Snap to it! Snap Inc. Banks on IPO; Canada Goose Wants to Keep NYSE Warm and Cozy; How Much Is That Handbag Company In the Window? Kate Spade Puts Itself On the Market

Next big thing?

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Looks like Snap Inc., the company that gave us Snapchat, is gearing up to be Wall Street’s next big IPO darling. Come March 1, the company is hoping to get an IPO valuation of between $19.5 – $22.2 billion, and is offering about 200 million shares on the New York Stock Exchange under the ticker symbol…wait for it…SNAP. You saw that one coming, didn’t you. It plans on pricing those shares between $14 to $16, which should bring in over $3 billion. The company already boasts 158 million active users and most of Snapchat’s money comes from advertisers. Revenues for the company came in this year at $404.4 million –  a far cry from 2015’s $58.6 million. However, one hurdle Snapchat might have to overcome is the perennial question of how it plans to make a profit. Sure it took in over $400 million in revenue last year, but it still also posted a $514 million loss.  In any case, before Snap Inc. makes its big Wall Street debut, top brass, including CEO Evan Spiegel, are set to hit the road, for a “road show,” – which is not as cool as it sounds – to visit investors in hopes of whetting their fiscal appetites on the potential of Snap Inc. stock. One hitch – and apparently there are more than a few – is that new shareholders won’t have any voting powers and instead will have to trust the board to know what they are doing in order to make tons of cash for the company.

What’s good for the goose…

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Image courtesy of MrWildLife/FreeDigitalPhotos.net

You don’t have to be Canadian to notice the swarms of people sporting the Canada Goose brand of winter gear. Chances are, if you’ve ever thought about buying one of those coats, you might have reconsidered after looking at the price tag.  But apparently more than enough people are buying the brand’s merchandise to warrant a $100 million IPO filing, and Canada Goose will list on the New York Stock Exchange under the ticker symbol…wait for it…GOOS. Didn’t see that one coming, did ya? Okay, you probably did. While that $100 million isn’t exactly screaming: “SNAPCHAT!” the fact is Canada Goose’s revenue grew close to 40% between 2014 and 216, with just its online sales hitting $33 million in 2016. By 2016, revenue for the company came in at over $290 million. You may not have bought one of their jackets, but chances are, with figures like, that you know someone who did. In fact, in the last three years in the United States, sales grew by 76%, and 33% in the last year, to total over $103 million. In Canada those numbers only grew by 15%. Go figure.  While Canada Goose still scored a $27 million profit on that $291 million revenue, it does still have a wee bit of debt to the tune of $278 million. So yeah, a few extra bucks from an IPO would do wonders.  Of course, you can’t file for an IPO just on the basis of a few jackets. With that in mind, Canada Goose has big plans to expand its product offerings from footwear to bedding and everything in between.

Up for grabs…

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It was just a matter of time, I suppose, before Kate Spade threw in the fiscal towel and decided to put itself up for sale. Except, at Kate Spade, they’re calling it “exploring strategic alternatives.” However the company wants to spin it, it still heartened Wall Street which sent shares of the company up more than 13% for a change. To be fair, Kate Spade’s recent quarterly earnings weren’t even horrible.  In fact, the company took in a 39% increase in profit of $86 million on $471 million in revenues, missing estimates by just one million measly dollars. The handbag company even added 41 cents per share when just 34 cents were expected.  Shares are up over 20% for the year and sales of its merchandise in its own stores increased by over 9% . Its rivals, including Michael Kors  and Coach would have loved to see similar results themselves. But alas, for Kate Spade, China just wasn’t feeling the love while a strong dollar kept plenty of tourist shoppers at bay. And in our neck of the woods, consumers just aren’t buying handbags as much as in the past, which is quite the problem when your core product is just that.

