BlackBerry 10: The Game Changer?

This week Research In Motion unveiled its newest operating system, the BlackBerry 10, at RIM’s BlackBerry World conference. CEO Thorsten Heins showcased their new focus on fewer keystrokes and swipe gestures, and is replacing BlackBerry’s physical keyboard in favor of a new touch-based keyboard. RIM’s created a new OS to enable a simpler and convenient way for accessing information which they hope can compete against Apple’s iOS and Google’s Android. BlackBerry currently only has 6.7% of the market share of smartphones compared to their 2009 market share of 55%.

A severe problem with the BlackBerry is the lack of applications available on the phone. It will be extremely difficult for RIM to draw software developers from Apple’s highly lucrative App Store to develop apps for the BlackBerry. However, RIM is “subsidizing” certain app developers to create apps, such as Gamesloft, set to offer 11 games at launch. They are also improving their software toolkits to make the task of creating apps simpler.

RIM used to be synonymous with smartphones, but is now severely behind. Clearly, investors do not believe that this phone will be enough to revive RIM back to its glory days, and RIM will need to push developers into creating a smartphone that can truly compete against RIM’s rivals. Because its rivals are now well established, RIM needs a revolutionary phone and the BlackBerry 10 currently does not seem to be enough.

-- Evan Wang

Violence Is Not The Answer

If the recent May Day protests are any indication, the Occupy movement is alive and well. As a voice against economic inequality, it remains a vital part of democracy, but some of its offshoots seem to support violent approaches rather than peaceful ones. Nevertheless, if the movement wishes to consider itself a valid voice in the stream of political dialogue, it must make every attempt to disassociate itself from violent offshoots.

In an attempt to merge its goals with the labor movement, Occupiers called for a General Strike for May 1^st. However, rioters using black bloc tactics to incite violence and the destruction of property overran some of the protests, particularly those in Seattle. In addition to apologizing for any of the violence incurred—whether or not condoned—the movement should attempt to prevent such actions from occurring proactively. After all, violence weakens the voice of the peaceful activist.

If the Occupy movement wants to regain what was lost of its credibility, it needs to make every attempt to dissociate itself from any further violence perpetrated under its banner. While peaceful protest remains a vital and constitutionally granted part of the American political system, violence is not.

-Patrick Malanga

Facebook IPO: A Little too Late?

With May 18th set as the official date for the IPO of Facebook, people are thinking the timing could not be more off. The latest earnings report showed a 7.5% decline from the previous quarter, and major brands are becoming skeptical of the value Facebook's ads provide them. All of these signs may create obstacles at an extremely inconvenient time: 3 weeks before the social networking giant's historic IPO.

When any company prepares for an IPO, it is essentially trying to market itself by building buzz for the few months leading up to it. In Facebook's case, it is trying but the results are not favorable. The last earnings report before an IPO is the last chance to give potential investors a look at hard numbers that can ultimately influence their investment decision. Thus, it is extremely important to show growth, but Facebook instead showed a 7.5% decline from the previous quarter. Facebook shrugged this off as just being seasonal trends, which may be an unsubstantiated excuse. If this really was a seasonal trend and Facebook was expecting it, why did they choose to IPO right after the slowest part of the year?

Had the IPO been set last fall, Facebook may have seen much greater success. During that time, Facebook was generating bigger profits and their was much excitement towards the future of Facebook. The earnings report at that time would have also shown positive numbers.

In addition, advertisers are becoming increasingly agitated since Facebook provides very few ways to measure the success of its ads. Cookies, which track the viewer's online action after seeing ads, are not allowed. The only numerical value given to advertisers the number of "likes" and "impressions" on the ad. Despite this, many companies like Unilever and Proctor and Gamble plan on ramping up their ad spending on Facebook, showing positive signs. Advertising on social networking sites is still relatively new, and companies will have to wait before they can figure out its true value in terms of the sales it brings.

Simply put, timing is everything, and Facebook waited too long.

-Smit Purohit

New Treasury Security

The Treasury Department is set to choose whether to issue floating-rate debt for the first time in later this week. Unlike other Treasury instruments which have fixed interest rates, floaters issue coupons that move higher or lower depending on the bond market. Analysts believe that the Treasury will agree to issuing floaters which will mark the first addition in 15 years of a debt instrument to the Treasury’s arsenal. 

