Look out, DreamWorks Animation (NYSE: DWA) -- your arch enemy, Disney (NYSE: DIS), wants to be king of animation at the cinema over the next few years. Actually, I suppose other companies who produce animation, such as Time Warner (NYSE: TWX), News Corp. (NYSE: NWS), and Viacom (NYSE: VIA), should watch out as well.
According to a Disney press release, ten cartoons will be released through 2012. The lineup sounds pretty impressive. We'll be seeing the third Toy Story movie in the summer of 2010, and two years later, audiences will be revving up for a Cars sequel. During the holiday season of 2011, a Pixar fairy tale called "The Bear and the Bow" will be weaving its magic (hopefully) in the multiplexes, which is interesting, because during the summer of that same year, Pixar will be releasing something called "newt", so fans will get two Pixar properties three years from now. Other animated projects include Bolt, which will use the voice talents of John Travolta and Miley Cyrus, and The Princess and the Frog.
Whew, there was a lot of cool intellectual properties in that press release, and as a Disney shareholder, I am excited at the prospects. But this isn't just about a bunch of cartoons, my friends -- not at all. This is a huge test for Bob Iger. Was he correct in spending billions to acquire Pixar and its talent trust, specifically John Lasseter? Mr. Lasseter, the chief creative officer for both Walt Disney Animation and Pixar Animation Studios, has a lot of pressure weighing down upon his shoulders. Not sure if he would actually admit that, but he does. He's the man who's supposed to see Disney's animation assets into the future, to bring Disney's animation brand back to prominence. Many people thought that Disney was losing its way in terms of traditional animation; to add insult to injury, some were questioning whether Pixar, when it wasn't part of Disney proper, was what Disney used to be -- innovative in its creativity, obsessed with quality, and driven to provide a moving experience for animation fans whenever they sat before the silver screen.
So, we'll see whether those billions invested in the Pixar acquisition truly will reap stellar returns on invested capital. It will be the performance of the non-Pixar films that will tell the tale.
Disclosure: I own shares of Disney; positions can change at any time.
The market's choppy, consolidating (or perhaps worse) pattern continues. Further, the steel sector remains vulnerable to a U.S./global economic slowdown, but one company that may hold its own is AK Steel.
AK Steel Holding Corp. (NYSE: AKS) is the third largest U.S steelmaker, and features coated, cold rolled and hot rolled carbon steel used by the automotive, appliance and manufacturing markets, among other buyers.
Analysts expect AK Steel Holdings' 2008 revenue growth to slow to about 2%-5% in 2008 after a 16% rise in 2007. Analysts expect stainless steel raw material surcharges to end, but carbon steel should show some price improvement as companies rebuild inventories.
Longer-term, analysts likely AKS' sector position, overall product mix, debt reduction, and cost containment (particularly regarding legacy costs). The Reuters F2008/F2009 EPS consensus estimates for AKS are $4.01/$4.33.
The risks? AKS remains vulnerable to companies' willingness to rebuild steel inventories, particularly the auto sector, which accounts for more than 40% of revenue.
The First Call mean rating for AKS is: Hold. [9 firms.] Mean 2008 target: $49.00. [high: $57, low: $45.] Stock Analysis: AK Steel is a moderate-risk stock not suitable for low-risk investors. More-cautious investors may want to wait for a possible pull-back in AKS' shares to about $51, but keep in mind AKS's shares may not retreat to that level. Investors with an investment horizon longer than 2 years should be rewarded from AKS' shares. Sell / Stop Loss if you were to purchase shares in this company: $31.
Disclosure: Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.
With people in Japan showing less and less interest for cars, Japanese automaker Toyota Motor Corp. (NYSE: TM) is exploring more efficient methods to increase sales in its strong competition with rival General Motors Corp. (NYSE: GM) for the title of the world's largest automaker. The attempt to boost sales has become even more difficult as, according Toyota officials, young people prefer spending their money on laptops or mobile phones than a car that could be easily replaced by public transportation.
