Mother Of All MBA’s

Recently DHL has decided to close one of their largest air hub’s in Ohio in order to try to reduce the risk of overall job losses throughout DHL as a whole.  These job losses come amid the outsourcing of its air cargo to UPS.  Will the move help DHL?

In my view, no.  DHL has long been the red headed step child of the shipping business, losing ground with each passing year.  Not only that, but outsourcing to one of it’s largest competitors definitely seems counter-intuitive to the masses.  Amidst antitrust rumors, this move to outsource may not only hurt the company, but bring a plethora of unwanted political attention.  McCain has already made his presence known by calling for an antitrust investigation.

I do sincerely hope that DHL pulls through, as I have personal interests in the company.  I honestly don’t see how they will.

It’s not always the idea of the business that will help an entrepreneur to greatness.  Having the business idea is just that, an idea.  It’s when you start to put that idea in motion that you realize there are many more moving parts than you had originally assumed.

For an example, let’s say you want to work on computers for a living, you want to be your own geek squad.  You figure you just need the know how and a way to get the computer parts you need and there you go, bam, a booming computer business.  There are numerous factors to consider when starting up, it’s not as easy as it would seem.

- Check into the type of business you want to be.  Are you alone on this venture or is someone helping you out?  Do you want to be a sole proprietor, a partner, LLC, a corporation?

- Tax laws are different in every state, especially when it comes to sales tax.  Check into this before you start diving into work.

- How will you get paid?  Let’s be frank about this, people just don’t use cash like they used to.  You need to be ready to accept credit cards.

- Get tax and accounting advice. It may cost a little, but it is much cheaper to start early than doing everything on the back end.

There are numerous other areas to look into. Try to review them before taking the leap, as it’ll save some headaches in the end.

Businesses in today’s economy need to do many things in order to retain top talent.  These have historically included sign on bonuses, phone service, per diems, even company cars.  But now that the price of gas has increased to a historical level, it may be time for companies to reevaluate their employees needs and assist in the gas costs their employees are facing.

Many people commute over 30 miles a day for work purposes (it’s double that in our household).  Many employees are being faced with the decision of either hoping their employers step up to the plate or looking for employment closer to home.  With this being an actual decision that employers are facing, there are numerous ways to make your HR department come out on top, by giving the employees the feeling that they are actually being cognizant of their employees needs.

1.  Aid with a gas stipen.  Employees would probably rather have this than a catered lunch and just remember that every penny counts to them.

2.  Reward for car pools.  This is the best of all options, as it aids the employees pocketbook while keeping everything environmentally friendly.

3.  Switch to 4 - 10 hour work days.  This is one less round trip, it’ll help immediately.

4.  Opt for at least one day of telecommuting from your employees.  They will love this and many are more efficient when working from home.

As always, try to keep up with the cost of living when it comes to annual reviews.  It is very simple for an employee to see that the raise you gave him/her is lower than the increase in cost of living.  That, compounded by the cost of commuting to work could be a deal breaker.

Powerhouse chipmaker Nvidia sent ripples through Wall Street when it lowered, or should I say, slashed its revenue forecast on Wednesday.  Nvidia lowered their revenue guidance by 17%!  That’s quite a step away from what analysts were expecting to see.

In response to this, the stock price of Nvidia dropped 31% by Thursday and the Nasdaq, having an already rough day, closed down 2%.  They are blaming end-market weakness.  Strange that they didn’t mention increase of competition from AMD, who only has lost around 1% in the same time period.  As AMD stands at number two, it stands to reason that they would be taking some of Nvidia’s revenue.

I am always floored when I hear about large diversions from guidance.  When I was in corporate accounting at a large communications company, if we came in even 1% off guidance, there would be hell to pay!  I recall the mad rushes trying to get everything looking the way it needed to just to hit guidance, I can’t imagine walking up to my boss and saying “Oh, and on that analyst call, just tell them that we missed revenue by 17%.”  It just would never have flown.

Honestly I think that Nvidia is taking a backseat to the issues, siting end-market weakness.  I see it as competition in an ever increasing competitive environment.  I’m interested to see how AMD fares.

NVDA 12.49 -5.54 (-30.73%) Jul 3 1:00pm ET

All of the news surrounding the economy just makes me want to vomit. Case in point, the happy news that the unemployment rate will continue to go up until at least 2009. How does this make Joe Smoe feel? Like they’ll never, ever find a job again…

But honestly, what did we as the people think would happen. Let’s look at the entire picture, shall we. We have been told for about a year that we are going into a recession. This has been driven into our heads for quite a chunk of time. So what do people do? They stop spending. Only someone who doesn’t care about money continues to spend, right? Everyone slows their spending on cars, homes, retail spending, the works.

With that reduction comes the reduction in demand for those goods and services. Now businesses must adjust to that reduction in demand by decreasing their workforces in order to keep up their profit in this time of “recession”. People are cutting jobs right and left in order to keep their bottom line.

As scary as this may seem to many, one thing I’ve come to realize is that it doesn’t automatically mean you’re personally in danger. I’ve been laid off twice and survived to tell about it. Honestly, there could be much worse things in this world than losing a job. I do blame the media for a substantial amount of hysteria that surrounds issues like this, they seem to try and make them as bad as they possibly can for Joe Smoe. I wish they’d try to make us feel good on a daily basis instead of insisting the sky is falling.

