Summary
Oracle Corp. will acquire Art Technology Group for $1 billion in cash, adding e-commerce programs to the software maker’s inventory. The purchase will give Art Technology Investors US $6 per share, 46% more than the company’s closing price. Art Technology`s sales have declined for four years until 2004. Oracle has already acquired 65 companies over the last five years and will continue to purchase software making companies. The software maker had $23 billion in short term assets at the end of the first quarter of this fiscal year before purchasing Art Technology, their ninth company in 2010. Competitors Hewlett Packard Co. and International Business Machines Corp are also acquiring companies. IBM has 15 acquisitions while HP has announced 8.
Connections
Chapter two in the textbook analyzes many different types of transactions. The transaction in this article can be analyzed in the same way. The article states that Oracle agrees to buy Art Technology Group. Assuming Oracle pays using cash, Oracle will lose $1 billion in cash and will gain an asset worth the same amount. The cash account will be credited by $1 billion and a new asset account will be debited by an equal amount. This is a simple exchange in assets and would therefore have no effect on the accounting equation. Art Technology Group has future value to the company and would therefore be classified as an asset. On the cash flow statement, which is also touched upon in this chapter, this transaction will be recorded under investing activities. Using the example on page 104 in the textbook as a guide, the transaction will be recorded as an item called "acquisition of Art Technology Group".
Reflections
Art Technology’s net income has risen rapidly, increasing from net loss of $4.2 million at the end of 2007 to $16.8 million at the end of 2009. As we look further back on the company`s annual net incomes however, their earnings have been proven to be very inconsistent. Despite this, with $23.6 billion to spare, the purchase of this company only cost Oracle a small fraction of their assets. In the long run, this could end up being a great investment if Art Technology continues to put up good results like in the past 3 years. Oracle has already 65 acquisitions since 2006. These acquisitions provided a major boost in the software maker’s earnings. Over a 5 year span, Oracle has almost doubled their net income since acquiring their first company, earning $6.1 billion in 2010 compared to $3.4 billion in 2006. Oracle’s net income will continue to trend upwards as they acquire more companies like Art Technology. Oracle’s competitors, Hewlett-Packard Co. and International Business Machines Corp are also buying into these profit generating investments. Competition will be close as these software making companies continue to bolster their profits by acquiring companies.
http://www.financialpost.com/news/technology/Oracle+spend+Technology/3767705/story.html
Oracle's Income Statement
Art Technology's Income Statement
Thursday, November 4, 2010
Thursday, October 14, 2010
Best Buy Profit Rises
Summary
Best Buy’s cell phone business helped improve their net income by 60% in the second quarter of the year. CEO Brian Dunn, hopes for another successful quarter (one of four periods in a fiscal year) as the holiday season approaches. Dunn describes shoppers as “highly selective” in spending, but believes that more customers will shop at Best Buy, especially with their new line of products and the arrival of the holiday season. During the second quarter, the net income increased to $254 million (60 cents per share) as opposed to the $158 million (37 cents per share) produced during last year’s second quarter. The revenue increased by 3% to $11.3 billion. Best Buy expects the net income for the year to be $3.70 per share, as opposed to the $3.55 per share from last year. The revenue is expected to be $52 billion, a growth of 5%.
Connections
This article connects to the income statement mentioned on page 22. As described in the book, the income statement focuses on the net income of the business. In Best Buy’s case, the net income recorded on the income statement would be $254 million. The revenue amount, as stated in the article, is $11.3 billion. Keeping in mind that net income is defined as revenues minus expenses, the total expenses for this quarter can be calculated by simply manipulating that formula and subtracting the net income from the revenue. The total expenses would therefore be $11.046 billion. This article also connects to shares discussed in this chapter. During the second period, Best Buy has earned a net income of $254 million (60 cents per share). Their income statement also states that the $254 million is applicable to common shares. Using these two values, the total shares issued at the moment can be calculated, which turns out to be roughly 423 million shares.
Reflections
At first glance, Best Buy seems a little too optimistic with their goal of increasing their revenue to $52 billion. According to Best Buy’s income statement, the company earned around $10.7 billion during the first quarter. In half a fiscal year, the electronics retailer has earned $22 billion in revenue, less than half of the expected revenue for the full year ($52 billion). The sales during the holiday season however, will definitely make up for this shortcoming. During the second and third quarters of the previous year, Best Buy has earned revenue of roughly $28 billion, much more than the first half of this year’s fiscal period. Since Best Buy’s revenue during this year’s second period is 3% greater than last years, it is safe to assume that the revenue during the second half of this year will be at least the same amount as last year’s. Best Buy is also showing progress with their net income, increasing their dividends to 60 cents per share this second quarter compared to 37 cents per share during the previous second quarter. With this rapid growth in income, investors should certainly look into this company.
