Archive by Author | melodymark

Handpicked Skeptic to Pitch Hardball Questions at Warren Buffett

The Oracle of Omaha, Warren Buffett engages in another annual meeting to discuss the future of Berkshire Hathaway’s future. Instead of the usual compliments he receives for profitable investments, he chose a hedge fund manager, Douglas A. Kass to criticize his tactics at their annual meeting on Saturday. Through research, Kass is predicting that the company’s stocks will fall. He points out that Warren Buffett is aging, so the company runs into founder risk. In addition, its growth is slowly down, which may be due to economy downturn even though Buffett is a contrarian investor.

Throughout the years, Buffett has made various profitable investments. However, this meeting will be more interesting because of the challenge he chose. Investors often depend on Buffett’s forecast when buying stocks. By answering questions that Kass prepares, Buffett will be able to bring attention to his company’s annual meeting, as well as, boost his company’s stock prices. Shareholders are also interested in his future plans for the company, such as who will succeed as the Chief Executive Officer, or whether he will continue to invest in more companies.

 

Written By: Melody mark

Source:

http://dealbook.nytimes.com/2013/05/02/handpicked-skeptic-to-pitch-hardball-questions-at-warren-buffett/

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G.M. and Mountain Dew Drop Ads After Criticism

Viewers and critics often analyze advertisements for racism. Recently, General Motors was accused of referencing to Chinese people in the 1930s. The foreign language was found in their background song with lyrics such as “ching ching, chop suey.” General Motors altered the ad immediately by editing lyrics out of the song. The company ultimately retrieved their newest ads because they do not want to risk the spreading of rumors and negative news. Another ad that portrayed racism was through Mountain Dew’s ad featuring African-American men. The agency implicitly linked violence with African-Americans. Both companies have taken their ads off public displays.

Although we are in the twenty-first century, racism still exists across the country. Campaigns against racism have little effect. Furthermore, it exists in working environments, limiting many people from job opportunities. These companies have to retrieve their ads because of public dissent. However, little is done to prevent racism from occurring elsewhere.

 

Written By: Melody Mark

Source: http://www.nytimes.com/2013/05/02/business/media/gm-and-mountain-dew-pull-ads-after-criticism-for-racial-insensitivity.html?_r=0

Unilever Ghana Sees 10% Revenue Growth on Lipton Tea Exports

Similar to Procter and Gamble, Unilever is a multinational consumer goods company that sells personal care products.  Lipton is one of over 400 brands that they own and export. Unilever has expanded to developing countries such as Ghana. Their base in Ghana exports Lipton Tea to West African countries such as Mali, Benin, and Ivory Coast. Unilever’s investment on this base exceeds 7.5 million cedis. This factory plans to produce over 1,000 tons of Lipton tea because they have projected a 10% revenue growth in Lipton tea export. Unilever also plans to expand their base in India because they find potential to profit in developing markets.

By investing in these countries, Unilever is providing the nations with more job opportunities. As these nations develop beyond their specialties, they will be able to support themselves. Cost of labor is also lower in Ghana and India, which greatly reduces the company’s costs. Their economy will also improve as more companies invest in them.

 

Written By: Melody Mark

Source:

http://www.bloomberg.com/news/2013-05-02/unilever-ghana-sees-10-revenue-growth-on-lipton-tea-exports.html

Fewer, Bigger Travel Sites

The online travel search business is shrinking and shrinking as two main travel agencies, Priceline.com and Expedia.com, are buying out smaller companies. This is shocking because Priceline purchased the airline and hotel search engine Kayak, or when Expedia acquired the German hotel search site Trivago in order to show a more diversified selection.

What this does is creates a larger stream of consumers booking hotel rooms through travel agencies, which will bring more customers to the original hotel website. This provides advantages for both the hotel company and the consumers as it consolidates the range of prices for similar rooms.

There are a couple of problems when Priceline acquired Kayak as there is a conflict of interest for websites now. Expedia won’t advertise for Kayak now because they are now owned by their rival, Priceline.

This affects a large population as many people tend to take vacations or stay in a hotel at various times throughout the year. Expedia has had almost 21 million visitors in March alone. This stat shows that many visitors will be able to benefit from the vast amount of information provided by Expedia and the search engine.

Written By: Melody Mark

Source:

http://www.nytimes.com/2013/04/30/business/travel-sites-merge-which-some-see-as-boon-for-consumers.html?partner=rss&emc=rss&utm_medium=twitter&utm_source=twitterfeed&_r=0

Apple Lays Groundwork for First Debt Sale Ever

In order for Apple Inc. to fund their $100 billion capital return program for their shareholders, they will be selling their debt for the first time. They also plan to buy back $60 billion shares so that the company will have more capital to invest with in the future. Apple is a technology company that is known for its large amount of cash available, unlike other companies.  However, fairly low interest rates and tax responsibilities are some reasons why Apple is choosing to sell debts in some form of currency. Because of this news, rating agencies such as Standard & Poor’s and Moody’s have given Apple an AA+ and Aa1 rating, respectively. Analysts have deduced that technology companies like Apple are not as safe to invest in because of the constant shift in consumer taste. They see Apple as a mature company, where growth is beginning to slow down.

