This validates my theory that gift cards are not really worth gifting!!

You are much better off gifting direct cash instead of gifting gift cards.. Which only provides profit to issuer of the gift cards.. first in the way of surplus cash and even more importantly.. in pure profit for unused or lost gift cards.. As per conservative estimates one fourth to one third gift cards are never used.

This is really ridiculous.. In order to look fancy or cool.. we gift something which is highly uncool and has big potential for being pure waste of money. Where as Cash, on other hand, in all probability will never be unused or lost..

This so called cool factor gives birth to IPOs of gift card unit!!! though not bad for my local economy.. but in general, the business practice which is not good for anyone.. can never be good for a company or even for a society in general..

my 2 cents..

BRIGHT SPOT FOR GROCER

IPO for Safeway gift-card unit

Supermarket operator says stock offering will be forminority stake in lucrative sector

By George Avalos

gavalos@bayareanewsgroup.com 

PLEASANTON — Safeway said Wednesday it will spin off its gift-card subsidiary, Blackhawk Network Holdings, through an initial public offering of Blackhawk’s stock.

If the offering proceeds as planned, an IPO could occur during the first half of 2013, the supermarket operator estimated.

“Blackhawk is doing very well,” said David Livingston, a Milwaukee-based retail consultant. “That has been one of the bright spots for the company. Safeway has not done that well with selling groceries.”

The potential IPO would be for a minority stake in Blackhawk, Pleasanton-based Safeway said. Blackhawk Network Holdings is a subsidiary of Safeway and operates Black­hawk Network. A cash infusion from an IPO, were it to occur, would come at an opportune time for Safeway. “The grocery end of the business has been pretty tough,” Livingston said. “Safeway faces an onslaught from Walmart markets in most of their major regions. The cash could also help keep Safeway in the black. And they can keep paying a dividend.” 

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Safeway is planning to spin off its gift-card subsidiary via an initial public offering slated for 2013. The division has been a bright spot for the company.
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Blackhawk Network sells gift, phone, sports, ticket and prepaid debit cards through a network of more than 80,000 retailers. The company offers more than 300 brands of prepaid cards from firms such as iTunes, Barnes & Noble, Visa, Starbucks and the NBA. People can buy the cards online or at racks in participating retailers. The cards can be found in grocery, big-box, convenience, pharmacy and specialty stores, and at Internet retailers including GiftCardMall.com. “People are more enthusiastic about giving gift cards, as well as receiving gift cards,” said Patty Edwards, chief investment officer with Trutina Financial, a Seattle-area investment firm. “Gift cards are considered a great store of value. They are almost like a second currency.” Earlier this year at an investor conference, the supermarket revealed that the value of the money stored on the cards totaled $6.9 billion in 2011. That was up 25 percent from 2010. 

The Blackhawk unit produced pretax income of $62 million in 2011. The firm’s adjusted earnings before interest, taxes, depreciation and amortization, also known as EBITDA, was $78 million. “Safeway has done well with how they display the gift cards,” Edwards said. “They are very prominent. I know that I can stop at Safeway, get a gift card, buy it, and be done with it.” Shares of Safeway rose 4.2 percent, or 66 cents, and finished at $16.48. The grocer’s stock continued to rise in after-hours trades. 

The timing and scope of the IPO will depend on “market conditions,” Safeway said in a prepared release. 

“I think the Blackhawk IPO will do very well, especially with the growth Blackhawk has been able to get,” Edwards said. “You don’t want another Facebook. Half the battle is to price it right and market it well.” 

Contact George Avalos at 925-977-8477. Follow him at Twitter.com/george_avalos. 

Fix US Corporate Tax Laws

They are highest in developed countries.. it is no surprise.. why will you like to pay 3.5 billion in tax when you don't need rest of the money.. this is crazy.. US needs some leader/s who can fix this tax code.. there are tons of other issues with tax codes.. but this is a big bummer.. they have to fix it..


Part of Apple’s profit on sales is stashed in other countries

Like other multinationals, tech giant seeks to change tax law

By Peter Svensson

Associated Press

NEW YORK — On Tuesday, Apple is set to report financial results for the second quarter. Analysts are expecting net income of $9.8 billion. But whatever figure Apple reports won’t reflect its true profit, because the company hides some of it with an unusual tax maneuver. Cupertino-based Apple, already the world’s most valuable company, understates its profits compared with other multinationals. It’s building up an overlooked asset in the form of billions of dollars, tucked away for tax bills it may never pay.

Tax experts say the company could easily eliminate these phantom tax obligations. That would boost Apple’s profits for the past three years by as much $10.5 billion, according to calculations by The Associated Press.

While investors might rejoice if Apple suddenly added $10.5 billion to its profits, unilaterally erasing a massive U.S. tax obligation could tarnish its reputation as a relatively responsible payer of U.S. taxes. Instead, the company is lobbying to change U.S. law so that it can erase its liabilities in a less conspicuous fashion.

