GM's recall nightmare

  Yet again, another GM recall NEW YORK (CNNMoney) General Motors has already recalled more cars and trucks in the U.S. this year than it has sold here in the five years since it filed for bankruptcy.

Those five years had been good for the "New GM." It recaptured lost market share. It made record profits. And it won praise for the quality of its cars from both critics and buyers.

Then on Feb. 14, GM announced a recall of about 800,000 cars due to an ignition switch problem that could cause the cars to shut off while being driven.

It has been engulfed by the recall crisis ever since.

The company's problems have snowballed. GM (GM, Fortune 500) ultimately recalled 2.6 million cars worldwide for the flawed ignition switch that's been tied to at least 13 deaths. And GM admitted that its employees knew of the problem at least a decade before the recall.

Recalls hit a record: GM has issued more recalls this year than ever before. There have been 29 separate recalls covering 13.8 million U.S. cars and trucks, and at least 15.6 million vehicles worldwide.

The surge is the result of new standards at GM. The automaker is looking back at repair advisories it has issued in the past and issuing recalls when they're warranted. GM says it's also issuing recalls more quickly when reports of new problems emerge.

GM named a new safety chief and also hired 35 additional investigators to follow up on reports of problems.

The company is going to great lengths to show how serious it's taking matters. Last week GM called the owners of 477 trucks, including Silverados, Sierras and Tahoe SUVs to tell them to immediately stop driving the vehicles, which have a steering problem. GM sent flatbeds to pick up the trucks and have them repaire! d.

Scrutiny mounts: So far GM has agreed to pay the maximum fine of $35 million to the National Highway Traffic Safety Administration for the delay in the ignition recall. And it will be subject to closer oversight by the regulator.

The Justice Department is also considering whether to bring criminal charges against the automaker. A similar probe over Toyota's 2009 and 2010 unintended acceleration recalls led to a $1.2 billion fine earlier this year.

GM CEO Mary Barra, who in January became the first woman to lead a major automaker, testified before Congress for two days in April. She faced harsh questions from lawmakers who argued the company is criminally liable.

The company has hired compensation expert Kenneth Feinberg, who worked with victims of 9/11 and the BP oil spill, to determine how to pay victims of the delayed recall.

The automaker is also facing dozens of civil lawsuits.

Profits wiped out: The company estimates it will cost $1.7 billion to repair the cars recalled so far in 2014.

That only covers the cost of actually making repairs, and not any civil or criminal fines it may have to pay to victims or the government.

GM shares are down 18% this year, lagging far behind rivals Toyota (TM) and Ford Motor (F, Fortune 500).

Car buyers don't care: The good news for GM is that car buyers have shown little concern about the recalls. New car sales have been strong in the three months since the ignition recall was announced, and the automaker is still No. 1 in U.S. market share. Even the price of used GM autos have stayed firm throughout the crisis.

4 Money Challenges Veterans Face - and How to Defeat Them

Derek Gordon/Shutterstock

The transition from military to civilian life can be fraught with emotional challenges, but practical things like getting a job, finding a place to live and paying bills can be just as difficult. Many veterans entered the military young, having never received much guidance about money management. If they've never spent much time as adults out of uniform, they are likely to need extra help to learning to handle debt and homeownership issues, and advice on creating a personal financial plan. When Mechel Lashawn Glass returned from her deployment as an Army intelligence analyst in Turkey during the Persian Gulf War in the early 1990s, she moved back in with her parents. Glass had joined the military and left home at 17; she returned home as an adult, but without a job or a home. "There used to be a two-year transition for veterans before they left service so they could put a plan in place and decide where they wanted to live and what they want to do with the rest of their lives as civilians," says Glass. "Now with the drawdown, many veterans are given 30 to 60 days' notice to leave the military and start a new life. The emotional, physical, and behavioral challenges for veterans are unique because so many of them have been overseas for years and don't really know where to begin. They usually go home but find that their families and friends have all changed or even moved away." A Hard Homecoming Glass stayed with her parents for a little while but the emotional trauma of her deployment left her withdrawn and difficult to communicate with, she says, so her mother asked her to leave the house. She eventually pulled herself together, found an entry-level job with IBM, and used her military benefits to go to college and eventually get a better position with the company. Today she is vice president of education for ClearPoint Credit Counseling Solutions. Glass says that the military has a lot of programs in place to help veterans find work and handle financial problems, but not all veterans are aware of them, and some are too proud to ask for help. So she co-authored with Scott Scredon "The Veteran's Money Book: A Step-by-Step Program to Help Military Veterans Build a Personal Financial Action Plan and Map Their Futures to give advice to veterans about paying off debt, repairing their credit and creating a long-term financial plan that can help them overcome some of the challenges of returning to civilian life. Glass says that many veterans face four major challenges.

Finding civilian employment. "Since the drawdown started, more veterans are coming back home to look for employment," says Glass. "The problem they're having is how to equate military experience with private employment."

