Monthly Archives: June 2015




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Other causes outpace Olympics for revenue in Massachusetts

BOSTON – While city and state officials have given voice to safeguarding public coffers from the Olympics effort, state taxpayers and motorists have for years taken advantage of opportunities to channel their dollars to Team USA.

Taxpayers filing tax returns can throw in some extra dollars for the Olympics and drivers can opt to pay an additional fee to display their Olympic pride on their bumper. In both cases, the money collected is routed to the US Olympic Committee, based in Colorado Springs, Colo.

But the Olympic license plates on the road trail in popularity against the states most ubiquitous specialty plates – promoting Cape Cod and the environment. And the $889,346 collected in Olympic fundraising via tax forms over the past decade has also lagged against the other funds that receive donations via tax returns.

In just one quarter of fundraising, Olympics booster Boston 2024 has eclipsed receipts from both funds since their inception close to 20 years ago. Boston 2024 reported $2.8 million in contributions in the first quarter of 2015.

Since 1996, the law steering specialty plate and tax-checkoff revenues from Massachusetts to the Olympics has generated $1.5 million, according to Mark Jones, senior director of communications for the US Olympic Committee. Massachusetts is one of 18 states with a specialty plate and one of 10 states with a tax check-off, he said.

From 1996-2015, a similar tax checkoff program in Virginia netted the US Olympic Committee $549,777, and over the same period in Delaware the committee took in $100,279 from the same type of program, Jones told the News Service. Bay State taxpayers contributed more than those two states combined in half the time.

Donations, which include direct contributions along with state tax check-offs and license plate programs, account for about 20 percent of the committees revenue, with the lions share of committee money tied to broadcasting and sponsorships, according to Jones.

Leading up to a September deadline for the committee to submit a 2024 summer Olympics city to the International Olympic Committee, local Olympics boosters are travelling around the state, hoping to drum up support for a Boston-based bid to host the games, though polling on the topic has been lukewarm and opposition has been strident against the idea.

The Olympic license plate and tax check-off law was signed by Gov. William Weld in November 1995, roughly half a year before Atlanta hosted the Summer Games on the centennial anniversary of the first modern Olympics.

State tax forms allow for donations to six causes – ranging from wildlife conservation to AIDS research and education to assisting residents with the cost of organ transplants. Contributions to the Olympics via tax forms pale against the other causes, especially aid for active duty military reservists and National Guard soldiers and help vaccinating and sterilizing homeless animals, which have been the two most popular in recent years.

That dynamic has been consistent. Of the five funds that date back to at least fiscal 2010, the Olympic tax checkoff has accounted for only 8 percent of the combined $3.5 million in revenues they have generated.

Drivers, too, have been less likely to choose the Olympics plates than many of the other offerings.

According to the Massachusetts Department of Transportation, 818 passenger vehicles have specialty Olympics plates out of 2,573,796 standard passenger vehicles registered in Massachusetts.

The Cape and Islands plates, meanwhile, can be seen on 43,285 vehicles.

The Olympics plates have brought in less annual revenue than plates that promote and benefit the environment, veteran homes, and alternatives to abortion for unwanted pregnancies. The Olympic plates have brought in more annual revenue than license plates promoting the Basketball Hall of Fame and less revenue than plates promoting the Red Sox, Patriots, Bruins and Celtics.

The Olympics plates cost $50 every two years on top of the $60 registration, and $16 of that goes toward the one-time cost of manufacturing it.

There may be a silver lining for those rooting for the Olympic spirt to catch on in Massachusetts.

Fiscal 2014, which ended before Boston was selected to represent the nation in the bidding for the games, was the best year for Olympic-plate revenue since before the Great Recession.

And through April of fiscal 2015, the tax check-off is ahead of all but one fund in achieving its estimated total for the fiscal year ending in June. The Olympics fund was tied with the fund helping people with organ transplants.


Credit Cards


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PayRange, A Startup That Enables Vending Machines To Take Credit Cards For …

PayRange, which makes a small device that plugs into vending machines that enables customers to pay with credit cards, said that it has raised $12 million in venture financing.

The company produces a deviceĀ that plugs into vending machines that interacts with an app. It uses Bluetooth to connect to the app, wherein customers can make a purchase. The device works with basically any vending machine, making it a good way to retrofit existing machines to take credit cards as cash becomes increasingly less commonplace.

