Despite having more than three and a half months under its belt, Obamacare's state and federally run health exchanges have been wrought with glitches.

For some state-run exchanges it's been nothing more than server-related overflow issues, but for many, such as the federally run Healthcare.gov, or state-run exchanges like Hawaii, it's been due to poorly executed IT source code that made their websites practically unusable for weeks or months. Although the majority of errors on Healthcare.gov have been fixed, the stigma of those two glitch-filled months remains in the forefront.

Other opponents of the health-care reform law would point to its fluid deadlines as perhaps its greatest flaw. Since the summer we've witnessed the delay of the employer mandate -- the actionable component of the Patient Protection and Affordable Care Act that requires employers of 50 of more full-time employees to offer them health insurance and to subsidize that employees' health coverage if it crosses a certain percentage of income or face a penalty -- as well as a twice-delayed December coverage cutoff date in order to have insurance by Jan. 1. In other words, these opponents would claim that the structure of the law itself, and an inability of the U.S. government to stick to set deadline, is Obamacare's greatest flaw.

Source: Adam Thomas, Flickr.

This could be Obamacare's biggest flaw
Yet for all of Obamacare's delays and technical glitches, there is potentially a bigger flaw that I believe could dwarf both of these concerns. That gigantic flaw is none other than cybersecurity concerns surrounding Obamacare.

We often hear about the safety concerns of using a debit card and having a thief or hacker steal our credit card information or PIN, but we're talking about a completely different can of worms with Healthcare.gov. A potential security breach into Healthcare.gov could give hackers access to names, email address, physical addresses, Social Security numbers -- basically the whole enchilada.

The Centers for Medicare and Medicaid Services, which oversees the day-to-day operations of Healthcare.gov, notes that no such attacks have been noted by the agency since it went live on Oct. 1, but a recent report by Reuters this past week would suggest that the site is far from safe.

According to David Kennedy, CEO of computer security consulting business TrustedSec, there are more than 20 security vulnerabilities that have been uncovered in Healthcare.gov since it went live on Oct. 1 that have yet to be dealt with. Not only can hackers steal individual information according to these potential flaws, but they could upload malware that could infect users utilizing Healthcare.gov's website, creating a problems that could quickly cascade.

Source: Don Hankins, Flickr.

Can Obamacare's biggest flaw make you rich?
While the potential for a cybersecurity breach is a very real threat, the possibility that you as an investor could profit from the millions, perhaps billions, of dollars being thrown at protecting your vital information is also quite tangible.

One plain-as-day move that the Obama administration recently made was to dump the primary architect behind Healthcare.gov, CGI Group, and replace it with IT-consulting juggernaut Accenture when CGI's contract expires at the end of February. CGI's tenure as lead contractor has been miserable, with Healthcare.gov practically unusable during the majority of its first two months, Vermont's health exchange still struggling to get off the ground, and Hawaii's Connector bringing up the caboose in national enrollments. Accenture, on the other hand, steps into a role where baseline expectations are already low (thanks to CGI's multiple fumbles), giving it the time to potentially focus its efforts on improving security measures with Healthcare.gov.

Beyond Accenture, it's a bit tougher to see who might benefit directly, but a few names nonetheless stand out.

Take Science Applications International , perhaps better known by its shorthand, SAIC. SAIC is the cybersecurity brainchild behind a number of government agencies, including the Department of Homeland Security as well as various CMS programs. Because of the pressing need for cybersecurity -- because, let's face it, cybersecurity is no longer optional given how advanced hackers have become these days -- companies like SAIC can still land new government contracts even while government spending shrinks. There are few segments of government spending that are practically limitless, but SAIC is sitting in one of those sweet spots.

Along those same lines is Booz Allen Hamilton , which acts as a technology and cybersecurity consulting company to businesses and the U.S. government. Like SAIC, Booz Allen Hamilton is intricately involved in consulting the U.S. government and its military branches on how best to secure its IT infrastructure. As a known consultant to Healthcare.gov already, it would only make sense that the U.S. government could continue to funnel more money and contracts Booz Allen Hamilton's way to ensure the security of millions of Americans' personal information.

Two more dark-horse candidates that could see a dramatic boost in their cybersecurity business are Amazon.com and Palo Alto Networks .

Amazon.com's EC2 virtual data centers are a lot cheaper to operate and provide more storage space than most cloud-computing companies, making Amazon a potentially smart choice for Obamacare's massive data needs moving forward. Furthermore, Amazon's Web services already come with cybersecurity measures, and I certainly don't recall seeing any massive cyber-attacks successfully perpetrated against Amazon since 2008, long before the cloud was what it is today.

I believe Palo Alto Networks holds a unique advantage over stodgier security companies in that its security applications are based in the cloud and geared more toward a social media-type setting. Put plainly, Palo Alto's firewalls allow for the company to handle nearly all source-code updates from the business end, requiring little effort from the end user, yet it can still protect users against older IT-architecture cyber concerns.

It remains to be seen what, if anything, CMS plans to do about protecting the integrity of Healthcare.gov from hackers, but I would certainly recommend keeping an eye on these five companies as possible beneficiaries.

As of Jan. 1, marijuana could be legally purchased and possessed in the state of Colorado. This change in law, however, has failed to win over at least one group of businesses.

Because the substance remains illegal under federal law, banks such as Bank of America and Wells Fargo are refusing to provide them with financial products (loans, checking accounts, etc.) for fear of running afoul of federal money laundering rules. In the following video, Fool contributor John Maxfield, the author of a recent in-depth series on the industry, discusses what this means for the business going forward.

Image Source: www.flickr.com/jurvetson.

T. Boone Pickens made his name through acquisition wheeling and dealing across the American energy landscape. Today he is a major advocate of American energy policy through the "Pickens Plan" and one of the top investors in Clean Energy Fuels . He also happens to have his own hedge fund, BP Capital, that deals almost exclusively in oil and gas. Energy investors can learn a lot by knowing what BP Capital invests in. However, there is one major reason that you and I should never invest like BP Capital. Let's take a look at what we can learn from the Pickens portfolio and why you shouldn't follow his portfolio to the letter. 

3 investing ideas from BP Capital
BP Capital's investment strategy is rather eclectic. Investments vary from independent oil and gas companies with market caps slightly more than $300 million, to ExxonMobil, an energy giant nearly 1,400 times that size. There are a few themes, though, that could be insightful for some energy investors.

• Invest in the small, quiet companies: A number of oil and gas companies have garnered lots of media attention lately, but many of those that BP Capital owns fly under the radar. These are mostly small, independent oil and gas producers that focus on a single shale formation. One example is BP Capital's investment in Gastar Exploration . This small company has mostly focused on drilling in the Marcellus shale, and has grown production by 55% year over year. Gastar is looking to start developing some assets in the midcontinent region it bought from Chesapeake Energy back in June. Small companies like this can go unnoticed from time to time, and picking them up in their infancy can lead to large returns. 
• Refining is a good place to be right now: The refining industry can go through long periods of feast or and famine. Based on the boom in American oil production, though, it is very likely these companies are preparing for a feast. West Texas Intermediate, the domestic oil price benchmark, is trading at a $13 discount to international price benchmarks. This means domestic refiners are getting cheap feedstocks. For Valero and Phillips 66 -- two positions in BP Capital's portfolio -- this could lead to some fantastic returns as they both export large portions of their production to premium markets such as Latin America and Europe. 
• Sell picks and shovels, don't dig for gold: Nearly 19% of BP Capital's portfolio is invested in oil-services companies. Weatherford International and Halliburton were two of the three largest pickups over the past quarter, with total invested increasing by 44% and 61%, respectively. Some may question these moves since both Weatherford and Halliburton have seen EBITDA decreases of 7.7% and 10.2%, respectively, over the past year or so. However, both of these companies generate much of their revenue from the North American market, which has been extremely competitive over the past year as companies drill less for natural gas. This could change, though, as companies start to ramp up for LNG facilities coming online in 2015. 

