Google Gets a Key Partner in Challenging Microsoft Office

Thus far, Microsoft (NASDAQ: MSFT  ) has mostly downplayed the disruptive threat that Google (NASDAQ: GOOG  ) Apps represents for its lucrative Office business. To be clear, Office is Microsoft's biggest cash cow, followed by Windows and servers. The business segment easily generated the most operating income last quarter at $4.1 billion.

You'd think Microsoft would take any threat to that business pretty seriously, but the company just doesn't see Google as a major contender. Microsoft business division exec Julia White told The New York Times late last year that Google hasn't "yet shown they are truly serious," saying they're still just an "advertising company." That may just be a public facade though, as Microsoft has reportedly set up a "Google Compete" team specifically to defend Office.

Either way, Google just got serious.

Thinking inside the box
As further proof that Hewlett-Packard (NYSE: HPQ  ) is sick of Wintel, the PC giant has just partnered with Big G to launch a new productivity offering geared toward small and medium businesses, or SMB. The package is called HP SMB IT in a Box, and HP is positioning it as a "one-stop shop" targeting the SMB segment.

HP SMB IT in a Box will notably include Google Apps for Business as a cloud-based productivity suite instead of Office, which promises to generate cost savings. Over 5 million businesses are now tapping the search giant's cheaper alternative. HP will provide the requisite hardware, including PCs and printers.

HP remains the No. 1 PC vendor in the world, grabbing 15.7% of the market in the first quarter, and is expecting a boost in sales next year when Microsoft stops supporting Windows XP. HP is a big partner to score for the Google Apps Reseller program.

Don't fear Apple
Even Apple (NASDAQ: AAPL  ) is getting into cloud-based productivity software, recently announcing iWork for iCloud at WWDC this week. During the demonstration, Apple kept pointing out that everything was taking place in a browser. The Mac maker made sure to point out that the new offering, which will launch in beta this fall, will support all of Office's common formats.

Microsoft doesn't need to worry as much about Apple here, though, since Apple almost never targets the enterprise directly. Apple has always gone after the mainstream consumer, and much of its recent enterprise momentum is thanks to the BYOD movement. Likewise, iWork for iCloud appears positioned toward meeting consumer productivity needs.

iWork for iCloud is also well behind Google Apps and Office 365 in terms of features, and it hasn't even hit the market yet. It won't be a big player in the enterprise.

Fear Google
The news is the latest in a string of collaborations between HP and Google. So far this year, HP has launched its first Chromebook, first Android tablet, and announced an Android laptop. After hedging its bets with those devices, HP is further diversifying away from Microsoft as part of its new multiplatform strategy.

The SMB segment is ripe for Google to target, as those businesses tend to be more price sensitive than companies in the Fortune 500. As Google continues to build up Google Apps, investors can expect the company to move up-market later on. Watch out, Microsoft.

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.

 

I Just Got Another "Strong Buy" Signal…

If you've been joining our twice-a-week get-togethers over at Strategic Tech Investor, you know that I'm a focused and disciplined investor - and that I ignore fads and refuse to chase "hot tips."

I'm also very price-sensitive: Although I'm hunting for stocks capable of delivering "moonshot" price gains, I won't pay a penny more than my charts or "black box" system tells me they're worth.

To enforce that discipline - and to help pass along to you all that I've learned through the years - I developed the set of five rules that we talk about here each week.

But one of my best tools is also one of my simplest. It's a roster of companies whose stocks I'd someday like to own, but that don't currently meet my stringent criteria.

I call it my "Watch List."

And through the years, this simple shopping list for stocks has ended up delivering some of my all-time biggest winners...

When Patience Can Double Your Money

The sell-off after the credit crisis of 2008-2009 was the biggest bear market since the Great Depression.

Five years later, however, U.S. stocks are within 5% of the all-time high achieved in mid-September. There are a lot of great companies whose shares I would like to own, but my stringent guidelines signal that these stocks are still overvalued.

So if I can't recommend the stocks, I do the next best thing: I put them on my Watch List.

And I wait... patiently, and for however long it takes.

I will wait months - even years, at times - to get the right stock at that perfect price.

This discipline can create some fascinating situations: Very often, in fact, I'll see "the crowd" running for the exits, jostling and shoving one another in a panic-driven effort to get as far as possible from a stock that I can see is actually trading at once-in-a-lifetime, bargain-price levels.

So, while those other investors are sobbing inconsolably about the loss they've taken on this stock, I'm inwardly thrilled (and sometimes outwardly grinning) at the "moonshot" magnitude profit potential that has literally fallen into my hands.

What this means is that I'm able to buy the stock at the optimum "entry point" - just ahead of the next big move higher.

And I believe that's just what we have with the Watch List stock I want to tell you about today.

The company is Santarus Inc. (Nasdaq: SNTS), a San Diego-based biopharmaceutical company whose shares could easily double in just two short years.

Santarus has a unique niche: It markets drugs that address the needs of patients being treated by physician "specialists." In other words, these drugs aren't run-of-the mill antibiotics - they are designed to treat such serious maladies as diabetes, high cholesterol, or autoimmune problems.

This is a stock that's been on a roll, zooming all the way to a record high of $28.10 a share in early August.

That's when the stock stumbled.

And it's also when I added it to my Watch List.

Shares of Santarus have really hit the skids in recent weeks: On Monday, they closed at $22.40, down 20% from that record high.

When a market index suffers through a correction of that magnitude - 20% or more - it's classified as an official "bear market." Bear-market sell-offs are often overdone, setting up a nice rebound for investors who are able to identify the correct opportunity - and deploy the courage to act.

And my analysis of Santarus shows me that it's time to move this stock off the Watch List... and onto the list for Strong Buy profit plays.

To see why that's so, we need to take a closer look at the stock.

Play the "Super-Size Me" Economy

If you want one reason that Santarus has been able to generate such consistent profit growth, it's this: The company has focused a lot of its energy on America's No. 1 "growth" industry - obesity.

Some docs will tell you that U.S. obesity isn't just a problem - it's an outright epidemic.

And they may be right.

Nearly 26 million people in the United States have diabetes.

