Nokia and SAP Tackle Corporate Car-Sharing Together

Nokia  (NYSE: NOK  ) has announced its support of SAP's  (NYSE: SAP  ) TwoGo car-sharing service with HERE, its mapping service.

With HERE, Nokia is already helping commuters avoid traffic and find public transport routes. Nokia says that SAP selected HERE as a location backbone for its TwoGo car-sharing service because of its scale across multiple screens and operating systems.

As part of SAP's enterprise services, TwoGo lets employees share work commutes in an effort to reduce the costs of corporate fleets, parking, and traveling. Since TwoGo is a cloud-based service, it automatically organizes employees into carpools. Additionally, TwoGo has been designed with large companies in mind. It works with corporate calendar applications so rides are synced with each employee's work schedules.

TwoGo is currently available for companies in Germany and the U.S. The service should expand to more countries soon.

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Legg Mason Beats on Both Top and Bottom Lines

Legg Mason (NYSE: LM  ) reported earnings on April 30. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended March 31 (Q4), Legg Mason beat expectations on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue grew slightly. Non-GAAP earnings per share dropped. GAAP earnings per share contracted significantly.

Gross margins increased, operating margins dropped, net margins contracted.

Revenue details
Legg Mason tallied revenue of $667.8 million. The 13 analysts polled by S&P Capital IQ predicted sales of $645.7 million on the same basis. GAAP reported sales were the same as the prior-year quarter's.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.52. The 10 earnings estimates compiled by S&P Capital IQ forecast $0.46 per share. Non-GAAP EPS of $0.52 for Q4 were 3.7% lower than the prior-year quarter's $0.54 per share. GAAP EPS of $0.23 for Q4 were 57% lower than the prior-year quarter's $0.54 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 32.6%, 320 basis points better than the prior-year quarter. Operating margin was 6.4%, 450 basis points worse than the prior-year quarter. Net margin was 4.4%, 730 basis points worse than the prior-year quarter. (Margins calculated in GAAP terms.)

Looking ahead
Next quarter's average estimate for revenue is $654.9 million. On the bottom line, the average EPS estimate is $0.75.

Next year's average estimate for revenue is $2.66 billion. The average EPS estimate is $3.26.

Investor sentiment
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 797 members out of 874 rating the stock outperform, and 77 members rating it underperform. Among 318 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 300 give Legg Mason a green thumbs-up, and 18 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Legg Mason is hold, with an average price target of $27.27.

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Why Health Care Dragged on the Dow This Morning

On a quiet day on the news front, the stock market took the path of least resistance and dropped modestly. Although the latest reading on consumer confidence soared well beyond expectations and home prices posted a 9.3% year-over-year gain, a disappointing measure of manufacturing activity in the Chicago region led investors to take a break from the run that has lifted the Dow Jones Industrials (DJINDICES: ^DJI  ) by between 1% and 2% for the month of April so far. As of 10:50 a.m. EDT, the Dow is down 30 points, or 0.2%, while the broader market posted somewhat smaller losses on a percentage basis.

Weakness in the Dow centered on the health care sector. Pfizer (NYSE: PFE  ) fell 3.3% after it cut its earnings guidance for the full 2013 year by $0.06 per share. The drugmaker now expects profit to come in between $2.14 and $2.24 per share. Given that and disappointing results showing that sales fell 9% and net income fell $0.01 per share short of expectations, Pfizer needs to demonstrate its ability to sell its stable of approved drugs. Otherwise, continued pressure from generic competition will continue to weigh on revenue well into the future.

UnitedHealth (NYSE: UNH  ) also fell, losing 0.9% on the same day that rival Aetna (NYSE: AET  ) reported earnings. Aetna managed to increase its earnings by keeping premium prices high and cutting its costs, and it's positioning itself to deal with the onset of health exchanges and other key provisions of Obamacare that will take effect within the next year. But what's increasingly clear is that competition among health insurance carriers will become fierce as Obamacare is increasingly implemented, and UnitedHealth needs to defend its leadership position by getting its plans onto as many health exchanges as possible without cutting profit margins any further than the new health-care law will require.

Finally, outside the Dow, Best Buy (NYSE: BBY  ) has soared almost 11% after selling its stake in its Best Buy Europe joint venture to its partner for $775 million. Under the deal, Carphone Warehouse Group will take over the venture, which originally had grand plans for expansion but foundered due to the weak European economy and Best Buy's own troubles. The move should help Best Buy focus more on its restructuring efforts in the U.S. and in other international markets.

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Can Altria Keep Growing Its Earnings?

On Thursday, Altria (NYSE: MO  ) will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed, kneejerk reaction to news that turns out to be exactly the wrong move.

Altria has topped the tobacco industry for decades, with its leading Marlboro brand retaining its popularity around the world. But with the company having spun off its Philip Morris International (NYSE: PM  ) division, Altria now has to rely on the U.S. market, with its unique challenges and risks. Let's take an early look at what's been happening with Altria over the past quarter and what we're likely to see in its quarterly report.

Stats on Altria

 

 

Analyst EPS Estimate	$0.53
Change From Year-Ago EPS	8.2%
Revenue Estimate	$4.04 billion
Change From Year-Ago Revenue	1.1%
Earnings Beats in Past 4 Quarters	1

Source: Yahoo! Finance.

Will Altria light up its earnings this quarter?
Analysts have stayed mostly stable on their views for Altria's earnings, keeping their estimates for the just-ended quarter unchanged over the past few months and raising their full-year 2013 consensus by a single penny per share. Yet the stock has provided strong returns, rising almost 10% since mid-January.

As I observed earlier this week, the entire cigarette industry has been under siege from regulatory and public health authorities. Altria's rivals Reynolds American (NYSE: RAI  ) and Lorillard (NYSE: LO  ) were able to defeat an FDA proposal to force them to show graphic warnings on cigarette packs, but between negative ad campaigns and new attempts to eliminate tobacco display cases in New York City stores, Altria isn't getting any help in fighting a long-term trend of declining U.S. cigarette volume.

Altria could now face yet another new challenge, as President Obama's latest budget proposal includes a $0.94-per-pack increase in the cigarette tax. The levy could raise as much as $78 billion, but it will dampen demand for cigarettes by imposing yet another price increase on consumers. As proposed, the budget likely won't pass, but elements like the tobacco tax might make it into a compromise bill.

Nevertheless, investors have continued to gravitate to Altria and its peers for their high dividend yields. Even assuming no growth at all, the 5% yield that Altria, Lorillard, and Reynolds all offer represents a modest but reasonable return that many conservative investors would be happy with right now. It's also well above the 3.7% yield that Philip Morris International pays.

In Altria's quarterly report, be sure to compare the company's results with those that Reynolds released earlier today. Reynolds saw a drop in volume but higher earnings, and it was able to confirm its earnings guidance for 2013. If Altria does likewise, it would go a long way toward reassuring nervous investors about its immediate prospects.

Altria has been the best-performing stock of the past 50 years, but as the number of smokers in the U.S. continues to steadily decline, is Altria still a buy today? To find out whether everyone's love-to-hate dividend stock is a savvy investment choice or a hazard to your portfolio, simply click here now for access to The Motley Fool's new premium research report on the company.

Click here to add Altria to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Century Aluminum Buying Rio Tinto Smelter

Check Out Coca-Cola's Freestyle: Love It or Hate It?

What happens when the Italian automotive design firm Pininfarina and a horde of Coca-Cola (NYSE: KO  ) industrial engineers tinker with a micro-dosing technology delivered by DEKA, the company that invented the Segway? Enter the Coca-Cola "Freestyle," a single fountain equipped with a touchscreen, capable of dispensing more than 125 Coke-branded drinks and innumerable variations.

It's a sleek, minimalist machine, combining a dispensing unit that recalls the chrome soda fountains of the '50s with the subtle molded contours of a contemporary illuminated cabinet. Since its introduction in 2009, the eye-catching fountain has progressed methodically through test marketing, but it now appears to be gaining traction, as it's available in 4,500 locations and growing.

Source: Pininfarina.it.

Innovation leverages revenue and marketing
Coke will see an impact on its top-line growth if the Freestyle gains widespread adoption. Lease rates and the cost of mix ingredients for the Freestyle are 30% higher than traditional fountain machines. The Freestyle may also prove its value as a marketing tool. Coca-Cola's global strategy rests on the enhancement of its core capabilities, one of the pillars of which is consumer marketing. Around the world, Coke engages in a herculean effort to direct eyeballs to its brands. In developing markets, the company fights for carbonated cola shelf space, but it also has to win shelf placement in the increasingly crowded varieties of non-carbonated drinks that Coke and its competitors offer. Installing Freestyle machines in developing markets could leverage Coke's marketing efforts by engaging consumers to try new brands. Thus, customers might first encounter a label via the Freestyle, enjoy the taste, and then find the same drink for purchase in bottled form in nearby grocery and convenience stores.

