Good Evening, Investor:
Friday, December 20, 2013
A strong economic report lifted the major indexes. The Dow gained 42 points, the Nasdaq rose by 46, and the S&P 500 Index advanced 8. Eighteen of the Dow's thirty components gained ground, led by Caterpillar (CAT), which rose 1.5%. Volume was heavy on this quadruple witching hour, and advancing issues outnumbered decliners by three to one. The prices of Treasuries strengthened, while the price of gold futures gained 0.84% to $1,203.70 an ounce. The price of crude oil on the New York Mercantile Exchange gained 0.28% to $99.32 a barrel.
In one of the biggest weeks of the year, the Dow gained 2.9%, the Nasdaq rose by 2.4%, and the S&P 500 Index advanced by 2.4%.
In Earnings News
- BlackBerry announced earnings dropped from 3 cents a share a year ago to a loss of $8.35 a share in the latest quarter. Revenue plummeted from $2.5 billion to $1.2 billion as the onetime pioneer in smartphones said it is having trouble selling any of its new line of smartphones. But the company's new CEO said BlackBerry will outsource its hardware business and manufacturing to Chinese company Foxconn Technology in a five-year deal and will now focus on software and services. The stock (BBRY) gained 15% in today's session.
- Red Hat reported earnings increased from 29 cents a share a year ago to 42 cents a share in the latest quarter. Revenue rose 15%, and the CEO said companies are turning to Red Hat's cloud-computing products more rapidly than anyone expected. The price of the shares (RHT) gained 14%.
In Other Business News
- The economy grew faster in the third quarter than anyone imagined, according to the Commerce Department. The third and final calculation of gross domestic product shows the economy growing at an annual rate of 4.1% from July through September, up from the previous estimate of 3.1%. Stronger-than-expected consumer spending accounted for most of the upward revision.
- Oracle announced it has an agreement to acquire Responsys, a company that provides online marketing software, for $1.5 billion. The price amounts to $27 a share, which is a 37% premium over the closing price for Responsys on Thursday. The price of Oracle's stock (ORCL) lost 0.6% and Responsys (MKTG) gained 40%.
Although this is the season of warmth and good will, it doesn't always feel that way in the shopping venues of our nation. Let's make that the shopping "gauntlets" of our nation, where crowds push, elbows fly, products disappoint, and perceived promises evaporate into thin air.
What are frustrated consumers to do? Well, some are becoming, um, er, unhinged. According to the W. P. Carey School of Business at Arizona State University, a growing number of consumers are experiencing "customer rage," particularly when dealing with customer service functions of various retailers. "Rage," in this case, is defined as feeling "very upset" or "extremely upset" at an interaction with a service department. A study carried out by the school indicates that rage is growing, with 68% of households saying they experienced such feelings this year, up from 60% two years ago.
So how do we know rage when we see itor feel it? Well, screaming and hollering is one sign, and the study shows the incidence of yelling at customer service representatives increased from 25% of encounters two years ago to 36% this year. Worse still, cases of cursing jumped from 7% to 13%. Yikes. Cursing? Really? I stand in my share of customer service lines and I can't remember one out of eight customers cursing. But what do I know with my ear buds in?
The researchers in Arizona note the problem is growing in spite of many companies devoting growing resources to improving customer service. According to one of the researchers, the problem is that many companies are doing "all the right things but in the wrong way." Phone trees with endless menus and waiting times are one example of well-intended but terrible service. And it turns out that "bad customer service is worse than no customer service."
Hmm, is it time to think outside the box? One tiny café in France is trying a unique approach. If you're in La Petite Syrah in France and you order a cup of coffee, it will cost 7 euros. But if you say: "A cup of coffee, please," the price is only 4.25 euros. And if you say: "Good morning. May I have a cup of coffee, please," the price goes down to 1.40 euros." Cool. And where can one find La Petite Syrah, the café where it pays to be polite? Where else? It's in the city of Nice.
Have a great weekend. And if you find yourself waiting in one of those customer service lines this weekend, it would be an ideal time to listen to Alison Shimada and Elaine Tse discuss "Reform, Growth, and Investing in China" as my guests for On the Trading Desk.
The opinions stated are those of the author and are not intended to be used as investment advice. The views are subject to change at any time in response to changing circumstances in the market and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally, or any mutual fund.
16,221.14, +42.06 or +0.26%
4,104.74, +46.61 or +1.15%
1,818.32, +8.72 or +0.48%
S&P MidCap 400
1,318.85, +14.51 or +1.11%
1,146.47, +21.02 or +1.87%
10-Yr Treasury Notes
99.32, +0.28 or +0.28%
1,203.70, +10.10 or +0.84%