In an attempt to reach younger people and lift car sales, Toyota is opening a new mall located in Yokohama, southwest of Tokyo. The new Tressa mall is pretty much like any other malls, with 220 stores and restaurants like cafes, clothing stores and even gym or games centers where people enjoy spending their time. However, in the new mall space, Toyota showrooms take center stage, placing at people's disposal a large variety of old and new cars models.
One thing that Toyota is aware of, and trying to improve upon, is that in Japan showrooms and TV advertising are not efficient any more in attracting people's interest for buying cars. The new mall is aimed at accomplishing Toyota's plan of global domination by providing "opportunities for people to come in contact with cars."
With the national average of unleaded regular gasoline above $3.15 and oil's recent price surge not fully felt by refiners yet, there's a good chance gasoline will hit $4 per gallon this summer in the United States, particularly if driving patterns mirror previous summers.
What's a good way to cope with the above? Turn it your advantage, to the extent possible, at both ends. Accordingly, here are a few tactics for investors and consumers in the $4 gasoline era.
So much for that oil slump. Oil's price pullback lasted all of one day as buyers piled back into oil futures Wednesday, sending oil surging up $5.00 to a new record close of $104.52, after OPEC said it would maintain current production quotas.
The Organization of Petroleum Exporting Countries agreed to maintain production targets at a meeting Tuesday in Vienna, Bloomberg News reported. That price-bullish reality, combined with a surprise report by the U.S. Department of Energy indicating that U.S. crude inventories fell for the first time in eight weeks, was enough to send the oil pits into frenzied buyer mode, once again. Earlier this week oil broke through the previous nominal high of $103.76 set back in 1980.
Gasoline, heating oil prices surge
The other major energy commodities also rocketed higher. Heating oil surged 14 cents to $2.93 per gallon, unleaded gasoline jumped 10 cents to $2.63 per gallon and natural gas climbed 37 cents to $9.72 per million BTUs.
And once again, OPEC repeated its oft-stated rationale that "the markets are well supplied," Bloomberg News reported, arguing that speculators and investors seeking to buy oil as a long-term asset and as an inflation hedge, are primarily behind oil's climb to the stratosphere. And once again, traders and other oil buyers acted as if there won't be enough oil to meet global demand at some point in the months ahead.
The highly improbable may be happening. U.S. gasoline consumption may be arcing downward, The Wall Street Journal reported Monday (subscription required).
Confronted with near-record gasoline prices, an anemic-growth U.S. economy, and rising food costs, among other living expense increases, U.S. gasoline consumption has fallen about 1.1% in the past six weeks, on a year-over-year basis, The Journal reported Monday, citing U.S. Government data. Further, excluding Hurricane Katrina in 2005, which destroyed energy facilities, the six-week drop in demand is the longest drop in 16 years.
If the 'mini' trend strengthens or at least holds on a year-over-year basis, experts say it will limit gasoline price increases that typically occur during the summer driving season - - a period when U.S. gasoline consumption historically increases and oil companies increase gasoline prices to take advantage of that higher demand.
Despite a weak economic environment, Japanese automaker Toyota Motor Corp. (NYSE: TM) is continuing its strong competition with rival General Motors Corp. (NYSE: GM) for the title of the world's largest automaker. The auto industry competition has become even stronger as new rivals appear in China, Russia, South America and other regions. In its attempt to claim sole dominance of the auto world, Toyota plans to gain ground in new markets by focusing on finding more efficient methods to build its cars.
One example of Toyota trying to think "outside the box," can be illustrated by a training practice put in place at the automaker's training center located inside its Motomachi assembly complex. The company has been having some workers using golf balls in order to exercise and make their fingers more flexible. A part of the training involves workers using their concentration to make two balls they hold in each hand roll in opposite directions. Sounds a little crazy, but the practice is designed to improve their skills on tasks regarding the assembly line of cars they build.
