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Sunday, July 24, 2005

Plan Maestro

After testing several platforms, I decided to move my site to WordPress. I find it to be more powerful and faster, and its interface is suficiently simple.

I am also testing some free hosting and it looks like Blogsome is the best. During this week I will try to figure out how to do the migration from Blogger, and design an aproppiate template. Hope to to see you at my new home:

Plan Maestro

Thursday, July 21, 2005

Four explosions on London transport

The initial reporting is hopeful.

FT.com / In depth / Terror - Four explosions on London transport: "Metropolitan police chief Sir Ian Blair said the explsions were “not as serious” as those on July 7. “We know we’ve had four explosions or attempts at explosions,” he said."

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Tuesday, July 19, 2005

Jobs: No Video for the iPod

AlwaysOn: "Jobs: No Video for the iPod"

Mmmm... Looks like another Steve Job's bluff, even though his arguments are very coherent. I do not want to trash my other post though

Update: Om Malik's has the scoop. It seems that Apple is going for the music video industry.

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MSN Search increasing market share

MSN Search gaining market share! Already with a 15.7% and slowly climbing, seems as if search is no a winner-takes-all industry. The two big questions are:
  • What does Longhorn know about search?
  • When are we going to see it?

Google still has tremendous share of pay-per-click advertising, but a lot depends on how much time it has to build a beachhead for other sources of revenue.

Search engine market shares in June 2005: Google - 36.9%, Yahoo! - 30.4%, MSN - 15.7% Your Daily Research Synopsis ZDNet.com:

Google's market share of US searches for June 2005 was at 36.9% compared with 37.5% in May 2005. Yahoo! had a 30.4% share, and MSN had a share of 15.7%. Bear Stearns noted that Google's query volume rose 36% YTY versus a 28% increase for the industry, outpacing Yahoo!'s 32% increase but trailing MSN's 42% increase. Month-to-month, Google's query volume declined 6%, which compares with a 4% decline for Yahoo!, a 1% decline for MSN, a 4% decline for AOL, and a 7% decline for Ask Jeeves. In Q2 2005 unique searchers versus Q2 2004 increased 31% for Google, 21% for Yahoo, and 14% for the industry, while the number of searches in Q2 2005 increased 38% for Google, 42% for Yahoo, and 31% for the industry. "

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B***!

John Kay you have been oficially promoted to head of the anti-b*** police. Keep up the good work.

After government, business is the next frontier of burocratic b*** We should do our best in avoiding this cancer that threatens with directness and humor .

FT.com / Comment & analysis / Columnists - John Kay: An empty language for empty heads: "Lies and spin communicate, but what they communicate is false. The defining characteristic of bullshit is that it does not attempt to communicate at all. Bullshit has the vocabulary and syntax of ordinary language, but not the meaning. And, in fact, the metaphor is not apt. What we describe as bullshit is more like candy floss: when you bite into it, there is nothing there. "


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Localization versus globalization

Great quote from Robert J. Samuelson.

"Localization usually trumps globalization, though countries seem to succeed more when they encourage globalization. ":

Localization usually wins, time and time again you see local players beating multinationals. Usually when MNCs win, is when they bought the local firm, kept most of its local operations and transfered their best practices.

However, the benefits of increasing productivity because of globalization are still solid:

1. Shaking sleepy incumbents
2. Transfering international best practices
3. Checking local monopolies abuses
4. Specializing in sector with comparative and competitive advantages

For example, Mexico still suffers from companies protected from international competition. Monopolies like Cemex and Telmex, and state-owned electric companies stop critical infraestracture industries.

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The auto industry in a crash course

American OEMs and suppliers struggles are such that every possible buyer is a good buyer. Now Visteon and Delphi are courting private equity firms. However the union issue is not easy to solve even for private equity's hardball tactics. As an investor i would not touch (equity or debt) this losing American players.

TheDeal.com - PE firms in the driver's seat: "Meanwhile, struggling auto parts giants Visteon Corp. and Delphi Corp., spun off from Ford and General Motors Corp., respectively, have each hired J.P. Morgan Chase & Co. to advise on the restructuring of their businesses, and private equity firms have held informal talks about investing in both companies.
While buyout firms have invested heavily in parts suppliers in recent years, carmakers historically have been suspicious of buyout firms, sometimes even shunning suppliers owned by them. But the Hertz auction and the feelers by Visteon and Delphi, coming on the heels of three other buyouts of Ford and GM units over the past six months, mark a turnaround in Detroit's attitude to private equity.
In January, GM sold its locomotive subsidiary, Electro-Motive, to Greenbriar Equity Group LLC and Berkshire Partners LLC for less than $500 million. In March, GM confirmed that it was exploring a sale of a stake in GMAC Commercial Mortgage Corp. In April, Kohlberg Kravis Roberts & Co., Goldman Sachs Capital Partners and Five Mile Capital Partners placed a $1.3 billion bid for 60% of the lending unit and have been conducting due diligence.
In May GTCR Golder Rauner LLC and Goldman Sachs Capital Partners bought Ford's subprime lender, Triad Financial Corp., for $2.4 billion.
'A year ago, they would not even meet with us; now the door is open any day of the week,' a sponsor at a major private equity firm said. "

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Archeology: dot.com bubble

A wonderful resource with dot.com business plans. If you are nostalgic, hungry for ideas, or in need of tutoring on how to write a business plan, this is a great place to go.

On an initial search I did not find blockbuster successes. No Google, eBay, Amazon or Yahoo, so big guns what are you waiting for.

Business Plan Archive

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Monday, July 18, 2005

Music and Video: Business Model Change


With disappointing DVD sales, Hollywood could be tempted to trumpet the pirates card. However, they should look in its past and see have adapted to similar dangers.

Apple's is just one way on taking advantage of the increasing use of the internet as a media distribution. What stops Hollywood firms from reaching an agreement with Apple to run short films on its new gadget?

Do not whine, be different

WSJ.com - Apple Looks to Sell Videos -- and Maybe iPods to Play Them:

"Music videos, too, make sense because of the iPod's ready-made audience of music lovers. Apple in recent months has started bundling a limited number of music videos when iTunes customers purchase an entire album on the site. Users who pay $9.99 for the latest album by the White Stripes, for example, get a video for a song by the rock duo called Blue Orchid that can be downloaded to a computer.

