Saturday, May 19, 2012

Dodging Verizon's New $30 Upgrade Fee -

It's hard to say which will annoy customers more: Verizon's latest cellphone fee or the company's unlikely justification for imposing it.

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In recent weeks, Verizon started charging existing customers $30 to upgrade to a new phone when they renew their contract. AT&T and Sprint charge $36 and $18 for the same thing, respectively, so one might forgive Verizon for just doing what everyone else is doing. But Verizon's excuse for adding the charge is pretty rich. The millions the company rakes in from the fee will be used to offer customers "wireless workshops" and "online educational tools," among other things, spokeswoman Brenda Rayney told SmartMoney. According to the press release announcing the fee, there will also be "consultations with experts who provide advice and guidance on devices that are more sophisticated than ever."

Here's an idea: how about I let you know when I want to spend my Saturday hanging out in a Verizon store learning things I could read in the manual -- and then you can charge me a $30 admission. Otherwise, I'm good.

What turns the knife harder on this latest move is that just a year ago Verizon abandoned its "New Every Two" program, which gave customers signing renewing two-year contracts $30 to $50 off their new phone. So now, not only do you not get the $30 credit when you upgrade, you have to pay them a $30 fee to get the new phone. That's as much as an $80 price hike! (When I asked about this point, Verizon declined to comment.)

 Dodging Verizon's New $30 Upgrade Fee3:28

It's hard to say which will annoy customers more: Verizon's latest cellphone fee or the company's unlikely justification for imposing it. Ben Popken tells digits how to avoid it altogether. (Photo: AP)

Sure, in out-of-pocket terms, $30 isn't that much. But to pay for "wireless workshops?" Say that it's for building out the 4G network, or, better yet, say, "Hey guys, we feel like making more money and -- at least we don't charge as much as AT&T's." Don't insult our intelligence.

Annoyed, I looked into ways for avoiding the $30 upgrade fee.

For starters, Verizon suggests it may be possible to offset the fee by trading in one's old phone. "While trade-in values vary, they can get 'cash' in the form of a debit card for their older phone and use that money to help offset the Upgrade Fee," Rayney says. You can check that program out at Customers may even get a better price selling the phone on their own and keeping the cash. However, while iPhones tend to hold their value, many less-desirable phones may not cover the $30 fee.

Another promising-sounding alternative method I researched involved a three-step switcheroo. First, start a new line of service with the new phone you want. Then, port your old phone number to a 3rd party service, like Google Voice (here's a guide from Lifehacker on doing so). Lastly, cancel the line with the old phone and port the old phone number back onto the new phone, thus keeping the new phone, the old number, and dodging the fee. But there's a catch. It only works if you wait three months to port the number back. If you do it before then, Verizon's system treats it like you're continuing the same service, and they hit you with the $30 upgrade fee. Curses.

Then there's the squeaky-wheel approach. If your phone is error-prone, complain to Verizon and they may end up swapping it out for free with a new phone. That's one backdoor method to getting a fee-free upgrade. Your mileage may vary, and you'll need to be "lucky" enough to have a faulty device.

Okay, so why not just leave Verizon? If they care so little about customer loyalty that they're going to penalize you for staying with them, why give them the satisfaction? Simply switch to a new carrier at the end of your contract and get your newer and fancier phone there. Unfortunately, unless you go with a pay-as-you go plan, you will need to pay the new service's activation fee. Wouldn't you know, it's usually about the same as the Verizon fee you're trying to avoid. Sweet-talking the customer service rep over the phone into dropping the fee sometimes works, and some credit unions waive cellphone plan activation fees for their members. Also, wireless retailer sites like periodically run promotions waiving activation fees if you buy through them. But depending on how frugal you're feeling, saving $30 may not be worth the hassle of jumping ship.

There is one one foolproof method I found for avoiding Verizon's new $30 upgrade fee: buy your new phone from someone other than Verizon on eBay for instance. Then you can add the phone to your account, sans upgrade fee. Because you're already a Verizon customer, there's no activation fee. Success -- that is, if you can find a phone cheaper than Verizon's discounted rate. This method also works for avoiding upgrade fees at other carriers as well.

However, if you buy your phone from someone other than Verizon, be sure to check that the phone hasn't been reported as lost or stolen. A "hot" phone can't be activated, leaving you with a pricey brick. Ask the seller for the ESN, MEID, or IMEI numbers, which are basically serial numbers for your phone, then check them out with Verizon. You can enter the number on this page at or call Verizon and they'll do it for you. If you buy a phone on eBay, you won't be locked into a new contract with an early termination fee either, but you also won't be able to get the discount pricing Verizon provides with signing those long-term contracts. It's a toss-up depending on what you value more: flexibility or price.

