Hits & Misses
Lotus finds a healthy position in the U.S. car market; Nokia silences its critics with a surprisingly popular phone-free device.
by Elizabeth Estahani

(Business 2.0) - HIT Flower power.

The U.S. auto market is the world's largest, so it's no surprise that a carmaker unable to sell here would hit hard times. Such was the case for venerable British marque Lotus, whose signature roadster, the Elise, has been available in Europe since 1996 but had been banned from the American market for failure to meet federal emissions standards.

Lotus finally addressed those concerns by refitting the Elise with a Toyota (Research) engine and then placed the $43,000 sports car in 42 high-end dealerships across the country, where eager buyers had long queued up on unofficial waiting lists. The result? A record year in 2005: The company sold 4,500 Elises worldwide--up 41 percent from the previous year--including all 2,400 cars shipped Stateside.

MISS Sometimes it's best not to eat your own dog food.

All dogs go to heaven--but that's small consolation to people who recently bought Diamond pet food. The maker of high-end kibble brought holiday gloom to at least 76 dog owners after it distributed bags of toxic pet food to retailers last fall.

The firm recalled 800,000 bags of 19 varieties of pet food in January after veterinarians began to link several mysterious pet deaths to Diamond. It turns out that instead of premium chow, owners were filling their furry companions' bowls with food tainted with aflatoxin, a by-product of fungus that grows on corn and causes liver damage in pets.

HIT Death, taxes ... and iTunes?

In Hollywood the digital age sits firmly on the list of things that are horribly frightening and yet utterly inevitable. But for NBC, it's getting a lot less scary. After the network announced a deal with Apple (Research) in December to make 12 of its shows available via iTunes, the payoff came at Internet speed: In January, NBC reported that ratings for its Steve Carell-fronted sitcom The Office had climbed nearly 20 percent in the key 18- to 49-year-old demographic in the month that the show had been available online.

NBC executives gave the new format the lion's share of credit for The Office's jump, pointing out that it's been the network's most popular download and positing that the platform is bringing in new viewers who otherwise would never have found the show.

HIT Bucking the trend.

Toymakers had a rough go of it again in 2005, with overall sales dropping about 2 percent, marking the third straight year of declines. But Texas-based Gemmy Industries has found a winning formula amid the slump: catering to America's insatiable demand for tacky novelty gifts.

Gemmy--whose past hits include the ubiquitous crooning fish Big Mouth Billy Bass--churned out another holiday must-have with Buck the Animated Trophy, a wall-mounted deer head that sings six different tunes with "life-like movements." Despite selling primarily at Kmart and Wal-Mart (Research) for a hefty $130, Buck has been a retail sensation, especially among the camouflaged set: Gemmy says it has sold over 200,000 units since the start of hunting season in September.

HIT No phone? No problem.

From the day Nokia (Research) unveiled plans to make a Linux-based Wi-Fi handheld for Web surfing and e-mail, industry insiders scoffed, calling the gadget "useless" and "a disaster," thanks in part to its missing calling capabilities. But the naysayers neglected to consult the consumer, with whom the 770 is striking a chord.

Since its release in November, the gadget has enjoyed strong online sales in the United States and Europe, so much so that Nokia said in January that it had sold out of its available inventory. Even better, the early adopters themselves are likely to boost future sales further as they enhance the device's capabilities--an open-source development site has already popped up. Nokia, meanwhile, says it's addressing the telephony issue with a VOIP software upgrade due later this year.

MISS Shock and aw.

When Taser (Research) went public in 2001, the stun-gun maker sent a charge through Wall Street, its stock tripling in nine months. But recently the only thing electrifying has been the speed of its descent. Taser suffered a series of jolts in 2005, including accounting errors that forced it to restate first-half earnings and delay its third-quarter report.

When it finally did file, the results were stunning: It reported that quarterly net income had fallen 95 percent to $330,000, largely as the result of safety concerns. Though 12 wrongful death or injury suits filed against Taser have been dismissed so far, the charges cut into demand while causing legal costs to skyrocket. Top of page

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