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Wii U and 3DS Lag as Nintendo Posts $456 Million Operating Loss

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Source: Nintendo.com

Nintendo is in desperate need of change. The company's recently released fiscal report features an array of worrying indicators and highlights a need for reinvention. The Wii U console has been an unprecedented failure and has no real shot at a meaningful recovery. The 3DS has performed respectably, given that much of the casual gaming market has migrated to mobile, but the system is losing steam. President Satoru Iwata and company will attempt to turn things around through the introduction of new avenues and partnerships, but for now, things aren't looking so good.


With its latest fiscal report, Nintendo is posting its third consecutive yearly loss, unheard of in its history as a game maker. What's more, the $456 million operating loss is arriving instead of the estimated $1 billion yearly operating profit that had been promised by President Iwata. The company revealed a net loss of $228 million. Cash and equivalent liquid assets dropped from $4.7 billion to $3.4 billion. That said, the most worrying parts of the report aren't the bottom line figures.

Did President Iwata make good on his committment?
Nintendo's loss and depleted cash assets were easy enough to see coming. The company invested substantially in research, development, and marketing in the last year, and also initiated a $1.1 billion stock buyback around the time of its last quarterly report. These costly moves probably weren't planned around the time that Iwata implied he would resign if the company failed to meet his target of $1 billion in operating profit. The last fiscal year already saw Nintendo make major adjustments for an increasingly inhospitable future. The question is whether it can make the right moves to get back into fighting shape.

Wii U continues to drag Nintendo down
Nintendo's push into still-mysterious "quality of life" ventures arrives out of necessity. The company's initial guidance for the last fiscal year projected its Wii U console selling 9 million units. After months of disastrous sales, the company finally revised its projection to 2.8 million consoles sold in the year. The machine failed to meet even that meager mark, selling only 2.72 million units for the fiscal year. The extent to which the system has been marked down and propped up with software bundles means that Nintendo is still losing money on each net sale, and the situation isn't likely to get much better. As of March 31, Nintendo had shipped just 6.17 million Wii Us. As of April 6, Sony  had sold over 7 million units of its red-hot PlayStation 4 console, despite launching it a year later than Nintendo's platform. 

Source: Nintendo.com

Crushing the notion that Nintendo believes a Wii U comeback is possible, the company expects to sell only 3.6 million units of the console in the current fiscal year. This low figure comes despite the impending releases of Mario Kart 8 and a new Smash Bros. Nintendo expects to sell only 20 million units of Wii U software this year. For comparison, Mario Kart Wii sold more than 38 million copies on last generation's highly successful Nintendo console. 

The portable game is changing
Making matters even worse for Nintendo, sales of its 3DS handheld device have been falling off faster than the company predicted. The handheld sold 12.24 million units in the last fiscal year, failing to meet the revised target of 13.5 million units, which was down from the initial guidance of 18 million units. Given the rate at which 3DS hardware sales are falling off, the company's target of 12 million units sold for the current fiscal year seems high. Furthermore, the company expects 3DS software sales to remain consistent, despite the fact that this year's lineup pales in comparison to what was debuted last year. Nintendo's projections give a hint as to what its strategy will be for the remainder of the year.

Look for a new 3DS this year
Nintendo's projection for 3DS hardware sales suggests that the system will see a new revision sometime this year. While the company has both given and adhered to unreasonable targets in the past, the most recent batch appears mostly grounded in reality. As Sony and Microsoft battle it out on the home console front, Nintendo must inject momentum into its handheld business and ride out the Wii U disaster. Expect a new version of the 3DS to be announced around the E3 conference in June.

Source: Nintendo.com

Nintendo's last life?
The disappointing state of Nintendo's gaming business endows its "quality of life" project with extreme importance. The company has lost relevance on the home console front, and dedicated handheld gaming is being eaten by mobile devices. Without the creation of a successful new revenue stream, Nintendo faces a bleak future.

Worse than the Wii U: Your credit card may soon be completely worthless
The plastic in your wallet is about to go the way of the typewriter, the VCR, and the 8-track tape player. When it does, a handful of investors could stand to get very rich. You can join them -- but you must act now. An eye-opening new presentation reveals the full story on why your credit card is about to be worthless -- and highlights one little-known company sitting at the epicenter of an earth-shaking movement that could hand early investors the kind of profits we haven't seen since the dot-com days. Click here to watch this stunning video.

The article Wii U and 3DS Lag as Nintendo Posts $456 Million Operating Loss originally appeared on Fool.com.

Keith Noonan has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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

 

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This Invention Will Change Way You Pay for Everything

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The biggest change to your wallet is set to come from a company you've never heard of.

The payment industry
Much attention has been focused on the coming revolution to the way people pay for goods and services. Whether it be the rumors of the journey of Apple , the efforts already exhibited by Google , or the remarkable success of the PayPal unit of eBay , many understand change is set to come.

The news wires have been abuzz about the prospect of Apple jumping into the payment industry following the company recently announcing it now has 800 million active iTunes account users, almost all of whom have credit cards. 


This is in addition to the remarks from Tim Cook, Apple's CEO, during its first earnings call this year, "the mobile payments area in general is one that we've been intrigued with, and that was one of the thoughts behind Touch ID... I don't have anything specific to announce today, but... it's a big opportunity on the platform."  

Google itself has already launched Google Wallet, which allows for its users to pay both friends and stores. And while its vice president of product management and payments said "making money comes later," for Google in its efforts in the payments industry, it is an even clearer picture of a technology titan preparing to enter into payments.

And all of this is to say nothing of eBay's entrenched PayPal division, which processed a staggering $27 billion worth of mobile transactions in 2013 alone.

The new entrant
But the thing about the payments industry is that it isn't just consumers who dictate how things are paid for. In addition, it's the stores -- known as merchants -- who accept the payments through their terminals. As a result, those stores are the ones who would have to pay for new technology to accept mobile payments, and many are resistant to the idea.

Yet one start-up, Loop, has a patented technology that allows individuals to pay on the existing infrastructure without ever pulling out their wallets. It saves stores and consumers both time and money.

In the video below, Motley Fool contributor Patrick Morris chats with Loop co-founder and CEO Will Graylin at the TRANSACT14 conference to talk about his technology, and how it's poised to change the payment industry.

Your credit card may soon be completely worthless
Apple, Google, and eBay understand the plastic in your wallet is about to go the way of the typewriter, the VCR, and the 8-track tape player. But when it does, a handful of investors could stand to get very rich. You can join them -- but you must act now. An eye-opening new presentation reveals the full story on why your credit card is about to be worthless -- and highlights one little-known company sitting at the epicenter of an earth-shaking movement that could hand early investors the kind of profits we haven't seen since the dot-com days. Click here to watch this stunning video.

The article This Invention Will Change Way You Pay for Everything originally appeared on Fool.com.

Patrick Morris owns shares of Apple. The Motley Fool recommends Apple, eBay, and Google (C shares). The Motley Fool owns shares of Apple, eBay, and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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

 

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The New Way to Get Rich Slowly

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The face of getting rich slowly is changing right before our eyes, even as the status quo is failing. Before this year's State of the Union address, the President's media supporters, fretting about his low approval rating, fumed"...never during his time in office has the state of the economy been better — yet rarely has he gotten such low marks from the public for his handling of it."

The GDP is indeed at an all-time high. But, as someone said when I updated a group on the economy recently, "Did I just blink and miss the recovery?" Sound familiar? A paradox, indeed.

