Online purchases last week were up substantially over last year, but the big test comes today: Cyber Monday. According to the comScore, online sales on Black Friday were up 22% over 2004. (See W$J for more on this.) Why the expected increase on Monday? Because people will have access to high-speed internet connections at work. This is from WaPo:

Industry experts say consumers spend their weekends window shopping, talking to friends, and getting ideas about what they need and want. Then they head back to work, where they have high-speed Internet connections and tempting moments of downtime. Many workers say they put in such long hours at the office, it's the only time they can shop online. At home, there's just too much to do.

ComScore reports that 58% of online purchases are made by people at work, with the heaviest hours in the mid-morning (10:00-11:00 am) and just after lunch (1:00-2:00 pm). Meanwhile, a Shop.org survey found the following:

[M]ore than one third of consumers (37%), or 51.7 million people, said they will use Internet access at work to browse or buy gifts online this holiday season. The survey found that more than half of young adults 18-24 (51%) and nearly half of those 25-34 (49%) will be shopping online during work hours. The survey also found that men (42%) are more likely than women (32%) to shop at the office.

I didn't find any surveys reporting the time spent shopping online, but check out the WaPo article, where two people claim that online shopping consumes only 10 minutes. If they are telling the truth, they should win some sort of award for most efficient online purchasers. Should employers worry about productivity? Here is a "workplace expert" from USA Today:

"There's a blurred line between work and personal life," he says. "Employees take work home and check their BlackBerrys while commuting." While "there will be some productivity lapses in the traditional sense," he says, they likely won't be significant. "When employees fall behind, they tend to make up a lap later."

Or how about this from Miguel Gamiño Jr., president and CEO of Varay Systems, an El Paso technology services company: "Shopping online takes less time than going to a store physically, so in the end it can help productivity."

All of this sounds like collective delusion to me, though I am hardly a role model for productive computer use.

UPDATE: If you subscribe to the W$J, you might find this "Holiday-Sales News Tracker" of interest. This concept: "Updated regularly with the latest holiday-sales figures, how individual retailers are doing and other developments." Nice feature.

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The W$J is talking about the flood of dividends and share repurchases in 2005. The total from the S&P 500 is up by 30% over 2004, itself a record year. The good news is that corporate profits have been high. The bad news -- or, more properly, the potential bad news -- is that American companies may be short on ideas:

The fact that companies have been sitting on so much cash is, in some respects, a vote of no-confidence in U.S. economic prospects: At least some companies may be signaling they can't find enough profitable ways to reinvest their earnings, so they are simply returning it to shareholders.

I doubt that this explains the upsurge in dividends. A competing hypothesis seems more plausible to me, namely, that "U.S. companies are merely starting to bring their payouts to shareholders back near historical levels in a mature economy with more pressure for shareholder-friendly corporate governance in the wake of accounting scandals."

There is a tax story here, too, as dividends are currently taxed at only 15%. That tax rate has been in effect since 2003, and that's when dividends started trending upward.

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I love root beer. Always have. When I was a boy, I drank A&W Root Beer from frosty mugs in my home town. As I have moved around the country, I have made a point of sampling the local brews. In Oregon, I fell in love with Henry Weinhard's, but in Wisconsin, I drink mostly Sprecher.

This weekend, for the first time, I tasted a root beer from Boylan Bottleworks in New Jersey. Unlike Henry Weinhard's and Sprecher, Boylan didn't make Luke Cole's list of Ten Best Root Beers in America for 2004, but it's excellent root beer in a cool bottle. It doesn't displace Henry Weinhard's as my favorite, but Henry Weinhard's is hard to find here in the Midwest, and Boylan's is a nice substitute.

The #1 root beer on Cole's list is Gale's, made in Chicago. If I can't find Gale's in Madison, I will be in Chicago on December 8. Gives me something to do there ...

Other root beer reviews are located here and here. Henry Weinhard's fares well on the first link, but not as well on the second. Of course, the second ranks IBC as the top root beer, and that is just wrong. IBC is a fine root beer, but not in the same league as Henry Weinhard's.

