Quantcast
Channel: DailyFinance.com
Viewing all 9760 articles
Browse latest View live

Qihoo 360 Technology Co Ltd. Earnings: What to Expect Thursday

0
0

Filed under:

Qihoo 360 will release its quarterly report on Thursday, and investors have had nothing but optimism about the prospects for the up-and-coming Chinese Internet sensation. With the company having taken steps that forced industry giant Baidu to take notice, Qihoo has fought hard to muscle its way into the search-engine market, even as Sohu.com , Tencent, and other players seek their own fortunes there.

Qihoo's traditional area of expertise is Internet security, with its computer antivirus product having huge market share in China. Yet Qihoo's growth recently has come from using its reputation for security products as a stepping stone to its browser and search engine, and a rapid increase in market share has eaten into Baidu's business as well as those of Sohu and other smaller search competitors. The question Qihoo has to answer, though, is whether it can keep growing now that it's a major player in the broader Internet business in China. Let's take an early look at what's been happening with Qihoo 360 over the past quarter and what we're likely to see in its report.


Qihoo 360's Internet Security product. Image source: Wikimedia Commons


Stats on Qihoo 360

Analyst EPS Estimate

$0.43

Change From Year-Ago EPS

95%

Revenue Estimate

$209.73 million

Change From Year-Ago Revenue

104%

Earnings Beats in Past 4 Quarters

3

Source: Yahoo! Finance

Can Qihoo earnings keep soaring this quarter?
In recent months, analysts have become more optimistic about Qihoo earnings, keeping their fourth-quarter estimates unchanged but boosting their full-year 2014 projections by 2%. The stock has kept soaring, posting a rise of almost 40% since late November.

Qihoo's third-quarter results showed just how impressive the rising Internet company has been in producing growth. Sales jumped 124%, with both online advertising and its gaming platform seeing revenue more than double during the quarter. Adjusted earnings per share soared 135%, beating estimates by a dime per share. Even though Baidu has done a good job of keeping its own growth rates up, they still don't come close to comparing to the pace that Qihoo has set.

But Qihoo still faces the huge challenge of monetizing its growing traffic. Hiring former Google China head John Liu last year could play a big role in earning more income from search results, as Qihoo is far behind Baidu in terms of the types of advertising it offers. Ad revenue represents a huge untapped resource for future revenue growth, as search ads made up just $28 million of Qihoo's overall revenue in the third quarter according to Morgan Stanley analysts.

The mobile-device realm will also be a key battleground for Qihoo, as both Baidu and other players like Sohu and Tencent are all trying to come up with viable strategies to take advantage of the growth in mobile. Both Baidu and Qihoo have looked for ways to get more revenue from their app stores, including efforts to make their search results more accessible to users without interrupting whatever they're doing on their mobile devices at the time.

In the Qihoo earnings report, watch to see whether the company follows the same path as Baidu did when it released its earnings last week. With Baidu having sacrificed profit growth in order to bolster revenue and compete more effectively, Qihoo might have to make similar margin-negative moves in order to hold its position in the industry.

Will you be happy with Qihoo forever?
As every savvy investor knows, Warren Buffett didn't make billions by betting on half-baked stocks. He isolated his best few ideas, bet big, and rode them to riches, hardly ever selling. You deserve the same. That's why our CEO, legendary investor Tom Gardner, has permitted us to reveal The Motley Fool's 3 Stocks to Own Forever. These picks are free today! Just click here now to uncover the three companies we love. 

Click here to add Qihoo 360 to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

The article Qihoo 360 Technology Co Ltd. Earnings: What to Expect Thursday originally appeared on Fool.com.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Baidu, Google, and Sohu.com. The Motley Fool owns shares of Baidu and Google. 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.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

Read | Permalink | Email this | Linking Blogs | Comments


Can the Xbox One Catch Up With the PlayStation 4?

0
0

Filed under:

A few months after the launch of the latest generation of game consoles, Sony's PlayStation 4 is well ahead of Microsoft's Xbox One in terms of sales. The PlayStation 4 has been in the lead from the start, but the gap seems to be widening as Sony struggles to ship enough units to meet the massive demand from gamers. The PS4 is currently hard to find at stores, and Sony has stated that this situation will persist until sometime in April. Meanwhile, the pricier Xbox One has plenty of availability.

Source: Newegg.


Source: Newegg.

The latest numbers put the PS4 at 5.8 million units sold, 2.3 million more than the Xbox One's 3.5 million units. Can the Xbox One catch up, or has the PlayStation 4 cemented its status as the dominant game console of this generation?

Price matters, and so does quality
The PlayStation 4 costs a full $100 less than the Xbox One, selling for $399 at retail compared to $499 for Microsoft's console. This price difference is largely due to Microsoft's decision to include the Kinect motion-sensing hardware with every console, forcing gamers to pay extra for the peripheral. Microsoft's goal was to give game developers a reason to support Kinect, guaranteeing that every Xbox One console included the device. But the decision seems to have backfired, with the higher price driving gamers to Sony's console instead.

While the price is a big reason the PS4 is outselling the Xbox One, graphical quality may also be a contributing factor. While nearly every game released or announced for the PS4 runs at a resolution of 1080p, with most churning out 60 frames per second, the Xbox One has had trouble keeping up. One example is the best-selling Call of Duty: Ghosts, which runs at 1080p on the PS4 but only 720p on the Xbox One. Even Xbox One exclusives, like the soon-to-be-released Titanfall, haven't been able to hit 1080p.

While this may simply be the result of developers taking time to get used to a new console, and visually it may not even make much of a difference to most people, it certainly makes the PS4 look like a more powerful system. Couple that with a lower price, and it's no wonder that the PS4 is outselling the competition.

Titanfall could provide a boost
Exclusive games are the biggest differentiator between game consoles, and while each system has its fair share of exclusives so far, Microsoft has one of the biggest games of the year all to itself. Titanfall, set to release on March 11 for Xbox One, Xbox 360, and PC, is poised to become one of the biggest games of the year, and it will almost certainly help drive sales of the Xbox One. The open beta for the game, which ran from Feb. 15 to Feb. 19, attracted around 2 million players, and Titanfall could end up being the first "must-have" game for either console.

Source: Microsoft

Microsoft is selling a Titanfall Xbox One bundle, which includes a copy of the game, for the same $499 that the console itself goes for, effectively giving the game away for free. While this bundle should help sell more consoles, it risks upsetting early adopters who bought the console in anticipation of Titanfall.

Sony has got some big exclusives of its own coming soon, so any sales boost for the Xbox One may be short-lived. Infamous: Second Son, an entry in the popular Infamous series, is set to release exclusively on the PS4 on March 21, and most other hotly anticipated games set to launch this year, like Watch Dogs and Destiny, are coming to both consoles.

The bottom line
Given the price difference between the two consoles, the PlayStation 4 is unlikely to relinquish its lead unless Microsoft cuts the price of the Xbox One, either directly or by selling a version without Kinect. The Titanfall bundle acts like a price cut to a degree, but with the PS4 having an advantage, at least for now, in terms of resolution, the higher price of the Xbox One is difficult to justify. Sony has a winner on its hands with the PS4, and it seems that the company is well on its way to dominating the living room once again.

Want to profit on business analysis like this? While Sony and Microsoft fight for game console supremacy, the key for your future is to turn business insights into portfolio gold through smart and steady investing... starting right now. Those who wait on the sidelines are missing out on huge gains and putting their financial futures in jeopardy. The Motley Fool is offering a new special report, an essential guide to investing, which includes access to top stocks to buy now. Click here to get your copy today -- it's absolutely free.

The article Can the Xbox One Catch Up With the PlayStation 4? originally appeared on Fool.com.

