Farmers Fight Back With an Alliance

Farmers are pissed. Campaigns to expose bad farming conditions and animal rights violation have finally forced farm groups to step up and respond. The U.S. Farmers and Ranchers Alliance was formed in November. “Farmers Create New Alliance to Fight Bad Publicity” by The Associated Press reports the purpose of the Alliance is “to improve farmers’ public image and advocate for what they describe as more farm-friendly policies”.

So far there isn’t a clear plan. The article reports social media will be used to showcase good farmers so as to balance out the images of bad farmers. The campaign will not involve ads. As spokeswoman Cindy Hackmann put it “We need to have a conversation instead of plastering an ad on a billboard or in a magazine” The other use of social media will be to exhibit real conditions of farms. The alliance believes that negative publicity has disillusioned consumers into believing in an impossibly perfect farm.  Joe Cornely, “spokesman for the Ohio Farm Bureau” stated:

 “So often people advocate for a utopian world and it’s not doable. Feeding the world requires us to kick up some dirt and create a few odors. That is just a reality of producing food and fiber that may not fit in with the utopian vision”

Egypt Protests and the Market Panics

There’s been a lot of worry in the global markets since the eruption of Egypt protests last week. On Friday, the Dow Jones industrial lost 166 points after enjoying a good week. According to “Unrest in Egypt Unsettles Global Markets” by Nelson D. Schwartz, the fear in the markets is much more than panic absorption. This comment from Jason S. Grumet, “president of the Bipartisan Policy center, a Washington research group” provides context by which some panic:

“A one-dollar, one-day increase in a barrel of oil takes $12 million out of the U.S. economy… If tensions in the Mideast cause oil prices to rise by $5 for even just three months, over $5 billion dollars will leave the U.S. economy. Obviously, this is not a strategy for creating new jobs”

According to the article, the Suez Canal and Sumed pipeline is used to move millions of barrels of oil in Egypt. In 2009, “2.9 million barrels of oil a day” or “2.6% of global production” passed though the country. The upheaval in the country seems to not have a solution anytime soon. Thus, the global economy must prepare for increased oil prices and the U.S. economy, which was on its way to recovery, must prepare for the impact. Throughout this week, the markets will be the first signs of the way the financial world responds.

AT&T Warns They May Have a Rough 2011

AT&T is coming to the reality that the Verizon iPhone will compete well with the their iPhone. Yesterday, AT&T admitted the beginning of 2011 might be a little rough for them. “AT&T, losing iPhone grip, signals tough start to year” by Sinead Carew reports the warning led shares to drop almost 3% yesterday. CEO Randall Stephenson stated:

 “It may be rocky in the beginning of the year, kind of volatile, hard to predict, but we think as we work through it and the market stabilizes, we’ll be able to grow through it”

In the 4^th quarter, AT&T added 400,000 customers, which is about 100,000 less than analysts expected. The good news is AT&T’s loss of iPhone exclusivity is forcing the company to pay attention to their other products. AT&T has 442,000 tablet customers, who can help to make up any losses from missing iPhone customers.

Quick News: Sara Lee Bidding, Netflix 4th Quarter, Sony's New Handheld

“Bids for Sara Lee Could Come as Early as Friday” reports…

Sara Lee bids may be coming this Friday at the request of the failing company. The possible bids may range between $19 and $21 a share. The company might be split up.

“Netflix Profit, Outloook Impress Investors; Shares Leap” reports…

Netflix is now “the third largest U.S. video subscription service”. They had an amazing fourth quarter: $595.5 million in revenue, $47.1 million in earnings, and additional 3 million subscribers. The fourth quarter was higher than expected. It seems Netflix is a bigger threat to the cable industry than previous expected. I wrote about the cable industry's negative views of Netflix in "Netflix vs. Cable/ Media Industry".

“Sony Unveils New Handheld Device to Take on Nintendo” reports…

Smartphones and the iPad have now become gaming consoles, replacing sales usually expected by handheld gaming devices. Sony is creating much anticipation about its new handheld. Its codenamed Next Generation Portable and will have 3G wireless connectivity, 5- inch screen, which will most likely be touchscreen. It has also been noted that Sony will introduce the new PSP which might also be a phone. I look forward to upcoming advertising from Sony and reviews of their new handheld.

