What It Takes to Make a Fortune in Hollywood

Have you ever wondered what it takes to really make a fortune in Hollywood? You can get a pretty good idea of this from an article in the June issue of The Hollywood Reporter.

April and May saw a flurry of big-budget blockbusters from almost all of the major studios. The Reporter tapped some insider sources to get a fresh handle on the production and marketing costs for each one, and then sat down to do the math. The following chart will help you visualize the discussion.

 

Walt Disney (NYSE: DIS  ) takes the cake with Iron Man 3's estimated global box office of $1.2 billion. The Marvel purchase is starting to look savvy these days, don't you think?

The Robert Downey Jr. movie spent the most on production and marketing, and it also led the league in terms of profit-sharing arrangements. But it's all worth it: A solid $400 million drops all the way down to the final profit line. That's more than the other four titles put together, on just 62% of the rivals' combined revenues. Economies of scale really pay off here. Iron Man scores the highest profit margin in this comparison at a solid 33%.

The muscle cars of Universal's Fast & Furious 6 aren't far behind, though. The sixth car-chase extravaganza in the series is set to deliver 27% of its box office take straight to studio owner Comcast's (NASDAQ: CMCSA  ) operating income. That's in spite of the second-thickest slice of profit-sharing deals with superstars like Vin Diesel and The Rock. Seems like you often get what you pay for in Hollywood. Big names pull in large audiences. In a business where nearly 100 cents out of every extra revenue dollar turns into operating profit, that's a pretty nice deal.

For another example of this, check out Time Warner's (NYSE: TWX  ) Hangover franchise. The first installment was a surprise hit, but the actors have blossomed into bankable stars by now. A sequel without Ed Helms or Zach Galifianakis would lose its marquee luster very quickly. Keep the production and marketing costs equal, reduce the star bait fees by half, and drop the ticket take to $200 million. You'd end up with a $100 million loss. The Hangover series has allegedly run its course -- if not for running out of raunchy jokes, it might be because the studio can't afford to pay the stars what they'd demand for a fourth installment.

The smallest profit-sharing budgets here also end up with the highest straight-up production costs per box office dollar. Viacom's (NASDAQ: VIAB  ) Star Trek crew is largely made up of relatively fresh faces, hoping to take a star turn after this marketing blitz. Warner's The Great Gatsby hangs its hat on the fading star of Leo DiCaprio, who isn't the ticket seller he once was.

Gatsby's $25 million profit contribution would be a rounding error in Warner's $1.2 billion of annual operating income. Viacom runs a smaller ship with just $325 million of reported EBIT income last year, so Spock's efforts will be appreciated. But in the context of Viacom's $3.9 billion of cable network profits, the entire Paramount venture seems like an afterthought.

The combined production and marketing budgets for these silver screen hits range from $253 million to $375 million, which is a fairly tight range. But the varied franchise brand values and star power quotients make a big difference to ticket sales. Disney and Comcast can laugh about it all the way to the bank while writing the huge paychecks they owe to Vin Diesel and Iron Man himself.

It's easy to forget that Walt Disney is more than just the House of Mouse. True, Disney amusement parks around the world hosted more than 121 million guests in 2011. But from its vast catalog of characters to its monster collection of media networks, much of Disney's allure for investors lies in its diversity, and The Motley Fool's premium research report lays out the case for investing in Disney today. This report includes the key items investors must watch as well as the opportunities and threats the company faces going forward. So don't miss out -- simply click here now to claim your copy today.

The Danger of Low Dividends

Earnings among S&P 500 companies are at an all-time high. By quite a bit, too: Operating earnings per share last year were more than 10% above the previous peak set in 2006, when the economy topped out before the recession.

Dividend payouts are also at an all-time high, but there is much less to be excited about here. Companies have been paying out a lower share of their earnings as dividends for decades, and the trend shows little sign of slowing. The dividend payout ratio is pitiful:

Source: Yale, author's calculations.

A lot of this decline over time is explained by companies using more of their free cash flow to repurchase shares. Benjamin Graham's classic 1949 book contains deep analysis and commentary on dividends, but scarcely a mention of share buybacks. That changed dramatically after the 1980s. Legg Masson has shown that from 1985 to 2011, S&P 500 dividends increased fourfold, but share buybacks increased 21-fold.  

The impact this shift has on how investors are compensated is deep. As Shawn Tully of CNNMoney pointed out earlier this year, the dividend yield on ExxonMobil (NYSE: XOM  ) is a little more than 2%, but the total yield including buybacks is north of 7%. Pfizer's (NYSE: PFE  ) dividend yields more than 3%, but with buybacks the company returns 7.6% to shareholders. Wal-Mart's (NYSE: WMT  ) total yield is about double its dividend yield.

There are mountains of evidence showing that, on average, investors are better off with dividends than share buybacks, as CEOs have a terrible history of buying back their shares at nosebleed prices.

But I think the damage of the shift toward buybacks may even be underrated. With interest rates at zero, investors have been clamoring for yield wherever they can find it. For years, that's been stocks with high dividends, whose prices have been pushed to record levels and yields down to near record lows. Shares of Verizon (NYSE: VZ  ) now yield less than 4% and Altria Group (NYSE: MO  ) , less than 5%.

These are still healthy yields, particularly compared with fixed-income alternatives -- and both companies have high dividend payout ratios. But I can't help but wonder whether companies favoring buybacks over dividends will ultimately be a disservice to companies with high dividends. The lack of yield among most stocks drives up valuations at companies that still do provide reasonable payouts, and high current valuations will eat into future returns.

Managers typically cite the desire to "enhance shareholder value" when announcing share buybacks. But never underestimate the power of unintended consequences. 

 

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Top 5 Companies To Invest In 2014

Amid a broad market rally, mobile-chip giant Qualcomm (NASDAQ: QCOM  ) sat on the sidelines this week, significantly lagging the rest of the market. What were investors worried about?

A lot of hopes have been pinned on Samsung's newest Galaxy S4 flagship device. Qualcomm enjoys relationships with both Samsung and Apple (NASDAQ: AAPL  ) , the top two vendors currently dominating the global smartphone market. While Apple is in a summer lull and new iPhones aren't expecting to be launched until this fall, Qualcomm is happy to ride its win in the Galaxy S4, as its Snapdragon chips power several of the geographical variants.

Unfortunately for Samsung and Qualcomm, Galaxy S4 sales may not be stacking up to lofty expectations. Samsung lost more than 6% of its value on Friday on concerns over the Galaxy S4. JPMorgan Chase analyst J.J. Park believes Galaxy S4 units will disappoint investors, and that the South Korean conglomerate has been reducing its orders. Samsung also recently introduced lower-end versions of its flagships, including the Galaxy S4 Mini. That could put pressure on Samsung's revenue and margins.

Top 5 Companies To Invest In 2014: Benvest New Look Income Fd (BCI.TO)

New Look Eyewear Inc. provides eye care products and services in eastern Canada. It offers high definition digital lenses, frames, and sunglasses, as well as contact lenses. The company also offers eye exams and other eye care services. As of March 31, 2012, it operated 69 corporately owned eye care stores, including 61 in Qu茅bec province and 8 in Ontario region; and an eyewear transformation laboratory. The company was formerly known as Benvest New Look Income Fund and changed its name to New Look Eyewear Inc. in March 2010. New Look Eyewear Inc. is headquartered in Montr茅al, Canada.

Top 5 Companies To Invest In 2014: The Connecticut Bank and Trust Company(CTBC)

The Connecticut Bank and Trust Company provides commercial banking products and services in Connecticut. It accepts various interest bearing and noninterest bearing accounts with a range of maturity date options, including commercial and retail checking accounts, money market accounts, individual retirement accounts, savings accounts, certificates of deposit, and sweep accounts. The company?s loan portfolio comprises commercial, commercial real estate, construction, consumer and installment, and residential real estate loans. It also provides cash management services; courier service; sweep and client escrow accounts; direct deposit of payroll and social security checks; online banking; CBT Surepay; wire transfers, automated clearinghouse, and electronic data interchange services; debit cards; merchant credit card processing; and automated teller machine services. In addition, the company offers third party products and services consisting of fiduciary services, investmen t management, and stock brokerage services, as well as insurance products, including commercial and personal lines, and payroll processing. It serves privately-owned businesses and individuals, including attorneys, accountants and physicians, manufacturing companies, service companies, and commercial real estate developers. The company offers its products and services through seven offices located in Hartford, Glastonbury, Vernon, Newington, Windsor, and Rocky Hill. The Connecticut Bank and Trust Company was founded in 2004 and is based in Hartford, Connecticut.

