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.
photo of Scott Forstall from the Business Insider article
Apple chose to announce the termination of key executives just as the most treacherous storm of the century was gripping the attention of news junkies and casual observers. But not even Hurricane Sandy could keep this news under the radar. Scott Forstall, head of mobile software (iOS), and once thought to be the heir apparent to Steve Jobs, is leaving next year, against his will. John Browett, head of retail, was terminated immediately.
According to the Business Insider piece, the reasons for Forstall's departure include:
John Browett has been with Apple for less than a year. He made headlines when his staff cuts had a negative impact on retail sales and customer satisfaction. CEO Tim Cook will oversee retail operations until a replacement is found.
Sources: "Apple announces executive shake up..."; by Hayley Tsukayama, Washington Post, October 30, 2012."Why Apple's Mobile Leader Scott Forstall Is Out" by Jay Yarow for Business Insider, October 29, 2012.
Here is John Green's six minute explanation of what the deficit and debt reduction really means to the US and world economies: [Note: click on the link above; video could not be embedded]
this is a photo of John Green, who is a videoblogger and author. Please click on the link in the intro above the picture to access the video.
And here is Robert Reich's two-minute explanation of the US economy:
Both of these videos try to do a better job of explaining current US economics than US leaders and economic journalists. They have very different styles and approaches. After listening to each of them, I have an expanded overview of what matters and what doesn't. What is your take?
Sources: John Green video: Upworthy, October 26, 2012.Robert Reich video: YouTube & moveon.org, June 11, 2011
image by David Manning, Reuters: David A. Siegel: Boss who wrote a memo telling employees how to vote
Until 2010, it was illegal for corporations to use corporate funds to endorse and campaign for ballot measures and political candidates. Then, the Supreme Court "Citizen's United" decision was issued, essentially saying that "corporations were people." That is, corporations had the right of free speech, like American citizens, and therefore could use their funds and their time to speak out on any issue.
Georgia-Pacific and Cintas are among the many major companies that have used this new privilege to send out letters and other literature to employees to tell them how to vote. David A. Siegel (pictured above), executive of a time-share company, told employees that their jobs would be threatened if a certain candidate was elected.
According to the NYT article linked below, executives are writing letters that complain about health care costs, tax increases and the "costs of over-regulation."
Cartoon by Charles Barsotti, (expressing a different viewpoint)from the New Yorker, October 29th and November 5, 2012.
What do employees on the receiving end of these letters think? Adam Skaggs, senior counsel for the Brennan Center for Justice, said, "If you're in a small community with a big employer, will you feel uncomfortable about putting up a yard sign for a candidate your boss doesn't favor?"
It does make one think about for "whom" the right of free speech was intended.
Source: "Here's a Memo From the Boss: Vote This Way," by Steven Greenhouse, NYT, October 27, 2012 (online and in print).
........Video from link below.
Jeff Masters, meteorology director of the forecasting service
Weather Underground, is worried. Hurricane Sandy is "looking like a very serious storm that could be historic,"
said Masters. "The Perfect Storm [in 1991] only did $200 million of damage and I'm thinking a
billion [for this storm]."
This storm is considered a "hybrid" because the storm moving up from Cuba is merging with another weather system, increasing the probable impact. The storm, predicted to be at its worst a few days before Halloween, is being dubbed the "Frankenstorm." The congruence with the full moon will make things worse. Forecasters now say that there is a 90% chance of the East coast getting hit hard.
Getting hit means experiencing 10 inches of rain, and two days of 50 mph+ winds, resulting in wind damage and power outages as well as the huge financial impact of business disruptions. Utility companies, conversely, have put its employees on notice that all time off will be cancelled, in order to maximize the response to downed power lines.
It might be a good time to be in the business of providing sand bags and window-board-up services...
Restaurant worker tries to protect business property (from article linked below)
Retail workers board up store (from article linked below)
Source: "Hurricane Sandy Hybrid Could Hit New York, New Jersey and Pennsylvania," by Seth Borenstein, AP and The Huffington Post, October 26, 2012.
image from artfulaging.blogspot.com
Today's seniors can't afford to retire. According to a Wells Fargo survey reported on a broadcast on KPCC this week (linked below), one-third of middle class workers plan to "work till they're 80," which is unfortunately past the average lifespan. Many in their 50's and 60's have been downsized out of their first careers, or have retired with insufficient retirement assets, and are looking to re-invent themselves in a second career. The KPCC "Take Two" team interviewed Marci Alboher about the changing landscape of retirement. She is a Vice President at Encore.org, which helps seniors find second careers in non-profit areas. Ms. Alboher is looking to give seniors a chance at being more fulfilled as well as supplementing their social security or recession-hobbled 401K retirement assets by creating an "encore career."