Bank of America Corp Still Dominates the Murky Student Credit Card Market

Source: Flickr / Md saad andalib.

Sometime this year, the Consumer Financial Protection Bureau will be quizzing financial institutions about how open they are about the products they make available to college students – often through incentives offered to colleges and universities, as well as their alumni associations. 

Back in December, CFPB Director Richard Cordray encouraged banks and credit card companies to be more transparent about products like debit cards, prepaid accounts, and financial aid disbursement cards, to name a few. Currently, these companies publicly disclose credit card agreement information only. 

Cordray sent out a warning to these purveyors of student-targeted financial products, stating that "When financial institutions secretly give kickbacks to schools, they are engaging in risky practices."

Who are these institutions that are engaging in a quid-pro-quo with higher education in order to make money from the captive student population? JPMorgan Chase and Capital One are two well-known entities, but the lion's share of the market – almost 67% -- belongs to FIA Card Services, a subsidiary of Bank of America (NYSE: BAC  ) .

CARD Act has had a noticeable effect
In its year-end report to congress in December, the CFPB noted that the Credit Card Accountability Responsibility and Disclosure Act of 2009 has appreciably decreased the number of agreements between colleges and credit issuers each year since its implementation. Very likely, the CARD Act's prohibition against marketing cards to persons under 21 years of age without written proof of the applicant's ability to pay had something to do with the reduction in credit card agreements. 

Still, the change in the number of agreements is impressive: a mere 617 agreements in 2012, according to the CFPB, compared to a whopping 1,045 in 2009. Credit-card issuers paid colleges and their affiliates, such as alumni groups, a smidge over $50 million for the privilege of reaching student customers, down from $84 million in 2009. Bank of America's affiliate, FIA, paid out $35.5 million of those incentives in 2012. 

That isn't surprising, since FIA Card Services had the largest number of open accounts at the end of December, nearly 984,000 compared with JPMorgan Chase, which had only 83.3 million accounts.

New products taking the place of credit cards
The new transparency and the decrease in the number of accounts pushed onto financially unsophisticated young people is a great improvement, but problems remain. The CFPB notes that products not covered by the CARD Act are now being promoted on college campuses, offerings such as prepaid debit cards, checking accounts – as well as debit cards used to access financial aid, which often winds up costing students fees they should not have to pay. 

While school officials say that 69% of debit card agreements between issuers and colleges are available for public scrutiny, the CFPB notes that finding them is very difficult to do, so all the players in this particular field are not known.

It appears that FIA may not be one, judging from a letter sent to financial institutions last fall from Congressional Democrats, asking whether or not they participated in this type of marketing behavior. Bank of America peers Citigroup and Wells Fargo were both on the mailing list, however .

One request by the CFPB to banks and card issuers will be that companies post debit card agreements on their websites, so that students and their parents can inform themselves about the terms of those agreements. So far, meetings between banks, universities, consumer groups, and the Department of Education have not produced an agreement, with industry groups unwilling to change a lucrative business venture. If the stalemate continues, students will continue to be the ones who pay the price. 

Big banking's little $20.8 trillion secret
There's a brand-new company that's revolutionizing banking, and is poised to kill the hated traditional brick-and-mortar banks. That's bad for them, but great for investors. And amazingly, despite its rapid growth, this company is still flying under the radar of Wall Street. To learn about about this company, click here to access our new special free report.

Why Teens Need a Summer Job

This summer's job scene for teens is shaping up to be a mixed bag. In its annual outlook, Challenger, Gray & Christmas, a global outplacement firm, expects employment among 16- to 19-year-olds to grow by about 1.36 million. That's roughly the same number of teens who found jobs last year, but 3% fewer than were added to summer payrolls in 2012.

SEE ALSO: 6 Ways College Students Can Earn Extra Cash

What's more, the participation rate of teens in the labor force, which tends to peak during summer break, has been plunging. It reached a record high of 71.8% in July 1978, reports Challenger. But by this spring, it had fallen to a near-record low of 31.7%, and the unemployment rate for teens topped 20%.

The state of the labor market in general is partially to blame. Teens are competing with recent college grads, adults who are having trouble finding higher-paying jobs and retirees looking to supplement their income. Company CEO John Challenger notes that retail stores are hiring fewer workers as more shopping moves online. Other traditional employers of teens -- fast-food joints, restaurants and movie theaters, for example -- are also cutting back.

It's also true, says Challenger, that lots of teens have dropped out of the summer labor force to attend summer school, participate in sports or other extracurricular activities, or volunteer.

Life lessons. That's all well and good, but I can't help wondering whether teens are missing out on valuable life lessons by not holding down paying jobs. Showing up on time, taking responsibility, getting along with co-workers and supervisors, earning your own money -- and learning how to manage it -- are all critical skills, just as much as knowing how to program a computer or write a literate report.