Facebook Allows Advertisers to Use Your Posts

I previously wrote “Facebook and Japan: The Story of Clashing Cultures” about Japan’s rejection of the social site. Japan’s social networkers are very private. They belong to social networking sites which allow them to use fake names and avatars and give little to no personal information. Facebook is completely public and with previous privacy issues, it has been hard for the company to enter the Japanese market. Now, there might be another problem halting privacy advocates from the site. “Facebook’s ‘Sponsered Stories’ Turns Your Posts into Ads” by Laurie Segall reports Facebook will be taking posts mentioning particular brands, products, or services and allowing advertisers to use them as “sponsored stories” to post on your friends pages.

There is a video posted by Facebook to explain the advertising procedure. As of now hundreds of users have liked the video with some exclaiming they can’t wait. The problem with the advertising plan is no one can opt out. The video assures only friends will see the "sponsored story" but how does this help Facebook’s privacy image?

It is expected that sites like Facebook would use advertising to make money. But to allow advertisers to use posts without giving users the ability to protect their posts is ridiculous. Many have private pages and strict privacy settings to prevent such a thing from happening. And yet, it seems, Facebook is going to ignore the privacy settings it claims to respect.

LG Electronics Had a Bad 4th Quarter

LG Electronics has reported a depressing 4^th quarter loss. The company, rated 3^rd in handsets and 2^nd in TVs, experienced losses in both sectors. According to “Worst Could Be Over For LG Elec After Record Q4 Loss” by Reuters, the South Korean company reported 262 billion won (KRW) loss in handsets, 122 billion won operating loss within TVs, and overall 246 billion won loss in operations for the quarter.

The loss in handsets is because LG waited long before introducing their smartphone to the market. As the smartphone industry has grown rapidly, companies cannot afford late entries. According to the article, analysts predict the company will still play catch up in the new year. The loss in TVs is due to an overall drop in consumer demand. Prices have dropped for almost all HD TVs and mixed with the bad economy, consumers have either already purchased their HD TVs at low prices or are waiting patiently as this is a buyer’s market.  

The good news is that the new line of LG smartphones has gotten positive ratings. As the title of the article might suggest, these 4^th quarter may not repeat as their Optimus phones warm up in the market. But there is competition in the smartphone industry. LG will place their phones in the market but may not find them amongst the top brands unless their phones present impressive new technology.

My Competitor Copied Me: Simmons vs. Sealy

If imitation is the greatest form of flattery, companies should be very flattered when competitors copy products or technology. Well, Simmons Mattresses isn’t gleaming with flattery. Sealy, the mattress company recently revealed new Posturepedic mattresses with “coils tucked into fabric cylinders”; the same coil technology used by Simmons. “Sealy Adopts a Simmons Technology, and a Mattress Battle Erupts” by Stephanie Clifford reports Simmons is infuriated.

While Sealy and Simmons are not fighting for first place in the industry, that belongs to Sealy, both are looking for ways to stay ahead of other successful manufacturers, Tempur-Pedic and Select Comfort. For Simmons, their coil technology was a differentiating factor, central to their success in the industry. Seeing Sealy copy the technology has Simmons worried they can no longer build their brand around such technology.

Some in the industry see Sealy’s move as counterintuitive as it can prove to consumers that Simmons might have had better technology. But the move brings about two important points:

First, Simmons may have promoted their coil technology as their own but they don’t own it.  Sealy is not the first manufacturer other than Simmons to use the technology.

Second, Simmons and Sealy should focus their attention on Tempur-Pedic and Select Comfort. The latter two companies have had gradual increasing sales and are going to rival sales of Sealy and Simmons. Tempur-Pedic and Select Comfort have changed the mattress industry. They have introduced transparency with an open discussion about their manufacturing, eliminated the salesperson and its environment with online sales, and invested heavily in direct advertising. The result has been consumers willing to pay expensive prices for the technology of a Tempur-Pedic and/or Select Comfort.  

At the midst of this rivalry, Simmons is wasting time. In the not-too-distant future, Tempur-Pedic, and any other coil-less mattresses will lead the industry. The article reports Sealy plans to copy Tempur-Pedic’s advertising methods with investment in direct advertising. Unlike Simmons, Rick Anderson, President of Tempur-Pedic, responded: “Growth spawns a lot of imitation”. It seems Sealy is taking notes from competitors and making a strong fight to stay at the top. Simmons should take a cue, accept flattery and make plans to beat out the competition.

