Saturday, November 30, 2013
Best Black Friday TV Deals: Where to Go Depends on What You Want
Friday, November 29, 2013
UnitedHealthcare Medicare Advantage cuts doctors
She is also losing her oncologist at the prestigious Yale Medical Group — the entire 1,200 physician practice was axed.
Senay, 71, of Canterbury, Conn., is among thousands of UnitedHealthcare Medicare members in 10 states whose doctors will be cut from their plan network.
The company is the largest Medicare Advantage insurer in the country, with nearly 3 million members. More than 14 million older or disabled Americans are enrolled in Medicare Advantage plans, an alternative to traditional Medicare that offers medical and usually drug coverage but requires members to use the plan's network of providers.
"I have a rare incurable disease, and these doctors have saved my life," said Senay. "I am in good hands, and I will not change doctors."
UnitedHealthcare has begun telling members about the network changes. But there is now about one week before the Dec. 7 deadline for choosing new coverage next year. Timing is crucial since once they sign up, most Advantage beneficiaries are locked into their plans for the year. Losing a doctor does not constitute an exception to the rule. Insurers can drop providers any time with 30 days advance notice to members.
Several medical associations are encouraging doctors to appeal the cancellations, which could make it more difficult for seniors to choose a plan in the time remaining. Neither Medicare, which oversees the Advantage plans, nor UnitedHealthcare would disclose how many providers will be dropped.
The American Medical Association and 39 state affiliates, along with 42 medical specialty and patient advocacy groups, have urged Medicare chief Marilyn Tavenner to extend the enrollment deadline and require insurers to reinstate the doctors for another year. Medicare has told the ! Connecticut attorney general that it will not postpone the deadline.
UnitedHealthcare spokeswoman Jessica Pappas said in a written response to questions, "While these changes can be difficult for patients and their doctors, they are necessary to meet rising quality standards, slow the increase in health costs and sustain our plans in an era of Medicare Advantage funding cuts." However, the doctors dropped from Medicare Advantage plans can still treat patients covered under other UnitedHealthcare policies.
The Affordable Care Act phases in reductions in government payments to Medicare Advantage plans — $156 billion over 10 years — to bring the program into line with the costs of caring for seniors in traditional Medicare.
Medicare officials review the private plans every year to make sure they comply with network adequacy and other requirements, but the agency did not approve the reconfigured networks resulting from the new provider cancellations. Spokesman Raymond Thorn said the agency "is currently reviewing UHC and other plans' provider networks and closely monitoring all areas that have experienced disruptions to ensure that beneficiaries have full, transparent and timely information and access to needed care."
While Medicare officials would not disclose how many provider terminations they are scrutinizing, state medical groups have provided some tips for investigators. The Ohio State Medical Association estimates that UnitedHealthcare has canceled contracts with hundreds of Ohio doctors effective Jan. 1. The cancellations include most of the orthopedic surgeons in Dayton, the only hand specialty practice serving the Cincinnati area, a large gastroenterology practice with 2,500 patients that also provides most of the inpatient care at five Cincinnati-area hospitals, and the largest practice of retina specialists serving 600 UnitedHealthcare members, many with macular degeneration, in central and southern Ohio. In Connecticut, UnitedHealthcare is terminating ab! out 2,250! physicians, including 810 specialists, Feb. 1, said Mark Thompson, executive director of the Fairfield County Medical Association, prompting the medical associations in Fairfield and Hartford counties to file a federal lawsuit to stop the cancelations.
In New York City, UnitedHealthcare's contracts with about 2,100 physicians will be canceled, affecting some 8,000 patients, according to the Medical Society of New York.
In Florida, UnitedHealthcare has dropped the state's only National Cancer Institute-designated cancer treatment facility, the Moffitt Cancer Center, and its 250 physicians in Tampa.
Senay was able to find another Advantage plan that includes her doctors, with the help of Tammy Harris, a Medicare counselor with Connecticut's senior health insurance information program.
Harris said not everyone will be so lucky. Elderly patients worry about traveling long distances to reach new doctors, she said.
"If they have to drive to New Haven," she said, "it's like going to the moon."
Kaiser Health News is an editorially independent program of the Henry J. Kaiser Family Foundation, a non-profit, non-partisan health policy research and communication organization not affiliated with Kaiser Permanente.
Sunday, November 24, 2013
The gift most everyone buys for the holidays
According to the National Retail Federation, a number of shoppers are turning to gift cards— but not just for ultra-picky recipients.
A recent study by the industry's trade association found that gift card spending will reach an all-time high this holiday, with more than 80% of shoppers planning to purchase at least one. What's more, the average shopper will spend an average of $163.16 on gift cards, an increase of 4% on the year. That means total spending in the category will reach $29.8 billion.
A desire for practical gifts, customized designs and digitalization are all reasons for the boost, experts said.
"In general, the economy has put the concept of a gift card into a more favorable position," said Kathy Grannis, senior director of media relations for the NRF.
The popularity of gift cards dipped from 2008 to 2010, when shoppers flocked to dramatically reduced items, sometimes selling for more than 70% off. The state of mind at that time, Grannis said, was more about quantity than anything else. Shoppers could find a cashmere sweater for $30 instead of $100, often enabling them to purchase multiple gifts for friends and family.
Although price is still the No. 1 reason a person decides to shop at a specific retailer, what has become increasingly more important today is value, she said. This value push often sends shoppers toward gift cards issued by full-priced retailers, where they can be used as a down payment on more expensive items.
Value also encourages many consumers to buy brand-specific gift cards, even though most recipients prefer general-purpose cards from American Express or the likes, experts said. Because providers of general-use cards do not receive any benefits from sales made with the cards, they are forced to charge a purchasing fee to turn a profit. These range from $3.95 to $6.95! at American Express, depending on the quantity loaded onto the card and where they are purchased, said Janna Herron, a credit card analyst at Bankrate.
Fewer fees
On the flip side, only two retailers in Bankrate's study—Staples and Toys R Us—charge a fee to purchase a basic gift card.
Shoppers also shy away from general-purpose gift cards because recipients can be faced with dormancy charges and maintenance fees, although they have become less of an issue following the Credit Card Accountability, Responsibility and Disclosure Act (CARD) that went into effect in 2010, Herron said. Before the act was passed, shoppers could be hit with a service or inactivity charge after six months of not using the card; they could also incur a fee for doing a balance check or using the card at an ATM.
"There were many different fees that issuers assessed that weren't very transparent," she said. "You could lose value on your card pretty quickly."
While this legislation was good for consumers—according to CEB TowerGroup research, the percentage of value lost on gift cards is 1%, down from 6.4% in 2009—it has made it harder for credit card companies to make money from gift cards. This will likely cause some companies to follow Chase, which discontinued its gift cards earlier this year, Herron said.
Individual retailers have also made strides in reducing the stigma that previously existed against gift cards, Grannis said. For a nominal fee, companies have customized their offerings with images of Santa Claus, penguins and puppies, to make the cards more appealing and more tailored toward recipients.
Gift card, Pez dispenser included
For $2.99, Home Depot shoppers can purchase a small toolbox gift card holder or choose a free design with a pop-up tree and flashing star. Bass Pro Shop customers can have their gift cards packaged in tins shaped like a tackle box, a gun safe or an ammo box, for $2.49 to $3.99. This year, Target is offering a gift card packaged with a Pez ! dispenser! that is modeled after the dog seen in its ads, and retailers such as DSW and Ross allow customers to upload their own images to the card for a small fee.
Despite these efforts, some shoppers still feel gift cards are too impersonal. Lauren Plavchak, 24, said she steers away from gift cards, unless she doesn't know the recipient very well.
"I generally buy gift cards for people that I'm not as close to," she said. "Sometimes it's a work gift exchange where it's something that I guess wasn't really thought about in advance, and it's one of those last-minute things."
Digital gift cards slower to grow
For those shopping on a time crunch, online and mobile offerings have increased the practicality of gift cards, Herron said. Shoppers can notify recipients of gift cards through Facebook or via email, and Starbucks recently introduced the ability to Tweet a gift card. These features are especially desirable to Millennials, who mark convenience as paramount.
The approach appears to be resonating with shoppers. According to CEB TowerGroup research, e-gifting segments should increase tenfold from an estimated $300 million in 2012 to $3 billion in 2013.
"It's something that retailers are interested in, but it's a little slower [to be adopted] than I expected," Herron said.
For example, Retail Systems Research published a recent report on digital gift cards that showed 69 of 99 retailers evaluated offered digital gift cards — up from 59% in 2011 and 40% in 2010. Although the report noted an improvement in the offering, broadcasting and fulfillment of gift card orders, it said they can still get better.
Among them: Customers feel there is a "bait and switch" when the retailer says they can purchase a gift card for as little as $10, but the smallest suggested card is $50; complex checkouts require multiple screens to be filled out, and irrelevant information is often requested; a surprising number of retailers still do not have apps; and retailers show strange social! prioriti! es, asking consumers to post pictures on their Facebook pages rather than offering a place to purchase gift cards.
