Tibco Needs to Raise the Bar

NEW YORK (TheStreet) -- On July 3, I told you that Tibco Software (TIBX) looked like a great buy. This is even though the company, which is in a heated battle with (among others) Oracle (ORCL) and IBM (IBM), was coming off a fiscal second quarter in which revenue dropped 1% year over year. In that article, I said:

"I still like Tibco's long-term prospects -- even though many others don't. Management deserves credit for the moves that they've made, many of which should create more value for shareholders over time. Accordingly, with long-term revenue growth that should outperform both IBM and Oracle, I value shares of Tibco at $25, or 15% above current value."

Today, given that shares of Tibco are trading only percentages shy of my $25 target, it's time to re-evaluate the company's prospects, especially since Tibco is due to report third-quarter earnings on Thursday.

Truth be told, when factoring in the company's earnings miss in the June quarter, there's no denying that Tibco has not had a tremendous year. But even so, I don't believe there's been a software company that has significantly outperformed to the extent investors would believe that weak enterprise spending has not had an impact on the entire sector. To that end, my 15% upward bet on Tibco following the stock's selloff had much to do with the fact that the Street grossly overreacted. Not to mention, there was some cause for optimism that enterprise spending would begin to pick up, which it has. I won't lie and tell you that the corporate-spending recovery has been as robust as I expected. In that regard, I can't blame those who bailed on the stock. But from my vantage point, I can see that after long periods of underperformance, Tibco, which is in the midst of some pretty significant restructuring initiatives, has proven capable of navigating this soft spending patch. That the Street dismissed Tibco's 3% sequential revenue growth, while overly emphasizing the 1% year-over-year decline, was a perfect example. Granted, the company still underperformed in year-over-year license revenue. But on a relative basis, we can't discount that Tibco's performance was in the same quarter that Oracle posted growth of less-than-1%, missing Oracle's own guidance. Plus, investors ignored that not only did Tibco grow license revenue 5% sequentially, to $82 million, but the company continues to do well in maintenance revenue, which advanced at a better-than-expected rate of 6% year over year and 3% sequentially.

The bears, meanwhile, remained unimpressed.

Look, I'm not suggesting that this was an extraordinary quarter by any stretch. I'm not going to pretend that the prolonged weakness in Europe and government spending suddenly no longer matter. Still, we have to agree that on the basis of non-GAAP EPS of 18 cents, which met Street estimates, management's efforts to reorganize infrastructure sales are moving along better than expected.

Tibco's challenge -- above all else -- is to grow revenue at a rate that convinces the Street that the company is gaining some real operational leverage. In other words, while there are clear business improvements, there is still plenty of work left for the company to do to justify more gains in the share price. I believe this work starts on Thursday, when third-quarter earnings are released.

The Street will be looking for EPS of 22 cents on revenue of $258.2 million, which represents revenue growth of just 1.3%. Essentially, there's not a whole lot that's expected in terms of top-line growth. I believe this is a situation where the Street has essentially embraced Tibco's new direction, while appreciating the company's efforts at reorganization. To go along with the company's existing strengths in messaging and integration, over the past couple of quarters, management has been working to grow Tibco's capabilities in areas like real-time business intelligence, visualization and complex event processing. These are technologies that are specifically targeted to capitalize on the growth of big data. These area -- including message-oriented middleware, where Tibco currently ranks second to IBM in market share -- makes Tibco a direct rival of giants like IBM and Oracle. What's more, management recently discussed shoring up the company's strengths in data analytics, which is not only Oracle's specialty, but it's also a market in which SAP has shown strong interest. While Tibco isn't expected to immediately threaten Oracle, IBM or SAP, the company's ambitions and its high level of execution makes it one to watch. While growth has not been exceptional, Tibco deserves some time to get its house in order. It's a good thing that management has done such an excellent job of communicating the company's course. The Street, meanwhile, even by virtue of its dismissive reaction to the company's progress, appears to now be on the same page. While this can certainly be a good thing for the company, it also means that unless Tibco blows the Street away with earnings and raises guidance, this stock just might have reached its ceiling. At the time of publication, the author held no position in any of the stocks mentioned. Follow @saintssense This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Richard Saintvilus is a co-founder of StockSaints.com where he serves as CEO and editor-in-chief. After 20 years in the IT industry, including 5 years as a high school computer teacher, Saintvilus decided his second act would be as a stock analyst - bringing logic from an investor's point of view. His goal is to remove the complicated aspect of investing and present it to readers in a way that makes sense. His background in engineering has provided him with strong analytical skills. That, along with 15 years of trading and investing, has given him the tools needed to assess equities and appraise value. Richard is a Warren Buffett disciple who bases investment decisions on the quality of a company's management, growth aspects, return on equity, and price-to-earnings ratio. His work has been featured on CNBC, Yahoo! Finance, MSN Money, Forbes, Motley Fool and numerous other outlets. Follow @saintssense

Microsoft to Debut Next Gen Tablet (MSFT)

Keeping pace with its competition, tech giant Microsoft (MSFT) will detail its newest product on September 23rd.

The meeting is largely expected to unveil the newest Surface tablet, which is expected to feature a built-in battery as well as new processors. Unconfirmed rumors also suggest that the firm will be releasing multiple tablets, with a smaller version of its Surface tablet possibly making a debut.

Microsoft’s newest release will go head-t0-head with Apple (AAPL), which will be debuting the latest iPhone model at a meeting tomorrow. As Microsoft continues to battle to take away Apple’s market share, the unveiling and reception of its latest surface will be a key factor moving forward.

Microsoft shares were up 51 cents, or 1.61%, at Monday’s close. The stock is up more than 18% this year.

Top Portfolio Products: Decker & Co. Launches With Focus on Southeast Asia

Decker & Co., a broker dedicated to the southeast Asia/frontier space, launched this week.

New products introduced over the last week include a suite of large-cap equity funds from Nuveen and four new corporate term bond ETFs from BlackRock.

Meanwhile, Vanguard added new interactive graphics to help retirement plan participants.

Here are the latest developments of interest to advisors:

1) Decker & Co Launches; Dedicated to Southeast Asia/Frontier Space

Decker & Co, the first U.S.-based broker to be fully dedicated to the southeast Asia/frontier space, announced recently that it is fully licensed and operational. The firm’s clearing partner is Broadcort, a division of Merrill Lynch. The new firm will offer U.S. funds access to local research and listed corporates through its partnership approach. In doing so, it will fully promote its partners’ brands regionally to help them build their own brand equity. It plans to bring handpicked corporates to the U.S. and will frequently visit Asia for that purpose. The firm will also arrange investor trips to Asia at least quarterly.

Mark Decker has more than 20 years’ experience in the region, including positions in Hong Kong with Bear Stearns/Lehman Brothers and CLSA in the ’90s. He was also director of equities at SCB Securities in Thailand, and was responsible for the opening of the west coast office of Kim Eng Securities in 2009. The firm’s team has relationships with funds focused on investing in southeast Asia. Its network includes broker partners in Vietnam, Sri Lanka, Malaysia, India, Bangladesh, Indonesia, Hong Kong, Thailand, Singapore, Pakistan and Cambodia.

2) Nuveen Asset Management Launches New Equity Strategies

Nuveen Investments has announced the availability of a new suite of large-cap equity mutual funds managed by Bob Doll, Nuveen’s asset management chief equity strategist and senior portfolio manager.

The series includes six newly created funds and three funds having recently transitioned to Doll. They are: traditional, Nuveen Large Cap Value Fund (NNGAX); Nuveen Large Cap Core Fund (NLACX); Nuveen Large Cap Growth Fund (NLAGX); specialty, Nuveen Core Dividend Fund (NCDAX); Nuveen Concentrated Core Fund (NCADX); Nuveen Growth Fund (NSAGX); and alternative, Nuveen Large Cap Core Plus Fund (NLAPX); Nuveen Equity/Long Short Fund (NELAX); and Nuveen Equity Market Neutral Fund (NMAEX).