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Solar Jobs Have the Power; Michael Kors Sings the Retail Blues; GM Sets a Record, But Profit Disappoints

Sunshine days…

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The sun is where it’s at these days as the amount of jobs in the solar industry jumped 25% in the last year, now employing over 260,000 workers. According to The Solar Foundation, the reason for the job growth in this field has to do with a massive decrease in cost to install solar panels, combined with rising demand. A perfect fiscal storm – but in a good way.  The solar industry is projected to grow significantly  as solar capacity  continues to grow. It’s actually looking like solar power will end up becoming the most widely used power source.  The U.S. Department of Energy, in its own study, found that there are more Americans working in the solar power industry, compared to the 187,000 employees toiling away at natural gas and coal power plants. In fact, one out of every fifty new jobs in 2016 was in the solar industry, and the number of solar jobs increased in 44 out of 50 states.  Women represent 28% of the solar workforce and that number is expected to climb.  In case you were thinking of switching careers, the  industry is expecting to add about 51,000 jobs in 2017.  And with a median wage of $26 per hour, that might not be such a bad idea.

It’s in the bag…

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Image courtesy of Sicha Pongjivanich/FreeDigitalPhotos.net

No matter how much Michael Kors wants to blame department stores for its dismal performance, it can’t. Because it just wasn’t their fault. Entirely. The fact is, there were just a lot less shoppers at both department stores and at Michael Kors stores.  Shares of the company fell almost 15% as it announced that it earned $1.64 per share. That should seem impressive, since analysts forecasted that the company would gain $1.63 per share. However, the 6.4%  drop in sales was just too much to bear, especially because a 5.4% drop was anticipated. So you can imagine the collective disappointed sigh on Wall Street. Revenue for the quarter dropped 3.2% to come in at $1.35 billion, when estimates were for $1.36.  For the full year, the company now expects to take in sales of $4.48 billion, when it previously had its sights set on $4.55 billion. As for the $4.71 billion in sales Michael Kors took in last year, well, that’s now a sweet distant memory, isn’t it? As part of a big plan, Michael Kors’ brass explained that it’s going to scale back on its offerings in wholesale stores. With too much inventory and major discounts eating substantial chunks into its margins, the company has even decided not to participate in friends and family sales.  The theory is that by ditching these deep discounts, the brand will somehow get reinvigorated and finally gain back some of its value and prestige. Too bad it’s taking so long to find out if this plan will actually work.

It’s a record…

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General Motors just came out with its fourth quarter earnings bumming out Wall Street with news that its profit dropped $1.8 billion and earning $1.28 per share. Nothing says disappointing quite like a 71% year-over-year drop, which is exactly what this profit was. But apparently, that drop isn’t as tragic as it seems, since that figure was the result of a $4 billion tax gain from a one-time accounting change. Too bad that bit didn’t stop the stock from taking a 4.7% hit. Revenue for the quarter came in at $44 billion, an 11% increase over last year, even though estimates were for just over $40 billion and $1.17 per share. A year ago, revenues almost hit $40 billion, taking in $1.39 per share.  The big joyful news, though, is that GM scored a record $166.4 billion in revenues for 2016, a 9% increase from last year that brought in a profit of $9.4 billion and added about $6 per share. Estimates were for $163.5 billion. As for GM’s 52,000 hourly workers, they can look forward to a $12,000 bonus this year, up from last year’s $11,000. This little initiative will set GM back by $624 million, but hey, those folks deserve it, no? And while GM sold 10 million vehicles globally, Wall Street’s still uneasy about the company’s 845,000 ownerless cars that were sitting around at the end of 2016.

Kate Spade Shares Stylin’ on Latest Reports; Sears Has a Fiscal Guardian Angel; Amazon Dismisses Gravity With Latest Patent