Best Financial Companies To Buy Right Now: Twin Disc Incorporated(TWIN)

Twin Disc, Incorporated engages in the design, manufacture, and sale of marine and heavy duty off-highway power transmission equipment. The company?s product portfolio includes marine transmissions, surface drives, propellers, and boat management systems, as well as power-shift transmissions, hydraulic torque converters, power take-offs, industrial clutches, and controls systems. It sells its products to customers primarily in the pleasure craft, commercial, and military marine markets, as well as in the energy and natural resources, government, and industrial markets through direct sales force and distributor network worldwide. Twin Disc, Incorporated was founded in 1918 and is headquartered in Racine, Wisconsin.

Advisors' Opinion:

• [By Louis Navellier]

  As an expert in hydraulic torque converters, power-shift transmissions and industrial clutches, Twin Disc Inc. (NASDAQ:TWIN) is a heavy-duty company with heavy-duty earnings. Earlier this month, company leadership announced that this year was the company’s best year since the economic downturn, and the last quarter brought in the highest sales to date! Fueled by strong demand from the oil and gas industry, Twin’s fourth-quarter sales skyrocketed 51%, and earnings exploded by 273%. Analysts can’t even nail down this company’s potential — during the last four quarters, Twin has boasted an average earnings surprise of 93%!

Top 5 Companies To Invest In 2014: Brammer(BRAM.L)

Brammer plc, through its subsidiaries, engages in the supply of power transmission components and provision of related inventory management, procurement, and logistics services in Europe. The company offers bearings, belts and pulleys, chains and sprockets, linear motion, motors, seals, gearboxes, pneumatics, hydraulics, clutches and couplings, tools and maintenance, and health and safety products for various production and operational processes. It also provides maintenance, repair, and overhaul services. The company serves aerospace, automotive, chemical, construction and aggregate, food and drink, glass, metal, petroleum, pharmaceutical, pulp, paper and packaging, recycling, transportation, and utility industries. Brammer plc was founded in 1920 and is based in Manchester, the United Kingdom.

Top 5 Companies To Invest In 2014: Guardian Exploration Inc (GX.V)

Guardian Exploration Inc. engages in the acquisition, exploration, and development of petroleum and natural gas properties in western Canada and the state of Montana. It holds a farm-in agreement with Deckland Inc. to earn a 50% working interest in the well located in the Jenner area of Alberta, Canada. The company was formerly known as Guardian Resources Inc. and changed its name to Guardian Exploration Inc. in May 2001. Guardian Exploration Inc. was incorporated in 2001 and is headquartered in Calgary, Canada.

European Stocks Erase Drop as Investors Await U.S. GDP

European stocks erased their decline, with the Stoxx Europe 600 Index heading for its best month since October 2011, as investors awaited a report on the pace of U.S. economic growth in the second quarter. U.S. futures were little changed, while Asian shares dropped.

Vinci SA (DG) slipped 1.9 percent after saying profit declined as poor weather hindered roadworks in Europe. Anheuser-Busch InBev NV jumped 6.9 percent after the maker of Stella Artois beer posted earnings that beat estimates. Invensys added 2.1 percent after Schneider Electric SA (SU) said it will buy the company for the equivalent of 502 pence a share.

The Stoxx Europe 600 Index rose less than 0.1 percent to 299.56 at 9:18 a.m. in London, erasing a drop of as much as 0.5 percent. The gauge has gained 5.1 percent in July as the Federal Reserve said it remains flexible on the pace of its bond-buying program. Standard & Poor's 500 Index futures climbed 0.1 percent today, while the MSCI Asia Pacific Index dropped 0.9 percent.

The Fed will reveal the outcome of its two-day meeting after European markets close today. The Fed will leave its benchmark interest rate at 0.25 percent, according to every economist in a Bloomberg survey. The central bank may begin to reduce its bond-purchase program in September, economists predicted in a separate survey.

The European Central Bank and the Bank of England announce policy decisions tomorrow.

U.S. Economy

A report at 8:30 a.m. in Washington may show the U.S. economy, the world's largest, grew at a 1 percent annual rate from April through June. It expanded at a 1.8 percent pace in the first three months of the year.

A separate release at 8:15 a.m. will show that companies in the U.S. hired a net 180,000 workers this month, economists projected. The ADP Research Institute's report showed that private employers increased their workforce by 188,000 in June.

Vinci lost 1.9 percent to 40.08 euros. Net income in the first six months of the year fell to 748 million euros ($994 million) and missed the 760.5 million-euro average estimate in a Bloomberg survey of analysts. Net income will decline less in the second half of the year, the company said in a statement.

Don't Get Too Worked Up Over AGL Resources's Earnings

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 AGL Resources (NYSE: GAS  ) , 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, AGL Resources generated $137.0 million cash while it booked net income of $295.0 million. That means it turned 3.2% of its revenue into FCF. That sounds OK. However, FCF is less than net income. Ideally, we'd like to see the opposite.

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 AGL Resources 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 21.7% of operating cash flow coming from questionable sources, AGL Resources 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 21.7% of cash flow from operations. Overall, the biggest drag on FCF came from capital expenditures, which consumed 86.5% of cash from operations. AGL Resources investors may also want to keep an eye on accounts receivable, because the TTM change is 7.0 times greater than the average swing over the past 5 fiscal years.

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.

Add AGL Resources to My Watchlist.

German Data, Home Prices Boost Futures

Markets looked poised to undo Monday's losses, following positive data from Germany and the housing sector.

Before the open, the Dow Jones Industrial Average and the S&P 500 were up 0.2%, while the Nasdaq gained 0.3%.

European markets edged higher after the Gfk’s forward-looking consumer-sentiment indicator Germany, the continent's largest economy, soared to a six-year high of 7.0 in August and exceeded expectations of 6.9.

In the U.S.,  home prices continued their upward climb in May, according to the S&P/Case-Shiller 20-city composite. That index jumped 2.4% in May, up 12.2% year over year, and all 20 cities rose by at least 1.2%. San Francisco led the pack with a 4.3% increase, while both Dallas and Denver are at record pre-crisis levels. However, these figures largely reflect a time before the recent increase in interest rates that have somewhat weighed on demand.

In corporate news, there were plenty of movers in the financial sector. J.P. Morgan (JPM) was gaining ground on news that it would settle charges that it manipulated electricity markets in California and the Midwest with a $410 million fine.

Barclays (BCS) tumbled after its second quarter earnings and revenue disappointed, and it would issue $8.9 billion in new shares.

Deutsche Bank (DB) fell after its second quarter profit and revenue also missed expectations.

UBS (UBS) rose on a second quarter revenue beat.

Among healthcare names, Pfizer (PFE) climbed after its second quarter earnings per share beat by a penny; revenue was light. Investors are also cheering news that a reorganization at the company may pave the way to a split.

Merck & Co. (MRK) fell even as second quarter earnings per share beat, on lower than expected revenue. The company also cut its 2013 sales estimates, warning of FX headwinds.

Community Health Systems (CYH) is up on news that it is buying Health Management Associates (HMA) in a cash and stock deal valued at $7.6 billion. HMA, however, is down, following disappointing earnings.

Aetna (AET) climbed on better-than-expected second quarter earnings and an upbeat full year forecast, overshadowing a revenue miss.

Elsewhere, BP (BP) fell after announcing that it's spill fund is running out of money. It has raised the estimated cost of disputed claim settlements by $1.4 billion to $9.6 billion.

Cummins (CMI) rose on a smaller-than-expected decline in second quarter and an unexpected rise in revenue.

Coach (COH) sank as tis second quarter revenue missed expectations.

Goodyear Tire (GT) rose gained after revenue fell less than expected.

Asian Stocks Rise as Japanese Exporters Gain on Weak Yen

Asian stocks rose, with the regional benchmark index heading for its first advance in five days, as Japanese exporters gained after the yen weakened, and China's central bank injected funds into the money market.

Toyota Motor Corp. (7203) climbed 2.9 percent in Tokyo as the yen's weakness boosted the outlook for export income. Daiwa Securities Group Inc., Japan's second-largest brokerage, rose 3.3 percent after posting earnings that beat analyst estimates. Jiangxi Copper Co., China's biggest producer of the metal, dropped 3.2 percent in Hong Kong after copper futures declined.

The MSCI Asia Pacific Index added 0.5 percent to 133.81 as of 5:42 p.m. in Tokyo, with almost two shares rising for each that fell. The gauge is headed for a 2.5 percent advance this month after China pledged to do more to support transition in the world's second-largest economy and earnings at companies from Daihatsu Motor Co. to Nomura Holdings Inc. beat analyst estimates.

"As the yen continues to weaken, profit at Japanese exporters will improve," said Daphne Roth, Singapore-based head of Asia equity research at ABN Amro Private Bank, which oversees about $207 billion. "That should drive earnings upgrades, boosting the share market. The market will remain volatile as investors await Japan's economic reforms. The market is still hung up on the prospects of the Federal Reserve's stimulus tapering."

Japan's Topix index rose 1.8 percent to close higher for the first time in five days. The benchmark Nikkei 225 Stock Average climbed 1.5 percent.

