Teri Bernstein, MBA, CPA has been teaching full time in the Business Department of Santa Monica College since 1985. Prior to that, she worked in Internal Audit and Special Financial Projects for the 1984 Los Angeles Olympics, CBS, Inc., and Coopers & Lybrand. She attended the University of Michigan and Wayne State University.
Even though it was not a great stock market day today (April 30, 2012), Barnes & Noble stock went soaring. Reuters reported early in the day that there were a few stocks to watch for their performance today. But why would Barnes & Noble--a bookseller in a decade where booksellers are failing--jump over 60%?
Here is the succinct report from Reuters Market Pulse report:"MICROSOFT CORP $32
BARNES & NOBLE INC $22.36, up 63.5 pct
Microsoft has agreed to invest $300 million in Barnes & Noble's Nook digital-book business and college texts, in a deal that helps establish the value of the popular Nook business while giving Microsoft a foothold in the e-book market. "
I guess that says it all. If Microsoft wants a piece of your business, your stockholders are going to benefit.
image from itnews.com.au
A business communication blog, Contactually, posted a piece recently about 4 blunders to avoid in email communications. Their piece was directed at small businesses, but their suggestions can apply to anyone using email for business communication.
I think that two of the issues mentioned address one of my own pet peeves--students responding to a general message I send out with a special request--but without changing the subject line. For example, I send out an advance syllabus to my online students, with the subject line similar to "Preliminary syllabus for Business 1"
Sometimes I get back an email with the same subject line, but with this content:
"Professor--I have an emergency and need to be out of the country for the first two weeks of class. Please don't drop me!"
The message is very important, but the way it shows up in my mailbox is "Preliminary syllabus for Business 1" It doesn't look like a priority email to me, even though, IF I open it, I find out that it is important.
I would add a few other "best practices" to email content:
right click on the image to open it in a new window so you can see the detail with more clarityor, if you want a BIGGER IMAGE ...
The other day, BBC news reported that Nestle Corporation was about to buy Pfizer Nutrition. One of Pfizer Nutrition's main products is infant formula, and 85% of its business is in emerging markets, according to this news story.
"Geez," I thought. "This is like deja vu all over again." (to quote Yogi Berra) Nestle Corporation, the Switzerland-based food giant, made the news years ago for its marketing of infant formula in third-world countries. Unfortunately, this had several unforeseen consequences--mothers misunderstood how to dilute the formula, often depriving their babies of needed nutrition. Water supplies for diluting the formula were often contaminated. Mothers did not realize that their natural milk supplies would dry up if they fed their infants formula. As a chocolate lover, my main connection to Nestle was their chocolate milk powder, so I was surprised to learn how diversified a company they were. At any rate, the infant formula controversy in the early 1980's was an often-written-about global marketing disaster. I wonder how Nestle will roll forward this acquisition.
As it turns out, many businesses are highly diversified. The graphic above is a festive representation of some of the relationships. However, when there is horizontal integration, competition lessens, and consumers often find themselves with fewer choices. Favorite brands might disappear as corporate purchases swallow up competition.
image from Marketplace piece linked below
In the same week that Mad Cow Disease was in the headlines because of a sick cow in California, Whole Foods, in honor of Earth Day (April 22), decided to no longer sell "red-rated" seafood at its stores. These red-rated fish are either over-fished or are caught in a harmful way, according to the Blue Ocean Institute and Monterey Bay Aquarium.
The fish, which might seem expensive when priced at $13.99, $16.99 or even $21.99 per pound, do not really reflect the full cost associated with catching and killing those fish on a sustainable basis. Jeremy Hobson of Marketplace interviewed David Ginsburg (a USC environmental biologist) to find out what these ratings mean. Ginsburg said the real cost of the fish, in terms of the environmental cost that would be incurred to replace the fish, would probably be double the current retail price. In 10 years, that fish might cost $100 per pound, and fish like Ahi Tuna might not even be available 20 or 30 years from now.
Fox News reported that Whole Foods is the first national retailer to take a stand on this issue.
if video above doesn't open, click this link: NY Times Business Live video
The first story in the New York Times Business Day Live video above discusses a new business niche being explored by big banks such as US Bank, Bank of America, Wells Fargo, and Citibank. They are marketing services to "unbanked" customers, who typically get checks cashed at storefront "pay-day loan" shops. Here's the catch, the storefront check-cashing and short term loan businesses are heavily regulated by legislation passed recently in connection with the Consumer Financial Protection Bureau. This limits the amount of interest that can be charged, and requires several disclosures.