“There is a snack vending machine located in virtually every emergency room in this country,” CEO Paresh Patel said. “People often run to the ER without their phone chargers or headphones. At my former company — which was a vending machine operator — we took the same snack machine and removed two food products and replaced with phone chargers and headphones. We priced those items for $12.50 each. The average price of the other items in the machine was $1.25. We could only do this because the machine took cashless payment as almost no one would have had 13 dollar bills on them to make a purchase, since the machines don’t take larger bills like $20s.”

That idea isn’t too far-fetched these days, with many vending machines showing up in airports that sell products like headphones and even iPods. Naturally, those by default require cards, but bringing that technology to lower price points is what PayRange is shooting for.




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Will Kinder Morgan Miss Revenue Estimates Again in 2Q15?

Enlarge Graph

The lower revenue estimate could be attributable to the following:

  • KMI’s CO2-based enhanced crude oil recovery and natural gas midstream businesses are exposed to commodity prices. Since crude oil (USO) and natural gas prices (UNG) have been weak, the segment’s revenues might be negatively impacted.
  • KMI is usually affected negatively in the second and the third quarters of the year due to lower demand for natural gas and NGLs (natural gas liquids) during warmer weather conditions.

Reported revenue versus consensus estimates

Kinder Morgan (KMI) beat revenue estimates in nine out of ten quarters until 3Q14 when crude oil prices started falling. After a ~6.7% miss in 4Q14, KMI missed its 1Q15 revenue estimate by a huge margin. The 1Q15 revenue estimate was ~$4.6 billion. KMI reported revenues of ~$3.6 billion, a ~21% miss. We’ll have to wait for the 2Q15 earnings release to see whether KMI beats or misses its 2Q15 revenue estimates. We’ll cover this in a post-earnings series on KMI next month.

Peer comparison

KMI’s C corporation peers the Williams Companies (WMB) and Spectra Energy Corp (SE) missed their 1Q15 revenue estimates by 26.3% and 9.4%, respectively. KMI’s MLP peers Sunoco Logistics Partners (SXL), Energy Transfer Partners (ETP), and Enterprise Products Partners (EPD) missed their 1Q15 revenue estimates by 33.9%, 29.1%, and 38.4%, respectively. KMI, WMB, and SE together make up ~9.4% of the Energy Select Sector SPDR Fund (XLE).

In the next article, we’ll analyze KMI’s 2Q15 EPS (earnings per share) estimates on similar lines.

Correction: This post originally described KMI’s reported revenues as “~$3.6 million” instead of “~$3.6 billion.” We regret this error.


Credit Cards


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4 arrested for trafficking in credit cards

Sarasota, Florida — The Sarasota County Sheriffs Office arrested four south Florida men using counterfeit credit cards to buy gift cards and merchandise at the Mall at University Town Center.

Detectives say asset protection saw two of the men making numerous purchases with multiple credit cards last week and notified them of the suspected activity. During the investigation, Capital One Bank confirmed the transactions were fraudulent.

On Tuesday, the men returned to the mall with two other men and they were watched by members of the Tactical Unit. They shopped separately with various credit cards at different stores and left the mall to put purchases in the trunk of their vehicle.

Deputies confronted the men in the parking lot and during a search of their wallets and the vehicle, found 23 credit cards with the mens names embossed on the front, but account numbers that did not match the encoded financial institution information on the back magnetic strip. The value of the gift cards and merchandise they bought over the two days exceeded $14,000.

Ricardy Multidor, Shnyder Rouzar, Vladimir Saint-Hilaire and Mickenson Desir have been charged with one count each of Trafficking in Counterfeit Credit Cards and are being held on $25,000 bond apiece. Additional charges are pending.




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AMD Needs Revenue Gains, Not Split, to Sustain Rally

Advanced Micro Devices Inc. shares have posted their biggest gains since February in the past week, fueled by speculation that the money-losing chipmaker is considering breaking itself up or spinning off units.

That rally may fizzle on signs that a breakup isn’t in the cards. The company denied a Reuters report on Friday that it has hired advisers to explore a split, saying in a statement it has no such project in the works. Analysts also said a separation of units would be risky and ill-advised.

