Monster: Threats from Economic Uncertainty and Social Media Rivals

A San Francisco portfolio manager recommended a short on Monster Worldwide (NYSE: MWW, $13.50). The company's business is of highly cyclical nature and the recent deterioration in economic indicators doesn't bode well for MWW's prospects. Monster has been losing share consistently in the online employment solutions space to CareerBuilder and has also seen its position challenged by a number of social media competitors, with LinkedIn presenting the biggest threat. Niche sites with better focus on specific industries like DICE are preferred by recruiters looking for better qualified candidates. Based on projected earnings and multiples for companies in related industries and with similar financial performance, the upside for the short is 40%+.

Roulston Energy Partner Steve Maloney on IEA's Decision to Release 60 Million Barrels of Oil

IEA's decision to release 60 million barrels of oil, ostensibly to offset "Libyan supply disruptions", is a commodity-denominated analgesic to take the sting out of the end of Fed QE2 debt monetization. The US tranche is less than 5% of the Strategic Petroleum Reserve. All in, the supply add is about a day of demand, eadily sopped up by Chinese and Japanese shortages.

Much has been made of the fact the US tapped the SPR under catastrophic conditions: war (the Gulf War) and Katrina. For many investors, the end of QE2 and the market's retreat is just such a catastrophe. So are fallong poll numbers.

But QE2 has been a false friend. We have a weakened dollar, propped up by a weaker euro, and put commodities on the offensive. Political draws of this kind are merely a rear guard action.

The question going forward is to what extent IEA/SPR becomes a second front for QE advocates as the Fed retreats. This equities sugar high can become an addiction if grown-ups fail to step in.




Stephen Maloney is a partner at Azuolas Risk Advisors with over 30 years experience in the US and EU modeling risk and valuation in energy, FX, and other commoditites. His clients include companies, hedge funds, and financial institutions actively marketing or trading physical and financial commodities and derivatives.

Roulston Media Partner Mark Ramsey on the Problems with Traditional Radio's Business Model

Roulston Research’s Media Partner Mark Ramsey recently created a blog posting discussing how the challenges traditional radio faces today are a result of it's business model. Traditional broadcast radio has always been focused on ratings being the key measure of success in the industry but an increasing amount of its competitors don’t focus on ratings at all. Mark states, “Radio is constrained by a model that rewards broadcast licenses with agency dollars but invites radio’s competitors to compete for everything else and even for the growing fraction of agency dollars transferred out of advertising and into marketing.”

Mark believes that control is moving more and more toward the consumer and broadcasters need to focus on providing content where consumers want it and monetize on that relationship. Fans will find content that they are interested in wherever it is located even if it is not local. Therefore, broadcasters should not delay or get rid of podcasts and provide more streaming content on their website to better meet the needs of consumers otherwise other competitors will take advantage of their lack of exposure in this space. He cites Apple as a perfect example when they introduced the iPhone even though they knew it would cannibalize some of the iPod’s market because if they didn’t someone else would have. You can read Mark’s full article on how he thinks traditional broadcast radio needs to adapt their business model at http://www.markramseymedia.com/2011/06/the-problem-is-radios-business-model/



Mark Ramsey Media is one of the best-known research and strategy providers to media companies in America. He has worked with several television and innumerable radio broadcasters over his career, including all the biggest names, from Clear Channel, CBS, Bonneville, Sirius XM, and Greater Media in the US to Corus and Astral Media in Canada. Clients from outside broadcasting have included EA Sports and Apple.

National Cinemedia: Network Effect and Rising CPM's Point to Upside

A San Francisco presenter recommended National Cinemedia (NASDAQ: NCMI, $16.36) as a Buy. The company runs a nationwide cinema advertising network and has the leading market share in a rational duopoly with privately-held Screenvision. NCMI has 27-year exclusive contracts with the three largest movie chains in North America, which have founded the company and retain a combined 52% share in it, and the dominant presence in the metropolitan areas with the best demographics. CPM's in movie advertising are currently double the prime time TV rates due to much higher recall rates for movie ads and better targeting capabilities, but will move higher as the domestic industry matures. As National Cinemedia adds more independent operators coupled with consolidation by the three chains, the network effect will continue to strengthen, bringing in more and more advertisers. The company is sacrificing short-term growth in CPM's by going after large CPG accounts, but in the long-term higher utilization will more than make up for it. The presenter's target is $30 by 2014, or almost a double from where the stock is trading now.

