Meet Pete D'Arruda: A man with 25 charge cards, more than a quarter of a million dollars in available credit -- and a lot of financial self-control.
D'Arruda says he has more than $300,000 in available credit thanks to some 25 Visas, Mastercards, and individual store, airlines and gas cards -- or about $12,000 per card. If he throws in his home-equity line of credit, it's close to $400,000.
"It's not taboo to have a bunch of credit cards," said D'Arruda, a personal finance consultant who has been building his credit trove for about five years. "It's about how you manage them."
The founding principal of Capital Financial Advisory Group in Cary, N.C., and author of three personal-finance books is testing the more-is-better theory of credit cards: The more cards and available credit one has, the better the credit score -- assuming, of course, the bills are paid promptly.
With a FICO credit score in the 810-815 range, it's working for him. But credit-agency experts say it's unnecessary and could create a financial maelstrom for those less diligent with their money.
"For many people they would end up with $350,000 in debt and that would not be a very good thing," said Rod Griffin, director of public education for Experian.
D'Arruda charges everything from coffee to the rent for his office space on credit cards. He prides himself on his ability to manage them all and to pay them promptly, keeping himself from falling into a debt spiral.
"I like to pay my bills on time," he said. "Even though I have all those outstanding potential balances, I don't have many outstanding balances."
What he does have, he boasts, is hundreds of thousands of miles and points, numerous discounts and even freebies from retail stores and vacation spots, waived annual fees on some credit cards and better interest rates on insurance and car and home loans. Typically, the higher the credit score, the lower the interest rate. What's more, he's got a running tally through credit-card statements on where he's spent money both personally and for business.
"I'm getting paid to have a good credit score," he said.
He's got a Disney Visa card from Chase -- with Buzz Lightyear on it that entertains his daughter Carrie -- with which he's accumulated enough points to pay for a Disney cruise this Thanksgiving. His platinum American Express card points will cover the airfare to Orlando, Fla.
Even cards with fees are a bonus for D'Arruda. He's got a Visa Black Card, a new elite card with concierge service, access to airport lounges, cash-back rewards or airfare on any airline with no blackouts. He's assessing it for a year to determine if he'll use the rewards programs enough to cover the cost of the $495 annual fee, but he got the fee waived to do so.
"They pulled my credit score and saw that I was a good risk," he said.
Credit scores are calculated through a complicated and proprietary algorithm of measures that differ among scoring agencies. However, there are three major pieces of your credit-score picture that all follow to closely
The most important: Your bill-paying history. It will account for as much as 35% of your total score. Pay all your bills on time. Even if it's just the minimum payment, make sure that bill is marked paid on the designated date -- or sooner. D'Arruda said he sometimes makes two payments a month to keep his balances in order.
Next up is what credit-ratings agencies call the "utilization rate," or your debt-to-available-credit ratio. D'Arruda, who said his typically stands at about 10% to 15% and no more than 25%, began this credit-building experiment based on the simple notion that your credit score is mostly determined by the amount of available credit subtracted by the amount outstanding.
It's a fussier method than that, but your utilization rate is worth some 30% of your score. Creditors don't want to see the ratio over 30% and consider it an important link to your financial acumen and any lifestyle changes you may be facing.
"You don't need a lot of credit cards to have a good utilization rate," said Barry Paperno, consumer operations manager for myfico.com, the consumer arm of credit-scorer FICO. "And obtaining 25 credit cards for your score is overkill. Utilization looks at percentages more than dollars."
Consider it this way: If you have $300,000 in available credit and carried a $30,000 balance, your utilization rate is 10%; if the available credit stands at $3,000 and you charged $300, your utilization rate is the same.
What you must have are credit limits that meet your charging needs, said Steven Katz, senior director of operations for TransUnion, the credit- and information-management company. "You may need a smaller number of cards with higher limits or more cards with smaller limits to stay under that 30% utilization rate."
Don't max out one card over another either in order to keep the utilization rates under 30%, he added. If you take out a store credit card with a $5,000 limit and you charge $4,750 for a home-theater system, your utilization rate on that card will set off alarms.
"It's a good idea to try to keep the balance on each card under 30% of the limit," Katz said. "It will help guide your efforts to keep your overall credit use low."
A perfect score is near impossible to get and having credit but not using it won't get you there. That's doesn't mean that you have to carry a balance that you must then pay interest fees on each month. You just need to use the card and pay it off to maximize your credit score.
"The ideal place to be is under a 10% utilization rate but over 0%," FICO's Paperno said. "There needs to be some kind of recent activity" to activate a score.
Your credit mix and history contribute about 15% to your score. Creditors like to see how you handle revolving credit, or credit cards, and installment loans, like mortgages and car and student loans. They average the age of the accounts divided by the number of accounts. Surprisingly, income doesn't play a very significant part of the credit score.
D'Arruda had a long credit history before he started on this venture and said he was cautious about how much credit he applied for when. That's because your score gets dinged each time it's checked for new credit. Applying for too much credit at once has creditors worried that you're in a financial bind and getting ready to rely on credit you might not pay back.
New accounts opened also impact your score by about 10% for much of the same reason. "Taking on new credit has shown to indicate a higher level of risk," Paperno said. "People who go into default tend to have added new credit more recent than those who haven't."
D'Arruda admits he started collecting credit cards as a personal challenge to see how many he could get before he got cut off. The limits on each card vary, of course, and he's even got an American Express that has no limit, though he's not willing to test what that might mean.
"This is a lesson in discipline," he said. "When you get the credit card, it's like free money. You have to manage them well. It all comes down to not overspending because it's not your money."
And he said he only chooses cards that will help him with points, miles, cash back and other perks. He likes the 30% discounts he gets at Kohl's, for example, and the special sales offered only to Home Depot and Best Buy cardholders. He's a big fan of the Capital One card because it offers double miles.
His tool for limiting credit-card abuse? A metal money clip. It only holds five cards at a time, which helps him to monitor spending.
"You've got to treat it like cash," he said. "You have to pay it back and if you do it wrong, you have to pay a whole bunch more back."
Wednesday, August 24, 2011
Retail Rewards
No money down: Retailers are adding free loyalty programs in addition to store-branded credit cards.
• Don't shop around: Shopping at just three or four stores racks up more loyalty points than buying at many stores.
• Elite perks: The Neiman Marcus credit card, InCircle, tracks what shoppers buy and how they cross-shop the company's different stores including Bergdorf Goodman.
• Combine to conquer: Avoid carrying all those rewards cards. The KeyRing app digitizes program barcodes onto a smartphone. At the register, just scan from the phone.
• Digital divide: Creating a separate email address to give to stores keeps a shopper's primary inbox clear.<
• Big pharma: CVS/Pharmacy ExtraCare rewards program has 67 million members.
• Rewards reapers: About 3 out of 4 Americans belong to a retail loyalty card program.
