The news of the insane profits instantly fueled the hate towards the public face of high gas prices - the oil companies.

Obama said in a statement, “Perhaps the only thing more outrageous than Exxon Mobil making record profits while Americans are paying record prices at the pump is the fact that Senator McCain has proposed giving them an additional $1.2bn tax break.”

And on Obama’s heels, four senior Democrats in Congress called a press conference critisize the largest US oil companies for spending more on stock buy-backs to enrich shareholders than on energy exploration.

Some argue that Exxons profit margin of 8.5% is significantly lower than other blue-chip stocks and that the company is actually not making that much money. But its hard to hear the words “record profits” at a time when there are “record prices.” It doesn’t take much to convince Americans that the two are related.

But the real question is, are the two related? Is a profit margin (defined as the net income divided by revenues) of 8.5% too high for a company that sells a commodity? After all, it is publicly held and must do its best to earn a healthy return for its investors. Aren’t they just doing their job.

After a little research, and a pass through their most recent press release… I’m convinced its a little bit of both. Is Exxon taking advantage of the high gas prices? Probably. Are they the root of all evil and the cause for the $4.95 gas in San Francisco? Probably not.

I spent a few minutes pulling up the most recent financial statements for a few other commodity companies to see if a 8.5% margin was fair. I was surprised to learn it was:

Exxon: 8.5%
Coal: 9.2%
Sugar: 4.6%
Aluminum: 8.3%

Of course this back-of-the-napkin approach has its flaws. An in-depth look into the financial statements of these industries is needed to get a clearer picture. However, it does shed a little light (or at least a little perspective) on the subject of high gas prices.

As much as I would like to blame big oil for the dent in my wallet, I’m not sure it’s entirely their fault.

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Now just a few weeks ago, at the Macworld Expo in San Francisco Apple announced software upgrades to the iPhone, the AppleTV, and the iPod Touch. As expected, the iPhone and AppleTV owners weren’t charged a dime because that type of upgraded was included in the original purchase price.

However, the software update to the iPod Touch was more significant that the others with the addition of five new mobile apps—Mail, Maps, Stocks, Weather, and Notes. So Apple decided that such a significant software upgrade would require $19.99 to activate. Now I have no problem with Apple charging for the new apps. In fact, I think it adds to the perceived value that the iPod Touch has and adds even more value to the software running the iPod Touch as well as the iPhone. What I do have a problem with is everyone and their dog explaining that Apple was forced to charge for the upgrade, citing GAAP accounting principles or even worse, Sarbanes-Oxley.

Doesn’t anybody remember the $1.99 charged for the 802.11n wireless adapter last year? Everyone blamed the extra fee on accounting rules then, just as they are now. But the more stories I read, the more that this argument appears asinine. Why would any company be forced to charge for a product? Hasn’t anyone heard of Google?

The simple fact is that Apple charged $19.99 because they thought the upgrade was worth it. Whether or not you agree is up to you, but it had nothing to do with accounting principles. In fact, I went back and dug up this quote from Lynn Turner, former chief accountant of the Securities and Exchange Commission, which I thought explained the situation perfectly:

“[generally accepted accounting principles] doesn’t require you to charge squat. You charge whatever you want. GAAP doesn’t even remotely address whether or not you charge for a significant functionality change. GAAP establishes what the proper accounting is, based on what you did or didn’t charge for it.”

In this light, the revenue recognition treatment of the iPhone and AppleTV appears reasonable because the accounting rules apply to how the company dealt with the $500 it had already charged customers. In fact, it is probably in Apple’s best interest to “smooth” the earnings of the iPhone over 24 months instead of recognizing it all up front and then explaining subsequent drops in earnings. In that case, the accounting treatment used is a privilege for Apple, not a requirement.

So what happens when a company is doing so bad that the market begins believing it might have to file bankruptcy? They get acquired of course! Bank of America announced today that it would but Countrywide Financial for $4 billion (with a ‘b’). But the fact that Countrywide was willing to take a deal that valued it shares 8.3% below trading levels reveals just how desperate the firm was.

