31 July 2012: Apple fingerprinting and Zynga stocks drop

Australian Insurers IT investments: Australian insurance companies expected to spend around $5.2 billion on IT this calendar year, up 2.8% from 2011.  [CR: How does this compare to other industries? I would imagine the technology spend will continue to increase, offset by efficiencies gained from the investment for a neutral to positive profit impact.]

Apple acquires fingerprint scan company: Apple acquires AuthenTec for $US350 million to gain fingerprint authentication and encryption security technology. Future potential is to act as an alternative or replace four-digit pin login or digital signatures. Last week Samsung said it would use AuthenTec in new devices, a relationship now not expected to go ahead. [CR: Shows how fragile the technology infrastructure is.  A single decision by Apple can wipe out or create whole industry segments. Also speaks to the elephant in the room of security of devices that can be easily left on trains, stolen, or lost.]

Toll Holdings to build 3000 online shopping pick up points. To offer package recipients a choice of delivery times, weekend deliveries, and alternative weekend location parcel pickup.  Seen as one of the company’s key growth areas. PwC report shows online spending to double by 2016 to $27 billion. Annual spend on logistics portion of e-tail in Australia is just over $50 million, toll holdings has 5 to 6 percent of that market, looking to double market share. To partner with the Victorian Newsagents Association, which will offer e-tail product called Nagent and a product called Nparcel. [CR: question for your business – what areas of the economy are growing, what assets do you have internally to capitalise, and what external partnerships do you need to make it happen?]

Parliamentary inquiry into IT pricing: Politicians and consumer advocates publically slam tech vendors foe charging more in Australia than overseas. Vendors avoided Monday’s inquiry, spoke through the Australian Information Industry Association, which cites local taxes, warranty conditions, and the need to recoup research and development costs. [CR: I attended a business session this morning that noted Australia is the third-most expensive country in the world to live in and Sydney is the most expensive city in the world.  Perhaps looking at software and music cost discrepancies is like staring at the fly splattered on the grill of the car getting ready to run you over.]

Telsyte survey of businesses allowing personal devices: Does your organisation allow staff to use their own personal devices and public apps? Smartphones 54%, Notebooks 43%, Media tablets 40%, Applications 28%.

Zynga stocks drop 40% last week: On back of report that revenue was up 19.1% year on year but company reported a net loss of $US22.8 million compared to net profit of $US1.4 million in Q2 2011. Three reasons given: 1) changes to Facebook algorithms that benefited new games but penalised older titles; 2) delayed launch of Zynga’s newest game The Ville; and 3) under performance of “Draw Something” game. Next step is mobile: On Facebook, four of the top five games are Zynga’s, on iPhone only one is.  [CR: Zynga was first in, but the market is getting saturated and getting harder to stand out.  I hear in the three reasons for the $22.8 million loss (let that number sink in)... that they no longer have the unfair advantage and the market is saturated in their segments. How to differentiate is the question, and doing more of the same is not the way.]

30 July 2012: Difference between a degree and dropping out and The end to poverty predicted

Apple and Adobe not participating in public Australian parliamentary inquiry into international and domestic IT price differences. In last week’s private hearings, FIN Review understands Apple blames layers of AU taxes, warranties, and copyright holders. iTunes songs set at a flat fee, and up to copyright holders to charge differently in each country, leaving it with music publishers such as Sony Music, Universal Music, and EMI.  Adobe also did not make a submission, claims prices due to taxes, charges, and strict warranty rules. [CR: Rather than making a deal about the software companies not participating in a public and therefore politically dangerous questioning, how about responding to what they are saying are the issues with the system? Not as fun as demonising big corporate, but may prove effective.]

Difference between a degree and dropping out: Mike Dockery of Curtin University study found getting a job before you have the average schooling of employees in that field outweigh the downsides.  While more schooling increased wages, the effect fell once passing the average level of qualification for people in the profession, and the penalty for being underqualified was small, very likely less than the extra years of education. Argues against assuming that extra schooling increased earnings just because people who finished school tended to earn more: “classic evaluation fallacy; people do better because they are different, not necessarily because of the level of school.” Article expressing sentiment from the likes of Clive Palmer, university and billionaire, and web company Atlassian co-founder and drop-out Scott Farquhar, who say education is as much about on-the-job as from university. But for every Clive Palmer or Steve Jobs, there is a Marius Klopper, CEO of BHP who has a bacherlor of engineering, an MBA, and a PhD in materials science. [CR: Agree, it is based on the individual and their ability to capitalise on the education.]

Olympics – Chanel Nine opening ceremony traffic: 1.72 million people watched the early morning start, compared to the 2.9 million viewers for afternoon opening of the 2008 Beijing games.

Environmental protestors halt China paper mill: Demonstrators entered a government office in the port city of Qidong near Shanghai and smashed computers and destroyed furniture to protest against a waste-discharge plant they said would pollute the local water supply. Company website followed by saying the mill project had been abandoned [CR: The people rise up. Wonder if it is setting precedence.]

End to poverty: Christopher Kojm, head of National Intelligence Council in the US, says worldwide poverty will be virtually eliminated by 2030, and a middle class of some 2 billion people will push for more rights and resources. The 1 billion people who live on less than $US1 per day will drop to roughly half that amount in two decades. [CR: Optimistic, must look him up. Poverty gone in our generation? It is a dream I am willing to share and be a part of.]

India accounted for 56% of the world’s new leprosy infections in 2010 (126,800 of a total of 228,474 cases.) [CR: following the previous story, access to medical aid a big part of ending poverty.]

Australian advertising market to grow 2.8% a year over the next four years to $14 billion, 2% in 2012 to $12.5 billion (PwC report). Entertainment and media market to grow 4.1% over four years to $38 billion. Internet advertising expected to grow from $3 billion to $4.7 billion over four years. Media companies face two scenarios: a “dystopia” where consumers continue to expect digital content to be free; or “the more likely outcome” whereby media companies provided a collection of niche, customised content for which consumers were willing to pay. [CR: Digital is significantly cheaper and more engaging through interaction than TV, but that does not mean you do not have to work for your spend.  I have blogged in the past about the lack of accountability using marketing spends as an example. We are seeing the invisible hand of the market correct itself, as competition in the digital space raises the quality of engagement.]

Losses of Facebook and other internet companies: Facebook initially valued at $US100 billion on eve of May debut now at $US65 billion. Social gaming Zynga stocks at 25% of peak from last year. Groupon and Netflix also under pressure. Old line tech companies like Apple, Google and Amazon are doing fine. CEOs and early investors might have been a little too eager to cash in. Companies can grow their markets faster than ever – but that means they can also reach saturation faster than ever. [CR: Is it a common failure as the banking system – greed and pride? The promise of celebrity status overriding solid business models and traditional academic business rigour?]

PWC Australian Entertainment and Media Outlook 2012-2016: Australian free to air (FTA) ad revenue expected to drop 4.5% next year. Digital channels accounted for 25% of total FTA viewing last year, helped boost overall FTA audience by 5%, but FTA will need to continue to evolve to accommodate technology advances and continuing fragmentation across platforms. Personal video recorders (PVRs) are now in at least 44% of homes, threat to effectiveness of TV advertising, 45% of viewers disengage or are not viewing ads at all. Newspaper advertising expected to fall at a compound annual growth rate (CAGR) of 5.1% over the next four years. Digital newspaper advertising expected to grow at a CAGR of 8.3% until 2016, but represents only 8% of the total annual newspaper advertising revenue. Magazine advertising expected to fall ata CAGR of 8.5%, magazine digital expected to increase 20.6%, represents 5% of total magazine advertising. Internet advertising will sustain 12% CAGR until 2016. Search and directories to grow at a CAGR of 13.2%, online display advertising to grow at a CAGR of 8.3%, Mobile advertising to grow CAGR 46% over the next four years. Mobile banners at 0.61% click through rates compared to 0.07% for browser-based banners. Australia has the world’s second-highest smartphone penetration rate behind Singapore. Global m-commerce expected to increase at a rate of 39% over the next four years.  

27 July 2012: Eatability.com sells for $6 million and 40 percent of homes worth twice as much as original price

Caltex closing Sydney refinery, shedding 630 jobs. Only way to end losses which reached $200 million last year. Carbon tax did no come into the decision. Caltex is Australia’s biggest refiner and marketer. Value of its two refineries already written down by $1.5 billion. Second Brisbane plant will remain open for now. Shares rose 1.4% on the news. Competition faced from weak margins, small and outdated plants, tougher competition from mega-refineries in China and India, and the robust Aussie dollar. Caltex will take a $430 million charge to cove the closure costs, and a further $250 million will be invested in the conversion of the plant to an import terminal. [CR: Same thing seen in any manufacturing, converting local producers into an import service.]

Eatability.com sold to Sing Tel-Optus for $6 million. Launched in 2003 as a way to find good restaurants in Sydney, 12-employees, has millions of monthly visitors, over 235,000 user-generated reviews on 37,000 restaurants nation-wide. The purchase is part of the telco’s drive to get local content to get customers onto its smartphone apps and mobile network. Optus recently started  $2 million seed funding program for start-ups and bought a Singaporean food site HungryGoWhere. [CR: I wonder how much longer stories like these will continue to pop up, or if this is the new paradigm.]

