The Future Trends Online (Business & Economy)

November 2006/ ©2006 Brian Morgan Articles

Contents
Newspaper Sales Down
Video Game Sales Up
Green Cars – Delphi Scandal
Corporations Serve Themselves
Saving Chrysler

Newspaper Sales Down

Circulation at the nation’s largest newspapers plunged over the last six months,
according to figures released today. Overall, average daily circulation for 770
newspapers was 2.8 percent lower in the six-month period ending Sept. 30,
2006.

Newspaper circulation has been in a long, slow decline for decades. But the pace
of loss seems accelerated now, as the industry tries to adjust to the steady
migration of readers and advertisers to the Internet.

Newspaper executives attribute some of the latest losses to intentional cutbacks

in the number of copies that are paid for in bulk by third parties, for example to be
distributed to hotel guests. These count as paid circulation but are of less interest
to advertisers than copies paid for directly by readers.

Though the industry has felt consecutive declines over the last five years, the
Newspaper Association of America said that the figures for the latest period were
“the largest variance year over year” of which it was aware.

Still, the association said, when newspaper Web sites are taken into account, the
number of readers its members reach is up very sharply. Revenues from Web
sites are rising quickly as well, but they account for only a small portion of overall
revenues, and it could be decades before Internet revenues exceed those from
the printed editions of major newspapers. (Resource: The New York Times)

Video Game Sales

The annual sales for US video games for 2004 was about 9.9 billion dollars, in
2005 it was at 10 billion dollars, according to the NPD Group. For the first time
ever, sales of portable software titles broke the $1 billion mark. Total software
sales also continued to set new records, with sales exceeding $6.2 billion, an
increase of 8 percent in overall sales when compared to $5.8 billion in 2003.
According to recent research conducted by leading consumer and retail
information company The NPD Group, total U.S. consumer spending on PC
Games reached $1.4 billion in 2005. Of this total, online subscriptions to PC
games and gaming web sites were estimated to account for $344 million. The
research, which was designed to better capture sales of digital downloads and,
for the first time, online subscriptions, also addressed gamer demographics, such
as the ages of online and casual game subscribers.

“While The NPD Group’s retail tracking service shows what appears to be a
decline in PC game sales, critical developments in the PC games industry,
specifically the Internet, is fundamentally changing the PC software industry,”
said Anita Frazier, industry analyst, The NPD Group. “With the increase in high
speed Internet access, not only are users purchasing their games online,
they are also willingly paying additional recurring fees over and above the
price of the game to subscribe to services that let them play with others
online.”

“Any business that markets or sells products to kids needs to be aware of the
role of these (Consumer Electronic) CE devices in their lives,” said Anita Frazier,
industry analyst, The NPD Group. “Today’s kids are digital natives whose
activities are fundamentally different than previous generations, making the
information within this report critical for more effective product development and
marketing strategies.” (Resource: NPD)

Green Cars
Nov. 6, 2006 issue - If Joanne Aggens, a Wilmette, Ill., village-board member,
trades in her 200,000-mile Subaru for a hybrid, she'll save $50 off the $75 price
of her city vehicle sticker—a new clean-car perk she and her fellow board
members recently approved. Towns are also using free parking and HOV-lane
privileges to entice residents to drive green cars. "It's not going to send a mob
down to the local dealership," says Bradley Berman, editor of HybridCars.com,
"but it's one more way that a city can encourage civic responsibility."

L.A., Salt Lake City, Albuquerque and New Haven offer free parking for green
cars, trying to meet the clean-air goals in the U.S. Mayors Climate Protection
Agreement. Environmentalists like the city activism. "People are not willing to
wait for a change in Washington to take action on what they see to be a major
problem," says the Sierra Club's Jack Darin. Not everyone's a fan. "These are
incentives for the fairly well off," says Heritage Foundation energy analyst Ben
Lieberman. And Chris Canning, Wilmette's lone dissenting voter, says the benefit
discriminates against public-transit users and residents who can't afford a new,
cleaner car. (Resource: Newsweek Online)
More on Delphi
Nine former Delphi Corp. execs, including J.T. Battenberg III and Alan Dawes,
want the ailing supplier to pay their legal fees stemming from a federal
investigation into company accounting practices.

And news reports last week indicated those legal fees will rise.