Fading Optimism

The Topix has climbed 34 percent this year amid optimism Prime Minister Shinzo Abe will push through reforms while the Bank of Japan continues record stimulus to beat deflation. The gauge traded at 1.23 times book value, compared with 2.48 for the S&P 500 and 1.70 for the Stoxx Europe 600 Index.

"The market is range-bound," said Kenichi Kubo, a senior fund manager at Tokio Marine Asset Management Co., which oversees about $51 billion. "At the beginning of this year, stocks extended gains on widespread optimism, but it's not like that now."

Japan's factory output declined 3.3 percent in June, the most since March 2011 when the nation was hit by a record earthquake. That was lower than any forecast in a Bloomberg News survey of 29 economists whose median estimate was for a 1.5 percent drop. A separate report showed the jobless rate fell to 3.9 percent in June, the lowest since 2008.

Liquidity Boost

China's Shanghai Composite Index increased 0.7 percent, heading for its first advance in five days. The country's central bank conducted reverse-repurchase operations for the first time in five months, helping alleviate a cash squeeze that drove the benchmark interbank lending rate to a four-week high. The People's Bank of China added 17 billion yuan ($2.8 billion) to the financial system today at a yield of 4.4 percent using seven-day reverse repos, according to traders.

Hong Kong's Hang Seng Index increased 0.5 percent. South Korea's Kospi Index (KOSPI) added 0.9 percent, while Taiwan's Taiex Index gained 1 percent. Singapore's Straits Times Index added 0.4 percent and Australia's S&P/ASX 200 Index closed little changed. New Zealand's NZX 50 Index dropped 0.6 percent.

India's S&P BSE Sensex slid 1 percent, erasing gains of as much as 0.4 percent, after the nation's central bank left interest rates unchanged.

The Asia-Pacific gauge fell 7.8 percent through yesterday from this year's high on May 20 amid signs China's economic slowdown is deepening and on concern the Federal Reserve will start tapering monetary stimulus. Shares on the gauge traded at 12.9 times estimated earnings as of yesterday, compared with 15.3 times for the Standard & Poor's 500 Index and 13.5 times for the Stoxx Europe 600 Index.

U.S. Futures

Futures on the S&P 500 Index added 0.2 percent. The gauge fell 0.4 percent in New York yesterday as energy shares led losses amid a plunge in natural gas and a report showed a drop in pending home sales.

Japanese exporters rose after the yen fell as much as 0.5 percent today, heading for its first drop in four days. A weaker yen boosts the overseas income of the nation's carmakers and electronics manufacturers when repatriated.

Toyota, the world's biggest carmaker, climbed 2.9 percent 6,070 yen in Tokyo. Sony Corp., the maker of Bravia Televisions and PlayStation game consoles, increased 2.9 percent to 2,117 yen. Panasonic Corp. (6752), Japan's third-biggest TV maker, gained 2.3 percent to 864 yen.

Tencent Holdings Ltd. (700), China's biggest Internet company, jumped 4 percent to a record close of HK$363.60 in Hong Kong. The stock, which is leading gains in the Hang Seng Index this year, advanced 4.1 percent last week after U.S. companies in the sector surged. The company accounted for almost half of the Hang Seng Index's net increase today.

Earnings Performance

Daiwa Securities advanced 3.3 percent to 839 yen. Net income rose to 57.3 billion yen ($582.4 million) for the three months ended June 30 from 2.7 billion yen a year earlier, the company said in a statement yesterday. The results beat the average 51.1 billion yen estimate of six analysts surveyed by Bloomberg News.

Yakult Honsha Co. (2267), a maker pro-biotic and fermented milk drinks, surged 17 percent to 4,935 yen after saying first-quarter profit increased to 3.8 billion yen from 1 billion a year earlier.

Of the 152 companies on the MSCI Asia Pacific Index that posted results since July 1 and for which estimates are available, 55 percent exceeded analyst estimates, according to data compiled by Bloomberg.

Yanzhou Coal Mining Co. slumped 9.3 percent to HK$5.26 after China's fourth-largest producer of the fuel reported a preliminary first-half loss after forecasting a profit in April.

Raw-materials producers declined as copper and gold futures fell. Jiangxi Copper slipped 3.2 percent to HK$13.18 in Hong Kong. Zijin Mining Group Co., China's biggest gold producer, fell 3 percent to HK$1.64.

Woolworths Ltd. (WOW) dropped 1.6 percent to A$33.22 after Australia's largest retailer said challenging economic condition were evident in the second quarter.

6 Reasons Why Activision Blizzard Should Worry

Activision Blizzard (NASDAQ: ATVI  ) shareholders haven't been doing a whole lot of complaining lately. The stock hit a fresh four-year high on Friday, fueled by the leading video game developer's move to buy back most of the shares owned by majority stakeholder Vivendi.

The move won't come cheap for Activision Blizzard, but it does eliminate the uncertainty of what the French conglomerate would do with its 61% stake in the game maker.

The new high comes just as Activision Blizzard is set to report quarterly results on Thursday. If you think that everything is rosy here, think again.

Let's go over a few reasons to worry as Activision Blizzard steps up to report.

Analysts see a brutal quarter with revenue falling 43% and earnings falling even harder. Wall Street's forecasting a profit of $0.06 a share, well off the $0.20 a share it earned a year earlier. World of Warcraft players continue to defect from the massive multiplayer game. The game peaked in popularity with more than 12 million active accounts three years ago. We're now down to 8 million -- and falling. Last year's sleeper hit -- Skylanders: Spyro's Adventures -- will be challenged in a few weeks. Disney's (NYSE: DIS  ) Disney Infinity takes the same model of physical figures that can enter a virtual world when planted on a base. Skylanders was the industry's hottest seller through the first half of 2012, but now we're seeing Activision Blizzard turn to deep discounts to get young gamers hooked before Disney steps in next month. The video game industry has been declining for four years, but diehard gamers feel that November's debut of PS4 and Xbox One will breathe new life into the niche. That may be wishful thinking, and at the very least it will take a couple of years before either platform grows into a substantial base of players. Call of Duty: Ghosts also happens to hit the market in November. This is the franchise that has been Activision Blizzard's saving grace as other once-popular lines fall out of favor. It should set new sales records, but it won't be easy. Gamers saving up for new platforms or those concerned about buying too many games for current generation systems may be more hesitant than usual this time. Take-Two Interactive's (NASDAQ: TTWO  ) Grand Theft Auto IV held the sales record before Activision Blizzard's Call of Duty games took the lead. After more than five years, Grand Theft Auto V hits the market in September. If Call of Duty: Ghosts fails to raise the bar for initial unit sales, don't be surprised if the finger gets pointed at Take-Two's magnetic release hitting the market six weeks earlier. Young gamers aren't made of money, you know.

With all of these potentially negative catalysts in play, Activision Blizzard will be challenged to keep its multi-year highs going.

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Why Turquoise Hill Shares Tanked

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 Canadian mineral explorer Turquoise Hill Resources (NYSE: TRQ  ) sank 12% today after receiving notification from the government of Mongolia that project financing for Oyu Tolgoi will now require approval by the Mongolian parliament.

So what: Unfortunately for Turquoise, and parent company Rio Tinto (NYSE: RIO  ) , the Mongolian parliament is currently in summer recess and the approval process will take plenty of time even after that, so all work on the underground development will be put on hold indefinitely. Given that Oyu Tolgoi is Turquoise's primary operation -- total capital invested in the mine to March 31 was about $6 billion -- the delay represents a huge setback for management and raises plenty of uncertainty for shareholders.  

Now what: Management will naturally do what it can in the meantime. "Operations of the open-pit mine, commissioning of the concentrator, and the ongoing export of concentrate from Oyu Tolgoi will continue," wrote Turquoise Hill in a statement. Of course, when you couple the Mongolian government's seemingly unstable policies with Turquoise's sector average P/E, the trade-offs between risks and rewards at this point look particularly unfavorable.   

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Germany's Resilience Keeps the DAX in the Green

Germany's economic resilience continues as Europe struggles all around the continent's leading economy. German stocks have waxed and waned throughout the year, but this week was a good one for investors as the DAX (DAXINDICES: ^DAX  ) picked up gains of more than 2.2%, shoring up what's been a bad past month for the index overall. Export strength continues to fuel Germany's slight economic growth, but can that continue as other European nations feud with the region's unofficial leader over the continent's future? Is this still a safe spot for investors?

Doubling down on exports
Engaging with Germany has become a headache-inducing problem for European countries recently. German leaders blocked a deal this week on carbon emission limits for cars in an attempt to protect domestic players such as Volkswagen (NASDAQOTH: VLKAY  ) , who have made gains despite the region's downturn. Volkswagen and other auto leaders have helped prop up the German economy, particularly with strong exports to nations such as China -- where VW's one of the market leaders. The country's me-first approach is working well for investors, but not for other countries in Europe mired in an economic drought.

