IOS 7 is here: A whole new iPhone experience

The new iOS 7 iPhone software not only has a new look, but Apple successfully addresses many long-standing issues.

NEW YORK (CNNMoney) Your iPhone is about to get a giant makeover: Apple is pushing out iOS 7 to iPhone users on Wednesday.

The new iPhone operating system is the most substantial update in the software's history. Apple not only added new features and functionality, but the company radically reinvented the six-year old operating system's appearance.

For the most part, Apple (AAPL, Fortune 500) succeeded in making iOS easier on the eyes and simpler to use. Apple trimmed the fat where necessary and added some meat to areas that were lacking.

New look: The most noticeable difference in iOS 7 is the design. Gone are the core apps that look like real-life objects. In their place is a far more modern, streamlined, flatter digital aesthetic.

Apple didn't eliminate depth and texture altogether, but it redefined how it uses those effects. For instance, Apple made some menus and features appear translucent, like a frosted sheet of glass. That not only provides a stylish touch, but it produces a layered effect to help visualize how different parts of an app are linked, and how they are separate.

  Inside Apple's new iOS 7

You'll notice this everywhere from the home screen icons to the design of the lock screen to the screen that shows up when you receive a call. But the way you use those elements is more or less the same as before.

Related story: Hits and misses of Apple's new iPhones

And there are still touches of the old version of iOS throughout the new iOS 7. For example, the Messages app still uses speech ! bubbles, and the camera app still uses an on-screen shutter button. But the look of those features has been spruced up as well.

There was a time when Apple had to demonstrate how its flat, glass screen could replace many self-contained gadgets people already owned. So everything had a glassy, textured layer applied to it. The calendar had to look like a paper calendar. The compass had to look like something you'd see in a 16th-century Spanish galleon.

Now that the vast majority of us understand our smartphones, Apple has been able to ditch those visual analogs and become truer to its sleek, modern hardware.

New features: Perhaps the most useful addition to iOS 7 is Control Center. It's your metaphorical junk drawer full of settings, media playback controls, and shortcuts to utility apps, like the clock, camera and calculator. You can now also toggle the LED on and off from control center, functioning as a de facto flashlight. And it's easily accessible: just swipe up from the bottom of the screen.

Control Center isn't a revelation: Having quick access to Airplane Mode, Wi-Fi and Bluetooth is something that's long been on Android. But it's a welcome addition -- and frankly should have already been added to iOS a long time ago.

Related story: Apple will never make a cheap iPhone

Siri's functionality has been expanded some. It can now be used to search for Wikipedia and Twitter. That's nice, but it's still no Google (GOOG, Fortune 500) Now, which can tell you to leave home earlier than usual because there's an accident on the freeway.

The new weather app in iOS 7 is more informative than ever, and the App Store can automatically update your apps.

The Photo app has mostly been changed for the better by automatically arranging your photos according to time and place. But the new shared photo streams addition felt incomplete. It allows multiple people to share and comment on photos -- think of it as a remixed version of group MMS. But wit! h so many! people already using Apple's iMessage to share photos, it's unclear why people are supposed to use the new feature.

The Notification Center in iOS 7 now has three separate sub-pages, making it feel more bloated and confusing than its previous iteration. For example, if you don't use a calendar, one of the sub-pages is just a completely empty screen.

Question marks: Apple overhauled multitasking in iOS 7, giving apps the ability to fully run in the background. That means apps like Twitter and Facebook will be able to automatically update their feeds without you having to open the app. Apple even promises that iOS 7 will learn which apps you use the most, when you use them, and will make sure they're always updated at that time. But it will be hard to tell how well this feature will work until app makers begin to support it.

  iPhones 5C and 5S good enough for Apple

Airdrop is Apple's file sharing protocol, allowing iPhone users to share photos, contacts and things like passbook cards with one another. In theory, it is a wonderfully simple way to transfer files. But you can't use it with the Mac version of Airdrop. And the main appeal of Airdrop seems to be photos -- which is confusing since that's what shared photostreams are for. Until there is a critical mass of people running iOS 7, it's hard to gauge how useful Airdrop will be.

Bottom line: Despite a few hiccups in execution, Apple has successfully re-thought iOS for the better.

The biggest achievement of iOS 7 is Apple's willingness to acknowledge that it's immensely successful hardware had gone a bit stale. Apple had the awareness and courage to make some major changes without doing anything so drastic that it risked alienating its user base.

IOS 7 isn't perfect, but it's still as wor! thy a mob! ile OS as Google's Android. IOS 7 lays down the foundation for the next five or so years that will allow Apple to keep the iPhone feeling modern and progressive.

What Makes Clients Happy? A Good Retirement Plan

Americans that work with a financial advisor are twice as happy about and confident in their retirement plans as those not working with an advisor, according to a study released Wednesday by Franklin Templeton.

The 2013 Franklin Templeton Retirement Income Strategies and Expectations survey found that 90% of investors working with advisors are pleased with their retirement income plans, and 87% are confident in these plans. Just 44% of investors who are not working with advisors say they are happy with and confident in such plans.

“The findings confirm that the most essential emotions surrounding retirement income planning—happiness with, confidence in, as well understanding one’s plan—are all increased substantially when you work with a financial advisor,” said Michael Doshier, vice president of Retirement Marketing for Franklin Templeton Investments, in a press release.

For the study, some 2,000 adults 18 and older completed an online survey in January.

Investors who work with advisors are much more likely to understand their retirement income plan (86%) versus investors who don’t (48%). 

“Retirement income planning can be overwhelming, and professional assistance goes a long way in not only achieving financial goals, but feeling good about the process,” Doshier said.

More than half of investors who completed the survey, 58%, cited experience with retirement planning as the most important factor when selecting an advisor. Plus, the same number, 58%, who had developed a written retirement income plan said they understood how much of their current income would be replaced by Social Security.

In addition, over half (51%) indicated that they would switch financial advisors or begin working with one for the first time if an advisor developed a written retirement income strategy for them. This was particularly true for investors in their key asset-accumulation years, specifically, 65% of those 35-44 and 62% of those ages 25-34. 

When asked what they most want most from an advisor, investors said:

Over the next five years, close to a third (31%) of investors expect to change their retirement strategy, while 22% plan to make changes in their retirement investments. Also, 13% anticipate beginning to work with a financial advisor for the first time.

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Check out Median Retirement Balance Is $3,000 for All Working-Age Households on AdvisorOne.

 

Hulu Sale Called Off - Analyst Blog

Owners of Hulu have abandoned the plan to divest the company and have decided to invest in the online video streaming company instead. The owners aim to create a strong competitor for market leader, Netflix Inc. (NFLX). This is the second time in two years that the sale of Hulu has been called off.

Hulu is currently owned by News Corp. (NWSA), Walt Disney Co. (DIS) and Comcast Corp (CMCSA). Notably, Comcast acts as a silent partner following its acquisition of NBC Universal.

Hulu attracted bids from several potential bidders, which included big companies like DIRECTV (DTV), Time Warner Cable Inc. (TWC) and a joint bid from AT&T Inc. (T) and Chernin Group. While AT&T and DTV proposed a $1 billion dollar bid, Time Warner Cable wanted to become a stake holder in Hulu.

However, the bidders were restricted from owning the content rights for Hulu for more than two years. Network companies generally hike prices post the completion of the agreement.

The current owners have decided to retain ownership and inject $750 million for future growth. In spite of having no management control, Comcast will contribute an equal share of the $750 million investment.

The media houses have agreed that they will retain the subscription base model and will deliver content to enhance the customer's subscription value. However, postponing the sale still leaves the possibility of a stake sale.

