Will you be sat next to the love of your life or an obnoxious smelly person?

More and more companies are using social media such as Facebook to engage with their customers and potential customers.

KLM, the Dutch airline, has just introduced a new initiative which could make your next flight with them very interesting.

They are allowing their passengers to link their Facebook profiles to their check-in information.

This in effect means that when you check in you can view the Facebook profiles of other people on your flight who have agreed to show their profile.

If you like the look of them or think that they would be interesting to sit next to for the flight then you can choose a seat next to that person. KLM call it the “meat and seat” service.

A quick discussion in the office this morning showed opposing views on this one. Some thought that it would be a great opportunity to meet new and interesting people whilst others thought it would be a bit creepy for someone to select you to sit next to.

Either way, it’s certainly a novel approach by KLM in terms of integrating social media into a core function of their business.

Personally, I think it’s a great idea and I shall straight away set up a Facebook profile identifying myself as extremely overweight, opinionated and loud mouthed as well as suffering from severe personal hygiene problems.

With any luck that will mean that the seat next to me will be free and I can read the newspaper in peace and quiet…

The team here at ExP are now taking a break over Christmas and we’ll be back blogging in January but we will be posting on our Facebook page though and with no requirement to check into a flight, our Facebook page can be found here.

Thanks to all of you that read our blog and we’ll see you in 2012!

KPMG are into underwear and Deloitte are into shoes…

It’s a sign of the times but two of the UK’s highest profile high street shopping chains are in financial trouble.

La Senza, the luxury women’s underwear shop, has reportedly called in KPMG to help restructure the business.

Whilst some of the less professional male readers amongst you may well suggest that the first thing they should do is to undertake a reasonableness review of the lingerie brochures, the chances are that KPMG’s consulting work with La Senza will involve a lot more.

It’s possible that the retail chain will either get additional investment or perhaps more likely close a number of shops or even put the company into administration (this is where a company is controlled by an administrator who is independent from the directors and in effect decides for example whether the company can become a going concern again or whether it should be broken up or even liquidated)

Is it really a surprise though that the bottom has fallen out of the luxury underwear market?

With the onset of the recession many people are buying less luxurious underwear or simply making do with what they’ve got.

With the emergence of internet shopping there’s also the fact that the cost structure of these “bricks and mortar businesses” is significantly higher than retailers selling over the internet.

In simple terms, revenue is down but costs are still high. The end result is that a formerly profitable company has turned into a loss making business and La Senza is at risk of going bust.

Deloitte meanwhile have been appointed as Administrators of the shoe shop chain Barratts.

Barratts has nearly 200 shops in the UK and according to press reports Deloitte are said to be “working closely with suppliers to ensure the business has the best possible platform to secure a sale, preserve jobs and generate as much value as possible for all creditors.”

Whilst it’s not good news for the employees of La Senza and Barrats, I’ve got a feeling that unfortunately there will probably be more retail companies facing trouble on the high street in the near future.

Is it better to be loyal or disloyal?

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We’ve all heard of the big coffee chains such as Starbucks and Costa Coffee and with their growth over recent years it’s become more and more difficult for the smaller independent coffee shops to compete.

Over in Singapore though a novel approach to competing with these “coffee shop big boys” has just been introduced.

Lots of businesses have a “loyalty card” programme whereby people earn various points each time they spend money with a company. They can then use these points to buy various items with the company.

The giant Tesco supermarket chain for example has one of the largest loyalty card schemes in the UK whereby “Tesco points” can be used to purchase Tesco products. Most international airlines also have loyalty programmes such as Sky team and Star Alliance where the points earned can be exchanged for free flights.

Antic Studios, a creative agency in Singapore has just come up with a new concept and it’s a “disloyalty card”.

The aim is to help a group of 8 smaller independent coffee shops in Singapore develop.

The idea is that an individual picks up a disloyalty card at one of the independent coffee shops. If they then visit the other 7 independent shops they get their card stamped and can then return to the original coffee shop to claim their free drink.

It’s a novel way of smaller companies who are in effect in competition with each other joining together to create awareness of themselves and encouraging people to try them out instead of staying with the big guys.

Smaller competitors working together to create stronger competition against the big coffee chains – a nice idea and well worth discussing over a cup of coffee.

It’s really not me. It’s him…

It’s an exciting time in anyone’s career when they apply for a job. Unfortunately for a lot of people in today’s economic environment the chances of success in getting a job are not always that high.

I’m probably biased in my outlook though but for certain professions I think there will always be a demand and anyone that furthers their knowledge in the financial and business functions will be ahead of the game.

What about politics and agriculture though? And more to the point how important is your name in determining whether you get a good job or not?

There was a rather amusing mix up the other day when following Silvio Berlusconi’s resignation, Italy’s new government got a bit confused in its appointment of a new cabinet.

They contacted Professor Francesco Braga who is an expert in agriculture at the University of Guelph in Ontario, Canada and told him that he had been appointed as the new deputy agriculture secretary in Mario Monti’s new government.

This probably came as a bit of a shock to Professor Braga as although he’s an expert in agriculture he’s lived in Canada for 28 years.

He reportedly told The Toronto Star newspaper: “I thought, ‘Oh, my God.’ I replied to their email. Suddenly, there is a flood of emails from friends, foes and industry associations, all kinds of important players in Italian agribusiness, congratulating me. So I thought, ‘OK, it must be true.’”

Alas for Professor Braga though the appointment was meant for another Professor who is also called Franco Braga.

Now the second Professor Braga does in fact live in Italy but the interesting point here is that he is not an expert on agriculture as he is in fact a professor of construction engineering at Rome’s Sapienza University.

He had been recommended by Altero Matteoli, the previous infrastructure minister and to make matters even more confusing, he was not recommended for the agriculture post but was instead recommended for the position in infrastructure.

So in conclusion, the Italian economy was in turmoil and Silvio Berlusconi’s government were widely blamed for the problems.

A new government led by Mario Monti is being set up to hopefully bring some stability to the economy.

One of the new government’s first appointments was a deputy agricultural minister who they mistakenly thought was a Canadian agricultural professor but then it turned out that it was a professor of construction.

In summary then things appear to be all under control…

Paper or plastic – which is best?

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Money makes the world go around but does it matter if it’s paper or plastic money?

A few years ago if you looked in your wallet or purse you would probably have seen paper banknotes. Dollars, Euros, pound sterling and other currencies had paper notes of various denominations.

Today though there are 23 countries around the world that use plastic banknotes instead of paper notes.

Canada recently joined the list of plastic note countries and has just launched a plastic $100 note.

Why the switch to plastic notes though as after all the world has managed with paper notes for plenty of time. There are a few reasons for the switch.

Durability is perhaps the major one. The usable life of plastic banknotes for example can be up to 2.5 times longer than the traditional paper note.

There are also better security features on the plastic notes. Sophisticated holograms on plastic banknotes make it more difficult for counterfeit notes to be made.

So with all these benefits why don’t more countries use plastic notes?

On the downside of things, whilst the useful life is longer the initial upfront cost of production can be quite a bit higher with more complex banknote production facilities required.

Some people have also said that plastic notes are more slippery and therefore more difficult to count large amounts of money. To me though this wouldn’t necessarily be a major problem if the large amounts of banknotes that were being counted were mine!

Whichever way you look at it the chances are that over the next few years more and more notes will be plastic rather than paper and for any of you that have pulled a pair of trousers out of the washing machine and found a soggy broken paper banknote in the pocket this can only be a good thing.

Does $300m mean bigger is better?

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Here’s an interesting development. MP3 players such as the iPod Nano are getting smaller and smaller but due to advances in technology the sounds that they emit are getting better and better.

Whilst music fans are appreciating the portability of the smaller MP3 players together with the flexibility of having quality music players on their phones there’s a trend at the moment of the headphones getting bigger and bigger.

It used to be bigger players and smaller headphones but now it’s the other way around.

As is often the case it’s the fashion conscious younger generation that are driving the change.

HMV, the UK chain of music shops where people used to flock to to buy the latest CDs has unsurprisingly seem a dramatic drop in sales of CDs as more and more people are now buying their music online via Apple iTunes for example.

There is some short term hope for HMV though at least in terms of their sales of headphones and it’s been reported that their sales from headphones and other technology will shortly exceed their sales of CDs and DVDs.

Now these headphones aren’t cheap. Some of the better known high end headphone brands such as Dr Dre go for in excess of £350. That’s quite a lot when you consider the iPod Nano that the headphones could be plugged into retails for less than £100.

Manufacturers have started to segment the market nicely for headphones with for example the Bob Marley Reggae inspired “House of Marley” headphone range recently being launched by Bob Marley’s son Julian.

So, what’s next on the horizon in the business world when it comes to headphones?

I mentioned one of the best known brands of headphones Dr Dre earlier and you’ve no doubt heard of HTC which offer very good Smartphones and are in competition to Apple and their iPhone.

Well, earlier this summer HTC paid $300 million for 51% of a US company called Beats Electronics. What’s the main brand that Beats Electronics has? Yep, none other than Dr Dre.

This could be quite a smart move by HTC.

They are building up their technology and design on the Smartphone side of things and by buying Dr Dre they are getting a sudden jump up in headphone technology.

Will this be the sweet sound of success for HTC?