Coca-Cola will also reap valuable customer insight by mining the data from the machines. Every Freestyle maintains a data connection to Coke headquarters and uploads information about each drink dispensed and all supplies used. The company should enjoy a wealth of real-time information about ordering habits and popular flavors that may be candidates for bottling in local areas, not to mention cost information from the supplies data.

Benefits to restaurants
In theory, the Freestyle should be sought after by restaurants as well. Firehouse Subs, which claims that it was the "first brand to advertise" the Freestyle machine, reports a double-digit increase in sales in the first quarter of last year from its marketing partnership with Coke. Burger King Worldwide (NYSE: BKW  ) has signed on to place a Freestyle machine in every one of its company-owned stores, although this is less impressive than it sounds, as the company is in the process of selling its stores and transitioning to a 100% franchisee store-owned model.

The chain that can exert a disproportionate influence on Freestyle acceptance is, of course, McDonald's (NYSE: MCD  ) . One of the most visible purveyors of Coke products, McDonald's would probably welcome the widespread adoption of the Freestyle. After all, the Golden Arches have recently encountered some consumer fatigue. McDonald's U.S. sales have been stalling recently. It could use an incremental sales injection generated by the Freestyle, even if it's temporary.

The most powerful quality control inspector: the customer
Which brings us to a surprising supersized "if": The Freestyle may suffer from a small but tangible quality issue. As reported by website Benzinga earlier this year, a common complaint regarding the Freestyle is the residue of flavor left from previous drinks. The customer in front of you who orders an Orange Vanilla Hi-C may leave behind a tiny residual flavoring in the tubes that colors the taste of your straight-up, traditional Coke. You can bet that McDonald's, to whom standardization is a directive, won't fully implement a fountain for which it cannot assure a consistent taste across its highest-selling drinks. In addition, existing Coke fountains allow for multiple simultaneous servings, whereas the Freestyle can accommodate only one customer at a time. Of concern to McDonald's as it tests the Freestyle will be the speed at which customers can self-serve inside restaurants.

Time will render its verdict
Muhtar Kent, CEO of Coke, has emphasized a long-term approach to the Freestyle, indicating that Coke will see the benefits of the system "this decade." Conceivably there is plenty of time to address quality issues. However, once the novelty wears off, it's possible that we may ultimately see the Freestyle as an addition to, but not a replacement for, the traditional fountain. Potential abounds for this innovative product, but only time will decide if it's a practical replacement for current dispensing technologies.

Have you tried the Coca-Cola Freestyle? Let me know about your experience in the comments section below.

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Coca-Cola's wide moat has helped provide its shareholders with superior gains in the past, but the company faces some new threats to its continued market dominance. The Motley Fool recently compiled a premium research report containing everything you need to know about Coca-Cola. If you own or are considering owning shares in the company, you'll want to click here now and get started!

Why Greenway Medical Technologies Shares Slumped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Greenway Medical Technologies (NYSE: GWAY  ) , a cloud-based health-care management services company, dipped as much as 17% after the company revised its full-year 2013 outlook.

So what: Before the opening bell, Greenway offered an update for its remaining fiscal 2013 based on preliminary results for the third quarter. Greenway now expects full-year revenue of $132 million to $134 million, and a GAAP EPS loss of $0.11 to $0.13 on gross margin ranging from 51.5% to 52.2%. At the end of the second quarter in mid-February, it had been forecasting revenue of $145 million to $150 million, and a GAAP EPS profit of $0.10 to $0.17 on gross margin of 54.5% to 56%. Greenway's CEO, Tee Green, noted that a shift away from one-time licensing models to a recurring revenue stream is what hurt Greenway's revenue outlook. He also noted that recurring revenue is up to 56% of total revenue in the current quarter, as opposed to just 46% in the year-ago period.

Now what: It's pretty easy based on the above figures to see why the Street isn't one bit happy with Greenway today. As a provider of electronic health records and other cloud-based health-management tools, I don't see any reason why it should be struggling to recruit new customers and/or boosting its recurring revenue stream. I applauded Greenway for landing a whale in Walgreen last summer, and I feel it could offer a very compelling investment thesis on paper moving forward; unfortunately it has failed to deliver for investors now on multiple occasions.

Craving more input? Start by adding Greenway Medical Technologies to your free and personalized watchlist so you can keep up on the latest news with the company.

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Time Warner Cable Beats Analyst Estimates on EPS

Time Warner Cable (NYSE: TWC  ) reported earnings on April 25. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended March 31 (Q1), Time Warner Cable met expectations on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue increased. Non-GAAP earnings per share grew. GAAP earnings per share expanded.

Margins dropped across the board.

Revenue details
Time Warner Cable reported revenue of $5.48 billion. The 25 analysts polled by S&P Capital IQ predicted a top line of $5.49 billion on the same basis. GAAP reported sales were 6.6% higher than the prior-year quarter's $5.13 billion.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $1.41. The 23 earnings estimates compiled by S&P Capital IQ predicted $1.37 per share. Non-GAAP EPS of $1.41 for Q1 were 8.5% higher than the prior-year quarter's $1.30 per share. GAAP EPS of $1.34 for Q1 were 12% higher than the prior-year quarter's $1.20 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 51.9%, 130 basis points worse than the prior-year quarter. Operating margin was 19.9%, 130 basis points worse than the prior-year quarter. Net margin was 7.3%, 10 basis points worse than the prior-year quarter. (Margins calculated in GAAP terms.)

Looking ahead
Next quarter's average estimate for revenue is $5.59 billion. On the bottom line, the average EPS estimate is $1.69.

Next year's average estimate for revenue is $22.25 billion. The average EPS estimate is $6.56.

Investor sentiment
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 195 members out of 237 rating the stock outperform, and 42 members rating it underperform. Among 72 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 65 give Time Warner Cable a green thumbs-up, and seven give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Time Warner Cable is outperform, with an average price target of $101.42.

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Can You Trust the Cash Flow at AAR?

Although business headlines still tout earnings numbers, many investors have moved past net earnings as a measure of a company's economic output. That's because earnings are very often less trustworthy than cash flow, since earnings are more open to manipulation based on dubious judgment calls.

Earnings' unreliability is one of the reasons Foolish investors often flip straight past the income statement to check the cash flow statement. In general, by taking a close look at the cash moving in and out of the business, you can better understand whether the last batch of earnings brought money into the company, or merely disguised a cash gusher with a pretty headline.

Calling all cash flows
When you are trying to buy the market's best stocks, it's worth checking up on your companies' free cash flow once a quarter or so, to see whether it bears any relationship to the net income in the headlines. That's what we do with this series. Today, we're checking in on AAR (NYSE: AIR  ) , whose recent revenue and earnings are plotted below.

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. FCF = free cash flow. FY = fiscal year. TTM = trailing 12 months.

Over the past 12 months, AAR generated $111.4 million cash while it booked net income of $67.3 million. That means it turned 5.2% of its revenue into FCF. That sounds OK.

All cash is not equal
Unfortunately, the cash flow statement isn't immune from nonsense, either. That's why it pays to take a close look at the components of cash flow from operations, to make sure that the cash flows are of high quality. What does that mean? To me, it means they need to be real and replicable in the upcoming quarters, rather than being offset by continual cash outflows that don't appear on the income statement (such as major capital expenditures).

For instance, cash flow based on cash net income and adjustments for non-cash income-statement expenses (like depreciation) is generally favorable. An increase in cash flow based on stiffing your suppliers (by increasing accounts payable for the short term) or shortchanging Uncle Sam on taxes will come back to bite investors later. The same goes for decreasing accounts receivable; this is good to see, but it's ordinary in recessionary times, and you can only increase collections so much. Finally, adding stock-based compensation expense back to cash flows is questionable when a company hands out a lot of equity to employees and uses cash in later periods to buy back those shares.

So how does the cash flow at AAR look? Take a peek at the chart below, which flags questionable cash flow sources with a red bar.

Source: S&P Capital IQ. Data is current as of last fully reported fiscal quarter. Dollar values in millions. TTM = trailing 12 months.

When I say "questionable cash flow sources," I mean items such as changes in taxes payable, tax benefits from stock options, and asset sales, among others. That's not to say that companies booking these as sources of cash flow are weak, or are engaging in any sort of wrongdoing, or that everything that comes up questionable in my graph is automatically bad news. But whenever a company is getting more than, say, 10% of its cash from operations from these dubious sources, investors ought to make sure to refer to the filings and dig in.

