The price of new textbooks has gone through the roof. But what students spend on books has barely budged.
If you follow business news, you've probably heard about "activist investor Carl Icahn."
But who is Carl Icahn?
He's a 78-year-old man worth $23 billion, whose favorite sport seems to be arguing with CEOs.
"Activism in general draws a person who does not shy away from the limelight or shy away from a fight," says Scott Galloway, professor of marketing at NYU's Stern School of Business.
Icahn has been fighting for decades.
"Oh, gee, he goes way back," says Donald Margotta, associate professor of finance at Northeastern University.
In the 1980s, Icahn was known not as an activist, but as a corporate raider, using debt to acquire companies, often to break them up.
"The corporate raiders were a little bit different [than today's activist investors] in that usually their objective was to acquire the company," says Margotta. "Whereas now people don’t really want to acquire the company, although they do want to break it up."
Instead of acquiring entire companies, today's activist investors acquire large portions, and then leverage that portion through the media.
"Since activist investors are only taking an ownership position and a portion of the company they also are reliant on other stockholders to have their viewpoint," says Don Steinbrugge, managing partner of hedge-fund consultant Agecroft Partners. "The more media attention they can get the more they can educate the other stockholders in what their position is."
The position could be to buy back stock, to split up the company, to seek an acquisition or a number of other strategies, but the underlying plan is to rally shareholders to force the CEOs hand, and then profit off any resulting increase in the stock price.
But for Icahn it seems to be about more than making money. He seems to want to set things right — as he sees it.
"He basically believes that corporate managers are, by and large, inept and self-serving," Margotta says.
Apple CEO Tim Cook may be the exception. In his open letter, Icahn called Cook "the ideal CEO" and insisted "this letter is in no way intended as a criticism of you as CEO, nor is it intended to be critical of anything you or your team are doing from an operational perspective at Apple."
Except for that share buyback thing, of course.
What's in a name? A lot, apparently, if you happen to be one of the most powerful men in money.
Back during the financial crisis, then-Chairman of the Federal Reserve Ben Bernanke used an alias while planning the rescue of the global economy. Evidence in the AIG lawsuit introduced Thursday revealed Bernanke emailed with colleagues and others using the name "Edward Quince."
According to the Wall Street Journal, it's still unclear where Bernanke got his pseudonym, or why it was even used.
Lego announced Thursday it will cut ties with oil giant Royal Dutch Shell today following pressure from Greenpeace, which released a viral video and gathered signatures to protest the partnership. Shell-branded Legos aren't as common as "Star Wars" or superhero themed kits, but the agreement dates back decades and it's reportedly worth at least $110 million.
Inspired by those strange bedfellows, we found a few more examples of corporate incongruity.
McDonald's and Play-Doh
Thanks to brand licensing, children can pretend to do chores with their own Dyson vacuum or Home Depot leaf blower, and plenty of other toys. But fewer products let kids turn processed, salty, artificially colored goop into McDonald's food.
The discontinued Play-Doh McDonald's Restaurant playset molded fries, burgers and milkshakes, using plenty of the best Play-Doh color: brown.
Electronic Arts Games and various weapon manufacturers
A screenshot of the \"Medal of Honor\" website, via Eurogamer.
Blockbuster video games trade on their realism: in settings, character models, physics, anything. That's especially true for war-related titles, some of which depict weapons and equipment specifically modeled after commercial firearms and real military gear.
Electronic Arts took the idea a step further in promoting "Medal of Honor: Warfighter" in 2012. The game's website featured links to buy the real-world weapons and equipment included in the game. One developer blogged about using the advertised gear. A knife company sold a "Medal of Honor"-branded tomahawk, with proceeds going to EA's program to aid the Navy SEAL Foundation and the Special Operations Warrior Foundation.
Critics bashed EA for advertising and licensing weapons, and the company rolled back the promotion. EA claimed none of their marketing partners paid for product placement, but were merely trying to give back to service members.
Susan G. Komen and KFC
We've told you about oilfield services company Baker Hughes making pink drill bits for Breast Cancer Awareness Month. Not quite as strange, but certainly more ironic: KFC's 2010 "Buckets for the Cure" campaign.
The fast food chain donated 50 cents of each pink bucket sold to Susan G. Komen for the Cure, and raised $2 million in the first week. But the idea of selling fried food to fight cancer was criticized by activists and roundly mocked. ABC called the effort "Eat a Breast to Save a Breast," and Stephen Colbert described it as "hypo-crispy."
