Apple Stock Slammed by Poor iPhone Sales

Apple (Nasdaq: AAPL) stock plunged more than 8% in after-hours trading after it announced that it sold fewer iPhones than analysts expected in its Q1 of 2014.

Apple sold just 51 million iPhones versus analyst expectations of 56 to 57 million. The iPhone contributes about half of Apple's earnings.

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Not helping was that Apple revenue guidance for the current quarter was also below expectations. The company's mid-point of $43 billion missed the $45.74 billion consensus.

However, Wall Street's main beef was with the iPhone miss.

Overlooked is that Apple's other businesses made up for the iPhone's shortcomings. Apple beat expectations on earnings per share - $14.50 versus $14.35 - and barely missed on revenue - $57.6 billion versus $58 billion.

That was made possible in part by the iPad selling more units than expected, 26 million versus 24 to 25 million, and more Macs, 4.8 million versus 4.6 million.

Original post from 1 p.m.:

It's the worst of both worlds: Apple (Nasdaq: AAPL) stock will get hard if it reports lousy earnings today after the closing bell, but good earnings won't affect the Apple stock price much at all.

That's the unfortunate legacy of Apple's mega-boom years from 2010-2012, when it posted 50% or higher earnings growth for nine consecutive quarters.

Apple's long streak of outstanding earnings distorted Wall Street's expectations to the point where only a huge beat is enough to move Apple stock up significantly. But even a minor disappointment will result in a major pullback, particularly in the generally weak market we've seen since the start of the New Year.

Analysts are looking for a strong quarter from Apple, the first of the company 2014 fiscal year and historically its most lucrative because of heavy holiday sales.

The quarter is also an important barometer for how Apple will fare for the rest of the year, as it hints at how the tech giant's new offerings, introduced over the course of the fall, are likely to sell through subsequent quarters.

Here's what to expect from Apple earnings:

Breaking Down Apple (Nasdaq: AAPL) Earnings Expectations

The consensus numbers on AAPL are for earnings per share of $14.35 on revenue of $58 billion. Both would be new all-time highs, and would represent growth of 6.6% on the top line and 4% on the bottom line.

As usual, most investor attention will be focused on iPhone sales, as that iconic product accounts for about half of Apple's earnings. This quarter will tell us how the iPhone 5C is doing, the slightly cheaper and less capable brother to the iPhone 5S.

Most reports have indicated the 5S is much more popular, which will help boost Apple's margins, something that tends to please analysts. Expectations are for a gross margin of 37.5%.

Actual iPhone unit sales are expected to be 56-57 million, about 10 million more than the year-ago-quarter. And that's without the deal with China Mobile, which did not go into effect until after the quarter ended but will open up the iPhone to 700 million new customers.

Analysts are looking for 24-25 million iPad units, a slight increase over last year's 22.86 million.

With regard to the iPhone and iPad, analysts will likely grill Apple over the declining market share of those products in its competition with smartphones and tablets running Google Inc.'s (Nasdaq: GOOG) Android software.

And Mac sales should be about 4.6 million, which would represent a healthy 13.3% gain in a slumping PC market.

One issue that will definitely come up during the conference call will be activist investor Carl Icahn's continued demands for Apple to buy back more shares.

So far Apple has been polite with Icahn, and has bought back at least 47 million shares over the past year (which has improved its EPS, by the way), and that has helped buoy the Apple stock price, currently trading at about $550. But the company may not be willing to do much more.

What Will Move Apple Stock Higher

One thing you won't hear about in Apple's earnings call is plans for new products, such as the long-rumored iWatch or Apple television. CEO Tim Cook will say that Apple has exciting products in the pipeline, but won't get any more specific.

But one of those new products - or both, or something else - is what the company needs to push Apple stock back to its previous all-time high just north of $700 and beyond.

The deal with China Mobile certainly helps, but there simply isn't enough growth left in the smartphone and tablet markets to move Apple stock in a big way. The company needs a new product category to create a fresh conduit of profits in order to again start chasing that elusive $1,000 price target.

The phenomenal growth of Apple since the 2007 introduction of the iPhone is a grand illustration of why tech is where investors can find huge profits. That's why we've identified several tech trends that are on the verge of experiencing exponential growth. This is how savvy investors can double their money...

US Steel, AK Steel Go Their Separate Ways

Analysts tend to group steel makers into two groups–AK Steel (AKS) and US Steel (X), who are more reliant on higher steel prices, and Steel Dynamics (STLD) and Nucor (NUE), who have more flexibility in their businesses.

Bloomberg

At least that’s the way it’s supposed to work. Today’s price action, however, suggests a different grouping after all four released earnings. Steel Dynamics, which met earnings forecasts, and Nucor, which beat, have gained 1% and 0.8%, respectively, suggesting that such a pairing makes sense, at least today. But AK Steel, which reported a profit, and US Steel, which lost money for the seventh time in nine quarters, have gone in very different directions. AK Steel has gained 19%, while US Steel has dropped 1.2%.

Nomura’sCurt Woodworth and team explain why investors soured on U.S. Steel:

We view X's results as positive but disappointing in terms of guidance. Flatrolled costs showed significant sequential improvement, as costs per ton decreased about $16/ton, adjusted for maintenance spending, which drove adj. EPS to $0.27 compared to our estimate of a loss per share of -$0.25. However, management failed to provide measurable cost savings targets or
other Project Carnegie-relate initiatives, which we believe investors were anticipating…

Hot Undervalued Companies To Own In Right Now

Cowen’s Anthony Rizzuto and team were pleased with the results. They write:

AK Steel reported adjusted EPS of $0.09, above its guidance of $0.02 to $0.06, our estimate of $0.03 and the consensus estimate of $0.02. The results exceeded our forecast primarily due to higher shipments, partially offset by a lower average selling price per ton of $1,031/st compared to our $1,085/st estimate. Average selling price per ton decreased 4% sequentially due to a lower proportion of value-added product shipments to the spot market.

And the performance differential isn’t just for today. AK Steel has gained 98% during the past six months, while US Steel has risen 33%. For two similar companies, that’s very different performance.

This Luxury App Takes You Window Shopping Around the World

NEW YORK (TheStreet) -- It's not exactly an idea you'd expect from two 20-somethings, dreamed up one night while cramming for final exams.

But that's how brothers Stijn and Jeroen Verrezen came up with their iPhone and iPad app, which allows users to window-shop the flagship storefronts of the world's most expensive and exclusive luxury brands.

Officially launched at the recent conclusion of fashion week in New York City, the Turnhills Window Shopping app literally puts worldwide window-shopping at your fingertips. And this is luxury window-shopping. Think Gucci, Louis Vuitton, Prada, Michael Kors and more. "The most expensive brands -- it's really unbelievable what they do with their windows -- you will see Louis Vuitton has skeletons of dinosaurs on display. It's amazing. Each time they do their window, they try to come up with something totally original. It's almost a form of art," Stijn Verrezen says during a phone interview from Belgium, where the two brothers grew up and still live. The app is actually the latest incarnation of the brother's computer-based window shopping idea; they launched a website last year. The idea is to feature regularly updated images of flagship storefronts because flagship stores typically display items available at all the other stores around the country or world for a particular brand, Stijn Verrezen says. Also see: How Lexus Is Selling Lexus Without Having to Sell Cars>> Once window-shoppers identify a must-have item in a storefront via the app, they can head to the designer's local store to try it on and buy it. Or buy the item online. "The collections are pretty much the same at your local store, but the window of the local shopping mall store is much smaller," Stijn Verrezen says. "So to get ideas about the latest trends, you can peek through brands on our app. This is like window-shopping in the real world." "Window shopping is an important aspect of real-life shopping," he adds. "And it's also of great value to the virtual shopping experience. It gives someone a first impression of a particular brand without going to the brand website." Rigorously updated, the app provides real-time content from around the world. Users can swipe through shopping districts on their iPhone or iPad to view the latest arrivals and fashion trends of 23 luxury brands.

