Coach Gets Quirky With Kate Spade; Warren Buffett’s Latest Thoughts; It’s Kumbaya for Comcast and Charter Communications

Luxury quirk…

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Coach is about to get a whole lot more accessorized now that it announced it will be buying Kate Spade. The $2.4 billion price tag on the deal means Coach will be plunking down $18.50 per share, which ends up being a 9% premium over Kate Spade’s Friday closing price. Analysts are digging the merger, thinking it’s a good fit and news of the deal set Wall Street tongues wagging, subsequently sending shares of both companies up.  In fact, ever since Kate Spade brass decided on a sale back in December, the stock has been on the rise. Which is weird because before that the stock was flagging over increased competition and decreased traffic and sales. Much of the enthusiasm over the sale is because people think Coach will have an opportunity to up its street cred with millennials. After all, Kate Spade’s quirky merchandise tends to resonate with that finicky demographic. And when something actually resonates with millennials, companies want in and are quick to figure out how to make a lot of money in that arena.  In fact, 60% of Kate Spade sales come from millennials while only 15% come from outside the U.S. Go figure.

It’s all about the tapeworm…

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It was that time of year again where one of the wealthiest men in the world imparted his financial wisdom onto his shareholders, and also regular people. Sort of. At the annual Berkshire Hathaway meeting held in Omaha this past weekend, Warren Buffett and his partner, Charlie Munger, shared their isights on several topics including Wells Fargo, Amazon and even the Republican healthcare bill.  On Wells Fargo, Buffett said there were three huge mistakes, but the biggest one was not acting on the problem when they first heard about it. On the Republican healthcare bill, he shared this pearl: “Medical costs are the tapeworm of economic competitiveness.” Got it? Tapeworm. Also,  he messed up royally by not ever owning shares of Amazon.  He admits he never anticipated Jeff Bezos going as far as he did. Apparently Buffett’s oracle skills failed him on that one. On a different note, he said that if he dies tonight, he’s convinced shares of Berkshire Hathaway would go up tomorrow. Warms the heart now, doesn’t it.

Well isn’t this precious…

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Comcast and Charter Communications are joining hands in the spirit of fighting against the dreaded and unflagging power of wireless carriers. Apparently when it comes to fighting wireless carriers, there is an inherent safety in numbers. So together the two companies will join hands and tackle such things as customer billing and device ordering systems. Also, they made a deal with each other that neither one would attempt to buy any other wireless companies and to consult one another before either one would make related deals,. They want to avoid increasing competition between the two companies. A move like this allows them to develop wireless services for their own companies without worrying over competition from each other. So its’s a little kumbaya and a little self-preservation.  And bonus: The two companies have said the plan could have the potential of lowering costs for its customers. However, that remains to be seen so don’t hold your breath.

 

UnFriendly Skies Take a Well-Deserved Beating; FY-Infosys – Americans Getting on Payrolls; Paid Internships vs. Actual Job

Turbulent…

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The day of reckoning has finally come for airlines and their awful and questionably lawful treatment of its passengers. If you recall, the impetus for this day stemmed from a recent United Airlines flight, where a passenger, David Dao, was forcibly dragged off a plane and left with a litany of injuries including a concussion and broken teeth. So over at the House Transportation and Infrastructure Committee there was a hearing where airline execs insisted that they’ve been working to improve the situations that have been responsible for all the recent bad press. United CEO Oscar Munoz apologized again at the hearing for the recent tussle that cost his airline a presumably hefty settlement.  Of course plenty of blame has been pointed at unruly passengers. But then again who can blame them? Flights have gotten more crowded, equipment and tech failures have been resulting in delays on a fairly regular basis and obnoxious fees keep cropping up like a bad fungus. And don’t even get me started on the practice of over-booking flights. Apparently, a few airlines are rethinking their policies on that issue.  In the meantime, lawmakers are warning they’ll slap on major legislation if things don’t improve and they promise it wont be pretty.

Trump’d…

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A company based in India, with 200,000 employees worldwide, is now on the line to hire 10,000 workers in the U.S. Enter Infosys, one of a number of companies who engage in outsourcing – a four letter word according to the President – because the practice takes jobs away from Americans. Now, the company announced plans to open four new centers in the United States in the next two years. In the past, Infosys and other similar companies have relied on work visas for its employees. But now President Trump has ordered a major review and overhaul of that program. That’s expected to lead to some very unpleasant changes for companies who are used to employing foreigners in the United States, instead of tapping into the talent pool already present in the country. As for Infosys’s CEO, Vishal Sikka, who happens to be based in Palo Alto (oh, the irony), he explained that “…bringing in local talent and mixing that with the best of global talent in the times we are living in and the times we’re entering is the right thing to do. It is independent of the regulations and the visas.” Of course it is.

