Bit-drama; Sports Authority Strikes Out; Uber’s New Bosses

Bit-scam?

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An Australian man by the name of Craig Wright is claiming to be Bitcoin’s illustrious creator. But as much as he wants people to believe him and embrace him as creator-extraordinare of the crypto-cuurency, there’s plenty of reason not to bite. Insisting he’s Satoshi Nakamoto, the pseudonym behind the currency’s creator, Wright, a computer scientist, decided that it was time for him to reveal his true identity and correct all of the misinformation out there. Wright explained, “I didn’t take the decision lightly to make my identity public and I want to be clear that I’m doing this because I care so passionately about my work and also to dispel any negative myths and fears.” How…gallant. According to Wright, he substantiated his own claim by showing that he had access to blocks of bitcoin that could only have been created by the actual bona fide creator. How very convenient. But naysayers say he’s nothing more than a con man who used some blocks that had already been around and just copied them. Incidentally, Wright’s home was raided by police back in December as a result of a tax investigation conducted by the Australian Tax Office. Though Bitcoin launched in 2009, its creator, who is reported to hold about $450 million worth of bitcoin, fell off the virtual grid in 2011. There are a reported 15 million plus Bitcoins currently in circulation. Wright said he believes that Bitcoin can be used to make the world a better place and is set to release research on the massive potential of the crypto-currency. Awww! Can it cure cancer too?

Game over?

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Looks like it’s game over for Sports Authority, as the retailer will shutter its 463 stores after failing to reorganize itself following its Chapter 11 bankruptcy filing back in March. Initially, the chain had big plans to shut down just 140 of its stores. But now the chain will liquidate and very unglamorously auction itself off. There’s a hearing scheduled for May 16 but in the meantime, the flailing company is hoping somebody shows a little fiscal mercy in the way of a generous offer. Problem is, the offers it already had wouldn’t even be enough to cover the $100 million worth of administration and liquidation costs. Of course, there’s also the whopping $1.1 billion that Sports Authority owes to its creditors. Apparently Dick’s Sporting goods was catering the thought of scooping up Sports Authority, but don’t bother checking to see if Dick’s would keep the old sign in place. Because it wouldn’t. It has no intention of bringing on any negative associations. Fact is, Sports Authority and Dick’s were rivals with Sports Authority having the upper hand. But then Dick’s brought its “A” game and began presenting its merchandise better while also offering way more in the tech arena. Hence, Dick’s is not in the downward spiral in which Sports Authority finds itself with one analyst even calling it the only game in town now. Ouch. Perennial brick-and-mortar killer Amazon and friends also had a passive hand in Sports Authority’s demise. But ironically enough, deeply discounted merchandise at Sports Authority, as a result of liquidation attempts, have been hurting sales at Dicks and other sporting goods chains. Lately, anyway. But that fiscal dent will be minor and short-lived, especially when you consider that shares of Dick’s surged a bit today on the news of Sports Authority’s losing uphill battle.

Riding it out…

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About 1,000 Uber drivers in New York are going all out by forming an association (read: union) to take on Uber management. Calling itself the Amalgamated Local of Livery Employees in Solidarity, or Alles for short, this new association is, ironically, forming just as Uber celebrates its fifth anniversary this week in the Big Apple, where there are some one million active Uber riders. Alles was formed to protect and provide security for its members against all sorts of entities including insurance firms and car companies, just like unions protect employees. Except that Uber drivers are not considered employees but rather contractors. This comes after the ride-sharing app agreed to a $100 million settlement over expense claims in Californian and Massachusetts. The money, if approved by a San Francisco Federal judge, will be divided according to how many miles each Uber driver drove for the company. And while the $100 million settlement is still waiting approval from a San Francisco fedeal judge, lawyers in Florida and Illinois have filed two more class-action lawsuits against Uber claiming that the ride-sharing app violated the Fair Labor Standard Act. That’s in addition to the numerous other lawsuits staring down Uber all over the country.