Highlights from Legacy Vs. Social Media Roundtable

At our Legacy Vs. Social Media Roundtable last week former Clear Channel exec Jim Meltzer focused on the future of radio content. While Pandora and satellite radio have taken market share and offered new options the increased needs for advertising revenue on satellite is more challenged by Pandora’s model and there seems to be a limited shelf life for the sustainability of the model. Radio still controls certain channels in advertising as well as local market content distribution. The more radio leverages their local market advertising advantage and the ongoing need of local weather, news, entertainment and other content they have a foothold that can be expanded. The problem is that industry financial and corporate driven non local content (franchising programming in particular) has limited further growth. Could they team sales with national partners in search and couponing? There are creative new paradigms that CBS and some larger players somewhat seem to understand but new paradigms could be very opportunistic.

Larry Cornett formerly of Yahoo talked on search and Google’s opportunity for growth. From couponing to advertising the discussion highlighted the many alternatives that Google has positioned and can leverage versus the models from Facebook to Groupon. As the revenue and content mix moves more to advertising the challenge of balance is a potential threat. At the same time Larry discussed the switch of advertisers to online resources and the substantial future opportunities still ahead. Measurement capability, behavior and location tools are some of the overwhelming advantages. As mobile grows the top and bottom line expansion in the space is still a market size unknown and search internationally is still worthy of premium growth expectations.


Jim Meltzer is the principal of Meltzer Media Management, a broadcast management, sales, internet and organizational firm founded in August 2008. Mr. Meltzer was previously a Vice President and General Manager at CBS Radio. Prior to that, he was a Regional Vice President at Clear Channel Communications.

Larry Cornett is the founder and principal of Brillant FORGE which provides Product and Design Strategy and Management Consulting services to Fortune 500 companies and startups. Prior to founding Brilliant FORGE, Larry was the Vice President of Consumer Products for Yahoo! Search, leading a multinational team of product managers, designers and developers who were focused on creating world-class Search experiences to compete with Google and Bing.

Highlights from the Wireless and Mobile Device Roundtable

At our Wireless and Mobile Device Roundtable Ross Rubin and Craig Mathias discussed the capacity issue of 3G for the next few years. Continued technology improvements will allow some capacity growth but tiered and priority pricing seem inevitable. Over the next 3-5 years unlimited data plans will be replaced with offloading and other incentive pricing tools by all the players. Microsoft's recent decisions with Nokia and Skype were questioned in detail and when pushed Ross Rubin of NPD gave Microsoft technology a three year window to work with Nokia before significant risk to both companies. It was felt Nokia took a bigger risk not looking at Android as an option and that may come back to haunt them while for Microsoft the partnership seems to have less risk.

Ross Rubin is Director of Industry Analysis for The NPD Group while Craig Mathias is Principal at the Farpoint Group.

Roulston Healthcare Partner Randy Vogenberg on whether Employers will Abandon Health Care Plan Coverage Under Obamacare

The consulting firm McKinsey & Company was thrust into the political spotlight Tuesday after it published a study finding that, once fully implemented, the health care reform law will drive huge numbers of employers to drop or dramatically restructure their companies' health care benefits.

According to McKinsey this survey was not done by their healthcare group or senior consultants and is at odds with prior surveys, expert consensus, and experience from the only state - MA - where ~5 years after universal care has been in-place, 78% of employers provide healthcare vs. 70% before, highest in the nation. This link shows how embarrassed McKinsey is about this: http://tpmdc.talkingpointsmemo.com/2011/06/multiple-sources-throw-controversial-mckinsey-health-care-study-under-the-bus.php#more.

Unlike most surveys McKinsey refuses to release the details of the survey participants and the survey methodology which makes it even more suspect: http://www.plansponsor.com/Despite_Anticipated_Costs_Most_Employers_to_Keep_Health_Care_Benefits.aspx

The recently released IFEBP (International Foundation of Employee Benefit Plans, WI) survey on the same topic, if employers will drop out of coverage, is here: The message is that many unknowns remain in health care owing from the stalled implementation of health reform, and each stakeholder or influencer continues to be engaged in posturing whilst incremental decisions are being made. It also shows that published surveys from any source can not only be flawed or not but create an immediate firestorm causing a retreat to safe ground once again.