How do you like your coffee?

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If you’re not having the easiest time finding a job, maybe getting a position as an intern might be the better way to go. And leave it to Glassdoor to unearth the 25 highest paying internships in the United States. You see, the median annual salary in the U.S. for a full time worker is $51,350 – or about $4,300 a month. An internship gig at Facebook – provided you can even get one  – is worth $8,000 a month. Plus, as a Facebook intern, you get room and board, free food, transportation…Does it get any better than that? Just good luck. You’ll need it. Actually, you’ll really need computer science skills. But that’s besides the point. Microsoft comes in second with a paycheck that is about a thousand dollars less a month than what you’d get at Facebook. But former interns can’t stop raving about the projects they got to work on. Rounding out the third spot is ExxonMobil. While it’s not tech-related, it is a company that is highly focused on professional development of its interns. And who couldn’t use some of that? Amazon and Apple take spots fifth and sixth, respectively, and they’ll both keep you in style for about $6,400 a month. While the tech companies seem to dominate much of the list, there are still plenty of opportunities to map out a career in banking. If you’re sure that’s your thing.

Panera Bread Shacks Up With Krispy Kreme Investor; Nothing Smooth About a Recent Nivea Campaign; Payless Out. Chapter 11 In.

Yummm…

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Krispy Kreme needs to scoot on over and make some room over at JAB, the investment firm that controls it. It’s latest roomie is moving in and its name is Panera Bread. Panera is expected to fit in quite nicely at JAB, at least that’s what all the analysts keep saying, as the firm’s other entities include Peet’s Coffee and Tea, Caribou Coffee and Keurig Green Mountain Coffee. JAB will take the sandwich chain private for a tasty $7.5 billion, which comes out to about $315 per share and more than a 20% premium. And why shouldn’t JAB pay all that money? After all, the chain boasts 2,000 locations and pulls down annual sales of $5 billion. Of course it makes cash like that because it offers healthier options than most other fast-food chains, not to mention readily available wifi. For a fast-casual restaurant chain, it happens to be very tech forward. And don’t even get me started on the restaurants online ordering. Just. Don’t. Talk about a draw. Apparently JAB wants Panera to continue doing exactly what it does so well (translation: no changes) because it’s keeping all the execs in their current roles, including founder and CEO Ron Shaich. Wall Street’s was totally digging the news as well sending shares up to around $312 a pop. Add that to the fact that Panera has beat estimates for the last year and half, and JAB has got itself a pretty nifty deal.

Racist deodorant?

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Racist may not be the first word that comes to mind when you think about deodorant. But then again, that might be because you hadn’t yet heard about Nivea’s slogan in its ad for “Invisible for Black and White Deodorant.” According to marketing geniuses at Nivea, “White is Purity. ” And that’s precisely the slogan that was used to promote the product. I. AM. NOT. KIDDING. The ad was originally unleashed on the company’s Middle East Facebook page and social media did not take it well, with one outraged Twitter user writing: “Your comments are FULL of society’s refuse. This cleared your marketing department? #prnightmare.” Beiersdorf, the German company that counts Nivea amongst its holdings, wisely deleted the ad. Just not before white supremacists weighed in with their thoughts on the slogan, including this one:  “We enthusiastically support this new direction your company is taking. I’m glad we can all agree that #WhiteIsPurity.” The way white supremacists feel about an ad campaign would make a fairly good barometer, in terms of marketing efficacy, don’t you think? As to how the ad got past quality control in the first place remains a mystery.

And there’s nothing Star Jones can do about it…

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Another one bites the fiscal dust and this time the dubious distinction of filing for Chapter 11 bankruptcy goes to Payless Shoes. Even the likes of Tyra Banks and Star Jones wasn’t enough to save the Kansas-based chain from having to shut down around 400 stores in the United States and Puerto Rico. But that’s what you gotta do when your revenue tanks 4% just in the last year, and Amazon and deep-discount stores keep eating into your business. However, all is not lost, as Payless still has around 4,000 other stores in over thirty countries. The company just needs to do a little fiscal restructuring. But then again, don’t we all?

