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Bold Move: Dish Launches $25.5 Billion Bid for Sprint

Bold Move: Dish Launches $25.5 Billion Bid for Sprint

 

 
Satellite TV provider Dish Network offer a bid of $25.5 billion for Sprint Nextel. The offer is a means to top another bid for Sprint: a $20.1 billion dollar bid for a 70 percent stake in Sprint from Japanese tech company Softbank. This offer, which Sprint accepted in the fall of 2012, was intended to give Sprint a much desired cash infusion to avoid impending bankruptcy. 
 
Sprint acknowledged the bid from Dish and said its board would evaluate the offer, but did not elaborate or extend further with the comment. Following news of the bid from Dish, shares of Sprint shot up nearly 25 percent in afternoon trading while Dish shares dipped roughly 3 percent. 
 
The Chief Executive Officer of the Dish Network, Mr. Charlie Ergen, said the combination of his company with Sprint would create a new company that offers customers the greatest possible bandwidth for video and other data feeds. 
 
Mr. Ergen said while cable companies do a decent job in providing bandwidth inside of residential homes and wireless companies offer bandwidth outside of homes, no company currently allows for the efficient combination of said bandwidth. 
 
“The pipes with regards to bandwidth are fairly clogged,” said Ergen. “If you are attempting to procure a lot of data, you better get yourself a big pope; if we get this deal done, nobody is going to have a bigger pipe than Dish Sprint.”
 
The bid for Sprint would also provide Dish with another coveted target—wireless broadband provider Clearwire. 
 
Dish engaged in a brief bidding war earlier this year with Sprint for the broadband provider, but Clearwire decided to accept Sprint’s offer instead. Sprint already owned a 50 percent stake in the broadband provider before the bidding competition took place. 
Dish claims its bid for Sprint represents approximately a 13 percent premium over the Softbank offer. Ergen claims that Dish would be willing to spend an additional $600 million to pay the breakup fee that Softbank is owed if that deal collapses because of Dish’s offer. 
 
Many analysts said that there are several questions regarding Dish’s plans for Sprint that make it difficult to judge who will be the winning bidder. 
 
The wireless sector has been home to a number of deals in recent years, and Dish has been interested in finding a partner in the sector. Charlie Ergen has been labeled a gambler by trade, and this proposed deal might just be his attempt of getting all the other wireless corporations to open up negotiations with him. 
 
 
Source: CNN

Know Your Role: CEOs Earn 354 Times more than the Average Worker

Know Your Role: CEOs Earn 354 Times more than the Average Worker

 

 
Oracle CEO Larry Ellison was the top-earning CEO in 2012 with a salary of $96.1 million; the average American worker earned $34,645 last year. 
 
Chief Executive Officers of the country’s largest companies earned an average of $12.3 million in total pay in 2012, which is roughly 354 times more than the typical average American worker, according to the AFL-CIO—a group that represents over 50 trade unions in the states. 
 
Ellison topped the list of the highest-paid executives in 2012, followed by the $54.3 million earned by Credit Acceptance Corp’s Brett Roberts and Discovery Communication CEO David Zaslav’s $50 million compensation package. 
 
The one noteworthy salary was pulled-in by Apple CEO Timothy Cook, whose salary dropped to $4.2 million from $376 million in 2011, when his pay got a robust boost from long-term stock awards. The drop in Cook’s pay was enough to decrease the overall average pay for CEOs of top American companies by 5 percent from 2011. 
 
The considerable discrepancy in pay between Chief Executive Officers and the average worker has skyrocketed over the last couple decades, peaking in 2000, when the gap was 525 times. In 1980, CEO compensation was only 42 times that of the average American worker. 
 
The AFL-CIO each year underlines the pay discrepancy between CEOs and workers from companies that are part of the S&P 500. Richard Tumka, the president of the AFL-CIO, said he hopes the project will remind the nation’s leaders that most workers continue to struggle financially. 
 
“The average American worker struggles every day to make ends meet. The average worker’s wages are stagnant, and their companies are attempting to take their pensions and health insurance,” Trumka said.
 
The union wants regulators to enforce a pending rule from Wall Street reforms for publicly traded companies to publicize executive pay compared to their average employees. The United States Securities and Exchange Commission has delayed efforts to structure this rule, in part because of spirited lobbying efforts from large American companies. 
 
The labor group built a website database earlier today compiled from 327 companies based on SEC filings; the site will reveal CEO compensation for all 500 companies of the S&P as the data is released to the public. 
 
