Fine-Tune Your Finances Before You Travel Overseas

August 8, 2014, 8:04 am

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Filed under: Travel

By Theresa Kim

When heading overseas, travelers often forget about the financial planning. Besides basic preparations, like making copies of your bank account and credit card information, there are some subtler financial measures that can potentially save you from myriad problems while abroad.

1. Notify Your Financial Institutions

The money in your bank account has no significance if your account is frozen. Even the slightest deviation from your normal spending pattern can raise a red flag for a fraud department, which may result in your account becoming frozen or your credit card denied.

Prevent this from happening by informing your bank and credit card companies about the location of your travels and the duration of your stay in the foreign country.

2. Set up Online Accounts

An online bank account will give you added convenience and security over your funds while traveling overseas. With an online account, you can easily check your balances, transfer and deposit funds and stay on top of recent transactions.

Setting up automatic payments can also help you pay bills on time and meet your financial duties while thousands of miles from home.

3. Have Multiple Forms of Payment

Although the ideal form of payment depends on your travel destination and spending habits, it's a good idea to carry a variety of payment methods such as cash, debit cards and credit cards.

It's also wise to have multiple bank accounts and credit cards - especially ones that are accepted internationally, such as Visa (V) and MasterCard (MA) for credit cards, and Chase (JPM) and HSBC (HSBC) for banks.

Even if you're set on using one spending method for the majority of the trip, you should still carry the extra card with you. Also, it is crucial that you have the card you used to book the trip with you at all times, even if you don't intend on using it for foreign transactions.

4. Check Exchange Rates

When traveling abroad, you should familiarize yourself with foreign currency and exchange rates to understand the value of a dollar. You can use an app, like Currency, to find out the latest exchange rates. Note that in addition to exchange rate conversion fees, you may encounter foreign exchange fees when converting money abroad.

5. Get a Travel Rewards Card With No Foreign Transaction Fees

To find the right travel rewards card for you, first analyze your spending habits and travel pattern. Signing up for the right travel rewards credit card will get you a wide range of benefits and perks while traveling -- including no foreign transaction fees, which can help travelers who use credit cards as their main form of payment overseas. You can also rack up rewards points and miles for travel rewards or cash back.

6. Get an ATM Card from an Online Bank

Signing up for a no-fee ATM card will give you the freedom to withdraw money without having to worry about racking up fees. Keep in mind that you don't necessarily have to change banks to avoid ATM fees overseas, as many banks will waive them for certain checking account holders.

7. Carry Cash, Too

For Americans, U.S. dollars can be the most cost-effective form of payment, as you automatically save on any fees you would have to pay at a financial institution. Most vendors will also give you a fair exchange rate on the conversion from dollars to their local currency.

Exchanging money at the airport may be convenient, but you'll pay for it with fees and expensive exchange rates. A better idea would be to withdraw the foreign currency through your bank or at an ATM machine upon arrival.

And remember: No one turns down cash. Traveling with a couple hundred dollars worth of emergency cash is a smart decision in the event you can't access money. Just make sure to carry cash in small denominations, as it can be dangerous to flash large amounts of money in public.

 

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GM Recalls Another 312,000 Vehicles, 6 Models

August 8, 2014, 9:39 am

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Filed under: Consumer Ally, Recalls, Consumer Protection, Auto Recalls

DETROIT -- General Motors (GM) is issuing six more recalls totaling more than 312,000 vehicles as the company cleans up past safety issues.

The recalls in North America pushed GM's total for the year to 66, covering just over 29 million cars and trucks. That beats the company's old full-year record and has pushed this total number for the industry this year to more than 40 million, also an annual record.

The largest of Friday's recalls covers 215,243 Saturn Vue SUVs from the 2002 through 2004 model years. GM says keys can be removed when ignitions are not in the "off" position. The problem is linked to two crashes and one injury.

GM is conducting a companywide safety review following a bungled recall of 2.6 million small cars with faulty ignition switches. GM has admitted knowing about the defective switches for at least a decade, yet it didn't recall the cars until February.

In the recalls announced Friday, GM has told dealers to stop selling some of the vehicles until repairs are made.

Including the Vue recall, GM has called back more than 17.5 million vehicles for ignition switch problems. In many cases the switches can be knocked from the "run" position to "accessory," shutting off the engine and disabling the power steering, power brakes and air bags.

The National Highway Traffic Safety Administration, the U.S. government's road safety agency, is investigating ignition switches across the auto industry to make sure they can't be inadvertently moved from the run position.

Dealers will inspect the Vue ignitions and replace the cylinder if needed at no cost to customers. The company says it's important for drivers to make sure the SUVs are in "Park" before they exit the vehicles.

Other recalls announced Friday include:

o. 72,826 Cadillac ATS, Chevrolet Trax in Canada and Buick Encore cars and SUVs from the 2013 model year. In some of the vehicles, the front lap belts may not lock properly, allowing people to move in a crash. Dealers will replace the belt pretensioners. GM doesn't know of any crashes, but it has told dealers not to sell the vehicles until repairs are done.

o. 15,386 Chevrolet Impalas from 2014 and 2015. On some LT and LTZ models, the front console storage door may not latch properly in a rear crash. Dealers will replace the latch. The company knows of no crashes or injuries, but it's ordering dealers to hold the cars until repairs can be made.

o. 3,624 Cadillac ATS sedans from 2013 and 2014 to fix a problem with front lighting. These cars were all exported from the U.S.

o. 3,110 Chevrolet Spark minicars from 2014. Lower control arm bolts in the suspensions may not be tightened to specifications. Owners have been told to have their cars transported to dealerships for inspection and tightening. No crashes reported.

o. 2,091 Chevrolet Aveo subcompacts from 2009 and 2010, 2009 Pontiac G3 subcompacts and the 2007 Chevrolet Optra in Canada. A brake fluid issue could lead to longer brake pedal travel and reduced brake performance. GM knows of no crashes or injuries.

 

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Stock Markets Rise on Signs of Easing Ukraine Tensions

August 8, 2014, 10:07 am

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Filed under: Stock Markets, Investing

NEW YORK -- U.S. stocks are closing higher as investors were relieved by reports of easing tensions between Ukraine and Russia.

News reports said Russia had ended military exercises near Ukraine.

The Dow Jones industrial average (^DJI) rose 185 points, or 1.1 percent, to close at 16,553 Friday.

The Standard & Poor's 500 (^GSPC) index rose 22 points, or 1.2 percent, to 1,931. The Nasdaq composite (^IXIC) rose 35 points, or 0.8 percent, to 4,370.

The gain in the S&P 500 was the biggest since March 4 and turned the index higher for the week.

Lululemon (LULU) rose 3 percent after the company's founder agreed to sell half his stake as part of a deal to avert a battle for control.

Bond prices fell. The yield on the 10-year Treasury note edged up to 2.42 percent.

 

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The Education Savings Account You Never Hear About

August 8, 2014, 11:00 pm

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Filed under: School, Personal Finance, College, 529 Plans, Education

As a tool for college savings, options like 529 plans offer some impressive tax breaks to help savers cover college expenses. But they're not the only game in town.

If you want the added flexibility of being able to cover educational expenses before your children even reach college, one choice stands above the rest: the Coverdell Education Savings Account, named after the Georgia senator who sponsored the legislation that created the accounts.

What ESAs Have That College Savings Plans Don't

Most of the tax incentives available both for educational expenses and for savings plans tied to education focus exclusively on college expenses.

• The American Opportunity Tax Credit offers up to $2,500 annually for students in their first four years of college.
• The Lifetime Learning Credit provides as much as $2,000 per year in tax credits for advanced learning, whether it be for additional undergraduate studies, graduate programs, or further education later in life.
• 529 plan accounts allow assets to earn income on a tax-free basis, with accountholders never paying tax as long as withdrawals are used for qualified college expenses, including tuition, room and board, and ancillary expenses like books and required course materials.