Following these trends much like Pickens has done with BP Capital could lead to some strong returns over the next couple of years as the fast-paced boom in oil and gas production in the U.S. unfolds. 

What Pickens does that you shouldn't
Having hundreds of millions of dollars to throw around in a hedge fund provides certain luxuries that you and I simply don't have as individual investors. One of those advantages is that Pickens and his hedge fund can frequently trade in and out of stocks without incurring painful transaction fees. In the third quarter of last year, BP Capital made buys or sells on all but one of its 30 positions. The turnover on BP Capital's portfolio was so drastic that its largest position of the previous quarter, Apache, was completely sold off within 90 days. Also, disclosures to the SEC are just a snapshot of the company's positions at two points of time; there is no telling how much buying and selling happened between them.

Unless you have your own seat on the exchange, it would be extremely costly to trade in and out of positions so frequently. Sure, you may be able to catch the headwinds of a few overperforming energy stocks from time to time, but the fees you would incur going in and out of positions will more than likely eat a large chunk of those returns. 

What a Fool believes
Everyone out there has a different investing style, and normally that style will work for that person and that person alone. Looking at the portfolios of people like T. Boone Pickens can be a great way to get investment ideas in the energy space, but keep in mind that your time horizon for investing may be wildly different than that of BP Capital.

It's all change at Novartis . The head of its cancer business, Herve Hoppenot, has left the business to go to a new job. He will be replaced on an interim basis by Alessandro Riva, who was previously in charge of the oncology unit's development and medical affairs.

This is a significant development for Novartis and, more importantly, for its shareholders. Oncology is one of the company's biggest divisions and contributed the biggest-selling drug of 2012, with the leukemia treatment, Gleevac, generating $4.7 billion in sales. Meanwhile, total sales for the therapeutic area are roughly one-third of the company's total pharmaceutical sales of $32 billion.

Therefore, while the job is not as senior as a CEO position, its impact on the stock could prove to be significant.

However, since the news was released a week ago, shares have been firm and are up more than 4%. This is welcome news for shareholders and shows that the market appears willing to give the firm the time it needs to find a successor.

Furthermore, its progress in recent years in terms of top- and bottom-line growth appear to be keeping it on the right side of the market. While many of its competitors have struggled to deliver top-line growth, Novartis has been able to grow total sales from $41.5 billion in 2008 to $56.7 billion in 2012.

This equates to an annualized growth rate of more than 8%, which is well-ahead of the likes of AstraZeneca , Johnson & Johnson , GlaxoSmithKline and Bristol-Myers Squibb , all of which have struggled to grow their top line over the same period, with AstraZeneca experiencing a marked decline as it experiences a "patent cliff," in which many of its blockbuster drugs are going off-patent without adequate replacements.

In addition, GlaxoSmithKline continues to experience severe problems in China, while Johnson & Johnson and Bristol-Myers Squibb are going through a period of significant change, as they seek to simplify their business models and move away from slower-growing products and into faster-growing spaces.

In addition, Novartis seems to hold its own versus the aforementioned health-care sector peers in terms of earnings-per-share forecasts in 2014 and 2015.

Indeed, Novartis is forecast to increase EPS by 6% in 2014 and by 10% in 2015. This is highly impressive, especially when revenue is expected to increase by only 2.8% per annum over the same period.

The forecast EPS figures compare favorably versus other global health-care stocks, with only GlaxoSmithKline from the aforementioned group matching the anticipated EPS growth rate of Novartis in 2014 and 2015, although GlaxoSmithKline has been unable to keep up with Novartis over the past five years.

Meanwhile, Johnson & Johnson is set to post EPS growth of 7% in 2014 and in 2015, while Bristol-Myers Squibb is expected to deliver growth of 3% in 2014 and a reduction in EPS in 2015 of 6%. AstraZeneca, still on its road to recovery, is likely to post EPS declines of 9% in 2014 and 2% in 2015.

So while Novartis is undoubtedly experiencing a period of uncertainty while it seeks to replace the head of its important oncology business, it does seem to have time on its side and, more importantly, compares favorably versus other global health-care stocks.

Of course, the likes of Johnson & Johnson, GlaxoSmithKline, AstraZeneca, and Bristol-Myers Squibb remain relatively attractive for health-care investors. The uncertainty surrounding Novartis and its head of oncology appears to do little to prevent it from being added to that list.

The industrial giant General Electric wrapped up 2013 by reporting impressive earnings growth and a robust order backlog -- two promising signs for investors. In short, the turnaround that's been five years in the making continues to pick up steam.

Nevertheless, shareholders who felt shortchanged by management during the recession admit there's only one thing that can restore their faith: Raise the dividend; rinse and repeat.

For GE to re-establish itself as one of the bluest of blue chips, heady dividend growth must continue. Fortunately, GE's management team is well on its way.

A company led astray
As the saying goes, "Revenue is vanity, profit is sanity, and cash is reality." GE shareholders know this all too well.

For decades, General Electric accelerated revenue growth by investing in all stripes of businesses. At one point, management promised shareholders it could be the preeminent player in industries as disparate as light bulbs, movies, and natural gas turbines. If you're not seeing the commonality, well, that makes two of us. Whether executives were distracted or vain is irrelevant. GE was simply pursuing growth for the sake of growth.

At the same time, the century-old manufacturer went full throttle into banking in a race to boost the bottom line. As debt levels increased, so did returns on shareholder investment, to a point where GE's companywide return on equity surpassed 20%.

Those levels are atypical for a company of GE's size and ultimately proved unsustainable. As a result, so did GE's outsized dividend payment. When GE found itself entangled in the worst financial crisis since the 1930s, the company was forced to commit the ultimate sin and cut its dividend. On a per-share basis, GE's annual dividend payout shrank by half from 2008 to 2009, as shown in the following chart:

Considering GE's century-old dividend history, let's just say shareholders were none too pleased to watch their income stream fall off a cliff. Many investors jumped ship around 2008.

For those who stuck around, their message was clear: GE needed to return to its roots, and -- most importantly -- future success would be measured in terms of cash returned to shareholders. A consistent, growing dividend payout would be key for GE's share price to bounce back.

Back from the brink
In the five years since the fallout, GE's doubled down on its commitment to increase dividend payouts and share buybacks in a step-wise fashion. While the turnaround is far from complete, GE seems to have followed through on promises made.

Last year, CEO Jeff Immelt emphasized the importance of returning cash to shareholders: "We want investors to see GE as a safe, long-term investment. One with a great dividend that is delivering long-term growth." He elaborated on this mission in a section on capital allocation:

The top priority remains growing the dividend. Since 2000, we have paid out $106 billion in dividends, more than any company except [Royal Dutch Shell], and more than we paid out in the first 125 years of the Company combined. We like GE to have a high dividend yield, which is appealing to the majority of our investors.

The message is clear, but shouldn't the results speak for themselves? A look at the prior chart shows that GE is leaps and bounds ahead of where it stood in 2010. Since then, GE's shored up its balance sheet and reined in its financial arm, GE Capital. In only three years, GE's dividend has grown from $0.46 to $0.79 per share, a 72% increase. The company's approach is commendable as well.