Top 5 Blue Chip Stocks To Own Right Now

The app also allows users to get daily updated storefronts of the most renowned brands' flagship stores, create personal wish lists of favorite items, prepare for shopping in the real world by comparing prices of items on the app and by items through linked Web-based stores.

The app's pictures of flagship storefronts are taken by professional photographers. Turnhills works with three -- two focused on New York City stores and one in London. Also see: Sears Clear on Why It's Selling Rolex: It's Taking on Amazon, eBay>>

But no fashion app would be truly complete without including a renowned fashion capital such as Paris, and that fact is not lost on the Verrezen brothers.

"The most beautiful stores of Paris will be added in two weeks," says 26-year-old Stijn Verrezen, who remains at home in Belgium at his "day job" -- at the family's business, a factory that develops sun awnings. Jeroen, 24, is in New York City promoting the app. The pair started their business on a shoestring, using personal savings, with no investors or PR reps. They are promoting their app primarily via Facebook (FB) and other forms of social media, including Pinterest. And so far, the Verrezen brothers aren't doing all that bad for themselves. Stijn estimates the app has been picking up about 150 users each day. The app can be downloaded for free from iTunes. In terms of their long-range plans, that's harder to pinpoint. For now, they brothers focused on increasing the number of luxury brands available on the app, with hopes of having 35 luxury brands featured by month's end. "We really just started out brainstorming and thought this would be a great idea to put our effort into. We're just two guys. We weren't particularly interested in fashion. It was more of a business concept," Stijn Verrezen says. "But we really like the idea of how brands create their reputation and create value."

Top 5 Defensive Companies To Watch In Right Now

As more investors flock to the FMCG sector as a defensive measure, FMCG stocks continue to reap huge investment returns. Blue-chip stocks like Hindustan Unilever (HUL), Nestle , Dabur , Colgate , Britannia and Glaxo SmithKline Consumer yielded over ten-fold jump in return for every rupee invested ( One rupee test ) during the period FY10-FY12. Clearly, the FMCG sector is being lapped up by the investor community.

Warren Buffet, the guru of value investing believed that the best way to test the investment potential of a stock is to determine the return earned by shareholders on every rupee invested. In other words, have these stocks generated at least one rupee for every rupee invested? This is measured by the increase in market cap relative to the increase in net worth.

The table below shows that FMCG companies have done very well with the "one rupee test", which is why investors are willing to wager on this defensive bet?

One Rupee test on FMCG companies (standalone)

Top 5 Defensive Companies To Watch In Right Now: Pennant Energy Inc.(PEN.V)

Pennant Energy Inc., a junior exploration company, engages in the investment, exploration, and development of oil and gas properties. It holds 100% working interest in the Bronson and Kaybob prospects covering 1,920 acres of land located in the established Kaybob South Field area of west central Alberta; an undivided 25% working interest in 2 producing oil and gas wells and certain P&NG right in 2 sections of land located at Badger, Alberta; 17.17% working interest in the Ferrier property located northwest of Red Deer, Alberta; 25% working interest in the Pearl and Watts fields located northeast of Drumheller, Alberta; and 24% interest in the Pembina property located southwest of Edmonton, Alberta. The company also has non-operated working interests ranging from 15% to 45% in 9 producing oil wells in the Daly Field in Manitoba. The company was formerly known as Penteco Resources Limited and changed its name to Pennant Energy Inc. Pennant Energy Inc. was founded in 1987 and is headquartered in Vancouver, Canada.

Top 5 Defensive Companies To Watch In Right Now: Gold Port Resources Ltd. (GPO.V)

Gold Port Resources Ltd., an exploration stage junior mining company, engages in the identification, acquisition, and exploration of mineral properties primarily in Guyana, South America. It principally explores for gold and copper ores. The company owns interests in the Groete Creek Gold and Akaiwong projects located in Guyana. Gold Port Resources Ltd. was incorporated in 1995 and is headquartered in Vancouver, Canada.

5 Best Value Stocks To Buy Right Now: MFA Financial Inc (MFA)

MFA Financial, Inc., incorporated on July 24, 1997, is engaged in the business of investing, on a leveraged basis, in residential Agency mortgage-backed securities (MBS) and Non-Agency MBS. Its business objective is to generate net income for distribution to its stockholders resulting from the difference between the interest and other income it earn on its investments and the interest expense it pays on the borrowings, which it uses to finance its leveraged investments and its operating costs. Its operating policies require that at least 50% of its investment portfolio consist of ARM-MBS, which are either Agency MBS or rated in two rating categories by at least one of rating agency, such as Moody�� Investors Services, Inc., Standard & Poor�� Corporation (S&P) or Fitch, Inc. The remainder of its assets may consist of direct or indirect investments in other types of MBS and residential mortgage loans; other mortgage and real estate-related debt and equity; and other yield instruments.

The mortgages collateralizing the Company�� MBS portfolio are Hybrids, ARMs and 15-year fixed-rate mortgages. The Hybrids collateralizing its MBS typically have fixed-rate periods ranging from three to 10 years. Interest rates on the mortgage loans collateralizing its ARM-MBS reset based on specific index rates, which include London Interbank Offered Rate (LIBOR) or the one-year constant maturity treasury (CMT) rate. The mortgages collateralizing its ARM-MBS have interim and lifetime caps on interest rate adjustments. The Company�� Non-Agency MBS have been at discounts to face/par value.

Advisors' Opinion:

• [By Jon C. Ogg]

  MFA Financial Inc. (NYSE: MFA) has an estimated $0.20 decline in book value. This is partially attributable to the company’s recent special dividend declaration. For the third quarter, Sterne Agee sees MFA with a core earnings per share of $0.19, yet the dividend of $0.50 is a combined $0.22 estimated and $0.28 special.

• [By Jonas Elmerraji]

  We're seeing the exact opposite setup in shares of MFA Financial (MFA). Unlike NCT, shares of MFA have been in a well-defined downtrend since the middle of May. That high probability range puts this stock's likely target price lower for the end of August.

  Since the best time to buy an uptrend is at support, it makes sense that the best time to sell a stock in a downtrend is at trendline resistance. That's the exact level that MFA is testing this week. If you own MFA right now, it makes sense to be a seller on the first semblance of a bounce lower.

  Momentum provides some extra confirmation here too. RSI has been suck down in bearish territory since the uptrend began in May. Oscillators like RSI tend to become range-bound when stocks' price action trends. I'd look for a move above 50 on RSI as a precondition to a move higher in price.

• [By Dividend]

  MFA Financial (MFA) has a market capitalization of $2.68 billion. The company employs 37 people, generates revenue of $499.16 million and has a net income of $306.84 million. MFA Financial�� earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $289.95 million. The EBITDA margin is 58.09 percent (the operating margin is 57.14 percent and the net profit margin 61.47 percent).