'The Sims' and various record labels
The life simulation video game series "The Sims" theoretically offers limitless possibilities for product placement, but EA — the company of the branded weapons for charity — have kept the games marketing partnerships both restrained and deeply strange. Sims can wear clothes by H&M and Diesel, sure, but far weirder is the "Sims 3: Katy Perry's Sweet Treats."
The expansion pack adds outfits, decorations and locations inspired by Perry's album "Teenage Dream," and Perry recorded a version of her song "Last Friday Night (T.G.I.F)" in the game's made-up Simlish language.
A little-known plant that has been an ingredient in foods for decades has taken on outsize importance in the fracking world over the past few years - and it has created huge swings in its commodity price and in the fortunes of farmers.
Ever since the 1950s, the guar plant has been the source of the guar gum additive the food industry uses to thicken foods or keep various ingredients smoothly mixed together. It’s in everything from frozen pizza to ice cream, egg white substitutes and baked goods.
“Guar is what we call an emulsifier,” says Calvin Trostle, a professor of agriculture at Texas A&M and a guar expert. “Guar is somewhat like a soybean plant. It has pods up and down the main stem."
Guar gum is not only a common food additive, but also an important ingredient in the fracking process (the hydraulic fracturing of underground rock to release oil and gas deposits).
Crop specialist Calvin Trostle, Texas A&M University, adjust branches on a guar plant that contain maturing seed pods.Courtesy of Calvin Trostle
In the last 40 years, multiple companies including Halliburton, Baker Hughes, FTS International and others have tried to create a synthetic substitute for guar gum, but they’ve failed to develop anything as effective for hydraulic fracturing, according to Trostle.
With guar gum as its only option, the industry has demanded more and more of the stuff.
“The demand for guar exploded, literally mulitiplied by five, ten times, caught the suppliers’ side by surprise, and basically created a drastic shortage,” says Dennis Seisun, a guar market analyst and the publisher of The Quarterly Review of Food Hydrocolloids. (Hydrocolloids are substances that form a gel when mixed with water.)
As fracking and the demand for guar boomed, so did the price of the commodity, 98 percent of which comes from India and Pakistan. A couple of years ago, the price peaked at about 35 times what the cost of the plant product was just a few years earlier.
Seisun, who regularly visits India and the region where guar is produced, says that’s been an economic boon for farmers there. There is now a futures market set up for guar, and farmers are able to hold back part of their crop yield to wait for a better price.
Some farmers in the U.S. wanted to get into the guar business, too.
“Last year, it was kind of like a revolution,” says Curtis Erickson, a north Texas farmer who was one of many spurred to plant guar because of its exploding price. “We knew we could plant it and farm it and make money at the end of the day. And we were very excited.”
Texas farmers grew about $20 million worth of the plant, based on what a Texas-based raw guar processor had contracted to pay them. The processor was the only one in the U.S. that could handle raw guar.
But as demand soared, India and Pakistan guar suppliers managed to catch up with increased supply. And oil companies, which were paying high prices, stopped hoarding guar.
The price plummeted.
The Texas-based guar processor, which had promised the farmers a set price for their guar, could not pay. And the farmers are now stuck with a crop they can’t reclaim, and which they couldn’t sell anywhere else in the U.S. even if it was returned to them.
“There’s a lot of farmers that I’m aware of that borrowed money last year to farm the guar on,” Erickson says “And since they didn’t get paid back, they in turn couldn’t pay their banks back.”
“And then the bank will come looking to collect somehow,” Erickson says.
The farmers have taken their case to court, and the Texas guar plant is now bankrupt.
While the price of guar has declined, it’s still about three times higher than it used to be. But since the U.S. historically has had little to no supply chain for processing raw guar, Seisun says India and Pakistan will remain the major suppliers.
“Competing with costs of production in low-cost areas like India and Pakistan have always presented a problem. And I don’t see that source of supply is going to be very different in the near future,” Seisun says.
Meanwhile a few Texas farmers, including Erickson, have planted a small quantity of guar again this year. Erickson says he wants to be ready, in case the guar market in the U.S. bounces back.
A handful of restaurants are experimenting with no-tipping models, guaranteeing their servers a base level of pay. So far, satisfaction is up and turnover is down.