I’m so fancy…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Kate Spade wants to put itself up for grabs and that news sent its shares up 23%, giving Wall Street plenty of cause to celebrate. And the Street will take whatever it can get, especially since Kate Spade was down 9% just in the last six months. In fact, similar companies including Michael Kors and Coach have also experienced declines during the same time period. But the kicker is that both of those companies, along with four others, are being bandied about as potential buyers of Kate Spade. Talk of a potential sale is just what hedge fund Caerus Investors wants to hear. While the firm, which entered the picture back in 2009, hasn’t disclosed its exact stake in the company, it did send a letter to Kate Spade’s board back in November urging it to put itself on the auction block. And that’s exactly what’s planned for next month. With a market cap of $2.3 billion, Caerus thinks Kate Spade could get picked up for a nifty premium – between $21 to $23 per share -and naturally, Caerus stands to profit from that. But that wasn’t the only story to come out of Kate Spade today. Apparently, an options trader purchased 2,000 calls for Kate Spade shares just minutes before it was reported that it’s exploring a sale. A call, by the way, allows a buyer to score shares at a pre-agreed upon price. Not only was one very lucky buyer involved, but it also netted a very shrewd trader a cool $320,000 within minutes. Insider info? Hmmm. I’m sure the SEC would like to know. Because that would be so bad. Just ask Martha Stewart. As for Kate Spade, she hasn’t been part of the company since 2006.

On a another note…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Even though its stock just went up 9% – the most in two months – Wall Street definitely does not feel the same amount of love for Sears as it does for Kate Spade. The stock closed at a 52 week low just yesterday and its planning to close 30 more Sears and Kmart stores in early 2017. But there is someone who seems to love the embattled retailer unconditionally: CEO Eddie Lampert, who said he’s going to get a $200 million letter of credit for the troubled company. In fact, he has so much faith in the company  – and apparently he’s the only one who does – that he thinks that letter of credit could grow to $500 million. This is not Lampert’s first “loan” to Sears. In the last two years he’s shelled out over $800 million to the company.  Talk about faith.  At least this loan comes with guarantees that if Sears goes bust, its suppliers will still get paid. I wonder if the rest of his hedge fund buds over at ESL Investments feel the same, even as the firm continues to back Sears? For some inexplicable reason, Lampert is devoted to Sears, despite the fact that its sales are constantly going down and it has already lost billions. Most investors think the time has come to throw in the retail towel.  But not Lampert, who in addition to being Sears’s CEO and biggest cheerleader for the last four years, also happens to be its biggest investor.  However, others only see red flags and are wondering why Lampert is the only one eager to throw money at a company which has been losing so much of it in so little time.  Sears’s last quarter lost $750 million, so much worse than last year at this time when it only lost $454 million. Revenue fell a whopping 13% to $5 billion. In fact, in the last eight years, Sears has lost around $9 billion. Also, with the seeming exception of Lampert, everyone is wondering why Sears would need money right after the holiday season, which is supposed to be the most lucrative quarter out of the whole year.

Yeah, they thought of that too…

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Because fulfillment centers weren’t enough, now the e-commerce giant is looking to do away with gravity – besides logistics companies – with its latest patent for an airborne fulfillment center (AFC). It’s exactly what it sounds like – a warehouse in the sky. Flying at a lofty 45,000 feet, drones would basically zoom into the warehouse, pick up items that were ordered and then deliver them.  The company’s ramped up its drone tech efforts and this latest project fits in nicely with that initiative.  Right now Amazon drone delivery requires that Amazon build warehouses in specific areas, on land, where drones can happily roam free and deliver items to customers. Some of the uses mentioned in the filing include fulfilling orders during football games. The AFC would be stocked ahead of time with certain game “essentials” that could be easily delivered as you cheer for your favorite team. Another idea would be to allow customers to order right from a giant ad board and have their items delivered “within minutes.” But before you start having nightmares of flying robotic insects whizzing all around you, Amazon is going to need to get major regulatory approval from aviation authorities before launching any airships.

Michael Kors Department Store Diss; Disney Swims to Great 3Q; Ralph Lauren Hits and Misses and Hits

More bag for your buck…

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Image courtesy of duron123/FreeDigitalPhotos.net

