Pandora tops a new survey that asked respondents aged 12 and older which streaming service they listened to in the past month. The survey included mentions of the newly launched services from Apple and Microsoft , and Pandora's direct rival Spotify. But leading the market only matters if it comes paired with increased monetization. 

The survey in question comes from Edison Research's annual Infinite Dial study. Pandora led the audio-streaming companies, with a 31% market share, by a large gap, with ClearChannel's iHeart Radio's second-place finish with 9%. But Pandora actually loses money on an increased number of listeners due to royalty fees -- unless those listeners can become monetized through advertising.

Additional data from the survey suggests Pandora has a better shot at monetization than Spotify. 

Leader of the pack
Here's a look at the overall Edison Research survey data, provided in an infographic form via Statista.

Sources: Statista and Edison Research. Methodology: Used Random Digit Dial sampling to survey 2,023 persons aged 12 and older.

It's important to view these results as a generalization rather than the gospel truth of Pandora's market share for a given month. But for the sake of argument, let's say the data does show Pandora's actual share of the streaming market. What would that mean for the company? 

Leading the pack means that Pandora is bleeding out even more revenue through royalty acquisition costs. According to a Wall Street Journal report last year, Pandora pays out about 0.12 cents per listen. That figure comes in below the reported 0.13 cents per listen for Apple and the 0.14 cents for Google. But Pandora's overall revenue is also a lot lower than those tech giants. Spotify uses a more complicated royalty formula that includes weighing a song's popularity over a period of time compared to the company's entire streaming catalog. But Spotify claimed in December that the average payout per listen was about 0.6-0.84 cents. 

I previously went into detail about how Pandora needs to improve its advertising revenue per thousand listener hours, or ad RPMs. This metric aims right at the heart of the business: how much Pandora can make, monetizing its users through advertising. Remember, Pandora can't monetize through listening alone, due to the royalty fees per listen.

Ad RPMs have improved steadily on mobile platforms, but traditional computers had a shaky couple of years before recovering last year. The Edison Research data also shows why Pandora might have a better shot at monetizing its users than Spotify.

Why could Pandora beat Spotify?
Let's get a basic truth out of the way first: Pandora isn't competing with streaming services from Apple and Google. It might look that way since the products bear similarities, but Google and Apple can take losses in streaming in hopes of moving more mobile devices or proprietary music purchases. And iHeartRadio has a multichannel reach, including video game console integration. It is more a distributor of radio stations than a traditional streaming service. 

So Pandora only competes with Spotify, once the services are stripped down to the basics. And some demographic information released by Edison Research shows why Pandora could win this fight.

According to the survey, the 18-34 age demographic streams the most music in a month, with 66% compared to the 47% for aged 12 up to 18. Edison's third category is oddly ages 18-49, which comes in at 59%. Some basic subtraction suggests streaming isn't that popular with the 35-49 crowd.)

Still here? Okay, the point of all those numbers was that the 18-34 demographic is the key audience for streaming services. And a whopping 84% of that demographic were aware of Pandora's existence, compared to 44% for Spotify:

Source: Edison Research 

Awareness of a service doesn't directly equal use of said service -- but it's a vital first step. And Edison provided additional data showing that 47% of streaming listeners in this key demographic had listened to Pandora in the prior month, compared to 11% for Spotify.

So there's awareness and usage dominance, both of which would entice advertisers targeting that particular demographic. And it's a popular demographic to target, since the below-18 set tends not to have as much spending money to purchase the advertised items.   

Foolish final thoughts
Actual metric data will remain sparse for Spotify unless the company does finally push for an IPO. Surveys such as Edison's provide an interesting look into the demographics listening to the streaming services. Pandora might not beat Google or Apple, but there's a strong chance of it staying ahead of Spotify.

The 3D NAND industry is poised to take off. In a research report issued last month, TechNavio said that the rising flash-storage needs at practical price points will compel enterprise clients to increasingly adopt 3D NAND drives. This will expand the 3D NAND industry by compound annual rate of 180.7% between 2013-2018, the report says. Let's understand why we're shifting to 3D NAND, and how you can profit from it. 

Why 3D NAND?
The manufacturing cost of flash memory is directly proportional to its die size. Since the introduction of flash memory, manufacturers have been shrinking their fabrication process. This allows more transistors to be crammed in the same die area, thereby increasing chip density at practically no extra cost.

But the laws of physics are playing a spoiler. We're nearing a scaling limit, which essentially means that memory manufacturers can't shrink their fabrication process any further without a trade-off with economic feasibility. In simple terms, there isn't much room to increase the chip density of planar NAND modules.

Toshiba explained the possibilities of 3D NAND technology back in 2007. These flash modules are comprised of vertically stacked NAND strings, which save precious die area and allow more transistors to be stuffed in. Consequently, this boosts the chip density at practical price points. 

Prime beneficiaries
Samsung understood the potential of 3D NAND technology, and it began the mass production of its V-NAND drives in July last year. 

In its presentation, the consumer tech goods giant explained that its 40nm 3D NAND process had an equivalent lithography of 10nm planar NAND modules. Crossbar estimates that using 20nm 3D NAND process will produce an equivalent lithography of 5nm planar NAND, thereby allowing Samsung to breach the scaling limit. 

Considering that Samsung has a technological head start, it will be able to debug known issues with 3D NAND drives before any of its competitors. This, in turn, will contribute in improving its V-NAND fabrication yields and result in gains from economies of scale.

SanDisk is another formidable competitor here. The pure-play flash-memory manufacturer is working with Toshiba to introduce its own iteration of 3D NAND modules, known as BiCS. As per the agreement, about 49% of the total NAND output goes to SanDisk. 

According to TrendForce, BiCS modules have already gone through their rigorous testing and sampling phase. And to mass-produce these modules, Toshiba is expanding its Fab-5. The research firm estimates that the manufacturing facility will commence operations in the fourth quarter of 2014. 

An indifferent peer
Western Digital , however, seems to be unaffected by this 3D NAND mania. Though the memory giant manufactures planar NAND drives, it has no intention of venturing into the 3D NAND space -- at least not yet. The company is betting on helium-filled hard drives to capture the enterprise-scale storage industry. 

This indifferent approach will create an entry barrier for Western Digital later on.

