Latest in Stimulus: 'Cash for Refrigerators'

Discussion in 'Wall St. News' started by S2007S, Aug 24, 2009.

  1. S2007S


    This is getting better and better by the day, so someone already maxed out on credit cards is going to run out to buy a $900 fridge with a $50 rebate, maybe they can put it on their best buy or sears card they already owe $2453 on and pay no interest till 2011, of course if you forget to pay it in full by then or just dont want to pay because you dont feel like it that rebate of $50 dollars will now be your interest payment every month till you are done paying it off. Way to go, these stimulus packages will only put people further into debt, anyone who actually thinks this or cash for clunkers was a good idea will be fooled once again.

    Latest in Stimulus: 'Cash for Refrigerators'

    By Matthew Boyle Matthew Boyle – 2 hrs 15 mins ago
    A $300 million cash-for-clunkers-type federal program to boost sales of energy-efficient home appliances provides a glimmer of hope for beleaguered makers of washing machines and dishwashers, but it's probably not enough to lift companies such as Whirlpool (NYSE:WHR - News) and Electrolux out of the worst down cycle in the sector's history.

    Beginning late this fall, the program authorizes rebates of $50 to $200 for purchases of high-efficiency household appliances. The money is part of the broader economic stimulus bill passed earlier this year. Program details will vary by state, and the Energy Dept. has set a deadline of Oct. 15 for states to file formal applications. The Energy Dept. expects the bulk of the $300 million to be awarded by the end of November. (Unlike the clunkers auto program, consumers won't have to trade in their old appliances.)

    "These rebates will help families make the transition to more efficient appliances, making purchases that will directly stimulate the economy," Energy Secretary Steven Chu said in a statement announcing the plan. Only appliances covered by the Energy Star seal will qualify. In 2008, about 55% of newly produced major household appliances met those standards, which are set by the Energy Dept. and Environmental Protection Agency.

    The money can't come soon enough for the home appliance industry, which is mired in an unprecedented sales slump that began when the housing market cooled in 2006. Since then that slump has worsened considerably. Shipments of washers, dryers, refrigerators, and ovens dropped 10% in 2008 and are down 15% through July, according to the Association of Home Appliance Manufacturers. "It's brutal," says Raymond James (NYSE:RJF - News) analyst Sam Darkatsh.

    a marketing push around rebates

    The leading appliance makers have felt the pinch. Whirlpool of Benton Harbor, Mich., which controls about 40% of the U.S. market, has seen its sales drop 20% through the first two quarters of this year. North American shipments for its Stockholm-based rival Electrolux, meanwhile, have dropped for a dozen consecutive quarters. Both companies have laid off hundreds of workers, and General Electric (NYSE:GE - News) mulled shutting down an entire refrigerator plant earlier this year until deciding to keep it open with a reduced workforce.

    Not surprisingly, appliance makers cheered the news. Electrolux spokesman Tony Evans calls the federal program a "great opportunity to encourage consumers to replace their old appliances." Lately, cash-strapped consumers have chosen to repair, rather than replace, hobbled dishwashers and other water-intensive appliances, according to industry analysts. Electrolux says it is readying "aggressive" marketing programs that will run parallel with the rebates, and it's reasonable to expect appliance makers and retailers will devise additional discounts to amplify the rebates' appeal. "We will be ready to go when the new incentive programs hit the market," Evans said.

    Unlike the popular, $3 billion cash-for-clunkers vehicle program, which ends on Aug. 24, there's no guarantee that hard-hit consumers are prepared to plump for new washers, stoves, and fridges. The federal outlay will piggyback on rebate programs for energy-saving appliances that have existed for years in more than 25 states, but which have largely failed to spur demand. Home improvement retailers like Home Depot (NYSE:HD - News) and Lowe's (NYSE:LOW - News) have also offered deep discounts on big-ticket appliances lately, with little impact.

    "The cash-for-clunkers (program) had a discernible value proposition for the consumer, because he knows how much his (clunker) is worth," says Darkatsh, the Raymond James analyst. "With appliances, there is no trade-in. You can walk into Home Depot and get a great deal on a home appliance any time you want one. Why would it drum up sales now?" Laura Champine, an analyst with Cowen & Co. (NasdaqGS:COWN - News), agrees. "I'm not sure if it will be as powerful as cash for clunkers because there is something compelling about that $4,500 discount," she says. "Also, a new car is more fun than a new dishwasher. So I'm not sure if it will be as much of a driver, but any driver is welcome right now."

    Stock Market Overreaction

    Analysts also believe that the stock market's reaction to the program is overblown. Whirlpool's shares rose 6% on Aug. 20 when news of the program circulated, and climbed another 5% the following session. "That's silly," says Darkatsh. He estimates that in a best-case scenario the rebates will equate to about $240 million in incremental sales for Whirlpool. But that's unlikely, as it assumes that every American buying under the voucher program would not have done so otherwise. "The vast majority would have bought them anyway," as purchases of appliances such as fridges and washing machines are far less discretionary than, say, cars or big-screen televisions, Darkatsh says.

    The recession's ability to blunt the program's impact was underscored by a call to the California Energy Commission to discuss its approach to the rebate program. The entire state office is on unpaid furlough each Friday in August; no one picked up the telephone.
  2. When is "cash for blowjobs" coming?
  3. Where you going to find a "service provider" willing to do the paperwork for the rebate?
  4. Aargh - why do we need to stimulate sales of Chinese or other nations' products?
  5. Lucrum


    They should call these programs what they really are : CASH FOR VOTES.
  6. Note to 90% of traders on this site:

    You don't pay taxes so how they spend "taxpayer money" is none of your business.
  7. That's always been around :D

  8. S2007S


    Because without china the global economy isnt much of anything...

    everyone gets excited at hearing 8%+ growth for china...
  9. Cash for votes is exactly what this is.

    Only problem is that the money to pay for this has to come from productive individuals.....and that herd is thinning.
  10. If you want to motivate people to spend, you need to get them out and about. Simplest way is to get gas down under 2 bucks.

    This country was designed to burn cheap gas.

    People don't need a reason to buy a new car ie cash for clunkers, just give them cheap gas and that old clunker will break down once they start driving it more.

    This is all predicated on Americans not "eating" up their fuel savings with more food.

    Cash for refrigerators, bigger reefers hold more food. Booyah!!!

    News flash:

    Dad leaves new side x side ref in will. Awwwh, Pop's a swell guy.
    #10     Aug 24, 2009