Last Friday, Disney’s Chairman Rich Ross resigned from the company after more than 2 years in response to the disappointing box office sales of the company’s latest studio production John Carter. His decision to resign reflected on his inexperience as a studio executive. While he had a vast amount of experience as a network executive at Nickelodeon, FX and eventually at Disney, he had little bearing on what the future of the company should be when he took on the role as chairman.

However, analysts overestimated the loss John Carter would incur at $200 million. However, this was not the case. At present day, the film has made $270 million worth of ticket sales. Disney has issued a report, announcing that the film would cause a studio-wide loss of $80 to $120 million.

While Ross’ resignation may come off as an overreaction to the disappointment caused by the creative failure of studio affiliates, rather than the guidance of executive management, the former chairman felt that he was unable to give the company the drive it needed to compete with the studios that produced box office successes like Avatar and The Hunger Games. In fact, studios such as Marvel Entertainment now shadow Disney because it has been unable to rebrand itself as a studio that can deliver fun live-action movies past the Pirates of the Caribbean franchise. Ross has witnessed box office bombs from franchise-hopeful Prince of Persia: The Sands of Time, Winnie the Pooh and Prom.

In a memo to his staff upon the day of his resignation, Ross said, “The best people need to be in the right jobs, in roles they are passionate about, doing work that leverages the full range of their abilities. I no longer believe the chairman role is the right professional fit for me.”

Despite his modesty, Ross was fairly effective in getting rid of rerun studio ideas, hoping that Disney would become a place where innovation would propel itself to extend the company’s life cycle into a new age of growth. He slashed production ideas for 20,000 Leagues Under the Sea and Wild Hogs 2. Disney’s stock price, while having fluctuated mildly since 2009, had increased more than two-fold at more than $42 per share since Ross had taken the chairman position.

As Disney looks for a new chairman, it needs one that can modernize both its film studio, while also maintaining its brand image as a classic franchise. It can accomplish this by continuing successful management of its network, resorts and theme parks, while also reinvigorating its studios to create innovative films that cater to its younger generations.

In a world of extreme energy prices and continued uncertainty about how to predict the future cost of fuel, how can a company protect themselves? Well, Delta Airlines, the nation’s second largest passenger air carrier, has come up with the solution. Buy your own place to make the fuel.

There is no doubt that when you crack open the statement of cash flows for Delta, fuel is huge burden. In 2011, the airline spent over $11 billion on fuel alone and it accounted for 36 percent of their operating cost. They spend approximately $32 million every day just on fuel.

This facility by many estimates has the capacity to drop their fuel cost by as much as 10 percent which means savings for shareholders in the billions. It is located in Trainer Pennsylvania and is not far from New York City.

It is a full operation refinery and therefore makes much more than just jet fuel. Delta does not have much interest in getting into the production of refined products so they plan to be a passive owner and will independently contract the facilities operation.

They will pay the contractor with all of the non-jet fuel products that come from the facility. The actual cost to them for buying the plant from current owner Conoco Phillips will only run them around $100 to 150 million; a small price for a huge savings.

The refineries on the east coast and especially in the north have a huge disadvantage to their southern counterparts because they lack access to the distribution points along the gulf. This operational inefficiency means the facility does not make sense for Conoco.

However, the location is perfect for Delta because of its proximity to NYC. This location inefficiency is turned into its most attractive quality and both sides cut costs and get more efficient.

It is nothing new for an airline to be struggling with high energy costs. For many years these firms have been skating on the edge and most recently American Airlines was forced into bankruptcy.

In order for this industry to have meaningful growth and sustainability they need to take control of their costs and come up with innovative solutions. Delta should be praised for their crack at vertical integration through the purchase of this facility.

They saw a unique opportunity to get their own refinery at a perfect time and they jumped at it. Corporate efficiency is always a goal of any private firm and this plan will save the firm huge amounts of money.

Many may wonder, if you’ve never set foot in a Best Buy store over the past two or so decades, where you purchase your electronics. Where, indeed? The king of big box retailing of consumer electronics in the United States may finally be showing the strains of maintaining its vast empire.

Together, with its subsidiary brands, Best Buy collectively operates 1,150 stores domestically and internationally. In 2009, the company became America’s largest east coast consumer electronics retail store after beating rival Circuit City out of business. Now, though, Best Buy may be the one in trouble, with the consumer electronics business slowly moving out of ‘big box’ store territory.

For those who are unclear on the term, a big box store is a retail store that put simply is, a big box. The stores usually belong to a chain and are large, free-standing, rectangular buildings that, according to the American Independent Business Alliance, are over 50,000 square feet and have a tendency to “kill-off” smaller retail stores in the area. Examples of these include Wal-Mart, Sears, Lowe’s, Home Depot and Best Buy.

Big box retailers are slowly becoming a thing of the past and Best Buy isn’t like Wal-Mart or Home Depot. Many of the goods sold by those two retail giants cannot be purchased online, food is perishable and twenty-foot oak boards are inconvenient to ship. Best Buy will either have to change with the times, or become a relic of the past. Physically immense stores used to be first stop shops for consumers, but now nearly all of Best Buy’s stock can be purchased online and there is no longer an incentive to drag our lazy backsides to the store.

When Best Buy was founded, its big box electronics retail style gained immense popularity. At the stores, shoppers could get a firsthand look at what they were purchasing. Nowadays though, that could be contributing to the waning of the company’s revenue. Shoppers will go to the stores to take a look at what they want to purchase and then purchasing it cheaper online. The Wall Street Journal’s Justin Lahart puts it well when he said, “The commoditization of many electronics goods and shoppers’ growing comfort with buying expensive items online will only intensify the problem.”

Now, in arguably its most critical point in history, Best Buy is in desperate need of a change. Companies at this critical juncture need top executives to take charge and steer the company in a positive direction. Instead on April 10, Best Buy CEO Brian Dunn resigned, as if the company’s problem wasn’t any of his business, literally.

According to Best Buy’s official statement regarding the matter, “There were no disagreements between Mr. Dunn and the company on any matter relating to operations, financial controls, policies or procedures. There was mutual agreement that it was time for new leadership to address the challenges that face the company.”

Despite what the official statement claims, though, the Wall Street Journal says otherwise. Citing company statements and information, the WSJ claims that the resignation of CEO Brian Dunn was related to “exploring whether he misused company assets in the course of an alleged relationship with a female subordinate.” Regardless of the details, though, Brian Dunn is gone and he has perhaps left the company he helmed for 28 years floundering.

According to FactSet company statistics, Best Buy employs approximately 180,000 employees. With its plan to close 50 of its big box locations, how many individuals will lose their jobs? The company’s top management will have to seek out a new CEO fast and adopt a do-or-die mentality if it hopes to survive this fiscal year. Salvation for the company is still possible at this stage, but Best Buy’s future is grim.

Last Friday, Goldman Sachs, a New York investment bank, released regulatory information. Among this information was CEO Lloyd Blankfein’s compensation for the fiscal year. The records revealed that he was paid a total of $16.1 million. This amount, a fourteen percent increase from his 2010 compensation, comes as a surprise to many based on Goldman’s performance in 2011.

While earnings for the bank were roughly $4.4 billion in 2011, Goldman experienced a forty-seven percent decline from 2010. Specifically, in the third quarter of their fiscal year, Goldman actually incurred a net loss. This was only the second time the company lost money since its IPO back in 1999. Further, the bank’s net income went down by a staggering fifty-eight percent in the final three months of 2011.

So how did Goldman Sachs, an established, international banking corporation, struggle to make a net income in 2011?

The short answer: turbulent financial markets. However, Goldman Sachs was certainly not alone. Many of Wall Street’s largest, most profitable banks also endured a challenging year as the financial markets were hurt by the European debt crisis. It was especially difficult for Goldman because of a lack of consumer confidence in the market. The stock and bond markets were certainly not reliable and it was reported that many clients avoided mergers and new sales of stock. Undoubtedly, 2011 proved to be a struggle for many of these banks. But perhaps the more important question is why Goldman’s CEO’s compensation still went up despite the weak performance of the company.

Chairman and CEO Lloyd Blankfein was given a base salary of $2 million, a bonus of $3 million and stock awards of nearly $10.7 million. The remaining amount of compensation was spent on his retirement plan, a car and personal driver and security services. Perhaps the most questionable amount of the $16.1 million is the $258,701 that was spent on security. Why is it that JPMorgan Chase, the country’s largest bank, only spent a little over $20,000 on their CEO’s security, while Goldman spent over ten times that amount?

Goldman Sachs responded to the criticism by calling the security services “business-related necessities” for their executives. The company also went on record saying that the security, which is primarily home security, is imperative due to the elevated threat levels in the “current environment.”

