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 So far in 2014, we've seen Facebook stock (Nasdaq: FB) continue its dramatic share price rebound, Twitter stock (NYSE: TWTR) plunge more than 40%, and two new social media IPOs debut - GrubHub (NYSE: GRUB) and Weibo (Nasdaq ADR: WB) - but have you ever wondered, how do social media companies make money? We asked Money Morning E-Commerce Director Bret Holmes to give us the scoop. Part of Holmes' job is to utilize web advertising via social media platforms to best market Money Morning. As a result, he's on top of what's going on inside of today's social media giants. Holmes said the key to unlocking value for social media companies is successful advertising models. "Social media companies are legitimate advertising websites, no different than, say, Google or Yahoo. The same way Google made its money is the same way Twitter and Facebook will make their money," Holmes explained. And web advertising via social media is a market that's growing at a staggering rate. A 2013 Nielsen report showed that 89% of advertisers use free social media advertising and 75% use paid social media advertising. The report also highlighted that 64% of advertisers expected they'd increase their paid social media advertising budgets over the course of 2013. On May 12, BIA/Kelsey released its U.S. Social Local Media report. The research firm projected that total U.S. social media advertising revenue will grow from $5.1 billion in 2013 to $15 billion in 2018, for a compound annual growth rate (CAGR) of 24%. That means a lot of opportunity for social media companies to make major money. The trick for social media companies looking to profit as ad platforms is to find the best way to insert advertising into the user's experience without impacting the user in a negative way. And that advertising methodology is hugely important to these companies' revenue growth. The same BIA/Kelseyreport in May revealed that the greatest year-over-year jump in social media ad revenue ever has been seen this year. It's grown from $5.1 billion in 2013 to $8.4 billion, which the firm largely attributes to a surge in both native and mobile advertising. It estimates that social mobile revenue alone is projected at 38.3% CAGR. Exemplary of the profitability of this kind of social media advertising growth is Facebook. In late April, Facebook announced that its mobile ads accounted for 59% of its second quarter ad revenue, up from approximately 30% of ad revenue in the first quarter of 2013. Mobile ad revenue alone came in at a mammoth $2.265 billion for the quarter. This kind of advertising success is tied directly into a social media company's bottom line - and its profitability for investors. To learn how to gauge which companies will succeed, here's how social media advertising actually works... How Social Media Companies Make Money: A Lesson from Facebook  We'll use Facebook as an example. The Facebook IPO was an unmitigated disaster. It lost over half of its value within six months of listing, and was priced at 107 times trailing 12-month earnings, making it pricier than 99% of all companies in the S&P 500 at the time. But boy did it rebound. From July through September 2013, the Facebook stock price more than doubled. Shares are up more than 150% over the past 12 months, and 15% so far in 2014. As of July 8, FB stock traded at $62.60 - putting it $24.60 over its IPO price of $38. It was advertising that undoubtedly turned the tides for Facebook. "Facebook has gotten really good at advertising. It's new, it's inexpensive, and it's smartly done," Holmes said. "When Google first started, it wasn't good at advertising, and look at them now. Facebook is going to be a success story." Here is what Facebook did to unlock its value and become what Holmes described as "the most advantageously competitive product on the market for advertisers, hands down"... Originally, Facebook started with space ads. Then, it added self-promoting individuals' or a company's Facebook page. But things were still sluggish. However, around the start of 2013, Facebook developed a new advertising format. They're technically referred to as native social ads - ads that are seamlessly integrated into the social media's platform. BIA/Kelsey projects social media native revenue as the fastest-growing social media advertising method at a 38.6% CAGR by 2018. "Facebook has integrated in-stream ads to the user experience. Response rates are high and advertisers will always chase the least expensive ad with the best response. It works because it's new and cheap," said Holmes. In-stream ads can be videos. For instance, a commercial will appear before the user may watch an Internet video. The in-stream video ad will typically last 15-30 seconds. On a social media site like Facebook, which has real-time update feeds, in-stream ads can be inserted into a streaming feed. So, for example, the user scrolls through the News Feed to see what friends and family are up to, and in-stream ads are peppered into the Feed. By far the largest social network, FB's Q2 2014 ad revenue reached $2.27 billion - an 82% increase from the same quarter last year. Revenue for the full year 2013 was $7.87 billion, a 55% gain year over year. "For the first time in 2013, Facebook let advertisers access FBX, an ad exchange where you can customize your own ads," explained Holmes. "Now we can glean information and better target our audience. We can also advertise on mobile now." The ad model is helping Facebook monetize its massive 1.28 billion monthly active users who increasingly access the site via mobile devices. Facebook revealed it has more than 1 million advertisers in total as of the start of 2014. And to top it all off, Facebook continuously improves its method to provide performance-based analytics that are invaluable to advertisers. Watching Facebook's advertising Cinderella story shows us a great deal about how advertising makes money for social media companies. One company that hasn't yet found a way to make money on its user base is Twitter - but it's working on it. In a troubling Q1 2014 earnings report, Twitter revealed that monthly active users (MAUs) were lackluster, with only a 6% gain since last quarter. And the previous quarter saw only a 3% growth in MAUs. The report also showed that TWTR's net loss grew by more than $100 million. Twitter stock fell more than 8% that day, and it's down nearly 17% since its Nov. 8 initial public offering (IPO). In an effort to improve its numbers, Twitter is in the process of rolling out 15 types of new ads aimed at e-commerce companies and mobile game developers, according to The Wall Street Journal. But the key here is the addition of a mobile-app install unit. That means an ad for a game, for example, includes a button that takes users directly to an app store where they can buy it.
