7 Years After Crisis, Americans Still Spooked Over Stocks

Wall Street
U.S. flags fly over the New York Stock Exchange early Tuesday morning Jan. 22, 2008.

Seven years after the financial crisis (and six years after Warren Buffett declared it to be over), Americans are still leery of getting back into stocks.

That’s the upshot of a poll recently released by Gallup, which confirmed that while no longer quite as negative on stocks as they were a couple of years ago, American investors still haven’t returned to the levels of stock ownership seen before the crisis — or even in its immediate aftermath.

Once Burned, Still Shy

In the run-up to the financial crisis, Americans threw care to the wind. Despite having been burned just a few years earlier by the “popping” of the dot-com bubble, Americans at the dawn of the financial crisis were more devoted to stock investing than ever before.

Just before the bubble burst in 2000, 62 percent of Americans owned stocks (either directly, through a mutual fund, or through a 401(k) or IRA plan). Undeterred, investors proceeded to pile right back into the market post-bubble. By the time the financial crisis hit in 2008, stock ownership levels had exceeded pre-bubble levels — hitting 65 percent.

Homelane plans to raise Rs 315 crore from Sequoia and others investors

 

Homelane plans to raise Rs 315 crore from Sequoia and others investors

BENGALURU: US venture capital firm Sequoia Capital is co-investing in a $50 million (Rs 315 crore) round in home solutions startup Homelane, a venture backed by storied entrepreneur duo K Ganesh and Meena Ganesh.

The Bengaluru-based startup raised $4.5 million in February from Sequoia Capital and Aarin Capital, an early stage venture investment firm founded by Ranjan Pai, billionaire investor and MD of Manipal Education and Medical Group, and T V Mohandas Pai, former Infosys board member.

The 11-month-old startup founded by former Pearson CEO Srikanth Iyer, along with a former colleague Rama Harinath, assists homeowners with customizable home solutions including kitchens, wardrobes, entertainment and vanity units. Customers can choose designs, fixtures and customized fittings, while Homelane is responsible for last-mile delivery. It offers customers a 45-day delivery guarantee, else it pays customers rent for delayed delivery. Its average ticket size is Rs 5 lakh.

“We believe the addressable market size in India is $10 billion. A million homes are being handed over across the top ten cities in the country this year alone,” Iyer said.

The home solutions opportunity has encouraged investors to put money into several ventures in the space. Bengaluru-based home design and decor startup LivSpace raised Rs 29 crore from Helion Venture Partners, Bessemer and Jungle Ventures last year. Tata Group chairman emeritus Ratan Tata made a personal investment in furniture e-tailer Urban Ladder in November last year, and a few months prior to that, Urban Ladder received $21 million in Series B round of funding led by Steadview Capital.

Homelane will deploy its fresh funds to expand its footprint to 10 metros including Mumbai and Delhi this year. It is already present in Bengaluru, Pune, Hyderabad, Kochi and Chennai. “We want to become a national brand. We are hitting 100 orders a month in Bengaluru. With a Rs 60-70 crore annualized run rate in one city in one year, it could be Rs 600 crore across ten cities,” Iyer added.

Homelane has tied up with some of the developers in Bengaluru including Vakil, ETA Star and Citrus Ventures. The company is also deploying a part of the fresh funds to enhance its tech play that includes 3D visualization, project management and a mobile app.

G V Ravishankar, MD in Sequoia Capital India Advisors, said, “Homelane has made tremendous progress since we first invested and business is much ahead of plan. We are seeing significant inbound interest from investors. We remain committed to partner with HomeLane to fundamentally change the way this industry functions and provide a better experience to the consumer.”

‘Death of net neutrality will kill media freedom’

‘Death of net neutrality will kill media freedom’

 

NEW DELHI: Several TV news channels died only because they could not afford the carriage fee charged by cable and DTH operators. The proposal of doing away with net neutrality, as mooted by a Trai consultation paper, raises the possibility of media websites too falling prey to the carriage fee model.

This was the consensus at a workshop titled, “Erosion of net neutrality: Impact on the media”.

If the Trai proposal were to be accepted, India will have more in common with China, which has a notoriously controlled internet access, than with the US, which recently adopted a “hard law” to protect net neutrality, according to Raman Jit Singh Chima, global policy director at Access, an organization dedicated to keeping internet open and espousing the rights of users.

Referring to the push already made some telecom and Internet companies for “zero rating arrangements” (or differential rating for different sites, apps or services), Chima underlined the need for a “net neutrality oversight” to en-sure diversity of content and check any attempt to throttle avenues to access information.

READ ALSO: What is net neutrality and why it is important?

Organized by the Foundation for Media Professionals on Friday, the workshop was also addressed by advocate Apar Gupta and journalist Nikhil Pahwa, who along with Chima are volunteers with “Save the Internet” campaign launched in the wake of the TRAI paper. The main points made by the three experts on the implications for the media are:

The erosion of net neutrality will not just affect media startups, but also established news organizations. Once digital freedom is compromised, the destiny of each website, irrespective of its size or quality, will be determined by telecom operators providing access to Internet.