• IHS estimates that 3D NAND market share is poised to surge from less than 1% currently to 49.8% in 2016. Western Digital will miss out on this explosive growth. 
• Plus, Western Digital will have to compete fiercely to dislodge established 3D NAND products from Samsung and SanDisk later on.
• Moreover, as the price per gigabyte falls with the maturing 3D NAND industry, enterprise clients will increasingly adopt flash drives. This, in turn, will harm Western Digital's hard-drive business.

Therefore, it is vitally important for Western Digital to enter into the 3D NAND segment.

Foolish final thoughts
The prospects of 3D NAND definitely look good on paper. Actual growth, however, will depend on how well these chips perform against the 2D NAND chips. Investors might want to keep a close eye on upcoming benchmarks and adjust their portfolios accordingly.

Banks like JPMorgan take risks every day. While many understand the loan-making and investing activities that make the headlines, not everyone realizes that these same banks are also exposing themselves to the possibility of much greater financial distress. Since 2008, commodities businesses have become a major part daily operations.

Thankfully, the Federal Reserve is thinking about stepping in. Perhaps this is cause for JPMorgan to consider selling its commodities business to trading company Mercuria. The deal is supposedly for $3 billion for a unit that has made $750 million in operating profit a year. Terms aren't expected to be announced from the Fed for a few months, and many expect Goldman Sachs and Morgan Stanley to be largely immune. For more, tune in to the video below. 

Commodities trading isn't the banking industry's only secret

This segment is from Tuesday's edition of "Digging for Value," in which sector analysts Joel South and Taylor Muckerman discuss energy and materials news with host Alison Southwick. The twice-weekly show can be viewed on Tuesdays and Thursdays. It can also be found on Twitter, along with our extended coverage of the energy & materials sectors @TMFEnergy.

Source:  glassdoor.com

When I first saw the headline announcing that J.C. Penney had turned a profit for the fourth quarter, I was very happy to hear the news. Who doesn't love to root for the underdog, especially a corporate icon such as J.C. Penney that many of us grew up with and adored? Unfortunately, not only did that "profit" come from a one-time tax benefit, but there are a number of other factors suggesting that the turnaround is questionable.

The rebound
On Feb. 26, J.C. Penney reported its fourth-quarter results. Net sales slipped 2.6% to approximately $3.8 billion. jcp.com sales leapt 26.3% to $381 million. Same-store sales inched up 2%. Holiday sales bumped up 3.1%. It was quite an improvement on the face of it.

The most exciting parts of the report were the optimistic commentary and outlook. For the current quarter, same-store sales are expected to be up between 3% and 5%. For the full year, J.C. Penney expects even better results, with mid-single digits in same-store sales growth.

Even better and most vital to J.C. Penney's survival was the $2 billion in liquidity it ended the year with. This was far greater than the $1.3 billion to $1.5 billion it had been predicting back in August and September.

Where it starts getting salty
This is a retail chain with daily customers and not a construction company with an order backlog. It's hard to imagine that J.C. Penney has much visibility beyond the current quarter at any given moment. Heck, it's often difficult enough for retail chains that lack severely volatile results to predict the future one quarter out.

JC Penney Corporate Office. Source: JC Penney

Now consider the fourth quarter again. Let's ignore the fact that the company is celebrating a turnaround completion with an adjusted $0.68 per-share net loss. The 3.1% growth in sales during the November-December holiday period sounds great, but we already knew same-store sales for November alone were up 10.1%. This means December was a bust.

Making matters worse, part of the reason for November's sales spike may have simply been due to the severe discounting of leftover inventory that began in October. In some cases J.C. Penney slashed prices so severely that it was selling merchandise for less than wholesale cost. That would certainly explain why November showed more growth.

It's easy to go up from the bottom
No doubt that gains are better than losses. But J.C. Penney's sales situation was already so severely beaten down that it was almost as if sales had no other place to go but up. In the year-ago period, same-store sales plunged by a shocking 31.7%. A 2% improvement, and including severe discounting, suggests little recovery from the year-ago carnage.

For jcp.com, the bright spot of the current report, revenue was up nicely on a percentage basis but still only $381 million. Not only is this a fraction of overall revenue, but it's still 21% lower than the $480 million jcp.com achieved just two years ago. Many retailers, even struggling ones, are experiencing vast increases in online sales.

The first-quarter guidance was the most encouraging. But once again it's a 3% to 5% expected gain compared to a year-ago quarter that saw a 16.4% drop in same-store sales. It's a start, sure, but it may be a bit too early to pop the champagne. Take this turnaround with a grain of salt for now until more positive evidence surfaces in the months and quarters ahead.

Euphoria is the best word to describe what's happened to American Airlines stock since the company's merger with US Airways. In just three months, American Airlines shares have soared more than 50%, reaching a new high just short of $40 earlier this week.

American Airlines Stock Chart, data by YCharts.

This came after the company's valuation had already risen more than 50% between when the merger was announced in early 2013 and when the merger closed near the end of the year. All in all, American's market value has grown from an estimate of $11 billion last February to $28 billion today.

While this has happened, analysts and investors have continually increased their expectations for the new American Airlines' earnings. This cycle of rising expectations and a rising stock price is unsustainable. American Airlines stock is likely to correct sharply lower later this year as reality sets in again.

Expecting a record profit
Last year, American Airlines reported a solid profit of $1.95 billion before special items. That was vastly higher than the company's 2012 adjusted profit of $407 million, primarily due to cost savings related to American's bankruptcy filing, as well as profit growth at US Airways. (All of these figures combine the results of American Airlines and US Airways.)

American Airlines earned a solid profit of nearly $2 billion last year. Photo: American Airlines.

American should be able to build on that profit in 2014 as it realizes additional cost savings from the bankruptcy process, replaces inefficient aircraft with better planes, and reaps early revenue synergies from its expanded network.

However, many analysts and investors are now looking for a lot more than "earnings growth." Analysts surveyed by Bloomberg projected on average that American Airlines will nearly double its profit this year to $3.5 billion! These bullish estimates seem out of control.

First signs of trouble
To some extent, the rapid rise in investor expectations was driven by the strong Q1 guidance that American provided in late January. At that time, the company projected a 6%-8% Q1 operating margin.