MTV's Provocative Investment: Stupid or Smart?

Unless you enjoy teen sex driven shows, you might not know about “Skins”. “Skins” is MTV’s latest late night show. The show is about sex-crazed teens and has a TV-MA rating. While TV-MA means teenagers are not suppose to watch, not many adults have an interest in teen sex lives – but other teens do. It’s pretty obvious the show about teens, not rated for teens, is going to be liked by teens. I haven’t watched the show but I did catch some news on the concerns about the show. I recently read “MTV’s Naked Calculation Gone Bad” by David Carr which talks about the ways the show has crossed the line.

It was previously reported by Brian Stelter in his article “A Racy Show With Teenagers Steps Back From a Boundary” that MTV executives had to question if the show which employs teen actors/actresses crossed the line into child pornography. Both Carr and Stelter reports MTV plans to edit out more scenes in order not to scare advertisers and the public from thinking they promoted such content. Taco Bell withdrew their advertising from the show but there hasn’t been a complete advertising boycott from the show. Carr reports that MTV had a great marketing plan for its show which resulted in 3.3 million viewers for the first episode. While many will say the show is a depiction of actual teen life or just crossing the line, the subject of his article is business ethics.

Google CEO Steps Down, Founder Steps Up

“Day-to-day adult supervision is no longer needed” is a very short explanation of the change happening at Google. Yesterday, the general press reported CEO Eric E. Schmidt will be stepping down and co-founder Larry Page will take the spot. Schmidt’s response to the newsbreak was the opening quote via twitter; alluding to the purpose of his 10 year appointment and his resignation from the position. According to “In Google Shake-Up, an Effort to Revive Start-Up Spark” by Claire Cain Miller and Miguel Helft, Schmidt was appointed to bring more management to an environment run by the young founders, Larry Page and Sergey Brin.

Schmidt brought management experience while Page was president of products and Brin was president of technology. The article reports throughout the 10 years, the founders sometimes clashed with Schmidt. In the past couple of years, his grown-up management style may have driven away young talented engineers looking for a company still motivated like a start up. But he did provide a professional model of running a company and helped Google to its success and increased value.

This CEO change may not be about hostility. Page and Brin were in their late 20s when they founded Google and are now in their late 30s. If Schmidt’s tweet was written with honesty, then this is about allowing grown ups to be grown ups and show what they have learned from Schmidt.  Schmidt will not be leaving the company; he will be the executive chairman when Page steps up in April.

Apple's Record Revenue and Steve Jobs' Absence

As most of you know, Steve Jobs has announced he’s taking a leave of absence, placing COO Timothy D. Cook as Apple’s leader.  Many are heartbroken by his leave and worried about the impact it will have on Apple. Amidst the announcement comes good news: Apple had an amazing quarter with $26.7 billion in revenue. I read two articles, “Apple sets new record with sales of $27 billion” by David Goldman and “Can Apple Find More Hits Without its Tastemaker?” by Steve Lohr about the revenue jump and Steve Jobs.

Apple’s record revenue is due in large part to the Holiday frenzy for the iPad and iPhone. Goldman notes the iPad’s tremendous success is attributed to its successful adaption within the business community. This is before the anticipated arrival of the Verizon iPhone, which is expected to sell millions more iPhones. All of this has been credited to Steve Jobs. Lohr exclaims that Jobs is an intuitive innovator, able to create phenomenal products without consulting traditional forms of market research, such as focus groups.

Johnson & Johnson: How Many More Recalls?

Two days after the company was hit with a lawsuit by the state of Oregon, Johnson & Johnson had a recall this last Friday. I didn’t think it could get any worse for this company. On my last post “Johnson &Johnson’s Recalls Bring Lawsuit”, I refrained from criticizing the company too much or stating they should get rid of the McNeil Consumer Healthcare division. After so many recalls and the lawsuit, reading “Can Johnson & Johnson Get Its Act Together?” by Natasha Singer and Reed Abelson has convinced me Johnson & Johnson needs to eradicate and rebuild their McNeil Division.

