Unfortunately for the author, he is technically Generation X as opposed to Y (sarcasm). However, the points of the article are the same. My key take away? Yes, our youngest generations are being dealt a very crappy hand. An 8-2 off-suit in poker terms. But, unlike in poker, we all have to play the hands we are dealt.
In light of this article (and the obnoxious political FB posts lately), I promise to stop bitching, crying, whining and pointing the finger at what got us in this mess. Our generations’ time and energy would be better spent solving the problems. We “youngin’s” are the 2nd largest group of voters behind the baby-boomers. Let’s go out, get educated, vote for representatives who will create an America that our kids will be proud to grow up in. Better yet still, let’s not wait on the government to solve all our problems. Become active in your community, become self-reliant and give a helping hand to someone who needs it. It is time to put up or shut up.
I’m cutting the cord, like for reals - how to cancel your cable subscription
Everyone loves watching TV. EVERYONE! It’s been estimated that the average person watches like 4 hours of TV while simultaneously spending 6 hours online and playing video games for another 8 hours EVERYDAY! (Don’t quote me on that. 67% of all statistics are made up anyway.) However, that much loved entertainment comes at a hefty price. And who enjoys paying $75-$300 per month for such wonderful service? NOBODY!!
Being a newlywed in our first home with a new puppy in the family, 2012 has been an expensive year. Expensive year + expensive bills = cutting the cord. I know, I know. What about football, baseball and basketball? What about DesperateRealHousewivesBachelorettePad-whatever-you-call-it? (Don’t judge, anyone who has met my wife knows there’s no getting around her affinity for trashy television…)
In our desperate attempt to remove this monthly expense from our personal income statement, I did a little research… I believe I have found the solution. This is not an all-in-one solution, but a combination of offerings to achieve a resemblance to what we were already getting. So here it goes…
Netflix streaming subscription - $7.99 (I cannot express the amount of annoyance I would feel if I had to call that Qwikster)
Hulu Plus - $7.99
AppleTV - $99.00
Optional - Upgrade internet service
Hulu Plus/NetFlix/ESPN3 are all apps on either the AppleTV or my gaming consoles*. So between those 3 alone, we cover most (if not all) of our preferred shows. But wait, you can’t watch them live! Oh yeah, that’s right. We never did anyway.
The only missing piece is the live sports (specifically the Dawgs, Braves, and Hawks). That is where the HDTV antenna comes into play. Oh you didn’t know there are antennas that attach to your house to get HD channels for free? Well, wham, bam, thank you ma’am because there is! I found this site was the best place to look to determine what antennas you need. There are different types for uban/rural, amplified, multi- or single directional etc. And if you’re unsure of the signal strength in your local area, go here to help determine which antenna fits your geographical needs. Based on where we live, we’ll get CBS, FOX, CW, NBC, ABC, PBS, and a few more channels with acronyms I’m unfamiliar with. Hello live sports.
Since a lot of the non-live shows/movies will be streaming via the internet, we will be switching from AT&T’s sub-par internet speeds to a Comcast data plan. Those telecomm companies don’t have the bandwidth that cable operators can offer. Luckily for us, we’ll be paying roughly the same price for FASTER speeds.
So, after some up front costs (antenna + parts and AppleTV if you don’t already own one like I do), our monthly bill has gone from $95 per month down to $16… For those of you who don’t want to reach for a calculator, that’s nearly $1,000 a year in savings. You’re welcome, now go invest it in an Roth IRA… or go buy a couple of these.
Now some of you sports fanatics may have some crazy, overpriced all-inclusive sports package. I’m sorry to say, there is no replacing those types of bundled packages. And yes, there will likely be a weekend or two when the Dawgs aren’t on my awesome new setup. That’s when I will either go to a local bar or pick a brother-in-law’s house to watch it. Worst case scenario, since I don’t care what my friends think, I will very rudely invite myself to their house. If I’m lucky, it’ll be the ultimate excuse to go watch the game in person. Win-win if you ask me.
If you give it a shot for yourself, please let me know how it goes. I’m interested to hear how this can be done for people with various circumstances. I plan on posting a follow-up mid football season for a progress update.
*Since I was born in the mid 80’s, I am not ashamed to say I was a gamer through college and I also own a couple gaming consoles that also have these apps.
