Top Stocks To Invest In 2014, Top Stocks To Buy For 2014: March 2013

Sunday, March 31, 2013

History Shows Shorts Likely to Knock Texas Instruments Lower

Shares of Texas Instruments (TXN) are lower despite issuing Q1 guidance in a range that straddles consensus estimates. In heavy after hours trading Monday, the stock has fallen 2.5%. History indicates additional losses are likely today.

TXN gives an edge to wider next-day share moves following evening earnings releases. It has widened 13 times, narrowed 11, turned in one flat performance, and once ended even with its evening move in next-day trade over the 26 quarters we've tracked. The near-term pattern has recently changed and the stock has narrowed its move in three of the last four quarters, following a long nearly uninterrupted streak of widening moves.

Looking deeper into the data, shorts take notice: the stock has declined in 11 after-hours sessions, and headed deeper in the red the next day eight times - adding to its downside 73% of the time it records an earnings-driven after-hours decline within our database. The stock has recorded an after-hours gain in 15 of the quarters we've tracked, adding to its gains the next day in 5 quarters (33% of the time).

On Oct. 25, 2010, TXN declined 1% in evening trade after topping Q3 estimates and setting its Q4 guidance in a range that straddled the Street view. The stock cut its downside the following day, closing the Oct. 26 regular session off 0.3%.

On July 19, 2010, TXN declined 5.6% in after-hours action after beating EPS estimates, missing revenue estimates, and setting guidance in line with expectations. The stock cut its downside the following day, ending down 3%.

On April 26, 2010, TXN edged up 1.3% in evening trade after reporting better-than-expected results and guidance. The stock lost its upside the following day, closing the April 27 regular session down 2.2%.

On Jan. 25, 2010, TXN slipped 1.4% in after-hours trade despite reporting better-than-expected results and guidance. The stock closed the Jan. 26 regular session with the same 1.4% decline.

On Oct. 19, 2009, the stock advanced 2.9% during evening extended-hours following a quarterly beat and positive guidance. Shares were up a slim 0.6% the next day.

On April 20, 2009, TXN advanced 3% in after-hours trade after beating expectations and setting its guidance mostly above the Street view. It lost the gain the following day, ending the April 21 regular session down 1.2%.

On Jan. 26, 2009, shares were up 4.9% after a Q4 earnings beat and news of more job cuts. The gain was reduced somewhat the next day when shares closed up 3.6%.

On Oct. 20, 2008, the stock fell 5.6% after TXN earnings missed by a penny and guidance was below the Street view. The loss expanded to 6.3% the next day.

On July 21, 2008, the stock fell 12.1% after TXN missed with Q2 results and guidance. The loss expanded to 14% the next day.

On April 21, 2008, TXN declined 2.2% in evening trade after issuing guidance that could miss the Street view. It tumbled 5.8% by the close on April 22.

On Jan. 22, 2008, TXN firmed 3.1% in evening action after topping Q4 estimates and setting its Q1 guidance in line with the Street view. The stock added to its upside in the following Jan. 23 regular session, gaining 4.5% by the close.

On Oct. 22, 2007, TXN declined 4% in after-hours trade after the company met expectations but issued sales guidance below forecasts. It added to its downside in the Oct. 23 regular session, losing 8.3%.

On July 23, 2007, TXN slipped 3.4% in night trade after reporting Q2 EPS in line with estimates but missing on sales. Shares eased a bit further the next day to end the regular session down 4.5%.

On April 23, 2007, the stock was up 9.7% in the evening hours after the company reported ahead of the Street with Q1 results and guided mostly above. The gain was pared slightly, to 7.7%, the next day.

On Jan. 22, 2007, shares were up 2.3% after results topped the year-ago period and despite guidance below the Street view. The stock gained 3.5% the next day.

On Oct. 23, 2006, TXN slipped 1.1% in after-hours trade after the company reported mostly in-line to better-than-expected results but also issued sales and earnings guidance mostly below the Street view. The decline grew more aggressive the next day, with TXN closing the Oct. 24 regular session down 4.2%.

On the evening of July 24, 2006, the stock gained 3.6% after the company reported ahead of the Street with Q2 results and offered guidance that straddles the Street's view. The gain improved slightly, to 4%, the next day.

On April 18, 2006, TXN rose 3.2% in after-hours trade when the company topped Q1 estimates and guided for higher-than-expected Q2 earnings. The shares lost steam though and ended the following day?s regular session up 1.3%.

On Jan. 23, 2006, shares fell 1.9% after the company reported revenue and earnings short of the FC mean. The decline stretched to 3.1% the next day.

On Oct. 24, 2005, TXN declined 4.2% in evening trade after the company reported better-than-expected results but set its sales forecast in a disappointing range. TXN ended the Oct. 25 regular session down a deeper 7.6%.

On July 25, 2005, TXN ended the night session up 5.5% after the company topped Q2 estimates and guided for Q3 to be in line with expectations. The stock held those gains to close the next day session up the same amount, up 5.5%.

On April 18, 2005 TXN advanced 5.9% in night trade after the company posted better-than-expected results and guided in-line to better than the then current Street view. It reduced that upside slightly on April 19, closing bell-to-bell trade up 5.5%.

Back on the night of Jan. 25, 2005, TXN added 2% in after-hours trade after the company beat expectations and guided in-line to slightly lower than the Street view. The issue added to its upside on Jan. 26, closing the regular session up a bullish 7.3%.

TXN jumped 5.7% in night trade back on Oct. 18, 2004, reporting better-than-expected results and in-line guidance. It closed the Oct. 19 regular session up 6.9%.

Before the Oct. 18-19 event, TXN had been holding to a pattern of seeing its extended-hours gains or declines pared back in next-day trade.

TXN scored a 2.5% advance the night of July 20, 2004, after the company reported in-line results but issued guidance that could miss estimates. The stock turned sharply lower in the July 21 regular session, declining 5.1% by the closing bell.

On April 19, 2004, TXN added 1% in night trade after beating revenue expectations and guiding higher. The stock tumbled 2.3% by the end of the next day's regular session.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Huge Fracking Potential in UK

The shale gas industry is booming in the United States. The practice of hydraulic fracturing has contributed to the drop in natural gas prices and jobs are springing up at shale drilling sites across the nation.

And the same could be happening for the United Kingdom soon enough.

Lord Browne, former chief executive of BP (NYSE: BP) and current director of shale gas company Cuadrilla, believes that hydraulic fracturing, or fracking, could have huge potential for the nation.

"We could potentially double the reserves of gas in the UK, we could add 50,000 jobs maybe, and probably even reduce the price of gas," he told

The practice of fracking consists of injecting a combination of sand, water, and chemicals into rock to break apart the shale and release the natural gas within.

And Browne believes that Lancashire, where his company has its fracking site, could become Europe’s fracking capital:

“Lancashire has huge potential…If they had the will they could perhaps become the centre of shale gas for Europe, much as Aberdeen became the centre of oil and gas for Europe. It is not inconceivable.”

But before any of this can happen, government approval is required.

In June, the government halted Cuadrilla’s only fracking site, located at the Bowland basin near Blackpool, after several earthquakes occurred in the region.

And a subsequent report affirmed that it was “highly probable” the quakes were connected to Cuadrilla’s fracking activity. The report is under review by the Department of Energy and Climate Change (DECC), which will determine whether or not drilling can continue.

Lord Browne seems to think it will be allowed. But he is more concerned with the faith of the public, which will not be as easy to win back:

“We are confident we can do it safely and we don’t affect the environment, but it’s all very well us saying that: we have to convince everybody…Engaging the stakeholders is absolutely crucial.”

Cuadrilla believes Lancashire’s Bowland basin contains up to 200 trillion cubic feet of natural gas...

3 Reasons to Buy Berkshire Hathaway

If we were to ask the world to name the most successful financial holding company in history, it's a pretty safe bet�Berkshire Hathaway� (NYSE: BRK-B ) (NYSE: BRK-A ) would take the cake.

Why? As Warren Buffett pointed out on the very first page of his 2012 letter to Berkshire shareholders, the company's per-share book value has grown by an astounding average of 19.7% each year since 1965, good for an overall gain of 586,817% -- and, might I add, absolutely destroying the S&P 500's perfectly respectable 7,433% return over the same period, including dividends.

To put that in perspective, if you had taken $5,000 in 1965 and achieved with it the same annual rate of return as Berkshire, today it would be worth a whopping $29.3 million.

OK, so it's easy to look back and see how much money you could have made investing with Berkshire over the past 48 years, but does that mean the Omaha-based conglomerate won't continue to outperform the broader market indexes going forward? Hardly.

In fact, here are three reasons you can feel great about buying shares of Berkshire Hathaway today.

1. Look who's driving this thing

Source: AP.

While Buffett's leadership has undoubtedly left its mark on Berkshire over the years, much of the company's success has stemmed from (in Buffett's recent words) its "cadre of terrific operating managers," on whom he relies to run Berkshire's underlying businesses with very little oversight.

That's also part of the reason it's so darned difficult to figure out exactly who�Buffett's eventual successor�will be; the possible�list of candidates includes a wide range of names from former hedge-fund manager Todd Combs to insurance head Ajit Jain, MidAmerican Energy's Gregory Abel, Geico's Tony Nicely, and Tad Montross of General Re.

In any case, Buffett made it clear in his 2011 shareholder letter that Berkshire has already chosen not only his successor, but also "two superb back-up candidates as well."

In the same paragraph, Buffett then reminded us that more than 98% of his net worth is in Berkshire stock. He elaborated:

Being so heavily concentrated in one stock defies conventional�wisdom. But I'm fine with this arrangement, knowing both the quality and diversity of the businesses�we own and the caliber of the people who manage them. With these assets, my successor will enjoy a�running start.

Which brings me to the next reason you might consider buying shares of Berkshire.

2. Taking over the world, one business at a time
Of course, great leadership certainly can't hurt. Buffett himself often says he likes to find businesses capable of performing well even in spite of the occasional bad manager, even half-joking once that Coca-Cola (NYSE: KO ) could be run by a ham sandwich.