The main reason for the paradox is unemployment. The reporter above was correct when she said it's never been better during Mr. Obama's time in office ... but she unwittingly nailed the problem: The incumbent Chief Executive has been in office quite a while already and never in the past century has it taken this long for employment to recover, prompting experts to dub this "the jobless recovery." A recent Gallup poll shows unemployment is America's number one problem.


Juxtapose the lack of well-paying jobs with record numbers of $100 million houses for sale and price records for art and collectibles and the rising tide of rhetoric around income inequality seems inevitable.

Talk is cheap, though, so I called up a few folks at the Federal Reserve to find out: Is there hard data to verify income inequality?

There is - and it's much, much worse than you or I might have even thought.

The Inequality Gap
If you're over 30, you might remember the power-duo Lennon-McCartney. Welcome to the new duo articulating life today: Piketty-Saez. Thomas Piketty heads the Paris School of Economics and Emmanuel Saez, the Center for Equitable Growth at U.C. Berkeley. In 2003, they published a landmark study on inequality that everyone has been using ever since.

recent update to the study shows that a stunning 95 percent of the entire gain from the current recovery has gone to just the top 1 percent of the nation's income-earners:

Interestingly, the 1 percent are not impervious to downturns. The table above shows they get hammered a lot harder by downturns than the plebs.

But the data also confirms: 99 percent of the nation is scrapping for only 5 percent of the total gain of this recovery, while the top 1 percent are snagging 95 percent of the entire nation's wealth increase. This has never happened before.

Is it a permanent shift or just an aberration? The Pikkety-Saez data set goes back 100 years, making it easy to spot long-term trends. To distill all the data down to a single number, I created an "index of equality" comparing inflation-adjusted incomes of the 99 percent with the 1 percent, starting in 1913. A rising line reflects more for the 99 percent, comparatively.

The chart shows that, for 70 years, the 99 percent did better, relatively speaking, than the 1 percent — in other words, income equality improved.

Then it fell off a cliff.

This is not how it was supposed to be. What changed?

Trickle down
After the 1982 recession, our government embarked on what has since been called "trickle-down economics." In essence, the thinking went that if you bless the rich, they will create opportunity (and wealth) for the rest.

Did the wealth trickle down? In a word, no. Here's a different look at the same data set. This chart compares the actual incomes (in 2012 dollars) for the two groups. To make them comparable, I indexed them based on the 1913 number.

You can see how the advent of World War II created a spurt of income growth for the 99 percent as women went to work, industrial competitors Japan and Germany were decimated, and newcomer China had not yet awakened to take away American manufacturing jobs. It was the golden age of the American industrial worker, complete with job security, the corporate ladder, and, when you're all done, a pension you can count on.

That came to a screeching halt in the '80s as trickle-down economics became the new normal for all subsequent governments. The two lines converging after 1985 indicate the 1 percenters' share of the nation's wealth increased again ... dramatically.

So what can you do about that?
Your first option is to vent your outrage over dinner or on the blogosphere. The rich, by the way, are feeling that. Tom Perkins, billionaire co-founder of the largest venture capital firm, recently caused a stir in a letter to the WSJ, complaining that the 1 percent are being vilified.

Outrage doesn't put food on the table, though. A more sensible option is to do something.

1. Embrace the new reality. The days our parents knew are gone forever. It's hard now just to find a job with decent pay. Oh, and if you thought a government job is your ticket to security, think again. This Fed chart shows government jobs have been steadily declining for the past five years with no signs that the trend will reverse. Not only are you on your own for your current needs, you won't be able to count on a pension or Social Security either.

2. Embrace the wisdom that doesn't change. Live below your means and get rid of debt.

3. Invest. The 1 percent make their living off their investments. The tax code is harsh on labor but easy on capital. As you transfer your income from labor (a job) to capital (investing), you are likely to reap those benefits. Is this easy for someone making a living from an income-stressed job now? Perhaps not. But not making investing a serious priority only ensures permanent servitude to capricious bosses.

4. Reframe your income opportunities. What new income opportunities are there? In a nutshell...

Start your own business
This may sound daunting, even depressing, but consider:

1. We've never seen a generation so well-equipped to be on their own as this one. The main reason for this is technology. You have resources at your fingertips that your parents didn't have. Sites like elance, fiverr and others provide brokerage platforms for personal services — a great starting point.

2. In human history, self-employment has always been the default: We are wired for independence. The technology of the industrial revolution took that away, but current technology is giving that independence back. In this new world, your efforts are justly rewarded by a marketplace which, while not perfect, is not as capricious as a fickle boss or an employer given to outsourcing jobs.

3. Never has it been as easy to start small while maintaining your day job. For less than $100, you can get a domain name and a year's hosting. Getting set up to receive payments is a little trickier, but still easier than finding a well-paying job. There is a lot of free advice on how to do everything from marketing to shipping your product.

The revolution is under way already
Starting your own business sounds more radical than it really is. Several readers (and writers) on this very blog are already going down this road. They're not alone. This Federal Reserve chart shows the dramatic shift from large employers to small employers, which includes start-ups. (It's interesting to note how those weathered the recession so much better too.)

Even if you don't open your doors tomorrow, start thinking what business could hold your future. Ask friends. Ask many friends. Some will be naysayers, others eternal optimists. Listen to both groups. Take cautions from the Eeyores, but don't let them stop you.

It is a new day out there. You might not become a 1 percenter, but you can get a lot closer, get many of their benefits, and enjoy the freedom and fair reward your efforts bring.

It will still be getting rich slowly because durable things rarely are created overnight; but self-employment is the new way, make no mistake about it. And while getting rich slowly this way is a tougher road than just showing up for work and collecting a paycheck, the advances in technology keep making it easier. In the end, this road would be more rewarding than getting laid off five years before you plan to retire.

This article The New Way to Get Rich Slowly originally appeared on GetRichSlowly.com.

How to get even more income during retirement
Social Security plays a key role in your financial security, but it's not the only way to boost your retirement income. In our brand-new free report, our retirement experts give their insight on a simple strategy to take advantage of a little-known IRS rule that can help ensure a more comfortable retirement for you and your family. Click here to get your copy today.

You may also enjoy these financial articles:

Giving kids money to manage

10 habits of financially successful people

The Opportunity Fund: How to be prepared for lucky breaks

The article The New Way to Get Rich Slowly originally appeared on Fool.com.

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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

 

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Apple TV vs. Amazon's FireTV vs. Google's Chromecast: Which Internet Video Solution Is Best?

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is the latest of the major tech firms to release a set-top box, joining a crowded market alongside TV and Google's Chromecast. While these devices may not be of major importance to the companies' respective bottom lines, they do serve to extend their content ecosystems into the living room.

With still relatively little uptake, it's a market that remains open for grabs. How do these three products compare?

Interface
Apple TV has a fairly standard interface, one that should be easily understood by just about anyone capable of operating a television. Like the iPhone and the iPad, Apple TV offers up a simple grid of icons, each representing a different app. Clicking on an app brings up that particular app's content.


Amazon's FireTV is similar, but with a heavy emphasis on Amazon's own content. Vertical rows offer up categories like "movies" and "TV" populated with selections from Amazon's Prime video service. Third-party apps are there, but kept in their own individual row, accessible in a similar way to the Apple TV.

Google's Chromecast, in contrast, is dramatically different, lacking its own dedicated interface. Once you've set it up and turned the TV to the proper input, you must use your smartphone or tablet to control it. For someone technically inclined, this is fairly straightforward, though occasionally annoying, and I can imagine it being quite confusing to the typical user. Rather than having a set Chromecast app, you must have each individual app (HBO Go, Hulu, etc.) installed on your smartphone or tablet. Within these apps, you can tell them to send the content to Chromecast, rather than playing on your device's screen.