Hulu received such high interest from potential bidders as growing saturation in the U.S. pay-TV market and increased competition from online video streaming service providers has sliced the traditional pay-TV operator's market share. Furthermore, Hulu boasts a strong subscriber base of more than 4 million and has generated $700 million revenues last year through advertising and monthly subscriptions.

Owners of Hulu wanted a buyer keen on investing in programming and maintaining its growth momentum. The media groups have confirmed that they themselves will spend on programm! ing, marketing, technology and expansion from the proposed $750 million investment.

Acquiring Hulu would have given the traditional pay-TV operators the leverage to negotiate better with the media companies. Nevertheless, Hulu's independent standing is favourable for the customers. We believe that stiff competition from this over-the-top (OTT) companies like Hulu may force the pay-TV operators to reduce their monthly fees to remain competitive.

Get Paid To Buy This Rebound Play, With A Shot At 80% Upside

The changes at Groupon (Nasdaq: GRPN) appear to be paying off. The departure of founder and CEO Andrew Mason in February marked an emotional low point. The stock has doubled since then, and it is now up nearly 250% from the extreme low in November.

 

The bottoming bounce from the $2.60 low to the $9.43 yearly high has support at the $6 midpoint of the range.

Looking at the bigger picture, the post-IPO high near $31 to the extreme lows has a recovery target of about $16, about 82% above the current price.

As of this writing, GRPN is trading around $8.80. If you are comfortable holding on to this inexpensive stock for a potential recovery, then selling put options could allow you to collect income while you wait to get into GRPN at a 14% discount.

Cash-Secured Put Selling Strategy
While the typical investor might use a limit order to buy a stock or ETF at a designated price or lower, the options trader can do one better by selling a cash-secured put.

This strategy has the same mathematical risk profile as a covered call. With put selling, there is an obligation to buy the stock at the strike price if it is assigned, allowing you to get into the stock at a discount. In fact, the true entry cost basis is even lower with the subtraction of the premium you earned from selling the puts.

And if the stock is not below the strike price at expiration, then the premium received is all profit. In other words, you're getting paid not to own the stock.

There are two rules traders must follow to be successful at selling put options.

Rule One: Sell puts only on stocks you want to own.
The intention of this strategy is to be assigned the stock as a long-term investment (each option contract represents 100 shares). So make sure you have the money ready to buy the stock at the options' strike price if a sell-off occurs. Paying in full ensures that no additional money is needed to hold the stock for potentially many months or even years until a price recovery.

Rule Two: Sell either of the front two option expiration months to take advantage of time decay.
Collect premium every month on put sales until you are assigned shares at a cost-reduced basis. Every month that you keep the premium is money subtracted from your entry price.

Action to Take --> Sell to open GRPN Aug 8 Puts at 40 cents or better. (This is a volatile stock, so I suggest using a limit order to get the desired price.)

This cash-secured put sale would assign long shares at $7.60 ($8 strike minus 40-cent premium), which is about 14% below GRPN's current price, costing you $760 per option sold. If the options expire worthless, you keep the $40 premium, earning a potential 5.3% return in 23 days.

But remember, you should only sell this put if you want to own GRPN at a discount to the current price. If you are assigned the shares, a September covered call can be sold against the stock to lower your cost basis even further.

If the stock does not fall below the strike price before expiration, then you keep the premium you collected, essentially getting paid not to buy the stock.

For more analysis on GRPN, see the video below (starting at 3:10):

This article was originally published at ProfitableTrading.com:
Get Paid to Buy This Stock at a Discount for a Chance at an 80%-Plus Rally

Pentagon Watch: Where Did Your Tax Dollars Go This Week?

The U.S. military has a reputation as a somewhat secretive organization. But in one respect at least, it ranks among the most "open" of our government agencies. The Department of Defense is positively sunshine-y in the frequency and clarity with which it describes the contracts it issues to private companies, updating them daily on its website.

 So what has the Pentagon been up to this week?

The Department of Defense requested $614 billion in total funding for the current fiscal year 2013. Spread over 52 weeks, that works out to $11.8 billion in spending. And with about 47% of that money, historically, going to personnel costs, that leaves about $6.2 billion a week to spend on military hardware (planes, trains, and main battle tanks), infrastructure projects (such as resiting a VA hospital, dredging a river, or constructing an air base), services (engineering and software design work), and military supplies.

Last week, the Pentagon awarded contracts worth a combined $6.226 billion -- putting it right on target to spend all the money it's been allotted for this fiscal year, "sequester" notwithstanding. Where did the money go?

To Russia with cash
Well, probably the biggest news of the week, and certainly the most controversial, was a contact issued Monday to pay a Russian defense contractor, Rosoboronexport, $572.2 million (later revised down to $553.8 million) for 30 Russian Mi-17 transport helicopters -- that we will promptly hand over to the Afghan National Securities Forces. This follows on a decision one week earlier to hand a Brazilian company, Embraer (NYSE: ERJ  ) a $1 billion contract to build fighter planes for the Afghan Air Force.

Afghan military Mi-17 helicopters in flight. Source: Wikimedia Commons.

In one respect, therefore, it appears that sequestration of defense spending may be having an effect on U.S. defense contractors -- it's forcing the Pentagon to be more careful about how it spends its cash, and to give more business to low-cost defense contractors from other countries.

Nor is the Pentagon the only actor pinching its pennies. Last week, Boeing (NYSE: BA  ) also headed to Brazil to sign a deal cooperating with Embraer on the global marketing of the latter's KC-390 aerial refueling tanker.

Heavily into helicopters ...
Boeing also made news this week when it landed its second multibillion-dollar contract in as many weeks, for the sale of Chinook heavy lift helicopters. Two weeks ago, the U.S. Army ordered up $4 billion worth of the whirlybirds. This week, Boeing won a $3.4 billion contract to sell more Chinooks to the militaries of Turkey and the United Arab Emirates, with the U.S. government acting as the middleman.

U.S. Army CH-47 Chinook. Source: Wikimedia Commons.

... and softly into software
Another big winner for the week was Microsoft (NASDAQ: MSFT  ) . The Pentagon granted Mr. Softy a contract worth up to $412.2 million for Microsoft Blue Badge cardholder support. This contract, whereby Microsoft will assist the Defense Information Technology Contracting Organization with software design work, costs a lot -- in part because Microsoft is being asked to license access to its proprietary source code as part of the work.

Galaxy still flying
A smaller contract win, but still significant, was Lockheed Martin's (NYSE: LMT  ) receipt of a $27.9 million indefinite-delivery/indefinite-quantity contract to do software work upon Air Force C-5 Galaxy transport aircraft. The Pentagon has caught some flak over continued support for the Galaxy, whose basic design is now close to 45 years old. But the Galaxy remains the largest transport aircraft in the U.S. fleet, capable of carrying a half-dozen MRAPs, or five combat helicopters within its capacious cargo hold.

U.S. Air Force C-5 Galaxy hold. Source: Wikimedia Commons.

The Air Force is currently in the process of upgrading more than four dozen Galaxies under a comprehensive Reliability Enhancement and Re-engining Program. Once completed, the planes will be dubbed "Super Galaxies" -- C-5Ms, equipped with more power, a faster rate of climb, and the ability to operate off of runways 30% shorter than their predecessors require.

Opportunities on the horizon
That's about it for the highlights of last week's Pentagon contracting news, but now what should we be on the lookout for in the future? Well, probably the most interesting bit of news on that front was the announcement Thursday that the U.S. Defense Security Cooperation Agency has informed Congress of plans to sell $4 billion worth of services and equipment to the government of Saudi Arabia, as part of a plan to modernize the Saudi Arabian National Guard forces.

The contractor in charge of the project, Vinell Arabia, isn't exactly a household name here. But as it turns out, Vinell is a subsidiary of marquee defense contractor Northrop Grumman (NYSE: NOC  ) .