But unlike those other options, the education savings account allows parents more flexibility to use account assets for a broader range of educational expenses. Specifically, the education savings account is unique in allowing tax-free treatment for money used for qualifying expenses from kindergarten through 12th grade.

Those who send their children to public school might figure that there's little reason to have an education savings account, as they generally won't owe tuition and fees or room and board for their children's studies. But ESAs also allow tax-free distributions for books, supplies, equipment and academic tutoring services. In addition, costs of transportation such as busing are eligible, as are purchases of computers, Internet access and related technology services as long as the student will use those items during their education.

Why Aren't Education Savings Accounts More Popular?

According to the most recent figures available, less than $1 billion was invested in education savings accounts as of five years ago, and ESAs have become so small that overall asset statistics haven't been updated since then. For comparison, the Investment Company Institute reports that as of the end of 2013, 11.6 million 529 plan accounts held more than $227 billion in assets. There are several reasons why education savings accounts haven't become more popular:

• Contribution limits are extremely low compared to 529 plans, with ESAs permitting only a maximum of $2,000 per year. Moreover, income limits restrict some higher-income taxpayers from contributing to ESAs, with single filers earning more than $110,000 and joint filers with income above $220,000 not allowed to establish or add money to education savings accounts.
• Rules governing unused ESA funds are stricter than for 529 plans. Assets in an education savings account that aren't used by the time the child reaches age 30 must be distributed, with taxes and a 10 percent penalty applying since the distribution isn't used for qualifying educational expenses. Although some options for transfer to another qualifying beneficiary under age 30 exist, they aren't as flexible as alternatives for 529 plan account owners.
• Because the laws governing education savings accounts require financial institutions to act as custodians for the assets -- much like a retirement account -- many institutions have chosen not to offer accounts to customers. Major fund companies including Vanguard and T. Rowe Price used to have ESAs as options for investors, but they've stopped accepting new account applications. Fidelity never bothered accepting ESA accounts in the first place.

Take a Closer Look

Even with these limitations, education savings accounts can be a useful tool for expenses before your child graduates from high school. If you anticipate having substantial school expenses prior to college, then it's worth taking a closer look to see if an ESA would give you benefits that a 529 plan or other college-saving option can't deliver.

You can follow Motley Fool contributor Dan Caplinger on Twitter @DanCaplinger or on Google+.

 

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Staples Might Put Your Invention on Its Shelves

August 8, 2014, 11:00 pm

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Filed under: Entrepreneurs, Products, Stores, This Built America

The dream of countless inventors is to see their product sold at stores. Thanks to Staples (SPLS) and Fundable, that dream may become a little more real for one of them.

The Crowd2Shelf Contest was launched Aug. 1. Entrants are asked to create a crowdfunding campaign page by Aug. 31 and generate support with votes from the public.

"A panel of innovation experts including Fundable and Staples representatives will select the top 25 submissions ... on their number of votes, the success of their crowdfunding campaign and judges' recommendations," according to Staples.

The top 25 will be announced Oct. 5, and a winner crowned Dec. 10. "The winning entrant(s) will have the opportunity to present their products to the Staples store merchandising teams," Staples said.

With crowdfunding on the rise, the amount of submissions could reach staggering levels.

 

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7 Brokers Offer You 'Free Money' on Dividend Reinvestment

August 8, 2014, 11:00 pm

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Filed under: Investing Basics, Dividend Stocks, Investing

For investors, nothing makes the job of beating the market easier than brokers who willingly hand over free money via reinvested dividends.

Yup, I just said "free money." You see, some brokers have access to company-sponsored dividend reinvestment plans -- they're also called DRIPS -- for equities that pay dividends. A good broker will connect your shares to the DRIP so that each time you're due a dividend payment, the DRIP kicks in and uses the cash to purchase more shares.

Let's walk through an example. Say you own 500 shares of Apple (AAPL). Apple is paying 47 cents per share of dividends quarterly, good for $235 when deposits are made later this month. Reinvesting those dividends would allow you to purchase roughly 2.44 shares of Apple stock commission-free at current prices.

A Short History of Crushing the Market With Reinvested Dividends

The beauty of this strategy is that it can help you beat the market. For instance, in early 2007 my wife and I purchased 150 shares of International Business Machines (IBM) at $95.82 apiece. We resolved to put all dividends back into the stock.

Seven years later, our dividends have purchased 21.731 new shares commission-free. Our returns are better than most as a result. Indeed, our position is up 124.1 percent versus 88.8 percent for the investor who bought but didn't reinvest. (Though, to be fair, they might have made up the difference investing their cash proceeds elsewhere.)

There's also the dividend yield to consider. Stock we've purchased through reinvesting also pays dividends, resulting in an annualized payment that yields 5.26 percent on our original purchase price -- more than double the 2.40 percent new shareholders are getting. Nabbing those extra stubs commission-free has proven invaluable.

Seven Brokers Who Want to Help You Get Paid

1. Charles Schwab (SCHW). Reinvesting is free, according to a Schwab representative, but some stocks don't qualify. Also, you can't reinvest in dividends paid for American Depository Receipts (known as ADRs), which act like stock but are issued by a foreign company.
2. E*Trade's (ETFC) dividend reinvestment program is similar to Schwab. There is the added benefit of the company's suave commercials that make you feel like an insider. If, you know, you're into that sort of thing.
3. At Fidelity Investments, reinvesting is free. But unlike with Schwab, it's possible to reinvest proceeds from dividend-paying ADRs.
4. Scottrade offers an intriguing option called a flexible reinvestment program. Scottrade says customers with individual retirement accounts, margin accounts or cash are eligible to employ the FRIP, which allows for pooling funds from dividend-paying stocks into purchasing new shares of up to five other stocks or exchange traded funds commission-free, including non-dividend payers. The catch? Scottrade won't purchase fractional shares on your behalf. (There are other caveats.)
5. Sharebuilder offers essentially the same reinvestment options as Fidelity. Sharebuilder's zero minimum balance and low fees on trading make it a good choice for beginning investors without much capital to invest.
6. TD Ameritrade (AMTD) offerings are similar to what the other majors offer, but with a catch. The brokerage says in its terms and conditions that it "does not intend" to charge a fee for dividend reinvesting but could change its mind at any time. If it does, the fee will not exceed the commission rate, which as of this writing was $9.99 for Internet-placed orders.
7. TradeKing's program is similar to what Fidelity offers, but with restrictions. Only stocks or ADRs priced at more than $4 a share qualify. They also must trade on an exchange or quote on the NASDAQ.

While I can't tell you which broker is right for you, if my own experience counts for anything, reinvesting dividends with any of them is likely to be a better strategy than not reinvesting at all.

Motley Fool contributor Tim Beyers owns shares of Apple and International Business Machines. The Motley Fool recommends Apple and TD Ameritrade. The Motley Fool owns shares of Apple, International Business Machines and TD Ameritrade. Try any Motley Fool newsletter service free for 30 days.

 

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11 Steps That Will Get You Off the Debt Roller Coaster

August 11, 2014, 11:00 pm

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Filed under: Personal Finance, Budgeting, Debt Assistance, Financial Education

For too many people, debt means more than just a high balance on their cards -- it's a vicious cycle from which they just can't seem to break free. They resolve to do better this month and make small gains and steps towards freedom, and then something goes wrong, and they wind up where they started -- or even further behind.

If you're prone to this cycle, here are 11 ways to reframe your mind and set yourself up for a positive, debt-free financial future:

1. Accept That You've Got Some Work Ahead of You

The first step in any change is to admit that a change is necessary. You need to get real with yourself and realize that you're in a bad situation and you'll have to take drastic measures to free yourself.

Making a little more than the minimum payment every month won't cut it; you need a total money overhaul. Until you admit (and accept) that, you'll never make any real progress.

2. Create a Budget

There is no way around it: You need a budget. Period. You'll never get your finances on track if you don't know what's coming in and what's going out each month.