• Check receipts: Retailers often tack some of the best coupons to the end of a receipt.
• Don't shop around: Shopping at just three or four stores racks up more loyalty points than buying at many stores.
• Elite perks: The Neiman Marcus credit card, InCircle, tracks what shoppers buy and how they cross-shop the company's different stores including Bergdorf Goodman.
• Combine to conquer: Avoid carrying all those rewards cards. The KeyRing app digitizes program barcodes onto a smartphone. At the register, just scan from the phone.
• Digital divide: Creating a separate email address to give to stores keeps a shopper's primary inbox clear.<
• Big pharma: CVS/Pharmacy ExtraCare rewards program has 67 million members.
• Rewards reapers: About 3 out of 4 Americans belong to a retail loyalty card program.
• Check receipts: Retailers often tack some of the best coupons to the end of a receipt.
Why Pay Full Price?
With retailers' rewards programs getting increasingly sophisticated, preferred customers can get discounts: points they can turn into store credit, coupons printed on sales receipts, the opportunity to buy merchandise before the general public -- even secret password and birthday sales.
At Talbots, Black Card customers -- anyone with a store-branded credit card who spends $1,000 annually -- were given a sneak peek and chance to order the spring collection early. Old Navy, the bargain-priced division of Gap Inc., had a secret sale last year, with its $8.50 camisoles for $2. To receive the discount, shoppers had to flash a coupon or say to a sales associate "Cami for me." The clothing store Anthropologie offers discounts to Anthro card members on their birthdays. DSW does as well, along with another coupon on shoppers' half-birthdays.
[More from WSJ.com: The Online World of Female Desire]
What began as a barcode fob for grocery store coupons in the 1990s has evolved into a high-tech way for retailers to track the every move of their biggest, most-frequent spenders. Stores can market to shoppers directly based on the products they buy, aiming to win an even greater share of their wallets, in retailer parlance. Of course, to reap rewards, shoppers must first establish themselves as frequent customers. About three out of four Americans belong to a retail loyalty card program, according to ACI Worldwide, which handles electronics payment for hundreds of retailers and financial institutions.
This discounts are worth it to stores in order to keep the most loyal customers happy. Fifteen percent of a retailer's most loyal customers can account for as much as half of its sales, says Keith Jelinek, director in the retail division of consulting firm AlixPartners. It takes between 12 and 20 new customers to replace a lost loyal customer, says Keith Colbourn, vice president, global loyalty practice leader at Dunnhumby, an analytics firm that works with retail giants Tesco PLC and Macy's Inc.
CVS/Pharmacy connected its rewards program with its social media efforts. Just before Easter, CVS/Pharmacy asked its Facebook fans to vote on whether they liked Cadbury Creme Eggs or marshmallow Peeps. Coupons for the winning item -- $1 off two eggs -- were loaded into the in-store coupon center for one day. "We delivered real value, instantaneously, on the basis of their interests," says Rob Price, chief marketing officer for CVS/Pharmacy, the retail division of CVS Caremark Corp. (NYSE: CVS - News).
To get discounts, shoppers must hand over personal data. Often, the more details given, the more discounts received, which brings up the issue of data privacy and the corresponding pitfalls.
Floor staff at J.Crew, Ann Taylor and other retailers routinely ask shoppers for their email addresses and nearly every chain store, from Walgreens to Wet Seal, has a spot on its website for consumers to sign up to receive store emails. It's a quick, cheap way for a retailer to tell shoppers about deals and discounts -- and arguably the least invasive piece of information a shopper can give a retailer.
In order to receive their emails, many retailers also will require a name and, in some cases a ZIP code or a date of birth. Some take it a step further and ask users to set up an online account that requires a login, allowing a retailer to track how often they visit the site, as well as what items draw their attention.
At J.C. Penney, shoppers can give a cellphone number to receive as many as eight mobile coupons a month. Old Navy shoppers can receive text messages with details on the featured item of the week.
[More from WSJ.com: Looking to Speed Security for Frequent Fliers]
To sign up for a retailer's loyalty program usually requires name, mailing address and telephone number. These programs assign shoppers a number, often a barcode or a phone number, essentially applying a digital tracking number to each customer.
DSW uses this barcode-generated purchase data to make its marketing more relevant. "If someone is only interested in buying hiking boots, there's probably not a lot of point in talking to them about the latest high heels that have come in," says Derek Ungless, chief marketing officer.
Supermarket chain Kroger Co. (NYSE: KR - News) sends individualized mailings to millions of its rewards program members several times a year. The packets of coupons from the store as well as its suppliers are based on each shopper's habits. "Like snowflakes, no two are alike," says Ted Sarosy, vice president of loyalty for Kroger.
Now, retailers are devising ways to track barcode holders outside the store. CVS, which has 67 million loyalty card members, recently offered fans of its Beauty Club Facebook page a free antibacterial product. For the voucher, shoppers had to enter their ExtraCare number and email address. "That's another way for us to fingerprint the customer to give them more personalized value," said CVS's Mr. Price.
More than 7,100 CVS locations have in-store coupon centers, computerized columns that, when shoppers swipe a rewards card, spit out personalized coupons. The center is designed to "influence their shopping visit that day," says Mr. Price. The deals attached to a receipt are meant to encourage another visit.
The most details a consumer gives are through a branded credit card, which provides detailed financial information. To encourage use of its credit card, Target Corp. (NYSE: TGT - News) began last fall offering shoppers 5% off every purchase with its branded credit card, the only loyalty program offered by the big box chain.
With Gap Inc.'s credit card program, shoppers get advance notice of sales, exclusive offers and 10% off all Tuesday purchases. Shoppers receive five points for each dollar spent at one of the company's brands.
Neiman Marcus Group Inc.'s loyalty program, InCircle, is a credit card that can only be used at Neiman Marcus's five divisions, which include Bergdorf Goodman and Last Call. The card allows the retailer to keep track of purchases, as well as shopping frequency and any cross-shopping among its brands. The loyalty program "can retain customers, it can get new customers, it could win back anybody who has lapsed," says Maggie Lucas, director of marketing.
[More from WSJ.com: Do's and Don'ts for Online Fashion Shopping]
Although the majority of apparel and accessories retailers tie their loyalty program to a credit card, some companies have begun to unbundle the two as skittish customers have shunned credit in favor of cash or debit payments.
By adding a non-credit-card loyalty program with free enrollment, retailers widen the appeal of the rewards program. Chains with non-credit card loyalty programs include Sears Holdings Corp., which includes Kmart, Modell's Sporting Goods and teen retailer American Eagle Outfitters Inc.
Women's clothing chain Talbots Inc. split its rewards program into three parts in 2009 as part of a brand overhaul. Along with its existing charge card, the company added a non-credit card, allowing it to capture information about its in-store shoppers similar to that of online shoppers. If someone makes a purchase online or through the catalogue, "we instantly capture her information," says Lori Wagner, chief marketing officer.