It has been almost 3 months since I last made a post. In an attempt to get my thoughts together and get back on track, I’m going to summarize what I plan on posting in the, oh so near, future. (Maybe this will hold me accountable to actually do it… we’ll see)
Mid-Year review of 2012 - Where I’ve been and what I (we) have accomplished
Yes I do CrossFit. Yes it works and no I’m not in a cult (although I understand why you’d think so)
The 2nd step to creating a personal budget
I’m cutting the cord, like for reals - how we’re cancelling our cable subscription and you should too :)
I am proudly a part of this millennial spectrum (albeit on the “older” side of it). Thus, I took offense to this article. So, just once, I want to take a stab back…
The real reason why millennials are stressed? Because we know we’ll have to clean up the mess the baby-boomers have created. By definition, we (by we, I mean, collectively all young people) haven’t been alive long enough to damage our society to begin with.
So next time you read another article bashing young people for our immaturity, lack of employment, huge debt, and irresponsibility… please try to remember who really created the environment that put us here.
The first step to creating a personal budget is also the most important...
I read a lot of articles about personal finance with titles like, “The top 5 Money Saving Tips”, or “Finance 101: How to create a budget” or “Stuck in a money crunch? Follow these 10 steps for a Personal budget”.
Most of the articles provide really great advice. They talk about what steps to take, strategies to implement and how to create goals for yourself. I think for the average person, it is really difficult to create and maintain a budget. Whether it is how they were raised or fear of numbers, most people are not comfortable managing their own money in a proactive manner. These sites really do seem helpful.
With all that being said, in my personal experience/opinion, there is one area that I believe is grossly overlooked in every self-help personal budget I come across. And that is summed up with one question. How do you know what direction you should be going if you don’t know where you are today? Stated differently, where do you spend your money today? The easy expenses are always the items we gravitate towards first. “Oh, my car note is $300, rent is $1000, cable/cell/internet is another $150…” and etc. Fair enough. I always believe the devil is in the details…
How much did you spend on groceries last year? What about restaurants (yes that daily Starbucks trip too)? Hmm, better yet, how about those annoying items like oil changes and new tires? Don’t forget about birthdays, holidays and gifts every year.
Pretty tricky to manage right?
This is no easy task. It’s the hardest part of budgeting but also the most critical. My advice is to accurately track every penny spent (at least) once every 3 months. At this granular level of “tracking”, it is not a matter of ensuring you capture all the dollars spent (although that is still very important); it is that you will actually start to correlate your decision making with their financial impacts. This is the best way to change spending behavior. Too often people do not connect their many small decisions with the impact on their overall financial picture. Doing this “tracking” helps connect the dots.
But guess what? I have not mentioned one word about planning. During this time of getting familiar with your current spending, DO NOT PLAN. Become accustomed to tracking where your money is being spent. Do nothing else. Crawl first, walk later. (Now of course, if you are filing for bankruptcy and the bank is foreclosing on your house, obviously this message is not meant for you. Sorry.)
The very first month I got serious about tracking my personal spending, I was utterly shocked at the amount of money I spent on food, video games, and well… crap. I was spending almost 1/3 of my paycheck on groceries and eating out. Do not get me wrong, I really enjoy food and drinks with friends in social settings. But wow, I never realized I dedicated so much of my money this way. But once I started tracking my spending, I could slowly start to see how my decisions (i.e. going out to pint night at Taco Mac every Thursday) were impacting my overall ability to save money.
You must know where you spend your money. Down to the damn penny. That sounds excessive, but with today’s tools you really have no excuse unless your personal mantra is “ignorance is bliss”. Balancing check books is lame even for a numbers lackey like myself. There are some awesome, free tools out there. Mint.com is one of the best free financial planning/consolidation tool out there. What Mint.com aims to do is consolidate all your financial accounts into one snapshot. (I’m a stickler about privacy and Mint.com passes the sniff test on that front as well. Otherwise, I would not use them.) They can pull transactions from your bank accounts, debit card, credit card and even loans and investments. They even go one step further and take a best guess on the nature of the transaction and put it in a category for you. So a credit card transaction to “Gas South” will automatically be marked as “Gas Bill” which is a sub-category under “Bills and Utilities”. These transactions all get labeled and consolidated into a pretty summary for you. (They do awesome budgets and goals too.)