Facebook has included this tool since late 2012 - and in its most recent quarter, mobile in-app install units represented half of the company's revenue. Another way Twitter has been trying to boost ad revenue is through e-commerce. In early May, it built in a way to send impulse-buy ads to people based on what they are tweeting about. In doing so, TWTR partnered with Amazon.com Inc. (Nasdaq: AMZN) to let users type #AmazonCart to respond to tweets that include an Amazon link - and put the item directly in their cart. If Twitter is able to increase its user base and find successful ways to monetize it via ads, the stock could pull a Facebook-like turnaround. For more on what Twitter has recently done to turn itself around, read here about its latest major management shake up... Related Articles: Nielsen: Paid Social Media Advertising - Industry Update and Best Practices 2013 BIA/Kelsey: Press Release: U.S. Social Media Advertising Revenues to Reach $15B by 2018 The Wall Street Journal: Coming to Your Twitter Feed: 15 New Types of Ads
Unbowed by fines and new regulations, Goldman Sachs (NYSE: GS) has simply looked elsewhere for fresh victims. In a deal that barely registered with the mainstream media, Ecuador's central bank agreed earlier this week to swap half of its gold reserves - worth $580 million - with Goldman in exchange for liquid assets.  The Ecuadorian central bank thinks it's going to earn $16 million to $20 million in profit over the three-year duration of the deal. Of course, the details of the transaction, such as the fees and interest rate that Goldman is charging, were not disclosed.
And as we all know, the devil is in the details - particularly when you're dealing with a Wall Street pirate like Goldman Sachs. "They've invited the wolf to dinner without realizing they're on the menu," said Money Morning Chief Investment Strategist Keith Fitz-Gerald. "There's no doubt that Goldman will come out the winner. We just don't know exactly how they plan to do it." Goldman Sidesteps Washington... Again Fitz-Gerald said that the Ecuador gold deal matters because it's telling us that Goldman and its nefarious brethren on Wall Street have not changed their behavior one iota in the wake of the 2008 financial crisis for which they were mostly to blame. What's more, he said that U.S. politicians who believe that efforts like the 2010 Dodd-Frank Act have put a lid on Wall Street's bad behavior are dreaming. "Washington thinks they have this thing under control," Fitz-Gerald said. "All they've done is just a slap on the wrist. The Big Banks have just reconstituted their business elsewhere, where they don't have the same regulatory burden. If you think anything has changed in New York, you're sadly mistaken." And whatever Ecuador is saying publicly, that it was willing to make any kind of deal with the likes of Goldman Sachs indicates that the country is in serious trouble. That much is obvious to everyone. "It does raise a red flag," Bianca Taylor, a sovereign analyst at Loomis Sayles, told Bloomberg News. "Whenever a country needs to sell or monetize its gold reserves, it's definitely a signal that the sovereign is strapped for cash." Maybe Ecuador genuinely believes that swapping its gold with a shark like Goldman will work out for the best, but history says otherwise... The Damning Track Record of Goldman Sachs (NYSE: GS) One thing that anyone should know entering into a deal with Goldman Sachs is that they will come out on the short end. Goldman plays to win. And it's more than willing to bend the rules in its favor. Just look at what Goldman did last spring... GS made several moves to manipulate gold prices, advising investors to sell while snapping up the yellow metal as people followed their advice and prices dropped. Goldman does much the same thing with stocks, mostly through its Conviction Buy List. "The truth is that Goldman Sachs and the rest of the big banks on Wall Street invariably 'blow up' customers to make money for themselves," said Money Morning Capital Wave Strategist Shah Gilani. "And not only do big banks like Goldman run roughshod over their customers and clients, they manipulate markets, industries, economies, and countries to fatten their already gigantic bonus pools and personal fortunes." Yes, countries. Ecuador wouldn't be the first nation to be seduced by Goldman's promise of rescue from a financial pickle. Last fall, Goldman tried a similar stunt with Venezuela. Like Ecuador, Venezuela is strapped for cash and thought it could use its gold reserves to obtain some extra liquidity. The deal that was negotiated would have swapped 1.45 million ounces of Venezuelan gold - to be held for seven years by the Bank of England - in exchange for $1.6 billion from Goldman. But the gold at that time was worth $1.8 billion, representing an immediate 10% profit for GS. In addition, Venezuela would have paid about 8% a year for the loan. And the gold collateral was to be subject to margin calls, adding more uncertainty. Recognizing