The Gaming Industry has grown into a global market and continues to expand. Ernst & Young’s data on the performance of the gaming industry shows that as a whole, it has seen strong revenue growth over the past year.
However, analysts forecast a slowdown in the U.S. gaming industry alongside the slowdown of the overall economy. The U.S. industry has been forced to look beyond their borders to international markets as a result of state laws restricting their expansion potential. There have been various setbacks as well as inventive ways around the issues.
Companies are taking full advantage of both Florida and Pennsylvania, the two markets still open to new entrants in the U.S. gaming industry. As racetrack betting declines in states such as New York, companies are trying to revive these venues by filling them with slot machines and giving them the appearance of commercial casinos.
But the market is not without challenges. One potential restriction is a bill proposed in the U.S. Senate that would put into play additional regulations on the Indian Gaming Industry. At the moment, the Indian Gaming Industry continues to grow by “leaps and bounds.” The Louisiana casino industry is also booming despite the state’s slow recovery from Katrina.
With the $12 billion (gross revenue) online gambling industry largely eliminated in the U.S., companies are looking to exploit new markets in Europe and Asia. Internet poker had experienced extrodinary growth over the past few years, but was terminated with the Unlawful Internet Gambling Enforcement Act, barring the use of electronic payment.
Companies hoping to grow and expand in the gaming industry are looking to markets in China, Singapore, Macau, Spain, the Bahamas, South Africa, India, and possibly even Russia. Macau’s gaming revenue surged 23% in 2006, surpassing the Las Vegas Strip as the world’s biggest casino market.
The complete report can be found here.
According to research conducted by fourth year MIT Sloan doctoral student, Melissa Mazmanian, BlackBerry use has a large impact on the workplace. Many people who participated in the research study claim they are “addicted” to their BlackBerry.
Mazmanian observed “a gradual blurring of the lines between ‘work time’ and ‘personal time’ by device owners. Some people feel more productive when they use a BlackBerry. Others feel compelled to stay in the loop.”
According to Mazmanian, “many users feel trapped by the social expectation to be constantly available.”
Her research, which won an Academy of Management award, is being funded by the National Science Foundation. Mazmanian is working with several companies and hopes to have completed her study by this summer.
Learn more about Melissa Mazmanian’s research at the MIT news site.
Hedge funds have been very prominent in the news lately, but are reluctant to reveal their inner workings, holdings, or investment strategies. However, if the top hedge fund managers make more than $1 billion a year and have an estimated $1.2 trillion under management they must be affecting the financial markets somehow.
Researchers at four business schools, including Wharton, conducted a study on hedge funds and their impact on the financial markets. Hedge funds were found to be more effective than any other activist shareholder at making stock prices jump. Stock prices appear to rise sometime during the 40-day period surrounding a hedge fund’s public announcement of a push for change in a specific company. These gains continued for about 12 months after the announcement.
The study looked at 888 cases involving shareholder activism by 131 hedge funds from the start of 2001 through 2005.
Researchers found that the majority of activist hedge funds targeted companies that they “believe are undervalued based on financial statement analysis.” However, the hedge funds did not try and gain control of these companies. They acquired only a small share about 6%, just enough to have a voice in the company. Their push for change ranged from friendly to hostile and included multiple types of pressure.
Researchers concluded that hedge funds do have a positive affect on company share prices, but warn it might not last too much longer. Abnormal returns resulting from hedge fund activism are likely to decline or even disappear. This research can be found in the report “Hedge Fund Activism, Corporate Governance and Firm Performance” available on the Wharton site.
2008 is shaping up to be a volatile election cycle in the United States. Between the Iraq War and the renewal of Bush tax breaks, the election results could have a huge impact on the economy.
Many financial analysts believe that a gridlock situation, where no single party controls the legislative and executive branch, is “good” for the economy as either party needs to negotiate with the other in order to move legislative ideas forward.
With the possibility of single-party rule after 2008, CreditSights takes a detailed look at what that might mean for the economy in their report entitled “Election 2008 – Why Markets Care (And Why They Don’t)”.
Among the items on the legislative agenda, Bush tax cuts would have one of the most influential effects on the markets. 2008 will be critically important with regard to the tax cuts, because it is the last election before a decision must be made on whether or not to extend them.
Various items are up for consideration including the reversion back to the personal income tax rules of pre-2001 levels.
According to CreditSights, a return to pre-2001 income tax rates would “generate an additional $167 billion in revenues in 2012.”
Other sources of revenue include the re-introduction of the estate tax and reverting back to the pre-2003 dividend tax, taxing at the recipient’s marginal income tax rate.
A major concern for the financial markets is whether or not the capital gains tax increases.
A higher capital gains tax could potentially have a “negative impact on equities and on investment in proprietorships and partnerships.”