This is all aimed at accomplishing Toyota's plan of global domination. One thing that Toyota is aware of, and trying to improve upon, is its ability to run efficient operations in countries outside of Japan. Consider this... Toyota currently operates plants in 27 countries, with plans to build in even more locations. Where the potential trouble comes into play is the fact that key management jobs in each country are held entirely by Japanese executives who decide all the company's major operations and strategic plans.
Despite a shaky economy where recession concerns deepen each day, car demand is booming for at least one major auto maker. It looks like even in a recession people continue to need cars, and the good times are rolling for car maker Honda Motor Ltd. (NYSE: HMC), which reported that its profit rose 38.1% in the third-quarter. For this period, Japan's second-biggest automakers counted strong sales for its fuel-efficient models in the U.S., Europe and Asia.
Honda's third quarter profit climbed to 200 billion yen ($1.87 billion), compared with 144.8 billion yen in the same period last year year. Cost-cutting also made the automaker post a record gain in its earnings numbers during the fiscal third quarter.
One of Honda's best competitive advantages is its strong reputation for providing more fuel-efficient cars. Thus, the recent surge in oil prices helped Honda's sales to jump 10% to 3.045 trillion yen ($28.52 billion).
The Wall Street Journalheadline says it all: "Lax Lending Standards Could End Up Fueling Sudden Acceleration in Auto-Loan Delinquencies".
It makes perfect sense and could even be worse than the subprime home lending crisis in terms of its impact on the industry. Because taking out a car loan is pretty rarely a savvy financial move -- and people tend to use them to buy cars they really can't afford -- the industry may be especially vulnerable to an economic slowdown. Irresponsible borrowers are more likely to take out car loans than home loans, and also more likely to walk away from them. And there isn't going to be any federal bailout to help fast food workers keep their Escalades.
Analysts report that delinquencies in car loans rose sharply in late 2007. Consequently, it's important to look at the possible exposure any automotive-related company you invest in has to credit problems. Some companies do their own financing, others don't. A quick look at the risk factors disclosed in the 10-Ks filed with the SEC may provide some clues.
In the words of one reviewer, "it's hard to hide the disappointment" with the new 2008 Focus from Ford Motor (NYSE: F). While the car is "serviceable," it lacks the pizazz of the new compact cars from Honda, Mazda and Volvo. This is particularly annoying since Ford owns Volvo and has a stake in Mazda.
To make matters worse, there is a new Focus made by Ford in Europe which is earning rave reviews. But the American version of the car will not use the more advanced platform of the European model. It's the same old story: American consumers get the boring version of Detroit's global efforts. In this case, they even have to put up with cheesy fake air vents glued to the fender.
The good news is that Ford's new Sync electronics system is getting lots of positive reviews. As our own Brian White noted (Mr. Softy climbs in with Ford), Sync was developed with Microsoft Corp. (NASDAQ: MSFT) and allows drivers to use their MP3 players and cell phones in the car with voice-activated software. The reviewer at The New York Times thinks it's a great system, going so far as to say that it is far better than BMW's iDrive. Our pals at AutoBlog agree, and they claim that Sync is actually helping Ford sell more cars. So even though the car itself may be dull, at least you'll have a cool computer system to keep you from noticing too much.
It looked like Toyota (NYSE: TM) would pass GM (NYSE: GM) for the No. 1 spot in global car sales for 2007, but it is not clear that it happened. GM sales in China and South America may have been good enough for it to keep the lead spot.
Now Toyota has announced ambitious plans to up its sales 5.6% to 9.85 million vehicles in 2008. That would almost certainly put it ahead of GM and break the U.S. car company's all-time record year set 30 years ago.
According toThe Wall Street Journal, "Katsuaki Watanabe, Toyota's president, said the company aims to achieve its bold sales targets by expanding in fast-growing emerging markets." That means the Japanese company will have to do well in growing markets like China and hold its own in the U.S.