Worthless?

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The verdict is in and it’s a big giant “NO.” As in, NO!, Yahoo will not spin off its pricey stake in Chinese e-commerce site Alibaba. The stake, which is reported to be worth an estimated $30 billion, will stay put and instead, all of Yahoo’s assets and liabilities will be cast-off into the sunset to go and form their very own company. That, my friends, is what they call a “reverse-spin off.” Turns out, the IRS couldn’t be trusted NOT to tax an Alibaba spin-off, which would potentially leave shareholders to foot a $10 billion tax bill. Yahoo, whose shares are currently trading at under $34 yet is apparently worth nothing, will keep its internet biz and its 35% stake in Yahoo Japan. The company, despite being one of the top five most-visited websites every single day, just couldn’t seem to compete with Google and Facebook when it came down to selling search and display ads. Although shares of Yahoo are down 30% this year, this reverse spin-off is likely to draw a lot of interest for companies looking to make an acquisition. But don’t hold your breath as this reverse spin-off process could take a year to complete.

Bad day, mate…

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In other parts of the world, Australian police raided the home and office of Craig Steven Wright – a name that in all likelihood means absolutely nothing to you. Unless of course you’re a bitcoin enthusiast. Following leaked emails and other assorted information, investigations by both Wired magazine and Gizmodo have concluded that Wright is likely Satoshi Nakamoto, the pseudonym for the creator of bitcoin, the crypto-currency that has captivated the world. Sort of. In March of 2014, a Japanese American man who goes by the name Dorian Satoshi Nakamoto was falsely identified as bitcoin’s reclusive creator while he also steadfastly denied it. As for the police raid, well, here’s where things get weird-er. Australian Federal Police are saying that the bitcoin reports that have been surfacing about the creator’s true identity have nothing to do with its current operation and raid and referred media calls to the Australian Tax Office, which also could not comment. Naturally.  The home in question, which was being rented by Wright, is considered to be relatively modest, especially for someone who is potentially sitting on about one million bitcoins.  Incidentlly, the Australian government doesn’t much care for the crypto-currency. As stricter rules were imposed for Australian banks to impede money laundering and terror financing, bitcoin operators bore the brunt and major banks in Australia closed the accounts of bitcoin companies back in September.  If Wright really and truly is Satoshi Nakamoto, then his bitcoin stash amounts to about $400 million, which should be more than enough to pay his legal fees.

Get your resume ready…

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If you’re currently not working at Airbnb, then maybe you need to ask yourself why. According to Glassdoor’s 2015 list of best places to work, the home-sharing company takes the number one spot with one employee quoted as saying, “Fast growth, amazing people.” Can you say that about your company? Hmmm. Airbnb wasn’t even on the list last year but this year more than made up for it as it not only pushed Google out of the top spot but kicked it down to number eight. Or maybe Google did that all on its own. In any case, business management consulting group came Bain & Company came in at number two, while Guidewire snagged third place. Social media giant Facebook took the five spot, while LinkedIn ranked number six. Curious to see where else you’d rather be working? Well, there are 50 companies listed and surely you could find gainful employment by at least a few of them.

Golden Earnings for the Golden Arches; European Bitcoin Victory; Say It Ain’t So: Lego Brick Shortage

