Alphabet Soup: Google Parent Hits a Milestone; Premium Quality: Tesla Could Get Even Pricier; SEC Gets SCOTUS-Smacked

Whoa…

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Image courtesy of lekkyjustdoit/FreeDigitalPhotos.net

Google’s parent company, Alphabet, broke the $1000 per share ceiling and yes, that is a vey impressive feat. Even for Google. What’s more impressive, is that this milestone happened on the very same day that shares of Apple, the world’s most expensive company, was downgraded. Not that Google would be experiencing any schadenfreude, or anything of the sort. In any case, Alphabet can pat itself on the back for becoming the third S&P 500 company to break the $1000 barrier, following in the illustrious footsteps of Amazon – who achieved that milestone just last week – and Priceline. Yes, Priceline. Remember them? To be fair, Google had, once upon a time, hit $1,200 a share but then the stock split. And then it became Alphabet, and the rest is S&P history.  Of course Berkshire Hathaway also trades above $1000. Way above $1000. In fact, if you’re inclined to spending $250,156.00, you could pick up a single solitary share of Warren Buffett’s company. But then again, what’re you gonna do with just one share?

Cry me a river…

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Image courtesy of jesadaphorn/FreeDigitalPhotos.net

A new Tesla was sounding really good, at least up until the weekend when Automotive News reported that AAA is gearing up to raise its insurance rates on the super-shmancy electric automobiles. But that’s just AAA insurance. The verdict is still out on whether other insurers will follow suit. It’s all because of some very unflattering data detailing Tesla’s higher-than-usual and more expensive claims for both the Models S and Model X. In fact, those pricey claims could mean a 30% premium increase on Teslas, which makes you wonder if the fuel savings is even worth it. Tesla seems to be offended by the new data, calling it “severely flawed” and “not reflective of reality.” Apparently, the data had the audacity to compare a Tesla to a Volvo station wagon. I mean, c’mon? A Volvo station wagon? Not that I have anything against Volvo station wagons. Some of my best friends drive Volvos. And station wagons. It’s just that a station wagon is the last thing on my mind when fantasizing about being behind the wheel of a Tesla. Just saying.  In all fairness, however, Tesla boasts some of the most advanced safety features in their automobiles. Yet, none of that seems to help given the car’s expensive collision costs. In fact, claims for the Model S are 46% higher than other cars, and its losses come in at 315% higher. Yikes. Station wagons aside, those are some very un-sleek numbers. Ironically, Tesla’s medical payment claim frequency is below average while its personal injury protection losses are very low. So take that, Volvo!

Can’t touch this!

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Image courtesy of bluebay/FreeDigitalPhotos.net

Score one for Wall Street because it looks like the SEC won’t get to grab all those ill-gotten gains like it used to. At least according to the U.S. Supreme Court, which just ruled – in a 9-0 decision –  that the SEC’s use of “disgorgement” now has to face the wrong end of a five year statute-of-limitations. Disgorgment is the act of repaying money that was attained illegally, typically by people and firms in the financial industry.  For this latest Wall Street victory, the securities sector can thank Charles Kokesh, a New Mexico-based investment adviser. It all started back in 2009 when the SEC sued Kokesh for misappropriating funds from his investors. He may not be a saint, but he was ordered to pay $2.4 million in penalties plus another $35 million – which was for disgorgement purposes. The problem, Kokesh and his lawyers argued, was that much of that $35 million disgorgment figure had happened outside a five year statute of limitations. Instead of $35 million, the disgorgment should have been closer to $5 million, which is quite a substantial difference. As for the SEC, this new ruling is going to prove to be a real downer for the agency seeing as how it has since collected $3 billion for disgorgment claims.  Oh well. Maybe it’ll discover a new way around that minor, yet pesky obstacle.

 

Global Markets Fight Back Terrorists; Lumber Liquidators Whacked with Another Settlement; Starbucks Feeds America’s Hungry

The terrorists have not won…

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Image courtesy of FrameAngel/FreeDigitalPhotos.net

Markets all over the world took a beating because of the cowardly terrorist attacks in Belgium that left dozens dead and many more wounded and forever haunted. Companies dealing in travel and hospitality industries suffered the most today with Royal Caribbean losing almost 4% and Carnival Cruise Lines taking its own 3% hit. Online booking site Priceline Group endured a 3% loss as airlines like Delta Airlines and American Airlines Group lost a couple of percentage points, as well. It’s no surprise, I suppose, that healthcare stocks actually saw increases, as did material stocks. But in a big f.u. to terrorism, the Dow Jones actually picked up a point as global markets rebounded later in the day, even those in Europe. Gold also rose, because well…gold always rise. Investors consider the precious metal as a perennially safe bet. Seems fair.