Building on that effort, Apple has approached the four major music companies, Warner Music Group Corp., EMI Group PLC, Vivendi Universal SA's Universal Music Group and Sony BMG, a joint venture between Sony Corp. and Bertelsmann AG, to license music videos for sale through iTunes, according to people in the media industry. The videos, which could go on sale as early as September, would likely be sold for $1.99 each, with the possibility of a discount if consumers buy a music video and a song at the same time, these people say.

For music companies, a deal with Apple would represent another attempt to generate income for the music videos they sometimes spend hundreds of thousands of dollars creating. Music companies are still smarting from their two-decade-old strategic blunder of letting cable network MTV air video content for next to nothing, a decision that gave them little participation in the creation of what has become a hugely successful business for Viacom Inc."


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Human Resources in Retail: Asset or Expense (Part I)


Trader Joe's, Aldi, Costco a couple of retailers that believe that less people but better people and well paid is a much better model than Wal-Mart's. I will post some of their numbers in future posts, since could be a momentous change in the overworked and badly paid retailing industry.

Fostering a Loyal Workforce at Trader Joe's workforce.com:

" In some ways, the employee philosophy at Trader Joe's is similar to the one espoused by Aldi, its German parent company. In an effort to control labor costs, which are among the biggest expenses on any retailer's profit and loss statement, Aldi and Trader Joe's take a somewhat bare-bones approach to the amount of labor needed in stores at any given time. However, they don't scrimp on pay.

For its management-training program, Aldi makes extensive use of executive recruiters and woos applicants with a generous financial package that includes a starting salary of about $47,000 annually plus pension benefits. To get the most motivated people into its 12-month training program, the company offers new hires a fully expensed company car-- an Audi A4. This is an attractive perk for recent college graduates, one of the key targets of the chain's recruiting efforts."


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Google Earth: The adventure continues (Part II)

First tries in developing the potential of Google Earth. Check some great views of the Atacama Desert and the stages of the Tour de France

Google Earth Hacks


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Google Earth: The adventure continues

How do I stop posting! I was thinking about taking this week for reassessment but there is so much interesting stuff.

People are beggining to test some initial business models based on Google Earth:

Marrying Maps to Data for a New Web Service - New York Times:

"This spring, even before the Google programming interfaces were published, a Silicon Valley programmer, Paul Rademacher, wrote software making it possible to display real estate listings from the bulletin-board site Craigslist overlaid on Google Maps.

The resulting mash-ups, as the hybrid Web services are called, can be viewed at housingmaps.com. The site has already attracted more than a half-million viewers and now receives more than 10,000 visits a day. Virtually all the traffic has come from Internet word-of-mouth publicity; Mr. Rademacher said he had posted only a single brief notice on Craigslist asking for testers when he started the service.

The idea came to Mr. Rademacher while he was driving around Silicon Valley looking for a home to rent. Before starting on his reconnaissance mission, he said he had painstakingly printed out the location of each rental listing on a different map.
'I was driving around with a huge stack of paper,' he recalled. 'That was the 'Ah-ha' moment; it was obvious they should all be on a single map.' Because the new hybrid services raise potentially thorny questions about how revenue might be shared as well as potential disputes over the ownership of digital information, Mr. Rademacher said he had decided to avoid accepting advertisements on his site and had done it purely as a proof of concept."


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Sunday, July 17, 2005

Diagnosis

I am reassessing the tools and materials of this endevour after two weeks of blogging. It will take a week before coming back on July 25 with new material and posibly a new site. Things I have learned:

  • Blogger: I have not been comfortable with its posting tools. It is slow and complicated when you have several links (Like this post!). It is great that is free, but I was expecting something easier to use since it is owned by Google.
  • Other Tools: I will test Ecto for editing and WordPress for publishing, and also look for some hosting. MIT seems to great tools for alumnis and I will test them too
  • Bloglines: Great tool but I have to reduce the number of links and prioritize . They are more than 100 at this moment, and they are taking more than 2 hours just to read them.
  • Language: You have probably noticed than I have been mixing posts in english and spanish (and even some in spanglish). However, it looks like material in spanish will have to wait. The angle on business issues that affect latin America stays though.
  • Material: I will try to leave less but more insightful posts. At least one every two days, mixed with references to other sites interesting notes
  • Del.i.cious: I am waisting to much time saving material on the web that is of interest. It looks that del.i.cious is a fast tool to the same.
  • Comments: I have to leave some time to leave comments in other sites. Too much time reading has been a drag, specially when you have a full-time job ... uf. However, what is the use of this if you do not become part of a community.
Any comments and advised will be REALLY, REALLY apreciated. I am new at this and without any tutoring. Cheers!

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Wednesday, July 13, 2005

FT.com: Ebbers sentenced to 25 years for fraud


Auch! What is going on with this cases. Why some of this guys are getting the full weight of the law and others a free ticket?
FT.com / By industry / Telecoms - Ebbers sentenced to 25 years for fraud:
"Executives accused of white-collar crime have had mixed fortunes in US courts in recent months. John Rigas, 80, founder of Adelphia Communications, was last month sentenced to 15 years in prison for looting the cable television company and lying to investors. Richard Scrushy, however, the former chairman of HealthSouth, who was accused of orchestrating a $2.7bn accounting fraud at the company he started, was found not-guilty after a controversial trial in his Alabama hometown."

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Tuesday, July 12, 2005

Hollywood's business model threatened ... once again



It looks as if every 15 years Hollywood faces an inminent threat: MP4, video, foreign films, TV. However it has managed to reinvent itself. ¿What is the treatment doctor for a pacient hooked on DVD sales and facing substitution? ¿Maybe to leave blockbuster medicine and embrace low-budget films innovation?

FT.com: DVD sales slump proves more is less
"DreamWorks added to the gloom on Monday when it disclosed that retailers
were continuing to return copies of its DVDs, and predicted a loss for the
quarter.

This spate of bad news for DVDs is a blow not just to the individual studios that have warned but also to Hollywood: DVDs have been the industry's lifeblood in recent years even overtaking box office receipts. PwC says Hollywood generated a record $15.2bn in DVD sales in 2004 an increase of more than 30 per cent. That compared with just $9.4bn in box office revenues last year.

One of the main attractions of DVDs has been their low manufacturing costs providing bigger margins to the studios than the VHS tapes they replaced. Their contributions are all the more important at a time when the box office has been mired in a record slump that has stoked fears that consumers are turning to the internet, video games and other sources of entertainment.

The studios are suffering in part from a long-anticipated slowdown in DVD sales as the market matures. Tom Wolzien, a media analyst at Sanford Bernstein, has predicted that sales will drop from double-digits to 9 per cent this year, and 4 per cent in 2006."