Perhaps the biggest issues, though, is that there are not enough retailers are in the game— Sephora, for example, runs literally uncontested among its peer group. Another issue is that card management is too often difficult.
"Several retailers' e-gift cards were the email itself, which meant that if the email was lost, the recipient was basically out of luck," the Retail Systems Research report said. "Given that gift card revenue may only be recognized once the card is redeemed, one would assume that retailers would make it as easy as possible for recipients to redeem their cards."
MORE: Why it's OK to skip Black Friday
MORE: The secret to surviving Black Friday
MORE: Should retailers brace for a blue Christmas
CNBC is a USA TODAY content partner offering financial news and commentary. Its content is produced independently of USA TODAY.
Saturday, November 23, 2013
Oppenheimer Cuts Refiners on Deteriorating Earnings Outlook
Oppenheimer’s Fadel Gheit and Robert Du Boff have become the latest analysts to offer their opinion of refining stocks, when they downgraded Holly Frontier (HFC), Marathon Petroleum (MPC), Phillips 66 (PSX), Tesoro (TSO) and Valero (VLO) to Perform from Outperform today.
AFP Gheit and Du Boff explain their cuts:
We are lowering our ratings for refining stocks…on a deteriorating earnings outlook, and are removing our price targets for the stocks…We are cutting our 3Q13 earnings estimates for the group to reflect weaker market crack spreads, notably for gasoline, a narrowing Brent-WTI spread, and lower sequential margin capture rates. Margin capture should be down for a variety of reasons, including the cost of RINs (~$0.85/g, up slightly from 2Q13), planned and unplanned downtime, pipeline constraints, and the shift in the oil market structure from contango to backwardation, which implies higher crude acquisition costs relative to benchmark cracks. While we note crude differentials began to widen in September, this will not have a positive impact on the bottom line for the quarter because of the lag time in crude purchases, typically 1-2 months.
The cuts follow Citigroup’s upgrade of Valero and Tesoro on Oct. 2, and Deutsche Bank’s pessimistic outlook on refiners from Sept. 10.
Holly has dropped 0.4% to $41.63, Valero has gained 0.2% to $34.17, Tesoro has advanced 1.6% to $44.47, Phillips is off 0.9% at $59.03 and Marathon is up 0.2% at $65.36.
Friday, November 22, 2013
Is There A Light At The End Of The Tunnel For J.C. Penney?
Shares of the Plano, Texas-based company surged Wednesday after the 110-year-old retailer reported quarterly results that were not as awful as Wall Street had feared. The company had a net loss of $489 million, or $1.94 per share, wider than the $123 million, or 56 cents, it lost a year earlier. Revenue fell 5.1% to $2.78 billion, an improvement from a year earlier when sales plunged 27%. What caught the eye of investors, however, was the optimistic tone CEO Mike Ullman had regarding the all-important fourth quarter.
Revenue at existing stores, a key retail metric, will rise in the fourth quarter, on both a year-over-year and quarter-to-quarter basis, according to Ullman. Same-store sales rose in October for the first time in more than two years. During the holiday quarter a year ago, comparable sales fell 31.7 percent. Gross margins also are improving. The company's profits were hurt in the past quarter because it had to mark down slow-selling merchandise that former CEO Ron Johnson brought in during his disastrous 17-month tenure. J.C. Penney was able to quell concerns about its liquidity by noting that it had $1.71 billion in cash and cash equivalents including the funds available from its credit facility.
Wall Street, which has pushed J.C. Penney's shares up more than 30% over the past month, was heartened by the news. J.C. Penney surged nearly 7% to $9.31. One investor that isn't benefiting from the run-up is billionaire Bill Ackman. The head of the Third Point hedge fund unloaded his stake in the retailer, which he had held for several years, in August at a loss of about $470 million.
Speaking to analysts on the earnings conference call, Ullman, who was pushed out in favor of Johnson prior to his recent return, didn't appear to be resting on his laurels.
"The work we've been doing over the last seven months to stabilize the business financially and operationally required fun! damental changes in many aspects of our business, " he said. "It's hard work with no quick fixes, but our teams are rising to the challenge and our customers tell us they love the progress we're making."
If investors are game enough to buy J.C. Penney shares, the time to do it is now. Wall Street is starting to take a shine to the stock and shares of the retailer may surge higher as more investors start to believe that Ullman's turnaround is sustainable. Just look at what happed to Best Buy.
Last year, many on Wall Street had given up on Best Buy (NYSE:BBY). The consumer electronics giant made headlines for all the wrong reasons including having to fire its CEO Brian Dunn for having an affair with a female subordinate. Founder Richard Schulze stepped down as board chairman because he didn't notify other members about Dunn's relationship. Schulze briefly considered buying the company, whose financial performance had been dismal, but abandoned the idea. Schulze rejoined the company this year as chairman emeritus Under the leadership of current CEO Hubert Joly, shares of Best Buy have skyrocketed more than 200%. However, Best Buy stumbled in the most recent quarter, posting disappointing earnings. This underscores the notion that corporate turnarounds take time and often don't go smoothly.
Many challenges lie ahead for J.C. Penney. As Bloomberg noted, the company's gross margin of 29.5% lags rivals such as Macy's (NYSE:M) (39.2%) and Kohl's (NYSE:KSS) (32.5%). For the company to remain competitive, that's got to change. Wal-Mart (NYSE:WMT) and Target (NYSE:TGT) are also competing for the same shopper and will be ferocious competitors with J.C. Penney when it comes to price.
Unfortunately, the macroeconomic environment isn't great for J.C. Penney as consumers, especially those with lower incomes, take a cautious approach to the holidays. Stable gas prices, which are closely correlated with consumer confidence, are preventing merry holidays from turning miserable but they certainly won't be jolly for some retailers. The National Retail Federation is expecting holiday sales to rise 3.9% to $602.1 billion, a projection that many economists think is optimistic.
The Bottom Line
Ullman deserves credit for making progress in undoing the damage done by his predecessor. Ironically, Ullman was shoved aside as CEO to make way for Johnson, whose claim to fame was establishing Apple's (Nasdaq:AAPL) retail stores.
Investors with a high tolerance for risk and an ! iron stomach should buy J.C. Penney's shares today. There's a chance that the stock could follow Best Buy and "pop" over the next few months. Equally, the retailer could stumble again.
Disclosure - At the time of writing, the author did not own shares of any company mentioned in this article.
Tuesday, November 19, 2013
Top 5 Canadian Stocks To Watch For 2014
Alamy With BlackBerry announcing its exit from the consumer business last week and now entertaining a bid to go private, it's worth looking at how the once-dominant smartphone maker got crushed by Apple, Samsung and other competitors in the mobile marketplace. At first glance, it's obvious that the company was too wedded to its keyboard-based devices even as new designs and technologies cut into its business -- precisely what Clayton Christensen called the Innovator's Dilemma. Looking deeper, one could pin some blame on the Canadian firm's dual-CEO leadership structure, as well as its inordinate focus on corporate customers. Its Hail Mary pass to recapture market share this year with the touch-screen Z10 and hard-keyboard Q10 fell far short. BlackBerry investors over the past five years have seen more than 90 percent of shareholder value evaporate. And the take-private bid, for its part, is far from a done deal. "In apparel you have fashion leaders. In technology, you have innovation leaders," said C. Britt Beemer, a longtime consumer analyst and researcher. Not only did BlackBerry fail to innovate, but also its executives "kept reading their own press clippings" and "did nothing to be able to go out there and defend their turf." BlackBerry's decline made Beemer recall a time when the Zenith brand controlled 60 percent of the market for color-console TV sets, "but it was shrinking 50 percent every year." The mobile company was chasing "huge contracts with companies, then one day those companies that had these large contracts made changes."
Top 5 Canadian Stocks To Watch For 2014: Transdigm Group Incorporated(TDG)
TransDigm Group Incorporated designs, produces, and supplies engineered aircraft components for use on commercial and military aircraft principally in the United States. The company?s products include mechanical/electro-mechanical actuators and controls, ignition systems and engine technology, pumps and valves, power conditioning devices, AC/DC electric motors and generators, NiCad batteries and chargers, engineered latching and locking devices, rods and locking devices, engineered connectors and elastomers, cockpit security components and systems, cockpit displays, aircraft audio systems, lavatory components, engineered interior surfaces, and lighting and control technology. Its customers comprise distributors of aerospace components; commercial airlines, including national and regional airlines; commercial transport and regional and business aircraft original equipment manufacturers (OEMs); various armed forces of the United States and foreign governments; defense OEMs; system suppliers; and various other industrial customers. TransDigm Group Incorporated was founded in 1993 and is based in Cleveland, Ohio.
Advisors' Opinion:- [By Rich Smith]
Cleveland-based TransDigm Group (NYSE: TDG ) is buying a piece of GE.