http://www.cbc.ca/money/story/2010/09/14/bestbuy-results.html?ref=rss
Comment link: Jason's blog
Best Buy’s cell phone business helped improve their net income by 60% in the second quarter of the year. CEO Brian Dunn, hopes for another successful quarter (one of four periods in a fiscal year) as the holiday season approaches. Dunn describes shoppers as “highly selective” in spending, but believes that more customers will shop at Best Buy, especially with their new line of products and the arrival of the holiday season. During the second quarter, the net income increased to $254 million (60 cents per share) as opposed to the $158 million (37 cents per share) produced during last year’s second quarter. The revenue increased by 3% to $11.3 billion. Best Buy expects the net income for the year to be $3.70 per share, as opposed to the $3.55 per share from last year. The revenue is expected to be $52 billion, a growth of 5%.
Connections
This article connects to the income statement mentioned on page 22. As described in the book, the income statement focuses on the net income of the business. In Best Buy’s case, the net income recorded on the income statement would be $254 million. The revenue amount, as stated in the article, is $11.3 billion. Keeping in mind that net income is defined as revenues minus expenses, the total expenses for this quarter can be calculated by simply manipulating that formula and subtracting the net income from the revenue. The total expenses would therefore be $11.046 billion. This article also connects to shares discussed in this chapter. During the second period, Best Buy has earned a net income of $254 million (60 cents per share). Their income statement also states that the $254 million is applicable to common shares. Using these two values, the total shares issued at the moment can be calculated, which turns out to be roughly 423 million shares.
Reflections
At first glance, Best Buy seems a little too optimistic with their goal of increasing their revenue to $52 billion. According to Best Buy’s income statement, the company earned around $10.7 billion during the first quarter. In half a fiscal year, the electronics retailer has earned $22 billion in revenue, less than half of the expected revenue for the full year ($52 billion). The sales during the holiday season however, will definitely make up for this shortcoming. During the second and third quarters of the previous year, Best Buy has earned revenue of roughly $28 billion, much more than the first half of this year’s fiscal period. Since Best Buy’s revenue during this year’s second period is 3% greater than last years, it is safe to assume that the revenue during the second half of this year will be at least the same amount as last year’s. Best Buy is also showing progress with their net income, increasing their dividends to 60 cents per share this second quarter compared to 37 cents per share during the previous second quarter. With this rapid growth in income, investors should certainly look into this company.
http://www.cbc.ca/money/story/2010/09/14/bestbuy-results.html?ref=rss
Comment link: Jason's blog
Thursday, April 29, 2010
BMO calls for change in retirement plans
Summary
The BMO Retirement Institute is proposing to the government to give people more control over their savings. One of the main concerns is the age restriction in the registered retirement savings plan (RRSP). BMO recommends allowing them to choose when to withdraw money, instead of having to convert their RRSPs at the age of 71. They are also proposing to change the tax rates for the income, stating that investment returns should be taxed at the same rate as investment income from other plans. The final suggestion is to increase the maximum contribution limit for the plan.
Connections
This article connects to chapter 16.2 and the registered pension plan deduction. Most employees are enrolled in the registered retirement savings plan (RRSP), which exempts the money saved up in the plan from income taxes. The book leaves out some key points regarding this payroll deduction and gives a very vague description of the plan. The book doesn’t point out that banks are the source that gives out this plan. According to this article, BMO, a bank, wants to give Canadians more control over these savings. Why would BMO want to do this? I think they are simply just trying to make this plan more attractive so more people would open RRSP accounts. More of these accounts lead to more money for the bank’s investments which leads to more revenue, assuming the savings go to the bank.
Reflection
As a future employee myself, I am planning to open an RRSP account, whether my employer requires me to or not. I think this is a good way for me to manage my money and will give me something to live on when I retire in the future. Despite the fact the bank only wants to make revenue off my money, it is hard to ignore the benefits. The removal of the age restrictions could allow workers to keep the savings in the account as long as they want and obtain more savings. The exemption from income taxes is a good addition as well. What surprised me the most was that Canadians did not have full control of these savings. Canadians should have always had control of their savings since it is their money that they earned.
http://www.cbc.ca/consumer/story/2010/04/22/con-bmo-retirement.html
The BMO Retirement Institute is proposing to the government to give people more control over their savings. One of the main concerns is the age restriction in the registered retirement savings plan (RRSP). BMO recommends allowing them to choose when to withdraw money, instead of having to convert their RRSPs at the age of 71. They are also proposing to change the tax rates for the income, stating that investment returns should be taxed at the same rate as investment income from other plans. The final suggestion is to increase the maximum contribution limit for the plan.