3) BlackRock Expands iSharesBonds Suite of Defined Maturity ETFs

BlackRock announced recently that its iShares ETFs business has expanded its suite of iShares bonds with four new corporate term ETFs. These new products offer investors access to a diversified pool of investment-grade corporate credit securities with a defined maturity date, daily liquidity and price transparency. If iSharesBonds are held until maturity, investors can expect a yield that is similar to the yield to maturity of the underlying bonds held in the ETF. The four new iSharesBonds are as follows: iSharesBond 2016 Corporate Term ETF (IBDA); iSharesBond 2018 Corporate Term ETF (IBDB); iSharesBond 2020 Corporate Term ETF (IBDC); and iSharesBond 2023 Corporate Term ETF (IBDD)

4) Vanguard Offers New Tools for Retirement Plan Participants

Vanguard is offering new interactive graphics to help 401(k) retirement plan participants make key decisions about their retirement assets. Two examples of this new technology are the “Boost Your Savings” dial and its retirement analysis alerts. Both tools are delivered to participants based on their savings rate, investment mix, other retirement readiness indicators, and plan features. They are prominently displayed on the vanguard.com secure home page of targeted participants.

The savings booster is a spedometer-like gauge that displays a participant’s current savings rate and recommends a range of increases. Users can turn the dial to the number they want and in one click, submit a request to change their regular contribution amount. In a test of the dial, Vanguard recommended a 1%, 2% or 3% increase. Participants who used the dial between its rollout in December 2012 and May 2013 increased their savings rate by an average of 2%.

Retirement analysis alerts are delivered in the form of a stoplight to encourage participants to use either of two investment advice services if offered within their plan. One is the personal online advisor (POA), which provides a personalized forecast and fund recommendations from Financial Engines. The other is the Vanguard managed account program (VMAP), powered by Financial Engines, which creates, implements and monitors a custom plan for a fee. For the year to date through May, nearly a quarter of the participants who received these alerts clicked on them. Of those who responded, 12% adopted POA and 6% chose to enroll in VMAP.

Read the July 5 Portfolio Products Roundup.

Consequences Of Maxing Out Your Credit Card

There are over 600 million credit cards held by U.S. consumers and the average credit card debt per household averages about $16,000 according to the Federal Reserve's February 2012 report on consumer debt. Just because your card company offers you a $5,000 limit, doesn't mean that you have to come close or exceed this amount. Some of this debt can be a reflection of carrying a high credit card balance or maxing out on credit card purchases. With the average credit card holder owning 3.5 cards, it's important to manage and keep track of purchases made with your card, so you don't go over your credit card limit or cap.

Consequences
If for some reason you are nearing your credit card limit or if you go over your limit, there are dire consequences. You should be aware and prepared for the penalties and fees that will incur. When you max out on your card, you owe a debt to the credit card company and you're expected to pay it.

There are various reasons why you shouldn't max out your credit card. First off, you won't be able to use your card at any time once you push your card to the limit.

You will need to pay off a portion of the balance in order for you to use the card again. Some companies will close or put a freeze on the account all together, requiring you to pay the entire amount in full in order to use the card again. You can bet on the fact that your credit score will be affected and will drop. The majority of you credit score is based on how much "available" credit you use.

Thirty percent of an individual's FICO score is affected by what happens on the card. If you had good credit before you applied for the card, that will surely change the course of things, when you max out your card.

If you try to refinance a mortgage loan, apply for educational loans or attain additional credit, the maxed out card will show up on your credit report which look bad on your part and can determine if you are a risk or not.

At the lender's discretion, they can charge a default rate if you max out. These rates can vary depending on the company and can rise as high as 30% or more depending on the balance, which could spell disaster for your repayment plans.

Depending on your credit cap, if you're paying the minimum balance, the repayment can take up to a few years. The balance can include finance and interest charges that accrue along with over-limit fees which can balloon your balance. Don't miss any payments or pay late under any circumstances. This may increase your minimum payment amount and the lender can raise your interest rates which will affect your overall credit score.

What you can do
You can always choose to pay the balance in full; again this is depending on how much the balance is. The best way to prevent going over your credit card limit is to stop the spending and create a budget in advance and establish where and when you want to spend your money. You can also sign up for email or text alerts to tell you when you're about to go over your limit.

Kaia Zawadi is a professional freelance journalist/writer/editor. She regularly writes stories about banking and personal finance for MyBankTracker.com

Copa Holdings: Panama Profits

There are always good operators in even the worst industries. Therefore, I am recommending a leading regional airline based in Panama, says Gavin Graham, contributing editor to Internet Wealth Builder.

Copa Holdings (CPA), operates a fleet of 83 modern aircraft, with an average age of 4.3 years, consisting of 57 Boeing 737-700s, and 737-800s, and 26 Embraer 190 jets.

From its base at Tocumen International Airport in Panama City, it offers the most destinations and international flights of any hub in Latin America, including eight destinations in the US as well as Toronto.

Tocumen's convenient location, excellent weather, and sea level altitude contribute to Copa's excellent on-time record and its ability to act as the centre of a major hub-and-spoke operation, allowing passengers to reach any destination within Central and South America with only one stop.

Copa has expanded rapidly in the last decade. After going public in 2005, it used the access to public markets to grow and modernize its fleet. Also in 2005, it purchased the second largest Colombian airline, and now operates an extensive schedule of internal and international flights in that country.

Copa carried 10.1 million passengers in 2012, a 17% increase on the previous year, and experienced a 24% increase in capacity as it added ten new Boeing 737 aircraft.

With its rapid growth and profitable track record, Copa has far outperformed the S&P 500, returning 170% over the five years to the end of 2012, compared to a 12% increase in the index.

With its new membership in the Star Alliance beginning in mid-2012, Copa should benefit from increased traffic from members of other airline loyalty schemes in the alliance, especially the merged United Continental. As well, it has added new US destinations, such as Las Vegas in 2012, and Boston in 2013.

With the widening of the Panama Canal in 2016 forecast to add substantially to trade and visitors to Panama, and with the boost to its capacity through adding seven new Boeing 737-800s in 2013, it is reasonable to expect Copa's traffic to continue rising over the next few years.

Assuming that the airline keeps its costs competitive, and maintains its conservative policy of fuel hedging to offset the risk of higher prices, Copa should be able to maintain its margins at their present levels, and remain a profitable and successful airline, benefiting from the rising demand for air travel from the growing Latin American middle-class.

With earnings of $11-$11.50 per share projected for 2013, Copa is selling at around 12-times forecast earnings. It pays around 30% of its earnings as a single annual dividend in June of each year, giving it a yield of 1.7%, although it paid a dividend early in December 2012, to beat the change in US dividend tax law.

Copa Holdings is a buy for investors, willing to put up with the volatility inherent in airlines, as a play on growing air traffic and rising incomes in Latin America and the Caribbean.

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Is Sears Just Doomed?

With its stock down nearly 14% on Friday in response to poor earnings, it looks like a lot of investors threw in the towel on Sears Holdings (NASDAQ: SHLD  ) last week -- but not Fool contributor Rich Smith.

He threw in the towel on this stock five years ago, when the company had a chance to remake itself as the Made in the U.S.A. store -- and blew it. Now Wal-Mart's (NYSE: WMT  ) stolen a march on Sears and promised to put $50 billion worth of American-made goods on its shelves over the next 10 years.

For Sears, this looks like the final blow, but it all started with a blown opportunity.

To learn about two retailers with especially good prospects, take a look at The Motley Fool's special free report: "The Death of Wal-Mart: The Real Cash Kings Changing the Face of Retail." In it, you'll see how these two cash kings are able to consistently outperform and how they're planning to ride the waves of retail's changing tide. You can access it by clicking here.

Starbucks Appoints Chiquita Exec As Supply Chain Executive VP

Starbucks  (NASDAQ: SBUX  ) has appointed Deverl Maserang to lead the company's Global Supply Chain Organization, the company announced Thursday.

 

Beginning June 3, Maserang will become executive vice president responsible for supply chain operations worldwide, which encompasses responsibilities from manufacturing and engineering to procurement and inventory management. Maserang joins Starbucks from Chiquita Brands International and brings more than two decades of experience in supply chain leadership positions. In leading the Global Value Chain for Chiquita and Fresh Express, he oversaw about 20,000 employees. Before Chiquita, Maserang worked in supply chain positions at Pepsi Bottling Group, United Parcel Service, and several start-ups.

 

Maserang will report to Starbucks CFO Troy Alstead, who is also the company's chief administrative officer, and be a part of the company's Senior Leadership Team. Maserang's appointment follows other recent, senior leadership appointments by the company. After its first-quarter report, Starbucks moved around five people in its Senior Leadership Team.

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Why young advisers need mentoring

If financial advisers want to build a strong and sustainable business, they need to develop a mentoring program for young employees.

