Along with many other companies eBay's stock seems to be falling drastically. So what can this online auctioneer do to lower their risk?
I think the first thing they need to do is diversify, through more acquisitions. Currently online auctioneering of people's old "junk" is probably not very profitable since so many people are holding onto every last penny trying to prepare for the thunderstorm of rainy days that seems to be approaching. If no one is spending money it is tough to make any money. So the next question is what to diversify their company into... Unbeknownst to me I recently used both of eBays sister companies; Skype and Paypal. These two companies are a good start for eBay but I feel that they need more to offset the losses they are incurring from their past cash cow. According to an article by Michael Copeland a senior writer for Fortune Magazine, eBay is fairing much worst off then many of its competitors like Amazon (http://money.cnn.com/2009/02/20/technology/ebay_stock.fortune/index.htm).
Copeland also referred to getting away from eBays traditional business of acting as an auctioneer since that seem to bring in the lowest amount of revenue for the online trading business but I feel that would alienate to many of eBays faithful and loyal customers. In my opinion, eBays most profitable avenue may be to increase the functionality of their off shoot program paypal, by purchasing other companies that perform the same function as paypal and in doing so they could set the standard for online purchases.
Monday, February 23, 2009
Free Drinks In Coach?!?
With the rising costs of traveling I feel that it has become difficult for me, as a college student, to even fathom traveling by an airplane. As spring break approaches I forfeited the thought of even buying a plane ticket to Miami and opted to spend the 11 hours in a car over paying the outrageous air line fees. It seems that air lines are finding all sorts of things to charge their customers for, including baggage checking and non-alcoholic drinks. But when is enough, enough?
US Airways, one of the many companies feeling the pain during the financial crisis decided to charge passengers for all types of drinks on their flights. However, during a press conference last Monday, US airways CEO decided that effective on March 1sst they are going back to the old system of free drinks for their passengers.
I feel that this change may be a little to late in saving the face of US airways. The risk associated with making such a vast change probably scarred many long time US airways customers. Their attempt to save money could end up costing them more money in lost customers. I guess we will have to wait to see what happens next quarter to see how US airways cost cutting attempts will effect their future profits. http://money.cnn.com/2009/02/23/news/companies/airline_drinks/index.htm
US Airways, one of the many companies feeling the pain during the financial crisis decided to charge passengers for all types of drinks on their flights. However, during a press conference last Monday, US airways CEO decided that effective on March 1sst they are going back to the old system of free drinks for their passengers.
I feel that this change may be a little to late in saving the face of US airways. The risk associated with making such a vast change probably scarred many long time US airways customers. Their attempt to save money could end up costing them more money in lost customers. I guess we will have to wait to see what happens next quarter to see how US airways cost cutting attempts will effect their future profits. http://money.cnn.com/2009/02/23/news/companies/airline_drinks/index.htm
The Auto Industry
As time goes by here in Atlanta the stories of layoffs and job closings seem to accumulate. However I know that their are cities that are far more worse off than Atlanta. Take Detroit for example, they were once a bustling city of auto makers, but now in these financially troubling times how can a city that relied so heavily on one industry even break even?
It will be interesting to see how the US government will respond to the pleas of companies like GM and Chrystler. These two American companies employ hundreds of thousands of Americans. However if these companies were to fail, what would happen to all those people and the economies they live in. Obviously if these two companies were to fail, the effects would be felt Nationwide, but places like Detroit where almost the entire economy is based off this one industry, will certainly be detrimental. Should the US government help these companies and possibly prevent them from failing or will they just be throwing tax payer money into an unless money pit? On one hand, you could save thousands of jobs and possibly help to stimulate the economy by allowing those who are employed to have a positive money stream. However the risk of helping these companies that seem to be failing regardless of their numerous attempts to cut costs, seem a bit to great for me to endorse. I am sorry but we are a part of a market system where the strongest companies survive. Even if we do bail out some of these auto companies, if these companies fail at adapting to the current market conditions then they will continue to fail well into the future. I hate that so many people may lose their job, but the management should have been producing products that would have been more suitable for the market. If you were a manager at a company still attempting to sell gas guzzling SUVs, within the past 5 years I have a feeling that the you and the other managers of your company failed to look around and analyze the current market. http://money.cnn.com/2009/02/23/news/companies/federal_auto_options/index.htm?postversion=2009022317
It will be interesting to see how the US government will respond to the pleas of companies like GM and Chrystler. These two American companies employ hundreds of thousands of Americans. However if these companies were to fail, what would happen to all those people and the economies they live in. Obviously if these two companies were to fail, the effects would be felt Nationwide, but places like Detroit where almost the entire economy is based off this one industry, will certainly be detrimental. Should the US government help these companies and possibly prevent them from failing or will they just be throwing tax payer money into an unless money pit? On one hand, you could save thousands of jobs and possibly help to stimulate the economy by allowing those who are employed to have a positive money stream. However the risk of helping these companies that seem to be failing regardless of their numerous attempts to cut costs, seem a bit to great for me to endorse. I am sorry but we are a part of a market system where the strongest companies survive. Even if we do bail out some of these auto companies, if these companies fail at adapting to the current market conditions then they will continue to fail well into the future. I hate that so many people may lose their job, but the management should have been producing products that would have been more suitable for the market. If you were a manager at a company still attempting to sell gas guzzling SUVs, within the past 5 years I have a feeling that the you and the other managers of your company failed to look around and analyze the current market. http://money.cnn.com/2009/02/23/news/companies/federal_auto_options/index.htm?postversion=2009022317
Ipods Risky?
