Q&A: Suzanne McGee on Chasing Goldman Sachs

In the hierarchy of Wall Street, Goldman Sachs has become the top dog: the cool, smart kid who finance geeks want to be. And, although Goldman’s top brass gets dragged down to Washington, D.C., the bank still reigns, at least financially.

Telecom Dividends a Nice Buying Opportunity

After years of mounting customer outrage over its clogged network, AT&T has finally scrapped its unlimited-data plan and raised the price on heavy data users. It’s a wonder it took so long. Since the iPhone debuted exclusively on AT&T in June 2007, Apple stock has risen 110 percent, while AT&T is down 38 percent. The $30-a-month unlimited plan was designed to attract customers, and with 50 million iPhones sold, it did. But AT&T’s network was crippled as a few users hogged bandwidth: 3 percent of AT&T’s smart-phone customers use 40 percent of its data. AT&T now offers a two-tiered system: 200 megabytes for $15 a month; two gigs for $25. Use more than that, and you’ll pay extra. Network strain is likely to ease as a result, and analysts believe others will follow AT&T and that the switch will usher in a new era of (more profitable) metered data-pricing.

Q&A With Zappos CEO Tony Hsieh

Online shoe retailer Zappos made a name for itself with topnotch customer service. It paid off: Amazon bought it for $1.2 billion last fall. In his new book, Delivering Happiness, CEO Tony Hsieh talks about Zappos’s unique business approach and giving customers that “wow” feeling.

Is Now the Time to Buy BP Stock?

Apparently we should all be buying BP stock right now. At least that’s the recommendation of the people paid to know these things: financial analysts who follow the company.

High-Frequency Trading: Out of Control

High-frequency traders, who have maintained a low profile, say that because their frenzied trading provides liquidity, they help markets run smoother, improving the environment for all investors. But combine the speed at which they operate, the outsourcing of decision making to computer codes, and an almost complete lack of regulation, and this shadow market can fuel and exaggerate volatility.
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BP's Photo Blockade of the Gulf Oil Spill

As BP makes its latest attempt to plug its gushing oil well, news photographers are complaining that their efforts to document the slow-motion disaster in the gulf are being blocked from the sites where the effects of the spill are most visible.

Will Splitting Offshore-Oil Regulator Prevent Future Accidents?

On Tuesday, Interior Secretary Ken Salazar cut the Minerals Management Service in half, separating its duties of regulating the offshore oil and gas industry and of collecting billions in revenue from it. The move is a tacit acknowledgment that a conflict of interest is inherent to the agency’s dual mandate, and is an indictment of the decisions the MMS made that have arguably exacerbated the Deepwater Horizon disaster. With oil still leaking into the Gulf of Mexico (BP engineers are getting desperate), the MMS faces mounting criticism for its role in the mess, first for a 2003 decision not to require remote-control shutoff switches in the gulf as a last-resort safety mechanism in the event of a blowout, and second for granting BP an exemption from providing a detailed environmental report of the Deepwater Horizon site. ...

The First Vatican-Approved Stock Index

Ever wonder how the pope would do as a stock picker? We might find out. Last month the first Vatican-approved equity index launched. The Stoxx Europe Christian Index is a compilation of 533 European companies that adhere to Catholic values. Meaning no profits from porn, gambling, weapons, tobacco, or birth control. Oil, on the other hand, is OK. BP and Shell are among the index's top 10 components. "Environmental issues are not part of our screening criteria," says Michael VanDam of Christian Brothers Investment Services, a cosponsor of the index and one of six committee members determining its components....

Jobs: Where Will You Work in the Future?

The year 2030 sounds far off. In a way, the number itself conjures images of silver unitards and hovercrafts, just as 2010 probably did to people back in 1990. A lot’s changed since then, but more has stayed exactly the same, which is part of the problem.

The Computer Glitch Felt Round the World

 So this is what high-frequency trading looks like. Just before 3 p.m. today, the Dow Jones industrial average went from being down about 180 points, mostly off continuing fears over the Greek debt crisis, to falling off a 900-point cliff, to then rallying back another several hundred points. All in the span of about 20 minutes. During that span, share volume spiked to its highest levels in more than a year, to more than 4 million shares being traded in the Dow Jones alone.Stocks in every sector mimicked the roller-coaster dip and climb. Shares of Accenture dived from $41 all the way down to 1 penny, and then back to around $35 in under five minutes. Shares of Proctor & Gamble crashed from about $60 down to $48 and then up past $60 in a few minutes. The big news surrounding Proctor & Gamble today: an investigation into high instances of diaper rash in Pampers. Painful, yes. But enough to cause a massive sell-off and then buy-back? No way. As precarious as the situation is in...

Why You Should Invest Like It's 1976

A year into the stock-market recovery, there's a lot of uncertainty about how long the boom will last. We may be able to learn something from the market's performance during the mid-1970s, as the similarities so far are striking. After peaking in January 1973, the Dow Jones industrial average fell 50 percent, to 570, by late 1974. Over the next 15 months, however, the market gained back nearly 75 percent of its value. The Dow's latest crash, from its October 2007 high of 14,000 to a low of 6,500 in March 2009, marked a similar loss over a similar period of time. The recovery is also strangely similar: in the 13 months since March 2009, the Dow has risen about 70 percent. If the 1970s model holds, the Dow could hit 11,500 sometime early this summer. Then comes decision time.By 1976, deficit spending and inflation (remember the energy crisis?) created headwinds that pushed the Dow down 30 percent over the next two years, where it hovered until the bull market took off in 1982. Some...

Goldman Sachs: Has The SEC Finally Grown a Pair Under Mary Schapiro?