You deserve a break today…

Image courtesy of tiverylucky/FreeDigitalPhotos.net

Image courtesy of tiverylucky/FreeDigitalPhotos.net

Looks like McDonald’s CEO Steve Easterbrook’s job looks pretty secure for the foreseeable future now that McDonald’s posted some awesome third quarter earnings. The numbers were so good that shares of the company jumped 8% and took the Dow Jones Industrial Average up more than 250 points as well. Sales in the U.S. brought a nice little surprise of a 1% increase. And even though wage raises and benefit improvements did take a big chunk out of the Golden Arches operating costs, the company still earned $1.31 billion and $1.40 per share. That was a 23% jump over last year’s $1.07 billion with $1.09 added to shares, and marked the first time in two years that McDonald’s saw improved sales.The much-hyped turnaround plan is actually working with thanks in part to McDonald’s All-Day Breakfast and the introduction of the Premium Buttermilk Crispy Chicken Deluxe Sandwich. Try saying that one five times fast. Or even three. Some franchises, however, are’t digging this all-day breakfast because, besides adding many more menu items, those breakfast items tend to be cheaper and negatively affect sales at some stores. Revenue fell to $6.62 billion, but it was only a 5% drop from last year’s $6.99 billion. And considering that Wall Street expected  McDonald’s to pull in only $6.41 billion and $1.27 per share, nobody’s too upset over that 5% dip.

VAT do you want already?

Image courtesy of Victor Habbick/FreeDigitalPhotos.net

Image courtesy of Victor Habbick/FreeDigitalPhotos.net

Score one for Bitcoin as the virtual currency is considered tax-free. Well, in Europe, anyways. Just like plain old, regular, not-so-virtual cash. Europe’s highest court ruled that  Bitcoin and other virtual currencies are on par with real money and European citizens can scoop up as much of the virtual stuff as they want without having to pay VAT – a  tax that presumably taxes the nerves of anyone who has to pay it. This piece of Bitcoin drama began with Swedish Bitcoin operator David Hedqvist who felt that the currency should not be taxed. However, the Swedish tax authority, Skatteverket, disagreed vehemently and brought the issue to EU’s highest court. And while David Hedqvist is no doubt celebrating this recent victory, there is still one aspect about Bitcoin that has yet to be determined: is it legal tender? To be continued…

Everything is not Awesome…

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Image courtesy of nonicknamephoto/FreeDigitalPhotos.net

Scary news from the world’s largest toymaker, Lego. It seems the Danish plastic brick manufacturer might not have enough brick’s to go around. But rest assured, that here in the States, our plastic brick supply is safe. For now. With The Lego Movie, Star Wars and The Avengers all part of the Lego family, the company can’t seem to make enough toys to keep up with the demand. In just the first half of the year, sales for the toys were up a whopping 18%. To help alleviate some of the shortage, Lego will be expanding three factories in Mexico, Hungary and, of course, Lego’s hometown in Denmark. The company even has plans to expand in China. But everything may still not be awesome in certain parts of Europe, as they are likely to be affected by this very tragic plastic brick shortage.

The Labor of LIBOR; Coal Company Not Energized by Obama’s New EPA Policies; Disgraced Bitcoin-er Busted

Don’t bank on it…

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Image courtesy of iosphere/FreeDigitalPhotos.net

From the most hallowed banking institutions of UBS and Citigroup, disgraced banker Thomas Hayes will now make his way to the halls of a correctional institution, all thanks to his role in the LIBOR scandal. On trial in the UK, Hayes pleaded not guilty, although jurors felt otherwise and now gets to spend the next fourteen years in prison contemplating his misdeeds. The U.S. already charged Hayes back in 2012 for his misdeeds at UBS and the Royal Bank of Scotland and a number of banks already had to cough up $9 billion in penalties over their involvement in rigging the benchmarks. Hayes was found guilty on all 8 counts of conspiracy to defraud. And it’s not everyday a trader gets convicted for rigging rates on the London Interbank Offered Rates. In fact, Hayes has the dubious distinction of becoming the first person to be convicted in the scandal, which makes sense, since he was apparently the ringleader for more than a dozen other brokers and traders who participated in messing with global rates for mortgages, loans and credit cards just so that they could profit. Those misdeeds affected some $350 trillion in global financial markets. Including ours. Talk about rude.