On Friday, as trading wound down for the week, TransDigm announced a deal to buy the Electromechanical Actuation Division of General Electric (NYSE: GE ) Aviation for $150 million, cash. The business, which makes proprietary, highly engineered aerospace electromechanical motion control subsystems for civil and military applications, counts all three of the world's biggest airplane manufacturers -- Boeing, Airbus, and Brazil's Embraer -- among its clients, and Sikorsky and General Atomics, as well, on the military side.
- [By Eric Volkman]
TransDigm (NYSE: TDG ) is rewarding its shareholders mightily with an extraordinary payout. The company has declared a special dividend of $22.00 per share, which will be paid on July 25 to shareholders of record as of July 15.
Top 5 Canadian Stocks To Watch For 2014: Celadon Group Inc.(CGI)
Celadon Group, Inc., through its subsidiaries, provides transportation services between the United States, Canada, and Mexico. It offers a range of truckload transportation services, including long-haul, regional, less-than-truckload, intermodal, and logistics services. The company transports various types of freight comprising tobacco, consumer goods, automotive parts, home products and fixtures, lawn tractors and assorted equipment, light bulbs, and various parts for engines. It also operates an e-commerce business that provides discounted fuel, tires, insurance, and other products and services to small and medium-sized trucking companies through its website, www.truckersb2b.com. In addition, the company provides warehousing and trucking services, as well as freight brokerage services. Celadon Group, Inc. was founded in 1985 and is based in Indianapolis, Indiana.
Top 5 Insurance Companies To Watch In Right Now: STMicroelectronics N.V.(STM)
STMicroelectronics N.V., an independent semiconductor company, engages in the design, development, manufacture, and marketing of a range of semiconductor integrated circuits and discrete devices. Its products include discrete and standard commodity components, application-specific integrated circuits, custom devices and semi-custom devices, and application-specific standard products for analog, digital, and mixed-signal applications. The company also offers subsystems and modules for the telecommunications, automotive, and industrial markets comprising mobile phone accessories, battery chargers, ISDN power supplies, and in-vehicle equipment for electronic toll payment, as well as provides Smartcard products. Its products are used in various microelectronic applications consisting of automotive products, computer peripherals, telecommunications systems, consumer products, industrial automation, and control systems. The company sells its products through distributors and ret ailers. STMicroelectronics N.V. was founded in 1987 and is headquartered in Geneva, Switzerland.
Advisors' Opinion:- [By Tim Brugger]
In addition to the upgraded Atom processor rollout, Intel also announced a realignment of its management structure. Now comes word the "leading semiconductor company" named in a recent press release announcing the acquisition of a STMicroelectronics (NYSE: STM ) and Ericsson (NASDAQ: ERIC ) mobile GPS joint venture was none other than Intel. When Krzanich said he was committed to the rapidly changing mobile computing market, he wasn't kidding; and that should be sweet music to the ears of Intel shareholders.
- [By Lee Jackson]
STMicroelectronics NV (NYSE: STM) supplies most set-top box chips for Scientific�Atlanta, and also sells chips for disk drives that end up in DVRs; but still has less than a 10% exposure. The consensus target for the stock is $11. Investors do receive an outstanding 4.0% dividend from the company.
Top 5 Canadian Stocks To Watch For 2014: Concord Medical Services Holdings Limited (CCM)
Concord Medical Services Holdings Limited, together with its subsidiaries, operates a network of radiotherapy and diagnostic imaging centers in the People�s Republic of China. The company�s services comprise linear accelerators external beam radiotherapy, gamma knife radiosurgery, head gamma knife systems, body gamma knife systems, proton beam therapy, diagnostic imaging, and other treatment and diagnostic modalities. It offers clinical support services; develops treatment protocols for doctors; and organizes joint diagnosis between doctors in its network and clinical research. The company also operates a specialty cancer hospital, as well as leases medical and diagnostic equipment. As of March 31, 2011, it operated a network of 121 centers with 68 hospital partners that cover 46 cities and 24 provinces, and administrative regions in China. The company was founded in 1996 and is headquartered in Beijing, the People�s Republic of China.
Top 5 Canadian Stocks To Watch For 2014: Panhandle Royalty Company(PHX)
Panhandle Oil and Gas Inc. engages in the acquisition, management, and development of oil and natural gas properties. The company?s mineral and leasehold properties are located primarily in Arkansas, New Mexico, North Dakota, Oklahoma, and Texas. As of September 30, 2011, it owned 255,857 net mineral acres; leased 17,480 net acres; held working and royalty interests in 5,107 producing oil and natural gas wells; and operated 48 wells in the process of being drilled. It serves pipeline and marketing companies. Panhandle Oil and Gas Inc. was founded in 1926 and is based in Oklahoma City, Oklahoma.
Monday, November 18, 2013
Canaccord Genuity Raises Price Target on Avago (AVGO)
Canaccord Genuity announced on Monday that it has raised its price target on Avago Technologies Ltd (AVGO
The firm has maintained a “Buy” rating on AVGO, and has increased the company’s price target from $45 to $53. This price target suggests a 20% upside from the stock’s current price of $42.55.
Analyst Michael Walkly commented: "Teardown analysis of the iPhone 5S and 5C by iFixit suggests Avago has maintained very strong RF dollar content share.”
“We believe these trends are consistent with our long-term thesis that Avago is well positioned to benefit from the rapidly growing demand for FBAR/BAW filters needed to support the growing mix of LTE smartphones.”
“We also believe Avago’s proprietary technologies, strong IP portfolio, and diverse customer base in several growth markets position the company for strong long-term growth trends with industry leading margins,” added the analyst.
Looking ahead, the analyst expects to see 2015 EPS of $3.93 per share. Revenue is expected to be $3.4 billion.
Avago Technologies shares were up 93 cents, or 2.26%, during Monday morning trading. The stock is up 34% YTD.
Sunday, November 17, 2013
Salesforce.com aims to get businesses ‘social’
Apart from VIP-only events expected to include Tony Bennett, Jerry Seinfeld, MC Hammer and Green Day, Benioff has a new product for the customer-tracking software suite he sells to businesses.
It offers businesses a way to make more money off their existing customers, by connecting with them online via Facebook, Twitter, LinkedIn or Google's YouTube video site.
The opportunity for Salesforce is expected to grow quickly but also be hotly contested, as those social networks sell their own do-it-yourself marketing campaigns.
Facebook, LinkedIn and Twitter are all expected to post revenue growth rates of more than 35% in 2014, and YouTube is expected to generate 10% to 15% of Google's $60 billion in 2014 ad revenue.
Thanks in part to sales of its new software, acquired in a string of 2012 acquisitions that cost more than $1 billion, Salesforce's sales are expected to rise 29%, to $5.2 billion, for the fiscal year ending in January 2015.
To get there, the company will need to convince enough corporations and smaller businesses to think of Salesforce first when they think of social media marketing.
While many companies are eager to try the burgeoning marketing technique, many also don't have the in-house expertise to manage the new technology.
That was the case initially at L'Oreal USA, the American unit of the French beauty and hair care giant.
"There were some cases where we spent more than we should have, and had to pull a (marketing) experiment," says Barry Gilmore, L'Oreal USA's chief information officer.
Then L'Oreal began using new marketing and analysis tools Salesforce rolled out this year.
The software helps automate the process of discovering the interests of existing customers, then deciding which promotions to send to t! heir social media accounts, via text or video ads.
L'Oreal brand managers used it to sign up thousands of hair salon owners in the U.S., who in turn used it to create thousands of Facebook pages that were peppered with social media ads for shampoos and conditioners.
"The return on investment was very positive," Gilmore says.
With his investment in the new technologies, Benioff is attempting to do the same thing he's advising his customers to do: sell more to existing customers.
The company pioneered the business of selling monthly software subscriptions over the Internet, earning Salesforce steady revenue growth for more than a decade.
Its shares have risen 14-fold since the company went public in 2004, turning Benioff into a billionaire and philanthropist.
Yet as its main market has slowly matured, the company has been adding new features.
Now, after acquiring social media marketing technology along with start-ups Radian6 and Buddy Media in 2012, Salesforce can help businesses identify, contact, service and sell more to their existing customers using social networks.
"Some people get a 20x return on their social media spending, but others don't even get their investment back," says Michael Lazerow, co-founder and former CEO of Buddy Media, who's now chief marketing officer for Salesforce's marketing product.
If experienced consumer brands like L'Oreal can use help with their social media marketing campaigns, many small and mid-size companies will likely need help as well.
While the opportunity for Salesforce could be huge, it isn't a clear one as Oracle and SAP, its chief rivals in the market for customer-tracking software, have also acquired social media marketing start-ups.
Google, too, has designs on the market, thanks to its 2012 acquisition of Wildfire, Buddy Media's chief start-up rival.
Facebook and Twitter, moreover, have developed their own marketing and ad technologies — while compiling a wealth of data on its users for! targetin! g ads.
