Here is a brief look at some of the recent news stories that featured Neeley students, staff and faculty. For a complete look at Neeley in the News, check out In the News Archives.


Star Telegram
November 10, 2013
Local mompreneurs find success in Facebook auction businesses - By Jackie Hoermann

“Going once! Going twice!”

“S-O-L-D.”

Typed — not spoken — on Facebook-based businesses.

Retail businesses have found viral success online by tapping into large social networks on Facebook, especially those that cater to Facebook’s fastest-growing user demographic, young moms.

And North Texas mompreteurs have caught on to this trend in a big way. Many are buying online. Some are selling, too.

Local social media-savvy mothers who run the Facebook-based auction companies Jewelry Nut Auctions, Honeysuckle and Bulldog, and Smocked by StellyBelly are making a name for themselves in the world of this booming new business model.

Fort Worth residents Meredith Miner, 37, and Victoria Wise, 39, have struck retail gold selling jewelry and accessories through Jewelry Nut Auctions. The duo did more than $1.4 million in sales last year and are on track to hit $2 million before year’s end.

All this from an idea that started on a playdate.

“Victoria was telling me about this new business model and how it had worked so well in the children’s clothing business,” Miner said. “She has a background in jewelry design and she’s just very creative, and I have a business background. So we said, ‘We can totally do this.’ And we did.”

Stacy Landreth Grau, an associate professor of professional practice in marketing at Texas Christian University, said she isn’t surprised that businesses on Facebook are doing so well.

“It makes absolute sense,” she said. Grau, who teaches both digital marketing and marketing communication in social media courses, found in her research that social media business strategies and regular business practices are more similar than not.

Facebook “auctions” generally work like this: Customers first register, or at least “like” the companies on their Facebook pages. At certain times each week, businesses post merchandise for sale and the quantity available. The first person to comment “sold” on the post wins the item and gets an invoice via PayPal or in the mail.

“It all goes back to the fundamentals of having a good target audience. … If you sell through Facebook, all of your connections are there,” Grau said. “Say I’m a mom and most of my friends are, too. I’m probably going to sell very well if I have that network of similar connections to sell to, and especially if what I’m selling is valuable to them.”

Increasingly, research shows, that’s who’s using Facebook most frequently — moms. They’ve become a key target audience to Facebook, and according to Grau, that makes sense. Women in their late 20s to early 30s have a lot to share, such as wedding announcements, baby updates and family vacation pictures.

“Right now, the people more likely to be on Facebook are Generation X-ers and baby boomers,” Grau said. “Whereas younger generations are doing a lot more with Twitter because it’s fast, constant posting. They also really like Instagram, Snapchat and Tumblr.”

Facebook businesses also are relatively low risk, she said, because selling online cuts costs typically incurred when opening a store, including rent, employees, merchandisers, and so on. The Facebook business model is convenient and “sticky,” she said.

“If you look at the statistics, Facebook is still the stickiest website,” she said. “People spend close to an hour a day on it, check it four to five times a day, and that’s more time they’re spending there than on any other sites.”

 

Star Telegram
November 16, 2013
MR stock goes from nearly worthless to worthwhile - By Andrea Ahles  

Stock of bankrupt companies usually trades for pennies.

But not the shares of American Airlines’ parent company, AMR Corp.

After almost two years of operating under bankruptcy court protection, the Fort Worth-based carrier’s stock shot up above $12 a share this week before closing Friday at $11.77 — a 1,380 percent increase since the beginning of the year.

And as the airline prepares to exit bankruptcy and merge with US Airways following the settlement of a federal antitrust lawsuit, shareholders are poised to reap a big pay day. Under the restructuring agreement approved by the court, shareholders — who typically get nothing during a reorganization — are guaranteed 3.5 percent of the equity in the new combined airline and could receive much more than that.

Clearly, Wall Street feels good about the merger. With both airlines posting profits and record revenues, investors seem confident that the new American Airlines Group will be flying high, including its stock price. US Airways stock has also risen almost 77 percent this year indicating that the combined company is worth billions.

“There is potential upside for the shareholders,” said Don Shelly, a finance professor at Southern Methodist University . “Everybody seems to be really optimistic.”

What usually happens

When a publicly-traded company files for bankruptcy, debt holders have priority to collect what they’re owned, and there’s usually nothing left for shareholders. For example, in the recent bankruptcy case of the snack-maker Hostess, Inc., the shareholders received nothing as the company’s assets were sold off to pay off debts.

“It is uncommon for equity owners to retain any interests in contested bankruptcy cases, since in the vast majority of bankruptcy cases the creditors are not receiving 100 cents on the dollar, in money or value, and at least one class doesn’t vote to accept the plan,” said Wayne Barnes , a bankruptcy law professor at Texas A&M University School of Law in Fort Worth.

It appeared that AMR shareholders were going to be in a similar situation when the carrier filed for bankruptcy in November 2011. In its filing, AMR listed $29.6 billion in debt and only $24.7 billion in assets.

