I have been critical of the mass move to MBAs observing that one is literally on every corner offered in the day time, evening, weekend, and on line.  Now comes Brazen Careerist who suggests that unless it is really from a top school, it is probably of little value. Not only do I agree, I suspect that time and money would be better spent on obtaining a certification like CIA or CMA. Think about it, the CIA or CMA standard is the same coast to coast.  The same is certainly not true of the varying degrees and calibers of MBAs. And those exams are much easier and cheaper to take than pursuing an MBA.  A tip of the hat to Kelly Clark for spotting this interesting article. 

Statistics out of context mean nothing, statistics only mean something in a contextual presentation or shown as a matter of change.  Here is what I mean.

While I can’t find it on the net, there is a puff piece about Lancaster on the Home Center section of the May 20 DMN.  Routinely the paper spotlights a community and lately has done so with a picture of a couple by the article with their home, ususally re done, and a positive statement about the community.  And routinely the paper prints ‘crime statistics.’  Here is the stat on Lancaster

2006 Crime one murder, eight rapes, 17 robberies, 141 aggravated assauts, 880 burglaries, 224 vehicle thefts and 505 thefts

To which my wife exclaimed, that’s terrible, to which I said,. how do you know? My point is that citing this as a statistic is utterly meaningless.  Here is why

There is no baseline for reference.  What should be the average or above average stat for a bedroom community of 34,000 on the edge of a large metro area-five murders, 200 aggravated assaults, what?  Here we have no idea as the article does not reference any baseline that we can use, ie what is normal, what should we expect

Next, what is the trend?  This is my personal gripe about most statistics.  The Odessa Realtors in their monthly meeting used to cite the numbers of homes listed or sold or whatever for the month.  So what, that tells me nothing!  Is the trend rising, falling, flat, what?  This is why graphical presentations are so effective.  A bar or line graph tells one quickly in this case whether crime is up down or the same.

I asked my wife why she was alarmed.  Well she replied, the numbers were much better for San Marcos, Really, what were they I inquired?  She did not know but she felt they were lower.  YIKES this is exactly what real statistics are trying to filter out, get past the feelings and let’s see the facts. 

My point to students is that stats are only meaningful in context.  Citing a stand alone statistic tells the reader or listener nothing about what is actually happening.  So, learn to use the graph function in excel and present your statistics in context!

Interested?  Learn more by reading Lies Damned Lies and Statistics.  I ran across this book while researching my dissert, and it really makes some good points about how someone wanting to emphasize his or her cause often skews or distorts the facts.

Just because class is over does not mean we aren’t keeping an eye open for more links to class.  Frankly no one has her finger on the pulse of America better than Oprah Inc, and I am serious about that.  Today’s show was on my favorite topic, DESIGN. 

Click on the photo at left and you will see Sarah Jessica Parker, star of Sex in the City, with her new clothing line-BITTEN!  Now you would probably think well here we go, just another high priced snob fashion line by a star for her snob friends, well no way.  Every piece, dresses, skirts, handbags, all priced at 20 bucks or less!  Steve & Barry’s  are low priced clothing stores located in shopping malls.  Gee, stop and think, this is just the opposite of what the big box retailers are doing, while JCP and Sears are trying to flee the mall and join Target in stand alone stores, these guys leased another 3.5 M square feet last year.  Click to read about how they do it.  Would you believe a 70% compound ten year sales growth rate?  Malls who are losing tenants are glad to see these guys on show up. And Steve and Barry are able to negotiate build out rates as high as $80 paid for by the mall desperate for shoppers.

This is classic managerial accounting-figure out what folks want and get the price affordable.

Next on the lineup

Victoria Hagan is designing for Target-affordable interiors

Stephon Marbury decided to do something about $130 sneakers, his do the same thing and are $14.95. Again, opening at Steve & Barry’s.  This is particularly aimed at stopping theft and violence involved with high priced sneakers among young people.

Isaac Mizrah is designing affordable wedding dresses at Target-try less than 200 bucks, many under $100.

Put it all together, and you can see why WMT has the blues. As we discussed this semester, TGT has grabbed the up market design trend from all the rest, Sears is adrift with Lands End, WMT can’t get going, Mervyn’s is on the rocks.  So TQM wins again, keeping your eye on the long term goal remains important.  Trying to shift in mid stream as WMT is doing, Prices are Going Down!  But Golly we are Trendy, at the same time just does not work. 

Bottom line, this is another triumph for my emphasis on the importance of Design.  We were not at Steve and Barry’s today but at Dillard’s at North Park Mall. I could not help but notice an entire Porsche Design Store!  On the TGT website I hyperlinked above, note the number and names of famous designers.  I would say TGT has firmly established itself as the affordable go to design center.   Sarah JP said she was hooked after the first time she walked into a  Steve and Barry’s.

Clearly this is another triumph for the imnportance of DESIGN!

