Philip Frost has never been shy about backing his investments. Frost, the former founder of IVAX, and Chairman of generic heavyweight Teva Pharmaceuticals, has big stakes in a variety of emerging health-care companies.  However, out of all his investments, he's likely watching Opko Health closest.

Frost has a truly massive stake in Opko that totals nearly 140 million shares, 398,000 of which were bought in March, according to SEC filings. That means Frost owns about 40% of Opko's stock. Since Frost has amassed such an eye-popping stake in Opko, let's take a look at the catalysts that may move Opko's shares this year, including Tesaro's  potential FDA filing.

OPK data by YCharts

First, a bit of background
Frost is no rookie when it comes to building successful companies. His track record includes founding Ivax in 1987 and selling it to Teva for $7 billion in 2006. Frost built Ivax into a generic powerhouse by executing a series of acquisitions, and it appears he's executing a similar strategy with Opko, which has taken stakes in -- or acquired -- a variety of intriguing young companies in the past couple of years.

Last year, Opko acquired Cytochroma to get its hands on Cytochroma's vitamin D prohormone, and PROLOR Biotech, to lock-up technology that makes prohormones last longer so that patients require fewer doses. That technology has already been put to work on a long-acting Factor VIIa treatment for hemophilia that was recently awarded FDA orphan drug designation.

Opko also has an ownership stake in tiny Arno Therapeutics that gives Opko the right to eventually acquire it, and Cocrystal, a company that's working on hepatitis C therapies. In January, Frost helped orchestrate the merger of Biozone, a company in which Opko had previously held a 12% equity stake, with Cocrystal. That deal effectively locks up control of Biozone's technology for improving how topical therapies and OTC products are absorbed through the skin.

Additionally, Opko has an equity stake in Tesaro, the company that licensed Opko's anti-nausea drug Rolapitant, and a 19% equity stake in sRNA company RXi Pharmaceuticals, which Opko received in exchange for all of Opko's RNAi technology in March 2013.

Converting products into profit
Opko was dealt a blow in December when Tesaro reported that Rolapitant failed to meet a secondary endpoint in trials. That dashed investors' hopes for a slam dunk across both the trials' primary and secondary endpoints, sending shares in both Opko and Tesaro reeling. However, Rolapitant did succeed in achieving its primary endpoint for reducing vomiting, and that has Tesaro on track to file for FDA approval later this year. If approved, Opko will collect a milestone payment, as well as double-digit royalties on sales.

Opko is also in the process of launching its 4kscore test. That test provides doctors with a new prostate cancer screening tool that may reduce the number of unnecessary biopsies tied to false positive PSA tests. Opko will conduct those tests at its own lab, and eventually plans to provide the test as part of a point-of-care solution for doctor's offices.

In addition to those two developments, Opko expects to report later this year how its vitamin D drug Rayaldy, acquired in the Cytochroma deal, performed in phase 3. That trial has a scheduled completion date of June 2014.

Fool-worthy final thoughts
A lot is going on at Opko this year that investors will need to track. Investors will get an early read into demand for the 4kscore prostate test during the next couple quarters, should see Tesaro file for Rolapitant approval, and learn how Rayaldy did in trials, too. If Rayaldy's results are favorable, Opko plans to file for FDA approval in 2015. If so, that would mean Rayaldy could begin contributing meaningfully to Opko in 2016.

Opko could use one (or more) of these products to pan out because it's burning through cash. The company exited last quarter with $185 million in cash, but its costs totaled $176 million last year. That handily dwarfed its $96 million in revenue, and suggests that investors should still consider Opko a speculative play, albeit an intriguing one.

The Department of Defense worked overtime Friday, awarding 34 separate defense contracts in 24 hours. Total value: $1.46 billion.

The biggest award by far went to defense contractor Lockheed Martin , recipient of a $610.9 million contract modification on a foreign military sales contract to supply PATRIOT anti-aircraft missiles and related equipment to the Emirate of Kuwait.

Lockheed won the original contract back in December -- a $263.4 million award to sell Kuwait fourteen four-packs of Patriot missiles, plus seven launcher modifications kits, with a June 30, 2016 due date. Today's modification adds 92 single-pack PATRIOT missiles, 50 more launcher modification kits, plus associated ground equipment, tooling, and initial spare parts.

Although the numbers do not exactly match up, the Pentagon notes that the total value of this contract to Lockheed Martin is now $873.8 million, including the original contract and today's modification. The new deadline for delivery has also been moved up a bit, to May 31, 2016.

Additionally, Lockheed Martin was awarded a $13.1 million firm-fixed-price delivery order to supply the government of Australia with 19 radar receiver processors used aboard MH-60R Sikorsky SeaHawk helicopters. Delivery on this foreign military sales contract is due March 2017.

The Department of Defense worked overtime Friday, awarding 34 separate defense contracts in 24 hours. Total value: $1.46 billion. Among the publicly traded companies winning contracts, three firms -- soon to become one -- won contracts to keep the military fed and hydrated. Specifically:

• Sysco's Foodservice Alabama unit won a five-month prime vendor bridge contract worth up to $12.5 million to provide "food and beverage support" to U.S. Army and Air Force bases in Alabama and Florida through Aug. 30, 2014.
• Sysco's Eastern Maryland division won a separate prime vendor bridge contract, also five months in duration, but worth up to $21.4 million in value, to provide "food and beverage support" to U.S. Army, Navy, Air Force, and Marine Corps locations in Maryland through Aug. 30, 2014.
• Meanwhile, Sysco's soon-to-be subsidiary US Foods won its own five-month prime vendor bridge contract (worth $27.4 million) to provide food and beverage support to U.S. Army, Navy, Air Force, Marine Corps, and federal civilian agencies in Georgia through Aug. 30, 2014.

In an unrelated contract, the Willbros Group won a firm-fixed-price contract to perform "fuel services" for the U.S. Army through April 30, 2019. This five-year base contract has an estimated maximum value of $14.2 million to Willbros, although it may be extended by three succeeding five-year option periods, which would increase its value.

