When listening to the Q112 earnings call this week for Pandora Media (P), it really struck me that this company was mostly built on the old business model. Sure, companies such as Pandora, Angie's List (ANGI), and Yelp (YELP) have new relevant services, but none of them have veered much from the labor intensive model of hiring local sales reps to find advertisers.

The Pandora

VeriFone Systems, Inc. (PAY)'s CEO Douglas G. Bergeron is aggressively pushing to expand the electronic payments company by doing acquisitions. In the process, he's exposing his investors to the risk of surprises such as the stock's price drop on Friday.

Bergeron said Thursday that the San Jose-based company had earned 13 cents a share in the three months ended April 30th, down from 27 cents per share during the same period a year earlier.

VeriFone is in the middle of major transition. In August it said it completed its merger with the electronic payment company Hypercom Corp. for around $485 million. Then this January Bergeron announced that he finished his acquisition of Point, a payment and gateway services provider in Northern Europe, for around €600 million and the retiring of around €170 million in Point debt.

Taking out items such as the costs from its acquisitions, VeriFone would have made

Coach (COH) shares increased ~13% YTD, but plummeted ~8% in the recent 3 months. It would appear that the drop represents an entry opportunity to this investment with decent revenue exposure to emerging markets such as China. But my deeper analysis reveals that even following the recent drop, COH share valuation remains escalated. Investor should be cautious about further near term price correction.

In my last article, I ran you through my relative valuation analysis for Tiffany (TIF). Here I will use the same financial comparisons to determine a fair stock value for COH

As an M&A investment banker focused on the retail sector, and creator of the Web-only Retail Index, a diverse group of constituents have asked me to comment on today's official word from Talbots (TLB) that Sycamore Partners was not prepared to execute a transaction.

In reality there are four other stakeholder perspectives that are relevant. This includes shareholders, Talbots' board, Talbots' management and the broader equity markets.

In M&A you have to think through the motivations/predicament of each stakeholder and extrapolate an outcome. When I studied the facts I concluded that the deal wouldn't get done. Why is that?

Talbots' board's negotiating posture was weak as it is the subject of legal suits (breaches of fiduciary duties in connection with conduct related to the proposed sale of the company) and the company is in poor financial condition.

Sycamore's negotiating posture was strong. In my opinion, Sycamore's offer of $3.05 per

It's bad enough that Research In Motion (RIMM) is losing market share to Apple (AAPL) and Google (GOOG), but throw in the departure of key executives, well that's when things become more complicated.

Just recently, RIM's head of sales, Patrick Spence, announced he would be leaving the company to pursue another leadership position. Spence has been with the company for 14 years. He was a driving force behind RIM's dominance, but since the company's products have been becoming inferior, sales have been plummeting.

The new role will be combined with the COO. This is a strategy which I believe to be very poor. A company like RIM should maintain a strong sales team separate that of the top executives. This increase in oversight gives very little wiggle room for a new sales force.

This isn't just a regular departure either. Pence was the one that helped launch BB7 and he

Facebook

Ticker: FB

Share Price 5/24/2012: $33.03

Shares Outstanding: 2,138,085,037

Market Cap: $70.6B

Website: facebook.com

Company Overview:

Facebook, Inc. (FB) is a global networking company that enables users to connect with each other. The company generates revenue by enabling advertisers to engage its active users.

Stats:

Problems with the IPO:

Facebook's IPO has been a disaster, which will only get worse for investors. Just days before the IPO Facebook increased the offering size by 25% by adding an additional 83.8mm shares. Additionally, the offer price of shares was increased from the proposed $28-$35 per share to $38. Increasing both the offerings size and price shortly before the IPO makes it incredibly difficult to have a successful IPO as measured by share price performance. Retail participation was a large part of the IPO, but the availability of shares to retail investors in almost unlimited quantity was a red flag. Historically, the

The debacle in Facebook (FB) over the past week should have easily been foreseen given that the IPO pricing was giving a $100B valuation on a company with less than $5B in revenues. Unfortunately, this sort of hype is somewhat rampant in sectors of the tech space. Facebook in a lot of ways reminds me of a couple of companies I continually short after long rallies through option strategies, in that they share common characteristics with Facebook. They are Salesforce (CRM) and Amazon (AMZN). Among traits all three companies share are the following:

• The stock is very connected to their "superstar" CEO, which I always find to be a red flag. Quick, name the CEO of high-flyers Chipotle (CMG) or Intuitive Surgical (ISRG). I can't either, although most investors know Mark Zuckerberg, Jeff Bezos and Marc Benioff.
• All of these stocks have huge price to cash flow ratios.
• None of

Johnson & Johnson (JNJ) seems to be paying out a lot more money than it is bringing in these days. Although some of these payouts could be considered investments in future revenue, the company might be getting off balance, which could spell disaster for investors. Additionally, with doctors and patients outraged over drug scandals like the recent discovery of high levels of chromium in certain capsules, consumption could decline, leaving Johnson & Johnson and others with empty pockets. Unless the company can find a way to seriously cut down on costs, I expect to see profits down in the next few weeks, and this is one stock that can't really afford any more losses.

