Debt Collectors Are on the Hook Now; Oracle Pays Big for NetSuite; VW’s Surprising Return to the Top of the Heap

Karma time…

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The tables are turning on debt collectors and after forty years it’s about time. The Consumer Financial Protection Bureau (CFPB) has got big plans that involve some major federal oversight for an industry that has plagued tens of millions of Americans for decades. In 2015, the CFPB received a mind-blowing 85,000 complaints against the industry. So you might just find it comforting to know that debt collection agencies had to pay $136 million to the CFPB and several states over debt collection issues and sales of credit card debt. Now, before debt collectors make their first, sometimes-harrassing, phone call, they are required to substantiate the debt and gather information so as not to try and collect anything that they are not entitled to collect. Speaking of harassment, the industry will need to put the kibosh on their “excessive and disruptive” debt collection tactics or face consequences. Consumers will now even be able to request that debt collectors not contact them at work or during certain hours. Debt collectors will also be required to wait thirty days before contacting family members of a deceased consumer from whom they wish to collect. Some of the 9,000 debt collection agencies are pleased with the new regulations because they feel they will clear up ambiguities. But these are, after all, debt collectors we are talking about, and they are primarily concerned with how their costs will go up for compliance. However, they can probably afford a few upgrades given that the industry sees $13.7 billion in annual revenue with about 70 million Americans in the throes of debt collection. You see, sometimes there are happy endings. Sort of.

Silver lining…

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Oracle is throwing down some major cash to pick up cloud computing business, NetSuite. Not that industry experts are particularly surprised. After all, Larry Ellison and his family already own about 40% of NetSuite shares. The deal is valued at $9.3 billion, which comes out to approximately $109 per share with a 20% premium on Wednesday’s closing price.  Larry Ellison will get about $3.5 billion out of it. So no doubt he’s celebrating. It’s one of Oracle’s biggest deals, with one just other ahead of it. NetSuite, which was founded in 1998,  supplies cloud-based business management services for about 30,000 companies in 100 countries. The company is touted as having paved the way for cloud-based computing and was the first company to offer business web-based applications. But the time now was ripe for some change and NetSuite apparently needed a little assistance from Oracle and its global reach to grow even greater. The official press release touted the companies as complementary to each other and that they will coexist in the marketplace forever. And that is just a beautiful and moving sentiment. Naturally, shares of both NetSuite and Oracle rose today, and why shouldn’t they. When the tide is high, all boats rise.

Winner winner…

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Diesel-gate be damned. Volkswagen is now the world’s largest automaker and there’s nothing you can do about it but scratch your head and drop your jaw. Even though sales in the U.S. continue to slump – though not as bad as you might think  – the German automaker sold more cars in the first six months of 2016 than Toyota, who is used to holding the title of world’s largest automaker. Volkswagen was poised to earn the title for the full year except the unfortunate emissions scandal put the kibosh on that goal. For four years in a row, Toyota was the world’s best-selling automaker through 2015. So it’s ego is probably feeling a bit bruised right about now. GM is in third place and experts don’t think it’ll ever win the top slot. Volkswagen sold 5.12 million cars to Toyota’s 4.99 million vehicles. Toyota’s sales were down by .6% over the same period last year while Volkswagen’s sales were miraculously up 1.5%.  To be fair, an earthquake in Japan damaged one of Toyota’s plants and that incident is being blamed for its shortfall in production. But apparently U.S. consumers seem to be more offended by the emissions rigging than the rest of the world with falling U.S. sales by 7%. However, the U.S. is a relatively small market for VW who counts Europe and China as its key markets. The question, though, remains if VW can keep it up and reclaim some glory.

 

 

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France Says Non Vive La Uber; Smuckers Jells Up Some Tasty Earnings; Is Larry Page Channeling George Jetson?

Let them eat cake…

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Uber, the multi-billion dollar company that operates in 60 countries and can’t seem to stay out of legal trouble is making headlines, yet again. The ride-sharing app just got slapped with an almost million dollar fine – half of which was suspended – for running an illegal taxi service in France. But that fine is the least of Uber’s problems considering it just raised another $3.5 billion in funding. The French court took aim at Uber POP, an app that connects riders with nonprofessional drivers who use their own cars to transport passengers. Licensed taxi drivers in France took exception to the app and put pressure on French officials to bid adieu to Uber POP by getting the service suspended there last year. Last week, a German court also gave a big nein to Uber, upholding a previous ruling that banned Uber POP there for violating local transport laws. Besides Uber getting slapped with a big fine, two Uber execs also got hit to the tune of 50,000 euros, which is nothing compared to the five years of jail time and million dollar fine that they could have received. This case marks the first time that actual executives from the company had to stand trial. The employees were found guilty of deceptive commercial practices, acting as accomplices in operating an illegal transportation service and, just for good measure, violating privacy laws. That’s in addition to being held responsible for inciting others to break the law by employing them, causing riots and taxi strikes. However, this latest ruling is far from the company’s first legal tussle since it was founded in 2009. The company continues to grapple with numerous regulatory issues in Europe and Africa and there is a long road ahead. And in case you didn’t see it coming, Uber is appealing the French court’s ruling.

I don’t think you’re ready for this jelly…

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It’s just jelly to you but to its shareholders, it’s a profit of $191 million. I am talking about J.M. Smucker Co., whose latest earnings positively dazzled Wall Street, sending shares jumping 25% today, to a record high of $142.27. Of course, it wasn’t just an increased urge for PB&J’s, with Smucker’s Jif peanut butter, that sent those sales soaring. Dunkin’ Donuts Brand Coffee, Folgers Coffee and…wait for it…pet food figured prominently in Smucker’s epic 39% profit surge. Smucker’s coffee products account for the company’s biggest market and pulled down a 9% increase in the fourth quarter, while its pet foods, that include Meow Mix and Milk-Bone, accounted for a third of all sales. It helped that the company offered up plenty of promotions to drive demand for its K-cup offerings. The company’s acquisition of Big Heart Pet Brands last year also helped a lot to drive up the impressive earnings. Revenue surged 25% to $1.81 billion when analysts only expected $1.75 billion and Smucker’s added $1.44 to its shares when predictions were only for $1.20. Those earnings were especially welcome since last year at this time, the company posted a 41% profit loss.

Just because he can…

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Alphabet CEO, Larry Page is into cars. Especially if they can fly. These days, the Google co-founder is funding two companies that are currently building and tweaking prototypes of small, all electric planes that can take off and land similar to helicopters. Just like the flying saucers you saw on the Jetsons. Page has already plunked down $100 million into Zee.Aero, a start-up launched in 2010, that has been testing two prototypes in Hollister, California. But why fund just one company when you have the means to fund two? That’s why Larry Page has also poured money into Zee.Aero competitor, Kitty Hawk, led by Sebastian Thrun, the Google X founder who is also behind Google’s self-driving car program. Coincidence? I think not. But it’s sure to be a crowded race to the finish as there are at least a dozen other companies around the world that are hoping to churn out a similar prototype, well before Larry Page’s darlings.

 

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

You deserve a break today…

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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?

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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.