It is no secret that Blankfein is a controversial figure disliked by many. Last November, during the Occupy Wall Street movement, protestors gathered in front of the headquarters, accusing the bank of numerous violations and demanding Blankfein’s imprisonment.

Just last month, Goldman’s executive director Greg Smith resigned after submitting an essay to the New York Times about the bank. In his essay, Smith discussed the integrity of the bank and said Goldman was “losing its moral fiber.”

It is obvious that people are watching Goldman Sachs with dismay. While analysts expect the bank to successfully recover financially and generate a profit in the upcoming year, Goldman will need to alter their ways if they truly seek long term success. Quite simply, they must act more ethically and in the interest of their clients rather than solely in the interest of their profits. Who knows- maybe the bank would not have to spend as much on Blankfein’s security if this were to happen!

Imagine a product where you could get something at a huge discount, have an insane amount of time to decide whether or not to use it, and once you do use it, you can still get your money back if you did not like it. Sound familiar? No, this is not some salesman’s empty promise. It’s called the Groupon Promise.

This deeply discounted deal actually does exist, and the unlimited ‘get your money back’ guarantee is available to all of Groupon’s consumers. However, for a public company with shareholders to answer to, is this a viable business model? Maybe not, as evidenced by Groupon’s tripping start as a public company.

Shortly after Groupon issued their first quarter results their independent auditor Ernst and Young cited weak internal controls and has requested a restatement. The revenue had to be lowered by over $14 million for the quarter, and the stock plummeted on the news by more than 12 percent. Wall Street analysts expected the newly IPO’d firm to book a profit for the quarter, but they failed to, and after the restatement, their quarterly loss totaled an eye-popping $37 million.

So what’s wrong with this Groupon picture? One major issue is that the firm has such a lenient return policy that it is nearly impossible for the firm to implement adequate control measures. How do you control a blanket return policy with very little protection for the company? They really have no way of judging what items and what size and quantity will be returned and the ultimate size of the refunds. The company has reaffirmed its guidance for the current quarter but given their initial falter, how can anyone believe them going forward?

As students at Bentley who have taken GB 112/212, it is hard not to think déjà vu on this story. Sunbeam under CEO Chainsaw Al used the channel stuffing measure of booking profits with extremely lenient return policies. Sunbeam was focused on getting the revenue recognized with little concern over the product’s actual use. Similarly, Groupon makes their money off the high volume of deals they promote, but is not adequately managing their exposure when the customer demands their money back. They have been recognizing revenue before the transaction is completed, in many cases, before the consumption of services. And, with the right of return of Groupon’s money back guarantee, this was a perfect set-up for misstating their financials.

At the end of the day, I agree with E&Y’s statement that this really is based on a lack of internal control. Groupon is still an infant of a public company. Their management team does not actually understand the basics of what revenue recognition means. In addition, offering an unlimited return policy can impede the growth of their business. It will only provide a short term pop that may backfire and cause a long term black mark on your record. This company now sits with their stock at new lows, a full 30 percent below its IPO price; a fresh shareholder lawsuit on their hands; and the company has only been public for 5 months. What a way to start your marriage to investors.

A key take away from this story is that the basic concepts of accounting and revenue recognition are not only for students of accounting or your local CPAs. They are necessities for all members of the business world. The real culprit here was not a management team trying to game the system. They simply had no idea that what they were doing was wrong. But, when people’s money is on the line, ignorance is not an excuse, and in the blink of an eye, your reputation is totaled. It took an independent auditor to tell them “No”. Maybe if they had read their GB 112 book a little more closely, this never would have happened.

President Obama signed into law the $447 billion American Jumpstart Our Business Startups (JOBS) Act this past Thursday, in an effort to bolster American employment and ease the process for private companies to go public. The bill received bipartisan support from both parties with a House vote of 390-23 to approve it and a Senate vote of 73-26.

While Washington is optimistic, government officials and consumer protection agencies are doubtful that the JOBS Act will provide an adequate safety net for small business. Former SEC Chairwoman Mary Schapiro has voiced concern that the law will lead to IPO failure, a greater lack of transparency, and investment fraud.

Provisions written into the law curtail legislation in Sarbanes-Oxley which to have some extent, prevented research analysts and investment bankers from artificially driving share prices up through stock recommendations during the past decade. Goldman Sachs, Morgan Stanley, and Bank of America have already been devising strategies by which they might take advantage of the change in legislation. With the JOBS Act’s passing, coverage of emerging companies will be much easier for investment banks.

Most importantly, businesses that go public under a threshold of $1 billion of gross revenue will not be required to undergo independent audits and disclose financial information for up to 5 years. The law also includes a provision that will allow firms to raise up to $1 million a year from private equity pools sourced from online solicitation by independent investors. The logic behind the JOBS Act is that deregulation will enable small and medium-sized businesses to better capitalize themselves through “crowdfunding”, a form of fundraising that involves this kind of behavior.

However, it must be admitted that businesses would be able to effectively save hundreds of thousands of dollars by avoiding legal and accounting costs. But the true question is this – will the JOBS Act incentivize businesses to succeed or endanger them?

Many Americans are criticizing the JOBS Act as yet another unnecessary stimulus package that will only add to the $15.6 trillion in national debt. Moreover, Harvard economist and Economic Recovery Advisory Board member Martin Feldstein estimates that the bill is to spend $200,000 per newly created job.

Of the $447 billion stimulus, $253 billion will be set aside to cut and suspend payroll taxes for qualifying employers, as well as to provide tax credits. $62 billion will be spent for a Pathways Back to Work Program to provide a job search and training initiative to people with low income, $49 billion of which will extend unemployment benefits for up to “6 million long-term beneficiaries.” The remaining $140 billion will be allocated toward infrastructure spending in the form of new public works projects, subsequent job creation, rainy day funds to prevent furloughs, and the formation of the National Infrastructure Bank receiving an injection of $10 billion.

Dealogic is a company that monitors corporation IPOs among other sorts of market release information.

According to the company, 174 companies launched IPOs in the first quarter of 2012 and raised a total of $16.5 billion USD.

Dealogic reported that at this time last year, amount of money raised from IPOs was approximately 43 percent higher, and that this was the slowest quarter for IPOs since 2009

Despite these statistics, however, the Wall Street Journal’s Lynn Cowan reports that “bankers…are optimistic that the atmosphere for new stocks is improving – especially in the U.S.”

Of course, one of the major companies that most are probably citing for that ‘improvement’ is the upcoming IPO of social networking giant Facebook.

With Facebook’s IPO speculated to be worth as much as $10 billion, it’s no wonder why all eyes are on Mark Zuckerberg’s remarkable miracle baby.

According to statements by the SEC and others familiar with the matter, Facebook expects its IPO to occur within the first half of 2012, likely around May.

Oftentimes when companies are preparing to go public, they will halt the sale of their stocks on secondary markets (individual trading).

They do this so that they are able to account for their entire shareholder base. Facebook has done precisely that, and last week, Bloomberg reported that Facebook removed its shares from being traded on secondary markets.

Interestingly, Facebook’s pending IPO has resulted in private company trading platforms to lay off workers and to reduce revenue predictions. SecondMarket is one such company.

The firm laid off 10 percent of its 150 person workforce last Friday in order to ‘cut costs’ prior to Facebook going public.

This ripple effect reveals that companies such as SecondMarket rely heavily social-media stocks and other online web industries.

In an email to the Wall Street Journal, a representative of SecondMarket stated that “in a post-Facebook world, we have decided to eliminate some positions that are no longer core to our company’s long-term mission.”

Prior to Facebook’s halting of secondary share trading, demand for Facebook shares had still continued to increase, and peaked with a total market cap of approximately $105 billion.

This would be incredible for any company, much less a social media firm that has been around for less than a decade.

According to information disclosed in Facebook’s S1 filing with the SEC, Mark Zuckerberg owns a 28.2 percent share in his company.

With Facebook predicting an IPO valuation of $75 to $100 billion, this could mean a potential $28 billion payout to Zuckerberg, pretty impressive, for a 27-year-old.

With 845 million users, and more and more signing on every day, how long will it be before everyone in the world has a Facebook?

Will it become too big, flooded with advertisements and bugs? Will Facebook become the next MySpace, or goes in a more positive direction?

The business world has shown time and time again that when a market or business is spiraling downward, it is best to take action quickly rather than stall.

Unfortunately, the continental debt crisis in Europe is not going to fix itself and the European Union collectively needs to formulate some sort of plan.

The European debt crisis, as with seemingly all economic crises, is a rather complex issue. Essentially, a number of countries in the Eurozone, which includes the seventeen European countries using the Euro, borrowed and spent beyond their limits.

Whenever this is the case, countries tend to lose control of their finances.