In the end, Verizon's new $30 upgrade fee is bound to become the new normal. I took an informal poll of a few friends who were on Verizon. At first they were shocked, because they hadn't heard of it, then incredulous, because the explanation was so inane. However, when I asked them if the fee was enough to make them move to a new carrier when it came time to upgrade their phone, they said no. "After all," my friend Melinda said, shrugging her shoulders, "it's only $30."

Looks like Verizon's got our number on this one.

Thursday, May 17, 2012

Futures Up on Positive Retail Numbers, Greek Bailout Approval

Market futures are maintaining gains on a number of positives: U.S. February retail sales were up, Greece will get its second bailout and German investor sentiment is on the rise.

Futures lost some of their strength after 9 a.m., but remained up: futures on the Dow Jones Industrials rose 46 points to 12,943, and on the Standard & Poor’s 500, up 5.2 points to 1,372.

Retail sales rose 1.1% in February, matching forecasts; the growth was 0.6% without autos and gasoline, higher than expected.

In stock news, at least 50 advisers who managed nearly $12 billion in client assets at Merrill Lynch have departed the Bank of America (BAC) unit since January 1, based on moves tracked by Reuters. Another 20 advisers who managed more than $4 billion in assets have left the firm since September; in total, these departures represent roughly 1 percent of the brokerage’s roughly $1.5 trillion client asset base, according to the Reuters story. Merrill denied there is a “great exodus.”

Deutsche Bank downgraded Cablevision Systems (CVC) to Hold from Buy.

The Wall Street Journal reports that auto repair retailer Midas (MDS) agreed to be acquired by TBC, a unit of Japan’s Sumitomo, for $173 million. Shares of Midas rose 28% in premarket trading.

After reporting lackluster fourth quarter results late Monday, shares of Urban Outfitters (URBN) were off 5%.

Sunday, May 13, 2012

Here's Why Nordson's Latest Report Might Worry You

Here at The Motley Fool, I've long cautioned investors to keep a close eye on inventory levels. It's a part of my standard diligence when searching for the market's best stocks. I think a quarterly checkup can help you spot potential problems. For many companies, products that sit on the shelves too long can become big trouble. Stale inventory may be sold for lower prices, hurting profitability. In extreme cases, it may be written off completely and sent to the shredder.

Basic guidelines
In this series, I examine inventory using a simple rule of thumb: Inventory increases ought to roughly parallel revenue increases. If inventory bloats more quickly than sales grow, this might be a sign that expected sales haven't materialized. Is the current inventory situation at Nordson (Nasdaq: NDSN  ) out of line? To figure that out, start by comparing the company's inventory growth to sales growth. How is Nordson doing by this quick checkup? At first glance, OK, it seems. Trailing-12-month revenue increased 18.4%, and inventory increased 20.5%. Over the sequential quarterly period, the trend looks healthy. Revenue grew 6.0%, and inventory grew 3.0%.

Advanced inventory
I don't stop my checkup there, because the type of inventory can matter even more than the overall quantity. There's even one type of inventory bulge we sometimes like to see. You can check for it by examining the quarterly filings to evaluate the different kinds of inventory: raw materials, work-in-progress inventory, and finished goods. (Some companies report the first two types as a single category.)

A company ramping up for increased demand may increase raw materials and work-in-progress inventory at a faster rate when it expects robust future growth. As such, we might consider oversized growth in those categories to offer a clue to a brighter future, and a clue that most other investors will miss. We call it "positive inventory divergence."

On the other hand, if we see a big increase in finished goods, that often means product isn't moving as well as expected, and it's time to hunker down with the filings and conference calls to find out why.

What's going on with the inventory at Nordson? I chart the details below for both quarterly and 12-month periods.

Source: S&P Capital IQ. Data is current as of latest fully reported quarter. Dollar amounts in millions. FY = fiscal year. TTM = trailing 12 months.

Source: S&P Capital IQ. Data is current as of latest fully reported quarter. Dollar amounts in millions. FQ = fiscal quarter.

Let's dig into the inventory specifics. On a trailing-12-month basis, finished goods inventory was the fastest-growing segment, up 36.1%. That can be a warning sign, so investors should check in with Nordson's filings to make sure there's a good reason for packing the storeroom for this period. On a sequential-quarter basis, finished goods inventory was also the fastest-growing segment, up 4.7%. Nordson seems to be handling inventory well enough, but the individual segments don't provide a clear signal.

Foolish bottom line
When you're doing your research, remember that aggregate numbers such as inventory balances often mask situations that are more complex than they appear. Even the detailed numbers don't give us the final word. When in doubt, listen to the conference call, or contact investor relations. What at first looks like a problem may actually signal a stock that will provide the market's best returns. And what might look hunky-dory at first glance could actually be warning you to cut your losses before the rest of the Street wises up.

I run these quick inventory checks every quarter. To stay on top of inventory and other tell-tale metrics at your favorite companies, add them to your free watchlist, and we'll deliver our latest coverage right to your inbox.

Add Nordson �to My Watchlist.