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Archive for July 2010

Consumer Products That Stalk Their Buyer

Many of you have probably heard about the hub bub around Wal Mart using smart RFID tags to improve and manage inventory, product loss control, store shelf restocking, etc.

Well, here my friends at Unilever have taken things to a new level. Kinda freaky in a way. Defiantly innovative. But not sure of the total ROM/ROI. It could backfire due to consumer privacy concerns. This is clearly not something that would go over well in the U.S. and Western Europe due to privacy concerns, and would probably back fire with consumers ultimately damaging the brand and generating negative brand gravity.  Check it out! What do you think?

-DF

Is Your Detergent Stalking You?

From AdAge – Posted by Laurel Wentz on 07.29.10 @ 12:23 PM

NEW YORK (AdAge.com) — Unilever’s Omo detergent is adding an unusual ingredient to its two-pound detergent box in Brazil: a GPS device that allows its promotions agency Bullet to track shoppers and follow them to their front doors.

Starting next week, consumers who buy one of the GPS-implanted detergent boxes will be surprised at home, given a pocket video camera as a prize and invited to bring their families to enjoy a day of Unilever-sponsored outdoor fun. The promotion, called Try Something New With Omo, is in keeping with the brand’s international “Dirt is Good” positioning that encourages parents to let their kids have a good time even if they get dirty.

Omo accounts for half of Brazil’s detergent sales and is already found in 80% of homes there, so Unilever’s goal is more to draw attention to a new stain-fighting version of Omo and get it talked about rather than looking for a big increase in sales.

That made the idea of doing a promotion where the prize finds the consumer, rather than the consumer having to look for the prize — and maybe not bothering — appealing.

Fernando Figueiredo, Bullet’s president, said the GPS device is activated when a shopper removes the detergent carton from the supermarket shelf. Fifty Omo boxes implanted with GPS devices have been scattered around Brazil, and Mr. Figueiredo has teams in 35 Brazilian cities ready to leap into action when a box is activated. The nearest team can reach the shopper’s home “within hours or days,” and if they’re really close by, “they may get to your house as soon as you do,” he said.

Once there, the teams have portable equipment that lets them go floor by floor in apartment buildings until they find the correct unit, he said.

Of course, Brazil has a high crime rate, and not everyone is going to open the door to strangers who claim to have been sent by her detergent brand to offer a free video camera. Bullet has thought of that. If the team tracks a consumer to her home but she won’t let them in, they can remotely activate a buzzer in the detergent box so that it starts beeping. And if the team takes too long to arrive, and the consumer has already opened the box to see if she’s a winner or just do laundry, she’ll find, along with the GPS device and less detergent than expected, a note explaining the promotion and a phone number to call.

“Anything can happen,” Mr. Figueiredo said. “We have to be innovative, but we don’t know what reaction to expect from consumers.”

In a big web component, the site experimentealgonovo.com.br (Portuguese for “try something new”) goes live in August, and will include a map showing roughly where the winners live, pictures of each winner and footage of the Bullet-Omo teams hunting down the GPS-enabled detergent boxes, knocking on doors and surprising consumers.

“It costs more than a traditional promotion and is riskier because it’s never been done before, but it’s worth it,” Mr. Figueiredo said. The technology aspect of the promotion costs less than $1 million, out of Omo’s overall marketing budget of about $23 million.

“We believe in using new technology for promotional marketing,” Mr. Figueiredo said.

Plus Bullet just likes figuring out how to ingeniously embed stuff in products. Two summers ago, sales of Unilever’s Fruttare Popsicles soared when Bullet disguised 10,000 iPod Shuffles as popsicles and popped them in freezer cases. The agency’s creatives had noticed while reading their iPod instruction manuals that an iPod can operate at temperatures below freezing. They immediately began freezing their own devices as a test, then constructed a fake ice-cream bar case that mimicked the popsicle but fit an iPod, and a wildly successful summer ice cream promotion was born.

Written by David Frederick

July 30, 2010 at 3:06 PM

CBO – The Role of Immigrants in the U.S. Labor Market

This is a very interesting report from the CBO.  Let me start out by saying a couple of things here. 1: I am both a product of immigrants from Italy, Ireland, Germany and England, and of American Indian ancestry.  So I guess that makes me both a proud product of (legal) immigrants to the USA,  and a product of the original possessors of this land and country.  2: I am a firm believer in comprehensive immigration reform. What is my definition of comprehensive immigration reform? Simple. 1: Effectively and immediately secure and manage our borders. 2: Create a comprehensive program to deal with the 12+ million folks here illegally – of ALL nationalities. 3: Ensure a legal and effective path to citizen ship for those who truly want to assimilate, contribute to our society, economy and national value i.e. fully becoming an American. 4: Attract educated and motivated people from around the world who can and want to contribute to our growth, national values and defense, and economic success. Thus, creating jobs, opening business, innovating, etc.

Just like many immigrants from China, Korea, Japan, Western and Eastern Europe, etc.. They come to build a better live and ultimately build a better country. To be part of something special. Something exceptional. To become an American. These people, families – immigrants could go any where i.e. Germany, Canada, Australia, the UK, etc. And many do and contribute in a positive and exceptional manner to those countries.