While the problem (debt) had been brewing ever since the early 2000s, it became most apparent with the collapse of Greece’s economy in 2009.

Greece was the first country in need of a multi-billion dollar bailout (a term Americans are all too familiar with).

Not long after, Ireland and Portugal were in similar situations, requesting similar bailout packages.

However, just because a country receives a bailout does not mean that the problem will be fixed.

In fact, Greece remained in a difficult situation and needed even further monetary assistance.

The greatest problem arises when Greece, or any other country struggling economically, fails to cut their spending and is unable to pay back the money that was lent to them.

It is a difficult situation for all of Europe because they have not been receiving money back.

So why does the European Union keep increasing the bailout packages? Simply put, there would be even greater challenges presented for the Eurozone if Greece went bankrupt.

Undoubtedly, Europe is in a tough spot. As a result, many people are asking the same question: “What is the best course of action Europe can take to recover financially?”

Angel Gurria, head of the Organization for Economic Cooperation and Development, believes the European Union should increase the financial firewall to at least one trillion Euros.

In order to restore confidence in the European markets, Gurria said, “The mother of all firewalls should be in place.”

He believes placing the potential bailout amount that high will prevent the crisis from spreading to and harming larger economies such as that in Spain.

Gurria is adamant in his belief that Europe needs to act now.

He suggests that a series of changes in markets, tax systems, and education will encourage people to spend and, in turn, to help stimulate the economy.

In an interview before his news conference, Gurria said, “Europe is stalling. It needs to get out of first gear and make growth the number one priority.”

Fortunately, he is not alone in his belief. The United States is among a number of countries supporting the increase of the European financial firewall.

Even Germany’s top government officials, who have always favored a firewall cap of $500 billion, said they would not oppose a second rescue fund to complement the existing one.

Germany’s reaction to this proposal was unexpected and is representative of how determined European countries are to fix this serious crisis.

As students at a business school, it is important for us to understand the global markets and their massive implications on international business.

The European debt crisis is a fine example of a situation where it is imperative for the world’s greatest economists to act swiftly.

Whether increasing the firewall to one trillion dollars is the answer to this debt crisis or not, we should never cease to draw up plans for improving the world economy.

Welcome to the weekly market wrap for the week of March 12 through March 16. Recent articles trending in various business newspapers and magazines have mostly held a positive outlook on the future of the domestic market.

The market performance data of this 11 trading week of 2012 is no different, with stocks scoring gains thanks to optimism that, even though the economy is recovering, the Federal Reserve would still maintain an easy-going monetary policy.

All three of the major stock indices reached major milestones. The S&P crossed the 1,400 mark, The DJIA reached levels not seen since before the 2008 financial crisis, and the NASDAQ reached levels which had not been seen in over a decade. Crude oil futures fell slightly this week, trading at around $107.15 at closing Friday afternoon, and gold futures also fell, trading in at approximately $1659.70.

A notable contribution to this past trading week’s positive sentiment may have been the Labor department’s announcement that claims for unemployment benefits had reached a four-year low. AMC Networks, the owner of the popular AMC theaters announced this week that it had earned $29.5 million in this most recent period, up from $19.3 million in the same period last year. This growth in earnings further reinforces the sentiment of economic recovery as it shows consumers are more inclined to go out and spend on leisure and luxury than they were at this time last year.

Returning to market news, the domestic market made its strongest surge forward on Tuesday, following news that retail sales had increased 1.1 percent in February. Furthermore, following the Fed’s policy meeting, officials announced that the labor market had improved and that ‘global financial strains had eased.’

Investors will be happy to learn that in their most recent ‘stress testing’ (a test conducted by the Federal Reserve on large banks to determine whether they could survive sharp economic downturn), most banks passed.

Total volume of U.S. stocks traded at closing on Friday the 16th was at an extremely high 8 billion shares. A big concern for the investors and consumers alike now is the continually rising gasoline prices, which have jumped 17 percent since the beginning of the year.

Despite the worry about gas prices, it was a fairly solid week for the U.S. markets, with all indexes closing more than 2 percent higher than they had opened at the beginning the week. S&P closed at 1,404.17, the DJIA at 13,232.62, and the NASDAQ at 3,055.26.

Oil prices have continued to rise these past few weeks, and they have risen a cumulative 17 percent since the beginning of 2012. All this serves to do is take more and more money out of consumer pockets and away from spending that could continue to fuel the ‘in progress’ economic recovery.

In a statement issued by economists at Nomura Securities International, Ellen Zetner (economist) said that “consumers have yet to get really rattled” by the rising prices. However, the keyword is yet. Rising prices have yet to impact consumer spending and sentiment, but how long will this neutrality continue?

There’s no end in sight for rising gas prices, especially because important refineries in the east coast that convert crude oil to gasoline are beginning to shut down. Why are they being shut down? It’s simple. The cost of crude is now rising to points where the companies that operate these refineries are losing money on them, and cannot afford to keep them running.

In a statement issued by Sunoco Inc., the company expects to close the largest northeast oil refinery July 2012. And although Sunoco states that the company has taken steps to ensure that even if the refinery closes, there will be adequate gasoline supplies for consumers this summer. But what’s going to happen after that? Just the closing of the Sunoco refinery alone will take 335,000 barrels per day of gasoline away from the market.

As aforementioned, rising gas prices can definitely put a damper on the recent optimism of continued economic recovery. And because we all know how the law of supply and demand works, as the supply of crude is continually restricted due to tension in Iran (a major supplier), prices will only continue to climb.

This past Thursday, Prime Minister of the U.K. said that he had discussed with President Obama the possibility of utilizing “strategic” oil reserves of the U.K. and the U.S. to help reduce the problematic oil prices worldwide. Many eyes are now watching what actions President Obama will take to resolve this problem which may quickly escalate into a crisis.

Analysts from the Wall Street Journal have concluded that as summer approaches, even tapping oil reserves may not solve the problem, as gas usage usually sees a 3 percent growth in the summer months. Despite all this negative sentiment however, economists state that whether or not the economy is largely impacted by rising oil prices largely depends on exactly how high the prices go.

We should all keep in mind that we have all seen gas prices at a little over $4 in 2008. Although prices have not stopped their climb, James Hamilton, an economist at the University of California San Diego states that “Everybody understood that $4 gasoline is something that you might have to live with, when it’s a higher price than anybody remembers paying, that gets their attention.”

The real question now is whether the US economy can take another spike in gas prices. If gas prices do not rise at too rapid of a pace, then the economy in its currently strengthened state may be able to weather the storm. However, with the rising price of crude, refineries not being able to break even and closing down or idling, and gasoline supply depleting as we enter a period of higher demand, will the U.S. economy be able to sustain its recovery momentum?

If you have ever taken a close look at the backside of an iPhone, iPod or any other Apple product, chances are you have read (and thought nothing of) three critical words: Assembled in China. In the wake of founder and CEO Steve Jobs’ death, the American multinational technology corporation has come under fire for the controversial issues of outsourcing and supplier responsibility.

Last year, of the nearly 160 million Apple products sold, almost all were manufactured outside of the United States. Upon hearing this fact, one might ask, “Why has Apple chosen to outsource practically all of its manufacturing positions to countries such as China?” While the answer may seem obvious, even top government officials in Washington D.C. and President Obama have asked the same question.

The response Apple executives have given is not one any American, let alone American government official, would like to hear. Essentially, the United States is no longer able to keep up with many overseas countries in terms of industrial manufacturing.

Apple executives explain that manufacturing in countries such as China is the only possible way to produce the desired amount of products at the lowest cost and in the shortest amount of time. Jared Bernstein, an ex-economic advisor to the White House, says that “Apple’s an example of why it’s so hard to create middle class jobs in the U.S. now.”

Apple has 63,000 employees worldwide, 43,000 of which are located in the United States. However, the more significant statistic lies in their contractors. Apple relies on suppliers and manufactures that are primarily foreign companies. These companies employ nearly 700,000 workers, yet almost none of them are American. Not only is this outsourcing a sad testament to American industrialization, but it also gives rise to the equally important topic of worker rights.

In addition to Apple being criticized for outsourcing jobs, executives have also been questioned for the working conditions of its contractor’s employees. Granted, a factory overseas may be able to produce ten times as many iPhones per day as in America, but there is certainly more to it than higher levels of skill and speed.

In China, thousands of workers live in dormitories so that they are readily available at any hour of the day. Not only are the living conditions poor, but the work day is often divided into only two shifts, one starting at 7 a.m., the other at 7 p.m. The amount of stress placed on workers is enormous and has even resulted in suicides. It is without question that outsourcing is cheaper, faster, and ultimately more convenient. However, it goes without saying that Apple needed to take action.

