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Want to manage your money better than billionaire Warren Buffett has? It's easier than you think. Just do this one simple thing.

Massive mistakes
It's tough to believe the man on top of the $315 billion Berkshire Hathaway, who himself is worth more than $65 billion, has ever made a single mistake when it comes to managing money. After all, since he took over in 1965, Berkshire Hathaway has grown by a staggering 693,518%, from $19 a share to $134,973.

But Buffett, like us, is human, and he has made mistakes, which he admits have cost him billions.

Source: www.insidermonkey.com.

At the end of 2008, Berkshire Hathaway had a $7 billion position in ConocoPhillips . Yet Buffett suggests he "made a major mistake of commission," as he "bought a large amount of ConocoPhillips stock when oil and gas prices were near their peak."

Buffett didn't think energy prices would plummet as they did, and as a result, while his position in ConocoPhillips cost $7 billion, it was worth just $4.3 billion. Buffett admitted, "the terrible timing of my purchase has cost Berkshire several billion dollars."

Just this year, Buffett noted he'd lost $873 million in the purchase of $2 billion worth of bonds from Energy Future Holdings, which bought the assets of electric firms in Texas in 2007.

In those two instances, there is one common thing that led to Buffett losing billions, and when we manage our money with it in mind, we'll be in a much better place.

Is it never to invest? Absolutely not. Is it to avoid energy stocks? That isn't it either.

It's that whenever a decision about money is being made, never do it alone.

The simple solution
In 2008, when discussing the ConocoPhillips fiasco, Buffett said he made the investment:

...without urging from Charlie or anyone else.

And in 2013, he said he first bought the debt of Energy Future Holdings:

...without consulting with Charlie. That was a big mistake.

Implicitly in 2008 and explicitly in 2013, Buffett admits the biggest problem wasn't the companies themselves or the industries they found themselves in, but instead that he flew solo when making the investment.

Buffett didn't ask Charlie Munger, the long-standing second-in-command at Berkshire and Buffett's trusted business partner, what he thought about the investments. Instead, Buffett made them alone.

Through this, we can learn whenever any decision surrounding an investment is made, whether it be making an investment in a company, buying a home, or anything of that sort, the best course of action is to enlist the help of someone else, and never make it on your own.

Warren Buffett at the 2013 Shareholder Meeting.

Does that mean you need a financial advisor? That's a real grey area, and there's not a yes or no answer, but it's important to remember they can be incredibly costly, too. Does it mean you should blindly follow "hot" stock market trends?

Considering Buffett says to "be fearful when others are greedy, and be greedy when others are fearful," the answer to that is easier: Of course not.

What Buffett wants us to see is an investment decision should always be made after consulting others -- whether they're friends, co-workers, family, advisors, or others -- who are trusted. While the combined decision may not always be correct -- Buffett and Munger have made mistakes together -- any decision made in isolation has a greater chance of failing.

We can learn a lot from the right things Buffett has done, but learning from wrong things, too, will allow us all to manage our money a little better.

At a press event in San Francisco recently, Samsung  revealed a prototype of the Simband -- a wearable device that can track biometric data, such as heart rate, body temperature, oxygen levels, and hydration. That's a big step up from most fitness bands, which monitor simpler information like steps taken and calories burned. The Simband can also be charged from a small battery pack that clips to the device, so it doesn't have to be removed while charging.

Unlike Samsung's consumer-facing Galaxy Gear and Galaxy Gear 2 smart watches, the Simband is a flexible, open platform that can be modified by other companies for various needs. The device is modular -- meaning that its sensors can be swapped out by third-party manufacturers to create customized wearable devices.

The Simband's sensors. Source: Samsung

The health data from the Simband platform can be delivered, through Wi-Fi and Bluetooth, to other apps, gadgets, and services via Samsung's online service SAMI (Samsung Architecture Multimodal Interactions).

What does Simband mean for Apple?
Many industry watchers consider Samsung's Simband to be a preemptive strike against Apple , which is expected to launch Healthbook, a new health-tracking app, in iOS 8. Healthbook will reportedly capitalize on the motion-sensing features of the new A7 chip, which debuted in the iPhone 5S, and possibly interact wirelessly with the company's long-rumored "iWatch".

Both Apple and Samsung have been rapidly expanding in the medical device industry. Apple has held meetings with the FDA and hired major talent from medical device and sensor companies. Samsung acquired several medical imaging companies and launched GEO, its own line of imaging equipment, last March. Samsung then confidently claimed that it would become one of the world's largest medical equipment companies by 2020, with $10 billion in annual revenues coming from medical devices.

But Samsung doesn't plan to sell the Simband to consumers. Instead, it will license it as a reference design to other manufacturers. That's a play straight out of Google's playbook -- rather than face Apple head-on in smartphone hardware, Google released its open source OS, Android, to divide and conquer the smartphone market.

In other words, individual companies licensing Simband technology might only claim slivers of the market on their own, but Simband as a platform -- like Android in smartphones -- could become the dominant platform in wearables, thanks to its modular flexibility.

What does Simband mean for Nike?
Nike's popular FuelBand fitness trackers could also be threatened by the Simband.

Nike, Jawbone, and Fitbit currently use proprietary technologies that are not compatible with one another. If the wearables market gets flooded by new competitors licensing Samsung's Simband technology, these three companies would end up with proprietary tech in a market dominated by a single standard -- similar to how BlackBerry lost the smartphone market to a fragmented universe of Android smartphones.

The other problem is that licensing technological architecture -- such as ARM Holdings' mobile processors, Qualcomm's hardware templates for smartphones, and Google Android -- results in the production of cheaper, easier-to-manufacture devices. Thanks to those licenses, lower-end Android smartphones can cost less than $200 unlocked -- a third of the price of the original 8GB iPhone, which launched at $599 in 2007.

We can see similar demand in the fitness band market. Some consumers were notably disappointed when Nike's $150 FuelBand SE did not include a previously rumored heart rate monitor. A competing product from Adidas, the miCoach Smart Run, included a heart-rate monitor but cost $399 -- which made it impractically more expensive than mid-tier smartphones, high-end tablets, and low-end laptops.

Nike's Fuelband SE. Source: Nike

If Samsung's Simband gains a foothold with wearable makers, cheaper fitness bands with comparable features to higher end devices will arrive -- just as cheaper Android phones and tablets eventually started matching the specs of higher-end Apple devices.

The Foolish takeaway
In conclusion, Samsung seems to have learned that tackling the consumer wearables market head-on with devices like the Galaxy Gear is the wrong approach. After all, why release a single device when it can provide the foundation for many more?

According to research firm Canalys, the smart bands market -- which includes smart watches and fitness bands -- is expected to grow 350% year over year to 8 million shipments worldwide by the end of 2014, hit 23 million units by 2015, and top 45 million units by 2017.

To capitalize on that whopping growth, investors should follow these wearable devices closely and see which company's approach will come out on top -- Apple's Healthbook for iOS devices, simpler fitness bands from Nike and Jawbone, or Samsung's modular Simband.