Yes, I know immigration is a touchy and politically sensitive topic. (I can also hear some of you saying what the hell does this have to do with business, innovation, etc. Keep reading.) But the reality in America is that its a huge uncontrolled mess with a critical negative impact and consequence for national security, national prosperity, employment, and economic issues facing all American’s and American Business. To quote a Founding Father, shrewd business man and objective thinking – Benjamin Franklin “The importation of foreigners into a country that has as many inhabitants as the present employments and provisions for subsistence will bear, will be in the end no increase of people, unless the new comers have more industry and frugality than the natives, and then they will provide more subsistence, and increase in the country; but they will gradually eat the natives out. Nor is it necessary to bring in foreigners to fill up any occasional vacancy in a country for such vacancy will soon be filled by natural generation.”
(“Observations Concerning the Increase of Mankind and the Peopling of Countries,” 1751)

This brings me to my point and this report from the CBO. One of the biggest strengths the United States has is its diversity of culture and thinking. We are a truly a nation of immigrants. A nation of immigrants that have traditionally and historically followed the law, assimilated into our national ideals and collectivly worked to build a greater country for both their family and their fellow citizens. Throughout American history many if not most of these immigrants brought with them highly skilled labor, professional skills in medicine, science, technology, and much more. ALL of which have directly and tangibly contributed to and made a direct impact on our national success and identity.

What the CBO’s report is showing is that the current flood of immigrants over the last decade, etc. to the U.S. are primarily from Mexico and Central America. Many illegally. More importantly, over half of the immigrant population in 2009 coming from these regions did not even have a high school diploma OR GED credential.

How does this help America and American Business? OR any country for that matter facing a similar challenge. It doesn’t. We are not an agrarian society any more, nor a manufacturing one since we off shore everything to China! So…. what to do in a world and country, in this case the USA, that is heavily technology and information based. These types of economies need and require skilled, educated, trained, intelligent and innovative workers. Not an uneducated mass of people who do not contribute to the greater growth/value and at worst, have limited potential to truly help themselves and their families to a better life . I know that sounds cruel. But reality and truth is cruel. This is fact and undisputed. It is also the nature of things through time and memorial and is nationally and regionally universal. This is the case around the world and through the centuries.

So what to do? Well, there are a lot of things that can be done now at least as far as the U.S. is concerned outside of the 4 definitions of immigration reform I outlined above. Some ideas include the following:

  • Create an accelerated recruitment and fast track to citizenship program for highly skilled , trained, and motivated people who are interested in wanting to become an American citizen, contribute to our country, and build a better life for their family and ours.
  • Help support Universities and Colleges to work with foreign students who want to stay, become citizens, and contribute to America i.e. attract bright minds, hard workers and motivated people who want to become a positive part of our country.
  • Create a more efficient and effective work visa programs for people who want to come here legally, work and contribute but may not for legitimate reasons want to become an American.
  • Help educate and/or re-educate/train American’s who have lost their jobs to out sourcing, economic issues, etc. Lend a helping hand to lift up American’s who are willing, able, and motivated to learn, contribute and prosper.
  • Create tax credits to help American’s who cant afford to send their kids or themselves to college so they can learn and gain the skills necessary  to contribute more effectively to their own lives and those of their fellow citizens.
  • Create a tax system that enables American business – small, medium and large, to recruit, hire, train and place American workers to succeed and excel in today’s global economy. Do you know that American businesses pay the highest corporate tax rates in the world when combining Federal, State and Local taxes? Add to this the upcoming tax changes and you kill small business. Do you really have to ask why American companies send jobs and work to China, Egypt, Vietnam, etc.? We need something like Ireland’s corporate tax plan.
  • Punish American business that knowingly hires, retains, and utilizes illegal aliens/immigrants – regardless of nationality and country of origin. We are a nation of laws. Additionally, we don’t need no new laws. Simply enforce what we have in place.
  • Look at the situation holistically and from a point of reality not from one political view or another. Look at it Nationally and whats in the best interest of the country and the American people first. Most importantly what is consistent and in compliance with the Constitution and laws of our nation.
  • And more.

Look, this isn’t rocket science. Its not complicated. In fact, the Constitution is pretty clear on this. The existing laws of the nation are clear on this. So what is the problem here? In addition to the Constitution and existing laws,  there are additional  real, effective, simple and productive ways to create a win win for all and work within the framework of our laws and constitution. However, it is politically tough, sensitive, and when viewed from prejudiced, biased, and close minded binders its becomes damn near impossible. Especially in our current political climate. It takes will, perseverance,  vision and an understanding of the Constitution and will of the American people to lead. Currently, we don’t have that in our national leadership. To quote the former President of MIT – Francis Walker (President MIT 1881-1897)

“For it is never to be forgotten that self-defense is the first law of nature and of nations. If that man who careth not for his own household is worse than an infidel, the nation which permits its institutions to be endangered by any cause which can fairly be removed is guilty not less in Christian than in natural law. Charity begins at home; and while the people of the United States have gladly offered an asylum to millions upon millions of the distressed and unfortunate of other lands and climes, they have no right to carry their hospitality one step beyond the line where American institutions, the American rate of wages, the American standard of living, are brought into serious peril. “Restriction of Immigration” by Francis A. Walker, The Atlantic Monthly, June, 1896; Vol. 77, No. 464; pages 822-829.