Timothy Green owns shares of Microsoft. The Motley Fool owns shares of Microsoft. 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.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

Read | Permalink | Email this | Linking Blogs | Comments

How 1 Utility Uses Exploration to Grow Earnings

0
0

Filed under:

There's been much in the news about the U.S. becoming less dependent on foreign oil. One reason is the discovery of large oil reserves in the Bakken shale formation in Montana and North Dakota. MDU Resources Group  does not do much prospecting in the Bakken, but it does benefit from this play by offering electric and natural gas as well as construction services to the largest Bakken producer, Continental Resources , and to railroads like Union Pacific that ship Bakken crude oil to the rest of the U.S. and Canada.

MDU spans the electric and natural gas value chain from well-head to meter across Idaho, Montana, North Dakota, and even Minnesota, Oregon, and Washington State. Its geographical footprint includes the Bakken shale oil fields. The company even has a website devoted to Bakken with the tag line "built for the Bakken."


In spite of MDU's exposure to the boom that is the Bakken crude oil play, the company's performance was weak overall in 2012, due mainly to writedowns of natural gas and other properties. But all of this has changed in 2013. MDU reported higher and healthier operational income and promises more for 2014.

The company has made its utility operations more cost-efficient and growth-oriented, while gaining from higher than expected yields in non-utility sources of income in construction and oil and gas exploration. In short, the Bakken boom is helping MDU become a more full-service energy company.

Will MDU's Bakken franchise and cross-energy value chain strategy be enough to grow this utility into an integrated energy player?

First the utility
MDU only generates nearly a third of its income from its natural gas and electric distribution, pipeline, and energy services businesses. The rest of MDU's income derives from construction services and oil and gas exploration.

About a quarter of the utility segment's 2014 investment of $300 million is slated for the Bakken region. This investment will help improve service reliability for the company's 6% electric and 4% natural gas customer base growth in 2013 in the Bakken region. In this way MDU continues to protect its solid utility earnings and gain customer satisfaction. This factor alone is critical to convert a utility ratepayer into a construction services customer. 

MDU's Pronghorn natural gas and oil midstream pipeline, gathering, and storage assets grew higher volumes. These volumes took advantage of scalable operations that kept expenses at bay. Storage and pipeline improvements will increase service reliability, lower cost of service, increase the return on rate base, and help turn ratepayers into non-utility customers. 

A growing customer base, lower operating expenses, and an integrated plan for increased customer relationship investment seem to be the key not only to manage regulated rate base earnings, but grow a non-regulated franchise.

Now for the rest of the company
As good a utility story as MDU has posted, it is topped by MDU's growth strategy to explore for shale oil and build services to feed this boom. MDU's Fidelity Exploration & Production Company's oil exploration unit met 2013 targets with over 2.8 million net barrels from acreage in the Bakken field and nearly 2 million in Utah's Paradox Basin. This unit contributed over a third of MDU's in 2013.

Fidelity also just acquired an additional producing acreage in Paradox. This basin stretches across four states and contains over a million barrels of recoverable oil and a billions of cubic feet of natural gas along in formations where Fidelity is drilling. Growth for MDU will be determined by drilling success and higher gas and oil prices.

The Bakken and other shale oil fields are growing at break-neck rates. What keeps up with their pace is construction and other ancillary services. MDU seemed to realize this opportunity in its backyard. MDU's construction services and materials segment earned 35% of total 2013 adjusted earnings from this source alone.

Is there a growth story here?
MDU has been growing equity at about 5% with an over 2% dividend yield promised to shareholders. Is a 7% return enough? S&P seems to think so, as it rated MDU BBB+ for having enough capacity to meet commitments, and is strong enough to withstand the risks of the Bakken and Paradox exploration market, on which most of MDU's earnings depend. With international tensions driving oil prices ever higher, Bakken and Paradox production will only become more valuable. I believe MDU is well positioned to maintain and grow its 7% return.

More rock-solid income plays
One of the dirty secrets that few finance professionals will openly admit is the fact that dividend stocks as a group handily outperform their non-dividend paying brethren. The reasons for this are too numerous to list here, but you can rest assured that it's true. However, knowing this is only half the battle. The other half is identifying which dividend stocks in particular are the best. With this in mind, our top analysts put together a free list of nine high-yielding stocks that should be in every income investor's portfolio. To learn the identity of these stocks instantly and for free, all you have to do is click here now.

 

The article How 1 Utility Uses Exploration to Grow Earnings originally appeared on Fool.com.

Bill Foote has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

Read | Permalink | Email this | Linking Blogs | Comments

Should You Buy RadioShack on the Pullback?

0
0

Filed under:

RadioShack took a beating on Tuesday as investors pushed the stock down more than 17% to close at $2.25. The stock's sell-off comes after RadioShack reported a wider than expected sales decline for its fourth quarter, and the electronics retailer said it would shutter up as many as 1,100 U.S. stores.

With the stock spiraling out of control, some value investors are wondering whether this is an opportune entry point. However, RadioShack's turnaround story appears crippled at best. Here are a few reasons why investors should avoid buying shares of RadioShack, despite the stock's recent pullback.

Some things are better left in the '80s
RadioShack has kept square footage of its regular stores low, which has helped the chain keep overhead costs to a minimum up to this point. This, though, is no longer enough to keep the struggling retailer afloat.


There was a time when RadioShack's turnaround efforts were on track. In 2011, the company was busy forging important relationships with big-box retailers such as Target . In fact, RadioShack operated as many as 1,400 kiosks in Target stores throughout the United States that year. That partnership helped RadioShack put its products in front of a broader audience of shoppers.

Unfortunately, the company broke up with Target last year after the two retailers failed to agree on the terms of the partnership. Worse still, RadioShack reportedly lost $38 million during the first three quarters of fiscal 2012 through its mobile tie-up with Target, according to The Wall Street Journal.

Yet even if RadioShack's prior arrangement with Target had worked out, small-format concept stores and manageable overhead would only get the company so far. One of the biggest obstacles RadioShack faces today is declining mobile sales. "As the wireless industry slows, this could be another hit to their turnaround. [RadioShack] is highly dependent on wireless, and now as that industry matures, it makes results that much more challenging," said David Strasser, an analyst at Janney Capital Markets.

Mobile sales account for half of RadioShack's total annual sales. But unlike in the 1980s, RadioShack isn't the only retailer selling mobile devices these days. In fact, RadioShack doesn't even rank among the top 10 U.S. retailers in terms of mobile device sales, according to a survey from Consumer Intelligence Research Partners. Moreover, declining wireless sales were only partially to blame for the company's weak fourth-quarter results.

A challenging retail environment
The electronics chain said lower store traffic during the all-important holiday shopping season was also responsible for the dismal numbers. For the period ended Dec. 31, RadioShack lost $1.90 per diluted share. For comparison, that means the company lost $1.27 more than it did during the same period a year ago when it posted a loss of $63.3 million, or $0.63 per share.

RadioShack's store-closure plan, too, could take its toll on the company. As Strasser mentioned in his analyst note, the cost of closing these locations will negatively affect RadioShack's liquidity. This move will cut the company's store count by 20%, leaving RadioShack with roughly 4,000 remaining retail outlets throughout the United States, 900 of which are owned by franchisees.

Source: The Motley Fool.

Ultimately, there are much better value plays available to investors in the consumer goods space today. RadioShack's stock is still trading above its 52-week low of $2.02, despite the recent sell-off. But given the immense odds stacked against this name, it's likely that RadioShack will eventually share Circuit City's fate.

3 Stocks that won't go bust like RadioShack 
RadioShack looks to be headed for extinction, but that doesn't mean your portfolio should suffer. As every savvy investor knows, Warren Buffett didn't make billions by betting on half-baked stocks. He isolated his best few ideas, bet big, and rode them to riches, hardly ever selling. You deserve the same. That's why our CEO, legendary investor Tom Gardner, has permitted us to reveal The Motley Fool's 3 Stocks to Own Forever. These picks are free today! Just click here now to uncover the three companies we love. 

The article Should You Buy RadioShack on the Pullback? originally appeared on Fool.com.

