Tag Archives: CFA

1 Stock to Buy for Your Kid's Portfolio

By David Hanson and Matt Koppenheffer, The Motley Fool

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In this video, history is made when both Matt Koppenheffer and David Hanson agree on an investment thesis: They agree that Markel is the superior investment for a 20-year time span rather than Bank of America. Markel, they note, is a great company that consistently grows profits and book value. Bank of America, meanwhile, is trading cheap, and it may be a good investment for five years, but for a 20-year time frame, it’s not a proven great company. Matt and David say they’d like to see more tangible evidence of improved business performance at Bank of America before recommending it as a long-term investment.

Bank of America’s stock doubled in 2012. Is there more yet to come? With significant challenges still ahead, it’s critical to have a solid understanding of this megabank before adding it to your portfolio. In The Motley Fool’s premium research report on B of A, Matt joins analyst Anand Chokkavelu, CFA, to lift the veil on the bank’s operations, including detailing three reasons to buy and three reasons to sell. Click here now to claim your copy.

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Source: FULL ARTICLE at DailyFinance

Is T-Mobile Running a Scam?

By Evan Niu, CFA, The Motley Fool

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No. 4 domestic carrier T-Mobile is making a big push, rebranding itself as the “Un-Carrier” and deriding its larger rivals for their subsidizing ways. The company finally got its magenta hands on Apple‘s iPhone, filling the biggest historical gap in its device portfolio.

CEO John Legere is full of fighting words. Not only was his presentation last month laced with expletives, but he also added:

These bold moves serve notice that T-Mobile is canceling its membership in the out-of-touch wireless club. This is an industry filled with ridiculously confusing contracts, limits on how much data you can use or when you can upgrade, and monthly bills that make little sense. As America’s Un-Carrier, we are changing all of that and bringing common sense to wireless.

At the same time, T-Mobile’s new plans simply replace confusion with even more possible confusion. Are T-Mobile’s new initiatives a scam?

Still tied down
Washington State Attorney General Bob Ferguson thinks so. He calls T-Mobile’s new campaign “deceptive” and wants to prevent Washingtonians from getting “duped.” Ferguson doesn’t believe that T-Mobile has been properly disclosing the full limitations of its new plans and warns that customers are still being effectively tethered to a two-year commitment in an underhanded way.

T-Mobile has been focusing on pitching its service plans as having “no annual contract,” which is true. However, for consumers who are buying a phone on the new two-year installment plans (i.e., the vast majority of consumers), they’re still effectively locked in during the term.

Not only has T-Mobile not killed smartphone subsidies entirely, which is evidenced by its iPhone pricing, but devices still being paid off through installments are locked to T-Mobile’s network. The only way to have T-Mobile graciously unlock a device is to pay it off in full — which can easily cost more than early termination fees that other carriers impose.

For example, Verizon Wireless charges a $350 early termination fee for smartphones (which declines $10 per month satisfied). Theoretically, a consumer could buy a subsidized iPhone for $200, immediately cancel service, and pay the fee for a total device cost of $550. That’s less than the $650 retail price that Apple charges, as well as the $580 total required to pay off a T-Mobile iPhone. Interestingly enough, Verizon launched its own installment plans shortly after T-Mobile.

Assuming that most consumers want to avoid such a hefty upfront payment, a safe assumption, T-Mobile consumers are still locked in to a “two-year sentence” — just of a different nature.

T-Mobile has cooperated with the state and agreed to “adequately disclose” the terms to customers, while offering a grace period that covers the past month allowing purchasers to back out.

On top of that, even though T-Mobile is billing its plans as offering “unlimited” data, the fine print shows that only 500 MB of “high-speed data” is included. After hitting that cap, data speeds will be throttled to embarrassingly slow 2G speeds. Want

Source: FULL ARTICLE at DailyFinance

This Is How Apple Will Grow Share in a Mature Smartphone Market

By Evan Niu, CFA, The Motley Fool

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Apple investors have been fretting lately over where future iPhone growth will come from, as data continues to pile up that the high-end segment of subsidized, developed markets approaches maturity. Before even including the very distinct possibility of an affordable iPhone, Apple still has a powerful weapon in grabbing share from Google Android: customer loyalty.

That’s the conclusion of a Yankee Group report, which expects Apple to top Android in the U.S. by 2015. The researcher surveyed 16,000 consumers over the past year, asking questions about smartphone ownership and purchasing plans. Current trends support the current duopoly structure of the market, with 84% of respondents planning on buying either an iPhone or Android in the next six months.

However, where the two dominant mobile platforms differ is loyalty.

Source: Yankee Group via AllThingsD.