That's more than 8% of the whole country.

The majority suffer from type 2 diabetes, which is very often associated with being overweight later in life. Obese patients usually have high blood sugar, a condition with lots of complications.

Santarus has two drugs that help these patients improve their blood sugar levels, improving their health as a result.

Glumetza helps keep the levels under control, and Cycloset can lower them without the patient needing to increase insulin levels.

Another drug, Fenoglide, targets high cholesterol levels, another condition related to America's growing waistlines. Then there's Zegerid, which reduces heartburn and other gastric problems.

Earlier this year, Santarus introduced a fifth drug with a big potential upside.

The drug - known as Uceris - is an extended release tablet for patients suffering from ulcerative colitis, an inflammatory bowel disease.

The drug had recent quarterly sales of just $16.2 million. But Santarus is projecting sales will increase some 18-fold to roughly $300 million in the next few years.

A drug with revenue of that magnitude approaches "blockbuster" status - the Holy Grail for any drug maker.

Santarus' current revenue needs are well covered - as are those in the intermediate term.

And the company isn't standing pat - for it has three additional drugs in its pipeline, namely:

Ruconest, designed to treat patients with a rare genetic disorder that causes swelling of the body. Santarus submitted the drug to the U.S. Food and Drug Administration (FDA) last April and expects to get approval in the next few months. Rifamycin SV MMX, which treats travelers' diarrhea, an embarrassing, inconvenient, and sometimes dangerous problem affecting globetrotting business folks and tourists alike. SAN-300, a drug that targets multiple inflammatory and autoimmune diseases. With phase I completed, the drug should enter phase II trials by the end of this year Five Reasons the Stock Will Double

With a market cap of $1.5 billion, Santarus trades at 15 times forward earnings, which is in line with the Standard & Poor's 500 Index. That's not pricey for a stock that my analysis says will double in value from the current level of roughly $22.

Let me show you why by running it through the "five filters" that comprise my tech-investing system.

Rule No.1 - Great Companies Have Great Operations: We look for well-run firms. CEO Gerald T. Proehl has nearly 30 years' experience in the field. He joined Santarus in 1999 after spending 14 years in management roles for global drug maker Hoechst Marion Roussel Inc. He took Santarus public in 2004. The firm has a 36% profit margin and an 84% return on equity (ROE). Rule No. 2 - Separate the Signal from the Noise: If you really want to create wealth, you have to ignore the market's many distractions and find companies with rock-solid fundamentals. The stock corrected in August on profit-taking because of an analyst downgrade that followed stellar earnings. But the company is making all the right moves for the stock to reenter its uptrend. Rule No. 3 - Ride the Unstoppable Trends: We look for stocks in red-hot sectors because they offer the best chance for life-changing gains. That's clearly true in biotech. Because of a steady stream of new drugs approved for sale, the industry has been on fire over the last two years. And the long term looks great as aging Baby Boomers seek to maintain a high quality of life - and benefit from drugs that combat diseases as diverse as cancer, diabetes, and arthritis. Rule No. 4 - Focus on Growth: As a rule, companies with the highest growth rates will give you the highest possible stock returns. In the most recent quarter, Santarus grew sales by nearly 90%, and operating income by 392%. Rule No. 5 - Target Companies That Can Double Your Money: I believe Santarus will grow earnings per share (EPS) by more than 60% next year from this year's estimated $1.26. I'm projecting earnings of about $2.90 a share for 2015. If the stock just continues to trade at the current price/earnings (P/E) multiple of roughly 16, the share price could hit $46 - for a gain of as much as 104%.

This stock meets all five of our double-your-money criteria. And we believe that the shares have that kind of potential. Given the recent sell-off, expect the shares to trade sideways for a time - making this a stock that's in search of a catalyst.

That catalyst could come as soon as November 4, when the company is scheduled to report its third-quarter earnings.

But once the stock is ignited anew, we expect it to head for new highs. The performance will really accelerate once the shares trade consistently above their August closing highs.

We'll keep you posted.

Make sure that you get Michael's update on Santarus' shares as soon as it's time to pull the trigger. By joining Strategic Tech Investor, you'll get Michael's research delivered to your inbox twice weekly, free of charge. Just enter your email address below and click "Submit."

Was Cisco Really a Good Choice for the Dow?

On this day in economic and business history ...

What is the Dow Jones Industrial Average (DJINDICES: ^DJI  ) without any consumer-facing industrial company? The venerable index found itself in a bind in mid-2009, as General Motors, the only Dow stock that might be called a "consumer industrial," collapsed into bankruptcy. What company might replace it? Could the Dow retain its identity as a barometer of American industrial strength if its only heavy-industry concerns built aircraft and earth-movers far beyond the price range of average Americans?

Perhaps it could. On June 8, 2009, the Dow's editors tapped Cisco (NASDAQ: CSCO  ) to replace the belly-up automaker, and also replaced floundering Citigroup (NYSE: C  ) with Travelers (NYSE: TRV  ) , its onetime subsidiary. When the change was announced, Dow Jones editor-in-chief Robert Thomson noted that Cisco was the right choice "because its communications and computer-networking products are vital to an economy and culture still adapting to the Information Age -- just as automobiles were essential to America in the 20th century." Citigroup's ouster was necessary as well, since its financial-crisis struggles had left the government with a substantial stake, and had left the bank in the midst of a "substantial restructuring."

Despite its high praise, Cisco turned out to be a Dow laggard -- its 30% gain in the four years following the change has thus far been nearly 45% below the index's return over that same time frame. Travelers, on the other hand, proved a better choice than Citigroup, as the former has gained 110% to the latter's 50% since the change.

Mmm, snacktacular
In another universe, the Dow might have chosen to replace General Motors with the world's largest diversified food processor: PepsiCo (NYSE: PEP  ) , which took on its modern form (or at least the better part of it) on June 8, 1965, when Pepsi-Cola merged with Frito-Lay. Pepsi was already a successful multinational at the time, with operations in 107 countries, and comments from CEO Donald Kendall revealed a pseudo-Machiavellian drive to create a whole world of snackers through the export of Frito-Lay brands. "Just as we exported soft drinks after World War II," he boasted, "we can export the snack habit. The snack food field is wide open, and our big opportunities are in the international field."

