twmc posts
FeedPosted Apr 13th 2009 1:30PM by Zac Bissonnette (RSS feed)
Filed under: Magazines, Marketing and advertising
With circulation declining in large part due to the huge amount of free content available on the internet, some magazine publishers are adopting what seems like a counter-intuitive approach to competing: raising prices.
Magazines like
Time, Newsweek, Business Week and even the upmarket
New Yorker have long relied on low subscription prices to attract large numbers of subscribers, which in turn attracts advertisers. But the
New York Times reports that
The Economist has raised its price substantially of late and is still continuing to buck the trend of declining circulation. That has other publishers taking notice, and many are planning to increase their subscription and newsstand rates, after years of falling prices.
Continue reading Can magazines get away with price increases?
Posted Nov 16th 2008 12:30PM by Trey Thoelcke (RSS feed)
Filed under: Earnings reports, Forecasts, Home Depot (HD), Lowe's Cos (LOW), Trina Solar ADS (TSL), Suntech Power Hldgs ADS (STP)
Last week, JA Solar Holdings Co. Ltd. (NASDAQ: JASO) posted a quarterly loss and lowered its guidance. But as interest in alternative energy continues to grow, analysts polled by Thomson Financial are still looking for good things from solar energy concerns scheduled to report earnings this week.
Strong growth at Trina Solar Ltd. (NYSE: TSL) in the third quarter prompted it to lift its guidance back in October. Analysts expect the Chinese company to post profits that are 76.3% higher than a year ago, or $1.18 per share on revenues of $268.4 million (+225.0%). Though Trina Solar missed estimates in the second quarter, analysts on average recommend buying TSL. Shares are down 81.4% from a year ago and trading near an all-time low.
Earnings of rival LDK Solar Co. Ltd. (NYSE: LDK) are expect to have risen 47.9% to $0.71 per share on revenues of $486.7 million (+206.6%). Also based in China, LDK has not missed estimates in recent quarters; in fact, it blew past expectations in the second quarter. Yet the consensus recommendation is to hold LDK. Like Trina Solar, LDK's shares are trading near an all-time low; the share price has fallen 50.0% in the past year.
Analysts anticipate third-quarter earnings for Canadian Solar Inc. (NASDAQ: CSIQ) to be a whopping 96.3% higher than a year ago, or $0.54 per share on revenues of $248.0 million (+154.5%). The company easily topped estimates in the previous quarter. ReneSola Ltd. (NYSE: SOL) and Suntech Power Holdings Co. Ltd. (NYSE: STP) are also expected to report earnings growth of 29.7% ($0.37 per share) and 23.8% ($0.42 per share), respectively. All three of these stocks reached 52-week lows last week, and all are considered buys.
Continue reading The week in preview: High hopes for solar, not so much for home improvement
Posted Aug 4th 2008 11:15AM by Zac Bissonnette (RSS feed)
Filed under: Competitive strategy, Wal-Mart (WMT), Amazon.com (AMZN), Stocks to Sell
The Wall Street Journal reports (subscription required) of upcoming releases this summer such as Andrew Davidson's
The Gargoyle,
New York Times reporter David Carr's memoir
The Night of the Gun, and Ron Suskind's
The Way of the World: A Story of Truth and Hope in an Age of Extremism.
There's a
separate article on the release of Stephenie Meyer's book
Breaking Dawn, which
The Journal calls a "vampire romance novel."
Borders Group (NYSE:
BGP) said it has sold 250,000 copies in the first 24 hours following the book's release.
That's an impressive number, and it may be some cause for hope for shareholders who have taken a beating in booksellers like Borders,
Barnes and Noble (NYSE:
BKS) and
Books-a-Million (NASDAQ:
BAMM).
But don't get too excited. Since the first American edition of the first Harry Potter book in October of 1998, shares of
Scholastic (NASDAQ:
SCHL), a specialty publisher of children's books, have gone from around $20 per share to their current price of $26 -- a gain of 30% over the course of a decade. Not exactly something to get excited about, especially considering it's one of the bestselling books of all time, ever.
The bookstores might get a temporary jolt from late sumer and fall hits, but the long-term fundamentals of the industry will drive results. A new CD from Eminem -- or even The Beatles for that matter -- wouldn't be enough to save a company like
Trans World Entertainment (NASDAQ:
TWMC). For bookstores, that means the lower prices and wider selection of
Amazon.com (NASDAQ:
AMZN), or conveniences of stores like
Wal-Mart (NYSE:
WMT), as well as the onset of digital delivery are the factors investors have to look at.
And even vampire romance novels can't compete with those.
