Financial News

[iDumb]

I didn't wanna open a thread just for an article, so this thread will be used in future for other important financial news. But if anyone is aware of the Rajaratnam case, this is an opinionated piece on that. I didn't really understand what this guy was trying to say.









Rajaratnam Conviction an Unwanted Sign of Arrival









Daniel Gross is economics editor at Yahoo! Finance.




Daniel Gross, On Wednesday May 11, 2011, 10:53 am EDT




The conviction of hedge fund manager Raj Rajaratnam on 14 counts of insider trading essentially brings to a close one of the largest criminal case of financial misdeeds in recent years. Before the verdict, 21 one of the 26 people accused of being part of a wide-ranging conspiracy to gather, dispense and trade on insider information had already pleaded guilty. The evidence presented at the trial certainly undermined the tepid faith that the markets offer a level playing field for individual investors.

The Rajaratnam insider-trading ring was a sideshow to the larger financial scandals of recent years. Its impact on the economy pales in comparison to the Lehman Brothers debacle. The sums of money and institutional failures involved were much less dramatic than in the Bernard Madoff affair. Yet the trial inspired interest in large measure because of its cast of characters. This wasn't a boiler room operation, or a bunch of mob-connected guys in New Jersey manipulating micro-caps. No, this was a conspiracy involving an investor who was able to tap into the nervous system of the financial system and extract valuable, profitable information.

When I sat in on the trial in late March and early April, it struck me that the case offered an updated twist on an old story: the rise and integration of immigrants into the establishment. While the revelations were enormously embarrassing, the trial marked a sign of arrival of sorts for South Asian immigrants. Raj Rajaratnam's story is that of an immigrant meritocrat, forming bonds and networks with those from a similar background, obtaining the best education and work experience possible -- and then putting it all to ill use.

Since large-scale immigration from India, Pakistan and Sri Lanka began in the 1960s, South Asians have generally been outsiders in American institutions: in politics, in the Fortune 500 and in the media. Ten years ago, perhaps the most well-known South Asian immigrant businessman was Apu Nahasapeemapetilon, the convenience store proprietor of The Simpsons. As recently as five years ago, then-Sen. Joe Biden stuck his foot in his mouth when noting: "You cannot go to a 7-Eleven or a Dunkin' Donuts unless you have a slight Indian accent. I'm not joking."


But that image of South Asians has changed rapidly in the past several years. In politics, second-generation Indian-American immigrants Bobby Jindal and Nikki Haley have won races for governor in Louisiana (2007) and South Carolina (2010), respectively. Aziz Ansari, a graduate of New York University's Stern School of Business and the son of Indian immigrants, plays a character on NBC's Parks and Recreation who bears the distinctly non-South Asian name of Tom Haverford. Actor Kal Penn, the son of Indian immigrants, has moved from the Harold and Kumar franchise, the movie The Namesake and the TV show House to the White House. In the corporate world, Indra Nooyi, who came to the U.S. from India to attend graduate school at Yale, was promoted in 2006 to CEO of the iconic American brand Pepsico. The following year Vikram Pandit was named CEO of Citi.


In its own way, the Rajaratnam trial highlights this trend of immigrants' arrival. Rajaratnam, who immigrated from Sri Lanka to attend the University of Pennsylvania's Wharton School of Business, helmed a $7 billion hedge fund, the Galleon Group. Rajaratnam wasn't getting tips from guys who loaded trucks or took out the trash. His network, which included many immigrants from South Asia, reached into blue-chip companies, name-brand consulting firms, even the sanctum sanctorum of American capitalism: the boardroom Goldman Sachs.

The days I attended the trial, the jury heard testimony from Rajiv Goel. As Peter Lattman of the New York Times noted, Goel and Rajaratnam "met in the early 1980s in Philadelphia as South Asian immigrants who had come to the United States for an elite business education at the Wharton School of the University of Pennsylvania." Goel worked as a finance executive at companies such as MetLife and Bank of America before arriving at Intel. I listened as Goel testified about how he had helped funnel information to Rajaratnam about a transaction that involved Intel and Clearwire. At one point, he corrected defense lawyer Terence Lynam's pronunciation of the name of another Intel executive, Sriram Viswanathan, an India-born executive who was a leader in the company's venture capital and WIMAX units. Viswanathan, who was not a target of the investigation, also testified at the trial. The government's first major witness had been Anil Kumar, a senior consultant at McKinsey and fellow Wharton classmate of Rajaratnam, who had immigrated to the U.S. from India. Kumar pleaded guilty to funneling information he gleaned from clients to Rajaratnam.

