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Baronash posted:This is some bizarro world bullshit. Corporations don’t have a responsibility to maximize their quarterly profits over all else. Short-sighted business decisions are the result of dumbass C-levels, not regulations that would prevent them from implementing loss leaders, R&D, or loving paid vacation. Yeah, the court case that always gets referenced when talking about a corporation's duty to maximize shareholder value is Dodge v. Ford Motor Co. and it's less about micromanaging poo poo to maximize shareholder value, so much as the idea that the directors of a company are not allowed to act contrary to the interests of shareholders. Ford was too obvious in his desire to actually work against the interests of his shareholders, because he correctly suspected the Dodge brothers were going to be competition; even after the case, Ford had a lot of leeway over how to run the company, provided he didn't go out of his way to gently caress over shareholders. In practice, Amazon could do whatever the gently caress they want with the price of Prime, justify it in whatever way they like, and the courts would tell any shareholder litigants to piss up a rope if they were using the courts to try and micromanage the board of directors.
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Dec 31, 2018 03:21
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But Very Serious People have told me how naive I am for suggesting that companies have even a shred of thought for anything beyond next quarter, and besides that It's The Law to maximize shareholder value over all else.
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Dec 31, 2018 03:45
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PT6A posted:Go to a menswear store, then? I do some work on the side for one, his main problem is that people have stopped wanting to see the clothes in-person ahead of time. These stores still exist, it's just that you'll have to find a local store whose name you don't recognize immediately. Did that. At smaller stores the going rate is more than twice what you should be paying.
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Dec 31, 2018 03:57
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I just wanted to provide all of us with some thematic music for posting in this thread: https://archive.org/details/attentionkmartshoppers
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Dec 31, 2018 04:50
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DrNutt posted:But Very Serious People have told me how naive I am for suggesting that companies have even a shred of thought for anything beyond next quarter, and besides that It's The Law to maximize shareholder value over all else. No need to mix those two issues. It remains an enormous systemic problem that so many companies are too focused on the next quarter/year, despite it being perfectly legal to base decisions on the long term.
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Dec 31, 2018 05:25
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DrNutt posted:But Very Serious People have told me how naive I am for suggesting that companies have even a shred of thought for anything beyond next quarter, and besides that It's The Law to maximize shareholder value over all else. This is bullshit that gets repeated to justify bad decision making.
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Dec 31, 2018 05:51
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I unfortunately can no longer find that survey, which I learned about on this forum, where the vast, vast majority of CEOs of major companies said that they would rather post a profit next quarter with no certainty about anything after that rather than post a loss next quarter followed by multiple quarters of solid growth. I understand that kind of short-sighted thinking by destitute people, because crippling poverty doesn't let one worry about the future, but when it's very wealthy people running huge corporations it's quite another story.
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Dec 31, 2018 05:57
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 if you think somone in corporate finance ever thinks beyond this quarter’s numbers.
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Dec 31, 2018 06:09
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Owlofcreamcheese posted:I used to circle things in the toys r us/sears christmas catalog/fliers. And then your parents would say "I'm sorry little Owlofcreamcheese but we can't give you the crossed-out eyes and mouths of all of these catalog models"
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Dec 31, 2018 06:39
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Baronash posted:Corporations don’t have a responsibility to maximize their quarterly profits over all else. Are you new here? To capitalism?
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Dec 31, 2018 06:41
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Golbez posted:Are you new here? To capitalism? Did you bother reading the other 3 sentences, or were you too excited about laying this sick burn? “Fiduciary duty” has a specific legal meaning, and corporations aren’t obligated to maximize profits. This is an especially weird topic to get hung up on when the subject of the conversation, Amazon, generates relatively razor thin margins because the majority of their earnings are reinvested into the company, which has been a major factor in their position as the market leader.
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Dec 31, 2018 07:13
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PT6A posted:On one hand, you can ask "well, if they're the same price, why would you buy from Amazon?" but I could equally ask, "if they're the same price, why wouldn't I buy from Amazon?" It's a 10-second operation because they already have my CC number and address, and I've never had a problem with the delivery services they use. Sure but the first time you order a birthday gift last minute because you just completely forgot and it missed the delivery date or never showed up you’re going to be seriously second guessing that assumption.