That’s a big difference in platform loyalty, and the effects in the long term will be a gradual shift toward iOS. There will always be defectors, but in this case the number of turncoats is extremely asymmetrical. Only 6% of iPhone users are looking to move to the other side, while 18% of Android users are eyeing iPhones.

Rival platforms from Microsoft and BlackBerry are hardly in the picture, with only 3% of iPhone users and 6% of Android users interested in abandoning the top two platforms.

By the time 2015 rolls around, Yankee Group is projecting iOS to surpass Android in U.S. market share. By 2017, Apple could be enjoying 42% of the domestic smartphone market, while Android sits idly by with a 34% slice. Yankee Group exec Carl Howe compares the platforms to leaking buckets of water, except that Google’s leaks a lot more than Apple’s.

Even as unit growth in the U.S. slows, Apple can still gain share through Android defectors.

Even though Apple boasts the highest loyalty rates, there is a debate raging as to whether Apple remains a buy. The Motley Fool’s senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on both reasons to buy and reasons to sell Apple and what opportunities are left for the company (and your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.

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Source: FULL ARTICLE at DailyFinance

The Top 3 Stocks on the Dow

By Travis Hoium, The Motley Fool

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It was a week without a definitive direction on Wall Street, but at the end of the day, stocks continued to move higher. The Dow Jones Industrial Average was up 1.13% this week and the S&P 500 rose 1.74%. On the economic front, we saw slow home sales on Monday, decent unemployment news on Thursday, and weaker-than-expected GDP and consumer confidence on Friday. But investors focused on more company-specific items to drive stocks higher.

DuPont led the Dow by jumping 7.5% this week. Last quarter’s earnings disappointment set extremely low expectations for the company in the first quarter, but it was able to meet them. First-quarter revenue rose 2% to $10.4 billion, and earnings from continued operations fell slightly to $1.46 billion, or $1.56 per share. The real hope was that earnings will pick up later in 2013 because ag unit sales were up 14% and volume grew 8%, so we could be in for much better results in the future.  

Microsoft rose 6.8% this week as sentiment toward the company continued to improve. Microsoft beat earnings estimates, and the stock continued its steady rise all week. The two main news items were a patent ruling win against Motorola and a debt offering. The patent ruling was the first of two major cases in which Google‘s Motorola subsidiary had claimed it was owed $4 billion in royalties, but the judge found that $1.8 million was a more appropriate payment. The second trial is set for this summer. The company also announced $2.7 billion in bond sales.

Bank of America rounds out the top three, gaining 6.5% this week. The stock is especially sensitive to economic news, and despite GDP growth that came in lower than expected, investors were happy to see solid growth, and decent unemployment data helped pushed the stock higher. The company also settled with former Merrill Lynch brokers who claimed they were owed deferred compensation. The company will pay $21 million to settle the class action lawsuit, putting another black eye from the financial crisis behind it.

Bank of America’s stock doubled in 2012. Is there more yet to come? With significant challenges still ahead, it’s critical to have a solid understanding of this megabank before adding it to your portfolio. In The Motley Fool’s premium research report on B of A, analysts Anand Chokkavelu, CFA, and Matt Koppenheffer, financials bureau chief, lift the veil on the bank’s operations, including detailing three reasons to buy and three reasons to sell. Click here now to claim your copy.

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Source: FULL ARTICLE at DailyFinance

Bank Stocks Are Dirt Cheap — but for How Long?

By David Hanson and Matt Koppenheffer, The Motley Fool

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Both Citigroup and Bank of America trade at a discount to their tangible book value. In the following video, Matt Koppenheffer and David Hanson make a case for which bank will trade at a premium to tangible book value first. David goes with Citi. The stock has been on a tear this past year, and the bank has none of the lawsuit drama hanging over it that Bank of America has. Matt thinks Bank of America will win out. There are lawsuits, but as these settle, Matt thinks there is more certainty in the bank, and that, with improving operations, will drive the stock higher.

Check out the video for more details.

Bank of America’s stock doubled in 2012. Is there more yet to come? With significant challenges still ahead, it’s critical to have a solid understanding of this megabank before adding it to your portfolio. In The Motley Fool’s premium research report on B of A, analysts Anand Chokkavelu, CFA, and Matt Koppenheffer, financials bureau chief, lift the veil on the bank’s operations, including detailing three reasons to buy and three reasons to sell. Click here now to claim your copy.

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Source: FULL ARTICLE at DailyFinance

Are Bonds Announcing a Stock Market Correction?

By Alex Dumortier, CFA, The Motley Fool

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This week’s see-saw dynamic in U.S. stocks continues this morning, with the S&P 500 and the narrower, price-weighted Dow Jones Industrial Average up 0.65% and 0.55%, respectively, at 10:05 a.m. EDT.