In order to be truly successful in today’s business world, companies must not always act out of self-interest, but in an ethical manner that benefits all shareholders, including its suppliers and consumers. Apple is a leader not only in the technology industry, but in the world of business as a whole. Thankfully, they have responded appropriately by making a conscious effort to be more responsible for its suppliers and contractors. If you venture to Apple.com, you will find a link on the home page that links to the company’s mission toward achieving the highest standards of social responsibility.

As students at an American business university, it is crucial that we at least think of ways to change the current economic system. Rather than simply observing the trend of outsourcing gain popularity in America, it is necessary for the upcoming generations of business students to find a solution to the problem.

While Apple is displaying a commitment to its suppliers, they are by no means showing any interest in bringing jobs back to America. One can only hope that in the future, other large companies will take an initiative in benefiting the United States economy as a whole.

The popular local search and user review site Yelp, Inc. (YELP) went public last Friday. The San Francisco, CA-based company offered 7.2 million shares at $15 each. At the day’s end of the company’s public debut, the stock price closed at $24.58, a 64 percent increase.

As with many dotcom companies that have decided on an IPO, one has to wonder, what does Yelp need $100 million for? Like any modern day e-corporate army, more hardware and a war chest for global expansion. Yelp has already reached Canada, the U.K., Western Europe, and Australia.

What separates Yelp from companies such as Groupon? Revenue streams, unlike Groupon, are not dependent on subscriptions and do not depend on such a volatile business model. In fact, the deal-of-the-day Chicago-based website heavily depends on the efforts of key marketing and creative agents who draft up promotions featured online, as well as email.

Yelp, on the other hand, has structured itself such that it uniquely offers a diverse array of services by which it gains revenues.

The company’s current revenue streams come from fees that local businesses pay for sponsored searches, advertisements and promotions, as well as sales incurred from the site’s apparel store.

Yelp’s margins gained off of commissions are also quite fair. Local businesses are still able to maintain their own margins, allowing for higher profits and a better business venture.

Yelp’s first “daily deal” is an instance that is representative of its usual promotions. It offered a massage parlor advertised promotions, and sold 1,616 deals in only one day. Yelp walked away with $79,184.

What may distinguish Yelp’s IPO from Groupon’s is its comparatively modest fundraising. Groupon asked for $700 million, which resulted in increased overvaluation of the company. Overvaluation is the bane of most dotcom companies’ long term survival but Yelp is making an earnest attempt to play it safe and not overcapitalize, lest it be swept into the troubles of constant speculation games among investors.

This is not to say Yelp is not overvalued. TechCrunch reported that the company now holds an estimated market value of $1.47 billion. Moreover, the company has still not been able to make a profit, incurring a loss of $16.7 million last year and $9.6 million the year before it. Long term investors have to ask themselves “does this thing have wheels?”

While Yelp, like so many others, is using the dotcom frenzy as Miracle-Gro, the company relies off of people to grow. Having been founded in 2004, it has seen more years than its counterparts and gained some insight into the dos and don’ts of going public.

Yelp realized that its first priority must be to attract additional subscribers, but to also not do it through lavish spending on creative marketing.

The specifics of Yelp’ public ownership is not yet disclosed, this including the amount of the public stake after the IPO. However, we can be certain that Yelp, now being more of a people’s stock, must now deliver to their owners who are both ecommerce hopefuls and speculators.

How do companies that are so crucial to their industries that they become household names, end up in balance sheet and managerial nightmares? General Motors made cars so stellar they coined the phrase “the Cadillac of (insert noun).” Kodak established “the Kodak moment.” Research In Motion all but created the smart phone with their Blackberry.

Admired for its product dominance and wide reach across the technology industry, Hewlett Packard has been a force to be reckoned with over its 60+ year existence. However, the Hewlett Packard of today tells a vastly different story.

Last week this supposed juggernaut of American business and long-time Dow component, showed the worst year-on-year sales decline since the sales meltdown in the depths of the financial crisis of 2009. HP announced Q1 earnings declines of 44 percent, with PC sales declines of 15 percent and Printer sales declines of 7 percent. GAAP margin fell from 10.5 percent to a pitiful 6.8 percent. Services, the supposed growth area of the company, eked out a pathetic 1 percent uptick. The market cap of this company has dropped from $104 billion to $54 billion in the last year. For investors, this past year has been a bloodbath.

Last week’s news was no surprise to those of us who have been following this once magnificent company. After CEO Carly Fiorina was ousted by the HP board in 2005 for poor performance, the former CEO of NCR Inc., Mark Hurd, took the helm. Although HP’s financials benefited during Hurd’s leadership, with the stock appreciating nicely, he was fired in August, 2010 for a scandal with one of the company’s female contractors.

Since then the company has been in a complete tailspin. Their replacement CEO Leo Apotheker was misguided and tried to completely change the basis of the company. His strategy was to remake this behemoth of hardware into a software and services company. This is like saying GM is getting out of the car business and is only going to make car parts. He wanted to discontinue the PC business, and led an insanely expensive $10 Billion acquisition of British software firm Autonomy, Inc. After this, the stock value continued to erode with Wall Street analysts shaking their heads in confusion. Apotheker was fired after just 11 months on the job.

A hasty pluck from the HP Board, their new CEO, the former head of eBay and California governor hopeful Meg Whitman, said to investors last week that this turn around will be time consuming. She mentioned to CNBC’s David Faber in an on air interview that IBM’s turnaround took 10 years, implying that this is not going to be a quick fix.

The question for us to consider is what should HP do to regain the stature it once had? None of their businesses are doing well. They have everything from IT outsourcing, to printer ink; from the laptop this article was written on to blade servers. This $120 billion in revenue diversified company needs to define itself and develop a strategy for how they will reclaim their former glory.

As students of finance and accounting, we are taught about the power of efficient operation. This sprawling bureaucracy is anything but. Major corporate turnarounds are nothing new. The question is whether HP is going the way of Kodak or Ford. Ford streamlined their business and redefined their products. They were the only one of the Big 3 to refuse government bailout funds and now show profits not seen in years. Kodak refused to alter their business and now sits in bankruptcy. I certainly hope that this employer of nearly 350,000 can turn itself around and regain its former glory as a powerhouse of American business.

Presented by the Bentley Microfinance Group

BMG Speaker Series

Dr. Jane Tchaïcha, Associate Professor of Modern Languages at Bentley University, was featured in BMG Speakers Series: Microcredit Working for Women: The Case of Morocco. Dr. Tchaïcha worked with two non-governmental organizationsin Morocco: AMSSF and Ajddigue Women’s Cooperative. AMSSF is a large microlending program that has seen a 95 percent paid back rate on loans while Ajddigue Women’s Cooperative focused on a literacy program for women. Dr. Tchaïcha shared success stories of Moroccans, specifically women, who were able to receive loans and empower themselves through their own business ventures. Overall, the event was successful and the Bentley Microfinance Group is looking to host its next speaker series featuring Susan Hammond (interim CFO) and Kristin Zecca on March 7 at 6:30-7:30p.m. in Backbay AB.

New Loan Clients

As BMG enters a new academic semester, new potential loan applications are in the works. The first client, the owner of a business that specializes in clay cookware, had almost given up hope on securing financing for further expanding their business and continuing to service existing customers. When put in contact with BMG, the client was relieved to hear that their business was eligible for a loan.  In addition to Internal Relations’ recent success, External Relations has recently made contact with Dream Ventures, an organization that seeks to support disenfranchised homeless individuals by equipping them with desperately needed financial tools that help bring their business ideas to fruition. Once a partnership is secured, BMG hopes to financially support graduated clients and take their businesses to the next level. This prospective partnership combined with the potential client, will see that BMG’s loan officers are kept busy for quite some time to come.

BMG Meet ABC

Recently the Bentley Microfinance Group partnered with the Arts and Business Council of Greater Boston to form the Artist Investment Fund. Using BMG’s financing resource, and the Arts & Business Council’s network of artists, the Artist Investment Fund aims to improve the economic viability of the artisan community in the Greater Boston area. The fund has $20,000 dedicated towards lending to clients of the Arts and Business Council. From this partnership, we hope to improve the client flow and improve the lives of several artists.

New Website

We are excited to announce the launch of our new website—to learn more about us please visit: Bentleylends.org.

Three years ago at the 2009 TED Conference, Better Place CEO Shai Agassi asked the crowd “how would you run a whole country without oil?” He then began to outline his company’s business model, demonstrating that making the electric car a global standard is a possibility.

Better Place wants to provide the world with an electric car system that is affordable, through pre-paid contracts in which customers agree to purchase a finite amount of miles per year, and accessible, through strategic placement of charge stations. Moreover, it plans to eventually have a network in which all of its electricity will be harnessed from various forms of renewable energy. This includes, but is not limited to, solar, wind, and hydro.

