I own shares of offshore driller Seadrill  and I'm pretty positive on the long-term outlook for Transocean . Both companies recently reported quarterly earnings that were in line and above most analyst expectations, and Seadrill even increased its already-huge dividend by a couple pennies. However, even with the positive news, and my positive view on the outlook for both of these companies, I think it's worth exploring the very real risks that lie with investing in these two big players in offshore oil and gas drilling. 

Would a Seadrill dividend cut in the next couple of years be a disaster for your retirement? If so, you may want to diversify your exposure. Source: U.S. Coast Guard.

Am I selling? No, I'm not; but maybe you should. Let's take a closer look at why. 

Bifurcated demand could cause problems for both sides 
The expected demand for offshore drillers is likely to be soft over the next couple of years, but the reality is -- as I and others have pointed out -- the offshore market is really made up of two components: traditional legacy ships, and high specification ships. While there's little doubt that demand for these legacy ships will be down, there is expectation that demand for ships that can operate in deeper and more hostile water, and can drill deeper, will be relatively strong. 

Transocean has seven drillships under construction, but only one goes online by 2015. Source: Transocean.

On the surface, this indicates that Transocean, with its massive fleet that has a lot of older ships, is most at risk, while Seadrill, with its shiny new fleet that it's adding as many as 19 ships to over the next several years, is well-positioned. While this is largely true -- though Transocean's downside is probably less than it may seem -- my concern is that many investors are going into the next couple of years as if this is simply a binary outcome situation; i.e., Seadrill will do well, while Transocean won't, and that's just not the case. 

What investors need to consider is that a lot of new ships are under construction. According to Rigzone, there are 68 new drillships under construction right now, 35 of which are scheduled to be completed by 2015. This is an incredibly important category, because drillships -- specifically ones that can operate in deepwater or ultradeep water, command dayrates of more than $500,000. However, these rates could fall, as Seadrill described in its quarterly earnings release (emphasis mine):

There are reasons, however, to believe that some of our major competitors will accept rates levels for a sixth generation vessels in the $425-$475k level. Currently, the market suffers from limited exploration drilling and delays in field developments from the major oil companies ... Oil companies are trying to determine when dayrates will trough, thus are not compelled to sign contracts if they feel dayrates are still declining. Once a leading edge is defined, others tend to be compelled to award contracts. To this point, in the recent weeks, we have seen increased inquiries by both majors and independent operators following the establishment of a leading edge dayrate.

Seadrill's newbuilds will have a lot of competition over the next two years. Source: Seadrill.

In short, oil companies are both delaying investment in offshore drilling and waiting to see if dayrates will fall further. The risk for Seadrill is a larger number of newbuilds coming online at a period where there isn't quite enough demand, even in the high specification segment of the market. Of the 68 drillships under construction, 11 are Seadrill's, and eight of those are scheduled to come online in 2014 and 2015. Lastly, the global fleet of drillships is 106, with 98 of those deepwater or ultradeep. By the end of next year, there will be another 35 in operation -- in the middle of a soft demand cycle.

See the risk now?

Debt service double-whammy 
Both Seadrill and Transocean have a lot of debt:

SDRL Total Long Term Debt (Annual) data by YCharts.

As you can see, Seadrill has added a lot more debt, while Transocean has actually paid its down. Most importantly, look at just how leveraged Seadrill is, with a scary-high debt-to-equity ratio. What this tells me is that, while Transocean's older portion of its fleet may suffer from lack of demand, the company is much, much less leveraged than Seadrill.

And this high leverage could create a double-whammy. Simply put, demand for drillships alone needs to grow by more than 30% over the next 20 months just to support newbuilds. If it doesn't, Seadrill could see dayrates get pushed down, and its utilization rates fall at the same time that its debt costs increase when newbuilds are delivered.  

Here's one last chart:

SDRL Payout Ratio (TTM) data by YCharts.

Anyway you slice it, Seadrill's high debt load has supported the dividend in the past. Sure, it's not taking out loans to pay the dividend, but if it weren't paying a dividend that's more than double what its peers pay, it wouldn't need to take on so much debt. It's good to see the payout ratio falling below 100%, but as debt grows, dayrates and utilization rates must remain high as well. 

Final thoughts: Find balance in your portfolio 
As I wrote above, I'm not selling my Seadrill shares. As a matter of fact, I could see myself buying more, or buying shares of Transocean. That's because I'm still 25 years from retirement, Seadrill is only 1.5% of my portfolio, and I don't own shares of any other offshore driller. It's about my level of risk, timeline, and total exposure to the industry. 

If you're heavily exposed to offshore drillers, close to retirement, and will depend on income from these companies in the next few years, you should at least consider rebalancing your exposure. I can live with a bad couple of years for offshore drillers. Can you?

If not, maybe it's time to sell off part of your Seadrill or Transocean shares. 

On May 27, Apple was granted patent No. 8,738,104 for molding a liquid metal unit around a display screen with a thin laminate. This is more than a subtle indication that we will be seeing an iPhone released with a molded liquid metal body and a sapphire laminate. Both of these substances have unique and remarkably strong properties that, in theory, could make your phone bulletproof.

Sapphire is already in use, and in many places
Sapphire Glass isn't just used in iPhones. It's a key component in bullet-proof glass as well. You would think that a military Humvee windshield would have a thick block of bullet-resistant glass, but that isn't the case. The method of implementation is actually the same. In the case of the Humvee, the layer of artificial glass prevents the bullet from penetrating the cabin, but because the laminate is on the inside, the glass stays outside of the cabin. In the case of the iPhone, the laminate is on the outside to prevent scratching. In either case, you just don't need a thick layer of artificial glass to get the benefits.

Source: Youtube

Opportunity vs profitabilityThe process is the also the same
The photo to the right shows a laminated Humvee windshield that has been shot four times by an AK47, twice from the inside out and twice from the outside in. You can see that the form remains intact. While GT Advanced Technologies is manufacturing the sapphire glass for upcoming Apple devices, other manufacturers have been using sapphire glass for several years. Saint-Gobain SA , for example, is a supplier to the U.S. Army for sapphire armor and sapphire bullet-proof windows. Note, the Humvee photo below was not laminated with sapphire but with another substance. The process and results are the same, but sapphire may in time act as a replacement for the existing laminate, allowing higher-caliber protection.

GT Advanced Technologies has been knighted by Apple as the preferred supplier for sapphire screens. The two entered into a deal in October when Apple made a $578 million prepayment to the company. But until production, GT won't recognize revenue on the deal. The management team says it will be able to recognize revenue by year end, but when the company will become profitable is anyone's guess. With this mammoth investment, Apple bought exclusivity in an undisclosed number of markets, but this leaves a substantial number of opportunities in other industrial areas such as automotive windshields. At this stage, the trade-off is opportunity for profitability, so investors should realize there is no earnings support for GT's valuation today.