Moving in separate directions
Even before this week’s stock market gyrations, which were kicked off by a sharp decline on Monday, many investors and pundits had been loudly calling for a correction. Indeed, the market‘s rally since last year’s June low has been a dogged, low-volatility climb that appeared to break from the “risk-on/risk-off” dynamic that has governed asset markets in the aftermath of the financial crisis, despite the fact that many of the same macroeconomic headwinds remain.

One ominous sign for stocks can be found not in the stock market, but in bonds, with Treasury bonds in particular finding new favor with investors since early March. Bill Gross, who manages PIMCO’s Total Return Fund, the world’s largest bond fund, has lifted its allocation to U.S. Treasuries to 33% against 28% in February — the highest it has been since July. The decline in yields suggests that the risk of deflation, or at least a slowdown in the economy, has increased.

As the following graph shows, bonds’ new-found popularity shows up in a split between the charts of the 10-year Treasury yield and the S&P 500’s level over the past month (as bond prices increase, yields decline):

Note that a drop in yields (blue line) has accompanied the stock market wobbles in mid-2011 and during the second quarter of 2013:

While I’m not convinced that a stock market correction is imminent, I do think this week is a healthy reminder that stock prices do not move only in one direction. Volatility had been remarkably muted over the past several months, and investors need to accept that this is unlikely to be the status quo on an ongoing basis.

The Motley Fool’s chief investment officer has selected his No. 1 stock for this year. Find out which stock it is in the brand-new free report “The Motley Fool’s Top Stock for 2013.” Just click here to access the report and find out the name of this under-the-radar company.

The article Are Bonds Announcing a Stock Market Correction? originally appeared on Fool.com.

Fool contributor Alex Dumortier, CFA has no position in any stocks mentioned; you can follow him on LinkedIn. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

From: http://www.dailyfinance.com/2013/04/18/are-bonds-announcing-a-stock-market-correction/

Will Bank of America Abandon Its Promises?

By David Hanson and Matt Koppenheffer, The Motley Fool

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When Bank of America CEO Brian Moynihan launched Project New BAC, a cost-saving initiative, many investors saw the goal of cutting $8 billion of expense by the middle of 2015 as too ambitious. However, as the bank marches through 2013, Moynihan and team are telling investors that the bank is on track to achieve those goals.

In this video, Motley Fool banking analysts David Hanson and Matt Koppenheffer debate whether the bank will ultimately achieve these goals and if its a bad thing for investors if they fall short. 

Bank of America’s stock doubled in 2012. Is there more yet to come? With significant challenges still ahead, it’s critical to have a solid understanding of this megabank before adding it to your portfolio. In The Motley Fool‘s premium research report on B of A, analysts Anand Chokkavelu, CFA, and Matt Koppenheffer, Financials bureau chief, lift the veil on the bank’s operations, including detailing three reasons to buy and three reasons to sell. Click here now to claim your copy.

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From: http://www.dailyfinance.com/2013/04/18/will-bank-of-america-abandon-its-promises/

After Breaking $400, Is Apple Headed to $320?

By Evan Niu, CFA, The Motley Fool

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The Apple sell-off today has been utterly hopeless, with shares breaking through $400 for the first time in more than a year. The last time shares were worth less than four Benjamins was before Christmas 2011. Still, is even more pain in store? Could Apple head to $320 next?

That’s the case that Creative Global is laying out, with founder and analyst Carlo Besenius adding insult to injury to Apple investors today. Besenius reads the charts, which tell him that $380 is a support level from a technical analysis standpoint, but he thinks the true bottom is even lower. Decelerating sales, deteriorating margins, and intensifying competition could push shares all the way down to $320 in the coming months.

Besenius’ claim to fame is when he downgraded Apple to “sell” last October before shares cratered from all-time highs. Specifically, shares were trading around $685 at the time of his call, and two months later he assigned the Mac maker a price target of $420. In February, Besenius further dropped his price target to $320, so today’s research note is more of a reiteration of that previous premonition.

I’d normally say that at $320, Apple would be trading at 7.3 times earnings or that its cash position would equal 46% of its market cap, but recent history shows that Apple’s fundamentals are futile, since the stock trades purely on momentum and emotion these days.

The news that Cirrus Logic expects lower iDevice volumes has caused both companies to plunge today. The data coming out of the audio-chip specialist lends some credibility to Besenius’ pessimism, since Apple was responsible for 91% of sales in the previous quarter. iPhone weakness could definitely manifest itself in Cirrus Logic‘s results.

