Best Tiny Stocks For 2018: April 2014

Wednesday, April 30, 2014

Nabors Industries CEO: $95M in pay, stock gains

It's been a big week for big reveals on the CEO pay front.

The latest: Nabors Industries' Anthony Petrello, who received compensation valued at $68.2 million and gained another $27 million from vested shares, the gas and oil drilling contractor said Wednesday in its annual filing.

Nabors Industries had been under pressure to limit pay and severance packages for executives since 2011, when then-CEO Eugene Isenberg stepped away with a $100 million termination fee, but remained as chairman. Isenberg later waived the payment.

Facing renewed shareholder pressure, Nabors' board of directors terminated a potential $50 million severance payment to Petrello and capped his cash bonus last year. But a new, restructured employment contract provided Petrello a one-time payment worth $45 million, Nabors says.

Petrello, 59, also received a stock award valued at $18.7 million, $1.5 million bonus and $1.7 million in salary. Petrello's 2012 compensation was valued at $19.7 million.

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News of Petrello's compensation comes on the heels of several mega-paydays disclosed in proxy filings over the past week. Among them:

Cheniere Energy reported that CEO Charif Souki received compensation valued at $142 million and gained another $130 million from vested shares.

LinkedIn said CEO Jeffrey Weiner received compensation valued at about $49 million and gained nearly $180 million from stock options and vested shares.

Time Warner Cable said CEO Glenn Britt received compensation valued at nearly $118 million, including $62 million in stock and options that vested when he retired Dec. 31.

Wal-Mart reported CEO Mike Duke, who retired Jan. 31, received deferred comp valued at $140 million.

Follow Strauss on Twitter @gbstrauss.

Tuesday, April 29, 2014

Time Warner Cable guy Glenn Britt: $118m in 2013…

Time Warner Cable executives will land some fat golden parachutes after the cable operator's $45 billion merger with Comcast is finalized later this year. None will come close to $118 million CEO Glenn Britt got after retiring in 2013.

Britt received compensation valued at about $14.2 million, including a $5.7 million bonus. He gained $17.5 million exercising stock options and another $24.1 million as part of a special dividend of restricted shares, Time Warner Cable said Tuesday in its annual proxy. Britt also received $62.1 million, in stock and options that vested when he retired Dec. 31. He'll get a one-time benefit valued at $81,000, which the company described as secretarial and travel support.

Time Warner Cable's board said Britt, 65, could have earned $16 million in 2013 if the company had met performance targets.

His successor, Robert Marcus, made headlines after Comcast and Time Warner announced their Feb. 12 merger, just six weeks into Marcus' watch. Under terms of his employment contract, Marcus, 48, will pocket about $80 million. Marcus received 2013 compensation valued at $8.5 million, gaining about $4.1 million exercising stock options and nearly $2.5 million from vested shares.

Among other Time Warner Cable execs, CFO Arthur Minson — who rejoined the company last May — received compensation valued at nearly $5.5 million. He'll receive a post-merger golden parachute valued at $27 million.

Executives, along with 1,800 other Time Warner Cable employees, will also be eligible for supplemental bonuses payable in 2015. The cable operator's board says the bonuses are designed to retain employees until the merger is complete.

Time Warner Cable said shareholder return jumped 43% last year, outpacing the Standard & Poors 500's 32% gain.

Follow Strauss on Twitter @gbstrauss.

Monday, April 28, 2014

Benzinga's Volume Movers

Related FURX Benzinga's M&A Chatter for Monday April 28, 2014 Forest Labs To Acquire Furiex Pharma A Deal Potentially Worth $1.46 Billion Forest Labs to Buy Furiex Pharma in $1.5B Deal (Fox Business) Related FRX Benzinga's M&A Chatter for Monday April 28, 2014 Will Merck (MRK) Disappoint This Earnings Season? - Analyst Blog Forest Labs to Buy Furiex Pharma in $1.5B Deal (Fox Business)

Furiex Pharmaceuticals (NASDAQ: FURX) shares moved up 28.41% to $102.92. The volume of Furiex Pharmaceuticals shares traded was 2285% higher than normal. Forest Labs (NYSE: FRX) announced its plans to buy Furiex Pharma for up to $1.46 billion.

Susser Holdings (NYSE: SUSS) shares rose 36.54% to $77.87. The volume of Susser Holdings shares traded was 1198% higher than normal. Energy Transfer Partners LP (NYSE: ETP) announced its plans to acquire Susser Holdings in a deal valued at around $1.8 billion.

AstraZeneca PLC (NYSE: AZN) shares climbed 14.97% to $78.94. The volume of AstraZeneca shares traded was 968% higher than normal. AstraZeneca rejected Pfizer's (NYSE: PFE) $76.62 per share bid.

NorthStar Realty Finance (NYSE: NRF) surged 8.86% to $17.45. The volume of NorthStar Realty Finance shares traded was 419% higher than normal. American Realty Capital Properties (NASDAQ: ARCP) is in talks for a takeover of NorthStar Realty Finance, Financial Times' Ed Hammond said on Twitter.

Posted-In: volume moversNews Intraday Update Markets Movers

Most Popular Short Sellers Retreat From First Solar and SolarCity (FSLR, SCTY, SPWR) Facebook and Google Buck Short Interest Trend (FB, GOOGL, YELP) Earnings Expectations For The Week Of April 28: Big Oil, Big Pharma And More Weekly Highlights: Apple's Stock Split Surprise, iPhone Sales And More Financials, Futures Move Lower Following News BofA Has Suspended 2014 Capital Plan UPDATE: Organovo Reports Pre-Release Availability of 3D Liver Contract Services Related Articles (AZN + ARCP) Benzinga's M&A Chatter for Monday April 28, 2014 Market Wrap For April 28: Apple Hits New 52-Week Highs In a Volatile Start To the Trading Week Mid-Afternoon Market Update: Markets Trade in Swing-Prone Session as J.C. Penney Rallies Mid-Day Market Update: NASDAQ Drops 0.8%; Susser Shares Surge On Acquisition News A Big Week for Economic & Earnings Data - Ahead of Wall Street Earnings Picture Still Looks Hazy - Economic Highlights Around the Web, We're Loving... Newmont Terminates Merger Talks With Barrick Lightspeed Trading Presents: Effective Scalping with Rifle Charts on the Lightspeed Trader Platform Detroit Reaches Deal with Labor Unions

Sunday, April 27, 2014

Top 5 Consumer Service Stocks To Invest In 2015

The S&P 500 SPDR (SPY) is the oldest and best-known exchange-traded fund. Here�� a quick primer on the history of SPY, by the numbers:

Vital StatsBelow are some stats that put SPY into perspective:

Oldest U.S.-listed ETF (launched 1993)Largest U.S. listed ETF ($141.6 billion in AUM)Most Heavily Traded U.S. listed ETF (ADV of 5.2 million shares)Year by YearBetween its first full year of trading in 1994 and 2012, SPY has turned in 15 positive annual performances and lost ground in four years:

Combined together, that translates into an aggregate performance of about 331% between inception and June 30, 2013:

Since it launched in 1993 (and through June 2013), SPY�� winning sessions outnumber its losing ones by about 1.17 to one. Visualized another way:

Visualized another way, here�� a look at the daily performance of SPY since its inception (note the significant increase in volatility throughout 2008 and 2009):

Here�� yet another way to look at the daily historical volatility of SPY:

Top 5 Consumer Service Stocks To Invest In 2015: Evercore Partners Inc(EVR)

Evercore Partners Inc. operates as an independent investment banking advisory firm. The company operates through two segments, Investment Banking and Investment Management. The Investment Banking segment offers advisory services on mergers, acquisitions, divestitures, and other strategic corporate transactions primarily for multinational corporations and private equity firms; and restructuring advice to companies in financial transition, as well as to creditors, shareholders, and potential acquirers. This segment also provides capital markets advice; underwrites securities offerings; raises funds for financial sponsors; and offers equity research and agency-only equity securities trading for institutional investors. The Investment Management segment manages financial assets for institutional investors; provides independent fiduciary services to corporate employee benefit plans; provides wealth management services for high net-worth individuals; manages private equity funds ; and offers specialized investment management and trustee services. The company operates primarily in the United States, Europe, and Latin America. Evercore Partners Inc. was founded in 1996 and is headquartered in New York, New York.

