How to make $12 million by doing nothing! (Seriously, this isn't a Ponzi scheme). And thoughts on gift-giving.

From Dan Gross:

A while ago, I wrote in Slate about how gift cards are generally bad news for consumers, good news for corporations, and somewhat inefficient means of giving gifts. Yesterday, Williams-Sonoma proved me right. In this filing (scroll down to the earnings guidance release), the company notes that it plans to record:

"a benefit of approximately $12 million before tax or $0.062 per diluted share associated with unredeemed certificates. During the second quarter of fiscal 2006, we completed an analysis of our historical gift certificate and gift card redemption patterns, which included an independent actuarial study. Based on this analysis, we concluded that the likelihood of our gift certificates and gift cards being redeemed beyond four years from the date of issuance is remote. As a result, we have changed our estimate of the elapsed time for recording income associated with unredeemed gift certificates and gift cards to four years from our prior estimate of seven years. This change in estimate will result in income recognition of approximately $12 million before tax in other income in the second quarter of fiscal 2006."

Translation: $12 million spent on Williams-Sonoma gift cards and gift certificates was utterly wasted because the recipients lost them or decided not to use them. What a great business!

I've always wondered why people don't give cash as gifts? I know it's considered rude etc, but I've never understood why people would rather give a gift-card than give cash. I know that cash is kinda impersonal, but it goes seem to be a very efficient method of gift-giving (given the variance in individual taste).

I understand that there's are some occasions when you wouldn't give cash (to a significant other, as a thank-you gift to a colleague etc), but why the blanket proscription on the giving of cash?

Here's another stray thought on gift-giving. In India, it's considered rude to open a gift in front of the person who gave it to you. You take it home and open at home. In the US, it's expected that you open the gift in front of the person who gave it you! Very interesting!