History is repeating itself. After facing generic competition in the United States to its second-biggest product in 2006, Sanofi-Aventis is now dealing with a similar threat in Europe. Competition concerns came after Switzerland's Schweizerhall Holding AG announced it would launch a copy of the Plavix blood thinner that could be bought for a lower price. Schweizerhall said it expects German regulators to approve its generic version of Plavix, called clopidogrel.
Sanofi-Aventis's fears about generic competition are justified as the company had to fight against a similar situation less than a year ago. Back in 2006, Bristol-Myers Squibb Co. (NYSE: BMY), which develops the product with Sanofi, saw a big plunge in its sales after Canadian generics company Apotex Inc. launched a cut-price copy of the drug.
Privately held EMI Group reported to Billboard this week that the free track offered by Coldplay last week, "Violet Hill," was downloaded more than 2 million times. The song was made available from the updated Coldplay website on April 29 for one week before being released "commercially" in digital stores Tuesday, and it remains at Coldplay.com as a stream.
EMI had previously reported that the song was downloaded more than 600,000 times in the first 24 hours it was available. More impressively, EMI also told Billboard that the 2 million mark "is four times that of the combined sales of the Official U.K. Charts Co.'s entire Top 40 chart last week." "Violet Hill" will only be released as a physical single, a 45-rpm vinyl record, via this week's copy of British music newspaper NME. Coldplay's new album, Vida la Vida or Death and All His Friends, is released in the UK on June 12 and in the United States on June 17.
If the free availability and massive download of this one track is any indication, EMI is fully embracing digital downloads. More importantly, and coincidentally, EMI has also picked up on the platform former artist Radiohead used last October to market and distribute their seventh album, In Rainbows. Although the new Coldplay album will not be released in a similar manner, this method of distribution indicates how promising free music is to marketing new albums. At the end of the day, I can only hope that more free music will be this exciting.
Credit cards ... the little plastic cards in your wallet that are so convenient to rely on when you are strapped for cash. While the convenience of having cards definitely makes it easier to buy items when you are running low on cash, the flip side is that credit card debt can drown the typical household, and statistics are showing that Americans are pulling out their cards more than before.
One of the reasons why credit card usage has been on the rise is the fact that homeowners are having a harder time using home equity to get a cash infusion into their accounts. As a result, they are looking to borrow money from somewhere, and more times than not, they are turning to credit cards.
The evil with credit cards is that once you start to use them to pay for your basic necessities like food and gas, you find that in the months to come you still can't afford your basic needs but in addition, your monthly bills are racking up like crazy due to your credit card expenses. It's a scary cycle that many families find themselves trapped in.
In reaction to surging fuel costs, several major airlines announced today that they were raising their fares in order to recoup some of their rapidly increasing flying costs.
The increase this time around is $20 and effects passengers traveling on UAL Corporation (NASDAQ: UAUA), Delta Air Lines, Inc. (NYSE: DAL), and AMR Corporation (NYSE: AMR)'s American Airlines. The $20 jump in prices will be added to the airline's fuel surcharges, and consequently, these charges are now running at $130 round trip on most flights that you will book through the airlines.
The current rate hike was first initiated by Delta, and marks the second time in just over a week that the airline has been forced to raise fares in order to combat record high fuel costs. Times are definitely tough for airlines, and they are doing everything they can to combat fuel prices, but regardless of the rate increases most analysts are still expecting to see huge losses this year from most, if not all, airline carriers.
Is Target just trying to keep up, or does it see a benefit in matching drug price cuts by its larger competitor? In response to the price cuts, Target said that it "understands the challenges guests are facing in the current economic environment." It probably planned to make these price cuts as soon as Wal-Mart did and gain the same kind of free PR that comes with such a drastic price reduction in something that millions of Americans now depend on.
But Target does not position itself as the "low price" leader like Wal-Mart does. Its marketing is more upscale, and so is the appearance of its stores -- even while carrying much of the same merchandise. So why is Target matching these prescription drug price cuts? Is it trying to take customers from Wal-Mart? Of course -- the two are fierce competitors even though marketing and merchandise presentation strategies are what I'd consider to be worlds apart. Sometimes, price is everything.
Gasoline prices continue to increase along with crude prices, and the latter seem to find a new record every single day. Wasn't it just a few months ago that the media was going crazy about oil reaching the $100 per barrel mark? It hit $122 this week. Now, that's not a year later; that's less than half a year later. It's not surprising then that automakers with an inflexible SUV-selling strategy are getting pummeled, while automakers with a decent offering of gas-efficient vehicles are seeing product mix changes in retail sales.