So un-coal…

Image courtesy of dan/FreeDigitalPhotos.net

Image courtesy of dan/FreeDigitalPhotos.net

Battered and broken is just one way to describe the coal industry as President Obama just announced the latest EPA policies which are supposedly going to reduce greenhouse gas emissions 30% by 2030. And of course that is splendid news. Just not for Alpha Natural Resources who made its own announcement today: bankruptcy. The natural gas boom combined with the new EPA rules have dealt quite the blow to the second biggest coal producer. While the company has over $10 billion in assets with around 8,000 employees, it also needs to ditch some $3.3 billion in debt. The once powerful coal supplier had to close more than 80 mines since 2011 as the shale boom began to take effect. And who can blame shale? After all, it is a cheaper, less polluting energy source.

Bit-fraud…

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Image courtesy of Victor Habbick/FreeDigitalPhotos.net

Mark Karpeles, the disgraced head of collapsed Tokyo bitcoin exchange, Mt. Gox, has, un-shockingly, been arrested in Japan on suspicion of (gasp) fraud. Who would have thought. Apparently, Karpeles falsified documents and manipulated the computer system over thirty times in an effort to fatten up his bank account by about a million bucks. If the 30 year old Karpeles is found guilty, he might just become pen pals (no pen-pun intended) with Thomas Hayes, except the French-born Karpeles would be idling his incarcerated says in Japan. If you recall, 850,000 bit coins – equal to about $480 million at the time –  went missing under Karpeles’ watch. But wouldn’t ya know it, 200,000 bit coins were subsequently recovered by Karpeles, who must have remembered where he had apparently misplaced them. As for the remaining missing cyber-currency, well, Karpeles conveniently blames the theft on a “bug” from a cyber-attack. You don’t say…

Bitcoin Makes its Stateside Debut; Bad Day for Barbie; Fruity Pebbles Gets Some Company

It’s a bit time…

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Image courtesy of Victor Habbick/FreeDigitalPhotos.net

The first US regulated bitcoin exchange has made its US virtual debut. San Francisco-based Coinbase raised $106 million with some of that backing coming from Andreessen Horowitz and even the New York Stock Exchange. Which must mean that this whole crypto-currency thing is super legit, despite the fact that there is no government backed regulation for it, nor is it backed by the FDIC. But no worries as Coinbase, which already has 1.9 million users, 2.2 million accounts and 40,000 companies signed up with it, says it is insured against hacking, internal theft and accidental loss.  How very forward-thinking. Especially considering that earlier this month, European bitcoin exchange, Bitstamp, suffered a hack attack that cost it about $5.2 million. Of course, nobody will forget how Bitcoin exchange Mt. Gox was forced to call it quits after getting brutally hacked…to bits. Coinbase is currently allowed to conduct business in 25 states and makes its money by taking 0.25% of Bitcoin transactions. How very industrious. But the exchange doesn’t take its cut for the first two months after opening an account because Coinbase very thoughtfully felt this would be a good gimmick to attract more business. Hey, sign me up. Now if I could just get myself some Bitcoins…

Just not that into you anymore…

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Image courtesy of ratch0013/FreeDigitalPhotos.net

Big changes are taking place at Mattel, the toy company famous for the ever-evolving “Barbie Doll.” Barbie is, in part anyways, the reason for the major power shift at Mattel. It seems girls are just not that into her anymore. Sales of the doll worldwide have been falling for the past few years with this last quarter, which included the holiday shopping season, ending on a particularly dismal note. Barbie, her friends and that malleable Malibu Dream House just can’t compete anymore with Disney’s Frozen dolls. Barbie also can’t seem to compete with electronic devices (and really, what can?). Mattel earned close to $150 million and $0.44 a share, which seems decent, unless of course that is a 60% drop from what the company pulled in last year. Mattel also said that because the dollar was so strong against other currencies, it affected sales. Except the dollar’s strength against other currencies didn’t seem to affect sales of the aforementioned Disney Frozen dolls and electronic devices.  Hence, Bryan Stockton, who up until this morning was Mattel’s Chairman and CEO, will be replaced by Christopher Sinclair , who will become interim chairman and CEO.

