The Teen Whisperer: How the author of “The Fault in Our Stars” built an ardent army of fans

THE TEEN WHISPERER

How the author of “The Fault in Our Stars” built an ardent army of fans.

by Margaret TalbotJUNE 9, 2014

Green wanted to write “an unsentimental cancer novel” that offered “some basis for hope.” Illustration by Bartosz Kosowski.

In late 2006, the writer John Green came up with the idea of communicating with his brother, Hank, for a year solely through videos posted to YouTube. The project wasn’t quite as extreme as it sounds. John, who was then twenty-nine, and Hank, who was three years younger, saw each other about once a year, at their parents’ house, and they typically went several years between phone calls. They communicated mainly through instant messaging.

Hank was living in Missoula, where he’d started a Web site about green technology. John was living on the Upper West Side while his wife, Sarah Urist Green, completed a graduate degree in art history at Columbia. He had published two young-adult novels, “Looking for Alaska,” in 2005, and “An Abundance of Katherines,” in 2006, and was working on a third. Like the best realistic Y.A. books, and like “The Catcher in the Rye”—a novel that today would almost certainly be marketed as Y.A.—Green’s books were narrated in a clever, confiding voice. His protagonists were sweetly intellectual teen-age boys smitten with complicated, charismatic girls. Although the books were funny, their story lines propelled by spontaneous road trips and outrageous pranks, they displayed a youthfully insatiable appetite for big questions: What is an honorable life? How do we wrest meaning from the unexpected death of someone close to us? What do we do when we realize that we’re not as special as we thought we were? Read more of this post

The Dark Side of the Internet of Things: Intruders for the Plugged-In Home, Coming In Through the Internet

Intruders for the Plugged-In Home, Coming In Through the Internet

By NICK BILTON

JUNE 1, 2014 11:00 AM 35 Comments

Home, connected home. The front door opens with a tap on aniPhone. The lights come up as if by magic. The oven sends a text: Dinner is ready.

You will probably be hearing a lot about these sorts of conveniences this week from the Apple Worldwide Developers Conference in San Francisco. Apple is expected to unveil software that promises to turn our homes into Wi-Fi-connected wonderlands, where locks, lights, appliances — you name it — can all be controlled via an iPhone or iPad. You can bet that before long, refrigerators will come with “Made for iPhone” stickers.

These initiatives are all part of what is known as the Internet of Things. That is a catchall term used to describe connectivity — specifically, how people connect with products, and how products connect with each other.

Sounds great. But I can’t shake the feeling that one day, maybe, just maybe, my entire apartment is going to get hacked. Read more of this post

Surviving and Thriving in the Cloud

Surviving and Thriving in the Cloud

Red Hat’s core Linux business remains strong, but increasing cloud adoption could provide upside.

By Norman Young | 06-02-14 | 06:00 AM | Email Article

The change in computing model from client-server to cloud-device presents opportunities and pitfalls for  Red Hat (RHT). The undisputed king of the Linux operating system faces possible disruptions to its business model, since end users may be insulated from OS decision-making in the public cloud. However, we think the core Red Hat Enterprise Linux business combined with its growing middleware and virtualization distribution will give the firm an edge in the data center, private cloud, and hybrid environments while it develops its open-source cloud infrastructure projects, OpenStack and OpenShift. Our $50 fair value estimate assumes continued growth in the core RHEL business, adoption and strong growth of middleware and virtualization services, and little near- to medium-term revenue contribution from OpenStack and OpenShift.

Sunny Forecast for Clouds
Improvements in hardware, software, and networking have combined with the secular trend toward outsourcing to usher in the era of cloud computing. The economies of scale offered by remote data centers managed by third parties allow enterprises to offload or outsource some or all of their computing and storage workloads. Cloud adoption is particularly cost-effective for smaller and midsize users that lack the capital, manpower, or expertise to build and maintain their own data centers. Read more of this post

Chinese Firms with Weak VIEs: Dumb Investment

Chinese Firms with Weak VIEs: Dumb Investment

by Ben StrubelJune 02, 2014, 12:10 pm

Chinese Companies with Weak VIEs: Dumb Investment of the Week by Ben Strubel of Strubel Investment Management

After a wave of accounting and fraud scandals in 2011 (billions of investor dollars were lost), Chinese companies, particularly small and mid cap, are beginning to come back to US markets. Investors are beginning to warm up to these companies again and the share prices of many have risen as the memories of the multitude of fraudulent Chinese companies fade away.

