Browse Month by March 2017

Investigation Begins On The Largest Sewage Spill Experienced In A Decade

Every year, massive amounts of sewage are dumped into the Pacific Ocean polluting the water bodies. Sewage spills are a frequent problem that is not dealt properly according to environmentalists. Recently, a sewage spill in Mexico resulted in the dumping of 140 gallons of raw waste into Tijuana River that originates in Mexico and flows into California. The spilling continued for 2 weeks from February 2nd. The local authorities failed to identify the cause of the stench in some neighborhoods which lead to the late discovery of the raw sewage spill.

The Tijuana river has been polluted due to massive sewage spills from USA and Mexico in the past few years. The old sewage system and lack of plumbing infrastructure were blamed for the recurring problem.

The officials in the USA and Mexico have agreed for a bi-national investigation for the sewage spill. The International Boundary and Water Commission (IBWC) is responsible for maintaining water treaties between USA and Mexico. According to the report from IBWC, the spill started on February 2nd during a routine maintenance operation on a sewage collection pipe. When the authorities identified the spill after two weeks, the spill was contained, but several millions of gallons of raw waste had already reached the water by that time.

The polluted Tijuana River has affected several beaches in the San Diego area. It has greatly affected the coastal waters in California. Serge Dedina, the mayor of Imperial Beach, California has commented that the beaches were affected massively due to the largest spill in more than a decade. As a result, several beaches up to Coronado were closed down. A few beaches were opened on Sunday with numerous warning signs in red and yellow, restricting the beach goers.

Dedina has also commented that the spill was not politically motivated, though it was a deliberate action to receive support for the sewage pipeline repair work by Mexico. The mayor wants the US government to support Mexico in improving sewage infrastructure in Tijuana so that such a disaster doesn’t happen in the future.

The Tijuana State Public Service Commission announced that the spill was accidental and that it was caused by heavy rains. The disturbance from the rains resulted in the collapse of sewage interceptor. The sewage spill was reported to IBWC on February 23rd even though the spill started two weeks ago according to USA officials.

The beaches were closed because water polluted with raw sewage could result in various illnesses and infections. About 20 miles of coastland starting from Rosarito, Mexico to Coronado, California was affected due to the massive spill. The representatives from the states have requested the federal government to take actions to prevent such spills in the future.

Edward Drusina, the commissioner of IBWC commented that the information regarding sewage spills must be received by the commission in a timely manner. There is no confirmation on volume and duration of the spill from the IBWC officials. The investigation is likely to end by March so that the results are provided on April 1st.


Snap Shares Decelerate As The IPO Hype Subsides

Snap, the parent company of Snapchat launched its IPO amidst a lot of buzz last week. The shares were initially priced at $14 – $16, but the price continued to surge just in two days. Immediately after the launch, the shares were trading at $24, much higher than the expected pricing. On Monday morning, Snap shares were open at $28.17 which was 4% higher than Friday. However, on Tuesday, the IPO buzz had subsided and the price was at $22.

Even though the price of Snap shares is greater than the expected value, most of the Wall Street experts believe that Snap shares are overvalued. Seasoned investors are not interested in buying Snap shares because they don’t think it is worth the cost. Top analyst surveys indicate that Snap shares are not great to buy. The estimate of share price is between $10 and $23, resulting in an average of $16.5. The valuation has appalled experienced investors because Snap is yet to make any profit. It was clearly mentioned in the prospectus that Snapchat may not generate any profit in the future.

Snap is a small and young company that came up with a revolutionary product which allowed disappearing videos and messages. Snapchat was picked up by the teens immediately after its launch and it was widely used for sexting. The teenage users are not loyal to the brand and Snap is yet to monetize the platform properly. Snapchat is a free app and the revenue can be generated only through advertising. Another alarming feature of Snapchat is the fact that the active monthly user base has stayed flat at 150 million in the last two quarters.

Facebook launched Instagram as a rival to Snapchat and shamelessly copied Snapchat Stories. The ephemeral messaging on Instagram rivaled Snapchat and it is embraced by a mature audience. Instagram is owned by Facebook which has mastered advertising on the internet. Snap doesn’t have the ability or corporate structure to compete with Facebook. The target demographic of Snap is extremely narrow and the app is widely used only in first world countries. While Google and Facebook have an audience of 3.6 billion, Snap is available only to about 650 million all over the world.

While Snap increased its revenue to $400 million from $58 million in just four years, the company incurred $512 million losses. Even though Snap IPO is launched, the company is yet to make a profit. Investors who purchase Snap shares are simply betting that the company would come up with some innovative product that will surpass the popularity and demand of Facebook and twitter. Considering the immature managers and unreliable demographic, this won’t be a possibility.

The share price performance of Snap is surprisingly good despite the challenges faced by the company. Investors are willing to hold on to the shares for at least one year and this has increased the demand in the market. Advertisers too are keen on the target demographic of Snap, which could help the company if it comes with the never-before-seen product that couldn’t be copied by Facebook.


GM Sets Its Vision On Revenue Generation As It Gets Rid Of European Brands

General Motors (GM) confirmed that it has finalized a $2.3 billion deal to sell Opel and Vauxhall brands of the company to Peugeot. Effectively, this means that GM is getting out of the European market willfully. The CEO Mary Barra has taken the most courageous step to get rid of the perennial loser for GM. The 109-year old company was selling its cars to every market without considering the consequences. The new move to sell the European brands has helped the company to focus on revenue generation.

Analysts are happy with this decision that tells the investors that GM now wants to focus on areas that generate better returns in long term. The Opel and Vauxhall brands in Europe has not generated any profit for GM in the past two decades. In fact, several experts consistently questioned the measures GM took to stay in the European market despite evident failure. The $2.3 billion deal is profitable for GM as it can target its audience and produce cars for those who want. The parent company of Peugeot and Citroen, PSA is operated by the French government with 14% shares.

While the move to exit the European market is a great idea by GM, it has consequences as well. By leaving Europe, GM is effectively losing its market share. Just in last year, 1.2 million GM cars were sold in Europe. The headquarters of Opel is in Germany, which is adored by car manufacturers for the endless possibilities of innovation and design engineering.

The car sales in Europe has helped GM to take care of the investment cost of car manufacture in other parts. North American Cruze is modeled after European products. Europe is undeniably one of the biggest markets for car sales and GM is potentially losing it all with this deal.

The stock price of GM has been low ever since Barr took her office in 2014. The shares were priced at $40 in 2014, but it has gone down to $37. Barr tries hard to increase the share price of GM stocks, but it continues to stay well below the $40. The business profile of GM undergoes an overhaul with this deal. The company is hoping to provide better returns for the shareholders by cutting out the losses.

GM requested and obtained federal bailout in 2009 as the company was approaching bankruptcy. The bailout was granted because the collapse of the largest US car manufacturer would result in another Great depression. The sales in North America and China are sufficient to keep the business afloat.

The Europeans prefer Ford over GM because they aren’t interested in SUVs and pickup trucks. By taking $4 billion charges on the sale of Opel, GM will have the cash flow to buy back its stocks. The representative said that the company will purchase $4 billion stocks in the upcoming months. GM is now focused on developing electric cars such as Chevrolet Bolt and has also invested $500 million in Lyft service.