Olympics - BBC lack of ad breaks and sponsorship value: Games broadcast on the BBC changes traditional value of increased brand recognition and revenue. Companies leveraging sponsorship for internal employee motivation and performance. Example: instances of 8% increase in phone complaints being resolved for the first time. [CR: I can attest to this, building internal company pride for the work that is recognised in the market.]

Qantas-related manufacturing job losses in Victoria: LTQ Engineering, where engines used in some Qantas aircraft are refurbished, to lose 164 engineering jobs in September. LTQ forecast to lose $37 million over next six years, made a loss of $18 million over last four. Due to reduced regional demand, tough international competition, and more reliable new-generation engines. [CR: Such a familiar story, off shore competition and inability to keep up with technology.]

Home values: RPData March 2012 Value Accumulation Report: Over 40% of Australian homes are worth at least twice what their owners paid for them, 5.4% are worth less than what their owners paid for them. [CR: I am unsure the value in such broad numbers, as it is so localised and dependent on how long the owner has had the home.]

Coles beats Woolies for 12th quarter: Sales for Westfarmers rose 4.7% ($2.25 billion) to $50.1 billion. Solid growth in Coles and Bunnings, flat sales at Kmart, 1.8% sales decline at Target. Coles outperformed Woolies for 12th consecutive quarter, posted 16th consecutive quarter of positive same store sales growth, lifting same store sales by 3%, total sales by 4.6%, sales at stores open for at least a year rose more than twice the rate of Woolies. Coles opened 8 new supermarkets in the year, Woolies opened 32. Bunnings same store sales increased 2.9% in June quarter (reinvestment in prices as part of its “range reset” dempended the impact of strong transaction growth). Officeworks sales dropped 1.1% in June quarter (technology and office furniture price slump).

Europe’s car industry over-capacity: Ford and Peugeot both on track to lose $US1 billion in Europe this year. Estimates say the European industry operates around 65% capacity, whereas 75% is needed to be profitable. Closing plants a challenge in Europe, which has more legal rights than in the US. Even after four years of catastrophic sales, only a few of Europe’s 100 or so car plants have shut down. Car sales rose slightly in Germany first six months of the year, dropped 14% in France, almost 20% in Italy, and in June fell over 40% in Portugal and Greece. [CR: At what point should a company do what needs to be done to manage its finances?]

Skype open to police, expanding its cooperation to law enforcement authorities to make online chats and other user information available to police. [CR: On the one hand, I share concerns over privacy, while frustrated at evil people using technology to hide.]

26 July 2012: House prices rising slowly and Olympics cost comparison

National Disability Insurance Scheme uptake: Council of Australian Governments met to review the NDIS which would invest $1 billion in a trial to replace the current disability insurance scheme with a single system to improve care and lift average funding to $35,000 per person. Support split along party lines, with Labour SA, Tasmania, and ACT agreeing to fund the trials and Liberal WA, Qld, NSW and Victoria not reaching a deal.  Deal would cost NSW an extra $70 million, Victoria an extra $40 million, could support an additional 15,000 people in the two states, deal is worth $300 million in federal funds to NSW and $100 million to Victoria. Gillard: “If you value a national disability scheme, you will find the money.” NSW premier says too much of the program is allocated to administrative projects, Victoria says needs more time to consider, “I think we owe it to the disability sector to get this right and that’s what I intend to do.” Trials in SA. Tasmania, and ACT will cover up to 10,000 disabled people from mid-2013. Queensland premier says state is unable to fund the program, will consider in 2014. [CR: It is interesting to watch the politics. If you don’t agree with the program structure, you are painted as hating people with disabilities, and politics get in the way of addressing the core issues.]

House prices rising slowly: Australian Property Monitors data: House prices rose nationally by 0.4% in June quarter from previous quarter, second quarter rise in a row, prices up 0.9% since start of the year. Impact by NSW and Victoria government incentives to purchase property ending in June, leading to potential future downward trends in coming months. Brisbane is the most affordable of all mainland capitals (30% cheaper than Sydney), has recorded eight consecutive falls in median house prices.   Boom conditions expected to drive prices higher in Perth and Darwin. [CR: While uncomfortable, would we not want a continued slow decrease to re-balance?]

Price decreases and deflation: Vegetables up 5.2%, furniture up 4.5%, bread down 3.1% (impact from $1 supermarket loaves), domestic holiday travel and accommodation down 4% (impact from strong AU dollar for international travel, competition between airlines), audio, video, and computing equipment down 3.8% (impact from discounting in past 6 months, price deflation from manufactures competing for market share). [CR: Increasing competition resulting in price decrease will drive innovations in efficiencies, but will it be at a cost of innovations in R&D?]

Victorian car parts manufacturing CMI Industrial closure: Two plants in Melbourne, 67 employees in Campbellfield, 52 at West Footscray will wind down in October. In April, CMI issues caused a temporary stand down of 1800 workers at Ford Australia. [CR: A smaller company impacts on the whole supply chain.  Ongoing manufacturing challenges.]

Billabong considering shutting stores and buyout: CEO Laura Inman took the helm in May, releasing turn-around strategy end of the month, “In order to make sure that we absolutely do the right things at the right time.” Earmarked 150 stores for closure, identified 85 more stores that are marginal and may go if sales cannot be improved. Billabong has 12 brands in over 100 countries doing wholesale and retail.  Shareholders believe Billabong’s turnaround as a public company may take too long and may be better off in private hands, considering a $695 million takeover bid from private equity firm TPG.

Apple sales up but shares fall: Apple sold 28% more iPhones in the last quarter than same time last year but growth did not meet expectations as shares fell 5% in after hours trading. Apple suffers from likelihood of new device release announcement causing delays in consumer purchases.  Analyst John Jackson of CSS Insight: “Apple is in that rarest of all positions where the Street will punish them  for anything less than an excess of success.” For quarter ending June 30, Apple sold 17 million iPads at $US9.17 billion revenue, compared to 9 million iPads and $6.05 billion revenue the year prior. Apple reported net income of $US8.82 billion, up from $US7.31 billion last year. Revenue was $US35.02 billion compared to $US28.57 billion last year. Figures were above Apple’s predictions but fell well short of Wall Street analysts estimates, who take Apple forecasts with a grain of salt due to the company’s long history of underpromising and overdelivering on its financial performance. [CR: Apple can’t win. It sells more than they said, but they get punished for not selling what analysts think they should have done. They also get slammed for people wanting their next product.]

Olympics – Australian dominate contracts and budget comparison: Forty Australian companies have picked up 46 contract deals in London. When London won the 2012 Olympics in 2005, the government predicted a budget of $3.8 billion – that has now soared to $17.7 billion, but remains far less than the $44 billion cost of the Beijing Games. [CR: Can’t help but soar.  Once secured, there is no competition to ensure there is accountability for original promises. What are they going to do, move the Olympics or say they can’t hold them again next time?]

Olympics – Consumption impacts from technology changes in the last four years: Monthly video viewership up 330%, Facebook has 900 million accounts compared to 90 million four years ago, Twitter carries over 140 million tweets per day compared to 1.1 million, there are over 50 million tablets in the market that did not previously exist. [CR: It will be interesting to see who the technology “winners” will be this year.]

Olympics – cost stats for hosting countries from 1976: Montreal (1976) – Cost $US1.5bn, three decades to repay debt; Los Angeles (1984) – Cost $US546m, first Olympics to make a profit since 1932; Seoul (1988) – Cost $US4.0bn, Elevates the nation’s role in the region; Barcelona (1992) – Cost $US9.4bn, Games generate profit of $US5 million; Atlanta (1996) – Cost $US1.8bn, Cost recouped through commercial partnership; Sydney (2000) – Cost $US3.8bn, Best games ever, but loses $US2.1bn, tourism falls from 3.4% to 2.6% of GDP by 2008; Athens (2004) – Cost $US12.8bn, Costs exceeded budget by $US8.2 billion; Beijing (2008) – Cost $US44bn, Most expensive games on record leaves legacy of infrastructure.

25 July 2012: Retail percentage of online sales stats and Coke and McDonald's slipping

Challenge for carbon tax Productivity Commission in assessing business compensation aid for carbon tax.  Says it will be difficult to separate carbon tax impacts from other factors such as currency fluctuations, unrelated changes in costs and the normal ebb and flow of business. [CR: Speaks to chaos theory as applied to business. Take all of the “normal” interconnected economic complexities affecting organisations. Now exponentially increase those interconnections by adding a variable of the carbon tax.]

Opera Australia model for exclusive tickets to Ring Cycle: As part of a “Ring Leader” program, Opera Australia offering buyers to donate $3,000 to $12,000 to get priority access to tickets before they go on sale. Tickets are additional at $600 to $2000 for a full four-opera cycle of the Wagner opus. The scheme was successful, with only C and D reserve tickets available when single-ticket sales opened. Over 50% of Ring Leaders had not previously donated. The scheme raised most of the $19 million budget. When asked if the Ring Leaders program unfairly quarantines tickets for the richest segment of the population, CEO Adrian Collette said “it should be seen in the context of everything else the company did to ensure broad access to opera. “It is the biggest artistic challenge the company could undertake, and this was the only way of getting it on. The choice was this or nothing.” [CR: Reads like the ends justify the means. Will be interesting to see if the model is an ongoing trend, and if so the extent that concession will be made to “lottery” in those to the inner circle who may not otherwise have the opportunity.]