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Innovation: MP3 players disruption (Part II)

Or if you have an iPod, 199 USD to spare and can wait till august you can go for the Harman Kardon's Drive+Play.

ALT1040 has the goods...

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MP3 Players low end disruption










Thanks Fernando for the tip:

4 GB FM transmitter imported directly from China connected to your car lighter. Costs 4o USD pesos. Its main buyers are taxi and truck drivers, and comes with a large selection of rancheras and tropical music.

¡How can iPod compete with them!
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Monday, July 11, 2005

Marginal Revolution: Libros para Africa

Muy buenos libros de economía recomienda Marginal Revolution para economistas preocupado con el desarrollo de Africa, y por que no, con cualquier país en vía de desarrollo. Los libros de William Easterly y del peruano Hernando De Soto son sorprendentes y provocadores.

Otro buen libro y que no está en la lista: "The Power of Productivity: Wealth, Poverty, and the Threat to Global Stability" de William W. Lewis, basado en un detallado estudio mundial de McKinsey de las restriciones a la productividad y el crecimiento. El capítulo sobre Brasil: sólido.

Marginal Revolution: Books for Africans:

Last year before leaving for Liberia, I solicited book recommendations from a few friends (including Alex). I wanted to come up with a fairly short list of books that Liberian leaders should read if they were interested in building an economic system that would be conducive to economic growth.Here is the list of books that I took and donated to a college library:

  • The Birth of Plenty by William Bernstein
  • The Noblest Triumph, by Tom Bethell
  • The Mystery of Capital, by Hernando De Soto
  • The Elusive Quest for Growth, by William Easterly
  • The Wealth and Poverty of Nations, by David Landes
  • How the West Grew Rich, by Nathan Rosenberg and L.E. Birdzell"
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New Coke cumpliría hoy 20 años


A 20 años de la mayor catástrofe del marketing... que no fue catástrofe. Con el tiempo la historia se olvida y los ganadores la tergiversan. Hay quien lo vende como un hábil reposicionamiento de la cansada imagen de Coca-Cola.

¡PAMPLINAS! : Goizueta sudó tinta. Para que sirva de recordatorio que la suerte es parte esencial de los negocios

FT.com : Published: July 10 2005 18:45

Good marketing ploys can be like a bitter pill, with the sugar coating on the inside. Within that genre, Coca-Cola pulled off probably the greatest marketing stunt ever exactly 20 years ago. For much of the 1980s, the drinks company had been running out of fizz. By 1985, it seemed entirely plausible that it would lose the Cola wars to challenger PepsiCo.

Coke was in a bind. It had a well-known, but tired product, which consumers found hard to swallow, according to blind taste tests. Pepsi, as the underdog, also had the sympathy vote. Coke's risky but brilliant response? It introduced its own new concoction, with a taste eerily similar to its rival's.

Within weeks, consumers across the US were screaming for the return of the real thing. Coke duly revived its old formula as Coca-Cola Classic. Two years on, new Coke had almost vanished. But the sight of mighty Coca-Cola giving in to humble Americans, paired with the free publicity, boosted the Classic brand for the rest of the decade just as its marketers had always envisioned. Or so the business school case study might one day teach. Business gurus, after all, are notoriously fond of rationalising after the event. In fact, Coke was taken as much by surprise as everyone else...
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Location, Location, Location

Pobres retailers: palos porque no tienen buenas ubicaciones, palos porque tienen demasiado buenas ubicaciones. Y además a los vaivenes de los veleidosos clientes, que dura vida...

FT.com: UK retailers: Published: July 8 2005 15:32

Any visitor to Marks and Spencer's flagship store in Marble Arch knows it is prime retail space. So why are investors in M&S and other retailers not getting a return matching that offered by commercial property?

Over the last decade, the dividend yield on shares in Boots, J Sainsbury and M&S has averaged between 3.7 and 4.6 per cent. Over the same period, commercial property has yielded 7.8 per cent. Investors have also lost out on capital appreciation. Sainsbury's shares have fallen 40 per cent, M&S's 21 per cent and Boots' shares are up 8 per cent, while retail property, according to the Investment Property Databank, has seen capital growth of 61 per cent.

Investors are entitled to ask why retailers have not made their property work harder, although what value boards should assign to it is less clear. Balance sheet net book values ₤630m for Boots, ₤2.1bn at M&S and ₤5.3bn at Sainsbury bear little relation to market values. In any case, these are difficult to ascertain since, at best, only other retailers would be interested.

Retailers could perhaps make more imaginative financial use of their property. Boots is experimenting with sub-letting parts of its stores. But other arrangements, like sale and leasebacks, do not change the value of what shareholders own, even though they deliver a one-off cash boost. At the very least, boards should have property yields in mind when making strategic choices, while investors should be using them as a benchmark against which to judge retailers' performance."


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Sunday, July 10, 2005

RSS de Medios Chilenos

Gracias Hector Vergara:

RSS de 7 Medios Chilenos

Libre comercio en agricultura: Hipocresía de los países desarrollados


Marginal Revolution destaca el artículo en Foreign Affairs sobre los ganadores y perdedores de una posible reducción mundial de protecciones a la industria agrícola:


Marginal Revolution: Who would gain from agricultural free trade?:

...the reality is that liberalizing agricultural trade would largely benefit the consumers and taxpayers of the wealthy nations. Why? Because agricultural subsidies serve first and foremost to transfer resources from consumers and taxpayers to farmers within the same country...Other countries are affected only insofar as world prices rise. But the big, clear gainers from such price increases would be countries that are large net exporters of agricultural products --rich countries, such as the United States, and middle-income countries, such as Argentina, Brazil, and Thailand.

What about the poorer countries? For one thing, many poor countries are actually net importers of agricultural products, and so they benefit from low world prices. An increase in prices may help the rural poor, who sell the agricultural goods, but it would make the urban poor -- the consumers -- worse off. Net poverty could still be reduced, but to what extent depends in complicated fashion on the working condition of roads and the markets for fertilizer and other inputs...

Regardless of whether agricultural liberalization increases or decreases poverty, the impact would not be significant. Most studies predict that the effect of such liberalization on world prices would be small...

Furthermore a general reduction of trade barriers in rich countries could leave some of the world's poorest countries worse off. A substantial part of least-developed countries' exports enjoy favorable conditions of access to the markets of rich countries under various preferential trade arrangements..."

Mercosur puede ser un importante ganador en industrias como azúcar, jugo de naranja, soya, algodón y tantas más. Brasil ha logrado prácticamente solo el crear conciencia de los costos de dicho proteccionismo y defenderlos en la WTO. ¿Cuáles son las oportunidades para Chile?