Earlier this week, American Airlines released its February traffic statistics, and the company noted that it had canceled 28,000 flights in the first two months of the year. American reiterated its unit revenue guidance but cautioned that costs would come in higher than expected. Despite this disclosure, the average analyst EPS estimate has barely budged, dropping just $0.01.

Four specific headwinds
Looking ahead, American Airlines faces four particular demand-side headwinds that will hit in the next year or two -- leaving aside the risk of integration problems. These all involve increased competition in markets where American is particularly strong.

1. A real competitor in London
First, since creating a joint venture with British Airways several years ago, the American Airlines/British Airways alliance has dominated travel between the U.S. and London's Heathrow Airport. Most notably, the two partners offer 17 daily nonstops between New York and London, including 12 nonstops on the JFK-Heathrow route. This is by far the most important international route for business travelers from the U.S.

Delta is boosting its presence on the New York-London route through a joint venture with Virgin Atlantic.

However, Delta Air Lines recently received antitrust approval for its joint venture with Virgin Atlantic. Later this month, the two carriers are implementing a coordinated schedule consisting of nine daily roundtrips between New York and London.

Delta still can't match the presence of American and British Airways on this route. However, its new joint venture makes Delta a lot more competitive. Combine this with Delta's brand-new terminal at JFK Airport and a leading position in the New York air travel market, and Delta is in a position to win market share among profitable business travelers.

2. A new threat in the transcontinental market
Second, American is the clear market leader on the busy transcontinental route from JFK Airport to Los Angeles, as well as a major player on the route from JFK to San Francisco. These routes have very high fares, and American is deploying its brand-new A321T aircraft on both routes. With 10 first class seats and 20 business class seats on these planes, American needs very high fares to be profitable.

However, JetBlue Airways is upping its game in the transcontinental market beginning this summer. Not only is it boosting its economy class capacity by 33% from JFK to Los Angeles and by 59% from JFK to San Francisco, but it's also deploying flat-bed premium seats on those routes for the first time ever.

JetBlue plans to undercut American on price for flat-bed business class seats. Photo: JetBlue.

JetBlue and American will both be using the A321 aircraft on these routes, yet JetBlue outfits them with 159 seats, compared to just 102 seats for American. If rising premium cabin seat inventory on these routes cuts into premium fares, American Airlines could face margin pressure due to its focus on high-fare traffic for the transcontinental routes.

3. New competition in Dallas
American Airlines has also benefited from its dominant position in the Dallas-Fort Worth area ever since Delta closed its rival hub there in 2005. Southwest Airlines operates a focus city at Love Field in Dallas, but it has been banned from offering nonstop long-haul flights at Love Field. This limited its ability to compete with American's massive hub at Dallas-Fort Worth International Airport.

Southwest is adding lots of long-haul flights in Dallas this fall and in 2015. Photo: Southwest Airlines.

However, Southwest will be allowed to fly from Dallas to anywhere in the U.S. starting in October. Within the next year or so, Southwest will start service to 20 new cities from Love Field -- and if it gets access to additional gate space at Love Field, it will add 12 more new destinations.

American Airlines currently has the only nonstop service on many of these routes. It holds a dominant seat share on many of the others. New competing service on Southwest will drive down fares on many of these routes starting in Q4 and ramping up next year.

4. Low-cost carriers arrive in D.C.
Lastly, American will see margin pressure at its highly profitable Reagan Airport hub near Washington, D.C., starting later this year. US Airways has held a dominant share of Reagan Airport slots, and faced very little competition on most of its routes from the legacy carriers that held most of the other slots.

As part of the American Airlines-US Airways merger, the companies had to sell off dozens of Reagan Airport slots to low-cost carriers. JetBlue, Southwest, and Virgin America will all be expanding at Reagan Airport later this year, and most of their new flights will attack American Airlines-dominated routes. More competitors and more capacity will inevitably drive fares lower.

Foolish bottom line
I have great respect for American Airlines CEO Doug Parker and the rest of his leadership team. However, good management cannot change the fact that the airline business is ultra-competitive and has few barriers to entry.

Several artificial barriers to entry that have protected American Airlines are falling this year. Delta and Virgin Atlantic were given antitrust immunity to coordinate schedules, Southwest's base at Love Field in Dallas is opening to long-haul flights, and American was forced to divest slots at Reagan Airport to competitors.

Some of these three big changes -- as well as JetBlue's unrelated decision to introduce a premium cabin on transcontinental flights -- will start impacting American next quarter. However, the biggest impacts will come at the end of this year and through 2015. Investors should steer clear of American Airlines stock until the euphoria wears off and the market starts to rationally weigh the merger benefits against headwinds like these.

On Wednesday, investors appeared to remain nervous for most of the day about the same issues that have plagued the market all week, including the ongoing tensions between Russia and Ukraine and signs of a further slowdown in the Chinese economy. By the close, the broader stock market managed to recover and post a tiny gain, but many stocks fared much better, with positive news sending their shares upward. Among today's winners were Rite Aid , VeriFone Systems , and Diamond Foods .

Rite Aid gained 7% in the wake of an analyst upgrade from Goldman Sachs this morning, with the company raising its price target on the drugstore chain operator by 60% to $8 per share. The analyst report pointed to some favorable factors helping Rite Aid, including a more extensive presence in states where Medicaid expansion could boost sales than rivals CVS Caremark and Walgreen . Modest gains in same-store sales in February didn't blow investors away, but the real question is whether Rite Aid can keep chipping away at its debt burden and make progress in catching up with Walgreen and CVS on the earnings-growth front. With debt levels that almost match its market capitalization, Rite Aid still has further to go before it can declare itself out of danger for good.

VeriFone soared 11% after a favorable earnings report. Revenue gains of 1.7% and an adjusted profit of $0.31 per share gave investors in the electronic payment-system operator a positive surprise, and the company is even more optimistic about trends in the industry toward more secure payment methods that could require customers to upgrade older, more vulnerable equipment. Several analysts also piled on to raise price targets and future earnings estimates, pointing to other favorable factors such as international growth and digital advertising innovations. Some would argue that the stock already prices those growth expectations in, but there's no denying VeriFone's industry has huge potential for companies that can capitalize on it.