Disability plan debate numbers: Meeting today to review proposed National Disability Insurance Scheme planned for next July. Proposed to cost NSW an extra $250 million and Queensland an extra $360 million to offer same services available to Victorians. Fedral government committed $1 billion to initial trials, full scheme needs an additional $6 billion. Queensland Premier Campell Newman said his government would not pay extra to be a part of the scheme and Canberra would have to cover the cost of the Queensland trial. Queensland spends the lowest on disability services based on its population. Other states have committed millions to be a part of the trial. [CR: Frustrating that the political debate is about whether they will spend the money, rather than leaders getting personal with the problem and focusing on a resolution.]

Facebook founder and PayPal co-founder Peter Thiel buys into Sydney start-up ScriptRock, Theil’s Valar Ventures joined other investors in contributing $1.2 million. Three ScriptRock co-founders to move to the US and expand AU operations. ScriptRock sells tools that cut down on IT expenses by automating work that traditionally needs a lot of manual input. [CR: By that definition, it sounds like it will build my applications for me... Good on ‘em. I do wonder how long this start-up cycle will continue, or if this is the new paradigm.]

Europe’s debt crisis update: Spain: fears that spiralling debt will force it to seek a $353 billion bail out from the EU and IMF. Interest rates on Spain’s 10-year borrowing rose to 7.59%, the highest since the euro was created. The stock market in Madrid fell by 5%. Greece: hints from politicians that Germany preparing grounds for Greece to leave the euro. Europe already spent 270 billion trying to rescue Greece. Germany largest economy, followed by France, Italy, then Spain. Italy: Ten cities risk bankruptcy, schools may not be able to open. Cities in southern Italy plagued by mis-management, corruption, wasteful use of EU funds, and infiltration of the Mafia. Plans to dissolve 64 of Italy’s 107 proveniences. [CR: Puts things in perspective from a macro-national level and a micro-project level. AU’s problems are minor by comparison, and any project challenges you are managing are a hiccup when placed next to whole cities going bankrupt. Now would be a good time to say your three points of gratitude.]

Virgin Australia to slow capacity expansion: In 11 months to May, domestic capacity rose 9% and peaked at 15% year on year increase for some months.  Capacity growth in 2011-12 was about 5% to 6%. Qantas maintains about 65% domestic market share, including Jetstar and QantasLink, and has also increased capacity, leading to lower fares potentially impacting industry profitability. An all-out price-war has not happened as yet, COO Sean Donohue states Virgin has a lower cost base and working on greater efficiencies. [CR: Here’s a question: If the airlines have a price war, what does that do to their capacity to fund R&D into alternate sustainable fuels? If we then encourage a price war with our travel dollars, are we then not telling subsequent generations we gladly trade their environment for our trip to Bali? Just sayin’.]

Retail percentage of online sales stats: store name (% online sales of total sales, Growth in 2011): John Lewis (16.7%, 37%), Nelman Marcus (16.3%, 14%), Saks (9.2%, 28%), Nordstrom (9.1%, 35%), JC Penney (8.7%, 2%), Debenhams (8.2%, 73%), Macy’s (7.4%, 40%), Marks & Spencer (5.6%, 31%), Kohls (5.4%, 37%), House of Fraser (4.5%, 130%), David Jones (<1%, n/a)

Supplier management perspective from David Jones group executive, merchandise, Donna Player: The current difference between overseas and AU prices from international suppliers is 30% to 50%, aiming for 10% to 20%. Player led price harmonization at Big W to price reductions between 15% to 20%. Led Big W’s omni-channel business, which is leading in the AU retail market. David Jones CEO Paul Zahara said in March net profit for the year would fall 35% to 40% and David Jones faced years of lacklustre earnings as it reinvested heavily to transform into a fully integrated omni-channel retailer.Player: “There’s an opportunity for us as a business to engage without customers more so than any other time in my career. I want to give them more reasons to love the David Jones brand.” [CR: Two take-aways: 1) Player on board for 12-days, important to champion the vision of the CEO; and 2) I love the term “omni-channel”, reminds me of when I started in “multi-media”.]

Coca-Cola and McDonalds slipping: Coca-Cola Enterprises reports net income fell 17%in Q2 2012, Chairman and CEO John Brock said it faced a “unique combination of unfavourable weather and ongoing marketplace challenges”. Western Europe’s main Coke bottler earned $US205 million in April-June quarter compared to $US246 million the year prior, volumes fell 6%. McDonalds income fell 4% in Q2 2012, same store sales increased 3.7%, compared to same store sales increase same period last year of 5.6% and increase in Q1 2012 of 7.3%. [CR: I always have struggled with the noton of perpetual increases in same store sales.]

Stats on Australia’s richest individuals from financial services research group: There were about 340,000 high-net-worth individuals in 2011. The number increased to 410,000 in 2012, with net wealth climbing from $645 billion to $825 billion. By 2017, expectations are that Australia’s wealthiest will be more than 600,000 and collectively be worth more than $1.2 trillion. 33% of the wealthy have a private banker. Interesting part of client profiling at Macquarie is to look at where they spent their formative years of 18 to 25, as these circumstances affect the way the bulk of ptoeple make decisions and risk appetite for life. [CR: Yes, that is interesting. Look at how you spent your formative years. Can you see how that affects you now?]

Stats on employee-owned companies performance: UK Employee Ownership Index published by law firm Field Fisher Waterhouse says companies owned by more than 10% of their employees outperform All Share companies each year by 10% on average. Over successive five-year periods, they outperform by 79%; over three years by 41%. US General Accounting Office study of 110 firms found that participatively managed, employee owned companies increased their productivity growth rate by an average of 52% per year. [CR: Give them autonomy, mastery, purpose. You won't lose.]

24 July 2012: Samsung sues Apple and NAB mobile stats

Goodman Fielder losses. Australia’s largest baker, accounts for more than 33% of packaged bread sold in Australia, almost 50% of packaged bread sold in New Zealand, facing the second consecutive bottom line loss in 2012, as written down value in AU and NZ by almost $400 million in two years. Aiming to cut costs by $100 million by 2015.  Helgas, Lawsons and Buttercup brands are losing market share to $1 Woolworths and Coles private-label bread and premium priced loaves by artisan bakers such as Sonoma and Bourke St Bakery. Company has cut prices, and is culling varieties and closing plants to reduce costs. Major rival is George Weston Foods (Tip Top and Burgen bread). Analysts say break makers need to raise prices to lift margins. Woolworths CEO: We are constantly reviewing trading terms with suppliers... it only works if there’s something in it for the retailer and something in it for the manufacturer, but ultimately it’s the customer that drives the decisions we make” [CR: See story below. Not sure how it works with private labels competing for profit share, then saying something needs to be in it for both parties.  Only way customer will decide is if they refuse to shop if item is not stocked, which is unlikely when private labels diversify into broader choice ranges.]

Woolworth sales up. Woolworths is Australia’s largest retail, shares reached a 12-month high. Company set a strategic plan in November aimed at restoring “aspirational” earnings growth to 10% over the next few years. Group sales for three months ending June 24 rose by 5.1%, full year sales up 4.7% to $56.7 billion. Australian food and liquor same store sales up 1.3%, total sales up 3.8% to $8.55 billion. Woolworths opened nine new supermarket and liquor stores and refurbished 11 others in the quarter. This despite the 4.3% food price deflation. With the new stores, sales per square metre fell from $16,424 to $16,194, suggesting weaker productivity.  Big W same store sales up 1.6% in June quarter following seven consecutive quarters of flat or weaker sales, growth attributed to government May and June handouts. Dick Smith same store sales up 15.4% in AU, 9.9% in NZ due to reduced prices in preparation for divestment, sale expected to be complete next month. [CR: I would be surprised if productivity did not decrease during expansion.  Not sure on the ration a to what to expect in that industry, but how long does a store take to be operating at optimum? Or any change initiative for that matter?]

Samsung sues Apple, says Apples two iPhone 4 models and the iPad 2 infringe on 3G patents. [CR: Because it worked so well last time.]

Online spending expected to double to $27 billion by 2016. Food has been the biggest boost, up from 17% in 2011 to 23% current.  (Frost & Sullivan and PwC survey). Over 50% of 1000 respondents driven online by lower prices, 26% made using mobile devices, 62% purchased electronics.  Spending last year was $13.6 billion, expected to hit $13.6 billion this year. [CR: Exciting to see the innovation in how to engage online, unfortunate it is driven by the commercial mandate, will be good to see benefits to social good that come out of the activity.]

NAB mobile stats: Over 33% of internet banking log-in are from mobile devices. Use of digital channels has increased by about 270% over the past 12 months. Strategy: NAB will try to exploit any technology edge to boost cross-sell, particularly of wealth management products, and leverage competitive advantage in its wide ranging third-party distribution networks. [CR: I am seeing “33% through mobile” as a current benchmark.]