The upshot: Northrop Grumman's about to land a contract worth 16% of its annual revenue haul for a whole year. The contract hasn't been announced yet. No one knows about it -- except that now, you do.

Boeing operates as a major player in a multitrillion-dollar defense market in which the opportunities and responsibilities are absolutely massive. However, emerging competitors and the company's execution problems have investors wondering whether Boeing will live up to its shareholder responsibilities. The Fool's premium research report on the company provides investors with the must-know issues surrounding Boeing. They'll be updating the report as key news hits, so don't miss out -- simply click here now to claim your copy today.

Does This Justify Google's Motorola Mobility Acquisition?

Looking back, it was really just a matter of time. Last year's acquisition of Motorola Mobility, for $40 a share, totaling a cool $12.5 billion, was a watershed moment for Google  (NASDAQ: GOOG  ) . Ostensibly, Google's largest acquisition to date was completed to secure Motorola Mobility's 17,000 patents, along with another 7,500 that were pending approval. The idea was the patents would ward off potential patent-related lawsuits.

But Google CEO Larry Page wasn't fooling anyone; buying Motorola Mobility was a direct means to go after Apple (NASDAQ: AAPL  ) and Samsung in the lucrative U.S. smartphone OEM market. Google's partnership with LG has already produced a Nexus smartphone, and Motorola has some, too, but that's so un-Google. If we've learned anything over the past couple of years, it's that Google isn't afraid to aggressively enter new markets with guns blazing: Google Fiber, the use of white space for wireless connectivity, self-driving cars, Glass -- the list goes on and on.

So, when is Google -- via its Motorola Mobility unit -- going to get to work manufacturing its own high-end smartphone, and get serious about taking on Apple? Turns out, that time is nearly here.

Get ready for Moto X
Motorola has a suite of smartphone alternatives, of course; its RAZR phone was once a cutting-edge mobile device. But as Apple's iPhone and Samsung's Galaxy line of phones hit the streets, Motorola's share of the domestic smartphone pie continued to shrink -- down to an 8.5% market share in March of this year, from 9.1% the end of 2012. Google doesn't take losing lightly. The answer? Step up to the plate with its own premium Motorola Mobility phone, manufactured right here in the U.S.

As we learned through an interview with Motorola Mobility CEO Dennis Woodside at the All Things Digital conference, the manufacturing of the Moto X phone -- which will sport a new design, using two batteries to save power, and possibly incorporate sensors to predict users' needs -- will be outsourced, but it's Google-backed Motorola Mobility, through and through. As Woodside put it, "We're trying to bring Motorola back to its roots." And maximize the $12.5 billion purchase price, while at the same time going after Apple's share of the domestic smartphone market? You can bet on that.

The target date for rolling out the Moto X is this October and, like Apple and its iMacs, Moto X will be made in the USA -- just outside Fort Worth, Texas, to be precise. Moto X will generate about 2,000 local jobs, too.

Google is also exploring ways to incorporate cutting-edge technologies into its Moto X smartphone, including electronic tattoos and wearable devices to confirm a Moto X user's identity. As Google continues to push the envelope, and combines its drive for innovation with taking ownership of its own OEM devices, who knows where its smartphone will end and an all-in-one mobile device begin? A lack of innovation has been mentioned time and again as one reason Apple's share price has declined so dramatically lately. That's not likely to be a problem for a Google-driven Motorola Mobility device.

Unseating Apple in the U.S. isn't going to happen overnight, if it happens at all. With 39% of the domestic smartphone market as of Q1 of 2013, Apple actually stretched its lead over Samsung (at least in the U.S.). Not surprisingly, Google's Android continues to rule the OS roost, running 52% of all Americans' smartphones in Q1. Google's OS market domination, along with its willingness to push technology to new heights, bode well for Google's latest foray. Maybe Page knew what he was doing when he plopped down $12.5 billion for Motorola Mobility, after all.

It's more important than ever to understand each piece of Google's sprawling empire. In The Motley Fool's new premium research report on Google, we break down the risks and potential rewards for Google investors. Simply click here now to unlock your copy of this invaluable resource.

Google to Help Developers Add Gaming, Location and More to Android Apps

Continuing a string of announcements from its I/O developer conference, Google (NASDAQ: GOOG  ) on Thursday announced changes to its Google Play services that will span four major areas for developers and users. 

Google Play services (version) 3.1 changes affect gaming, location, messaging, and notifications settings. In gaming, the search giant introduces achievements, leaderboards, multiplayer, and saving (so users can pick up the game where they left off on a different device). On location, Google has made it easier to build "efficient location-aware apps" with three pieces of software. Regarding messaging, Google is making it easier for developers to set up Google Cloud Messaging platform on their apps. Finally, with user notification software, Google is making it easier for developers to synchronize notifications across a user's multiple devices. 

This latest version of Google Play is rolling out already, so Android developers can start building better apps with this new software today.

link

This Week's 5 Smartest Stock Moves

If you're feeling good about the market, you're not alone. Take my hand as we go over some of this week's more uplifting headlines.

1. IMAX's big picture keeps getting bigger
IMAX (NYSE: IMAX  ) is crossing the border again.

The company behind the projection systems that deliver larger-than-life cinema experiences signed a deal to install five more screens in Mexico for multiplex operator Cinepolis. The move will expand IMAX's presence through Cinepolis in Mexico to a dozen locations.

It's not the only way that IMAX grew its reach. Paramount Pictures expanded its partnership with IMAX, making sure that some of the studio's biggest releases -- including Michael Bay's Transformers 4 and Christopher Nolan's Interstellar -- will screen in the premium-priced format.

Bay and Nolan are also committing to using IMAX cameras to film key action sequences to give filmgoers another reason to pay up for the IMAX screenings when the movies come out next year.

2. Starbucks is a soda jerk
We're not exactly at the point where you can order a fizzy latte, but Starbucks (NASDAQ: SBUX  ) is arming some of its Seattle stores with carbonators as it tests sparkling beverages.

Starbucks is offering handcrafted spiced root beer, lemon ale, and ginger ale sodas at the stores. The test locations are also offering to carbonate iced tea and Refresher energy drinks.

It's a smart move, giving Starbucks more beverage options that appeal to children and adults that don't fancy tea or coffee. Starbucks is also doing the right thing by sidestepping the obvious cola and diet cola offerings by rolling out the line with beverage flavors that aren't easy to find elsewhere.

3. Netflix creeps you out
Netflix (NASDAQ: NFLX  ) is taking another crack at original programming this week. Flying high off of the critically acclaimed success of February's House of Cards, the Eli Roth-helmed Hemlock Grove is available today exclusively through Netflix's streaming service.

Whether or not the series is a hit, Netflix itself is a hit with at least one analyst.

BTIG analyst Rich Greenfield initiated coverage of the reborn dot-com darling with a bullish rating and a $250 price target this week. It's hard to bet against the company given the stickiness of its flagship streaming platform. The average subscriber is spending nearly an hour and a half a day on Netflix -- according to Greenfield -- making the $7.99 a month plan one of the best value propositions in the entertainment market.

4. Rolling like a burrito
Chipotle Mexican Grill (NYSE: CMG  ) is back to beating Wall Street's profit targets.

The 1,458-unit fast casual chain saw net income spike 22% to $76.6 million, or $2.45 a share. There was an tax credit padding results by $0.10 a share, but even then Chipotle blew out the $2.14 a share that analysts were forecasting.

Coming out on top is a welcome surprise. Chipotle was a consistent market beater for years, but it had actually missed Wall Street income expectations in each of the two previous quarters.

Chipotle isn't perfect. Comps rose a pedestrian 1% during the quarter, and guidance calls for flat to slow comps growth for all of 2013 barring any menu price increases.