The same hackers who stole contact information from 83 million JPMorgan Chase account holders last month also targeted a dozen more financial institutions. The Obama administration has been getting briefings on the breach since this summer, the New York Times reported, and national security officials and banks have been conferring over several IP addresses attributed to the attackers.
ETrade, Fidelity, ADP, Bank of the West, HSBC, Citigroup and Regions Financial are some of the institutions targeted by the addresses. The government is reportedly troubled by the lack of an apparent motivation for the hacks.
As we look out for more breaches, here's what we're reading — and numbers we're watching — Thursday.4206
The number of words in activist investor Carl Icahn's open letter to Apple CEO Tim Cook. In short: Icahn praises Cook and several new products but (still) believes the company is undervalued and wants it to buy back more stock. Apple stock should be trading at $203, Icahn wrote, double its current value. So far, the letter has helped: at about noon eastern time shares were up 1 percent.$16,353
The average pay gap between Hispanic and non-Hispanic employees in the high-tech sector, USA Today reported. Similarly, blacks and Asians in the industry earn $3,656 and $8,146 less than whites, respectively.1 million
How many signatures Greenpeace nabbed in a petition for Lego to end its long-standing promotional agreement with oil company Royal Dutch Shell. Lego bowed to pressure from Greenpeace — which also made a viral video showing a cute Lego arctic community ravaged by oil — and agreed not to renew the partnership, the Wall Street Journal reported.
The clothing company Gap, which also owns Old Navy and Banana Republic, is unfashionable right now--at least to investors. Its CEO announced his retirement, and since that news broke, the markets have been unkind to the company's stock. Plus, President Obama will be in California today. He's scheduled to deliver a speech on the economy. But the president's not making many campaign speeches ahead of the midterms. His role is to motivate donors more than voters. We look into the change in tactic. And if you like cars, Paris is a good place to be right now. The city is hosting the Paris Motor Show, one of the biggest events of the year for the global auto industry. More than 270 companies from 21 countries are showing off their latest products. A report from our friends at the BBC takes a look at a few of them.
President Barack Obama is making a series of economic speeches around the country, and the latest comes Thursday in Santa Monica, California.
All this speaking means the president hasn't been doing a lot of campaigning for Democrats in close red state races.
“When you look at the approval ratings for President Obama in most of these states, he’s in the low 30s,” says Larry Sabato, director of the University of Virginia Center for Politics.
Sabato says the president is helping Democrats more by staying out of sight and raising big money.
Who still loves him? The party’s base.
“There are a lot of very affluent Democrats and liberals who are willing to pay money to see the president,” says John Jack Pitney, a political scientist at Claremont McKenna College.
The White House doesn't have numbers for how much President Obama has raised for Democrats. When asked, The Democratic National Committee wouldn't provide one, either.
The Center for Responsive Politics does keeps track of fundraising reports, though. It says the Democratic Party has raised almost $600 million so far this year.
Two major federal government agencies and the country's state attorneys general have settled a case with AT&T in which the wireless carrier will pay $105 million dollars for cramming.
If you don't know what cramming is, you're not alone, and that's part of the problem. In this case—the biggest in history according to the Federal Communications Commission and the Federal Trade Commission—it's about AT&T allowing third party companies to hit its customers with fraudulent charges.
Click the media player above to hear FTC Chairwoman Edith Ramirez in conversation with Marketplace Tech host Ben Johnson.
$80 million of the settlement will go through a program the FTC has set up to reimburse customers who suffered the charges.
Despite recent gains, older Americans still aren’t saving enough for a comfortable retirement, according to a new survey from Interest.com. There's a personal finance rule of thumb that says seniors need at least 70 percent of their pre-retirement income once they quit working.
In 2013, seniors in only two places met that threshold: Nevada and Washington D.C.
Mike Sante, managing editor of Interest.com, says many federal workers in the District of Columbia retire with government pensions. Nevada may be harder to explain, but he suspects the predominance of union workers in Las Vegas may be part of the reason.
“Union membership tends to mean that they still have traditional retirement plans,” says Sante.
American seniors are inching closer to meeting that retirement “rule of thumb," however. They now earn close to 60 percent of pre-retirement income.
Americans 65 and over earn about 60 percent of what pre-retirement Americans ages 45-64 earn. That's a 10 percent jump from 2005.
Sante contends those gains are partly due to the fact that more seniors are staying on the job longer. Many can't afford to retire at age 65.
Sante says the survey is aimed not at seniors but “everybody who’s working in their 30s, 40s and 50s.”