European anti-German sentiment -- seen in debt-plagued nations such as Greece and Italy recently -- isn't likely to spark a backlash against German exporters like it has against the country's leadership. While the situation might appear tense, this isn't China and its caustic relationship with Japan that led to riots against Japanese automakers and other firms. Europe still holds on to a mandate of cooperation, and as long as that holds on, leading German firms like VW and other industrial companies should be able to tap into the EU successfully as a source of revenue -- albeit a struggling one.

An opposite effect has emerged -- European firms have turned to Germany for growth. French bank BNP Paribas (NASDAQOTH: BNPQY  ) is looking to cut costs and expand in Germany to boost its European sales, according to The Wall Street Journal. At first glance, it's a smart move by BNP: Few other economies in Europe are providing growth to financial firms, and leading banks in other countries have looked abroad for growth. Considering BNP's stock has lost more than 5% this year and the company's also looking to expand in North America and Asia, the international approach is a way to reduce dependence on a struggling business climate in Europe.

Yet it'll have a tough time competing with the likes of Deustche Bank (NYSE: DB  ) and Commerzbank, Germany's second-largest and largest loan lenders. Deustche Bank in particular has grown impressively in Germany, increasing its market share substantially over the past few years and providing the fuel for exporters like VW to grow.

The bank's growth hasn't translated to its financials or its stock recently -- the latter which has sunk more than 4% year to date -- but investors looking to Germany should key in on the country's export-led environment for winning stock picks. Deutsche Bank, as a major lender of large loans to exporters, fits that bill.

Germany and the rest of Europe will bounce back eventually, and Deutsche Bank will be at the heart of the region's financial grid. Many global regions are still stuck in neutral, and their resurgence could result in windfall profits for select companies. A recent Motley Fool report, "3 Strong Buys for a Global Economic Recovery," outlines three companies that could take off when the global economy gains steam. Click here to read the full report!

Will This Be BlackBerry's Game-Changer?

With half of all companies expected to employ a bring-your-own-device, or BYOD, program by 2017, there's about to be a growing need to secure employee mobile computing devices in a streamlined manner. To that end, BlackBerry (NASDAQ: BBRY  ) recently introduced its Secure Work Space solution for Google Android and Apple (NASDAQ: AAPL  ) iOS devices, allowing organizations to secure and manage non-BlackBerry devices through its BlackBerry Enterprise 10 service. For users, Secure Work Space will separate work apps and data from personal data by keeping everything work-related contained behind a secured firewall. For BlackBerry, Secure Work Space opens up a tremendous opportunity to monetize non-BlackBerry devices when it becomes available in the coming months.

A multi-platform solution
According to Forrester Research, 350 million employees will use smartphones in 2016, and of those, 200 million will opt into a BYOD plan. From a technology management standpoint, it's a nightmare to manage a stable of differing employee devices because it's costly, inefficient, and difficult to deploy. With BlackBerry's end-to-end multi-platform solution, which covers 95% of smartphones shipped in the first quarter, it streamlines the enterprise IT administration process by eliminating the need to manage multiple network infrastructures. For the first time in what feels like ages, BlackBerry could have a competitive edge against Apple and Google.

Not the only game in town
As Apple works to further the iPhone's momentum in the enterprise market, it will be introducing a host of business-friendly features within the release of iOS 7. Enterprise customers will soon be able to benefit from enhanced virtual private network features, improved security management, employee app licensing, single sign-on authentication, and third-party data encryption.

Through Samsung's SAFE initiative, the South Korean smartphone maker hopes it can increase Android's enterprise market share, which stood at less than 25% in the first quarter, according to Good Technology. Like Apple, the SAFE initiative focuses on business security and scalability, but it also aims to ease concerns about Android's vulnerability stemming from its open-source nature, through implementing industry-leading AES 256-bit on-device encryption.

Despite these competitive threats, BlackBerry has the edge among BYOD-friendly companies because its Secure Work Space solution embraces a multi-platform approach. It's a nearly perfect fit for the spirit of BYOD, which is largely motivated by increasing employee productivity through catering to individual preferences.

Massive potential
Assuming Forrester Research has an accurate gauge that 200 million employees will opt into a BYOD program in 2016, BlackBerry's addressable market for its Secure Work Space solution could be quite massive. If IDC's latest smartphone market share figures are any indication, BlackBerry's BYOD addressable market would be 95% of smartphones shipped in the first quarter. Out of the 200 million devices, that's 190 million potential devices BlackBerry could seemingly tap into. With a cost of $99 per year per device, BlackBerry has a tremendous opportunity to drive absurd levels of service revenue growth, which happens to be company's most profitable segment.

Ultimately, the biggest challenge for BlackBerry will be how well it can convince potential customers that it has the staying power to remain viable in the coming years. Perhaps its $3.1 billion nest egg of cash should be brought to sales pitches.

Can BlackBerry go all the way?
In case you haven't heard, there's currently a war raging on between the five largest technology companies that shape our digital and technological lives. To help investors make sense of it all, The Motley Fool has compiled a special free report, laying down the details in an easy-to-understand manner. Get started by clicking here now.

Don't Get Too Worked Up Over Destination XL Group's Earnings

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 Destination XL Group (Nasdaq: DXLG  ) , 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, Destination XL Group burned $11.6 million cash while it booked net income of $4.9 million. That means it burned through all its revenue and more. That doesn't sound so great. FCF is less than net income. Ideally, we'd like to see the opposite.

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 Destination XL Group 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 21.7% of operating cash flow coming from questionable sources, Destination XL Group 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 18.4% of cash flow from operations. Overall, the biggest drag on FCF came from capital expenditures. Destination XL Group investors may also want to keep an eye on accounts receivable, because the TTM change is 2.3 times greater than the average swing over the past 5 fiscal years.

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.

Is Destination XL Group the right retailer for your portfolio? Learn how to maximize your investment income and "Secure Your Future With 9 Rock-Solid Dividend Stocks," including one above-average retailing powerhouse. Click here for instant access to this free report.

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

Add Destination XL Group to My Watchlist.

Netflix to Add More Streaming Options for Members

Netflix (NASDAQ: NFLX  ) will add a new streaming service for members that allows up to four devices to stream video simultaneously, the company said in a letter to shareholders on Monday. Right now, Netflix members can stream content from up to two devices at the same time. 

The company said that some of its members max out of the $7.99-per-month two-stream limit option. The four-device option will cost $11.99 a month. Netflix expects about 1% of its customers to sign up for the new tier.

The new Netflix plan will put it one step ahead of rival Amazon.com's  (NASDAQ: AMZN  ) Prime streaming service, which allows up to two devices to stream simultaneously. 

Netflix said in the statement that the new tier will be available "shortly," but has not announced an official date. 

More Expert Advice from The Motley Fool

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The South Continues to Abandon Coal

Some power producers across the nation waver between commodities, vacillating along with the prices of coal and natural gas. But those in the southeastern states have done nothing but reaffirm their commitment to the cleaner-burning fossil fuel. In this video, Fool.com contributor Aimee Duffy discusses the pipeline players that are connecting the South with its natural gas supply.

It's easy to forget the necessity of midstream operators that seamlessly transport oil and gas throughout the United States. Kinder Morgan is one of these operators, and one that investors should commit to memory due to its sheer size – it's the third-largest energy company in the U.S. – not to mention its enormous potential for profits. In The Motley Fool's premium research report on Kinder Morgan, we break down the company's growing opportunity – as well as the risks to watch out for – in order to uncover whether it's a buy or a sell. To determine whether this dividend giant is right for your portfolio, simply click here now to claim your copy of this invaluable investor's resource.

Why Brunswick Shares Jumped

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 Brunswick (NYSE: BC  ) were getting fired up today, climbing as much as 12% after issuing a strong quarterly report and improved guidance.  

So what: The boat-and-engine maker delivered an adjusted profit of $1.23 per share, better than expectations of $1.08, as revenue edged up 5%, to $1.1 billion, helped by growth in outboard boat products, fitness equipment, and bowling products. Most importantly, the company lifted its outlook for the full year, saying it now expects earnings per share of $2.55-$2.65, up from a previous range of $2.30-$2.50. Analysts had called for $2.50. The increase is due, in part, to aspects outside of operations, including a favorable debt-financing agreement and a lower tax rate.

Now what: Despite a weak marine market, Brunswick keeps on pleasing the Street. Though management is only forecasting 4% sales growth for the year, improvements in profitability are enough to keep earnings growing a solid pace. Even with the sluggish economy, Brunswick looks like a decent bet, but if the recovery picks up and boat sales improve, the stock could surge once again.

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Top 5 Performing Companies To Buy Right Now

LONDON --�

Prudential
Shares in insurer�Prudential� (LSE: PRU  ) (NYSE: PUK  ) are up 51% in the last 12 months. In that time, the FTSE 100 is 16.7% ahead.