that Goldman probably did not have Venezuela's best interests at heart, the South American nation backed away from the deal before signing anything. Good for them. But then there's the tragedy that was Greece. Goldman Sachs Makes Greece Pay Greece made a deal with Goldman back in 2001 to borrow about 2.8 billion euros disguised as a derivative so it would not show up as new debt and draw the ire of European Union regulators. Right off the bat Greece owed 600 million euros more than it had borrowed. But things got much worse very quickly. Because of how the derivative was structured, the drop in U.S. bond yields following the Sept. 11 attacks created huge paper losses for Greece. Goldman kindly offered to revise the deal to help out the struggling nation. The inflation-based swap Goldman proposed went into effect in 2002. But then bond yields fell, driving Greece's losses on the deal to an appalling 5.1 billion euros. Chalk up another victory for Goldman, which pocketed a fortune. Greece, on the other hand, was one step closer to a sovereign debt crisis that rippled out across Europe and was felt around the world. It's a tale the Ecuadoran central bank should have brushed up on before shaking hands with anyone from Goldman. "Greece is just another example of a poorly governed client that got taken apart," Satyajit Das, a risk consultant and author of "Extreme Money: Masters of the Universe and the Cult of Risk," told Bloomberg News. "These trades are structured not to be unwound, and Goldman is ruthless about ensuring that its interests aren't compromised - it's part of the DNA of that organization." How do you think Ecuador will fare in its deal with Goldman Sachs? Share your thoughts on Twitter @moneymorning or Facebook. You may recall that the unbridled greed of the Big Banks was also a primary force behind the subprime mortgage crisis. Amazingly, with the wounds from the last housing crisis still fresh, Wall Street is making a new gamble that threatens a $1 trillion mortgage meltdown... Related Articles: Bloomberg News: Goldman Secret Greece Loan Shows Two Sinners as Client Unravels Bloomberg News: Goldman Gets Ecuador Gold as Correa Steps Up Cash Hunt
LONDON (MarketWatch) — Shares of Vodafone and Marks & Spencer led the U.K. benchmark index lower on Tuesday after both companies reported full-year earnings, while oil giant BP declined after a legal setback related to the Deepwater Horizon disaster. The FTSE 100 index (UK:UKX) dropped 0.5% to 6,813.44, on track for a second straight day of losses. • Stock market LIVE: Latest news and commentary on the market » /conga/story/misc/stockmarket_live.html 289248 Vodafone Group PLC (UK:VOD) (VOD) posted the biggest drop in the index, sliding 4.3% after the company said full-year adjusted operating profit fell 37% and revenue slipped 1.9%. Also among top decliners, Marks & Spencer Group PLC (UK:MKS) dropped 2.7% after the U.K. retailer said pretax profit fell for the full year. Shares of BP PLC (UK:BP) (BP) gave up 0.9% after an appeals court in New Orleans rejected the oil major's request for a review of the settlement case for victims of the Deepwater Horizon oil-spill disaster. BP spokesman Geoff Morrell said in a statement that the company was "disappointed" with the decision and that it is "considering its legal options". Click to Play  Private group sought to arm Syrian rebels Dion Nissenbaum takes a look at the strange tale of an effort by private U.S. citizens, including some with ties to private security contractors, to arm Syrian rebels on their own. Photo: AP. In data news in the U.K., April inflation rose to 1.8% from 1.6% in March, coming in higher than the consensus estimates of 1.7%. The Office for National Statistics said increased fares for air and sea travel helped lift consumer prices last month, suggesting the higher-than-expected inflation partly was due to the timing of Easter. "Inflation is stabilizing close to the Bank of England's 2% target, giving little reason to keep interest rates at rock-bottom levels," Rob Wood, chief U.K. economist at Berenberg, said in a note. The pound (GBPUSD) advanced after the data, trading at $1.6829, up from around $1.6822 late Monday. The main U.K. interest rate currently stands at a record low of 0.5%, and a rate hike would be supportive for the pound. More must-reads from MarketWatch: Put your money in growth stocks and dividend payers 5 dividend stocks that may be safer than Treasurys The wildest videos taken with a GoPro