UPDATE: More reviews here. This is really an amazing site with 311 root beer reviews. Obviously, my passion for root beer is mild in comparison. Somehow, I missed Anthony's top-rated root beer, which is made and distributed in Oregon. It's called Bulldog.

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In retailing, "Black Friday" refers to the day after Thanksgiving, when most retailers finally become profitable. (Best Buy and certain other retailers refer to the day as "Green Friday" because of the money generated on that day.) According to the W$J, "shoppers turned out in sometimes-frenzied droves."

After returning from an early-morning excursion to Best Buy, my wife reported that the customers who snapped up the deeply discounted Toshiba L25-S1192 laptops ("doorbusters") were mostly men in their 20s, who had camped out at the store beginning at 9:30 pm on Thanksgiving Day. Even more surprising, there was talk among this group of listing their purchases on eBay.

So I checked it out, and eBay has over 50 listings for that laptop, all posted on November 25. Best Buy's price was $379.99, and many of the listed laptops have already cleared that price. According to the NYT, many of the doorbusters are sold below cost. The volume of eBay listings doesn't seem particularly large, given the number of laptops sold by Best Buy, but I wonder whether this sort of "professional" activity will discourage shoppers like my wife from sacrificing sleep and ultimately lead to a change in the way that stores lure customers on the day after Thanksgiving.

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Thanks to "Wasteland Fan," whoever you are, for nominating Conglomerate as the "Best Law Blog."

Nominations are being accepted through the end of Saturday, November 26. In addition to seconding our nomination for Best Law Blog, there is still time to nominate Conglomerate for "Best Business Blog." (We missed the deadline for "Best New Blog" by three days!)

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My family spent Thanksgiving with a friend in Minneapolis who is a Senior VP for online stores with Best Buy. In addition to having a wonderful Thanksgiving meal, we enjoyed lots of conversation about retailing, particularly e-commerce, which has long fascinated me. Among other topics, we discussed corporate blogging. Best Buy doesn't have a corporate blog, but I encouraged my friend to explore blogging as a means of building a community of people who are interested in the company.

Tonight, after arriving back in Madison, I checked out Best Buy's e-commerce site, which has been having technical problems all week. I found this:

Although my friend is not in charge of the technical side of the business, he wondered whether a corporate blog might prove useful in circumstances like this. In a word, yes.

Corporate blogging is not all roses, but it's strength lies in the possibility of genuine communication between officers of a corporation and the corporation's customers, employees, suppliers, etc.

Here is a nice article with some suggestions on corporate blogging. If you are interested in further reading, try Naked Conversations.

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While Larry Ribstein is off to China and India, his blog has been taken over by a group of young turk  business law bloggers, some of whom are former guest bloggers at Conglomerate. Take all of this as a preview of Truth on the Market, a new blog to be launched in January.

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I missed the Thanksgiving blogging yesterday while at the Magic Kingdom, so I have to impart in a time-lapse way my Thanksgiving story.  My 4 year-old asked me a few months ago "what is Thanksgiving again?"  So, I told him the "Father Guido Sarducci" version of a people who lived in a place where they weren't free so they went across the ocean to a place where they could be free.  Life was hard, but after a year they had a great harvest and celebrated with a big feast to give thanks to God to bringing them to this place.  Luke's response:  "Is this the story with the Pharoah?"

Of course, this put my mind into a cynical spiral where I wondered if all these stories were just recurring mythologies of persecution and destiny.  A friend stopped my spiral by telling me that the similarities in the stories were not evidence of mythological underpinnings but merely evidence of the recurrence of bad Pharoahs.

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. . .that's how I'm feeling after returning from our Disney cruise/Disney World vacation.  We returned today from sunny Florida to Milwaukee in the 20s with inches and inches of snow.  But that's just the beginning.  Then, I see that Bloglines is telling me that I have 255 new posts.  Ideoblog alone has 18 new posts.  Wow.  Larry must be on a roll.  Nope, Larry "No other authors, ever" Ribstein has turned over his blog to a whole crew of familiar Glom "faces," including Kate Litvak, Josh Wright, and Geoff Manne.  Larry also notes that some assemblage of these guest bloggers will start their own blog, Truth on the Market, sometime soon.

I hope I haven't missed anything else while away.

