Herbalife Shares Slump 10% On EPS

(Photo by: Heidi Gutman/CNBC)

Nutrition supplement company Herbalife reported disappointing earnings, and shares slid lower in after-market trading.

Herbalife (HLF) reported second-quarter adjusted profit of $1.55 per share, a 10% increase over the prior-year results. But analysts expected Herbalife to post second-quarter earnings of $1.57 per share, according to FactSet and MarketWatch.

Shares of Herbalife, down 10%, cascaded lower as the headline rippled through after-market trading. The stock rose 2% Monday in regular trading, anticipating better news.

In its press release on results, Herbalife said second-quarter worldwide volume increased 5% compared to the prior year period. The company raised its fiscal 2014 adjusted earnings-per-share guidance to a range of $6.17 to $6.32 per share.

Herbalife had reported better-than-expected earnings for 21 quarters in a row. High-profile investor Carl Icahn has defended the business in the face of short-seller Bill Ackman of Pershing Square, who thinks Herbalife is a pyramid scheme.

 

Can NVIDIA's SHIELD Tablet Really Be the Next Big Thing in Gaming?

NVIDIA just expanded its SHIELD product lineup with a new tablet and gaming controller, Credit: NVIDIA

"We all own tablets. But we all wish we could do more with them."

So began NVIDIA Corporation's (NASDAQ: NVDA  ) initial introduction to its new Android-based SHIELD tablet last week. Titled "Gamers Deserve a Tablet That Can Do More," the post ultimately makes no secret of NVIDIA's ambitions to change mobile gaming for the better.

It's got the specs to do so: The SHIELD tablet notably features an 8-inch full HD display, front-facing speakers, NVIDIA's mobile powerhouse processor in the 192 Kepler-core K1 GPU and a 2.2 GHz ARM Cortex A15 CPU with 2GB RAM -- a big step up from the Tegra 4-powered Note 7, which I recently noted NVIDIA was already pushing hard to demonstrate to gamers that tablets can offer so much more than we think. And it's reasonably priced, too, with the 16GB and 32GB versions retailing for $299 and $399, respectively.

In addition, rather than relying on third-party controllers as it previously had with the Note 7, NVIDIA also simultaneously introduced its own SHIELD wireless controller as an optional $59 accessory -- something crucial for any hardcore gamer to take the tablet seriously. And similar to the SHIELD portable handheld console NVIDIA launched around this time last year -- which NVIDIA still insists it will continue to support and develop from here -- the SHIELD tablet will not only serve as a solid portable Android gaming platform, but also supports low-latency streaming of your favorite titles directly from your gaming PC to the tablet or an HD TV.

Here's NVIDIA's real end-game
That brings me to a curious follow-up blog post from Jeff Fisher, senior VP of NVIDIA's PC business, which aims to explain exactly why they launched the new devices.

Android already has more than 1 billion monthly active users, Credit: Author SS, Google I/O

As it stands, Fisher explains, Android gaming today sits pretty much right where PC gaming was around two decades ago: It's an open platform with an enormous user base -- more than one billion 30-day active users, in fact, as of Google's (NASDAQ: GOOG  ) (NASDAQ: GOOGL  ) I/O Conference last month.

"But," Fisher went on, and like the PC industry back then, "the underlying performance, software tools and resulting content have yet to be delivered."

Now, however, and thanks in no small part to NVIDIA's efforts over the years, the global PC gaming market is on track to exceed $25 billion this year.

So, can lightning strike twice? Actually, I think the shift is already well under way.

After all, as I noted only last month, games accounted for nearly 90% of Google Play's revenue in the first quarter, and Google Play Games growth accelerated to tack on 100 million new users accounts over the previous six months alone. What's more, Google management stated their company paid out four times as much money to developers in 2013 compared to 2012.

But NVIDIA, for its part, wants to specifically kick-start Android as a serious gamers' platform with its SHIELD devices. Over the long run, what better way to do so than by taking the necessary technology and cramming it into a tablet, which effectively sits at the center of the current Android revolution? Going forward, the capabilities of mobile devices -- both from a raw processing and power management standpoint -- will only continue to advance. And with it, so, too, will the quality and capabilities of gaming content and software accessible to the broader Android community.

Now don't get me wrong: This doesn't mean the SHIELD tablet needs to be a smashing success to prove its point. Rather, it simply needs to raise some eyebrows as a solid first step, and spur what NVIDIA clearly views as a multiyear journey.

Personally, from an investors' perspective, that kind of thinking is exactly what I love to see.

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What today's anti-Obamacare rulings mean to 4.7 million Americans

NEW YORK (CNNMoney) Some 4.7 million Americans could be at risk of losing their Obamacare subsidies if Tuesday's federal appeals court in the D.C. Circuit ruling stands.

These are the folks who received subsidies to purchase their health insurance through the federal Obamacare exchange, healthcare.gov.

The three-judge federal panel said, according to the Affordable Care Act, individuals cannot use tax credits or subsidies to buy health insurance on the federal exchange. The Obama administration plans to appeal.

However, later Tuesday, another federal appeals court unanimously upheld the ability for enrollees to receive subsidies on the federal exchange.

For Americans receiving subsidies, nothing will change until the legal court battle ends. People in the 14 states and Washington D.C. that run their own exchanges would not be affected by this ruling.

Subsidies are key to the Affordable Care Act's success: About 87% of those who signed up for Obamacare plans on healthcare.gov received them.

Many people feel they cannot afford health insurance without help.

The subsidies limit the cost of coverage to no more than 9.5% of one's income for those who qualify. Those eligible for subsidies paid an average of $82 a month, compared to $346 without assistance, the administration said last month.

"These subsidies are extraordinarily important," said Ron Pollack, executive director, Families USA, a consumer group that supports Obamacare. The assistance makes a "critical difference" in whether low- and moderate-income Americans can afford coverage.

Anyone earning up to 400% of the poverty line -- up to $45,960 for an individual and $94,200 for a family of four -- was eligible for a premium subsidy during the initial open enrollment period, which ended March 31. Additional cost-sharing subsidies are available to those with incomes below 250% of the poverty line.

Dow Earnings: Is It the Big Mac, or the Little Wallet?

