Google’s Tax Troubles Continue in Madrid; Will Oreo Scoop Up Hershey?; Pier 1 Not Feeling the Outdoor Love

Mucho dinero…

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Image courtesy of Sira Anamwong/FreeDigitalPhotos.net

It was just another day in the life of Google as authorities raided its offices, this time in Madrid, Spain. At issue, yet again, is the search engine giant’s corporate tax practices in Europe and the looming question as to whether or not Google, and other big corporations like it, are steering their profits legitimately, in order to score a reduced tax rate. Spanish authorities are investigating the search engine giant to see if it has been in engaging in the  dark art we know as tax evasion. Back in May, France investigated Google for “aggravated financial fraud” and “organized money laundering” which both sound awfully sinister. France is hoping to get $1 billion from its investigation. Even Italy’s authorities are in on the action and looking to see if Google underpaid its taxes there as well.  Google already forked over $175 million in back taxes to British authorities, whose politicians are still whining because they feel that the amount was too low. Expect more post-Brexit griping. Naturally, Google and its peers are calling out their innocence and are adamant that they comply fully with tax rules. But, at any rate, the investigations still seem far from over.

Yummm…

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Image courtesy of Sira Anamwong/FreeDigitalPhotos.net

The mood is sweet on Wall Street with talk of a Hershey takeover from Oreo maker Mondelez International. Given that there’s a trend to cut back on the amount of sugar people have been consuming, the timing seemed opportune for a buyout of a company that makes the world’s most beloved -in my opinion, anyway – chocolate bar. Mondelez, which also makes Cadbury chocolates, is currently the second largest confection manufacturer in the world. If the buyout goes its way, it will become the number one sweets maker, as 90% of Hershey’s revenue comes from North America. Shares of Hershey shot up 22% on the tasty news, hitting a record high of $117.79. Shares of Mondelez also went up, just not as much. Hershey’s market value is about $21 billion, give or take. But in order for the buyout to go forward, the Hershey Trust would have to give its blessing. After all, it controls 81% of Hershey stock and voting rights. However if you’re looking for some hostile action, might I suggest you look elsewhere. Mondelez already pledged to not shed any jobs and to keep the illustrious Hershey name intact.

Missed it…

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Image courtesy of Sira Anamwong/FreeDigitalPhotos.net

It’s looking like a long walk off a short Pier 1 as revenue for the home store chain came in at a disappointing $418.4 million. That number might seem impressive, except that it wasn’t to analysts, who were expecting revenue closer to $420 million. The company lost $6 million in profits and 7 cents a share when predictions were for a 5 cent per share loss. If those figures weren’t depressing enough, then consider that last year at this time, Pier 1 took in revenue of $436.9 million with a $7 million profit and an 8 cents per share gain. Shares of the company are now 50% less than what they were a year ago. The big area to disappoint was outdoor furniture. Darn you, outdoor furniture. That category was supposed to bring in some boffo results, but instead proved to be a real downer. The table top category did nicely. Just not nice enough. Taking a page from Chipotle, the company will now attempt to march out a rewards program and even add a gift registry. Which is weird, because I assumed the company already had a gift registry. I even went to check just now and wouldn’t you know it? It doesn’t. In any case, the company is forging ahead with plans to close 20 stores, while it already shuttered 8 this past quarter. Pier 1 did, however, open another three stores, presumably in more economically hospitable areas.

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Google Spits in the Face of Online Payday Lenders; This Trump’s For You; Mega Merger Nixed

Well if Google’s doing it…

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Google has been able to do what politicians couldn’t. Which might mean that its up to Google to Make America Great Again. In any case, online payday lenders are officially getting the boot from Google.  Come July 13, companies that deal in online payday loans wont get their ads displayed above search results under Google’s AdWords program. If you think that’s awfully harsh, then consider that payday loans are often due in 60 days and carry annual interest rates of at least 36%. Other types of loans and lenders will still be able to keep their ads in place, though. For now. Facebook has been banning payday loan ads since last summer, while Yahoo has still yet to catch on. A payday lender trade group called Google’s new policy “discriminatory and a form of censorship.” However, the Consumer Financial Protection Bureau (CFPB) has its own thoughts about the online payday lending industry. The CFPB’s cold hard research highlights the numerous hidden risks, costly banking fees and account closures resulting from these loans. The industry also tends to disproportionately target minorities. The CFPB found that a staggering one third of borrowers had their accounts closed by their banks while half of the borrowers paid an average of $185 in back penalties. And that’s before you even get to the annual percentage rate of 391% that are placed on these types of loans