Media start-ups or small independent media ventures will of course be immediate casualties of an arrangement in which telecom companies are empowered to create fast and slow lanes or block content for commercial reasons. If they lose their freedom to create and share content, these small media players are liable to close because of their inability to bear the additional burden of preferential treatment.

READ ALSO: Net activism backing net neutrality packs a punch

The big news portals that can afford the carriage fee demanded by telecom companies will be forced to shift their spending from news gathering to distribution costs, affecting the quality of journalism. The vulnerability of established media houses is evident from the experience of the internet.org plat-form promoted by Facebook. They are under pressure to stay on the platform lest they become less accessible online.

The idea of making the Internet less open will also have security implications. The privacy of journalists may be compromised as telecom companies will do “deep packet inspection” as part of their business deal to ensure speedy access to certain website and slow down access to others.

It also raises a cross media holding issue. Can the owner of what is just a pipeline to Internet be all-owed to discriminate between the content? Can the telecom com-pany be allowed to be partial to those media sites with which it has financial deals?

Click here for complete coverage on net neutrality

Readers and viewers will be deprived of choice in the post-net neutrality era as they will have access only to those media sites that are customers of the telecom operator. In the process, websites of small publishers and regional press media players are likely to disappear from the radar of Internet users. As the Internet loses its existing dynamism and openness, it will become harder for new entrants to be noticed irrespective of the merit of their innovations.

Net neutrality rules go into effect in US

Net neutrality rules go into effect in US

 

NEW YORK: New rules that treat the internet like a public utility and prohibit blocking, slowing and creating paid fast lanes for online traffic took effect on Friday.

Cable and telecom industry groups have sued to have the rules thrown out, arguing they are too onerous. But on Thursday, a federal appeals court declined to block the rules from taking effect as the industry litigation against them proceeds. A court could still eventually overturn the rules.

There will be no immediate effect on how consumers and companies use the internet. Broadband providers today typically treat content from different websites and services equally.

“We had the internet for some time obeying such principles but they’ve never been codified. Now they have been codified,” said Nicholas Economides, a professor at New York University’s Stern business school and an expert on networks and telecommunications. “Consumers should not see any substantial difference.”

Regulators, consumer advocates and internet companies like video site Vimeo and crafts marketplace Etsy had concerns about internet providers’ power over web traffic. For example, there were worries that being able to pay for a special internet fast lane would let richer companies more easily reach users and stifle the growth of newer, poorer startups.

What is new: The Federal Communications Commission (FCC) will be able to investigate complaints about “unreasonable” business practices by internet providers that aren’t explicitly banned. Many broadband companies say this invites uncertainty — they don’t know what’s allowed.

Here’s a look at what the developments mean for consumers and companies:

What is net neutrality, and what are the new US rules?

Net neutrality is the principle that internet providers treat all web traffic equally, and it’s how the internet works today.

The FCC enacted rules that protect that, to make sure cable and phone companies don’t manipulate traffic: They can’t create special fast lanes for some content, like video from YouTube, or intentionally block or slow Web traffic. Many Internet providers say they don’t plan to do those things, but the FCC worried that they could.
What’s changing for consumers?

In enacting its rules, the FCC placed internet service in the same regulatory camp as telephone service. That means providers have to act in the “public interest” when supplying internet service and refrain from “unjust or unreasonable” business practices.

The FCC can investigate complaints about industry practices that might violate net-neutrality principles, even if they’re not specifically prohibited by the rules.

What about for companies?

Internet companies Netflix and companies that manage internet traffic, like Cogent, can also complain to the FCC about “unreasonable” behavior by broadband providers over network-connection deals in the backbone of the internet.

Companies could complain that broadband providers are charging them too much to connect to their networks, for example.

Fights over these arrangements had in the past led to a slowdown in Netflix streaming speeds for customers of several major internet service providers.

Which companies are affected?

Cable companies like Comcast, phone companies that provide internet service to people’s homes and smartphones, like AT&T and Verizon, and cellphone companies like Sprint.
Why is the industry opposed?
Companies say they don’t want the stricter regulation that comes with the net neutrality rules. They say the regulations will undermine investment in broadband, and that it’s not clear what is and isn’t allowed under the greater authority the FCC has to investigate unspecified complaints.

They are also concerned about price regulation. The FCC says it won’t pre-approve the prices companies set for internet access. But consumers can complain about the cost of their service and the government can look into it under the new rules.

US to probe TCS, Infosys on visas

 

US to probe TCS, Infosys on visas

BENGALURU: In a worrying development for India’s IT industry, the US government has launched an investigation against Tata Consultancy Services (TCS) and Infosys — the two biggest players in the space — for possible violations of H-1B visa regulations.