Michael Kors is biting back at the hand that feeds it: department stores. The accessories company is blaming them for its recent losses, fed up with the constant discounts department stores are putting on Michael Kors merchandise. In case you haven’t noticed there is nary a moment when Michael Kors products are not discounted. I dare you to prove that one wrong. The fact that consumers can use coupons for Michael Kors products? Ugh. Don’t even get them started. In fact, CEO John Idol is putting the kibosh on them and also chucking those friends and family discounts. Michael Kors reported a 7% drop in its first quarter wholesale business and is planning on shipping less merchandise to the stores in an attempt to reclaim some much-needed pricing power. Michael Kors feels that consumers forgot the value of its products. Seems like a prudent move considering that Macy’s, in particular, brings in the largest chunk of wholesale revenue for Michael Kors.  In any case, it’s a strategy that Coach also is beginning to employ, except that Coach also plans to pull out of about 250 stores completely. Earnings came in at $147 million and 88 cents a share on $988 million in revenue. That was a slight change from last year’s $174 million and 87 cents on $986 million. The fact that mall traffic and tourism were down didn’t help matters. Even same stores sales took a 7.4% hit, which was especially brutal since analysts only predicted a 4.2% decline. Still, analysts expected 74 cents on $953 million in revenue, so the earnings weren’t all that bleak in the first place.

It’s Dory’s world after all…

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Disney posted impressive earnings throwing a big shout out to its studio division, who cranked out the incredibly endearing and ridiculously, lucratively marketable “Finding Dory.” Okay, so marine life wasn’t the only reason since “The Jungle Book “and “Captain America: Civil War “also contributed to that success. Just not as much. Not nearly as much. In any case,  Disney particularly relished those 3Q earnings considering that its 2Q earrings missed the mark while this quarter it took in $1.62 per share, beating estimates by one penny. But not everything was coming up roses and clown fish at Disney, all because of ESPN and a future for it that looks more bleak than bright. Taking a beating from “cord-cutting” consumers who are giving the heave-ho to cable subscriptions and bundles, ESPN is, not surprisingly, rapidly losing subscribers. The network signed a $1 billion deal with BAMTech to find a way for ESPN to bring “direct-to-consumer ESPN-branded, multi-sports subscription streaming service.” Two words, ESPN: blue tang.

No medals for you…

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Even Michael Phelps couldn’t help win this one. Of course  I am referring to Ralph Lauren’s recent earnings that had the luxury brand posting a 7% sales loss. Ralph Lauren reported a loss of $22 million with 27 cents per share. That’s a far cry form last year when the company took in a profit of $64 million and 73 cents added per share. Revenue, which came in at $1.55 billion, took a hit, but analysts expected that hit to be closer to $1.77 billion so complaining wasn’t necessary. Shares still went up today so clearly these losses have done little to spook investors. That’s because those losses were expected as part of a strategic comeback plan engineered by Ralph Lauren CEO Stefan Larsson, who took over back in November. His grand plan also includes reducing turnaround times from design to shelves and to focus on Ralph Lauren’s core brands – initiatives that he thinks will generate roughly $180 million to $220 million in annual savings. That and closing about 50 stores should have Ralph Lauren returning to its fiscal glory in no time.

 

Apple/Google Fiscal Smackdown; Michael Kors Isn’t Down or Out!; Ya-Who is Suing Tech Giant?

Heel-nipping…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

It was bound to happen. Or was it? In any case, Google’s parent company Alphabet reigned supreme, albeit briefly, as the world’s most highly valued company, just edging out Apple. It happened when shares of Google’s parent company Alphabet jumped, giving it a market valuation of $533.4 billion. That figure narrowly pushed aside Apple’s market cap of $532.7 billion. But Alphabet still deserved that boost, if only for just a moment, seeing as how it nailed its earnings. Revenue for Alphabet jumped almost 20% to $17.3 billion while analysts didn’t even expect Alphabet to get past $16.9 billion. The company also took in a profit of $8.67, once again beating expectations of $8.08. Those earnings were fueled in large part by its mobile ad sales figures. It was news of those fabulous earnings that sent shares of Alphabet up 4.2%, and even hitting an all-time high of $784.77, which then caused its market cap to slip past Apple. And then, just like that, it was over, as shares of Alphabet dipped leaving Apple to once again reclaim its spot as the world’s most highly valued company.

S-Kors!

