Game on Oprah! John Oliver’s $15M Giveaway; Fortune 500 Companies’ Latest Surprises; Burberry Boss Paycheck Getting a Whole Lot Smaller

New queen of daytime…

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Image courtesy of renjith krishnan/FreeDigitalPhotos.net

Move over Oprah. John Oliver just achieved god-status in the television talk show realm after buying nearly $15 million in medical debt and then forgiving it. Poof. Just like that. On his latest show “This Week Tonight with John Oliver,” the talk-show host took on the debt collecting/buying industry, which can be dubbed “shady” at best. Oliver said, “It is pretty clear by now (that) debt buying is a grimy business, and badly needs more oversight, because as it stands any idiot can get into it.” So John Oliver did “get into it,” and spent just $50 to start his very own debt collection company called Central Asset Recovery Professional aka CARP. It’s no coincidence, he pointed out, that the company is named after the bottom-feeding fish. Oliver’s company was almost immediately offered close to $15 million in medical debt from 9,000 Americans, social security numbers, names and addresses included, for just half a cent on the dollar. In case you were wondering, that came out to about $60,000. Then, with the simple push of a red button, John Oliver, forgave the debt, presumably with funds from his own bank account. But most importantly, Oliver easily trumped Oprah Winfrey’s 2004 television giveaway, when she gave out $8 million worth of cars to 276 audience members. And he didn’t even do it for ratings. Sort of.

Rank and file…

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Fortune Magazine’s annual list of the biggest 500 companies by revenue for fiscal 2015 is out and it was Netflix that was making big waves this year. The video streaming site, which launched in 130 new countries in January, and was the top fiscal performer for 2015, ticked up 95 spots to the 379th spot. However, while the climb was quite impressive, there are still 378 companies that rank higher than Netflix. Rounding out those top spots are Walmart, ExxonMobil, Apple and Berkshire Hathaway. No big surprises there. Apple, by the way, which moved up to two spots from last year’s fifth place, was the most profitable company on the list, earning $53 billion for fiscal 2015. Companies including GM, Ford and AT&T also cracked the top ten with Amazon landing at number 18 and Walgreens following close behind at number 19. Microsoft managed to crack the top 25 for the first time ever as Facebook climbed 85 spots this year to claim its 157th ranking. Interestingly enough, more than half of the companies on the list saw a drop in sales, with energy companies taking the biggest beating of all.

Pay raze…

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The CEO of Burberry Group PLC, Christopher Bailey, will now have to switch to generic brands when he goes grocery shopping. After failing miserably to post respectable earnings results, the dapper exec will watch as 75% his paycheck vanishes into thin air. The CEO, who also serves as the Chief Creative Officer – and herein, might lay the problem –  will earn a paltry $2.74 million this year, a far cry from the $10.8 million he scored last year. Shareholders are also withholding his bonus for missing profit targets. That might seem a bit harsh, but shareholders in hundreds of companies are getting fed up with massive executive salaries that are completely at odds with results. Bailey, however, is not the only executive at the company who will be experiencing the fiscal wrath of the Burberry shareholders. Executive directors at the fashion house will also be stripped of their bonuses this year, because after all, it’s not like Bailey was solely responsible for shares of Burberry taking a 35% hit in the last twelve months. Burberry has announced that it will implement a cost-cutting plan – that has little to do with Bailey’s pay cut – in addition to a share-buyback program. Prudent moves when a companies reports disappointing fiscal earnings. But the earnings may not be entirely Bailey’s fault. Consider that 40% of Burberry sales come from the Chinese, who are in the midst of their own fiscal woes.

Apple vs. Feds Smackdown; Billionaire Country Breakdown; It’s Highs and Lowe’s for Home Improvement Sector

Rotten to the core…

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It’s game on between Apple and the FBI as the two entities tussle about unlocking an iPhone. The Feds feel this request falls under the Writs Act from 1789 that compels companies to assist in law enforcement. Apple is preparing to argue before a Federal court that software code should be protected by the First Amendment while terrorists the world over sit back and enjoy a good laugh at the the expense of the U.S and its constitutional rights. This is all because the Feds want Apple to unlock a phone belonging to San Berbardino shooter/terrorist Syed Rizwan Farook as authorities are convinced there is a lot of valuable intel contained on that one little device. In fact, since early October, Apple has received orders to unlock thirteen other devices, and an L.A. district court judge ruled that Apple should help the Feds bypass that pesky setting which wipes an iPhone clean after ten incorrect password guesses. Apple CEO Tim Cook is adamantly against this backdoor attempt to unlock an iPhone lest it fall into the wrong hands. Cook wants the issue decided by Congress and not the courts. Problem is, phones regularly fall into the wrong hands, as in this case, so what to do about a device that potentially holds vast amounts of life-saving information that could lead to the arrests and capture of more wrong hands?

 

All about the benjamins…

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After owning the title for so long, the city of New York no longer reigns supreme as home to the largest population of billionaires. The title of “Billionaire Capital of the World” now  belongs to Beijing, which is kind of weird since the Chinese economy has taken such a beating these last few months. These new findings come courtesy of the Hurun Report, a Shanghai-based firm that publishes monthly. And while Forbes’ compiles its own list of billionaires, the two publications tend to yield slightly different results, if only because they employ different calculation menthods. Incidentally, Hurun’s results did take into account January 15, the day when China’s economy hit the skids, tanking 40%.  But that still didn’t stop it from adding 32 new billionaires to the list, bringing its grand total identifiable billionaire population to 100. Beijing’s numero uno billionaire is Wang Jianlin, a real estate developer whose net worth is estimated to be $26 billion. Hurun chairman, Rupert Hoogewerf, says that these rankings don’t tell the whole story of China’s vast wealth, and estimates that only about 50% of China’s billionaires were identified. Plenty of the county’s other billionaires prefer to keep their wealth asecret so they don’t end up having to fork a chunk of it to authorities. New York still managed to welcome four more billionaires into its fold, giving the city a grand total of 95. Moscow took the third spot while Hong Kong and Shanghai scored spots four and five respectively.