The article is vast, filled with information to link all of the recall events and F.D.A. investigations performed on the company. If you are not aware of McNeil recalls, please read the article. I have also written about the company three times before. So, I’m not going to give a full summary but I will point out important aspects of the article.

According to the article, there have been other recalls.

Last year, O.B. Tampons disappeared from store shelves. The company did not publicly address the reasons for the shortage or officially state there was a recall. Bonnie Jacobs, the spokeswoman for McNeil Division, “declined to explain the nature of the supply disruptions that caused the shortage”. Sounds like another “phantom recall”.

Outside of the McNeil division, contact lenses and two different hip implants have also been recalled.

The impact on Johnson & Johnson has been severe.

While these recalls have not been life threatening, they have altered consumer confidence in their brand. According to some figures in the article, company consumer sales went from 1.7 billion to 1.3 billion in 2009, dropping 25%; over-the-counter medication and nutritional products, the main area of recalls, have dropped 40%; the 2010 total cost of the recall is $600 million; and Goldman Sachs has lowered 2011 earning expectations.

Obviously, recalls cost money. But these continuous recalls, coupled with phantom recalls, are costing money from products pulled from shelves and from consumers choosing other brands over J.&J. And which brands are replacing J.&J.? Generic drug store brands. The article reminds us that when you go to a drug store, the missing areas of J.&J. products are usually replaced with that store’s generic brand. Considering J.&J. is more expensive, the only reason to purchase them was brand assurance, which is all lost because of the recalls.

“This is really unusual to have this gross systemic failure”

                        -Donald Riker the editor of OTC Product News

Possible theories for the failures.

Being that McNeil and its spokeswoman, Bonnie Jacobs refuses to provide an explanation for these recalls, some people, including former employees, have their own theories: “[Decentralization] of its oversight of manufacturing and quality control in error” and lack of investment in manufacturing. The article mentions despite many problems, the company hesitates to invest money to solve these manufacturing issues. They are not eager to buy equipment or fix problematic ones.

The article did end on a somewhat positive note, speaking of the steps the company has taken to fix their problems. They have changed operations and set “monthly goals…in its overhaul plan submitted to the F.D.A." Overall, some in the industry do believe J.&J. is trying to fix its problems.

I don’t have the inside scoop on J.&J.’s game plan. But I hope it includes some makeover of the McNeil division. Everything, from it manufacturing to its public statements, needs work. I do not like that despite being caught with a phantom recall and another possible one with O.B. tampons, McNeil continues to hide information as if it has much integrity to save. At this point, McNeil needs to admit guilt and work on their public image with the millions of consumers they have lost.

I have said it before and I’ll say it again, although its brand has been badly hurt, J.&J. will not fall because of its McNeil nightmare. To save itself, J.&J. needs to fix the McNeil division.

In the mean time, I have read that to be cautious, McNeil might have more recalls. I hope to one day, within this year, read a positive story about Johnson & Johnson’s operations. I also hope Ms. Bonnie Jacobs can say more to us than generic statements. consumers don't want to hear the company is “working on it” unless the statement reveals a plan.

Johnson & Johnson's Recalls Bring Lawsuit

Just when one thought the recall mess with Johnson & Johnson was over, it isn’t. There isn’t another recall; Instead, a lawsuit against the company over its “phantom recall”. “Oregon Sues J.&J. in Motrin Buyback” by Natasha Singer and Reed Abelson reports the state is suing for violation of “the state’s unlawful trade practices act by misrepresenting the effectiveness and quality of [Motrin]” and “failing to disclose to consumers that the Motrin might have been ineffective”.

In 2009, McNeil Consumer Healthcare, the division of J.&J. responsible for all of the recent recalls, hired contractors to buyback Motrin without publicly acknowledging that the product was on recall; Hence, a “phantom recall”. According to the article, in July 2009 the product was recalled and then in April 2010, the recall became public. The total amount of products recalled, including different brands, is 200 million.

Is This Finally the End of MySpace?

When was the last time you went on your MySpace account? I haven’t gone on mine in years. I grew out of using it as millions of other people have. When I do feel the need to connect to others, Twitter and Facebook serve me well. While MySpace has changed some of their interface to seem up to date, “Hot Social Networking Sit Cools as Facebook Grows” by Tim Arango reports on Tuesday the company had to lay off almost half of their staff. The layoff may be foreshadowing a sale of the company.

