Sunday, September 30, 2012

A Venture Capitalist?s E-Commerce Shopping List

Niren Shah - Norwest Venture PartnersEditor?s note: Sergio Monsalve is a Partner at Norwest Venture Partners where he�is focused on early and growth investments in the digital media, mobile, and social areas. Follow him on Twitter.� E-commerce is one of the fastest-growing sectors in technology and is poised to get even hotter, with sales expected to double between 2010 and 2015, according to�eMarketer.�So how can discerning investors find the most promising opportunities? They have to first take off the rose-colored glasses.

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Cronyism Is Destroying Spain's Future

spain shadows

Here's the news from Spain last week, in case anybody missed it: huge cuts in government spending; higher taxes; biting austerity; unemployment higher than in Greece; big and growing demonstrations in Madrid; violent clashes with police; and in Catalonia, a rising clamour for secession. The only hope on the horizon takes the ambiguous form of an expected financial rescue package, with still more austerity strings attached, from the richer countries of the north.

Such help, however, will offer no more than temporary relief unless Spain addresses a deeper problem that it can only sort out on its own. It's a problem that has a decisive impact on the country's capacity to remain a competitive global player and that will be terribly difficult to solve because it is embedded in the national DNA.

During the 14 years I've lived in the country, I've talked with many Spaniards about this. But the most forthright and revealing group has been those who work abroad – in London, Holland, Germany, the US. They all miss the sunshine, the food, the strong family bonds, the warm, easy Spanish way of living. They also share – and here is the thing – an exasperation with the Spanish way of work.

I'm thinking, say, of two young men, in their early 30s, who moved to London six years ago, before the economic crash. They've done well. One, who started out as a waiter, is now the operations manager of a successful restaurant chain. "To have got ahead the way I have in London I'd need an uncle with good connections. I didn't, so I left."

The other works in the digital video industry. He had entered some work for a prize, but a number of prestigious British companies were running against him so he had no expectation of winning. Yet win he did. On pure merit. The notion of an unconnected unknown like him winning an equivalent prize in Spain was, he said, unthinkable.

The lessons from these two stories, entirely typical of Spaniards abroad, are clear: the Spanish are not inherently idle; the labour market in Spain does not sufficiently reward talent and hard work. The Spanish disease that both these young men said they had fled was "amiguismo" –"friendism" – a system where one gets ahead by who one knows.

Reams of opinion columns in the Spanish press in recent months have pointed to amiguismo in the political classes. Which is no doubt largely true but fails to acknowledge that corrupt or lazy or incompetent politicians do not inhabit a closed ecosystem but behave in a manner in keeping with the way society operates at large.

It is true that Spain had enjoyed a sustained economic boom for the best part of two decades. The usual explanation is that the country benefited from fluid access to cheap northern European credit. But there is a little more to it than that. There are also some mightily well-run and successful Spanish companies, such as the multinational retail clothing colossus Inditex, which owns Zara, or, like it or hate it, the Banco Santander. Yet I am afraid that these are the exceptions and not the rule.

I recently asked a boss at a well-known Spanish company what percentage of the 300 or so middle-class staff under him did their jobs to the best of their abilities. Despondent, he replied: "The number is low." The deeper sin lies in an institutionalised Spanish system where both the financial and moral incentives to work well are undercut by the perception that if you do not know the right people there is little point in giving the best of yourself at work.

Where does all this come from? It might be tempting to dwell on the peculiarly closed-minded, our-fate-is-in-God's-hands brand of Catholicism that reigned in Spain for half a millennium but I think I'll stick for now to the prevailing educational system. Going to school in Spain is a pretty deadly business. The emphasis is all on learning by rote. Creativity and curiosity are not part of the package. School is not, remotely, fun. Work, the idea is instilled ominously early on, cannot be much fun either.

I have a large Spanish family, with 25 first cousins on my Madrileña mother's side alone. About 15 years ago, when the Spanish economy was buzzing, a male cousin came to visit me in Washington, where I then worked. I told him one night at a bar that I enjoyed my job. He said nothing in reply but, as I discovered two days later, he'd been mulling over what I said, deeply troubled. "What you told me the other night," he said, "about enjoying your job… you weren't serious, were you?"

Here was an employed, friendly, middle-class 36-year-old Spaniard and he had never, ever had wind of the notion that someone might feel enthusiasm for what he did for a living. For my cousin, as for so many Spaniards, work is a necessary evil, a nuisance to be dispensed with as briskly as possible before turning to the serious business of life – drinking, nibbling tapas, hanging out with friends until the small hours.

This is all very well, even admirable from a certain philosophical point of view. Nor did it seem to matter very much while the Spanish bubble grew. But it is dangerously infantile in the present circumstances. Now that the bubble has burst, people's approach to work matters a great deal. The brightest, the boldest or the most restless young people go abroad for money and fulfilment; the rest, half of whom are unemployed, stay at home – baffled, desperate, increasingly angry, kicking out at government and being kicked back.

