This Morning: FB’s Four Downgrades, QCOM, SWKS Surge

Here are some things going on this morning in your world of tech:

Shares of Facebook (FB) are down $1.03, or 3.3%,a5 $30.21, after the company last night beat Q4 revenue and earnings expectations but turned up lower mobile results and higher investment costs, than some analysts expected. The stock this morning got four downgrades, from Jefferies & Co., Stifel Nicolaus, BMO Capital, and Citigroup.

Citi’s Neil Doshi, cutting his rating to Neutral from Buy, while maintaining his $30 price target, writing “We view FB as a core long-term �Net stock. But with plans to invest heavily in the biz in 2013, and little expected contribution from new initiatives like Gifts or Graph Search, we don�t see any near-term catalysts for the stock.”

“We believe that FB can justify a 35x EPS multiple (given its high 30% EBITDA and EPS 3-year CAGR); but, with 2013 numbers coming down, we can�t justify a higher multiple than that. Hence, the Neutral.”

Shares of Fusion-IO (FIO) are down $3.10, or 15.4%, at $16.99 after the company last night slashed its year revenue outlook, citing delays in ordering new gear from two customers who make up half its revenue, Apple (AAPL) and Facebook. The stock this morning got three downgrades, that I can see, from Credit Suisse, JP Morgan, and Piper Jaffray, though Lazard Capital also raised the stock to Buy from Neutral.

In his upgrade note this morning, Lazard Capital’s Edward Parker, raising FIO shares to Buy from Neutral, with a $23 price target, writes that “Customer concentration and its associated lumpiness is a fundamental aspect of the business, but with the reset we believe numbers now adequately compensate for this.”

Shares of Qualcomm (QCOM) and Skyworks Solutions (SWKS), both big Apple (suppliers that reported last night, are both rising this morning after better-than-expected results, with SWKS up $2.95, or 13.4%, at $24.51, and Qualcomm up $3.15, or almost 5%, at $66.68. Price targets and estimates appear to be going up for both, though there are no ratings changes as of yet.

In her assessment of Skyworks this morning, JoAnne Feeney of Longbow Research particularly likes the fact the company has diversified its business away from Apple, writing “Samsung [Electronics (005930KS)] exposure of 17% and new product ramps there are helping to offset the Apple decline (25% of sales); the company is holding onto share in PA and new functions look to be offsetting ASP and integration pressures.”

“QCOM�s results last night also confirm the ramp of non-Apple models and we see strong smartphone growth in line with our initial views.”

Shares of Research in Motion (RIMM) continue to be under pressure this morning following yesterday’s debut of the BlackBerry 10 operating system, the company’s planned name-change to BlackBerry, and the unveiling of two new smartphones, the Z10 and Q10, even though there was some decent praise for the Z10 last night from gadget reviewers.

The stock gets another downgrade this morning, following the one from Evercore last night, this one from Credit Suisse’s Kulbinder Garcha, who cuts the stock to Underperform from Neutral, writing that “we see limited scope for traction in the hypercompetitive smartphone market,” and that “RIM’s major business model change in services will result a significant decline this high margin revenue stream, driving operating losses and potential cash burn.”

RIMM shares are off 93 cents, or 7%, at $12.85.

Being the CEO of Your Own Destiny

In the following video, Motley Fool analyst Brendan Byrnes sits down with Maynard Webb, author of Rebooting Work: Transform How You Work in the Age of Entrepreneurship.

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Brendan Byrnes: Let's talk about that one that you mentioned, being the CEO of your own destiny. Why do you think that is the future?

Maynard Webb: I think being the CEO of your own destiny is extraordinarily important because you can no longer cede control to a company anymore. You do your best work when you're driven to do it. Self-employed people are far more passionate than people that work for companies and I think all of us have a purpose in where we're going in our life and the more we own that versus expect the company to take care of us the better work we will do.

What to Expect From Oil and Gas Majors This Week

Closing out the week, the major integrated oil companies are hoping to appease investors regarding their fourth-quarter and full-year results. Royal Dutch Shell (NYSE: RDS-A  ) kicks things off tomorrow, and ExxonMobil (NYSE: XOM  ) squares off with Chevron (NYSE: CVX  ) on Friday. Most are coming off shaky third quarters with regards to 2011, so stock watchers are certainly hoping for some positive news. Overall, the energy sector will have its eyes on these companies because their outlooks can offer so much insight. Tune in below for more details on what to expect.

News from these companies provide hints of what's coming at smaller upstream players

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Canadian Pacific Railway Beats on Revenue, Matches Expectations on EPS

Canadian Pacific Railway (TSX: CP) reported earnings on Jan. 29. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), Canadian Pacific Railway beat slightly on revenues and met expectations on earnings per share.

Compared to the prior-year quarter, revenue increased and GAAP earnings per share shrank significantly.

Gross margins grew, operating margins expanded, net margins dropped.

Revenue details
Canadian Pacific Railway booked revenue of $1.51 billion. The 19 analysts polled by S&P Capital IQ expected net sales of $1.49 billion on the same basis. GAAP reported sales were 8.8% higher than the prior-year quarter's $1.38 billion.

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

EPS details
EPS came in at $1.28. The 27 earnings estimates compiled by S&P Capital IQ averaged $1.29 per share. GAAP EPS of $0.08 for Q4 were 94% lower than the prior-year quarter's $1.28 per share.

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

Margin details
For the quarter, gross margin was 34.5%, 410 basis points better than the prior-year quarter. Operating margin was 25.2%, 360 basis points better than the prior-year quarter. Net margin was 1.0%, 1,470 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $1.44 billion. On the bottom line, the average EPS estimate is $1.12.

Next year's average estimate for revenue is $6.04 billion. The average EPS estimate is $5.73.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 378 members out of 397 rating the stock outperform, and 19 members rating it underperform. Among 125 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 119 give Canadian Pacific Railway a green thumbs-up, and six give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Canadian Pacific Railway is hold, with an average price target of $95.14.

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• Add Canadian Pacific Railway to My Watchlist.

Research In Motion Changes Name to BlackBerry

As part of its BlackBerry 10 global launch event, Research In Motion (NASDAQ: RIMM  ) is officially changing its company name to BlackBerry.

In a blog post released today, CEO Thorstein Heins is quoted as saying, "From this point forward -- we are BlackBerry. One brand. One promise. Our customers use a BlackBerry, our employees work for BlackBerry, and our shareholders are owners of BlackBerry." In a video posted in the blog post, CMO Frank Boulben provides further detail on the philosophy behind the name change.

For shareholders, the change in nomenclature will also be accompanied by a ticker symbol change from RIMM to BBRY.

Founded in 1984, Research In Motion's most recent initiatives are meant to revamp the company's image and improve its shrinking business. So far today, the market seems unimpressed with the new name and offerings. As of this writing, the company's stock is down 6.65%.

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3 Shares Set to Beat the FTSE 100 Today

LONDON -- The FTSE 100 (FTSEINDICES: ^FTSE  ) , which closed above 6,300 for the first time yesterday, has slipped back to 6,318 as of 10:25 a.m. EST. But general optimism seems to be pretty robust at the moment, and people will surely be wondering when the index of top U.K. stocks will beat 6,400, 6,500 -- and even 7,000!

But even when the index is up, there are shares beating it. Here are three constituents of the various FTSE indexes that are rising today.

Bowleven (LSE: BLVN  )
Bowleven, the oil and gas explorer focused in Africa, saw its shares perk up by 8.7% today after it released a drilling update from its IM-5 well off the Cameroon coast. While investigating the Middle and Upper Isongo sands prospects, the exploratory well has found what might be a viable discovery. At a depth of 3,330 meters, initial indications suggest the presence of hydrocarbons. Determining type and quality will have to wait for further tests.

Bowleven investors needed a boost, as the share price was down about 20% over the past year before today's news.

Victoria (LSE: VOG  )
Victoria Oil & Gas is another explorer and producer to rise on good news today, with shares up 1.4% to 2.1 pence. Victoria's share slump has been rather more extreme, with the price having fallen by more than 40% over the past 12 months.

But today the company got a lift from an operations update that told us it now has 15 customers for the gas produced at its Logbaba operation, taking a total of 2.8 million standard cubic feet per day. We also learned that Societe Generale has agreed to a $15 million lending facility.

BP (LSE: BP  ) (NYSE: BP  )
And to keep to the oil theme, shares in BP are up a modest 0.3% to 477 pence, which may or may not be enough to beat the FTSE at the end of the day. But the important news is that the company's legal dealings with the U.S. District Court for the Eastern District of Louisiana have been concluded. In line with the previously agreed penalty of $4 billion over five years and a five-year period of probation, the court has accepted that all criminal charges concerning the Deepwater Horizon disaster have been resolved.

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Economic Data Show Eurozone Steadier, Still Weak

FRANKFURT, Germany (AP) -- The euro area's economy is showing modest signs of improvement, as new figures Wednesday indicated more consumer optimism and steadier bank finances. Weak demand for bank loans, however, made it clear the recovery was still some way off.

The European Union's economic sentiment indicator, which mixes business and consumer outlooks, rose by 1.4 points in January to 89.2 for the 17 EU countries that use the euro. It was the third straight monthly increase. The jump was fed by increased confidence among consumers and from businesses in the construction and service sectors of the economy.

Meanwhile, sentiment in industry and the retail trade remained broadly flat.