Luckily for Berkshire shareholders, Buffett hasn't had to test that principle, thanks largely to its massive, stable insurance segment, which includes industry behemoths Geico and General Re. As I noted recently, however, Berkshire also made nearly $9.7 billion last year from its stakes in chemical maker Lubrizol, industrial stalwart Marmon, metalworking specialist Iscar, MidAmerican Energy, and Burlington Northern.

And don't forget that Berkshire just last month acquired a 50% stake in ketchup king H.J. Heinz (NYSE: HNZ ) , after which Buffett publicly stated he fully intends to continue his buying spree with Berkshire's ever-growing cash pile.

What's more, Berkshire also owns literally dozens of other various diversified companies, including Fruit of the Loom, Dairy Queen, NetJets, Pampered Chef, See's Candies, Shaw Industries, McLane, Clayton Homes, and Ben Bridge Jeweler, to name just a few.

With a list like that, the word "diversified" just doesn't seem to do Berkshire justice.

3. Like a mutual fund, only better
Finally, and as you might be aware, Buffett also knows a thing or two about investing. So if you're still not convinced by Berkshire's incredible management and incredibly diverse group of solid underlying businesses, maybe its equity portfolio will push you over onto the bull's side of the fence.

You see, thanks to Berkshire's massive balance sheet, Buffett is afforded the ability to invest both its shareholder equity and the float from its insurance operations -- the latter of which provided more than $73 billion in free money to invest last year.

In case you're worrying what will happen when Buffett is no longer around to manage that money --�he will�be 83 this August, after all --�rest assured he's covered those bases, too. For the past few years, Buffett has been steadily increasing the responsibility of two like-minded former hedge-fund managers in 42-year-old Combs and 52-year-old Ted Weschler, most recently noting they have both "proved to be smart, models of integrity, helpful to Berkshire in many ways beyond portfolio management, and a perfect cultural fit."

As a result, Combs and Weschler now manage a total of nearly $10 billion of Berkshire's portfolio and should be well prepared to take over completely when they're called to do so.

Foolish final thoughts
In the end, it's entirely up to you to decide whether you should add Berkshire to your own portfolio.

However, if you'd still like to learn more, check out Berkshire expert Joe Magyer's�premium report on the company. In it, he�provides investors with key reasons to buy as well as important risks to watch out for. Click here now for instant access to Joe's take on Berkshire!

Wall Street set to rise as banks grab spotlight

MARKETWATCH FRONT PAGE

Wall Street is poised to bounce back from the prior session�s drop, even as the mood darkens in Europe after Moody�s Investors Service slashes the credit ratings of several banks. See full story.

Stocks to watch Friday: Ryder, Arch Coal

MarketWatch�s rundown of corporate headlines of interest to investors early Friday. See full story.

Europe stocks track global bourses lower

European stocks slump as investors track a sharp plunge on Wall Street and on the Asian bourses, although Spanish stocks rally after the results of two consulting firms� bank stress tests were less gloomy than feared. See full story.

Ifo gauge of German business sentiment declines

Germany�s closely watched Ifo index of business confidence hits a two-year low in June as concerns about the euro-zone debt crisis continue to weigh on sentiment. See full story.

Auditors: Spain�s banks may need up to $78 billion

Much-anticipated review by independent consulting firms finds banking sector requires $77 billion in a worst-case scenario to get back on firmer footing after housing-market collapse leaves it freighted with soured loans. See full story.

MARKETWATCH COMMENTARY

After 15 years in New York City covering Wall Street, David Weidner is leaving. He leaves 15 observations on the industry he�s hated to love and loved to hate. See full story.

MARKETWATCH PERSONAL FINANCE

It�s a situation that seems to defy supply-and-demand logic: If there�s more demand in the housing market, wouldn�t the cost of borrowing funds to buy a home be significantly on the rise? See full story.

YHOO Rises 3.5%: Barclays Sees $18.22 in Alibaba, Y! Japan, Cash Value

Shares of Yahoo! (YHOO) today closed up 76 cents, or 3.5%, at $22.70 after Barclays Capital’s Anthony DiClemente raised his rating on the shares to Overweight from Equal Weight, based on the company’s minority stakes in Chinese e-commerce outfit Alibaba Group, and in Yahoo! Japan, being undervalued at the current stock price. DiClemente raised his price target on the stock to $26 from $22.

Alibaba’s valuation has probably risen to $55 billion from the $40 billion at which the company raised capital back in Q3 of last year, writes DiClemente, increasing the value to Yahoo! by $2.23 billion to $8.98 billion.

DiClemente lays out a back-of-the-envelope for valuing Alibaba:

Given the limited financial disclosure around Alibaba Group, it is difficult to assess the exact value of the company. That said, we thought it would be helpful to provide an idea of what Alibaba�s financials looked like for calendar year 2012 and could look like for 2013. We note that this is a rough estimate using limited financials and may not accurately reflect Alibaba Group�s actual financials. Given the disclosures in Yahoo!�s financials, we know that Alibaba grew revenue 71% and 74% in 2Q12 and 3Q12, respectively, with average operating margins above 30%. If we assume 1) that in 2013 Alibaba saw revenue growth decelerate to 60% (Alibaba saw revenue growth accelerate to 74% in 3Q12), 2) modest margin expansion in 2013 to 32% operating margins and 3) that depreciation and amortization is equal to 6% of revenue, versus EBAY at over 8% for FY11 and FY12, we arrive at EBITDA of $1.77 billion and $2.92 billion for FY12 and FY13, respectively. We note that this number could be conservative as there are likely other adjustments and one-time items that would need to be made in order to arrive at a more normalized non-GAAP operating income.�A $55 billion valuation for Alibaba would thus imply ~19x an estimated 2013 EBITDA of $2.92 billion.

DiClemente sees Yahoo! ultimately giving most of the proceeds of that stake to shareholders:

Excluding the $800M in preferred shares which will be redeemed within 10 years, we believe monetization of Yahoo!�s Alibaba stake will yield $8.2 billion in cash for the company. We believe that a significant portion of this cash will be returned to shareholders because: 1) we believe Yahoo! has an active and shareholder-friendly board that is focused on value creation; 2) large-scale M&A appears unlikely as Marissa Mayer has said that she prefers smaller M&A �in the size and scale of double-digit millions and low hundreds of millions�; 3) YHOO�s new management team has proven its commitment to capital returns, announcing a $3 billion return of capital in 3Q and then buying back nearly $1.5 of stock in 4Q alone; and 4) CFO Ken Goldman has stated repeatedly that buying back stock at thencurrent levels is �extremely attractive�, and though Yahoo! shares have performed well since, the company still trades at a significant discount to its peer group.

While Yahoo! is not currently planning to “monetize” Yahoo! Japan the way it is the Alibaba stake, DiClemente notes that shares of Yahoo! Japan traded in Tokyo have risen 37% since September 18th of last year, a $1-per-share after-tax value for Yahoo!, by his calculations.

Lastly, DiClemente thinks the “core” Yahoo! operations are now worth perhaps $7.78 per share, up from a prior estimate for $5.84, given improvements in things such as “cost-per-click,” the rate the company gets paid for its search ads, in light of the recent better-than-expected Q4 results.� However, he’s not counting on further improvement to boost the stock, writing “we need to see improvement in user engagement metrics and fundamentals in
order to get more constructive on the core business.”

DiClemente combines that $7.78 for the core with $18.22 in value for Alibaba and Yahoo! Japan, plus $5.6 billion in cash, to arrive at his $26 price target.

Saturday, March 30, 2013

Wages and Consumption Are Both in Long-Term Downtrends

Courtesy of frequent contributor Chartist Friend from Pittsburgh, here are four charts of wages, income and consumption. The charts depict changes from a year ago (also called year-over-year) and the percentage of change from a year ago. These measure rates of change as opposed to absolute changes, and so they are useful in identifying trends.

As I noted in Why the Middle Class Is Doomed (April 17, 2012), advanced economies are caught in the pincers of rising costs of essentials (not just food and energy but education and medical care) and a global oversupply of labor that has been "localized" by the Internet, i.e. previously localized labor can now be performed anywhere on the globe.

The build-out of Internet infrastructure that culminated in the dot-com boom boosted employment, wages and consumption, and the credit-housing bubble of the mid-2000s also boosted income and consumption. Now that these temporary conditions have faded, what's left is the relentless chewing up of traditional industries by the Web as distributed software boosts productivity while slashing the number of people required to create value.

What's remarkable about the first chart is the increase in volatility in recent years: the changes in wages and salaries are increasingly dramatic. This might be reflecting the dynamics of the global economy pulling wages lower while massive financial-stimulus policies of the Central State and bank (the Federal government and the Federal Reserve) act to artificially boost wages with trillions of dollars in borrowed/printed money.

The downtrend is clearly visible in this chart: lower highs, lower lows.

Real disposable personal income includes government transfers such as unemployment, which have soared in the "recovery." Higher taxes reduce disposable income, so we can anticipate lower personal income as bloated government spending is slashed and taxes rise.

Real personal consumption rose on the back of unprecedented Central State/bank stimulus, but the boost provided by this injection of financial sugar is over and the economy is about to suffer glycemic shock as the costs and unintended consequences of this grandiose attempt to restart a virtuous cycle of "growth" with trillions of dollars in borrowed and printed money limit future injections of stimulus.

We can anticipate declining employment, wages, income and consumption as consequences of long-wave global trends, over-indebtedness and failed policy, i.e. doing more of what has already failed spectacularly.

Charles Hugh Smith on the Death of the Middle Class (this is my first interview with Kerry Lutz of the Financial Survival Network, and I greatly appreciated Terry's keen questions on the era's key financial topics.)

*Post courtesy of Mr. Smith at Of Two Minds.