Most systems dole out points based on the amount spent. Members of the DSW Rewards program earn a $10 certificate for every 1,500 points earned. (Points differ based on full price or clearance items, but equate to roughly 10 points per $1 spent.) Customers who rack up more than 6,000 points each year achieve Premiere Rewards status. That top tier of customers can receive triple points on purchases two days a year of their choosing.
The company mails out certificates to its 16 million rewards members because customers have said they prefer that method. "It's not a bill," says Kelly Cook, vice president of customer strategy and engagement. "It is happiness."
Unrewarding
Privacy concerns: Each rewards program has a statement outlining a retailer's privacy policies. Read it carefully to know what information is being collected, where your information will be used and what other companies it may be given to without your knowledge.
To unsubscribe: Getting off a retailer's email list is usually pretty easy. Find an email from the retailer in question, scroll to the bottom and look for a link that says "Unsubscribe," often in tiny print. If you have an account on a retailer's website, login and search for the unsubscribe option in your account settings.
Opting out entirely: Opening a loyalty card is much easier than closing one. To opt out, shoppers often need to take their card to a store to speak to an associate or send a written request to the company directly to close an account. Ask the retailer to discontinue use of your information entirely, including third-party distribution.
At Talbots, Black Card customers -- anyone with a store-branded credit card who spends $1,000 annually -- were given a sneak peek and chance to order the spring collection early. Old Navy, the bargain-priced division of Gap Inc., had a secret sale last year, with its $8.50 camisoles for $2. To receive the discount, shoppers had to flash a coupon or say to a sales associate "Cami for me." The clothing store Anthropologie offers discounts to Anthro card members on their birthdays. DSW does as well, along with another coupon on shoppers' half-birthdays.
[More from WSJ.com: The Online World of Female Desire]
What began as a barcode fob for grocery store coupons in the 1990s has evolved into a high-tech way for retailers to track the every move of their biggest, most-frequent spenders. Stores can market to shoppers directly based on the products they buy, aiming to win an even greater share of their wallets, in retailer parlance. Of course, to reap rewards, shoppers must first establish themselves as frequent customers. About three out of four Americans belong to a retail loyalty card program, according to ACI Worldwide, which handles electronics payment for hundreds of retailers and financial institutions.
This discounts are worth it to stores in order to keep the most loyal customers happy. Fifteen percent of a retailer's most loyal customers can account for as much as half of its sales, says Keith Jelinek, director in the retail division of consulting firm AlixPartners. It takes between 12 and 20 new customers to replace a lost loyal customer, says Keith Colbourn, vice president, global loyalty practice leader at Dunnhumby, an analytics firm that works with retail giants Tesco PLC and Macy's Inc.
CVS/Pharmacy connected its rewards program with its social media efforts. Just before Easter, CVS/Pharmacy asked its Facebook fans to vote on whether they liked Cadbury Creme Eggs or marshmallow Peeps. Coupons for the winning item -- $1 off two eggs -- were loaded into the in-store coupon center for one day. "We delivered real value, instantaneously, on the basis of their interests," says Rob Price, chief marketing officer for CVS/Pharmacy, the retail division of CVS Caremark Corp. (NYSE: CVS - News).
To get discounts, shoppers must hand over personal data. Often, the more details given, the more discounts received, which brings up the issue of data privacy and the corresponding pitfalls.
Floor staff at J.Crew, Ann Taylor and other retailers routinely ask shoppers for their email addresses and nearly every chain store, from Walgreens to Wet Seal, has a spot on its website for consumers to sign up to receive store emails. It's a quick, cheap way for a retailer to tell shoppers about deals and discounts -- and arguably the least invasive piece of information a shopper can give a retailer.
In order to receive their emails, many retailers also will require a name and, in some cases a ZIP code or a date of birth. Some take it a step further and ask users to set up an online account that requires a login, allowing a retailer to track how often they visit the site, as well as what items draw their attention.
At J.C. Penney, shoppers can give a cellphone number to receive as many as eight mobile coupons a month. Old Navy shoppers can receive text messages with details on the featured item of the week.
[More from WSJ.com: Looking to Speed Security for Frequent Fliers]
To sign up for a retailer's loyalty program usually requires name, mailing address and telephone number. These programs assign shoppers a number, often a barcode or a phone number, essentially applying a digital tracking number to each customer.
DSW uses this barcode-generated purchase data to make its marketing more relevant. "If someone is only interested in buying hiking boots, there's probably not a lot of point in talking to them about the latest high heels that have come in," says Derek Ungless, chief marketing officer.
Supermarket chain Kroger Co. (NYSE: KR - News) sends individualized mailings to millions of its rewards program members several times a year. The packets of coupons from the store as well as its suppliers are based on each shopper's habits. "Like snowflakes, no two are alike," says Ted Sarosy, vice president of loyalty for Kroger.
Now, retailers are devising ways to track barcode holders outside the store. CVS, which has 67 million loyalty card members, recently offered fans of its Beauty Club Facebook page a free antibacterial product. For the voucher, shoppers had to enter their ExtraCare number and email address. "That's another way for us to fingerprint the customer to give them more personalized value," said CVS's Mr. Price.
More than 7,100 CVS locations have in-store coupon centers, computerized columns that, when shoppers swipe a rewards card, spit out personalized coupons. The center is designed to "influence their shopping visit that day," says Mr. Price. The deals attached to a receipt are meant to encourage another visit.
The most details a consumer gives are through a branded credit card, which provides detailed financial information. To encourage use of its credit card, Target Corp. (NYSE: TGT - News) began last fall offering shoppers 5% off every purchase with its branded credit card, the only loyalty program offered by the big box chain.
With Gap Inc.'s credit card program, shoppers get advance notice of sales, exclusive offers and 10% off all Tuesday purchases. Shoppers receive five points for each dollar spent at one of the company's brands.
Neiman Marcus Group Inc.'s loyalty program, InCircle, is a credit card that can only be used at Neiman Marcus's five divisions, which include Bergdorf Goodman and Last Call. The card allows the retailer to keep track of purchases, as well as shopping frequency and any cross-shopping among its brands. The loyalty program "can retain customers, it can get new customers, it could win back anybody who has lapsed," says Maggie Lucas, director of marketing.
[More from WSJ.com: Do's and Don'ts for Online Fashion Shopping]
Although the majority of apparel and accessories retailers tie their loyalty program to a credit card, some companies have begun to unbundle the two as skittish customers have shunned credit in favor of cash or debit payments.
By adding a non-credit-card loyalty program with free enrollment, retailers widen the appeal of the rewards program. Chains with non-credit card loyalty programs include Sears Holdings Corp., which includes Kmart, Modell's Sporting Goods and teen retailer American Eagle Outfitters Inc.