“Oh, to be back in the land of Coca-Cola (KO),” Bob Dylan once sang, and the lyric popped in our head this morning, because the news crossing the Tape on Tuesday – big, blue-chip earnings reports and key consumer data – provides a pretty good look at how things are in the land of Coca-Cola.

Tuesday is a big day for Dow components. Six of the index’s 30 members report earnings (five before the bell, one after market close), providing an unusually good “tell” on the state of the consumer both here in the U.S. and globally.

Coca-Cola, McDonald's (MCD), DuPont, United Technologies (UTX) and Verizon (VZ) all reported earnings before the bell. Microsoft reports after the market closes. The Street was not impressed. Of the five that reported, only Verizon is higher in midday trading; the others are all in the red, with Coke down 3%. That’s on a day when the Dow itself is up about 70 points.

Revenue growth tells you why. Verizon’s revenue rose 7.5% to $21.5 billion from the year prior period. United Technology saw revenue up 7.4% to $17.2 billion. McDonald’s rose 1% to $7.2 billion. For Coke, it was down 1% to $12.6 billion. DuPont’s also slipped to $9.7 billion from $9.8 billion.  None of those are particularly strong numbers.

Of that group, Coke, McDonald’s and Verizon probably give the cleanest read of the consumer. The first two saw familiar struggles, and the latter’s nifty increase came with an asterisk.

Verizon found itself getting a big boost from tablet sales, which helped it draw in about 50% more customers than it did a year ago. “Tablets are extremely good for the industry, not just for Verizon,” CFO Fran Shammo said. The rub? That growth came amid heavy promotions, some of which included giving customers a free tablet with existing accounts.

McDonald’s same-store sales were down 1.5%, which the company attributed to “negative comparable guest traffic amid ongoing broad-based challenges.” In other words, the company is saying that the problem isn’t the quality of the Big Mac but the quantity of spare cash in their customers’ wallets.

For the S&P 500 companies as a whole, this is looking like another lackluster earnings season. With about a quarter of the companies having reported, Thomson Reuters is pegging second-quarter earnings growth at 5.1% overall, and that once again is a disappointment; on July 1, growth was pegged at 6.2%, the firm said. On Jan. 1, the estimate was for 9.7%.  Revenue growth is now expected to be a modest 3.4%.

The question is: Do these corporate reports speak to broader issues? Coke, for example, saw flat soda volume in North America. Is that about consumer purchasing power, or changing tastes?

This morning’s reports on consumer prices and wages help provide an answer. Consumer prices, including food and energy and not seasonally adjusted, were up about 2.1% from a year ago. Adjusting for that inflation, average hourly wages were actually down 0.1% in June from a year ago.

In other words, even that relatively mild amount of inflation is more than consumer wages can compensate for, which explains the weak revenue growth, and consequently implies that McDonald’s problems are more about their customers’ wallets than the Big Macs.

Why Next Week's Earnings Are Critical to Facebook Stock

Facebook Inc. (Nasdaq: FB) stock was rattled Tuesday when U.S. Federal Reserve Chairwoman Janet Yellen singled out valuations on social media and biotech stocks as "stretched." FB stock then slipped 1.08% to $67.17. Volume was a hefty 43,984,000 shares, landing FB on Tuesday's list of most actively traded stocks.

"In aggregate, investors are not excessively optimistic regarding equities," Yellen said in her semiannual testimony before Congress. "Nevertheless, valuation metrics in some sectors do appear substantially stretched - particularly those for smaller firms in the social media and biotechnology industries."

Industry experts were quick with the comebacks.

Leon Cooperman, the legendary chairman and chief executive officer of Omega Advisors Inc., said Wednesday on CNBC, "What does Janet Yellen know about valuation?"

Paul Marshall, co-founder and chairman of Marshall Wace LLP, one of Europe's largest hedge fund groups, quipped at CNBC's Delivering Alpha conference on Wednesday that Janet Yellen should to stick to her day job.

Facebook shares were quick with a rebound, however, bouncing back 0.49% to $67.66 by Wednesday's close.

Next week Facebook will come under intense scrutiny again when the company reports second-quarter earnings. With FB stock trading just some 7% off its all-time high of $72.59 and up nearly 155% over the past year, the stakes are indeed high...

Earnings Preview: These Are the Numbers That Could Move FB Stock Higher

Facebook is scheduled to report second-quarter earnings on Wednesday, July 23, after the market close.

Data from The Wall Street Journal shows the consensus estimate is for earnings per share of $0.32, up from $0.28 three months ago and up from $0.13 in the same quarter a year earlier.

Here's a breakdown of what analysts will be looking for in FB earnings...

Revenue

Revenue growth continues to be a key and closely watched metric. The Menlo Park, Calif.-based company has impressed with robust year-over-year (YOY) growth rates for the last four quarters. In Q1 2014, FB posted revenue of $2.5 billion, handily ahead of the $2.36 billion analysts were looking for and a 72% increase compared with the $1.46 billion booked in Q1 of 2013.

Analysts expect revenue of $2.81 billion for Q2 2014, up 55% YOY. While that would be a healthy growth rate, it would also mark a notable growth slowdown. It could also be a sign that FB's meteoric revenue growth rate has peaked.

This next metric already accounts for the majority of Facebook's revenue - and there's still plenty of room for growth ahead...

Mobile Advertising

Mobile ads accounted for 59% of FB's revenue in Q1. That was up 30% YOY and came in ahead of the 56% industry experts had projected.

Early forecasts have mobile ad revenue showing continued strength, accounting for 62% of FB Q2's revenue.

More importantly, there is still room for more growth in the mobile arena. According to a report from Gartner, the global mobile advertising market will grow from $13.1 billion in 2013 to $41.9 billion by 2017 at a compound annual growth rate of 34%.

Facebook continues to improve the relevancy of the ads that reach users. Improving ad relevancy doesn't just help marketers grow their business, it also improves Facebook's ad click-through rates.

Daily Active User Count

Facebook's member count has swelled to about 1.28 billion. That whopping total is one of FB's greatest competitive advantages.

Over the last several quarters, however, a greater emphasis has been placed on daily active user count - especially from advertisers. The tally in Q1 was 820 million, up 6% YOY. That figure is expected to increase 4% in Q2 to 834 million.