Of the three, Amazon's Fire TV is the winner. Compared with the Fire TV, Apple TV is slow, with a noticeable lag between button presses. The FireTV also offers voice control, which Apple TV lacks. Amazon's device could be improved to offer a greater emphasis on third-party content, but the grid of third party apps is no different than what Apple TV is offering. Google's Chromecast comes in last for its reliance on a separate device.

Pricing
Pricing is pretty straightforward: Google's Chromecast, at $35, is the indisputable winner. Apple TV and Amazon's FireTV are tied in second place, each at $99. For that $99, both Apple and Amazon give you the device, a remote and a power cable. Google's Chromecast plugs directly into the TV's HDMI input.

App availability
In terms of pure numbers, Apple offers the most third-party apps (more than 30 in total). Google's Chromecast has about half that, and Amazon's FireTV has even less. Still, it's a bit of a toss-up between the devices, as the apps offered vary.

Amazon's FireTV, for example, is the only device capable of streaming Amazon Prime Video, the second most popular streaming video service. It's also the only option for Showtime Anytime, the Internet-based version of the premium cable network. However, it's currently lacking HBO Go, available on both Google's Chromecast and Apple TV.

Both Amazon's FireTV and Apple TV offer WatchESPN -- a service Google's Chromecast doesn't have. Apple TV has many other network video apps, including the History Channel, WatchABC and the Disney Channel, not available on the other two.

Audiophiles might prefer Google's Chromecast over the others, as it does offer up more in the way of streaming music services (Rdio, Songza, etc.). But those who have purchased a lot of music through Apple's iTunes or Amazon will likely prefer their respective devices.

Amazon's FireTV is capable of playing video games, a feat unmatched by Google's Chromecast and Apple TV. However, to really take advantage of the feature, you must purchase a separate $40 controller, and at least for the time being, there are no must-have games.

No clear winner
After testing all three devices, I can't say definitively that there's a clear winner.

Google's Chromecast is offered at an unbeatable price, but its arcane control scheme limits its appeal. Amazon's FireTV wins on the interface, but is held back by a lack of apps. Apple TV has the most content, but it's sluggish compared to the FireTV, and Amazon's increasingly impressive Prime video service is nowhere to be found.

Unlike smartphones and tablets, which are already showing signs of maturity, Internet-connected set-top boxes remain in their infancy. Until a device that's clearly better than its rivals emerges, the market remains wide open.

Apple TV, Amazon's FireTV, and Google's Chromecast are beloved by one group of people
While subscribers to traditional cable packages might still find these devices useful, they are of particular interest to cord-cutters. As cord-cutting grows in popularity, it seems likely that cable is going away. But do you know how to profit? There's $2.2 trillion out there to be had. Currently, cable grabs a big piece of it. That won't last. And when cable falters, three companies are poised to benefit. Click here for their names. Hint: They're not Netflix, Google, and Apple. 

 

The article Apple TV vs. Amazon's FireTV vs. Google's Chromecast: Which Internet Video Solution Is Best? originally appeared on Fool.com.

Sam Mattera has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Amazon.com, Apple, Google (A and C shares), and Netflix.Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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

 

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The Red Flags Sending Twitter, Inc. Stock to All-Time Lows

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Twitter stock has taken an incredible hit lately. With the help of the recent lockup expiration, shares have sunk 50% from the all-time highs it achieved in late 2013. In fact, Twitter shares recently reached all-time lows.

In the following video, senior Fool technology specialist Daniel Sparks examines the reasons for Twitter's decline. He identifies two red flags that have investors concerned: a pricey valuation and slower-than-expected user growth. But Daniel also notes that the market's dramatic response to these red flags may be overblown. A bit of perspective reveals an excellent and rapidly growing business that could make a solid long-term holding after the sell-off.

Did you want in on Twitter stock at near-IPO prices? Now may be your chance.

An opportunity you don't want to miss
If you thought the iPod, the iPhone, and the iPad were amazing, just wait until you see this. One hundred of Apple's top engineers are busy building one in a secret lab. And an ABI Research report predicts 485 million of them could be sold over the next decade. But you can invest in it right now, for just a fraction of the price of Apple stock. Click here to get the full story in this eye-opening new report.

The article The Red Flags Sending Twitter, Inc. Stock to All-Time Lows originally appeared on Fool.com.

Daniel Sparks has no position in any stocks mentioned. The Motley Fool recommends Facebook, LinkedIn, and Twitter and owns shares of Facebook and LinkedIn. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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

 

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Could Your Social Media Profile Hurt Your Chances of Getting a Loan?

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The fine line between your personal life and your credit is being crossed as some lenders are looking at social media as one of the methods to determine the credibility of applicants.

Personal lenders such as Lenddo and the peer-to-peer network Lending Club gather information on people from social media to apply in conjunction with that person's loan application to determine their trustworthiness. While Lenddo factors in a person's habits and activities on social media to determine if he or she is worthy of a loan, Lending Club only uses the information to help fight against fraud.

Determining factors
Lenddo will look at how long your social media account has been active, the number of friends and followers you have, and most importantly, whether or not any of your friends on social media have an account open with Lenddo.


If you do have a friend who uses Lenddo, the company will check your friend's account history. Depending on whether they are in good standing or not could either help or hurt your chance at being accepted for a loan. If your friend has poor history, it will be factored in negatively. On the other hand, if a buddy is in good standing with a loan, it can help improve your chances of being approved.

Jeff Stewart, a co-founder and CEO of Lendoo stated, "It turns out humans are really good at knowing who is trustworthy and reliable in their community. What's new is that we're now able to measure through massive computing power."

In today's digital world, the majority of people have at least one social media account open. As reported by Statistic Brain, 58 percent of people polled in America use social media, with 98 percent of adults between the ages of 18 to 24 using social media. They also reported that there are approximately a total of 1.4 billion users on Facebook worldwide.

Steps to present the best you on social media
Clean up your social media accounts if you are serious about taking out a personal loan. Avoid profile pictures that contain anything that may appear offensive or inappropriate.

Also, untag yourself from any photos you feel could jeopardize your credibility. If you still have pictures of your keg stands from college, it's time to either delete them or to change the privacy settings so that the pictures are only viewable among friends.

Minimal activity on social media could prevent you from getting a small business loan
Certain lenders can also view social media accounts for small businesses, as social media activity can help them determine your loan worthiness based on things like consumer reviews (on sites like Yelp) on your social media accounts.

The only problem with social media is that people have the ability to skew a lender's perception of a business. Small businesses who want to appear credible to a lender can create fake accounts on Facebook, Yelp and other social media platforms as a way to give the illusion they generate business and are received positively by their customers. Therefore, a company may be able to trick a lender into appearing as more credible for a business loan.

What small businesses can do to improve their social media profiles
Just like an employer can take a peek at your social media accounts, lenders (outside of Lenddo and Lending Club) may also check you out on Facebook or Twitter. Whether or not a lender factors social media into the approval or denial process, it's a good idea to look as polished as possible on your social media.

Small businesses who want to improve their image should consider the following tips before applying for a loan from a lender.

  • Create a social media account on all relevant social media platforms (if you have not created any already).
  • Post quality pictures of the entire business.
  • Address any concerns or reviews on popular websites where people can critique your business.
  • Respond to customer comments.
  • Try to be active on your social media accounts.

This article Could Your Social Media Profile Hurt Your Chances of Getting a Loan? originally appeared on My Bank Tracker.