Randy Vogenberg is principal at the Institute for Integrated Healthcare which offers health care and employer based benefits strategic consulting, value based benefit plans and design, pharmaceutical, diagnostic & device industry training, advising on managed customer linkages, and health policy and applied economic issues analyses for benefit design solution opportunities in the health care marketplace. He also principal of Bentelligence which provides a 360 degree view of benefits advisors, health plans and employer plan sponsors. It is a web based market intelligence tool and expert support for all stakeholders in health care. In addition, Randy recently wrote a book called Pharmacy Benefits that addresses benefit plan design, the selection of a pharmacy benefits manager and pharmacy network, compliance, specialty pharmacy, and cost-saving strategies which you can purchase at www.ifebp.org/pharmacy.

Roulston Transportation Partner on How Higher Oil Prices Have Affected the Rail and Trucking Industries

Roulston Research Transportation Partner McKee Stewart Jr. gave his take on how higher fuel prices have affected the railroad and trucking industries. He expalined, "With the recent run up in fuel prices the great “Road vs. Rail” debate is being rekindled. Over the course of the last year, national average highway diesel fuel prices have increased by roughly 35%. For a truckload or full container shipment, add on fuel surcharges can increase the costs of transportation by 40 – 50%, depending on the carrier, the mode, and the economic clout of the shipper to negotiate rates. Combined with the recession, shippers are looking to cut transportation costs wherever practicable.

From a shipper’s perspective, there are obvious issues that drive the choice of transportation mode, including service / transit time requirements, the quantity and nature of the goods to be shipped, cost drivers such as distance to and from the railhead, the overall distance that the shipment needs to move. As overall distance increases, rail becomes much more competitive against trucking based on the inherent efficiency associated with its advantage of low fuel consumption per ton mile.

The real question isn’t train vs. truck, it’s about how and when intermodal moves make sense. Rail carriers have been improving service, and have cost advantages over trucks. Combined with the trucking industry capacity issues revolving around driver retention and hours of service, intermodal will continue to gain share, especially in the 1,500 mile length of haul category.

These trends clearly benefit the railroads, particularly the Class I group of carriers like Burlington Northern Santa Fe (a Berkshire Hathaway company), Union Pacific, CSX, and Norfolk Southern. However, on the trucker’s side, rail can be a very helpful partner. Long haul carriers like JB Hunt, Schneider, Werner, ABF, Con-Way, FedEx and UPS generate enough loads to get favorable rates, have over the road options to hold their rail vendor costs down, and have extensive relationships with small and medium shippers that historically haven’t had much negotiating clout with the railroads.

Over the long term, as intermodal transport continues to gain share, the ‘hidden’ beneficiaries may well turn out to be regional carriers such as Con-Way. The more obvious beneficiary to the increasingly complicated supply chain may well turn out to be third party logistics companies like CH Robinson."



McKee Stewart is founder and Principal of Stewart Management Systems LLC which is a consulting practice focused on Financial Planning and Analysis, Yield Management, and Business Intelligence. He previously worked for over 20 years with Roadway Express in a variety of Senior Level Positions.

Roulston Healthcare Partner Ed Berger on How Healthcare Reform Politics Shouldn’t Affect Investment Opportunities or Strategy

The long debate over, and eventual passage of, healthcare reform fostered a vibrant cottage industry devoted to identifying the potential winners and losers that would result from the legislation. It seemed a foregone conclusion that a policy initiative of such ambition and scope would create new business and investment opportunities while simultaneously deflating the prospects of some established enterprises. The fact that no such dramatic affects have yet been observed might of course be attributed to the legislation’s long implementation timeline – we are still, for example, a long way from the state health exchanges and broad coverage mandate that were and remain the focal point for the reform debate. And the prospects for implementation of those and other elements of the reform bill have been thrown into question by the apparent commitment of the House Republican majority to either repeal major elements of the initiative or deny the funding they require. Two questions remain for investors: “Does the reform legislation as it stands really create new winners and losers?” and “Should investment strategy be predicated upon expectations concerning the success of efforts to repeal or frustrate implementation of reform?”

I’d answer “No”, fairly resoundingly, to both questions. Worry about the investment strategy impact of the politics of healthcare reform is as overheated and futile as the political debate itself. Step back from the political rhetoric for a moment and consider what the healthcare reform bill really entails:

1. At full implementation, it mandates that (almost) everyone buy health insurance, or pay a penalty for failing to buy insurance;

2. It regulates insurance company business practices;

3. It creates mechanisms, through expansion of Medicaid and creation of state insurance exchanges, to provide insurance to individuals and families that can’t afford it in the current market;

4. It (partially) pays for increased public subsidies through a variety of Medicare cost control measures;

5. It mandates broader implementation of electronic medical records and related health information technology ((HIT) tools;

6. It funds an ambitious comparative effectiveness research (CER) initiative;

7. It enables a broader program of Medicare alternative payment demonstration projects, most specifically and notably trials of accountable care organizations (ACOs) as a model for implementing incentives to control costs while improving quality.