Although the company is accused of using old leather shoes to produce industrial gelatin for its capsules, the impact could spread to all manufacturers. In this way, Johnson & Johnson's already tarnished reputation could take another

I will start this article with a very detailed disclosure. About a month ago, I nearly bet the farm to short (EXM), but I did not, and now I regret it a bit.

Now to the "numbers." I say numbers with emphasis because the drybulk sector is in such chaos that believing any financial statement of any company in the sector seems a bit naive to me. But straight from the most recent quarterly financial statement, Excel Maritime lost over $156 million just in operating income alone. This is all occurring at a time when there is absolutely no chance for a drybulk recovery to save the company.

"Book value" is now showing that equity per share is $17.40 per share! LOL. If you believe that, I have a bridge I would like to sell you. To give you some support for why I am so skeptical about that figure,

First Solar (FSLR) has hit a rough patch for the past several years, including earlier this month when it announced a considerable drop in its sales. These events have naturally had an adverse effect on this stock. Could more recent events help the company turn things around?

One of those main events involves competing with Chinese solar manufacturers. U.S. solar manufacturers have complained that the Chinese government has been heavily subsidizing their solar manufacturers so that they can sell their products in the U.S. at considerably lower prices. That has led to U.S. manufacturers, like First Solar, being unable to sell their products at competitive prices.

In the fall of last year, several U.S. solar manufacturers took their case to the U.S. Department of Commerce. The goal was to get strict tariffs imposed on certain imports of solar cells and panels from China. In March, the U.S. began imposing fees

Rex Energy (REXX) is a small/micro cap oil and gas E & P company. It has shown strong growth in production volume and in proved reserves in the last few years (> 50% CAGR). Yet it has evident problems. The reasons are below:

1. It has lost money on a GAAP basis for the last three quarters in a row. This is no "one time expense" phenomenon, even though the "adjusted earnings" figures have consistently painted a rosier picture.
2. REXX's production is primarily natural gas. US natural gas prices have fallen dramatically since last summer's high of nearly $5/MMbtu.. Their near term bottom recently was $1.90/MMbtu. They have rallied back to their current $2.65/MMbtu. This may be a dead cat bounce. Given the recent economic and consequent commodities weakness, the most likely direction over the next several months is downward.
3. US natural gas storage is far above its historical norm after

On Wednesday, Pandora (P) reported stronger than expected first-quarter earnings on the heels of rising revenue. The company's performance over the past several months has been lackluster, but this quarter, the company brought what investors seemed to be looking for and that was revenue, active users and hours listened. P second-quarter results can be marked by 1Q13 revenue of $80.8 million, a 58% jump year-over-year; an increase in active users to 51.9 million, a 53% increase year-over-year; and an increase in market share to 5.95% of total U.S. radio listening.

These results illustrate that P is driving revenue through investments in marketing and sales efforts in markets across the nation. They also show that because of these investments, P is not seeing profitability and thus is operating solely to grow its listeners and revenue. P CEO and Chairman Joe Kennedy states,

Consumers continue to embrace Pandora's unparalleled personalized radio experience

by Morgan Smith

After years of resisting the obvious trend towards ever-larger smartphone screens, Apple (AAPL) is apparently caving in to market demand and is preparing to launch an iPhone with a display that is at least 14% larger than those on its existing 3.5 inch-display models.

Doing so would hew the iPhone more closely to a trend made popular by smartphones produced by Samsung (SSNLF.PK), Sony (SNE), Motorola Mobility (MMI), LG and HTC that operate on either Google's (GOOG) Android or Microsoft's (MSFT) Windows Phone mobile operating systems - and a reactive strategy from a company long-considered one of the America's most innovative.

Since 2007 when the iPhone launched, the smartphone landscape has witnessed a screen arms race that has seen smartphones' screen real estate expand from a svelte 3.5-inches to an almost-unwieldy 5.3-inches. Indeed, Samsung, which is now the world s largest Smartphone maker, shipped its latest flagship

Iron ore prices are falling. Coal (KOL) prices crashed along with natural gas (UNG). China's residential construction market is slowing down. All these developments tell us we'll either see slower growth in mining, or outright contraction, as we're already seeing with coal in the U.S.

For many companies this will quickly mean that the need to conserve cash will be front and center. And in a capital-intensive industry where no additional productive capacity is needed and there's a need to conserve cash, there's only one quick and obvious solution: to cut capex.

