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3 things Malaysia Airlines must do to survive

Written By limadu on Jumat, 01 Agustus 2014 | 14.44


With its reputation now severely damaged, executives are grappling with tough questions about the future of the airline.

Should the name be changed? Should the business go private? Can the airline even survive?

"I don't think they've ever gone through this type of situation in the past," Abdul Aziz Abdul Rahman, the former CEO of Malaysia Airlines, told CNN.

"The business model definitely needs to be changed."

Here are three things management must do to rescue Malaysia Airlines:

Restructure the business: Even before Flight 17 was shot out of the sky, the airline's majority owners were working on a wide-ranging review of its business.

It hadn't turned a profit in years, efforts to compete with low-cost carriers had failed, and the need for yet another government bailout was growing.

These are big problems, and any new turnaround plan will mean major change.

Malaysian state investor Khazanah Nasional, which owns nearly 70% of the airline, is reportedly considering taking it private. Shares are trading near record lows, and buying out the remaining shareholders could cost as little as $325 million.

After taking the business private, management could sell some desirable assets, including Firefly, its budget unit. The state investor could then reduce its stake in the leaner company, opening the door to new investors.

Related: Passengers' families could collect millions

Another option is a tie up with Air Asia, one of the budget carriers that has been taking Malaysia's business by offering cheap fares on short routes. A partnership has been rumored in the past, but nothing materialized.

Cut costs in a big way: Analysts argue that Malaysia Airlines needs to slim down, and drop some of the flashy features of a flag carrier, in order to compete.

Related: Is 2014 the deadliest year for flights? Not even close

Abdul Aziz said Malaysia Airlines needs fewer full-service flights, and more discount fares. The airline also needs to lower food costs and increase seat counts.

The company's powerful labor union, however, is unlikely to support any major changes.

Change perceptions: Perhaps the biggest challenge faced by the airline is its association with two doomed flights -- events that are likely to be remembered by potential customers.

Airlines often change their logos and color schemes after disasters, as Japan Airlines did after a 1985 crash. But media reports have suggested Malaysia Airlines might go further and change its name.

Is that necessary? It's hard to say. After all, the Malaysia Airlines brand isn't just about the carrier -- it's an advertisement for Malaysia itself.

Abdul Aziz, the former CEO, is optimistic about the airline's ability to emerge from tragedy.

"I think it can survive," he said. "They have the foundation."

First Published: July 31, 2014: 9:39 PM ET

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Unlimited vacation days and other perks you don't get

employee mandatory vacation


Or how about this? Your company pays you cold hard cash to go on vacation and demands that you stay out of touch -- no calls, no emails, no texts, no kidding.

Whether it's to attract talent, prevent burnout, cut costs or just make work better, there are actually companies out there that offer these sweet, atypical time-off packages.

With very few exceptions, however, they tend to be offered by smaller, niche businesses, said Gregory Harris, president of Quantum Workplace, an employee engagement survey firm.

Image Market, an Omaha, Neb.-based custom t-shirt maker for high school clubs, offers a standard vacation policy -- two weeks paid plus holidays. But on top of that, it closes for two weeks over Christmas and employees get paid for that time as well.

Then during the summer months, workers are allowed to take as much time as they like -- with half of it paid by the company, and another quarter of it paid through their personal and sick days.

Why so much paid time off? Christmas and summertime are slow for business. But the policy has proven to be a big cost saver, said company owner Kelly Loneman.

Related: 10 vacation experiences of a lifetime

Loneman estimates the company saves about 25% of payroll costs in the summer. Plus, it saves in recruiting and training expenses because turnover is so low.

"It's rare to have someone quit," he said. With all the paid vacation time, "it's really hard to leave after you've had that."

Many tech start-ups have launched equally pioneering vacation policies. They're competing hard for talent, they work crazy hours in frenzied sprints to meet deadlines, and their cultures -- including their vacation philosophy -- are usually built around the ethos of the company's founder, said Kris Dunn, who blogs at HRcapitalist.com.

Take New York City-based consumer products manufacturer Quirky, founded in 2009.

Quirky shuts down for the first week of May, August and January, which are slower times for the company. That's down from the four weeks a year the company designated when the policy began in 2013.

But the idea for the policy is the same. "[It's] centered around the fact that this will lead to better work, more beautiful products, and an emotionally balanced team. Should we all feel it doesn't [do that], we reserve the right to go back to our old ways," Quirky founder Ben Kaufman wrote in a blog post.