Tiiiiiiimmmmbbbberrrr…

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Image courtesy of FrameAngel/FreeDigitalPhotos.net

The settlements just keep coming in for Lumber Liquidators Holdings. Today’s award goes to the California Air Resources Board (CARB) – I laughed at the acronym too – in the amount of $2.5 million. The number seemed a bit low to me, especially since 40 of Lumber Liquidators 375 stores are in California, not to mention, the company’s flooring has the potential to cause cancer from the high levels of formaldehyde present in them.  Not exactly minor details, I feel. But the other reason I’m scratching my head is because there was no formal finding of any violation, nor was there any admission of wrongdoing by Lumber Liquidators. Just saying. This settlement, by the way, has nothing to do with Lumber Liquidator’s previous settlement with the DOJ that had the flooring company shelling out $10 million to the government agency. Naturally, shares of Lumber Liquidators are up by almost 16% and closed at $13.93. But considering that shares lost more than 70% of their value since that scathing “60 Minutes” report last March, and there are still plenty of class-action suits headed toward Lumber Liquidators, you probably don’t want to hold your breath waiting for the company to fully fiscally recover. In fact, if you ask Kase Capital’s Whitney Tilson,  who is a big fan of shorting Lumber Liquidators, he thinks the flooring company actually has a 50% chance of going bust.

Bon appétit…

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Image courtesy of FrameAngel/FreeDigitalPhotos.net

Don’t feel so bad skipping that sandwich you’ve been eyeing at Starbucks. If nobody buys it, you might just help feed someone who is considered “food insecure.” The plan came from baristas and now the coffee chain has made a pledge to donate 100% of its unsold food through FoodShare and Food Donation Connection (FDC). It’s all in an effort to feed the 48 million Americans who don’t have the luxury of knowing if or when their next meal is coming.  It is estimated that 15% of American households are considered “food insecure” while at the same time an estimated 70 billion of food waste is produced by Americans that are far more fortunate. Starbucks had already been donating pastries and other types of foods that had longer shelf lives since 2010. The challenge, however, was how best to preserve the highly perishable products like salads and sandwiches. But now the FDC will send refrigerated vans to all of Starbucks 7,600 plus U.S. locations, pick up all those unsold goodies and fill the bellies of those who could really use them. Starbucks plans to have given out 5 million meals by the end of 2016.

 

William Shatner Wants $30 Billion for Water; Harley-Davidson’s Wall Street Hits and Misses; Under Armour Needs to Bulk Up Projections

Rain rain don’t go away…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Leave it to Star Trek legend William Shatner to take California’s drought emergency straight to Kickstarter. The 84 year old actor and Priceline shiller wants people to beam him up some cash – $30 billion’s worth, to be exact – so that a  four foot above ground pipeline can be built from Seattle to Nevada’s Lake Mead. The fact that Seattle doesn’t have a surplus of water to really be giving out to California, which is in its fourth year of drought, doesn’t seem to bother Shatner much. I’m guessing he didn’t ask officials in Seattle their thoughts on the idea. California Governor Jerry Brown has already issued a drought emergency and apparently there is about a year’s supply of water left. Mr. Shatner isn’t entirely convinced himself that he can even raise the $30 billion needed to build the pipeline but he is hoping to raise awareness on the issue. “If I don’t make 30 billion, I’ll give the money to a politician who says, ‘I’ll build it.’ I don’t think that last part is the best idea Mr. Shatner has ever had, but its sure to get a few people talking.

Not so hog wild…

Image courtesy of dan/FreeDigitalPhotos.net

Image courtesy of dan/FreeDigitalPhotos.net

Profits for iconic Hog maker, Harley Davidson, are up thanks to a somewhat reduced tax rate. So why the sad faces on Wall Street over the price of its shares? Because those very shares took a 6% hit today over revenue that fell 3.4% to $1.51 billion, down from $1.57 billion a year ago. The bike makers also revised forecasts that have less bikers getting on those legendary two-wheeled machines. Harley-Davidson initially expected to deliver between 282,000 – 287,000 Hogs this year. But now that range is looking closer to 276,000 – 281,000 orders. Some of that, of course, can be attributed to that annoyingly strong U.S. dollar that seems to be sucking the fun from just about every company’s earnings these days. But Harley-Davidson has also had to deal with competitors  – hard to believe that anyone can compete with a Harley – who have been offering better discounts and totally messing with the motorcycle company’s earnings. The good news is that the motorcycle brand still took in $270 million and $1.27 per share, even though analysts only expected $1.24 per share. Can someone please get those analysts on a Harley? A year ago the Hogs pulled in about $265 million at $1.21 per share.

