Fiat Gets Going with Google; April Showers Bring Great Car Sales; Building-A-Profitable-Bear

Behind the wheel…

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It might just have been a bit of good luck that car company Fiat gets to team up with Google to engineer some self-driving cars. The company will supply Google with 100 Chrysler Pacifica hybrid minivans and it will mark the first time that Google shares its inside information with outside entities. If you’re thinking of saving up to buy one, don’t bother. They won’t be for sale. Besides, they’re minivans. Google has dealt with other car companies, like Toyota, except Google did the work on the cares rather than working together with Toyota. This collaboration is a sweet deal for Fiat, which has a lot of catching up to do in the way of technological advancements in their vehicles. Besides, the company is kind of low on cash and wouldn’t have had enough of it to make a meaningful investment towards tech upgrades. But with this new collaboration in the works, it doesn’t have to worry about raising money for that. How very convenient.

New car smell…

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Speaking of Fiat, global sales of the company sank around 2%, keeping up with the rest of the grim state of the global economy. But all was not lost as sales in the U.S. picked up 5%, selling 200,000 cars and trucks while dealing a minor blow to analysts’ estimates of a paltry 4.6% increase. Sales of Jeep also scored big compared to the same time last year as it increased 17%. But that’s minor compared to sales of Compass and Renegade automobiles which more than doubled. Sales of automobile in the U.S. in April were so good that it just might be coming off of the best April. Ever. Car sales are considered a fairly accurate barometer of consumer spending and last months’ numbers indicate that the economy, the U.S. economy, that is, is looking good and healthy. Individual sales of cars throughout the industry was up 3%, with a lot of help from SUV and pick-up truck sales. Unfortunately I did not contribute to any sales growth. The volume of cars sold told a very different and unpleasant story by dropping 3.5%. Some companies have also lopped off major chunks from their incentive programs seeing as how they tend to eat the bottom line. Not that this should come as any great shock but VW was down 9.7% as it continues its brutal journey back from its emissions scandal. Some analysts thinks the car industry is about to hit a peak. But apparently it’s just a cyclical issue and nothing that should cause you to lose sleep. Unless of course you’re in the business of selling cars.

Bear market…

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Build-A-Bear just released its earnings – yes, it is a publicly traded company – and the results didn’t exactly leave investors feeling…warm and fuzzy. Ya dig? The DIY stuffed animal biz that boasts some 400 stores picked up $3.53 million in profit, adding 22 cents per share. Too bad the company missed expectations of 37 cents per share and didn’t perform nearly as well as last year at this time when the company scored a profit of $6.82 million with 40 cents per share added. Revenue was up 1.7% to $95 million for the quarter compared to last year, but again, the workshops missed estimates of $96.6 million, fuzzy ears and all. To be fair, however, it will probably still get a fourth straight year of profitability, even if the numbers don’t wow investors. In the fiscal blame game, the company pointed the finger at some expenses tied to store remodeling, international expansion and the ever-pesky high tax rate. The board announced that it hired advisers to come up with “a full range of strategic alternatives.” Which is basically code for trying to figure out a bunch of ways to make more money. Investor J. Carlo Cannell, who happens to own an 8% stake in the company, feels that the board is the real problem and called them and their actions “financially unsophisticated, lacking in proper corporate governance and shareholder unfriendly.” Don’t hold back now, J. Carlo.

McDonald’s European Tax McMess; OPEC Member Smackdown; Unemployment Ups and Downs

Did the Hamburglar do it?

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Hold on to your McMuffins because the Golden Arches are under investigation by European regulators. Apparently McDonald’s neglected to pay taxes on its franchise profits earned in Europe and Russia since 2009. The EU says that 250 million euros made just in 2013 wasn’t  even taxed and McDonald’s had an unfair advantage over its competitors. Gasp. McDonald’s European franchise office is based in the teeny tiny country of Luxembourg. The trouble seems to have started when authorities in Luxembourg decided that McD’s was exempt from paying taxes on its profits because the U.S. was also taxing them on those profits.  McDonald’s, however, says the allegations are false and that it paid over $2 billion in corporate in taxes, besides other taxes, between 2010 and 2014. Starbucks, Fiat and Apple also faced similar investigations and Starbucks and Fiat ultimately found themselves forking over $34 million each in back taxes and penalties.

Can’t we all just get along?