Diamond Foods picked up 11% as the snack-food maker also had a better report than investors had expected. Diamond's adjusted earnings per share topped estimates by a penny per share, and overall, the company's revenue was relatively flat from year-ago levels. But looking deeper at Diamond's numbers, there was a huge disparity in performance between the company's two major divisions, with nut sales plunging more than 10%, but sales of other snacks climbing almost 11%. CEO Brian Driscoll expects an unfavorable price environment for the nut division for the rest of the current fiscal year, but Diamond has made substantial headway after a dramatic plunge brought about the need for a long-term turnaround strategy.

We're just a few months into 2014 and Pandora and Zynga are already steadily outpacing the market. While a few months of gains isn't much to go on, let's take a look at what these companies are doing right, what advantages they may or may not have, and what hurdles they face going forward. 

Pandora: Up 27% year to date 
Pandora's music streaming service went public in 2011 and has made some investors very happy. The stock is up more nearly 27% this year and up more than 155% since its IPO three years ago. The company captured about 30% of music streaming listeners last month, with iHeartRadio coming in second with just 9%.

Source: Edison Research.

Pandora's advantage over the competition is its massive active listener base totaling about 76 million right now. Last month, those listeners streamed 1.51 billion hours. All those hours of streaming represent advertising opportunities for Pandora.

But not everything is rosy for Pandora. Though the company saw a 9% year-over-year increase in total listeners last month, it was Pandora's slowest growth to date. The company is also facing stiff competition from Apple's iTunes Radio. iTunes entered the market just six months ago and now nabbed 8% of the Internet radio listeners last month, taking the No. 3 spot behind iHeart Radio and Pandora.

If the increased competition weren't enough on its own, the company recently forecasted lower fiscal first-quarter earnings than expected, and Pandora said diluted earnings per share would be a loss of $(0.16) and ($(0.14). So while Pandora may be doing relatively well now, investors should seriously consider how iTunes Radio could hurt the company, and keep in mind that Pandora needs an increase in listeners in order to continue wooing advertisers to its service.

Zynga: Up 43% year to date
Zynga's stock has been battered and beaten back since its IPO a few years ago, but in 2014 the stock is up more than 40% and up more than 50% over the past 12 months. Zynga's in the middle of a turnaround and investors are pleased with the company's focus on mobile games, cost-cutting, and new management.

Less than a year ago, Zynga's founder Mark Pincus turned over the CEO title to Don Mattrick -- a move that signaled a new Zynga was emerging. After being one of the most dominant gaming companies on Facebook, Zynga is trying to figure out how it can sustain itself apart from the social media juggernaut. The company is releasing and creating new versions of its most famous games like FarmVille 2, Zynga Poker, and Words with Friends, but it's also purchasing other companies with in-demand games. In January, the company bought NaturalMotion, maker of Clumsy Ninja for $527 million.

But just as with Pandora, there are a few things investors should be wary of. The most disconcerting for Zynga is that the company is so reliant on creating smash-hit games or at least purchasing them from other companies. The company makes the vast majority of its revenue from just a handful of successful games and typically gets just 2%, or less, of its users to make in-game purchases. So creating massively popular hits is a must. While the stock is doing well so far this year, investors shouldn't be naive about how hard it will be to keep its blockbusters coming.

Foolish thoughts
While both Pandora's and Zynga's stocks are doing well so far this year, I can't imagine Zynga being a great long-term play for investors. The ephemerality of mobile games and the necessity for creating continual huge hits make the company seem fragile. Even if Zynga has another few hits up its sleeve, it doesn't have much of an advantage over the competition and it's too easy for users to move on to another company's game.

As for Pandora, the company definitely has an advantage over the competition with its sizable number of active users. Even with increased competition from iTunes Radio, Pandora has already etched out a solid place in the music streaming space that'll be hard for the competition to overcome. Apple is notorious for taking over new markets, but Pandora should be able to old its own against the iMaker, at least for now.

If you hear a financial analyst say a company's valuation doesn't matter, just look at a stock chart for Cisco Systems . Adjusted for splits, Cisco's stock ran from under $2 per share to over $77 in the five years between 1995-2000. However, the stock was crushed with the pop of the Internet bubble. The last 13 years have treated investors to a stock in $20-$30 per share price range. Today, Cisco looks cheap by a few metrics, but even its relatively attractive yield isn't enough to offset three big concerns.

Yes, you can pay too much!
There might not be a more aggravating Wall Street-ism than the saying, "it's different this time." The truth is, there have been very few companies that, over the long-term, proved they were different. The good news for Cisco investors is it's unlikely that they are paying too much for the stock today.

Shares trade for just over 11 times analysts' projected EPS for this year and yield a healthy 3.5%. This puts Cisco in a similar class with companies like Microsoft  and Hewlett-Packard . HP carries a somewhat lower yield at under 2%, and a lower expected growth rate of 4%, but also has a cheaper forward P/E ratio. Microsoft is a former high-flyer that has come down to earth. Shares can now be had for under 14 times earnings, with an expected 8% growth rate and a nearly 3% dividend.

The first reason Cisco's 3.5% yield may not be enough is, the company has spent over $84 billion on share repurchases since the beginning of the current program. Unfortunately for investors, shares trade for less than a 6% premium to the company's average buy price of $20.54. In addition, diluted shares are down less than 1% in the last year. It's fair to say that Cisco could have done better using this $84 billion elsewhere.

The transition no one wants
Cisco's CEO, John Chambers, said in recent earnings, "I'm pleased with the progress we've made managing through the technology transitions of cloud, mobile, security, and video." Maybe what he should have said is, "We didn't anticipate how important these fields were going to be, but we are happy that we know now."

The second reason Cisco's 3.5% yield may be insufficient is, the company's gross margin has taken a serious hit. Last year, Cisco's gross margin was over 60%. In the last six months, this number dropped to just over 57%, and in the current quarter it fell further to 53%.

In comparison, HP still gets 50% of its business from personal computer and printer sales. With two major businesses slowly becoming obsolete, it's understandable that HP's gross margin sits at less than 30%.

Microsoft's gross margin was 70% two quarters ago, and today is 66%. With 68% growth in the company's devices and consumer hardware division, and just 9% gross margin, it makes sense that Microsoft's gross margin would decline.

