July 2011

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

Published on: 29 Jul 2011

$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…

Published on: 27 Jul 2011

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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This McDonald’s will be a Whopper…

Published on: 25 Jul 2011

The world’s greatest sporting event is next year. The 2012 Olympics in London will showcase some of the finest athletes in the world. People who have dedicated most of their lives to achieving sporting greatness.

Natural ability combined with dedication, practice, the right mental attitude and not to forget the right diet results in some of the best athletes the world has seen.

McDonald’s are one of the official sponsors of the Olympics and are in the process of building 4 new restaurants within the Olympic park.

Their flagship restaurant at the Olympics will be an impressive size. It will be their largest in the world at 3,000 square metres and will be able to seat 1,500 customers. It’s equivalent in size to two and a half Olympic swimming pools.

It represents an interesting juxtaposition – the world’s greatest sporting event with up to 1,500 people munching away on their burger and fries.

One of the business challenges facing McDonald’s at the moment is the movement towards a more health aware population and whilst no doubt some of their best selling fast food during the Olympics will be their traditional Big Mac and fries they have also announced that they will be offering a range of healthier alternatives at the event.

McDonald’s also took the opportunity during the Olympic announcement to publicise additional activities concerning their staff development. Namely, “McDonald’s best-of-the-best crew and managers will work at its Olympic venue restaurants. In the next year, McDonald’s will select 2,000 of its top-performing restaurant staff from the UK and around the world – the largest Olympic team ever assembled – to serve the world’s top athletes, coaches, spectators, media and officials at the Games.”

Some nice work by McDonalds in terms of looking after some of their top staff but it still remains to be seen whether we’ll see Usain Bolt queuing up for his Happy Meal before his 100m final.

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Apple has beaten their profit expectations but is it for real?

Published on: 22 Jul 2011

Steve Jobs announced Apple’s best ever quarterly results with revenue for the 3 months to 30 June up over 80% and profits up by 125%.

China is a market that recently has had significant growth potential for Apple and the latest results show that there was a 600% increase in revenue from China during the quarter.  Apple has reportedly said that there is an “incredible opportunity” in China at the moment.

This “incredible opportunity” will not come without its challenges though and there will be competition in China. Bizarrely enough it looks like some of this competition may well look rather familiar.

Whilst fake goods including fake iPhones are fairly common in parts of Asia it is unusual to have a complete fake Apple store.

27 year old blogger, “BirdAbroad” stumbled across an Apple store that looked familiar to start with but then turned out to be a complete fake.

As the photo above shows (courtesy of BirdAbroad) the store looks pretty real. In her words it was a “beautiful rip-off” and “they looked like Apple products. It looked like an Apple store. It had the classic Apple store winding staircase and weird upstairs sitting area.

The employees were even wearing those blue t-shirts with the chunky Apple name tags around their necks.”

The imitation Apple store was seen in the Chinese city of Kunming and reportedly the workers even believed they were working for Steve Jobs.

Alas for them the store isn’t an official Apple store though and highlights some of the challenges the real Apple will face.

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Should you get married if you’re a finance person?

Published on: 20 Jul 2011

Marriage – that traditional bond between man and woman where they share their journey through life. Joining in together with the good times and the bad times but above all being a symbol of ultimate love between a man and a woman.

That’s all very nice but forget about all that romantic stuff, if you’re a finance person is now the right time to get married?

One of the cornerstones of a marriage is the gold wedding ring and they are likely to be getting more expensive in the near future as yesterday the price of gold hit a new all time high record price of $1,610 an ounce.

Why has the price suddenly shot up? Is it because the world has suddenly got all romantic and there has been a surge in demand for gold wedding rings?

The answer has nothing to do with weddings but rather the case that gold is seen as a “safe haven” for investments during times of global economic uncertainly.

With the current economic problems in Greece and thoughts that high debt countries such as Italy and Spain may get drawn into the crisis, investors are avoiding shares and government bonds and instead investing in gold.

So, looking on the bright side for those of you that are about to get married, although your wedding ring is likely to become more expensive to buy, not only will your “emotional wealth” hopefully grow after you get married but so will the value of the gold investment on your finger.

Then again, whether you’ll ever be looking to sell your wedding ring at any stage in the future is another discussion altogether…

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Would you go to the gym and post this video on YouTube to get a job?

Published on: 11 Jul 2011

Despite most economies around the world looking like they are coming out of the recession, it’s still a tough job market out there and there are challenges in getting the perfect job.

Owen Hargreaves, the former Manchester United player has been plagued by injury during his career. He has played at the very top of the game though having represented England but is currently looking for a job.

He’s no doubt got the skills to play for a leading club and at 30 is still very much at his peak in terms of age.

But what about his fitness levels. Are other top clubs going to pay serious money to employ somebody who may not be able to play if injury hits again?

The corporate equivalent would be asking whether you would pay a significant golden hello and high salary to an employee who may well not be able to work for you shortly after joining you.

“Hats off” to Owen though as he’s taken the unusual step of posting a series of workout videos on YouTube showing him undertaking strenuous exercise. This will hopefully convince prospective employers that he is fit enough to play football again at the top level.