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Dec 31, 2018 07:20
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Meanwhile, there's the airline who was punished after the CEO gave the employees - you know, the people who do all of the work - a meagre cost of living increase after years of stagnant wages up against inflation. Their stock price decreased sharply and JP Morgan downgraded their status from neutral to overweight. Revenue doesn't count as profit if it's paid out to employee salaries, so they are objectively punished for not maximizing profit when they gave that money to their employees and not their parasitic shareholders. I looked it up: it was Doug Parker of American Airlines. I give him a tiny bit of credit for barely trying to do the right thing.
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Dec 31, 2018 07:30
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JustJeff88 posted:Meanwhile, there's the airline who was punished after the CEO gave the employees - you know, the people who do all of the work - a meagre cost of living increase after years of stagnant wages up against inflation. Their stock price decreased sharply and JP Morgan downgraded their status from neutral to overweight. Revenue doesn't count as profit if it's paid out to employee salaries, so they are objectively punished for not maximizing profit when they gave that money to their employees and not their parasitic shareholders. “If you ignore the parts of what I said that were wrong, then I was completely right!”
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Dec 31, 2018 07:35
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Corporations management might think beyond next quarters, but the shareholders and markets do not, and they ultimately call the shots.
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Dec 31, 2018 07:38
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Sodomy Hussein posted:I have no idea what I'm going to do when JCP dissolves if I want to see the clothes before I buy them.
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Dec 31, 2018 07:45
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What would happen if we did away with quarterly reports in favor of yearly reports?
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Dec 31, 2018 07:51
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Nissin Cup Nudist posted:What would happen if we did away with quarterly reports in favor of yearly reports? I don’t believe quarterly reports and the focus on them have always been the status quo
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Dec 31, 2018 08:01
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Nissin Cup Nudist posted:What would happen if we did away with quarterly reports in favor of yearly reports? Investors with better insider info and resources for competitive intelligence would likely be better off. It would help negate some of the obsession with Q/Q growth, but it does serve some purpose in keeping companies honest. I can't imagine it'd be a good thing for small cap biotech for example where sales data at launch would only accessible via very expensive qualitative CI, quantitative market research, secondary claims datasets, etc. Not that individual traders should be dabbling in highly speculative biotech stocks, but an example where launch success is often highly indictive of long-term opportunity.
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Dec 31, 2018 08:06
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Baronash posted:Did you bother reading the other 3 sentences, or were you too excited about laying this sick burn? “Fiduciary duty” has a specific legal meaning, and corporations aren’t obligated to maximize profits. You're speaking in legal terms. I'm speaking in general "this is what life is like" terms, as also pointed out by JustJeff88. Publicly traded American companies have been 100% focused on quarterly profits for a good long while now. Edit: OK, fine, no, they don't have a *responsibility* to only care about maximizing quarterly profits. They simply choose to operate that way. Golbez fucked around with this message at 08:25 on Dec 31, 2018 |
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Dec 31, 2018 08:23
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Well if we smash capitalism we would never have to hear some smug fuckhole utter the words "fiduciary duty" while defending some lovely company's heinous behavior. So let's do that, I guess. e: Just to be clear I'm not suggesting anyone here has done this, I'm specifically talking about the times I have heard that phrase uttered by sociopathic libertarians IRL. Professor Beetus fucked around with this message at 08:28 on Dec 31, 2018 |
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Dec 31, 2018 08:26
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Golbez posted:You're speaking in legal terms. I'm speaking in general "this is what life is like" terms, as also pointed out by JustJeff88. Publicly traded American companies have been 100% focused on quarterly profits for a good long while now. Specifically they choose to operate that way because boards are very replaceable without involving courts. A stock-market company where votes aren't consolidated (your Facebooks, Alphabets and such's consolidated vote-shares are exceptions on the US stock markets) will have to deliver one of three things for investors not get antsy. A: Dividends B: Growth C: Stock buybacks Investors getting antsy is not bad because they will walk away with the companies money (that's not how stocks work). Investors getting antsy is bad because you never know who's buying which can lead to hedge funds, activist funds or billionares jumping in and replacing both board and management. This puts a big onus on those directly controlling the company to deliver well on A, B and C (which of course is also in their own short-term interest). Or, more specifically you have to deliver on the expectation that A, B and C will happen which guess what, you do through positive quarterly reports. You have negative quarterly reports, and investors start selling. I think going annual or just bi-annual would do a lot for the long-term health of publicly traded companies.