Posted Jul 13th 2008 3:10PM by Zac Bissonnette (RSS feed)
Filed under: Marketing and advertising
Being a shareholder in Trans World Entertainment (NASDAQ: TWMC) hasn't been a lot of fun for the past decade or so. The company is the leader in mall-based music sales but, as you can imagine, iTunes and Wal-Mart (NYSE: WMT) have made that market position into a Pyrrhic victory.
Founder and CEO Robert Higgins withdrew his $5-per share takeover offer back in May, citing the poor credit market, and a $7-per share offer from a fund calling itself Sherwood Investments mysteriously evaporated. Now the stock is down in the $2.50 per share range and, with no going-private deals on the horizon, the company is making a last ditch effort to execute some kind of turnaround that might restore some modicum of shareholder value.
The company is in the process of rebranding all of its stores under the f.y.e. label, and is also embarking on an ambitious ad campaign featuring R&B star Ne-Yo and WWE star Batista in television commercials. The Business Review reports:
In one 30-second commercial, Batista and another WWE wrestler, MVP, drop-kick and body-slam each other in what seems like an impromptu fight inside an f.y.e. mall store. Bass-thumping rock music blares as fans cheer from outside the roll-down security gate.
In the other spot, teenage girls at an f.y.e. realize the chart-topping singer Ne-Yo is wearing headphones in the store, singing aloud to himself a cut from his yet-be-released album, "Year of the Gentleman."
Continue reading Trans World Entertainment attempts revival with ad campaign
Posted Jul 6th 2008 3:10PM by Zac Bissonnette (RSS feed)
Filed under: Scandals, Krispy Kreme Doughnuts (KKD)
MGL Asset Management Group's press release purporting to offer $7.25 per share for Krispy Kreme Doughnuts (NYSE: KKD) was pretty quickly debunked as illegitimate and, very probably, an effort to hype the stock for a quick buck. Jon Ogg reported on the mysterious offer on our sister site, BloggingBuyouts.
The stock jumped on the news of the offer, but quickly gave up all the gains and then some after media and analyst reports dismissed the offer. But anyone who jumped on the stock at the sight of the press release got burned.
How can you prevent this from happening to you? A good rule of thumb: When you're looking for information on material developments, look to the SEC filings. The offer was made solely through a press release -- something that anyone with a few hundred bucks to pay the wire fee could send into the hands of millions of investors in a few minutes. Until you see something about the "offer" in the SEC's Edgar Database, it should be regarded as a rumor. I wrote about a similarly non-materializing offer at Trans World Entertainment (NASDAQ: TWMC) back in November.
Another solution is to leave the "in-play" trading to the pros -- it's all about information and you're unlikely to have an edge. If you see a news item that a company has received an offer, don't jump in.
Posted May 18th 2008 4:10PM by Zac Bissonnette (RSS feed)
Filed under: Competitive strategy, Marketing and advertising, Technology
CNBC reports that the video game industry is making progress in its efforts to offer downloads of high-quality games over the internet. Nintendo has introduced WiiWare, which lets users download games for the Wii from independent publishers. Developers set the price -- far cheaper than the high-budget games put out by the big publishers -- and Nintendo takes a chunk of the revenue. CNBC adds that "Digital delivery of all forms of entertainment is widely considered to be a foregone conclusion. Only the timeframe is in question. Not only will publishers have to learn to adapt, but game retailers such as Gamestop (NASDAQ: GME) will have to figure out how to compete directly with companies that are also clients."
What happens if the downloading trend takes off as most experts assume it will? The story of Trans World Entertainment (NASDAQ: TWMC) could be a harbinger of things to come if Gamestop is unable to adapt. As the number-one operator of mall-based CD stores, Trans World has seen its sales and profitability plummet -- the shares have declined from over $13.00 in 2005 to the current price of $2.60. The market was very late in pricing in the disastrous effects that the MP3 would have on the brick-and-mortar industry.
Maybe Gamestop can adapt. But with a P/E ratio of over 30 for a company whose business model will have to change drastically over the course of the next decade, investors may want to keep in mind the collapse of Trans World Entertainment.
Posted May 8th 2008 11:07AM by Eric Buscemi (RSS feed)
Filed under: Analyst reports, Analyst upgrades and downgrades
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MOST NOTEWORTHY: National Financial Partners, Blackbaud and Trans World were today's noteworthy upgrades:
- Citigroup upgraded shares of National Financial Partners (NYSE:NFP) to Buy from Hold on valuation, as they believe the recent weakness is overdone. Citigroup also added the stock to their Top Picks Live list.