There is one particularly impressive video of him shown below and that is of him undertaking what can only be described as freestyle aerobics on a treadmill.

Personally, I don’t think I’ll try this at the gym tonight though as somehow I feel I’d be unconscious at the back of the treadmill with the treadmill belt spinning around my head within a few seconds of trying to run backwards…

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Which is worse. A $3 billion fraud or taking $100 and giving it back the next day?

Published on: 09 Jul 2011

Taylor Bean & Whitaker were one of the largest privately held mortgage lenders in the US.

Paul Allen was their CEO and involved in all the key areas of the business. Unfortunately for a lot of people Mr Allen also became involved in the fraud which led to the Taylor Bean business being closed down with 2,000 people losing their jobs.

The fraud also contributed to the collapse of Colonial Bank in the States after they purchased hundreds of millions of dollars of Taylor Bean mortgages.

Two major European banks also suffered as BNP Paribas and Deutsche Bank lost nearly $2 billion as a result of buying various corporate paper from Taylor Bean which was not suitably backed up by collateral.

A $3 billion fraud with thousands of people losing their jobs. Clearly a serious crime.

The end result was that Mr Allen was jailed for just over 3 years.

Meanwhile at the other end of the spectrum in terms of crime against financial institutions and the financial amount involved, a teller at Capital One bank in the States was approached by Roy Brown who put a hand under his jacket, claimed it was a gun and demanded money.

The teller handed Mr Brown 3 piles of money but he only took one $100 bill.

Mr Brown then had a change of heart and the next day handed himself into police and told them that his mother didn’t raise him that way.

He was homeless and told police that he needed the $100 to attend a detox centre.

Despite Mr Brown’s dramatic change of heart he was subsequently sentenced to 15 years in prison for the robbery.

So in summary, $3 billion and 3 years vs. $100 and 15 years…

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Would you consider this to be a bribe?

Published on: 04 Jul 2011

The Wimbledon tennis championships are taking place this week and as well as the diehard tennis fans that have been lucky enough to get tickets there will be a number of corporate entertainment packages present.

Corporate entertaining is big business and typically involves companies inviting key contacts such as important clients to major sporting events where they are provided with excellent seats as well as wined and dined with some of the best food and drink available.

The argument behind this expense is that it helps maintain and build relationships.

The UK Bribery Act has just come into force and raises the question as to whether corporate entertaining could possibly fall under these new bribery provisions.

The Ministry of Justice defines bribery as “giving someone a financial or other advantage to encourage that person to perform their functions or activities improperly”.

Does this mean therefore that free tickets to events such as Wimbledon could result in charges of bribery taking place and the people involved being liable to an unlimited fine or a jail sentence of up to 10 years?

Any of you at Wimbledon at the moment courtesy of corporate tickets can probably relax though as it all appears to be down to a matter of proportionality.

A recent announcement by Brent McDaniel, the UK head of Anti-bribery & Corruption at KPMG, said that “for those enjoying corporate hospitality this week, proportionality sits at the heart of this legislation. The SFO (Serious Fraud Office) are likely to have little interest in prosecuting over a bottle of wine or a day at the races. The mandate is to stamp out grand scale corruption in high risk countries, but evidence of companies undertaking thorough risk assessments and training is vital to evade prosecution.”

This all sounds ok then for anyone who is the lucky recipient of corporate entertaining.

It is worth noting as a conclusion though that if the company you work for is thinking of spending a lot of money on a high quality corporate entertaining programme at major sporting events around the world then please do bear in mind that I am personally available to attend these events, even at short notice.

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She’s good looking but she won’t speak to you.

Published on: 01 Jul 2011

If you are a singer or a member of a band there was a time when your ability to sing was the most important thing.

Now there’s a bit of a debate out there as to whether the music industry is too busy creating “artificial talent” rather than identifying the people that can really sing.

The rise of reality TV shows such as “the X Factor” where pop stars of the future are identified has driven this accusation of creating “artificial stars”.

Using Michael Porter’s well known strategic business model, the Value Chain and you could argue that a few years ago the key primary component was “Inbound Logistics” where the naturally talented performers were identified. Nowadays it’s arguably more the case that it’s the “Marketing & Sales” component of the chain where the real value is created.

There’s an interesting current development on this debate over in Japan.

Japan’s biggest girl band at the moment is a group by the name of AKB48. They are big for two reasons – firstly, in terms of their success (they have had 8 number one singles in Japan) and secondly, in terms of the number of girls in the band (currently a total of 61!).

The interesting thing though is that the latest addition to the band is a lady by the name of Aimi Eguchi.

Aimi was originally introduced on the group’s site as normal 16-year-old from a town north of Tokyo.

Sharp eyed fans though spotted the fact that she looked very similar to some of the other group members and AKB48’s management subsequently announced that she didn’t really exist and was a fake.

She was in fact a computer generated creation that was made up of the features of 6 of the other band members.

Now whilst some people would say that you’re likely to get more sense from a conversation with the fake Aimi than some of today’s pop stars, it’s worth asking whether this is a sign of the way forward in the music industry?

Will the “inbound logistics” of scouring the music clubs to identify the next big group be replaced by the design services of computer programmers?

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The ExP Group