The Department of Defense worked overtime Friday, awarding 34 separate defense contracts in 24 hours. Valued at $1.46 billion in total, the contracts covered everything from aircraft, to anti-aircraft missiles, food service for servicemen and servicewomen. But among the more traditional "defense contractors" winning work:

• General Dynamics won a $74.6 million firm-fixed-price contract to develop, design, and deliver to the U.S. Marine Corps 916 Cougar egress upgrade kits for Force Protection-designed Mine-Resistant, Ambush-Protected vehicles (MRAPs). These kits include upgrades to MRAP front doors, rear doors, rear steps, and exhaust systems aimed at increasing the survivability of troops within. Work on this contract should be completed by September 2015.
• Britain's Airbus was awarded a $34 million contract modification to supply the Royal Thai Army with six Lakota helicopters equipped with environmental control units, mission equipment packages, and airborne radio communication (ARC-231) radios,kk by April 3, 2015.
• Kaman Corporation was awarded a $41.6 million contract modification to produce 10,001 Lot 11 Joint Programmable Fuze systems for the U.S. Air Force by April 2016.
• General Electric won a $24.9 million firm-fixed-price contract to perform out-of-warranty repairs on F138 engines (used to power C-5A Super Galaxy aircraft) for the U.S. Air Force through March 31, 2016.
• L-3 Communications was awarded a $9.7 million contract modification to continue providing tier 1 service desk support to the U.S. Army in the National Capital Region through March 29, 2015.
• Boeing subsidiary Insitu was awarded $8.4 million firm-fixed-price delivery order to supply the U.S. Marine Corps with hardware (including spare parts) and services necessary to operate, maintain, and support previously procured RQ-21A Blackjack EOC unmanned aircraft systems. Delivery is due December 2014.

Struggling smartphone maker BlackBerry released its latest earnings results this morning. Shares rose this morning, but have now given up most of their early morning gains. By the end of the day, BlackBerry closed down 7% as investors had time to digest the latest figures.

In this segment from Friday's Tech Teardown, host Erin Kennedy and Motley Fool tech and telecom bureau chief Evan Niu take a look through what was a pretty bad report by most standards. Revenue fell below the $1 billion mark, the company's net loss was $423 million, and the report revealed that people still aren't buying BB10 devices at nearly the pace the company hoped. The market's positive reaction was due to the net loss being smaller than expected, as well as the company's messenger service, BBM, continuing to hold up, now with 85 million monthly active users. Evan discusses BlackBerry's strategy from here and its progress toward its turnaround, and the biggest Catch-22 that stands in its way.

The Department of Defense awarded 34 separate defense contracts worth $1.46 billion in total Friday. Among the publicly traded companies winning work:

• A joint venture between Britain's Mace International and Tutor Perini subsidiary Black Construction won one of the larger awards, an indefinite-delivery/indefinite-quantity contract for "design-build/design-bid-build" construction projects at the U.S. Navy Support Facility at Diego Garcia, worth up to $95 million. Lasting 60 months' duration, this contract has an expected completion date of March 2019.
• Honeywell won one of thee indefinite-delivery/indefinite-quantity, cost-plus-fixed-fee contract to provide life cycle sustainment, integration, acquisition, and technical support for anti-terrorism/force protection Naval Electronic Surveillance Systems. An "as required" contract, this three-year contract may ultimately be worth as much as $43.2 million to Honeywell -- or more, if one or both of the additional one-year option periods are exercised. For now, the expected completion date is March 27, 2017.
• CACI won one of the other anti-terrorism/force protection contracts. Like Honeywell's, it should wrap up on March 27, 2017, but may be extended. The size of CACI's contract, however, is expected to be slightly smaller -- only $42.4 million.
• Science Applications International Corp won a four-month prime vendor bridge modification worth up to $40 million on a contract to continue unspecified "maintenance, repair, and operations" work for the U.S. Army, Navy, Air Force, Marine Corps, and federal civilian agencies through July 31, 2014.
• Triumph Group won a firm-fixed-price, indefinite-quantity/indefinite-quantity contract to supply the U.S. Navy with up to $20 million worth of aircraft parts and support through Dec. 31, 2020.
• Cubic Corp won a $6.9 million firm-fixed-price, cost-plus-fixed-fee and cost contract to support management of inventory supply chains, spare parts supply, repairs, and other aspects of the U.S. Air Force's P5 Combat Training System (P5CTS) Depot through March 5, 2015.

The Canadian subsidiary of U.S. defense contractor Textron has won a contract to supply the Philippines' Department of National Defense with eight specialized helicopters, as was announced by Canada's Minister of International Trade the Honorable Ed Fast on Friday.

Negotiated by Canada's Canadian Commercial Corporation, this $105 million contract will see Bell Helicopter Textron Canada Ltd. deliver the helicopters during the next two years.

Textron Bell's products are popular with the Filipino DND, which operates a fleet of some 42 UH-1H "Huey" helicopters, plus several other models of Bell products, according to military aircraft researcher FlightGlobal Insight.

The specific type of helicopter being sold from Canada was not identified in the Minister's announcement, however.

Textron Bell UH-1H Huey helicopter. Photo: Wikimedia Commons.

Staples  has had stagnant sales growth for the last five fiscal years; maybe it's time that the company reorganizes itself in yet another private-equity deal, to come out with a new line of staple offerings for today's changing office-supplies market. The ways office supplies are offered and consumed have evolved in the age of e-commerce and digital consumption, but office-supplies store operators, including Staples, have remained largely the same. Office Depot  recently acquired Office Max, but merging with competitors to become bigger may do little to bring disappearing customer demand back to stores. Like many brick-and-mortar retailers, office-supplies operators face similar structural challenges to their old retail business models.

Old retail concept
Office-supplies companies, like Staples and Office Depot, came to exist when people needed a special place to get their stationery. Nowadays, to get basic office supplies, people don't need to go anywhere, thanks to online shopping. Even when they do, other retail outlets of all sizes, from big box supermarkets such as Wal-Mart to street corner drug stores like Walgreen, all offer commonly used stationery supplies, partly replacing the need for stand-alone office-supplies stores.

Moreover, because of digitalization at work and in school, people are buying less old-time office supplies, including paper, pens, envelopes, staplers, staples, etc. As demand for traditional office supplies wanes, it's no surprise that sales for Staples and others have declined over time.

The root of the problem for Staples and others in the office-supplies market is that customers don't come to office-supplies stores the way they used to. The traditional retail concept that Staples and others still rely on to operate their stores now adds less value to today's customers. Moving goods through the supply chain to consumers was a challenging task that retailers needed to take on in the past.

Current retail environment
Merchandise distribution is less challenging in today's inter-connected marketplace. Staples recently announced the closing of 225 stores, which seems like a natural reaction to the current changing market conditions. In comparison, Office Depot added a chain of Office Max stores by merging their two operations. This looks like a less logical response, given that there isn't a booming office-supplies market in the making.

However, closing stores is only a defensive reaction as a result of realizing what customers may no longer need. Taking proactive moves, Staples must first learn what customers really want for today's office supplies. Switching to online selling may seem like a business initiative, but a separate presence of staples.com may contribute little to how Staples could better operate its existing stores. It's just another online operation among many other online sites -- unless, of course, Staples can connect what's online with what's in its stores.