The current path we are on as a nation is one of peril and unsustainability, especially when viewed through unbiased reality supported by the CBO’s report. We need REAL pro-active and pro-American change and now. The alternative is bad for everyone – Americans, American Business, and immigrants. I would be curious as to your thoughts on this. Please comment!

-DF

One final thought: The U.S. is not the only country that has this problem. Look at Germany, the U.K, Canada, Australia, France, etc. Some countries control and manage this challenge tightly i.e. Switzerland, others are an abysmal failure – the USA.

FROM THE CBO’S REPORT: THE ROLE OF IMMIGRANTS IN THE U.S LABOR MARKET

People born in other countries represent a substantial and growing segment of the U.S. labor force—that is, people with a job or looking for one. In 2009, 24 million members of the labor force—more than one in seven—were foreign born, up from 21 million in 2004. However, the growth of the foreign-born labor force was much slower between 2004 and 2009 than between 1994 and 2004. In that earlier period, the size of the foreign-born labor force grew at an average annual rate of more than 5 percent, whereas from 2004 to 2009, the rate was about 2 percent. As a share of the total, the foreign-born labor force grew from 10.0 percent in 1994 to 14.5 percent in 2004 and to 15.5 percent in 2009.

Among members of the foreign-born labor force in the United States in 2009, about half came to this country before 1994. In 2009, 40 percent of the foreign-born labor force was from Mexico and Central America, and more than 25 percent was from Asia.

In 2009, over half of the foreign-born workers from Mexico and Central America did not have a high school diploma or GED credential, as compared with just 6 percent of native-born workers. In contrast, nearly half of the foreign-born workers from places other than Mexico and Central America had at least a bachelor’s degree, as compared with 35 percent of native-born workers.

Over time, participants in the U.S. labor force from Mexico and Central America have become more educated. In 2009, they had completed an average of 9.8 years of schooling— up from 9.5 years in 2004; 55 percent lacked a high school diploma or GED credential — down from 59 percent in 2004; and among 16- to 24-year-olds, 50 percent were not in school and were not high school graduates — down from 60 percent in 2004. Nevertheless, those born in Mexico and Central America are constituting an increasingly large share of the least educated portions of the labor force. For example, in 2009 they made up 64 percent of labor force participants with at most an 8th grade education — a figure that was 58 percent in 2004.

To a considerable extent, educational attainment determines the role of foreign-born workers in the labor market. In 2009, 70 percent of workers born in Mexico and Central America were employed in occupations that have minimal educational requirements, such as construction laborer and dishwasher; only 23 percent of native-born workers held such jobs. On average, the weekly earnings of men from Mexico and Central America who worked full time were just over half those of native-born men; women from Mexico and Central America earned about three-fifths of the average weekly earnings of native-born women.

Foreign-born workers who came to the United States from places other than Mexico and Central America were employed in a much broader range of occupations. They were more than twice as likely as native-born workers to be in fields such as computer and mathematical sciences, which generally require at least a college education. Their average weekly earnings were similar to those of native-born men and women.

The information on immigration in this report comes from the Current Population Survey, a survey of U.S. households conducted monthly by the Census Bureau. The survey asks respondents where they and their parents were born. Those who were born in another country are asked when they came to the United States to stay and if they have become a U.S. citizen by naturalization. They are not asked about their legal immigration status.

TO READ THE FULL CBO REPORT CLICK HERE

Written by David Frederick

July 30, 2010 at 1:40 PM

New Look & Feel

Hi Folks,

Just a quick note. As you may have noticed, I have put up a new look and feel for my iAIR Blog. If you haven’t seen it, check it out! I hope you like it and hopefully, it is more intuitive to navigate and read! Let me know what you think.

Thanks!
Dave

Written by David Frederick

July 29, 2010 at 5:15 PM

The 10 Biggest Brand Disasters of 2010

Have you seen the new Verizon television commercial showing the “tween” boy waking up and getting up out of bed, instantly grabbing his Verizon phone and subsequently montage through his day – breakfast, ignoring mom and dad, school, recess, class, after school doing nothing by the way, home, dinner, bed all the while staring at his Verizon phone? If this is not a said state of human evolution, anti-social down right idiotic behavior and marketing, I don’t know what is. There is more to life than staring at the tiny screen of your smart phone ALL DAY LONG! Note: You don’t have to be an anti-social “tween” to do this either. I know plenty of so called adults that do exactly the same thing. Get a life people!!! Unplug from the mother ship and come back to the real world. We miss you!

Anyway, this horrible, dumb, ignorant commercial made me think of this article that came out today regarding the 10 biggest brand disasters of 2010. Check it out. I guess, Verizon isn’t alone in marketing garbage and an unproductive lifestyle.

-DF

The 10 Biggest Brand Disasters of 2010
By: DOUGLAS MCINTYRE (read the full article here)

It’s been a rough year for those in the branding business at big corporations. SEC investigations, massive product recalls and oil spills (among more traditional factors like competition and slowing sales) have taken a toll on the reputations, as well as the stock prices, of some of America’s most well-known companies.