GE's payout ratio, which represents the amount of earnings paid out to shareholders, stands at about 48% based on last year's earnings per share. Investors typically grow wary when a payout ratio creeps near 80%, a far cry from GE's current standing.

Furthermore, GE is tackling dividend growth from multiple angles. Management is focused on boosting organic revenue and expanding margins, thereby increasing earnings. At the same time, the company is buying back shares periodically to decrease the total outstanding to less than 10 billion. The following chart shows the multiple avenues by which GE is steadily redistributing cash to shareholders.

A Fool looks to the future
A half-decade into GE's turnaround, it's hard to be skeptical of the comany's progress. GE announced a dividend increase just last month to $0.22 per share, continuing a streak of six dividend increases since 2010. The preceding charts prove that GE's headed in the right direction in this regard.

Shareholders, by and large, won't be satisfied until GE to be a top-tier dividend stock once again, but that's to be expected. GE's become known for its ability to always shoot higher and push further. Even if the dividend returns to its peak in 2008, don't expect this company to rest on its laurels.

Find the next General Electric
General Electric is a prime example of a stock that made investors rich if they held for decade after decade. Letting your winners run is a strategy that we take seriously, in the spirit of great investors like Warren Buffett. That's why our CEO, legendary investor Tom Gardner, is so adamant about finding the greatest businesses for his ultra-long-term portfolio. He recently isolated his best ideas, and permitted us to reveal "The Motley Fool's 3 Stocks to Own Forever." These picks are free today, so click here now to uncover the three companies we love.

Chipmaker Xilinx's performance in 2013 wasn't outstanding, as its gain of 30% trailed the broader market and the Philadelphia Semiconductor Index. However, it makes sense to have a stock such as Xilinx considering its diversified business and solid dividend yield. In addition, the company is well-positioned to benefit from China Mobile's 4G roll-out, improvement in the industrial end-market, and an industry-leading position in the 28-nanometer manufacturing process, where it leads the likes of Altera .

China Mobile boost
The prospects in Xilinx's end-markets look quite promising, which is why the stock could turn in a decent performance once again in 2014. Xilinx is a key supplier to Huawei and ZTE, which are among the primary beneficiaries of China Mobile's LTE roll-out. China Mobile had selected nine vendors last year to deploy its network, and both Huawei and ZTE were among the winners. Going forward, Xilinx should see strong business from its Chinese customers as deployment of LTE gains pace.

According to ZDNet, China Mobile is projected to spend approximately $13.5 billion on its LTE network, covering more than 350 cities by the end of the year. The carrier plans to build more than 500,000 base stations by the end of 2014, and this should spur demand for Xilinx's programmable chips.

A commanding position
Nomura analyst Romit Shah believes that the programmable logic devices (PLD) market is expected to rise 10% this year to $4.7 billion. The 28-nanometer platform is expected to account for a fourth of PLD revenue, and Xilinx commands 70% of this platform.  

This 28-nanometer chip platform has been a key growth driver for Xilinx, as it drove the company's revenue from new products up by 22% in the last-reported quarter. In addition, Xilinx is able to command a higher margin through this platform, as evidenced by a 400-basis-point increase in gross margin last quarter. 

Now, Xilinx is looking to further improve its position by introducing a 20-nanometer chip platform. It shipped the industry's first 20-nm programmable chip in November, which addresses a wide range of applications such as data centers, defense systems, and wireless connectivity. Xilinx is seeing good demand for its new products and its innovation should keep momentum going in the future as well.

An improving industrial market
Xilinx closed 2013 on a weak note, as its outlook for the recently concluded third quarter wasn't up to expectations, primarily due to weakness in the industrial business. However, the industrial outlook for 2014 remains quite upbeat and could bring Xilinx back on track.

According to the Manufacturers Alliance for Productivity and Innovation, the U.S. industrial outlook for 2014 and 2015 is strong. Manufacturing production is expected to rise 3.1% this year, bettering last year's growth of 2.1%. On the other hand, traditional manufacturing is expected to improve 3%, compared with the 2% growth seen in 2013.

As industrial production picks up, Xilinx's programmable chips should, ideally, see more demand. Additionally, considering the strength that has already been seen in its communications business, it won't be surprising if Xilinx posts good growth this year.

A thing to watch for
Xilinx needs to be wary of Altera, which has reportedly taken market share away from Xilinx. Last year, Xilinx saw one of its customers, probably Ericsson, move to Xilinx. However, Xilinx still managed to post growth in its communications business, despite Ericsson's reported move away.

But then, Altera is aggressively developing its own class of 20-nm and 14-nm chips. Altera believes that it will be able to make a serious dent in Xilinx's market position in the future with its 14-nm chips, as it expects to capture nearly 50% of the industry's revenue within five years.

Xilinx has been executing well and its innovations are finding good traction already. In comparison, Altera is seeing weakness in its business and its market share lags behind Xilinx. Hence, it might be quite some time before Altera catches up to Xilinx, but by then, even Xilinx would have bolstered its R&D efforts further.

The bottom line
Xilinx had performed well last year and the same could continue in 2014 as well. There was a slight hiccup toward the end of 2013, but the prospects look robust going forward. With LTE deployment in China, an upswing in the industrial market, and strong automotive sales, Xilinx should be able to continue its steady and stable performance.

Divestment, it seems, is a hot topic in the global health-care sector. A number of major health-care players are shifting their business strategies in one way or another and are seeking to offload various parts of their businesses.

Although company-specific, reasons for doing so usually make sense: slow growth in certain divisions, a strategic shift away from one product line or type, and a change in focus for a company are all valid reasons for divestment.

So it's encouraging to see that Johnson & Johnson appears to be making continued progress with the divestment of what it deems to be its slower-growing products and businesses. Recent developments include news that it's close to offloading its blood-testing unit for just over $4 billion, with private equity outfit Carlyle Group being the mooted bidder.

If such a sale goes through (it is rumored to become a formal announcement as soon as this week), then it would be good news for Johnson & Johnson. Its revenue has stagnated somewhat over the past five years, with it being just 5.5% higher in 2012 than it was in 2008. Therefore, it clearly needs to change its strategy and focus on growing the top line, since costs haven't shown the same low growth over the past five years. This has led to a squeezing of profit, with earnings per share being 14.7% lower in 2012 than they were in 2008.

Nevertheless, Johnson & Johnson has shown impressive absolute share-price performance over the same period. Shares were around $57 at the end of 2008 and, having fallen to less than $50 in 2009, they have recovered to reach their current price of $95.

Of course, a comparison to the Dow over the five-year period highlights their relative underperformance, with the Dow delivering a capital gain of 91% and Johnson and Johnson adding just 66% over the same time period.

However, with a strategy to sell off lower-growth parts of the business (such as the blood-testing unit), Johnson & Johnson could be one to watch. Certainly, market forecasts seem to indicate that its low-growth days could be behind it, with the market expecting revenue to increase by just under 15% over the next three years -- around 4.7% per annum.

As I mentioned, Johnson & Johnson isn't the only global health-care company seeking to shift its strategy. GlaxoSmithKline is doing something similar with its consumer brands, with soft drinks Ribena and Lucozade being sold and the company using the proceeds to invest in research and development facilities, as well as refocusing on its drug pipeline. Although its pipeline is strong, the refocusing of internal capital could prove to be positive for the stock, since it may lead to higher growth rates for the top and bottom lines.