Man that’s a lot of cereal…

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Image courtesy of rakratchada torsap/FreeDigitalPhotos.net

Post Holdings Inc., which is best known, in my most humble opinion anyways, for Fruity and Cocoa Pebbles, has decided to pick up MOM Brands to the crunchy tune of $1.15 billion. MOM Brands is best known, in my most humble opinion for Malt-O-Meal hot cereal – and perhaps, even better known for its seventies/eighties era commercial with that kid who asks for some more Malt-O-Meal, which was supposed to send our mothers into a tizzy to run out and buy boxes of the low-in-sugar breakfast (it should be duly noted that I didn’t fall for it). I wonder what became of him. In any case, MOM Brands is also known for ripping off other cereals and selling them for less, or as they say in the land of marketing, value brands. Laugh all you want, but those value brands brought in revenue of $760 million and $120 million in profit. This new crunchy company combo will take an 18% bite out of the market share for cereal, with General Mills and Kellogg’s still taking 30% of market share.

Coach Goes Shoe Shopping; Bitcoin of a Breach;

Well-heeled…

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Image courtesy of biosphere/FreeDigitalPhotos.net

Luxury handbag and accessories maker Coach (COH) went shoe company shopping to go with all its merchandise and decided to settle on $530 million worth of Stuart Weitzman shoes. Coach announced this morning that it’s buying luxury shoe company Stuart Weitzman, which was/is actually owned by private equity firm Sycamore Partners LLC, who is getting $530 million in cash for the company. But if all goes well, in that Stuart Weitzman hits its revenue goals in the next three years, Sycamore stands to gain another $44 million – a win/win for all. In 2013, the footwear maker pulled in $270 million while Coach has been undergoing some growing pains in the last couple years as it struggles to compete with trendy rivals Michael Kors and Kate Spade. Shares of Coach rose $0.46 in pre-market trading which can only mean one thing – Wall Street is totally into the purchase.

Oops! It happened again…

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Image courtesy of Victor Habbick/FreeDigitalPhotos.net

Bitstamp, Europe’s top bitcoin exchange had to put the kibosh on services after 19,000 bitcoins went missing. In case you were wondering…which I know you were, that’s over $5 million. No withdrawals and no deposits (which probably won’t be an issue) can be made with Bitstamp as of now, but it has reassured its customers that “their balances held prior will not be affected and will be honored in full.” Awww. that’s sweet. How very responsible and conscientious. Sort of. Apparently the exchange’s “operational wallets were compromised” which sounds like something out of a movie. The rest of the exchange’s bitcoin stash is kept in “cold storage.” And while that just sounds like the secret compartment in the back of your mother’s freezer, it’s actually a term to describe computers that aren’t connected to the internet but hold information. Like my Commodore 64 I had when I was eight.  The breach doesn’t quite have the stench of epic failure of the Mt. Gox breach collapse almost a year ago, which saw $650 million worth of the crypto-currency mysteriously disappear along with the collapse of the exchange itself.  However, the breach is still alarming enough to shake up the unregulated bitcoin universe. Bitcoins are, by the way trading in the $270 range, which is cute and all but nothing like its $1,240 peak, pre-Mt. Gox collapse, of course.

Stamp’d out…

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Image courtesy of anankkml/FreeDigitalPhotos.net

The United States Postal Service had its best fiscal quarter in seven years. In fact, this quarter was up 18% over the same time last year.  A very impressive feat considering that volume for mail is down 26% in the last ten years. But even with that 18% increase the USPS continues to operate at a loss. Those pieces of paper to which you affix stickers with a monetary value on it – you do realize I am talking about stamped envelopes, don’t you? – have gone down in volume by a third. Even though the price for stamps kept going up and up and up… the postal service still saw $17 billion in losses in the last decade. To help recoup some of those billions, the postal service consolidated over 300 processing facilities, cut 212,000 jobs and nixed 23,000 routes. And now expect snail mail to get even snail-ier with the average delivery time going up from 1.8 days to 2.1 days.

