Millennials Warm to a Once-Discredited Financial Product

April 7, 2015, 3:21 am

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Filed under: Debit Cards, Financial Education

By Tom Anderson

Millennials -- the generation weighed down with student loans that abhors taking on more debt -- are embracing a once-derided financial product: Prepaid debit cards.

A third of Americans 18-34 years old have used a reloadable prepaid debit card compared with only a quarter of Americans overall, according to an April survey by TD Bank. And 60 percent of millennials would consider using one compared with half of the overall population. "These cards are much more mainstream than many people think," said Tami Farrow, TD Bank's head of retail deposit payment products.

One reason: They've cleaned up their act. Prepaid debit cards used to be notorious for charging high fees, including several prepaid cards promoted by celebrities, such as Justin Bieber and Kim Kardashian. But criticism from consumer advocates-and cheaper offerings from American Express and Chase in recent years-put pressure on the bad actors to lower fees or leave the market, McBride said.

A 2014 Pew study found that fees on prepaid debit cards offered by large banks were "economical compared to the cards studied in 2012."

Still, Watch Out for Those Fees

TD Bank found that 21 percent of prepaid debit card users has more than $100,000 in income. Among prepaid debit card users, 46 percent said the cards let them budget and keep track of their spending better. That number rises to 60 percent among millennials. "One of the benefits that came through loud and clear in the survey is that millennials like the convenience, the simplicity and the predictability of the cards," Farrow said. TD Bank launched its own prepaid debit card in March.

Unlike with credit cards, users can receive prepaid debit cards without going through a credit check and will not be denied a card because of a bad credit score. "Prepaid debit cards are a great tool for consumers who want to minimize the risk of overspending," said Bill Hardekopf, CEO of LowCards.com, a website for credit card information.

More than half of prepaid debit cards have no monthly fee or will waive the monthly fee if a certain amount is loaded on the card, according to a new Bankrate.com survey. "It's easier to avoid fees altogether on prepaid debit cards," said Greg McBride, Bankrate's chief analyst.

Bankrate found that 48 percent of prepaid debit cards have an activation fee, which ranges from $1.88 to $9.95, depending on where the card is purchased. And 16 percent still charge for customer service calls (down from 27 percent in 2014). That's why Hardekopf offers this advice: "You should always closely review the terms and conditions of any card to find those hidden fees."

 

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Where's the Beef? McDonald's Rolls Out Bigger Burgers

April 7, 2015, 5:14 am

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Filed under: Company News, McDonald's, Food & Beverage, Restaurants

NEW YORK -- Bigger burgers will be back on the menu at McDonald's, at least for a while.

McDonald's (MCD) says it's introducing a trio of "Sirloin Third Pound" burgers for a limited time starting later this month, the latest sign the chain is pushing to improve perceptions about the quality of its food.

The sirloin burgers would have the biggest beef patties on the chain's menu and come after McDonald's dropped its Angus Third Pounders in 2013. At the time, some analysts said the Angus burgers were too pricey for McDonald's customers.

McDonald's says the sirloin burgers will cost around $4.99, although franchisees can determine their own prices.

McDonald's is pushing to turn around its U.S. business, which has seen sales and customer visits slip for two years in a row at established locations amid intensifying competition. Already this year, the company has made a number of announcements including a simplified grilled chicken recipe, curbing the use of antibiotics in chicken, and a pay bump and vacation time for workers at company-owned stores.

The chain has said it also plans to expand a program that lets customers build their own burgers by tapping a touchscreen.

In a column published in The Chicago Tribune last week, McDonald's CEO Steve Easterbrook said he's taking action to transform McDonald's into a "modern, progressive burger company."

McDonald's said the sirloin burgers will come in three varieties: Lettuce & Tomato, Bacon & Cheese and Steakhouse, which comes with grilled mushrooms and onions, white cheddar and peppercorn sauce.

 

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Get Organized With Dollar Store Finds -- Savings Experiment

April 7, 2015, 5:19 am

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Filed under: Savings Experiment, Shopping, Home & Garden

When it comes to spring cleaning, a lot of people think they need to spend more to get organized. However, the dollar store can be a one-stop-shop for all your organizational needs. Here are some great ways you can keep your home tidy for just a few bucks.

First, shoe organizers are good for more than just storing shoes. You can set one up in a crowded pantry to organize small packaged food, or use it in the bathroom to store and organize all your toiletries.

And speaking of bathrooms, did you know you could use low-cost shower curtain rings in other rooms of your house? Just loop a few of the rings on a clothes hanger and use it to hang everyday accessories like scarves, belts and even ties.

Another great multi-purpose item you can find at the dollar store is ice cube trays. One-dollar ice cube trays are great for organizing small office supplies, jewelry, and even screws and nails. Weekly pill dispensers also work well for this sort of thing.

Lastly, mesh laundry bags are not only super cheap, they can also be perfect for storing kids toys, especially the kind that might get damp and used outside a lot.

Staying organized doesn't mean spending big bucks. Give these dollar-store deals a try, and you can stay clutter-free without breaking the bank.

View Poll

 

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Gas Prices Seen 32% Lower This Summer Than a Year Ago

April 7, 2015, 5:44 am

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Filed under: Travel, Transportation, Gas Prices, Vacation Planning, Economy

By DAMIAN TROISE

NEW YORK -- Drivers will see the lowest summer gasoline prices in about 6 years, according to the Energy Department.

The national average price is forecast to fall 32 percent from a year ago to $2.45 a gallon between April and September, the period when Americans do most of their driving. That would mark the lowest seasonal average since 2009.

For the year, the department's Energy Information Administration expects gasoline to average $2.40 a gallon, down from $3.36 a year prior.

The lower prices are a result of world oil supplies growing faster than demand because of higher production in North America and elsewhere. That dynamic has been depressing the price of crude oil. But, the Energy Department warned that the forecast could substantially change if oil-related sanctions against Iran are lifted as part of ongoing negotiations. That country is believed to hold at least 30 million gallons of oil in storage.

The price of Brent crude, a benchmark used to price oil used by many U. S. refineries and the most important factor in gasoline prices, is forecast to fall 40 percent this year.

U.S. drivers are expected to consume slightly more gasoline, a 1.6 percent increase, during the summer. But gasoline expenditures by household are expected to be the lowest since 2004, according to the EIA, with people spending about $700 less on gasoline in 2015.

The average price of gasoline in the U.S. was $2.38 a gallon Tuesday, down 33 percent from last year, according to AAA and GasBuddy.com.

Here are some tips to get more mileage out of the gas you buy.

• Stay Cool: The air conditioner wastes gas, but so can keeping the windows down. In hot weather, the Energy Department recommends keeping windows open when driving at lower speeds and the air conditioner on low when driving faster.
• Price Check: Smartphone apps such as Waze, Gas Guru and GasBuddy can find the gas stations near you with the lowest prices.
• Don't Speed: Every 5 mph that you drive over 50 is equivalent to paying an additional 17 cents a gallon for gas, according to the Energy Department.
• Keep Your Tires Inflated: When tires don't have enough air, it forces the vehicle to use more energy to move. Tires that are properly inflated also last longer.
• Keep It Light: Don't leave heavy items you don't need in the trunk. Additional weight is a gas sucker, especially for smaller cars. And keep cargo or containers you don't need off the roof. Carrying stuff up there makes a car use more energy to overcome the air drag.
• Turn It Off: When you're parked and sitting in the car, turn the engine off.