Ahora bien, no parece ser la bala de plata para solucionar los problemas de Africa, pero soy excéptico de que dicha bala exista.

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¡China es una oportunidad no una amenaza!

Excelente foto, conclusión no tan excelente:
Abriendo Juego, Abriendo Mundos:
"Da miedo ver tanto chino trabajando.
¿Qué piensan nuestros empresarios? "

Fernando, no hay que tenerles miedo, esta es una tremenda oportunidad histórica. ¿Acaso los chinos no comen, no compran y no se divierten? ¿Acaso las empresas chinas no necesitan proveedores de calidad y bajo costo? ¿Acaso no están liberalizando también su economía interna y abriéndose a la inversión extranjera? ¿Acaso los precios de bienes de consumo no han caído en Chile mas de un 25% los últimos 10 años con un tremendo beneficio para el chileno común?

No soy un iluso que espera que se democraticen pronto y que no habrán sectores afectados por la importación China. Pero incluso en México, más dependiente en la manufactura y compitiendo directamente con empresas chinas, los empresarios babean con las oportunidad que se ofrecen. Maseca ha liderado el esfuerzo, pero Cemex, Modelo, Nemak, y varias más buscan oportunidades en China. Pregúntale a Ricardo Claro cómo le ha ido a Sudamericana de Vapores y sus planes de crecimiento, y que decir de las empresas de recursos naturales.

Tú has reclamado con justa razón por nuestra falta de capacidad innovadora y empresarial, ¿Si no aprovechamos esta ventana de oportunidad, entonces cuál?
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Saturday, July 09, 2005

¡Viva México la tierra del tequila!

Buenas noticias para la industria tequilera. A pesar de los problemas de abastecimiento de agave, la fiebre tequilera sigue su marcha. También es muy interesante el aumento de participación de los tequilas 100% agave.

¡Brindo con un extraordinario Don Julio reposado!¡Salud hermanos mexicanos!

Salud! Mexico's tequila output hits record -MSNBC.com:

MEXICO CITY - Production and exports of Mexico's most famous liquor reached record levels in the first half of the year, according to the tequila industry's
regulatory council.

Overall production hit 110.2 million liters, up from 87.4 million liters for the same period last year and from the previous record, 95.8 million liters, in 2000.
Of that, 60.8 million liters were exported, up from the previous record of 54.9 million liters for the same period last year...

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Innovación: Mentiritas, Mentirotas y Citaciones

Kevin Maney en USA Today nos pide precaución a la gente que trabajamos en temas de innovación al citar a pesos pesados. ¡Quién hubiera pensado que estas abusadas citas fueran falsas o descontextualizadas!:

• "This 'telephone' has too many shortcomings to be seriously considered as a means of communication."
William Orton, president of Western Union, in 1876, when Alexander Graham Bell tried to sell the company his invention.

• "Everything that can be invented has been invented."
Charles Duell, U.S. Patent Commissioner, 1899.

• "Who the hell wants to hear actors talk?"
Harry Warner, Warner Bros., as movies with sound made their debut in 1927.

• "640K ought to be enough for anybody."
Bill Gates, Microsoft co-founder, 1981.

• "I think there is a world market for maybe five computers"
Thomas Watson, builder of IBM, in 1943.

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Friday, July 08, 2005

Estamos de luto con los ciudadanos de Londres

Nada que agregar a Brad DeLong, sólo traducirlo:

Estamos de luto con los ciudadanos de Londres

Estamos de luto con los ciudadanos de Londres

Prometemos ayudar a encontrar y matar a sus ejecutores, planificadores, y ayudantes.

Observamos que han pasado 46 meses desde septiembre 11 del 2001, y que Osama bin Laden todavía está vivo y en libertad. Que alguien pueda planear Septiembre 11 y seguir vivo y en libertad es un sólido estimulo para quienes piensan seguir sus pasos -- incluyendo a quienes planearon, apoyaron, y concretaron la atrocidad en Londres.

Más atención a Osama bin Laden y a su ilk, por favor. Y menos atención a usar a Osama bin Laden como pretexto para lanzar irresponsables planes neoconservadores, por favor.

Mala Organización en el Ajedrez: Parte I


Los tenistas tienen la Asociación de Tenistas Profesionales (ATP), el fútbol la Federación Internacional de Fútbol Asociado (FIFA), el fútbol americano la National Football League (NFL),

¿Los ajedrecistas? Caos con C mayúscula:

1. Al menos 5 jugadores claman ser el campeón del mundo
2. FIDE (federación internacional de ajedrez) no logra tener un ciclo que de credibilidad
3. Las federaciones locales no se logran financiar
4. ¿Los organizadores de torneos? quién mejor que Michael Greengard aka MIG: para describir la situación:

The Daily Dirt Chess Blog: Dortmund's Folly?:
"The Dortmund supertournament starts today. They have already made news by canceling live internet broadcasting of the games. Chess fans have been spoiled by free live broadcasts at a wide variety of locations for years. Far more people watch rebroadcasts at Playchess.com and the ICC than at the official sites. It would almost be nice if they could reserve rights to the broadcast of moves and use these for sponsorship, but they can't.

Free broadcasts provide general PR for the event, but little or nothing for the sponsors of the event, unless, as in Linares and Dortmund, the town itself is one of the sponsors and name recognition is a factor. Two-thirds of international news entries containing 'Dortmund' are about the big Borussia Dortmund football team. And only bullfight fanatics knew about Linares.

Unless the organizers feel they are gaining something from a live broadcast, why pay for one? Well, the costs are minimal (zero, since Playchess would do it) and goodwill in the chess community is a pretty good reason, you would think. The reason they gave for the cancelation, to attract more visitors to the tournament, sounds ridiculous. The games are available online right after the round. Do they think people are so excited at the prospect of watching live chess they will leave their homes and go to Dortmund when they can't watch live online? Maybe a few dozen people who live in the area would do this, tops. Nobody is coming from abroad based on this change, especially since they announced it just days before the first round.