In the year before the merger, Pepsi-Cola reported $272 million in sales, compared with $184 million for Frito-Lay. The company would -- as long-term investors know -- blow past that combined $456 million in sales as it expanded its line of brands. Four decades later, PepsiCo was a true giant, with a reported $32.6 billion in worldwide sales -- representing an annualized revenue growth rate of 11.5%.

PepsiCo has quenched consumers' thirst for more than a century. But recently, the company has left shareholders craving more. With increased competition and loss of market share, many investors wonder if this global snack food and beverage giant is simply fizzling out. Are more bland results ahead for PepsiCo? The Motley Fool's premium report on the company guides you through everything you need to know about PepsiCo, including the key opportunities and threats facing the company's future. Simply click here now to claim your copy today.

One You Want, One You Don't (ACAD, NTEK)

Call them hunches (because that's all they are), but now would be a great time to get out of a NanoTech Entertainment, Inc. (OTCMKTS:NTEK) position and/or get into an ACADIA Pharmaceuticals Inc. (NASDAQ:ACAD). NTEK looks like its reached its maximum potential - for the time being - while ACAD looks like it's ready to start rolling higher again.

Just so there's no confusion, and to avoid ruffling feathers, neither is a long-term call based on the merits of either company. Both are short-term, chart-based outlooks intended to take advantage of short-term trading realities. Translation: Don't take it personally if you're in a NanoTech Entertainment trade for the long haul, or if you've made a long-term bet against ACADIA Pharmaceuticals.

Yes, with just a quick glance, NTEK looks like it's in a solid uptrend. That's because it is. It looked like it was in a solid uptrend in late June and early July too, however, and that rally stopped and turned on a dime. Point being, nothing lasts forever. In fact, here and now looks like the ideal time for the bears to up-end the rally from NanoTech Entertainment, Inc.

Two things hint at that outcome. One of them is the fact that NanoTech Entertainment shares reached a new all-time high today by surpassing the July peak of $0.1395, Generally speaking, reaching new highs is a bullish hint to buy. In reality though - and with small caps in particular - new highs is a reason and opportunity for the smart money to start selling, right when everyone else least expects it. The other red flag is the fact that the bullish volume is waning on the way up, and has been downright tepid with this last leg. Something's got to give sometime.

But isn't ACADIA Pharmaceuticals Inc. wickedly overbought too? Yes... and no.

Though ACAD got overheated through the first part of October, it paid its dues for doing so - the stock peeled back from a peak of $29.38 on the 3rd to a low of $19.64 on the 9th, where it started to find near-perfect support at the 100-day moving average line (gray). The perfection and persistence of that support, in fact, is the reason we can have some confidence that the bulls drew a mental line in the sand there.

Better still is the way ACADIA Pharmaceuticals shares are now finding support at the 50-day moving average line (purple). Yeah, the 20-day line (blue) seems to have stepped in as a ceiling, but the bigger undertow has been turning bullish since Monday. We'll take the subtle hints at face value. And, if ACAD manages to close above the 20-day moving average line at $25.19 before sliding under the 50-day average line at $22.71, that'll be full-on bullishness. For most traders though, there's enough bullish undertow as it is right now.

If you'd like to get more trading ideas and insights like this one, sign up for the free SmallCap Network daily e-newsletter. It's full of stock picks, market calls, and more.

First Take: Wall Street holds back Yahoo cheers

SAN FRANCISCO — Yahoo CEO Marissa Mayer has performed a miraculous company culture shift and overhaul of services but a makeover of its advertising business remains to be seen.

Wall Street will have to continue its wait. Yahoo on Tuesday reported third-quarter results that gave little to cheer in that regard. Adjusted display ad revenue slid 7%, to $421 million, from a year ago. Search revenue edged up 3%, at $426 million, on an adjusted basis.

Yahoo shares closed 1.8% lower, at $33.88, in regular trading and remained flat in after hours.

"Signs of a fundamental turnaround at Yahoo would begin with a recovery in its user engagement levels. And so far, there isn't evidence of this," said Mark Mahaney, analyst with RBC Capital Markets, ahead of Yahoo's report.

Analysts expect Yahoo's share of the U.S. display advertising market to shrink to 7.5% in 2013, down from 9.2% last year, according to eMarketer. Google is expected to increase its position to 17.4%, up from 15.3% last year. Facebook's share is expected to surge to 17% this year, up from 14.8% last year.

Yahoo's stock pop under Mayer — it has more than doubled — is largely attributed to its holdings in Alibaba. The Chinese e-commerce giant is expected to go public and could command an $80 billion valuation. That would make Yahoo's 24% stake worth roughly $19 billion.

Mayer is the sixth CEO in six years at Yahoo. The troubled Internet pioneer's top spot had become a revolving door of those unable to correct its course in a losing advertising battle against Google and Facebook. Twitter is expected to nearly double its advertising revenue by next year, posing another challenger.

Yahoo reported net income of $296 million, or 28 cents per share, on revenue of $1.08 billion.

Analysts expected Yahoo to report third-quarter net income of $356.5 million, or 33 cents per share, on revenue of $1.08 billion, according to the survey of estimates from Thomson Reuters. That's a decline from net income of $420.7! million, or 35 cents a share, on revenue of $1.09 billion in the same period a year ago.

Domino’s Pizza Plunges as Earnings Fail to Deliver

Shares of Domino’s Pizza (DPZ) have plunged today after the company failed to deliver what investors had ordered.

Ceci n’est pas une Domino’s Pizza.

MarketWatch has the details:

Domino’s reported a quarterly profit of $30.6 million, or 53 cents a share, up from $26 million, or 44 cents a share, a year earlier. Excluding some tax impacts, the company reported earnings of 51 cents, up from 43 cents.

Revenue rose 6.9% to $404.1 million, as more pizza orders boosted its supply-chain business, and it added 126 new stores globally — nearly all overseas.

Wall Street analysts on average expected a per-share profit of 52 cents on revenue of $403 million, according Thomson Reuters.