“I've seen a lot of great people wash out of the business in their first two or three years,” Christine Gaze, TD Ameritrade Institutional's director of practice management, said during InvestmentNews' NextGen Virtual Career Fair on Friday. “Our research shows that firms with junior associate programs results in 44% greater income for the owner.”

(Pershing's Dellarocca: Opportunities for NextGen financial planners are growing rapidly)

Guided support helps NextGen advisers find clients in their early years, she said, adding that seasoned advisers should consider taking their junior associates to client meetings to take notes and run analysis until they develop the confidence to take on their own clients.

“The expectation that the junior adviser should be beating the pavement from Day One is inconsistent with advisers' need for succession planning with the next generation,” Ms. Gaze said. “The typical transition to a successor requires 10 years.”

Ms. Gaze took note of Cerulli Associates Inc.'s research showing that the average age of an adviser is 52 and that 26,764 advisers are expected to leave the industry between 2012 and 2017. In light of those statistics, TDAI offers NextGen scholarship and grant programs to attract top talent and promote young advisers.

Getting Rich from Military Technology, Part II

The Russian and the Frenchman

First, let's return to Mendeleev and his missing elements. Why were there gaps in his table? Did the Russian scientist make errors in arranging the elements? Or, based on the gaps, were these apparently "missing elements" key to another aspect of chemistry?

Mendeleev was perplexed, but he also anticipated that something novel would happen. Back in those days, chemistry was a fast-evolving field of science, with many great minds applied to the hardest challenges. (It still is, actually.) Somewhere, someone would figure out the reason for the gaps in Mendeleev's table.

Mendeleev left space in his table of the elements. He predicted that the missing substances were likely somewhere out in nature, but yet to be discovered and isolated. Indeed, in 1871, Mendeleev postulated the existence of a yet-undiscovered element. He named it "eka-aluminium" (using the Russian form of spelling) because of its proximity to aluminum on his proto periodic table.

A few years later, in 1875, a French scientist, Paul Emile Lecoq de Boisbaudran, discovered the substance that had eluded Mendeleev and named it gallium — after Gaul (Gallia, in Latin), the ancient Roman name of what is now France.

De Boisbaudran had a hard time isolating his first samples of gallium. In one of his early efforts, de Boisbaudran used nearly 700 pounds of zinc-bearing sphalerite ore from the Pyrenees mountains to isolate about 1 gram of gallium. It was quite a messy, complex process.

Gallium Today

Since the 1870s, isolating gallium has become an easier task. Today, gallium is produced as a byproduct of aluminum and zinc production. Aluminum and zinc are — no surprise to the chemists out there — atomic neighbors of gallium on our modern periodic chart. Gallium is also right next to two other elements with intriguing properties, indium and germanium.

Still, gallium is not at all a common element these days. It's scarce, and its uses are high-end. Such as? Well, there's a compound called gallium arsenide (GaAs), which is a semiconductor. And now allow me to get technical for a moment.

Basically, semiconductors conduct electricity, but not in an open manner, such as how copper wire conducts electricity to, say, a light bulb. With a copper wire, electricity moves like a car driving down a smooth street, with no bumps. It's just a nice, clean ride through the wire. Put another way, nothing interesting happens to the electrons as they move.

But with semiconductors? It's like driving down a street covered with speed bumps interspersed with potholes. You bump up, you bump down. You feel the ride. That's sort of what happens to electricity in a semiconductor as well, except it's a good thing for electrical and electronic engineers that the ride is so bumpy. That's the trick, in fact.

Semiconductors move current through things called "holes," or charge carriers. Basically, you can fill a hole with an electron or leave it empty. Got that? It's full or empty. Or consider a light switch that's on or off. Mathematically, it's a one ("1") or a zero ("0"). Do you see where this is going?

Actually, it's going into the realm of quantum physics, but for our purposes, let's just understand that semiconductors control binary digital computing. Semiconductors wind up in all manner of computer chips, microwave frequency integrated circuits (ICs), monolithic microwave ICs, infrared light-emitting diodes, solar cells and lasers. Most of the world's semiconductors are made out of silicon, but not all.

Optical Electronics in America

Back in the 1980s, a brilliant scientist named Geoffrey Taylor worked at Bell Labs in New Jersey. Among other things, he researched optical systems and semiconductors, including the above-noted gallium arsenide. It's a long story, but Dr. Taylor left Bell Labs and took a job at the University of Connecticut, at Storrs.

Along the way, Dr. Taylor scrounged much of his former equipment from Bell Labs and hauled it to Storrs. He also picked up all manner of equipment from other corporate and government labs when they downsized during the serial tech crashes of the past two decades. In essence, Dr. Taylor has a full-up semiconductor materials research lab and fabrication center at UConn. (I've been there.)

Dr. Taylor then put together a team based on optical technologies through which to pursue his research.

A Busted Solar Power Play

A few years ago, they began to work on solar power systems using gallium arsenide. Basically, with solar, the sunlight hits the panel and the photons — the light particles — go into the semiconductor material. The photons stimulate electricity, which is why solar panels generate power. Light goes in, electricity comes out. So far, so good.

It's a long story, but you likely know that the solar space has developed a reputation for uneconomic business efforts — Solyndra and all. So it wasn't too long before Dr. Taylor and colleagues realized that they were barking up the wrong tree, businesswise. In terms of making things work, the solar business is just too competitive for some cutting-edge ideas just now, what with the Chinese flooding the world with super-cheap materials and equipment. Still, the team had their gallium arsenide material and they learned a few things from the solar research.

Hey, a Laser Beam!

Like what, you wonder? Well, forgive me if I oversimplify it, because — I assure you — it's truly complex quantum science. Instead of the "light goes in, electricity comes out" pathway, what if you reverse the flow? That is, put electricity into the gallium arsenide and out comes light. Hey, that sounds like a laser beam. And what a laser beam!

Fast-forward to now. The team has evolved the idea by a country mile. But the truth is that the team is still more in a research mode.

This is a seriously high-tech idea, with all the issues and risks that come with such things.

Using Light for New Purposes

They've developed a next-generation gallium arsenide semiconductor device, incorporating a technology called POET (Planar Opto Electronic Technology). POET allows the integration of optics and electronics on a single chip, which is the breakthrough.

So what are we talking about? With conventional semiconductors, like silicon, you can move electrons, but not photons (light particles), which are much smaller. But by developing the ability to handle photons, with gallium arsenide, you're opening up entirely new capabilities.

First, with photons, you can now move down truly to the level of quantum computing — literally at the atomic level. This is important, because modern computing is at the edge of capabilities with electrons and bulky old silicon. If you know what "Moore's law" is — long story — we're about to see the last chapter written. So gallium arsenide is the next great leap for technology, setting computing up for the next 50 years or so.

According to Dr. Taylor, POET is a "disruptive technology" within many commercial and government markets. It overcomes critical problems for all manner of tasks, starting with the physical size and energy limitations of silicon chips.

In fact, the benefits of POET are analogous to what occurred with the first silicon integrated circuits, except now we see the improvement down at the atomic level, versus the much larger scales of silicon technology.

In practice, POET eliminates connectors, solder joints, assembly and multiple packaging steps. It decreases the size of a computer chip, as well as cost, complexity and power consumption. How about dramatically smaller supercomputers, which don't require air conditioners the size of a railway car?

At the same time, POET technology is versatile. It's possible to integrate POET with incumbent silicon tech. Thus, while POET is revolutionary, it's also compatible with much of the world's existing capabilities. In other words, POET does not require a brand-new "tech ecosystem" if it is to gain market traction.

Military Apps — Even Vampire-Killers

POET immediately addresses the requirements of numerous military development and procurement programs for improved sensors, faster and more secure communications, improved memory and storage and overall computing power. There's no end to the transformation in computing power, imaging, target definition, signals intelligence and more that we could see from this.

What else? Well, looking out into the future, POET chips can generate coherent light beams — like laser light — with very small inputs of power. So imagine, say, a ship with a phased array radar that can lock onto a fast-moving object while a "smart skin" on the hull literally weaponizes and emits laser light precisely onto the target. Star Trek, anyone? Well, we're not there yet, but people are working on it. It's a vampire killer. Eventually.

Mendeleev's "missing element" now forms the foundation to a host of new breakthroughs that can revolutionize the world of digital computing and change the nature of weaponry and war.

The tech is so new that, as I've described, it's scarcely out of the lab. Where will it go? Well, if you had asked that question about, say, silicon chips, back in the 1960s or 1970s, could you have envisioned what is happening today? This idea can go anywhere, and I suspect that means it will go far.