With 29.4% of operating cash flow coming from questionable sources, AAR investors should take a closer look at the underlying numbers. Within the questionable cash flow figure plotted in the TTM period above, other operating activities (which can include deferred income taxes, pension charges, and other one-off items) provided the biggest boost, at 25.2% of cash flow from operations. Overall, the biggest drag on FCF came from capital expenditures, which consumed 32.0% of cash from operations.

A Foolish final thought
Most investors don't keep tabs on their companies' cash flow. I think that's a mistake. If you take the time to read past the headlines and crack a filing now and then, you're in a much better position to spot potential trouble early. Better yet, you'll improve your odds of finding the underappreciated home-run stocks that provide the market's best returns.

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We can help you keep tabs on your companies with My Watchlist, our free, personalized stock tracking service.

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Why Now Is the Time to Buy eBay Stock

Stocks are moving on quarterly earnings this week, and eBay is no exception. Investors sent eBay (NASDAQ: EBAY  ) stock lower in after-hours trading on Wednesday, despite the e-commerce company posting a 19% increase in profit for its first quarter. Unfortunately, double-digit increases in both revenue and profit weren't enough to stop shares of eBay from dipping more than 5% at the market open today. What's really going on with this Internet darling?

The stock stumbles
Slowing sales growth in eBay's PayPal division coupled with a weaker-than-expected forecast for the company's second quarter is the real culprit. The company issued second quarter earnings guidance of $0.61 to $0.63, and revenue between $3.8 billion and $3.9 billion. For comparison, analysts had expected earnings of $0.66 per share on revenue of $3.95 billion.

The market failed to factor in the fact that eBay's full-year guidance remains the same. This tells investors that eBay's transformation is readily underway, and that its long-term growth trajectory is still intact.

It's also important to note that eBay is up about 55% in the last year, whereas rival e-commerce giant Amazon (NASDAQ: AMZN  ) is up 41% for the year. Additionally, what the recent decline in the stock doesn't show is that eBay is on its way to becoming a global powerhouse. Much like its rival Amazon, eBay is a long-term investment play. Alas, quarterly earnings forecasts can distract investors from taking a bigger picture view, which is often necessary when investing in a growth stock or turnaround story, such as eBay.

A more competitive marketplace
In an effort to reinvigorate its namesake marketplace, eBay is taking a page out of Amazon's playbook. Similar to Amazon's pricing structure, third-party sellers on eBay's platform are now able to list products free, and simply pay a flat sales fee on the final value of the item sold. This strategy appears to be working, as eBay added 3.9 million new users to its online marketplace in the first quarter.

Moreover, eBay CEO John Donahoe aims to double the company's active user base in the next two years, with the goal of reaching $300 billion in sales and PayPal payments by 2015. While this is certainly ambitious, eBay is well-positioned in mobile, and has a growing network of large retail partners -- two growth drivers that should push the stock higher in future quarters.

Amazon may be eBay's biggest competitor today; although, where the stocks are concerned, eBay is the name to own today. To that end, Amazon trades at more than 74 times next year's earnings, which makes the stock look wildly overpriced. eBay, on the other hand, trades at just 17 times fiscal 2014 earnings.

Everyone knows Amazon is the king of the retail world right now, but at its sky-high valuation, most investors are worried it's the company's share price that will get knocked down instead of competitors'. The Motley Fool's premium report will tell you what's driving the company's growth, and fill you in on reasons to buy and reasons to sell Amazon. The report also has you covered with a full year of free analyst updates to keep you informed as the company's story changes, so click here now to read more.

Is Chipotle Making McDonald's Mistake?

Chipotle Mexican Grill (NYSE: CMG  ) has a plan to boost its moribund comps.

The fast-growing restaurant chain will be adding premium margaritas -- handmade with Patron silver tequila, triple sec, agave nectar, and fresh lime -- to more than half of its restaurants next week.

These drinks won't be cheap, priced between $6.50 and $8 apiece. 

The allure may be obvious. Average ticket prices could head higher as customers trade up from sodas and beers. However, McDonald's (NYSE: MCD  ) also thought that it could boost sales and woo new customers by adding premium beverages. It hasn't exactly worked out well lately. Comps turned negative in October for the first time in a decade, and customer complaints are growing. 

Is Chipotle biting off more of this tequila worm than it can chew?

In this video, longtime Fool contributor Rick Munarriz wonders if Chipotle's new product may result in confusion and slow-moving lines. There's also the fear that Chipotle's value proposition gets blurred. What do you think? Check out the video, then chime in with your thoughts in the comment box below. 

Chipotle's stock has been on an absolute tear since the company went public in 2006. Unfortunately, 2012 hasn't been kind to Chipotle's stock, as investors question whether its growth has come to an end. Fool analyst Jason Moser's new premium research report analyzes the burrito maker's situation and answers the question investors are asking: Can Chipotle still grow? If you own or are considering owning shares in Chipotle, you'll want to click here now and get started.

The 4 Favorite Stocks for Short-Sellers

Most investors own stocks in the hopes of seeing them rise in value over the years. But for short-sellers, betting against stocks is the name of the game, and profits come when share prices fall.

Short-selling has always had a somewhat questionable reputation among mainstream investors, with many companies prevailing on those negative attitudes to blame short-sellers for share-price declines. But often, short-sellers direct their efforts at companies that are fundamentally weak, and as a result, watching the short-interest figures that stock exchanges provide can clue you in to stocks that are especially risky or are facing major obstacles.

With that in mind, let's look at the four S&P 500 (SNPINDEX: ^GSPC  ) stocks that have the highest percentage of their available share-float sold short, according to the latest available figures from S&P Capital IQ.

J.C. Penney (NYSE: JCP  ) , short position: 55.5% of float and 25.6% of outstanding shares
This retailer's recent travails are well known, as J.C. Penney tried and failed to transform itself from a coupon-driven discount retailer to a more attractive destination for shoppers. With the Ron Johnson experiment having backfired, the company has recently started to move back toward its original focus, albeit trying to hang onto some of the progress it has made with store renovations and in-store specialty shops. Despite recent news that George Soros has taken a substantial position in the stock, short-sellers think that the retailer is doomed to eventual failure as its competitors have already taken advantage of its weakness.

GameStop (NYSE: GME  ) , short position: 38.1% of float and 37.2% of outstanding shares
GameStop has seen its stock rise sharply recently, hitting five-year highs as bullish investors look forward to a new wave of video game consoles expected to hit the market in the near future. Yet even though new consoles will drive sales for GameStop in the short run, short-sellers are focused on longer-term challenges to the retailer's business model. With increased digital distribution from gamemakers and other measures that make reselling old unwanted games more difficult, GameStop could lose a big portion of its used-game inventory, which is a major profit center for the company.

First Solar (NASDAQ: FSLR  ) , short position: 30.4% of float and 21% of outstanding shares
The solar industry has been hit hard by overcapacity, but First Solar shocked bears earlier this month with guidance on sales and earnings that was far above what industry analysts were expecting. Moreover, its purchase of TetraSun will help First Solar boost the efficiency of its solar modules, an area in which the company has long lagged some of its competitors. Short-sellers are feeling the squeeze as a result of much higher share prices recently, although the stock still trades well below its levels from early 2011. It'll be interesting to see whether they'll give in and cover their positions in light of the news.

U.S. Steel (NYSE: X  ) , short position: 29.4% of float and 29.3% of outstanding shares
The steel industry has struggled for a long time, and the continuing sluggishness in Chinese growth has led to major questions about how long investors may have to wait before demand for steel, along with the related commodities that go into producing it, starts to rise. Even with the shares at levels below their 2009 financial-crisis lows, U.S. Steel still has short-sellers believing the stock can fall lower still.

Don't sell yourself short
Just because these stocks have high short interest doesn't mean that you should sell them automatically. But short-sellers are focused on the risks involved with these companies, and you should be fully aware of those risks if you intend to own shares of their stock.

Investors and bystanders alike have been shocked by First Solar's precipitous drop since 2011, but with its most recent news, will First Solar's rebound continue? If you're looking for continuing updates and guidance on the company whenever news breaks, The Motley Fool has created a brand-new report that details every must know side of this stock. To get started, simply click here now.

These Four Sectors Look Ripe for a Pullback

 Next week marks the start of May.

 

Historically, the period between May and November is weak for the stock market. You've probably heard Wall Street advise investors to "sell in May and go away."

 

Here's a look at a few sectors you may want to "go away" from...

 

 Transportation stocks have broken down. The iShares Transportation Fund (NYSE: IYT) broke down from a rising-channel pattern (the blue lines on the chart). It has formed a declining channel (the red lines) with a series of lower highs and lower lows. If this downtrend continues, IYT could erase all its gains so far this year and trade back down to $95 per share over the next few months...

 

 

 As you can see from the following chart, the SPDR Industrials Fund (NYSE: XLI) is forming a similar pattern...

