Strome Business Minute With Dr. Jeff Tanner

I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. The problems with Boeing’s seven-thirty-seven Max have proven to be much harder to fix than a simple software glitch it was first thought to be. Production has halted and JP Morgan says the company will burn through one billion dollars a month while shut down, mostly to support suppliers. Boeing is also paying customers like Southwest Airlines and American hundreds of millions in compensation as they cancelled thousands of flights that were depending on the new aircraft. While the compensation Boeing is paying is a secret, Southwest shared one hundred and twenty five million dollars with its employees as a year-end bonus. No word from American on their use of funds but they are still embroiled in a labor dispute with their mechanics. To find out more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.

I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. Amazon closed last week on ninety five acres in Suffolk, close to Interstate six sixty four and the Port. While Amazon has confirmed the purchase, they won’t say what the land will be used for. Speculation, though, is that Amazon will build a fulfillment center there. After all, last summer, the Army Corps of Engineers entertained a proposal for a fulfillment center on that site, which requires a site plan permit approval. And a July report from the Hampton Roads Economic Development Alliance pointed to a fulfillment center coming that would result in one thousand new jobs. But what exactly is a fulfillment center? While it’s not a where you find personal fulfillment, it is a special kind of warehouse where Amazon fills orders. To find out more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.

I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. According to a study in the Journal of Consumer Psychology, a badly wrapped gift is more appreciated by someone if they already know and love you. If you don’t know them well, then the gift is more appreciated when wrapped perfectly. It seems our expectations of the gift itself are influenced by the wrapping. What a relief for sloppy wrappers like me! As we end our second year, I’d like to thank Rick Smith, studio engineer, Jeff Sandner, post production, and Chuck Doud, producer for all of their work to make this show a success. I’d also like to thank professors Michelle Carpenter and Ron Carlee for filling in as hosts from time to time throughout the year. Happy holidays to all of you and thank you for joining us on a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.

I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. According to the Wall Street Journal, investors have moved one hundred and thirty five billion dollars out of stocks and into bonds and ETFs, investments that are less volatile and safer than stocks. Beginning last year, the outflow has accelerated as global trade wars continue. In fact, recent signals that the war with China could reach some resolution led to five billion moving back to stocks in just one week, but any negativity will likely see it leave again. Most of the outflow has come at the expense of mutual funds, as it is the retail customer, the individual investor, who is most worried but corporate demand for stocks is also slowing. If this continues, expect more volatility but a flat market overall. To learn more, visit odu.edu/business. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.

I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. When shopping online, people use reviews but how depends on the situation. Strome professor Yuping Liu-Thompkins says consumers rely on how many people say they like it when the objective is to gain something good but when the product is bought to avoid something bad, the actual rating score is more important. So a stock broker is selected by how many people like it while an insurance agent may be chosen based on the rating score. But can we trust reviews? Amazon reported blocking thirteen million bogus or fake reviews last year. Reviews matter, as Yuping says a ten percent increase in rating volume yields a three point five percent retail sales increase while a ten percent rating score increase doubles that gain. To learn more, visit odu.edu/business. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.

I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. Celadon, one of the largest companies you’ve probably never heard of, declared bankruptcy last week, throwing thirty-two hundred drivers out of work. Reaching one billion dollars in revenue in twenty fifteen, an investigation for accounting fraud certainly played a role in Celadon’s bankruptcy. But trucking companies have gone under at triple the rate this year over last, with six hundred forty shutting their doors. Trucking volume is down significantly, declining steadily all year. Manufacturing volume has also declined, meaning less to ship. These declines have also been felt by truck makers, with Cummins announcing layoffs for two thousand workers just before Thanksgiving, a startling reversal from a strong twenty eighteen. Used trucks from bankrupt companies will only make the problem worse. To learn more, visit odu.edu/business. This has been a Strome Business Minute, presented by the