Advisors' Opinion:

[By David Hanson and Matt Koppenheffer]
In this special "Best and Worst 2013" edition of The Motley Fool's everything-financials show, Where the Money Is, banking analysts David Hanson and Matt Koppenheffer tell viewers why Evercore Partners (NYSE: EVR ) crushed the market in 2013. Despite the increase in its valuation multiple, David thinks the small investment bank could be poised to continue producing strong returns.
[By David Hanson and Matt Koppenheffer]
In this segment from Thursday's episode of The Motley Fool's everything-financials show,�Where the Money Is, banking analysts Matt Koppenheffer and David Hanson go through a rapid-fire round of three top headlines. The newsmakers included�KKR (NYSE: KKR ) ,�Bank of America (NYSE: BAC ) ,�Morgan Stanley (NYSE: MS ) ,�Lazard (NYSE: LAZ ) , and�Evercore (NYSE: EVR ) .
[By Jonathan Levin]
The company began operations in 2006 and its fleet includes Airbus SAS single-aisle A319 and A320 jets. Owners include Indigo Partners LLC, Evercore Partners Inc. (EVR) and Evercore Co-Chairman Pedro Aspe, a former Mexico finance minister, according to the pre-IPO filing.
[By Sofia Horta e Costa]
Evraz (EVR) plunged 11 percent to 185.8 pence, the most since Russia�� biggest steelmaker began trading in London in November 2011. The company�� board of directors refrained from announcing a final dividend, citing deteriorating market environment and a weaker second-half performance.

Top 5 Consumer Service Stocks To Invest In 2015: American Heritage International Inc (AHII)

American Heritage International Inc., formerly Cumberland Hills Ltd., incorporated on January 19, 2010, intends to focus on electronic cigarette. The Company�� product includes American Heritage, American One, American Freedom, American Nights, American Standard and Smoking Alternative Gums and Mints.

The Company�� initial and primary line will be the American Heritage line. American One is a disposable Electronic Cigarette, good for over 500 draws, about the equivalent of over two packs of traditional cigarettes. American Freedom will be the brand name for its Nicotine-Free line of Electronic Cigarettes. American Nights will be a product line targeted to the young adult market of social smokers. Smoking Alternative products will include gums, and mints.

Advisors' Opinion:

[By James E. Brumley]
The winds of change are blowing in the cigarette arena, and though in a superficial sense it looks like the usual big tobacco names such as Reynolds American, Inc. (NYSE:RAI) or Lorillard Inc. (NYSE:LO) are positioning to retain their dominance in the new era of cigarette smoking, in reality, it's a little name like American Heritage International Inc. (OTCBB:AHII) that could end up beating the big guys at their own game.
[By Bryan Murphy]
The latest and greatest of these new entrants is a little startup called American Heritage International Inc. (OTCBB:AHII)... a little company that could really rattle the cages of its bigger brothers.

Best Beverage Companies To Watch In Right Now: Shutterfly Inc.(SFLY)

Shutterfly, Inc. provides an Internet-based social expression and personal publishing service that enables consumers to share, print, and preserve their digital photos through the medium of photography in the United States. It offers a range of personalized photo-based products and services for consumers to upload, edit, enhance, organize, find, share, create, print, and preserve their memories. The company produces and sells photo books, greeting and stationery cards, personalized calendars, and other photo-based merchandise, including calendars, mugs, canvas prints, mouse pads, magnets, and puzzles. It also offers photo prints consist of wallet and photocards. In addition, the company provides commercial print services. Shutterfly, Inc. was founded in 1999 and is headquartered in Redwood City, California.

Advisors' Opinion:

[By Rich Smith]
Redwood City, Calif.-based Shutterfly (NASDAQ: SFLY ) has acquired photo bookmaking software producer MyPublisher.

Calling its new acquisition's software client "best in class," Shutterfly CEO Jeffrey Housenbold argued that in conjunction with Shutterfly's own cloud-based platform, the companies are ready to "set the standard for design, choice and quality in the personal publishing and social expression category."
[By John Kell]
Shutterfly Inc.'s(SFLY) fourth-quarter earnings fell 18% as the e-commerce company recorded higher expenses. Shutterfly also said it expects to post a loss for the current year. Shares dropped 7.6% to $45.90 premarket.

Top 5 Consumer Service Stocks To Invest In 2015: Tessera Technologies Inc.(TSRA)

Tessera Technologies, Inc., through its subsidiaries, develops, licenses, and delivers miniaturization technologies and products for electronic devices worldwide. The company operates in two segments, Intellectual Property and DigitalOptics. The Intellectual Property segment offers semiconductor packaging technologies, which create mechanical and electrical connection between semiconductor chips and systems, such as computers and communication equipments through connection to printed circuit boards. The DigitalOptics segment provides mobile camera module solutions in categories, including actuator technologies, image enhancement solutions, and wafer level optics that can be applied to mobile phones and other consumer electronic products. It also offers customized micro-optic lenses from diffractive and refractive optical elements to integrated micro-optical subassemblies. This segment serves customers in digital still cameras and mobile handsets markets, as well as semicon ductor lithography, high-end communication routers, military and defense, and barcode scanners markets. Tessera Technologies, Inc. was founded in 1990 and is headquartered in San Jose, California.

Advisors' Opinion:

[By Eric Volkman]
In the latest development in a fight over the future of Tessera Technologies (NASDAQ: TSRA ) , the company has replaced its chief executive. The new CEO, Thomas Lacey, will serve in an interim capacity until a replacement is found. His predecessor, Richard Hill, will continue to serve as the firm's board chairman. Tessera Tech is currently conducting a search for a more permanent CEO.
[By Eric Volkman]
As part of a reconfigured capital allocation strategy devised last month, Tessera Technologies (NASDAQ: TSRA ) is going to pay a special distribution to its stockholders of $0.30 per share of its common stock. It will be paid May 31 to shareholders of record as of May 23.
[By Rich Duprey]
Troubled Tessera Technologies (NASDAQ: TSRA ) announced today�that it has named a new interim chief financial officer, John Allen, who was previously the company controller. He will immediately assume the new role as his predecessor C. Richard Neely, Jr., who was only appointed to the position this past August, saw his tenure come to an abrupt end today. The press release announcing the change didn't even wish him luck in his endeavors.
[By James E. Brumley]
They say a company is judged by the company it keeps. What's less said - though never disputed - is that a company is equally judged by the kind of talent it can attract... winning people tend to only work for winning companies. In that light, the fact that the newest chief of Endeavor IP Inc. (OTCBB:ENIP) is a former executive from the ranks of Rambus Inc. (NASDAQ:RMBS) and Tessera Technologies, Inc. (NASDAQ:TSRA) should underscore just how seriously the market should be taking ENIP. RMBS and TSRA didn't become large powerhouses by hiring folks who don't know what they're doing, and conversely, the fact that a former Rambus and Tessera Technologies guy was willing to step into the unknown and take the helm at Endeavor IP speaks volumes about the potential of the young company's IP portfolio.

