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7 Products With Outrageous Markups

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make-up brushes in holder and cosmetics isolated on whiteBy Hal M. Bundrick

Everyone knows movie theater popcorn is no bargain, but would you have thought it was served with a 900 percent markup? With a cost of 60 cents and a bucket price near $6, you're losing a quick fiver -- and that's before you splurge on the giant soft drink and a big box of candy. But those aren't the only high-profit items you're likely buying on a regular basis. The Student Money Management Center at the University of Nebraska-Lincoln, figured out some high-margin items.

 

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How You Can Easily Split Expenses With Friends

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Group of friends having dinner at a restaurant
Andres Rodriguez/AlamySharing a meal with friends doesn't have to end with confusion over the bill.
By Stefanie O'Connell

I don't know what it is about sharing costs, but for some reason, any time I go out with a group of smart, young professionals, we're reduced to incompetent consumers the moment the bill arrives. Perhaps it's the taboo of publicly discussing money or sheer apathy towards social spending, but the amount of misconceptions and failed considerations that surround sharing costs and splitting bills with friends and colleagues never ceases to amaze me. Here are some guidelines to help:

1. Pay for your order. If you're sharing something like a pizza, it makes sense to simply divide the total bill by the amount of people. But when you go out in large groups, there's bound to be more variation. Someone orders an extra drink or two, another person orders the filet mignon, and meanwhile you're sitting there with your salad and water. Why should you be expected to contribute as much to the bill as your expensive-taste counterparts? Asking for separate checks from the outset is a great way to avoid any confusion.

The same policy applies to self-prepared group meals. I'm all for sharing the costs of a summer barbecue, but as a vegetarian, I don't think it's fair to pay as much for salad and pasta as everyone else is paying for ribs, burgers and steaks. In those cases, I prefer to BYOF (bring your own food).

2. A tip is a percentage. If you've dined out more than once your life, you know perfectly well that the tip is based on a percentage of your total bill. That fact doesn't change when you're in a big group. Just like your meal, tips shouldn't be split equally (unless you've all ordered the same thing). Rather, it should be calculated as a percentage of what you ordered. That doesn't change when the tip is included, either -- just use the same percentage the restaurant used to calculate your included tip.

Once again, separate checks can spare you this confusion. But if the restaurant can't accommodate that request, here's my strategy. I calculate what I owe based on my order, then figure the proper additions of tax and tip and add it to my total bill. With the prevalence of smartphone calculators and apps designed specifically for this purpose, there's no excuse not to put in your fair share. If you're not a smartphone carrier, just use this simple calculation for the tip: move the decimal point one space to the left and double.

3. Speak up. I'm definitely the frugal one in my social circles. When you've grown up together, it can be tricky when your income and spending values start to become very different from each other. The peer pressure to spend beyond your means can be incredibly tempting, but it's also dangerous. I decided to "come out" as frugal to my friends. Now that they know my spending priorities, they're more inclined to consider low-cost group activities when I'm involved. As an added bonus, I'm also the first one to score hand-me-downs, freebies and other extras!

4. Offer an alternative. If you can offer a low-cost alternative to group activities (for example, a potluck rather than a fancy restaurant), then you can have a lot more social time without so much spending. Even if the meal or activity is already planned, take it upon yourself to research promo codes, coupons or group rates. If you put in a little extra effort, you might be able to score savings for everyone involved, including yourself.

5. Say "no." Sometimes the best option is to opt out. I've been on a few group trips where I've sat out of select activities or meals that I knew would be beyond my price range or outside of my spending plan. Don't be afraid to explore on your own while your colleagues venture elsewhere. By picking and choosing which group expenses you partake in and which you opt out of, you can still be involved, but on your own terms and in line with your budget priorities.

Don't let money dictate your social calendar or create a divide in your friendships, just find ways to share group expenses that are fair and work within your budget.

Stefanie O'Connell is a New York City based actress and freelance writer. She chronicles her struggle to "live the dream" on a starving artists' budget at thebrokeandbeautifullife.com.

 

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Corporate America Needs to Change for Millennials

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Business people working together in  office
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By Hal M. Bundrick

Millennials, generally defined as adults in their early 30s and younger, are gradually beginning to redefine America's priorities, from profits to purpose. Rather than reflecting the competitive and combative attitude of baby boomers, Generation Y rallies to marketing related causes and the acquisition of experiences rather than things.

It is a generational shift just now beginning to impact the nation, according to Morley Winograd, a senior fellow at the University of Southern California and Michael Hais, a former vice president for entertainment research at Frank N. Magid Associates. The authors have released a new Brookings Institution report "How Millennials Could Upend Wall Street and Corporate America."

"The initial tremors are already changing consumer markets and forcing corporations to change their workplace practices," say Winograd and Hais in the report. "But soon, as millennials become an increasingly large share of the adult population and gather more and more wealth, the generation's size and unity of belief will cause seismic shifts in the nation's financial sector, shaking it to its very foundations and leading to major changes in the nation's board rooms."

A Great Career in Tech or the Government

That change is reflected in a list of "dream employers" Millennials want to work for. The authors note a survey of 10,000 millennials having one to eight years of job experience that was fielded by the consulting firm of Universum in 2011. The usual suspects topped the list: Google (GOOG), Apple (AAPL) and Facebook (FB). But the U.S. State Department ranked fourth, the FBI seventh and the CIA 10th. Other than technology companies, government agencies occupied the most slots in the list of the top 15 most coveted places to work.

The rankings of dream jobs goes to the heart of a recent Intelligence Group study that found that 64 percent of millennials saying they would rather make $40,000 a year at a job they love rather than $100,000 a year at a job they think is boring.

"In the future, most Americans, taking their cue from millennials, will demonstrate a greater desire to advance the welfare of the group and be less concerned with individual success," the report says. "They will be less worried about being guided in their daily decisions by software and more intrigued by the opportunities it offers. Even without any major environmental disaster, they will display a greater reverence for the environment and less interest in the acquisition of things as opposed to experiences."

By 2020, more than one in three adult Americans will be millennials. It is also estimated that by 2025, they will make up as much as 75 percent of the workforce.

"Companies that dedicate their future to changing the world for the better and find ways to make it happen will be rewarded with the loyalty of millennials as customers, workers and investors for decades to come," the report concludes. "Those that choose to hang on to outdated cultures and misplaced priorities are likely to lose the loyalties of the millennial generation and with it their economic relevance."

 

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Best of DailyFinance: The Week in Review (June 2-8, 2014)

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This Disruptive 3-D Printer's Opportunity Is Deceivingly Large

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Although Mcor Technologies, the disruptive Ireland-based 3-D printing company, only uses regular copy paper as its main 3-D printing material to keep operating costs low, its market opportunity is surprisingly large. Conceptual models and early stage prototypes are Mcor's bread and butter, making its products great fits for product developers that produce a high volume of models and prototypes and are looking to lower their operating costs compared to 3D Systems' and Stratasys' offerings. In terms of market opportunity, virtually every marketed product or industrial component starts off as an early prototype or model. While it's difficult to put a dollar figure on Mcor's opportunity, early prototypes and models certainly contribute to what 3D Systems believes is a $35 billion design-to-manufacturing value chain worldwide.