In every business cycle, there will be times when the company reaches the mature state. Apple’s growth has been slowing down ever since the release of the iPhone 5.  It has also been relying on older products to boost their sales, even though there does not seem to be a purpose behind some of their older products. In this society, people are always demanding for new developments. For Apple to continue to be one of the biggest technology companies, it will have to be able to compete in the market that is constantly changing.

 

Written By: Melody Mark

Source: Cox, Josie. “Apple Lays Groundwork for First Debt Sale Ever.” Reuters. The Thomson Corporation, 29 Apr. 2013. Web. 29 Apr. 2013.

Mitsubishi UFJ Said to Seek $4 Billion of Morgan Stanley Assets

Recently, there has been news of foreign banks acquiring U.S.-based banks. This is a good opportunity for them to gain influence in the states. One example would be Mitsubishi UFJ Financial Group Inc.’s plan to purchase Morgan Stanley’s $4 billion trust-banking assets. They are also paying $3.7 billion for Deutsche Bank AG’s property lending assets. Decrease in assets is able to relieve these banks’ burden, but also shrinks their market share. Currently, Mitsubishi UFJ is a Japanese bank with the largest market capitalization. Through these purchases, their net income has surpassed their projected net income of ¥670 billion.

This growing trend signifies a shift in power in the banking world. U.S. banks are no longer as influential due to the financial crisis. Another reason for Mitsubishi UFJ’s expansion is Japan’s shrink in demand for loans. As people in Japan age, they are less willing to borrow loans from big banks. As Japanese banks acquire more assets from U.S. banks, it will be interesting to track how other banks react to their expansion into foreign markets.

 

Written By: Melody Mark

Source: Bloomberg

http://www.bloomberg.com/news/2013-04-28/mitsubishi-ufj-said-in-talks-to-buy-morgan-stanley-trust-assets.html

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

U.K. Has Unwinnable Battle on Tax Avoidance, Panel Says

Tax evasion has been an issue for many countries around the world because of the difficulty of tracking all funds. The U.S. government has implemented and revised various plans that would eliminate loopholes. However, the United Kingdom has been struggling to find the perfect solution. House of Commons Public Accounts Committee (HMRC) is aiming to increase transparency among private companies. Multinational businesses are reluctant to reveal their books because they would have to follow tax regulations for every country they operate in.  The committee also supports the idea of simplifying tax laws to eliminate businesses’ attempt to avoid paying taxes. The complexity of the system discourages taxpayers from understanding and agreeing with the system.

This situation is very similar to the one that the U.S. is currently dealing with. Analysts find that accounting firms have created multiple tiers of advisory and procedures that makes the system complicated. Although tax laws continue to prevent people from evading taxes, there is little improvement within the system. It will take time for the government to simplify the system because many lobbyists support this complex system.

 

Written By: Melody Mark

Source:

Penny, Thomas. “U.K. Has Unwinnable Battle on Tax Avoidance, Panel Says.” Bloomberg. Bloomberg L.P., 25 Apr. 2013. Web. 26 Apr. 2013.

Revenue in Decline, Zynga Promotes a Game Sequel

New games are constantly being developed and released into the market. However, few are popular and can generate revenue for the company. Zynga is a prime example of how game developers are struggling to stand out among others. The company is losing money every quarter because people lose interest in games. Reports reveal that less people are activating the games even though they were once popular. Zynga plans to release their new game, Draw Something 2, in which they incorporated new features and drawing tools that would enhance the user’s experience.

It has been difficult for game developers to create games that would attract users’ attention because of the accessibility of applications through iTunes App Store. Zynga has also been struggling because they are unable to create a mobile game that is viral. It is evident that the market is becoming more competitive. Zynga, one of the most popular companies in the past, is struggling to keep its market share.

 

Written By: Melody Mark

Source:

Wortham, Jenna. “Revenue in Decline, Zynga Promotes a Game Sequel.” New York Times. The New York Times Company, 24 Apr. 2013. Web. 25 Apr. 2013.

Corporate News: FedEx Fends Off Rivals for U.S. Postal

The U.S. Postal Service has been through various structural changes. With recent news about reducing delivery days from six days per week to five days per week, the future of U.S. Postal Service (USPS) is questionable. There are various private competitors in the market today that offer more services and attention to customers. An example would be United Parcel Service (UPS). Amid all efforts to cut operation costs, USPS has managed to form deals with other companies, such as FedEx Corp. to expand its operations. They agreed to a $10.5 billion contract that requires FedEx to ship Express and Priority mail from one U.S. airport to another.

While UPS is a main competitor, FedEx will be able to continue to improve its express air operations. In addition, USPS will also be able to continue its services because they are able to transport mail through a fast, reliable medium such as FedEx. Internet advances have changed the way mail delivery services operate. People are less dependent on delivery of physical mail now that they are able to convey messages through various mediums online. Because of these changes in people’s expectations, delivery contracts are important to USPS and FedEx because the business is not expanding. Fortunately, more jobs may be created as a result of this contract.