Are you ready to profit from this $14.4 trillion revolution?
Let's face it, every investor wants to get in on revolutionary ideas before they hit it big. Like buying PC-maker Dell in the late 1980s, before the consumer computing boom. Or purchasing stock in e-commerce pioneer Amazon.com in the late 1990s, when it was nothing more than an upstart online bookstore. The problem is, most investors don't understand the key to investing in hyper-growth markets. The real trick is to find a small-cap "pure-play" and then watch as it grows in EXPLOSIVE lockstep with its industry. Our expert team of equity analysts has identified one stock that's poised to produce rocket-ship returns with the next $14.4 TRILLION industry. Click here to get the full story in this eye-opening report.

The article Could Your Social Media Profile Hurt Your Chances of Getting a Loan? originally appeared on Fool.com.

The Motley Fool recommends Facebook and Yelp. The Motley Fool owns shares of Facebook. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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

 

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Is Sprint's T-Mobile Acquisition Dead Before It Begins?

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Well, that didn't take very long.

While we knew its chances certainly weren't a sure thing, many believed the odds of Sprint's reportedly looming bid for smaller telecom rival T-Mobile would at least see the light of day.

However, it sounds like this deal has already met some serious opposition from U.S. regulators that could threaten to derail Sprint's T-Mobile deal before it begins.

Source: T-Mobile.


Sprint's deal gets shot down
Since word of Sprint's intension to acquire T-Mobile originally surfaced last week, a number of sources close to regulators in Washington have reportedly claimed that the deal is unlikely to gain the regulatory approval needed.

As we've seen with past telecom megamergers like AT&T's own attempted purchase of T-Mobile, the top telecom regulatory brass are clearly hesitant to concentrate too much power in only a few telecom giants. And although Sprint with T-Mobile would still be only the third largest U.S. telecom player, decreasing the number of potential choices for consumers has regulators on guard.

However, it appears that Sprint, and its parent company, Japanese telecom power SoftBank, plan to press on with their acquisition campaign for the time being. And in the following video, tech and telecom specialist Andrew Tonner discusses some of the new regulatory hurdles Sprint must overcome if it ever hopes to nab T-Mobile.

Are you ready to profit from this $14.4 trillion revolution?
Every investor wants to get in on revolutionary ideas before they hit it big -- like buying PC maker Dell in the late 1980s, before the consumer computing boom, or purchasing stock in e-commerce pioneer Amazon.com in the late 1990s, when it was nothing more than an upstart online bookstore. The problem is, most investors don't understand the key to investing in hypergrowth markets. The real trick is to find a small-cap "pure play" and then watch as it grows in explosive fashion within its industry. Our expert team of equity analysts has identified one stock that's poised to produce rocket-ship returns with the next $14.4 trillion industry. Click here to get the full story in this eye-opening report.

The article Is Sprint's T-Mobile Acquisition Dead Before It Begins? originally appeared on Fool.com.

Andrew Tonner has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Amazon.com. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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

 

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Housing Barometer: Recovery Staggers Forward

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How We Track This Uneven Recovery
Since February 2012, Trulia's (NYSE: TRLA) Housing Barometer has charted how quickly the housing market is moving back to "normal" based on multiple indicators. Because the recovery is uneven, with some housing activities improving faster than others, our Barometer highlights five measures:

  1. New construction starts (Census)
  2. Existing home sales, excluding distressed sales (National Association of Realtors, NAR)
  3. Delinquency + foreclosure rate (Black Knight, formerly LPS)
  4. The employment rate for 25-34 year-olds, a key age group for household formation and first-time homeownership (Bureau of Labor Statistics, BLS)
  5. Home-price levels relative to fundamentals (Trulia Bubble Watch)

The first four measures are reported monthly; to reduce volatility, we use three-month moving averages for these measures. The fifth, prices from our Bubble Watch, is a quarterly report. For each indicator, we compare the latest available data to (1) its worst reading for that indicator during the housing bust and (2) its pre-bubble "normal" level.


Recovery Staggering Ahead Drunkenly
Of the Housing Barometer's five indicators, all have improved over the last year except new construction starts. But only rising home prices and falling delinquencies + foreclosures have been steady. The other three measures - sales, starts, and young-adult employment - have zigzagged, both gaining and losing ground over the year:

  • Home prices have had a strong and steady recovery. Trulia's Bubble Watch shows prices were 5% undervalued in Q1 2014, compared with 15% at the worst of the housing bust, which means that prices are two thirds (67%) of the way back to their "normal" level of being neither over- nor under-valued. One year ago, prices looked 10% undervalued - just one third of the way back to normal from their worst levels. Recently, price gains have slowed, causing prices to approach normal a bit more slowly in the last quarter.
  • The delinquency + foreclosure rate was 63% back to normal in February 2014, up from 42% one year earlier. With rising prices and an improving economy, fewer homeowners have become seriously delinquent on their mortgages in the first place. At the other end of the pipeline, more foreclosures are being completed and sold. The remaining foreclosure inventory is increasingly concentrated in FloridaNew York, and New Jersey, and other judicial-foreclosure states where the foreclosure process can take years.
  • Existing home sales (excluding distressed) were 61% back to normal in February, up from 53% one year earlier. But it's been a bumpy year for sales: they improved to 79% back to normal before falling down to the current rate of 61%. Higher home prices and mortgage rates have reduced affordability. Furthermore, the mortgage market might be in a temporary adjustment period with the new mortgage rules, though mortgage credit will likely loosen rather than tighten going forward.
  • New construction starts are just 44% of the way back to normal, down from 45% back to normal one year ago. But within new construction, the recovery is uneven. Starts of single-family homes and condo buildings are still lagging, but apartment construction hit a 15-year high in 2013. This apartment boom in 2013 is in anticipation of more young people moving out of their parents' homes and into their own rentals. And, speaking of young people ...
  • Employment for young adults has finally improved. February's three-month moving average shows that 75.8% of adults age 25-34 are employed, up from 75% one quarter earlier. Young-adult employment is now 39% back to normal. While that's not halfway back to normal, it's a clear improvement over the dip down to 25% in the second half of 2013. Because young adults need jobs in order to move out of their parents' homes, form their own households, and eventually become homeowners, the housing recovery depends on Millennials getting jobs.

Why the Recovery Has Been Bumpy
Why is the housing recovery staggering ahead rather than moving confidently forward? Three reasons:

  1. Affordability is worsening. Even though it remains cheaper to buy a home than to rent in the 100 largest metros, homeownership is now more expensive than it was last year, thanks to rising prices and higher mortgage rates. And declining affordability is a bigger challenge for first-time home buyers than for current homeowners looking to trade in a home that has also increased in value.
  2. Investors are stepping back. Now that prices have risen, and fewer people are losing homes to foreclosure, investing-to-rent makes less sense. Until recently, investors had been an engine pushing up home sales and prices; as they step back, price gains are slowing and sales volumes are sagging.
  3. The mortgage market is shakier. Both mortgage purchase applications and mortgage-based home sales are declining. Mortgage rates are rising and have been volatile, and the new mortgage rules add short-term uncertainty. But this reason may be only a temporary hurdle: rates remain low by historical standards, and the new mortgage rules offer longer-term clarity that should encourage banks to make more loans that are within the new rules.

These reasons have contributed to recent stumbles in sales and starts. (Winter weather hurt, too, but hasn't been the main factor.) However, the two recovery measures that aren't dependent on affordability, investor demand, or mortgages are showing signs of strength: the delinquency + foreclosure rate is dropping, and young adults are going back to work. The boost to young-adult employment is especially important right now. The less the recovery can depend on the engine of investors, the more the housing market will need to rely on young adults entering the housing market, first as renters - and eventually as buyers.