Liquid metal offers considerably more strength to the body
Liquid metal also has unique properties that make it much harder than traditional metals. The main property seems to be its flexibility in manufacturing; it can be molded like plastic, but it acts like glass in that the atoms don't line up in a pattern, making it considerably stronger than other metals.

Crystalline structure

http://liquidmetal.com/properties/the-science

Amorphous structure

http://liquidmetal.com/properties/the-science

Lack of grain contributes to liquid metal's strength
Unlike crystalline structures, no detectable patterns can be found in the atomic structure of the liquid metal alloys. The lack of a grain means that you can achieve superior strength and hardness compared to conventional metals. Since the atoms don't line up in a pattern, it strengthens the end product because the atoms don't slip on impact. The lower image is an amorphous structure and the one above is crystalline. It's easy to see the difference in grain.

Not just for iPhones, golf clubs, and warheads
One of the traditional uses for liquid metal has been golf clubs, and a quick look at this YouTube video comparing the hardness of a liquid metal ball-bearing with a Titanium one demonstrates why you might want to tee off with this new alloy. But you wouldn't be the only one looking to use liquid metal to improve your airborne assault. You might be using it on the fairways of your local golf club, but the military is testing it to replace depleted uranium warheads that are not as environmental friendly.

We don't know if there will be an announcement of an iPhone or smart watch made of liquid metal and sapphire glass at next week's WWDC conference, but it seems like the devices are in the works. Assuming we don't need a military-sized budget to afford one, indestructibility could be the next differentiating factor.

The idea is sound: reward your most loyal customers by giving them discounts for spending more at your store. Shop Your Way is Sears' increasingly popular loyalty program that, having started from nothing just a couple of years ago, now accounts for three quarters of the retailer's eligible sales. Although it can make Sears "sticky" for consumers and perhaps reverse the long, steady decline in which Sears is mired, it needs to do so quickly before it breaks the bank. 

Like many such programs, Shop Your Way awards members points for purchases they make at Sears stores, Kmart, and through its website. Sales made at Sears Canada and through third-party merchants at Sears Marketplace are excluded. Like an airline's frequent flyer program, members can redeem those points for merchandise, so the more they spend the more they save.

And therein lies the problem, as they can also eat away at margins. In the first quarter, Sears gross margins tumbled $328 million to $1.8 billion, and though a good portion of the decline was due to Lampert spinning off Lands' End, the Shop Your Way program contributed to the impaired margin rate, which declined by 220 basis points. It was a similar situation in the prior quarter as well, where the Sears Hometown & Outlets spinoff bore the biggest responsibility for declining margins, Shop Your Way had a hand in the 170 basis point drop at Kmart and the 260 basis point decline at Sears. 

Yet Sears Holding also carries the burden of having two promotional models, the Shop Your Way program and traditional discounting, which ultimately is what the loyalty program amounts to. Lampert admits it's going to cost the retailer points, but he sees the value of additional investments in the program paying off further down the road.

As it stands now though, because sales remain in free fall, the more people that sign up for the program the faster it erodes profits, which it really can't afford to give away at this point. Losses widened to $442 million in the first quarter from $292 million in the same period in 2013 as same store sales fell for yet another quarter, a years' long skein that shows no sign of abating.

In essence, loyalty program members will become bigger fish in a quickly drying out pond. Moreover, a recent study by McKinsey & Co. found that despite their general growth and popularity, loyalty programs actually destroy value for their owners. Companies with them grew no faster than -- and sometimes slower than -- those without loyalty programs.

Source: Sears Holdings SEC filings

Now perhaps without the program things would have been even worse for the retailer, but considering sales are still declining even as membership rises, it's actually not unreasonable to assume spending patterns haven't changed all that much. And because margins are increasingly contracting, they're just getting more stuff they otherwise might have paid for, although Sears says its most engaged customers spend 75% more than the average member. 

Yet because only the scantest of information is given on Shop Your Way, it's hard to know just how much everyone's actually spending, and whether it's more or less than they were before the program. Certainly it's a delicate balance and Sears needs something to staunch the bleeding, but Shop Your Way could be the cure that's worse than the disease. Or at least hastens its spread.

The term "loyalty program" is really a misnomer, since it should really be providing a vast database of information about a customers spending habits. The retailer must put that information into use then to enhance the relationship between it and the customer. If all a retailer is doing is rewarding existing behavior -- rather than increased positive behavior, such as shopping more often or spending more -- then all the company is doing is reducing its profit per customer.

This seems to be the path Sears Holding is on. My worry is that road leads it at last to the brink.

The ways that we get our energy are constantly changing. With increasing pressure from environmental groups, coal prices have been dropping and localities around the world are considering restrictions or outright bans on hydraulic fracturing (aka "fracking") for oil and natural gas. Wind and solar power are commonly looked at as up-and-coming alternatives to traditional fossil fuels, though both have a way to go before they will be able to fully replace our dependence on oil and coal.

To get a different take on what might drive the future of alternative energies, I talked with Jennifer Reinert of CrowdSun.com. According to Reinert, CrowdSun is a new platform that "matches investors with commercial solar projects. Investors include banks, hedge funds, insurance companies and other accredited investors seeking excellent returns in alternative energy." Similar to crowdfunding websites like Kickstarter, CrowdSun has already helped to raise $300,000 in direct funding for solar energy projects.

Innovation vs. cost
A number of companies are competing to come up with innovative new products for producing "green" energy from renewable resources such as solar and wind. Companies such as First Solar are riding the wave of the green energy boom, but technological advances alone may not be enough to spur the mass acceptance of alternative energies.

According to Reinert, "Increased efficiencies in solar technology have usually taken years to be adopted by the marketplace. On the other hand, cost decreases, driven down by economies of scale, have happened at a rapid pace, leading to increasing adoption by the marketplace. Since we believe that electricity is a commodity, consumers respond more to affordability."

This doesn't mean that technological advances are meaningless, of course; First Solar and other companies are working to make their products more efficient, as with First Solar's Series 4 modules that boast an 8% increase in energy output over conventional modules with the same power rating. Over time, advances such as these will bring down the cost of solar units and speed adoption both by utilities and residential consumers.

This trend can already be seen as the cost of solar units declines; the Solar Energy Industries Association indicates that residential solar prices fell by 7% between the first quarter of 2013 and the first quarter of 2014, as compared to a 5.7% drop in non-residential prices; over that same period, residential installations exceeded non-residential installations for the first time since 2002.