Others in the ring include Roomy Khan, a well-connected figure in Silicon Valley. As the Deecan Herald reported, she "allegedly helped Rajaratnam make $4 million in a day by passing on a tip from Indian origin Moody's analyst Deep Shah about Hilton hotel chain takeover by private-equity firm Blackstone Group."


Yet another South Asian immigrant figured prominently in the trial, although he wasn't accused of any wrongdoing. The prosecutors presented evidence that Rajaratnam was trading on information he got from a member of Goldman Sachs's board of directors: Rajat Gupta. It would be hard to get more establishment than Gupta, who had run the consulting firm McKinsey & Co. Beyond the McKinsey and Goldman posts, as his bio notes, the Indian immigrant was "chairman of the Board of Associates of the Harvard Business School; and Dean's Advisory Council, Massachusetts Institute of Technology Sloan School of Management."

Rajaratnam's crimes weren't those of a marginal outsider motivated by desperation or poverty. When the ring started, he was already a wealthy man many times over. The management fees he would have reaped from running Galleon for a single year would be enough to last most people a lifetime. Rather, his crimes stem from an impulse that has deep roots in America's financial system: the desire by those on the inside to game the system for further gain.

Daniel Gross is economics editor at Yahoo! Finance

Subscribe to Daniel Gross's RSS feed here.

Follow him on Twitter: @grossdm. Email him at grossdaniel11@yahoo

[Zeeshan]

Why is the fact that he is an immigrant should be of concerns? US is a land of immigrants and to harp on about the change of immigrants' status should be of no factor. If he is a criminal then he should be prosecuted as such. Anyways, it's a deep article and I didn't scrutiny it enough. Waiting for others' thought.
====
On a different note, how much do you guys save? I get about thou a month and blow it all in 2 weeks. I have a feeling since behavior do not change, if I ever won a million dollar lottery I would be p-- poor next day. Any advice on savings? Thanks.

[iDumb]

Z, next time you go to a massage parlour, say no too inappropriate touches - it will save you a lot of money. I was forced to pay tips for service I didnt want or get. I was almost gonna call immigration on her.. taking advantage of unsuspecting ppl tsk tsk

[Zeeshan]

Originally Posted by iDumb
Z, next time you go to a massage parlour, say no too inappropriate touches - it will save you a lot of money. I was forced to pay tips for service I didnt want or get. I was almost gonna call immigration on her.. taking advantage of unsuspecting ppl tsk tsk

Check your pm. Can't share the story here.

[goru]

http://www.marketwatch.com/story/nob...MW_latest_news

So... why did Microsoft buy Skype?

[iDumb]

Originally Posted by goru
So... why did Microsoft buy Skype?

Because Microsoft still thinks they are in the playing field of cutting edge technology. They have been losing money in all their pet projects and losing windows market share day by day to mac and others.

I remember in one of Bill gates interview, how he mentioned "tablet PC" was it and that it would revolutionize how we do things. He got it right on the money but it was apple that had the right application to "revolutionize" the market. Windows tablet has been a failure forever.

The real growth in communication/information technology is currently in mobile devices. And it's embarrassing that Microsoft being a software company is lagging here... and playing catch up. Even google is kicking their *** with android. This is just another move of that catch up playing.

Microsoft will be one of the worst performing stock this year. The only way it will go up is if overall market drags it upward.

[goru]

LinkedIn IPO on May 19th... one of the big ones I've been waiting for.

http://online.wsj.com/article/SB1000...819356434.html

I wonder what prices us "ordinary" investors will get.


(should this be in the stocks thread?)

[iDumb]

No i think we should let that thread die. We need fresh starts.

You know with all this social network sites going public, a new bubble may be in brew - and I love bubbles - reminiscent of the late 90s. We should all be excited and if we treat them as gambling (get in and get out) rather than investing, money can be made.

Some of the numbers these ppl come up with makes my jaw drop like recent valuation of groupon. I will be watching LinkedIN ipo, i didn't know about it but I don't think i will do anything. I will follow it closely to see how it pans out so come facebook IPO, I am putting all my money in for sure and will be flying with pigs. Just thinking about it makes me glee like a virgin about to get lucky.

