Ford unveiled the all-new 2015 F-150 at a special event in Detroit last month. The Motley Fool was on the scene and got all the details. Photo credit: Ford Motor Co.
When an automaker like Ford introduces a product like the all-new 2015 F-150 pickup to the media, they don't just pull a sheet off the truck and say, "Here it is, guys!"
In fact, last month, Ford took over Joe Louis Arena -- home of the Detroit Red Wings -- to unveil its new pickups with an elaborate, big-budget presentation that kicked off two days of media events at the North American International Auto Show.
We (The Motley Fool's John Rosevear and Rex Moore) were there in Joe Louis Arena when it happened, and we can tell you that it was a very impressive event. Not just because Ford's top executives gave an elaborately choreographed update on the state of the company before revealing the all-new truck (see it here, here, here, here, here, and here), but because the media presence was absolutely massive.
Hundreds of journalists from around the world crowded the arena, and mobbed the stage afterward to get up-close looks at the new trucks. Several key Ford executives stuck around to talk to the media, including Ford Chief Operating Officer Mark Fields -- likely the next CEO of Ford.
Fields' comments to the media were fascinating, and we've captured them in this short video. He explained how the new trucks were expected to actually help Ford's corporate fuel-economy averages, and pointed out some key features that Ford thinks will increase the new pickups' appeal to families. He also gave some insights into Ford's expectations for profitability and spending in 2014.
We tried in this video to give you the flavor of the events following the reveal of the new pickups -- but Fields' comments are also worth a close listen for any Ford shareholder. Take a look, and then scroll down to leave us a comment with your thoughts on the new F-150.
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Things are looking pretty good lately for Pharmacyclics . Its Imbruvica partnership, with Johnson & Johnson subsidiary Janssen, is racking up approvals. Analysts are predicting some impressive sales, and the market has noticed. The company's stock price has risen over 40% this year, while the broad market remained somewhat flat.
But, there's trouble on the horizon. Both Gilead Sciences , and Abbott Labs' pharmaceutical spin off, AbbVie are positioned to compete in the near future. Let's take a look at all three therapies, and see just how concerned Pharmacyclics investors should be.
Gaining steam Pharmacyclics' agreement with Johnson & Johnson's subsidiary Janssen over the development and commercialization of Imbruvica triggered some substantial milestones recently. During the fourth quarter of 2013, Pharmacyclics recorded $123.6 million in revenue. Milestone payments from Janssen totaled $110.0 million for the quarter.
Royalties this year should quickly outpace the $13.6 million recorded during fourth quarter 2013. Pharmacyclics is entitled to 50% of Imbruvica's net sales. Imbruvica was approved about halfway through November last year, for the relatively uncommon indication of mantle cell lymphoma (MCL). On February 12, 2014, the FDA approved Imbruvica as a second line therapy for the far more common indication, chronic lymphocytic leukemia (CLL).
Destination blockbuster In order to reach blockbuster status, or $1 billion in annual sales, Imbruvica might need another label expansion. MCL comprises about 5% of all non-Hodgkin's lymphomas, or roughly 3,500 new patients diagnosed annually in the US. The label expansion to CLL increased the drug's market more than fourfold with about 16,000 new cases per year.
At about $90 per pill, CLL treatment with Imbruvica is expected to run about $98,400 per year. MCL should cost a bit more, about $130,000 because it requires more pills. At these prices, Imbruvica would need to serve about 1,700 MCL and 8,000 CLL patients annually to achieve blockbuster status.
High expectations The reason I'm so hung up on Imbruvica's chances of becoming a blockbuster is because the market has already priced it into Pharmacyclics' share price, and then some. Adding $500 million directly to the company's bottom line, on top of the $67 million it recorded in 2013 gives you a recent price-to-earnings ratio of around 20.
Imbruvica is approved as a single agent oral therapy, so patients unable to undergo chemotherapy will likely use it in the months ahead. Also, the number of existing patients that did not respond to previously available therapies should be large enough to support $1 billion annually in sales, for the near term. Going forward, the drug needs to expand into other markets and indications.
Trouble ahead Unfortunately for Pharmacyclics, it isn't alone in this field. Gilead Sciences' idelalisib could begin putting pressure on Imbruvica before the end of the year. Like Pharmacyclics' therapy, Gilead's idelalisib inhibits the proliferation of B-cells, but through a different mechanism. It's currently under review for treatment of both refractory indolent non-Hodgkin's lymphoma (iNHL), and CLL. The FDA accepted the applications in September and December of last year, respectively. Idelalisib also won a breakthrough designation for CLL, which means it may compete with Imbruvica sooner rather than later.
So far, the chances of that approval look pretty good. Like Imbruvica, Gilead's therapy also resulted in the early halt of a late stage trial. Last October, an independent data monitoring committee recommended stopping a phase 3 study evaluating idelalisib in refractory CLL patients. Interim data showed that progression free survival was significantly higher for patients receiving idelalisib.
A third CLL treatment While I think the prospect of idelalisib entering the market is enough reason to be concerned about Pharmacyclics' ability to maintain its valuation, AbbVie might have a candidate that could split the CLL market even further. This January the company began a phase 3 CLL study with next-generation Bcl-2 inhibitor ABT-199. Results from the trial should be ready early next year.
Too effective? AbbVie's therapy might be too effective at destroying cancerous cells. During phase 2 trials, the death of a patient receiving ABT-199 due to tumor lysis syndrome (TLS) resulted in a temporary voluntary suspension of trials.
The condition, TLS, that resulted in a patient's death is not uncommon in some types of blood cancer treatments, and can even occur without treatment. The condition, associated with the breakdown of too many cells, results in a sudden elevation of calcium, uric acid, and various cellular components in the blood stream that can overload the kidneys and liver.
While any death in a clinical trial is taken very seriously, TLS should be preventable. If anything, this suggests the drug is highly effective. At the time of writing, the trials are back online, and I expect them to continue through completion.
Final Thoughts Blood cancers in general are highly heterogeneous conditions, CLL included. I wouldn't be surprised if both of Imbruvica's competitors eventually win approval for the indication. And I wouldn't be surprised if a majority of patients are eventually treated with more than one of the above therapies, as they operate with different mechanisms. While I wouldn't be a buyer of Pharmacyclics at this price, I wouldn't let go in fear of competition either.
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Cory Renauer owns shares of Abbott Laboratories. The Motley Fool recommends Gilead Sciences and Johnson & Johnson. The Motley Fool owns shares of Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Once a floundering big pharma with looming patent cliffs and a pitiful pipeline, CEO Pascal Soriot has remade AstraZeneca in a relatively short period of time. Patent cliffs are still likely to compress revenue for the next year, but AstraZeneca now boasts an appealing pipeline targeting a host of therapeutic classes, including an immuno-oncology pipeline that holds up pretty well to comparisons with Bristol-Myers , Merck , and Roche (Mr. Soriot's former employer).
Fourth quarter results are likely to be a sign of things to come AstraZeneca had a pretty "blah" quarter in absolute terms. Revenue fell 6% as the sales of leading drugs Crestor and Nexium fell 10% and 5%, respectively, while Symbicort sales rose 10%. Gross margin fell about two points on mix, currency, and less sales leverage, and operating earnings dove 29%.