I’m Michelle Carpenter in the Strome College of Business at Old Dominion University and this is a Strome Business Minute. The State Council of Higher Education issued the Commonwealth Research and Technology Strategic Roadmap, which identifies research areas that will yield the greatest impact in economic development. The report says research and investment in life and health sciences; autonomous systems; space and satellites; agricultural and environmental technologies; cybersecurity; and data science and analytics will have the greatest impact. ODU is leading in all areas. ODU’s Cybersecurity Center is one of five designated by the federal government as a center of excellence, work with NASA includes numerous small satellite launches carrying ODU designed experiments, we have globally-recognized leaders in analytics, leading scholars in health sciences, and marine science and coastal resiliency efforts are yielding new approaches and technologies. To learn more, visit odu.edu/business. This Strome Business

A recent study published by the Journal of Consumer Research finds that some people are more likely to be victims of investment fraud.

I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. If you’re a boomer who likes antiques, you may already know that millennials don’t. Prices for antique furniture and other forms of antiques are falling. Like one antique dealer said about antique sales, if it’s brown, mark it down. One thing about that furniture; it might be easier to dispose of than the retirement homes boomers have built. According to Laura Kasisto of the Wall Street Journal, boomers will vacate one out of four homes over the next two decades, more than the houses built over the past two decades, many that are in retirement communities complete with golf, shuffleboard, and other amenities millennials don’t want. Boomer homes may solve the affordable housing crisis, if we can locate places to work nearby. To learn more, visit odu.edu/business. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.

I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. Alarm bells are sounding over corporate debt. As I’ve pointed out before, companies such as AT&T, GM, and other well-known names have taken on significant debt but the current increases in corporate debt are primarily being taken on by weaker companies with higher risk. The debt comes in the form of bonds, many of which are considered junk or near junk. That shift in debt to weaker companies has been prompted, in part, by a lack of investment options with decent returns, so investors have been willing to take on the added risk. The fear, of course, is that if interest rates rise, we’ll see a bubble that bursts much the way consume credit did in two thousand eight, leading to our last recession. To learn more, visit odu.edu/business. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.

I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. Kissinger recently likened trade wars to the Cold War, anticipating long lasting warfare. While many are looking for a short-term resolution, ODU professor Shaomin Li is forecasting long term effects of the trade war on China. He notes surveys that indicate companies are either foregoing planned investments or considering moving operations to other countries, a shift he says had already started but accelerated due to the trade wars. Japanese and American firms are moving their operations to South Asia and Mexico, according to his study just published in the Chinese Leadership Monitor. Prior to tariffs, rising wages, a challenging political economy, and other factors were causing businesses to reconsider China; tariffs have just pushed them to act, and it’s these actions that will have long-lasting effect. To learn more, visit odu.edu/business. This Strome Business Minute is presented by th

I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. I honestly thought Lord and Taylor was dead and gone but it’s not. Bought by a clothing rental company, Le Tote, in August, the deal included free rent for three years and closing five stores. One of the closures before the sale was the company’s flagship in New York City, which was nearly seven hundred thousand square feet. Lord & Taylor’s previous owner, Hudson Bay, sold the eleven story building to WeWork, a company struggling financially. Let’s hope they got paid in cash. Lord & Taylor’s new owners are now launching a new New York City store, a tiny twenty four hundred square feet or less than one percent of the old store’s footprint. Perhaps this type of reduction is the direction all retailing will take. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.

In honor of the 18th anniversary of Enron’s bankruptcy, let’s take a look at the 6 largest bankruptcies in American history. Enron’s was notable for its impact on Pacific Gas & Electric which also filed for bankruptcy due to Enron’s manipulation of energy prices, the same PG&E which filed for bankruptcy again earlier this year due to the catastrophic California wildfires in 2017 and 2018. Like Enron, WorldCom, one of the biggest US telecom providers, was a house of cards built on illegal accounting manipulations, and like Enron, saw its CEO go to prison. GM, Washington Mutual, CIT and Lehman Brothers round out the group, all of which went down in the 2008 recession. GM and CIT both recovered while the rest are all memories.

