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Friday, December 19, 2003

 

Walmart now selling songs for 88 cents

Walmart has now gone online with their music downloads business. 88 cents a track. What's especially nice is if you can find a CD which has only one long track. For example, this Led Zeppelin documentary which runs 46 minutes on a single track. Only 88 cents!

posted by Ryan : 10:01 AM | permalink

Wednesday, December 17, 2003

 

Looking forward to 3 weeks of leisure

Now that both Finance and Accounting are done with, one might ask “What is really the difference between Finance and Accounting?” Answer: Not much, I got similar amounts of sleep in both classes. Beyond that, I would say that Accounting is backward-looking and compliance-oriented while Finance is forward-looking and decision-oriented.

My big takeaway from Accounting is this: accountants look benign on the outside, but they can be dastardly and deft at their shady craft.... so hire one that you trust.

My big takeaway from Finance is this: the models that investment bankers use to evaluate a company's worth are complex, elaborate tools that put exceptional rigor into.... a wild guess. This is why financiers have a better sense of humor than accountants: you simply can't keep a straight face when you're estimating cash flows for AOL in the year 2009.

Anyways, Operations Management is done with, tomorrow I have my Strategy final, and Friday is the People Management final. But the worst is over. Come Saturday, I’ll have three weeks of eating, movie watching, shopping, gifts, airports, and family to look forward to. Maybe I’ll even find some time to start preparing for these consulting case interviews.... Or, for old time's sake, curl up by the fire with the ole' Accounting textbook.


posted by Ryan : 10:38 PM | permalink
 

Friction in private equity markets

Interesting thoughts here from VentureBlog about friction (and bubbles) in private equity markets. Excerpt:
...the venture industry features... little secondary market liquidity, no real-time price info, wildly volatile (and historically phenomenal) returns calculated over very long time frames and a substantial oversupply of dollars trying to get in against a large number of incumbent LPs who have no interest in giving up their seats at the table. That's a lot of friction. And it will be a long time before the venture industry reaches anything close to a new equilibrium point.
And yet, private equity and venture capital are still considered to be the Holy Grail of career moves amongst many of my classmates at Wharton. A partner from Bain & Company's Private Equity group came and spoke a few weeks ago, and he made the comment that many of today's private equity shops won't be around in a couple of years. He advised students to pick a top quartile performer or not go into private equity at all.

Easy money should always be recognized for what it is: good luck. But it's never an equilibrium payoff. That's just the nature of markets.

posted by Ryan : 9:35 PM | permalink
 

Executives who blog

Here's a nice little list of executives who blog, inspired by a New York Times article entitled "The Corporate Blog Is Catching On." Despite the article's title, I don't think the corporate blog will ever catch on, because there are simply too many lawyers who would have otherwise. Statistic of the day: the US has 70% of the world's lawyers and only 5% of the world's population.

posted by Ryan : 9:23 PM | permalink

Sunday, December 14, 2003

 

If accounting is the language of business, then I'm proud to be illiterate

Reading the average financial statement leads one to believe that accountants are true masters of illusion and deception. However, I believe accountants get too much credit in this respect. The reality is that accountants simply have no no grounding in the English language. Consider the following question from a Wharton Accounting exam.
Determine the unrealized gain (after taxes) that had been included in accumulated unrealized holding gains/losses in respect of marketable securities classified as available-for-sale disposed of during Fiscal 1998.
afdslkaj;lkj;lkj;lkjsasfd;lakfssssssssssssssssssssss

Sorry, I just fell asleep and my head hit the keyboard. If you're an insomniac and want an alternative to counting sheep, just consider counting prepositions in financial statements. Welcome to accounting, "the language of business."

posted by Ryan : 1:15 PM | permalink

Tuesday, December 09, 2003

 

Dell takes U-turn on the outsourcing bandwagon

As related in this article from The Economist (subscription required), Dell has allegedly threatened to move their outsourced India call center back to Texas. A Dell spokesman commented that "customers weren't satisfied with the level of support they were receiving." Later in the article, The Economist speculates:
Dell may be the victim of well-organised e-mail and bulletin-board campaigns by pressure groups and customers who have allowed their politics to cloud their judgment. Which customers, after all, can claim happy experiences with Texan call-centres? By using Indian ones, Dell does at least keep its computers cheap—which is the main point about its products.
I would disagree with The Economist on two points here. 1) The article implies that the main point for Dell is to keep its prices/margins low. There is some truth to this, but a great deal of Dell's success is due to delivering good service to its corporate customers. After all, corporations spend a great deal more supporting PC's than buying them. Price is not everything. 2) Furthermore, I question the speculation that Dell is caving in to political pressures here. Dell's boss is Wall Street and I don't believe it would compromise its relationship with investors purely to satisfy a few vocal locals in Texas.