The Big 4 don’t appear to be happy about this…

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We blogged earlier this year about Michel Barnier, the EU internal market commissioner announcing plans to issue new laws which would dramatically impact the “Big 4” (namely Deloitte, Ernst & Young, KPMG and PwC.)

Well, these changes have now got a bit closer as the draft law has just been released.

In an attempt to reduce conflict of interest and to introduce more competition into the industry the main proposal of the draft law includes the requirement for the Big 4 firms to separate their auditing and consulting divisions in the EU.

This is a pretty big issue as in simple terms if the law becomes final it could prevent the Big 4 “audit firms” from providing any non audit related services such as consulting, providing tax advice or running training courses.

This could see a major restructuring of the audit profession.

Other provisions in the draft law include banks being banned from insisting that a company uses a Big 4 firm if they are to be lent money by the bank (at the moment a number of banks make it a requirement for a company to be audited by a Big 4 firm before they will release significant loans.)

There is also a proposed requirement for audit firms to be rotated every 6 to 12 years.

Perhaps unsurprisingly the Big 4 are reported to be against any changes to the current rules (after all as the saying goes, “how many turkeys would vote for Christmas?”).

I’m pretty sure though that the “mid tier group” of auditing firms that are below the Big 4 in terms of size such as BDO, Grant Thornton and Mazars would maybe take a different view to the Big 4 and be in favour of Mr Barnier’s views as this could open up a number of opportunities for them.

Before everyone that works at a Big 4 company starts rushing to rearrange the office furniture though it’s worth noting that the law at the moment is only draft and the EU states and the European Parliament have to provide the final sign off before the law becomes a reality.

Are the BRIC nations building a wall?

10 years ago today the term “BRIC nations” was introduced by Jim O’Neill of Goldman Sachs

It represents an acronym for the 4 largest developing countries that have the potential to become some of the world’s most influential economies and whilst the people of Burundi, Rwanda, Iceland and Costa Rica may well hope that one day their economies will become powerhouses it’s the nations of Brazil, Russia, India and China that are leading the way.

The BRIC nations represent over 40% of the world’s population and it’s estimated that China will have more middle income families than the US by 2013 and India will have more by 2020.

If you think about it that’s a lot of middle income families that will be wanting to buy a lot of middle income products.

There has been an interesting trend though and that is that many companies saw the BRIC nations as the “factories” of the world where products would be produced. Some also saw a huge market opportunity where European and American firms could target sales as these nations became wealthier. Manufacturers of middle income products such as electronics equipment and cars were no doubt licking their lips in anticipation.

There has however been a movement towards intra-BRIC trade. For example, India and China are major importers of energy whilst Brazil and Russia are big exporters of resources.

As a group the BRIC nations are becoming more economically mature but is there a new challenger to the BRIC nations?

Well up step CIVETS, a group of countries that represent 8% of the world’s population and whilst the acronym isn’t as catchy as BRIC, the CIVETS group have combined economies that are growing faster than the BRIC nations and have suddenly caught the attention of a lot of investors.

For those of you that are good at geography see if you can guess what CIVETS stands for…

It’s Colombia, Indonesia, Vietnam, Egypt, Turkey, and South Africa.

Will passing your ACCA or CIMA exams make you slimmer?

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According to a report released yesterday by Eurostat, if you’re in the UK and you’re speaking to a woman then there is a 24% chance that she is obese (or to use less technical terminology, she is very fat).

At the other end of the “fat scale” are ladies from Romania who have the privilege of being the “slimmest nation” in the EU with only 7% of Romanian ladies being classified as obese.

So nearly 1 in 4 ladies in the UK are obese. From an environmental analysis point of view this increase in the number of fat people over recent years is a classic movement in the “Social” part of PESTEL analysis.

As well as having serious implications for the health of those individuals that are overweight the movement towards “fat nations” can have serious implications for businesses over the medium to long term.

In the private sector, Airlines for example will need to invest in bigger seats and spend more on fuel costs to move all this heavier weight around the world.

The public sector will also be impacted with for example hospitals needing to have stronger and bigger beds.

One interesting thing I noticed within the Eurostat report though was the following statement:

The share of obese persons also varies according to the educational level. For women, the pattern is again clear: the proportion of women who are obese falls as the educational level rises in all Member States.

Wow – this is interesting as surely it means that the cleverer you are, the less likely you are to be fat?

So does this means that all your hard work spent improving your educational levels by studying for ACCA and CIMA not only helps your career but also reduces your chances of being obese??

This must be an additional incentive for studying and it also provides a great excuse for any gentlemen that are reading this.

After all, if your wife or girlfriend happens to catch you looking at a slim lady then all you have to say is that you were simply “admiring her intellectual ability”…

So are they top or bottom of the league?

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In most industries if a company had revenue of £153m and a wage bill of £174m there would be serious questions asked.

Manchester City are the current leaders of the Premier league in the UK and they have just released their annual financial results.

The figures show that as well as being top of the league in terms of football they are also bottom of the league in terms of their financial results.

Their income was £153m and their expenses £348m. The resulting loss of £195m is the largest loss ever reported in English football history.

A loss of £195m on sales of £153m would have alarm bells ringing for most companies but Manchester City have got wealthy investors.

Sheikh Mansour of Abu Dhabi has so far invested over £460m on players since 2008 and has plenty of cash to invest.

The European footballing body Uefa though have introduced “Financial Fair Play rules” which come into full effect in 2013-14 and require clubs to break even over three years.

The reason for this is that Uefa are keen to prevent football becoming a rich man’s toy and these new rules will prevent wealthy backers from simply throwing money at a team to make it successful without caring about the loss that arises.

After all, if you’ve got a personal wealth of several billion then what does the odd hundred million here and there matter?

Manchester City have stated that they are confident that they will achieve a break even position over a 3 year time period and one of their recently announced revenue streams is a lucrative 10 year sponsorship deal worth £400m with Etihad Airways.

Press reports though have pointed out that Etihad Airways is based in Abu Dhabi, the home of Sheikh Mansour who is a member of the emirate’s ruling Al-Nahyan family and questions have been asked as to whether the £400m sponsorship deal was higher than would normally have been the case and was simply undertaken at an inflated price to artificially reduce the loss to get to the required breakeven point.

As a lifelong supporter of Bristol City (struggling in the division below the Premier League) I sometimes question whether it’s good for the sport of football if only a handful of clubs get huge amounts of money pumped into them.

It’s worth noting however that I would of course quickly change my mind should a wealthy backer invest in Bristol City…

ACCA exam tips released today but don’t do what this person did…

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There’s a saying that studying for professional exams is a marathon and not a sprint.

In other words, it’s a long hard journey to reach the exam finish line and not just a quick sprint to exam glory. Anyone that has qualified as an accountant will fully appreciate that it’s hard work and certainly feels more like a marathon than a sprint!

So qualifying as an accountant can be compared to a marathon race although one thing for sure is that you shouldn’t adopt the approach that Mr Rob Sloan took when he recently ran the Kielder Marathon in the UK.

Mr Sloan was 20 miles through the 26 mile race when he decided to give up because he was feeling tired. He then got on a bus and headed home.

As luck would have it though his bus home went near the finish line and he jumped off just before the finish line. He then hid behind some trees and came back to the course when he thought no one was looking and then sprinted to 3rd place.

Mr Sloan was awarded the medal for 3rd place but luckily for the honest runners in the race, his cheating was eventually found out and he was disqualified from the race and is now facing a ban from his running club.

It’s only the examiners that know for sure what’s in the December 2011 ACCA exams but we’ve put together a list of subject areas that we’d personally make sure we knew pretty well in the run up to the exams.

We launched our Facebook page yesterday and the December 2011 ACCA exam tips can be found at www.facebook.com/theexpgroup

We’ve also added to our free ACCA and CIMA courses by launching free online training courses on Facebook towards ACCA’s Foundations in Accountancy (FIA) qualifications and these courses can also be found at www.facebook.com/theexpgroup

Good luck to those of you that are studying for the exams and I hope the final sprint goes well and you’re not forced to “get on the bus” half way through…

Are the young ones always smaller?

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I’m willing to bet that nearly all of you have used a Microsoft product. Probably an equally high proportion have used Google and a reasonably significant number of you will own an Apple product.

What about LinkedIn? Most of you have no doubt heard of it and a number of you will be registered with the website.

But did you know that Microsoft currently has one of 9.40, Apple has one of 13.61, Google has one of 20.30 and LinkedIn has one of well, … well, you’ll just have to wait a moment to hear the figure as it’s rather impressive.

So, what figures am I talking about?

The figures mentioned above refer to the PE ratio or the Price Earnings ratio.

In an attempt to astound you with my knowledge, the Price Earnings ratio measures… (wait for it)… the ratio of Price to Earnings (a round of applause please for that brilliant explanation).

In other words, the share price of Microsoft for example is such that the market is currently prepared to pay 9.40 times the earnings to own it.

The PE ratio is also sometimes known as the “price multiple”, “earnings multiple” or simply “multiple” and whilst share prices can be affected by a number of different things, a high PE ratio generally implies that the market is expecting earnings to rise in the future.

If we round up the PE ratios of the companies above we get:

Microsoft: 9

Apple: 14

Google: 20

That other tech giant on the market, LinkedIn currently has a PE ratio of 1,498 (yes, 1,498).