Westpac launches iPad and says bank branches will halve in size over next few years. iPad app allows transfer of funds, make payments by drag and drop, check balances. Plans Facebook payments by the end of the year. Customers who were active users of mobile services stayed with the bank longer and were more likely to buy other products (Harry Wendt, GM of online and mobile). App has been downloaded 14,000 times in past two weeks. Developed iPad first due to “proliferation of devices and screen resolutions” on Android.” Says apps more secure than web browser since the concept is new and had not attracted attention of organised crime gangs. Over 1.4 million customers use Westpac’s mobile banking services (over 33% of online transactions). It took two and a half years to reach 1 million mobile customers, then six months to reach the next million.  Westpac recorded 42.4 million logins to its website in year to May 2012, an increase of 17% from previous year. Of these, 12.6 million were on mobile devices, up 195% from last year. Customers made 41.2 million online payments worth $251 billion, mobile accounted for $580 million. Value of transactions going through branches has decreased an average of 5% per year for past 5 years.

AU and NZ online travel industry to grow by 11% in 2012 to $US13.5 billion. Linely Planet and trip Advisor are successful because they sell inspiration. Almost 75% of Facebook users boast about trips, 20% say they have booked trips after seeing friend’s posts.  Wotif.com booked $595.6 million through the site during six months ending December 2011, posted a net profit of $28.8 million, up 14%, revenue up 4% at $74 million.  Webjet booked $369 million during first half of financial year, up 29.5% from previous corresponding period. Net profits up 17% to $5.9 million, revenue up 37% to $28.2 million. Sydney-based Hotels Combined  deals aggregator, 24 languages, 120 different currencies, rooms in 220 countries, founded in 2005, has 200 staff, 95% of revenue from overseas, generated bookings worth $478 million for year ending June 2012, double previous year, visitors up from 79 million to 132 million.

23 July 2012: Reduced consumption impacts on clean coal projects and Qantas launches "social commerce" Hooroo

Electricity Gas Australia 2012 report on the state of the energy sector by the Energy Supply Association of Australia, figures for year ending June 2011: There are more than 250 new power projects or expansions planned , mainly lower emission generation. 38% of the new capacity installed was gas, 35% wind, driven by the 2020 Renewable Energy Target.  Annual growth in generation capacity slowest since 2005-06, energy consumption fell by 0.6%. South Australia has highest ratio of wind power (17%), Queensland highest solar. New capacity mainly displaced cleaner black-coal generators rather than more emission intensive brown-coal plants due to provision of financial assistance to brown-coal plants plants. Black-coal generation fell from 57% in 2009 to 51% in 2011. Emission generation fell in most states, but increased in Victoria where large brown-coal generators are situated. Federal government’s draft energy white paper estimates that up to $240 billion of new investment in electricity and gas infrastructure will be needed by 2030. [CR: Finding the balance of new projects and new capacity. The headline of the story was “Clean coal projects suffer”. I wonder what another headline would look like of “Success in reducing energy consumption”.]

US Presidential candidates silent on gun control after Auroro shootings that killed 12 and injured 59. Obama called for a moment of silence and ordered flags at half mast, Romney called the killings a “hateful act”. Gun control blamed in part for Al Gore’s 2000 defeat. [CR: Americans like their right to bear arms. Taking a step back, only reason to have guns apart from hunting is to mitigate a future fear of having to use them on other human beings. How much of our laws are defined by distrust and fear.]

Analysts expectations say Coles to outperform Woolworths. Woolworths expected to grow by 3% to $8.5 billion, Coles expected to grow by 6% to $6.55 billion. Both companies rejigged customer loyalty programs, launched new advertising campaigns, and cut prices. Coles revamped FlyBuys in April, increasing reward points and offering 10% discounts on five favourite items. Woolworths offered loyalty card members discounts between 20 to 40% on over 1000 products in an “extra special extra simple” campaign, and rolled out heritage and fresh food credentials campaign and flagged new store formats offering freshly cut meat and vegetables and freshly baked bread. Analysts say that Woolworths initiatives will take more time to result in revenue. [CR: The reporting year is like a political election, where everyone tries to get their initiatives returning results to be the “winner”.]

Theil Fellowship in the US offers a two-year US$100,000 in the “20 under 20” grant, encouraging students to drop out of college. Two sides of the debate. One side involves skills to write software or build a robot, plus an outsize does of ambition and a youthful belief in one’s ability to change the world produce fame and fortune as college graduates have to move back home due to not being able to get a job. On the other side, if the start-up fails, unemployment for those with only a high school diploma is 21%. [CR: Everyone wants to be Jobs or Zuckerberg.]

Gruen Transfer to be shelved this year, internal goal was to “entertain, yet leave the viewers feeling smarter”. [CR: Always like a brand that makes me feel better as a result of my engagement with the brand. I wonder if they will come back the year after and analyse themselves?]

Qantas launches “social commerce” travel booking site Hooroo to compete with Wotif and tripadvisor in $2 billion agency booking sector. 45,000 people signed up before official launch. Idea is to blend travel booking with content and user conversations and ratings. First phase of Qantas brand overhauls started three weeks ago, asking Australians to upload photos of themselves for a chance to feature on Qantas planes, 300,000 people viewed the pre-TV launch video, 64,000 people uploaded photos. Hooroo is spending $3 million to $5 million in coming months on online advertising and word of mouth seeding.Initial seeding program for bloggers reached 250,000 people, who were not paid but given domestic trips to create content and “talkability” about Hooroo.

Mobile device stats: Yahoo! Research indicates 39% of Australians intend to buy a tablet in the next 12 months. 4.3 million unique monthly visitors to Yahoo!7 out of 8.8 million total access the site through a mobile device. 30% of realestate.com.au, about 25% on Seek.

20 July 2012: AU broadband penetration and ebook stats

In 2011, Australia fell three places to 21^st out of 34 developed nations for fixed line broadband penetration.  24.6 subscriptions per 100 citizens, below the OECD average of 25.6, and Switzerland in first place with 39.9. Australian in eighth place for wireless broadband access with 56.2 subscriptions per 100 compared to OECD average of 54.3, South Korea in first place at above 100.  NBN plans to have work completed or underway for 750,000 premises by the end of the year. [CR:I would be interested in numbers comparing growth in wireless and mobility, will we look back in ten years and see the investment in fixed broadband as a stop-gap?]

Australia shareholder returns at 2.5% over the past two years, compared with 8% in the UK and 15% in the US. [CR: I acknowledge the drive for profits, but I also look at the overall economies of those countries. Is greater shareholder returns always the best solution? I also wonder what the breakdown is between industry segments in our two-speed economy.]

Solicitor census shows there is one lawyer for every 400 people in Australia. That is 7000 more than GPs, four times as many dentists. NSW has 41% of the total lawyer pool. In  most large law firms, over half of senior associates are female, less than 20% of partners are female.

First State Super Fund gets out of tobacco. ($33 billion fund), caters mainly to public sector employees, has sold more than $150 million of shares in manufacturing of cigarettes and other tobacco products.  40% of fund members work in the health sector. [CR: Good to see member influence on fund investments.]

US BookStats survey of 2000 publishers shows ebook net revenue in the US doubled in 2011, reaching $US2.07 billion from $US 869 million in 2010. eBooks accounted for 15.5% of publisher’s revenue. Print sales dropped from $US12.1 billion in 2010 to $US11.1 billion in 2011. Total net revenue remained flat, increasing 0.5% from $US13.9 billion to $US13.97 billion. Children’s books grew 12% from $US2.48 billion  to $US2.78 billion. Bricks and mortar stores remained largest sales channels, but online sales increased from $US 3.72 billion to $US 5.04 billion. [CR: I will need to dig it up, but interested in comparison of growth of book digital sales to other industries.]

19 July 2012: ATO audits and private-label grocery stats

Australian Taxation Office fewer but tougher audits: Collectable debt has increased 16% to $16.4 billion as cash-strapped businesses file late. Most of the debt is in the “micro” area – 3 million businesses that earn less than $2 million per year. Budget cuts reduced ATO staff by 1000, more than government agency.ATO computer systems more sophisticated, now check 600 million pieces of third party information, up from 409 million pieces four years ago. ATO to reduce checks on “highly wealthy individuals” by more than 66%, to do 200 reviews and 50 audits compared to 657 and 93 in 2011.  ATO plans to audit 190,000 micro businesses, down from 244,000 in 2011, and 530,000 individuals, down from 684,000 in 2011.  Where the ATO found money in 2011: Audit of microbusinesses ($4.3bn), Audit of small-medium businesses ($2.2bn), Audits of large groups ($2.1bn), Audits of individuals ($2.0bn), overclaimed GST refunds ($567m), Overclaimed income tax refunds ($200m), Excess superannuation contributions ($178m). [CR: Reducing government staff, with the largest unclaimed debt in the most challenging space of millions of micro-businesses. It is easy to see how things would shift to stricter “police-state” like controls.]