BOOM!! Now you can be ashamed of all the naughty spending habits you always knew you had but were too afraid to confront. Give it some time and start tracking. Congratulations, you are now on your way to financial independence. If I can keep up on my goals for this year (which includes blogging consistently), I will be following up with some helpful next steps to a personal budget. Look out!
You may be thinking, “Well hey, you’re a financial analyst, no wonder this comes easy to you!”. This is partly true. My professional background and experience forces me to be more attuned to these things than the average person. But you are kidding yourself if you think professionals in the accounting and finance industry (myself included) do not have “money problems.” For example, I believe it is way more dangerous that I know exactly how much money I spend and I eventually become numb to those figures since I deal with large sums of money on a daily basis. I am still a normal dude (most of the time) compelled by the same desires as anyone else.
In case you do not know anything about me yet, I work with numbers on a daily basis. I analyze, budget, manipulate and streamline all sorts of data (I even do fun projects on the side like this one). Typically that involves pushing around Benjamin’s in a spreadsheet for the company I work for. So I try to read everything and anything dealing with finance that I can get my hands on (personal, banking whatever)
This does not by any means make me an expert on personal finance. As a matter of fact, let me go ahead and state this explicitly: you should not, by any means, ever take information I may, or may not, directly present in this blog post, or any blog post, as financial advice. I doubt my advice would bankrupt you; however if you do go bankrupt or have some ill-fortune, it’s your own fault. I am merely speaking from my own personal observations and experiences. And yes, I sound like an annoying brat who is trying to mitigate some imagined liability. Yes I am that guy. See you next time.
It is the last point that I have the most issue. I came to your service for a reason. It was cool (YouTube), it helped me connect to friends (Facebook) or it solved a real world problem (mint.com). In almost every scenario, these offerings were free! Awesome! Who doesn’t love free? Second, they all started with absolutely ZERO advertising. Which was another plus. I hate being marketed to unsolicited (another weird pet peeve of mine). Also, it clutters the screen space, which in turns creates a worse user experience. But I get it, they gotta make money off me somehow, right? Fair enough.
For me, the hiccups happen when privacy policies are modified. I find it a little concerning when Google, Facebook, or any company would go out of their way to change privacy policies that modify how they collect my data in the name of delivering more valuable information to advertisers and in turn generate more advertising revenue. Notice I said, “more” information. Because guess what? Some online companies already know waaaaaay too much about you. And yes, they won’t say it exactly this way, but they need to sell this information to make money. This guy’s blog post does a great job of summarizing how much Google can potentially know about you. We all know that FB knows your life story. They changed the profile page into a Timeline, enough said.
So you may be asking, “Dude, what’s the big deal? What are you so paranoid about? Don’t get your panties in such a wad! It’s not like anyone is going to nuke your house. No one cares about your online activity except you!” You’re probably right. It’s about principle.
I freak out because I view the internet as an extension of real life. It has enhanced my real life in ways no one thought possible 30 years ago. I can stay connected to people all over the world. I can transfer money in seconds. I can share my idiotic thoughts to whoever does (or doesn’t) listen. It takes what can’t be done in a physical setting and extends that experience virtually anywhere. However, I simply want to hold the web to the same standard as those real physical scenarios (and maybe I shouldn’t, which may be my problem).
I will close with this example; imagine you go to a mall to do some shopping for a loved one. You are stopped at the front gate because you first check-in to the mall with a membership ID. No worries though, it is a free membership after you provide the generic information (name, address, phone number whatever). C’mon, at least they grant you access to the stores! You walk in and while browsing the many stores, the mall records you at every stop. First, Macy’s then JCPenny’s. The list of items you look at is also documented. Perfume at Macy’s and KitchenAid mixer at JCPenny’s. You break for a minute to view some videos at a store. You laugh at one of the funny clips from Wedding Crashers and stroll along. As you leave, you pass by one of those vendors that sells flying helicopters and quickly leave. You’re distracted by the railroad cars instead. Time for food! You grab a slice from Sbarro’s.