Top 5 Consumer Service Stocks To Invest In 2015: United Utilities Group PLC (UUGRY)

United Utilities Group PLC, incorporated on April 08, 2008, is the holding company of a group which owns and operates water and wastewater assets in the North West of England. The Company provides water and wastewater services to around seven million people and businesses in the North West of England, through its wholly owned subsidiary United Utilities Water PLC (UUW). UUW holds licenses to provide water and wastewater services to a population of approximately seven million people in the North West of England.

The Company had approximately 56,000 hectares of catchment land, approximately 189 reservoirs, approximately 94 water treatment works, over 42,000 kilometers of water pipes, over 77,000 kilometers of sewer pipes, and approximately 570 wastewater treatment works. The Company�� wholly owned subsidiaries include United Utilities Water PLC and United Utilities Property Services Limited.

Advisors' Opinion:

[By Harvey Jones]
Severn Trent's share price has had a flat 12 months, aside from a bout of takeover excitement in May, which pushed the stock to a 12-month high of 20.90p. But management rejected the bid, claiming it failed to recognize the value in the business, and the excitement trickled away. Now it trades at 7.20p. That still represents of rise of 23% over three years and 29% over five years, against 18% and 26% for the FTSE 100 respectively. So there is growth to be had, although being a utility, most investors will focus on the income. Right now, Severn Trent yields 4.41%. That is less than fellow water company United Utilities Group (UUGRY), which yields 5.05%, but still comfortably above the FTSE 100 average of 3.54%.

Friday, April 25, 2014

Ex-Bank of America CFO to Pay $7.5M Fine to New York

New York Attorney General Eric T. Schneiderman said Friday that former Bank of America (BAC) CFO Joe Price agreed to a $7.5 million fine and to be barred from serving as an officer or director of a public company for 18 months in order to settle the state’s lawsuit against him.

The deal concerns the bank’s actions in 2008 when it began its merger with Merrill Lynch.

According the attorney general’s office, “Despite its top executives’ specific knowledge of mounting losses at Merrill Lynch that were forecast at more than $9 billion, Bank of America failed to disclose that information to shareholders prior to their vote on the proposed merger,” it said in a press release.

Schneiderman also alleged former-BofA CEO Kenneth D. Lewis and Price “misrepresented to shareholders the impact that the merger with Merrill would have on Bank of America’s future earnings.”

A month ago, Lewis agreed to a $10 million settlement with the attorney general, and BofA agreed to a $15 million settlement concerning Lewis’ actions during the merger. He is barred from work on public-company boards for three years.

“This [Price] settlement is one more step in our effort to hold top financial executives accountable for their actions,” said Schneiderman, in a statement Friday.

“As with our settlement last month with CEO Ken Lewis, today’s action sends a message that conduct harming investors, shareholders, and the public will not go unpunished. I’m pleased to close the final chapter in our litigation over Bank of America’s merger with Merrill, and I will continue to hold individuals — as well as corporations — accountable for their actions,” the attorney general explained.

Bank of America declined to comment on the matter.

Wednesday, April 23, 2014

Qualcomm Inc. Shares Stumble After Disappointing Guidance

Image source: Qualcomm.

Shares of Qualcomm (NASDAQ: QCOM ) fell 3.9% in after-hours trading, following the release of mixed results for the second quarter of fiscal year 2014. Guidance for the coming quarter also raised more questions than it answered.

Qualcomm's sales increased 4% year over year to $6.4 billion, driving a 12% increase in non-GAAP earnings per share. Landing at $1.31 per share, the earnings result exceeded Wall Street's $1.22 target by a fair margin, while revenues fell just short of the $6.5 billion consensus.

Semiconductor sales increased by 8% year over year while licensing revenues grew by 1%.

In the third quarter, Qualcomm expects to see adjusted earnings of approximately $1.20 per share on $6.5 billion in sales. Both of these numbers sit below the current analyst view. Nevertheless, management held full-year revenue guidance steady while bumping up the earnings range by $0.05 per share. The $5.15 midpoint of the new 2014 earnings guidance is just a hair richer than current analyst projections.

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In a prepared statement, CEO Steve Mollenkopf celebrated "another solid quarter" with strong demand for combined 3G/LTE wireless chipsets. "We continue to see increasing demand for our industry-leading chipsets and strong growth in calendar year 2014 of 3G/4G smartphones around the world," Mollenkopf added.

Mena Facebook Growth Due to Mobility

There are 56 million Facebook users in Mena, and the number is growing, mainly thanks to mobile connectivity, writes Andrew Scott, of The National.

Facebook (FB) claims 56 million active monthly users in the Middle East and North Africa, with 28 million of them daily users of the social network.

The company, which has released data for the Mena region for the first time, said the numbers reinforce the growing trend of mobile connectivity. In the region, 33 million people use phones or tablets to access Facebook every month and more than 15 million visit daily.

To be sure, internet penetration in the Middle East exceeds 40%, with about 90 million Internet users, as of June last year, according to internetworldstats.com.

"The digital ad pie is still smaller than other parts of the world, no doubt, but it's growing pretty fast," said Jonathan Labin, Facebook's head of Mena, Africa and Pakistan.

"Most big companies and more and more small companies are using Facebook. It's how you use it effectively to get the best business results where we need to work in the region."

The food retailer Just Falafel is an example. It spent US$300,000 to $400,000 on advertising on the social network. For its outlay, it made a 19-fold return on its investment to the tune of $9 million, according to Facebook.

Suresh Bhura, the director of media and development at Crayons Communications, says although traditional media remains a favorite of advertisers, "digital [advertising] is growing and complementing the overall marketing strategy."

Mr. Bhura added: "I believe the UAE is far behind in comparison to the global spend but it is growing. There are local clients who understand the power of the digital platform. However, most need educating and convincing to build their trust in this medium."

Last year, Facebook started operations in the Middle East amid the growing use of social media tools—including Twitter, TripAdvisor, and LinkedIn—in the region.

It was reported this week that 80% of hotels in the region have gained directly from an increase in the use of social media and digital marketing this year.

"When it comes to competition, you never know where it comes from," said Mr. Labin. "Facebook constantly wants to innovate, as competition can come from everywhere and we understand there will be competition.

"The key is that the pie is growing and the idea that one player needs to decrease because another player is rising isn't necessarily so.

"We are seeing more usage of Instagram, but that doesn't mean people are using Facebook less, the pie of time spent online is just growing overall."

In the second quarter of this year, Facebook had nearly 700 million daily active users worldwide, including 182 million in Europe, 181 million in Asia, and 142 million in North America.

During that period, the company had more than 1.15 billion active monthly users. In addition, the number of mobile daily active users grew to 469 million from 425 million in the first quarter and 293 million in that quarter last year.

The growth in mobile usage of Facebook is reflected in the company's earnings; mobile revenues comprised 41% of total income in the second quarter of this year, up from nothing in the first six months of last year.

Total advertising revenue topped US$1.5 billion in the second quarter this year.

Monday, April 21, 2014

Will Electronic Arts Stock Benefit From Hasbro Deal?

On Tuesday, both Hasbro (NASDAQ: HAS ) and Electronic Arts (NASDAQ: EA ) stock rose slightly after the companies announced a new four-year agreement, under which EA will develop mobile games based on several of Hasbro's most popular gaming brands.

The deal, which extends the scope and length of an existing six-year agreement, will include new mobile versions of Hasbro's Monopoly, Scrabble, The Game of Life, Battleship, Boggle, Clue, Risk, and Yahtzee.

