• IPO: Shamu making "splash" in stock market


    image taken by Gerardo Mora, Getty Images, from link below

    SeaWorld recently announced its intention to put forth a $100 million IPO (initial public offering). Its revenues have increased over the past three years, since it was purchased by the Blackstone Group LP. In the first quarter of 2012, revenues were up by 8%, and profits were up by 73%.

    As with any IPO, the question that investors must ask is: What is SeaWorld planning to do with the money raised in the IPO? In this case, SeaWorld plans to pay down debt, and make a payout to Blackstone.

    Source: "SeaWorld Going Public: Shamu making Splash in Stock Market," by , Southern California Public Radio, December 27, 2012.

    Follow up:

    • What other entertainment locations are owned by SeaWorld in addition to the SeaWorld theme parks?  Which of these venues seems to be the most promising for the future, according to analysts?
    • What additional questions would you like to have answered before you made an investment in the SeaWorld IPO?

  • Oregano key to marketing healthier chickens


    image from article linked below

    Demand can create supply. When it comes to food, a growing number of consumers want to only eat meat and poultry products that have not been pumped full of antibiotics, which is a part of big farm food production. From the linked article:

    "Retailers like Costco, Whole Foods, and Trader Joe's, as well as some restaurant chains, claim they cannot get enough antibiotic-free meat."

    To meet the needs of this growing consumer population, Bell & Evans is mixing oregano oil into its chicken feed, as an alternative to antibiotics.

    Some "health nuts" claim that oregano oil can help cure colds and other viral and bacterial illnesses in humans, but there is scant scientific evidence to back up such claims.  Nevertheless, Scott Sechler of Bell & Evans has been "medicating" his chickens with oregano-laced feed for about three years. His experience? Nothing has worked better as a substitute for antibiotics.  The use of oregano oil is also complimented by several "best practices" in terms of hygiene.

    In addition, Bayer, a drug producer, did a study with pigs comparing the oregano oil product used by Bell & Evans with four of Bayer drug products. To the surprise of Dr. Lucio Nipoli, the Bayer product manager, oregano oil out-performed all of the drugs, and the pigs taking the oregano oil looked "much more healthy and were not so dehydrated and wasted."

    More testing will be required if alternatives to antibiotics are to be in wider use.

    Source: "In Hopes of Healthier Chickens, Farms turn to Oregano," by Stephanie Strom, NYT, December 25, 2012.

    Follow up:

    • Are you concerned with the use or over-use of antibiotics in food production?  Why or why not?  Would you be willing to pay more for antibiotic-free meat?
    • Have you been aware of marketing campaigns involving antibiotic-free meat, poultry and milk?  Did your family buy an organic turkey for Thanksgiving, or do you purchase rBST-free dairy products? What laws affecting the production and sale of these products could make marketing them more profitable?
  • Immigration and business law for young workers: DACA


    image from mccoyouth.blogspot.com

    Deferred Action for Childhood Arrivals (DACA)...is a law aiming for humane treatment of young adult immigrants.  It creates opportunities for immigrants who arrived as children, but who are already integrated into the American education system and American culture. It allows businesses to be able to consider these young adults for employment.

    DACA is a messy piece of legislation for businesses in some ways. For example, if an employee presents new documentation after their DACA application, and indicates that they are "now authorized" to work, does that put the employer at risk for having employed the worker (using unauthorized credentials) before they were "legal"?

    On the other hand, businesses can hire workers with an EAD (employment authorization document) issued as the result of a DACA application, knowing that no laws have been broken or ignored. This expands the pool of qualified workers to hire.

    "Deferred Action" does not provide a permanent path toward citizenship, however. It would take the Dream Act to create such a path.

    Sources: "Deferred Action for Childhood Arrivals": Homeland Security URL with FAQs.

    "New Policy for Young Immigrants Creates Paperwork Deluge," Karen Grigsby Bates, NPR, December 12, 2012.