Women's clothing chain Talbots Inc. split its rewards program into three parts in 2009 as part of a brand overhaul. Along with its existing charge card, the company added a non-credit card, allowing it to capture information about its in-store shoppers similar to that of online shoppers. If someone makes a purchase online or through the catalogue, "we instantly capture her information," says Lori Wagner, chief marketing officer.
Most systems dole out points based on the amount spent. Members of the DSW Rewards program earn a $10 certificate for every 1,500 points earned. (Points differ based on full price or clearance items, but equate to roughly 10 points per $1 spent.) Customers who rack up more than 6,000 points each year achieve Premiere Rewards status. That top tier of customers can receive triple points on purchases two days a year of their choosing.
The company mails out certificates to its 16 million rewards members because customers have said they prefer that method. "It's not a bill," says Kelly Cook, vice president of customer strategy and engagement. "It is happiness."
Unrewarding
Privacy concerns: Each rewards program has a statement outlining a retailer's privacy policies. Read it carefully to know what information is being collected, where your information will be used and what other companies it may be given to without your knowledge.
To unsubscribe: Getting off a retailer's email list is usually pretty easy. Find an email from the retailer in question, scroll to the bottom and look for a link that says "Unsubscribe," often in tiny print. If you have an account on a retailer's website, login and search for the unsubscribe option in your account settings.
Opting out entirely: Opening a loyalty card is much easier than closing one. To opt out, shoppers often need to take their card to a store to speak to an associate or send a written request to the company directly to close an account. Ask the retailer to discontinue use of your information entirely, including third-party distribution.
Things Your Neighbors Won't Tell You
1. "Complaining will cost you dearly."
When Richard Laermer and his partner moved into a Manhattan co-op, his next door neighbor invited them over to dinner. "We had a lovely wine-infused time," recalls Laermer, a PR executive. But those good times didn't last. A few short weeks after breaking bread, Laermer left a Post-It note on the neighbor's door asking if her kids could be quieter in the mornings. The neighbor responded by cutting off all contact.
Falling out with your neighbors can mean more than just uncomfortable meetings in the hallway or front yard, added stress and sleepless nights. A bitter neighbor has the power to block renovations that could improve the value of your home and sue you over anything from a barking dog to street parking. When Laermer, for example, wanted to change the position of his apartment's front door to create an alcove, his neighbor threatened to sue because it would infringe on her privacy. "It would have added $75,000 to the value of our home," he says. After five years of the silent treatment, the couple moved in 2007 to friendlier climes in Connecticut, he says. "Try to build a good relationship with your neighbors because friends usually don't sue friends," says Robert W. Zierman, a lawyer who practices boundary dispute law in Seattle.
2. "I will use your Wi-Fi -- and get you arrested."
Nearly one-third of Americans admit to using their neighbor's Internet service, nearly double the number from two years ago, according to a national survey by the non-profit Wifi Alliance Trade Alliance. Such thieving can push your data usage above its monthly limit and increase your Wi-Fi bill, says McCall Butler, a spokeswoman for AT&T, who recommends that customers protect their Wi-Fi network with a password and change it regularly. Worse, there's no controlling what Wi-Fi thieves do with your signal, and if what they're doing is illegal, you could be in hot water.
Barry Covert, a lawyer based in Buffalo, N.Y., is currently representing two clients -- one in Buffalo, N.Y. and one in Milford, Mass. -- who he says had their wireless internet hijacked by neighbors to download child pornography. The clients are no longer facing charges -- the U.S. Attorney's Office and Immigration and Customs Enforcement, a division of the Department of Homeland Security, issued an official apology in March to the family in Buffalo, and the Federal Bureau of Investigations told SmartMoney.com that the agency believed the people in Milford were innocent. Neither case went to court, but if they had, Covert says legal fees could have run to $100,000.
The solution is simple: Secure your Wi-Fi, and change the password regularly. It's not failsafe, but it sets up an obstacle, and that can be enough to encourage a thief to move on to the house down the block. "If you use technology, you need to know how it can be used against you," Covert says.
3. "Good luck blocking out our din."
Unofficially, the biggest complaint people have about their neighbors is noise, says Bob Borzotta, who has conducted online polls on the issue at his website NeighborsFromHell.com. That includes barking dogs, loud music, car and house alarms and domestic arguments. And these aren't the constant complaints of a neighborhood killjoy. "I know two people who ended up having intestinal surgery because of anxiety related to long-running disputes with neighbors over noise," Borzotta says. Lost sleep and noisy neighbors can mean hefty doctor's bills to deal with anxiety and stress. People who suffer from psychological distress spend an average of $1,735 more on health care each year than lower-stress folks, according to research published last month by researchers at the Medical University at South Carolina. Another option -- soundproofing -- can cost $200 for one wall between you and the noisy neighbor and $300 for the ceiling, according to Ted White, president of the Michigan-based Soundproofing Company. Soundproof Windows range from $350 to $900 per window, according to Reno, Nevada-based Soundproof Windows Inc.
4. "I'm a registered sex offender."
For obvious reasons, this may be the last thing in the world your neighbor will tell you, but it's important, even for people who don't have children. Thanks to the Sexual Offender Act of 1994, also called "Megan's Law," people convicted of sex crimes must notify local law enforcement of any change of address or employment post-prison. That information is then made public, via the National Sex Offender Registry. And as would-be home buyers use these tools right along with Zillow to evaluate their future neighborhoods, the presence of a convicted sex-offender can hurt property values. A study by the researchers in Longwood College and Longwood University in Virginia said that registered sex offenders living nearby can reduce your home's value by 9% and homes near registered sex offenders can take over 70% longer to sell.
5. "We're ripping up the flower beds and planting corn."
Forget Farmville. About 43 million Americans now grow their own fruits, vegetables, berries and herbs, according to a 2009 National Gardening Association report, up 19% over the previous year. But what's good for the farmer isn't necessarily so good for his neighbors. A Virginia Tech study from 2009 suggested that landscaping and pristine lawns help increase property values by an average of 7.5%. A home valued at $150,000 with no landscaping could be worth up to from $8,000 to $19,000 more with a sophisticated landscape with color and large plants, the study said: "Relatively large landscape expenditures significantly increase perceived home value and will result in a higher selling price than homes with a minimal landscape."
At least if your neighbor decides to plow her garden, perhaps she'll share the harvest. Cat Rocketship, 27, ripped up her lawn when she moved to a settled neighborhood in Des Moines, Iowa, and planted soy beans, corn, squash, tomatoes and peppers. But now, she says, "we're feeding at least two families with the vegetables we're growing."
6. "My apartment has bed bugs."
