That’s Sue Bad! Wells Fargo Faces City Lawsuit; Disney’s Enchanted Earnings; Sprint One Step Forward, Two Step Backward

You don’t say…

Image courtesy of Stuart Miles/FreeDigital Photos.net

Image courtesy of Stuart Miles/FreeDigital Photos.net

Try not to get too emotional now, but Wells Fargo is getting sued by the city of Los Angeles for…get this...fraudulent business practices. I know. Hard to believe. According to City Attorney Mike Feuer, “The largest California-based bank had a culture of high-pressure sales that pushed employees toward “fraudulent conduct.” Apparently some of the bank’s employees allegedly opened unauthorized accounts, misused confidential information and charged fees all in the name of sales. Wells Fargo is also accused of failing to notify its customers that their information was breached. Customers were charged fees, many of which ended up in collections and damaged their credit reports. Unauthorized accounts were opened using money from existing accounts. Wells Fargo says that it did have a few misbehaving employees in their midst who were either fired or disciplined for engaging in such appalling practices. The lawsuit is seeking $2,500 – $5,000 per violation and an end to these practices. A statement from the bank said, “Wells Fargo’s culture is focused on the best interests of its customers and creating a supportive, caring and ethical environment for our team members.” But when asked directly whether unauthorized accounts were opened, the bank was conveniently mum.

Charming…

Image courtesy of jscreationzs/FreeDigitalPhotos.net

Image courtesy of jscreationzs/FreeDigitalPhotos.net

They don’t call it the happiest place on earth for nothing. Disney came out with its second quarter earnings which were up a very magical 10%. Much of that was from its parks and resorts, which were up 24% alone. It helps that Disney not so charmingly raised its prices on them. Shanghai Disneyland, scheduled to open next year, ought to add a little more drama in the fiscal quarters following its debut. Profit for the company came in at $2.1 billion and $1.23 per share. Analysts only expected $1.11 per share while last year the House of Mouse took in $1.9 billion. There was a downside. Sort of. ESPN’s carrying fees ate into a lot of that profit but because sports games are so insanely popular, Disney still managed to make some cash off of them. But no earnings report since 2014 would be complete without mention of the surprise runway hit movie from the magical kingdom of Arendelle. “Frozen” continues to be a constant source of fiscal joy as toys from the film keep flying off the shelves. Even though Disney has yet to repeat the magical quarter from whence “Frozen” was released, it is hoping “Avengers: Age of Ultron” will facilitate that, as its release of “Cinderella,” while taking in a charming $495 million, was no “Frozen.” But then again, what is?

Are you listening?

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Perhaps you recall Sprint’s recent promotions to get customers to switch over from Verizon and AT&T? One involved cutting bills from other carriers in half. I recall chainsaws being used in these commercials. Then there was the promotion where Sprint even offered to eat the cost of customers’ early termination fees from the aforementioned carriers. Well, those tactics almost paid off. Sprint picked up 1.2 million new subscribers in its fourth quarter, bringing its total subscribers to 57 million, and keeping it comfortably perched at the number three spot amongst wireless carries. It just barely beat T-Mobile. But the math didn’t quite work out so nicely and Sprint also took a loss of $224 million losing 6 cents per share. It’s particularly harsh since Wall Street was only expecting a loss of about 4 cents. Revenue was down $8.28 billion when analysts expected $8.5 billion and was a 7% drop from last year. So I guess the promotions are over. Or will be.

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Standard & Poor’s Overrated Ratings Settlement; Spirited Numbers for Whiskey and Bourbon; Who Will Radio in on RadioShack?

Poor ratings system…

Image courtesy of suphakit73/FreeDigitalPhotos.net

Image courtesy of suphakit73/FreeDigitalPhotos.net

It’s shaping up to be an expensive week for Standard and Poor’s, the ratings company owned by McGraw Hill Financial Inc. After two years of legal wrangling, where the Department of Justice accused the S&P of defrauding investors, S&P agreed to pay for $1.5 billion in a settlement. According to the lawsuit, S&P made sub-prime mortgages sound way better than they actually were, generously over-rating them during the height of that hard-to-forget financial crisis of 2008. One of the juicy little highlights from the lawsuit, as taken from an excerpt from an instant-messaging exchange between two of its analysts, goes a little something like this: “It could be structured by cows and we would rate it.” So what were they trying to say about our friends in the bovine community? Hmm. While S&P gets to avoid admitting actual wrongdoing, as per the terms of the settlement, it will be shelling out $687.5 million to the DOJ and another $687.5 million to 19 states and the District of Columbia. S&P said the DOJ was only coming down on them because it downgraded the US sovereign debt from AAA all the way down to AA+, but the DOJ says NOT! In a separate lawsuit, S&P  reached a settlement with pension fund, Calpers (California Public Employees Retirement System), also a victim of S&P’s too-generous sub-prime mortgage ratings system.

I’ll drink to that…

Image courtesy of artur84/FreeDigitalPhotos.net

Image courtesy of artur84/FreeDigitalPhotos.net

It’s been a very good year for bourbon and whiskey as exports of these spirited spirits topped the $1 billion mark. Even here in the US, sales for Kentucky bourbon and Tennessee whiskey grew, with revenue for both rising 9.6% to $2.7 billion and 19.4 million cases of the stuff being scooped up. 19.4 million cases? Who are you people drinking all this? But it’s the premium selections that are really hitting it big with drinkers…er, consumers, as revenue in that category is up over 19%. All this while beer seems to be experiencing a decline on the whole by 4% in the last five years, with Budweiser losing 28% for that same time frame, despite those super Superbowl ads. Craft beer, however, tells a different story as that tasty category is experiencing an uptick. Some analysts are even thinking all these increasing numbers come courtesy of millennials, who seem to prefer high-quality spirit versus the stuff their parents enjoy. By the way, it should be duly  – and might I add, fondly – noted, that Kentucky produces 95% of the world’s bourbon supply. Go Kentucky!

Shacked out…

Image courtesy of cool design/FreeDigitalPhotos.net

Image courtesy of cool design/FreeDigitalPhotos.net

Rumors are swirling as to who will emerge and scoop up RadioShack as bankruptcy looms near for the company that was just never able to compete with the behemoth that is e-commerce. The New York Stock Exchange had suspended trading of the 94 year old company on Monday, with shares tanking down to $0.14 a share in after hours trading. So will it be Sprint who decides to take up some of RadioShack’s retail leases? The company has 4,300 stores in the US, alone. Or will Amazon add the chain to its arsenal and increase its brick-and-mortar presence in the world? Word on the street is that Jeff Bezos might do just that as a way to showcase some of the gazillions of products that Amazon has to offer, for the right price, of course.