Gender stats: A couple of articles in response to Yahoo CEO 37-year old and pregnant Marissa Mayer. 3% (6 women) of ASX 200 companies in Australia have female executives. Companies with female CEOs with children: Westpac, GrainCorp, Oroton Group, MacDonal Australia, Noble and Sussan Group, Kraft Food. The Human Rights and Equal Opporutnity Commission received 165 cmoplaints abiout pregnancy discrimination in 2010-2011. There are 20 women CEOs of Fortune 500 companies.  [CR: As I mentioned in a recent blog, I acknowledge this needs to be highlighted to change the perceptions, but it will be good when it is no longer notable similar to ethnicity or similar factors.]

Federal economic modelling for unskilled workers: High school graduates and people with low-level education (hairdressers, fitness instructors, massage therapists, baristas) could be forced back to school or out of work within 13 years. Highly qualified workers in healthcare, the professions, education, and mining will have their pick of jobs in 2025. National Workforce Development Agency launched today to aim to provide taxpayer subsidised education to generate the skills demanded by industry instead of those deemed important by education providers. Demand for high skilled workers to grow by 65% and 75% of the workforce, compared to the current 60%. Growth in high-skilled jobs to grow at 160% of the rate of low skilled jobs. [CR: Wonder what this means for the gap between rich and poor and providing access to education as well as communicating the value of that education. Also wonder how pop-culture college drop out stories of the likes of Steve Jobs impact a propensity of people to pursue education.]

Supply chain impact of Ford layoffs: Local production fell an average of 336,000 vehicles to 221,000 last year. Supplier base has reduced from 200 companies to 150 over the past decade. Supply chains forced to diversify into other industries and markets, which can then prompt merger and acquisition activity. Components exports worth $1.2 billion in 2010. [CR: Fascinating to watch the organism that is the market evolve and adapt to internal and external influences. I keep in mind that my use of the term “fascinating” from an external academic perspective is also “painful and catastrophic” from those going through it.]

Proposed National Disability Insurance Scheme (NDIS) to help 200,000 people who are on disability support pension find work. 45,000 new workers will be able to find work.   Employment rates for the disabled is around 40%, below OECD average. Moving 35,000 people from disability support pension to jobs would deliver a $9.6 billion gain. Disability support pension will draw $14.8 billion in 2012-2013, expected to rise to $17 billion by 2015-2016 and is almost twice the cost of jobseeker income support. NDIS expected to start from July 2013 with a $1 billion pledge in the July 2013 budget. Productivity commission recommended funding of $3.9 billion. [CR: Good to see this rising on the agenda.]

Medical journal The Lancelot: 66% of adults in Britain fail to take enough exercise to remain healthy. [CR: I wonder what the numbers are in AU and US. Would you be in that 66%?]

Spaniards leaving recession-wracked country increased 44% in first six months of 2012. [CR: Interesting to see how economies drive global populations and the long-term impact that has on retaining and cross-pollinating local cultures.]

Private-label groceries to increase to 33% of grocery sales in next five years (currently 23.5%).  Driven by consumers seeking greater value and rapid expansion of ranges by retailers.  Dry, chilled and packaged groceries have highest growth: Butter 68% by 2013, sugar 67% by 2013 compared to 56% in 2003, bread 56% in 2013 compared to 18% in 2003, milk 55% in 2013 compared to 51% in 2003. Private label beer, wine and spirits grown from 2% in 2003 to 8% in 2013. Eggs to slip from 61% in 2003 to 53% in 2013 as consumers opt for free-range. Own-brand groceries represent 40% of grocery bill for lower-income families compared to 15% for higher income families. Retailers targeting higher income with premium, organic, and fair trade lines. Branded suppliers forced to reduce prices, have lost shelf space tpo private label brands which are expected to generate double the gross margin of branded product. In April, Woolworths estimated at drawing 18% of revenue from private labels, Coles 23%. [CR: Retailers say branded options will give “more choice”, but it will result in increasingly smaller supply chain, which may then prompt an increase in local options.]

Deloitte Access Economics released study findings that globally 2.5 billion consumers will purchase $170 billion worth of goods using mobile commerce technology.

18 July 2012: Carbon tax spent on pokies and New Yahoo! CEO

Carbon tax compensation goes to poker machines, Queensland poker machine revenue increased more than 7% in May when first Clean Energy payments went out and rose almost 12% in June compared to last year. Electronic gaming revenue in lower socio-economic areas of Victoria, such as Bendigo and Ballarat, grew by more than double the state average. [CR: Frustrating fact of reality.]

Ford Australia planning to cut 440 jobs in Victoria and reduce production by about a third from November to a new annual output of 33,000 cars. Has seen a sharp drop in sales of its Falcon down 36% as consumers switch to SUVs and compacts. President and CEO said committed to produce vehicles in Australia until at least 2016. Investment at start of the year of $103 million for locally made Fords to be more fuel efficient, included $34 million federal funding and undisclosed amount from Victoria.  Ford Australia posted a loss of $290 million last year, sales down 25% year to date. History of job losses: 2006 – 640 jobs; 2008 – 450 jobs; 2010 – 240 jobs. Gillard on 17 Jan 2012 “As a result of us making $34 million available to join with Ford in new investment to keep car manufacturing here, we’ll actually see the number of jobs grow. There will be an additional 300 jobs as a result.” [CR: History has a way of making bold declarations seem silly in hindsight.]

Australian Communications and Media Authority approved the use of 05 prefix once the 04 numbers are used up. [CR: Glad someone’s thinking about what’s next.]

New Yahoo! CEO announced, 37 year-old Marissa Mayer, ex-Google vice-president of location and local services. [CR: Refer to past article on revolving door of CEOs over the past five years and the prospect of laying off thousands. Will be interesting to see what she does.]

17 July 2012: Ingrams to sell and inquiry into costs for technology

About chicken: Bob Ingham putting Ingham Enterprises on the market, potential vale of $1.5 billion. Ingham, 81 years old, selling the 94-year-old business that sells around 35% of all chickens sold in Australia. Annual turnover is $2 billion. Ingams and rival Baiada control close to 70% of the chicken meat market in Australia. Baiada MS states consumption of chicken in Australia increased but real prices have dropped between 20% and 25% in past few years. Poultry production increased 30% in past five years to 1.1 million tonnes in 2012-2013. By comparison, flat beef and veal production is at 2.1 million tonnes (remaining steady), flat lamb production is at 430,000 tonnes (decreasing 40%), and pork production is decreasing.  Australians increased consumption each year to an average 42 kg per person in 2010 (Americans consumed 50kg per person). Costs are increasing with consumption, increasing price is not an option due to a supply chain dominated by two supermarket chains, forcing consolidation in the chicken business to gain efficiencies. [CR: Recall yesterday’s article on newsagents? Observe history in other industries.]

Queensland Premier Campbell Newman said 3000 jobs have gone since the financial year, has previously stated the state has 20,000 more jobs than it can afford. [CR: Wonder how many will go straight into resources.]

High level of absentees expected this winter due to influenza.  Normal rate for June is 3.5%, August is 4.5%. [CR: The story the numbers do not tell is that it can hit all at once, with 25% gone in one week.]

Standard Media Index (SMI) – monitors revenue spending by media agencies handling about 60% of all advertising revenue – year to June results: overall ad market down 0.2%, Total TV down 1.8%, free-to-air TV down 4.1%, regional free-to-air TV up 1.1%, Pay TV up 11.3%, Total newspaper down 8.1%, Regional newspaper down 5.7%, Metropolitan newspaper down 8.8%, National newspaper down 13.5%, Magazines down 10.6%, Cinema down 2.8%, Digital up 22.6%, Radio up 3.4%, Outdoor up 2.1%. [CR: Look at digital go.]

Parliamentary inquiry underway to explain why costs for technology are so much higher in Australia as compared to overseas. Citing high cost of labour, Australia’s large physical size, and relatively small population. Hourly rate comparisons: UK - $9.68, US - $7.37, AU - $16.51.

Game console stats: Australians bought 450,000 game consoles during first half of 2012, down 13% from the year prior. The value of those sales fell 28.7% to $118.8 million. Next gen Xbox and Playstation not announced. Nintendo to release 8th generation Wii U before Christmas. The Ouya Google Android system is in development, attracted $US4 million from 32,000 backers on Kickstarter, to cost $US99 [CR: Tastes like chicken. (refer to previous story about increasing sales, lowering profit... see what I did there? Never mind.)]

Online group buying sites have niche competition. Total turnover for the channel peaked in Q3 2011 at $158.5 million but has fallen since. Major players like LivingSocial, Scoopon and Groupon now compete with niche players. Pink Rewards targeted at the gay and lesbian community. Trade Saver focuses on hardware stores. SME Savings focusing on small businesses.  [CR: The ebb and flow, large companies try to satisfy everyone, niche players exist until technology moves on and creates opportunity and forces change or elimination.]

16 July 2012: Giving to performing arts and David Jones hiring trend

Australia’s 28 major performing arts companies received more revenue in 2011 from individual giving than corporate sponsorship for the first time. Non-government income rose 20% to a new high of $65.2 million. Individual giving represented 53% of total non-government revenue, compared to 5% in 2010.  Overall giving to performing arts has increased almost fourfold over the past decade, running counter to a broader decline in giving reported by the Australian Tax Office.  Reasons cited for growth are “a maturing of relationships between companies and donors” and “a growing understanding of how effectively the money is used and the difference it makes”. A dip is expected in 2012 based on historical trends. [CR: Side factor of 2-speed economy is the potential for greater philanthropy in the higher speed. Also to note in the non-profit sector that sophistication of relationship management and communication is critical.]