Prudential's last results confirmed a 71% earnings per share increase, and a 16% dividend hike. Although a decline in EPS is expected for 2013, the dividend is forecast to rise again.

Looking further ahead, broker forecasts put the shares on a 2014 P/E of 12.0, with an expected dividend yield of 3%. That's a discount to the average FTSE constituent.

Prudential's business has considerable exposure to Asia, where it generates around one-third of its profits. It is the prospects of those operations that have pushed Prudential's shares higher in recent years.

Excellent easyJet
Budget airline�easyJet� (LSE: EZJ  ) is the FTSE's best performing share of the last 12 months. Anyone buying a year ago would be 145% ahead today, excluding dividends.

Top 5 Performing Companies To Buy Right Now: Con-way Inc (CNW)

Con-way Inc. (Con-way), incorporated in 1958, provides transportation, logistics and supply-chain management services for a wide range of manufacturing, industrial and retail customers. Con-way�� business units operate in regional and transcontinental less-than-truckload and full-truckload freight transportation, contract logistics and supply-chain management, multimodal freight brokerage, and trailer manufacturing. Con-way is divided into four segments: Freight, Logistics, Truckload, and Other. At December 31, 2011, Con-way Freight operated 286 freight service centers, of which 144 were owned and 142 were leased. At December 31, 2011, Con-way Freight owned and operated approximately 9,200 tractors and 26,400 trailers, including tractors held under capital lease agreements.

Freight

The Freight segment consists of the operating results of the Con-way Freight business unit. Con-way Freight is a less-than-truckload (LTL) motor carrier that utilizes a network of freight service centers to provide day-definite regional, inter-regional and transcontinental less-than-truckload freight services throughout North America. LTL carriers transport shipments from multiple shippers utilizing a network of freight service centers combined with a fleet of line-haul and pickup-and-delivery tractors and trailers. Freight is picked up from customers and consolidated for shipment at the originating service center. Freight is consolidated for transportation to the destination service centers or freight assembly centers. At Freight assembly centers, freight from various service centers can be reconsolidated for transportation to other freight assembly centers or destination service centers. From the destination service center, the freight is delivered to the customer. Typically, LTL shipments weigh between 100 and 15,000 pounds. In 2011, Con-way Freight�� average weight per shipment was 1,305 pounds.

Logistics

The Logistics segment consists of the operating results o! f the Menlo Worldwide Logistics business unit. Menlo Worldwide Logistics develops contract-logistics solutions, which can include managing complex distribution networks, and providing supply-chain engineering and consulting, and multimodal freight brokerage services. Menlo Worldwide Logistics��supply-chain management offerings are primarily related to transportation-management and contract-warehousing services. Transportation management refers to the management of asset-based carriers and third-party transportation providers for customers��inbound and outbound supply-chain needs through the use of logistics management systems to consolidate, book and track shipments. Contract warehousing refers to the optimization and operation of warehouses for customers using technology and warehouse-management systems to reduce inventory carrying costs and supply-chain cycle times. For several customers, contract-warehousing operations include light assembly or kitting operations.

Menlo Worldwide Logistics provides its services using a customer- or project-based approach when the supply-chain solution requires customer-specific transportation management, single-client warehouses, and/or single-customer technological solutions. However, Menlo Worldwide Logistics also utilizes a shared-resource, process-based approach that leverages a centralized transportation-management group, multi-client warehouses and technology to provide scalable solutions to multiple customers. Additionally, Menlo Worldwide Logistics segments its business based on customer type. At December 31, 2011, Menlo Worldwide Logistics operated 76 warehouses in North America, of which 55 were leased by Menlo Worldwide Logistics and 21 were leased or owned by clients of Menlo Worldwide Logistics. Outside of North America, Menlo Worldwide Logistics operated an additional 63 warehouses, of which 48 were leased by Menlo Worldwide Logistics and 15 were leased or owned by clients. Menlo Worldwide Logistics owns and operates a small fleet of tr! actors an! d trailers to support its operations, but primarily utilizes third-party transportation providers for the movement of customer shipments.

Truckload

The Truckload segment consists of the operating results of the Con-way Truckload business unit. Con-way Truckload is a full-truckload motor carrier that utilizes a fleet of tractors and trailers to provide short- and long-haul, asset-based transportation services throughout North America. Con-way Truckload provides dry-van transportation services to manufacturing, industrial and retail customers while using single drivers as well as two-person driver teams over long-haul routes, with each trailer containing only one customer�� goods. This origin-to-destination freight movement limits intermediate handling and is not dependent on the same network of locations utilized by LTL carriers. On average, Con-way Truckload transports shipments more than 800 miles from origin to destination. Under its regional service offering, Con-way Truckload transports truckload shipments of less than 600 miles, including local-area service for truckload shipments of less than 100 miles.

Con-way Truckload offers through-trailer service into and out of Mexico through all major gateways in Texas, Arizona and California. For a shipment with an origin or destination in Mexico, Con-way Truckload provides transportation for the domestic portion of the freight move, and a Mexican carrier provides the pick-up, linehaul and delivery services within Mexico. At December 31, 2011, Con-way Truckload operated five owned terminals with bulk fuel, tractor and trailer parking, and in some cases, equipment maintenance and washing facilities. In addition, Con-way Truckload also utilizes various drop yards for temporary trailer storage throughout the United States. At December 31, 2011, Con-way Truckload owned and operated approximately 2,700 tractors and 8,000 trailers, including tractors held under capital lease agreements.

Other

! The Other! reporting segment consists of the operating results of Road Systems, a trailer manufacturer, and certain corporate activities for which the related income or expense has not been allocated to other reporting segments, including results related to corporate re-insurance activities and corporate properties. Road Systems primarily manufactures and refurbishes trailers for Con-way Freight and Con-way Truckload.

Advisors' Opinion:

• [By Bobby Raines]

  Con-Way is a trucking company. As you probably know the vast majority of freight in the U.S. moves by truck, which means Con-Way's success is very closely linked to the health of the overall economy. The company did some restructuring over the last couple of years and has seen steady increases in revenue and earnings since 2009. The stock dropped sharply in August after an earnings miss, but seems to have bottomed out in October and has been rising steadily so far in 2013. The company has a five-year growth rate of 26 and is trading at 121% of its 52-week low. Con-Way also has a 1.3% dividend yield.

Top 5 Performing Companies To Buy Right Now: MannKind Corporation(MNKD)

MannKind Corporation, a biopharmaceutical company, focuses on the discovery, development, and commercialization of therapeutic products for diabetes and cancer in the United States, Europe, and Asia. Its lead product candidate, AFREZZA Inhalation Powder, an ultra rapid-acting insulin that is in Phase III clinical trials for the treatment of diabetes for the control of hyperglycemia. The company also develops MKC1106-MT, an investigational cancer immunotherapy product, which is in Phase II clinical trials for the treatment of adults with type 1 or type 2 diabetes; and MKC204, which is in preclinical development stage for the treatment of malignancies and inflammatory diseases. In addition, its products include MKC253 (GLP-1), a Phase I clinical trials product for the treatment of type 2 diabetes; MKC1106-PP, a Phase I clinical trials product for diverse tumor types, metastatic disease, and/or progressive and refractory disease; and MKC180, an obesity compound and MKC1106-NS , a cancer immunotherapy product that are in preclinical trials. MannKind Corporation was founded in 1991 and is headquartered in Valencia, California.

Top Value Companies To Invest In Right Now: Computer Programs and Systems Inc.(CPSI)

Computer Programs and Systems, Inc., a healthcare information technology company, designs, develops, markets, installs, and supports computerized information technology systems to small and midsize hospitals in the United States. Its enterprise-wide system automates the management of clinical and financial data across the primary functional areas of a hospital. The company offers services that enable customers to outsource certain data-related business processes in the areas of clinical care, revenue cycle management, cost control, and regulatory compliance. Its software products include Patient Management, which enables a hospital to identify a patient at any point in the healthcare delivery system, and to collect and maintain patient information through the process of patient care; Financial Accounting that provides various business office applications to track and coordinate information needed for managerial decision-making; and Clinical, which automates record keeping and reporting for a range of clinical functions, such as laboratory, radiology, physical therapy, respiratory care, and pharmacy. The company?s software products also comprise Patient Care that allows hospitals to create computerized patient files; and Enterprise Applications, which provide software applications that support its products for use in various areas of the hospital. In addition, it offers support and maintenance services; business management services, including electronic billing, statement processing, accounts receivable management, payroll processing, contract management, and insurance services; and system implementation and training services, such as conversion and training. Further, the company sells computer hardware, peripherals, forms, and office supplies. It serves acute care community hospitals; and small specialty hospitals that focus on medical areas, such as surgery, rehabilitation, and psychiatry. The company was founded in 1979 and is headquartere d in Mobile, Alabama.