It’s been a busy week for the SEC. On Wednesday, the regulatory agency took a small, but important first step toward shining light on the very dark, very unregulated world of high frequency trading. And now come charges of civil fraud levied at Goldman Sachs. Talk about a double whammy. In the old days, the SEC would’ve put its feet up and called it a week after the high-frequency trading action. But following it up two days later by charging the biggest, baddest bank in the world with $1 billion of fraud? Who does the SEC think it is? The country’s financial watch dog? Let’s hope so....

Why Investment Banking Revenues Are Heading Down

Investment banks may have wrecked the world economy in 2008, but they sure made money picking up the pieces. In 2009, the global investment-banking industry took in $311 billion in net revenue, a 50 percent jump from 2008 and only $17 billion off its 2007 peak. Profit margins last year were 24 percent, the highest ever. Leading the pack were the usual American suspects: Goldman Sachs, JPMorgan, Citi, and Bank of America. Armed with TARP cash--essentially, free money from the Fed--and facing a cleared field thanks to the demise of Lehman Bros. and Bear Stearns, i-banks took advantage of a lack of liquidity and huge spreads in credit and fixed-income markets. Trading revenues soared as leverage remained high. Those that dialed back on risk, like Morgan Stanley, came to regret it. For the most part 2009 was easy money. But that party is over. A recent Boston Consulting Group report forecasts an 11 percent drop in industry revenues in 2010. Even as the economy recovers and traditional...

Why the Democrats Are Saying, 'Drill Baby, Drill!'

President Obama's decision to open up vast tracts of ocean off the Atlantic coast and eastern Gulf of Mexico for oil and gas drilling is making big waves. What's most interesting is that after eight years of George Bush and Dick Cheney, it's the Democrats who will end up lifting a longstanding moratorium on exploration off the East Coast. ...

Texas: An Alternative-Energy Breakthrough

As President Obama champions alternative energy, a vexing problem remains: there's no way to share wind and solar surpluses nationally—whisking, say, a percentage of the Midwest's abundant turbine power to cities on the Eastern Seaboard. That's because the country's electricity grid is divided into three independent sections: east, west, and, since the mid-1930s, the querulous state of Texas. A proposed superstation in New Mexico would sync the three systems, a measure that renewable-energy experts see as a tipping point for investment in the industry. But only if Texas, the country's biggest producer of wind power, participates. Because the project threatens to bring the Longhorn State at least partially under federal jurisdiction, Texas has fought it since it was announced in 2007. Texas wants things both ways: a chance to connect to the national market, but also set its own wholesale prices in state.Now, after a hearing last week, the standoff could be coming to a close. Jon...

Recalls: Which Reactions to Past Screw-ups Should Toyota Follow, and Avoid

Businesses make terrible mistakes. It's how they react that can determine whether they thrive—or even survive. Toyota was slow to acknowledge its problems, but ultimately recalled 8 million vehicles and apologized. Whether it ends up back on track like the brands at right or has a bumpier ride like those at left, one thing's for sure: it's not there yet. ...

Toyota's Mysterious Black Boxes

Whenever an airplane crashes, investigators focus on the black-box data, which may explain why the plane went down. Though most drivers don't realize it, two thirds of new U.S. automobiles have black boxes, too. They're called "event data recorders." These devices tell the airbags when to deploy, but they also record the car's speed, whether the brake or gas pedal was engaged, and if seat belts were fastened. They've become such a vital tool to car-crash investigators that the National Highway Traffic Safety Administration (NHTSA) has issued new requirements, which take effect in 2012, standardizing exactly what data the devices measure.In theory these black boxes could help explain what's causing the sudden acceleration problems that led Toyota to recall millions of vehicles. There's just one catch: Toyota keeps its data secret. Ford, GM, and Chrysler's black boxes use an open platform that allows law-enforcement officials to download data. But only Toyota is able to download the...

It’s in His Game: Why Nike and EA Have Stuck With Tiger Woods

It’s been a strange week for Tiger Woods. Just as rumors and photos of him attending rehab for sex addiction at a Mississippi clinic surfaced, one of his few remaining corporate sponsors, video game publisher Electronic Arts, demonstrated it wasn’t just sticking by Tiger, it was doubling its bet on him. On Thursday, EA Sports announced not just one new Tiger videogame, but two: the latest installment of its long-running golf game, Tiger Woods PGA Tour '11, slated for a June release on the Nintendo Wii, as well as a new online  version, marking one of its first forays into internet gaming. Even as Tiger’s marketing death spiral continues, he is still a bankable brand for the few remaining companies that have stuck  with him."We didn't form a relationship with Tiger so that he could act as an arm's length endorser," EA Sports president Peter Moore said earlier this month in a blog post. "Regardless of what's happening in his personal life ... Tiger...

Geithner Under Fire for Fed E-mails to AIG

Criticism has dogged the Treasury secretary for months. Now newly uncovered e-mails indicate how the New York Fed, under his tenure, directed AIG to keep quiet about its disbursement of $62 billion in bailout funds.

Is Carbon Regulation Good for Business?

Cap-and-trade opponents have tried to portray the legislation working its way through Congress as bad for business. The U.S. Chamber of Commerce says it would set off a "catastrophic cascade" of lawsuits and "choke off growth"—and some economists say that the House bill, if enacted, would shave 1 percent off GDP growth in the near term. But carbon regulation is coming—the EPA last month declared greenhouse gases a danger to public health—and some believe CO2 emissions are poised to become a key performance indicator, like cash flow or supply-chain efficiency. IBM is betting the new rules will boost its business. Since 2007, the company has helped 3,300 companies reduce energy use by an average of 40 percent. Most recoup their investment within 18 months, according to IBM. "For every dollar saved on energy, there's an additional $6 to $8 in operational savings," says Rich Lechner, IBM's VP for energy and environment. Just as firms like SAP made billions in the 1980s and '90s selling...