Business Pundit

Brazilian-Owned 3G Capital Buys Burger King

Drea — Thu, 02 Sep 2010 20:12:56 +0000

Investment firm 3G Capital bought Burger King today for $3.26 billion. 3G Capital is backed by Brazilian tycoon Jorge Paulo Lemann, known in Brazil for founding the prestigious investment firm Banco Garantia and owning Brazilian brewing giant AmBev, which eventually merged with Belgium’s Interbrew to become InBev.

Burger King isn’t 3G’s first US fast food investment. The firm invested in Wendy’s in the past, according to the New York Times, which has more of the story:

3G views Burger King as a turnaround opportunity…Burger King has struggled lately. Last week it forecast weak demand in its new fiscal year amid high unemployment in the United States and economic weakness in Europe. It also cautioned that uncertainty regarding the costs of wheat and beef could affect its results.

The fast-food giant was last taken private in 2002 by three buyout firms — TPG Capital, Bain Capital and Goldman Sachs’s private equity unit — but since returning to the public markets in 2006, it has underperformed its biggest rival, McDonald’s. From its initial public offering until Tuesday, before reports of a potential sale emerged, Burger King’s shares have fallen about 6 percent, according to Standard & Poor’s. During the same time period, McDonald’s stock has climbed 111 percent.

Among 3G’s plans for the fast-food chain is building out internationally. Burger King already has 93 restaurants in Brazil and plans to open about 500 new franchises in Latin America over the next five years, the company disclosed in a regulatory filing.

3G expects to begin its tender offer no later than Sept. 17 and to close the deal in the fourth quarter this year. Burger King has the right to solicit higher offers through Oct. 12 under what is known as a “go-shop” period.

The Wall St. Journal has some analyst commentary on the situation:

BK, America’s second-biggest burger chain after McDonald’s, has been down this road before, having gone public in 2006, which is why some franchisees and investors are grumbling about the idea of going private again. As the WSJ’s Julie Jargon notes, some figure BK’s problem is its intense focus on die-hard Whopper munchers and a lack of menu creativity — not the ownership.

(Another analyst) figures that going private will allow Burger King to make more dramatic changes than it otherwise would, to “shake the boat a little more,” since there would be fewer cooks in the kitchen. With shareholders out of the picture, 3G Capital could help BK catch up to McDonald’s, which has impressed investors by offering everything from salads and snack wraps to smoothies lately. BK could also stop worrying so much about its debt.

Finally, $4 billion seems to be a pretty good price, according to Telsey Advisory Group analyst Tom Forte, who notes that BK’s shares were just $16.45 — near a 52-week low — before the buyout chatter heated up.

Ferrari Recalls 1,200+ 458 Italias

Drea — Thu, 02 Sep 2010 16:33:55 +0000

Finally, a recall the middle class doesn’t have to worry about. Ferrari has recalled 1,248 Ferrari 458 Italias after fires destroyed five existing models. The BBC has more:

…a Ferrari spokesman said the company had investigated the five reported incidents of spontaneous fires in the 458, and traced the problem to materials in the wheel arch lining and heat shield.

According to Ferrari, the glue securing the wheel arch lining and heat shield can melt and deform when under high operating temperatures. When this comes into contact with the exhaust, “the glue can smoke and the wheel arch liner can ignite.”

Ferrari has notified all 458 owners informing them of the fix – which takes around half a day – and involves securing the wheel arch liner with bolts and screws instead of glue. All future 458 Italias will be built in this way.

Ferrari unveiled the 560-hp, $230,000 458 Italia about one year ago. It is recalling all the models it has sold, and replacing the ones that caught fire for free. According to the Daily Mail:

The new Ferrari suffered an unusually high number of supercar fires, with four coming a cropper in the space of ten days last month. There were reported incidents in California, Paris, Switzerland, China and one other unnamed location.

In July a customised 458 which featured a £65,000 Dolce and Gabbana interior was wrecked in a warehouse blaze at Heathrow Airport after being flown in from Saudi Arabia.

The Daily Mail also has some interesting pictures of burned-up 458s.

I wonder if this is making Toyota feel a little bit better.

Mariner Energy’s Vermillion Rig Explodes in Gulf

Drea — Thu, 02 Sep 2010 16:22:29 +0000

A Mariner Energy oil rig, the Vermilion Rig 380, caught fire off the coast of Louisiana today. Of the 13 workers on the rig, 12 are alive and awaiting rescue, and one is missing. At time of writing, the oil rig wasn’t producing any oil, but there’s no word on whether it sits on top of a live well. It’s unclear whether there’s another oil spill involved. CNN has ongoing coverage of the fire.