Can you tell when the announcement was made?

Of the deal, Stifel Nicolaus analyst Christopher Brendler said:

“This deal comes together because no one wanted to see Countrywide fail; it is a win-win for everyone involved, but doesn’t indicate that the mortgage problems are behind us.”

But it does mean that BofA will likely become the nation’s largest mortgage lender. Brendler also said Countrywide is no sure bet for BofA. The company still has a dicey portfolio, with $80 billion in high-risk mortgage loans. Several months ago, many of these loans were not considered high risk, but the deterioration of the markets now makes them so

So let’s all give BofA a round of applause for helping to stabilize the lending market (and pick up a a major lending company at WalMart prices) and wish them luck with their new prize!

Warning: when most people read a list like this they get excited and believe they are now able to deduct everything but the kitchen sink. Quoting IRS Publication 535:

To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your industry. A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary.

It is important to distinguish business expenses from:

• The expenses used to figure cost of goods sold,

• Capital expenses, and
• Personal expenses.

Generally, you cannot deduct personal, living, or family expenses. However, if you have an expense for something that is used partly for business and partly for personal purposes, divide the total cost between the business and personal parts. You can deduct the business part.

For example, if you borrow money and use 70% of it for business and the other 30% for a family vacation, you generally can deduct 70% of the interest as a business expense. The remaining 30% is personal interest and generally is not deductible.

I just wanted to warn business owners that you need to be very careful when deducting business expenses, especially when allocating expenses between personal and business use. These types of deductions are audit red flags for the IRS, so be sure to keep detailed records of your justifications for making business deductions.

If you’re looking for a home-based business where you might actually make money, Yahoo Finance has a list of the Top 25 Home-Based Business ideas, including Yoga Instructor, Accounting, Web Design, Gift Baskets, and Computer Repair.

• social networking
• wikis
• communication tools - like chat clients or SMS tools
• it’s constantly in “beta”
• the name usually ends in “r” and doesn’t use any vowels

Ok, so maybe the last two points were a little tongue-in-cheek, but some of the most famous Web 2.0 companies have been Flickr, YouTube, Twitter, Digg, and Del.icio.us - but there are literally hundreds of them out there - with new ones popping up every day.

But a new study released by Ernst & Young and Dow Jones VentureOne at the Web Ventures Conference in California revealed that $844.4 million of Venture Capital (VC) funding was directed into 167 deals last year, more than twice as much money and nearly twice as many deals as occurred in 2005.

You can read the entire synopsis here, but here are some of my favorite parts:

The research shows that on a global basis, Web 2.0 is still in an early stage and there remain relatively few liquidity exits for companies in this space, although there have been particularly noteworthy ones like Google’s (NASDAQ: Goog) US$1.65 billion acquisition last year of YouTube. In addition, because of the nature of this kind of business — which does not seem to require a tremendous amount of technology infrastructure — the research shows that individual deals are relatively modest.

The US dominated the Web 2.0 market, with 126 deals and US$682.7 million invested, an 83% increase in deals from 2005 and a 136% increase in capital. On a sub-regional basis, the San Francisco Bay Area was the busiest region in the US for Web 2.0 deals and was home to more than half of all financings last year. The New York metropolitan area, Southern California and New England also saw tremendous growth in deal flow and investment over 2006.

From the investor perspective, the low capital requirements, potential high return and the faster time from development to revenue are the primary drivers of the increase in venture capital investment in the Web 2.0 segment. In addition, success stories such as YouTube have had a positive impact both on entrepreneurs and investors.

It’s interesting to note, however, that while money is being thrown around like there’s no tomorrow, the experts claim that we are not entering into the dangerous “bubble territory.” Personally, I think it’s a little premature to say that. Sure Web 2.0 is hip, cool, full of AJAXy goodness, and has a lot of strong followers (how many people visit YouTube each day?), but there are very few companies that have turned their innovative web idea of novelty app into some sort of revenue-generating product or service. There’s only so much money you can make off of Adsense and other online advertising, and these Web 2.0 companies are going to have to develop revenue-generating plans. As far as I can see, the VCs seem to be jumping on board the Web 2.0 companies a little too fast, worrying more about being late to the game that making sure that the company is actually going to provide a return from the general population. Right now, it appears the most promising revenue is coming from Web 2.0 companies aimed at servicing the B2B market.