Looking beyond the sector
It's not just players within the solar sector that can influence the growth of alternative energy technology, either. One company that could have a major impact on alternative energies going forward is Tesla Motors . As Reinert put it, "The trend toward storage technology, in which Tesla is taking a lead role for their automobiles, will eventually help spur further adoption of solar so that the power that it generates can be used during non-production hours."

Tesla is in the process of setting up a massive battery production facility (its "gigafactory") and has made it clear that its battery innovations could change more than just the automotive world. At last week's Joint Venture Silicon Valley energy storage symposium, Tesla CTO J.B. Straubel stated that "[Tesla is] an energy innovation company as much as a car company," when asked why Tesla was involved in stationary energy storage development. He further explained that residential batteries such as those used to store solar-generated energy have the "same architecture" as mobile batteries such as the lithium-ion batteries used in Tesla's vehicles.

More importantly, Tesla's "gigafactory" will serve to not only improve the efficiency of such energy storage solutions but will also help to drive prices down as well. Advances may come quickly, as Straubel believes that energy capacities for stationary storage will scale faster than those of vehicle batteries.

The future of energy
While traveling recently, I drove past the University of Tennessee's West Tennessee Solar Farm. Having grown up less than an hour from its location, I was honestly quite surprised to find that one of the largest solar facilities in the southeast United States was located in my proverbial backyard. While I wouldn't have guessed that Tennessee had a large solar presence outside of perhaps metropolitan areas such as Nashville, there are actually over 200 solar-related businesses in the state. This number will likely grow in the future, and similar growth will likely be seen in other unexpected places as well.

Reinert said that there are "many more opportunities in the small to mid-sized solar arrays that either provide power for a specific use (factories, businesses, etc.) or that are established to sell power back to a utility, which of course can be any size" than massive arrays, which makes sense. It's easier for an individual company or homeowner to convert to solar or other alternative energies than for a municipality, and it's these small-to-mid-sized projects that will drive adoption. As prices continue to fall, this adoption rate will likely continue increasing as well; in time, it could even change the energy industry as a whole.

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a look at particularly stock-shaking analyst upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Devon Energy  gained nearly 1% this morning after Wells Fargo upgraded the natural gas and oil company from market perform to outperform.

So what: Along with the upgrade, analyst David Tameron raised his price target to $85-$90 (from $70-$75), representing as much as 22% worth of upside to yesterday's close. So while contrarian traders might be turned off by Devon's year-to-date price strength, Tameron's call could reflect a sense on Wall Street that the company's production growth prospects still aren't fully baked into the valuation.

Now what: According to Wells, Devon's risk/reward trade-off is rather attractive at this point. "Upgrade is primarily based on a combination of the following: improving production visibility which should drive 20%+ crude growth over the next few years (driven by Permian, Eagle Ford and Canada), peer leading EBITDA growth and debt adjusted cash flow per share, and attractive valuation," said Tameron. With Devon shares still sporting a reasonable EV/EBITDA of 5.4 -- in line with peers -- it's tough to disagree with Wells' bullishness. 

Recently, I discussed how one possible reason for Twenty-First Century Fox hiring Channing Tatum to play Gambit in X-Men: Apocalypse might be to place Gambit in the "starring" role that Hugh Jackman's Wolverine has had in the series thus far. This wasn't exactly a popular notion, and the reaction to the article brings up a very good point: even though some fans think that Wolverine has gotten too much of the focus in the X-films, he's still a very popular character and won't be easily replaced.

While it's unlikely that Fox would lock down a major multi-film contract with Jackman to get him to reprise the role in a number of films and spin-offs, the studio would be well served by a contract similar to the one Robert Downey Jr. signed with Disney's Marvel Studios. This would allow Wolverine to appear in a few more core "X-Men" films, while stand-alones and spinoffs could focus on other characters.

Source: Twenty-First Century Fox

The 'Iron Man' solution
There are several similarities between Jackman's position regarding Wolverine and Downey's position on playing Tony Stark/Iron Man. Both actors are among the oldest members of the current casts of their franchise (in Jackman's situation, this would refer to the younger X-Men: First Class-era cast, who will be the main cast of the franchise moving forward). Both have expressed concerns about the roles eventually being recast within the past year, especially in regard to Wolverine whose healing factor significantly slows his aging.

When Downey's contract expired, negotiations led to him signing a smaller contract to reprise the Iron Man role in upcoming "Avengers" films but not in stand-alone films. Such an agreement would work well for Jackman and the "X-Men" films, allowing both Jackman and the studio (and hopefully the fans) to benefit.

Why the studio should act now
Fox would likely benefit the most from such a deal, as it would lock Jackman in to reprise the character at least a few more times at what would likely be a lower rate than if each film were negotiated separately. It would also ensure that the studio could plan out at least a few more Wolverine appearances without having to recast, since a film-to-film approach would depend on Jackman's willingness to reprise the role as well.

With the positive reviews that X-Men: Days of Future Past has been getting and the franchise working its way back up from the lows it hit after X-Men: The Last Stand and X-Men Origins: Wolverine (two films that were negatively received and which may have played a part in First Class' box office slump), now would be the time to negotiate. If Apocalypse receives a bump from Future Past's rising star (similar to the post-Avengers bump that several Marvel films received and the post-X2 bump that made The Last Stand the biggest box-office success of the franchise despite being panned by fans) then the cost of securing the actor for additional follow-ups will likely only rise.

Source: Twenty-First Century Fox

Spin-offs and stand-alones
A contract that covered two or three films (similar to Downey's two-film "Avengers" contract) would ensure that Wolverine was present for major team-ups while allowing the studio to test the waters with its new talent as well. While a "Magneto" stand-alone was once planned as a follow-up to X-Men Origins: Wolverine, plans for it seem to have been scrapped once the first Wolverine solo film was reviewed so poorly. Now, such films could help to fill the gaps between primary "X-Men" releases similar to the approach that Disney is taking with its Marvel and Star Wars properties.

In addition to potential stand-alone films with characters like Michael Fassbender's Magneto (which has been hinted at a few times, though is far from confirmed), Jennifer Lawrence's Mystique (who James McAvoy suggested might make a good "face" for the franchise), or Gambit, the studio could also create stand-alone appearances for popular mutants as a way to introduce them to the X-Men cinematic universe. While this may seem crowded, writer-producer Simon Kinberg has stated that the studio is looking at how to manage the future of the franchise and is taking some cues from Marvel Studios (to the point of possibly considering an X-universe TV series as well.)

