Nasdaq: FB
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You Might be Invested in Facebook Stock and Not Even Know it
Investors who boast that they were smart enough to avoid the hype of investing in Facebook (Nasdaq: FB) stock might want to check their mutual funds' holdings before relishing in their bravado.
According to data compiled by investment research firm Morningstar for The Wall Street Journal, some 160 U.S.-based mutual and exchange-traded funds bought shares of Facebook in May. And since only some fund companies choose to reveal their holdings on a monthly basis, the ones that chose to invest in Facebook will be disclosed over the next two months as fund companies file quarterly reports.
"Even if John Q. Public didn't buy [Facebook] directly, he may own one of the hundreds of mutual funds that did," Geoff Bobroff, a mutual fund consultant in East Greenwich, RI, told The Journal.
What is notable in many cases about the purchases, including those by lead underwriter Morgan Stanley (NYSE: MS), is that some of the funds that purchased shares wouldn't normally invest in a high-growth technology company like Facebook. And some wouldn't invest such a high percentage, like Morgan Stanley that had at least seven funds with over 5% of portfolio holdings in Facebook stock.
"That's a huge gamble," Michael Kalscheur, a financial planner with Castle Wealth Advisors LLC, told The Journal. "Are you really going to put an IPO as a top-five holding in a fund?"
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iTunes Revamp Will Fortify Apple (Nasdaq: AAPL) Ecosystem
A major revamp of its catch-all iTunes software will strengthen the already formidable Apple Inc. (Nasdaq: AAPL) ecosystem.
"People with direct knowledge of the matter" confirmed to Bloomberg News last week that Apple's biggest overhaul to iTunes since 2009 will appear before the end of the year.
According to the Bloomberg report, changes include the addition of music sharing features, better integration with Apple's iCloud remote storage service, and easier ways to discover new apps, music, and movies.
The upgrade is long overdue.
Launched as a mere music jukebox in 2001, iTunes has gradually added chores like media content management, an online store and syncing. As a result, it's evolved into a Frankenstein that fails to uphold Apple's legendary ease-of-use ideal.
"At some point, you've got to sit down and say, 'How do we create a really good, easy experience for consumers that doesn't involve them wading through endless tabs and subsections of the site," Carl Howe, research director at theYankee Group, told MacNewsWorld.
Although the iTunes Store generates a relatively small portion of Apple's overall revenue -$1.9 billion out a total of $39.2 billion in the March quarter - the software is a main ingredient of the glue that holds the Apple ecosystem together.
An iTunes revamp will tidy up the cluttered ecosystem that helps drive sales of iPhones, iPads and Macs - AAPL's real revenue generators.
With that in mind, it's also easy to see the iTunes overhaul as a defensive move.
It's surely no coincidence that the Bloomberg story appeared mere minutes after Google Inc. (Nasdaq: GOOG) announced an upgrade to the Android ecosystem. The Google Play store added movies, TV shows and magazine subscriptions - just like the iTunes Store.
What to Expect from an iTunes Revamp
While the details remain veiled in secrecy, the recent leaks offer several clues about what Apple has in mind for iTunes.
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How to Spot Winners as Facebook (Nasdaq: FB) and Friends Fight Patent Wars
For big players like Facebook Inc. (Nasdaq: FB) and Apple Inc. (Nasdaq: AAPL), last summer marked a dramatic turn toward patent warfare in the world of technology.
Microsoft Corp. (Nasdaq: MSFT) and Apple in July 2011 spent over $4.5 billion at an auction on a portfolio of 6,000 patents.
Then in August, Google Inc. (Nasdaq: GOOG) purchased Motorola Mobility for $12.5 billion, gaining over 17,000 patents.
Facebook and Yahoo! Inc. (Nasdaq: YHOO) currently headline the battlefield. This spring, Facebook spent a whopping $550 billion on patents. Then Yahoo sued Facebook for patent infringement.