Calculating the value of a company’s brand is as much an art as a science because it requires looking at an array of factors. The two largest brand valuations firm — BrandZ and Interbrand — come up with radically different numbers for the same companies or products. Each of the brand valuation operations give general descriptions of their methodologies, but keep many details of their calculations secret.

Using the firms’ data as a reference, 24/7 Wall St. chose 10 big-name brands operating in the U.S. that have lost substantial chunks of their brand valuations in the first half of this year. We then examined a whole host of other criteria, including the value the brand has to its parent company’s market capitalization, the change in stock price over the first six months of the year compared to both the S&P 500 and firms in its peer group (each of these company’s stocks underperformed the broader market during the time) and the company’s earnings for the 2009 calendar year and the first quarter of 2010. Of course, another consideration was whether the company had a major negative event that made headlines. Toyota’s recalls certainly qualified, as well as BP’s massive oil spill.

Intangibles also play into 24/7 Wall St.’s calculations just as they do in other brand valuations. Numbers alone may show that BP’s brand value dropped 60% in the first half. But there’s a powerful case that BP has zero or even negative brand value because of the lasting impact the rig explosion and oil spill in the Gulf will have on the company’s financial health and reputation.

In total, the 10 companies on our list have lost well over $100 billion in brand value since Jan. 1. Here they are:

1. BP (BP)
Brand value Jan. 1, 2010: $20 billion.
Brand value June 30, 2010: $0.
Change: -100%

BP has the distinct honor of being the only brand to lose virtually all of its value in less than a year. (The only recent comparable case is AIG.) BP’s management is reviled by nearly everyone, and its gas stations have lost plenty of customers.

The firm has put $20 billion into escrow to cover cleanup and liability costs from its Gulf oil spill, but that the amount could be far below BP’s eventual liabilities. It’s in the process of selling some assets to raise money. Chapter 11 bankruptcy protection is always a possibility however remote in most experts’ opinion. Even if BP recovers financially, its brand will suffer for years, perhaps decades. Ironically, the U.K.-based company was rated as the No. 1 oil company brand just last year by BrandZ because of its reputation for being environmentally responsible.

2. Dell (DELL)
Brand value Jan. 1, 2010: $16 billion.
Brand value June 30, 2010: $9 billion.
Change: -44%.

Since founder Michael Dell returned as CEO in early 2007, Dell has been sliding. Revenue for the fiscal year ended Feb. 1, 2008 was $61.1 billion versus fiscal 2010’s $52.9 billion. Net income has been cut in half to $1.4 billion between the two periods.

But a sales decline may be the least of the problems. In 2007, after a year-long investigation, Dell disclosed an accounting scandal aimed at inflating its financial performance. As a result, it was forced it to restate financial results for fiscal years 2003 through 2006 and for the first quarter of 2007.

Unbelievably, Dell didn’t seem to learn its lesson. In 2008, government investigators found that it had a relationship with Intel (INTC) that federal, European Union and New York State authorities claimed helped the chipmaker maintain an unfair advantage in the PC market and artificially inflated Dell’s earnings performance. Dell admitted to these transactions with Intel and recorded a $100 million liability in its first quarter of fiscal 2011 to establish a reserve for a potential settlement with the Securities & Exchange Commission. The settlement would involve a civil injunction against Dell for alleged violations of federal securities laws. Michael Dell is currently in settlement talks with the SEC.

That’s not Dell’s only legal woe. Another lawsuit, which has been ongoing for three years, claims Dell shipped as many as 12 million computers containing faulty electrical components. Some of the e-mails disclosed in the case indicate that Dell employees were aware of the problems. It’s always tough to calculate the toll suits like these take on a company’s reputation, but it’s pretty clear that Dell’s standing has sunk.

3. Adobe (ADBE)
Brand value Jan. 1, 2010: $7 billion.
Brand value June 30, 2010: $4 billion.
Change: -43%.

Apple has damaged the prospects of several of the companies on this list, but none more than Adobe. Its Flash player has been the dominant multimedia software on the PC, a position it took from Microsoft and RealNetworks (RNWK) years ago. But Flash needs to migrate to mobile devices, where Apple has very effectively blocked a portion of that migration by refusing to allow Flash software onto its iPhones, iPods and iPads.

In April, Jobs wrote: “Flash was created during the PC era for PCs and mice. The mobile era is about low power devices, touch interfaces and open Web standards, all areas where Flash falls short.” Ouch.

Adobe’s stock dropped from $35 the day that Jobs wrote the statement to $32.50 five trading days later. Apple’s App store, which has over 200,000 applications and claims in excess of 3 billion downloads, allows Jobs’s company to almost entirely control what kind of software and multimedia technology runs on its products. Apple also forbids Adobe’s Creative Suite software to run on its devices. Google’s Android, however, runs Flash — so all is not lost in mobile devices.

Adobe recently posted strong sales, but concerns about its mobile future still dog the company

4. Sony (SNE)
Brand value Jan. 1, 2010: $12 billion.
Brand value June 30, 2010: $7 billion.
Change: -42%.

Once the consumer electronics darling of the 1990s, Sony has lost its footing, and it doesn’t look like it’ll regain its premier position anytime soon. In its fiscal 2010 (ending in March), it recorded major losses, and revenue fell for the third year in a row as sales of TVs and digital cameras continued to decline.