Facebook breathed a sigh of relief last month when a Forrester Research survey found FB remains teen users' favorite social media site - by a long shot.

Some 28% of teens who are on Facebook say they use it "all the time." That was a higher percentage than teens said about any other social media site.

Engagement Rate

Just as important as daily active user count is the amount of time users stay on the site, otherwise known as the engagement rate.

Advertisers closely watch this figure. You see, the longer a user stays on the site, the more ads they see and the more likely they are to click on an ad to make a purchase.

Facebook continues to add new features to keep members coming back often and staying on the site longer. Some of these new additions, like a new microphone app allowing Facebook to listen to what a user is doing, and an opt-in "Nearby Friends" app providing real-time location sharing, have raised privacy issues. FB has so far managed to shrug off such concerns.

Of the industry experts that follow FB stock, five have an "Overweight" rating on the stock, 34 have a "Buy," and four maintain a "Hold." There are no "Underweights" or "Sells." The median price target is $80, according to data from The Wall Street Journal.

Don't Miss Today's Top Story: If you follow the headlines, you'd think the last place to invest your hard-earned money is in healthcare. But this pick has beaten the S&P 500's returns by more than 50% over the last two years, and it's headed higher. Don't hesitate on this industry boom that's already here...

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Are Acuity Brands and Cree the Best LED Lighting Plays?

Shareholders in lighting company Acuity Brands (NYSE: AYI  ) were given a rude reminder of the risk of holding a highly rated stock recently. The company's third quarter results missed estimates and the stock plunged more than 15%. But it might not all be so bad. Acuity's management doesn't give earnings guidance, so Fools should expect some volatility around the results. In addition, the company is attractive for a host of reasons, many of which also apply to Cree (NASDAQ: CREE  ) and Hubbell  (NYSE: HUB-B  ) . Is this a good buying opportunity in Acuity Brands?

Acuity Brands, Cree, and Hubbell: cyclical and secular growth prospects
Acuity Brands is attractive because it has cyclical growth prospects via an upturn in spending in the commercial and industrial construction sector. In addition, it also has a secular growth story from the growth in utilization of LED lighting. Given the company's P/E ratio of 33 times current earnings, it's reasonable to conclude that Acuity needs both these growth drivers to perform in order to take the stock higher.

The good news is that the indications from Cree's LED lighting results is that the secular story is very much intact. Cree manufactures LED products, lighting (LED based), and power and radio frequency products. In its latest set of results, LED products (which service a range of industries) only grew 3%, but Cree's LED lighting solutions grew 35% and now make up 44% of its total sales from just 37% last year. Moreover, Cree's management expects "double digit growth in lighting in both LED fixtures and LED bulb" -- good news for Acuity because LED lighting sales now make up a third of its overall sales.

As for the expectation of a cyclical pickup in lighting demand, investors need to appreciate that construction activity was held back in the winter due to severe weather. But Fools already know that anecdotal and industry data is pointing to a stronger second half for commercial construction. Hubbell, a rival company to Acuity, manufactures electrical systems, power systems, and lighting products for the residential and nonresidential markets. In line with the industry, its first quarter performance was hampered by the severe weather, but in a Q1 2014 earnings call Hubbell's management added, albeit tentatively, to the chorus of companies suggesting an uptick in construction activity: "[B]ut certainly we see some dynamics within the markets that may end up resulting in some upside going forward on the nonresidential construction." 

Moreover, Hubbell is interesting because its management commented that residential lighting was the strong area in the quarter, rather than weather-affected commercial and industrial lighting. In other words, commercial and industrial lighting was held back by the weather. Given that Acuity's core strength is in nonresidential lighting, it's reasonable to expect that Acuity's lighting results will improve with better weather in 2014.

Acuity and Cree display uneven growth
While the outlook for LED lighting looks assured, it's also likely to follow a variable growth pattern. There are a few special factors that Fools need to consider about the market.

One of the biggest deciding factors in making the switch from conventional to LED lighting is the cost efficiency of using a LED light. Simply put, there is pressure on LED manufacturers and lighting companies to spur adoption by lowering prices or investing in increasing LED efficacy. For example, in Cree latest quarter its management disclosed that its lighting margins were below expectations (lighting gross margins fell 320 basis points to 27.4% in the quarter to April) due to LED bulb price reductions.

Moreover, the mix of lighting products sold in the quarter will also affect margins for Cree and Acuity. On an adjusted basis, Acuity's gross margins fell by 70 basis points to 40.3% even while net sales increased by 11.5%. The reasons behind the fall were due to negative foreign exchange effects, a warranty issue due to a design defect in an older product, and a negative product mix shift. Acuity's management described the latter as a "temporary activity" that is "impossible to predict". Therefore, Fools shouldn't get too wrapped up in any one quarter's results, especially coming from a company that doesn't give earnings guidance.

Moreover, growth industries require growth products, and Acuity's investment in ramping up its electronic component capabilities reduced gross margins by 20 basis points in the quarter. Furthermore, management expects further investment to constrain gross margins "over the next few quarters." Acuity needs to make these investments because selling lighting controls (alongside LED lighting) is a key component of its growth plan.

Clearly, LED lighting is a growth industry, but it won't come without some bumps along the way.

The bottom line
The long-term outlook for Acuity is good. Cree is generating strong growth with LED lighting, and Hubbell is also seeing relative strength with its lighting solutions. Indeed, analysts have Acuity's EPS rising by 19% and 25% in the next two years. Good growth looks assured, but for the reasons discussed above, Fools can expect some volatility along the way. On a forward P/E of more than 23 times earnings to August 2015, the stock doesn't look great value right now, but it's well worth following for a future entry point.

Leaked: Apple's next smart device (warning, it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

Why UnitedHealth Group Will Move the Dow Tomorrow

The strong results we've seen in the first week of earnings season have helped push the Dow Jones Industrial Average (DJINDICES: ^DJI  ) to fresh intraday highs. Yet tomorrow morning, Dow investors will get a new read on the economy from a different perspective, as health-insurance giant UnitedHealth (NYSE: UNH  ) will give its latest results. Even as most investors will be focused on how UnitedHealth does compared to WellPoint (NYSE: WLP  ) and other insurance peers, UnitedHealth's results will have implications for Dow companies elsewhere in the health care sector. With reform affecting all corners of the health care market, investors can't afford to watch only a single part of the sector to get a full understanding of the state of the industry.

