Amazon Expands Grocery Service

Amazon.com Inc is add more territory to its online grocery delivery program to Brooklyn’s well-heeled Park Slope neighborhood, giving the No. 1 U.S. online retailer a foothold in one of the wealthiest and densest markets in the United States.

The AmazonFresh program, which offers same-day or next-day delivery on more than 500,000 items including fresh and frozen groceries, will soon expand to other areas in Brooklyn.

The move is part of Amazon’s slow build-out of its “Fresh” program, targeting one of the largest retail sectors yet to be upended by online commerce. Amazon declined to say if it will expand to Manhattan or other parts of the New York metro area.

“Currently, we are offering AmazonFresh in Brooklyn and will continue being thoughtful and methodical in our expansion,” an Amazon spokeswoman said in an e-mail.

Groceries have proven to be one of the toughest sectors for technology companies to manage, and Amazon faces competition from established companies like FreshDirect as well as fast-growing startups like Instacart.

But a successful foray in Park Slope could help Amazon cement customer loyalty and boost sales, especially among wealthy and middle-class families, analysts have said.

The top 10 to 20 percent of wealthiest Americans spend between 3 and 4 times more on food than the average American family, according to Bill Bishop, chief architect at Brick Meets Click, a consulting firm focused on retail technology.

“They are the sweetest of shoppers so anybody who attracts that business is taking the cream of the market,” Bishop said.

Amazon could also use its Fresh program to experiment with its own delivery service, analysts have said.

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Is RadioShack Going Bankrupt?

Troubled electronics retailer RadioShack Corp says filing for bankruptcy protection is an option if its cash situation worsens, after reporting its tenth straight quarterly loss.

The company said it was also exploring other options, including a sale or an investment, and liquidation as the last resort.

RadioShack, whose sales have been in free-fall since 2010 as it struggles to compete with internet retailers, said in a regulatory filing it was working with its lenders and landlords to restructure its debt and cut costs.

“It would surprise me if we got to Nov. 1 without a bankruptcy,” Wedbush Securities Inc analyst Michael Pachter told Reuters.

RadioShack shares, which are in danger of being delisted from the New York Stock Exchange, were up 2 percent at 95 cents in volatile early trading.

The company said same-store sales declined 20 percent in the latest quarter, while total sales plunged to their lowest in more than 20 years.

The company is being advised by a restructuring attorney at law firm Jones Day as it tries to strike a deal with creditors to close stores, two people close to the matter told Reuters on Wednesday.

RadioShack tried to close 1,100 stores this year, but reduced that number to 200 a year when lenders did not agree to the plans.

RadioShack’s landlords, however, may be open to mass store closures if they believe it will allow them to find new tenants more quickly than in a bankruptcy, a source close to the matter told Reuters.

David Tawil, president of hedge fund Maglan Capital that focuses on companies approaching bankruptcy, said he saw “major execution risks” to RadioShack’s recapitalization and turnaround efforts.

“I don’t think that the chances are great that RadioShack survives,” Tawil said, adding that the company’s credit default swaps were trading higher, pointing to market expectations of a near-term debt default.

The company ended the second quarter with $30.5 million in cash and $658.0 million in debt, which matures between 2018 and 2019.

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Cisco Goes To The Cloud

Cisco Systems Inc will offer cloud computing services, pledging to spend $1 billion over the next two years to make a foray into a market currently dominated by the world’s biggest online retailer Amazon.com Inc, the Wall Street Journal reported.

Cisco said it will spend the amount to build data centers to help run the new service called Cisco Cloud Services, the Journal reported.

Cisco, which mainly deals in networking hardware, wants to take advantage of companies’ desire to rent computing services rather than buying and maintaining their own machines.

Enterprise hardware spending is dwindling across the globe as companies cope with shrinking budgets, slowing or uncertain economies and a fundamental migration to cloud computing, which reduces demand for equipment by outsourcing data management and computing needs.