The Wall Street Journal and The Detroit News said the Securities and Exchange
Commission will name Battenberg and Dawes in a civil complaint relating to
Delphi's accounting practices.

The nine Delphi execs piled up legal fees of nearly $150,000 from Delphi's
Chapter 11 filing in October 2005 through February 2006, they said in a U.S.
Bankruptcy Court petition this month.

Investigators have been trying to determine if Delphi execs improperly

manipulated inventories and paid service providers to inflate earnings and cash
flow after Delphi's spinoff from General Motors in 1999.

CEO Battenberg and CFO Dawes retired from Delphi last year, before the
company filed Chapter 11 and restated financials for 1999-2002.

A hearing on the issue of legal fees is scheduled for Nov. 30 in U.S. Bankruptcy
Court in New York. (Resource: www.autonews.com)

Corporations Serve Themselves

Corporations exist to control markets, and often to replace them. Business
leaders reduce uncertainty not through clairvoyance (or "perfect foresight," as
the economics textbooks call it), nor by confident exploitation of probability
("portfolio diversification"). They do it by forming organizations large enough to
forge the future for themselves. In politics these are countries and parties; in
economics, big corporations.

Technology dictates that markets must be controlled. The products that define
modern life—automobiles, jet aircraft, electric power, microchips, and cable
television—cannot be produced except over long lead times and by integrating
vast networks of engineering talent. This requires planning. Tasks must be
subdivided so that organized knowledge—chemistry, metallurgy, optics, physics,
genetics—can be brought to bear. The subdivided tasks must then be
assembled. Customers must be found, and if possible committed, well in
advance. These are the tasks of the Technostructure: the network of
professionals who actually run organizations. Sometimes the planning goes
wrong. But the uncertainties are mainly technical and organizational, rather than
caused by the market. In an interesting example, Airbus has firm customers for
its A380 at present; what it lacks are the actual planes.

Once control passes to the organization, Galbraith wrote, it passes completely;

the economics developed to describe the small firm and its owner-entrepreneur
becomes obsolete. Corporations work for themselves, not for their
shareholders. In particular, they do not maximize profits merely to pass them
along. To think otherwise, he wrote, "one must imagine that a man of vigorous,
lusty and reassuringly heterosexual inclination eschews the lovely and available
women by whom he is intimately surrounded in order to maximize the
opportunities of other men whose existence he knows of only by hearsay." Years
later, when a few mainstream economists began to study the extreme
detachment of shareholders from management, they called it the "principal-agent
problem." The language wasn't as colorful, and the insights weren't any deeper.
(Resource: www.MotherJones.com)

Saving Chrysler
The car business is one of the few industries in which companies can go from
being darlings to financial disasters in less than a year. This is especially true in
Detroit. Chrysler made almost $1.5 billion last year but said last week that it lost
that much in the third quarter.

It's gotten so bad that there are once again whisperings from Germany that
parent DaimlerChrysler (DCX) might even be thinking of spinning it off if they
can't fix it again. One source close to Daimler management says that top
executives are worried not only about Chrysler's heavy costs, but that its product
lineup is completely out of step with what consumers want. Its sales are 70%
trucks and minivans in a market where consumers remain gun-shy about buying
SUVs, even as gasoline prices have fallen from their $3 a gallon summer high
toward $2 a gallon.

So what's Daimler's German brain trust going to do? Right now the plan is to
fix Chrysler. Chairman Dieter Zetsche did that job himself a few years ago when
he ran the unit before taking over the top job on Jan. 1 and is confident he can do
it again.

But on the earnings call last week, Chief Financial Officer Bodo Uebber did not
rule out an eventual spin-off. German magazine Der Speigel reported that
Daimler's supervisory board is mulling several exit scenarios.

If Daimler gets to that point, the company may have an eager suitor. How about
Renault-Nissan (NSANY)? Its overachieving chief executive officer, Carlos
Ghosn, has been rebuffed by General Motors (GM) in his quest to add a North
American carmaker to his alliance. Ford Motor (F) says any alliance talks are on
hold until new CEO Alan Mulally gets a chance to root through the company's
problems. (Resource: www.Businessweek.com)

The Future Trends Online November 2006

©2006 Brian Morgan Articles

Contact Author: B-Morgan@earthlink.net

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