[Rifat]

i don't know if this is the appropriate thread for this: but why are gas prices so high this season? I pay around $4.33 per gallon while about a couple of months ago i only paid a dollar less than that. what's going on?

[iDumb]

Originally Posted by Rifat
i don't know if this is the appropriate thread for this: but why are gas prices so high this season? I pay around $4.33 per gallon while about a couple of months ago i only paid a dollar less than that. what's going on?

Oil market is pretty complicated, it is very controlled. To get a good idea of where the price at pump will be going, you should follow the price of crude oil. Recently, there was a mini-crash there sending crude oil below 100. But to see that change in the gas pumps takes weeks to months.. as millisecond trading can not be converted to gas station price. So, the consensus is if crude oil stays below 100, the price at pumps SHOULD go down in coming months even though historically oil prices supposed to be going up as summer approach.

There are many factors that contribute to this price fluctuation. But the recent rise is due to devaluation of dollars. There is an inverse correlation. As all the commodities are price in dollars - when dollar is devalued - the "intrinsic" value of the commodity kicks in and price goes higher in terms of number of dollars.

As long as dollar is being devalued, things like oil and gold will be rising. Recent rise in stock market can also be attributed to this devaluation of dollars. So how to stop dollar from dropping like that. One way to do is for federal reserve to increase the interest rate, getting rid of cheap borrowing of dollars. But this is a dangerous time to do that as stock market will react negatively with rise in interest rate.

That is a dumb down version of it (or the way I understand it), ppl with economics background can explain more.

As I said initially oil market is controlled. Some examples are: in times of election, it is often seen that gas price drop dramatically at the pumps. Also OPEC is very careful in keeping the prices high and profit rolling. They will always supply short of the demand for oil...

[Rifat]

^^makes a lot of sense. Thanks Orphy for the explanation!

I will be keeping a close eye on this website over the summer.
http://www.oil-price.net/

[iDumb]

MF chief jailed without bail in NY hotel-sex case
IMF chief jailed without bail in NYC attempted-rape case; more allegations emerge

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Dominique Strauss-Kahn, head of the International Monetary Fund, is arraigned Monday, May 16, 2011, in Manhattan Criminal Court for an alleged attack on a maid who went into his penthouse suite at a hotel near Times Square on Saturday to clean it, in New York. Strauss-Kahn must remain jailed at least until his next court hearing for attempted rape and other charges, a judge said Monday. (AP Photo/Richard Drew, Pool)

Jennifer Peltz, Associated Press, On Monday May 16, 2011, 11:05 pm
NEW YORK (AP) -- Haggard and unshaven after a weekend in jail, the chief of the International Monetary Fund was denied release on bail Monday on charges of trying to rape a hotel maid as allegations of other, similar attacks by Dominique Strauss-Kahn began to emerge.

In France, a lawyer for a novelist said the writer is likely to file a criminal complaint accusing Strauss-Kahn of sexually assaulting her nine years ago. A French lawmaker accused him of attacking other maids in previous stays at the same luxury hotel. And in New York, prosecutors said they are working to verify reports of at least one other case, which they suggested was overseas.

Strauss-Kahn's weekend arrest rocked the financial world as the IMF grapples with the European debt crisis, and upended French presidential politics. Strauss-Kahn, a member of France's Socialist party, was widely considered the strongest potential challenger next year to President Nicolas Sarkozy.

Making his first appearance on the sex charges, a grim-looking Strauss-Kahn stood slumped before a judge in a dark raincoat and open-collared shirt. The 62-year-old, silver-haired Strauss-Kahn said nothing as a lawyer professed his innocence and strove in vain to get him released on bail.

The judge ruled against him after prosecutors warned that the wealthy banker might flee to France and put himself beyond the reach of U.S. law like the filmmaker Roman Polanski.

"This battle has just begun," defense attorney Benjamin Brafman told scores of reporters outside the courthouse, adding that Strauss-Kahn might appeal the bail denial.

Strauss-Kahn is accused of attacking a maid who had gone in to clean his penthouse suite Saturday afternoon at a luxury hotel near Times Square. He is charged with attempted rape, sex abuse, a criminal sex act, unlawful imprisonment and forcible touching. The most serious charge carries five to 25 years in prison.