    "Five Issues Every Employer Must Know About DACA" by Ann Cun, LawLogix, September 12, 2012.

    Follow up:

    • Read the details of this law.  What do you see as possible advantages of the law to businesses, short term and long term?  What are the advantages for individuals?
    • What do you see as possible disadvantages to the law for businesses? What are the disadvantages for individuals?
    • Imagine that your parents moved you to a foreign country when you were five years old. Then imagine that you discovered, as you became an adult, that you did not have the same rights to work or drive a car as your colleagues, who were born in that country.  What would you consider to be a fair path to being able to remain in that country and to obtain full rights as a citizen? What would you see as other options for yourself?
  • Investment opportunities and Big Data

    This is an ad that appeared in this week's New York Times Magazine:

    The text of the second part of this advertisement reads:

    "Travelers who order special meals seem more committed to their plans. The only way to discover a surprising fact like this is to use new tools to analyze massive amounts of seemingly unrelated information. It's called Big Data and it's creating investing opportunities well beyond the technology sector.
    At Fidelity, we dig deeper into the big issues and hidden trends, using our global reach and expertise to give you smart investing ideas. Watch the video on Fidelity.com/thinkingbig for more forward thinking
    ."

    Since this is an ad, its contents should be taken with a grain of salt. But there are a few things going on here.  First, the ad--unusually--is based on an article that is footnoted in the fine print of the ad (and is linked below). The marketing tool used by Fidelity in this ad is that their advice is grounded in research, and is therefore more reliable.

    They are also making the point that their company is on the cutting edge of information technology--the use of big data--not just to market products, but to look for investment opportunities that relationships hidden to most of us might provide. The "smart investor" usually wants to get ahead of market trends, because that is where the bigger returns might be.

    I found it interesting, when reading the background article, that some of the most effective analysts of Big Data are engineers, physicists and actuaries, rather that MBAs. These scientists and math experts are more interested in the soundness of the algorithms providing the data, rather than being attached to any particular regression theory. 

    As ever, every reader, investor, or analyst must be careful to remember that Big Data is providing correlations not cause and effect. Nevertheless, if knowledge really is power, then investment opportunities might evolve from the best information extracted from Big Data.

    Sources: Fidelity ad reproduced above, New York Times Magazine, pages 8 and 9, December 23, 2012.
    "Bizarre Insights From Big Data," Quentin Hardy, NewYorkTimes.com, March 28, 2012.

    Follow up:

    • Research "Big Data" on the internet.  What companies are emerging as leaders in this field?
    • Would you invest in a company mining Big Data? Would you use information provided by these companies to make other investments? Why or why not?
    • What is the difference between "correlation" and "cause and effect"?  List some erroneous conclusions that can be drawn by confusing the two.

  • Happiness is the precursor--not the result--of success

     



    website linked below at "Sources"

    Shawn Achor has studied happiness, and he has found that a person's external world is only a 10% predictor of their success and happiness. A better predictor, according to his research and the research of other brain scientists, is the way one's brain processes the world--whether it is through a positive or negative filter.

    Achor quoted other statistics relevant to his research into "positive psychology":

    • 75% of job success is predicted not by IQ, but by "optimism levels, your social support, and your ability to see stress as a challenge instead of a threat."
    • A positive brain is 37% better at sales.
    • A doctor with a positive attitude is 19% faster and more accurate with diagnoses.
    • A positive brain is 31% more productive than when "neutral, negative or stressed."

    If your approach is more to the negative, do not despair.   There is one key activity that research has shown can activate the positive brain: For 21 days in a row, take 2 minutes to write down THREE new things that you are grateful for. To support this activity, other actions to increase the habit of positivity are:

    • journaling about one positive within the last 24 hours, allowing your brain to re-experience the positive;
    • exercise, which reminds your mind and body that actions have consequences;
    • meditation, to break the institutionalized "ADHD" that comes from multi-tasking rather than focusing on one thing; and
    • performing "random acts of kindness" (see the link for simple suggestions).

