I had to think about where to put this one, and decided to post it here because I think this is the way many companies of this type are going to go. It’s finance related and credit card related, and that’s what this blog is all about. There’s also customer service issues, which will destroy many businesses as well.

Newport News is a women’s clothing company. I don’t know if they’re an actual store or just an online store, but for my purposes it doesn’t matter. Here’s the story.

My wife has been a client of theirs for more than 10 years. Recently she ordered a swimming suit because she was going on a cruise, and wanted to see if something they had would work for her. When it came she looked at it through the packaging, decided it wasn’t what she wanted, and two days later she sent it back. Three days after that she got an email from them saying they’d received her returned purchase; all seemed well.

That is, until she got the bill. They had charged her for the purchase. She figured maybe things just crossed in the mail, so she called to make sure that’s what it was. Instead, she was told that she would have to pay for the item since the bill went out before they had received the item, which wasn’t true at all. She said she should be getting a refund for the purchase, and the person told her she’d have to talk to the bank they work with because they handled all money issues.

What the heck is that? I don’t know, but she contacted the bank, who told her the other people were wrong, and that she needed to pay at least $10 to make sure she didn’t get hit with a bigger fee. What could she do but pay the $10. Then she left on her cruise, figuring that things would work out.

They didn’t. She gets back and another bill had come with an even higher balance. She calls again, saying she had returned the item and was told she should be getting some kind of refund. Not only that, but they had lowered the amount she could borrow on the card from $500 to $100. The person she talked to acknowledged that she’d sent the item back, but said she owed shipping and handling charges for returning the item; that had never happened before. She was incredulous, as you can imagine. This person told her she’d have to call the bank again.

My wife calls the bank and finally she gets a modicum of satisfaction. The person tells her that they did see the item had been returned and she would be refunded that. He also tells her that, unfortunately, she still has to pay the shipping fees for returning the item, which was around $26; are you kidding?

She asked about the new lower balance and he tells her that’s because she was late with a payment, which she wasn’t because she had followed what she’d previously been told. She told the man to cancel her card, then he spent 5 minutes trying to talk her out of it; come on!

So, the card is canceled, she’s sent the $26 and change, and she’s still mad. I’m mad also because this company disregarded her long term loyalty and, if they changed terms of return, not only didn’t inform her, but come on, $26 for shipping and handling charges on an item that probably cost the same, and weighed almost nothing? If that’s not somewhat fraudulent I don’t know what is.

Newport News; I hope they go out of business because of stuff like this. And, as I said earlier, I believe many other companies are going to be doing this kind of thing against consumers whose accounts are relatively small. It seems the new credit card rules must not apply to everyone; that’s not right.

Once again, CNN Money & Fortune Magazine has come up with the Top 100 Companies to work for list. This year, an entrant that’s been on every list since they began charting this has moved into the #1 spot for the first time. I can’t lie, I never heard of SAS before I checked this out here, but it does sound like a fun place to work.

First, here’s the top 10:

1 SAS
2 Edward Jones
3 Wegmans Food Markets
4 Google
5 Nugget Market
6 DreamWorks Animation SKG
7 NetApp
8 Boston Consulting Group
9 Qualcomm
10 Camden Property Trust

I don’t know all of these companies, but three of them I feel like I know pretty well. Who hasn’t seen a DreamWorks presentation? In my mind, any company that makes animated movies has to be a fun place to work, so I’m not overly surprised by that. Google is another company that has a lot of activities for its employees to do, although they had kind of an up and down year in 2009 and actually eliminated a few of those perks. But it seems the people who work there love the place.

The one I know the best is Wegmans Food Market, like Google, a former number one employer. As a matter of fact, not only did I briefly write about them in another blog back in 2006, and write about them again in one of my newsletter, but Forbes Magazine had a wonderful write up about them in 2003, naming them the number one company in the world for customer service. I love Wegmans, and it’s not because I share a property line with them at the present time (our “backyards” are up against each other). Everyone is just so nice, every store is wonderful, the quality can’t be knocked, and they’re very good to their employees. I know many people who started there when they were young, earned scholarship money, worked there during their breaks to earn more money, and when they graduated worked there until they could find their true calling, which, for some of them, was to stay at Wegmans and move up the ladder in some fashion.

Congrats to all 100 companies; check them out at that first link above.