Agassi knows that to change the reality of the average driver paying four dollars for a gallon of gas to the dream of using a battery that costs four cents per mile, it needs momentum. Since Better Place’s founding in Palo Alto in 2007, it has raised $750 million in venture capital worldwide. While the company is at present funding pilot projects in California, Hawaii, and Ontario, it plans to generate critical mass abroad.

Israel, the first nation to partner with the company, has been a key ally and sponsor of Better Place as a nation that wants energy independence. The country levies high taxes on vehicles that are solely oil-dependent and rewards consumers who purchase electric cars with tax breaks. It is these kinds of policy incentives that not only Israel, but Denmark, Japan, the U.S., Canada, and Australia are implementing to champion not just clean energy, but a better world.

How has Better Place accomplished so much in so little time?  Strategic partnerships with industry giants such as Renault-Nissan, investment firms, and governments have been vital in making the enterprise self-sustainable.  With a tentative IPO date of 2014 and a valuation of $2.25 billion (2011), Better Place plans to expand as demand for hybrids and electric cars increases.

Better Place Chairman Idan Ofer has voiced great interest in China, where the company opened a visitor’s center in Guangzhou at the end of last year. Ofer is optimistic, observing that China’s government plans to have one million electric cars on their roads by 2015. He forecasts that the tipping point for electric car use will come in three to four years.

In his TED speech, Agassi called on the leaders of the world, stating that support is needed from executive powers in order to witness the advent of the electric car. He referenced JFK, who once said that we could put a man on the moon by the end of the decade. He posed a similarly daunting assertion; we will reduce the world’s CO2 emissions to zero before the world ends.

It will always be a constant that our world will have a finite amount of resources. Worldwide renewable energy-driven transportation is the way to the future. It may seem like a far off dream but consider this quote:

“All this will not be finished in the first one hundred days, nor will it be finished in the first one thousand days, nor even perhaps in our lifetime on this planet. But let us begin.” – JFK

Google has been found to be one of a couple of advertising companies that have been tracking iPhone and Apple product users through Apple’s internet browser, Safari. Although the browser prevents this type of tracking from occurring by default, Google and other companies managed to bypass this.

Technical details aside, the code that allowed Google to conduct this kind of tracking was discovered by Jonathan Mayer, a researcher at Stanford University. According to Rachel Whetstone, a spokesperson from Google, the goal of this “tracking” was so that Google servers could establish a temporary connection between itself and Safari to ensure that information passing between the two remained anonymous.

However, The Wall Street Journal’s Jennifer Valentino-DeVries states that however temporary the connection, this kind of system could “then result in extensive tracking of Safari users.” This poses a potential privacy issue because Safari is the most popular internet browser on mobile devices, namely the iPhone and iPad.

This type of information surfaces at both an interesting and sensitive time because of the iOS versus Android war. Although never explicitly stated, one can only wonder if this type of tracking implementation was some slick way for Google to gather information on Android’s top, and perhaps only, formidable competitor.

According to Mayer, the Stanford researcher who discovered Google’s tracking, “there are zero legitimate-use cases” of Google’s tracking implementation, a feature normally blocked by default on Safari.

After The Wall Street Journal reported on Google’s tracking of Safari users, the issue was escalated a step further as the Federal Trade Commission was called in to investigate the matter. Although not all users may be aware, Google has recently been in the process of overhauling its privacy policies after a privacy settlement was reached by Google and the FTC last year.

The Wall Street Journal also stated that “At the heart of the complaints is the fact that, until recently, a page on Google’s site told Safari users they could rely on the browser’s settings to prevent tracking by Google. Among other things the [aforementioned] FTC settlement barred the company from misrepresenting its privacy practices to users.”

Breaches of the Google’s settlement with the FTC could result in the company having to pay up to $16,000 per violation per day. And with the FTC prohibiting Google from misrepresenting its privacy practices, Google’s circumvention of Apple’s anti-tracking defaults on Safari after promising users that they could “rely on the browser’s settings to prevent tracking by Google” is rather unsettling.

According to a spokesman from Google, the company “[is] taking immediate steps to address [the] concerns” about the tracking code and has already halted the tracking process and deleted associated files.

Google’s settlement with the FTC last year involved the company’s abandoned Buzz social network. And how according to the FTC, Google used “deceptive tactics and violated its own privacy promises to consumers.”

This time, though, the privacy issues raised by Google’s tracking of Apple’s Safari browser could have a much larger impact because of the sheer amount of users using the application.

Diamond Foods, the maker of such popular brands as Pop Secret Popcorn and Emerald Nuts, has announced that they have to restate two years of financial statements for misrepresenting payments made to their nut suppliers.

The initial reaction to this may seem like a peanut of a headline, but how does a company misrepresent a pile of nuts by so much that they have to lower their net income for FY 2011 by $40 million? That is a whole lot of nuts!

This story goes beyond the shell of the walnut. When you break the shell, you see the real mess they made. This company had inked a $2.35 billion all stock deal with Procter & Gamble to become the second largest snack food company in the country by acquiring P & G’s Pringles brand. But, because of their wacky antics, P & G has stepped away and is now taking other bids.

Furthermore, their little $40 million pile of nuts faux pas has got them into big trouble with their bankers. Under the terms of their debt requirements, they have caps on their leverage ratios and must earn a certain amount of net income to qualify for their continued borrowings. With this new restatement, they have broken these agreements leaving their long term fate uncertain.

Oh, and I almost forgot to mention, the head nuts CEO, Michael Mendes and CFO, Steven Neil, have been ousted. The stock fell almost 40 percent in one day once this story broke. Overall, it is one big pile of mixed and very nasty nuts.

As business students, it is our goal to look at situations like this through the academic lens. What could have been done differently? Who did not see the signs? In the post Enron era, weren’t Sarbanes-Oxley and the SEC supposed to keep such mismanagement and wealth destruction from happening?

The sad truth is that no matter how many rules and regulations are put into practice, there will always be those who will act out of line. While it may seem that the proper reaction to this is to draft yet another piece of legislation, or point fingers at yet another blinded executive, the real take away from this is very simple.

Keep your eyes open, and if something doesn’t look right, it probably isn’t. Question it, and don’t stop asking questions until you get an explanation that makes sense.

We are here at this school so that once we go out into the business community, we will not act in the way that Diamond Foods has. It is important for us to look at this as a lesson in why going for the short term gain can get you into trouble.

The shareholders who were misled have now lost a good portion of their investments, and the employee’s futures are now uncertain.  Can you imagine what the morale in the hallways has been after this story went public?

This was a company that went for the cover up instead of the truth and hoped no one would call their bluff. Well, someone did and now all their stakeholders have to pay the unnecessary price. This is a company that had great potential and was going to become a leading force in their industry, but because of the poor decisions of some, this dream remains a fantasy.

Though we must keep in mind that the Federal Reserve’s near-zero interest policy is still stymying consumer borrowing and spending that could accelerate the recovery of the U.S. economy, analysts are optimistic about 2012 and the recovery of our economy.

Take their optimism with a grain of salt, though. Around this time last year, the economy seemed to be on the path to recovery, too. U.S. unemployment rates had fallen to their lowest since 2009 early last year, coupled with an increase in incomes without an increase in inflation. It was predicted that the U.S. would maintain its recovery momentum throughout 2011, but it didn’t.

The multitude of problems that struck the U.S. and world economies throughout the year were often unpredictable and some were obviously out of our control, but that is no excuse.

Man-made crises also caused many of the problems that plagued 2011. The large earthquake and tsunami that struck Japan derailed supply chains all over the world, increasing conflicts in the Middle East cleared money out of consumer paychecks as oil prices ramped up, and the European debt crisis devastated global markets.

According to analyst Tim Gill of NEMA, “Even the modest degree of optimism that we had [for 2011] turned out to be too much.”

The contrast between analyst predictions and the actual path of the economy exhibits the uncertainty of “economy prognostication,” which is all about identifying trends the economy is following and attempting to predict the future position of the economy.

The aforementioned natural disasters and man-made issues are always a possibility, but if the U.S. economy were in better shape, it would be able to withstand them better.

Dean Maki, the chief U.S. economist for Barclays Capital who spoke on the predictions of recovery in 2012 stated that, “Because it’s still only a modest recovery, we still are vulnerable to unforeseen shocks.”

There is now more caution in predicting economic growth, given the overturn of many analyst predictions last year. A survey by the Wall Street Journal had economists predicting an average increase of 2.6 percent in U.S. GDP this year.