Best,
Byron King

Don't panic after Bill Gross exit

Is Bill Gross' future at Janus really that bright? Only time will tell. NEW YORK (CNNMoney) The bond king has left the building. Should investors run for the exits too?

Investors with money at Pimco are understandably queasy after legendary investor Bill Gross shocked the financial world by jumping ship on Friday.

Some are already yanking their cash from the $2 trillion pile that Pimco manages. Others may even follow Gross to Janus Capital (JNS) where he's poised to manage a new bond fund.

But Morningstar is warning investors to avoid overreacting.

"Now is the time to reassess, but not panic. Yes, Bill Gross -- one of the world's greatest living investors -- is leaving. But there's a deep bench behind him," said Scott Burns, global director of manager research at Morningstar.

Not telegraphed: It's clear Gross's departure caught many people off guard -- even the experts.

Morningstar placed all 50 rated Pimco funds under review on Friday to give it time to weigh the news.

"Fund managers leave but it's rare it happens at such a flagship like this. It's always better for investors when it's deliberate, planned and telegraphed," said Burns.

He said it's possible hundreds of billions in Pimco funds may leave the firm with Gross.

Of course, that's nothing new for Pimco, which has been rocked by 16 straight months of client outflows at its flagship Total Return fund. The Total Return fund is up 3.6% this year, but that's trailing its benchmark, according to Morningstar data.

Pimco's outflow problems weren't helped by the surprise departure earlier this year of former CEO Mohamed El-Erian. His exit triggered a wave of negative stories suggesting Gross's erratic behavior was to blame.

It's possible Pimco could benefit from fewer distracti! ons now that Gross is gone.

Deep bench: Morningstar stressed that Pimco has a number of capable fund managers it can rely on to fill Gross' shoes, including deputy chief investment officers Dan Ivascyn and Mark Kiesel.

Ivascyn was named fixed-income fund manager of the year in 2013 by Morningstar and Kiesel won the prestigious award the year before.

"There's a lot of depth at Pimco. It's not like his departure has left the cupboard bare," said Burns.

It's also worth remembering that Gross secured his reputation as a legend in finance after decades of success. The 70-year-old who founded Pimco back in 1971 isn't exactly a rising star anymore.

"One way or another, this was coming to an end," said Burns.

Jump to Janus? Gross's arrival at Janus is already generating serious excitement. The asset manager's shares surged 38% on Friday as Wall Street bets the blockbuster news will translate to greater profits.

It's too early to say whether mutual investors should move their money to Janus. The release revealing the Gross move was short on details and the relatively young fund he's going to manage isn't even reviewed by Morningstar.

Nor is it clear what strategy Gross plans to implement at Janus. Investors should also beware of the transaction fees that go along with moving money from one fund manager to another.

"He's not even in the saddle yet," said Burns.

CoreLogic: Gain in Home Prices Less Robust in May

Lynne Sladky/AP WASHINGTON -- U.S. home prices rose in May compared with a year earlier, but the gains have slowed. Data provider CoreLogic (CLGX) said Tuesday that prices increased 8.8 percent in May compared with 12 months earlier. The pace of gains has slowed as more homes have come onto the market, according to CoreLogic. On a month-to-month basis, prices rose 1.2 percent from April to May. But CoreLogic's monthly figures aren't adjusted for seasonal patterns, such as warmer weather, which can affect sales. Prices increased the most in Western states, including Hawaii, California and Nevada. Home sales began to stall in the middle of last year after double-digit price increases and higher mortgage rates made real estate less affordable for many people. But sales rose last month as price gains have moderated and mortgage rates have dipped. Sales of existing homes climbed 4.9 percent in May to a seasonally adjusted annual rate of 4.89 million homes, according to the National Association of Realtors. However, sales are down 5 percent year-over-year. The Realtors forecast that sales of existing homes will decline 2.8 percent this year to 4.95 million, compared with 5.1 million in 2013. Sluggish sales, in turn, will slow annual price gains this year to roughly 5 percent or 6 percent, economists predict. Prices rose in the 12 months ending in May in every state, CoreLogic said. The states with the biggest price gains were Hawaii, 13.2 percent; California, 13.1 percent; Nevada, 12.6 percent; Michigan, 11.8 percent; New York, 11 percent; Georgia, 10.3 percent; and Oregon, 10.1 percent. Ninety-four of the 100 largest metro areas reported higher prices in May compared with a year earlier. The six that did not record an increase were: Worcester, Massachusetts; Hartford, Connecticut; New Haven, Connecticut; Little Rock, Arkansas; Rochester, New York; and Winston-Salem, North Carolina. Average prices have risen nationwide for the past 27 months. Still, homes nationwide are 13.5 percent below their peak values in April 2006. Ten states have exceeded their previous peaks, including Alaska, Louisiana, Oklahoma, Nebraska, Iowa, South Dakota, North Dakota, Colorado, Texas and New York.

Why Bank of America Is Set to Grow

Bank of America (BAC), inclusive of yesterday's poor trading, has still provided investors a 37.9% return in the last 12 months, and has recently upped its dividend after passing its Federal Stress Test in the last month.

Throughout 2014, the bank has continued to make progress in this regard. It's been settling litigation left and right, and CEO Brian Moynihan appears to continue steering the ship in the right direction. USA Today reported on recent litigation leading up to the bank's earnings:

Bank of America in March agreed to pay $9.3 billion to settle claims it marketed risky mortgages to Fannie Mae and Freddie Mac. At the same time, the bank reached a $15 million settlement with the New York State Attorney General's office over its 2009 purchase of Merrill Lynch.

And on April 9, the bank also agreed to pay $772 million in refunds and fines to settle allegations by the Consumer Financial Protection Bureau and the Office of Comptroller of the Currency that it had bilked millions of customers with deceptive credit card practices. The agreement was "in line with what we expected," bank spokesman Tony Allen said last week.

Although many people seemed to be surprised by Bank of America's earnings, there were some of us that were expecting exactly what we got: good underlying bank performance that was negatively affected by one time legal costs.

When the smoke cleared, the bank had beat on its revenue line, posting a number of $22.76 billion versus analyst estimates of $22.33 billion to $22.4 billion. Ex-items, the bank wound up earning $0.35 per share.

In addition to its legal costs, the bank saw its mortgage business — which it has been trimming over the last couple of years — slowing. Mortgage originations were down 65%.

The bank's balance sheet strength continued to improve. It had $1.4 billion in charge offs, down from $2.5 billion in the same quarter the year prior.

Some of the more important news came later on in the afternoon when it reported the bank was close to settling with the DOJ, a reason which I think is one of the reasons it bolstered its legal reserves in quarter one:

Bank of America (-2.5%) boosted legal reserves by $2.4 billion in the first quarter, and management is playing coy about why, but the WSJ says the bank is near a multi-billion dollar settlement with the DOJ to end civil probes into a number of legacy issues. The talks have been ongoing for months, but intensified, say sources, after JPMorgan late last year settled for $13 billion.

If settled, it'll surely cost the bank a significant amount of money. But, it'll be over, and that's the important part. Putting their heads down and knocking each one of these out of the way until there's none left. It may not look like it, but the bank is making significant progress in this regard.

The bank continues to get leaner and meaner under the watchful eye of Moynihan. The bank's total employees was down to 238,600 from 262,800 in the same quarter a year prior. It's also operating with 5% fewer branch locations. This is all part of a cost-cutting initiative that was put into place a couple of years ago, that is concluding during this year.

Bank of America's banking division posted a profit of $1.66 billion, as compared to $1.45 billion a year earlier. This shows underlying fundamental progress for the bank's "meat and potatoes" business.

As the bank continues to stay on the front line of the automation adoption curve in the banking sector, and continues to keep its head down and make progress, I think better days will be ahead for shareholders.

Moynihan seems to be doing a damn good job in making progress to get the bank over the hump of the '07 to '08 disaster, which was the main item he was tasked with as CEO of the bank.

I contend that BAC is a buy here. There's likely to be a couple more months of legalese headlines that could potentially mire the stock price, but in the long term, the bank's underlying business is performing. Better days are ahead for Bank of America; it just needs to hold on and wait. Moynihan has been doing a brilliant job since he began, and my trust is with him and Buffett that Bank of America will soon rise like a phoenix from the ashes.