“On the AMR books the liabilities exceeded the assets. There was negative equity and so from that standpoint there was nothing that should be given to the equity holders,” said Larry Lockwood , a finance professor at Texas Christian University . “You couldn’t take the assets and use them to pay off the creditors. There wasn’t enough.”

As a result, shares of AMR stock plummeted the day it filed for bankruptcy, closing at 26 cents.

Why AMR stock bounced back
For all of 2012, AMR shares traded below $1. The stock was delisted from the New York Stock Exchange in January 2012 because it could not maintain the listing requirements and began trading at over-the-counter markets.

But then in February 2013, AMR announced plans to merge with US Airways as part of its bankruptcy restructuring and shareholders were told they would receive at least 3.5 percent of the new company. And if the value of the new combined entity grew and all of AMR’s creditor claims were paid in full, shareholders could get even more.

“What you’re seeing in the AMR price right now is that expectation of receiving additional shares of the new company,” Lockwood said.

As new labor contracts were put in place and cost-cutting measures were implemented, AMR’s earnings improved. The carrier posted profits in the second and third quarters bolstered by record revenues.

Some Wall Street analysts, who typically don’t follow over-the-counter stocks, reinitiated their coverage of AMR’s stock this fall as it continued to rise.

Wolfe Research analyst Hunter Keay told investors in October that shares of AMR could be worth as much as $13 a share if a merger was completed, but less than $2.50 if the Justice Department was successful in blocking the deal.

“Our extensive analysis leads us to believe that a merger will happen but there is extreme upside/downside risk associated with that call, and a complete loss is entirely possible,” Keay said in a research note, adding that investing in AMR’s stock wasn’t for the faint of heart.

Keay had an “outperform” rating and $11 price target on AMR’s stock. But he pulled it last week after the share price soared over $12 on news of the settlement and now that stock will be exchanged for shares in the new entity next month.

How equity is divided
With the merger set to close in December, investors are waiting to see if they’ll end up with more than 3.5 percent of the new company.

But figuring out what much they’ll get is very complicated.

AMR’s unsecured creditors are split into two groups: double-dip and single-dip creditors. Together, their claims for what AMR owes them is an estimated total of $5.6 billion before accrued interest. These creditors will receive preferred stock on day one of the new company that will convert to common stock on day 30, day 60, day 90 and day 120 to pay off their claims.

As part of the new labor contracts negotiated during bankruptcy, American’s labor unions and other non-union workers were also promised an equity stake of 23.6 percent of the total claims allowed by AMR, which for employees is valued at about $1.7 billion, assuming the other two creditor groups are repaid in full.

The estimated total amount of claims is $7.28 billion, according to an illustration in the disclosure statement filed by AMR with the bankruptcy court on June 5. That illustration, based on various assumptions, says that all $7.28 billion in claims will be paid, if the new combined carrier’s stock price trades at $14.99 a share or higher during a five-day period prior to the 30, 60, 90, and 120 day mark after the merger closes.

At that share price, the 3.5 percent equity stake that AMR shareholders received after the merger would be worth around $400 million and the new company will have a market capitalization of approximately $11 billion.

However, if the new company’s market cap is higher than that — because the share price has risen above $15 — there will be excess equity in the new American. Since the unsecured claims are a fixed value, the extra equity would be distributed among the old AMR shareholders at the same 30, 60, 90 and 120 day marks.

US Airways shares closed at $23.89 on Friday, giving the airline a market cap of $4.7 billion. US Airways shareholders will receive one share of new American stock for each share they own of US Airways , and according to the merger agreement US Airways shareholders will receive 28 percent of the equity in the new combined carrier. So if the merger were to occur now, the market cap of the new airline would be around $17.95 billion.

If the new combined company is worth $17.95 billion on the 120th day after the merger is completed, all of AMR’s unsecured creditors and labor unions would be paid in full plus interest and the old AMR shareholders would be given the excess equity value, almost $5 billion in this scenario, in the form of additional shares. The illustration in AMR’s filing shows old AMR shareholders could end up holding 28 percent of the new company’s equity under this scenario, which is almost the same amount that existing US Airways shareholders will have received.

“Given the dynamics of claims recovery associated with a successful merger, we estimate that holders of [AMR stock] could witness outsized potential gains at [US Airways’] current share price,” J.P. Morgan analyst Jamie Baker told investors in a research note last week..

On the flip side, if the share price of the new American drops below $15, the value of the 3.5 percent equity stake owned by AMR shareholders will be worth much less and they would not have received any additional equity.

End of the rainbow
Although airlines stocks as a group have increased this year, the large increase in AMR’s share price means some investors will likely sell off the stock to reap profits.

“Profit-taking is inevitable,” Baker said, noting that AMR’s shares are up 1,300 percent and US Airways shares up 70 percent year-to-date.

In fact, shares of AMR have declined slightly this week, down 12 percent from a high of $13.50 reached the day the antitrust settlement was announced.

Shelly said he doubts hedge funds would hold onto American’s stock or shares of the new company as a long-term investment and institutional investors, who own US Airways shares, will likely re-evaluate their holdings once the merger is completed. When the merger closes, existing stock will be exchanged for new shares in American Airlines Group , which will trade under the ticker AAL on the Nasdaq exchange.