Setting the stage for annual film releases exploring different characters wouldn't be that far-fetched, especially since other teams such as X-Force are purported to be in the works. Adding solo films every few years would help the studio to keep a consistent release schedule without having to rush to churn out additional X-Men films or sequels for the sake of sequels for untested properties like the "Fantastic Four" reboot.

Will the studio sign Jackman?
Signing Hugh Jackman to a multi-film contract would make a lot of sense for Fox, though as yet there's no indication that negotiations are under way. If such a contract were signed, it might not be for a few years; as Jackman still has at least one or two more appearances planned as the character, there isn't any pressure on the studio at the moment despite the potentially increasing pricetag of signing him for additional appearances.

If such a contract does eventually get signed, though, it will be interesting to see whether it's for only "X-Men" films or if the character will continue to dominate the solo films as well.

Facebook's  acquisition of WhatsApp was a great strategic move in terms of gobbling up a rapidly growing competitor. The social media company has been criticized for paying a large sum of $19 billion to acquire a company without a proven revenue base.

WhatsApp is seeing robust growth in increasing its user-base, and more importantly, WhatsApp users are very engaged. WhatsApp can be a big revenue generator for Facebook going forward, and might prove to be a great financial transaction as well, in addition to being a strategic deal, by Mark Zuckerberg.

The company surpassed 500 million users in the last month, which speaks to why Google  reportedly tried to acquire WhatsApp for $10 billion, but couldn't get its founders to agree on terms.

Explosive growth
Facebook's acquisition of WhatsApp has put the social media giant into the forefront of the cross-platform mobile communications space, as WhatsApp has substantial reach and user engagement in growing regions of the world.

Facebook disclosed that the worldwide messaging volume on WhatsApp's platform was more than 53 billion daily, with more than 700 million uploaded photos and 100 million videos every day. WhatsApp's metrics are growing at more than 100% year over year. Such explosive growth by WhatsApp prompted Facebook to lay out such a large sum to acquire WhatsApp, before it attracted further interest from bigger rivals like Google. 

With WhatsApp crossing 500 million users, the company could be well on its way to having more than 1 billion users in years to come. Once WhatsApp crosses the 1 billion user mark, or sooner, Facebook would likely start to monetize it aggressively. 

WhatsApp is a multi-billion-dollar opportunity
Cantor Fitzgerald analyst Youssef Squali stated that monetization of WhatsApp is likely going to kick off in 2016, and is going to be a multi-billion-dollar opportunity for Facebook. Considering the fact that Facebook laid out $19 billion to acquire WhatsApp, the analyst is spot-on with respect to WhatsApp's revenue opportunity. 

Since WhatsApp users are extremely engaged and are cross-platform across all mobile operating systems, the app provides a lot of utility to users and will remain very "sticky." WhatsApp isn't an ad-supported business model like Facebook, but it instead collects a small fee of $0.99 per year after a one-year trial. But, to recoup the massive investment laid out by Mark Zuckerberg, the company likely has to evolve to an ad-supported revenue model.

If WhatsApp becomes an advertising-based business, like Facebook and Instagram, Cantor Fitzgerald's estimates don't look overly lofty. Considering that WhatsApp should be hitting 1 billion users globally, an ARPU of $2 would make the company a $2-billion-per-year business. Facebook's own revenue per user in the last 12 months stood at $7.46, which goes to show the possibilities for WhatsApp in the future. 

Going forward
Facebook can earn substantial revenue and earnings from WhatsApp if it decides to make slight changes in WhatsApp's business model. But, that remains a grey area for now. WhatsApp clearly remains in growth mode, and will likely be focused on growing its user base and engagement in the near future.

But, once that phase is over, the company will look to monetize this global asset, and Facebook's earnings per share will see further boosts. Facebook's EPS grew more than 170% in the last quarter to $0.25, and once such a valuable asset starts being aggressively monetized, the company's EPS will see incremental growth and drive more upside in Facebook's stock price. 

Yamana Gold and Agnico Eagle Mines  purchased precious metals producer and explorer Osisko Mining for $3.9 billion. The two companies outbid Goldcorp's hostile offer to acquire Osisko Mining for $3.6 billion by 11%. This purchase offers several benefits, but also risks for Yamana Gold. 

Production, costs, and balance sheet
This deal may improve Yamana Gold's operations, mainly because Osisko Mining has lower cash costs than Yamana. This year, Osisko Mining expects its cash costs to reach $550 per ounce, which is roughly 20% lower than in 2013. This lower cash cost could reduce Yamana Gold's average cash costs, possibly as much as 3%, according to some analysts. In 2014, Yamana Gold expects its all-in sustaining cost to fall below $850 per GEO. 

Osisko Mining is also able to translate a higher portion of its revenue to operating cash flow: Last year, its operating cash flow-to-revenue ratio was 0.39, while Yamana Gold's ratio was 0.35. In terms of production and growth, Osisko Mining expects to increase its gold production by nearly 16%, year over year. It also plans to augment capital expenditures by 20% to 148 million. The higher capex and expected rise in production will benefit Yamana Gold via increased operations. 

Osisko Mining's balance sheet is also in good shape. The company has more than $200 million in cash, low debt (its debt-to-equity ratio is only 17%), and no deficit in its equity. These conditions suggest the company won't impose on Yamana Gold's balance sheet. 

Price, loans, partners
Despite those strong numbers, this deal raises several questions. First, is the price right? Without a detailed valuation it will be hard to answer this question, but consider the following:

1. Osisko Mining's market value, before Goldcorp tried to take over the company, was below $2.5 billion. This doesn't mean the company isn't worth more than $2.5 billion, especially to be the majority owner of such a company, but this also raises the question of whether such a spike in its tag price is prudent. 
2. Since Osisko Mining has low debt, which could be mostly covered by its cash on hand, the main value of this company comes from its mines. The company's three resources -- Canadian Malartic, Hammond Reef, and Upper Beaver-Kirkland Lake -- are expected to produce roughly 550,000 ounces of gold this year. Assuming the company generates free cash flow of $200 million in 2014, steady 10% growth in the next 20 years, and a cost of capital of 8.5% (the precious metals sector average), the discounted cash flow valuation of the company comes to $2.3 billion. This is a very rough estimate, but it isn't far off the initial market value of the company at the beginning of the year. 

Therefore, the price Yamana Gold and Agnico Eagle Mines paid for Osisko Mining might have been too steep. 

Besides the price of Osisko Mining, the two main factors to consider are the debt Yamano will take to pay for deal and the partnership with Agnico Eagle Mines. 