Top 5 Defensive Companies To Watch In Right Now: Sandspring Resources Ltd (SSP.V)

Sandspring Resources Ltd., a resource exploration company, engages in the exploration and development of mineral properties in the Republic of Guyana, South America. It primarily focuses on the Toroparu gold-copper prospect, which consists of 100% controlled Upper Puruni property comprising a claim block of 167 contiguous medium scale prospecting permits, 13 medium scale mining permits, and 7 small scale claim licenses covering an area of 74,742 hectares; and 5 contiguous prospecting licenses that cover an area of 23,471 hectares located west of Georgetown in the Upper Puruni river area, Guyana. The company is based in Centennial, Colorado.

Top 5 Defensive Companies To Watch In Right Now: Castings(CGS.L)

Castings P.L.C. produces and sells various iron castings. It offers ductile iron castings, spheroidal graphite (SG) iron castings, austempered ductile iron castings, simo castings, Ni-resist castings, and grey iron castings. The company also undertakes the design, including virtual analysis, of ductile and SG iron castings; and produces prototypes and pre-series castings, as well as fully machined ductile iron castings and sub-assemblies. It serves the commercial vehicle and automotive markets. The company has operations primarily in the United Kingdom, Sweden, rest of Europe, and North and South America. Castings P.L.C. is headquartered in Brownhills, the United Kingdom.

Top 5 Defensive Companies To Watch In Right Now: Reis Inc(REIS)

Reis, Inc., through its subsidiary, Reis Services, provides commercial real estate market information and analytical tools in the United States. The company maintains a proprietary database containing information on commercial real properties, including apartment, office, retail, and industrial properties in the metropolitan markets and neighborhoods. Its data is used by real estate investors, lenders, and other professionals to make informed buying, selling, and financing decisions; and debt and equity investors to assess, quantify, and manage the risks of default and loss associated with individual mortgages, properties, portfolios, and real estate backed securities. The company?s products include Reis SE and ReisReports that provide online access to a proprietary database of commercial real estate information and analytical tools designed to facilitate debt and equity transactions, and ongoing evaluations; and trend and forecast analysis at metropolitan and neighborhoo d levels, as well as to building-specific information, such as rents, vacancy rates, lease terms, property sales, new construction listings, and property valuation estimates. It serves banks, other financial institutions, investment funds, equity owners, regulators, brokers, and appraisers, as well as property owners, developers, and builders. The company was founded in 1980 and is based in New York, New York.

Top 5 Defensive Companies To Watch In Right Now: Mercer International Inc.(MERC)

Mercer International Inc., together with its subsidiaries, manufactures and sells pulp produced from wood chips and pulp logs. The company offers northern bleached softwood kraft (NBSK) pulp and market pulp. Mercer International sells its products primarily in Europe, Asia, and North America. The company was founded in 1968 and is based in Vancouver, Canada.

Top 5 Defensive Companies To Watch In Right Now: Berkshire Bancorp Inc.(BERK)

Berkshire Bancorp Inc. operates as the bank holding company for The Berkshire Bank that provides community banking services to businesses, professionals, and retail customers primarily in New York City metropolitan area and the Villages of Goshen and Harriman. The company offers various deposit products, including statement savings accounts, NOW accounts, money market deposits accounts, checking accounts, time deposits, and certificates of deposit. Its loan portfolio comprises commercial mortgage loans secured by office buildings, retail establishments, multi-family residential real estate, and other types of commercial property; commercial loans to businesses for inventory financing, working capital, machinery and equipment purchases, expansion, and other business purposes; and residential mortgage loans secured by first liens on one-to-four family owner-occupied or rental residential real estate, as well as residential single family construction, home equity, and short-t erm fixed-rate consumer loans. Berkshire Bancorp Inc. also offers title insurance agency services. The company operates seven deposit-taking offices in New York City; four deposit-taking offices in Orange and Sullivan Counties, New York; one deposit taking office in Ridgefield, New Jersey; and one deposit taking office in Teaneck, New Jersey. The company was founded in 1979 and is based in New York, New York.

Advisors' Opinion:

• [By Tim Melvin]

  One interesting bank that is seeing insider buying activity is Berkshire Bancorp (BERK). The company has recently switched from the Nasdaq to OTC markets, but that has not stopped director Moses Marx from consistently buying BERK stock. Berkshire does business in the already overbanked New York and New Jersey markets, and the stock is very cheap at just 82% of book value. Insiders won more than 60% of the bank, so investors are on the same side of the table as management.

Top 5 Defensive Companies To Watch In Right Now: Universal Electronics Inc.(UEIC)

Universal Electronics Inc. develops and manufactures pre-programmed wireless remote control products, audio-video accessories, and software products. The company offers infrared and radio frequency remote controls; audio-video accessories; integrated circuits; and software, firmware, and technology solutions, which enable devices, such as televisions, set-top boxes, stereos, automotive audio systems, cell phones, and other consumer electronic devices to wirelessly connect and interact with home networks and interactive services to deliver digital entertainment and information. It is also involved in intellectual property licensing activities. The company sells its products directly, as well as through distributors in Europe, Australia, New Zealand, South Africa, the Middle East, Mexico, Asia, and Latin America under the One For All and Nevo brands. It primarily serves cable and satellite television service providers, original equipment manufacturers, retailers, custom inst allers, software development companies, private label companies, and personal computing companies. Universal Electronics Inc. was founded in 1986 and is headquartered in Cypress, California.

Top 5 Defensive Companies To Watch In Right Now: Generex Biotechnology Corp (GNBT)

Generex Biotechnology Corporation, incorporate in September 1997, is a development stage-company. The Company is engaged in the research and development of drugs delivery systems and technologies. The Company focuses at the technology for the administration of formulations of large molecule drugs to the oral (buccal) cavity using a hand-held aerosol applicator. Through the Company's wholly-owned subsidiary, Antigen Express, Inc. (Antigen), the Company has expanded its focus to include immunomedicines incorporating vaccine formulations. During the fiscal year ended July 31, 2011, the Company has received regulatory approval in Ecuador, India, Lebanon and Algeria for the commercial marketing and sale of Generex Oral-lyn. Using the Company's buccal delivery technology, the Company has also launched an over-the-counter glucose spray called Glucose RapidSpra.

The Company's wholly-owned subsidiary, Antigen, concentrates on developing vaccine formulations that work by stimulating the immune system to either attack offending agents or to stop attacking benign elements. The Company's immunomedicine products are based on two platform technologies and are in the early-stages of development. The Company continues clinical development of Antigen's synthetic peptide vaccines designed to stimulate a potent and specific immune response against tumors expressing the HER-2/neu oncogene for patients with HER-2/neu positive breast cancer in a Phase II clinical trial and patients with prostate cancer and against avian influenza in two Phase I clinical trials. The Company initiated a Phase I clinical trial in patients with either breast or ovarian cancer.

The Company's buccal delivery technology involves the preparation of formulations in which an active pharmaceutical agent is placed in a solution with a combination of absorption enhancers and other excipients classified generally recognized as safe (GRAS) by the United States Food and Drug Administration (FDA) when used in accordance with speci! fied quantities and other limitations. The resulting formulations are aerosolized with a pharmaceutical grade chemical propellant and are administered to patients using the Company's RapidMist brand metered dose inhaler. The device is a small, lightweight, hand-held, easy-to-use aerosol applicator comprised of a container for the formulation, a metered dose valve, an actuator and dust cap. Using the device, patients self-administer the formulations by spraying them into the mouth. The device contains multiple applications, the number being dependent, among other things, on the concentration of the formulation. Absorption of the pharmaceutical agent occurs in the buccal cavity, principally through the inner cheek walls.