The Treasury Department today gave GMAC Financial Services another $3.79 billion dollars, bringing the total amount they’ve been given to more than $16 billion and, in effect, giving the government 56% ownership in the company. Who needs a quick loan?

Supposedly, this new money is to help shore GMAC up to make sure they don’t fail because of the prediction that they’re going to lose money on the mortgage part of their business. The money will be used to shore up the automobile loan side of the business, which supposedly is thriving and doing well, just not well enough to overcome the pending losses.

First, I’m somewhat confused. Didn’t the House just pass legislation so this kind of thing didn’t happen again? Does it take time before it goes into effect, or does the Senate have to agree with it before it’s passed (which, based on how the Senate hasn’t worked together on anything this year, seems doubtful)?

Second, since GMAC was supposed to raise the rest of the money on their own and couldn’t get it done, what makes them any different than Citigroup, which had so much trouble selling all the new shares it created to pay off its TARP loan that the Treasury actually had to hold off on selling its own shares of Citi stock because the price dropped so low? By the way, Citigroup did finally pay off the loan, though the Treasury still is holding on to those shares.

Anyway, it looks like GMAC will be trying to sell off that mortgage group, Residential Capital LLC, which lost $2.7 billion through the first three quarters of 2009, following $9.96 billion of losses in 2008 and 2007.

This situation seems to prove that sometimes trying to be something more than what you are isn’t a good thing. GMAC used to be the top automobile lender in the United States, and has tried to branch out into all these other businesses in hopes of becoming a major banking operation. Bad timing and bad choices seems to have undermined them, and this is what they’re left with. Let’s hope they find a buyer for the mortgage group that can sustain itself; we certainly don’t need good money buying a bad operation and failing because of it.

On Thursday, the “Pay czar” of the United States (I didn’t even know we had such a thing) decided to slash the salaries of those bank executives from banks that the administration gave bailouts to. These slashes were drastic, and were in response to bonuses that had to be paid out to brokers who, somehow, were a part of helping the Dow Jones break 10,000, and had incentive clauses in their contracts.

Pay czar Kenneth Feinberg reworked contracts for the 25 highest-paid employees at five financial firms and two automakers who were the biggest benefactors of the bailout. He’s cutting their compensation 90% for the rest of the year. He did say he wouldn’t go backwards and take some of what they’ve already been paid back. This involves: American International Group; Bank of America; Citigroup; General Motors; Chrysler; GMAC; and Chrysler Financial.

To say that the American public was up in arms is more muted than how people actually reacted. Some folks lost their minds when they heard about the bonuses being paid out. I can’t say I blame most of those people. After all, the Dow has gone back and forth since it hit 10,000, and the weekend ended with it under that mark again. Also, it wasn’t really these companies that had much to do with the Dow getting to 10,000 either. Citigroup and Bank of America posted big losses. Chrysler did post a profit, but they also sold 20% of their company to Fiat, so that might have helped some. Overall, these companies haven’t quite lit the world on fire with the bailout help, and, it seems, the banks might either need some help or, as many believe, should be left to burnout and go away.

How do I feel about cutting salaries? Oddly enough, I have to say that I had mixed feelings, but I don’t now. Initially I thought the government was going after everyone at these companies, and I had a problem with that concept. Seeing that it’s limited to 25 people total, I don’t have those qualms anymore. One of these guys, and I don’t remember which one right now, still earned $10 million last year. Another, who had dropped his salary to only $1, still earned $40 million in bonuses and incentives. For a bank that had been bailed out!

That’s not criminal, but how could anyone not see that as a problem? I don’t have a problem with incentives for employees because that’s just how the world works. But for these executives to take that much money after having to be bailed out; that’s just a shame. I’m one of those people who never holds it against anyone for making the money that someone is willing to pay them, but in this case I’m making an exception because the bonuses that were earned were false. The salary part, I really don’t have as much of an issue with, but lessons have to be taught, right?

One of the Bank of America executives said that cutting these salaries could result in talent leaving these companies for greener pastures, which meant companies that didn’t have to accept the bailout. To me, it seems that one of the problems with these companies is that they didn’t have any real concept of how to recruit, or at least evaluate, talent in the first place. That’s not uncommon, but it’s still frightening. If the only “talent” someone has is making money, but they have no discretion, I don’t know that I want that kind of talent on my staff. At the same time, I also don’t want the kind of talent that feels everything can be fixed by slashing workers and protecting profits above everything else. There has to be a balance after all.