Wow – that’s not bad is it?

So hang on. A PE ratio this high implies that the market has factored in an expectation of significant growth in earnings for LinkedIn.

This really is an expectation of pretty significant growth as at the moment for every $1 of current earnings an investor gets he or she has to pay $1,498.

So, for the sake of the LinkedIn shareholders let’s hope that in the future more people become linked in.

I don’t think your customers are as loyal as this one…

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A lot of companies seem to mistakenly focus most of their effort on getting new clients rather than looking after their existing ones.

Some companies are so concerned with getting new clients that they forget about their existing clients and they end up winning one new client but losing two existing ones.

The benefits of having loyal customers who undertake repeat purchases can be substantial.

I’m not sure though that many companies will have as loyal a customer as Mr Thomas Stuker.

Mr Stuker is a sales consultant and has made nearly 6,000 flights with United Airlines.

To put that into perspective he’s accumulated 10 million air miles with them and has flown the equivalent of 400 times around the world.

To say he is a frequent flyer is stating the obvious and from the airline’s point of view, assuming an average cost of $300 per flight that’s a nice $1.8 million dollars revenue as a result of his flights.

Now United Airlines understandably appreciate his custom and when he reached the 10 million mile landmark the airline announced that they were going to name one of their planes after him and award him free upgrades for life.

Anyone who flies a lot will appreciate that you can accumulate “airmiles” with airlines as part of their loyalty programmes.

United Airlines are part of the Star Alliance mileage programme so Mr Stuker will no doubt be excitedly looking forward to some free flights for him and his family as a result of the 10 million miles he’s accumulated.

Then again, after flying the equivalent of 400 times around the world with his job he may well prefer to take his next holiday at home…

Was this as easy as 1,2,… (now what was the next one)?

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There’s a well known technique in public speaking of batching topics in groups of three.

The general idea is that it helps with the flow of the presentation and it’s easier for the audience to remember.

Unfortunately for US presidential hopeful Rick Perry, three topics were one too many when he spoke last night at the live presidential nomination debate for the US Republican candidate.

The speakers at the debate were all candidates to lead the Republican Party in next year’s US Presidential election against President Obama.

Mr Perry was in the process of listing the three US government departments he would abolish if he was elected president when he forgot what the third one would be.

His exact words were:

“I will tell you: It’s three agencies of government, when I get there, that are gone: Commerce, Education and the….. what’s the third one there? Let’s see….. OK. So Commerce, Education and the…..the third agency of government I would…..I would do away with the Education, the….. Commerce and…..let’s see….. I can’t. The third one, I can’t. Sorry. Oops.”

Now, we all make mistakes at one stage or another when speaking in public so is this really something for Mr Perry to worry about?

After all, the debates are only seen as one of the key deciders in whether somebody will win the nomination or not and they were only seen live on primetime TV across America. The press and TV in American are also only talking about it all the time.

Now, any of you studying professional exams will appreciate that two out of three is 66.67% and I’m sure that if you got 67% in your exams you’d see that as a success.

A potential future president of America only being able to remember 2 out of 3 of his proposed policies though probably isn’t so good.

The video of Mr Perry’s performance can be found here and get ready to cringe with embarrassment.

Which companies do you think are most likely to bribe?

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Here’s a quick question for you:

Companies from which of the following countries are most likely to bribe when doing business abroad?

Is it China, Netherlands, Russia or Switzerland?

My feeling is that a lot of you will probably be able to guess the correct answer but in case you’re struggling to identify which ones are most likely to make illegal payments then according to a survey of 3,000 business executives undertaken by Transparency International, companies from Russia and China are the most likely to pay bribes when doing business abroad.

Transparency International Chair, Huguette Labelle said “It is clear that bribery remains a routine business practice for too many companies and runs throughout their business dealings, not just those with public officials. And companies that fail to prevent bribery in their supply chains run the risk of being prosecuted for the actions of employees and business partners.”

At the other end of the honesty scale are companies from the Netherlands and Switzerland. Companies from these two countries were found to be the most ethical when it came to bribes, or rather not making bribes.

It’s not just the countries that the companies are from that can have an impact on the likelihood of bribing but also the industry sector that they are working in.

Bribery was most likely to happen when public sector works and construction contracts were involved.

Agriculture was reported as being the least likely industry to find bribes.

So in summary, the purchases of unmarked brown envelopes which would fit a wad of cash in are likely to be significantly higher by a Russian construction company than a Dutch agricultural company.

Was this the deal of the day?

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Last Friday Groupon raised $700 million in its initial public offering (IPO).

Some of you may have heard of Groupon. It’s done remarkably well in the 3 years since it started in 2008 and now has over 100 million users.

It’s a daily deal site whereby people sign up to get daily “special offers”. The business model of Groupon is such that when people buy a “special offer voucher” to use on a deal, Groupon shares the revenue with the service provider that is providing the special offer.

Interestingly enough their arrangement is such that if somebody buys a special offer voucher but then subsequently doesn’t use the voucher then Groupon keep all the revenue.

In simple terms an IPO is where the owners of a private unquoted company offer a proportion of their shares to the general public.

Let’s look at some of the figures.

A relatively small proportion of the company was offered in the IPO (just over 5%) but $700 million was raised. This values the company at nearly $13 billion. Not bad for a business that started just over 1,000 days ago.

In the past, other tech companies that have undertaken an IPO include Google who raised an impressive $1.7 billion back in 2004. Since then Google has gone on to become a $200 billion company but will Groupon grow to such heady heights?

To me it seems that whilst the Groupon business model has so far been successful it’s a fairly limited business model.

After all, it’s simply offering discount vouchers and the business model would surely be easy to copy and if one of the tech big boys such as Google or Facebook decided to really push a similar voucher scheme Groupon could have real problems.

One of the challenges the Groupon business model has is that the suppliers that sign up to offer discounts on Groupon are doing so in the hope that their classic their discount voucher will be a classic “loss leader” and will result in repeat purchases by the bargain hunter customers.

Figures are not available as to how many of these bargain hunters do more than simply purchase the discount voucher and then never undertake a second purchase from the supplier but my guess is that it could be a fairly significant number.

So, in summary, a business model that is relatively easy to copy and has limited barriers to entry combined with a customer base who are always looking for the next bargain (which may well be with another discount voucher company). This seems to me to be a risky investment.

Luckily for Groupon a lot of investors took a different view to me and at the close of the first day of trading the share price had risen to $26 from a launch price of $20.

Only time will tell though whether the IPO was indeed a great daily deal…

Surely this is the best “out of office notification” ever?

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I recently visited Cardiff for a few days of work. Cardiff is the capital of Wales and one thing you notice as soon as you enter Wales is that the road signs are written in both English and Welsh.

This reminded me of a production error which was reported a while ago which to me must rank as one of the funniest results of an out of office notification.

If used properly the out of office notification is a great tool as it lets the sender of the message know if you’re away for a while and who to contact in your absence.

The error here though involved Swansea Council in Wales who required a road sign saying:

“No entry for heavy goods vehicles. Residential site only”

They emailed their in-house translation service with a request for a translation of this phrase into Welsh and a reply came back with:

“Nid wyf yn y swyddfa ar hyn o bryd. Anfonwch unrhyw waith i’w gyfieithu”

They then produced the sign with both the English and Welsh text on it and put it in the required place by the side of the road.

It was a while later that some Welsh speakers noticed the road sign and it turned out that instead of telling drivers of heavy goods vehicles that they couldn’t drive down that particular road the Welsh text on the road sign actually said:

“I am not in the office at the moment. Send any work to be translated”

Is this a children’s fairy tale or an adult horror story?

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Forget about the Eurozone crisis that is currently dominating the news and instead, here’s a nice bedtime story to tell your children…

So children, are you feeling tired and ready for your story?

Once upon a time, in a land far far away there was a man called Gordon Reece (or Mr G.Reece).

Now Mr G.Reece was enjoying himself in the sunshine when suddenly everyone in the world started feeling happy and some wealthy friends and banks offered to lend him as much money as he wanted.

Mr G.Reece shielded his eyes from the sun and shook his head in disbelief. He couldn’t believe it but he gladly accepted the loans and with all that money he decided to treat himself.

He bought some houses, cars and a new Sony Playstation.

He even employed a couple of people to help him keep his house and garden tidy.

Things were going well but suddenly people around the world started becoming unhappy and didn’t buy as many things as they used to.

Mr G.Reece suddenly realised he had spent all of the money he had borrowed and didn’t have any money left to pay the interest on the loans.

He had an idea though. He could surely just go to another bank and get a new loan so that he could pay the interest.

Alas for Mr. G.Reece the banks didn’t want to lend him any more money as they knew he couldn’t afford to pay them back.

He then had another idea. To reduce his outgoings he would get rid of one of his employees and pay the other one a lower salary.

His employees were so upset that they messed up his house and garden and told him that they would carry on messing up his house and garden until he reinstated the job and the previous salary.

He then suddenly remembered his wealthy friends that had lent him money (a Mr F.Rance and Mrs G.Ermany). He gave them a call, explained the situation and they kindly agreed to write off some of the debt he owed them and also gave him a bit of cash to help him through the next few weeks.

His interest payments were now lower which was good but he was still struggling to pay the interest and the wages of his employees.