I love the Web 2.0 revolution and the amazing web development that we’ve seen from it - but turning that revolution into a sustainable business model is going to prove to be difficult for most.

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Prosecutors said the deal calls for Hunsaker, DeLia and Depante to complete 96 hours of community service and to make restitution. Because of her health, the court will likely waive the community service requirement for Dunn, who has cancer.

Is there anyone else that thinks this deal is a joke and practically turns this sort of thing into an acceptable practice? 96 hours of community service? Seriously? And to top it all off, Patricia Dunn can run one of the largest companies in the world, but she can’t perform some community service - so she gets off completely free! Not even a slap on the wrist!?

I’m sorry, but this sort of “justice” just makes me sick. People wonder why the Enrons and the WorldComs of the world happen? It start with the small stuff folks, just like this. If you can get away with wire tapping with a slap on the wrist, then it comes as no surprise that corporate fraudsters aren’t too afraid of being caught.

College students generally ask about the level of work-life balance in the world of public accounting for one reason - they are worried about the stories they hear of 80+ hour weeks and are afraid that those stories reflect reality. They don’t want to go from pulling all-nighters during mid-terms to pulling all-nighters for a group of partners that go home at 5pm everyday. And I can understand their fear, because I had the same concerns when I first explored the possibility of joining public accounting. However, many of these students also have an unrealistic idea of “balance.” For some, balance means 9-5 work days so that they can go out with their friends in the evening. The reality? Well, as any one of you who work in any sort of client services industry can attest, the reality is much different.

In the client services industry, the time spent at work isn’t determined by the clock - it’s determined by the client and the expectations that the client has set. For an accountant, that expectation is often a financial statement filing date or April 15th. For a waiter, the expectations is that the food will reach the table in the shortest time possible. For a lawyer, the expectation is to win the case. But most of the time, winning the case doesn’t get done by putting 40 hours a week into the case. Winning the case means going the extra mile and spending those extra hours to make sure the job is done right. And that’s what the client expects - quality.

However, for some reason many students I talk to are instantly disappointed when I tell them they might have to put in some 55+ hour weeks in order to meet deadlines. At the same time, I can honestly tell people that I have a fairly good work-life balance. Why? Because I believe that the key to achieving a work-life balance is perspective. In order to achieve a work-life balance you have to stop thinking in terms of hours or days, or even weeks. In order to achieve work-life balance you have to begin to think in broader terms.

Last week was tough for me, for example. I left work about 8pm or so every night, and didn’t get to see my kids before they went to bed. Last week was not a balance between work and life. This week, however, I was able to go to a Sharks game, come home early to babysit while my wife went out, and leave work early to attend a fun recruiting dinner. If you had asked me last week if I thought I had a work-life balance, I might have said no. If you ask me now if this week was a good balance between work and life I would say no. But if I stand back and take a look at the past few weeks, I can honestly say that I have achieved a good work-life balance.

What’s the point of my rambling? I’m not sure, actually. I think I’m just tired of hearing people complain that they don’t have a good enough balance in their life - when in reality they’re either not taking the proactive steps to create that balance, or they aren’t looking at the broader view which would actually reveal that they have a work-life balance after all.

Shoddy administration.

That’s right, I said it. The health care system in America sucks because of shoddy administration. If any one of America’s public companies were run with the same inefficiencies and ridiculous bureaucracy, the shareholders would bail and the company would be failing for bankruptcy.

When I first began working full time and signed up for one of the several health care options, including a health savings account, I decided to go with Kaiser. I chose Kaiser based on a large number of different factors, but the bottom line is that it was the best fit for my family’s medical needs, and offered the best price.