This full-color model was 3-D printed from paper. Souce: Mcor Technologies.


Mcor boasts that its 3-D printers cost anywhere between 5%-20% less to operate than what competitors like 3D Systems and Stratasys offer. For less than $50,000, small businesses and product designers can own Mcor's flagship full-color 3-D printer -- a fraction of the cost that 3D Systems and Stratasys charge for their color 3-D printers.

Investors shouldn't necessarily take this to mean that 3D Systems and Stratasys do not stand a chance against Mcor's cost advantage. Perhaps 3D Systems' and Stratasys' higher cost and more capable 3-D printers become used later on during a product's design cycle, while Mcor's machines remain well suited for the earliest stages of prototyping and modeling applications as a way to reduce product development costs. In other words, it's entirely possible that Mcor's paper-based 3-D printers become more complimentary than disruptive to other 3-D printing technologies. Still, 3D Systems and Stratasys investors would be wise to monitor how Mcor's products are received in the marketplace, and whether the company's products are likely to have a negative impact on these 3-D printing giants.

In the following video, 3-D printing specialist Steve Heller asks Mcor CEO Conor MacCormack about what he sees as the biggest opportunity for the company.

A transcript follows the video.

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Steve Heller: It sounds to me like your product is more geared toward the prototyping market. What kind of applications is your product best suited for in that market? What are you most excited about as an opportunity?

Conor MacCormack: For us, when we had this idea, obviously it was running costs. We felt that was the problem. But when we started to build the machine, and people got a chance to actually hold the parts, people said, "There's a fantastic feel of these objects. They're very, very smooth."

People have built up kind of a database over the years of handling paper. There's a very nice tactile nature to the parts.

Our biggest use cases are really, as you mentioned, the early stages of the designer view. Prototyping -- a lot of people on Wall Street talk about, "Well, if it's not part of a jet engine or something that goes into a spacecraft, how would you use it?"

But the reality is, on the street, maybe 75%-80% of what people use 3-D printing for is non-functional. They want something that's a nice, low price point, high quality, and if you can get color in there, all the better.

Heller: You have a great proof of concept then.

MacCormack: We're going after the same markets as everybody else. You have product designers, you have architects, you have MCAD industrial design, you have GIS -- Geographical Information Systems -- all the usual suspects in the commercial side, we'll be going after.

But also, with our technology, we have access to the consumer. The consumer might not be buying our machine right now because of the price point, but the content out of the machine is very much a consumer-oriented product. It's high color, high quality, and that's going to happen, we feel, via retail.

Just like you would see in 2-D printing, where people would get their 2-D photographs printed in a local store, in high-quality printer in the back room, we believe that that's how consumers are going to get access to high-quality 3-D printing, via the retail. We are very well geared for setting that up, this year or next year.

Heller: Right.

The article This Disruptive 3-D Printer's Opportunity Is Deceivingly Large originally appeared on Fool.com.

Steve Heller owns shares of 3D Systems. The Motley Fool recommends 3D Systems and Stratasys. The Motley Fool owns shares of 3D Systems and Stratasys. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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

 

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Seadrill Ltd. and its Deepwater Peers Have a Big Week

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Photo credit: Seadrill 

Seadrill started June off on a very positive note after the contract driller signed a $1.1 billion five-year contract for its West Jupiter ultra-deepwater drillship. That contract was a sign of good things to come as Freeport-McMoRan agreed to a two-year drilling contract worth $425 million with Rowan for its Rowan Relentless drillship. Finally, Ocean Rig signed a six-year, $1.3 billion agreement for its Skyros drillship as well as a six-well contract for a semisubmersible rig.


These contract wins are important ones for the deepwater industry, which had seen new awards fall to the lowest level since the financial crisis last quarter. This slowing market had been particularly concerning to Seadrill investors as the company is in the middle of building out its fleet and has several upcoming drillships without contracts.

The good news here is that drillers like Freeport-McMoRan are beginning to make plans to drill again after energy companies reset expectations after seeing surging project costs. The fact that deepwater explorers are beginning to sign new contracts should keep drillers like Seadrill, Rowan and Ocean Rig utilizing as close to 100% of capacity as possible, which is what investors want to see.

To help investors keep up with the latest contracts I created the slideshow below. It details the drillships that Seadrill, Ocean Rig and Rowan were able to get under contract as well as what energy companies joined Freeport-McMoRan in securing new rigs. 

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The article Seadrill Ltd. and its Deepwater Peers Have a Big Week originally appeared on Fool.com.

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

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

 

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Why Zynga's Drop Is a Buying Opportunity

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Following an investor presentation -- on the back of news of more executive departures -- Zynga shares plunged to lows not seen in nearly a year. While investors shouldn't attempt to time the market, they should take advantage of large moves in either direction to modify positions. As long as an investing thesis hasn't changed, investors can use their acquired knowledge of the company to take advantage of a large, outsized market move that happens too often these days.

Anybody following Zynga over the last year knows that the company is in the midst of finishing up a turnaround led by CEO Don Mattrick. The company has shown a promising reversal in user trends and monetization metrics and is now embarking on a path toward growth. In the midst of all these improvements, investors became overly cautious on the mobile and social gaming sector following the disappointing IPO of King Digital Entertainment .

Analyst disappointed about CEO body language
The Zynga CEO gave a presentation at the Bank of America Merrill Lynch conference and analysts were disappointed with the tone and body language of the presentation. Despite limited actual news, several data points were extrapolated as negative that weren't new for the company. Some of the excuses for the stock dropping more than 10% during the day were really a rehash of current concerns that existed prior to the conference: low EBITDA margins, an unknown game pipeline, and the decision to not pursue real-money gaming.


Considering the lack of any long-term changes in the business model, investors can probably conclude the stock is reaching a crescendo with the negativity. The stock has now collapsed nearly 50% after reaching a high of more than $5.75 back in March. In that time, Zynga has produced solid stabilization in financial metrics, but it won't match the incredible 41% EBITDA margins of King Digital.

The building of solid franchises with repeatable business probably sets the company up for more stable margins in line with the 18% operating profit margins at Electronic Arts . Zynga is currently struggling to get the EBITDA margins up to those levels, much less match the higher margins of King Digital.

Source: Zynga Q1 2014 Presentation

On the right path, but don't expect a miracle
As with any turnaround, the path to recovery is always rocky. Investors should never get too high or too low when a company is in the midst of executing on a plan. The key is that the company is showing stable-to-growing user play and the key market is growing.

In the latest quarter, Zynga saw a reversal in user trends after a couple years of consistently declining numbers. The most impressive change was the trend in daily average users that increased sequentially to 28.4 million in the first quarter, up from 26.6 million in the fourth quarter. The impressive shift came without the help of any major games and on the back of improvements in old games such as Zynga Poker that recently gained bookings for the first time in seven quarters.

Source: Zynga Q1 2014 Presentation

Bottom line
Investors should expect volatile stocks like Zynga to have dramatic moves including the recent decline. Instead of panicking, investors should take advantage of the dips that occur without any evidence of a change in the turnaround plan. Despite the noise from the Merrill Lynch conference, the lack of an announced development pipeline provides the company a first-mover advantage, and real-money gaming remains an opportunity when that market opens up in the future. Investors need to quit sweating every move of the CEO and focus on the long-term potential of the company. Based on the margins of Electronic Arts, where Mattrick worked previously, Zynga has plenty of upside going forward.