The survey is one hopeful sign as the eurozone struggles to get out of a recession that saw its economy shrink in the second and third quarters of 2012. A drawn-out crisis over too much government debt is weighing on growth as countries cut back on spending to reduce their deficits.

Nonetheless, the sentiment indicator remains well below its long-term average of 100 for 1999-2012. And much of the improvement in consumer sentiment came from just one country, Germany.

The data mean that the eurozone probably bottomed out in October and that "growth prospects are brightening, " IHS Global Insight analyst Howard Archer said. Still, he said it "remains to be seen to what extent and how quickly this will feed through to boost eurozone economic activity.

The European Central Bank expects the economy to shrink 0.3 percent throughout the course of 2013, but to make a modest recovery later on in the year.

Bank lending data from the ECB confirmed Wednesday that the recovery remains a ways off. Its quarterly lending survey, released Wednesday showed a "pronounced net decline" in business loan demand in the last three months of last year. The main reason: Companies are not seeing a need to finance new fixed investment such as buildings and machinery, a key component of any economic recovery.

The survey also shows banks continue to tighten credit standards.

The ECB survey of senior loan officers at 131 banks indicated that the banking system is on a steadier footing. Banks are now reporting better access to funds from deposits and borrowing.

Banks, key to growth as suppliers of credit, were hit hard during the eurozone debt crisis by losses on government bonds. This made it harder for them to borrow from other banks and bond investors due to fears they might not pay the money back.

Banks are also facing regulators' demands to hold back more money as a financial buffer against losses. These requirements can also mean less money available to lend out.

Eurozone financial markets have been more stable since the ECB offered to buy bonds issued by indebted countries in the secondary market if those countries promise to reduce their deficits. That offer has lowered government borrowing costs although no bonds have actually been bought.

The improvement on stock and bond markets, however, has yet to be seen in the wider economy.

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Research In Motion Is No More

Today is the day. Research In Motion (NASDAQ: RIMM  ) has at long last launched its newest BlackBerry 10 platform, which has been in development for years and seen numerous delays along the way. In a symbolic move to mark the company's fresh start with BB10, it has decided to change its name simply to BlackBerry to unify its branding.

That also comes with changing its ticker symbol from "RIMM" on the Nasdaq to "BBRY." On the Toronto Stock Exchange, the company will trade under the symbol "BB." These changes will be effective Feb. 4. Research In Motion is officially no more. Say hello to BlackBerry.

RIM unveils a new iPhone
At the launch event in New York, CEO Thorsten Heins unveiled two new devices, the Z10 and Q10. The Z10 takes obvious design cues from Apple's iPhone, except that it boasts a larger 4.2-inch display. It's a touchscreen device that carries internal specs competitive with rival devices, such as an 8-megapixel primary camera and a 1.5 GHz dual-core processor of unknown origin.

Qualcomm has been rumored to have scored the spot with its Snapdragon S4 Pro chips, but RIM has not confirmed that.

The Q10 looks similar to BlackBerry devices of the past, sporting a physical keyboard that has long been one of RIM's target market niches. Devoted physical keyboard users have always been a focus for RIM, and the company hasn't lost sight of that user base, which tends to be business users.

Who needs the U.S. market? Oh yeah, we do.
RIM first detailed what would become BlackBerry 10 back in Q1 2011. That's a whole two years that the company has been working on building the platform from its 2010 acquisition of QNX Software. BlackBerry loyalists have been anxiously awaiting this day for quite a long time, and the bad news is that those in the U.S. will still have to wait even longer.

The Z10 is launching later this week in RIM's home turf of Canada as well as the U.K. Those are two of RIM's core markets, but the critical U.S. market remains larger than both of those combined, even given RIM's plunging domestic market share. Kantar Worldpanel ComTech's most recent figures showed RIM's share sliding to just 1.1% in December.

Platform	12 Weeks Ending Dec. 25, 2011	12 Weeks Ending Dec. 23, 2012
iOS	44.9%	51.2%
Android	44.8%	44.2%
RIM	6.1%	1.1%
Windows	2.2%	2.6%

Source: Kantar Worldpanel Comtech.

Google Android stayed relatively flat, while Apple gained and now comprises over half of the market. Microsoft has made some gains with Windows Phone and has made its intentions clear that it wants to cement itself as the No. 3 platform.

Segment	Revenue (MRQ)	Percentage of Total Revenue (MRQ)
Canada	$127 million	4.7%
United States	$520 million	19.1%
United Kingdom	$302 million	11.1%

Source: RIM. MRQ = most recent quarter.

Last quarter, 19.1% of RIM's revenue was still being generated in the U.S., showing how important that geographical segment still is to its results despite its market share losses.

What's another couple months after you've already waited years?
U.S. consumers will have to wait until mid-March for the Z10 to land stateside. Heins said that the delay was due to carrier testing procedures that are taking longer than expected. The Q10 won't be available in the U.S. until April, so U.S. consumers will have to wait two to three months before they can get their hands on any BB10 device.

That revelation put significant pressure on the stock; shares promptly dropped upon that news and are currently down 8%.

Good, but not better
Upon the unveiling, a slew of tech sites have released their reviews, and the general consensus is that while BB10 is a solid mobile platform that's competitive in many ways with iOS, Android, and Windows Phone, it's not better and doesn't provide any compelling reason for users to switch from other platforms.

Market researcher Ovum believes the platform will garner some short-term interest from existing users, but still faces daunting challenges in the long term. RIM investors have gotten a little ahead of themselves in recent months, with shares more than doubling. Maybe some profit-taking is in order.

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Should You Bet on Mediterranean Shale?

The Mediterranean has joined the shale game, but as most of Europe's Mediterranean countries drag their feet, all eyes are on Israel, Turkey, and Algeria.

For Israel, it will be a slow road without the majors.

For Algeria, it's full speed ahead, in theory—but the foreign interest is just dabbling for now due to a lack of shale infrastructure.

For Turkey, the situation is more promising thanks to a renewed interest by the majors and a near-perfect blend of good governance and attractive fiscals.

Here's what the playing field looks like:

Turkey

Turkey is the best bet here. In Turkey, it's all about the Dadas Shale, in which the majors have recently expressed a renewed interest, making the game immediately more promising for the North American juniors who are betting heavily on this play.

The Dadas Shale is being compared to Texas' Eagle Ford shale and Oklahoma's Woodford shale in both size and potential. What is that potential? Well, those who are investing in it say it has more than 100 billion barrels of original oil in place.

While nothing's being produced, testing is about to begin and new technology has the majors and juniors highly optimistic.

Positives

• Everyone likes working with the Turkish government—permits are fast and bureaucracy is kept to a minimum. Turkey is too keen to become a regional energy hub to let bureaucracy stand in the way. There's just too much riding on this.

• Fiscal terms are very attractive: foreign companies get a flat 12.5% royalty tax and a 20% corporate tax rate

• The infrastructure is already there; it's easy to refine and get to your choice of markets

• Shell has recently renewed its interest in Dadas (it's about to drill five wells)

• ExxonMobil is in talks with the government right now about a Dadas license of its own

Negatives

• The National Oil Company is holding on to key geological data that would help the industry, but this year should see some new regulations that make exploration even easier

• This is still some way off (but Shell's drilling in Dadas this year might be the turning point—at least the juniors think so)

Israel 

Some think Israel is on the verge of a major energy revolution because of the combination of shale discoveries and a recent conventional natural gas discovery (16 trillion cubic feet).

While Israel doesn't have much by way of heavy oil, it does have world-class shale oil resources.

Shale can contain both natural gas and oil, and in terms of oil, Israel's shale plays put it in third place vis-à-vis expected volume, behind the US and China (but ahead of Russia).

Positives

• If these shale oil reserves can be extracted, we're talking about making Israel a rival to Saudi Arabia

Negatives

• Geopolitical tectonics

• Still in the very early stages of this game

• The regulatory environment isn't perfect and the government has raised taxes since discoveries; permits are also hard to come by

• For now, this will remain a game for the juniors. The majors aren't interested: it's a bit tricky to operate in the Arab world and in Israel at the same time

• Because of the above, exploration and extraction will be SLOW, and the market will ignore it for now

Algeria

Algeria—suffering from a decline in conventional production and foreign investment interest recently--has dived right into shale with its state-backed energy firm, Sonatrach. In fact, Algeria seems to be solely focusing on shale now and all its efforts are directed at attracting foreign partners to its shale plays.

Positives

• Estimated 2 trillion cubic meters of shale gas reserves valued at $2.6 trillion (in three provinces that span 180,000 square kilometers)

• Soon-to-come (progressive) tax laws and regulations governing the industry; these new laws will encourage unconventional exploration (the opposite that is happening in Europe)

• Contractual terms are already favorable and the new tax law, if passed, will adjust royalty fees for levels of production. It will also adjust taxes on oil revenues to be proportionate with exploration difficulty and exploration risk

• Already-in-place: more favorable conditions for potential fracking partners

• The government has outlined an $80 billion energy investment plan; $60 billion of that is earmarked for exploration, the rest for infrastructure (including refining capacity)

Negatives

• Doesn't have the infrastructure for shale (though that hasn't stopped the interest—Italy's Eni, Exxon Mobil Corp., Royal Dutch Shell to name a few)

• Commercial viability is still a long way off and we're looking at some 400 test wells in the meantime

• The singular focus of the new hydrocarbon law on shale—at the expense of conventional exploration—is not necessarily sending the right message to foreign investors. Algeria needs its traditional oil and gas production to increase in order to fund its shale ambitions, and infrastructure …

• The ongoing hostage crisis at a BP-operated gas field in the Algerian Sahara desert bodes ill for the entire Sahel. This will reverberate throughout Algeria and then on to Niger and across the Sahel.