This likely move comes at an unusual time as analysts predict that interest rates cannot fall much further. This pits the Treasury on the opposite side of households and corporations who are trying to lock in record-low interest rates. Nevertheless, from the Treasury perspective, it has validity. The floating rate notes would not necessarily increase government’s exposure to volatility to short-term interest rates. The Treasury is already exposed to short-term interest rate swings since they issue new bills weekly. By selling 2-year floaters, the Treasury can decrease the number of 3-month bills issued weekly thus the Treasury will need to conduct less auctions. Experts expect the demand for this security to be very high as potential investors like financial institutions, money market mutual funds, and state and local governments are looking park their cash in high-quality, safe assets. 

- Ravi Tamboli

Amazon to Tax Sales in Several States

Amazon agreed to begin taxing sales made in Texas starting in July of this year and is on track to collect sales taxes in 12 states by 2016. This goes against Amazon's adamant policy of making tax-free sales, a feature that has made it popular among online customers wishing to save a little extra money. According to the law, companies do not have to tax sales made in states where they lack a physical presence. However, it is unclear whether strengthening its relations with state governments will cause a consumer backlash and hinder sales.

This move comes as a strategic play on Amazon's part. Adding warehouses in various locations impacted its sales revenue in the first quarter, increasing it by 34%. Currently it faces opposition by states when trying to build additional cost saving shipping warehouses. In exchange for permission to build new facilities in Texas, Amazon agreed to collect taxes.

This trend is expected to continue for the next few years, with Amazon reaching deals with several states. This has the potential to hinder its sales. Right now, Amazon is betting on the idea that additional facilities will increase profits more than a consumer backlash would hurt them. If they are proven to be wrong, they can expect to see struggling years ahead, as they lose the competitive edge that has made them unique in the online retail business. Consumers, if forced to pay taxes either way, may change online retailers, hindering its growth. However, if Amazon's play pays off, they may see increased efficiencies, better relations with states, and more growth.

-Smit Purohit

FS UPCOMING EVENT

Semester Wrap Up: Financial Jeopardy

Date: Thursday, May 3rd, 2012
Time: 12:30 pm - 1:45 pm
Location: Tisch 200

Join the Finance Society as we wrap up another great semester with a friendly (but competitive) game of Financial Jeopardy. Bring some friends and form a team to compete with the E-board’s winning team from last year. Winners get a prize!

Starbucks Ready for Huge Growth

Oh Starbucks. There's always those people who make fun of Starbucks lovers saying, "I'd never pay 5 bucks for a cup of coffee!" and, "What does a 'tall' even mean?" But despite these critics of one of the largest coffee brand in the world, there exists millions of people willing to dish out those 5 dollars because it is the little things in life that one truly appreciates. Starbucks has created its culture to do just that and please tired customers in the morning with sweet and energetic drinks.

Furthermore, many of the large corporations we hear about all the time, Apple and Starbucks being two of them, have begun realizing potential in Chinese markets. With recent expansion into China, Starbucks has been able to tap into a new market of millions of people. It plans on opening 400 new stores in the China/Asia Pacific region, which doesn't include what is already existing there. Even if, for example, 10% of China is willing to pay for a Starbucks cup, that's already over 100 million new people. Besides expansion into China, Starbucks also started diversifying to gain market power by selling juice, liquor, and its newest success the K-Cup.

Other signs of long term growth are apparent as well. Starbucks has given optimistic guidance towards its third quarter results, saying that its Tazo Tea will generate billions in revenue and the K-Cups will add close to 3 to 5 cents of earnings per share due to increased demand of them. It opened a total of 176 stores the past quarter for a grand total of 17420 stores worldwide. They reported income from China/Asia Pacific of only 69.5 million, but because of the new addition to stores, this number is likely to increase by several hundred million going into the next year. Also, the fact that they are able to pay dividends, which may be small, indicates that they are financially set for the near future.

And the last reason I believe Starbucks will grow is because now we can all buy Starbucks at Disney theme parks! It aims to open 6 new stores that will blend into Disney's themes and be noticeable to vacationers near the entrance of the park. Food prices at amusement parks are already overpriced, and since Starbucks is notorious for expensive coffee, we can only imagine how much a cup of joe will cost in Disney. Coupled with the price will be high demand from many tired parents from the previous day's adventures in Disney. If Starbucks becomes successful in Disney theme parks, it can then look to expand into other theme parks across the nation and even worldwide.


By Kunal Agrawal