It only takes one embarrassed and silent neighbor with a mattress full of bed bugs to infect an entire apartment building. In one recent study, the arrival of a single suspected bedbug resulted in infestation in 45% of the units in a 233-unit apartment building within three years. Getting rid of the pests is hard -- it may take several cycles of extreme extermination, and around $550 for a typical one-bedroom apartment, according to San Francisco-based exterminator Dan Fitzsimmons.
In some cases, landlords have to tell new tenants about infestations. New York, which has suffered from a rise in bed bugs infestations in recent years, requires it by law. But neighbors can keep their own bed bug problems to themselves, and if the critters creep from their apartment to yours, it's not always clear who's on the hook. In some cases, the landlord will cover the costs; in others it's the tenant's responsibility. The only thing would-be tenants can look for, beyond asking the landlord, is obvious signs of filth: The more unhygienic the neighbor, the greater the odds of an infestation.
When Richard Laermer and his partner moved into a Manhattan co-op, his next door neighbor invited them over to dinner. "We had a lovely wine-infused time," recalls Laermer, a PR executive. But those good times didn't last. A few short weeks after breaking bread, Laermer left a Post-It note on the neighbor's door asking if her kids could be quieter in the mornings. The neighbor responded by cutting off all contact.
Falling out with your neighbors can mean more than just uncomfortable meetings in the hallway or front yard, added stress and sleepless nights. A bitter neighbor has the power to block renovations that could improve the value of your home and sue you over anything from a barking dog to street parking. When Laermer, for example, wanted to change the position of his apartment's front door to create an alcove, his neighbor threatened to sue because it would infringe on her privacy. "It would have added $75,000 to the value of our home," he says. After five years of the silent treatment, the couple moved in 2007 to friendlier climes in Connecticut, he says. "Try to build a good relationship with your neighbors because friends usually don't sue friends," says Robert W. Zierman, a lawyer who practices boundary dispute law in Seattle.
2. "I will use your Wi-Fi -- and get you arrested."
Nearly one-third of Americans admit to using their neighbor's Internet service, nearly double the number from two years ago, according to a national survey by the non-profit Wifi Alliance Trade Alliance. Such thieving can push your data usage above its monthly limit and increase your Wi-Fi bill, says McCall Butler, a spokeswoman for AT&T, who recommends that customers protect their Wi-Fi network with a password and change it regularly. Worse, there's no controlling what Wi-Fi thieves do with your signal, and if what they're doing is illegal, you could be in hot water.
Barry Covert, a lawyer based in Buffalo, N.Y., is currently representing two clients -- one in Buffalo, N.Y. and one in Milford, Mass. -- who he says had their wireless internet hijacked by neighbors to download child pornography. The clients are no longer facing charges -- the U.S. Attorney's Office and Immigration and Customs Enforcement, a division of the Department of Homeland Security, issued an official apology in March to the family in Buffalo, and the Federal Bureau of Investigations told SmartMoney.com that the agency believed the people in Milford were innocent. Neither case went to court, but if they had, Covert says legal fees could have run to $100,000.
The solution is simple: Secure your Wi-Fi, and change the password regularly. It's not failsafe, but it sets up an obstacle, and that can be enough to encourage a thief to move on to the house down the block. "If you use technology, you need to know how it can be used against you," Covert says.
3. "Good luck blocking out our din."
Unofficially, the biggest complaint people have about their neighbors is noise, says Bob Borzotta, who has conducted online polls on the issue at his website NeighborsFromHell.com. That includes barking dogs, loud music, car and house alarms and domestic arguments. And these aren't the constant complaints of a neighborhood killjoy. "I know two people who ended up having intestinal surgery because of anxiety related to long-running disputes with neighbors over noise," Borzotta says. Lost sleep and noisy neighbors can mean hefty doctor's bills to deal with anxiety and stress. People who suffer from psychological distress spend an average of $1,735 more on health care each year than lower-stress folks, according to research published last month by researchers at the Medical University at South Carolina. Another option -- soundproofing -- can cost $200 for one wall between you and the noisy neighbor and $300 for the ceiling, according to Ted White, president of the Michigan-based Soundproofing Company. Soundproof Windows range from $350 to $900 per window, according to Reno, Nevada-based Soundproof Windows Inc.
4. "I'm a registered sex offender."
For obvious reasons, this may be the last thing in the world your neighbor will tell you, but it's important, even for people who don't have children. Thanks to the Sexual Offender Act of 1994, also called "Megan's Law," people convicted of sex crimes must notify local law enforcement of any change of address or employment post-prison. That information is then made public, via the National Sex Offender Registry. And as would-be home buyers use these tools right along with Zillow to evaluate their future neighborhoods, the presence of a convicted sex-offender can hurt property values. A study by the researchers in Longwood College and Longwood University in Virginia said that registered sex offenders living nearby can reduce your home's value by 9% and homes near registered sex offenders can take over 70% longer to sell.
5. "We're ripping up the flower beds and planting corn."
Forget Farmville. About 43 million Americans now grow their own fruits, vegetables, berries and herbs, according to a 2009 National Gardening Association report, up 19% over the previous year. But what's good for the farmer isn't necessarily so good for his neighbors. A Virginia Tech study from 2009 suggested that landscaping and pristine lawns help increase property values by an average of 7.5%. A home valued at $150,000 with no landscaping could be worth up to from $8,000 to $19,000 more with a sophisticated landscape with color and large plants, the study said: "Relatively large landscape expenditures significantly increase perceived home value and will result in a higher selling price than homes with a minimal landscape."
At least if your neighbor decides to plow her garden, perhaps she'll share the harvest. Cat Rocketship, 27, ripped up her lawn when she moved to a settled neighborhood in Des Moines, Iowa, and planted soy beans, corn, squash, tomatoes and peppers. But now, she says, "we're feeding at least two families with the vegetables we're growing."
6. "My apartment has bed bugs."
It only takes one embarrassed and silent neighbor with a mattress full of bed bugs to infect an entire apartment building. In one recent study, the arrival of a single suspected bedbug resulted in infestation in 45% of the units in a 233-unit apartment building within three years. Getting rid of the pests is hard -- it may take several cycles of extreme extermination, and around $550 for a typical one-bedroom apartment, according to San Francisco-based exterminator Dan Fitzsimmons.
In some cases, landlords have to tell new tenants about infestations. New York, which has suffered from a rise in bed bugs infestations in recent years, requires it by law. But neighbors can keep their own bed bug problems to themselves, and if the critters creep from their apartment to yours, it's not always clear who's on the hook. In some cases, the landlord will cover the costs; in others it's the tenant's responsibility. The only thing would-be tenants can look for, beyond asking the landlord, is obvious signs of filth: The more unhygienic the neighbor, the greater the odds of an infestation.
The Tricks Behind Infomercial Get-Rich Pitches
As an impulse buy, you might plunk down a few bucks for a Shamwow, an Aluma Wallet or a Shake Weight. But would a TV infomercial persuade you to part with thousands of dollars on a get-rich-quick scheme?
