Article from The New York Times:
http://www.bizjournals.com/portland/stories/2009/03/09/daily22.html
SUMMARY
It is reported that residential real estate agents on the west side of the United States earn the most commission on home sales last year. The average home price in the west is the highest in the country, reaching $312,000. ForSaleByOwner.com, a website that provides home sales advertising services in 1999 reported that western real estate agents averagely earned a commission of $16,230, which is a figure a bit higher than that of the northwest and significantly higher than those of the south and midwest. Although these figures may not look bad, but if we look at the total agent commission nationwide, we can see that a significant drop of $12 billion from 2007 ($58.4 billion) to 2008 ($46.6 billion). There is no big surprise since the commisions started to decline ever since 2005, when the figure that year reached a high $71 billion. The national average commission in the year 2008 was $12,600, which is around $1,000 lower when comparing it to the figure in 2007.
CONNECTION
I connect this article to the first of section of Chapter 16, where it talks about the three different types of gross pay. Real estate agents are one of the best examples for people who earn money by commission. Some of the agents are hired by real estate companies, therefore they are paid a basic salary, but some portion of the commission they earn obviously has to go to the company. This kind of job is more secure since if the country goes into recession and less people buy houses, even if they don't get to sell any houses, they are still paid to support their livings. However, some of the agents create their own little company. In this case, although they get more commission, that is the only money they'll earn, And if a recession happens and the market falls (like right now), they will have no income if no houses are sold. Other examples of commission earners are sales representatives from large retail stores. They often try to persuade customers into purchasing additional products and services, such as accessories, service plans, and extended warranties. If the customers agree to purchase them, a large portion of the money goes to the pockets of the sales representatives.
REFLECTION
First of all, I am quite impressed to find out that real estate agents in the United States are earning an average of $16,230 per home, while the average price of homes is $312,000. That is more of 5 per cent of the home price. As far as I know, the usual amount of commission a Vancouver real estate agent earns for selling a house is around 5 per cent of the home price for the first 100 to 200 grand, then 2~3 per cent for the rest of the price. This information may not be THAT accurate, but we kind of have the idea that US real estate agents seem to be earning a bit more commissions than Canadian agents. I also find that a drop of only $1,000 in the national average commission between 2007 and 2008 but that bad since the US fell deeply into recession in 2008. The significant drop of $12 billion in total commissions is quite predictable because it is obvious that not many people like the idea of buying houses during such a period of time.
Wednesday, March 11, 2009
Monday, March 2, 2009
Chapter 15 Blog
Article From The Sydney Morning Herald:
http://business.smh.com.au/business/recession-be-damned-as-apple-bucks-sales-trend-20090122-7nvo.html
SUMMARY
I found this article from The sydney Morning Herald and it talks about the earnings and sales trend of the famous Apple Inc. While other major electronic corporations (Sony, Fujitsu, etc) are experiencing low income due to the on-going major recession, Apple's profit during the last year has actually exceeded the expections of analysts. In the period ended December 27, 2008, sales has increased by 5.8 percent to $US 10.2 Billion. The first-quarter net income also rose by 1.5 per cent to reach $US 1.61 billion. It is reported that Apple managed to sale 4.36 million Iphones, 22.7 million Ipods, and 2.52 Macs in the quarter, despite that period being the worst US holiday shopping season in the last few decades. Apple also rose to $US 92.70 on the Nasdaq Stock Market recently, which is a significant $US 9.87 increase. Another thing to point out is that the shares fell 57 per cent last year. Analysts claim that Apple is running very successfully while selling huge quantities of its premium quality products. Upon its release, The Iphone has contributed a significant portion of Apple's profit. Analysts states that it is still at an early stage of its cycle and will continue to have more growth in the future. Chief operating officer Timothy Cook denied the rumors about offering a stripped-down version of the Iphone in the future and is has a good feeling about the their competition with other major corporations. Apple Inc is currently running without the management of CEO Steve Jobs, who is on medicare leave and is expected to be back in June.