The lingering issue is how physical stores can remain a value-added business proposition in the age of e-commerce. To ensure continued relevancy, online tools may be used to provide digital access to a store's physical setting. For example, online access to updated store inventory information may incentivize some customers to make a store trip for supplies that can't be conveniently bought online. Also, given the continued decline in its store sales, but a trend of increasing online orders, Staples could, over time, convert some retail stores into distribution centers or pick-up sites for online operations. This would save the company delivery and shipping costs.

Potential future changes
As the largest office-supplies retailer, Staples ultimately has to envision a modern retail concept to justify the need for continued physical retail presence in the age of e-commence. The reason why a retail store was there before may not provide the same valid grounds for its being there today. The traditional retail idea of channeling goods to customers through retail stores is no longer the most relevant in today's product distribution.

However, Staples remains product-centric with a vision of striving to offer every product that customers need. The company expanded its business with new models of contract selling and catalog business; but these are mere old-school retail-store tactics used to reach out to business customers. To add real value, today's retailers may have to go beyond distributing products; they may have to provide additional services that can create product uses and stimulate customer demand.

One such service that Staples could offer would be office designs that illustrate what office supplies may go into the setting up of different offices. With the service, Staples could make suggestions to customers about their office-supplies purchases, instead of being concerned about losing customer demand. Different model office designs could be conveniently shown on the company's website to avoid taking up expensive retail space. Service-supported retailing helps transform the old retail concept to maintain the vitality of today's retail business. Staples can either take initiatives to change its old retail practice or continue its decline and wait for activist investors to come in and show it the new way.

By all means, Staples and other traditional retail stores should compete with online office-supplies retailers. But Staples would do much better if it could also lead the efforts to redefine the value it could offer as a service-oriented retailer. When customers value the additional product-use services, they'd likely buy the recommended products from the retailer.

Facebook  made some wild announcements this week. After revealing that it will be paying $2 billion to acquire a company that builds virtual-reality goggles, it announced a new Lab team made up of rocket scientists, plane designers, and laser communications experts to bring the Internet to hard-to-reach places. While it's great to see Facebook CEO Mark Zuckerberg try to change the world, will his bold and risky moves disappoint investors in the process?

A solar-powered drone pictured in Facebook's new Internet.org marketing video. Image source: Internet.org.

The market doesn't seem entirely happy with Facebook's new ambitions. While it's possible Facebook's daring aspirations could pay off at some point, there is also risk that these speculative investments may not work out. Apparently, the market feels the risk may be greater than the opportunity. The stock ended the week down about 11%.

The social platform of the future?
Facebook announced it was acquiring virtual-reality company Oculus VR on Tuesday.

Why did Facebook decide to buy a virtual-reality start-up at a wild valuation of $2 billion? A Facebook press release announcing the deal to acquire Oculus argued that virtual reality might become the "next social and communications platform." And Zuckerberg said in a Facebook post that he believes this social platform will be a big deal. He believes that "augmented reality will become a part of daily life for billions of people."

Zuckerberg may be right about the future of virtual reality. After all, he is obviously a smart guy. But the market isn't happy about the deal for a good reason; $2 billion is a big sum to pay. Even more, it follows the acquisition of WhatsApp, which still has investors scratching their heads. Just like in the Oculus deal, the price Facebook says it will be paying for the messaging service is disturbing. The deal is valued at $19 billion.

Facebook CEO Mark Zuckerberg (right) in his conference room. Image source: Facebook.

Reaching the 10% without Internet
Ending the week with a bang, Facebook announced Thursday that it is launching a team called Connectivity Lab under its Internet.org project that will be working on new aerospace and communication technologies, including solar-powered drones, satellites, and lasers. The initiative's initial focus will be to reach the 10% of the world's population in areas difficult to reach with traditional Internet solutions.

While there won't be any obvious benefit for Facebook in the near-term, there's potential over the longer haul. Bringing the Internet to the rest of the world will help build the knowledge economy and, in turn, solve many big social and economic challenges, Zuckerberg explains in a new in-depth update on Internet.org's progress and plans. If the world progresses, Internet companies like Facebook may, too.

A voiceover in Internet.org's new marketing video stated it this way: "So, what happens when the rest of us get access [to the Internet]? It doesn't get twice as good. It gets, like a bazillion times as good."

The project won't be cheap. To kick things off, Facebook is buying Ascenta, a company whose founders helped create an unmanned solar-powered drone. Then there is the human resources that will be required. Facebook says the team includes "some of the world's top experts from Ascenta, NASA's Jet Propulsion Laboratory, NASA's Ames Research Center, and the National Optical Astronomy Observatory." While it's not clear Facebook will be picking up the cost of the teams salaries, it's safe to bet that Facebook is at least contributing to the teams well-being partly.

All of this, of course, is once gain risky business.

A tough position for investors
Investors are left between a rock and hard place. While Facebook's mission to connect the world is noble, it is also risky. And regarding recent acquisitions, there certainly is potential; but best-case scenarios seem priced in at the valuations Facebook is paying.

With the stock already trading aggressively, at 19.5 times sales, Facebook's recent speculative bets make staying on the sidelines a good idea.

Once an income investor's best friend, LINN Energy has recently provided some nightmares for that conservative crowd. Distributions rose 97% from its 2006 inception to early 2008. Subsequent hikes have been few and far between. Investors' take home grew a measly 15% in the following six years. While the recession and poor pricing deserve some of the blame, size itself has also become a challenge limiting LINN's long-term prospects.

Both LINE units and LinnCo shares are caught in a downdraft. Not even consummation of the prolonged Berry courtship eased shares out their slump and tepid guidance for 2014 only enhances concern.

Slim coverage for 2014
Most worrisome for many is the tight coverage ratio built into that guidance. The company forecasts a mere $12 million excess over full year DCF. On LINN's $961 million distribution, that's a bare-bones coverage ratio of 1.01. The tightness was cited by Barron's as a primary reason for JPMorgan's recent downgrade.

The immediately obvious culprit would be the dilutive effect of the Berry acquisition. LINN's size now creates a need for acquisition in huge chunks and the Berry acquisition was important as proof-of-concept with respect to future C-corp acquisitions.

The size of the deal, coupled with LINE's weakness in the face of a short attack, made that deal far more dilutive than management intended. Despite this, I think Berry's production mix will compensate. The economic value of its high oil content mitigates the consequences of that dilution substantially.

Ultimately though, it's a factor completely within LINN's control that contributes most directly to the tight coverage. That's a dramatic hike in capex in 2014—specifically maintenance capex.