I remember when I was in elementary school and CDs first came out, I thought, how could they make something that will beat a CD player? Now, in my final semester of college I have realized that there is a growing trend and accessory on almost every college student regardless of nationality or upbringing. IPODS!!! I am guilty of having my own 30g iPod, jam packed with music and movies. Apple seems to be fully capable of running a monopoly on the portable music and video industry, especially with all the functionality in todays iPods from being able to make phone calls to checking your email or the latest stocks. With so many people using this device, I for one would like to know if there are any longterm risks to using iPods? Hell, if I can get cancer from microwaving a sandwich for thirty seconds, is it far fetched to think that I could get cancer from jamming to my iPod which can play for hours on end without the batteries dieing?
Well I spent some time looking for the risks associated with iPods and I found an interesting article about the current "younger" generation and their usage of iPods and the risk associated with using the factory ear buds that apple sells with their iPods (http://www.time.com/time/health/article/0,8599,1881130,00.html?cnn=yes). I would like to hope that Apple has begun to hedge against risks that may be associated with long-term hearing loss. This could potentially be a catastrophic loss for Apple in the future if they fail to protect themselves from possible lawsuits.
Well I spent some time looking for the risks associated with iPods and I found an interesting article about the current "younger" generation and their usage of iPods and the risk associated with using the factory ear buds that apple sells with their iPods (http://www.time.com/time/health/article/0,8599,1881130,00.html?cnn=yes). I would like to hope that Apple has begun to hedge against risks that may be associated with long-term hearing loss. This could potentially be a catastrophic loss for Apple in the future if they fail to protect themselves from possible lawsuits.
Tuesday, February 10, 2009
Fords Electric Van...
Well the Ford company is planning on releasing a new electric van that will be marketed toward small business owners. This concept provides a lot of opportunities to the largest segement of businesses which happen to be small businesses. Its suprising to think that small businesses cover such a large portion of the business makeup. Obviously an electric vehicle has many benefits both enviromentally and financially, but how practical will it be?
This is probably an attempt by the Ford company to make up for their relatively limited amount of alternative energy vehicles. It might be a risky business venture to release a vehicle of this type so late in the "alternative energy" game. it would be interesting to see how much Research and Development Ford put into this vehicle and if it will really payoff well. There is obviously a lot of risk involved in releasing such a new concept in an unfriendly market. Will small business owners have the capital to pay for such a vehicle and will Ford make back its R&D money in such a concept vehicle. I guess we will have to wait and see.
Here is some info on the new Ford Van...http://money.cnn.com/2009/02/09/autos/ford_electric_van/index.htm?postversion=2009020914
This is probably an attempt by the Ford company to make up for their relatively limited amount of alternative energy vehicles. It might be a risky business venture to release a vehicle of this type so late in the "alternative energy" game. it would be interesting to see how much Research and Development Ford put into this vehicle and if it will really payoff well. There is obviously a lot of risk involved in releasing such a new concept in an unfriendly market. Will small business owners have the capital to pay for such a vehicle and will Ford make back its R&D money in such a concept vehicle. I guess we will have to wait and see.
Here is some info on the new Ford Van...http://money.cnn.com/2009/02/09/autos/ford_electric_van/index.htm?postversion=2009020914
Monday, February 9, 2009
The Lowes Plan
Lowes has recently announced their plan to "clawback." According to Parija Kavilanz a senior writer for CNN.money, Lowes "board [of directors] can seek to take back compensation based on merit if it determines that an executive engaged in fraud or intentional misconduct that caused or substantially caused a significant restatement of the company's financial results."
This is a great way for Lowe's to protect themselves from over compensating as we have recently seen so often. Hopefully this is a proactive stance that the board has elected to take rather than a retroactive warning to any past executives.
This is a great way for Lowe's to protect themselves from over compensating as we have recently seen so often. Hopefully this is a proactive stance that the board has elected to take rather than a retroactive warning to any past executives.
Salary Freezes
Recently my girlfriend and I have been discussing the policies that our employers have presented to us in wake of the current financial decline. We both work for country clubs in the Atlanta area. The club I worked for has decided to fire a few of the executives and maintain the employees that are seen as "the face" of our club, anyone who comes in direct contact with members, due to the fact that management sees these employees as vital to the way we do business. On the other hand, my girlfriends club has decided to enact a policy to reduce the bonuses received by employees in an attempt to ensure all the employees that they will have a dependable job that provides all of their employees a steady paycheck.