Strauss-Kahn, who has headed the international lending agency since 2007, was in New York on personal business and was paying his own way, so he cannot claim diplomatic immunity, the IMF said. He could seek that protection only if he were conducting official business, spokesman William Murray said. The agency's executive board met informally Monday for a report on the charges against Strauss-Kahn, its managing director.

The French newspaper Le Monde, citing people close to Strauss-Kahn, said he had reserved the $3,000-a-night suite at the Sofitel hotel for one night for a quick trip to have lunch with his daughter, who is studying in New York.

The 32-year-old maid told authorities that she thought the suite was empty but that Strauss-Kahn emerged from the bathroom naked, chased her down a hallway, pulled her into a bedroom and dragged her into a bathroom, police said.

He grabbed her breasts, tried to pull down her pantyhose, grabbed at her crotch and forced her to perform oral sex on him during the encounter at about noon, according to a court complaint. She ultimately broke free, escaped the room and told hotel staffers what had happened, authorities said. She was treated at a hospital for minor injuries.

"The victim provided a very powerful and detailed account of the violent sexual assault," Assistant District Attorney John "Ardie" McConnell said. He added that forensic evidence may support her account. Strauss-Kahn voluntarily submitted to a forensic examination Sunday night.

Brafman said defense lawyers believe the forensic evidence "will not be consistent with a forcible encounter." Defense lawyers wouldn't elaborate, but Brafman said "there are significant issues that were already found" that make it "quite likely that he will be ultimately be exonerated."

Prosecutors asked the judge to hold Strauss-Kahn without bail, noting that he lives in France, is wealthy, has an international job and was arrested on a Paris-bound plane at Kennedy Airport. He had left the Sofitel hotel before police arrived, leaving his cellphone behind, and appeared hurried on surveillance recordings, authorities said.

At one point, Strauss-Kahn called the hotel "in a panic" about the phone, a law enforcement official said Monday.

Hotel security officers hadn't found a phone. But they were instructed by NYPD investigators to set a trap by informing him they had it and asking where they could get it to him, said the official, who spoke on condition of anonymity because the investigation had not been completed.

Strauss-Kahn told them he was about to board a flight -- unknowingly tipping off authorities to his whereabouts, the official said.

Prosecutors said they couldn't force Strauss-Kahn's return from France if he went there.

"He would be living openly and notoriously in France, just like Roman Polanski," said Chief Assistant District Attorney Daniel Alonso, referring to the film director long sought by California authorities for sentencing in a 1977 child sex case. Swiss police arrested him in 2009, but he was freed last year when Switzerland declined to extradite him to the United States.

Defense lawyers suggested bail be set at $1 million and promised that the IMF managing director would remain in New York City. His lawyers said Strauss-Kahn wasn't trying to elude police Saturday: The IMF head rushed out of the hotel at about 12:30 p.m. to get to a lunch date with a family member, then caught a flight for which he had long had a ticket, according to Brafman and fellow defense lawyer William W. Taylor.

"This is not a case of someone who commits a crime, runs to the airport and jumps on the first available plane," Brafman said.

Still, Criminal Court Judge Melissa C. Jackson, who was an assistant district attorney in Brooklyn for nearly 22 years before being appointed to Manhattan Criminal Court in 2003, said the fact that Strauss-Kahn was on a plane when arrested "raises some concerns." She ordered him jailed at least until a court proceeding on Friday.

Strauss-Khan will be held in protective custody in the city's Rikers Island jail because of his high profile, said city Correction Department spokesman Stephen Morello. Unlike some inmates, who share 50-bed barracks, Strauss-Kahn will have a single-bed cell and eat all his meals alone there. Also, when he is outside his cell, he will have a guard escort.

Strauss-Kahn makes an annual tax-free salary as head of the IMF of $420,930, plus an annual "scale of living" allowance of $75,350, according to a 2007 IMF press release.

According to the 2000 biography "Les Vies Cachees de DSK" by Vincent Giret and Veronique Le Billon, Strauss-Kahn's wife, Anne Sinclair, was one of France's highest-paid TV journalists before she gave up her job to avoid a possible conflict of interest when her husband became a government minister in 1997. The biography says Sinclair is also a wealthy heiress, whose grandfather Paul Rosenberg was a prominent modern art dealer before the Second World War.

French newspapers have inventoried the couple's real estate holdings, which reportedly include a six-room apartment in Paris' chic 16th arrondissement; a 240-square-meter apartment on the luxurious Place des Vosges; a home in Marrakech, and a house in Washington.