That’s their strongest prediction in almost half a year, but it is still lower than what they predicted last year. The overall vibe from predictions this year is that economists have learned a lesson from last year and are not ready to fully buy into the momentum that 2012 may (or may not) hold.

Economists say that there are reasons that they believe the economy is on “firmer footing this time around.“ They admitted that much of the drop in U.S. unemployment in 2011 was not because people were being hired, but instead because they were giving up looking for work, meaning they no longer counted as unemployed.

On the flipside, economists say that the more recent drops in unemployment have been due to actual hiring. And one of the most important pieces to the recovery puzzle, the housing market is beginning to take shy but confident steps towards improvement, the first since the bursting of the housing bubble in 2008.

Louis Crandall from the research firm Wrightson ICAP said that this time, economic recovery seems to be spreading to more sectors of the economy. This way, even if we are hit with a natural disaster or global market failure, the U.S. economy will be more prepared to handle the impact of the shock.

**INFORMATION SOURCED FROM THE WALL STREET JOURNAL AND THE NEW YORK TIMES

It has been 37 months since the Fed stepped in to oversee and manipulate the free-market system of the U.S. 37 months since the Fed’s near-zero interest rate policy has been implemented. The ultimate question now is if the policy is working, or is it doing more harm than good?

The Fed recently voted to extend the near-zero interest rate policy into the foreseeable future, yet business and consumer loans have not seen any dramatic increases (the hopeful result of the policy). The lack of growth in loans is likely due to the fact that businesses and consumers see no rush to take out loans when this near-zero interest rate policy is still going to continue for many years.

“The Fed has removed the last shred of possibility that interest rates were going to revert to normal in the near future,” said Christopher Carrol, a Johns Hopkins University economics professor.

To justify the near-zero interest rate policy, Federal Reserve Chairman, Ben Bernanke, said in a recent statement that U.S. fiscal policy should first focus on doing no harm, then, focus on helping the economy recover. However, the policy that initially did no harm by promoting loans is now harming our economy.

This policy has resulted in an enormous rise in liquidity in banks all across America, but none of it is being put to use. There is plenty of capital currently in the banking system, but nobody asking to loan it out. Why would consumers and businesses take the risk of borrowing that money today when the low cost money, courtesy of the near-zero interest rate policy, will still be there tomorrow?

Although it was not the intention of the Fed, conservative investors, such as retirees, those near retirement, insurance companies, and others are now presented with a tough choice. These individuals and businesses must either move into riskier investing environments, or deal with the consequences of coming up short on low-risk investments which are no longer providing sufficient returns due to the near-zero interest rate.

Since the crash of late 2008, the Fed held short term interest rates at near zero in order to spur economic growth and to help the ailing housing market.

Yet, one unintended side effect of that policy is the reduced returns on savings accounts and other low-risk investments. Compared with the peak of $1.42 trillion in 2008 prior to the crash, these reduced returns are extremely obvious when the interest incomes from CD accounts, savings accounts, insurance products, and other sources amounted to $976 billion in the fourth quarter of 2011, down nearly 33 percent.

The U.S. economy doesn’t need the life support of the near-zero policy anymore. A patient needs to get up and move in order to get better. In short, the Fed is now doing more harm than good.

An interest policy that does not allow businesses and individuals to get the investment returns they need, and makes banks so wary to loan except to those whose credit is so strong they don’t need loans, is hardly what the economy needs right now.

Facebook’s soon-to-be public status is no small news. In its IPO registration statement to the SEC, the company values itself at, a hoped for, $100 billion. However, the company’s projected value and all other standard IPO information is not all to be found within the Facebook registration statement.

Within Facebook’s IPO, the company reveals something unexpected. “We expect that substantially all of the net proceeds Mr. Zuckerberg will receive upon such sale will be used to satisfy taxes that he will incur upon his exercise of an outstanding stock option to purchase 120,000,000 shares of our Class B common stock.” Zuckerberg received the aforementioned 120 million options for being CEO and head honcho of Facebook in 2005. Because the options will be treated as standard income (though $6 billion is hardly standard), Mr. Zuckerberg will have to pay income tax at a Federal rate of 35 percent.

According to some quick math done by Robert Frank of The Wall Street Journal: Wealth Report, “The cost basis for those options is six cents a share, so if the company is valued at $100 billion, and the shares are valued at around $50 each, [Zuckerberg’s] gain from the sale would be up to $6 billion. Taxed at 35%, the tax bill would be more than $2 billion.” The Financial Times projects a more slightly more modest tax bill of $1.5 billion.

Zuckerberg’s newly projected tax bill provides important opposition to the widespread debate that the rich pay lower taxes than middle and lower class Americans, a point brought up by Berkshire Hathaway CEO and investment magnate, Warren Buffet, last August. Buffet wrote an article titled “Stop Coddling the Super-Rich” in which he discusses how the rich are given extraordinary tax breaks “while the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet.”

The income gap that has been growing between the wealthy and the middle class in the United States has been subject to much debate over the past decade, and even before that. In his article, Buffet mentions that since 1992, the IRS collected data from the 400 Americans bringing in the greatest incomes. The 400 had a total income of $16.9 billion that could be taxed, and they paid 29.2 percent on that sum ($4.93 billion).

He goes on to say that the same data collected again in 2008 showed that the total taxable income of the top 400 had climbed to an astronomical $90.9 billion, but that the taxable rate had fallen to 21.5 percent on that sum ($19.4 billion). $19.4 billion divided amongst the wealthiest 400 means an average income tax of about $48.7 million, a startlingly low amount relative to their average incomes of $227.4 million.

Warren Buffet stated that “my friends and I have been coddled long enough by a billionaire-friendly Congress. It’s time for our government to get serious about shared sacrifice.” Though it is undeniable that America’s income gap is growing at an alarming rate, it would be wrong to point fingers at all of our wealthy individuals and say that they are not contributing their part to our ailing economy.

Zuckerberg is the perfect example. With his estimated $2 billion income tax this year, he is paying an income tax equal to 41 of the wealthiest 400. Warren Buffet’s statement may be true for “professional investors and private-equity chiefs, but not for dot-commers and many entrepreneurs.”

After facing an overwhelming amount of protests calling for recognition of the first amendment and privacy rights, the Stop Online Piracy Act (SOPA) and Protect IP Act (PIPA) bills were indefinitely suspended.  While the U.S. government is still determined to draft legislation that will effectively stop overseas piracy, the power play against Hong Kong-based Megaupload, a file-hosting site best known for streaming free videos, now serves as a precedent to businesses and sites that engage in illegally sourced file sharing.

On January 21, Kim Dotcom, the founder of Megaupload, was arrested in New Zealand along with three of the company’s employees.  Pirated content was discovered on leased servers in Virginia, which gave the U.S. the jurisdiction to act.  New Zealand police seized more than $13 million worth of Dotcom’s personal assets and $39 million worth of company assets were frozen by Hong Kong Customs.

Sites such as FileSonic, rather than following suit, have immediately done away with their illegal file sharing service, but kept their file storage services.  However, while cyberspace is still being patrolled by investigators, many users are hesitant to access their private content for fear that they will be caught with illegally sourced content. Even popular cloud storage sites such as Dropbox may encounter a shortfall in user traffic due to the SOPA/PIPA episode.

To software developers, SOPA would have further increased the privatization of the Internet, going one step past their pre-existing intellectual property right bodies (i.e. the U.S. Patent and Trademark Office).

Moreover, it would have granted an innumerable amount of content owners the power to accuse one another of copyright and the number of lawsuits would skyrocket.  Markham C. Erickson, a founding partner of Holch & Erickson LLP who serves as lead counsel to Google, eBay, Amazon and Skype, commented that the bill is so broadly worded that it would allow “for an almost unlimited class of rights holders to harass and intimidate sites.”

SOPA was identified by businesses as anti-innovation and a startup killer, precisely because it would deny startups from ease of entry.  To the tech geek developing hardware or software out of their garage, this would be a nightmare.

Imagine this – had SOPA been passed during the ‘70s, there would be no Apple.  No Microsoft.  IBM would still be around as a hardware monopolist and we would have never entered the Information Age.  No Facebook.  No Twitter.

When the U.S. drafts up its next legislative piece, it must be careful to distinguish between the people whose livelihoods depend on the use of affordable, open source content – which is not owned via patent or copyright – and the masses that thrive off of pirated content.  With pressures from pirate nations like China, Russia, and India, businesses, as well as U.S. citizens, will bear the brunt of anti-piracy legislation.

Startups and existing corporations may find that privatizing, as well as monetizing their content, especially when going global, may become even more of a difficulty, as we approach a different solution.

By Phillip St. Pierre

It is that time of year again: Bentley students are posting up in the library, stressing out about the group presentations and final papers that professors are throwing at them. Or, if you are like me, you are probably freshening up on your procrastination tactics, choosing to go to the gym for a couple of hours just to get out of studying for the upcoming finance exam.

