Intersecting Minds: Education, Business and Technology at the North Carolina State Jenkins Graduate School of Management

D’oh

March 31, 2009
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Via TechCrunch… Myspace’s new CEO doesn’t even have his own Myspace. I don’t know where the blame ultimately lies here, but this is a PR fiasco, and yet another indicator that Myspace as a company is losing touch. You’re the newly-hired CEO of a company that’s quickly losing ground to your main competitor, and you don’t even have a profile? As my Grandma would say, “Oy vey!”

That’s terrible, and it’s not a positive sign that this guy will have any idea how to fix what ails Myspace.


Tuesday Quick Hits

March 31, 2009
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The big news over the last 24 hours surrounds the ongoing saga of automakers GM and Chrysler. This morning, the US gov’t rejected the strategic plans offered by the two automakers as insufficient to justify increased amounts of federal spending. However, the government will float more capital to both companies in order to prevent immediate bankruptcy.

Coupled with this news, the Obama administration asked for and received the resignation of GM CEO Rick Wagoner. He had been leading GM since 2000.

Stocks have reacted adversely to this turn of events, and the Dow was down nearly 300 points during Monday’s trading session. However, stocks are set to rebound slightly this morning.

Meanwhile, home prices continue to plunge. The S&P Case Shiller 20-city index reported a 2.8% monthly fall and a 19% annualized fall over last year.

And finally, air travel, another lagging indicator of economic activity, has taken a large hit. The number of passengers on all U.S. flights is expected to fall 7.8% in 2009, the largest drop since post-9/11/2001.


Facebook crushing Myspace

March 26, 2009
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“I don’t feel like getting picked up on by 55-year-old men,”

So said one of my classmates yesterday when we were talking about Myspace. And that in a nutshell describes why Facebook is now crushing Myspace in terms of total number of users and page views. Myspace is viewed as the land of creepsters and stalkers. Most people just don’t feel as safe on Myspace as they do on Facebook. I blew up my Myspace account a few weeks ago, and don’t have any regrets about it at all.

In contrast to Myspace, Facebook is clean, elegant and simple to use. It’s the equivalent of a plug’n’play system. Sign up. Enter information. Add friends. Go. Facebook also has amazing privacy settings, and as a result of these features, Facebook is now experiencing massive growth with older demographics. While I don’t have the hard data, the anecdotal evidence is everywhere. I saw a recent status message from a friend that read, “I’m a little worried when on my ‘People You May Know’ feature I don’t see two of my best friends… I see their Mom’s”

Facebook has now become the dominant design for social networking websites. Its user base is so massive (rapidly approaching 300 million worldwide) relative to other sites that it will continue on this hockey stick pattern for the foreseeable future.


Wednesday Quick Hits

March 25, 2009
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A fascinating blog post on TechCrunch about the UK government implementing social media studies into elementary school curricula. Students will be taught about blogs, podcasting, and yes, even Twitter.

The stock market has rebounded nicely this morning coming off yesterday’s loss. Movement has been propelled by two reports showing improvement in durable goods orders as well as an increase in new housing starts.

Meanwhile, the news in California remains grim. Housing prices fell 41% year-over-year, dropping the median home price from $418,000 to $247,000. That’s an incredible drop in value and won’t help the state unwind from crushing debt and high unemployment.

The automobile market continues to evolve towards more fuel-efficient, hybrid models. Honda and Toyota are now looking at engaging in a price war for this emerging market of vehicles. Good news for consumers.

IBM is preparing to cut a large number of US-based service jobs and ship them over to India.


Salesforce and Twitter

March 24, 2009
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Following up on my post yesterday about businesses taking Twitter to the next level, it looks like Salesforce is one step ahead of me. From the CNN article:

Enter Salesforce.com (CRM). At a Salesforce meetup in New York this morning, CEO Marc Benioff introduced “Salesforce for Twitter,” marrying Salesforce’s customer care software with the 140 character tweet… The advantages are obvious: Beyond better customer care, Salesforce’s approach is scalable as Twitter continues to grow. With multiple designated Twitter repliers at a company, it’s easy for customer care managers to track who on their team is answering how many Twitter questions and how helpful individual staff are being.

I’ll be keeping my eye out for stories like this one.


Tuesday Quick Hits

March 24, 2009
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The Dow has opened up down just under 100 points after it rallied yesterday to the tune of nearly 500 points or slightly more than 6% yesterday.

GM and Chrysler are set to potentially receive another bailout from the government pending a review of their ability to stay solvent.

U.S. mortgage lending could increase sharply this year based on lowered interest rates from the Fed’s repurchase of mortgage-backed securities.