Interestingly enough, deepwater drilling giant Apache Corp. agreed to buy Mariner Energy for $2.7 billion back in April, in a deal that would complete in Q3 of this year. D’oh. Apache also sucked up $7 billion worth of assets that BP firesaled to finance its Gulf oil spill losses. None of those assets, however, were in the Gulf.

How “Kate Plus 8″ Motivated the Discovery Channel Gunman

Drea — Thu, 02 Sep 2010 15:29:10 +0000

Image: iamkennard/Twitpic

Gunman James J. Lee was shot by police yesterday after taking hostages at the Discovery Channel headquarters near Washington, DC. After a four-hour standoff and negotiations, police killed Lee, who had a bomb and looked prepared to shoot hostages.

What, exactly, was Lee’s beef with the Discover Channel? Bloomberg BusinessWeek explains:

A gunman police shot to death after he took hostages at Discovery Channel’s headquarters said he hated the company’s shows such as “Kate Plus 8″ because they promote population growth and its environmental programming because it did little to save the planet…In court and online, he had demanded an end to Discovery Communications LLC’s shows such as TLC’s “Kate Plus 8″ and “19 Kids and Counting.” Instead, he said, the network should air “programs encouraging human sterilization and infertility.”

Lee, 43, also objected to Discovery’s environmental programming. Lee faulted the Discovery Channel for shows as varied as “Future Weapons,” “It Takes a Thief” and “Planet Green.” He wrote in 2008 that a show he called “Planet Green” was “about more PRODUCTS to make MONEY, not actual solutions.”

In the February 2008 protest in which he was arrested, he threw fistfuls of cash in the air and paid homeless people to carry signs condemning the network. Police found his pockets stuffed with more than $20,000, according to court records.

The Southern Poverty Law Center has more on Lee’s outlook:

In a list of demands (Lee) apparently posted before invading the Discovery building, Lee, whose MySpace page identifies him as a Silver Springs resident, repeatedly spoke of “parasitic human infants” and “unwanted pollution babies” and furiously argued that humans were destroying the planet with pollution, war and over-population. But unlike earlier eco-terrorists like Unabomber Ted Kaczynski, Lee zeroed in on immigrants as a primary evil. He spoke of “anchor baby filth,” a reference to babies born in the United States to undocumented immigrants.

“NO MORE BABIES!” he wrote in his list of demands. “Population growth is a real crisis. Even one child born in the US will use 30 to a thousand times more resources than a Third World child. It’s like a couple are having 30 babies even though it’s just one. If the US goes in this direction maybe other countries will too!”

The argument that immigration fuels environmental degradation has become increasingly popular in nativist circles. In late July, in fact, the Southern Poverty Law Center released a special report — “Greenwash: Nativists, Environmentalism & the Hypocrisy of Hate” — that detailed how right-wing immigration restrictionists were attempting to appeal to environmentalists to join their battle. The report suggested that most of those making such appeals were disingenuous about their interest in the environment, and were merely cynically seeking allies.

Lee wrote a manifesto for the Discovery Channel on his website, SaveThePlanetProtest.com. Among the points:

All programs on Discovery Health-TLC must stop encouraging the birth of any more parasitic human infants and the false heroics behind those actions. In those programs’ places, programs encouraging human sterilization and infertility must be pushed. All former pro-birth programs must now push in the direction of stopping human birth, not encouraging it.

It is the responsiblity of everyone to preserve the planet they live on by not breeding any more children who will continue their filthy practices. Children represent FUTURE catastrophic pollution whereas their parents are current pollution. NO MORE BABIES! Population growth is a real crisis. Even one child born in the US will use 30 to a thousand times more resources than a Third World child. It’s like a couple are having 30 babies even though it’s just one! If the US goes in this direction maybe other countries will too!

Develop shows that will correct and dismantle the dangerous US world economy. Find solutions for their disasterous Ponzi-Casino economy before they take the world to another nuclear war.

(etc.)

Is it apt to label Lee an eco-terrorist? I’m not fond of the word “terrorist,” but in Lee’s case, it fits. He used fear, weapons and threats to try to gain publicity his points about the environment. Luckily, he didn’t kill anyone.

Some of Lee’s points are valid when you pare down all the extremist rhetoric. American babies do consume more than those in developing countries. Our economy is pretty Ponzi-ish of late. But, being an extremist, Lee was convinced these conditions needed a maverick hero. He also misread the Discovery Channel’s goals with shows like “Kate Plus 8.” It’s not about promoting large-scale reproduction as it is about entertainment and shock value.

Lee interpreted Discovery’s motives through his distorted perspective, then felt compelled to make the “change” that nobody else would. I’m sure most extremists think this way. Some such quasi-heros inevitably find gaps in which to act on their drives, harming or killing people in the process. With the bad economy, I wouldn’t be surprised to see more people taking similar offensive leaps.