 

 

 The materials sector is rolling over, too. But the pattern is a little different. The SPDR Materials Fund (NYSE: XLB) looks like it's completing the right shoulder of a "head and shoulders" formation. If it fails to make a new high and then breaks below support at $37.30 per share, XLB could collapse to the next support zone near $35...

 

 

 One sector that isn't rolling over is utilities. In fact, utility stocks are among the market's best performers so far this year. But the move is starting to look parabolic...

 

 

Parabolic moves always end badly. They get overstretched to the upside and then suddenly turn lower. The resulting decline usually wipes out at least 50% (or more) of the move higher. So while utility stocks aren't showing the cautionary weakness of the other sectors, they're still vulnerable to a swift move lower.

 

– Jeff Clark

Citigroup's Stellar Earnings: Give Vikram Pandit His Due

When Citigroup (NYSE: C  ) turned in its first-quarter earnings report, the stock initially went wild. While things turned nasty shortly thereafter, it certainly wasn't because Citi had a disappointing report card. Indeed, the megabank knocked aside analysts' predictions on both earnings and revenue, giving CEO Michael Corbat a nice big pat on the back after a full quarter as the new kid on the block.

While Corbat deserves credit for some of the good news contained in that announcement, one area of Citi that was given special attention by former CEO Vikram Pandit -- investment banking -- truly shone, making the whole of the company look spiffier than it would have otherwise.

Decisions of the past are creating profits now
It was on Pandit's watch that Citigroup hired high-flying UBS investment banker Stephen Traber back in mid-2010. Trauber was well known for bolstering UBS' energy investment division, and brought along his own team when he joined Citi. Although Trauber noted that the move wasn't motivated by money, the pay package was to die for: A total compensation package that could reach $30 million over a three year period.

A hefty investment, to be sure, but it is paying off in spades now. Citi's advising fee income for mergers and acquisitions shot up 84% from the year-ago period, capping three straight quarters of rising revenue from that sector. Overall, revenue from trading and investment banking increased 31% year over year. The new team has hoisted Citi higher in M&A global rankings this year, as well, where Citi now holds the No. 5 spot, compared to a lowly No. 11 ranking in 2012.

Despite feelings that Pandit failed Citigroup and was punished for that by being unceremoniously pushed out the door last October, the former CEO was far from a total wash-out. Though the bank's stock plummeted during the financial crisis, its share value has risen over 80% since last June, which was well before Pandit's exit. And, even though his pay package incited a shareholder revoltlast spring, it must be noted that he received token pay -- at his own request -- for the years 2009 and 2010, while he shed billions in nonperforming assets and helped shape the bank back into a profitable enterprise. By contrast, Corbat was paid $11.5 million last year, plus a bonus.

Without a doubt, Pandit made some blunders, such as the loss on the sale of Citi's interest in Smith Barney, the brokerage firm it formerly shared with Morgan Stanley (NYSE: MS  ) . Also, the disputed pay package of $15 million, which was measurably higher than that for the CEOs of more profitable peers Morgan Stanley and Goldman Sachs (NYSE: GS  ) , was obviously seen as overblown. Even Bank of America's (NYSE: BAC  ) Brian Moynihan had shareholders' blessing for his -- albeit -- much smaller $7 million pay package less than a month later despite lingering mortgage-related problems and boisterous protests outside the meeting's doors.

But, as investors know, a company is always molded by its history, both positive and negative. Despite his eventual unpopularity, Vikram Pandit helped form Citi into the recovering financial entity that it is today -- and it's only fair to give credit where credit is due.

Citigroup's stock looks tantalizingly cheap. Yet the bank's balance sheet is still in need of more repair, and there's a considerable amount of uncertainty after a shocking management shakeup. Should investors be treading carefully, or jumping on an opportunity to buy? To help figure out whether Citigroup deserves a spot on your watchlist, I invite you to read our premium research report on the bank today. We'll fill you in on both reasons to buy and reasons to sell Citigroup, and what areas Citigroup investors need to watch going forward. Click here now for instant access to our best expert's take on Citigroup.

How to Become Financially Independent in Seven Years or Less

You are middle-aged. Your net worth is meager. Your income is barely sufficient to meet expenses... And those expenses are going up. The Great Recession is looming. Economists are predicting things will get worse. What can you do?

 

Should you give up your dream of retiring comfortably one day? Should you accept a future of increasingly meager existence? Should you grow bitter and curse the powers that be for putting you in this situation?

 

Or should you take responsibility for your situation and make changes?

 

That last question was rhetorical, of course. But sometimes, I wonder if people really do understand their options. There are things that happen in life that we can't control. But we can control the way we respond to them.

 

I understand that when you are halfway through your life and are barely making ends meet, it seems like the only chance to become financially successful is to win the lottery (either an actual lottery or the stock market equivalent of one). So it may be frustrating to hear some rich guy from Palm Beach telling you that you can't quickly turn $25,000 into $1 million by investing in stocks.

 

But I believe – no, I am certain – that anyone who has modest intelligence and a positive attitude can become financially independent in seven years or less if he or she is willing to work enormously hard.

 

You do not have to give up on your dream of being wealthy. You always have the ability to change your financial life. It will take a bit of time and patience. And it will require that you change some of the thoughts and feelings you have about wealth and your relationship to wealth.

 

The first thing you must do is accept the fact that you are solely and completely responsible for your current financial situation. Before you react defensively, read that sentence again... I didn't say you are the cause of your situation. I said you are responsible for it.

 

By taking responsibility for your current condition, you also assume responsibility for your future. Nobody can change your fortune but you. And nobody else will. The sooner you accept that reality, the sooner you will shed the anger and blame and begin to feel financially powerful.

 

I'm not giving you a pep talk. I'm telling you the truth. I've done it myself, and I've coached dozens of people to do it, too. It is a simple adjustment of your thinking, but it is extremely powerful. It works instantaneously. Without it, you cannot move forward, even by a single inch.

 

The next thing you must do is set realistic expectations. I've had people tell me that they don't want to make 10% or 15% per year on their money. They think returns like that are "ho-hum." They want some incredible stock tip or some secret get-rich-quick technique. But when I hear people say that, I think, "This person will never become wealthy."

 

Realize that 10%-15% is a high rate of return. Warren Buffett – the most successful investor of all time and the third-richest person on the planet – has averaged 19% on his investments over his entire career.

 

And realize that the journey to millions of dollars is earned $100 at a time. You must be willing to accept this fact to move your financial life forward. Your financial life is like a train that has stalled. And right now, you want to be driving it at 100 miles an hour. But it can't go from zero to 100 miles an hour in no time flat. Inertia is against you. Be happy with 10 miles an hour now... and then 20... and then 30. This is how wealth accumulates: gradually at first, but eventually at lightning speed.

 

The third thing you must do is thoroughly understand the difference between spending, saving, and investing. With every paycheck you get, cover your necessary expenses first (bills, mortgage, etc.). Then put some money toward saving. And then put some money toward investing. Then and only then – after you have "paid yourself" – should you add to your "spending" account.

 

The fourth thing you must do is recognize that your net investible income (the amount of cash you have after spending and saving) is the single most important factor in determining how quickly you will become wealthy.

 

Commit to adding to your income with a second income. Make an honest count of the number of hours each month you devote to television and other non-productive activities. Devote them to wealth-building instead. Cast aside the comfortable shoes of victimization. Put on the working boots of a financial hero.

 

It's not fun to realize, in the midst of your life, that you haven't acquired the wealth you want. But the good news is your past doesn't have to be a prologue... unless you allow it to. You can change your fortunes today by doing the four things I've just told you to do.

 

You are only 47, not 87. You have plenty of time to increase your income and grow your net worth. Why do you assume all is lost when – as any 87-year-old will tell you – you have a whole wonderful life ahead of you... a life that can be rich in 100 ways?

 

Regards,

 

Mark Ford

Editor's note: Mark recently formed a small group where he shares detailed, step-by-step instructions to reaching seven figures without stocks, options, or other risky investments. Until recently, he only shared this information with a few close associates ­– several of whom have created multi-million-dollar fortunes for themselves. But Mark has decided to expand his circle. And he's agreed to offer DailyWealth readers interested in joining his group a special deal – for a short time. Click here for more details.

Has Valero Already Seen Its Best Days?

On Tuesday, Valero (NYSE: VLO  ) will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

Refining stocks have done extremely well lately, with relatively cheap domestic crude fueling low input costs while high international prices for gasoline and other refined products widen crack spreads and boost profits for Valero and its peers. But how long can those good times continue? Let's take an early look at what's been happening with Valero over the past quarter and what we're likely to see in its quarterly report.