What is maintenance capex?
To clarify LINN's accounting, the SEC forced a few changes in LINN's non-GAAP reporting. Hedging costs are now deducted from cash flow when calculating DCF. The term 'maintenance capex' was also deemed too abstract. It's been replaced by the line item "discretionary reductions for a portion of oil and natural gas development costs." It's really the same figure with a new name. It's also a line item to keep an eye on.

When LINN plans capex for the coming year, it grades projects by probability of success and anticipated production. It then sets aside a sufficient subset of its high probability drilling projects to offset its production decline. In short, maintenance capex is the capital budget needed to hold production flat.

That maintenance capex is directly subtracted from operating cash flow to generate distributable cash flow, more commonly referenced by the acronym DCF. DCF is all the cash that LINN believes it could throw your way. So, all the drilling deemed necessary to hold production flat is organically funded through cash flow. The remainder of LINN's capex budget—its growth capex — is funded through debt.

As LINN has grown, the split between maintenance capex and growth capex shifted considerably. The chart below shows its capital budget over the last four years. Only 29% of LINN's $575 million 2011 budget was designated for maintenance. That percentage mushroomed after 2012, reaching 50% of 2014's $1.6 billion capital budget.

Data from LINN

Every penny of cash flow diverted to maintenance capital lowers DCF, which in turn compresses coverage. That's ultimately a large piece of the reason for LINN's tight coverage guidance. Rising maintenance capex is trimming DCF.

The magnitude of that acceleration is apparent if you compare LINN's budgeted Q1 spend to its full year maintenance capex. Maintenance capex for Q1 is $193 million, or $772 million at an annualized rate. Yet, LINN's full-year guidance is $802 million, a $30 million excess over Q1's spending pace.

That increase in maintenance capex - a discretionary non-GAAP charge - is the reason for the tight projected full year coverage. Back out that increase and the DCF excess becomes $42 million. That's a large enough surplus that unitholders might begin to clamber for a distribution hike. Management doesn't need added pressure for a hike that future production might be unable to cover.

Managing near-term expectations is one possible cause for this sharp maintenance capex hike. Conservative guidance serves the dual purpose of communicating uncertainty and validating management's decision to hold the distribution, providing time for LINN to explore monetization of its unconventional Permian assets.

Alternatively, this could be part of a longer-term structural trend. LINN's large production base may just now need substantial capital to offset decline. In fact, Barron's cites capex increases as the specific cause for JPMorgan's downgrade. It's a factor that investors should watch in the future.

Waffle Tacos with Bacon, anyone ?

Yum! Brands' Taco Bell rolled out its much-anticipated breakfast menu this week. It's an interesting move and points out that doing breakfast right can be quite lucrative for fast-food restaurants. Just ask McDonald's , where the morning menu accounts for 15% to 20% of total revenue. Mickey D's is so successful that Yum! Brands targeted it by using real people named Ronald McDonald to tout Taco Bell's breakfast.

How well did the Bell do with its new menu? Motley Fool managing editor Eric Bleeker has the answer in this video -- and says competing restaurants such as Chipotle Mexican Grill can learn a lot from Taco Bell's efforts.

Russian troops are massing near the Ukrainian border a week after the Eurasian power annexed the Crimean Peninsula. Despite recent overtures from Vladimir Putin, the posturing raises concerns that Russia has the remainder of Ukraine in its sights -- or, at least, the eastern portions of the country.

Although the geopolitical implications appear to be uniformly negative -- if you live in the West, that is -- the potential impact on world equity markets of a broader incursion is less certain. In the middle of 2008, for instance, Russia invaded neighboring Georgia following a similar set of facts, and, looking back, the effect on the S&P 500 is virtually imperceptible (particularly when you consider the Lehman Brothers failed a month later).

To be clear, this isn't to say that there won't be any economic consequences of such a decision. In the first place, Ukraine straddles the wide expanse between Europe and Russia. As such, it's a vital thoroughfare for natural gas, over which roughly a third of Europe's energy needs flow.

Additionally, Ukraine has a rich and developed agricultural base. In Soviet times, according to the CIA World Factbook, it produced a quarter of the nation's agricultural output. And today, according to geopolitical blog registan, Russia and the European Union together purchase almost 40% of Ukraine's agricultural exports.

On top of this, there are multiple American companies that stand to both gain and lose from an escalation. On the potential losing side are American oil and natural companies with interests in the region and relationships with the Russian government.

ExxonMobil comes to mind. As I discussed last weekend, in 2011, the company entered into a $500 billion partnership with Roseneft, an integrated oil company owned by the Russian government, to drill for oil in the Arctic. Additionally, Exxon had been exploring a deal with Ukraine's former government to tap into natural gas reserves in the Black Sea.

By contrast, companies in the defense industry could prosper from an escalation of tensions between the West and Russia. Take Lockheed Martin and Boeing, both of which rely to a large extent on defense sales to fuel their bottom lines. Though, as my colleague John Reeves has pointed out, even the impact on these companies is slightly more nuanced, as they too have public and private customers in the region.

The net result is that we simply don't know what will happen to global stocks if Russia were in fact to invade the remainder of Ukraine. It's for this reason, in turn, that investors would do themselves a favor by not worrying about issues like these and focusing their attention instead on identifying great companies that will be around for years, with or without an ostensibly independent Ukraine.

What do you call a company that dominates one industry that is slowly declining, while the industry that offers the most hope represents less than 10% of its business? Intel .

Not that many years ago, Intel was one of the most loved technology stocks. The company spent billions more on research than its closest competitor produced in sales, and Intel was inside everything. Things have changed for the chip giant, but ironically, Intel's future could come from software, of all things.

Left behind by mobile
It's no secret that Intel has been largely left behind by the mobile revolution. If you need proof, consider that the Intel division that includes chips for tablets and smartphones generates just 8% of the company's revenue -- and this percentage is actually down from 9% two years ago.

Some of the biggest names in mobile aren't chip-related at all. Google has a commanding presence based on the Android operating system. Apple sells more than 50 million iPhones and more than 25 million iPads in a quarter, and most people call it a "disappointment."

Even Intel's old bedmate, Microsoft , seems to have finally found the key to mobile growth. The company's Surface business more than doubled last quarter, and Windows Phone is on track to take market share over the next few years.

So how does Intel get back in the game? In the most unlikely way of all: a partnership with Samsung. To be more accurate, through Intel's membership in the Tizen Association.

A balancing act
Tizen was essentially born from a frustration with Google's Android dominance. Tizen's white paper says it best: "Tizen represents a clear opportunity to bring balance back to the mobile industry."