The government does carry its share of the blame. But it is a symptom – a big, glaring symptom, for sure – and not the root cause. What's needed if Spain is not to sink gradually back into a sort of bucolic, early 20th-century Mediterranean poverty is a revolution across the board in attitudes to work. Like it or not, the system has to be overhauled and replaced by one where the rules are fair and merit is rewarded. Everywhere.

Catalonia is a much more productive region than Andalucía, as the independentists will never cease to remind you, but the difference as far as amiguismo goes is only one of degree. There is much talk now of a huge financial rescue plan from the north. Good. It will bring much-needed relief. But it will be no more than a passing cure so long as the corruption of amiguismo continues to stain Spain's otherwise warm and delightful soul, hampering the country's capacity to compete in the grown-up world.

This article originally appeared on guardian.co.uk

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How to Find a Good Lawyer and Pay Attorney Fees

Lawyers – what would we do without them? More than half of the signers of the United States Declaration of Independence were lawyers, including John Adams and Thomas Jefferson. 19 of 43 presidents have been attorneys. More than a third of the House of Representatives are lawyers, along with 60% of the senators. For better [...]

How to Find a Good Lawyer and Pay Attorney Fees is a post from the Money Crashers personal finance blog.


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Saturday, September 29, 2012

Baby Food Breakdown: Store-Bought Vs. Homemade

I?m a die-hard do-it-yourselfer, and that includes making my own baby food. (I don?t sew my own nappies, but I do use cloth diapers.) I really enjoy making my own baby food, but what I really want to know is if it?s actually saving me money. Here is a cost comparison of making your own [...]

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HP May Have Another Giant Write-Down Coming (HPQ)

Meg Whitman

Next week Meg Whitman will be meeting with analysts to discuss HP's planned turnaround.

But Jefferies analyst Peter Misek jumped the gun with a report yesterday that not only advised investors to sell HP's stock, but warned that HP could be heading for another huge write-off, to the tune of $3 billion, reports the Silicon Valley Business Journal.

Misek estimates that HP's stock will hit $14 a share in the next 12 months. It's been trading near $17 recently. Other analysts, on average, think HP will recover to $24. Misek isn't the only bear. Earlier last month, UBS Analyst Steven Milunovich also recommended that investors sell the stock.

But Misek takes it a step further. He's predicting that HP could announce an additional $3 billion write-off related to last year's $11.7 billion purchase Autonomy.

Last month, HP wrote down $8 billion, due to a goodwill impairment on its $13.9 billion EDS acquisition

Autonomy has been an Albatross around Whitman's neck. In May, Whitman told investors that sales of Autonomy were "disappointing" and that the former Autonomy CEO Mike Lynch was out the door. 

UPDATED: Although HP hired a well-known software guy, George Kadifa, in May, to run HP's software business, Autonomy wasn't part of his job. Earlier this month, Microsoft’s North American President Robert Youngjohns was hired run Autonomy.

HP doesn't separately report Autonomy's financial results, but on its last earnings statement, it said that HP's Software unit includes $14.6 billion of goodwill, of which $6.9 billion relates to Autonomy.

Software accounted for $2.9 billion in net revenue for the nine months ending July 31, a lot less than the company's other business units like the Personal Systems Group ($27 billion), the Imaging and Printer Group ($18.4 billion), the Services Group ($26.2 billion) and the enterprise hardware group ($15.3 billion).

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STOCKS FALL: Here's What You Need To Know (DIA, SPY, QQQ)

trust fall loyal

Markets got hit by some disappointing economic data today.

First the scoreboard:

Dow: 13,437, -48.8, -0.3%
S&P 500: 1,440, -6.4, -0.4%
NASDAQ: 3,116, -20.3, -0.6%

And now the top stories:

  • Overall, U.S. economic data was uninspiring today.
  • Personal income climbed by just 0.1 percent in August, which was weaker than the 0.2 percent expected by economists.  Spending, however, jumped by 0.5 percent.  In other words, consumers are saving less than expected.
  • Chicago's Purchasing Managers Index (PMI) unexpected fell to 49.7 from 53.0 in August.  Economists were expecting the measure to slip to just 52.8.  A reading below 50 signals contraction and this was the first sub-50 reading since September 2009.
  • The University of Michigan's Consumer Confidence index came in at 78.3, which was slightly below the 79.0 expected. CHARTS: Every Bullish And Bearish Trend In The Stock Market Right Now >
  • The big news of the day was certainly the Spanish bank stress test.  According to consulting firm Oliver Wyman, which conducted the test, the capital shortfall came in at 60 billion euros.  This was right in line with expectations.
  • The fact that the stress test results weren't worse may have helped the euro jump and send stocks off of their lows of the day.
  • Today also may have been a major turning point for China. Two big headlines crossed from this morning: 1) China announced a schedule for its leadership transition and 2) the Communist Party of China booted disgraced former leader Bo Xilai. "Simply put, the dust finally settled on new leadership," wrote Bank of America's Ting Lu. "These decisions will significantly reduce the political and economic risks perceived by both onshore and offshore investors. Note rumors about political infighting have significantly disturbed markets so far this year."
  • Don't Miss: DEUTSCHE BANK: These Are The 29 Best Stocks Right Now >