Tamara Rutter owns shares of Target. The Motley Fool has no position in any of the stocks mentioned. 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.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

Read | Permalink | Email this | Linking Blogs | Comments

Why BlackBerry's Sponsored BBM Content Is the Right Move

0
0

Filed under:

BlackBerry held out as long as it could. But this week the company rolled out beta testing of featured placement, sponsored posts, and sponsored invites in its BBM messaging app. The move is a big step in the right direction for a company that can no longer rely on hardware sales to keep it afloat.

BlackBerry Messenger. Source: BlackBerry.

Same BBM, new opportunities
To understand how this is good for BlackBerry, let's take a quick look at what the company is testing. To be clear, all of this is in beta mode right now, so not all users are seeing it.

  • Featured placements: Companies that have Channels in the BBM app can pay to have their content featured on the main Channel landing page.
     
  • Sponsored invites: Channel owners can invite BBM users to subscribe to their channel. BBM users can deny the invite and won't hear from the Channel again. The number of sponsored invites a user receives is limited to three per month.
     
  • Sponsored posts: Channels can send sponsored posts into the BBM updates tab, where chat updates and subscribed content updates are posted. Users can block sponsored updates from specific channels if they don't find them relevant.

So let's quickly dissect what BlackBerry is doing here. The company is offering content creators three ways to pay to have their content pushed out, while still giving BBM users the capacity to control how they see that content. This sounds like a win-win.


Compare this strategy to Twitter's sponsored tweets. Twitter allows for sponsored tweets that show up in a user's feed, which is actually a bit more invasive than BBM's strategy. BlackBerry is regulating sponsored posts to the updates screen, where users are already accustom to seeing content. BBM users can theoretically still access the chat options and never see sponsored post if they don't want to.

As for featured placements, this doesn't seem that much different than Facebook curating content to the sections in its Paper app. Users select general themes in Paper and then receive content based on those themes, but they don't decide who the initial content comes from. Featured placements are paid for, unlike Facebook's curated content, but could still deliver relevant content to users as long as BBM uses the demographic information correctly.

It's possible the sponsored invites may become a nuisance, but just like sponsored posts, BBM users can still access the chat section without having to see any of the invites. Again, this is still in beta mode and if BlackBerry decides its users are being oversold, it could easily change how all this works.

Foolish thoughts
I've been skeptical about BBM's ability to turn BlackBerry around, and the new sponsored options don't change my opinion. But it's hard to argue with BlackBerry experimenting with new ways to generate revenue. BBM has about 80 million active monthly users right now, and testing the waters with a few sponsored solutions is exactly what the company should be doing with the app.

While valuing revenue from BBM right now would be purely speculative, investors should watch for any changes made to the beta testing. It's my guess that BlackBerry will keep around all three options when it launches them to all BBM users, at which point the company is likely to talk more about how much revenue the new features are generating. That probably won't happen for a few more months, but it should give BlackBerry investors something to look forward to.

Three stocks to help you retire rich
It's no secret that investors tend to be impatient with the market, but the best investment strategy is to buy shares in solid businesses and keep them for the long term. In the special free report "3 Stocks That Will Help You Retire Rich," The Motley Fool shares investment ideas and strategies that could help you build wealth for years to come. Click here to grab your free copy today.

The article Why BlackBerry's Sponsored BBM Content Is the Right Move originally appeared on Fool.com.

Fool contributor Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends Facebook and Twitter. The Motley Fool owns shares of Facebook. 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.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

Read | Permalink | Email this | Linking Blogs | Comments

AMD's Mantle May Already Be Irrelevant

0
0

Filed under:

When AMD first announced its Mantle graphics API, the promise of radically improved performance over Microsoft's DirectX -- the de facto standard in the PC gaming industry -- seemed almost too good to be true. With the first games to support Mantle now available, the API provides large performance gains for certain configurations, but more modest gains otherwise. While Mantle is impressive, it's likely no game changer for AMD.

Source: AMD

The biggest problem with Mantle is that game developers need to add support for the API, a task which adds both cost and time to the development process. Given that Mantle is only supported on AMD GPUs -- not those from rival NVIDIA -- the return on investment for game developers is questionable at best.

Microsoft isn't taking Mantle lying down, with the dominance of DirectX critical to the success of the Windows platform. At the upcoming Game Developers Conference, Microsoft is set to host two presentations that promise to unveil plans to make future versions of DirectX more efficient by reducing overhead, the same feat that AMD has accomplished with Mantle. In addition, a presentation about OpenGL, the other major graphics API, promises to show how the existing implementation can reduce overhead by a factor of 10 or more. With DirectX already widely used by game developers, and OpenGL apparently able to match Mantle's performance gains today, Mantle doesn't seem to have much of a chance of gaining wide acceptance.


A two-horse race
Both DirectX and OpenGL have been around for a long time, and both are very mature graphics APIs. Almost all triple-A PC games use DirectX, and the Xbox One uses a modified version of DirectX that allows for more direct hardware access. OpenGL, on the other hand, is cross-platform, and the embedded version has become the standard on mobile devices. Some high-profile PC games use OpenGL, like the phenomenally successful Minecraft, but DirectX has largely remained the standard in the world of PC gaming.

Where does Mantle fit in? If the performance gains are indeed short-lived, then it doesn't fit in at all. DirectX will take some time to catch up, but OpenGL, at least according to the GDC presentation, is already capable of matching Mantle's performance improvements. And with OpenGL supported by all major graphics hardware vendors and functional on all major platforms, supporting Mantle doesn't make much sense.

What this means for AMD and NVIDIA
Mantle was supposed to provide AMD with a big advantage over NVIDIA's hardware, and while the performance gains are real, they will likely be short-lived. AMD certainly deserves credit for pushing the graphics industry forward, lighting a fire under Microsoft to improve DirectX, but Mantle is extremely unlikely to supplant either DirectX or OpenGL.

This leaves AMD in the same position that it was in before Mantle, spreading itself too thin across multiple businesses and falling behind in all of them. NVIDIA's recently announced GPUs based on the new Maxwell architecture provide massive gains in power efficiency compared to AMD's products, and at the high end of the market, NVIDIA's products offer the best performance per dollar, according to Tom's Hardware.

While Mantle has certainly compelled Microsoft to improve DirectX, I doubt the API will be around five years from now. OpenGL already provides a cross-platform alternative to DirectX while being supported by all graphics vendors, not just AMD, and any performance advantage that Mantle has will be short-lived. If the goal of Mantle was to push the graphics industry forward, then AMD succeeded. But Mantle doesn't give AMD an advantage against NVIDIA, and the latter will likely keep its market-leading position.

Looking for stocks you can buy to hold?
As every savvy investor knows, Warren Buffett didn't make billions by betting on half-baked stocks. He isolated his best few ideas, bet big, and rode them to riches, hardly ever selling. You deserve the same. That's why our CEO, legendary investor Tom Gardner, has permitted us to reveal The Motley Fool's 3 Stocks to Own Forever. These picks are free today! Just click here now to uncover the three companies we love. 

The article AMD's Mantle May Already Be Irrelevant originally appeared on Fool.com.

Timothy Green owns shares of Microsoft and Nvidia. The Motley Fool recommends Nvidia. The Motley Fool owns shares of Microsoft. 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.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

Read | Permalink | Email this | Linking Blogs | Comments

Morgan Stanley: Bubbly-Looking Tech Stock Valuations Make Sense This Time

0
0

Filed under:

Facebook stock trades at more than 100 times earnings and has soared 145% in the past twelve months.

Facebook and Twitter's bubble-like valuations may not be so crazy after all. Despite the recent run-up in stocks like these, portfolio exposure today to "big data and analytics, social, and mobile" is prudent, says Morgan Stanley managing director and chief U.S. equity strategist Adam Parker, cited by The Wall Street Journal. Is Parker's wildly bullish proclamation a sign that that the Street's market figures are losing their minds again and that a bubble really is upon us, or does Parker have a sensible argument?

Wild valuations
There's no better graphical representation of the ridiculous valuations many tech stocks saw during the tech bubble of the late nineties than this chart of Microsoft.

MSFT Chart


MSFT data by YCharts

Even nearly 15 years after the tech bubble of the late nineties, Microsoft still trades substantially lower than the highs it saw then.