So where do you put your money? Turkey - no contest. This is a combination package that includes good governance, good fiscals, brilliant infrastructure and a clear pay off as soon as the juniors and majors strike shale. This is a solid, long-term play whose importance to Turkey's overall energy ambitions cannot be understated.

*Post courtesy of Oil Price.

This report is part of Oilprice.com's premium publication Oil & Energy Insider. Oil & Energy Insider gives subscribers an information advantage when investing, trading or doing business in the energy sectors. Successful investors, hedge funds and senior executives, have access to high level intelligence and power in ways that you, as an individual investor, are locked out of (the game is and never has been fair.) Let us help you level the playing field by using our network of traders, intelligence assets and high level partnerships to ensure you are making the right investment decisions.

 

Why Netflix Is Poised to Pull Back

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, movie rental service Netflix (NASDAQ: NFLX  ) has received a distressing two-star ranking.

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

Netflix facts

Headquarters (founded)	Los Gatos, Calif. (1997)
Market Cap	$9.0 billion
Industry	Internet retail
Trailing-12-Month Revenue	$3.6 billion
Management	Founder/Chairman/CEO Reed Hastings CFO David Wells
Return on Equity (average, past 3 years)	38.9%
Cash/Debt	$748.1 million / $400.0 million
Competitors	Apple Comcast Amazon

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

On CAPS, 19% of the 9,637 members who have rated Netflix believe the stock will underperform the S&P 500 going forward.

Just last week, one of those Fools, All-Star miclane05, tapped the stock's recent surge as particularly unsustainable:

[Netflix] might succeed in fending off hula, [C]omcast, and others, ink some long term content deals like the one with [D]isney, and be successful, but ... this stock has gotten way ahead of itself. This is not a high growth company and, at this P/E (or PEG) anything less than a grand slam will look like a loss. At this price, anything but the smallest position in a real-money portfolio is a pure gamble.

Of course, this short pitch doesn't even come close to telling the entire story of Netflix. You're in luck, though. The Fool's brand new premium report on Netflix tells all sides of the story for one of the most compelling tech companies in the world. You can grab your copy now, which comes with free updates for 12 months, by just clicking here.

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Bank of America Finally Does Something Right

Maybe I'm being a bit harsh with that title, but if you've read previous columns of mine on Bank of America (NYSE: BAC  ) you'll know I'm no fan of the bank as a general investment: More than four years on from the financial crash, I think it remains too big, too diverse, and too unwieldy for average investors -- like myself -- to get their heads around.

And I'm still not convinced the last crisis-related shoe has dropped for the superbank, let alone LIBOR-related fines and/or suits -- the other financial time bombs out there just ticking away, waiting to go off for many of the world's big banks. But CEO Brian Moynihan and company have just managed to impress me with a savvy move that has the potential to be win-win-win scenario for B of A, the U.K., and the Republic of Ireland.

The investment that shall not be named
Financial Times is reporting that B of A will be moving $50 billion of its derivatives business out of Ireland and into MLIB, the London-based subsidiary that came along with Merrill Lynch, which B of A bought in the darkest days of the financial crash. �

$50 billion is big chunk of change, especially for a country like Ireland. Having all of those exotic investments there in the Dublin office was making the Irish government nervous: fearful for potential fallout for Irish taxpayers. �

After the drubbing the country took from a real-estate crash that rivaled America's, and the years of punishing austerity it's taken to bring the Irish economy back from the dead, the mere mention of the word "derivatives" -- variations of which played a large role in the financial crisis -- is probably enough to send any Irish politician running for the country's lovely green hills.

The U.K. is happy about the move because B of A's base of operations is in London, and regulators wanted that big book of derivatives business physically closer to home, where they could keep a better eye on it.�

Celtic Tiger vs. British Bulldog
So that's the win-win part of the story for Ireland and the U.K. What about the win for Bank of America?

B of A kept that $50 billion in derivatives in Dublin for a simple reason: lower corporate income taxes.�Remember the Celtic Tiger? Part of the go-go 90s, when seemingly every company on the planet wanted to relocate to Ireland because of the tremendous tax breaks the government was offering? Taxes are still low there�, but corporate income taxes have also come down in the U.K., and are scheduled to go lower in April: down to 23%.

In addition, according to Financial Times, there's approximately $8 billion of deferred tax assets waiting for B of A to use in the U.K., which the bank can potentially use to reduce its corporate tax bill further, or possibly even eliminate it.�

Howling masses, happy investors
One slight danger with this ingeniously tax-advantageous move is the current hostile mood of the British people and its politicians to transnational corporations and the taxes they pay.

The self-induced, austerity-beset U.K. is hunting left and right for ways to fill government coffers, and has of late turned to breaking down the doors of companies like Starbucks and Goldman Sachs (NYSE: GS  ) in order to do it. In Goldman's case, it recently had to renounce plans to defer paying out bonuses to its London-based employees because there was such a governmental uproar over it.

Goldman's plan was to pay the bonuses out after April 6, when rates were scheduled to come down. The bank wasn't doing anything illegal or even, in my opinion, unethical in trying to maximize the take-home pay for its bonused employees, but caught a load of flak for it regardless. B of A's reputation is still recovering enough from its egregious financial-crisis misfires: It really doesn't need to take any more hits in that area.

But that's an admittedly small danger, one which is more than offset by the shifting of this derivatives business from Dublin to London. The other smile-inducing aspect of this move is that it's a sign of B of A continuing to streamline its operations post-crisis. Since the superbank's European headquarters is in London, it makes sense to manage this large book of business from there, and for the same reason, U.K. regulators want it there: It's easier to keep an eye on, along with the people managing it.

Maybe if the London Whale had instead been the New York Whale, and the reportedly $100 billion derivatives bet Bruno Iksil placed in the London office had instead been placed in JPMorgan Chase's (NYSE: JPM  ) New York office, things would have turned out differently for CEO Jamie Dimon and company. Even in this age of digital money and Skype, physical location can still matter.

Way to go, Bank of America, for this smart and savvy move that appears to be a winner for everyone involved. Who knows? I might become a convert to B of A yet.�

But don't let me have the last word when it comes to America's home-team bank. Check out The Motley Fool's brand-new report on B of A. Our analysts give you a thorough detailing of the superbank's prospects, along with three reasons to buy and three reasons to sell. Just�click here�for full access.�

Olin Beats on Both Top and Bottom Lines

Olin (NYSE: OLN  ) reported earnings on Jan. 29. Here are the numbers you need to know.

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

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

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

Revenue details
Olin reported revenue of $587.6 million. The nine analysts polled by S&P Capital IQ predicted a top line of $540.4 million on the same basis. GAAP reported sales were 32% higher than the prior-year quarter's $445.8 million.

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

EPS details
EPS came in at $0.44. The eight earnings estimates compiled by S&P Capital IQ forecast $0.35 per share. GAAP EPS of $0.43 for Q4 were 87% higher than the prior-year quarter's $0.23 per share.

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

Margin details
For the quarter, gross margin was 17.0%, 40 basis points worse than the prior-year quarter. Operating margin was 11.6%, 330 basis points better than the prior-year quarter. Net margin was 5.9%, 170 basis points better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $593.5 million. On the bottom line, the average EPS estimate is $0.54.

Next year's average estimate for revenue is $2.43 billion. The average EPS estimate is $2.18.

Investor sentiment
The stock has a five-star rating (out of five) at Motley Fool CAPS, with 567 members out of 583 rating the stock outperform, and 16 members rating it underperform. Among 139 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 137 give Olin a green thumbs-up, and two give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Olin is hold, with an average price target of $22.50.

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• Add Olin to My Watchlist.

Why D.R. Horton 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 homebuilder D.R. Horton (NYSE: DHI  ) were adding another level today, climbing as much as 11% after reporting a strong quarter.

So what: Riding the bullish wave in the housing sector, the nation's largest homebuilder delivered its strongest Q1 in six quarters. Profits more than doubled to $66.3 million, or $0.20 a share, up from $0.09 a year ago, beating estimates of $0.14. Closing and orders were up 26% and 39%, respectively, while the average sales price increased 15% and Horton's backlog grew 62%. Revenues jumped 39% as well.

Now what: Horton's report was yet more evidence of the housing recovery, and I expect the bullishness to continue, with housing inventory reaching its lowest levels in the past five or six years. Still, shares already have bright expectations baked in, with the P/E based on expected 2013 earnings at 27. Keep an eye on future developments with Horton by adding the stock to your Watchlist here.�

Cerulli Delivers Tough Message for IBDs on Recruitment, Market Share

The independent broker-dealer community received a stark and sobering message on Tuesday about the overall health of the industry.

A presentation by Cerulli Associates’ Tyler Cloherty and Patrick Newcomb at the FSI One Voice Conference in San Diego focused trends impacting the IBD space, specifically recruitment and market share, both of which IBDs are losing.

“From a general market stance, we are seeing IBDs lose headcount and market share to dually registered reps and RIAs,” said Cloherty, Cerulli’s associate director.