Shareholders should probably get used to this. With Crestor, Nexium, and Seroquel patents expiring in the coming years, it will be challenging (and quite likely impossible) for the company to show revenue growth absent a large deal. At the same time, the company will be investing heavily to support a deep Phase III and Phase II pipeline and those R&D expenditures are going to pressure profits.
A business undergoing metamorphosis Assuming that AstraZeneca's operations evolve according to plan, the business is going to be quite a bit different in 2019. Today AstraZeneca has a large cardiovascular franchise (around one-third of sales), but the company has not joined the gold rush for PCSK9 inhibitors and has no particularly interesting cardiovascular drugs in late-stage studies.
Diabetes is also a changing market for AstraZeneca. Buying Bristol-Myers' share of their joint venture does not appear to be a particularly good use of cash, and it is unclear how committed AstraZeneca is to this area over the long term. Farxiga was only just recently approved by the FDA and the company appears committed to developing follow-on indications of Bydureon (including a longer long-acting once-a-month formulation), but it is unclear if the company wants to reinvest the cash flow into early stage development of novel compounds. Still, the deal that AstraZeneca agreed to with Bristol-Myers rankles; AstraZeneca likely could have driven a harder bargain and Bristol-Myers clearly wanted out.
AstraZeneca does appear to be interested in maintaining its place in the respiratory market. Tralokinumab and benralizumab target asthma in different ways and both could become $1 billion-plus drugs, even with ongoing competition from Novartis and Glaxo and emergent threats from companies like Roche.
The biggest change is a real repriortization of oncology and immunology. AstraZeneca has built an oncology pipeline that looks both broad and deep. Through a partnership with Amgen, the company has also acquired an interesting collection of immunology/autoimmune assets. Brodalumab, an anti-IL-17 antibody in Phase III trials, looks like a drug to watch in psoriasis though Novartis has its own IL-17 drug secukinumab that is looking quite strong. Amgen will get half of the economics here, as well as for other interesting earlier stage compounds under consideration for asthma, Crohn's, and ulcerative colitis.
Oncology will draw the eyeballs Wall Street seems almost obsessed with immuno-oncology today, and it is not too hard to understand considering the multi-billion dollar potential per drug in areas like lung cancer, melanoma, and so on. Like Bristol-Myers, Merck, and Roche, AstraZeneca has compounds under development in the PD-1/PD-L1 space, with MEDI4736 as the focal point. Like Bristol-Myers and Roche, AstraZeneca is also committing to developing a wide collection of compounds as potential mono- and combo-therapies, including antibodies, antibody drug conjugates, and small molecules, and is definitely looking at dual checkpoint and checkpoint/agonist combinations.
Considering the long-term opportunity It has taken a while, but AstraZeneca has developed the MedImmune acquisition to the point where MedImmune now accounts for about half of its pipeline. More important than where it came from is where the pipeline is going - the company is looking to start six Phase III studies in 2014 and possibly more than a dozen in 2015, all of which could support more than $9 billion in sales in 2020.
The problem with AstraZeneca from a valuation standpoint is that a lot of this exciting pipeline will go toward offsetting impending sales declines due to patent losses and competition. With that, I am looking for about 2% long-term revenue growth today and similar growth in free cash flow. Due to the way in which I model revenue (risk-adjusted sales), there is very definite upside to those growth rates as subsequent clinical data de-risk the revenue outlook, but there is also the risk of total wipe-outs of individual programs if the data are bad.
The Bottom Line With shares currently fairly valued in my model, but a higher than normal dividend yield, I don't think AstraZeneca is particularly overpriced, nor much of a bargain. I do like the company's pipeline, which addresses large revenue opportunities like oncology but also offers more balance than Bristol-Myers is targeting at present. In a sector lacking many clear bargains, AstraZeneca is an OK candidate but the company must deliver good news on its late-stage pipeline to create value.
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What: Shares of Workday rose more than 15% Thursday after the HR and finance enterprise application specialist announced better-than-expected fiscal fourth quarter 2014 results.
So what: Quarterly revenue rose 74% year over year to $141.9 million, including an 86% jump in subscription revenue to $110.7 million. That translated to an adjusted net loss of $0.13 per diluted share, compared with an adjusted net loss of $0.16 per share in the same year-ago period.
Analysts, on average, were expecting an adjusted net loss of $0.16 per share on sales of $137.91 million.
For the current quarter, Workday expects revenue in the range of $148 million to $153 million, or a year-over-year increase of 61% to 67%. For the full fiscal year 2015, revenue is anticipated to be in the range of $710 million to $740 million, representing growth of 51% to 58%.
By contrast, analysts were looking for first quarter and full year sales of $148.22 million and $705.5 million, respectively.
Now what: Even so, I have a hard time believing that performance merits valuing Workday as a $20 billion company -- that's 43 times last year's sales. Workday's beat today wasn't that big, its revenue isn't growing that quickly, and its losses aren't narrowing that fast. For now, and especially after today's pop, that's why I think investors would be wise to watch Workday from the sidelines.
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Everyone makes mistakes and credit bureaus are no exception. In fact, a Federal Trade Commission study last year found that one in four consumer credit reports contain errors -- these include everything from minor mistakes to outrageous oversights.
It's important to know what to look for when you're checking for mistakes in your credit reports. There are three types: identity errors, incorrect account details and fraudulent accounts.
1. Identity errors. The three major credit bureaus are Equifax (EFX), Experian and TransUnion. Each bureau maintains its own database of consumer data, including personal information, account information and payment history. This information is included in your credit reports.
From time to time, a credit bureau -- or all three -- will get some information wrong. Some of these errors are minor. For instance, one bureau might have your street address incorrect. It's annoying, but it won't hurt your credit. Other times, it's a more serious error: Your name could become mixed up with someone else's, and you could begin seeing some of his accounts on your credit report. This will affect your credit either positively or negatively, depending on his payment history.
2. Incorrect account details. Sometimes the bank or lender providing information about your accounts to the credit bureaus gets things wrong.
On the other hand, the credit bureau could incorrectly process the information provided. For instance, your credit card could be displaying the wrong credit limit, your mortgage might have the incorrect origination date or your auto loan could show as "open" when it's clearly been closed.
3. Fraudulent accounts. This is the most serious error out there, since it means someone has used your identity -- including your name, Social Security number and other personal data -- to open and begin using an account. If there's a line of credit on your credit report that you didn't open, you'll want to move quickly to ensure that the fraudster can't continue opening accounts in your name. You can do so by adding a security freeze on your credit reports.
A security freeze will prohibit you -- or anyone posing as you -- from opening any new lines of credit. Keep the freeze on your account until you've sorted out what's going on and taken the appropriate steps to prevent fraud from happening to you again, including signing up for a credit monitoring service. You also might want to consider changing your Social Security number.
What to Do If You Spot an Error
Once you've identified an error on your credit report, you'll need to dispute it with the credit bureau or directly with the information provider.
Disputing with the credit bureau. This is the most conventional route and is best for disputes involving incorrect personal information on your credit report. Get a copy of your credit report(s) containing the error, gather supporting documentation for your case and write a letter to the appropriate credit bureau(s) describing your specific dispute. Make it clear and concise. After you've made a copy for your own files, send the letter to the credit bureau. The credit bureau is legally required to investigate your dispute and will typically do so within 30 days of receiving the notification.
Disputing with the information provider. If your bank or lender is reporting incorrect information to the credit bureaus, or if someone else opened an account in your name, start by contacting your bank or lender (the information provider) directly. Find an email address or phone number, and make notes of any conversations you have with a representative. Sometimes, talking to your lender directly can facilitate the dispute process.