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OPEC members just can’t seem to get along these days which is a bit unsettling considering they control a trillion dollar oil supply. Because of the oil glut and the fact that oil prices are so low –   a barrel closed at $42.49, the lowest price since 2009 – Venezuela is finding itself cash-strapped as oil is a big chunk of the country’s bread and butter. Together with a few other cash-strapped countries, including Ecuador and Algeria (don’t laugh), they want Saudi Arabia to cut back on its oil production output to help bring prices back up and make them less cash-strapped. Saudi Arabia doesn’t want to, but might consider doing so if Russia and Mexico do the same. Saudia Arabia, by the way, is the world’s largest oil exporter and is not cash-strapped so they don’t really feel the need to cut back. Saudi Arabia also said it would listen to what the other countries have to say. Which is nice and all. But it still intends to do what it wants. Like it always does. Russia also has no plans to cut back since it does not see a point in doing so. And besides, who tells Russia what to do? Iran wants OPEC to reduce output just so that it can make room for its re-entry into the wonderful lucrative world of petroleum production. But to be clear, Iran has no intention of capping its own output to help out with the current oil glut. Maybe, just maybe, Iran will agree to cap its oil production once it reaches its pre-sanction levels. After all, its gotta make up for lost times, you know?  OPEC pumped over 32 million barrels a day in November. Once Iran and Indonesia (yes, that country’s back, too) return, expect that number to be much much higher. While annual revenue for OPEC was $550 billion last year, in the five years prior, the organization was pulling down $1 trillion annually.

You say that’s a good thing?

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Applications for unemployment benefits rose to 269,000 applicants, gaining 9,000 newbies from last week and apparently that’s good news. Well, maybe not to the 269,000 applicants, but we won’t go there just yet. And even though that means that there are now approximately 2.16 million Americans right now collecting unemployment benefits – is that term an oxymoron? – unemployment is still considered to be at historically low levels. Believe it or not, this report actually points to a healthy job market. And why shouldn’t it? The number of unemployment benefit recipients is 9.3% less than it was a year ago. An average of 206,000 jobs have been added per month in the last year with a whopping 270,000 jobs added just in October. Even average hourly earnings are up 2.5% in the last twelve months. You can be sure the Fed will be considering this latest report as it mulls its decision to raise interest rates, which by the way, is more than likely to happen in about two weeks.

 

Walmart’s Court-ing Big Problems; What’s in a Name? Ask Chrysler, If You Can Still Call It That; Stuyvesant High Schooler Fails in Lying;

 Hitting a Wal…mart…

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Image courtesy of nirots/FreeDigitalPhotos.net

Walmart’s lawyers have been especially busy this year. But not to Walmart’s advantage, it would seem. The retailer just got word that a Pennsylvania supreme court upheld a lower court’s ruling from 2007 that it has to pay over $150 million to approximately 187,000 employees who sued the the company in a class action suit. According to the lawsuit, Walmart stiffed employees by not compensating them for rest/meal breaks, or actually making them work through those breaks and then not paying the unrested, hungry employees for that time. Of course, Walmart is considering appealing the ruling, whose amount is sure to put a major dent in its quarterly earnings. I’m guessing you’re not as choked about that as Walmart execs are. Then there was last weeks’ decision by a National Labor Relations Board administrative law judge who found that the US’s largest employer also threatened employees in California because they tried to organize. Back to today, the lawyers and family of John Crawford, who was shot inside a Beavercreek, Ohio Walmart , named the corporation in a lawsuit. The lawsuit alleges that Walmart did not provide a “reasonable place to shop” because a bb gun involved in the shooting was left unpackaged in the store for two days.

What’s your name again?

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Image courtesy of olovedog/FreeDigitalPhotos.net

Chrysler Group LLC it isn’t. Well, it was. Up until Tuesday morning when the automobile manufacturer announced it was changing its name  to “FCA US LLC.” Got that? Neither did I. But apparently this name fits in better, globally, anyway, with its parent company Fiat Chrysler Automobile NV. But it’s okay if you forget and call a Chrysler a Chrysler, because those cars will still be made and be called Chryslers, along with Jeeps, Dodge and Fiats, who are all also keeping their names. The company – and name – which originated in 1925, with some vision and assistance from the very industrious Walter P. Chrysler, employs 77,000 people all over the world and has 36 manufacturing facilities, with 23 in the United States alone.

He lied! He lied!

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Image courtesy of africa/FreeDigitalPhotos.net

Looks like Mohammed “Mo” Islam is not such a whiz kid after all. After a story appeared in New York magazine about a 17 year old Stuyvesant High Schooler who was rumored to have pocketed $72 million in the stock market, it turns out none of it was true.  The story was picked up by just about everybody, including this blog, and the young man and a friend were even scheduled to do an interview on CNBC to discuss their non-existent success.  However, New York Observer’s Ken Kurson, and a team of media and legal professionals uncovered the hoax, after noticing how so many many people questioned the story, which first picked up steam inside the hallowed halls of Stuyvesant High. Apparently the only trades Mohammed ever made were simulated ones and his fortune is more akin to the fake kind you might find in a board game. New York magazine did issue an official apology, but it seems that it’s the wrath and disappointment of Mohammed’s parents who will make Mohammed come to rue his dubious actions. According to Mohammed, his dad, “wanted to disown me. My mom basically said she’d never talk to me.” And who can blame them.