Leaked: Apple's next smart device (warning, it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

The article Why Zynga's Drop Is a Buying Opportunity originally appeared on Fool.com.

Mark Holder and Stone Fox Capital clients own shares of ZYNGA INC. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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

 

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Twitter's Valuation Is Becoming More Attractive

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Micro-blogging platform Twitter  remains a very volatile stock, and the company's stock price saw a recent pullback of more than 50%. Twitter's stock price was extremely overvalued when it was in the 70s, but now represents a far more attractive investment.

There were unrealistic expectations surrounding Twitter's long-term value, with many investors and analysts drawing scenarios of Twitter becoming the next Facebook . However, that is not the case. Twitter does represent a good platform where advertisers can reach digital-savvy users.

Valuation more attractive
Public market valuations of Twitter had heightened expectations as overly bullish investors were anticipating that Twitter's 255 million monthly users could match Facebook's global scale of 1.3 billion users. That is unlikely to materialize, however, and expectations of the company have been reset. 


Twitter should see substantial revenue growth and margins should meaningfully expand as the company's pre-IPO stock compensation expenses are expensed on its financials. Twitter saw its revenue growth reaccelerate for two consecutive quarters; if the company can sustain revenue growth at more than 110% for a few more quarters, then the company will have a much larger revenue base. 

Twitter's shares got hammered after the last earnings report came out because investors got spooked about the company's user growth and engagement. Investors clearly overlooked the company's fantastic revenue growth, though. Twitter's user engagement was down as measured in terms of timeline views per users, both in the U.S. and also outside of it. However, Twitter's user growth increased 25% year-over-year, and Twitter's average revenue per user (ARPU) is on the upswing. Twitter might not get to more than a billion users like Facebook, but it is a great broadcasting platform due to its real-time nature.

Monetizable platform
Twitter has a reasonably light ad load on its platform compared to Facebook. It can ramp up the number of ads on mobile devices, as 78% of its total usage is coming from mobile. Twitter can also grab a sizable chunk of the growing mobile advertising platform. Advertising on social media is still a portion of the total advertising pie as well, and one that should grow substantially bigger over time. 

Total advertising spending on mobile is estimated to be $31.5 billion in 2014, according to market research firm eMarketer. The leaders in the space are Google  and Facebook, and these two firms are expected to control close to 70% of the mobile advertising market in 2014. Google being the leader in search and mobile OS through Android is expected to have 47% of the market in 2014, while Facebook is at a distant 22% market share. 

Being a much smaller company relative to Google and Facebook, Twitter should have 2.6% of all mobile advertising spends worldwide, according to eMarketer. Twitter is increasingly making itself a more monetizable platform through other means, however.

Twitter's acquisition of mobile ad exchange MoPub has given the company a solid position for benefiting from growth stemming from in-app advertising. The company has now made another acquisition in the form of Namo Media to complement MoPub's position in mobile app monetization. These initiatives, coupled with growth in mobile ad spending by marketers worldwide, should aid Twitter to grow its annual ARPU from $3.35 to much higher levels. It will probably take Twitter closer to Facebook's trailing twelve month ARPU of $7.46 as well. 

Going forward
Twitter is a niche social media platform, but it still has a lot of room for user growth. In the U.S. it has 57 million users, and internationally it has 198 million users. As a result, there is room for more user penetration across the globe. 

Twitter doesn't need to be the size of Facebook to deliver solid revenue and earnings growth. The company's operating margins should expand dramatically after the IPO stock comp costs are expensed fully. Twitter currently trades at 9.5 times its 2015 revenue estimates of $2.04 billion, and that multiple should expand and drive upside in the company's stock price.

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The article Twitter's Valuation Is Becoming More Attractive originally appeared on Fool.com.

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

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

 

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Apple vs. Android: Why Tim Cook Was Right to Slam Google

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Source: applecom. 

Last week was all about Apple  as the company held its annual developers conference. CEO Tim Cook used his keynote address to take swipes at Microsoft and Google . But while the criticisms were accurate (and hit the nail on the head), Cook's complaints against the Android operating system won't cause Google to lose market share anytime soon. So what exactly did Tim Cook say -- and why doesn't it matter?


Cook made several comments about Google's Android. The one about China was downright misleading. Cook boasted that almost half of Apple's customers in China had switched from Android to an iPhone. Cook neglected to include the fact that Apple only began a major iPhone push in that country late last year, so it stands to reason that customers would jump at the chance to try an Android alternative. But Cook's other Google criticisms were more on point.

Google's low adoption for newer Android
Cook's key Google criticisms came down to newer versions of Android having a lower adoption rate and that the Google Play app store isn't as well monitored as Apple's. 

The slide Cook showed for adoption rates pointed out that only about 9% of Android users have installed version 4.4, the newest release that goes by the nickname KitKat. Cook then pointed out that iOS 7, which was released a mere month earlier than KitKat last fall, is present in about 89% of iPhones. 

Is that true? 

According to data Google collected during a recent seven-day period, KitKat represented nearly 14% of Android version distribution. Jelly Bean, which was released in 2012, had the highest distribution with 58% across its three versions. But that data came out after Cook's keynote and still supports his general notion: older versions of Android have far more users than newer versions.

Source: google.com 

But one of the reasons that Android has leapt ahead of Apple's iOS in market share is that Android comes with phones of all shapes and prices. So newer, high-end Android phones will have KitKat installed. But cheaper devices -- including the Moto X and the lower-tier prepaid phones available from StraightTalk -- will run Jelly Bean or earlier. 

And that tactic has given Google a large advantage. According to Gartner, Android phones held 78% of the worldwide smartphone market last year. Apple came in second with about 16%.

But Tim Cook did make a better point with his Android security comments.

Android more prone to malware
Cook claimed that 99% of mobile malware occurs on the Android platform. He followed with a slide quoting ZDNet's Adrian Kingsley-Hughes, who wrote: "Android fragmentation is turning devices into a toxic hellstew of vulnerabilities." 

And neither Cook nor Kingsley-Hughes is wrong that Android has far more security problems than iOS devices. Part of that does come from the fragmentation (or the coexistence) of too many versions at one time, but Android's app store was built with an eye toward open source and personalization. So Google doesn't have as rigorous of a screening process as Apple and that can lead to security issues. 

But Android users with KitKat who use the app store with the same responsibility of web surfing -- or not clicking a link in an email from a Nigerian prince -- aren't likely to run into a major problem with an Android device. Many users of low-end Android devices simply can't shell out the money required for an iPhone, and have to live with the app store's positive and negative aspects. 

Foolish final thoughts 
Tim Cook made a good point against Google but it won't help Apple bulldoze Android's market share. Android has too many devices across price ranges that can appeal to a wider audience. That's not to say Android doesn't have some glaring flaws, but Apple shouldn't throw stones in glass houses ... lest someone point out the Maps problem, to name one flub. 

Leaked: Apple's next smart device (warning, it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

 

The article Apple vs. Android: Why Tim Cook Was Right to Slam Google originally appeared on Fool.com.