Miller Tabak’s Stephen Anderson explains why investors are so gloomy:

DPZ's +5.5% domestic blended comp far outpaced the -1% domestic comp reported by Pizza Hut (owned by Yum! Brands (YUM)) last week, while the company's international units logged their 79th consecutive quarter of positive same-restaurant sales. Nevertheless, we think this is being overlooked in the pre-market by a weaker-than-expected margin that contributed to only the second quarterly earnings miss in the past two years.

We still anticipate above-peer same-restaurant sales growth both in the U.S. and overseas, reinvigorated unit growth in the U.S. (helped potentially by a new unit prototype), a more benign food cost environment, and incremental share buybacks will provide support EPS growth of at least 20% in the next two years. However, in light of the 57% year-to-date rally and the 138% gain from the June 2012 low, and as we model more difficult sales comparisons in the U.S. beginning in 4Q13 (lapping the introduction of pan pizza), we prefer to await a more significant pullback in DPZ shares.

Feltl & Co.’s Mark E. Smith–not to be confused with the Fall’s noted curmudgeon–agrees:

DPZ has a strong domestic business that is taking market share from its peers and an international business with ample room for growth over the next several years. We like DPZ's expected earnings growth rate, strong cash flow from the highly franchised business and the geographic diversification with market share gains in most markets. However, trading at 24x our new 2014 EPS estimate, we think the shares are fully valued. We would turn more positive if sales and earnings increased more than we expect or if the shares traded below $57 with no change in
fundamentals.

Shares of Domino’s Pizza have dropped 4.3% to $65.91 today, while Yum has declined 1.1% to $66.24 and Papa John’s International (PZZA) has fallen 1.1% to $71.28.

Tesla Unveils Model X, GM Hit by Peugeot Capital Raise Speculation

Anticipation, Angela Carter once wrote, is the greatest part of pleasure. But investors haven’t gotten too much pleasure form the showcase of Tesla’s (TSLA) Model X this weekend if they’d expected a big bump in the stock. Its shares have gained just 1.2% to $180.82.

The San Jose Mercury News has the details:

If Hollywood movie makers were trying to create the quintessential Silicon Valley scene, they couldn’t have done any better than the one Saturday afternoon in the 4100 block of El Camino Real.

Hundreds of people, nearly all of them snapping photos with iPhones, milled about at the opening of America’s newest Tesla store, one mile from Stanford University and three miles from Google’s campus. The sleek, white showroom gleamed. Flat screen monitors touted the benefits of the company’s pricey and tech-hip all-electric vehicles. Music from a live DJ pulsed. And the valet parking was thick with visitors arriving in Tesla Model S sedans they already owned…

The company has so far received 6,000 orders for its Model X SUV, with customers putting down $5,000 for the standard version and $40,000 for the signature version, even though Tesla has not announced the price of the vehicle or exactly when it will begin delivery. Most deliveries are expected in 2015, and the base price is expected to range from $70,000 to $90,000.

General Motors (GM), meanwhile, is dropping as Peugeot contemplates raising capital. GM owns 7% of the company. The Wall Street Journal reports:

The board of PSA Peugeot Citroën will meet later this month to consider a potential capital injection from Chinese partner Dongfeng Motor Corp., according to a person familiar with the matter, as the ailing French auto maker looks for financing to ensure its survival into the second half of this decade.

Battered by dwindling sales in Europe, its core market, Peugeot is continuing to rack up losses and is burning cash that it badly needs to develop new products and expand its industrial footprint outside Europe in coming years.

Peugeot’s board meeting, set for Oct. 22, comes after months of talks with Dongfeng about a potential expansion of their existing partnership outside China, including an investment in Peugeot, people familiar with the matter said.

The French government also could participate in a capital increase alongside Dongfeng, to help fund its development projects after 2016, though Peugeot hasn’t formally asked it to do so, one of the people added.

Shares of General Motors have dropped 0.5% to $35.16, while Ford Motor (F) has dipped 0.3% to $17.07 and Toyota Motor (TM) has decline 0.8% to $130.64.