Budgets are not evil; they are the road maps by which you will escape the debt roller coaster. Make one, and resolve to start following it. If you need help, here's the easiest budget ever -- designed for people who hate budgeting.

3. Change Your Money Mindset

The way you view your money has a significant impact on the way you spend your money. Until you learn to see your funds for what they are -- a tool to enable you to live a better life -- you'll continue to fall back into the same bad habits you've always had.

If you're a shopaholic, find new ways to relieve stress and entertain yourself. If you hate money and hate dealing with it, get to the root of that feeling (maybe you saw your parents struggling with their finances?) and start seeing your budget as something you have control over. Get your mind right, and your finances will follow.

4. Resolve to Pay Cash for Everything

Many people get into debt because they're in the habit of thinking that it's OK to buy things on credit. Flip your mindset: Start thinking about how you'll pay cash for everything in the future.

Imagine, for example, paying cash for a car instead of financing your purchase. To make this a possibility, you'll need to start "making car payments to yourself" -- setting aside $200 a month in a savings account earmarked for your next car. It's too early for you to start this now -- you have debt to pay off first -- but embracing a "pay cash" mentality will help you in this journey.

5. Resist Temptation

We all have weaknesses when it comes to our spending. Maybe you have a soft spot for good wine, or your favorite way to get over a bad day is to treat yourself to a new pair of shoes.

Identify your spending pitfalls so you can come up with ways to resist them, then do whatever it takes to break their hold on you. Cut up your credit cards if need be.

6. Create a Repayment Plan

How you pay off your debt is up to you. However, the most important thing is simply that you come up with a concrete plan and stick to it. A popular strategy is the debt snowball, in which you pay the minimum on all your debts, and then put as much money as you can into paying off the the card with the lowest balance. You wipe that dept out completely first, which will give you the pleasure of a quick "win" and keep you motivated. Then repeat the process with the next-lowest balance, and so on, until you're debt free. You can also try the common variation on the snowball that starts with paying off the card with the highest interest first, then work your way down the line.

7. Work More, Spend Less

To supercharge your savings, you need to start working that budget you've created to the max, striving each month to bring in more and spend less.

Look at each of your expenses and identify any you can trim or cut out altogether. Consider your "needs" versus your "wants." Simultaneously, think of ways you can start supplementing your income, whether it's taking on a second job or selling some of your old stuff on eBay (EBAY).

8. Get Aggressive

You may need to take some extreme measures for a little while, but when you're paying compound interest, every day you can shave off your repayment plan matters.

Consider some temporary changes you'd be willing to live with to reach your goal faster. Maybe you can downgrade your apartment for a few years. Maybe you even need to move back in with your parents, or find a roommate. It may not be terribly comfortable for a while, but financial freedom will be worth it.

9. Plan for Emergencies

One of the easiest ways to fall back into debt is to fail to plan for emergencies. While you can't foresee what will happen when, you can assume that something will manage to go wrong in the not-so-distant future, whether it's your car breaking down or your dog needing a pricey vet visit.

While you want to throw everything you possibly can toward paying down your debt, make sure to also include an emergency savings fund in your budget. Start with a target of $1,000 while you're repaying debt. Once you're done digging out, you can focus on building your cash reserves to three to six months of your expenses. Don't be caught unprepared when the unexpected inevitably happens.

10. Keep the End in Sight

Escaping the cycle of debt is a long-term goal. Change won't happen overnight, and there will be plenty of times when it will feel easier to give up than keep pushing forward.

To keep the positive momentum going and discourage yourself from backsliding, remind yourself often of what you're working toward. What will freeing yourself from debt do for you? Enable you to quit a job you hate and find work you love? Pay for your children's education? Save for retirement? Keep these goals front and center in your mind.

11. Go Easy on Yourself

Yes, it's possible to be aggressive and go easy on yourself at the same time. While you want to actively work to get your finances under control, you need to temper your newfound intensity with some serious kindness towards yourself.

Yes, you've made some mistakes in the past. But you've learned from them, and you're taking steps to correct them. What's done is done; stop beating yourself up about it and focus on how you can move forward.

Paula Pant ditched her 9-to-5 job in 2008. She's traveled to 30 countries, owns seven rental units and runs a business from her laptop. Her blog, Afford Anything, is a gathering spot for rebels who want to ditch the cubicle, shatter limits and live life on your own terms -- while also building wealth, security and freedom.

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'Naked PCs' Expose Microsoft's Emerging Markets Problem

August 11, 2014, 11:21 pm

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Filed under: Microsoft, China, International Trade, Computer Industry, Investing

By Jeremy Wagstaff and Gerry Shih

On a trip to Beijing a decade ago, Bill Gates was asked by a senior government official how much money Microsoft (MSFT) made in China. The official asked the interpreter to double check Gates' reply as he couldn't believe the figure was so low.

It's a problem that hasn't gone away. Indeed, Microsoft's current issues in China conceal a deeper problem for the U.S. software giant -- despite the popularity of its Windows operating system and Office suite, few consumers in emerging markets are willing to pay for legitimate copies.

That not only costs Microsoft in lost revenue, but is also holding back the spread of its newest Windows 8 version -- analysts say even buyers of pirate software prefer older versions. According to StatCounter, a website that tracks what software is loaded on Internet-connected computers, more than 90 percent of PCs in China -- now the world's biggest market -- are running pre-8 versions of Windows.

Microsoft is trying to tackle the issue. This year it's offering Windows 8 at a discount to PC manufacturers who install its Bing search engine as the default. And it's giving away versions of Windows 8 for phones and some tablets.

But, as the industry shifts from desktop to mobile, the cloud and free or cheap software, China sums up both the old and new challenges Microsoft faces in making money in emerging markets -- and, increasingly, in developed ones.

"The great danger for the company is that what has happened to them in emerging markets -- basically no revenue from new PCs because of piracy -- is not far off what's happening everywhere," said Ben Thompson, the Taiwan-based author of stratechery.com, a popular technology blog.

Core Cost

For sure, China is a major, and unique, headache for Microsoft. Many of the problems are tied to a broader push by the Chinese government to limit foreign firms' dominance and encourage local technology firms to become viable competitors.

After years of healthy relations with Beijing, Microsoft last month was suddenly targeted by anti-monopoly regulators who raided its China offices as part of a price-fixing investigation.

But the spats mask the fact that Microsoft has never really cracked how to get people in emerging markets to pay for its software. The company rarely breaks out revenues by geography, but it has provided clues about the size of the problem.

In 2011, then CEO Steve Ballmer reportedly told employees that, because of piracy, Microsoft earned less revenue in China than in the Netherlands -- with 1 percent of its population -- even though China bought as many computers as the United States.

According to the BSA anti-piracy lobby group that Microsoft co-founded, emerging markets account for 56 percent of all PCs in use, and 73 percent of software piracy. Of the $77.8 billion revenue Microsoft generated in its 2013 financial year, China, Brazil and Russia each "exceeded" $1 billion, according to a Microsoft presentation. For comparison, Apple Inc generated $27 billion in Greater China, which includes Hong Kong and Taiwan, in its 2013 financial year.

For Microsoft, that's a lot of lost revenue from the heart of its business. "Windows and Office are still very much the core of Microsoft," says Sameer Singh, an India-based analyst.

The most recent breakdown by Microsoft of its results by product line -- for the first quarter of fiscal 2014 -- shows that 56 percent of its global revenue and 78 percent of operating profit came from Windows and Office.

Microsoft doesn't just lose the revenue from pirate copies, it also loses access to customers who might buy other Microsoft products that work with or on top of Windows and Office.

Across most markets, Windows and Office account for more than half of revenues, says Andrew Pickup, Microsoft's Asia PR chief. This, analysts say, is because many of Microsoft's other products, such as Exchange and Windows servers, depend on customers already using Windows and Office.

"The Microsoft ecosystem is obviously pretty interconnected," says Jan Dawson of U.S.-based Jackdaw Research. "So it makes sense that the proportion of revenue would be similar in emerging markets."

