Don't you love the holidays? Love is in the air. Friends get together. Resolutions for next year are put into place. And that's just what happened on Wall Street!
Would you like a cardiac defibrillator with that bottle of baby shampoo?
In a week filled with a few notable buyout announcements, none loomed as large as Johnson & Johnson's (NYSE:JNJ) $23.9 billion cash and stock deal for medical equipment specialist Guidant (NYSE:GDT).
On the consumer retail level it may seem like an odd match. Why is the company behind Band-Aids and the ubiquitous "No More Tears" baby shampoo scooping up a maker of pacemakers and defibrillators? Well, those more familiar with J&J know why. In fact, the deal was expected. Yes, the company makes plenty of consumer brand products but it's also active in pharmaceuticals and medical devices. It already had a presence in the cardiovascular space after its acquisition of stent manufacturer Cordis. In other words, the company always had heart -- now it's just going to get more.
Maybe the video store clerk meant "no latte freeze" when he said "no late fees"?
Video rental giant Blockbuster (NYSE:BBI) made some waves earlier in the week when it said that late fees on delinquent rentals would be a thing of the past. But it was right to be skeptical. After all, the company said the move would cost it between $250 million and $300 million in projected late fees for 2005 while saying that profits should come in flat with this year's showing. So obviously the company expects to make back that money somehow.
That's why one needs to take a closer look at the process. Let's say you're late in returning a video. You will have a seven-day grace period to return it to the store without penalty. In other words, rental periods have been extended. After the grace period runs out you will be charged for the movie. Yes, you own it -- generic plastic Blockbuster cover and all! You can bring it back for an account credit within 30 days but then you will be hit with a $1.25 restocking fee. So despite the "no late fees" mantra, you will pay a price for your slacker ways.
Yet the company has been testing the process and it obviously likes what it sees. When folks aren't rushed to just drive over and toss the rented flick into the return chute, they can time their return to when they want to casually stroll the store for something else. While you can imagine that some folks are going to get steamed by some of the new fees, it's clear that Blockbuster needed to do something desperate to remain relevant, as mail-delivered online rentals continue to nibble away at the bricks-and-mortar market share.
Did you hear? Mister Softy is going out with Dairy Queen.
Bespectacled billionaires belong together. At least that's one way to look at the fact that Microsoft (NASDAQ:MSFT) co-founder Bill Gates has joined the board of Warren Buffett's Berkshire Hathaway (NYSE:BRKa). They are good friends. One can only imagine what their holiday gift-swap must be like. Yet more importantly, Berkshire Hathaway lands the tech-friendly gray matter of said Gates.
It's hard to knock Buffett's empire, but a common shot during the dot-com boom days was that Berkshire Hathaway missed out on some big gains by steering clear of investing in tech stocks. Buffett's cautious stance was ultimately vindicated when many dot-com darlings collapsed, but now that survivors like eBay (NASDAQ:EBAY) and Amazon (NASDAQ:AMZN) are thriving, it's good to have a tech-savvy chap on board.
While that obviously won't challenge the company's emphasis on insurance holdings, perhaps Gates can do something about making those Dairy Queen Blizzard machines spin even faster in a shorter amount of time!
Until next week, I remain,
Rick Aristotle Munarriz
Longtime Fool contributor Rick Munarriz doesn't have any billionaire friends but he plays a lousy game of bridge anyway. He does not own shares in any of the companies mentioned in this story. He is also part of the Motley Fool Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