He decided that maybe this time he should actually go and visit his wealthy friends Mr F.Rance and Mrs G.Ermany and persuade them to write off even more of the debt and maybe give him some more money.

He jumped on a plane and headed to see them. He was feeling fairly positive when he arrived to meet his wealthy friends but then his face suddenly dropped.

There, heading to see the wealthy friends were none other than Mr P.Ortugal, Mrs S.Pain and Mr I.Taly. Three of his poorer friends who were also hoping to be given some money.

The problem though is that the wealthy friends don’t have enough money to give to all of the poor friends.

So children, what can they do?

Well, it’s time to go to sleep now kids and the story will be continued another night so sleep well, sweet dreams and don’t have any nightmares…

We’ve got some good news for you. We’ve just found 55 billion euros…

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Sometimes things go missing. You search high and low and if you are lucky enough to find them again then you can be pretty happy.

Germany though has just found something that it didn’t even know was missing.

It’s not as though it’s simply some keys that have dropped down the back of the sofa. No, Germany has just found €55 billion.

This is a pretty significant amount and the “find” came about due to spotting an accounting error.

In October last year, FMS Wertmanagement was created when toxic loans and securities with a face value of nearly €175 billion were transferred to it from HRE bank which was nationalised in 2009.

In other words, a so called “bad bank” was created out of the insolvent parts of HRE bank whereby the bad parts (the toxic debts) of the HRE bank were moved to a separate bank (FMS Wertmanagement).

Moving the toxic debt to the “bad bank” meant that what stayed in the nationalised HRE bank was non toxic and the nationalised HRE bank became solvent. This would in thoery help ensure that HRE bank would make a full recovery.

The German Finance Ministry today announced that there had been a double booking of debt and that staff had inadvertently subtracted funds when they should have added them.

The end result is that the reversal of this accounting error means that German debt, as a percentage of GDP reduces from 83.7% to 81.1% – i.e. debt has fallen by 2.6 percentage points.

So, in summary some good news for the German economy.

I should also mention that if the person that made the initial accounting error is by any chance reading this then we do run a wide variety of training programmes including our introduction to finance range of courses…

It’s just not tennis to leave your phone on at work is it?

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We’ve all been there. Sat in a meeting when suddenly somebody’s mobile phone starts ringing and there’s a mad rush by that person to grab the ringing phone and turn it off.

It’s often the case that the person with the “cheesiest” ring tone is the one that forgets to put their phone on silent.

When the phone rings there’s usually a mumbled apology along with a slightly embarrassed look but then the meeting carries on.

Whilst half the people at the meeting may well be thinking something along the lines of “what an idiot”, the meeting will normally continue with the ring tone soon becoming a distant memory.

There are certain jobs though where it really isn’t advisable to take your phone with you to work. For example, I’m not sure that a surgeon or classical musician should really have their phone with them when they’re working.

The video below shoes an interesting situation when top tennis player Caroline Wozniacki is about to serve against her opponent, the French tennis player Alize Kornet.

As a professional tennis player you need to remain focussed and concentrated at all times. Miss Wozniacki’s concentration though is broken by the ring tone of a phone belonging to none other than her opponent…

It doesn’t make a good photo if you’re fired does it?

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30 years ago he joined the British subsidiary of Olympus, the Japanese camera and optical giant, as a salesman. He slowly worked his way up through the ranks of the company until last month he became the first western CEO of the Olympus group.

Unfortunately for Mr Michael Woodford his new position lasted for only 2 weeks before he was fired from his position as CEO and according to media reports was told by the Olympus board to “get a bus to the airport”.

A western CEO of a Japanese company is extremely rare and a CEO being fired after only 2 weeks is probably even rarer.

According to the Olympus board, Mr Woodford was fired for “causing problems for decision-making”.

Mr Woodford didn’t hold back from giving his version of the story and he claimed that he was fired for in effect being a high level “whistle blower”.

After his appointment as CEO he started asking questions about payments Olympus had made to financial advisers for Olympus’s acquisition of Gyrus, a British medical equipment company, for $2bn.

The interesting thing was that advisory fees of nearly $700m were paid to a Cayman Islands registered company called AXAM whose owners were not identified by Olympus.

The really interesting thing though was that the advisory fees paid were equal to nearly 33% of the total acquisition price. This figure of 33% seems a tad high when compared to the industry average for such acquisitions of between 1% and 5%.

The really, really interesting thing though was that AXAM disappeared from the trade register 3 months after receiving their final payment from Olympus.

Now, I’m not a detective but there are some fairly chunky corporate governance issues in this one and a payment of $700m to an “anonymous” Cayman Islands company which has since disappeared probably does warrant a bit of a debate to say the least.

Mr Woodford won’t be involved in those debates though as his position as CEO was abruptly ended after 2 weeks.

The Olympus share price fell nearly 50% in the days immediately after the announcements.

Olympus has denied any wrongdoing.

Would you look at this advert or not?

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Those marketing guys can be a creative bunch and the 2012 Olympics will be a great opportunity for them to show off their skills.

The Olympic organisers though are worried that some people may show off more than just their skills.

Ambush or guerrilla marketing is where companies which are not official sponsors of events such as the Olympics try to get their advertising message across without paying any sponsorship money to the organisers.

We’ve blogged elsewhere about Hugo Boss and Bavaria beer’s attempts at ambush marketing so what are the Olympic organisers worried may happen next year?

The London Olympic Games and Paralympic Games Act 2006 (the UK law in connection with the Olympic Games) is being changed to try to prevent people from using their bodies as mobile advertising boards.

At the last Olympic Games in Athens a man invaded one of the diving events with a brand name written across his bare chest.

Olympic organisers are worried that ambush marketing may go one step further and people may “streak” naked at an event with advertising slogans written across their bodies.

Whilst a naked spectator running across an Olympic event will no doubt get the press cameras clicking it’s not something that the Olympic authorities and the official sponsors would appreciate.

The change to the legislation could result in a person that undertakes guerrilla advertising at the Olympics by using advertising on his or her body being fined £20,000.

My personal view though is that this is nothing for the organisers to worry about. Given how cold the British summers are I doubt there will be many people willing to take their clothes off at the London Olympics and run as a mobile advertising board…

Would you have done this if you were an Ernst & Young partner?

An Ernst & Young (EY) partner has been rather naughty. In fact, I should straight away say that he quickly became a former EY partner as soon as EY found out what he had done.

So, what did he do?

Well, put it this way but it wasn’t the most professional of things to do.

The Public Company Accounting Oversight Board (PCAOB) is the main “watchdog” of the US auditing profession. As part of their quality review procedures they look at samples of audit working files of registered audit firms.

EY were selected for a review and in particular the audit of one of the clients of Peter O’Toole, an EY partner who had been with the firm for 20 years.

Now, it appears that Mr O’Toole’s work on this particular client wasn’t exactly complete and he tried to hide the fact that the work was incomplete by going back to the audit files and doing a quick “tidy up“ before the PCAOB visit.

Working together with a senior manager (who unsurprisingly is also now no longer with EY), Mr O’Toole created fake documents about work they said they had completed hoping that these fake documents would go unnoticed and the PCAOB would sign off on the audit files.

Alas for Mr O’Toole the backdated fake documents were identified and his dishonesty was found out.

If there’s one key lesson from this it’s probably that it’s best to be honest and not try to cheat with things.

As a result of faking the documents, Mr O’Toole lost his job of 20 years with EY, was barred from auditing for 3 years by the PCAOB and had to pay a civil penalty of $50,000.

If instead of trying to falsify things he had simply owned up to his mistake the chances are that he would have had a “slap on the wrist” and would still be in his job.

Sorry to break the news to you but Christmas is cancelled…

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3 years ago in the middle of the financial crisis when some of the best known banks in the world were on the verge of collapsing, the Royal Bank of Scotland (RBS) was rescued by the British tax payers to the tune of £45 billion.

Since then the bank has been under a lot of scrutiny. Not just from the point of whether it would survive but also when it would turn things around so that the business became profitable and the tax payer would start to get their money back.

Along with lots of other companies that have suffered in the crisis, RBS has undertaken a cost cutting exercise over the last couple of years.

Chris Kyle, the CFO of the Investment Banking division of RBS yesterday announced some additional cut backs to his staff.

An internal memo to his staff told them amongst other things that:

– No-one will be given a new Blackberry phone or other handset.

– There will be no magazine or newspapers subscriptions (I guess this now means that they won’t be able to do the daily FT crossword over morning coffee in the office)

– People working late in the office will not be able to claim a taxi expense to take them home unless they are working past 10pm (it used to be a 9pm cut off)

The bank has also banned all staff entertaining for the rest of the year so there will be no bank funded Christmas party for the RBS investment bankers and instead the bankers will have to pay for their office Christmas party themselves.

Now, whilst some people will think this is good cost control some others may feel that this is just “window dressing” to give the impression that the investment bankers’ excessive remuneration and benefits are being stopped.

Some of the RBS employees may well be a bit upset about having to pay for their Christmas party but last year over 300 key staff within the bank reportedly shared a bonus pot of £375 million which equals an average bonus of over £1.1 million each.

I guess these particular individuals are quite relaxed about buying their own Christmas drinks…

Is it easier to become a partner if you’re a man or a woman?