Ford Motor Co. (NYSE: F), which showed a surprising profit in its most recent quarter, said that it plans to really up the presence of gas-efficient six-speed transmissions by the end of 2009, and wants to have these transmissions in 98% of its North American vehicles by 2012. If Ford follows through with this commitment, it'll be a game-changer for the industry. And, it will force General Motors Corp. (NYSE: GM) to do the same thing. Ford stated that the newer 6-speed automatics will get 4% to 6% better gas mileage than the standard 4-speed and 5-speed automatic transmissions.
GM is not sitting idly by at the same time, though. It debuted a 6-speed automatic transmission in the popular 2008 Chevy Malibu, which it is pitting as a strong competitor to market leaders Honda Motor (NYSE: HMC) Accord and Toyota Motor Corp. (NYSE: TM) Camry. Will the new trend in the consumer vehicle market be smaller 4-cylinder engines with advanced, fuel-efficient 6-speed automatic transmissions? You can count on it until oil prices fall to $50 a barrel. And, that'll be when pigs fly.
Yuck! If there's one drink I really dislike it's Dr. Pepper, and yet the company has managed to pick up market share against its largest rivals the past few years. Still, investors are concerned and shares of Dr. Pepper Snapple Group Inc. (NYSE: DPS) received a lukewarm welcome when they began trading today (Wednesday) on the New York Stock Exchange. The company was spun off from under former owner Cadbury Schweppes.
The company has many other brands other than Dr. Pepper and the splashy Snapple, including 7UP, Canada Dry, Schweppes, Mott's, Sunkist and RC Cola. Last year the company's sales totaled $5.7 billion.
No doubt, though, Dr. Pepper will now face the stiff competition from Coca-Cola Co. (NYSE: KO) and PepsiCo (NYSE: PEP), both of which are much larger and have wider portfolios, all on its own. With rising commodity costs, competing against such larger rivals isn't going to be a picnic.
To add to investors' concerns, the company hasn't issued any near-term earnings guidance, making many would-be buyers sit on the sidelines until the now-third-largest beverage company in the U.S. -- with its 15% market share -- has a quarter or two of financial results behind it. Despite giving longer term goals of increasing annual revenue by 3-5% and EPS by 7-9%, it seems that, with the current economic climate, investors want to see actual results before they dive in.
Also, it's no secret that with consumers getting more and more health-conscious, U.S. sales of traditional carbonated soft drinks have fallen in the last few years. The company will to have to adjust and extend its portfolio appropriately if it wants to survive. That, combined with a softening economy and rising costs can only entice me to hold off on this particular stock... at least for now.
DPS shares finished the day up 45 cents, or 1.8%, to $25.50.
Going into this afternoon's report, analysts were expecting to see the company show earnings of 10 cents a share, but the company failed to miss that estimate, by posting 9 cents a share for its most recent quarter. Despite missing by a penny, the stock has been moving up strongly in after-hours trading, with investors so far pushing shares up a bit over 14%?
Doesn't sound right, does it? The recent market has been punishing stocks that have missed estimates, so why is CROX shooting to the upside?
This post is part of our Battle of the Brands feature. Let us know which brand you prefer, and check out other Battle of the Brands posts.
When it comes to multi-bladed disposable razors, how many blades is enough? In the long-standing rivalry between the two biggest brands of disposable razors, the current answer seems to be five. For now.
The Gillette company, which in 2005 became part of Procter & Gamble (NYSE: PG), invented the safety razor in 1895, as well as the first razor marketed to women in 1916. They started the current arms race in multi-bladed disposable razors by introducing a twin-blade razor in 1971, and then the triple-bladed Mach 3 in 1998. Schick responded with the four-blade Quattro in 2003, then in 2005, Gillette introduced the five-blade Fusion. Of course, each of these models includes a version for women, and versions with various bells and whistles.
St. Louis-based Energizer Holdings (NYSE: ENR), a U.S. manufacturer of batteries, purchased the Schick brand of razors from Pfizer (NYSE: PFE) in 2003. Outside the North America and Australia, the same products are sold under the Wilkinson Sword brand. Either way, Schick remains a distant second to Gillette in global sales, though some analysts saw patent infringement lawsuits filed against Schick by Gillette as evidence that Gillette recognized a potential threat. Combined, these two brands account for nearly all razor sales in America.
It wasn't that long ago that Wall Street was in love with Crocs, Inc (NASDAQ: CROX), the maker of the trendy slippers that took the world by storm last year. After going on a tear for most of 2007, the stock started to break down last November, and has been in a tail spin for the past 5 months.
The company is going to be reporting its first quarter numbers tomorrow after the market close, and all signs are pointing to yet another troublesome quarter for the company. Earnings.com is showing Wall Street estimates of 10 cents a share, but that number does not really hold too much water after the company announced a much weaker forecast last month in its preliminary release.
Last month, CROX shocked Wall Street when it said that it expected to see a 5 cent per share loss in the quarter, and revenues falling somewhere between $195 and $200 million. After that news came out, the already troubled stock took a serious nose dive, and gave up around 40% of its value.