Amazon Lands Itself in the Middle East; Price of New Skin Drug Will Make Your Skin Crawl; Spoiler Alert: Uber’s Not So Diverse

Just Souq it up…

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In case you were wondering what Amazon’s been up to lately, here’s a hint: It’s got nothing to do with drones. Sort of. Instead, the online marketplace just agreed to scoop up Souq.com, the Dubai-based Amazon of the Middle East, and apparently the largest online retailer in the region. While we don’t know the exact numbers involved in the deal, we do know that 1.) There was one other bid by a billionaire from Dubai and 2.) It’s apparently the biggest tech merger & acquisition in the Arab world. Ever. At least according to somebody at Goldman Sachs. But I guess Goldman Sachs would know something like that. Rumor has it that although the Dubai billionaire, Mohamed Alabbar, counter-offered $800 million for the company, Amazon will be paying even less. What’s super-interesting about that factoid is that last year Souq.com was valued at around a billion following a funding round.

What a bargain…

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The good news is that the FDA actually approved a new treatment for severe eczema. The bad news is that it costs $37,000 a year to get it. But for some it might be worth every penny considering that one-third to two-thirds of the patients who used the drug actually regained clear or almost-clear skin.  Manufactured by Frace’s Sanofi SA and New York’s Regeneron Pharmaceuticals, the just approved drug, called Dupixent, is actually injected under the skin every two weeks, unlike previous eczema treatments, which are typically topical and often involve steroids and antihistamines. The injection apparently contains an antibody that does something to basically scare off the skin condition condition. Sort of. In any case, while $37,000 seems like a ridiculous amount of money to pay – because it is – consider that it’s still lower than Humira and Enbrel, drugs that also treat skin ailments. However, Wall Street didn’t look at it that way and instead sent shares of Regeneron down upon news of the five-figure price tag.

 

Well, what did you expect?

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Uber finally finally released its very first diversity report following a slew of issues, a ton of criticism, not to mention claims of sexual discrimination. But the only surprising thing about the report is that there weren’t any.  Surprises, that is. Sure the company employees minority groups. Unfortunately, those groups aren’t as well-represented at the top. The ride-hailing app employs about 12,000 people globally, and about 64% of them are males. Of that 12,000 figure, 36% are women and 22% of those women hold higher-level positions, while 15% of them work in the company’s tech areas. In the U.S., however, the numbers are almost embarrassing as blacks hold just 2.3% of leadership roles, while Hispanics represent .8% of those positions  – just not on the technical side.  And just to be clear, those percentages are not exclusive to Uber, but rather are fairly representative of Silicon Valley tech companies. Except now Uber pledged to throw $3 million at the problem in order to find solutions to make those numbers...better.

Show Me the Money! Forbes Unveils Its Annual List of People With Money to Show; UK Shows Google What Happens When You Don’t Shut Down Haters; Twitter Did Something Impressive. Just Not With Its Earnings

Rich-y rich…

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It’s that time of year again. The one where Forbes reminds us just how much money we don’t have relative to the richest people in the world. And here goes. There are 13% more billionaires this year than last year and their combined net worth totals almost $7.7 trillion. Yes. Trillion.  The number one spot goes to Microsoft co-founder Bill Gates who’s net with totals $86 billion. When Gates is not busy fixing the world and explaining to the President why his budget ideas are bad ideas, he runs the world’s largest charitable organization. Naturally, the Oracle of Omaha, Warren Buffet, comes in a close second with a net worth of $75.6 billion, while Amazon’s Jeff Bezos makes his debut into the top three with a net worth of $72.8 billion. And even though we only finally see a woman on this list at the number 14 spot, there’s still some uplifting news. For instance, the number of women who ma∂e it onto the list has increased 170% since 2009. Also, there’s a record 56 women on the list who are self-made billionaires. If you’re curious to see who did and didn’t make the list, click here to find out. And spoiler alert: Perhaps President Donald Trump really ought to consult Bill Gates on any and all future budget concerns for the country, considering he lost a billion in the last year and ranks #544.

Dis-content…

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Just when you thought Google could do no wrong, the search engine giant finds itself in the midst of some major policy revamping after a bunch of big-name advertisers pulled their marketing  – and whole lot of money – because it was showing up on /sexist/hate-filled/offensive/anti-semitic/terrorist-promoting content. The trouble started when major brands, including the BBC and department store chain Marks & Spencer, noticed their ads being being placed alongside content promoting violent extremist groups. Last I heard, department stores were no great fans of terrorism. Now, part of the policy revamp includes broadening Google and YouTube’s definitions of hate speech, which is always a good thing since hate manages to always rear its ugly face no matter how subtly its presented. Also, content won’t be able discrimnate against groups based on their identity, socieo-economic class and country of origin. Such measures ought to make it a tad bit more difficult for the haters to get their odious messages out. In addition to some added controls and a few default settings, Google should end up creating a kinder, gentler platform. Hopefully…