MySpace was a company so popular it was fought over by Viacom and News Corporation. When News Corporation won with a $580 million purchase, Viacom was embarrassed and fired its chief executive Tom Freston. Now, the company “reported a $156 million operating loss”.

Reasons sited in the article as to the exodus out of MySpace: people have lost passion in it, oversaturation of advertisement, MySpace focused on money as opposed to growth and user retention, and now its music community may soon be vanishing also.

This is simply the end of MySpace; despite many tries to make a comeback, it has failed. The website no longer holds appeal for former or prospective users. The article ends on a very thoughtful point: If MySpace can go from the leader of social media to a relic in Facebook’s shadow, could the same end happen to Facebook when another social media platform emerges?

Is AT&T a Little Mad About the Verizon iPhone?

Today at 1:11pm, Verizon plans to announce its carrying of the iPhone. This is not breaking news. The press conference has been known for the past couple of days and iPhone coming to Verizon has been anticipated for quite some time. The iPhone by Verizon has brought speculation of an AT&T impending doom, the lost of millions of AT&T subscribers, and the gain of those millions to Verizon. “With iPhone Taunts, AT&T-Verizon Rivalry Escalates” by Jenna Wortham reports that yesterday, AT&T decided to respond to the fanfare surrounding the official announcement with an insult:

“I’m not sure iPhone users are ready for life in the slow lane”

-Mark Siegel, an AT&T spokesman

Verizon’s spokesman, Jeffrey Nelson came back with his own statement:

“AT&T is known for a lot of things, but network quality is not one of them…Typically companies try to call attention to their strongest suit”

Facebook and Japan: The Story of Clashing Cultures

Facebook may soon rule the world. But the empire won’t include Japan. “Facebook Wins Relatively Few Friends in Japan” by Hiroko Tabuchi reports less than 2% of Japan’s population uses Facebook. Japan is still the tech advanced and driven society it has been known as. So, Why hasn’t Facebook been adopted by Japan? Two reasons: Japan’s Internet culture clashes perfectly with the Facebook culture and the company has rivals in the country.

“The Internet in Japan has not been so closely connected with real society…Those other community sites can keep offering the joys of staying remote from real life”

                                      -Mr. Kodama, the Facebook manager for Japan

In Japan, users actively participate in online communities. Typically, they don’t use personal photos, real names, or make attempts to connect their real life with their profile. This is completely different from the Facebook culture. Facebook prides itself on being an open real community. Even if a Facebook user didn’t want to upload photos or give personal information, they have to use their real name. While there may be ways to get around the policy, Japanese users have been faced with the real name policy at almost every attempt to not use it. Thus, most are not attracted to Facebook, even after making attempts at it.

Starbucks: 40 Years and a New Logo

On its 40^th birthday, Starbucks decides to reinvent itself with a new logo. According to Parija Kavilanz of cnnmoney.com, the new logo debuted yesterday. The familiar siren is enlarged and green; the company name is removed. Apparently, not all fans like the new logo. Some fans responded with confusion as to the reasons Starbucks would change a very familiar logo and also remove its name.

I like the new company logo. The siren is considered the company mascot and the enlargement is well done. The removal of the name may seem quite confusing, if Starbucks is not a well-known company. The article mentioned a comment from a fan that felt Starbucks was giving up great marketing space. I personally don’t know anyone who would not recognize the new logo as being part of Starbucks. Maybe this is the gift of 40 years, being able to receive recognition without having to give your name.

Kavilanz compared the logo change to Gap. The company had attempted to change its logo. The new logo was so hated that after one week, Gap regressed to the previous well-liked logo.  

New Expectation for OWN: First Year Profit

I previously wrote in "OWN: The Next Biggest Part of Oprah’s Empire Starts Today" that Discovery and Oprah expects OWN (the Oprah Winfrey Network) to turn profit in year 2 or 3. Brian Stelter of New York Times reports in “A Profit Is Forecast in the First Year for Oprah’s Network”, after only a few days on air, Discovery is claiming OWN will produce a profit within its first year. It was made very clear, in the few articles I read, that Discovery and Oprah stated not to expect a first year profit. While profit expectation seems like great news, it can create a problem for OWN, Discovery and Oprah. The purpose of publicly stating to expect a profitless first year is to avoid setting a standard the network can’t reach. It’s not a low expectation but simple reality. Now, Discovery had broken this reality.