However, Cisco is dealing with a different issue. There is massive competition, and routers and switches may be seen as commodities. With a significantly lower gross margin, it will be harder for Cisco to produce the same massive cash flow that it had in the past.

Speaking of that...
Cisco's cash flow is the third reason the company's 3.5% yield may not be enough for investors. In the last six months, Cisco's core operating cash flow (net income + depreciation) increased by just 1.5%.

HP and Microsoft are also managing through a transition phase in their businesses, yet both produced operating cash flow growth of at least 5% in just the last three months. It's hard to see how Cisco investors can feel good about this comparison.

Final thoughts
The bottom line is, Cisco isn't too expensive and shares carry a nice yield at more than 3%. However, questionable share repurchases, falling gross margin, and anemic cash flow growth should make investors question the real value of the shares.

Until Cisco can solve some of these issues, investors might want to wait for confirmation that Cisco will return to growth in the future. You might miss the first leg of a move upward in the stock, but waiting may save you from more lost years if the company can't find its way back.

King Digital Entertainment has put a price range on the shares to be floated in its upcoming initial public offering. In a filing submitted to the Securities and Exchange Commission today the company, maker of the wildly popular title Candy Crush Saga and other games for mobile devices, said it aims to raise up to $533 million in its flotation. 22.2 million shares of the Ireland-based firm will be sold at a range of of $21 to $24 apiece. 

The firm plans to list on the New York Stock Exchange under the ticker symbol KING. No date has yet been set for the IPO.

The lead underwriters of the company's flotation are JPMorgan Chase unit J.P. Morgan, Credit Suisse , and Bank of America Merrill Lynch.

Because of the popularity of Candy Crush Saga in particular, King's IPO is certain to attract investor interest. The market might be wary of such companies going public, however; since its December 2011 IPO Zynga's share price has dropped from $10 to just under $5.80 at its most recent close. 

The stock market demonstrated its continuing confusion Wednesday, initially falling sharply on ongoing concerns about tension in the Crimea and Chinese economic sluggishness. Yet by the end of the day, the S&P 500 had actually managed to post a gain on the day, once again showing the resiliency of the five-year-old bull market. Unfortunately, though, shareholders in several stocks still suffered substantial losses, with Geron , Express , and Herbalife among the market's losers today.

Geron plunged 62% after the biotech company got bad news about its key imetelstat drug, as the FDA issued a clinical hold on the treatment for multiple myeloma and essential thrombocythemia. The FDA cited risks of liver damage and abnormal liver-function test results in Geron's phase 2 study, and because of the hold, Geron probably won't be able to start a scheduled myelofibrosis study for imetelstat as soon as it had hoped. With Geron still striving to find a viable long-term business model after having given up on the stem-cell research it had done in the past, any threat to imetelstat's success has severe implications for the company's survival -- as shareholders discovered today.

Express fell 12% as the retailer reported poor financial results and gave discouraging guidance for the coming year. Same-store sales for the fashion company rose 1%, but overall revenue fell a larger-than-expected 2.2%, and earnings also fell short of what investors had hoped to see because of extensive markdowns. Express also said it saw declining same-store sales in the beginning of the new fiscal year, with earnings guidance predicting a 10% to 25% drop in earnings per share from last year's levels. Until retailers stop the cutthroat discounting behavior that has plagued the industry throughout the holiday season, Express and its peers will have trouble recovering fully.

Herbalife dropped 7% after the Federal Trade Commission opened an investigation into the multi-level-marketing retailer. The company has been the subject of an intense battle between high-profile institutional investors, including Bill Ackman on one side and Carl Icahn and others on the other. With Ackman having sold the stock short and having attacked Herbalife vigorously, today's news comes as no surprise to him. But while news of an investigation is never positive, it's too early to tell whether the actual results of the civil probe will reveal anything that hurts the company's long-term prospects -- or reward those who've bet against the stock.

Interestingly, other companies with similar business models were mixed today, with USANA Health falling 4% but Nu Skin Enterprises soaring 7% despite Herbalife's news, as investors apparently concluded that Herbalife's troubles won't affect Nu Skin.

Apple's iTunes Radio is well on its way to becoming the second largest music streaming service, but still trails Pandora Media by a wide margin. The service, launched last September and has quickly gained an 8% share of the market according to a survey from Edison Research. That places it ahead of Google Play Music All Access and Spotify, and just behind iHeartRadio.

With Apple just getting under way with iTunes Radio, how much of a threat does it pose to Pandora's business?

Feeling the impact
Last October, in iTunes Radio's first full month after its launch, Pandora felt the impact. The number of listeners "tuning in" to its website and app fell from 72.7 million in September to 70.9 million in October. Pandora returned to growth again in November, but still fell short of its September metric with 72.4 million listeners.

This isn't a seasonal problem. In the previous year, Pandora increased listeners from September to October. And it's not exactly a one-time impact. There's been a significant drop-off in year-over-year listener growth since September.

Pandora saw another sequential drop in listener hours in February, but that could be explained by the shortened month. The company still added 1.9 million net new listeners last month. But the dropoff in listener hours was more severe than in previous years indicating that perhaps something else is at play.

Average hours per listener were up in January, however, and flat in December. The slight decline year over year in February ought to be monitored.

How big is iTunes Radio?
Although Apple rarely releases metrics on its users or listener hours like Pandora, the results of the Edison Research survey may give us a clue.

Last month, 75.3 million people used Pandora. If that accounts for 31% of the market, and iTunes Radio has 8%, we can estimate iTunes Radio users at about 19.4 million.

That sounds pretty impressive for a service that's less than six months old, but Apple announced it had piqued the interest of 20 million users just one month after it launched.

That announcement also said that it streamed 1 billion songs, which is just about 58 million hours. Comparatively, Pandora streamed 1.51 billion hours last month -- more than 25 times with less than four times the users. It's likely a lot of people were just trying iTunes Radio and its current 19.4 million users are much more active listeners.

Still, average listener hours per Pandora user are relatively flat year over year in the last three months. So those that do listen to Pandora, aren't listening any less. As such, user growth will be key. Since iTunes Radio was released in September, Pandora has added 2.4 million net new listeners. In the same period a year ago, the company added 9.4 million net new listeners.