The rest of the world will be annoyed, and will realize that waiting a few hours to see the games isn't a tragedy. Most fans never watch live anyway, but they are the most dedicated, passionate group around. You want to keep them happy and leverage that pass"

Bombas en Londres y riesgos económicos

¿Sorprendente?, no. Pero eso no quita la indignación por lo sucedido. Saludos a todos los amigos en Londres (Pedro, Milena, Christian, Math, Lindsey, Filippo)

Con respecto a las consecuencias económicas, el Financial Times aprovecha para recordar los riesgos macro que enfrentamos:

FT.com / Lex - Lex: Terrorism: "Today, however, markets look more vulnerable than ever. The world's economic imbalances have mounted, with the US current account deficit now running at more than 6 per cent of gross domestic product. Far too much still depends on Anglo-Saxon consumers. The eurozone, meanwhile, remains stagnant and oil prices are at record highs. In addition, the economic rise of China has introduced another, potentially destabilising, factor, with protectionist sentiment rising on both sides of the Atlantic.
Simultaneously, the capacity of global leaders to initiate joint action continues to look limited given the personal acrimony between the main actors. Tensions over Iraq, the European constitution, world trade and China's currency peg have all contributed to this.
Excess liquidity in the global monetary system has created bubbles, notably in housing. Even for equities, valuations are stretched relative to longer-term earnings, while bond yields are close to all-time lows. Investors hold unusually divergent views on fundamental economic prospects. In the awful event of a further, more devastating, attack, markets could prove more vulnerable."
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Burbujita o Burbujota

El Reino Unido puede dar una idea del posible impacto de un fin de la burbuja especulativa en EEUU al enfrentar primero sus efectos:

FT.com / World - Week in economics: UK housing market continues to limp:

"in a week with little important economic data, housing figures were even more prominent than usual. The Halifax, Britain's largest mortgage lender, produced its price index, showing a rise of just 0.1 per cent over the month in June. This gave an annual increase of 3.7 per cent - the smallest gain since March 2001.

Prices have risen in three months this year and fell in the other three, leading to a net monthly gain of only a tenth of a percent. The price of the average British house is now 162,605 pounds compared to 162,411 in May....

..."The measured retreat in the housing market continues and we expect by the early autumn that annual price growth will have dipped into the red for the first time since the mid-1990s," said Paul Guest, an analyst at Economy.com, aconsultancy. "Annual house price growth last month fell below annual earnings growth for the first time in almost 4 years in June. As this trend is expected to continue through the remainder of the year, the price to earnings should come down and boost affordability, particularly among first time buyers.""


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Wal-Mart vs Target

Wal-Mart navegó sin real oposición los últimos 25 años. Algunos problemas en su internacionalización (Alemania, Reino Unido), pero en casa dominaba. Pero recientemente Target ha sido la piedra en el zapato. El alza del precio del petróleo ha tenido un menor impacto en sus clientes que tienen mejores ingresos.

Las consecuencias de largo plazo no las tengo claras. ¿Acaso alguien sabe que pasara en el volátil mercado del petróleo en los próximos años?

FT.com / By industry / Retailing & leisure - US retailers boosted by strong June sales: "Wal-Mart's improved performance was also again overshadowed by Target, its main discount rival. The retailer, which attracts more well-off shoppers than Wal-Mart, reported a 9 per cent increase in same store sales, easily beating its original 4-6 per cent forecast, citing stronger than expected sales of clothing. Target also increased its earnings guidance for the quarter, saying it now expected quarterly earnings of at least 58 cents per share, against Wall Street analysts' previous consensus estimate of around 53 cents. "

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Thursday, July 07, 2005

Soñando con burbujas

David Altig nos refiere a "Marginal Revolution" y me hace recordar alguna clase de Finanzas y lo inestable de los modelos de valoración de activos cuando la tasa de descuento es cercana al crecimiento proyectado.

El punto interesante es que es posible un escenario así se magnifica con las actuales bajas tasas de interés:

macroblog: The Best Advice You Will Get On Thinking About Bubbles:
"My notice of Alex Tabarrok's post on bubblemania is a few days overdue -- hey, it's summertime, and the blogging ain't easy -- but what he has to say is too good to pass without comment:
Is there a housing bubble? Some say yes, some say no. I say who cares? The real question is not whether there is a bubble the question is, What are the chances that housing prices will fall dramatically? Contrary to popular belief, knowledge of whether prices are following fundamentals or a bubble tells us very little about this question.
An efficient market is not necessarily a stable market. Indeed, an efficient market can be as or even more volatile than a market plagued by bubbles.

My thoughts exactly. Alex provides a quick overview of why arguing about bubbles or not-bubbles is such a dubious exercise, relying on some straightforward economic theory:
Consider the stock market - the price to earnings ratio can be written (using the Gordon Growth Model) as P/E=D/E*(1+g)/(r-g) where g is the growth rate of dividends and r is the discount rate. Since r and g are small a small change in g can have a large effect on the P/E ratio - so much in fact that it is very difficult to reject a model of stock prices based solely on fundamentals (see my paper with Gary Santoni or the Barsky and DeLong classic Why Does the Stock Market Fluctuate (JSTOR).)

The principles are similar with respect to the housing market. "


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Viraje en Kmart/Sears

Sorprendente cambio,consecuencia directa de la fusión con Sears, y admiro las agallas de sus ejecutivos. En una industria de márgenes bajos como abarrotes es imposible sobrevivir a Wal-Mart sin su afiatada cadena logística::
Three Super Kmarts Closing; Rest to Follow?: "Three Super Kmarts Closing; Rest to Follow?

JULY 07, 2005 -- TROY, Mich. -- Kmart, based here, said it will shutter three Super Kmart stores in the Memphis, Tenn. area, but industry observers say it could only be a matter of time before the discount chain, which completed a merger with Sears in March, does away with its ailing food-retailing business altogether.

'No surprises here,' Richard D. Hastings, v.p. - senior retail sector analyst at Bernard Sands, LLC in New York, told Progressive Grocer. 'Many of the larger-format Kmarts are being converted into Sears Essentials, and the remaining Kmart stores are focused primarily on gross margin, and that means apparel, not food. I would not be surprised to see the eventual discontinuation of all Super Kmarts in future.' Hoffman Estates, Ill.-based Sears has said it plans to convert 400 Kmart stores into Sears stores...

...'When it comes to food retailing, replenishment, transportation, promotional events, and pricing are deeply integrated issues,' noted Hastings. 'If there is a weakness in one phase of this chain, then the rest will likely underperform. In the case of Wal-Mart, there was and remains a perfect synchronization of these functions, something that Kmart never achieved. For this reason, Kmart's historical ventures into supercenters and supermarkets were never competitively favored, especially against the greatest distribution and logistics company in the world, Wal-Mart"
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Wednesday, July 06, 2005

Aerolíneas de Bajo Costo

WSJ.com - International:
"Gol, aerolínea de Brasil, dijo que planea lanzar un operador de bajo costo en México en sociedad con dos grupos de inversionistas locales. La aerolínea podría empezar a operar en 2006."