The bottom line: Now that you know which common errors to look for, remember that you're responsible for clearing up mistakes. You're entitled to one free copy of your credit report from each of the three credit bureaus each year. Stay on top of things by checking your credit reports often to make sure they're accurate.
Bethy Hardeman is the consumer advocate for creditkarma.com, a free credit monitoring website that helps more than 22 million people access their credit score for free.
Kiyoshi Ota/Bloomberg via Getty ImagesBy YURI KAGEYAMA
TOKYO -- The Mt. Gox bitcoin exchange in Tokyo filed for bankruptcy protection Friday and its chief executive said 850,000 bitcoins, worth several hundred million dollars, are unaccounted for.
The exchange's CEO Mark Karpeles appeared before Japanese TV news cameras, bowing deeply for several minutes.
He said a weakness in the exchange's systems was behind a massive loss of the virtual currency involving 750,000 bitcoins from users and 100,000 of the company's own bitcoins. That would amount to about $425 million at recent prices.
The online exchange's unplugging earlier this week and accusations it had suffered a catastrophic theft have drawn renewed regulatory attention to a currency created in 2009 as a way to make transactions across borders without third parties such as banks.
It remains unclear if the missing bitcoins were stolen, voided by technological flaws or both.
"I am sorry for the troubles I have caused all the people," Karpeles said in Japanese at a Tokyo court.
Karpeles hadn't made a public appearance since rumors of the exchange's insolvency surfaced last month. He said in a web post Wednesday that he was working to resolve Mt. Gox's problems.
The loss is a giant setback to the currency's image because its boosters have promoted bitcoin's cryptography as protecting it from counterfeiting and theft.
Bitcoin proponents have insisted that Mt. Gox is an isolated case, caused by the company's technological failures, and the potential of virtual currencies remains great.
Debts at Mt. Gox totaled more than 6.5 billion yen ($65 million), surpassing its assets, according to Teikoku Databank, which monitors bankruptcies.
Just hours before the bankruptcy filing, Japanese Finance Minister Taro Aso had scoffed that a collapse was only inevitable.
"No one recognizes them as a real currency," he told reporters. "I expected such a thing to collapse."
Japan's financial regulators have been reluctant to intervene in the Mt. Gox situation, saying they don't have jurisdiction over something that's not a real currency.
They pointed to the Consumer Affairs Agency, which deals with product safety,
as one possible place where disgruntled users may go for help.
The agency's minister Masako Mori urged extreme caution about using or investing in bitcoins. The agency has been deluged with calls about bitcoins since earlier this year.
"We're at a loss for how to help them," said Yuko Otsuki, who works in the agency's counseling department.
It's hard to know how many people around the world own bitcoins, but the currency has attracted outsize media attention and the fascination of millions as an increasing number of large retailers such as Overstock.com begin to accept it.
Speculative investors have jumped into the bitcoin fray, too, sending the currency's value fluctuating wildly in recent months. In December, the value of a single bitcoin hit an all-time high of $1,200. One bitcoin has cost about $500 lately.
Roger Ver, a Tokyo resident who has provided seed capital for bitcoin ventures such as Blockchain.info, a registry of bitcoin transactions, said he believes bitcoin will survive, possibly emerging with better technology that's safer for users.
He said Mt. Gox people were likely sincere but had failed to run their business properly.
"Mt. Gox is a horrible tragedy. A lot of people lost a lot of money there, myself included," he said ahead of the bankruptcy filing. "I hope we can use this as a learning experience."
Some countries have reacted sternly to bitcoin's emergence, but many people remain fans of its potential.
Vietnam's communist government said Thursday that trading in bitcoin and other electronic currencies is illegal, and warned its citizens not to use or invest in them.
Late last year, China banned its banks and payment systems from handling bitcoin, although people still use them online. Thailand earlier put a blanket prohibition on using bitcoins and Russia has effectively banned them.
There was still considerable appetite for bitcoin in China, where it has become attractive as an investment since tightly-regulated state banks offer very low interest rates on deposits.
Even some with money tied up in Mt. Gox were undaunted.
Huang Zhaobin, a 21-year-old student in Chengdu, said he had lost 50,000 to 60,000 yuan ($8,125 to $9,750) from the Mt. Gox closure.
"Actually this money itself is the benefit from bitcoin investment," said Huang, who plowed 10,000 yuan into bitcoins about three months ago.
"If it is legal, I will continue to invest for sure as it is the trend in the world."
In Singapore, Tembusu Terminals, a joint venture specializing in crypto-currencies, announced Friday its first bitcoin ATM in the city-state and plans for many more. In Hong Kong, a group opened what it said was the world's first bitcoin retail store.
Yang Weizhou, analyst at Mizuho Securities Co. in Tokyo, said laws to regulate virtual currencies may have to be created by countries including Japan.
She said lawsuits from those who lost money were likely, and any court rulings would chart unexplored territory and help define the reach of virtual money.
The trend toward such technology for peer-to-peer payments wouldn't replace traditional money but was here to stay because of its convenience, she said.
"It is undeniable," she said. "One must separate the Mt. Gox problem from the overall concept."
-Associated Press video journalist Kaori Hitomi in Tokyo, researcher Fu Ting in Shanghai and writers Chris Brummitt in Hanoi, Vietnam and Satish Cheney in Singapore contributed to this report.
Simon Dawson/Bloomberg via Getty ImagesU.K. retailer Tesco began selling its own brand of tablet computers last fall.By Leila Abboud
and Paul Sandle
BARCELONA, Spain -- Originally derided as a pricey niche product for geeks, tablet computers have become so common that supermarkets are now selling their own brands, pushing out low-cost rivals.
The shifting nature of the market underscores how millions of people are choosing simpler devices to surf the web, send emails and shop, putting pressure on traditional PC companies.
And since Apple pioneered the tablet in early 2010, the gadgets now available at the lower end of the market are becoming commodity items that non-technology companies can order from Asian contractors using common components.
"Reference designs for tablets and smartphones from companies like Qualcomm (QCOM) have drastically reduced barriers to entry and increased commoditization pressure in the hardware industry," said Sameer Singh, Hyderabad-based tech analyst.
"This opens the door for not only players that can survive on low margins, but also for companies that use hardware as a channel for something else."
Tesco in Britain and Walmart (WMT) in the United States, are selling their own branded tablets pitched at customers unwilling to pay $400 or more for an Apple (AAPL) or Samsung product.
Grocers like Tesco and France's Carrefour aren't only trying to cash in on booming tablet sales,
but also to nudge people to buy everything from films to groceries from their online stores, pushed through their devices, a lesson learned from Amazon (AMZN) and Google (GOOG).
Traditional computer makers including Asus, Acer, Hewlett-Packard (HPQ), Lenovo, Dell, Sony (SNE) and LG will continue to be squeezed, said Gartner (TI) analyst Tracy Tsai.
They account for only 10 percent of the market today, far behind Apple and Samsung with 60 percent and also smaller than the 20 percent share held by white label tablet makers who manufacture for others, such as Archos. Amazon and Google hold the other 10 percent.
"Some of them will pull out from the market of tablets altogether," Tsai predicted.
The price for tablets running Google's Android software ranged from $99 to $299 in 2013, providing an estimated 15 percent to 25 percent gross margin to hardware vendors, but when prices need to be cut to meet the competition the margin could drop.