How can investors protect themselves from a repeat of 2011? One thing investors need to do is thoroughly educate themselves on the WFOE (Wholly Foreign Owned Enterprise)/VIE (Variable Interest Entity) system many US listed Chinese companies use. Because of prohibitions on foreign ownership in certain sectors many Chinese companies use a complex legal structure to get around this.

At its most basic the WFOE/VIE structure looks like the diagram below. There is a US listed entity that is registered in Delaware or another corporate haven like the British Virgin Islands or the Cayman Islands. This entity then owns the WFOE which is a PRC registered entity. The WFOE then has a contractual arrangement with one or more VIE entities. The owners of the US listed entity do not own any of the assets in the VIE.

image001

Some companies also include a Hong Kong based entity between the US listed entity and the WFOE. Additionally, most companies have multiple VIEs and various Chinese nationals (typically founders and management) with varying equity stakes in the assortment of entities. Read more of this post

Kepler space telescope spies a ‘Mega-Earth’

Kepler space telescope spies a ‘Mega-Earth’

By Joel Achenbach, Published: June 2

Astronomers have discovered a surprising planet, a rocky world with 17 times the mass of Earth. There have been “Super-Earths” discovered before, but this one is in a league of its own. The scientists call it a “Mega-Earth.”

Discovered by NASA’s Kepler space telescope and announced Monday at an astronomy meeting in Boston, this planet, officially named Kepler-10c, scrambles the equations that dictate how massive a rocky planet can be without ballooning into a Jupiter-like gas giant.

The theorists didn’t see this coming. The orthodoxy was that, beyond about 10 Earth masses, a planet would hold on to so much hydrogen gas that it would become like Jupiter or Saturn. Kepler-10c suggests that plus-size planets can stay rocky, with clearly defined surfaces, rather than becoming gaseous and bloated.

That means there’s more real estate out there for life as we know it on Earth.

Kepler-10c is also very old, having formed about 11 billion years ago, less than 3 billion years after the birth of the universe. Rocky worlds weren’t believed to have existed that long ago.

“Nature will do what she wants, regardless of earthling theorists,” said Sara Seager, a Massachusetts Institute of Technology planetary scientist who was not involved in the new discovery but said by e-mail that she finds it “incredibly exciting.” Read more of this post

Visions and Voices on Emerging Challenges in Digital Business Strategy

Visions and Voices on Emerging Challenges in Digital Business Strategy

Anandhi Bharadwaj 

Emory University

Omar A. El Sawy 

University of Southern California – Marshall School of Business

Paul A. Pavlou 

Temple University – Department of Management Information Systems; Temple University – Department of Strategic Management

N. Venkat Venkatraman 

Boston University – Department of Management Information Systems
June 1, 2013
MIS Quarterly Vol. 37 No. 2, pp. 1-XX/June 2013
Fox School of Business Research Paper No. 14-001

Abstract: 
This section is a collection of shorter “Issue and Opinions” pieces that address some of the critical challenges around the evolution of digital business strategy. These voices and visions are from thought leaders who, in addition to their scholarship, have a keen sense of practice. They outline 27 through their opinion pieces a series of issues that will need attention from both research and practice. These issues have been identified through their observation of practice with the 30 eye of a scholar. They provide fertile opportunities for scholars in information systems, strategic management, and organizational theory.

 

Devil’s Advocate: The Most Incorrect Beliefs of Accounting Experts

Devil’s Advocate: The Most Incorrect Beliefs of Accounting Experts

Sudipta Basu 

Temple University – Department of Accounting
December 1, 2013
Accounting Horizons, Vol. 27, No. 4, 2013
Fox School of Business Research Paper No. 14-005

Abstract: 
This commentary reflects the views of a panel of six experts tasked with writing an essay on the most incorrect beliefs of accounting experts. The title provides ample motivation for this discussion – to document the views of some thought leaders in accounting research on a seldom-debated and mostly ignored issue – incorrect beliefs. While each essay offers a thoughtful message on its own, in combination they reflect an even stronger view, and offer sound advice for accountants of all stripes and persuasions.