1 Discounted Natural Gas Company to Own

After hitting 10-year lows last summer, natural gas prices are slowly starting to rise. However, a number of natural gas-heavy E&Ps are still trading significantly below their net asset value. While gas prices are far from their 2007 levels, low-cost producers are able to eke out profits with gas prices at or above $4 per thousand cubic feet.

However, some of the best deals are found in gas companies significantly increasing liquids production. In this video, energy analyst Joel South points out two deeply discounted companies and determines which one is the best investment for your portfolio.

Energy investors would be hard-pressed to find another company trading at a deeper discount than Chesapeake Energy. Its share price depreciated after negative news surfaced concerning the company's management and spiraling debt picture. While the debt issues still persist, giant steps have been taken to help mitigate the problems. To learn more about Chesapeake and its enormous potential, you're invited to check out The Motley Fool's brand-new premium report on the company. Simply click here now to access your copy.

Can These Companies Prove Big Oil Wrong?

Despite being a year of steady progress, 2012 showed the world that industrial biotechnology is still not quite ready for the limelight. Big Oil shifted its focus to more proven thermocatalytic technologies that plan to transform the nation's abundance of natural gas into fuels and high-value chemicals. Massive development deals involving hundreds of millions of dollars are few and far between for aspiring biotechnology companies these days.

Established energy companies are chasing more certain returns with their investments in renewable chemicals, but that hasn't stopped a determined group from developing their platforms. Here's a list of companies accepting Big Oil's challenge of "don't tell us; show us."

Infecting the status quo
The brightest company investors can get their hands on is renewable-oils manufacturer Solazyme (NASDAQ: SZYM ) , which is hardly reeling from a lack of major energy company investments. This disruptor has partnerships and joint ventures in place with several big companies and recently received a $120 million loan from the Brazilian Development Bank. The loan actually has a negative interest rate after factoring in inflation rates for the Brazilian real.

The company will have manufacturing capabilities on three continents next year. Europe will initially be home to the company's nutritional efforts, while Brazil will boast the largest and most diverse product lineup with Bunge. A smaller facility with ADM in America's heartland will be on call for partners, with potential for big expansions as needed.

Big Oil isn't the only one pivoting. Amyris (NASDAQ: AMRS ) has transformed itself over the past year to focus almost exclusively on high-value chemicals. Initial plans to produce large amounts of sustainable diesel and jet fuels landed Total (NYSE: TOT ) -- which is still going all-in on Amyris -- but also dampened the company's financial situation. Investors will get their first glimpse of how full-scale industrial biotechnology works, as Amyris' first commercial facility ramps up production through the second half of the year.

In the majority
Investors shouldn't make the mistake of thinking that all of the action is happening from publicly traded companies. It's quite the opposite. Numerous private companies are among the front-runners for bringing bio-based chemicals to the market. Some have even raised more money and are targeting a wider range of products than Amyris, Solazyme, and Gevo.

Genomatica has developed one of the premier industrial biotechnology chemical platforms to date, with plans build a biorefinery capable of producing more than 100 million pounds of butanediol per year by 2015. In all, the company's platform can produce more than 20 chemical building blocks that enable a wide range of oils, fuels, polymers, solvents, resins, coatings, and more. Unlike competitors trying to manufacture and sell their own products, Genomatica will license the technology it develops to the industry for rapid deployment at a fraction of the cost.

Investors hoping to get into the shining star of bio-based chemicals had their hopes dashed last summer, when the company withdrew plans for an IPO. It wasn't alone. Several renewable companies, including waste-to-fuels company Enerkem, nixed IPOs last year, citing unfavorable market conditions (poor industry performance) as the their main concern. Whether Genomatica holds an IPO anytime soon remains to be seen, but it will be one for investors to watch.

On the algae front, companies such as Algenol and Joule Unlimited are turning heads with their initial commercialization plans. In the same week that ExxonMobil (NYSE: XOM ) and Synthetic Genomics stated that their algae technology was "at least 25 years away," Algenol announced that it had achieved peak production rates of more than 9,000 gallons of ethanol per acre per year. Corn ethanol achieves a yield of just 400 gallons on the same basis.

Algenol is targeting even higher yields for its platform, which will be important if the company wants to keep up with Joule Unlimited. The company is developing a modular commercial algae platform that may ultimately produce 25,000 gallons of ethanol and 15,000 gallons of diesel per acre per year. Steering clear of IPO talks, Joule has raised more than $110 million in private financing since its inception.

Foolish bottom line
Can these companies and others like them show Big Oil that there's real merit behind biocatalytic processes? Everything hinges on development and the mitigation of unknown factors surrounding the technologies. It will be difficult to decipher in much detail, but investors will want to keep an eye on production costs coming from Solazyme and Amyris in the next several years. Industrial biotechnology should capture huge pricing advantages with cheap and non-volatile sugar prices, compared with the currently favored feedstock of natural gas.

If you're still convinced about the dominance of petrochemicals, check out The Motley Fool's "3 Stocks for $100 Oil." For free access to this special report, simply click here now.

PepsiCo Outperforms as Dow Is Poised for Early Losses

LONDON -- Stock index futures at 7 a.m. EST indicate that the Dow Jones Industrial Average (DJINDICES: ^DJI ) may open 0.45% lower this morning, while the S&P 500 (SNPINDEX: ^GSPC ) may open 0.4% lower. CNN's Fear & Greed Index remains in "extreme greed" territory after closing at 88 yesterday.

Today's weekly jobless-claims data, due at 8:30 a.m. EST, is expected to show a slight improvement on the previous week, with claims falling from 366,000 to 360,000. However, any improvement here could be overshadowed by news that both Europe and Japan remain in recession. Eurozone GDP fell by 0.6% in the final quarter of 2012, while in Japan, GDP fell by 0.1% over the same period.

Corporate earnings may provide some good news, with several big names due to report this morning. PepsiCo (NYSE: PEP ) made a strong start, reporting 5% growth in organic revenue for 2012 and earnings per share of $1.09, beating expectations for earnings of $1.05 per share. Other big names expected to release quarterly earnings before the opening bell include General Motors, Discovery Communications, DirecTV, Molson Coors Brewing, BorgWarner, Waste Management, and Apache.

Stocks that could be actively traded this morning include Cisco Systems, which was down 2% in premarket trading after updating its third-quarter revenue guidance, and Applied Materials, which was nearly 3% higher in premarket trading after forecasting a pick-up in equipment sales.

European markets
Markets moved firmly lower in Europe this morning as the details of the disappointing GDP figures became clear. In the final quarter of 2012, eurozone GDP fell by 0.6%, exceeding expectations for a 0.4% drop and confirming the eurozone's ongoing recession. In individual countries, GDP fell 0.9% in Italy, 1.8% in Portugal, 6% in Greece, 0.6% in Germany, and 0.3% in France. Figures for Spain were not published today, while in the U.K., GDP fell by 0.3% in the final quarter of last year.

At 7 a.m. EST, the DAX was down 1.1%, the CAC 40 was down 0.8%, the FTSE MIB was down 1%, and the IBEX 35 was down 1.6%. In London, the FTSE 100 (FTSEINDICES: ^FTSE ) was down 0.8%, with oil services and engineering firm AMEC the biggest faller, down 6.1% after it downgraded its guidance for the year ahead despite beating expectations in its full-year results. Pharmaceutical firm Shire was 3.5% lower, cruise ship giant Carnival was down 2.9%, and miner Eurasian Natural Resources was down 2.6%, probably due to profit-taking following its recent strong gains.

If you're looking for shares that can outperform the wider market, you need to look beyond the news headlines. This free Motley Fool report, "The Top Growth Share For 2013," highlights a share that gained 38% in 2012, during which time the wider market rose just 6%. The company is a household name, and its earnings per share have risen by 44% since 2009 -- so click here now to download your free copy of this report while it is still available.

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The Safest Oil Stock to Buy Right Now...

A funny thing happens during corrections and bear markets. Selling begins and the usual suspects are punished: second-tier stocks, companies with shaky prospects and even shakier financials, companies with too much exposure to the area that's creating the particular problem or perceived problem. Then the next phase hits, where investors become increasingly nervous and begin to sell other stocks in the bad sector. They may not have any direct, fundamental issues with the selling excuse, but, better safe than sorry, right? The final phase resembles a Third-World country the day after a coup: everyone is taken out and shot.

Currently, this is happening across just about all market sectors, but especially in energy. As the U.S. dollar strengthens, oil prices typically weaken, because all oil trades are made in dollars. In addition, managers have made supertankers full of money on energy, so naturally, economic uncertainty is as good a reason as any to take the risk off the table. Fortunately, this wholesale liquidation is creating a fantastic opportunity for longer-term, income-oriented investors on the hunt for high-quality stocks at bargain prices.

One of the best out there is integrated oil giant ConocoPhillips (NYSE: COP).

When the baby is thrown out with the bathwater... it may be time to buy
As uncertainty grips world markets and the outlook for the global economy grows hazy, commodity prices, especially the price of oil, have come back. The price per barrel of Brent North Sea Crude currently hovers around $105, 15% off its intra-year high of around $125. Naturally, oil-related stocks have fallen in sympathy with the spot price of the black gold.

ConocoPhillips is no exception. Shares trade around $64.50, a 21% discount from its 52-week high of $81.80. But has ConocoPhillips' business changed simply because the price of oil has fallen? Of course not! And that's when opportunity is created...

ConocoPhillips is a pure exploration and production ( E&P) play, and one of the largest in the business with more than 1.76 million barrels of production daily. The company looks for oil and other fossil fuels, pulls them out of the ground, refines them, and then sells them. But, ConocoPhillips' days as fully-integrated pure play are numbered. But more on that later...

Earnings per share (EPS) growth has followed oil prices during the past few years, rocketing nearly 135% from $3.24 in 2009 to $7.62 in 2010. For 2011, EPS is projected to clock in at $8.50 -- not the kind of staggering growth it put up the previous year, but 11% EPS growth for a company with an $86 billion market cap is nothing to sneeze at. The balance sheet is also pristine, with nearly $12 billion in cash on the books and a low debt-to-capital ratio of only 19%. Clearly, ConocoPhillips is a cash flow monster.