Now a group of mobile-focused Internet stocks, including Facebook, Twitter, and LinkedIn, are trading at bubble-like valuations. Will we look back and see Microsoft-like charts for these social stocks ten years from now?

Facebook and LinkedIn trade at 22 and 16 times sales, respectively. For reference, Google trades at 7 times sales. Twitter, even after an 18% sell-off in the past month, trumps them all with a price-to-sales ratio of 55. Is another tech bubble upon us -- this time with a hot emphasis on social, mobile, and cloud computing?

The Journal's Matt Jarzemsky notes in his report citing Parker's take on tech stocks that many tech stocks are looking pricey:

The past year, tech stocks in the large-cap S&P 500 have gained 25%, outperforming the overall index's 22% advance. Small-cap tech stocks in the S&P 600 are up a more-impressive 38% ... As a result, about 40% of tech stocks are trading above 5-times sales, a level seen briefly during the 1970s and otherwise only in and around the late-90s tech bubble, Morgan Stanley says.

A bubble or not?
Parker argues that valuations are justified this time around. Central to his argument is that the same tech stocks with rosy valuations are, in general, among the few in the market with robust revenue growth.

Consider Facebook and Twitter for instance. Not only is Facebook's revenue growth staggering, but its year-over-year ad revenue, which accounts for 90% of the social network's total revenue, is actually growing at accelerating rates.

Source: Data for chart retrieved from SEC filings for quarters shown.

And the sheer rate of Twitter's revenue growth puts Twitter among tech's fastest growing publicly traded companies. The company's fourth quarter revenue was up 116% from the year-ago quarter.

Parker, who has an "overweight" rating on the tech sector, makes an excellent point. When stocks like Facebook and Twitter have rosy valuations, investors shouldn't immediately assume the stocks are overvalued. While I wouldn't argue that either Facebook or Twitter is undervalued, their robust revenue growth combined with their potential for lucrative net margins in the future make these pricey stocks at least a hold.

Six growth stock picks based on a proven strategy
They said it couldn't be done. But David Gardner has proved them wrong time, and time, and time again with stock returns like 926%, 2,239%, and 4,371%. In fact, just recently one of his favorite stocks became a 100-bagger. And he's ready to do it again. You can uncover his scientific approach to crushing the market and his carefully chosen six picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.

The article Morgan Stanley: Bubbly-Looking Tech Stock Valuations Make Sense This Time originally appeared on Fool.com.

Daniel Sparks has no position in any stocks mentioned. The Motley Fool recommends Facebook, Google, LinkedIn, and Twitter. The Motley Fool owns shares of Facebook, Google, and LinkedIn. 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.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

Read | Permalink | Email this | Linking Blogs | Comments

Why Renren, AeroVironment, and Smith & Wesson Soared Today

0
0

Filed under:

Stocks paused Wednesday, with the S&P 500 closing near the unchanged level as investors waited to see what might happen next both geopolitically in Ukraine as well as domestically in the weather-torn U.S. economy. Even with stocks fighting to a draw today, Renren , AeroVironment , and Smith & Wesson Holding managed to give their shareholders good news today, with their shares rising sharply in response.

Renren soared almost 23%, adding to its nearly 10% jump Tuesday. Although the Chinese social-media company didn't make any major announcements today, sentiment in China's Internet industry has been extremely strong lately, with solid earnings results from search giant Baidu last week helping to drive gains for a number of players in the space. With Baidu having bought Renren's Nuomi group-buying site in January, investors want to know how Renren will move forward from here, especially given that the growth at Nuomi was one of the sole bright spots for the company during the third quarter.

AeroVironment climbed 21% after the drone-maker announced its most recent quarterly results. Revenue jumped by almost half, with solid performance both for its unmanned aircraft division and its electric-charging business. As companies start to look at the commercial potential of drones, AeroVironment could see a huge expansion of the drone business beyond its current military focus. Meanwhile, as demand for electric vehicles begins to climb, the company's charging systems could become a much more integral part of its overall business, maximizing AeroVironment's overall growth opportunities.


Smith & Wesson gained 16% as the gunmaker's quarterly report included a 7% jump in sales, which helped boost adjusted net income by nearly 35% and well exceeded the more tepid expectations that investors had for the company. Moreover, Smith & Wesson gave positive guidance for its current quarter, raising its full-year fiscal 2014 projections for revenue and profits. Even though rival Sturm, Ruger didn't fare as well last week, disappointing investors and sending its shares down in response, Smith & Wesson shows that the gun industry isn't down for the count just yet.

Do you have what it takes to pick winning stocks?
They said it couldn't be done. But David Gardner has proved them wrong time, and time, and time again with stock returns like 926%, 2,239%, and 4,371%. In fact, just recently one of his favorite stocks became a 100-bagger. And he's ready to do it again. You can uncover his scientific approach to crushing the market and his carefully chosen six picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.

The article Why Renren, AeroVironment, and Smith & Wesson Soared Today originally appeared on Fool.com.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends AeroVironment and Baidu and owns shares of Baidu. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

Read | Permalink | Email this | Linking Blogs | Comments


"Project Tango" Illustrates Why Investors Should Love Google Inc.

0
0

Filed under:

For years, Google has walked the fine line between innovative and invasive. "Project Tango" continues the tradition in a way that's good for investors, Fool contributor Tim Beyers says in the following video.

What is "Project Tango"? Generally speaking, it's a phone. But it's also a motion-sensing device capable of 3-D-mapping a space in extraordinary detail. The idea, Tim says, is to give developers a platform for new apps that provide everything from indoor navigation to immersive gaming.

We've seen Google experiment with this sort of technology before. Remember "Ingress," the Google-developed game that used your smartphone to view enhanced images of the world around you? Think of it as the 1.0 version of the sorts of immersive gaming experiences Google wants to enable via "Project Tango."


But can it work? Sure, Tim says. Google already has experience blending the digital into our walkabout lives via Google Glass. "Project Tango" technology takes the idea a step further. Meanwhile, the virtual reality simulation Oculus Rift was a runaway hit at CES while researcher MarketsandMarkets projects 15.18% annualized growth in the market for VR and immersive games between now and 2018.

Now it's your turn to weigh in. What's your view of "Project Tango"? Please watch the video to get Tim's full take, and then leave a comment to let us know where you stand, and whether you would buy, sell, or short Google stock at current prices.

You own a smartphone. Now, here's how to profit from it 
Forget what you've heard about the smartphone revolution. The truth is that one company sits at the crossroads of smartphone technology as we know it. It's not your typical household name, either. In fact, you've probably never even heard of it! But it stands to reap massive profits no matter who ultimately wins the smartphone war. To find out what it is, click here to access the "One Stock You Must Buy Before the iPhone-Android War Escalates Any Further."

The article "Project Tango" Illustrates Why Investors Should Love Google Inc. originally appeared on Fool.com.

Tim Beyers is a member of the  Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He Google at the time of publication. Check out Tim's Web home and portfolio holdings, or connect with him on Google+Tumblr, or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.The Motley Fool recommends and owns shares of Google. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

Read | Permalink | Email this | Linking Blogs | Comments

Why Hovnanian Enterprises, XOMA, and Yongye International Tumbled Today

0
0

Filed under:

Having seen a big drop on Monday and a big jump on Tuesday, stocks took the Goldilocks route Wednesday, as the broader market finished little changed as investors struggled to guess which direction macroeconomic and geopolitical issues will push the stock market next. For shares of Hovnanian Enterprises , XOMA , and Yongye International , though, the day was ugly, with those three stocks seeing substantial declines.

Hovnanian fell 10% as the homebuilder reported fiscal first-quarter earnings results that included a doubling of its year-ago loss and just a 1.6% rise in revenue. Deliveries fell more than 4% and net contracts dropped almost 11%, and although Hovnanian reported that its contract backlog had risen both in dollar-terms and number of homes, bad weather this year compared to a favorable selling season last year took its toll on the homebuilder's results. CEO Ara Hovnanian expressed his belief that conditions would improve during the rest of 2014, but investors weren't convinced and sold shares off in response. The drop could prove to be a bargain opportunity, though, if better weather reverses the troubling housing environment. But other factors could cause housing to cool off as well, especially if Fed tapering leads to higher interest rates later this year.