Similarly, Bristol-Myers Squibb recently announced that it's stepping back from its diabetes alliance with AstraZeneca . Although diabetes drug development is a fast-growing space, the capital generated from the sale of its stake allows it to simplify its operating model and reallocate the capital to areas that it thinks could deliver increased long-term value for shareholders.

So divestment seems to be the name of the game, not only for Johnson & Johnson but also for GlaxoSmithKline and Bristol-Myers Squibb. As they continue to reallocate capital over the medium to long term, top-line disappointments over the past five years could prove to be a thing of the past.

Get a glimpse of what's on the tech horizon with Foolish reports from the field at the 2014 International Consumer Electronics Show. Companies ranging from start-ups to Fortune 100 firms launch and showcase thousands of products at the event, which attracts visitors from around the world.

The high-definition video processor behind the hugely popular GoPro, Ambarella  also has a less glamorous day job powering security cameras. With prices coming down, more and more users can say goodbye to grainy, unattractive security footage.

It's technology like this that's led David Gardner to impossible gains like 926%, 2,239%, and 4,371% and he's ready to do it again. You can uncover his scientific approach to crushing the market today by simply clicking here now. Access is limited, so act fast!

A full transcript follows the video.

Evan Niu: Hey, Fools. Evan Niu here. I'm joined by Eric Bleeker and we're at CES 2014, taking a look at all the booths. One of the big stories this year has been Ambarella. Ambarella ... we were just at the GoPro Hero booth, a lot of people, but another area that Ambarella is seeing some opportunities is in high-def security cameras. We have a booth right behind us; they do use Ambarella in these security cameras. What else are we seeing, Eric?

Eric Bleeker: Definitely. It's interesting to be at security cameras after the excitement of GoPro -- it feels like a dance club over there. It's exciting -- security cameras, a little more boring, but it shouldn't be boring out there for investors because, like you said, we talked with the booth owner, the guy who is running this, and he says his products use Ambarella, he is very happy with them.

You can see the extension here; it's very natural, because through using low-definition footage -- often to save on the space that you're storing your security footage -- it's quite unuseful. You're not able to even identify what's being shot, so it's a natural progression to go toward high-definition video, and we see the prices being brought down to a level that that's affordable.

For Ambarella investors out there, they do have that concentration in GoPro, in part because GoPro is doing so well, but it looks like they also have some traction within this space. This can be an unsexy space, but as an investor, you know what? Unsexy gets paid.

We saw Ambarella off about 13% one of the days at CES because of a downgrade, because of concerns over valuation. One way to push valuation back up? Diversify revenue, find new revenue streams, so very encouraging to see Ambarella inside some security products here.

Evan: There you have it, Fools. For all the latest on Ambarella and CES, makes sure to check back at Fool.com Fool on! 

IBM will release its quarterly report on Tuesday, and the stock has been the most disappointing member of the Dow Jones Industrials over the past year, having been the sole Dow component to lose ground in 2013. Yet despite every indication that IBM's revenue weakness will continue, IBM earnings continue to grow, and Big Blue hopes to keep its momentum going against Hewlett-Packard , Oracle , and its other rivals in the tech industry.

IBM made a smart move when it started years ago in diversifying its business beyond its initial hardware focus, helping it avoid the fate that has really hurt Hewlett-Packard by incorporating higher-margin services and consulting work into its business mix. But with a new CEO on board, 2013 was a difficult transitional year for IBM, and weakness in overall information-technology spending among enterprise customers has made competition between IBM, Oracle, HP, and other industry players that much fiercer. Can IBM turn 2014 into a banner year? Let's take an early look at what's been happening with IBM over the past quarter and what we're likely to see in its report.

Source: IBM.

Stats on IBM

Source: Yahoo! Finance.

Will IBM earnings keep climbing despite falling revenue?
In recent months, analysts have cut their views on IBM earnings somewhat. They've reduced their fourth-quarter estimates by $0.03 per share and cut their full-year 2014 projections by three times that amount. The stock has finally found a little traction, rising 3% since mid-October.

IBM's third-quarter report explains a lot about why the computer giant has struggled so much lately. Even though the company's earnings managed to top expectations, revenue was about $1 billion below what investors had expected to see. One of the biggest problems came from the systems and technology segment, which suffered a 17% drop in sales from the year-ago quarter. That comes largely because of greater enterprise use of cloud computing, with virtual solutions making it less necessary for customers to build their own infrastructure and buy their own servers. Some believe that IBM is too focused on earnings per share, with gimmicks like tax-rate reductions and massive stock buybacks sending EPS higher while masking weakness in other metrics.

But IBM is fighting back against Oracle, Amazon.com , and other major cloud players. The company said last week that it would spend $1.2 billion on building new data centers around the world, adding 15 centers to its existing network of 25 data centers as part of an ongoing initiative to cover the entire world in the next couple of years. In addition, IBM invested $1 billion toward a division centered on its Watson system, hoping that it can help IBM compete against Oracle and HP in the big-data and business-analytics areas, which have become increasingly important to enterprise customers seeking to draw profitable conclusions from the data they collect. With expectations of turning Watson into a $10 billion business, IBM hopes to differentiate itself against Oracle in order to justify high-margin sales of related services and products.

Nevertheless, competition is getting tough. Hewlett-Packard managed to grow its market share in the server industry over IBM, even though HP likely cut its prices in order to spur switching. Moreover, Amazon has seen a lot of success from its commodity-based cloud-services division, forcing IBM to focus on higher-margin premium services that require more of a long-term commitment from customers.

In the IBM earnings report, look beyond earnings per share to look at where net income and revenue actually come from. If IBM expects to succeed not just in hitting its $20 per share earnings target in 2015 but also produce lasting growth potential, it needs to succeed in its more innovative initiatives at building up higher-margin businesses.

Click here to add IBM to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Couldn't make it to the 2014 International Consumer Electronics Show? Never fear: The Fool was there to check out the tech and report back on who was there and what was new. With thousands of products in more than 15 categories, the next big thing was surely making its debut at the CES in Las Vegas.

It's going to take a few years, but many automakers are talking about building wireless connectivity into their vehicles. This could spell trouble for Sirius XM , as 4G-enabled vehicles can provide a whole host of services -- including Internet radio.

It's technology like this that's led David Gardner to impossible gains like 926%, 2,239%, and 4,371% and he's ready to do it again. You can uncover his scientific approach to crushing the market today by simply clicking here now. Access is limited, so act fast!

A full transcript follows the video.

Eric Bleeker: Hey, Fools. I'm Eric Bleeker, joined here by Austin Smith. We are in the car section of CES. It is absolutely enormous; so much is happening on this front. One area that I've seen a kind of sea change in this year is car companies actually building in wireless connectivity, whether 3G or 4G.

In the past we haven't seen this as much, and you have to wonder how this could affect the coming Sirius XM, if you've got the data built in to stream something like Pandora . What are your thoughts on this?

Austin Smith: Yeah, I look at this and I actually think this could be a major blow to Sirius XM. Of course, not instantly, because there's a refresh cycle and a build cycle that's going to be involved in this, but maybe in four to five years you could really start to see the Sirius XM business model under pressure.

What they do is they come preinstalled in vehicles. They give you a trial, and then they try and upsell you to a subscription. But when the car companies are faced with a decision to install Sirius XM or install 4G connectivity, which obviously has much greater options and value add for a customer, they're going to go with the latter, because with that 4G connectivity you can not only get a product like Pandora radio. You can also get better mapping service; it can become an entire technology suite, as opposed to just getting that satellite radio.