Along with your membership ID, and your recorded browsing history, the mall decides it wants to make this experience even better for you. After all, they could probably help you faster than you can help yourself. So the mall quickly runs some calculations based on what they’ve been tracking. After 30 minutes or so, they have a pretty good picture of why you’re here. The mall sells this information to the highest bidder, er, I mean most “relevant advertisers”, and suddenly vendors approach you simultaneously. Discounts on comedy DVD’s from an electronics store, coupons for pizza from someone dressed as Mario and Luigi, perfumes worn by super models, and a cooking show host using Kitchen-Aid products. Wow, you realize some of these offers are pretty dead-on! Even offering a toy railroad set for your son’s birthday next week which they pulled from your phone’s contact information. But now you’re a little concerned too. Can you stop the mall from tracking its traffic? The mall says sure, just opt-out of mall tracking next time.
Yes, I realize that example a little extreme. But this is why I “freak out”. In my mind, this is exactly how shopping happens on the internet. What are your thoughts? Am I really as weird as people tell me or do I bring up any valid points here?
UPDATE: There are articles like this one from Forbes.com that do nothing but reinforce my queasiness surrounding online privacy.
Do you wanna know, “what they know”? Wall Street Journal has put together an awesome interactive tool that displays how you’re being tracked and by some of the largest websites and which companies your data go to as a result. Check it out.
Zynga recently announced quarter and year end results. This was an important one. This was the first earnings announcement after going public; it also wrapped up their fiscal 2011. They were able to edge out Wall Street expectations but set the bar pretty low for 2012. See the coverage by Business Insider for more information.
One thing I HATE about the accounting/finance world, is how complicated it is to report GAAP results (GAAP is an acronym for Generally Accepted Accounting Principles). Zynga’s 8-K filing is a perfect example of how laws make financial reporting a chore for public companies to measure success. Zynga cannot simply report GAAP results. Why? Because the results look AWFUL on a GAAP basis. Yes, GAAP is the standard to compare any/all public companies. It is the divine “apples to apples” standard.
On a GAAP basis, Zynga reported net loss per share of (1.22) for the quarter and (1.40) for the year. On a non-GAAP basis, Zynga reported net income of $0.05 and $0.24 per share for the quarter and year respectively. Confused about why they are able to do that? Me too.
Zynga (like many, many companies) decide which items they wish to exclude from their GAAP results in order to provide investors with reliable metrics to track the financial success (or failure). Companies call these “Adjusted Earnings” or “Non-GAAP” measures. Essentially, Zynga management can exclude anything they feel will help illustrate the company’s performance. (Why it is called GAAP, I’ll never know. Obviously with so many companies using “Adjusted Earnings”, GAAP is not “Generally Accepted” by anyone but accounting professionals…) My ranting can not illustrate this well enough. See below for Zynga’s GAAP to Non-GAAP comparison:
Here is a description the non-GAAP measures Zynga uses and their limitations (from Zynga’s 8-K Filing):
Some limitations of bookings, adjusted EBITDA, non-GAAP net income, free cash flow and non-GAAP EPS are:
-Adjusted EBITDA and non-GAAP net income do not include the impact of stock-based compensation ;
-Bookings, adjusted EBITDA and non-GAAP net income do not reflect that we defer and recognize revenue over the estimated average life of virtual goods or as virtual goods are consumed;
- Adjusted EBITDA does not reflect income tax expense;
- Adjusted EBITDA does not include other income and expense, which includes foreign exchange gains and losses;
- Adjusted EBITDA excludes both depreciation and amortization of intangible assets, while non-GAAP net income excludes amortization of intangible assets from acquisitions. Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future;
-Adjusted EBITDA and non-GAAP net income do not include gains and losses associated with legal settlements;
-Free cash flow is derived from net cash provided by operating activities less cash spent on capital expenditures, and removing the excess income tax benefits or costs associated with stock-based awards;
- Non-GAAP EPS treats shares of convertible preferred stock as if they had converted to common stock at the beginning of each period presented;
- Non-GAAP EPS gives effect to all dilutive awards outstanding, including stock options, warrants and unvested restricted stock units that were excluded from the GAAP diluted earnings per share calculation. See non-GAAP EPS reconciliation for further details ; and
- Other companies, including companies in our industry, may calculate bookings, adjusted EBITDA, non-GAAP net income and non-GAAP EPS differently or not at all, which will reduce their usefulness as a comparative measure.