Healthcare reform “works” – i.e. achieves the cost control and quality improvement goals its advocates seek – if and only if near-universal insurance coverage is accompanied by altered provider incentives (such as those posited for ACOs) and the more efficient use of resources enabled by CER and HIT. But the important thing for investors to understand is that the movement toward CER, HIT and ACOs predates the passage of reform, and that repeal of reform might slow, but would certainly not stop, that movement.

The insurance companies that adapt most effectively to their regulatory environment, and to the pressures to control costs, will flourish at the expense of those that do not. Companies that improve healthcare data access and management are advantaged in the evolving marketplace. Medical technologies and/or therapeutics to improve clinical outcomes will be good investments, and those that do so while reducing costs will be the best of those investments. Provider organizations that effectively address the structural, managerial and care delivery issues that will allow ACOs to succeed will flourish at the expense of those that do not. And it is a good bet that all of these things would have been true absent healthcare reform, and will remain true regardless of the near term political debate.


Dr. Edward Berger, has more than 25 years of experience working in senior management or as a consultant with medical device, biotechnology and health services companies, dealing with problems at the intersection of U.S. and international health care policy, corporate strategy development, and strategically sensitive corporate communications with government, investors and the media. He is the founder and principal of Larchmont Strategic Advisors which helps life sciences companies create and implement integrated strategies to address the many policy and regulatory obstacles and opportunities they face in their efforts to secure public and private insurer coverage and optimal reimbursement for new or evolving technologies.

Details from June 8th Retail Roundtable Event with Roulston Retail Partner Arnie Cohen

In our Consumer Roundtable Arnie Cohen discussed cotton prices reaching their peak two months ago. Companies seem to have a better handle on this and labor prices since the holiday season while freight costs continue to be a burden. Look for possible new cotton sourcing out of Africa. The differentiating stickiness in retail continues to drive Arnie’s views on those who are growing. Pricing isssues are impacting primarily lower end markets in a trifurcated market. Higher end retailers are able to maintain much of their margin as price elasticity is tied to stickiness of customer and more unique product mix where customer is more accepting of price change with style change. Trends and traffic are consistent at that end of the market.

The lower end is struggling with both pricing and traffic and changed consumer behavior. Unemployment, big box challenges and dollar store models are all impacted by both demographic changes and margin pressures. Arnie sees JCrew men’s trends stronger and he feels the company seems to have regained in women’s from a dismal holiday. Urban, maybe after to many risks at Holiday seems to have regained some touch. Some companies continue to be out of touch with who is their core customer while others are still challenged. Abercrombie seems to be having traffic and product challenges. PVH was cited as improving recent trends from management decisions and consistent execution. The group discussed Macy’s where Arnie continues to have concerns with Vendor issues and treatment of the 60% of branded product where the best innovators increasingly are treated roughly and Macy’s leverage in this space and leverage pushed on suppliers may have longer term repercussions. Target has missed on the fashion trends but Arnie still has a positive impression if they can get their handle on pricing.



Mr. Cohen has spent the 27 years immersed in the retail and consumer direct industry. He has held a variety of senior executive positions with Gucci, J. Crew, Macy’s, American Eagle and others, incubating, leading and fixing brands and distribution platforms both domestically and abroad. Arnold is well known as one of the top merchandisers in the industry, both in the US and overseas

Roulston Technology Partner Keith Mallinson on the Proposed Acquisition of T-Mobile USA by ATT

Much of the debate on the proposed acquisition of T-Mobile USA by AT&T is about what antitrust lawyers and economists call horizontal competition issues among wireless carriers. What choice do consumers have: how many wireless carriers are competing locally, nationwide and how will this affect prices for basic services in voice minutes, texts and megabytes of data? Until quite recently in the last couple of years, vertical issues—in supply chain competition between carriers and their handset vendors, operating system suppliers and applications providers—have never figured much in discussions on telecom carrier mergers, despite the fact that major US wireless carriers wielded significant control over their supply ecosystems.