David Jones adding 200 “style advisors” armed with iPads across its 36 stores: one-on-one service roles that involve meeting customers at the door, accompanying them around various departments, offering advice on styles and sizes, and helping customers pay for multiple purchases in a single transaction.  Positions will be trialled over Christmas and are based on the personal shopper concept introduced at the CBD stores two years ago. Myer planning on cutting 100 back-office staff in next few weeks. David Jones has hired 100 new supervisory staff and is adding about 200 staff in support functions such as IT, digital marketing and operations and reached an agreement with the Shop Distributive and Allied Employees Association for a new enterprise agreement to give more than 9000 staff a 10.2% pay raise over the next three years.  [CR: I keep reading about how brick and morter needs to differentiate by adding service, we finally see a big player doing PR about a move to act. The Christmas season will decide if the armchair analyst recommendations are correct.]

News agents: There are 4000 news agents across Australia, down from 5000 a decade ago. Margins on newspaper sales have shrunk, newsagents lose money on delivery, newspapers used as a source of traffic for other revenue channels of transport tickets, lotto tickets, and confectionary. New distribution project called T2020 to redraw distribution lines and reduce number of distributors by up to 90%.  Newsagents will then tender for the new distribution areas.  [CR: Appears to be the natural order of things, we will see corporations and conglomerates emerge, the smaller shops perhaps coming up with one or two points of innovation to differentiate based on the needs of the local market.]

13 July 2012: Media company Aegis sells for $4,827 billion and Unemployment rates released

Japanese advertising company Dentsu Inc. made friendly $A4,827 billion cash offer for global media company Aegis Group. The enlarged group will be No. 1 in Asia, No. 2 in Europe, and fastest growing in North America. Local arm of Aegis is Australia’s largest media buyer, handling over 20% of domestic advertising dollars. Regularory approval expected to take until October. Aegis operates in over 80 countries and generated £1.1 billion revenue in 2011 calendar year.  Dentsu operates in 29 countries, generated £2.7 billion revenue FY2012. [CR: The types of deals that happen only a few times in a generation.]

Employment fell in June by the most in six months. Unemployment at 5.2%. Breakdown by state: NSW (5.1%), VIC (5.5%), QLD (5.3%), WA (3.5%), SA (6.4%), TAS (7.4%). Participation rate (measures working age population) dropped from 65.4% to 65.2%. [CR: Being in Queensland, makes me realise what a bubble we are in within our nation and globally.]

12 July 2012: Brisbane snags the G20 and Harvey Norman trying to be last one standing

Complaints about Carbon Tax: Australian Competition and Consumer Commission (ACCC) has had 630 complaints and inquiries related to the carbon tax since July 1, 10% of the 8350 general complaints. 250 of the inquiries were about how the carbon price would impact electricity and gas bills. [CR: If there is change, it will come from business pressures, not consumer.]

Brisbane to host the G20 in 2014. Federal government to fund $370 million. Brisbane expected to receive a $50 million economic benefit from hosting 4000 delegates and 3000 accredited media. NSW Planning and Infrastructure Minister Brad Hazzard: “To think that the US President, the heads of Russia, of Britain are going to Brisbane and be told this is a gateway city to Australia is just ridiculous.” Melbourne lord mayor said they did not want the event and WA Premier said his state lost interest when the costs emerged. Additional refurbishment investment in hotels expected.  [CR: I remember being in Melbourne for the G20 in 2006, getting to the train amid the protestors.  Chaos is the operative word I would use.]

Next battleground – social TV apps: Deloitte State of the Media Democracy survey of 2000 Australians found that 60% of TV viewers multi-task with mobile devices. Ten announced joint venture with UK-based Zeebox, a “second screen” TV platform and consumer service, allows users to find out more information, interact with other viewers, and buy things they see on screen. Similar solutions with other networks includes Seven’s Fango, Nine’s jump-in app, and ABC iView.  Zeebox is an agnostic app not tied to one channel.  [CR: I remember exploring the potential of TV hot spots in 2001 with set-top boxes, with the ability to book an appointment for a test drive when viewing a car commercial. That seems so archaic now... and I feel old.]

China population: China predicted to hit the point where there are more dependents than workers in 2013, which is 3 to 4 times faster than during the economic development of Japan and South Korea.  Fertility figures circulated at the China Update conference are 1.2 births per woman, below the official figure of 1.8 and below Japan’s figure of 1.4.  2.1 births per woman is the standard level for maintaining a stable population.  There will likely be a change in the one-child policy but the real cause is the same shift in social and economic attitudes leading to fewer children in the developed world. More developed countries can try and keep older people in the workforce, but China has a massive drop off in skills capacity ion the older workforce.  Only short-term solutions said to be capital investment to boost labour productivity and improve the quality of the workforce. [CR: Like a big simulator game, trying to make your populous have babies... but how does this fit into the whole global over-population discussion?]

Harvey Norman buys a Retravision and a Betta Electrical store in Gunnedah, NSW, looking at six more Retravision retailers looking to exit following collapse of Retravision Southern buying group in May. Harvey Norman bought Clive Peters for $55 million in 2010.  Consumer electronics has experienced 20 to 40% annual deflation, prices continue to fall but rate of decline has eased. Harvey Norman global sales have fallen 6.7% to $4.4 billion nine months ending in March, 7.5% decline in Australia. Harvey Norman has shown no interest in 300 Dick Smith stores being sold by Woolworths. [CR: Last one standing.]

Store wars: Coles announces another round of price reductions as part of a “Down Down” campaign, said to reduce prices on a range of products and brands by up to 29%. Made it clear the reduction would be funded by Coles, not suppliers, sacrificing margin to drive volume and subsequent profit.  Last week Woolworths accused of threatening to take products off shelves if suppliers did not cut prices by as much as 10%. Earlier Metcash’s IGA retailers launched $5 million, six-week campaign to promote price reduction up to 25%. [CR: Intense competition, suppliers often the ultimate losers.]

11 July 2012: Darryl Lea to sell and weakening labour market stats

Confectionery retailer Darrell Lea appoints insolvency firm after 85 years of operation.  Sales have fallen 20% over the past five years to about $80 million, posted a bottom line loss of $3.3 million in 2011. Points to influx of Lindt, Haigh’s, Max Banner and Guyilan, coupled with underinvestment in Darrell Lea brand and stores. Also been dogged by in-fighting from siblings over the family empire. For sale is the brand and 69 stores and manufacturing operations, employs 700 staff. [CR: No matter how long an organisation has been around, they are always at risk from external challenges, and internal challenges don’t help.]  (Sue Mitchell, Will Glasgow)

Labour force participation rates for women with children under 15 increased 66% between 2001 to 2009 (Household, Income and Labour Dynamics in Australia). Lone mother participation rates increased from 51% to 64%. Attributed to nation’s improved economic performance, the need for additional family income, preference for shorter career breaks, and government policies such as the 2004 childcare tax rebate. Biggest increases in spending were on housing rents and mortgage payments while car costs and petrol feel the most. Most likely major life event facing Australians over a 12-month period were changing jobs and moving house.  [CR: Interesting how moms in the workforce is attributed to “improved” economic performance AND need for additional income.  We are doing better so we need to work more? In a country where the primary stress is changing jobs. Something feels not quite right here.] (Jacob Breger)

Degrees versus apprenticeships: Apprentices earn an average of $52k after training (2010 National Centre for Vocational Education Research NCVER) compared to $50k for bachelor graduates (Graduate Careers Australia survey). Federal government aiming for 40% of young Australians to have a bachelor’s degree or above by 2025. Tertiary Education Minister Chris Evans figures show 2.4% increase in higher education enrolments in 2011 from 2010, NCVER May data shows 6.9% increase in apprenticeships.  Bachelor degrees show higher income in subsequent years. [CR: Access to education is critical, but so is initiative and opportunity.] (Primrose Riordan)

Labour market is weakening, making it harder for blue-collar workers (manufacturing, wholesale, transport, construction) to find work outside the mining sector especially for males over 50.   Unemployment is 5.1%, expected to hit 5.2%.  Structural changes have driven growth towards mining and energy, while online shopping and frugal consumer spending habits decrease growth in retailing, manufacturing, and travel. In FY2012, mining sector employment grew 24%, whereas all other sectors which represent 98% of total employment remained flat. [CR: A clear example of the two-speed economy. Knowing this, how will you cross-skill?] (Bianca Hartge-Hazelman)

China’s southern Guangdon province discharged 9.5 billion tonnes of raw sewage (75% of Guangdon’s output) into local rivers. Over 50% went into the Pearl River Delta. [CR: One of the world’s fastest growing economies, and still we have this.]