There are many businesses that I am never quite sure on how they have managed to stay afloat.  Take Walgreens.  This is a store from my grandmothers day, but no matter how many times I’ve gone into that store I can’t make it for my era.

Amazingly, Walgreens posted a 2% increase in profits with the vision of opening a cool 7,000 more brick and mortar stores  within the next few years.  How did they do this?  Well they claim to be wonderful at cost cutting and spending control.

I’m sorry to say but I can understand this.  Any Walgreens I’ve been into within the past few years looks like a slammed together discount outlet, full of aging product and a lack a space.  The introduction of 7,000 new stores only reminds me of the Krispy Creme fiasco, where all the newly opened stores were quickly shut down, leading to huge loses.

But I must commend them on increasing their profit within this economy.  While I have always found that they have higher prices than most, they must have the public image of being a frugal store.

We are all well aware of the fall in the housing market due to many factors, including lending to those that could not afford outright the amount needed for homes of their dreams. Well guess what, the bottom may be falling out of the automobile market for the same reason.

Around 25% of all car loans in the US are underwater, meaning that the buyer actually owes more than the car is worth. 25% is a huge chunk of automobiles, considering how many cars are actually on the road today. Why is this?

This is due to the same phenomena that was seen in the housing market, basically back door lending tactics, lenders making risky loans and the subprime car loan market. I a perfect Suzie Orman world, you would have a 50% down payment on a vehicle and get a 3 year loan with the lowest possible interest rate. As this is not a perfect world, many have loans spanning up to 7 years. This increases the amount of interest paid over the life of the loan (good for banks) and decreases the payment amount for the buyer (good for the buyer). But the amount of principle paid off on these longer term loans is smaller, as you are paying more interest up front. This basically means that you will end up underwater on your car loan until near the end of the loan term.

Be that as it may, automobile dealers still offer 0% financing or large incentives for vehicles. But, as always, the catch is that you must have fairly perfect credit. The rest of the US must still deal with the banks interest rates and the fact that the car they can afford is much different than the one that they want or need to drive.

It is being said that the bottom will fall out of this market as well, and I foresee it will and change for the better.

Wholesaler Costco reported an increase in sales for the month of May, while many other grocery chains cannot claim the same. Stores such as JC Penney’s and Gap showed decreases as high as 14% for the same time frame. So are cost conscious consumers actually getting better deals or is the perceived value at wholesalers getting to the customers?

On one front, Costco is offering a valuable commodity right now, cheaper gasoline. Costco actually matches or beats the surrounding gas stations in order to gain the gas customers. They are hoping that if you come to fill up your vehicle, you’ll end up staying to fill up your shopping cart as well. This is true value that they are offering, not perceived.

But when it comes to the actual products that Costco sells, consumers must make themselves aware that the Costco price isn’t always the lowest price that you can obtain on a given item. Placement tactics on loss leader items, such as milk, bread and eggs, get customers in the door and get the customer so far into the back of the store that it’s almost impossible to get out without purchasing something else.

The perceived value that many have of wholesalers is that the wholesaler is buying in such large quantities that there is no way to get a lower price. This is just not true, as sales at local grocery stores can often match or beat the Costco price. While you can get Coke at Costco for $8.99 a 36 pack, you can often find soda on sale at the grocery chains for lower. The perceived value, mixed with the actual value many have of Costco is what will make them money when the economy is down. They will be able to charge more for some items, hoping the consumer won’t see that the price is lower down the street.

COST - Costco Wholesale Corporation (NASDAQ)

71.19 -2.31 (-3.14%) Jun 6 4:00pm ET

The unemployment rate has made headlines again, having the biggest percentage of unemployed workers since 1986. At 5.5%, there’s nothing really to smile about. But as with any percentage released, you can’t take it at face value, any economics class will teach you that.

The jump was from 5% to 5.5%, which is a monstrous jump, but the fact is that the jump was skewed by the Labor department not accurately estimating the previous months unemployment due to a rise in teenage unemployment. The rise would have been shown to be more gradual if that change had been taken into account on a larger level.

While it’s still not good news, it is showing that the unemployment rate isn’t “suddenly” tanking, it’s just slowly tanking, not comforting to those who are worried about finding or keeping their job.

Losses were as follows:

Business and Professional Services 39,000

Construction 34,000

Service 27,000

Manufacturing 26,000

Communications giants Verizon and Alltel are in talks as Verizon eyes the subscriber base of Alltel. A somewhat newly marketed mobile dominator, Alltel has a growing subscriber base, one that Verizon would most definitely want to get its hands on.

That type of merger would not only put pressure on AT&T (who by the way I loath) but would also spark the competitive spirit throughout the mobile industries. I am still waiting for the mobile carrier that starts to pay the contract cancellation fee of another company to attain the subscriber. (When that happens, I will be leaving AT&T as quickly as possible)

So will the merger help or hurt consumers. As stated earlier, I feel it will help consumers by means of increased competition. They’ll be doing anything they can to win our business.

Verizon Communications Inc (NYSE:VZ) 36.98-0.38 / -1.02% Jun 04