Top 5 Performing Companies To Buy Right Now: Magellan Health Services Inc.(MGLN)

Magellan Health Services, Inc. engages in the specialty managed healthcare business in the United States. The company, through its contracted network of third-party treatment providers, offers managed behavioral healthcare services, including outpatient programs, such as counseling or therapy; intermediate care programs comprising intensive outpatient programs and partial hospitalization services; and inpatient treatment and crisis intervention services. It also provides radiology benefits management services, such as the delivery of diagnostic imaging and other therapeutic services through contracts with health plans and insurance companies, and governmental agencies. In addition, the company offers specialty pharmaceutical management services, including contracting and formulary optimization programs; specialty pharmaceutical dispensing operations; and medical pharmacy management programs. Its specialty pharmaceutical management services are provided under contracts with health plans, insurance companies, employers, and governmental agencies to manage specialty drugs used in the treatment of conditions, such as cancer, multiple sclerosis, hemophilia, infertility, rheumatoid arthritis, chronic forms of hepatitis, and other diseases. Further, the company provides Medicaid administration services comprising pharmacy point-of-sale claims processing systems and administration, drug utilization review, clinical prior authorization, utilization and formulary management services, preferred drug list programs, maximum allowable cost programs, and drug rebate program services under contracts with health plans and public sector healthcare clients for Medicaid and other program recipients. It serves health plans, insurance companies, employers, labor unions, and various governmental agencies. Magellan Health Services, Inc. was founded in 1969 and is based in Avon, Connecticut.

Top 5 Performing Companies To Buy Right Now: UK MAIL GROUP PLC ORD GBP 0.10(UKM.L)

UK Mail Group plc, through its subsidiaries, operates as an independent parcel, mail, and logistics services company in the United Kingdom. The company provides express collection and delivery services for parcels, mail, and palletized goods. It operates through four divisions: Mail, Parcels, Courier, and Pallets. The Mail division provides postal services, two-day time-definite delivery services, and other value added services for its customers. The Parcel division offers next day business-to-business, business-to-consumer, and international collection and delivery services through a network of 55 sites and 2,500 vehicles. The Courier division offers fulfillment services, including ad hoc, contract, and international courier; logistics; and technical courier solutions, such as delivery swap-out and installation services. The Pallets division provides pallet delivery solutions through a network of approximately 70 independent distribution and logistics specialists with var ious next-day and three-day delivery options. The company was formerly known as Business Post Group plc and changed its name to UK Mail Group plc in October 2009. UK Mail Group plc was founded in 1974 and is based in Slough, the United Kingdom.

This Box Office Disaster Is Bad News for Netflix

Ciber Earnings Are on Deck

Today’s 3 Worst Stocks

Generally positive economic data, in combination with a blowout quarter from social networking giant Facebook, sent most stocks higher Thursday. Although jobless claims rose last week, the potentially negative repercussions were muted by a third consecutive month of domestic durable goods orders. The S&P 500 Index (SNPINDEX: ^GSPC  ) , reinvigorated after two consecutive days of losses, added four points, or 0.3%, to close at 1,690. But no matter what happens to durable goods orders, there will always be a few bad apples in the market, and three stocks in particular stood out today as rotten.

The biggest decliner in the entire S&P 500, PulteGroup (NYSE: PHM  ) , shed 10.3%, as homebuilders fell dramatically. It's odd: The company reported quarterly earnings today, doubling profits from the same period a year ago. So what's the catch? Well, orders fell, but the main reason behind the brutal fall was simply the result of high expectations. Analysts wanted more than 100% earnings growth. Analysts are hard to please sometimes. 

Oil and gas explorer Newfield Exploration (NYSE: NFX  ) lost 6.3% Thursday after its quarterly earnings also failed to impress investors. In sharp contrast to PulteGroup, however, profits actually fell by nearly 40% in the quarter due to lower gas volumes. Newfield's profitability has fluctuated wildly over the years: The company lost $542 million in 2009, then made over $1 billion in the combined years of 2010 and 2011, only to lose nearly $1.2 billion in 2012. It's not a very predictable business, and shareholders suffered for that today.

Digital storage company Western Digital (NASDAQ: WDC  ) rounds out today's list of laggards, tumbling 5.9% after its net income fell 44% in the fiscal fourth quarter. Western Digital's fall from grace exemplifies the declining PC market, as Western Digital's hard drives become less and less relevant in an era of shifting consumer tastes. Most mobile devices use chips to store data instead of the antiquated hard drive, a fact evidenced by a 22% revenue slump in the recent quarter.

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Ford's Asia Strategy Is Paying Off

Mortgage Rates Are Cooling Down

Freddie Mac released its weekly update on national mortgage rates this morning, showing continued moderation in rates across the board.

Thirty-year fixed rate mortgages (FRM) dropped six basis points over the past week to end at 4.31%. The rate reached a two-year high of 4.51% two weeks ago, and clocked in a year ago at 3.49%.

Fifteen-year FRMs shed two basis points over the past week, falling to 3.39%. Each of the most popular flavors of variable-rate mortgages dropped a basis point apiece, with 5/1 ARMs falling to 3.16%, and one-year adjustables to 2.65%.

Freddie Mac Vice President and Chief Economist Frank Nothaft expressed hope that falling rates will "help to alleviate market concerns of a slowdown in the housing market," noting that "low inventories of homes for purchase are putting upward pressure on house prices." Even if price tags are getting bigger, the belief is that lower interest payments on mortgages to buy them may help to even out the total cost.

While rates remain low by historical standards, they have risen in recent weeks after the Federal Reserve indicated it might slow its bond purchases later this year. The bond purchases have kept long-term interest rates low, encouraging more borrowing and spending.

-- Material from The Associated Press was used in this report.

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Why the Dow Is Headed Higher Today

Blue-chip stocks are broadly higher today on the heels of two important economic reports and yesterday's better-than-expected earnings from Alcoa (NYSE: AA  ) . With roughly an hour left in the trading session, the Dow Jones Industrial Average (DJINDICES: ^DJI  ) is higher by 75 points, or 0.49%.

Aluminum giant Alcoa unofficially kicked off second-quarter earnings season yesterday after the closing bell. For the three months ended June 30, the company posted a loss of $119 million compared with a $2 million loss in the same quarter last year. However, as my colleague Matt Thalman discussed earlier, if you back out the $195 million in restructuring charges, then the company actually posted earnings of $76 million, or $0.07 per share.

This positive news was followed today by a report from the Bureau of Labor Statistics estimating that the number of job openings across the country increased in May by 1.4%. You can see this in the chart below.

While the growth rate was slower than in the preceding month, when the number of job openings skyrocketed by 7.3%, there are two things to note. First, it grew against an impressive month last year. In May of 2012, the number of open jobs shot up by 22% on a year-over-year basis. And second, any movement in the right direction should be welcomed.

Also out today were results from the National Federation of Independent Business' small-business optimism index. The figure for the current month came in at 93.5, down from last month's 94.4. As the NFIB's chief economist noted: "After two months of incremental but solid gains, the Index gave up in June. This appears par for the course, given that there is no reason for small employers to be more optimistic and lots of things to worry about."

In terms of individual stocks, IBM (NYSE: IBM  ) is the worst-performing component on the Dow this afternoon, down by 1.6% at the time of writing. The decline was not coincidentally preceded by Goldman Sachs' downgrade of the technology company's stock. The rationale paralleled a similar downgrade of Intel yesterday. According to the research note explaining the decision, it was motivated by a forecast decrease in demand from emerging markets, where IBM gets roughly $17 billion in revenue.

The Motley Fool's chief investment officer has selected his No. 1 stock for this year. Find out which stock it is in the special 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.

Best Insurance Companies To Invest In 2014

Berkshire Hathaway (NYSE: BRK-A  ) (NYSE: BRK-B  ) subsidiary Brooks Sports is drawing quite a bit of attention from Buffett devotees these days. The running-shoe maker has sprinted to 34% volume growth in both 2011 and 2012, with U.S. sales growth hitting the tape at 43% by the end of last year.

Our roving reporter Rex Moore caught up with Brooks CEO Jim Weber at the recent Berkshire shareholder meeting in Omaha. In this segment of a multipart series, Rex asks Jim what the company is doing differently to achieve this record growth.

Is Berkshire for you?
Thanks to the savvy of investing legend Warren Buffett, Berkshire Hathaway's book value per share has grown a mind-blowing 586,817% over the past 48 years. But with Buffett aging and Berkshire rapidly evolving, is this insurance conglomerate still a buy today? In The Motley Fool's premium report on the company, Berkshire expert Joe Magyer provides investors with key reasons to buy as well as important risks to watch out for. Click here now for instant access to Joe's take on Berkshire!

