The struggling Palm Corporation is set to team up with Microsoft to launch a Windows-based version of the Treo smart phone, marking the first time the handheld computer pioneer will sell a device based on its former rival’s software.
David Richards
Harvey Norman + Dick Smith Online Back End Up For Sale
EBay is set to sell eBay Enterprise the owners of Magento the Company that powers some of Australia’s largest retail web sites including the backend of the Harvey Norman web site.
Among other users of the Magento retail software offering are Bing Lee, Dick Smith, Winnings Appliances and Big Brown Box as well as IKEA and several leading International brands who sell into Australia.
Private-equity firm Permira is tipped as the organisation that is interested in buying eBay Enterprises for a reported around $900 million, according to people familiar with the matter.
The deal, which was being finalized early today, could be announced as soon as Thursday US time (Friday Australian time) when eBay is scheduled to release second-quarter financial results.
EBay also plans to complete the spinoff of its PayPal payments unit on Friday.
EBay has been seeking a buyer for the Enterprise unit, which helps power online retail sites for companies such as Harvey Norman, IKEA , since at least January, when it said it also could also spin it off.
The unit suffered a blow last week when Toys “R” Us one of its larger customers, said it would take its U.S. business in-house by mid-2016.
An eBay spokesman declined to comment. New York-based Permira didn’t immediately respond to a request for comment.
According to the Wall Street Journal EBay also been in talks recently with private-equity firm Thomas H. Lee Partners LP to sell the unit for as much as $1 billion.
Resolving the fate of eBay Enterprise, formerly known as GSI Commerce, is among the final loose ends the company hoped to tie up before its new life as a stand-alone company.
The roughly $900 million price would be less than half the $2.4 billion that eBay paid in 2011 for the unit. In the hopes of securing a deal, eBay had extended the prior deadline of June 30 to Wednesday, one of the people said. The people said there was no guarantee a deal would be reached.
Iomega Moves Into Video
Storage company Iomega, has won a key contract to build its REV drive portable storage technology into a new generation of broadcast and professional video equipment.
Grass Valley, which competes with Sony and Panasonic in the broadcast video equipment market, said its new Infinity series of camcorders, recording, and storage products will use Iomega’s REV technology as the recording medium. The Grass Valley products are the first such products to use off-the-shelf Iomega REV removable disks as recording and playback media. REV Pro 35GB* disks will allow users to record more than two hours of SD (standard definition) or 45 minutes of HD (high definition) video with complete flexibility in the use of encoding and compression schemes.
The deal, announced at the International Broadcasting Convention (IBC) in Amsterdam on Monday marks a potential breakthrough for Iomega. The company which has been up for sale for the past 12 months and was nearly taken over last year by several former Maxtor executives is best known for its Zip drives and media, introduced its REV Pro technology, capable of storing up to 35Gb (Gigabytes) of data on a single disk smaller than a deck of playing cards, in April last year. A 35Gb disk can store more than two hours of standard or 45 minutes of high definition video.
Iomega developed the technology to replace traditional tape for data storage and recording. The company claims it combines portability and cost-effectiveness of tape-based technologies with the speed, flexibility and ease of use of non-linear hard drive technology. Werner Heid, Iomega’s chief executive, said the Grass valley contract could be worth between US$25m and $30m in annual revenues, and potentially much more if REV becomes established as an industry statndard. “Grass Valley’s new breakthrough products showcase the superior capabilities of REV technology for professional storage needs in this market,” he claimed.
Since the REV technology was launched, Iomega has sold over 125,000 REV drives and 600,000 REV disks.
 Click to enlarge |
WiMax To Replace 3G
The new cellular mobile networks, such as 3G, i-Mode and EVDO, “are just stepping stones to deployment of WiMax in late 2007”, analyst Paul Budde predicts in his latest report.
“These networks, built for voice services, have been fine-tuned over the years for efficient and effective voice transmission,” Budde comments. “While technologies such as GSM and CDMA allow, in principle, mobile data services, these networks can never be optimised for that. “Voice will remain the killer application for mobile, with some data services included as support services and niche market services.”
Budde says SMS remains a major growth area. However, revenue growth isn’t keeping pace with the growth in the number of messages. They will reach 4.5 billion this year – an average of 250 messages for each subscriber, Budde estimates. By the 2010 more than 10 billion messages will be sent each year. But SMS accounts for only 10-15 percent of revenues.
“MMS was aimed to provide longer text messages, in addition to music and pictures. Started in 2001, it has failed to take off,” Budde notes. Budde says his Mobile Data and Content Markets report is available from $795 (excl GST).