There are, however, loopholes in these laws, and the loopholes are being exploited by big banks, at the expense of the poorest customers. First of all, the regulations aimed at the pay-day loan shops do not apply to banks. There are no limits on interest. According to the video piece, sometimes 300% interest charges can apply to these transactions. The banks market services to direct customers to higher interest and higher fee options.
One product that is in a growth mode is the "pre-paid gift card." American Express is also involved in this business, which currently is a $30 billion market that is expected to grow to $90 billion by 2013. There are many hidden fees in these cards, including diminishing balances just by the passage of time, and fees for speaking to a live customer service representative.
The Consumer Financial Protection Bureau is looking into expanding recent regulations to include activities engaged in by big banks.
image from article linked below; pictured: Caine Monroy
Many Facebook and internet aficionados have been reading lately about Caine Monroy, a 9 year old who built an arcade out of cardboard while amusing himself at his dad's workplace. The interview by laist.com with Caine can be found at this link: Caine's Arcade: interview with Caine
Some facts about this remarkable young entrepreneur:
Caine has gotten a lot of help from others, including Nirvan, who made a video called "Caine's Arcade." This film was a vehicle by which people could share information about Caine's arcade on social media. This social networking made Caine's Arcade a hit. Forbes magazine predicted that Caine would be a billionaire within 30 years.
image from article linked below at Marketplace
Here's an IPO for a business that will help other businesses manage the "Big Data" that you and me and millions of others generate when we play Angry Birds or click a link on our iGoogle page. The name of the company is Splunk, and Marketplace's Queena Kim interviewed several experts about Splunk and its IPO this week.
As it turns out, the sheer magnitude of the data that is being collected even by small companies is mind-boggling. The "Cookies" deposited on your hard drive by businesses whenever you interact with them online deliver chunks of data about you and your preferences and spending habits. Businesses--especially large businesses like Facebook, Google and Zynga--want to be able to use that data to understand their customers better.
Splunk is a company that helps big and small businesses filter and summarize that data in usable form.
image from it lounge.com
The reality of "Cloud computing" is not at all what it seems. We might be getting used to the idea of parking all of our files in cyberspace. But this cyberspace is not a nebulous cloud. A Cloud is a huge warehouse, filled with computers and using a lot of power to keep those computers going, and to keep those warehouses cool so the computers don't overheat.
image of one of Apple's iCloud centers from smartphoneseek.com
So Greenpeace decided to weigh in on how environmentally friendly these data storage centers actually were. Amazon and Apple each received an "F" grade; Google did a little better because it uses some sustainable energy sources. Gary Cook, from Greenpeace International, says that these warehouses, plus the carbon footprint of the telecommunication services that are required to access the data "would place it fifth largest in terms of countries and it's supposed to double, potentially triple in the next ten years, and so this demand could, if attached to the right source, could really be leading us toward a renewable energy economy.”
But, at least in Amazon's and Apple's situations, the power input is NOT attached to the right source. The centers are using a cheap source of power: COAL. Apple does have plans to incorporate solar power, however, but it is requiring time and money to get their "solar farm" up and running.
Link to: the Marketplace Tech Report article by John Moe
Link to: Full report by Greenpeace
image from sabinabecker.com
It is a belated tax day here in 2012--falling on the 17th rather than April 15th--but it is tax day nonetheless. I prepare three tax returns for our family, and let's just say that when I was in my 20's I could live comfortably for 3 years on what we pay in Federal taxes alone. My California tax bill would make a decent annual salary. But I am not complaining. I have a safe country to live in, where I have a lot of freedoms and choices, half way decent roads...and LIBRARIES! how cool is that!. I have had plenty of economic opportunity.
I was feeling pretty good about my situation until...I read that several mega-corporations are not paying their fair share in taxes. The NY Daily News article by Camille Rivera and Dan Cantor delineates how General Electric, for one, does it. BTW-- General Electric earned $10.5 Billion in US profits alone, between 2008 and 2010. Its top executives made $234 million during that time. But GE got a TAX REFUND of $4.7 Billion tax refund over that period.