My first question for my girlfriend was, "how did the employees respond to no bonuses?" She simply said that many people were just happy to have a job and they realized the severity of our current economy. As a risk management student, I wondered which strategy would be more risk adverse. On the one hand, you may fire a few employees but be able to retain the status quo of the office environment or you could keep everyone and just reduce everyone's bonuses. I kind of prefer what my girlfriends club did by freezing all the employee salaries, because it provides security but at the same time when i received my Christmas bonus i definatly did my part to stimulate the economy, because the first thing i did was go out and spend the money I received.
So after further looking into this topic I found a news article about executives freezing their compensation... http://money.cnn.com/2009/02/09/news/economy/salary_freeze/index.htm?postversion=2009020914 I think its repulsive that executives of recieved the amount of benefits that they recieved in 2008 after their corporate profits tumbled. I understand the need to be well off and wanting to live a healthy comfortable life but honestly 18.4 billion in bonuses is just over the top... I doubt i could spend that much money on myself in the course of a lifetime.
My first question for my girlfriend was, "how did the employees respond to no bonuses?" She simply said that many people were just happy to have a job and they realized the severity of our current economy. As a risk management student, I wondered which strategy would be more risk adverse. On the one hand, you may fire a few employees but be able to retain the status quo of the office environment or you could keep everyone and just reduce everyone's bonuses. I kind of prefer what my girlfriends club did by freezing all the employee salaries, because it provides security but at the same time when i received my Christmas bonus i definatly did my part to stimulate the economy, because the first thing i did was go out and spend the money I received.
So after further looking into this topic I found a news article about executives freezing their compensation... http://money.cnn.com/2009/02/09/news/economy/salary_freeze/index.htm?postversion=2009020914 I think its repulsive that executives of recieved the amount of benefits that they recieved in 2008 after their corporate profits tumbled. I understand the need to be well off and wanting to live a healthy comfortable life but honestly 18.4 billion in bonuses is just over the top... I doubt i could spend that much money on myself in the course of a lifetime.
Regions Bank... Risk adverse?
I have been a Regions bank customer for nearly a decade now. I first opened my own account to yield some returns off of my saving account. Little did I know how profitless I would be with only $200 in my account. However recently Regions bank invested some of their own money into FirstBank Financial of McDonough, Ga. Regions made this purchase last Friday after FirstBank failed.
There is some discussion by market analyst whether or not it is a good idea to let banks like Regions acquire failing banks. This is the second bank that Regions has bought, in the last year. According to consensus estimates, analysts predicted that Regions "is expected to lose $705.8 million this year" (LaMonica).
This does leave me quite troubled and perplexed. The first thing i ask myself is if this may be some sort of last ditch effort to try to receive a big payoff on a risky investment. The FDIC cliams that they would not allow risky banks to purchase failing banks, but how long will banks like regions continue to be able to buy failing banks? Currently regions shares increased by 12%, I however feel that this will be a short lived success. I think if banks are predicted to lose as much money as analyst say, the FDIC should step in before banks are able to make such risky investments, like buying a failed bank.
(LaMonica)
http://money.cnn.com/2009/02/09/markets/thebuzz/index.htm?postversion=2009020913
There is some discussion by market analyst whether or not it is a good idea to let banks like Regions acquire failing banks. This is the second bank that Regions has bought, in the last year. According to consensus estimates, analysts predicted that Regions "is expected to lose $705.8 million this year" (LaMonica).
This does leave me quite troubled and perplexed. The first thing i ask myself is if this may be some sort of last ditch effort to try to receive a big payoff on a risky investment. The FDIC cliams that they would not allow risky banks to purchase failing banks, but how long will banks like regions continue to be able to buy failing banks? Currently regions shares increased by 12%, I however feel that this will be a short lived success. I think if banks are predicted to lose as much money as analyst say, the FDIC should step in before banks are able to make such risky investments, like buying a failed bank.
(LaMonica)
http://money.cnn.com/2009/02/09/markets/thebuzz/index.htm?postversion=2009020913
Monday, February 2, 2009
More Layoffs
So in recent news employees from Macy's Atlanta office were recently layed off effecting nearly 800 employees including many executives. I think it is becoming rare to find anyone who has not been recently effected by a layoff of some sort. Personally, I work at Ansley Golf Club and have seen 4 fellow co-workers layed off due to the financial bleakness of the future. The 'upper management' claimed to refrain from laying off anyone that would be seen as "front line employees" or those who directly interact with our members on a day-to-day basis. But how long will my job be safe? Was there nothing we could have done to stop this financial decline? If AIG would have hedges some of the risks in financing the housing market, would we still be where we are today? Im curious to find out what other factors have lead to the current decline or if it was simply a domino effect of failing checks and balances...
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