UnitedHealth expects to release its earnings report before the market opens Thursday morning -- last quarter's report was available to the public just after 6 a.m. EDT. The Dow component will then hold a conference call at 8:45 a.m. EDT to discuss the results.

Source: UnitedHealth.

Investors aren't entirely confident about UnitedHealth's prospects, with expectations that revenue will rise while net income levels fall. It's tempting to blame health care reform for the earnings shortfall, and indeed, adapting to the new requirements of the Affordable Care Act and other federal program guidelines has taken substantial effort for UnitedHealth. One of the biggest risks that UnitedHealth, WellPoint, and their peers have to deal with is the potential for dramatic cuts in reimbursement rates from Medicare and other federal and state-government programs. Obamacare in particular has increased reliance on Medicaid, and while that has helped bolster customer counts for health insurers, it also makes insurers even more dependent on what the government decides is appropriate payment for the services that UnitedHealth and its peers arrange for.

Source: University of Michigan Medical School Information Services, Flickr.

But UnitedHealth faces some other issues that have held back its performance recently. Pharmaceutical companies both within and outside the Dow Jones Industrial Average have seen substantial growth lately, with blockbuster drugs coming to market and helping to replace revenue from older drugs that have lost patent protection. For UnitedHealth, WellPoint, and other health insurers, though, brand-name drugs represent a huge cost of business, eating into their profit margins and diverting income toward pharma giants. Similarly, medical-device innovations can boost prospects for the companies that produce and sell them, but high-priced equipment often leads to higher costs for procedures, and that can crimp UnitedHealth's profits as well.

UnitedHealth will move the Dow tomorrow as investors look not only at the prospects for the health insurance industry, but also at its interaction with drug companies and other health care providers. In the fixed-sum game of health-care reform, gains for UnitedHealth almost certainly come at the expense of other players in the industry, and Dow investors must accurately assess which companies will feel the brunt of any pain that helps UnitedHealth boost its profits.

Leaked: This coming blockbuster will make every biotech jealous
The best biotech investors consistently reap gigantic profits by recognizing true potential earlier and more accurately than anyone else. Let me cut right to the chase. There is a product in development that will revolutionize not just how we treat a common chronic illness, but potentially the entire health industry. Analysts are already licking their chops at the sales potential. In order to outsmart Wall Street and realize multi-bagger returns you will need The Motley Fool's new free report on the dream-team responsible for this game-changing blockbuster. CLICK HERE NOW.

Dollar extends gains after Yellen’s comments

Reuters U.S. Federal Reserve Chair Janet Yellen testifies before the Senate Banking Committee on Capitol Hill in Washington July 15, 2014.

The dollar was higher against major rivals Wednesday, slightly extending its overnight gain following comments by the head of the Federal Reserve, but finding it unable to advance much further without fresh cues during the Asian session.

As of 04:50 GMT, the dollar rose to ¥101.74 compared with ¥101.68 late Tuesday in New York. Meanwhile, the euro fell to $1.3562 from $1.3568 after hitting a one-month low of $1.3560 in mid-afternoon trade.

Click to Play Yellen, the economy and mortgage-backed securities

Sara Murray and Roger Bayston discuss Fed Chairwoman Janet Yellen's congressional testimony.

The greenback's rise during Asia session tracked its overnight gain in the wake of comments by Federal Reserve Chairwoman Janet Yellen that interest rates would climb earlier and faster than expected if U.S. data on inflation and employment continue to improve.

"If the labor market continues to improve more quickly than anticipated by the (Fed) ... then increases in the federal-funds rate target likely would occur sooner and be more rapid than currently envisioned," she told the Senate Banking Committee. The Fed has held its benchmark short-term rate near zero since late 2008.

The dollar (USDJPY)  went as high as ¥101.78 in mid-morning before turning top heavy. Market participants pointed out that selling orders are stacked up around ¥101.80-¥102.00, keeping a lid on further gains.

"U.S. interest rates are unable to rise successfully," said Kyosuke Suzuki, head of FX and money-market sales at Societe Generale. "With groundwork to allow the dollar buying not being set, it is hard to expect the situation to lean toward a stronger dollar this week."

Mr. Suzuki expects the greenback to trade in a tight range of ¥101.20-¥102.00 for the rest of the week.

Given the recently stronger correlation between the dollar-yen and U.S.-Japan interest-rate differentials, the reaction of U.S. long-term rates to economic data needs to be closely monitored, said Junya Tanase, chief FX strategist at J.P. Morgan.

The dollar could go either way against the yen over the short term, but is more likely to fall, given strong downside pressure on U.S. Treasury yields and weakness in the dollar across the board, Mr. Tanase said.

Investors may need to be more cautious about the risk of a dollar-yen fall in the case of weak U.S. economic data such as producer prices, industrial output and capacity utilization, later Wednesday, he said.

In other currency trading, the euro (EURJPY)  was at ¥137.97 from ¥137.96.

The WSJ Dollar Index (XX:BUXX)  , a measure of the dollar against a basket of major currencies, was up 0.07% at 73.07.

More must-reads from MarketWatch:

Recap of Janet Yellen's appearance before Senate

Decoding Yellen: Sooner rate hike means March at the earliest

China GDP beats, but will there be more stimulus?

Microsoft CEO Satya Nadella: Ready to Think Outside the "Devices and Services" Box

Just before stepping out of Microsoft 's (NASDAQ: MSFT  ) CEO office, Steve Ballmer set the company to focus on a devices and services strategy. It's a carbon copy of the strategy that made Apple (NASDAQ: AAPL  ) the most valuable company in the world, and Redmond has been making steady headway toward this goal. The traditional old software sales core is giving way to Microsoft-branded tablets and set-top boxes, with Nokia's mobile expertise thrown in for good measure.

But Satya Nadella, who took the reins from Ballmer in February, is ready to move beyond the simple "devices and services" thinking.

Microsoft CEO Satya Nadella is looking to make some big changes to his company. Source: Microsoft.