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Dec 31, 2018 08:43
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Golbez posted:You're speaking in legal terms. I'm speaking in general "this is what life is like" terms, as also pointed out by JustJeff88. Publicly traded American companies have been 100% focused on quarterly profits for a good long while now. I don't see why semi annual or annual quarterly earnings reports would change the underlying issue. Investors will still seek to maximize annualized ROR and have the flexibility to enter/exit investments at any time. Stock valuation would likely just be subject to higher volatility given fewer data points to inform both short and long term trends. Investors calls associated with quarterly earnings releases also provides some mechanism for questioning execs and increasing transparency, even if they do often seem overly cordial/choreographed.
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Dec 31, 2018 08:46
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Because investors are irrational and react disproportionally to surprises in financial statements. You dole out the information at a lower pace and investors have to rely on at least superficially rational methods such as forecasts and valuations in-between reports.
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Dec 31, 2018 08:53
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MiddleOne posted:Because investors are irrational and react disproportionally to surprises in financial statements. You dole out the information at a lower pace and investors have to rely on at least superficially rational methods such as forecasts and valuations in-between reports. If you wanted to maximize the value and reliability of hard quantitative valuations via forecasts would you rather have N data points or 4N? Lack of data will result in qualitative speculation filling the void which highly favors investors with the means to obtain credible competitive intelligence. This will likely either be costly (and proprietary/private) market research or just straight up insider info.
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Dec 31, 2018 09:03
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KingNastidon posted:If you wanted to maximize the value and reliability of hard quantitative valuations via forecasts would you rather have N data points or 4N? Lack of data will result in qualitative speculation filling the void which highly favors investors with the means to obtain credible competitive intelligence. This will likely either be costly (and proprietary/private) market research or just straight up insider info. Over a long time period 4N and N are indistinguishable. Do you think daily reports would be healthy for the stock markets? That is to say 365N. Every report creates an opportunity for speculation (and that includes profiteering off insider trading which you so kindly brought up) which creates inherent instability in company valuations as investors and hedge funds bet on the outcome. Whether a quarter underperformed or not ultimately tells you very little about the long-term prospects of a business since it's just too little time. It also incentivizes prioritizing the next quarter over the annual result which is its own can of worms. You say qualitative speculation but ultimately everyone has access to the same market indicators and financial reports even without the statements. This will force investors to analyze and react to incremental changes in-between reports instead of hap-hazardly reacting to minor changes on an income statement every 3 months. Additionally, for the fiduciary purposes annual is fine. MiddleOne fucked around with this message at 09:21 on Dec 31, 2018 |
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Dec 31, 2018 09:17
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MiddleOne posted:Over a long time period 4N and N are indistinguishable. Do you think daily reports would be healthy for the stock markets? That is to say 365N. Every report creates an opportunity for speculation (and that includes profiteering off insider trading which you so kindly brought up) which creates inherent instability in company valuations as investors and hedge funds bet on the outcome. Whether a quarter underperformed or not ultimately tells you very little about the long-term prospects of a business since it's just too little time. It also incentivizes prioritizing the next quarter over the annual result which is its own can of worms. I mean, 365N would be preferable for equalizing access to information, no? I may just be hyper focused on my own world in small biotech with high M&A activity, but the short-term performance can be highly correlated with long-term success and overall valuation of the company. Launch excellence is a key offering of every major management consultancy in the industry for a reason. If you're one of the few people with access to daily aggregate national sales data or even spend given implications with clinical trial recruitment progress then the value of your insider information increases considerably with fewer public data points. For example, a company could put earnings target for a recent drug launch in 2019, 2020, 2023. The value of insider information on sales trends in May becomes increasingly important if there won't be publicly available information until January (annual) rather than July (quarterly). This would not only impact FY 2019 forecasting, but would reset the baseline for projections into future years and therefore the NPV / market cap estimates. And because this information is increasingly important investors have increased incentive to pay for it -- either via legitimate methods like market research or secondary data analyses which favors large institutional investors with the resources to do it. Or more unsavory methods like direct insider information or intentionally predatory competitive intelligence.
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Dec 31, 2018 09:56
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OneEightHundred posted:Kohls is basically the same thing as far as I'm concerned. Kohls is doing pretty well so you are good. Having no mall exposure and Sears/JCP finally going under should help them more than others too.