Like other companies, Apple typically keeps profits on overseas sales in overseas accounts. When someone buys an iPad in Paris or Sydney, for instance, the profit stays outside the United States.

Apple may pay some corporate income taxes on that profit to the country where it sells the iPad, but it minimizes these by using various accounting moves to shift profits to countries with low tax rates.

Cash is King!! Again..

I disagree with the author or analysts mentioned in this article that only merchants benefit out of this settlement.. In my view ultimately it is Customers who benefit more from this.. Due to monopoly or collusion of Visa/Master Card processing companies there was additional fixed cost for merchants. That cost has to come up in some way or other and is ultimately to be paid by customer. Now, there are two aspects of this settlement. Merchants can either charge extra for Credit Card based payments or they can even give discount to cash customers. Every time I pay at any retail store by credit card, I know that I am paying almost 2.5% to visa/master card or even 3.5% to Amex. Out of that, I am at the most getting 1 or 2% back at the end of year or usually even more in form of points/rewards. Nevertheless, if I have option, I would like to pay merchant in cash as long as they give me 2.5% or even 2% cash discount. First, I am paying it immediately based on my cash availability (or bank balance if using checks or debit cards) and second most importantly, I am getting immediate gratification of saving 2% which could be substantial savings. But then, that is personal choice..

In case of US, I think, Visa/Master Card folks have already made majority of population addicted to credit cards and people do spend more than their monthly incomes and don't mind carrying credit card loan/balances. It will be difficult for majority of population.. but in general, it will be good..

Off course there are some advantages of this Credit Card transaction based business. First, you don't have to carry cash which if lost is gone.. where as credit cards you can cancel them immediately. Then, you get some kind of purchase protection plans or extended warranties or sometimes, even ability to fight with merchants for bad merchandise. I have rarely used them.. but they are there.. But are all these benefits worth paying 2.5-3.5% extra on all of your purchases??

CREDIT CARD FEES

Using plastic may get costlier

Visa, MasterCard and banks will pay more than $6 billion in suit settlement with merchants

By Jessica Silver-Greenberg

New York Times

Retailers will be able to charge their customers more for paying with credit cards under the terms of a multibillion-dollar settlement announced late in the day Friday.

MasterCard, Visa and major banks, including JPMorgan Chase and Bank of America, agreed to pay more than $6 billion to settle accusations that they engaged in anti-competitive practices in payment processing.

The settlement is the culmination of a lawsuit brought in federal court on behalf of roughly 7 million merchants in 2005. Merchants said the companies engaged in price-fixing to charge high fees for processing credit and debit card payments.

In addition, the merchants claimed, the payment processors unfairly banned stores from compelling their customers to use less expensive methods of payments like cash and checks.

“Our decision to settle is based on our belief that MasterCard and our stakeholders are best served by an amicable resolution,” Noah Hanft, MasterCard’s general counsel, said in a statement.

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PAUL SAKUMA/ASSOCIATED PRESS

Under the settlement Friday, merchants can charge higher prices to consumers who opt to pay for their purchases with credit cards.
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Joseph Saunders, the chief executive of Visa, reiterated that the settlement was in the best interest of all the parties. Together, MasterCard and Visa have agreed to pay $5.2 billion. 

As part of the settlement, MasterCard and Visa additionally agreed to reduce the charge to process transactions for eight months. That fee reprieve is estimated by the plaintiffs to be worth $1.2 billion. 

“We think this is a historic victory,” said K. Craig Wildfang, a lawyer with Robins, Kaplan, Miller & Ciresi who represented the plaintiffs in the lawsuit. 

The retailers battling the card giants include Kroger and Safeway. 

Last year, retailers won another victory over what financial firms can charge them when customers use a different form of plastic, the debit card. 

Under the Dodd-Frank financial reform law, banks had to reduce “swipe fees” that they collect from merchants each time a customer makes a purchase with a debit card. 

Under the credit-card settlement Friday, worked out over months of negotiations, merchants can charge higher prices to consumers who decide to pay for their purchases with credit cards. 

A customer, for example, who buys a $100 item with a credit card might be charged an additional $2.50. A judge still needs to approve the settlement. 

Until now, the card companies banned merchants from adding such a surcharge, although gas stations and other retailers sometimes offered a discount for customers who paid in cash. 

Lawyers for the merchants said the ability to charge for credit card use would not necessarily result in greater costs for consumers, but rather can be used as a way to push the credit card processors to reduce the amount they charge merchants. 

Retailers have long sought to be able to charge customers more who pay with credit, reasoning that levying greater fees would help reduce their overall costs for accepting the plastic. 

Merchants pay roughly $40 billion in fees each year to MasterCard and Visa issuing banks, Wildfang said. 

The American Bankers Association said in a statement that while the banks “may not like all the results in this case, our industry is ready to put this matter behind us.” 

Frank Keating, the association’s president, said: “Let’s be clear — retailers, not consumers, benefit from today’s resolution.” 

“Let’s be clear — retailers, not consumers, benefit from today’s resolution.” 

— Frank Keating, president, American Bankers Association