 
Source: CNN
 

 

Dow Drops more than 200 Points After Boston Marathon Bombing

Dow Drops more than 200 Points After Boston Marathon Bombing

 

 
A widespread sell-off in stocks accelerated this afternoon following the news of two explosions at the Boston Marathon. The Dow Jones Industrial Average, which was down all day, dropped 266 points (roughly 1.8 percent) following reports of the explosions in the Massachusetts’ capital. The Nasdaq dropped 2.4 percent and the S&P 500 slipped 2.3 percent on the day. 
 
The majority of domestic news outlets reported that two bombs went off near the finish line of the Boston Marathon shortly before 3 this afternoon. Before news of the bombings went public, stocks were already suffering worldwide as gold prices plunged and investors positioned themselves in lower risk assets like U.S. treasuries. The initial sell-off started when investors awoke to the news that China’s financial growth had decreased in the first quarter. 
 
The Chinese economy grew at a rate of 7.7 percent in the first quarter of this year, compared to the first quarter of 2012. The report was disheartening and confirmed China’s fragile recovery, said HSBC’s Asian economic research department. 
The majority of economists expected the Chinese economy to grow 8 percent, and since it reflected weaker global demand for Chinese goods, the news also drove stocks in Europe and Asia lower.
 
The Nikkei, Hang Seng, and the Shanghai Composite all dipped more than 1 percent, and the London exchange followed suit losing nearly.7 percent. 
 
China is currently the world’s second-largest economy after the U.S., and is regarded as one of the top engines of global economic stimulation and growth. 
 
In addition to China’s disappointing numbers, Gold dropped nearly 10 percent to settle at $1,360 an ounce and numerous gold-based ETF’s including the popular SPDR fund dropped significantly. 
 
Along with this information, a major survey of American homebuilders revealed that the housing recovery may have lost some of its steam that it gained last month. This news weighed on shares of construction and homebuilder companies, including Toll Brothers, DR Horton and Lennar. 
 
In a separate case, the New York Federal Reserve released its monthly manufacturing survey that revealed slightly improved conditions for New York manufacturers in the month of April compared to March. The indexes for general business conditions and new orders remained widely positive, despite marginal month-to-month declines. 
 
 
Source: AP

Nice Rebound: Stocks Bounce Back After Worst Day of 2013

Nice Rebound: Stocks Bounce Back After Worst Day of 2013

 

 
U.S. stocks rebounded back from the largest one-day sell-off of 2013 as investors cheered a comprehensive slate of economic reports and corporate results. 
 
The Dow Jones Industrial Average increased by more than 150 points, or 1.1 percent while the S&P 500 added 1.4 percent and the NASDAQ rose by 1.5 percent. This bounce back comes one day after all three indexes dropped significantly, following disappointing economic news out of China and the tragic events that occurred at the Boston marathon. 
 
Investors were optimistic as a result of housing statistics, which topped 1 million in the month of March for the first time since the summer of 2008. Building permits came in at a yearly rate of 900,000 in March, which was slightly less than forecast estimates but still solid. The positive housing numbers caused homebuilder stocks to spike as Hovnanian Enterprises added 1.6 percent, the PulteGruop rose more than 4 percent and Lennar increased by 2.4 percent. 
 
In addition to the housing sector, a number of companies reported strong earnings. Coca-Cola shares increased nearly 6 percent, leading gains on the S&P 500 and the Dow after the company shattered earnings and sales forecasts. In addition, Johnson & Johnson shares enjoyed modest increases after the company’s first quarter earnings also exceeded expectations.
 
Goldman Sachs also reported solid results; however, the banking giant’s shares slid roughly 2 percent as investors worried that Goldman was taking on too much risk to deliver robust earnings. 
 
Yahoo also reported earnings; the company’s revenue missed estimates, but still reported higher-than-expected numbers. Shares of Yahoo dropped slightly during after-hours trading. 
 
Gold also bounced back today following a dramatic 9 percent drop-off to a 2-year low. The price of gold gained roughly 2 percent, settling at $1,387.40 per ounce; other commodities featured mixed results.  
 
European markets closed with slight losses on concerns about slowing global growth while the Asian markets ended the day mixed. Also, the dollar dropped versus the pound and the euro, but increased versus the yen. 
 
 
Source: SEC.GOV

Underground Profits: The Lucrative World of Cigarette Smuggling

Underground Profits: The Lucrative World of Cigarette Smuggling

 

 
Cigarette smuggling is a hot new business as taxes rise in some states but remain marginal in others. Yes, the act of purchasing cigarettes in one state, then selling them in another is illegal; however, a truckload of cigarettes purchased down South can earn a smuggler upwards of $1,940,000 if they are sold in New York. And these lofty margins are what attract criminals into the underground world of cigarette smuggling. 
In 2011, roughly 65 percent of all cigarettes sold in New York were smuggled from another state, according to a free-market report think tank. This figure is up from roughly 36 percent in 2006. 
 