 

Creating Value by Changing the Old Guard: The Impact of Controlling Shareholder Heterogeneity on Firm Performance and Corporate Policies

Journal of Financial and Quantitative Analysis / Volume 48 / Issue 06 / December 2013, pp 1781-1811

Creating Value by Changing the Old Guard: The Impact of Controlling Shareholder Heterogeneity on Firm Performance and Corporate Policies

Hua Denga1, Fariborz Moshiriana2, Peter Kien Phama3 and Jason Zeina4

Abstract

Theory suggests that controlling shareholders can influence firm value through both shared benefits creation and private benefits consumption. Using negotiated control-block transfers from 31 countries, we look beyond ownership concentration and investigate how controlling shareholder heterogeneity influences the relative importance of these two effects. We document that a control transfer precipitates positive firm outcomes particularly when the vendor has maintained control over an extended period and the acquirer displays a strong incentive to engage in restructuring. In such cases, we observe a sustained positive price reaction, more focused corporate investments, lower leverage, higher operating efficiency, and superior long-term performance.

 

Wisdom of Crowds: The Value of Stock Opinions Transmitted Through Social Media

Wisdom of Crowds: The Value of Stock Opinions Transmitted Through Social Media

Hailiang Chen

Prabuddha De

Yu (Jeffrey) Hu

Byoung-Hyoun Hwang

Social media has become a popular venue for individuals to share the results of their own

analysis on financial securities. This paper investigates the extent to which investor opinions

transmitted through social media predict future stock returns and earnings surprises. We

conduct textual analysis of articles published on one of the most popular social media

platforms for investors in the United States. We also consider the readers’ perspective as

inferred via commentaries written in response to these articles. We find that the views

expressed in both articles and commentaries predict future stock returns and earnings

Investor Networks in the Stock Market

Investor Networks in the Stock Market

Han N. Ozsoylev

Johan Walden

M. Deniz Yavuz

Recep Bildik

We study the trading behavior of investors in an entire stock market. Using an account

level dataset of all trades on the Istanbul Stock Exchange in 2005, we identify investors

with similar trading behavior as linked in an empirical investor network (EIN). Consistent

with the theory of information networks, we find that central investors earn higher returns

and trade earlier than peripheral investors with respect to information events. Overall, our

results support the view that information diffusion among the investor population influences

trading behavior and returns.

Do Security Analysts Speak in Two Tongues?

Do Security Analysts Speak in Two Tongues?

Ulrike Malmendier

University of California, Berkeley

Devin Shanthikumar

University of California, Irvine

Why do security analysts issue overly positive recommendations? We propose a novel

approach to distinguish strategic motives (e.g., generating small-investor purchases and

pleasing management) from nonstrategic motives (genuine overoptimism). We argue that

nonstrategic distorters tend to issue both positive recommendations and optimistic forecasts,

while strategic distorters “speak in two tongues,” issuing overly positive recommendations

but less optimistic forecasts. We show that the incidence of strategic distortion is large and

systematically related to proxies for incentive misalignment. Our “two-tongues metric”

reveals strategic distortion beyond those indicators and provides a new tool for detecting

incentives to distort that are hard to identify otherwise.

Connected Stocks

THE JOURNAL OF FINANCE • VOL. LXIX, NO. 3 • JUNE 2014

Connected Stocks

MIGUEL ANTON and CHRISTOPHER POLK ´ ∗

ABSTRACT

We connect stocks through their common active mutual fund owners. We show that the

degree of shared ownership forecasts cross-sectional variation in return correlation,

controlling for exposure to systematic return factors, style and sector similarity, and

many other pair characteristics. We argue that shared ownership causes this excess

comovement based on evidence from a natural experiment—the 2003 mutual fund

trading scandal. These results motivate a novel cross-stock-reversal trading strategy

exploiting information contained in ownership connections. We show that long-short

hedge fund index returns covary negatively with this strategy, suggesting these funds

may exacerbate this excess comovement.