In fact, finding a job is a skill in itself. I agree with Challenger when he says that kids need to "get out from behind the computer" and not rely as heavily on online job boards. "Many mom-and-pop stores do not advertise job openings on the Internet," he says, "nor do most families looking for babysitters, lawn mowers or house cleaners."

Based on my own experience hiring magazine staff, I always counsel young people to make personal contact whenever possible and to follow the classic advice of Mr. Miyagi in the movie The Karate Kid, when he tells Daniel always to look an opponent in the eye. For more advice, see Job-Hunting Tips for New Grads and . How Students Can Improve Their Chances of Getting a Job.

Building skills. Of course, summer extracurricular activities can be valuable. Playing sports teaches teamwork. Volunteering is a plus if you're working in an area that's related to your field of interest, says Paul McDonald, senior executive director of Robert Half International, a specialized staffing firm with offices worldwide. "It's all about building your resume," says McDonald.

Regardless of their major, college students looking to build a resume for the full-time job market should be learning technical skills -- Power Point and Excel, at a minimum -- as well as so-called soft skills, such as how to listen, write and think critically. "Knowing how to make a presentation itself sets people apart," says McDonald.

Despite the so-so labor market, top students with the right skills sometimes get multiple offers, both for summer work and for permanent jobs, says McDonald. If you're fortunate enough to find yourself in that position, he advises that you handle the situation diplomatically. When you get the first offer, be upfront; thank the employer and say you're waiting to hear from others, if that's the case. But be prepared to give an answer within two to four weeks.

And if you've accepted a job that's related to your field, don't change your mind if something else comes along. That can create ill will, and you don't want to burn any bridges. Says McDonald, "If your decision made sense, stick with it."

Best Buy posts profit but revenue drops

NEW YORK (AP) — Cost cuts helped consumer electronics retailer Best Buy record a stronger-than-expected profit in the first quarter, but sales continued to be weak as shoppers hold off for new product launches of smartphones and tablets expected in the fall.

Adjusted earnings beat expectations and shares were up more than 2% at midday.

But sales fell short of Wall Street estimates. And Best Buy said it expects revenue in stores open at least 14 months, a key retail metric known as same-store sales, will fall in both the second and third quarters.

Best Buy is grappling with a weak consumer electronics industry and increased competition from online stores, notably Amazon.com, and discounters like Wal-Mart. Under CEO Hubert Joly, the company has been trying to turn around results, revamping merchandise, training employees and cutting costs.

SEARS: Retailer reports wider loss, may close more stores

ASK MATT: Is it time to bail on retail stocks?

ISI analyst Greg Melich said Best Buy's cost cutting efforts are helping offset weaker sales and costs related to price matching with competitors.

"Progress continues on the cost reduction front, but gross margin dollar declines continue as secular industry pressures persist," he wrote in a note to investors.

Revenue at stores open at least 14 months fell 1.9% during the three months ended May 4. That is not expected to improve in the next two quarters, said CFO Sharon McCollam in a call with analysts.

"As we look forward to the second and third quarters we are expecting to see ongoing industrywide sales decline in many of the consumer electronics categories in which we compete," she said. "We are also expecting ongoing softness in the mobile phone category as consumers eagerly await highly anticipated new product launches."

The electronics seller said its net income was $461 million, or $1.31 per share. That's a turnaround from a loss of $81 million, or 24 cents per share, a year earlier.

That inclu! des a one-time tax structure change that helped earnings by $1.01 per share.

Adjusted earnings were 33 cents per share. That beat analysts' average estimate of 19 cents per share, according to FactSet.

Total revenue fell 3% to $9.04 billion from $9.35 billion. Analysts polled by FactSet expected $9.23 billion.

Shares rose $1.29, or 5.1 percent, to $26.64 morning trading Thursday. The stock had been down about 36% since the beginning of the year.

Lung Drug Data Showdown: InterMune vs. Boehringer Ingelheim

SAN DIEGO (TheStreet) -- Before I dive into the comparison of InterMune's (ITMN) pirfenidone with Boehringer Ingelheim's nintedanib, Dr. Gary Hunninghake, a specialist in idiopathic pulmonary fibrosis (IPF) at Brigham and Women's Hospital in Boston, says declaring one drug better than the other is a fool's errand.

"You cannot tell from the data published," said Hunninghake, referring to the results from three phase III studies (one from InterMune, two from Boehringer) published Sunday in the New England Journal of Medicine. "Both drugs were evaluated in [IPF] patients with relatively early state disease and both had fundamentally similar outcomes."

I spoke with Hunninghake on Thursday. His editorial on the pirfenidone and nintedanib data, titled "A New Hope for Idiopathic Pulmonary Fibrosis," was also published today in the NEJM. He called the new IPF drugs a game changer and says both are likely to be approved in the U.S. Doctors and their IPF patients here will finally have effective therapies to treat a progressive, lung-scarring disease that has a death rate worse than that of many cancers.