Cloud is the future and critical for most tech giants. Oracle Corporation (NYSE:ORCL) is no exception. Oracle now generates more than $1 billion of subscription revenues annually from its cloud-hosted application suite, equal to about 3 percent of total revenues and 11 percent of total software license and subscription revenues. This is roughly equivalent to what rival SAP is generating While the move from effectively zero to $1 billion in cloud revenues over the span of three years has been impressive, Oracle still has a long way to go. Rival and cloud leader salesforce.com (NYSE:CRM) posts $1 plus billion of revenues per quarter, while Oracle's GAAP cloud revenues were up just 19 percent year-over-year in the recent November 2013 quarter. [Related -salesforce.com, inc. (CRM) Q4 Earnings Preview: What To Expect?] Oracle competes with niche cloud vendors such as Salesforce, Workday (NYSE:WDAY), Veeva, NetSuite, and Concur. These rivals are eating the lunch of Oracle's and SAP's legacy on-premises applications business. Deutsche Bank analyst Karl Keirstead estimates that Oracle's on-premises, application software license sales likely declined by about 25 percent year-over-year in the recent November quarter. This is alarming, to say the least, although the decline in Oracle's total on-premises applications revenues (including maintenance support) is likely much less given that maintenance fees decline with a lag. [Related -Hewlett-Packard Company (HPQ) Q1 Preview: Can HP Report Earnings Upside?] While concerned, one should not panic. Oracle's guidance for new license sales and subscription revenue growth of 1-11 percent for its third quarter (up from zero growth in the November quarter) implies that the decline in on-premises application license sales will likely moderate. In addition, the on-premises applications business is now down to 17 percent of total license and subscription sales, down from 23 percent two years ago. Even if this rate of decline continues, it's becoming a much smaller piece of Oracle's total license mix given the steady growth in the much larger database business and the ramp of cloud subscription revenues. Though the decline in new on-premises application license sales will undoubtedly pressure Oracle's on-premises maintenance fee stream, Oracle has one key lever – renewal rates – to try to stem that decline. Keirstead noted that absent new license sales in a very mature and highly penetrated ERP market, Oracle can direct its efforts to improving the user experience and functionality of its on-premises software to reduce the predilection of customers to consider Workday or other alternatives. Oracle can also use price (reducing the cost of professional services associated with upgrades) to limit customer attrition. Also, recent trends suggest an uptick in demand for PeopleSoft v9.2 migrations after IT budgets seemed to loosen up a bit. If the partner checks have to be believed, then Oracle now has a more active "protect the base" inside selling and calling program to convince existing PeopleSoft customers to upgrade to v9.2 instead of considering cloud alternatives such as Workday. Meanwhile, Oracle's focus on its Cloud suite has ramped materially of late, as the recent Oracle HCM World conference in Las Vegas was the first time that both Larry Ellison and Mark Hurd presented at the same event outside of OpenWorld, an effort on the part of Oracle to demonstrate the seriousness of its Cloud push to both customers and employees. According to Keirstead's checks, Oracle is now flagging about 400 Fusion Cloud customers. A new version of Fusion Cloud (v8) is available for new customers and is expected to be launched to existing v5 or v7 customers in March 2014. In terms of the HCM Cloud, v8 will add a time and attendance module (a hole in the suite) and will (finally) integrate with Taleo's Enterprise modules. In terms of cloud suite, Oracle still does not have anything close to the kind of customer traction necessary to conclude that it is winning the battle with Salesforce, Workday, Veeva and the other SaaS vendors that are fighting to replace on-premises Oracle systems. However, Keirstead say it doesn't need to be winning. He says that Oracle needs to pour resources and senior leadership energy into upgrading the on-premises versions (as it's done with PeopleSoft v9.2) and upgrading its Cloud suite (as it did with v7) in order to stem the share losses to manageable proportions. Oracle claimed that annualized cloud bookings were up a full 35 percent. Oracle cites about 10,000 Cloud customers, equal to 2-3 percent of its 400,000 global customers. Oracle signed a deal to buy cloud marketing, automation software vendor, Responsys for $1.5 billion in December. In January, it struck a deal to buy Corente, a provider of software-defined networking (SDN) technology for wide area networks (WANs). The Corente deal extends Oracle's virtualization capabilities with leading software-defined networking technology to deliver cloud services In February, Oracle agreed to acquire BlueKai, developer of a popular, cloud-based, data management platform (DMP) for online, offline, and mobile marketing data. DMP is the key asset of BlueKai and would help Oracle effectively compete against Salesforce, which doesn't yet offer a DMP product. Oracle is a massive ship to turn, and it's happening slowly, but the business software giant is at least making many of the right moves and may be further along on its cloud journey than most Street analysts think.