Not long ago, the idea that Apple might trade at $320 would have seemed ludicrous, in part because of the fundamentals. These days, anything seems possible, as Apple’s upcoming earnings and difficult June guidance could further terrify investors into dumping their shares, while fundamental valuation will continue to be meaningless.

One of these days, fundamentals will matter again. In preparation of that day, investors are wondering whether Apple remains a buy from a fundamental perspective. The Motley Fool’s senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on both reasons to buy and reasons to sell Apple and what opportunities are left for the company (and your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.

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From: http://www.dailyfinance.com/2013/04/17/after-breaking-400-is-apple-headed-to/

Did Microsoft Just Shoot Down a Surface Phone?

By Evan Niu, CFA, The Motley Fool

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Following a big, bold bet on first-party tablets, a Surface Phone simply seems inevitable. If it is pursuing such a device, Microsoft is playing it close to the chest. At AllThingsD’s Dive Into Mobile conference earlier this week, Windows Phone exec Terry Myerson downplayed the idea of the software giant jumping directly into the smartphone hardware ring.

Myerson said the only reason the company would do so would be if current hardware partners like Nokia or HTC weren’t providing an experience in line with Microsoft’s standards. Nokia’s been a “great partner” thus far, according to the exec, and he’s happy with the Windows Phones that Nokia has in its pipeline.

Still, just because Microsoft may not need to get into smartphone hardware yet doesn’t mean it’s not prepared to. In November, The Wall Street Journal reported that Microsoft was exploring first-party smartphone designs with Asian component suppliers. Preliminary steps, but steps nonetheless.

Steve Ballmer has made it quite clear that Microsoft’s future is becoming a devices-and-services company, which is hard to do without more devices. Ballmer also specifically said that Microsoft would “obviously” jump into other hardware markets if there were “opportunities to set a new standard.”

In tablets, Surface RT launched alongside Windows 8, so Microsoft didn’t really even give OEMs a chance to prove themselves before the company stepped up. In smartphones, Nokia is the dominant seller of Windows Phones, selling nearly three-quarters of all smartphones on that platform in the fourth quarter.

Nokia has even acknowledged the inherent risk, even if CEO Stephen Elop has said Microsoft’s entry could serve as a “stimulant” for the platform. For example, this is listed as a risk factor in Nokia’s most recent annual report:

Microsoft may make strategic decisions or changes that may be detrimental to us. For example, in addition to the Surface tablet, Microsoft may broaden its strategy to sell other mobile devices under its own brand, including smartphones. This could lead Microsoft to focus more on their own devices and less on mobile devices of other manufacturers that operate on the Windows Phone platform, including Nokia.

I interpret Myerson’s comments as indications that Microsoft isn’t planning on pulling the smartphone trigger anytime soon (a 7-inch Surface is more pressing), but that doesn’t mean it can’t be locked and loaded should the need arise.

It’s been a frustrating path for Microsoft investors, who’ve watched the company fail to capitalize on the incredible growth in mobile over the past decade. However, with the release of its own tablet, along with the widely anticipated Windows 8 operating system, the company is looking to make a splash in this booming market. In this brand-new premium report on Microsoft, our analyst explains that while the opportunity is huge, the challenges are many. He’s also providing regular updates as key events occur, so make sure to claim a copy of this report now by clicking here.

From: http://www.dailyfinance.com/2013/04/17/did-microsoft-just-shoot-down-a-surface-phone/

Why Bank of America Is Down Despite Quadrupled Profit

By Alex Dumortier, CFA, The Motley Fool

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After posting solid gains yesterday, U.S. stocks are falling hard this morning, with the S&P 500 and the narrower, price-weighted Dow Jones Industrial Average down 0.87% and 0.7%, respectively, at 10 a.m. EDT.

Bank of America still looks cheap
I’ve been a student of Finance and the financial markets for years, and yet I still fall into this trap. After reading the first part of the Reuters headline “Bank of America profits quadruple,” I immediately checked the quote page and was briefly, almost instinctively, surprised to find that the shares were down in premarket trading. I shouldn’t have been; as Howard Marks writes in the excellent book The Most Important Thing: “First level thinking says, ‘I think the company’s earnings will fall; sell.’ Second-level thinking says, ‘I think the company’s earnings will fall less than people expect, and the pleasant surprise will lift the stock; buy.'”

In other words, expectations provide the context necessary to analyze results and their impact on the share price. And so it was that B of A’s quarterly profit rose to $2.62 billion in the first quarter from $653 million in the prior year period, which worked out to $0.20 per share; alas, analysts were looking for $0.22. In addition, total adjusted revenue fell 4%.