Still, Salesforce also has its own database, compiled on users over the past decade. The data can help identify which customers might be receptive to a well-timed online promotion.
That's what Ford Motor did when it used the technology to send social media ads to customers who'd bought a vehicle five years earlier, with the idea that they might be ready for a new set of wheels.
That same type of marketing can be applied to any product or service with a predictable purchase pattern. "We're trying to create a new model that blends sales, service and marketing," says Lazerow.
Expect that model to be sold hard by Benioff and his company this week, as the stars in comedy and music play on.
(Look for Part 2 of our series on social media marketing in Wednesday's column: The Rise of the Corporate CMO.)
John Shinal has covered tech and financial markets for 15 years at Bloomberg, BusinessWeek, the San Francisco Chronicle, Dow Jones MarketWatch, Wall Street Journal Digital Network and others.
Friday, November 15, 2013
Beanie Babies Creator Pleads Guilty to Tax Evasion
Best Safest Companies To Own For 2014
Despite turmoil in Washington and skepticism over the Affordable Care Act, two industry heavyweights remain bullish about equities and the economy.
“Forecasting the market is pretty basic — just watch the correlation to corporate earnings growth and the S&P 500,” Douglas Cot� the chief investment strategist at ING U.S. Investment Management, told an audience of over 500 at the Investment Management Consultants Association's Advanced Wealth Management Conference in Chicago. “When earnings grow, stocks go up and when earnings slow stocks go down.”
With that in mind, and in the context of what he described as “the Washington mess,” Mr. Cot�said the “safest trade right now is to get back to a full allocation to equities.”
Best Safest Companies To Own For 2014: Under Armour Inc.(UA)
Under Armour, Inc. develops, markets, and distributes performance apparel, footwear, and accessories for men, women, and youth primarily in the United States, Canada, and internationally. It offers products made from moisture-wicking synthetic fabrics designed to regulate body temperature and enhance performance regardless of weather conditions. The company provides its products in three fit types: compression (tight fitting), fitted (athletic cut), and loose (relaxed) extending across the sporting goods, outdoor, and active lifestyle markets. Its footwear offerings comprise football, baseball, lacrosse, softball, and soccer cleats; slides; performance training footwear; and running footwear. The company also provides baseball batting, football, golf, and running gloves, as well as licenses bags, socks, headwear, custom-molded mouth guards, and eyewear that are designed to be used and worn before, during, and after competition. Under Armour sells its products through retai l stores, as well as directly to consumers through its own retail outlets and specialty stores, Website, and catalogs. The company was founded in 1996 and is headquartered in Baltimore, Maryland.
Advisors' Opinion:- [By Teresa Rivas]
Safeway (SWY) was up nearly 4% after an upgrade to Outperform at Credit Suisse, which also upgraded lululemon (LULU), sending shares up 1%, and downgraded Under Armour (UA)��hares were down 1.6%.
Best Safest Companies To Own For 2014: Fluor Corporation(FLR)
Fluor Corporation, through its subsidiaries, provides engineering, procurement, construction, maintenance, and project management services worldwide. Its Oil & Gas segment offers design, engineering, procurement, construction, and project management services to upstream oil and gas production, downstream refining, chemicals, and petrochemicals industries. This segment also provides consulting services comprising feasibility studies, process assessment, and project finance structuring and studies. The company?s Industrial & Infrastructure segment offers design, engineering, procurement, and construction services to the transportation, wind power, mining and metals, life sciences, manufacturing, commercial and institutional, telecommunications, microelectronics, and healthcare sectors. Its Government segment provides engineering, construction, logistics support, contingency response, management, and operations services to the United States government focusing on the Departme nt of Energy, the Department of Homeland Security, and the Department of Defense. The company?s Global Services segment offers operations and maintenance, small capital project engineering and execution, site equipment and tool services, industrial fleet services, plant turnaround services, temporary staffing services, and supply chain solutions. Its Power segment provides engineering, procurement, construction, program management, start-up and commissioning, and operations and maintenance services to the gas fueled, solid fueled, plant betterment, renewables, nuclear, and power services markets. The company also offers unionized management and construction services in the United States and Canada. Fluor Corporation was founded in 1912 and is headquartered in Irving, Texas.
Advisors' Opinion:- [By Louis Navellier]
Fluor Corporation (FLR) is one of the world�� leading heavy construction and engineering firms. I don’t want to imply that this is a bad company because it is actually a very good one. However, Fluor has divisions including Oil & Gas, Industrial Infrastructure, Government, Global Services and Power. Virtually all of them are seeing limited spending as a result of the global slowdown and reduced government spending around the world. The stock is up more than 23% this year, but earnings are actually down on flat revenues. Analysts have been lowering their estimates for the rest of this year as well as 2014, and the stock is currently rated as a by Portfolio Grader. When the economy recovers, I expect will see this company’s fundamentals improve substantially … but until that happens investors should avoid the stock.
- [By The Energy Report]
JH: One of the areas where the U.S. for decades has been the leading technological power is in small nuclear reactors. We've used them on our aircraft carriers and on our nuclear submarines safely and efficiently. The U.S. has an advantage in understanding small modular nuclear reactors. One of the companies that we have followed for a long time that's working on that is Babcock & Wilcox Co. (BWC). There's also Fluor Corp. (FLR), which is working on small modular nuclear reactors. President Obama and the Department of Energy are funding research on the implementation of small modular nuclear reactors.
- [By Louis Navellier]
If we look at the sector using Portfolio Grader, we see that many of the big names in the group like Flour (FLR), Granite Construction (GVA) and KBR incorporated (KBR) are rated ��ell.��The anticipated spending for both government and private industry simply hasn�� materialized, and the companies are not seeing revenue or profit growth.
Top 10 Cheap Companies To Buy Right Now: Goldman Sachs Group Inc.(The)
The Goldman Sachs Group, Inc., together with its subsidiaries, provides investment banking, securities, and investment management services to corporations, financial institutions, governments, and high-net-worth individuals worldwide. Its Investment Banking segment offers financial advisory, including advisory assignments with respect to mergers and acquisitions, divestitures, corporate defense, risk management, restructurings, and spin-offs; and underwriting securities, loans and other financial instruments, and derivative transactions. The company?s Institutional Client Services segment provides client execution activities, such as fixed income, currency, and commodities client execution related to making markets in interest rate products, credit products, mortgages, currencies, and commodities; and equities related to making markets in equity products, as well as commissions and fees from executing and clearing institutional client transactions on stock, options, and fu tures exchanges. This segment also engages in the securities services business providing financing, securities lending, and other prime brokerage services to institutional clients, including hedge funds, mutual funds, pension funds, and foundations. Its Investing and Lending segment invests in debt securities, loans, public and private equity securities, real estate, consolidated investment entities, and power generation facilities. This segment also involves in the origination of loans to provide financing to clients. The company?s Investment Management segment provides investment management services and investment products to institutional and individual clients. This segment also offers wealth advisory services, including portfolio management and financial counseling, and brokerage and other transaction services to high-net-worth individuals and families. In addition, it provides global investment research services. The company was founded in 1869 and is headquartered in New York, New York.
Best Safest Companies To Own For 2014: Petroleo Brasileiro S.A.- Petrobras(PBR)
Petroleo Brasileiro S.A. primarily engages in oil and natural gas exploration and production, refining, trade, and transportation businesses. The company?s Exploration and Production segment involves in the exploration, production, development, and production of oil, liquefied natural gas (LNG), and natural gas in Brazil. This segment supplies its products to the refineries in Brazil, as well as sells surplus petroleum and byproducts in domestic and foreign markets. Its Supply segment engages in the refining, logistics, transportation, and trade of oil and oil products; export of ethanol; and extraction and processing of schist, as well as holds interests in companies of the petrochemical sector in Brazil. The Gas and Energy segment involves in the transportation and trade of natural gas produced in or imported into Brazil; transportation and trade of LNG; and generation and trade of electric power. In addition, the segment has interests in natural gas transportation and d istribution companies; and thermoelectric power stations in Brazil, as well engages in fertilizer business. The Distribution segment distributes oil products, ethanol, and compressed natural gas in Brazil. The International segment involves in the exploration and production of oil and gas, as well as in supplying, gas and energy, and distribution operations in the Americas, Africa, Europe, and Asia. Further, the company involves in biofuel production business. Petroleo Brasileiro was founded in 1953 and is based in Rio de Janeiro, Brazil.
Advisors' Opinion:- [By Aimee Duffy]
Transocean is as good a bellwether as any, given it's the world's largest offshore driller. The company's most recent fleet status report shows that a number of rigs that were idle are now booked for work. Seadrill (NYSE: SDRL ) is no slouch either, with its fleet of 61 drillships and rigs. It just inked a massive $2.7 billion contract with Brazil's state-owned oil company, Petrobras (NYSE: PBR ) .