However, it's still refreshing to see Chipotle getting back to besting the prognosticators on the bottom line.

5. Satellite radio hitchhikes on the information superhighway
Sirius XM Radio (NASDAQ: SIRI  ) officially rolled out its MySXM offering this week.

MySXM is the satellite radio provider's crack at Web-based personalized radio. Listeners can choose up to 100 different variations of dozens of Sirius XM stations.

This was a service that Sirius XM was originally hoping to make public by the end of last year, but better late than never.

This is a smart move because it increases the value of its online product. Receiver-based subscribers only have to pay $3.50 a month more for Internet access, so making that add-on offering more compelling should help boost average revenue per user.

Got Chipotle? Get smart.
Chipotle's stock has been on an absolute tear since the company went public in 2006. Unfortunately, 2012 wasn't kind to Chipotle's stock, as investors questioned whether its growth was dwindling. Fool analyst Jason Moser's new premium research report analyzes the burrito maker's situation and answers the question investors are asking: Can Chipotle still grow? If you own or are considering owning shares in Chipotle, you'll want to click here now and get started! 

For Sony, It's Not 'Game Over' -- Yet

Shizuo Kambayashi/APSony CEO Kazuo Hirai Investors will no longer be rewarded for holding on to shares of Sony (SNE). The Japanese consumer electronics titan is holding off on paying a dividend this fiscal year. It's the first time that Sony won't be declaring a dividend since going public in 1958. There's a lot of history in that time. The company that got its start in 1946 as an electronics shop in a department store building would go on to usher in an era in which Japan became known as an exporter of quality consumer electronics. From televisions to camcorders to video game systems, Sony either pioneered new trends or hopped on existing ones and raised the bar. Steve Jobs, Apple's (AAPL) visionary, credited Sony as having been his inspiration in his youth. This is the company that ushered in the era of portable media players with the Sony Walkman in 1979, following that up a couple of decades later by leading the development of the Blu-ray optical disc platform that gives video buffs a hi-def viewing experience. Sony was great. It's not doing so well these days. Getting It Wrong Sony has bet on the losing side before. Its Betamax platform faltered when the market favored VHS. Its memory stick solution never took off relative to SD cards in the realm of data storage. However, it has been able to overcome its past miscues by rocking nearly everywhere else. It's a different scene these days. Sony has posted losses in all but one year since 2008, and fiscal 2015 is shaping up to be another year of red ink. Sony just warned that it's looking at a loss of nearly $2.15 billion, fueled largely by an impairment charge as it writes down the value of its mobile communications unit. Smartphones were supposed to be the ticket for Sony to rejuvenate its fading electronics arm, but Sony's been no match for nimbler and more effective players outside Japan. This has been a rough year for Sony. It sold off its unprofitable PC unit and it spun off the horrific television business, which hasn't posted an annual profit in the past decade. Earlier this year it shuttered most of the Sony stores in this country. Why not? It's not as if Sony has a lot of consumer electronics to sell in a world where VAIO PCs are gone -- and its TV business will likely be sold off if it's not discontinued. Holding On to What It's Getting Right Things aren't all terrible at Sony. After falling behind the Wii and Xbox 360 in the previous generation of gaming consoles, PlayStation 4 is crushing Wii U and Xbox One. This may not seem like a big deal outside of die-hard gamers, but it could be a way for Sony to begin to rebuild its brand with young teens and millennials who don't necessarily associate the company with quality consumer electronics. Sony is also holding up well on the entertainment front. In its prime, Sony began to expand into movie studios and record labels. The music industry has been a challenging niche since folks began to swap MP3 files, but the video industry is benefiting from the digital revolution in which content creators can benefit beyond theatrical and retail physical media distribution. All of this may not be enough. Sony brought in a new CEO two years ago, choosing to go with cost-cutting insider Kazuo Hirai as its new helmsman. Losses continue despite his initiatives, but there's always the hope that he's making the hard decisions now to cut loose money-draining divisions. The layoffs and subsidiary trimming may not be helping morale, but there are enough parts that are still working to serve as a foundation. The challenge here is for Sony to stop the bleeding. A turnaround can't begin until losses turn into profits. We're not there yet, and Sony may never get there. . More from Rick Aristotle Munarriz
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Here's Why Buying Oracle on the Pullback Makes Sense

In 2008, Oracle's (ORCL) CEO, Lawrence Ellison, called cloud computing a "nonsensical" concept, and had absolutely no strategy for maneuvering the company in that direction. Five years hence, cloud computing has become an indispensable tool for huge companies seeking a sophisticated IT support system.

Competitors Are Taking Oracle's Share of the Pie

Additionally, investors in Oracle have recently become conscious of its growing competition. As this article points out, Oracle's revenue growth is quite petty when compared to high growth achieved by its major rivals. Workday's revenue grew 61% year-over-year to $91.6 million with major contribution from subscriptions for its cloud applications.

Oracle claimed in its earnings call that its cloud business was growing at a faster pace than Workday, which is a relatively smaller player in terms of resources and customer base. However, it is a fact that Workday has shown phenomenal growth in subscriptions for its cloud business. Besides strong business fundamentals, it has a maintained healthy operating margins and adequate cash on its balance sheet.

One of Oracle's arch-rivals, SAP (SAP), has been experimenting with various cloud strategies and trying to incorporate a business suite to the cloud of late. In its recent results, it announced growth of 25% in software and cloud subscription revenue. Its revolutionary HANA platform has been driving excellent growth in the past few quarters. In the first quarter, HANA tripled its revenue as compared to same period last year, that testified to its potential to make it big in the industry. Oracle's weaker than expected results negatively affected SAP's share price as investors grew apprehensive on the industry's prospects.

Partnering with Salesforce.com

Oracle's CEO Larry Ellison announced an alliance with Salesforce.com (CRM) last year in order to strengthen its foothold in the cloud computing sphere and said that it would be a partner in the company's latest 12c technology. The company was in the news recently for its acquisition of ExactTarget, which provides marketing solutions in the form of SaaS, for a whopping $2.5 billion. There has been no monetary ascertainment of the value this deal will bring to Salesforce, but it will surely provide adequate leverage to the company in providing marketing solutions in the form of SaaS.

From Different Angles

Oracle is currently working on new business propositions, including the cloud, that are going to rattle its CEO's previous line of thought. The issue with the company is that there is no simple input-output relationship, making it difficult to analyze the stock with defined methods or metrics. I have outlined a few points that investors need to look out for:

A major part of Oracle's earnings call was focused on software which camouflaged the poor performance of its hardware business. Its hardware system product revenue declined 23% year over year. The future still looks bleak with regard to hardware revenue, which, as per management, is expected to grow anywhere between negative 6% and 2% in the next quarter

As mentioned on the earnings call, Oracle has partnered with industry leaders Microsoft and Salesforce.com in order to reshape its cloud computing applications. This combined effort should have positive implications for Oracle's cloud business besides the presence of its much talked-about 12c technology.

The decline in share price after the earnings call has made it a reasonable buy when compared to its peers. At a forward P/E of around 9, Oracle is cheaper than rivals like Salesforce.com

Is It the Time to Buy?

While the wheels are turning at Oracle, management has given out big gifts like a doubled dividend and massive buyback to its shareholders for remaining patient and optimistic. The time is ripe to invest in the company because it has massive opportunities in the future and is reasonably cheap.

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Market Wrap for Friday, May 16: Stocks Rally Out Of Thursday's Valley

Related BZSUM Mid-Afternoon Market Update: Markets Rallying Into The Close As Dillard's Catches A Boost On Earnings Mid-Day Market Update: Nordstrom Rises On Upbeat Results; WWE Shares Slide

A late day rally led markets higher to recover some value lost during Thursday's sell off.

