Filed under: Major movement, Analyst reports, Forecasts, Market matters, Citigroup Inc. (C), Boeing Co (BA), Goldman Sachs Group (GS), Lockheed Martin (LMT), Politics, Headline news

It was only last week that Goldman Sachs (NYSE: GS) caused havoc in the stock market (or at least lead the charge) downgrading Citigroup Inc.(NYSE: C), and General Motors (NYSE: GM) among others, but now they have started to express concern that some of the defense sector stocks might be vulnerable to the next president’s ax.

Bloomberg is reporting that last month Goldman Sachs was issuing warnings to their clients about the fact that Barack Obama and John McCain both might seek to reduce or end large ticket defense purchases such as Lockheed Martin (NYSE: LMT) F-22 fighter and the Army’s $159 billion Future Combat Systems, a modernization plan jointly managed by Boeing Co (NYSE: BA) and SAIC Inc.

It was only a few weeks ago I posted Chasing Value: General Dynamics & Raytheon: The defense does not rest and things continued to look bright until a few days later, perhaps after the GS behind the scenes warning started to have an impact on the market that the sector took a mysterious swoon — now I know why.

If Goldman Sachs, one of the few investment houses with any credibility left, makes a move everyone else seems to want to get out of the way.

I’ve viewed the defense sector favorably this year and will not abandon ship because GS is getting cold feet. They have been rather negative on everything lately and I do not think the (stock) world is coming to an end.

The Bloomberg article notes that while some programs will be cut others will be added. It is all a guessing game as either presidential candidate will want to review the entirety of defense expenditures in a new administration.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of GD.

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Filed under: Raising money, Venture capital industry, Private equity industry, Public or private?

If you have been following the substitute energy saga alongside ridiculous oil prices going from rising to high to astronomical, you’ve run across the name Tesla Motors. Tesla is a venture capital and privately funded auto maker that produces a high performance electric powered sports vehicle.

The Tesla Roadster and soon to be sedan are now both now going to be manufactured in California, or so a report in the San Francisco Chronicle and elsewhere are noting. Governor Schwarzenegger included some incentives that have kept the electric auto maker from moving manufacturing to New Mexico (besides the Governator ordering one unit for himself). But it appears that the Say of California is giving it more than mere tax incentives.

It appears that this is going to get equipment leases from the say, as well as additional allows. What is interesting here is that this gets the company even further on the map. There have been recent reports that Tesla was in the market for another big financing. Whether or not that comes about now is not certain. Other reports show that the company may even supply battery units to Daimler or other automobile manufacturers.

What is becoming fairly certain is that Wall Street expects to see Tesla file for an initial public offering. As capital intensive as these businesses are, the company needs to have a steady automobile (no pun intended) to be able to raise the capital it needs.

Think of the good news…. At least one US auto manufacturer will be considered cool.

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Filed under: Ripoffs and Scams

With scrap metal prices going the same direction as the price of gas at the pump it’s no wonder that thefts of metal have been trending up as well. Recently a disturbing trend has shown up in cities across the U.S. where manhole covers are being stolen and sold for scrap! This rash of heavy metal thefts has led some cities to begin welding the covers in place, which has unfortunately prevented the Teenage Mutant Ninja Turtles from getting their fill of delicious pizza!

On a more serious note, the theft of manhole covers isn’t just only an pricey pain for cities to deal with — replacement costs range from $200 to $500 — but also a danger for pedestrians. In Philadelphia, where 600 covers went missing last year, two kids have already fallen into the uncovered manholes. Thankfully they only suffered minor injuries. The missing covers have also done damage to many cars whose owners are asking the city to cover the damages.

With all of the problems these thefts create, and the fact that it takes quite a bit of work to replace a 200-pound manhole cover, you’d be surprised to learn that the manhole bandits only receive $10 to $15 per cover. Some of the blame for these rash of thefts lays with unscrupulous scrap metal buyers who don’t comprehend that manhole covers emblazoned with “Property of NYC” mean exactly that!

