Game Over for Gawker; Yelp-ing With Joy; Election Triggers Record Gun Sales

 

Over and done with…

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The invasion of privacy lawsuit that forced Gawker into bankruptcy has finally come to a close. Well, almost. All Gawker needs to do is write a check to Hulk Hogan for $31 million, which is actually small potatoes considering that the original judgement against Gawker was for $140 million. Hogan’s suit was helped by the fact that PayPal co-founder Peter Thiel secretly financed the suit. He’s no fan of Gawker founder Nick Denton ever since he outed Thiel back in 2007. Of Hogan’s lawsuit, Thiel said, “I saw Gawker pioneer a unique and incredibly damaging way of getting attention by bullying people even when there was no connection with the public interest.” He makes a valid point. In any case, Gawker was forced to file Chapter 11 bankruptcy and the company’s assets were sold in a government auction to Univision for the bargain price of $135 million. But I guess that’s what you’d call payback.

Surprise!!!

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Yelp had a nice surprise today in the form of a profit. And who doesn’t like a surprise like that?  However, with that profit came the news that the company would be saying goodbye to 175 employees – 4% of its workforce – since the company has been unsuccessful in its attempts to expand across the pond. Yelp, which reviews restaurants and other assorted businesses, makes its money through advertising, of course, and also through other services like online reservations. The company’s third quarter net income was $2.1 million, earning the site 22 cents per share, even though experts predicted a 3 cent per share loss. The company’s revenue rose by 30% to $186.2 million, again beating expectations of $183 million. That was a major change from Yelp’s year-over-year profit loss of $8.1 million and 11 cents per share. The company saw a 29% uptick in reviews which brought its total customers to 115 million users.

Oh shoot!

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Leave it to the presidential race to send gun sales soaring. Both Sturm-Ruger and Smith & Wesson have been reporting months of record gun sales. In the meantime, FBI background checks to purchase firearms rose 16% to 2.3 million this year from last year’s 2 million during the same period. And you can expect background checks to set a new record for 2016. How’s that for a correlation?  Anticipating new gun-control regulations, gun enthusiasts are stocking up as the second amendment figures prominently in this election. As a result, Sturm-Ruger not only experienced a sales surge back in the summer, but saw net sales in its third quarter jump 34% 10 $161.4 million as consumers loaded up on such favorites like concealed-carry pistols and AR-15 rifles.  Profits also went up for the company 66% to $20 million and $1.03 per share. Sturm-Ruger took all possible political outcomes into consideration both in the White House and the Senate.  While Hillary Clinton hopes to bring back the assault weapons ban, Donald Trump wants to tweak gun legislation and focus on healthcare for the mentally ill instead. The irony is that Sturm-Ruger sales went up following incidents involving gun violence that led to politicians demanding stricter gun-control laws. If gun enthusiasts feel that it will be more difficult to purchase guns in the future, they stock up now. During Sturm’s second quarter earnings call, the company implored its customers and “all freedom-loving Americans to take action in support of the Second Amendment.” Sturm-Ruger pledged $2 to the NRA for every gun it sold and offered to match all donations up to $5 million. Incidentally, despite record gun sales, shares of both Smith and Wesson and Sturm-Ruger had been down 11%. Look for Smith & Wesson’s earnings December 6.

 

Google Exec’s Royal Pay Day; Why Chipotle Wouldn’t Serve Lunch Today; Yelping Early on Earnings

Does that include the corporate jet?

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Sundar Pichai may not just yet be a household name – something that strikes me as totally weird – but remember that name. He is, after all, one of the highest paid CEO’s of a publicly traded company, and he just scored a record $199 million Google (GOOG) stock award  – the highest ever…for a Google exec. This not-so-minor tidbit was revealed following a February 3 regulatory filing where Pichai disclosed that he received…wait for it…a whopping 273,328 class C shares of Google. Google, by the way, closed today at 682.74. You do the math. Those shares are set to vest quarterly – as long as Pichai manages to last at Google through 2019. And why wouldn’t he. With his last stock award worth about $250 million, Pichai’s Google stake stands at a staggering $650 million. Although, to be fair, tech stocks did take a hit today, with shares of Google parent company Alphabet falling – if only just by 2%. But I suspect Pichai will still come out on top. So perhaps you might want to check Google’s job board. Diane Greene, who heads Google’s cloud business, snagged $42.8 million, while Google CFO Ruth Porat will be taking home $38.3 million in equity.