Surprisingly, IBDs are the net winners in recruiting, he added, but it’s something of a pyrrhic victory, as they are getting lower-end advisors.

“It doesn’t make sense for fee advisors to continue to pay a percentage to a broker-dealer, so they leave. IBDs are left serving small market reps, typically fall in the $10 million to $75 million range, with the majority at the lower end of that range.”

Dually registered reps do in fact stay with the IBD for their commission-based business, but that only accounts for about 30% of the assets. More and more assets, Cloherty said, are going to their own RIA.

“The question becomes, ‘What do IBDs have to provide in order to keep higher-end reps there?’” he noted. “Smaller IBDs who don’t have the resources for high-end offerings—those with typically 50 to 250 reps—are getting crushed. What they’re doing is loosening their compliance standards and offering products that larger firms might not offer, which isn’t good in-and-of itself.”

LPL Financial, Raymond James and AIG Advisor Group, larger broker-dealers organized in networks, have the base of scale and can make the necessary investments in packaged platforms to keep advisors at their firms, Cloherty said.

“It’s tough to make that investment into technology and oversight,” added Newcomb, a senior analyst with the firm, noting it’s the reason so many small IBDs are outsourcing to third-party vendors like Envestnet and Lockwood.

“For simplicity’s sake, you’re seeing a lot of broker-dealers trying to deliver a UMA environment, but it’s tough to get advisors to make the move because packaged models start to look like they’re the firm’s client, rather than the advisor’s client,” he said.

In order to satisfy this issue, broker-dealers will have to implement more “rep-driven programs.”

Both Cloherty and Newcomb were quick to add it’s not all bad news for independent broker-dealers, and concluded with a few positive takeaways:

• There is a bit of an opportunity to recapture assets from RIAs that are under $100 million in AUM and subject to state regulation.
• Larger firms are also creating commission-based platforms that keep the rep registered with the IBD, but they can also hang their own hat.
• Generalist firms will no longer get it done. Advisors must specialize or they will die by 1,000 paper cuts. 
• From a recruiting standpoint, there are still a lot of advisors to be cherry-picked from wirehouses. However, the key is to focus on retention rather than strictly recruitment. 

“It’s not enough to get them to leave the wirehouses, they have to want to stay with you,” Newcomb said.

---------

Check out complete conference coverage at AdvisorOne’s FSI OneVoice 2013 enhanced landing page.

RIMM: Crew Sets Up for BB10 Unveiling

Two miles uptown from Wall Street, on Manhattan’s Lower East Side, a couple of workers are putting up tape barriers and metal fences in front of Pier 36, the site of this morning’s debut for Research in Motion‘s (RIMM) BB10, its major new release of the BlackBerry operating system, meant to take back smartphone share from Apple (AAPL), and Samsung Electronics (005930KS), and a host of other Google (GOOG) partners.

Above the doors, a sign reads “Welcome to the BlackBerry experience.” Behind it, high up on one of the hanger-like structures, hangs an enormous BlackBerry logo banner.

Doors open at 9 am, Eastern, and the presentation starts at 10 am.

Entrepreneurship vs. Paternalism

In the following video, Motley Fool analyst Brendan Byrnes sits down with Maynard Webb, author of Rebooting Work: Transform How You Work in the Age of Entrepreneurship.

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Brendan Byrnes: So let's talk about the unique framework of this book; the four things in the unique framework? Could you talk about those four mind-sets that people have of work and how you came up with those?

Maynard Webb: Absolutely Brendan, and in the era of entrepreneurship I think people actually need a framework to identify what they should do. And so I've created a framework that has two boxes that are tied to the age of paternalism; Frame 1 is what you do as a company man or a company women. Frame 2, which is in the era of entrepreneurship is about being the CEO of your own destiny which is what I think is a sweet spot of the future of work. Frame 3, which is back in the age of paternalism, is the disenchanted employees, and we have too many of those in the world today. And Frame 4 is the aspiring entrepreneur; somebody who wants to be in the future of work but isn't making enough economics yet to get there and I have painted, for each of those, a formula of what they should do.

3 Reasons to Avoid Netflix

The market is big on Netflix at the moment. In this video, however, Fool analyst Blake Bos offers three reasons to avoid this company. First, Netflix operates in a hypercompetitive market. Second, content costs will likely eat away at revenues. Third, Netflix trades at 100 times earnings and doesn't have the deep, wide moat or industry dominance that, say, Amazon does to justify that high a price. Further, Amazon has almost 10 times the free cash flow as Netflix and can easily throw its weight around in this market. Netflix, therefore, doesn't have the financial clout to directly compete with Amazon.

The relevant video segment can be found between 17:48 and 22:23.

The precipitous drop in Netflix shares since the summer of 2011 has caused many shareholders to lose hope. While the company's first-mover status is often viewed as a competitive advantage, the opportunities in streaming media have brought some new, deep-pocketed rivals looking for their piece of a growing pie. Can Netflix fend off this burgeoning competition, and will its international growth aspirations really pay off? These are must-know issues for investors, which is why we've released a brand-new premium report on Netflix. Inside, you'll learn about the key opportunities and risks facing the company, as well as reasons to buy or sell the stock. We're also offering a full year of updates as key news hits, so make sure to click here and claim a copy today.

YRC Q1 EPS Beats, Operating Loss Improves

Shares of trucking company YRC Worldwide (YRCW) are down 3 cents, or 5%, at 58 cents after the company this morning reported a 29% drop in revenue, to $1.06 billion, missing the average $1.11 billion estimate, yielding a net loss per share of 33 cents, 15 cents better than expected.

YRC CEO Bill Zollars has promised to get the struggling freight hauler back to pre-tax profitability this quarter, and Q1 showed some signs of improvement in that direction. Adjusted Ebitda loss narrowed each month, from $27 million in January to $21 million in February to $5 million in March.

YRC’s total tons of freight hauled fell by 35% while revenue per hundredweight rose 0.4% including a fuel surcharge. The company’s volume rose in April from March, it said, both in national and regional freight hauling.

YRC has “stabilized its customer base,” said Zollars in the statement, and its “Regional companies have a lot of momentum.”

The company said it yesterday reset certain debt covenants, including a requirement to deliver $5 million in Ebitda this quarter, and $100 million cumulatively for Q2 through Q4, and to maintain $25 million in cash on the books.

YRC had $18 million in cash from operations during the quarter, leaving it with $130 million in cash and equivalents at the end of the quarter.

Offshore vs. Onshore Drilling: Which Is a Better Investment?

Over the past few years, two improved drilling techniques have helped expand the amount of recoverable oil and natural gas around the world. Improvements in fracking technology have opened up otherwise uneconomic drilling locations all over North America, and ultra-deepwater drilling is expanding drilling in oceans worldwide.

But one of these is a better investment for a variety of reasons.

The nature of oil drilling
Companies drill for oil or natural gas for one reason -- profits. But drilling on land and drilling offshore provide two different return-on-value calculations and time horizons.

An onshore driller can turn on and off new drilling with the price of oil or natural gas. Look at the correlation of price to the number of inland rigs in operation to show the difference. A few months of down prices, and the number of rigs working inland drops. That's because it takes a matter of weeks to drill an inland well, not a long time horizon for drillers.�

US Inland Rotary Rigs data by YCharts.

This has a boom-and-bust effect on companies such as Baker Hughes (NYSE: BHI  ) and Haliburton (NYSE: HAL  ) , which provide equipment to drillers. If prices are high, then business is good, but if prices fall, business drops off in a heartbeat. Bentek Energy says that Eagle Ford shale well drilling averages about 19 days for each well, so a month's notice may be all that's needed.�

In shallow water offshore, a similar boom and bust can take place, because contracts are measured in months, not normally in years. But ultra-deepwater drilling has changed that dynamic. Ultra-deepwater wells take months to drill, and oil companies are locking up rigs with extremely long-term contracts. Last year, Transocean (NYSE: RIG  ) signed 10-year contracts with Royal Dutch Shell for four newly built rigs that won't even be complete until at least 2015. The contract pays Transocean as much as $520,000 per day, an incredible rate given the long duration of the contract. Competitor�SeaDrill (NYSE: SDRL  ) has half of its floater fleet contracted into 2017.�

Just to put the difference in perspective, can you imagine an onshore rig contract that reached until 2025? The onshore market is simply too volatile to make that long-term bet. That's why offshore drilling service companies, particularly those with ultra-deepwater exposure, are the best bet.�

How to play the trend
With long-term contracts at high dayrates the norm in ultra-deepwater, there are a few ways to play the trend.

Rig owners are a play on offshore drilling and depending on the company can be a leveraged way to play ultra-deepwater drilling. SeaDrill�has one of the largest ultra-deepwater fleets and is adding more rigs this year. Transocean sold a large portion of its shallow-water rigs to focus on ultra-deepwater and is finally putting the Macondo spill behind it. Noble is another company that is focusing on ultra-deepwater by adding new rigs to its fleet at a rapid rate. SeaDrill, my top pick in the space, also pays a hefty 8.5% dividend yield.�

Oceaneering International (NYSE: OII  ) is a service provider to offshore drillers, providing the equipment and technology that make these wells possible. Subsea 7�is another contractor providing engineering services from the seabed to the surface.�

You can also bet on specific drillers like InterOil, which has assets off Papua New Guinea, or Cobalt International Energy, which is drilling for oil off the coast of Angola. The challenge with these investments is their volatile nature given the unknowns of these new fields. I'd rather cash in by owning companies contracting with drillers to lock in more certain gains.�

Offshore is the way forward
I've mentioned that SeaDrill is my top pick, and one of our analysts has taken a deep dive into the stock to provide investors with both the positive and the negative sides.