Naked PCs

Part of the intractability of piracy in emerging markets is that each part of the chain poses a problem.

For PC makers working on wafer-thin margins the operating system is one of the costliest parts of the machine, while mom-and-pop shops which form the bulk of retailers in such markets can't afford to turn away price-sensitive customers who are comfortable buying pirate software.

Convincing [computer-makers] to ship every PC with Windows pre-installed is difficult.

The problem, therefore, starts with computer makers, Singh says, since "convincing them to ship every PC with Windows pre-installed is difficult." Margins on PCs for a company like Lenovo Group are "near single digits," says Bryan Wang, an analyst at Gartner (IT).

The result is that up to 60 percent of PCs shipped in the emerging markets of Asia, says IDC research manager Handoko Andi, have no Windows operating system pre-installed -- so-called 'naked PCs', which usually instead carry some free, open source operating system like Linux. That compares with about 25 percent in the region's developed markets like Japan and Australia.

A quick scan of Taobao, the popular Chinese e-commerce site operated by Alibaba, shows a vast selection of PCs shipped with Linux rather than Windows. Once the machines hit the retailers, it's hard to tell where legitimate software stops and piracy begins.

On a recent morning in Zhongguancun, a teeming electronics hub in north Beijing, shopkeepers offered to bundle what they said were legitimate versions of Windows with a new laptop, either for free or the equivalent of about $30.

Microsoft began lobbying Lenovo in 2004 to stop shipping naked PCs, but the Chinese firm countered that its margins were too low, a person familiar with the negotiations said. Two years later -- just days before then-President Hu Jintao visited Gates' U.S. home -- China announced a new law requiring PCs to be shipped with operating systems. That merely dented piracy rates, which fell to 79 percent in 2009 from 92 percent in 2004, according to the BSA.

Lenovo said it reached an agreement with Microsoft in June of this year to ensure that Lenovo PCs sold in China would come pre-installed with a genuine Windows operating system.

Mobile 'Also-Ran'

Microsoft's new approach is to push the price of Windows low enough to make it worth a PC maker's while. The cost of a Windows license has fallen to below $50 from as high as $150, said IDC's Andi, taking Microsoft down to "levels where they've never competed before."

Microsoft's Pickup said it was too early to gauge take-up.

In any case, making Windows cheaper for PCs is just part of a broader response to deeper shifts in the industry. The rise of mobile, tablets, cloud-based services and free operating systems has marginalized Microsoft and challenged its business model.

While Windows is on more than 90 percent of traditional computers -- according to data compiled by analyst Ben Bajarin -- that figure drops to below 14 percent once mobile devices such as phones and tablets are factored in, estimates Gartner.

More than half those devices run Google's (GOOG) Android mobile OS, which is effectively free to handset and tablet makers. Apple (AAPL), a key player in all types of devices, gives away upgrades to its operating systems for free.

Pickup says Microsoft has listened to phone makers' complaints and relaxed what hardware they need to install the mobile version of Windows. It has also made the operating system free on any mobile device of 9 inches or less.

Taken together, the moves are "about bringing down the cost as more and more of the populations in these emerging markets are having their first computing experience," Pickup said.

These are significant concessions, analysts say, but Microsoft will have to learn to be a bit player, where its software and services run on other people's operating systems.

"The biggest threat to Microsoft," Dawson said, "is the shift from a PC-based world where Microsoft dominated to a mobile world where Microsoft is an also-ran."

-Additional reporting by Noel Randewich in San Francisco and Bill Rigby in Seattle.

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Consumer Reports Adds Footnote to Favorable Tesla Review

August 11, 2014, 11:51 pm

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Filed under: Technology, Media, Automotive Industry, Consumer Goods, Car Buying

By Bernie Woodall

DETROIT -- Consumer Reports, which last year gave top marks to electric carmaker Tesla Motors' (TSLA) Model S sedan, now says the car it owns has had "more than its share of problems."

While the car has impressed staff at the influential U.S. consumer magazine with its "smoothness, effortless glide and clever, elegant simplicity," there have been many quirks that might dampen consumers' experiences, Consumer Reports said in a statement Monday.

Consumer Reports, which anonymously buys the vehicles it tests from auto dealerships, said the Model S it owns now has traveled nearly 16,000 miles. Its 2013 Model S was purchased for $89,650 in January of that year.

"Just before the car went in for its annual service, at a little over 12,000 miles, the center screen went blank, eliminating access to just about every function of the car," the magazine said in its statement.

Tesla fixed the issues on the magazine's Model S under warranty. These included a "hard reset" to restore the car's functions after its center screen went blank and problems with the automatic retracting door handles, which were occasionally reluctant to emerge.

Last November, Consumer Reports ranked the Model S best among all cars on the market in its annual survey of vehicles on U.S. roads. And in May 2013, the magazine awarded the Tesla sedan 99 out of a possible 100, one of the best ratings it has ever given an automobile.

The base version of the Model S starts at around $70,000.

Tesla said in statement that it considers service a top priority.

"We err on the side of being proactive to ensure the best driving experience possible," it said. "That means we are particularly attentive in addressing potential issues, even if those issues appear to be very minor or have a low likelihood of causing any future problems.

"We take these actions with the customer's convenience and satisfaction top of mind and strive to go above and beyond the expected level of service.

"In addition, we are constantly upgrading the functionality, features and quality of every Model S through the free over the air updates we provide to every owner," it said.

Tesla has been one of the hottest U.S. stocks this year, more than doubling its value. Shares closed Monday at $259.32 a share, up 4.5 percent.

Tesla's only production model is the Model S, but next spring it plans to introduce a crossover electric car, the Model X.

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5 Car Rental Ripoffs You Should Avoid

August 12, 2014, 12:42 am

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Filed under: Consumer Ally, Travel, Consumer Protection, Saving

The lines at the car rental counter can be long, and everyone standing there has a target on them.

For a lot of travelers, by the time you get off the plane and make it to the car rental counter, you're either tired or eager to get where you're going -- or both. And that's just the way the folks who rent you cars want it.

The less in tune you are with what they're doing and the less focused you are on what they're trying to sell, the more likely you are to spend money on unneeded upgrades and get stuck with other charges that you can -- and should -- avoid.

Car rental agents are rewarded for how much they can get you to add. Here are five areas to pay close attention to when renting a car, or you'll run the risk of paying far more than necessary:

1. The fine print. Understand the terms of your rental. If you rent a car for a week for $200 and bring it back after six days, what will you pay? The deal you might have gotten was based on a seven-day rental. You could be charged a far higher rate or even face a penalty for bringing it back too soon. Maybe not, but you ought to know that before you drive away. Make sure what is included in the price and what isn't. Sometimes, airport fees and additional charges can make what seems like a cheap rental expensive.

2. Insurance. Car rental agents can be relentless in their push to get you buy their insurance, which is couched in confusing terms like "collision damage waiver." The best defense against that is to call your car insurance company before you leave home and see what it covers. Then follow up with a call to your credit card company, since many cards offer supplemental coverage to what your auto insurer covers. Car rental companies will charge you for roadside assistance (millions of Americans have access to that through AAA and other services) and the time a vehicle can't be rented because it's being fixed (ask your insurer about "loss of use" coverage).

3. Damage charges. The complaints are repeated over and over again. A consumer gets a bill from a car rental company for damage that they didn't think they are responsible for. If you can't make the case with any evidence, you'll not likely to get off the hook. Be sure to thoroughly inspect the vehicle prior to pulling out of the parking spot, and make sure any damage is noted before leaving. Take photos of the vehicle using a camera or smartphone that has a time stamp, paying particular attention to any existing damage.

4. Gas charges. Prepaying for a tank of gas is a sucker's bet. But be clear about the rules for how much gas has to be in the car when you return it and whether you need a receipt, as well as how far you're allowed to drive from a gas station. Seriously. Driving more than 10 miles after filling up your tank could lead to a penalty. Or failing to show your receipt could negate bringing it back full.