    Sources:  "The Happy Secret to Better Work," Shawn Achor, filmed at TEDxBloomington, May 2011. This is the link to the video embedded above. It also contains a link to a transcript of the talk. 

    Talk #2 in this link: "Shawn Achor: The happy secret to work success," filmed at TEDxBloomington, May 2011; posted February 2012 [ALL of the TEDxBloomington talks on business topics are posted here].

    Good Think Inc. "The Happiness Advantage" (contains links to book and other materials)

    Follow up:

    • What example from Shawn Achor's talk makes the most sense to you?
    • If you accept Achor's premise, what implications might it have for management of a business? 
    • Can these principles be applied to marketing as well? How has the opposite approach to positive psychology been used in traditional marketing campaigns?
    • Peruse the other videos in the TEDxBloomington site.  What other topics are of interest?

     

  • Kinder, gentler management

    Bill Moyers, in an interview with James Autry, former publishing executive and poet.

    http://billmoyers.com/segment/poet-james-autry-on-issues-of-art-and-heart/#

     

    James Autry was the CEO of a publishing company...but he is also a poet.  He has hired people, fired people, has dealt with budgets and administrative edicts. But...maybe...he is mostly a present and mindful human being who is interested in all that life has to teach us. Listen to this extraordinary interview and/or read the transcript. Read or listen to the poems..and the reflections of a CEO for whom self-interest took a subordinate position to reality.

    Source:  "Poet James Autry on Issues of Art and Heart": Bill Moyers, December 14, 2012. Note: video and full transcript are available at this site: take your pick.

    Follow up:

    • Read the poem about firing a salesman. What are your thoughts?
    • On an experiential level, what would you think about James Autry if he were your boss? List the pros and cons.

  • Gun sales are up...


    photo from the December 18 Fox News article

     

    Shortly before the tragic shooting at the Sandy Hook Elementary School in Newtown, Connecticut, Fox News reported that gun sales were up during this holiday season.  Commentators speculated that increased sales were due to Obama's re-election (and the possibility that it might mean future implementation of gun controls) and fears regarding "the apocalypse" (presumably the Mayan calendar issue). Said interviewee Tim Strunk, of the sports outfitting store, Dunkelberger's, in Stroud, Pennsylvania:

    "It is through the roof, absolutely," he says. "Assault rifle-style guns, the black guns, are doing especially well."

    The article (posted prior to the shooting tragedy) focused on the surge in gun ownership and concealed-weapon carry permits by women. Ironically, the guns involved in the elementary school tragedy were owned by an outspoken female gun enthusiast.

    Another spike in gun sales has occurred since the Newtown killing spree. Many fear that there will be a crackdown on gun sales, particularly of assault weapons, and are buying now. In addition, sales of ammunition are up. Some gun owners think that it would be easier to crack down on ammunition sales than gun sales, and fear that ammunition will be in short supply, so they are buying in anticipation of short supply later.

    There are gun enthusiasts, and there are those who eschew weapons...but there is no convincing another to change their position on gun possession. That said, are there business opportunities to be exploited in this environment?

    Certainly. Every person has to make their own decision. My pension plan, STRS, is invested in the maker of the gun that was used to kill most of the kids at Sandy Hook. They stand to benefit for increased sales of the "Bushmaster," and, ironically, so do I--a person who promised my dying father I would never own a gun. But I might benefit from a pension plan who does own the maker of guns.

    I'm not sure what I should do about this.

    Sources:  "After Obama re-election, gun owners clinging to Second Amendment," by Peter Boyer, Fox News, December 6, 2012.

    "Gun Sales Surge After Connecticut Massacre," by William La Jeunesse, FoxNews.com, December 18, 2012.