Because of these limitations, you should consider bookings, adjusted EBITDA, non-GAAP net income, free cash flow and non-GAAP EPS along with other financial performance measures, including revenue, net income and our financial results presented in accordance with GAAP.
Alright, before an accountant starts beating me to death about preventing another Enron from happening; standards, laws, and regulations are absolutely required to ensure every public company reports consistent earnings to protect investors. I get all that. If you want to raise capital via public offering, it’s part of the rules of the game.
But at what point does reporting become a bit ridiculous? Yes, we absolutely need a standard to compare Zynga to any public company. I totally understand that. BUT (and it’s a big BUT), Zynga must report non-GAAP results. How else are investors supposed to track Zynga’s progress? GAAP does not do investors or Zynga any justice. (For example, Zynga generated positive cash flow and has over $1.5B in cash on the balance sheet. They must be doing something right…)
Zynga’s business is not the same as Google, Microsoft, or even Facebook. It’s not a manufacturing company like Ford, GM, or Daimler-Chrysler. It is not even close. The basis for measuring these companies should not be the same either.
What is the measuring stick for technology companies? Who do you think should decide what’s in vs what’s out?
Facebook - Not Originally Created To Be A Company...
Facebook recently filed an S-1 with the SEC to finally go public. Their IPO is one of the most anticipated public offerings in history. The filings show that they have extraordinary growth and are already very profitable. This is a very hard thing to do. (I will be talking about how FB’s IPO was so different from Zynga’s in a later post.)
FB’s financial disclosures were awesome. They provided great charts and statistics that helped substantiate their filing. Kudos to FB. However, the most interesting piece in the whole filing was Zuck’s letter to potential investors. This letter laid out Zuck’s views regarding FB’s roots, where FB is today, and where he believes FB is going. You can check it out here.
He opens up by saying, “Facebook was not originally created to be a company. It was built to accomplish a social mission — to make the world more open and connected.” He goes on to explain how this “connectedness” is a good thing. And I agree (for the most part).
He later goes on to give his take on “money’s” role in accomplishing this goal… “Simply put: we don’t build services to make money; we make money to build better services.”
He later goes on to explain the “The Hacker Way” and about staying relevant in the social network. I first thought, “this sounds pretty awesome! It sounds like he genuinely cares about the “product” and about the goal of connecting people, not money! What a great guy!”
But wait a second… I am getting a fit of déjà vu. Rewind to 2004. There was a giant technology IPO who also filed a wonderful prospectus (S-1). In the filing, they stated:
DON’T BE EVIL
Don’t be evil. We believe strongly that in the long term, we will be better served-as shareholders and in all other ways-by a company that does good things for the world even if we forgo some short term gains. This is an important aspect of our culture and is broadly shared within the company.
Google users trust our systems to help them with important decisions: medical, financial and many others. Our search results are the best we know how to produce. They are unbiased and objective, and we do not accept payment for them or for inclusion or more frequent updating. We also display advertising, which we work hard to make relevant, and we label it clearly. This is similar to a well-run newspaper, where the advertisements are clear and the articles are not influenced by the advertisers’ payments. We believe it is important for everyone to have access to the best information and research, not only to the information people pay for you to see.
Google’s Founders’ Letter goes on to discuss their other goals as well (the very next section following the above passage is titled “Making the World a Better Place”). Fast forward to 2012. Google has recently come under fire (and rightly so) for compromising these principles by sacrificing objectivity in favor of pushing their own products and in turn revenue and profitability. They have come a long way since 2004… But at what cost?
Money does weird things to people (and companies). History has shown us that much. Zuck will be a multi billionaire once FB goes public (he’ll owe over $1B in taxes!). Despite all this, he has proven to be dedicated to fulfilling the “social mission”. I hope they continue to do great things. But it does not mean I am not weary of the effects this filing could have on the company.
So all in all, my message/challenge to FB. I hope you can look back to your filing 8-10 years from now and honestly say you have upheld the beliefs in your original filings. I have no doubt that if you do, you will continue to be a successful and profitable company.
What are your thoughts/opinions regarding FB’s letter to investors? Is it too much “pie in the sky”? Do you think they only view money as a means to an ends?
