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The Biz Roundup February 9

The new Kindle is here! Buy Shoestring Venture after you buy the new Kindle! (AMZN) on Feb. 9 unveiled the second-generation version of its Kindle electronic reading device, with what the company says is improvement in the display, battery life, and operation of the device.

The new device screen can render 16 shades of gray, compared with four on the original Kindle. It can also read text aloud and store 1,500 books, compared with 200 on the previous version.

(“Amazon Unwraps the New Kindle,” Business Week, February 9) So why would you want to carry around 1,500 books?

Nissan joins the club.

Nissan Motor said on Monday it would eliminate 20,000 jobs, or 9 per cent of its global workforce, as it became the fourth big Japanese carmaker to abandon hopes of earning a profit this year. . . .

The loss would be its first under Carlos Ghosn, the chief executive dispatched by Renault in 1999 to turn the then debt-ridden company around. Mr Ghosn now leads the combined Nissan-Renault group. “In every planning scenario we built, our worst assumptions on the state of the global economy have been met or exceeded,” Mr Ghosn said, noting that Nissan was being squeezed by an “unforgiving” rise in the value of the yen in addition to tumbling demand.

He said the immediate goal of the restructuring was to ensure positive free cash flow next year. He urged the Japanese government to offer taxpayer-supported financing to carmakers.

(“Nissan to cut 20,000 jobs ,” Financial Times, February 9) These are not layoffs and will be phased in over 18 months, but Nissan has a big hole to fill and we’ll probably see some plant closings by June.

You see, a sale at Saks means they’re cutting their margins from 80% to around 50%.

When Saks Fifth Avenue slashed prices by 70% on designer clothes before the holiday season even began, shoppers stampeded. “It was like the running of the bulls,” says Kathryn Finney, who says she was knocked to the floor in New York’s flagship store by someone lunging for a pair of $535 Manolo Blahnik shoes going for $160.

Saks’s deep, mid-November markdowns were the first tug on a thread that’s now unraveling long-established rules of the luxury-goods industry. The changes are bankrupting some firms, toppling longstanding agreements on pricing and distribution, and destroying the very air of exclusivity that designers are after.

(“Saks Upends Luxury Market With Strategy to Slash Prices,” Wall Street Journal, February 9) This, in the end, is bad news for the luxury retail brands, both the retailers and the manufacturers. The entire purpose, or at least a sizable fraction of the purpose, behind premium brands and luxury goods is to show the rest of the world that you can buy expensive goods. The whole raison d’etre of a Manolo Blahnik pair of shoes is that they cost five hundred bucks or more. At around a hundred bucks, anyone can afford a pair and they lose their exclusiveness. Gucci learned this the hard way in the 1990’s.

Something has changed in marketing movies: women.

This weekend, women were particularly smitten with “He’s Just Not That Into You.” The New Line Cinema film, starring Drew Barrymore, Ben Affleck and Jennifer Aniston, generated an estimated $27.5 million in ticket sales — a strong showing that produced tears of joy for distributor Warner Bros.

About 80% of the audience for the film was female, but more guys should be heading to the movie houses next week, said Dan Fellman, Warner Bros. domestic distribution chief.

“The girls will bring them in next weekend for Valentine’s Day,” Fellman said. “We are off and running and should do very well next weekend. We’ve got a big hit on our hands.” . . .

“Women continue to drive box office in a big way,” he said. “And we still continue to, mistakenly, underestimate the power of the female audience.”

(“Women drive movie ticket sales,” Los Angeles Times, February 9) In my ins and outs with movie marketing, there’s one market that drives sales: guys from about 14 to 28. Which is why movies seem to always be made to high school or college guys. Now, there’s always a debate about this: does Hollywood make movies for adolescent males because they’re the ones who buy tickets or do adolescent males primarily buy tickets because Hollywood makes movies for them? With “Twilight” and now “He’s Just Not That Into You,” the studios are learning they can get big box office by marketing to someone other than hormone-addled doods.

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