AMD should remain a single company so it can integrate and improve products that have lost market share to Intel Corp. and Nvidia Corp., according to analysts such as Gus Richard of Northland Capital Markets and Deepon Nag of Macquarie Research. Nag also cited potential regulatory challenges to any plan to sell assets. AMD, which unveiled new graphics chips last week, said it plans to stick to the strategy of expanding into new markets for custom-made chips.




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Angry Hawthorn threaten to ditch AFL revenue share scheme

However, a quirk of the system this year is that the Sydney Swans or Greater Western Sydney — both who have top-10 draft academy or father-son prospects — could trade out their first two picks, and then only have to use a late pick to matchbids for their academy stars. The rest of the points required to match the bid or bids would be subtracted from their 2016 allocation.

Emma Quayle explainsthe new draft system here.

While the scenario looms as an extreme possibility, it nevertheless has some clubs questioning its fairness.

Hawks president Andrew Newbold was so incensed that only four clubs, including the Gold Coast Suns and Brisbane Lions, would be able to use future picks to secure players that he contacted Fairfax Media to express his displeasure.

If that is being mooted, I will be very strong on the fact they can tear up the equalisation proposal. Its breaking one of the conditions that we sat down in good faith and negotiated over, Newbold said.

I am not just wearing a Hawthorn hat here. How do the Bulldogs wear that?

There wont be a war – we just wont agree. Our agreement will end. Well say: We gave you (AFL) an opportunity to do what you said, which was create a pure draft, and you didnt do it. Lets pack up and go home on the revenue share.

Newbold said the Hawks were expected to tip in about $650,000 into the equalisation pool this year, $150,000 of which the club says is self-funded as part of a salary-cap increase. The revenue tax will be reviewed by the AFL after the 2016 season.

The Giants have two highly rated academy players, Jacob Hopper and Matthew Kennedy, while the Swans have Callum Mills.

As part of an agreement by their clubs to support the introduction of the revenue tax, the Hawks and Collingwood president Eddie McGuire have been strong on the need for a pure draft and salary cap. This, in part, has led to the Swans having their cost-of-living allowance phased out.

They (AFL) have got an opportunity here to send a clear message that they are aiming for a pure draft by giving everyone the same opportunity. And if in year one they are saying they are just going to give four clubs that ability, what are they doing? They are creating another exception, Newbold said.

We just wont cop it. We will just tell them: Tear up the competitive balance fund because one of the conditions was a pure draft and you, at the first opportunity, have flown in the face of that.

The AFL is looking at whether clubs must have a minimum points balance heading into the draft in order to participate in bidding.

Bulldogs president Peter Gordon said he was not in a position to comment.

While there is support from players and clubs for the introduction of future draft picks, Newbold has expressed reservations that it could be abused by under-pressure coaches and list-management staff coming to the end of their contracts and more intent on short-term self-preservation.

I think its complicated. We are comfortable with it from our point of view but I dont know that it benefits everyone. I think you are increasing your dependence on your list manager and coach taken a long-term versus short-term view, Newboldsaid.

I am very comfortable Hawthorn wouldnt do that because I have faith in (recruiting chief) Graham Wright and I think we have shown over the last 10 years we are a club that likes to take a longer term view of achieving success. But that is the risk for this particular policy setting.




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U.S. Airlines Extend Rally as Revenue Pessimism Seen Easing


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Missouri lawmakers approve further limits on locals’ ticket revenue stream

The Missouri General Assembly has voted to send a bill to the governors desk that is intended to curtail speed traps around the state.

Missouri law limits to 30 percent the amount of traffic fine revenue municipalities can keep. Cities or towns that receive more are required to turn it over to the state. The revenue is then applied to schools in the community.

House and Senate lawmakers reached agreement on a bill to see the threshold lowered to 12.5 percent for St. Louis County municipalities and 20 percent for other areas. SB5 now awaits Gov. Jay Nixons signature.

Sen. Eric Schmitt, R-Glendale, said it is important to rein in the ongoing practice of municipalities, especially in the St. Louis area, drumming up local revenue through excessive traffic tickets.

Government should exist to serve its citizens, not extort them, Schmitt said in prepared remarks. Passing this bill is a big step toward ending government by speed trap and taxation by citation.

Fine amounts would also be limited to no more than $300.

According to a fiscal note attached to the bill, the fine cap would result in the loss of about $550,000 for the city of Kansas City.