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Stocks To Watch For April 17, 2014

Related GS Will Walgreens Relocate to Europe? - Analyst Blog Sears Appoints New Executive (revised) - Analyst Blog Should the Street Fear Hillary? (Fox Business)

Some of the stocks that may grab investor focus today are:

Wall Street expects Goldman Sachs Group (NYSE: GS) is estimated to report its Q1 earnings at $3.45 per share on revenue of $8.70 billion. Goldman Sachs shares rose 0.11% to $157.40 in after-hours trading.

Google (NASDAQ: GOOGL) reported weaker-than-expected first-quarter earnings. Google posted its adjusted profit of $6.27 per share on adjusted revenue of $12.19 billion. However, analysts were estimating earnings of $6.36 per share on revenue of $12.41 billion. Google shares dropped 3.26% to $545.50 in the after-hours trading session.

Analysts are expecting General Electric Company (NYSE: GE) to have earned $0.32 per share on revenue of $34.36 billion in the first quarter. GE shares slipped 0.11% to $26.09 in after-hours trading.

E. I. du Pont de Nemours and Company (NYSE: DD) is expected to report its Q1 earnings at $1.58 per share on revenue of $10.45 billion. DuPont shares gained 1.23% to close at $67.72 yesterday.

International Business Machines (NYSE: IBM) reported downbeat first-quarter revenue. IBM posted its adjusted earnings of $2.54 per share on revenue of $22.48 billion. However, analysts were projecting earnings of $2.54 per share on revenue of $22.93 billion. IBM shares tumbled 4.18% to $188.20 in the after-hours trading session.

Pepsico (NYSE: PEP) is projected to report its Q1 earnings at $0.75 per share on revenue of $12.40 billion. Pepsico shares gained 0.27% to $85.00 in after-hours trading.

Analysts expect Morgan Stanley (NYSE: MS) to report its Q1 earnings at $0.60 per share on revenue of $8.52 billion. Morgan Stanley shares declined 0.40% to $29.77 in after-hours trading.

Posted-In: Stocks To WatchEarnings News Pre-Market Outlook Markets Trading Ideas

© 2014 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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24/7 Wall St.: America's healthiest cities

There's no doubt that great strides have been made in Americans' health over the years. Americans smoke less, are more likely to be insured and live longer. However, significant health disparities remain across the nation, influenced by individual choices, the community and clinical care.

To determine the well-being of Americans, Gallup-Healthways surveyed hundreds of thousands of Americans in 189 metropolitan areas in the United States in 2012 and 2013. The survey recorded the physical and emotional health of the residents, as well as measuring job satisfaction and access to basic needs. The resulting Gallup-Healthways Well-Being Index allows for comparisons between places and over time.

Not surprisingly, the physical health of residents was influenced by their habits. While less than 20% of Americans surveyed were smokers, more than 34% of Charleston, W.Va., residents smoked, the most in the nation. Residents also reported among the highest rates of obesity in the country.

In America's healthier areas, on the other hand, smoking rates tended to be much lower. San Jose had the second lowest smoking rate, with just around 11% of respondents reporting a smoking habit. Obesity rates in the areas were among the lowest.

According to Dan Witters, research director for the Gallup-Healthways Well-Being Index, there is a clear relationship between poor physical health outcomes, such as obesity, and many of these habits. "When you're talking about obesity, the big three are healthy eating, exercise, and smoking."

Having access to basic needs, such as medical care, medicines, food and shelter, also appeared to play a major role in determining the physical well-being of residents. Witters explained that "providing people with a safe place to exercise" obviously plays a role in regional obesity rates. Additionally, having a personal doctor "increases the probability that they'll have a trusted professional advising them about their healthy habits."

In addition to having access to ! basic needs, a healthy state of mind made a difference in the physical health of many area-residents. In fact, half of the metro areas with the best physical health index scores were also among the least likely to report recent bouts of depression. Emotional states such as anger, stress and sadness became much less common in areas with high physical health scores as well.

Survey participants who were "clinically diagnosed with depression had a significantly elevated probability of carrying around obesity," Witters said, as well as a variety of other chronic conditions.

Poverty and financial instability can make it very difficult to stay healthy. All but one of the 10 healthiest metro areas had poverty rates considerably lower than the national rate in 2012. Seven of the least healthy metro areas, on the other hand, had poverty rates exceeding the national rate. While access to healthy food has an impact on good nutrition, Witters pointed out that poverty played a greater role.

THE LEAST-HEALTHY CITIES: Yes, 24/7 Wall St. has that list, too

Many components of staying healthy are learned. If people are poorly educated, they are less likely to know how best to care for themselves. Nine of the least healthy metro areas had college education attainment rates below the national rate. Residents of eight of the healthiest regions, conversely, were considerably more likely to have attained a bachelor's degree than Americans as a whole.

To identify the best and worst cities for physical health, 24/7 Wall St. reviewed the metropolitan areas with the best and worst scores on the Physical Health Index, part of the Gallup-Healthways Well-Being Index. The Gallup-Healthways Well-Being Index assessed 189 metropolitan statistical areas. The Physical Health Index is one of five subindices included in the groups' overall score. The index measures physical well-being for the United States, states, metropolitan areas and occupations, based on answers to a variety of questions. In addition to th! ese figur! es, we also considered income, poverty and educational attainment data from the U.S. Census Bureau, all from 2012.

AMERICA'S HEALTHIEST CITIES:

10. Washington-Arlington-Alexandria, D.C.-Va.-Md.

> Physical Health Index: 79.7
> Obesity rate: 22.2% (26th lowest)
> Blood pressure: 26.7% (47th lowest)
> Poverty rate: 8.4% (4th lowest)

Washington was one of the healthiest metro areas in the nation. Less than 18% of respondents reported health problems that prevented them from participating in age-appropriate activities, compared with more than 22% of Americans who reported such health problems. Like residents in a number of the healthiest metro areas, Washington-area residents were relatively wealthy and had especially high rates of educational attainment. A typical household earned $88,233 in 2012, more than all but one other metro area. Nearly half of adults living in the region had completed at least a bachelor's degree that year, also among the best rates nationwide. High incomes and a well-educated population likely contributed to healthy behaviors and relatively few health concerns. Less than 15% of respondents said they smoked regularly, one of the lower smoking rates in the nation.

9. San Francisco-Oakland-Fremont, Calif.

> Physical Health Index: 79.7
> Obesity rate: 19.7% (11th lowest)
> Blood pressure: 24.9% (26th lowest)
> Poverty rate: 11.9% (51st lowest)

Residents of the San Francisco metro area were among the nation's most likely to practice healthy behaviors that can promote good health outcomes. Nearly 87% of respondents said they did not smoke, the fifth highest rate in the nation. Also, more than 70.6% of respondents told Gallup they had eaten healthy all day within the past day, and nearly 63% stated they had had regularly eaten fruits and vegetables. Both were among the highest rates in the nation. As a result, residents were able to avoid a number of serious health problems. For example, relatively few res! pondents ! had been told by a doctor that they had high blood pressure or cholesterol. Also, less than 20% of respondents surveyed were obese, among the lowest rates in the nation. By keeping their cholesterol, blood pressure and weight under control, residents were also able to avoid more serious consequences. Respondents were less likely than Americans in most metro areas to indicate they had previously suffered a heart attack or that they were diabetic.

MORE: Ten cities where people can't find work

8. Minneapolis-St. Paul-Bloomington, Minn.-Wis.

> Physical Health Index: 79.8
> Obesity rate: 22.7% (31st lowest)
> Blood pressure: 22.7% (9th lowest)
> Poverty rate: 10.7% (24th lowest)

Residents of the Twin Cities area were among the most likely to say they had access to basic needs that could promote good health. More than 95% of respondents said they had a safe place to exercise, and more than 90% said they had health insurance, both among the highest rates in the nation. Respondents' good health also gave them enough energy to get things done, and a large number noted that their health did not prevent them from participating in their usual activities. Residents from the Minneapolis-St. Paul metro area were quite wealthy, and therefore likely better able to afford medicine, healthy food and medical care. Median household income was more than $66,000 in 2012, among the highest in the nation, and just 10.7% of people lived below the poverty line, versus almost 16% nationwide.

