The Bottom Line: Netflix's uh-oh
I'm all about balance, and today's Bottom Line has a good balance between the two featured pieces. The first one is about occupational fraud. It's dense, but well worth your time. The second one is lighter, a little more fun, but you'll definitely still learn something.
Read on, friend...
2018 Global Study on Occupational Fraud
Hope that title didn't scare you away. Like I said in the intro, this piece is dense. It's actually an 80 page eBook about occupational fraud from the Association of Certified Fraud Examiners (ACFE). There's so much in it that I don't have time for a long intro. I'm diving right in...
If you're not sure about exactly what I mean by occupational fraud, here's the definition according to ACFE:
Occupational fraud is fraud committed against an organization by its own officers, directors, or employees.
Clear enough, right? So how about some takeaways from the report...
- Canada and the Middle East lead the pack with the largest median loss of $200,000 due to fraud. The US clocks in with a median loss of $108,000. Clearly, fraud is no small issue.
- There are three types of fraud. Asset misappropriation, corruption, and financial statement fraud. Asset misappropriation is the most common form of fraud, but is responsible for the smallest median loss. On the flip side, only 10% of fraud cases fall into the financial statement fraud category, but that form of fraud led to a median loss of $800,000.
- Corruption only accounts for 30% of the fraud cases in the US — the smallest percentage of any country.
- 40% of fraud cases were detected by a tip from an employee, customer, or someone else close to the organization.
Think fraud only affects large companies? Think again. Companies with less than 100 employees had the largest median loss of $200,000.
I know I say this a lot, but I've barely scratched the surface of this piece. You need to read this one for yourself.
How Netflix Nearly Lost Its Footing and What it Did to Recover
Not-so-fun-fact: In 2011, Netflix lost 800,000 subscribers and saw its stock price drop by 80% nearly overnight. Getting back on track required some gutsy moves and a well-thought-out financial strategy. Teampay has the scoop (I'll summarize)...
You might not remember this now, but back in 2011, Netflix decided to spin off its DVD service into a separate company called Qwikster. Right after this announcement is when it all hit the fan. Their stock price dropped from $300/share to $78/share. It was up to then-CFO, David Wells, to turn things around.
They knew they had to focus on three things:
- Get the public back on their side
- Increase streaming subscriptions
- Shift DVD subscribers to a separate business area
Netflix knew DVDs couldn't be the future of the company so even though they backtracked on Qwikster, they still spun DVDs off into DVD.com. Yeah, contrary to popular belief, they didn't fully backtrack on spinning DVDs off. They just got rid of the name "Qwikster."
Their next step was getting more streaming subscribers on board ASAP. To do that, they spent heavily on R&D. How heavily? Nearly 60% of the year's profits went to R&D. That was a huge bet during a time when internet streaming didn't really exist. But, this also put them light years ahead of the competition.
I'm going to leave you with a classic cliffhanger here. Want the rest? You know what to do...
The Hit List
Here's a few things that caught my eye this week...
2) Could Tesla get bought out by a tech giant like Apple? It's not out of the question according to CNBC.
3) Mike Baker asks, Do you need a corporate travel manager?
Pick of the Week
2018 was a big year for Lola.com:
By now, you probably know that Amazon paid no federal taxes. But, I thought it was interesting to see this chart from the Washington Post detailing their profits vs. tax payments...