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Not so long ago the finance profession was predominantly a male one.

At the risk of showing my age, when I first entered the world of work the senior roles in the company I worked for were completely dominated by men.

Things are rightly changing though and in most countries around the world the younger generation that are now entering all business functions appear to be more evenly balanced between the two sexes.

This opening up of opportunities to both men and women can only be a good thing. Any form of discrimination whether it’s discriminating on the basis of race, gender or religion is not only morally wrong but can also result in valuable parts of the working population being overlooked for jobs.

KPMG is one of the top firms in the world and they appear to be getting their gender equality sorted out.

Despite being in the finance and consulting industry which in previous generations was dominated by men, their latest set of promotions indicate that woman are “fighting back”.

KPMG in the UK has just announced the appointment of 29 new partners and 88 new directors.

Prior to their announcement the proportion of female partners working for KPMG in the UK was 14%. Out of the new promotions though, 24% of the new partners and 30% of the new directors are women.

Richard Bennison, CEO of KPMG in the UK, said:

“We are also very pleased to be able to improve the gender balance amongst our partners. We are genuinely committed to enabling more women to reach senior positions.”

So, whilst the number of female partners is still in the minority the percentage is starting to get more balanced.

Congratulations therefore to KPMG on this and it does of course raise the question of how long will it be before the balance is completely reversed and 14% of the total partners are men and 86% are women?

Goodbye to a visionary and creative genius.

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Born to an unmarried interracial couple, adopted at a young age, dropped out of college and fired from him first major job. Steve Jobs went on to build two billion dollar businesses.

Unfortunately, the iconic face behind Apple lost his battle with pancreatic cancer on Wednesday and the world lost one of the true business greats.

In terms of his impact on business as well as people’s everyday lives, his legacy will be right up there with the likes of other great visionaries who introduced “life changing technology” such as Henry Ford and the mass motor car.

Steve Jobs taught the world many things and whilst there have been, and no doubt will be, lots written on his business methodologies one particular approach of his stands out as far as I’m concerned.

His creations really encase the concept of providing great products but importantly offering real “value” for these great products.

By “value” I don’t mean that they are the cheapest. In fact, they are far from the cheapest but what Apple do provide are excellent products which customers will pay a premium for as they perceive that this additional value the products offer is worth paying for. In classic Michael Porter terminology this could be referred to as “differentiation”.

Steve Jobs had an uncanny ability to spot the next great thing that customers would want and then to develop a product which although relatively expensive would create such “value” that customers would purchase it instead of cheaper options.

If Apple had competed purely on price then there would always be another company which would come along and offer a similar product for a lower price.

As well as the innovative Apple products that have hit our shelves, Steve Jobs will also be associated with the black St. Croix Collection turtleneck sweater that he would wear at product launches.

Since his death there has been a run on people wanting to buy these sweaters and the company that manufactures them, US based Knitcraft Corp has reported a surge in orders in the last 24 hours. Despite a total order run of between 4,000 to 5,000 sweaters many St Croix stores have now run out of stock.

Rest in Peace, Steve Jobs.

Can I have a skinny latte, a blueberry muffin and a corporate loan please?

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One of the real challenges facing a lot of companies at the moment is access to funds.

The economic turmoil over recent years has led to the loan markets largely drying up and without access to suitable cash reserves a number of firms have hit cashflow problems and have gone out of business.

Similarly, a lot of businesses that have wanted to start up in the recession haven’t had access to loan funds to enable them to do so.

The end result is that jobs have been lost.

The global coffee chain Starbucks though think that they may have an answer to some of the funding problems.

They have just launched a campaign to try to stimulate job growth in America by launching a “Create Jobs for the USA” initiative.

They are partnering in this initiative with Opportunity Finance Network (OFN), a group of private financial institutions that provide affordable loans to certain parts of the American population including low-income people and communities.

As well as donating $5 million to get the project off the ground Starbucks are also covering the admin expenses of OFN as well as paying for the manufacture of wristbands which will be given to any of their customers who donate $5 in one of their coffee shops.

Starbucks Chairman and CEO Howard Schultz said “Small businesses are…employing more than half of all private sector workers – but this critical jobs engine has stalled. We’ve got to thaw the channels of credit so that community businesses can start hiring again.”

100% of the donations made will go to OFN to help fund loans to community businesses including small businesses, microenterprises and nonprofit organizations.

Starbucks themselves though have also been a victim of the recession with several hundred stores being closed in the US alone in recent years and some sceptics may argue that this is just a PR initiate by them.

My personal view though is that if this initiative helps to create jobs then it can only be a good thing.

Will the Big 4 firms be completely different next year?

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Michel Barnier, the European Union’s top financial services policymaker, has reportedly drafted a green paper which is expected to be presented to the European Parliament later this year.

If the proposals included within the paper are actually implemented it would mean a radical shake up of the Big 4 business models within the EU.

Mr Barnier has been quoted in the press this week as declaring that “auditors are the dog that did not bark during the crisis and their role has been put into question”.

His proposals are pretty significant and they include preventing the Big 4 from doing any non-audit services such as undertaking consulting work, providing legal advice, running training courses or performing bookkeeping services (or at least not providing these to their audit clients).

The argument behind this is that it would prevent potential conflicts of interest where for example, the auditors are reporting on some consulting work undertaken by their colleagues from their consulting division.

If the Big 4 were prevented from undertaking any non-audit work this would be pretty dramatic for them. It’s estimated that in the UK 67% of their revenue is from non-audit work with only 33% coming from audit work.

Mr Barnier’s proposals also include appointing two auditors for companies with balance sheets greater than €1 billion and at least one of these auditors would need to be a non-Big 4 company.

There is also a proposal to enforce a compulsory rotation of auditors if they have audited a company for a period of 9 years.

Perhaps unsurprisingly the Big 4 have rallied against the proposals (after all, “how many turkeys would vote for Christmas”) but there do appear to be some valid arguments against Mr Barnier’s proposals.

For example, having dual auditors would no doubt increase the cost of the audit significantly.

Whatever the outcome of the proposals when they are discussed at the European parliament later this year, this is a subject which will be debated for many years to come by people who hold opposing views on the matter.

Would you fire somebody if they drank the last drop of milk in the office?

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In today’s work environment the pace of life seems to be getting faster and faster. Work and study pressures can all increase the amount of time that we spend at work.

I must admit that I need a coffee in the morning before I’m fully up to working speed.

That kick of caffeine always seems to help get my brain into gear.

Over in the States though it’s been reported that Keith Zakheim, the president of multimillion dollar PR firm Beckerman PR, was a little upset when he got into the office early only to find… (in fact this is so bad that I’m finding it difficult to write)… but he found that there was… wait for it… no milk left in the fridge to go with his coffee.

He was so upset that he sent the following email to his staff

From: Keith Zakheim
Date: September 27, 2011 8:20:21 AM EDT
To: Beckerman Staff
Subject: I don’t know what else to do…

I have repeatedly requested until I am blue in the face that the person that finishes the milk must replace the milk. Its not complicated and is a simple sign of respect for fellow employees.

So, imagine my chagrin this morning when I stumbled in at 715 … only to find that the skim milk in the refrigerator had three drops of milk left. Literally 3 drops, an amount that would maybe fill the tummy of a prematurely born mouse. The person that did this is either incredibly lazy, obnoxiously selfish or woefully devoid of intelligence – 3 traits that are consistent with the profile of FORMER Beckerman employees.

As you can tell from the tenor of this email, I am not happy and at my wits end … and I have repeatedly beseeched you to replace the supplies that you consume – whether its pencils, paper, or MILK. This costs you nothing – I pay for it! Yet, it is still repeatedly ignored.

So, I am gravely serious when I write this – if I catch someone not replacing the milk, or at least, in the case where the downstairs store has close already, not sending an email to the office so the first person that arrives (usually Christa or me) can pick one up upon arrival – then I am going to fire you. Im not joking. You will be fired for not replacing the milk, and have fun explaining that one to your next employer. This is not a empty threat so PLEASE don’t test me.

99% of this office consists of great people that work hard, treat their employes with respect, and understand that they are part of something that is bigger than them. However, there seems to be a small element that doesn’t understand this. So its time that they do or else they should start refreshing their resume.

For those of you who have worked for me for years, you know this is not my style so PLEASE take this seriously!

Thank you for your cooperation.

KZ

KEITH ZAKHEIM | CEO
BECKERMAN
ANTENNA GROUP

It’s not been reported what happened when Mr Zakheim subsequently went to the biscuit tin and found there were no biscuits in it.

How would you feel if you were called a liar on Oracle’s website?

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Meet two companies – Oracle and Autonomy.

A lot of you will probably have heard of Oracle but probably less of you have heard of Autonomy.

Oracle is a business software and hardware systems company whilst Autonomy develops search software.

Oracle’s Chief Executive is Larry Ellison and Autonomy’s Chief executive is Mike Lynch.

Interestingly enough Oracle’s CEO has recently accused Mr Lynch of lying or in his words of telling “whoppers”.

So, what’s the story behind all of this?

The story began a couple of weeks ago when Oracle’s Elison said that he thought Hewlett Packard had overpaid when they had paid £7bn to buy Autonomy and that Mike Lynch from Autonomy had earlier this year offered to sell Autonomy to Oracle but Oracle had turned it down as they felt it was too much.