Muy bien…

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You, like so very many others, probably didn’t get your Chipotle lunch fix today. And that’s not a bad thing. Stores were closed for the better part of the day as approximately 50,000 Chipotle employees gathered in 400 locations, ranging from movie theaters to conference centers, to discuss the Denver-based company’s food safety problems that have been plaguing sales at its 1,971 eateries. Chipotle CEO Monty Moran’s big plan for today’s gathering was to go over new procedures for food safety. That was probably a really great idea since an E. coli outbreak in October and a norovirus in December caused the company to temporarily shutter 43 locations, not to mention incur some brutal fiscal declines.To be fair, Chipotle’s 30% sales decrease are nothing compared to what happened to all those people who got sick. The fact that a Federal Grand jury issued a subpoena for a criminal investigation only adds insult to fiscal injury. But at least the CDC said that the outbreaks seem to be over. I’ll believe it when I hear that CDC employees themselves start ordering Chipotle’s legendary burritos. But if you don’t need those kind of assurances and are ready to chow down on a late lunch/early dinner of soft flour tacos, then bon appetite! Chipotle re-opened at 3:00 pm today.

Early reviews are in…

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Yelp’s earnings were released today –  a bit too early, mind you –  and brought with it the news that Yelp CFO Rob Krolik, who joined the company in 2011, will be stepping down. He will either stay on board until the company can find a suitable replacement or until December 15. Whichever comes first. Weird, I know. In any case, Yelp posted revenues of $153.7 million, handily beating estimates of $152.3 million, and also gained 11 cent per share even though analysts expected the company to report a loss of 3 cents per share. Shares of the company, incidentally, were down in the afternoon. Go figure. If you have yet to post an opinion/review to Yelp, rest assured that there were still 95 million other people who did it for you, letting you know the all the good, bad and ugly about our country’s countless dining establish, both fine and otherwise. Yelp’s been on a fierce mission to battle the competition out there by diversifying its restaurant bookings, offering event management and even doing payments. That’s in a addition to the company’s plans for expansion beyond the U.S. And Yelp has no time to waste as shares of its stock have been going down since March of 2014, when the company hits its high of $97.25.

 

 

Wild Things at the ECB Conference; Google Gets Antitrust Slapped by EU; Smith & Wesson’s Shares Shoot Up

Think you’re having a bad day?

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Image courtesy of noppasinw/FreeDigitalPhotos.net

Mario Draghi, President of the European Central Bank just might be having an even worse day than you, this April 15. And he didn’t even have to file his taxes. As Mr. Draghi was speaking at a conference in Frankfurt, Germany today when a female protester literally jumped onto the table from which he spoke and threw a stack of papers and confetti at him screaming, “End ECB dictatorship!” Now folks have been known to take intense issue with what they consider to be measures that are just a bit to harsh for fiscally challenged European countries, especially Greece and Spain, but if I didn’t know any better, I’d say Ashton Kutcher was somewhere in the room telling Mario Draghi he’d just been punk’d. But…Ashton wasn’t there. Alas, if only the rest of the conference had been as exciting. Instead the ECB President went on to discuss the less riveting topics surrounding the state of the European economy, how it’s allegedly improving and that the $1.2 trillion quantitative easing program is apparently working. In case you were wondering just what on earth is quantitative easing, or QE, as the cool kids call it, it’s a super special type of monetary policy used when the regular one doesn’t seem to be working properly (the details of which I will not delve so as to maintain my audience). As for the protester, Josephine Witt, who managed to pass through multiple security checks posing as a journalist, she gleefully tweeted: “I would say, the #ecb ‘s security service is just as good as putins.”