Sony’s leading edge in the video-game market has also evaporated. Competition from Microsoft and Nintendo has been so successful that, according to BrandZ, the PS3 has a brand valuation of $426 million compared to the Wii’s $10 billion and the Xbox 360’s $4.6 billion.

5. Goldman Sachs (GS)
Brand value Jan. 1, 2010: $16 billion.
Brand value June 30, 2010: $10 billion.
Change: -38%.

Goldman may be the only brand on this list to have regained some of its value recently. Many regard its $550 million settlement with the SEC as a victory that will lift a black cloud from the company (even though that settlement took quite a toll on the investment bank’s latest earnings). Others argue that the SEC essentially got Goldman to admit wrongdoing by forcing it to pay such a large fine. The SEC investigation and settlement may put off some current and potential customers, but Goldman also has other challenges to deal with. It may still face legal charges from authorities other than the SEC, including the New York State attorney general.

Goldman’s actions are also part of the government’s review of AIG’s collapse. The bank will also remain under fire for its compensation practices, although it’s not clear what actions, if any, the federal government will take.

More serious is the wave of financial reform that has swept across Europe and the U.S. In Europe, Goldman may have to reserve pay for some of its bankers, and it may face direct levies to cover the costs of future financial firm failures. Goldman’s investors are particularly nervous about provisions in the U.S. financial reform bill that will restrict proprietary trading — the most critical engine of Goldman’s profits — and new regulations of derivatives. Analysts believe that new regulations could cut $1.5 billion from Goldman’s profits. In its second-quarter earnings report on July 20, Goldman reported that revenue from investments and trading had plunged 40% year over year.

6. Research In Motion (RIMM)
Brand value Jan. 1, 2010: $25 billion.
Brand value June 30, 2010: $16 billion.
Change: -36%.

RIM’s BlackBerry dominated the smartphone market from 2002 until 2009. But then it began losing its grip thanks largely to the Apple’s (AAPL) iPhone. Google’s Android-based phones, as well as smartphones from LG, Motorola and Samsung have also helped erode RIM’s lead. Recent data from Changewave, a well-regarded wireless research firm, showed that in June, 52% of people polled said they planned to buy an iPhone (up from 31% in March), 19% planned to buy an Android-powered HTC phone (up from 12%) and only 6% planned to buy a BlackBerry (down from 14%). Recent data from research company Comscore show a similar shift but not nearly as dramatic.

RIM has also struggled to expand into the consumer market, but new handsets like the Curve have mostly fallen flat. And while revenue keeps growing — up 24% in it most recent quarter year over year to $4.24 billion — analysts remain concerned about RIM’s prospects.

7. Nokia (NOK)
Brand value Jan. 1, 2010: $40 billion.
Brand value June 30, 2010: $27 billion.
Change: -33%.

Even though Nokia reins as the largest manufacturer of mobile handsets in the world and claims up to 37% of the global market, it has failed to gain traction in high-end smartphones. Its shares have plummeted 67% in the three years since Apple started selling the iPhone, and now it’s rumored that Nokia’s board is shopping around for a new CEO to replace current chief Olli-Pekka Kallasvuo.

Nokia has virtually surrendered the high-end smartphone market to the iPhone, BlackBerry and Android-powered handsets. The loss in market share is beginning to take a toll on Nokia’s financial performance. In June, it projected that second-quarter revenue for its mobile devices and services division will be below its previous forecast of $8.2 billion to $8.8 billion. Nokia attributed the change to lower-than-expected average unit prices.

As a result of its failure to penetrate the most lucrative and fastest-growing portion of the handset sector, Nokias shares are down 32% this year to a 12-year low. S&P recently revised downward its credit rating on Nokia’s debt because the rating agency doesn’t expect “a material improvement in profitability over the near term.”

8. Johnson & Johnson (JNJ)

Brand value Jan. 1, 2010: $45 billion.
Brand value June 30, 2010: $33 billion.
Percent change: -27%.

Johnson & Johnson has been in the top 10 of Fortune’s Most Admired Companies list since 2006 (it was No. 4 in 2010), but that standing may not hold following a series of recalls of some of the most popular medications from J&J’s McNeil Consumer Healthcare division. Since May, McNeil has recalled more than 135 million bottles of medicine for children and infants, including, Tylenol, Motrin and Benadryl.

McNeil has shut down its Fort Washington, Pa., manufacturing plant, where the drugs were made and where conditions have been described as “deplorable.” The plant’s problems have caused mean that drugs like Tylenol and Benadryl could be in short supply well into next year. On Monday, the Food & Drug Administration cited yet another plant for poor conditions, this one in Lancaster, Pa.

Making matters worse, FDA documents presented at a congressional investigation of the recalls indicated that J&J may have covered up some of its knowledge of the problems. Describing what FDA investigators found, House Oversight and Government Reform Committee Representative Edolphus Towns said in a statement: “These documents are extremely troubling. We can’t tell where the spin ends and the truth begins.”