In an open letter to Microsoft employees today, Nadella started to narrow down his long-term focus. "While the devices and services description was helpful in starting our transformation, we now need to hone in on our unique strategy," Nadella wrote.

Working in this "cloud-first and mobile-first world," it's not good enough to simply sell a few products into the cloud and mobile markets. Instead, Nadella wants to rebuild the entire company so that every effort feeds into these two core opportunities.

Microsoft is launching this approach from a strong platform. "We help people get stuff done," Nadella wrote. Redmond's tools are already involved in everything from writing term papers and composing poetry to managing entire cities or fighting HIV infections. Put it all together: "This is an incredible foundation from which to grow."

Nadella promises to always put the customer first, and to equip them with whatever it takes to make a difference in the world. Lofty goals for sure, especially coming from a late starter and fringe player in the mobile space. When it comes to smartphones and tablets, Microsoft's market share is disappearingly tiny next to Apple and Android.

To get this done, Nadella's "customer-obsessed" culture will be paired with a leaner management structure and faster, more data-driven decision processes. It seems appropriate to build big data analysis into the very structure of a modernized business model.

"We will streamline the engineering process and reduce the amount of time and energy it takes to get things done," Nadella wrote. "You can expect to have fewer processes but more focused and measurable outcomes. You will see fewer people get involved in decisions and more emphasis on accountability." And in the end, "every team across Microsoft must find ways to simplify and move faster, more efficiently."

He didn't explicitly say that the buck stops at the top, but that's the vibe I'm getting out of this letter. If this cultural transformation is successful, Microsoft should end up with shorter and straighter decision routes from top to bottom. Nadella talked about large-scale retraining efforts, and a newfound appetite for experimentation.

At some point, the flatter organization he's investing in should also result in heads rolling among middle management. Again, no direct promises or threats to this effect, but headcount reductions must follow from this strategy. And Nadella did spend some ink on accountability, which should help him make the most of the coming cuts.

We'll know more concrete details on Nadella's emerging vision over the next few weeks. He plans to expand on this letter in two weeks, when Microsoft reports fourth-quarter results. Expect a steady stream of reorganization announcements for the rest of July, and then buckle in for the final details at the Microsoft Global Exchange conference near the end of the month.

I like Satya Nadella's open attitude toward trying new ideas, and I hope he can execute on the promises he made in this letter. Again, we'll know much more during the next few weeks. I, for one, can't wait to see Microsoft repainting its bigger picture.

Leaked: Apple's next smart device (warning, it may shock you)
The technology sector never stands still, and Microsoft will soon find itself chasing another runaway Apple invention. Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

The Risks of Spending Your Retirement Savings

Getty ImagesSpending your nest egg appropriately can be just as challenging as was saving it. After years of saving up for retirement, there will come a time when you need to start spending your nest egg. Drawing down your assets in an appropriate way can be just as crucial to your retirement security as saving and investing. Here are some risks to avoid when spending your retirement savings: Losses in retirement are especially problematic. You annual returns start to be very important in the years leading up to and immediately after retirement. When you are saving up for retirement, it's certainly better to get a 15 percent return than a 5 percent return or a loss, but over a 30-year career the returns of a single year won't make or break your retirement. However, returns make a much bigger difference once you start taking withdrawals from your investments, especially if you experience a decline it the early part of your retirement.

3 Stocks Under $10 in Breakout Territory

DELAFIELD, Wis. (Stockpickr) -- At Stockpickr, we track daily portfolios of stocks that are the biggest percentage gainers and the biggest percentage losers.

>>5 Stocks Set to Soar on Bullish Earnings

Stocks that are making large moves like these are favorites among short-term traders because they can jump into these names and try to capture some of that massive volatility. Stocks that are making big-percentage moves either up or down are usually in play because their sector is becoming attractive or they have a major fundamental catalyst such as a recent earnings release. Sometimes stocks making big moves have been hit with an analyst upgrade or an analyst downgrade.

Regardless of the reason behind it, when a stock makes a large-percentage move, it is often just the start of a new major trend -- a trend that can lead to huge profits. If you time your trade correctly, combining technical indicators with fundamental trends, discipline and sound money management, you will be well on your way to investment success.

>>5 Rocket Stocks to Buy in July

With that in mind, let's take a closer look at a several stocks under $10 that are making large moves to the upside.

ShoreTel

ShoreTel (SHOR), together with its subsidiaries, provides Internet protocol unified communications systems for enterprises in the U.S. and internationally. This stock closed up 2.3% to $6.67 in Tuesday's trading session.

Tuesday's Range: $6.46-$6.74

52-Week Range: $3.77-$9.81

Thursday's Volume: 555,000

Three-Month Average Volume: 506,002

From a technical perspective, SHOR jumped higher here right above some near-term support at $6.30 with above-average volume. This stock recently formed a triple bottom chart pattern at $6.25, $6.35 and $6.30. Following that bottom, shares of SHOR have started to rip higher and move within range of triggering a major breakout trade. That trade will hit if SHOR manages to take out some key near-term overhead resistance levels at $6.79 to its 50-day moving average of $6.93 with high volume.

Traders should now look for long-biased trades in SHOR as long as it's trending above some key near-term support levels at $6.30 to $6.25 and then once it sustains a move or close above those breakout levels with volume that hits near or above 506,002 shares. If that breakout materializes soon, then SHOR will set up to re-test or possibly take out its next major overhead resistance levels at $7.21 to its 200-day moving average of $7.68. Any high-volume move above those levels will then give SHOR a chance to tag $8 to $8.50.

Ceres

Ceres (CERE), an agricultural biotechnology company, develops and sells energy crops to produce renewable bioenergy feedstocks in North America. This stock closed up 3.5% to 69 cents per share in Tuesday's trading session.

Tuesday's Range: $0.66-$0.69

52-Week Range: $0.50-$3.64

Tuesday's Volume: 198,000

Three-Month Average Volume: 360,856

From a technical perspective, CERE jumped higher here right above its 50-day moving average of 63 cents per share with lighter-than-average volume. This stock recently formed a double bottom chart pattern right below its 50-day at 66 to 65 cents per share. Shares of CERE are now starting to trend higher off those support levels and move within range of triggering a major breakout trade. That trade will hit if CERE manages to take out Tuesday's intraday high of 69 cents per share to more key overhead resistance levels at 71 to 75 cents per share with high volume.