A spinoff could make this an even better deal...
So shares have been knocked back to an attractive price. The company is well engineered, financially. There's obvious value in that alone. However, more value is about to be unlocked. In July, ConocoPhillips announced plans to spin off what is referred to as its "downstream" business, allowing the parent company to focus on its core E&P business. This collection of assets includes its refining business, chemicals division, and the midstream, natural-gas business. The total value for the new company will be somewhere in the $50 billion neighborhood. The transaction, which will be tax-free to shareholders, will be completed sometime in the first half of 2012. Shares of the new company are also expected to pay a dividend, but no numbers have been suggested yet.

Risks to Consider: These days, owning shares of an integrated oil company come with a wagon load of risks. Aside from the obvious associated fluctuation due to commodity price volatility, ConocoPhillips' premiere risk is the location of its reserves and core production. Actually, most of ConocoPhillips assets are quite secure: Three-quarters of ConocoPhillips' production lies in what oil patch expert Bill O'Grady of Confluence Asset Management would refer to as "friendly" places (O'Grady describes "unfriendly" places as "somewhere you wouldn't want to raise children). However, historically, oil from "friendly" places is more expensive to pull out of the ground. The regulatory environment in these places can increase production costs and, subsequently, put the squeeze on margins. The headwinds of an uncertain global economy and softening energy demand also present a considerable challenge. But the value presented and above-average dividend yield is adequate compensation for investor risk.

Action to Take--> ConocoPhillips shares currently trade for about eight times forward earnings and yield close to 4%. The company's three-year average annual EPS growth rate has been about 54%.

Netflix Up 14%, Minds Gap In UK

On the same day Whitney Tilson reiterated his love for Netflix,� the company launched service across the pond and challenged another kind of love: competitor Lovefilm.

The Netflix (NFLX) launch into the UK and Ireland Monday was long in the works; the buzz had shares rising into the close — up 14% to $98.49.

Amazon.com owns Lovefilm, having purchased it last year, and Netflix is offering similar services and prices to steal away customers, reports the Wall Street Journal.

Netflix streaming also poses a challenge for satellite broadcaster British Sky Broadcasting Group (BSB.London), which provides paid programming in the UK and Ireland. News Corp. (NWSA), parent of Barron’s and the Journal, owns a 39% stake in BSkyB.

Tilson was on CNBC earlier today when the stock was trading at about $94. He liked it, at that point anyway, and said that while he bought Netflix at around $77, he’s sticking with it.

Silver Lower, Grain Futures Rise in Trading

Agricultural commodities are closing higher after a cold snap in the southern U.S. damaged winter crops.

Analysts said Wednesday that wheat may be scarcer in the coming months after a hard freeze stretching from Tennessee to Texas damaged crops this week.

May wheat rose 5.25 cents at $7.3675 per bushel. Corn rose a nickel to $7.3525 per bushel. Soybeans added 6 cents to $14.5375 per bushel.

Trading has been relatively quiet this week ahead of a government report on grain stocks due out Thursday. Analysts expect the report to show corn supplies at a 15-year low. Traders are bidding up grains because they expect demand to increase after the report is released.

Energy futures and most metals settled higher. Silver edged down.

25 Important Things to Remember As an Investor

1. The intrinsic value of the stock market as a whole increases by about 1% every six weeks. That's what you'll get over the long term. Everything else is noise.

2. Several academic studies have shown that those who trade the most earn the lowest returns. Remember Pascal's wisdom: "All man's miseries derive from not being able to�sit�in a�quiet room alone."

3. The single best three-year period to own stocks was during the Great Depression. Not far behind was the three year period starting in 2009, when the economy struggled in utter ruin. The biggest returns begin when most people think the biggest losses are inevitable.

4. Economist Alfred Cowles dug through forecasts a popular analyst who "had gained a reputation for successful forecasting" made in The Wall Street Journal in the early 1900s. Among 90 predictions made over a 30-year period, exactly 45 were right and 45 were wrong. This is more common than you think.

5. There is virtually no correlation between what the economy is doing and stock market returns. According to Vanguard, rainfall is actually a better predictor of future stock returns than GDP growth. (Both explain slightly more than nothing.)

6. The Financial Times recently wrote: "In 2008, the three most admired personalities in sport were probably Tiger Woods, Lance Armstrong, and Oscar Pistorius." Given the volume of recent insider trading charges, something similar could occur among the investing "greats."

7. There are no investment points awarded for difficulty or complexity. Simple stocks can make outstanding investments.

8. 90% of Warren Buffett's success can be explained by three factors: Patience, compound interest, and time.

9. All bubbles begin with a rational idea that gets taken to an irrational extreme. That's why so many people fall for them.

10. How long you stay invested for will likely be the single most important factor determining how well you do at investing.

11. According to Longboard Asset Management, from 1983 to 2007, 40% of stocks were unprofitable, 19% lost at least three-quarters of their value, 64% underperformed the market, and 25% were responsible for all the market's gains. Statistically, successful stock-picking is more about avoiding awful investments than finding good ones.

12. There were 272 automobile companies in 1909. Through consolidation and failure, three emerged on top, two of which went bankrupt. Spotting a promising trend and a winning investment are two very different things.

13. In hindsight, everyone saw the financial crisis coming. In reality, it was a fringe view before mid-2007. The next crisis will be the same (they all work like that).

14. Management fees, transaction costs, and taxes are the bane of investment returns. Thankfully you can invest in commission-free low-cost index ETFs in a tax-protected Roth IRA through Vanguard.

15. You are under no obligation to read or watch financial news. If you do, you are under no obligation to take any of it seriously.

16. Investor Dean Williams once said, "Confidence in a forecast rises with the amount of information that goes into it. But the accuracy of the forecast stays the same." We're looking at you, Wall Street analysts.�

17. When you think you have a great idea, go out of your way to talk with someone who disagrees with it. At worst, you continue to disagree with them. More often, you'll gain valuable perspective. Fight confirmation bias like the plague.

18. Daily market movements are driven by people with short investment horizons. Are you a long-term investor? Then nothing they do applies to you. Ignore it.

19. Someday we will look back at financial advisors who don't have a fiduciary duty as one of the most harmful oxymorons of all time. Always make sure you understand the incentives of the advisor sitting on the other side of the table.

20. Take the highest level the S&P 500 traded at in every decade going back to 1880. At some point during the subsequent 10 years, stocks fell at least 10% every single time, with an average decline of 39%. Market crashes are perfectly normal.

21. To paraphrase Motley Fool member TheDumbMoney, companies that have antagonistic relationships with their regulators probably want to engage in behavior that won't benefit their long-term shareholders. Bear Stearns and Lehman Brothers fought hard for permission to use more leverage. It killed them.

22. Remember what Wharton professor Jeremy Siegel says: "You have never lost money in stocks over any 20-year period, but you have wiped out half your portfolio in bonds [after inflation]. So which is the riskier asset?"

23. People talk about market averages -- average P/E ratios, average annual returns -- but historically, markets rarely trade anywhere close to averages. Stocks are typically swinging between far undervalued or far overvalued, crashing or surging. The middle ground we think of as "normal" is a rarity.

24. The best company in the world run by the smartest management can be a terrible investment if purchased at the wrong price.

25. The single most important investment question you need to ask yourself is, "How long am I investing for?" How you answer it can change your perspective on everything.�

Check back every Thursday and Friday for Morgan Housel's columns on finance and�economics.�

Friday, March 29, 2013

Top Portfolio Products: DoubleLine Launches First Equities Mutual Fund

New products introduced over the last week include an equities fund from DoubleLine, two new funds from Aberdeen Asset Management and a new fund from Brown Brothers Harriman.

In addition, Natixis launched a new fund; Sammons launched a new IRA; and Vanguard proposed merging two funds, reported lower expense ratios for another fund and published a paper on investing.

Here are the latest developments of interest to advisors:

1) DoubleLine Launches First Equities Mutual Fund

The DoubleLine Equities Small Cap Growth Fund (I shares, DBESX; N shares, DLESX), the first open-end domestic stock mutual fund managed by newly formed DoubleLine Equity, opened to investors Monday. The new fund seeks long-term capital appreciation. The fund's assets will be invested principally in equity securities of small-cap U.S. companies or foreign companies whose shares trade on a U.S. exchange or are otherwise actively traded in the U.S., including in the form of American depository receipts (ADRs) and American depository shares (ADSs). The fund may invest in some securities that may trade principally or only outside the U.S.

In conjunction with the launch, DoubleLine Capital and DoubleLine Equity are holding a webcast/conference call at 4:15 PM Eastern/1:15 PM Pacific on April 1. Jeffrey Gundlach, CEO and chief investment officer of DoubleLine, will discuss his views on the equity markets and macro environment. A presentation on the fund strategy will be given by DoubleLine Equity partners Husam Nazer, portfolio manager of the fund, and Brendt Stallings, portfolio manager of other equity strategies at the firm.

2) Aberdeen Launches Latin American and European Equity Funds

Aberdeen Asset Management announced the launch of two new mutual funds: Aberdeen Latin American Equity Fund (A shares: ALEAX) and Aberdeen European Equity Fund (A shares: AEUAX).

ALEAX will be managed by the emerging-markets equity team, led by Devan Kaloo, head of global emerging-markets equities. The team will seek to achieve long-term capital appreciation by investing in equity securities of Latin American companies.

AEAUX will be managed by the pan-European equity team based in London, led by Jeremy Whitley, head of U.K. and European equities. The team seeks to achieve long-term capital appreciation by investing in equity securities of European companies.

3) Brown Brothers Harriman Announces Launch of BBH Global Core Select Fund

Brown Brothers Harriman & Co. (BBH) announced that it has launched the BBH Global Core Select Fund (BBGNX, BBGRX), a no-load mutual fund. The fund will be co-managed by Regina Lombardi and Tim Hartch, two members of the BBH core select investment team. The fund is the successor to the BBH private investment partnership, BBH Global Funds—Global Core Select, which launched on April 2, 2012.