5. The upsell. That could be anything from getting you rent a bigger car to paying a daily fee for a GPS or a toll transponder. Anything you're going to get charged for on a daily basis or prepay from a car rental agency is going to be money you could have saved. Do you really need to rent a GPS in today's world of smartphones? Do you really want to pay a premium to pay tolls? Need a car seat? Bring one.

 

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Federal Budget Deficit Falls to $94.6 Billion in July

August 12, 2014, 1:40 am

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Filed under: U.S. Government, Government Spending, Treasury, Barack Obama, Investing

By MARTIN CRUTSINGER

WASHINGTON -- The federal government ran a lower deficit this July than a year ago, keeping it on course to record the lowest deficit in six years.

The July deficit was $94.6 billion, an improvement of 3.1 percent from a year ago, the Treasury Department reported Tuesday in its monthly budget statement.

For the first 10 months of this budget year, the deficit totals $460.5 billion, down 24.2 percent from the same period a year ago.

The Congressional Budget Office expects this year's deficit to total around $500 billion, down from $680.2 billion last year. That would be the lowest deficit since an imbalance of $458.6 billion in 2008, which was a record at the time. The Great Recession and efforts to deal with the financial crisis sent deficits above $1 trillion for four straight years.

The July imbalance followed a $70.5 billion surplus in June, a month when government coffers are swelled by quarterly tax payments. But without the quarterly payments, the government ran a deficit in July, a month when it has recorded deficits in 58 of the last 60 years.

The yearly deficit peaked at $1.4 trillion in 2009 and remained above $1 trillion for each of the next three years, finally falling to $680.2 billion last year.

CBO projects the deficit will fall to $469 billion in 2015 before starting to rise again, topping $1 trillion annually starting in 2023. Spending on the government's major benefit programs, including Social Security and Medicare, will drive those increases as more baby boomers retire.

For the first 10 months of the current budget year, which began in October, government revenue totals $2.47 trillion, up 8 percent from the same period a year ago, reflecting a stronger economy which has boosted employment and led to rising income tax revenues and higher corporate tax payments.

With two months left in the current budget year, government spending is up 1.2 percent to $2.93 trillion, compared to a year ago, reflecting government efforts to restrain outlays in an effort to get control of the budget deficits.

Republicans have accused President Barack Obama of failing to propose significant cuts to reduce soaring entitlement costs. Democrats counter that Republicans would rather impose sharp cuts on needed government programs than impose higher taxes on the wealthy.

Neither side is expected to make major concessions in this congressional election year. But the budget wars of the past three years have subsided at least for a brief time. An agreement was reached in December on the broad outlines for spending over the next two years. The agreement will allow Washington to avoid the gridlock that culminated in October's 16-day partial shutdown of the government.

The budget cease-fire also includes legislation that suspended the government's borrowing limit through March 15 of next year. That puts off another battle over raising the debt ceiling until a new Congress takes office in January.

 

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3 Ways to Be a Better Investor You Won't Learn in a Book

August 12, 2014, 2:23 am

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Filed under: Investing Basics, Investing

Roughly 17 years ago, I didn't know my ABCs from my 123s when it came to investing.

I was a high school senior, enrolled in a half-semester economics course, when our teacher signed us up for a nationwide investing contest for high school seniors, in which we were to invest a fictitious $100,000. The student who generated the largest gain would "win."

I didn't win. Nor did I expect to, with barely any knowledge of how businesses or the stock market worked. But I placed in the top 20 in the country thanks to my sole holding -- Oregon Metallurgical -- being bought out for a substantial premium. When I realized I could do this with real money, my love of investing was born.

What You Don't Know Matters a Lot

Throughout the next decade, first as a day trader during my early investing years, then eventually as a registered investment adviser, I taught myself everything I believed there was to know about investing. I immersed myself in investing books, spent hours perusing financial websites and reading earnings reports and engaged in as much investment community banter as I could.

But little did I know there was much, much more to learn about investing than I ever imagined. And only through nearly two decades of investing experience have I discovered that there are more than a handful of ways you can become a better, smarter investor -- and that some of the most important lessons are learned through experience. Here are three that I've learned:

1. Set Investing Goals -- and Then Prepare to Reset Them

Imagine this scenario: You and your family sit down for a talk with your financial adviser and devise a 10-year financial plan. Practically every detail is covered, including how you'll add to your retirement nest egg on a monthly basis, how you'll fund your children's education, and what dollar figures and growth metrics you should aim to hit. The boundaries of success are firm, and you'll either surpass them or fall short.

The above scenario plays out countless times. I should know, since this is what I used to do for a living. But have you really succeeded if you surpass an investing goal devised 10 years ago? Conversely, does falling short of your investing goal mean you've failed?

The answer is almost always no. Goals are a moving target and are subject to much more complexity than simply the amount you invest and the growth you achieve. Many factors in your life are dynamic. Income, marital status, family size, medical expenses and home ownership are all some of the most common major ones that are prone to change and that can drastically alter your ability to save and invest. This, in turn, can shift the expectations of your investment goals up or down.

The lesson is that your financial goals -- and you -- need to remain flexible. Real-life investing goals are moving targets that will require you to be able to spot when changes are needed and be willing to make the necessary adjustments. Remember, you're not competing against Warren Buffett for who can have the most cash in the bank. Instead, you're investing for a future and lifestyle that's unique to you.

2. Embrace Naysayers and Contrarians

People are often their own worst critics, but they generally shy away from the criticism of others. That's why it's only natural for us to want to surround ourselves with friends who share common interests and have somewhat similar views. However, when it comes to investing, this can be very dangerous.

It is said that a contributing factor to the late Steve Jobs' success at Apple (AAPL) was that he was not afraid to surround himself with people who disagreed with him and had the courage to give him honest criticism and feedback.

It's advice that can easily be applied to your investing strategy. After all, you are the CEO of your own financial destiny.

If you surround yourself with like-minded people who only agree with everything you say, it's nearly impossible to grow as an investor. However, if you're willing to examine both sides of the coin, you'll have the opportunity to take your knowledge of investing to a deeper level by exploring your convictions.

3. Reread Between the Lines of Your Favorite Investing Books

Looking back, it's been about 15 years since I first read Burton Malkiel's "A Random Walk Down Wall Street." Throughout his book, Malkiel preaches one of the core philosophies of investing success: that it's impossible to predict future stock price movements, and that a strategy of buy-and-hold gives investors their greatest chance of long-term success. This is an ethos I live by today -- but it wasn't always that way.

There was a period during college and shortly thereafter where I made a living as a day trader, jumping in and out of stocks, sometimes just to make pennies at a time. The lesson I learned from "A Random Walk" had become a distant memory because I assumed that reading the book and placing it upon my bookshelf made me knowledgeable.

But after rereading "A Random Walk" in 2005, and practically every year since, I realized I had been doing myself a disservice all these years, as I was discovering something new or applicable each time I reread it.

Now I'm constantly refreshing my mind with its core investing concepts, adding new perspective to my dynamic investing situation and applying what I've learned following rereading the book.

The point is that if you read to gain knowledge and simply allow that book to gather dust on your bookshelf, you're denying yourself the ability to gain new perspectives and, most important, the chance to apply those ideas to your own unique situation.

Motley Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on Twitter @TMFUltraLong. The Motley Fool owns shares of and recommends Apple.

 

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Postal Service Posts $2 Billion Quarterly Loss

August 12, 2014, 2:41 am

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Filed under: Company News, Earnings, U.S. Government, Transportation & Logistics

WASHINGTON -- The U.S. Postal Service lost $2 billion this spring despite increasing its volume and charging consumers more money to send mail, officials said Monday.