Alboher says that the retirement issues faced by workers have worsened and will continue to get worse. This is partly because fewer businesses are providing "defined benefit" retirement plans, which guarantee a certain amount of income in retirement. Instead, employees are lucky if they can get a "defined contribution" plan, like a 401K plan, which allows employees to put aside a limited amount of investment each year toward their retirement. Employees are not guaranteed anything--they could lose it all in a market downturn...or they could profit and end up with enough to retire on. There is no safety net.
If seniors who now cannot afford to retire are staying in their jobs longer, or are getting "encore jobs," it follows that this will have an impact for others in a stagnant or shrinking job market. Promotional opportunities for those in their 30's and 40's will be fewer...which in turn would mean fewer entry-level jobs for those in their 20's.
image from news.efinancialcareers.com
Alboher believes that the concept of retirement is being re-thought, and that more individuals will work in a second "encore job" till very late in life. One of the reasons for this is that, to retire in reasonable comfort, it is necessary to save 12 times what is now 80% of your salary. This means that if your household income is $100,000, then you would need to save [$100,000 x 80% x 12] or $960,000 to be able to retire and still make ends meet. This takes a lot of risk-management planning and investment follow-through!
Source-podcast and transcript: "Is the Great Recession redefining retirement?" Take Two, Southern California Public Radio, October 26, 2012. [Alex Cohen and A Martinez of Take Two, with Marci Alboher, VP of Encore.org ]
image by Peter Wynn Thompson of the New York Times
Nick Sarillo is a pizza shop owner, who has built his business by developing and adhering to a "trust-and-track management style." He developed his principles the hard way--first by being overly optimistic and over-expanding...and then by saving his business. To do this he appealed to his customers with transparency. Then, because he was dealing with a young employee population, he adopted a "coaching" attitude, by making goals clear, allowing workers to meet those goals in their own way, and by tracking successes and giving real bottom-line feedback.
Sarillo's marketing plan was also unique. He tracked and gave back 5% of profits to the community by allowing groups to use his building to fund-raise. This increased his visibility and made his business an integral part of community activities. Sarillo has written a book about his management style: "A Slice of the Pie: How to Build a Big Little Business." He has also been on the cover of Inc. magazine.
Source: "A Pizzeria Owner Learns the Value of Watching the Books," by Ian Mount, NYT, Small Business, October 24, 2012.
image from Reuters by Jane Rosenberg
Several months ago, I wrote a blog about the sentencing of Raj Rajaratnam in "Insider Trader Gets Eleven Year Prison Sentence." This week, another player in that scandal, an insider at Goldman Sachs, Rajat Gupta, was sentenced to two years in prison and a $5 million fine. The sentence was far less than prosecutors requested. Nevertheless, the judge and others deemed Gupta's crimes as "a terrible breach of trust." Gupta leaked information, obtained at a Board meeting, of a pending investment by Warren Buffett.
Source: "Ex-Goldman Director Gupta Gets Two-Year Sentence," by Grant McCool and Basil Katz, Reuters, October 24, 2012.
images from respective company promotional materials
UPS and 3M are two businesses that support other businesses in achieving their goals. UPS shipping directly correlates with Sales of many companies. 3M products--tape and packing materials--also correlate directly with increased production and Revenue levels.
When these companies report a drop in earnings and Sales projections, it is an indicator of overall economic health and growth. According to the commentators, even though introductions of new products such as the iPad mini may influence holiday sales, until "emerging markets" experience a growth in demand for basic middle and upper-middle class necessities, companies like UPS and 3M won't see growth, and neither will the US economy.
Source--Podcast: "UPS and 3M lower earnings forecasts" by Jeff Horwich, Marketplace, American Public Media, October 23, 2012.
Follow up: What specific consumer items needed by third-world countries are mentioned in the podcast? Do you agree? What other items would you add to the list as indicative of consumer growth?
Winnie O'Kelley of Business Day Live. See Video Story at Source Link below
In advance of the final presidential debate centering on foreign policy, Winnie O'Kelley of Business Day Live, interviewed Annie Lowry about the economic effects of certain foreign policy positions. Two items that Ms. Lowry believed would be central to the debate were the US position on trade with China and defense spending.
