Still no brick and mortar Google stores? We have beautiful Apple and Microsoft stores — large footprint, high-cost locations full of colorfully-shirted reps and tables with multiples of the product lined up, teeming with customers. Here is a novel, if imperfect, idea. Google could buy Radio Shack, immediately cease doing most everything Radio Shack does, and instead refit the stores to display and sell Google hardware devices. Google has (its own and those of others) tablets, phones, the Chromebox, Chromecast (for TV streaming), and will soon be automating your house starting with the Nest (connected thermostat), among other products like Google glasses. In January 2014 Google paid ~$3.2B for Nest, ~$650M for DeepMind (ever heard of it?), making the $250M market cap of Radio Shack like a rounding error. What would Google get? 4,300 company-owned locations in the U.S., 270 in Mexico, and 1,000 other locations worldwide. Radio Shack debt and cash make the enterprise value a bit closer to ~$425M to own it outright, but this is peanuts. Given that Google does things differently are they going to “me too” a fancy large-footprint stores to compete with Apple and Microsoft or go with 1,000s of stores in ready-made locations close to the people? An issue is the customer experience in the stores. Can Google train reps and offer a quality customer experience with just just a handful of employees in small platform stores? Perhaps not, however, Google is very good at centralizing — the solution is to push the customer experience into the Google cloud and use its own hardware like Chromebox to allow onsite customers in small stores to interact with those shirted experts at a central location — while not making the locations “dumb terminals”, they offer a consistent user interaction with the ability to deeply train a virtual team. As well, the training required to roll out a new product could be done and rolled out nearly instantly. I want to try some Google products, but how? Buy the “Shack” and in six months you have 4,000+ Google stores. Bad idea? Maybe.
Chrysler Group LLC has withdrawn its planned IPO. See the filing here. Earlier this year I posted about firms that file for their IPO as a mechanism to attract M&A bids. This is a similar example. Instead of completing the IPO, Chrysler scrapped it after Fiat agreed to buy the ownership stake that was to be sold in the IPO. Fiat bought ~41.46% of Chrysler owned by the union. The stake had been for sale (to Fiat, among other buyers) but the groups could not agree on a valuation. The IPO filing created a credible threat that forced Fiat’s hand, but also served as a price discovery process and allowed both sides to better realize a fair market value for the stake. A properly orchestrated IPO can serve several purposes.