 

Tweeting Redemption, Snapchat to That, Fiat’s Fiscal Flop

Twitter this, critics…

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Image courtesy of Master isolated images/FreeDigitalPhotos.net

Twitter gave its critics something to chirp about with an incredible earnings season. In fact, not only did its earnings rise 35% but the micro-blogging site also picked up millions more active users topping out at over 271 million active users trumping expectations of 267 million. Net revenue for the company was $312 million which was up 124% from a year ago. Twitter says that it has made improvements to its “onboarding” process. Now when new users sign up, the feeds that they’ll apparently enjoy get to them quicker. But Twitter’s excellent quarter likely had a lot more to do with the World Cup and the Twitterverse going full throttle for the event. However, many are still left wondering how advertisers are actually benefitting from the millions of dollars they plunk down on the site. Many will also be wondering if the company can pull off another good quarter without the World Cup and all the tweets that event pulled in. And btw, despite the great earnings, the company still posted a net loss of $145 million.

Hey, where’d it go?

Image courtesy of Salvatore Vuono/FreeDigitalPhotos.net

Image courtesy of Salvatore Vuono/FreeDigitalPhotos.net

Remember how the app Snapchat turned down a $3 billion offer from Facebook? Remember how Snapchat said that the messages – some of a delicate nature – disappeared forever but really they didn’t? Remember that charges of deception were brought against the company and it settled? Anyways, Snapchat has been in heavy duty money talks with Alibaba Group Holding Ltd., among other potential investors, which could put the company’s value at $10 billion. The messaging company boasts that over 700 million messages a day go through the site. So maybe blowing off Facebook wasn’t such a bad thing after all. Besides, the social networking giant went ahead and came up with a similar app of its own called Slingshot.

Ciao to Fiat?

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Image courtesy of ddpavumba/FreeDigitalPhotos.net

Remember how long ago it’s been since J.Lo starred in those Fiat ads? Well neither do I. Apparently those ads didn’t prove very effective either otherwise they might have tried similar campaigns, no doubt in this past fiscal quarter where shares of the Italian car company tanked over 50%. FiatSpA, which also controls Chrysler, saw particularly poor numbers in North and Latin America.  Net profit for the company was $263 million while a year ago it was $583 million.

Southwest Goes Global (Almost), Chrysler Goes Up and Hormel Goes For More Protein

Going (more) places…

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Image courtesy of ping phuket/FreeDigitalPhotos.net

Southwest is headed even more south…and west. The airline made its first flights today to Jamaica, the Bahamas and Aruba, as part of its new venture to go international. Plans for flights to Mexico and the Dominican Republic are also in the works. This was all part of the plan when the airline bought AirTran back in 2011 to expand and take over its routes. Southwest has been struggling to compete with other airlines like JetBlue. Its traffic grew a very miniscule 1.4% this year. Even though Southwest is the largest carrier of passengers within the United States, it’s but a blip compared to its fellow carriers who soar high above international waters. If you’re looking to book your next trip across the pond with Southwest, you’re going to have to wait a while…a really long while as Europe, Asia and South America have yet to become amongst its destinations.

Increasing-ly popular…

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Image courtesy of sattva/FreeDigitalPhotos.net

Chrysler is having better luck (and sales) than GM these days (but then again, who isn’t?). The third largest US automaker just came out with earnings and reported a 9% increase in sales. In fact, it was the auto company’s best June since 2007, which is a mighty feat considering the company had filed for chapter 11 back in 2009. The company, which is a subsidiary of Fiat, saw a particularly nice 28% sales increase from its Jeep brand and an even nicer 113% sales increase from its Fiat 500L. Unfortunately, Chrysler’s own brand dropped 12%. But at least it’s not experiencing issues like GM, who once again, announced yet another recall of 8 million vehicles and barely broke even in its earnings.

Rich in protein…

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Image courtesy of lamnee/FreeDigitalPhotos.net

Nothing says hip, cool protein like Spam and milk. That’s just what you were thinking, right? With a winning combo like that it’s no wonder Hormel Foods (HRL) just plunked down $450 million to buy CytoSport, maker of the very muscular Muscle Milk. Hormel, which in addition to its Spam line also makes foods like chili and Skippy Peanut Butter, feels it wants to attract a younger demographic that’s like totally into its protein consumption and well…Spam just wasn’t doing the trick. Apparently, the younger generation wants their protein through a straw. With Muscle Milk, Hormel will have a cool hip brand that younger people can totally dig. Wall Street will dig the purchase as well since CytoSports, which also makes powders and bars, is expected to pull in a very wholesome and hearty $370 million.