For those of you keeping track, this is the second third-party content licensing agreement announced by EA in as many months. If you recall, the last was unveiled in early May detailing a multiyear partnership with Disney (NYSE: DIS ) , through which the House of Mouse granted EA exclusive rights to develop and publish new games based on Star Wars characters and storylines "for a core gaming audience."

In contrast to this week's Hasbro deal, however, Disney opted to retain the rights to develop new titles within the mobile, social, tablet, and online game categories.

Is this a bad thing?
But while our initial inclination might be to applaud Electronic Arts' efforts in grabbing this low-hanging fruit, I can't help but doubt whether this will actually be good for Electronic Arts stock.

On one hand, these deals are great for companies like Disney and Hasbro because it gives them a low-overhead way of leveraging wildly popular brands they already own. At the same time, it also negates the risk of spending big bucks to develop and publish big-name games that may or may not turn out to be a flop with consumers.

On the other hand, considering Electronic Arts stock has fallen more than 45% over the past six years since the initial Hasbro deal was put in place, it's fairly obvious that licensing third-party content hasn't exactly helped the company's own brand prowess.

Then again, that doesn't mean these deals were directly responsible for Electronic Arts' fall from grace.

After all, as I wrote in April, voters at Consumerist.com have named Electronic Arts the "Worst Company in America" for each of the past two years (at least among consumer-facing businesses), largely thanks to stale storylines, halfhearted sequels, subpar product support, and games that seemed to be rushed to production.

Foolish takeaway
With that in mind, it's safe to say that Electronic Arts' problems go much deeper than a simple reliance on third-party content. Then again, if EA could actually manage to harness the power of that content while also consistently creating awe-inspiring, high-quality, wholly original games, you can bet Electronic Arts stock would follow suit by rewarding patient long-term investors.

For now, though, despite the Hasbro and Disney deals, I'm still convinced EA has much to prove before I'll be willing to deem its stock worthy of my investing dollars.

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Sunday, April 20, 2014

2 Things Investors Should Watch Very Closely This Week

Allow me to make a bold claim. In my opinion, this is the most important week in April for stocks and the economy, as two unusually significant economic reports are scheduled for release on Tuesday and Wednesday, either of which could exert a big impact on the S&P 500 (SNPINDEX: ^GSPC ) .

The first, which I discussed at length yesterday, is the National Association of Realtors' report on March existing-home sales. The gravity of this can't be overstated, as the housing market is a principal component of the American economy.

Although the pace of existing-home sales has increased consistently since the middle of 2010, everything seemed to change last year. After peaking at a seasonally adjusted annual rate of 5.38 million in July of last year, they've since taken a nosedive. Most recently, the figure dropped to 4.6 million in February.

With the spring selling season just around the corner, the question is whether the downturn is a temporary blip, caused perhaps by extreme weather from earlier in the year, or whether it's a genuine correction. If it's the former, there's little reason for concern. If it's the latter, there may very well be.

Along these same lines, the second report will shed light on the homebuilding industry. On Wednesday, the government is scheduled to release its estimate of new home sales for March.

The figure for February, while not as dire as the market for previously owned homes, similarly suggested that the momentum in the housing market may have taken a turn for the worse, as new home sales were down by 3.3% compared to January. Again, the thing to watch is whether the downturn is temporary or here to stay, at least for the time being.

In sum, if you're an investor or are otherwise interested in the economy, then I'd strongly encourage you to keep a close eye on both of these events.

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A Few Reasons Why Finish Line Is a Good Buy

The holiday season is an exciting period for retailers as people are tempted to open their wallets and fill those retailers' coffers. In fact, this period is exciting for investors too as they watch their companies prosper. This was seen when shoe retailer Finish Line (FINL) posted its third-quarter results recently. Its numbers were ahead of analysts' estimates and sent shares higher.

Reasons to smile

Finish Line's revenue surged 23% to $364.5 million over last year's quarter. This increase in top line was driven by an increase in demand for its products, especially basketball products. The company also reported same-store sales growth of 7.1%. Adjusted earnings for the quarter stood at $0.06 per share, as compared to a break even last year.

Finish Line shifted in focus toward basketball products due to a sharp increase in demand. Finish Line had to diversify its product portfolio, as consumers were losing interest in running shoes, and focus on basketball came in handy.

In fact, peer Foot Locker (FL), which concentrates more on basketball products, could not match up with Finish Line's same-store sales. In its recent quarter, Foot Locker witnessed comparable store sales growth of 4.1%, with total sales growing 6.4% to $1.6 billion over last year. However, both Foot Locker and Finish Line witnessed growth in basketball sales. The popular brands were Jordan and Nike (NYSE: NKE), which saw increased demand.

Nike has been a key driver for both footwear companies since its products such as Air Max, Free, and Flyknit are very popular among customers. Nike's growing popularity and success are evident from its second-quarter results, which it reported recently. Its revenue grew 8% to $6.4 billion as sales from both Nike brand and Converse increased. Also, its gross margin expanded since it has shifted to higher margin products such as Flyknit. Moreover, Nike's future looks bright as the footwear manufacturer reported an increase of 12% in its future orders .

Since both Finish Line and Foot Locker sell Nike's products, both benefited from growth at Nike. However, for Finish Line, product innovation has been an important reason for its top line growth. Products such as SpringBlade and Spine Laser by Adidas and Under Armour were some of its new products that were very successful. Similar to Foot Locker, Finish Line experienced sales growth in Jordan's products.

Future plans

Finish Line is expected to benefit from new products, including those that have already been introduced and some that are expected to launch in coming months. In fact, Nike's CEO plans to introduce more higher-margin products in the future, encouraged by the success of Flyknit shoes.

Additionally, the footwear retailer plans to strengthen its marketing efforts and online presence. It promoted its recent product launch by sending emails to its Winner's Circle members and received a great response .

Finish Line's partnership with Macy's has also been quite helpful in the company's growth. The shoe retailer has its shops in 181 Macy's stores. Macy's provides great exposure to Finish Line as its makes adjustments to its merchandise and product assortments. Most importantly, Macy's helped the company expand its female customer base. This addition of female customers should help Finish Line boost its sales.

Bottom line

The footwear industry seems to be doing well. Finish Line looks well placed with more efforts on marketing strategies, product innovations, and a fruitful partnership. Moreover, Nike has been performing well because of popularity of its products and its effort to bring in new products. This should continue to benefit the footwear retailer, especially when combined with its promotional efforts. Because of this, Finish Line should be a rewarding investment.

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Saturday, April 19, 2014

Should Electronic Arts Stock Investors Fear E3?

By most measures, Electronic Arts (NASDAQ: EA ) stock has been a delight for investors. A new 52-week high set on June 7 comes just ahead of a press conference to preview plans for the E3 entertainment expo, which opens this week in Los Angeles. What could possibly go wrong?

Three things, I think:

Arkham Origins, the latest in Time Warner's (NYSE: TWX ) hot-selling Arkham Asylum series, is winning interest thanks to a new trailer. More than 2.6 million have already watched.

GTA V, the latest in Take-Two Interactive's (NASDAQ: TTWO ) multibillion-dollar Grand Theft Auto franchise. A recent trailer for the new game has garnered more than 6 million views as of this writing. Don't be surprised if this game, which is due to hit stores in September, captures the bulk of the buzz coming out of E3.

Call of Duty: Ghosts, a newer, darker version of Activision Blizzard's (NASDAQ: ATVI ) hot-selling war series is due in November. A YouTube trailer posted two weeks ago has more than 13 million views as of this writing.

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And what of EA's latest, Madden NFL 25? Just 178,000 have watched this trailer so far.

