Supreme Smackdown to Apple; Wall Street Bonuses Shrink, But I’d Still Take One; Amazon Store: The San Diego Sequel

Un-appealing…

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Not everyone has the ability to say no to one of the world’s most valuable companies. But the Supreme Court did just that to Apple when it graciously told its lawyers that it was not interested in hearing its appeal on an earlier ruling from June of 2015. Now, the iPad maker has to pony up some $450 million for its role in conspiring with publishers to increase book prices that apparently violated Federal antitrust laws. Apple feels that this ruling will “chill innovation and risk taking.” Maybe. But consumers still didn’t appreciate the way that Apple caused e-book prices to go from $9.99 to $12.99 and $14.99. Except Apple didn’t act alone, bringing in Hachette Book Group, Harper Collins, Penguin, Simon & Schuster and MacMillan to help fleece e-readers everywhere. Basically, any publisher from whom you’ve ever read a book helped facilitate this antirust breach. Apple wanted to make sure the iPad got a nice little boost when it made its grand debut in 2010. So publishers got to set the price they wanted for e-books on Apple devices and in return Apple would enjoy a 30% cut of sales. This, my friend, is the nefarious practice known as “agency pricing.” Publsihers played along because they didn’t like that the price of e-books on Amazon was going down and this method provided a convenient way to recoup that cash. The publishers started charging Amazon the same prices that it charged Apple, forcing Amazon to raise its prices also. Apple will pay $400 million to e-book customers in the form of credits, in addition to $20 million to the thirty states that sued. Of course, that doesn’t include the $30 million in legal fees that Apple’s lawyers get to collect or the changes that Apple is being forced to make to its business practices.

Whose your daddy…

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New York State Comptroller Thomas DiNapoli released some pricey data for one of New York’s top industries: Securities. Not that this will have you shedding tears, but the average Wall Street bonus fell 9% for 2015, checking in at $146,200. And while most people don’t come close to making that kind of cash in a year, the average Wall Street-er scored that, in addition to his or her salary. While that salary might seem high, consider that in 2006, the average Wall Street bonus was $191,360. And even though a whopping $25 billion worth of bonuses were awarded in 2015, it was 6% less than the previous year, as profit from broker-dealer operations dropped $1.7 billion to $14.3 billion. Profits for the six biggest banks hit $93 billion, by the way, which is more than 35% higher than the previous year. If you can believe it, that figure is still not as high as it should be and signals that the economy is still having a hard time bouncing back from 2008’s fiscal crisis. If you’re thinking about a career in securities, that might not be such a bad idea as the average Wall Street salary rose 14% in 2015 to $404,800. Except that prospects for 2016 look a bit grim and are actually expected to drop. There are approximately 172,400 people employed in the securities industry and 4,500 jobs were added in 2015. That figure, however, is still 8% less than it was pre-2008 fiscal crisis. By the way, these figures, we are warned, are not accurate estimates since they don’t include stock options and other forms of deferred compensation. The numbers also don’t include those for securities employees outside of New York City.

Isn’t it ironic…

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Mega e-commerce site, Amazon, arguably best known for being the largest online marketplace in the U.S. – not to mention some really great television –  is poised to open its second brick-and-mortar store where it will sell books, naturally, in addition to its own comprehensive line of tablets and devices. In fact, there will be nothing in the store that you wouldn’t be able to purchase on the company’s website. Rumors of the brick-and-mortar first surfaced when a big sign went up during the summer over the vacant space in a swanky San Diego mall. Then, last month, job postings for the 7,500 square foot store began appearing. Amazon’s store will be in good company as Tesla and Apple will be its mall neighbors. Meanwhile, the revenue expected from setting up an actual store isn’t expected to leave any meaningful dent in the company’s earnings. I guess it’s just a cute gesture for people who prefer to leave their homes to enjoy an actual physical shopping experience.