With shares of Pfizer (NYSE:PFE) trading around $29, is PFE an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework: T = Trends for a Stock’s Movement Pfizer is a biopharmaceutical company that discovers, develops, manufactures, and sells medicines for people and animals worldwide. The company manages its operations through five segments: Primary Care, Specialty Care and Oncology, Established Products and Emerging Markets, Animal Health and Consumer Healthcare, and Nutrition. Pfizer's main products are human and animal biologic and small molecule medicines, as well as vaccines, nutritional products, consumer healthcare products, and products for the prevention and treatment of diseases in livestock and companion animals. Pfizer on Monday said one of its experimental drugs had failed to meet its goals in two late-stage studies among patients who had received prior treatment for advanced non-small cell lung cancer, the most common form of the disease. Although Pfizer continues to test the drug, called dacomitinib, in another Phase III study, hopes for its success have now largely faded, according to ISI Group analyst Mark Schoenebaum. ”We believe consensus expectations (for the drug) will be close to zero given today’s readout” of unsuccessful trial results, Schoenebaum said in a research note. T = Technicals on the Stock Chart Are Mixed Pfizer stock has been trending higher in the last couple of years. However, the stock is currently pulling back and may need time to stabilize. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Pfizer is trading between its rising key averages which signal neutral price action in the near-term. 
(Source: Thinkorswim) Taking a look at the implied volatility (red) and implied volatility skew levels of Pfizer options may help determine if investors are bullish, neutral, or bearish. | Implied Volatility (IV) | 30-Day IV Percentile | 90-Day IV Percentile | | Pfizer options | 22.24% | 96% | 94% | What does this mean? This means that investors or traders are buying a very significant amount of call and put options contracts, as compared to the last 30 and 90 trading days. | Put IV Skew | Call IV Skew | | February Options | Average | Average | | March Options | Average | Average | As of today, there is an average demand from call and put buyers or sellers, all neutral over the next two months. To summarize, investors are buying a very significant amount of call and put option contracts and are leaning neutral over the next two months. On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion. E = Earnings Are Mixed Quarter-Over-Quarter Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on Pfizer’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Pfizer look like and more importantly, how did the markets like these numbers? | 2013 Q3 | 2013 Q2 | 2013 Q1 | 2012 Q4 | | Earnings Growth (Y-O-Y) | -9.30% | 360.50% | 58.33% | 358.00% | | Revenue Growth (Y-O-Y) | -2.39% | -7.12% | -9.30% | -6.65% | | Earnings Reaction | 1.67% | 0.44% | -4.46% | 3.20% | Pfizer has seen increasing earnings and decreasing revenue figures over the last four quarters. From these numbers, the markets have had mixed feelings about Pfizer’s recent earnings announcements. P = Average Relative Performance Versus Peers and Sector How has Pfizer stock done relative to its peers, Merck (NYSE:MRK), Novartis (NYSE:NVS), Sanofi (NYSE:SNY), and sector? | Pfizer | Merck | Novartis | Sanofi | Sector | | Year-to-Date Return | -2.74% | 6.55% | -2.13% | -8.33% | -2.66% | Pfizer has been an average relative performer, year-to-date. Conclusion Pfizer discovers and develops medicines for people and animals around the world. The company said one of its experimental drugs had failed to meet its goals in two late-stage studies. The stock has been trending higher in recent years, but is currently pulling back. Over the last four quarters, earnings have been increasing while revenues have been decreasing, which has produced mixed feelings among investors about recent earnings announcements. Relative to its peers and sector, Pfizer has been an average year-to-date performer. WAIT AND SEE what Pfizer does next.