To learn more about the strengths and weaknesses of this company, as well as what to expect from Seadrill going forward, be sure to check out this�brand-new premium report�put together by one of our top Stock Advisor analysts. Click here to�get started.

Manitowoc Sells Warewashing Biz

On Monday, crane and kitchen-equipment maker Manitowoc (NYSE: MTW  ) announced that it has narrowed its focus a bit and sold, effective today, its Jackson warewashing business to Japan's Hoshizaki USA Holdings.

Specific financial terms weren't disclosed. However, Manitowoc did allow that sale of the warewashing -- or, as most people would probably call it, industrial-strength dishwashing -- business will net it $26 million. Manitowoc says it plans to use the funds to pay down its debt, which currently sits north of $2 billion. �

Investors didn't appear particularly impressed with the sum, however, bidding down Manitowoc shares 0.2% to close at $17.67.

McDonald’s: Piper Starts at Buy; Mind the Parking Lots

What can you tell from this picture?

Shares of McDonald’s (MCD) climbed 92 cents, or 1.3%, to $71.51 today after Piper Jaffray analyst Nicole Miller Regan initiated coverage of the stock with an “Overweight” rating and an $85 price target.

The core of Regan’s view is the high-margin business in Asia-Pacific, Middle East, and Africa regions, with profit margin for franchises in those areas close to 90% of sales, better than that for MCD’s domestic operations. And volume growth “APMEA,” as she calls it, is double overall company volume growth at 6%.

Furthermore, remodeling of stores should add 6% to 7% “lift” to sales this year.

But the most fascinating part of the report is the fact that Regan and team have collected overhead imaging data on parking lots at McDonald’s franchises around the country. Using this data and testing against past store results, she believes she’s able to forecast a 1% rise in same-store sales. Each 1% rise in same-store sales adds 5 cents per share to earnings, writes Regan.

Here’s the detail:

We have resourced a process that provides us with parking lot imagery by which we are able, we believe, to better determine the direction of same-store sales trends. (We apply “parking lot filled” percentage change to historical correlations.) The initial back-testing period compared quarterly data from 2002-2007, which generated an approximate 0.60 correlation based on a sample of approximately 75 observations/quarter. Our current analysis is focused on approximately 1,200 outlets operated by franchisees, and is comparing the change in parking lot fill rates to the change in U.S. same-store sales results. The sample size is approximately 300 observations/quarter (120 observations/month).

Regan’s $85 price target is based on a multiple of 17.5 times her 2011 earnings per share estimate of $4.84.

Will These Numbers from Emulex Be Good Enough for You?

Emulex (NYSE: ELX  ) is expected to report Q2 earnings around Jan. 30. Here's what Wall Street wants to see:

The 10-second takeaway
Comparing the upcoming quarter to the prior-year quarter, average analyst estimates predict Emulex's revenues will shrink -5.2% and EPS will drop -23.1%.

The average estimate for revenue is $121.9 million. On the bottom line, the average EPS estimate is $0.20.

Revenue details
Last quarter, Emulex chalked up revenue of $119.3 million. GAAP reported sales were 0.7% higher than the prior-year quarter's $118.4 million.

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

EPS details
Last quarter, non-GAAP EPS came in at $0.19. GAAP EPS were $0.01 for Q1 compared to -$0.08 per share for the prior-year quarter.

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

Recent performance
For the preceding quarter, gross margin was 63.0%, about the same as the prior-year quarter. Operating margin was 6.9%, 1,160 basis points better than the prior-year quarter. Net margin was 0.6%, 660 basis points better than the prior-year quarter.

Looking ahead

The full year's average estimate for revenue is $481.7 million. The average EPS estimate is $0.73.

Investor sentiment

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Emulex is hold, with an average price target of $8.05.

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How Far Will Netflix Fall This Week?

If any stock is justified in taking a breather this week, it would have to be Netflix (NASDAQ: NFLX  ) .

Shares of the leading video service soared 71% last week -- more than any other stock -- after posting blowout quarterly results.�Surprising analysts with an unexpected profit is pretty darn awesome, but debunking myths of waning popularity by adding 3.85 million net new streaming subscribers is even better.

However, was model affirmation worth the $3.9 billion bump in market cap that Netflix experienced on the week?�Bulls will argue yes, but every rally has its limitations.

Naysayers aren't home
Last week's push wasn't a short squeeze.

There were just 10.1 million shares sold short as of mid-January, well below October's peak of 17.2 million bearish wagers. The short covering has been happening for months, and many of those skeptics were spared last week's surge. You actually have to go all the way back to March of last year to find the last time that Netflix's short interest was this low heading into last week's quarterly report.

When you consider that share volume clocked in at nearly 58 million shares during last week's four trading days, there's more to last week's rally than merely bears heading for the exits.

A lot of the buying came from investors who had their faith restored in the model and the company. No one is even close to Netflix in its niche, and the gap will grow that much wider now that Netflix has more than 33 million global streaming subscribers. No one can justify the investment in content acquisition that can be divided by as many premium customers as Netflix has lined up.

A knock on Netflix is that it doesn't own its content, but the same can be said of most satellite and cable television providers.

Blinking amber
Despite the big push last week, Netflix shares still opened 2% higher at $172.57 this morning, setting a fresh 52-week high mere minutes later at $177.25.�However, the shares weakened a few hours into the trading day.

If there's an encouraging sign it's that many of the headlines on Netflix through financial outlets today are bearish. We're seeing the accounting issues of how Netflix scores its digital content deals regurgitated, and many are hopping on the lofty earnings multiples that the stock is now commanding. Contrarians will eat all of that up as a bullish indicator.

Bulls need to be realistic here, though. Netflix isn't going to revisit its 2011 highs north of $300 just because it's generating record revenue with its record number of subscribers.

It's a different company now. Investors bid up Netflix because they falsely assumed that splitting DVD and streaming into two separate categories would ultimately boost average revenue per user. It didn't. It's tethered to the $7.99 monthly price, and even during last week's call it stood by its intention to not raise prices.

It's probably the right strategy. Amazon.com (NASDAQ: AMZN  ) is cheaper, and it includes free two-day shipping of Amazon-stocked merchandise and monthly Kindle book rentals. Coinstar's (NASDAQ: CSTR  ) Redbox Instant is matching Netflix on price, yet it also include four nights of DVD rentals from its fleet of kiosks.

Streaming a happy medium
Netflix has always been a volatile stock, and you can expect the next few weeks to be just as frenetic.�The market's not sure if Netflix is the ultimate disruptor or a rebirthed dot-com darling that's about to get disrupted itself.�The gyrations will make Netflix popular with traders, and longtime investors -- including myself as a satisfied Netflix investor since 2002 -- should already be used to the ups and downs.

CEO Reed Hastings has a clear vision of what he sees for Netflix. He hasn't bowed to studio pressure to offer tiered pricing so they could offer fresher content without devaluing new releases. Nor has he bowed to rivals offering everything from pay-per-view rentals of new releases to video games.

He sticks to the simple $7.99 monthly plan, even though Time Warner's (NYSE: TWX  ) HBO -- which Hastings often refers to as his service's biggest competitor -- charges roughly twice as much for less content.

It's hard to fault his vision when the stock is climbing, just as it was easy to come down on Hastings when the stock crashed during the latter half of 2011. At the end of the day, he knows what he's doing. Longtime investors are reasonably sure of what they're doing. Speculators, on the other hand, are too involved with the wild swings to seriously weigh the company's fundamentals.

Netflix may not have deserved all of last week's nearly $4 billion pop, but there's only so much it can give back this week when nearly everything that bears believed has been proven wrong.�

Stream on
The precipitous drop in Netflix shares since the summer of 2011 has caused many shareholders to lose hope. While the company's first-mover status is often viewed as a competitive advantage, the opportunities in streaming media have brought some new, deep-pocketed rivals looking for their piece of a growing pie. Can Netflix fend off this burgeoning competition, and will its international growth aspirations really pay off? These are must-know issues for investors, which is why we've released a brand-new premium report on Netflix. Inside, you'll learn about the key opportunities and risks facing the company, as well as reasons to buy or sell the stock. We're also offering a full year of updates as key news hits, so make sure to click here and claim a copy today.

2 Stocks That Are Wasting Your Money

Your company's buying back stock? Hurray! Or should that be "Boo!"?

According to Boston University finance professor Allen Michel, when a company announces it's buying back stock, that stock tends to outperform the market by 2% to 4% more than it otherwise would have over the ensuing six months.

But multiple studies show that�over the long term, buybacks actually destroy shareholder value. CNBC pundit Jim Cramer cites the example of big banks that bought back shares in 2007-2008 �-- just before their stocks fell off a cliff. Far from buy signals, Cramer calls buybacks "a false sign of health ... and often a waste of shareholders' money." Indeed, the Financial Times recently warned: "the implied returns over a period from buy-backs by big companies would have been laughed out of the boardroom if they had been proposed for investment in ... conventional projects."