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Twitter’s Getting Its Game On, We Hope; Amazon Buries the Hatchet with Hachette; Job Quitters Are Getting the Feds Excited

About that “strategy statement”…

Image courtesy of africa/FreeDigitalPhotos.net

Image courtesy of africa/FreeDigitalPhotos.net

Twitter did its very best to impress investors by telling them all the new strategies it plans to implement to help the social media company rake in $11 billion in the next 5-8 years. I guess it worked as the stock went up by 7.5%. Twitter’s got all sorts of exciting plans mapped out. Among them are an instant timeline where you don’t even have to share to be a follower. How reassuring. Also really smart people are developing algorithms to figure what users would want to know. Then Twitter wants you to be able to “record, edit and share video.” A dream come true for so many. And because the social media site would hate for you to feel like you’ve missed out on anything, like for instance, today’s photos of Kim Kardashian – or rather, her backside –  then fear not, oh faithful tweeter, as there will be a “what you missed” function. How very useful. Now if Twitter could just figure out how to word a “strategy statement” that doesn’t exponentially exceed 144 characters.

Is that the library calling?

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Because compromise is the hallmark of strong relationships, Amazon and Hachette publishers have finally done just that, ending a months-long fight over e-book pricing control. Hachette will now have control to price its e-books however it pleases, but apparently Amazon is going to provide the  publisher with enough incentives to keep those prices low. Which must be a relief for a bunch of its esteemed (and not-as-esteemed) authors, like Robert Galbraith a.k.a. J.K. Rowling, whose ebook, The Silkworm, was going for a whopping $14.99 on Amazon. The average price of a best-selling ebook hovers around $7.60. Sometimes they reach a $9.99 price point. That’s what I call “statement pricing.” Anyways, several authors took major fiscal hits from the feud. The whole “dispute” also got many people wondering if maybe Amazon has just a wee bit too much power over publishers. Hmmm.

I’ll quit to that…

Image courtesy of jumpe/FreeDigitalPhotos.net

Image courtesy of jumpe/FreeDigitalPhotos.net

Americans are quitting their jobs at the fastest rate in six years and that is, in fact, awesome news. About 2.8 million Americans walked out on their jobs, which apparently means that they are confident that they will (or already have) new jobs lined up in time to make their mortgage payment. So I guess it helps that hiring rates are also up. However, jobless claims also rose by 12,000, to 290,00, a bigger than expected climb, but still under the the 300,000 mark, which is really nothing to worry about – except, of course, for those who need to pay their mortgage. Jobless claims, though, are at a 14 year low and Fed Chairwoman Janet Yellen is loving (okay, not her exact words) the jobless claims number and “quit rate”  since they point to a recovering labor market. Besides, did you know that high quit rates are good for wages? It’s true, I tell you.

Zynga Zinger, Supreme Cyber Smackdown and Fannie Mae is Back on Top

Game over?

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Zynga took a nasty little hit to its second quarter earnings by barely breaking even. And that’s being generous. While Wall Street was hoping to see revenue of $157 million, the San Francisco-based gaming company, currently notable for “Farmville,” took in $153 million in revenue with a $.07 per share loss. Ah! But what is a mere $.07 in the grand scheme of things, you might be wondering? Well that grand scheme adds up to a $62.5 million loss. Last year at this time the company’s loss was but a mere $15.8 million. However, there is hope on the mobile horizon, or so Zynga feels, as “Farmville 2: Country Escape” has become an Editor’s Choice in the Apple App store – a very significant barometer of what makes a game successful. Then there are those handy licensing deals with the NFL and Tiger Woods, among others, that Zynga is counting on to turn those earnings in the up direction.

E-commerce competition!