 

Written By: Melody Mark

Source:

Sechler, Bob. “FedEx Fends Off Rivals for US Postal Service Contract.” Wall Street Journal. Dow Jones & Company, 23 Apr. 2013. Web. 24 Apr. 2013.

Corporate News: Hedge Fund Invests in Microsoft

Activists are able to change how corporations operate if they have enough shares of a specific company. Hedge-fund executives often claim that they have enough shares to take on a board position at specific companies. Jeffrey W. Ubben is the founder of ValueAct Capital Management LP, which is a hedge-fund that invests in a small number of companies. He was able to take a board seat at Acxiom Corp with its shares of the company because he disagreed with the decisions made by the director. ValueAct was also able to push Gardner Denver Inc to sell itself to KKR & Co., which is a private equity firm. Such activists also influence the stock’s market trend. At Ubben’s investor conference, he discussed the profitability of Microsoft and how investors seem to undervalue its true worth. This conversation sparked Microsoft’s shares to increase 3.6%. Unfortunately, it is unlikely that Ubben would be able to buy enough shares to change Microsoft’s operations and Board directors.

This trend exists among other investors and hedge-fund executives because they disagree with policies that various public companies adopt. The opportunity for shareholders to influence a company gives the public hope that a company does not have total authority over its company or even the market in general.

 

Written By: Melody Mark

Source:

Glazer, Emily, and Shira Ovide. “Corporate News: Hedge Fund Invests in Microsoft.” The Wall Street Journal. Dow Jones & Company, 23 Apr. 2013. Web. 23 Apr. 2013.

Taiwan Tries to Shore Up Its Defenses Against Samsung

As competition between various technology companies increase, some are losing market share quicker than others.  Samsung Electronics, just like other companies, is expanding and innovating in a way that brings in the most profit. They have developed smartphones and memory chips that have outperformed those produced by Taiwanese manufacturers. However, Taiwanese manufacturers feel threatened because they are no longer the top seller of technology parts, one of them being Taiwan Semiconductor Manufacturing Co. (TSMC). Although Samsung claims that they are not targeting Taiwan’s businesses, the Taiwanese government still supports the alliance of Taiwanese and foreign companies because it believes that Samsung holds too much power at the moment. Apple is also hoping that TSMC’s technology can outperform Samsung’s because Apple does not want to get its chip supplies from Samsung, a rival company.

The increase in competition among various technology suppliers reflects a society that is constantly innovating. While there is great competition between these companies, their products aim to outperform each other. As a result, people are able to benefit from these products and their continuous advances.

 

Written By: Melody Mark

Source:

Huang, Annie. “Taiwan Tries to Shore Up Its Defenses Against Samsung.” New York Times. The International Herald Tribune, 21 Apr. 2013. Web. 22 Apr. 2013.

GE Posts Higher Net, But Warns on Europe

General Electric Co. (GE) was able to generate a fifth of its revenue last year from Europe, but it has begun to notice a decline in orders since last quarter due to the slow growth of the European economy. The lowering in orders is also due to delays in projects in various European countries. However, overall, GE has been performing well because they are able to cut costs and restructure their system to produce at an optimal level. Their first-quarter profits rose 16%, which was above analysts’ expectations. In addition, they are also lowering their expected performance to “single to double digit growth.” The Chief Executive Jeffrey Immelt plans to construct a plan that will stimulate growth within the company. Failure to do so would lower his pay because his paycheck depends on the company’s performance. On another note, Immelt has confidence in GE’s performance in the second half of the year because he predicts that Middle East’s gas turbine orders will increase.

Lowering of industrial orders may be due to a decline in the number of infrastructure projects. Europe seems to be slowing down in terms of expanding and building. The conglomerate’s performance is an indicator of the economy’s performance because of the segments it focuses on.

 

Written By: Melody Mark

Source: Sechler, Bob. “GE Posts Higher Net, But Warns on Europe.” The Wall Street Journal. Dow Jones & Company, Inc., 20 Apr. 2013. Web. 21 Apr. 2013.

Fund’s Debut in Thailand Raises Hopes for Other Share Sales

Southeast Asia’s stock markets have been doing well in the past months.  Various companies in Thailand have had their initial public offerings this year. Companies like BTS Rail Mass Transit Growth Infrastructure (BTS) had stock prices that rose 13% when the stock market closed on Friday. Its I.P.O. is the largest in Southeast Asia this year. The performance of the stock market reflects the country’s economy. Thailand has been investing more money in infrastructures that will benefit their citizens directly. These infrastructure companies also depend on their I.P.O. to fund their projects. Other companies that plan to go public are airlines, power producers, industrial developers, and banks.

Analysts have calculated that Thailand’s stock market has risen 9.9% thus far since January. Because of the economy’s performance, private investment companies are reaching out to these companies and planning to invest in them. Banks such as Citigroup and Goldman Sachs also plan to hire more people because of the increase in jobs available in their fast-growing economy.

Written By: Melody Mark

Source:

Reuters. “Fund’s Debut in Thailand Raises Hopes for Other Share Sales.” The New York Times. The International Herald Tribune, 20 Apr. 2013. Web. 20 Apr. 2013.