In addition, the company doesn't limit or track the number of vacation, personal or sick days that workers take. So long as you're responsible at work, "you take time as you need it," said company spokesman Tiffany Markofsky.

To date, no one has abused the privilege, she said.

Related: What about a 3-day work week?

Other companies go even further.

Evernote, which makes apps for information sharing and memory jogging, pays employees $1,000 per year to take more than 5 days off in a row and to travel. The idea is to "encourage you to go away and take an actual vacation," company spokesman Ronda Scott said.

Contact management software maker FullContact doesn't care if employees watch paint peel on their vacation days. But it will pay them $7,500 once a year to take time off. And by "off" they mean having no contact with the office whatsoever.

The big idea: "If you don't disconnect you're going to break," said company spokesman Brad McCarty. "Better not call in. It's a lovely bit of tough love."

They also don't track employees' days off. The only commandment: "Don't screw your team."

Innovative start-ups can sometimes spur trends among bigger companies. But HR experts doubt that super-flexible (and frankly, utopian-sounding) "no-policy" vacation policies will catch on.

Small and nimble may allow for cool. But the bigger and older a company gets, Dunn said, "it becomes really hard to manage."

Plus, many start-ups are likely to be acquired by much bigger fish before they grow old.

And those big fish do things differently. On the generous side, the average number of paid days off (including vacation, holidays and sick days) ranges from 27 days after the first year of employment to 38 days after 10 years among Fortune's top 100 best companies, according to the Great Place To Work Institute.

And yes, those days will be tracked.

First Published: July 31, 2014: 6:43 PM ET

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Elon Musk wants Tesla 'elves' to service cars

tesla model s The Tesla service team will pick up your car and return it before you even know it's gone.


The company has already shaken up the automobile industry. Musk has introduced well-reviewed cars that run only on electricity. He's changed the car shopping experience. Now Musk is aiming to transform how your car gets fixed.

Musk expects that Tesla cars won't have to receive frequent maintenance, but when they need to be serviced he wants it to be quick and with as little disruption to a Tesla owner's day as possible.

Related: Tesla's next 6 months will be busy

Eventually a Tesla service team will be able to pick up your car (maybe while you're at work), service it, and return it to you that same day. The plan is for an entire pit crew team to work on the car at the same time.

"In most cases, you won't even know it's gone," Musk said on a call with investors Thursday.

Tesla reported a jump in sales for the second quarter, but a drop in profits. Musk is spending a lot of money ramping up production on its Model S, developing a crossover vehicle set to hit the market next spring, and building a new lithium batter factory that's key in the development of the less expensive Model 3.

He expects to spend between $750 million and $950 million this year on these investments, but part of that also goes towards improving service.

This year, Tesla (TSLA) starting delivering vehicles in the U.K. and China -- where Musk said sales are off to a "very encouraging start." The company is on track to deliver 35,000 cars before the end of 2014.

First Published: July 31, 2014: 7:02 PM ET

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Kim Kardashian's game makes $700,000 a day

Written By limadu on Kamis, 31 Juli 2014 | 14.44

kardashian app Hitting the hottest clubs with the virtual Kim Kardashian will make you a Hollywood A-lister in no time.


"Kim Kardashian: Hollywood" from Glu Mobil lets you create an avatar that can work to achieve virtual A-list status. Your mission: Hob-nobbing with celebrities, going to a photo shoot and wearing expensive clothes.

The game is free to download, but players spend real money on things like virtual clothes, virtual hairstyles and energy boosts for their avatars. The more your avatar does, the faster you can move up the ranks from the E List to the A List -- the objective of the game.

If sales continue at their current rate, the game will gross $200 million in its first year, according to Doug Creutz, an analyst at Cowen and Company. That would put "Kim Kardashian: Hollywood" in the big leagues with smash-hit mobile games like Candy Crush.

Related: The 13 most WTF gadgets

Creutz estimates there are only about seven other apps in the world that are pulling in more money right now. And Kardashian's is one of the top five most downloaded apps in Apple's store.

"I don't even know what genre to call it, but people are taken with it," he said.

Shares of game maker Glu Mobil (GLUU) have soared more than 30% since the app launched in late June. Glu reported a 51% jump in sales for the second quarter late Wednesday, thanks to the Kardashian game as well as other hits such as Dino Hunter: Deadly Shores.

It's impossible to know if "Kim Kardashian: Hollywood" will maintain its current growth, Creutz said. Adding new characters and levels to the game -- hello Kourtney and Khloe! -- could keep more people playing longer.