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Today's W$J contains a sobering article on shareholder activism by hedge fund managers. The motivation for activism is that "it is getting tougher to show top-notch returns as more hedge funds pursue similar investment ideas and overall market volatility drops." This is the best argument against shareholder activism that I have seen in a long time. Does anyone (other than a hedge fund manager) believe that hedge fund managers know more about the companies in which they invest than the officers and directors of those companies?

This reminds me of the 1980s:

A chief complaint is that many companies are sitting on oodles of cash earning paltry returns, and it should be returned to shareholders through share buybacks or dividends. Companies in the Standard & Poor's 500-stock index have accumulated more than $650 billion in cash, up from $329 billion five years ago, and almost a third of the nonfinancial stocks in the S&P 500 have more cash than debt. Other companies are sitting on valuable real estate that isn't being appreciated by the market, restive investors argue.

If you need a refresher on the 1980s, I would recommend this article by Michael Jensen, which discusses the adverse incentive effects associated with large free cash flows. Here is the abstract:

The interests and incentives of managers and shareholders conflict over such issues as the optimal size of the firm and the payment of cash to shareholders. These conflicts are especially severe in firms with large free cash flows--more cash than profitable investment opportunities. The theory developed here explains 1) the benefits of debt in reducing agency costs of free cash flows, 2) how debt can substitute for dividends, 3) why diversification programs are more likely to generate losses than takeovers or expansion in the same line of business or liquidation-motivated takeovers, 4) why the factors generating takeover activity in such diverse activities as broadcasting and tobacco are similar to those in oil, and 5) why bidders and some targets tend to perform abnormally well prior to takeover.

I do not intend to condemn the 1980s wholesale, but I believe that the virtues of leverage often were exaggerated, especially at the end of that decade. Perhaps the time is right for an academic defense of cash stockpiles.

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Former guest blogger Geoff Manne and Randy Barnett of the Volokh Conspiracy have organized a paper symposium on Raich v. Gonzales, the medical marijuana case decided in the Supreme Court's last term. The papers comprise the fourth issue of the Lewis & Clark Law Review, and the cover appears below. All of the papers are available online. You will notice contributions by bloggers Ann Althouse and Glenn Reynolds, among others. Well done, Geoff and Randy.

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We have been quiet on Open Source Media, which is now Pajamas Media ... again. Frankly, I have a hard time getting excited about this story, though with a little encouragement from Ann, I did notice a business organizations angle. Take a look at Dennis the Peasant's account of his dealings with Roger Simon. The story bears a striking resemblance to the facts of Urban Decay, where a California appellate court held that two women who developed ideas for a cosmetics company had formed a partnership. Roger Simon responds:

Mr. Kelly [aka Dennis the Peasant] believes that somehow Charles Johnson and I have knifed him in the back in a business deal. He is indeed correct that we had several discussions with him and one meeting in Los Angeles. After that nothing substantive occurred. No contracts were ever signed. No investment was made. Nothing happened. Communications dwindled to zero. It was like the many preliminary business conversations that peter out before fruition in most of our lives, certainly in mine and probably in yours. Then Charles and I developed a different approach to the business. We found investment elsewhere and Mr. Kelly, when he heard about it, turned into an online stalker. He has threatened to sue me on several occasions. I invite him to go ahead and do it. I look forward to the contents of his website being read aloud in court.

Whether contracts were signed is irrelevant to the existence of a partnership. Same goes for the investment. But the portion of Simon's statement that I have italicized could be a crucial difference between Pajamas Media and Urban Decay. The key inquiry: Is Pajamas Media a different business than the one envisioned during those early talks between Simon, Kelly, and Johnson? If it is the same business, I could see a pretty strong argument for partnership under Urban Decay.

Stepping away from the result in Urban Decay, I think that Simon lands on the core issue in many cases involving inadvertant formation of a partnership, namely, whether the initial negotiations constitute formation of a business or merely preparation for incorporation. Every corporation or LLC is preceded by some planning, but such planning does not necessarily result in the formation of a partnership.

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This is the best Potter film yet, in my opinion. If you are a fan of the books, you may lament the missing scenes -- lots of them! -- but if you can abide less-than-slavish adherence to the original story, you should enjoy this show.