XOMA plunged almost 28% after the biotech company chose not to move forward with late-stage studies of its key osteoarthritis drug gevokizumab. All isn't lost for XOMA on gevokizumab, as the company might have the potential to divide its original target population into segments in an effort to find a group for which the drug is more effective, and the drug might be useful for other treatments. Nevertheless, with investors having had high hopes for the study, XOMA needs to find a new strategy quickly in order to calm shareholders' fears. Moreover, with the biotech sector more broadly having gotten a lot of attention from momentum investors -- and with many stocks in the industry having seen huge price increases -- the tolerance for even temporary failure is relatively low.


Yongye dropped nearly 11% after the Chinese crop-nutrient company said that shareholders had rejected a proposal for the company to go private. The proposal would have paid shareholders $6.69 per share in cash, but some investors argued that the deal would have essentially allowed the buyers to take advantage of low valuations for Chinese small-cap stocks in general and Yongye in particular. With today's rejection, those investors will have a chance to see whether their long-term support of the company will pan out.

Will these stocks bounce back?
Good stocks can come back from setbacks. But there's still a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

The article Why Hovnanian Enterprises, XOMA, and Yongye International Tumbled Today originally appeared on Fool.com.

Dan Caplinger and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

Read | Permalink | Email this | Linking Blogs | Comments

Arch Coal Divests Hazard Subsidiary

0
0

Filed under:

Arch Coal has removed an asset from its portfolio. The company announced that it has sold its Hazard unit to privately held Blackhawk Mining for $26.3 million in cash. The subsidiary's core asset is the Hazard thermal coal mining complex in western Kentucky and its related infrastructure, as well as roughly 38 million tons of thermal coal reserves in the eastern part of the state.

The deal also includes Arch Coal's release of $15.6 million in reclamation liabilities to Blackhawk Mining. It subsequently expects to be released from $43.8 million in reclamation surety bonding. Additionally, Arch Coal stands to receive up to $35 million in royalty payments from select coal reserves it maintains at Hazard.

News of the sale comes less than a month after Arch Coal announced it had sold its mining equipment subsidiary ADDCAR. The firm divested that unit to Australia-based UGM Holdings for a total of $21 million.

The article Arch Coal Divests Hazard Subsidiary originally appeared on Fool.com.

Eric Volkman has no position in Arch Coal. Nor does The Motley Fool. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

Read | Permalink | Email this | Linking Blogs | Comments

Goldman Leads Dow Higher; Exxon Pulls It Lower

0
0

Filed under:

A disappointing ADP jobs report left the major indexes struggling today. At the bell, the Dow Jones Industrial Average was down 35 points, or 0.22%, while the S&P 500 lost 0.01%. The Nasdaq managed to finish in the black, but just barely, up 0.14%.  

February's job figure of 139,000 came in below economists' expectations of 155,000, while January's original 175,000 number was revised down to 127,000. The markets didn't take kindly to the news, though the Dow itself was a mixed bag. Goldman Sachs , gaining 1.88%, led the 12 components moving higher, while ExxonMobil , down 2.82%, was the worst of the 18 stocks that declined.

Goldman's move came on higher-than-normal volume of 4.45 million, compared with a three-month daily average of 3.1 million. The bump could have come in part from a recent Bloomberg rating indicating that the bank is a top merger-and-acquisition advisor. As companies find their growth slowing and look for new revenue streams, the market may be ripe for mergers, which would put Goldman in a good position. M&A advising also pays well, as Bloomberg estimated that Goldman made $1.23 billion in fees from such deals in 2013.  


Exxon's drop, meanwhile, comes after management told investors it expects flat production this year of around 4 million barrels of oil per day. In the long term, though, Exxon plans to cut low-margin wells, which will help profits in the long run and will reward investors with a long-term view. For more about this issue, click here.  

Outside the Dow, and helping the Nasdaq finish higher for the session, shares of Facebook rose 4.03% after a Stifel analyst increased his price target from $72 to $82. The analyst said Facebook "continues to gain share of the overall marketing spend," which would bode well for the company and would ease concerns about whether Facebook's ads are working with customers.  

Looking for the next big thing? Look no further
They said it couldn't be done. But David Gardner has proved them wrong time, and time, and time again with stock returns like 926%, 2,239%, and 4,371%. In fact, just recently one of his favorite stocks became a 100-bagger. And he's ready to do it again. You can uncover his scientific approach to crushing the market and his carefully chosen six picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.

The article Goldman Leads Dow Higher; Exxon Pulls It Lower originally appeared on Fool.com.

Matt Thalman owns shares of Facebook. The Motley Fool recommends Facebook and Goldman Sachs and owns shares of Facebook. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

Read | Permalink | Email this | Linking Blogs | Comments

Mixed Day for Sin Stocks: Brown-Forman Pops While Reynolds American and Lorillard Fall

0
0

Filed under:

Sin stocks generate a lot of strong opinions because of the industries they operate in: alcohol, tobacco, guns, and casinos, to name a few. Some people would even include defense contractors in their definition of sin stocks.

Businesses that operate in this part of the market are often considered recession-proof and therefore make for safe and profitable investments. That's true to a point, but these businesses are still just businesses, and no business can guarantee that investors will never lose money.

Let's look at two sin stocks that fell today, as well as one that put in a good performance. First up is Brown-Forman . The alcohol maker best known for its Jack Daniel's brand rose 3.69% following a strong quarterly earnings report this morning. The company posted revenue of $1.08 billion, and earnings per share of $0.82 easily beat last year's $0.73 and Wall Street expectations of $0.75. Sales rose 5% from a year earlier and met expectations. Management looks to be doing a great job, with costs under control and margins growing by 90 basis points. Current shareholders have little to worry about right now, as the company should continue to produce solid returns and will probably continue to grow if it isn't acquired.  


Two sinful losers today were cigarette makers Reynolds American , down 3.57%, and Lorillard , down 3.22%. Let's look at a chart of their recent share performance.

LO Chart

LO data by YCharts

That big spike hit as news came out that the companies have been in merger discussions over the past few weeks. But now things are cooling back off. Reynolds and Lorillard are the second and third largest U.S. cigarette companies, and investors are starting to question whether regulators would approve the deal. Furthermore, even though a merger would help both companies with efficiencies and cost savings, U.S. cigarette volumes are still on the decline, and that trend doesn't look to be changing anytime soon.  

Looking for the next big thing? Look no further
They said it couldn't be done. But David Gardner has proved them wrong time, and time, and time again with stock returns like 926%, 2,239%, and 4,371%. In fact, just recently one of his favorite stocks became a 100-bagger. And he's ready to do it again. You can uncover his scientific approach to crushing the market and his carefully chosen six picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.

The article Mixed Day for Sin Stocks: Brown-Forman Pops While Reynolds American and Lorillard Fall originally appeared on Fool.com.

Matt Thalman and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

Read | Permalink | Email this | Linking Blogs | Comments

Does Samsung's New Chromebook Pose a Threat?

0
0

Filed under:

Samsung's very first Chromebook was an interesting beast. Unlike the power-guzzling, under-performing Atom based initial Google Chromebook, the Exynos Dual powered beauty offered solid performance and battery life in a power envelope that enabled a slim, fan-less design. The success of this particular Chromebook actually sent Intel , and the rest of the PC industry, into somewhat of a panic, leading them to flood the market with fast and cheap - although not quite fanless - "Haswell" powered Chromebooks.

This new Chromebook is attractive...
Samsung's pair of new Chromebooks are actually quite attractive. The 13" model, which will retail for $399, comes packed with a 1920x1080 display, a Samsung-designed Exynos 5 Octa processor, 4GB of DDR3, and 16GB of onboard storage. It should be quite zippy, have solid battery life, and in general be a nice machine for users that don't need the full power and flexibility of a more expensive Windows device.