I think this is something that Sirius XM's shareholders need to very seriously think about. There is an auto refresh cycle here; it's going to take a while for these 4G-connected vehicles to get out into the wild, but we're seeing Audi, we're seeing General Motors  -- we're seeing basically all of the companies here -- talk about 4G connectivity in some major way, and I think you have to be very aware of this as a Sirius XM shareholder.

The car companies are going to have to start deciding. It's not going to be both are coming installed with the vehicle. They're going to start making a cut one way or the other, and I think 4G connectivity is a much more compelling offer -- and that's actually kind of a benefit for companies like AT&T, which are really getting involved in this 4G install push into vehicles, and then they can pick up an entirely new subscription from these vehicles, much the same way Sirius has, but on data as opposed to just satellite radio.

Eric: Yeah, and even if consumers aren't really adopting the car-based stuff ... I know Sirius XM investors have seen this threat for years, but one of the other areas we're seeing -- such as Google's new Automotive Alliance, Apple  pushing further into cars -- is that you can also tether with a smartphone.

The pace at which the car industry has really embraced technology is a sea change from previous years, and I think people extrapolating that this didn't happen in 2009 or 2010 need to realize the pace is quickening right now.

Anyway, that's it for our take on Sirius XM, Pandora, and everything cars. For all your CES news, check back to Fool.com. Fool on!

Two years ago, 3D Systems launched its first consumer-focused 3-D printer at the Consumer Electronics Show. That was the moment the 3-D printing industry began to move toward widespread adoption. This year, a $499 3-D printer made by Taiwan's XYZPrinting debuted at CES. Billed as a true plug-and-play system, XYZ's da Vinci printer boasts superior print fidelity (at its slowest print speed) to the Cube for a fraction of the price.

The $1,300 Cube, which accounted for 10% of 3D Systems' third-quarter revenue, competes directly with the MakerBot, a recent Stratasys acquisition that reported similar revenue figures to the Cube shortly before its buyout. The cheapest MakerBot, a "mini" model yet to launch, costs slightly more than the entry level Cube. (Other Cube models compete with the typical $2,000-plus MakerBot.) Both of these machines, which are collectively touted as the next big thing in 3-D printing, now look like costlier, less-capable versions of an unknown device produced by an Asian upstart.

Doesn't this remind you of the PC price wars all over again?

Hardware on the firing line
A year ago, I pointed out enthusiasm for 3-D printing technology and stocks had already far outpaced what was then possible. I also noted that 3-D printing, which relies on both hardware and software improvements to drive wider adoption, resembles nothing so much as the progression from large, commercial-scale mainframe computers to inexpensive desktop PCs. Investing in hardware-focused enterprises right as the industry shifts from one model to the next could be a recipe for long-term losses. Thus far, I've been wrong on that count, as both 3D Systems and Stratasys have soared in the past year:

DDD Total Return Price data by YCharts

But much of the excitement shown on public markets toward 3-D printing hasn't been directed toward consumer 3-D printing, but more commercial 3-D printing companies: million-dollar printer builder ExOne has doubled since its IPO last spring, and large-scale 3-D printer maker voxeljet clings to a 40% gain since its October IPO, after a one-month double was undone by weak guidance. Aside from the Cube and MakerBot, which are both smallish consumer subsets of the two largest commercially focused 3-D printing companies on the market, most consumer 3-D printers are typically more hobby kits than complete plug-and-play systems.

The da Vinci, which is made by a subsidiary of the multibillion-dollar Kinpo Group conglomerate, is probably only one early salvo in what's certain to be a barrage of lower-cost and higher-capability consumer 3-D printers. While these models will never have the sheer size of the large commercial models (ExOne's largest model tops out at 155 times the total "build volume," or 3-D printable area, as the da Vinci) the progression toward cheaper models does point toward the inevitability of a 3-D printer price war. Another factor in this inevitability is the simple fact that some very important 3-D printing patents expire this year, opening up a new avenue of low-cost competition.

Source: Nicolas Bollusa via Flickr

The da Vinci, Cube, and MakerBot all use fused deposition modeling technology, which went off-patent several years ago. In fact, the MakerBot's rise would not have been possible if FDM had remained patented. This year's patent expirations involve laser sintering, which is a more advanced and accurate form of 3-D production. Some laser sintering patents cover (or will have covered) a high-end desktop machine called the Form 1, which I covered more than a year ago and which uses stereolithography, a different form of laser-based printing. This higher-capability printer is nearly an order of magnitude more expensive than the da Vinci. In a few years' time, the lack of patent protection should bring costs on laser-based 3-D printing down to the price of a new iPad, if not lower.

If 3-D printing becomes common in the home, it won't be because of today's large companies pushing proprietary models -- it'll be the result of a commodification process similar to what happened during the rise of the PC. American manufacturers found themselves pressured on price by a growing group of hungry foreign competitors, and eventually the PC became a commodity with razor-thin margins in which American manufacturers couldn't really compete. The real profit in the PC industry was eventually found in software, and it's quite likely that software and services will become the profit engines of 3-D printing as well. It won't matter whether that software runs on commercial-scale machines in on-demand manufacturing centers or on millions of small desktop printers -- once commodification kicks in, it'll push the profits out of hardware, as it has many times in the past.

United Technologies will release its quarterly report on Wednesday, and the stock has soared to all-time record highs on the strength of its aviation and defense-centered business. Yet even if United Technologies earnings continue to grow, the question the conglomerate faces is whether it can outperform peers Boeing and Lockheed Martin in making the most of opportunities in the military and commercial side of its core business.

United Technologies has a wide array of businesses, making everything from Otis elevators to commercial heating, ventilating, air conditioning, and refrigeration systems. But especially after its acquisition of Goodrich, United Technologies has relied increasingly on its aerospace prowess, with its Pratt & Whitney division helping to supply engines and its Sikorsky segment manufacturing helicopters and related parts. With the boom in aerospace, can United Technologies keep up the pace against Boeing, Lockheed Martin, and other companies serving both the civilian and military areas? Let's take an early look at what's been happening with United Technologies over the past quarter and what we're likely to see in its report.

Photo credit: Bin Im Garten.

Stats on United Technologies

Source: Yahoo! Finance.

What's next for United Technologies earnings?
In recent months, analysts have gotten less excited about their views on United Technologies earnings, cutting their fourth-quarter estimates by a penny per share and their full-year 2014 projections by just over 1%. The stock, though, has performed well, climbing more than 8% since mid-October.

United Tech's third-quarter earnings report was just the latest sign of the success that the company has had lately. Earnings rose 13% from the year-ago quarter, and United Tech raised the lower end of its earnings guidance range by a dime per share despite seeing weak revenue from poor economic conditions in Europe and falling demand from military customers. Given the ongoing pullback in military spending, the results validated CEO Louis Chenevert's overall strategy toward taking more advantage of commercial aerospace opportunities rather than relying on defense-oriented business. That should give United Tech a key advantage over Lockheed Martin, from which investors expect falling revenue because of its greater emphasis on its defense business.

Aerospace continues to be the highest growth driver for United Tech, but it's important not to underestimate the value of the Otis and Carrier brands in giving the company needed diversification. Otis hasn't grown at anything close to the rate of other divisions, but its operating margins are the highest of any segment in the company. Meanwhile, the climate, controls, and security segment saw a 10% jump in profits during the third quarter on general strength in business spending on increasingly important tools to make operations more efficient. Those businesses will be essential if United Tech wants to outperform aerospace giant Boeing.