Pioneer Electronics Still Struggling CE Plunges 22%
Pioneer Electronics has reported a $194 Million dollar loss due to a 22% fall in sales of their consumer electronics products, sales of in-car gear rose 15.4%.
The Japanese company is now planning to spin off its home A/V business and integrate it into a home electronics sales subsidiary. It is not known how the move that is set to happen in July will affect the company’s Australian operation which also acts as a distributor for none Pioneer products.
In home electronics Pioneer hopes to leverage its DJ equipment business which is strong in Australia “to achieve steady growth”.
While sales overall were up 3.5% year on year, the company, which has struggled to make a profit since getting out of the plasma TV business, said that increased OEM sales of car navigation systems and consumer-market sales of car audio products had helped the company.
Home electronics sales declined 22 percent year on year, to 95,925 million yen. Although sales of DJ equipment rose, sales of optical-disc-drive-related products declined substantially, the company said.
Operating income declined 52.1 percent year on year, to 5,997 million yen, due to an increase in selling, general and administrative (SG&A) expenses and a lower gross profit margin, among other factors.
Pioneer recorded a net loss of 19,552 million yen compared with the previous fiscal year’s 3,670 million yen net income, reflecting the decline in operating income and combined with 6,242 million yen in restructuring costs and a 5,040 million loss on impairment of investment securities recorded as an extraordinary loss.
Pioneer executives announced a two-year plan for its business segments. In car electronics it will “work to create new value through transforming the business model.” Part of that will be technology that “transcends conventional car navigation systems,” in a partnership with Mitsubishi Electric to jointly develop a “multimedia platform” for vehicle-linked next-generation automotive equipment.
Smart Phones In, PDAs Out
A new report from ChangeWave Research found sales of e-mail-capable PDAs have “nearly ground to a halt” while smartphone sales are up.
ChangeWave regularly surveys a group of over 5,000 IT professionals responsible for corporate purchases. These individuals are also early-adopter consumers, and their buying habits are monitored as early trend predictors, said a ChangeWave spokesman. The study of 2,040 professionals found that “hybrid” PDAs that perform e-mail (but not telephony) have declined in proportion to the rise in smartphone sales. Companies like HP in Australia are struggling to off load PDA stock.
Since June, ownership of smartphones among respondents has increased by a third to 12 percent, while ownership of hybrid PDAs dropped by more than half to 3.3 percent.
In terms of brand share, Palm had a 28 percent share of smartphones owned by the IT professionals, down 2 percent.It held a slim 1 percentage point lead over Research in Motion (RIM) with a 27 percent share, up 3 percent.Motorola increased its share since June by 5 percent, to 11 percent. The study found that more respondents owned a Hewlett-Packard hybrid PDA than Palm PDAs, with HP’s share increasing by 8 percent since June, to 29 percent, and Palm’s share up 5 percent, to 25 percent.Dell’s share was up two percent to 18 percent, and RIM saw a dramatic loss in share of 50 percent, down to 15 percent.
For those who planned to purchase a product in the next 90 days, 7.3 percent said they would buy a smartphone, compared to 1.2 percent who said they would buy a hybrid PDA. Of those planning to buy smartphones, Palm is the top choice for 26 percent of the respondents, but its share dropped 5 percent since June. RIM, with 16 percent, is in second place and gained 2 percent.Motorola gained 5 percent to 13 percent in terms of planned purchases, said ChangeWave.
Amazon Is Coming & Retailers Had Better “Be Ready” Warns Officeworks Boss
Amazon is coming to OZ and retailers had better be ready.
At a Retail Leaders forum in Sydney yesterday, Wesfarmers group managing director Richard Goyder said that the US Amazon giant will “eat all our breakfasts, lunches and dinners”, unless Australian retailers become more innovative and barriers to competition are removed.
Wesfarmers owns both Coles, Officeworks, Target, Bunnings + K Mart.
At CES 2016 a Best Buy executive told ChannelNews that the Company had to “learn quickly” how to deal with Amazon when they started stripping market share away from the consumer electronics retailer.
Greg Revelle the chief marketing officer for Best Buy said that the retailer had to make sure that they delivered a better instore experience while competing head on online.
A former senior executive at Radio Shack said that it was the impact of Amazon that killed off Radio Shack.
Mr Goyder said that Amazon are currently are gearing up for a major push into Australia and that retailers had better be ready.
Goyder says his biggest fear was not the competitive threat from Australian retailers but overseas online retailers such as Amazon.
He said that online retailers such as Amazon, Google and asos.com could trade 24 hours a day, seven days a week and 365 days a year, while Australian bricks and mortar retailers, including Wesfarmers’ Bunnings, Kmart, Target, Coles and Officeworks chains, were restricted by archaic trading hours and excessive regulation.