It is a very different competitive landscape today with the balance of power flipping over. Apple has an increasingly strong competitive position versus carriers on the one side, and with mobile applications developers and content providers on the other. The iPhone company is extracting a lion’s share of total ecosystem profits. Similarly, Google with its increasingly popular Android operating system and ecosystem, is also a powerful competitive counterbalance to the aspirations of wireless carriers in value-added offerings above and beyond connectivity services.

Such is the increasing vertical competition from Apple, Google and over-the-top providers such as Skype, with wireless carriers increasingly dependent on efficiency-based competition in commoditized connectivity services, there is increasing justification to allow smaller and insufficiently profitable players, such as T-Mobile USA, to be acquired. The increased heft of combined carriers, such as an even larger AT&T, would be a more effective foil to the rising might of these others. The Wall St Journal has recently reported that the Justice Department has concerns about Apple as a prospective purchaser of patents, including those for wireless technologies, from bankrupt Nortel. Google is under antitrust investigations in Europe. Forcing continued uneconomic fragmentation upon wireless carriers will imbalance competition across the broader ecosystem.


Keith Mallinson is founder of WiseHarbor, providing expert commercial advisory to technology and services businesses in wired and wireless telecommunications, media and entertainment serving consumer and professional markets. He is also regular columnist with Wireless Week, FierceWireless Europe, and IP Finance. Prior to forming Wise Harbor Mallinson led Yankee Group's global Wireless/Mobile research and consulting team as Executive Vice President. He currently forecasts the long-term outlook in mobile operator services, network equipment and devices to 2025 which is available to purchase on his website at http://wiseharbor.com/forecast.htmlhttp://wiseharbor.com/forecast.html

Roulston Technology Partner on Fallout from Recent Data Breaches

Roulston Technology Partner Bart Perkins recently wrote a blog posting about the recent high-profile data breaches to consumers personal data. Cybercrime has been in the headlines recently with the Sony PlayStation Network compromising 77 million user’s personal data, email marketer Epsilon exposing consumer data from fortune five-hundred companies such as Citibank and Disney, and Vodafone Australia making millions of customers names, addresses, and credit card information freely available. Bart explains how most people consider data security to be an IT problem but a breach comes with tremendous direct costs which averaged 7.2 million dollars in 2010, or $214 per compromised consumer record. Direct costs include hiring extra staff to help control the breach, external legal counsel, and credit monitoring services for victims whose personal data was compromised.

Bart states, “Although frequently overlooked, indirect costs of breaches are often higher than direct costs.” He mentions that the primary indirect costs are:

1. Staff
2. Public Relations
3. Finger-pointing
4. Government Inquiries
5. Political Attacks
6. Customer Inconvenience

To read Bart’s full article and see how these six issues affect companies that have data breaches follow the link to Computerworld’s website at http://www.computerworld.com/s/article/356892/Data_Breaches_Costly_Fallout


Bart Perkins has over 25 years experience leading IT efforts for major corporations and consulting firms. Former CIO of YUM! Brands and Dole Food Company, Bart developed technology supplier management systems to reduce risk, improve service levels and lower costs. Bart has been a Partner at KPMG Peat Marwick (Nolan, Norton & Co.), a Vice President at Technology Solutions Company, and co-founder of The Value Sourcing Group, an IT vendor management consulting firm. His consulting engagements span a wide range of industries. Bart's clients include Marriott, Blockbuster, Thermo-Fisher Scientific, Diageo, General Foods, Kraft, Nabisco, IBM, Kaiser Permanente, PepsiCo, NCR, Thomson Reuters, Barilla, Boeing, Aetna, Georgia Pacific, and Heineken. Bart writes a monthly column on IT Management for Computerworld and is a judge for CIO Magazine's CIO 100.

Roulston Technology Partner on Future of Mobile Broadband

Roulston Research’s Technology Partner Keith Mallinson recently was interviewed at the Mobile World Congress 2011 hosted by GSMA Mobile Broadband in Barcelona, Spain. He spoke about the rapid rise in mobile in general since the 1990’s especially after the introduction of GSM to now having over 5 billion connections with mobile voice and text worldwide. The rise in mobility came about through vision, reduction of costs, and the introduction of prepaid phones. He believes mobile broadband is at the tipping point of having most of the world access the internet through mobile devices. The industry will have to introduce new technologies like HSPA and Evolved to drive down costs. They will also have to increase backlog with fiber technologies to increase capacity and performance. These changes will bring about large changes in the service and delivery side along with innovation on pricing from the traditional flat rate to pricing options that offer the consumer more flexibility. He believes these changes will allow the industry to have mobile broadband accessible to the masses over the next 10-15 years. You can hear his full interview at http://www.gsmamobilebroadband.com/mwc/summary.asp