It pays to remain focused on what matters relative to your investing style. Mimicking Marks‘ above distinction, I’d say a trader is concerned with the impact of quarterly earnings on the share price, whereas a long-term investor focuses on what earnings can tell us about a company’s future earning power. In that regard, B of A’s results look encouraging on a number of fronts: Brian Moynihan is doing a creditable job shrinking costs, and the provision for loan losses continues to decline, while capitalization ratios continue to improve.

Based on the newly released end-of-first-quarter balance sheet data, Bank of America shares are changing hands at roughly a 10% discount to their tangible book value this morning, and they still look like an attractive (i.e., underpriced) risk to me.

Bank of America’s stock doubled in 2012. Is there more yet to come? With significant challenges still ahead, it’s critical to have a solid understanding of this megabank before adding it to your portfolio. In The Motley Fool’s premium research report on B of A, analysts Anand Chokkavelu and Matt Koppenheffer lift the veil on the bank’s operations, detailing three reasons to buy and three reasons to sell. Click here now to claim your copy.

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From: http://www.dailyfinance.com/2013/04/17/why-bank-of-america-is-down-despite-quadrupled-pro/

Is Samsung About to Address Its Biggest Weakness?

By Evan Niu, CFA, The Motley Fool

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One of the biggest criticisms of Samsung’s mobile device lineup is the company’s continued use of plastic casings. At a time when rivals like Apple  and other Google  Android OEMs are focusing heavily on materials selection and build quality, Samsung has been sticking to plastic. Recent rumors suggest that Samsung may be preparing to up the game in build quality and materials.

In the video below, Fool contributor Evan Niu, CFA, explores what the speculation means for investors.

As one of the most dominant Internet companies ever, Google has made a habit of driving strong returns for its shareholders. However, like many other web companies, it’s also struggling to adapt to an increasingly mobile world. Despite gaining an enviable lead with its Android operating system, the market isn’t sold. That’s why 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.

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From: http://www.dailyfinance.com/2013/04/17/is-samsung-about-to-address-its-biggest-weakness/

Don't Plan on Upgrading Your New Verizon iPhone Anytime Soon

By Evan Niu, CFA, The Motley Fool

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No. 1 domestic wireless carrier Verizon  Wireless recently announced it was tightening upgrade policies, extending the time frame that consumers have to wait to a full 24 months. Carriers have also been trying to reduce subsidies via platform competition. That’s an incremental negative for Apple , since the company still relies heavily on subsidies to boost iPhone prices, but not as bad as if AT&T  had made the move (it sells more iPhones).

In the video below, Fool contributor Evan Niu, CFA, explains how this might affect Apple investors.

There’s no doubt that Apple is at the center of technology’s largest revolution ever, and that longtime shareholders have been handsomely rewarded with over 1,000% gains. However, there is a debate raging as to whether Apple remains a buy. The Motley Fool’s senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on both reasons to buy and reasons to sell Apple, and what opportunities are left for the company (and your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.

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From: http://www.dailyfinance.com/2013/04/17/dont-plan-on-upgrading-your-new-verizon-iphone-any/

Make Up Your Mind: Should Devices Get Bigger or Smaller?

By Evan Niu, CFA, The Motley Fool

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There’s been a lot of talk about the growing consumer trend toward phablets, oversized smartphones that approach tablets in dimensions. Analyst continue to call on Apple to address this niche segment of the smartphone market, particularly because Samsung and the rest of the Google Android army has been able to tap it quite successfully.

At the same time, investors are expecting the next big wave in computing to come in the form of smaller wearable devices. Should devices get bigger or smaller?

We want bigger phones!
Among others, Topeka Capita Markets analyst Brian White believes that Apple absolutely needs a phablet in order to compete, since that form factor is popular in markets like China.

There’s certainly a case for Apple to release such a device, but chances are that Apple won’t release a larger iPhone until next year. Besides, there’s data that suggests that Apple shouldn’t be in any rush, since the 3.5-inch iPhone 4S outsold the 4.8-inch Galaxy S3 in 2012. Flurry Analytics also thinks phablets comprise a relatively modest slice of the broader market.

Oh no! Phones are too big!
One of the reasons why people also expect Apple to release an iWatch at some point is because phones are getting too big and becoming cumbersome to carry around. Microsoft is reportedly laying some component groundwork for a possible smart watch.

That’s despite the fact that Microsoft used to offer a smart watch, except it failed to gain traction in part because it carried a $10 monthly subscription fee. Microsoft could even be considered a first mover in smart watches.

Google will likely be the first to market with a wearable device when it launches Google Glass later this year. Glass will be a different approach to the market, with the search giant going straight for the jugular.