10 July 2012: Job ads fall and ACTA treaty back to the drawing board

Australian newspaper and internet job ads fell for third month in a row. Newspaper and internet ads decreased 2.6% in May, and another 1.2% in June. Newspaper adds dropped 3.3%, internet ads dropped 1.1%. Attributed to a “mild softening” in labour demand, potential concern over global economy, and pressure on profitability. (ANZ Group’s monthly job ads index)  [CR: When I see decreases or increases such as this, I have to ask whether this is a “decrease” or a “correction”. We pass value judgments on increase and decrease as “good” and “bad”, when in reality a continuous increase of job ads would appear untenable and be incredibly painful for anyone looking to hire or maintain staff.] (Jacob Greber)

China city of Wenzhou mandates corporate expenses: The Wenzhou city Commission for Discipline Inspection imposed a limit of $9.28 per person on work-related meals.  Banned abalone, sharkfin, sea cucumber, high-end and imported alcohol, and premium cigarettes on expenses. China’s national government to ban shark fin at government functions within 3 years.  Chinese officials spent 200 billion yuan on meals in 2004. [CR: Two thoughts: 1) We see the invisible hand of the market at work for environmental outcomes. Increase cost, stop the undesirable behaviour.  2) I cannot imagine a governemnt body in Australia called the “Commission for Discipline Inspection”.  That is just so non-politically correct.] (Yidi Zhao)
NAB online sales index for May showed online spending grew by 14% year on year, compared to 41% for same month in 2011. Brick and mortar retail grew by 0.2% in the same period.  Multi-channel retailers (those offering both online and store-front) are generating up to 30% of their monthly sales through their online stores. [CR: The story is not that online is decreasing, but that the tipping point has passed and we are seeing the innovation normalise and prepare for the next leap, which will be whatever follows mobile.] (Mercedes Ruehl)

ACTA treaty on terminal pause: Anti-Counterfeiting Trade Agreement (ACTA) is a multinational treaty designed to stop illegal downloads and sale of fake luxury goods and medication. On July 4, the European Parliament voted overwhelmingly against ACTA.  Treaty being reviewed in Australia by the Joint Standing Committee on Treaties, recommended delaying final ratification. A minimum of six countries required to enforce the treaty. Current position is that a new treaty may be negotiated, citing lack of transparency in negotiations as the reason for the failure. [CR: Free downloads now almost seen as a “right”, be interesting to see the reaction when they finally do crack down.] (David Ramli)  

CBA mobile stats: In June, 46% of online interactions were through mobile devices.  Kaching mobile solution opened up to allow merchants who bank with other institutions to receive payments. (Brian Corrigan)

Nokia engineers say they have developed a filter system to stop 80% of accidental touches on the smartphone. New Scientist research shows that about 1500 out of 4000 touches are unintentional mistakes. [CR: I will admit to a few unintentional tweets.]

US Judge Richard Posner calls into question the validity of using software patents, in June threw out the case Apple was bringing against Motorola Mobility.  Said “It’s not clear that we really need patents in most industries. You just have this proliferation of patents, and its a problem.” [CR: A question I am asked from start-ups, “should we patent?”This issue with patents is that it is not an assessment of who came up with the idea first, but which digital corporate has the biggest legal pockets. The patent process then becomes a tool to squash competition.]

Google Android data: Of all devices that accessed Google’s App store in the two-week ending last Monday, 10.9% were running the current operating system, Ice Cream Sandwich released eight months ago. 64% of devices run previous operating system Gingerbread, released in December 2010. [CR: Mmmm... fragmented deserts.]

Analysts are saying Blackberry may be up for shareholder lawsuits if there is indication RIM has misled investors.  RIM shares dropped 95% from peak mid-2008, posted a $518 million quarterly loss. BlackBerry 10 delayed, to be launched “later this year”. [CR: The risk of optimism.]

9 July 2012: Do we want racial diversity? Yahoo! CEO search and Costco expands

Racial diversity survey by Leadership Management Australia of 2000 AU and NZ businesses: 66% embrace cultural diversity, 50% think it brings benefits, 45% of business leaders do not want their organisations to be more diverse, 30% of employees do not want their organisations to be more diverse. [CR: Does that mean they are diverse enough, or that they just don’t want anyone not like them?](Lucille Keen)

Yahoo! Looking for new CEO. Hulu CEO Jason Kilar declined the role. Five executives have taken the role since 2009. Scott Thompson left in May after failing to correct an error in his academic credentials. Yahoo! Shares have fallen 1.7% this year. [CR: Five CEOs in three years... You could take it and say “What’s the worst that can happen?] (Brian Womack)

Retailer Costco set to expand to second stores in Melbourne and Sydney, with plans for stores in Brisbane and Adelaide [CR: strange reading this, when I remember shopping in Costco when it first opened as a kid in Seattle in the 80s.]

6 July 2012: Telstra charge increase and Retailer strategic response to online competition

Telstra to increase mobile charges: New range of “Every Day Connect” plans incorporate a 10% increase in call rates to $.99 per minute, a $.05 increase to flag fall rates to $.40, and lower data allowances, which are 500 meg a month lower.  Cheapest smartphone plans increased from $49 per month to $60 per month. Telstra says traffic on wireless network is doubling every 12 months. Telstra signed up 958,000 new mobile customers pushing market share to 44%. Telstra’s annual capital budget at 14% of sales at $3.5 billion, $1 billion of which goes into mobile network infrastructure.  Telstra’s 4G network covers 40% of the population, Optus expected to activate 4G in capital cities in coming weeks and Vodafone committed to launching services next year. (John McDuling)

Commonwealth Bank Facebook banking: CBA plans Facebook banking by end of the year to enable payments to Facebook friends, mobile numbers, and email addresses. Customers will be able to make BPAY payments and transfer funds or check account balances and transactional histories. Android and iPhone Kaching app has been downloaded more than 365,000 times, used to transfer more than $1 billion. [CR: Puts new emphasis on someone “hacking your Facebook”] . (Brian Corrigan, Paul Smith)

Wheat price increase: Drought across US midwest cropping belt drives prices up 31% in past fortnight to 10 month high.  Wheat is at $US8 per bushel, was at $US9 per bushel in 2010 during the Russian drought and below $US13 per bushel of the soft commodities boom four years ago. Expected to continue to increase and affect food prices globally unless weather conditions change. Farmers resistant to forward sell due to threat of El Nino associated with drought in Australia. Last year was a record Australian wheat crop harvest of 29.5 million tonnes, this year is expected to be 24.1 million tonnes. [CR: Wonder if the price increases will be blamed on the carbon tax?] (Sophie Morris)

Salvos Stores increase 8% in sales over 64 stores in NSW and ACT over the past year. Those shopping for fashion reasons account for 15% of the increase. Australian Bureau of Statistics said retail sales rose 0.5% in May, the biggest rise since 2010. Total retail sales rose 3.3% over the year. Influenced by satorialist-style blogs capturing people wearing street style. [CR: Social media influencing retail, although I suspect the government carbon tax payment may have an impact on certain socio-economic areas, as noticed a few days ago.] (Lisa Carapiet)

Flight Centre increase: Boost in corporate and leisure sales contributed to profit before tax upgrade of 18% on prior year. Focus for the year will be on growing business organically by opening more stores and recruiting additional sale staff.  Expected to employ 1000 new sales consultants and open it’s 2500^th shop and business.  [CR: Good to see an article about employment numbers going the other way for once.] (Michael Hobbs)

US retailers respond to online: Competing against “showrooming”, where shoppers check out products in stores then buy online.  Best Buy responds by replacing standard bar codes with Best Buy-only bar codes on big ticket items so they cannot be scanned and compared online.  Walmart, Macy’s Best Buy, Sears, and the Contain store now add web return centres, pick-up locations, free shipping outlets, payment booths, and drive-through customer service centres for online sales. Over 50% of sales through Walmart.com are picked up at Walmart stores. In April, Walmart started offering cash sales online, accessed a new type of customer. 40% of customers who paid with cash online used non-cash methods to pay such as check or debit card when picking up in store. The service accounts for 2% of online sales. Sears offers drive through for same day pickup of web purchases.  Container Store VP of stores John Thrailkill: Online orders tend to be larger than in-store purchases, customers who picked up orders in store visited 50% more often than customers who only shopped in store. (Stephanie Clifford)

5 July 2012: Brumby's carbon tax memo

Brumby’s pinged for carbon tax memo: Brumby’s Bakery Managing Director Deane Priest in an internal Backmix newsletter to franchisees: “We are doing a recommended retail price review which is projected to be in line with CPI, but take an opportunity to make some more moves in June and July, let the carbon tax take the blame, after all your costs will be going up due to it.” Opposition leader Tony Abbot handing out posters to stores that state “The federal government estimates that the carbon tax will increase the cost of energy by 10 per cent in its first year of operation. It will also increase the cost of our suppliers... We always strive to keep our prices at reasonable levels but because the carbon tax will make electricity more expensive, our prices will increase. We apologise for the increases.” If a company is caught with price rising conduct that is a concern, ACCC has power to issue infringement fines of $6600 or take court action with penalties of $1.1 million. [CR: As an executive be careful what you say in all communications, even if it is goaded on by political persuasion.] (Claire Stewart)

US auto industry beats expectations in June: US auto industry posted 22% rise in sales in June: Toyota 60.3%, Honda 48.8%, General Motors 15.5%, Chrysler 20.3%, Ford Motor 7.1%. 