- [By Arjun Sreekumar]
But over the past few years, the world's largest integrated oil companies have also joined the party. For instance, Brazilian oil major Petrobras (NYSE: PBR ) is preparing to drill exploration wells offshore Tanzania, where it holds 50% stakes in two offshore exploratory blocks, while ExxonMobil (NYSE: XOM ) has turned its attention to exploratory prospects off the coast of South Africa, where it acquired a 75% stake in blocks owned by Impact Oil & Gas late last year.�
- [By Taylor Muckerman]
All 1.4 million cars that were sold between January and May have to fuel up somehow, and that is where Brazilian powerhouse Petrobras (NYSE: PBR ) comes in to the picture. As the largest energy company in the country, Petrobras' gasoline sales would�presumably�follow a similar growth trajectory as auto sales once the retirement of old vehicles is taken into consideration. If the gap between international fuel prices is allowed to be closed ��the recent diesel price hike in March assisted with this ��then revenue from the company's downstream could really take off.
- [By Tyler Crowe]
One big region to keep an eye on is the pre-salt formation of Brazil. Auctions for this lucrative field are expected later this year, and Seadrill already has a working relationship with Petrobras (NYSE: PBR ) , with three rigs already offshore Brazil. Since Petrobras has a government-mandated 30% operator stake in every well in this new region, having a solid working relationship could mean very good things for Seadrill in the future. Tune into the video below where Fool.com contributor Tyler Crowe discusses some other promising regions that could offer big gains for Seadrill. He also wonders why its competitors are not yet putting up a big fight: Can they move fast enough to keep up with Seadrill's ambitious plans?
Thursday, November 14, 2013
German Stocks Retreat From Record as Wacker Chemie Drops
German stocks fell, dragging the benchmark DAX Index from an all-time high, as stronger-than-forecast U.S. manufacturing growth fueled speculation the Federal Reserve will scale back stimulus.
Wacker Chemie AG dropped 3.6 percent after Citigroup Inc. downgraded Europe's largest producer of polysilicon. EON SE, Germany's biggest utility, retreated for a third day as Citigroup added the shares to its least-preferred list. Volkswagen AG, Europe's biggest automaker, climbed 0.7 percent to the highest price since at least 1992.
The DAX declined 0.3 percent to 9,007.83 at the close of trading in Frankfurt, after rising to a record yesterday. The gauge has still gained 0.3 percent this week as Volkswagen rallied 6.8 percent on better-than-estimated third-quarter earnings. The broader HDAX Index slipped 0.2 percent today.
"The manufacturing data in the U.S. was stronger than expected," James Butterfill, who helps manage about $44 billion as head of global equity strategy at Coutts & Co. in London, wrote in an e-mail. "This could be detrimental to equities as the market prices chances of an earlier taper. We continue to believe it will be in the latter part of the first quarter of 2014, providing support for equities in the last quarter."
The Institute for Supply Management's U.S. factory index increased to 56.4 in October, the highest since April 2011, from 56.2 a month earlier. The median forecast in a Bloomberg survey of 83 economists was 55. Readings above 50 indicate growth.
Fed PolicyThe Federal Open Market Committee maintained its monthly bond purchases at $85 billion this week and said it will wait for more evidence of sustained improvement before paring stimulus measures. The odds for the Fed to start reducing bond purchases in January rose to 45 percent from 25 percent before the statement, Citigroup Inc. said. Economists surveyed by Bloomberg Oct. 17-18 predicted the Fed would wait until March to begin the cuts.
China's official manufacturing gauge rose more than forecast to the highest level in 18 months. The Purchasing Managers' Index advanced to 51.4 in October, from 51.1 a month earlier, the National Bureau of Statistics and China Federation of Logistics and Purchasing said in a report. The median estimate in a Bloomberg survey of economists called for 51.2.
Stock markets in Austria and Luxembourg are closed today for All Saints Day. The volume of shares changing hands in DAX-listed companies was 37 percent lower than the average of the last 30 days, according to data compiled by Bloomberg.
Wacker DowngradeWacker Chemie dropped 3.6 percent to 66.77 euros after Citigroup downgraded the shares to sell from neutral. The brokerage cut its profit estimates for the company, citing the outlook for the Siltronic unit, slower margin recovery in its chemicals businesses and a lower polysilicon earnings.
EON retreated 0.4 percent to 13.40 euros as Citigroup added the stock to its least-preferred list, replacing RWE AG, Germany's second-biggest utility. RWE declined 0.9 percent to 26.96 euros.
Volkswagen preferred shares increased 0.7 percent to 188.45 euros, a fourth day of gains.
K+S AG, Europe's biggest potash producer, advanced 2.2 percent to 19.20 euros. OAO Uralkali, the world's largest producer of the crop nutrient, said it expects global demand for the chemical to climb to the highest for at least a decade next year as a decline in prices ends a slowdown in sales.
Wednesday, November 13, 2013
Yahoo selling sled.com and other odd domains
Want to buy av.com from Yahoo? It might cost you $1.5 million.
NEW YORK (CNNMoney) Yahoo said it has "stumbled across" about 100 Web domains it owns, including sandwich.com and av.com, and it will sell off the names in an auction this week."As we discussed what to do with them, it became obvious that it was time to set them free...back into the wild of the Internet," Yahoo wrote in a post on the Yahoo-owned Tumblr site announcing the "domainapalooza" on Wednesday.
Yahoo (YHOO, Fortune 500) will run the auction through Sedo.com from Nov. 14 to Nov. 21. The list currently includes domain names with common nouns, like sled.com, westerns.com and jockeys.com, as well as stranger fare including batoota.com, truestory.com, raging.com and fonzo.com.
Yahoo said it will add more names to the list this week.
A list of old domain names is a strange asset to stumble upon, but the forgotten gems could net Yahoo a tidy sum. The "reserve range" listed for these domains ranges from $1,000 for several of the offerings to $1.5 million for av.com.
Yahoo has made a lot of buzzy moves since Marissa Mayer took over as CEO last year. Since Mayer left Google to join Yahoo, the company has bought several start-ups, most notably Tumblr. Mayer has also been stressing the importance of mobile and personalization as the online media company tries to accelerate its online ad sales.
The stock has surged during Mayer's tenure, but many critics point out that the company still lags behind other online leaders, such as Google (GOOG, Fortune 500) and Facebook (FB, Fortune 500) in the race for ad dollars. 
Monday, November 11, 2013
Bank Merger Arbitrage Spreads and Pipeline Indicate Different Trends
Sterne Agee is out with a key report discussing merger arbitrage spreads and trends in mergers and acquisitions in the banking sector. While the M&A trade has been on the back burner of late, there have been some developments in the arbitrage spreads for pending M&A deals and in the short interest for the buyers. The firm feels that merger arbitrage spreads seem reasonable at this time, but buying shares of the acquirers could bring higher returns based on such a high building short interest that is happening against the acquirers.
The recently announced PacWest Bancorp (NASDAQ: PACW) and CapitalSource Inc. (NYSE: CSE) merger was called a beacon in an otherwise dim bank M&A landscape so far in 2013 as it was only a $2.3 billion deal total. So far, 2013 looks to register lower in banking M&A activity than the lean years of 2011 and 2012 at only about $9.1 billion in total so far, versus almost $17 billion for each of the past two years. There are only 13 pending transactions that exceed $100 million, and two of these are expected to close imminently.
The M&T Bank Corp. (NYSE: MTB) and Hudson City Bancorp Inc. (NASDAQ: HCBK) transaction is the only pending deal of 2012 vintage due to various regulatory concerns. MTB currently has 9% short interest outstanding and PACW 15%. Another merger covered is the deal between Provident New York Bancorp (NASDAQ: PBNY) and Sterling Bancorp (NYSE: STL), and the balance are simply too small for us to warrant effort.
Arbitrage spreads in general are currently priced around 3.4%, and this is called fairly reasonable, according to the Sterne Agee banking team. Buying the spreads on these two largest transactions would yield about 10.4% and 8.9% on an annualized basis for merger-arb investors.
Sentiment is swinging against the buyers as mergers appear to be the only viable short-term solution to meaningfully grow bank balance sheets. The short interest remains at a fairly high at 6% to 7% of outstanding shares with an average of 17 days to cover.
Sunday, November 10, 2013
Meet the newest Apple supplier play
Naturally, the stock popped more than 20% Tuesday following GT's announcement of the multiyear agreement, under which it will own and operate Advanced Sapphire Furnaces to produce sapphire material for Apple's wildly popular devices.
What's more, Apple is fronting GT Advanced Technologies an advance payment of $578 million to help the smaller company get its operations up and running, for which GT will reimburse Apple over a period of five years beginning 2015. Apple is also leasing GT Advanced Technologies a new 700-employee manufacturing facility in Mesa, Ariz.
A much-needed lifeline...
To be sure, the news couldn't have come at a better time; GT Advanced Technologies simultaneously released its dismal quarterly earnings that day, badly missing expectations thanks primarily to the continued long-standing weakness of its photovoltaic (PV) solar cell business.