Major Indexes

The Dow Jones Industrial Average rose surged 44.5 points, or 0.27 percent to close at 16,491.

The S&P 500 added 7.01 points, or 0.37 percent to close at 1,878.

The Nasdaq rose 21.29 points, or 0.52 percent to close at 4,090.59.

The Russell 3000 climbed 10.34 points, or 1.04 percent to close at 1,001.2.

Top Stories

Darden (NYSE: DRI) announced that it will be selling Red Lobster to Golden Gate Capital for $2.1 billion. This is a move that many shareholders have been urging the company to delay for further discussion. Shares reacted accordingly, falling more than four percent.

13Fs were released after the close Thursday and resulted in some interesting trading activity Friday. Platform Specialty Products (NYSE: PAH), for example, rose almost six percent Ackman announced a large stake in the company. Verizon Communications (NYSE: VZ) rose more than two percent after Dan Loeb and Warren Buffett added positions in the company and David Tepper sold his stake.

Stock Movers

Rackspace Hosting (NYSE: RAX) shares were up 18.22 percent into the close to $36.26 on confirmation of approach by potential buyers and partners.

Shares of Dillard's NYSE: DDS) were up as well, jumping almost 15 percent to $110.08 near the end of regular trading after the company beat on both top and bottom lines in its report following Thursday's close.

Nordstrom (NYSE: JWN) shares gained more than 14 percent and crossed the $70 level as the company reported upbeat first-quarter results. Nordstrom posted a quarterly profit of $0.72 per share on revenue of $2.93 billion. However, analysts were expecting a profit of $0.68 per share on revenue of $2.86 billion. Analysts at Credit Suisse upgraded Nordstrom from Neutral to Outperform.

Shares of World Wrestling Entertainment (NYSE: WWE) were down 43.28 percent into the close to $11.31 following announcement of NBCUniversal deal on Thursday. Benchmark downgraded WWE from Buy to Hold.

Vonage Holdings (NYSE: VG) was down as well, dropping almost five percent to $3.53 despite seemingly little news into the end of trading.

Global markets

Asian markets were mostly weak led by a sell off in Japanese markets. The Shanghai index rose 0.08 percent with Hong Kong's Hang Seng down 0.08 percent. Japan's volatile Nikkei gave up 1.41 percent.

Europe was mostly flat on the week The Euro Stoxx index, which tracks 50 blue chips gained 0.3 percent, London's FTSE picked up 0.22 percent, and France's CAC rose 0.26 percent.

Commodities

As equity markets moved higher, energy futures also rose in value. At last check, brent oil was up 0.71 percent to $109.74. Oil rose in value four of five days this week.

Precious metals sold off slightly this week. Gold futures traded down 0.32 percent heading into the equity market close to $1,293.18. Silver futures lost 0.72 percent to fall to $19.38.

Currencies

The Powershares ETF (NYSE: UUP) which tracks the value of the US dollar versus a basket of foreign currencies, rose a twentieth of a percent to close out a strong week. The ETF was last trading at $21.40.

The closely watched EUR/USD pair dropped 0.09 percent to $1.3698. Other big movers on the day include the GBP/USD, which rose 0.19 percent, and the USD/CHF which fell 0.24 percent.

Bonds

Treasuries added a little value today. The iShares ETF (NYSE: TLT) which tracks the performance of 20 plus year government bonds was down 0.28 percent heading into the close. The ETF make a huge move to gain 2.07 percent this week.

Posted-In: Benchmark China Credit Suisse Dan Loeb David Tepper Europe Golden Gate Capital Japan Red Lobster Warren BuffettEarnings News Econ #s After-Hours Center Markets Best of Benzinga

© 2014 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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Herbalife and GNC Are Good Investments, Here’s Why

There is a jump of more than 200% since 1970 in the number of Americans who are either obese or overweight, with around 34% of Americans as obese and nearly two-thirds being overweight. A metabolic disorder like diabetes increased 400% in the same period. According to Gary Taubes and Dr. Peter Attia of Nutrition Science, fat-free food labels are only worsening the obesity crisis. They have started causing growing concern in society as well.

Due to the reasons mentioned above, the awareness about keeping healthy and taking proper nutrition is spreading fast among people. Vitamins and supplements are more of a part of the lifestyle nowadays due to which the wellness industry is a flourishing business. GNC Holdings (GNC) and Herbalife (HLF) are popular in the wellness and dietary supplements market.

Looking at GNC

GNC's business is very well diversified and runs through three different segments – retail, franchise and manufacturing/third-party.

GNC has been growing top and bottom lines through strong comparable-store sales growth and is the least controversial of the three companies in this space, and the strong increase in consumer traffic resulted in 8.2% product comps in quarter three. In addition, GNC.com significantly exceeded the industry growth rates and delivered 31.7% comps increase this quarter.

Moreover, GNC offers a dividend that yields 1% that still has a significant room for improvement because the company has ample free cash flow with a payout ratio of 21%. The company has been good at returning money to shareholders through the share repurchase program. GNC has returned far more cash to shareholders than it raised since its IPO in April 2011; its shares have appreciated by a whopping 260% since then.

GNC acquired the UK-based web-only retailer Discount Supplements to boost growth, and expanding in the UK and other European and Scandinavian markets must accelerate growth.

The health and wellness market has been dominated by GNC for over seven decades. It has 8,100 locations in 54 countries worldwide and marvelous brand awareness. These strong reasons make GNC a trusted brand for consumers to fulfill their needs of a healthy lifestyle.

Going forward, GNC targets to maintain the store count growth of approximately 115 net new stores each year and sees potential for opening approximately 5,000 total standalone GNC stores in the U.S.

A Look at Herbalife

The global rise of obesity enabled Herbalife to record net sales of $1.2 billion, 19% above last year's third quarter. However, Herbalife's marketing practice, like all other direct-selling through individual distributors is questionable.

But Herbalife has received good recent endorsements as it won in the Belgian appeals court. The court rejected claims of Herbalife being a pyramid scheme. The court concluded that the income that its distributors earn from others recruited to buy or sell its products isn't in violation of European consumer protection laws.

So, the company looks to be a good investment option with increasing acceptance in Europe and most probably in the U.S. as well. The P/E ratio of 15 indicates that the stock is cheap with a satisfying dividend yield of 1.70%. Analysts are projecting an impressive CAGR of 15% for Herbalife for the next five years.

Conclusion

Both companies have capitalized on people's awareness about leading a healthy lifestyle. While GNC is a well-established name and oldest of the lot, Herbalife has also been making its mark. The growth expectations look promising. But the cheapest is Herbalife and it could make a good addition to your portfolio.

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Under Armour: More Games ahead for us

It's not the suit.

The much-maligned suit worn by the U.S. speedskating team should never have been victimized, Under Armour CEO Kevin Plank, says in an exclusive interview. "It was a bit of a witch hunt that began to build," he says, in his first extensive interview since the Under Armour suit became a scapegoat for the failure of U.S. speedskaters to win Olympic medals. "The suit became the witch."

Plank is so certain that the "Mach 39" suit is a winner, he says Under Armour will continue to invest in it and tweak if until the 2018 Olympic Games in South Korea. And he's so confident that the suit can help the U.S. Speedskating team, that Under Armour on Friday announced it plans to not only renew its team sponsorship, but double its length through 2022.

Tucker Fredricks of the United States wears an Under Armour uniform in the the men's 500-meter speedskating race Feb. 10 at the Winter Olympics in Sochi, Russia.(Photo: Patrick Semansky, AP)

"We're doubling down," says Plank. "We will not stick our heads in the sand. We want people to know that when we get knocked down, we get back up bigger, better and stronger."

