It's hard to compete against "free."
Free-to-play and casual games finally took a big bite out of Activision Blizzard's (NASDAQ: ATVI ) tent pole franchise, World of Warcraft. The subscription-based game lost 1.3 million members last quarter, or 14% of its total user base.
In the following video, Fool contributor Demitrios Kalogeropoulos says there's a sliver lining to this bad news, and that Activision has some levers it can pull to keep Warcraft afloat. Still, the best-case scenario is for a more steady decline for this aging game that will give the company time to build up its newer franchises.
While Activision and Microsoft have been taking the headlines when it comes to console gaming, investors following the gaming sector would do well to also keep tabs on Electronic Arts. We can help. The Motley Fool's special report breaks down the risks and opportunities facing the company to help you decide if EA is right for your portfolio. Click here to get your copy now.
Hot Sliver Stocks To Watch For 2014: Pininfarina(PNNI.MI)
Pininfarina SpA engages in the provision of design, product, and process engineering services; and manufacture of vehicles. The company also engages in the product and interior design activities, as well as in the extra-automotive means of transportation. It serves automotive, railways, bus, heavy truck, nautical, and aeronautical industries. The company operates in Italy, Germany, Sweden, Morocco, and China. Pininfarina was founded in 1930 and is headquartered in Cambiano, Italy.
Hot Sliver Stocks To Watch For 2014: Arcos Dorados Holdings Inc (ARCO)
Arcos Dorados Holdings Inc., incorporated on December 9, 2010, is a McDonald�� franchisee. As of December 31, 2010, the Company operated or franchised 1,755 McDonald��-branded restaurants, which represented 6.7% of McDonald�� total franchised restaurants globally. It operates McDonald��-branded restaurants under two different operating formats, Company-operated restaurants and franchised restaurants. As of December 31, 2010, of its 1,755 McDonald��-branded restaurants in the territories, 1,292 (or 74%) were Company-operated restaurants and 463 (or 26%) were franchised restaurants. It generates revenues from two sources: sales by Company-operated restaurants and revenues from franchised restaurants, which consist of rental income, which is based on the greater of a flat fee or a percentage of sales reported by franchised restaurants. As of December 31, 2010, it owned the land for 510 of its restaurants (totaling approximately 1.2 million square meters) and the buildings for all but 12 of its restaurants. It divides its operations into four geographical divisions: Brazil; the Caribbean division, consisting of Aruba, Curacao, French Guiana, Guadeloupe, Martinique, Puerto Rico and the United States Virgin Islands of St. Croix and St. Thomas; North Latin America division (NOLAD), consisting of Costa Rica, Mexico and Panama, and South Latin America division (SLAD), consisting of Argentina, Chile, Colombia, Ecuador, Peru, Uruguay and Venezuela. As of December 31, 2010, 35.1% of its restaurants were located in Brazil, 29.7% in SLAD, 27.1% in NOLAD and 8.1% in the Caribbean division. The Company conducts its business through its indirect, wholly owned subsidiary Arcos Dorados B.V.
Company-Operated and Franchised Restaurants
The Company operates its McDonald��-branded restaurants under two basic structures: Company-operated restaurants operated by the Company and franchised restaurants operated by franchisees. Under both operating alternatives the real estate location may ! either be owned or leased by the Company. It owns, fully manages and operates the Company-operated restaurants and retains any operating profits generated by such restaurants, after paying operating expenses and the franchise and other fees owed to McDonald�� under the Master Franchise Agreements (MFAs). In Company-operated restaurants, it assumes the capital expenditures for the building and equipment of the restaurant and, if it owns the real estate location, for the land as well. Under its franchise arrangements, franchisees provide a portion of the capital required by initially investing in the equipment, signs, seating and decor of their restaurants, and by reinvesting in the business over time. It is required by the MFAs to own the real estate or to secure long-term leases for franchised restaurant sites. It subsequently leases or subleases the property to franchisees.
In exchange for the lease and services, franchisees pay a monthly rent to the Company, based on the greater of a fixed rent or a certain percentage of gross sales. In addition to this monthly rent, it collects the monthly continuing franchise fee, which generally is 5% of the United States dollar equivalent of the restaurant�� gross sales, and pays these fees to McDonald�� pursuant to the MFAs. However, if a franchisee fails to pay its monthly continuing franchise fee, it remains liable for payment in full of these fees to McDonald��. As of December 31, 2010, it was engaged in several joint ventures, which collectively owned 24 restaurants, in Argentina, Chile and Colombia.