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Michael Kors had a very good holiday season (in a backhand sort of way) judging by its recently released earnings. So just how good were they? Well, the company’s drop in comparable sales was much smaller than expected. Got that? So yeah, there was still a drop, it’s just that the drop wasn’t that bad. Phew. Those sales, by the way dropped only .9% even though analysts predicted Michael Kors would drop 4.5%. What a way to boost investor confidence. Sort of. But it’s still good, even in that ironic kind of way, because investors were starting to wonder if Michael Kors had the capacity to grow any more, or did it already go as high as it could go way back when? Naturally, shares jumped a whopping 19% on the very exciting, very un-disappointing news and gave those shares their biggest one-day percentage gain in two years. Company revenue also picked up by 6.3% to $1.4 billion, beating predictions of $1.36 billion. Profit, however, fell to $294.6 million, from the $303.7 million it posted at the same time last year. The company  added $1.59 per share, but once again, analysts only expected $1.46 per share.

Ya-who?

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As if Yahoo didn’t have enough problems, now the tech company is facing a nasty lawsuit. The suit claims, among many other things, that Yahoo was biased against men – specifically, the company managers that govern the “Media Org.” The former employee also took issue with the company’s QPR – as in Quality Performance Review charging that the ratings system favored women. But wait – there’s more. The lawsuit then charges that Yahoo didn’t give adequate warning in the wake of mass lay-offs and violated the WARN Act. The WARN Act is a law requiring companies to give 60 days notice prior to mass lay-offs.  The lawsuit is being brought by ex-Yahoo employee Gregory Anderson. Anderson worked at Yahoo for four years and served as an editorial director. Apparently, he was part of a large group of people – 600 at that – who were laid off around the same time as him. So what’s Anderson hoping to get out of this, should he miraculously prevail against an immensely powerful and influential company? Well, the usual unspecified damages, back pay and benefits, plus $500 for every single day where he was entitled to receive warning about impending mass lay-offs. Hmmm, I wonder what the other 11,000 employees who were laid off between 2012 and 2015 will do if Anderson actually wins? Naturally Yahoo did not comment on the lawsuit. But you know what it will comment on? It’s earnings, which came out today and once again, more mass lay-offs are coming down the pike.

Bling it On: Tiffany’s Earnings Shine; Michael Kors Earnings Do Not Shine: Did Someone Say Snapchat IPO? Sort of.

You paid how much?!

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Image courtesy of MR LIGHTMAN/FreeDigitalPhotos.net

Shares of Tiffany & Co. shot up over 12% to $95.68 – the most in almost six years and, well, why not? After all the high-end bling company scored some epic digits in its latest earnings report, proving once again that people really do like expensive jewelry. I mean, was it ever even a question? Even though the declining euro against the dollar seems to be messing with everybody else’s earnings Tiffany & Co. seemed to emerge from the quarter virtually unscathed. Sadly, I was not the recipient of any high-end Tiffany & Co. pieces lately, but plenty of other lucky consumers were as it was the high-end collections that drove sales for the luxury retailer this past quarter. Those pricey accessories took in $962.4 million in revenue, with profits of $104.9 million and 81 cents per share. Analysts only predicted 69 cents per share. Sort of impressive, except that last year Tiffany & Co. pulled down $1 billion in revenue with $125.6 million in profits and 97 cents per share. Those shares, by the way, are down 20% for the year. But considering that the company just increased its forecast, those stock prices might be making a comeback.

Going down down down…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Unfortunately for Michael Kors, his fashion company took a nasty beating over the declining euro. But it wouldn’t be right to blame all the company’s bad earnings on the strong dollar as other factors also caused the company’s stock to plunge. While it may be hard to believe, it was just a few months ago that the stock hit an all time high of $97.60. Today, however, the stock is teetering at just under $46, its lowest point since December 2012 when it first made its IPO. Besides the strong dollar, same store sales were down a very uncool 6%. That may not seem like such a big deal but for Michael Kors it’s huge, especially when you take into consideration that the retailer also reduced its earrings outlook. Coach and Kate Spade are definitely giving Michael Kors an unwelcome run for its money, as well. When the dismal earnings for Michael Kors were announced, though, those two companies also saw their shares take a beating, as investors wondered whether bad earnings for fashion companies would be trending. Another culprit behind Kors’ earnings was Apple. No joke. While accessories tend to be hot sellers and profit drivers for companies like Michael Kors, the Apple watch is putting a major chink in those sales. After all, if you’re already spending that kind of cash on your wrist, why not have an Apple watch perched there?