Stats on Valero

Analyst EPS Estimate	$0.98
Change From Year-Ago EPS	216%
Revenue Estimate	$30.41 billion
Change From Year-Ago Revenue	(13.5%)
Earnings Beats in Past 4 Quarters	4

Source: Yahoo! Finance.

Will Valero keep pressing higher this quarter?
Analysts have gotten even more optimistic on Valero's earnings recently, raising their earnings-per-share estimates by $0.17 for the first quarter and by $0.30 for the full 2013 year. Yet even though the stock has posted an 8% gain since late January, it has pulled back considerably in the past month from more substantial gains.

Valero has been able to cash in on extremely strong conditions in the market for refined energy products, especially gasoline. In large part, international demand is to blame for continued high gasoline prices in the U.S., with Venezuela having become a huge new player in importing gasoline. Competitors are taking advantage, with rival Phillips 66 (NYSE: PSX  ) having boosted its exports by half in the fourth quarter of 2012 in order to maximize its benefit from those favorable conditions. Still, Valero has a huge share of between 20% and 25% of all the U.S. petroleum products that get sent abroad.

Yet Valero and its peers have seen new challenges pop up recently. Price spreads between U.S. West Texas intermediate and European Brent crude oil have narrowed considerably in April, threatening those wide margins. That's especially bad news for HollyFrontier (NYSE: HFC  ) , Tesoro (NYSE: TSO  ) , and Valero, whose western-U.S. exposure has helped those companies benefit the most from cheap mid-continent crude supplies. Phillips 66's recent deal to transport U.S. crude by rail may look a lot less lucrative if spreads narrow further, and Valero and the rest of the industry will inevitably see profits shrink if the financial incentive to export gasoline gets smaller.

Valero could also feel a big hit from regulation. Ethanol credits that Valero and other refiners are required to obtain have soared in cost lately, raising fears that the mandate for higher ethanol use will lead to higher prices at the pump for consumers and a big decrease in gasoline consumption from refiners. Meanwhile, proposed new EPA regulations to reduce sulfur, nitrogen oxide, and benzene levels in gasoline would require massive capital investment from refiners in order to comply.

In Valero's quarterly report, watch for how the refiner addresses all of these challenges. After having earned so much for so long, any hint that Valero could have seen the end of its growth phase could add to the stock's recent troubles.

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Click here to add Valero to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Why Citibank Tanked This Week

The market hasn't been kind to Citigroup (NYSE: C  ) this week; it's down 1.14% so far on this last day of trading. We can thank Bank of America (NYSE: BAC  ) for that, and the herd mentality that led to a market panic after the superbank missed earnings expectations.

Big-bank roundup
Here's where Citi's peers and the rest of the market stand on this last day of trading:

B of A is down the most: 4.04% so far. JPMorgan Chase (NYSE: JPM  ) is down big, as well: 2.68%. Wells Fargo (NYSE: WFC  ) , down just 0.60%, is have the best week out of the big four banks.

Foolish bottom line
Citi, like its peers, was having a fine week until Wednesday. B of A reported first-quarter earnings, missed analyst expectations by $0.02, and investors lost their minds -- sending B of A, Citi, and the rest of market down into the same pessimistic abyss.

And this after Citi reported impressive first-quarter earnings only two days earlier:

Net income rose 30%. Total revenue rose 3% year over year, no small feat when even sector stalwarts like JPMorgan and Wells Fargo saw revenue declines: 3.8% and 1.4%, respectively. Even better, Citi's revenue rose 12% from the fourth quarter. Net losses at Citi Holdings, Citigroup's "bad bank," dropped by 21%.

For Citi investors, the good news is CEO Michael Corbat's superbank is up 0.29% already on the day. The rest of the big four look to be in recovery mode as well. There's a lesson to be learned, here, one that Foolish investors learned a long time ago.

On a day-to-day, week-to-week, and even month-to-month basis, the stock market can be capricious. One minute your favorite stock is up, the next, it's down, either for seemingly no reason at all, or maybe because herd mentality has taken over, and investors are doing what everyone else is doing: taking counsel of their fears.

But Fools know to stay focused on company fundamentals and the long term, and to stay in their stocks for as long as they believe in them. "Get rich slowly." Perhaps my favorite Foolish investing motto, and one to keep in my during weeks like this. 

Looking for in-depth analysis on Citi?
If so, look no further than our new premium report on the superbank. In it, Matt Koppenheffer -- The Motley Fool's senior banking analyst -- will fill you in on both reasons to buy and reasons to sell Citigroup. He'll also clue you in on what areas investors need to watch going forward. For instant access to Matt's personal take on Citi, simply click here now.

Annaly: 'Quintessential income stock'

Yahoo! and Apple: This Could Be a Beautiful Marriage

There have been numerous rumors over the past week that Apple (NASDAQ: AAPL  ) and Yahoo! (NASDAQ: YHOO  ) are thinking about taking their relationship to the next level. Both The Wall Street Journal and Bloomberg have chimed in with reports to that effect.

Here's the thing: This could be a beautiful marriage.

An unexpected rendezvous
As it turns out, Apple and Yahoo! both happen to be heading toward the same destination. Apple needs to bolster integration with third-party data sources and cloud services, while Yahoo! is trying to regain relevance in the mobile era. Meanwhile, they share a mutual enemy in Google (NASDAQ: GOOG  ) .

By fetching data from Yahoo! on the back end for numerous services beyond the current partnership (primarily stocks and weather), Apple could further snub Google. If Yahoo! can score some prominent screen real estate on iOS devices, that gives the company a renewed sense of mobile relevance.

Even beyond the high-level strategic implications, there's another important department where Apple's and Yahoo!'s interests converge: design.

Design matters
Apple's iOS interface is aging, and many users (including myself) have been calling for a revamp. This may already be en route, with design guru Jony Ive now directing interface at Apple and the Mac maker's Worldwide Developer Conference, or WWDC, coming up in June. WWDC is typically when Apple shows off the newest versions of iOS to developers and the world, and iOS 7 could be the most important upgrade in years, as it's expected to feature an aesthetic overhaul.

Ever since becoming Yahoo! CEO, Marissa Mayer has put a heavy focus on Yahoo!'s core products, revamping the home page and acquiring a handful of mobile startups. The company has also recently released new mobile apps for email and weather -- and they're shockingly attractive.

Both feature minimalist modern designs with typographical accents, an aesthetic philosophy more characteristic of Google and Microsoft these days. In fact, simply comparing Yahoo! Mail and Gmail on iOS show that Mayer may be nudging her company's design approach in the same direction as her former employer's, and that's a good thing.

Yahoo! Mail (left) vs. Gmail (right). Screenshot previews from iTunes App Store. Source: Apple.

The Yahoo! Weather app that was just released is also clean and striking. The app pulls relevant location images from Yahoo!'s Flickr service and accomplishes a similar effect to what Microsoft's Bing home page does, which is known for its beautiful imagery. Yahoo! Weather also makes heavy use of intuitive gestures that have become accepted conventions.

Yahoo! Weather. Screenshot preview from iTunes App Store. Source: Apple.

This is all coming from a company that investors mostly (and justifiably) disregarded a year ago as having missed out on mobile, yet Mayer's focus on product design is earning the company a shot at mobile redemption. The bottom line now takes a back seat to products, which is the right long-term call for Yahoo!'s turnaround.

I've already replaced the standard weather app on my iPhone with Yahoo!'s new mobile meteorologist. Yahoo! provides the back-end data to the iPhone's default Weather app, so the information itself is more or less the same. Yahoo!'s is just much easier on the eyes.

On the other hand, it's not as if Apple is prepared to outsource design of its first-party apps, many of which are still mostly in their original forms. Apple doesn't have a particularly good track record with updating its first-party apps, but hopefully that will now change with its shift toward greater interdepartmental collaboration. Ive and Mayer were recently spotted bumping elbows at an all-star pizza party of Silicon Valley's elite. Perhaps they discussed minimalist typography.

Ive's iOS is due out in a matter of months, and if Apple takes any cues from the design direction that Mayer is pursuing with Yahoo!'s offerings or integrates some of the search company's services, Apple and Yahoo! could give Google some serious competition in the design department.

Apple now sits near 52-week lows, and earnings are coming up in a matter of days. With that in mind, investors are dying to know whether Apple remains a buy. The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on both reasons to buy and reasons to sell Apple and what opportunities are left for the company (and your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.

2013: Is This the Year Alcatel Goes Bankrupt?

Alcatel-Lucent (NYSE: ALU  ) reported Q1 2013 earnings Friday and -- there's no sugarcoating this -- the news was not good.

Nearly a year into a much-ballyhooed program to right its ship and save its business, the company's still losing money and burning cash like mad. Four months after negotiating a financial lifeline from Goldman Sachs (NYSE: GS  ) and Credit Suisse (NYSE: CS  ) -- bankers who, if you ask me, would be just as happy to see Alcatel fail and forfeit its patent portfolio -- the company's just piling more debt atop an already top-heavy debt load.