Trailer for EA's latest in the "Madden" football series. Sources: EA and YouTube.

Gamers aren't salivating over EA's offerings the way way they are over competitors' titles.

Maybe it won't matter in the long run. But as the market gets tougher -- as iPads and iPods conspire to attract former console couch potatoes -- investors are probably going to need much more than the annual Madden refresh to push Electronic Arts stock to fresh highs. New Star Wars titles can't get here fast enough.

Do you agree? Please vote in the following poll, and then leave leave a comment to let us know whether you would buy, sell, or short Electronic Arts stock at current prices.

Console-ation prize
As much as the headlines speak of trouble in the console market there's still money to be made on stocks like EA. Let us show you how in a new Motley Fool special report that breaks down the risks and opportunities facing the company. Click here to get your copy now.

Thursday, April 17, 2014

Vapor Group, or Still AvWorks Aviation to Some, Has Cleared the Hurdle (SPLI)

It's a rarity that I reiterate an idea I've previously opined... particularly one that I only published just a couple of days earlier. The fact that I'm going to do so with AvWorks Aviation Corp. (OTCMKTS:SPLI) - perhaps better known to some as Vapor Group - should tell you how important it is to re-convey the message. Here goes...

After a miserable pullback from a peak of $0.45 in late March to a low of $0.046 on Tuesday of this week (a 90% drubbing), SPPLI shares are poised to make a solid bullish swing. I can's stress enough that this optimism in no way reflects any long-term optimism regarding Vapor Group, AvWorks Aviation, or anything else you may want to call it; it's strictly a short-term call. But, given what's at stake, even this budding short-term swing is worth noting.

For those not familiar with it, AvWorks Aviation is officially an electronic cigarette venture. The company's claim to fame is an e-cig vaporizing technology that can essentially turn anything that can be vaporized (without scorching it) into something that can be smoked. It took the marijuana industry about 0.2 nanoseconds to connect the dots, and though SPLI doesn't hold itself up as a marijuana player, the timing of the launch of the new vaporizing product is an amazing coincidence... right at the advent of legalized recreational marijuana, and a big leap forward for the medical marijuana movement.

None of that has anything directly to do with my new bullishness on AvWorks Aviation/ Vapor Group now, however. No, the reason I'm looking for SPLI to swing higher now stems from the pivot clue we saw in Tuesday's bar.

Simply put, Tuesday was a hammer-shaped doji - a bar where the open and close were essentially the same, and both happened to be at the top of a tall daily range. Yes, as the name implies, that long-tail that marks the low for the day means that whole day's bar looks like a hammer. The fact that we saw it on the heels of a huge pullback is another big clue of a bounce. An even bigger clue is that we saw a volume spike for SPLI that day, which suggests a big chunk of any sellers are finally getting washed out and/or a big piece of the would-be buyers army is starting to pour back in. Either way, the volume surge implies a move from a net-bearish to a net-bullish environment.

That was as of Tuesday anyway. The last and much-needed big clue from AvWorks Aviation or Vapor Group shares was the follow-through since then... higher highs and higher lows, which pushed SPLI above the falling resistance line (dashed) as a result. In other words, the momentum has changed direction.

Again, this isn't a long-term call, and it's not fundamentally driven. It remains to be seen what kind of future Vapor Group has, and that picture is made even murkier by the dust of the recent reverse merger with an aviation technology company. For the next few days that I care about, however, none of that really matters.

James E. Brumley is a paid contributor of the SmallCap Network. James E. Brumley's personal holdings should be disclosed above. You can also view SmallCap Network's complete disclaimer and disclosure.

Wednesday, April 16, 2014

Is Medicare enough?

If you're considering getting supplement insurance, or Medigap, sign up within six months of enrolling in Medicare.

NEW YORK (Money Magazine) My father just went on Medicare. Should he buy Medigap insurance? Which policy is best? -- Joe, Houston.

If your dad isn't insured by a former employer, he should buy supplement insurance, or Medigap, which pays for some costs not covered by Medicare.

Ultimate Guide to Retirement Getting started401(k)s & company plansInvestingAnnuitiesIRAsSelf-employment plansPensions and benefit plansSocial SecurityInsuranceEstate planningLiving in retirementGetting help

And, says Bonnie Burns, a policy specialist with California Health Advocates, he should sign up within six months of enrolling in Medicare, when he can't be rejected for health reasons (some states let you qualify later on for a similar six-month window if your employer plan is canceled).

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Since switching policies later may involve a physical, your dad's best plan is one that suits him over time, not just one that meets his needs cheaply now.

All policies must match one of Medicare's 10 standardized plans -- from basic coinsurance to coverage of skilled nursing. Learn more at Medicare.gov.

Tuesday, April 15, 2014

Leading Digital Ordering Worldwide

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Recognized world leader Pizza Company Domino's Pizza Inc. (DPZ) sells and delivers pizza through the U.S. and internationally, operating its business in three segments: Domestic Stores, Domestic Supply Chain and International. As of Dec. 31, 2013, the domestic stores comprised 4,596 franchised stores and 390 company-owned stores. The International segment consists of 5,900 franchised stores outside the U.S. Generating nearly $3.8 billion in the U.S. and $4.2 billion internationally during 2013, Domino's fourth-quarter 2013 results beat estimated figures for both earnings and revenues. Same-store sales popped 3.7% domestically and 7% internationally, while diluted earnings per share leaped 21.9% to $0.78. It was the 80th quarter and 20th full year in a row of international same-store sales growth for Domino's.

The franchise owner-operators system and the increased emphasis on technology innovation have pushed revenues 5% year over year. Moreover, the digital ordering system installed by the company, with ordering apps for iPhone, Android, Windows Phone 8 and Kindle Fire generated approximately 40% of sales in the U.S. International segment has been showing promising results, with significant growth potential: Management expects international same store sales growth of 3 6%. Still, this industry is always subjected to macroeconomic pressures and cyclicality, putting these companies in certain risk of being affected by these setbacks.

Good Company, Great Improvements

Domino's is currently the second largest pizza chain in the U.S., and leader in the delivery segment, with a strong brand position. Its franchising strategy minimizes the company's capital requirements and facilitates EPS growth and ROE expansion. Shareholders have been consistently rewarded by Domino's through share repurchases and dividend distribution – recently increased 25.0% for 2014-, and is likely to continued, given the fact that the board of directors has already approved an additional $200.0 million share repurchase authorization for 2014.

A recent brand revitalization initiative is on track, with product and technology innovations designed to increase store count and raise guest traffic. The company introduced new products as to diversify its menu, with side items such as Parmesan Bread Bites, Stuffed Cheesy Bread and Chocolate Lava Crunch Cakes, as well as the new Handmade Pan Pizzas, and Oven Baked Sandwiches. Besides, the company established a new distribution network, the Domino's Supply Chain Services (SCS), through which it supplies dough and other raw materials to more than 5,000 stores in the U.S.

Domino's re-imaging of stores strategy, which includes relocation, began in November 2013, and is expected to be finished by the end of 2017. Moreover, the company is improving its online ordering platform, released in 2006. Investing heavily on this technology-driven initiative in digital ordering, the company has launched new mobile applications for diverse mobile devices, and a new Spanish-language ordering app for smartphones, being therefore capable to cover over 95% of smartphones sold in the U.S. These developments are expected to boost sales while enabling customers to save time and effort by using the enhanced app system. Domino's, currently generating over $3 billion in digital sales globally in 2013, has become one of the top technology-driven brands across the globe. Digital Ordering is a key competitive advantage and is allowing Domino's Pizza Inc. (DPZ) to compete strongly; CEO J. Patrick Doyle said, "We're effectively competing against smaller players that either don't have digital ordering or certainly don't have the same kind of robust platform that we're operating on."