Earlier on July 20, J&J announced second-quarter earnings, in which it saw a very slight bump in sales year over year. More troubling to J&J investors, however, was the company’s outlook. To reflect the recalls and the Fort Washington plant shutdown, J&J lowered its earnings guidance range to $4.65 to $4.75 a share for the full year, down from $4.80 to $4.90.

J&J not only faces plunging sales in one of its largest divisions — and a potentially huge number of liability suits — but it will also certainly lose its position as the country’s most well-regarded health-care product and drug provider.

9. Google (GOOG)
Brand value Jan. 1, 2010: $100 billion.
Brand value June 30, 2010: $74 Billion.
Change: -26%.

Google’s decision to largely abandon China, the fastest-growing Internet market in the world, and slowing growth in its search engine business have taken a toll on the company’s brand value this year.

After disputes with the Chinese government over censorship and Google’s accusations that its servers were broken into by a government-supported group, the search giant decided to move its presence to Hong Kong. While ethically defensible, Google’s choice has the potential to cost the company billions of dollars in future revenue. Google has lost its competitive advantage in Chinese search to local search company Baidu and to Microsoft’s Bing. China has reapproved Google’s license to operate in the country, but the relationship remains testy.

As if losing ground in the fastest-growing market in the world weren’t enough, Google’s core search engine business has also started to slow. The company has been adding costs in order to buttress the business and to work on diversifying its revenue streams. So even though revenue rose from $5.5 billion in the second quarter of 2009 to $6.8 billion in its most recent quarter, expenses have increased even more sharply, from $3.6 billion to $4.5 billion during those periods.

10. Toyota (TM)
Brand value Jan. 1, 2010: $30 billion.
Brand value June 30, 2010: $24 billion.
Change: -20%.

A series of major recalls has severely damaged the world’s largest automaker’s reputation for quality, safety and customer focus. Toyota has flagged defects in nearly 10 million cars worldwide since the beginning of the year. That news was bad enough, but then allegations surfaced that top executives knew about many of the problems and either failed to report them in a timely manner or attempted to cover them up. As a result, Toyota has agreed to pay the National Highway Traffic Safety Administration $16.4 million, the maximum fine the agency can levy. But Toyota also faces hundreds of liability suits that could eventually cost billions of dollars. On June 19, Toyota received its second grand jury subpeona regarding the recalls, this time related to steering problems.

Once ranked near or at the top of J.D. Power & Associates’ rankings, Toyota fell to the next to last spot in the firm’s recently released annual Initial Quality Survey. Toyota’s 2010 story has one surprising twist: U.S. vehicle sales haven’t fallen. In fact, they were up 9.9% during the first six months of 2010.

Even though the economy is reeling, there’s no excuse for big corporations to take their eye off the ball in such a damaging way.

Written by David Frederick

July 29, 2010 at 11:15 AM

SEC Says New FinReg Law Exempts It From Public FOIA Disclosure

This is what happens when you rush through a 2,700 page financial regulation bill that no one reads. Yet, again the systematic and methodical disassembly of constitutional rights for the American people. Why would the Federal Government and the SEC not want to comply? What are they hiding? What else is in the the 2,700 pages that will effect your business/commercial liberties and your personal liberties. What a mess.

-DF

SEC Says New FinReg Law Exempts It From Public Disclosure

Under a little-noticed provision of the recently passed financial-reform legislation, the Securities and Exchange Commission no longer has to comply with virtually all requests for information releases from the public, including those filed under the Freedom of Information Act.
fox news

So much for transparency.

Under a little-noticed provision of the recently passed financial-reform legislation, the Securities and Exchange Commission no longer has to comply with virtually all requests for information releases from the public, including those filed under the Freedom of Information Act.

The law, signed last week by President Obama, exempts the SEC from disclosing records or information derived from “surveillance, risk assessments, or other regulatory and oversight activities.” Given that the SEC is a regulatory body, the provision covers almost every action by the agency, lawyers say. Congress and federal agencies can request information, but the public cannot.

That argument comes despite the President saying that one of the cornerstones of the sweeping new legislation was more transparent financial markets. Indeed, in touting the new law, Obama specifically said it would “increase transparency in financial dealings.”

The SEC cited the new law Tuesday in a FOIA action brought by FOX Business Network. Steven Mintz, founding partner of law firm Mintz & Gold LLC in New York, lamented what he described as “the backroom deal that was cut between Congress and the SEC to keep the SEC’s failures secret. The only losers here are the American public.”

If the SEC’s interpretation stands, Mintz, who represents FOX Business Network, predicted “the next time there is a Bernie Madoff failure the American public will not be able to obtain the SEC documents that describe the failure,” referring to the shamed broker whose Ponzi scheme cost investors billions.

The SEC didn’t immediately respond to a request for comment.

Criticism of the provision has been swift. “It allows the SEC to block the public’s access to virtually all SEC records,” said Gary Aguirre, a former SEC staff attorney-turned-whistleblower who had accused the agency of thwarting an investigation into hedge fund Pequot Asset Management in 2005. “It permits the SEC to promulgate its own rules and regulations regarding the disclosure of records without getting the approval of the Office of Management and Budget, which typically applies to all federal agencies.”