So cut capex the mining industry will. And since one man's capex is another man's revenues, there's an obvious insight to be had here. This obvious insight is that suppliers to the mining industry are going to see a deep contraction in their orders, production, revenues and profits.

The purest mining equipment supplier out there seems to be

Last week, I wrote that investors should continue to avoid J.C. Penney (JCP), despite the significant drop in the company's share price. In this follow-up piece, I will explain in more detail why J.C. Penney shareholders are likely to experience continued disappointment over the next few quarters. The primary reason is that, in spite of the awful Q1 result, investor expectations are still (on average) too high.

To be clear, Ron Johnson's turnaround strategy for J.C. Penney makes sense from a business perspective. Simplifying the company's pricing strategy is likely to improve margins over the long-term while allowing massive process simplification (leading to cost savings). Meanwhile, bringing a better merchandise assortment into the stores will allow the product (rather than the promotion) to drive customer traffic. But even though I think this overall vision is sound, that does not mean that the company can achieve all of these benefits in

In football, often it's not the team that prepares the best, or the team that has the best athletes that wins the game. Instead, it's the team that can most effectively adjust to the other team's strategy that is ahead when time expires.

Likewise, leadership of large companies must adapt to their markets and what their competition throws at them. Micron (MU) is in the middle of one of these adaptations. The bankruptcy of competitor Elpida was greeted with enthusiasm by analysts and investors. Elpida's bankruptcy would most likely mean that one of its major semiconductor competitors, like Samsung, Hynix or Micron would purchase the all-important fabrication centers, and the consolidation would help producers of DRAM push prices up.

Indeed, further consolidation in DRAM producers seems a likely bet. Micron is still playing from the same playbook that late CEO Steve Appleton engineered - bank money and secure cheap financing

by Mark Goldstein

Verizon (VZ), the New York-based telecommunications company, is the second largest fixed telephony provider in the United States and is comprised of several divisions of varying profitability and growth opportunities. Essentially its businesses are divided between copper-wire / optical fiber line services and Verizon Wireless (of which UK-based Vodafone (VOD) owns 45%). At the moment Verizon is trading near its 52 week high at just over US $40 per share.

Despite Verizon Wireless being the largest wireless communications service provider in the United States, given the market and technological dynamics facing the telecommunications sector I recommend investors "short sell" Verizon stock over this quarter and the next. True, Verizon is well known for paying a quarterly dividend but its latest quarterly profit came largely from Christmas sales of the Apple (AAPL) iPhone 4S which nudged upward the average monthly bill of its wireless customers. Wireless markets in

The technology industry is one filled with innovation. But that innovation has a price. Every time a customer chooses an iPad or a Mac over a PC, some company prospers at the expense of another. Every time someone chooses an Android smartphone over a Windows Phone, one company thrives while another withers. If Dell's (DELL) first quarter results have shown us anything, it is that Dell is suffering.

Quarterly Overview

After the markets closed on May 22, Dell announced its first quarter results for fiscal 2013. The company posted GAAP EPS of $0.36 on revenues of $14.422 billion, representing year-over-year growth of -27% and -4%, respectively. Non-GAAP EPS of $0.43 missed estimates by 3 cents, and revenue missed estimates by $490 million, a huge miss that the company cannot simply sweep under the rug. Dell's CFO Brian Gladden stated that "We continued to shift the mix of our business during

The term "short" means different things to different people. To most, it means "Don't buy." To speculators, it means buy a put. To professional traders, it can mean buy a put or short the stock outright. Puts are not yet available and I assume a locate on the stock would not prove very successful. So, for now, this is about avoiding the stock and getting ready to short Facebook (FB) at the right time.

The question is why? Here are 10 reasons:

1. The company and the stock are grossly overvalued. No surprise here - the company sports a trailing P/E of around 80. At that valuation Apple (AAPL) shares would fetch $1100 per share. Facebook sells for 25 times revenue; Google (GOOG) for five times revenue.

2. Growth rates for advertising revenue fell to 44% in the fourth quarter of 2011 (year over year comparison), a big drop from the 77%

Shares of Zale Corp (ZLC) finished over 13% higher on Wednesday following a better than expected earnings report.

Earnings

• ZLC reported a net loss of 14 cents per share, a major improvement from the net loss of 28 cents per share a year ago.

• Same store sales rose 8%

Debt

ZLC has $425 million in debt, this is a significant challenge for the company considering ZLC only has equity of $85 million. Given ZLC's difficulty in turning a profit, the debt load is difficult to maintain.

Valuation

ZLC is currently trading at just 0.37 times book value. The valuation is certainly indicative of a company that is struggling. However, if ZLC is able to turn around the business, the shares likely have significant upside.

Short Interest

ZLC currently has a short interest of 3.64 million shares or 13.9% of the shares outstanding. The rally following earnings was likely caused by