.” Words of a wisdom from a genuinely wise woman. She also gave props to her predecessor, Ben Bernanke. The first female to head the Federal reserve, she was joined by fellow honorees Supreme Court Justice Elena Kagan, Yankees pitching great Mariano Rivera and legendary singer Aretha Franklin.

Missing the mark…

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Target can’t seem to shake that pesky mark on its back after coming out with earnings that tanked 16%. Of course that massive fiasco of a data breach that cost the company $26 million is still looming large and certainly contributed to its disappointing – though not unexpected – performance. But then there was Canada! Oh Canada. The foray to our friendly neighbors to the north didn’t work out quite the way Target hoped. Those embarrasing inventory shortages were not exactly the stuff successful expansions are made of and so the president of its Canadian operations was shown the door.

 

Bad Credit Suisse, Dick’s Not Feeling Sporty and Home Depot Has Room For Improvement

Plea…pretty pretty plea!!!

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It’s official. Credit Suisse (CS) entered a guilty plea for assisting – or perhaps the word is abetting? – Americans with avoiding paying Uncle Sam. Or as the Feds call it, Tax Evasion. The Swiss bank has been engaged in this troublesome little activity through 2009. Now it has to fork over $2.6 billion to the Federal Government and New York Financial regulators. One glaring omission from this long-awaited plea agreement was a list of names of the alleged evaders. But no dice even though their fellow Swiss banking institution, UBS, (UBS), did have to give up a list of names of their alleged perps/client list when it pled its guilt back in 2009. It also had to pay a fine of over $780 million in penalties (but really it was handing over that list of names that put a crimp in their operation). Credit Suisse now holds the dubious distinction of being the largest financial institution in twenty years to enter a guilty plea. Classy.

Not exactly par for the course…

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Dick’s Sporting Goods (DKS) wasn’t playing around when they announced their earnings today. Dick’s, which also owns Golf Galaxy blamed its golf and hunting sales that threw its shares down almost 15%. Since the start of the year Dick’s watched the value of its shares fall 23%. And while they were hoping for their value to bounce back the opposite happened and they kept falling and falling and… While it earned $1.44 billion in sales which was an almost 8% jump over the same period last year, it still missed the Street’s mark of $1.46 billion. Dick’s currently has 566 stores in the US.

Never stop improving…

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Home Depot (HD) sales didn’t exactly nail Wall Street’s expectations but don’t expect anyone to get too worked up over it. Analysts predicted $19.97 billion. But oh well. The home  improvement outfitter only delivered $19.69 billion. Which, by the way was almost a 3% increase over last year. Naturally, it wouldn’t feel right if the word “winter” wasn’t mentioned in the context of how it affected their fiscal quarter and was responsible for its missed expectations. So for good measure I’ll say it. Winter. There. That particularly nasty little season that, like a very rude guest, refused to leave quietly, apparently affected the start of the spring selling season. But the Atlanta based retailer called its May sales “robust” which, in my most humble opinion is quite a fitting adjective for a company like Home Depot.

The Urge to Merge, Targeting a Parachute and Cottage Cheese Sighs

Watch it where?

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Watching television on an actual…television? Ugh. That is like so last year. Well maybe not just yet but AT&T (T) and DirecTV (DTV) are banking on it. They are on a mission to deliver content to all of your devices and not jut that relic of a 96″ HD monitor you’ve been paying off  for the better part of the year. So much so that AT&T just picked up the satellite programming provider from the telecommunications giant for a staggering $48.5 billion. That’s $3.5 billion more than what Comcast (CMCSA) is shelling out for Time Warner Cable (TWC). The merger between AT&T and DirectTV puts their customer base at 26 million while Comcast/Time Warner Cable have slightly more at 30 million subscribers. However, all these companies do face regulatory issues from the FCC and the Department of Justice. But mergers like these are allegedly good for the consumer. Cheaper bundles are headed our way. Though to be fair I’m skeptical after spending my morning live chatting with one of the telecom giants just to switch my cable carrier.

They’re paying you what?!

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Target shareholders felt its recently ousted CEO, Gregg Steinhafel was getting a bit too much of payday. Especially considering he was at the helm of the company as its holiday shopping season hacking fiasco unfolded before his eyes. Steinhafel’s 2013 paycheck was slashed by 37%. Instead of making the $20.6 million he earned in 2012, he now only received $12.9 million. I know you feel for him. Steinhafel has to pay back $5.4 million in retirement benefits also. I know. I know. Your heart goes out to the guy. But not to worry. He can just wipe away his tears with all those $100 bills he’s going to have courtesy of his $54 million golden parachute.

Not so comforting food…

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While Campbell’s Soup (CPB) is good food, its earnings were definitely not. Despite marching out some new products this year, it just wasn’t enough to beat Wall Street’s expectations. The company behind Prego and the snack that smiles back, Goldfish, was not smiling back it its third quarter which saw its revenue pretty much flatline. Analysts pegged their earnings at $2 billion instead of the disappointing $1.97 billion it posted. It was hardly a dent into the $1.96 billion it pulled in last year at this time. On the dairy front, Kraft Foods (KRFT) must have been feeling a bit lactose intolerant today thanks to a cottage cheese recall. 1.2 million cases of the stuff was taken off the shelves. Some of their ingredients were not stored well and this may or may not result in stuff that would gross you out. But not as much as it’s going to gross out Kraft’s revenue.

 

KY: Dude Where’s My Hemp? Hailing Uber

Seed project…

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Kentucky’s state agricultural department has a 250 pound stash of hemp seed that they’re itching to plant for some pilot projects they’ve got planned. The problem is the DEA is keeping it at a UPS facility and is being very uncool about releasing it. A group of Veterans who would like to take up farming would like to utilize these seeds, which makes the fact that the DEA is holding them that much more rude  – and uncool. So state officials are doing what any red-blooded American would do in a situation like this: They are suing. US Attorney General Eric Holder, Customs, the DEA and the Justice Department are the defendants. A hearing is scheduled for today because those seeds really need to be planted by June 1 in time for the hemp growing season. I’d like to see the DEA try this in Colorado.

Pin this…

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Pinterest. You know it. You love it. You must be among its 30,000,000 active monthly users. The social media company just infused with some major cash –  $200 million, in case you were wondering – raising its valuation to $5 billion. If you haven’t noticed (though I’m sure you did) it now has “promoted pins” which means ads in Pinterest speak. And this next one is quite the biggie: Pinterest has apparently overtaken Twitter as the social destination for women. Which might partly explain a bit why Twitter hasn’t been living up to its hype. Some of that new money is going abroad, that is to help spread the Pinterest love all over the world, though it is already in 31 countries.

Headed in new directions….

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The Uber app, a ride sharing service that is ticking off the taxi industry, wants to raise several hundred million dollars and get a $10 billion valuation (just like Pinterest – only not). Even though Uber began just five years ago, the company has proven to be a massive success – doubling their reach in just six months – even as it deals with major regulatory problems courtesy of miffed taxi drivers. In fact, some Uber drives are even getting ticketed by police. But it’s going to take a lot more to thwart the app’s efforts as it is used in over 100 cities  – worldwide.  The Financial Times said the app could likely pull in a billion dollars just for 2014. Among Uber’s very prescient backers is Amazon’s very own Jeff Bezos (who seems to have sizable stakes in all the right tech companies). Right now India is their largest market now outside of the US. But as with so many other tech companies lately, people wonder if they are really worth all those billions.