When it was first founded in 1994, Amazon.com was operating out of founder Jeff Bezos’ garage and earning $20,000 per week in sales within two months. Twenty-three years later, Amazon has 175,100 full-time employees and earned nearly A$150 billion in revenue in 2015.
Known as ‘The Everything Store’, especially with Amazon Marketplace enabling sellers to offer new and used items alongside Amazon’s own products the launch of Amazon could have a major impact on Australian retailers who lack capability.
The US Company is already sourcing warehouses and several major Australian Companies are already using Amazon storage and cloud serices offerings.
Amazon began as an online book retailer, thanks to Bezos’ research that illustrated the worldwide demand for literature combined with the low price of books and the huge number of titles available in print. Gradually, Amazon expanded into selling CDs, DVDs, toys, electronics, and appliances.
After surviving the dot-com bubble bursting at the start of the 21st century, Amazon introduced Amazon Prime in 2005, a membership offering free two-day shipping on all eligible purchases for an annual flat-rate fee. Later Amazon Prime expanded to offering its members streaming media. In 2007, Amazon launched Amazon Kindle, an e-book reader, followed by a tablet computer called the Kindle Fire in 2011.
Amazon Prime, meanwhile, has also contributed dramatically to the company’s growth. In 2009, Amazon had 2 million Prime members, and in 2011, that grew to 5 million; in 2015, Prime membership is estimated to be around 40 million, and worldwide paid membership grew 53% last year. Even better for Amazon? Prime customers spend over double what non-Prime customers do- about $1,500 per year compared to about $625 per year.
One of Amazon’s most significant lasting impacts was their adoption of “free shipping” in the early 2000s, when they began their Super Saver Shipping program, offering free shipping for orders of over $25. During one promotion, Amazon began offering free shipping with the purchase of a second book, which lead to a huge jump in sales. Clearly, Amazon realized that consumer psychology favored labeling things as “free”; however, they might not have foreseen the effect free shipping would have on side industries such as shipping and logistics.
Some retailers doubt that Amazon will be able to offer free shipping in Australia due to the high cost of transport.
The Impact of Amazon.
A consumer realizes that he needs to replace his coffee maker.
He knows he has two choices: driving to a physical store and hoping that they have the model he wants, and loading it into his car and driving home, or searching online until he finds his preferred make and model at the lowest price available, and having it shipped directly to his home. Which one does he choose? These days, our hypothetical consumer is becoming much more likely to choose the latter option. Thanks to online shopping, foot traffic, retail space openings, and holiday sales in retail stores have all decreased significantly in the USA
When and if Amazon arrieves in Australia the impact on retailers could be “severe” especially with foot traffic through the door of retailers claims analysts.
For example, brick and mortar retail stores in the USA saw foot traffic cut by about 50% between 2010 and 2014, from more than 30 billion visitors during the holiday season to 17.6 billion visitors.
Similarly, new retail space openings have been extremely low compared to years past, down to 43.8 million square feet in 2013, compared to more than 300 million in 2000, 2005, 2006, and 2007.
Finally, online sales increased at more than double the rate of brick and mortar sales during the 2015 holidays; in fact, Shorr research saw a 35% increase in business with e-retailers during the 2014 peak holiday season.
These trends have led to significant drops in revenue for some companies, and in some cases, even bankruptcy, with large companies such as Radio Shack, Circuit City and K-B Toys experiencing total liquidation. And while the US economy has added around 2.4 million jobs since the Great Recession, the retail industry has experienced a net loss of 60,000 jobs since the recession.
Is Dick Smith Set To Become Super Cheap Tech?
Is Dick Smith set to become Super Cheap Tech?
Sources within Dick Smith claims that the Super Retail Group that own Super Cheap Auto group are currently running a ruler over the remnants of the Dick Smith retail chain that was placed into administration earlier this week.
ChannelNews has been told that the group is only interested in selected stores and that over 50% of the current Dick Smith stores could be closed down.
Under Super Cheap Tech, the stores could take on Jayco as well as range auto tech and consumer electronics excluding the likes of TV’s and PC’s.
Dick Smith’s bankers – NAB and HSBC – called in receivers Ferrier Hodgson who is set to formally launch a for sale process in an effort to shift the Dick Smith group as one entity.
ChannelNews has also been told that both a South African and New Zealand retail group have contacted the receivers regarding selected assets.
The company’s New Zealand operations, which remain profitable, are expected to be the most attractive of the assets along with the Move stores and the Dick Smith online operation.
The collapse came just days before another company, home furnishings chain Laura Ashley, called in FTI Consulting as ?administrators.
FTI Consulting said it intended for the business to trade as usual while “an urgent assessment of the company’s financial position is conducted”. Laura Ashley’s New Zealand operations will not be affected, nor will the brand’s British stores, which operate as a separate company.