So why run buybacks at all? According to FT, management can use them to goose per-share earnings, which helps CEOs earn bonuses based on "performance." Also, the investment banks that run buybacks earn income and fees from promoting them. But you and me? Unless the purchase price is less than the shares' intrinsic value, we miss out.

And we're about to miss out again.

Procter & Gamble (NYSE: PG  )
Procter & Gamble surprised a lot of investors last week -- and pleasantly -- when instead of reporting the $1.11 a share in fiscal-second-quarter profit it had been expected to produce, the company announced it actually earned $1.22. P&G shares promptly popped 4% in response to the news. Sadly, what should surprise exactly no one is that now that the stock costs more, management has decided to buy more of it, saying it now plans to buy back at least $5 billion of its shares.

That's a bad decision, and I'll tell you why.

Priced at 15.5 times earnings, P&G certainly looks cheap enough, but looks can be deceiving: 15.5 times earnings is actually a bit expensive, considering that few analysts expect the company to grow its profits any faster than 8% a year over the next five years. It's also a deceptively low-looking number for two reasons: First, it doesn't take into account P&G's $26.5 billion net-debt load. (If that were counted as part of its market cap, we'd be saying P&G has a P/E of 17.7.) Second, it doesn't mention that with just $10.7 billion in free cash flow backing up its earnings, P&G actually only generates about $0.83 in real cash profit for every $1 it says it's "earning."

Nokia (NYSE: NOK  )
Then again, at least Procter & Gamble has free cash flow. Because our other featured cash-profligate today -- Nokia -- does not.

Oh, sure. I know I gave Nokia props last week for finally turning in an FCF-positive fourth quarter. I even expressed some hope that the company is turning itself around. Remember, though, that this is for now just a hope. And remember, too, that one FCF-positive quarter doesn't change the fact that Nokia burned cash the other three quarters of last year, and ended the year nearly $1.1 billion in the red for cash-burn. Regardless, the company promised to make all that right, and spend more than a billion dollars buying back as many as 370 million Nokia shares over the next 18 months. Of course, to find the cash to do this, Nokia had to suspend its popular dividend program.

My reaction: Thanks, but no thanks, Nokia. If it's all the same to you, I'd rather take the cash. Then, if the numbers look right, I can buy back your shares myself.

Herbalife (NYSE: HLF  )
Come to think of it, though, if Nokia could be persuaded to reinstate its dividend, I might actually be tempted to spend the money on another stock entirely. You see, I don't like to end this column on a down note, and fortunately, this week I don't have to. Because as it turns out, one company that's buying back shares today -- Herbalife -- actually looks like quite a good bargain.

Priced at a lowly 11.3 times earnings, but growing these earnings at upward of 15% a year (and not for nothing, paying a 2.8% dividend yield to boot), Herbalife shares look awfully tempting at today's prices.

Is the stock controversial? Is it "risky?" Sure it is. That's why hedge fund honcho Bill Ackman is shorting Herbalife. But if you ask me, the $427 million in real free cash flow this company generated over the past year is proof positive that Herbalife is for real, and its profits reliable. Unless and until that changes, I think Herbalife's entirely right to be buying back shares -- as it recently promised to do.

Unless you think the company is bald-faced lying about its cash flows, you might want to pick up a few shares, too.

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

Phillips 66 Earnings: an Early Look

With hundreds of companies having already reported quarterly results, we're now in the heart of earnings season. The key to making smart investment decisions with stocks releasing their quarter reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

Let's turn to Phillips 66 (NYSE: PSX  ) . As a recent spinoff from ConocoPhillips (NYSE: COP  ) , Phillips 66 has taken advantage of nearly unprecedented profit opportunities in the refining industry. But how long can the good times last for the company? Let's take an early look at what's been happening with Phillips 66 over the past quarter and what we're likely to see in its quarterly report on Wednesday.

Stats on Phillips 66

Analyst EPS Estimate	$1.67
Change from Year-Ago EPS	(42%)*
Revenue Estimate	$46.03 billion
Change from Year-Ago Revenue	3%*
Earnings Beats Since Going Public	2 out of 2

Source: Yahoo Finance, S&P Capital IQ. * Includes one-time gain on disposition; calculated from pro forma numbers.

Will Phillips 66 refine its profits even further?
Analysts have been increasingly optimistic about Phillips 66's prospects this quarter, increasing their earnings-per-share estimates by nearly a dime over the past three months. But shareholders have had even more enthusiasm about the stock, which has jumped more than 25% since late October.

Phillips 66 came onto the public company scene at exactly the right time. With huge spreads between international and U.S. energy prices, Phillips 66 has been able to take advantage of massive profit opportunities. That has sent share prices through the roof, and among its peers, only HollyFrontier (NYSE: HFC  ) has managed to see a larger increase in earnings per share over the past two years.

But logistical issues have forced the company to make some costly decisions lately. Phillips 66 recently made a five-year deal with Global Partners (NYSE: GLP  ) to ship Bakken crude to its New Jersey refinery. Even though the transport adds costs of $10-$15 per barrel, it's still cheaper to use domestic oil pegged to lower West Texas Intermediate prices rather than importing Brent crude from overseas.

One interesting move that Phillips 66 plans to make later this year is to bundle some of its assets in pipelines, rail lines, and natural gas liquids into a master limited partnership structure. By doing so, the company will take advantage of investor interest in MLPs to raise capital while still retaining a majority interest in the assets. Phillips 66's 50% general partnership interest in DCP Midstream Partners (NYSE: DPM  ) hasn't worked out as well as it hoped, but much of its struggles came from the propane side of its business.

In Wednesday's report, Phillips 66 should continue to post strong results, but look for any guidance that could point to narrowing spreads in the future. When that inevitable day comes, Phillips 66 and its refining peers will likely take a fairly big hit.

Is Phillips 66 the best energy play?
Clearly, Phillips 66 has done a good job of cashing in on favorable trends in the industry. But we've picked one incredible natural gas company that looks even more promising, presenting a rare "double-play" investment opportunity today. We're calling it "The One Energy Stock You Must Own Before 2014," and you can uncover it today, totally free, in our premium research report. Click here to read more.

Click here to add Phillips 66 to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

S&P Puts Hasbro on Downgrade Watch

Standard & Poor's announced it has placed Hasbro's (NASDAQ: HAS  ) BBB+ rating on its watch list for a potential downgrade. The ratings agency indicated concern with the toy company's recent operating performance and its increased leverage.

S&P said in its announcement that it expects that the latter "increased to about 2.3x in 2012 from 2.2x in 2011." As a result, it continued, "we believe Hasbro's ability to drive leverage under our 2x threshold appears less likely over the intermediate term."

Last week, the toy maker released preliminary 2012 results that showed declines in both revenue and net profit. The firm also said it will reduce its workforce by roughly 10%.

Wells Fargo Aims to Outshine Bank of America in Its Own Back Yard

Not content with cornering the mortgage-writing market, Wells Fargo (NYSE: WFC  ) is expanding its investment banking business. In a body blow to peer Bank of America (NYSE: BAC  ) , Wells has established an investment banking arm in B of A's hometown of Charlotte, North Carolina, where the larger bank had previously tried -- without success -- to set up its own shop.

Investment banking comeback?
The investment banking business has taken a hit since the financial crisis, and Morgan Stanley (NYSE: MS  ) recently announced�cuts of 15% to its Asian section as part of its overall downsizing of 1,600 jobs.

On the other hand, JPMorgan Chase (NYSE: JPM  ) noted late last year that investment banking is stepping up, and its latest earnings report showed net revenues increased 21%�year over year. Goldman Sachs (NYSE: GS  ) made a good showing as well, presenting net revenues up 64%�from the year-ago quarter.

Getting its fair share
Wells Fargo saw a 30% uptick�in its own investment banking fees from 2011, and is positioning itself to take on a larger presence in the sector. According to Bloomberg, the bank has already moved some of its 900 workers to the new digs in Charlotte, just minutes away from Bank of America's former location. The former CEO of B of A, Ken Lewis, put up the building several years ago to house approximately 550 employees, but Lewis lost his taste for the business early on -- until he decided to buy Merrill Lynch, that is. Many of the Charlotte traders were moved to New York after the purchase of Merrill.

On the face of it, Charlotte doesn't seem like the obvious choice for an investment banking enterprise. But Wells inherited a banking base there when it bought Wachovia�in 2008, and there is a large contingent of workers with investment banking experience living in the city. Another plus is that the area is less hectic than New York and offers a lower cost of living.

One Fool's take
Wells isn't deterred by the Bank of America experience and seems to be taking a laid-back approach when it comes to staffing its new headquarters. Analysts feel the bank won't have a problem finding skilled workers who would be happy to move to less-expensive Charlotte when Wells is ready to expand.

Will Wells Fargo succeed where B of A failed? It would seem so, particularly since the bank is much more committed to the idea than Lewis apparently was. The bank has instituted a training program�for its investment bankers, hiring a consulting firm to teach employees the art of the deal, with an eye toward bringing in more business. That sure sounds like dedication to me.

Dedication indeed. Wells Fargo's�commitment�to solid, conservative banking helped it vastly outperform its peers during the financial meltdown. Today, Wells is the same great bank as ever, but with its stock trading at a premium to the rest of the industry, is there still room to buy, or is it time to cash in your gains? To help figure out whether Wells Fargo is a buy today, I invite you to download our premium research report from one of The Motley Fool's top banking analysts. Click here now for instant access to this in-depth take on Wells Fargo.