Speaking of Europe…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Google’s not having the best day in Europe either. The all-mighty search engine is getting called out by the European Union for abuses of power. The EU is handing Google a “Statement of Objections,” with an antitrust complaint that accuses the company of favoring and promoting its own services and products over competitors in user search results and comparison shopping. Google has a 90% share in Europe’s search engine market and 35% of Google’s ad revenue comes from Europe. The United States also began a similar investigation but dropped it after Google graciously agreed to make some changes. The changes, however, weren’t enough for companies like Microsoft, Yelp, Expedia etc., who are happy about this probe since they feel that Google’s search engine dominance is making for a very uneven playing field. The EU is also investigating whether Google forces mobile device companies to use them and whether or not those companies are even allowed to tweak Android software.

Shoot ’em up…

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Image courtesy of Surachai/FreeDigitalPhotos.net

Firearms: Love ’em or hate ’em matters not when there’s money involved. Shares of gun maker Smith & Wesson saw a 13% increase on shares today as the company announced that orders for firearms are picking up.  In fact, the stock hit a high today of $14.75 and is up over 50% since the beginning of 2015. Last year the company took in over $626 million in sales, a record for the company. Even though sales aren’t expected to come close to that figure this year, Smith & Wesson is still expected to rake in between $546 – $550 million dollars –  and no one seems to be taking issue with that. Well, at least not on Wall Street.

Home Sweet Amazon-Serviced Home; Ben Bernanke Joins the Blogosphere; AG Settles Score With GNC

Is there anything it won’t sell?

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Image courtesy of renjith krishnan/FreeDigitalPhotos.net

Amazon has come out with yet another way to take your money. This time it’s through its new Amazon Home Services with over 700 home improvement service providers services at your fingertip, with verified reviews for added peace of mind. Plumbing problems? Too tired to assemble that new gym equipment? Don’t feel like vacuuming? No problem. Just log on and Amazon will make sure it all gets taken care of. Services are paid for via your Amazon account only after the project is completed. So why is Amazon’s home service offerings different from all others, like Angie’s List, Yelp etc.?  Perhaps it the comprehensive vetting process it conducts, including making sure service professionals are licensed, insured and have had their backgrounds thoroughly checked. But Amazon also offers a money-back guarantee charmingly called a “happiness guarantee.” Apparently, consumers also trust Amazon, giving an added incentive to use the ever-powerful e-commerce giant. To be fair, however, I too, once trusted Amazon. But then last month one of its vendors sent me a completely different set of fairy wings than the ones I ordered. Just sayin’.

Payback…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

The blogosphere just got a bit more crowded now that Former Federal Reserve Chairman Ben Bernanke joined the mix with his own blog for the Brookings Institute. He is, after all, its latest Distinguished Fellow in Residence of the Economic Studies Program. It’s very pish posh, indeed. The position, I mean. Not the blog. “Now that I’m a civilian again, I can once more comment on economic and financial issues without my words being put under the microscope by Fed watchers.” Which means he doesn’t have to be polite anymore and gets to say whatever he wants. For instance, Mr. Bernanke can use his blog for, among other purposes, striking back at the many critics he’s had over the years who took issue with his policies. Janet Yellen, who took over for him last year, does not get to have that kind of fun. At least for now. In today’s post, Mr. Bernanke graciously explains the reasons behind the low interest rates. By the way, he’d like you to know that it’s not necessarily because the Fed is keeping it that way – though there is some truth to that.

Whaddya mean there’s no ginseng in there? 

