Archive | April 18, 2013

American Economy Goes Downhill

After the Dow Jones Industrial Average has been hitting highs for the past few weeks, the Dow is now moving back down. The Dow Jones has been going down two days in a row, and has seen a drop of 0.6%. On Monday the Dow saw its biggest drop so far this year. On Wednesday Blue Chip stocks had also seen a drop of 138 points. Large companies such as Apple, EBay and Microsoft have also seen a decrease in the value of their stocks.

The economy seems to have been recovering in prior weeks, but the information that was recently released is showing the opposite. Stocks are now starting to drop, and these trends are currently very unpredictable. Not only is the stock market not doing well, but the recent reports on employment have also indicated that not much improvement has been made. These trends can be a bad sign for investors, and if investors do not feel that the market is doing well they are less likely to invest and ultimately leading to an even larger downfall in the economy.

Written by: Jessica Ho
Source: The Wall Street Journal

http://online.wsj.com/article/SB10001424127887324493704578430253256006938.html?KEYWORDS=Us+stocks+edge+back

The Market For Caffeinated Snacks

As Americans become increasingly health conscious due to awareness of obesity, the market for caffeinated snacks has boomed. U.S. retail sales of caffeinated products have gone up 49% to $1.6 billion since 2008. Food companies have begun diversifying their products to gain a market share; you can now buy caffeinated beef or turkey jerky, waffles, jelly beans and even marshmallows! Caffeinated gum has also hit stores recently.

Concerns regarding this recent trend have surfaced since many believe these products appeal to children. 200-300 milligrams of caffeine per day is not harmful for adults, but these products range between 12-50 milligrams and often packed with sugar to mask the bitter flavor of caffeine. How many children would you expect to eat just one marshmallow or jelly bean? The companies that produce these products insist that they are only for active adults but sales to children in the U.S. have increased.

Evan Chang
Source: The Wall Street Journal

Morgan Stanley Reports Profit, but Investors Have Doubts

Profits are good, but not good enough in the case of Morgan Stanley, as investors show worry in the bank. The stock of the company dropped 5.4 percent and reached its lowest levels since January.

Just like Goldman Sachs, Morgan Stanley is switching their sources of revenue and working to make the best of changing regulations. Unlike Goldman Sachs, however, Morgan Stanley is dramatically cutting their fixed-income trading and reducing staff before it continues to lower total profit. In further contrast to Goldman Sachs, Morgan Stanley had a 42 percent loss while Goldman Sachs had a drop of only 7 percent.

The intended direction of Morgan Stanley, as stated by Chief Executive James P. Gorman, is to switch to less volatile practices such as wealth management. “Richard Bove, an analyst with Rafferty Capital Markets, said that Morgan Stanley’s decision to shrink the fixed-income business meant that not only was it losing talented traders, it was not attracting as many as it used to. As a result, it will be hard for Morgan Stanley to keep up with competitors.”

I think that the big investment banks are all going through changes that is leaving the markets in a state of uncertainty overall. Even more so for Morgan Stanley, who seems to be in lower position in the eyes of Goldman Sachs and JPMorgan.

Source:

http://dealbook.nytimes.com/2013/04/18/morgan-stanley-swings-to-a-profit-beating-estimates/

PayPal Slows for EBay

EBay owns three general business services, which are the Marketplace (EBay platform), payment (PayPal) and GSI commerce system. In the past quarters, reports have shown that PayPal and GSI had been expanding quicker than EBay Marketplace. As a result, PayPal’s performance leaves a bigger impact on the general performance of eBay. Through these mediums, EBay’s profit increased by 19%, and revenue increased by 14%. They are also able to attract users from one of their biggest competitors- Amazon.com. However, PayPal’s growth slows down as more competitors appear in the market, such as Intuit Inc and Square Inc. EBay attempts to restructure their system by changing sellers’ price structure and “listing-fees for many items in favor of a flat sales fee based on an item’s category.” This format appears to be similar to Amazon’s structure.

EBay’s dependence on PayPal to drive its revenue may become a problem in the future.  Also, Amazon’s business structure serves as a threat to EBay even though the two websites are based off of different vending methods.

 

Written By: Melody Mark

Source:

Bensinger, Greg. “PayPal Slows for EBay.” Wall Street Journal. Dow Jones & Company, 17 Apr. 2013. Web. 18 Apr. 2013.

Blackstone Ends Pursuit of Dell

The private-equity firm, Blackstone Group LP is ending its pursuit of Dell Inc. after they claimed that they would try to top a leveraged buyout by the computer maker’s founder. Blackstone has tried to place a bid that would top the offer of Michael Dell, the founder as well as the private-equity firm Silver Lake Partners. Although the reasons for why the company chose to drop their potential bid that would keep the company in the hands of public shareholders. Due to the halt to the rival deal effort, the Silver Lake and Mr. Dell are able to push ahead with the offer to buy all of the company’s shares at $13.65 apiece. The firm is trying to save the company because there has been evidence from late March that there is a sinking market for personal computers.

I believe that since computers fell nearly 14% in the first quarter, it might be Dell Inc.’s best bet to allow Blackstone Group to buyout the computer maker’s founder because they may be able to save the company from declining in their sales. The negotiations between the two companies also show that there have been talks about other potential CEOs for Dell, which might be a better plan for the company in the future.