Not just iTunes Radio
The problem for Pandora isn't so much iTunes Radio as it is the plethora of streaming options for music listeners.

Google actually owns the largest music streaming property -- YouTube. The company is working on a music streaming service based around the video platform, which would differentiate itself from other music streaming services. Considering the reach of the YouTube app -- 49.7% of smartphone users -- Google could be very successful if it releases a music service on the platform.

Moreover, Pandora faces competition from Spotify, radio behemoth Clear Channel Communications (iHeartRadio), Rhapsody, and dozens of niche genre-specific streaming sites. The market is fractured right now, as everyone battles for their piece of the growing market. Pandora has the most to lose, and naturally is growing much more slowly than the rest of the market as new competition enters.

And Pandora's valuation poses a problem. Currently priced at 10.8 times sales and over 200 times estimated 2014 earnings, Pandora is priced incredibly high considering the size and strength of its competition.

What: Shares of Magnachip Semiconductor Corp.  fell more than 12% early Wednesday, then recovered to close down around 2.8% after the company announced "non-reliance on previously issued financial statements."

So what: Specifically, MagnaChip says its audit committee determined it will need to restate its financial statements for the the first, second, and third quarters of 2013 and 2012, and for the years ending 2012 and 2011. To explain the flub, MagnaChip stated revenue on certain transactions was incorrectly recognized when products were shipped to a distributor. Instead, revenue should have been recognized when the distributor shipped product to the customer.

Separately, MagnaChip announced it has appointed Jonathan W. Kim as its new chief accounting officer, effective immediately.

Now what: The update comes more than six weeks after MagnaChip postponed its fourth quarter earnings release and conference call -- both were previously scheduled for Jan. 28. The stock has already fallen more than 20% since then, which likely explains why it was able to recoup its early losses as today's trading wore on.

Investors can also take at least some comfort knowing the restatement isn't expected to change previously reported cash and debt balances as of the end of each period in question. It will, however, extend the time required going forward for revenue recognition from certain transactions with MagnaChip's distributors. Meanwhile, revenue generated from MagnaChip's non-distributor customers will not be affected.

Though the stock might look cheap trading around 0.6 times sales and 5.6 times this year's expected earnings, I'm still not particularly compelled to buy in today. Rather, before making any long-term investing decisions, I'm perfectly happy waiting until the dust settles, then digging in after MagnaChip's restatements are complete.

The Department of Defense awarded six separate defense contracts Wednesday, worth $960 million in total. Among the largest of the contracts awarded:

General Dynamics' National Steel and Shipbuilding Co. subsidiary was awarded a $128.5 million contract modification to perform detailed design and construction work necessary to convert the U.S. Navy's planned Mobile Landing Platform USNS Lewis B. Puller (T-MLP-3) into an Afloat Forward Staging Base (T-AFSB-1).

The Puller will be the first of a (short) line of Mobile Landing Platforms designed to function as floating forward staging bases for amphibious assaults, humanitarian aid work, anti-piracy missions, and mine-sweeping. Measuring 837 feet long and displacing 80,000 tons, the vessel will have room to carry up to four CH-53 heavy-lift helicopters, and nearly 300 special operations and other troops. It will be designed to travel at speeds up to 15 knots, and to have a range of 9,500 nautical miles. A total of two AFSBs are currently expected to be built, the Puller and an as-yet unnamed vessel currently designated MLP-4.

NASSCO laid the keel for the Puller on Nov. 5 and expects to deliver the vessel to the Navy in October 2015.

Artist's conception of how USNS Lewis B. Puller (T-MLP-3) will look when complete. Source: Wikimedia Commons.

The Department of Defense awarded six separate defense contracts Wednesday, worth $960 million in total. Two subsidiaries of publicly traded defense contractors won contracts:

L-3 Communications subsidiary Interstate Electronics Corp. was awarded an $8.9 million contract modification exercising options on line items to conduct a "new technology refresh" of C-Band Pulse Doppler Radar Transmitters, and to replace Navy Mobile Instrumentation Ship Communication Systems supporting flight tests of Trident II ballistic missiles. Specifically, L-3 will perform system engineering, design, and development work, system testing, verification, and validation, and support logistics and provide full system documentation necessary to support the test flights. All of this work is to be completed by March 15, 2016.

Meanwhile, Italian defense contractor Finmeccanica's subsidiary DRS Technical Services won a $30.3 million hybrid firm-fixed price, cost-plus fixed-fee and cost reimbursable multi-year contract to operate, control, and maintain satellite communications between the continental United States and U.S. Army locations worldwide. DRS will also provide "help desk" and field operations support related to the communications systems. DRS's contract will continue through at least March 11, 2017.

U.S. stocks ended the day roughly unchanged on Tuesday, with the benchmark S&P 500 index up 0.03%, while the narrower Dow Jones Industrial Average fell 0.07%. Last month, I highlighted that Berkshire Hathaway was in discussions to unwind its four-decade relationship with Graham Holdings (and its predecessor, The Washington Post Company). Under the proposed structure, Berkshire would exchange all (or most of) its Graham Holdings stock for an "as yet unformed subsidiary" that would house a business and assets from Graham Holdings' portfolio. Today, Berkshire filed a form with the Securities and Exchange Commission that reveals what Graham Holdings is contributing to the swap: WPLG, a Miami television station, along with nearly all of its Berkshire "B" shares and $328 million in cash.

In reporting the story, CNBC.com is carrying the headline "Buffett's Berkshire gets its first TV station." That may well be true if we are referring strictly to Berkshire's operating subsidiaries. However, Buffett is not unfamiliar with this industry -- let's not forget the $518 million investment he made in Capital Cities' shares after its takeover of ABC in 1985. That gave Berkshire an 18% stake in the merged company, Capital Cities/ABC, and Buffett a seat on its board. (Capital Cities/ABC was acquired a decade later by another one of Buffett's favorite companies, the Walt Disney Company.)

Is Buffett getting a steal here? Given the longevity and nature of the relationship he has enjoyed with The Washington Post Company and the Graham family, I believe that he is treating Graham Holdings fairly. In the press release announcing the deal, Buffett offered a statement according to which he is "sure this is a mutually beneficial transaction for both companies."

