What's Important in the Financial World (11/16/2011) Dell's Problems, BMW Sales

BMW said its expects double-digit percentage growth in the U.S. in 2012. And Cadillac says it will launch two new models to compete with BMW next year. Both brands have had sales improvements this year. Only one of two things could account for that. The first is that BMW is taking market share from Mercedes, Lexus, Lincoln and Infiniti. Cadillac’s unit sales are up in 2011, so it must have added market share as well. Maybe luxury car sales overall are mediocre. Two or three companies might have the products or prices to outgrow their segment. The other possibility is that the rich in the U.S. are large enough in number and optimistic enough about their prospects that luxury car sales are up substantially. BMW’s forecasts may be easy to make because all combined high-end car sales will be up by double digits next year. The overall consumer economy is weak, but there is still room for a healthy market for cars and light trucks that cost more than $50,000.

In Europe, panicked bond investors have climbed in off of the ledge, at least for a day. Yields on sovereign debt issues by countries with strong balance sheets, such as France and Austria, rose sharply, especially compared to the yield on German debt. The fear of irrational contagion pressed markets down around the world. But the climb in yield has halted and started to reverse. Equities markets have a good day or two.

The relationship between Apple (NASDAQ: AAPL) and Walt Disney (NYSE: DIS) has come full circle. Steve Jobs joined the Disney board in 2006 after the entertainment company bought Pixar, which Jobs helped to create. As part of the $7.4 billion transaction, Jobs became Disney’s largest shareholder. Yesterday, Robert Iger, Disney’s CEO, joined the Apple board. Apple remains locked in a battle with Netflix (NASDAQ: NFLX), Amazon.com (NASDAQ: AMZN) and a host of telecom and cable companies for access to premium content. Iger could be an aid to Apple as it continues to set its digital content plans. There is, of course, the chance that Disney competitors will not appreciate Iger’s presence as an Apple overseer.

Dell’s (NASDAQ: DELL) earnings showed how hard it is to be in the mainstream PC industry now. Quarterly sales were little better than flat. Forecasts were poor, even when interruptions of the supply of computer parts due to the Thailand flood are taken into account. Dell does not have a tablet PC product or a smartphone. Desktop sales have all but disappeared among consumers. Laptops have begun to be supplanted by lighter and more portable devices. Dell has been flanked by the rapid changes in consumer electronics.

Douglas A. McIntyre