“We had a situation where everybody was happy and then the DOJ nixed it and now it’s back on again,” Shelly said, describing the ups and downs of American’s situation since it announced its proposed merger in February. “Hedge funds tend to like volatility because that’s where they make money.”

But for those individual investors who have held on to their AMR stock through the two-year bankruptcy process, there may be a pot of gold at the end of the rainbow.

“It is rare that equity holders come out with anything at all and in this case it looks like it could be a very good deal,” Lockwood said.  

 

Times India
November 17, 2013
Supply chain vital for business, Bengal’s progress

With the focus of Bengal’s industrialization drive on small and medium enterprises (SMEs), logistics professionals and managers should direct their effort towards developing a collaborative supply chain for this sector. This was highlighted at a conference on “Unlocking the future of supply chain management,” organized by Council of Supply Chain Management Professionals (CSCMP) in association with The Times of India on Saturday.

KPMG India’s partner and head of management consulting Ambarish Dasgupta pointed out that Switzerland and Austria have a strong rural economy with “rich farmers, bakers and producers of other goods”.

Stating that no other business process has a greater impact on competitiveness than supply chain management, Chatterjee Group president Aniruddha Lahiri said, “Every company is trying to remain in the market or on the shelves at the lowest cost. You don’t have a choice as working capital is money and money can’t be kept unutilized.”

Speaking on the need for supply chain management, Lahiri cited the instance of a laptop which, he said, has about 120 components. “This means dealing with 120 supply chain players. You can’t say we leave out all and deal with one supplier in China. For, if somebody makes the chip better, another player’s screen is best. The buzz is moving away from one to one to one to many collaborators,” said Lahiri.

Pointing out that the greatest challenge of supply chain management professionals is reaching rural India, IIM-Calcutta director Saibal Chattopadhyay referred to the highly fragmented truck industry that carries the bulk of goods transported across the country. Chattopadhyay, however, pointed to problems in logistics in the country.

“Though India has the largest road network, less than half the roads are paved. Only 7,000 km of roads are four-lane compared to 30,000 km in China. National highways comprise only 2% of the country’s road network though they carry 40% of our transport load. Unless we shore up our infrastructure, we will continue to face logistical challenges,” said Chattopadhyay.

Emphasizing on training logistics professionals, CSCMP president and CEO Rick Blasgen said countries the world over need to invest in education programmes to churn out supply chain managers.

“We need globally relevant certification for companies to hire their future supply chain managers,” said Blasgen adding that companies around the world were recognizing the importance of these professionals who were even rising to be CEOs of firms.

Professor Nancy Nix from the Neeley School of Business at Texas Christian University and senior CSCMP functionary too spoke on the need for training. Most universities have programs on marketing, finance and accounting but not one on supply chain management, she said.

 

HW
November 2013
REAL ESTATE: Oil and Gas Exploration Could Shock Housing Markets - By Jacob Gaffney

The special report from Reuters hit the wire on Wednesday, Oct. 9, 2013 6:14 a.m. in New York. Authors Michelle Conlin and Brian Grow engineered the wording just so, as to maximize impact. The title of the piece read “U.S. Builders Hoard Mineral Rights Under New Homes.”

In the piece, homeowners declared their shock that such a thing could be happening, literally right under their feet. D.R. Horton was named and shamed a “heavy user” of the practice.

The climactic scene from “There Will be Blood” comes to mind. In that story, miner-turned-oilman, Daniel Plainview, buys all of the property around the Sunday ranch and uses drainage to sieve away their vast, lucrative stores underneath.

“I drink your milkshake!” Plainview declares before beating the Sunday heir to death with a bowling pin. Gruesome.

The truth, as always in the housing business, is much more nuanced. This is no miscarriage of justice. D.R. Horton is not conning anyone out of his or her mineral rights. And neither is it alone. An article in the fall 2012 issue of the Appraisal Journal states, “It is common for owners when selling their land to reserve all or part of the minerals for themselves — thus, selling the surface only or the surface and part of the mineral interest.”

Those words, written by Dr. Joseph Lipscomb, a professor of finance and real estate in the Neeley School of Business at Texas Christian University, in Fort Worth, indicate a widespread practice that needs proper evaluation. The demonization of mineral rights conveyance won’t change the growing impact the oil and gas industries are having on the real estate market.

“When advances in drilling and fracturing technology made shale gas production feasible, mineral estates once believed to have little or no value became potentially very valuable and appraising this land became more complex than a routine appraisal of the fee simple estate,” Lipscomb wrote.

The mortgage industry may be more aware of this than the oil and gas industries, it should be noted. Wingspan Portfolio Advisors, when working with a large energy company, found that more than 10% of the residential oil and gas leases involving residential communities are endangered by foreclosures and mortgage defaults.

These properties are located in important petroleum producing areas across the country. The Barnett Shale, for example, is located underneath where most North Texans sleep at night. And energy companies want it.