Traders should now look for long-biased trades in CERE as long as it's trending above its 50-day 63 cents per share and then once it sustains a move or close above those breakout levels with volume that hits near or above 360,856 shares. If that breakout gets underway soon, then CERE will set up to re-test or possibly take out its next major overhead resistance levels at 91 cents per share to $1.

Ballard Systems

Ballard Systems (BLDP) is engaged in the development and commercialization of proton exchange membrane fuel cells worldwide. This stock closed up 3.4% to $4.26 in Tuesday's trading session.

Tuesday's Range: $4.04-$4.47

52-Week Range: $1.25-$8.38

Tuesday's Volume: 6.62 million

Three-Month Average Volume: 4.77 million

From a technical perspective, BLDP spiked higher here right above some near-term support at $3.88 with strong upside volume flows. This spike higher on Tuesday is starting to push shares of BLDP within range of triggering a big breakout trade. That trade will hit if BLDP manages to take out Tuesday's intraday high of $4.47 to some more key near-term overhead resistance at $4.52 with high volume.

Traders should now look for long-biased trades in BLDP as long as it's trending above some near-term support at $3.88 or above its 50-day at $3.62 and then once it sustains a move or close above those breakout levels volume that hits near or above 4.77 million shares. If that breakout triggers soon, then BLDP will set up to re-test or possibly take out its next major overhead resistance levels at $5.17 to $5.40. Any high-volume move above those levels will then give BLDP a chance to tag $6.

To see more stocks that are making notable moves higher, check out the Stocks Under $10 Moving Higher portfolio on Stockpickr.

-- Written by Roberto Pedone in Delafield, Wis.

RELATED LINKS:

>>One Big Investor Loves This Small Stocks -- Should You?

>>3 Stocks Rising on Unusual Volume

>>5 Foreign Stocks You Need to Sell This Summer

Follow Stockpickr on Twitter and become a fan on Facebook.

At the time of publication, author had no positions in stocks mentioned.

Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including

CNBC.com and Forbes.com.

You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.

Will this market continue to shrug its shoulders?

While many are worrying about inflation, the cost of oil and the drop in GDP, the market has not shown any signs of concern, and continues to maintain a floor beneath it. The question is if the market has still higher to go before it gives us our correction back toward the 1750-1800 region.

For the last month and a half, I have been referencing two fractals, one in the Russell 2000 (IWM)  and one in the Nasdaq 100 (NQU4) , which have guided us up to this region. As I have noted, this fractal, should the market play out in a similar manner, would suggest that the market could drop with crash-like speed within the next week or two.

However, I do have to note that if the IWM is able to make a high above its March high, it would invalidate the fractal from my perspective. Yet, that still does not invalidate my expectation for a larger-degree correction around the corner.

Last weekend, I noted that the market still had purple waves (3), (4) and (5) to complete as of the close on Friday. I suggested that we could still strike our target to complete wave (3) at 1958 the Emini S&P 500 futures (ESU4) , setting up a pullback toward the 1943ES region, which would then propel us higher to complete wave (5).

Sunday night the market spiked to just a point-and-a-half over our target for wave (3), and then reversed, and headed to a low of 1947ES for wave (4), setting up one more spike higher to complete wave (5).

The reversal we witnessed since the market hit the top of (5) was quite abrupt, but it has not done any technical damage to the larger-degree uptrend at this time. In fact, if you look at my bullish count in blue on the second 60-minute ES chart linked below, you will see that there is a possibility that wave 4 completed just over the 1.00 extension. While one may consider this 4th wave to be quite small, when we consider how large wave 2 of this degree was, and we consider the theory of alternation, it may fit that wave 4 was that small. In this pattern, the next topping target for the market will be within the 1980-1991ES region.

In order to trigger this potential, the market is going to have to break out over the 1957/58ES resistance. If you look at the first ES chart, you will see that we have significant resistance in the 1957/58ES region. This is where a b-wave has multiple degrees of confluence, from which the market can still see a drop toward the 1919ES region.

If you look closely at the 60-minute chart, you will note that the resistance region is where (y)=1.382*w, along with where a=c within the (y) wave. Any break out over that region would have me strongly considering that we are in blue wave 5.

Even if we do break over that resistance, any break down below 1942/44ES at any point thereafter invalidates the immediate bullish potential, and will likely signal we are heading lower, unless, of course, the market decides to complete this pattern as a diagonal. The diagonal potential becomes invalidated with a break down below 1936ES.

So, for early this week, we have the 1957/58ES level as primary resistance, with 1965ES, and 1972ES as Fibonacci extension targets higher. However, should the market break down below 1942ES support in impulsive fashion, then we are likely targeting at least the 1931ES level, with a preference for a 1919ES target.

While I still maintain the 1750-1800 region as a lower target when we finally begin a correction, the question still remains as to when that correction will be seen — the summer, or fall of 2014.

See charts illustrating wave counts on the ES, INX and NQ.

Why the Best of 2014 Is Yet to Come

U.S. stock markets are taking a short break today for the Independence Day holiday and it gives us an opportune moment to look at where markets have been this year and where markets are going. 

So far, the Dow Jones Industrial Average (DJINDICES: ^DJI  ) and S&P 500 (SNPINDEX: ^GSPC  ) have returned 8.5% and 4.2% respectively, but that hasn't been because of a booming economy. In fact, the economy shrunk in the first quarter, which means investors are pricing in growth in the second half of the year when the economy is expected to pick up steam. 

^DJITR data by YCharts

Where we've been
The year 2013 was highlighted by a fast rising stock market, but that was driven by optimism for an improving economic future. That confidence and optimism was put to the test in the first quarter when markets slumped to start the year and the economy shrank 2.9%.

Despite the poor numbers, everyone from consumers to the Federal Reserve seemed to see better days ahead for the rest of 2014. The Conference Board's Consumer Confidence Index hit 85.2 in June, which is the highest level since January 2008 when the economy started to implode. The Institute for Supply Management said its non-manufacturing index was 56.0 in June, indicating economic expansion, and Markit's service-sector purchasing managers index was 61.0 in June, the highest since October 2009.