You should expect more lawsuits as many of the tech giants have a similar wartime strategy: The best defense is a good offense.
The plan is to snatch up as many patents as possible, then defend their plunder. The strategy effectively chokes out the competition, preventing the other guy from developing or implementing new technology because doing so infringes on patents.
But aggressive patent warfare leads to a big casualty: innovation. Technology investment buzzwords like creativity, growth, research and development take a sideline while companies lock each other up with litigation.
In fact, companies heavily participating in patent warfare doom themselves to fail. That's why investors should steer clear of the patent trolls.
Becoming a Monster: Patent Trolls
Patent trolls buy patents specifically to extort money from innovators. They are akin to a modern day mafia, according to the The Washington Post.
Patent trolls take advantage of the fact that litigation in any arena is typically a war of resources.
They sit atop their pile of patents, waiting to have a tenable enough argument that a company has been infringed upon. Then they sue.
The result? A patent troll suit can easily annihilate tech startups that simply don't have the resources to outlast a larger company in litigation.
Any tech company putting major effort into aggressive patent litigation should raise a red flag to investors. It is evidence of mixed-up priorities that scream failure.
For example, let's take a look at Yahoo.
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The 2012 IPO Calendar: How to Spot the Winners
You might find yourself eyeing the 2012 IPO calendar with a bit more scrutiny after the Facebook (Nasdaq: FB) fiasco.
Although Facebook has been nabbing the most attention for disappointing its investors, it's hardly the first IPO to do so. It's all part of the fickle IPO process.
In fact, about 40% of the IPOs to hit the market over the past 12 months have seen their share prices fall below their IPO prices.
Facebook isn't the only factor to blame -- U.S. unemployment is up, the Eurozone debt crisis is sapping bullish spirit, and the upcoming U.S. presidential elections in November are adding to market uncertainty.
But avoiding IPOs altogether could also be a huge mistake.
Just ask those who bought the Google (Nasdsaq: GOOG) initial public offering. The Google IPO priced at $85, started trading at $100, and now trades around $560.
So how can you put yourself in the 60% group and earn a profit in the process?
With the right research and guidance, you can spot winners just like Google.
Do Your IPO Research
Investing in IPOs is like buying and selling any asset: due diligence is required.
An IPO, like a credit-default swap or subprime mortgage, is the ideal financial instrument for a limited set of circumstances. It is up to the individual or the institution to determine if the IPO they are considering is suitable for a long-term investment or a short-term flip.
If it qualifies as just a short-term flips, that is enough to tell you not to buy.
Whatever the investment objective, however, information is readily available for the necessary and needed due diligence.
For example, on March 17, 2011 Michael J. De La Merced wrote an article in The New York Times about the IPO of FriendFinder Networks (NYSE: FFN).
In his Timespiece,"FriendFinder Braves Choppy Market with IPO, Again," De La Merced did an excellent job of detailing his concerns with the stock, ranging from the disposition of the proceeds of the IPO to the accounting at the company to the number of times it had attempted to go public before and had to withdraw the offering.
FriendFinder Network IPO priced at $10 a share last year; it's now selling for around $1.15.
Other times an IPO can be hurt by factors having nothing to do with the financials of the company or the overall economic situation.
Take the Carlyle Group (Nasdaq: CG), a Washington, DC-based private equity group, which went public in May. Until Election Day in November, private equity groups will be vilified by the Obama Administration, unions and others due to Republican presidential candidate Mitt Romney's work with Bain Capital.
There is no way that can aid the share price of Carlyle Group. Now trading around $21 a share, Carlye Group has slipped from its IPO high of $22.45.
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Facebook Stock Price Hits Low – Can this New Strategy Help?
After hitting a new low of $25.75 on Tuesday, Facebook (Nasdaq: FB) stock slid further Wednesday morning despite a nice rally for U.S. equities.
With the Dow up nearly 90 points right after the opening bell, Facebook shares edged down to $25.68 in early morning trading, reaching another new low. Shares now sit more than 30% below the IPO price of $38.