SEC Charges Former Jefferies Exec With MBS Fraud

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The Securities and Exchange Commission on Monday charged a former executive at New York-based broker-dealer Jefferies & Co. with defrauding investors while selling mortgage-backed securities (MBS) in the wake of the financial crisis so he could generate additional revenue for his firm.

According to the SEC’s complaint filed in federal court in Connecticut, Jesse Litvak arranged trades for customers as part of his job as a managing director on the MBS desk at Jefferies. Litvak, the SEC says, “would buy a MBS from one customer and sell it to another customer, but on many occasions he lied about the price at which his firm had bought the MBS so he could re-sell it to the other customer at a higher price and keep more money for the firm.”

On other occasions, the SEC says that Litvak “misled purchasers by creating a fictional seller to purport that he was arranging a MBS trade between customers when in reality he was just selling MBS out of his firm’s inventory at a higher price.” Because MBS are generally illiquid and difficult to price, it is particularly important for brokers to provide honest and accurate information.

The U.S. Attorney’s Office for the District of Connecticut announced criminal charges against Litvak on Monday as well.

The SEC alleges that Litvak generated more than $2.7 million in additional revenue for Jefferies through his deceit. His misconduct helped him improve his own standing at the firm, as his bonuses were determined in part by the amount of revenue he generated for the firm.

George Canellos, deputy director of the SEC’s Division of Enforcement, said in a statement that “brokers must always tell their customers the truth, particularly in complex securities transactions in which it is difficult for investors to determine market prices on their own. Litvak repeatedly lied to his customers and invented facts to bring additional profits into his firm and ultimately his own pocket at their expense.”

According to the SEC’s complaint, Litvak worked in the Stamford, Conn., office at Jefferies, and his misconduct lasted from 2009 to 2011. Litvak’s customers included some funds created by the U.S. government under a program designed to help strengthen the markets for MBS during the financial crisis. Said the SEC: “Had these customers been aware that they could have paid less for the MBS they purchased, they likely would have done so.”

Is This Old-School Retailer Really a Tech Company?

Discount retailer Wal-Mart (NYSE: WMT  ) is not typically thought of as being a leading-edge tech company. Operating in 27 countries, generating $444 billion in 2012 revenues, and with 2.2 million employees, it's more likely considered a stodgy, steady-growth business at best and, well, its many critics have derisive names for it at worst. Yet both views are mistaken, because to be able to move that much merchandise globally, Wal-Mart has to be at the top of its game technologically.

Where Wal-Mart goes, others follow
Because of its reach, when the retailer creates a vendor program, it can transform an industry. It was one of the first large companies to invest heavily in RFID tag technology a decade ago, and though some suggest it almost killed the industry because of its dominance of it, Wal-Mart also brought it into the mainstream. It was also one the first retailers to adopt and push for the universal barcode as a labeling system and it was an early adopter of electronic data interchange, or EDI, the transfer of documents electronically between the company and its suppliers instead of using paper or fax�(which remains one of the requirements for becoming a Wal-Mart vendor).

Efficient supply chain and inventory management requires superior tech knowledge, and 5,500 members of its far-flung workforce are dedicated to IT .

Corralling big data
Yet it's not alone as a vanguard of tech usage. Target (NYSE: TGT  ) can easily match the deep discounter in tech innovations, like using its branded Visa credit card to mine data from its customers' spending habits. Best Buy (NYSE: BBY  ) is attempting to thwart the impact of "showrooming" by displaying QR codes -- the quick-response pixilated square that's becoming more ubiquitous on packaging and elsewhere -- to give shoppers more product information and prevent them from needing to go online to buy the item elsewhere. Target and Macy's (NYSE: M  ) are using them as well, with the latter even educating the public through TV spots about the value QR codes represent.

Wal-Mart's leadership in the space, however, comes from its willingness to invest in the latest technology to connect its global retail operations to one of the largest nongovernment data warehouses in the world. According to SAS, Wal-Mart handles more than a million customer transactions each hour and imports those into databases containing an estimated 2.5 petabytes of data. It is also home to an embedded tech incubator, WalmartLabs.

So from influencing the way customers shop to predicting what they'll need and want next, Wal-Mart is every bit as much a tech company as Apple or Cisco. It's just wrapped in a layer of dull retailing.

Fencing in the competition
The next advance for Wal-Mart may be in mobile communications. It launched a location-aware app that goes into "in-store mode" as soon as a customer is within range of a store, called geo-fencing,�and essentially pushes promotional data to a smartphone. It also provides customers with the current sales flyer, allowing them to see what's new on sale, scan bar codes, and tally the cost of what's being bought before even getting to the register. Additionally, shoppers can switch to online mode so that if the product is out of stock in store, they can find it online and have it shipped.�

Obviously, the reason behind all of Wal-Mart's investments in technology has been to drive sales, and though traditionally that's been for its brick-and-mortar stores, as the mobile app shows, it's now for the digital arena, too, and with good reason.

Amazon.com (NASDAQ: AMZN  ) has devastated the business models developed by Best Buy and Barnes & Noble, and Wal-Mart wants to make sure it's not the next victim. Where Wal-Mart dwarfs Amazon's $57 billion in annual sales, its e-commerce sales are a comparatively meager $4.9 billion, as estimated by Internet Retailer, or less than 10% of its rival's total. And with Amazon pushing further into Wal-Mart's domain with retail sites like Diapers.com and Wag.com, a pet supplies site, it's all padding the top line.

The importance of e-commerce to Wal-Mart is evident in that some 12% of online sales made through its smartphone app as of last November happened while customers were in the store, or at least using its app in the in-store mode. Embracing the showrooming concept may just allow it to compete more effectively against its digital rival.

Wal-Mart everywhere and anywhere
Mobile commerce is firmly established with consumers, and though still relatively small, it will continue to grow until it's a significant part of the overall shopping experience. Juniper Research says spending by all retailers on mobile marketing will reach $55 billion by 2015, nearly double the $28 billion that will be spent this year. But whether it's in the backroom, around the globe, in your neighborhood, or on your smartphone, you can be sure Wal-Mart will be leading the way forward.

Considering its stock, at 14 times earnings estimates, is as discounted as the products lining its shelves, an investor may want to include the retailer in the tech portion of a well-balanced portfolio.

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

Are You Expecting This from Affymetrix?

Affymetrix (Nasdaq: AFFX  ) is expected to report Q4 earnings around Feb. 2. Here's what Wall Street wants to see:

The 10-second takeaway
Comparing the upcoming quarter to the prior-year quarter, average analyst estimates predict Affymetrix's revenues will grow 29.1% and EPS will remain in the red.

The average estimate for revenue is $84.1 million. On the bottom line, the average EPS estimate is -$0.03.

Revenue details
Last quarter, Affymetrix reported revenue of $79.6 million. GAAP reported sales were 24% higher than the prior-year quarter's $64.0 million.

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

EPS details
Last quarter, non-GAAP EPS came in at -$0.03. GAAP EPS were -$0.25 for Q3 versus -$0.14 per share for the prior-year quarter.

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

Recent performance
For the preceding quarter, gross margin was 58.0%, 120 basis points better than the prior-year quarter. Operating margin was -5.9%, 330 basis points better than the prior-year quarter. Net margin was -22.4%, 710 basis points worse than the prior-year quarter.

Looking ahead

The full year's average estimate for revenue is $295.2 million. The average EPS estimate is -$0.14.

Investor sentiment
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 346 members out of 409 rating the stock outperform, and 63 members rating it underperform. Among 111 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 96 give Affymetrix a green thumbs-up, and 15 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Affymetrix is hold, with an average price target of $5.49.

Looking for alternatives to Affymetrix? It takes more than great companies to build a fortune for the future. Learn the basic financial habits of millionaires next door and get focused stock ideas in our free report, "3 Stocks That Will Help You Retire Rich." Click here for instant access to this free report.

• Add Affymetrix to My Watchlist.

Coming Soon: Atwood Oceanics Earnings

Atwood Oceanics (NYSE: ATW  ) is expected to report Q1 earnings on Jan. 30. Here's what Wall Street wants to see:

The 10-second takeaway
Comparing the upcoming quarter to the prior-year quarter, average analyst estimates predict Atwood Oceanics's revenues will grow 26.1% and EPS will compress -7.0%.

The average estimate for revenue is $233.0 million. On the bottom line, the average EPS estimate is $0.93.

Revenue details
Last quarter, Atwood Oceanics reported revenue of $252.5 million. GAAP reported sales were 42% higher than the prior-year quarter's $177.6 million.

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

EPS details
Last quarter, EPS came in at $1.45. GAAP EPS of $1.45 for Q4 were 31% higher than the prior-year quarter's $1.11 per share.

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

Recent performance
For the preceding quarter, gross margin was 59.6%, 560 basis points worse than the prior-year quarter. Operating margin was 45.4%, 540 basis points worse than the prior-year quarter. Net margin was 37.8%, 330 basis points worse than the prior-year quarter.

Looking ahead

The full year's average estimate for revenue is $1.02 billion. The average EPS estimate is $4.89.

Investor sentiment
The stock has a five-star rating (out of five) at Motley Fool CAPS, with 2,360 members out of 2,383 rating the stock outperform, and 23 members rating it underperform. Among 671 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 666 give Atwood Oceanics a green thumbs-up, and five give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Atwood Oceanics is outperform, with an average price target of $53.42.