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Dec 31, 2018 14:01
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nepetaMisekiryoiki posted:Next to other brand, on the high value shelf, and often placed in a slightly more desirable position, or with more product. This can be the better of available positions. The location other stores will put high bidder in. In still other store, house brand is put on less desirable shelves altogether. Is there no corporate practice you won't shill for? Invalid Validation posted:Is it a problem if they aren’t forcing higher prices for consumers though? Yes, because their embrace of knock-offs and outright fraudulent products means that consumers are fairly often not even getting what they pay for. Liquid Communism fucked around with this message at 14:18 on Dec 31, 2018 |
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Dec 31, 2018 14:14
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KingNastidon posted:I mean, 365N would be preferable for equalizing access to information, no? I may just be hyper focused on my own world in small biotech with high M&A activity, but the short-term performance can be highly correlated with long-term success and overall valuation of the company. Launch excellence is a key offering of every major management consultancy in the industry for a reason. If you're one of the few people with access to daily aggregate national sales data or even spend given implications with clinical trial recruitment progress then the value of your insider information increases considerably with fewer public data points. That's really focused on biotech, though. Most other industries don't have quite as bad a "Gotta make all your profits upon launch" thing going, do they? Like, for instance, defense or engineering contractors (picking those because I know about the industries somewhat) - basically anything where a government is the customer - yes, there's profits on launch, but most of the earnings are spread out over years (and hostage to annual appropriations). When your product takes 10-20 years to get to operational status and your only customer is the guy who also collects your taxes, a quarterly approach is (to me) a terrible idea. You could say similar about, say, homebuilders or a lot of industries where projects have a long development time (or really high R&D costs or both). Pharma is unique in a lot of ways in that launches matter so hugely. Everybody else, some de-emphasizing of the short-term might not be a bad idea and might not actually decrease the quality of information available on the public domain.
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Dec 31, 2018 14:19
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JustJeff88 posted:I unfortunately can no longer find that survey, which I learned about on this forum, where the vast, vast majority of CEOs of major companies said that they would rather post a profit next quarter with no certainty about anything after that rather than post a loss next quarter followed by multiple quarters of solid growth. I understand that kind of short-sighted thinking by destitute people, because crippling poverty doesn't let one worry about the future, but when it's very wealthy people running huge corporations it's quite another story. It gets easier when you realize that none of the execs surveyed plan to stay past the nanosecond their bonuses underperform.
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Dec 31, 2018 14:49
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Liquid Communism posted:Is there no corporate practice you won't shill for? It is very interested, how supposed progressives shout "shill" as soon as any consideration of retail exists. Tell me sir, what is the way you think store is supposed to operate? Decide what you want to yell about - the thing that gets destroyed of Amazon Basics is generic knock off and fraudulent product, because people have the house brand from Amazon right there. It really seem you and other just want to moan about how Amazon isn't protecting random capitalist enough for doing least effort of sale. Shading of the argument of Steam being evil because. it let's other people's game on all the time and not just your favourites.
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Dec 31, 2018 15:18
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Baronash posted:Did you bother reading the other 3 sentences, or were you too excited about laying this sick burn? “Fiduciary duty” has a specific legal meaning, and corporations aren’t obligated to maximize profits. Except for those pesky private equities, eyeing them greedily. If ya aren't maximizing profits, somebody else may try to buy the company.
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Dec 31, 2018 16:32
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QuarkJets posted:The complaint is that Amazon is giving premier placement to their own products after making a generic version of a competitor's, I don't give a poo poo if a bunch of competitors are bidding for premier shelf space at a store so long as the store isn't saying "gently caress all of you, I'm putting my pasta on all of the premier shelves and yours is going on the bottom shelf" Every grocery store, restaurant, and clothing store in America does this and has done it for decades. No company or product has a right to a spot on another company's shelves. That's sort of the deal with retail. Companies that want complete control over the retail experience will direct sell or self-distribute. Apple even builds entire stores that sell only their brand and restrict other retailers from carrying their newest products. If you have some sort of completely unique product (a gaming console, brand name fashion/logo, specific movie/doll/art/food, etc) that sells very well, then you can try to bully retail stores into accepting your terms. Lots of companies do that by banning stores from offering sales or coupons on their items if they want to carry them. There are lots of concerns about Amazon, but white labels and advertising their own products on their own site are not unique to Amazon nor major problems. Leon Trotsky 2012 fucked around with this message at 16:59 on Dec 31, 2018 |
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Dec 31, 2018 16:55
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Leon Trotsky 2012 posted:No company or product has a right to a spot on another company's shelves. That's sort of the deal with retail. Except when they sell that right, which they do. Big companies will buy up shelf space to push smaller competition to crappier spots, or off the shelves entirely.