Even if we take into account the diminished ethical capacities of someone who would steal a manhole cover weighing more than most men, the return on investment is horrible! Assuming the thieves drive to the manhole and then again to a scrap metal location, they’ll easily use a gallon of gas, leaving a net profit of $6 to $11. Unless the thief is a body builder the final take will need to be split in half which leaves barely enough to order off the value menu at Taco Bell; let alone enough to buy a significant amount of drugs. With meth’s prices starting at $20 for a 1/4 of gram, a team would need to steal four manholes to make a buy, and causing between $800 and $2000 in labor and materials for cities, not to mention any children or vehicles damaged due to the theft.

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Filed under: Entrepreneurship, Ripoffs and Scams, Shopping, Technology

Like my fellow writer, Gary Sattler, I’m a pretty huge fan of eBay. Over the years, I’ve watched the site grow. I’ve used it to raise money, get rid of junk, purchase presents for my wife, and generally just drool. In the ideal of times, eBay has represented a sort of capitalist utopia, where buyers and sellers work together to find the best price for an item, exchange stuff, and generally keep the US Postal Service in business.

Of course, like Gary, I’ve also watched as my capitalist utopia has grown to represent the dangers of any unregulated market. Predatory sellers offering substandard crap to unwitting sellers, predatory sellers withholding money or threatening ratings, counterfeit items, incomplete descriptions, and a devil’s roll-call of other tricks that undermine trade and pit users against each other have all conspired to transform my eBay from the best store in the world to a substandard back alley where getting cheated is not just a possibility but a probability.

I’ve had to become very cautious; nowadays, before I put down a bid, I read every description like it’s a legal document, searching for the loophole that my opponent — excuse me, seller — is going to use to cheat me. In the process, eBaying has lost a lot of its fun.France’s courts have decided to fight back. Earlier this day, a French court ruled that eBay must pay approximately $63 million to French companies whose products have been victimized by the on the internet marketer. The plaintiff, LVMH, which represents several French luxury brands, argued that its business has been hurt by eBay. In addition to allowing counterfeit duplicates of Vuitton and Dior bags to appear on the site, eBay was attacked for permitting actual bottles of Dior, Kenzo, Givenchy and Guerlain perfume to be sold, as these are only supposed to be marketed under the direct supervision of a specialist dealer.

Personally, I don’t know where I stand on this. On the one hand, I’ve been burned a couple of times by dishonest dealers on eBay. On the other hand, my wife is a perfume junkie, and I appreciate the fact that I have the ability to pick up her favorite fragrances for a fraction of the retail price. While there’s no question that eBay needs to take a stronger hand in policing its dealers, I’m not sure I want to be left to the not-so-tender mercies of “specialist dealers” the next time I decide to purchase my wife a bottle of Cannabis Rose!

Bruce Watson is a freelance writer, blogger, and all-around cheapskate. He’s spent years looking for the next eBay. Still looking…

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Filed under: Ripoffs and Scams, Transportation, Travel

Grant Martin reported on our sister blog Gadling that Delta is going to levy a $25 fuel surcharge on domestic tickets purchased with frequent flyer miles. International flights will ring up a $50 charge.

Does this make sense? The airline convinces me to sign up for its frequent flyer program hoping to gain my loyalty by giving me swag for each flight. Now I’m sold, and fly Delta for a few years, the very epitome of a loyal customer. The marketing tactic has succeeded brilliantly. Each company lusts for loyal customers.

Then I go to redeem those frequent flyer miles, and I find that most of the flights I want are booked (but I can have all the free magazine subscriptions I want). When I finally do manage to use my miles to book a flight, Delta hits me up for chump change at the gate.

Now I’m no longer a loyal customer; I’m a pissed ex-customer. How many dollars were spent on cultivating me as a customer? Thousands. How much did it cost the to destroy all of that marketing? $25. Is it any wonder the airlines are a mess?

More travel stories

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Filed under: Rumors, Management, Rants and raves, Microsoft (MSFT), Yahoo! (YHOO), Headline news

It should be no surprise to anyone that despite all the ranting and raving to the contrary Mr. Carl Icahn, billionaire investor, shareholder white knight and corporate raider is heating up things in the Yahoo! Inc (NASDAQ: YHOO) boardroom.

It has been reported that he bought a sizable chunk of the company in the neighborhood of $25 per share, hoping to make another fortune pushing Yahoo back to the negotiating table with Microsoft Corp. (NASDAQ: MSFT).