Image courtesy of cooldesign/FreeDigitalPhotos.net

Image courtesy of cooldesign/FreeDigitalPhotos.net

It’s about to get a whole lot nastier – but luckily, not for consumers – in cyberspace thanks to the nifty new alliance that was forged between Barnes & Noble and Google. Yes. I did write Google – well Google Shopping Express, to be more precise. The two companies have teamed up to provide a little competition to Amazon. But that’s not in the official statement, of course. The partnership, which should give a much needed boost to the bookseller, will provide same-day delivery in certain areas, just like rival Amazon. After all the trouble Amazon caused for book publisher Hachette, this new deal probably couldn’t have come at a better time as consumers are feeling a little less affectionate towards the e-commerce giant. Google Shopping Express has already teamed up with major retailers like Target and Costco. By the way, you can subscribe to Google Shopping Express free for the first six months, with a subscription fee to be determined at the end of that time. Or you could just plunk down $4.99 per order. Happy shopping!

Pay it backwards…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Fannie Mae, who once upon a time had to hit up taxpayers to the tune of $116 billion at the height of the financial crisis is about to have paid us all back in full. Sort of. The mortgage lending company just reported its tenth straight profitable quarter – $3.7 billion in profits, in fact.  And a check for that amount is in the mail…to the US Treasury. After the Treasury cashes that out, Fannie Mae can take a breather as it will have more than fully repaid its debt. And while that $3.7 billion profit might seem impressive, that figure is actually a 63% decrease over the same period last year, where Fannie Mae pulled in over $10 billion in profit.  Incidentally, Fannie Mae earned $84 billion in 2013. Not bad for a year’s work, huh?

 

 

Dr. Dre Takes A Bite Out of Apple, Amazon/Hachette Smackdown and I Said Jet-Set Not Jetsons!

An Apple a day…

Image courtesy of samuiblue/FreeDigitalPhotos.net

Image courtesy of samuiblue/FreeDigitalPhotos.net

Dr. Dre must be in a very good mood now that Apple (AAPL) is forking over $3 billion to him and his fellow Beats Electronics co-founder Jimmy Iovine. After weeks of talk and rumor, the deal is official. Some feel that the deal might have happened sooner had Dre not bragged about becoming hip-hop’s first billionaire in a leaked video. Apparently Apple wasn’t down with that move. But hey, better late than never. Apple, however, was definitely down with the way Beats music subscribers paid for the service which they previously received for free. So next time you find yourself in an Apple store with a few hundred dollars lounging around in your pocket, take comfort in the knowledge that you just might be able to purchase some tricked out headphones that last year pulled in over a billion dollars in revenue.

Oh no you didn’t!

Image courtesy of adamr/FreeDigitalPhotos.net

Image courtesy of adamr/FreeDigitalPhotos.net

The latest drama to play out in the corporate school yard is brought to you by Amazon and book publisher Hachette. So whose side are you going to take? Well let’s see now. How do you feel about Robert Galbraith aka JK Rowling? And just how eager are you to read that author’s new novel, The Silkworm? If you were thinking about buying the title from Amazon you might want to look elsewhere since it’s a Hachette book. Pre-ordering the title from Amazon isn’t an option (anymore). Amazon and Hachette were trying to negotiate how much to charge for Hachette’s books. Amazon wanted Hachette to reduce its prices. They couldn’t agree. Btw, Hachette pulled in $3 billion in revenue for 2013. Amazon pulled in $75 billion. Gee, I wonder who has the upper hand here?

Jetting off with Michael Kors…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Michael Kors earnings flew way past Wall Street predictions by almost $100 million, which does little to explain why its stock was going all over the place today. Though investors would argue that they aren’t enthusiastic about its gross margins as the company goes forward. In a corporate conference call the term Jet Set was used. A lot. Apparently “Jet-Set” is way cooler and more cost-benefitting than saying “luxury” or “ultimate” or whatever…No doubt a marketing firm was paid handsomely to come up with this theory. Anyways, the self-proclaimed “jet-set” company pulled in over $900 million in revenue and overall had more than a 50% increase over last year. The company might want to send a thank you note to Europeans who are totally getting behind the Michael Kors label/brand and helped increase revenue there by a very jet-setting, luxurious, ultimate 125%. So I guess that gives it leeway to call itself whatever it wants.