Mutually beneficial, perhaps; equally beneficial, no. Buffett didn't become the world's third richest man by not looking out for No. 1; here are two winning aspects of the deal for Berkshire and its shareholders:

• The operating business: WPLG is a solid media property. In the November ratings period, it was ranked second among Anglo stations in Miami (it was tied for first place a year earlier).
• The stock swap: In contributing Berkshire's Graham Holdings shares, Buffett is effectively paying with a currency that looks somewhat overvalued. In exchange, he is receiving Berkshire shares, which are currently undervalued (or no worse than fairly valued, at the very least). Furthermore, the long-term business prospects of Berkshire Hathaway are superior to those of Graham Holdings.

Graham Holdings' prospects are certainly much better than those of the Berkshire's textile operations when Buffett ultimately decided to shutter it. Nevertheless, this looks like an intelligent exit from a business association that Buffett had maintained through roughly four-fifths of Berskhire Hathaway's existence.

As one of the largest smartphone markets in the world and boasting impressive triple-digit growth, India is a great opportunity for Apple . And Apple has a plan to capitalize on it.

"Apple plans to go local with a vengeance," said The Economic Times from its Kolkata and Mumbai offices.

Apple to sell lower-cost, older devices
Apple's newest models are simply too expensive to gain any traction in India. The global average selling price, or ASP, for Apple iPhones was about $650 in 2013, according to IDC. That's a considerable premium compared to the typical smartphone. "IDC data shows 66% of Android's 81% [third-quarter] smartphone share [of global shipments] are junk phones selling for $215," AppleInsider's Daniel Eran Dilger stated politely in November 2013.

Fortunately, selling premium phones means that even older iPhones that have worked their way down Apple's cost curves can sell successfully in markets like India. This is Apple's plan, exactly.

"Apple wants to focus more on its entry-level models in these stores such as iPhone 4, iPhone 4s, iPad mini and iPad 2, which are essentially in the sub- 30,000 [rupees (or about $490 dollars)] segment and also its largest-selling products in India," a senior executive of a leading Apple trade partner in India told The Economic Times.

iPad 2. Image source: Apple

The news follows another report last month from The Economic Times that Apple had planned to reinitiate iPhone 4 production to sell the iPhone in emerging markets India, Indonesia, and Brazil.

Too hot to ignore
Apple had experimented with offering more affordable pricing on the iPhone 4 in emerging markets in 2013. In the company's fiscal 2013 third-quarter earnings call Apple said the iPhone 4 push helped iPhone sales grow 400%, year over year, during the quarter -- far higher growth than any other country mentioned in the earnings call. In Apple's fiscal 2013 fourth-quarter earnings call Apple CFO Peter Oppenheimer expressed again that Apple was pleased with "unit sales up sharply year-over-year" in India.

Beyond selling older, lower-cost devices to attract customers, Apple plans to pursue a more aggressive retail strategy in the country. It plans to set up smaller 400 to 600 square foot exclusive locations in big cities and tier II markets with local resell partners, according to The Economic Times.

"Apple wants to set up these smaller stores in areas where people have high disposable incomes, there's a strong penetration of smartphones and a large student population such as Pune, Vizag, Guwahati, Durgapur and Gangtok," said The Economic Times' Writankar Mukherjee and Sagar Malviya.

Bolstering its presence in such a hot emerging market could help Apple expand its customer base. Considering the stickiness of Apple's ecosystem, building an Apple-branded retail presence in India could pay off for the company over the long haul. Products like the iPad 2, iPad mini, and the iPhone 4 could serve as a gateway product into the Apple ecosystem.

In case you hadn't been paying attention, e-commerce powerhouse eBay and famed activist investor Carl Icahn don't exactly see eye to eye.

After waging similar activist campaigns against other high profile tech companies like Apple and the now-private Dell, Icahn has most recently trained his sights on eBay, more specifically eBay's prized PayPal division.

Icahn, as many others before him, believes that eBay investors would stand to benefit enormously if eBay were to spinoff or divest PayPal. However, where many have failed in this pursuit, Icahn seems particularly well suited to play the role of change agent de jour at eBay given his penchant for a well-publicized boardroom battle.

The latest chapter of this corporate theater is now set to unfold as eBay's proxy statement was released yesterday, setting the stage for what could be the final showdown between Icahn and eBay's management team.

Source: Twitter

eBay vs. Icahn - Round 3
As you can imagine, Carl Icahn's shadow loomed large over eBay's initial proxy statement. Proxy statement's typically don't make for the most exciting reading as they're largely filled with important, but somewhat dry, corporate minutia like auditor approvals, amending past executive incentive programs, and the like. However with billions of investors' dollars potentially at stake, the eBay proxy statement did feature several interesting parts.

One interesting aside here is that eBay once again nominated embattled board member Scott Cook , the co-founder and current member of the board at Intuit, to serve another one-year term on eBay's board. Mr. Cook has been one of the many negative focal points of Icahn's PR battle against eBay. Specifically, Icahn takes issues with Cook's presence on eBay's board because PayPal and Intuit compete against one another in some business areas. The obvious conflicts of interest that could arise for Cook's presence on eBays board member serve as yet another example of the many corporate governance issues at eBay that Icahn has railed against in the series of public letters he's recently released. However, eBay is sticking with their man here, and hoping that shareholders will do the same.

The case against Icahn
The meat of the eBay v. Icahn battle comes toward the end of eBay's proxy in voting item #6.

eBay starts by conveying in bold lettering its recommendation that shareholders vote against the Icahn plan. Then it recounts Icahn's proposal as it was received, "Shareholders recommend that the Board of Directors and management act expeditiously, consistent with effective tax consideration, to engage an investment banking firm to effectuate a spin-off of eBay's Payments segment into a separately traded public company." 

eBay then lays out its argument for why shareholders should reject the Icahn proposal over the next 4 pages. eBay includes the following as rationales for keeping PayPal under its corporate folds:

• eBay and PayPal provide  one another with massive network effects. eBay argues that it enabled PayPal greater chances of success with new products it's launched by allowing PayPal to tap into eBay's larger customer base with no customer acquisition cost. As an example, eBay notes the success that its own mobile app provided for PayPal's entry into the mobile payment space. Specifically, sales on eBay's mobile app in 2009 accounted for 80% of PayPal's initial mobile payments. The number has since decreased as PayPal mobile payments have expanded. However, it's clear that eBay consistently funnel business into PayPal's service at zero cost to PayPal.
• eBay and PayPal have grown faster together than they would have apart. This again ties in with the example from the preceding bullet point. PayPal gets lots of customers from eBay without having to spend anything to acquire those customers. Not a bad deal at all for PayPal.
• eBay's greater financial strength helps fund PayPal's growth initiatives. As the larger of the two companies, eBay has often allowed PayPal to tap its own financial resources, which come at a lower cost than external funding.
• PayPal benefits tremendously from eBay's massive data resources, again at now cost. Having free exposure to eBay's transactional data has enabled PayPal to better detect fraudulent transactions, which have enabled PayPal to maintain its industry-low loss rate.

eBay elaborates on a few more particulars as well, but hopefully you get the general implication here. PayPal without questions saves reams of money from not having to pay for access to eBay's massive network of buyers or the data that comes with it.

Not over yet
However, what's less clear to me at least is whether those cost saving translate a large enough benefit to eBay and PayPal when compared to the possible additional premium that the market might place on an independently traded PayPal, even after it incurred those new expenses.

Icahn clearly believes that PayPal would trade at such a massive premium on its own when compared to eBay's current valuation that the juice would indeed be worth the squeeze. As a follow up, Icahn issued another one of his blistering letters yesterday as well with the promise of a much more detailed argument soon as well. eBay didn't specify when exactly it plans to hold its upcoming 2014 shareholder meeting where this vote will finally come to a head, so we're still awaiting a firm date to circle for this eventual showdown.

However, as eBay reiterated in its proxy statement and Carl Icahn with his letter yesterday, both sides appear firmly entrenched in their hugely differing viewpoints. It's not clear how far Icahn plans to go to pursue his PayPal liberation campaign, but with billions of investors dollar potentially hanging in the balance, this is a business drama investors everywhere would do well to watch continue to unfold.

It was rather quiet on Wall Street today. with only one major economic report coming out. The Dow Jones Industrial Average ended the session down 11 points, or 0.07%, while the S&P 500 increased by 0.03%, and the Nasdaq rose 0.37%. But while the major indexes didn't make big waves today, a few retailers did.

American Eagle Outfitters dropped 2.67% today, after Morgan Stanley analysts downgraded the stock from "equal weight" to "underweight." The company's earnings release yesterday just slightly beat Wall Street's estimates, with management citing weak demand for its goods as it expects first-quarter results to break even with last year. Quite a few teen retailers have reported similarly weak quarterly results and pessimistic expectations for the future, and I wouldn't be surprised to see the number of companies in this niche shrink in the years to come.   

One consumer stock on the move today was Krispy Kreme Doughnuts , which ended the regular session up 2.42% and jumped another 9.76% following its after-hours earnings report. Was the report that great? Well, no. The company's earnings per share of $0.12 were shy of estimates by a penny, while revenue fell 4.6% and sales of $112.7 million missed expectations of $118.75 million. Apparently, stocks rose on the company's outlook for fiscal 2015, where it sees 20% to 30% year-over-year EPS growth and a 10% jump in its store count. The company also increased its share repurchase authorization from $50 million to $80 million. 

Another big mover after the bell was Vail Resorts , which lost 3.37% following its own after-hours earnings report. EBITDA rose 6% over the same quarter last year, but net income dropped 2.1%. The dramatic 73% drop in snowfall in the Tahoe region from the same period contributed to a 27.2% visitation decline to its Tahoe resorts for the quarter. On a positive note, Vail Resorts doubled its dividend, from $0.2075 to $0.4150 per share.  

The Department of Defense awarded six separate defense contracts Wednesday, worth $960 million in total. Defense contractor Northrop Grumman won two of them.

The smaller of the two awards, worth $30.8 million to Northrop, came in the form of a contract modification calling upon the company to provide unspecified "continued logistic support services" to the U.S. Army through Jan. 31, 2015.

The larger award, worth $750 million, was easily the largest contract awarded Wednesday, consuming more than 78% of all funds on offer. This award modified a previously awarded indefinite-delivery/indefinite-quantity, 10-year contract running from Nov. 21, 2005 through Nov. 21, 2015, under which Northrop will perform research, development, testing, and evaluation services for the development of the U.S. Missile Defense Agency's Ballistic Missile Defense System's Command, Control, Battle Management, and Communications division.

Northrop will support all information technology, facilities, ground and flight tests, warfighter wargames and exercises, and modeling and simulation work conducted by BMDS, and will in particular support the Ballistic Missile Defense Network Operations and Security Center, the Joint Functional Command Component for Integrated Missile Defense, and the 100th Missile Defense Brigade.

Originally valued at $2.5 billion, this contract will now be worth $3.25 billion to Northrop Grumman as a result of this contract modification.

In its latest update on stun-gun sales, TASER International reported Wednesday that it has booked several new orders for its eponymous stun guns. These orders should ship in the current first fiscal quarter of 2014 and will show up in this quarter's revenues when earnings are next released. Specifically, TASER has sold:

• 800 TASER X26P "Smart Weapons" to an unidentified "international" customer.
• 90 X26Ps, plus TASER Cam HD recorders, to the Fayetteville Police Department in North Carolina.
• 85 X26Ps to the El Paso Police Department in Texas.
• 500 TASER X26 Smart Weapons to the U.S. Department of Defense.
• 300 X26s to the New York Police Department.
• 170 TASER X2 model Smart Weapons to the Chesterfield County Police Department in Virginia.
• 72 more X2s to the Georgia Department of Corrections.

Additional sales of various TASER weapon models -- and based on the company's past reporting practices, presumably orders of fewer than 20 units each -- and/or sales of TASER CAM HD recorders and/or subscriptions to the company's TASER Assurance warranty and upgrades plan were booked to law-enforcement customers in Arizona, California, Colorado, Delaware, Florida, Illinois, Indiana, Kansas, Kentucky, Maryland, Mississippi, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Vermont, Virginia, West Virginia, and Wisconsin -- half the states in the Union.

TASER did not disclose financial details on any of these sales, but at advertised list prices (for the products for which prices are listed), their value would appear to add at least $1.7 million to TASER's revenue stream.