Speaking of which…

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Even though Twitter doesn’t exactly have the fiscal luxury to delete accounts, to its credit, the social media company did just that and put the kibosh on close to 380,000 of them because of their links to terrorism. So lousy earnings aside I say “Kudos” to Twitter.  Those accounts were just the ones it took down between July and December of 2016.  Since August of 2015, over 635,000 accounts have been removed for the same reason. The information was disclosed in its latest transparency report and these actions are part of an effort to weed out extremist groups and other assorted haters. Interestingly enough, almost 75% of the accounts that were removed from Twitter were discovered by technology created just for this purpose for Twitter, while 2% of those accounts came down after governments made requests for the company to get rid of them.

 

CEO Leaving Ralph Lauren Over “Difference of Opinion”; Apple Gets De-Throned; “Fake News” Scandal Leaves Facebook Unscathed

Ride the pony…

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Shares of Ralph Lauren fell today, over 11% at one point, all because CEO Stefan Larsson announced he is stepping down after a little over a year on the job. It seems Larsson and the big kahuna himself, Ralph Lauren, just didn’t see eye to eye on how the company should evolve to attract more shoppers, and younger ones, to boot. Which roughly translates to: the two guys just didn’t get along.  Larsson, who used to be the global president of Old Navy,  will step down in three months while the company searches for a new CEO. In the meantime, Ralph Lauren will stay put, in his role as Executive Chairman and Chief Creative Officer while Chief Financial Officer Jane Nielsen will serve as interim CEO. The other thing staying put is a plan – that was already in the works – to enhance the Ralph Lauren brand.  Shares of Ralph Lauren had fallen 22% in the last twelve months and it has had to close several stores and eliminate several jobs. But apparently, and ironically, it’s all part of its growth plan. The news came down during the company’s quarterly report call, where the lifestyle brand reported earnings of $1.86 per share, with revenue down 12% to $1.71 billion. At least that last bit was forecasted. And it was welcome news since analysts expected the company to only pull down $1.64 per share. As for Larsson, he’ll be walking away with a nifty $10 million in severance, not to mention health benefits, for the next two years.

Taking a bite out of the apple…

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Move over Apple. There’s a new sheriff in town. Well, maybe “sheriff” isn’t quite the right word. But the tech giant has been dethroned, this year anyway, as the world’s most valuable brand, and now ranks as the second most valuable brand. Which is ironic, since yesterday it released its earnings report and brutally beat expectations adding  $3.36 per share on a record setting $78.4 billion in revenue. Analysts predicted earnings of $3.22 per share on $77.3 billon in revenues. But I digress. The company to earn the dubious distinction of being the world’s most valuable company for 2016, as determined by Brand Finance, is none other than Google. No great shock here. Brand Finance takes it upon itself to conduct this yearly study, identifying and ranking the 500 most valuable brands in the world. Google, by the way used to sit in the top spot. But it’s been years. Like five of them, to be precise, since it sat atop this illustrious throne. Apple’s brand value tanked 27% from last year’s $146 billion to this year’s $107 billion. As for Google, its brand is currently valued at $109.5 billion. Part of the problem, for Apple anyway, is that the Apple watch failed to become as fabulous as Apple thought it should be.  Then there’s the fact that the tech giant seems to have no new products on the horizon – that we know of – while battling all the  smart-phone competition. According to Brand Finance, “Apple has failed to maintain its technological advantage and has repeatedly disillusioned its advocates with tweaks when material changes were expected…” That’s gotta hurt. And in case you were wondering, because I know you were, Amazon ranks third with a brand value of $106.4 billion, AT&T comes in fourth at $82 billion, while Microsoft rounds out the fifth spot with a brand value of $76.3 billion. And no, I didn’t forget Walmart or Facebook. They rank eighth and ninth respectively.

That’s just beautiful…

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Speaking of Facebook, the social media giant just released its latest quarterly earnings and well, it would be really swell if all companies could have earnings as good as that. And with over one billion users, it’s no wonder the company posted better than expected earnings, to the tune of $2.57 billon with revenues of $8.8 billion and $1.24 added per share. Estimates had Facebook pulling down $1.11 per share and $8.5 billion in revenues while last year at this time Facebook raked in $5.84 billion. If you do the math, that’s a 51% increase over last year. In fact, this quarter marked Facebook’s sixth straight quarter in which it beat forecasts in both profit and revenue. A lot of that success can be attributed to Facebook’s mobile and live video. Its ever lucrative ad revenues also don’t seem to ever disappoint. Facebook is now planning on a hiring spree, especially because it’s looking to create even more community and groups. Its monthly active users are up 17% to 1.86 billion and mobile users were up 21% from last year to 1.74 billion. As for Facebook being enmeshed in the “fake news” controversy, well as you can see, the scandal failed to make a dent at the company. Well, fiscally anyway.