The loss for the spring quarter, which ended June 30, was significantly higher than the $740 million loss for the same three-month period last year. The agency blamed increases in compensation and benefit costs for the red ink and said it would be unable to make a congressionally mandated payment of $5.7 billion this September for health benefits for future retirees. The loss came despite a 2 percent increase in operating revenue compared to last spring.

"Due to continued losses and low levels of liquidity, we've been extremely conservative with our capital, spending only what is deemed essential to maintain existing infrastructure," said Joseph Corbett, the Postal Service's chief financial officer.

The Postal Service is an independent agency that receives no tax dollars for its day-to-day operations but is subject to congressional control. It has asked to end most Saturday deliveries, a request that is languishing in Congress amid opposition by postal unions. The agency also is seeking to eliminate the congressionally mandated $5.7 billion annual payment for future retiree health benefits.

Fredric Rolando, president of the National Association of Letter Carriers, agrees that Congress should get rid of the 2006 mandated payment but says it would be "irresponsible to degrade services to Americans and their businesses" just as postal delivery is rebounding with the economy. Because more people are shopping online, "the Internet is now a net positive for USPS, auguring well for the future as e-commerce grows," Rolando said in a statement.

The Postal Service has defaulted before on federally mandated annual payments to cover expected health care costs for future retirees. Corbett said the agency also needs $10 billion to replace old vehicles, buy new package sorting equipment and make other infrastructure upgrades.

Other findings from the latest quarterly report compared to the same time period last year:

• Shipping and package revenue was up 6.6 percent, while standard mail revenue increased 5.1 percent. The increase was attributed both to higher volume and prices charged to consumers.
• First-Class mail volume declined by 1.4 percent, but revenue climbed 3.2 percent because of price increases.
• Operating revenue increased by $327 million to $16.5 billion.
• Operating expenses increased by $1.5 billion to $18.4 billion.

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Small Business Optimism Ticks Up Only Slightly

August 12, 2014, 3:15 am

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Filed under: Economy

With sentiment improving and GDP growth rate picking up in the second quarter, investors and economists alike are looking for anything to confirm or refute the upswing in the economy. The National Federation of Independent Business (NFIB) said its Small Business Optimism Index technically rose 0.7 points to 95.7 in July.

What should stand out in this latest report is that the higher readings among the index components were not universal. The 10 index components were little changed other than outlook for expansion and business conditions, which accounted for most of the small gain in the index.

Some problems that these businesses are confronting are mediocre capital spending reports, large inventories and deteriorating sales trends. As long as these problems persist, the small business portion of the economy will continue to not be able to pull its weight.

We have included a brief snippet on each reading inside the index cited by the NFIB. A review of the July indicators is as follows:

• Labor Markets - Business owners increased employment by an average of 0.01 workers per firm, marking the 10th positive month in a row. Out of all the owners reporting, 75% made no net change in employment, 53% hired or tried to hire in the last three months, and 42% reported that there were few or no qualified applicants.
• Job Creation - Job creation plans continued to strengthen and rose 1 point to a seasonally adjusted net 13%. Actual job creation remained positive.
• Sales - The seasonally adjusted net percent of owners reporting higher nominal sales fell 1 point to a reading of 3%, although still one of the very best readings since 2007.
• Earnings and Wages - Earnings trends were unchanged at a net negative 18%, one of the best readings since 2007. Rising labor costs are keeping pressure on earnings, but there appears to be an improvement in profit trends in place.
• Credit Markets - Out of the owners reporting, 6% said their credit needs were not met. This remains unchanged and only 2 points above the record low. Thirty percent of owners reported all credit needs met, and 52% explicitly said they did not want a loan.
• Inventories - The pace of inventory reduction was steady, with a seasonally adjusted net negative 3% from all owners reporting growth in inventories. More companies now are reducing inventory rather than building their stocks.
• Inflation - 12% of owners reported reducing their average selling prices, and 25% reported price increases. Seasonally adjusted, the net percent of owners raising selling prices was a net 14%, unchanged from June and 15% higher than December.

Filed under: Economy

 

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How to Plug Leaks in Your Budget

August 12, 2014, 3:15 am

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Filed under: Personal Finance, Credit Cards, Budgeting, Financial Education

By Erin Lowry

"Wait, where did all my money go?!"

Instead of viewing your bank account with shock and annoyance, you can avoid the panicked feeling of having no money with one simple strategy: identifying budget leaks.

Creating a spending budget is often well-intentioned, but it doesn't always stop money from disappearing with little warning. Spreadsheet aficionados may know where each penny is spent, but the average Mint user is likely a little more apathetic.

For those who can't wait for the next payday to cover expenses, it may be time to figure out how to plug the leaks in your budget.

Identify Your Spending Threshold

Jackie heads into the checkout aisle at the grocery store and sees the rack of magazines. She thinks to herself, "Well, it's only $4.50," and throws the magazine down with her pile of food. A few hours later she's out for a walk and grabs a latte, once again thinking, "It's only $5."

Needless to say, it's easy to make this spending cycle repeat itself over and over, multiple times a day.

Identifying a spending threshold is an important part of finding the leaks in a budget. Most -- if not all -- people have a set amount of money that simply doesn't sound like much. Whether it's $5 or $50, they're comfortable spending their threshold limit without thinking.

This small amount can add up quickly during a day, a week, a month and certainly a year.

If Jackie spends $10 each day without thinking, she'll be out $3,650 a year. She may be able to afford spending $3,650 on mindless purchases, or maybe she'd rather put it toward funding an individual retirement account, investing in an index fund or even taking a really nice vacation.

Identifying a spending threshold often leads to finding a common budget leak: "the latte factor."

Traditional Leak: The 'Latte' Factor

The Latte Factor swept the personal finance community after the publication of David Bach's book "The Automatic Millionaire."

The concept is simple and refers to a small amount of money spent regularly on an unessential item. For some, the latte factor is literal -- a $5 cup of coffee each day -- while others may be spending the money on happy hours, magazines, candy or eating lunch out each day. It's a manifestation of not understanding a spending threshold.

Some diligent budgeters itemize their latte factor into a budget, especially if they find spending $100 a month on coffee is a worthwhile investment. Others indulge in the latte factor without considering the ramifications on their budgets.

The easiest way to identify a latte factor is to spend a month tracking pennies. Literally.

Write down each cent spent during a one-month period, and track mindless or unnecessary purchases. Determine if those need to be accounted for in a budget, or if you can shift your current funds around to cover those expenses.

Uncover (Food) Waste

Throwing a few dollars around a day can add up quickly -- but throwing away dollars on unused products may be even worse.

Some budget leaks are directly related to poor shopping habits, especially when it comes to perishable items. Groceries are an easy spot to be springing a consistent budget leak. In fact, a 2012 National Resources Defense Council study found the average American family throws away about 25 percent of food and beverages purchased. This could mean $1,365 to $2,275 a year for a family of four.

Americans can combat this blatant budget leak by planning out meals, sticking to a shopping list and only buying what will be consumed during a week. If food won't be consumed, then freeze it. And don't forget doggy bags for meals at restaurants.

Interest Rates on Debt

Debt runs rampant in America. From student loans to consumer debt, it's hard to entirely avoid debt. Unfortunately, debt repayment often comes with crushing interest rates that make it difficult to pay down the principal sum.

A key component to managing consumer debt and paying it down involves shopping. Well, shopping around the debt.

Banks will actually compete for debt, and someone with a good to excellent credit score can find banks that will offer deals to switch over his or her debt. Of course, the bank hopes the indebted will fall into a trap and end up continuing to dig deeper into the hole.

But balance transfers are one cheap and fast way to pay down credit card debt. For example, let's say Gretchen has $9,000 worth of debt on her credit card and pays $300 a month at an 18 percent interest rate. She will spend $3,046 in interest and take nearly 3½ years to pay it off.

By using a multiple balance transfers, Gretchen would only pay $507 in interest and fees with the debt paid off in just over two and a half years. That's a savings of $2,539, according to MagnifyMoney's balance transfer calculator.