Pfizer: Given a Golden Opportunity and Lost It

Imagine: you are a company that sells a drug to help people to stop smoking. All of sudden you receive an immense demand for your product. Sounds absolutely perfect. Sounds like a dream. Well, according to “In Japan, Pfizer is Short of Drug to Help Smokers” by Hiroko Tabuchi, this was Pfizer’s reality. Japan was a smoker friendly environment. People could smoke anywhere and paid low prices. October 1 the government raised cigarette taxes as a move to get people to quit. It worked.

Smokers wanting to quit rushed to doctors requesting Pfizer’s Chantix (or Champix in Japan), which aids smokers to quit smoking. Although Pfizer knew about the tax increase a year before its arrival, the company did not prepare for the great demand. According to Tabuchi “less than two weeks after the tax increase…the company was forced to suspend sales of the drug”. Pfizer has stated they will have some products to sale this month.

Motorola Breaks Up, Now 2 Separate Companies

Motorola has split. It seems, for some time, Motorola had two focuses, the mobile market and corporate market, which had created a de facto division within the company. Paul R. La Monica of CnnMoney.com reports in “Motorola finally breaks up. What Now?” that Tuesday morning the company officially split into two. The two divisions are Motorola Mobility and Motorola Solutions. The stock ticker also reflected the division; MOT became MMI (mobility) and MSI (solutions).

This isn’t bad news as shareholders have been waiting years for this moment. Now that the company is split, each side can effectively focus on their goals. The obvious goal for Motorola Mobility is the smartphone and tablet market. Sanjay Jha, the CEO of Motorola Mobility, stated in an interview (the video is embedded in the article) that the two companies were entirely different and will perform better separated.

Will 2011 Be the year of iPad Competition?

This Thursday is the International Consumer Electronics Show in Las Vegas. The main theme is going to be… tablets! While tablets from other manufacturers have been expected for some time, companies are claiming 2011 will be the year of iPad competition.  “Rivals to the iPad Say This Is the Year” by Joshua Brustein reports that manufacturers have used iPad’s impressive 2010 as a preview of consumer expectations with tablets.

Motorola, Hewlett- Packard, Microsoft, Toshiba, and Research In Motion are among manufacturers mentioned as coming out with their tablets. They are hoping to give consumers other options and provide features not given from the iPad. Brustein has pointed out:

“The tablet market is shaping up to resemble the smartphone market, in which a few companies, like Apple, Research In Motion and Microsoft, design their own operating systems, [with others running] on Android”

The caveat of not competing in 2010: iPad has gained a large portion of the market, the iPad is considered the definition of a Tablet, Apple has a strong brand, and, as the article reported, there are 7.46 million iPad customers. Hopefully, consumers will appreciate competition and manufacturers would have used their time wisely to create tablets to effectively compete in the market.  

OWN: The Next Biggest Part of Oprah's Empire Starts Today

As most of you know, today is New Year's Day and the debut of OWN: the Oprah Winfrey Network. OWN has gotten much press. Not only is it anticipated because it belongs to Oprah, it is the first personalized cable channel. It also a big venture. It is to replace Discovery Health channel, it is a partnership between Oprah and Discovery, and Discovery has invested about $200 million (as reported by Brian Stelter of NY Times). I read two NY Times articles, “Oprah’s Network is Her Highest Hurdle” and “Shaping a Network With Oprah’s View” both by Brian Stelter. Instead of giving summaries, I’m going to give some important points about OWN.

Oprah Has Planned This For a Long Time

Often celebrities are approached to simply give their name to a product. Even if some of those celebrities may have always wanted to enter into such a venture, most have not prepared for it. Oprah is a different story. According to “Oprah’s Network is Her Highest Hurdle”, she thought up OWN in 1992. She previous attempted a move into cable as the co-founder of Oxygen network. That didn’t go well for her and it was sold to NBC Universal. According to Oprah, the experience taught her: “don’t partner when you’re not allowed to be in charge and make a decision”. And in 2007, she partnered with Discovery to mold OWN. This has been a well establish goal and she has made efforts to make it happen.