Connections
This article connects to chapter 16.2 and the registered pension plan deduction. Most employees are enrolled in the registered retirement savings plan (RRSP), which exempts the money saved up in the plan from income taxes. The book leaves out some key points regarding this payroll deduction and gives a very vague description of the plan. The book doesn’t point out that banks are the source that gives out this plan. According to this article, BMO, a bank, wants to give Canadians more control over these savings. Why would BMO want to do this? I think they are simply just trying to make this plan more attractive so more people would open RRSP accounts. More of these accounts lead to more money for the bank’s investments which leads to more revenue, assuming the savings go to the bank.
Reflection
As a future employee myself, I am planning to open an RRSP account, whether my employer requires me to or not. I think this is a good way for me to manage my money and will give me something to live on when I retire in the future. Despite the fact the bank only wants to make revenue off my money, it is hard to ignore the benefits. The removal of the age restrictions could allow workers to keep the savings in the account as long as they want and obtain more savings. The exemption from income taxes is a good addition as well. What surprised me the most was that Canadians did not have full control of these savings. Canadians should have always had control of their savings since it is their money that they earned.
http://www.cbc.ca/consumer/story/2010/04/22/con-bmo-retirement.html
Sunday, April 11, 2010
GM posts $4.3B US loss
Summary
In the second half of 2009, GM has suffered a $4.3 billion (US) loss. Despite this, GM believes that they can make a profit this year. In the first half of 2009, GM has earned $109 billion. These figures however, cannot be compared to previous years because of the changes in accounting, which allowed GM to revalue their assets. Also, in the beginning portion of 2009, GM stated that they earned $47.1 billion in revenue and $57.5 billion in the second half. GM has also received $52 billion in aid from the US government. The company has promised to pay back $6.7 billion and hopefully before June this year as stated by the new chief financial officer of the company.
Connections
This article relates to chapter 15.3, which talks about ratios. More specifically, this article connects to to the rate of return on net sales ratio. The company made $47.1 billion in the first half of 2009 and $57.5 billion during the second half, resulting in a $10 billion dollar increase in revenue. The performance of the Detroit based company however, cannot be judged based on revenue alone. According to figures stated in the article, the net income % in the first and second half are 231.4% and -7.5% respectively. Upon further research, I have discovered that GM gained $128 billion in reorganization funds. Realistically, without the reorganization gains, GM has a net loss of $19 billion in the first half, which changes up the percentages to -40.3% and -7.5%.
Reflections
Just coming off a near bankruptcy, GM has managed to increase their revenue by 10 billion and the rate of return on sales ratio by 32.8% since the first half of 2009, both of which are more than healthy increases for the company. I think that this is a sign of good things to come for the automotive company. If they can continue to raise their revenue and more importantly, their net income, they can hopefully stay away from bankruptcy. It is clear that no one wants to see GM go bankrupt, including the US government, who has given the company $52 billion in aid. If GM does go into bankruptcy, it will definitely have an impact on the economy, let alone the automotive industry.
http://www.cbc.ca/money/story/2010/04/07/gm-loss.html
In the second half of 2009, GM has suffered a $4.3 billion (US) loss. Despite this, GM believes that they can make a profit this year. In the first half of 2009, GM has earned $109 billion. These figures however, cannot be compared to previous years because of the changes in accounting, which allowed GM to revalue their assets. Also, in the beginning portion of 2009, GM stated that they earned $47.1 billion in revenue and $57.5 billion in the second half. GM has also received $52 billion in aid from the US government. The company has promised to pay back $6.7 billion and hopefully before June this year as stated by the new chief financial officer of the company.
Connections
This article relates to chapter 15.3, which talks about ratios. More specifically, this article connects to to the rate of return on net sales ratio. The company made $47.1 billion in the first half of 2009 and $57.5 billion during the second half, resulting in a $10 billion dollar increase in revenue. The performance of the Detroit based company however, cannot be judged based on revenue alone. According to figures stated in the article, the net income % in the first and second half are 231.4% and -7.5% respectively. Upon further research, I have discovered that GM gained $128 billion in reorganization funds. Realistically, without the reorganization gains, GM has a net loss of $19 billion in the first half, which changes up the percentages to -40.3% and -7.5%.
Reflections
Just coming off a near bankruptcy, GM has managed to increase their revenue by 10 billion and the rate of return on sales ratio by 32.8% since the first half of 2009, both of which are more than healthy increases for the company. I think that this is a sign of good things to come for the automotive company. If they can continue to raise their revenue and more importantly, their net income, they can hopefully stay away from bankruptcy. It is clear that no one wants to see GM go bankrupt, including the US government, who has given the company $52 billion in aid. If GM does go into bankruptcy, it will definitely have an impact on the economy, let alone the automotive industry.
http://www.cbc.ca/money/story/2010/04/07/gm-loss.html
Wednesday, March 24, 2010
Bank card fraud hits N.B.