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Dec 31, 2018 17:23
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JustJeff88 posted:Revenue doesn't count as profit if it's paid out to employee salaries Revenue invested in anything is not counted as profit. Profit is what you have after your investments. This concept has existed before the invention of the corporation. BrandorKP posted:Except when they sell that right, which they do. Big companies will buy up shelf space to push smaller competition to crappier spots, or off the shelves entirely. Yes, that was what was specifically said in the whole post. That's the deal with retail. Nobody has a legal right to a specific spot on a shelf in a specific store. Part of the reason Amazon decided to self-distribute and direct sell is that they were getting screwed by IT/hosting companies and 3rd party shippers. Go to any restaurant in America from 1900 to 2018 and count how many offer both Pepsi and Coke products. It will be 0 and it is not because the restaurant owners are Pepsi fans or think Sprite is better than Mountain Dew. Leon Trotsky 2012 fucked around with this message at 17:29 on Dec 31, 2018 |
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Dec 31, 2018 17:26
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BrandorKP posted:Except when they sell that right, which they do. Big companies will buy up shelf space to push smaller competition to crappier spots, or off the shelves entirely. It's their store. They can decide who buys space on their site. Just like how the media can pick and choose who advertises on them and where those ads go. This argument that Amazon has a duty to keep an even playing ground on their own site only makes sense if Amazon became nationalized (thus gaining public oversight) and was regulated to do so. Then if they tried you could point to a corporate charter that specifies that as being an illegal move. But that's the not the case. This is a private company who doesn't care and you can't tell them how to position products on their private website. It would be like the government coming to SomethingAwful and telling Lowtax that you have to advertise for other websites if you want to advertise at all. SA is a private website and Lowtax can display information on it as he feels regardless of whether you agree. If he posted something or advertised something that was truly heinous you'd be within your right to complain or leave. But ultimately, Lowtax is paying the bills and gets to decide what is on this site. Now if you're arguing that their should be a publicly owned mass retailer that could compete with Amazon, that would be forced to promote all products evenly, and would focused on keeping prices low rather than simply max profits, then I'm on board.
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Dec 31, 2018 17:48
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I’m inclined to agree that Amazon isn’t uniquely nefarious and that people in this thread are a little paranoid and are exaggerating the Amazon monopoly threat. But you could argue that while maybe what Amazon is doing isn’t really totally new or unique, Amazon certainly is taking it to the n-th degree and so they are definitely more of a monopoly threat to retail than what has come before. What do you think about that?
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Dec 31, 2018 17:48
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silence_kit posted:But you could argue that while maybe what Amazon is doing isn’t really totally new or unique, Amazon certainly is taking it to the n-th degree and so they are definitely more of a monopoly threat to retail than what has come before. What do you think about that? It seems like the opposite, a website has far far lower stickyness than a physical business. It's much easier for walmart to drive the other stores out of your town and make you 'have' to shop there than it is for amazon to drive away all other competition on earth and make you have to shop there. Like this thread is full of stories of people very casually deciding to shop somewhere else and it being no big deal. Compared to stuff sears or walmart could do in the past where you really functionally had no other choices in a lot of locations.
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Dec 31, 2018 18:12
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Also Amazon in its history has used its tactics that in the end benefit customer. Basically they used their market power to offer benefits to a consumer that make it tough/expensive for other companies to match. Great. So far I haven’t seen any contrary behavior to that. The only thing I am leery of is fake reviews and fraudulent products. My perspective is probably pretty skewed though as my career has been in corporate retail. Also AWS a loving wonder and more beneficial to society than what most retail companies would ever do. Insanely cheap and accessible servers is a god send to research companies. One of my favorite career moments was seeing IT executives poo poo their pants when they saw AWS prices at a couple hundred dollars a month vs their 6 million dollar teradata servers in hardware alone they were pushing.
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Dec 31, 2018 18:36
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