Do You Love or Despise Wal-Mart?
Wal-Mart has become the largest corporation in the world employing hundreds of thousands of people in the United States and over a million world-wide. The big retailer posted revenues of $351.1 billion and profits of $11.3 billion in 2006. Wal-Mart has topped the Fortune 500 list five out of the last six years. Its sales are bigger than the GNP of over 150 countries. It employs more people than anybody expect the US Post Office.
Over the years as Wal-Mart has continued to grow, Wal-Mart has become a bigger and bigger target of the media, union groups, consumer groups, etc. Wal-Mart is one of the most watched companies in the world. Union groups claim Wal-Mart pays below average wages. Other labor groups claim Wal-Mart discriminates against women. Whatever side of the fence you reside on, no doubt you have an opinion.
Those who love Wal-Mart love it for the low prices and one-stop shopping. With Wal-Mart Super Center stores consuming nearly 200,000 feet of space, thus the name “Big Box”. There is plenty of room for product variety. Super Centers carry clothing, building supplies, furniture, groceries, a pharmacy, etc. Many smaller business co-host inside the store such as McDonalds, banks, etc. In one trip, you can buy almost anything you want.
The folks who hate Wal-Mart say that Wal-Mart has an unfair competitive advantage and is squeezing out the small mom and pop stores. They also believe that Wal-Mart pays below average wages, mistreats their employees and discriminates against women. One such claim states that Wal-Mart pays such low salaries that many of its workers have to go on welfare and food stamps in order to survive. Since our taxes support these services, it means that while we may be saving money on the goods we buy there, it is costing us tax money every time we shop there. For example, another statistic states that 46% of the children of employees’ children effectively have no health insurance, because the health insurance that Wal- Mart provides has a deductible so high that parents can’t afford to take their kids to the doctor. Instead, like most of the poor, they rely on local hospital emergency rooms, which is an inefficient waste of taxpayer dollars.
It seems everybody has an opinion on Wal-Mart. Senator Obama recently stated, “I won’t shop there” at a union rally. US Senator Hillary Rodham Clinton refused to accept a donation from Wal-Mart to her election campaign. Already in November last year, she returned a 5,000 USD donation to the Big Box Mart Store. Ann Lewis, Senator Clinton’s assistant, says the money was returned as there are “serious differences with current company practices”. During her Arkansas years in the 1980’s, Hillary Clinton served on the Wal-Mart board.
In many towns, Wal-Mart building requests are turned down as supporting Wal-Mart has become political poison. In Hernando, Florida, county commissioners voted against allowing Wal-Mart to build its fourth Super Center there. During an open meeting, nearly everybody there expressed concern against Wal-Mart and did not want another monster store. The politicians listened and voted against it. They expect Wal-Mart to sue them.
How popular is hating Wal-Mart? Books upon books have been written on the subject. Books such as How Wal-Mart is Destroying America, and What You Can Do About It are best sellers. PBS did a documentary about the store and its practices.
Wal-Mart used to advertise “Made-in-America” merchandise. No more. Contrary to its “all-American” advertising hype, Wal-Mart sources over 80% of its products from overseas. In 2004, almost 10 percent of everything imported to the United States from China was imported by Wal-Mart — making the company, if it counted as a sovereign nation, China’s eighth-largest trading partner. Because of this, Wal-Mart is criticized for causing US job loss. The claim states that Wal-Mart can push suppliers so hard, suppliers are forced to lower costs by outsourcing to China and offering lower quality items.
What do you think?
Keith Scott is a successful Webmaster and publisher of http://www.i-hate-walmart.com/wal-mart-forum. His website provides at www.i-hate-walmart.com/wal-mart-forum a place for people to express their opinion on Wal-mart. Good or bad, express your opinion on what you think of Wal-Mart
Going Public via Initial or Direct Public Offering: The Role of an Investor Relations Firm
Depending on the size and nature of a public offering, it may be necessary to hire a separate investor relations firm. In many instances, both direct and initial public offerings can benefit from the services of professional investor relations assistance.