Expansion Plans

An international expansion is taking place for Domino's and since the majority of its revenue is being generated by international market, the firm has committed to accelerate its presence within these markets outside the U.S. With 80 consecutive quarters of positive same-store sales in its global units, between 70 countries, Domino's is looking towards emerging markets such as Brazil and Indonesia. The Indian market has been growing rapidly and is set to replace UK as the largest international market for Domino's. With 95% of the world's population living outside the U.S., CEO Doyle believes this is the right strategy to seize the global market's growth opportunities.

In this effort towards developing its worldwide footprint, Domino's has signed a 15-year license agreement with Johannesburg-based Taste Holdings as part of the company's brand in South Africa, Lesotho, Swaziland, Namibia, Botswana, Zimbabwe and Mozambique. Through this agreement, franchise stores of Taste Holdings will be converted to Domino's Pizza outlets.

Bottom Line

Indeed this industry has always been regarded as an unstable one, given the various pressures it suffers and difficulties to sustain profitability and growth levels. The weak consumer spending environment has affected the companies in the restaurant industry, as consumers burdened with higher gasoline prices payroll tax increases and delayed tax refund checks have been restricting its discretionary spending. And the fact that Domino's has been investing heavily for some time in reimaging and unit expansions as well as technological improvements, has raised some questions regarding the future benefits of these initiatives.

Still, Domino's Pizza is a company that has survived two recessions, and managed to grow during and after them, reporting steady figures. The efforts in product enhancement and technological development conducted by the company are expected to increase sales, with an estimated unit growth of 4.0% to 6.0% over the long term, mainly in the international markets. CEO J. Patrick Doyle believes "technology" is the main driver of growth results; "Consumers worldwide are redefining convenience, and we are meeting their evolving needs by pioneering technology in the restaurant industry." Doyle said. Domino's is everyday regarded as a more promising company, and a long-term steady grower stock, with low business risk.

Disclosure: Damian Illia holds no position in any of the stocks mentioned.

About the author:Damian IlliaA fundamental analyst at Lonetreeanalytics.com constantly looking for value and income investments.

Visit Damian Illia's Website

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Monday, April 14, 2014

Drilling Down Into Seadrill's First-Quarter Results

Seadrill (NYSE: SDRL ) reported earnings last week. The contract driller recorded its best operating quarterly result ever and is primed for more as drilling picks up. Let's drill down into the results and see what made this quarter so good.

Behind the numbers
Coming into the quarter, analysts were expecting revenue of $1.14 billion, Seadrill beat that number and delivered $1.27 billion of revenue. That revenue generated operating profit of $552 million which was up from $441 million last quarter. Finally, net income came in at $440 million, or $0.87 per share, as Seadrill's high-margin business delivered excellent profits. There were a lot of moving parts this past quarter, so let's take a quick look at how it affected the numbers.

Utilization was strong this quarter with floater utilization at 92%, up from 86% in the fourth quarter, while jack-up utilization was 99% in the quarter, up from 94% last quarter. The higher the utilization of Seadrill's fleet, the more money the company can make, so seeing improvements here is great. Overall, utilization was very strong this quarter which helped contribute to the excellent results.

In addition to utilization, the company made several adjustments to its fleet which contributed to the excellent results. In the quarter, Seadrill completed the sale of its West Janus jack-up rig for $73 million. The company recorded a gain on that sale of $61 million in the quarter. This sale is of course a one-time item, but given how Seadrill manages its portfolio, these sales happen a lot. Looking ahead, the company has already announced the completion of two sales after the quarter ended, which will impact next quarter's results. One is a $2.9 billion sale of 18 tender rigs to SapuraKencana Petroleum and a $210 million drop-down transaction with Seadrill Partners (NYSE: SDLP ) . Seadrill's fleet is always on the move -- assets are sold while new pieces are added to its portfolio all the time.

Speaking of which, the company ordered four jack-ups last quarter at the cost of about $230 million per rig; they will be delivered in 2015. The company also completed the $590 million purchase of Songa Eclipse which is an ultra-deep-water, semi-submersible rig. Finally, Seadrill secured a two-year extension for the West Leo which is also an ultra-deep-water, semi-submersible rig. The company estimates that there is a total revenue potential of about $430 million with that vessel.

It's important to watch how Seadrill manages its fleet. As vessels are added or subtracted it can have a noticeable effect on the company's quarterly results. For example, in this past quarter, the additions of both the West Eclipse and the West Hercules boosted both revenue and fleet utilization while the sale of West Janus helped to boost profits.

What to expect next
Don't expect these portfolio adjustments to slow down as Seadrill is in the midst of a major growth phase. The company has 19 rigs under construction, which are expected to be delivered between now and the end of 2015. So far, 10 of those newbuilds have already secured long-term contracts. Having a large contract backlog is crucial to Seadrill's business because it enables the company to fund its growth, maintain its balance sheet all while funding a very strong dividend.

As last count the company's backlog stood at $19.1 billion, which is down $1.9 billion from its previous report. However, this decrease is largely related to the sale of its tender fleet to SapuraKencana, which accounted for virtually all of the decrease. Seadrill does have a few vessels not currently under contract; however, it is involved in active discussions and expects to announce new contracts for all these units over the coming months. While this is an area to watch, given the strong offshore market these days there is no reason to be concerned.

This strong backlog gives Seadrill the clarity of earnings to pay out a very substantial dividend. That backlog, when combined with its excellent results this quarter, enabled Seadrill to raise the payout to $0.88 which implies a current yield of about 8.7%. The payout looks very secure which has been enhanced by the company's ability to drop down assets to Seadrill Partners. The company can pull this important new lever to free up capital to pursue growth opportunities by shedding slower growth assets.

Foolish bottom line
Seadrill delivered its best quarterly operating results ever. The future looks even brighter as the company continues to build its fleet to take advantage of the major growth opportunities in offshore drilling. Best of all, investors are being paid very well to hold shares and will likely be paid more in the future as the company executes on its plan.

If you're an energy investor on the lookout for new opportunities, then you should consider one of the more exciting plays in the space: Seadrill. To help you size up this stock, one of The Motley Fool's top Stock Advisor analysts has authored a premium research report on the company, covering everything from its strengths and weaknesses to what to expect going forward. Simply click here now to claim your copy and determine whether Seadrill deserves a place in your portfolio.

Sunday, April 13, 2014

Will Ford's Stock Have Another Summer Swoon?

Photo Courtesy of Ford.

Over the last few years Ford (NYSE: F ) stock typically takes a beating during the summer months and then often rallies back during the autumn months. Is it destined to follow the same pattern this year? Nope, I don't think so, not this time. Even after its rally from a 52-week low of $8.82 to near $15 I don't think Ford stock is due for a pullback, and I think most investors still see enough upside they won't sell off shares. I could easily be wrong, because you never know what the market has in store for us day to day, but here's some good news going into the summer months.

May forecast
We won't have the exact numbers for how many vehicles sold in May for a couple weeks, but investors got a little antsy in April when SAAR – seasonally adjusted annualized rate – of vehicle sales dipped below 15 million. Everyone had their trigger finger on the sell button, but relax, according to TrueCar (link opens a PDF) the SAAR is predicted to bounce back this month.

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To spread a little light on TrueCar's forecast I'm about to show you, these aren't numbers pulled out of a hat or picked blindfolded. TrueCar bases its forecast on actual transaction data and is refined through other historical factors that impact vehicle sales.