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Life Insurance for Military Members ? Death Gratuity and SGLI

Before any military member goes on a mission, he or she gets an operations order spelling out the succession of command, plus instructions and resources in case the mission goes bad. Essentially, this is what life insurance does for your family. Life insurance provides emergency money to see your family through in case the plan [...]

Life Insurance for Military Members – Death Gratuity and SGLI is a post from the Money Crashers personal finance blog.


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Friday, September 28, 2012

Foursquare Partners With OpenTable To Make Dinner Reservations Simple

OpenTableMaking reservations just got really easy, thanks to a new partnership. Here's what Foursquare had to say about its parntership with OpenTable today

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Ptch Partners With Paramount, Letting Users Remix Their Own Paranormal Activity Found Footage

PTCH_EditorEver since Paranormal Activity hit it big in movie theaters five years ago, fans have been making their own spoof videos, essentially trying to replicate the found footage style of the movies in homage to the original. Shot on a shoestring budget, Paranormal Activity became a huge hit and has inspired a series of sequels, one of which -- Paranormal Activity 4 -- is set to be released next month, just in time for Halloween. Paramount Pictures, the studio behind Paranormal Activity and all its sequels, is hoping to make it easier than ever for fans to create their own home movies inspired by the horror flick. To do so, it's partnering with mobile video editing app Ptch, allowing users to integrate filters, sounds, clips, and images from the movie series into their own mobile videos.

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Neil Young Begins His Long Quest Towards True Audio Fidelity With Pono, A New Music Service And Device

Singer-songwriter-rocker Neil Young has been talking about problems with modern audio codecs for decades. He was angry at CDs back in the 1990s and most recently he lashed out against MP3s and digital audio compression at a popular tech conference, saying "My goal is to try to rescue the art form that I?ve been practicing for the past 50 years. We live in the digital age and, unfortunately, it?s degrading our music, not improving it ? It?s not that digital is bad or inferior, it?s that the way it?s being used isn?t doing justice to the art. The MP3 only has 5 percent of the data present in the original recording. ? The convenience of the digital age has forced people to choose between quality and convenience, but they shouldn?t have to make that choice.?

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Baby Food Breakdown: Store-Bought Vs. Homemade

I?m a die-hard do-it-yourselfer, and that includes making my own baby food. (I don?t sew my own nappies, but I do use cloth diapers.) I really enjoy making my own baby food, but what I really want to know is if it?s actually saving me money. Here is a cost comparison of making your own [...]

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Thursday, September 27, 2012

NIKE Says China Is Weak, Shares Sink (NKE)

nike lebron x sneaker

Nike just reported earnings of $1.23 per share, better than consensus estimates of $1.13.

The apparel manufacturer also beat on the top line, reporting revenues of $6.67 billion versus the $6.44 billion expected.

However, Nike also said global futures orders ex-currency were up 8 percent in the quarter versus the 10 percent expected.

Shares are trading down nearly 5 percent in the after-hours session.

North America orders were up 13 percent versus the 14 percent expected.

Western Europe orders were up 6 percent versus the 4.2 percent expected.

China orders were down six percent versus the 1.2 percent rise that was expected.

Emerging markets orders also missed estimates, up 14 percent versus the 18 percent expected.

NBG retail analyst Brian Sozzi weighed in on Nike's report in a flash to clients after the announcement:

This time around, the market appears to be upset with reported sales weakness (includes currency) in Western Europe (missed consensus), Central Europe (missed consensus), and emerging markets (missed consensus). Further, Japan on a reported and currency neutral basis came nowhere near consensus. To add insult to injury, or further support to the bear camp, currency neutral future orders fell short of consensus by 200 bps.

...

Where the tricky aspect arises is that Nike’s inventory position appears to be in better shape (gives hope on China concerns being alleviated), China ex. currency sales actually trumped consensus (likely as prices were cut to move excess inventory), and there was a stronger tone around gross margins (which marginally beat consensus, giving hope to the bulls that want to finally see price increases filter through into gross margins).

A bunch more information needed on the earnings call to determine whether to buy the weakness in the morning. For now, the stay on the sidelines call still in play.

More on the sales picture:

North America sales came in up 13 percent at $2.71 billion versus estimates of a 14 percent rise.