In case you don’t keep up with earnings reports, a few weeks ago Apple released their Q1 earnings (their fiscal year is 1 quarter off from the calendar year).
And of course, they blew it out of the water. They are now reporting more than DOUBLE the revenue of Microsoft ($46.0B vs $20.9B). And besides generating moreprofitthan Google reported inrevenue, they reported total cash (and cash equivalents) of$96.7BILLION.Yes, that’s with a big fat capital “B”.
So what does that mean? I took a challenge from my brother-in-law, to see how far $96.7B can take you. I immediately loved the idea of completing this exercise. I’m a numbers guy if you don’t know me very well. So we had to make it easy for the average person to interpret. I don’t do pretty charts very often. So Jeff’s friend, @radrice, put together my findings.
So how does one determine how long Apple could F-Around? As much as possible, I used Apple’s financial statements filed with the SEC to arrive at a conclusion:
First, I separated “Cost of Revenue” between “Hardware” and “Non-Hardware” expenses
"Non-Hardware" expenses were then added to R&D, Sales, and General & Administrative expenses to arrive at "Total People Costs"
Total People Costs are theoretically all costs excluding stock based compensation (salary, travel, meals, office supplies, internet costs etc)
Next I assumed (based on my own experience dealing with Fortune 100 companies) a certain % for marketing/advertising/fees to remove (roughly 2%-3% of Revenue or $600M/Qtr)
This total arrives at the total cost to simply “F-around” all the time
This would assume they keep spending what they normally spend i.e. Rent, Electricity but excludes Advertising, Marketing, etc.
Apple’s cash is the sum of Cash, Short-term, and Long-Term Securities. I did not assume any additional interest accumulation. (Let’s pretend they just cashed it all out)
Lastly, I took the average of “F-around” costs over Apple’s trailing 4 quarters and determined how long their $96B in cash would last…
There is obviously room for improvement in this analysis. What would you conclude if you attempted this exercise? How would your process differ?
I have a friend who sends me interesting articles from time to time. He is a pretty smart dude and you should check him out when you get a chance here. The blog post he sent me talked about Amazon and Apple’s earnings release (“A Tale Of Two Catalysts”).
I think you could honestly skip the whole post and read the last paragraph. More specifically, the last 2 sentences say it all. “But context is important. Right now, Apple probably makes more profit in a day than Amazon does in a quarter.” And he’s right.
I don’t care what any company creates or does. When you can create “something” that is better than anything else that currently exists AND your target market recognizes that value and pays the premium associated with your “something”, you’re gonna be successful and profitable.
I think it’s important to realize that you need both to be successful and profitable. This post about Amazon and Apple is a prime example of this (no pun intended). Amazon has been successful, but not wildly profitable (lately). 3.6% profit down to 1.3% is cruddy. Revenue was solid and one could argue they’re stealing market share. Also, they’re expanding and growing into other markets, which tends to hurt margins until they “figure it out”. That’s not to say Amazon has not been doing great things; it absolutely has. When Amazon puts pressure on every retail chain in America and Amazon is officially altering the way America goes shopping; you are officially doing some badass stuff. That’s pretty amazon, er, I mean amazing. Their “product” is better than all the alternatives out there. But what’s the price of being better? For Amazon, it’s margins.
With record revenue and profits last quarter, it’s easy to see Apple has been both successful and profitable (lately). What Apple has done is absolutely remarkable. Apple is a hardware company. They design and build devices that are shipped all over the world. That is essentially what they do. Did I forget to mention, they compete in a consumer market, which traditional is synonymous with super high competition and typically equates to low prices/low margins? And their products command 38-45% margins?! Yes, read that sentence again. It says 38-45% That is absolutely INSANE. The majority of costs that actually go into those devices have been mostly commoditized (yes, I think I made that word up). Okay to be fair… yes they differentiate themselves because they’re technically an integrated hardware/software manufacturer. Without a doubt, some value has been created there. But seriously, does that value command an additional 20 more points of profit than other hardware manufacturers? No, it doesn’t. So why on earth are they getting away with PRINTING MONEY. It is because Apple makes amazing products that are arguably better than any alternative out there. Consumers recognize that Apple products are better AND agree to the premium sale price to get it. Absolutely stunning.