Some might believe that this refers to Apple, but that would be inaccurate. Though Apple sells millions of iPhones, the iOS system only held 12% of the global smartphone market at the end of 2013. On the other hand, Android carried a nearly 82% global market share.

The fact that Samsung shipped more than 32% of all global smartphones at the end of last year is hardly surprising. The success of Samsung has largely come on the back of Android. However, Samsung apparently isn't satisfied with the status quo. From a desire to break free of Google's influence, and a desperate attempt by Intel to gain relevance, Tizen was born.

The fastest-growing mobile software isn't Tizen, Android, or iOS
A few years ago, Windows Phone took a tiny percentage of shipments, and the real battle was between Android and iOS. According to IDC Research, that relationship has changed. Windows Phone is projected to move from 3.6% market share at the end of 2013 to about 7% by 2018.

Android and iOS are expected to grow by 11% and 10% annually through 2018, compared to a nearly 30% annual growth rate from Windows Phone. This should be great news for Intel, as the company has long counted on Microsoft for its dominance in the PC industry. However, most Windows Phone models still run on some version of the ARM architecture, which leaves Intel out in the cold.

Why Tizen?
As the two primary backers of Tizen, Samsung and Intel have very specific reasons to make this software successful.

• First, out of necessity. Android dominates smartphones, and with the release of Android Wear for wearable devices, this dominance looks to continue as the mobile device landscape expands.
• Second, Tizen software supports a program called Application Compatibility Layer, which allows Tizen devices to run Android apps with 100% compatibility and at native speeds. Having the ability to run hundreds of thousands of apps out of the gate is critical in mobile.
• Third, Intel desperately needs Tizen to succeed. The company still gets more than 60% of revenue from PCs, and mobile devices are cannibalizing this business. As the only pure chip partner on the Tizen board and one of the two main forces behind the OS, you better believe that if Tizen becomes a new mobile force, Intel will be inside.

Samsung has already brought Tizen to the Samsung Galaxy Gear 2 and a few other devices. Now it's time for the OS to make a grand entrance. Intel is expected to announce its next generation of chips in the second half of 2014. Could these new chips power a lineup of Tizen smartphones? If Samsung and Intel have anything to say about it, the answer is likely yes.

Facebook recently stunned the world by buying Oculus VR, the maker of the virtual reality headset Oculus Rift, for $2 billion. Oculus Rift started out on Kickstarter, where it gained popularity as a niche gaming device frequently praised for its immersive tech, but occasionally mocked for its appearance.

Facebook's purchase of Oculus VR initially made little sense compared to the $1 billion it paid for Instagram and its $19 billion acquisition of WhatsApp. Purchasing Instagram added a parallel photo sharing social network to its own, and it gained over 450 million new mobile users by acquiring WhatsApp. Buying a VR headset company for $2 billion, on the other hand, seemed reckless and impulsive to many analysts and investors.

The Oculus Rift. Source: Wikipedia.

Yet there's an ambitious side to the acquisition many investors are ignoring -- the fact that the $300 headset can be used as a VR telepresence device. Speaking about the Oculus Rift, CEO Mark Zuckerberg stated: "Imagine enjoying a courtside seat at a game, studying in a classroom of students and teachers all over the world, or consulting with a doctor face-to-face -- just by putting on goggles in your home."

Therefore, Facebook acquired Oculus as a virtual extension of its social network of 1.3 billion users. Of the three examples of virtual telepresence that Zuckerberg mentioned, telehealth -- the practice of remotely visiting a doctor -- is certainly the most fascinating. It's also a high-growth market -- research firm IHS predicts that the U.S. telehealth market will grow from $240 million in 2013 to $1.9 billion by 2018.

What Facebook has learned from Google and Microsoft
The telehealth market is ripe for disruption since the current solutions are still relatively new.

Last November, Google evolved its Google Answers online knowledge marketplace into Google Helpouts, a platform which allows Google-vetted experts to answer questions about a wide variety of topics. The site integrates into Google's social network, Google+, and payments are made via Google Wallet. The experts can charge clients per session, per minute, or both, and Google takes a 20% cut of the fee. The sessions can be conducted via text, voice, or video.

To encourage the use of Google Helpouts as a health care platform, Google waives the 20% fee for all health care related questions. Merging a social network and a telepresence platform with health care professionals means EHRs (electronic health records) and cloud-connected medical devices could eventually be synchronized to Helpouts as well.

Meanwhile, Microsoft has tested the Kinect as a telehealth device through Avanade, a joint venture with Accenture . Since the Kinect tracks physical movements via a camera, it can be used to conduct remote physical examinations. A physician can give instructions to the patient via Skype, and the patient's health data can be accessed and updated over the cloud via Microsoft's HealthVault EHR program.

How the Oculus Rift could disrupt the telehealth market
That's where Facebook comes in. As the largest social network in the world, Facebook already has the necessary connections to build a massive telehealth network.

The Oculus Rift has a stereoscopic 3D display within its goggles and is controlled via head movements and external controllers. A treadmill, known as the Virtuix Omni, allows Oculus users to walk around in the virtual game environment.

The Virtuix Omni treadmill being used with the Oculus Rift. Source: Wikimedia Commons.

Whereas that setup would be fun for games, it would also be an ideal one for telehealth checkups. Just like Google Helpouts and Microsoft's Skype, the Rift could be Facebook's virtual platform for remotely visiting the doctor. Facebook also has a new payment system similar to Google Wallet, which can be used to pay medical bills. And just like the Kinect, Virtuix's treadmill could track a patient's movements, which could be sent over the Internet to the physician.

Albert "Skip" Rizzo, a clinical psychologist and associate director for medical virtual reality at the University of Southern California's Institute of Creative Technologies, has researched the ability of the Rift to treat soldiers with post-traumatic stress disorder (PTSD).

Virtual Iraq, a simulator used to treat PTSD with the Oculus Rift. Source: Company website.

Dr. Rizzo immerses patients in a virtual reality program known as Virtual Iraq, which recreates a combat environment through weather conditions, ambient sound, and insurgent attacks -- all of which are carefully monitored and controlled by the clinician. Virtual Iraq has since been adopted by several military medical centers and 55 veterans affairs clinics across the United States.

The success of Virtual Iraq suggests that the Rift could also be used to help treat other issues. If similar software were connected to a telehealth platform, those sessions could be conducted at home.

Potential challenges for the Rift as a telehealth device
Although all of those applications sound incredible, Facebook has a lot of obstacles to overcome if it intends on using the Rift as a VR telehealth device integrated into its social network.