The Company classifies its restaurants into one of four categories: freestanding, food court, in-store and mall stores. Freestanding restaurants are the type of restaurant, which have ample indoor seating and include a drive-through area. Food court restaurants are located in malls and consist of a front counter and kitchen and do not have their own seating area. In-store restaurants are part ! of a larg! er building and resemble freestanding restaurants, except for the lack of a drive-through area. Mall stores are located in malls like food court restaurants, but have their own seating areas. As of December 31, 2010, 808 (or 46.2%) of its restaurants were freestanding, 359 (or 20.5%) were food court, 265 (or 15.1%) were in-stores and 319 (or 18.2%) were mall stores. In addition, it has four non-traditional stores, such as food carts.
As of December 31, 2010, the Company had completed the reimaging of 308 of 1,569 restaurants. Many of the reimaging projects include the addition of McCafe locations to the restaurant. It has developed system-wide guidelines for the interior and exterior design of reimaged restaurants.
McCafe Locations and Dessert Centers
McCafe locations are stylish, separate areas within restaurants where customers can purchase a range of customizable beverages, including lattes, cappuccinos, mochas, hot and iced premium coffees and hot chocolate. As of December 31, 2010, there were 267 McCafe locations in the Territories, of which 12% were operated by franchisees. Argentina, with 71 locations, has McCafe locations, followed by Brazil, with 67 locations. In addition to McCafe locations, it has Dessert Centers. Dessert Centers operate from existing restaurants, but depend on them for supplies and operational support. As of December 31, 2010, there were 1,306 Dessert Centers in the Territories.
The Company�� menus feature three tiers of products: affordable entry-level options, such as its Big Pleasures, Small Prices or Combo del Dia (Daily Extra Value Meal) offerings, core menu options, such as the Big Mac, Happy Meal and Quarter Pounder, and premium options, such as Big Tasty or Angus premium hamburgers and chicken sandwiches and low-calorie or low-sodium products, which are marketed through common platforms rather than as individual items. These platforms can be based on the ty! pe of pro! ducts, such as beef, chicken, salads or desserts, or on the type of customer targeted, such as the children�� menu.Advisors' Opinion:
- [By Jim Jubak]
If you're the world's largest McDonald's franchisee, you expect to get hit when McDonald's (MCD) reports slowing growth (1.9% in the third quarter) in same-store sales. And when you're the largest operator of quick-service restaurants in Latin America, you expect to take a hit when growth slows in Brazil, one of your key markets. And if both happen at once, your shares plunge.
That's a pretty good description of what happened to shares of Arcos Dorados (ARCO) when they went from $15.73 on Oct. 18 to $10.73 on Nov. 15, a drop of 31.8%. Since then, the shares have been slowly moving back up, climbing 17.8% through the close on Dec. 18.
Why the recovery? Financial markets are looking ahead to easier year-to-year comparisons on growth that will kick in for McDonald's and Arcos Dorados after March. The recent gain on shares, though, outpaces the 7.7% gain for McDonald's in that period. That's because the general improvement on global economic growth will have more impact in the Latin American economies, where Arco Dorados operates, than in the United States, which accounts for 32% of McDonald's sales.
The World Bank just raised its 2013 growth forecast for East Asia (to 7.5% from 7.2%) and for China (to 8.4% from 8.1%). I think that's positive news for Brazil's big commodity exporters. And for Brazil's economy as a whole. The World Bank is now projecting 4.2% growth for Brazil in 2013, up from a projected 2.9% in 2012. The 52-week high for shares of Arcos Dorados is $22.90.