4 July 2012: Microsoft writes off $6.2 billion and South Korea gender equality

Microsoft writes off $6.2 billion: Blamed on performance of online services division. Paid $6.3 billion to acquire digital advertising agency aQuantive in 2007, growth and profitability lower than expected. Failed to gain foothold in smartphone market, CEO Balmer announced Slate computers two years ago that never materialised two months before Apple iPad was released, Online search and advertising investments not paid off.  Xbox and Kinect are bright spots. [CR: $6.3 billion for a digital agency? Sounds like a bargain.] (Brian Corrigan)

Dell to purchase Quest Software for $2.4 billion. Quest was founded in 1987, has $US857 million in annual sales, sells software t manage databases, protect information, and simplify access to data.  Looking to be an end to end solutions company across SME and enterprise. Dell’s profit fell 33% to $US635 million, mobile and desktop computer sales down 6%. [CR: Perhaps Dell will fare better?] (Evelyn Rusli)

South Korea gender diversity: South Korea is Asia’s fourth largest economy, only 50% of women 15 years or older were working last year. Female participation with higher education is lowest of the 34 members of the Organisation for Co-operation and Economic Development. Royal Bank of Scotland: South Korea working age population to contract by 2016, curbing growth by 1.7 percentage points to 2.5% by 2050. Women in OECD countries earn on average 16% less than men, women earn 39% less than men in South Korea. 1.9South Korean boardrooms made up of 1.9% women. (Eunkyung Seo)

US Information Security Oversight Office said government spent more than $US11 billion to protect secrets last year, double the cost a year ago. [CR: I wonder if they have twice as many secrets, or how additional channels such as social media or WikiLeaks impact the costs?]

Thousands of anti-pollution protestors in China halted the construction of a copper plant, lobbed bricks at government offices and were dispersed by police with tear gas. [CR: Reference previous story on China air pollution.]

3 July 2012: Financial industry moderate growth and Trends in TV

Australia parking price comparison: Sydney most expensive, Melbourne least. 1 hr: BNE $27.94, SYD $26.71, MEL $17.08 | 2 hr: BNE $42.31, SYD $51.35, MEL $34.36 | 4 hr: BNE $65.71, SYD $72.25, MEL $58.85 | 8 hr: BNE $65.83, SYD $74.23, MEL $63.68.  Perth, Adelaid and Hobart are all under $5 for 1 hour parking.  Brisbane fastest growing, rising 29% in 2010-2011 compared to 7% Sydney and 3.5% Melbourne. RACQ executive manager of public policy Michael Roth says Brisbane high rates due to lack of supply and lack of competition. (Jason Murphy)

Ernst & Young say EU to worsen in 2013: bank balance sheets in 2012 is worrying, but the real impact will be seen in 2013 with loan defaults.  Non-performing loans are a “ticking time bomb”. Leniency from lenders is masking the true extent of non-performing portfolios. (CR: Would it be better to increase the immediate pain and call in the loans or delay the inevitable?] (James Hurley)

Financial industry to see modest growth: Westpac chairman Lindsay Maxsted and CEO Gail Kelly predict moderate growth due to consumers reducing their gearing and businesses (apart from mining) limiting new investment, as well as increased regulation on banks from government. Westpac return on equity declined from 23% in 2007 to 15.1% in first half of this year. ANZ reported a 7% fall in underlying profit from domestic operations six months to March, compared to 21% rise in profit from Asia Pacific and America division. ANZ CEO Mike Smith: “We are seeing a competitive advantage emerge in our core franchisees through greater customer and product connectivity and from diversification to higher growth countries in Asia.” Australia’s economic fundamentals remain sound with low unemployment, controlled inflation, and low levels of government debt.  Westpac reporting $100 million in savings as a result of 560 staff positions and outsourcing and offshoring some back office functions. [CR: Competitive advantages “emerge”... at times it can feel as though they just pop up and surprise us.] (John Kehoe)

Trends in TV: For the younger generation, TV is on in the background while playing computer game and watching YouTube.  As a result, cable channels introducing shorter episodes, bulking up online content, and changing plot lines based on social media response.  Prized demographic is the millenials, 98 million people aged 7 to 29. 41% of viewers watch shows recorded earlier on DVRs – Boston consulting Group and ad agency Barkley study.  TV shows are now being offered online within hours of airing.  Television network CW’s executive vice-president of marketing and digital programs Rick Haskins: “You need to supply them the product, however they want to consume it”. Digital accounts for 18% of network’s total viewing, doubled in the last year. 93% of viewers who stream episodes have not watched them in the last year.  Nickelodeon ratings dropped this season by 25% after it made episodes available through Netflix, responding by adding 650 new episodes of programming. YouTube content being picked up for TV, YouTube show Annoying Orange debuted with 2.6 million viewers and first in rating timeslot for 2 to 14 year olds. Parallax media strategist Jess Wiener talks about a “360-degree connection” and a “tri-level experience”, finding out details about the characters and discussing on Facebook. The season premier episode of Disney’s Pretty Little Liars series became the most commented cable show in social media history with 534,000 tweets.  (Dawn Chmielewski, Meg James)

Apple iPad in China: Apple paid $60 million to settle ownership dispute over the name iPad , highlights pitfalls of overseas trademarks as well as China attracting technology investors. (The Guardian)

Australian Bureau of Statistics report: Online orders to businesses up 32% in 2010-2011 to $149 billion.  Proportion of businesses that received orders online increased by 13% to 28%. 33% of micro businesses (<4 emplloyees) had a web presence, 97% of large businesses. [CR: I wonder who the 3% of large businesses were who did not have a web presence?]

2 July 2012: Australian dollar predictions and Carbon tax impacts

Australian dollar predictions: In 2011-12, AU dollar spent four times as many days above parity as below, averaging US$1.03 over the year, hit a high of US$1.10 in July and a low of US$.95 in October. Macquarie and ANZ predict dollar will hit $US1.07 in a year, Macquarie predicts dollar will stay above parity until 2015. [CR: In the same article the ANZ rep says the old prediction model placed the dollar at US$.89. We can’t predict 6 months out, and we are stating numbers for three years out?]

Advertising win for SBS Tour de France: SBS sold all advertising slots for Tour de France weeks before it began. In 2010, SBS secured broadcast rights until 2017 for an undisclosed sum, believed to be $2m to $3m. Analysts speculate value of advertising to SBS is between $4m and $5m.  Average daily audience in Australia is 700,000 viewers, higher than in the US.  As a public broadcaster, SBS is restricted to screening only 5 minutes of advertising per hour.

Carbon tax impacts: Wesfarmers CEO Richard Goyder says while Coles will take a hard line on supplier’s price rises, at some point prices will start to rise as a result of the carbon tax. Myer CEO Bernie Brookes estimated tax will cost Myer $4 million per year. Said they tendered for new electricity business and the wining tender was 37% higher than last year.  Energy Retailers Association of Australia CEO Cameron O’Reilly says carbon price will push up price, but increase also a result of rising infrastructure costs.  Treasury modelling shows carbon tax will increase prices by 0.7% in 2012-13, food to increase by less than 0.5%. Australia Industry Group survey shows 40% of manufacturing businesses, 40% of services businesses, and 44% of construction businesses will try to pass the cost to consumers.  [CR: Difficult for businesses needing to raise rates as a result of high labour costs, will be lynched for taking advantage of the carbon tax.]

Telstra Corp’s venture capital buys stake in IPscape for less than $5m: North Sydney-based IPscape was established in 2007 and is a global provider of contact centre applications, Telstra to incorporate IPscape’s technology  into its own virtual contact centre (VCC) solution for large corporate clients. Telstra’s venture capital division recently led a $35m round of financing for California-based video streaming service Ooyala and also invested in restaurant booking service Dimmi. [CR: The crazy world of tech start-ups and acquisitions.]

Barriers to Indigenous in education: Over 150,000 Australians hold an accounting or book-keeping qualification, 11 self-identify as indigenous Australians. Aboriginal and Torres Strait Islander people represent 2.5% of the total Australian population.  Australia’s three main accounting bodies (CPA Australia, the Institute of Chartered Accountants in Australia, and the Institute of Public Accountants, also known as the Joint Accounting Bodies) launch an initiative to attract 1000 indigenous people into the Accounting profession. Cultural barriers include a reluctance to leave traditional lands, different notions of property and ownership, and strong ties to clan and kin. [CR: Interesting to note the challenges faced.]

Business lending increases: Total lending to AU and NZ businesses by banks increased 0.8% in May. Business credit increased 3.3% over the past year, fastest annual growth since 2009.By comparison, home loan lending increased by 0.3% in May. Home lending has grown 5.1% in past year, slowest annual pace in 34 years. [CR: Increased business capital flows and decreased consumer debt... that’s good, right?]

Japan solar: Japan’s third-largest mobile company said to build nation’s largest solar plant (111 megawatts) to start operating in FY 2014. [CR: Solar is not a nuclear killer. By comparison, the recently restarted Ōi Nuclear Power Plant in Japan has an 1180 megawatt capacity.]