Lessons Learned
Amazon, which sells its Kindle Fire tablet at cost or even at a loss, ties people to its site to buy music, books or films rather than them buying Apple's iTunes or going to Carrefour and Tesco.
"If you get a tablet into someone's hand, it is almost a digital shop window," said Ben Wood, analyst at CCS Insight.
"The retailers are realizing: 'Crikey, we need this to be part of a much bigger strategy to make sure that Amazon does not eat us alive.' "
Carrefour is also selling smartphones and a smartwatch starting at 149 euros, in addition to four tablets, while a Pakistani bakery chain called Gourmet poached a former Samsung executive to help it sell smartphones starting at $15.
Tesco shifted more than 400,000 of its Hudl tablets, priced at 119 pounds ($200) in little over three months after a September launch.
"We saw an opportunity in the market for a lower priced but highly spec-ed tablet," said Michael Comish, who heads Tesco's digital strategy and operations.
"We were certainly pleasantly surprised by consumer demand," he said, adding that Tesco was selling as many Hudls as it could produce in the autumn.
Carrefour's cellphone, dubbed the Smart, launched at Christmas and was among the store's top-five selling products in recent months, said Jose Zdziech, sales director for technology products.
Big retailers have been here before. In the past many worked with manufacturers in Asia and elsewhere who produced everything from clothing to refrigerators that the retailers then sold under their own brands. Carrefour and Tesco, the world's second and third-biggest retailers, then turned to that network of manufacturers to make gadgets.
Tesco's Comish said they designed the Hudl to drive people to purchase films, music and now books from blinkbox, a video-on-demand provider Tesco bought in 2011. The company spent a lot of time on the user interface, he said, to make it easy to get to Tesco services, without forcing customers to use them.
Carrefour's Zdziech said the retailer would continue to sell Apple and Samsung products since its own products weren't aimed at the high-end. But Carrefour has dropped some competing tablets and phones from lower-end manufacturers he declined to name. "We had to make some choices so as to better showcase our own branded products," he said.
Shutterstock/Northfoto
Target's (TGT) major customer data breach will likely turn out to be an expensive problem. While the retailer has just announced that it incurred $61 million in costs associated with the incident in its fourth quarter, direct costs when all is done have been estimated to be $500 million to $1 billion -- and that's on top of any sales lost as a result of customers avoiding its stores after the breach.
If you're a Target shareholder, you've felt the pain from Target's stock price drop since the news was made public. If you're a Target consumer, you're likely worried about how much of your personal information was compromised, and your credit and or debit card may have been misused. All in all, it's an ugly situation and one of the risks we face in our ever more electronically connected lives.
What's the Worst That Can Happen?
The data thieves were likely motivated by money. With credit and debit card information for tens of millions of cards, they could buy stuff with the credit cards and drain cash out of people's accounts with the debit cards prior to being found out.
As Target points out on its website dedicated to the data breach, you as a consumer ultimately aren't responsible for any false charges on your accounts associated with that theft of your information. Target is offering free credit monitoring for people who shopped in its stores, to help folks affected by the loss quickly get a handle on just how big the impact is to them personally.
While, as a consumer, you won't ultimately be held responsible for false charges on your account from this breach, that doesn't guarantee you'll be free from any effort associated with the losses. While your card company probably had fraud monitoring capabilities that blocked much of the thieves' charging, if your account did get wrongly charged, you still have to make sure it gets cleaned up.
When Credit Beats Debit
Cases like these -- in which people's card information gets stolen and used for nefarious purposes -- illustrate one way that credit cards clearly beat debit cards.
If you were shopping at Target with acredit card when your information got stolen,
all it would likely take is one phone call to your card company to get the charges reversed and the card replaced. In some cases, card issuers have been proactively replacing cards that were used at Target during the breach window.
If, on the other hand, you were shopping with a debit card, it gets a bit more challenging. You must contact the bank that issued your debit card within two days of noticing the theft to be covered by its maximum guarantee. If the money came out of your checking account, your bank generally has 10 days to investigate the theft before deciding whether it has to refund the money.
That's 10 days after you report that your cash is missing from your account. That's potentially 10 days of bounced checks, late payments, overdraft fees, returned check fees and all the other personal headaches associated with not having your money in your account.
Given a choice -- what would you prefer?
A quick phone call that takes care of the problem.
About two weeks where every payment you legitimately make could get rejected and bounced back with extra fees, while your account is empty and waiting on the investigation.
Still, Be Responsible With Credit
While credit cards are safer than debit cards when it comes to the fairly rare event of fraud, they can still be financially dangerous tools in everyday use.
Discover Financial(DFS) recently reported that it received more than $7 billion in interest payments in 2013. That's revenue the credit card issuer earned, largely on the money it loaned out to people who didn't pay their balances in full every month.
Interest rates on credit cards are incredibly high. Even "low interest" cards are charging around 11 percent, according to Bankrate (RATE).
If you're paying interest to borrow money from a credit card, you're helping fund the costs associated with making good on that "$0 fraud liability" promise that many credit cards have. And the interest you're paying is money you lose every month -- not just on the rare occasions when you fall victim to a scam.
If you are going to use credit cards, be smart with them. Pay off your balance in full every month to avoid interest charges. You might even want to act like the money is coming directly out of your checking account as if it were a debit card by deducting it from your checkbook with each transaction. That way, you'll know how much you really have available to spend on everything else to reduce your risk of overspending.
As Target's data breach reminds us, our digitally interconnected world is still a dangerous place for you and your money. While you can't eliminate all financial risk from your life, you can mitigate the damage by staying vigilant and on top of your spending -- no matter how you spend your money.
Motley Fool contributor Chuck Saletta has no direct position in any stocks mentioned, but his wife owns shares of Target. The Motley Fool has no position in any of the stocks mentioned.
Alex Wong/Getty ImagesConsumer Financial Protection Bureau Director Richard Cordray.
WASHINGTON -- The top U.S. consumer watchdog said Thursday he has called and written the heads of big credit card companies to press them to offer free credit scores to customers.
Richard Cordray, director of the U.S. Consumer Financial Protection Bureau, said consumers who monitor their credit will be less likely to default. But borrowers have told the bureau they don't always know how to obtain their score or report errors.
Some card companies such as Discover Financial Service (DFS) have already said they would provide credit scores on customers' monthly statements.
"I recently sent letters and followed up with phone calls to the CEOs of the nation's top credit card companies strongly encouraging them to consider making credit scores and educational content freely available to their customers on a regular basis," Cordray said in a statement.
Richard Hunt, head of the Consumer Bankers Association,
a trade group for retail banks, said banks support efforts to better educate consumers but that providing credit scores might not be the best way to do it.
"There are numerous factors considered in weighing a consumer's credit portfolio -- not just a credit score," Hunt said in a statement Thursday.
The consumer bureau, which was created by the 2010 Dodd-Frank law, has long had concerns about consumers' access to accurate credit information. The CFPB began supervising credit reporting agencies such as Equifax (EFX) and Experian in 2012.
The major nationwide credit-reporting companies are already required to provide consumers with a free copy of their credit report every year if they request it.
But borrowers often complain about errors on their credit reports, the CFPB said. When they file disputes about the errors with credit reporting agencies, the mistakes aren't always fixed, the bureau said.