SEATTLE — The hackers responsible for the wave of breaches at big retailers this holiday season very likely began testing a method to infect thousands of point-of-sale systems in big retail chains in January 2013. "This is a well-funded adversary taking their time to develop very specific malware to go after very specific targets and a big payday," says Chris Petersen, chief technology officer at security intelligence firm LogRhythm. "This is organized crime applied to cybercrime." Last April, Visa issued an alert to retailers about network intrusions targeting POS data at grocery merchants in early 2013. The technique discovered by the payment card giant involved installing a memory-parsing program on Windows-based cash register systems and back-of-house (BOH) servers. The clever piece of malware was designed to extract data from magnetic-striped payment card transactions.  By last November security analysts and forensic investigators were quietly discussing cases of big retail chains getting hit by memory parsing attacks, says Avivah Litan, banking security analyst at research firm Gartner. "I can't give you names, but there were others hit," Litan says. "Target got hit the biggest." The breaches of customer databases at Target, Neiman Marcus and other yet-to-be-disclosed retail chains have all the earmarks of a methodical attack used in cyber espionage known as an Advanced Persistent Threat. An APT attack often begins with intelligence gathering. Researchers tap search engines and social media websites to build dossiers on employees likely to have privileged access to wide parts of a company network. Personalized e-mails carrying a viral PDF attachment or Web link get sent. A tried-and-tr! ue ruse: trick a subordinate into following orders from his or her superior to click on the viral payload. With control of the right logon and password, the attackers gain privileged access to sensitive databases and internal applications. "This is a huge wake-up call for companies to think about security from an 'inside-out' model and assume the bad guys are already on the network," says Eric Chiu, president of cloud control company HyTrust. "Access controls, role-based monitoring and data encryption are critical to ensure that data is protected from attackers that might be on your network." It's plausible that the hackers responsible for stealing personal data for 70 million Target customers spent months locating — and systematically infecting — thousands of Target POS registers and servers. "They may have found an entry point in summer, then slowly compromised thousands of point-of-sale registers, waiting until the holiday season for the transaction volume to reach the highest of the year and for the security teams to get overwhelmed," says Petersen. "To do that all under the radar over a long period of time takes sophisticated malware." Security officials at Target, Neiman Marcus and other retailers eventually detected the data thefts. And public disclosures have been prompted by the reporting of cybersecurity blogger Brian Krebs. On Jan. 2, US-CERT, the cybersecurity incident reporting body, warned retailers to increase the security of POS systems. Yet despite the alerts from Visa and US-CERT, U.S. retailers — and consumers — remain vulnerable. The reason: The U.S. continues wide use of magnetic striped payment cards. The rest of the world, led by Europe, Asia and Canada, has moved to chip-embedded payment cards, which are much more difficult to counterfeit. "Replacing these cards in the U.S. is a billion-dollar proposition and a five-year time frame," says Anup Ghosh, CEO of browser security firm Invincea. "In the interim, consumers ! need to c! ount on retailers to secure their store and corporate enterprise networks in order to ensure exposed consumer data is protected."
Wall Street stock futures were continuing to hold steady following the mid-week decision by the Federal Reserve to begin easing off on its easy-money stimulus policy. Dow Jones industrial average index futures rose 0.1% and Nasdaq index futures added 0.2%. Standard & Poor's 500 index futures also crept upward — up 0.1%. Fed policymakers decided to cut from January $5 billion each from the central bank's monthly purchases of U.S. Treasuries and mortgage backed securities. It also said it "will likely reduce the pace of asset purchases in further measured steps at future meetings." U.S. stocks were little changed in the previous session, although the Dow did notch a new high. THURSDAY: Stocks close mixed as Dow edges up to new high In Asia, the People's Bank of China moved to inject liquidity after the interbank market showed stress, but concerns over a repeat of the summer's credit crunch weighed on the market. The country's central bank decided to hold steady on its monetary policy instead of opting for stimulus. On Friday, Hong Kong's Hang Seng index was down by 0.4% to 22,806.28 and China's Shanghai composite dropped by 2.2% to 2,084.79. The regional heavyweight, the Nikkei 225 index, fell 0.1% to 15, 870.42. The Standard & Poor's rating agency said it has downgraded the European Union's credit rating, stripping it of the highest grade of AAA. The major European benchmarks traded in a narrow range Friday. Contributing: Associated Press