 

Oui Oui Disney; Bitcoin’s Being a Downer; HP is Happily Doing the Splits

Who needs Versailles anyways?

Image courtesy of TeddyBear[Picnnic]/FreeDigitalPhotos.net

Image courtesy of TeddyBear[Picnnic]/FreeDigitalPhotos.net

Apparently going to Disneyland in France is tres outré as the theme park is seeing less and less people coming to strut their stuff at the happiest place on earth…in Europe. But if you were just thinking that a walk along the Seine and a visit to the Eiffel Tower would not be complete without a trip to EuroDisney then fear not mon ami. Disney has decided to whip out $1.25 billion to help save EuroDisney…from itself. The park hasn’t exactly been the Disney epicenter of the world since it opened its doors in 1992, yet Disney alleges that it is the number one tourist destination in Europe. Who knew?

A bitcoin of a drag…

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Image courtesy of Victor Habbick/FreeDigitalPhotos.net

Bitcoin has reached yet another milestone but its nothing of which to be proud as the crypto-currency just hit a new low. In fact the virtual coins have been experiencing a steady decline since December of 2013 when its high reached an impressive $1,147.00 per coin. There is nothing impressive about the $290.00 mark it saw this weekend. Some experts think the drop in value has a “bit” to do with the fact that because more businesses have begun to accept the currency, more bitcoins are being generated and circulated. Of course, the more something becomes the available, the less valuable it becomes. Then there are those pesky regulatory hurdles that are also cramping bit coin’s style, but mostly its value. Others feel there are other more complicated reasons and explanations – the details of which I will gladly spare you. One of those “others” is Garrick Hileman, an economic historian with the pish-posh London School of Economics, who graciously informs us that “approximately 3,600 new bit coins” are welcomed into the world each day.

It’s not you, it’s me… 

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

It’s splitsville yet again in the magical realm of corporate as HP has now decided to break up…with itself. It’s no secret (especially since it’s a publicly traded company) that HP’s computer and printer divisions were no match for its corporate hardware and services division. I can attest to this on a personal level for having recently junked out of an HP laptop that had a litany of “issues” which a six month old computer should not possess. But I digress. It’s true the corporate and hardware services division was/is growing a lot quicker and when that happens in a company, at least lately, companies decide to split ’em up. Case in point, last week’s not surprising announcement by eBay and its plans to bid adieu to PayPal. As for the shareholders, well now they’ll own shares of two companies. How very lucky for them. Not lucky, however, for the additional 5,000 employees who will need to brush up on their LinkedIn skills. The company employs over 300,000 people and rakes in $110 billion in revenue. Oh and by the way, HP is currently in year four of its five year turn around plan, in case you were wondering.

Kinder-gized! BuzzFeed’s On a $50 Million Buzz and Gov’t: Beware the Bitcoin

Feeling energetic…

Image courtesy of puttsk/FreeDigitalPhotos.net

Image courtesy of puttsk/FreeDigitalPhotos.net

Chairman and CEO, Richard Kinder of Kinder Morgan Inc (KMI), the brains behind Master Limited Partnerships or MLP’s (you should really google that one but hint: it gives major corporations tax-free status), decided to consolidate all four of his energy companies to the tune of $71 billion. Who is he, you might be wondering? Well as of today he helms the fourth largest energy company in the US with about 80,000 miles of oil and gas pipelines. He had (has?) four companies now under one roof. Lots of very important fiscal matters precipitated this decision which will be saved for another blog post (perhaps on somebody else’s blog). Shares of the stock went up 11% on the news. What all this means for you? Not much unless, of course you are an investor in the company, in which case your dividend is going up about 16% next year. As for KMI, well, it gives the company a nice solid boost which will likely help capture some of that $1.5 trillion in purchases and projects from the impending shale and drilling boom. Interestingly, Richard Kinder was once considered a front-runner for a job at Enron, which eventually went to Kenneth Lay. Instead of dwelling on the job he didn’t get,  Kinder took Enron cast-offs and built a multi-billion dollar energy empire. Ken Lay, on the other hand, screwed people out of millions and drove the company into the ground. Kinder, by the way, takes a yearly salary of $1 and no bonus. But don’t feel so bad. His annual  income is worth billions.