It's actually an interesting exercise to compare this device with a comparably priced Windows 8.1 notebook. In this case, a scan of Newegg.com reveals that a close competitor is this $366 notebook from Acer:


(Source: Newegg.com)

For roughly the same price, the user gets a Pentium M3520, a quad core Atom-class CPU with integrated Intel HD graphics (it should be a fair bit faster than the Exynos Octa), and a larger - but lower resolution (1366x768 against 1920x1080) - display. In place of the 16GB of integrated flash memory, Acer offers a 5400 RPM 500GB hard disk drive (more space, but much slower storage). Of course, the Acer runs Windows 8.1 while the Chromebook is limited to Chrome. A final thing to point out is that the Chromebook is fanless while the Acer apparently needs a fan.

...but the traditional PC vendors are pushing hard, too
While Samsung's new Chromebook has a more premium feel to it (the whole faux leather thing gives that impression) and while Samsung probably has a pretty nice cost structure, it's important to note that the traditional PC vendors appear to be willing to fight tooth-and-nail to try to claw share away from Samsung by aggressively pursuing Chromebooks. Indeed, Acer put out a new Chromebook, packing an Intel Haswell processor that offered greater performance than the Samsung Chromebook but retails for only $199. Unsurprisingly, this device rose to the top of Amazon's best-sellers list in seemingly no time flat:

(Source: Amazon.com)

Does the new Chromebook change things?
The interesting thing here is the pricing of the new Chromebook. The best-selling notebooks seem to be, unsurprisingly, the cheapest ones (sans the MacBook Air). While the new Chromebook is obviously better/faster, there is probably some very real price elasticity in the low end notebook/Chromebook market. At $399+, many will probably go with a full Windows 8.1 device. The value in these Chromebooks seem to be as secondary/tertiary devices, which would explain the high sensitivity to price. Note that the Acer laptop, even with a fan, seems to sell better than the first-gen Samsung simply because it's a mere $44 cheaper.

Foolish bottom line
It looks as though Samsung has seriously de-focused on traditional notebooks and is trying to instead "build up" its Chromebook line (presumably because Samsung can keep more of the bill-of-materials to itself with a non-Wintel device). Whether this succeeds or not, time will only tell, but one thing is clear: The traditional PC ecosystem better put out a fanless, Intel-based Chromebook sooner rather than later. Say, when's Intel's Bay Trail going to find its way onto a Chrome device, anyway? 

All tech investors should know this opportunity
Opportunities to get wealthy from a single investment don't come around often, but they do exist, and our chief technology officer believes he's found one. In this free report, Jeremy Phillips shares the single company that he believes could transform not only your portfolio, but your entire life. To learn the identity of this stock for free and see why Jeremy is putting more than $100,000 of his own money into it, all you have to do is click here now.

The article Does Samsung's New Chromebook Pose a Threat? originally appeared on Fool.com.

Ashraf Eassa owns shares of Intel. The Motley Fool recommends Intel. The Motley Fool owns shares of Intel. 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.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

Read | Permalink | Email this | Linking Blogs | Comments

Electronic Arts' Titanfall Is a Big Deal

0
0

Filed under:

Microsoft and Electronic Arts announced a promotional $500 Xbox One Titanfall bundle, which is a great deal for consumers, as $500 is the same retail price as the stand-alone Xbox One. This arrangement should add a nice tailwind to Xbox One console sales and help expand Titanfall's attach rate. The bundle will be available to consumers on March 11.

Michael Pacther, video game analyst with Wedbush Securities, stated in early January that he believes Electronic Arts will sell between 6 million-10 million copies of Titanfall, depending on the game review scores. "If it gets above a 90, it will likely be at the high end of that range, below an 80, at the low end," Pacther said.

Since then, a beta testing of Titanfall was played by over 2 million unique users, according to the developer, Respawn. Initial reviews have been extraordinarily positive.


Cnet's Jeff Bakalar has covered video games for more than five years, and in his review he wrote, "to the average gamer, Titanfall will likely be the closest feeling of 'next-gen' they'll have on an Xbox One for the foreseeable future."

How does Microsoft fit in to this?
Gregg Moskowitz of Cowen & Company asked Microsoft management to clarify why Xbox platform revenue grew $1.2 billion year-over-year in the second quarter, but at the same time related cost-of-goods-sold rose $1.6 billion.

Amy Hood, Microsoft's Chief Financial Officer, said that Microsoft is still in "launch mode" for the Xbox One and will continue to expand markets over the course of the year, implying the company could likely see costs exceed revenue in the near term.

Hood added that "many people are excited about the launch of Titanfall in March, and we'll continue to add and expand markets over the course of the year. So, I would continue to think about our investment in being the leading next-generation console as certainly extending."

Microsoft is also using its Xbox platform to demonstrate the power of its cloud computing services. Abbie Heppe, Community Manager at Respawn said: "We are one of the first games to take advantage of Xbox Live Cloud and have engaged in throughout the world to provide a consistent and incredible experience for players servers. Of course we also make some of our calculations of artificial intelligence through the cloud, and all this just promoting our game."

Microsoft's heavy investments in exclusive deals places Xbox One at a tremendous advantage when factoring in the growth trajectory of video game sales. According to PWC, consumer spend on video games over the next five years will increase at a compounded annual growth rate of 6.5% to reach $86.9 billion in 2017, up from $63.4 billion in 2012.

If demand proves to be as strong for Titanfall as expected, consumers have no choice but to purchase an Xbox One to be able to play the game.

Will GameStop be left in the dark?
Holiday season sales for GameStop were disappointing, with new software sales down 22.5% year over year. Rumors that both Microsoft and Sony are prepping diskless consoles are causing some investors to wonder if GameStop can remain relevant.

According to Forbes, Microsoft has dismissed rumors of a diskless $399 Xbox One. "No, you cannot believe everything you read on the Internet," tweeted Microsoft's chief of staff for the devices and studios group. Wedbush's Michael Pachter also commented that such a device would be "dumb, dumb, dumb."

Sony, however, has been more vocal about the future potential of cloud-based, or diskless, gaming with its PlayStation Now, which was announced during CES in early January. But, PlayStation Now's effects are unlikely to impact GameStop's business model for several reasons.

First, many gamers continue to place an important value on disc-based games, many of which are collectible items such as a GameStop's exclusive $150 Grand Theft Auto collectors edition set. Second, there is a major infrastructure constraint (i.e., bandwidth speeds) for the average gamer, which could limit adoption rates. Third, Sony and GameStop have shared a positive relationship as retail partners, as GameStop provides critical marketing and distribution outlets.

Additionally, the ongoing bandwidth battle between Netflix and Comcast may cause Sony to second guess its strategy of relying on customers to utilize large amounts of Internet data to access games.

Foolish take
Investors may also be under-appreciating GameStop's balance sheet. The company's strong free cash flow can allow buybacks and dividends to play a larger role in shareholder returns. GameStop's $5 per share in cash and zero debt prompted Barron's on Jan. 18 to forecast that shares have an upside potential of 20% or more.

Electronic Arts and Microsoft could grow together over the years as demand for video game consoles and games continues to rise. Granted, Xbox One console sales aren't a primary money-maker for Microsoft, but the Xbox gives Microsoft direct access to the living room and could play a vital role as part of the company's broader mobile/pc/entertainment ecosystem.

Learn how you can profit from the war for your living room
You know cable's going away. But do you know how to profit? There's $2.2 trillion out there to be had. Currently, cable grabs a big piece of it. That won't last. And when cable falters, three companies are poised to benefit. Click here for their names. Hint: They're not Netflix, Google, and Apple.

 

The article Electronic Arts' Titanfall Is a Big Deal originally appeared on Fool.com.

Jayson Derrick has no position in any stocks mentioned. The Motley Fool owns shares of GameStop and Microsoft. 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.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

Read | Permalink | Email this | Linking Blogs | Comments


How Zynga Plans to Go Mobile

0
0

Filed under:

Shares of social gaming company Zynga are up almost 50% since early January. Zynga is one of the best-performing tech stocks of 2014 so far, outperforming competitors Glu Mobile and Electronic Arts by a wide margin.