RBS analyst Wanli Wang was quoted as saying, “We see growing demand for wearable gadgets as the size of the smartphone has become too big to carry around.”

So now we have analysts calling for bigger smartphones, which is almost immediately followed by analysts deriding smartphones as being too big. Is there room for both? Or do analysts and consumers need to make up their minds?

As one of the most dominant Internet companies ever, Google has made a habit of driving strong returns for its shareholders. However, like many other web companies, it’s also struggling to adapt to an increasingly mobile world. Despite gaining an enviable lead with its Android operating system, the market isn’t sold. That’s why 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.

From: http://www.dailyfinance.com/2013/04/17/make-up-your-mind-should-devices-get-bigger-or-sma/

No, T-Mobile Has Not Killed iPhone Subsidies

By Evan Niu, CFA, The Motley Fool

Filed under:

T-Mobile’s been stirring the pot in recent months, launching an ambitious “Un-carrier” initiative and touting its new unsubsidized strategy. Contrary to popular belief, T-Mobile hasn’t been able to quit subsidies quite yet (they are rather addictive, after all).

I can’t quit you
The magenta carrier has axed service contracts, but is still offering to foot part of the device bill, even if it’s not being entirely forthright about it. I noted the discrepancy between Apple‘s retail pricing and T-Mobile’s installment plan totals when the device was announced last month, but now investors have more evidence regarding the arrangement.

For starters, Apple now sells T-Mobile iPhones through its own online store, and they’re unlocked and contract-free. These models are sold at full retail pricing of $649 to $849. Unlocked iPhone buyers can choose to have a T-Mobile SIM pre-installed or get one SIM-free. It makes no difference to Apple.

Source: Apple Online Store.

If you mosey on over to T-Mobile’s online storefront and compare full device cost, there’s exactly a $69 difference between its prices and Apple’s prices.

Buy From

16 GB Model

32 GB Model

64 GB Model

Unlocked?

T-Mobile

$580

$680

$780

No

Apple

$649

$749

$849

Yes

Difference

$69

$69

$69

Sources: Apple and T-Mobile. iPhone 5 pricing shown.

That missing money has to be coming from somewhere. There are exactly two candidates for who’s covering the difference. Hint: It’s not Apple.

Not something for nothing
It’s not as if T-Mobile is giving away the $69 for nothing. The vast majority of consumers will opt for the installment plan, and those devices will be locked to T-Mobile’s network while you’re still on the hook for 24 monthly payments. The carrier will unlock the device for you once it’s paid off and you can call it your own. For $69, T-Mobile still has a good shot of getting two years of loyalty, just not through a service contract.

In theory, a customer could go purchase an iPhone from T-Mobile at full price for $580 and have them unlock it immediately and then go use the savings to buy an Apple Wireless Keyboard, but T-Mobile is playing the odds and hoping very few people care enough to do this.

BTIG analyst Walter Piecyk also noticed this difference, and believes it’s a “promotional subsidy within T-Mobile’s new strategy.” Furthermore, Piecyk believes the promotion will expire eventually and T-Mobile iPhones will go back up to full retail pricing, even if they’re available on installment plans.

Been there, done that
T-Mobile actually isn’t the only carrier to offer these types of promotions. Other prepaid carriers do the same.

Leap Wireless‘ Cricket brand offers a $150 rebate, bringing the entry-level iPhone 5 down to $500. Cricket is also a prepaid carrier with no contracts, and Leap absolutely pays subsidies. On the most recent conference all, CFO

From: http://www.dailyfinance.com/2013/04/16/no-t-mobile-has-not-killed-iphone-subsidies/

Gold: The End of an Era

By Alex Dumortier, CFA, The Motley Fool

Filed under:

Stocks in Japan and Hong Kong suffered sharp losses today, and major European markets are also in the red. U.S. stocks look to be following their lead this morning, with the S&P 500 and the narrower, price-weighted Dow Jones Industrial Average down 0.8% and 0.64%, respectively, at 10:05 a.m. EDT.

Gold is losing its luster
On the back of a challenging week during which it lost $60 per ounce, gold is reeling on Monday, down more 5%, having dipped below $1,400 intraday for the first time since March 2011. Gold is a highly volatile asset, and recent downward momentum could be nothing more than a spate of volatility in a long-term secular uptrend. Still, I think Societe Generale‘s research note of April 2, titled “The End of a Gold Era,” looks increasingly prescient. The report included an end-of-year price target of $1,375, and that figure is now in sight. Ten days later, Goldman Sachs piled on with a year-end forecast of $1,450.