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Image courtesy of Getideaka/FreeDigitalPhotos.net

This time it is not a bank that has reached a deal with New York Attorney General Eric Schneiderman. GNC Holdings Inc. begrudgingly settled a lawsuit over its Herbal Plus products found at GNC, of course, but also at Target, Walmart and Walgreens. Apparently, it wasn’t at all clear that the ingredients listed on the outside of the bottles of the dietary supplements were actually present on the inside. Who would have thunk it? The presence of things like echinacea, ginkgo biloba, ginseng and St. John’s wort couldn’t be verified when the AG used DNA barcoding methods to test for them. That’s kind of a huge embarrassing problem in the $33 billion a year dietary supplement industry. Of course, GNC disagrees vehemently with the AG’s testing methods saying the “lawsuits are without merit.”  GNC, however, used its own internal test methods, in addition to third party independent test methods which, naturally yielded different results. Despite all that, the supplement company will now be using bar-coding methods –  just like the AG’s office –  beginning in the next 18 months, so that consumers will know for sure if there really is echinacea in that bottle they’re holding, conveniently labeled “echinacea.”

 

 

Smokin’ Earnings for CVS; Yelp Satisfies Craving by Scooping Up Eat24; Israelis Go Full Force On Corporate Cyber Attacks

Butt out…

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Image courtesy of Mister GC/FreeDigitalPhotos.net

CVS had some smokin’ good earnings even though it kicked the tobacco habit. As one of the largest pharmacies in all the land, CVS beat those fourth quarter estimates, and perhaps even shocked the tobacco industry, by earning a record $1.32 billion in profit and $1.21 a share. A year ago CVS pulled in $1.27 billion, tobacco and all. It was a big gamble, getting rid of cigarettes and its nicotine friends, since tobacco helped CVS pull in $2 billion annually. What may have contributed, however, to this quarter’s pleasing numbers was a super-combo of two very unique factors:  First, there are more insured Americans – who were previously uninsured – making up for lost times by getting all their prescriptions filled, and then some. Then there was that flu vaccine that proved less than useful against this season’s particularly nasty strain of the virus. Because the vaccine wasn’t as effective this time around, consumers were flocking to CVS to buy flu remedies causing a 13% increase in sales to $37.1 billion. Analysts only expected CVS to pull in $36 billion. So I guess, in some weird alternate universe, CVS can thank the flu. Sort of.

Can I get that to go?

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Image courtesy of Iamnee/FreeDigitalPhotos.net

Yelp is hoping to increase its presence in the food delivery arena by chowing down Eat24 to the very hearty price of $134 million. The two companies did some experimenting over a year ago and apparently it whet Yelp’s appetite to go full force on acquiring the online ordering engine. While Eat24 was only founded back in 2008, it already deals with 200,000 restaurants in 1,500 cities. Yelp will now compete with GrubHub –  who itself had a nifty little IPO debut back in April –  and is counting on its recent purchase to allow for a more streamlined approach to the online ordering experience. Sounds pretty tasty to me. Yelp currently has around 84,000 advertising accounts and, in case you were curious, it also has about a million restaurants listed with 135 million average monthly users dishing out their reviews, however unsavory they might be.

Bring it on…

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Image courtesy of chanpipat/FreeDigitalPhotos.net

Because Israel’s cyber-security is actually a matter of life and death for its citizens, it only make sense that it would lead the way in cyber-hacking defense. And since necessity is the mother of invention, it should come as no surprise that the latest defense mechanism to be used in the fight against corporate hacking – think Target, JPMorgan Chase, Home Depot, to name but a few –  is coming from Israel’s military. And hey, if you happen to make a few bucks on all the economic opportunities that come with protecting your peeps, then why not? Unit 8200, Israel’s elite intelligence division, has entered the cyber defense fray, launching its very own “cyber security” foundry called Team 8. With some help from investors like Google Chairman Eric Schmidt and Cisco, it’s safe to say (no pun intended, or maybe a little) that Team 8’s got some major street cred. Founded by former Unit 8200 member Nadav Zafrir, Team 8 bills itself as a “start-up for start-ups” (catchy, huh?).  No doubt Target, Home Depot and JPMorgan Chase are currently exploring their cyber-security options and licking their chops in anticipation of what Team 8 can do for them. Or not. Whatever the cost to implement the technology, it will still pale in comparison to the epic damage cyber hacks can cause. But I’m guessing if Eric Schmidt is throwing money at Team 8, then it’s probably worth it to have a go at the technology.