On a different note, I've noticed that many corporations have jumped on the outsourcing bandwagon, drooling over the short-term benefits to their bottom-line. Often times, their view of the world is that customer service is a cost center. The result of this phenomenon, in laymans terms, is that customer service just plain sucks these days. American Express is about the only exception that comes to mind. I wonder if Dell, in a commoditized industry, realized that they had made a strategic mistake by compromising the quality of their customer service. If that is the rationale behind Dell's move out of India, I applaud them.

posted by Ryan : 1:27 PM | permalink
 

Coke now interested in our health

Talk about posturing. All of a sudden Coke executives are interested in our health. This is the same company that calls their market share "stomach share." Their stated goal is to get as much of their product in your stomach as possible. Coke used to come in 8oz bottles, then 12oz, and now the standard size is 20oz, with 24oz and 32oz bottles in some markets. Eventually we'll see 30-liter size as proposed by The Onion. And they're trying to hook kids and teenagers, just like the tobacco companies did. It's not a secret nor a conspiracy: it's their growth strategy.

posted by Ryan : 3:20 AM | permalink

Monday, December 08, 2003

 

Music prices coming down

Well music prices are finally coming down. Even though I despise the music industry, I've gotten past complaining about sky-high CD prices. I rarely buy CD's any more. It's amazing what public transportation and an MP3 hard drive player do to your music listening habits. Actually, my last two music purchases were DVD's (Pink Floyd's "Live at Pompeii" and Coldplay's "Live 2003". For just a little more money than a CD, a DVD concert gives you get video, Dolby Digital surround, and a longer playing time.

posted by Ryan : 7:14 PM | permalink
 

Goodbye Citibank

After 6 years of banking with Citibank, they have chosen to kiss my business goodbye. Last year, a Citibank teller persuaded my wife to switch account types, and misinformed us about the required minimum balance. The teller essentially misled us (accidentally I'm sure) into an account type that did not meet our needs. A year later, we unknowingly fell below the account's true balance requirement and were charged a $25 fee. After I explained the mixup to a customer service representative and his supervisor, they were unwilling to forgive the fee. According to Citibank, it doesn't matter what the Citibank teller told me -- I am held responsible for what's in the "manual." They emphasized that they couldn't verify my "claim" about the teller's misinformation. I emphasized that I had been a loyal customer to Citibank for 6 years with checking, savings, brokerage, and credit card accounts, and a consistently high average balance. I informed them that if they wanted to keep their $25 fee, they would lose my business permanently. They made no effort to dissuade me. It likely costs Citibank about $500 on average to acquire a customer like myself (adding customer acquisition costs for bank, credit card, and brokerage customers). But they wouldn't budge. Ultimately, the $25 fee was more important to them. Time to find a new bank.

The CEO of Commerce Bank addressed a group of Wharton students a few months ago, and I was impressed by the degree to which he emphasized customer service in his organization. One of his points was that banks have been so focused on M&A that they have completely forgotten about their customers. Look at the 3-yr stock returns on Commerce Bank vs. Citigroup and you can draw your own conclusions (Commerce Bank in red):



posted by Ryan : 3:23 PM | permalink

Tuesday, December 02, 2003

 

Man is it cold out there

22 degrees and windy. I just got back from a recruiting dinner. I naively walked 7 blocks with only a pea coat and gloves (well, I had pants on too). But my point is, you need a hat and scarf out here. And even then, your face will probably freeze. When I lived in Utah I could get away with being macho, but I can already tell that's not going to work here on the east coast. Do your worst, wintertime.

posted by Ryan : 9:14 PM | permalink

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