EisnerAmper Blog

Technology and Life Sciences Blog

The New York Mets Held Back and It Paid Off

 Permanent link

April 23, 2015

Fogarty,MarcBy Marc Fogarty CPA, CFE


As some of you may know, I am a New York Mets fan and the season opener is a bit of a tradition for me and a friend from grade school. So even though I usually write about technology or IPOs in this space, bear with me while I indulge a different passion.

I was surprised this year when the Mets decided not to play their newly returning pitcher Matt Harvey in the opening game. He had not pitched since August of 2013 due to an arm injury that required surgery; but based on his prior track record, lots of fans were excited to see him back on the field.  Instead of playing him in the opener, the Mets announced that Harvey would pitch in the second game of the season. The decision to save their returning star pitcher for the second home game turned out to be a huge 'win' in more ways than one!

When you look at the past three years' attendance stats below, there is generally a steady decrease in attendance from opening day to the second game.

Opening day = 41,053
Game 2 = 22,239

Opening day = 42,442
Game 2 = 29,146

Opening day = 43,947
Game 2 = 39,489

This year's attendance is the highest with nearly 44,000 fans and that is without having Harvey on the mound. It’s highly probable that there was a dramatic increase in attendance for the second game, over 10,000 fans (a 26% increase), because they started Matt Harvey in that game.  That strategic shift proved to be best for the team and best for business.  From ticket sales to parking fees to concession sales, the increase in fans for game two had a compounding effect.   

Each year I've gone to the opening day game and it has always been a sellout. Ironically, the stadium finds a way to somehow pack more and more fans in each year (note the increase from 41K to 42K to 44K). I’m not sure how they are getting more seats in the stadium, but there's one thing I am sure of… From the play on the field to the revenue generation, this is a great start to the season!

What Is “Net Neutrality” and Why Should You Be Concerned About It?

 Permanent link

April 21, 2015

Fogarty,MarcBy:  Marc Fogarty, CPA, CFE

Net neutrality is a term that was coined by a Columbia law professor for the concept that internet service providers (“ISPs”) should treat all internet traffic equally and there should be no discrimination to the individuals or companies that use it.

People in support of net neutrality see the potential for ISPs to make alliances with big corporations who can pay for higher priced, faster connections. This would discriminate against startup companies who might not be able to pay more to be on the World Wide Web. ISPs have challenged net neutrality rules, saying that government regulation will reduce their ability to make a profit, and that they should be able to reap the benefits of the money they have invested (and will continue to invest) in technology to speed up the internet.

Here is an example of how net neutrality might protect the average consumer. Without net neutrality, big companies, like Netflix, will have to pay more to ensure that they have the internet speed needed so your movies play faster.  While at first you may dismiss this as Netflix' problem, eventually you are going to see that cost passed along to you, the consumer. Let's then say that a competing new company wants to enter the field. They have a better technology, great customer service, better cost, etc. But without net neutrality, they can't be guaranteed internet connectivity as fast as Netflix. If the ISPs wanted to, they could make it harder for startups to enter the market, and an era of favoritism and 'pay to play' politics could undermine our country's entrepreneurial spirit.

In February 2015, after over a decade of debate, the FCC approved rules that prohibit ISPs from speeding up internet connections for select company websites, or from slowing access to or entirely blocking consumer's access to websites who have not paid a premium.  Lawsuits have already been filed by several opponents of the new rules which reclassify ISPs as telecommunications providers, rather than information services, therefore making them answer to government regulation like public utility companies. The issue of net neutrality is far from over but the supporters seem to have won the first battle.

What Is the Value of Virtual Currency?

 Permanent link

April 15, 2015

Fogarty,MarcBy Marc Fogarty, CPA, CFE

I went to my local gas station and did something I never do – I paid cash. It made me think of two things:  one, how many dollar bills it took to pay for a tank of gas, and two, how rarely I carry cash these days. It’s easy and convenient to use “virtual currency” but will this technological trend change the perceived value of money?