Lowry predicted that the issue of China being a "currency manipulator" would arise, and that trade policies with China would be a major factor over the coming years. As China's economy improves, its citizens become more willing and able to purchase products manufactured in the US and other countries. The valuation of the Chinese currency, however, makes Chinese products more attractive to consumers world-wide. This unfairly impacts the export figures for countries, like the US,whose currency is valued more appropriately. International pressure, particularly from the US administration is seen as a way to open up markets for American businesses.
Changes in defense spending can also have a major effect on US businesses. Defense contracts, being long term, have a way of stabilizing the economic future for companies and cities where defense production and military bases are located. In addition, the defense budget has a direct impact on semi-skilled jobs.
Video source: "Business Day Live: Economics of the Foreign Policy Debate," NYT Dealbook, hosted by Winnie O'Kelley, and interviewing Anne Lowry, October 22, 2012.
image from images.businessweek.com
Earlier this week, I found an article about a California medical research firm that managed to get a project funded with tax-payer dollars. It made me be vigilant for other instances where government money has made a big difference for a private company. I didn't have to wait very long, or look very far. An article by Greg Palast in The Nation described how a private equity manager, Paul Singer of Elliott Management, used strong-arm tactics to purchase the stock of Delphi, a key supplier of auto parts to the American auto industry. Delphi was then the recipient of government bailout money, and prospered as the US auto industry has turned around in the last two years.
The reason this story is news now is that Ann Romney's blind trust made a $1 million investment in Elliott Management prior to the purchase of the Delphi stock, so Mitt and Ann Romney are beneficiaries of the increase in the value of that investment from 67 cents per share to $22 per share. Wow! That is a more than a 3,183% return on investment over a two-year period. None of that return would have been possible without the government bailout of the auto industry.
Mitt Romney was not in any way an active participant in this scenario. On the contrary: Mitt Romney wrote an editorial, published in the New York Times, on November 18, 2008, entitled "Let Detroit Go Bankrupt." The article clearly stated a position opposed to the government bailout that led to the enormous profits from which he would eventually benefit.
Mitt Romney did absolutely nothing wrong, even though the article unfairly vilifies him. He is just lucky to have been in a position to make an incredible amount of money the way only those in "the 1%" can make money.
Source: "The Romneys Made Millions Off the Auto Rescue Mitt Opposed," The National Memo, October 20, 2012.
image from the article linked below
Google didn't do as well as anyone expected last quarter. Not only that--Google unfortunately filed its report with the SEC before the end of trading on Thursday, October 18, and the stock market immediately punished Google for its poor performance. Its stock price fell 9% before the end of trading.
Reported profits for the 3rd quarter were down substantially: 20%. This performance was the result of two factors:
It seems that Wall Street gets nervous when a powerhouse like Google does poorly. It remains to be seen whether things will turn around by year end.
Source (print and podcast): "Google Shares Drop..." by Eve Troeh, Marketplace Business, American Public Media, October 18, 2012.
Bob Klein: image from the California Stem Cell Report
Medical research and development costs big bucks--but the payoffs can also be great. Primary research into stem cell possibilities is one area that medical researchers and business investors both hope will produce spectacular returns. But one company, StemCells Inc., has been particularly successful with respect to attracting investments to fund its research from a tax-payer funded source.
The California Institute for Regenerative Medicine (CIRM) is a $3-billion tax-payer-backed fund. It has given more money to StemCells, Inc. than to any other single entity. $20 million went to CIRM went to fund Alzheimer's research...but that project had been rejected two times by CIRM's scientific review panel. However, due to "arm-twisting" and "lobbying" of CIRM's Board of Directors, the Board reluctantly agreed to approve the funding.
CIRM does not have a stellar record of "arms-length" transactions in its funding of research done by non-profits: approximately 90% of the money it doles out goes to entities affiliated with CIRM's Board members. But this situation appears to be particularly egregious because the Board felt pressured by Bob Klein, described by Michael Hiltzik as:
"...the Northern California real estate man who drafted
Proposition 71, headed the ballot campaign and served until last year as
the first chairman of the agency's governing board. In California stem
cell circles, his prestige is immense. And the fact that his advocacy
for StemCells was his first such appearance before the board since his
departure surely gave it a special zing...Klein's pitch was that
StemCells was about to publish in a peer-reviewed journal new data
validating its Alzheimer's approach."