Although the last thing you may want on your mind are ways to gain more to your workload towards the end of the semester, it is important to look ahead and consider possible internships for the spring. For many companies, the deadline for a spring internship has already come and gone, but there are still some opportunities out there that could prove to be helpful.

In light of this topic, I decided to speak with two Bentley students regarding the internships they held this past summer. Not only did I gain insight from these individuals about their experiences, but they also gave valuable advice on how to make the most out of an internship.

Anne Desmond, a senior at Bentley, and Landi Morris, a fifth year MBA student, interned at Grant Thornton’s Boston office over the summer. The position focused on mentoring them in accounting, particularly tax and advisory services, with a workload similar to what a fulltime employee would expect.

At Grant Thornton, Desmond and Morris went through two weeks of training to learn the company’s day-to-day operations. Once familiar with the firm and its systems, they began working directly with clients and attending weekly development sessions to freshen up their skills. I also learned that these professional development programs were not what one would expect; many times they included bringing the interns to Red Sox games, duck tours and various shows in the Boston area.

“My experience at Grant Thornton was extremely rewarding,” said Morris. “I was able to participate in numerous audits that allowed me to apply the accounting concepts I learned while at Bentley. Not only was I given a lot of responsibility and exposure to a variety of client industries, but the people I worked with were incredibly friendly and open to giving advice.”

“The most important skill I was able to define was communication. I was responsible for communicating with the client on nearly every engagement I was assigned to,” she said. “I was also working in close quarters with the manager and partner assigned to the client during a of couple audits. It can be particularly nerve wracking to report to the partner as an intern. Another important skill I was able to improve upon was time management. During an audit, there are often a lot of different tasks to complete at the same time, and it requires an incredible amount of organization and time management skills to complete it all.”

I then spoke with Desmond to not only hear about her experiences at Grant Thornton, but also to discuss internships in general and their importance in aiding the job search upon graduation.

“I think an internship is very beneficial when looking for a fulltime job. If you end up working at the company you interned at, it makes senior year much less stressful,” said Desmond. “Even if you do not work for the company you interned at, the experience will still be valuable in determining what you want to do and hopefully give you a better idea of what size company you want to work at.”

“Everyone at Bentley understands the importance of internships for their resume and job hunt,” she said. “I think to make the most out of an internship, you should try to ask a lot of questions so that you understand what you are doing. It makes it easier if you keep a list of questions and ask them at a time that is convenient for your supervisor.”

Not only does an internship look good on one’s resume, in Landi and Anne’s cases, interns who are successful and put in adequate effort are oftentimes offered a fulltime position at their respective firms following graduation. This way, one gets to test out a potential company to see if it fits their goals, and they also have the opportunity to work for that company if the internship goes smoothly.

An internship is something that may not be necessary in order to land that dream job upon graduation, and it is definitely something that adds value both to one’s resume and general work experience. Think about what you want to do after school; if you are unsure at all about a career path, land an internship to find the best path for you.

Welcome to the weekly market wrap for the week of November 21 through November 25, with markets being closed this Thursday in observance of Thanksgiving. Markets fell sharply amid intensifying concerns about the Eurozone, with Friday marking the seventh consecutive negative close for the S&P, which fell a cumulative 7.8 percent. Crude oil futures grew to $97.50 this week before falling to around $96, gold futures ended the week down more than $10 near $1,685.00.

Traders and investors have been held hostage this week from negative trends set into motion yet again by, you guessed it, the Eurozone debt crisis. The debt crisis can be described as somewhat of an unfolding train wreck, now spreading into the big players of the region, France and Germany. Although the IMF (International Monetary Fund) announced that it would implement lending policies to combat the debt, this was in lieu of Spanish and

Italian debt costs rising to their highest since the beginning of the crisis.

There were renewed concerns of credit rating downgrades in Europe and the U.S. as the credit ratings of both Portugal and Hungary were downgraded even further. France’s triple-A credit rating came under scrutiny amidst reports that Belgium would be unable to pay its agreed share to rescue Dexia, a Belgian-French bank.

Germany was unable to sell off all of their 10-year bonds, and pressure mounted on German Chancellor Angela Merkel to approve “stability bonds” that would help the finance of Eurozone governments. However, because

Germany doesn’t want to risk its triple-A credit rating, Merkel has issued a statement saying that a common interest rate bond for the entire Eurozone would send the “wrong signal.”

Due to the slew of negative news emanating from Europe, domestic markets dropped dramatically falling below 50 and 200 day moving averages. Selling continued this week as the government revised its third quarter GDP growth estimate from 2.5 percent to 2.0 percent.

Another focus in the U.S. market this week has been on “Black Friday,” which begins the start of the Christmas shopping season. Despite this being the busiest shopping day of the entire year, retailers underperformed.

Normally popular online retailer Amazon was one of the worst performers in the retail space, ending this trading session down 3.5 percent. Other retailers such as Home Depot and electronics giant Best Buy both slid into the red by small margins.

According to Bloomberg, 25 percent of Christmas shopping is done in the week following Black Friday, and the Christmas shopping season accounts for over 40 percent of annual retail sales. Thus, the coming weeks leading up to the end of 2011 will be a critical time for retailers, the U.S. economy and Santa Claus.

**Information sourced from The Wall Street Journal, Bloomberg, CNN Moneywatch & Nasdaq Online.

The National Basketball Players Association’s executive director Billy Hunter predicted it over a year ago, claiming he was “99 percent sure” that a NBA lockout would arise following the 2010 season. Many were aware that a lockout was a possibility, but I don’t think anybody, players or owners alike, expected the discussions to be this difficult.

We are now over five months into the lockout, and talks aren’t going anywhere. Just to add insult to injury, Celtics fans who were hopeful for one last championship run with the ever-aging big three are seeing the chances of any games being played this season slipping out of our grasps.

From a fan’s perspective, I just want to watch some basketball games. The NBA, along with the other major professional sports leagues, is extremely lucrative to be a part of. Sure, owners and players alike don’t want to sacrifice any of their earnings, but they are making millions of dollars a year just to manage or play basketball; it’s the fans that are losing the most the right now.

Although it would be easy to say that both sides just need to meet halfway and come up with some resolution, it is a little more complicated than that. Billions of dollars are being discussed, lawsuits are being filed and the rumors of Kobe Bryant playing in Italy or Chris Paul going to China are becoming a reality as the clock continues to tick, with no agreement in sight.

During the 2010 NBA season, Commissioner David Stern was projecting season losses of approximately $350 million, and in order to go from negative to positive he proposed that the league initiate a “hard” salary cap. Currently the NBA has a cap on total salaries a team can accrue, but there are some instances that allow teams to go over this cap if they don’t mind paying a luxury tax.

With the “hard” cap in place, under no exceptions would teams be allowed to spend more than the cap specifies. This would directly affect players who are looking to sign those large, long-term contracts.

An example of this would be the Miami Heat in the summer of 2010 free agency, with their acquisitions of Lebron James and Chris Bosh. They ended up exceeding the salary cap, but were granted an exception because they had to fill out their roster, and did this by signing players to “veterans minimum” contracts.

The salary cap is the main factor of argument, but there are various sub-topics that need to be smoothed out as well, including the maximum contract years a player can sign to, the minimum age a player has to be before entering into the NBA, and the possibility of getting rid of a couple teams so the talent pool of players isn’t as disbursed.

Synonymous with the salary cap is how much the players should be paid; the previous collective bargaining agreement gave the players a 57-percent share. The players were quick to reject the NBA’s original proposal of 47 percent, and are lobbying towards a less drastic cut of salary to a percent in the lower 50 percent, with a 51- to 49-percent split the bare minimum.

Even after several meetings per week between the NBA and NBPA (National Basketball Players Association), talks have virtually been at a stalemate for the past few months. It seems as though the players were willing to negotiate a decrease in revenue, but were adamantly against a salary cap with no exceptions, which would decrease the amount of money teams can spend on players.

Commissioner Stern fired back with roughly a 50-50 split in revenue, but the NBA was ultimately not budging in its proposal of a hard salary cap. Even with a mediator involved and a final ultimatum given by Commissioner David Stern and the owners, the frustrated players decided to go a different root: disband from the union and take the NBA to court.

From a player’s perspective, this may be the best way to get what they see as an acceptable offer from the owners, as the pressures and hassles of lawsuits and multiple court proceedings may lead the NBA to bend a little in their proposals. On the other hand, court proceedings usually take a great deal of time, and the more games that are cancelled from the season (so far all the games up to December 15), the more paychecks players are missing.