Best Insurance Companies To Invest In 2014: Travelzoo Inc(TZOO)

Travelzoo Inc., an Internet media company, together with its subsidiaries, publishes travel and entertainment deals from travel and entertainment companies, and local businesses in North America and Europe. Its publications and products include the Travelzoo Websites, such as travelzoo.com, travelzoo.ca, travelzoo.co.uk, travelzoo.de, www.travelzoo.es, and travelzoo.fr; the Travelzoo Top 20 e-mail newsletter; and the Newsflash e-mail alert service. The company also operates SuperSearch, a pay-per-click travel search tool; Travelzoo Network, a network of third-party Websites that list deals published by Travelzoo; and Fly.com, a travel search engine that allows users to find the best prices on flights from various airlines and online travel agencies. In addition, it provides Local Deals and Getaways services that allow its subscribers to purchase vouchers for deals from local businesses, such as spas, hotels, and restaurants through the Travelzoo Website. As of December 31, 2011, the company?s advertiser base included approximately 2,000 travel companies, entertainment companies, and local businesses, including airlines, hotels, cruise lines, vacations packagers, tour operators, destinations, car rental companies, travel agents, theater and performing arts groups, restaurants, spas, and activity companies. Travelzoo Inc. was founded in 1998 and is headquartered in New York, New York.

Best Insurance Companies To Invest In 2014: Idera Pharmaceuticals Inc.(IDRA)

Idera Pharmaceuticals, Inc., a biotechnology company, discovers and develops DNA- and RNA-based drug candidates for the treatment of infectious diseases, autoimmune and inflammatory diseases, cancer, and asthma and allergies, and for use as vaccine adjuvants. The company designs and creates proprietary Toll-Like Receptors (TLR) to modulate immune responses, including TLR agonist, a compound that stimulates an immune response through the targeted TLR; and TLR antagonist, a compound that blocks activation of an immune response through the targeted TLR. Its drug candidates include IMO-2125, a TLR9 agonist, which is in Phase 1 clinical trial for hepatitis C virus infection; and TLR7, 8, and 9 agonists that are in research stage for viral diseases. The company also develops IMO-3100, a dual TLR7/TLR9 antagonist, which is in preclinical development stage for autoimmune and inflammatory diseases, such as lupus, rheumatoid arthritis, multiple sclerosis, psoriasis, and colitis. In addition, its drug candidates also comprise TLR7 and TLR8 agonists that are in research stage for solid tumor cancers. The company has a licensing and collaboration agreement with Merck KGaA to research, develop, and commercialize TLR9 agonists for the treatment of cancer, excluding cancer vaccines; a license and research collaboration agreement with Merck & Co., Inc. to research, develop, and commercialize therapeutic and prophylactic vaccine products containing its TLR7, 8, and 9 agonists in the fields of cancer, infectious diseases, and Alzheimer?s disease; and a research collaboration and option agreement, and a license, development, and commercialization agreement with Novartis International Pharmaceutical, Ltd. to discover, develop, and commercialize TLR9 agonists for the treatment of asthma and allergies. The company was founded in 1989 and is based in Cambridge, Massachusetts.

5 Best Stocks To Watch Right Now: Hiscox Insurance Fund Ord 75p(HSX.L)

Hiscox Ltd, together with its subsidiaries, engages in the insurance and reinsurance businesses. It offers a range of marine, non-marine, aviation, and whole account reinsurance products for fixed and moveable assets, such as ships and other vessels, cargo in transit, energy platforms and installations, pipelines, subsea assets, satellites, commercial buildings, and industrial plants and machinery. The company also offers home and contents insurance, together with cover for art work, antiques, classic cars, jewelry, collectables, and other assets, as well as insurance for burglary, kidnap and ransom, seizure of assets, acts of vandalism, fires, flooding, and storm damage. In addition, it provides specialty insurance products for contingency, terrorism, bloodstock, specie, personal accident, political risks, aviation, aerospace, and construction; and insurance coverage for professional liabilities, errors and omissions, directors and officers liability, commercial office, p rofessional indemnity, and small and large technology and media E&O. Further, the company offers commercial property, onshore energy, and the U.S.A. homeowners insurance products; and marine and energy insurance products, such as marine hull, energy liability, and upstream and midstream energy insurance. It primarily serves international companies, homeowners, wealthy individuals, and small commercial enterprises, as well as technology and media, aviation and aerospace, and marine and energy sectors. Hiscox Ltd operates primarily in Bermuda, the United Kingdom, Ireland, the United States, Guernsey, France, Germany, Belgium, the Netherlands, Spain, Portugal, and Austria. It offers its products directly, as well as through brokers. The company is headquartered in Hamilton, Bermuda.

Time to Buy Apple?

Which Companies Do Well on This SEC Requirement?

The Securities and Exchange Commission sees climate change as enough of a risk that it requires companies to disclose their climate-change-related risks in their annual 10k filings. Most, however, deal only cursorily with the potential for tightened regulation, without considering the many other threats to business operations that arise from a warming planet.

A recent report from sustainable business advocate Ceres found wide discrepancies in disclosure quality among oil and gas majors. Ceres found that BP (NYSE: BP  ) , Suncor (NYSE: SU  ) , and Eni (NYSE: E  ) provided the best disclosure overall, while ExxonMobil (NYSE: XOM  ) and Apache (NYSE: APA  ) did the worst.

Eni provided good disclosure by, among other things, mentioning specific emissions reductions for its combined cycle co-generation work, and providing a detailed discussion of its flaring and carbon capture and storage efforts. BP's disclosure included a detailed analysis 
of the effects of indirect risks and opportunities on its operations. For example, BP disclosed that its "low-carbon businesses and future growth options outside oil and gas... have the potential to be a material source of low-carbon energy and are aligned with BP's core capabilities." Suncor quantified the effects of existing regulations, and also described a basis for its conclusions about materiality. The company explained how it assesses
 future regulatory risks using a carbon price range. ExxonMobil and Apache either only vaguely acknowledged various climate change risks or failed to discuss them at all.

John Vechey of PopCap Games recently joined The Motley Fool for a climate change summit. Among his guests was Stu Dalheim, vice president of shareholder advocacy at Calvert Investments. In the video below, Dalheim explains how Calvert assesses material, environmental, and sustainability issues to discover how effectively companies are recognizing their risks and working to minimize them and build sustainability.

One way for energy companies to deal with climate-change risk is to provide less carbon-intensive fuels. In that area, this home-run investing opportunity has been slipping under Wall Street's radar for months. But it won't stay hidden much longer. Forward-thinking energy players like GE and Ford have already plowed sizable amounts of research capital into this little-known stock... because they know it holds the key to the explosive profit power of the coming "no choice fuel revolution". Luckily, there's still time for you to get on board if you act quickly. All the details are inside an exclusive report from The Motley Fool. Click here for the full story!

United Technologies Helps Nudge the Dow Higher

The Dow Jones Industrial Average (DJINDICES: ^DJI  ) eked out another win today, even as the two other major indexes closed lower, as earnings season continued to march on with a mixed bag today. With some help from United Technologies' (NYSE: UTX  ) strong report, the blue chips pushed up 22 points, or 0.14%. Shares of the parent of Otis elevators gained 3% as a jump in aerospace orders and cost-cutting helped the company beat earnings estimates. EPS improved from $1.62 to $1.70, while the experts had called for just $1.57. The company's acquisition of Goodrich last year helped drive a 16% increase in revenue to $16 billion, but that was short of the consensus at $16.37 billion. United also raised the low end of its full-year guidance up to $6.00 from $5.85, keeping the high end at $6.15.

On the other end, Travelers (NYSE: TRV  ) flopped in its earnings report, finishing the day down 3.8% after saying it will cut jobs and lower auto insurance prices. Despite that news, earnings per share of $2.13 was well ahead of estimates at $1.60 as the insurer saw fewer catastrophic losses. Still, the company had a 7% decline in personal auto insurance premiums, prompting the decision to lower prices. Shares of fellow insurers also dropped on that news as it may lead to lower industrywide margins and a potential price war.

Also reporting earnings today was AT&T (NYSE: T  ) , which shed 0.5% after hours once its report came out. Profits slipped 2.1% despite an increase in revenue as smartphone subsidy costs rose. Still, adjusted per-share earnings rose inched up from $0.66 to $0.67, thanks to share buybacks, but missed estimates by a penny. AT&T's wireless division added contracts for 551,000 devices, but most of the additions were for less-lucrative tablets. Revenue improved 1.6% to $32.1 billion, topping estimates of $31.8 million.

Finally, Cisco Systems (NASDAQ: CSCO  ) shares finished down 0.6% after the networking specialist announced yet another acquisition, saying it would buy Sourcefire, which provides network security services, for $2.7 billion. The deal will provide additional revenue for Cisco, but won't necessarily lead to integration between the systems, according to analysts. Sourcefire finished up 28%, in line with the premium Cisco offered.

With the American markets reaching new highs, investors and pundits alike are skeptical about future growth. They shouldn't be. Many global regions are still stuck in neutral, and their resurgence could result in windfall profits for select companies. A recent Motley Fool report, "3 Strong Buys for a Global Economic Recovery," outlines three companies that could take off when the global economy gains steam. Click here to read the full report!

