Motley Fool Hidden Gems Investing - Monster Trucks and Earnings Surprises

Episode Date: January 16, 2015

Intel surprises. Best Buy disappoints. And Target checks out of Canada. Our analysts discuss those stories and share some stocks on their radar. And veteran auto writer Paul Lienert shares the latest on big trucks, self-driving cars, and The North American International Auto Show. Learn more about your ad choices. Visit megaphone.fm/adchoices

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That's why they call it money. From Fool Global Headquarters, this is Motley Fool Money. It's the Motley Fool Money Radio Show. I'm Chris Hill. Joining me in studio this week for Million Dollar Portfolio, Jason Moser. From Motley Fool Funds, Charlie Travers, and from Motley Fool Deep Value, Mr. Ron Gross. Good to see you, as always, gentlemen. How you doing, Chris?

We've got the latest from the energy industry, banking, retail, and more. We'll check out what's happening at the North American International Auto Show in Detroit. And as always, we'll give you an inside look at the stocks on our radar. But earnings season officially began this week, so we're going to start with big tech. Intel's fourth quarter profits came in higher than expected, but guidance for Q1 was a little weak, Charlie. and the stock was flat on Friday. You look at the quarter itself, though, looked rock solid. Yeah, Intel really crushed it for the year. Sales were up 6%, earnings per share up 22%. I think going into 2014, I didn't expect that, and the company itself didn't expect it. Brian

Krasanich said on the call they thought that revenue and profits would be flat for the year. And the reason they thought that, if we step back in time a little bit, wasn't all that long ago. all the growth in computing came from mobile devices. Everyone was buying tablets, that's what was hot. People were using phones a lot. And those are really the substitutes for PCs. And there was a stretch, I want to say it was like six or seven quarters, where all the major PC manufacturers were reporting severe declines in desktop sales. And so I think nobody was optimistic about Intel's 2014, including the company. But here they are, and they turned in just a fantastic year. So their PC group did better than they expected.

And then the data center group did really well with mid-teens growth. And that's, if you think about what they do in the cloud and with big data and how important that is to companies these days, that's really no surprise. I happen to like what Brian Krasanich is doing with the company. Intel is morphed under his leadership to be more than just a provider of chips for servers and PCs. He's really broadening the company's focus, quicking up the pace of innovation. So, if you think of wearables, the Internet of Things, and tablets, they were in 46 million tablets last year. I see a lot of opportunity that they're executing on. Even though, as you mentioned, Q1 guidance was a little soft, I think big picture Intel did great last year, and the

future looks pretty good for them as well. That's a cash flow-rich business, too. I mean, I think that's a dividend that investors can count on, and it will continue to grow over time. Another thing I'm sure investors weren't expecting last year from Intel, Ron, was the stock performance. The stock was up 44% last year. Yeah, it's really nice to see. The stock was depressed on the whole late-to-the-game and mobile scenario, and we thought, the Million Dollar Portfolio team thought for quite some time that they would catch up and the stock would do the same. But we're seeing strength in other areas, too. I was going to ask, Charlie, that mobile thesis, do you think that's still

to come even in a more significant way? And the stack actually hasn't caught up to that kind of part of the story yet? So they rolled out a new line of processors at the Consumer Electronics Show, getting into smaller devices that don't require fans. All the mobile stuff before that was all AMD-derived, whether it was Apple designing the chip or Samsung or whoever. But Intel is really coming on, and you're seeing a lot of low-cost, two-in-one type devices. I think the next year or two looks pretty good for them. The majority of big banks reporting fourth quarter earnings this week. Wells Fargo, Goldman Sachs, JPMorgan Chase, and Bank of America.