This morning AP reported that Jerry Yang, CEO and company are lobbying major shareholders to rally support for their position that Yahoo! should get a higher offer or stand alone as an independent company. It seems to me that they are standing on lose ground given that many huge and small shareholders alike have already spoken, and they would have taken the deal.

The market has spoken as well, with Yahoo stock losing over a third of it’s value recently and nearing $20 per share this morning Icahn is losing 20% of his investment as things look this day. This is turning into the battle of the billionaires.

One small problem the billionaire boys in Redmond are not that hot on the deal any more because, as Gates Leaves Microsoft, he Calls Yahoo Deal Unlikely.

I think this whole saga might make a adorable Neil Simon play if they would let him into the meetings to take some notes.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I don’t own shares in the stocks mentioned in this story.

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Filed under: Food, Ripoffs and Scams

I’m in New York City this week and one of the exciting things about that is that I have the ability to try a wide variety of foods that Cape Cod grocery stores don’t have. Today I purchased a package of “Glenny’s Low-Fat Soy Crisps” and, while they were quite good and relatively healthy for a packaged snack food, the consumer advocate in me has some complaints about the advertising on the package at right. It reads “10 Grams pure Soy Protein” and “Only 65 Calories per Serving.”

This is a classic example of advertising spin: it isn’t false and it isn’t even misleading necessarily — but it’s a case of the company putting its best nutritional foot forward, and health-conscious consumers will need to be vigilant.

A look at the nutritional fact shows that there are indeed 65 calories per serving, with 2 servings per bag for a total of 130 calories. Each serving contains 5 grams of protein and the entire bag contains 10.

My beef with the marketing here’s that they present the one you want a lot of — protein — on a per bag basis and then they present the calorie count on a per serving basis. 10 grams of protein appears right above 65 calories, but you’d actually have to eat 130 calories to get the 10 grams of protein.

Moral of story: pay no attention to “low -fat”, “high protein”, “light,” “low calorie”, etc labels on the front. If you want to know what you’re eating, flip the product over, put on your glasses, and read the nutritional label: “just the facts ma’am.”

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Filed under: Ripoffs and Scams, Shopping, Fraud

Word on the street is that eBay is trying to be nicer to its customers in order to win some of them back. Ticked off buyers and sellers around the world have made it no secret that things at eBay haven’t been good for a while.

One example: eBay has gone “PayPal only” in Australia, and people think that’s a sign of things to come in the United Says. By allowing only PayPal to pay for auctions, eBay has suggested things will be safer. Customers know superior. All that’ll happen is eBay will make more money.

The latest eBay idea is to offer “more” buyer protection. (I put more in quotes, because that sentence advocates that buyers are currently protected, and there are plenty of unhappy eBayers who might state differently.)
Currently the PayPal buyer protection offers up to $2,000 to eBay buyers who don’t get their item from the seller. Now eBay states they’ll lift the limit on the protection. And sellers who accept PayPal will also get unlimited protection against the reversal of charges, rather than the current annual limit of $5,000.

That sounds nice, but I’m skeptical. Everything I’ve heard suggests that the good guy often finishes last with PayPal’s “guarantees” and I’m not incline to believe that this is any real improvement. I’d love to be convinced otherwise. If you believe eBay and it matters to you… the new policy will be rolled out in fall.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.

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Filed under: Sex Sells, Bargains, Entrepreneurship, Ripoffs and Scams, Technology, Health, Fraud, Relationships

Flipping through the newspaper, I recently encountered an article discussing the rising problem of prostitutes advertising their services on Craigslist. According to the author, Vivekananda Nemana, a probe by New York city councilman Eric Gioia had found that 85% of “erotic services” ads were offering illegal acts.

Now, while I’m a regular Craigslist visitor, I tend to hang out in the apartment, gig, job, and furniture listings; never having ventured into the dark world of “erotic services,” I hadn’t seen any prurient sexual ads. Although, to be honest, some prurient sexuality would really have made those job listings a lot more interesting. I have the ability to see it now: “Midtown advertising agency ISO discreet, erotic copywriter, 25-40. Must be able to type 60 wpm. With one hand.”

At any rate, I expected the prostitute advertisements to be somewhat subtle. The article had stated that “Thousands of men and women promise ’sensual, full service massages’ with ‘all your fantasies fulfilled.’” It seemed to me that these sorts of ads left a lot to the imagination, and I could easily visualize a young sex worker, brought up on charges, claiming that “full service” meant that she did both shiatsu and Swedish, while “all your fantasies fulfilled” meant that you were dreaming about getting rid of that lower back pain.