 

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Students Entering College Get a 'D' In Financial Literacy

April 7, 2015, 6:09 am

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Filed under: Student Loans, College, Education, Financial Education

Reading, writing, and arithmetic are fine, but there's a life basic that many college lack: financial literacy, according to "Money Matters on Campus," a report from financial aid company Higher One and education technology company EverFi. That's a growing problem, as the trend of increased levels of loans taken to pay for college means that graduating students will face greater financial pressures without necessarily having the skills to manage them.

The survey of 42,000 first-year college students in four-year and two-year schools across the U.S. covered such topics as banking, savings, credit cards and school loans. It was the latest in an annual series that started in 2012.

Although respondents have increased experience with credit cards, bank accounts and student loans compared to previous years, such "responsible planning behaviors" as budgeting and reviewing accounts decreased. In addition, increased levels of loans were matched by fewer plans of how to pay them back. Students entering two-year colleges typically had more responsible financial behaviors than those going into four-year colleges. On the whole, the percentage of students reporting responsible behaviors declined from 2012 to 2014, whether paying bills on time, reviewing bills, paying off credit cards, following budgets to limit spending or balancing checkbooks.

Overall, students who had entered two-year colleges showed more responsible behavior than those in four-year schools. For example, only 25 percent of four-year students kept receipts, while 53 percent of two-year students did. Eighty-three percent of two-year students checked account balances, compared to 62 percent of four-year students. While 60 percent of two-year students used personal financial budgets, only 39 percent of four-year students did.

Relatively few students receive formal training in financial literacy. Only 34 percent of four-year students took a high school course in the subject. For two-year students, the amount was 24 percent.

To some degree or other, most students entering college -- and adulthood -- over the years have had a bit of a shock, as they had to be far more active in managing their affairs than before. But the cost of school is hitting many hard. Tuition, costs of books and supplies, getting enough financial aid and having sufficient money to last a semester are significant causes of stress for many.

Managing money will become only more important as the students move toward graduation. In 2012, 71 percent of graduating college students had loan debt, according to The Institute for College Access & Success.

"All college students are stressed financially, regardless of their experience or knowledge or behaviors," Mary Johnson, vice president of financial literacy and student aid policy at Higher One, told MarketWatch.com. "The one area that seemed to make it worse is the level of student loans."

For good reason, too. Sixty-three percent of four-year students and 44 percent of two-year students taking part in the study reported having school loans. A little more than half of the latter had less than $10,000 in loans, compared to 25 percent of four-year students. And 22 percent of four-year students had more than $40,000 in loans, while only 5 percent of two-year students did.

 

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FBI Warns of Thieving Phony Government Websites

April 7, 2015, 6:10 am

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Filed under: Personal Finance, U.S. Government, Consumer Protection, Ripoffs & Scams, Internet Fraud

The growing problem of phony government websites run by crooks outperforming real government websites in search engine results led the FBI on Tuesday to issue a warning to consumers to avoid being victimized.

The pretend government sites are set up to both collect "fraudulent fees" and personal information from victims that can be used for identity theft and a host of other crimes, according to the FBI's Internet Crime Complaint Center.

Victims end up on the phony sites when searching for such things as replacing a Social Security card or getting an Employer Identification number. On the site they are asked to fill out forms to obtain what they are looking for, the FBI said.

Information requested on these sites typically includes name, address, phone number, e-mail address, Social Security number, date of birth and mother's maiden name -- pretty much anything a crook would need to apply for credit in your name or even create a phony tax return.

It gets worse.

After turning over all that information, the victim is then asked to pay $29 to $199 for the purported government service. Pay them and the phony sites will then ask for more: a copy of a birth certificate, driver's license or other document that will pretty much allow the thieves to become you.

After paying and sending the information, victims are then told to wait (up to a few weeks) while their request is processed. During that time, the FBI said, additional charges can post to their credit or debit cards.

As a first line of defense, the FBI suggests taking note that federal government websites end with ".gov" rather than ".com."

Here are some further tips from the FBI:

• Use search engines or other websites to research the advertised services or person/company you plan to deal with.
• Search the Internet for any negative feedback or reviews on the government services company, their Web site, their e-mail addresses, telephone numbers, or other searchable identifiers.
• Research the company policies before completing a transaction.
• Be cautious when surfing the Internet or responding to advertisements and special offers.
• Be cautious when dealing with persons/companies from outside the country.
• Maintain records for all online transactions.

If you have been victimized by such a scam, you're asked to contact the FBI's Internet Crime Complaint Center at www.IC3.gov.

 

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Consumer Borrowing Climbs to Record High in February

April 7, 2015, 8:41 am

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Filed under: Student Loans, Personal Finance, Credit Cards, Economic Indicators, Auto Loans

By MARTIN CRUTSINGER

WASHINGTON -- Consumers increased their borrowing to a record high in February, driven by a large jump in auto and student loans.

The Federal Reserve reported Tuesday that consumer borrowing expanded $15.5 billion in February following a $10.8 billion gain in January. The February increase pushed borrowing to a fresh record of $3.34 trillion.

Borrowing in the category that covers auto loans and student loans increased by $19.2 billion, the biggest monthly gain since July 2011. That offset a $3.7 billion decline in the credit card category.

Economists expect credit card use to rebound in coming months, which would bolster consumer spending this year.

Consumer borrowing has risen 6.8 percent over the past year, fueled by an 8.3 percent rise in auto and student loans. The credit card category is up a more modest 3.4 percent. Credit card debt has grown much more slowly since the Great Recession, when millions of jobs were lost and laid-off workers struggled to find new employment.

But economists are hopeful that with healthy job growth and unemployment down to 5.5 percent, households will feel more confident about using their credit cards.

The Fed's monthly credit report does not cover mortgages or other loans backed by real estate such as home equity loans.

 

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Market Wrap: Stocks Slip, Dollar Gains Mute Deal Optimism

April 7, 2015, 9:56 am

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Filed under: Currency, Market News, Mergers & Acquisitions, Public Utilities, Telecommunications

By Caroline Valetkevitch

NEW YORK -- U.S. stocks ended slightly lower Tuesday, reversing course late in the session as strength in the dollar offset optimism about deal news.

The S&P utilities sector, which helped lead gains Monday, was the biggest drag on the S&P 500, closing down 1.1 percent.

The dollar recovered from recent losses, reaching session highs in afternoon trading. That shifted investor focus again to worries about its impact on U.S. earnings.

"If the [dollar] move is gradual it shouldn't impact stocks too much, as companies will have a chance to hedge against the impact, but a sharp rise will have an impact," said Tony Roth, chief investment officer at Wilmington Trust in Wilmington, Delaware.

Stocks were in positive territory for most of the session, lifted by deal news that suggested companies still see value in the market.

Shares of FedEx (FDX) rose 2.7 percent to $171.16 as it seeks to buy Dutch package delivery company TNT Express for $4.8 billion.

Two years ago, competition regulators blocked United Parcel Service's (UPS) bid for TNT because, unlike FedEx, that suitor already had a strong European network.

The Dow Jones industrial average (^DJI) fell 5.43 points, or 0.03 percent, to 17,875.42, the Standard & Poor's 500 index (^GSPC) lost 4.29 points, or 0.21 percent, to 2,076.33 and the Nasdaq composite (^IXIC) dropped 7.08 points, or 0.14 percent, to 4,910.23.