Here are some of the loopholes and manipulations that GE took advantage of:
Other companies, such as hedge fund management companies, have even more egregious tax havens. If these corporate entities paid their fair share, the tax bills of middle income taxpayers would decrease.
Please take note: Even if you "got a refund," be sure to check out your data. Look at how much you PAID in taxes, even if a refund was due. Check Social Security taxes, Medicare Taxes and State Taxes as well as Federal Income Tax.
image from switcheasy.com
The following link showed up on my Facebook page today. DESIGN and STARTUPS. I followed it, and found that it was a combination of:
The young Mr. Riley knows that "the medium is the message." [see Follow up] He has created a well designed website that provides substantial content for any interested web surfer--with a point of view. The ease with which the reader is able to move from topic to topic is an interactive advertisement for the way that good design can draw in the skeptical. I clicked on the link, planning to click right back out. But it caught me. I was curious.
The site is intriguing. It gave me a brief education in design precepts, and the principles espoused by some premier design people. Moreover, it showed me what great design looks like on a webpage.
I began to think of all the possibilities for marketing, for entrepreneurs and...when I arrived at the end of the piece and saw that it was put together by a soon-to-be college graduate, I realized it was a great example of a Year 2012 resume.
I figured I had to share it.
image from core77.com
image from ktla.com
Price fixing scandals might seem like a remnant from history, but a recent case involves some of the newest technology. This will be old news to those of you who own and use a Kindle (Amazon). Did you ever wonder why so many of the books were priced at $9.99 (which for some books is below Amazon's cost)? And how did those books get so much cheaper than hardcovers or paperbacks? Publishers and Apple, Inc. don't like the way that Amazon has attracted customers with its low-priced content.
Marketplace's Eve Troeh and Jeremy Hobson discussed the lawsuit brought by the Department of Justice on a recent broadcast. [the "lawsuit..." link is to a Wall Street Journal article which provides more detailed information...but WSJ links sometimes expire].
The Department of Justice sued 5 publishers and Apple, Inc. accusing them of conspiracy to raise eBook prices by meeting secretly in restaurants and sending follow-up emails. The publishers are trying to hang onto some way of making money in this changing environment where so much of the reading public has switched to eBooks. The more voracious the reader, the more likely they are to benefit from a consistently low-priced book delivery (such as that provided by Amazon). As a group, the publishers then tried to pressure Amazon to change its pricing policies, or so the Department of Justice claims.
Apple might be in the mix because they see the bigger picture--and want to be the delivery system of not only book content but also movies and entertainment content. Amazon is moving into this area with their Kindle Fire tablet. Apple does not want to see Amazon dragging its loyal book readers into the other content.
Three of the lawsuit respondents have already settled, agreeing to let Amazon do what it wants to pricing. Apple has not settled, but denies participating in price fixing. What Apple may have done, is request an "agency pricing" model, and then make the publishers apply this pricing to everyone, including Amazon. Is this unethical? While that question may remain debatable, the legality of the publishers' and Apple's actions will be determined in court.
image from simonrezende.com
The stereotype of "oil magnate" tends to be masculine: JR Ewing of Dallas fame, Daniel Plainview (the character played by Daniel Day Lewis in There Will Be Blood)...or an oil sheik (such as in the not-yet-released-in-the-USA film Black Gold). But in Brazil, Maria das Graças Foster, the head of Petrobras, is the most powerful woman in the oil business, according to a NYT article by Simon Romero.
This is news now because Dilma Roussef, the current president of Brazil, is a long-time board member of Petrobras, and she influenced the board to promote Ms. Foster this year. It is also news because Petrobras is investing in oil exploration, according to the article, as much (in time-adjusted dollars) as the US spent sending a man to the moon. Ms. Foster is well qualified to be overseeing the company while it undertakes this project because of her background as a chemical engineer, as well as having earned an MBA. She is dedicated to her work, choosing to live in a non-glamorous apartment. She does not own a car.
Like President Roussef, Ms. Foster supports the leftist Workers Party, but also wants to see foreign oil companies in Brazil to compete with Petrobras. Share price of Petrobras jumped 4% on the day that Ms. Foster was appointed to her present position. A major challenge that Ms. Foster faces, is surmounting the hurdles to increase production from 2.3 million to 4.5 million barrels a day.
cover of NYT Magazine 4-8-12
"Just one more game" is the article headline for the NYT Magazine cover story by Sam Anderson. How apt those words are, in my experience. How many of us have said that to ourselves as we played "one more game" of Angry Birds, or Words With Friends, or even Spider Solitaire, Freecell or Tetris?
