Divided They Fall at United; Puerto Rico’s Fiscal Plans Fall Short; Barnes & Noble is Singing the Fiscal Blues

Who me?

Image courtesy of  jesadaphorn/FreeDigitalPhotos.net

Image courtesy of jesadaphorn/FreeDigitalPhotos.net

The airline United is anything but these days as honcho Jeff Smisek ducked out of the company he had been helming, along with two other executives. Apparently, it’s because of a Port Authority investigation that’s in full swing stemming from some events in 2011 that resulted in the “chairman’s flight.” The “chairman” refers to former Port Authority chairman David Samson, who managed to finagle United to offer twice weekly flights from Newark airport to Columbia, South Carolina. While I’m sure Columbia, South Caroline is a fabulous place, that particular flight route was initially deemed unprofitable. So what made the route become profitable all of a sudden? Coincidentally, David Samson’s weekend home is located there and that flight makes for an awfully convenient commute. See where I’m going with this? But the burning question is if those flights were a sort ahem bribe from the airline or a shakedown by Mr. Samson in exchange for some investment cash and other dispensations from the P.A. That all remains to be determined. David Samson already resigned in 2014 after a probe began over intentional lane closings on New York’s George Washington Bridge. Did I mention Samson was a close confidant of Chris Christie. Just saying. Days after stepping down, the Newark-Columbia route was shut down. I guess it wasn’t profitable anymore. As for Smisek, well he still walked away with $5 million and another $3.5 million in stock.

You debt-or believe it…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Puerto Rico thinks they finally have a plan to fix all that fiscally ails them. To address the territory’s $72 billion debt, a panel put out a five year plan to restructure $47 billion of it. With bondholders left to pick up the remainder, Puerto Rico will still be left with a $14 billion financing gap between 2016 – 2020. Lucky bondholders. Debt from the power, water and sewer companies is not included. The plan includes many reforms including a lot of cuts to education and teachers’ pensions. Why education is always the first to get spending cuts is weird since kids aren’t the ones responsible for creating debt. Know what I mean? Also, the plan calls for exploring public/private partnerships for hospitals, highway, building and transit authorities. The plan also wants to explore changes to the tax laws because, after all, why should the United States be the only place that needs to overhaul its tax code? As with any iffy fiscal plan, no timeline has been set which, in my most humble opinion, doesn’t bode well. Even then, the plan still needs approval from legislature and the governor.

What’s in store…

Image courtesy of adamr/FreeDigitalPhotos.net

Image courtesy of adamr/FreeDigitalPhotos.net

Barnes & Noble, though it may be the largest book store chain on the planet, still took a big old $35 million hit on $939 million in sales – worse than the year before when it saw a loss of $28.4 million Hey, the bigger they are the harder their sales fall. But who knows? Maybe with new CEO Ron Boire taking the reigns – as of yesterday – maybe there’s still hope for the embattled bookseller. These new earnings reflect B&N’s spin-off of its college-division, 600 stores and the Nook, B&N’s shaky attempt at putting its electronic stamp on the e-reader industry. The bookseller just can’t seem to make strides against Amazon. Well, to be fair, most companies find Amazon to pose quite the challenge. In any case, B&N lost 68 cents a share when last year at this time it only lost 56 cents a share.  $17 million of B&N’s loss was from the Nook and this was B&N’s fifth straight quarter of losses, sending shares down today over 16% at one point today.  But B&N has a plan, so they say for a new store prototype. Those stores will be considerably smaller and carry a larger assortment of merchandise, including toys and games, which incidentally saw a 17.5% increase for the chain.

Volvo’s Heads for U.S. Shores; Etsy’s Coming Unglued; Apple Looks for Greener Pastures…in China?

They’re boxy…but safe…

Image courtesy of  Vichaya Kiatying-Angsulee/FreeDigitalPhotos.net

Image courtesy of Vichaya Kiatying-Angsulee/FreeDigitalPhotos.net

Volvo’s got big news. Yes. Volvo. Big. News. The car once known for its safety record, not to mention, its boxy style, is setting up shop on American shores. The Swedish auto manufacturer, which is now owned by Chinese company Geely Holding Group, will be plunking down $500 million for a facility in South Carolina.  Apparently, the master plan to is to rekindle the love Americans once had for the car, which has seen its market share in the US dwindle steadily. In fact, the new American Volvo plant is expected to be able to roll out some 100,000 cars a year – which seems a bit high considering the car maker only managed to sell about 56,000 of them in the last year. The new plant is expected to create some 2,000 jobs and you can start driving your American-made Volvo by 2018. But the move has got a lot of people scratching their heads as to why Volvo opted to go to South Carolina as opposed to Mexico where it’s so much cheaper to produce…well, everything. But South Carolina doesn’t seem to be complaining about it and apparently it’s the place to be as the state is home to some 250 car makers. So welcome to America, Volvo.

Not so crafty after all…

Image courtesy of  franky242/FreeDigitalPhotos.net

Image courtesy of franky242/FreeDigitalPhotos.net

It made for a bedazzling IPO, but Etsy’s glitter is not gold as a Wall Street analyst said that as many as 5% of goods on the crafty website could be fakes. So just how many items is that exactly? About 5 million, give or take. Can you guess where the stock went after that damning little analysis? The stock made its much-heralded IPO opened last month at around $30. As I write this, the stock is hovering at $20.67, down about 9% just from today.  Researchers over at Wedbush say that NFL, Louis Vuitton, Disney and Chanel (to name, but a few) could theoretically make some very ugly copyright infringement cases against the online retailer. That’s more than enough to send investors running. Even though analysts say there’s a chance Etsy could avoid getting directly blamed, the issue of fakes could still make big, bad, fiscal problems by causing reduced fees, the big Etsy money generator. As for that stock price, which had many wondering if it wasn’t just a bit too high to begin with, well Wedbush seems to think that the stock is going to come down a lot and settle in to a more realistic price point of $14 per share.

Cupertino, it ain’t…

Image courtesy of foto76/FreeDigitalPhotos.net

Image courtesy of foto76/FreeDigitalPhotos.net

Apple is teaming up with the World Wildlife Fund and has plunked down an undisclosed amount of money for…forests…in China. As part of an environmental initiative on Apple’s part  – not necessarily China’s – the company behind the iPhone and iWatch wants to “power all its operations worldwide on 100 per cent renewable energy.” That is so friggin’ noble.  As you sit there playing Candy Crush on your iPad, the powerhouses behind that electronic marvel will be busy protecting about 1 million acres of forest in an effort to responsibly manage a geographical area that houses all kinds of useful natural materials that everyone needs.  And it’s all so ironic considering that China isn’t exactly a beacon of light for environmental causes. In fact, it holds the dubious distinction of being the number one environmental offender in the world. But since most of Apple’s products are manufactured there anyway, it made sense to take part in such an endeavor. Well, sort of.