The fund’s strategy is to invest in established, cash-generative businesses that are leading providers of essential products and services with strong management teams and loyal customers, and are priced at a discount to estimated intrinsic value. It will generally hold 30 to 40 companies with market capitalizations greater than $3 billion and which are headquartered in either developed countries, including the U.S., or developing countries with well-established and liquid capital markets. At least 40% of the portfolio’s net assets will typically be invested in non-U.S. stocks. 4) Natixis Global Asset Management Launches Aurora Horizons Fund

Natixis Global Asset Management (NGAM) announced the launch of the Aurora Horizons Fund (AHFAX). The fund may help investors achieve additional risk diversification within a traditional long-only portfolio of stocks and bonds by providing diversified exposure to alternative strategies. The fund is managed by Aurora Investment Management.

AHFAX is a multistrategy, multimanager fund that provides diversification by dynamically allocating across subadvisors that execute alternative strategies, including long/short equity, long/short credit, event-driven, short-biased and macro. It is managed by Aurora’s team of investment professionals including Roxanne Martino, CEO and portfolio manager; Scott Schweighauser, president and portfolio manager; Justin Sheperd, CIO and portfolio manager; and Anne Marie Morley, managing director of operational due diligence.

5) Sammons Retirement Solutions Launches LiveWellPlus Mutual Fund IRA

Sammons Retirement Solutions has launched the LiveWellPlus Mutual Fund IRA, available exclusively through independent financial advisers. The new IRA is designed to enable advisers to jumpstart long-term retirement planning strategies and enhance IRA values. For rollovers and contributions, an account bonus equal to 3% of the net amount of the rollover or contribution will be added to the account. LiveWell Plus also aims to promote long-term retirement asset growth through access to more than 100 mutual funds from 19 fund families, ranging from PIMCO and BlackRock to boutique managers.

A minimum rollover/contribution of $50,000 is required, and contributions are allowed for six months after opening. The program is available for traditional, Roth, inherited and SEP IRAs, as well as rollovers or transfers from qualified plans such as 401(k), 403(b) or government 457 plans. The offering has no front-end loads, no fees for reallocations or rebalancing, and charges one recordkeeping fee plus fund expenses. For amounts over $100,000, the recordkeeping fee is 0.85% for the first six years, dropping to 0.40% in the seventh year. An early withdrawal charge may apply to amounts withdrawn in the first six years. 6) Vanguard Proposes Fund Merger; Reports Expense Ratios; Publishes Paper

Vanguard is proposing to merge the $950 million Vanguard Florida Tax-Free Fund (VFLTX) into the $8.2 billion Vanguard Long-Term Tax-Exempt Fund (VWLTX). The proposed reorganization is in response to the elimination of Florida's tax on intangible property. As a result, Florida residents no longer receive additional state tax benefits from investing solely in Florida municipal bonds.

The proposed reorganization offers VFLTX shareholders an opportunity to merge into a larger, more diversified fund that seeks to provide current income that is exempt from federal income taxes. In addition, VWLTX features the same low 0.20% expense ratio. The reorganization, which is tax free, requires approval by VFLTX shareholders and will be submitted for their consideration at a meeting to be held in July.

The Vanguard Wellington Fund (I shares, VWELX; A shares, VWENX) is reporting lower expense ratios in its recently filed prospectus. VWELX and VWENX shares are reporting expense ratios of 0.25% and 0.17%, respectively, for the 2012 fiscal year, a two-basis-point decline from FY 2011 figures.

The fund invests approximately 65% of its assets in stocks and the remaining 35% in investment-grade corporate bonds, with some holdings in U.S. Treasury, government agency, and mortgage-backed securities. Wellington Management Co. has served as the fund’s advisor since its inception in 1929. In addition, several Vanguard municipal bond and municipal money market funds also reported modest expense ratio reductions.

Vanguard has published a new paper, “Principles for Investing Success,” that details its core investing principles: 1) create clear goals; 2) develop a suitable asset allocation; 3) minimize costs; and 4) maintain perspective and long-term discipline. The paper sets forth the rationale and data underlying these principles, and shows how investors can put them into practice and give themselves the best chance for investing success.

Read the March 22 Portfolio Products Roundup at AdvisorOne.

BlackBerry’s Must-Win Moment

Give Thorsten Heins credit for being gutsy. The BlackBerry (NASDAQ: BBRY ) chief skewered Apple's (NASDAQ: AAPL ) iPhone as old technology ahead of the U.S. launch of the new Z10 handset.

Say what you will about this being Heins' pot-kettle-black moment. It doesn't matter. What does is that he's openly challenged Apple and CEO Tim Cook to the tech equivalent of a fistfight, and the whole world is watching to see if he'll be knocked right back on his keister.

Can BlackBerry win? What little data we have so far says the Z10 is a mild seller. But retail sales isn't where the fight will be won or lost, says Tim Beyers of Motley Fool Rule Breakers and Motley Fool Supernova in the following video.

Please watch and then leave a comment in the box below. Did you buy a Z10? Have you switched from BlackBerry to iPhone or vice versa? Let us know what you think.

Unsure of how how the smartphone race will impact Apple? Allow me to introduce you to The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, whohas the skinny on the various reasons to buy or sell Apple right now.Click here to get his latest thinking on the stock �and what opportunities are left for Apple (and your portfolio) going forward.

Former Morgan Keegan Fund Directors Settle With SEC

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The Custody Rule and its Ramifications When an RIA takes custody of a client’s funds or securities, risk to that individual increases dramatically. Rule 206(4)-2 under the Investment Advisers Act (better known as the Custody Rule), was passed to protect clients from unscrupulous investors.
Differences Between State and SEC Regulation of Investment Advisors States may impose licensing or registration requirements on IARs doing business in their jurisdiction, even if the IAR works for an SEC-registered firm. States may investigate and prosecute fraud by any IAR in their jurisdiction, even if the individual works for an SEC-registered firm.

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The Securities and Exchange Commission has reached a settlement with the eight former independent directors of the Regions Morgan Keegan Funds who were charged by the SEC with overstating the value of their securities as the housing market was collapsing in 2007.

The SEC filed the charges in early December and the directors, in turn, filed an administrative proceeding against the SEC the same day, as they had vowed to “vigorously” fight the charges.

However, on Wednesday an administrative proceeding was issued asking for a stay for the hearing set for April 2 as a settlement in principle has been reached between the SEC’s enforcement division and the respondents. “The parties have agreed in principle to a settlement on all major terms,” stated a joint motion released by the SEC.

The eight directors oversaw five funds, which were invested in some securities backed by subprime mortgages. The mutual funds involved were the RMK High Income Fund, RMK Multi-Sector High Income Fund, RMK Strategic Income Fund, RMK Advantage Income Fund and Morgan Keegan Select Fund.

The SEC’s action in December followed a related $200 million settlement with Morgan Keegan, a subsidiary of Raymond James Financial, last year and sanctions against two employees in 2010.

As the SEC explained in its December order, “fund directors are responsible for determining the fair value of fund securities for which market quotations are not readily available,” but the eight directors violated this securities law by delegating “their fair valuation responsibility to a valuation committee without providing meaningful substantive guidance on how fair valuation determinations should be made.”

The fund directors, the SEC said, “then made no meaningful effort to learn how fair values were being determined.” They “received only limited information about the factors involved with the funds’ fair value determinations, and obtained almost no information explaining why particular fair values were assigned to portfolio securities.”

The SEC’s order goes on to say that these failures were “particularly egregious” given that fair valued securities made up the majority–in most cases upwards of 60%–of the funds’ net asset values.

Steve Crimmins, one of the two attorneys with K&L Gates in Washington who defended six of the independent directors, told AdvisorOne in an interview in December that the SEC has failed for too long to provide guidance on fair valuation, which has been a “notoriously gray area.”

The attorneys representing the eight directors issued a statement at the time saying that “more than five years after the events concerned, the SEC staff now seeks to pursue administrative charges against a group of independent directors alleging that they unintentionally caused regulatory violations related to portfolio valuation.” However, the attorneys wrote, the “SEC has chosen to ignore a host of facts and circumstances which demonstrate that these directors at all times acted diligently and in good faith during the unprecedented market turmoil of 2007.”

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Read Vow to Fight SEC Charges From Ex-Morgan Keegan Fund Directors on AdvisorOne.

Quietly, Opera is working on becoming a Smart TV powerhouse - 04:27 PM

(gigaom.com) -- Quick: What’s the first thing that pops in your head when you think of Opera? If you’re anything like me, it’s probably the company’s desktop browser. But there’s more to Opera: The company has been hugely successful in mobile, bringing in more than $400 million in ad revenue in 2012 alone, and it’s now getting ready to repeat that success story on the TV.

Opera has been active in TV for some time. The company’s browser software-development kit has been powering TVs and connected devices from Panasonic, Toshiba, Sharp and Philips as well as the new Boxee TV, just to name a few. Frode Hernes, VP of products and connected devices at Opera told me during a phone conversation last week that consumers already use an estimated 30 to 50 million TVs and connected devices that are powered by Opera.

Top Stocks To Buy For 3/29/2013-1

Gramercy Capital Corp. NYSE:GKK opened at $2.31 and with a gain of 20.78% closed at $2.79. Company’s fifty days average price is $2.21 whereas it has a market capitalization $139.33 million.
The total of 2.31 million shares was transacted over last trading day.

The PMI Group, Inc. NYSE:PMI opened at $3.37 and with a gain of 12.12% closed at $3.70. Company’s fifty days average price is $3.46 whereas it has a market capitalization $596.32 million.
The total of 9.23 million shares was transacted over last trading day.

PolyOne Corporation NYSE:POL opened at $12.81 and with a gain of 11.21% closed at $13.89. Company’s fifty days average price is $12.80 whereas it has a market capitalization $1.30 billion.
The total of 2.21 million shares was transacted over last trading day.

