Archive | April 27, 2013

Apple’s 10-Year-Old iTunes Loses Ground to Streaming

Ten years after iTunes made digital music purchases mainstream, Apple is losing its share in the digital music market.  Its market share has fallen to 63%, which is its lowest point since 2006.  It continues to sell most songs for 99 cents each, but consumers are showing preference for subscription-based music markets.  Some companies, like Amazon.com, which has seized 22% of U.S. music sales in the past several years, are even beginning to offer music for prices cheaper than Apple’s.  Apple has focused less on its music market, which was once known for giving undiscovered artists a chance at fame, and more on TV shows, movies, and books sold on iTunes.

Apple is looking at ways to improve iTunes, such as subscription plans and music streaming.  Since iTunes already has 435 million customers, all Apple should have to do is match competitors.  It is a trusted company with satisfied customers, so retaining business shouldn’t be too difficult for the company that is already responsible for so much innovation.

Written by: Constantine Kostikas

Source: Businessweek.com

Companies Hold Back On Borrowing

The amount of companies borrowing money from banks is decreasing, and this in return slows down the progress of many banks. The amount of loans being taken by companies has decreased since last month, and the increase of loans for the first quarter is relatively low compared to that of the previous years. Companies are not borrowing much because investors are afraid and suspicious of the economy, and are not fully confident that their investment will have a positive return. Many investors are worried about what will happen in the future.

Investors have valid reasons to hold back on investing because the recent reports of the stock market and its highs and lows are not in any way reassuring for investors. The constant drop and rise on the stock market tells investors that the market is not yet stable, thus giving them less of an incentive to invest. Employment rates are also indicating that the economy is not doing so well. But at the same time investors holding back on their investments is also having a negative impact on the economy, so as they hold back because the economy is not doing well, they themselves are hurting the economy at the same time.

Written by: Jessica Ho
Source: The Wall Street Journal

http://online.wsj.com/article/SB10001424127887324743704578443130749674850.html?mod=WSJ_economy_LeftTopHighlights

Federal Cuts Are Concern in Modest U.S. Growth

Economists continue to analyze the state of the economy by looking into consumer spending, unemployment rate, gas prices, etc. There has been positive news regarding the economy’s growth and expansion. However, after further examination, some economists have realized that this is not the case. For example, Steve Blitz, the chief economist of ITG Investment Research, believes that the speed of growth is still slower than what is necessary to fully recover from the depression. In addition, new jobs have been created in the food service and retail industries. However, these are industries that are known for low-paying positions. As a result, families are still struggling to pay for taxes and other household spending.

Federal cuts have also played a role in the economy’s growth. There have been negative results because it is the only driving force. Private companies are still reluctant to spend because of the instability of the market. It will be interesting to analyze how the economy will grow in the future because of the many mix signals in the economy today.

Written By: Melody Mark

Source: New York Times

http://www.nytimes.com/2013/04/27/business/economy/us-economy-grew-at-2-5-rate-in-first-quarter.html?ref=todayspaper&gwh=DDFE738911476EF97814764812DFBB46

Scalpers Beware: New Laws Redefine What Is a Ticket

With many companies choosing to become paperless, concert promoters in the California state have chosen to preserve paperless tickets, which would be redeemed at the venue by the purchaser. Online sellers of tickets such as StubHub, eBay and Ticketmaster are seen as having an issue with these paperless tickets because they are also promoting paperless tickets. The change in direction towards paperless tickets is due to the reason of an increase in scalping, which has become more sophisticated. One reason why the price for the average North American ticket prices have increased over the past ten years is to make up for the difference of concert promoters who earn profit through the secondary market. New York is currently the only state that restricts paper ticketing and almost in New Jersey, where a ban has been proposed.

I believe that the benefit of paperless tickets ensures that some tickets stay at face value rather than being bided online at a secondary market is what is most beneficial for many concertgoers who should not pay an extra amount from scalpers.  The only downside is that only 0.1% of the tickets sold today are paperless which proves that if this method of using paperless tickets is chosen, it may lead to a decrease in profits because people would rather purchase them traditionally, but end up spending more in the secondary market.
Written by: Samantha Chin

Source: The Wall Street Journal

http://online.wsj.com/article/SB10001424127887323551004578441132136821420.html

Verizon Price Gap: $30 Billion

One of the largest global joint ventures might come to an end in the near future, as the dynamic duo in telecommunications are planning on a buy out. Verizon Wireless and Vodafone group, the two companies have been in a joint venture for a long time but their dispute comes in the issue of the buy out. 

There has not been an official made by either company but there has already been many disagreements in terms of pricing, Verizon has planned on a bid worth over $100 million dollars but Vodafone believes that it is worth around $130 million. 

If Verizon is willing to executive this deal with the approval of Vodafone, it would be one of the largest mergers in history. Vodafone is a giant cellular company outside of the United States and with these assets, it could make Verizon an even bigger company. 

-Derby Ng

http://online.wsj.com/article/SB10001424127887323789704578445180890685490.html?mod=WSJ_business_whatsNews

A New Meaning Of Risk

The term entrepreneur describes a person who “organizes and operates a business or businesses, taking on financial risk to do so” (Wikipedia); Michael Stock, a 36 year old American real estate developer and private security contractor is pushing this definition to its limits. His company Bancroft Global Development, trains soldiers in a wide range of skills while its sister company, Bancroft Global Investments operates by financing projects in war zones. Bancroft has built luxury rentals in Afghanistan and is now shifting its focus to Somalia; operating on the belief that all “hot spots” cool down eventually.