In order to make this transaction, Yamana Gold entered into a two-year, $750 million loan. Some analysts believe the company's debt burden will reach over $1.6 billion. This loan alone could bring the company's debt-to-equity ratio to 0.3, compared to 0.19 at the end of the first quarter. This higher debt poses a financial risk on Yamana Gold. Moreover, considering the gold market has yet to recover, taking another mining company focused on gold (instead of other precious metals) could also further raise Yamana Gold's operational risk. 

Finally, the partnership with Agnico Eagle Mines means some of the burden of this purchase will fall on another company, but the rewards and decisions will also be made together. Keep in mind also that any partnership poses a risk of the entities failing to agree on key issues down the line. 

Takeaway
Yamana Gold's purchase of Osisko Mining raises several questions regarding its valuation, and the added risk the company took to make this deal. Despite these risks, Osisko Mining seems to offer benefits such as growth in operations, low debt, and low production costs, which could serve Yamana Gold well. 

Source: Wikimedia Commons

Yet another industry has run afoul of China's antitrust laws, this time seven companies in eye care that were accused of fixing prices. 

According to the National Development and Reform Commission, the eye care companies -- including Johnson & Johnson , Valeant Pharmaceuticals' Bausch & Lomb, and Nikon -- exerted too much control over dealer pricing policies, going so far as to control terms of product promotions. If dealers didn't comply, they faced financial penalties from the manufacturers, including even seeing their supplies halted. The agency fined the seven firms a total of $3.1 million, with the largest fine of $1.4 million assessed against the French eye care firm Essilor. J&J was fined $577,000 while Bausch & Lomb received a $596,000 levy. Nikon's fine was under $300,000.

Only the latest 

This latest episode follows last year's major price-fixing scandal involving infant formula that saw the NDRC impose more than $100 million in fines against international suppliers including Nestle, Danone, Abbott Labs, and Mead Johnson Nutrition. It was alleged the formula makers took advantage of mothers leery of domestic suppliers after instances of tainted milk and formula caused the death of hundreds of infants and children and sickened thousands more. Mothers were willing to pay triple the cost of domestic formula by having relatives in foreign countries buy up local stocks and ship them back to China.

Before that, the NDRC accused six LCD panel makers of fixing prices, imposing fines that totaled $56 million against the likes of Samsung, LG Electronics, and four Taiwanese manufacturers. Late last summer it was collecting data from foreign automakers on the price they charge for cars under the suspicion they were setting minimum prices. Jewelry firms were also fined.

Eyecare, however, has come under particular scrutiny following allegations made last summer by a Chinese daily newspaper that Alcon, the eye care unit of Novartis , was bribing doctors to promote its medications, which itself was preceded by bribery allegations for the promotion of Alcon's lens implants.

The paper apparently has a history of alleging bribery and price fixing against international companies, also leveling charges against Eli Lilly, Sanofi, GlaxoSmithKline, and AstraZeneca. Whether true or not -- nothing has been found to date -- China's State Administration for Industry & Commerce said it was going to launch a probe of the pharmaceutical and medical device industries, investigating the higher prices Chinese consumers were paying for health care products. It might very well be the latest price-fixing allegations and fines were an outgrowth of this query.

Riding the growth

China, of course, remains a rapidly growing emerging market and even though that pace of growth has scaled back dramatically over the past few years, it remains far ahead of most other economies. The economy expanded at a 7.7% clip last year, well ahead of the 1.9% growth experienced in the U.S., let alone the euro region, which remained negative. Even the darling of the EU, Germany, barely inched forward 0.4% last year.

That's creating situations where income levels are rising. As the middle class expands they're looking to tap into global consumer trends. The companies themselves have sought to expend greater amounts of money in China to take advantage of the opportunity. Although emerging markets remain just a small part of Johnson & Johnson's overall business, within those countries China and Brazil drive the majority of the growth. Earlier this month J&J said it planned to introduce more than 30 major products in China by the end of 2016 in its medical devices and diagnostics divisions.

Other companies have similarly bold plans, and while it might seem they're trying to take advantage of the situation in China, the country's rapid market expansion likely plays a larger role in the rapidly rising price environment. The government is fearful of upsetting its growth, which explains the massive cash infusions it's made into its economy to keep it moving. Higher prices would be a reflection of such distortions.

Apparently, though, it's easier to accuse companies of gouging consumers than to admit what impact its own policies might play. Thus, antitrust fines might simply soon become a cost of doing business in China.

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Huntsman  gained 1% today after Goldman Sachs upgraded the chemical products company from buy to conviction buy.

So what: Along with the upgrade, analyst Robert Koort planted a price target of $32 on the stock, representing about 19% worth of upside to yesterday's close. So while contrarian traders might be turned off by Huntsman's price strength over the past year, Koort's call could reflect a sense on Wall Street that the company's growth prospects still aren't fully baked into the valuation.

Now what: According to Goldman, Huntsman's risk/reward trade-off remains particularly attractive at this point. "We add Buy-rated HUN to the Americas Conviction List as we expect further expansion of HUN's multiple to be supported by its 1) structurally improved margin profile as a result of restructuring initiatives, 2) better earnings quality with a mix shift toward specialty businesses; and 3) better leverage to a global cyclical recovery with growth and reinvestment in a broad and diverse portfolio of chemical assets," said Koort. With Huntsman shares hitting a new 52-week high today and trading at a 30-plus P/E, however, I'd hold out for a wider margin of safety before betting on those expectations. 

Micron Technology , which supplies flash memory to Apple , is on a strong run this year. The stock has gained almost 35% and is trading close to its 52-week high. A strong recovery in memory-chip prices and solid demand for its products were tailwinds for Micron this year. As a result of consolidation in the flash memory industry and the acquisition of Elpida, the company's performance has improved.

Even at its 52-week high, Micron still looks like a good investment, as chip prices are expected to remain strong. Moreover, the upcoming ramp of the next-generation iPhones can drive Micron to new highs. Let's take a closer look at Micron's prospects and see why the company looks like a good bet despite its already strong run in 2014.

Why Micron should get better
Micron's solid operational execution, along with favorable industry and market conditions should lead to better performance going forward. In the dynamic random-access memory, or DRAM, segment, Micron expects wafer production to remain soft due to DRAM-to-NAND conversion. Moreover, the chipmaker expects shrinkage in total industry bit-supply growth in 2014.

Even beyond 2014, Micron expects industry supply growth in the 20%-30% range, driven by relatively stable wafer output and a slowdown in process technology migration. Since the five-year DRAM demand forecast is expected to be in the 25%-30% range, the supply and-demand situation continues to remain favorable for Micron. 