Meanwhile, a lawyer for 31-year-old French novelist Tristane Banon said she will probably file a complaint alleging Strauss-Kahn sexually attacked her in 2002. Lawyer David Koubbi told French radio RTL that Banon hadn't pressed her claim earlier because of "pressures" but would do so now because "she knows she'll be taken seriously."

The Associated Press is identifying Banon as an alleged victim of sexual assault because she has gone public with her account.

Banon's mother, Anne Mansouret, a regional Socialist official in Normandy, said she had advised her daughter at the time against pursuing her claim.

A French lawmaker from a rival political party also alleged, without offering evidence, that Strauss-Kahn had victimized several maids during past stays at the Sofitel near Times Square.

The hotel issued a statement calling conservative lawmaker Michel Debre's claims "baseless and defamatory." Sofitel management "has had no knowledge of any previous attempted aggressions," the hotel said, adding that it had set up a hotline for workers to report incidents more than a year ago.

McConnell, the assistant district attorney, said in court Monday that New York authorities are working to verify at least one other case of "conduct similar to the conduct alleged." When the judge asked whether the potential other incident occurred in the United States, McConnell said he "believed that was abroad."

Strauss-Kahn's lawyers said they had no immediate response to the allegations emerging from overseas.

In France, defenders of Strauss-Kahn, a former finance minister who had topped the polls as a possible candidate in presidential elections next year, said they suspected he was the victim of a smear campaign.

The 187-nation IMF provides emergency loans to countries in severe distress and tries to maintain global financial stability.

Associated Press writers Jamey Keaten in Paris, Chris Rugaber in Washington and Tom Hays in New York contributed to this report.

[iDumb]

LinkedIn raises IPO ante amid high investor demand
LinkedIn raises IPO asking price by 30 percent as investors vie to buy into online networking


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Michael Liedtke, AP Technology Writer, On Tuesday May 17, 2011, 5:55 pm EDT
SAN FRANCISCO (AP) -- Investors are clamoring to connect with the online networking service LinkedIn Corp. in the latest sign of the fervor for Internet companies that specialize in bringing together people with common interests.

The demand to buy a piece of LinkedIn is so intense that the 8-year-old company is expected to make its stock market debut Thursday with a value of at least $4 billion. That would make LinkedIn's initial public offering of stock the biggest by a U.S. Internet company since Google Inc. went public in 2004, according to the research firm Renaissance Capital.

The appetite for LinkedIn's IPO encouraged the company's bankers to raise the asking price by about 30 percent Tuesday to $42 to $45 per share. It won't be surprising if the IPO is priced even higher Wednesday evening and then sells for more than that Thursday morning when they are expected to begin trading on the New York Stock Exchange under the symbol "LNKD."

The IPO is expected to raise about $200 million for LinkedIn and produce $125 million to $135 million for existing stockholders, who plan to sell some of their shares. The biggest winner will be LinkedIn's co-founder and chairman, Reid Hoffman, whose 20 percent stake in the company will be worth more than $800 million.

The coming-out party on Wall Street for LinkedIn, which focuses on connecting professionals online, could be the prelude to even more excitement if several popular Internet companies decide to go public during the next year. The list of candidates includes the online messaging service Twitter, online game maker Zynga, online coupon service Groupon and the biggest social network of all, Facebook.

"LinkedIn will be used very heavily as a modeling tool for other companies in this space," predicted David Menlow, founder of research firm IPO Financial. "The pricing is going to have a dramatic effect. This is just the starting point for valuation adjustments."

Facebook is the most prized among the Internet companies still awaiting an IPO. It was valued at $50 billion as part of an investment organized in January by Goldman Sachs Group Inc., a major shareholder in LinkedIn. If Goldman Sachs follows through on its plan to sell its entire LinkedIn stake in the upcoming IPO, the bank would receive about $38 million at the mid-point of the targeted price range.

LinkedIn, based just down the street from Google's Mountain View, Calif. headquarters, has become profitable by building a website that acts both as a Rolodex and a hiring center.

People set up LinkedIn accounts to post the resume on a page and connect with current and past colleagues. LinkedIn members can then ask the people they know to introduce them to other connections that might help further their careers.

Although not nearly as popular as hanging out on Facebook, LinkedIn has emerged as a widely used directory. Through March, it had 102 million members and is adding another million each week.