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Las 25 preguntas científicas para este siglo

No la tienen fácil los científicos del siglo XXI. Los logros de los últimos dos dejaron la vara alta.

El Science Magazine realizo una lista de los principales temas de investigación que vienen. La mayoría es biogenética... algo de lo que soy sumamente ignorante y supongo tendré que aprender. Destaco las dos últimas por sus implicaciones económicas:

  • What Can Replace Cheap Oil -- and When?
  • Will Malthus Continue to Be Wrong?

Tranquiliza que hay progreso. El motor híbrido (Toyota Prius) puede que nos de un tiempo mientras la tecnología fuel cell se hace económicamente viable. Y con respecto a Malthus: EEUU, Europa, Los tigres asiáticos y una gran parte de Latinoamérica ya lo vencieron. Africa es la gran incógnita.

125th Anniversary Issue:Science Online Special Feature:

THE QUESTIONS: The Top 25 Essays by our news staff on 25 big questions facing science over the next quarter-century.

  1. What Is the Universe Made Of?
  2. What is the Biological Basis of Consciousness?
  3. Why Do Humans Have So Few Genes?
  4. To What Extent Are Genetic Variation and Personal Health Linked?
  5. Can the Laws of Physics Be Unified?
  6. How Much Can Human Life Span Be Extended?
  7. What Controls Organ Regeneration?
  8. How Can a Skin Cell Become a Nerve Cell?
  9. How Does a Single Somatic Cell Become a Whole Plant?
  10. How Does Earth's Interior Work?
  11. Are We Alone in the Universe?
  12. How and Where Did Life on Earth Arise?
  13. What Determines Species Diversity?
  14. What Genetic Changes Made Us Uniquely Human?
  15. How Are Memories Stored and Retrieved?
  16. How Did Cooperative Behavior Evolve?
  17. How Will Big Pictures Emerge from a Sea of Biological Data?
  18. How Far Can We Push Chemical Self-Assembly?
  19. What Are the Limits of Conventional Computing?
  20. Can We Selectively Shut Off Immune Responses?
  21. Do Deeper Principles Underlie Quantum Uncertainty and Nonlocality?
  22. Is an Effective HIV Vaccine Feasible?
  23. How Hot Will the Greenhouse World Be?
  24. What Can Replace Cheap Oil -- and When?
  25. Will Malthus Continue to Be Wrong?

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Petróleo :¿Todo lo que sube tiene que bajar?

Muy interesante análisis de Econbrowser de las expectativas a un año más de precios de petróleo usando Black & Scholes

Econbrowser: $100 a barrel-- what are the odds?:

I've used that s = 0.36 value along with the futures price to set the mean m to illustrate this implied probability density for the June 2006 price of oil in the above figure, and tabulated the probability that this implies that the June 2006 oil price would be below any particular value P in the table below. The market is putting something like a 7% chance that oil will go above Simmons's $100, and a 15% chance it could go below Ayer's $40.

Implied probability distribution for June 2006 oil pricePrice (P)

$ per barrel Probability that
June 2006 price will be below

30 0.03

40 0.15

50 0.34

60 0.54

70 0.70

80 0.81

90 0.89

100 0.93


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The World's least favorite advertising agency?

British Airways pone fin a un caso de estudio de escuela de negocio...o puede estar preparando la negociación de sus porcentajes

FT.com - BA review puts Saatchi contract at risk:

"News of the exercise sent shock waves through the advertising world because of the status of the assignment and the history between BA and the Saatchi brothers who started working for the airline in the early 1980s. Their work established the airline as a global brand and cemented their reputations as workers of marketing wonders.

The Saatchis dubbed it "the world's favourite airline" in 1983, basing their claim on the observation that while other airlines carried more people, none of BA's competitors transported more international passengers."

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Tuesday, July 05, 2005

Volver a los diecisiete...

Sorprendente la recuperación del centro de Santiago como centro habitacional. Es cosa de darse una vuelta por el sector poniente. Quizás esta puede ser una razón detrás del reciente dinamismo del sector de retail en dicha comuna con Ripley, Líder y otros buscando ubicaciones.

El Mercurio: Ventas de casas y departamentos creció 14,8%:

"La comuna de Santiago Centro, como ha sido habitual en los últimos meses, lideró las ventas de departamentos (por unidades) en mayo de 2005 con una participación de 34,4%. Detrás de Santiago, se ubican Las Condes y La Florida con Puente Alto.

En lo referente a la venta de casas por unidades, en mayo de 2005 la mayor participación la tuvo Maipú / Cerrillos / Pudahuel, con una participación de 43,3%. Le siguen Quilicura y Puente Alto.

De acuerdo al ranking por comunas de las ventas de departamentos según monto en
UF, la comuna de Las Condes lideró las ventas del mes de mayo con una participación de 32,3%. Detrás se ubican Santiago Centro y La Florida con Puente Alto. Asimismo, en cuanto a la venta de casas en UF, el grupo de comunas conformado por Maipú Cerrillos/Pudahuel lideraron la venta con una participación de casi 30% del monto total. Detrás se ubican Peñalolén y Vitacura."

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¡Otro salud por los vinos chilenos!

Que interesante el crecimiento de los vinos chilenos en Europa Continental. Me imagino que una parte se debió al fortalecimiento del Euro el último año. ¿Otras razones?

Diario Financiero:

"En cuanto al crecimiento del vino embotellado por regiones, en el mes de mayo, Europa (que representa más de la mitad de los envíos) creció 5,4% en valor; Estados Unidos y Canadá (con casi un quinto de las exportaciones) aumentó 11,2%; y Latinoamérica (que representa cerca de 15%), tuvo un alza de 16,9%.

Dentro de los principales países a los cuales Chile exporta, destacan los crecimientos en lo que va corrido del año para vino embotellado de: Estados Unidos 13,4%, Reino Unido 4,8%, Alemania 48,2%, Canadá 33,4%, Holanda 35,5%, Irlanda 8%, Bélgica 38,6% y Finlandia 24,6%."


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Aerolíneas en Chile

Un artículo del diario financiero respecto al crecimiento de la industria de aerolíneas llamó mi atención, dado los crecimientos de participación de mercado de Sky Airline y Aerolíneas del Sur. Lo que sí, por la naturaleza de la industria dudo que estén en punto de equilibrio.