In some cases, those complaints are passed along to companies that collect and submit borrowers' data to reporting agencies. The bureau found that those data providers don't always notify the reporting agencies when they find errors but instead delete the incorrect information.
That can lead credit reporting agencies to issue incorrect scores, the bureau said. It warned on Thursday that data providers must fully investigate customer disputes.
The sandwich chain Quiznos is running out of dough.
Quiznos reportedly is preparing to file for bankruptcy protection, partly because of declining sales. The Wall Street Journal says the sandwich chain has been struggling with a heavy debt load for years, and has been forced to close thousands of stores. It now has about 2,100 stores, down from a peak nearly 5,000 back in 2008.
In its latest push to help consumers gain more control, the Consumer Financial Protection Bureau is pushing credit card companies to provide users with free copies of their credit scores. Consumers are already entitled to a free credit report once a year,
but this would provide another tool to understand all sorts of decisions that affect their financial lives -- everything from the rates they pay on loans to whether or not they land a certain job.
Presidents Day is long gone, but the big deals on new cars may last for another month. General Motors (GM) and Ford (F) are extending some of their best deals through the end of March. The really bad weather this year has hurt sales and led to an inventory build-up on dealer lots.
Here on Wall Street, the Dow Jones industrial average (^DJI) gained 74 points Thursday, but the focus was on the Standard & Poor's 500 index (^GPSC), which rose 9 points to close at a record high. The Nasdaq composite (^IXIC) rose 27 points. It's at the highest level in nearly 14 years, but still well below its all-time high.
Finally, despite the boom in shale oil production in North Dakota, the U.S. still has a long way to go before it can achieve energy independence. Bloomberg reports the extraction of oil and gas from those fields in North Dakota is very expensive. In addition, output from these shale oil fields drops faster than it does from conventional drilling methods. The International Energy Agency says it will take 2,500 new wells a year just to maintain current production levels.
J. Scott Applewhite/APFederal Reserve Chair Janet Yellen testifies before the Senate Banking Committee on Thursday. The central bank will be watching to see whether the slowdown in job growth and consumer spending is just a temporary blip caused by severe winter weather, she said.By Lucia Mutikani
WASHINGTON -- The U.S. government slashed its estimate for fourth-quarter growth as consumer spending and exports were less robust than initially thought, suggesting some loss of momentum heading into 2014.
Economists polled by Reuters had expected growth would be cut to a 2.5 percent pace.
It is not unusual for the government to make sharp revisions to GDP numbers, as it does not have complete data when it makes its initial estimates. In fact, the latest figures will be subject to revisions next month as more information is received.
The revision left GDP just above the economy's potential growth trend, which analysts put somewhere between a 2 percent and 2.3 percent pace. Even with the revision, the second-half growth pace was a stellar 3.3 percent and a jump from 1.8 percent in the first six months of the year.
Consumer spending accounted for a large chunk of the revision after retail sales in November and December came in weaker than assumed.
Consumer spending was cut to a 2.6 percent rate, still the fastest pace since the first quarter of 2012. It had previously been reported to have grown at a 3.3 percent pace.
Consumer spending, which accounts for more than two-thirds of U.S. economic activity, contributed 1.73 percentage points to GDP growth, down from the previously reported 2.26 percentage points. As a result, final domestic demand was lowered two-tenths of a percentage point to a 1.2 percent rate.
The loss of momentum appears to have spilled over into in the first quarter of 2014, with an unusually cold winter weighing on retail sales, home building and sales, hiring and industrial production.
Temporary Soft Patch
The Federal Reserve, which has been cutting back on the amount of money it injects into the economy through monthly bond purchases, views the recent soft patch as temporary.
Fed Chair Janet Yellen told lawmakers Thursday that the cold weather had played a role in the weakening data.
She said, however, that it would take a "significant change" to the economy's prospects for the Fed to suspend its plans to wind down its bond buying.
Despite the first quarter's weak start, economists remain optimistic that growth this year will be the strongest since the recession ended almost five years ago. For all of 2013, the economy grew 1.9 percent.
An uptick in inflation also accounted for the downgrading of GDP growth in the fourth quarter. A price index in the GDP report rose at a 1 percent rate, instead of the previously reported 0.7 percent rate.
A core measure that strips out food and energy costs increased at a 1.3 percent rate, revised up from a 1.1 percent pace.
Trade weighed on fourth-quarter revisions as well, after a fall in exports in December resulted in a bigger trade deficit in the fourth quarter than the government had initially assumed.
Trade's contribution to growth was lowered to 0.99 percentage point from 1.33 percentage points. It was still the largest contribution to GDP growth since late 2010.
Inventories, previously reported to have risen by $127.2 billion in the fourth quarter, were revised down to $117.4 billion. The rise in the stocks of unsold goods was still the largest since early 1998 and followed a gain of $115.7 billion in the third quarter of 2013.
The contribution to growth from inventories, which the government put at 0.42 percentage point a month ago, was revised down to only 0.14 percentage point. Excluding inventories, the economy grew at a 2.3 percent rate, revised down from a 2.5 percent pace.
Government spending was also revised down, but the impact was offset by upward revisions to investment in residential construction, nonresidential structures and business spending on equipment.
NEW YORK -- U.S. consumer sentiment rose marginally in February even as concerns about the extreme weather persisted, a survey released Friday showed.
The Thomson Reuters/University of Michigan's final reading on the overall index on consumer sentiment for February came in at 81.6, slightly above the 81.2 in both the preliminary February number and the final January reading.
It was also slightly above the median forecast of 81.3 among economists polled by Reuters.
"The most significant implication is not whether consumers have correctly assessed the weather's negative impact on the economy,
but the resilience consumers have demonstrated in the face of the polar vortex as well as higher utility bills and minimal employment gains," survey director Richard Curtin said in a statement.
The survey's barometer of current economic conditions edged up to 95.4 from the 94 preliminary reading, which was also the median forecast. It was 96.8 in January.
The gauge of consumer expectations was 72.7, slightly lower than the initial February reading of 73 but up from January's 71.2.
The survey's one-year inflation expectation ticked down to 3.2 percent from 3.3 percent in the preliminary release, while the five-to-10-year inflation outlook was unchanged from the preliminary at 2.9 percent.
Shutterstock/Africa Studio
"Only about one-third of Americans are living within their means and think they are prepared for the long-term financial future. One-third are living within their means but are often not prepared for this long-term future. And one-third are struggling to live within their means."
That's the upshot of a new report from the Consumer Federation of America, which this week reported that 63 percent of Americans say they're making somewhere between "fair" and "no" progress in building up their savings.
This number isn't surprising. Times are tough, with some experts putting America's "real" unemployment rate -- the number of people unemployed while seeking work, plus those unemployed because they've given up looking -- at nearly twice the official unemployment rate, or 11.1 percent.
What makes the 63 percent figure so significant, though, is that according to the consumer advocacy group, most Americans are "doing everything right" to secure their financial futures.
64 percent of respondents polled in the federation's survey say they "have sufficient emergency savings to pay for unexpected expenses like car repairs or a doctor visit."
68 percent say they are spending less than they earn, and saving the difference.
76 percent say they are either completely free of consumer (i.e., not mortgage or education loan) debt, or at least working to pay their debt down.
Through working, saving and paying down debt, a slim majority of Americans -- 51 percent -- say they now have enough money piled up in "emergency savings" to pay off their entire credit card debt, should that prove necessary.