This article Housing Barometer: Recovery Staggers Forward originally appeared on Trulia.com.

Big banking's little $20.8 trillion secret
There's a brand-new company that's revolutionizing banking, and is poised to kill the hated traditional brick-and-mortar banks. That's bad for them, but great for investors. And amazingly, despite its rapid growth, this company is still flying under the radar of Wall Street. To learn about about this company, click here to access our new special free report.

The article Housing Barometer: Recovery Staggers Forward originally appeared on Fool.com.

NOTE: Trulia's Housing Barometer tracks five measures: existing home sales excluding distressed (NAR), home prices (Trulia Bubble Watch), delinquency + foreclosure rate (Black Knight), new home starts (Census), and the employment rate for 25-34 year-olds (BLS). Also, our estimate of the "normal" share of sales that are distressed is 5%; Black Knight reports that the share was in the 3-5% range during the bubble. For each measure, we compare the latest available data to (1) the worst reading for that indicator during the housing bust and (2) its pre-bubble "normal" level. We use a three-month average to smooth volatility for the four indicators that are reported monthly (all but home prices). The latest published data are February data for the employment rate, existing home sales , new construction starts, and the delinquency + foreclosure rate; and Q1 for home prices. Jed leads Trulia's housing research and provides insight on market trends and public policy to major media outlets including TIME magazine, CNN, and numerous others. Jed's background includes a Ph.D. in Economics from Harvard University and more than 15 years of publications and research management in economic development, land use and housing policy, and consumer technology adoption. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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

 

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The Decision That Changed Warren Buffett's Life

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Warren Buffett started investing when he was only 11 years old, but he didn't begin to master his craft until he met Ben Graham, the father of value investing. Much of Buffett's early investing was based on strategies he learned from Ben Graham. However, looking at Buffett's recent track record today, much of his investment process has changed and been influenced by Charlie Munger and Phil Fisher.

In the following video, Motley Fool analysts Matt Koppenheffer and David Hanson discuss the lessons they learned from Warren Buffett while attending the annual Berkshire Hathaway shareholder meeting in Omaha, Nebraska. During the meeting, Warren Buffett and his business partner, Charlie Munger, took questions from shareholders for nearly 6 hours and provide their thoughts on everything from investing, corporate governance, and personal success. The discussion regarding the influence of Munger vs. Graham took center stage on several different occasions. Matt and David discuss why Buffett needed to switch to a more encompassing view of the investment world in order to be successful managing a massive conglomerate.

Warren Buffett just bought nearly 9 million shares of this company
Imagine a company that rents a very specific and valuable piece of machinery for $41,000... per hour (that's almost as much as the average American makes in a year!). And Warren Buffett and Charlie Munger are so confident in this company's can't-live-without-it business model, they just loaded up on 8.8 million shares. An exclusive, brand-new Motley Fool report details this company that already has over 50% market share. Just click HERE to discover more about this industry-leading stock... and join Buffett in his quest for a veritable landslide of profits!


The article The Decision That Changed Warren Buffett's Life originally appeared on Fool.com.

David Hanson owns shares of Berkshire Hathaway. Matt Koppenheffer owns shares of Berkshire Hathaway. The Motley Fool recommends Berkshire Hathaway. The Motley Fool owns shares of Berkshire Hathaway. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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

 

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How This 1 Company Is Attempting to Overcome One of Cancer's Greatest Risk Factors

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Cancer is one of the scariest disease diagnoses imaginable, at least according to one U.K. study, and that's primarily because researchers, despite decades of work and collaboration, are still scratching the surface on what triggers cancer in the first place. If we don't fully understand the triggers and risk factors well enough, it can make it difficult for researchers to ultimately fight the disease and not just the symptoms of cancer.

What's potentially scarier is that the World Health Organization in February projected that global cancer rates could rise by as much as 57% over the next 20 years from an estimated 14 million cases annually to 22 million.

As we saw last year by taking a deeper dive into the 12 most-commonly diagnosed cancer types, there is a laundry list of risk factors that can lead to an increased risk of getting certain types of cancers. Obesity, diabetes, alcohol consumption, and smoking are just some of the factors that appeared with some regularity. Yet no factor seemed to stand out more, at least to me, than age.



Source: Thomas Leuthard, Flickr.

One of cancer's greatest risk factors
While all cancers are different, and a person at any age can get cancer, the general consensus among the scientific community is one reason cancer rates have gone up is because life expectancy rates have also risen. Data from the World Bank sows that life expectancy in the U.S. has jumped from the rough equivalent of 70 years in 1968 to just shy of 79 years as of 2011. This progress, though, appears to have come at the cost of a higher incident rate of cancer.

A study released in February from the National Institutes of Health postulated that DNA methylation over the course of our lives can alter "interactions between DNA and the cell's protein-making machinery." As the study described, these DNA changes amount to it being tougher and tougher for genes to continue to carry out their normal function and, instead, mutating into a cancer cell because it's "easier."

Of course this is just one theory, and I'm sure if you scour medical books or the Internet you'll find a handful more where this came from. The point being that the older we get, the chance that we get cancer seems to increase, even if we don't fully understand the "why" component.

The typical response to fighting cancer by most pharmaceutical companies is to target the replication process itself or specific cancer-cell protein signatures. While varying in effectiveness based on the type of cancer involved, this equates to treating the symptoms and not necessarily the underlying cause of cancer. One biopharmaceutical company, however, has a unique and revolutionary approach that just might even the score with father time's increased risk of cancer.

Battling the disease, not just the symptoms
The biopharmaceutical company in question is OncoMed Pharmaceuticals and what makes it so unique is that it's clinical-stage therapies are designed to attack cancer stem cells, or CSCs.

CSCs are believed to be self-replicating according to the National Cancer Institute, and produce progenitor cells similar to what normal stem cells do in our body. These progenitor cells help repopulate tumor cells which have been destroyed by chemotherapy treatment of the body's immune response. CSCs are believed to be incredibly resistant to most types of chemotherapy and radiotherapy, making it difficult to eradicate them. Finally, CSCs are also suspected to be one of the primary causes of secondary tumors, relapses, and global metastases. Again, these are theories as a lot about CSCs is still being studied, but this marks a possible pathway to fight the root cause of a disease and not necessarily just its outer layers. 

OncoMed's solution is to develop a number of therapies which target CSC proteins to block their ability to replicate and proliferate progenitor cells.


Source: OncoMed Pharmaceuticals.

The company's lead product is demcizumab, a mid-stage product designed to block notch-signaling (specifically DLL4) in CSCs. In a phase 1 pancreatic cancer study in combination with Gemzar, demcizumab delivered four RECIST partial responses and an additional seven cases of stable disease out of 16 evaluable patients (a clinical benefit of 69%) while also being well-tolerated. In the 5 mg dose the median progression-free survival observed was 176 days.

Another exciting experimental therapy currently in two phase 1b/2 studies is OMP-59R5, an anti-CSC antibody that binds with the notch 3 receptor and prevents signaling through notch 2 and notch 3. Last year OncoMed noted in in its phase 1 study that OMP-59R5 was well-tolerated in patients with solid tumors and that it prolonged stable disease in some patients when dose at 2.5 mg/kg or higher.

In addition to demcizumab and OMP-59R5, OncoMed has three additional phase 1 studies ongoing and at least seven other preclinical programs listed on its website.

Source: Geralt, Pixabay.