Consumer-products giant PepsiCo may seem like a boring company, but its history of enriching shareholders is anything but boring. PepsiCo has made its investors boatloads of money over a long period of time, thanks to its effective management, world-class brands, and products that are bought every day across the world in a good economy or bad.

That's the formula that has allowed PepsiCo to provide such impressive returns to investors over the course of its history. The company recently increased its dividend for the 42^nd consecutive year. Its track record is evidence of the powerful business PepsiCo operates. For that reason, PepsiCo should keep generating strong returns for a long time to come.

Source: Pepsico.com

PepsiCo: Not in a hurry to shake things up
If you think there isn't much fizz in the soda industry, you'd be right, and that's just how PepsiCo likes it. The company is under pressure from analysts and investors to shake things up, but management has long resisted calls to change strategy just for the sake of doing something.

PepsiCo's major adversary in the soda wars, Coca-Cola , announced a partnership with Keurig Green Mountain . Coca-Cola invested $1.2 billion in Keurig for a 10% stake in the company. Together, they will develop an at-home cold beverage system, utilizing Keurig's existing coffee-brewing technology.

At the time, this partnership seemed like the next big hit. But to a certain extent, it seems like Coca-Cola might be afraid of shifting consumer preferences. Consumers are slowly demonstrating a distaste for the sparkling beverages that make up the bulk of Coca-Cola's business because of the high calories and sugar. Even diet drinks, like Coca-Cola's flagship Diet Coke, are facing scrutiny for their chemicals.

The reason why PepsiCo hasn't pursued a similar partnership is that it holds a much more diversified business than Coca-Cola. PepsiCo's revenue mix is evenly split between food and beverages. PepsiCo holds a slew of brands that aren't under as much pressure as soda right now. These include Gatorade, Quaker, and Frito-Lay. Besides which, the likelihood of an at-home cold-soda-beverage platform becoming a smash hit is far from guaranteed.

SodaStream has had such a product on the market for several years now, and it's by no means a widespread phenomenon. The investment represented a drop in the bucket for Coca-Cola from a financial perspective, so it doesn't have much to lose. But it's clear that PepsiCo is in no rush to pursue a similar deal. Nor should it be.

PepsiCo keeping it all in the family
In addition, one of its biggest investors, Nelson Peltz of Trian Fund Management, recently pressured PepsiCo's board of directors to spin off its North American beverage business. Trian, which owns about 1% of PepsiCo, believes that the company could create substantial value for shareholders by pursuing a spinoff by basically separating the wheat from the chaff. PepsiCo's foods business is growing faster than its beverage unit, so Peltz feels the sum of the parts is worth more than the whole.

But PepsiCo's board won't spin off the beverage unit, and rightly so. There's really no reason to. The beverage business isn't growing rapidly, but it's still massively profitable and represents a core brand connection with consumers.

PepsiCo's performance speaks for itself
PepsiCo hasn't bowed to complaints from analysts and investors that its growth isn't impressive enough and that it should do something big to shake things up. The truth is that the company simply doesn't need to spend a lot of money on something that may or may not pan out. It produced 10% earnings growth last quarter and announced a 15% dividend increase in May. Plainly stated, PepsiCo is doing just fine.

PepsiCo has returned more than $60 billion to shareholders over the past decade through dividend payments and share repurchases. This year, it expects to return $8.7 billion to investors, which would represent a 35% increase from last year. It's plain to see that PepsiCo is right on track and doesn't have anything to prove.

Retail restaurants in the casual, fast-casual, and quick-service sectors are facing pressures from rising food costs, especially the cost of beef. The Bureau of Labor Statistics recently reported that the Consumer Price Index for meats, poultry, fish, and eggs rose 1.5% in April.

Over the last three months the CPI for these foods is up 3.9%, while the index for meats rose 2.9% for its largest increase since November 2003. Finally, the index for food away from home rose 0.3% in April, the third-straight such increase, and has increased 2.2% over the last 12 months. 

The high price of beef will likely be in play going forward. According to a recent survey conducted by Bloomberg, the spike in beef costs is due in part to the size of the US cattle herd falling to its lowest level in 63 years. This could force the price for steak and ground beef to climb by as much as 5-10% and 10-15%, respectively, over the next two years.

Why this matters
Put simply, consumers will have to pay premium prices for beef for the next year or two. However, the question remains as to whether diners will eat in or cut back on per-ticket orders. That being said, retail restaurants will invariably pass higher food costs to their guests.

In fact, fast-casual chain Chipotle Mexican Grill recently announced during its last earnings call that it will raise prices in the "single digits" this quarter to offset higher food costs.

Jack Hartung, the company's chief financial officer, said that "beef prices are expected to continue to move higher as supply remains tight."

Chipotle's management believes, however, that the company will continue to perform well regardless of the menu price hikes. The chain also touts its reputation as environmentally conscious in light of its leadership regarding the labeling and use of genetically modified organisms.

Alex Spong, Director of Investor Relations, stated during the call that Chipotle "eliminated virtually all of the GMO ingredients in our food."

"Our corn and flour tortillas are the only foods we currently serve that are made using ingredients that contain or could contain trace amounts of GMOs and now we're testing new non-GMO recipes for these tortillas," Spong said.

While this could help continue bringing diners to its doors, the proof is in the earnings. Chipotle has also resisted menu price increases until this announcement. Raising menu prices actually could help support profits, provided that customers are not put off by the price hike. Be that as it may, Chipotle is a very pricey investment, and some investors might find better value by dining elsewhere in the sector.

Other restaurant chains respond to rising beef prices
The Cheesecake Factory announced menu price hikes of at least 2% a year back in February before the CPI reported rising beef prices in March and April.

The Factory recently reported its financial results for the first quarter of fiscal 2014, which ended on April 1, 2014, and reported total revenue of $481.4 million for the period compared to $463.0 million in the year-ago period.

Like other chain restaurants, The Cheesecake Factory and its Grand Lux Cafe line saw their sales rise by a mere 0.9% during the quarter, due in-part to the harsh winter weather. However, the company does not seem too worried about rising beef costs and the planned menu price hikes should help Cheesecake continue to bake, so to speak.

Chairman and CEO David Overton argued that the chain's extensive menu, high-quality foods and service level allow for a "unique dining experience for our guests." Overton believes that Cheesecake will continue to deliver "dependable comparable sales results over a sustained period of time."

At the other end of the retail restaurant table, Sonic Corporation rolled out a 2% price hike in Nov. 2013 to offset higher food and commodity costs. The quick-service chain is strong in a number of ways.

Source: Mike Mozart, Flickr

Sonic saw earnings per share improve by 16.7% in the most recent quarter compared to the year-ago quarter despite the harsh winter weather and rising food costs. The company also has a history of solid earnings-per-share growth.

Finally, Sonic's present share price of $20.30 is off of its 52-week high of $23.56, and its forward P/E of 20.71 is well below today's price-earnings ratio of 29.90. This indicates that some solid share price growth is on the grill for 2014, regardless of slightly higher bills for diners.