Find and Plug Those Leaks

Whether it's mindless spending or high interest rates on debt -- everyone has a budget buster. Tracking spending habits and evaluating lifestyle choices are easy ways to quickly find and, more importantly, plug any budget leak.

Erin Lowry writes about personal finance and manages social media for MagnifyMoney.com, a site dedicated to helping consumers save money by finding simple, transparent financial products. She is also the founder of the personal finance blog Broke Millennial.

 

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3 Signs That the Personal Computer Market Is Rebooting

August 12, 2014, 3:17 am

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Filed under: Company News, Technology, Industry News, Computer Industry

Following the introduction of Apple's (AAPL) instantly popular iPad line of tablets in 2010, many believed computing would switch, if not entirely, then largely to mobile devices. And for a while, statistics seemed to bear this out. According to IT market researcher IDC, from late 2010 to the end of 2013, annual worldwide PC shipments dropped by 12 percent.

But the death of the personal computer, it seems, has been greatly exaggerated. The latest numbers indicate that the PC decline could be leveling off. And other indications show that the dowdy old PC might not be headed for irrelevance after all. Here are three developments indicating otherwise.

Shipments Are Starting to Flow Again

The years of decline were then; this is now. Preliminary research from Gartner Group (IT) indicates that worldwide PC shipments inched up by 0.1 percent on a year-over-year basis in this year's second quarter following eight straight quarters of declines.

It's a small number, but it masks some impressive gains. In the U.S. market, the tally was much higher at 7.4 percent, while the Europe, Middle East and Africa mega-region saw an 8.6 percent improvement. It was the Asia-Pacific region that dragged the overall number down, recording a 9.5 percent year-over-year fall.

Asia-Pacific aside, the improvement is due to a number of factors. First is the accessibility of new and attractive hardware, with thin, powerful notebooks doing well and touchscreen models dropping to affordable prices.

On the software side of the equation, in April, Microsoft (MSFT) stopped supporting its creaky old Windows XP operating system.

This has given users of aging PCs running the OS a strong incentive to upgrade. And a great many of them spent a little more to buy new machines prepackaged with the company's current Windows 8.1 rather than undergoing cumbersome software updates.

Industry Veterans Are Getting Their Due

When the sales declines started to snowball, many big names in the PC space dreamed of escaping the segment altogether.

One was Hewlett-Packard (HPQ), which in 2011 revealed it was considering a spinoff of its PC business. Meanwhile, that year Intel (INTC) -- maker of the chips that power a great many of the world's PCs -- was at the beginning of a cycle that would see its top line decline over three consecutive years.

HP never did let that unit go, which in retrospect looks like a smart call. In the IT giant's most recently reported quarter, its overall revenue was slightly down on a year-over-year basis. Not so the tally for personal systems (essentially its devices business), which advanced by 7 percent to $8.2 billion.

Personal systems is HP's largest division in terms of sales.

This was due in no small part to sales of desktop PCs and notebooks, which both grew by 6 percent. Personal systems, by the way, is HP's largest division in terms of sales.

Intel, which in spite of its efforts at diversification is still strongly tied to the PC market, showed an 8 percent year-over-year gain in top line (to $13.8 billion) in its most recent quarter. Much of this increase came from the firm's core PC client group, which was responsible for nearly 60 percent of that total.

Here at home, HP's 7 percent bump was eclipsed by the recently taken private Dell's approximately 13 percent growth. Then there's the global market leader, China's Lenovo (LNVGY), which enjoyed a fat rise of roughly 15 percent.

Even Apple Experienced a Growth Bump

Even one of the most prominent players in mobile hardware is cashing in its chips on PCs. Apple's portable gadgets might get the visibility and the buzz, but in the firm's most recent quarter, it was computers that won the growth contest.

The company's Mac line saw an 18 percent annual rise in terms of units sold and a 13 percent increase in terms of net sales. Both figures trumped the growth in iPhones, iPads and iPods.

In fact, when looking at Apple's four main product lines, the Mac was one of only two (along with the iPhone) to record an increase in unit sales across the most recent three- and nine-month periods.

Macs are helping Apple pump out the profits ($7.7 billion in net income for the most recent quarter, on $37.4 billion in sales). They're also providing they're share of cash to fund the company's dividend, an unusual feature for a tech company stock.

Like a Phoenix

The gains in the PC market are healthy and encouraging -- and if current trends continue, they're also likely sustainable. All that's to say that things are looking pretty good for a technology that was written off by the skeptics not so long ago.

Motley Fool contributor Eric Volkman has no position in any stocks mentioned. The Motley Fool recommends Apple, Gartner and Intel, and it owns shares of Apple, Intel and Microsoft. Try any of our newsletter services free for 30 days.

 

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Job Openings Highest in Over a Decade

August 12, 2014, 4:25 am

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Filed under: Careers

The U.S. Bureau of Labor Statistics is out with its monthly Job Openings and Labor Turnover Survey for the month of June. This JOLTS report compares hirings, firings and employees quitting their jobs and reports the number of job openings each month. It is never a true market-moving report, but it signals the underlying strength and weakness in the jobs market.

The job openings report was at its highest reading back in 2001. It then reached a pre-recession peak in June 2007, but according to the recent report, there were some 4.671 million job openings on the last day of June — the highest reading in over a decade. The hires rate was 3.5%, and the separations rate was 3.3%. Within the separations, the quits rate was 1.8%, and the layoffs and discharges rate was 1.2%.

Without looking at seasonal adjustments, it turns out that the job openings level increased for more than half of the industries but decreased for retail trade. Still, the number of job openings increased in all four regions of America.

From January 2014 through June 2014, the number of job openings was up by an average of 159,000 job openings per month, creating a total increase of 797,000 openings.

There were 4.8 million hires in June versus 4.5 million total separations in June.

Here is what stands out. The total quits rate from the private sector was 2.1% versus only a 1.3% layoffs and discharges rate.

It may seem odd, but many quits are good for the job market and imply a stronger economy. The issue is that this generally implies that workers are leaving to pursue more lucrative positions or to pursue other interests, theoretically creating a job opening when they quit. This means there is a stronger jobs market where workers have upward mobility and opportunity as well.

24/7 Wall St. has included a link to the full report and a table showing how high the current openings are compared to the last 14 years.

FULL JOLTS REPORT

Filed under: Jobs

 

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Want Fries With That Burger? By 2020, You'll Reply 'No to Both'

August 12, 2014, 4:36 am

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Filed under: Starbucks, McDonald's, Food & Beverage, Restaurants, This Built America

The days of hamburger chains reigning supreme across America are fading. If new predictions from financial services firm Janney Capital Markets are accurate, fast food will be more upscale and adventuresome by 2020.

Today, three of the top five fast food chains in America are burger companies. McDonald's (MCD) ($35.9 billion in sales for 2013) crushes all competition for revenues. Subway, though it has more restaurants, comes in a distant second at $12.7 billion, followed by Starbucks (SBUX) ($11.7 billion), Wendy's (WEN) ($8.8 billion) and Burger King ($8.5 billion).

Janney Capital projects that in 2020, McDonald's will fry up $43.8 billion in sales -- still No. 1. But Starbucks ($18.8) and Subway ($18.4) are predicted to trade places in the 2 and 3 spots, and Dunkin' Donuts ($11.6) and Chick-fil-A ($10.8) are expected to round the top five, as the other burger chains slide down the list. As lead analyst Mark Kalinowski said on the Huffington Post, "Americans' tastes are evolving" towards flavorful fast casual dining locations.

I'd Like Improved Quality and Taste Instead

Janney Capital predicts the shift stems from several factors. Customers want higher quality and better tasting meals. That may seem obvious, but based on the fast food people have been eating the past few decades, it hasn't always been the case. This is why chains like Chiptole Mexican Grill (CMG) (recently surpassing McDonald's in sales growth), Dunkin' Donuts (DNKN) and Chick-fil-A stand to make significant strides in the industry. Even though Chick-fil-A has been a lightning rod for boycotts and protests over the religious convictions of its leaders, the chain has been consistent in service and food quality, and its sales have kept growing.