I haven’t gotten sick since my coverage started, but my kids have - multiple times - requiring a number of different trips to the doctor and a trip to the emergency room for a broken arm. But our health care bureaucratic nightmare began when my wife took the kids to their first Dr. appointment and was told that we were not “in the system.” This was about a month after signing up with the program, so I wasn’t too surprised that it had taken about 6 weeks to process, but my wife had to travel to another building to fill out a mountain of paperwork just to get a temporary card.

Then, at a follow-up visit just a short time later, she was forced to fill out the same paperwork again for another temporary card.

Then, a few weeks later when one of our daughters broke her arm, we were forced to fill out even more paperwork in order to see the Dr. - again, because we weren’t in the system yet. My wife was already upset form the broken arm, but became even more upset when she missed her appointment because filling out paperwork had taken the entire appointment time slot! Luckily, the Dr. recognized how upset she was and took some extra time to see my daughter in between other patients.

A few weeks later, the icing on the cake came… in the mail. After countless phone calls to the HMO trying to get added to the mysterious “system” I finally received a welcome package from Kaiser complete with insurance cards for everyone. However, only three days later I received another welcome package along with 4 new insurance cards - with different numbers. Then a week later I received another welcome pack with insurance cards, and then another!

As of today, I have received 4 different welcome packs with insurance cards along with 2 letters telling me to throw away the previous cards. I have received so much crap from Kaiser in the mail, I don’t know if I’m even covered anymore. With my luck, I’ve been completely deleted from the system and I’m going to have to start this whole hellish nightmare again. I just hope nothing serious happens to me in the meantime…

Why is email (and instant messenger) a horrible way to contact customer service? I’ve broken it down into a few reasons:

• No matter how much you write about your problem, error messages, and steps taken to fix it… NOBODY READS IT
• If the customer service rep doesn’t really want to deal with your problem all he/she has to do is send you a canned reply. By the time you respond to the worthless advice your new email will reach a different customer service rep. No accountability.
• It is next to impossible to talk to a manager.
• The rep can’t hear your frustration, anger, and malice toward them. And you can’t hear the rep eating his bacon double cheeseburger while watching his favorite youTube videos.
• The time between responses can take 10 minutes (via chat) or 3 days (via email). If you have a quick follow-up questions you can pretty much forget it.

Let me give you a recent example of the ineffectiveness of emailing customer service.

A few days ago (3 to be exact) I wrote to the customer service department at the US Postal Service. Since I’ll me be moving soon - but only to a “temporary” home until my permanent one is found - I had a few questions about forwarding my mail twice within such a short period of time. In my email I explained my situation in as much detail as possible. I then asked a series of questions regarding mail forwarding - hoping that at least one of them would be answered. Well, three days later (today) I received this response:

Thank you for visiting our website. It is my understanding that you would like to file for a Change of Address.

I regret that I am unable to process your Change of Address via email. Change of Address request may be submitted in any one of the following ways:

- For a $1.00 verification fee, a domestic Change of Address can be filed online (https://moversguide.usps.com). If you prefer not to pay the $1.00 processing fee, you will be offered the option to print and mail a Change of Address Order.
- For a $1.00 verification fee, a domestic Change of Address request can be filed by telephone (1-800-275-8777).
- You can pick up a Change of Address card at the local Post Office.

Once the card is filled out completely (both sides) and signed, the form may be submitted to the local Post Office, handed to the carrier, or dropped into a collection box (no postage is necessary for a Change of Address card). I apologize for any inconvenience this may cause.

After you have notified the USPS® of your change of address, it could take up to ten postal business days for mail to begin arriving at your new address.

If I can be of assistance to you in the future, please don’t hesitate to contact me.

Thank you for choosing the United States Postal Service.

Regards,

Sovier D

Do you see the problem now with emailing customer service? Sovier D didn’t read one word I wrote! I didn’t want to file for a change of address - I can do that online in 5 minutes. What I did have were about 5 questions regarding the mail forwarding process that never got answered. Now I’m going to have to call or stop by the post office to ask my question… something I should have done at the beginning.