Yahoo CEO Mayer Needs Ad Execs' Dollars, Not Just Attention

David Paul Morris/Bloomberg via Getty ImagesYahoo CEO Marissa Mayer NEW YORK and SAN FRANCISCO -- Three weeks ago, Yahoo chief executive Marissa Mayer strode into a Manhattan hotel and was greeted like a rock star by hundreds of advertising executives who snapped pictures as she sat down for an interview with journalist Charlie Rose. That same audience a year ago would have been grousing that Mayer hadn't done enough to engage Madison Avenue, which is arguably Yahoo's most important constituent since the Internet company derives more than 75 percent of its revenue from ad sales. "I think that Marissa has gotten a bit of a bad rap," said David Cohen, the chief media officer at UM, the global media arm of Interpublic Group. The industry perceived Mayer as not caring about advertising, choosing instead to focus solely on products, Cohen said. Ad agency executives say that over the past six months Mayer and her team have been working hard to change that perception, courting advertisers at key industry events, hosting lunches and attending meetings with agency representatives that include Yahoo executives like Chief Operating Officer Henrique de Castro, Senior Vice President and head of Americas Ned Brody and Chief Marketing Officer Kathy Savitt. The charm offensive has impressed many on Madison Avenue, but getting advertisers to actually spend more on Yahoo's Web properties won't happen overnight, industry experts said. The shift to advertising exchanges, which allow marketers to instantly buy placement for their ads across a broad constellation of websites, has pushed down the prices that online publishers such as Yahoo can charge. That was painfully apparent in the second quarter of this year, when Yahoo's display advertising revenue slid 11 percent due in part to a double-digit decline in ad prices. "Advertisers will become more excited if there's clear evidence that Yahoo is growing again in terms of its users and its engagement," said Mark Mahaney, an analyst at RBC Capital Markets. Since Mayer became CEO, Yahoo's (YHOO) stock has more than doubled, recently reaching a near 8-year high of $35.06. But analysts say the gains are mostly due to aggressive share buybacks and the impending initial public offering of Chinese e-commerce giant Alibaba Group, in which Yahoo owns a 24 percent stake. More than a year into Mayer's tenure, Yahoo's core business remains stagnant. Revenue has been flat or down for the past four years and Wall Street doesn't expect the situation to improve when Yahoo reports its third-quarter results on Tuesday. Analysts are expecting third-quarter revenue to decline around 1 percent to $1.08 billion, according to Thomson Reuters I/B/E/S. A Yahoo representative said the company has built a team to specifically focus on agency relationships and has recently realigned its sales force according to industry expertise. Yahoo is "working closely with our advertisers to develop opportunities in a more integrated way across our full suite of media, programmatic, video and mobile properties," Yahoo said in an emailed comment. Mobile Target Yahoo is trying to play catch-up to Facebook (FB), Twitter and Google (GOOG) in the fast-growing mobile advertising business, as consumers increasingly access the Web on smartphones instead of PCs, and flock to social media websites that require novel ad formats. Spending on mobile ads grew 145 percent year over year to $3 billion in the first six months of 2013, according to the Internet Advertising Bureau. Mayer has revamped many of Yahoo's mobile apps to make them more attractive to consumers and advertisers. In May she spent $1.1 billion to acquire Tumblr, a popular blogging and social media website. "There's a promise there but it's not ready for prime time today," said Ritu Trivedi, managing director, digital marketplace at MediaVest, a Publicis media agency, referring to Yahoo's mobile ad efforts. Mayer has said that turning Yahoo's business around will be a multi-year process. She has accelerated the pace of product development, and added workplace perks such as free food and top-of-the-line smartphones for employees. But even as the CEO tries to forge closer ties with advertisers, she has made it clear that Yahoo's users come first. That is a big change from the old Yahoo, which was famous for loading its websites with advertising that critics said were overly intrusive and detrimental to the user experience. For instance, Yahoo's new mobile weather app, which takes basic weather feeds and links them with the Flickr photo-sharing service, has sparked interest from advertisers. The app could be particularly appealing to hotel and retail marketers, said Peter Stein, CEO of Razorfish, a digital marketing agency. So far however, Yahoo has kept the weather app ad-free. "There message has been very direct and on point, they are definitely focused on the consumer," said Ari Bluman, chief digital investment officer in North America for WPP's media buying arm GroupM. Consumers First Some ad experts say Mayer's prioritization of users before advertisers is a smart move that could ultimately pay off by increasing Yahoo's popularity with consumers. But others say it may not go over well on Madison Avenue in the short term. For instance, Yahoo did a major overhaul of its popular sports home page to coincide with the start of the NFL season this year. One advertising agency executive said they found out about the change a week before the launch, and so the agency had to scramble to re-design ads that would fit with the new format. "Our client was very upset," said the executive, who did not want to be identified because the agency works closely with Yahoo. "I have a six-page typed memo about the problems we had with Yahoo and this one client." A Yahoo representative said that the company has "moved faster in the past year than anytime in our recent history" to launch better products and to "evolve" the ads on its websites. "We think this will improve performance for our advertisers over time, and we're working closely with our advertising partners." Still, the overall assessment of Mayer is positive. Tamara Bousquet, senior vice president of media at digital marketing agency DigitasLBi, recalled a dinner she attended in late September with other advertising executives where Yahoo was the topic of conversation. "Every single person around that table thought the company was handled better since Marissa came on board," she said. Company: Oracle Cash compensation: $5.5 million Stock and options: $90.7 million Total compensation 1-year change: 24% Despite his $1 salary, Ellison is not only the highest paid tech CEO this year, but the highest paid of all CEOs.

South Dakota ranchers reeling from cattle losses

SIOUX FALLS, S.D. (AP) — Western South Dakota ranchers are reeling from the loss of tens of thousands of cattle in last weekend's blizzard, and many will dispose of carcasses in pits set to open Monday.

Rancher Heath Ferguson said the storm killed 96 percent of his herd of 100 black Angus and Limousin cattle, a hit worth about $250,000. He said total losses topped more than 1,000 head, as six other herds were roaming the family's 16,000 acres east of Sturgis.

Up to 4 feet of snow fell in the Black Hills area last weekend. Reports of 20 or more inches of snow were common, and 21½ inches in Rapid City were a record for both a 24-hour period in October and the entire month. At least two deaths were attributed to the storm, and it took a particularly heavy toll on livestock.

Ferguson said the vast majority of ranchers don't have insurance covering storm-related damage.

"It's cost-prohibitive for a producer," he said Sunday in an interview with The Associated Press. "Unless you're a really big operator, you can't afford to pay for the insurance."

Cattle ranchers dealing with weather-related losses would typically turn to the federal Livestock Indemnity Program, but that farm bill provision has expired and its future is in flux due to congressional gridlock and the continuing federal shutdown.

"We're an independent, pretty self-sufficient bunch, but we need help," Ferguson said.

South Dakota Gov. Dennis Daugaard and U.S. Sen. John Thune did an aerial assessment Thursday of the blizzard damage and livestock losses. State officials said at least 10,000 to 20,000 head of livestock died, but the estimate will likely rise.

The South Dakota Stockgrowers Association estimates that western South Dakota lost at least 5 percent of its cattle, much of which are raised for slaughter. Nearly a third of the state's 3.7 million cattle and calves reside in the western part of the state.

Ranchers who lost cattle will be able to dispose of the carcasses for free at severa! l pits being dug in Pennington County, according to the county's Emergency Operations Center. The county is coordinating the effort because the U.S. Farm Service Agency is closed during the shutdown.

Livestock owners are encouraged to document all animal losses with pictures, vaccination and hauling receipts in case disaster payments are available in the future.

South Dakota Farmers Union president Doug Sombke said that even if the federal government was open and Congress could reach a compromise on a new farm bill, it would take months to implement the Livestock Indemnity Program.

Meanwhile, the Stockgrowers Association, the South Dakota Cattlemen's Association and the South Dakota Sheep Growers Association are seeking donations to a relief fund that has been set up to help ranchers, and a couple of Montana groups are asking local farmers to donate cattle and sheep.