But Dr. Hunninghake, which company -- InterMune or Boehringer -- has the superior IPF drug? "If either company tries to make a claim that their drug is superior over the other, I would say these data do not support it," he says. With all due respect to Dr. Hunninghake, nothing will stop investors from comparing the pirfenidone and nintedanib study results, so let's get at it. In addition to the NEJM publication today, the pirfenidone and nintedanib data are being highlighted at a press briefing sponsored by the American Thoracic Society (ATS). The data will also be presented at the ATS annual meeting on Tuesday. I previewed these data on Friday.  Boehringer conducted two phase III studies of nintedanib dubbed "INPULSIS-1" and "INPULSIS-2." The studies enrolled 513 and 548 IPF patients, respectively. The studies' primary endpoint measured the annual rate of decline in forced vital capacity over 52 weeks for patients treated with netedanib and placebo. In INPULSIS-1, the annual rate of decline in FVC was -114.7 ml for nintedanib versus -239.9 ml for placebo -- a relative reduction of 52% and statistically significant. Here's what the result looks like graphically (from the NEJM):


In INPULSIS-2, the annual rate of decline in FVC was -113.6 ml for nintedanib versus -207.3 ml for placebo -- a relative reduction of 45% and statistically significant. Here's what that result looks like graphically (again from the NEJM):


In my preview of the IPF data Friday, I mentioned the primary endpoints of the respective phase III studies designed by InterMune and Boehringer were different. InterMune, however, re-analyzed the pirfenidone study using Boehringer's annual rate of FVC decline endpoint.  In InterMune's ASCEND phase III study, the annual rate of decline in FVC was -122 ml in the pirfenidone group and -262 ml in the placebo group -- a relative difference of 53% and statistically significant. Here's what this results looks like graphically:


When using Boehringer's primary efficacy endpoint for IPF benefit, InterMune's pirfenidone comes out looking equivalent to nintedanib in one study and superior in the second. [With the caveat that we're comparing across trials.] The primary endpoint of InterMune's ASCEND study measured the proportion of patients in the pirfenidone and placebo arms experiencing a clinically meaningful change (10% or greater) in FVC. The study enrolled 555 IPF patients and achieved its primary endpoint with a high level of statistical significance. At 52 weeks, 16.5% of the IPF patients treated with pirfenidone experienced an FVC decline of 10% or more or death compared to 31.8% in the placebo group. The relative reduction favoring pirfenidone was 48% Boehringer analyzed the nintedanib data from INPULSIS studies to also come up with a categorical description of the drug's efficacy. In INPULSIS-1, 29% of nintedanib-treated patients experienced an FVC decline of 10% or more compared to 43% in the placebo group -- a relative reduction of 33%. In INPULSIS-2, 30% of nintedanib-treated patients experienced an FVC decline of 10% or more compared to 35.5% in the placebo group -- a relative reduction of 15.5%. Using a categorical definition of efficacy in IPF (InterMune's primary endpoint) and comparing across trials, pirfenidone outperformed nintedanib. [Note: InterMune's study enrolled slightly "sicker" IPF patients with a baseline predicted FVC of 67-68% compared to 79-80% in Boehringer's INPULSIS studies.] Let's compare mortality data in the InterMune and Boehringer studies.

Stock quotes in this article: ITMN 

All-cause mortality in the pooled INPULSIS studies was 5.5% in the nintedanib arms versus 7.8% in the placebo arms -- a 30% relative reduction in the risk of death favoring nintedanib but not statistically significant.

The death rate due to respiratory cause was 3.8% in the nintedanib patients compared to 5% in the placebo groups -- a 26% relative reduction in risk of death but again, not statistically significant.

Switching to InterMune's ASCEND study, the rate of all-cause mortality in pirfenidone-treated patients was 4% versus 7.2% in placebo patients -- a 45% relative reduction in the risk of death but not statistically significant.