Is Atwood Oceanics the right energy stock for you? Read about a handful of timely, profit-producing plays on expensive crude in "3 Stocks for $100 Oil." Click here for instant access to this free report.

• Add Atwood Oceanics to My Watchlist.

Coming Soon: Plains Exploration & Production Earnings

Plains Exploration & Production (NYSE: PXP  ) is expected to report Q4 earnings around Jan. 31. Here's what Wall Street wants to see:

The 10-second takeaway
Comparing the upcoming quarter to the prior-year quarter, average analyst estimates predict Plains Exploration & Production's revenues will increase 47.9% and EPS will grow 175.0%.

The average estimate for revenue is $765.5 million. On the bottom line, the average EPS estimate is $0.55.

Revenue details
Last quarter, Plains Exploration & Production reported revenue of $605.1 million. GAAP reported sales were 21% higher than the prior-year quarter's $501.8 million.

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

EPS details
Last quarter, non-GAAP EPS came in at $0.39. GAAP EPS were -$0.41 for Q3 compared to -$0.62 per share for the prior-year quarter.

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

Recent performance
For the preceding quarter, gross margin was 73.5%, about the same as the prior-year quarter. Operating margin was 6.3%, 5,230 basis points worse than the prior-year quarter. Net margin was -8.8%, 880 basis points better than the prior-year quarter.

Looking ahead

The full year's average estimate for revenue is $2.49 billion. The average EPS estimate is $1.96.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 388 members out of 402 rating the stock outperform, and 14 members rating it underperform. Among 89 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 86 give Plains Exploration & Production a green thumbs-up, and three give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Plains Exploration & Production is hold, with an average price target of $52.63.

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• Add Plains Exploration & Production to My Watchlist.

American Capital: Financing turnarounds

I firmly believe that financial stocks will lead the pack in 2013, spurred by the Fed's aggressive easy-money policies.

Based on this outlook, here is a new recommendation: American Capital Ltd. (ACAS), a Bethesda, Md.-based private equity firm that finances growth firms and makes money from turnarounds, distressed businesses, energy infrastructure investments and its own mortgage trusts.

ACAS is a turnaround story itself, having run into a liquidity crisis in September 2008 and threatened by bankruptcy, even as it suspended its dividend.
But it has been all positive news since then as the finance company has sharply shed its debt ratios and returned to profitability.

Just in the past year, revenues are up nearly 19% to $625 million. Return on equity is an enviable 34%. Its net asset value (NAV) has jumped from $10 in 2010 to more than $17 today.

What I really like about American Capital is its buyback and dividend policy. If the stock price sells below its NAV of $17.39, it buys back its own shares.

Since it began this policy in late 2011, it has bought back 15% of the company�s shares. It will start paying a dividend when it sells above its NAV, but the NAV has been rising so fast that the price has had a hard time keeping up.

It could happen this year, judging from its price rise since Jan. 1. Yet the stock is relatively cheap, selling for 12 times estimated earnings in 2013. Zack's just rated it a #1 buy.

Let's make it a top buy, as well. Purchase American Capital and set a protective stop of $12 a share.



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Corporate Economists Have Rosier View of 2013

Corporate economists are becoming more optimistic about 2013, in a new survey predicting the U.S. economy will expand at a fairly robust pace this year despite continued uncertainty in Washington.

According to the National Association for Business Economics Industry survey, released Monday, 50% of those polled say the economy will advance at a 2.1% pace or better over the next four quarters. That is up from just 36% forecasting that level of growth last October.

“The economy continues to soldier on,” said Timothy Gill, chairman of the NABE Industry Survey Committee and economist at the National Electrical Manufacturers Association. “While the panel was nearly unanimous in its view that the economy will expand over the next four quarters, it was split as to the degree of growth expected.”

U.S. stocks gain on Caterpillar profit

NEW YORK (MarketWatch) � U.S. stocks opened mostly higher Monday, with the S&P 500 index struggling to extend gains into a ninth session, after blue-chip equipment maker Caterpillar Inc. reported a profitable quarter and as orders for durable goods rose.

While the jump in durable-goods orders for Decemberis a welcome one, the picture painted by Caterpillar�s �telling you a little bit more about the global story,� said Dan Greenhaus, chief global strategist at BTIG LLC.

After finishing above 1,500 last week for the first time since December 2007, the S&P 500 SPX �was off 1.02 points at 1,501.94.

The Dow Jones Industrial Average DJIA � climbed 8.12 points to 1,304.30, with Caterpillar CAT � leading gains that included half of its 30 components.

The Nasdaq Composite COMP � advanced 7.55 points to 3,157.26.

The Commerce Department reported orders for durable goods in the U.S. climbed 4.6% last month.

Shares of Jos. A Bank Clothiers Inc. JOSB � fell 15% after the men�s apparel maker late Friday projected yearly profit would decline 20% from last year, with sales undercut by unseasonably warm weather.

The Men Who Run J. Sainsbury

LONDON -- Management can make all the difference to a company's success and thus its share price.

The best companies are those run by talented and experienced leaders with strong vested interests in the success of the business, held in check by a board with sound financial and business acumen. Some of the worst investments to hold are those run by executives collecting fat rewards as the underlying business goes to pot.

In this series, I'm assessing the boardrooms of companies within the FTSE 100. I hope to separate the management teams that are worth following from those that are not. Today I am looking at supermarket chain�Sainsbury� (LSE: SBRY  ) .

Here are the key directors:

Director	Position
David Tyler	(non-exec) Chairman
Justin King	Chief Executive
John Rogers	Finance Director
Mike Coupe	Commercial Director

David Tyler became chairman toward the end of 2009. A qualified accountant, his background is largely in finance. Having started his career on�Unilever's respected management trainee program, he undertook various finance roles in that group before becoming finance director of Natwest Investment Bank, then auction house Christie's, and then GUS, where he played a major role in its demerger.

He took over from Sir Philip Hampton as the latter decided to concentrate his attentions as chairman of�RBS. But in another example of multitasking chairmen, Tyler will take on the chairmanship of FTSE 100 REIT�Hammerson�in May. That may throw up some interesting discussions about unlocking the value in Sainsbury's property portfolio.

King of the supermarkets
Justin King is one of the better-known FTSE CEOs, as someone who runs a well-known company, is outspoken (he recently vocally criticized the Chancellor's shares-for-employment-rights plan), and has achieved a successful turnaround in Sainsbury's performance. When he joined as CEO in 2004, the business was in a poor state. It has reported 31 consecutive quarters in sales growth and recently marked its highest market share for a decade -- though the share price is pretty much where it was when he started.

Before Sainsbury, King was director of food at�Marks & Spencer�for three years, and in senior roles at Asda for seven years before that. His earlier career was also the food sector, with Mars, PepsiCo, and Grand Metropolitan.

King has denied repeated speculation that he is about to announce his resignation. If he does, then Mike Coupe is in pole position to succeed him. He has been commercial director since 2010, overseeing trading, marketing, IT, and online operations. He joined Sainsbury as trading director in 2004 and became a board member in 2007. Also a Unilever management trainee, his career included stints with�Tesco,�Asda, and Iceland stores.

Finance and property
John Rogers' early career was in engineering. He subsequently moved into consultancy and then became finance director of Hanover Acceptances, an investment company. He joined Sainsbury in 2005 as director of group finance. He undertook finance and property roles before becoming CFO in June 2010.

Sainsbury's five non0execs have good-looking CVs, though none of them are especially well-known corporate names.

I analyze management teams from five different angles to help work out a verdict. Here's my assessment:

1. Reputation.�Management CVs and track record. Good.	Score 4/5
2. Performance.�Success at the company. Successful.	Score 4/5
3. Board Composition.�Skills, experience, balance, Good.	Score 3/5
4. Remuneration.�Fairness of pay, link to performance. Uncontroversial.	Score 3/5
5. Directors' Holdings,�compared with their pay. Executives have good holdings, required by guidelines.	Score 4/5

Overall, Sainsbury scores 18 out of 25, a good result. Investors credit Justin King with doing a good job in a tough market, and if he does decide to move on, there seems to be a smooth succession plan.

I've collated�all my FTSE 100 boardroom verdicts on this summary page.

Buffett's favorite FTSE share
Let me finish by adding that legendary investor�Warren Buffett�has always looked for impressive management teams when pinpointing which shares to buy. So I think it's important to tell you that the billionaire stock-picker has recently acquired a substantial stake in a prominent FTSE 100 company.

A special free report from The Motley Fool -- "The One U.K. Share Warren Buffett Loves" -- explains Buffett's purchase and investing logic in full.

And Buffett, don't forget, rarely invests outside his native United States, which to my mind makes this British blue chip -- and its management -- all the more attractive. So why not download the report today? It's totally free and comes with no further obligation.

More Expert Advice from The Motley Fool

PepsiCo has satiated consumers bellies for more than a century. But recently, the company has left shareholders craving more. With increased competition and loss of market share, many investors wonder if this global snack food and beverage giant is simply fizzling out. Are more bland results ahead for PepsiCo? In The Motley Fool's brand-new premium report on the company, we guide you through everything you need to know about PepsiCo, including the key opportunities and threats facing the company's future. Simply click here now to claim your copy today.