For reference, in 2011, PV sales made up more more than 82%, or roughly $740 million, of GT's total revenue of $899 million. When all is said and done this year, taking the midpoint of management's latest guidance, PV should only account for around 10% of GT's projected $305 million in sales. Meanwhile, polysilicon sales will represent around 73% of this year's total, while sapphire should bring in the remaining 17%.
Thanks to the Apple deal, however, GT stated it expects revenue to more than double to a range of $600 to $800 million in 2014, of which 80% should come from the sapphire business.
...but the devil's in the details
Before you get too excited, let's talk about what this deal doesn't mean.
First, note GT's press release explained gross margin from this new sapphire business is expected to be "substantially lower than GT's historical equipment margins." That's fair enough; given GT Advanced Technologies' current weakness, few would argue they made! the wrong move by sacrificing margin in exchange for the long-term stability of the business.
Second, the agreement does not involve sapphire replacing Corning's (NYSE: GLW ) Gorilla Glass as the full-screen protective cover of choice on Apple's iPhones and iPads -- at least over the short term. Still, that's little consolation for Corning investors, who watched Corning stock drop 4.4% on the news.
But as fellow Fool Evan Niu pointed out back in March, sapphire is currently just too darned expensive and difficult to produce for Apple to be able to count on large enough quantities to fulfill demand. In fact, that's why GT management was quick to add the caveat that, while the agreement does require them to maintain a minimum level of capacity, it doesn't guarantee production volumes.
That's also why Apple only took advantage of sapphire's incredible scratch resistant characteristics last year by using it to cover just the tiny camera lens on the iPhone 5. Now, though, Apple is also using sapphire to protect the new Touch ID home buttons in this year's new iPhone 5s.
Meanwhile, Corning certainly hasn't been resting on its laurels. To the contrary, the 162-year-old company recently unveiled Gorilla Glass 3 at this year's Consumer Electronics Show, saying the latest generation is not only 20% thinner than the original, but also up to three times stronger than last year's Gorilla Glass 2. Going further, Corning has continued to relentlessly pursue ways to streamline its own manufacturing processes for Gorilla Glass, which singlehandedly drove sequential sales and earnings gains of 8% and 23%, respectively, in its specialty materials segment last quarter.
There's still hope yet
That said, GT's press release also pointed out it has already "accelerated the development of its next generation, large capacity ASF furnaces to deliver low cost, high volume manufacturing of sapphire material." When all is said and done, GT says, it'll be nicely positioned as "the industry's lowe! st cost s! apphire producers."
However, an MITReview article earlier this year pegged the cost of an average sapphire display cover at roughly $30, while at the same time saying the cost could eventually fall below $20 "in a couple years" thanks to competition and improved technology. Though that estimate likely didn't account for a massive cash infusion from Apple to speed up the process, it still becomes apparent the folks at GTAT have their work cut out for them if they plan on catching up to Corning's value proposition anytime soon.
But don't for a second think GT Advanced Technologies' only opportunity lies in its newfound status as a bona fide Apple supplier. After all, thanks largely to both an expected late-2014 rebound in PV sales and the introduction of several new equipment products in its other segments, GT expects 2015 sales to exceed $1 billion. By 2016, GT thinks sales could "nearly double from 2014 levels" and drive its non-GAAP earnings to over $1 per share, all on the back of continued sapphire segment contributions and incremental strength in equipment revenue.
If all goes as planned, then, and considering the stock currently trades for just under $10 per share, it appears patient long-term GT Advanced Technologies investors could be handsomely rewarded over the next few years.
The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.
<SCRIPT language='JavaScript1.1'SRC="http://ad.doubleclick.net/adj/N4538.USAToday/B2304017.8;abr=!ie;sz=550x300;ord=[timestamp]?"></SCRIPT><NOSCRIPT><AHREF="http://ad.doubleclick.net/jump/N4538.USAToday/B2304017.8;abr=!ie4;abr=!ie5;sz=550x300;ord=[timestamp]?"><IMGSRC="http://ad.doubleclick.net/ad/N4538.USAToday/B2304017.8;abr=!ie4;abr=!ie5;sz=550x300;! ord=[time! stamp]?" BORDER=0 WIDTH=550 HEIGHT=300ALT="Advertisement"></A></NOSCRIPT>
Saturday, November 9, 2013
Rise of the Western Banana Republics?
These are dark times for developed economies such as the United States and parts of Europe. Income inequality has been rising steadily for the last 40 years, but the 2008 financial crisis, the ensuing global recession and subsequent stimulus by the global central banks have only exacerbated the divide between the rich and poor.According to a recent study on income inequality by the National Bureau of Economic Research, the US now has the highest income inequality and lowest upward mobility of any country in the developed world. Accordingly, the study found that while the picture grows increasingly bleak for America’s middle class, “the share of total annual income received by the top 1 percent has more than doubled from 9 percent in 1976 to 20 percent in 2011.”
Earlier this year, a report by the Organization for Economic Co-operation and Development (OECD) also found that the US now leads the developed industrialized world in income inequality. Finally, a recent study from the University of California, Berkeley, found that 95 percent of income gains from 2009 to 2012 went to the top 1 percent of the earners, a trend largely attributed to the Federal Reserve’s asset purchases, since the rich hold a much larger proportion of financial assets than other income brackets.
Percent Change in Real Income Since 1948
Source: IRS data compiled by economist Emmanuel Saez
“Lost in the angst over inequality is the critical role that central banks have played in exacerbating the problem,” wrote Stephen Roach, former top economist at Morgan Stanley and lecturer at Yale. In an article, entitled Occupy QE, he wrote, “All of this means that the wealthiest 10 percent of the US income distribution benefit the most from the Fed’s liquidity in! jections into risky asset markets. And yet, despite the significant increases in asset values traceable to QE over the past several years – residential property as well as financial assets – there has been little to show for it in terms of a wealth-generated recovery in the US economy.”
The problem, Roach argues, continues to be the crisis-battered American consumer. “In the 22 quarters since early 2008, real personal-consumption expenditure, which accounts for about 70 percent of US GDP, has grown at an average annual rate of just 1.1 percent, easily the weakest period of consumer demand in the post-World War II era. That is the main reason why the post-2008 recovery in GDP and employment has been the most anemic on record.”
Clearly, the struggles of the middle class are alarming, since its well-being is a necessary component of a successful democracy. Further, history shows a disappearing middle class has disturbing implications for the future growth prospects of the economy. Some have voiced concern that the United States and some European countries are in danger of becoming banana republics plagued by growing inequality, huge debts, political paralysis and subpar growth.
A banana republic – the term was first applied to the shaky regimes of Central America and the Caribbean – is a politically unstable country stratified into a large, impoverished working class and a ruling plutocracy that comprises the elites of business, politics, and the military. This politico-economic oligarchy controls the productive assets and uses its privileges to exploits the country’s economy. Growth in such an imbalanced economy tends to be limited, and its benefits accrue largely to the elites.
While there are certainly policies that can be implemented to arrest the decline of America’s middle class, and it’s our sincerest hope our political and business leaders act to stop potential social and economic stagnation, engaging in a polic! y debate ! is outside the narrow scope of this newsletter. Rather, we aim to show how income inequality in developed economies is rising, and how past economic research shows unequivocally the correlation between income inequality and inflation, and the need for investors to protect their portfolios.
Inflation Doves Are Strange
Surprisingly, some economists have recently argued that moderate inflation may be a good thing. According to an October story in The New York Times, “The Fed has worked for decades to suppress inflation, but economists, including Janet Yellen, President Obama’s nominee to lead the Fed starting next year, have long argued that a little inflation is particularly valuable when the economy is weak.”
These economists argue, “Rising prices help companies increase profits; rising wages help borrowers repay debts. Inflation also encourages people and businesses to borrow money and spend it more quickly,” according to the article, headlined “In Fed and Out, Many Now Think Inflation Helps.”
The push for “modest” inflation has been advocated by such prominent economists as Paul Krugman and Kenneth Rogoff. Of course, these arguments presuppose that incomes would keep up with inflation, companies would spend, and that the central banks can be precise in controlling inflation.
Such views apparently ignore the recent phenomenon of globalization and the weakness of unions as well as new market dynamics and technologies, all of which will likely stifle efforts to renegotiate most wages upward, further increasing income inequality. And record Fed stimulus has yet to incentivize companies (which have trillions on their balance sheets) to spend and hire sufficiently to boost economic growth above the current sluggish levels.
In an inflationary environment, many companies may not be able to pass through costs – which may mean less hiring or even layoffs. Finally, central banks have a terrible record of timing s! timulus p! rograms, nearly always leading to higher inflation than intended, which is what we believe will happen.
In sum, what all this means is that not only is higher inflation very likely given the dovish bent of many central bankers and economists, but so is greater income inequality, which not only predicts but can potentially exacerbate the length and impact of future inflationary periods.