Every now and then I come across a story that is truly incredible and this one definitely fits the bill. Bancroft’s performance in the real estate development of volatile areas should be fascinating to observe and I will definitely be staying tuned. This company is making extraordinary, albeit precarious investments… the insurance costs must be astronomical.

Evan Chang

Source: The Wall Street Journal

http://online.wsj.com/article/SB10001424127887323820304578410573747048086.html?mod=WSJ_hpp_LEFTTopStories

J.C. Penney’s Johnson Cleanup Includes Unpaid Contractors

J.C. Penney is still dealing with multiple issues left behind by former C.E.O. Ron Johnson, including litigation that claims construction work orders by the company went unpaid for. The construction work was ordered to create Johnson’s new vision of the shopping experience in J.C. Penney stores, but the vision did not fare very well with consumers.

J.C. Penney has been having cash issues for a long time apparently, as the construction companies allege that J.C. Penney continuously put off payments for work, which in turn raised costs of construction due to delays. At the moment, the costs are still going to be unpaid and add on to the money woes of J.C. Penney. One of the largest issues surrounding the company is how much money it has spent under Ron Johnson. Now, investors are still giving funds, like George Soros, and J.C. Penney also has a $1.75 billion loan commitment from Goldman Sachs. However, given that the company lost $985 million last year, that money may not last for very long if the new C.E.O. can not turn things around.

With these new costs appearing and sales continuing to decrease, I still remain highly pessimistic about the company’s future. Given that the economy statistics recently released were less than stellar, there is even more concern for J.C. Penney if consumer spending as a whole drops. I do not think J.C. Penney will be able to successfully fix its problems for a long time, if ever.

 

Source:

http://www.bloomberg.com/news/2013-04-26/j-c-penney-s-johnson-cleanup-includes-unpaid-contractors.html

New York City Employee Pension Funds Sue BP Over Gulf Oil Spill

BP is being sued by the New York City pension funds for $39 million. The New York City pension funds claims that BP misled investors that led to over $39 million in investment losses. Going back to 2010, BP’s deep water horizon drilling rig caused 4 million barrels of oil to be spilled into the Gulf killing 11 workers in the process. The spill was ranked as the biggest spill in U.S history, yet BP misled their investors by reporting minimized damages and costs to shareholders. This is not the first case involved with BP. Last year BP paid 8.5 billion to settle several cases and $4 billion to the U.S government for criminal penalties. A $17 billion claim is also in effect over violations of the US Clean Water Act.

The actions taken by BP were unethical and all information should have been disclosed to shareholders. The risk involved with the largest oil spill in the US history is high and misleading shareholders could have had a serious impact on both the economy and the company itself. Although BP was smart in minimizing their losses, being ethical is still key in a business.

Written by: Wilson Tang

Source:

http://www.bloomberg.com/news/2013-04-27/new-york-city-employee-pension-funds-sue-bp-over-gulf-oil-spill.html

Able Abe

Despite Prime Minister Shinzo Abe’s efforts, deflation remains a major issue entrenched in Japan. For one of the world’s largest economies, Japan has no quick fixes regarding this issue. Minister Abe, who took office last December, has made it his priority to fight deflation by urging the central bank to commit to a target of 2 percent annual inflation, which is a percentage that economists consider healthy. These efforts are an attempt to get rid of the damaging decline in prices, profits and wages that has troubled Japan for the last fifteen years.

The central bank, under the leadership of its new governor, Haruhiko Kuroda who was appointed this month, started an aggresive and bold plan to reinvigorate economic and price growth. In addition, the bank followed through with its plans for inflation by doubling their holdings of government bonds and Mr. Kuroda described the program as “monetary easing in an entirely new dimension.” Plus, the Nikkei 225-stock index has risen 30 percent since the start of the year, while the yen has fallen 14 percent against the dollar. This provides much to the relief of Japanese exporters, because a weaker yen means that their exports are more attractive abroad.

 

Written by Kevin Zhang

Source:

http://www.nytimes.com/2013/04/27/business/global/27iht-yen27.html?ref=business

Times Co. Profit Falls; New Subscription Model Is Set

The New York Times Company has been facing declines in first quarter revenue. In one year the income per share has fallen from 28 cents to 2 cents. This huge loss in net income is largely due to the decline in advertising revenue. New York Times executives attributed the loss in advertising revenue to the decline in spending by movie studios and real estate developers.

Despite the loss of income, The New York Times as a paper this past year has been successful. Their overall circulation revenue rose by over six percent. This is because more people are subscribing digitally and because of the hike in prices for print newspapers.

Even though the amount of subscriptions both digitally and print have rose, they are  still making strides to expand. As Mark Thompson, The New York Times president and chief executive stated, “We will be rolling out other strategic initiatives designed to further leverage The Times brand and newsroom to create new products and services for a wider range of customers, domestically and around the globe.”

URL http://www.nytimes.com/2013/04/26/business/media/times-company-reports-a-drop-in-income.html?_r=0

-Jonathan Chan