GM's shares fell 20 cents to $26.46 in Thursday midday trading.
GM said the agreement constitutes another step in the company's plan to focus on designing, manufacturing and selling cars and light trucks around the world. GM added that the deal would leverage Navistar's strengths in commercial trucks and engines, enhance its economies of scale and lower costs. Good decision
Analyst C. Leonard Bauer, formerly of Prudential, said he likes the sound of the Navistar deal.
"This will enable GM to allocate more resources on its core: cars and light trucks," Bauer said. "I like the sale to Navistar in that it gets GM out of a space that did not represent a big gainer. GM has seen the future, and for them it's not in manufacturing mid-size trucks."
Toyota Motor (NYSE: TM) said this week that it plans to speed up its cost-cutting efforts globally in 2008, which should save it up to $2.7 billion annually. The world's largest automaker by unit volume is being squeezed with higher commodity costs and product development costs, just like domestic automakers in the U.S. Same song, different verse.
Toyota President and CEO Katsuaki Watanabe said, "I would expect to exceed what we've done under the previous plan," alluding to previous cost-cutting efforts that have been made and measured on a per-vehicle basis in recent times. Watanabe said that cost cuts should "grow every year" as sales rise. Sounds like a one-two punch to me. Is it feasible for Toyota, which has been stung by some bad safety PR recently?
Toyota's Value Innovation (VI) cost-savings plan has been in the works since 2005, and meant to group the thousands of components in every Toyota vehicle into a series of modules and systems -- in effect, simplifying design and saving tremendous costs when scaled globally across all platforms. Watanabe added, "I believe the strategy is basically proceeding as planned." The competition is, of course, not standing still when it comes to cost cuts, but those are mostly in labor and production capacity.
The odds of a 2007 Energy Bill passing the Democratic Party-led U.S. Congress, with President Bush's blessing, "Are still likely," according to a Washington-based, public policy lobbyist with knowledge of the matter.
"The bill will need a few revisions, but I'd say it's a 70/30 go, in favor of the bill being signed by the president," the lobbyist told Bloggingstocks Tuesday, on condition he not be identified by name.
The lobbyist, who represents primarily Democratic Party-based constituencies, said the the bill's renewable energy component and potential tax increases remain the hangups in the bill.
Modification likely
"More than likely President Bush will get the renewable energy component modified, but the Democrats may gain extra footing with better solar/wind energy credits," he said.
The bill current would require utilities to generate more power from renewable energy. Lawmakers from the Southeast U.S. have said they're concerned that utilities in their states will not be able to meet the requirement, due to a lack of wind power, The Wall Street Journal reported.
With the U.S. Federal Appeals Court of San Francisco's ruling that threw out proposed fuel economy standards, look for a renewed effort by the current U.S. Congress to pass new, tougher standards, possibly by year's end, a source familiar with various lobbying groups told Bloggingstocks.
Based in Washington and familiar with Democratic Party and energy-issue constituencies, the source told Bloggingstocks that some legislation, albeit minor, was now likely.
"Don't expect miracles, but the public sentiment and Congressional support appears to be there for a modest increase in CAFE [Corporate Average Fuel Economy] standard," he said, speaking on condition that he not be identified by name. He added that to-date the Bush Administration has resisted raising the CAFE; if the administration does so again, it's unclear whether Congress would have the votes to override the veto.
Look out, DreamWorks Animation (NYSE: DWA) -- your arch enemy, Disney (NYSE: DIS), wants to be king of animation at the cinema over the next few years. Actually, I suppose other companies who produce animation, such as Time Warner (NYSE: TWX), News Corp. (NYSE: NWS), and Viacom (NYSE: VIA), should watch out as well.
With people in Japan showing less and less interest for cars, Japanese automaker 
In the words of one 
It looked like 
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