Amazon Acqui-Hires Zoox

Amazon offered $1.3 billion to buy Zoox last month. So what are you buying when you buy a tech company? Since there are often limited fixed assets, generally, you are seeking to get the employees. In this case, two Zoox senior engineers had already accepted offers from other companies. So Amazon upped the offer by $100 million to compensate the employees who stay after the acquisition. The new condition of the acquisition is that all of the employees on a "key list" must stay and at least 19 employees on a second list must stay. Finally, three schedules of other employees was created. 90 percent of the employees on the first two schedules must stay and 88 percent on the lowest schedule must stay, otherwise, Amazon can walk away from the deal.

Kia's Home Run

When Kia debuted the Telluride, the company set production capacity at 60,000 units. Demand was so high that the company upped production to 100,000 units, but one couple has already waited 9 months for their SUV and they were told to expect another 5-6 month wait. A production shutdown due to COVID-19 has slowed delivery and once production restarted, a parts shortage still limited manufacturing. Obviously, sales of the Telluride is a best-case scenario for Kia, although production difficulties means the best-case has been limited to date. One other thing we want you to note is terminology. The article states that the turn rate was 11 days for most of the year, but it is currently at 0 days. The turn rate is the same as the days' sales in inventory ratio we discussed in the textbook.

Total Cost To Reward And Retain Employees

As we mentioned in the textbook, there are numerous other ratios that can be calculated and analyzed. The American Productivity & Control Center (APQC) is advocating a new ratio, the total cost to reward and retain employees (TCRRE). This ratio is calculated by summing costs for compensation, benefits, payroll processing, award/incentive administration, and employee assistance, divided by sales. In using this ratio, APQC argues that a low TCRRE ratio may indicate that a company may be spending too little on employees, which can result in lower morale or employee satisfaction. However, as with most other ratios, there is no absolute measure for this ratio. In this case, the ratio is determined in large part due to the company's size, culture, internal reward, and retention practices.

It's Bobby Bonilla Day!

It is a New York holiday (at least until 2035) that you may not be aware of, Bobby Bonilla Day. What is Bobby Bonilla Day? In 2000, the New York Mets owed Bonilla $5.9 million to buy out his contract. Rather than pay the lump sum, Bonilla and the Mets agreed to a payment of about $1,193,248.20 every July 1st for 25 years, starting on July 1, 2011. The agreed upon interest rate was 8 percent. So, the former Mets slugger will be receiving payments until 2035, when he turns 72, 36 years after he last played for the team.

Fintech

So what is Fintech? Fintech is a broad term, covering direct money transfers, crowdfunding, and direct to consumer lending. But an important part of fintech is embedding financial products in everyday consumer and business products. For example, Amazon offers free credit on every purchase, although it is often better to use an Amazon credit card for a 5 percent discount, assuming that you pay your credit card bill every month. Of course the Amazon credit card and the Apple credit card are actually fintech services as well. But Amazon went even further, partnering with Goldman Sachs to offer small business loans of up to $1 million to its merchants. Shopify has also rolled out loans to its customer base, loaning out over $750 million to date. A big advantage for existing companies in offering financial products to existing customers is a built-in client base, as well as knowledge of what financial services a customer may need.

Wirecard Turmoils

Creditors of German digital payment processor Wirecard, which advertised "Beyond Payments," may find that the company's debts are beyond payment. Wirecard also proved that accounting fraud is unfortunately worldwide when it filed for bankruptcy yesterday. The company said that €1.9 billion ($2.1 billion) in cash that was on its balance sheet probably never existed in the first place. Now, things have gotten bad for the company's auditors as the German shareholder association SdK announced that it had filed a criminal complaint against the company's auditor Ernst & Young (EY). SoftBank, a major investor, also announced that it planned to file against EY. In its defense, EY stated there were "clear indications that this was an elaborate and sophisticated fraud, involving multiple parties around the world at different institutions, with a deliberate aim of deception" and that "even the most robust and extended audit procedures" were not enough to uncover the fraud.

Day Trading For Profit?

In our opinion, a negative financial outcome of the COVID-19 pandemic is the rise of day trading. Dave Portnoy, the CEO of Barstool Sports, has named himself "Davey Day Trader" and helped popularize day trading. And although not all are day trading accounts, Robinhood added 3 million accounts during the first quarter of 2020. One new investor, a 20-year old from Nebraska, tragically committed suicide after his account balance showed a loss of over $700,000. In fact, his account balance may have only been temporary until trades settled. It is important to note that short-term investors tend to do worse than longer term investors, and for day traders, the success rate is less than 10 percent, with only 1 percent or so who really make money. We do believe that investing is worthwhile, but do your research, diversify, and make longer term decisions.