But enough about the big picture. Let's delve into the specifics. In Q1 2013, Alcatel:

Grew its revenues a bare 0.6% in comparison to Q1 2012, or ... Viewed more pessimistically, saw revenues slide 21.2% sequentially. Experienced gross margin slippage (0.8% worse than in last year's Q1). Reported a $0.19-per-share net loss, versus the $0.15-per-share profit it earned last year.

Operating cash flow at the firm ran negative to the tune of $188 million, while cash flow from operating activities -- which Alcatel defines differently from OCF -- came to negative-$542 million. This is significant, because when you pair this operating cash burn with Alcatel's spending on capital investments, it works out to a total of $694 million in negative free cash flow for the quarter.

To put that number in context, $694 million is more cash than Alcatel burned in all of 2012 or 2011. It's nearly as much cash as the company burned through in 2010 ... and this time, the company burned all this cash in just one single quarter.

To put that number in even more context, $694 million is quite literally the most cash Alcatel has ever burned in any single quarter at any time in the past 10 years. (You actually have to go all the way back to the bad old days of the Bubble Burst -- 2001 -- to find a quarter in which Alcatel's performance was more horrendous.) And of course, thanks to all this cash burn, and all this lack of cash generation, Alcatel now officially has more debt on its books than it does cash.

Meanwhile, back on the ranch
Meanwhile, what are Alcatel's rivals up to? Well, rival Nokia (NYSE: NOK  ) is back to nearly FCF-positive now, helped in large part by three straight operating-profitable quarters at its Nokia Siemens Networks division, which competes with Alcatel. Cisco Systems (NASDAQ: CSCO  ) , as always, is rolling in cash and generated $10.5 billion worth of the stuff over the past year.

Which kind of makes Alcatel look like the odd man out here. I mean, I hate to say it, folks -- and I've never said it before -- but the more I look at the numbers, and how fast they're worsening, the more I begin to think:

This really could be the year that Alcatel goes bankrupt.

Nokia's been struggling in a world of Apple and Android smartphone dominance. However, the company has banked its future on its next generation of Windows smartphones. Motley Fool analyst Charly Travers has created a new premium report that digs into both the opportunities and risks facing Nokia to help investors decide if the company is a buy or sell. To get started, simply click here now.

Does This Shed Light on Apple's OLED Plans?

With its groundbreaking earnings announcement Tuesday, Apple (NASDAQ: AAPL  ) just gave the world plenty to talk about for the next few months.

One of the most referenced quotes from CEO Tim Cook, however, came from the Q&A portion of Apple's earnings conference call. When asked whether he had any thoughts about potentially increasing the screen size of the iPhone from 4 inches, Cook replied:

My view continues to be that iPhone 5 has the absolute best display in the industry. And we always strive to create the very best display for our customers. And some customers value large screen size; others value also other factors such as resolution, color quality, white balance, brightness, reflectivity, screen longevity, power consumption, portability, compatibility with apps and many things. Our competitors had made some significant trade-offs in many of these areas in order to ship a larger display. We would not ship a larger-display iPhone while these trade-offs exist.

And by "competitors," you can bet Cook was primarily referring to smartphone behemoth Samsung, with its wildly popular Galaxy series devices. Samsung's upcoming Galaxy S4, for instance, boasts a huge 5-inch AMOLED screen, and its new Galaxy Mega will be available in ridiculously large 5.8-inch and 6.3-inch models. 

Samsung Galaxy Phones, Image Source: Samsung.

Apple loves me, Apple loves me not ...
Of course, Cook hasn't exactly hidden his disdain for OLED; back in February at the Goldman Sachs Technology and Internet Conference, Cook railed on OLED displays, calling their color saturation "awful" and telling consumers they should "think twice before [they] depend on" them for accurate color.

Naturally, that spooked investors in Universal Display (NASDAQ: PANL  ) , the company whose technology enables nearly every OLED device on the market today. Even so, I noted that Cook's comments seemed curious at the time, especially given that recent reports claimed Apple had just hired a senior OLED technology expert away from one of its primary screen suppliers in LG Display (NYSE: LPL  ) .

Meanwhile, LG earlier this week reiterated plans to spend more than 50% of its total capital expenditures budget on OLED development. While the company will certainly need to improve its mass-production capabilities to support its impending launch of large-screen OLED televisions, that hasn't stopped the rumor mill from wondering whether some of that capacity could be reserved for Apple.

After all, Cook also teased during the call of "a lot more surprises in the works," and "potential exciting new product categories."

So what does it all mean?
That brings me back to Cook's comments about not changing the iPhone's display until Apple can be sure all the kinks are worked out.

Consider this: In answering that simple question about screen size, Cook brought up "resolution, color quality, white balance, brightness, reflectivity, screen longevity, power consumption, portability, [and] compatibility with apps." While some of that could be chalked up to good old fashioned chest thumping, many would argue OLED might have the edge in several of these categories already.

The Galaxy S4, for instance, boasts a screen resolution of 1080 by 1920 pixels, good for a density of 441 pixels per inch. In comparison, the iPhone 5's 4-inch display has a lower resolution at 1136 by 640 pixels, and lower pixel density of 326 ppi.

And while the iPhone's LCD Retina display may currently have the edge in other categories like accurate color reproduction, brightness, and white balance, I can't imagine Apple -- with all its vast resources -- would find it that difficult to make the necessary tweaks to an OLED screen. In addition, keep in mind that critics have hailed the 55-inch OLED TV from LG as possibly the most lifelike television ever, with its near-infinite contrast ratio, zero motion blur, wide viewing angles, and rich colors -- and all at just 4 millimeters thin.

LG OLED Television, Image Source: LG.

If that weren't enough, as I've noted before, OLED also allows device makers to create screens that can be flexible, transparent, and nearly indestructible.

Foolish final thoughts
If LG's capex investments can solve the problem of supply, then, and if Apple's new OLED hire -- who, incidentally, helped lead LG's OLED TV effort -- can translate these advantages into an Apple device, Tim Cook could easily step out and say, "Look! We've fixed everything I said was wrong with OLED displays. Behold our amazing new device."

Mark my words, then: I'm going out on a limb to say at least one of Cook's "surprises" will include the first ever Apple device to utilize an OLED display. When that happens, investors will see Apple's stock in a whole new light.

More expert advice from The Motley Fool
Universal Display has a powerful patent portfolio behind OLEDs, a technology poised to dominate the displays of the future. Its placement at the center of OLEDs makes the company an underappreciated way to play the enormous sales growth in tablets and smartphones. However, like any new technology, there are plenty of risks to Universal Display. Motley Fool analyst Evan Niu, CFA, has written a new premium report that dives into reasons to buy the company as well as the challenges facing it. For access to this comprehensive report, simply click here now.

EC Asks for Public Feedback on Google Antitrust Proposals

For one month, the European Commission will let the public send feedback on Google's  (NASDAQ: GOOG  ) antitrust proposals.

It's no secret that the EC has been concerned about Google's growing power in the search market. Due to the company's dominance, it fears that the company is using its power to benefit itself in search and search advertising across the European Economic Area (EEA). 

In March 2013, the EC formally informed Google that the following four practices may violate European Union antitrust rules:

Google uses its search results to favor its own specialized web search services like restaurants, hotels, or product searches  Google incorporates third-party website content within Google's specialized services  Google requires third-party websites to buy all or most of their online search advertising from Google  Google restricts third parties from running similar advertising campaigns on rival search engines

Altogether, the EC believes that these practices could harm consumers by reducing choice and stifling innovation in the search and search advertising fields.

In an effort to address the EC's antitrust concerns, Google has offered to commit to the following for five years:

Label promoted links to Google's specialized search services, separate these promoted links from other web search results, and display links to three rival specialized search services Offer websites the option to opt-out their content from Google's specialized search services so that doing so does affect the third-party's Google search rank Remove any written or unwritten obligations that require websites to buy online search advertising only from Google No longer impose obligations that would prevent advertisers from managing search advertising campaigns across competing search engines

After the EC receives and takes the public's feedback into account, it may decide to make these proposals legally binding for Google.

More Expert Advice from The Motley Fool

As one of the most dominant Internet companies ever, Google has made a habit of driving strong returns for its shareholders. However, like many other web companies, it's also struggling to adapt to an increasingly mobile world. Despite gaining an enviable lead with its Android operating system, the market isn't sold. That's why it's more important than ever to understand each piece of Google's sprawling empire. In The Motley Fool's new premium research report on Google, we break down the risks and potential rewards for Google investors. Simply click here now to unlock your copy of this invaluable resource, and you'll receive a bonus year's worth of key updates and expert guidance as news continues to develop.