Although Zynga's shares have outperformed since mid-2013, the situation was very different back in 2012. After reaching its peak in 2012, Zynga's revenue started to decline quickly after the company's most popular game, FarmVille, experienced a massive decrease in users. Investors became aware that the company had little to no exposure to mobile, and that it was too dependent on Facebook's platform to generate revenue. Shares dropped from $14 per share in early 2012 to almost $2 per share by Nov. 2012. However, the company's now in the middle of a turnaround as it tries to change its business to a mobile-focused model. How does Zynga plan to go mobile?


Source: Zynga

The mobile strategy
When Don Mattrick -- who oversaw the Xbox 360 and PC gaming business at Microsoft for six years -- joined Zynga as CEO in mid-2013, he started executing a back-to-basics approach combined with a mobile focus. Instead of pursuing an online gambling license in the U.S. Mattrick focused on developing free-to-play social games, optimized for mobile platforms.

In order to accelerate its mobile strategy, Mattrick decided to acquire mobile gaming studio NaturalMotion for $527 million on Jan. 30. With the acquisition of NaturalMotion, Zynga is getting 12 years of experience in building sophisticated tools for mobile gaming.

New releases
Perhaps we've just started to see the fruits of Zynga's new mobile strategy. On March 3, the company announced it will kick off a soft launch of FarmVille 2: Country Escape. Zynga will also release two updated core titles by the end of March, Zynga Poker and Words With Friends, which will be available for iOS and Android in select markets before the official release, planned for the end of June.

With FarmVille 2: Country Escape, Zynga is betting the farm on mobile devices, as this is the first FarmVille title designed specifically for tablets and smartphones. Zynga is hoping to recapture some of the game's original players, who stopped playing FarmVille when their gaming preferences changed from using Facebook's platform to playing with mobile devices.

It's all about recovering old users
After reaching a peak of more than 310 million monthly average users in the third quarter of 2012, Zynga's user base decreased considerably, as FarmVille gamers left for mobile games like Hay Day, a similar farm simulation game from SuperCell Oy, which recently reported it had doubled revenue to $892 million in 2013. 

Zynga reported 112 million monthly average users in the fourth quarter of 2013, well below its peak. However, a major improvement in user metrics could be in the cards if its mobile games manage to attract previous users. More than a billion people have played Zynga games in the past six years, including 400 million that have played FarmVille.

Beware of Glu Mobile
The road to mobile success is full of challenges. Zynga will have to compete against companies like Glu Mobile that have several years of experience developing games optimized for mobile. A leader of 3-D freemium mobile gaming, Glu recently announced amazing fourth-quarter performance, which was mainly due to the successful release of Deer Hunter 2014, a hunting simulator game that has seen more than 70 million downloads since its release in Oct. 2013.

Final Foolish takeaway
By releasing three major mobile titles only seven months after becoming CEO of Zynga, Don Mattrick is showing us that moving games to mobile continues to be a top priority. The company, which just acquired mobile game studio NaturalMotion in late January, could benefit enormously from recovering old FarmVille users.

A better stock pick for the year ahead
There's a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

The article How Zynga Plans to Go Mobile originally appeared on Fool.com.

Adrian Campos has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

Read | Permalink | Email this | Linking Blogs | Comments

Is It Time for Starbucks to Stop Milking GMOs?

0
0

Filed under:

Although the dairy cows we currently get our milk from aren't themselves genetically modified (yet), they're fed lab-altered grain and feed, primarily from corn and soy, but also alfalfa, cotton seed, and sugar beets, which are among the most genetically modified crops around.

But there are alternatives, and GMO Inside, an organization trying to eliminate genetically modified organisms from the food chain, is targeting java slinger Starbucks in a bid to pressure it to source its milk from organic farmers whose cows are fed only non-GMO feed. 


Source: GMO Inside.

The organization notes that Starbucks is already an industry leader when it comes to sourcing its dairy from farmers who avoid use of bovine growth hormone, as well as using only USDA-certified organic soy milk, which is already GMO-free, and now it wants the company to take the next step and go all the way with the rest of its milk.

GMO Inside has targeted a number of dairy-product companies, including dairy giant Dean Foods and Greek yogurt maker Chobani, which Whole Foods Market purportedly dumped last year because it wouldn't source its dairy from GMO-free farmers (of course, the fact that Whole Foods sells GM products from other companies and was planning on introducing its own house brand of Greek yogurt didn't hurt, either).

There's a growing roster of companies that are abandoning genetically modified ingredients, from cereal makers such as KelloggGeneral Mills, and Post Holdings, to ice cream shop Ben & Jerry's and, most recently, buttery spread maker Smart Balance.

Yet as Ben & Jerry's has found out, it's not so simple to source GMO-free dairy products because of the pervasiveness of GM-tainted feed. Because it's also committed to sourcing its dairy locally, as it has for the past 30 years, the 460 family farmers that comprise the St. Albans dairy cooperative have found it difficult to get GMO-free feed. More than 85% of all corn grown in the U.S. and 94% of all soy is genetically modified. Monsanto , Dow Chemical , and DuPont  control 80% of the corn seed and some 70% of the soy. In fact, 98% of GM soy and 49% of GM corn is used to feed livestock and poultry.

Of course, once a company begins the process of alternative sourcing, it can't expect that that will fully satisfy those looking for complete elimination. When General Mills announced that its original Cheerios cereal would go GMO-free, GMO Inside immediately launched a new effort to have Honey Nut Cheerios begin using non-GM ingredients, too. Yet the pressure also prevents companies from engaging in a form of greenwashing, doing just enough to silence critics but no more.

Starbucks CEO Howard Schultz has been a leading figure in an enhanced form of business ethics, perhaps not as pious as the conscious capitalism as espoused by Whole Foods co-CEO John Mackey but certainly respectable nonetheless and likely willing to adopt such goals as eliminating GM dairy for its supply chain if enough customers joined in.

The rate of growth in the number of GM crops planted in developed countries seems to be slowing. It was up less than 1% in the U.S., and actually decreased in Canada and South Africa (Asia, however, seems to be on the rise). As more companies drop these ingredients from their products, more farmers will turn away from growing them, and the leveling out will turn into a decline, something GMO-free proponents hope can be achieved one cup of coffee at a time.

No crying over spilled milk
As every savvy investor knows, Warren Buffett didn't make billions by betting on half-baked stocks. He isolated his best few ideas, bet big, and rode them to riches, hardly ever selling. You deserve the same. That's why our CEO, legendary investor Tom Gardner, has permitted us to reveal The Motley Fool's 3 Stocks to Own Forever. These picks are free today! Just click here now to uncover the three companies we love. 

The article Is It Time for Starbucks to Stop Milking GMOs? originally appeared on Fool.com.

John Mackey, co-CEO of Whole Foods Market, is a member of The Motley Fool's board of directors. Rich Duprey owns shares of Dean Foods. The Motley Fool recommends and owns shares of Starbucks and Whole Foods Market. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

Read | Permalink | Email this | Linking Blogs | Comments

Amazon Is Still a Buy

0
0

Filed under:

Investors were not happy with Amazon's recent results, and consequently the company's stock dropped more than 10%. However, there are still many reasons why investors should buy the company's shares. The company's web services sector is a fast-growing business, it has continued its tradition of constantly innovating its services and products to increase the satisfaction of customers, and it is focused on a long-term growth strategy.

The web services sector has a great potential
Amazon's web services sector recorded an impressive growth rate in the last quarter. Though it brought less than 8% of the company's domestic revenue, it posted 52% revenue growth. Of course, it generated less than 1% of Amazon's revenue on the international front. However, it recorded a 25% year-over-year revenue improvement in this market segment. IDC Research said the worldwide public cloud services revenue is expanding at a double-digit growth rate. Given that the web services sector recorded sales of less than $4 billion in 2013, you should get an inkling of how large Amazon's potential is.