What it all boils down to is discrepancies in a couple percent of revenue. Yes, we are talking about 2 or 3 percent of billions of dollars, but for players and owners alike who are making more money than they would be doing virtually any other job in the world, they are just killing themselves as the cancellation of the 2011 NBA season is in sight.

Not only is the lockout emptying the pockets of NBA owners and players, those who are making a living as ticket vendors, concession workers, and parking attendants are struggling to find a job. As an avid basketball fan, I am hopeful that both sides would just agree on something like a 50-50 revenue split of basketball-related activities and meet in the middle on the salary cap, but that is most likely just wishful thinking.

Look on the bright side, some players are getting a chance to travel overseas and increase the NBA’s popularity globally, but at the same time, they are probably making a third or less of what they would make in the NBA. And for those players who have decided not to play overseas, they must find other ways to keep themselves busy and make money. Take Celtics guard Delonte West for example; what better way to spend your time off from basketball than working at a furniture store to pay off your bills.

Welcome to the weekly market wrap for November 7 through November 11. The 45th trading week of the year closed on a strong note, despite wavering confidence in Europe, specifically Italy during the middle of the week. Crude oil futures experienced growth this week, closing at around $98.73/barrel on Friday afternoon. Gold futures also grew, closing at around $1787.27/ounce.

An overview of the major U.S. indices; the S&P more or less remained even throughout the week, and the Dow Jones Industrial Average and NASDAQ recorded slight gains and losses, respectively. As aforementioned, the market closed on a strong note, with gains of about two percent. This gain represents the fourth market advance in the past five trading sessions.

Italy remained at the center of investor focus for the better part of the week. Markets opened on a strong note, as investors reacted positively to reports that the bailout fund that will be applied to Europe will be expanded.

This opening sentiment was further bolstered when news came that Italian Prime Minister Silvio Berlusconi was going to step down, which would clear the way for a new government to deal with the country’s out-of-control debt crisis.

The only day that the market tumbled this week was Wednesday. This drop was a result of Europe’s largest clearinghouse (a financial institution that acts as a marketplace for trading securities and derivatives – an example would be the London Clearing House or the U.S. Fedwire) announced that it was hiking up margin requirements for investors trading in Italian bonds and securities. Concern was also expressed about just when Berlusconi would step out of office.

However, as the trading week neared the weekend, the markets rallied due to news of a respected economist appearing ready to take over for Berlusconi within the next few days. The Italian Senate also approved many economic reforms that strengthened investor confidence.

Although the ongoing debt crisis in Europe dominated market headlines for the past few weeks, US economic news continued to improve despite the problems in Europe. The US trade gap (which has been notoriously high) narrowed in October more than expected, thanks to increased exports and decreased imports. This improvement in the trade balance may boost third-quarter growth predictions.

Also important, the new jobless claims during the past week fell to 390,000 from 400,000 a week earlier. Though too early to correctly determine U.S. economic trends as 2011 begins to come to a close, positive conditions and indicators in the U.S. economy could continue to spur growth and recovery.

Treasury yields for this past trading week remained stable during the week for the most part due to positive news beginning to come from Europe. Although the economic conflict in Europe can still spread onto U.S. shores and hinder U.S. economic recovery, investors and the world at large breathed a sigh of relief this week that, for the moment, the debt crisis in Europe is still contained.

**Information sourced from The Wall Street Journal, Bloomberg, Forbes Money and Nasdaq Online.

Welcome to the weekly market wrap for October 31 through November 4. The month of October has shown the strongest monthly market rally since 1974. However, as the month ended and proceeded into early November, the markets winning streak came to an end.

The S&P500, DOW and NASDAQ all fell this week, with this marking the first drop in the S&P index since September. Crude oil futures experienced little change, however, trading for $94.22/barrel at market closing on Friday. Gold futures grew slightly to $1757.11/ounce.

Domestic and international market focus again fell on Europe, as the debt bailout deal that was proposed last week fell into doubt. Greece was largely responsible for the trading patterns seen this week, as well as the market volatility.

The week started on a poor note, with stocks taking a substantial hit of five percent upon Greece’s announcement that it would base its participation in the latest bailout on a national vote. This sparked fears that Greece would exit the Eurozone (an EMU that belongs to the EU). However, the markets recovered when protests from Germany and France, as well as dissention within the Greek government, forced the Prime Minister to rescind his proposition of referendum.

Domestic markets regained footing slightly midway through the week when Federal Reserve Chairman Ben Bernanke announced that the Fed was “[preparing] to take further action as appropriate to promote a stronger economic recovery.”

Also helping the positive sentiment was an announcement from the Labor Department stating that, although hiring slowed in late October, the unemployment rate hit a six-month low and job gains in the two months prior had been stronger than predicted, pushing unemployment down to 9 percent.

By Friday, however, markets were unable to build on the positive growth that occurred the past few days, owing to news that discussion on how to handle the Eurozone debt crisis at the G20 summit was “less than amicable.” Eventually, as the week wound to a close, domestic markets had suffered a 2.5-percent weekly loss, brushing away four weeks of gains.

Despite poor market performance this week amid the chaos in European markets, the dollar climbed ~2.5 percent against a small crowd of major foreign currencies, including the yen and the euro.

In other market news, the S&P500 and the DOW, two of the world’s most renowned stock indices, will soon be merged. The S&P, which is owned by McGraw Hill, will merge with the DOW, owned by CME, with McGraw Hill holding 73-percent ownership and CME holding 24.4 percent. News Corp. will have a 2.6-percent stake. The joint S&P/DOW index is expected to be operational by 2012 pending regulatory approval and closing conditions.

INFORMATION SOURCED FROM THE WALL STREET JOURNAL, THE NEW YORK TIMES, FORBES MONEY AND CNN MONEY WATCH.

Similar to the Austrian position laid out in my article last week, economist Hyman Minsky’s theory of economic crises has recently gone mainstream. Minsky (1919-1996), an American economist who did not receive much recognition during his life, developed a theory that explains economic crises based on a dynamic within the banking sector’s function as a financial intermediary.

As early as 2007, the theory was being referred to as a prescient explanation for the then unraveling housing market. And although it is still not generally accepted by the mainstream economic profession, any decent observer of the financial media or economic inter-webs has at least heard the term “Minsky Moment” thrown around once in a while.

Minsky’s theory, called “The Financial Instability Hypothesis” (FIH), is an endogenous explanation for economic cycles. Minsky’s position is that the financial sector, which finances the “real economy” in all capitalist countries, has a tendency to become less and less stable over time.

Minsky’s commonly quoted phrase is that “stability breeds instability.” More specifically, after a period of time where financial intermediaries act conservatively, there is a growing profit incentive to act more and more speculatively, eventually leading to a financial crisis.

To flesh out this dynamic, Minsky categorizes three types of financing relationships that can exist in an economy: “Hedged”, “Speculative” and “Ponzi”. Hedged borrowers have the income stream to afford all future cash flow payments. Speculative borrowers can afford to pay back interest payments, but not the debt itself. They speculate that they will be able to “roll over” the principle (presumably at the same interest payment) when it comes due. Ponzi borrowers can’t really afford to pay back much of anything; they hope to be able to sell the asset they financed at a profit before their debt payments come due.

After a period of time where the economy is mostly financed by “hedged” relationships, financial intermediaries can easily increase their profitability by acting “speculatively,” which then similarly leads to “ponzi” financing. The ponzi financing climaxes with what has been termed a “Minsky Moment,” where suddenly everybody realizes what has happened, and the self-reinforcing cycle of price appreciation that fed the boom reverses and heads downward.

A deleveraging period occurs, which causes a return back to sounder lending practices, and starts another period of “hedged” financial relationships. The process is bound to repeat itself as long as this natural tendency of capitalist economies isn’t prevented by government restraints.

Without going into it, I hope it is clear at this point that Minsky’s theory fits as a very accurate description of the housing bubble during the past decade. The financial industry financed adjustable-rate-mortgages whose borrowers were relying on interest rates staying low. These were the “speculative” borrowers. Additionally, the financial industry financed homebuyers that simply wanted additional income via expected property appreciation. These were the “ponzi” borrowers. Then a financial crisis commenced; now lending practices are back to being strict, and households are trying to pay down debt.

As mentioned, due to its accurate description of the recent financial crisis, Minsky’s theory has become well known in the financial media, although it hasn’t been accepted and applied to the degree Minsky probably intended.

The underlying suggestion of the theory is that capitalist economies are not as inherently stable as the mainstream economic profession has come to believe it can be (with proper monetary and fiscal policy of course). Consequently, just like the advocates of Austrian business cycle theory, those in favor of Minsky’s explanation have a lot of work to do.

Special thanks to Professor Bryan Snyder for providing much of the background information used to write this article.