Keith Mallinson is founder of WiseHarbor, providing expert commercial advisory to technology and services businesses in wired and wireless telecommunications, media and entertainment serving consumer and professional markets. He is also regular columnist with Wireless Week, FierceWireless Europe, and IP Finance. Prior to forming Wise Harbor Mallinson led Yankee Group's global Wireless/Mobile research and consulting team as Executive Vice President. He currently forecasts the long-term outlook in mobile operator services, network equipment and devices to 2025 which is available to purchase on his website at http://wiseharbor.com/forecast.htmlhttp://wiseharbor.com/forecast.html

Roulston Media Partner on How Traditional Radio Can Battle Pandora

Roulston Media Partner Mark Ramsey wrote a blog posting several weeks ago on how Pandora radio is real radio and that traditional broadcast radio should pay attention to the medium. This past week he wrote a new posting about how traditional radio can battle Pandora radio. Most of the traditional broadcast companies dismiss Pandora and feel they have the strengths of being local, big, and useful in an emergency. Mark dismisses these so-called advantages because Pandora offers personalization, which makes it better than being local in many ways, and offers value every time the listener turns on the radio.

Mark believes that the biggest advantage Pandora has over traditional radio is through advertising and not customization, which is why terrestrial broadcasters should consider it a rival entertainment medium. Pandora’s ads can be delivered to people with similar characteristics so there is very little waste in the advertiser's budget. Some traditional broadcasters are trying to create personal versions of their radio brands. Mark dismisses this idea and thinks the main advantage traditional radio has over Pandora is content. He states, “Pandora has personalization. Radio has personalities.” Radio’s advantage is that it is live and in the moment so offering a selection of non-music content that appeals to a broad audience is the key to their success. He suggests that traditional radio shouldn’t compete against Pandora directly with a knockoff weaker version. Instead it should focus on its strengths of creating and monetizing first class on-air shows with talent that will attract advertisers. You can read part 1 of his article at http://www.markramseymedia.com/2011/05/how-radio-can-battle-pandora-part-1-wake-up-radio/ and part 2 at http://www.markramseymedia.com/2011/06/how-radio-can-battle-pandora-part-2-beyond-music/


Mark Ramsey Media is one of the best-known research and strategy providers to media companies in America. He has worked with several television and innumerable radio broadcasters over his career, including all the biggest names, from Clear Channel, CBS, Bonneville, Sirius XM, and Greater Media in the US to Corus and Astral Media in Canada. Clients from outside broadcasting have included EA Sports and Apple.

Roulston's Technology Consultant on Microsoft's New Mobile Phone Operating System Codenamed "Mango"

Roulston Research’s Technology Consultant Ross Rubin spoke about Microsoft’s next version of its mobile phone operating system codenamed “Mango” that will be introduced this fall in his blog posting this week. Mango offers improved Web browsing and email capabilities including the ability to run multiple applications at once. It is the first major update to the Windows Phone 7 that was introduced last fall and Microsoft hopes it will help them increase their market share aginst rivals in the smartphone business Apple and Google. Microsoft stated that all previous Windows phones that have been released will be upgradeable to the newest version. This will help Windows Phone efforts with its strong domestic partners Samsung, LG, and HTC. However, Ross believes that the biggest impact of Microsoft maintaining control over which handsets will be upgradeable with Windows 7 will be felt overseas. The Mango will be featured in the first Windows based phone from Nokia who will have the creative freedom to do almost anything it wants to with its Windows phone license. You can read Ross’s full blog posting on how he feels the introduction of Mango will affect Microsoft on NPD’s website at http://www.npdgroupblog.com/2011/05/where-mango-will-bear-fruit/#more-1260


Ross Rubin is a director of industry analysis for The NPD Group. With over 20 years experience analyzing and writing about the technology industry, Rubin leads The NPD Group’s coverage of consumer electronics with an emphasis on connected intelligent devices and convergence. He will be participating in the Wireless and Mobile Devices Roundtable event in New York City on June 8th at 2 PM with Farpoint Group Principal Craig Mathias.