Weighing on Facebook Wednesday was news that the Nasdaq Omx Group (NDAQ) will tell brokers exactly how it will recompense investors for the myriad trading problems during the Facebook IPO frenzy. Problems at Nasdaq contributed to order issues that prompted several class action law suits.
But what drew more attention from investors was a comment by Ironfire Capital founder Eric Jackson. The analyst appeared on CNBC's "Squawk on the Street" program Monday and said that Facebook will lose its dominance as a social network in less than 10 years.
Jackson highlighted Facebook's inability to make leeway in the thriving and prominent mobile arena, as well as the stock's steady tumble since the company's epic IPO.
The comments have triggered suspicions that Facebook will suffer the same fate as MySpace, once the dominant force in the social networking circle, and Yahoo (Nasdaq: YHOO), once a leader in Internet search.
"In five to eight years they are going to disappear in the way that Yahoo has disappeared," Jackson said. "Yahoo is still making money, it's still profitable, still has 13,000 employees working for it, but it's 10% of the value that it was at the height of 2000. For all intents and purposes, it's disappeared."
Now Facebook has a new strategy to increase its reach - and its profits - but it's one that will likely raise some eyebrows.
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Facebook Stock Price: Is Mark Zuckerberg Losing Sleep Over This?
Everyone's eyes are on the falling Facebook stock price, but CEO and founder Mark Zuckerberg remains silent on the issue.
Facebook (Nasdaq: FB) stock is down about 17% from its $38 IPO price. But Zuckerberg has not commented publicly or issued a company statement, according to The Wall Street Journal.
Silicon Valley rumors tell us that Facebook employees have been told to concentrate on work and not comment on the IPO fiasco.
Meanwhile, Nasdaq criticism continues and lawsuits pile up as investors who are left with more FB shares than they wanted - worth less than they bargained - feel cheated.
And Wall Street is left to bet on when or if FB stock will rebound.
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Five Ways to Avoid the Next Facebook IPO Fiasco
On the heels of the Facebook IPO fiasco, many investors are wondering how they can find the next best thing and avoid getting "facebooked" in the process.
Tall order? Not really.
First, look for companies with ideas that can be applied across a wide variety of industries.
If I had said this five years ago, you'd be looking for Internet- related startups or companies that can do "it" better, faster or cheaper.
Going forward however, I think the true innovation will be exponential progress that's made linking living systems with their digital counterparts. Everything from synthetic biology to computational bioinformatics will grow a lot more rapidly than the broader markets.
So will key markets related to healing human illness, solving hunger and figuring out how to deliver potable water to broad swathes of the planet.
No doubt there will be tremendous ethical challenges along the way, but I believe we will see the line blur between what's needed to live and how we actually live our lives.
Though it's hard to imagine given the state of the world at the moment, I believe a fair number of the best up- and- coming investments will be outside the traditional first- tier markets of the United States, Europe and Japan.
In fact, I'd bet on it.
Second, don't confuse the ability to organize or share information with the ability to generate revenue
One might lead to the other but they are not the same thing.
The way I see it, Facebook is a classic example of everything you don't want in a business. It is 900 million users who spend an average of $1.32 a year. Compare that to Amazon.com, which clocks in at a much more valuable and consistent $36.52 per person.
Call me crazy, but I don't think Facebook stock will see the bottom for a while. As I wrote last Friday, at best Facebook is worth $7.50 a share.
Revenue is slowing. Facebook doesn't dominate the mobile markets that are becoming the preferred consumer channel for tens of millions of people. And, in what is perhaps the death knell, startups are already cannibalizing Facebook's user base.
The ability to "like" somebody is really no different than signing their yearbook in high school --only you're using a computer and the Internet to do it.
Third, hunt for fringe thinkers working in their garages.
It's not enough to think differently. The next big things will come from those thinkers operating on the fringes of what the rest of us consider normal.
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