    Follow up:

    • One way to make investment decisions is to look at current events and make stock market "bets" based on what is current in the news. What investment decisions might you make in the light of the information in these articles?
    • Given my promise to my dying father, what should I do with respect to the benefits I might receive due to my pension plan's investment in assault weapons?
    • Tracking Terrorist Assets: if you are interested in a long, philosophical paper about the relationship between terrorism and financial gain, check out this link. It is a little unnerving to see the link between business and terrorism. After reading it, what are your thoughts?
  • Right to work (for decent pay) has a setback

     


    Michigan is now also a "right to work" state.

    Recently, the lame-duck state legislature in Michigan voted to make Michigan a "right to work" state, and Governor Rick Snyder immediately signed the bill into law. "Right to work" is a cleverly-worded descriptor. Any "right" implies something good.  However, the issues around the recent legislation in Michigan are more complicated.

    The opposite of "right to work" is "union shop." "Union shop" workplaces have taken a vote, at some point, that included all workers--both union and non-union members.  The question posed would have been something like:

    Should everyone who works here, and who benefits from the union-negotiated wages and benefits, be required to pay union dues?  Or, should workers who choose not to pay get a "free ride"? 

    If the vote was affirmative, then everyone in the workplace would be required to pay dues. Workers who chose NOT to be union members could request that the "non-chargeable" expenses of the union be subtracted from the dues that they paid, but the expenses of the union that supported negotiations would be shared by everyone.

    "Right to work" legislation removes the right for unions to hold this vote and collect dues from all workers. It requires unions to sign up members one-by-one. This increases administrative expenses for unions, and takes energy away from their primary function to present a united worker front in negotiations with management.

    On the other hand, weaker unions may seem attractive to businesses thinking of locating in the state.

    The law will not take effect immediately, as current contracts need to expire first. The immediate aftermath of this legislation has been union mobilization for the the next election cycle and the decline in popularity of Michigan's governor.  It will be interesting to see how this plays out in the months and years ahead, given the current strength and size of Michigan's unionized working populations.


    Sources: "What 'Right To Work' Would Mean For Michigan," by Roland Zullo, Research Scientist, Institute for Labor and Industrial Relations, University of Michigan. [research paper written before the vote]

    "Now Michigan: anti-union legislation in the home of the car industry," editorial in The Economist, December 15, 2012.

    "After 'Right to Work,' Michigan Snyder's Popularity Plummets," by PaddyK PaddK, The Political Carnival Blog, December 18, 2012. [data from Public Policy Polling]

    Follow up:

    • The title of this post uses the phrase "right to work (for decent pay)." How is that meaning different from "right to work"? What is the implied end of the sentence in the common-held meaning of "right to work"?
    • Read the sourced articles, and research other stories from the Washington Post and CNN for example. Make a chart showing the pros and cons of the recent Michigan legislation.  Draw your own conclusion.

  • Thwarting corporate banking abuses


    image from jschott.com; cartoon by Trussell & Trussell

    "Dodd-Frank" is a comprehensive regulatory law that was passed in 2010, as a response to the financial meltdown and banking crisis of 2008.  Wall Street and big banks don't like the law.  They have spent millions of dollars lobbying to fight it, and hiring consultants to manage "compliance" in form but not substance. So Dodd-Frank has not been fully implemented. Only a third of the regulations are actually in place, and some of those have only been implemented with compromises. 

    Check out the
    link to a comprehensive chart delineating what aspects of the law have been implemented. Note that only 9% of the banking regulations have been put in place. Only half of the derivative regulations have been implemented, even though the valuation of derivatives was widely acknowledged to be the prime cause of the financial meltdown.

    Another chart on the same link shows how much taxpayer-subsidized meeting time with federal regulators has been used by the various lobbying agencies.