CONNECTION
The part of the articles that talks about the increase of decrease in net income, sales, and stock shares between different quarters is related to some of the concepts I learned in Chapter 15. Analysts use the trend analysis technique to estimate the earnings and sales of the company in the future. They record and use the major sales and income figures from the past quarters as well as other information they gathered to predict the amount of impact the recession can have on the new figures. After the results are announced, they use comparative financial statements to compare the new figures with those in the past to determine the performance of the company. They also use percentage charts to convert the increase or decrease into percentages for better and easier understanding. Insiders of the company also use comparative financial statements to determine the current status of the company, which will then help them to decide on future plans.
REFLECTION
I was not really surprised when I read that Apple overcame the worst holiday shopping season during the most severe recession since the great depression. I have always thought that Apple is most successful entertainment electronics corporation. The quality of their products is probably somewhere on the top among hundreds of other companies. Their products have really creative features and sleek designs that really distinguish Apple from the other competitive brands. Apple also have great ways to promote and advertise their products, such as the CEO, Steve Jobs holding a conference to unveil new products. The insiders of Apple also make really great decisions to increase the profit. As we know, major Apple products such as Ipods, Macbooks, and the Iphone almost evolve every one or two years. Each time new features and designs are developed to encourage owners of the previous models of the product(s) to buy the new one. There are lots of other strategies Apple uses to stand out in the competitive industry. But just by looking at some of the points listed above, we can see why Apple has the strength to overcome the recession while other companies are suffering from great loss in profit.
http://business.smh.com.au/business/recession-be-damned-as-apple-bucks-sales-trend-20090122-7nvo.html
SUMMARY
I found this article from The sydney Morning Herald and it talks about the earnings and sales trend of the famous Apple Inc. While other major electronic corporations (Sony, Fujitsu, etc) are experiencing low income due to the on-going major recession, Apple's profit during the last year has actually exceeded the expections of analysts. In the period ended December 27, 2008, sales has increased by 5.8 percent to $US 10.2 Billion. The first-quarter net income also rose by 1.5 per cent to reach $US 1.61 billion. It is reported that Apple managed to sale 4.36 million Iphones, 22.7 million Ipods, and 2.52 Macs in the quarter, despite that period being the worst US holiday shopping season in the last few decades. Apple also rose to $US 92.70 on the Nasdaq Stock Market recently, which is a significant $US 9.87 increase. Another thing to point out is that the shares fell 57 per cent last year. Analysts claim that Apple is running very successfully while selling huge quantities of its premium quality products. Upon its release, The Iphone has contributed a significant portion of Apple's profit. Analysts states that it is still at an early stage of its cycle and will continue to have more growth in the future. Chief operating officer Timothy Cook denied the rumors about offering a stripped-down version of the Iphone in the future and is has a good feeling about the their competition with other major corporations. Apple Inc is currently running without the management of CEO Steve Jobs, who is on medicare leave and is expected to be back in June.
CONNECTION
The part of the articles that talks about the increase of decrease in net income, sales, and stock shares between different quarters is related to some of the concepts I learned in Chapter 15. Analysts use the trend analysis technique to estimate the earnings and sales of the company in the future. They record and use the major sales and income figures from the past quarters as well as other information they gathered to predict the amount of impact the recession can have on the new figures. After the results are announced, they use comparative financial statements to compare the new figures with those in the past to determine the performance of the company. They also use percentage charts to convert the increase or decrease into percentages for better and easier understanding. Insiders of the company also use comparative financial statements to determine the current status of the company, which will then help them to decide on future plans.
REFLECTION
I was not really surprised when I read that Apple overcame the worst holiday shopping season during the most severe recession since the great depression. I have always thought that Apple is most successful entertainment electronics corporation. The quality of their products is probably somewhere on the top among hundreds of other companies. Their products have really creative features and sleek designs that really distinguish Apple from the other competitive brands. Apple also have great ways to promote and advertise their products, such as the CEO, Steve Jobs holding a conference to unveil new products. The insiders of Apple also make really great decisions to increase the profit. As we know, major Apple products such as Ipods, Macbooks, and the Iphone almost evolve every one or two years. Each time new features and designs are developed to encourage owners of the previous models of the product(s) to buy the new one. There are lots of other strategies Apple uses to stand out in the competitive industry. But just by looking at some of the points listed above, we can see why Apple has the strength to overcome the recession while other companies are suffering from great loss in profit.
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