Tears of Tomorrow
In analyzing the inequality-inflation relationships for 53 countries between 1981 and 2000, a researcher at the London School of Economics’ Center for Economic Performance, finds a positive relationship between inequality and inflation holds even when controlling for other factors such as the overall level of development. According to the 2005 study by Chris Crowe, politicians in high-inequality countries may have incentives to choose higher inflation, a process he divides into two stages.
“To demonstrate the first stage, note that inflation is a tax. Printing money raises revenue for the government, in the process expropriating a proportion of any wealth held in nominal assets such as cash. But not all people face the same inflation tax rate. Inflation is regressive, a tax that hits the poor and middle class hardest because they hold more nominal assets, as a fraction of total income, than the wealthy. This means that the wealthy – who can mostly avoid the inflation tax – might well prefer it to more progressive taxes such as income tax,” Crowe wrote.
And the political and economic preferences of the rich carry ever more weight as they grow richer. “To put it simply, money talks. But if political voice depends on income, then greater inequality means greater inequality in political participation. In turn, this increases the adoption of policies – such as inflation – more favorable to the wealthy,” Crowe argues.
Of course, this provides only partial explanation for inflation. Some policy-makers are simply inco! mpetent, ! according to Crowe. Inflation worldwide has clearly waned since its heyday in the 1970s, while inequality has not. Still, the positive correlation Crowe found between inequality and inflation cannot be ignored.
Given the negative trends in income inequality that are happening in Europe and the U.S., and suggestions by economists and policymakers that they indeed hope to generate higher levels of inflation in the future, we reiterate to investors our recommendation to invest in companies that have pricing power; commodities, real estate and diversified international portfolios that would take advantage of better growth dynamics in other countries, all of which offer protection from inflation.
Friday, November 8, 2013
Cablevision Systems Corporation Shares Rise on Q3 Earnings Beat; Dividend Maintained (CVC)
Regional cable TV and Internet provider Cablevision Systems Corporation (CVC
Cablevision’s Q3 Earnings in Brief
- Net income totaled $294.6 million, or $1.10 per share, reversing last year’s loss of $3.79 million, or -1 penny per share.
- Revenue rose 1.8% from last year to $1.57 billion.
- Analysts expected much lower earnings of just 11 cents per share, on matching revenue.
Latest Dividend Reiterated; Yield Surpasses Peers
In its earnings release, Cablevision announced it would continue its dividend payout of 15 cents per share. The latest dividend will be paid on Dec. 13 with an ex-dividend date of Nov. 20. The company has not raised its dividend payout since May of 2011.
Despite the lack of dividend raise, CVC’s dividend yield of 3.84% compares favorably with other stocks in its industry. Time Warner Cable (TWC
Shares Rise, but Still Tail Indexes
Cablevision shares rose more than 2% in early trading on Friday, but the company’s stock performance has lagged the wider markets for quite some time. Year-to-date, CVC has gained about 6%, compared with a 24% gain in the benchmark S&P 500 index. The stock was trading around the $38 level as recently as early 2011, so its dividend yield has risen significantly as its stock price plunged to around $16.
5 Stocks Under $10 Set to Soar
DELAFIELD, Wis. (Stockpickr) -- There isn't a day that goes by on Wall Street when certain stocks trading for $10 a share or less don't experience massive spikes higher. Traders savvy enough to follow the low-priced names and trade them with discipline and sound risk management are banking ridiculous coin on a regular basis.
Just take a look at some of the hot movers in the under-$10 complex from Thursday, including Neurometrix (NURO), which is soaring by 38%; OCZ Technology (OCZ), which is ripping higher by 21%; Westell Technologies (WSTL), which is soaring by 19%; and Merrimack Pharmaceuticals (MACK), which is spiking up by 17%. You don't even have to catch the entire move in lower-priced stocks such as these to make outsized returns when trading.
Guess what happened? Shares of Higher One didn't wait long to trigger that breakout, since the stock took out those key overhead resistance levels the following week. Shares of ONE are now exploding higher today and launching cleanly above all near-term overhead resistance levels with large upside volume. This stock has tagged an intraday high today of $9.99 a share, which represents a huge gain of close to 30% from the time of this writing. This stock now has a great a chance to hit $11 to $12 in the coming weeks, so make sure to keep this name on your radar.
Low-priced stocks are something that I tweet about on a regular basis. I frequently flag high-probability setups, breakout candidates and low-priced stocks that are acting technically bullish. I like to hunt for low-priced stocks that are showing bullish price and volume trends, since that increases the probability of those stocks heading higher. These setups often produce monster moves higher in very short time frames.
I'm not as eager to recommend investing long-term in stocks that trade less than $10 a share because these names can be very speculative, and the odds for picking the long-term winners aren't great. But I definitely love to trade stocks that are priced below $10. I like to view them as a trading vehicle with lots of volatility and lots of upside when the trade is timed right.
When I trade under-$10 names, I do it almost entirely based off of the charts and technical analysis. I also like to find under-$10 names with a catalyst, but that's secondary to the chart and volume patterns.
With that in mind, here's a look at several under-$10 stocks that look poised to potentially trade higher from current levels.
Nanosphere
One under-$10 medical equipment player that's quickly moving within range of triggering a major breakout trade is Nanosphere (NSPH), which develops, manufactures and markets an advanced molecular diagnostics platform, the Verigene System, which enables simple, low-cost and highly sensitive genomic and protein testing on a single platform. This stock has been hit hard by the bears so far in 2013, with shares off by 27%.
If you take a look at the chart for Nanosphere, you'll notice that this stock is just starting to spike sharply higher today back above its 50-day moving average of $2 a share. This spike is quickly pushing shares of NSPH within range of triggering a major breakout trade. That breakout will trigger once NSPH manages to take out the upper-end of its recent sideways trading chart pattern.
Traders should now look for long-biased trades in NSPH if it manages to break out above some near-term overhead resistance levels at $2.17 to $2.20 a share and then once it takes out its gap down day high from August at $2.29 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action of 652,718 shares. If that breakout hits soon, then NSPH will set up to re-fill some of its previous gap down zone from August that stated just above $3 a share. If that gap gets filled with volume, then NSPH could easily tag $3.50 to $4 a share.
Traders can look to buy NSPH off any weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support levels at $1.81 to $1.77 a share. One can also buy NSPH off strength once it clears those resistance levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.
Castle Brands
Another stock that's rapidly moving within range of triggering a big breakout trade is Castle Brands (ROX), which develops and markets premium and super-premium brands in the beverage alcohol categories: rum, whiskey, liqueurs, vodka, tequila and fine wine. This stock has been on fire so far in 2013, with shares up huge by 234%.
If you take a look at the chart for Castle Brands, you'll notice that this stock has been uptrending very strong for the last three months, with shares soaring higher from its low of 30 cents per share to its recent high of 99 cents per share. During that uptrend, shares of ROX have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed shares of ROX within range of triggering a big breakout trade.
Market players should now look for long-biased trades in ROX if it manages to break out above some near-term overhead resistance levels at 93 cents per share to its 52-week high at 99 cents per share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average volume of 501,958 shares. If that breakout triggers soon, then ROX will set up to enter new 52-week-high territory, which is bullish technical price action. Some possible upside targets off that breakout are $1.50 to $2 a share.
Traders can look to buy ROX off any weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support levels at 80 cents to 77 cents per share, or around its 50-day at 70 cents per share. One can also buy ROX off strength once it clears those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.
Stereotaxis
One under-$10 health care player that looks poised for a potentially large move higher is Stereotaxis (STXS), which designs, manufactures and markets an advanced cardiology instrument control system for use in a hospital's interventional surgical suite to enhance the treatment of arrhythmias and coronary artery disease. This stock has been on fire so far in 2013, with shares up big by 43%.
If you take a look at the chart for Stereotaxis, you'll notice that this stock has formed a major bottom pattern over the last three months, since this stock has found buying interest each time it has pulled back towards $3.50 and $3.10 a share. Buyers have stepped in at those levels and have not let the sellers pressure STXS lower. Shares of STXS are now starting to spike higher today right off its 50-day moving average of $3.59 a share. That spike is quickly pushing shares of STXS within range of triggering a big breakout trade above a key downtrend line.
Traders should now look for long-biased trades in STXS if it manages to break out above some near-term overhead resistance at $4 a share with high volume. Look for a sustained move or close above that level with volume that hits near or above its three-month average action of 1.98 million shares. If that breakout triggers soon, then STXS will set up to re-test or possibly take out its next major overhead resistance levels at $5 to $6.24 a share. Any high-volume move above $6.24 a share will then give STXS a chance to re-fill some of its previous gap down zone from August that started at $10 a share.
Traders can look to buy STXS off any weakness to anticipate that breakout and simply use a stop that sits right below those key support levels at $3.50 to $3.10 a share. One can also buy STXS off strength once it clears $4 a share with volume and then simply use a stop that sits a comfortable percentage from your entry point.