With FDA's blessing, InterMune pooled survival data from ASCEND with the previous phase III CAPACITY studies. When these studies are combined, the death rate in the pirfenidone arm is 3.5% compared to 6.7% in placebo-treated patients -- a 48% relative reduction in the risk, which is statistically significant. InterMune can make a legitimate claim to a mortality benefit for pirfenidone in IPF with the pooled data from the ASCEND and CAPACITY trials. How this survival benefit shows up in the pirfenidone label is yet to be determined. Boehringer says the INPULSIS studies were not powered to demonstrate a nintedanib survival benefit. It's interesting however, that the two INPULSIS studies enrolled 1,061 IPF patients, while the combined ASCEND and CAPACITY studies enrolled 1,247 patients. The difference in size isn't all that large. Moving to safety and tolerability: Ten IPF patients treated with nintedanib suffered heart attacks in the two INPULSIS studies (five in each study) compared to two heart attacks reported in placebo-treated patients (one in each study.) Two of the nintedanib heart attacks were fatal; one of the placebo patients also died. The rate of serious adverse events listed as "cardiac disorder" was 5% in the nintedanib arms (pooled) versus 5.4% in the placebo arms (also pooled.) The rate of "serious ischemic disease" reported in the INPULSIS studies was 2.4% in both the nintedanib and placebo arms. There's some new and interesting liver safety data being reported today for the first time from Boehringer's nintedanib studies. Six patients (0.9%) discontinued nintedanib treatment because of elevations in AST, ALT or bilirubin levels -- all markers for liver toxicity. There were no cases of Hy's Law reported in the studies. Eight percent of nintedanib patients experienced elevation of ALT or AST three times the upper limit of normal or greater. The comparable rate of ALT/AST elevations above three times the upper limit of normal for InterMune's pirfenidone was 3%. One case of Hy's Law in a pirfenidone-treated patient was reported. Investors have previously raised some concerns about the liver safety of pirfenidone, but these new nintedanib data suggest Boehringer's drug is no better, perhaps worse. As previously reported, the rate of diarrhea in the nintedanib patients was 61.5% and 63.2% in the two INPULSIS studies. The placebo-adjusted rate of diarrhea was 43% and 45%. However, only 5% of patients discontinued from the two studies due to the diarrhea. Other gastrointestinal-related adverse events of note were 17% and 19% placebo-adjusted rates of nausea. Vomiting was reported in 11% and 7% of patients, adjusted for placebo. Moving to InterMune's study, rash was reported by 28% of pirfenidone-treated patients compared to 8.7% in the placebo arm -- a 19% difference. The placebo-adjusted rate of nausea attributed to pirfenidone was 23%, vomiting 4%. There's a lot to digest here already so I won't go into detail on the key secondary efficacy endpoints of the respective IPF studies except to recount that InterMune's pirfenidone demonstrated a progression-free survival benefit while Boehringer showed a reduction in the time to first acute exacerbation in INPULSIS-2 but not INPULSIS-1. But let's end with some more comparative efficacy data and slides.

Stock quotes in this article: ITMN 

The mean decline from baseline in FVC was 235 ml for pirfenidone and 425 ml for placebo -- a relative difference of 45%. Here's what that looks like (From the NEJM):

This is what the comparable mean FVC declines look like in Boehringer's two studies:

When the Boehringer trials are pooled, the relative difference in FVC decline was 54% favoring nintedanib over placebo. That's superior to pirfenidone.

-- Reported by Adam Feuerstein in Boston

Stock quotes in this article: ITMN  Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.

Canadian Solar Inc. (CSIQ) Q1 Earnings Preview: Sun Usually Doesn’t Shine

Canadian Solar Inc. (NASDAQ:CSIQ) will release its first quarter 2014 financial results before the market open on Friday, May 16, 2014. On the same day, management will hold a conference call at 8:00 a.m. U.S. Eastern Time to discuss the Company's first quarter of 2014 results and its business outlook.

Wall Street anticipates that the alternative energy company will earn $0.12 per share for the quarter, which is $0.22 better than last year's loss of -$0.10 per share. iStock expects  Canadian Solar to fall short of Wall Street's consensus number, the iEstimate is -$0.10.

Sales, like earnings, are expected to rise, exploding 63.9% year-over-year (YoY). CSIQ's consensus revenue estimate for Q1 is $431.98 million, a whole lot more than last year's $236.61 million.

[Related -Canadian Solar Inc. (CSIQ) Q4 Earnings Preview: What To Watch?]

Canadian Solar designs, develops, and manufactures solar wafers, cells and solar module products that convert sunlight into electricity for a variety of uses. Its products include a range of solar modules built to general specifications for use in a range of residential, commercial and industrial solar power generation systems.

In a preliminary announcement, management upped guidance for the first quarter. "The Company expects its revenue to be in the range of $460 million to $470 million, compared to previous guidance which was in the range of $415 million to $430 million. The Company also expects its gross margin to be in the range of 14% to 15% compared to its previous guidance which was in the range of 14%-16%."

[Related -Futures Mixed Despite Strong Jpmorgan Earnings; Radioshack Corporation (RSH) In Focus]

According to Schaeffer's Investment Research, somebody (or many) is expecting a mighty move from CSIQ. Schaeffer's Options Center writes, "The most active strike of the session [Tuesday] was CSIQ's July 33 call, where all of the 1,364 contracts traded did so on the ask side. Implied volatility ticked higher, and open interest rose the most of any strike overnight, collectively pointing to buy-to-open activity. With CSIQ trading at $27.63, the equity would need to surge more than 19% for the calls to move into the money. As such, delta on the option is docked at 0.34, suggesting a roughly 1-in-3 chance of an in-the-money finish at the close on Friday, July 18, which is when the calls expire."