DRAM is expected to deliver strong results, with stable revenue and gross-margin expansion later in the year. The chipmaker is also trying to provide its server customers with unique solutions to help differentiate its products. Micron is working with major networking customers to improve bandwidth performance and benefit from trends such as the cloud, data centers, and the LTE rollout. In addition, the company's involvement in hybrid-memory-computing enablement and DDR enablement are additional growth drivers. 

Micron's cutting-edge NAND process technology is also expected to deliver strong growth. The company is ramping yields of its 20-nanometer and industry-leading 16-nanometer technologies. These smaller form-factors should result in increased demand for its products as they are more efficient in nature, consuming less power and delivering better performance. 

The company's graphics business is also gaining momentum, as it shipped more than 100 million gigabits in the previous quarter. Also, Micron's GDDR5 product was qualified by an important customer with the company recording positive yield improvement on its 25-nanometer process.

iPhone 6 is an opportunity
The biggest growth opportunity for Micron comes from Apple. After acquiring Elpida, Micron landed the Apple account and supplied memory for the iPhone. Apple is now getting ready to launch the iPhone 6, which might arrive in September, and is expected to carry cutting-edge technology such as a LiquidMetal chassis and sapphire display. Also, the iPhones are going to be bigger this time, according to rumors, as Apple is trying to capture the market for large-screened devices.

As a result, Apple is expecting huge demand for the device, and it could ship as many as 80 million units of the iPhone 6 this year. As Apple increases production of the iPhones, Micron will gradually see an upswing in its business going forward and report greater revenue growth.

The bottom line
One of the most impressive things about Micron is that the company is still very cheap despite its share-price appreciation this year. Micron has a trailing P/E ratio of 11 and a forward P/E ratio of 9. This is very cheap, especially considering that Micron's bottom line is expected to grow at a compound annual growth rate, or CAGR, of 13% for the next five years. The historical five-year average growth rate is just 2.7%. Even though Micron trades near its 52-week range, it is still a good buy.

Brand differentiation can be one of the most powerful sources of competitive strengths, a key aspect to consider when evaluating investment decisions. Tiffany , Michael Kors , and Williams-Sonoma are firing on all cylinders while generating big profitability for shareholders thanks to their exclusive brands, and this says a lot about these companies and their potential over the coming years.

Tiffany is shining around the world
Tiffany is arguably the most valuable and recognized brand in the jewelry business, and the company is performing remarkably well lately. Sales during the quarter ended on April 30 increased 13% versus the same period in the prior year to more than $1 billion, considerably better than analysts' forecasts of $953 million for the quarter.

Source: Tiffany.

While performance was strong across the board, growth rates were particularly encouraging in Asia. Sales in the Asia-Pacific region jumped by 17% to $261 million, sales adjusted for currency fluctuations increased by an even stronger 19% in the region, and comparable-store sales grew by an impressive 10%.

Strong product pricing and disciplined cost management allowed Tiffany to expand profits during the quarter, as gross  margin increased 200 basis points to 58.2% of sales. Net income grew 50% versus the same quarter in the prior year, and earnings per share of $0.97 were materially better than the $0.78 per share Wall Street analysts forecasted on average.

Healthy sales growth, expanding profit margins, and abundant opportunities in international markets mean that Tiffany is well positioned to continue delivering glowing performance for investors over the coming years.

Michael Kors is on the right side of the trend
Michael Kors has been one of the most spectacular growth stories in the affordable luxury fashion business over the past several years. The industry can be particularly fickle and dynamic; however, judging by recent financial reports, Michael Kors is still as hot as it gets.

Source: Michael Kors.

Sales during the quarter ended on March 29 increased by an explosive 53.6% versus the same quarter in the prior year to $917.5 million, comfortably above Wall Street estimates of $818.1 million in sales for the quarter.

Retail revenues grew 49.7% to $408.4 million because of a 26.2% increase in comparable-store sales and 101 net new store openings. Wholesale sales jumped 55.5% to $473.7 million, and licensing revenues increased 79.1% to $35.4 million.

Michael Kors is a remarkably profitable business even if management anticipates that profit margins could be under pressure as the company invests for growth in the coming quarters.

Gross profit margin increased to 59.9% of sales during the last quarter, compared with 59.7% in the same quarter during the prior year. Operating margin was also higher, reaching 26.8% of sales versus 26% of revenues during the same period in 2013.

Net earnings per share came in at $0.78, a big year-over-year increase of 56%, and considerably better than the $0.68 per share analysts forecasted on average.

As long as Michael Kors continues delivering the right products to its affluent and fashion-conscious clientele, strong demand is indicates the company has enormous room for expansion, both in the U.S. and abroad.

Multiple tailwinds for Williams-Sonoma
Williams-Sonoma is benefiting from multiple tailwinds at the same time. High-end brands are a particularly strong spot in the generally dismal retail business, and Williams-Sonoma has done an impressive job at adapting to the the online retail revolution, a crucial competitive factor in the current environment.

Source: Williams-Sonoma.

Sales during the quarter ended on May 4 grew 9.7% to $974 million, driven by a 10% increase in comparable-brand sales. This was better than Wall Street analysts' expectation of $943 million in revenues for the quarter. Direct-to-consumer sales increased 17.2% versus the prior year, representing 50% of total revenues.

Both gross and operating margins were marginally higher during the quarter, and Williams-Sonoma delivered a big 20% increase in earnings per share, reaching $0.48 during the period versus an average forecast of $0.44 from Wall Street analysts.

While most peers are being hurt by the competition from online retailers and lackluster consumer spending, Williams-Sonoma is growing impressively in the face of challenging industry conditions, and this is a clear reflection of the company's competitive strengths and management quality.

Foolish takeaway
Tiffany, Michael Kors, and Williams-Sonoma are delivering extraordinary financial performance thanks to their highly demanded brands and strong pricing power. The three companies are solid candidates for investors looking to position their portfolio in unique consumer names with attractive prospects for sustained growth.

U.S. stocks finished at (another) record high yesterday, but they may not repeat the feat today, if this morning's small losses persist. The benchmark S&P 500 and the narrower Dow Jones Industrial Average are down 0.1% and 0.19%, respectively, at 10:18 a.m. EDT. While the stock market is repriced on a near-continuous basis during the trading day, one unique, illiquid asset with an extremely limited supply is on auction as we speak. The auction, which is held annually, is only open for five days; with just three-and-a-half days remaining, the current high bid stands at $370,100. What is the asset in question? A steak lunch in New York (travel expenses not included) with billionaire investor Warren Buffett, CEO of Berkshire Hathaway . My question today: Is it possible on an economic basis to justify paying six or seven figures for lunch with Buffett?