Fuel Tech
Another under-$10 stock that's starting to move within range of triggering a big breakout trade is Fuel-Tech (FTEK), which uses a suite of advanced technologies to provide boiler optimization, efficiency improvement and air pollution reduction and control solutions to utility and industrial customers. This stock is off to a slow start in 2013, with shares up just 7% so far.
If you take a look at the chart for Fuel Tech, you'll notice that this stock has entered a tight consolidation chart pattern over the last month, with shares moving between $4.19 on the downside and $4.78 a share on the upside. Shares of FTEK are now starting to trend higher and move within range of triggering a big breakout trade above the upper-end of its recent sideways trading chart pattern.
Market players should now look for long-biased trades in FTEK if it manages to break out above some near-term overhead resistance levels at $4.66 to $4.68 a share and then once it takes out more resistance at $4.78 to its 52-week high at $5.20 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action of 77,549 shares. If that breakout hits soon, then FTEK will set up to enter new 52-week high territory, which is bullish technical price action. Some possible upside targets of that breakout are $5.50 to $6, or even $7 a share.
Traders can look to buy FTEK off weakness to anticipate that breakout and simply use a stop that sits right below its 50-day at $4.33 a share, or just below its 200-day at $4.14 a share. One can also buy FTEK off strength once it clears those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.
NuPathe
One final under-$10 pharmaceuticals player that's quickly moving within range of triggering a near-term breakout trade is NuPathe (PATH), which develops and commercializes branded therapeutics for diseases of the central nervous system, including neurological and psychiatric disorders. This stock has been hammered by the sellers in 2013, since shares of are off sharply by 48%.
If you take a look at the chart for NuPathe, you'll notice that this stock has been downtrending badly for the last four months, with shares plunging lower from its high of $3.09 to its recent low of $1.57 a share. During that downtrend, shares of PATH were consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of PATH have now started to reverse that downtrend, and we could be seeing an end to the downside volatility in the short-term. That reverse is starting to push shares of PATH within range of triggering a near-term breakout trade.
Traders should now look for long-biased trades in PATH if it manages to break out above some near-term overhead resistance at $1.79 a share with high volume. Look for a sustained move or close above that level with volume that hits near or above its three-month average action of 150,366 shares. If that breakout hits soon, then PATH will set up to re-test or possibly take out its next major overhead resistance levels at its 50-day of $2.21 to $2.50 a share.
Traders can look to buy PATH off weakness to anticipate that breakout and simply use a stop that sits right below some key near-term support levels at $1.65 or at $1.57 a share. One can also buy PATH off strength once it clears $1.79 a share with volume and then simply use a stop that sits a comfortable percentage from your entry point.
To see more hot under-$10 equities, check out the Stocks Under $10 Setting Up to Explode portfolio on Stockpickr.
-- Written by Roberto Pedone in Delafield, Wis.
Thursday, November 7, 2013
NVIDIA Corporation (NVDA) Q3 Earnings Preview: Can We See Another Beat?
NVIDIA Corporation (NASDAQ: NVDA) plans to release its third quarter financial results on Nov.7. The graphics chip maker company will host a conference call on the same day at 2 p.m. PT (5 p.m. ET) to discuss the operating performance for the third quarter.
Wall Street expects Nvidia to earn 20 cents a share, according to analysts polled by Thomson Reuters. The consensus estimate implies a drop of 39.4 percent from last year when it earned 33 cents a share. The consensus estimate has declined by 2 cents in the past three months.
Quarterly revenues are projected to drop 12.6 percent to $1.05 billion from $1.20 billion in the same quarter last year. Nvidia expects third quarter revenue to be $1.050 billion, plus or minus 2 percent.
Nvidia has two key segments - Graphics Processing Unit (GPU) business and Tegra. The GPU business includes GeForce graphics chips and cards for PCs, Tesla graphics for super-computing applications, Quadro for computer-aided design or medical imaging). GPU accounts for more than 70 percent of sales.
The second is the Tegra line of mobile system-on-a-chip (SoC) processors. Tegra integrates a CPU, GPU, and memory controller onto a single chip that powers smartphones and tablets. Last year, Tegra accounted for 18 percent of total revenues.
Investors will be keeping a close eye on GPU unit performance amid declining PC sales as the segment primarily caters to PCs. The GPU unit's revenue grew only 2 percent in 2012, and, in fact, sales fell 3 percent over the past 3 years. The company's GPU business had second quarter revenue of $858.6 million, up 7.5 percent from a year earlier.
Meanwhile, Tesla chips have gained traction in supercomputing space, and the market would welcome if there is any positive momentum in Tesla sales.
Another focus point could be Tegra, which is considered as the next leg of growth for Nvidia. Wall Street will be watching for customer signings on the smartphone front as it faces cut throat competition from market ! leader Qualcomm, Inc. (NASDAQ: QCOM). Tegra Processor business generated revenue of $52.6 million in the second quarter, down 70.7 percent year over year.
Gross margin is another key metric. Reported and adjusted gross margins for the third quarter are expected to be approximately flat relative to the prior quarter at 56 and 56.3 percent, respectively.
The magnitude of the upcoming Tegra 4 ramp may impact margins of Nvidia. Margins are particularly susceptible to oscillate in the second half of 2013 given that to what extent a rebounding lower-margin Tegra business is going to offset growing Tesla adversely, and to a lesser extent, GRID sales. So, investors should focus on margin commentary.
Meanwhile, GRID interest is encouraging. Thus far, GRID is being well-received in the marketplace as customer sign-ups and trails are increasing with material revenue generation likely still several quarters out. Recently, Amazon Web Services has deployed GRID GPUs.
In addition, the street could be looking for updates on Project Shield, a unique Android gaming device that is expected to ship in the second quarter of fiscal 2014.
Moreover, the outlook for the fourth quarter revenue would be closely monitored, and it may decide the movement of the stock depending upon how it fares with the street's view of 22 cents in earnings and $1.09 billion in revenue.
For the second quarter ended July 28, 2013, the Santa Clara, California-based company reported net income of $96.4 million, or 16 cents a share, compared to $119.0 million or 19 cents a share for the year-ago quarter. Excluding items, it earned 23 cents a share. Revenue for the second quarter fell 6.4 percent to $977.24 million.
Gross margin for the quarter improved to 55.8 percent from 51.8 percent a year ago while adjusted gross margin increased to 56.3 percent from 52.0 percent last year.
Out of 32 analysts covering the stock, seven analysts have a rating of "strong buy" or "buy," while 22 analysts recommend "hold."! Three an! alysts have a "sell" rating on the stock, which has traded between $11.15 and $16.10 during the past 52-weeks.
Tuesday, November 5, 2013
Tuesday Closing Bell: Markets Close Mixed after Weak Open
November 5, 2013: U.S. markets opened lower Tuesday morning on another day with little U.S. economic data on tap. The ISM non-manufacturing PMI for October came in better than expected but had little impact on stock prices. The European Commission lowered its growth estimate from 1.2% to 1.1% for the eurozone in 2014, and that pushed European markets lower.
European and Latin American markets closed lower today while Asian markets closed mixed.
Wednesday's calendar includes speeches by Cleveland Fed President Sandra Pianalto and the following scheduled data releases and events (all times Eastern):
7:00 a.m. – Mortgage Bankers Association purchase applications 10:00 a.m. – Leading indicators 10:30 a.m. – EIA weekly petroleum status report 3:00 p.m – Treasury STRIPSHere are the closing bell levels for Tuesday:
S&P500 1792.97 (-4.96; -0.28%) DJIA 15618.22 (-20.90; -0.13%) NASDAQ 39339.86 (+3.27; +0.08%) 10YR TNOTE 2.67% (-0.53125) Gold $1,308.10 (-6.60; -0.5%) WTI Crude oil $93.37 (-1.05; -1.3%) Euro/Dollar: 1.3474 (-0.0040; -0.30%)Big Earnings Movers: AOL Inc. (NYSE: AOL) is up 8.6% at $42.04 after reporting rising advertising revenues. The Mosaic Co. (NYSE: MOS) is down 1.5% at $46.05 on weak results. T-Mobile US Inc.(NYSE: TMUS) is down 0.8% at $28.12 even though subscriber numbers rose. Hertz Global Holdings Inc. (NYSE: HTZ) is down 10.5% at $21.31 after recording a $40 million dollar charge to cover a loss on the sale of its Advantage brand.
Stocks on the Move: GT Advanced Technologies Inc. (NASDAQ: GTAT) is up 20.5% at $10.10 after earnings and signing deal to supply Apple Inc. (NASDAQ: AAPL) with sapphire glass. Marvell Technology Group Ltd. (NASDAQ: MRVL) is up 8.5% at $13.03 following reports of an investment by KKR & Co. (NYSE: KKR). Oxygen Biotherapeutics Inc. (NASDAQ: OXBT) is up 62.7% at $8.38 along with other biotech stocks making big moves today.
In all, 129 NYSE stocks put up new 52-week highs today, while 30 stocks posted new lows.