Look out Intuitive Surgical, Inc. (NASDAQ:ISRG), and step aside BioTelemetry Inc. (NASDAQ:BEAT). There's a new cardiac name in town, and its name is Stereotaxis Inc. (NASDAQ:STXS). This small company's stock is soaring today on the heels of encouraging news, though the prompt for the stock's strength has been brewing for quite some time. This nudge for STXS, however, may well mean it has a lot more potential than ISRG or BEAT do for the foreseeable future. And that's saying something. BioTelemetry shares are up more than 200% over the past four months on news of an agreement with UnitedHealthcare, a glimmer of hope on the revenue and earnings front, and a new corporate structure that the market seems to like much better than the old one. Intuitive Surgical, Inc. shares haven't had the same luck of late, still under pressure from a scare earlier in the year that robotic surgeries were going the way of the Edsel due to safety concerns that could ultimately crimp demand for its products. And so far, those fears haven't been unmerited. Last quarter's revenue from ISRG was noticeable weaker. So what makes Stereotaxis Inc. such a superior investment idea now? Two things. One of them is Japan. The other is safety. On the safety front, the STXS approach to treating cardiac arrhythmia is different than most procedures in that the catheter used to do the repair work is soft, flexible, and can reach further into the reaches of the heart in order to place the radiofrequency energy (which restores the heart's normal pattern of beats). Stereotaxis catheters are also guided magnetically, making them more precise in addition to farther reaching. Traditional heart catheters tend to be stiff, and therefore risky, as they can puncture the heart. And, traditional catheters don't offer the same precision placement of the RF treatment. The quality of the product, however, is only part of the reason the medical community is apt to start gravitating toward safer and perhaps more effective options while steering clear of now-questionable robotic surgeries. Another reason may be that insurance companies and regulators see the value of this less-invasive yet more-effective approach supplied by Stereotaxis. Enter Japan. The Niobe heart catheter system from STXS has been categorized in the highest reimbursement class of medical products in that country, meaning it's going to be readily easy to sell the product and approach to doctors and patients there. Japan's attitude toward the device, however, may just be a microcosm of how the rest of the world and its insurers are going to see Stereotaxis-made equipment. Even beyond Japan, and even beyond the transition away from robotic surgeries and toward laparoscopic approaches, however, STXS has some key drivers in its future. The V-drive and its recurring revenue potential is one of them. That's $30 million worth of hardware/upgrade sales, plus all the follow-on revenue. Another catalyst is expansion into China if it can find the right partner. All told, the company could be penetrating what's a $1 billion robotic (and minimally invasive) catheter market that's still a little fuzzy, but rife with acquisitions. Yes, STXS is overbought thanks to today's pop, but worth every penny in the grand scheme of things. The current market cap of $38.2 million in no way reflects the potential upside of its heart catheter surgery systems, now that they're proven, and now that the medical community is supporting them. If you'd like to get more trading ideas and insights like this one, sign up for the free SmallCap Network daily e-newsletter. It's full of stock picks, market calls, and more.
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Let's paint the bigger picture first, using the broad brush stroke of the weekly chart. As you can plainly see, the last several months have been miserable for IWEB. Heck, the last four years have been tough for the stock. But, the tide turned - significantly - in early July when shares finally started to make higher highs and higher lows. The bullishness we've seen over the past five weeks is literally the most bullishness we've seen from IceWEB in years. 
Zooming into a daily chart provides that last bit of reassurance needed to go ahead and take the plunge on IceWEB. Despite Wednesday's opening gap, ever since late June we've seen the stock well supported by key moving average lines.... the 50-day line (purple) in early August, and today and yesterday, the 20-day moving average line (blue). That should be more than enough to keep the rebound effort going when things get tough. 