In Good Will Hunting, the self-educated prodigy Will Hunting embarrasses an arrogant Harvard graduate student in a Cambridge bar before concluding his withering put-downs by observing that: "You dropped a hundred and fifty grand on an education you coulda' picked up for a dollar fifty in late charges at the public library."

I can't help but recall that scene when I think of a wealthy investment manager plonking down hundreds of thousands or millions of dollars to have lunch with Buffett. I'm tempted to paraphrase Will Hunting with: "You dropped $3.5 million [the winning bid in 2012 and record price to date] on some lunchtime wisdom you coulda' picked up for $20.62 at Amazon.com."

The latter figure is the cost of a complete compilation of Buffett's annual letters to his investors, beginning in 1965 through 2013. Reading, working through, and understanding those letters will put you well ahead of most investors -- including many professionals -- in terms of understanding intelligent investing and sound corporate governance.

Naturally, having Buffett's attention for several hours is worth a premium over reading his letters. After all, it's sort of like showing up at the Berkshire Hathaway annual meeting Q&A session and finding you're the only person there -- you get to set the agenda for the discussion.

In fact, based on the winning bid for the last year's auction (approximately $1.23 million), the value of the Buffett lunch has compounded at an annualized rate of 35% since 2000. That's an impressive return, particularly once you factor in a nearly two-thirds decline in the value of the winning bid between 2012 and 2013 (it seems there was a bit of a Buffett lunch bubble in 2012).

There are several purely economic arguments for paying a multimillion-dollar sum to have lunch with Buffett. For one thing, winning bidders are invariably investment managers -- typically hedge fund managers. A nugget of wisdom gleaned during the lunch that produces even a small improvement in investment approach or process can be very valuable indeed when it is deployed over the right-size asset base and the right investment period.

Furthermore, the supply of these lunches is becoming increasingly limited. With Buffett now 83, it's unlikely that there will be more than 10 to follow. Combine that constrained supply with some deep-pocketed bidders and it's no wonder the price of the asset skyrockets. Even with a million or multimillion-dollar price tag, winning bidders may yet be getting value for their winning-bid dollar.

Finally, the meetings can be serendipitous: Ted Weschler paid a total of $5.2 million to win the auctions in 2010 and 2011. He ended up closing his hedge fund and now works for Buffett, managing a billion-odd dollars on Berkshire Hathaway's behalf.

The new proposed rules by the Environmental Protection Agency, or EPA, have far reaching impacts on coal used by power plants to produce electricity. It doesn't, however, impact coal used for steel and especially that exported to foreign locations. Based on this news, the large 10% decline by Walter Energy is perplexing considering the coal miner is almost completely focused on the metallurgical export market.

With the recently released first-quarter results, the company has plenty of issues outside the EPA. From a China slowdown to an oversupplied metallurgical coal market, the company has plunged to new low after new low. Ironically, the ruling has a greater impact on Peabody Energy and the majority of stocks in the Market Vectors Coal ETF, which ended up virtually flat the day of the ruling. The reaction is very suggestive of a market overly negative on Walter Energy and fellow met coal leader Alpha Natural Resources despite the smaller EPA impact.

EPA decision
On June 2, the EPA came out with a proposal to reduce the carbon emissions from the power sector by 30% from the levels achieved in 2005. The mandate is for the reduction in carbon emissions to be met by 2030. The proposal, if approved, will greatly impact power producers focused on coal and the miners that provide that thermal coal.

Leading domestic coal miner Peabody Energy pointed out some issues with the EPA policy. According to the company, coal provided 90% of America's increased electricity needs during the polar vortex winter. In addition, it claims that more than a third of U.S. households qualify for energy assistance. Of course, Peabody Energy is tied to coal demand, but it has some good points on the source of low-cost electricity, calling into doubt whether some of the stricter parts of the proposal will be implemented.

These facts also call into question how the flexible proposals of the EPA will reduce electricity bills by 8% in 2030 if the low-cost source is removed from the equation.

Met coal focused
Of any domestic coal producer, Walter Energy is likely the least affected by the new EPA rules. According to the release by the company, it obtains 95% of revenues from the export of metallurgical coal.

The company projects full year 2014 met coal production to total 9.0 to 10.0 million tons after recently closing the high-cost mines in Canada. The company expects to sell 10.5 and 11.5 million metric tons based on production and nearly 2 million tons in inventory when the first quarter ended. In the last quarter, Walter only produced 174,000 metric tons of thermal coal. At roughly half the selling price of met coal, the thermal position is immaterial to the operations of the company.

Alpha Natural Resources faces more issues from Central Appalachia thermal coal production, which is a prime target of the EPA rules. Outside of that, Alpha Natural Resources is one of the largest met coal producers in the world with vast resources and access to export terminals. Even with the weakness in met coal prices, the company obtained roughly 36% of revenue from the higher valued coal source. It still leaves a substantial amount of revenue potentially affected by the EPA proposals.

Bottom line
When a government proposal impacts a stock more than warranted, it typically provides a buying opportunity. Walter Energy was hit mercilessly despite the limited impact the rules will have on the company. It's always possible that the 645-page EPA proposal contains hidden impacts only noticed by a few sellers, but more likely than not forced selling in the sector automatically dumped weaker stocks such as Walter Energy and Alpha Natural Resources, while buyers moved into the market to buy the stronger miners, such as Peabody Energy. Walter Energy is far from a safe investment, but at this point the market appears irrational on this name.

Despite strong revenue growth, this morning Hovnanian Enterprises reported a net loss of $7.9 million, or $0.05 per share, for the three months ending April 30.

Revenue increased by 6.4% to $450 million during the second quarter of the 2014 fiscal year for the homebuilder. However, expenses at Hovnanian Enterprises came in at $457 million for the quarter, which was a 7.5% increase over the second quarter of last year.

"We launched our national sales campaign, Big Deal Days, in March and were encouraged by the 728 net contracts signed during the month of March 2014, the highest level of monthly net contracts since April 2008," said Chairman, President and CEO Ara Hovnanian in the company's press release. "However, our sales pace during April and May was choppy and the total monthly sales pace per active selling community in both months fell short of last year's levels."

Hovnanian Enterprises did see impressive growth in the gross margin of its homebuilding efforts, which expanded from 18.9% to 20.2%, however its loss resulted in increased selling, general and administrative expenses, which rose by $10 million to $47.8 million.

In addition to its strong growth in revenue, Hovnanian also saw significant rise to the value of its backlog of contracts, which rose from $865 million to $1.05 billion, a gain of 21% year-over-year. In total, the homes in backlog increased to nearly 2,800, a gain of 13.6%.