And Jason, I don't know, I look at the results, nothing really seems all that impressive. And if you look at the reaction of the stocks, it reflected that, all of them down this week. Well, Chris, I'm no anti-dentite, but I have about as much enthusiasm for these big banks as I do for going to the dentist. I just don't really find them to be terribly compelling investment ideas. You never really know the wheelings and dealings and what's going on behind those doors. You look at big banks like Bank of America and Citibank, they're claiming these litigation expenses every quarter that are bigger than the market caps of a lot of companies out there. Citibank, I think, was $3.5 billion this quarter alone in litigation expense. Think about that. You see something

like JP Morgan or Goldman Sachs, they focus more on investment banking. And that's obviously something that's going to continue to happen, but you're also getting a very black box situation there as well. The one that stands out to me among them all is Wells Fargo, simply because it's such a strong player in the mortgage market. And to put some numbers around that, mortgage originations for Wells Fargo this past quarter were $44 billion. And that was actually down a little bit from the same quarter last year, down a little bit from the previous quarter as well. But Bank of America only originated about $15 billion in the same quarter. So, you can see that Wells Fargo, they have a bit more of a reliable stream there in those

mortgage originations. That's a bit more of a stable market there. And they just have a better reputation in the business. And I think that's why you see Warren Buffett and Berkshire Hathaway holding such a fondness for Wells Fargo. But for me, I like maybe sort of disruptors in the space, something like Bank of Internet. Little banks, to me, are pretty interesting. I've been touting Ameris Bank Corp down in Moultrie, Georgia for some time now, and that's really recovered nicely from the financial crisis. Or other than that, just maybe look at some of those really well-run insurers. You'll get some bank exposure through their portfolios. You don't have to really participate in that big banking sector if you don't want to.

Yeah, Ron, for the litigation charges, I'm starting to wonder if there are any publicly traded law firms, because it seems like a lot of these big banks have one-time charges to the tune of billions of dollars, and it's happening quarter after quarter. I know that technically they have to report it as a one-time charge, but some of them are starting ... I'm sensing a trend with some of them. Yeah, and that's a problem analysts have about what to count as one-time, what's really non-recurring. As you say, if you see something happening quarter after quarter, you really have to think about whether you should be extrapolating those charges into the future,

because at least for some time, they're not really going to be one-time charges. Shares of Target up on Thursday after the retail giant announced it will be closing down its operations in Canada. Ron, you'd think that a company based in Minnesota might have an easy time expanding into Canada. This was doomed from the start. They really just could never get traction. Just a series of bad business moves from wrong inventory and warehouse problems and inexperienced staff. They just couldn't make it work. and here we are with a $5.4 billion write-down. They spent $4 billion to get into it. It's

going to cost half a billion to exit. $2.5 billion of losses generated over the last two years. It just wasn't going right. And they came out and they said, listen, we think we could turn it, but it's going to take another six years. And even then, there's no, in my opinion, guarantee. So better to kind of rip the Band-Aid off now. Let's focus on our U.S. business, which really does need some attention as well. Let's focus on the online business. The Citi Target store concept, which is their smaller store concept for more urban areas, is probably going to be the area of focus going forward for some time now, I think. That's probably the biggest expansion potential. Time to let Canada go.

Brian Cornell has been the CEO at Target since the middle of August, and shares of target up around 30% in the time since he took over. He had a little bit of an easy act to follow. But it really does seem like, under his leadership, they're not afraid to, as you say, rip the Band-Aid off. I think it's important. You sometimes have to be bold. As we said, retail is a tough business. It's really competitive. They obviously had the security breach, which didn't help them any, and certainly depressed the stock for a while. Things are looking a little bit better now. Holiday sales were better than expected. They just came out and said they expect about 3% growth for the fourth quarter.

They raised adjusted EPS guidance, excluding all those charges that they're going to be booking for the Canada business. But things are looking OK. The stock reflects that things have turned, but the U.S. business still is a competitive one, and it needs to firm up a little bit more. As we've said recently, the drop in oil and gas prices is not good for everyone. Schlumberger, the world's biggest oil field services company, announced it is cutting 9,000 jobs in an effort to reduce costs. Not good for the workers, obviously, Charlie, but good for shareholders. The stock getting a little bit of a pop on the news.