Alamy Microsoft CEO Steve Ballmer is heading for the exit. Should Microsoft (MSFT) shareholders follow suit? Shares of the software giant soared 7 percent on Friday on news that it would be replacing Ballmer as CEO within the next 12 months. The market's opinion of the news must sting Ballmer (though it also made him a few hundred million dollars richer), but investors expecting that Microsoft's next leader will be able to return the company to its former glory may be in for a rude awakening. Why would consumers and businesses want to return to a time when they were dependent on a stodgy operating system that was expensive and slow to adapt? What if Microsoft doesn't find the right CEO? What if there is no such thing as the CEO? Those are just a few of the heavy questions that Microsoft's stockholders face in light of Ballmer's pending departure, and they may not like the answers. You Can't Go Home Again First, let's talk fundamentals. Does Microsoft's business make it a good buy for forward-thinking investors? Well, in the past dozen years, Microsoft has gone from being the world's most valuable company to one that is worth less than two-thirds of what current leader Apple (AAPL) is today. Microsoft and Google (GOOG) commanded nearly identical $290 billion market caps at the kick off of this trading week, and the search engine giant wasn't even publicly traded when Ballmer was tapped to be Microsoft's CEO in 2000. In fact, Google had only been founded 16 months earlier. Tech babies grow so fast these days. And that, at least in part, is the root of Microsoft's problems. Computing hasn't merely evolved -- it has metamorphosed. Consumers aren't buying PCs like they used to. Desktop and laptop sales have fallen sharply for five consecutive quarters, which has never happened before. That's not a lull. That's not a bad stretch. That's a trend. And it isn't just a Windows woe. Apple's Mac sales have also been sliding in recent quarters. Most PC buyers never needed the full processing power their machines had under the hood, and that's even more true today. A large percentage of us just want to surf the Web, check email, and stream media. We don't need a desktop or laptop for that; all we need is an Internet connection. We live in a world of mobile apps and browser-based software, which increasingly means means that we can be operating system agnostic: Windows, iOS, Android, Linux -- it all looks and feels mostly the same once you get started. Those are painful shifts for Microsoft: Its two primary cash cows are its Windows operating system and its Office productivity suite. Windows has only managed to claw out a 4 percent share of the market in smartphones and tablets, and that's after throwing billions of dollars at mobile computing. Google's Android has become the operating system of choice for smartphone and tablet users, and Apple's iOS is a distant second worldwide. That leaves Microsoft with a nearly insurmountable amount of ground to make up, even assuming it can figure out how to compete with the freely available open-source Android. Microsoft used to command premium prices for its Windows updates; soon, it may not even be able to give them away. The outlook for Microsoft Office is a bit more secure, largely because Google's competing cloud-based software hasn't exactly stormed the market -- yet. However, it's really just a matter of time before the productivity business succumbs to the allure of free, cloud-based applications. The Good News And yes, there some good news. Microsoft is still growing despite the headwinds. Server and tools software products continue to sell briskly. Microsoft's Xbox 360 has been the country's top gaming console for months, and after a few initial missteps, excitement is building for November's debut of Xbox One. Bing has been able to hold its own in search, fortified by a deal struck with Yahoo (YHOO) to handle the dot-com pioneer's search business. Microsoft is growing overall, and analysts see revenue and earnings per share climbing in the 4 percent to 6 percent range in fiscal 2014. The tech bellwether isn't reeling, but it's certainly not growing fast enough to satisfy today's growth stock investors. Meet the New Boss ... Finally, let's talk leadership. We can safely assume that Microsoft won't hire its next CEO from the inside. Promoting from within is often a smart move, but investors didn't send Microsoft's stock $20 billion higher in value because they hoped Ballmer was going to be replaced by someone already helping call the shots in Redmond. Microsoft is going to need a seasoned outsider with a big name, and don't be surprised if it's a former Google or Apple executive. Hiring Google execs has worked well for many of the Internet's meandering companies. Yahoo shares have nearly doubled in value since ex-Googler Marissa Mayer took over 13 months ago. Facebook (FB) certainly hasn't suffered since Sheryl Sandberg stepped in as COO. Then we have Apple. Executives from the iEverything company used to be untouchable, but a slumping share price since last October's iPhone 5 release and a corporate shake-up shortly after that could drive a big name from Apple to accept the Microsoft challenge. So Microsoft may actually wind up with a name that the market likes, which could give it a short-term bounce -- but that still doesn't mean that you buy Microsoft here. No matter who is running the show, its attempted transformation from a software dynamo into a tech firm that specializes in products and services will be long, expensive, and likely unsuccessful. Microsoft isn't going away: It has far too much money. However, it hasn't been able to buy or build its way into relevance in the markets that are growing. The ultimate question for investors here is, will Microsoft will be more relevant in five years than it is now? You can hope for a transformational figure as its next CEO, but deep down inside, you know the answer.
Cora Reed/Shutterstock For more than five years now, the U.S. stock market has mostly soared upward as the global financial system emerged from the wreckage of the housing bust, the banking crisis and the ensuing market meltdown. Yet several looming threats could put the brakes on those gains, and investors appear increasingly nervous about whether stocks will keep providing the returns they've grown accustomed to. Let's look at what the rest of 2014 is likely to bring. The Halloween Scare October routinely scares many investors, and despite the irrationality of many seasonal investing strategies, it's easy to understand why with a simple look at history. The Crash of 1929 that many blame for setting the stage for the Great Depression occurred in October, as did its 1987 successor, which featured the largest single-day percentage drop in the Dow Jones Industrials (^DJI). Over the years, other minor market disruptions happened during October. And while the last financial crisis started gaining momentum in the summer, October 2008 produced two of the five worst days in history for the Dow in terms of point declines.