In many ways, though, United Tech needs Boeing to succeed to guarantee its own positive performance. For instance, United Technologies makes key systems for Boeing's 787 Dreamliner aircraft, which has been plagued with problems throughout the past year. Although General Electric makes the majority of engines for the aircraft, United Tech supplies most of the parts that Rolls-Royce uses for its share of Dreamliner engine production, and so it needs Boeing to resolve any lingering problems with the model in order to make sure that it reaps its share of profits from aircraft sales going forward. Similarly, United Tech is a subcontractor on a massive Boeing defense tanker contract, showing the interrelation among various players in the defense industry.

In the United Technologies earnings report, watch closely to see the breakdown of growth among the company's various business segments. Ideally, investors will want to see solid growth in all of United Tech's businesses, to guarantee that any future weakness in any one area won't lead to major disruptions to the company as a whole.

Click here to add United Technologies to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

If you're following the 3-D printing stocks, you likely know the group had a rough-and-tumble time in the market last week. The dual catalysts for the group's drops, which both came on Tuesday, Jan. 14, were Stratasys' announcement during the trading day that it anticipated 2014 earnings to fall short of analysts' estimates, followed by ExOne's issuing of a statement after the market close that its 2013 revenue would be less than expected. 

As is typical within a sector or industry, shares of fellow 3-D printing companies 3D Systems and voxeljet fell in sympathy, though 3D Systems nicely recovered. Arcam shares held quite steady.

When the market closed out the trading week, Stratasys, ExOne, and voxeljet were decided losers, down 7%, 13%, and 6%, respectively; 3D Systems matched the overall market's performance of -1%; while Arcam closed up nearly 4%.

Data by YCharts

Why the market over-reacted to the news 
Let's get to the specifics of the news announced by Stratasys and ExOne.

Stratasys expects its 2014 adjusted earnings per share to be in the $2.15-$2.25 range, below analysts' estimates of $2.31. The company cited a significant increase in its operating expenses as the reason.

The market overly punished Stratasys for this news, in my opinion. It would be one thing if an anticipated drop in revenue was cited as the reason, as that would likely signal a decreasing demand for the company's 3-D printers. But Stratasys' revenue guidance of $660 million to $680 million is actually above analysts' estimates of $658.5 million.

Stratasys' operating income is expected to increase for good reasons, as the company plans to ramp up its marketing and research and development efforts. If Stratasys wants to stay a leader in the fast-evolving and competitive 3-D printing market, it has no choice but to increase its short-term expenses in an effort to fuel long-term staying power and growth.

Stratasys needs to ratchet up its game, as its primary competitor, 3D Systems, has been going gangbusters in the past year with some key acquisitions and partnerships. 3D Systems' buyout of Phenix Systems last summer has given it metals printing capabilities. Its diverse partnerships include teaming with Google for Project Ara to create a large-scale 3-D printing manufacturing platform capable of producing customizable open-source modular smartphones, and its just-announced partnering with Hershey to produce 3-D printed edibles and a new class of 3-D printers for edibles.

ExOne lowered its 2013 revenue expectation to a range of $40 million to $42 million, below its prior guidance of $48 million. The company cited delayed approvals for foreign sales in Russia, France, India, and Mexico as the reason.

The market overreacted in this case, too, in my opinion. ExOne didn't lose any orders here, as this is simply a matter of revenue shifting from one quarter to a later date. In this case, ExOne said these orders will be booked in the first half of 2014. ExOne sells pricey machines costing $500,000 and up, so quarterly revenue should be expected to be "lumpy," especially until the company grows considerably larger. 

How the 3-D printing companies currently stack up by valuation
Here's how the pure-play 3-D printing stocks stack up by common valuation measures and a couple of other key metrics, as of Jan. 17:

Sources: Yahoo! Finance; voxeljet's third-quarter earnings report.
*For nine-month period through Sept. 30.

Those who are currently invested in Stratasys or have been considering buying Stratasys' stock might consider the stock's pullback last week as a buying opportunity. Its valuation, relative to its peers, is compelling for those who believe in the company's long-term growth potential. 

The sector's bigger picture
While 6% (voxeljet), 7% (Stratasys), and 13% (ExOne) weekly drops are fairly sizable, the one-year returns put last week's turbulent week in perspective. (ExOne has only been public since February; voxeljet has only been public since October and is up 40.2% from its IPO day closing price.)

Data by YCharts

Foolish final thoughts
Long-term investors shouldn't get too caught up in short-term movements in stock prices, unless those short-term movements have been caused by events that have materially affected their original investing theses. 

This segment is from Thursday's edition of 'Digging for Value', in which sector analysts Joel South and Taylor Muckerman discuss energy & materials news with host Alison Southwick. The twice-weekly show can be viewed on Tuesdays & Thursdays. It can also be found on Twitter, along with our extended coverage of the energy & materials sectors @TMFEnergy.

Prior to Google  purchasing Nest for $3.2 billion dollars, it was already helping the environment by reducing our reliance on energy produced by the likes of coal and natural gas. The company has made several investments in wind power which should be a warning sign to conventional power suppliers might. You see, the more buy-in that renewable energy sources like solar and wind receive, the less traditional utilities will be needed.

Now, add to the fact that Google, and small start-ups like Verdigris, are helping us reduce our overall energy usage, and the top line at major utilities could slowly start to miss out on billions of dollars. For more on our thoughts, check out the short clip below. 

Google's off to a fast start in 2014. You could be too with our Top Stock

Most investors own stocks, profiting when they rise in value and losing money when their stocks decline. But for short-sellers, that basic dynamic is reversed, and you can actually profit when share prices decline.

In the following video, Dan Caplinger, The Motley Fool's director of investment planning, goes through the basics of short-selling and what you need to know to be successful at it. Dan goes through the mechanics of short-selling with your broker, noting how you profit by paying less to replace borrowed shares after a stock price falls. He notes that with failed companies like General Motors before its bankruptcy, short-selling was extremely lucrative. But with other high-flying stocks, including Netflix and priceline.com , short-selling was extremely costly. Dan concludes that before you use short-selling, you need to understand the risks involved and know how to protect yourself from potentially huge losses.

Fusion-io will release its quarterly report on Wednesday, and investors are nervous about the expected plunge in revenue that they expect to result in the data-storage specialist's year-ago profit turning into a loss. Yet even in the face of much larger competitors EMC and Western Digital , many still hold out hope that Fusion-io earnings will eventually recover and help the share price gain back some of its long-term losses.

The revolution in the memory space has been fast and furious in recent years, as the rise of flash-memory products has forced companies like hard-drive specialist Western Digital to adapt to changing demand for more innovative memory solutions. Yet despite having cutting-edge technology, Fusion-io hasn't been able to leverage its product prowess into a reliable competitive advantage, leaving itself vulnerable to EMC, Western Digital's recently purchased Virident Systems, and other competitors. Let's take an early look at what's been happening with Fusion-io over the past quarter and what we're likely to see in its report.

Source: Fusion-io.

Stats on Fusion-io

Source: Yahoo! Finance.

Can Fusion-io earnings recover?
In recent months, analysts have drastically marked down their views on Fusion-io earnings, widening their loss estimates for the December quarter by $0.08 per share and reversing early expectations for modest profits in fiscal 2014 and 2015 to current calls for losses. The stock has gotten crushed, falling almost 35% since mid-October.

Most of the damage to Fusion-io's stock came after its September-quarter earnings report. The company managed to beat expectations with a narrower loss than investors had thought they'd see. But calls for only slight sequential gains in revenue left shareholders disappointed, as they'd hoped to see massive revenue gains of as much as 30% to 35%. Combined with Fusion-io's guidance toward falling margins and the departure of its CFO and chief sales officer, investors weren't reassured that the company will get back on solid footing in the near future.