Despite the failure of the two retailers, analysts anticipate strong results from the December trading period. Analysts at Citi said it appeared discretionary spending growth over Christmas would hit 6 per cent, with feedback and store visits showing strong results for Dick Smith competitor JB Hi-Fi and Super Retail Group’s Rebel business.
Ferrier Hodgson’s James Stewart on Tuesday said the New Zealand business was profitable and “expected it would be ?attractive to potential buyers”. The company operates 62 stores in New Zealand.
Another retailer that could be interested is Briscoe Group, which operates a number of brands including Briscoes Homeware, Living & Giving and Rebel Sport in New Zealand.
It has about 80 stores across the country and annual revenues of more than $450 million.
The company unsuccessfully tried to acquire another Australian chain, Kathmandu, last year, lobbing a $312m bid in July.
Harvey Norman Ask And Get 45 Days Credit
Harvey Norman is pressuring vendors to change their trading terms to 45 days. In the past they have operated on 30 or under terms depending on their relationship, discounts and rebate volumes insiders have told SmartHouse.
This week the Company combined the buying offices of Harvey Norman, Domayne and Joyce Mayne with several buying staff being retrenched.
Under pressure from the new 45 terms is Australia’s largest distributor Ingram Micro who has recently announced that they have cut 16 back of house credit management staff.
Ingram Micro Australia who operates on wafer thin margins some as low as 2% are now being forced say management to accept 45 days instead of 30 in a move that one insider told ChannelNews was having a big impact on cashflow.
A major vendor who has a multimillion dollar exposure to Harvey Norman said ” the bottom line is that when a partner like Harvey Norman want extended terms we have to borrow more money if we decide to extend their credit terms. Several retailers are under pressure and one way that they are preserving cashflow is by negotiating new credit terms. Others are cutting back on stock levels however this has hurt some retailers. For example in December and January we saw demand for flat panel TV’s rise however some retailers suffered because they did not have stock or extended credit terms”.
One retailer who has admitted that a lack of stock hurt their operations was Clive Peeters they have also said that in recent months that they have cut back on stock levels in an effort to preserve cash flow.
One major consumer electronics retailer said the issue for Harvey Norman is not consumer electronics but everything else. “They have a lot of stock in their warehouses from furniture and bedding to soft furnishing and because this merchandise is not selling they have a potential cash flow issue.”.
“In reality they will be pushing their terms out to 60 days. With many retailers who are not publically listed the insurance Companies who are providing credit cover for vendors are going to be reluctant in this environment to support extended credit terms” they said.
A look at JB Hi Fi credit terms shows that currently they are trading on a 56 day cycle from the placing of an order to the payment for the product.
David Ackery General Manager of Electrical at harvey Norman said that he was unable to comment on the issue of credit terms.
Toshiba Shares Smashed After $1.2 Billion Dodgy Profits Scandal
Struggling PC, copier and medical equipment Company Toshiba who last year slashed 19 PC operations around the world has admitted they have been fudging their profits for several years.
Now the Japanese Company is set mark down past profits by a massive $1.2 billion due to what Toshiba management are describing as “accounting irregularities”.
The latest markdowns is almost double its earlier estimation with a large percentage of profits or lack of them attributed to the poor performance of the Companies PC Division.
In a case shaping up to be one of corporate Japan’s biggest debacles since a scandal at Olympus in 2011, a Toshiba-appointed independent panel has been investigating the infrastructure giant’s finances after Japan’s financial watchdog warned of possible accounting irregularities back in February.
The company said in May it would need to reduce its profit for the 2009 through 2013 fiscal years because of improper accounting.
Since the problem was discovered and following investigations by independent investigators, massive irregularities were discovered in Toshiba’s personal computer and semiconductor businesses
Initially Toshiba management tried to hide the scale of scandal.
The independent panel is expected to report its findings by mid-July. Chief executive Hisao Tanaka has hinted there will be a major management reshuffle at that time with the real possibility emerging that more Countries selling PC’s could be slashed or the PC Division dumped all together.
The Wall Street Journal said that as a result of the accounting problems, Toshiba hasn’t been able to report its earnings for the 12-month period ending March 31-an announcement originally scheduled for June. The company hopes to file the earnings by the end of August.
Worries over the earnings restatement and the company’s corporate governance culture have weighed on Toshiba’s shares which have plunged on the Tokyo stock market.
Analysts say, however, they are not worried about the possibility of a cash shortage.
“This is one of the largest crises in our company’s history,” said Mr. Tanaka, at an annual meeting of shareholders last month. Some shareholders demanded the resignation of all executives when their terms expire in September.