A further 17 percent say they have no debt at all.
Yet, despite doing all the right things financially, it's not all good news.
For one thing, having only enough cash to pay off your debts only gets you to a net worth of zero -- which probably isn't what you want to have when heading into retirement.
For another thing, those same 17 percent who say they have no debt also have no savings, according to a separate study of family finances from Bankrate.com(RATE).
And the finances of many more Americans remain in an even more perilous state -- 28 percent of Americans do have credit card debt, and in fact, have more debt than money they have socked away in savings.
And hard as Americans are working to improve their finances, progress is hard to come by.
In Bankrate's study, it turns out that the number of respondents saying they are "more comfortable" with their debt load, and are seeing improvement in their "overall financial situation" over the past year are equally matched by the number of people saying they are "less comfortable" with their debt and feel "worse" about their financial situation. In fact, 24 percent of those polled swung either way on these questions -- while about half of people polled say they're basically stuck in neutral over the past year.
How do you feel about the state of your finances? Are you feeling more comfortable or less comfortable than you did one year ago -- or about the same? Weigh in below.
Motley Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.
The number of Americans who signed contracts to buy homes was essentially flat in January, a possible sign of a softening real estate market.
The National Association of Realtors said Friday that its seasonally adjusted pending home sales index inched up 0.1 last month to 95. The index has fallen 9 percent over the past 12 months as sales momentum has faded.
Pending sales are a barometer of future purchases: A one- to two-month lag usually exists between a signed contract and a completed sale.
Higher mortgage rates, rising prices and a tight supply of homes have restricted sales in recent months. Snowstorms across much of the country also delayed purchases. The Realtors project that sales will total 5 million this year, down from 5.1 million in 2013.
Ian Shepherdson, chief economist at Pantheon Marcoeconomics, thinks home buying could slow further through March.
"The bad news is that existing-home sales need to fall a bit further to move fully into line with the pending-sales index," he said in a client note.
The rising costs of buying a home have contributed to a slowdown in signed contracts over the past seven months. Sales of existing homes plummeted in January to the weakest pace in 18 months, the trade group said last week.
Some of the price pressures will be eased if more homes come onto the market in the months ahead.
One way to increase the supply is through the construction of new homes, a sector not measured by the Realtors' indicator on sales.
Purchases of new homes rose 9.6 percent in January to a seasonally adjusted annual rate of 468,000, the Commerce Department said this week. That was the fastest pace since July 2008 and could lead to an uptick in construction.
More homeowners might also choose to put their properties on the market, a possibility suggested by a decline in underwater mortgages at the end of 2013, according to a report Friday by real estate data provider Zillow (Z). Homeowners are considered underwater if they owe more on their mortgage than their home is worth.
A decline in underwater mortgages should enable more Americans to list their homes for sale because they would no longer be unloading their homes at a financial loss.
The share of mortgage holders with negative equity in their homes fell to 19.4 percent in the final three months of last year, down from 27.5 percent during the same period in 2012. Still, the negative equity rate remains four times the level of a healthy housing market.
So even if the supply of homes increases, it will be several years before the market returns to its usual conditions.
"Negative equity likely won't be back to normal levels for another five years," said Stan Humphries, chief economist at Zillow.
Scott Olson/Getty ImagesTravelers at Chicago O'Hare International Airport.By Justin Bachman
American Airlines (AAL) has ended its bereavement fares, the discount offered to people who needed to fly immediately because of a loved one's death. That cold, callous, corporate decision -- which now aligns American's policy with that of its heartless merger partner, US Airways -- has unleashed the predictable gnashing of social media teeth.
But it's not worth shedding a single tear for bereavement fares. Anyone shopping carefully -- a group that might not include mourners -- already knows that the "break" airlines offered the bereaved have been, at best, pathetic.
A bereavement fare is typically just a small discount off the cost of a last-minute purchase, which are nearly always exorbitant.
United (UAL) offers a 5 percent discount off a walk-up fare and wants to see a death certificate to ensure you're not lying. Delta's (DAL) price break varies -- which likely means it's influenced by seat inventory -- and applies only for immediate family members. (Delta, too, wants to verify the death.)
Such paltry discounts mean little, especially when you're not debating whether to make the trip and just need a ticket procured quickly. "Five percent off a $900 fare isn't going to make that big of a difference to someone in an emotionally chaotic state," Rick Seaney, chief executive of FareCompare.com, told the Los Angeles Times. Exactly.
I have a better idea: Go to the Internet. Many sites specialize in last-minute travel deals or fare bidding, such as Priceline (PCLN). If that's too much work at a fraught time, a travel agent can quickly handle the same chore. And one-way flights may make more sense, offering additional flexibility with an expensive purchase.
A bereavement discount is, as much as anything, a meaningless marketing gesture that does little to help distraught travelers. To truly help those who just lost a loved one and are facing an enormous airfare, let's lobby for flat funeral pricing of, say, $200 to $700, depending on distance. Maybe the discounts could be subsidized by all those $200 ticket-change fees? That would be far more comforting -- for every air traveler.
David Paul Morris/Bloomberg via Getty Images
Companies can make brilliant moves, but there are also times when things don't work out quite as planned. From a new online retailer blowing away expectations in its first quarter since going public to the world's largest burger chain eating crow over its chicken wings, here's a rundown of the week's smartest moves and biggest blunders in the business world.
Comcast (CMCSK), Netflix (NFLX), and You -- Winners (Mostly)
The week kicked off with Netflix shelling out some dough to be able to stream its content faster for Comcast's Xfinity broadband subscribers. It's a move that's long overdue, as Netflix's monthly reports on different access providers showed that Xfinity speeds on Netflix video streams were starting to decline in recent months. This is the kind of stuff that would result in consumers either ditching Comcast or unsubscribing from Netflix so this "peering" arrangement benefits both companies.
Naturally it's also good news for Comcast subscribers. No one likes to see online videos stop to buffer or degrade in image quality. Everybody wins -- mostly.
(The down side, though, can be viewed like this: Netflix, the 800 lb. gorilla of streaming video, just caved on the net neutrality fight and agreed to pay for bandwidth. It'll have to pass that cost on to subscribers eventually. And with Netflix out of the fight, expect any smaller company that sees its content being throttled to pay the Danegeld quickly, too.)
The Japanese consumer electronics giant has been struggling on several fronts lately, and now it's retreating on the retail front, too. Sony revealed plans to close 20 of its 31 Sony Store locations in this country. The outcome probably won't come as a surprise to anyone that has walked by one of its locations. However, Sony's been scaling back through layoffs, selling off its Vaio computer business, and other acts of surrender. Keeping the Sony Store locations would just be a public admission that it's not as cool as Apple (AAPL) with its namesake stores.
"While these moves were extremely tough, they were absolutely necessary to position us in the best possible place for future growth," Sony Electronics chief Mike Fasulo notes in a press release explaining the move. It's true that sometimes you need to take a step back to take two forward, but there's little reason to believe that this is what will happen this time.
It's going to cost theme park fans a little more to visit Disney World now. The family entertainment giant kicked off the week by raising ticket prices to its gated Florida attractions by $4, making it a stiff $99 cover charge to get into the flagship Magic Kingdom.
Naturally the Internet is buzzing with negative opinions, but that's not new. Disney raises its single-day ticket prices every year, yet attendance keeps setting new records. The hikes had taken place in early June during the three previous years, but Disney moved the increase up several months this time around. That's bad news for springtime visitors who only planned to spend a single day at the park -- there are still a variety of multi-day pass discounts -- but it's good news for Disney shareholders.