The first is the issue of HIPAA (Health Insurance Portability and Accountability Act) compliance. HIPAA laws were only intended to regulate providers, insurers, and health care clearinghouses that accept payments electronically. They weren't intended to regulate video chat sessions -- therefore, as the telehealth market grows, regulations could increase.

The second is the fact that Facebook is a casual social networking platform not generally associated with health-related issues. If Facebook intends to use its social networking muscle to grow its telehealth presence, it will have to set up some kind of new "Facebook Health" platform to ensure that confidential health data and selfies aren't flowing into the same News Feed.

The Foolish takeaway
It's certainly hard to imagine Facebook suddenly becoming a telehealth platform, or the Oculus Rift becoming a medical device. Yet Mark Zuckerberg specifically mentioned virtual doctor's visits, and Facebook now owns all the necessary pieces to take a giant leap forward in telehealth. It's now just a matter of whether -- and how -- he intends to put all the pieces together.

There are two investments you can make that will do more good for your financial well-being than any stock, bond, mutual fund, precious metal, or real estate.

In fact, you shouldn't invest a dime in any of these things until these two areas of your finances are completely taken care of. I'm talking about making sure that your credit cards are under control and that you have more than adequate health insurance for you and your family. If not, your other investments could be losers before you even buy them.

Credit cards can wipe out your gains and then some
While it's common knowledge high credit card balances can mess up your credit score and make it tougher to borrow money in the future, many people don't think of credit cards in one very obvious way: as the opposite of a solid investment.

Think of it this way. The average annual return of the S&P 500 over the past century is right around 10%. Even if you are a very successful investor, the best consistent returns you could reasonably hope for would be around 15%. On a $10,000 investment, returns like this translate to $1,500 per year.

On the other hand, credit cards can charge much higher interest rates. Standard interest rates can be as high as 29.99%, and this can climb even higher if you miss a payment. However, let's assume you have a more "reasonable" interest rate like 24%.

If you are carrying a $10,000 credit card balance, it is costing $2,400 annually in interest alone. So, even if you make 15% returns on your investments, you are actually losing $900 per year by not using your money to simply pay off your high-interest debt. It almost always makes sense to pay off credit card debt before even thinking about investing.

Consumers with the highest credit scores carry a balance on their credit card that represents around 7% of their available credit, on average. Since we all know a great credit score can save you money in the long run, shoot for that amount as a target balance that is acceptable to carry. Just as important as the balance itself, shop around for the best interest rate available. In addition to introductory "teaser" rates, permanent rates of 14% or so are not impossible to find.

Invest in your own good health
Would you ever put your entire portfolio at risk by buying something risky, say a small biotech company, or even a bunch of risky options? Of course not. However, if you don't have decent health insurance, that is exactly what you're doing.

If something goes wrong with your health, it could completely wipe out your savings and investments, and even leave you in severe debt. Consider the average appendectomy in the U.S. costs almost $14,000, the average knee-replacement costs more than $25,000, and a heart attack can cost well into the six-figure range. Plus, while you're recuperating, the average hospital stay costs almost $4,300 per day!

Starting to get the point? Health insurance may seem pricy, and it is, but it is nothing compared to the costs that you'll incur if you have health issues. Think of health insurance as an investment, not a burden. Better yet, think of it as insurance for your financial health as well as your physical health.

Then what?
Once your high-interest debt is under control and your health is covered, then and only then should you start thinking about putting money in the market. Once you are at this point in your financial life, solid high dividend companies are a great place to start.

With the SPDR S&P Biotech Index up 38% over the trailing-12-month period, it's evident that investment dollars are willingly flowing into the biotech sector. Keeping that in mind, let's have a look at some of the rulings, studies, and companies that made waves in the sector last week.

A two-sided coin
In terms of regulatory actions it was a mixed week with one company receiving a long-awaited approval from the Food and Drug Administration while another got buried under a unanimous vote against recommending approval by the FDA's panel.

The lucky victor this week is Biogen Idec which, on Friday, announced that the FDA had approved its long-acting hemophilia B injectable drug Alprolix. Hemophilia B is a rare inherited disorder affecting roughly 4,000 people in the U.S. that doesn't allow their blood to clot properly and can lead to excessive bleeding and bruising. Aprolix works as a prophylactic infusion given once weekly, or every 10-14 days, to stay ahead of possible bleed complications. In its B-LONG study, for instance, the overall median annualized bleeding rates was 2.95 for the weekly prophylaxis arm compared to 17.69 for the on-demand treatment group. Alprolix was also approved in Canada last week. With peak sales potential of around $400 million in the U.S. -- assuming a six-digit annual therapy price tag -- Biogen continues to impress with its pipeline innovation.

The other side of the coin featured Novartis having its breakthrough therapy designated drug serelaxin absolutely buried by the FDA's advisory panel. According to a Tuesday release by the FDA's Cardiovascular and Renal Drugs Advisory Committee, it voted 11-0 against recommending Novartis' acute heart failure therapy serelaxin for approval. While finding no fault with its safety or tolerability, the panel did find holes in its RELAX-AHF trial which led to it stating that "there is insufficient evidence to support the proposed indication." This was a study with only a single independent trial where two are usually needed to get a drug approved. Furthermore, per Forbes, an FDA reviewer questioned the claim that serelaxin reduced mortality rate at day 180 and suggested a follow-up study be conducted. All told, with the EU sending Novartis away empty-handed earlier this year with regard to serelaxin, it now looks as if its ongoing lengthier trial testing serelaxin's safety and efficacy that's scheduled to be completed in 2016 will be necessary if it's to ever be approved.

Mid-stage madness
It was also a busy week for phase 2 pipeline updates with two positive and one mixed clinical study release.

Late in the week Idera Pharmaceuticals reported positive top-line data from its phase 2 study involving IMO-8400 as a treatment for moderate-to-severe plaque psoriasis. In its 32-patient study Idera noted that IMO-8400 met its primary endpoint of safety and tolerability, and its secondary endpoint of efficacy by delivering a lesion improvement of 50% or greater as measured by the Psoarisis Area and Severity Index in nine of 20 patients compared to just one in seven for the control arm. What's more intriguing is that Idera is a clinical-stage DNA and RNA drug developer, so this success could help validate the effectiveness of RNA-based therapeutics. It's probably best to wait until we have the full data set before getting too excited, but this was a good way for shareholders to end the week.