Without further ado...
When comparing manufacturer's percentage change vs May 2012, Nissan and Ford are the big winners, with Volkswagen a distant third. TrueCar forecast of percentage increases at 25.4%, 20.1%, and 9.4%, respectively. Moreover, the entire industry is forecast to increase 12.1% over the previous month, April. That should be enough to calm down those with a trigger-happy sell button.

Percentage change is nice, but we have to keep that in perspective with total volume. Since Ford and General Motors (NYSE: GM ) sell higher volumes in the U.S. it's difficult to gain a high percentage increase year over year. When looking at total volume TrueCar's forecast shows GM on top, predicted to sell just over 266,000 vehicles this month, with Ford in second place at just under 247,000.That definitely takes a little excitement out of Volkswagen's 9.4% increase when you consider it's predicted to sell only 58,000 this month. It's also eye opening to how impressive Ford's predicted 20.1% gain is.

But wait, there's more!
Right now, this coming summer and second-quarter earnings are looking good for domestic auto investors. It seems the numbers predict that we'll avoid a summer swoon and have great sales figures to boot. What's more, due to the construction rebound full-size pickup sales continue to increase – bringing in more profits than the average sale.

"Full size truck sales continue to gain momentum in May and we expect the segment to post a 22 percent increase compared to the nearly nine percent industry increase," said Jesse Toprak, senior analyst for TrueCar.com. "Stability in the industry is now the norm, which is a positive for automakers as it results in the ability to optimize production levels, therefore improving profitability."

Bottom line
As a long-term investor, do you know what two of my favorite words are? Hint: both are in the above quote – stability and profitability. It wasn't long ago that those two words were impossible to incorporate into a sentence with Detroit's Big Three automakers. Things are different now, and as such, I think Ford's stock and its investors can finally have a relaxing summer without taking a beating.

If you're concerned that Ford's turnaround has run its course, relax – there's good reason to think that the Blue Oval still has big growth opportunities ahead. We've outlined those opportunities in detail, in the Fool's premium Ford research service. If you're looking for some freshly updated guidance to Ford's prospects in coming years, you've come to the right place – click here to get started now.

Saturday, April 12, 2014

The week in Tech: 5 must-know things

LOS ANGELES — Weekend project: Let's start changing all of our passwords.

The top five tech headlines this week are highlighted by a huge undertaking for all of us: password changing, thanks to the discovery of Heartbleed, a security bug that could make Internet surfing less safe as websites patch up holes.

Security researchers who uncovered the threat are worried because the lapse went undetected for more than two years.

Many popular sites, including Google, Yahoo, Facebook, YouTube and Tumblr, said that they fixed vulnerabilities this week or were not affected and that new passwords are recommended for those sites. Apple and Amazon said their consumer sites were not vulnerable.

The bottom line: Experts say it's imperative to update your passwords ASAP and to use effective ones that aren't simply "123456" or "Password." Try combinations of letters, numbers and symbols.

Here's more from the week in Tech:

A MOVE FOR MESSENGER

Sorry, Facebook fans, but that messenger program we all use on the social network to instantly reach out to folks is leaving the mobile Facebook. If you want to connect with someone, you'll need to leave Facebook soon and open up the free-standing Messenger app. The reason for the change? Facebook says messaging is a better experience on the app, so it wants to put the emphasis there.

FAREWELL TO XP

Another big change came to users of Windows XP, the 12-year-old operating system that no longer will get security updates from Microsoft, which wants you to stop using XP and buy new software. But guess what — Tuesday came and went, and millions of XP machines kept on running. So far, so good, but folks: XP without security has been described as a hacker's paradise. Best to join the modern era with more current software.

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HELLO TO A NEW GALAXY

Speaking of contemporary, Samsung this we! ek brought out the latest state-of-the-art Galaxy smartphone. The S5 has a slightly larger screen and built-in heart-rate monitor, is waterproof and — oh! — takes a pretty cool picture, too. In his review, USA TODAY's Ed Baig called the Galaxy S5 "a solid device" that didn't break much major ground.

WHAT'S UP IN APPS

Finally, in app news, the numbers puzzle 2048 is No. 1 on the free iTunes app chart for the third week in a row, but bubbling under is the mind game What's the Difference?, another fun time-waster. Tops for Android is Cut the Rope 2, a character-based adventure game.

Readers: Have you changed your passwords yet? Any questions about password management? Let's chat about it on Twitter, where I'm @jeffersongraham.

Thursday, April 10, 2014

The Botched Facebook IPO

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Related FB May Be More Room to Run for Facebook Share, Pivotal Analyst Says Amid Upgrade Twitter Analyst Gets Off 'Negative Bent,' Shares Upgraded By Cantor Fitzgerald Don't Panic Over Recent Tech Turmoil (Fox Business)

In business there are few occasions more prestigious than the day a company goes public. The initial public offering is a day of reckoning in which a company that kept itself closed to the outside world finally opens up.

But if an IPO can be analogized as the company crossing over from being a teen to being an adult, then an IPO failure is a company not being quite ready to strike out on its own. Facebook (NYSE: FB) was one such unready youth.

Despite being one of the world’s most anticipated initial public offerings, the IPO was fraught with difficulty and failed to impress investors upon its launch.

See also: No Legwork Mondays Bank of America's $5 Debit Card Fee Fiasco

IPO Bust

In May 2012 Wall Street was abuzz with talk about the impending Facebook initial public offering. The company placed its initial share price at $38.00, seemingly a reasonable sum to purchase a share of a company which many predicted would be the future of social media, and maybe the Internet itself.

But after the company’s first full day of trading, Facebook was down $4.00 per share. And the company continued to slide in subsequent weeks and months of trading. What caused such a dramatic and unpredictable turn of events?

Was NASDAQ to Blame?

One of the first things that went wrong during the Facebook IPO had to do with its timing. Because the NASDAQ usually begins trading IPOs about an hour after the markets open at 9:30 a.m., anxious investors were forced to wait to get their hands on a share of the stock.

But as of 11:00 a.m. Facebook was still not being traded, causing investors to grow nervous. As the day wore on investors complained that some of their orders were not being properly executed, this despite the fact that more than 80 million shares were bought and sold within the first 30 seconds of the company’s trading.

These trading errors have been attributed to NASDAQ system problems, and led to numerous lawsuits.

Was Morgan Stanley to Blame?

Another major issue which affected the Facebook stock price within the first days of its IPO was a lawsuit filed against Morgan Stanley (NYSE: MS), the investment bank primarily responsible for handling the company’s IPO, and a host of other underwriters.

Investors claimed the underwriters had withheld negative information about the company, information which would have been helpful in making investment decisions after the company’s IPO. In fact, according to published reports, four different major banks including Morgan Stanley and Bank of America, all reduced their earnings targets for Facebook just ahead of the company going public.

Lesson Learned

The Facebook the IPO will serve as a valuable lesson for all companies which decide to go public in the future. In this case the investor lawsuits, in combination with NASDAQ’s technical issues, served to compound overall investor dissatisfaction with the Facebook IPO.

Though Facebook is currently trading in the range of $60.00 per share, it took the company a relatively long time to break free from the stigma it acquired as a result of is botched initial public offering.