Unfortunately for the options player(s), Canadian Solar EPS-driven price-sensitivity has been mostly to the downside. The stock has lost ground in the days surrounding 12 of the last 16 quarterly checkups. On average, CSIQ slid -9.41% with a minimum loss of -0.8% and a max fall of -25.20%.

Meanwhile, investors pulled out buy tickets four of the last 16 as a positive response to earnings news, including two of the last three. The stock advanced anywhere from 3.8% to 9.3% for the quartet of EPS announcements that pleased Wall Street.

Overall: Much of the surprise has been taken out of Canadian Solar Inc. (NASDAQ:CSIQ) Friday earnings release due to management's earlier guidance. It is doubtful EPS alone, based on the past four years, will be enough to make option bulls happy. However, a second dose of a better than expected outlook from management might offer a fighting chance. 

Nail salon no-no has lessons for entrepreneurs

Several weeks ago I was having lunch at Whole Foods when a woman I've known for many years -- I'll call her "Martha" -- was in the checkout line with her lunch. I invited her to sit at my table as all of the other tables were filled.

For more than 30 years Martha has been the owner of a popular and successful day spa. I hadn't seen her in a few years and we were having a great time catching up on each other's lives. Her mood shifted to a more worried tone when I asked her how her business was doing.

Martha said her business was just barely holding on. She blamed it on on new nail salons that have opened in great number. She felt the pinch when they only did nails but lately she learned that a number of her customers were also getting other services from these salons, such as lash and brow tints and brow arching and other services that she, too, offered.

I listened intently to Martha and didn't feel that I had enough information to comment on either her company or those rival nail salons. It wasn't long before I got a better idea of what was going on.

About one week later I was getting ready to go out of town and needed a manicure. Remembering the conversation with Martha I decided to go to her salon.

When I got there, I stood at the front desk for more than 10 minutes while the receptionist talked to her cellphone provider, complaining about unrecognized charges on her cell phone bill. When she completed the call she than wanted to tell me about the perils of buying into the family plan for your cell service.

Finally, she asked my name and started to flip through her appointment book in search of my name. When I told her that I didn't have an appointment she looked at me between squinted eyes and said, "You're kidding. Right?" She went on to say that there was no way that I could expect service without an appointment.

So, I left. I decided to see what the rival salons were like. I walked into one of these salons with absolutely no appointment and within! three minutes I was sitting at a table having a manicure that turned out to be nicely done. While having the manicure I asked the technician if her place did pedicures and if I could schedule one. I couldn't quite understand her broken English combined with her heavy accent, but I understood when she picked up my bag and guided me to the pedicure seat. And within minutes my feet were soaking in warm, soapy water in preparation for a foot massage and pedicure.

Like most busy working people we know that manicures and pedicures are important. And there is a great demand for these services. But sometimes making appointments can also prove inconvenient. The truth is, it represents another appointment on an already overcrowded appointment book.

The object of running a successful business is being able to service the needs of the customer. That means, you must give the customer what she wants, when she wants it, and in the way that best serves her needs. A number of salon owners have figured this out and are about the business of satisfying the customer.

Too often entrepreneurs will come up with an idea or vision and instead of checking on or researching buyer needs they plunge full steam into what they think the customer wants or worst yet, what is convenient for them. There is more to making a business successful besides the enthusiasm and optimism of the entrepreneur. Flexibility and the ability to respond to customer need is paramount.

I hope Martha takes the time to rethink her business practices and takes a closer look at how responsive and flexible she should consider being to the needs of her customers.

Gladys Edmunds, founder of Edmunds Travel Consultants in Pittsburgh, is an author and coach/consultant in business development. Her column appears Wednesdays. E-mail her at gladys@gladysedmunds.com. An archive of her columns is here. Her website is gladysedmunds.com.

RIAs should be forced to hire outside examiners: Gallagher

Bloomberg News

Securities and Exchange Commission member Daniel Gallagher wants registered investment advisers to be forced to hire third-party contractors to conduct examinations.

In a remarks at the Financial Industry Regulatory Authority Inc.'s annual conference in Washington, Mr. Gallagher recommended that the SEC write a regulation that would require advisers to hire an examiner to review their operations.

The rule would be similar to one the agency adopted in 2009 that forces advisers who maintain custody of client assets to bring in an auditor to verify that the funds are safe.

“How we examine advisers would be the subject of the rule I'm talking about,” Mr. Gallagher told reporters on the sidelines of the Finra conference.

In a Q&A afterward with Finra chairman and chief executive Richard G. Ketchum, Mr. Gallagher said he is worried that the SEC might miss the next huge investor rip-off along the lines of the multibillion-dollar Ponzi scheme perpetrated by Bernard Madoff.

The problem, Mr. Gallagher said, is that the agency lacks the resources to oversee the roughly 11,000 registered investment advisers. The SEC annually examines about 9% of them.

“We have no Rick Ketchum on the adviser side and no SRO,” Mr. Gallagher said. “We are sitting there with our chins out, waiting to get pummeled.”

