Month: September 2014

PayPal to Become its Own Entity

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https://www.paypal-community.com/t5/image/serverpage/image-id/10498i9662491295327039/image-size/original?v=mpbl-1&px=-1

With the announcement of Apple Pay, Alibaba’s IPO, and the popularity of various payment systems, it is clear that PayPal has its hands on a golden opportunity. As one of the earlier payment systems, people have used and trusted PayPal. The division from Ebay is a great move that will allow PayPal to pursue new opportunities as mobile payments have become more and more popular.

Ebay has held back PayPal as a subsidiary of a downward company. Investor Carl Icahn has commented “PayPal’s a jewel and Ebay is covering up its value.” PayPal founder Elon Musk has gone on record stating “It doesn’t make sense that a global payment system is a subsidiary of an auction website… It’s as if Target owned Visa or something, [PayPal] will get cut to pieces by Amazon payments or by other systems like Apple and by start-ups if it continues to be part of eBay… It will either wither or be spun out.”

The division will allow PayPal to aggressively cement itself as a global payment system, in a market brimming with potential growth.

http://www.forbes.com/sites/stevenbertoni/2014/09/30/ebay-and-paypal-to-split-carl-icahn-and-elon-musk-wish-comes-true/

Malaysia Airlines Cutting 6000 Jobs

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Malaysia Airlines in Beijing Capital International Airport, one of the busiest in the world, empty http://www.scmp.com/sites/default/files/styles/980w/public/2014/03/10/malaysia_airline-epa-net.jpg?itok=2l6N8_SN

 

Two unthinkable disasters have befallen Malaysia Airlines that are still fresh in the memory of fliers. One, flight MH370 lost in the sea. Two, flight MH17 shot down over Ukraine by rebels. Flights have been lifting off with empty seats, despite recent price cuts. In China, fliers have completely deserted the airline with the loss of flight MH370, which was carrying 152 Chinese citizens. Almost 200 crew members have quit due to fear and stress.

Malaysia Airlines has cut 6,000 jobs to repair the airline’s profitability, which was already reporting losses before the two tragedies. The airline will be run by the state, and a new Chief Executive will be appointed to lead the company. All in the effort to restructure the airline.

At this point, all Malaysia Airlines can do is attempt to salvage its reputation or rebrand. With disasters fresh in the minds of potential fliers, customers shy away from Malaysia Airlines despite cheap fares and relative safety of airplanes. Mohshin Aziz, an aviation analyst at Maybank Investment Bank puts the daily losses at about $1.7 million a day, which is unsustainable for the airline. For Malaysia Airlines to even attempt to recover, first they are going to have to cut costs.

http://www.theguardian.com/business/2014/aug/29/malaysia-airlines-cuts-6000-jobs

http://www.npr.org/blogs/parallels/2014/07/23/334062483/after-two-disasters-can-malaysia-airlines-still-attract-passengers

CVS to Stop Selling Tobacco Products

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CVS, one of America’s largest chain drugstores, has recently announced that they will no longer carry tobacco products. This marks a change in policy for the company, now focusing on health care rather than retail sales. Otis W. Brawley of the American Cancer Society commented “If you’re in the business of promoting health and providing health care, it’s very hypocritical to be selling tobacco products. It just doesn’t make sense and in fact is almost a conflict of interest.” 

Though this seems like an ethical change meant to attempt to improve the health of Americans, it seems to me a precautionary measure, as local governments are already acting to prevent pharmacies from selling tobacco products. For example, the city of San Francisco has already passed a ban preventing any store with an embedded pharmacy from selling tobacco products.

CVS made $123 billion in 2012, and the estimated loss of $2 billion is a loss they can eat to improve the company’s reputation. By “making” the decision to stop selling tobacco products CVS positions itself as a company that cares about the general health of the nation. In reality, the company is just acting before tobacco products are banned in pharmacies altogether.

http://www.nytimes.com/2014/02/06/business/cvs-plans-to-end-sales-of-tobacco-products-by-october.html