Market briefing---Lane (medium)
The discussions regarding rule based policy and discretion---Craig (fast)
Nasdaq---Anthony (slow)
>> it’s still summertime but all convertibles may not offer a smooth ride for all investors. general motors, yahoo and 100 companies could see their earnings per share fall if their stock prices keep rising. why? because they sold convertible bonds that could soon be swapped for stock . a bear stearns report says sales of these contingent convertibles may reduce earnings by 4% to 6% below thomson financial estimates for 2003 and 2004. this type of bond has a provision requiring a share price increase of 10% to 30% above the conversion price before they can be swapped for stock . now, this year’s stock rally has brought some share prices of some of these companies a lot closer to their conversion triggers than when the convertible debt was initially sold. the contingent convertible bonds don’t have to be included in the earnings per share calculations until the stock reaches the conversion trigger. with ordinary convertibles the stock delusion must be recognized immediately. motorcycle maker harley-davidson and automaker ford motor company are both celebrating milestones this year. both companies are celebrating their 100th anniversary. as bloomberg news report erbil ko nig finds the sen tennials reflect diverging fortunes for these two ikons. he joins us from southfield michigan with the story. welcome.
>> hello.
>> so how have ford and harley differed in the way they’ve actually celebrated their sen tennials this year?
>> ford by comparison was relatively more low key. harley, there have been groups of harley―harley sent groups of motorcyclists into cities to build up their centennial. it’s this weekend in milwaukee. they are talking about a million visitors this weekend in milwaukee. by comparison, ford kept the bulk of their centennial activity to like four days in mid june. they still had something like 225,000 visitors, so it was still large, but you know, there were like 3200 vintage vehicles, and there is a greater number of motorcyclists going into milwaukee this bend.
>> have the companies used the centennialss for marketing purposes?
>> harley-davidson very much so in the sense that as a way of marketing new models. i mean it’s essentially been one of the main things you’ve done this year. ford has had some mention of the centennial but it’s been lower key. earlier this year they had a $5 a day lease special on a couple models which is―harkens back to the ridge henry ford increasing his worker’s wages to $5 a day. it’s been mentioned in some ads but been much more prevalent in harley’s marketing than in ford’s.
>> it’s been much lower key, other than match boxcars, haven’t seen anything of 100th anniversary pomp and circumstance. there is a co-branded truck they have, these two businesses do business today.
>> f 150, harley-davidson edition f 150, costs several thousand more than the regular truck. you know, it’s got the harley-davidson logo, harley-davidson colors, and in a way it’s very similar. it’s marketed in a way very similar to harley-davidson motorcycles. it’s a limited edition, a very niche product. like i said, it’s an upscale product.
>> and it does very well.
>> yes. you know, they don’t have the kinds of incentives that, you know, you see across the regular product line.
>> you bring up incentives. incentives have been key in the way wall street has looked at ford and judged its market abilities here. the current financial conditions of harley and ford are very different; aren’t they?
>> yes. essentially harley, while it has competition, is―we talked to one investor for the story. he said that, you know, harley almost can control the pricing in its segment of the upscale segment of the motorcycle market where upon ford competes against all segments. and, you know, their larger rival general motors started no interest financing back in the fall of 2001, and there is just a lot more price pressure for ford.
>> and there are a lot of niche players going after harley-davidson. but over the last couple of years they haven’t been able to really do much of a dent in their market share, while ford is facing a very different situation.
>> yes, we―one investor we interviewed said that you just don’t have the cache among other motorcycle makers that you do with harley. ford, whereupon they face competition from korean auto makers on the low end of the market, japanese auto makers throughout, their traditional rivals, g.m. and chrysler throughout.
>> ford has a major problem in the middle of its market right now. they don’t have a very well selling sudan. similar problem with general motors.
>> yes. the taurus, you know, the taurus of the mid 1990’s was the top selling car in the u.s., and it hasn’t been that―it hasn’t hit those heights in quite some time.
>> and they are going to be coming out with the ford 500 i believe, and the future a in the years to come. but all they’ve shown so far is pictures of them. they haven’t shown any concepts.
>> right. we will probably see more of those at the detroit auto show. ford hasn’t formally said what the schedule is going to be, but there is chance we’ll see more soon.
>> we will indeed. last time we talked about a 100th anniversary for a carmaker was oldsmobile. that didn’t work out too well. hopefully ford will do better than that.
>> paid to play, at least that’s what companies such as apple computer are hoping consumers will do.