Finra, the industry-funded broker-dealer regulator, which oversees approximately 4,300 firms, in the past pushed legislation to extend its authority to include investment advisers. It is no longer pursuing such a measure.

Under the rule Mr. Gallagher has in mind, the third-party auditor could be an existing SRO or it could be a private-sector firm. The competition between SROs and other firms would bring prices down, he said.

“That will be a much more competitive and efficient marketplace, I think in particular for the dual-hatted registrants,” Mr. Gallagher said, referring to investment advisers who also are registered as brokers. “They will be inclined to say, 'Let's go with what we know'” and select Finra for examinations.

Mr. Gallagher is one of five SEC commissioners and one of two Republicans on the body. At least three members have to agree to propose a rule.

In 2012, a bill that would establish an SRO to oversee investment advisers died without coming to a committee vote, despite strong Finra support. That measure would have required advisers to register with an SRO.

Congress does not need to weigh in on the rule that he supports, Mr. Gallagher said. The rule would not give the third-party auditor ru! le making or enforcement authority, as the 2012 legislation would have.

Mr. Ketchum applauded Mr. Gallagher's idea as a way to increase oversight of investment advisers.

“This is a creative alternative,” Mr. Ketchum told reporters at a press conference at the Finra meeting. “There's a huge disparity of oversight with regard to investment advisers. It's not an OK environment when you can go decades without being examined. That creates a risk for investors that's not appropriate.”

He was quick to add that Finra has no intention of lobbying to revive a bill that would expand its regulatory reach. He also pointed out that all he knew of Mr. Gallagher's proposal was based on what Mr. Gallagher said in a recent speech and his comments at the Finra meeting.

“This is his proposal, not ours,” Mr. Ketchum said. “It's a decision for the commission to make, not for Finra.”

U.S. Directly Accuses Chinese Government Of Online Economic Espionage

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For the first time ever, the United States formally accused a foreign power of engaging in cyber-spying against U.S companies in order to steal trade secrets.

On Monday, U.S. Attorney General Eric Holder announced indictments against five officers in China's People's Liberation Army (PLA) for "serious cybersecurity breaches" against six American firms: Westinghouse Electric, a division of Toshiba (OTC: TOSBF) , Alcoa (NYSE: AA), Allegheny Technologies (NYSE: ATI), U.S. Steel (NYSE: X), the United Steelworkers Union and SolarWorld (OTC: SRWRY).

The five PLA officers are reportedly in China, and it is unlikely that Beijing will hand them over to the United States.

Related: Russia Threatens To Cut Off Gas To Ukraine, Preparing For 'Historic' Energy Deal With China

Holder said the indictments marked the first time charges had been brought against "known state actors" for hacking into U.S. commercial targets.

"In sum, the alleged hacking appears to have been conducted for no reason other than to advantage state-owned companies and other interests in China," he said in a prepared statement, "at the expense of businesses here in the United States. This is a tactic that the U.S. government categorically denounces."

China's Foreign Affairs Ministry denied the U.S. claims.

"The Chinese government, the Chinese military and their relevant personnel have never engaged or participated in cyber theft of trade secrets," it said in a statement. "The U.S. accusation against Chinese personnel is purely ungrounded and absurd."

China also took the U.S. government to task over its own, highly-publicized online surveillance activities.

Last year, the New York Times ran a lengthy report on China's extensive efforts to break into American corporations, organizations and government agencies via a special, Shanghai-based cyber-intelligence unit.

But Monday's announcement, says one analyst, is ground-breaking. Frank Cilluffo, head of the Homeland Security Policy Institute at the George Washington University, told Reuters it indicates "that DOJ has 'smoking keyboards' and [is] willing to bring the evidence to a court of law and be more transparent."

Bonnie Glaser, a senior Asia expert at the Center for Strategic and International Studies, says the carefully-prepared indictments also indicate that U.S. diplomatic efforts to discourage such cyber-hacking by China have not worked.

"The Chinese have ignored U.S. requests to stop stealing U.S. companies' intellectual property," she told theWashington Post. "The U.S. believes it is necessary to impose consequences for China's actions."

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© 2014 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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Britain's AstraZeneca rejects 'final' Pfizer bid

LONDON — British drug maker AstraZeneca rejected Monday what its New York-based rival Pfizer called over the weekend its "final" takeover offer.

In a statement, AstraZeneca's board cited the "uncertainty and risks" for shareholders as a reason for the rejection, which came just hours after the maker of the erectile-dysfunction drug Viagra had upped the value of its bid to 55 pounds (around $93) a share in a deal that would have led to the world's largest drugs company.

Pfizer's latest bid that came Sunday night valued AstraZeneca at around $116 billion. It said the new offer would be its final one.

"Pfizer's approach throughout its pursuit of AstraZeneca appears to have been fundamentally driven by the corporate financial benefits to its shareholders of cost savings and tax minimization," Leif Johansson, AstraZeneca's chairman, said Monday.