Getting Buzzed…

Image courtesy of cooldesign/FreeDigitalPhotos.net

Image courtesy of cooldesign/FreeDigitalPhotos.net

Maybe you were taking a quiz on BuzzFeed today or scrolling through one of its highly entertaining lists. Whatever it was, you helped contribute to the reason why venture capital firm Andreesen Horowitz put up $50 million putting for BuzzFeed, making its latest valuation at $850 million. Investors are sure BuzzFeed is about to go head to head with the more hard core news outfits given the public’s propensity to get so much of their content off of BuzzFeed. And it’s no wonder since the company very resourcefully uses technology to come up with ideas for content that people will want to read. Pure genius, if you ask me. But it’s advertisers – big major advertisers – who are loving it too and investors love when advertisers love something. Also, BuzzFeed’s got that new BuzzFeed Motion Pictures coming up and generating plenty of investor tongue wagging. It’s rumored that the company took in $120 million in revenue last year and reportedly gets 150 million users per month. The new funds are slated to be used to expand into Tokyo, Mumbai, Berlin…

The wild wild west…

Image courtesy of Victor Habbick/FreeDigitalPhotos.net

Image courtesy of Victor Habbick/FreeDigitalPhotos.net

Government regulators had no love for Bitcoin today as the Federal watchdog agency, Consumer Financial Protection Bureau, issued an advisory over the controversial cyber-currency. Because Bitcoin and its fellow digital currencies are not insured or backed by any government, consumers who opt to use them are “stepping into the Wild West.” Yeehaw. The agency warns that consumers are at risk to unstable exchange rates, hacking, scams and theft. But others argue that credit cards and the internet faced the same issues and criticisms in their early days. Sounds fair. In any case consumers can now vent their complaints about the virtual currency at www.consumerfinace.gov.

Drug Company Ex-pat? Suspicious Packages and License to Bitcoin

Isn’t that a tax relief?

Image courtesy of Victor Habbick/FreeDigitalPhotos.net

Image courtesy of Victor Habbick/FreeDigitalPhotos.net

Chicago-bsed drug giant AbbVie, maker of the very popular Humira,  is buying fellow company Shire Pharmaceuticals for close to $55 billion. Wall Street seems to be happy about the strategically financial move. Too bad the Obama administration and some members of Congress don’t share the joy. And why whouldn’ they? Tax inversion my friends.  Basically, it’s shifting the tax residence of the company abroad, in this case the UK. AbbVie will now have a much more manageable tax rate of 13% instead of an onerous 22% which will free up the company to do all sorts of new and exciting things, although its headquarters will still remain in Chicago. It’s the largest inversion deal. Ever. But Treasury Secretary Jacob Lew is particularly miffed and said, “We should not be providing support for corporations that seek to shift their profits overseas to avoid paying their fair share of taxes.” However, others argue the US government ought to make the tax laws more hospitable to these big companies.

Do I need to sign for that?

Image courtesy of posterize/FreeDigitalPhotos.net

Image courtesy of posterize/FreeDigitalPhotos.net

FedEx isn’t having the best day. It probably has something to with that indictment on drug-trafficking charges. Hard to believe (or not) but the shipping company was indicted by a San Francisco grand jury for conspiracy to deliver prescription drugs for illegal internet pharamcies. Whoops. The indictment also says that FedEx knew about this for a decade and even took precautions to protect itself. To be fair, FedEx says it asked the US government on several occasions for a list of the illegal pharmacies but the government apparently never got around to it. So there. However, the DEA and FDA said FedEx was repeatedly warned. Couriers in Kentucky and Tennesee, among other places, feared for their lives as packages were delivered to empty parking lots, vacant homes and of course the occasional school. Because, after all, what alleged crime would be complete without involving the use of a school? FedEx delivers over 10 million packages a year and pulled in $44.3 billion in revenue for 2013. FedEx was charged with 15 counts of conspiracy but no officers have been charged. The company could face fines of over $800 million.