Economists are bullish on the economy for the second half of 2014.

So, the first half of 2014 has been marked by some negative economic data, but high confidence has continued. One reason for that may be a steadily falling unemployment rate, which dropped to 6.1% in June and consumers are confident they can drive growth in the future. 

What to watch in the second half of 2014
With the fairly weak GDP data but high confidence in mind, I look at the second half of 2014 as being when the rubber hits the road. If economic growth doesn't pick up as expected, markets could retreat. And with so much optimism priced in, it's time for the economy to start proving that the rally over the past 18 months is built on a solid foundation.

But that's where I think we'll start seeing some positive trends. First, the unemployment rate is finally low enough that power will begin shifting to workers, who may be able to demand higher wages than they could  have when even finding a job was difficult. If that happens, people will have more money to spend and the economic engine can get fired up again.

If spending improves, companies will have an incentive to put the billions of dollars on corporate balance sheets to work by investing in future growth. Growth could be a reinforcing loop that feeds on itself.

Foolish bottom line
Considering the recent data surrounding confidence and employment, I think the economy will begin growing again. The first quarter was somewhat of an aberration because of bad weather throughout the country that kept consumers home. 

On an economic front, the best is yet to come for the U.S. Whether that translates to continued record highs for the Dow Jones Industrial Average and S&P 500 is another story. Only time will tell if an improving economy is enough to keep stocks moving higher in the second half of the year.

How you can beat the market
The smartest investors know that dividend stocks simply crush their non-dividend paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.

Keurig Green Mountain Is Making Coke Look Good

Herb Swanson/Bloomberg/Getty Images One of this year's biggest winners on Wall Street is Keurig Green Mountain (GMCR). The stock was up 65 percent through the first half of 2014, a surprising spike for the leader in single-serve premium coffee, which was starting to see its growth decelerate. The initial catalyst for Keurig Green Mountain's surge came in February when Coca-Cola (KO) paid $1.25 billion for a 10 percent stake in the company. Coca-Cola paid roughly $75 a share for the stock, and it paid a much higher price for more a couple of months later when it boosted its stake to 16 percent. It's a significant development when the world's largest beverage company takes such a sizable stake in a niche player, but Coca-Cola's validation of the K-Cup champ has also made that investment more valuable. That initial $1.25 billion purchase is now worth more than $2 billion. Given the meandering ways of Coca-Cola's own business -- analysts expect to see flat sales growth this year -- riding the coattails of a hot beverage company could be just the ticket to silence those skeptics reminiscing about Coca-Cola's glory years of heady growth. The Mountain is Always Greener on the Other Side Coca-Cola's investment isn't the only reason why Keurig Green Mountain has been percolating. Despite losing patent protection for its K-Cup portion packs two years ago, growing numbers of coffee brands and retailers are turning to Keurig Green Mountain to fuel single-serve initiatives. BJ's Wholesale Club announced last week that it will have Keurig Green Mountain itself handle K-Cup production for BJ's private-label Wellsley brand. Keurig Green Mountain this week it revealed that it's teaming up with European giant Nestle (NSRGY) to introduce the first K-Cup to offer branded coffee and creamer in the same portion pack. Nestle Coffee-mate K-Cups will be available through Keurig's website in the fall and across retail outlets early next year. Hot and Cold Nothing trumps fears over expiring patents like the introduction of new technology with proprietary platforms -- and fresh patent protection clocks. Keurig Green Mountain will have two new product lines hitting the market in the coming months.

Wal-Mart Should Be Your Next Pick

Wal-Mart's (WMT) first quarter results were not so interesting since it failed to meet the Street's expectations. It was mainly because of factors such as cold weather conditions and cuts in the food stamp benefits, in November last year.

Delving deeper

Net revenue for the quarter stood at $115 billion, an uptick of 0.8% over last year. On a constant currency basis, revenue from the U.S., the biggest segment, grew 2% to $67.85 billion and that of international operations rose 3.4%. However, international sales declined, on a reported basis, mainly because of unfavorable currency movements.

Same store sales in the U.S., a key metric for any retailer, decreased 0.2%. Although average purchase size grew 1.3%, store traffic was a matter of concern as severe weather conditions kept customers away from stores. People wanted to stay at home and order the required items online.

Therefore, it resulted in higher online sales. Wal-Mart's e-commerce business climbed 27% over the prior year as customers prefer to have their orders delivered at their footstep instead of walking up to the stores.

This was probably the reason why the company witnessed a 1.4% drop in U.S. traffic and 0.2% decline in that of Sam's Club. Nonetheless, increased membership fee led to an overall increase in revenue from Sam's Club.

Strengths in focus

Despite stiff competition from its peers and dollar stores, Wal-Mart has strengths which should help in its future growth. Firstly, its growing online business should help in driving revenue higher. The company's initiatives to improve its e-commerce operations should be helpful. Also, the retailer's entry in the money transfer business should bear fruits.

Moreover, Wal-Mart's entry into the organic food market is quite an interesting move. Since people have become increasingly health conscious, they look for healthier and natural food options. Hence, it should lead to higher store traffic. Also, it has introduced attractions such as video game trade in program which is expected to attract the young population. Therefore, it is eyeing different customer demographics by strengthening a variety of segments.

Most important strength in focus for Wal-Mart is its smaller format stores which witnessed a same store sales increase of 5% in the first quarter. Efforts into these smaller stores, including Neighborhood Market stores and Express stores, should pay off in the long run. These stores are easier to access, even during colder winter conditions, since these are located in the urban areas. With plans of a total of 270-300 new store openings during the year, the company's future looks bright.

Ending thoughts

Despite a large number of problems faced during the quarter, the retailer managed to register an increase in its top line. Also, its efforts should start bearing fruits as customers flock in for their regular needs as well as for organic food. Although the company provided a lackluster outlook for the second quarter, its strengths in new format stores and online business is something to rely on. Therefore, investing in Wal-Mart should be rewarding in the long run.

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We Can Invest in Uber Before Its IPO

Too many people view taxi service as nothing more than a pedestrian, everyday type of business.

Those people would be very wrong.