That said, can you imagine what would happen if the Discovery Channel really did air shows like “Sterilization Nation” and “19 Abortions and Counting?” There would be far more than just one hostage-taker at its headquarters.

When Feedback is Too Honest

Drea — Thu, 02 Sep 2010 10:38:30 +0000

Apple Announcement Covers iPod Touch 4, Revamped iPods

Drea — Wed, 01 Sep 2010 18:15:16 +0000

Today’s Apple announcement revolved around the iPod Touch 4, a new line of redesigned iPods, iOS 4, and more (see the NYT’s complete liveblog here.)

Apple, aside perhaps from its Apple TV, is once again leading the industry in product design, aesthetics, and capability. Here’s a summation of Steve Jobs’ announcements on the new iPods and Apple TV:

New versions of all iPods

iPod Touch is smaller and has the same HD “retina” display as the iPhone 4. It has cameras in front and back, has video chat, and runs on an Apple A4 chip. Prices: $229 for 8GB, $299 for 32GB, $399 for 64GB.

iPod Nano now has a touchscreen, making it even smaller than previous versions. It’s more like the iPod Touch than older iPods. It has a 24-hour battery life and comes in seven different colors. It will cost $149 for 8GB and $179 for 16GB.

iPod shuffle is now basically a tiny square with big “Mac wheel” controls on it. It will come in five different colors and cost $49.

Apple TV

Jobs also pushed Apple TV, which has been a dud so far. Apple TV will now have 99-cent TV show rentals, HD movies for $4.99, and streaming Netflix. You can also browse iTunes, photos from your computer, podcasts, and YouTube. The new Apple TV box is also tiny compare with the old one. It’s a neat product, but scarcely better than its competition.

The new iPods, meanwhile, indicate that Apple once again reaffirmed its dominance of the music and mobile niches not through marketing, but through innovation and clever design.

California Votes Down 2012 Plastic Bag Ban

Drea — Wed, 01 Sep 2010 13:59:59 +0000

In a blow to environmentalists, California voted down a ban on single-use plastic grocery and pharmacy bags starting in 2012, followed by convenience and liquor store bags in 2013. The move would have stopped Californians from using roughly 19 billion bags per year. From the CS Monitor:

The plastics industry is working hard to defeat the measure. “This bill is bad for the economy and bad for the environment,” says Keith Christman, managing director of plastic markets at the American Chemistry Council (ACC), which is heading the opposition.

A previous version of the bill allowed for a 5-cent fee that retailers should charge customers to cover the cost of a recycled paper bag. Mr. Christman says that Californians call ill-afford such a fee, as the state faces a $19 billion budget deficit and an unemployment rate higher than the national average. “This will put 1,000 workers out of work and add $1 billion to the grocery costs of working families who will now have to pay for something they once got for free,” he says.

The loss-of-jobs complaint is offset by the opportunity for small companies to create reusable bags, says Environmental Defense Fund senior analyst Wade Crowfoot. Christman counters that the majority of reusable bags are already made more cheaply elsewhere, whereas plastic bags are made in the US.

I have no sympathy for the industry on this one. According to this source, plastic bags make up 10% of the debris that washes up on the US coastline. They kill 200 different kinds of species, thanks to ingestion and suffocation. They use oil: One estimate says China will save 37 million barrels of oil a year by banning free plastic bags. Another, by the Australian government, says that “The amount of petroleum used to make a plastic bag would drive a car about 11 metres.” Polyethylene, from which the bags are produced, is a suspected carcinogen. Too boot, plastic bags are terribly inefficient to recycle.

That’s a heck of an impact for a product that’s easy to replace with a reusable alternative. Still, California lawmakers concluded the ban would infringe on personal choice (ABC):

California lawmakers rejected a bill late Tuesday night that would have made the state the first in the nation to ban all plastic shopping bags. Opponents of the bill argued that the ban went too far to regulate personal choice. Republicans and some Democrats opposed the bill, saying it would have added an extra financial burden on consumers and businesses already facing tough times.

“If we pass this piece of legislation, we will be sending a message to the people of California that we care more about banning plastic bags than helping them put food on their table,” said Sen. Mimi Walters, R-Lake Forest. The American Chemistry Council was the ban’s biggest opponent. “I can’t underscore this enough. … This is their battleground,” she said. “The ACC is opposing this. Hiring lobbyists, showing ads, targeted radio spots.”

Keith Christman of the American Chemistry Council said that more than 500 organizations and companies were against the ban. He said groups were concerned about the cost the ban on plastic bags would put on working families, specifically $1 billion per year to buy paper bags.