Broad-based Employee Stock Ownership: Motives and Outcomes

Broad-based Employee Stock Ownership: Motives and Outcomes

E. Han Kim 

University of Michigan, Stephen M. Ross School of Business

Paige Parker Ouimet 

University of North Carolina at Chapel Hill
June 10, 2013
Journal of Finance, Forthcoming

Abstract: 
Firms initiating broad-based employee share ownership plans often claim ESOPs increase productivity by improving employee incentives. Do they? The answer depends. Small ESOPs comprising less than 5% of shares, granted by firms with moderate employee size, increase the economic pie, benefitting both employees and shareholders. The effects are much weaker when there are too many employees to mitigate free-riding. Although some large ESOPs increase productivity and employee compensation, the average impacts are small, because they are often implemented for non-incentive purposes, such as conserving cash by substituting wages with employee shares or forming a worker-management alliance to thwart takeover bids.

 

Investing Process – Thirty Years of Shareholder Rights and Firm Valuation

Thirty Years of Shareholder Rights and Firm Valuation

Martijn Cremers 

University of Notre Dame

Allen Ferrell 

Harvard Law School; European Corporate Governance Institute (ECGI)
July 2013
Journal of Finance, Forthcoming

Abstract: 
This paper introduces a new hand-collected dataset tracking restrictions on shareholder rights at approximately 1,000 firms over 1978-1989. In conjunction with the 1990-2006 IRRC data, we track firms’ shareholder rights over thirty years. Most governance changes occurred during the 1980s. We find a robustly negative association between restrictions on shareholder rights (using the G-Index as a proxy) and Tobin’s Q. The negative association only appears after the judicial approval of antitakeover defenses in the 1985 landmark Delaware Supreme Court decision of Moran v. Household. This decision was an unanticipated, exogenous shock that increased the importance of shareholder rights.

 

Worth the Hype? The Relevance of Paid-For Analyst Research for the Buy-and-Hold Investor

Worth the Hype? The Relevance of Paid-For Analyst Research for the Buy-and-Hold Investor

Bruce K. Billings 

Florida State University – Department of Accounting

William L. Buslepp 

Texas Tech University – Area of Accounting

George Ryan Huston 

University of South Florida – School of Accountancy; Florida State University – Department of Accounting
September 4, 2013
Accounting Review, Forthcoming

Abstract: 
The SEC Advisory Committee on Smaller Public Companies recommends paid-for research to fill the void created by declining sell-side coverage. Potential conflicts of interest inherent in paid-for research challenge this recommendation. We evaluate whether paid-for research provides value to investors or merely reflects hype. Analyses of one- and two-year ahead paid-for earnings forecasts fail to identify significant bias. Using a portfolio approach, favorable (unfavorable) paid-for recommendations yield positive (negative) stock returns at release, with upward (downward) drift over the following year. Regressing future stock returns on recommendations and valuation estimates using paid-for analysts’ forecasts yields similar results. Further, results fail to indicate significant differences in paid-for and matched sell-side research. Overall, our evidence suggests that paid-for research provides relevant information for the buy-and-hold investor that is comparable to that of matched sell-side research, providing empirical support for the SEC Advisory Committee recommendation.

 

Tone Management

THE ACCOUNTING REVIEW American Accounting Association

Vol. 89, No. 3 DOI: 10.2308/accr-50684 2014 pp. 1083–1113

Tone Management

Xuan Huang

Siew Hong Teoh

Yinglei Zhang

ABSTRACT: We investigate whether and when firms manage the tone of words in

earnings press releases, and how investors react to tone management. We estimate

abnormal positive tone,ABTONE, as a measure of tone management from residuals of a

tone model that controls for firm quantitative fundamentals such as performance, risk,

and complexity. We find that ABTONE predicts negative future earnings and cash flows,

is positively associated with upward perception management events, such as, just

meeting/beating thresholds, future earnings restatements, SEO, and M&A, and is

negatively associated with a downward perception management event, stock option

grants. ABTONE has a positive stock return effect at the earnings announcement and a

delayed negative reaction in the one and two quarters afterward. Balance sheet

constrained firms and older firms are more likely to employ tone management over

accruals management. Overall, the evidence is consistent with managers using strategic

tone management to mislead investors about firm fundamentals.

Optimistic Reporting and Pessimistic Investing: Do Pro Forma Earnings Disclosures Attract Short Sellers?

Optimistic Reporting and Pessimistic Investing: Do Pro Forma Earnings Disclosures Attract Short Sellers?