Roulston's Media Consultant Jim Meltzer on Terrestrial, Satellite, and Internet Radio

Last month I was interviewed by Rocco Pendola for Seeking Alpha. Today I’d like to expand on some of my comments.

For a guy who has never been an exec in the media industry, Rocco asked some insightful and well researched questions. I could also see by some of the comments after the blog that some of his followers didn’t always agree with me. His followers are investors and I am an operator/consultant. Even though the common goal is increased shareholder value, we all have different points of view.

The radio industry is not dead yet, although their stock prices may cause some doubt. If some operators continue on the same path there will be fewer players at the end of the decade (and I don’t mean just through further consolidation). Radio cannot stay the same when listeners and technology have radically changed.

The operators who embrace new ways of delivering unique, compelling, and addictive content to their users will succeed. I am talking over the air, on mobile, and online. Those operators who create social networks for their like minded users will succeed. Those operators who, like Google and Facebook, learn as much as they can about their users will succeed.

Radio has to move from a “push” medium to one that is interactive. We MUST let the consumer lead our strategic decisions. Consumers want value, not “radio.” They want music and information content on their terms, not ours. It is the wise broadcaster who understands the difference.

A few of the most innovative media companies have already launched lifestyle websites that aren’t even branded with their stations’ call letters. BUT, they are promoted heavily on and sold by their local stations. Due to the existing strong relationships their local advertising sellers have in the marketplace, they are generating new advertising revenue streams.

I stand firm on my comments about most of the media companies discussed in Rocco’s interview. If I had it to write it over again, I would have focused more on Clear Channel’s tremendous debt and less on operations. They do have an understanding of the digital space, but due to their heavy debt load, are not focusing on developing their terrestrial assets (local radio stations) to serve as launching pad, or large megaphone to the Internet. The best way to do that is to serve their local communities with more local, entertaining and compelling content.

Most of the comments generated by the interview were directed at statements I made about Sirius/XM. To set the record straight, my wife and I have 3 subscriptions to the service and are both frequent users. My concern regarding their long term success isn’t about content as much as cost to the consumer. There is no barrier to entry for content providers on the Internet, and how much and if they charge for their service could affect the Company’s growth.

Here is a link to the interview. http://seekingalpha.com/article/267923-thoughts-on-terrestrial-satellite-and-internet-radio-from-jim-meltzer?source=from_friend_client



Jim Meltzer is the Owner of Meltzer Media Management, a broadcast management, sales, internet and organizational firm founded in August 2008. Mr. Meltzer was previously a Vice President and General Manager at CBS Radio. Prior to that, he was a Regional Vice President at Clear Channel Communications. He has over 30 years of experience as an executive in the radio broadcasting industry, mostly for publicly traded companies. Jim will be participating in our June 9th Social Vs. Legacy Media Roundtable at 10 AM in New York City with former Yahoo Executive Larry Cornett.

Roulston's Technology Consultant on Innovation in Wi-Fi

Roulston Research’s Technology Consultant Craig Mathias recently wrote an article on how the wireless-LAN industry continues to see remarkable innovation despite being around for over twenty years. He points to the introduction of new products from Motorola and Meru Networks as perfect examples of how the industry continues to reinvent itself. Motorola introduced a new high-end controller called the NX 9000 which has the potential to evolve from simply a controller to a platform of applications. Craig states, “As controllers are basically single-board computers running specialized software, why not host that software on a platform capable of much more? And, indeed, Motorola is going to move in that direction over time.”

Meru Networks announced the new AP400 series which allows users to have up to four radios at capacity levels that were once thought to be unheard of. Craig expects the level of innovation in this space to slow over the next three to five years based on his belief in the life-cycle of high technology products. He explains, “Products and services are essentially good enough to address almost any common application with very favorable price/performance, and that further innovations from that point would more likely be in pursuit of incremental enhancements in revenues and profits (via product-line extensions), not the application of new basic technologies.” This will eventually allow people to focus on applications instead worrying about constantly upgrading rapidly changing technology. You can read Craig’s full blog post at
http://www.networkworld.com/community/blog/wi-fi-no-slowdown-innovation-yet

Craig J. Mathias is a Principal with Farpoint Group, an advisory and systems-integration firm based in Ashland, MA, specializing in wireless networking, mobile computing, and related technologies, products, and services. He will be participating in the Wireless and Mobile Device Roundtable event on Wednesday June 8th at 2 PM in New York City.