Those are my thoughts; what are yours?

Something I always find funny is how both hospitals and companies get charged with something, agree to pay a fine or a settlement, then officially state that they didn’t do it.

In this case, General Electric was charged by the SEC for improper accounting practices that made their company look more successful to investors than it actually was. The SEC accused them of doing it four times between 2002 and 2003, but indicated, in their own way, that it might have been a practice that went on for much longer, as GE kept reporting successes that weren’t predicted for almost 11 years.

So, the two sides must have debated things, and GE gets to pay a $50 million civil penalty, which we might as well just call a fine, for what we’re supposed to believe is not an admission of guilt. To their credit, they’re also not saying they didn’t do it. They’re just staying silent on it all, and there’s this money sitting out there that they’re going to pay to be allowed to move on.

My question is how they’re allowed to kind of get away with not having to fess up to doing something wrong? I always ask the same thing when hospitals pay big fines, but at least I understand that one. If hospitals challenge a federal audit and lose, they have to pay triple damages, plus lawyer fees, and some of what hospitals have been fined for have come to some pretty high dollars.

One hospital in Rochester some years ago was fined $6 million for a minor lab issue that, unfortunately, went on for a couple of years unnoticed by anyone. If they’d fought, they’d have probably lost, and it would have cost them more than $18 million. No one wants to take chances like that. And, though the hospital didn’t admit to guilt, since the claim was intentional fraud and the hospital really didn’t know the process was going on, they were allowed to deny doing anything wrong, based on the claim of fraud, when everyone in health care knew they’d done something wrong, just not intentionally fraudulent.

So, do you feel GE is getting off the hook easily or not? I mean, $50 million is a pretty high dollar amount, but based on the amount of money they probably made over those 11 years, that figure is probably a drop in the bucket, kind of like that “drop in the bucket” $1.67 billion Abbott Laboratories got hit with just over a month ago. What’s your thought on this?

No, not Bud Abbott, but Abbott Laboratories, who just lost a $1.67 billion dollar jury-awarded judgment against Johnson & Johnson for patent infringement. Humira, Abbott’s pharmaceutical that blocks tumor necrosis factor, related to arthritis, is the culprit, as the jury found that Abbott had stolen part of a study J&J did in 1994 to apply to its drug.

At this point, things get hazy, because of a couple of reasons. One, I didn’t know research could be patented. Two, I didn’t know human antibodies could be patented. Three, I didn’t know that there were some things drug companies could keep from other drug companies longer than a few years; what’s the deal with generic drugs then?

What’s odd is that I don’t have much problem with the judgment of $1.67 billion, which does seem high. We don’t know just how much money drug companies make when they market these things, and it was mentioned that J&J’s competing product, Remicade (sounds like something we’d drink in the summer, doesn’t it?) made $1.03 billion in the first quarter of this year.

However, it’s figures like these that teach us just why pharmaceutical prices are high, and why they’ll continue to stay high. Research takes time and is expensive, and these companies have to try to get their money back as much as possible. We don’t often hear of the testing that’s done on something that they end up determining they just can’t release to the public, but we know there are way more failures than successes.

Still, the judgment caused a minor tremor, and nothing else in the pharmaceutical world. That also tells us a lot. Who reading this blog would be able to sleep after getting hit with a judgment like this?

Time Magazine’s online magazine has a new story titled Top Ten Crooked CEOs. It actually comes out being 11, since the very first one they show is actually two people, Kenneth Lay and Jeffrey Skilling of Enron.

Just to throw this in, I always had a feeling that Kenneth Lay was actually railroaded into a conviction, and that’s probably naive of me. His overall actions didn’t seem like those of a guilty person, and when his claim that CEOs don’t always get the correct figures from the finance people was met with derision, I actually believed it because I’ve seen it happen.

Years ago I was working at a hospital where things just didn’t seem like the VP of Finance was reporting. I got there at a bad time, helped bring cash into the door, yet for some reason where I was working was having problems paying vendors, even though the VP was reporting profits of nearly a million dollars. Turns out she was changing the figures manually, and twice fired everyone in the accounting department for incompetence because they couldn’t help her justify her figures.