A collaborative list of heavy-hitters
Another thing you'll note is that OncoMed has plenty of funding and a lot of heavy-hitter partnerships. None might be bigger than the mammoth deal it struck with Celgene in December. Celgene put up $155 million in upfront payments to OncoMed, purchased $22.5 million in OncoMed's common stock, and pledged up to $3.3 billion (with a "b") in milestone payments for the co-marketing rights for up to six of OncoMed's therapies, including demcizumab, and five preclinical therapies including OMP-305B83, an anti-DLL4/VEFG notch receptor, and anti-RSPO-LGR. Of course it'll be up to OncoMed's therapies to outperform in studies as to whether it sees a dime of that $3.3 billion or not, but the sheer magnitude of the milestone potential is huge!

But, Celgene isn't the end of it. OncoMed also has a strategic partnerships with GlaxoSmithKline and Bayer .

Its collaboration with GlaxoSmithKline extends back to 2007 and could equal nearly $700 million in milestone payments over the length of its co-marketing program, which currently covers OMP-59R5 and phase 1 experimental anti-notch 1 therapy OMP-52M51.

OncoMed's partnership with Bayer is a bit more recent, beginning in 2010, and will comprise up to five agents targeting the Wnt-signaling pathway. All told, OncoMed received $40 million upfront and could see an additional $387.5 million per program in addition to mid-single to low-double-digit royalties if approved.

Added together this represents around $6 billion in aggregate milestone potential is OncoMed's pipeline is successful -- although that thought is probably a bit utopian.

The usual risks implied
But, as with all wholly clinical stage cancer-focused biopharmaceutical companies two major risks are implied. The first is that OncoMed is likely to continue burning through cash in the near-term as it furthers its clinical-stage compounds and continues to uncover new anti-CSC compounds in the preclinical setting. It has more than ample cash to continue its work at the moment, but there's no guarantee that it will have ample cash a few years from now.

Secondly, the failure rate for cancer therapeutics is fairly high. It's sometimes possible to gauge the effectiveness of a therapy based on a previous clinical comparison to an already approved drug that works along the same pathway. Anti-CSC drugs like that being developed by OncoMed have no prior comparison, which makes its technology highly intriguing, but its effectiveness still somewhat unknown.

Overall, though, I believe OncoMed could have the necessary tools to tackle cancer from the source of cell differentiation rather than merely attempting to alter cell proliferation. While we're not talking about a cure necessarily, we are beginning to see a possible shift in how cancer-focused companies approach cancer treatment, and as such, I would strongly suggest you add this biopharmaceutical company to your watchlist moving forward.

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The article How This 1 Company Is Attempting to Overcome One of Cancer's Greatest Risk Factors originally appeared on Fool.com.

Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong. The Motley Fool recommends Celgene. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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

 

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Is McDonald's Looking to Take a Page From Chipotle's Playbook?

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You can't blame McDonald's for wanting to capture some of the magic of its former spinoff Chipotle Mexican Grill . But is a kitchen overhaul that will allow customers greater choice and the ability to design their own burger enough to win back customers that the Golden Arches has been losing to the burrito maker and other eateries?

Source: Wikimedia Commons


We may be about to find out. McDonald's has set the wheels in motion on ambitious plans to remake the kitchens at all of its roughly 14,000 U.S. locations. The big change will be the addition of a "high-density prep table" that will allow restaurants to offer customers more fresh ingredients and condiments to top their burgers and other sandwiches.

As fellow Fool Rick Munarriz told us last November, McDonald's was already testing a "build your own" sandwich at a California location with the new prep area. Customers could choose from 20 different toppings, and they were able to order from touchscreen tablets.

CEO Don Thompson last month called these prep stations "a key enabler for the future menu," although he stopped short of providing many specifics about what's to come. What he would say was that the stations will allow for more ingredients and for more efficient preparation of food.

Model of efficiency
McDonald's knows it needs to do something. Same-store sales in the U.S. for the first quarter were down by 1.7%, and operating income was off by 3%, directly attributable to fewer people going into their restaurants.

The rollout of the new equipment is expected to continue throughout the next few months, and it should be in all locations this summer, the company said in its recent earnings call.

If there's a model of efficient preparation of built-to-order food, it's Chipotle. Its short burrito- and salad-assembly line buzzes through long lines of hungry customers, and it helps to turn every store into a machine that practically prints $10 bills, one after the other, after the other.

Source: Chipotle.com

Same-store sales growth for Chipotle was up 13.4% over the first quarter of 2013. That was an acceleration over the already impressive 9% same-store number in the prior quarter. Overall revenue for the chain was up 24.4%, to $904 million.

At this stage, McDonald's would love to have even a sliver of that growth in the U.S. In March, Bloomberg attributed McDonald's slowdown to both fierce competition in fast food, and to "declining consumer sentiment." It's not alone. Yum!'s U.S. same-store numbers for 2013 were flat with 2012.

Chipotle, however, has been able to rise above the competition, capitalizing on the decline of sentiment in brands like McDonald's.

A renewed focus
There were many references in McDonald's April earnings call about putting the customer at the center of the company's plans: "The key to our growth lies in our ability to place the customer at the center of everything that we do," Thompson said. The prep stations are a part of that effort.

Thompson acknowledges that this won't be an overnight success.

"... It will take time for consumers to notice the changes and reward us with increased visits," he said. "This is not about a silver bullet."

The Foolish bottom line
The new prep stations may not be a silver bullet, but they are good first step for McDonald's to build upon as it looks to win customers back. There's no clear link between its new prep tables and Chipotle's burrito-building machine, but there are certainly similarities.

If the fast-food standard-bearer is indeed taking a page from Chipotle's playbook, there's certainly no shame in doing so. The fact that Chipotle continues to buck the trends weighing on other fast-food companies shows it's doing something right.

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The article Is McDonald's Looking to Take a Page From Chipotle's Playbook? originally appeared on Fool.com.

John-Erik Koslosky owns shares of Chipotle Mexican Grill. The Motley Fool recommends Chipotle Mexican Grill and McDonald's. The Motley Fool owns shares of Chipotle Mexican Grill. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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

 

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magicJack VocalTec Ltd. Earnings: Will the Stock Keep Slumping?

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On Monday, magicJack VocalTec will release its quarterly report, and investors aren't really certain what to expect from the provider of voice-over-Internet services. To an even greater extent than peers Vonage and 8x8 , magicJack has demonstrated its long-term promise to investors at the beginning of the year, But lately, investors have questioned the prospects for the industry, as stocks throughout the sector have come under pressure.

For decades, telephone companies counted on constant streams of monthly income that financed the creation of massive wireline networks. Yet with the birth of the Internet, magicJack VocalTec, Vonage, 8x8, and other providers had an opportunity to use Internet-based infrastructure to deliver voice calls, and as bandwidth increased, so too did the ability for those calls to rival wirelines in terms of quality. Given its value proposition, magicJack is attractive to consumers, but can it do better than the more enterprise-focused efforts that Vonage and 8x8 have made? Let's take an early look at what's been happening with magicJack VocalTec over the past quarter and what we're likely to see in its report.


Source: magicJack VocalTec.


Stats on magicJack VocalTec

Analyst EPS Estimate

$0.49

Change From Year-Ago EPS

(3.9%)

Revenue Estimate

$37.18 million

Change From Year-Ago Revenue

0.8%

Earnings Beats in Past 4 Quarters

4

Source: Yahoo! Finance.

Can magicJack VocalTec earnings keep rising?
Analysts have been a lot more excited about magicJack VocalTec earnings in recent months, boosting their first-quarter estimates by almost half and making more modest increases to full-year 2014 and 2015 projections as well. The stock is up 28% since early February, but it has still lost almost a quarter of its value in just the past month after having made an even more impressive run-up.