Folks will likely keep coming since the difference between $95 last week and $99 now isn't likely make or break a vacation plan.
So much for using chicken wings as a catalyst to drum up sales: McDonald's is discounting its Mighty Wings, but there's more to this markdown than meets the eye. The Wall Street Journal is reporting that weak sales have left the world's largest restaurant chain with 10 million pounds of unsold Mighty Wings. In a desperate move, McDonald's is effectively slashing the per-piece price by 40 percent in offering five pieces for $3 in a new promotion.
McDonald's is pitching this as a "limited time" offer, but in this case, the limited time is probably "however long it takes to sell 5,000 tons of wings."
You never get a second chance to make a first impression on Wall Street, and zulily made the most of its opportunity. The online retailer posted blowout results in its first quarter as a public company with sales doubling to $257 million. Earnings of $0.10 a share blew away the $0.04 a share that analysts were targeting.
The market's noticing. Shares of zulily have climbed in each of the first four trading days of the week, soaring a whopping 79 percent along the way.
Motley Fool contributor Rick Munarriz owns shares of Netflix and Walt Disney. The Motley Fool recommends Apple, McDonald's, Netflix, and Walt Disney. The Motley Fool owns shares of Apple, McDonald's, Netflix, and Walt Disney. Try any of our newsletter services free for 30 days.
When it comes to tax refunds, many Americans say they plan to do something virtuous with the money they get back from Uncle Sam, like pay down debt or put it in the rainy day fund.
We're not completely fooling ourselves: Experts say people who plan to save their refund or use it to pay off bills do that -- with at least part of the money.
But whether we realize it or not, having a little extra money in the checking account also often leads to a splurge or two, like a new pair of shoes or a nice dinner out.
"You also find significant spending among households who say they're saving it," said Jonathan Parker, a finance professor at MIT's Sloan School of Management who has studied how people spend money they get back from the government.
It's not clear whether people are aware that they are spending a bit more than they otherwise would have.
Parker said people may just see that their bank balance is a bit higher, or know that they just deposited that big check, and feel comfortable spending a bit more even a month or two later.
"It actually caused spending even though you think you saved it," he said.
For many Americans, a tax refund is a significant financial boost. The Internal Revenue Service said Thursday that it had issued more than 40 million refunds already this year, and the average refund so far is $3,116.
Many people plan to use those refund checks to get their financial house in order. A survey released this week by financial services firm Edward Jones found that only 8 percent of respondents would spend a tax refund on something fun, like clothes, entertainment or a meal out.
By contrast, 52 percent of those surveyed said that if they were to get a refund this year, they'd spend it on necessary items, like household expenses or credit card debt. Thirty percent planned to save it, and 8 percent planned to invest it; 2 percent weren't sure.
The phone survey of 1,018 Americans was conducted earlier this year and had a margin of error of 3 percentage points.
Parker said if you really want to make sure that you are actually saving your refund, the best thing to do is to put it in a place where it's hard to get to, like a mutual fund account or a retirement plan.
If you just leave it in the checking or even savings account, it's too easy to dip in, even unintentionally, for nonessential expenses.
Still, Parker said there's not necessarily anything wrong with using your tax refund to splurge a bit -- after all, an indulgence here and there can make you happy.
It's only a problem if you do something like go on vacation instead of paying that overdue credit card bill or just end up regretting frittering away the money.
"[If you're] not paying your utility bills, then you ought to be thinking differently," he said.
Mattel (MAT), the world's largest toymaker, agreed to buy Mega Brands (MB) for $460 million, acquiring the biggest challenger to Lego A/S in the construction-toy market.
Mattel is offering C$17.75 ($16) a share, according to a statement today, a 36 percent premium over yesterday's closing price. The board of Montreal-based Mega Brands unanimously approved the transaction, and investors holding 39 percent of the stock, including Chief Executive Officer Marc Bertrand and Fairfax Financial Holdings (FFH), agreed to the deal.
The purchase of Mega Brands, the world's second-largest maker of snap-together blocks, will fill a product hole for Mattel. It doesn't have its own construction line, locking it out of a $4 billion market in the U.S. and Europe. The category also is a bright spot in a toy industry that has seen growth stall in the U.S.
Mattel considered starting its own construction line, then opted instead to buy Mega Brands because it would be faster and less risky, Mattel CEO Bryan G. Stockton said on a call with reporters. Mattel got its first taste of construction in 2012 when it debuted blocks for its Barbie brand through a licensing deal with Mega Brands. Mattel realized that replicating this kind of expertise would take years, Stockton said.
'About Growth'
"This acquisition is all about growth," Stockton said. "We see an opportunity to expand our brands in this category across boys, girls and preschool."
Mattel shares rose 0.8 percent to $37.44 at 10:34 a.m. in New York. They had declined 9 percent over the past year through yesterday. Shares of Montreal-based Mega Brands surged 36 percent to C$17.73 today in Toronto.
Mattel is coming off a lackluster holiday season, with sales sinking 6.3 percent -- the biggest quarterly drop since 2009. The El Segundo, California-based toymaker has looked to acquisitions to boost sales in the past. In February of 2012, it paid $680 million to buy HIT Entertainment, owner of Thomas the Tank Engine. It also acquired Fisher-Price for $1.1 billion in 1993, Tyco Toys for $755 million in 1996 and American Girl for $700 million in 1998.
Hasbro (HAS) -- the world's third-largest toymaker, after Mattel and Lego -- has shied away from making large acquisitions to enter categories. It started its own building brand, KRE-O, in 2011. Mega Brands' Mega Bloks is more established, though that company's sales are still about a 10th the level of Lego's.
Lower Margins
Today's deal should close next quarter. It's expected to reduce this year's earnings because Mega Brands has lower gross margins, Mattel said. After that, the transaction should add to profit as Mattel uses its distribution and manufacturing scale to reduce costs and its marketing skill to drive sales, the company said.
"This rounds out their portfolio," said Sean McGowan, an analyst at Needham & Co. in New York. Mattel will be able to expand the brand quickly by moving it into countries where Mega Bloks aren't currently sold, he said. Mega Brands is only in about half of Mattel's markets.
Mattel will continue to look for acquisitions in toy categories where it doesn't have much of a presence, the company said.
Fairfax Investment
Fairfax, the Toronto-based holding company run by CEO Prem Watsa, is Mega Brands' largest shareholder, with a 19 percent stake, according to data compiled by Bloomberg. Fairfax bought into the company in 2008, purchasing C$64 million in convertible debentures as part of the toymaker's recapitalization plan.
Fairfax, also the biggest shareholder of smartphone maker BlackBerry (BBRY), acquired 65 million shares in 2010. Mega Brands stock had dropped about 75 percent since the closing of the debentures purchase. At its peak in December 2005, Mega Brands was worth C$552.40 a share. The company was forced into a major recall and paid a penalty in the U.S. after children swallowed magnets that detached from its toys.
Bertrand, the CEO, will serve as an adviser for a year and Mega Brands' headquarters will stay in Montreal, Mattel said.
M. Spencer GreenBundled up pedestrians walk past an advertisement for South America and Central America in the window of a travel agency in Blue Island, Ill.By DON BABWIN
CHICAGO -- Shannon Frauenholtz has had it with winter. Barely able to stomach the television news with its images of snowbound cars, she heads to the tanning salon, closes her eyes and imagines she's back in Mexico, where she's already vacationed once this winter.