Dude, what gives?

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Under Armour came out with earnings today and informed those that matter that it hit its revenue targets and raised its outlook. The Maryland-based athletic company even has PGA Masters Winner Jordan Spieth shilling for it. Under Armour also pulled in 5 cents per share on revenues of $805 million when analysts only called for $802.5 million. The apparel division grew 21% while the footwear division grew 41%. So why are investors still not satisfied with the athletic apparel company’s earnings? Here’s where things get dicey. Even though Under Armour raised its outlook for revenues from $3.76 billion to $3.78 billion, investors, analysts and others who throw large sums of money at the company expected higher projections of $3.82 billion in revenues. That $.o4 billion difference put a damper on the morning for many investors. Hence the stock took a bit of a hit this morning. Nothing major, just a few percentage points, but enough to put several Wall Street-ers in a bit of a snit.

Raise Praise for Walmart ; Pinterest Tries to Double Up; Priceline’s Beamed Up Earnings

You raise me up…

Image courtesy of nongpimmy/FreeDigitalPhotos.net

Image courtesy of             nongpimmy/FreeDigitalPhotos.net

It’s a good day to be a Walmart employee. No, seriously. It is. The gargantuan retailer just announced it’ll be raising the salaries of some 500,000 of its hardworking employees raising to about $1.75 more than the Federal minimum wage. Full-time employees will go from an average of $12.85 an hour to about $13 per hour. Part-timers will see their paychecks go up to $10 per hour from the average $9.50 they make now. The pay-raise fun begins in April and CEO Doug McMillon says it’s all part of a master plan to improve customer service, employee morale, etc. Those are all nice and pleasant things, of course, but no doubt Walmart is really hoping it will also lead to higher sales and profit. Walmart figures higher pay will help attract and retain employees that know the value of good customer service. And if it improves its somewhat tarnished reputation for its lousy pay practices in the process then why not?  So how bad could their pay practices have been that the company is implementing this change? Well, a majority of its employees’ salaries were so low that, all together, they were eligible to receive millions – I repeat, millions – of dollars in public benefits.  This initiative will cost Walmart about $1 billion, but hey, you’re worth it.

 In the land of unicorns…

Image courtesy of vectorolie/FreeDigitalPhotos.net

Image courtesy of vectorolie/FreeDigitalPhotos.net

The next social media darling that may be headed off to the wonderful, not-so-mystical land of Silicon Valley “unicorns” is Pinterest. By “unicorns,” I am referring to billion dollar startups, a term thoughtfully coined by Cowboy Ventures founder Aileen Lee. But apparently these “unicorns” are turning out to be a bit more ubiquitous than previously thought as Pinterest is but among a larger group of “unicorns” and “decacorns” and “super-unicorns”…but I digress. Founded by CEO Ben Silbermann, Pinterest graciously allows users to “pin” images of all kinds of stuff that appeals to them on their boards, thereby bringing light and joy to the world. And now Pinterest is said to be adding a “buy” button. That ought to bring even more light and joy. Adding e-commerce into the social media start-up picture tends to prove lucrative on so many levels. Pinterest is rumored to be raising funds to the tune of $500 million. Any takers? This new round of funding would put the company in the $11 billion valuation stratosphere, nearly doubling its $5 billion valuation it had back in May.

But what does this mean for Captain Kirk?

Image courtesy of jscreationzs/FreeDigitalPhotos.net

Image courtesy of jscreationzs/FreeDigitalPhotos.net

Priceline, the company shilled by the inimitable William Shatner, beat Wall Street estimates for its fourth quarter earnings taking in almost $452 million with adjusted earnings at $10.85 per share. Well beam me up on those numbers, Scottie, because analysts only expected Priceline to score $10.05 per share. Those impressive digits were helped by growth from hotel and car rental reservations. Revenues were $1.84 billion and, once again, those analysts predicted the online travel booking service would only rake in $1.8 billion. Naturally, shares of Priceline took a joyous upswing in the news and clearly sending the message to Wall Street that the Orbitz-Expedia deal didn’t seem to have any adverse affects on the company. Well, not yet, anyway. If you’re in the market for some shares of Priceline, it’ll only set you back about $1,200.00…per share.