Ordinarily, earnings reports are the primary driver for a stock's gains. But in February, magicJack got an even stronger endorsement, as well-known investor Whitney Tilson compared the stock to Netflix, arguing that if it can continue to market its low-cost phone services in a way that differentiates it from Vonage, 8x8, and other similar voice-over-Internet providers, it could see the same exponential growth that helped send the streaming-video giant soaring.

Fourth-quarter results from magicJack VocalTec helped the stock soar even further, as revenue jumped by 23%, calming fears among some shareholders that magicJack's sales growth had hit a ceiling. Net income also came in far better than investors had expected, but the best news came from magicJack's forward guidance, with the company expecting to bring in 10% to 15% more revenue than analysts had projected. With magicJack looking to offer its products in more than 10,000 new retail locations this year, the opportunities for further growth look healthier than ever.

Still, magicJack VocalTec faces plenty of competition. Video-calling services like Skype offer calling at no additional cost beyond an Internet connection, making spending even $30 per year seem somewhat unnecessary. Indeed, despite magicJack's solid revenue numbers, active subscriber counts fell slightly from the previous quarter. An anticipated new product from magicJack could help drive interest again, but magicJack needs to convince users of the value proposition it offers versus similar voice services.

In the magicJack VocalTec earnings report, see if the company starts to address the weaknesses that Whitney Tilson identified in his recommendation, including inconsistent customer service and improved marketing techniques. If magicJack can take the right steps, it could be at the beginning phases of a strong growth spurt that could lift shares higher.

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The article magicJack VocalTec Ltd. Earnings: Will the Stock Keep Slumping? originally appeared on Fool.com.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Best of DailyFinance: The Week in Review (May 5 - 11, 2014)

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How to Know When It's OK to Co-Sign a Loan

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|BU002322 CD Image 21093 Volume Series 21 People Filling Out Applications with Loan Officer Photographer PhotoLink retail shoppi
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It's not easy qualifying for lines of credit these days, and in order to do so, many millennials are turning to family members for a leg up. A recent survey of 18- to 30-year-olds by Experian Consumer Services, which provides credit monitoring services, shows that nearly two-thirds of them have used a co-signer in the past, and three-quarters say they would ask their parents to co-sign for them in the future. The survey shows that millennials needed cosigners for:
  • College loans: 35 percent
  • Residential leases: 32 percent
  • Car loans: 19 percent
  • Legal agreements for credit cards: 17 percent
  • Car leases: 11 percent
  • Home loans: 6 percent
The trend is also reflected in an April report on student loans from the Consumer Financial Protection Bureau. It concludes that 90 percent of private student loans in 2011 had a cosigner. One issue noted by student loan borrowers was that although the lenders say cosigners can be removed from a loan after a specific number of on-time payments, getting the lender to actually do it is a complicated process. Worse, the lenders often use the death or bankruptcy of the cosigner as a trigger to require immediate full repayment of the loan from the borrower. But even if it doesn't come to such extremes, co-signing is not something to be taken lightly.

Co-Sign or No-Sign?​

When you co-sign for a loan, that debt will also appear on your credit report. But the real concern is the most basic one: Co-signing a loan or credit application means you're agreeing to pay the debt in its entirety if the main borrower defaults on the loan, becomes disabled or dies.

According to Experian's survey, most borrowers with a co-signed loan responsibly handle repaying it. But 8 percent net total of co-signed contracts are in bad standing because of late payments, missed payments or a default.

"It's important to recognize that you're making a high-risk decision, not just doing a good deed if you co-sign a loan," says Susan Tiffany, director, personal finance for adults at the Credit Union National Association. "The idea is that you're helping out your kids or your parents, but it has implications for you, too. You need to consider the fact that if someone needs a co-signer, it's because they've already been denied credit on their own and are considered a high risk."

In fact, Tiffany warns, in some states, debt collectors can go after a co-signer before pursuing the primary borrower for a debt.

Becky Frost, senior manager of consumer education for Experian, offers the following tips for parents, grandparents or other relatives contemplating co-signing a loan:
  • Use discretion. Before you co-sign for anyone, be absolutely certain that he or she is capable of responsibly managing the account and will always pay bills on time.
  • Have "the credit talk." Explain how credit works. It's important for the young person to understand that late payments, a maxed-out account or collections will affect both your credit scores and your ability to qualify for loans in the future.
  • Stay in touch. It's important to maintain constant communication with your child to ensure that payments are being made on time and in full. The lender is not required to notify the co-signer about late payments or a delinquency.
  • Consider the timing. If you're planning on applying for a loan for yourself in the next six months, it may not be a good time to co-sign for your child. With mortgages in particular, it's not a good idea to take on a new debt just before or during the lending application process.
"If you do choose to co-sign a loan, then you need to do some soul-searching and some pencil-sharpening so you know that you're co-signing for an amount you can absorb if you would need to," says Tiffany. "Make sure you're aware of the status of payments and find a way to monitor them before things get completely out of hand. Each individual has to make a decision about whether to co-sign or not, but it's important not to have any illusions about what you're doing and the risk you're taking."

Michele Lerner is a Motley Fool contributing writer.

 

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Establishing a Business Plan

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"Hey, the American Dream exists: look at me!"


In this episode, Lisandro of North Pole Air Conditioning and Heating Services, Inc. works with a team of experts to establish a business plan aimed at expanding his company's reach. From infrastructure growing pains to building a profitable long term strategy, the Wells Fargo Works Project supports small businesses.


Produced with Magical Elves Production (Top Chef, Project Runway).

 

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Becoming a National Brand

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"We're ready to expand. My ultimate goal is to be a national brand."


In this episode, Zoey of Zoey Van Jones Brow Studio learns how to build her "small business" brand to drive expansion via online marketing, lines of credit, and content creation. Watch how the Wells Fargo Works Projects works for small businesses.


Produced with Magical Elves Production (Top Chef, Project Runway).

 

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Building Loyalty

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"We focus primarily on our connection with our customers and our employees."

In this episode, Jou Lee and Shua of Golden Harvest Foods aim to create loyal customers and employees with a rich in-store experience. From developing a retirement plan for their employees to building special demonstration events, the Wells Fargo Works Project helps connect this family business to their larger community.

Produced with Magical Elves Production (Top Chef, Project Runway).

 

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Creating a Marketing Plan

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"We both want this dream of ours to be fulfilled."


In this episode, Deundra and James of Universal Martial Arts Academy create a marketing plan to help build their customer base. The Wells Fargo Works Project sends the small business owners to marketing and ecommerce boot camp, offering guidance for maximizing their business online.


Produced with Magical Elves Production (Top Chef, Project Runway).

 

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Why We Hate to Love Walmart (and Why It Can Still Surprise Us)

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BGHMJ8 A woman shops inside a Walmart Supercenter in Arkansas, U.S.A. WALMART; WAL-MART; WAL; MART; SUPERCENTER; RETAIL; WALMART
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Is any U.S company more reviled than Walmart (WMT)? Documentaries, songs, books and sites sport anti-Walmart sentiments. The company -- which reports its quarterly earnings on Thursday -- is a lightning rod for negative opinion from liberals and conservatives. Considering that a "hate+Walmart" search on Google (GOOG) yields about 40 million results, one wonders how the world's largest retailer and largest U.S. private employer stays in business. Yet millions of us love shopping there enough for the company to net sales of $466.1 billion for the fiscal year ended January 2013.