The Company competes with Pfizer, Eli Lilly, Novo Nordisk Merck & Co., Inc., GlaxoSmithKline PLC, Novartis, Inc., MedImmune Inc., MannKind Corporation, Alkermes, Inc. CPEX Pharmaceuticals, Inc., Nektar Therapeutics, Amylin Pharmaceuticals, Cephalon, Inc., Micromet, Inc., Novavax, Inc., Sanofi Pasteur Inc., Dendreon Corporation's, Rxi Pharmaceuticals Corporation's, Cell Genesys, Inc., Pharmexa-Epimmune, Inc. and CEL-SCI Corporation's.

Dell Boosts Share of Shrinking Server Market; HP, IBM Slip Further

Dell Inc. (NASDAQ: DELL) posted its highest-ever share of the global server market — 18.8% — as competitors International Business Machines Corp. (NYSE: IBM) and Hewlett-Packard Co. (NYSE: HPQ) both lost share. That s the good news for Dell; the bad news is that the worldwide market is shrinking.

According to the latest data from International Data Corp. (IDC), factory revenue in the worldwide server market fell 6.2% in the second quarter of 2013, from $12.64 billion in the second quarter of last year to $11.86 billion. IBM maintained its top spot in both market share and revenue, with a 27.9% share and sales of $3.31 billion. Those totals represent a loss of 1.2% of market share and 10% lower revenue.

HP remained in second place, but like IBM, saw market share decline from 29.5% in the second quarter of 2012 to 25.9% and revenues shrink by 17.5%, from $3.72 billion to $3.07 billion.

Dell's market share rose from 16.0% to 18.8% and revenues rose 10.3%, from $2.02 billion to $2.23 billion.

Oracle Corp. (NYSE: ORCL) also lost share and posted lower revenues, while fifth place Cisco Systems Inc. (NASDAQ: CSCO) gained 1.5% of market share and saw revenues rise by 42.6%. Cisco's total second-quarter revenues, however, amounted to just $537 million.

Demand for Windows Server from Microsoft Corp. (NASDAQ: MSFT) fell 5.1% year-over-year, although quarterly Windows Server hardware revenue totaled $5.8 billion, nearly half of all factory revenue for the quarter. Unix-based servers continue to lose share as Linux-based servers continue to post gains. Linux now accounts for 23.2% of all server shipments while Unix servers have dropped to 15.1%, the lowest ever total, according to IDC. IBM's z/OS accounted for 9.8% server factory revenue.

Data center growth and cloud-based computing are driving what growth there is, but the uncertain economic environment acts as an anchor to sustained gains as server customers seek more efficiency and lower infrastructure costs.

Is Groupon a Discount at Current Prices?

With shares of Groupon (NASDAQ:GRPN) trading around $10, is GRPN an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Groupon offers online retail services. The company provides daily deals on the stuff to do, eat, see, and buy in more than 500 markets in 44 countries. It provides an online service that lets groups of people create campaigns to pool resources, including money and personal commitments to take action, and it allows users to sell products and transact business online. Groupon is poised to see rising traffic as it provides consumers with ways to save on common shopping experiences and activities. Look for Groupon to continue to grow and provide consumers and businesses with new opportunities.

Groupon shares are trading up slightly as CEO Eric Lefkofsky says that the company is looking to buy at least three warehouses to support its direct e-commerce sales and fulfillment efforts. A Kentucky facility has already been singled out for acquisition while e-commerce sales have been ramping up. Though sales are increasing, Groupon's margins have been sagging — Lefkofsky says that the warehouse purchases will help to expand them.

T = Technicals on the Stock Chart Are Strong

Groupon stock has struggled to gain traction since its initial public offering. However, the stock has been surging higher this year. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Groupon is trading above its rising key averages which signal neutral to bullish price action in the near-term.

(Source: Thinkorswim)

Taking a look at the implied volatility (red) and implied volatility skew levels of Groupon options may help determine if investors are bullish, neutral, or bearish.

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
Groupon Options	59.72%	43%	41%

What does this mean? This means that investors or traders are buying a significant amount of call and put options contracts as compared to the last 30 and 90 trading days.

	Put IV Skew	Call IV Skew
September Options	Top Safest Stocks To Invest In 2014 Flat	Average
October Options	Flat	Average

As of today, there is an average demand from call buyers or sellers and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a significant amount of call and put option contracts and are leaning neutral to bullish over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.

E = Earnings Are Increasing Quarter-Over-Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on Groupon’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Groupon look like and more importantly, how did the markets like these numbers?

	2013 Q2	2013 Q1	2012 Q4	2012 Q3
Earnings Growth (Y-O-Y)	-125.00%	50.00%	0.73%	100.00%
Revenue Growth (Y-O-Y)	7.11%	7.53%	29.69%	32.17%
Earnings Reaction	21.55%	11.44%	-24.24%	-29.59%

Groupon has seen increasing earnings and revenue figures over the last four quarters. From these numbers, the markets have had mixed feelings about Groupon’s recent earnings announcements.

P = Excellent Relative Performance Versus Peers and Sector

How has Groupon stock done relative to its peers Facebook (NASDAQ:FB), Google (NASDAQ:GOOG), United Online (NASDAQ:UNTD), and sector?

	Groupon	Facebook	Google	United Online	Sector
Year-to-Date Return	115.40%	56.05%	21.52%	46.15%	39.73%

Groupon has been a relative performance leader, year-to-date.

Conclusion

Groupon allows consumers and companies to find a happy medium when transacting for goods or services. The company is reportedly looking into purchasing warehouses in order to expand its e-commerce business. The stock is currently surging higher after struggling a bit since its initial public offering. Over the last four quarters, earnings and revenues have been rising, however, investors in the company have had mixed feelings about recent earnings reports. Relative to its peers and sector, Groupon has been a year-to-date performance leader. Look for Groupon to OUTPERFORM.

5 Steps To Keep The IRS Out Of Your Hair

Our tax system is complicated, and any interaction with the IRS can be stressful. What with all the recent scandals, there's even more than the usual concern about dealing with the IRS. One problem can trigger another, so problems tend to snowball.

For that reason, make your tax returns timely and pristine. Make your communications clear and on time. In fact, observe these simple rules year round, not just at tax time. Respect them and you'll reduce your chances of coming to grief with the IRS.

1. File On Time. Timely filed returns are less likely to be examined then late ones. Extensions are fine. There's nothing to suggest that going on extension makes your return stick out. In fact, some advisers believe going on extension reduces your chance of audit.

File on time, and if possible pay on time too. But if you can't pay with your return, you should still file on time.

2. Don't Ask For Too Big A Refund. If you've paid in way too much, you are entitled to the money back. However, too much back can trigger an audit. There's no bright line, but if the amount is very large, consider applying some of it to your next year's estimated taxes. By the time you file your return it will be part way through the year and you should be thinking about this year's taxes too.

3. Keep good records. You might assume that keeping good records is required only if you're audited or in a tax dispute. Actually, keeping good records helps keep you out of tax trouble, and not just for businesses. For example, recreational gamblers should keep a diary or other contemporaneous record of how much they bet and lose on each visit. See Tax Return Filed? Now Consider Your Records.

Another example: charitable donations. Put a $20 check instead of a $20 bill in the collection plate. See Need A Tax Receipt? In business, it's even more important to keep good records. Most audits are correspondence audits. You are told your deductions will be disallowed unless you promptly mail back records substantiating them. For more click here.