The defense of the appeal seems a little thin, but the funding was approved anyway. The situation seems to raise issues about arms-length transactions, and the fiduciary responsibilities of Board members. An in-depth insiders view of the situation can be found at the California Stem Cell Report.
Source: "Reaping benefits of stem cell fund,"by Michael Hiltzik, Los Angeles Times, October 17, 2012.
Video is linked at The Guardian
This year's Nobel Prize in Economics went to two academic researchers who separately developed models for "two-way" marketing transactions. These transactions require that both parties to the transaction agree to engage in the transaction before it can take place. Some examples of these transactions are:
Roth, when interviewed after the announcement, said that he was going to teach his classes as usual. "But I imagine that they'll be listening with renewed interest," he said.
"I think this will make market design more visible to economists and
people who can benefit from market design."
Source: "Nobel Prize for economic sciences awarded to Alvin Roth and Lloyd Shapley-video." [Note--the first part of the video is sub-titled in English, but the second part is in spoken English].and "Nobel Prize for Economics Won By Alvin Roth and Lloyd Shapley," by Larry Elliott and Josephine Moulds, The Guardian, October 15, 2012.
image from deathandtaxesmag.com
"The fox is guarding the henhouse" is a metaphor that warns against overseers that have vested interests. The analogous situation with respect to food inspection created a grim reality this past summer. Listeria-contaminated cantaloupes caused illness for 147 consumers, and resulted in the deaths of 33 people (Bloomberg Markets Magazine, November 2012).
image from the first article linked below
We in the United States might think that our food gets objective government inspection, but that is far from accurate. The FDA (Food and Drug Administration) had never inspected Jensen Farms, the purveyor of the Listeria-contaminated cantaloupes. Instead, Jensen had been given a top safety rating from a subcontractor hired by Primus Group, Inc., a private, for-profit inspection firm. According to the article:
"In 2011, the FDA inspected 6 percent of domestic food producers and just 0.4 percent of importers. The FDA has had no rules for how often food producers must be inspected. The food industry hires for-profit inspection companies -- known as third-party auditors -- who aren’t required by law to meet any federal standards and have no government supervision. Some of these monitors choose to follow guidelines from trade groups that include ConAgra Foods Inc. (CAG), Kraft Foods Inc.and Wal-Mart.The private inspectors that companies select often check only those areas their clients ask them to review."
According to industry professionals, the situation is getting worse. Several factors contribute to the deterioration of security with respect to food safety:
In another recent story, it was discovered that Asian seafood exported to the United States had been fed pig excrement. This practice causes concern because of the role that pigs play in the incubation and spread of viral illnesses. Transparency with respect to food inspection may cost businesses more, but it may be a factor in consumer preferences.
Sources: "Food Sickens Millions as Company-Paid Checks Find it Safe," by Stephanie Armour, John Lippert, and Michael Smith, Bloomberg Markets Magazine, October 11, 2012
"Asian Seafood Raised on Pig [excrement] Approved for US consumption" Bloomberg, October 11, 2012. [Note: Please do a web search for this title, since use of an alternate word in the link for the one in the bracket disrupts the link on this blogsite.]
sample of a graph analyzing web traffic vs. sales from andrewhy.de
Medical Cosmetics had a problem: they were getting a lot of visitors to
the website for their non-surgical aesthetic medical business (Botox,
lasers, etc.)--but those visitors were not translating into new patient revenues.
Michele Bracci, wife of the founder, Dr. Stephen Bracci, and marketing director for Verve Medical, did an analysis and decided to make some changes to the website. The changes Verve made included:
photo of the successful MD and marketing team from article linked below
These were the results:
The Verve Medical Cosmetics experience was a successful one, but many small businesses do not approach web design in a successful way, according to Gabriel Shaoolian of Blue Fountain Media in New York City. Three strategies can make all the difference in achieving a web design that leads to increased Sales:
Source: "Three Proven Ways to Convert Visitors to Buyers Online," by Katherine Reynolds Lewis, NYT Small Business, September 12, 2012.
you remember being a teenager, and being too embarrassed to ask anyone
about medical issues that concerned your body and your health? Using
social media to bridge this gap is certainly a way of "building a better mousetrap."
and health clinics are businesses--actually classic examples of service
businesses. Doctors in private practice are "small businesses" (check
out the small business blog from a few days ago). The article linked
below puts the focus on doctors who are building their business
services by including text messages as part of their care delivery
image from article linked at "Source" below
There are pros and cons to this new business model. The obvious advantage is that teenagers--who often avoid doctors and shun advice from adults--can connect in a way that feels more comfortable. The doctor featured in the article also has a whiteboard filled with resources. Teens can take photos of the board with their smartphones and then access the resources when they need them. This is both more sustainable (no need to waste paper on brochures that are usually discarded) and more effective--the photo remains in memory, ready to be accessed when it is needed.