GMX Resources Inc. NYSE:GMXR opened at $5.60 and with a gain of 10.69% closed at $6.11. Company’s fifty days average price is $4.84 whereas it has a market capitalization $188.82 million.
The total of 3.49 million shares was transacted over last trading day.

Ruby Tuesday, Inc. NYSE:RT opened at $13.30 and with a gain of 9.95% closed at $14.36. Company’s fifty days average price is $12.88 whereas it has a market capitalization $931.29 million.
The total of 1.43 million shares was transacted over last trading day.

Obama to Release His Budget Outline April 10

WASHINGTON (AP) -- The White House says President Barack Obama will release his federal budget outline on April 10 -- two months late.

Under the law, the president was supposed to submit a budget on Feb. 4. But White House aides said deliberations over spending in the past few months delayed the release of Obama's blueprint.

The Republican-controlled House and Democratic-controlled Senate have passed rival budgets in the past week.

The Senate budget embraces nearly $1 trillion in tax increases over the coming decade and shelters the domestic programs House Republicans want to cut. The GOP version would balance the budget over the next decade without raising taxes.

Genworth Sells Wealth Management Unit for $412.5M

Genworth Financial (GNW) announced Thursday that it is selling its Genworth Financial Wealth Management unit to a partnership of two private equity firms—Genstar Capital and Aquiline Capital—for $412.5 million.

According to the parent company, the deal is expected to close in the second half of 2013, and it will take a $40 million after-tax loss, with $35 million recorded in the first quarter. Genworth Financial said proceeds of the deal would be used to “address” its debt coming due in 2014 or before.

What will the deal mean for advisors who use Genworth Financial Wealth Management’s platform? According to Gurinder Ahluwalia (left), president and CEO, there will be no short-term changes for those RIAs and independent BD reps who form the core of GFWM’s advisor clients.

Longer term, he said, the acquisition will be positive for advisors, leading to “more enhancements and more investment in the business,” which includes its TAMP investment platform and technology and practice management tools, including Altegris’ liquid alternative investing products.

“Genworth decided we weren’t core to their business,” Ahluwalia said in a Thursday interview, while with its new owners, “we have a couple of firms who love our business.” Not only will Ahluwalia and his management team stay in place, so will GFWM’s “mission and organization,” he said. “You want to be in a place where your vision is shared by your corporate parents,” Ahluwalia said, and as for his management team, “We’re pretty jazzed.”

When asked whether the two private equity firms were interested in a shorter-term return on their investment, Ahluwalia said that while he couldn’t speak for Genstar and Aquiline, he knew that a short turnaround of their investment was not the plan. “We’re going to invest in the business for a longer-term outcome. For me that means new solutions—investing or technology,” he said, mentioning that he and his top managers were engaged in the presale discussions: “We’ve engaged with them our vision of a multiyear plan; they’re absolutely aligned with our growth objectives.”

Those words were echoed in Genstar and Aquiline’s announcement of the acquisition, stating that “Aquiline and Genstar will bring their operational expertise and industry experience to help GFWM and Altegris increase their scale and capabilities,” specifically “to enhance product development and technology offerings at GFWM, and expand distribution channels and launch new alternative products at Altegris."

Jeff Greenberg, CEO of New York-based Aquiline, called GFWM and Altegris “market-leading businesses with strong brands, experienced management teams and high growth potential,” while San Francisco-based Genstar principal Tony Salewski said in the same statement that GFWM and Altegris were “each well-positioned to meet the growing needs of independent financial advisors and increased demand from retail investors for access to alternative products.”

Ahluwalia has guided GFWM from its beginnings as Genworth Financial Asset Management to an integration with AssetMark Investment Services and then acquisitions of Quantuvis Consulting and Altegris, making GWFM one of the fastest-growing investment outsource providers to advisors. While the name of the company will change—“that’s something we’ll be working on from now until closing” of the deal—he argues that what won’t change is the firm's focus on risk management. “It’s such an important principle for advisors,” he said, “around their practice but also for their investment clients.”

-----

Read LTCI Benefits Exceed $6B in 2012 on AdvisorOne.

3 Reasons Investors Are Scared of Biotech Stocks

Biotechs offer the possibility of monster returns. Overnight doubles aren't out of the question. Triples and quadruples as a drug successfully progresses through the clinical trial process are the norm.

And yet many investors shy away from the industry. Let's take a look at why.

Down on bad news
Biotechs face many succeed-or-fail binary events over the course of drug development. Clinical trials, Food and Drug Administration advisory committee meetings, and FDA approval decisions all offer an opportunity for a monster pop or a monster drop.

As drugs succeed, they're given a larger value, but that means if a drug subsequently fails, it has a larger effect on the stock price. Phase 1 failures tend to have very little effect on stock prices. Phase 2 hurts a little more, especially for companies with limited pipelines. Drugs that fail in phase 3 are quite costly.

For example, shares of ZIOPHARM Oncology (NASDAQ: ZIOP ) were cut by two-thirds this week after its cancer drug palifosfamide�failed a phase 3 trial in metastatic soft tissue sarcoma. The smaller phase 2 trial suggested the drug was working, which built up the value of the company. The drug did delay tumor progression by a month, but the increase wasn't statistically significant.

Down on good news
These days, it doesn't take bad news to send shares down. Good-but-expected news is often enough to do it. After the excitement of the binary event is over, investors flee. It's "sell the news" without the "buy the rumor."

For example, Navidea�Biopharmaceuticals� (NYSEMKT: NAVB ) dropped 12% following the approval of its lymph node diagnostic Lymphoseek this month. The approval was widely expected after an earlier FDA rejection for issues at a third-party manufacturer.

In December, ARIAD Pharmaceuticals (NASDAQ: ARIA ) experienced the same issue with a double-digit drop after its leukemia drug Iclusig was approved by the FDA. Strong data and a fast-track designation got the drug approved quickly.

Down on unexpected news
The worst risk is the kind that can't be foreseen.

At least with binary events, investors can see it coming. Data from a clinical trial will be released. The FDA will make a decision about whether the drug is approvable. The exact date might not be known, but at least it can be pinpointed to a month or two, with many events coming in a smaller window than that.

But sometimes events come out of left field. And they're almost never the good kind.

Shares of Affymax� (NASDAQ: AFFY ) , for instance, are down more than 90% year to date after the company had to recall all of its red blood cell stimulating drug, Omontys, that treats patients on dialysis with chronic kidney disease. The drug caused allergic reaction in some patients, which was occasionally fatal.

Didn't you say something about monster returns?
I did.

While there's a lot of risk investing in the biotech industry, there's also the potential for insane increases in share prices. Regeneron Pharmaceuticals (NASDAQ: REGN ) , for instance is up 550% over the last 3 years thanks to the successful development and launch of its macular degeneration drug Eylea.

So how do you find the next Regeneron while avoiding companies like ZIOPHARM, Navidea, ARIAD, and Affymax? A little skill and a little luck.

Binary decisions that look like they're a shoo-in typically don't result in big returns; investors have already factored in the approval or positive clinical trial and sell after the news is released. When the result is negative, like it was for ZIOPHARM, it's even more costly.

Investing in less-than-sure-things is more risky, but it comes with much larger rewards. The trick is to find companies where other investors are discounting the risk more than is necessary, which allows you to buy with a margin of safety.

It's hard to predict a drug getting pulled off the market like Omontys was. Instead, investors have to make sure the potential return from a company with a drug already on the market justifies the risk. A commercial-stage drugmaker really has to be a bargain to justify the risk, especially given the lackluster launches recently.

While you can certainly make huge gains in biotech and pharmaceuticals, the best investing approach is to choose great companies and stick with them for the long term. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of.�Click here now�to keep reading.

U.S. Flies B-2 Bombers Over South Korea

Yonhap/Associated Press

A U.S. Air Force B-2 stealth bomber flew near Osan U.S. Air Base, south of Seoul, on Thursday in a display of force aimed at deterring North Korean threats of attacks on the U.S. and South Korea.

Two B-2 stealth bombers flew from a base in the American heartland, dropped test charges on targets near North Korea and returned to the U.S. on Thursday, as Washington mounted its most overt display of military force amid months of escalating tensions with North Korea.

The B-2s, the most advanced heavy bombers in the U.S. arsenal, flew low over the South Korean city of Osan before dropping eight dummy munitions on a South Korean bombing range as part of annual joint exercises with South Korea's military. The dummies were inert versions of 2,000-pound bombs, one of the bigger conventional weapons in the U.S. arsenal. The B-2 can also carry nuclear payloads.

The maneuvers illustrated the growing concern inside the Obama administration that North Korea and its 30-year-old leader, Kim Jong Eun, may move beyond threats that have been commonplace against the U.S., South Korea and other allies in Asia. The fear is that Mr. Kim will continue with a string of military provocations that run the risk of sparking a major security crisis in Northeast Asia.

Tensions Escalate

North Korea Cuts Hotline North Korea said it was severing a military hot line with South Korea and showered invective on Seoul's new leader, even as Seoul pursued plans to improve relations with the North.

Signal Amid the Noise The hotine is used to coordinate traffic heading from the South into the Kaesong Industrial Complex, a few miles inside the North. So far, traffic heading from the South into the industrial zone has been unaffected.

Earlier

Bank of America Helps Fuel M&T Bank’s Growth

Once again, the downsizing of Bank of America (NYSE: BAC ) has resulted in gains for another bank. Just as the shedding of branch locations has been a boon to several smaller banks looking to expand their own footprints, the recent news that B of A will be closing a mortgage servicing center in western New York state has attracted another bank's interest, saving nearly half of the office's jobs in the process.

Bank of America is looking to reduce its sprawl, as well as some of its mortgage-servicing business -- and M&T Bank (NYSE: MTB ) is looking to increase its presence in that very area. Not only is M&T a local bank based in Buffalo, but it is also expanding its own mortgage-servicing business.