Still, company executives haven't given up on Fusion-io's prospects. Immediately after the earnings-related plunge, CEO Shane Robison and Chief Legal Officer Shawn Lindquist made major insider stock purchases, demonstrating their commitment to Fusion-io's recovery.

The challenge that Fusion-io faces is finding more customers for its innovative products. Initially, interest from Apple and Facebook seemed to guarantee Fusion-io's long-term success. Yet between weak margins and drops in spending from those major customers, Fusion-io has had to struggle to keep revenue up. Meanwhile, a rash of new players in the space, including Violin Memory and Nimble Storage, only add to the challenge that Fusion-io faces in differentiating itself from rivals. Meanwhile, hopes that EMC might seek to buy out Fusion-io, or that Seagate might want to answer Western Digital's purchase of Virident with interest in Fusion-io, simply haven't panned out for shareholders.

In the Fusion-io earnings report, watch for the company to give its latest read on customer demand for its products. With tech devices having been big sellers during the holiday season, Fusion-io needs to demonstrate its continuing ability to get its share of sales to reassure investors that it can bounce back from its recent setbacks.

Click here to add Fusion-io to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Couldn't make it to the 2014 International Consumer Electronics Show? Never fear: The Fool was there to check out the tech and report back on who was there and what was new. With thousands of products in more than 15 categories, the next big thing was surely making its debut at the CES in Las Vegas.

Valve recently launched its own gaming hardware platform: the Steam Box, running Steam OS. Will the $500 gaming system be able to put a dent in the Xbox market?

Thanks to an uncanny ability to identify key trends in technology, David Gardner has established a market-thumping track record. Investors have seen a slew of storylines coming out of CES 2014, but the real challenge is recognizing where the opportunities truly lie. Click here to get David's latest thinking on where you should be invested to profit on the future of technology.

A full transcript follows the video.

Evan Niu: Hey, Fools, Evan Niu here, and I'm joined by Eric Bleeker. We're on the floor of CES 2014, and right behind us we have Valve and Steam; a lot of Steam boxes on display. They recently launched Steam OS -- pretty interesting stuff there, really getting into their own gaming hardware platform. What do you think, Eric?

Eric Bleeker: Yeah, Valve is a very innovative company. I wish it was public so I could buy it. Of the video-game companies, you look at what they've done with Steam; it's absolutely incredible. It's become the platform for distributing video games, well ahead of its time when you think about similar platforms that exist now.

Very much a forward-thinking company, but one of the areas you have to look at with Steam Boxes, and potential impact on the market, it starts at about $500. Those are the cheapest ones, for what is essentially a gaming PC in your living room. It's just a tough to imagine it making a big dent on the market.

You could say "Xbox starts at $500," but across a generation that price dramatically goes down. I don't think these have that same obsolescence curve. It's just a different model, when you're working with what essentially boils down to a PC.

As far as a Sony  or a Microsoft , and how a Steam Box and a Steam OS might affect them, I think it will remain for the most part relatively a niche product. It appeals very well to the high end of gamers.

That being said, Valve is a pretty innovative company, and they could do some very sought-after games that the distribution only goes to Steam Box, or build an installed base that way, so they've got a couple tricks up their sleeve that I think could make this interesting.

Evan: Yeah, I'm going to agree with you on that one, because I think, like you said, Valve's real angle with Steam has always been about distribution. That was really where they hit big, was the distribution model.

They're the top dog in PC gaming distribution, so the hardware side of it ... it's kind of interesting, but it also might just be a side play, a hedge bet like, "Why not? Might as well. Maybe we do something, maybe we don't." Ultimately, I think they're still going to stay the market leader in PC games.

Eric: Yeah, and if they release the next Half-Life for a Steam Box, maybe I'll just end up buying one. There you have it, Valve. You've got me, if you just make the right move!

Niu: All right, Fools, that's it for Steam OS. For all the latest CES, check out Fool.com. 

Halliburton will release its quarterly report on Tuesday, and investors have expressed some concerns in recent months about the oil-services company's future prospects, bidding share prices down from their near-record high levels. After strong earnings from Schlumberger last week, investors want Halliburton earnings growth to show similar gains, but the company will still have to work hard to outperform peers including Baker Hughes and offshore specialist Transocean .

Halliburton has traditionally set itself apart from Schlumberger by concentrating on the key North American market, which proved to be a prescient move when the boom in unconventional oil and gas production flared up during the 2000s. Now, though, greater expansion opportunities abroad have given Schlumberger the inside track to further growth, forcing Halliburton to answer with its own global aspirations. Can Halliburton outperform Baker Hughes and Transocean with its successful efforts? Let's take an early look at what's been happening with Halliburton over the past quarter and what we're likely to see in its report.

Source: Arne Hückelheim, via Wikimedia Commons.

Stats on Halliburton

Source: Yahoo! Finance.

How fast can Halliburton earnings grow?
In recent months, analysts have cut their views on Halliburton earnings, reducing fourth-quarter estimates by $0.12 per share and cutting a dime per share from their full-year 2014 projections. The stock has plateaued, falling 1% since mid-October and more sharply from higher levels in November.

Halliburton's third-quarter report showed some of the pressures that the oil-services giant is facing right now. Even though global revenue rose 5%, pushing net income higher by 24%, Halliburton's shares tumbled on the day after the announcement. Somewhat surprisingly, revenue in North America actually dropped from year-ago levels, while gains in the Eastern Hemisphere segments of Europe/Africa and Middle East/Asia drop overall sales growth. Nevertheless, operating income continued to come predominantly from North America, driving about 60% of Halliburton's total in contrast to Schlumberger's more diversified global reach. That's consistent with what Baker Hughes saw as well, with record revenues in its Middle East and Asia-Pacific segment.

More recently, Schlumberger's earnings report late last week suggests that Halliburton needs to continue emphasizing its international prospects. Schlumberger saw international revenue rise 11%, beating its overall gains of 8.4% even though the company suffered shutdowns in Iraq due to violent uprisings there. Nevertheless, investors still expect faster growth from Halliburton, as its lower forward earnings multiple attests.

In addition, Halliburton needs to recognize the value of offshore drilling. Schlumberger's results included strong demand from its projects in the Gulf of Mexico, which offset poorer results onshore. Similarly, Transocean has seen huge interest in its drilling rigs both in the Gulf and around the world, as a big ramp-up in offshore projects has driven demand especially for deepwater-capable facilities that allow operators to take advantage of discoveries in hard-to-reach areas of the ocean floor.

Still, Halliburton expects North America to play a key role in 2014 and beyond. Its Frac of the Future and Battle Red initiatives both center on the region, with Battle Red emphasizing improvement in its service-delivery model while its Frac of the Future seeks to focus on greater productivity from oil and gas plays. If anticipated demand for energy products in the U.S. rises as a result of manufacturers moving operations to take advantage of low prices, then Halliburton's continued emphasis on the region could prove to be full of foresight.

In the Halliburton earnings report, watch to see if it gets its growth from the same sources as Schlumberger. Halliburton needs to walk its own path, but better results across the industry will likely come from similar places. To outpace Baker Hughes and Transocean, Halliburton needs to make sure it's in the right place at the right time.

Click here to add Halliburton to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Forbidden City. Photo credit: Flickr/Yinan Chen (Good Free Photos).