- Jefferies upgraded shares of Blackbaud (NASDAQ:BLKB) to Hold from Underperform on valuation, as they believe management did the right thing by lowering guidance while buying back stock more aggressively.
- B. Riley lifted Trans World (NASDAQ:TWMC) to Buy from Neutral as they believe the company could ultimately go private should credit conditions improve
OTHER UPGRADES:
Posted May 7th 2008 11:18AM by Zac Bissonnette (RSS feed)
Filed under: Deals
The strange saga of the
Trans World Entertainment (NASDAQ:
TWMC) takeover battle that wasn't is getting even stranger.
In a press release issued last night, the company announced that
"Robert J. Higgins
, its CEO and largest shareholder, has withdrawn his preliminary proposal to acquire the Company, which proposal was first announced in
November 2007."
But wait: shortly after Higgins' $5 per share "preliminary offer," Sherwood Investments put out a press release announcing it would be willing to pay $7 per share but that "this offer may be increased as a result of the information obtained from the due diligence process." In an earlier post, I
questioned the legitimacy of the offer, and we never really heard much more about it.
In the press release issued last night, Trans World added "that there are no other pending proposals by management and/or any third parties to acquire the Company at this time."
So whatever happened to the Sherwood offer?
Posted Dec 13th 2007 8:38AM by Zac Bissonnette (RSS feed)
Filed under: Deals
Tuesday I wrote about Sherwood Investments' 13-D filing (the first in the firm's history) indicating a 5.48% stake in
Trans World Entertainment (NASDAQ:
TWMC), the owner of mall-based music and entertainment stores including f.y.e., Suncoast, and Sam Goody.
Obviously this lends a good deal of credibility to Sherwood's offer, but there are still a few things that investors need to wonder about.
The first, and most important question, is how many contingencies does the offer contain. If the offer is loaded with hedges and outs for Sherwood, it's a lot easier to dismiss it as blustering. If Sherwood's offer is contingent on the ability to secure financing and the Kansas City Royals winning the World Series, it's pretty easy to dismiss. How many contingencies does the offer have? It's hard to say because
in the the 13-D filing, Sherwood actually contradicts itself:
On November 29, 2007, Sherwood sent a letter to the Issuer and the Special Committee, in which it made a preliminary proposal to acquire all of the Issuer's Common Stock not owned by Sherwood for $7.00 per share, subject to a due diligence review and complete and fair evaluation of the Issuer's business. A copy of that letter is attached hereto as Exhibit C.Continue reading Sherwood Investments' flipflop on Trans World
Posted Dec 12th 2007 2:20PM by Zac Bissonnette (RSS feed)
Filed under: Deals
I've
written about Sherwood Investments' offer of $7 per share for
Trans World Entertainment (NASDAQ:
TWMC) and I've expressed more than a little skepticism.
Now, at least some of the skepticism has been assuaged -- Sherwood has
filed a 13-D indicating a 5.48% stake in the company. Should we take the offer more seriously now? Yes. We now have confirmation of Sherwood's ownership of the stock it reported in press releases and an assurance that the company was not trading on the hype its press releases generated. So the ethical worst case scenario has been eliminated.
But questions remain.
Right now, Trans World is a stock trading up about 40% in less than a month on two offers, both of which are contingent on financing.
Continue reading Trans World Entertainment gets a 13-D filing from Sherwood
Posted Nov 30th 2007 4:31PM by Zac Bissonnette (RSS feed)
Filed under: Deals
Not too long ago I
wondered about Sherwood Investments' $7 per share bid for
Trans World Entertainment (NASDAQ:
TWMC). I questioned whether Sherwood was serious about its offer, but added that Julian Benscher, the man who signed the company's press releases, told me by phone that the offer was serious.
After that post was published, Benscher called me back and explained that the reason he had not acquired 5% of the company and filed a 13-D yet was that Sherwood's securities lawyer is currently traveling.
In addition, he said that his reason for stating in the press release announcing the offer that Sherwood would possibly raise its offer was that in a prior PR on TWMC, he has said he believed the company's value was higher: "We are highly confident that an auction of the company would result in a sale in excess of $8 per share, a considerable premium to your current proposal."
I'll believe that Sherwood's $7 per share offer is serious when a deal is consummated.
Goldman Sachs Group, Inc. (NYSE:
GS) has been shopping the company for months, it's hard to imagine another bidder emerging with a higher offer.
But until then, I think investors should take Sherwood's offer with a bucket of salt.