A growing concern
M&T will assume B of A's lease on the current location, as well as employ up to half of the 1300 people�employed there, 100 of whom will stay with Bank of America. M&T will be taking on more than workers, however. The bank will also get to service the loans�formerly under B of A's care, although it won't own the actual servicing rights to the loans -- it will function as Bank of America did, as a servicing contractor. M&T has a burgeoning business in mortgage servicing and is well-regarded�for its ability to deal with problem loans.

M&T has been growing by leaps and bounds over the past year, as evidenced by its acquisition of Hudson City Bancorp (NASDAQ: HCBK ) �--�whose 135 branch locations will certainly help in spreading the M&T brand around the region, and as far south as Virginia. The acquisition is expected to close�sometime around the end of the second quarter.

Win-win for all involved
For Bank of America, the move is likely more of the slimming and trimming that it has been undergoing for the past year or more. Although a spokesperson stated that the bank is closing the facility because of a reduction in delinquent loans, this seems unlikely. As I mentioned yesterday, B of A services the largest chunk of the nation's foreclosures -- nearly 13% of the total. This fact doesn't seem to jibe with the bank's assertion that there are many fewer homeowners�requiring assistance with troubled loans.

At any rate, both banks are getting what they need, and at least half of the affected employees will be absorbed into the new operation, with M&T pledging to help all workers find other jobs, as well -- making it a win-win all the way around.

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Opinion: Juan Williams: Race and the Gun Debate771 comments

This week much of the talk about gun control concerns New York Mayor Michael Bloomberg's $12 million ad campaign to put pressure on senators in key states to support legislation that he backs. Or the talk is about the National Rifle Association's pushback against the Bloomberg campaign. Then there was last week's mini-tempest over Senate Majority Leader Harry Reid's decision not to include Sen. Dianne Feinstein's assault-weapon ban in a comprehensive gun-control bill the Senate will take up next month.

One thing you don't hear much about in the discussions of guns: race.

That is an astonishing omission, because race ought to be an inescapable part of the debate. Gun-related violence and murders are concentrated among blacks and Latinos in big cities. Murders with guns are the No. 1 cause of death for African-American men between the ages of 15 and 34. But talking about race in the context of guns would also mean taking on a subject that can't be addressed by passing a law: the family-breakdown issues that lead too many minority children to find social status and power in guns.

Workers’ Retirement Confidence Sinks to All-Time Low

A new survey finds a record number of Americans have lost confidence in their ability to afford retirement.

The 2011 Retirement Confidence Survey, released Tuesday by the nonpartisan Employee Benefit Research Institute (EBRI) in Washington, and co-sponsored by the Principal Financial Group, found more than a quarter of workers (27%)—the most ever in the two decades of the survey— now say they are “not at all confident” about having enough money to live comfortably in retirement.

Reinforcing that trend, the percentage of workers saying they are “very confident” ties with 2009 at 13%—the lowest rate ever measured by the survey.

The survey finds that many systemic conditions are forcing Americans to redefine retirement, such as high unemployment rates; government fiscal crises; rising health care costs; lower investment returns; a surging older population putting pressure on Social Security and Medicare; and longer life expectancies.

“Americans are beginning to recognize the level of savings needed for a comfortable retirement. Now it’s critically important to take steps to improve the chances they’ll have enough,” said Greg Burrows, senior vice president of retirement and investor services at The Principal, in a statement. “Research shows even simple actions, like calculating how much is needed for retirement, increases savings. Creating a plan and working with a financial advisor can also help get savers on realistic paths to a secure retirement.”

Among other key findings in the 2011 Retirement Confidence Survey, available on the EBRI website at www.ebri.org:

Roughly a third of both workers and retirees said they had to dip into their savings last year to pay for basic expenses. Significantly, those with retirement savings—such as a 401(k) or an individual retirement account (IRA)—were far less likely than those without these accounts to tap into their savings.

Many people do not plan or save for retirement. Well over a third (42 percent) say they determined their retirement savings need by guessing. Seventy percent say they are a little or a lot behind schedule in planning and saving for retirement.

More than half of workers say they have less than $25,000 in total savings and investments, excluding their homes.

A significant number of workers (20 percent) say they now intend to retire later (at an older age) than they had planned. But almost half of current retirees (45 percent) say they retired earlier than they planned, mainly because of a health problem or disability.

The annual Retirement Confidence Survey is conducted by the nonpartisan Employee Benefit Research Institute (EBRI) and Mathew Greenwald and Associates.

Securities America Recruited Production Jumps More Than 300% in ’12

Thanks to the addition of sizeable groups of reps from Investors Security and Eagle One Investments and other recruiting efforts, Securities America says it increased the level of recruited fees and commissions in 2012 close to 310% from the 2011 level.

“We’re perfectly situated to address two major advisor motivators for changing broker-dealers: advisors at wirehouses and large independent broker-dealers who want more responsive customer service, and advisors at smaller firms who want better technology and help growing their business,” said Jim Nagengast (left), CEO and president of La Vista, Neb.-based Securities America, in a press release.

Securities America executives also say that the firm is actively searching for a national director of recruiting. The broker-dealer was bought by Ladenburg Thalmann (LTS) from Ameriprise Financial (AMP) in late 2011 for $150 million. It has about 1,700 advisors nationwide; it says some 300 new reps were recruited over the past 12 months or so.

In early January, it added 30 advisors from regional broker-dealer Eagle One Investments of Washington, Iowa, as affiliated reps. The Iowa group has had about $4.5 million in annual revenue.

This news came just a couple of months after Securities America recruited 130 affiliated advisors from Suffolk, Va.-based Investors Security with about $1 billion in client assets.

“The financial pressures of running a successful broker-dealer today are squeezing many smaller firms to the point where it just makes sense to affiliate with a larger entity that can spread those costs across more advisors,” Nagengast said. “At the same time, they want support from home office employees whose names, voices and faces become familiar to them. Advisors want to know their business and their clients come first—and with Securities America, they can be confident in that.”

Top Producing Advisors

Securities America said it attracted a good number of large producers and branches over the past 12 months, such as:

Ryan Kaufman and Koi Wealth Management, a branch with $1.3 million in revenue in Rocklin, Calif., who came over from Woodbury Financial Services;
John Lindsey, a former Edward Jones advisor in Westlake, Calif., who moved with about $100 million in client assets; and
Michael Mullis’ Kelly & Mullis Wealth Management, a Vestavia, Ala.-based, practice with $223 million in client assets that joined the firm from LPL Financial (LPLA).

Securities America says that with its parent company, Ladenburg Thalmann, advisors have capabilities that are more typically associated with a wirehouse, such as investment banking, syndicate offerings, a dedicated fixed-income desk and advisor-friendly trust services.

“In the past, we found some wirehouse advisors reluctant to give up access to investment banking, IPOs and bond inventory—even though they were often expected to sell those same investments to their clients—and the prestige those services can carry with high-net-worth clients,” said Gregg Johnson, senior vice president of branch office development and acquisitions, in a statement.

“Now advisors can have those Wall Street services for their more sophisticated clients plus the independence they want to best serve all of their clients,” Johnson added. “We’re attracting highly successful advisors who have been in positions of leadership and influence at their previous broker-dealers.”

In terms of where the 300 freshly recruited reps came from, more than 75% came over from other independent broker-dealers. Close to 10% came from the wirehouses, around 7% from financial institutions, and the remaining advisors (under 5%) from regional firms.

Thursday, March 28, 2013

This Is One Incredible CEO

The Motley Fool's readers have spoken, and I have heeded your cries. After months of pointing out�CEO gaffes�and faux pas, I've decided to make it a weekly tradition to also point out corporate leaders who are putting the interests of shareholders and the public first and are generally deserving of praise from investors. For reference, here's�my previous selection.

This week, I'm going to step out of the public arena and highlight a truly exceptional (and reclusive) CEO in the private sector, Jeffrey Hildebrand of Hilcorp Energy.

There are plenty of well-run publicly traded companies, but every so often a privately held company catches my eye that I feel deserves a pat on the back. Today, it's Hilcorp's�turn.

As you might imagine, finding out production, location, and other information about a privately held oil and gas exploration and production operator can be difficult. Thankfully, Hilcorp's website helped fill in some of the missing pieces.

Kudos to you, Mr. Hildebrand
Hilcorp employs approximately 1,000 people in 11 different regions, including the Cook Inlet in Alaska, the Gulf of Mexico, and the Rocky Mountains. Hildebrand founded Hilcorp, building it up little by little since 1989 by purchasing predominantly discarded assets by major E&P oil and gas companies and utilizing its superior technology to develop those assets and, occasionally, to sell those assets for a profit.

Hilcorp did exactly this in September, agreeing to part ways with three fields in the central Gulf of Mexico shelf that it had acquired previously from Chevron. In total, Hilcorp received $550 million by selling these properties to EPL Oil & Gas, helping that E&P company double its proven reserves and boost its oil output to approximately 20,000 barrels per day.

That payment -- in addition to what's forecast to be a 70,000 barrel-per-day (bpd) production count, according to Forbes --�allows Hilcorp to focus on its two primary areas of projected rapid growth: Alaska and its Utica shale acreage.

According to the U.S. Geological Survey, the Cook Inlet in Alaska could yield 600 million barrels of oil and 19 trillion cubic feet of natural gas. That's great news for Hilcorp, which has acquired bounties of acreage in the region from Chevron previously and more recently from Marathon Oil, where it agreed to pay $375 million. Since it acquired Chevron's properties, Hilcorp was able to boost its Cook Inlet production from 6,500 bpd to 8,000 bpd, but it's also seen natural gas output taper a bit. However, when all is said and done, Hilcorp will own 70% of all Cook Inlet natural gas production, which should play right into its hands when President Obama's energy independence push stabilizes gas prices and boosts demand. Hilcorp spent more than $230 million in developing the Cook Inlet in 2012 and could spend an additional $150 million to $200 million in 2013 according to Platts.