Lowe’s and behold…

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Home Depot and Lowe’s regaled us with their earnings and it was good news, kind of. Both home improvement chains scored lofty gains in large part due to housing demand, low interest rates and job and wage growth – all super good things. Oh, and this time the warm weather actually helped sales too. But while Lowe’s quarterly sales gains were up 5.5%, Home Depot’s sales gains were way more impressive, gaining close to 9%, suggesting that Home Depot is benefitting way more from housing gains than Lowe’s. Which probably explains why shares of Lowe’s fell a bit today. Apparently Home Depot , according to experts anyway, has a stronger brand image and consumers see it as the go to store for their home improvement needs. Case in point, kitchen products are a big seller for Home Depot and that department killed it this quarter, while Lowe’s kitchen products department performed below average. Ouch. Home Depot also has 2,274 stores compared to Lowe’s 1,857 stores. In any case, Lowe’s is expecting to snag a 6% rise in sales, compared with analysts predictions of less than 5% and the company still added 59 cents per share with sales of $13.24 billion, smacking down predictions of $13.07 billion.

Gem – Truly Outrageous Auction Price; Macy’s Needs a Miracle on 34th Street and on Wall Street; Rolls Royce Profits Sputter

Just brilliant…

Image courtesy of Sicha Pongjivanich/FreeDigitalPhotos.net

Image courtesy of Sicha Pongjivanich/FreeDigitalPhotos.net

One Hong Kong billionaire went shopping recently and dropped $77 million…on just two items…for his seven year old daughter. Is your head still attached? Just checking. Joseph Lau, scooped up two large stones at a Geneva auction which was probably way more fun than sitting in a Macau prison where the billionaire is appealing a conviction for corruption and money-laundering. One of the gems Lau bought for $48.5 million is a 12.03 carat “Blue Moon” – as in once in a Blue Moon does a gem like this come around – which set a record for the amount of money paid per carat in a gem. If you do the math, that comes out to approximately $4 million per one brilliant carat. But Lau can afford it since his net worth is estimated to be about $10 billion. Besides, he coincidentally set a second record  – in less than 24 hours – when his company sold a Hong Kong office tower for $1.6 billion. It set a record because it was double the amount of the previous record commercial real estate sale. Some guys – and seven year old girls – have all the luck I tell you.

Let it snow, now!

Image courtesy of Vichaya Kiatying-Angsulee/FreeDigitalPhotos.net

Image courtesy of Vichaya Kiatying-Angsulee/FreeDigitalPhotos.net

Macy’s could use a miracle right about now. Except this time on Wall Street where shares of the company took a 14% hit as it experienced its biggest one day fall in seven years. The company announced that it would be cutting its annual profit forecast as sales and traffic have been anything but miraculous, with quarterly sales that took a 5.2% hit. Revenue dropped to $5.87 billion when analysts thought Macy’s would pull in $6.15 billion. Macy’s profit dropped 45%, falling to $118 million, coming in at 56 cents per share. Analysts thought that would be just 54 cents per share.  First, Macy’s brass blamed the weather. Only this time it was blamed for being too hot instead of too cold explaining why shoppers haven’t been rushing into stores to buy warm-weather apparel. Then Macy’s blamed tourists for not spending enough money in its stores. Macy’s is also pointing the finger at off-price, aka discount, stores like Marshall’s and Nordstrom Rack. Those types of retailers have seen a 44% increase between 2009 and 2014 and have been taking away a big chunk of sales from Macy’s. Together with slow growth and weaker demand for some of Macy’s biggest brands and you get…a big hot fiscal mess. That’s on top of the fact that Macy’s already announced it would be closing 35 – 40 underperforming stores back in September. Too bad the numbers make it seem like all the stores are under-performing. Then investors were bummed that Macy’s nixed the idea of making a Real Estate Investment Trust (REIT) out of its properties. Investors like REIT’s for their liquidity, special tax incentives and the big dividends they yield. Macy’s has got about $21 billion worth of property that could have the potential to trade at a much better value. Instead the retailer will start offering some major discount action in an attempt to get shoppers into its stores just in time for the holiday season.

Not revved up…

Image courtesy of Sharron Goodyear/FreeDigitalPhotos.net

Image courtesy of Sharron Goodyear/FreeDigitalPhotos.net

While visions of Rolls Royce might have you thinking about royalty and James Bond, the heart of its business is in its engines, especially those used for aircraft, ships and industrial use. Unfortunately, the heart of the business is currently undergoing some fiscal coronary issues as new-ish CEO Warren East issued yet another profit warning for Rolls Royce today. Then things got ugly. Shares of Rolls Royce took a 20% beating after Mr. East said that  profits will be 30% lower than what even the analysts were predicting for the famous engine company. To add insult to injury, shares of Rolls Royce suffered their biggest single day drop in fifteen years. The 131 year old, British-based company also reported weak demand for spare parts and services for its existing engines. Now, its executive board is considering scrapping the company’s dividend. Stay tuned…