My generation grew up in an era where people still paid for things with cash, but that won’t be true for my children’s generation.  Let’s look at a real world example of how virtual currency can be a mainstream part of our day. Jenny has each paycheck automatically deposited in her bank account so she never sees a paper check or has to go to the bank. While at work she signs into her Amazon account and buys a Mother's Day gift easily by just selecting the credit card they have on file for her. She orders her groceries online through Peapod and picks them up at the end of the work day. Even her credit card statement, which is how she is paying for everything, is automatically paid by her bank account because she set up auto pay. Jenny has never had to pay cash nor has she had to bother with figuring out the correct change for a transaction. Everything just ‘magically’ gets to where it’s supposed to go.

When grownups say to their children that they can’t afford something, it’s no wonder the child says something to the effect, “Can’t you just use your credit card?”  Teaching the value of money to a child in this digital age can be quite challenging. Our children are growing up in a world of virtual transactions, and this is before virtual payment systems like Bitcoin, ApplePay and the new Facebook Messenger App payment system have even gained widespread acceptance. Without seeing a tangible exchange of currency for goods, will this generation "feel" the value of an exchange?

I recently read an article where a parent brought home their monthly salary all in one-dollar bills to show their children the value of money. They printed their monthly bills and laid them in different places on the table. Piles of money were then applocated to each of those bills. Besides the mortgage payment and utility bills, they also allocated dollar bills for groceries, gas and other incidentals like a treat at Rita’s Water Ice. The children quickly discovered that they needed to sacrifice some of the incidentals in order to pay for grocery bills and gas, so the treat at Rita’s was out. 

The experience of tangibly exchanging currency for items each month can have a profound effect in helping children and even adults understand the value of money.  I'm not saying virtual currency is a bad thing, but it definitely provides a different perspective of value that will certainly affect the next generation.

Synergies in the Tech Acquisition Market

 Permanent link

April 6, 2015

Fogarty,MarcBy Marc Fogarty, CPA, CFE

Some business owners know from the start that they want to grow a company for the sole purpose of selling it. Others start a business because they enjoy what they are doing and it’s a bonus when the company blossoms into something larger than expected. An acquisition for the latter type of business owner can be a challenge. Unlike a business that is simply sold and handed over, These owners might wish to stay with the company. They might also wish to maintain the corporate culture and original intent of the business they created.

There have been a lot of tech acquisitions in the past year and a few have something in common that answers the need of this type of entrepreneur – business synergy.  About a year ago, I wrote about WhatsApp Waiting for the Right Buyer and how some tech business owners want to hold out for ‘something more than money.’  This trend seems to be continuing and the Amazon acquisition of Twitch this past fall is no exception.

Twitch is a video service that allows users to stream live video game sessions and e-sports competitions to a world-wide audience. The company launched in June 2011 and just three years later was being courted by Google. Google, with its YouTube video streaming service, might have seemed like a good fit. But, possibly due to antitrust concerns, the deal did not go through. This paved the way for Amazon to ‘make its move’ with a Twitch purchase of approximately $970 million in cash.

Whereas Google might have absorbed Twitch in an acquisition, Amazon is a more complimentary fit. Amazon sells video games and has started creating their own original entertainment media that competes with Netflix, HBO and others. There appears to be a natural synergy between the two companies that Twitch’s CEO, Emmett Shear, sums up nicely in a letter to his Twitch community:  “We’re keeping most everything the same: our office, our employees, our brand, and most importantly our independence. But with Amazon’s support we’ll have the resources to bring you an even better Twitch.”   

It might be tempting to take the first offer, but waiting could bring the right opportunity that’s an even better fit. If you’re a business owner who’s as lucky as WhatsApp and Twitch, maybe you really can wait to have your cake and eat it too.

Microsoft Technology and the Future of Virtual Reality

 Permanent link

March 31, 2015

Fogarty,MarcBy Marc Fogarty, CPA, CFE

Microsoft’s new HoloLens was introduced in late January and may actually be a game changer. The HoloLens, which some people have inaccurately compared with Google Glass, is a wearable device that projects a hologram to create a virtual reality environment. The new HoloLens is still in the prototype phase with no specific release date, but it is anticipated to be released sometime this year, around the same time Windows 10 is released.