The company gets about two-thirds of its revenue from fees that it charges for greater access to the website and more data about the expertise listed on each member's page. Businesses and job headhunters use LinkedIn to recruit people who might not even be looking for a job at the time. LinkedIn also has made money from business surveys of its members and a service that offer career advice to college graduates.

The rest of LinkedIn's revenue comes from Internet ads, which serve as the financial backbone for Google, Facebook and many other Internet companies.

The lofty appraisals being given LinkedIn and other online networking companies have raised worries of an investment meltdown if the businesses don't turn out to be as successful as enthusiastic investors anticipated.

That is what happened in the late 1990s when hundreds of unprofitable Internet companies attracted billions in venture capital and then went public to much fanfare. That led to a devastating collapse that still haunts Internet investors.

The big difference this time is that the current Internet darlings haven't rushed to the public markets. Instead, they are waiting until they have developed ways to make money while amassing massive audiences.

"These are serious businesses with huge global market opportunities ahead of them," said John O'Farrell, a partner with Andreessen Horowitz, a venture capital firm that owns stakes in Facebook, Twitter, Zynga and Groupon. "To an uninformed person, the valuations may look like a bubble, but we believe they will in fact prove to be very low valuations."

Last year, LinkedIn earned $3.4 million on revenue of $243 million. Its growth accelerated during the first three months of 2011, putting it on a pace to generate $500 million in revenue this year. Management, though, has warned that the company might lose money this year as it invests in more products and more computers to run its website as it tries to ward off competitive threats overseas.

If LinkedIn's IPO is priced at the mid-range target of $43.50 per share, the company would have a market value of $4.1 billion -- about 17 times its 2010 revenue. By comparison, Google's current market value of $170 billion is less than six times its revenue last year. When Google went public, though, its market value of $24 billion was 16 times higher than its revenue from the previous year.

AP Business Writer Tali Arbel in New York contributed to this story.

[iDumb]

Things are heating up already... Let's see how it goes, come on facebook - announce your IPO already. i value facebook at 100 billion (double GS valuation of 50). No LOGIC, just cuz I feel like it.....

[goru]

Holy Market Hype!

LinkedIn opened at $80 and reached $93 in like 4 minutes as I was watching it. Now back to $85.

[goru]

Approaching $110 now!

[i_1_primeval_man]

I was wondering if any one could help me with trading in Newyork Stock Exchange. I mean what are the requirements for trading for non US citizens. Do you need to register with a Brokerage Farm? Which are the better ones and what sort of trading cost are involved? And How do you take part in IPO offerings?
Sorry, a lot of questions at the same time. I use BellDirect to trade in ASX, but not familiar at all with the Newyork Stock Exchange. With the possibity of facebook and twitter IPO offerings i think i should get ready to invest. Thanks in advance for the all the help.

[goru]

Is Sony a good buy right now?

http://www.google.com/finance?q=NYSE:SNE

Took a dive on the initial DDoS attack fiasco... and got worse after the intrusive attack and data theft in April when PSN got shut down completely. They already have PSN back up, and are now they are about to bring Store back online... but not sure if it will help much, really. But perhaps a long term hold is a good idea?

[iDumb]

Deal sites appeal shoppers and businesses alike
Daily-deal sites are growing in popularity; clones abound, but nobody's clipping Groupon

Ellen Gibson, AP Retail Writer, On Monday May 23, 2011, 8:57 am EDT


Groupon is adding 150 employees a month at its U.S. headquarters and trains them in a church because the conference rooms at its headquarters aren't big enough. Ideeli has crammed so much electronic equipment into its New York office that the power goes out every day.

And at LivingSocial, well, the living is a little too social. Its third office in Washington, open just two months, ran out of room so fast that employees have to work at narrow desks in the hallway.

Deal-a-day websites blast email offers for deep discounts, sometimes good for only a few hours. And they're becoming so popular that their offices are starting to look as crowded as their subscribers' inboxes.

In just three years, the business model has changed local advertising, delivering faster results than other marketing methods. Store owners get immediate revenue and can see exactly how many customers an offer brings in.

The exponential growth of the sites, along with the emergence of hundreds of clones, is reminiscent of tech companies before the dot-com stock bubble burst in 2000. But Lou Kerner, a social media analyst at Wedbush, argues this isn't a fad: It's a new category of commerce that has changed how companies from hair salons to sandwich shops market their products.