An additional variable thrown into the mix is the Iraq War. CreditSights examines whether or not the tax cuts should be renewed based on the current fiscal policy and the huge savings that will be generated as the operations in Iraq and Afghanistan eventually come to a close.
The full CreditSights report is available for purchase here.
According to Hitwise, the horrible weather over the Spring Bank Holiday weekend positively impacted the daily market share of UK internet visits.
A rise in online shopping was seen throughout the UK. Although the weather did not permit any gardening, websites like House & Garden saw the greatest gain. Visits to retail websites were up 17% while travel sites saw an increase of 20%, their greatest share of UK internet visits in two months.
Evidently, people were checking the weather hoping to see change, resulting in a 20% increase in UK internet searches for the term “weather”.
Hitwise Vice President of Research Heather Hopkins was “a bit surprised to see barely a change in searches for “global warming” as the foul weather was blamed by many on climate change.
All statistics can be found on the Hitwise site.
A critical aspect of so-called “Web 2.0” applications is the ability to use the Internet as a platform for deployment of fully functioning applications, rather than simply serving up static web pages.
In an interview with Adobe Systems President Shantanu Narayen, Knowledge@Wharton explores how the Company’s development tools and software platforms may serve as the foundation for the next generation of web applications.
In the interview, Narayen discusses how Adobe publishes release dates long in advance, as compared to the secrecy others such as Apple often use. According to Narayen, “One of the clear trends we are seeing is that it behooves us to involve the community in the development of the next generation of applications. Being transparent about our plans enables us to get better feedback so that we can deliver better solutions to our customers.”
Asked about Silverlight, the coming Flash competitor from Microsoft, Narayen indicated how he saw that as validation of the space and their market. According to Narayen,
“Flash is installed on 98% of Internet-enabled desktops. We’re clearly the incumbent.”
The full interview is available on the Wharton site.
Despite substantial savings, US law firms have been slow to outsource their support services, according to ALM Research.Orrick, Herrington & Sutcliffe says it saved an estimated $20 million over 5 years after it moved scores of support staff to Wheeling, West Virginia, all without diminishing its services.
But even with the purported success, most other large law firms still haven’t jumped to copy it for themselves. Leaders say savings wouldn’t be significant for their firms and the cost of splitting attorneys from staff would be too high.
Consultants say that law firms will eventually have to bite the bullet, especially with the ever-increasing cost of doing business, amplified by the recent round of associate salary hikes.
The full story can be purchased here.
The highlights of Booz Allen’s study CEO Succession in 2006 (available June 1 in Strategy+Business) are 1) merger related CEO changes provide a substantial boost to stock prices and 2) “from 1995 to 2006 annual CEO turnover has grown 59%; in that same period, performance-related turnover increased by 318%. In 1995, one in eight departing CEOs was forced from office – in 2006, nearly one in three left involunarily.”
Booz Allen examined nine years of CEO succession data, and identified two fundamental shifts in the ways corporate boards address CEO selection and oversight: They are becoming less tolerant of poor performance, and they are increasingly splitting the roles of CEO and chairman and recruiting chairmen who have not previously served as a company’s CEO. “It’s clearly time to say goodbye to the age of the imperial CEO,” said Steven Wheeler, Senior Vice President at Booz Allen. “Welcome to the era of the inclusive CEO, who embraces and reflects the concerns of board members, investors and other constituencies.”
This report was covered by the New York Times and the International Herald Tribune.
The Economist magazine offers a comprehensive special report on international banking in its May 19th-25th issue.
Much of the “Risk and Reward” report and an associated leader column looks at the ways in which investment risks have been transformed and transferred in ways that make it more difficult to identify and quantify. As regulators have focused their attention on the health of banks, “they have shunted problems into the less supervised realms of the financial system, such as the pensions industry,” the Economist writes in the leader.
“If pension fund trustees, with less experience than banks in judging credit risk, have allowed the wrong investments, the consequences would be grave indeed.”
For non-subscribers, the full 18-page survey can be purchased as a PDF by clicking the “offer to readers” link here.
While “green” technologies are emerging in various markets, the concept is just beginning to take hold in the IT market.
Forrester Research has released a new report entitled Tapping Buyers’ Growing Interest in Green IT. The report is based upon online and phone interviews with IT procurement and operational professionals across North America and Europe.
According to Forrester, Green IT has appeal to IT suppliers for four reasons:
- Marketing greener products, or as analyst Christopher Mines calls it “putting a green halo around the company, products and processes”.
- Saving customers money by reducing lifetime energy costs
- Compliance with existing or anticipated regulations
- Saving money by applying green approaches to their internal processes
According to Mines, while IT buyers are becoming aware of vendors’ green messages, but most have yet to integrate it into their IT purchasing criteria. He sees two drivers which will bring it to the forefront of IT buying decisions: cost reductions and corporate responsibility. As vendors create effective ROI messages for green IT, adoption rates will clearly pick up.