All posts by Peter Jefferson

About Peter Jefferson

Peter Jefferson is a full-time researcher for www.businessdistrict.com, a task he took on in 2011 when the site was launched. He brings to the position a wealth of practical experience in the field of fiscal policy, having consulted with various government bodies on revenue collection, expenditure and economic growth. Contact Peter at peter[at]businessdistrict.com

What Does Alibaba’s Entrance on the NYSE Mean for US Businesses?

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Good News for Small Business? Wait and See
Good News for Small Business? Wait and See

Investors can celebrate now that the Chinese enormous e-commerce business Alibaba has brought billions to several mega-wealthy players. Friday’s IPO of Alibaba reaped a wildly huge amount of money for its owner and founder Jack Ma to the tune of $18 billion. Several other well-placed personages, including Japan’s richest man, Masayoshi Son woke up on Saturday quite a bit richer. And the US-based Yahoo also saw a nice profit from its stake in Alibaba. What about the little guy? How have smaller US businesses been impacted by this historic Wall Street event?

Jack Ma says Alibaba’s success will bring success to regular businessmen.

“At Alibaba, we fight for the little guy, the small businessmen and women and their customers,” CEO Jack Ma said. “Our proposition is simple: we want to help small businesses grow by solving their problems through Internet technology.”

Is this really true? CEO Michael Tudor of Ripen eCommerce, a consulting firm for online retailers, agrees with Ma. Tudor says that Alibaba will help businesses “establish themselves in the Chinese market.”

US Business Inventories and Sales Looking Good in June

Economy

Although not as strong an upward climb as in May, June’s inventories showed a continued surge with a 0.4 percent rise, not quite meeting May’s 0.5 percent. The figures were supplied by the US Department of Commerce which also revealed that there was a small gain in stock prices for non-automobile retailers.

The figures released last week for wholesale and manufacturing inventories point to a second-quarter growth estimate which may be slashed as much as a half of a percentage point by the time the government publishes its revisions on its predictions later this month.

Smaller inventories are a good sign for the third-quarter of GDP.

Sales are also on the rise. In June business sales went forward by 0.3 percent, matching a similar gain in May. If Junes pace were to continue it would take businesses to clear their shelves of their inventory in 1.20 months, the same as in May.

Georgia Takes First Place in CNBC Survey Best State for Business

Economy

According to a recent CNBC survey, Georgia came out on top of all other US states for the way business is conducted there.

The survey looks at ten key aspects of conducting business, giving a different number of points to each, according to the importance that particular aspect has for business. The CNBC Top States study uses more than 50 metrics in the ten key categories of competitiveness. The categories are weighted according to how frequently they appear as selling points in marketing literature distributed by the economic development offices of each state. This is how the survey holds the states to their own set of standards. For 2014 the following categories were evaluated, with maximum points which can be earned in each:

o    Cost of Doing Business (450 points)
o    Economy (375 points)
o    Infrastructure (350 points)
o    Workforce (300 points)
o    Quality of Life (300 points)
o    Technology & Innovation (300 points)
o    Business Friendliness (200 points)
o    Education (150 points)
o    Cost of Living (50 points)
o    Access to Capital (25 points)

Georgia finished first with 1659 points out of a maximum of 2500. In second place was Texas with 1641 points. Utah, Nebraska and North Carolina were 3rd, 4th, and 5th.

The five worst states for business were Connecticut, which ranked 46th, Alaska, which came in 47th overall; West Virginia, Hawaii, and Rhode Island coming in at the bottom of the barrel. CNBC has never rated the Ocean State higher than 48th. It is a state with high taxes, high unemployment, and high utility costs. Rhode Island is working on making some changes. They have passed over 25 business reform legislation to ease up on heavy regulations and attract more jobs. These reforms are part of a four-year plan, which Rhode Island officials say was motivated by the CNBC past surveys.

Facebook’s Instagram Beginning Ad Placement Outside US

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Ads Coming to Instagram
Ads Coming to Instagram

Facebook’s mobile photo service, Instagram will be expanding is new advertising business to countries outside the United States.

The plan is to first show ads to users in Australia, Britain and Canada later this year by working with just a small number of advertisers in each of those countries.

Facebook has already begun placing ads in Instagram inside the US, beginning last November with brands like Levi’s and Ben and Jerry’s ice cream. Instagram announced that the ads within the US have, in some cases yielded results “well above the ad industry’s average for performance.”

Instagram has over 200 million users, and is therefore expected to be an excellent source of advertising revenue for Facebook, which purchased the mobile photo service in 2012 for $1 billion. Seeking to calm investor expectations of a quick revenue uptick, Facebook CEO Sheryl Sandberg said that the company was going to roll out their ad program on Instagram at a moderate pace.

“We don’t see the need or the urge to ramp this as quickly as we possibly can,” Sandberg said.

Toys “R” Us Struggling to Play the Competition Game

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Toys R Us Posted Net Losses in 2013
Toys R Us Posted Net Losses in 2013

As the economy struggled in its continuing bid at recovery, Toys “R” Us took a lot of the brunt as sales plummeted in 2013. The giant toy store chain reported a net loss of $210 million during the fourth quarter of 2013 and a total loss of $1 billion for the year. The losses were blamed on fierce competition from on-line sellers such as Amazon, and discount department stores like Wal-Mart.

Earnings for 2012 totaled $239 million, accentuating the challenges of last year’s marketplace.

The private held retailer posted a decrease in same-store sales of 4.1 percent in the US and 2.2 percent internationally during the fourth quarter of 2013. Those figures are an important indicator of a retailer’s overall health, and they included the crucial holiday season.

“It was a challenging year, with declines in both our domestic and international segments,” CEO Antonio Urcelay said in a statement to investors.

“The U.S. business experienced the more significant downturn, primarily due to a decrease in net sales, margin pressure and one-time items, including the write-down of excess and obsolete inventory as we take the necessary and prudent steps to improve the business.”

Toys “R” Us did have a good year in China, however. As the Chinese economy continues to expand and more people are climbing the affluence ladder, there is more disposable income available to spend on children’s playthings.

So far this year things are looking up a bit for Toys “R” Us here at home. So far there has been a 3.5 percent increase in same-store sales in the US due to an increase in entertainment related toys connected to beloved movie franchises. Net sales for all of 2013 totaled $12.5 billion. That is $1 billion less, or 7.4 percent, from 2012.