My Reply to Dominic's Latest Jim Cramer Commentary
This orignally started out as a comment to Dominic's Latest Jim Cramer Commentary... however, since this got to be very long very quickly, I made it a blog. The order is in order of personal interest...
#1 was possibly NS and CSX. I own some CSX... I'll say this could be interesting since our railroad footprint and NS's are pretty much overlapping... maybe if BNSF or UNP and CSX or NS got together it would be more interesting... a true continental RR.
#7: is Office Max and Office Depot I remember working in 97 for Staples (please don't ask about it other than this)... Staples and Office Depot were thisclose to merging. I remember we had all the welcome Office Depot customer signs, buttons, etc... ready to go. We were then informed that the big merger was blocked and there was a let down. One of the major reasons was that this would be very uncompetitive in the office supplies market. I remember hearing that the judge pretty much said that Staples, Office Max, and Office Depot pretty much made up their own catagory of 'Office Superstores' and that fact killed the deal. The fact that there would only be two such superstores (and that #1 and #2 would be combining) it would not work. Yes, now it's #2 and #3... but I still personally don't see how this would work out. This sounds too much like the 1997 deal for my liking. I wouldn't make up anything yet for this deal.
On #3 Comcast & Time Warner... I can see this. These two titans of cable would have been totally anti-competitive 10 years ago. Satellite dishes for TV were not a prevelant as they are now... it's hard to go to the mall and not see a few places that offer dish TV. I know around here also, Verizon's FIOS is making a HUGE run against the TV market. I can't think of too many hours of TV lately that VZ's FIOS is does not have an ad on it trying to get people in my area to switch their TV, Broadband, and phone to this FIOS network. Now if VZ could get a few boatloads of people to switch, full control of their wireless division (VOD does own 45%), a TV station or two on the air and own a professional team, they'd be the RG south of the border here... but I digress. T (which I used to own) also has an almost quadruple play in their service areas... offering Dish Network TV along with a now fully owned Cingular, as well as local and long distance phone. There are tons of TV channels in this deal... and a bunch of the 'triple play' customers. Cable, Phone, and Internet have a bunch of competitors now... Kind of like how SIRI (another I used to own) and XMSR has a chance of getting though... Free radio is viable, CD players are a part of most car radios, MP3 players are now a major source of entertainment in autos as well as DVDs. I think both of these are similar in the way they could go... or not.
#5 BP and Chevron could just happen... but I would see someone else coming into play like the way Lukoil got into the mid-atlantic after the XOM deal. Lukoil took all the old Mobil stations clear from here in NJ to Va in the deal, putting them on the map here in the US. Yes, they own Getty, but who really knew that BEFORE they got their own branded station? Only reason I knew that was that Getty stations soon after Lukoil came here offered the same credit card... I don't think Lukoil could white knight and be the in the west with Arco (which is owned by Chevron). Or maybe they could be. There would also have to be some other opinions from other places around the world. Caltex (owned by Chevron) and BP would have overlap around the world. Who would be the heir apparent there? From my spot in the world, there wouldn't be as big of and impact as XOM's deal... Exxon and Mobil branded gas was huge in this area. I know down south BP is bigger... and out west Chevron's a large player. We'll see what happens with that...
I've personally got one more... this shows my northeast bias, but for us around here, #10 would be A&P (GAP) and Pathmark (PTMK). In my home area, most places that have a Pathmark have an A&P close by. Consolidating these stores would leave our area with only 2 other major competitors (depending on region) Shoprite (a co-op) and Stop & Shop (Owned by AHO). There are some smaller competitors like Acme (more like the Phile area... owned by SVU), as well as Kings and Wegman's (both privately owned and more upscale grocery stores), local farmer's markets (which are mostly produce with maybe a limited meat section), and delis (my area is the deli capital of the world, I swear). I believe it won't happen. At least in my home area, there isn't enough competiton to warrant such a consolidation. There are no Wal-Mart Supercenters here in northern NJ that I know of. Yes, there are some groceries, but it's mostly snack type foods, colas, cookies, soups. There are no feature meats, no produce, no veges of any sort. Local farmer's markets and delis cannot provide the 1 stop shopping that most people demand these days. Farmer's markets compete on either cheaper prices or fresh/local produce. Delis compete more on the impulse buys and getting maybe an item or two but not wanting to go to the grocery store (and delis also tend to make breakfasts and lunches, so I'll buy full price fritos since they have it and I'm getting a burger of the week here).
Just my opinions.. take them for what they're worth. As a secondary disclosure: I own CSX, used to own SIRI and T, and used to work at SPLS.