MORE: Under Armour CEO says he learned tough business lessons

Few well-meaning Olympic sponsors have undergone the kind of intense media and image scrutiny that Under Armour has over the past week, as the highbrow brand name suddenly got linked to Olympic-sized failure. "This brand was dragged through the mud," he says. "There was a lot of conjecture and speculation, but none of it based on fact."

For Plank, 41, the whole tumult has been a hugely humbling experience, he says, yet he adamantly refuses to point a finger of blame at anyone.! "In no way, shape or form will we ever point fingers at the athletes. These guys have a ton of things going through their heads. There was no push back from us. We said, whatever will make the athletes more comfortable, we'll do."

U.S. Speedskating executive director Ted Morris says he's thrilled — and the skaters will be, too. "It's a testament to (Under Armour's) commitment and fire to keep working with us," he says.

But it hasn't been easy. Plank says that the night the suit brouhaha broke, he was up at 4 a.m., unable to sleep "sick to my stomach that the company I love was getting beat up. And I can't do anything about it but bite my lip and hope the facts come out."

After the team voted to switch suits — and fared no better — Plank insists, he did not celebrate or feel vindicated. "We remain patriots first," he says. "As I sat there watching the events on TV and my laptop, I'm wearing red, white and blue and an American flag."

Contributing: Kelly Whiteside

Productivity grows at 3.2% rate

WASHINGTON — U.S. productivity growth slowed in the fourth quarter while labor costs kept falling. For the year, productivity turned in another weak gain.

Productivity grew at an annual rate of 3.2% in the October-December period, down slightly from a 3.6% growth rate in the third quarter, the Labor Department reported Thursday. Labor costs fell at a 1.6% rate in the fourth quarter after an even bigger 2% rate of decline in the third quarter.

THURSDAY STOCKS: How markets are doing

For the year, productivity rose a slight 0.6%, down from a 1.5% increase in 2012, and the weakest performance since an 0.5% rise in 2011. Labor costs edged up a slight 1% in 2013, continuing a trend of modest gains in labor costs.

Productivity measures output per hour of work. Greater productivity raises living standards because it enables companies to pay their workers more without having to raise prices which could boost inflation.

The Federal Reserve monitors productivity and labor costs for any signs that inflation could pick up. Mild inflation has allowed the Fed to keep short-term interest rates at record lows and purchase bonds to try to keep long-term rates down.

The Fed in December and again in January announced that it was reducing its monthly bond purchases, taking them from $85 billion per month down to $65 billion.

But at the same time, the Fed strengthened its commitment to keep short-term rates low for an extended period. It expects to keep those rates low "well past" the time that unemployment dips below 6.5%. The unemployment rate is currently 6.7%.

In records going back to 1947, productivity has been growing by about 2% per year.

In 2010 and 2011, productivity increased at annual rates above 3%. That reflected the fact that millions of Americans were laid off as companies struggled to cope with a deep downturn. While output was down as well, the number of workers fell more, increasing the rate of productivity.

After that initial jump, productivity ! has slowed in recent years.

WPCS surges on bitcoin platform; Textron gains

NEW YORK (MarketWatch) — WPCS International Inc. was the biggest gainer in premarket trade Friday following the communications company's announcement that it was launching a software platform to trade the digital currency bitcoin.

Gainers Bloomberg Enlarge Image WPCS said it would launch a bitcoin trading platform.

WPCS (WPCS) launched a beta version of BTX Trader, which is set to be used to gather data and execute trades on five exchanges for bitcoin, a virtual currency that has been highly volatile in recent weeks. Shares in WPCS were up 54% premarket.

Bitcoins recently traded on the Mt. Gox exchange at $794 Friday. This month, the cryptocurrency has traded as high as $1,240 and as low as $455.

Textron Inc. (TXT)  shares gained 2.2% premarket Friday after the firm said it would acquire Beechcraft Corp. for $1.4 billion. Beechcraft, maker of Cessna planes and Bell helicopters, emerged from Chapter 11 bankruptcy earlier this year.

Decliners Click to Play China rebukes Japan leader's visit to Yasukuni Shrine

Japanese Prime Minister Shinzo Abe visited the Yasukuni Shrine, triggering condemnation from the Chinese government, which views the shrine as a symbol of Japan's past militarism.

Central European Media Enterprises (CETV)  fell 5.2% premarket after gaining 1% in the previous session.

Trending tickers

Twitter Inc. (TWTR)  shares retreated 0.9% Friday as investors tried to gauge whether the Internet company's stock surge this week was poised to continue. Twitter was up 22% on the week with 82.7 million shares changing hands on Thursday alone.

3D Systems Corp. (DDD)   was closely watched after it gained 7% Thursday to trade at $92.10. Shares were up another 2% premarket. Canaccord Genuity raised its price target on the 3D printing company ahead of the Consumer Electronics Show in January.

Canaccord Genuity Analyst Bobby Burleson wrote on Tuesday: "We are increasing our price target to $95 from $85 ahead of expected multiple expansion during CES. We believe new consumer-related product releases and refreshes will be met by investors with optimism."

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Microsoft Gets Its Tablet Strategy Right

For years, Microsoft tried unsuccessfully to make a foray into the tablet market dominated by Apple. In the last year the company had some success –making its presence felt in this market, and IDC predicting better days ahead for the software pioneer.

Windows-based tablets market share has risen from less than 1% in 2012 to 3.4% in 2013, and is expected to reach 10.2% in 2017.

What made the difference? What did Microsoft do right this time around? Two strategic moves, in our opinion.

The first was development of Surface 2, which gets the hardware-software bundle right at a competitive price. With its Windows operating systems, Office Suite and keyboard, the Surface 2 has bridged the gap between laptop and tablet, appealing to users who seek the full functionality of a laptop rather than a smartphone in a tablet.

"The Microsoft tortoise has been playing a slow-and-steady strategy on mobile, largely because it was about 1,000 years late to the starting gate writes New York Times' Bob Tedeschi. "But Microsoft's continued dominance with Windows and Office gave it time to develop a mobile strategy while maintaining a prominent place on desktops."

"The value proposition of the base Surface 2 seems about right," he continues. "For around the price of an iPad, you get a tablet that's great for watching movies, checking email, browsing the web and using most of the basic apps you'll need."

The second strategy is a partnership with Best Buy which is beginning to pay off, as discussed in a previous piece.

Last June Microsoft MSFT +0.94% and Best Buy BBY -0.92% entered a partnership whereby Microsoft set Windows Stores at Best Buy. Sales of Microsoft's Surface 32GB topped the list of items sold at Best Buy on Black Friday, according to iPad Insight.

The sales picture was quite different at Walmart, where Apple AAPL -0.33%'s iPad Mini 16GB topped the list, and Target TGT +0.09%, where Apple's iPad Air 16GB topped the list.

To be fair, data from one season isn't sufficient to confirm a trend. Nonetheless, Surface's superior performance in Best Buy stores demonstrates that electronic gadgets are not commodities that can be purchased merely anywhere, especially as these products become more sophisticated.

Besides, getting into retailing can be a very profitable enterprise for gadget makers, as the history of Apple stores confirms.

Microsoft's Windows Stores occupy between 1,500 square feet to 2,200 square feet of Best Buy floor space, allowing consumers to compare and purchase a broad range of the company's products and accessories, including Windows-based tablets and PCs, Windows Phones, Microsoft Office, Xbox, and so on.

The bottom line: Though late, Microsoft is getting its Tablet strategy right by addressing genuine consumer needs; and by letting consumers experience the product in its retail stores. Will it catch up with market pioneer and leader Apple? It remains to be seen.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Benzinga Weekly Preview: Markets Anxiously Await Fed Meeting

Next week the US Federal Reserve will be in the spotlight as investors anxiously wait to see whether or not the US central bank will begin to taper its bond buying plan.