The Look

Given its cookie-cutter reputation, you might expect that all Walmarts would be created fairly equal -- and that they'd all look like the one closest to you. In fact, the stores come in an array of different sizes and styles: large Supercenters that include supermarkets, neighborhood size (the average Walmart), discount stores, Sam's Clubs and small format (including Walmart Express, Walmart on Campus, Amigo, Super Ahorros and Supermercado).

One of the most common complaints about the stores is aesthetic: Walmarts are perceived as dirty, noisy, crowded, all the same big box. Of the three Walmarts within 15 miles of my home, that is only true of the one that serves the most demographically and economically diverse clientele. Within a block of rivals Target (TGT), Kohl's (KSS), Best Buy (BBY) and Home Depot (HD), it's a depressing, dispiriting place to shop.

The second is in a semi-rural town and is much cleaner and quieter -- a joy to shop in.

The third is a Walmart Supercenter in a bustling small city. It has three (yes, three) beauty salons with spa services, a full-service local bank, an Auntie Anne's and a Subway. It is clean and busy, yet its checkout lines are two to three people deep at most. An assistant manager (who wasn't supposed to talk to reporters at all) likened Walmart to a car with options. Example: his store carried the local high school's colors in various apparel and novelties, but a larger Walmart didn't because it served more high schools.

Wages

Walmart's wage controversy is just one thread in the larger political debate over the minimum wage and U.S. wage stagnation in general. The low wages and part-time hours it offers mean 8 percent to 10 percent of Walmart's 1.3 million U.S. associates have to use food stamps and Medicaid to make ends meet. Conservatives deplore the government aid, and liberals deplore the low wages. The company says its average hourly wage across the U.S. is $12.81 per hour, but this doesn't include part-timers. Officials in big cities like Washington and Chicago have searched their souls about whether they should allow Walmarts to open within their borders, thanks to this issue.

Fanning the fires of anger is the fact that, over the last few years, Walmart's CEOs have been the nation's highest paid, relative to what they pay their workers. Former CEO Michael Duke earned 1,034 times the median Walmart worker salary, according to a Payscale survey in 2013 or 836 times according to NerdWallet's numbers. He also received an outsized deferred compensation package. Doug McMillon is the new CEO, and as an executive vice president, he had a total compensation package of more than $25 million.

Debate rages in the media and academia over what it would cost Walmart and its customers if the company boosted what it paid to a "living wage." According to a policy paper from think tank Demos.org, the company could raise the full-time salary of its average sales associate to $25,000 annually from $18,324.80 (based on independent market research firm IBISWorld's findinghttps://cms.aol.com/554/content/posts/edit/20882658/ of average pay of $8.81 per hour) with only a 1 percent hike in prices. This would cost each Walmart shopper $12.50 more per year, research from Berkeley's Labor Research Center concludes.

Foreign Imports and Trade Practices

Some dislike Walmart because 80 percent of its suppliers are in China, and many of the rest are in Third World countries. Tragedies at factories in Bangladesh and India making products for Walmart haven't improved the chain's image. On the positive side, the company is making an effort to more sustainably source some products, such as fair trade coffee.

But it's not just Third World wages that are affected. The Employment Policy Institute wrote that 200,000 American jobs were lost to foreign manufacturers from 2001 to 2006, thanks to the glut of foreign products imported after Walmart first began expanding its China partnership. A former Texas manufacturer poignantly described how Walmart pressures its U.S. suppliers to make items here as cheaply as possible, also costing American jobs.

Entrepreneurs dream of "making the retail big leagues" by getting a deal to sell their products at Walmart. However, there have long been complaints and lawsuits concerning Walmart's relentless pressure on suppliers to cut prices at the expense of their own margins. This pressure even extends to consumer giants such as Kraft Foods (KRFT), forcing it to lay off 13,500 workers several years ago.

In good news, Walmart is holding an open call for U.S. companies this July to show their products, with a pledge to buy $250 billion in American-made goods over the next decade.

The Competition

Before Sears (SHLD) deteriorated as a major retailer, it was a beloved chain, selling everything a family needed, even kits to build homes. Walmart garners nothing like that warm feeling, yet it sells almost everything one could need, from womb to tomb, including caskets.

It's now a tossup which retailer other retailers fear most: Amazon (AMZN) or Walmart. Whole Foods Market (WFM) just reported disappointing earnings, and its explanation was that Walmart is beating it on organic food, with prices at least 25 percent lower for similar items. Amazon's sales growth of 20 percent can't put a patch on Walmart.com's growth of 30 percent over the last year.

Worldwide, 245 million customers shop Walmart weekly. We love to hate it, even those of us who won't admit to loving its low prices because deep down, we know they come at a cost.

 

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Wall Street This Week: CafePress Pressed, Fossil Ticks

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www.fossil.com
From the world's largest retailer stepping up with fresh financials to a maker of fashionable timepieces proving that it can still grow in this unwelcome climate for watchmakers, here are some of the things that will help shape the week that lies ahead on Wall Street.

Monday -- Sounds Good

DTS (DTSI) has carved a cozy living providing sound-enhancing technology in Blu-ray players, video game consoles and other devices.

Despite its success, DTS is trading a lot closer to its 52-week low than its 52-week high. One thing holding it back is that it has failed to impress the market with its quarterly financials. It's coming off back-to-back quarters of falling short of Wall Street's profit expectations. It's against this setting that DTS will step up after Monday's market close to deliver its latest results. Will the streak of disappointment stretch to three quarters, or is DTS finally going to put out a report that looks as good as its audio technology sounds? We will know soon.

Tuesday -- Fossil Fuel

Fossil (FOSL) may seem to be toiling away in an industry worthy of its name. Aren't wristwatches dinosaurs? Who wears watches anymore when we have smartwatches to tell us the time. Folks with active lifestyles are saving their wrists for fitness bracelets.

Well, Fossil is growing just nicely in this environment, thank you very much. When the trendy watchmaker reports on Tuesday analysts see revenue climbing 13 percent. They see top-line growth of 10 percent for all of 2014. Fossil's profitability isn't expected to clock in as nicely, but unlike DTS,we've seen Fossil blow Wall Street's profit targets away consistently over the past year.

Wednesday -- Press Hard

CafePress (PRSS) has been a disappointment for investors since going public at $19 two years ago. The stock opened higher on its first day of trading, but it's been mostly downhill for the shares, which now fetch less than a third of the initial public offering price.

CafePress was hoping to attract designers and enterprising folks looking to sell their graphics on T-shirts, mugs and other items. The rub for CafePress is that it's hard for sellers to stand out. It also doesn't help that the prices are a bit out of whack. CafePress reports on Wednesday afternoon.

Thursday -- Retailers on Parade

We have moved on from the otherwise uninspiring holiday shopping season for brick-and-mortar retailers, and now we're starting to dissect 2014. A few prominent retailers will be reporting on Thursday across all pricing categories.

Walmart (WMT), J.C. Penney (JCP) and Kohl's (KSS) are just some of the chains updating the market on Thursday. Walmart is the world's largest retailer, so expect its report to carry a healthy amount of weight in surveying the state of the economy and consumer spending.

Friday -- Go Go Godzilla

It will be relatively quiet on the earnings front on Friday, but the same can't be said for the local multiplex. "Godzilla" will likely be the top draw, giving Time Warner (TWX) the honor of unseating "The Amazing Spider-Man 2," which has been a huge box office winner since debuting earlier this month.

Summer is peak movie season, but studios like to get an early jump on the audiences by introducing potential blockbusters as early as May. Enjoy the popcorn.

Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Fossil.

 

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