Fed Chairman Ben Bernanke stated in Congressional testimony this morning that allowing AIG to fail would have posed “unacceptable risk” to the global financial system.

The Wall Street Journal has an interesting article up this morning on how college towns have proven more recession resistant than most other cities.


Economy Timeline Refresher

March 23, 2009
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Having a discussion with a friend a few minutes ago, I realized that a lot has happened to the economy in the last 6 months. From Bear Stearns and Lehman collapsing to the fear of stagnation, to all the different plans and actions taken by the Bush and Obama administrations, there’s been a lot. Here’s a refresher for those interested:

September 12, 2008: All quiet on the Western front. Dow = 11,421

September 13, 2008, Lehman Brothers Declares Bankruptcy: The first semi-climatic event of what would turn into a series of crises. Lehman Brothers declares bankruptcy that morning citing over a $100B more debt than assets. At the time, Lehman was the largest bankruptcy in American history. The stock market closed down more than 500 points that day. Dow = 10,917

September 16, 2008, AIG Collapses: AIG’s stock price falls over 95% after their credit rating is downgraded. Analysts had compared the assets on their balance sheet to those on Lehman Brothers’ balance sheet. There they found the same mortgage-backed securities, but they were leveraged two times as much as Lehman’s. This led to a massive liquidity crisis which in turn led to the first of what would become tens of billions of dollars in bailouts from the federal government. Dow = 11,059

October 3, 2008, TARP becomes law: The Troubled Assets Relief Program (TARP) was the Bush administrations first response to the ballooning crisis. As mortgage-backed securities began to deline in value, major investment and commercial banks began reporting huge losses. The bill set aside $700B for the Treasury Secretary, Hank Paulson, to ensure these lending and investing institutions became insolvent. Unfortunately, almost no oversight was created for a bill that had been hastily created. The money that had been designated to relieve the frozen credit markets instead sat inside the banks. Dow = 10,325

November 4th, 2008, Barack Obama is elected President: Taking over from a lame-duck Bush administration, Obama promises swift and bold action on the economy. Dow = 9,625

December 12, 2008, GM runs out of cash and the Auto Bailout: GM and the other large, American automakers had been in trouble for years, after facing stiff foreign competition. The combined punch of soaring commodity prices in mid-2008 with the credit crisis of late-2008 brought GM, long the world’s #1 automaker, to the brink of bankruptcy. They requested $12B in aid from the federal government. Dow = 8,629

January 20th, 2009, Obama Inauguration: Obama begins outlining his first actions in office, including a general economic stimulus package, a foreclosure prevention plan and a recipe to cleanse the banks of the toxic mortgage-backed securities that were plaguing their balance sheets. Dow = 7,949

February 17th, 2009, American Recovery and Reinvestment Act passes Congress: The stimulus package. Leveraging his high approval ratings and a desire for action, Obama pushes this $787B bill through in less than a month. The bill allocates $288B in tax cuts, $80.9B for infrastructure, $147B for health care, and the rest for education, energy and environment investments. Dow = 7,552

March 4th, 2009, Foreclosure Prevention Plan details are released: The Obama administration releases details on their $75B plan to alleviate a burgeoning foreclosure crisis. Millions of Americans are losing their homes, driven by crashing home prices, increasing job losses, and oversized loans they can’t afford. The plan offers assistance to banks to renegotiate mortgages around the securities. Dow = 6,875

March 9th, 2009, Dow hits bottom?: Dow = 6,574

March 23rd, 2009, Tim Geithner unveils $1T Bad Debt Relief Plan: Secretary Treasury Tim Geithner proposes a nuanced private-public partnership to leverage private hedge fund equity with $820B of government debt to buy up toxic assets from banks balance sheets. Dow = 7,775

I know there have been many other events, as well. If you’d like to see more on this list, let me know in comments and I’ll throw them up.


Atwitter

March 23, 2009
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Seems these days that everyone is talking about Twitter, and for good reason. The social networking site is experiencing explosive growth at the moment. Twitter experienced 1,382% year-over-year growth from February ’08 to February ’09, according to Neilsen. That’s an incredible jump in usage, and these days it seems like everyone is talking about it (link to funny Daily Show video).

So what is the attraction to Twitter? Why do we feel the need to communicate our thoughts/actions 140 characters at a time to a sea of followers? Don’t we already have facebook status messages, individual text messaging, and blogs to do all this for us?