This illegal activity is not just taking place in New York; the Mackinac Center for Public Policy estimates that more than 15 states have smuggling rates that exceed 20 percent. Factor in counterfeit cigarettes from overseas, and the Bureau of Alcohol, Tobacco, Firearms and Explosives estimates lost government revenue at over $5 billion per year. 
 
Many involved in the legal sale of cigarettes blame rising state taxes for the exorbitant increase in illegal smuggling; these individuals estimate that things will get worse if President Obama’s proposed 94 cent per-pack cigarette tax increase goes through. 
The New York-Virginia corridor is the most popular arena for illegal cigarette smuggling as the considerable difference in taxes and the states’ relative close proximity make it an attractive route for smugglers. In the state of Virginia, state taxes are 30 cents per pack while in New York, they are a whopping $5.85—the highest rate in the United States. 
 
While the Virginia-New York corridor gets the majority of the attention, professionals tracking the situation claim that trafficking rings can run from any of the low-cost states to the high ones. North Carolina to Michigan and Virginia to California are also popular routes for smuggling. 
 
The quantity of smuggled and/or counterfeit cigarettes arriving from overseas, particularly from China, is also increasing. These knockoffs are particularly bothersome to the American tobacco companies, and could pose a significant risk to consumers. “You have no idea what’s in a counterfeit cigarette,” says a spokesman for Altria, which produces Marlboro and other cigarettes. Rabbit feces, rat droppings and dirt have all been observed in counterfeit cigarettes, says Sutton, who notes that manufacturing typically takes place in old factories, in caves or underground. 
Public health officials believe there is no reason to oppose Obama’s tax proposal.
 
Higher cigarette taxes encourage Americans to quit smoking; smoking rates decreased by more than 10 percent after the 62-cent-a-pack federal tax increase in 2009. Moreover, smoking costs society a large amount of money—nearly $200 billion a year in lost productivity and medical costs, according to the U.S. Centers for Disease Control. The dollar amount is peanuts; however, compared to the nearly 500,000 lives lost each year to cigarette smoke. 
 
 
Source: AP

Rocky Mountain Plunge: SEC Charges Denver Businessman with Insider Trading

Rocky Mountain Plunge: SEC Charges Denver Businessman with Insider Trading

 

 
The United States Securities and Exchange Commission today charged a wealthy Denver businessman with insider trading based on proprietary information he procured from the CEO of an oil company that was about to secure a prominent investment. 
 
An investigation by the SEC found that Scott Reiman procured inside information regarding Delta Petroleum before the company’s announcement that it had received a $684 million investment from private investment company Tricinda. Following the announcement of the investment, Delta Petroleum stock jumped almost 20 percent and Reiman reaped substantial profits. 
 
To settle the charges, Reiman agreed to pay roughly $900,000 and accept a barring from the securities industry and from services as a director or officer of a public company for at least five years. In addition to the charges filed against Reiman, the SEC also filed charges against Reiman’s source, then CEO Roger Parker, and a trader, Michael Van Gilder. 
 
“Reiman illegally took advantage of confidential information that he procured through his friendship with Parker and traded the company’s stock for significant and illegal profits,” said Daniel Hawke, Chief of the Securities and Exchange Commission’s Market Abuse Unit. 
 
According to the complaint filed by the SEC, Reiman is founder and manager of the Denver investment firm Hexagon. Reiman received numerous tips from Parker regarding Tracinda’s investment in Delta Petroleum. On several occasions during the winter of 2007, Reiman purchased Delta stock or risky option contracts after speaking with Parker, including once within a few minutes after ending a phone conversation with Parker. 
 
The SEC charged Reiman with violations of the Securities Exchange Act of 1934; Reiman neither denied or admitted the charges filed against him. Instead, Reiman agreed to pay disgorgement of roughly $400,000 plus interest of nearly $94,000 and a penalty of $400,000. The charges also prohibit Reiman from serving as a director or officer of any public company for at least five years and from acting in any role within the securities industry. Reiman is awarded the right to apply for reentry into the industry after five years. 
 
 
Source: Sec.gov

Inflation is Extremely Low Right Now: Is it Time to Worry?

Inflation is Extremely Low Right Now: Is it Time to Worry?

 

Prices of common goods are not going up very much, but should we celebrate?