Diario Financiero: Tráfico doméstico de pasajeros creció sobre 10% en mayo:

Las aerolíneas locales también registraron buenos resultados. La firma ligada al empresario Jurgen Paulmann, Sky Airline, repuntó 19,7% en mayo. Según plantea el informe "si se consideran sólo las rutas operadas por esta empresa, la participación se eleva a 23,6%, superior al mes anterior que fue de 22,7%", explica.

Otra de las que también experimentó avances fue Aerolíneas del Sur, ya que aumentó a 4,7% su participación de mercado, frente a los resultados del mes anterior que sólo fue de 2%. En este sentido, el documento también especificó que si se consideraban sólo las rutas operadas por la firma, su porcentaje en el mercado se elevaba a 11,1%.

También se menciona un punto preocupante: la caída de los volúmenes de carga internacional. Los altos precios del petróleo y su transferencia a precios de flete deben ser una pesada carga. Esto refuerza otras noticias internacionales de caída de cargas marítimas y aéreas internacionales:

La carga internacional continuó en mayo con una tendencia negativa (en los primeros cinco meses sólo abril fue positivo), registrando una caída de 6,4% con 20.373 toneladas.

De estas el 53% fue transportada por el grupo Lan. En el acumulado enero-mayo la carga cayó 3,6%."


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Aerolíneas: Hay esperanzas para Latinoamérica

Parece que al fin algunos se estan animando con una aerolínea de bajo costo en LATAM; una pena que no sea un operador de los famosos ¿Sí se puede?

El Economista - Anuncian nueva aerolinea "low cost" en Mexico:

"Anuncian nueva aerolinea 'low cost' en Mexico, Publicado el 5/7/2005

NUEVA YORK.- La aerolínea brasileña GOL Linhas Aereas Inteligentes GOL.N* dijo el martes que acordó lanzar un operador de bajos costos con sede en México.

La compañía dijo que firmó un memorándum de entendimiento con Inversiones y Técnicas Aeroportuarias, el empresario mexicano Fernando Chico Pardo y CPH para iniciar la creación de una aerolínea de bajo costo, basada en el modelo que GOL opera actualmente en Brasil. (Reuters) "

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Arenas Movedizas en la industria automotriz

Con el exceso de capacidad en la industria automotriz, los nuevos descuentos de GM lo más probable es que gatillen una guerra de precios. Chrysler y Ford ya anunciaron que van a igualar los descuentos, mientras los autos japoneses gozan de un premio de precio por la calidad de sus autos y menores costos previsionales y operacionales.

Cada vez más esta industria se parece a las industrias del acero y aerolíneas donde todos pierden excepto los minimills y las aerolíneas de bajo costo. En la industria automotriz algunas de las pocas empresas a seguir son Toyota, Nissan, Johnson Controls y Magna.

FT.com - GM's price cuts drive record sales: "Incentives have become an addictive drug for the three Detroit-based carmakers, especially since GM introduced zero-per cent financing as the kingpin of its Keep America Rolling scheme after the terror attacks of September 2001.
According to CNW, an automotive research group, GM and its dealers spent an average of $7,328 per vehicle on incentives in June, equal to 23.4 per cent of the suggested retail price. Ford's discounts were above $7,000 and Chrysler's about $5,900.
Asian carmakers have stepped up incentives in recent months. Total incentives on a Toyota stood at $4,022 in June. Nissan offered $3,355, or 12.9 per cent of the average sticker price.
Besides denting profits, incentives lower trade-in values. Some analysts have singled out lower residual values as a key reason for the slump in GM and Ford's market share."

Monday, July 04, 2005

Freakononomics

La popularidad del excelente libro de Levitt y Dubner me ha sorprendido. Quién hubiera pensado que llevara a sus autores a los principales talk shows de Estados Unidos incluido el excelente "The Daily Show with Jon Stewart".

El blog Freaknomics tiene varias muestras más de las controversiales y sorpresivas recomendaciones de Steven Levitt:

Freakonomics: "Chicago police borrow a page from Freakonomics
By Steven D. Levitt
In Freakonomics, we talk about how some of the most powerful incentives are social, not financial. One example we give is posting the pictures of people caught soliciting prostitutes on the web. How appropriate that the following story appeared recently in the Chicago Tribune:

(It was long, so I edited out parts. You can see the whole article here at least for a while.)


Web site puts `johns' on the spot
City anti-prostitution plan unfair, critics say

By Gary Washburn and Charles Sheehan
Tribune staff reporters
Published June 22, 2005


People seeking prostitutes in Chicago already face arrest and impoundment of their cars if they are caught, but now they risk something else: public embarrassment on a city Web site.

The city has begun posting the names and photographs of alleged 'johns' on the Police Department's Web site for all to see, including spouses, children, employers, friends and neighbors, Mayor Richard Daley announced Tuesday.

'I don't have to tell anyone how fast information travels on the Internet,' Daley said.

'Its victims are, first of all, the prostitutes themselves,' Daley said. 'It is estimated that between 16,000 and 25,000 women are involved in prostitution in Chicago over the course of a year. Most of them were victims of sexual abuse and domestic violence from a very young age.

'Once they become prostitutes, they're subject to even more violence, abuse and possible death from their pimps and their customers. They spend their lives surrounded by criminals and drugs and [are] vulnerable to sexually transmitted diseases.'

The names and partial addresses of 21 people, along with police photographs of 20 of them"

Nisipeanu campeón de Europa

Nisipeanu campeón de Europa ganando en una tensa ronda final al eterno guerrero Alexander Beliavsky. El partido con comentarios en el sitio del torneo:
European Chess Championship: "Nisipeanu rode out the storm
International master Aleksander Czerwonski comments:
Aleksander Beliavsky could have made a quick draw looking for the tie - breaks. He had already shown his abilities in rapidplay chess. However, Beliavsky is a real fighter so he played for a win. He was refusing all the drawing possiblities until it was too late to make a peace. It's how Rumanian grandmaster Dieter - Liviu Nisipeanu became the European champion. Let's have a look at the crucial game for the title."

Friday, July 01, 2005

Aerolíneas de Bajo Costo

El alza del petróleo parece que está acelerando la reestructuración hacía líneas de bajo costo (Southwest, Jet Blue, Raynair). A pesar que el combustible les representa un mayor porcentaje de sus costos, han tenido los márgenes para continuar el ataque.

¿Tan mala es la situqación de las aerolíneas tradicionales? Como dijo alguna vez Warren Buffet: ¿Un buen ejecutivo en una mala industria?, le apuesto a la industria.

Airline turbulence
By Paul Betts, Financial Times

The market capitalisation of airline stocks has fallen more than $10bn since oil prices started their latest upward spiral in February.