In an effort to help prevent municipalities from shielding ticket revenue from schools, the bill also provides a definition of general operating revenue.

Communities that fail to send all excess revenue to county schools could face disincorporation via a public vote.

A very important part of this bill is the clarity it provides for municipalities and for drivers, Schmitt stated. By putting in place an inclusive definition of revenue, municipalities will know specifically how their budgets are funded.

To view other legislative activities of interest for Missouri, click here.




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PPG Highlights Comexs Revenue amp; Cost Synergy Goals

PPG Industries Inc. (PPG – Analyst Report), at a securities analyst meeting held at Cabo San Lucas, Mexico, reviewed PPG-Comex Mexican operations and gave updates about the growth of the Mexican economy and PPG-Comex.

PPG-Comex is PPG Industries architectural paint and coatings business in Mexico and Central America. The company completed its $2.3 billion purchase of leading Mexican paint company Comex in Nov 2014.

PPG Industries announced that it expects cost synergies from the Comex acquisition to be in the range of $45 million to $50 million by the end of 2016, an increase from the previous expectation of $30 million to $40 million. Through PPG-Comex distribution network, the company expects to generate $40 million to $50 million in revenues within two years from sales of PPG products.

PPG Industries also unveiled a revenue goal of $60 million to $70 million within five years for incremental coatings sales in Central America. The company had earlier issued no incremental revenue guidance relating to Comex.

The companys share price rose 1.3% in the trading session last Thursday. The stock closed the day around 1% higher at $117.81.

PPG Industries has a diversified business and a leading position in several paints and coatings end markets. Healthy momentum across automotive OEM, automotive refinish and aerospace markets is expected to support its results this year. PPG Industries should also continue to gain from acquisitions.

Recently, PPG Industries agreed to buy privately-owned specialty powder and liquid coating maker IVC Industrial Coatings, Inc. for an undisclosed price. The deal, which is subject to customary closing conditions, is expected to close in the third quarter of 2015.

PPG Industries currently holds a Zacks Rank #3 (Hold).

Better-ranked stocks in the chemical space include Stepan Company (SCL – Snapshot Report), LyondellBasell Industries NV (LYB – Analyst Report) and LAir Liquide SA (AIQUY – Snapshot Report), all carrying a Zacks Rank #1 (Strong Buy).

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Morgan Stanley wants Google to stop hiding how it gets its revenue, and there …

Morgan Stanley analyst Brian Nowak and his team believe that Google could add more than $100 to its stock price if it became a bit more transparent about how it makes its revenues.

GOOG was trading around $541 this morning. Nowaks note is titled The Pathway to $650.

It reads like an open letter to new Google CFO Ruth Porat, who replaced Patrick Pichette earlier this year.

Nowak can expect Porat to actually read this note, because she came to Google from … Morgan Stanley.

For a long time, Google has given almost no meaningful breakouts of the various products that drive its revenue. It reports sales from advertising and other, and it breaks out United Kingdom revenue. It also provides percentage growth ratesĀ aggregate paid clicks and average cost-per-click.

That all adds up to more than $60 billion in revenues per year.

But the company has, for the longest time, said nothing about what really drives that $60 million: YouTube? Search? Mobile? Desktop? Gmail?

No one really knows.

That leaves analysts guessing how Google earns its money. Heres Morgan Stanleys revenue estimates for YouTube, for instance:

Morgan Stanley

Nowaks note goads Porat by pointing out that some of Googles competitors — like Facebook, Amazon and Expedia — get better stock valuations because they have broken out some of their numbers more clearly:

Enhanced disclosure around mobile search and YouTube would help investors better asses GOOGLs performance and long-term competitive positioning, and should result in a higher valuation.We believe that GOOGL has the largest mobile ad rev base(~50% larger than FB), but we are not certain. This uncertainty, mixed mobile search agency checks and FBs strong and disclosed mobile results create ambiguity about GOOGLs long-term positioning. At YouTube, third party data show audience leadership, but rev and growth are unknowns. A 10%+ expansion in GOOGLs multiple from more detailed disclosure seems plausible given AMZN and EXPEs 13-18% mult expansion (in part) from improved disclosure.

There is some chutzpah there — neither Amazon nor Facebook break down their revenues on a product by product level. A better comparable might be Apple, which breaks down sales by device and service. Nonetheless, almost all tech companies provide more detail than Google does.