Hot Performing Companies To Buy For 2014: Amarin Corporation PLC(AMRN)
Amarin Corporation Plc, a clinical-stage biopharmaceutical company, focuses on developing treatments for cardiovascular diseases. Its lead product candidate includes AMR101, a prescription grade omega-3 fatty acid, which is in second Phase III clinical trial for the treatment of high triglyceride levels in statin-treated patients who have mixed dyslipidemia. The company, formerly known as Ethical Holdings plc, was founded in 1989 and is based in Dublin, Ireland.Advisors' Opinion:
- [By Brian Nichols]
I simply do not like speculative biotech companies trading with billion dollar valuations; that are yet to receive an FDA approval, however, it's very difficult to deny the potential of Amarin's lead candidate AMR101, if it reaches just half of its full potential. The company's lead candidate AMR101 will be used to treat high triglycerides to prevent cardiovascular disease, among other preventable diseases. The potential for this drug led to a great deal of optimism surrounding the company, which includes a 1,200% gain from January 2010, till May 2011. However, after a failed attempt to obtain a patent along with profit taking the stock has lost 60% of its value from 52-week highs, which is now presenting a good opportunity for value investors.
Despite its recent pullback from 52-week highs the stock is trading with a 600% gain over the last 2 years. The strong gains are a result of two very encouraging phase III trials: ANCHOR & MARINE. Together the two trials allow the drug to treat two ranges of high triglycerides with the potential for 40 million patients treated with the drug. I think that as the company's FDA date approaches, and investors who took profits begin to buyback shares, the stock will rise; and I look for gains of more than 100% over the next 52 weeks in a stock that has great potential as a long-term investment.
Hot Sliver Stocks To Watch For 2014: Novellus Systems Inc.(NVLS)
Novellus Systems, Inc., together with its subsidiaries, develops, manufactures, sells, and supports equipment used in the fabrication of integrated circuits. The company operates in two segments, Semiconductor Group and Industrial Applications Group. The Semiconductor Group segment provides equipment used in wafer processing, advanced wafer-level packaging, and light-emitting diode (LED) manufacturing. Its deposition systems use chemical vapor deposition (CVD), physical vapor deposition (PVD), and electrochemical deposition (ECD) processes to form transistor, capacitor, and interconnect layers in an integrated circuit; and High-Density Plasma CVD (HDP-CVD) and Plasma-Enhanced CVD (PECVD) systems employ chemical plasma to deposit dielectric material within the gaps formed by the etching of aluminum, or as a blanket film that can be etched with patterns for depositing conductive materials into the etched dielectric. This segment?s CVD Tungsten systems are used to deposit co nductive contacts between transistors and interconnects; PVD systems are used to deposit conductive aluminum and copper metal layers by sputtering metal atoms; and Electrofil ECD systems are used for depositing copper to form the conductive wiring on integrated circuits using copper interconnects. The Industrial Applications Group segment provides grinding, lapping, and polishing equipment for fine-surface optimization. It offers products for use in the semiconductor and LED manufacturing, automotive, aerospace, medical, green energy, and glass and ceramics industries, as well as manufacturers of products, such as pumps, transmissions, compressors, and bearings. The company markets its products through direct sales force and manufacturer?s representatives primarily in Europe, the United States, Korea, Japan, China, Taiwan, and southeast Asia. Novellus Systems, Inc. was founded in 1984 and is headquartered in San Jose, California.
Hot Sliver Stocks To Watch For 2014: Socket Mobile Inc.(SCKT)
Socket Mobile, Inc. produces and sells mobile handheld computers and data collection products for the business mobility market. The company offers products to run mobile applications that enable the accessing, collection, and processing of data by using Bluetooth and wireless local area network (LAN) connection technologies. Its product line includes a family of handheld computer products for business enterprise uses; wearable cordless ring scanners for industrial applications; and a range of data collection products, including two dimensional (2D) and linear (1D) bar code scanners, plug-in radio frequency identification reader/writer products, and plug-in magnetic stripe readers that work with the company?s handheld computers, as well as 2D and 1D cordless hand scanners, which work with third-party mobile handheld devices, such as Smartphones, tablet computers, ultra-mobile personal computers, notebooks, and desktop systems. The company also offers original equipment man ufacturer (OEM) embedded products consisting of Bluetooth and wireless LAN plug-in cards that are used primarily by OEMs of electronic products to build wireless connection functions into their products using the Bluetooth and wireless LAN standards for wireless connectivity; and provides extended warranty and accidental breakage coverage services for products, including handheld computers, and ring and cordless hand scanners. It markets its products through a network of distributors and resellers, as well as through OEMs and value added resellers in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. The company was formerly known as Socket Communications, Inc. and changed its name to Socket Mobile, Inc. in April 2008. Socket Mobile, Inc. was founded in 1992 and is headquartered in Newark, California.