While a strong U.S. dollar is a sign of solid fundamentals, analysts are concerned that the currency will weigh on the earnings of U.S. multinational companies. Bank of America Merrill Lynch (BAC) cut its 2015 earnings estimates for the S&P 500 by $2 a share, citing the foreign exchange headwind.

Stocks Making Moves

General Motors (GM) shares fell 2.5 percent to $35.73 and the stock was among the day's most active after Canada agreed to sell nearly 73.4 million shares of the automaker to Goldman Sachs (GS).

Other decliners included shares of Viacom (VIA-B), which fell 1.9 percent to $67.28 after it halted its $20 billion repurchase program as it embarks on a restructuring that includes cutting jobs and reorganizing three of its domestic network groups.

Shares of Twitter (TWTR) jumped 4 percent to $52.87 and hit their highest in six months following a Barron's report that the company has hired advisers to fend off a takeover bid.

Informatica (INFA) jumped 4.3 percent to $47.79 after the enterprise software provider said it would be taken private by Permira Advisers and Canada Pension Plan Investment Board.

Declining issues outnumbered advancing ones on the NYSE by 1,699 to 1,352, for a 1.26-to-1 ratio on the downside; on the Nasdaq, 1,457 issues fell and 1,267 advanced for a 1.15-to-1 ratio favoring decliners.

The benchmark S&P 500 index was posting 9 new 52-week highs and no new lows; the Nasdaq composite was recording 68 new highs and 24 new lows.

About 5.7 billion shares changed hands on U.S. exchanges, compared with the 6.3 billion daily average for the month to date, according to data from BATS Global Markets.

-With additional reporting by Ryan Vlastelica.

What to watch Wednesday:

• The Federal Reserve releases minutes from its March interest-rate meeting.

 

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How to Discuss Aging Issues With Your Kids

April 7, 2015, 11:00 pm

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Filed under: Health Care, Family Money, Estate Planning, Retirement Living, Financial Education

By Maryalene LaPonsie

The Internet is full of advice for adult children who want to discuss aging issues with their parents. Articles present carefully worded ways to approach seniors about selling their house, putting down the car keys or signing up for long-term care.

While these are all important issues for children and their parents to discuss, waiting for children to bring up the conversation has the potential to leave some seniors feeling blindsided or, worse, manipulated into decisions they didn't want to make.

It's a situation Stewart Ingram, executive director of Sagewood, a senior living community in Phoenix, is all too familiar with. "I've seen a lot of moms and dads who haven't been involved in the decision and their children are fixated on finding [their parents] a place for their own peace of mind," he says.

Rather than letting children drive decisions on housing, health care and estate plans, seniors may find it more empowering to be the ones leading the discussion. Here are five tips to help older parents be proactive and start the conversation with their children.

Choose Carefully Which Child or Children to Approach

There is no one-size-fits-all approach to discussing aging issues, according to Keith Fenstad, a certified financial planner and director of financial planning with Tanglewood Wealth Management in Houston. "Every family dynamic is different," he says, "every one of these conversations will be different."

The first difference may be who is involved in the conversation. While some parents may find it makes sense to sit down with their entire family, others may find it easier to discuss issues with only one or two children. Doris Hall of Byron Center, Michigan, has five children and chose to talk to her two nearest daughters about her plans. "I really trust them," the 77-year-old says. "I know they will take care of me."

Select Conversation Topics Beforehand

Just as the conversation participants may differ from family to family, so too may the topics. In Hall's situation, she went over finances and health directives with her daughters. Ultimately, she named her children on her accounts and set up a Lady Bird deed that will allow them to easily take over her property and avoid the need to go through probate. However, this approach may not work for every senior. "I've found there are seniors who don't want to involve their children," Ingram says.

In those cases, seniors may want to approach the conversation more broadly. Fenstad suggests parents who aren't comfortable sharing financial details with their children at least create a file with their documents and share where it can be found. "It's a comfort to know mom and dad have put stuff together," Fenstad says. "You don't have to divulge information.

Be Prepared for Objections or Concerns

Having a conversation with adult children about aging can also open the door for them to express their concerns. Before sitting down with the kids, seniors should anticipate possible objections and solutions.

For example, if driving may be an issue, seniors may want to consider whether voluntarily giving up driving at night or on busy roads would be an acceptable compromise. Those who want to stay in their homes, but are having trouble with upkeep, may want to discuss options to hire help for maintenance or housekeeping.

Find a Neutral Time and Location for the Discussion

Emotions can sometimes run high during discussions of aging, and some seniors may find comfort in bringing in a third party. "Some clients use our offices to host family meetings," Fenstad says, adding that some families find it easier to write a letter rather than have a face-to-face conversation. Others may prefer to have conversations individually with their children instead of calling a family meeting. Hall took that approach by talking informally with each of her daughters.

It may be difficult to have a productive conversation with adult children who are stressed or grieving. So seniors may want to avoid having a discussion during high-emotion times, such as at the height of the holiday season or immediately after a death.

Have a Plan B If Your Children Aren't Up for the Challenge

Finally, realize not every adult child is mature and capable enough to process their parents' aging. "A lot of times children can be in denial about their parents' physical state," Ingram says.

Adult children could also be irresponsible with the information shared with them or combative about their parents' decisions. "If your gut feels that the information isn't going to be helpful," Fenstad says, withhold that information.

However, that doesn't mean seniors should go it alone as they age. Parents can turn to a trusted financial adviser for assistance in developing a plan to manage their finances as they age. Meanwhile, Ingram notes some senior living communities, like Sagewood, include health care services and can be a good option for seniors who don't want to have to worry about children helping to cover those costs.

While aging is not always an easy topic to discuss, Hall encourages other seniors to talk with their kids. "I got a lot of relief knowing that was all taken care of," she says of her conversations with her daughters. "That gives me peace of mind."

 

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How to Fight the Urge to Borrow Against Your Tax Refund

April 7, 2015, 11:00 pm

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Filed under: Taxes

By Steve Nicastro

Taking out a loan based on money you're expecting to get back from the government sounds harmless. But fees can make tax refund anticipation loans a much more expensive option than just waiting for your refund to arrive.

In 2006, a $200 refund anticipation loan would have've carried the equivalent of up to a 700 percent annual interest rate when fees were included, according to a report by the Washington-based Consumer Federation of America. Even after a regulatory crackdown, research from the National Consumer Law Center showed lenders slapping annual rates of as much as 149 percent onto these very short-term loans.

After banks stopped making such loans a few years ago, their numbers fell dramatically -- 100,000 of them were issued in 2013, down from a peak of 12.7 million in 2002, according to the Consumer Federation of America. But payday lenders and other nonbank companies, like tax preparation firms, still offer them, along with a newer type of loan known as a refund anticipation check. Over 21 million taxpayers sought one of these high-cost products in 2012 and 2013, paying $55 to more than $200 for the privilege, the consumer group says. And there's a risk involved.

"There is the possibility that the [borrower's] refund might not come through as expected," says Carrie Houchins-Witt, a certified financial planner in Coralville, Iowa. If you still owe taxes from previous years or the IRS rejects a credit or deduction, you might end up with the equivalent of a high-interest loan and no tax refund to pay it off. If you're hankering for your refund, there are better ways to get your hands on it quickly than taking out a high-cost loan:

1. File Early

Submitting your return earlier improves your shot at a quick refund. Plus, it's nice to put that task behind you and not have to scramble in mid-April or request an extension. Houchins-Witt's clients who filed online this year got refunds in an average of eight business days, she says, and those who requested paper checks waited just three weeks -- half the time the IRS estimates it will take.