There are many thousands who would and do. If there were no suckers, there wouldn't be so many get-rich ads on TV.
The persuasiveness of infomercials works on multiple levels. They often appear on reputable financial news channels, giving them an air of respectability and, perhaps, giving naive viewers a sense they are either regular programming or geared to the "insiders."
At a time many Americans are out of work and overextended by debt, the prospect of a streamlined path to wealth can be an easy sell. The offerings promise lucrative earnings and back up those testimonials with satisfied customers bragging of stellar successes.
As is so often a rule to live by: If it sounds too good to be true, it probably isn't. No amount of celebrity endorsements or alleged success stories can change that when it comes to infomercials.
Broadly speaking, this subset of infomercials creeps along the fine line between common advertising hyperbole and outright misrepresentation. For the most part, these are not fly-by-night con artists or overseas spammers. Many of the familiar faces in infomercials have been at it for years. There really are books, charts, DVDs and mentoring services, as promised; the catch is that you won't always get them by calling a phone number or attending a free seminar. The deal you see on TV is typically no more than a means to hook you into buying added materials that can cost hundreds or thousands of dollars over time.
And as for those promised results, echoed in rose-colored testimonials, they are often either exaggerations, aberrations or outright lies.
Last month, the Federal Trade Commission went after one prominent infomercial king and joined forces with Colorado Attorney General John Suthers to take the uncommon step of going after a woman who offered a testimonial.
Russell Dalbey, CEO and founder of the company behind the "wealth-building" program "Winning in the Cash Flow Business" is charged by the FTC with defrauding consumers with what were described as "phony claims that they could make large amounts of money quickly."
"When someone is selling a program designed to help people make money, they have to accurately describe how much consumers can expect to make and be truthful about how quickly they will be able to do so," says David Vladeck, director of the FTC's Bureau of Consumer Protection. "None of that happened in this case, and people who bought the program paid the price."
According to the FTC, "millions of consumers nationwide" saw infomercials for Winning in the Cash Flow Business hosted by TV personality Gary Collins. The program claimed to teach customers how to find, broker and earn commissions on seller-financed promissory notes -- privately held mortgages or notes often secured by the home or land that is the subject of the loan.
"You'll be amazed at just how easy it is to generate a stream of extra income every month. Build financial freedom and a better quality of life in just minutes a day. Or even retire earlier than you ever dreamed possible. Order now and you'll be ready to profit in minutes," one of the infomercials claimed.
The complaint says consumers spent approximately $40 to $160 on the initial program and were later encouraged to spend hundreds or thousands of dollars more on additional products and services.
Promoting the "system" were testimonials from consumers who claimed to have made "$1.2 million in 30 days," "$79,000 in a few hours" and "$262,216 part time."
The FTC and Colorado's AG charged Marsha Kellogg with falsely claiming she earned $79,975.01 from one transaction using Dalbey's program, and that her total earnings were more than $134,000. The complaint alleges she earned $50,000 less than what she claimed.
The charges faced by Dalbey come as no surprise to Suzann Bacon, vice president of operations for the Better Business Bureau's Denver office.
"We've been working with this particular case since 2003. It has been a long time," she says. "It is not just the infomercials, it is the whole business model in this particular case. It is a really small handful of folks who made money with what they are selling."
The BBB did initially accredit Dalbey's company in 2003, but revoked that seal of approval within a year.
Bacon's office has collected 170 complaints related to infomercials in the past three years, most about service, sales practices and false advertising.
A common tactic the BBB looks for in its reviews are fraudulent claims that may not relate directly to the content of what is offered -- claiming something is a "limited time offer" or a "$100 value," for instance, even though the promotion is constant and the pricing arbitrary.
"In an economy of today, when people are looking for jobs and everything is so slow, people are looking for something that is too good to be true," Bacon says.
Dalbey is not the only infomercial star to face legal woes.
In 2008, Utah residents Linda Woolf and David Gengler were charged in connection to the "Teach Me to Trade" stock-picking system. Customers paid between $3,000 to $40,000 to learn the system, even though the duo were, in the words of the Securities and Exchange Commission, "unsuccessful traders." Combined, they earned more than $6 million selling the product.
An SEC complaint alleges that at their workshop presentations between 2003-06, Woolf and Gengler made false and misleading statements to sell TMTT packages of personal mentoring, software and classes, often targeting retirees. In his workshops, Gengler urged investors to borrow against their retirement accounts to buy these products, the SEC says.
This month a federal judge in Texas sentenced Eric Rulack Farrington, another infomercial star, to 11 years in prison for "orchestrating a multimillion-dollar mortgage fraud scheme in the Dallas area." He was also ordered to pay approximately $1.6 in restitution and forfeit approximately $1.2 million to the U.S.
Author Kevin Trudeau's infomercial for "Free Money -- They Don't Want You to Know About" is a variation of the infomercials once made popular by Martin Lesko (known for wearing a Riddler-like suit adorned with question marks).
Trudeau, perhaps trying to appeal to a tea party sensibility even as he espouses how to collect no-strings-attached money from the government, spends much of the infomercial promoting these secrets as though they were divined from the "Da Vinci Code." The government wants him taken down, you see, because the information he espouses is dangerous. In reality, it appears to be a revisited list of various government programs, most of which can be easily found with an Internet search.
The consumer news and advocacy site ConsumerAffairs.com, however, has logged numerous complaints that ordering Trudeau's books has led to pushy upsells and being charged for additional, unwanted products.
Real estate, in particular, is a ripe category for infomercials, with many offering tips on how to buy and flip distressed property. It's a theme many may have first seen via the late-1980s infomercials featuring Tom Vu, a Vietnamese immigrant who claimed to have amassed a fortune by flipping property.
Dean Graziosi's "Real Estate & Foreclosure Profits" program is a near constant presence on late-night TV.
Graziosi, a self-proclaimed real estate mogul who rose to that status after a poverty-ridden childhood, seeks to inform those who buy his system of how the current housing downturn can be tapped.
He claims various methods allow users to buy property for as little as a few hundred bucks, and that the housing market has already bottomed out and is ready to soar once again. For $19.95 you can order a copy of Graziosi's book and learn his secrets. One can be assured, though, that the disclaimer that "Some students may have purchased optional support program. Results not typical" means buyers will get still more sales calls promoting more expensive materials. To Graziosi's credit, the majority of complaints logged with the Better Business Bureau in his home base of Arizona were "resolved," and he retain a sizable Internet following.
Armando Montelongo parlayed exposure as former host of the A&E network's "Flip This House" into a national slate of free seminars promoting the tactics needed to buy and fix up run-down property for profit. His infomercial boasts that he is "America's No. 1 and top real estate investing expert."