I’m not sure these guys give a flying squirrel about the working poor, but nice rhetoric, I guess. This reminds me of something I heard on a David Cross comedy routine: “Americans have a long and proud history of voting against their own best interests.” Here we go again.

3-D, Price Hikes Lead to Drop in Cinema Sales

Drea — Wed, 01 Sep 2010 13:00:37 +0000

Image: eye of einstein/Flickr

The cinema was one of the Great Depression era’s most popular escapes. Today’s Great Recession, however, is seeing fewer cinema visitors. The reason? An increase in the price of the average movie ticket. The BBC has the story:

Box office receipts in the US rose by $100m (£64.9m) this summer, despite the lowest attendance in five years, figures have shown. Movie website Hollywood.com said the actual number of tickets sold was expected to be 552m – the lowest since 2005, when the figure was 563.2m.

The drop in attendance is thought to be due to a steep rise in ticket prices, mainly for 3D screenings. The cost of an average US cinema ticket rose by 5% over the last 12 months, according to The National Association of Theatre Owners.

Cinema-goers now pay an average of $7.88 (£5.10) per ticket, a rise of 38 cents (25 pence) from 2009.

Box office analyst Paul Dergarabedian said the higher revenue was a “shallow victory”. He added: “You want to see attendance go up every year, not down.”

According to WiseGeek:

A survey conducted by the American Association of Retired People show that 40% of seniors no longer attend films because they can no longer afford the prices. The average non-matinee movie ticket now costs about 10 US dollars (USD). Popcorn costs about six USD, and a drink, about four USD. Thus, the average expense at a theater is about 20 USD. For a family of four, that’s approximately 80 USD for two hours of entertainment.

A sixteen year old making minimum wage must work nearly four hours to afford seeing a film and purchasing concession items. Movie tickets for a poorer family might be 10% of a family’s weekly income. To an increasing number of people, movie tickets are now too high a price to pay for entertainment, especially when film rental is significantly less expensive.

Marginal Revolution describes questions the economics of the film industry:

(In the film industry,) the cost of manufacturing the product has no affect on the purchase cost to the consumer. For example Honda can make a cheaper car with less features and cheaper finishes than BMW without losing all of their customers to the superior car because they sell their product for less. You spend less to make something, you charge less for it. Makes complete and obvious sense. Not so in the film business.

I am an independent film producer and I make films that typically cost somewhere between $5M and $10M. But when I make, say, an $8M film it has to compete at the same price level as the studios’ $80M or $100M film. It costs the consumer the same $12 at the multiplex (and whatever it costs to rent a DVD from Blockbuster these days) for either film. There is no price advantage to the consumer for choosing to see a less expensive film. This naturally makes it terribly difficult for smaller films to find an audience. I find this quite fascinating and I can’t readily think of another industry like it.

A few years ago Edgar Bronfman Jr, during the time his family briefly owned the Universal film studio, suggested that theaters actually charge different admission prices for different pictures so those films that cost less to make had correspondingly lower ticket prices than the mega-budget studio pictures. He was roundly ridiculed by the industry. But truth be told I actually think the less-the-warm reception his proposal received had more to do with the fact he was an ‘outsider’ who had bought his way into Hollywood than on the actual merit of the idea itself. Sound like good economic practice to me.

Paying actors less than, say, $1 million per movie wouldn’t hurt, either. The Movie Blog has an excellent explanation of where your $10 goes when you pay for a movie.

The Origin of the Bluetooth?

Drea — Wed, 01 Sep 2010 10:26:31 +0000

Image: EatLiver.com

Top Accredited Online Colleges Of 2010 Announced

Ryan — Wed, 01 Sep 2010 07:32:10 +0000

The Best Regionally Accredited Online Colleges of 2010

Now that online higher education is the mainstream, it is important to separate the best quality schools from the lesser ones. Part of that effort has been taken up by a website called The Best Degrees which has produced a thorough 7,000 word research document that ranks the top 25 online colleges using systematic evaluation criteria.

According to the site, they rated online colleges for 2010 according to several important factors such as programmatic accreditation, academic awards, reputation, special features, cost and selection of online degrees offered.

Here are their top 15 highest rated online schools:

1. UMassOnline
2. Southern New Hampshire University
3. Liberty University Online
4. Western Governors University
5. Fort Hays State University
6. American Military University
7. Baker College Online
8. Walden University
9. Ashford University
10. Grand Canyon University
11. Saint Leo University Online
12. Northcentral University
13. Drexel University Online
14. Capella University
15. University of Phoenix

For all 25 colleges ranked, you can visit the original article: Top 25 Online Schools in 2010