The Wall Street Journal-20080119-The Buzz- Best of WSJ-com-s Money Blogs
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The Buzz: Best of WSJ.com's Money Blogs
[From Deal Journal, MarketBeat and Wealth Report]
Sprint Nextel's
Dropped Call
After 'Merger of Equals,'
Less Than Half the Value;
Don't Call It 'Luxury'
Perhaps Sprint Nextel should drop "Nextel" from its name. It has already dropped more than the entire value of Nextel.
When Sprint and Nextel agreed to a "merger of equals" at the end of 2004, they were valued at $70 billion together. The current value of the combined Sprint Nextel stands at about $25 billion.
The stock fell 25% Friday after the company said it will slash jobs and close stores as it loses customers at a rapid clip. Sprint Nextel is suffering from the same reliance on customers with weak credit that is battering mortgage and other financial firms.
The deal was basically a stock swap that handed each company's shareholders half of the combined Sprint Nextel. That means the value of one or the other of the companies has been wiped out entirely.
For the record, the banks responsible for putting the deal together were, for Sprint: Lehman Brothers Holdings and Citigroup; for Nextel: Goldman Sachs Group, Lazard and J.P. Morgan Chase.
If there is a silver lining for Sprint Nextel shareholders, it could be that -- like Countrywide Financial -- the drastic decline in value may prove irresistible for an acquirer.
-- Dana Cimilluca, Deal Journal
blogs.wsj.com/deals
Luxury Isn't Dead;
(Is the Word?)
Several Web sites have picked up on a speech by New York-based luxury expert Andrew Sacks to the Leading Hotels of the World annual conference in Monte Carlo. His talk was about connecting with the wealthy, and the overuse of the term "luxury," which has been slapped on everything from cellphones to toilet paper.
The trouble for high-end marketers is how to market luxury in an age when the term has become meaningless. Here are some highlights from the speech:
-- Beware of That Word: "There are some words that simply get worn out. Like anything else, there is a natural lifespan to language -- the word 'luxury' is the grand offender of the last several years." That word is now, he says, "a descriptor that is highly suspicious to the very people to whom it is designed to appeal -- the affluent."
So what to do?
-- Respect Your Customer: "They have earned their money, they are smart and they are demanding. But they also are regular people -- usually. The wealthy got that way by being good stewards of a business and of a dollar. Respect their respect for money."
In other words, if you price it high, deliver high value.
-- Use Their Personal Networks: Word of mouth is the real driver of sales among the rich, Mr. Sacks says. "The power of personal networks can be far more important than advertising," he says, adding -- and this is the most important point of all -- "give your customers a good experience with things they can talk about and they will."
In other words, if you want to sell to the rich, deliver true luxury. Just don't use the word.
-- Robert Frank, The Wealth Report
wsj.com/wealth