2. Get Help

If you procrastinate or avoid filling out your tax forms, ask yourself if you need help. Tax preparation software can make completing returns much easier and is even available from the IRS. The agency also offers a free tax prep services, called Free File, for those with taxable incomes under $60,000.

There are free community services, too. The IRS-sponsored Volunteer Income Tax Assistance program, for instance, offers free tax preparation nationally from IRS-certified volunteers at locations like community centers and libraries. Find one near you on the IRS website.

3. File Online

Filing a return electronically means you'll receive a refund much sooner than you would by mailing paper forms. The IRS estimates it will take three weeks or less to issue a refund after it receives a digital return; having your refund directly deposited into a bank account cuts the time further. Processing a paper return, the agency says, takes about twice as long.

4. Use Direct Deposit

To speed up your refund by allowing direct deposit, you'll need to fill out three lines (lines 76 b-d) on the IRS 1040 form with your financial institution's routing number, account type (checking or savings) and account number. You can split a refund among as many as three accounts this way. Alternatively, you can receive a refund on a prepaid debit card. This option isn't ideal, since there are fees involved, but it probably won't cost as much as a refund loan or anticipation check.

5. Embrace the Wait

While you may be tempted to get your money more quickly with a refund loan, waiting several weeks for your refund pays off.

In any case, some tax-prep companies have a 21-day wait time to receive a refund anticipation check or credit -- about the same as the IRS says it takes to process an online return and issue a refund. But some big tax-prep firms charge almost $35 for a refund credit on a prepaid card for amounts from $350 to $1,000, and almost $60 for a check, on top of the preparation fee. So that could end up costing you from 3.5 percent to 17 percent of your refund.

Are a few days or weeks worth the cost? "I know times can be tough," says Kathleen Hicks, a former Fort Worth, Texas, City Council member. Hicks fought against payday lenders for seven years as a council member for a district where many unbanked residents lived paycheck to paycheck, and she strongly discourages the use of borrowing against an anticipated tax refund. "Stay the course, and think about the fact that many times people end up owing a lot more than they borrow," she says.

Still feeling impatient? You can track your refund with the IRS's Where's My Refund? program or with its smartphone app IRS2Go.

To avoid waiting for a big tax refund next year, adjust your W-4 tax-withholding form so your employer can deduct the right amount of income tax. Brian Devers, a certified public accountant with Lovelace, Norvelle & Mathews in Forest, Virginia, recommends this step, which can mean bringing home more of your earnings. "It will be like getting a pay raise," he says.

 

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Loyalty Card Members Hate These 5 Things

April 7, 2015, 11:00 pm

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Filed under: Retail, Personal Finance, Shopping, Consumer Issues, Stores

By Krystina Gustafson

The average shopper's keychain is bogged down with loyalty cards for their local supermarket, drug store or favorite apparel retailer.

But despite the fact that the average U.S. household belongs to more than 21 loyalty programs, few of these initiatives are providing consumers with more than just an easy way to find their keys.

According to a recent report by Capgemini consulting, shoppers actively use fewer than 50 percent of the rewards programs to which they belong. The statistics are even worse on social media, where nearly 90 percent of the conversation around loyalty programs was negative during the month of December, the firm said.

The difference between a successful loyalty program and one that falls flat can be huge for a retailer's top line. Mark Taylor, one of the authors of Capgemini's study, said a well-run program can increase a company's overall profitability by 20 percent.

What's more, it's cheaper to persuade existing shoppers to spend more in a retailer's store, with costs running five to seven times higher to acquire a new customer, he said.

"In the U.S., [companies] spend $50 billion annually on loyalty programs; they're just not hitting the mark," Taylor said.

Below are five ways rewards programs are falling short.

Rewards Can Be Hard to Redeem

It seems not a day goes by when retailers don't flood the zone of consumers' inboxes. So why is it that so few rewards programs allow shoppers to redeem their points on their smartphones?

According to Capgemini's study, although 79 percent of loyalty programs use mobile strategies to target shoppers, less than a quarter allow them to redeem rewards through the technology. This makes it difficult for consumers to easily bounce between the web and the store while shopping, and can cause retailers to miss out on a potential sale.

"If you care about your customers and you listen to what your customers are telling you ... then the program rewards can't be out of sync," Taylor said.

They're All About the Benjamins

Shoppers want to feel as if they're more than just another transaction.

But because loyalty programs haven't substantially evolved since their original inception in the 1980s, when American Airlines (AAL) began rewarding frequent travelers with miles, Forrester analyst Emily Collins said in a recent report that companies aren't tapping into the most important aspect of shoppers' loyalty: their emotional loyalty.

"Loyalty as we know it today, ruled by points and discounts, is insufficient," she said.

Jay Henderson, director of product strategy for IBM Commerce, said retailers should pursue different avenues of engaging shoppers, by rewarding them for activities including checking into a location on their mobile phone or writing a review. Only 16 percent of programs currently reward customers for writing reviews or taking online surveys, Capgemini's study found.

"Certain brands can get into a cycle where they're hyper-focused on 'What's the discount today,' " Henderson said. "They can lose sight of the bigger experience around their products and services."

They Need to Get Personal

This one may come as a surprise for anyone who's heard tales of a retailer keying into the fact that a shopper is pregnant before she's shared the news with her parents or significant other. But according to Capgemini's study, only 11 percent of loyalty programs push personalized offers based on a shopper's location or purchase history.

Instead, rewards are typically based on a shopper's "class," which lumps together customers whose only commonality is the amount of money they spend.

Along Those Lines ...

One of consumers' biggest gripes about retailers' communication is that they don't feel the information they're being sent is relevant. According to IBM (IBM), only 21 percent considered communications from the average retail, travel or hospitality brand applicable to them.

"Over 80 percent of brands say that they think they have a holistic view of the customer ... and then you ask consumers and consumers are like, 'Uh-uh,' " Henderson said.

Aligning their communications with shoppers' expectations is critical in acquiring their trust, and getting them to hand over their data, Henderson said.

"Consumers are very willing to share all sorts of information with brands," he said. The expectation that is then created, though, is that the brand is going to do something useful with that information, Henderson explained.

It's a Long Road Ahead

If retailers are going to offer benefits to their loyal shoppers, they'd better make them tangible. According to Capgemini's study, another pet peeve consumers have is that sometimes there is a lot required of them to qualify for rewards, and they feel as if the loyalty program isn't worth it.

One way to solve this is by making it easier for shoppers to accumulate points; for example, by letting them build up points by interacting with the brand across social media.

 

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Easy, Last-Minute Move Could Cut Your Taxes by Thousands

April 7, 2015, 11:00 pm

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Filed under: Taxes, Retirement Plans, IRA, Tax Deductions

If you haven't filed your 2014 tax return yet and are searching for ways to reduce your tax bill, I have good news. You have until April 15, 2015, to contribute to a traditional individual retirement account for the 2014 tax year. Depending on your circumstances, you may be able to reap a large deduction that could translate into thousands of dollars in tax savings.

For example, if you are in the 35 percent tax bracket, are under 50 years old and make the maximum $5,500 contribution for 2014, you can save as much as $1,925 in federal taxes. If you are over 50, you can make a $6,500 contribution, thereby saving even more. If you are in the 15 percent tax bracket, you could still save about $975. And that's just federal tax savings. In states with an income tax, retirement savers receive a bigger tax benefit.