MORE: Cities with the most content (and miserable) workers

7. Denver-Aurora, Colo.

> Physical Health Index: 79.8
> Obesity rate: 19.3% (6th lowest)
> Blood pressure: 22.2% (7th lowest)
> Poverty rate: 12.7% (tied for 66th lowest)

A low obesity rate was one major reason the Denver metro area was one of the nation's healthiest. Less than one in five Denver-area residents were considered obese, considerably lower than the more than one in four of all Ameri! cans. Acc! ording to a recent article from The Guardian, Denver is a "fitness mecca," with a well-established biking infrastructure and exercise culture. Unsurprisingly, residents of the Denver area were more likely than the vast majority of Americans to exercise on a regular basis, with more than 57% reporting 30-minute exercise sessions at least three times weekly. Regular exercise cannot only limit obesity, but also promotes overall physical health. The region also had one of America's lowest poverty rates, with less than 13% living under the poverty line. Poverty is linked to poor health outcomes because residents with low incomes often lack health education and the resources needed to afford healthy food, medicine and care service.

MORE: America's most content (and miserable) cities

6. Lafayette, La.

> Physical Health Index: 79.9
> Obesity rate: 28.1% (66th highest)
> Blood pressure: 28.8% (84th lowest)
> Poverty rate: 17.9% (127th highest)

The Lafayette metro area had some of the nation's healthiest residents despite their unhealthy choices. Just 43.4% of respondents said they exercised regularly, the worst rate in the nation. People in Lafayette were also less likely than Americans nationwide to eat healthy foods and more likely to smoke. Despite their behaviors, residents were among the most likely Americans to report feeling well-rested and to say they were able to participate in age-appropriate activities. Only 9.2% of respondents had asthma, among the lowest rates in the nation. Still, the high rate of smoking may pose problems for residents who are asthmatic. The Centers for Disease Control and Prevention identifies tobacco smoke as one of the leading triggers for asthma attacks.

MORE: America's most (and least) literate cities

5. Madison, Wis.

> Physical Health Index: 79.9
> Obesity rate: 20.8% (16th lowest)
> Blood pressure: 22.0% (6th lowest)
> Poverty rate: 12.7% (tied for 66th lowest)

Madison area residents! were amo! ng the most likely Americans to say they had access to basic needs that could promote good health. Nearly 90% of respondents said they had enough money for health care, medicine and food in the past 12 months, more than in any other metro area. Good access to basic needs, alongside limited poverty and a well-educated population, all likely contributed to the good physical health of area residents. Madison residents were among the least likely to have been diagnosed with diabetes — just 7.2% said they were diabetic compared with more than 11% of all Americans. And only 2.2% of respondents said they had been told by a doctor that they suffered from a heart attack, versus nearly 4% nationwide.

MORE: Nine cities where wealth is soaring

4. Naples-Marco Island, Fla.

> Physical Health Index: 80.0
> Obesity rate: 16.5% (2nd lowest)
> Blood pressure: 31.3% (55th highest)
> Poverty rate: 13.8% (91st lowest)

Respondents from Naples were among the most likely people surveyed by Gallup to note that they felt well-rested and had enough energy to get things done, both indicators of good physical health. Another major reason the area was rated so well for physical health was the low obesity rate. Just 16.5% of those surveyed said they were obese, the second lowest rate in the nation. People also often indicated they practiced healthy behaviors that contribute to lowered obesity rates, such as eating well and not smoking. Three-fourths of people surveyed said they had consistently eaten healthy food within the past day.

MORE: Cities with highest (and lowest) taxes

3. Charlottesville, Va.

> Physical Health Index: 80.1
> Obesity rate: 18.7% (4th lowest)
> Blood pressure: 27.4% (64th lowest)
> Poverty rate: 13.9% (98th lowest)

Residents of the Charlottesville metro area were the least likely to report health problems that prevented them from participating in age-appropriate activities. Nearly 85% of respondents said they were able! to do wh! at similarly aged peers normally did, the most in the nation. Also, less than 19% of respondents were considered obese, one of the lowest rates in the nation, and recurring pain was also relatively infrequent. Both obesity and recurring pain are factors that can potentially limit people's ability to participate in age-appropriate activities. Emotional well-being may have also contributed to the area's overall good state of health. Respondents were less agitated by and large — more than nine in 10 survey participants said they were not angry at all in the past 24 hours, better than residents of all but two other metro areas.

MORE: The best (and worst) paying cities for women

2. San Jose-Sunnyvale-Santa Clara, Calif.

> Physical Health Index: 80.6
> Obesity rate: 19.5% (8th lowest)
> Blood pressure: 23.6% (13th lowest)
> Poverty rate: 10.8% (28th lowest)

Healthy behaviors likely contributed to the good state of health in the San Jose region. Barely 10% of area inhabitants identified themselves as smokers, less than in all but one other metro area. Nearly 80% said their health did not keep them from going about their day-to-day lives, the best rate nationwide. The area's median household income of $90,737 in 2012 was the highest nationwide, and its poverty rate of 10.8% was among the lowest. Higher incomes likely helped residents take better care of their health. More than 75% of respondents said they had visited a dentist within the past 12 months — also among the highest proportions in the United States.

MORE: Ten U.S. cities where violent crime is soaring

1. Holland-Grand Haven, Mich.

> Physical Health Index: 80.9
> Obesity rate: 23.4% (44th lowest)
> Blood pressure: 23.9% (17th lowest)
> Poverty rate: 11.3% (37th lowest)

Holland area residents exercised less than the majority of Americans. They were also less likely to eat healthy all day compared to most Americans. Despite unhealthy habits, however, Holland ! metro are! a residents were the nation's healthiest. Nearly nine in 10 survey participants said they had enough energy to get things done the day before, better than in all but a handful of metro areas. Also, proportionally fewer respondents suffered from chronic pain than respondents nationwide did. Just 24% reported recurring neck or back pain, compared with more than 30% nationally. And less than one in five survey participants said they had regular knee or leg pain, also nearly the lowest rate in the nation. Like many of the cities with the best health, the Holland area's poverty rate was significantly lower than the national rate.

24/7 Wall St. is a USA TODAY content partner offering financial news and commentary. Its content is produced independently of USA TODAY.

Cisco Earnings Don't Tell the Whole Story

A slight earnings beat apparently wasn't good enough for Wall Street, which nudged Cisco (Nasdaq: CSCO) stock down more than 4% in after-hours trading.

Even an increase in the quarterly dividend by $0.02 a share, to $0.19, wasn't enough to deter the bears. Cisco's yield will rise to about 3.3%.

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The maker of networking gear announced results after the market closed Wednesday and said it earned $0.47 cents a share in its fiscal second quarter, just barely beating expectations for $0.46 cents a share.

Revenue was $11.2 billion, also slightly higher than the $11.04 billion that analysts had forecast.

Investors were disappointed despite the beat because both numbers represent declines from the year-ago numbers.

Still, it would be a mistake to underestimate the veteran tech giant. Cisco is very much a company in transition right now, with an eye toward the future.

"We delivered the results we expected this quarter," chairman and Chief Executive Officer John Chambers said. "I'm pleased with the progress we've made managing through the technology transitions of cloud, mobile, security and video. Our financials are strong and our strategy is solid. The major market transitions are networking centric and as the Internet of Everything becomes more important to business, cities and countries, Cisco is uniquely positioned to help our customers solve their biggest business problems."

Granted, Cisco faces some serious challenges right now.

In addition to weakness in emerging markets, which the company acknowledged last year, rivals Juniper Networks Inc. (NYSE: JNPR) and F5 Networks, Inc. (Nasdaq: FFIV) have been nibbling at Cisco's market share.

What's more, Cisco faces an even bigger threat on the horizon: software-defined networks (SDNs) that offer a cheaper alternative to the hardware-based networking equipment that is Cisco's bread-and-butter.

Finally, Cisco is still trying to fight its way out of "laggard" status. The world's most valuable company by market capitalization in the late 1990s, Cisco stock went flat after the dot-com bubble burst and has been searching in vain for growth ever since.

And yet, with all those headwinds, Cisco stock hasn't reacted as one would expect...

Why Cisco (Nasdaq: CSCO) Stock Hasn't Collapsed - But Will Go Higher

Over the past month, Cisco stock is up 2.58%, closing at $22.85 Wednesday. And over the past year, Cisco stock is up 8.7% (although down somewhat from its 52-week high of $26.49).

If Cisco's business is in such trouble, why hasn't the stock collapsed?

Note: For all the potential in tech, two sectors stand out as the best bets to generate triple and quadruple-digit gains. These sectors are just hitting their stride...