The bottom line
Rising beef prices are here to stay for at least the next two years because of the smaller cattle herd. However, diners will continue to eat out rather than cook at home, in my opinion. The question remains as to whether they will cut back on their per-ticket orders.

In any event, investors should pick and choose their dining locales carefully as the rising beef prices take hold; chains like The Cheese Factory and Sonic Corporation appear well positioned to weather the food-cost storm.

Between Shapeways, 3D Systems , Stratasys , and now Proto Labs, it's safe to say that the 3-D printing as a service space is becoming increasingly crowded. Although manufacturing expertise can be certainly act as a key selling point between competitors, speed is also an area where 3-D printing service centers can out-muscle the competition. French-based Sculpteo thinks its fast turnaround times will help differentiate it from competing services.

On average, Sculpteo can turn a 3-D model into a 3-D printed object for its customers within eight days, but in certain instances, it can fulfill orders within five days. Shapeways, which focuses on providing consumers with professionally 3-D printed objects, has a current turnaround time of more than three weeks, with expedited shipping. Sculpteo is more focused on the business market, with its ideal customer being a small business that needs to rapidly iterate a prototype, make product improvements, and bring said product to market as quickly and affordably as possible. Ultimately, Sculpteo and competing rapid prototyping services are playing to the strength of 3-D printing, which allows prototypes to be made quickly and affordably. This fundamental strength has brought 3D Systems and Stratasys greater fortune in recent years, and it has certainly been a boon to their stock long-term prices.

DDD data by YCharts.

While 3D Systems' and Stratasys' competing professional 3-D printing services don't readily advertise 3-D printing lead times, both companies certainly have their share of expertise with 3-D printing as a manufacturing medium, not to mention they have an opportunity to sell their 3-D printing products to companies like Sculpteo that are working to define the segment. At the end of the day, the name of the game for 3D Systems and Stratasys is to sell as many 3-D printers as possible, so it creates an opportunity to generate a highly profitable stream of recurring revenues through the sale of proprietary materials over the lives of their printers.

In the following video, 3-D printing specialist Steve Heller asks Kristen Turner, director of U.S. marketing at Sculpteo, how it differentiates itself in the crowded 3-D printing service space. Going forward, 3D Systems and Stratasys investors should continue to monitor developments out of the 3-D printing as a service space to get a better understanding of which technologies -- and therefore companies -- are most favored.

Canola field in New South Wales, Australia. Source: Wikimedia Commons

Monsanto just won the right to ruin Australia's farming industry and further control the world's food supply. Even though an organic farmer's livelihood hangs in the balance, a judge Down Under said it doesn't matter: There will be no accountability for genetically modified crops contaminating a neighboring farmer's fields.

Imagine an industrial manufacturer whose regular methods of operation include allowing pollutants to spill onto surrounding properties, contaminating them. Now picture a judge ruling that because the products it manufactured were lawful, there was nothing inherently wrong with their manufacture. And because its disposal systems were standard industry practice, the fact that it was polluting its neighbors' property didn't matter, so the manufacturer couldn't be held responsible for the outcome. That's the equivalent of what that Australian judge just decided.  

Steve Marsh is an organic farmer in Australia whose neighbor Michael Baxter began planting Monsanto's genetically modified Roundup Ready canola seed soon after Western Australia authorized their use in 2010. Baxter planted the seed in plots adjacent to Marsh's organic fields that were separated only by a dirt lane.

In his lawsuit against Baxter that was filed after Marsh lost organic certification of 70% of his fields (costing him over $78,000), the organic farmer contended the GM seed blew across the road and contaminated his organic canola. 

According to the Australian Oilseeds Federation, GM canola accounted for approximately 15% to 20% of Australia's canola crop in the 2012 to 2013 growing season. Here in North America, where GM canola accounts for 90% of the total, it's nearly universal. 

Monsanto, DuPont , and Syngenta  control 53% of the world's seed production with their GM variants. With at least 85% of all soybeans, corn, and sugar beets grown from genetically modified seed it's a good bet if you see any of those listed as ingredients on a label, there's a good chance it's been modified on a genetic level. It's estimated 60% to 70% of all food on supermarket shelves is GMO.

Although Monsanto has said it would never go after a farmer for violating its patents in instances where just trace levels of its transgenic genes were present, in actuality it has proven all too willing to bring the full weight of its vast financial resources against farmers who've claimed their were crops were contaminated in a fashion similar to what happened with Marsh. Since 1997, Monsanto has filed 145 lawsuits against farmers who've improperly reused its patented seeds -- or about one lawsuit every three weeks for 16 straight years. And it's never lost.

The judge in his ruling further said he thought the decision by the organic authority to strip Marsh of his certification was a "gross overreaction," that since only a small portion of the canola was contaminated, it could easily have been removed. But that's beside the point as it suggests farmers using GM-tainted seeds can ride roughshod over the rights of other farmers, and that organic farmers have to accommodate them.

The ruling stands the concept of property rights on its head. A farmer should have the right grow GMO crops so long as they stay on his property. He ought to be required to take pains to ensure they don't contaminate his neighbors crops. Like polluters, once the seed crosses over that boundary, he is then infringing on his neighbor and should be held accountable. 

Unlike the U.S. and elsewhere where the probability of cross-contamination is acknowledged and trace amounts of GMOs are permitted in crops that are otherwise labeled "organic," Australia doesn't have that distinction. Organic means 100% organic with no trace GMOs permitted. It was thought that if Marsh was successful in defending his property rights that Australia might be forced to relax its standards. Now, though, having lost the decision, it's possible Australia might do so anyway.

Because Monsanto requires farmers to sign nonliability clauses when they purchase seeds from it, the biotech was not at risk financially in the event of a loss (it hedged when asked if it was financially defending Baxter in the case). So it was a win-win situation regardless, because no matter how it fell out, if Australia changes its strict anti-GMO policies, it will be able to sell more GM seed.

While I thought this case was the best chance proponents of organic farming had of denting Monsanto's armor, in the end it proved it's as invincible as it's always been.

There are a number of factors that influence stocks each week, but the first few days of a new month are particularly important given two critical reports about auto sales and unemployment.

Early in the week, stocks are likely to be influenced by news out of the nation's largest car and truck manufacturers, as they begin rolling out sales figures for the month of May.

The big question is whether they'll be able to continue their momentum from last month. In April, General Motors reported a nearly 7% increase in vehicle sales despite the still-tepid economy. And Fiat Chrysler notched a 14% gain thanks to a strong performance from its Jeep branded sport-utility vehicles and Ram pickup trucks.

The one carmaker left in the dust in April was Ford . Sales at the company fell, albeit by less than 1%, over the month. As my colleague Daniel Miller discussed at the time, the drop was the result of a dismal performance by Ford's Lincoln brand and lackluster demand for the American automaker's car segment.

With GDP statistics recently suggesting the economy contracted in the first-quarter of the year, analysts and investors will be watching the updated figures from the month of May closely.

The second big report this week, due out on Friday, concerns the government's official estimate of unemployment. While the unemployment rate has dropped considerably since the peak of the Great Recession, it's since gained additional momentum.