If you are in a low tax bracket, you may prefer contributing to a Roth IRA over a traditional IRA. However, if you want to pay less in taxes right now, the traditional IRA is a great choice.

The ability to deduct contributions to a traditional IRA is limited by your income level. However, if you or your spouse is not covered by a retirement plan at work, in many cases your entire contribution will be tax-deductible.

Situations in Which You Might Qualify for a Full Tax Deduction

• Self-employed: My husband and I are deducting $12,000 from our 2014 income as we are both self-employed. That will reduce our state and federal tax bill a lot. He is over 50 so he can deduct $6,500, while I can deduct $5,500. I plan to establish a SEP IRA next year so I can contribute even more in future years.
• Unemployed but married to someone who earns income: If you or your spouse does not work but the other does, don't forget the Spousal IRA. You can deduct your full contribution to a spousal IRA in 2014 if you as a couple have an adjusted gross income of $181,000 or less.
• Employed but not eligible for your employer's retirement plan: Lots of companies make new employees wait before being allowed to contribute to a 401(k) plan, commonly six months. In this case your IRA contribution may be fully tax-deductible.

For more information, check out the IRS' easy-to-understand chart for which contributions are deductible if you are not covered by a retirement plan at work.

Quick, Easy Way to Get This Done Before the April 15 Deadline

If you don't already have an IRA for tax-deductible contributions, you can easily set up a traditional IRA with an online brokerage firm. I hold mine at TD Ameritrade. The account application takes only 10 to 15 minutes to complete, and there is no annual maintenance charge or non-activity fee. You can fund the account electronically from your checking or savings account.

No time to decide how to invest the money? Don't worry. Depending on the amount you deposit, you may get access to commission-free trades for a certain period after funding your account -- which is a nice bonus when you want to build a diversified portfolio of stocks and exchange-traded funds. This way you can get past the crunch time, do some research and come back a few weeks later to place the trades commission-free. For example, TD Ameritrade offers over 100 ETFs commission-free if you expect to add funds in the future.

Figuring out how to invest money can be overwhelming. One way to start is to complete a quick survey that measures your risk tolerance. This neat calculator helps translate your investment risk tolerance into a sample portfolio allocation. While I don't endorse or recommend the sample allocations the algorithm generates since every individual has unique needs and circumstances, this is a good starting point. Once you know the general buckets you want, you can search for stocks, bonds, low-fee ETFs or mutual funds to match them and allocate based on percentages that work for you.

The information contained herein is strictly for educational and illustrative purposes, providing commentary, analysis, opinions and recommendations, and should not be considered investment advice for any specific subscriber or portfolio or an offer to sell or a solicitation to buy any security. Please consult a qualified tax advisor with regard to your personal circumstances.

 

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Why Buffalo Wild Wings Is Fastest-Growing Restaurant Chain

April 7, 2015, 11:00 pm

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Filed under: Company News, Food & Beverage, Restaurants

By Ashley Lutz

Buffalo Wild Wings, the fastest-growing restaurant chain in the U.S., is thriving where casual-dining competitors like Red Lobster, Olive Garden and Applebee's have struggled.

While many chains focus on the food, Buffalo Wild Wings invests in the customer experience. Each location has numerous TVs, and customers can watch the event of their choice. Customers can play trivia games on tablets as servers entice them to sample sauces.

"Buffalo Wild Wings looked fun, and cost-conscious families saw it as a two-fer," Bloomberg analyst Jennifer Bartahus writes. "If you're going to spend $40 on your family, the lure of being able to entertain yourself at the same time is strong."

Guest Captains Take Charge of the TV Channels

Buffalo Wild Wings' success can be partly attributed to consumers moving to affordable subscription services like Netflix over traditional, costly cable packages, writes Bryan Gruley at Bloomberg. "The restaurants focused on sports as younger clientele came to watch cable and satellite channels they couldn't afford at home," Gruley writes. "Buffalo Wild Wings became an early adopter of flat screens and high-definition TV."

The company has hired "guest captains" who are responsible for changing TV channels. They were key to the brand's March Madness strategy, vice president of marketing Bob Ruhland told Business Insider. "This person isn't burdened with cleaning tables and delivering food," Ruhland said. "They make sure that TVs are on the right channel and are going to be really key during March Madness when people are following specific teams."

CEO Sally Smith told Bloomberg Business that the company would build as many as 600 locations in the U.S. While Netflix might be helping Buffalo Wild Wings' business, a Macy's executive blames Netflix for sluggish sales. Millennials have a tendency to spend money on electronics and online subscriptions rather than apparel, chief financial officer Karen Hoguet said at a conference covered by MarketWatch. "I think part of that is the customers are buying other things, whether the electronics, cable services, Netflix, whatever."

 

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Are You Paying Too Much for Satellite Radio?

April 7, 2015, 11:00 pm

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Filed under: Company News, Media, Industry News, Entertainment Industry

Sirius XM Radio (SIRI) kicked off the year with a record 27.3 million subscribers to its premium audio service, gaining 1.75 million more accounts through 2014.

It's easy to see why Sirius XM is so popular. Terrestrial AM and FM radio stations can be limiting in their offerings, and sitting through blocks of ads can be a tiresome trade for free content. However, with Sirius XM rolling out a pair of price hikes since 2012 -- and passing on a music royalty fee to members a few years earlier -- it naturally leads to considering the ultimate value for satellite radio.

It's a decision that is ultimately subjective, but one should probably note that Sirius XM didn't have to increase its rates when it did in 2012 and again in 2014. This isn't the same company that was on the brink of bankruptcy in early 2009. It has rattled off 16 consecutive quarters of profitability, and free cash flow keeps expanding with every passing year.

Sirius XM is certainly entitled to its success. No one is saying that a platform -- even one that's practically a monopoly when it comes to satellite radio -- should be hit with a high ceiling. Consumers have a choice, and they're willing to pay up for the service in record numbers. However, dig deeper into the numbers and explore the alternatives, and satellite radio may not be the best choice for you.

Dissed Content

Growing companies certainly have a right to boost their rates, but it always helps when they are returning the favor by investing more money in new content. Netflix (NFLX) is a perfect example. It's seen its content streaming obligations balloon from $5.7 billion to $9.5 billion in less than two years. That's money that Netflix has squared away in future content.

Sirius XM hasn't been as aggressive. In fact, in one regard it's gone the other way: Its content and programming costs have decreased over the years. It went from $370.5 million in 2009 to just $297.3 million last year. Revenue and subscriber counts have naturally moved higher in that time, so we're talking about content and programming going from 14.7 percent of its revenue five years ago to just 8.4 percent in 2014.

There are a couple of good reasons that Sirius XM can get away with paying less. For starters, unlike Netflix, where there's no limit to the breadth of its catalog, there are only so many channels that Sirius XM can offer without degrading the audio quality of broadcasts. There's also the allure of audience, as on-air talent is willing to take less money to reach Sirius XM's growing audience. Even the mighty Howard Stern is reportedly making less now per year than he was during his initial five-year contract.

Sirius XM's Business Structure

This doesn't mean that Sirius XM is ripping you off. In fact, the one thing it can't escape is the escalating royalties that it has to pay record labels, artists, and sports leagues. Sirius XM's revenue share and royalties surged from $486.9 million in 2009 -- or 19.3 percent of that year's revenue -- to $810 million, or 22.8 percent, now.