Chambers touched upon the answer in his comments. It's true that Cisco's traditional business is under pressure. But company management realizes what's happening and is moving toward taking advantage of the new opportunities created by the changes in the tech landscape.

Over the past year, Cisco has made several key acquisitions to allow it to move into such areas as the cloud (Meraki), SDNs (Cariden), and cybersecurity (Sourcefire), which not only offer growth but higher margins than its traditional business of networking hardware.

The combination of these acquisitions and the slow erosion of Cisco's old business have taken a toll on the company's profits, as we can see in today's earnings, and may see for the next couple of quarters.

Nevertheless, it's a promising strategy, even if it takes a year or two to pay off. At least Cisco management realized that sitting still was a death sentence and has taken aggressive action.

With Cisco stock under pressure in the short term, investors should consider this a buying opportunity.

With a P/E of just 12.4, and a forward P/E of just under 11, Cisco stock is already in bargain territory.

Once the company's strategy kicks in, the higher margins and better cash flow will start to be reflected in the earnings. And that will start nudging Cisco stock higher.

"The financial model remains strong, and the new products could add upside," Brian Marshall at ISI Group recently told Barron's. "At this price, the stock has more upside potential than downside."

Can #Cisco make a comeback, or is it "dead money"? Voice your opinion on Twitter @moneymorning or Facebook.

With e-commerce booming in China, investors are eyeing a planned IPO for Alibaba, the Chinese version of Amazon.com, which is expected later this year. But there's actually a much more profitable way to tap into this trend before the Alibaba IPO...

Related Links:

Barron's:
Cisco Battles Back Marketwatch:
Will Cisco Spook Wall Street again? The Street:
Cisco Remains a Buy Ahead of Earnings

New York Times earnings fall on lower ad sales

The New York Times Co. said Thursday its fourth quarter net income fell due to lower advertising sales, a hike in growth strategy investment and the absence of a sales gain that was recorded a year ago.

Its fourth quarter net income totaled $65.6 million vs. $178.1 million in the October-December period in 2012. But in the year-ago period, the company recorded a $164.6 million gain on the sale of its ownership interest in job site Indeed.com.

Shares of The New York Times Co. rose 5.1% Thursday morning to $14.55.

Fourth quarter advertising sales declined 6.3% to $212 million. There was one extra week of business in the year-ago period. If the week were excluded in the comparison, advertising revenue would have been down 1%.

Circulation revenue fell 3.9% to $207.6 million. Excluding the extra week, it would have risen 2.7% as more customers bought its digital packages and higher print home-delivery prices helped offset a decline in print copies sold, the company said.

About 33,000 net digital subscribers were added, outpacing the growth rates seen in the second or third quarters.

Total quarterly revenue fell 5.2% to $443.8 million. It would have grown "slightly year-over-year" had it not been for the extra week in 2012, the company said.

For the entire year, its revenue declined 1.1% to $1.57 billion. Net income fell 52% to $65.1 million.

Wall Street eyes a breather after rally

NEW YORK (MarketWatch) — U.S. stock futures straddled the flat line on Friday, indicating Wall Street may try to catch its breath after a rally that saw the Dow Jones Industrial Average post its 50th record close of the year in the previous session.

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Futures for the Dow Jones Industrial Average (DJH4)  rose 9 points to 16,431, while those for the S&P 500 index (SPH4)  were nearly unchanged at 1,837.

Futures for the Nasdaq 100 index (NDH4)  gained 0.25 point to 3,582.

Wall Street stocks rallied on Thursday, extending a record run on the heels of a sharp fall in weekly jobless claims. The Dow industrials (DJIA)  surged 122.33 points, or 0.8%, to 16,479.88, for its 50th record close this year. The S&P 500 (SPX)  rose 0.5% to nab its 44th record close of 2013.

Twitter (TWTR)  reached its highest level ever, soaring more than 76% this month, though shares were largely flat in premarket trading.

Dan Greenhaus, chief strategist with BTIG, said in a note that the gains for markets overall have been largely down to seasonal effects.

Reuters Enlarge Image

But he said social-media firms have not been the only big beneficiaries, noting shares of Oracle Corp. (ORCL)  are up 7% for the month, while steel companies are higher by 5%, chemical firms by 3%, and machinery names by almost 6%.

"Importantly, all this comes as the economic data is getting better…and interest rates move higher," said Greenhaus, alluding to the fact that the 10-year bond yield hit 3% on Thursday for the first time since September. The yield gained 2 basis points on Friday to 3.014%.

"While it appears [there is] nothing technically important about a 3% 10-year yield, it will get attention, but that is hardly any more economically damaging than 2.99%," Greenhaus said.

Among specific names, shares of Cessna maker Textron (TXT)  could gain after the company said it would pay $1.4 billion to buy U.S. plane maker Beechcraft Corp.

Shares of WPCS International Inc. (WPCS)  were up 40% in thin premarket trading. The company said Thursday that one of its units released a software platform for bitcoin traders.

European markets reopened from a two-day Christmas break to push higher — the Stoxx Europe 600 index (XX:SXXP)  gained 0.6%.

The Shanghai Composite (CN:SHCOMP)  outperformed other Asian markets as fear of stress in the country's money market eased. The Nikkei 225 index (JP:NIK)  retreated from a six-year high after data showed consumer prices rising higher than expected —1.2% on-year in November, above the 1.1% that had been forecast.

Gold prices drifted lower and oil was flat, but the dollar was pulling back across the board.

More stories from MarketWatch:

Twitter, 3D Systems, WPCS are stocks to watch

Delta to honor cheap airfares after website glitch

Pimco's El-Erian skeptical of Fed's QE exit

Stocks Hitting 52-Week Lows

Enzon Pharmaceuticals (NASDAQ: ENZN) shares tumbled 28.28% to reach a new 52-week low of $1.15. Enzon Pharmaceuticals shares have dropped 63.30% over the past 52 weeks, while the S&P 500 index has gained 28.75% in the same period.

Silvercorp Metals (NYSE: SVM) shares fell 1.30% to touch a new 52-week low of $2.19. Silvercorp's PEG ratio is 5.18.

Bancolombia SA (NYSE: CIB) shares touched a new 52-week low of $47.94. Bancolombia's trailing-twelve-month ROA is 1.45%.

Posted-In: 52-Week LowsNews Movers & Shakers Intraday Update Markets

(c) 2013 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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Lamborghini hatches next supercar, Huracan

It's been a wonderful run for the Lamborghini Gallardo, but now the brand thinks it has come up with a worthy successor: the Huracan.

The official rollout of the Huracan won't come until the Geneva Motor Show next year, with first deliveries in the spring, but as 2013 rolls to a close, Lambo officials apparently wanted the world to see what the future holds.

Huracan will be powered by a new 5.2-liter V-10 engine that delivers 610 horsepower. It has a rare combination of both direct and indirect gas injection aimed at optimal performance and better fuel economy compared to the Gallardo engine. The engine is combined with a seven-speed dual-clutch transmission.

That engine/transmission combination, along with the car's low weight and aerodynamics, should result in a top speed just over 200 miles per hour. With its computer-controlled all-wheel-drive system, powering from zero to 62 miles per hour should take a mere 3.2 seconds. To 124 miles per hour (200 kilometers per hour): a lickity-split 9.9 seconds. The car will automatically shut off the engine at stop lights, so-called start-stop technology to further save gas.

Like other Lamborghinis, Huracan is named for a famous fighting bulls.

"The fighting bull Huracán of the Spanish Conte de la Patilla breed was known for his outstanding courage and strong sense of attack. He fought in Alicante in August 1879, showing his unrelenting character and remaining defiant and invincible, thus entering into the legend of fighting bulls' history," Lamborghini writes.

Huracan has a tough act to follow. Gallardo ([pronounced gay-YAR-doe) was the most successful Lambo ever. Over a decade, 14,022 were made.

Apple’s Share Slipped as 251 Million Smartphones Shipped in Third Quarter

Global shipments of smartphones grew 45% year-over-year in the third quarter of 2013 to a record 251 million units. The quarter also marks the first time total shipments topped a quarter billion.

Samsung Electronics topped the list with a record 88.4 million units shipped and a record 35% market share. Apple Inc. (NASDAQ: AAPL), which reported earnings earlier Monday afternoon, reported sales of 33.8 million units and market share of 13%. Huawei Technologies shipped 12.7 million units to retain the third largest share of the market with a 5% share.