By the way...the link to the article above contains a short, interactive shooting game.
Did I lose you for a few minutes to the linked game or did you continue reading? LOL.
The author recounts his own history of digital game abstinence and addiction, which he then justifies: "Humans have always played stupid games. Dice are older than recorded history. Ancient Egyptians played a board game called Senet, which archaeologists believe was something like sacred backgammon. We have rock-paper-scissors, tick-tack-toe, checkers, dominoes and solitaire — small, abstract games in which sets of simple rules play out in increasingly complex scenarios."
Anderson would get some support from Jane McGonigal, author of “Reality Is Broken.” McGonigal thinks that playing games, for humans, is a road to an ideal psychological state--healthy, productive and an "optimal form of engaging reality." Not an refuge from reality. Many game enthusiasts would agree, I think.
image from Amazon.com
One of the folks interviewed for the article, Zach Gage, is a 26 year old game app programmer--an "indie game designer." He recently developed Unify, which is a sideways, two directional version of Tetris. He has another game in development, which started as a parody of the very popular "Angry Birds," which he calls "Unify Birds." His recently released project grew out of an immersion in games he hates--word games. His is called SpellTower and in two months it earned enough money for him to live on for two years. How's that for an entrepreneur innovator/inventor?
The types of games, situations in which games are played, and the demographics both of who is developing those games and of who is playing those games has changed radically in the brief history of digital gaming. The genre of digital gaming provides quite an education in product cycles...as well as human nature.
"What's The Easiest Way to Cheat On Your Taxes?" It took a committee of writers to pull together this article in this weekend's NYT Magazine: [ADAM DAVIDSON, JACOB GOLDSTEIN, CAITLIN KENNEY, and DAN KEDMEY]. But what an eye-catching headline--and a timely one, since personal income tax returns are due next week on Tuesday. They surveyed 20 accountants to come up with some advice and some words of caution.
What are the easiest ways to cheat?
Taking advantage of legal deductions, even if they are loopholes, is not cheating. The biggest loophole deduction available to a large number of middle class taxpayers who are employees is the deduction for mortgage interest on a home.
The accountants also gave advice about what people had tried, but failed to get away with:
The tax code is so complicated that many grey-areas create what seem to be opportunities for creative interpretations of the tax code.
Here is one aspect of the tax code that did not make it into the article: there is a big difference, legally, between "not reporting income" and "exaggerating your deductions." For historical and practical reasons, failing to report income is a felony. This was so that criminals who could not be prosecuted for their more heinous crimes, could be prosecuted, convicted and imprisoned for not reporting income. The gangster Al Capone is an example. Therefore, the downside risk of no reporting income is considerably higher than most young people assume is the case.
<p style="padding left:60px;">0 from GSWlaw1 on you tube
As always, cheaters beware...
image from nowtheendbegins.com
Those of us who have been smug and complacent with our MacBooks now have to face a new menace: A malicious virus is attacking Apple computers with OS X. All it takes is a visit to certain websites...no need to download or take additional actions. It is easy to get infected. As reported on Marketplace, this is a game-changer for Apple marketing, and consumer perception.
Say Marketplace's John Moe: "The Flashback Trojan has infected over 600,000 Mac computers around the world, most of them in the United States, and it shows no signs of slowing down. It is unusual for bad guys to target Mac computers and while the incidents of big Mac attacks are still very slim compared to those on PCs, it’s happening more and more. "
I'm one of those former PC users (1983-2009) who experienced scores of computer crashes, freezes and data and document losses at the hands of PC viruses. Since I've had my MacBook Pro, I've felt safe. But apparently, as MacBooks and Apple products are used more and more for business transactions, it becomes cost-effective for criminals to develop viruses to attack Macs.