For a company going public with an initial public offering, the decision to hire an investor relations firm will probably depend on the company’s ability to internalize the function or the underwriting firm’s ability to provide the service. Because an investor relations firm can be very important in the establishment and maintenance of relationships within the financial community, many corporations opt to hire a firm that specializes in such tasks. In some cases, companies may opt to hire out this function in hopes of gaining additional contacts through the investor relations firm.
The function of a good investor relations firm is relatively straightforward. The investor relations firm serves as a highly visible point of contact for interested investors and members of the press, answering questions and providing information as necessary. These goals are often accomplished through a combination of internet resources, press releases, webcasts, and phone calls. Brochures and other types of corporate collateral are also the responsibility of the investor relations firm. This includes the fact sheets, presentation materials, and earnings releases that are necessary before an offering.
Prior to an initial public offering, the role of the investor relations firm is especially critical. A good firm can play a major role in the success of an issue, creating an impression of success and stability for investors. Heavy roadshow support is a given with any investor relations firm, and the company may help compose various financial reports to present to prospective investors. Good firms will also help by arranging numerous meetings with potential investors, based on the preferences of the issuing company.
Because direct public offerings are generally used by companies with smaller capital needs, the use of an investor relations firm is somewhat less common. Regardless, its function is just as important to a smaller company as it is for a company seeking funds through an initial public offering. With a direct public offering, there is no underwriter to guarantee sales, so full responsibility for the success of the issue lies with the issuing corporation.
Because the process of issuing and selling public shares is time-consuming and stressful, it may be beneficial to enlist the aid of an outside investor relations firm to help with marketing the issue and communicating with investors. In addition to easing the stress, the use of an investor relations firm can help a corporation appear more professional to investors, creating a greater image of stability and profitability.
It’s not impossible for an issue to be successful without the aid of an investor relations firm, but success is certainly more likely with one. By allowing capable hands to take over investor relations functions, the corporation can focus on other important tasks at hand before the issue.
Joel Arberman is the Managing Member of Stock Aware, LLC. We publish a free investment newsletter and offer investment awareness services. Learn more at
http://www.StockAware.com
Understanding Mergers, Acquisitions, and Spinoffs
Mergers, acquisitions and spin-offs are part of the corporate restructuring strategy in which big and small companies indulge in today’s corporate world. These are also called consolidation activities. Companies pursue consolidation activities to strengthen their strategic and competitive positioning.
Merger happens when a new company is formed by the combination of two separate legal entities. The stocks of both of the companies are surrendered and a new company issues fresh shares in the market. An acquisition is a purchase of one company by another where the target company ceases to exist and the acquiring company holds the stock of the target company.
In today’s world, top managers try to name an acquisition also as a merger, because it gives a negative impression in the minds of the stockholders that their company has been acquired. An equal merger is very seldom seen and most of the times it is an acquisition given the name of a merger. A merger can be both hostile as well as friendly.
A spin off is a divestiture wherein a new company is formed by selling or distributing the shares of an existing company. Companies pursue spin-off in order to streamline their main businesses. Then the companies sell their businesses, which have lower productivity.
Impact of Mergers and Acquisitions on the Shareholders and Employees
Mergers and acquisitions are not always welcomed by the members of the company whether it is the shareholders or the employees. The reason for this is that a merger normally leads to more job cuts and reduction of workforce. Job cuts are what the employees are afraid of and something that is inevitable. As far as the shareholders are concerned, mergers and acquisitions can lead to creation of large and small groups of shareholders. The minority shareholders are always at a risk of losing their interest to the larger groups. However through mergers and acquisitions the companies can achieve economies of scale and an improved infrastructure for the staff.