Autonomy’s Lynch then said that any discussion of him talking to Oracle about them purchasing Autonomy was “inaccurate”.

Now the previous sentence is quite important as seeing that Autonomy was quoted on the London Stock Exchange, if there was any kind of sales process taking place then Autonomy were required to notify the Stock Exchange about it.

No such notification took place.

After Mr Lynch said that any talk of him discussing a potential sale to Oracle was inaccurate, Oracle responded in quite a dramatic way.

They posted a statement on their website (with the nice webpage address of Oracle.com/PleaseBuyAutonomy) and they didn’t hold back.

Amongst other things, they released PowerPoint slides of the meeting that Mr Lynch attended and the Oracle statement is entitled “Another Whopper from Autonomy CEO Mike Lynch”.

The statement then goes onto say amongst other things:

“Autonomy CEO Mike Lynch continues to insist that Autonomy was never ‘shopped’ to Oracle.  But now at least he remembers and admits to meeting with Oracle President Mark Hurd and Doug Kehring, Oracle’s head of M&A, this past April.  But CEO Lynch insists that it was a purely technical meeting, limited to a ‘lively discussion of database technologies.’  Interesting, but not true.  The slides Lynch showed Oracle’s Mark Hurd and Doug Kehring were all about Autonomy’s financial results, Autonomy’s stock price history, Autonomy’s Price/Earnings history and Autonomy’s stock market valuation.  Ably assisting Mike Lynch’s attempt to sell Autonomy to Oracle was Silicon Valley’s most famous shopper/seller of companies, the legendary investment banker Frank Quattrone.  After the sales pitch was over, Oracle refused to make an offer because Autonomy’s current market value of $6 billion was way too high.

We have put Mike Lynch’s PowerPoint slide sales-pitch up on the Oracle website – Oracle.com/PleaseBuyAutonomy – with the hope Mike Lynch will recognize his slides, his memory will be restored, and he will recall what he and Frank Quattrone discussed during their visit to Oracle last April. Yesterday, the Autonomy CEO did not remember having any meeting with Oracle.  Today, he remembers the April meeting and inaccurately describes how it came about and what was discussed.

The Statement continued but the key message appears to be that the two individuals are probably not the best of friends and somehow I don’t think the two CEOs will be sending each other Christmas cards this year.

Who earns the most out of a PwC or Deloitte partner and who’s suing Deloitte for $7.6bn?

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The Financial Times or FT as it is generally known, is a great newspaper.

First printed way back in 1888 by James Sheridan and Horatio Bottomley, the FT specialises in business and financial news.

You can find a lot of information in the FT.

Information ranging from share prices to the latest business activities can all be found within the paper’s famous light salmon coloured covers.

They have also recently highlighted some interesting figures about the average partner remuneration in the UK firms of PwC and Deloitte.

In the year to 30 June 2011 the average profit share for each PwC partner in the UK was a healthy £763,000.

In the previous year to 30 June 2010, Ian Powell, the Chairman of PwC, received £3.6 million. The latest figures show that he managed to increase this amount to £3.7 million in the year ended 30 June 2011.

But what about PwC’s fellow Big 4 partners from Deloitte?

Even though the Deloitte figures are not entirely comparable with PwC’s due to differences in the treatment of past pension obligations, the results are interesting and it’s not all good news for Deloitte partners in the UK.

This year saw their average profit share fall by 13%. They now have to scrape by with £758,000 per year compared to the £873,000 that they had the year before.

Whilst figures are available for the UK Deloitte partners they are not currently available for the Deloitte partners from over in the US.

My guess though is that the US Deloitte partner’s profit shares may well be reduced this year though as money may be held back for potential legal fees after it was announced today that Deloitte in the US are being sued for the princely sum of $7.6 billion.

They are accused of failing to detect fraud during their audits of a US mortgage firm which went out of business during the US housing crash.

A Deloitte spokesman was quoted in the press as saying the court claims were “utterly without merit”.

So, how well are Nike doing?

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You probably haven’t heard of the lady by her name but you have without a doubt seen her most famous piece of work.

40 years ago Carolyn Davidson was paid the princely sum of $35 for the design of a logo.

That logo was the Nike Swoosh and it has gone on to become one of the most famous logos in history.

Nike has just released their latest set of financial results and for the 3 months to 31 August 2011 they made an impressive net profit of $645 million. Despite a global recession Nike has increased profits by a healthy 15% on the same quarter last year.

Their revenues showed an even more impressive increase, rising 18% to a quarterly figure of $6.1 billion.

The fact that sales increased by 18% but profit only increased by 15% indicates that costs increased and Nike stated that costs had increased due to higher raw material prices.

Nike is the world’s largest sports shoe and clothing maker and the latest set of results emphasised its global business. Sales improved in nearly all the markets that they operate in. There were especially strong gains in the US, India and China.

North America is Nike’s biggest market with sales rising 16% to $2.2 billion but the emerging markets are quickly catching up with revenue from this area rising 35% to nearly $800 million.

So, what will the results look like for the corresponding quarter next year?

Well, with the 2012 Olympics taking place my guess is that the results for Nike will look pretty sporting.

What would you do if your credit card balance was this big?

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Sometimes it’s difficult to get a feel for economics and the concepts and amounts involved.

A friend sent me an email that’s doing the rounds on the internet and it emphasises rather nicely the issues behind the financial problems that the US currently faces.

It moves away from “grown up economic terms” to instead use an example about the US financial problems which people will find easy to understand.

They may also however find it a bit shocking.

The US financial position can be succinctly stated as:

1.    US Tax revenue: $2,170,000,000,000
2.    Fed budget: $3,820,000,000,000
3.    New debt: $1,650,000,000,000
4.    National debt: $14,271,000,000,000
5.    Recent budget cuts: $38,500,000,000

Now, if you simply remove 8 zeros and imagine it is a household budget you’ll get the following:

1.    Annual family income: $21,700
2.    Money the family spent: $38,200
3.    New debt on credit card: $16,500
4.    Outstanding balance on the credit card: $142,710
5.    Total budget cuts: $385

There. It’s easy. Who said economics was difficult?

Now, how do we go about extending the credit card limit again?

Was it really that easy to lose £1.3 billion?

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I tell you what. I don’t really have insurance against anything going wrong but if I put a tick in this box and pretend that I do nobody will notice and it will be ok. Won’t it?

Mr Kweku Adoboli, a 31 year old banker with UBS in London, was working in his office in the early hours of Thursday when he was arrested on suspicion of fraud and false accounting.

In simple terms he is alleged to be a “Rogue Trader“ who undertook illegal transactions which cost the bank a serious amount of money.

£1,300,000,000 to be precise.

That’s a fairly significant figure and would represent the largest single fraud that has ever taken place in the City of London.

Not whilst there is the principle of “innocent until proven guilty” and Mr Adoboli hasn’t yet had an opportunity to defend himself, it’s not currently looking too good for him.

There are striking similarities to the case 3 years ago where trader Jerome Kerviel lost Societe Generale nearly €5bn through Rogue Trading activities.

A detailed investigation has just begun but the early reports indicate that the fraud involved setting up fictitious hedging transactions to trick the bank’s risk management systems into thinking that a trade or position had been hedged against to minimise risk and limit exposure.

A hedge is in effect a form of insurance to insure that if a particular trade goes wrong there is some offset present to mitigate the loss.

If setting up false hedging entries into the bank’s “computer risk system” turns out to be true then there will be some nervous (and possibly soon to be unemployed) people at the bank who were responsible for the risk management system.

Many thought that the days of individuals being able to lose significant amounts of money for banks through unauthorised transactions were a thing of the past. After all, banks have spent a considerable amount of time and money over recent years in ensuring their risk management systems were good enough.

Unfortunately for UBS though it looks suspiciously like their systems weren’t up to the job.

What is about 20% of your height and could make some companies very happy?

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Here’s a good question – what is about 20% of your height and could help a number of fashion companies to increase their sales by a significant amount?

The answer is a “mini-me”.

Top fashion brands such as Burberry, Barbour jackets and Ugg boots have all seen increases in sales of certain items of clothing recently and some people are putting it down to the ex-Spice Girls singer, model and husband to David, Victoria Beckham.

Mrs. Beckham recently took time out from shopping to give birth to a baby daughter called Harper.

Photos in the press show that baby Harper is not only a cute looking baby but that she also follows her mum in the fashion stakes.

Now whilst Harper is only a few weeks old and therefore doesn’t get overly involved in detailed discussions with her mum as to what she will wear, the photos show that mother and daughter are wearing matching outfits.

This has resulted in a boom for sales of “mini-me clothing”.

A fashionable mum who owns a Burberry trench coat for example can now buy a mini version of exactly the same coat for her young daughter for £375.

If mum wears the trendy Australian Ugg shoes then the lucky baby daughter can also own her own pair for £104.

Anyone with young children will appreciate that they grow at a remarkable rate and this got the accountant in me thinking about the “cost per hour of use ratios” that will apply to these clothes purchases.

Unless your dad goes by the name of David Beckham then I think the resulting figures will be a bit of a shock…

Do you know a male, aged 36 to 45 who works in a finance related function?

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Don’t panic whatever you do but by any chance do you work with a male who is 36 to 45 years old and whose job is in a finance related function?