Amazon is constantly innovating
Amazon is always evolving new means to deliver its products, including the possibility of dispatching drones to deliver products for customers. The innovations enrich customers' experience and bring a great advantage over the company's rivals in a competitive environment. Wal-Mart has grown its revenue by 77% in the past decade, but Amazon has recorded a revenue increase of more than 1,000% at the same time. In addition, analysts expect earnings growth next year of 132.47% over this year's earnings.


It is also about long-term growth
The brick-and-mortar beginning of numerous retailers is accompanied by challenges in terms of tradition and innovation. The companies are focused on quarterly margins and same-store sales. Amazon, meanwhile, is focused on the long term. This is reflected in the billions of dollars that the company is investing in future expansion. Amazon is expanding into new sectors, with groceries being just one fantastic example. Over the next five years, analysts that follow this company are expecting it to grow earnings at an average annual rate of 28%.

Competitors
Netflix is following a similar pattern to Amazon. It is trading its revenue growth for its free cash flow. The company competes with Amazon's Instant Video for customers, and recently announced that it would pursue documentaries more aggressively in a bid for more original content. Netflix has massive potential in its streaming business. The worldwide streaming video market is expected to hit $35 billion in revenue by 2018.

eBay concentrates on its PayPal and Marketplaces business. Its PayPal division wants to maintain its market share in the worldwide payment market, and wants to own the payments space. Due to the potential in the sector, eBay will want to expand this business quickly. Gartner expects global mobile transaction volume to average a 35% annual growth rate between 2012 and 2017. It is also forecasting that the market will worth $721 billion by 2017.

Final Foolish thoughts
Strong reasons abound for buying shares of Amazon. The company's web services business is showing fast growth, and Amazon is constantly innovating for the satisfaction of the ordinary customer. The company is also focused on a long-term growth strategy in its operations. Over the long term, its strategy will continue to result in market share gains.

Amazon's not the only great growth pick out there
They said it couldn't be done. But David Gardner has proved them wrong time, and time, and time again with stock returns like 926%, 2,239%, and 4,371%. In fact, just recently one of his favorite stocks became a 100-bagger. And he's ready to do it again. You can uncover his scientific approach to crushing the market and his carefully chosen six picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.

The article Amazon Is Still a Buy originally appeared on Fool.com.

Mark Girland has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, eBay, and Netflix. The Motley Fool owns shares of Amazon.com, eBay, and Netflix. 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.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

Read | Permalink | Email this | Linking Blogs | Comments

Thanks to DISH and Disney, the TV Business Isn't Changing Anytime Soon

0
0

Filed under:

Skipping ads just got harder for DISH Network customers. In a legal settlement finalized earlier this week, the satellite supplier agreed to limit features of its Hopper device for skipping ads while recording live TV broadcast via any of Walt Disney's various networks. Fool contributor Tim Beyers explains the implications for the TV business in the following video.

Specifically, DISH said it will alter Hopper in such a way that users won't be able to skip ads for the first three days after live broadcast. Why? Because networks tend to sell ads against "live+3" ratings, including views of recorded shows.

Hopper's ad-skipping technology reduces the relevancy of such ratings, forcing marketers to consider other options. A bad outcome not only for Disney but also any broadcaster that depends on commercial interruptions for earning meaningful revenue. That the House of Mouse took DISH to court over Hopper is hardly surprising.


In fact, according to The Hollywood Reporter, the two companies had spent months negotiating a new retransmission deal for Disney's lineup, including ABC and ESPN. Tim says it's likely other networks will ask DISH for similar concessions.

For its part in the deal, DISH gets access to on-demand Disney programming in-home and on mobile devices. The two companies also said they plan to cooperate on developing new advertising models. Perhaps, Tim says. For now, the deal all but guarantees that the traditional TV business will be sticking around for a while.

Now it's your turn to weigh in. Do you like this deal? Are would you rather the industry work together on ways to change the TV business? Please watch the video to get Tim's full take and then leave a comment to let us know where you stand.

Tune in to a better financial future
Even if the TV business isn't changing now, it will soon enough. Do you know how to profit from the coming shift? There's $2.2 trillion out there to be had, and three companies are poised to benefit most. Click here for their names. Hint: They're not Netflix, Google, and Apple.

The article Thanks to DISH and Disney, the TV Business Isn't Changing Anytime Soon originally appeared on Fool.com.

Tim Beyers is a member of the  Motley Fool Rule Breakers  stock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Apple, Google, Netflix, and Walt Disney at the time of publication. Check out Tim's Web home and portfolio holdings, or connect with him on Google+Tumblr, or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.The Motley Fool recommends and owns shares of Apple, Google, Netflix, and Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

Read | Permalink | Email this | Linking Blogs | Comments

5 Reasons Why Apple Inc. Won't Put Sapphire Screens on iPads

0
0

Filed under:

Apple wants to see fewer of these shattered glass covers -- but at what cost?

Apple is building a sapphire screen factory in Arizona. The move could be bad news for Corning , which currently supplies Gorilla Glass for Apple's gadget lineup. If Apple moves wholesale to sapphire screens instead, it'll take the wind out of Gorilla Glass' sails very quickly.

Sapphire is the second-hardest material known to man, just behind diamond. Replacing Corning's specialized Gorilla Glass with sapphire would make the screen unscratchable -- assuming that you don't walk around with your iPhone in a pocket full of diamonds.

But scratch-proof glass isn't everything. Ask Corning's accounting officer Tony Tripeny, who spoke on the matter at a telecom conference this week. Tripeny would like to set the record straight on a few points:

  • Sapphire is about 10 times more expensive than comparable Gorilla Glass slates.

  • Sapphire manufacturing processes use 100 times the energy of Gorilla Glass, running at much higher melting temperatures.

  • The screen formation takes 4,000 times longer.

  • Sapphire is so hard that forming proper screens out of it requires very expensive machinery.

  • Oh, and the extreme hardness against scratches doesn't translate into shatter-proof panels -- Tripeny said that Gorilla Glass can take 2.5 times as much pressure as a sapphire screen before cracking.


And then, once you've formed your expensive sapphire slate, this single crystal is prone to low-manufacturing yields. With glass panes, Corning and others have developed tricks of the trade to get usable end products out of slightly flawed slates. That's not possible with sapphire's single-crystal structure.

But it all comes down to cost. In consumer electronics, costs can make or break a product. So, replacing Gorilla Glass in large screens like 10-inch iPads or even 5-inch iPhones doesn't make much sense. If Apple is hell-bent on using Sapphire screens, Tripeny suggests that it has smaller form factors in mind.

Fact checking Corning's claims
All of this checks out against a sapphire-centric conversation I recently had with a materials engineer. In addition, my source says that sapphire slates have to be split just right, or the crystal structure will start playing tricks with both that supreme hardness and with the ability to let light through the screen.

So maybe we shouldn't expect sapphire screens for Apple's entire range of products. It's true that both Mr. Tripeny and my materials specialist have a bit of bias in favor of Gorilla Glass and against sapphire screens, but their talking points make sense from top to bottom.

Given these parameters, Apple might restrict sapphire screens to fairly small products, like perhaps a revamped iPod Nano -- or that elusive iWatch, where scratch resistance might matter more than shatterproofing or low costs.

How to get rich on smartphones -- from a brand new angle
Truth be told, one company sits at the crossroads of smartphone technology as we know it. It's not your typical household name, either. In fact, you've probably never even heard of it! But it stands to reap massive profits NO MATTER WHO ultimately wins the smartphone war. To find out what it is, click here to access the "One Stock You Must Buy Before the iPhone-Android War Escalates Any Further..."

The article 5 Reasons Why Apple Inc. Won't Put Sapphire Screens on iPads originally appeared on Fool.com.

Anders Bylund has no position in any stocks mentioned. The Motley Fool recommends Apple and Corning, and owns both stocks. 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.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

 

Read | Permalink | Email this | Linking Blogs | Comments

Viewing all 9760 articles
Browse latest View live




Latest Images