China tops the world on many lists. It has 1 billion more people than the U.S. as it is the most populated nation on earth. It leads the world in rice and wheat production. Unfortunately, China also tops the list of the countries with the highest carbon emissions. That's why China needs fracking even more than we do. Given that 29% of San Francisco's pollution is imported from China, however, the case could be made that we need China fracking, too.  

Carbon bubble
Worldwide carbon emissions are up 61% since 1990. Much of that growth has been fueled by China, which contributed 27% of global carbon emissions in 2012 as it spewed out 9,621 megatons of carbon dioxide. Even more worrisome is the fact that it is growing its carbon emissions by more than 5% annually. The country's heavy usage of coal-fired power is fueling its growing pollution problems.

America, on the other hand, has seen its emissions fall. Our carbon emissions are now at the same level as 1994, at 5,118 megatons. Part of the reason for this is that we're more careful not to waste energy. We've increased our output of clean power from solar and wind. However, fracking has unlocked so much cheap and cleaner natural gas that we've used to replace coal, which has lowered our carbon emissions. In 2012, the U.S. increased natural gas power generation by 211.8 billion kilowatt hours over 2011, while coal power decreased by 215.2 billion kilowatt hours. Our past success gives hope that fracking could have an even bigger impact on reducing China's emissions.

Massive shale gas reserves
According to estimates from the U.S. Energy Information Administration, or EIA, China has 1,115 trillion cubic feet of shale gas reserves. That's nearly twice the shale gas reserve estimate for the U.S. Just for some context on how much gas we're talking about, 5 trillion cubic feet of natural gas is enough to meet the energy needs of about 5 million American homes for 15 years.

The problem so far is that China is having trouble actually producing those reserves. That said, China is slowly starting to make some progress as shale gas production surged five-fold last year to 200 million cubic meters. The country hopes to push its production up to 6.5 billion cubic meters by 2015. However, that's still well off the 7.85 trillion cubic feet or 222 billion cubic meters that the U.S. produced in 2011 according to the EIA.

Looking for help
China is taking a dual approach to finding the key to unlock its massive reserves. Many Chinese energy companies have entered into joint ventures with U.S. producers to fund drilling in America. In one sense, China took advantage of shale gas producers that were strapped for cash to fund aggressive drilling programs. However, these deals also enabled Chinese companies to gain firsthand knowledge of how to use fracking to unlock shale gas reservoirs.

In addition to that, Chinese energy companies also signed shale exploration deals with U.S.-based producers like ConocoPhillips and ExxonMobil in hopes that the early insight both gained in unlocking American shale plays can work over in China as well. Both companies were early to acquire shale gas players as ConocoPhillips snapped up Burlington Resources and ExxonMobil picked up XTO Energy.

Both are now using that firsthand knowledge to try to unlock China's vast shale reserves. ConocoPhillips has two joint study agreements with Chinese national oil companies in the Sichuan Basin. Its agreement with Sinopec covers about 1 million acres while its deal with PetroChina covers half a million acres. 

ExxonMobil also has an agreement with Sinopec in the Sichuan Basin. Its agreement covers a 1,407-square mile area. Still, it's finding these rocks to be tough to frack with the same hydraulic fracturing techniques that are currently working in the U.S. The company believes that the industry will need to invest heavily to develop new fracking technologies to unlock these Chinese shale plays.

The water issue
ExxonMobil is running up against two major issues. Chinese shale formations are much deeper than those in the U.S. and most are in remote areas that lack water and infrastructure. Because hydraulic fracturing requires millions of gallons of water per well, this is a real problem. However, oil-field service companies like Halliburton and Baker Hughes could turn out to hold the keys to that problem. Both are working on water recycling technologies that could alleviate some of the water problems.

Halliburton will soon be running a test program in the Bakken Shale of North Dakota on its H2O Forward service. The project will use recycled flowback fluid and produced water to frack wells. If successful this service could be used in other basins as well as eventually exported to places like China. Meanwhile, Baker Hughes is working on its own solution called H2prO.

Final thoughts
With massive resources and a real need to clean up its emissions, China simply has to figure out how to frack its shale so that it can produce cleaner natural gas. While it still has a lot of work to do, once China does crack the code it should be able to ramp up its production rather quickly. While it might not meet its ambitious target to produce 60 billion-100 billion cubic meters of shale gas by 2020, as U.S. shale gas companies have demonstrated, once the code is cracked it's quite easy to "manufacture" gas by using multi-well pads and quick turnaround times.

Thanks to a combination of horizontal drilling and hydraulic fracturing, the U.S. is awash with cheap natural gas extracted from shale formations around the country. Yet despite the nation's growing use of the cleaner-burning fuel, U.S. carbon dioxide emissions likely increased last year, according to recently released data from the federal Energy Information Administration (EIA).

Why U.S. carbon emissions likely increased
Though final estimates are not yet in, the agency estimates that carbon emissions linked to the use of oil, gas, and coal rose 2% in 2013 after reaching a 20-year low in 2012. This modest increase is due largely to a small rise in coal consumption by the electric power sector, as higher natural gas prices and increased summer demand for electricity led utilities to boost their use of coal-fired units.

In April 2012, when gas prices reached a record low of roughly $2 per MMBtu, the shares of natural gas and coal as a source of electricity reached parity for the first time ever, according to the EIA. But since then, coal has regained much of the market share it lost, accounting for more than 40% of the nation's electricity each month since November 2012, while natural gas' share fell to roughly 25% over the same period.

Still, one year does not a trend make, and the larger picture is that U.S. energy-related emissions have generally been falling since 2005 due to a combination of weak economic growth after the 2008 global financial crisis, major improvements in energy efficiency for transportation and buildings, greater use of America's abundant and cheap supply of natural gas coupled, and reduced use of coal. Indeed, 2013 carbon emissions are still expected to come in about 10% lower than 2005 levels.

Retirement of coal-fired plants
Going forward, emissions are expected to continue to drop through at least 2015, due to a combination of greater demand for natural gas and new environmental regulations that will essentially force the retirement of older coal-fired units. Through 2020, the EIA forecasts that roughly 49 gigawatts (GW) of coal-fired capacity will be retired, representing approximately one-sixth of existing U.S. coal capacity.

Several major utilities have already announced plans to retire some of their coal-fired plants over the next few years. For instance, Georgia Power, the largest unit of Southern , received approval from Georgia regulators in July to retire roughly 20% of its coal plants in the state by April 2015. The company's decision was shaped mainly by the high cost of complying with environmental regulations, as well as lower natural gas prices and expected economic conditions.

Similarly, the Tennessee Valley Authority said in November that it would retire more than 3,000 megawatts (MW) of coal-fired capacity, covering the five coal units at its Colbert plant in Alabama, one unit at the Widows Creek coal plant in Alabama, and two units at the Paradise coal plant in Kentucky. Though official dates for retiring these eight units have not yet been provided, the company's SEC filings say that the five Colbert units will be closed no later than June 2016.

Lastly, Duke Energy plans to retire up to 6,800 MW of coal-fired capacity by 2015 as part of its new fleet modernization strategy, which also entails construction of a new natural gas plant in North Carolina. By shuttering two coal-fired power plants in North Carolina, the company probably retired 3,800 MW of coal-fired generating capacity last year.

Slow and steady
The role of natural gas in U.S. power generation should continue to expand gradually over coming decades. The EIA said gas' share of power generation will grow from 24% in 2011 to 27% in 2025 and to 30% by 2040, while coal's share will decline from 42% in 2011 to 38% in 2025 and to 35% in 2040. So while coal will continue to play an overarching role in U.S. power generation, natural gas should slowly but surely start to catch up over the next couple of decades.