Bubble burster…

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Image courtesy of arztsamui/FreeDigitalPhotos.net

Is there an IPO on the horizon for messaging app Snapchat? Maybe. Except CEO Evan Spiegel declined to elaborate on some key details during an interview with Re/code’s Kara Swisher and Walt Mossberg. For instance, the 24 year old founder wouldn’t even drop an itty bitty hint as to when Snapchat might make its big ticker debut. Speigel also dished out his thoughts on several other topics including his feelings that our current tech bubble is going to burst. Which is informative and all but really, when’s this Snapchat IPO coming at us? With 100 million users sending out around 700 million pics a day, the company has picked up funding and is valued at around $10 billion to $15 billion – depending on whom you ask, of course. But about that Snapchat IPO…

Coach Goes Shoe Shopping; Bitcoin of a Breach;

Well-heeled…

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Image courtesy of biosphere/FreeDigitalPhotos.net

Luxury handbag and accessories maker Coach (COH) went shoe company shopping to go with all its merchandise and decided to settle on $530 million worth of Stuart Weitzman shoes. Coach announced this morning that it’s buying luxury shoe company Stuart Weitzman, which was/is actually owned by private equity firm Sycamore Partners LLC, who is getting $530 million in cash for the company. But if all goes well, in that Stuart Weitzman hits its revenue goals in the next three years, Sycamore stands to gain another $44 million – a win/win for all. In 2013, the footwear maker pulled in $270 million while Coach has been undergoing some growing pains in the last couple years as it struggles to compete with trendy rivals Michael Kors and Kate Spade. Shares of Coach rose $0.46 in pre-market trading which can only mean one thing – Wall Street is totally into the purchase.

Oops! It happened again…

Image courtesy of Victor Habbick/FreeDigitalPhotos.net

Image courtesy of Victor Habbick/FreeDigitalPhotos.net

Bitstamp, Europe’s top bitcoin exchange had to put the kibosh on services after 19,000 bitcoins went missing. In case you were wondering…which I know you were, that’s over $5 million. No withdrawals and no deposits (which probably won’t be an issue) can be made with Bitstamp as of now, but it has reassured its customers that “their balances held prior will not be affected and will be honored in full.” Awww. that’s sweet. How very responsible and conscientious. Sort of. Apparently the exchange’s “operational wallets were compromised” which sounds like something out of a movie. The rest of the exchange’s bitcoin stash is kept in “cold storage.” And while that just sounds like the secret compartment in the back of your mother’s freezer, it’s actually a term to describe computers that aren’t connected to the internet but hold information. Like my Commodore 64 I had when I was eight.  The breach doesn’t quite have the stench of epic failure of the Mt. Gox breach collapse almost a year ago, which saw $650 million worth of the crypto-currency mysteriously disappear along with the collapse of the exchange itself.  However, the breach is still alarming enough to shake up the unregulated bitcoin universe. Bitcoins are, by the way trading in the $270 range, which is cute and all but nothing like its $1,240 peak, pre-Mt. Gox collapse, of course.

Stamp’d out…

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Image courtesy of anankkml/FreeDigitalPhotos.net

The United States Postal Service had its best fiscal quarter in seven years. In fact, this quarter was up 18% over the same time last year.  A very impressive feat considering that volume for mail is down 26% in the last ten years. But even with that 18% increase the USPS continues to operate at a loss. Those pieces of paper to which you affix stickers with a monetary value on it – you do realize I am talking about stamped envelopes, don’t you? – have gone down in volume by a third. Even though the price for stamps kept going up and up and up… the postal service still saw $17 billion in losses in the last decade. To help recoup some of those billions, the postal service consolidated over 300 processing facilities, cut 212,000 jobs and nixed 23,000 routes. And now expect snail mail to get even snail-ier with the average delivery time going up from 1.8 days to 2.1 days.