What 6 Homebuilder CEOs Are Saying About the Housing Industry

Few industries were as savagely beaten down during the recession as housing. Today, few industries have as much potential to rebound.

What are CEOs from some of the nation's largest homebuilders saying about the housing industry? I scanned through a pile of recent conference call transcripts to find out.

Jeffrey Mezger, KB Home (NYSE: KBH  ) :

Although the pace of the housing market recovery is gaining momentum, it is important to keep in mind that we are still in the early stages of the recovery. And there's a long way to go before the industry reaches normalized activity levels ...

There isn't a city we're in today that doesn't have a lot of opportunity. The California recovery has become strong enough. And I've been and talking about it for the last probably 6 earnings calls, but every city we're in has a similar recovery occurring, where there's a desirable area with no inventory, a lot of price movement upward, and then the recovery will ripple out to the other areas adjacent and so on and so on.

Stuart Miller, Lennar (NYSE: LEN  ) :

Housing is recovering, and the recovery is consistent, healthy and growing stronger. We saw from yesterday's housing starts and permits numbers that the recovery in housing is continuing to progress in both multifamily and single-family products. This data confirms what we've seen in the field for some time.

There has been an underproduction of housing during the downturn, as we produced as few as 550,000 homes per year during the downturn of both multi- and for-sale product. This is very close to the rate at which homes become obsolete. So for some of those years, we had essentially no net production against the normalized household formation rate of some 1.25 million annually. This shortfall will have to be made up, and the market is beginning to move in that direction.

Larry Mizel, MDC Holdings

The country is growing. The homebuilding industry, the opportunities have never been greater for the large builders. The capital markets are open and I would say in all the years I've been in business, this is probably the clearest period of time that I have seen as to the future of the housing industry for those who would have excess to capital.

Donald Tomnitz, DR Horton (NYSE: DHI  )

We're clearly raising prices on each and every one of our communities on a house by house, on a subdivision by subdivision basis ... We do have costs which are going up in some of our markets and with some of our subcontractors but clearly, our pricing power is exceeding the cost increases that we have today ...

We're trying to replenish our lot supply. To be quite frank with you, Phoenix turned around faster than we thought it was going to turn around and we probably are scrambling a little bit more than we normally would in the Phoenix market to replenish our lot supply, and the same thing in the Albuquerque market.

Ara Hovnanian, Hovnanian (NYSE: HOV  )

Needless to say, the growth in sales is significant. As a matter of fact, every single month in fiscal '13 is virtually double what it was 2 years ago. If you look at net contracts per active selling community ... We sold more homes per community in each of the prior 12 months than we did the year before. In fact, the 3.3 net contracts per community we reported for February of '13 was the highest net contracts per community for a single month since September of '07.

Richard Dugas, PulteGroup (NYSE: PHM  )

Demand up and down the East Coast remains strong, with double-digit percentage increases in almost every market. We continue to see notable gains reported by our operations in the New England area, the Carolinas and Florida. In fact, exceptional demand in our Florida markets is forcing us to take similar action to that in Phoenix, where we are purposefully slowing our rate of sales, as we focus on maximizing margin over driving volume.

Market conditions in the middle third of the country also showed continuous strength in the quarter. Demand in the Midwest was generally strong, with limited lot supply often being as big an influence of our reported sign-ups as buyer demand. All of our Texas markets posted double-digit gains, with Houston delivering the biggest year-over-year increase in sign-ups during the quarter.

For more on housing's recovery, check out what could be the coming boom.

Transcripts courtesy of SeekingAlpha.com.

More Expert Advice from The Motley Fool

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Rosetta Stone Breaks Language Barriers Woldwide

The following video excerpt was taken from an interview with Steve Swad, CEO of Rosetta Stone (NYSE: RST  ) , in which he talks about his business philosophy and how it is driving success both for language learners and for the company itself. In this segment, he explains why his products' global impact makes for a good buy.

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

 

Matt Argersinger: In your mind, what's maybe the No. 1 reason why an individual investor should buy Rosetta Stone and hold it for the long term?

Steve Swad: I think we're thinking long term. I think the market exists. I think our product is excellent. I think our brand is stronger than any brand in the space. Our balance sheet is strong and our geographical footprint is really nice with something in Europe, something in Brazil, something in Korea, something in Japan. I also like that we have two channels, an institutional channel and a consumer channel, and you get that all for a pretty modest price at today's prices.

Why Procter & Gamble Is Poised to Bounce Back

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, consumer products gorilla Procter & Gamble (NYSE: PG  ) has earned a respected four-star ranking.  

With that in mind, let's take a closer look at Procter & Gamble, and see what CAPS investors are saying about the stock right now.

Procter & Gamble facts

Headquarters (founded)	Cincinnati (1837)
Market Cap	$210.7 billion
Industry	Household products
Trailing-12-Month Revenue	$83.7 billion
Management	Chairman/CEO Robert McDonald CFO Jon Moeller
Return on Equity (average, past 3 years)	16.3%
Cash/Debt	$7.0 billion / $33.4 billion
Dividend Yield	3%
Competitors	Johnson & Johnson  Kimberly-Clark

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 97% of the 7,650 members who have rated Procter & Gamble believe the stock will outperform the S&P 500 going forward.

Just yesterday, one of those Fools, rmhjah, tapped Procter & Gamble as a particularly solid opportunity:

Although not a sexy company and definitely not a company that will make you rich overnight, they are a solid company with quality management. I have no idea if the iPhone 21S will be a huge hit 35 years down the road from now but I'm pretty sure people will still use soap to clean their bodies and laundry. There's a pretty good chance that men will still shave 35 years down the road and people will still have children that use diapers. I'm not looking to beat the S&P every year or have wonderful hidden stock advice at neighborhood BBQ's. I'm looking to put my children through college and retire comfortably while collecting a nice inflationary beating dividend.

If you want market-thumping returns, you need to put together the best portfolio you can. Of course, despite a strong four-star rating, Procter & Gamble may not be your top choice.

We've found another stock we are incredibly excited about -- excited enough to dub it "The Motley Fool's Top Stock for 2013." We have compiled a special free report for investors to uncover this stock today. The report is 100% free, but it won't be here forever, so click here to access it now.

Yahoo! New CEO rights the ship

As one of the original dotcom behemoths, Web-portal and online content provider Yahoo! (YHOO) needs no introduction.

The company has come a long way from its years of market dominance in the early 2000s, with Google usurping much of Yahoo's former territory. Ironically, former Google executive Marissa Mayer now has the helm at Yahoo, and is finally righting the ship.

Yahoo has always been an excellent value as a company from an asset perspective alone—it's why Microsoft tried to purchase Yahoo back in 2008. But, under Mayer's leadership, Yahoo is finally starting to develop meaningful partnerships to take advantage of its online assets.

For instance, Yahoo recently signed on to a deal with Cloud-storage specialist Dropbox in order to offer broader Yahoo!Mail services. Most notably, however, is the deepening relationship with Apple.

Since both Apple and Yahoo have a common enemy in Google, a closer integration of services and data offerings on Apple iOS devices benefits both companies significantly, with Apple distancing itself from Google and Yahoo developing a much needed presence in the mobile market.

As for Yahoo's bottom line, Mayer's presence has helped reinvigorate stagnant revenue, with Yahoo banking 2% growth last quarter on earnings growth of 28%.

In fact, Yahoo has averaged earnings growth of 47% during the past four quarters. Investors should note that Yahoo is scheduled to release its 2013 Q1 earnings after the close on April 16. While we expect no real surprises, you should take only small bites ahead of the event, or hold off until after the report.

For the past several years, YHOO shares were as flat as the company's revenue growth. In fact, the stock hardly strayed outside of a 2-point trading range between 16 and 18 since the start of 2009.

That all changed in the second half of 2012, as Marissa Mayer was appointed CEO. The stock came to life following the news, embarking on rally in late October that would carry YHOO more than 60% higher. The stock has enjoyed solid support from its 25-day and 50-day trendlines throughout this uptrend.

With earnings looming, YHOO is trading at a multi-year high just below former support/resistance in the $25 region. Another solid quarterly report could be just the catalyst YHOO needs to extend its current revival.

Don't Like China? You Should Sell These 3 American Companies

Investors are wary to invest in China for many reasons, but perhaps the biggest one is that they don't want to fund the government and its censorship policies. Well, unfortunately, those investors may be supporting China without even knowing it! The fact is, American-based companies are multinational enterprises, and Hewlett-Packard  (NYSE: HPQ  ) , Microsoft  (NASDAQ: MSFT  ) , and Google  (NASDAQ: GOOG  ) have all helped further Chinese censorship.