Groupon, the No. 1 daily-deal site, has swelled from 2 million subscribers to 85 million over the past year and a half, while second-place LivingSocial went from 120,000 subscribers to 28 million.

The sites are expected to generate $2.7 billion in revenue this year, more than doubling from last year, according to Local Offer Network, which collects and distributes deals from hundreds of sites. The daily-deal market could reach $4 billion by 2015, says Mark Fratrik, vice president at marketing research firm BIA/Kelsey. While that's a small slice of the $142 billion in online retail sales, daily-deal revenue is growing much faster than overall e-commerce.

The discounts and limited-time offers on daily-deal sites motivate shoppers to splurge on treats such as half-priced golf lessons at Miami's Better Golf Academy, or $75 worth of wine for $35. The sites fall into two categories:

-- Group-buying sites, such as Groupon, LivingSocial and BuyWithMe, that partner with small businesses to send subscribers a local offer each day. (Occasionally, they partner with big companies such as Gap to run a national deal.) Subscribers can opt to purchase the voucher, usually good for half off. Then Groupon takes 30 to 50 percent of the revenue. So a pizza parlor might take in only $4 on a pizza it can regularly sell for $16. The theory is that bringing in a bunch of new customers will offset the smaller profit and result in repeat business.

-- Flash-sale sites, such as RueLaLa, Gilt and Hautelook, that host limited-time sales for members only. They feature a different product or designer each day, like Dolce & Gabbana dresses that didn't sell or Rock & Republic jeans at 60 percent off. Private sales allow designers to unload excess merchandise and market to more budget-conscious customers while maintaining an air of exclusivity. Woot, a pioneer in 24-hour sales, focuses on gadgets, such as discontinued Flip cameras. Flash sales generally involve limited quantities and can sell out in a matter of minutes.

Skeptics predicted that traffic to daily-deal sites would flatten as the economy recovered and shoppers stopped worrying so much about finding a bargain. The opposite has occurred. LivingSocial had 7 million unique visitors in March, up 27 percent from February, making it one of the 10 fastest-growing websites, according to ComScore. Traffic to Jetsetter, a luxury travel-deal site, has grown tenfold since January 2010. Hautelook's traffic is up 15 percent since Nordstrom Inc., the high-end department store chain, announced plans to buy the site for $270 million in February.

In April, Facebook began testing a daily deals program in five U.S. cities. On May 3, Amazon launched MyHabit.com, which peddles a new luxury item at 60 percent off each day. Groupon rejected Google's reported $6 billion buyout offer last year, but the search giant launched a pilot program called Google Offers in Portland, Ore., in April.

Paul Hurley, 46, started flash-sale site Ideeli in 2007, operating out of his kitchen. Now the company rents space in two New York office buildings. Marketers, programmers and customer-service reps sit elbow-to-elbow.

Ideeli is on track to bring in $250 million in revenue this year, Hurley says, and has 4 million members, triple the number from a year ago. The biggest challenge, he says, is managing the growth. Up to eight fashion shoots are going on at once in the company's studio, and Ideeli has become one of the city's top hirers of models.

Groupon's staff has grown so quickly that the company hired a high-school yearbook publisher to produce a book of employee headshots, trying to maintain the tight-knit community atmosphere of a startup.

"It's really important to us that people still know each other's faces and names," says spokeswoman Julie Mossler, who has been with the company since 2008, when it had 120 workers. It now has 7,000. They include hundreds of former publishing professionals and journalism grads who write the clever blurbs to promote each item. A recent offer for half-priced family portraits started this way: "Ideally, every family would have a group mug shot to display above the mantelpiece; unfortunately, many of today's families are too busy to commit crime together."

Some subscribers find the emails entertaining enough to read daily, even when the deals miss. The need for staff with both marketing chops and the ability to write snappy copy makes finding the right people difficult. Mike Rothman, general manager of Thrillist Rewards, which targets men with offers like the $50 "Strip and Strip" (a strip steak at a gentlemen's club), says he is posting jobs faster than he can fill them. He currently has a dozen openings.

"Our biggest challenge is getting more people on board," Rothman says. "One of the positions we're recruiting for is a recruiter."

Daily-deal sites are thriving because they benefit both merchants and consumers without requiring tech savvy from the former, says Opus Research analyst Greg Sterling.