Posted Nov 19th 2007 8:10PM by Zac Bissonnette (RSS feed)
Filed under: Deals
On November 9th, I
wrote about Trans World Entertainment Corporation (NASDAQ:
TWMC) CEO Robert Higgins' offer to acquire the company for $5 per share. On Friday, shares of TWMC closed at $5.25, indicating that investors expect that either Higgins will raise his offer, or a competing bidder will emerge. What happened?
Sherwood Investments, which owns 4.34% of the company, put out a
press release containing a letter to Mr. Higgins and the board, voicing the opinion that the offer was "grossly inadequate", and urging the company to solicit other offers.
Sherwood's argument is pretty hard to dispute: At a price of only $8 per share the entire Trans World business would be valued at under $250 million or $259,000 per store (using the 963 stores reported as of August 4th, 2007) which is less than their replacement cost. Furthermore, $8 per share would represent less than the $11.81 per share of tangible equity on the most recent balance sheet and half the cost of current inventory. Let us remind you that just last year Trans World paid $78.8 million for 335 Musicland stores from bankruptcy. That deal equated to $235,000 per bankrupt store and now you are proposing to pay $161,000 per store for all the stores which represents a 31% discount, and Trans World is a going concern!
Why should shareholders accept $5 per share when liquidation should generate proceeds in excess of $8 per share? We are certain that in making a "preliminary proposal" you realize that significant additional consideration would need to be forthcoming in order to satisfy your minority shareholders.
The paltry valuation that Higgins is placing on the company with his offer is underscored when you consider that Trans World actually closed 125 of the 355 Musicland stores that it acquired, according to the
most recent 10-K. Using the 210 stores from the Musicland acquisition that TWMC currently operates, it really paid more than $375 thousand per store -- 2.3 times as much as Higgins is offering for Trans World.
Trans World's board will in all probability have to solicit other offers to avoid a proxy fight and, if Sherwood is right, that auction process would make Trans World a screaming buy at its current price.
Posted Nov 12th 2007 9:55AM by Eric Buscemi (RSS feed)
Filed under: Analyst reports, Analyst upgrades and downgrades, Federal Natl Mtge (FNM)
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MOST NOTEWORTHY: The U.S. banking sector, HSBC Holdings, Trans World and Mips Technologies were today's noteworthy downgrades:
- CIBC downgraded the U.S. Banks sector to Underweight from Market Weight as they see another leg down as investors shift focus away from write-downs to the impact the write-downs will have on risk-weighted assets and capital ratios.
- Morgan Stanley downgraded shares of HSBC Holdings Plc (NYSE: HBC) to Equal Weight from Underweight, as they believe the company may have to set aside more money for bad loans in the U.S.
- B. Riley downgraded shares of Trans World Entertainment Corporation (NASDAQ: TWMC) to Neutral from Buy, as they believe the downside risk should the Bob Higgins acquisition proposal fall through outweighs the potential upside should the bid be raised or should another bidder emerge.
- B. Riley also downgraded Mips Technologies Inc (NASDAQ: MIPS) to Neutral from Buy following the company's Q1 results to reflect the company's deteriorating balance sheet and licensing business softness.
OTHER DOWNGRADES:
Posted Nov 9th 2007 6:31PM by Zac Bissonnette (RSS feed)
Filed under: Deals
Shares of
Trans World Entertainment Corporation (NASDAQ:
TWMC) were up big today for the first time in a long time. CEO Robert Higgins
handed the company's board a "preliminary proposal" seeking to take the company private for $5 per share in cash. Mr. Higgins already controls about 40% of the company's stock, and the board is evaluating the offer. The stock soared more than 27% to close at $4.96 -- so close to the "preliminary proposal" that it indicates that investors expect that the company could well sell for a higher price.
Here's what makes this interesting. According to the company's latest proxy statement, Mr. Higgins has been CEO for a little more than 5 years, although he founded the company more than 30 years ago. The chart at right shows how the stock has performed during that period. In early 2005, shares of Trans World were trading well over $14 per share -- Mr. Higgins' offer is for just over a third of that.
What has happened since then? Trans World is in the CD and DVD business, with stores including Fye, Strawberries, Sam Goody, and Suncoast -- some of the company's brands were acquired by the company out of bankruptcy. Of course, the internet has made those industries sluggish at best, and declining same store sales and profitability have sent the stock tumbling.
Does Higgins deserve all the blame for the company's woes? Of course not. But as an executive in the industry, he should have seen the changes coming and made adjustments. He didn't, and now he is looking to take the company private at a firesale price, way below the company's book value.
To some, this may be akin to hiring a carpenter to renovate your house, watching him trash it, and then receiving an offer from him to buy it -- at a small fraction of its value before he went to work.
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