Now, if you're looking to sell your shares, hold on just one second. In the video below, Fool contributor Kevin Chen not only details these companies' China moves, but he also reveals one moral reason why you should stay invested. Hint:  Recall Berkshire Hathaway's Charlie Munger and his words about Berkshire's investment into Goldman Sachs.

Profiting from our increasingly global economy can be as easy as investing in your own backyard. The Motley Fool's free report "3 American Companies Set to Dominate the World" shows you how. Click here to get your free copy before it's gone.

Dow Dips, but Earnings May Pull It Higher

The Dow Jones Industrial Average (DJINDICES: ^DJI  ) rebounded yesterday in a big way, thanks to strong earnings reports from its components. Today, the Dow is down slightly for the same reason. With some good news and some bad, the component stocks are mixed, leading the index only 23 points lower just before 11:30 a.m. EDT.

The good
Boeing (NYSE: BA  ) is up this morning following positive earnings results for the first quarter. Earnings grew 20% despite the cost of battery issues for its 787 Dreamliner fleet. Revenue did feel the impact of the Dreamliner problem, however, with a 3% decline compared to the previous year. But Boeing said that the cost of the Dreamliner grounding was offset by higher sales of the very profitable 737 and 777 jets. Cost-cutting helped the company's government-based operations profit even after budget cuts -- with overall operating income growing 5% year over year. Though the company has not disclosed the total cost of the Dreamliner fleet grounding, it has been estimated to reach the hundreds of millions of dollars -- most of which has not been reflected in Boeing's earnings to date. Regardless, the company stated that the costs will not keep it from meeting its core earnings estimates of $6.10 to $6.30 per share.

The bad
Procter & Gamble (NYSE: PG  ) released earnings this morning that beat earnings estimates but disappointed with a lower-than-expected forecast for full-year earnings. The stock is down 4.65% so far in trading. Though the company was able to increase its current-quarter earnings by 5% compared to the previous year's quarter, it is still trying to find ways to stand out among the crowd, especially with its line of personal care products. While sales of products like Tide detergent pods have increased sales, net sales of hair and skin products both decreased in this most recent quarter. With that trend, the company forecasts EPS of $0.69 to $0.77 -- disappointing the Street, which was expecting $0.81.

The ugly
AT&T (NYSE: T  ) is also in the dumps this morning after announcing earnings after the bell yesterday. The wireless carrier is down 6.01% so far in trading, the most in almost three years. The company had gained 16% so far this year, but first-quarter results showed a loss of wireless market share to rival Verizon (NYSE: VZ  ) . AT&T added 269,000 new subscribers to its wireless services in the first three months of this year, but the growth was mainly due to new tablet users -- the company actually lost high-paying phone users during that time period. Verizon had substantial growth during the first quarter, with new wireless phone customers driving growth.

Boeing operates as a major player in a multitrillion-dollar market in which the opportunities and responsibilities are absolutely massive. However, emerging competitors and the company's execution problems have investors wondering whether Boeing will live up to its shareholder responsibilities. In our premium research report on the company, two of The Motley Fool's best minds on industrials have collaborated to provide investors with the key, must-know issues surrounding Boeing. They'll be updating the report as key news hits, so don't miss out — simply click here now to claim your copy today.

Why Fresnillo, Tullow Oil, and Randgold Resources Lagged the FTSE 100 Today

LONDON -- The FTSE 100 (FTSEINDICES: ^FTSE  ) rose an impressive 2% today to close at 6,406 points, boosted by expectations of further economic stimulus across the eurozone -- although it did take news of German private-sector shrinkage to raise such hopes. Will there be a further interest rate cut at the next meeting of the European Central bank? Some are now predicting exactly that.

Meanwhile, some of the index's constituents ran in the opposite direction. Here are three that lagged today.

Fresnillo (LSE: FRES  )
While it was a generally positive day for FTSE 100 shares, falls were led by gold and silver miner Fresnillo. Fresnillo shares fell 2.2% to 1,092 pence -- and they're down 42% since the start of the year as mining shares continue to suffer from weak commodities prices.

On top of general mining demand, the fall in gold prices to a two-year low didn't help -- nor did last week's quarterly production report, which revealed a 3.5% drop in gold production to 117,500 ounces.

Tullow (LSE: TLW  )
Tullow Oil shares faltered a little, dropping 0.9% to 1,037 pence after the firm reported a dry well. Its Priodontes-1 well, off the shore of French Guiana, has failed to find any oil or gas after being drilled to a depth of 6,318 meters. It will now be plugged and abandoned. The Stena Ice Max rig that was being used for it will now be moved to the firm's Cebus exploration well, which should be spudding in the next two weeks.

The Tullow share price is now down 17% since its April 2 month-high of 1,256 pence, and it's down about 30% over the past 12 months.

Randgold (LSE: RRS  ) (NASDAQ: GOLD  )
Across the board today, it's mainly the mining sector that's being hit. And along with gold miners in general, Randgold Resources is down a bit, having dropped 0.8% to 4,831 pence. Falling precious-metal prices seem to have taken the shine off Randgold's recent announcement that its major Kibali gold project in the Democratic Republic of Congo is set to deliver its first gold this year.

After a sustained climb from last summer's lows of below 4,600 pence took Randgold shares to an October high of 7,891 pence, the price has since crashed back to a new 52-week low of 4,452 pence this month.

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Goodbye, HTC

Things haven't been going so hot for Taiwanese smartphone OEM HTC lately. Unfortunately for the aspiring turnaround candidate, things are getting worse before they get better.

The company's One smartphone is tasked with driving HTC's turnaround. All other considerations aside, the flagship device looks like quite a contender with its Apple-caliber hardware and revamped software overlay. The tough part thus far has been getting the device in consumers' hands, since HTC component shortages caused the company to delay the One's launch.

STMicroelectronics (NYSE: STM  ) and OmniVision (NASDAQ: OVTI  ) are the two camera suppliers, and HTC is reportedly no longer considered a "tier one" manufacturer so it doesn't get priority any more. That implies that one of these image sensor specialists was giving HTC the cold shoulder in favor of bigger names.

Marketing matters
Samsung has simply buried HTC in a marketing avalanche that HTC can't keep up with, even if HTC's products are higher quality. HTC had vowed to ditch its "Quietly Brilliant" tag line in an effort to shift toward louder marketing. That was nearly a month ago, and that modest motto is still prominently displayed on its site.

Some of HTC's ads last year had rather convoluted messaging, but its most recent marketing push is even worse. The company commissioned Funny or Die to create a parody ad for its One, starring James Van Der Beek of Dawson's Creek fame. Following widespread derision, the clip was quietly taken down. Copies were floating around on YouTube but have been suppressed by Funny or Die on copyright grounds. It was a terrible attempt, and HTC should feel embarrassed.

When being social isn't special
HTC is Facebook's (NASDAQ: FB  ) first official partner with its new Home software suite, recently launching the HTC First. However, that's a mid-range phone and Home is hardly a differentiating feature since the social network is targeting a broad audience and Home is available for download in Google Play for a select number of devices.

Partnering with Facebook could pay small dividends, but nothing substantial enough to save the company.

The final straw?
Most recently, Nokia (NYSE: NOK  ) has scored a preliminary injunction against HTC in the Netherlands over a microphone component inside the One. At issue is STMicroelectronics providing HTC certain microphone components for the One -- components that were invented by and manufactured exclusively for Nokia.

The Finnish smartphone maker said it was just the latest in a long string of cases where HTC was using Nokia technology without consent, citing over 40 patents that Nokia has asserted against HTC throughout the world.

HTC said it's still looking into how big of an impact this could have on its business and is exploring "alternative solutions immediately." While STMicroelectronics is headquartered in Switzerland, it is organized under the laws of The Netherlands, which suggests that this injunction could potentially be a major blow to the One. HTC could overcome the setback, possibly by switching components, but that may cause even further delays, and this could be the final straw when considered alongside the other recent fumbles.

Farewell
Everything is going wrong for HTC right now. Even after acknowledging the importance of marketing, the company is already making missteps. The component supply chain isn't giving HTC any respect and is also now a battleground where rivals are trying to stifle its access to crucial ingredients.

CEO and founder Peter Chou said in March that he would step down if the One failed to turn the tide. I would have liked to see HTC mount a turnaround on the strength of a high-quality device like the One, which is garnering impressive reviews from the broader tech press. Sadly, quality products aren't enough. Marketing and supply chain management are just as -- if not more -- important.

Goodbye, HTC.

It's incredible to think just how much of our digital and technological lives are almost entirely shaped and molded by just a handful of companies. Find out "Who Will Win the War Between the 5 Biggest Tech Stocks?" in The Motley Fool's latest free report, which details the knock-down, drag-out battle being waged by the five kings of tech. Click here to keep reading.