 

This America’s for you…

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Next time you reach for an icy cold brew, you might just be wondering why it looks a little different. Riding the fiscal wave of patriotism, Budweiser will be rebranding its cans “America.” Instead of the slogan “King of Beers,” beer drinkers will find the slogan “E Pluribus Unum” on the cans. And in case it matters, Donald Trump is taking the credit that companies are inspired by his “Make America Great Again” campaign slogan. Really. During an interview on Fox News, Trump said, “They’re so impressed with what our country will become. They decided to do this before the fact.” Never mind that Budweiser’s parent company, Anheuser Busch InBev is Belgian. That’s just a minor detail. Anheuser-Busch InBev NV, along with Hershey’s, Coca Cola, Wal-Mart and even Carl’s Jr. are using patriotic marketing campaigns that are expected to last well past election season. To be fair, Hershey is utilizing this tactic because the company is an official sponsor of the Olympic U.S. team. For the first time in 122 years, the coloring on Hershey bars will be different , as red, white and blue will feature prominently on the confection’s wrappers. As for Wal-Mart, the gigantic retailer made a pledge back in 2013 to buy $250 billion worth of products that are “made in the U.S.A.” And let’s forget that minor hiccup when the chain was investigated by the FTC for mislabeling products that were, in fact, not made domestically.

Lay off my stapler!

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Shares of Staples and Office Depot took a nasty beating after a Federal judge ruled that the two companies cannot merge in fiscal blissful matrimony. The $6.3 billion merger was nixed since the judge felt that a huge merger between the two largest office supplies suppliers would be a horrible thing for consumers. The Federal Trade Commission thought the merger was as anti-competitive as it gets and couldn’t be more pleased with the judge’s ruling. Both the judge and the FTC felt competitive pricing, quality and service would be tossed aside as consumers would look on helplessly as they handed over their hard-earned cash. Office Depot said it won’t appeal the ruling. And why should it? It’s now going to get a $250 million break up fee from Staples. But that $250 million pales in comparison to the revenue it would have seen and the money it would have saved had the merger gone through. This was the second time, since 1997, that the two companies tried to merge. Shares of Staples fell 20% on the news at one point during the day, while Office Depot tanked about 40%. Staples and Office Depot continue to take massive hits from the other competition, Amazon. Amazon’s business to business division is but a year old, yet it already racked up more than a billion dollars in sales. And that’s while Staples and Office Depot were hit with massive losses.

Facebook Fright; Hershey’s Not So Sweet Earnings; Lowe’s Looking to R2D2 for Inspiration?

Not liking this…

Image courtesy of FrameAngel/FreeDigitalPhotos.net

Image courtesy of FrameAngel/FreeDigitalPhotos.net

Facebook just can’t be beat. Or can it? Hmmm. For its sixth straight quarter it toppled Wall Street expectations. It’s third quarter pulled in $3.2 billion which was a 59% whopper of an increase over last year’s equally impressive $2 billion. Wall Street analysts predicted only $3.1 billion. Ha! What do they know. Even its daily active users are up 19% to 864 million. I bet Twitter wouldn’t mind seeing some digits like that. Apparently 30% of us get caught up on our current events via Facebook. Then Facebook earned a hefty $0.43 per share, $0.03 more than what was expected. So how, you ask (and I know you are), is it even remotely possible that the stock took an 11% dive today? For that we can thank Facebook CFO David Wehner, who said some rather fiscally upsetting things during the company’s earnings call. For instance, Facebook costs will increase by a not so modest 55%-75%. Wall Street doesn’t care for stuff like cost increases. It tends to put a damper on things. If the cost increases weren’t upsetting enough, Mr. Wehner also had the audacity to spook Wall Street by mentioning that revenue will slow down. Yikes.