The mobile game market is expanding rapidly. The trick is to get more people comfortable with spending money on purchases within games that they downloaded for free. Right now, less than 3% of gamers do so.

First Published: July 30, 2014: 5:17 PM ET

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BofA hit with $1.3 billion mortgage penalty

countrywide fined federal judge


Bank of America (BAC) has been ordered to pay a nearly $1.3 billion penalty for mortgage fraud committed by Countrywide. The fraud happened years before BofA bought the struggling lender amid the financial crisis, saving it from collapsing under the weight of risky mortgages it had made.

The loans were made through a lending program it called the "High Speed Swim Lane." Some inside the company called it "The Hustle." It involved little, if any, income verification.

Countrywide then sold the mortgages to the government-backed lenders Fannie Mae and Freddie Mac.

A lawsuit brought by the government claimed the program was "intentionally designed to process loans at high speed and without quality checkpoints, and generated thousands of fraudulent and otherwise defective residential mortgage loans."

A jury last fall found Countrywide and former executive Rebecca Mairone liable. Mairone has been ordered to pay a $1 million penalty. Her attorney, Marc Mukasey, said in response that she is innocent and will "will fight on to clear her name."

Related: I've achieved the American Dream

The program was "a brazen fraud by the defendants, driven by a hunger for profits and oblivious to the harms thereby visited, not just on the immediate victims but on the financial system as a whole," wrote Judge Jed. S. Rakoff.

The penalties aren't intended to compensate victims but rather serve as a deterrent for wrongdoing, the judge said. He noted the whistleblower who alerted the government to the program may be eligible to receive a portion of the penalty. The case was the first tried under the whistleblower law. The office of U.S. Attorney Preet Baharara, which prosecuted the case, could not say if a payout would be made.

Baharara said in a statement the case demonstrated "that mortgage fraud cannot be viewed as simply another cost of doing business in the financial world."

Bank of America objected to the size of the penalty. Spokesman Lawrence Grayson said the company was reviewing a possible appeal.

Related: What economic rebound? 'I got left behind'

CNNMoney's James O'Toole and Ben Rooney contributed to this report.

First Published: July 30, 2014: 5:36 PM ET

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Grieving parents drowning in $200,000 student loan debt receive relief

student loan mason Lisa Mason (left) passed away 5 years ago, and her parents got hit with her six-figure student loan debt.


After a CNNMoney story about the family's situation ran Tuesday, hundreds of readers reached out to offer words of encouragement -- and financial support -- to the family.

So far, people have donated more than $8,000 through the Masons' GoFundMe page.

"We've been totally blown away," said Mason. "It's so encouraging to realize there's a lot of good people out there."

His fund raising goal is set at $200,000, the amount he now owes the private student lenders. Mason says he was so desperate to help his daughter Lisa get a nursing degree that he co-signed the $100,000 in loans she took out -- never could he imagine that his daughter would pass away before the debts were paid off.

Related: Grieving parents hit with $200,000 in student loans

When Lisa died of liver failure at the age 27 all of her student loan bills were immediately sent to the Masons. On a pastor's salary, Mason couldn't afford to care for his daughter's three children and keep up with the payments. Now, as a result of interest and late penalties, the loans have since doubled to $200,000.

While federal loans are typically forgiven in situations like this, it's up to the private lenders to decide whether to offer relief to a struggling borrower.

One of Mason's lenders, Navient Corp., reached out to Mason after being contacted by CNNMoney and lowered the interest rate to 0% on three of his four loans and reduced the total amount owed to $27,000 from nearly $35,000.

Even better, Mason said a debt collection firm that had been trying to collect on another loan called him Wednesday to say they had seen the CNNMoney story and would like to forgive the entire loan balance of $15,000.

Earlier this year, Mason had considered filing for bankruptcy. But it is very difficult -- often impossible -- to get private student loan debt discharged in bankruptcy, and Mason's lawyer told him he had such a slim chance of being approved that the legal costs would only add to his debt load.

Mason has also started a petition on Change.org, urging President Obama to make it possible to discharge all types of student loan debt in bankruptcy. His petition has received more than 2,000 signatures so far.

Related: 1 in 3 U.S. adults have debt in collections

Other families who have lost a child and then become responsible for huge student loans have also created petitions on Change.org -- often aimed at getting their particular lender to offer some relief.

