TOP 100 TRANSPORTATION AND LOGISTICS SITES
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| Carmax Profits by Keeping Costs Low Ockham Research submits: Carmax (KMX), the nation’s largest used car retailer, reported 4th quarter results on Thursday morning. Just yesterday, many major automakers reported March sales that were extremely ugly: [[GM]] down 45%, Ford (F) down 41%, Chrysler and Toyota (TM) down 39%, and Honda (HMC) down 36%. For the quarter, Carmax’s sales were disappointing, but still a little better than those results falling 28%. Nationwide, auto sales have been extremely weak, but interestingly, Carmax was able to lift earnings 70% from last year. The company netted 17 cents or $38 million, which far outpaces the analysts expectation of just 2 cents per share.So, how did Carmax increase earnings 70% while car sales slumped 28%? They kept costs very low, and also got a large amount of their earnings from the finance arm. Carmax knew that the next few quarter would be lean when they stopped giving forward looking guidance in June of 2008, and at that point they began cutting costs rapidly. The company dropped expenses by 10.6%, and thinned out its workforce by more than 20% since last May. The company is planning to further conserve cash by cutting its capital expenditure budget to $20 million for fiscal 2010 from $185.7 million the year prior.Complete Story » seekingalpha.com |
When Bankruptcy Is Good for Bondholders Felix Salmon submits: I’m fascinated that after roundly rejecting GM’s offer to swap their bonds for equity in the existing company, GM’s bondholders seem to have embraced with alacrity GM’s new offer to swap their bonds for equity in a new, post-bankruptcy company. It’s increasingly obvious, it if wasn’t clear all along, that the old exchange offer was in neither GM’s interest nor in that of the bondholders, and that bankruptcy is necessary to allow GM to shed certain obligations — especially obligations to its dealerships — which would otherwise hobble it for the foreseeable future. The new plan essentially constitutes the nationalization of GM: the US government will own 72.5% of the common equity, plus another $2.5 billion in preferred stock. I can see why bondholders like it: the US will be extremely hesitant to let any state-owned company default, and it won’t sell off its stake until GM’s future viability is assured.Complete Story » seekingalpha.com |
Ryanair Proposes Standing on Planes: Innovation or Insanity? Justin Fogarty submits:No one can ever claim Ryanair (RYAAY) isn’t creative. The European low cost airline (which has the largest international passenger volume in the world) is famous for its innovative approach to getting passengers from Point A to Point B … for very little money. For example in 2008, it offered 1 million seats for £0.01 each. The promotion was so successful, it crashed the company's website. And despite public outcries, it has yet to abandon the possibility of charging passengers for mid-flight visits to the bathroom. In its latest move, it was reported yesterday that Ryanair’s “plans to cut costs by making fliers perch on stools with seatbelts around their waists. Chief executive Michael O’Leary has already held talks with US plane manufacturer Boeing about designing an aircraft with standing room.” The motives for the move are clear, since “Ryanair estimates it would be able to pack in 30 per cent more passengers while slashing costs by 20 per cent.”Complete Story » seekingalpha.com |
German Luxury Auto Brands Dinged by Scrapping Scheme Research Recap submits: There are some interesting findings from Moody’s analysis of the impact of European “cash for clunkers” schemes. German automakers all appear to have lost market share under the German scrapping scheme, with luxury brands faring the worst. Makers of “cheap and cheerful” cars were the main beneficiries, with Skoda, Fiat and Hyundai all more than doubling their market share (albeit from a small base). German brands were the only ones that lost share and even GM’s up-for-adoption Opel unit managed to boost its share. OK, so it’s almost a German brand.Complete Story » seekingalpha.com |
Profile of Berkshire Acquisition Target Burlington Northern The Manual of Ideas submits:This morning, Berkshire Hathaway (BRK.A) announced the acquisition of railroad Burlington Northern Santa Fe (BNI) for a transaction value of $44 billion and an equity value of $100 per share in cash and stock. Read the public announcement (pdf) and coverage by Bloomberg and Reuters.Profile of Burlington Northern Santa Fe (BNI)Complete Story » seekingalpha.com |