Additional technical details about this virus can be found at eweek.com
data from the US. Labor Department Bureau of Labor Statistics, pulled together by Lam Thuy Vo
LAM THUY VO and JACOB GOLDSTEIN, of Planet Money on NPR, pondered What America Buys this week. The graphic above tells part of the tale. But comparing the data from 1949 to the data from 2011 reveals a lot about values and changing times:
also from the Bureau of Labor Statistics, as organized by Lam Thuy Vo
Like all statistics, these figures hide some relevant facts. For example, the average house in 2011 is over twice as large as the average house in 1949. And there are more cars per capita in 2011, which accounts for much of the discrepancy in transportation. Still, it is clear that changes in agriculture and clothing manufacturing processes have made a difference in our food and clothing budgets. I wonder if there has been a corresponding decrease in quality?
image from the website of author fareed zakaria
Do you remember last summer, when the US Government and financial markets were brought to a crisis point because the legal debt ceiling was going to be hit? For those of us who have forgotten how that played out, Matt Bai wrote an in-depth analysis of the situation in this weekend's cover story for the New York Times Magazine: "Who Killed the Debt Deal?" The title of this article in print was: "The Game Is Called Chicken." (page 22).
The essence of the conflict was this: a private deal was brokered between President Obama, a Democrat, and John Boehner, Speaker of the House of Representatives, a Republican. The privately brokered deal involved serious compromise, and is rumored to have contained a re-writing of the tax code, painful cuts in Medicare and Social Security benefits, and other difficult trade-offs. These trade-offs might have been an "ambitious and significant" settlement that truly changed things for the better--one that only could have been brokered on the brink of financial disaster. But selling such a settlement to their respective constituencies would have caused each side considerable grief.
As it played out, it seems that both sides panicked at the eleventh hour. Republicans claimed that "Obama moved the goal posts." Democrats said, "Boehner couldn't deliver." Trust was lost, and the opportunity for real change evaporated. Both sides turned the crisis into a festival of sound bites that obfuscated the complex realities.
After all the assumptions about "current law" vs. "current policy" and "floor" vs. "ceiling" re: tax revenues were sorted through, what emerged was a compromise that was not brilliant, but it was workable, and showed that, pushed up against a real boundary, enough compromises can be negotiated to keep things going. For now.
But business thrives in environments that are stable, and the current situation is only as stable as the governmental relationships that influence the financial markets. What will happen next?
from the NYT article online: President Barack Obama and Speaker John Boehner
cartoon by RJ Matson of the St. Louis Dispatch
What a concept! Gretchen Morgenson muses about a radical idea in a NYT article, "How to Avert a Financial Overdose," in this Sunday's paper:
"The Food and Drug Administration vets new drugs before they reach the market. But imagine if there were a Wall Street version of the FDA--an agency that examined new financial instruments and ensured that they were safe and benefited society; not just bankers. How different our economy might look today, given the damage done by complex instruments during the financial crisis."
Most of us want to be protected from being misled. We don't want to look stupid if we believe what people say, even if they are only telling part of the truth. When things get too complicated for a "reasonable person" to understand--such as the possible side effects of new drugs--we look to our government to regulate industries that are too complicated for most Americans to understand. Financial instruments can be equally complicated. It might be a good idea to have a government agency vet any new instrument and place "black box warnings" on items that could be dangerous to an investor.
Nevertheless, Ms. Morgenson points out in her article that just last week Congress approved a bill to allow rules regarding derivatives disclosures to be circumvented. How can that be good for anyone except the business entity that intends to mislead others by avoiding transparency?
Could government regulation come to the rescue?
The FDA analogy is the brainchild of Eric A. Posner and E. Glen Weyl, two professors at the University of Chicago, who, being professors, published a paper on the topic. They are particularly skeptical of "credit default swaps." In any event, they propose a pro-active, regulatory approach modeled on the FDA to ensuring that financial instruments have received a review by experts concerned with the financial health of markets and individual investors.
Sounds pretty sane to me. What do you think?
Check out this product introduction video from Google:
OK, It's from Google. And the product introduction date is April 1, 2012. April Fool's Day.
Google has quite a track record for April Fool's Day pranks, and Gmail Tap is no exception. It is not the only product rollout by Google today. Google Maps has also introduced an 8-bit retro map for Nintendo Games.
Ironically, a publication famous for hoax headlines, The Onion, has chosen April Fool's Day to introduce its for real "The Onion" App for the iPad.
What fun! Businesses can use the silly fun of an American holiday to communicate with its cyberspace customers. The April Fool's Day event and past participation creates a marketing tool that utilizes information technology and social networking to create a positive connection to brand names and to products.
The nature of the holiday and the use of humor are powerful tools for creating or maintaining a positive image.