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

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

 

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Bank of America's Latest 11-Figure Settlement and Why It Might Be a Good Thing

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According to the Wall Street Journal, Bank of America could end up paying more than $12 billion to finally settle their pending litigation with the U.S. Justice Department.

This may sound like a ton of money, and it is, but it's really not as bad for Bank of America as it sounds. In fact, the company could even be looking forward to the day they'll get to write that big check.


Why such a big settlement?
Just like most of the settlements before it, this one stems from poor handling of bad mortgages. Specifically, the Justice Department says mortgage-backed securities sold by the bank were of much worse quality than they led investors to believe.

At least $5 billion of the expected settlement is expected to be earmarked for consumer relief, and will go toward helping struggling homeowners reduce the principal and/or monthly payment amounts of unaffordable mortgages.

It's better than it could be
The first reason the $12 billion figure could be good news for the bank is because it's less than the Justice Department was originally seeking.

It was reported the original figure was $20 billion, which included the $6.3 million cash portion of the settlement with the FHFA that has since been settled. Still, after subtracting that amount from the total, the early estimates were still calling for a settlement of nearly $14 billion.

Banks generally have reserves set aside to deal with worst-case-scenario settlements, so the reduced figure might mean Bank of America has billions more in reserves than they'll actually have to pay out.

The end of an era
Earlier this week, CEO Brian Moynihan said the Justice Department settlement is the last big settlement left over from the financial crisis. There are still a bunch of relatively small legal issues to work out, but as far as the high-dollar legal bills are concerned, this is it.

Since the settlements began in 2011, Bank of America has paid out more than $60 billion in settlements, legal fees, and to rebuy bad mortgages it sold.

Shares are trading at a very low valuation relative to historic levels, and a lot of the reason for this has to do with uncertainty surrounding both legal issues and the bank's capital plan.

BAC Price to Tangible Book Value Chart

As far as the capital plan is concerned, there is no reason to think the recently resubmitted version won't be approved.

The $4 billion accounting error which caused Bank of America to withdraw their original capital plan caused hardly any change in the reported capital ratios. Additionally, the bank is playing it safe by asking for less than the $4 billion in buybacks and 400% dividend increase than the first plan requested.

The financial crisis and its after-effects represent a period of time shareholders will be glad to put in the rearview mirror. The bank's retail business is growing, capital levels are fine, and there is a high probability dividends will increase once Bank of America's new capital plan makes its way through the review process.

Once the financial crisis issues are truly in the past, more of the market's focus will shift to what really matters: the banking business. Once this happens, Bank of America's shares won't be cheap forever.

These stocks beat the big banks...
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The article Bank of America's Latest 11-Figure Settlement and Why It Might Be a Good Thing originally appeared on Fool.com.

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

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Which of These 3 Have the Best Chance to Fill the Upcoming Void at American International Group?

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Source: AIG.

When he stepped into the top spot at American International Group in 2009, CEO Robert Benmosche was faced with a faltering insurance company at the center of the nation's financial crisis. Since then, Benmosche has overseen the firm's resurgence in the insurance industry, along with its total repayment of a huge financial bailout from the U.S. government.

Announced in late 2013, Benmosche will retire from his position in early 2015, with the company looking at both internal and external options for his replacement. Here are three viable candidates that could continue Benmosche's lead.

Source: AIG


1. Jay Wintrob
Mr. Wintrob currently serves as President and CEO of AIG's Life and Retirement operations. Having worked in the insurance field for just shy of 30 years, Wintrob is expertly versed in the market's complicated nature.

In 1987 he joined SunAmerica, which was later acquired by AIG, holding numerous posts including President of SunAmerica Investments, overseeing the company's invested asset portfolio -- a task he continues to perform in the restructured AIG L&R segment.

Since investments are such an integral part of any insurance firm's operations, it's paramount that the new AIG CEO understands the complexities of managing a large portfolio.

Wintrob and his team have done a remarkable job managing AIG's portfolio through a trying environment of low interest rates and varying reliability of alternative investments. With his long-standing presence within the AIG organization, Mr. Wintrob is a serious contender for the head honcho's office.

Source: AIG

2. Peter Hancock
Mr. Hancock currently resides within the AIG organization as Executive Vice President and CEO of Property & Casualty operations. Though his tenure within the insurance behemoth is short, having only joined AIG in 2010, he is well versed in the firm's newly restructured operations.

Since the aftermath of the financial crisis lead to a serious dive into resurrecting the company's status within the insurance market, Hancock's position as top P&C executive has positioned him to lead the company with confidence going forward.

Hancock also has the benefit of a 20-year tenure within JPMorgan Chase as both CFO and Chief Risk Officer. With the global presence of JPMorgan Chase, Hancock will be more than familiar with the risks faced by a large interntational financial firm.

Though his current position limits his exposure to the firm's overall operations, Hancock has plenty of experience with Life & Retirement products. By co-founding an advisory firm, Hancock was able to glean experience in both risk and asset management, along with "innovative pension solutions."

Source: AIG

3. David Herzog
As AIG's Chief Financial Officer since 2008, Mr. Herzog has had a front row seat to the trials and tribulations of the insurer's participation in the financial crisis and the resulting cleanup.

With the insurer since 2001 when his previous employer, American General Corporation, was acquired by AIG, Herzog has held numerous positions including both Chief Operating Officer and Chief Financial Officer for the Life & Retirement operations as well as the entire organization.

As AIG's CFO, Herzog has expert knowledge of the insurer's entire operations, and knows what works and what doesn't -- number-wise. Though he may not have the experience of managing the insurance operations on a segment basis, his exposure to all areas within the newly streamlined AIG should be a strong support for any bid Herzog could make for the corner office.

Insider training
Obviously, all three of the candidates mentioned above are from within AIG's walls. Though the company has specifically stated that it is looking both within and without for qualified candidates, it's evident that there are some heavy-hitters within the organization that could easily replace Benmosche as CEO.

Regardless of who takes the top job within the insurer's organization, the company and its investors should be strongly confident in its ability to move forward with its reclamation of top insurer, thanks to its back-to-basics restructuring and drive for growth.

These stocks beat some of Wall Street's big finance firms...
Here's your chance to pocket big dividends. Despite the solid dividend AIG reinstated last year, it's still far from the best ones available on the market. Over time, dividends can make you significantly richer. And guess what? The big banks are laggards when it comes to paying dividends. So instead of waiting for a cash windfall that may never come, check out these stocks that are paying big dividends to their investors RIGHT NOW. Click here for the exclusive free report.

The article Which of These 3 Have the Best Chance to Fill the Upcoming Void at American International Group? originally appeared on Fool.com.

Jessica Alling has no position in any stocks mentioned. The Motley Fool recommends American International Group. The Motley Fool owns shares of American International Group and has the following options: long January 2016 $30 calls on American International Group. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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The Dow Keeps Inching Higher on Disney, JPMorgan Strength

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The Dow Jones Industrials  climbed another 21 points as of 11 a.m. EDT Monday to move further into uncharted territory from record levels reached last week. Investors are maintaining their complacency in the light of solid economic performance in the U.S.; while speeches from Federal Reserve officials could introduce some uncertainty into the market, few expect a major deviation from the policy course the Fed has set over the past year. Helping to send the Dow higher were Disney and JPMorgan Chase , which were among the best performers early Monday.