When it looked like it was going to happen again, the director of the department went to the board and showed them some numbers. They understood, she was now on her way out, and they looked at the CEO, who kept saying he had full belief in her competence, yet when presented with the numbers was stunned that he’d been misled. Yeah, he ended up going also, since it turned out we actually had a loss of almost a million; a $2 million dollar swing for a small company is never a good thing.

Anyway, back to the list. We all know Bernie’s on there; that one was easy. Many of the people on the list have been accused of insider trading, and I have to admit that’s one that escapes me all the time. I mean, how could CEOs not do insider trading; they’re right there, if they know the numbers they know whether to buy more or sell to protect themselves. If insider trading is bad, at least for CEOs and the like, then they shouldn’t be given stock options and shouldn’t be allowed to own any stock for the company they work at unless they created it.

Actually, the oddest thing is that no one from Arthur Anderson, the failed accounting firm that was actually convicted of aiding Enron in cooking its books, didn’t end up having anyone at the top go to jail for them, and actually is still around, which is surprising, though nothing like they once were. And, if I got my way, there would be a whole lot of bank managers who should have been arrested and tried, at least, for what’s helped to drive us into the economic fix we’re in now.

Anyway, check out the list; I think it’s quite entertaining.

I never thought I’d be writing any posts about Twitter on this blog. However, there’s no doubt that Twitter is not only a business, at least will be considered one once someone figures out how to monetize it, but is used for business purposes in more than one way.

Let’s start with a brief explanation of what Twitter is, since there are still many people who have no clue about it. Twitter is a website where people can go to either get information, share information, or talk to others about almost anything. All messages have to be completed in 140 characters or less, so it makes people concentrate on just the right language to use. Links can be posted, and they’ll get shortened if they’re too long, so that doesn’t usually hurt your character numbers.

Twitter is known as the fastest growing social media website in the world today, as it’s jumped from around 800,000 people last April to today’s estimated figure of close to 10 million people. Those numbers can’t be confirmed because Twitter doesn’t release member figures. So, it’s becoming an important tool in both personal and business matters, both in the United States and internationally.

I use Twitter for both personal and business purposes. From my Twitter name, which you can decide to follow by clicking this link, every blog post I make on any of my three blogs automatically is posted onto Twitter. I also regularly announce what I call “office hours“, which means I’m on instant messaging live to talk to people through one of my two business sites.

That, plus every once in awhile I’ll throw out something that I know because of my specialties, helping to highlight my competence in my fields of expertise; at least I hope that’s how it comes out.

After reading an article on the Marketing Pilgrim titled Posts, Tweets, And The Law, I realized that there could be a lot more at stake for some organizations than just talking about one’s company and advertising.

In this story, it talks about how a few large organizations, eBay most specifically, started out with someone representing the company, trying to put a human face on it. Then, out of nowhere, here came the legal suits, effectively putting a clamp on creativity and openness by instituting a series of rules on what could be said, and how. At that point, it changed the dynamic of what was being said and how it was being said, and in a way one couldn’t blame them because, as it says in the article, Cicso Systems is already facing some type of lawsuit that resulted from something that was stated on Twitter.

I have to admit that I haven’t paid that kind of attention to businesses that are on Twitter. I did know businesses were there, and that some companies have people who regularly search Twitter to see if their companies are being mentioned in some fashion. I’ve been contacted twice by companies after I had said something in passing using one of their names, usually complaining about something. Think about that and how powerful a customer service tool it can be, because their response is open for everyone to see, since, in order to send a private message to someone, that person has to be following you.

There will be more and more people who will be joining Twitter, and I expect business people will be coming along for the ride in record numbers soon, as more of them realize how well it might work to help them get new clients. As an executive coach, I’ve noticed there are more independent business people, especially executive coaches, who are joining, and I notice this because I end up having a lot of them following me. Sometimes I feel like I should be saying more profound things to justify it, but I just end up being myself.

I don’t know where all this will lead, but I figure that, at some point, there will be some regulations as to how large organizations will be able to participate on Twitter, especially as they determine how to monetize the site, which, in layman’s speak, means advertise, or accept advertising. It should be interesting and intriguing to see if they avoid the kind of uproar that Facebook faced when they finally went that direction.