It's actually a complicated, multi-billion dollar sector that right now is going through perhaps the most profound changes of any business model in the United States.

Indeed, this revolution is moving the industry from its original days of horse-drawn carriages to the age of global positioning systems (GPS) in automobiles.

The biggest name in the revolution is, of course, Uber, whose mobile cab service app is turning the taxi-for-hire model on its head, all while waiting for a much anticipated IPO.

But right now there's another way to play on Uber's success and future, with a well-known company that's going to surprise you....

Uber Has Disrupted the Industry Model Forever

If ever there was an industry ripe for high-tech disruption it would have to be taxicabs.

Here's the thing: The first known use of taxis for hire involved horse-drawn carriages in England more than 400 years ago.

Today, many taxis use autos equipped with GPS and other high-tech gadgets, a quantum leap from its humble beginnings. And yet, despite all these taxicab advances, many critics argue that when it comes to providing fast service, not much has changed in the past 400 years.

But that all got turned 180 degrees when Uber was founded in 2009, and its mobile app was launched in 2010 in San Francisco.

Think of Uber as a digital chauffeur service. Users simply tap on the Uber app and find drivers in the area who are willing to drive them to their destinations for a small fee.

Ironically, Uber has made headlines lately not because of its innovation, but because of what many investors believe is the startup's sky-high valuation.

After recently receiving $1.2 billion in additional venture funding, Uber is now worth some $18.2 billion.

But let's not get bogged down in debating just how much Uber will eventually be worth if it does in fact have a successful IPO.

Fact is, Uber represents the disruption of a centuries-old global industry, and the result of its technology is a staggering revenue growth model that merits a closer look.

Uber Is on Track for $1 Billion in Revenue

Uber is a company with a very simple concept but with huge financial opportunities.

See, the company uses data mapping software to create what amounts to an electronic exchange that links potential passengers with drivers who are willing to give rides for a fee.

The robust technology is a vast improvement over what any one cab company could hope to emulate.

Hence the company's slogan: Everyone's private driver.

This app's power derives from the fact that it can identify as many as a dozen drivers a short distance from the person who needs a ride.

People who use this service rave about it to anyone who will listen. On Apple's App Store, Uber earns a five-star rating with headlines like "Best car service in the world!!!"

Make no mistake, the company faces a bright future. The New York Times estimates that if the company could grab half of the taxi market share in the United States, it will generate more than $1 billion in yearly sales.

And that figure doesn't include the 36 other countries the firm currently serves. Nor does it include the potential for selling other services later.

What's more, Uber's leaders say the firm's sales, which TechCrunch recently pegged at $213 million for fiscal 2013, have been doubling every six months - a compound annual growth rate of nearly 145%!

But Uber offers an even more intriguing long-term play: a direct tie to an even newer technology - robotic chauffeurs - being developed at the same time at another high-tech company.

So while all the fuss today is focused directly on Uber's valuation and IPO dates, we've found a unique back-door way to play this robot-centric technology with a familiar name that shares some critical ties to Uber...

Google's Links to Uber Run Deep... and They're Getting Deeper

Investors targeting Uber's "killer app" would do well to look at Google Inc. (Nasdaq: GOOG, GOOGL) as a great backend play. The two companies are linked by money and technology.

First, the money...

Last year, Google's venture-capital unit invested roughly $258 million in Uber. At the time, it was the largest investment Google Ventures had ever made.

Second, the two companies have a natural high-tech affinity. That's because beyond its leadership in online search and mobile phones, Google is way ahead of the curve on robotic cars.

Consider that Google plans to test 100 self-driving prototype cars this summer in California. Just weeks ago, Uber announced that it hopes to tap driverless cars in the very near future.

Talk about synergy!

Uber Chief Executive Officer Travis Kalanick insists that passengers could end up paying less by summoning a driverless vehicle.

"When there's no other dude in the car," Kalanick explains, "the cost of taking an Uber anywhere becomes cheaper than owning a vehicle."

And in car-challenged New York City, Uber has quietly introduced a messenger service integrated into its own app. Kalanick has even touted the benefits of developing Uber into a platform for shipping and logistics.

That type of tech could dovetail nicely with Google Shopping Express, the tech giant's shipping service.

Meantime, Google recently integrated Uber into the search firm's highly popular Maps application. Users can link to Uber rides under the app's options for travel directions.

Now then, I downloaded the app and put it through its paces.

I can honestly understand why people love it so much. I tested the technology by sending a black SUV to pick up my daughter, 15, from a friend's house.

A screen popped up with a map showing where the car was located. At the bottom was a small picture of the car's front end and a box with the driver's name and Uber rating. It also had his license plate number.

Not only that, but the closer he got to picking up my daughter, the larger the map became. This was incredibly cool - I followed the icon of his car as it drove up to the front of the house.

I had pushed a button on the app that allowed me to share the driver's route and had texted that to my daughter's iPhone. Then I tracked her as he climbed 1.6 miles to the top of the Oakland Hills for the drop off.

Bear in mind, this all occurred phone-to-phone, seamlessly. Since I had an account, the service just billed me digitally, including a 20% tip.

All in all, an outstanding service!

Uber Is Another Piece in Google's ETF-Like Portfolio

Just because Uber is not yet publicly traded, that doesn't mean we can't invest in its future.

In fact, its relationship with cutting-edge companies like Uber is one of the reasons why I say tech investors should continue to take a good look at Google.

From online search to mobile phones to robotic cars and smart home devices, Google is becoming as much a high-tech ETF as it is an individual stock.

Trading at $582 a share, Google has a nearly $400 billion market cap. It has operating margins of 23%, a 15% return on equity, and $50 billion in net cash on hand.

Thus, Google offers investors high profit margins, the chance for appreciation, and access to disruptive tech firms like Uber.

There's no reason for investors looking to profit from Uber's bright future to wait for an IPO that will likely shut out retail investors.

Head for Google instead.

The Google play here is only the latest "backdoor" IPO investment Michael's looking at. His Strategic Tech Investment readers are making money on some of the biggest tech IPOs ever. To start getting Strategic Tech Investor, along with Michael's Secret Way to Profit from the Biggest Tech IPOs report, simply click here. It's free, and you'll get two updates per week.