    The cartoon above compares Dodd-Frank to the Glass-Steagall Act, a simpler piece of legislation which regulated bank abuses pretty effectively for over 60 years. The cartoon makes an reference to the business success advice to "build a better mousetrap" but also touches on the irony that Dodd-Frank was set up to allow a period of "ironing out the details" where the entities who were supposed to be regulated could influence the regulations.  Uh-oh.

    Source: "Deconstructing Dodd-Frank" by Ben Protess, Dealbook, New York Times, December 11, 2012.

    Follow up:

    • Read about the Glass-Steagall Act, as well as the pieces about the implementation of Dodd-Frank.  What are the pros and cons of each piece of legislation?
    • Use the charts about Dodd-Frank implementation to answer the following: 
      • What segments of Dodd-Frank have been fully implented?
      • What segments have made the least progress toward implementation?
      • What industry segments have lobbied federal regulatory agencies the most since 2009? What do you think they are trying to do?

  • Sharing on Facebook causes SEC trouble for Netflix

     


    image by Andrew Harrer of Bloomberg Business Week

    Reed Hastings' use of social media is in the spotlight again.  Do you remember when Netflix was in trouble, back in September of 2011? Then, the Netflix CEO posted a video where he personally explained the Netflix position and apologized to customers. That may have been unprecedented, but it was not illegal. 

    It seems that a congratulatory shout-out on Facebook, however, did break the law.  At least the SEC thinks so. Here is what Reed Hastings posted on July 3, 2012 at 7:57 am near Los Gatos, CA, to his public Facebook page:

    "Congrats to Ted Sarandos, and his amazing content licensing team. Netflix monthly viewing exceeded 1 billion hours for the first time ever in June. When House of Cards and Arrested Development debut, we'll blow these records away. Keep going, Ted, we need even more!"
                        [linked from the Bloomberg article posted below]

    According to an SEC rule adopted in 2000, any disclosure of "non-public information" by SEC filers must be made in a forum that is "public." Apparently, even in this age of social media, Facebook is not yet considered a "public" forum by the Securities and Exchange Commission. News releases and regulatory filings are the usual venues for such disclosures.

    Businesses engaging in social media will most likely be following this story closely, to see if the business communication environment has changed sufficiently to cause changes to laws and regulations.

    Source: "The Facebook Post that got Netflix CEO Reed Hastings in trouble with the SEC" by Kirsten Salyer, Bloomberg Business Week, December 7, 2012.

    Follow up:

    • Do you think this SEC problem will have a negative effect on the recent stock boost Netflix has experienced because of its new relationship with Disney? (see post from a few days ago)
    • Read the text of the SEC rule.  Do you think that Reed Hastings violated that regulation by posting on Facebook? Why or why not?
    • Why do you think the SEC made the rule? Read the background links in the actual rule for a deeper understanding.

  • DuckDuckGo ??: The growing art of data dodging


    image from onqny.com

    I can remember the first time "data mining" really freaked me out.  I was writing an email in Gmail, and I excerpted a children's story I had written about two sisters who were stowaways on a boat of female pirates going to Catalina, an island off the coast of Los Angeles. Before I had finished the email, ads popped up in the right column of my mail account, advertising hotels and bed-and-breakfasts in the main city on Catalina. Plus a coupon for the ferry.

    "Creepy!" I thought.  But "creepy" is the new "normal."  It turns out that others are also disturbed by search engines and other cyber outposts mining your online clicks to develop specialized marketing tools to direct at you.

    "Need is the mother of invention"...and this need for privacy is the inspiration for new businesses that cater to those who do not want to be data-mined. One such business is the search engine, DuckDuckGo.


    image from the search engine's website

    DuckDuckGo still connects you to businesses when you search for products...but they do not provide advertisers with your personal data, so that ads are not targeted to your address, or your friends.

    Another website, DeleteMe, actually promises to separate you from your data trail...for a small fee. It searches the web to remove photos and personal information.

    Talk about job creation! Businesses are forming, and apps are being developed, to DO more data mining...and, on the other side, there are businesses forming to THWART data mining. Perfect.