"From our first meeting in January to our latest discussion yesterday, and in the numerous phone calls in between, Pfizer has failed to make a compelling strategic, business or value case."

Basil Petrides, an analyst at London-based Beaufort Securities, said that were Pfizer to now pursue a hostile takeover of AstraZeneca it would likely mean increased negative public reaction and renewed support for the latter's board of directors, who appear to have the support of shareholders.

"Pfizer may walk away now, but they do have until May 26 before they need to do so," said Petrides. "I believe Pfizer need this deal and not going away. Its business model relies on M&A and it has singled out AstraZeneca for its portfolio."

Mick Cooper, analyst at Edison Investment Research, said: "AstraZeneca will have 6 months to demonstrate that it was right to reject Pfizer's offer, or face the prospect of a fresh approach."

Pfizer has been under considerable pressure from the British government, from some lawmakers in the U.S. and from industry leaders to justify the terms of its proposed takeover. There are fears Pfizer is chiefly in! terested in the move as a way to reduce its corporate tax liabilities, although that idea has been publicly rebuffed by the firm's Scottish-born CEO Ian Read.

Lawmakers and technology leaders in the United Kingdom have also expressed concerns over what a deal would mean for the nation's science industry, an area it has ambitions to be a world leader in, and for what they see as the inevitable job losses that would follower any takeover.

Shares in AstraZeneca fell sharply Monday, down around 13% in mid-morning trades on the London Stock Exchange. Pfizer's pre-market shares added 2.34% in New York.

DEAL NEWS: M&A frenzy as Pfizer amasses AstraZeneca critics

PLUG – Plug Power Stock a Sell Even on Good Earnings

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Anyone who follows Plug Power (PLUG) won’t be surprised that PLUG stock managed to fall nearly 10% right after Wednesday’s opening bell. Wild swings are what Plug Power is known for, and there are sure to be many more — probably to the downside — ahead.

There are always a few stocks that a portion of the market falls head-over-heels in love with, despite investors’ better judgment. Take look at what PLUG stock has done over the last 12 months, and it’s abundantly clear some players are blinded by their ardor.

True, Plug Power is one of the few ways for investors to bet on the exciting and revolutionary technology of electricity-generating fuel cells. But since when does it make sense for shares in a company that helps power fork lifts to rise more than 1,400% in a year?

Just as worrisome is the epic volatility seen in Plug Power stock. Indeed, PLUG stock has traded in a range of 22 cents to $11.72 in the last year alone. Sure, Plug Power stock still is up more than 140% for the year-to-date, but it’s also off 64% since its March 10 high. Have a look at the chart:

How does anyone figure an entry and exit point in a stock like that — especially one as neurotic as Plug Power stock?

Plug Power Stock Short Circuits on Earnings

The latest sell0ff in PLUG was set in motion by disappointing quarterly earnings. Plug Power reported a wider net loss year-over-year, to $75.9 million, or 57 cents a share, from $8.6 million, or 18 cents, in 2013. Yes, much of that stemmed from a charge of $68.4 million for stock warrants, but even on an adjusted basis, PLUG missed analysts’ estimate. Plug Power had an adjusted loss of 6 cents when Wall Street was looking for a loss of 5 cents.

Then again, missing by a penny a share is hardly a tragedy. Furthermore, although revenue declined to $5.6 million from $6.4 million, the top line comfortably exceeded Street estimates. That might be a disappointing quarter for PLUG, but it wasn’t so bad that the stock needed to be shellacked.

However, PLUG took a bad beating because that’s what happens to momentum stocks with insanely high valuations when anything negative comes to light.

Even after Wednesday’s selloff, Plug Power stock was luxuriously expensive, with a nosebleed forward price-to-earnings ratio (P/E) of 77. For comparison, the S&P 500 trades at 16 times forward earnings. Heck, even Netflix (NFLX) — a poster child for pricey momentum stocks — has a P/E of just 50.

That’s not to say that PLUG doesn’t have a solid business or a great future. It very well may. Walmart (WMT), the world’s largest retailer, uses fuel-cell-powered forklifts aided by Plug Power’s systems.

At an investor conference this week, PLUG said it will deliver more than 3,000 units this year and will end 2014 with a profit, excluding interest, taxes and depreciation. That’s nothing but good news for PLUG.

It does not, however, make Plug Power stock a buy.

Like fellow fuel-cell stocks Ballard Power Systems (BLDP) and FuelCell Energy (FCEL), PLUG stock trades wildly from headline to headline. The volatility alone makes Plug Power too risky because it’s far too easy to buy high.

If anything, Plug Power stock is a sell if you’re sitting on gains. Momentum stocks don’t stand a chance in this market, especially if they carry a 1,400% gain over the last year.

PLUG stock offers too many reasons to get out, and there looks to be plenty more selling ahead.

That’s why it’s time to pull the plug.

As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.