The answer to this inquiry is: not exactly. Inflation that is too low could be a terrible sign for the United States economy, and some officials within the United States Federal Reserve are starting to get concerned.

Talking with reporters on Wednesday, St. Louis Fed President Mr. James Bullard looked to the Fed’s favored measure of inflation—amount of personal consumption expenditures, minus energy and food—which has recently revealed that prices rose up 1.3 percent over one year ago.

“This figure is pretty low,” Bullard said at a Levy Economics Institute meeting. “I am getting concerned about this figure, and I think that provides the F.O.M.C with room to work-out its monetary policy.”

The Federal Reserve typically aims to keep inflation around 2 percent per year; inflation at this level is deemed healthy as it coincides with legitimate economic growth, a growing labor market and gradually rising wage rates.

“the history of our economy has shown that our markets perform best with slightly higher levels of inflations such as 2.5 or 3 percent,” said Bernard Baumohl, the chief global economist for the Economic Outlook Group. “Dormant or low inflation translates into a stagnant economy.”

There are a few key reasons as to why low inflation is a bad economic indicator. First, when companies do not have any leeway to raise price, they are more apt to cut costs, which would mean a reduction in their workforce or a cutback in hiring. Second, if inflation remains low, consumers are not as motivated to spend. Third, when inflation is low or dormant, it does not offer a considerable buffer against deflation if an economic event takes place. And lastly, low inflation often comes along with lower revenue growth and wages.

The Federal Reserve has kept its short-term interest rate close to zero since 2008. When this rate was not enough to boost the economy, it launched several bond-buying sprees in an attempt to lower long-term interest rates. The Fed is now operating its third round of asset purchases, buying over $85 billion in mortgage-backed securities and Treasuries each month. This program remains highly controversial, and many are speculating about when the Fed will start to ease its bond purchasing habits.

Figure Out How to Save Money

Figure Out How to Save Money

Figuring out How to Save Money


No matter what financial situation a person is in, it is always a good idea to try to save money. However, it is often difficult to figure out how to save money. Whether it is saving money for a retirement fund, or just trying to keep a few extra dollars, having extra money and being a careful spender is important in order to obtain financial success. 
Here are some helpful tips to help you figure out how to save money.

How to Save Money on Transportation
• New cars
o Choose a model that has a low purchase price and a low depreciation, insurance, gas, maintenance, and financing cost. New car guides can often provide this information.
o After choosing a model, go comparison shopping with several dealers both over the phone and online.
• Used cars
o Use a car guide, such as a “bluebook” to help compare the average retail price of the car with what the seller is asking.
o Have a mechanic check the car to find any potentially expensive problems.
• Car leases
o When leasing a car, consider the price, trade-in allowance, monthly payments, down payments, and any other fees that will be involved.
• Airline fares
o Look at internet travel sites and airline sites online to find special deals.
o Compare major carriers and low-cost carriers.

How to Save Money on Insurance
• Car Insurance
o Make sure a new policy is already in effect before cancelling an old one.
o Purchase insurance from a licensed, low price insurance. Call at least four of these agencies to find the best deal.
• Life Insurance
o Buy a term life insurance policy for just the protection without investments and savings services.
o When buying a universal life, whole life, or other case value policy, anticipate holding the plan for at least 15 years. Cancelling these plans early on can double the life insurance cost
• Homeowner/Renter Insurance
How to Save Money on Banking/Credit


• Debit Cards and Checking Accounts
o Use a free checking account that does not have a minimum balance requirement.
o Some banks provide lower checking costs through either direct depot or ATM use only.
• Credit Cards
o Send payments 7-10 days in advance to avoid late fees and increases in interest rates.
o If the entire bill cannot be paid off, switch the balance to a credit card with a lower APR.
• Savings Product
o Use a bank that is insured by the Federal government.
o Compare fees and rates of different banks and financial institutions.
o Consider U.S. Savings Bonds or Certificates of Deposit to earn the highest return.
How to Save Money on Housing Needs


• Buying a Home
o Try negotiating a lower sale price through a buyer broker working for you and not the seller.
o Have a home inspected before purchasing it.
• Renting a Home
o Find buildings and inquire about the availability.
o Do not sign a lease until you are sure you can be responsible for the monthly payments as agreed upon.
• Home Improvement
o Look at established licensed contracted who give fixed-price bids for jobs.
o Do not sign contracts that require a full payment before finishing the work.
How to Save Money at the Store


• Food
o Shop at lower-priced food stores. Smaller convenience store are more likely to have higher prices.
o Compare the unit price of similar products and choose those with the lower one.
o Take advantages of sale items.
o Buy basic ingredients instead of pre-packaged or ready-made food items.
• Prescriptions
o Use generic equivalents of drugs when possible.
o Call a pharmacy in advance to ask for a price of a medicine.
• Clothing stores
o Check online for any coupons or promotions the store may have.
How to Save Money for Retirement
• Keep putting away money regularly and stick to a plan.
• Understand your retirement needs.
• Put money towards an employer’s retirement savings plan
• Do not touch retirement savings.
• Learn about an employer’s pension plan.