Angela Smith, a mother from Chesapeake, Va., filed a petition on Change.org several years ago asking private loan provider First Marblehead Corp. to forgive the $40,000 in student loans that her husband had co-signed for their son Donte, who was shot to death in 2008. The petition received more than 150,000 signatures from sympathizers but there was no action from the lenders.

There's been one other success story so far, however, where the brother of a deceased borrower petitioned a bank to stop going after his grieving father for payments, and the loan was forgiven.

For Mason, the rush of support he has received after getting his story out there is beginning to change his whole outlook.

"For the first time since our daughter's death, we have a little bit of hope," said Mason.

First Published: July 30, 2014: 7:25 PM ET

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McDonald's may be liable for worker lawsuits

Written By limadu on Rabu, 30 Juli 2014 | 14.44

mcdonalds responsible lawsuits A government ruling could make McDonald's liable for labor lawsuits.


The National Labor Relations Board's top lawyer on Tuesday determined that McDonald's (MCD) is a "joint employer," along with thousands of independent franchise owners.

The ruling, if upheld, would mean that McDonald's could be held liable for labor violations at its more than 12,000 franchisee-owned restaurants.

"McDonald's can try to hide behind its franchisees, but today's determination by the NLRB shows there's no two ways about it: The Golden Arches is an employer, plain and simple," said Micah Wissinger in a statement issued by a public relations firm representing fast food workers. Wissinger is an attorney who brought the case on behalf of McDonald's workers in New York City.

In March, McDonald's workers filed seven class-action lawsuits in New York, California and Michigan over wage theft violations. The suits allege that McDonald's has forced employees to work off the clock, not paid them overtime and struck hours off their time cards.

Related: The real budgets of McDonald's workers

McDonald's has contended that franchisees operate as independent businesses and that therefore, it's not liable, but the N.L.R.B. ruling contradicts that claim. Other fast-food operators like Burger King could feel the repercussions.

The decision was hailed by low wage workers who have recently staged protests across the country seeking a $15 an hour wage.

"McDonald's clearly uses its vast powers to control franchisees in just about every way possible," Kendall Fells, organizing director of Fast Food Forward, said in a statement. "It's time the company put those same powers to work to do something about the fact that its workers are living in poverty."

The average fast food worker makes a little over $9 an hour.

Related: I work in fast food and I'm not a teenager

But a trade group representing the franchise lobby called the ruling a "seismic change" that could destroy jobs.

"Millions of jobs and the livelihoods of hundreds of thousands of independent franchise small businesses are now at risk due to the radical and unprecedented nature of this decision," Steve Caldeira , President & CEO of the International Franchise Association, said in a statement.

Caldeira added that franchise job growth and new business formation, which have outpaced non-franchise growth for the last five years, will undoubtedly come to a screeching halt if this decision is affirmed by the N.L.R.B.

McDonald's did not respond to a request for comment.

First Published: July 29, 2014: 7:16 PM ET

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Chevy Volt is insurance group's Top Safety Pick

2014 chevy cobalt


That's why General Motors' (GM) Chevy Volt won top marks for safety in small cars.

The Volt was named "Top Safety Pick Plus" Wednesday by the Insurance Institute for Highway Safety, because besides earning an "acceptable" rating in an actual crash test, the hybrid electric vehicle also has an optional forward collision warning system. It was the only car out of the 12 models tested to have the crash prevention technology.

IIHS submitted twelve small vehicles through a tough crash test called the "small overlap front test." In the test, 25 percent of the vehicle's front end on the driver's side strikes a rigid barrier at 40 miles per hour. It simulates a common head-on collision, when only part of the bumper connects with another car, telephone pole, or tree.

Purely measuring crash performance and potential injury to the driver, the Mini Cooper Countryman was the winner. It earned the highest rating of "good" and was named a "Top Safety Pick." The Countryman is a larger four-door version of the two-door Mini Cooper.

jd power apeal 2012 porsche 911 carrera Gallery: Best-loved cars in America

"The Countryman's safety cage held up reasonably well," said Joe Nolan, the Institute's senior vice president for vehicle research. "The safety belts and airbags worked together to control the test dummy's movement, and injury measures indicate a low risk of any significant injuries in a real-world crash this severe," he said.

Other "Top Safety Picks" were the Ford C-Max Hybrid, the Mitsubishi Lancer, the Scion FR-S and the Subaru BRZ. Those models earned the second highest rating of "acceptable."

The Hyundai Veloster and the Scion xB earned "marginal" ratings.

