On Thursday Google Inc.’s share price dropped a whopping 9% in minutes after third quarter results were released prematurely by R.R. Donnelley and sons, Google’s filing agent. The third quarter reports were disappointing mainly because of a reported 20% drop in earnings per share. Also, Google earned 11.33 billion dollars in advertising instead of analysts predicted 11.86 billion dollars.

Occurrences like this remind one of the importance of financial accounting and reports; Google’s extreme case demonstrates the power numbers carry. The leaked report indicated shrinking profits and rising costs (specifically in recently acquired Motorola), which caused investors to panic and dump shares. However, investors largely ignored the fact company revenues were up 45% from last year, a sign that the company is still growing and a positive CEO Larry Page emphasized. However, a fall in cash flow from last quarter is another negative and Google should be careful not to stray too far from their original business model with new projects.

My personal opinion is Google was bound to correct at some point after rising from 695.00$ to 747.24$ in just five weeks, and financial statements, including quarterly reports, help ground traders in financial reality, something hype easily strays from.

Articles:

http://www.dailymail.co.uk/news/article-2220489/Google-stock-crisis-Search-giant-loses-5billion-shares-hammered.html

http://news.investors.com/technology/101912-630017-goog-falls-as-earnings-disappoint.htm

http://investor.google.com/earnings.html

Image:

Google Inc. “Google Logo.” Logo. KurzweilAI.Net 10 Feb. 2012. 20 Oct. 2012

<http://www.kurzweilai.net/cash-for-your-cache-googles-new-program-pays-users-for-the-right-to-snoop#!prettyPhoto>.

Franchises are everywhere these days, from the cleaning services industry to the health and fitness industry. Some well-known fast food franchises include Tim Horton’s, McDonald’s, and Dairy Queen. So why are franchises so abundant? Growing businesses can acquire much needed cash through franchise-licensing fees. Furthermore, successful franchising can prove the effectiveness of a business model to banks, making them more willing to lend money.

However, franchising is not for every business. When you sell someone a franchise, you give him or her the right to sell under your company’s name. Since this person now represents your company, properly training and continuously motivating and supporting them is now your responsibility. You no longer wholly own your business either because the franchisees are not employees, but partial owners in their own right.

Given the open structure of the franchise model, I think franchising better suits companies targeting a large market and focusing on competitive pricing because differentiation strategies would require a more controlled, cohesive approach. However, carefully executed, well managed franchising could still work with a high quality, differentiation business model, especially as a solution to high start-up costs. In conclusion, franchising is an effective method every growing business should consider.

Articles:

http://techandscience.com/techblog/ShowArticle.aspx?ID=572

http://www.franchisedirect.com/top100globalfranchises/rankings/

Image:

Anticipation Imaging Partners. “Want a Franchise?.” Text. Anticipation Imaging Partners.com 2008. 7 Oct. 2012

<http://anticipationus.com/ContactUs.html>.

The lockout continues as three days of negotiations regarding a new Collective Bargaining Agreement (CBA) between the National Hockey League (NHL) and National Hockey League Players Association (NHLPA) ended this weekend. The main issue dividing both sides remains the same: Economics.

The NHL is demanding a revenue split between the league and players of 50-50 instead of the previous 43-57. Despite making $3.2 billion in revenue during 2011-2012, the NHL insists players are overpaid. This is a destructive viewpoint for several reasons. One, after the 2004-2005 lockout, the players accepted a 24% salary reduction and implementation of a hard salary cap, basically giving the NHL all it wanted. Expecting that to happen again is highly unlikely. Two, 5 teams made roughly $212 million in profit 2 years ago while the other 25 lost about $86 million total. Expecting the players to forfeit salary to solve the league’s revenue sharing problems is absurd. Three, before the old CBA expired, several owners rushed to sign star players to new lucrative long-term contracts highlighting their hypocrisy; it is this kind of contract that drives up player salaries.

In my opinion, the NHL needs a financial reality check before it risks hockey’s growing popularity.

Articles:

http://www.nhl.com/ice/news.htm?id=642514

http://www.sbnation.com/nhl/2012/9/17/3345350/nhl-lockout-2012-gary-bettman-nhlpa-cba

http://bleacherreport.com/articles/1352687-nhl-lockout-players-key-issue-remains-revenue-sharing

Image:

National Hockey League. “NHL Logo.” Photo. Sportsmediamasters.com  1 Oct. 2012. 1 Oct. 2012

<http://sportsmediamasters.com/?attachment_id=317>.