Source: Disney.

Disney climbed nearly 1% as the entertainment giant continued to see solid success from its latest film release. After a $70 million opening weekend, Maleficent fell back to No. 2 on the box-office depth chart this past weekend, with $33.5 million trailing only the newly released film adaptation of The Fault in Our Stars and bringing Maleficent's total take so far to more than $127 million. In its typical fashion, Disney aims to use the title character's distinctive appearance as a driver for merchandising sales, with makeup, clothing, and jewelry already centered on Angelina Jolie's portrayal of the villain of the Sleeping Beauty story. The film doesn't appear likely to approach Disney's biggest successes, but it nevertheless shows the star power that the company is able to tap in furthering its broader business agenda.


JPMorgan Chase rose over two-thirds of a percent as the global financial powerhouse took steps to shore up its foreign operations. Reports over the weekend addressed a number of shifts worldwide for JPMorgan, including the naming of a new head of its Asian mergers and acquisitions group after its current leader resigned after a distinguished career at the investment firm. JPMorgan also hired a new head for its European institutional business, poaching top talent from its Dow-component investment banking rival. With the moves, JPMorgan is following the same efforts as its other primary investment bank competitors in recognizing the value of foreign financial markets, especially in the red-hot M&A market. With U.S. regulatory scrutiny ever on the rise, finding growth opportunities elsewhere is the best solution for JPMorgan's long-term strategy.

With the Dow Jones Industrials less than 100 points away from the 17,000 mark, expect plenty of attention to the possibility of setting a new milestone. Long-term investors, though, should look beyond those considerations to think about whether strategic moves from Disney, JPMorgan Chase, and other members of the Dow Jones Industrials can help the stock market keep setting new records.

These stocks beat the big banks...
Here's your chance to pocket big dividends. Over time, dividends can make you significantly richer. And guess what? The big banks are laggards when it comes to paying dividends. So instead of waiting for a cash windfall that may never come, check out these stocks that are paying big dividends to their investors RIGHT NOW. Click here for the exclusive free report.

The article The Dow Keeps Inching Higher on Disney, JPMorgan Strength originally appeared on Fool.com.

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

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Sirius XM Plays the Religion Card

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Sirius XM Radio signing up Joel Osteen in a content deal last week didn't bring the kind of Wall Street accolades that it probably should have. The market's full of heathens, it seems. 

However, this is a pretty big catch for Sirius XM. Set any religious skepticism aside for a moment. This isn't about wooing those who aren't sympathetic to Osteen's church of beliefs. The autumn launch of Joel Osteen Radio on Sirius XM is about latching on to the folks who already follow the popular husband-and-wife team.  

The global reach of Osteen's Lakewood Church is huge. It claims that its television ministries reach over 100 million homes in the U.S. and tens of millions more across 100 different nations. Sure, these are homes that merely have access to Osteen's programming. It doesn't mean that they are actually being reached. His appeal is still undeniable.  


Thankfully, we have a better metric for gauging Osteen's appeal without having to crack open a ratings book. Each week, more than 1 million people download Osteen's free podcast according to his ministry's website. A whopping 48 million audio and video podcasts have been downloaded. 

The podcast numbers aren't as high as the television ministry's potential land grab, but it's the more impressive metric. If there are really more than 1 million people tech savvy enough to stream Osteen's podcasts, imagine how many more out there would prefer to seamlessly turn on their car's satellite receivers to tune in to hear Osteen's sermons.

Isn't that the point of being in Sirius XM's position? It has more than enough channels in its arsenal to offer specialized content, just like the pay-TV providers that serve more than 100 million homes in this country. There is no such thing as a single channel that's universally enjoyed, but everyone has a couple of channels that are indispensable, so they stick around. As the only game in town when it comes to premium live radio, we're talking about 25.8 million subscribers as of the end of March. If you're putting out prolific audio content, why wouldn't you want some real estate on Sirius XM's dial? You would be reaching folks with enough disposable income to pay for radio. This gives Sirius XM some surprising leverage when it comes to wresting radio icons from terrestrial radio. 

It doesn't matter what you personally think about Osteen or religious content in general. It's incremental for Sirius XM, and likely in a major way with many of his followers that had sworn off satellite radio. This is a pretty big deal, and regardless of where you fall on the spiritual spectrum, it should fortify your faith in Sirius XM as an investment.

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The article Sirius XM Plays the Religion Card originally appeared on Fool.com.

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

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St. Louis Fed Bulllard Still Sees Rate Hike Sooner Than Markets Expect

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144366870James Bullard, President of St. Louis Federal Reserve Bank, spoke on Monday in front of a group at the Tennessee Bankers Association Annual Meeting. The speech was titled "How Far Is the FOMC From Its Goals?" The title pretty much speaks for itself.

Bullard's comments indicated that the United States version of quantitative easing was more appropriate for our market versus the negative interest rate policy that was initiated in by the European Central Bank last week.

Bullard's top view is that the Federal Open Market Committee is much closer to its goals of steady pricing (up to 2.0% inflation and full employment) than at any time in the past five years. He said that unemployment has continued to trend lower and that inflation remains low but moving back toward target.

That being said, Bullard believes that the Fed's monetary policy stance remains far from normal, even with the bond purchase tapering underway. Concerns remain about the overall labor market performance and inflation that was unexpectedly low up until very recently.

Another observance from Bullard is that two main policy actions have not been reversed so far, even when you consider the tapering of bond purchases. The first is that Fed's balance sheet is still large and increasing, and the second is that the current policy rate remains at the zero lower bound.

The last thing we would point out is that Bullard has not changed his timeline as late first quarter 2015 as the time when interest rates would start to be raised by the Fed. Note that Fed Fund Futures currently signal a May 2015 to June 2015 timeline for Fed Funds to be raised to 0.25%. It is also not until the September to October 2015 period that Fed Fund Futures signal a 0.50% Fed Funds rate, and Fed Funds Futures do not have a 1.00% Fed Funds rate priced in until the March to April of 2016 period.

ALSO READ: European Central Bank Launches Negative Interest Policy Experiment


Filed under: Economy

 

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Amazon's Smartphone Is Expected to Have These 3 Radical Features

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Amazon.com is likely to announce a smartphone on June 18. The phone has been anticipated for months, has been the subject of numerous leaks, and has even appeared on screen (maybe) in a promotional video Amazon released ahead of the event.

Amazon's phone will enter a crowded market place, going up against numerous devices running Google's Android as well as Apple's various iPhones. This is no different from the tablet market, where its Kindle Fires have attained some level of success. But the tablet market and the phone market are quite different, and in order to compete, Amazon could use a variety of radical features to sway buyers.

Amazon could pay for data
In the tablet market, Amazon has competed on price, offering devices that are typically much cheaper than its competitors. The 7-inch Kindle Fire HDX, for example, retails for just $229 -- Apple's comparable iPad Mini with Retina display is almost twice as expensive ($399).


But Amazon can't so easily rely on this tactic to win over smartphone buyers.

In the U.S., most smartphones are purchased on two-year contracts, which result in consumers paying just a fraction of their device's total cost. Phone financing, a new trend that has emerged, is even worse for price discrimination, as consumers aren't even required to pay the up-front down payment. Although Apple officially charges $649 for its basic iPhone 5S, virtually no Americans pay that, instead forking over a $199 down payment or $27 monthly fee.