Pfizer also got in on the action this week by reporting positive results in its phase 2b study involving its PCSK9 inhibitor bococizumab (formerly RN316) for the treatment of hyperlipidemia. According to its Thursday press release, bococizumab injected once or twice monthly led to a placebo-adjusted mean change in baseline in LDL-cholesterol reduction at week 12 of minus 53.4 mg/dL for the 150 mg twice monthly dose and minus 44.9 mg/dL for the once monthly 300 mg dose. PCSK9 inhibitors represent a truly unique pathway to treating high cholesterol, and Pfizer's bococizumab has certainly impressed in trials thus far. If I were you, I would strongly suggest keeping a close eye on all PCSK9 inhibitors as they could represent the future of cardiovascular disease prevention when statins either aren't enough, when they cause serious adverse side effects, or in patients who are genetically predisposed to extremely high-cholesterol levels.

Finally, clinical-stage biopharmaceutical company Insmed fell 7% on the week after reporting mixed phase 2 data on Wednesday for Arikayce, its inhaled therapy for treatment-resistant nontuberculous mycobacterial lung infections. Insmed's press release notes that Arikayce failed to meet its primary endpoint of a change in mycobacterial density on a seven-point scale from baseline to the end of the randomized portion of the trial (which was week 12). It did, however, meet a key secondary endpoint of culture conversion with 11 of 44 patients demonstrating negative cultures after 12 weeks compared to just three of 45 patients in the control arm. There were also more adverse events noted in the Arikayce intent-to-treat group than the control arm. Ultimately, Arikayce's important secondary endpoint data should allow it to continue onto phase 3 studies, but it's not a slam dunk by any means. Although the serious adverse events profile was similar to the control arm, Arikayce is really going to have to demonstrate a statistical benefit to outweigh any efficacy and safety concerns the FDA may have if it ever hopes to be approved.

Photo: UTI Pictures

There are fewer than 20 years' difference between the youngest Baby Boomers and the oldest Millennials, but when it comes to money, the latter generation is more like their grandparents than their parents.

Economic disasters leave a lasting impression
This fact isn't surprising when you consider both groups lived through a massive economic downturn: for gramps and grandma, it was the Great Depression, while for their grandkids, the financial crisis made an indelible mark upon their psyches.

Post-World War II Boomers, perhaps spurred by their own parents to take advantage of a flourishing economic environment, seem to have a financial viewpoint all their own.

More conservative, less trusting
Like the so-called Silent Generation - aged 69 to 86 - Millennials typically admit to having a more conservative investing outlook than Boomers. Unlike other generational subsets, they tend to keep the majority of whatever wealth they have in cash: 52% of Millennials do so, compared with non-Millennials, who hold only 23% of their assets in such a liquid state.

Perhaps reflective of their mistrust of the stock market following the 2008 crisis, only 28% of Millennials' investments are in stocks, versus 46% for other age groups combined. In fact, 52% of Millennials polled by Wells Fargo recently expressed mistrust of the stock market as a good place to invest their money for retirement.

Most trusted advisors are family
Still, these differences between the two generations don't stop Millennials from listening to their parents when it comes to financial advice. Trust is huge with the younger crowd - only 19% in a recent Pew Research survey agreed most people can be trusted, compared to 40% of Boomers and 37% of the Silent Generation. When it comes to investing, Millennials, for the most part, think their parents got it right.

When asked by Bank of America's Merrill Lynch about their parents' style of investing, 65% or more of Millennials said that they thought mom and dad did a good job - and that their techniques should work just as well today as they did in the past. Similarly, 60% of younger investors told Wells Fargo that their primary source of investment guidance is family, while only 17% of Boomers said the same.

Other than family, experienced advisors get the nod
The trust issue has made Millennials much more cautious than their parents when it comes to investing, and they are not apt to invest blindly. Perhaps the biggest lesson learned from the Great Recession was that asking questions  is extremely important. This characteristic truly sets them apart from their parents: Whereas Boomers tended to invest without probing too deeply, their kids are freely admitting their ignorance of such matters, and performing due diligence.

While more than half of Boomers polled use professional investment advisors, only 38% of Millennials do so. While reflective of their overall mistrust of the financial system, those that do invest much prefer seasoned professionals.

Obviously, severe economic downturns tend to influence how people view money. Despite their different outlook from their parents and their own children, Boomers didn't escape the financial crisis unscathed, either. A recent Gallup poll shows that, despite being heavy users of banking products and services, only 12% of Boomers have a lot of trust in banks - less than any other generation surveyed.

Will Millennials' outlook change as they age? Time will tell, of course, but it looks like the younger generation will need a lot more persuading if they are to act upon the investing methods and advice of their parents.

Selling an investment typically has tax consequences. To figure out whether you need to report a gain -- or can claim a loss -- after you sell, you must start with the cost basis for that investment. For stocks or bonds, the cost basis is generally the price you paid to purchase the securities plus any other costs such as the commission or other fees you may have paid to complete the transaction. You usually get this information on the confirmation statement that the broker sends after you have purchased a security.

The Internal Revenue Service expects an investor who has sold securities to report his or her cost basis accurately. In 2008, Congress passed a law that requires brokerage firms, mutual funds, and others to report cost-basis information to both investors and the IRS on Form 1099-B when you sell:

• Shares of stock you acquired on or after Jan. 1, 2011;
• Shares of stock in a regulated investment company or dividend reinvestment plan you acquired on or after Jan. 1, 2012.
• Options, fixed-income securities, and other securities as determined by the IRS you acquired on or after Jan. 1, 2014.

The IRS provides more information about how this process works in its Instructions to Form 1099-B. If you sold securities, you should receive a copy of the 1099 filing by Feb. 15. Review the cost-basis information on your filing as soon as you get it. Check that the amount of cost basis your broker reports to the IRS matches your own records -- and if the amounts differ, contact the broker immediately to discuss any errors you find.

Top tip: Keep good records
Keeping good records of your securities transactions is important to accurate cost-basis reporting:

• Hold on to trade confirmations that show how much you paid for specific shares, or keep track of that information with your own records at home.
• Keep track of stock dividends or non-dividend distributions you receive, because they may affect the cost basis of your shares.

If you purchased stock of the same company at different times and prices, and can adequately identify which shares you sold, their basis is the cost for those specific shares. If you can't determine exactly which shares you are selling, tax rules will require you to calculate a gain or loss as if you're selling the earliest acquired shares. If you received the stock as a gift or through an inheritance, you may have to find the fair market value when it was given to you or the previous owner's adjusted basis.

The IRS expects you to keep and maintain records that identify the cost basis of your securities. If you don't have adequate records, you may have to rely on the cost basis that your broker reports -- or you may be required to treat the cost basis as zero. For this reason, you may want to check whether you have cost basis information for any securities you want to sell before you do so. IRS Publication 550: Investment Income and Expenses offers detailed guidance on how to calculate cost basis under different circumstances.