Sirius XM gets a chunk of that back through its subscriptions, where it charges a U.S. music royalty fee, which currently stands at 13.9 percent above the regular rate. The Copyright Royalty Board has an agreement where Sirius XM has to pay a slightly higher percentage of its revenue every year to keep playing music. However, if we add up both expense line items -- programming and content as well as revenue share and royalties -- we see that today's subscribers are getting less bang for their buck.

Clearly, Sirius XM represents a fair value to a growing audience or else its subscriber count would be going the wrong way. Despite the growing number of alternatives presented by the connected car -- anyone with a newer-model car and a Bluetooth-enabled smartphone can stream free or nearly free audio content apps through their car's speaker system -- there's still a sizable audience willing to pay for the seamless access to satellite radio. They appreciate the breadth of content and perhaps that it doesn't tax their smartphone data plans. Satellite radio is here to stay, but you'll have to work the math and size up the alternatives to determine if it's right for you.

Motley Fool contributor Rick Munarriz owns shares of Netflix. The Motley Fool recommends and owns shares of Netflix. Try any of our Foolish newsletter services free for 30 days. Check out our free report on one great stock to buy for 2015 and beyond.

 

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Tesla Boosts Range, Power, Price of Low-End Model S

April 8, 2015, 2:09 am

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Filed under: Company News, Technology, Automotive Industry

By TOM KRISHER

DETROIT --- Electric car maker Tesla Motors is going after mainstream luxury car buyers by adding all-wheel-drive and more range and power to the base version of its only model. But the added features at the low end of the Model S lineup will come with about a 7 percent price increase, to $75,000 for those buying the cars. The base lease price will rise to $838 per month from $796.

As of Wednesday, Tesla will stop selling the old base Model S called the 60. The $70,000 rear-drive car with a 380-horsepower motor could go 208 miles on a single charge and from zero to 60 mph in 5.9 seconds.

The new all-wheel-drive model, called the 70-D, can go a government-certified 240 miles per charge, has 514 horsepower and can go from zero to 60 in 5.2 seconds. Buyers also get free access to Tesla's network of quick-charging stations.

Competitive With BMW, Mercedes

CEO Elon Musk says with a $7,500 federal tax credit that takes the price to $67,500, plus tax credits in some states, the new version is price-competitive with BMW's midsize 5-Series, or the Mercedes E-Class when you add in savings from not buying gasoline. BMW's 5 Series starts around $50,000, while the E-Class starts at close to $52,000.

He said Tesla, which is based in Palo Alto, California, needed all-wheel-drive to appeal to luxury buyers, especially in colder climates such as the Northeast, where most luxury cars are sold. About 58 percent of the luxury car market in the U.S. is all-wheel-drive, according to Kelley Blue Book. "It's also good in warm climates where there's heavy rain or slippery roads for any reason," Musk said in an interview. "We've seen a strong interest in all-wheel-drive in all climates, really."

Tesla's next vehicle, the Model X SUV due out late this year, will be offered with similar features at the low end of the lineup, Musk said. Musk said he has no plans to spend more on marketing to match Mercedes and BMW even though he's going after more mass-market customers. The company will continue to host events for customers but "there are no plans yet to do advertising or endorsements or any discounting," Musk said.

Tesla Motors (TSLA) shares rose $3.78, or 1.9 percent, to $207.03 in morning trading. Its shares are down almost 4 percent over the past year.

 

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Shell Agrees to Buy BG Group in $69.7 Billion Takeover

April 8, 2015, 2:10 am

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Filed under: Energy, Company News, Mergers & Acquisitions, Oil & Gas Industry

By DANICA KIRKA and MIKE CORDER

LONDON -- Oil and gas company Shell has agreed to buy British rival BG Group for 47 billion pounds ($69.7 billion), in a deal that may signal a new wave of mega-mergers as the energy industry tries to adapt to lower prices.

Royal Dutch Shell (RDS-A) said Wednesday it will pay the equivalent of 13.67 pounds in cash and stock for each share of BG Group, 50 percent more than Tuesday's closing price. The deal will boost Shell's oil and gas reserves by 25 percent, including offshore projects in Australia and Brazil, and give it a bigger presence in the fast-growing liquefied natural gas market, Shell said.

Other energy giants may follow suit as they look to boost growth through acquisitions after increased production in the U.S. helped trigger a plunge in oil prices. The last wave of oil mergers took place in the 1990s after new production from the North Sea, Alaska and Mexico led to excess global capacity and companies linked up to protect themselves, or bought weaker rivals at lower prices.

Will this be the opening shot in a new wave of mega-mergers like the 1990s?

"Will this be the opening shot in a new wave of mega-mergers like the 1990s?" asked Christian Stadler, associate professor of strategic management at Warwick Business School in Britain. "Quite a few oil companies are under cost pressure with no sense of the oil price recovering. Companies had got used to $100 a barrel, and many need $40 to $60 to break even so we could see more of these deals."

The international price of crude oil has plunged from over $115 a barrel last summer to a low around $45 before recovering somewhat in recent weeks to trade at $58 a barrel Wednesday. Global natural gas prices have also dropped, because most of the natural gas traded internationally is linked to the price of oil.

Analysts at Wood Mackenzie say low prices have prompted most major oil companies to weigh acquisitions, though only a few have the size and resources to pull off a mega-merger. "If you're looking to the next big deal, Exxon Mobil stands out as most likely to pull the trigger," they wrote in a research note.

Exxon made the last giant oil and gas acquisition when it agreed to buy the U.S. shale driller XTO Energy for $31 billion in 2009.

The takeover of BG Group allows Shell to replace reserves at a time when exploration budgets are being cut and after its attempts to join the U.S. shale boom didn't amount to much, Stadler said.

Wood Mackenzie said BG's large position in the deep waters off of Brazil were likely the most attractive target for Shell. "It's all about the deepwater oil," analysts wrote.

The merger also combines the two largest investor-owned sellers of liquefied natural gas in the world. As new projects come on line in the coming years, the combined company will become the world's biggest seller of liquefied natural gas by 2018, Wood Mackenzie said.

Board Approval

The boards of both companies recommended that shareholders approve the deal, which they say will create a more competitive, stronger company amid the volatility in oil prices.

Shareholders seemed to think that Shell didn't get much of a discount for BG, however, despite the low oil and gas prices. Shares in Shell were down about 7 percent Wednesday while those in BG Group soared 32 percent.

BG shareholders will own about 19 percent of Shell after the deal is complete.

Combining the two companies will produce savings of about 2.5 billion pounds a year, Shell said.

"This an incredibly exciting moment for Shell," Chief Executive Officer-- Ben van Beurden told reporters. "It is bold and strategic moves that shape our industry."

BG's Norwegian CEO Helge Lund was conspicuously absent from Wednesday's press conference. Organizers said he remained at BG headquarters in Reading -- a two-hour drive from London -- to handle internal communication with the company's workforce. He will stay with BG only until the deal is completed.

He said in a statement that BG would benefit from the takeover.

"BG's deep water positions and strengths in exploration, liquefaction, and LNG shipping and marketing will combine well with Shell's scale, development expertise and financial strength," he said.

-Jon Fahey in New York contributed to this story.

 

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Can Phone Companies Do More to Block Robocalls?