When I actually went to Craigslist, however, I found that the marketing was a little more…spirited. One site promised “Crazy Low Rates” and declared that “CONDUM [sic] USAGE IS A MUST FOR EVERYTHING,” which seemed strange, given that the ad claimed to be offering massages. Most ads were more subtle, although many of them gave wink-wink nudge-nudge hints that they offered more than mere massages. On the other hand, several postings cautioned that they don’t do “F/S”; upon further investigation, I came to the conclusion that this means “full service,” as “fridge/stove,” “feet per second,” and “frozen section” all seemed just a tiny too weird to be plausible.

While my explorations of Craigslist’s sleazy side were far from comprehensive, I saw enough to convince me that there are a lot of people offering a lot of illegal services out there. I comprehend that Craigslist is unable (and unwilling) to police its listings, but it seems a little astounding to me that it’s possible for people to so bluntly advertise for sex. Since when did my favorite user to user purchasing site become the best little brothel on the web?

Bruce Watson is a freelance writer, blogger, and all-around cheapskate. If people are using Craigslist to find cheap, meaningless sex, then what’s the point of MySpace?

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Filed under: Budgets, Food, Ripoffs and Scams, Shopping, Recession

I’ve discovered that one of the joys of city shopping is that, rather than relying on one or two stores for all buys, city shoppers get to go to dozens of stores, each of which carries one or two items. While some people may be able to resist the siren call of the specialty joint, I can’t. Having discovered the perfect cheese shop or the best place for pesto, I always feel like I’m cheating myself if I go back to the supermarket. This, by the way, is one of the reasons that it takes me an insanely huge amount of time to shop.

One of my specialty stores is the Indian market around the corner. They’ve great spices, outstanding flatbreads, superb desserts, and astonishing samosas. The thing that keeps me coming back, though, is the almonds. The Naveen market’s almonds are perfectly crunchy and have a great taste. Now that I’ve gotten used to them, I can’t even envision going back to stale almonds that taste like cardboard. Added to the great taste and texture, there’s also the fact that the Indian store has great prices on almonds. When I first bought the nuts, they were going for $5.99 a pound and $8.99 for two pounds, prices that are insanely good for my area.

A few weeks ago, though, the market started trying to pull a fast one on me. Although their prices remained constant — $5.99 for the small bag and $8.99 for the huge bag — they reduced the weight of their products. The small bag now contained 14 ounces and the massive bag contained 28 ounces. Given that I was now getting a quarter of a pound fewer almonds for my $8.99, this was a markup of roughly 13%. I tried other stores and other almonds, but I eventually returned. The Naveen market was still charging the lowest prices and they still had the ideal almonds. I wasn’t happy about it, but there it was — I was stuck with paying nine bucks for the 28-ounce bag.
As it turns out, my local Indian store isn’t the only company that’s playing the weight game. As inflation and fuel costs drive up the price of foodstuffs, many companies are saving money by resorting to smaller sizes. Edy’s, for example, still charges $5.99 for a tub of ice cream, but the tub has shrunk from 1.75 quarts to 1.5 quarts, a 15% reduction. Other companies, from Tropicana orange juice to Wrigley’s gum, are using the same tactic of keeping a consistent price while decreasing the size of the product. Even bars and restaurants are getting into the act, often offering a 14-ounce glass of suds for the same price that they used to charge for 16 ounces.

Most analysts concur that the primary impetus that drives a purchase is brand loyalty. As someone who came from a Crest family, drank Minute Maid orange juice each morning and wiped his butt with ScottTissue every day until the age of 18, I have to admit that there is a lot of power in brands. In fact, I know many shoppers who buy their groceries on autopilot, picking up the same packages every time they go to the store with barely a glance at the labels. Manufacturers seem to be banking on the fact that, while people notice a rise in prices, they aren’t quite as swift to pick up on a drop in size. In that context, the new packaging method is a masterstroke.

On the other hand, if your favorite brand is trying to trick you, it might be a good time to reconsider your loyalties…

Bruce Watson is a freelance writer, blogger, and all-around cheapskate. A 14-ounce beer? Are you kidding me?

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