For years, Apple Computer (AAPL) Chief Executive Steve Jobs endured endless complaints about Apple's fast-falling market share in the PC business. But now that he's king of the hill in the digital-music market, Jobs seems intent on grabbing share with a vengeance.
With Apple's iPod family already in control of 55% of this fast-growing market, Jobs on Feb. 23 unveiled new lower-priced models. The company reduced the price of its existing 4-gigabyte iPod mini by $50, to $200, to make room for a new 6-GB model costing $250. And to goose sales of the poorly selling iPod photo, it dropped the price of that model to as little as $350, from $600.
"They're basically competing at every price point now. We think they've locked out the competition for at least the next six months," says Piper Jaffray (PJC) analyst Gene Munster. Jobs couldn't be reached for comment but in the past has said, "It's nice to see what we can do without that 5% market share ceiling." But not so nice for Apple's e-music rivals.
Home improvement took a bit of a hammering. On Feb. 22, Home Depot (HD) posted a heady 9.5% rise in fourth-quarter profits, to $1.04 billion. But its stock fell 4.1%, to $40.28, amid concerns that the nation's largest do-it-yourself chain failed to deliver another forecast-topping quarter. Analysts' fears about store saturation also grew as Home Depot reported lower traffic in its more than 1,800 outlets. To boost growth, it plans to push deeper into international markets and installation services. Fast-growing rival Lowe's (LOW), meanwhile, showed a 27% jump in quarterly profits, to $508 million, buoyed by better-than-expected sales growth and a bevy of new outlets in big markets. But Lowe's stock was flat on Feb. 23 after execs issued more cautious growth projections for 2005. The home improvement sector, it seems, still has work to do.
In a rare bit of good news for airlines, Continental (CAL) and American (AMR) won tentative approval from the U.S. Transportation Dept. to begin service to China. With passenger traffic and fares growing briskly in the Pacific, the routes should be lucrative, says Calyon Securities analyst Ray Neidl. Continental will begin flying daily from its Newark hub to Beijing later this year, while American will offer flights to Shanghai from Chicago's O'Hare International Airport beginning in 2006. It beat out rival Delta Airlines (DAL), which wanted to serve China from its hub in Atlanta.
If you can't beat 'em... cut your price. Pressured by stiff competition in the sport-utility market, especially from the Japanese, General Motors (GM) has quietly sliced sticker prices on its midsize SUVs by as much as $2,000. And those vehicles still carry $2,000 rebates. It's unusual for an auto maker to drop prices significantly in the middle of a model year. Why is GM worried? U.S. sales of midsize SUVs fell 21% in January, while sales of GM's Chevy TrailBlazer and GMC Envoy plunged 42% and 48%, respectively. The prolonged price war is forcing rival carmakers to offer more creative come-ons. Ford Motor (F) is currently offering a free Dell (DELL) desktop PC to buyers of a 2005 Focus compact -- and that's on top of 0% financing or $2,000 in cash.
Are more shoes about to drop at Fannie Mae (FNM)? The mortgage-housing giant said on Feb. 23 that its regulator had identified new problems with its accounting practices in five areas, including deficiencies in loan and securities transactions, and in consolidations. Fannie also said that the Office of Federal Housing Enterprise Oversight had approved and extended the deadline for its plan to boost capital reserves by 30% above the minimum required. Fannie now has until Sept. 30 to increase its capital levels; previously, it only had until June.
-- Chiquita Brands (CQB) will pay $855 million for Performance Food Group's Fresh Express salad business.
-- Boeing (BA) should reap about $1.6 billion from two long-awaited asset sales.
-- Winn-Dixie Stores filed for Chapter 11 bankruptcy court protection.
Cablevision Systems (CVC) shares rose 8%, to $30.30, on Feb. 23 amid expectations the father-son team of Charles and James Dolan may sell the nation's fifth-largest cable operator; the Dolans won't comment. The company also is bullish about 2005 cable revenues.