Bear in mind that the yellow metal was trading just below $1,600 at the publication of both reports. As the following chart for the SPDR Gold Shares ETF shows, gold has dramatically underperformed stocks so far this year:

GLD data by YCharts.

One of the reasons the metal is so volatile is that, relative to traditional asset markets (stocks and bonds), the gold market is a minnow, particularly when one considers the size of the “free float” — the amount that is actually available for trading. This quality amplified bull-market moves when sentiment was on its side; if a bear market is underway, it will do the same on the downside. And there’s plenty of potential downside left: Gold would need to decline by nearly half to achieve its inflation-adjusted average price since the price of gold floated in Aug. 1971.

If you’re looking for a safer bet than gold, The Motley Fool’s chief investment officer has selected his No. 1 stock for the next year. Find out which stock it is in the brand-new free report “The Motley Fool’s Top Stock for 2013.” Just click here to access the report and find out the name of this under-the-radar company.

The article Gold: The End of an Era originally appeared on Fool.com.

Fool contributor Alex Dumortier, CFA has no position in any stocks mentioned; you can follow him on LinkedIn. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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From: http://www.dailyfinance.com/2013/04/15/gold-the-end-of-an-era/

Is Google's Facebook Nightmare Beginning?

By Eric Bleeker, CFA, The Motley Fool

Filed under:

In April 2011, Google  CEO Larry Page made a move that left no doubt how serious the company thought of social media as a threat. He sent out a companywide memo announcing that 25% of the bonus for all employees, no matter their department, was based on the company’s success in mobile. 

Google clearly sees social and Facebook  as one of the great threats facing the company. With Facebook launching its Facebook Home user interface, which sits on top Android, how threatened should Google feel? While Facebook Home still operates on Android, it also makes Facebook the center of mobile devices. The scary thought for Google is that early versions of Facebook Home are just examples of “toeing the water,” and future releases could go deeper into minimizing Google’s own services while featuring Facebook’s. 

Facebook Home in action. 

Is Facebook becoming the realization of what Larry Page fears? Is search even the main battleground that will emerge between these companies in the next couple years? Let’s take a look at Facebook Home and the threats facing Google today. 

Google’s best weapon: being the best
Back in 2011, when Page went all hands on deck in the battle against Facebook, Google was scared. It was scared because the identity and user habits provided by all the actions taken within Facebook has the potential to be such a strong determinant of search quality. While many see Google now as an entrenched habit of users — it’s not uncommon to say “just Google it” when referring to broad search — the threat is twofold. 

First, if social search could better tap into user habits to offer more relevant results, the company is more susceptible than ever to competitors. The most common threat mentioned when it comes to Google is Microsoft‘s Bing, but that threat might be too obvious.

Instead, consider the recent reports from The Wall Street Journal that Apple  is in negotiations with Yahoo! to feature its content in more iOS applications. The reports note that Yahoo! has been contemplating ways to strengthen a search alliance with Apple, but one of the major sticking points is that leaving Google would “sacrifice the quality of search results.” Google’s greatest threat right now isn’t necessarily Microsoft; it’s the frayed relationship it has with Apple.

Apple is a company that would love to abandon Google from a strategic standpoint but doesn’t have options to do so. Google’s greatest weapon remains not its brand, but its quality and lead in search. 

The early innings of Facebook and search
A second idea that’s connected to the first is how much time users spend on Facebook. Not only does that allow Facebook to collect excellent data on user habits, but it also means Facebook can offer search or other products without needing to boot Google out of being the default search on a browser. If a user is frequently on Facebook and the company offered a unique search offering, it could display a search box prominently within the content

From: http://www.dailyfinance.com/2013/04/14/is-googles-facebook-nightmare-beginning/

Should Google Android Be Broken Up?

By Evan Niu, CFA, The Motley Fool

Filed under:

According to Google Chairman Eric Schmidt, the search giant has clearly won the mobile platform war. That assertion is based in part on the sheer fact that Android is by far the dominant mobile operating system on the planet. That’s indisputable.

Over the past two years, Android doubled its global market share and now powers 70% of all smartphones sold worldwide. That rise is incredible, any way you slice it.

Source: IDC.

The thing is that while Google likes to tout those legitimately impressive headline figures, saying there are now more than 1.3 million Android devices activated every day, the truth is that there are currently so many different distinct Android camps that lumping them all together is somewhat specious where it counts.

Should Android be broken up?

A subtle admission
Google has seemingly acknowledged this. The search giant subtly changed its methodology for measuring version distribution, which resulted in meaningful changes in its reported statistics. The aging Gingerbread fell from 44.2% to 39.8%, while the newest Jelly Bean soared from 16.5% to 25%.