The Tri-Wizard Tournament changes everything about Hogwarts, and that's all to the benefit of the film. The only classroom scenes are in the Defense Against the Dark Arts, where Brendan Gleeson rules as Alastor "Mad-Eye" Moody. He is terrific, by the way.

The Tournament offers a high-speed chase, an underwater battle, and a deathly maze, but the most surprising thing about this film is that it is so funny. Most of the humor emanates from teenage angst, but it is (almost) all well done. Harry, Ron, and Hermione have grown not only physically, but as actors. Indeed, Emma Watson is turning Hermione into the star of this series.

Voldemort is outstandingly rendered by Ralph Fiennes. The scene of his rebirth is the only part of the film that is frightening enough to keep my youngest children (age nine) from seeing the film.

This summer's release of Harry Potter and the Half-blood Prince combines with this movie to re-energize a brand that was flagging. For the first time, I am looking forward to the next installments of both the book and the movie.

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Ann Althouse, sympathetically commenting on a NYT Magazine article on the "gifted child movement," suggests that we should "let kids be kids."  I disagree.

Relentlessly mainstreaming gifted kids has negative pedagogical and social effects.  Trusting that genius will inevitably triumph works in the movies.  But not in real life.  It's true that some exceptional geniuses have done well despite dismal classrooms and "wobbly" family situations.  But the more common story is that talent and inspiration, if it's not cultivated, wastes away. 

The truth is that smart kids often learn differently from those in the mainstream.  Class can be boring and tedious.  Gifted kids are predisposed to develop procrastination habits; a surprising number underperform academically.  Worse yet, when kids display intelligence in mainstream classrooms, they're often ridiculed.  Teachers may feel threatened.  Classmates can be cruel.  Social pressure to downplay intelligence is strong.  If we care about cultivating genius -- as I think we should -- then why pretend it isn't there?

Compare the resources we offer gifted kids with the attention we lavish on athletes, or the resources we offer (or at least are legally required to offer) to those at the bottom of the bell curve.  If your child is learning disabled, or mentally retarded, or has a behavior disorder, then your school has a legal obligation to develop an individualized education plan tailored to your child's needs.  If you're gifted, the school has no special obligation at all.  In most school districts, I suspect we spend more resources at the bottom of the bell curve than at the top. 

Let kids be kids, maybe, but in the right environment.  I'm a member of SET/SMPY and an alum of CTY, aka "nerd camp."  I also spent four years working at CTY as a TA and residence advisor.  The surprising magic of CTY isn't in the classroom; it's in the social environment.  Accelerating learning and freeing kids from rigid lesson plans is only part of the point.  CTY provides a place where intelligence can thrive, where kids can be smart, eccentric, and curious about the world.  They can learn the social skills that they will need in academia or the lab or the law firm.  CTY teachers learn how to stay out of the way, guiding the students as needed but largely letting the kids teach themselves and each other.  Put kids in an environment where intelligence is ridiculed, and talent will be wasted.  Cultivate it with good textbooks, gentle oversight, and lots of cool puzzles to solve, and good things will happen, as the research shows. 

I recently heard that there's dozens of CTY alums working at Google.  I don't think it's a coincidence.

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A follow up to our discussion of hedge funds:  Over the weekend I was able to get my hands on a data set.  Out of 4400 funds, about 3800 give the managers a 20% profits interest.  About 400 are at 10% or 15% and about 200 at 25% or 30%.  Nine funds have a 50% carry and one has a 65% carry (but no management fee).  The management fees are scattered mostly at 1, 1.5 and 2%.  Most funds have a high-water mark, and a minority have a hurdle rate or preferred return. 

Once I get more data and find someone to help me sort it out, I will have more to say.  I was not surprised by the dominance of the 20% figure, which is consistent with what I'd heard.  There is some variation, so the interesting news will come once I've figured out what causes the variation.  Does it vary according to past performance?  Strategy?  Where the fund invests?  Lock-up periods?  Whether they use a preferred return?  Is there a clientele effect?  Are management fees a substitute for the carried interest, or a complement?  More to come. 

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