The glasses, a lot like ‘ski goggles’ according to one report, enable a person to see a three-dimensional world and interact with it. A technology writer at The New York Times who was at the unveiling event described a Minecraft scene displayed over a real room in which they were able to take a virtual hammer and smash a real coffee table. The coffee table splintered virtually and then disappeared from the virtual view.

The implications of using this type of technology for virtual learning are mind boggling. The current generation of children, who are growing up with computers and video games like Minecraft, are consequently developing fine motor skills at an early age. Many kids, if you watch them closely, do not need to look at their hands on their game controller or keyboard. Their brains automatically know which buttons to press in quick succession. They have essentially tuned out the world around them to focus on a specific task.

Flash forward about ten years and think of this computer-savvy video-playing generation learning everything from how to fix a car to performing surgery using a virtual reality system. It could lead to a whole new way of approaching education and exploring career options. Wouldn’t it be great if you could explore a new interest, like skydiving, in a virtual setting before taking the plunge for real?

Making virtual reality a part of our everyday lives is not just a Microsoft movement. If you’ll remember, Facebook acquired Oculus VR last March and Google invested in Magic Leap in October, which claims to be ‘transcending’ virtual reality and augmented reality. Samsung and Sony are also making a bid to compete as well.   

The Impact of Oil Prices on the Market and America’s Wallets

 Permanent link

March 23, 2015

Fogarty,MarcBy Marc Fogarty, CPA, CFE

The American production of oil continues to outpace the rest of the world despite instability of market prices. The price per barrel of oil hit a six-year low in January but has gone back up recently due to high global demand and colder than usual temperatures in the Northeast U.S., which increased demand for heating oil. 

While Wall Street may be nervous about the negative impact of the instability of oil prices, consumers and businesses that are able to take advantage of lower prices at the pump can use those savings to spend more and possibly invest more. When gas prices fall, consumer confidence rises.

In addition to the benefit of consumers having more money to spend on goods, businesses also benefit from reduced expenses. When gas prices decrease, retailers can save money on shipping and transportation costs which leads to higher profit margins. Those higher profits can, in turn, make the company more attractive to investors.

While Americans continue to debate the pros and cons of oil production issues, Saudi Arabia and its Gulf allies claim to not be worrying about news headlines on fluctuating oil prices. Their per-barrel production cost remains much cheaper than many of their competitors and they are focused more on protecting their global market share.

In the meantime, Americans can continue to enjoy the benefits of cheaper prices.

IPOs Expected to Increase This Year

 Permanent link

February 26, 2015

Fogarty,MarcBy Marc Fogarty, CPA, CFE

The past three years have shown an increase in IPO activity, with 273 IPOs in 2014. IPOs continue to be prominent in the tech and health care sectors, as I have mentioned in past blogs, due to an upturn in those markets.  Conversely, there are concerns that the IPO market will not fare as well for other sectors.

With low oil prices and a surplus in global supply, some have predicted a decline in energy IPOs this year. So it was a bit of a surprise to see Philadelphia Energy Solutions listed on the NASDAQ as a recently filed IPO. According to their website, “PES processes approximately 335,000 barrels of crude oil per day, making it the largest oil refining complex on the Eastern seaboard.” Time will tell if their decision to go public in a volatile market was a gamble worth taking.

It has also been predicted that tech IPOs will be on the rise again in 2015 and that prediction appears to be off to a good start! The new year heartily welcomed the online file storage company, Box, as one of the first tech companies to enter the market in 2015. With an IPO price of $14 a share, Box closed significantly up on its first day of trading, at $23.23 a share. This resulted in Box having a market value of $2.7 billion, which surpassed the $2.4 billion valuation announced last summer. 

Perhaps there won’t be an IPO that can even come close to last year’s record breaking star, Alibaba, but there is still plenty of opportunity on the horizon. If the market remains strong, more companies may decide that 2015 is the right time for an IPO.

EisnerAmper is an independent member of PKF North America.
PKF North America is an independent member of PKF International.