Hilcorp's Utica shale acreage could offer some very lucrative returns as well with its announcement of a joint venture with NiSource (NYSE: NI ) in July of last year. Total investment in the first phase of this joint venture will be $300 million and involves the construction of midstream pipeline infrastructure and a natural gas liquids processing facility to support natural gas production in the region. There is still a gigantic opportunity to build upon our existing midstream pipeline infrastructure that I would suspect deals like this between upstream E&P companies and midstream- and downstream-skilled companies will become the norm.�

A step above his peers
In addition to garnering exceptionally lucrative deals, which has helped grow Hilcorp to become the third-largest privately held E&P company, Jeffrey Hildebrand has done a phenomenal job in motivating his employees and rewarding the communities his company operates in despite the fact that he's the sole shareholder in the company.

To begin with, Hildebrand might be offering the most robust, across-the-board monetary perk I've ever seen. In 2006, Hildebrand began a campaign known as Double Drive, which aimed to double Hilcorp's value, its oil-field production rate, and its net oil and gas reserves by 2010. If met, he promised each employee a voucher for $50,000 toward the purchase of a new car. With that goal met, approximately 700 employees received a $50,000 voucher in 2011. The new drive, dubbed Dream 2015, will award Hilcorp's 1,000 employees with a $100,000 bonus � that's right, $100,000 � if the company again doubles its value, net production, and reserves by 2015.

Hilcorp, despite being privately held, is also the�cream of the crop when it comes to community donations and encouraging its employees to give back to the community. Hilcorp gives $2,500 to each new employee to donate to the 501(c)(3)-approved non-profit organization of their choice upon hiring. In each year following an employee's initial year, Hilcorp will match dollar for dollar up to $2,000 to qualifying non-profit organizations. Since its inception, Hilcorp's employees have donated $5.26 million via this method.

On top of donating, Hilcorp employees often volunteer their time in their local communities and Hilcorp itself aids employees with children by providing educational scholarships.�

Two thumbs up
After reviewing the numerous strategic moves Hildebrand has made as CEO and the bounty of rewards that this leader has promised and previously delivered to his employees, it's not difficult to see why Fortune 500 selected Hilcorp as the seventh in its list of "Best Companies to Work For" in 2013. Hildebrand has made incredibly smart deals and is doing a fantastic job in supporting his employees and the community -- a job that I feel is worth two emphatic thumbs up!

Do you have a CEO you'd like to nominate for this prestigious weekly honor? If so, head on over to the�CEO of the Week board�and chime in with your fellow Fools on who deserves some praise. If you don't have a nominee yet, don't worry -- you can�still weigh in�on other members' selections.

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BlackBerry: Bulls Cheer Z10 Upside, Bears Question Subs (Update)

Shares of BlackBerry (BBRY) gave up earlier gains as today’s session ground on following a fiscal Q4 report of lower-than-expected revenue, a surprise profit, and an outlook for this quarter’s net income to possibly break even despite spending 50% more on marketing to promote the company’s new BB10-based handsets.

The stock is closed down 12 cents, or 0.8%, at $14.45, and were up 4 cents in late trading.

On a conference call following the report, CEO Thorsten Heins said that “initial early global demand for BES 10 has been better than anticipated,” referring to the company’s software for managing different kinds of mobile devices in enterprise, including Apple‘s (AAPL) iPhone and Google (GOOG) Android-based devices.

When asked about how much of the BlackBerry subscriber base would move to new devices, Heins emphasized the arrival in May of the “Q10,” which has a hardware keyboard:

Going into the installed base, if you’re kind of recalling the segmentation of BlackBerry versus QWERTY versus full touch devises we are very strong in QWERTY. That’s why we are excited to have already more than 40 carriers testing the Q10 which then actually will go strongly into that existing BlackBerry base so we are all looking forward to launch Q10 globally and addressing that market segment even stronger and I think this will just yield another good opportunity for us to increase numbers of units and revenues.

Analysts reviewing the results have concluded that the 6 million handset units was lower than they were thinking, marked by lower sales of older BlackBerry 6 and 7 handsets, but higher sales of the recently introduced Z10 than previously expected. The company’s subscriber base declined from 79 million in the prior quarter to 76 million. Some estimates are going up, including losses swinging to profit for fiscal 2014.

CNBC‘s Carlos Quintanilla hosted a bear this morning, Kris Thompson of National Bank Financial, who has an Underperform rating on the shares and a $10 price target. Said Thompson,

It’s hard to suggest investors take a long term hold in stock because we don’t ultimately think Z10 is going to be that successful. Look at the math: the subscribers declined by 3 million, they shipped about 5 million of the BB7 devices, so if you look at the math, that means they lost about 8 million of their old BB6 and 7 subscribers. That makes sense if they have about, call it 60 million consumer subs, with the average contract length being two years, you’d expect over two years you’d have about 8 million per quarter maturing, so I do think you’re going to have number falling further as the old platform becomes more and more stale.

Not to be outdone, Bloomberg featured bear Colin Gillis of BGC Capital Partners, who emphasized that the 1 million BB10 shipments weren’t all sell-through. The anchors put up on screen Gillis’s haiku: “Pay heed to channel, inventory increasing and not selling through.”

Other analysts this morning are highlighting a mix of good and bad:

Bullish!

Pierre Ferragu, Bernstein Research: Reiterates an Outperform rating and a $22 price target. “Launch momentum will likely remain very strong in the next 3 months and possibly beyond. Major European countries like France, marketing campaigns haven�t started yet and can be a source of additional traction. We also expect very strong distribution support from Verizon coming in imminently, while the uncertain debuts at AT&T will be followed by much more distribution support. Lastly, major markets in Asia (Hong Kong, China) still have to be addressed and are likely to be added in the coming months. Moreover, we have multiple indications of a strong interest for the Q10, largely superior to interest demonstrated for its predecessor [�] Over half the buyers of the new Blackberry abandoned another platform (Apple or Android in the vast majority of cases), which means that very little of Blackberry�s own user base has been tapped so far. Secondly, and most importantly, the corporate refresh cycle hasn�t even started yet. We believe corporate users will take longer to come to the new platform, likely offering shipment support beyond the next quarter [�] This quarter and guidance given for the next quarter largely supports the idea that there will be resilience in Service revenues, at least in the near term [�] How the launch of Blackberry 10 can change the fate of the company remains unclear, but we maintain a high level of conviction that the stock doesn�t reflect yet the 12 months perspective described above.

Peter Misek, Jefferies & Co: Reiterates a Buy rating, and raises his price target to $22 from 19.50. “GM and EPS dramatically exceeded St expectations as we believe the margins and ASPs of the new BB10 phones were underappreciated. FQ1 (May) guidance of approaching breakeven is above St’s $(0.11), but we feel it is conservative (Jef $0.33). We continue to see large upside to consensus May and Aug Q consensus ests and that BBRY’s MDM opportunity is under appreciated [�] The focus on shipment number miss is bizarre as they make No money on the BB7 handsets so the fact they didn�t sell as much is actually a very good thing. Lastly the fact their operating cash flow was positive and is forecast to be positive means there is NO inventory in the channel. Or simply put they are selling every BB10 handset they make. Why? Because if they didn�t working capital would go higher significantly depressing cashflow. The short sellers are massively involved right now doing everything they can to keep stock down because if they don�t you could have a melt up and they lose money a lot of money.” Misek raised his fiscal 2014 estimate o $15.76 billion and $1.44 per share from a prior $14.89 billion and 11 cents.

Maynard Um, Wells Fargo: Reiterates an Outperform rating. “BBRY gross margin materially beats driving profitable quarter; guidance better than expected [�] Z10 units of 1 million were slightly lower than our 1.5mn forecast while BB7 units were in line with our 5mn forecast. With gross margin of 40%, this suggests Z10 gross margins are higher than our 27% estimate (or BB7 gross margin are not as loss making) [�] The company expects a lower cost base, more efficient supply chain, and improved hardware margins and a 50% sequential increase in marketing spending to result in breakeven earnings FQ1 2014 (Wells Fargo estimate for a loss of $0.07; consensus loss of $0.13). We expect Consensus estimates to increase and, on our initial take, believe the outlook could be conservative on an implied Z10 unit shipment.”

Bearish!

Mark Sue, RBC Capital Markets: Reiterates a Sector Perform rating and an $18 price target. “The concerning point for BlackBerry is the sharp erosion in its subscriber-base, down 3M to 76M, implying the world�s moving on as Blackberry tries to reverse its market-share loss. Encouragingly, the Z10′s holding in with 3/4 of its 1M units now sold through the channel. With cost reduction in older products and the BB10 ASP lift, GMs may hold at new found levels of ~41%. However, flow-through to earnings remains limited as Blackberry will amp marketing efforts to push new devices, implying it may see little near-term earnings. Considering the push-and-takes with news-flow, which seems to change on a weekly basis, an investment in Blackberry is not for the faint-hearted.” Sue cut his fiscal 2014 revenue estimate to $11.7 billion from a prior $12.4 billion, but improved his profit outlook to negative 4 cents from a 58-cent loss previously estimate. He raised his BB10 device estimate for this year to 10.7 million units from a prior 10-million estimate.

Shaw Wu, Sterne Agee: Reiterates a Neutral rating on the shares. “BBRY reported a surprisingly strong Feb. quarter where it returned to profitability much sooner than expected. This was driven by a big gross margin upside from cost reductions and 1 mm BB10 shipments. However, its cash balance declined by $63 million and subscriber base by 3 million. The key takeaway is that BBRY is here to stay with stabilization in its business and balance sheet. The key question remains whether the company can maintain momentum within an increasingly AAPL and GOOG world.” Wu raised his estimate for this fiscal year to $13.2 billion and a 45-cent profit from $12.1 billion and a 29-cent loss.

Simona Jankowski, Goldman Sachs: Reiterates a Neutral rating on the shares. The 22-cent profit beat her 23-cent loss expectation, while shipments of 1 million BB10 devices beat her 650,000-unit estimate, while the total unit shipment of 6 million was below her 8.2 million estimate.