Will Tomorrow's Boeing Earnings Take Off?

Boeing (NYSE: BA  ) is scheduled to release its quarterly earnings report tomorrow, and after a tumultuous first half of 2013, investors are hoping for good news. The aerospace giant has handled the many distractions relating to the issues with its new 787 Dreamliner aircraft quite well, and Boeing's earnings look poised to post the substantial growth that shareholders have been waiting to see.

Boeing's share-price gains make the stock the second-best performer in the Dow Jones Industrial Average (DJINDICES: ^DJI  ) this year, and long-term fundamentals support the bullish case for the company for years to come. But will Boeing manage to avoid further obstacles that could put the brakes on its high-growth trajectory? Let's take an early look at what's been happening with Boeing over the past quarter and what we're likely to see in its quarterly report.

Stats on Boeing

Analyst EPS Estimate	$1.58
Change From Year-Ago EPS	24%
Revenue Estimate	$20.78 billion
Change From Year-Ago Revenue	3.9%
Earnings Beats in Past 4 Quarters	4

Source: Yahoo! Finance.

Can Boeing earnings beat estimates again this quarter?
In recent months, analysts have grown more optimistic about Boeing's earnings, raising their June-quarter estimates by a penny per share but boosting their full-year 2013 forecasts by $0.14 per share. The stock has breathed a sigh of relief, climbing almost 25% since mid-April.

With all the news about the Dreamliner, many investors failed to notice that this year's Boeing earnings have been strong. In its first-quarter report, the company managed to crush earnings expectations with a 20% rise in net income despite a 3% drop in revenue for the quarter. With plane-production numbers keeping stable from year-ago figures, Boeing reaffirmed its guidance for the year, even with its 787 Dreamliner grounded for much of the quarter.

Of course, the Dreamliner continues to dominate headlines about Boeing. Late in April, news that the plane had received FAA clearance to start flying again led to new optimism about the company. Yet earlier this month, the stock temporarily plunged after a fire aboard a 787 in London renewed fears about the aircraft's viability. Even worse, yesterday's landing-gear collapse aboard a Southwest Airlines-owned 737 once again painted Boeing in a negative light by raising new quality concerns about one of its biggest workhorse aircraft models.

Yet despite those concerns, Boeing doesn't have many direct competitors that airlines could turn to for alternatives. Rival Airbus has seen its own order backlog skyrocket to more than 5,100 planes in the face of large new orders, leaving it ill-prepared to handle a mass movement of customers away from Boeing. Embraer (NYSE: ERJ  ) , which specializes in regional jets, is expected to see its profit double for the June quarter amid accelerating earnings growth, but it has no plans to start producing large-scale aircraft that could meet airlines needs. The same is true for Textron (NYSE: TXT  ) , whose Cessna division has seen its segment revenue jump more than 20% in the past two years. Catering to the corporate-jet and small-aircraft market, Cessna poses no threat to Boeing, leaving the aerospace giant's customers without viable alternatives to obtain commercial-sized jetliners.

Moreover, Boeing might get some help from the military side of its business. Following the critical design review of its KC-46A tanker aircraft, the company issued a statement saying it believes the Air Force will approve the plane. With $52 billion in potential revenue from the tanker contract, the news would be good not only for Boeing, but also a host of subcontractors on the project that include engine-maker United Technologies' Pratt & Whitney division and radar-warning system maker Raytheon.

In tomorrow's Boeing earnings report, look past the Dreamliner to see how the company's overall production backlog and flow-through are going. If the company is able to get past its challenges and keep getting aircraft through the assembly process and out the door, then Boeing's earnings could grow substantially in the years to come.

Boeing relies on airlines as customers, but Warren Buffett has claimed that investing in airlines is a surefire way to lose your hard-earned cash. Still, two airlines are breaking all the rules by keeping costs low and avoiding direct competition -- leading to enviable profits. Click here to learn how these two airlines are leading a revolution in the industry, and discover whether they can keep delivering big gains for shareholders!

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

1 Reason to Tread Carefully in This Sector

Can the 2014 Toyota Tundra Succeed?

In recent years, Toyota (NYSE: TM  ) has been incredibly successful in the U.S. car market, with models like the Camry, Corolla, and Prius all becoming best-sellers. However, Toyota has had trouble competing with the likes of Ford (NYSE: F  ) and General Motors (NYSE: GM  ) in the full-size-truck market. Truck buyers tend to be very loyal to their favorite brands, which makes it hard for competitors to unseat Ford and GM.

Toyota is releasing a redesigned version of its Tundra full-size pickup for the 2014 model year in order to improve its position in this market.  In the following video, Motley Fool industrials bureau chief Isaac Pino talks to Fool.com contributor Adam Levine-Weinberg about Toyota's plans for the 2014 Tundra and whether this new model improves Toyota's chances in the full-size-truck market.

China is already the world's largest auto market – and it's set to grow even bigger in coming years. A recent Motley Fool report, "2 Automakers to Buy for a Surging Chinese Market", names two global giants poised to reap big gains that could drive big rewards for investors. You can read this report right now for free – just click here for instant access.

DreamWorks Animation's False Start Will Test the Power of TV Over Internet

On the eve of Netflix 's (NASDAQ: NFLX  ) second-quarter earnings report, the company got some bad news from a partner. This disaster will serve as an important test for the Netflix model of TV shows over the Internet.

DreamWorks Animation (NASDAQ: DWA  ) had high hopes for Turbo, an animated comedy about a garden snail competing in the classic Indy 500 race. DreamWorks sees this film as a tentpole, and is already working on a TV series built on the accelerated snail's content shell. Netflix has exclusive rights to broadcast this show in every country where the company offers streaming video services. You'd expect no less, because Netflix also co-produces the show.

The racing snails who failed to win box office honors this weekend. Will they do better on Netflix? Image source: PR Newswire.

So Turbo is kind of a big deal, not only for DreamWorks Animation but also for content partner Netflix. The digital video veteran has already produced five original shows, mostly to good reviews. House of Cards and Arrested Development are up for Emmy consideration in some high-value categories, and Hemlock Grove competes for some less prestigious technical Emmys. Next year, I wouldn't be surprised to see Orange Is the New Black in the running for both drama and comedy awards.

Netflix is investing untold millions ( literally untold -- Netflix never discloses the size of its original content projects) in these original shows and plans to increase these investments next year. But the Turbo series will lean on a shockingly weak tentpole.

Turbo bowed to American audiences this weekend, and the numbers are in. According to Box Office Mojo , the film scraped together $21.5 million for an uninspiring third place on this weekend's chart. Time Warner 's (NYSE: TWX  ) R-rated, low-budget horror film The Conjuring scared up a $41.5 million pole position, followed by the third week of Universal Studios' Despicable Me 2 at $25 million.

Universal owner Comcast (NASDAQ: CMCSA  ) and Warner can celebrate their unexpected successes. The Conjuring was made on a minuscule $20 million budget, and R ratings often act as box office speed bumps. Nobody expected a home run. But the largely no-name creative team delivered some serious scares, conjuring up a fantastic 84% "fresh" rating on Rotten Tomatoes. Create something great and the free word-of-mouth marketing will come, and that's what happened to Warner's demonic film.

As for Despicable Me 2, Comcast must have expected a large haircut this week as the racing snails arrived to steal potential viewers from the same target demographic. But it didn't happen. The Steve Carell vehicle with a production budget about half the size of Turbo's stayed strong in its third week. That's as much a testament to Despicable's quality as it is to the Turbo concept not appealing to kids and their parents.

This is very bad news for DreamWorks and Netflix. Turbo is underperforming last year's Rise of the Guardians, which bombed at the domestic box office despite an all-star cast and heavy marketing support. It's starting to look like DreamWorks and Netflix have a non-starter on their hands with the follow-up TV series.

It's a little early to draw any long-term conclusions from this huge miss. After all, Guardians ended up earning its keep with a strong showing overseas plus very good DVD and Blu-ray sales. I don't expect that title to sprout sequels, spin-offs, and TV series, but it's also not the unmitigated disaster that the weak opening weekend seemed to portend.

How to find the big takeaway
In the end, this becomes an important litmus test for the Netflix distribution model. If Turbo: F.A.S.T. catches on with its young Netflix audience, it could light a fire under the core film's video home sales as well. If not, well, there's your first failed Netflix show and another whiff for DreamWorks. Wait until the show premieres on Netflix this fall, and then watch out for announcements of a second season -- or lack thereof.

None of this will change the picture for tonight's second-quarter earnings report, but it's something to keep in mind for us long-term Netflix investors.

The television landscape is changing quickly, with new entrants like Netflix disrupting traditional networks. The Turbo series will shed new light on how the model really works. The Motley Fool's new free report "Who Will Own the Future of Television?" details the risks and opportunities in TV. Click here to read the full report!