Aguirre used FOIA requests in his own lawsuit against the SEC, which the SEC settled this year by paying him $755,000. Aguirre, who was fired in September 2005, argued that supervisors at the SEC stymied an investigation of Pequot – a charge that prompted an investigation by the Senate Judiciary and Finance committees.

The SEC closed the case in 2006, but would re-open it three years later. This year, Pequot and its founder, Arthur Samberg, were forced to pay $28 million to settle insider-trading charges related to shares of Microsoft (NASDAQ:MSFT). The settlement with Aguirre came shortly later.

“From November 2008 through January 2009, I relied heavily on records obtained from the SEC through FOIA in communications to the FBI, Senate investigators, and the SEC in arguing the SEC had botched its initial investigation of Pequot’s trading in Microsoft securities and thus the SEC should reopen it, which it did,” Aguirre said. “The new legislation closes access to such records, even when the investigation is closed.

“It is hard to imagine how the bill could be more counterproductive,” Aguirre added.

FOX Business Network sued the SEC in March 2009 over its failure to produce documents related to its failed investigations into alleged investment frauds being perpetrated by Madoff and R. Allen Stanford. Following the Madoff and Stanford arrests it, was revealed that the SEC conducted investigations into both men prior to their arrests but failed to uncover their alleged frauds.

FOX Business made its initial request to the SEC in February 2009 seeking any information related to the agency’s response to complaints, tips and inquiries or any potential violations of the securities law or wrongdoing by Stanford.

FOX Business has also filed lawsuits against the Treasury Department and Federal Reserve over their failure to respond to FOIA requests regarding use of the bailout funds and the Fed’s extended loan facilities. In February, the Federal Court in New York sided with FOX Business and ordered the Treasury to comply with its requests.

Last year, the network won a legal victory to force the release of documents related to New York University’s lawsuit against Madoff feeder Ezra Merkin.

FOX Business’ FOIA requests have so far led the SEC to release several important and damaging documents:

•FOX Business used the FOIA to obtain a 2005 survey that the SEC in Fort Worth was sending to Stanford investors. The survey showed that the SEC had suspicions about Stanford several years prior to the collapse of his $7 billion empire.

•FOX Business used the FOIA to obtain copies of emails between Federal Reserve lawyers, AIG and staff at the Federal Reserve Bank of New York in which it was revealed the Fed staffers knew that bailing out AIG would result in bonuses being paid.

Recently, TARP Congressional Oversight Panel chair Elizabeth Warren told FOX Business that the network’s Freedom of Information Act efforts played a “very important part” of the panel’s investigation into AIG.

Warren told the network the government “crossed a line” with the AIG bailout.

“FOX News and the congressional oversight panel has pushed, pushed, pushed, for transparency, give us the documents, let us look at everything. Your Freedom of Information Act suit, which ultimately produced 250,000 pages of documentation, was a very important part of our report. We were able to rely on the documents that you pried out for a significant part of our being able to put this report together,” Warren said.

The SEC first made its intention to block further FOIA requests known on Tuesday. FOX Business was preparing for another round of “skirmishes” with the SEC, according to Mintz, when the agency called and said it intended to use Section 929I of the 2000-page legislation to refuse FBN’s ongoing requests for information.

Mintz said the network will challenge the SEC’s interpretation of the law.

“I believe this is subject to challenge,” he said. “The contours will have to be figured out by a court.”

To read the full article and see the documents click here

Written by David Frederick

July 28, 2010 at 12:15 PM

Federal Debt and the Risk of a Financial Crisis

Well, here is an interesting “briefing” from Jonathan Huntley of the CBO’s Macroeconomic Analysis Division. Read it and weep. Oh yeah, don’t forget to vote in November.

-DF

Federal Debt and the Risk of a Financial Crisis Briefing by Jonathan Huntley of CBO’s Macroeconomic Analysis Division.

In fiscal crises in a number of countries around the world, investors have lost confidence in governments’ abilities to manage their budgets, and those governments have lost their ability to borrow at affordable rates. With U.S. government debt already at a level that is high by historical standards, and the prospect that, under current policies, federal debt would continue to grow, it is possible that interest rates might rise gradually as investors’ confidence in the U.S. government’s finances declined, giving legislators sufficient time to make policy choices that could avert a crisis. It is also possible, however, that investors would lose confidence abruptly and interest rates on government debt would rise sharply, as evidenced by the experiences of other countries.

Unfortunately, there is no way to predict with any confidence whether and when such a crisis might occur in the United States. In a brief released today, CBO notes that there is no identifiable “tipping point” of debt relative to the nation’s output (gross domestic product, or GDP) that would indicate that such a crisis is likely or imminent. However, in the United States, the ratio of federal debt to GDP is climbing into unfamiliar territory—and all else being equal, the higher the debt, the greater the risk of such a crisis.

Over the past few years, U.S. government debt held by the public has grown rapidly. According to CBO’s projections, federal debt held by the public will stand at 62 percent of GDP at the end of fiscal year 2010, having risen from 36 percent at the end of fiscal year 2007, just before the recession began. In only one other period in U.S. history—during and shortly after World War II—has that figure exceeded 50 percent.