Both Samsung and Huawei market share in the quarter compared with the same quarter in 2012. Apple's share slipped from nearly 16% a year ago to 13% this year. Apple's volume grew by 26% year-over-year, while Samsung's shipment volume rose by 55% and Huawei's volume grew 67%.

The data comes from research firm Strategy Analytics' Wireless Smartphone Strategies service and is published on the company's blog.

The only other companies named in the results were LG Electronics and Lenovo. Once-powerful industry leaders Nokia Corp. (NYSE: NOK) and BlackBerry Ltd. (NASDAQ: BBRY) are lumped together in the "Others" category. Neither has a market share above Lenovo's 4.3%.

The following chart from Strategy Analytics tells the tale:

Slowly But Surely, the Tide's Turning For Vringo (VRNG)

Just for the record, I can't stand Vringo, Inc. (NASDAQ:VRNG). I've never agreed with its business model - litigation of patents that in retrospect probably shouldn't have been granted in the first place - and the investor hype that VRNG has surrounded itself with has largely obscured the truth and reality of its pivotal court case with Google (NASDAQ:GOOG).... a case that is now in post-verdict review, as the judge decides just how much money should be awarded. Yet, despite the fact that I'm anything but a fan of the company, I've got a funny feeling the stock's just a few days away from a major rally.

As those who've been following the Vringo story know all too well, though, there's more to it than just that, and "due process" has become something of a gray area as the matter finds itself in the middle of the court system, the U.S. patent office, and common sense. With all three forces already being blurred about where they stand, being caught in the middle of all three has just been absolutely maddening for Vringo, Inc.

Unlike most of the amateur journalists - and also probably shareholders - I don't come here to preach the merits of Vringo. Like I said above, I've found myself in the anti-Vringo camp more often than not. BUT, also like a said above, I've got a sneaking suspicion VRNG shares are on the verge of a monster-sized bullish move.

It's the shape of the chart that leads me to that conclusion. Slowly but surely, the post-verdict lull [the verdict from the suit against Google was handed down in October] has quietly been building into an uptrend. Actually, scratch that last statement. It's not an uptrend yet. I think it's going to be one soon, though. Here's why.

As you can see, since April, VRNG has made a string of higher lows. As you can also see, since March, Vringo shares have tested the 200-day moving average line (green) several times. Each brush of the 200-day average has promptly pushed the stock lower again. Additionally, as of this month, the stock's 20-day moving average line (blue) has crossed back above the 100-day (gray) and 50-day (purple). In fact - and this is the clincher - it looks like the stock is now, finally, finding support at those shorter-term moving average lines. The final clue we need is a move above the 200-day moving average line at $3.22, but given several months' worth of build-up, I'm pretty certain we'll get it. And once we do, it's off-to-the-races. Take a look.

Critics will be quick to point out that charts don't matter - fundamentals do. And in the case of Vringo, it's not even like the fundamentals matter, since there are none. The only thing really driving this stock is the promise of future settlements, or jury-awarded cash. I'll just say this - Vringo Inc. is one of those cases where the hype and buzz and speculation surrounding the stock has become far bigger than the company itself. In those rare cases, the chart reflects the ever-changing opinion of the stock's potential. Since it's opinion that's ultimately driving the stock's price, though, the chart suggests how public opinion is taking shape.... and will take shape in the future. (Sadly, human behavior is pretty predictable. This chart just puts that opinion on an X and Y axis, and shows us the brewing trend.)

Bottom line? If you wanted to take a swing on a long VRNG position, the odds are looking in your favor right now. If you wanted to wait until Vringo Inc. shares crossed above the 200-day moving average line - a reasonable reassurance - that would leave a little money on the table, but would reduce your risk quite a bit. Either way, the breakout's been brewing for a while, and I've got a feeling it's going to boil over soon... bullishly.

If you'd like to receive more trading ideas and analysis like this one, sign up for the free SmallCap Network e-newsletter today.

New BlackBerry buyout rumors include Google and Samsung

  How BlackBerry fell so fast NEW YORK (CNNMoney) Who isn't on the list of rumored potential BlackBerry suitors that surfaced this weekend?

Two weeks after limping-along BlackBerry received a preliminary $4.7 billion buyout offer from Fairfax Financial, a new Reuters report says the list of possible suitors has expanded significantly.

According to the Friday report, potential buyers of all or part of BlackBerry include Google (GOOG, Fortune 500), Cisco (CSCO, Fortune 500), SAP (SAP), Intel (INTC, Fortune 500), LG, Samsung and private-equity firm Cerberus Capital.

Even if the rumors prove to be true, it's unclear if those companies are really interested in buying BlackBerry. The company wants "preliminary expressions of interest" by early next week, Reuters noted. But it's possible that the two sides are simply testing the waters.

Shares of BlackBerry (BBRY) gained about 4% on the news.

BlackBerry wouldn't confirm the rumors, saying simply that the company "is conducting a robust and thorough review of strategic alternatives."

Related story: BlackBerry's bleak quarterly results

An actual offer from one of these companies would put BlackBerry on much firmer ground, given that the announcement from Fairfax sparked a lot of skepticism. Fairfax's "offer" was really just a preliminary letter of intent to buy BlackBerry, and Fairfax hasn't received any financial backing for a deal. Cynics think Fairfax is simply trying to draw in other offers and cash out its 10% BlackBerry stake.

BlackBerry's appeal to a Google or a Samsung likely lies in its patent portfolio, which experts value at about $2 billion to $3 billion. Such patents are advantage in the competitive and highly litigious world of smartphones -- just look at the never-ending Apple (AAPL, Fortune 500) v. Samsung lawsuits -- though BlackBerry's patents generally aren't considered as essential as those in the portfolios of its rivals. Still, those patents could give BlackBerry a much-needed lifeline.

This REIT Just Raised Its Dividend 40% -- Is More To Come?

U.S. companies are sitting on a total of more than $1 trillion in cash, but many are being rather stingy with their dividend payouts while they wait to see how the economic recovery progresses.

 

There is one company, however, whose management was confident enough to boost its dividend payment recently by 40%. This real estate investment trust (REIT) has raised its third-quarter dividend to 28 cents a share, which makes for a 4% annual yield.

With 40 hotel properties and 10,600 rooms in the U.S., this REIT caters to the upscale business travel and leisure travel markets, which have slowly begun to recover from the recession. The REIT looks for markets where there are barriers to entry, making it difficult to build new properties, as well as those where demand is robust, which allows it to charge profitable rates on its hotel rooms.

The REIT gets 90% of its earnings from nine of the U.S.' largest and best-known metro markets, and its hotels are managed by such well-known operators as Kimpton, Westin, Starwood (NYSE: HOT) and Hyatt Hotels (NYSE: H). The REIT I'm talking about is LaSalle Hotel Properties (NYSE: LHO).

	Flickr/Runneralan2004
	After backing out renovation expenses at its Park Central Hotel in New York, LaSalle's RevPAR grew 6.7%.

LaSalle's revenue rose 8.5% in the second quarter from the same period last year, and its revenue for the first half of 2013 rose about 10% from the first six months of last year. The REIT's funds from operations (FFO) per share -- a measure of earnings that accounts for a REIT's real-estate-heavy portfolio -- was also up more than 10% in the second quarter and more than 20% for the first half of the year.

Perhaps more importantly, the REIT -- whose profit margin was a healthy 37% -- saw its revenue per available room (RevPAR) rise 0.9% in the second quarter as hotel occupancies went up, allowing LaSalle to get better rates for its rooms. After backing out renovation expenses at its Park Central Hotel in New York, however, LaSalle's RevPAR grew 6.7%, which may be more indicative of its revenue growth going forward.

Over the past five years, LaSalle has seen its hotel revenue grow from $587 million in 2008 to $862 million, with earnings per share rising nearly ninefold, from 6 cents to 52 cents. The company has forecast FFO of up to $2.23 a share for the year, making for a price-to-earnings ratio of about 11.5.

Risks to Consider: The hotel sector is very competitive, and demand for rooms could cool if the economy falters again. LaSalle has taken on debt on which interest rates could go up, which could cut down on its profits even though it uses hedges to ward off this risk.

Action to Take --> REITs are required to pay as much as 90% of their income to shareholders, so there is a good possibility of higher dividend payments for LaSalle's owners. There is also some upside on the stock as the REIT continues to grow. Because construction activity was down during the recession, fewer hotel rooms coming online as demand is going up, so the REIT is anticipating a favorable environment for the near term.

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