Theodore E. Christensen 

Brigham Young University – Marriott School of Management

Michael S. Drake 

Brigham Young University – Marriott School

Jacob R. Thornock 

University of Washington – Michael G. Foster School of Business
September 24, 2012
Contemporary Accounting Research, Forthcoming

Abstract: 
We contribute to the debate regarding the informativeness of pro forma earnings disclosures by providing evidence that a group of informed traders, short sellers, trade as if firms’ voluntary non-GAAP earnings disclosures create information advantages they can exploit. While prior research indicates that short sellers identify firms that will experience declining operating performance, we investigate whether the disclosure of pro forma earnings acts as an indicator of future price declines that is distinct from poor operating performance. We find that short selling is significantly higher in quarters in which firms disclose non-GAAP earnings metrics relative to quarters in which they do not disclose adjusted earnings measures. Moreover, we find that short selling is significantly positively associated with the exclusion of recurring items and, more particularly, with the exclusion of stock-based compensation. We also find some evidence that short sellers trade more when managers exclude expense items to appear to meet analysts’ expectations on a pro forma basis when they fall short of expectations based on GAAP operating earnings. Finally, we find evidence based on abnormal returns suggesting that short sellers profit from short selling around earnings announcements containing pro forma earnings disclosures. Overall, the results are consistent with the notion that sophisticated market participants view pro forma earnings disclosures negatively and trade in order to take advantage of potential information asymmetries created by these disclosures.

 

Investing Process – How Does Earnings Management Influence Investors’ Perceptions of Firm Value? Survey Evidence from Financial Analysts

How Does Earnings Management Influence Investors’ Perceptions of Firm Value? Survey Evidence from Financial Analysts

Abe De Jong 

Erasmus University – Rotterdam School of Management

Gerard Mertens 

Erasmus University Rotterdam (EUR) – Department of Financial Management

Marieke Van der Poel 

Erasmus University – Rotterdam School of Management

Ronald Van Dijk 

ING Investment Management
February 26, 2013
Review of Accounting Studies, Forthcoming

Abstract: 
Survey evidence shows CFOs to believe that earnings management can enhance investor valuation of their firms. This evidence raises the question of correspondence between the beliefs of CFOs and investors. Surveying financial analysts to gain insight into how earnings management influences investor perception of firm value, we find analysts’ and CFOs’ beliefs to be generally consistent. We find that analysts perceive meeting earnings benchmarks and smoothing earnings to enhance investor perception of firm value, and all earnings management actions to reach a benchmark, save share repurchases, to be value destroying. CFOs, however, are reluctant to repurchase shares, preferring to use techniques viewed by analysts as value destroying (e.g., reductions in discretionary spending). Analysts’ inability to unravel such techniques perhaps explains CFOs’ preferences.

Valuation-driven profit transfer among corporate segments

Rev Account Stud (2014) 19:805–838

Valuation-driven profit transfer among corporate segments

Haifeng You

Published online: 4 February 2014

Springer Science+Business Media New York 2014

Abstract This paper investigates whether the desire to achieve higher equity

valuations induces conglomerates to manipulate their segment earnings. I extend the

Stein (Q J Econ 104:655–669, 1989) model to a multi-segment setting and show that

conglomerates have incentives to transfer profits from segments operating in

industries with lower valuation multiples to those with higher multiples, even if the

market is not fooled in equilibrium. If companies engage in such manipulation,

segments with relatively high (low) valuations should report abnormally high (low)

profits. The empirical tests confirm this prediction and further show that the relation

is stronger for firms with more dispersed segment valuations. This paper also

demonstrates that the simple sum-of-the-parts valuation with multiples tends to

overestimate the enterprise values for conglomerates and that the measurement

errors increase with segment valuation dispersion.

CEO Power and Mergers and Acquisitions

CEO Power and Mergers and Acquisitions

Ning Gong 

University of Melbourne; Financial Research Network (FIRN)

Lixiong Guo 

Australian School of Business at UNSW; Financial Research Network (FIRN)
May 12, 2014
FIRN Research Paper

Abstract: 
We find CEO power in acquiring firms can explain the occurrence of both large value creation and destruction deals in M&A. Specifically, we find firms with powerful CEOs make fewer deals and the returns on those deals are less dispersed. Firms with powerful CEOs are also less likely to do all cash deals and use a larger proportion of stocks in payments. We relate this to the incentive of powerful CEOs to avoid making big salient mistakes in major firm decisions to protect them from adverse career consequences. However, we also find that firms with powerful CEOs are more reluctant to withdraw deals given negative market reactions to the announcements of the deals, which suggests that powerful CEOs do pursue deals that increase their private benefits of control while avoiding deals with high ex ante uncertainty. Our evidence offers a new perspective on M&A deals with extreme returns and CEO objectives.