To compete on price, Amazon could use a completely new tactic, offering owners of its smartphone free data. Prime data, as a number of reports have suggested, will see Amazon pay carriers for some of the data its customers use.

Amazon may not be able to win by offering a cheap device, but it could sway some buyers with the prospect of reduced monthly bills. With Amazon paying for some of the data, owners of its phones would be able to choose cheaper plans with lesser data caps.

Tracking your head
Amazon's phone is also expected to include technology that would allow it to track a user's head. Leaked images have shown a device with multiple front-facing cameras, presumably to facilitate this feature.

Samsung, Google's biggest hardware partner, has implemented head-tracking to some extent in its phones, using features like Smart Scroll (scroll up and down a page by tilting your head while looking at the device) and Smart Stay (prevent sleep mode while a user is looking at the handset) to help set its devices apart from Apple's iPhones, which lack these features.

But most reviewers have found these features to be lackluster and poorly implemented (including myself). Relying on a single camera may limit the ability of these features to work as intended.

If Amazon could one-up Samsung, delivering a device that can truly and accurately a track user's head, it could offer a number of radical user interface features that haven't yet been seen on a smartphone.

A new operating system
Lastly, Amazon's smartphone will likely use its Kindle Fire operating system, which isn't new in the sense that Amazon first introduced it in 2011, but would be radical in that it would be the first implementation of Fire OS on a phone.

Fire OS, at its core, is saa version of Google's Android, but heavily altered so as to remove Google's services. This results in some notable omissions (like Google Maps) but allows Amazon to favor its own app store and media sales at the expense of Google's.

Buyers of Amazon's Kindle Fire tablets and Fire TV could become Amazon's primary customers. Apps and media purchased on these devices would likely carry over. At the same time, Amazon's app store is accessible through Google's own Google Play, and those Android users who have relied on it extensively may be enticed to make the switch.

A brutal market
Hopefully for Amazon, these features will be enough to set its handset apart. As it stands, the U.S. smartphone market is brutal, with only two companies -- Apple and Samsung -- finding much success.

Moreover, with the smartphone market nearly saturated, Amazon will have to work hard to win over buyers that may already be locked in Apple and Google's respective ecosystems.

Leaked: Apple's next smart device (warning, it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

The article Amazon's Smartphone Is Expected to Have These 3 Radical Features originally appeared on Fool.com.

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

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How Blackstone Mortgage Trust and Starwood Property Trust Take Two Different Routes to Big Profits

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Investors seeking high dividend yields who are concerned about risks associated with residential mREITs that own pools of fixed rate mortgages have some attractive alternatives.

The vast majority of commercial real estate loans are variable rate -- often LIBOR based floating rate loans. In contrast to a fixed rate mortgage portfolio, in a rising interest rate environment, these loans do not decrease in value. In fact, they potentially can become even more profitable.

Private equity firms Starwood Capital Group and The Blackstone Group L.P. are two of the largest players in the world when it comes to owning and operating investment quality commercial real estate.


Historically, commercial banks have provided construction loans and interim project financing for this class of real estate. However, since the Great Recession, a host of new banking regulations has made real estate lending much less attractive for large U.S. banks.

This has created an opportunity for private equity giants to sponsor sophisticated non-bank commercial mortgage lenders such as Starwood Property Trust and Blackstone Mortgage Trust to profitably fill the void.

The companies in this sector are structured as REITs, so long-term investors can count on at least 90% of taxable income to be passed through as dividends.

STWD 1 Year Total Returns Chart

Blackstone Mortgage Trust, with a current market cap of ~$1.4 billion, has chosen a very straight-forward and easy to understand strategy.

The vast majority of its commercial loans are senior mortgage notes. They borrow at lower rates and lend out at higher rates. They underwrite each deal so the loan to value, or LTV, gives them a cushion in the case of adverse changes with either the asset or the borrower. This is similar in many ways to how a bank would operate.

Blackstone Mortgage rate of growth since taking over the former Colony Trust commercial lending operation in May of 2013 has been incredibly impressive:

Source: Company presentation.

At the end of 2009, the year of the Starwood Property Trust IPO, approximately $105 million of loans were on the books. Fast forward to calendar year 2013, and ~$2.6 billion of loans were originated. During the most recent earnings call for the quarter ended March 2014, $5.4 billion market cap Starwood Property Trust announced $1.7 billion in loan originations for just the first quarter.

The growth is even more impressive when you take into account the variety of loan products and commercial real estate services that Starwood Property Trust is currently offering:

Source: Company presentation. 

Certainly subordinated or junior loans, and mezzanine loans are potentially riskier than senior mortgage debt.

However, these loans can also be more profitable. On the Starwood Property Trust website they show two loan examples:

·       1st Lien Mortgage Loans priced at Libor + 3.5% to Libor + 8%

·       Mezzanine Loans priced at Libor + 8% to Libor + 12% (typically non-recourse)

Investors are depending heavily on Starwood's expertise in underwriting more complex and riskier loans profitably. In its May 2014 Investors Presentation Starwood lays out how they attempt to reduce risk by maintaining relatively low LTV, and selling off parts of riskier loans:

Source: Company presentation.

In January 2013, Starwood Property Trust paid $856 million for most of LNR Property LLC business including its U.S. special servicing unit and 50% of LNR's stake in Auction.com; along with Starwood Capital Group purchasing the other 50% of LNR's stake in Auction.com and LNR's real estate development arm for $197 million.

The LNR special services group is the largest manager of U.S. troubled, or non-performing commercial real estate loans. The LNR acquisition was a source of fee income, mortgage originations, a treasure trove of information on commercial real estate markets, as well as ownership of Hatfield Phillips a servicer of European commercial loan portfolios.

The synergies from having Starwood Capital as a sponsor and advisor have resulted in Starwood Properties Trust becoming the largest commercial mREIT in the U.S. as well as the largest servicer of troubled commercial loans and REO properties. This growth, combined with an almost 8% dividend is very attractive, although it does flow from a complex business model.

Blackstone Mortgage Trust has The Blackstone Group L.P. -- one of the world's largest investment and asset management firms -- as sponsor and advisor. It has a much simpler business model for investors to understand, is also growing at a fast rate, and pays a competitive dividend.

Dividend investors searching for total returns that are not threatened by rising interest rates should take a closer look at this sector.

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The article How Blackstone Mortgage Trust and Starwood Property Trust Take Two Different Routes to Big Profits originally appeared on Fool.com.

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

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3 Pharma Giants Battling for Immuno-Oncology Dominance

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Cancer drugs have been taking center stage in recent months. Some of the drugs making the biggest headlines come from the field of immuno-oncology, which are drugs that manipulate the body's immune system in an effort to fight cancer.

Three companies are vying to be one of the first to get their drug to market.

The early leader was Bristol
Bristol-Myers Squibb was the early leader in the immuno-oncology market thanks to its drug Yervoy. This drug has been approved by the FDA to treat melanoma and is expected to generate $1 billion in sales this year and potentially almost $2 billion a year by 2020 if used in combination with other drugs.