The response of some large carriers, such as British Airways, is to continue pushing up the fuel surcharge introduced last year on airline tickets to offset the rise in jet fuel prices.

Low-cost airlines are still resisting, betting on picking up more customer volumes with cheap fares. Others, such as Lufthansa or Air France-KLM, have so far held back further increases, although the German airline did put up its surcharge for freight this week.

How far can airlines continue offloading the cost of fuel on travellers? Probably as much as the market will take. And if all other taxes and charges already imposed on tickets are added, they must be getting close to the limit...

Jaws 2005

¿Spielberg saving the movie industry again?

FT.com / Comment & analysis - Observer - US: "Tinseltown trials
Steven Spielberg's War of the Worlds, whichopened on Wednesday, may help Hollywood decide whether the current box office slump is simply the result of an uninteresting slate of films or something far worse.
After 18 weeks of declining box office receipts, the film industry is asking whether audiences are giving up on the cinema in favour of watching DVDs or playing video games at home. Films that might have been blockbusters in summers past, such as Batman Begins, have not been able to end Hollywood's losing streak. As a result, cinema chains are getting creative. AMC, the theatre chain, is offering rebates to anyone who sees Cinderella Man - the Ron Howard film that has had an underwhelming run - and dislikes it. 'We believe so strongly that you'll enjoy Cinderella Man, we're offering a Money Back Guarantee,' the advertisement says. For AMC's sake, Observer hopes its customers are an honest lot.
War of the Worlds has a few things on its side: it got decent-to-good reviews, with critics lavishing praise on its special effects. It has the Spielberg name and Tom Cruise as its star, though it is anyone's guess whether the actor's behaviour of late will draw audiences in or keep them away. "

Format Innovation

¿Game Over? Supermarkets threatened by big bad Wal-Mart have not been able to speed their operations and match its buying power. Note to self: Latinamerican retailers have to considerable improve their operations.


FT.com: Major US supermarkets downgraded:

"S&P cited increased competition in particular from Wal-Mart stores supercenters, which offer both groceries and general merchandise, as well as from Costco, the discount warehouse club, drug stores, and low cost dollar stores.

On Tuesday, Fitch credit rating agency said it had changed its outlook on Kroger and Albertson's debt to negative, and affirmed its negative rating on Safeway. "

¡Al mejor postor! Versión 3.0

Lo típico, gran creación de valor. ¿Pero estarán realmente contentos los accionistas de Bank of America pagando un premio de 20% por MBNA? Quizás valga la pena comprar acciones de Capital One

FT.com: Bank of America:

"So why pay $35bn to buy MBNA? The usual suspects are advanced to justify the deal, and they are real enough. As part of BofA, MBNA should have a lower cost of funds. The company put this at $100m in 2007, but that looks conservative, given the likely 150 basis point differential in their respective cost of deposits.

Furthermore, although BofA's track record on cross-selling is strong, it will eventually outgrow the available pool of high-credit branch customers. MBNA brings enviable customers as well as marketing skills.

But are they each worth as much as this deal suggests? The acquisition is expensive, at a premium to receivables of over 20 per cent. This at a time when overall growth in the credit card market is disappointing. Some of this may be cyclical. A housing boom has meant some consumers preferring home equity loans to large credit card balances. But the sluggishness of the market is also down to its maturity - a fact that consumers have cottoned on to as they wait for the next zero per cent teaser offer. Sometimes, organic growth can be just as exciting. "

The Auto Manufacturers formerly known as Big 3...

La valorización de mercado de Toyota es la suma GM y Ford. ¿Tendrán el tiempo para introducir las mejoras de Chrysler en sus negociaciones con proveedores?

FT.com - Daimler makes big productivity improvements:

"Nevertheless, Toyota Motor remains the most productive manufacturer, giving it a cost advantage of between $350-$500 per vehicle over Chrysler and the other two Detroit-based carmakers, General Motors and Ford Motor.

Ron Harbour, Harbour's president, said Toyota had created a virtuous circle, with low costs allowing it to add improvements to its vehicles, which other manufacturers could not match. Toyota took the attitude, he added, that "we may be on top, but we've got to act like we're on the bottom".

Mr Harbour said new models heightened the importance of flexible manufacturing: "Every company has to have the ability to quickly and inexpensively change the mix."

The survey points to a narrowing gap in the time taken by the most and least efficient manufacturers to build a vehicle, ranging from 27.9 hours at Toyota to just under 37 hours at Ford.

Chrysler "is not perfect by any means, but it's starting to show", Mr Harbour said, referring to the contribution of its German partner, Daimler-Benz, with which it merged in 1998.

Mr Harbour singled out Dieter Zetsche, Chrysler's chief executive for the past three years. "He didn't just come in there and walk over people. He's been able to mix the best of both worlds."

According to Mr Harbour, Chrysler is encouraging parts of its business to work as a team. It was no longer good enough for the purchasing department to bring down costs if lower-quality components caused disruptions on the assembly line."

¡Al mejor postor! 3.0

Los accionistas de MBNA deben estar eufóricos...

Bank of America to Buy MBNA for $35 Billion - New York Times:

"MBNA's shares surged today, climbing $5.29, or 25.1 percent, to $26.36 around midday on the New York Stock Exchange. Bank of America's shares fell $1.03, or 2.2 percent, to $45.88.

The merger comes at a time when the credit card industry is rapidly consolidating. Already, the 10 largest issuers control about 85 percent of the market, according to The Nilson Report, a credit card industry newsletter. With Bank of America surpassing Citigroup as the country's largest card issuer, this deal could change the industry's landscape even more.

'Today's announcement is not only about the creation of one of the world's largest card providers - that is compelling in and of itself,' Mr. Lewis said in a statement. 'But it's really a much larger story about two companies with complementary strengths. The result will be the country's top retailer of financial services with the size and scale to drive distribution and marketing efficiencies.'
The size of the deal raises questions about the future of the stand-alone credit card companies, which have found it increasingly difficult to compete against with huge full-service banks on their own.

In early June, Washington Mutual, a big West Coast banking company, reached a deal to buy Providian Financial, a leading credit card issuer, in a $6.45 billion deal. Morgan Stanley has announced plans to spin off its Discover Financial business. And in March, Capital One, one of the nation's biggest credit card companies, greed to buy the Hibernia Corporation, a regional banking company based in New Orleans, for $5.35 billion.

Some analysts now suggest that Capital One itself, and potentially American Express, could be next on the auction block."