Yeah, it did, Chris. Really, it's belt-tightening time at Schlumberger. Over the last five years, there's just been an unprecedented amount of spending in the industry from the oil and gas companies to expand reserves, increase their production. And Schlumberger was just a huge beneficiary of all that industry spending. Their revenue doubled over the last five years. And in North America, it tripled. I mean, you think about fracking and what's going on in the shales, North Dakota and Texas. Schlumberger really benefited from that. But that's all coming, grinding to a very quick halt. Spending is going to be down 25 to 30 percent in North America is their view of what's going to happen in the industry over the next year. And as a result,

unfortunately, they're trimming their workforce by about 7%. They're going to be fine. They are the largest oil services company in the world, as you mentioned. And usually when you see a commodity company or a cyclical business like this, it's the strong that gets stronger. And it's the weak companies that have bad balance sheets that tend to suffer the most. And you just wonder, with how well-managed they are and the strength of their balance sheet, if they come out of this all right. But I don't think they're going to be hurt as bad as some of the E&P companies. Can I put us all on the spot? With oil depressed now, do we make a macro bet, increase exposure in your own personal portfolios to

oil companies, assuming that we'll get some reversion to the mean, or at least higher prices in the future than we have now? Charlie, what do you think? I'll just say, I have no exposure to energy whatsoever in my portfolio, so buying one share of one stock would be increasing. And do you intend to do so? Not anytime soon. What do you think, Jay? I think it's reasonable to start doing that. I would not do that with any type of

timing based on the thesis, because I don't think any of us can really tell when prices may go back up. But I think it's reasonable to assume that oil prices will one day go back up. I think that's fair, too. And you, Mr. Gross? I think what Jason said is right. I don't have a lot of energy exposure, as you said you don't. But I think if you believe in reversion to the mean type investing and those types of theories, I think allocating a little bit more capital to that sector here makes sense. Coming up, two weeks into the new year, and we already have a winner in the first retailer

to go bankrupt competition. Stay right here. This is Motley Fool Money. As always, people on the program may have interests in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. Welcome back to Motley Fool Money. Chris Hill here in studio with Jason Moser, Charlie Travers, and Ron Gross. Guys, what had been a very good past 12 months for shares of Best Buy came to a screeching halt this week. On Thursday, the company warned that holiday sales were decent, but that they do not expect that strength to last. And, Ron, shares down about 15% in a single day.

Yeah, down 12% year-to-date. Still up 27% for the last 52 weeks. So, still pretty good. But some certainly negative comments. Pricing pressure, weak demand, weak extended warranty business, which is a really high-margin business. If you've ever been to one of those H.H. Gregg Best Buy types of stores, they're pushing those extended warranties pretty hard. The Geek Squad. Yeah, I'm always pretty – I feel bad saying sorry.

That's like you buy the $99 Apple TV and they want to sell you the warranty for like $50. I don't know who buys those, quite frankly. My parents buy them. No, I'm not joking. They do buy them. Mr. and Mrs. Driver, stop buying the warranty. And exchange rates have hurt their international business as well. So, weak guidance going forward.

They said fiscal 2016 is just going to be difficult. Strength in mobile phones and home theaters and consumer electronics, that strength is just not going to continue. Stocks sold off as I think it should have. What is the valuation like on the stock, keeping in mind, as you said, it really had a good run in 2014? Yeah, stocks at $34 now. Their guiding comp store sales are going to be flat to negative low single digits, and they're going to have lower operating margins. I don't think the stock looks that cheap here. I still struggle with Best Buy, the need for Best Buy. The only way I think you really can differentiate that business is from getting great sales

help. Otherwise, there's just so many other alternatives to Best Buy, and I don't think they give you that great sales help that they need to really offer. RadioShack down 35% this week on reports the company could file for bankruptcy as soon is next month, but Wet Seal is not waiting that long. Last week, we talked about the teen retailer closing two-thirds of its store, and on Friday of this week, Wet Seal filed for Chapter 11. I guess we shouldn't be surprised, Jason. No, I guess Weird Al couldn't really save Radio Shack, or probably won't be able to save Radio Shack. I can't imagine what kind of parody he would come up with the name