One possible consequence of this information delivery system, however, is the possible loss of privacy if the phone is not effectively password-protected.
Doctors are also using Facebook, their own websites, and other internet sites to deliver information to patients. In order for these resources to work for their businesses, however, they need to balance the cost/benefit in terms of time. For example, text messaging might SAVE time, if it avoids "phone-tag," but if it can also become time-consuming if clear boundaries are not set.
Source: "Texting the Teenage Patient" by Jan Hoffman, NYT Well, October 8, 2012.
napkin drawn by Carl Richards, whose article inspired this post; link below
If your financial life is in disarray, and you don't know where to begin planning, start by creating a balance sheet. This is the basis of all accounting: Assets = Liabilities + Equity. This can be restated in a format simpler for personal finance as:
Assets minus Liabilities = Net Worth
In a systematic way, just list your assets--the items that you own or have control of--on one side of the balance. These would include bank accounts, investments, real estate, personal property such as computers and furniture, jewelry, cars and any cash you keep on hand. Then, use statements or the internet to determine the value of each asset. You want to be sure to list your assets at their current value, so use Zillow or another service to determine property value, and "blue book" value for your automobiles. Check eBay to see what other assets might be selling for.
On the other side of the equation, list your liabilites--credit card balances, mortgages, car loans, student loans, and anything else you might owe. These are usually easier to value because almost always there is a certain exact amount due. Check your last statement, or go online to check your current balance outstanding.
When you are done, subtract your liabilities from your assets, and you will arrive at your net worth.
If you want to increase your net worth, you either need to add more assets or decrease liabilities. It is arithmetic, not some kind of hocus-pocus. Over time, you can create reasonable and achievable goals to improve your financial position.
Source: "A Simple Place to Start: Your Net Worth" by Carl Richards , New York Times Bucks Blog, October 1, 2012.
image by M. Spencer Green, Associated Press, from article linked below
Although CVS top management asserts that the policy is not company-wide, at least some CVS pharmacies have been filling prescriptions--and billing insurance companies--without patient approval.
CVS supervisor Ryan Barna sent a series of emails to the 50 pharmacists in his New Jersey region. These emails informed pharmacists that they had to meet internal quotas: At least 30% of prescriptions had to be re-filled. "You need to go out and make this happen this week and every week going forward," he instructed pharmacists, and added that "major personnel changes" would be among the consequences for those not meeting their quota. Barna advised the pharmacists to call the patients four times, then fill the prescription anyway, and leave a message with the patient that the prescription they needed would be ready for pick-up.
CVS has previously been found to have enrolled patients in their automatic refill program, without prior patient approval. Also, at least one CVS email quoted this tactic as a "best practice." Insurance claims are submitted when the prescriptions are filled--not when the patients pick them up. The New Jersey Division of Consumer Affairs will be following up on this matter.
As part of the LA Times article, David Lazarus contacted the California Board of Pharmacy and spoke to the Executive Director, Virginia Herrold, about the legality of refilling prescriptions with patient say-so. She said that such practices would constitute insurance fraud under California law.
Source: "Don't need that drug refill? Here it is anyway" by David Lazarus, Los Angeles Times, October 5, 2012.
image from articles2day.com
Even though both of the presidential candidates were bragging about what he'd do for small businesses in the first debate of the 2012 campaign season, one observer, via a Huffington Post article, saw fit to point out some major facts about small businesses that neither debater seemed to understand:
"Small businesses don't create the majority of jobs": According to Jared Bernstein (senior fellow at the Center on Budget and Policy Priorities), an analysis of government data shows that, since 1990, companies with more that 500 employees have done better at job creation than companies with less than 50 employees.
"Obama didn't really cut taxes for small businesses 18 times": Some of the tax cuts were tax incentives. They worked like a consumer buying a product at at special price. Sure--they can get the $100 shirt at a 25% discount. But they have to spend $75 to save the $25. It's not the same thing as a real tax cut.