He says, “When you’re still in your 30s and 40s, even in your 50s, you can still save a significant amount of money and have a big impact on your quality of life after you stop working."
If you like cars, Paris is a pretty good place to be right now. Not for driving—the traffic is terrible there pretty much any time of the year.
But if you like checking out the newest innovations in car design, there's a festival for petrolheads at the Paris Motor Show. More than 270 companies from 20 countries are showing off their latest vehicles.
BBC reporter Theo Leggett has this report from inside the show.
Most of us have cellphone, pay-TV and credit card bills, but few of us realize that simply calling companies and asking for a better deal can save a substantial amount on those bills.
“Many times customer reps are empowered to provide you with something,” says Tony Giorgianni, a money advisor with Consumer Reports. “It costs companies five times as much to acquire a new customer than it does to keep an old one.”
So, it is a factored-in cost of doing business to provide discounts or other incentives for customers who call and ask. Companies know that most customers won’t ask, so it’s a small price to pay to hang onto those who do.
In fact, a recent survey by CreditCards.com found that only 23 percent of credit card customers called to ask for better terms. But, when they did, most got better interest rates or waived late fees.
Matt Schulz, a senior analyst with CreditCards.com, says even he was surprised by the survey’s findings. So he understands that most customers don’t realize they have the power to get better deals.
“And that’s kind of understandable. Given that in the depths of the recession, all we saw in the headlines was credit limits being slashed and accounts being closed and all that sort of thing,” Schulz says, adding that banks are competing for customers again, as the economy recovers.
Consumer Reports’ Giorgianni points out that consumers have leverage in any industry where there’s competition.
Elizabeth Coffman, a college professor in Chicago, found out the power of the call recently when looking for a better price on her cellphone plan. She has a family plan with several cellphones on it at a price of $300 a month.
“We have called both the cable company and the cellphone company, because our charges were too high, and said we were going to go to another company if we couldn’t lower them. In both cases we were successful,” Coffman says.
But, it has been a while, and she decided to contact her cellphone company again, just as other carriers were offering discounts and incentives to win over customers. The result: a more than $100 per month price reduction, saving her more than $1,200 a year.
Carol Helton of Cape Coral, Florida had a similar story with her cable company. About six months ago, she called her cable company to complain about raised fees.
“I mentioned that I keep getting mailers from their competition and I was thinking about switching. They put me through to their ‘retention specialist.’ Not only was she able to take off the new charges, she was able to give us a lower rate than we had been paying,” Helton wrote in response to a Marketplace questionnaire on the Public Insight Network.
Sometimes, success isn’t immediate. Sharon Forrest of Atlanta, Georgia, says she called her phone company three times and had to wait for her bill to increase, before she could get them to reduce her payments.
“I learned not to take for granted that the company will make the changes they promise. I learned to persist,” Forrest wrote.
Giorgianni says persistence is important. If you call and don’t get the answer you want from a customer service representative, hang up and call again later. A different representative might be more helpful, or might know of a deal or promotion that the first one didn’t.
Most importantly, Giorgianni says, remain happy and positive. If a company thinks they still have a way of keeping you a happy customer, then they’ll try to do so. But if they think you’re so angry that they’ve already lost you, they’ll have little incentive to try.
Meanwhile, authorities said they still have not been able to identify 28 bodies found in clandestine graves.
Some employees who worked for an Amazon fulfillment warehouse in Nevada, had to wait nearly 25 minutes after each shift to be screened by security. They want to be compensated for that time.
This year's Nobel Prize in chemistry went to a team that came up with a way to take a closer look at the secret lives of living cells. It could make biomedical research a lot easier.
Flooding from extreme tidal swings was once just a rare nuisance for coastal cities. But rising sea levels have increased the frequency of these nuisance floods as much as tenfold since the 1960s.
A weather map on Wednesday showed no significant watches or warnings across the Lower 48.
October is, as you may know if you watched an NFL game in the past weekend, Breast Cancer Awareness Month.
Pink whistles, pink cleats — pink everything, practically, makes an appearance in support of the cause.
Also, which we saw in Salon today, courtesy of the oilfield services company Baker Hughes, one-thousand pink drill bits.
Which is great, I guess, but doesn't the pink get scraped off when the drills start drilling?
And, aren't there all kinds of carcinogens in oil?
Apple says its new operating system for the iPhone features encryption so secure that not even Apple has the key to it. But the FBI warns that the software could limit its ability to fight crime.