Written by: Samantha Chin

Source: The Wall Street Journal

http://online.wsj.com/article/SB10001424127887323809304578431513006541432.html?mod=WSJ_business_whatsNews

 

 

Dark Times For Greece

“Not in my wildest dreams would I expect to see the situation we are in,” Leonidas Nikas said. “We have reached a point where children in Greece are coming to school hungry. Today, families have difficulties not only of employment, but of survival.” Mr.Nikas, a principal of an elementary school in a working class suburb of Athens has things that he says he never thought would happen; there are children picking through trash cans for food, asking schoolmates for leftovers, and some bent over in hunger pains. Many parents have not been able to find work for months and many families are living off of savings and rations of pasta and ketchup.

Over the past five years, the Greek economy has shrunken by around 20 percent and unemployment rates have reached over 27 percent, the highest in all of Europe. In addition, 6 out of 10 or 6o percent of job seekers admitted to not having had work for over a year, which is drastically affecting the lives of many Greek families, their children coming to school underfed, hungry, or even malnourished. Unlike U.S. schools, Greek schools do not provide subsidized lunches, and the cost is proving too high for many families. Under these dark circumstances, a ray of light has been shone through Konstantinos Arvanitopoulos, Greece’s education minister, working with  the government to secure European Union financing to provide fruit and milk in schools, and vouchers for bread and cheese. In addition his department is working with the Greek Orthodox Church to provide thousands of care packages. “It is the least we can do in this difficult financial circumstance,” he said.

Written by Kevin Zhang

Source:

http://www.nytimes.com/2013/04/18/world/europe/more-children-in-greece-start-to-go-hungry.html?pagewanted=all

Subway Tops McDonald’s as No. 1 Worker Lunch Spot

Certify, an expense report management software company, has revealed that Subway beat McDonald’s as the most popular lunch destination for workers in the first quarter.  The two fast food restaurants were followed by Starbucks and Panera Bread.  Despite having 25,870 locations in the U.S., in comparison to the 14,160 nationwide McDonald’s locations, Subway is only now taking the lead; McDonald’s was still the leader in 2012.  Robert Newveu, Chief Executive Officer of Certify noted that workers don’t take advantage of their expense accounts because they simply need something to eat on the go.

The popularity of fast food restaurants among workers isn’t particularly surprising, but Subway’s progress is.  McDonald’s has been a dominating force in the fast food industry for years, so seeing Subway take the lead in any key consumer demographic is a major step for the company.

On a side note, this trend also speaks volumes about the eating habits of Americans.  The convenience of fast food continues to have an overwhelmingly negative affect on Americans’ health.

Written by: Constantine Kostikas

Source: Businessweek.com

Budweiser’s New Way to Give You Less Bud For Your Money

Budweiser after being dethroned of the top two beers in the United States has been struggling to find new ways to attract customers and generate a higher revenue with the hopes of obtaining the top two spots again for Anheuser Busch.

Their latest strategy is a new design for their beer cans, this new unique design is very interesting. The can is shaped as a bowtie similar to their logo, the bowtie has been Budweiser’s symbol for many years. What is also interesting about this new design is that, they are now giving less beer with each can. It is no longer the traditional twelve ounce can but now is a 11.3 ounce can. Their new design is said to be an attractive can and it will hopefully appeal to more younger adults and these new cans are said to be in stores beginning in May.

I am excited to see these new cans, but I don’t think the price should stay the same if they are giving less beer. But a new design might give some of us a new experience with drinking the old King of Beer.

-Derby Ng

http://blogs.wsj.com/corporate-intelligence/2013/04/17/budweisers-new-way-to-give-you-less-bud-for-your-money/?mod=google_news_blog

Apple Slowdown Threatens $30 Billion Global Supplier Web: Tech

The exponentially growing smartphone and tablet maker, Apple may start seeing a decline in sales. Cirrus Logic Inc. a company that produces the audio chips for apple products hinted that Apple products are moving at a much slower pace than anticipated. Since the company is directly linked to Apple to generate a majority of their revenue, a problem in the supply inventory is a sign of how Apple is doing as well. Cirrus Logic Inc. reported their biggest decline in revenue in the past 13 years. The revenue report of Apple’s main supplier of audio chips also had an effect of Apple, lowering their stocks by 5.5% down to $402.80, the lowest since December 2011. A Problem with the supply inventory can also suggest that Apple will not introduce any new products until there is a solution which could pull down their stocks even more.

Apple has been through similar times in the past and Steve Jobs was able to turn the company around. The new CEO, Tim Cook needs to follow Steve Jobs foot steps to continue what the company has become. The recent news has caused analyst to expect a decline in Apple’s financial records which will not look good for the company. Tim Cook needs to start being more innovative if he wants to beat analyst expectations.

Written by: Wilson Tang

Source:

http://www.bloomberg.com/news/2013-04-18/apple-slowdown-threatens-30-billion-global-supplier-web-tech.html

Intel’s Profit Falls 25% With Decline In Chip Sales

Intel’s profit decline of 25% is largely due to the fall in personal computer purchases. Since less people are purchasing personal computers, Intel is selling less computer chips. As time passes and innovation occurs, people will start moving toward the new hot item. For example many consumers are purchasing tablets and smartphones instead of personal computers.

Despite this first quarter drop in sales, Intel executives are more optimistic about the rest of the year. They believe their chip sales will increase because of their new products. Intel’s most notable innovation is the Haswell chip. The Haswell chip is a power-saving processor that supports touch screen computing on ultrabook computers.

Since Intel can finally sell its chips to faster growing markets like the ultrabook and tablet computer, they believe they are in a good position to flourish. However, despite this growth in other markets, Intel is still heavily dependent on the personal computer market. I think that their revenue will increase drastically because of their new Haswell chips.

URL: http://www.nytimes.com/2013/04/17/technology/intel-profits-fall-as-pc-slump-cuts-demand-for-chips.html?_r=0

-Jonathan Chan