An investigation by a Nashville TV station WTVF, Channel 5, however, found that the seminar was little more than a pitch to buy a follow-up event for $1,500. Despite infomercial claims Montelongo would be present at the seminars (free or paid), he failed to appear.
The reporters learned that Montelongo had 30 seminars that week across the nation and didn't go to any. Actual face time, they said (citing complaints received by the Texas Attorney General's Office) would set you back upward of $20,000.
The news team also uncovered that one of the star pupils in the infomercial faced eviction and multiple foreclosures in Nevada. Another claimed to have made $110,000 in eight months, despite the reality of having declared bankruptcy and not having earned more than $17,000 a year.
Also, while it may be possible to buy distressed properties and flip them when the economy improves, do you have the means to travel to where the properties are, assess them and the surrounding neighboring, buy them, fix them up and maintain them, pay the taxes on each and sell them for a profit possibly years later when the time comes? if you have a job already, the answer is almost certainly not.
There are many thousands who would and do. If there were no suckers, there wouldn't be so many get-rich ads on TV.
The persuasiveness of infomercials works on multiple levels. They often appear on reputable financial news channels, giving them an air of respectability and, perhaps, giving naive viewers a sense they are either regular programming or geared to the "insiders."
At a time many Americans are out of work and overextended by debt, the prospect of a streamlined path to wealth can be an easy sell. The offerings promise lucrative earnings and back up those testimonials with satisfied customers bragging of stellar successes.
As is so often a rule to live by: If it sounds too good to be true, it probably isn't. No amount of celebrity endorsements or alleged success stories can change that when it comes to infomercials.
Broadly speaking, this subset of infomercials creeps along the fine line between common advertising hyperbole and outright misrepresentation. For the most part, these are not fly-by-night con artists or overseas spammers. Many of the familiar faces in infomercials have been at it for years. There really are books, charts, DVDs and mentoring services, as promised; the catch is that you won't always get them by calling a phone number or attending a free seminar. The deal you see on TV is typically no more than a means to hook you into buying added materials that can cost hundreds or thousands of dollars over time.
And as for those promised results, echoed in rose-colored testimonials, they are often either exaggerations, aberrations or outright lies.
Last month, the Federal Trade Commission went after one prominent infomercial king and joined forces with Colorado Attorney General John Suthers to take the uncommon step of going after a woman who offered a testimonial.
Russell Dalbey, CEO and founder of the company behind the "wealth-building" program "Winning in the Cash Flow Business" is charged by the FTC with defrauding consumers with what were described as "phony claims that they could make large amounts of money quickly."
"When someone is selling a program designed to help people make money, they have to accurately describe how much consumers can expect to make and be truthful about how quickly they will be able to do so," says David Vladeck, director of the FTC's Bureau of Consumer Protection. "None of that happened in this case, and people who bought the program paid the price."
According to the FTC, "millions of consumers nationwide" saw infomercials for Winning in the Cash Flow Business hosted by TV personality Gary Collins. The program claimed to teach customers how to find, broker and earn commissions on seller-financed promissory notes -- privately held mortgages or notes often secured by the home or land that is the subject of the loan.
"You'll be amazed at just how easy it is to generate a stream of extra income every month. Build financial freedom and a better quality of life in just minutes a day. Or even retire earlier than you ever dreamed possible. Order now and you'll be ready to profit in minutes," one of the infomercials claimed.
The complaint says consumers spent approximately $40 to $160 on the initial program and were later encouraged to spend hundreds or thousands of dollars more on additional products and services.
Promoting the "system" were testimonials from consumers who claimed to have made "$1.2 million in 30 days," "$79,000 in a few hours" and "$262,216 part time."
The FTC and Colorado's AG charged Marsha Kellogg with falsely claiming she earned $79,975.01 from one transaction using Dalbey's program, and that her total earnings were more than $134,000. The complaint alleges she earned $50,000 less than what she claimed.
The charges faced by Dalbey come as no surprise to Suzann Bacon, vice president of operations for the Better Business Bureau's Denver office.
"We've been working with this particular case since 2003. It has been a long time," she says. "It is not just the infomercials, it is the whole business model in this particular case. It is a really small handful of folks who made money with what they are selling."
The BBB did initially accredit Dalbey's company in 2003, but revoked that seal of approval within a year.
Bacon's office has collected 170 complaints related to infomercials in the past three years, most about service, sales practices and false advertising.
A common tactic the BBB looks for in its reviews are fraudulent claims that may not relate directly to the content of what is offered -- claiming something is a "limited time offer" or a "$100 value," for instance, even though the promotion is constant and the pricing arbitrary.
"In an economy of today, when people are looking for jobs and everything is so slow, people are looking for something that is too good to be true," Bacon says.
Dalbey is not the only infomercial star to face legal woes.
In 2008, Utah residents Linda Woolf and David Gengler were charged in connection to the "Teach Me to Trade" stock-picking system. Customers paid between $3,000 to $40,000 to learn the system, even though the duo were, in the words of the Securities and Exchange Commission, "unsuccessful traders." Combined, they earned more than $6 million selling the product.
An SEC complaint alleges that at their workshop presentations between 2003-06, Woolf and Gengler made false and misleading statements to sell TMTT packages of personal mentoring, software and classes, often targeting retirees. In his workshops, Gengler urged investors to borrow against their retirement accounts to buy these products, the SEC says.
This month a federal judge in Texas sentenced Eric Rulack Farrington, another infomercial star, to 11 years in prison for "orchestrating a multimillion-dollar mortgage fraud scheme in the Dallas area." He was also ordered to pay approximately $1.6 in restitution and forfeit approximately $1.2 million to the U.S.
Author Kevin Trudeau's infomercial for "Free Money -- They Don't Want You to Know About" is a variation of the infomercials once made popular by Martin Lesko (known for wearing a Riddler-like suit adorned with question marks).
Trudeau, perhaps trying to appeal to a tea party sensibility even as he espouses how to collect no-strings-attached money from the government, spends much of the infomercial promoting these secrets as though they were divined from the "Da Vinci Code." The government wants him taken down, you see, because the information he espouses is dangerous. In reality, it appears to be a revisited list of various government programs, most of which can be easily found with an Internet search.
The consumer news and advocacy site ConsumerAffairs.com, however, has logged numerous complaints that ordering Trudeau's books has led to pushy upsells and being charged for additional, unwanted products.
Real estate, in particular, is a ripe category for infomercials, with many offering tips on how to buy and flip distressed property. It's a theme many may have first seen via the late-1980s infomercials featuring Tom Vu, a Vietnamese immigrant who claimed to have amassed a fortune by flipping property.
Dean Graziosi's "Real Estate & Foreclosure Profits" program is a near constant presence on late-night TV.
Graziosi, a self-proclaimed real estate mogul who rose to that status after a poverty-ridden childhood, seeks to inform those who buy his system of how the current housing downturn can be tapped.