"Most "small businesses" have one-man payrolls": 77% of businesses only employ the owner. If someone works as an "independent contractor" instead of an employee, then that contractor is technically a small business. This person is unlikely to employee additional workers.
"The small business job-creation problem goes back decades": The Hudson Institute released a report in September that showed that small business job growth fell during Clinton's administration, and also during Bush's administration. Businesses have been starting up with a smaller number of workers for several decades. We might picture a small business start-up as a dot-com with dozens of happy workers, but that is not the reality for most small businesses.
Since job creation matters--especially to the millions of Americans who are still unemployed and looking for work--it is important that any leader have a broad and deep understanding of the issues.
Source: "Presidential Debate: Five Small Business Facts Romney and Obama Conveniently Omitted" by Nate C. Hindman, Huffington Post, October 4, 2012
image from infosurv.com
VoiceBunny's CEO Alex Torrenegra recently pitched his company's voice-over software to the New York Tech Meetup, which is a marketplace for startup capital. VoiceBunny software allows a client to do a virtual audition by posting an online script. Voice-over artists can then audition by reading that script using the VoiceBunny software.
Actual voice-overs to be used in product can actually be recorded from these online readings through VoiceBunny, and payments for services can be collected. The niche marketing hook is: Get a professional-sounding voice for a reasonable price, and get it right away.
Voice over actors can't really make a good living by reading one-liners and getting paid less than $20, but the mini-gigs can help make ends meet between bigger jobs. It's a sustainable way of working because there are no commute times or costs. In addition, the advantage to crowdsourcing is that the job advertisement goes out to whomever might be hooked up to VoiceBunny and there is an instant match-up regarding availability.
image from voicebunny.com
Link to Podcast and transcript: "Could crowdsourcing talent online create jobs?" by David Brancaccio, American Public Media Marketplace Tech Report, October 4, 2012.
photo by Peter Foley of Bloomberg
Hedge fund manager David Einhorn (of Greenlight Capital) made a recommendation to short Chipotle stock. The consequence? Within five minutes the stock had tumbled 7%.
Chipotle has recently had several issues its expansion into other ethnic restaurants, and problems related to its hiring practices. Nevertheless, they are part of a growing restaurant segment of upscale casual restaurants.
Mr. Einhorn made his comments at the Value Investing Congress in New York.
photo from newshour24
Source: Los Angeles Times, "The Einhorn effect: Chipotle tumbles after Taco Bell comparison" by Tiffany Hsu, October 2, 2012.
image from article linked immediately below
Link to radio podcast and transcript: "Cloud Computing Saves Health Care Industry Time and Money" by Wendy Kaufman, NPR, All Things Considered, October 1, 2012
Health care research, analysis and data-sharing is now much less expensive, due to "cloud computing." Amazon sells cloud computer space to companies, including hospitals and medical research institutions, and those entities use the computer power to solve medical problems, diagnose diseases, and find cures.
One drug company wanted to screen 21 million chemical compounds. Rather than purchase the 50,000 laptops needed to analyze the data--as well as hire workers for several years--three hours of cloud computing time was rented at a cost of $15,000.
Of course, another feature of using the cloud is the opportunity for sharing information and ideas about products in development, diagnoses, and treatments. The business benefits exists for both the users of the cloud computing services...and for the providers. According to the article, it is estimated that Amazon makes $1 billion annually and growing.
image from guitar-site.org
Source: NYT "A Guitar Maker Aims To Stay Plugged In" by Janet Morrissey, September 29, 2012.
Fender Guitars has been around since 1948, when Leo Fender fashioned his first electric guitar. When I worked for CBS, Inc., in the early 1980's, Fender was located in Fullerton, California, and was owned by CBS--as part of Fender/Rogers/Rhodes. But now, it is called Fender Musical Instruments Corporation, and it is located in Scottsdale, Arizona. Weston Presidio owns almost half of the company--but it is trying to sell its interest.
Fender--the favorite guitar of many a classic rock star--is in trouble.
The changing nature of the music industry, and of recording media and instruments themselves has made the future less rosy for a guitar manufacturer. People are making music on laptops...or on cheaper guitars made in China (where some of Fender's guitars are now also made). In addition, the businesses with which Fender has forged partnerships are also struggling.
In times of economic downturn, too, there is less disposable income available for discretionary purchases such as musical instruments. More guitars are available on eBay and other second-hand markets.
Fender must adapt to survive.