In April, employers added jobs at one of the fastest rates during the recovery. Nonfarm payrolls, the principal metric used by economists to gauge the health of the labor market, expanded by 288,000 during the month. Additionally, the unemployment rate dropped to 6.3%, or the lowest level in six years.

Of course, this metric alone arguably overstates the health of the American worker, as large swaths of otherwise employable workers have stopped looking for work and thereby dropped out of the labor force (and thus the denominator of the unemployment rate). Additionally, the length of unemployment remains at a historic high.

Given this, analysts and investors will be watching the official report closely for signs that last month's momentum was part of a larger trend and not merely an outlier.

Electric-car maker Tesla Motors has a lot going for it. So much that the market demand for Tesla stock in the past two years has run up the price by more than 600%. A wildly successful Model S launch has given investors enough confidence to value the company at $26 billion -- almost half of General Motors' $55 billion market capitalization. But can Tesla really become a mass-market player? While it won't be easy, Tesla does have one major advantage on its path to competing with the big dogs.

Model S. Source: Tesla Motors.

Tesla's hidden infrastructure
Tesla's Supercharger network is impressive. The Tesla-branded charging stations will juice a Model S to a 50% charge (132.5 miles of range) in just 20 minutes, or an 80% charge in 40 minutes. These stations, which offer Tesla owners free charging for life, are rapidly proliferating. Today, Tesla owners can travel up and down the West and East coasts and across the country. By 2015, the company plans to have charging stations within driving range of 98% of the U.S. population.

Tesla's planned corridors for Supercharging stations to be open for use by the end of 2015. Source: Tesla Motors.

This planned network puts the most optimistic scenario for potential hydrogen fuel cell fueling stations by 2015 to shame.

But Tesla's map of planned Supercharger stations drastically understates the company's infrastructure. Tesla's greatest asset, in fact, may already be in your home: your electricity.

As it turns out, charging at home is sufficient for the majority of travel. A 2012 study by two doctoral students at the School of Engineering and Applied Science at Columbia University estimated that the average daily driving for urban-based cars is 36.6 miles and the average for rural-based cars is 48.6 miles. Both figures are well below the EPA-rated range of Tesla's 60-kWh and 85-kWh versions of its Model S, with ranges of 208 and 265 miles, respectively.

A charging Model S. Source: Tesla Motors.

After installing a 240-volt outlet, Tesla owners have plenty of power to wake each morning with a full charge. On Tesla's website, it says owners can get a 265-mile charge in nine hours using a 240-volt outlet. However, if owners pair a Tesla Wall Connector with its Dual Chargers option, they can fully juice their Model S in half that time.

Tesla has some tough challenges ahead, like building the manufacturing capacity to support sales of its lower-cost vehicle after it launches in 2017 so that the company can hit the planned level of 500,000 vehicles per year by 2020. But infrastructure is among Tesla's easier obstacles to overcome. Not only is it readily possible for owners charge their vehicles at home, but advancements in solar panel technology will likely improve the costs of charging electric vehicles over time.

The ease with which Tesla can tap into existing infrastructure gives its electric vehicles an edge over fuel cell technology, and also brings it one step closer to becoming a mass-market player.

Over the past few years, surging shale gas production from Pennsylvania's Marcellus shale has propelled the state to become the second largest gas-producing state in the country, recently inching ahead of Louisiana and behind only Texas.  

In addition to its positive impact on the state's economy, surging shale gas output from the Marcellus is also lining the state's coffers with hundreds of millions of dollars from so-called drilling impact fees. Yet some argue that Marcellus shale drillers should pay the state even more money. Are they right?

Photo Credit: Chesapeake Energy.

Pennsylvania's Marcellus cash cow
Major Pennsylvania gas producers paid some $225 million in drilling impact fees for the fiscal year 2013-2014, up from $204.3 million in the previous fiscal year and $204.2 million in 2011-2012. These fees, introduced as part of a law called Act 13 passed by Gov. Tom Corbett in 2012, fluctuate based on the price of natural gas and require operators to pay a certain amount for each horizontal well and each vertical well they drill, irrespective of the amount of natural gas the well produces.

Funds collected under Act 13, which are directly distributed to Pennsylvania's counties and municipalities, help pay for things such as infrastructure, emergency response, public safety, and environmental programs. In the less than three years through April 2014, Act 13 has added some $630 million to Pennsylvania's state revenue, according to Corbett, in addition to the $2 billion in state taxes Marcellus drillers have paid since 2007.  

Are Marcellus drillers paying enough?
Range Resources shelled out the most money to the state of Pennsylvania, paying  nearly $28 million in impact fees last year, while Chesapeake Energy was a close second with roughly $26.7 million. Other companies that contributed significantly to lining state coffers were Cabot Oil & Gas , which paid $13.3 million, Anadarko with $12.3 million, and Southwestern Energy, which shelled out $11 million.

For Chesapeake and Cabot, these impact fees aren't exactly an overwhelming factor, seeing as they're just a fraction of their annual profits, which came in at $474 million and $298 million, respectively, for the full-year 2013. For Range, however, $28 million in impact fees represents almost a quarter of its $116 million net income last year. Indeed, the company stated in its 2013 Annual Report that impact fees have increased the "financial burden" on its Marcellus shale operations.

But some want Range and other Marcellus drillers to pay even more. They argue that the state could have generated even more money had it adopted severance taxes, which are imposed on oil and gas producers in other states like Texas, Oklahoma, and West Virginia.

That's because revenue from severance taxes increases with production, unlike impact fee revenue, which depends on the number of wells drilled and the price of natural gas. According to an analysis by The Morning Call, the imposition of a 5% severance tax would have generated about $425 million for the 2013-14 budget, nearly twice as much as the $225 million generated from impact fees.

Is a severance tax the solution?
Pennsylvania's Democratic candidates for governor are all in favor of a new severance tax, which, they argue, would provide the state with much greater revenues in the years ahead. According to the Pennsylvania Budget and Policy Center, a 4% severance tax could generate $1.2 billion annually by 2019-20. However, opponents including Gov. Corbett argue that imposing a severance tax would risk driving away the Marcellus drillers that have been so vital to the state's job growth.

While the Marcellus shale is arguably the most economical shale gas play in the country -- with companies like Cabot, Range, and Chesapeake able to earn triple-digit rates of return at a wellhead gas price of $4 per Mcf -- a more challenging regulatory and tax climate could erode these returns and force them to cut back on drilling or look elsewhere for more profitable opportunities.

Beyond the potential negative impact on Marcellus drillers, landowners that have granted these companies leases to drill on their land could also suffer since most lease agreements would require them to pay a proportion of the severance tax, unlike the existing impact fee. As a result, they would receive less from royalty checks.

It's an interesting debate with good points put forth by both sides. What do you think is the optimal solution? Should Pennsylvania impose a severance tax, or are drilling impact fees the way to go?

It looks like any other recent Ford F-150. But secretly, this pickup at a Barrick Mining operation in Nevada was built with an aluminum cargo box as part of a Ford durability test. Source: Ford Motor Co.