Summary
New Brunswick has recently been the site of frauds involving credit and debit cards. Many people have been informed of money being removed from their bank accounts, although it is not known how many people or how much money is involved. Earl Lyon was a victim who lost $200 and immediately reported his loss to his bank and the police. Once a bank is informed of a possible fraud, an investigation immediately begins. Lyon’s bank has agreed to reimburse the removed $200. The RCMP is currently warning people to monitor their bank account and to never give out credit or debit card information.
Connections
This article connects to the beginning portion of chapter 14.2, which is about credit cards. The book talks about the importance of credit cards in our society and how it can function with people using credit cards in place of cash. The benefits of using credit cards include making purchases on credit or deducting the ammount straight from the user’s bank account. The book however, never dicusses about the disadvantages of using credit cards. It would very easy for someone remove money from another person’s bank account if they were to obtain the credit card information of that person. The article states that the bank has agreed to compensate for the $200 loss, but banks may not be so generous in the future if money continues to get stolen.
Reflections
Although I am not an owner of a credit card, I find it unnerving how easily someone access someone else’s bank account with the right information. With that being said, I will have to be careful of how I handle my information once I obtain my credit card in the future. Even with the possibility of losing money, it is hard to ignore the benefits of these cards. Credit cards could very well replace bills and coins in the future.
http://www.cbc.ca/canada/new-brunswick/story/2010/03/02/nb-debit-credit-card-fraud.html
Wednesday, January 13, 2010
K.K. Penner Tire Centers Plans To Pump Up Their Sales And Customer Service With The Sage Accpac Extended Enterprise Suite
Summary
This article is about the deployment of Sage Software’s Accpac Extended Enterprise Suite at K.K. Penner Tire Centers in Manitoba. The new software, consisting of Sage Accpac EPR and SageCRM, improves an already impressive customer service for the long running tire company with SageCRM allowing complete access to customer data. The company will also be able to track tire warranty information with this software. The 80 year old tire company has depended on Accpac since 1991. K.K. Penner Tire Centers has progressed tremendously since then.
Connections
The connection is the software, Accpac. Chapter 12.4 talks about the advantages of using this accounting program. It is interesting how a company can gain so many benefits from a mere computer program. Customer service can be greatly improved with the complete access to customer data, which can lead to a boost in sales. In addition to that, a lot of time can be saved by simply entering the transactions in the program instead of doing it manually, improving the efficiency the company’s accounting procedures.
Reflections
K.K. Penner Tire Centers made a brilliant decision when they decided to implement Accpac. It is obvious that Accpac played a significant role in the development of this company. Over the span of roughly two decades, the 80 year old company has grown ten fold since they were first introduced to this software in 1991. This is certainly not a coincidence with all the benefits that can be obtained through this computer program. Sage’s award winning accounting software is key to the success of the seasoned K.K. Penner Tire Centers.
http://www.sageaccpac.com/Company/News_Room/Press_Releases/details?CID=1D530158-A8FB-0001-40CE-1A20B6131784&CardId=162103&RowIndex=2&Product=Sage+Accpac+Extended+Enterprise+Suite&Year=*
This article is about the deployment of Sage Software’s Accpac Extended Enterprise Suite at K.K. Penner Tire Centers in Manitoba. The new software, consisting of Sage Accpac EPR and SageCRM, improves an already impressive customer service for the long running tire company with SageCRM allowing complete access to customer data. The company will also be able to track tire warranty information with this software. The 80 year old tire company has depended on Accpac since 1991. K.K. Penner Tire Centers has progressed tremendously since then.
Connections
The connection is the software, Accpac. Chapter 12.4 talks about the advantages of using this accounting program. It is interesting how a company can gain so many benefits from a mere computer program. Customer service can be greatly improved with the complete access to customer data, which can lead to a boost in sales. In addition to that, a lot of time can be saved by simply entering the transactions in the program instead of doing it manually, improving the efficiency the company’s accounting procedures.
Reflections
K.K. Penner Tire Centers made a brilliant decision when they decided to implement Accpac. It is obvious that Accpac played a significant role in the development of this company. Over the span of roughly two decades, the 80 year old company has grown ten fold since they were first introduced to this software in 1991. This is certainly not a coincidence with all the benefits that can be obtained through this computer program. Sage’s award winning accounting software is key to the success of the seasoned K.K. Penner Tire Centers.
http://www.sageaccpac.com/Company/News_Room/Press_Releases/details?CID=1D530158-A8FB-0001-40CE-1A20B6131784&CardId=162103&RowIndex=2&Product=Sage+Accpac+Extended+Enterprise+Suite&Year=*
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