If you do then look at him as discretely as you can.

Is he exhibiting any of the following characteristics?

– Volatility and being melodramatic, arrogant and confrontational, threatening or aggressive, when challenged.

– Performance or skills of new employees in their unit do not reflect past experiences detailed on resumes.

– Unreliability and prone to mistakes and poor performance, with a tendency to cut corners and/or bend the rules, but makes attempts to shift blame and responsibility for errors.

– Unhappy, apparently stressed and under pressure, while bullying and intimidating colleagues.

– Being surrounded by “favorites,” or people who do not challenge the fraudster, and micromanaging some employees, while keeping others at arm’s length.

– Vendors/suppliers will only deal with this individual, who also may accept generous gestures that are excessive or contrary to corporate rules.

– Persistent rumors or indications of personal bad habits, addictions or vices, possibly with a lifestyle that seems excessive for their income, or apparently personally over-extended in their finances.

– Self-interested and concerned with their own agenda, and who has opportunities to manipulate personal pay and rewards.

If he is then that may be a bit of a worry.

KPMG have announced that after an analysis of nearly 350 cases that they investigated for their clients across 69 countries from 2008 to 2010 a typical fraudster was a male, aged 36 to 45 who works in a finance related function and exhibits the above list of traits.

Now, strangely enough everyone in our office who is reading this is has now turned to look at me who just happens to be a male, aged 36 to 45 who works in a finance related function…

Tesco – “Every Little Helps”. Especially someone else’s shares…

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Share incentive schemes are a good way to motivate and reward senior executive employees.

As far as I’m aware though there are very few supermarket checkout operators that find themselves eligible for £100,000 worth of company shares as part of their remuneration package.

Mr Jeffrey Adams who worked on the checkout at Tesco’s Burton-on-Trent store in the UK though thought otherwise.

Back in 2002 he received some 44,000 shares in Tesco’s from the company that runs Tesco’s executive remuneration share plan.

These were meant for Mr Adams but alas not the Mr Jeffrey Adams that worked at the checkout in Burton-on-Trent but instead, Mr Jeff Adams who is the Chief Operating Officer of Tesco’s Fresh and Easy business in America.

Now what did Mr Adams (the checkout operator) do when he received the shares?

Did he do he honest thing and report it to his employees straight away?

No he didn’t.

Instead he sold the shares and made a profit of £100,000.

His ill-gotten gain remained secret for 7 years until Mr Adams (the Chief Operating Officer) tried to cash them in and found that the shares were nowhere to be found.

Mr Adams (the checkout operator) didn’t really appreciate the paper trail that exists when shares are sold and when he was arrested he claimed that they were left to him by his grandfather.

Mr Adams (the checkout operator) no longer works for Tesco and was last week jailed.

The judge said “You have to serve a prison sentence for £100,000 of dishonesty. You have shown no remorse and gave no plea of guilty.”

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So what do you think of equal opportunities? This person thinks it’s rubbish…

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Now this is an interesting one and emphasises the importance of proper proof reading in job adverts.

The Royal Liverpool & Broadgreen University Hospital recently placed a job advert on the UK’s National Health Service website.

All seemed pretty normal with the advert and there was some fairly standard wording present in the job description including:

“Applications are invited … to work at this large University teaching hospital”.

“The applicant will be joining a staff of 37 consultants…”

“We provide anaesthetic services across 2 sites for adult patients…”

But at the bottom of the advert there was a sentence saying

“the usual rubbish about equal opportunities”.

The mistake was a reference to the organisation’s equal opportunities policy and was quickly deleted and replaced with their standard wording about equal opportunities.

This looks suspiciously like a situation where somebody was dictating the advert to a secretary who then typed it out word for word without noticing the phrase.

Now, I wonder who will get the blame for the error. The manager that dictated it or the secretary that typed it?

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Are you a better negotiator than your child?

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Although the recession that has hit many countries around the world appears to be coming to an end, there are still millions who are impacted by pay freezes and higher prices.

It was recently announced however that one particular segment of the population has seen some good news this year.

For the first time in 7 years, “pocket money” given to children by their parents has increased.

The annual Halifax Bank pocket money survey results have been released and it’s good news for children.

This year, the typical child in the UK receives pocket money of £6.25 a week. This works out as an extra £18.72 a year and is a 6% increase on the previous year.

There were some interesting findings in the survey.

For example, there is a difference between the amounts that boys receive compared to girls. Boys now receive an average of £6.41 a week which is 32p more than the average for girls.

Just over 50% of the children polled believe they receive the right amount of pocket money whilst 43% of the children think they deserve more money (some interesting wage negotiations are no doubt ahead for these 43% when they start working as an adult!)

A total of 1,202 children aged between eight and 15 across the UK were questioned as part of Halifax’s research.

Flavia Palacios Umana, head of savings products at Halifax, said: “It is encouraging to see the amount of pocket money children receive has increased from last year, this gives kids the chance to save their money as well as spend it … teaching children important financial life lessons by using pocket money will quickly give them understanding of basic financial issues and more important the consequences associated with making and spending money.”

Is this a sign that the recession is definitely over or is it a case that children have become better negotiators with their parents?

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Will Manchester United get express delivery with DHL?

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Sponsorship deals for sports teams are big business and can represent an important source of income.

The football club Manchester United know a thing or two about sponsorship deals though and their arrangement with Nike will earn them a minimum of £303 million over a 13 year period.

They also receive £20 million a year from global financial company Aon to have the Aon name emblazoned over the Nike sponsored Man United shirts.

The club has now gone a step further and has just announced a world first whereby their training kit will now have its own sponsor.

Global logistics company DHL has just signed a 4 year deal with the football club whereby DHL will pay Man United £10 million a year to put the DHL logo on the training kit.

Whilst this is good money for the football club it does seem a lot for DHL to pay. It’s half of what Aon pay and whilst Aon have their name on the kit worn during matches, DHL only have it on the training kit that is worn whilst the players are training and warming up before a match.

Man United are one of the richest football clubs in the world and many other football teams would love to have a sponsorship deal for their main shirts of £10 million let alone their training kit.

In fact, there are only 4 other clubs in the UK that receive more than £10 million a year for sponsorship of their main kit (Arsenal, Chelsea, Liverpool and Manchester City).

All of the others receive less sponsorship for their main kit than Man United receives for sponsorship of their training kit.

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Your BlackBerry could save your life…

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Many of you will have a BlackBerry phone and a number of you may well be addicted to it. The red light flashes to tell you that you’ve got email and you’ll rush to check that all important message that comes in.

As well as emails they also have other uses and some photographs taken by this particular user on her BlackBerry possibly saved her life.

BlackBerry is commonly referred to in some countries as a “CrackBerry” on the basis that it is as addictive as Crack Cocaine but I’m sure that this lady will be carrying it with her where ever she goes from now on.

The unnamed lady was hiking in the picturesque mountainous Lake District region in the UK.

She was by herself and bad weather came in. She lost her bearings and didn’t know where she was.

The weather was worsening and on top of all of this it was starting to get dark.

The lady who was in her 50s contacted rescue services but they couldn’t initially get to her as she didn’t know where she was so couldn’t tell them her location.

They then remembered the camera that was built into the BlackBerry and the lady took some photos of the area where she was and sent them to the mountain rescuers phone.

The end result was that some of the rescuers recognised the location where the pictures were taken and went and found her and guided her to safety.

There was therefore a happy ending for this lady who no doubt cherishes her BlackBerry even more now.

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The exam results are out on Monday but what a cheek…

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It’s that time of year again when ACCA students are nervously waiting for their exam results and good luck to any of you that are getting them on Monday.

Exam results time is traditionally a time when recruitment companies start targeting newly qualified with tempting adverts to switch jobs and move on in their career.

Whilst newly qualified job offers are likely to be found in the more traditional advertising mediums a more unusual use of an advertising space has recently been announced by UK based betting firm Betfair.

They have reportedly paid a substantial five figure sum to advertise on the bikini bottoms of Britain’s female volleyball champions.

Betfair rather creatively hope that sports photographers will take photos of the ladies behinds and people will see the advert that is emblazoned on their bikinis.

I’m sure that most men watch women’s beach volleyball to appreciate the athleticism, skill levels and tactics of the ladies so they may well not even notice the adverts.

If they do notice the adverts however, they will have a Quick Response (QR) code on them which will take users with a smartphone to a website where more details about Betfair will be found.

Some people will think that advertising on bikini bottoms is a bit of a cheek but nobody can deny that the advertising industry certainly comes up with creative ideas.

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Creativity plus Bernie Maddof’s clothes equals…

Bernie Madoff is in jail for 150 years for his Ponzi scheme but this individual shows that it is possible to make money out of Madoff

A Ponzi scheme is named after 1920s fraudster Charles Ponzi and involves paying investors returns from other people’s investments rather than from genuine profits earned by the investments.

Typically people are attracted to such a scheme by the unusually high rates of returns that have been obtained.

They then will almost certainly end up losing their money though as it becomes apparent that the high rates of return are not from genuine investments but from other people’s money.

Madoff’s Ponzi scheme was the largest ever seen in the world and estimated losses to the investors are thought to be in the region of $18 billion.

The US authorities tried to get as much money as possible from Madoff’s assets to try to cover some of the losses that individual investors suffered.