Ford really wants you to know that their all-new aluminum-bodied F-150 is a tough truck.

This past week, Ford released more details of a secret field-testing program that began in 2011, in which some of Ford's big commercial-fleet clients put aluminum-bodied F-150s to work.

We'd heard a bit about that testing program from Ford COO Mark Fields and other executives when the new truck was first revealed back in January. But now we know a lot more.

These field tests were part of an unprecedented testing program for the all-new F-150, in which engineers went far beyond Ford's usual durability tests to ensure that the new truck's aluminum body would hold up to plenty of hard use.

What did Ford learn from those tests? Enough to make even Ford's top executives really confident about the 2015 F-150's chances.

They were just ordinary F-150s... with a secret change
The experimental pickups that Ford sent to three of its longtime commercial-fleet clients weren't actually all-new 2015 F-150s. That would have been too obvious, and Ford didn't want the testers to know exactly what they were testing.

Instead, Ford built six special prototypes, 2011 F-150s with experimental aluminum-alloy cargo boxes. Those were sent to three longtime Ford fleet customers -- who didn't know what they were getting. 

Ford's engineers wanted to see how well the aluminum cargo beds would hold up under harsh real-world use. 

And they were harsh. I asked Ford's Larry Queener, who ran the testing program, to explain just how harsh the testing regimen was -- and how well the experimental trucks held up.

Queener told me that the two prototype trucks at Barrick Gold's mines near Elko, Nev., were used by the company's surveying team, driving 100-300 miles a day over tough terrain -- often right into mine pits. "There are no county roads out there," he emphasized. The trucks drove over dirt and rocks and up and down hills, all day -- often with unsecured heavy equipment bouncing around in back.

The F-150s at Barrick are driven on rough dirt roads, often with heavy gear in the cargo box. Source: Ford Motor Co.

A utility company in North Carolina assigned one of their F-150s to a meter-reading team that regularly traveled on steep mountain roads. A third client, a construction company, put their F-150s to use at a hydroelectric dam project in Pennsylvania. Again and again, the trucks' aluminum pickup boxes were loaded with equipment and bounced over rough terrain.

Did the trucks' aluminum cargo boxes hold up? Yes. All six trucks are still in use. 

Did the users notice something different about the trucks? Well, Ford prototype engineer Denis Kansier -- who visited the sites to check on the trucks every three months -- said that some drivers noticed that the truck's beds didn't develop surface rust where the paint was scratched away, something that's typical with steel-bodied pickups.

And they didn't crumple like beer cans. For the most part, they held up like... regular F-150s, Queener says. in fact, Queener thinks that after 75,000-plus miles of hard commercial use, the trucks in the test might have looked a bit better than a steel-bodied pickup would have.

But Queener emphasizes that Ford learned some lessons from the tests -- and those lessons led to changes in the trucks that will go into production later this year. Among other changes, Ford increased the thickness of the cargo box's floor and made revisions to the tailgate to improve its long-term durability.

A massive testing program has made Ford very confident
These customer tests were just one small part of the elaborate testing program for the new F-150 -- but Queener points out that Ford learned lessons from those tests that it might otherwise have had to wait to learn from the experience of its paying customers.

Queener said that by the time the first 2015 F-150 rolls off the assembly line later this year, the company will have accumulated the equivalent of 10 million miles of durability testing on its new truck. That's significantly above and beyond Ford's usual new-product testing.

A typical day for the F-150s at Barrick's site in Nevada includes trips over terrain like this -- with no paved roads in sight. Source: Ford Motor Co.

But it begs a question: Why is Ford going to such great lengths to test its new truck -- and to make sure we know about all the testing? 

The simple answer is that Ford is making a big change to its most important product, its most profitable product -- and it wants truck customers, and Ford investors, to know why it thinks this is a good change.

By switching to a tough aluminum alloy for the body panels on the new F-150, Ford will be able to make each truck hundreds of pounds lighter than the current model -- up to 700 pounds lighter in some configurations.

That will improve the trucks' fuel economy (and their handling, and their towing capacities). Ford believes that the aluminum alloy they're using, and the construction techniques they've chosen for the new trucks, will allow its customers to get those benefits with no downsides. 

The company believes that its new F-150s will be just as rugged and durable as the current trucks. They believe that because of all the testing they've done, and Ford officials want us to know just how extensive that testing has been, so that we believe it too.

The new F-150 won't be the last new lightweight Ford
It's no secret that gas is a lot more expensive than it used to be, and that the world's governments are imposing ever-tighter restrictions on new vehicles' fuel economy.

All consumer vehicles, from small cars to big pickups, will need to get better fuel economy in coming years. Not only to meet those regulations, but as a competitive advantage. 

Your pickup's gas mileage may not matter a lot to you personally. But it matters to businesses. Commercial customers buy a lot of pickups. Being able to show a commercial truck-fleet manager that your pickups will get better gas mileage without compromising performance -- that they'll be cheaper to run over time -- can make the difference between a big sale, and no sale. 

Each of the big global automakers is taking a different approach to meeting tougher fuel-economy regulations. Some are pushing more aggressively into hybrid drivetrains, or fuel-cell powerplants, or battery-electric vehicles, or advanced construction materials like carbon fiber. Most are doing all of those things to some extent, but each company has its own emphasis.

Like most of its major rivals, Ford is working on all of those things. But Ford is also making a big companywide effort to make its vehicles lighter, without compromising durability or safety. 

The extensive use of aluminum in the all-new 2015 F-150 is a very high-profile change. Ford could have chosen a much more conservative route, like General Motors  did with its new 2014 Chevy Silverado.

But Ford thinks that reducing the weight of its products, without significantly changing how they function, is a good way to realize fuel-economy gains without the need to rely on new technology. There are more weight-saving changes coming in future Ford products, as the company does all it can to get the most out of current technology. 

What do you think? Has Ford made the case for its new truck, or do you need to see more to be convinced that it'll hold up in the real world? Scroll down to leave a comment with your thoughts.

Chesapeake Energy recently held its first analyst day since new CEO Doug Lawler took the reigns last year. One of the key takeaways from the conference was management's greater optimism regarding Ohio's Utica shale, which it called its "newest world-class asset."

Chesapeake expects the emerging play, where it is one of the largest and most active leaseholders, to be a key driver of its liquids production growth and plans to more than double its current Utica production level by year-end. But given the recent departure of some high-profile operators because of the Utica's higher-than-expected dry gas content, will Chesapeake's renewed focus on the play pay off?

Source: Flickr/Vicki Watkins.

A change of heart in the Utica
While the industry had extremely high hopes for the Utica initially, with former Chesapeake CEO and founder Aubrey McClendon calling it "the biggest thing to hit Ohio since the plow," the bullish sentiment has died down considerably after some operators' test wells suggested the play contains more dry gas and fewer liquids than initially believed.

Companies including BP , Hess , and Halcon Resources have added to the negative sentiment in recent months. BP said last month that it is scrapping plans to develop its nearly 100,000 acres of Utica shale leasehold following poor appraisal results from test wells. The British oil giant took a $521 million write-off associated with its Utica holdings for the first quarter of 2014.