Bristol was unquestionably the early leader in the PD-1 field with its nivolumab, but was bypassed by Merck's MK-3475 when Merck began the rolling submission process at the beginning of the year and received priority review from the FDA last month.

Bristol did not start the rolling submission process with nivolumab until April. Nonetheless at the American Society of Clinical Oncology meeting this week the company presented very solid survival data when nivolumab is used in combination with Yervoy. The survival rate of advanced melanoma patients was 79%.

This is welcome news for Bristol after seeing its stock dip in mid-May after reports were published that showed nivolumab plus Yervoy performed rather poorly with patients suffering from squamous non-small-cell lung cancer (NSCLC). The studies indicated a rather average 22% response rate, with a high adverse event profile, and a 6.5% drug-related death rate.

Needed good news for Merck as MK-3475 is its most important drug
MK-3475 is Merck's most important drug at the moment. The drug now covers 30 tumor types and the company expects 24 clinical trials by the end of the year involving roughly 6,000 patients. Perhaps more importantly, the FDA has a deadline of October 28 to make the marketing decision on the drug. Right now Merck is clearly in the lead to be at market at first.

At ASCO this week MK-3475 produced an overall survival rate of 69% in a study of 411 melanoma patients. Also at ASCO the company presented data showing that MK-3475 produced an overall response rate of 47% in the treatment of patients in previously-untreated advanced NSCLC.

AstraZeneca's aggressive timeline
AstraZeneca also reported positive results with its immuno-oncological drug MEDI4736. In its trial of 27 patients with advanced tumors 19% saw tumor shrinkage and 39% had their cancer stabilize. The drug also appears to have a low adverse event rate and relatively low toxicity.

AstraZeneca appears conscious of Merck's timeline advantage and is being rather aggressive in pushing its lung cancer timeline. The company is skipping phase 2 trials and is beginning phase 3 trials for Medi4736. 

High stakes battle
All three companies appear to have some reason to feel optimistic about immuno-oncology. Bristol's presentation at ASCO should partially erase some of the negative sentiments about nivolumab that appeared last month. Merck has taken the lead with MK-3475 and should be the first to market (if the drug is approved by regulatory agencies). And Astra is moving quickly as well by pushing into phase 3. The stakes are high as this is undoubtedly a market worth billions annually. Investors need to keep a close eye.

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Editor's Note: A previous version of this article incorrectly referred to Merck's MK-3475 as MK-4375. The Fool regrets the error.

The article 3 Pharma Giants Battling for Immuno-Oncology Dominance originally appeared on Fool.com.

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

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Weekend Box Office: 'Fault in Our Stars' Dazzles, Tom Cruise's 'Edge of Tomorrow' Stalls Stateside

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It's being called the Love Story of a new generation. Young adult novel The Fault in Our Stars continues to perform at the box office in ways executives probably had only dreamed. Conversely Edge of Tomorrow has mostly been the thing of nightmares as (at least domestically) it can't catch a break.

Credit: Fox


Fox

The line

The Fault in Our Stars

Finish: 1st place / Est. budget: $12 million / 3-day estimated total: $48 million

The analysis

Everyone expected The Fault in Our Stars to do well, but after taking in slightly over $8 million during its first Thursday night showings, analysts quickly revised their projections. While the final number could still fluctuate, Stars is going to likely finish around $48 million. That's lower than the $50 million to $55 million estimates that seemed possible on Friday, but it's still good enough to become one of the year's most successful non-franchise non-tentpole films.

This is impressive and not just for the studio. It's also a huge boon to the publishing business, which has seen a major windfall over the last decade with the book-to-theater adaptions of Harry Potter, Twilight, The Hunger Games, and Divergent. With The Giver and The Maze Runner due out before the year's end, that trend should continue.

Yet Stars was special because it's not a franchise, it's one and done. It has proven that young adult books don't need to be a series to be a hit at the box office. Author John Green acknowledged recently he doesn't plan to do a sequel. He does though plan to bring another one of his novels, Paper Towns, to the big screen with Fox again distributing and Fault co-star Nat Wolff in the lead.

As for lead Shailene Woodley, her banner 2014 continues and she still has White Bird in a Blizzard slated for the fall. 

The future

So far Fox is three for three this summer (if you count The Other Woman, which blew out the box office during the final week of April; technically that's not summer, but the season's bled into April and September). No matter how you look at it Fox is having a good frame. X-Men: Days of Future Past is still going strong and Stars is posed for a strong run -- it's earned an A grade from audiences, according to Cinemascore, so expect beneficial word of mouth ... and perhaps second trips for viewers to see what they missed because they were crying too hard.

Next week the studio debuts the sequel to How to Train Your Dragon, which will be Fox's third top-tier release in just four weeks.

It's not just the summer that looks good for Fox -- in addition to July's Dawn of the Planet of the Apes and August's buddy comedy Let's Be Cops, the fall brings two more literary adaptations in the aforementioned Maze Runner and Gillian Flynn's highly anticipated Gone Girl starring Ben Affleck and directed by David Fincher.

Warner Brothers (a subsidiary of Time Warner )

Credit: Warner Brothers

The line

Edge of Tomorrow

Finish: 3rd place / Est. budget: $178 million / 3-day estimated total: $29 million

The analysis

Tom Cruise's bankability has taken a major punch domestically over the years, but internationally he remains a big success. With Edge of Tomorrow that trend is likely to continue -- the film won't quite be able to top $30 million, which will be at least $7 million less than the box office take for last spring's Oblivion.

You have to go back to 2005 and War of the Worlds to find the last time he opened a non-franchise film to above $30 million. Even though Edge won't do gangbusters, the fact that both this and Oblivion were higher than he's scored in a while mean it's possible he's close to regaining his form with American crowds. Even though audiences weren't that impressed, the critics were -- despite a terrible start the movie has a Rotten Tomatoes ranking of 89%.

Still if the movie's going to break even on its $178 million production budget, domestic audiences have made it clear it's going to come from foreign receipts. Internationally the film is doing what it was expected to do after a surprisingly rough first weekend that netted just $20 million. As of now the movie has topped $100 million with a release in Japan still a few weeks off. China, as expected, is one of the film's strongest markets so far, which has embraced the film and boosted it above Oblivion's take.

The future

After a strong start with Godzilla, Warner Brothers has now taken back-to-back blows with the Adam Sandler/Drew Barrymore comedy Blended bombing and now Tomorrow failing to take off. Including the failure of Transcendence in April and this week's announcement that the Wachowski siblings' Jupiter Ascending will be pushed to 2015, Warner Brothers has hit a slump.

This is the second time in three weeks Fox and Warner Brothers have had the two biggest films of the weekend going head-to-head, and again Fox has come out on top. Still there is some good news on the horizon so investors don't need to be scared off -- the Jersey Boys musical and Melissa McCarthy laugher Tammy are set to unspool in the coming weeks and both are expected to do great so help is on the way.

Your cable company is scared, but you can get rich

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The article Weekend Box Office: 'Fault in Our Stars' Dazzles, Tom Cruise's 'Edge of Tomorrow' Stalls Stateside originally appeared on Fool.com.

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

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

 

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Why Apple, FireEye, and Microsoft Shares are Moving

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The Dow Jones Industrial Average had risen more than 34 points as of 11:30 a.m. EDT. Dow Jones component Microsoft was underperforming the index, while tech stocks Apple and, most notably, FireEye were rising.