4. Report Every Form 1099. How you handle information returns like Forms 1099 matters. A lot of what goes on at the IRS is information return matching to taxpayer identification numbers. Even a small mismatch can result in months of hassles or a tax bill.

There are different forms for miscellaneous income (Form 1099-MISC), interest (Form 1099-INT) and so on. The IRS matches your return to your forms to make sure you haven't understated income or overstated deductions. When you get 1099s, don't just stick them in a drawer–examine them promptly.

Payers are required to mail all 1099s to payees no later than Jan. 31. Then, the payer has another month (until Feb. 28) to send all 1099s to the IRS. This one month delay means that if you receive a 1099 you know is wrong, there may be time to correct it before the IRS receives a copy. If not, there's a way to issue a corrected form.

If you disagree with the Form 1099 but can't get the issuer to change it, you'll need to explain it on your return. Don't ignore it. But don't explain too much. Think Hemingway, not Faulkner.

If it isn't income—say an injury auto accident settlement—so note. Get some advice on how and where to do this on your return, but don't ignore the 1099. Forms K-1 for LLCs and partnerships are important too. Every form with your Social Security Number on it counts.

5. Keep business and personal affairs separate. Try to separate your tax life into business and personal. The person who forgets this rule and tries to morph personal matters into business ones is usually asking for trouble. See Just Business Not Personal? IRS May Not Agree. I'm thinking of people who:

Try to deduct the cost of their divorce because their business is at risk. Try to deduct a miserable vacation with their best client. Claim their hobby as a farmer or horse breeder was actually pursued for profit.

You can reach me at Wood@WoodLLP.com. This discussion is not intended as legal advice, and cannot be relied upon for any purpose without the services of a qualified professional.

Is US 10-year bond yield & Yen decoupling?

USDJPY and US 10Yr yield, the differential of both have always had strong positive correlation in past. However, recently we have witnessed a decoupling in the correlation between the Japanese yen and US 10 Yr yields, where differential have started widening.

The yields on 10Yr bonds have fallen on account of Fed policies keeping its interest rate nearly zero, whereas Yen has depreciated against the dollar largely due to the extended Asset Purchase program by BOJ supported by week macro economic data in Japan. If Fed maintains its policy rates unchanged and on other side Bank of Japan continues to expand its monetary policy to boost economy which should be enough to lift the USDJPY towards north. Hence, the differential between USDJPY and US 10Yr yield will uphold in near term. Now, the question remains for how long this will sustain as in past both have positive correlation for prolong period.

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

To read the full report click here

Microsoft, Quality, Durable, High Yielding, liquidity and CHEAP!!!

It is completely bizarre that we see investors husbanding cash and holding Treasury bonds rather than investing in some of the best companies in the world. Imagine investing in assets that offer the investor a "negative real rate of return" rather than investing in a proven leader with rock solid finances growing sales and earnings, at a price that offers a compelling if not out right high yield and with liquidity?

Yes, the worldwide crisis in government leadership along with the ussual investor mistakes has created an opportunity in my opinion in the shares of Microsoft stock. Please allow me to use my cocktail napkin approach to share what I see in Microsoft, and please I welcome your comments.

What first draws my attention to Microsft is how most investors dislike it and its stock and love Apple and its stock. Note: I use Valueline stock reports for they give great data history on the companies they follow. I always remember what Seth Klarman points out regarding one of investors' greatest advantages is time horizon. Valueline preaches it and Wall Street scorns it. If you talk with investors they will tell you Microsoft and its stock basically "stink". The company's stock has done nothing in years. No, I would point out. It's stock "price" has done worse than nothing in the last 12-years. If you look back to Microsoft's "Golden Age" with investors it woulld be around the year 2000, when the stock was trading near $48 per share and today it is trading around $28 per share. Thus, the stock price has declined around 42% over the last 12-years!!! This is worse than nothing!!! Microsoft is to blame!!!

Really? Blame Microsoft for the performance of its stock price. Why? Is company performance and stock price directly correlated? I mean should the fact that the share price of Microsoft stock declining reflect that Microsft the company's performance has deteriorated over the last 12-years? Well lets look at three keys to stock price and coporate performance.

First, revenue or sales! is the one number that can not be manipulated like earnings per share or EPS. In 2000, Microsofts revenue or sales per share was around $2.65. It's EPS was around $0.85 per share and it paid no dividend. Investors paid the handsome price of $48 per share for these sales, EPS and future growth potential. Thus, since the stock market is efficient the fact the share price today is close to $28, Microsoft must have disappointed investors because the stock price has decline over 42%!!!

Let's see about Microsoft's 2013 Valueline estimates to see how bad the company has done these last 12 or so years. Microsoft's estimated 2013 per share sales or revenues is around $9.85 (2000, around $2.65). So sales are UP and not down? Yes, Microsoft's sales are estimated to be up almost 300% in these last 12 or so years (Please check the numbers. I might be slightly off since I am doing this from memory, and why I call it table napkin analysis.). Clearly, Microsfot must be a dissapointment since the sales or revenue per share only went up 200 to 300%!!!

Let's see about EPS and again how it must have disappointed over the last 12 or so years. Microsoft's estimated EPS for 2013 is around $2.95 per share (2000, around $0.85). The EPS like the sales per share went UP and not down! The EPS increased by around 250% over the last 12 or so years. That is sooo disappointing. You know the EPS per share now exceeds the earnings per share in 2000. It isn't just that, but now the compsny pays a dividend of around $0.92 (2000, No dividend) which now exceeds thet total amount of the EPS (2000, $0.85) of the company back in 2000! The dividend yield is around 3.30% or 163% of the 10-year Treasury Bond. Of course the 10-year Treasury Bond yield is fixed and Valueline projects Microsoft's dividend for the next few years to increase by double digits!!

Now, when I buy a stock I look for 3 main risks to try and cover as best I can. The risks are balance sheet risk, EPS risk and price risk. (Please note: Cocktail napkin figur! es and yo! u should verify for yourself).

1.) Balance sheet risk. Current Assets of around $80 Billion, Current Liabilities of around $30 Billion and Long-term debt of around $10 billion. Thus, Microsoft has current asset after all debt of around $40 biilion and given there is around 8 billion shares of common stock outstanding that means there is basically $5 out of the $28 share price in current assets!!! I would say that qualifies Microsoft as having a rock solid balance sheet and since the company needs $0.40 of the estimated 2013 EPS for Capital Spending that the mountain of current assets is likely to grow, and the level of growth only mitigated from Microsoft buying back stock and increasing the dividend to investors. So I place a check with as much confidence as I can reasonably have that this is good in my opinion/

2.) EPS Risk. I think one of the greatest tricks for simple analysis was provided to me by Mary Buffett. If the name sounds familiar it should be for she is Warren Buffett's ex-daughter in law and author of the book, Buffettology. Two quick and simple observations can tell you if you are looking at special company or just another commodity business. They are the trend in sales and EPS figures over the years and the Return on Equity. If the company has many years of increasing sales and EPS figures like Microsoft, which has done exactly that for the last 11 out of 12 years then you know they have something special. It means they have some special sauce that makes their product or service voluable enough to be able to increase pricing and the customers allow it. Passing along pricing increases is what truly differentiates the extraordinary business from the commodity business. No surprise that Microsoft is the 600 pound gorilla in the coporate, government and education IT segment. This segment is the least trendy and the largest. You know there is an expression among corporate Head of IT that goes like this, "You don't get fired for hiring IBM'. This speaks to the anti-trendy nature o! f busines! s, government and education and solidifies Microsoft as a "platform" company that is ingrained into the infastructure and not likely to be removed for many years. Micrsoft new Surface Tablet, and new Windows 8 will obviously find its way into the corporate sector, but will serve most likely as the plateau for Apple's sales in the consumer side. Unfortunately, Apple is a trendy technology company and just as first mover advantage rewards as it has done for them, the lack of barriers to entry and not being a necessity will most likely show a pretty good erosion to the durability of their business. Now they might be able to come up with something new like Apple TV, but a businesss model based on constant Big Bang innovation is just too risky for me. Microsoft's return on equity is over 20% and though that might not seem supper great, It is anchored by the excess capital. If they had net debt5 like most company's the ROE would be far higher. I point out that Buffett thinks anything over 15% without debt is a great business. So check this off for Microsoft.