Wet Seal, but I guess that'll remain to be seen. Wet Seal is a teen retailer, so we know know how tough that business is. I can't say I've ever been to a wet seal. I guess I've seen them walking by. You and I were talking earlier about holding that bar up with Justice being what we compare these places to. At least Justice is part of a bigger company. It's not just standing on its own. Wet seal is obviously doomed. I'm actually floored they're filing Chapter 11, indicating that there's going to be some type of restructuring or some type of value there. It just seems like they're not quite getting the message. RadioShack, it looks like, will file. That's no surprise, obviously, either. I think there

could be some value there with RadioShack, actually. I mean, Ron's reckless prediction, I think, last year of incorporating that footprint into some type of Amazon delivery or distribution model, I think actually could make a lot of sense. So, maybe there's something there. They're actually in talk with Sprint for some of the locations. Sprint want to expand their distribution. Well, there you go. Quite a bit of them around the world, at least around our country. That remains to be seen. But yeah, WETSEAL's best days, I think, are behind it. Let's go to our man on the other side of the glass before we get to the stocks

on our radar. Steve, last time you were in either a RadioShack or a WETSEAL, I know you're not the target audience for WETSEAL, teen retail, but I'm just curious, last time you were in either one? RadioShack would have to be for probably some adapter or something. A couple months ago, maybe six, eight months ago. Good experience? If you're looking for a quarter-inch to eighth-inch adapter, it's the only game you've got. Or a battery. If you're looking for a hard-to-find battery, they're your store. All right, let's get to the stocks that are on our radar this week. And Steve will hit

you with a question. Ron Gross, you're up first. What do you got? I got, Steve, a stock that I just put on my radar, a deep value opportunity, Bassett Furniture, B-S-E-T. Value investors probably know it from a decade worth of potential opportunity here, but I've never pulled the trigger. They're a retailer of furniture, 55 stores, 34 licensed stores, selling at only 1.3 times tangible book value, really strong balance sheet, $40 million of cash, and it's only a $200 million market cap company, pay a little dividend. Furniture's a tough business, though. International imports eat their lunch over and over again, so you got to be careful here, and I'll be digging into that. That's a pretty small market cap to be paying

a dividend, isn't it? Yeah, it's a 1.6% dividend. Plus, they just paid a special dividend in December of $0.20 a share. So, they've got that excess cash. They're free cash flow positive. So, they've returned some to shareholders. Steve? Do they make good furniture? I'm on the hunt for good furniture, and it seems impossible to find well-made furniture. You know, it's not your higher end. You're not going to spend a ton of money. But in my opinion, we've shopped there before, it's quality at a reasonable price. Jason Moser? And I didn't get paid to say that.

Jason Moser, what's on your radar? Sure. Looking into TripAdvisor, ticker is T-R-I-P, thinking that could be one to shoot across the MDP radar here at some point, because travel is just a tremendous global market in general. But mobile is really taking hold in this global travel market. The Comscore data shows that more and more time is being spent looking at these travel sites via your tablets and your phones. TripAdvisor has done a wonderful job with their app. They have a good app for the iPad, iPhone. I've used them both. It is a company that makes a lot of cash. They've been growing sales at a good clip, and they make a lot of free cash flow.

And the stock has felt a little pain here recently, I think, just on some general concerns as far as near-term profitability. I think that's probably a little bit short-sighted, and I think it represents a very interesting opportunity today for a company that I think has a very long life ahead. Steve, question about TripAdvisor? How do I make sense of incredibly disparate ratings? So one person says, this is the worst hotel in the world. Right below it, this is the best hotel in the world. I think when you see those types of disparate ratings, you want to try to look for more ratings.

It's the Olympics. You throw out the best, you throw out the worst. I mean, I think, like anything, you probably want to throw the outliers out and just, you know, shoot for mediocrity. Look for some general trends. Always. Look for some general trends. Charlie Travers, what do you got?

American Express, ticker AXP. They report their year-end earnings on Wednesday, January 21st. I like looking at this company, not just for a standalone, but as a barometer of consumer spending. They've been a real beneficiary of unemployment rates coming down over the past few years. They saw members spending up 9% in each of the last two quarters. And I'm curious, now that they have partnerships with Uber, Apple Pay, McDonald's, if that trend continues. Steve? I'm a shareholder. Do you have an Amex card?