It was reported that, on Monday, there were more than 75,000 jobs cut on that day alone. Some of those figures came in like this:

Caterpillar, 20,000 jobs;

General Motors, 2,000 jobs.

And IBM, which is hiding its numbers for some reason, is estimated to have cut at least 40,000 jobs over the last year, although that’s mainly speculation. IBM’s take on it is that, since the Securities and Exchange Commission requires companies to disclose only “material” events, they don’t have to announce anything; whatever that means.

Today’s job losses began with Corning Inc, which laid off 3,500 workers. Baker Hughes, an oil services company, is laying off 1,500 workers. Most of the other job cuts announced are being spread out over time; thank goodness for small miracles.

It was announced today that around $386 billion dollars of the stimulus package was rolled out today, going to the banking industry. I’m thinking there are a lot of other industries that need some help also; I’m sure we’re going to get around to them eventually. But will there be anyone left to save?

Trust me, I’m not hating on anyone, especially after how good I feel about yesterday and the inauguration of Barack Obama. However, this question has to be asked, and I guess it comes down to me to ask it.

On the heels of the turmoil at Citigroup, of whom I’ve never been a big fan of, the news came out today that Robert Parsons, the former CEO of Time Warner, and someone who was considered one of the top CEOs in the country, will now be the chairman of the board of Citigroup.

Now, in this case, Parsons does have some background in banking. Before beciming Time Warner’s CEO and chairman, Parsons was chief executive and chairman of Dime Bancorp, a thrift bank, in the early 1990s. Parsons was also an economic adviser on President Barack Obama’s transition team. So he has some chops. But he has been out of banking for a very long time, and at this critical time when Citigroup is getting beaten up almost every day and is in the process of splitting in two, wouldn’t you have thought that they’d have wanted to bring in someone with more current experience in the banking world?

This happens often in the corporate world. Many CEOs move to businesses where they don’t have a background, but were CEOs, so it’s just expected that they’ll bring whatever skills are needed to the job. That doesn’t always work with people who have the experience in the business, so when it pertains to this issue, how would these people be expected to be better, or even legitimately good, without a lot of help?

Actually, I’m going to answer that one, though I’m going to use a much different example. The truth is that no one is ever trained to become president of the United States either, and yet someone is always elected. Some presidents have succeeded, but many have faltered, and badly. Not everyone has had government training before ascending to the presidency, but some have had more leadership training than others. The truth standard of being a top leader isn’t always knowing all the ins and outs of a business as much as having enough leadership skills to know who to pick that you trust, that you know will give you the best they have, and that you’ve selected quality people who, hopefully, know more than you do about a certain topic so that you have a chance to succeed and make the proper decisions.

So, I’m waiting for my call to become CEO of a major company. I’m already CEO of my own organization, even if my business consists of only myself. I’m ready to take over and make you money; call me!

Talk about a story that’s taking on a new life. Belkin International, a company that makes technology products, has now come under serious scrutiny. This is because one of their employees was caught paying for reviews of products on eBay, whether they had ever seen the product or not. Yeah, there’s something drastically unethical with that.

Of course, Belkin came out with a disclaimer just as quick; this is that disclaimer:

Belkin has always held itself to the highest standards of corporate ethics and its employees to the highest standards of personal integrity. Similarly, we support our online user community in discussion and reviews of our products, whether the commentary is good or bad. So, it was with great surprise and dismay when we discovered that one of our employees may have posted a number of queries on the Amazon Mechanical Turk website inviting users to post positive reviews of Belkin products in exchange for payment.

Mark Reynoso
President, Belkin

So, all will be forgiven, and it’ll be business as usual, right? Well, not so fast. At the same time as that statement was coming out, a present employee of Belkin, obviously anonymously, was outing the company, writing such lines as these:

“While never mentioned in an “official” policy, for years it has been pressed upon ALL Belkin employees to do whatever is needed to get good product reviews and good press. Everything from sending blog writers a device with custom firmware that hides known bugs yet claiming it to be official release firmware, faking hardware logo certifications (specifically Apple and MSFT), releasing blatantly inaccurate data from test results making our devices look superior to others, to placing “tailored” reviews of our products into places visible to consumers (as reported Amazon, etc), as well as writing poor reviews of competitors products.”

“In fact, our products are such junk, when an internal survey was done, it was found that the majority of Belkin employees purchased competitors products for home use, even with ours being offered free, as they are of such poor quality.”