Expedia Challenges Priceline With its Latest Acquisition; Retail Sector: Where Have All the Shoppers Gone? Costco Breaks Up With Amex

Book it…

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Priceline look out! And you too, William Shatner. Expedia just announced its lofty plans to buy Orbitz Worldwide Inc.for $1.34 billion, which squares out to about $12 a share at a 25% premium. The folks at Expedia feel it’ll help them give Priceline Group Inc. a real run for its money – and reservations, I suppose. Orbitz already picked up Travelocity a while back for $280 million and now the online travel booking service also gets CheapTickets, and ebookers as part of this latest deal. As you may recall (and it’s perfectly fine if you don’t), Priceline itself made a few purchases itself last year when it scooped up a stake in ctrip.com International and OpenTable Inc. Apparently, mergers and acquisitions in the online booking arena are all the rage right now but let’s just see how it pans out fiscally for the consumers booking all those services.

Show me the money…

Image courtesy of stockimages/FreeDigitalPhotos.net

Image courtesy of stockimages/FreeDigitalPhotos.net

Will the retail sector get it right already? January proved to be a colossal fiscal bummer as the Commerce Department announced that sales in the retail sector fell, yet again, to 0.8%. Economists forecasted it would only drop 0.4% and it’s the second straight month to drop after December’s dismal 0.9% plunge. So what gives? After all, gas prices are low, employment numbers are rockin’ and even wages are coming up…a smidge. Apparently, Americans have been more inclined to actually pay down some of their debt and even save up some cash for a rainy day. The nerve of those fiscally responsible Americans, I tell you. But economists, the same ones who predicted those retail numbers would only fall to 0.4% instead of the 0.8% it did fall, are predicting that those numbers should come right back up to a more respectable level, if we give it some…space. Let’s just hope they’re right this time.

While we’re on the topic of retail…

Image courtesy of photoraidz/FreeDigitalPhotos.net

Image courtesy of photoraidz/FreeDigitalPhotos.net

Costco shoppers rejoice. Next year when you go shopping at the wholesale warehouse you needn’t bother whipping out your Amex card anymore. The world’s second largest retailer and the charge card company just couldn’t work things out and thus an exclusive relationship between Costco and American Express is coming to an end March 31, 2016. The exclusive agreement allowed for Costco to pay a much smaller rate than other companies but alas, all good things must come to an end. The rate was so low , in fact, that it explains why the deal even lasted as long as it did. And thus, a sixteen year relationship has thrown in its fiscal towel. Sniff sniff. In Canada, a similar deal also came to an unfortunate demise last year. Oh Canada!  On Wall Street shares of American Express, took a bit of a hit while Costco shares actually went up. Perhaps next year, as you find yourself stocking up on a year’s supply of toilet paper and deodorant, you might just get to use your Visa or Mastercard, two cards that have so long yearned to be a part of the Costco magic.

United Sues Resourceful Computer Whiz; Twitter Is Making A Follower Out of You; California’s Bagged Out

Hide and seek the city…

Image courtesy of anankkml/FreeDigitalPhotos.net

Image courtesy of anankkml/FreeDigitalPhotos.net

United Airlines and Orbitz are suing a 22 year old computer whiz for doing something that isn’t necessarily illegal. The very resourceful and industrious Aktarer Zaman found a nifty little way to score some reasonably priced seats on airlines and runs a website called Skiplagged.com. Dubbed the “hidden city” strategy, you simply purchase a ticket that happens to have a layover in your destination city and then just skip the last leg of the flight. But you need to make sure it’s a one-way ticket and don’t check bags, since the bags will most definitely end up in the final destination even if you have no intention of ever going there. While others call the idea genius, United Airlines and Orbitz have, no doubt, other choice words for Zaman and are seeking $75,000 in lost revenue. (Even though airlines are reporting record profits, but I digress). Zaman, however, alleges he hasn’t made any profit from the website and argues that all he did was expose an “inefficiency.” United and Orbitz call it unfair competition and “strictly prohibited travel” (boohoo), even though the airlines are well aware of “hidden cities” which have been around for many years now.

I’m a leader, not a follower!