Android version distribution. Source: Google.

The new method now measures the devices that visit the Google Play store instead of including all devices that check in to Google’s servers (i.e., activations). Google says “new data more accurately reflects those users who are most engaged in the Android and Google Play ecosystem.”

Translation: Google wants to emphasize its own Android camp to developers, while minimizing the importance of Amazon.com‘s fork as well as all the Chinese OEM forks out there. Google uses the aggregate figures when they make for good headlines, but it concentrates on its sanctioned Android versions when it matters strategically.

Google doesn’t directly benefit from the different forks out there, and Amazon’s is by far the most successful in tablets. The e-tailer was the No. 3 tablet vendor in the fourth quarter, with 11.5% of the market, and none of those Kindle Fires feed into Google Play. That’s what Amazon’s Appstore for Android is for.

Facebook just launched its Home software suite, which I consider more of a “half-fork,” since Home still feeds into Google Play even though it emphasizes Facebook’s social services over Google’s. From the social network’s perspective, Home is still the right strategy, since Facebook knows better than to compete on a primary platform level.

Even BlackBerry is now piggybacking on Android’s dominance, using ported Android apps to pad its app counts. BlackBerry devices still rely on BlackBerry World for their app fix, and developers have to manually port their apps to the platform to run inside an emulator, so those smartphones were never getting included in Google’s figures. BlackBerry has made some progress getting developers to go native, but the company serves as another example of a third party riding Android’s success with no benefit to Google.

You can’t have one without the other
Device fragmentation has long been cited

From: http://www.dailyfinance.com/2013/04/14/should-android-be-broken-up/

Think Your Taxes Are High? The 5 Countries With the Highest Taxes

By Eric Bleeker, CFA, The Motley Fool

Filed under:

Tomorrow’s D-Day for tax filers across the United Sates. While its easy to bemoan your tax rate, especially if you owe money to Uncle Sam, the United States actually has a relatively low personal tax rate compared with other countries. 

Last October, accounting firm KPMG put together a study of the countries with the world’s highest tax rates on personal income. Not surprisingly, Europe was among the most-taxed regions. Western Europe led all world regions with  a 46.1% tax rate on personal incomes. By contrast, North America stood at 27.7%. 

Also, while the top income-tax bracket for America is jumping to 39.6% this year, it stands neck-and-neck with Spain for having the world’s highest income level where the highest rate of taxes takes effect. 

Clearly, taxes are a matter of significant controversy. Not only do tax codes and deductions vary wildly by country, but the services a citizen receives for his or her tax dollars also differ. Services are difficult to measure in an objective manner, but KPMG tried looking beyond purely top tax rates by measuring effective taxes for people who earn both $100,000 and $300,000 per year. 

Let’s look which countries’ citizens had the highest tax burden in 2012, and how they compare with the United States

1. Belgium

  • 2012 top rate of income taxes: 50%
  • Effective tax rate on $100,000: 47% (13.1% Social Security, 33.9% income tax)
  • World rank on effective tax rate of $100,000: 1
  • Effective tax rate on $300,000: 53.4% (13.1% Social Security, 40.3% income tax)
  • World rank on effective tax rate of $300,000: 2

2. Italy 

  • 2012 top rate of income taxes: 43%
  • Effective tax rate on $100,000: 45.2% (9.6% Social Security, 35.6% income tax)
  • World rank on effective tax rate of $100,000: 4
  • Effective tax rate on $300,000: 51.8% (10% Social Security, 41.8% income tax)
  • World rank on effective tax rate of $300,000: 3

3. France

  • 2012 top rate of income taxes: 45%
  • Effective tax rate on $100,000: 42% (22% Social Security, 20% income tax)
  • World rank on effective tax rate of $100,000: 8
  • Effective tax rate on $300,000: 54% (20% Social Security, 34% income tax)
  • World rank on effective tax rate of $300,000: 1

4. Denmark

  • 2012 top rate of income taxes: 55.4%
  • Effective tax rate on $100,000: 42.3% (0.2% Social Security, 42.1% income tax)
  • World rank on effective tax rate of $100,000: 6
  • Effective tax rate on $300,000: 51.5% (0.1% Social Security, 51.4% income tax)
  • World rank on effective tax tate of $300,000: 4

5. Greece

  • 2012 top rate of income taxes: 45%
  • Effective tax rate on $100,000: 46.5% (16.5% Social Security, 30% income tax)
  • World rank on effective tax rate of $100,000: 2
  • Effective tax rate on $300,000: 45.1% (5.6% Social Security, 39.5% income tax)
  • World rank on effective tax rate of $300,000: 14

For comparison: The United States