Meanwhile, four small vehicles were rated "poor." Those were the Fiat 500L, a larger four-door version of the Fiat 500, the Nissan Juke, the Nissan Leaf all-electric car and the Mazda 5.

most iconic american cars Gallery: 21 most iconic American cars

The Mazda 5 was the worst-performing of the vehicles.

"When we tested the Mazda 5 we saw a host of structural and restraint system problems," Nolan said. "Parts of the occupant compartment essentially buckled, allowing too much intrusion," he said.

Among other issues: the steering wheel moved too far to the right causing the dummy's head to barely touch the front airbag and slide off it to the left. The seat belt allowed the dummy to move too much. Its head hit the left side of the dashboard. Also, the side curtain airbag along the driver-side window didn't deploy at all. Plus the driver door unlatched during the test, which IIHS said shouldn't happen.

But the Mazda also was the worst in the less challenging side-impact test. It was the only 2014 car IIHS evaluated to earn anything less than acceptable in that test.

First Published: July 30, 2014: 12:12 AM ET

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Meat scandal takes a bite out of McDonald's sales in Japan


The fast food chain's Japanese unit said Tuesday that it will fall short of profit and sales targets for the year, after a longtime meat supplier was shut down last week by authorities for unsanitary practices.

As meat from the supplier has been pulled out of circulation, McDonald's outlets in China, Hong Kong and Japan have stopped selling items such as Big Macs and Chicken McNuggets.

The scandal has led to "negative impact on sales and consumer confidence," the company's Japanese unit said in a statement. "Our sales and profit expectations have been reduced."

The meat scandal began when Chinese television showed workers at a Shanghai food plant handling expired and tainted meat with their bare hands. Workers at the Chinese subsidiary of Illinois-based OSI Group said that the meat smelled bad, and they could be seen processing meat that had fallen on the floor.

McDonald's (MCD) Japan had previously forecast sales of 250 billion yen ($2.5 billion) and net income of 6 billion yen ($59 million) for the year. The company said it isn't able to provide new targets as the scandal's full impact is still unfolding.

McDonald's shares traded in Japan fell 2.8% Wednesday morning , and have shed nearly 4% since the food safety issue began unfolding last week.

Related: Big Mac shortage in China as scandal-ridden supplier issues recall

McDonald's has had a "challenging" year thus far in Japan, even before news hit over the bad meat scandal. The Japanese unit saw net income tumble 60% to 1.9 billion yen ($19 million) in the first half of this year compared to the same period last year. Sales at its directly owned stores and franchises dropped 4% after planned store closures.

Oher food chains have been caught up in the scandal, including Yum Brands (YUM), which operates KFC and Pizza Hut in China, Burger King (BKW), Papa John's (PZZA) and Starbucks (SBUX).

Many companies have cut their ties with the supplier, but McDonald's has largely stood by OSI Group.

First Published: July 30, 2014: 1:51 AM ET

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Herbalife stock tumbles on earnings miss

Written By limadu on Selasa, 29 Juli 2014 | 14.44


The controversial maker of diet shakes and supplements said it earned $1.55 per share in the second quarter, short of analysts' expectations of $1.57 per share. Herbalife also lowered its earnings targets for the rest of the year.

Herbalife (HLF) shares fell more than 5% in after-hours trading.

The results come less than a week after activist investor Bill Ackman launched another assault on Herbalife, renewing his argument that the company is a pyramid scheme. Ackman's Pershing Square hedge fund stands to gain at least $1 billion if Herbalife's stock price collapsed.

Herbalife sells diet shakes and other supplements worldwide through a vast network of independent distributors. Last week, Ackman gave a three-hour presentation accusing the company of exploiting the poor and immigrants.

He argues that Herbalife is a pyramid scheme because it makes more money by recruiting new distributors than it does selling products to consumers.

Herbalife has repeatedly denied that it operates as a pyramid scheme, saying its business model is no different from marketing at other companies that uses sales representatives, such as Avon (AVP). The company has said Ackman's attacks are baseless and that he is trying to manipulate Herbalife's stock price.

Related: Herbalife tanks after senator calls for probe

However, Herbalife disclosed in March that it is being investigated by the Federal Trade Commission.

Until now, Herbalife had reported strong results for several quarters in a row. Carl Icahn, another high-profile activist investor, is the company's largest shareholder.

Herbalife executives will discuss the results on a conference call with analysts Tuesday morning.

First Published: July 28, 2014: 5:16 PM ET

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