Hess, meanwhile, struck an agreement to sell 74,000 mainly dry gas Utica acres to American Energy Partners LP, which, ironically, is led by none other than Aubrey McClendon, for $924 million back in January. Hess has been busy divesting non-core assets in order to reduce its debt, repurchase its stock, and focus on its most promising opportunity in North Dakota's Bakken shale.

Halcon Resources, which commands 139,000 acres in the Utica, also doesn't seem too optimistic about the Utica. The company recently said it would suspend its drilling program in the play this year, citing worse-than-expected test results in the northern portion of the Utica and more attractive opportunities in North Dakota's Bakken shale and Texas' El Halcon basin.

But unlike BP, Hess, and other operators that have exited the Utica, Chesapeake enjoys numerous advantages in the play, including an industry-leading cost structure, extensive technical expertise, and improving infrastructure that should allow the company to significantly ramp up production and also generate much stronger returns.

Chesapeake's competitive advantages
Chesapeake is one of the largest leaseholders in the Utica, with over 1 million net acres under its belt. To date, it has drilled 485 Utica wells, of which 274 are currently producing. The company is currently pumping around 75,000 barrels of oil equivalent per day (boe/d) in the play, which is already up 50% compared to a first-quarter average production level of 50,000 boe/d.

By the end of the year, Chesapeake expects its net Utica production to exceed 100,000 boe/d. Not only is the company's Utica production poised to grow rapidly, but its operations in the play are now much more profitable than they were just a couple of years ago, thanks largely to major reductions in well costs and the number of days it takes to drill a typical well.

The company expects its typical Utica well to cost just $5.7 million by year-end 2014, down significantly from $7.7 million in 2012 and $6.7 million in 2013. Average drilling days have also fallen from 24 days in 2012 to 20 days last year to a projected 15 days by the end of this year. By comparison, the average Utica operator spends $11.8 million per well and takes 35 days to drill and complete a well.

As a result of this huge production cost advantage, the company's returns from the play are exceptionally high. Assuming a wellhead gas price of $4.50 per Mcf and an oil price of $95 per barrel, Chesapeake's Utica wells generate rates of return ranging from of 65% to a high just north of 80%, which even compare favorably to world-class plays such as the Eagle Ford and Bakken.

Overall, the company expects its Utica drilling program to generate a 45% rate of return this year, up from just 20% last year. By next year, that figure could rise to as high as 60%. Chesapeake also now has a major infrastructure advantage in the play thanks to the recent start-up of the ATEX pipeline, on which it has firm transportation commitments. This ensures its production can get to market at low cost.

Investor takeaway
Chesapeake's renewed focus on the Utica shale holds much promise for the company, given major cost improvements over the past two years. With production from the play expected to double by the end of the year, investors may want to keep an eye out to see whether production and returns match up with the company's projections, since any disparities would have a meaningful impact on its production and cash flow outlook.

The offshore drilling sector has not had a good year. Year to date, Transocean is down 16%, Diamond Offshore is down 11%, and Seadrill is down 13% as Wall Street analysts continue to speculate that the industry is heading toward a two-year slowdown.

Unfortunately, yet more warnings over the sector's outlook have recently emerged; this time, they came in the form of a caution. Wall Street believes that some investors who are looking at taking a position in one of the offshore drillers as a value play due to their low valuation may be stumbling into a value trap.

Looks too good to be true
At current levels, the offshore drillers look cheap. Diamond Offshore, for example, currently trades at a 2015 P/E of 9.8 and price-to-book ratio of 1.5. Transocean trades at a forward earnings multiple of 8.1 and a price-to-book ratio of 0.9, while Seadrill trades at a forward P/E of 7.9 and a price-to-book of 2.2.

While these valuations appear attractive at first glance, analysts at Barclays' see numerous headwinds going forward. These analysts believe that downward revisions to earnings could send valuations higher over the next few quarters. 

Overall, Barclays believes that there is a 30% downside to current EPS forecasts after factoring in items such as lower-than-expected day rates. With this being the case, analysts believe that after taking into account the worst-case scenario, Diamond could be trading at forward P/E's of 26.2, Transocean at a ratio of 12.9, and Seadrill at a ratio of 9.1 times.

Barclays bear
This is not the first time that Barclays has issued such a dismal forecast on the industry's outlook. Back in January, the bank issued a research note stating that drillship day rates could fall as much as 16% over the next few quarters.

As a result, the company downgraded 2015 earnings forecasts by as much as 40% for some companies. It also reiterated the fact that companies with high levels of leverage were going to suffer the most, claiming that Seadrill's shares could collapse by as much as 52% if forecasts proved accurate.

Only time will tell if Barclays' forecasts will come true. As of yet, there has been no such decline.

Net asset values could fall
Unfortunately, Wall Street analysts have another warning for value investors. Analysts believe that as day rates deteriorate, net asset values of offshore assets are going to decline.

Net asset values are usually used by value investors to establish a base case for investment since if a stock is trading below its net asset value per share then it is considered to be undervalued. Wall Street believes that underlying net asset values of drillers could decline from their present levels, similar to the way net asset values were written down by 16% following the financial crisis and then by 8% after the Macondo disaster.

Foolish summary
In conclusion, Barclays' view on the offshore drilling industry may prove to be more pessimistic than it should be. However, the bank's analysts raise some valid points. If day rates and utilization rates within the offshore drilling industry continue to fall, earnings are going to fall and this will result in a re-rating of offshore drillers' valuations.

If earnings fall, valuations will rise. Drilling companies that once looked cheap will then look expensive -- a classic value trap.

Hollywood producers like Aaron Sorkin, Kyle Killen, and Mike Judge all have dedicated followings, but that doesn't always translate to success unless you find the right network to support the project. For Judge and HBO (a subsidiary of Time Warner ), Silicon Valley has been a big success. As the series prepares to wrap its first season tonight, it's important to recognize why it's been a big win for both sides.

Comedic timing

Credit: HBO

Many people think of HBO for its top-tier Emmy winning dramas. But the premium heavyweight also has had a lot of success with comedies ranging from the very beginning with The Larry Sanders Show to more recently with Veep.

The problem is that the network hasn't had as much luck in producing hits for that category for the past few years. In fact, if you look at HBO's recent new comic offerings there's nothing funny about it or the ratings the group has produced. Granted this is HBO and they operate on a subscriber business model so ratings don't apply to the same level. But you still want to program shows people will actually watch.

Silicon Valley though represented a giant shift in that paradigm for HBO and it came at just the right time. With the network so focused on dramas and the exiting trio of True Blood, Boardwalk Empire, and The Newsroom, it needed something big to pop organically on the comedy side. The show has been a breath of fresh air for HBO -- paired with the dominating Game of Thrones and Emmy darling Veep, the network's had it most appealing Sunday lineup in a long time.

Raw data

After bowing to 1.9 million viewers (HBO's best performing rookie comedy premiere since 2009's Hung), Valley suffered a noticeable second week swoon (among live viewing) only to see most of that audience return weeks later before balancing out. It also attracts more affluent viewers, many of who are in the tech industry in which the series is set.