Posted-In: Facebook investor lawsuits IPO Morgan Stanley NASDAQMarkets Best of Benzinga

Most Popular UPDATE: Mars to Buy Significant Portion of P&G's Pet Food Unit (Including Iams, Eukanuba, Natura) for $2.9B in Cash; P&G Will Restate Can Marijuana Traders Handle A Stock Meltdown? Stifel Says Buy The Dip In Facebook, RetailMeNot, Netflix, Yahoo! Ahead Of Earnings Biotechs Struggling To Find A Bottom These iPad Air 2 Concepts Are Awesome Bulls In Rackspace Cheer As IBM Takeover Chatter Remains, Analysts Quiet On Rumor Related Articles (MS + FB) The Botched Facebook IPO May Be More Room to Run for Facebook Share, Pivotal Analyst Says Amid Upgrade Twitter Analyst Gets Off 'Negative Bent,' Shares Upgraded By Cantor Fitzgerald Benzinga's Top Upgrades Tougher Capital Rules for 8 Banks - Analyst Blog Market Wrap For April 9: Investors Breathe Sigh Of Relief Over Rate Worries Around the Web, We're Loving...

Wednesday, April 9, 2014

Your 401k Plan: To Borrow, or Not to Borrow?

At Investing Daily, we have grown increasingly concerned with the national trend toward underfunded retirement plans. As a service to our readers, for the next few weeks we'll send you a complimentary series of focused briefs to get you thinking about new ways to maximize performance both inside and outside of a structured 401k or similar plan. We hope you'll find these briefs useful … if they are not applicable to your situation please click here to stop receiving the series.

Okay, so you’re in a financial bind and could use some quick cash as a bail-out. Should you borrow from your 401k? After all, you may be many years from retirement and borrowing from your 401k is no problem. You can easily pay the money back.

Maybe—and maybe not.

Most 401k plans let you borrow up to half the balance (or $50,000, whichever is less), with a five-year period to repay the loan—or longer, if you’re using it to buy your first home. Interest rates are usually only a few points above the prime rate, and can vary widely, so you may even catch a break on a good rate. Plus, there’s no credit check required, and with some plans your money is only a phone call away.

In theory, it’s a great idea—borrow from yourself, and pay it back with interest. But as with most financial issues, it’s not as simple as it sounds. Can you afford to forsake the tax-interest your retirement funds otherwise could—and should—be earning all the time?

Personally, I am against taking out 401k loans. The money you've accumulated, and then taken out will be difficult to replace, unless you pay the loan back right away.

In addition, you are curbing the power of compounded interest, which helps your money grow over time. Taking cash away from compound interest is like taking fuel away from an engine—it curbs performance.

Still, I understand that even 401k Millionaires, pr! esent and future, might have a financial emergency, like a health issue or a natural disaster, such as a hurricane or flood, where money is needed until (and if ever) an insurance check comes along.

So let's take a look at the topic of 401k loans (and other loan possibilities) and see where they may be of value. Here's a checklist:

Evaluate all your options. Do you have a money market account? Or a savings account that's not earning much interest? Borrowing money from either of those poses less risk for your long-term financial health than from a 401k. You might also check into an unsecured debt consolidation loan. These tend to carry higher interest rates than a mortgage refinance or home equity loan, and the interest won't be tax deductible. But it's still a better deal than most credit cards.

Tap in, but proceed with caution. If none of the above options apply, and you're in a real financial emergency, borrowing from the 401k definitely beats making a hardship withdrawal. The good news is the money can be repaid at relatively low interest rates. Just be sure you can repay yourself within the required time limits—and still make contributions to your 401k plan, so your retirement nest egg doesn't take a major hit.

Pay yourself back. Otherwise your loan will be considered a premature distribution (assuming you're under 59 ½ years old), and you'll pay a 10 percent penalty, along with state and federal income taxes.

Read the fine print. If you change jobs, there's a good chance you'll have to pay the loan back immediately, in full, or face steep penalties and tax charges.

Don't make a habit of it. As I note above, borrowing from your 401k may be a viable option in a pinch, but don't let yourself fall into a pattern of dipping into your 401k instead of saving for things you need along the way. That's a recipe for long-term troubles.

Also remember that you'll miss out on any matching funds your employer may offer.

M! y take?
Consider a 401k loan as a last resort. In most cases, you’ll find there are a better ways to borrow than risking your retirement funds. If you’re a homeowner, a home-equity loan offers a good value, and unless you’re borrowing more than the value of your property, you’ll be able to deduct the interest.

Good luck, and good 401k savings. I'll see you in this space, next week.

Brian O'Connell is an investment analyst at Investing Daily and the editor of the 401K Millionaire. An ex-Wall Street bond trader, he has appeared as an expert financial commentator on CNN, NPR, Fox News, Bloomberg, CNBC, C-Span, CBS Radio, and many other media broadcast outlets, and is the author of two best-selling books on retirement investing.

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Monday, April 7, 2014

Lemon suit tests Tesla's restrictive sales deals

A lemon-law suit by an unhappy Tesla Model S owner who wants his money back could be the first test of Tesla's restrictive customer sales agreements.

The Wisconsin lawyer handling the state lawsuit against Tesla, a specialist in automobile lemon-law cases, says he believes state law there will overcome what he calls one of the the most unusual sales agreements that he's ever seen -- one he believes are aimed at keeping owners from being able to sue over bad cars in the first place.

Milwaukee attorney Vince Megna also says that Tesla's policy of selling cars directly to consumers -- rather than having franchised dealers -- is another reason that it is tougher for customers to take action if they are dissatisified with their car.

"They are a company that doesn't have to follow state rules," says Megna. "It really puts a person in tough, tough situation."

Megna represents physician Robert Montgomery, who says the $94,770 Tesla Model S that he had delivered in March, 2013 and in the first five months it was out of service 66 days according to Megna, and he wants a refund. Megna says that Montgomery's three demands for a buy-back under the Wisconsin lemon law went unanswered.

Tesla officials, reached for comment, say they can't talk about pending court cases.

Montgomery has had a laundry list of troubles -- not turning on, not going into "drive," door handles that don't work, a faulty battery coolant system and and more. Adding to the lost time, because Tesla has no Wisconsin facilities, the car had to be transported to Chicago for major repairs.

Because the car was out of service for 30 days or more, according to the suit and Megna, it falls squarely under Wisconsin's lemon law -- state laws that generally provide recourse for car buyers if a car is faulty and the maker can't make good on it.

But the case is complicated by Tesla's sales agreement that buyers sign, which Megna is designed to thwart lemon-law suits.

For one, he says, Tesla's deal says tha! t legal disputes must be filed in northern California, where Tesla is based, and where the owner lives. The agreement also mandates that Tesla or the owner can demand arbitration, which could pretty much allow Tesla to prevent cases from going to trial. And if there is a settlement, you can't tell anyone.

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"Tesla is like a dictator," Megna says.

Megna argues, however, in the suit that Wisconsin's lemon laws supersede Tesla's sales contract and that is should be allowed to go forward there.

Megna also has done a humorous video to promote the case and we've included it here. As you'll see, the self-described "King of the Lemon Laws" bears more than a passing resemblance in both his deadpan delivery and his eyebrows to Eugene Levy, perhaps best known as the dad in the American Pie movies series.

Sunday, April 6, 2014

Verizon to Launch Samsung Galaxy S4 Earlier Than Expected

Top domestic carrier Verizon (NYSE: VZ ) Wireless has announced that it will launch Samsung's newest Galaxy S4 slightly earlier than expected. The flagship smartphone will be available on May 23, compared with the previously expected availability date of May 30. After a $50 mail-in rebate, the Galaxy S4 will be priced at $200 on contract.

The news comes after Sprint Nextel (NYSE: S ) and T-Mobile (NYSE: TMUS ) ran into inventory-related delays last month when launching the device on their respective networks. Verizon is the last of the four major wireless carriers to launch the Galaxy S4, completing Samsung's lineup of the biggest U.S. carriers.

The Galaxy S4 promises to be among the top Android smartphones of 2013 and may put competitive pressure on the rival HTC One.

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