One-on-one with Abby Johnson, Fidelity’s ultra-private president; In a rare interview, the Fidelity president talks innovation and family business

One-on-one with Abby Johnson, Fidelity’s ultra-private president

Stephanie N. Mehta

@FortuneMagazine

JUNE 2, 2014, 6:00 AM EDT

In a rare interview, the Fidelity president talks innovation and family business

Abby Johnson, president of FMR LLC, the parent company of Fidelity Investments, told a room full of entrepreneurs that being a privately held business (FMR is owned by employees and the Johnson family) has pushed the company to innovate in-house.

“We don’t do acquisitions,” except for very small transactions, Johnson said in an interview Friday at TiECON East, a Boston summit for entrepreneurs in the fields of information technology, cleantech, education and life sciences. “We don’t have a public currency that would make any [major] acquisition viable. Everyone in the company understands this. We build stuff ourselves and over the long term that’s been very good” for Fidelity.

Fidelity’s build-not-buy attitude may not have encouraging to so-called FinTech (short for financial tech) entrepreneurs in the audience who were perhaps looking to score big by selling out to the mutual fund giant. But Johnson added that Fidelity is eager to invest, partner and buy from startups. Indeed, through its Fidelity Ventures arm and other activities, Johnson said, Fidelity is looking for partners that can help the company differentiate itself from competitors. Read more of this post

Honeywell CEO: How America can compete with China

Honeywell CEO: How America can compete with China

David Cote

@FortuneMagazine

JUNE 2, 2014, 5:18 AM EDT

The U.S. may never have more people than China so we need to focus on being the most innovative and productive country on Earth.

During the mid 1800’s, we eclipsed the UK economically because of population growth and dynamism.  We encouraged business, a strong working ethic, and innovation (some stolen from the UK).  During this century, China may eclipse the US as the world’s biggest economy.  While some might point to the unsustainability of China’s political system, it is very different than it was 50 years ago or 20 years ago.  China may have more issues to deal with (corruption, wealth disparity, state owned enterprises, pollution, and ghost cities to name a few), but they have shown tremendous capability to evolve their system and address their issues.  We are standing still.

This is not a case of is China “good” or is China “bad,” rather it’s a case of China “is.” At current growth rates, in about 25 years China will be the world’s largest economy and will still have a lower GDP per capita, meaning more growth is possible. This is not to say China’s growth will continue uninterrupted. Something could go awry.  It also doesn’t mean we should stop objecting to issues like cyber security, territorial disputes and intellectual property issues. Read more of this post

Apple’s newest product: Complexity

Apple’s newest product: Complexity

Adam Lashinsky

@adamlashinsky

JUNE 1, 2014, 6:54 AM EDT

Recently a friend I consider tech-savvy was trying to figure out how to share an audio file with his colleague. The file, an hour-long recording of a business meeting, was too large to attach to an email or text message, the only options his Apple iPhone presented to him. So he plugged his phone into his laptop, loaded up iTunes, and tried to drag and drop the file from his phone to his desktop. No dice. He right-clicked in search of a “Save to …” or “Export” function and came up empty-handed. After 10 minutes of ducking in and out of labyrinthine menus and byzantine screens in search of — well, anything of relevance — he finally gave up and searched the web. “iTunes automatically syncs voice memos to your iTunes library when you connect iPhone to your computer,” someone cheerily wrote on a message board. Not that anyone would be able to find them. “It was ridiculous,” my friend said. “I’ve been using iTunes for 10 years. It shouldn’t be this hard.”

Historically, Apple  AAPL -0.27%  products just worked. If you installed a printer, you didn’t need to worry about drivers to make it function. If you wanted to back up your files, you didn’t need to worry about when or how; Time Machine would automate the entire process. And perhaps most important, you didn’t need to read an instruction manual to use an Apple product. A seamless out-of-the-box experience was the company’s signature. Exhibit A: The “Get a Mac” ad campaign in the late 2000s. That simplicity allowed it to charge premiums for devices that largely used the same components as its peers. Apple’s late co-founder and chief executive, Steve Jobs, deserves credit for much of this uniformity. Without his singular vision and autocratic rule Apple might well have devolved into Microsoft-like internecine warfare.