One explanation for that spike could be HBO giving the show an early renewal after just a few episodes. While HBO is one of the better networks in terms of giving its shows a real chance to survive, this is still a culture of trigger-happy executives that has produced gun-shy viewers.

It's hard to gain audiences' trust no matter what your network's track record. What these numbers show though is that Valley could be a series that will bring HBO new subscribers and at a time where the network really needs them.

TV 'Space'

Credit: HBO

Silicon Valley could have easily joined the laundry list of flops that came before it. So why did it do so well? Some of the credit could go to having Game of Thrones as its lead-in, but a lot of it should also go to the genius of creator Mike Judge.

Best known for his work on MTV's Beavis & Butthead and Fox's King of the Hill, Judge's comic style has never really been able to translate to the big screen. While Office Space and Idiocracy are cult favorites, both under-performed at the box office and his most recent film Extract just bombed altogether. Still his fans are loyal and his return to the medium that made him famous was welcomed.

A programmer in his pre-Hollywood days, Judge drew upon that experience to craft the series about a group of friends working on a tech start-up, and as a result Valley's also been picking up props for its realism. While there will always be naysayers and people who believe TV can never truly nail the real-life aspect of any job or experience, Valley's gotten more right than it has wrong, according to many experts including Kurt Wagner at Mashable, who said it best when he wrote "for those in tech in the Bay Area, Silicon Valley doesn't just hit home — it is home."

It's also found a home with TV critics who have for the most part fallen in love with its well casted ensemble. Just the other week the Broadcast Television Journalists Association rewarded the series with three Critics Choice Award nominations and many are already suggesting it could even break into the Emmy race next month. In any case Valley is already a winner for HBO and that's something to celebrate.

The Dow Jones Industrial Average might take a breather from its record-setting run today. The index fell 26 points in pre-market trading, suggesting a lower start to the stock market after two back-to-back closes in record territory. World indexes were mixed in overnight trading, with Asian stocks up slightly and European shares down by 0.4% as of 7:30 a.m. EDT. 

Meanwhile, news is breaking this morning on Hillshire Brands and Dollar General , which should both see heavy trading in today's session.

Hillshire Brands' stock spiked higher by 8.6% in pre-market trading after the food company announced that it will conduct talks with its two corporate suitors, Pilgrim's Pride and Tyson Foods. At $55 a share in cash, Pilgrim's currently has the richest bid on the table to buy out Hillshire shareholders, but Tyson's isn't far off at $50. Both offers represent a more than 50% premium from where Hillshire's shares traded in January. The company stressed in a press release today that there "can be no assurances that any transaction will result from these proposals," because they both require it to walk away from its own proposed buyout of Pinnacle Foods. But investors seem to be betting not only that a Hillshire purchase will happen, but that the bidding will escalate further before it does: Hillshire's stock rose to as high as $58 a share before the opening bell. 

Dollar General today posted quarterly earnings results that were just a tad below Wall Street's expectations. Revenue rose to $4.5 billion while profit ticked higher to $0.71 a share. Analysts were targeting sales of $4.6 billion and earnings of $0.72. CEO Rick Dreiling said in a press release that the discount retailer's disappointing 1.5% same-store sales growth "reflected the challenges of unfavorable winter weather, heightened competition, and the current economic environment." Still, the company saw improving sales trends toward the end of the quarter, which gave management confidence to reaffirm its full-year guidance. Dollar General still sees same-store sales growing by between 3% and 4% in 2014, compared to last year's 3.3% growth. Profit should also come in at $3.50, ahead of the $3.20 it booked in 2013. The stock was up 1% in pre-market trading.

This article was written by Oilprice.com -- the leading provider of energy news in the world. Also check out this recent article:

China has denounced U.S. Defense Secretary Chuck Hagel's characterization of Beijing's territorial claims in East Asian waters.

At an international security conference in Singapore on May 31, Hagel warned that Washington "will not look the other way" when a country uses intimidation to sidestep United Nations rules on territorial waters and international navigation rights.

"All nations of the region, including China, have a choice: to unite, and recommit to a stable regional order, or to walk away from that commitment and risk the peace and security that has benefited millions of people throughout the Asia-Pacific, and billions of people around the world," the defense secretary told the Shangri-La Dialogue.

On May 1, China set up a floating oil rig close to the Vietnamese coast to explore for oil and gas believed to be in abundance beneath the floor of the South China Sea. Hanoi protested the move, and demonstrations in Vietnam against China have turned violent.

On May 26, a Vietnamese fishing boat near the rig was sunk under ambiguous circumstances, but all 10 crew were rescued. China and Vietnam blamed each other for the incident.

Shortly after Hagel's remarks, the secretary met with Lt. Gen. Wang Guanzhong, the deputy chief of China's General Staff. Reporters were not allowed to monitor the meeting, but Wang reportedly told the American that his criticisms were "groundless" and condemned him for speaking as he did before their military colleagues.

China Central Television quoted Wang as turning around the accusation of intimidation and pinning it on Hagel. "This speech is full of hegemony, full of incitement, threats, intimidation," the broadcast said.

The meeting was closed to the public before Hagel made his response, but a U.S. spokesman said the secretary advised Wang to resolve such disputes through diplomacy and dialogue with its neighbors.

China claims about 90 percent of the South China Sea, arguing that the region has been its territorial waters for decades, and it claims waters that are close to the Vietnamese coast. Vietnamese territorial waters extend 200 miles from its coast under the terms of the 1982 UN Convention on the Law of the Sea.

The Chinese and Vietnamese zones overlap, which is where the Chinese rig was positioned.

Hagel was not the only one at the Shangri-La Dialogue criticizing Beijing's claims of territorial waters. On May 30, Japanese Prime Minister Shinzo Abe told the conference that his country intends to take a greater security role in Southeast Asian waters.

Abe said his government supports efforts by countries in the region to protect their territorial rights, and would send coast guard patrol boats to protect Vietnam and the Philippines. Besides these two countries, Brunei, Malaysia and Taiwan say China is encroaching on their territorial waters.
Responding to Abe's remarks, Wang was equally critical of Japan as he was of the United States, and shrugged off Tokyo's offer for bilateral negotiations on East Asian issues.

"[Such talks] will hinge on whether the Japanese side is willing to amend the erroneous policy toward China and improve relations between China and Japan," Wang said. "Japan should correct its mistakes as soon as possible to improve China-Japan ties."

The long, drawn-out battle between one of the leading software and cloud computing providers on the planet, $185.9 billion in market capitalization Oracle , and the governmental resources of the state of Oregon is about to get ugly. And that's saying something, considering both sides have been at each other's throats over a botched website for Oregonians to enroll in Obamacare.

The money spent, and received, is staggering to be sure. But what's even more staggering is that after all the time, cost, and headaches, the state of Oregon still has nothing to show for its efforts. Oracle, on the other hand, has pocketed over $100 million in fees from the state, despite not delivering a working website. And that's why Oregon's governor, John Kitzhaber, is ready to take the dispute with Oracle to the next level.