Image courtesy of Master isolated images/FreeDigitalPhotos.net

Image courtesy of Master isolated images/FreeDigitalPhotos.net

Twitter started a new experiment by selling ad space on your timeline. But Will Shatner doesn’t like it. Not one single bit. All the hoopla began when the Star Trek legend noticed a MasterCard ad appearing on his “following” list.  This peeved the actor and Priceline sheller quite a bit, especially because he wasn’t following MasterCard’s account. Shatner then tweeted, “Why am I following MasterCard when I didn’t add them? I do not appreciate this.” Here here, Captain Kirk. Mr. Shatner, and presumably others, don’t like that it might be assumed that they are promoting and endorsing brands just because Twitter put those brands on their “following” lists. Shatner, it appears is not the only celebrity who seems to have brands appearing in their following lists.  Non-celebrities have this issue too, but who cares about them. While Twitter has been engaging in this practice since 2013, there is no word yet on how the micro-blogging website will proceed with Mr. Shatner’s complaints. And those of regular people, as well.

I’m bagging you to please stop…

Image courtesy of winnond/FreeDigitalPhotos.net

Image courtesy of winnond/FreeDigitalPhotos.net

Looks like Californians weren’t digging the plastic bag ban, after all. Opponents of the plastic bag ban collected a whopping 800,000 plus signatures to force a referendum on the issue, an especially impressive feat since only 504,000 signatures were actually needed. The American Progressive Bag Alliance (I swear I could not make that up if I tried) which is made up of several business groups and plastic bag manufacturers said that Senate Bill 270, aka the plastic bag ban, has less to do with helping the environment than it does with money. The APBA said “SB270” was basically a “back room deal” since stores make money by getting consumers to purchase reusable bags from them. Californians Against Waste are hearing none of that, arguing that the culprit-y bags not only pollute the environment but then have the nerve not to bio-degrade on top of it. The group also says that plastic bag manufacturers profit by selling $200 million worth of bags so it’s in their best interest to keep those bags around. In any case, once the signatures are validated, the fate of the bags, reusable and otherwise, will rest in the hands of California voters.

Priceline Pays a Premium, Online Gambling Stateside? And GM Has Recall Deja Vu

Book this…

Image courtesy of smarnad/FreeDigitalPhotos.net

Image courtesy of smarnad/FreeDigitalPhotos.net

Priceline.com is making big headlines and believe it or not it has nothing to do with William Shatner. Or Kayley Cuoco. Instead, the online hotel booking giant just picked up online restaurant reservation company, OpenTable, to the very hearty price of $2.6 billion. Priceline Group, which also owns Booking.com, Kayak and other companies, paid approximately $103 per share, a 46% premium in an all cash deal. Shares of of OpenTable shot up 40% from Thursday’s closing price. OpenTable makes reservations for approximately 15 million diners a month to over 31,000 restaurants worldwide. Restaurants pay a fee to OpenTable for the service.

Bet on this…

Image courtesy of foto76/FreeDigitalPhotos.net

Image courtesy of foto76/FreeDigitalPhotos.net

Speaking of selling businesses, the world’s biggest online poker company, PokerStars, has found a buyer. Canadian-based Amaya Gaming (AMYGF), a gambling equipment supplier,  is betting on the site to the tune of $4.9 billion. Of course, with gambling comes certain regulatory issues and other laws that sometimes make it difficult for online gaming sites to operate. Well in the US, anyways. PokerStars already had to shell out $731 million to settle some money laundering issues. Apparently, the company circumvented a few internet gambling laws, so the Department of Justice isn’t that enthusiastic about the company making its entrance back into the US. In fact its founder, Isai Scheinebrg, is currently under indictment in the US. But the timing of the deal shows signs – maybe subtle in their own special way – that the US is looking to deregulate the pastime.

Not a total recall…

Image courtesy of suphakit73/FreeDigitalPhotos.net

Image courtesy of suphakit73/FreeDigitalPhotos.net

While GM CEO Mary Barra is getting set to return to Washington next week, the auto company has announced yet another recall. Make that recalls. Many many recalls. Over 500,000 vehicles are being recalled. If only GM could run a tab for recalls…It had a staggering 38 of them this year. This time GM is recalling Chevy Camaros, Saabs and Buick LaCrosses. It seems that in a Camaro, when a driver’s knee bumps the key fob, it can cause the key to move out of the “run” position and lose power.  Definitely problematic. Just a week ago GM was accused of “incompetent negligence.” The company had to hand over a $35 million fine for its aforementioned “incompetent negligence.” Fifteen people were finally fired over the previous recalls involving the ignition switches. Which hardly seems like much considering that those involved knew of the problem for thirteen years. Yes. Thirteen years. Not days. Not weeks. Not months. YEARS.