Frugal Living

Frugal Living

Helpful Tips for Frugal Living


Frugal living may sometimes seem like a pain, but getting into the habit of saving money can add up quickly. The saved money can be invested, help pay off debt, or just be saved. To start off a new life of frugal living, here are some helpful hints to get into the swing of it.
Frugal Living and Transportation
• Buy a used car instead of new.
• Just use one car.
• Buy a used car with a low price, low depreciation, and low expenses.
• Carpool or take public transportation.
• Try to walk or bike when possible.
• Consider train travel instead of air travel.
• Shop around when renting a car.
• Find cheaper accommodations when traveling.
• Find positions that will allow you to telecommute.
Frugal Living and Houses
• Buy a smaller home and live within your means.
• Rent instead of owning a home if the cost of buying is too much. Money can be saved while renting which can be invested later.
• Find good contractors who provide fixed-price bids for house repairs.
• Make sure to understand all fees and payment involved in a home before agreeing to them.

Frugal Living and Food
• Purchase sale items at the store.
• Buy basic ingredients rather than ready-made or pre-packaged items.
• Compare unit prices of similar products.
• Eat out less. Packing lunch and snacks is a good alternative.
• Join a food co-op.
• If eating out, look for discounts or specials in advance.
• Eat sweets or drink alcohol in moderation.
• Instead of drinking juices, teas, or sodas, drink water instead.
• Cook food ahead.
• Eat less meat.
Frugal Living and Clothes


• Try to have a more minimalist wardrobe with pieces that go match well.
• Avoid being in situations where window browsing can happen.
• Stop impulse shopping.
• Only purchase bargain clothing, and only do it when it is necessary.
• Look for any online coupons or promotions that may be available.
Frugal Living and Entertainment
• Get rid of cable.
• Use a library card and borrow books and movies.
• Look up free entertainment, for example, days of free admission to a museum.
• Use coupon sites to take advantage of special deals for various activities.

Other Tips for Frugal Living
• Cut off a cell phone line.
• Save energy and gas to have lower monthly bills.
• Learn to trim or cut your own hair.
• Wash clothes less frequently and let them air dry.
• Make an attempt to stay healthy as a preventative measure.
• Purchase generic prescriptions whenever possible.

Compound Interest

Compound Interest

What Is Compound Interest?


Simply put, compound interest is the interest that is earned on interest. When interest is put on a principal, it adds to the total sum of the principal. The next time interest is put on the value, it is including the principal as well as the previously earned interest, which becomes compound interest.  This is different from simple interest, where the interest is cannot compound since it is not included in the principal.
A compound interest rate relies not only on the rate percentage, but also the frequency of compounding. When calculated, it can give the yearly rate of compound interest, also known as the annual percentage rate or effective interest rate. Not only does compound interest applies to certain savings, such as the balance in a bank account, but it can also be used on a loan.
In legal contracts involving compound interest, the compounding frequency must be disclosed. The rate can be annually, semiannually, quarterly, monthly, or even daily. The periodic rate is one way to look at the effect of compound interest.
This is the interest that is charged for the period and then divided by the principal. As mentioned, the effective annual rate is another effective way to look at the rate of compound interest in order to see the total accumulated interest of a year divided by the principal value.
Effective annual rates are a more useful way to measure and compare compound interests because they help normalize the different uses of compound interest rates and allow for easy comparison
In order to calculate compound interest, a simple equation can be used. The total amount accumulated is equal to the 1 + the percentage of the annual rate of interest, all raised to the power of the amount of years in question and then multiplied by the principal.
An easy way to estimate compound interest is through the Rule of 72.
Dividing the number 72 by the interest rate of return is a quick way to determine roughly how much time is required to double the amount of the investment. For example, if the expected rate of return is 8%, in 72 divided by 8, or 9 years the investment’s value will be doubled.
Many government agencies, such as the United States Securities & Exchange Commission also provide compound interest calculators online to easily calculate the interest that will be earned over a given time. All that is required is the principal amount, interest rate, compound frequency, and the number of years.
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