Today Apple still doesn’t include an instruction manual with its devices, and its user interfaces have less clutter than the competition. But its products are beginning to show that they come from one of the largest technology companies in the world, one with 80,000 employees. iTunes, iPhoto, iCloud, and other Apple software and services have grown confusingly complex, woefully outdated, or both. If you try to add a device made by another company to the mix, things can get a little hairy. (Woe to the benighted customers of devices running Google’s Android mobile operating system hoping that their Apple and non-Apple products will happily commingle.) Even Apple’s corporate structures mirror the increased complexity on the user experience side. Though its tax havens in Ireland and treasury operations in Nevada are not new, they now have the sheen of opacity that formerly held the allure of mystery. Apple, once the epitome of simplicity, is becoming the unlikely poster child for complexity. Read more of this post

IBM: The future will be quantified; IBM’s Bridget van Kralingen on how she leads a team of more than 100,000 people with a data-driven strategy

IBM: The future will be quantified

Adam Lashinsky

@adamlashinsky

JUNE 2, 2014, 9:59 AM EDT

IBM’s Bridget van Kralingen on how she leads a team of more than 100,000 people with a data-driven strategy.

Fortune: You head IBM’s  IBM 0.99%  consulting and services business, which traditionally sells to information technology professionals. Now you are focused on what you call a front-office agenda.

Van Kralingen: We are seeing a big shift in how IT is purchased. It is becoming the priority of “CXOs”: corporate leaders, public officials, mayors, and people who lead big functions like finance and human resources. The purchase decision is moving from the technical part of the shop to front-office leaders. We believe 61% of IT spending will be made or shaped by lines of business, as opposed to the IT department.

This is where “big data” comes in, right?

Yes. The business agenda is being empowered while it’s also being challenged by the plethora of structured and unstructured data. Getting it right allows businesses to shift from automating processes to focusing much more on enabling them to do things. An example would be giving real-time data to retailers to better stock store shelves and to deliver that information to a mobile device. Read more of this post

Allergan and Valeant are both hypocrites

Allergan and Valeant are both hypocrites

Stephen Gandel

JUNE 2, 2014, 5:23 AM EDT

The battle over Botox has pitted the doctors against the dealmakers. It’s the medicine men vs. the money men. It’s barbituates vs. barbarians, perhaps. You get the picture.

Valeant  VRX 0.65% , the company bidding to buy the maker of wrinkle reducer Allergan  AGN 1.79% , is headed by Michael Pearson, who spent two decades as a management consultant at McKinsey & Co. His chief lieutenant is Howard Schiller, a veteran Goldman Sachs dealmaker who once led M&A at that bank. Together, they have done 10 acquisitions in a little over three years, including last year’s nearly $9 billion acquisition of eye care company Bausch & Lomb.

Last week at an investing conference, Pearson told an audience that his company doesn’t claim to have the best scientists in the world. Indeed, in some ways he said Valeant is more like a professional services firm — like an investment bank or a law firm — than a pharma company. “We have a very good commercial organization that is very good at capital allocation,” Pearson said.

On the other side is Allergan, which is fighting the acquisition bid. Its CEO, David Pyott, comes from the drug industry. The company spent a little over $1 billion on R&D in 2013, much more than most other pharma companies its size. (Valeant, characteristically, says this is a negative.) It developed Botox almost from scratch and plans to launch 13 products developed by the company next year. Read more of this post

Almost Everything You Buy At The Grocery Store Is Made By One Of These 6 Companies

Almost Everything You Buy At The Grocery Store Is Made By One Of These 6 Companies

LIBBY KANE YOUR MONEY  JUN. 2, 2014, 10:19 PM

The array of products and packaging at the grocery store can be dizzying.

But when you follow the money, there aren’t as many choices as you might think.

2013 report by consumer rights group Food and Water Watch found that no matter how many brands appear on the shelves, your dollars are going to the same few parent companies.