Further increases in federal debt relative to the nation’s output almost certainly lie ahead if current policies remain in place. The aging of the population and rising costs for health care will push federal spending, measured as a percentage of GDP, well above the levels experienced in recent decades. Unless policymakers restrain the growth of spending, increase revenues significantly as a share of GDP, or adopt some combination of those two approaches, growing budget deficits will cause debt to rise to unsupportable levels, as shown in the figure below. (For more details, see CBO’s recent report The Long-Term Budget Outlook.)

Note: The extended-baseline scenario adheres closely to current law, following CBO’s 10-year baseline budget projections through 2020 (with adjustments for the recently enacted health care legislation) and then extending the baseline concept for the rest of the long-term projection period. The alternative fiscal scenario incorporates several changes to current law that are widely expected to occur or that would modify some provisions that might be difficult to sustain for a long period.

Although deficits during or shortly after a recession generally hasten economic recovery, persistent deficits and continually mounting debt would have several negative economic consequences for the United States. Some of those consequences would arise gradually—but a high level of federal debt, combined with an unfavorable long-term budget outlook, would also increase the probability of a sudden fiscal crisis prompted by investors’ fears that the government would renege on the terms of its existing debt or that it would increase the supply of money to finance its activities or pay creditors and thereby boost inflation. The resulting abrupt rise in interest rates would create serious challenges for the U.S. government. For example, a 4-percentage-point across-the-board increase in interest rates would raise federal interest payments next year by about $100 billion; if those higher rates persisted, net interest costs in 2015 would be nearly double the roughly $460 billion that CBO currently projects for that year. Such an increase in rates could also precipitate a broader financial crisis because it would reduce the market value of outstanding government bonds, inflicting losses on mutual funds, pension funds, insurance companies, banks, and other holders of federal debt.

Options for responding to a fiscal crisis would be limited and unattractive. The government would need to undertake some combination of three actions. One action could be changing the terms of its existing debt. This would make it difficult and costly to borrow in the future. A second action could be adopting an inflationary monetary policy by increasing the supply of money. However, this approach would have negative consequences for both the economy and future budget deficits. A third action could be implementing an austerity program of spending cuts and tax increases. Such budgetary adjustments, in the face of a fiscal crisis, would be more drastic and painful than those that would have been necessary had the adjustments come sooner.

This brief was prepared by Jonathan Huntley of CBO’s Macroeconomic Analysis Division.

To visit this site click here

Written by David Frederick

July 27, 2010 at 7:13 PM

Majority of Small Business Sector Facing Higher Taxes Under Obama Plan

Another interesting perspective and clear data points on the damaging impact of upcoming taxes on small business. When you tax small business into bankruptcy there are no jobs, no innovation, no spending and purchasing of other goods and services, no national growth, and ultimately, no tax base because you have taxed the small business owner out of business. Add the “tax” burden of national health care, government bailouts to banks that send their money overseas – See Goldman Sachs, AIG, etc., stimulus debt which has not stimulated anything but government expansion and bureaucracy, and unprecedented debt and government spending, it is not a promising outlook for small business owners in the U.S.A. for the next year or so. Hang in there though. American entrepreneurship, innovation, and perseverance will carry us through. Cross your fingers for real change in November! American’s and American Business need all the change they can get… dimes, pennies, nickles, quarters, etc. before the Obama Administration and Congress take that as well!

-DF


Majority of Small Business Sector Facing Higher Taxes Under Obama Plan

From Ryan Ellis

* The Obama Administration and Congressional Democrats have said that they want to raise taxes in the top two income tax rates in January 2011. Under their plan, the 33 percent rate will rise to 36 percent, and the 35 percent rate will rise to 39.6 percent automatically in January. These rates affect families and small business owners earning at least $200,000 per year

* Unlike corporations, small businesses usually don’t pay their own taxes. Rather, business profits flow through to the business owner. The business owner pays taxes on her small business by adding the profits to her income tax form. Therefore, personal income taxes are the same thing as small business taxes.

* According to the IRS, most small business profits pay taxes in households making more than $200,000 per year. The IRS keeps track of two types of small business income: sole proprietors, and “pass-through” entities like partnerships and S-corporations.

* All small businesses. There were 30 million tax returns reporting small business income in 2008. On net (profits reduced by losses), these owners reported business profits of $981 billion. A large chunk of this net profit–$488 billion—faced taxation in households making more than $200,000 per year. A majority of small business profits will face a tax rate hike under the Obama-Pelosi-Reid plan.

* Sole proprietors. There were 22 million tax returns reporting sole proprietor income in 2008. On net (profits reduced by losses), these owners reported business profits of $264 billion. A large chunk of this net profit–$90 billion—faced taxation in households making more than $200,000 per year. 34 percent of sole proprietor profits will face a tax rate hike under the Obama-Pelosi-Reid tax hike plan.

* S-corporations and partnerships. There were 8 million partners and S-corporation shareholders in 2008. On net (profits reduced by losses), these owners reported business profits of $717 billion. A majority of this profit–$398 billion—faced taxation in households making more than $200,000 per year. 55 percent of S-corporation and partnership profits will face a tax rate hike under the Obama-Pelosi-Reid tax hike plan.

Read more: http://www.atr.org/smallbusiness.html?content=5247#ixzz0ut1kySH2

Written by David Frederick

July 27, 2010 at 8:53 AM