Western Europe sales came in at $1.17 billion.

Japan sales were $183 million.

Greater China sales were $572 million.

Footwear accounted for $3.69 billion of revenue, while apparel accounted for $1.76 billion and equipment accounted for $386 million.

More from the press release:

*BEAVERTON, Ore.--(BUSINESS WIRE)-- NIKE, Inc. (NYSE:NKE) today reported financial results for its fiscal 2013 first quarter ended August 31, 2012. Strong demand for NIKE, Inc. brands propelled first quarter revenue to new record highs. As expected, diluted earnings per share were lower due to lower gross margin, higher SG&A and an increase in the tax rate.

“We had a strong first quarter and a great start to the fiscal year. NIKE, Inc. delivered an amazing array of innovation across some of the biggest moments in sport,” said Mark Parker, President and CEO, NIKE, Inc. “Innovation is how great companies sustain growth and build competitive separation,” Parker added. “We’ll continue to make strategic investments across our portfolio of businesses to capture our full potential over the long term and drive shareholder value.”

First Quarter Income Statement Review

  • Revenues for NIKE, Inc. increased 10 percent to $ 6.7 billion, up 15 percent on a currency-neutral basis. Excluding the impacts of changes in foreign currency, NIKE Brand revenues rose 16 percent, with growth in all key categories and every geography except Japan. Revenues on a currency-neutral basis for Other Businesses increased 9 percent, while Businesses to be Divested grew by 6 percent.
  • Gross margin declined 80 basis points to 43.5 percent. Gross margin continued to benefit from pricing actions and product cost reduction initiatives, however, this was more than offset by higher input costs, primarily materials and labor. In addition, gross margin was negatively impacted by a shift in the Company’s mix to lower margin businesses within the NIKE Brand and the conversion of the China market to direct distribution for Converse.
  • Selling and administrative expenses grew at a faster rate than revenue, up 18 percent to $2.2 billion. Demand creation expenses increased 29 percent to $891 million due to marketing support for key product initiatives, as well as support for the Olympics and European Football Championships. Operating overhead expenses increased 12 percent to $1.3 billion due to additional investments made in the wholesale business to support growth initiatives and higher Direct to Consumer costs from the addition of new stores over the last year.
  • Other income, net was $29 million, comprised primarily of foreign exchange related gains. For the quarter, the Company estimates the year-over-year change in foreign currency related gains and losses included in other income, net, combined with the impact of changes in foreign currency exchange rates on the translation of foreign currency-denominated profits, decreased pretax income by approximately $28 million.
  • The effective tax rate was 27.5 percent compared to 24.3 percent for the same period last year. The effective tax rate was higher due to a larger percentage of earnings coming from higher tax countries, primarily the United States, as well as a higher effective tax rate on operations abroad.
  • Net income decreased 12 percent to $567 million while diluted earnings per share decreased 10 percent to $1.23, reflecting a 3 percent decline in the weighted average diluted common shares outstanding. In a press release issued on May 31, 2012, the Company announced its intention to divest of the Cole Haan and Umbro businesses. Pro Forma diluted earnings per share, excluding the results of the Businesses to be Divested, would have been approximately $1.27, down 9 percent compared to the first quarter of fiscal 2012 on a comparable basis.**

August 31, 2012 Balance Sheet Review

  • Inventories for NIKE, Inc. were $3.4 billion, up 10 percent from August 31, 2011, in line with revenue growth, and reflecting strong demand for NIKE, Inc. products.
  • Cash and short-term investments were $3.3 billion, $433 million lower than last year as share repurchases and dividend payments increased year-on-year and the Company made debt repayments.

Share Repurchases

During the first quarter, NIKE, Inc. repurchased a total of 8.2 million shares for approximately $779 million as part of its four-year, $5 billion share repurchase program, approved by the Board of Directors in September 2008. As of the end of the first quarter, the Company has purchased a total of 58.5 million shares for approximately$4.9 billion under this program. On September 19, 2012, the Company announced that its Board of Directors approved a new four-year, $8 billion program to repurchase shares of NIKE's Class B Common Stock. During the second quarter of fiscal 2013 the Company's current $5 billion share repurchase program was completed, and the new program commenced.

Futures Orders

As of the end of the quarter worldwide futures orders for NIKE Brand athletic footwear and apparel, scheduled for delivery from September 2012 through January 2013, totaled $8.9 billion, 6 percent higher than orders reported for the same period last year. Excluding currency changes, reported orders would have increased 8 percent.*

Conference Call

NIKE management will host a conference call beginning at approximately 2:00 p.m. PT on September 27, 2012, to review first quarter results. The conference call will be broadcast live over the Internet and can be accessed at http://investors.nikeinc.com. For those unable to listen to the live broadcast, an archived version will be available at the same location through 9:00 p.m. PT, October 4, 2012.

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