B/W reports that homebuilders are still in a hole.   We have followed this story for you as well as every pundit who has mistakenly thought the worst was over. Well, it’s not. Chapter 11s, high interest loans, off balance sheet debt, and now Moody’s reports that several homebuilders will be in default of their loan covenants soon if things don’t improve. Again, this is why we study accounting. Understanding that a lease or un stated obligation can worsen the real deb/equity ratio helps us understand why firms like this are in so much trouble.  The mastery of accounting can move you from bookkeeping to accounting to analysis, which after all, is what Warren Buffet does best!

Private Equity Cerebus bought Chrysler.   Well sort of. Cerebus contribution will go to shore up Chrysler capital.  This is the sort of mentality you see when someone is so disgusted they just say, I want out.  Daimler let go 80% but read the link and you will see they virtually paid to get rid of it, quite a change from the $38 B they paid for it just a few years back.  We study accounting to better understand such transactions. We study managerial accounting to understand best practices and what would work, this never looked like it would from the start. I mention socionomics and popular culture because if the culture ain’t right it never will. Between odd product mix and culture, this one was never right. And as I have mentioned, Chrysler has always been the sickest of the Big Three, managing to stay afloat in good times and nearly going under in bad. So what will a private equity company do with a car company. I honestly have no idea, I would rather own a good preferred stock mutual fund frankly.  But if Chrysler can go for near nothing, this should be a wake up call to Ford and its unions, nothing is forever anymore.

WOW, is this going to happen?  A tip of the hat to alert student April Young who spotted this comprehensive article about redoing financial statements.

This link also includes a link to a sample of what the new statements would look like.  Basicaly they take from the operating financing investing format of the cash flow statement. If you read nothing else, read this one.

All

I have tried to get on MY UNT twice now, and each time it gave up, apparently all 33,000 of you are trying to access your grades at the same time overloading the server. I will try again tomorrow morning early since there will of course not be anyone trying at 5:30 AM.

DLE

Here is a link to the latest rally for The Fair Tax.  The book was written by the talk show host Neal Boortz, himself a lawyer, and Congressman John Linder. Seems the latest version of the Fair Tax Bill has 60 sponsors.  Boortz claims that congressmen are getting asked at every town hall meeting in America. And he says Steve Forbes Flat Tax only has four supporters.

Everyone I have talked with says there is zero chance of such radical tax reform in our lifetime.  I don’t agree.  And with two brand new candidates in the next election. whoever they are, each may finally be looking for the one issue that wold put them over the top other than the usual stuff. This would be that issue-tax simplicity.  IF the exising tax system were scrapped, tens of thousands of CPAs and tax preparers would be out of a job, that of course is exactly the point. What would they do? What about all the students studying taxes in school now?  Well, who cares?

Oh be forewarned, Boortz is libertarian in his outlook, so you may be exposed to reading ideas like we can and should look out for ourselves, a revolutionary idea for either side of the aisle in Washington at this point.

Rupert Murdoch is trying to take over the Wall Street Journal.  Click to read the story.  We have discussed numerous take overs in class and you have reported via books and movies on them.  Please click on the graph yours truly has thoughtfully provided at left.  Note this is a WEEKLY graph going back several years.  Clearly the stock of the Dow Jones DJ company has been in a long term decline. Murdoch offered  huge premium over the existing price-$60 which is $25  higher than it has traded for some time.  And the owner reaction? Nah, we ain’t interested.

Murdoch is famous for shaking things up.  CNN and MSNBC have seen their fortunes turn down since FOX got serious about cable news. As you know the newspaper business is not what it used to be. But wait, think about what we have studied in class about P/E, E/S, at the current earnings per share the $60 price reflects a much higher P/E than the market puts on DJ.  In fact at 55 the p/e is 13.27, at 30 it was about 8, so what does Murdoch see here?  So you see how the higher P/E is a vote that he sees earnings potential that the market does not?  And that the current owners are not able to deliver?

Well first of all, he wants one of the crown jewels of American business publishing.
And the entrenched ‘journalists’ of another age are in a snit about it, ignoring the reality of the internet and lower readership. For example, the Dallas Morning News readership plunged 14% in just the last six months.  If they didn’t have the pull out tv section, would anyone buy it?

But I digress.  Murdoch is planning to launch a rival to CNBC on television, yep an all day business channel. No doubt he wants to use the reporting assets of WSJ to complement his new channel.  Will he be able to take viewers away from well establsihed CNBC?  That will be a lot tougher than taking them from CNN I think as it is not so much a matter of political bias.

Note that this P/E is closer to the overall market. But remember, Murdoch is spending $60 B here, so he will have to make the money back to pay for this, and earnings will have to be substantially improved. 

Will the owners sell, can they justify not taking the offer (this sort of well we are worth more than that in the face of the fact that the market does not think so it typical reaction in this sort of deal.)

As Jerry Lee Lewis might say, there’s a whole lot of shaking going on here, but it is in the Boardroom of the DJ company trying to justify their lack of shareholder value.

I have enjoyed www.finance.yahoo.com but hey, here is a new kid on the block

Go to

www.businessweek.com

then click on companies on the info bar

Then you are to Company Insight Center, put the symbol in on the right and viola

Lots of info, is it as good as finance.yahoo

I report, you decide!