McDonald's has noticed the trend, so it's going through an 18-month makeover, changing the service and menu. What could be the hardest task of the rebrand is regaining customer trust, for example, by demonstrating more integrity and consistency, and having its equipment working and WiFi available when advertised -- two current problems facing the chain.

Yet, food quality has to be the top priority. McDonald's will keep its signature Egg McMuffins, Big Macs and french fries while adding fruits, vegetables and sustainable beef. With Chipotle's emphasis on responsibly raised "unconventional meat," it shouldn't come as a surprise to see McDonald's follow suit.

Other factors leading to declining sales are better options for similar prices -- such as Panera (PNRA) and Starbucks -- plus attention to the treatment of fast food employees across the industry. McDonald's, being the iconic brand, may be suffering the brunt of the frustration, justified or not. The brand also continues to struggle from the recession. The restaurant lost many customers due to the financial crisis, only to see a significant amount not return.

 

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Need Towels? The Front Desk Is Sending a Robot Right Up

August 12, 2014, 5:05 am

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Filed under: Technology, Travel, Travel Industry

By Justin Solomon

Look out, Rosie the Robot, Starwood Hotels' (HOT) Aloft brand has a taskmaster of its own.

His (or her?) name: ALO (pronounced "el-oh"), the chain's first Botlr (short for robotic butler.) Standing just under 3 feet tall, ALO comes dressed in a vinyl-collared butler uniform and will soon be on call all day and night to fulfill requests from guests.

Forget your toothpaste? Need more towels? How about a late-night chocolate bar? All guests of the hotel have to do is call the front desk, where staff will load up the Botlr with requested items, punch in the guest's room number and send it off to make the delivery, navigating hallways and even call for the elevator using WiFi.

At the Aloft in Cupertino, California, ALO is being fine-tuned for the Aug. 20 official launch of this pilot program. If successful, the Botlrs will appear in nearly 100 properties. "I think there is a chance that this could go enterprise-wide based on a successful pilot," said Brian McGuinness, senior vice president for the Aloft brand.

Helping People, Not Replacing Them

According to a study at the University of Oxford, 47 percent of U.S. employment is at risk of being replaced by computerization, but Starwood says these robots are not intended to replace any employees. Rather, they are there to free them up from small tasks, leaving them more time to deal with customers face to face. "It is certainly not replacing our staff but it is augmenting our ability to service our customers," McGuinness said.

"We applaud Starwood's program, which follows a long tradition of innovation in our industry," said Katherine Lugar, president of the American Hotel and Lodging Association.

The Botlr was designed and built by Sunnyvale, California, start-up Savioke, which in April announced a seed round of funding of $2 million from investors, including Google (GOOG) Ventures. Company CEO Steve Cousins said he sees a huge market for service robots. "There are all these places, hotels, elder care facilities, hospitals that have a few hundred robots maybe but no significant numbers and we think that's just a huge opportunity," he said.

Starwood Hotels, which is funding the pilot, has an exclusive deal with Savioke through the end of the year. The robots' cost was not made available, but Cousins said they will become more affordable as supply costs come down. The business model will be leasing the robots and charging a service fee, he said. "It's going to come in at a few thousand dollars, it's not going to be hundreds of thousands of dollars; it's not going to be tens of thousands of dollars," he said.

 

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When at First It Doesn't Succeed, Walmart Tries, Tries Again

August 12, 2014, 5:20 am

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Filed under: Company News, Technology, Retail, Shopping, Wal-Mart

By ANNE D'INNOCENZIO

NEW YORK -- Walmart thought shoppers would jump at the opportunity to use a smartphone app to scan items they want to buy as they walk through store aisles. In theory, they could speed through self-checkout.

But customers had trouble using the "Scan & Go" app during tests in 200 stores, so Walmart nixed it.

Instead of looking at the app as a failure, though, Walmart took what it learned from "Scan & Go" to create another service: It found that customers like being able to track their spending, an insight that became the impetus for a program that enables shoppers to store electronic receipts.

The story behind "Scan & Go" illustrates how traditional retailers increasingly are using the nimbler approach to innovating that Silicon Valley startups are known for. Rather than perfecting a program before rolling it out -- as most retailers do -- they're doing more testing and refining as they go along. If the tests work, they're rolled out nationally. If they don't, retailers shutter them and incorporate what they learn into other projects.

The test-and-learn approach comes as retailers face intense competition for U.S. shoppers, many of who are still struggling financially. Walmart, for instance, has had sales declines at its established U.S. discount stores for over a year. The industry also is fighting to keep pace with rapidly changing technology and online retailers like Amazon.com that lure customers with low prices and beefed up services.

"Retailers need to fail often and learn quickly and adapt and then adopt," said Lori Schafer, executive adviser at SAS Institute, which creates software for retailers.

Here's a look at some Walmart tests and what it's learning from them:

Delivery

The Details: Walmart is testing same-day delivery of groceries, fresh produce and other products in San Jose and San Francisco in California and Denver. Shoppers select a time slot and their items are delivered on the same day if ordered by 8 a.m. Delivery fees range from $3 to $10.

It's also testing same-day delivery of only general merchandise like toys and TVs in Northern Virginia, Philadelphia and Minneapolis if ordered by noon. Customers pay $10 for an unlimited number of items.

In January, Walmart began offering customers the option to order online and pick up their items in stores in Denver.

What Happened: Walmart Stores (WMT), which is based in Bentonville, Arkansas, said that same-day delivery has been well received. But in Denver, the pickup option is growing faster than home delivery. Executives reason that shoppers don't want to be holed up at home waiting for deliveries. It doesn't have any plans to roll it out nationally yet.

Lessons Learned: Ravi Jariwala, a Walmart spokesman, said the retailer is encouraged by the results of the tests. "We're trying to understand how we can provide convenient options for customers to shop online for groceries," he said.

Subscription Service

The Details: In late 2012, Walmart launched Goodies.co, a mail snack subscription service that lets shoppers taste five different surprise snacks that weren't sold on the discounter's shelves for a monthly fee of $7. Walmart then solicited feedback from customers in the site's social community so that it could use the responses to spot food trends.

What Happened: Goodies.co closed down a year after it was launched even as the subscription business has been a hot area as companies test shoppers' appetites to have everything from socks to razors to beauty products delivered on a regular basis. For some services, the exact products remain a mystery until they're shipped.

Walmart declined to elaborate, but analysts say Walmart customers weren't interested in paying for surprise items.

"I think any subscription service Walmart puts forth has to be aimed at the sweet spot of their shopper -- straight up groceries and toiletries," said Scott Shamberg, a managing director at Chicago-based TPN, a retail marketing agency.

Lessons Learned: Walmart said it learned how to interact with customers in soliciting feedback on new products and launched an invitation-only review program for the winter holidays to get input on a curated list of products. It's working on another iteration of product reviews.

3-D Printing

The Details: Last November, Walmart's U.K. operation, ASDA, began testing 3-D printing technology that allows shoppers to get 8-inch figurines themselves. The cost: 60 pounds, or $100. The service moved around from various stores, but in June, was officially launched at one in Manchester.

What Happened: ASDA spokesman Russell Craig said the test has been so popular that the retailer is considering rolling it out to other stores. "It's become the new family portrait," he said.

Some of Walmart's Sam's Club stores also are testing 3-D programs. Last month, at the newly opened Sam's Clubs in Montgomery, Illinois, and another outside Fort Worth, Tex., 3-D printers scanned shoppers' faces and then they had resin printouts of their heads placed on action figure-sized bodies of one of three Marvel characters.

Lessons Learned: Walmart says the tests are the beginning of customization. Walmart's CEO Doug McMillon told shareholders in June that he can imagine a day when the retailer can print small household items or replacement parts in a store or a distribution center.

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