Roulston's Retail Consultant on Rising Raw-Material and Labor Costs at Specialty Retailers

Roulston Research's Retail Consultant John Kyees gives his take on how retailers have been dealing with higher raw-material and labor costs. Gap reported last week that raw-material costs are rising faster than expected and faster than they will be able to raise prices. This will reduce profit margins at the company for the year and it is feared that other specialty retailers will face similiar problems. John explains, "Actually I think cotton price increases have slowed a bit. Gap is in that tier of retailers that can't raise prices easily without incurring a competitive disadvantage. Those retailers who are highly differentiated will be able to add 5-10% to their retail prices and preserve their profitability. Gap sales basics for the most part which are identifiable and very price competitive. Gap is also probably heavily concentrated with China sourcing which means they're experiencing labor cost increases as well as cotton cost increases. Retailers such as Urban Outfitters have maintained a diverse sourcing structure with China only accounting for about 20-25% of their sourcing. This gives URBN leverage with the Chinese factories in that URBN can move production to a lower cost country in which they've already established a reliable factory base."


John Kyees retired from Urban Outfitters on June 30, 2010. He joined the company in November 2003 as the CFO and served in that capacity until February 2010. John is a 33-year veteran in the retail industry with CFO roles at several retailers.

Roulston's Social Media Consultant on LinkedIn IPO and Valuation

Roulston Research's Social Media Consultant Rob Enderle has an interesting perspective on LinkedIn's initial public offering. The company sold 7.84 million shares at $45 last Thursday and shares soared 109% on the first day of trading. Rob states, "The feeding frenzy surrounding LinkedIn is largely the result of an imbalance between the number of investors and the amount of equity available for them to invest in. In short we have a supply/demand imbalance which is driving the stock higher than the company performance can sustain. This has likely created a bubble and a problem for the companies coming after because LinkedIn’s prospectus anticipates slowing revenue growth and uncertain profits going forward which could cause this bubble to break prematurely and before the other IPOs can come to market.

The big problem for the category is that the sustaining revenue that supported a similar trend surrounding Google’s IPO has largely been consumed by Google and Microsoft leaving it unavailable to the Social Networking vendors. Granted through Microsoft Facebook has some extra leverage but Microsoft isn’t Google and the uplift they can provide, as a result, is much more limited. Large IPOs also drive venture investment into competitors and social networking is still in its infancy and the combination of privacy concerns and legislation could cause any one of these companies to fail if the right, and increasingly likely, set of scenarios were to take place. Given we are, in the US entering an election period and the topic has already become an issue, these risks appear to be increasing at the moment. In short the over valuation of the social networking companies is the result of a feeding frenzy on a limited resource and while I believe we have some headroom through the Facebook IPO, there is increasing risk it will collapse prematurely. That should be factored into related investment decisions."


Rob Enderle is President and Principal Analyst of the Enderle Group, a forward looking emerging technology advisory firm. He specializes in providing rapid perspectives and suggested tactics and strategies to a large number of clients dealing with rapidly changing global events.

Roulston's Retail Consultant Bloomberg Interview on Wal-Mart Earnings and Outlook

Roulston Research’s Retail Consultant Craig Johnson of Customer Growth Partners recently appeared on Bloomberg discussing some of the major challenges Wal-Mart is facing moving forward. The company’s first quarter results beat Street expectations by 3 cents coming in at 98 cents per share. However, sales of stores based in the United States fell for the eighth straight quarter. Their core consumers have been hit hard by the economy and they have been losing sales to bottom-end food retailers like Aldi and Save-A-Lot. Wal-Mart’s super-center stores were created for the retail wars of the past but now consumers like convenience in addition to low prices so they have been shopping at other retailers. The company is rolling out smaller retail stores domestically to better compete with these stores but Craig feels they are 2-3 years late with this concept.

The other major problem the company has been having is that they have been losing sales to online retailers as consumers seek more convenience in their shopping habits. Consumer electronics has been a major growth driver for Wal-Mart over the past decade but the company has been losing sales to online retailers like Amazon.com. This is a major concern for them long-term and they have recently purchased online Chinese grocery store Yihaodian and social media start-up Kosmix, which is focused on e-commerce, to broaden their exposure in this area. However, in this space they don't have a major footprint and it will be one of their big challenges moving forward. You can view his whole interview at http://www.washingtonpost.com/business/johnson-says-wal-mart-losing-sales-to-online-retailers/2011/05/17/AFMZzo5G_video.html