Bitcoin to go mainstream?

Image courtesy of cuteimage/FreeDigitalPhotos.net

Image courtesy of cuteimage/FreeDigitalPhotos.net

The New York  Department of Financial Services is showing some bitcoin love by attempting to create a license for the crypto-currency. Sounds too good to be true, huh? But really it’s an attempt to make the virtual currency more mainstream. People engaged in criminal and other questionable activities tend to like bitcoin for its anonymous aspect. Who wouldn’t. But this new system might just make those shady transactions a little bit more challenging to complete. Policies and procedures would also be established to assist with the inenvitable consumer complaint and also to outline what happens in the case of a problem ala Mt. Gox and its hacker issue that caused the bitcoin trading exchange to go bust. Ben Lawsky, Superintendant of Financial Services said, “We have sought to strike an appropriate balance that helps protect consumers and root out illegal activity – without stifling beneficial innovation.” Sounds fair.

 

Big Bitcoin Winner, A Hedge Fund Goes to the Dogs and Labor Department Is Looking Up…Almost

Smooth as silk…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Venture Capitalist Tim Draper is a bit bitcoin richer these days after he won the lot of 30,000 crypto-coins auctioned off by US Marshals. The seized bitcoins came courtesy of Ross Ulbricht, alleged operator of the Silk Road online marketplace for drugs and guns. The original plan was for the government to auction off the coins in nine blocks but Draper had other plans and as he simply puts it, “paid more than other people.” Those other “people” included 45 bidders and 63 bids. The estimated value of the coins is somewhere between $17 million and $19 million. It seems Draper of the VC firm Draper Fisher Jurvetson has big plans for his newly acquired bitcoins which actually don’t involve a space voyage. Instead, the VC plans to use it for his Bitcoin startup Vaurum that is geared towards providing liquidity to markets with shaky currencies. The government still has 144,000 bitcoins so maybe you’ll have better luck at the next auction.

How smart…

Image courtesy of debspoons/FreeDigitalPhotos.net

Image courtesy of debspoons/FreeDigitalPhotos.net

Activist hedge fund Jana Partners has gone to the dogs. And cats. And fish…The fund is looking to buy the PetSmart and disclosed its 9.9% stake in the company. The chatter had Wall Street howling, sending shares up about 13%. The Phoenix-based company has seen its shares fall 18% in 2014 and reported some poor first quarter earnings. PetSmart has been trying to combat fiercer competition from companies like Amazon Prime and other e-commerce outlets by offering more grooming services and fresh food. The company has over 1,300 stores and is valued at almost $6 billion. And that’s nothing to bark at.

Laboring away…

Image courtesy of cooldesign/FreeDigitalPhotos.net

Image courtesy of cooldesign/FreeDigitalPhotos.net

The Labor Department is celebrating Independence Day early announcing that not only did the economy add 288,00 jobs, as ADP suggested yesterday, but also that unemployment took a much needed and much appreciated drop from its arrogant little perch of 6.3% to 6.1% The economy has added around 200,000 jobs for the last five months and many say that the Great Recession, that obnoxious unwelcome visitor that overstayed its visit, has officially been over for five years. Unfortunately states like Illinois, New Jersey Florida have yet to receive that memo as those states and 29 others are still trying to regain all their jobs. Nevada is also still trying to recover its economic mojo, signaling that while the recession, that started in 2007, has been over for several years, recovery has been mixed and slow. But on the bright side, North Dakota saw a huge energy boom and with that a 28% increase in jobs.