Monoliths including Kraft, PepsiCo, ConAgra Foods, Nestle, General Mills, and Campbell Soup Co. control more than their share of the market: Among 100 grocery categories, Food and Water Watch found that a handful of the largest companies control an average of 63.3% of the sales. In 32 of those categories, 75% of the sales were controlled by four or fewer companies.

The report concludes that the average consumer is powerless against the companies controlling the grocery market, and that since the beginning of the Great Recession, grocery prices have risen up to twice as fast as inflation.

infographic-food-monopoly-2-1

Alliances and Return Predictability

Alliances and Return Predictability

Jie Cao 

Chinese University of Hong Kong – Department of Finance

Tarun Chordia 

Emory University – Department of Finance

Chen Lin 

University of Hong Kong – Faculty of Business and Economics
May 8, 2014

Abstract: 
A trading strategy designed to exploit the information contained in the returns of alliance partners, yields economically and statistically significant returns. A long-short portfolio sorted on lagged returns of strategic alliance partners provides a return of 89 basis points per month that is robust to a number of specifications. Increased correlation in returns after the formation of alliances is driven by increased economic links and the increased probability of mergers amongst alliance partners. Investor inattention and limits to arbitrage may be the source of underreaction of a firm’s returns to that of its partners’.

Bust may be looming over China property market

Bust may be looming over China property market
Monday, June 2, 2014
By Kelly Olsen, AFP

BEIJING–After years of boom that have seen prices rocket, the prospect of a bust is looming over China’s vast property sector, with authorities hoping to avoid a meltdown that could send shock waves through the world’s second-biggest economy.

Housing was doled out by the state when Communist-style collectivism dominated economic management. But in the past two decades that has given way to market-oriented principles as China’s economy has opened.

New home prices have soared, more than quadrupling in Beijing and Shanghai since 2003, and more than doubling in the country as a whole, according to a report by Jeremy Stevens, Beijing-based Asia economist at South Africa’s Standard Bank.

The increases have been a key source of wealth for China’s rising middle classes, and a major driver of the economy.

Now some — including individuals who have made fortunes — foresee imminent disaster.

“I think Chinese property is the Titanic about to crash into the iceberg right in front of it,” Pan Shiyi, billionaire chairman of commercial developer SOHO China, said at a forum, China Business News reported last week.

At the same time, surging prices have driven homes beyond the reach of many ordinary Chinese, stoking resentment and inequality. Read more of this post

How Xiaomi Beats Apple at Product Launches

How Xiaomi Beats Apple at Product Launches

by Karan Girotra and Serguei Netessine  |   9:00 AM June 2, 2014

The iPhone 6 is due in September.

The build-up to its launch will almost certainly follow the Steve Jobs M.O. Device specifications will remain a closely guarded secret until the launch date (unless an employee forgets his phone at a bar). There will be long lines at stores. We probably won’t be able to actually get the product for a couple of months after the launch. And, of course, users (we) will have no input into what we actually get; Steve Jobs’ dictum that “people don’t know what they want until you show it to them” is still an act of faith for Apple’s management.

But is this the only way to launch new products? Let’s think for a second about the risks inherent in this approach. Imagine that something goes wrong and a hardware glitch makes it necessary to recall and/or repair all products (remember the iPhone4 Antenna problem)? Or what if a certain feature or the device as a whole is a complete miss with consumers (think Apple Maps)? Read more of this post

The Case for Corporate Disobedience

The Case for Corporate Disobedience

by Thomas Wedell-Wedellsborg  |   11:00 AM June 2, 2014

If your company puts you in charge of developing a foreign market or a new line of business, your challenges are in many ways similar to those facing a startup. Before you can scale the business, you have to understand what your customers really want and value, and how to deliver it to them — and that process requires a lot of flexibility.

In theory, you have decent odds of getting it right. Unlike entrepreneurs working out of the proverbial garage, you can draw on your company’s resources to get things done. But as Steve Blank, Henry Chesbrough, and others have pointed out, that advantage is offset by the daunting fact that corporate innovators have to fight a war on two fronts. Like a startup, you have to get the market fit right, but you also have to fight the corporate systems at the same time, dealing with the rules, procedures, and approval processes that every big company has in place to support its strategy. It is a fight that every manager is familiar with, but nowhere is the challenge bigger than when the existing strategy is not aligned with the demands of the situation you are in. Read more of this post

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