    Source: "The growing art of data dodging" by Stacey Vanek Smith. Marketplace, American Public Media, November 29, 2012.

    Follow up:

    • Try some searches on Google (or your usual search engine), and with DuckDuckGo.  How do they compare? Investigate some of the links before you answer.
    • According to a Pew study cited in the article, what proportion of Internet users object to data mining?  Are you among them?
    • How do you protect your personal information?  If you don't have any self-protective habits, check out this site.

  • Netflix makes deal to air Disney content

     

    Netflix has had a very rocky year. It lost a significant amount of content shortly after changing its pricing structure and alienating many of its customers. (Intro to Business, Sept 2011)


    Now, things seem to be looking up. Netflix made a deal with Disney to air its content, including some of the classics in the Disney library. Disney thinks that Netflix is an excellent partner for its family-oriented content.

    The stock market responded yesterday in strong support of this partnership.

    Source: "Netflix-Disney Deal: A game changer?" MSNBC, featuring Julia Boorstein. Aired December 5, 2012.

    Follow up:

    • Do some internet research. What what Netflix's stock price in May, 2012?  What what its stock price on December 5th, 2012?  What would explain the change?
    • Read the prior blog about Netflix to gain perspective.  What were analysts predicting for Netflix's future back then?
    • What are some of the other stories in the linked video from msnbc?  Who is the featured interviewee, and what does he have to say?

  • The Fiscal Cliff...in "Cliffs Notes" form

     


    image from the Congressional Budget Office, courtesy of local10.com

    The fiscal cliff is in the news every day.  Reading about the drama it is creating is a great opportunity to observe negotiation styles and negotiating techniques. The "bottom line" is that the fiscal cliff is a manufactured crisis, and is therefore resolvable.

    Walter Shapiro of Yahoo! News makes these main points:

    • "All comparisons to Greece, Spain, the Roman Empire or the Duchy of Grand Fenwick are ludicrously exaggerated."
    • "Even if all the Bush tax cuts expire on Jan. 1, no one will instantly be paying higher income tax rates."
    • "There is no $4 trillion magic number that the president and Congress must hit to prove their long-term deficit reduction plan is credible."
    • "Everyone in Washington wants credit for tackling the deficit but no one wants to be blamed for causing pain."

     



    cartoon by Bagley of the Salt Lake Tribune.

    Source for blog text: "Fiscal Cliff Notes: a study aid for the budget shell game" by Walter Shapiro, Yahoo! news, November 26, 2012.

    Follow up:

    • Read the article.  If no agreement is reached, what will Congress probably do?
    • Why does Shapiro say that no one will instantly be paying higher taxes?
    • Check out this video from msnbc.  After the Netflix story, there is an interview with Warren Buffett.  What does he have to say about the fiscal cliff?

  • LAWSUIT: Auditors of Hewlett Packard's "Autonomy"

    Hewlett Packard shareholders have sued the auditors of Autonomy, HP's over-priced acquisition. Meg Whitman, the CEO of HP, said that she relied on the financial statements that were prepared by the United Kingdom branch of the Big Four accounting firm, Deloitte Touche Tohmatsu (Deloitte). In addition, HP also relied on the work of KPMG, another Big Four accounting firm, who supposedly audited the work done by Deloitte.


    The lawsuit also named Hewlett Packard's Board and various executives for not providing adequate "due diligence" in making the purchase.  It will be very interesting to see what comes to light about the accounting firms' work as a result of this lawsuit.

    Source:  "Audit Firms Sued in HP Autonomy acquisition", Reuters, November 28, 2012.

    Follow up:

    • What are audit firms supposed to be doing, if they are not certifying that the financial statements are materially correct? Read this article and others, if necessary, to see what the auditing firms' responses are to this lawsuit.
    • What errors did Hewlett Packard make, and why do observers think they made those errors? (read prior post on this topic to get background on this issue)