Ferguson, who also makes his living by working in the Wyoming coal fields, said he owns his herd, but many struggling ranchers have had to borrow money to stay in business.

"There's an awful lot of producers out here that sold our herds down because of the drought," he said. "A lot of people are into the financial institutions pretty hard."

Third Quarter Roundup - Three Gurus Reduce Three - AN, WBMD, RHP

Third quarter reduction activity looks light so far in the ongoing portfolio research.

Here's a roundup review of three gurus, Edward Lampert of ESL Investments, Carl Icahn of Icahn Capital Management LP and Columbia Wanger Asset Management, all of whom reduced one company as of Sept. 30, 2013.

Guru: Edward Lampert

AutoNation Inc. (AN): Reduced

Impacts Portfolio: -1.33%

Up 7% over 12 months, AutoNation, the auto and truck dealership company, has a market cap of $6.07 billion. Shares were traded with a P/E ratio of18.40 and a P/B of 3.10.

Guru Action: As of Sept. 16, 2013, Edward Lampert reduced his AN position for the fifth time in third quarter, slicing 2.7% and selling shares in the average price range of $52.20. The current share price of $50.05 is down 4% change from average.

His holding history:

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The five-year trading history of Guru Lampert shows mega-gains, peaking at 518.8% in the fourth quarter of 2008, when he bought 1,521,700 shares at an average price of $7.92 per share. Lampert's gains on AN began to drop significantly in the first quarter of 2012 to a 39.9% gain and tapered off to a gain of 9.8% in the second quarter of 2013.

Overall, he has averaged a gain of 300% on 13,097,719 shares bought at an average price of $12.26 per share. Selling, he has also gained 41% on 59,453,152 shares sold at an average price of $34.65 per share.

The company's historical pricing, revenue and net income since 1990:

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Guru: Carl Icahn

WebMD Health Corporation (WBMD): Reduced

Impacts Portfolio: -0.17%

Up 108% over 12 months, WebMD Health Corporation, a health information company, has a market cap of $1.39 billion. Shares were traded with a P/B ratio of 2.70.

Guru Action: As of Sept. 17, 2013, Carl Icahn reduced hi! s position by 17.51%, selling shares in the average price range of $31.23. The current share price of $30.36 is down 3% change from average.

The four-quarter year trading history shows mixed results that averaged out to a 9% loss on 6,700,525 shares bought at an average price of $33.37 per share.

Check out the other gurus holding WBMD and the active insider trading.

Track historical pricing, revenue and net income since 2005:

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Guru: Columbia Wanger Asset Management

Ryman Hospitality Properties Inc. (RHP): Reduced

Impacts Portfolio: -0.18%

Down 13% over 12 months, Ryman Hospitality Properties Inc., a lodging REIT, has a market cap of $1.78 billion. Shares were traded with a P/E ratio of 367.50 and a P/B of 2.30. The dividend yield is 4.30%.

Guru Action: As of July 31, 2013, Columbia Wanger reduced its position by 25.96%, selling shares in the average price range of $37.25. The current share price of $35.29 is down 5% change from average.

The four-quarter trading history shows losses in every quarter, averaging out to a loss of 9%, on buying 8,160,410 shares at an average price of $38.60 per share.

The firm also lost 14% on the holding, selling 3,519,844 shares at an average price of $41.08 per share.

Check out the other gurus holding RHP and active insider trading.

Track historical pricing, revenue and net income since 1994:

[ Enlarge Image ]

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Who Should You Ask to Be Executor of Your Estate?

Alamy Choosing an executor for your will may not feel quite as personal as picking a guardian for your kids, but you should think carefully about who to put in charge of your money after you're gone. "A common adage in the industry is to name your enemy as your executor as a means of revenge," says John O. McManus, an estate attorney and founding principal of McManus & Associates in New York City. "It's a thankless job. If you appoint someone you love as executor, get your house in order. Otherwise, appoint someone you do not." If you know someone with a law degree or an accounting background, they may be a good choice to serve in the role. However, many people choose their closest relatives. According to the book, "The 101 Biggest Estate Planning Mistakes" by Herbert Nass, one of the worst things you can do is to ignore your spouse when choosing an executor for your will. Since your surviving spouse will be affected financially more than anyone else by your death, it makes sense for your spouse to be in control. But you should also have a backup executor in case your spouse doesn't feel up to the task or if you should both pass away at the same time. (And if your spouse passes away first, or if you divorce, be sure to update your will and your choice of executor.) If you ignore this important task and don't appoint an executor, the court will pick one for you. That person may or may not be a member of your family -- and even if it is a relative, it may not be the ideal choice. Before you decide, think hard about what you're asking this person to do. We talked to McManus about what it means to be an executor and how to go about choosing one. Q: What are the responsibilities of an executor? A: The executor is commissioned with the following tasks: Collect assets and information on beneficiaries. Determine debts and other claims against the estate and pay legitimate claims. Manage the estate assets. Determine and pay all taxes. Distribute the estate to beneficiaries pursuant to the will or intestate statute. Q: Do you need to have a financial or legal background? A: While it's not necessary to have a financial or legal background in order to be the executor of an estate, it certainly can be helpful. A law firm can perform most of the tasks associated with the estate administration, but the executor must make all final legal and financial decisions with the information provided by legal and financial professionals. It's recommended to have legal counsel and financial advice, as courts look more kindly on fiduciaries who seek outside professional help when making important decisions about estate assets. Q: How much time does it take to be an executor? As: Being the executor of an estate can eat up a few hours a week during the beginning and end of the administration, with less time required during the longer middle period. If the decedent had his or her affairs in order, the job of the executor can be greatly minimized. The executor can also retain legal counsel to perform a majority of the tasks associated with the estate, at the expense of the estate. There's a cycle to an estate administration, with a flurry of activity at the start with probate of the will in the surrogate's court, the initial gathering of assets and payment of initial expenses. Thereafter, the less glamorous work starts: to marshal all asset information by sending letters to financial institutions and to prepare the required estate tax returns. The estate administration may last from one to two years, on average, with a litigious matter dragging on for many more years after that. Q: Should you have more than one executor or is it best to have only one? A: Traditionally, having only one executor is thought to be easier; the paperwork and time spent on court proceedings and official business is reduced with just one. However, there are situations when more than one executor is helpful, especially if the elderly surviving spouse is assisted by an adult child of the deceased or two adult children remain involved in the estate of their deceased parent. Q: Is it best to ask someone before you name them in your will as executor? A: Consider ensuring that the executor you appoint truly loves you enough to agree to the nomination -- seriously. Additionally, it's best to name a few successor executors. The worst situation may be to have the court make the decision about who will serve as executor of your estate. Q: Can someone turn down the job of executor? A: The nominated executor can renounce the appointment and not serve as executor. In that case, the successor executor may be appointed. The renunciation is typically a simple procedure in the court with paperwork to be completed by the renouncing executor and signed in front of a notary public. Q: Can you get compensated for the time you put in as an executor? A: The executor fee is calculated in many states as a percentage of probate assets, not time spent. Probate assets mean the decedent's assets that pass through the estate and not by beneficiary designation or by operation of law to a named beneficiary. The executor's commission is determined by state statute and is taxable income to the executor in the year received. The executor may still take a commission even if he or she is also a beneficiary of the estate, but many executors waive their right to the statutory fee for one reason or another. Q: Can you be sued as an executor? A: Irrespective of whether the executor is paid for his or her work, the executor is held to high standards in many courts, and charges may be brought by beneficiaries if the executor spent estate assets unnecessarily, oversaw a diminution of estate assets due to lack of diversification in investments, or otherwise betrayed the trust of the beneficiaries. Q: Is there anything an executor can do to reduce family fights over personal property? A: Executors are often caught off guard by personal property issues. They're careful with a large annuity or an investment account, but actually things like photo albums are the most difficult to marshal. Warring beneficiaries could hire separate counsel over that. Have Mom and Dad clearly identify items and to whom they should pass -- use masking tape and marker for initials on the bottom of items or make a detailed list. The will directs what should happen to personal property, but in situations where there's a question of who should receive something, the executor has the final say. Our wills use the language that personal property should be divided in substantially equal parts, but the executor has a lot of leeway there. To keep estate bills down, it's best to involve fewer attorneys. If you can avoid litigation, the assets of the estate can be more easily preserved. Some of our clients direct that everything be sold so that only liquid assets will be passed to heirs.