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3.) Price Risk. Microsoft's stock price is just over its 52-week lows of around $26. The Enterprise value of the company is around $23 (Current Equity value minus net current assets) and with an estimated $2.95 EPS for 2013 that puts the Forward P/E of 7.8 on the E.V. and 9.5 on the current stock price. The earnings yield on the E.V. is 12.83% after tax and at an estiamted 20% tax rate at 15.39% versus a 10-year T-Bond's fixed yield of 2.02%. Oh, Valueline also think Microsoft's EPS will grow by over 10% for the next few years. So as far is price risk, I think when looking at MSFT's historical P/E ratios that it is cheap at current levels and when I think of it relative to bonds I think 15% looks better than 2%.

So if Microsoft doesn't stink, why did the share price do so poorly? Well, investors needed to understand that pric! e paid di! ctates risk and future return regardless of asset and growth expectations. In 2000, investors put a 50 plus P/E on Microsoft. Simplisticly, that P/E gave Microsoft and earnings yield of around 2.0% and at that time the 10-year Treasury was around 7.5%. Guess which one outperformed the other for the last 12 plus years? Now, the shoe is on the other foot so to speak with the 10-year T-bond offering a 2% yield and because of investor discuss Microsoft is priced to yield not around 7.5% but around15%!!! So don't blame Microsoft for its stock price performance, but past investors blame yourself. Today, Microsoft's stock looks like it is trying to reward investorzs that want a company that is an undeniable leader, an essential company, solidly financed, growing, offers liquidity and is returning value to shareholders thru dividends and share buy backs.

Last word of advise, never hold any asset too dear or too jaded!!! They all get their time in the sun and it ussually has to come after they have sufferrred greatly.

Happy investing to all. Please do not rely on my work or anyone else's but your own work. I hope this serves only to get you to do work/research on Microsoft and form your own opinion!!! Comments appreciated!
Related links:Seth KlarmanWarren Buffett

Boeing Gets Twin 747-8 Orders - Analyst Blog

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The Boeing Company (BA) has received an order from Silk Way Airlines of Azerbaijan for two of its 747-8 Freighters airplanes. The Baku-based cargo carrier Silk Way's order is worth $704 million at list prices.

The wide-body jet airliner – Boeing 747-8 – is the fourth-generation Boeing 747 version, with lengthened fuselage, redesigned wings, and improved efficiency. The jet airliner has two main variants – the 747-8 Intercontinental (747-8I) for passengers and the 747-8 Freighter (747-8F) for cargo.

The 747-8 Freighter gives customers 16% more revenue cargo volume in comparison to its predecessor 747-400 Freighter and offers comparable trip costs and lower ton-mile costs. The Freighter benefits cargo operators with lowest operating costs and best economics among large freighter airplanes. It is also environmentally friendly with lesser harmful emissions. After 150,000 hours of service, the 747-8 Freighters have reported a 1% improvement in fuel burn than expected by customers.

In Mar 2013, Boeing also received an order worth $1 billion from Cathay Pacific Airways for three 747-8 Freighter airplanes. The order also includes options for five additional 777 Freighters. With this order from Cathay Pacific and the cancellation of a five-plane order by Gulf-based DAE Capital, the 747-8 Freighter's order book for the year was at minus two previously. So far, Boeing has delivered 36 747-8 freighters to customers worldwide.

Previously, the company also expressed its willingness to slowdown the production level of this jumbo freighter airplane from two to 1.75 a month. However, the officials remain confident about the airplane's future growth.

Boeing is the largest aircraft manufacturer in the world in terms of revenue, orders and deliveries, and one of the largest aerospace and defense contractors. During the first h! alf of the year, Boeing delivered 306 jetliners, 6.6% more than the year-ago level. Boeing's second quarter delivery level increased 12.7% on an annualized basis with deliveries of 169 airplanes, marking a 15-year high. The production level was boosted in order to keep pace with the increasing demand for new aircraft.

The company expects its commercial airplanes deliveries between 635 and 645 in 2013. This includes more than 60 units of 787 airplanes. Commercial airplanes' 2013 revenue is expected in the band of $51 billion to $53 billion with operating margin of approximately 9.5%.

Boeing presently retains a short-term Zacks Rank #2 (Buy). There are other companies in the sector that also appear promising and are worth accumulating now. These are Zacks Ranked #2 (Buy) Embraer S.A. (ERJ), Northrop Grumman Corp. (NOC) and Alliant Techsystems Inc. (ATK).

Is CBS a Buy at These Prices?

With shares of CBS (NYSE:CBS) trading around $47, is CBS an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

CBS operates as a mass media company in the United States and internationally. The company operates in segments that include Entertainment, Cable Networks, Publishing, Local Broadcasting, and Outdoor. Consumers seek entertainment of various forms and through an array of platforms at an increasing rate. Through its segments, CBS is able to fulfill consumer needs as they continue to release content that excites the masses. Consumers around the world continue to seek varied forms of entertainment and CBS is dedicated to delivering amazing media, which can only lead to growth and rising profits well into the future.

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T = Technicals on the Stock Chart are Strong

CBS stock has been a strong path towards higher prices over the last several years. This path has taken the stock to all-time high prices where it is now consolidating and potentially setting-up to head higher. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, CBS is trading near its rising key averages which signal neutral to bullish price action in the near-term.

(Source: Thinkorswim)

Taking a look at the implied volatility (red) and implied volatility skew levels of CBS options may help determine if investors are bullish, neutral, or bearish.

	Implied Volatility (IV)	30-Day IV Percentile	90-Day IV Percentile
CBS Options	33.08%	66%	63%

What does this mean? This means that investors or traders are buying a significant amount of call and put options contracts, as compared to the last 30 and 90 trading days.

	Hot Biotech Stocks To Watch For 2014 Put IV Skew	Call IV Skew
July Options	Flat	Average
August Options	Flat	Average

As of today, there is an average demand from call buyers or sellers and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a significant amount of call and put option contracts and are leaning neutral to bullish over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.

E = Earnings Are Increasing Quarter-Over-Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on CBS’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for CBS look like and more importantly, how did the markets like these numbers?

	2013 Q1	2012 Q4	2012 Q3	2012 Q2
Earnings Growth (Y-O-Y)	27.78%	9.32%	20%	12.07%
Revenue Growth (Y-O-Y)	6.43%	2.99%	1.58%	-3.07%
Earnings Reaction	2.04%	3.95%	1.05%	6.11%

CBS has seen increasing earnings and revenue figures over the last four quarters. From these numbers, the markets have been optimistic about CBS’s recent earnings announcements.