April 8, 2015, 2:25 am

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Filed under: Consumer Ally, Telecommunications, Consumer Issues, Consumer Protection, Junk Mail and Telemarketing

By ANNE FLAHERTY

WASHINGTON -- Tired of those annoying, sometimes costly, robocalls favored by scammers? The Federal Communications Commission is being asked to consider whether more can be done to block the automated phone calls -- but the options appear to be limited.

The convergence of Internet and phone lines has made it easier to blast out hundreds of thousands of calls in a matter of minutes to see who takes the bait. The question of whether these calls can be blocked has never been more pressing than around tax season, when many pretend to come from the Internal Revenue Service.

The phone companies say they worry that automatic call-blocking might run afoul of laws requiring them to connect phone calls and have asked the FCC to clarify that it doesn't. Many carriers offer call-blocking services to consumers, sometimes for a fee. But they also don't want regulators to create any hard-and-fast rules, which they say could be difficult to implement.

Pressure From Consumer Groups

Consumer groups counter that the phone companies are dragging their feet for no good reason and that, once given the green light from the FCC, could block most robocalls if they wanted. "It is time for AT&T to provide free, effective solutions to this problem immediately, so that unwanted robocalls are stopped before they reach us," wrote Tim Marvin with Consumers Union in a recent letter to AT&T. The group, which has organized an online petition at EndRobocalls.com, sent similar letters to Verizon and Century Link.

AT&T says it's not as easy as it sounds. Robocallers can easily "spoof" their identity and location by pretending to be from a legitimate source or by altering the caller ID. So blocking robocalls is "a bit like a game of Whac-A-Mole: just as numbers are identified for blocking, the robocaller spoofs another number," the company said in an FCC filing.

150,000 Complaints a Month

The U.S. passed the widely popular "Do Not Call" legislation in 2003. Commercial telemarketers are not allowed to call you if you've put your number in the registry unless they have "an established business relationship" with you. But unsolicited phone calls remain a top consumer complaint. The Federal Trade Commission, which goes after businesses for deceptive business practices, say it receives on average of 150,000 complaints a month on robocalls and has filed more than 100 lawsuits against violators of the Do Not Call rules.

Still, regulators and phone companies say they remain stumped on how to fix the problem for good. "For every company we can shut down, there are probably 10 to 100 companies that can pop up in its place," said Patty Hsue, an FTC staff attorney who leads the agency's technical initiatives against robocalls.

A common example is "Rachel from Cardholder Services." The automated voice recording encourages listeners to press a number, which connects them with someone who promised to lower their interest rates in exchange for an upfront fee. The FTC was able to trace the calls back to multiple people inside the U.S. and demand refund checks, but copycat scams continue.

One Family's Concerns

Jeri Vargas says she put her mother on the "Do Not Call" list several years ago, but the 88-year-old woman diagnosed with Alzheimer's disease still gets several recorded phone calls a day pitching her on products. Aggressive telemarketing calls tipped Vargas off to her mother's failing health, she says. Yachting equipment arrived at the house one day, followed by magazines, books and light bulbs her mom didn't need. Vargas hid her mom's credit cards, only to find out later that a man claiming to sell fire extinguishers had her mom search through old statements to provide him a credit card number.

Vargas says she thinks that robocalls were an easy way of identifying her mother as a vulnerable target. Now the phone rings all day long, but Vargas is reluctant to get rid of the line in case of an emergency. "I don't mind if someone calls me because I can say, 'No thank you,'" said Vargas. "But it's hard for someone like my mom."

Technology to the Rescue?

The problem has gotten so bad nationwide that the FTC in 2012 began offering cash prizes for technical solutions. Among the winners is Nomorobo, which hangs up on robocallers for you. But it only was built to work on certain phone lines, namely Voice-over-Internet Protocol, or VoIP. Consumers groups say that the emergence of Nomorobo and other anti-robocalling technologies suggest the phone companies have the technical ability to spot obviously fraudulent calls.

Enter the National Association of Attorneys General. The group of state lawyers last fall, led by Missouri and Indiana, asked the FCC to clarify whether blocking robocalls might violate any telecommunications statutes. The major carriers say they agree that some legal guidance would be useful, but they also say they don't want to become beholden to any new regulation. USTelecom, an industry group, said in a statement that "complex technological and legal issues" remain.

The FCC confirmed this month that it is reviewing the NAAG petition, as it's required to do with any petition, but declined to comment further. There's no deadline for the agency to respond.

Five Things to Know About Robocalls

1. Sales robocalls are almost always a scam. Robocalls are never allowed on cellphones, unless you give them prior written consent or it's an emergency. Robocalls to your landline are only allowed from political campaigns, charities, debt collectors, survey takers and information services such as your pharmacy or school. So if you get a robocall selling a product or claiming that a product has been purchased for you, hang up immediately.
2. How the scam works. Scammers like to pretend they are conducting a survey or representing a charity before connecting you with a live operator who will try to sell you something. That's still illegal. Some also pretend to be from the IRS or Immigrations and Customs Enforcement, rambling off fake badge numbers and trying to scare people into thinking they will be audited or deported unless they pay a fee or divulge banking information.
3. Don't press "1." Pressing any number, even if it suggests that doing so will take you off their list, only confirms your number is working and that they have reached a live person. Engaging the call in any way will just lead to more calls.
4. Caller ID means nothing. It's called "spoofing," and it prevents you from knowing where the call is really coming from. You can ask your phone company to block a particular number. But by the time you do that, the same scammers will probably move on to a different number. Your own phone number can even appear on the caller ID, whereas the call might be coming from overseas.
5. Register your number on the "Do Not Call" list. But don't expect much. Scammers ignore the registry so it's unlikely to stop the problem. But at least then you'll know that every time you get a call, and it's not a political campaign, survey or charity, it's a scam. Under the rules, a company can only call you if you have an "established business relationship." Even in that case, it has to be a live sales call and not a robocall.

 

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The Apple Watch Reviews In, and There's a Consensus

April 8, 2015, 4:18 am

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Filed under: Company News, Apple, Mobile Technology, Products, Consumer Electronics

By Nicholas Carlson

Apple Watch reviews are out today. At first, many seem positive. But once you start getting into the details of what the reviewers say, it's clear: the reviews are brutal.

New York Times tech reviewer Farhad Manjoo sums up all the negativity with a dig disguised as a compliment. "The most exciting thing about the Apple Watch isn't the device itself, but the new tech vistas that may be opened by the first mainstream wearable computer. ... "For now, the dreams are hampered by the harsh realities of a new device. The Watch is not an iPhone on your wrist."

Re/Code's Lauren Goode says the Watch isn't very fashionable. "Apple Watch strives for high fashion, but it still looks like a techie watch. Even if you can easily swap out the basic, smooth plastic band for a more elegant one -- the $149 leather band, the $149 Milanese loop or the $449 link bracelet ---the face looks kind of like a miniature iPhone."

Yahoo's David Pogue says the Watch's software is hard to navigate. "Navigation is a big Watch weakness. There aren't any visual clues that more options are waiting if you force-press, or that anything will happen when you turn the knob. You eventually learn, but only by trial and error. And every time you force-press or turn the knob and nothing happens, you feel like a dolt."

The Wall Street Journal's Joanna Stern tells her friends to wait till next year to buy a Watch. "The body is bound to get thinner; the edges could stand to be less rounded. It isn't just the aesthetics, either. Soon, we won't have to charge the battery every night, the software won't ever get stuttery and those health sensors will get even more accurate. When was the last time Apple didn't improve first-gen hardware's performance while making it sleeker?"