For more information about investing, go to www.finra.org.

FINRA is the largest independent regulator for all securities firms doing business in the United States. Our chief role is to protect investors by maintaining the fairness of the U.S. capital markets. FINRA does not endorse, sponsor, or guarantee, nor is it sponsored by, any advertisers on this site, and any dealings with those advertisers are solely between you and the advertisers.

Choosing a college or university is hard work, and takes a lot of time and research for those who are serious about making the right choice. Of the myriad factors usually considered, however, the intellectual prowess of a school's faculty might not be something degree-seekers put on their priority list.

It's worth investigating, after all, since the caliber of the instructor surely has some bearing on student performance. Here are the top five institutions of higher learning, each ranked by the perceived intellect of its faculty, courtesy of the website Niche - which uses a variety of sources  for its ratings, including polls of students and alumni.

Stanford University, California
Currently No. 5 on U.S. News & World Report's ranking of national universities, Stanford has some extremely well-regarded programs, notably its Law School and School of Engineering, and is one of the top schools for computer science, as well. At more than $43,000 per year, the university is very pricey; those surveyed by Niche gave the school an A+ in academics, computers, and campus strictness - which may indicate a level of discipline that is conducive to learning.

University of Chicago
Tied with Stanford for position No. 5 by U.S. News is the University of Chicago, where the personal attention given to students undoubtedly has contributed to its strong academic rating. Over 77% of the University's classes have fewer than 20 students, and another 17% have between 20 and 49. Tuition and fees top those of Stanford, though, at more than $46,000 per year.

College of Wooster, Ohio
Of the five schools on this list, College of Wooster is probably the least well known. This college is, not surprisingly, quite a bit smaller than either Stanford or the University of Chicago, though it rates only an A- in academics  by Niche contributors. Still, students note that faculty treat them less formally, and despite the fact that the student to faculty ratio of 12 to 1 is double that of the two universities, students like the easy camaraderie and community spirit that permeates the college.

College of William and Mary, Virginia
A venerable institution founded in 1693, the College of William and Mary is a public school, which makes its price tag a bit more platable: Out-of-state students pay just under $38,000 in tuition and fees annually, while those who reside in-state face a much smaller bill, just over $15,000. Students feel affection and loyalty toward the college, professors, and each other, and most say they would choose William and Mary again, if they had the opportunity.

Smith College, Massachusetts
This private college in western Massachusetts has its own brand of cachet, perhaps due to its continuing status of being a women-only institution - though its graduate programs are available to men, as well. Smith's yearly tuition is comparable to Stanford's at approximately $43,000.

The overall perception of Smith by its students is that its appeal is somewhat limited, but that it offers a stellar academic experience. Especially attractive is the school's willingness to allow undergraduates a taste of graduate work, such as independent study and research with the college's faculty.

While there are many factors involved in choosing where to pursue your college degree, knowing that you will be taking instruction from the cream of the crop is no small thing, and is definitely worthy of your consideration.

Faced with persistently low natural gas prices over the past few years, Chesapeake Energy , the nation's second-largest natural gas producer, has made impressive strides in boosting its production of oil and natural gas liquids, which are more profitable than dry gas.

But the company recently said that its crude oil production growth will slow dramatically this year -- an announcement that clearly disappointed investors, judging by the immediate negative impact on Chesapeake's share price. But is the guidance really that big of a deal? 

Photo Credit: Chesapeake Energy.

Chesapeake's oil production growth to slow
Over the past few years, Chesapeake has made commendable progress in becoming a more liquids-focused producer, ramping up activity in liquids-rich plays such as the Eagle Ford and Utica shale and curtailing drilling in less economical gas plays such as the Haynesville and Barnett shales. Largely as a result of this shift, the company delivered 32% year-over-year growth in oil production in 2013.

That pace of growth puts it squarely among some of the fastest-growing midmajor liquids producers in the country, including EOG Resources , Apache , and Anadarko . EOG's enviable acreage position in the Eagle Ford helped the company deliver 40% year-over-year growth in oil production last year. Similarly, Apache's operations in the Permian Basin helped boost its North American liquids production by 34%, while Anadarko's stronghold in Colorado's Wattenberg shale and the Eagle Ford fueled 25% year-over-year growth in its domestic oil production.

But unlike these companies, Chesapeake's impressive streak of oil production growth won't continue into 2014. During its fourth-quarter earnings conference call, Chesapeake management forecast a sharp decline in the pace of its crude oil production growth this year, down to a paltry 1%-5%, due largely to the impact of 2013 asset sales.

Context is key
Though oil is Chesapeake's highest-margin product, the sharp expected decline in oil production growth must be viewed in the proper context. First, Chesapeake has unloaded more than $11 billion in assets over the past two years and plans to sell an additional $1 billion this year. Though the company characterized these assets as "non-core," many of them were producing properties in liquids-rich plays such as the Permian Basin  and the Mississippi Lime. Therefore, their loss will obviously take a toll on oil production.

Second, Chesapeake still expects strong year-over-year growth in natural gas liquids, or NGL, production of roughly 40%-45%, driven largely by Ohio's Utica shale. While NGLs aren't as profitable as crude oil, the company still earns a competitive return from their production. In the fourth quarter, Chesapeake received $31.76 per barrel of NGLs, compared to average unit costs of $19.35 per barrel.

Finally, Chesapeake's reduced oil production growth outlook has to be viewed against the backdrop of sharply reduced spending and improving capital efficiency. The company has slashed its capital budget from $13.4 billion in 2012 to just $6.7 billion last year and expects spending to decline by an additional 20% this year to an estimated $5.4 billion.

Yet despite its plans to cut $0.7 billion from its drilling budget and operate 10 fewer rigs this year, Chesapeake still expects to deliver 2014 company-wide production growth of 2%-4% on an absolute basis and 8%-10% adjusted for asset sales, highlighting marked improvements in capital efficiency. Capital efficiency should improve further this year, as the company targets 97% multiwell pad drilling utilization in the Eagle Ford -- its key driver of oil production growth -- which should shave $0.5 million off average well costs, reduce spud-to-spud cycle times to just 14 days, and boost returns.

The takeaway
While sharply lower oil production growth will certainly weigh on Chesapeake's earnings and cash flow this year, investors should recognize that the deteriorating outlook comes amid sharply reduced spending and significantly improved capital efficiency. While I expect Chesapeake shares to remain pressured by oil production concerns in the near term, I believe the company's longer-term outlook remains promising thanks to an improving balance sheet, reduced funding and liquidity concerns, and tremendous upside optionality to a rebound in natural gas prices.