“Everybody is realizing the cloud can be a vehicle for achieving better economics (and) lower cost,” the Journal quoted Rob Lloyd, Cisco’s president of development and sales as saying.

“It does not mean that we’re embarking on a strategy to go head-to-head with Amazon.”

Microsoft Corp last year said it was cutting prices for hosting and processing customers’ online data in an aggressive challenge to Amazon’s lead in the growing business of cloud computing.

Cisco could not be immediately reached for comment by Reuters outside regular U.S.business hours.

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Amazon Looking For Investors

Amazon has issued its first bonds in nearly 15 years as it looks to borrow money while interest rates are low.

Amazon’s position as the undisputed king of online retail has put the company in a good position to take advantage of cheap borrowing rates. Amazon issued three, five and 10-year bonds at 0.38, 0.63 and 0.93 percent above US Treasury rates with investors clamouring to get a ride on the firm’s coattails.

According to the Wall Street Journal, Amazon’s $3bn bond issue has attracted more than $10bn in investor interest. According to ratings agency Moody’s, the firm will use the cash generated in the bond sale to make investments such as buying its corporate headquarters.

Standard and Poor’s rated Amazon’s debt as AA- and said there was minimal financial risk with Amazon. While Moody’s rated the bonds at Baa1, the agency also forecast strong growth in sales for Amazon in the coming years. It seems that Amazon, given that it hasn’t got any other bonds, is proving popular with bond investors despite reporting low profits and recently having been grilled in the UK Parliament over allegations of tax avoidance.

Amazon has been diversifying the ways it generates cash, and while it long ago moved away from simply selling books, the firm is a big player in cloud services through its Amazon Web Services division and is aggressively marketing its own brand of electronics devices in the Kindle range of ebook readers and tablets.

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RIM’s PlayBook Tablet Pulled

Models of Research in Motion’s PlayBook tablet have been yanked from online stores of some top retailers in the U.S. and Canada, a move one analyst said could mean that the company is gearing up for a successor tablet.

The PlayBook tablet is no longer listed on the online stores of consumer electronics retailers including Wal-Mart, Best Buy, RadioShack and Staples. The products are listed as being out of stock in Office Depot’s online store.

In the BlackBerry maker’s home country of Canada, only the 32GB model is available on the websites of retailers Futureshop and Best Buy Canada, at a discounted rate of C$149.99 ($153). The 16GB and 64GB PlayBook models are out of stock.

However, the tablets remain available on RIM’s own online store.

RIM did not respond to requests for comment.

The first PlayBook shipped in April 19, starting at $500 for a 16GB model, but has sold poorly since. PlayBook sales dropped to about 130,000 in RIM’s most recent fiscal quarter, which ended on Sept. 1.

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Kindle Fire Raises Privacy Concerns

Amazon told a Massachusetts congressman that the Silk browser in its Kindle Fire tablet doesn’t pose a privacy threat to customers, but the lawmaker wasn’t satisfied with that statement.

U.S. Rep. Ed Markey (D-Mass.), the co-chairman of a congressional caucus on consumer privacy, on Tuesday released the results of questions he had put to Amazon CEO Jeff Bezos in October about Silk and the data it collected.

Markey wasn’t happy with Amazon’s answers.

“Amazon’s responses to my inquiries do not provide enough detail about how the company intends to use customer information, beyond acknowledging that the company uses this valuable information,” said Markey in a statement.

“Amazon states ‘Customer information is an important part of our business,’ but it is also important for customers to know how the company uses their personal information,” Markey continued. “Amazon is collecting a massive amount of information about Kindle Fire users, and it has a responsibility to be transparent with its customers. I plan to follow-up with the company for additional answers on this issue.”

Silk, which is based on the open-source WebKit engine, connects to Amazon’s cloud service and servers by default. The service will handle much of the work of composing Web pages, pre-rendering and pre-fetching content, and squeezing the size of page components, a way, claimed Amazon, to speed up browsing on low-powered devices like the Kindle Fire.

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