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P = Excellent Relative Performance Versus Peers and Sector

How has CBS stock done relative to its peers, Comcast (NASDAQ:CMCSA), News Corp. (NASDAQ:NWS), Walt Disney (NYSE:DIS), and sector?

	CBS	Comcast	News Corp.	Walt Disney	Sector
Year-to-Date Return	25.02%	8.57%	21.91%	29.06%	19.18%

CBS has been a relative performance leader, year-to-date.

Conclusion

CBS is a provider of entertainment and mass media solutions to a growing global audience that stands ready to enjoy its content. The stock has been on a strong path towards higher prices that has taken it to all-time highs, where it is now consolidating. Over the last four quarters, the company has seen rising earnings and revenue figures that have really sat well with investors. Relative to its peers and sector, CBS has been a year-to-date performance leader. Look for CBS to continue to OUTPERFORM.

FDA Delays Decision (i.e., Reverts to Norm)

After Sarepta Therapeutics (NASDAQ: SRPT  ) announced that it was going to have a conference call today to update investors about its plans for a marketing application with the Food and Drug Administration, I joked on Twitter that the lede for my article, "I couldn't have predicted this," worked either way.

History said that the FDA wouldn't approve a drug with so little data.

The FDA's recent rhetoric said otherwise.

As it turns out, the news was the most predictable response from the FDA. The agency punted.

When Sarepta last updated us in April, the company said the FDA wanted more information to help the agency decide if Sarepta should file a marketing application for its Duchenne muscular dystrophy drug, eteplirsen, with the limited phase 2 data or wait for a phase 3 trial.

Instead, the FDA told Sarepta that it wouldn't commit to using dystrophin as an acceptable surrogate endpoint for accelerated approval. The agency plans to make that decision based on the data that the company submits with its New Drug Application in the first half of next year. Increased dystrophin protein -- the mutated gene in Duchenne muscular dystrophy -- is the primary endpoint of Sarepta's phase 2 study.

Sarepta also has data that shows eteplirsen helps patients walk farther, which is more convincing since it's a clinical endpoint rather than a surrogate endpoint. There was talk on the conference call today that the six-minute walk data might facilitate a full approval, but that seems like quite a stretch. Sarepta certainly doesn't see that as a high likelihood since it's moving forward with a phase 3 clinical trial that would be required to confirm the phase 2 findings if it gains accelerated approval.

Ironically, phase 3 data from Sarepta's direct competitor -- GlaxoSmithKline (NYSE: GSK  ) and Prosensa's (NASDAQ: RNA  ) drisapersen -- that's due in the fourth quarter could help the FDA answer the question about whether dystrophin is an acceptable surrogate endpoint. If increases in dystrophin correlate with clinical outcomes, it would support approving eteplirsen with less data. It's not clear to me whether Glaxo and Prosensa would have to share that correlation with the FDA -- the clinical phase 3 data should be sufficient for approval -- and if it does make those calculations whether the FDA could legally use it to support the approval of another drug since NDA data is proprietary while under patent.

Shares are trading down as I write this, but I think that's likely just a function of traders exiting since the catalyst has been pushed back until next year. For long-term investors, nothing has really changed except they'll have to wait a little longer for a decision on when eteplirsen will be approved -- possibly with a few more ups and downs before that.

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If you need something to balance out the roller-coaster biotech portion of your portfolio, consider dividend-paying stocks. The Motley Fool's special report "Secure Your Future With 9 Rock-Solid Dividend Stocks" is a great way to kick-start your search. Just click here to get your free copy today.

Don't Be Fooled by Barnes & Noble's Pop

U.S. stocks are ahead this morning, with the S&P 500 (SNPINDEX: ^GSPC  ) and the narrower, price-weighted Dow Jones Industrial Average (DJINDICES: ^DJI  ) up 0.35% and 0.36%, respectively, at 10:05 a.m. EDT.

Barnes & Noble moves on, but will it move up?
Less than two weeks after bookseller Barnes & Noble (NYSE: BKS  ) released abysmal quarterly results, CEO William Lynch is out, having resigned after three years on the job. The departure is a final acknowledgement of Barnes & Noble's failed digital strategy; Mr. Lynch championed the development of the Nook e-book store, e-reader, and tablets. Last month, the company announced it would no longer manufacture its own Nook tablets.

Barnes & Noble's future course is highly uncertain, but Lynch's exit and the promotion of Michael Huseby to CEO of Nook media, which covers the company's digital business and its college book stores, suggests a breakup may be in the works (Mitchell Klipper remains chief executive of the traditional bookstore activity). In January, executive chairman Leonard Riggio, who owns 30% of the company, produced an offer to buy the traditional book stores.

Two weeks ago, commenting on B&N's results, I concluded:

As far as its bricks-and-mortar stores are concerned, Barnes & Noble is a business in decline, perhaps even terminal decline. There may be a size at which the company can produce steady profits, but it's hard to say quite where that "sweet spot" lies (assuming it even exists.) For investors, it's not impossible to make money speculating on businesses in that situation, but it requires timing, luck, and constant vigilance. There are certainly easier ways for investors to eke out a return.

As of yesterday's close, the shares are up more than 13% since then. It appears June 25 marked a short-term bottom in the stock:

BKS data by YCharts.

And the shares are up an extra 2.8% this morning. Nevertheless, I'm going to stick with my initial assessment at this stage. With an enterprise value of 8.1 times the (highly uncertain) estimate of the next 12 months' EBITDA (earnings before interest, taxes, depreciation, and amortization -- a measure of cashflow), I don't think the company is cheap enough to account for the decline in its businesses. Furthermore, one need only go back as far as February on this year's chart to verify that there is plenty of potential downside to the stock price. In sum, Barnes & Noble is not a bottom-fishing candidate.

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Books are now bits, and Barnes & Noble was unable to make that transition. Similarly, the future of television begins now, with an all-out $2.2 trillion media war that pits cable companies like Cox, Comcast, and Time Warner against technology giants like Apple, Google, and Netflix. The Motley Fool's shocking video presentation reveals the secret Steve Jobs took to his grave and explains why the only real winners are these three lesser-known power players that film your favorite shows. Click here to watch today!

GameStop

Our favorite aggressive growth idea for 2014 is an intriguingly-positioned stock in the red-hot video games market, at a time of rapid, but nerve-wracking technological innovation, suggests Stephen Quickel, editor of US Investment Report.

Owning GameStop (GME) is, essentially, a bet that it has the business model, financial strength, and management savvy, to continue the underlying growth that took it from $16 in mid-2012 to a November 2013 peak of $58.

After three bruising weeks of selling, the price has zipped back—propelled by the recent introduction of the new Microsoft Xbox One and Sony PlayStation 4 gaming consoles, which are currently sparking sales at GameStop's 6,683 company-operated stores in the US, Canada, and Europe.

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From today's rock-bottom P/E of 11 times estimated 2014 earnings, and its modest PEG ratio of 0.72, this stock appears headed for the $60 to $65 range, and perhaps higher, despite the technological guessing game among analysts and institutional portfolio managers.

Doubters worry that a rapid onset of direct digital downloading of video games by users could cut into GME's hardware and software revenues.

GameStop proponents note that GME has reworked its business model to expand into the digital market. They also note the company's strong balance sheet, above-average profit margins, and a dividend yield of 2%.