Fed's Bullard says economy is improving
There wasn't much macro economic news on Monday, which may have been why the Dow Jones was relatively muted. Of the few events of note, comments from St. Louis Federal Reserve Bank President James Bullard may have been most significant.

Bullard said the economy had improved over the last five years and is as close to normal as its been since the crisis. Still, he said the labor market was weak, justifying continued accommodation from the Federal Reserve. Overall, Bullard's speech did not shed much light on the Fed's future course of action.


Microsoft offers a cheaper Xbox
Microsoft today began selling $399 version of its Xbox One video game console. The new bundle, which doesn't include the Kinect voice- and gesture-controlled sensor, costs $100 less than the Xbox did at launch in late 2013.

Although the Xbox division may not be material to Microsoft's overall business, it stands as one of its best-known consumer brands. Microsoft's Xbox One has fallen behind rival PlayStation 4 in global sales, and the cheaper option may entice some gamers to purchase Microsoft's console. However, it will take some time for this play out, assuming, of course, that the price drop can affect the Xbox One's sales.

Source: Wikimedia Commons.

Apple after stock split
Apple investors may have awoken to a shock this morning -- the tech giant's stock, trading near $640 on Friday, are now down to about $92 per share. But Apple shares haven't experienced a crash -- rather, the new price is Apple's post-stock split value.

Apple executed a 7-for-1 stock split on Monday, giving shareholders seven shares for every share they previously held. Although this shouldn't have a material affect on Apple's business, it could facilitate the company's entrance into the Dow Jones and make it easier for retail investors to purchase Apple shares.

FireEye remains volatile
Shares of FireEye rose more than 6% on Monday, although there didn't seem to be any particular reason for the move. Longtime FireEye investors, however, shouldn't be surprised, as the high-flying tech stock has been tremendously volatile in recent months.

Shares of FireEye were trading near $100 per share in early March, before falling into the $20 range last month. Overall, FireEye shares are down a bit more than 4% since it first began trading late last year.

Leaked: Apple's next smart device (warning, it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

The article Why Apple, FireEye, and Microsoft Shares are Moving originally appeared on Fool.com.

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

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

 

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American Airlines' Asian Adventure Starts Now

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Just half a year into the merger of American Airlines and US Airways, the combined carrier is doing as well as even the most ardent bulls had hoped. If the new American has any flaws, it's the company's weak presence in Asia.

Indeed, Delta Air Lines and United Continental both have small international hubs in Tokyo. United also has a big transpacific hub in San Francisco, and Delta is rapidly building a competing West Coast gateway in Seattle. By comparison, American has a fairly small Asian route network -- and doesn't fly to Australia at all.


American Airlines has a relatively small presence in Asia. Source: American Airlines.

American Airlines wants to narrow the gap with Delta and United in Asia. This week, it starts daily service from Dallas/Fort Worth International Airport (its biggest hub) to Shanghai and Hong Kong. If successful, this service could pave the way to American maintaining a more competitive Asian footprint.

American Airlines' Asian dilemma
American Airlines has been the dominant carrier for travel to Latin America for the past two decades thanks to its hub in Miami. The acquisition of US Airways has also made it very competitive in the transatlantic market. However, for flights to Asia, American has poor hub locations compared to United Continental and Delta Air Lines.

American Airlines has hubs in Chicago, Dallas, Los Angeles, Miami, and New York. The New York and Los Angeles hubs are both undersized and cannot provide much connecting traffic, and Miami is located in the opposite corner of the U.S. from Asia. Chicago and Dallas aren't ideally located, either.

American Airlines' hubs are not ideally located for flights to Asia. Source: American Airlines.

The US Airways merger didn't help. US Airways never operated transpacific flights to Asia, although it had planned to fly from Philadelphia to Beijing prior to the Great Recession. Of the three US Airways hubs, all but Phoenix are on the East Coast. Unfortunately, Phoenix has a "hot and high" climate that makes it very challenging to operate long-haul international flights.

Up until last year, American's main transpacific hub has been Chicago, from which it flies to Tokyo, Beijing and Shanghai. American also flies from Los Angeles to Tokyo and Shanghai. However, American now seems interested in building up Dallas/Fort Worth as an alternative hub for transpacific flights.

American's new Asian gateway: Dallas?
American Airlines has been flying from Dallas to Tokyo since the 1980s, but it is now trying to better exploit its largest hub (with more than 750 peak-day departures) as a gateway to Asia. Last May, American began nonstop flights between Dallas/Fort Worth and Seoul. In October, it announced plans for the new Hong Kong and Shanghai flights that will begin this week.

This will make Dallas/Fort Worth the biggest Asian gateway for American Airlines. However, the key question is whether American can successfully compete with United and Delta for flights to Asia with Dallas as its largest transpacific hub.

On the plus side, American has unrivaled scale in Dallas. With 750 daily flights, American can provide a host of connection options. By contrast, United operates about 300 daily departures at its main transpacific hub in San Francisco. Delta's new gateway in Seattle is even smaller, with fewer than 100 daily departures (although it is growing rapidly there).

Delta is building an international gateway in Seattle, but it doesn't have many domestic flights there yet. Photo: The Motley Fool

However, geography is a big negative. From most major cities in East Asia, Dallas is more than 1,000 miles further than San Francisco, and more than 1,500 miles further than Seattle. This means that American's flights from DFW to Asia will be more expensive to operate than competing service from United and Delta. It will also require longer-range aircraft, which tend to be more expensive.

In large part, the success or failure of American's flights from DFW to Asia will depend on local market demand. If American can fill a large proportion of seats with travelers originating or ending in Dallas, then it should be able to fill the rest of the plane with passengers connecting to other cities in the South. However, for most of the U.S., connecting in a West Coast hub like San Francisco or Seattle (or a Midwest hub like Chicago) usually makes more sense.

Looking for a good Asian gateway
Dallas/Fort Worth may be a viable gateway for flights to the top few business centers in East Asia, but it is still no match for San Francisco or even Seattle. Longer-term, American may look to build its presence in the Los Angeles market to make that its primary transpacific gateway.

United Airlines is subleasing four of its gates in Los Angeles to American Airlines. Photo: The Motley Fool

American Airlines recently reached an agreement with United Continental to sublease four gates at Los Angeles International Airport. This will replace the two gates it was forced to give up as part of its merger with US Airways, while also providing room for growth.

Los Angeles is a highly fragmented market today: United and American each have about 20% market share at LAX. However, Los Angeles has a large local market, and it is a more convenient connection point for travelers in the western U.S. By taking over a few gates from United, American will gain a small lead. This may be enough to support expanded transpacific service, complementing the new routes from Dallas/Fort Worth.

Foolish bottom line
American Airlines is still searching for the magic formula to compete better with United and Delta on routes to Asia. Adding transpacific flights from its largest hub -- Dallas/Fort Worth -- could be one part of the solution. However, in the long run, American probably needs a real hub on the West Coast. Growing in Los Angeles may be its best bet.

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The article American Airlines' Asian Adventure Starts Now originally appeared on Fool.com.

Adam Levine-Weinberg is short shares of United Continental Holdings. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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

 

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