At first glance, it looked like a fantastic quarter for the company, as profit rose by a remarkable 82%, but things start to look less than rosy once we take a closer look. Analysts had been expecting to see the company show earnings during the quarter of 24 cents a share, and were disappointed to see the company come in below this, with only 22 cents a share.
This is the second quarter in a row in which the company posted weaker than expected earnings, and is quickly erasing the progress that the stock has been making since the beginning of March.
Industrial progressive rock band Nine Inch Nails have made another album available to fans and listeners for free this morning. The Slip, the band's first new album in two months, and third in the past year, was posted on a new website for fans to download free of charge. The move comes directly from front man Trent Reznor as a thank you to fans for their "continued and loyal support over the years."
Billboard called the release "a surprise move" but given Reznor's stance in the last year about the music industry and dislike of overpricing it is not all that surprising. It's also not the first time he has released an album this way. In March, Ghosts I-IV was released nearly identically as The Slip. The new album will also only initially be available from the band's website, but will see a future "traditional" physical release on CD and vinyl. Ghosts I-IV was released on CD and other physical formats about a month after it was first released in early March.
I have to say once again (like so many of the other recent Internet only album releases) that this is another great thing for the music industry. Although Reznor and NIN are essentially independent artists now without the backing of a major labor group, it does show that music does not have to be about making as much money as possible. At the end of the day though, neither Reznor nor NIN are probably going to suffer financially from the move, but that might just show us how much the music industry does not have to lose.
Shares of Sprint Nextel Corp. (NYSE: S) are rising on a Wall Street Journal (subscription required) report that Deutsche Telekom AG (NYSE: DT) is poised to make a bid for the wireless telecommunication company. If the report is accurate, Sprint's long suffering shareholders should do as the Steve Miller Band song suggests "take the money and run" because the deal may not happen.
For Sprint, though, this may be its only hope. Sprint shares have slumped almost 40% this year as the Overland Park Kansas-based company tried in vain to gain marketshare against larger rivals including Verizon and AT&T Inc. (NYSE: T). The commercials starring the company's affable CEO Daniel Hesse haven't helped much either. Remember when Hesse was named CEO last December, board member Irvine O. Hockaday Jr. remarked that Hesse "has the board's full support to take decisive actions necessary to improve our performance."
But as Bloomberg News points out, analysts argue that integrating the Deutsche Telekom and Sprint Nextel networks wouldn't be easy. Moreover, the U.S. Department of Homeland Security may not look kindly on a foreign company taking over a U.S. telecom provider for national security reasons, the news service notes.
Even so, the arguments for the merger are so compelling that it might be worth the risk.
In a column in Barron's (subscription required), analyst Todd Greenwald provides a bullish outlook for the video game industry, macroeconomic trends be damned:
We believe that this industry is virtually recession-proof and will be driven almost entirely by the release of new games, and continued hardware sales, rather than any macro-level consumer spending trends.
Last year's momentum has continued into the first half of 2008; year-to-date software sales are up 41% in the U.S., following 34% growth last year. Furthermore, this will likely accelerate in the coming months, driven by the releases of Grand Theft Auto IV, Nintendo's Mario Kart Wii and Wii Fit, and Konami's Metal Gear Solid 4.
I tend to agree with the notion that video games should be pretty recession-resistant -- they just aren't that expensive for the amount of time that so many young, male hardcore gamers spend with them. There's an argument to be made that a $50 video game actually provides a positive return on investment to the consumer because a night at home playing PlayStation in your underwear is cheaper than a night out on the town.
But one word of caution: Much of the growth, especially in more casual games like the Nintendo Wii, is being driven by a growing number of non-hardcore gamers. People who don't consider video games their main hobby may be more likely to give them up if things get tight.
Another problem to keep in mind: the Associated Press recently reported that teens are having a tough time procuring summer work in light of the struggling economy. That means less spending money for video games. But teen-oriented fashion retailers are more likely to be the victims of that.
This post is part of our Battle of the Brands feature. Let us know which brand you prefer, and check out other Battle of the Brands posts.
Drinkers of fine coffee may turn their noses up at Folgers or Maxwell House, but these two brands have been household names for decades. And they're not the just offering plain, old coffee for the commoners anymore. They've both added a variety of coffees to their product mixes in an effort to lure more upscale (picky? elitist?) coffee drinkers to their brands.
Folgers, one of the Procter & Gamble (NYSE: PG) family of products, has added roasts such as Black Silk, French Roast, Gourmet Supreme, and House Blend. They've also got a line of flavored coffees that include Crème Brulee, Vanilla Biscotti, and Caramel Drizzle. You will also find instant cappuccino in French Vanilla and Mocha Chocolate flavors, and the trusty old plain instant coffee is still available. I've had it, and it's not all that bad when you're in a pinch!