Some companies have gripes, though. They say that the sudden influx of customers overwhelms staff or that Groupon demands an unfair cut. Groupon responds that it has no shortage of willing partners and that businesses have the option to cap the number of vouchers sold.

The deals work better for some businesses than others. If you're running a hotel and some of the rooms were going to sit empty anyway, it makes a lot of sense. For restaurants, where the profit margin is tiny to begin with, it might be less appealing. (Plus customers tend to tip on the discounted total, making servers grumpy.)

Some merchants don't do the math before they run an offer and wind up getting burned. Businesses hope shoppers will spend more than the coupon's face amount. Other companies are prepared to take a loss, seeing it as a marketing cost. Each of the six business owners interviewed for this story by The Associated Press decided to run a second or third deal after trying it out.

There are hundreds of copycats willing to accept lower commissions, but many merchants prefer to partner with Groupon and LivingSocial because they reach more potential customers. While the business model is here to stay, many of the smaller players will be bought or die, Kerner says.

Facebook has the potential to dominate because it already has 600 million users, dwarfing Groupon's 85 million subscribers, and many businesses already have a presence on the social network.

Small businesses have jumped on the daily-deal model as a way to hook new customers in the digital age. Old ways of advertising no longer pay off, while new ones can be vexing. Newspapers are losing readers, especially young ones. The Yellow Pages is a doorstop. Google search results are unpredictable. Facebook pages are easy to set up, but then what? And reviews on third-party sites like CitySearch can hurt as much as they help.

"We're better than anything that's been out there," says Tim O'Shaughnessy, CEO of LivingSocial.

When Chris Young and his partner started a kayak-tour company, San Francisco Kayak & Adventures, last March, they knew they would need a marketing blitz to get the business off the ground. But a coupon in the San Francisco Examiner didn't produce a single sale. So they decided to try a less conventional form of advertising and ran a Groupon. They were inundated with calls.

Bess Wyrick, creative director at Manhattan floral design shop Celadon & Celery, is thrilled with the results of three deals she's run for flower-arranging courses -- a low priority for recession-scarred consumers. The offers brought in more than 1,000 students, who may be inspired to come back for more. But she's not convinced it's a long-term advertising strategy. If you continue to run promotions, she says, "How many of your clients are going to want to buy at the regular price?"

http://finance.yahoo.com/news/Deal-s...&asset=&ccode=

[goru]

So, when will it be time to buy in again? I'm getting cash ready...

[iDumb]

These flash crashes are bullshit. Looks more corrective than panicky. Market supposed to react in anticipation of news, this time the flash crash was after an expected news came. Nothing happened to any solid stocks. When everyone is panicky and looks for the exit, that's a good entry point going against wave. When everyone has money in the side, waiting to get in despite 500 points crash I would say market is pretty stable. Nothing really changed in last 6 months. Dow is gonna trade in the 11000 and 13000 range. So yeah I would say it's a good entry point with some low and slow profit. But if down crack below 11000 or whatever support level, I would hold on till fear sweeps across the board affecting good stock like aapl amzn goog isrg etc.

I have been all cash for last 6 months now so I prefer some more crash and fear in wall st. I might buy msft in the low 20s as a conservative play.

Posted via BC Mobile Edition (1)

[Zeeshan]

Dow plummets 634 points.

What's gonna happen to us now Orphy? What's gonna happen to us now?

[iDumb]

Originally Posted by ZeeshanM
Dow plummets 634 points.

What's gonna happen to us now Orphy? What's gonna happen to us now?

Nothing is gonna happen to me. I am all cash for past 6 months. I want market to crash (though I shouldn't say this). For selfish reasons, this is good. Like I said - Down broke below 11000, I would just watch at this point - I would jump in when SOLID stocks start to suffer and there is wide spread panic - like 2009. Some more crash needed. POS msft still in mid 20s or too high for my conservative play.

[iDumb]

ok guys i been very busy lately so haven't been actually seeing everything. There is actually panick in the financial sector ie bank stocks. i would look for opportunities there.

hoping for dow 8000

[iDumb]

I am somewhat tempted to buy bac at this level. If bac goes below 5, I am pulling my gambling trigger for sure. But for current level till five - gave wife free ride to make her own decision as she would be in front of internet with plenty of time. I think it's worth taking a risk....

I am also watching axp - that I sold at 48 few months ago Hasnt taken much hit yet but if this manipulative fear continues I will grab some axp at mid 30s.