MasterCard released its third annual study of women entrepreneurship and noted that for the first time, the US ranked first, narrowly edging out New Zealand. Other top countries included Canada, Israel, Poland and the Philippines, countries with very different histories, which signals the possibility for progress. At the bottom are middle-eastern countries which restrict women’s freedom. African countries are most likely to exhibit a gender balance in actual entrepreneurship. Other factors that make up the index include market factors such as labor force participation and financial market inclusion, education, and cultural inclusion. Mexico, Sweden, and Saudi Arabia saw the biggest declines year over year, but the study was created to encourage and mark improvement, such as France, Taiwan, and Indonesia.

General Dynamics Electric Boat division and Huntington Ingalls’ Newport News Shipbuilding just closed a joint twenty-two billion dollar deal with the US Navy to build nine Virginia-class submarines. The contract is the largest ever awarded by the US Navy, some 50% larger than the 2 carrier deal awarded earlier this year, and includes an option to buy a tenth submarine. The first submarine under this contract will be delivered in 2025; the Navy already has eighteen of the fast attack subs in the fleet with more on the old contract. Newport News Ship and Electric Boat both had to double production to two subs per year in order to win the joint contract, which includes a version with three times the Tomahawk missile capacity.

Last week, Xerox offered to buy Hewlett Packard. Which they turned down saying it was too low. Xerox countered, saying that if the HP board didn’t meet with them by the 25th, then they will begin a hostile takeover. HP again said no, daring Xerox to act. I suspect this is just negotiating. Meanwhile, Charles Schwab offered to take over TD Ameritrade. The market loved this, with the stock prices of both companies surging on the news. Schwab and other brokerage houses aren’t making any money since trade fees are low or nonexistent. Ameritrade brings complimentary business lines and the possibility of cutting overhead in half. One challenge is forty-three percent of Ameritrade is already owned by a Canadian bank.

The state-funded study examining the economics of five resort-style casinos across the state is out. The report says seventy six hundred jobs will be created with a median salary of about thirty-three thousand dollars, meaning half will be well below livable wages. In addition, the study says that the Danville location will have the greatest out-of-state revenue, or about thirty-two percent. That means that the best case scenario still requires local consumers to be successful. In Norfolk and Portsmouth, nearly all of casino revenue will come from consumers shifting spending from other purchases to casinos, as reported by our State of the Region study done in 2015, so the high estimates of tax revenue are really just shifts from one source to another.

Disney signed up 10 million customers for its new streaming service, Disney Plus, on the first day. Home to the Star Wars series Mandalorian and the Marvel series, the channel is off to a great start. The question for investors is whether a highly-fragmented streaming market is sustainable. Imagine no cable TV or Netflix or Hulu that carries the most desired channels. Want sports? You have to subscribe, not to ESPN, but to the NFL channel, the MLB channel, and so forth. Each college conference could have its own channel. That extreme situation is unlikely. Disney and a few others might create premium content channels but whether they can generate enough premium content to sustain an audience over time is questionable.

Some folks love the electric scooters, others despise them, but the business model isn’t working for everyone. Lyft and Uber have both found themselves unable to make money in some markets. Both companies left the Atlanta market, and Lyft also exited Dallas, San Antonio, and three other cities. Uber’s Jump left San Diego because of problems with the city but they left Atlanta back in September due to low revenue. Eight companies have tried Atlanta so far but they’re now down to six. If you don’t like the scooters left lying around, imagine that times eight. Whether you are a fan or not, as has been the case with a lot of new technologies, the market is getting saturated but it will settle out.

Nike is dumping Amazon. Yup, Nike is leaving Amazon to sell direct to consumers. Amazon is estimated to control forty percent of the country’s online market, yet Nike is stepping away. The company said that the move is part of Nike’s focus on elevating consumer experiences through more direct, personal relationships.