New Jersey imposes both estate taxes and inheritance taxes. Estates greater than $675,000 have to pay state estate tax, with rates on the assets in excess of that amount going as high as 16 percent. That tax comes directly out of the estate of the deceased person, reducing the amount heirs eventually receive.

Friday Closing Bell: Markets Post Small Gain as Shutdown Drags On

October 11, 2013: U.S. markets opened slightly lower Friday morning but that didn't last long. The report on consumer sentiment was not as bad as it could have been and that seemed to cheer investors a little. A White House meeting between the President and Republican House members raised hopes of an agreement on the government shutdown and raising the debt limit. Nothing came of the meeting except an announcement that Republicans would get together in an unusual Saturday morning meeting tomorrow.

Asian, European, and Latin American markets all closed higher today.

Monday's calendar includes a speech by Fed Chairman Ben Bernanke but no data is scheduled for release. Markets are open Monday as the U.S. observes the Columbus Day holiday.

Here are the closing bell levels for Friday:

S&P500 1,703.19 (+10.63; +0.63%) DJIA 15,237.11 (+111.04; +0.73%) NASDAQ 3791.87 (+31.13; +0.83%) 10YR TNOTE 2.687% (flat) Gold $1,268.200 (-28.70; -2.2%), and closed down 3.2% for the week WTI Crude oil $102.02 (-0.99; -1%), and closed down about 1.8% for the week Euro/Dollar: 1.3522 (+0.0033; +0.24%)

Big Earnings Movers: Micron Technology Inc. (NASDAQ: MU) is down 8.6% at $16.84 on disappointing results reported last night. JPMorgan Chase & Co. (NYSE: JPM) is down 0.1% at $52.49 after posting big loss due to legal costs. Wells Fargo & Co. (NYSE: WFC) is up fractionally at $41.45 on light earnings due to a drop in mortgage lending.

Stocks on the Move: Ariad Pharmaceuticals Inc. (NASDAQ: ARIA) is down 21.4% at $4.25. SolarCity Corp. (NASDAQ: SCTY) is up 23% at $47.16 on a higher forecast for 2014. Amarin Corp. plc (NASDAQ: AMRN) is down 20.1% at $5.09.

In all, 177 NYSE stocks put up new 52-week highs today, while 22 stocks posted new lows.

Come Hell Or High Water In The U.S. Shutdown And Debt

October 2013 is a "blue moon" of fiscal and political crises.

The world anxiously awaits Congress to pass, and the President to sign, legislation for a new Fiscal Year budget and raising the debt limit. The current shutdown originally began as a Tea Party attempt to defund Obamacare, over a temporary Continuing Resolution that only funded the U.S. government until November 2013. The Republicans in Congress are determined - come Hell or high water - to force a showdown over the Affordable Care Act, budget, deficit, and debt. President Obama and House Speaker John Boehner are star-crossed characters in a made-in-the-U.S.A. version of a Greek economic tragedy, playing out their ill-fated positions.

At a press conference last week, Speaker of the House, Rep. John Boehner (Republican - Ohio) sternly responded to a reporter who asked about winning, "THIS IS NOT A GAME!"

It is a game.

The "Play U.S.A." game (see graphic) simulates the risks and outcomes in the shutdown and debt crises. The "Play U.S.A." board is based on actual financial and political moves in real life that may lead the country on a path to ruin before government is restored. The game is not a joke.

Taking turns with a roll of a die, a player steps along the game board squares, which recalls the Candyland of your childhood. (Option: if you land on Stop, instead of pausing the game for a week, drink a shot and lose a turn.) See how long it takes you to reach "End Game - Government Restored." The objective is to win quickly, so you may stop playing.