Yes, yes, and yes to those other outlets. But Twitter does offer a unique value-add. It opens the door to providing direct, immediate feedback, and it breaks down yet another barrier between the masses and the elite in our society. Political reporters such as Karen Tumulty (@ktumulty) and Jake Tapper (@jaketapper) are on twitter and engaging their audience in coversations about the White House. And fans can tweet messages to their favorite basketball players (@THE_REAL_SHAQ, @CV31, @JBay4). If they’re lucky, they might even get replies.

Major corporations will also have to seriously consider adding Twitter to their social networking repetoire. Twitter should be another tool in the belt for tech-savvy companies because of its low cost and ease of use. There are all kinds of creative ways for companies to use the site for customer outreach and support. Retailers could let customers know of sales. Manufacturers and distributors could solicit immediate feedback on new products. You get the idea.

As I’ve been typing this blog post, I have my TweetDeck open and have received tweets from two of my favorite basketball bloggers, a quick blast from my cousin in Portland and a link to a hilarious video about people who follow Twitter too much :-). Additionally, Twitter has now made it possible to link your tweets to other social networking sites such as Facebook, Myspace and Orkut. I have my Twitter account (@RyanMills1) hooked up to my facebook status. Twitter is here to stay, and as more people continue to join the conversation, the site will accrue more relevance.


Monday Quick Hits

March 23, 2009
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… And I’m back from an extended break. Last week we went through a barrage of midterms, quizzes and presentations, and following that lovely stretch, I took an extended vacation down to the beach this past weekend. But I’m back now, on track, and will be resuming a normal blogging schedule. So onto the quick hits:

The big news this morning in business/economics is the unveiling of Timothy Geithner’s “bad asset” plan to help repair the financial system. While the plan is complex, it’s received mixed reviews. Economist Brad DeLong has a glass half-full take, while Paul Krugman has a considerably more negative opinion.

The stock market has taken to the plan and is poised to build on the gains from the last two weeks this morning. Futures currently has the Dow opening about 140 points higher. At least one high-profile analyst thinks the bull market is here to stay.

Pockets of the economy continue to struggle. High-end jeweler Tiffany’s announced a 76% drop in fourth quarter net income this morning. Luxury goods probably will be among the last consumer items to rebound from the recession as the United States undergoes a fundamental shift in consumption habits.


Peru Spring Break ’09

March 10, 2009
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Hi all, this is a guest posting from me, Alissa. I was one of the MBA students who went to Peru over Spring Break. We trekked all over the country through Lima, Trujillo, and Cusco. Our first stop was Lima, where we spent 2 days.

Lima was very metropolitan. We visited the Museo Nacional de Antropología, Museo Larco Herrera, and the San Francisco Franciscan monastery. Carlos, our Lima tour guide, had set up the visits so that we can reflect on the history of Peru before our visit to Machu Picchu.

Carlos, Best Tour Guide in Peru

San Francisco Franciscan Monastery

Unfortunately, we couldn’t take pictures inside the monastery, but when were looking down into a lower level burial chamber at one point (the part was barred and we can only look down into it) and John was so excited to see it that he leaned over to take a closer look at the crusty skull that he dropped his sunglasses. Our church guide had to open the gate leading into the chamber so John could retrieve them.

john

After Lima, we flew to Trujillo where the real work began. We first worked in Clementina, a homesteading community in the desert. People from the highlands/forest move down to the desert in hopes of a better life. After two years from setting up their stakes, the government will acknowledge them as legal owners. We planted trees for one day around the community. Clementina residents were happy to have us and helped us plant 100+ trees. Even though life is hard, the people are happy as life is better than before Clementina. After our tree planting day, we visited Sinergia, a non-profit microfinance association, where we worked with Jim Keller and Drew McWay on our projects on how to make Sinergia more efficient by:

  • Analyzing the loan process audit.
  • Analyzing accounting/loan software packages.
  • Analyzing the impact of micro-financing.
  • Analyzing basic business skills programs.
  • Analyzing competitors.

Our projects will not only help a great association, but will also impact people in need in numerous positive ways. For more information and to help them fundraise, please visit their website at:

http://sinergia-mfi.com/partnership_opportunity.php#who_we_ar

Marianne, John, and Thomas Working Hard

Gun Show in Clementina

After our work in Trujillo, we headed to Cusco and Machu Picchu. Isn’t the sky amazing?

Cusco - Blue Skies

Machu Picchu

What we heard was true – that Lima, Trujillo, and Cusco are very different cities. Lima was very metropolitan, Trujillo was impoverished, and Cusco was very eclectic with all the backpackers. This trip certainly gave my spoiled butt a wake up call and I’m sure the rest of the students who went on this trip will also agree with me.


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