Causes of Failure of Mergers and Acquisitions
Most companies have increased productivity after a merger or an acquisition. But things might not work that effectively if the corporate cultures are very different. Reduced efficiency and shrinking productivity can hamper the success of the new company if the employees do not enjoy the same privileges they used to have in the target company. These are some aspects, which are ignored by the top management while entering into a contract, but later on they realize the mistake. Due to these flaws the day-to-day business is hampered to the extent that the company may suffer huge losses in a short span of time. Experts suggest that the board of directors needs to be more realistic while making a deal so that the future integration is for the betterment of one and all. The value of the company, which is pursuing an acquisition or merger, would decline, as a result of the integration risks and cash exhaustion associated with the transaction.
Available Software
Several software packages are available in the market to help companies create documents associated with these transactions. Since the approval of the Stock Exchange Commission (SEC) is required to complete the transaction, a lot of documentation work has to be done. This software helps companies to reduce their paper work.
David Gass is President of Business Credit Services, Inc. His company publishes a free weekly e-newsletter on Small Business Consulting at their web site http://www.smallbusinessconsulting.com
Categorizing Stocks According to Types
Choosing a stock while making an investment decision depends upon your financial goals. Corporations issue different types of stocks, the basic two types being common stock and preferred stock. Another type of classification, commonly used is to classify stocks as growth, value, or blue chip stocks, amongst others. It is important to understand the various terms clearly so that you can make a wise investment decision.
Common Stock
This is the basic stock issued by a corporation and represents the fraction of the company owned by you. Common stockholders bear the most risks associated with the company. Common stockholders get dividends only after preferred stockholders get theirs. However, the investors holding common stocks have voting rights in the company, which enable them to influence corporate resolutions. Preferred stock holders do not have voting rights.
Preferred Stock
This is a form of equity, but has the characteristics of both bonds and common stock. As the name implies, preferred stock holders can claim the earnings and also the assets in the event of liquidation of the company, prior to common stock holders. However, the claims of preferred stock holders come after those of bondholders.
Additional Classifications
1 Growth Stocks: Growth stocks are stocks of companies whose financial performance and earnings exceed the industry average and the economy in general. The profits are typically re-invested to expand the business and minimal dividends if any, are paid to stockholders. Stockholders gain because the share price goes up as the company grows.
2 Value Stocks: These are stocks considered undervalued by investors. Typically, these may be stocks of companies going through a rough patch or whose growth potential has been underestimated by the market. These stocks attract those investors, who believe in the long-term growth of the company.
3 Blue Chip Stocks: Blue Chip stocks are stocks of financially sound, well- established companies with well-established management and track record of delivering earnings. Their stock price movements are less volatile and they pay regular dividends. Such companies have industry leadership.
4 Defensive Stocks: These stocks provide stability in stock price during periods of recession, economic slowdowns or slow down in industries. Consumers continue to buy food, medicines, gas and electricity even during slowdowns and stocks of companies dealing with these sorts of goods do not lose much value during rough patches in the economy
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5 Cyclical Stocks: Cyclical stocks are stocks of companies, whose performance increases and decreases along with business cycles. When the business cycle is in an upturn, the value of the stocks of companies related to the particular industry would appreciate rapidly, offering windfall gains. Commodities, airlines, durable goods manufacturers fall in this category. However, these stocks lose value during downturn in business cycles.
6 Income Stocks: These are especially suited for investors looking for a greater proportion of current income of companies. Income stocks offer a higher dividend in relation to their market price. Blue-chip companies and utilities like banks fall in this category.
7 Seasonal Stocks: Stocks of such companies fluctuate with seasons. Examples are stocks of retail companies and greeting card companies, which have a greater proportion of sales during festive seasons.
8 Penny Stocks: These are low value stocks, typically with a value in the range of $1 to $5 per share and are traded Over-The-Counter (OTC). They are highly speculative and high risk investments.
Additional Help
A thorough understanding of different types of stocks and the characteristics of each is essential to make informed decisions, and preserve or witness appreciation in the value of your investments. Modern software makes it easier to manage your stocks in various companies.
David Gass is President of Business Credit Services, Inc. His company publishes a free weekly e-newsletter on Small Business Consulting at their web site http://www.smallbusinessconsulting.com