He claims various methods allow users to buy property for as little as a few hundred bucks, and that the housing market has already bottomed out and is ready to soar once again. For $19.95 you can order a copy of Graziosi's book and learn his secrets. One can be assured, though, that the disclaimer that "Some students may have purchased optional support program. Results not typical" means buyers will get still more sales calls promoting more expensive materials. To Graziosi's credit, the majority of complaints logged with the Better Business Bureau in his home base of Arizona were "resolved," and he retain a sizable Internet following.
Armando Montelongo parlayed exposure as former host of the A&E network's "Flip This House" into a national slate of free seminars promoting the tactics needed to buy and fix up run-down property for profit. His infomercial boasts that he is "America's No. 1 and top real estate investing expert."
An investigation by a Nashville TV station WTVF, Channel 5, however, found that the seminar was little more than a pitch to buy a follow-up event for $1,500. Despite infomercial claims Montelongo would be present at the seminars (free or paid), he failed to appear.
The reporters learned that Montelongo had 30 seminars that week across the nation and didn't go to any. Actual face time, they said (citing complaints received by the Texas Attorney General's Office) would set you back upward of $20,000.
The news team also uncovered that one of the star pupils in the infomercial faced eviction and multiple foreclosures in Nevada. Another claimed to have made $110,000 in eight months, despite the reality of having declared bankruptcy and not having earned more than $17,000 a year.
Also, while it may be possible to buy distressed properties and flip them when the economy improves, do you have the means to travel to where the properties are, assess them and the surrounding neighboring, buy them, fix them up and maintain them, pay the taxes on each and sell them for a profit possibly years later when the time comes? if you have a job already, the answer is almost certainly not.
Acer sees more losses as revamp charges hurt Q2
Taiwanese PC maker Acer Inc reported a worse-than-expected quarterly loss, the first in company history, as it took charges to reorganize in a troubled first half, and said it would be impossible to break even for the full year.
Acer has been a dominant force in the PC business, particularly in the low-cost notebook segment, but has failed to counter the runaway success of tablets such as Apple's hot-selling iPad that have cut into PC sales and hurt profits.
The company has been refocusing on mobile devices to drive growth after a first half that saw the acrimonious departure of its chief executive following a row over the company's strategy and a series of cuts to its shipment forecasts.
Shares of Acer, the world's No.2 PC vendor, closed down 2.92 percent on Wednesday ahead of the earnings announcement.
They have fallen 65 percent this year in a broader market down 16.4 percent. Rival Asustek has gained 6.8 percent.
Chairman J.T. Wang told an investor conference that the second-quarter was a "correction period" and its loss was worse than expected because the company cleared up excessive inventory and made severance payments for senior management resignations.
Among those who resigned was Gianfranco Lanci, the former CEO who left abruptly in April amid a row over strategy and after a sharp cut in Acer's revenue outlook that triggered an 18 percent fall in its shares in four days.
Wang did not say how much Lanci received.
The chairman said while he expects the "fever" for tablet PCs receding and notebooks regaining consumer interest, Acer will still see a loss in the third quarter, though it would be better than the second quarter.
"Today I have to say, trying to break even this year becomes impossible," Wang said, citing a worsening macro environment in Europe and the need for "more time and effort" for the restructuring.
In July, Wang had indicated that the company would report a loss in the second quarter before returning to profit in the third and posting a small full-year profit.
Acer said in June it would take a $150 million charge to write off inventory and doubtful payments in Europe and will cut 300 jobs there.
Macquarie analyst Andrew Chang said in a report that recent checks indicate Acer has no new competitive products to launch in the third quarter to lift momentum and margins.
Macquarie expects flattish revenue growth in the third quarter from the previous quarter and a 29 percent drop from a year ago.
Acer posted a net loss of T$6.79 billion ($234.3 million) in April-June, much wider than the consensus forecast of a T$3.3 billion loss from six analysts polled by Reuters.
The unaudited net loss figure compared with a net profit of T$1.19 billion in the first quarter and earnings of T$$2.65 billion in the same period a year ago.
Acer has been a dominant force in the PC business, particularly in the low-cost notebook segment, but has failed to counter the runaway success of tablets such as Apple's hot-selling iPad that have cut into PC sales and hurt profits.
The company has been refocusing on mobile devices to drive growth after a first half that saw the acrimonious departure of its chief executive following a row over the company's strategy and a series of cuts to its shipment forecasts.
Shares of Acer, the world's No.2 PC vendor, closed down 2.92 percent on Wednesday ahead of the earnings announcement.
They have fallen 65 percent this year in a broader market down 16.4 percent. Rival Asustek has gained 6.8 percent.
Chairman J.T. Wang told an investor conference that the second-quarter was a "correction period" and its loss was worse than expected because the company cleared up excessive inventory and made severance payments for senior management resignations.
Among those who resigned was Gianfranco Lanci, the former CEO who left abruptly in April amid a row over strategy and after a sharp cut in Acer's revenue outlook that triggered an 18 percent fall in its shares in four days.
Wang did not say how much Lanci received.
The chairman said while he expects the "fever" for tablet PCs receding and notebooks regaining consumer interest, Acer will still see a loss in the third quarter, though it would be better than the second quarter.
"Today I have to say, trying to break even this year becomes impossible," Wang said, citing a worsening macro environment in Europe and the need for "more time and effort" for the restructuring.
In July, Wang had indicated that the company would report a loss in the second quarter before returning to profit in the third and posting a small full-year profit.
Acer said in June it would take a $150 million charge to write off inventory and doubtful payments in Europe and will cut 300 jobs there.
Macquarie analyst Andrew Chang said in a report that recent checks indicate Acer has no new competitive products to launch in the third quarter to lift momentum and margins.
Macquarie expects flattish revenue growth in the third quarter from the previous quarter and a 29 percent drop from a year ago.
Acer posted a net loss of T$6.79 billion ($234.3 million) in April-June, much wider than the consensus forecast of a T$3.3 billion loss from six analysts polled by Reuters.
The unaudited net loss figure compared with a net profit of T$1.19 billion in the first quarter and earnings of T$$2.65 billion in the same period a year ago.
Toll Brothers Earnings Up 54%, Revenue Slumps
Toll Brothers Inc.'s fiscal third-quarter earnings jumped 54% with a boost from a bigger tax benefit, yet the luxury home builder saw a double-digit drop in revenue as it delivered fewer homes and saw an uptick in its cancellation rate.
With the housing downturn now in its fifth year, home builders remain pressured by a laundry list of economic head winds, including high unemployment, weakened consumer confidence and tightened bank lending standards. Sales of new homes have ...
With the housing downturn now in its fifth year, home builders remain pressured by a laundry list of economic head winds, including high unemployment, weakened consumer confidence and tightened bank lending standards. Sales of new homes have ...
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