Designer John Vaccaro is a creative individual who bought most of Madoff’s clothes that had been put up for auction by the US Marshals. He then cleverly had the clothes cut up and made into iPad covers.

His iPad covers which are made out of Madoff’s old clothes sell for between $350 and $500 each and are apparently the latest craze that is hitting Wall Street in the states.

Just how long supply will last though is another thing. After all there was only a finite amount of clothes that were purchased.

Then again, the Designer could always set up his own little Ponzi scheme and start using other people’s clothes to supply the next batch…

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If the pilot and flight attendant take their clothes off is it good marketing?

Sometimes great advertising campaigns are down to timing.

Unfortunately for these two crew members of Cathay Pacific they took their clothes off at the wrong time.

Cathay Pacific, the Hong Kong based airline, is reportedly considering delaying a global marketing campaign following the publishing on the internet last week of some photos of two members of their staff who were, how shall we put it, in a compromising position in the cockpit of one of their planes.

According to various reports the 2 members of staff that starred in the photos were a female flight attendant and a male pilot.

They have both lost their jobs with the Airline and Cathay Pacific is adamant that the photos were not taken whilst the plane was airborne.

There was therefore no danger to any passengers and also no risk of the pilot’s intercom inadvertently being left on during the festivities.

Back to Cathay Pacific’s advertising campaign that will be delayed though and the company was planning on launching the second part of a major global marketing campaign in mid September.

So, why the decision to postpone the marketing launch?

Well, with all the publicity on the internet and in newspapers in Asia surrounding the photos of the team in action in the cockpit, the prominent lead tagline of their planned advertising campaign maybe isn’t the most appropriate at this moment.

Their planned tagline was:

“Meet the team who go the extra mile to make you feel special”.

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The Spaceship is about to land and there will be 12,000 people in it.

Steve Jobs is one of the best business presenters in the world. His presentations of the latest Apple products are legendary but he’ s just done rather well in a somewhat different presentation when he explained to the Cupertino City Council in California all about Apple’s plans for their new headquarters.

On land that was previously owned by Hewlett Packard, Apple has applied for planning permission to build a new Apple campus that will fit in an incredible 12,000 Apple employees.

Mr Jobs said that the design looks ‘a little like a spaceship’ and he’s certainly right. The building is glass sided and is in the shape of a large disc.

The campus will include a 1,000 seater auditorium as well as a corporate fitness centre.

Mr Job’s presentation is shown below.

Cupertino’s Mayor Gilbert Wong has perhaps unsurprisingly said that “There is no chance that we’re saying no. Every time that we have a large company that has a large sales tax produced we are very accommodating to that company.”

I’m sure that there are lots of Mayors in the US that would love to have Apple’s Spaceship land in their back yard.

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How much is your home worth? I guess it’s not as much as this one…

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There’s a new record in the UK. Britain’s most expensive home has just been sold for a rather nifty £140 million.

The average price of a house in the UK is £228,000 so that means that the anonymous Russian buyer that recently bought Park Place in the village of Remenham, near Henley-on-Thames, 35 miles outside of London could have instead bought over 600 “average homes”.

£140 million buys a lot of home though. The property is a 300 year old property in nearly 600 acres of land and includes stables and a boat house.

During the recent recession, the property development industry has taken a bit of a hammering.

Property developer Mike Spink however shows how it should be done.

He bought Park Place back in 2007 for a “mere” £42 million.

5 years later after reportedly spending several million on renovations he’s sold it for £98 million more than he paid for it. Not a bad return over 4 years.

Movie fans that saw the recent remake of the St. Trinians film would recognise the house as it was used as the school in the film.

Oh, and I forgot to mention but it’s also got its own golf course attached to it and a ghost by the name of Mary Blandy who was accused of poisoning her father in the 1700s is said to live there.

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The European Business Awards and our trumpet…

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We’re all feeling pretty pleased with ourselves here at ExP and apologies for “blowing our own trumpet” but we’ve just heard that the ExP Group were selected as a country representative in the 2011 European Business Awards, sponsored by HSBC.

This independent Awards programme is designed to recognise and promote excellence, best practice and innovation in the European business community.

The winners are selected by a 40 strong European Judging and Advisory Panel including leading politicians, academics, media owners and business luminaries.

The esteemed panel of judges were looking for organisations who exhibited innovation, business excellence and sustainability.

Thank you to the judges for selecting the ExP Group – we’re honoured (and very, very happy!)

John Casey, HSBC Head of Commercial Banking, Europe said “The European Business Awards provide a perfect opportunity to recognise the best of European business and their successes over the past twelve months. These companies have displayed an impressive ability to thrive despite challenging economic conditions, pursuing growth and creating prosperity. Their recognition is highly deserved, and through the European Business Awards their success – and the stories behind that – can be shared across the wider business community. We look forward to celebrating alongside these inspirational businesses.”

Petar Stoyanov, former President of Bulgaria, “This event inspires and stimulates European Business to reaching exacting criteria, where not only annual turnover and sales count, but also factors with high social importance – what we call business ethics.”

Many thanks to all our partners, clients, students as well as our wonderful team for their support in helping us to obtain such a prestigious achievement.

Now, where did we put that crate of champagne?

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Forget about face creams. The easiest way to make yourself better looking is…

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… to open up Photoshop and edit your photos.

Julia Roberts is a beautiful woman but wasn’t quite good enough for the cosmetics company L’Oreal.

She was used in adverts for some of their products but in the words of L’Oreal her photos were submitted to various “post production” alterations. In other words her photos were digitally altered to remove any wrinkles that the actress had.

British politician Jo Swinson wasn’t overly impressed with this and complained to the UK Advertising Standards Authority (ASA) arguing that airbrushing created a false impression of what the face creams could do.

The Julia Roberts advert was for Teint Miracle foundation by Lancôme, one of L’Oreal’s brands. Rather than promote the benefits of “Photoshopping images”, the advert claimed the foundation recreated the “aura of perfect skin”.

At the investigation L’Oreal conceded that certain ‘post production’ techniques had been used on the images but argued that the pictures were an accurate representation of her ‘naturally healthy and glowing skin’.

The ASA weren’t convinced by this and concluded that the adverts breached the advertising standards code for exaggeration and for being misleading. The adverts have now been banned in the UK. Interestingly though the ASA only covers the UK so it remains to be seen whether the adverts will still be used elsewhere around the world.

I’m not sure if Julia Roberts is too concerned with all of this though as she has reportedly been paid in the region of £15 million to represent the Lancôme brand.

With a payment of £15 million she won’t need any cream to get rid of the wrinkles but maybe will need some cream to sort out the “smile lines”.

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You’ve heard of the iPhone but what about iMerica?

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$75,876,000,000 is a lot of cash. But who does it belong to?

We blogged recently about Apple’s latest set of successful results but if you look into the figures you’ll see a staggering amount of cash that they hold.

Cashflow is a key factor for most businesses but by anyone’s reckoning $76 billion of cash is a hefty amount that will cover most eventualities.

Apple are reportedly holding onto the money for potential big ticket acquisitions but if you look at the latest market capitalisations of some well known companies on the London Stock Exchange then you can see what Apple could buy with their cash of $76 billion (£47 billion).

For example, they could purchase ALL of the following household names with cash:

BSB (Sky TV) (market cap = £14.8bn)

Burberry (£6.2bn)

Sainsbury (£6.1bn)

Marks & Spencers (£5.7bn)

Ryan Air (£4.7bn)

Next (£4.2bn)

Pfizer (£4.1bn)

Easy Jet (£1.5bn)

So, without taking out any loans or raising any additional funds Apple could buy all of the above.

These are phenomenal amounts of cash that they are holding.

They even have so much cash that they currently have more cash at hand than the US government!

According to the US Treasury, the total operating balance (in effect the amount of money the US government can spend before it hits their debt ceiling) was $74 billion. This is $2 billion less than the cash that Apple has at hand.

So, Apple has more cash than the US government. Will we shortly be seeing a picture of Steve Jobs on the one dollar bill?

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It’s the middle of summer so Merry Christmas everyone…

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It’s July. The sun is shining and for those of us in the northern hemisphere it’s the middle of summer. Even in London the clouds have gone away today and there are blue skies.

Surely therefore it’s a perfect time to start thinking about Christmas as it’s only a mere 5 months away?

July is probably a bit too early for most businesses to start promoting their Christmas items but the guys at Harrods think otherwise and they obviously know a thing or two about retail operations.

Harrods was established in 1824 and is probably the most famous department store in the world and tomorrow at 8am they are officially launching their 2011 Christmas range to the public.

Now I’m probably a typical male and the Christmas shopping will no doubt be done in a bit of a rush on Christmas Eve but Harrods seem to think there is a market for Christmas goods in summer (as well as autumn and winter).

It may not actually be such a crazy idea though as Harrods is a pretty unique shop. They have a significant number of international shoppers and if these people are visiting on holiday then they may well want to stock up on Harrods Christmas items whilst they are in the UK.

One of their new Christmas items this summer (!) is an exclusive “12 ice-creams of Christmas collection”.

The Christmas flavours of ice-cream include Christmas Pudding flavour and the slightly less appetising option of Brussel Sprout flavour ice-cream.

So in conclusion, Merry Christmas everyone and have a happy new year…

 

 

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