The Verge's Nilay Patel says it is "the first smartwatch that might legitimately become a mainstream product." Then he notes it's too slow. "The Apple Watch, as I reviewed it for the past week and a half, is kind of slow. There's no getting around it, no way to talk about all of its interface ideas and obvious potential and hints of genius without noting that sometimes it stutters loading notifications."

BloombergBusiness's Joshua Topolsky says "the Apple Watch is the most advanced piece of wearable technology you can buy today." Yet: the Watch too often interrupts him. "I'm in a meeting with 14 people, in mid-sentence, when I feel a tap-tap-tap on my wrist. ... A version of this happens dozens of times throughout the day-for messages, e-mails, activity achievements, tweets, and so much more." Plus: it's not a very good watch. "The Apple Watch activates its screen only when it thinks you're looking at it. ... Think about the way people normally look at their watches, then make it twice as aggressive."

Musings From Manjoo

• It's not for "tech novices." " There's a good chance it will not work perfectly for most consumers right out of the box, because it is best after you fiddle with various software settings to personalize use. "
• Apps don't work very well. "The Uber app didn't load for me, the Twitter app is confusing and the app for Starwood hotels mysteriously deleted itself and then hung up on loading when I reinstalled it."
• You have to use Siri to use the Watch, and Siri still stinks. "I grew used to calling on Siri to set kitchen timers or reminders while I was cooking, or to look up the weather while I was driving. And I also grew used to her getting these requests wrong almost as often as she got them right."

Perspectives From Patel

• The Watch, unlike the iPhone, requires two hands to use. "You simply can't one-hand the Apple Watch ... because it's a tiny screen with a tiny control wheel strapped to your wrist, you have to use both hands to use it, and you have to actually look at it to make sure you're hitting the right parts of the screen.
• It's not as good as an iPod at playing music. "Remember when turning sixth-generation iPods into watches was a thing? That nano did a great job of displaying a lot of music information on a tiny screen, and the Apple Watch does not."
• It's not a very good communications device. "There's no doubt that being able to send quick replies from your wrist is a powerful idea; it's the stuff of science-fiction legend, and every smartwatch has to be able to do it. But the Apple Watch is just the first step towards making that reality. It's not anywhere close to being an actually powerful communications tool, especially not when it's competing with the phone in your pocket."
• It isn't a great fitness tracker. "Out of the box right now, the Apple Watch is a very expensive, barebones fitness tracker. It's much nicer than its competitors -- I used it with the white sport band and thought it was really quite striking -- but it's certainly not more full-featured."

 

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Dave & Buster's Balances Food, Fun and Finance

April 8, 2015, 5:50 am

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Filed under: Company News, Earnings, Entertainment Industry, Restaurants

One of last year's more impressive IPOs continues to live up to the hype. Dave & Buster's Entertainment (PLAY) -- the company behind the huge restaurants and bars complete with their own video game arcades -- served up another quarter of strong growth on Tuesday night.

Revenue climbed 21 percent since the prior year's holiday quarter to $207.1 million. Adjusted net income nearly doubled to $14.1 million or 33 cents a share. Analysts were only holding out for a profit of 31 cents a share on $201.3 million in revenue.

It's the second quarterly report that Dave & Buster's has put out since going public late last year, and it's thankfully the second time in a row that results have exceeded expectations.

Earning Its PLAY Ticker Symbol

Folks are flocking to the eateries that can be accurately described as Chuck E. Cheese for adults, as patrons play high-tech arcade and virtual reality games or take a chance at ticket redemption diversions between rounds of food and drinks. Half of the top-line growth at Dave & Buster's can be attributed to the chain's brisk expansion. It added eight locations over the past year, growing its empire to 72 units.

However, the other half of Dave & Buster's revenue growth is attributed to a 10.5 percent surge in comparable-restaurant sales. In other words, the average location rang up 10.5 percent more in sales than it did a year earlier. There aren't too many restaurants posting double-digit comps growth these days, and that's been even harder to come by in table-service eateries.

This is a very scalable model, particularly with the high-margin games. If the locations are busy -- and they were certainly very busy this past quarter -- a little uptick in revenue can translate into a much bigger move on the bottom line. Roughly half of the chain's revenue comes from the games, so there's big money to be made in playing.

Playing to Win

Shares of Dave & Buster's have nearly doubled since the company went public at $16 in October. It didn't start off as a memorable IPO. It opened at $17 on its first day of trading, and the stock closed in the teens during its first 16 days of trading. Its first well-received quarterly report pushed the stock into the low $20s two months later, and now another strong report finds Dave & Buster's earning its right to trade in the low $30s.

Dave & Buster's will continue to grow. It plans to open another seven to eight locations this year. Why not? They have become gold mines. Despite the ups and downs of restaurants in general and casual dining in particular, Dave & Buster's has come through with four consecutive years of positive comps. Its initial forecast for the new year calls for it to stretch that streak to five years.

Things can always go wrong for Dave & Buster's, but as long as the economy continues to show signs of life, it's a safe bet that grown-ups looking for something a little different from the traditional outing will find their way to Dave & Buster's.

Motley Fool contributor Rick Munarriz 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. Click here to check out The Motley Fool's free report on one great stock to buy for 2015 and beyond.

 

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Fed Minutes: Officials Split Widely on Rate-Hike Timing

April 8, 2015, 7:05 am

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Filed under: Inflation, Unemployment Rate, Federal Reserve, Interest Rates, Economy

By MARTIN CRUTSINGER

WASHINGTON -- Fed officials disagreed widely last month on when they might begin lifting interest rates from record lows.

Minutes of the March 17-18 meeting released Wednesday reveal that several policymakers predicted a rate hike in June, while others concerned about low inflation didn't think a rate hike would be warranted until later this year. Still others said the economy wouldn't be strong enough for an increase until 2016.

The Fed's benchmark interest rate has been near zero since December 2008.

In the statement the Fed issued after its meeting, it signaled it was moving closer to a rate increase by dropping language it had been using since December that it would be "patient" before starting to raise its benchmark rate.

The minutes stated that "almost all" the policymakers agreed on the wording change.

With the economy improving, "they preferred language that would provide the committee with the flexibility to subsequently adjust the target range for the federal funds rate on a meeting-by-meeting basis," the minutes said.

But the minutes, which were released after the customary wait of three weeks after the meeting, showed there was no consensus on the exact timing of the first rate hike.

"Several participants" assessed that an improving economy would likely warrant the start of rate hikes in June. But other officials expressed concerns that falling energy prices and a stronger dollar would keep pushing inflation below the Fed's optimal level of 2 percent. They said the central bank should hold off until later in the year.

"A couple" of Fed officials said they didn't believe economic conditions would justify the start of rate increases until 2016.

Federal Reserve Chair Janet Yellen told reporters at a news conference following the meeting that just because the Fed had dropped the word patient didn't mean the central bank would become "impatient" in deciding when to start raising rates. She also stressed that the Fed's first rate move would be dependent on how the economy, including the job market and inflation, perform in coming months.

In a speech two weeks ago in San Francisco, Yellen stressed that when rate hikes do begin, they are likely to be very gradual.

Many private economists now predict the Fed's first rate hike won't occur until the September meeting, and they expect just two small quarter-point increases this year.

Analysts point to a slew of disappointing economic data recently, including Friday's jobs report, which showed that employers added just 126,000 jobs in March. The data indicate that growth in the world's biggest economy decelerated in the first quarter.

 

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