Not sweet on this…

Image courtesy of lamnee/FreeDigitalPhotos.net

Image courtesy of lamnee/FreeDigitalPhotos.net

The second largest, publicly traded confectioner just reported its earnings and you can bet they weren’t nearly as sweet as Facebook’s (but then again, what is?). I am talking about Hershey’s of course, maker of everybody’s favorite something or other. For me it’s the classic bar with almonds. Just saying. As for Hershey’s earnings, sales were up 6%. I am sure I assisted in that. Its market share stands at an impressive 31%, having grown .2% this quarter, yet again. But the company sadly missed analysts’ estimates. First of all, the company had revenues of $1.96 billion, which many would find to be a very respectable number. But not for Wall Street who strongly felt that revenue for Hershey’s should have been $1.97 billion. Yes missing that $10 million was kind of a drag. Then there was the earnings per share issue. The candy company gained $1.05 per share. Yet that wasn’t enough to satisfy Wall Street’s craving for $1.08 per share.

How’s that for customer service?

Image courtesy of digital art/FreeDigitalPhotos.net

Image courtesy of digital art/FreeDigitalPhotos.net

Attention humans: Your employment days might be numbered, thanks to Lowe’s. The home-improvement/hardware chain is testing out the use of robots to help customers in its stores. If you happen to be in San Jose, California, you might want to check out four of the new R2D2 wannabes, dubbed OSHbots at the Orchard Supply Hardware. No word on how much this little endeavor is costing and its cost effectiveness over real people. Lowe’s stock, however, is up 11% for the year, so far. Equipped with 3D cameras, screens and other doodads and knick-knacks, the OSHbots can help you find whatever it is you are looking for in the store. Just not an actual human being.

Dissing 21st Century Fox, BofA Not Feeling the Legal-ease and Hershey’s Not So Sweet News

Rejected…

Image courtesy of Ohmega1982/FreeDigitalPhotos.net

Image courtesy of Ohmega1982/FreeDigitalPhotos.net

Looks like Time Warner has no love for Rupert Murdoch. The media tycoon, who reigns over 21st Century Fox, put out an offer last month to buy its rival for $80 billion, or about $85 a share in stock and cash. He even graciously offered to sell off CNN, to avoid any anti-trust and regulatory issues. But he was still denied since it was “not in the best interests of Time Warner.” Many feel, however, that Murdoch was unfettered by this rejection and will likely come at Time Warner with an even better offer , especially because Murdoch is such a big fan of HBO. I’m sure he likes the hit show Girls, but it’s probably more about HBO’s $20 billion value that really makes him a super fan. That, and the fact that a “merger” like this could pull in $65 billion a year in revenue. Wall Street also appreciated news of the rejection and sent Time Warner shares up over 15%.

Banking on lawyers…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Bank of America came out with its earnings today and yeah…they had profits. Too bad they were down over 40% from a year ago, which means there was nothing for them to brag about today. Unless it wanted to brag about how its legal bills went up from $471 million last year to $4 billion this year. BofA can thank its lawyers for its $2.3 billion profit which was down from $4 billion a year ago. The Charlotte-based bank gained $0.19 a share instead of analysts’ predictions of $0.29 a share. Mortgage revenue was also down  but man, it was those legal bills that really put a crimp in profits. Good thing (or not?) that it reached a $650 million settlement with AIG for some outstanding mortgage bonds. However, the bank’s legal bills are far from coming to a halt. If it could just hammer out a deal with the DOJ for all the damage it caused leading up to the financial crisis by selling bad mortgages…

 

Not so sweet on this…

Image courtesy of Grant Cochrane/FreeDigitalPhotos.net

Image courtesy of Grant Cochrane/FreeDigitalPhotos.net

Hershey’s is about to induce a migraine. With commodities like cocoa and dairy going up, the number one candy maker in the United States is hiking up its prices by 8%. It’s the first time in three years that they’re doing this and who can blame them (well, I can) since cocoa and its fellow chocolate making ingredients are almost at three year highs. You can expect other companies like Nestle SA and Kraft to follow (though maybe they wont, but they probably will). At least you’ll have some time to prepare as you won’t feel it in your wallets until next year, when the hikes are set to take effect.