 

Kate Spade Shares Stylin’ on Latest Reports; Sears Has a Fiscal Guardian Angel; Amazon Dismisses Gravity With Latest Patent

I’m so fancy…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Kate Spade wants to put itself up for grabs and that news sent its shares up 23%, giving Wall Street plenty of cause to celebrate. And the Street will take whatever it can get, especially since Kate Spade was down 9% just in the last six months. In fact, similar companies including Michael Kors and Coach have also experienced declines during the same time period. But the kicker is that both of those companies, along with four others, are being bandied about as potential buyers of Kate Spade. Talk of a potential sale is just what hedge fund Caerus Investors wants to hear. While the firm, which entered the picture back in 2009, hasn’t disclosed its exact stake in the company, it did send a letter to Kate Spade’s board back in November urging it to put itself on the auction block. And that’s exactly what’s planned for next month. With a market cap of $2.3 billion, Caerus thinks Kate Spade could get picked up for a nifty premium – between $21 to $23 per share -and naturally, Caerus stands to profit from that. But that wasn’t the only story to come out of Kate Spade today. Apparently, an options trader purchased 2,000 calls for Kate Spade shares just minutes before it was reported that it’s exploring a sale. A call, by the way, allows a buyer to score shares at a pre-agreed upon price. Not only was one very lucky buyer involved, but it also netted a very shrewd trader a cool $320,000 within minutes. Insider info? Hmmm. I’m sure the SEC would like to know. Because that would be so bad. Just ask Martha Stewart. As for Kate Spade, she hasn’t been part of the company since 2006.

On a another note…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Even though its stock just went up 9% – the most in two months – Wall Street definitely does not feel the same amount of love for Sears as it does for Kate Spade. The stock closed at a 52 week low just yesterday and its planning to close 30 more Sears and Kmart stores in early 2017. But there is someone who seems to love the embattled retailer unconditionally: CEO Eddie Lampert, who said he’s going to get a $200 million letter of credit for the troubled company. In fact, he has so much faith in the company  – and apparently he’s the only one who does – that he thinks that letter of credit could grow to $500 million. This is not Lampert’s first “loan” to Sears. In the last two years he’s shelled out over $800 million to the company.  Talk about faith.  At least this loan comes with guarantees that if Sears goes bust, its suppliers will still get paid. I wonder if the rest of his hedge fund buds over at ESL Investments feel the same, even as the firm continues to back Sears? For some inexplicable reason, Lampert is devoted to Sears, despite the fact that its sales are constantly going down and it has already lost billions. Most investors think the time has come to throw in the retail towel.  But not Lampert, who in addition to being Sears’s CEO and biggest cheerleader for the last four years, also happens to be its biggest investor.  However, others only see red flags and are wondering why Lampert is the only one eager to throw money at a company which has been losing so much of it in so little time.  Sears’s last quarter lost $750 million, so much worse than last year at this time when it only lost $454 million. Revenue fell a whopping 13% to $5 billion. In fact, in the last eight years, Sears has lost around $9 billion. Also, with the seeming exception of Lampert, everyone is wondering why Sears would need money right after the holiday season, which is supposed to be the most lucrative quarter out of the whole year.

Yeah, they thought of that too…

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Because fulfillment centers weren’t enough, now the e-commerce giant is looking to do away with gravity – besides logistics companies – with its latest patent for an airborne fulfillment center (AFC). It’s exactly what it sounds like – a warehouse in the sky. Flying at a lofty 45,000 feet, drones would basically zoom into the warehouse, pick up items that were ordered and then deliver them.  The company’s ramped up its drone tech efforts and this latest project fits in nicely with that initiative.  Right now Amazon drone delivery requires that Amazon build warehouses in specific areas, on land, where drones can happily roam free and deliver items to customers. Some of the uses mentioned in the filing include fulfilling orders during football games. The AFC would be stocked ahead of time with certain game “essentials” that could be easily delivered as you cheer for your favorite team. Another idea would be to allow customers to order right from a giant ad board and have their items delivered “within minutes.” But before you start having nightmares of flying robotic insects whizzing all around you, Amazon is going to need to get major regulatory approval from aviation authorities before launching any airships.