While the loss was discouraging, the CFO of Hovnanian, Larry Sorsby, noted in the press release the reason behind this increase in expenses was the result of increased investments in new communities in an effort to "drive future revenue growth."

In addition the CEO added; "Given the increases in our consolidated net contracts, community count and backlog, we currently anticipate continued growth in revenues resulting in profitability during the second half of fiscal 2014. We expect to be profitable for all of fiscal 2014, but our profitability is expected to be more back-end weighted than it was in fiscal 2013."

The company has reported a total loss of $32.4 million through the first six months of its 2014 fiscal year, and while another quarterly loss is somewhat troubling, it's encouraging to know the CEO suggests the increased contracts and backlog has resulted in the home builder "firmly" believing "we are in the early stages of a housing recovery."

Marathon Oil recently announced that it will sell its Norwegian energy assets and the transaction should be an incremental positive for the company by allowing it to ramp up activity at its highest-margin onshore U.S. opportunities, buy back more shares, and accelerate its growth rate -- all potential catalysts to boost its currently depressed valuation.

Photo credit: Wikimedia Commons

Marathon offloads Norwegian assets
On Monday, Marathon Oil announced that it struck a definitive agreement to sell its Norwegian offshore oil-production business to Det norske oljeselskap ASA for a total transaction value of $2.7 billion, which includes debt and other liabilities that Det norske would assume. After adjusting for debt, net working capital, and interest, Marathon expects to receive net proceeds of approximately $2.1 billion.

The transaction, which is expected to close in the fourth quarter, will include the sale of Marathon's Alvheim floating production, storage, and offloading (FPSO) vessel, and a number of Marathon-operated and non-operated licenses to drill on the Norwegian Continental Shelf in the North Sea. Marathon's net production in Norway averaged roughly 80,000 barrels of oil equivalent (BOE) per day in 2013.

The move marks the culmination of Marathon's asset-sale strategy that has seen the company divest some $6.2 billion worth of assets since it spun off its refining arm into Marathon Petroleum Corporation and became an independent E&P company in 2011. By divesting non-core assets, Marathon expects to simplify its portfolio to concentrate on higher-margin opportunities, and to improve its overall production growth rate.

Is it a good move?
In my view, while the deal's metrics weren't all that attractive on a price-to-flowing-barrel basis, the transaction bodes well for Marathon for a few key reasons. First, it gives the company a lot of extra cash that it can use to invest in accelerating drilling activity across its higher-margin U.S. resource plays, and to buy back more of its own stock under its remaining $1.5 billion share repurchase authorization.

Marathon plans to invest roughly $3.6 billion of its $5.9 billion capital budget for the year on North American resource plays, with the largest portions allocated toward North Dakota's Bakken, and Texas' Eagle Ford, where the company expects to accelerate activity by 20% this year. With Marathon's rates of return in these two plays currently higher than 70%, a further acceleration of activity should provide further support to its upstream cash margins and cash flows.

Second, the transaction should materially improve Marathon's overall production growth rate and after-tax margins, according to Morningstar analyst Allen Good, given the high decline rates and high effective tax rates of its Norwegian assets. Last year, for instance, the company's effective tax rate for continuing operations fell to 68% from 74% in 2012 due largely to lower income from Norway and Libya, another high tax jurisdiction.

Overall, this transaction signals Marathon's continuing transformation into a North America-focused E&P company. In recent years, a number of Marathon's peers have also divested riskier foreign operations in favor of onshore U.S. assets. ConocoPhillips , for instance, has sold international assets in Kazakhstan, Algeria, and Nigeria to concentrate on the Bakken, Eagle Ford, and Permian Basin, which should account for 60% of the company's production growth through 2017.

Similarly, Apache has sold off some $8 billion worth of assets during the past year in order to focus on lower-risk, higher-growth opportunities in its Permian Basin and Central region operations. Like Marathon, both companies view their onshore U.S. assets as key drivers of production growth during the next few years.

Investor takeaway
After the Norwegian sale is completed, North America will account for roughly two-thirds of Marathon's production, which makes it an attractive way to invest in the continued growth in U.S. oil production. With shares currently trading at just around 11x forward earnings -- a significant discount to other similarly sized, North America-focused E&Ps -- I think the company's stock presents a compelling value.

As the market recognizes Marathon's growing exposure to U.S. shale and the associated upside to production, margins, and cash flows, multiple expansion could push its share price as high as $45 a share, which would represent roughly 25% upside from its current price of around $36 a share.

Apple  took the bold move of introducing its own programming language on Monday called Swift. To date, Apple has primarily used Objective-C as a language, which is starting to show its age, as it is over 30 years old. With that age comes considerable baggage for developers. Swift hopes to make life easier for developers.

Apple highlighted how young many of its developers are, which shows how vibrant the platform is. While it may be a short-term hurdle to ask all of its developers to learn a new language, it's a small obstacle that Apple can easily clear so long as it keeps developers focused on the end goal: millions of iOS users that pay up for content.

It's strategically similar to Apple's transition to 64-bit architecture in its A-chips last year, although that's a very different context. Swift is all about setting up a long-term roadmap for the future of the platform. 

In this segment of Tech Teardown, Erin Kennedy discusses Apple's Swift with Evan Niu, CFA.

Shares of industrial materials powerhouse Corning have been on a roll thus far in 2014, having outperformed the S&P 500 by an impressive 15% as we pass the halfway mark.

One key component of Corning's long-term growth story has been the resounding success of its hugely popular Gorilla Glass, which has become industry-standard in advanced smartphones and tablets like Apple's iPhones and iPads.

And as you might imagine, although by no means its primary financial driver, Corning's Gorilla Glass has grown to become a somewhat meaningful line-item in Corning's finances. However, it appears that those same companies that helped put Gorilla Glass on the map -- companies such as Apple and Samsung -- could be fast at work in finding its replacement as well.

Sapphire: the new thing in smartphones?
As many know, tech giant Apple has been investing heavily in sapphire technologies in a big way.

Late last year, Apple invested $578 million to help finance the construction of a large-scale plant with specialty materials manufacturer GT Advanced Technologies (NASDAQ: GTAT) that many believe could lead Apple to replace Gorilla Glass with sapphire in future products. And more recently, other names, like Samsung and LG,have also expressed interest in using sapphire in future smartphones and tablets.

So as Apple, Samsung, LG, and others investigate sapphire's significant potential, how large a threat does this pose to Corning and its investors? In the following video, tech and telecom specialist Andrew Tonner looks into this evolving storyline.