How the tides have turned
It was just two months ago that the news surrounding Oracle, at least outside the state of Oregon, was nearly all positive. Gartner had just released its list of top 10 software vendors worldwide, leaving Oracle fans with something to cheer about other than CEO Larry Ellison's making a stunning comeback in the America Cup to win sailing's most prestigious race.

Like one of its primary competitors, Microsoft , Oracle is ideally positioned to benefit from the on-going shift to cloud-related software and services. Cloud hosting's recent price wars have brought costs down to mere pennies, making it evident there's no revenue growth to be had there. Software delivered via the cloud is where the revenues are, and both Microsoft and Oracle are positioned perfectly.

Oracle reinforced its software, and by extension cloud, strength in 2013, according to Gartner. While Microsoft still rules the global software roost, as demonstrated by its $65.7 billion in software sales in 2013 -- more than twice that of any other vendor -- Oracle is steadily moving up the ladder.

After being in a virtual dead heat with IBM in 2012 with $28.7 billion in software sales, Oracle jumped 3.4% in 2013 to $29.6 billion, passing IBM to take over the number two spot worldwide. Obviously there's a long way to go for Oracle to move up to Microsoft's league, but surpassing IBM in sales is nothing to sneeze at. But Oregon's recent grumblings could put a damper on Oracle's positive steps.

Oracle vs. Oregon
Even when the Cover Oregon website, managed by Oregon's Health Authority and its primary contractor Oracle, was nearly three weeks late meeting the Oct. 1, 2013 deadline, the two sides were still on good terms. Emails back and forth between the two parties were glowing despite the delays. There was even talk at the time, which in hindsight seems nearly unfathomable, that Cover Oregon may be the answer to problems the federal site, healthcare.gov, was having.

Fast forward to Feb. of this year. There's still no insurance exchange website for Oregon residents, and Oracle poured salt on Oregon's wounds by removing around 100 of its approximately 165 programmers from the Cover Oregon project. That, as it turned out, was enough. Having already paid Oracle $134 million in federal funds, another $25.6 million is still owed, but is being withheld. Oregon has since given up Cover Oregon and will use healthcare.gov, as many states already do.

All those good tidings between the two sides in Oct.? Long gone, and apparently forgotten, based on scathing statements issued by governor Kitzhaber, which were refuted just as harshly by Oracle representatives. No word yet on whether Kitzhaber will sue Oracle, though the mutually agreed upon date to withhold legal proceedings expired this past weekend.

Final Foolish thoughts
For a company the size of Oracle, a $100 million or $200 million lawsuit isn't likely to cause many problems financially. And Oracle rightfully states that Oregon agreed to a contract for its time, not results. But Oracle has had client problems before that resulted in a lawsuit, and bad public relations are never good. Three years ago Oracle ponied up almost $200 million to settle charges it didn't disclose discounts other clients received, following a software contract with the U.S. government.

It all looked so good just a couple of months ago, and frankly, Oracle's not likely to suffer much in the mid-to-long term because of the Oregon debacle. But don't be surprised to hear a lot more mud-slinging, from both the state of Oregon and Oracle, in the near future.

Source: Costco.

Costco delivered lower-than-expected earnings last week. However, the company is still outperforming competitors such as Wal-Mart and Target by a considerable margin, which shows that Costco is a superior player in the industry with rock-solid competitive strengths. The long-term bullish case for Costco is still pretty much intact.

The numbers
Total revenues during the third quarter of fiscal 2014 increased by 7% to $25.8 billion, above analysts' expectations of $25.7 billion for the period. Product sales grew to $25.2 billion, versus $23.5 billion in the same quarter of 2013, while membership fees increased to $561 million, versus $531 million.

Same-store sales during the quarter increased 4% on the back of a 5% increase in the U.S. and a 3% growth rate in comparable-store sales in international markets. Performance was materially better when excluding the negative impact from foreign exchange fluctuations and falling gas prices: Same-store sales in the U.S. grew 6% and international comparable-store revenues jumped by a big 8% during the period, for a total increase of 6% in comparable-store sales excluding negative impacts from gasoline price deflation and foreign exchange volatility.

Gross margin was 10.62% of sales during the quarter, down marginally versus 10.67% of revenues in the same period during 2013. Operating margin declined 10 basis points to 2.9% of revenues, while operating income increased by 2.1% versus the same quarter in the prior year to $737 million.

Earnings per share came in at $1.07, a bit lower than the $1.09 per share Wall Street analysts forecasted on average.

Industry context
Retailers in different categories are going through a remarkably challenging period because of the unusually harsh winter, lackluster consumer spending, and aggressively promotional pricing environment. In fact, competitors such as Wal-Mart and Target are doing considerably worse than Costco.

Wal-Mart reported an increase of only 0.8% in sales during the quarter ended on April 30, while earnings per share declined by 3.5% year over year. Wal-Mart attributed its weakness during the quarter to the particularly challenging industry environment: "Like other retailers in the United States, the unseasonably cold and disruptive weather negatively affected U.S. sales and drove operating expenses higher than expected."

Target is still being hurt by the data breach that affected the company in December, so its performance can't be attributed solely to industry conditions. However, Target´s numbers for the quarter ended on May 3 were really uninspiring. Total sales increased by 2.1% to $17.1 billion, while comparable-store sales in the U.S. declined 0.3% year over year.

Costco was hurt by rising operating expenses during the last quarter, but the company is still doing remarkably well on the sales front, while clearly outperforming competitors such as Wal-Mart and Target. In such a stable and mature industry like discount retail, gaining market share versus the competition is of the utmost importance, since one company's gains are usually the other one's loses.

The future
Customer loyalty is a crucial factor to consider when analyzing a position in Costco. The economy will always have its ups and downs, and Costco will need to increase spending from time to time in order to consolidate its competitive strengths and position itself for growth.

As long as the company is gaining market share versus its peers, investors in Costco will benefit from solid returns in the long term, regardless of the short-term volatility in profit margins.

Fortunately for investors, Costco is actually stronger than ever on that area. The renewal rate was 87.3% during the last quarter on a global basis, while big markets like the U.S. and Canada were even better, with a renewal rate of 90.6% during the period.  

Customers love Costco because of its amazingly low prices and high-quality service. According to data from the American Customer Satisfaction Index, Costco has a score of 84, the highest one in its industry group, and considerably above the score of 80 obtained by Wal-Mart's Sam's Club, perhaps the company´s most direct competitor.

As long as demand remains strong and customers are still loyal to Costco, the company has abundant room for expansion, both in the U.S. and abroad. The rate of growth may vary on a year to year basis, but Costco is still on its way to continue making both customers and shareholders happy over years to come.

Foolish takeaway
Costco's numbers for the last quarter were a bit light on the profitability side, but the company is still doing much better than competitors such as Wal-Mart and Target, which shows that Costco is a superior player among discount retailers. The company's fundamentals are as strong as ever judging by customer loyalty and overall demand, so any dip in Costco as a reaction to earnings could be considered a buying opportunity for investors.