June 2007 Archive
My husband and I once daydreamed about quitting our day jobs and opening a dog boarding facility. There was a perfect tract of open land near one of the area’s largest employers, and we knew it could work. Alas, someone else had the same idea first (nice place, too) and our doggie dreams went up in biscuit dust.
No doubt about it, pet services is a hot growth industry. Not only are smaller players opening facilities and finding no shortage of customers, the big dogs also see dollar signs. I was reminded of my dashed dream when I saw PetSmart’s news this week that its PetsHotel service would be a major growth driver for the company.
With the pet services market growing by a rate of 6%, PetSmart CEO Phil Francis said he wants to seize the opportunity. Pet services (grooming, training, boarding) account for about 10% of the company’s sales. PetSmart already has 70 PetsHotel centers in its stores with plans to open 240 by 2010. (The stately indoors-only facilities offer day camps and overnight boarding with amenities such as hypo-allergenic lambskin blankets, TVs, one-on-one playtime, and even a “Bone Booth” where you can talk to your dog over the phone. An online tour of the facilities describes the “relief room,” where pet guests can “go” in a park-like setting.) Rival PetCo also has entered the game with Doggie Day Camps at a handful of its stores.
With the lavish love and attention spent on pets these day, is it any surprise that WE: Womens Entertainment has started airing reality show Adventures in Doggie Daycare following life at the Seattle’s Downtown Dog Lounge?
Before you ask what will they think of next, I think I spotted it. Dog runners (dog walkers are so passe) like Running Paws and the Chicago Dog Runner are getting buzz.
While it’s hard to predict what part of a trip to the grocery store will take the longest — circling the parking lot on a busy Saturday afternoon in search of a space or drawing #51 at the meat counter when the only butcher is serving picky #35 — it’s probably safe to assume that the wait to checkout will eat up plenty of precious time.
If, like me, you’re cursed with the uncanny ability to chose the absolutely slowest line in the store you’ll want to hear about what gourmet grocer Whole Foods has come up with as a result of its foray into the New York market, home to perhaps some of the most impatient shoppers on the planet. As a displaced New Yorker I can attest that the prospect of a long wait topped off by a sneer from the surly cashier was enough to keep me eating in restaurants for days rather than shopping for groceries.
In Manhattan, where its stores sit atop some pricey real estate and retail space is limited, Whole Foods has adopted the single-line concept: having all shoppers wait in one line for an available register (rather than one line per register). While the system is more commonly found in banks and airports than in supermarkets, Whole Foods has found that no matter how long the single line gets, the wait time is shorter than using the traditional one-line-per-register system. A recent “admittedly unscientific” survey conducted by The New York Times that visited five rival grocery chains (including Food Emporium, Gristede’s, Trader Joe’s, and Zabar’s) supported Whole Foods’ finding that a single line is the most efficient at speeding shoppers through the checkout process.
In fact, The Times found Whole Foods to have some of the fastest grocery store lines in the city. Of course, for the single line model to work there must be plenty of registers at the end of that line. Whole Foods can afford to staff lots of registers — more than 30 per store — given the premium prices it charges for its natural and organic foods.
The trick now is to convince New Yorkers to try the longer lines, rather than flee the store. I’m willing to give the single-line model a try because — at least at Whole Foods in New York — it’s impossible to choose the slowest line if there’s only one.
It’s been a rough first half for manufacturers of semiconductors and other electronic components. The rosy forecasts for 2007 have borne mixed results.
In the consumer electronics market, Nintendo has enjoyed better-than-expected sales of its Wii game console, while Sony’s PlayStation 3 hasn’t met expectations. (There have been some months when the much cheaper PlayStation 2 has outsold the PS3, measured by unit volume.) People are gearing up (and some may be lining up!) for the debut of the Apple iPhone. At the same time, LG Electronics and Samsung Electronics are getting a gut-check; their newest wireless handsets, their “iPhone killers,” may be barred from sale in the US if they contain chipsets from QUALCOMM, under a recent patent ruling by the US International Trade Commission.
It hasn’t been a barn-burner of a year for PC sales; it’s been good for Hewlett-Packard, not so good for Dell. Lackluster sales of cell phones have also dampened financial results at Motorola and Nokia. As the big electronics manufacturers stumble or fall, chip makers take a full face plant. Many have guided down expectations for their Q2 results, and some component manufacturers — such as Molex — are ready to hand out pink slips.
Two key markets, DRAMs and NAND flash memories, have performed to expectations for 2007, to the extreme. Memory chip makers have sold a lot of parts this year, but spot prices have collapsed so rapidly that the situation is dragging down the entire semiconductor industry’s growth for 2007. (Long-term supply contracts, with locked-in pricing, have kept memory prices from completely collapsing, though, and the latest pricing trends are upward.) The Semiconductor Industry Association recently cut its 2007 forecast, from a 10% increase to growth of less than 2% for the entire year, due to falling prices on microprocessors (the AMD-Intel pricing war), DRAMs, and NAND flash.
As Roseanne Roseannadanna could say of the chip business: Well, Jane, it just goes to show you; it’s always something!
What I love about this beat is that no matter how much I blog about subprime mortgages, it never gets old. They are like the gift that keeps on giving.
Seems that subprime mortgages were the trigger for cancelling the Everquest Financial IPO. Bear Stearns‘ hedge funds, run by Ralph Cioffi, who was slated to become co-CEO of Everquest Financial, had invested heavily in the risky mortgages. But with the subprime mortgage debacle, the funds began losing money and investors panicked.
Everquest Financial invested in collateralized debt obligations, or CDOs, which were backed by, you guessed it, subprime mortgages. Now Bear Stearns is being bailed out by rivals, and pundits say its subprime woes have made it a takeover target.
So what now for Cioffi? Can he regroup? Or will he leave Bear Stearns under a cloud? Will Everquest Financial be laid to rest forever or will it be resurrected in the third act?
Stay tuned for Part III: Everquest Financial, The Return of The Cioffi.
As the parade of big private equity deals marches on, swallowing up massive firms in some of the biggest deals in history, one industry remained conspicuously absent from the party: financial services. Stringent regulation, the leverage needed to acquire the asset-heavy companies, and the inherent risk associated with handling other people’s money have kept most buyout attempts at arm’s length.
In April Kohlberg Kravis Roberts was one of the first to enter the fray with its planned $29 billion buyout of payment processor First Data. The Carlyle Group, which has raised more capital over the last five years than any other private equity firm, announced earlier this month that it has formed a new unit to sniff out potential acquisition targets. After avoiding the industry for several years, Madison Dearborn Partners stated that one of the goals of its most recent buyout fund was to invest in financial services. Indeed, on Wednesday it became the first general private equity house to foray into retail money management when it led an investor group that will pay more than $5 billion for Nuveen Investments, which specializes in fixed-income and exchange-traded funds. (Nuveen can listen to competing offers until July 19.)
In the copy-cat world of private equity, where firms and their managers try to one-up one another in the pursuit of bigger and bigger deals — or to simply ape others’ successes — expect more buyouts of financial services firms to come. They may shy away from banks and other lenders because of credit concerns (or not), but don’t be surprised if private equity companies start plucking other financial service providers, especially other transaction processors and fund managers, that are ripe for takeover.