Recent jobs reports coupled with Washington's bipartisan budget deal have both supported the Fed's case to taper sooner rather than later. With that said, many are skeptical about a taper as housing data has been lack luster and the Fed may be hesitant to cut back at the end of the year.

Key Earnings Reports

Next week, investors will be waiting for several key earnings reports including Oracle Corporation (NASDAQ: ORCL), Nike, Inc. (NYSE: NKE), BlackBerry (NASDAQ: BBRY), Rite Aid Corporation (NYSE: RAD), and FedEx Corporation (NYSE: FDX).

Oracle Corporation

Oracle is expected to release second quarter EPS of $0.67 on revenue of $9.8 billion, compared to last year's EPS of $0.64 on revenue of $9.11 billion.

The analyst team at BMO has Oracle with an Outperform rating with a $42.00 target price and said the company is well positioned to continue growing and gaining market share.

"Oracle, as a leading provider of database, middleware, and applications solutions, in our view, is positioned for continued growth and market share gains through leveraging its installed base (cross-sell/up-sell), favorable product refresh cycles, and surrounding the competition in customer environments. We see multiple company-specific drivers: increasing specialized sales force (+3,000), traction of engineered systems and pull-through of related software, and an apps business that is primed for long-term growth. Oracle also appears positioned for continued margin expansion through prudent spending and cost economies of scale in both its core and Sun business."

On December 12, Morgan Stanley has Oracle with an Equal-weight rating, saying the company lacked any major catalysts for growth.

"ORCL now trades near our price target and, in our view, lacks an incremental catalyst to drive the multiple higher. After taking a fresh look at the four key debates on apps, data mgmt and hardware and capital returns that we laid out six months ago, we are hard-pressed to find conviction in further upside to our ests/multiple assumptions over the next year. In particular, our fourth deep-dive customer survey on Fusion Apps indicates momentum is continuing to weaken as competitive drums beat louder, while Engineered Systems growth has faded more rapidly than we expected. Net, until we see signs of product and sales investments yielding stronger returns, ORCL looks fairly valued at ~12x NTM P/E, in line with EPS growth and approaching long-term averages."

Also on December 12, RBC Capital Markets has Oracle with a Sector Perform rating with a $35.00 price target. The analysts at RBC said its reduced rating was attributed to Oracle's share price nearing the firm's Price target.

"ORCL now trades near our price target and, in our view, lacks an incremental catalyst to drive the multiple higher. After taking a fresh look at the four key debates on apps, data mgmt and hardware and capital returns that we laid out six months ago, we are hard-pressed to find conviction in further upside to our ests/multiple assumptions over the next year. In particular, our fourth deep-dive customer survey on Fusion Apps indicates momentum is continuing to weaken as competitive drums beat louder, while Engineered Systems growth has faded more rapidly than we expected. Net, until we see signs of product and sales investments yielding stronger returns, ORCL looks fairly valued at ~12x NTM P/E, in line with EPS growth and approaching long-term averages."

Nike, Inc.

Nike is expected to release second quarter EPS of $0.58 on revenue of $6.44 billion, compared to last year's EPS of $0.57 on revenue of $5.96 billion.

In mid-September, Piper Jaffray has Nike with a Neutral rating with a $71.00 price target, saying the company's outlook in the near term was more positive than its competitors.

"We believe the next several weeks potentially offer a compelling trade opportunity for NKE shares on the long side. The following events over the next four weeks could all be positive catalysts for NKE shares: Dick's Sporting Goods analyst day on September 18th, Nike's FQ1 earnings in late September, Nike's analyst day on October 9 and NKE shares being added to the DJIA on September 23. Furthermore, we believe product innovation such as Flyknit, mildly improving macroeconomic conditions in China and several global sporting events in 2014 provide a favorable backdrop. Lastly, NKE's earnings multiple relative to UA is approaching its historic low, which has typically been a good indicator of NKE's relative outperformance. We have raised our 12-month price target from $64 to $71, but are maintaining our Neutral rating given valuation."

JP Morgan has Nike with an Overweight rating with an $80.00 price target on October 1. The analysts at JP Morgan noted several risks to Nike's success, including the current employment figures in the US, which could stifle consumer spending.

"The economic climate, particularly the employment picture, can affect consumer spending and the department store industry. A greater than expected downturn in household spending could cause sales trends to decelerate below our current assumptions, rendering our estimates too high. Conversely, an improvement in the economy could render our estimates too low."

BlackBerry

BlackBerry is expected to report a loss of $0.43 per share on revenue of $1.58 billion, compared to last year's loss of $0.22 on revenue of $2.73 billion.

CIBC has BlackBerry with a Sector Underperform rating with a $5.00 price target on November 4. The analysts at CIBC said that although BlackBerry's balance sheet is improving, the company faces a long road to recovery.

"BB's balance sheet is now in good shape. Pro-forma cash (convert & restructuring) is $3.1B or ~$5/share. BB's survival was an issue for many enterprises who have watched the downward spiral. Today's cash up should alleviate the financial concerns, but competitive ones remain. BB's long-term strategy is a return to focus to the enterprise market. There are many issues with BB, but the largest one is BYOD led by iPhone and Samsung's Galaxy. Today it's not clear what a realistic BB response is. Establishing BB's competitive edge here is the largest unknown. We lower our rating to SU and PT to $5 from $12. Our prior thesis was the shares could only be bought for this sale process that has now failed. Current fundamentals are quite weak (Q3 market share 1% vs. 2.7% Q2, 4.3% Q3 LY) and yield a lower price, hence our downgrade to SU."

On the 15 of November, Macquarie also has BlackBerry with an Underperform rating with a price target of $5.50. The analysts at Macquarie noted that although the company's CEO has been praised, they found several red flags upon closer inspection.

"While we have heard very good things about Mr. Chen from his days at Sybase, we are concerned that he is not relocating to Waterloo and that he is not the permanent CEO. Furthermore, a review of the filings suggests that Mr. Chen appears to be incentivized to sell the company as one entity, which would accelerate his vesting on 13mm RSUs upon a change in control, with a further $6mm cash termination payment. We believe investors would prefer Mr. Chen's long-term compensation package to be tied to profitability thresholds and/or share price performance relative to the market or peers."

On the November 5, Societe Generale was more positive about BlackBerry and has a Hold rating with a $7.00 price target. The firm's optimism came from news that BlackBerry had decided not to sell itself.

"Blackberry announced yesterday that it has abandoned plans to sell itself to an investor consortium (which includes its largest shareholder Fairfax) for $9 per share. Instead, a consortium of investors (again including Fairfax) will invest $1bn in Blackberry in the form of convertible debentures. The investment should be completed within the next two weeks. The debentures will have a coupon of 6% and will be convertible into shares at $10 per share. The debentures have a term of seven years. Assuming all $1bn of the debentures are converted, the debenture holders would own 16% of the enlarged share capital. In addition to the financial transaction, it was also announced that the current CEO will resign as CEO from the board once the deal has closed. Peter Chen, the ex-CEO of Sybase, will join the board as the Interim CEO pending the completion of a search for a new CEO."

Rite Aid Corporation

Rite Aid is expected to release third quarter EPS of $0.04 on revenue of $6.29 billion, compared to last year's EPS of $0.07 on revenue of $6.24 billion.

BTIG has Rite Aid with a Buy rating with a $6.00 price target on October 3. The analyst team at BTIG saw a bright long term future for Rite Aid based on changes to healthcare policies in the US.

"We have reason to believe that results will improve from here over the longer term. While second half guidance was strong, it already incorporates the threat of increased reimbursement pressures and the weakness in new generics. What the guidance omits is any positive impact in the second half from the launch of the exchanges associated with the Affordable Care Act – even though that guidance already incorporates the cost of paying for more than two thousand consultants working in RAD's locations to help existing and prospective RAD customers to sign up for ACA coverage."