The matter looked serious enough for the country’s IT industry association Nasscom to promptly come down heavily on the move. Nasscom described it as an attempt by some to tarnish the contributions made by Indian IT service providers in maintaining the global competitiveness of US companies, which in turn has helped create jobs for Americans in the US.

READ ALSO: At Disney, American workers forced to train their H-1B replacements

The New York Times reported on Thursday that the US department of labour had opened an investigation against TCS and Infosys for “possible violations of rules for visas for foreign technology workers under contracts they held with an electric utility Southern California Edison (SCE).”

It said the power company had recently laid off more than 500 technology workers and said there were claims that many of those laid off were made to train their replacements who were immigrants on the temporary work visas brought in by the Indian firms.

READ ALSO: H-1B visa application cap reached within 5 days

The same publication had reported earlier this month about Disney firing 250 employees but requiring them to train the foreign immigrants, mostly Indian, replacing them before they left the company.

The investigation could be worrying because a previous federal investigation that was initiated in 2011 had led to Infosys being fined $35 million (Rs 219 crore then) by the US government. The charge then was that the company had misused easy-to-get B1 visas, which are meant for short business visits, to bring workers to the US for long-term stays.

Asked about the investigation, Infosys said it was committed to complying with US immigration laws. “The US department of labor (DOL) regularly selects a percentage of visa and labour condition applications for extra scrutiny in this industry, and we work closely with the DOL to assist them in this activity in the ordinary course of our business. We have received no indication of any broader investigation of Infosys visa practices,” it said.

A TCS spokesperson said the company maintains rigorous internal controls to ensure it is fully compliant with all regulatory requirements related to US immigration laws. R Chandrasekhar, president of Nasscom, said Indian IT companies were fully compliant with US visa regulations. “Immigration is a politically-charged issue and we need to make sure that technically-skilled immigrants don’t become collateral victim of politics that goes on in the US,” he said.

He said attempts by some quarters to portray the contribution of Indian IT companies negatively “would have serious detrimental impact on the strategic partnership and mutually beneficial economic and trade relationship that the two countries are striving to nurture.”

The precise nature of the allegations in the latest issue is not clear. But activists in the US typically argue that those on H-1B are often not paid the minimum salary as required by law, and that often H-1Bs are brought in even when similar talent is available in the US, which again is said to be violative of regulations.

But Cyrus Mehta, founder and managing attorney of New York law firm Cyrus D Mehta & Associates, wrote in his blog last week: “Lower costs, as is commonly believed, is not the driving factor in hiring H-1B workers. The employer has to pay the higher of the prevailing wage or the actual wage it pays similarly situated workers, and so it is generally difficult for an H-1B worker to replace a US worker because they are cheaper.”

Data shows that salaries that top Indian IT companies pay to those on H-1Bs are invariably higher than $60,000.

Sears Reports Smaller 1Q Loss but Sales Keep Sliding

Earns Sears
Sears Holdings reported a smaller first-quarter loss as it cut advertising and other costs, but sales continued to tumble, underscoring the need for a big cash injection that the struggling retailer said would materialize next month.

The company expects its plan to spin off 235 Sears and Kmart stores into a real estate investment trust to be approved by the Securities and Exchange Commission this week, paving the way for a rights offering to sell shares in the REIT to existing shareholders Friday.

The retailer, which has lost $7 billion over the past four years, expects to receive about $2.6 billion in proceeds from the sale early in July.

That deal, if accomplished, should buy Sears time to pursue a revival strategy that involves a loyalty program and shrinking its presence to its best-performing stores.

Still, that strategy has yet to produce profitable results for the retailer, which reported its 12th straight quarterly loss.

For the quarter ended May 2, net loss attributable to shareholders was $303 million, or $2.85 a share, following a loss of $402 million, or $3.79 a share, a year earlier.

Overall revenue slumped 25 percent to $5.88 billion, reflecting the sale of most of its stake in its Canadian operations, the spinoff of the Lands’ End (LE) clothing chain and the closure of stores.

Still, shares of Sears (SHLD) jumped 4 percent in premarket trading.

It reported a sharp drop of 10.9 percent at comparable stores open at least year, a key measure of retail performance. Sales at Kmart fell 7 percent, while Sears’ sales slid 14.5 percent, hit by falls in key categories like appliances, apparel and auto centers.

Sears said some of the decline was expected as it shrinks operations. Apparel was also hurt by supply disruptions due to a slowdown at ports in the West Coast, the company said.

Sears said it was in talks with lenders to extend a revolving credit facility, due to expire in April 2016, to 2020. It has already reached agreement with three lenders representing $1.175 billion in commitments, it said. The size of the facility would likely decrease to about $2 billion from $3.275 billion.

Sears was seeking a smaller lending framework because it has fewer stores, a larger online presence, and less need for financing due to decreased inventory levels, Chief Financial Officer Rob Schriesheim said on a pre-recorded conference call.