As with all of our growth stock recommendations, particularly those with a speculative element, we advise setting firm stop-loss limits in the 7% to 8% range, advancing them as prices rise and rarely decreasing them.

Overall, GME's dividend, financial strength, and bargain basement P/E and PEG ratios, make it an undervalued stock. And management's steps to cope with the digital downloading threat augur well for the stock's longer-term appreciation.

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Street View Puts Google in Crosshairs of U.K. Regulators

Google (NASDAQ: GOOG  ) is in trouble over Street View, again.

Three years after admitting that its horizontal mapping service has indeed been accidentally collecting "fragmentary" personal data, such as email addresses and computer passwords, in the course of taking pictures for Google Maps, Google got served with an enforcement notice by the United Kingdom's Information Commissioner's Office Friday.

According to the ICO, Google has been ordered "to delete the remaining payload data identified last year within the next 35 days and immediately inform the ICO if any further disks are found. Failure to abide by the notice will be considered as contempt of court, which is a criminal offence." The ICO action comes in response to Google's revelation last summer, that it had discovered a few more computer disks still in its possession, containing illicitly obtained information.

Google notes that it has never "accessed" or viewed the contents of the disks in question, nor published any of the data collected thereon. For these and other reasons, ICO says Google's culpability does not rise to the level where it deserves to be fined -- but it does deserve a stern warning, and that's exactly what ICO just issued.

A separate ICO investigation into whether Google's privacy policies comply with EU data protection legislation is still ongoing.

Wolverine Goes Berserk at Red Robin

Have you tried the new "Berserker" burger at Red Robin (NASDAQ: RRGB  ) ? I have, and as an investor, I find it to be a spicy and delicious triumph of Walt Disney (NYSE: DIS  ) licensing.

You wouldn't know it from the press release announcing the meal, which also describes a handful of cross-promotions between Red Robin and News Corp.'s  (NASDAQ: FOXA  )  21st Century Fox to boost interest in The Wolverine, based on the Marvel Comics superhero mutant of the same name. Fox is producing and distributing the film, which opens July 26 in U.S. theaters.

Red Robin's official Berserker burger promo. Image credit: Red Robin.

"The collaboration allows movie fans of all ages to experience the world of The Wolverine in a unique way, remixing the classic American passion for superheroes with epic offers that take 'Dinner and a Movie' to a whole new level," the companies said.

Additional meals include a spin on Red's Tavern Double burger -- "Kuzuri style," it's called -- which adds ginger, garlic, and cilantro for a more Asian flavor. Red Robin is also offering $3 off for those who see the movie on opening weekend and bring their stub in between July 29 and Aug. 1.

For Fox, every little connection to something tasty helps. The Wolverine follows 2009's X-Men Origins: Wolverine and stars Hugh Jackman in the title role. Last time, his performance overcame a weak script to bring in $373 million in gross receipts.

He might not be so lucky this time. Google's trend chart shows The Wolverine failing to crack the top 20 of movie searches. (Disney's second billion-dollar blockbuster, Iron Man 3, is still tops as of this writing.)

The good news? A more extensive trailer posted late last month has already earned 3 million views, thanks (I think) to scenes that appeal more directly to fans of the X-Men comics that made the character a must-follow.

The Wolverine, from Marvel and 21st Century Fox. Sources: Marvel, Fox, and YouTube.

Still, there's plenty of uncertainty, which helps to explain why Fox is working with Red Robin. Just don't forget that Disney is profiting here, too.

The House of Mouse controls a roughly $40 billion worldwide licensing machine that includes revenue from every Marvel Comics character imprint. But don't take my word for it. Go to a toy store sometime and look at the back of any of the X-Men toys on the shelves. You won't find mention of Fox, because the studio controls only the movie rights. Thus, every "Berserker" burger sponsored by Fox's marketing budget puts a little extra money in the pockets of Disney shareholders.

Think that makes Rupert Murdoch berserk? Let us know what you think, and whether you plan to see the film, using the comments box below.

With great power comes great profit
Marvel and its vast catalog of characters is just one many advantages Disney leverages on behalf of shareholders. In fact, there are so many moving parts that no single investor can expect to keep up with them all.  Let us help. The Motley Fool's premium research report lays out the case for investing in Disney today, and includes the key items investors must watch going forward. So don't miss out -- simply click here now to claim your copy today.

Vodafone Group Increases Dividend By 7% to Yield 5.1%

LONDON -- Vodafone  (LSE: VOD  ) (NASDAQ: VOD  )  released its final results this morning, and announced that the group's revenue saw a decline of 4.2% on a reported basis to 44.4 billion pounds, while EBITDA fell 3.1% to 13.3 billion pounds.

This was mainly caused by the continued turbulent conditions in Southern Europe, which has seen the company cut prices there in an attempt to keep its customers and as such revenue for the region fell 16.7% on a reported basis.

However, group adjusted operating profit rose 9.3% to 12 billion pounds, which was above previous guidance, and adjusted earnings per share increased 5% at 15.65 pence, following success elsewhere in the business.

Vodafone Red, the company's "new strategic approach to pricing and our customer proposition," was launched in 14 countries, and had 4.1 million customers as of May 12, 2013, with "very positive initial results".

Vodafone's cash cow and joint-venture with Verizon Communications, Verizon Wireless, saw service revenue up 8.1%, which led to the British-based company's share of profits up 30.5% to 6.4 billion pounds.

While there was no update on the talks between the two telecoms giants about a potential buyout of Vodafone's stake or a potential merger, this morning's results did confirm that the 2.1 billion pound dividend due to be received from Wireless will be reinvested into Vodafone's business.

The group was able to lift its total ordinary dividends per share by 7% today for a final figure of 10.19 pence and thus, with the shares up marginally in early trade to 197.93 pence, it brings Vodafone onto a current yield of 5.1%.

Group chief executive Vittorio Colao commented:

Thanks to further strong progress this year in our key areas of strategic focus -data, enterprise and emerging markets-and an excellent performance from VZW, we have achieved good growth in adjusted operating profit and adjusted earnings per share. However, we have faced headwinds from a combination of continued tough economic conditions, particularly in Southern Europe, and an adverse European regulatory environment. 

With the announcement of today's 7% increase, the ordinary dividend per share has grown over 22% in the last three years. The Board remains focused on balancing ongoing shareholder remuneration with the long-term investment needs of the business, and going forward aims at least to maintain the ordinary dividend per share at current levels.

Of course, whether today's results make Vodafone a buy is something only you can decide. But if you are looking for alternative investment opportunities, this exclusive wealth report reviews five particularly attractive possibilities.

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Will Star Wars Produce for Electronic Arts?

The following video is from Tuesday's MarketFoolery podcast, in which host Chris Hill, along with analysts Jason Moser and Matt Koppenheffer, discuss the top business and investing stories of the day.

Electronic Arts  (NASDAQ: EA  ) is going to be the exclusive provider of Star Wars-based games for Walt Disney  (NYSE: DIS  ) . The multiyear licensing deal will give EA the global rights to develop and publish new Star Wars games. In this installment of MarketFoolery, our analysts discuss what the partnership means for investors.

While Activision Blizzard and Microsoft have been taking the headlines when it comes to console gaming, investors following the gaming sector would do well to also keep tabs on Electronic Arts. We can help. The Motley Fool's special report breaks down the risks and opportunities facing the company to help you decide if EA is right for your portfolio. Click here to get your copy now.

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The relevant video segment can be found between 10:16 and 13:05.

For the full video of today's MarketFoolery, click here .