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Summers Bows Out

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Equity markets jumped higher Monday as Federal Reserve Chairman frontrunner Larry Summers ended his pursuit of the position. The news suggested Summers had been President Obama’s preferred successor to current Chairman Ben Bernanke, but several Democratic senators opposed the nomination, and Summers may be bowing out to avoid any chance of embarrassment. With Summers out of contention, Fed Vice-Chair Janet Yellen is the clear frontrunner. As we’ve mentioned before, Yellen is viewed as a consensus builder and receives credit for predicting the housing bubble. Powerful Democratic Massachusetts Senator Elizabeth Warren, who sits on the Senate Banking Committee, supports Yellen and indicated that she would be able to gather the necessary votes for her nomination. Regardless of the politics behind the decision, … Read more

Margins Will Drive Apple’s iPhone 5S and 5C Outcome

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Apple (click ticker for report: ) announced the release of its iPhone 5S and its even longer-awaited “cheap” iPhone 5C Tuesday, both of which we believe will be a big hit with consumers. The firm is also reportedly close to announcing a deal with China’s largest mobile carrier, China Mobile, which will help Apple sell even more units. The 5C Image Source: Apple The iPhone 5C is one of the most anticipated products in Apple’s history, and not because people thought it would be the best product ever, but rather because it is believed to be Apple’s emerging-market solution. The phone will retail (unlocked) for $549, $100 below the price of the 5S. The phone contains an internal steel construction … Read more

Is the New PayPal App a Game-Changer for eBay?

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Thursday afternoon, eBay’s PayPal (click ticker for report: ) released its updated version of its iOS and Android mobile application. This release marks the latest attempt for a digital wallet to usurp the importance of the credit/debit card and “simplify” payments. By no means is this the first attempt for a company to push a digital wallet. Google Wallet (click ticker for report: ) has failed to gain much traction, not because it is exclusive to Android, but mostly because it isn’t a very intuitive program and awareness isn’t high. Apple’s Passbook (click ticker for report: ) has sneaked into the marketplace to become the fourth most popular mobile commerce app. Passbook differs from Google Wallet in the sense that … Read more

Samsung’s Smartwatch Underwhelms

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The day many had been waiting for in tech came Wednesday morning as Samsung unveiled its long-rumored smartwatch, dubbed the “Galaxy Gear,” to the public. The Galaxy Gear acts as a compliment to a smartphone, allowing users to check text messages, phone calls, and e-mails, as well as set alarms, run apps, and check the weather. The smartwatch will supposedly integrate seamlessly with the upcoming Galaxy Note III, and it will retail for $300. The Market Isn’t Big Enough at Launch Our first issue with the Galaxy Gear is the miniscule addressable market at launch. Though the device will eventually be compatible with the Galaxy S IV and other Samsung smartphones, it will only work with the Note III at … Read more

Ballmer’s Last Big Move? Acquire Nokia’s Mobile Phone Unit

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Late Monday night, news broke that Dividend Growth Newsletter portfolio holding Microsoft (click ticker for report: ) will acquire Nokia’s (click ticker for report: ) device and services business for $7.1 billion. Though rumors about a deal have swirled since the two companies partnered for the Lumia, the timing is somewhat shocking, in our view. With CEO Steve Ballmer to depart within the next twelve months, we assumed he wouldn’t make any major splashes. Deal Details On the surface, this deal seems a lot like Google’s (click ticker for report: ) acquisition of Motorola Mobility. However, the details differ materially, particularly since Microsoft didn’t acquire the entire Nokia business. Further, Nokia will retain its patent portfolio and lease its patents … Read more

Pandora Preps for Battle

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Internet radio giant Pandora (click ticker for report: ) posted solid second-quarter results Thursday afternoon. Revenue rose 57% year-over-year to $157 million, slightly above consensus estimates. Earnings-per-share on a non-GAAP basis was much higher than the prior year at $0.04, which was also much better than consensus expectations. Free cash flow during the quarter was a negative $8.5 million as the firm continues to invest heavily in future growth. Goodbye Hours-Cap Perhaps the most important development during the quarter was that Pandora will remove its 40-hour cap on mobile listening effective September 1. After re-implementing the hours-cap in February, total listening hours declined 7% sequentially (but were still up 18% year-over-year though) to 3.88 billion. Pandora had no choice, in … Read more

Are You Ready for Some Football? Google Is.

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Digital news firm AllThingsD broke the story that Best Ideas Newsletter portfolio holding Google (click ticker for report: ) could be in talks with the NFL over exclusive rights for the NFL Sunday Ticket package, which allows consumers to view every NFL game. Another Best Idea portfolio holding, DirecTV (click ticker for report: ), currently holds exclusive rights for Sunday Ticket through the 2014 season, which costs the firm $1 billion annually. Why It Makes Sense for Google On the surface, such an idea seems interesting for Google. With the exclusive Sunday Ticket package, Google could really make a push into the TV business. Google could even pair the package with a purchase of the Google Chromecast, a portable online … Read more

Ballmer to Leave Microsoft; Market Cheers

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Early Friday morning, Dividend Growth Newsletter portfolio holding Microsoft’s (click ticker for report: ) long-time CEO Steve Ballmer announced that he’ll be retiring within the next year. Despite solid revenue and earnings growth throughout his tenure, investors have called for his job for years as rival Apple (click ticker for report: ) stole the spotlight in the tech world. The Bad While the late Steve Jobs will be known for his hits, Ballmer will be best known for his misses. After Apple dropped the iPod, Microsoft came to market with the Zune after the war was long over. Apple then released the iPhone, and Microsoft wasn’t ever able to fund a credible competitor in the United States, but it did … Read more

Icahn Reignites Apple

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Shares of Best Ideas portfolio and Dividend Growth portfolio holding Apple (click ticker for report: ) showed considerable relative strength following solid third quarter results July 24. Pricing momentum was augmented when legendary money manager Carl Icahn (or iCahn) sent out a series of tweets about the tech giant on August 13. iCahn Moves the Market Icahn needs no introduction, as he boasts a rumored net worth in excess of $20 billion, has engaged in numerous high-profile corporate battles (US Steel, Dell, TWA), and without question is considered one of the greatest money managers of his era. When Icahn speaks (or tweets), markets listen. While Icahn’s presence as an Apple shareholder has little, if any, fundamental change on the company, his … Read more

Blackberry: Strategic Alternatives Signal Failure

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After the launch of its new phone and operating system came and went without much fanfare, smartphone maker Blackberry (click ticker for report: ) announced that it is exploring strategic alternatives for the company. Although most tend to associate strategic alternatives with selling the company, Blackberry is also open to partnerships and joint-ventures. Let’s start with the obvious inference out of this news: Blackberry 10 didn’t save the company. If this wasn’t clear enough when Blackberry reported weak results for its fiscal year 2014 first quarter, we think the situation is obvious now. Consumers, particularly of the high-end smartphone variety, simply do not want Blackberry products. The app world is far inferior to competitors Apple (click ticker for report: ) … Read more