(click to enlarge)

Takeaway for the Small investor:

The investor should play safe. Prepare for frequent market disruption and unpredictability as a result of political instability through the 2014 elections. Find profit-taking opportunities in growth stocks, if you have not already. Look ahead for ba! rgains after corrections. Allocate positions in recession-proof, dividend stocks or US-based companies with a global footprint, and short-term 3-yr. Treasury bonds. The purchase power of large cash holdings is at risk if the dollar falls. Look for value in foreign markets that will show long term strength.

My maxim as a small investor is "the future belongs to the youth." That holds true during a recovery or despite a recession. I consult my young adult children to reach mutual investment decisions, or give a little seed money to co-opt their interest as stakeholders. We buy name-brand commodities (such as beverages or drugs), entertainment, new products, and those companies in their supply chains that carve new needs and emerging domestic and global markets. I am not buying so long as the government is shutdown. Innovation is the common thread. I will look for long buying opportunities in innovative companies such as 3-D Systems (DDD), 3-M (MMM), Corning (GLW), GlaxoSmithKline (GSK), Google (GOOG), Nike (NKE), Sam Adams (SAM), Viacom (VIA), Samsung.

Come Hell or high water

The U.S. government shutdown will cause the economy to shrink about 1% per week, quoting Pacific Investment Management Co.'s Bill Gross. Even after the government shutdown is over, there will be some bounceback, but loss to local economies or services will be actual and real. At a minimum, recession is assured, and recovery will be delayed. That is the high water.

Markets have remained resilient, even faithful, despite the shutdown. "Flat is the new up," says Scarlet Fu, of Bloomberg TV, with three-quarters of U.S. and U.K. stocks still trading within 10% of their 52-week high.

It was good news that Obama nominated Janet Yellen for Federal Reserve Chairman was welcome relief to the weary market, though not unexpected. Perhaps Boehner will take the cue from the Yellen nomination and bring the government back to work. Janet Yellen is a Fed "dove," meaning she will initially continue the practice of Quantit! ative Eas! ing - the Federal Reserve buying bonds at $85 billion per month to stimulate the economy - and eventually taper QE when unemployment drops to 6.5%. Complicated by government shutdown and sequestration, a U.S. in recession won't be reaching 6.5% jobless in the near term. This will favor countries such as India, Brazil, Japan, and Indonesia, with tenuous growth, who otherwise would have seen their currency and stock stalled in favor of the US market if the Fed had gone through with the expected September QE tapering that never happened. As a footnote, the bad news on the same day as the Yellen announcement was, the announcement of the Japan Airlines contract award to EU-based EADS Airbus for 31 next-generation Airbus aircrafts, over long-time provider Boeing (NYSE:SA), seems symbolic of a US decline.

Imagine what's in store for tomorrow. New discussions began on Day #10 of the shutdown, without reaching a solution. It is now Day #11, six days from the October 17 deadline to raise the debt ceiling. Gross says the chances of debt default are "one in a million," based on his conviction that the negative consequences of debt default are catastrophic, nuclear, unfathomable, unimaginable... Bruce Ratner, executive chairman of NYC-area real estate developer Forest City Ratner Cos., estimates the chance of debt default is over 50% because Republicans don't believe or can't see the seriousness. He advises, "Be ready for chaos," with uncertainty akin to that of war time. Volatility is bad for business and ramifications are huge. Ratner says the short-term impact will not be as bad as the [2008-2010] Economic Crisis, but added with the sequester cuts, economic growth will be slowed. He says the rest of the country will lag behind the vibrant international atmosphere and intellectual capital that is driving growth in New York City.

If the U.S. does not raise the debt ceiling, spending will be limited to revenue. The President could work with the Treasury to choose the order and priority of any payment. Pa! y for int! erest on the debt, or, pay for salary, Social Security, food stamps, or death benefits to military? The first priority will be to honor payments on the debt to lenders. China holds $1.3 Trillion of US Treasury securities. To support the US trade deficit, foreign countries have been buying Treasuries. Not raising the debt ceiling will trigger a downward spiral. The US will default on its national debt. Lender countries will shift their asset allocation to reduce holding US dollars. The market could drop 50%. The U.S. dollar could freefall. Interest rates would increase, thus exacerbating the total debt we seek to reduce. Jobs would be lost. However, if Congress does not address US debt obligations, President Obama may invoke the Fourteenth Amendment and intervene to save the country.

The US is creating world chaos when the world relies on the US currency as the world's reserve currency. Repeated political fighting about government temporary CRs (which are now perennially proposed in lieu of passing a full budget), tax revenue vs. deficit spending, and the debt ceiling reflects poorly on the U.S. government. It is wearisome and confounding. Over time, governments including China, Korea, Japan, and the EU will gradually reposition themselves to reduce their risk exposure to US government dysfunction. The United States dollar will no longer be the first choice of foreign countries for currency reserve. It won't happen magically on October 17, but in due time, the US will lose the business. This is Hell.

Hell and high water are biblical. Shutdown is a disaster by flood (if a rising tide lifts all boats, a hurricane or flood might sink them), the latter is a catastrophe by fire and brimstone. Both are tragic for their victims, and inexcusably preventable by the perpetrators. We cannot politically or financially endure a blue moon every month or two - both budget and debt brinkmanship at the same time all the time - like death by a thousand cuts.

"Play U.S.A."

The moves - the squares on! the game! board - reflect the roles of characters. The characters include: "You," the Investor, who tries to protect his financial position; "We the People" who let our voices be heard; "Leadership" or solutions; "Non-starters," in particular Congress, under the influence of Tea Party hardliners; "Chaos" (self-explanatory); and "The Market" reaction to government dysfunction.

"Play U.S.A." is at once complicated or crazy, chicken or childlike. The game is for one or more people from ages 9-99, from any country, of any political persuasion. We are at the mercy of the roll of the die.

You're forced to play. You don't like it. You faintly recall something about a "Gang of Six." You remember the good old days when "fiscal cliff" meant 10% across-the-board spending cuts in the US government. More fondly, you remember bipartisan compromise back in the day of Tip and the Gipper.

Source: Come Hell Or High Water In The U.S. Shutdown And Debt

Disclosure: I am long DDD. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. (More...)

Additional disclosure: I am a furloughed government employee, and am dedicated to public service.