She's toyed with the idea of joining her mother in Hawaii or just driving to an indoor water park, figuring that while the palm trees might be plastic and the "beach" smells of chlorine, at least it's warm.
"I don't need a vacation. I don't need the relaxation," said Frauenholtz, of New Ulm, Minn. "I just need the heat."
All over the Midwest and the East Coast, travel agents are being inundated with a simple request: Get me out of here. And travelers fortunate enough to have escaped are begging hotels to let them stay a little longer.
Because they know how miserable people are, warm-weather destinations in California, Arizona and Florida have stepped up their enticements. Trains and billboards in Chicago have been plastered with ads showing beaches and pool scenes. In Philadelphia, one promoter put fiberglass mannequins dressed in flip flops, tank tops and shorts atop taxis with their arms outstretched -- a whimsical inducement to "fly" south.
Reminding Americans that there are places where nose hairs don't freeze is an annual tradition.
But those in the business of luring visitors to warmer climates say it's rarely been easier than this season, when "polar vortex" has entered the everyday vocabulary and "Chi-beria" has become popular enough to emblazon on T-shirts.
"This year we wanted to have a little more fun with it," said Susannah Costello, of Visit Florida, the state's official marketing organization, which came up with the mannequin idea.
The ads showing children and bikini-clad women making snow angels in warm beach sand are more plentiful than in years past, acknowledged Erin Duggan, of Visit Sarasota County.
"We did that because we knew winter was shaping up to be brutal," she said.
Not that people needed much reminding of the harsh conditions.
"The winter is so bad, there is a certain amount of desperation," said Alex Kutin, an Indianapolis travel agent. "They come and say, 'I've got to get somewhere warm. Where do you recommend?'"
Another assault of bad weather was expected over the weekend, with forecasts for 6 inches of snow through Monday in a 1,500-mile stretch from Kansas to the East Coast. Parts of the Northeast could see a foot or more.
Kevin Tuttle, of Verona, Wis., was so intent on finding warmth that he decided against Florida out of fear that the polar vortex might reach down and find them there. Instead, he and his wife will take their 4-year-old son and 5-year-old daughter to Manzanillo, Mexico, a resort on the Pacific ocean.
"That's near the equator, right? It's got to be pretty warm," Tuttle said, adding that "a lot of sand castles are in my future."
Just how many more people are trying to get out of the ice box is unclear. Airlines do not release any route-specific data. And although the government tracks some of it, figures will not be released for six months.
But other travel statistics suggest there has been a jump, including figures from Visit Florida that show hotel bookings in Florida rose 3 percent in the four weeks ending Feb. 15 compared with the same period last year.
The jetsetter.com travel site found that the number of hotel bookings in warm-weather spots made by customers from Illinois, New York, Massachusetts and the Washington, D.C., area rose 7 percent in January compared with last year.
Extended Stay
Travelers are also staying longer once they arrive.
Micah Hilgendorf said the thought of heading back to ice-covered Chicago, where he owns a couple of bars, prompted him to tack on three days in Florida before and after a cruise out of Miami. He also flew to Palm Springs, Calif., for four days.
"All of that is last-minute because of the weather," Hilgendorf said.
Dave Knieriemen, a retired engineer from Fremont, Ohio, is doing the same thing.
"We've reserved a room for another night in case our flight gets canceled because of the weather," he said this week from Arizona as he watched the Cleveland Indians play a spring training game. "And it's so horrible [in Ohio] we might stay a bit longer, anyway."
Travel agents say the numbers of travelers would be even higher if all those who wanted to get away could find a seat on jets that are already full.
"It's far easier to find people a resort to stay in or a cruise ship than to find them a flight," said Gail Weinholzer, of AAA in Minnesota.
The inability to find a flight, afford a trip or get time off from work has sent a surge of customers to businesses closer to home that can offer even a short escape from the cold, such as tanning salons.
"We're getting a lot of people coming in here to warm up," said Kirstin Leffew, the manager of Bronze Bay Tanning in Pendleton, Ind. "They want the beds that have been used the most, the ones that are nice and hot."
Indoor water parks say they are busier than usual, too. Joe Eck, general manager of the Wilderness Resort in the Wisconsin Dells, said business is up 10 to 15 percent because of the bitter cold.
Among those who decided to go to the Wilderness -- which has real palm trees, the resort will remind you -- were Jennifer Drost and her family.
"Our kids are young enough where they still enjoy playing outside, but they haven't been able to because it was so darn cold," said Drost, who lives with her husband and three children in Fond du Lac, Wis. "All of us were getting on each other's nerves, [and] we just needed to get out of the house."
-Associated Press writer M.L. Johnson in Milwaukee contributed to this report.
Concerns about the political uncertainty in Ukraine caused some volatility in the markets Friday afternoon, with the major indexes making several U-turns ahead of the weekend.
The Dow Jones industrial average (^DJI), which had been up by as much as 125 points, briefly dropped into loss territory before rebounding to end 49 points higher. The Standard & Poor's 500 index (^GPSC) edged up 5 points, adding to Thursday's record high, but the Nasdaq composite (^IXIC) lost 10 points.
AP/Darko VojinovicPro-Russian militias have seized local government buildings in Crimea, Ukraine; the unrest there is making investors around the world nervous.
February was a great month for investors. All three major averages jumped by about 4 percent.
UnitedHealth Group (UNH) led the blue chips, gaining 1½ percent. Other health providers - Aetna (AET), Wellpoint (WLP), Cigna (CI) and Humana (HUM) -- all gained between 1½ and 2 percent.
And retail stocks remained active. Target (TGT) added another 3 percent. Best Buy rose 4 percent, and Fred's (FRED), a regional department store chain, jumped 10 percent.
But Pier 1 (PIR) fell 5½ percent after lowering its earnings outlook for a second time. That led to a series of brokerage downgrades.
Decker Outdoor (DECK) tumbled 12 percent. The maker of footwear brands such as Ugg and Teva issued a weak outlook. And apparel maker Lululemon (LULU) fell 5-percent on negative comments from Credit Suisse.
It seems as though there are always some big movers in the drug and biotech sectors - and that was certainly the case today.
GW Pharmaceuticals (GWPH) rose 2 percent after the FDA granted orphan status to its drug to treat a rare form of childhood epilepsy.
But most of the action was on the downside.
Endologix (ELGX) slid 24 percent after forecasting lower revenue growth.
Questcor (QCOR) fell 10 percent. It's lost big for three straight days amid allegations of questionable business practices.
Jazz Pharmaceuticals (JAZZ) fell 9 percent. It's also had a wild week following its earnings and a management shake-up.
Elsewhere, United Continental (UAL) fell more than 3 percent. It reported that a high level of weather related cancellations this quarter will hurt revenue.
And Monster Beverage (MNST) rose 4 percent. It reports strong revenue growth despite health concerns about its high-energy drinks.
What to Watch Monday:
Automakers release vehicle sales for February.
The Commerce Department releases personal income and spending for January at 8:30 a.m. Eastern time.
At 10 a.m., the Institute for Supply Management releases its manufacturing index for February, and the Commerce Department releases construction spending for January.
The House Energy and Commerce subcommittee holds a hearing on proposed changes to generic drug labeling.