Well, this is intriguing, and that last line is something entirely different. We all love picking on Microsoft operating systems as being insufficient whenever we get them, but the truth is that we all know that Microsoft is trying to give us ultimate quality, as much as they can, and that they’re certainly not out there paying anyone to say nice things about them just to get over on the public. In this case, if the first statements about paying for good reviews isn’t bad enough, paying for good reviews on products that the company knows aren’t good at all is troublesome.

If it’s true, and that’s always the big story. I’ve never purchased a Belkin product, but I’ve always been warned away from them by people who consider themselves as in the know. You can bet many of them are saying “I told you so” today after all of this has come to the forefront. Financially, who knows if this will hurt Belkin, since they’re a privately held company, not on the NYSE. However, if their reputation among the “geek squads” was already bad, this certainly won’t help.

Also, if it’s true, what does it say about other companies that get reviews on their products in paid circumstances? This is the type of thing that could bring in to question every single review that’s ever been written about anything. And, isn’t this another way of gaming the system and manipulating the finances, especially if the products are intentionally deficient?

If you’d like to read the entire post where I got this person’s quotes from, go here. Personally, I’m sick of reading about things like this. It’s not quite a Ponzi Scheme, and it’s not quite lying about the books and financial stability of the company, but it’s right up there. I think there should be an investigation; there probably won’t be. What do you think about this?

Wow, is the bad news starting to come out in droves these days. The big news of the last couple of days, finally, isn’t an American story, and yet it’s affected American businesses as well as businesses around the world. Satyam Computer Services, one of the largest outsourcing companies in the world, had its CEO, Ramalinga Raju, come forth and admit that he and his company have falsely inflated its profits for years. He admitted that about $1 billion dollars of the cash they stated they had was false, and that figure accounts for 94% of the actual cash on hand, or around $60 million dollars.

In a day, the stock price of Satyam dropped about 80%, and the entire Indian index fell 7.3%, as the value of the rupee also fell. Some began calling this India’s version of Enron; we all remember what happened there.

Of course, for a “mental genius”, the way Raju tried to solve the issue seems even more idiotic. His company came under scrutiny when they tried to buy two construction companies and, in the process of checking into their finances, found that things didn’t quite make sense, and of course the purchases were canceled. A quote written in a letter by Raju was “”It was like riding a tiger, not knowing how to get off without being eaten.”

In a twist of irony, just a few months ago Satyam received an award from a group of Indian directors for excellence in corporate governance. It reminded me of Bernard Madoff, who had also received an award of excellence just months before being found out.

Some U.S. companies have already filed class action suits in the US on behalf of those who purchased American Depository Receipts (ADRs) of the company; they certainly didn’t waste any time, did they? Of course, they could have, since it was a national holiday in India on Thursday, so no action could be taken to begin with.

It begs a couple of questions. One, once again, where was the oversight? It’s hard to believe that auditors wouldn’t have picked this up on their own, unless they knew what was happening. Two, who else knew? Raju’s brother, who also worked for the company, has resigned, although there’s no proof that he had any idea of what was going on. Three, it wasn’t even the Indian Securities Commission that outed Satyam; it was the World Bank. And four, what happens to Satyam now? Enron obviously didn’t survive, but they were an auditing company, and who would hire an auditing company that did what they did? Satyam supposedly delivers very adequate goods and services, and is a software company. They’ve already changed CEOs, as Raju waits to see what his ultimate fate might be. Will Satyam possibly lose customers who’ve enjoyed their services because of this admission, or will they feel that justice has been served in some capacity and keep working with Satyam? For that matter, will the Indian government allow Satyam to stay in business?

The odd thing is that it shows that it’s not just American businesses whose business practices needed to come under scrutiny. Unfortunately, we all know this isn’t the last story of this type we’re going to hear about either.

Originally posted 11/20/08

If you are a business owner and are looking to add or upgrade a car to use for business driving, it might be best to buy one before year-end. There is a special bonus depreciation deduction available only for 2008 that will allow you to claim up to $10,960 in depreciation for a new car or $11,160 for a light truck or van that is placed in service in 2008.

While the tax savings shouldn’t be used as an excuse to buy a new business vehicle, if one is in your plans, it will probably be cheaper to buy it before the end of 2008.