On October 7, Jefferies has Rite Aid with a Hold rating with a $5.30 price target, noting that although the company has made progress, it faces several headwinds in the future.

"Rite Aid has made progress in its turnaround, but we see declining EBITDA in the near-term as the company faces a fading generic drug wave, and some attrition from the Express Scripts customer wins from last year. Given Rite Aid's financial leverage, and its 30-40% lower store productivity vs. CVS and WAG, we believe the current EV/EBITDA discount vs. these peers is justified."

FedEx Corporation

FedEx is expected to release second quarter EPS of $1.62 on revenue of $11. 43 billion, compared to last year's EPS of $1.39 on revenue of $11.11 billion.

JP Morgan revised its estimate for FedEx from Neutral to Overweight with a price target of $154.00 on October 22. The analysts at JP Morgan noted that FedEx's buyback announcement instilled some confidence in the company.

"What has changed to drive our upgrade to OW? We have been cautious on FDX for the past four months due primarily to concerns regarding the headwind from trade down and excess international airfreight capacity. While we still have concerns about trade down, we now believe that the combination of FDX's Asia / U.S. air capacity reductions and its initial steps to flow IE into commercial lift provide the ability for FDX to absorb trade down pressures. We also read FDX's large and uncharacteristic buyback announcement last week as indicating they are being aggressive and they are willing to change to drive improvement."

Citi's analysts were also optimistic and has FedEx with a Buy rating with a price target of $170.00 on December 10.

"We believe further upside in FedEx shares remains, as the current investor base appears to be playing for a meaningful improvement in profitability, led by cost efforts underway at the company's Express segment. Sentiment is firming around FedEx's ability to produce profit improvement and coupled with accretion from the buyback and help from improving volumes, $10 of earnings power should enter the discussion for F15. We are increasing our target to $170 and reiterate our Buy"

Economic Releases

Although the Fed will be on everyone's mind next week, European PMI data is also due out and will be closely watched. Last month's figures were slightly weaker, but still indicated growth. Most are expecting to see similar figures out this week. France's PMI last month showed a disappointing contraction and if this month's figures follow the same trend, it will signal that last month's data was not a fluke and instead that the nation has fallen off track.

Daily Schedule

Monday

Earnings Releases Expected: No notable releases expected Economic Releases Expected:  US industrial production, Italian trade balance, eurozone manufacturing and services PMI

Tuesday

Earnings Expected From: Jabil Circuit, Inc. (NASDAQ: CSPI), Verifone Systems, Inc. (NYSE: PAY) Economic Releases Expected: Japanese trade balance, New Zealand current account, US current account, US CPI

Wednesday

Earnings Expected From: General Mills, Inc. (NYSE: GIS), Lennar Corporation (NYSE: LEN), FedEx Corporation (NYSE: FDX), Oracle Corporation (NASDAQ: ORCL) Economic Releases Expected: US FOMC meeting announcement, US housing starts, US building permits, British unemployment rate, Indian interest rate decision.

Thursday

Earnings Expected From: Accenture plc. (NYSE: ACN), Pier 1 Imports, Inc. (NYSE: PIR), ConAgra Foods, Inc. (NYSE: CAG), Rite Aid Corporation (NYSE: RAD), Nike, Inc. (NYSE: NKE), Red Hat, Inc. (NYSE: RHT) Economic Releases Expected: British consumer confidence, US existing home sales, British retail sales, British mortgage approvals, eurozone current account, Swiss trade balance.

Friday

Earnings Expected From:  BlackBerry (NASDAQ: BBRY), CarMax Inc. (NYSE: KMX), Walgreen Co. (NYSE: WAG), The Finish Line, Inc. (NASDAQ: FINL) Economic Releases Expected:  eurozone consumer confidence, US GDP, US consumer spending, Italian trade balance

Posted-In: Federal ReserveNews Previews Economics Federal Reserve Pre-Market Outlook Markets Trading Ideas Best of Benzinga

(c) 2013 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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When Will The Pain End For Caterpillar?

Tweet 0 Disqus Email Print Feedback Share Tweet 0 Disqus Email Print Feedback 0 Disqus When Will The Pain End For Caterpillar? October 23, 2013 | Filed Under » Earnings Recap, Equity, Heavy Construction, Industrial Equipment Wholesale Tickers in this Article » CAT, GE, UTX, BA, GS, After reporting weaker-than-expected results earlier this year because of a drop-off in orders for mining equipment, Caterpillar (NYSE:CAT) CEO Doug Oberhelman sounded an optimistic note, telling CNBC, "We don't want to be overly optimistic but it certainly feels better than the last two springs."

Unfortunately, things haven't gotten better for the Peoria, Illinois-based company. The company today reported earnings that were far worse than analysts expected and slashed its outlook for the year. The numbers were so bad that CNBC's Herb Greenberg nominated Oberhelman to win the title of worst CEO of the year. That assessment, though, may be overly harsh.

For one thing, Oberhelman doesn't seem like he's sugarcoating the company's problems. He called 2013 "a painful year" in the company's earnings release, but he added that there are "encouraging signs" for 2014.

"The rest of the business is hanging in there," Oberhelman said to CNBC.

Commodities have gone through cycles of booms and busts for decades. The forces of supply and demand balance each other out, and when that happens Caterpillar stands to benefit. Of course, the tricky part is figuring out when that rebound will occur.

"It (mining) comes back," said Eli Lustgarten, an analyst with Longbow Securities, to CNBC. "It just takes time."

The time, though, is right for investors to add Caterpillar to their portfolio because the shares have gotten too cheap to ignore.

For one thing, the shares are trading at a price-to-earnings multiple of about 14, well under their five-year average high of 39.9. That's cheaper than other industrial companies such as General Electric (NYSE:GE) (18), United Technologies (NYSE:UTX) (19) and Boeing (NYSE:BA) (23). Wall Street has an average 52-week price target on Caterpillar of about $92, about 9.5% above where it currently trades.

Investors, though, should be aware that the road ahead for Caterpillar will not be easy.

According to Caterpillar, sales from its Resource Industries division, which serves the mining sector and is the company's largest, are expected to plunge 40% this year. The company's other businesses, Power Systems and Construction Industries aren't doing great either. Sales in both divisions are expected to fall 5% in 2013, though these businesses should hold their own if the economy doesn't falter.

Mining giants such as Rio Tinto (NYSE:RIO) and BHP Biliton (NYSE:BHP) are slashing their capital expenditures because of weak commodities prices, which many analysts expect to continue. Both Goldman Sachs and Credit Suisse Group expect gold prices to continue their losses into 2014, according to Bloomberg News. The declines in gold are expected to pull down prices for silver. UBS expects the metal to fetch an average of $24 an ounce, down 17.2% from an earlier forecast in 2013 and $25 in 2014 (16.7% lower from a previous estimate). Earlier this month, Chile raised its estimate for the global surplus of copper by 40%. The largest copper producer expects prices in 2014 to fall to $3.15 per pound versus $3.15 in 2013, according to Reuters.

The Bottom Line

Caterpillar is the type of stock that illustrates Warren Buffett's famous quote "be fearful when others are greedy and greedy when others are fearful." There are many examples of stocks that people have left for dead that have roared back. Many pundits argued that Best Buy was stuck in a race for customers with Amazon that i! t couldn't win. Netflix was written off after angering customers with an ill-advised price increased. Both have surged more than 200% this year. Though no one can predict that Caterpillar will equal that performance, the stock should do better than it is today.

Disclosure - At the time of writing, the author did not own shares of any company mentioned in this article.