I do. I love it. World-class customer service. Steve, you got a stock in there you like? American Express. I'm a shareholder. I love it. All right. Ryan Gross, Jason Moser, Charlie Travers. Guys, thanks for being here.

Thanks, man. We are heading to the Motor City to get the latest on the auto industry. Stay right here. This is Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill. The North American International Auto Show kicked off this week in Detroit with more than 800,000 people expected to attend. Paul Leinart has spent his career covering the

automotive industry, most recently with Thomson Reuters, and he joins me now. Paul, always good to talk to you. Same here, Chris. Good to be here. You've spent time on the floor. What is your headline for the 2015 show so far? Trucks are back. Green is almost gone. Really? who knew huh with with gas prices plummeting everywhere over the last couple of months but i think the the the two big themes at this year's show no surprise are lots and lots of new trucks on the floor and lots of very interesting performance cars and maybe as a sub theme many new luxury and premium crossovers and suvs now given what has happened to the price of gas over the last few months. I'm not all that surprised about the trucks. And Americans'

love affair with trucks is probably one that, like any long-term love affair, may have its rocky moments now and then, but it strikes me as a love affair that will never die. But is it really that one-sided, that essentially the green, eco-friendly cars are all but out the door? Well, there are some twists here, too, Chris, but you're absolutely right. Americans love trucks, and they especially love big trucks. And we'll talk in a second about so-called midsize trucks. But there were several important new ones on display at the show, again, with a twist. And remind me to talk about the Ford F-150 Raptor, because that's a very interesting twist. General Motors, and we'll get to trucks in a second, but General Motors sort of made the big

the first big splash of the week on Monday, when they unveiled the Chevy Bolt, which is a compact electric vehicle that they say they're going to sell for a mass market price under $30,000. It's got a range of 200 miles. What did you think when you first saw it? Well, I thought, Elon Musk, what do you think about it? And we had a chance to chat with Elon last night because he was in town here for an industry conference that takes place concurrently with the show, the Automotive News World Congress. And someone asked him point blank, what is this, a competitor? He goes, nah, a couple hundred thousand a year. Nah, it's not a competitor. But Tesla, Elon's company, is planning to come out with something called the

Model 3 about the same time, about the same price range, about the same mileage range. So it's going to be a very interesting battle that shapes up between Tesla and good old Chevrolet. Now, the vehicles you and I are talking about right now, these aren't going to hit the market for a couple of years. Did either GM or Tesla hedge just slightly in terms of the timing? Because as we just talked about with the price of gas, I mean, these are large companies, but they are still nimble enough to react to changing conditions. And I'm just wondering if either company is sort of thinking, well, that's our plan right now, but check back with us in a year and maybe we'll think differently. GM, if anybody flinches or blinks or resets the

calendar, it would more likely be GM and not Tesla. But I don't think GM will do that either. They signal their intent to go into this market, you know, the pure battery electric with a much longer range. A couple years ago, I think Dan Ackerson, the former CEO, was talking about it a year and a half ago anyway. Elon Musk was asked that question also last night, and he said, we are absolutely on track to launch this Model 3 in 2017. We're going to ramp up to half a million units a year by 2020, and we expect to be building a few million cars a year by 2025. And these are all pure electrics.

That's all Tesla does. He poo-poos everything else, doesn't think much of hybrids, thinks hydrogen fuel cell cars are the silliest thing he's ever heard of. What was the reaction when he talked about ramping up to millions of cars being produced? Because when you look at Tesla Motors' production right now, in 10 years, they're talking about ramping up production 30 times what it is right now? Yeah, let me put this in perspective. Last year, Tesla built fewer than 40,000 cars. So yes, that would be a significant jump. And just to put it in context, that would

put them roughly on a par with Chrysler in the U.S. Chrysler last year sold 2 million cars here. All right. Let's get back to the trucks. And I will tell you right out of the gate, I am not a truck person. I'm not anti-truck, but I've never owned a truck. And to a certain extent, they kind of all seem about the same to me. If you told me I had to go out and buy a truck, I would probably just flip a coin a few times to narrow down my choices. So tell me about the F-150 Raptor, which, by the way, I hope whoever came up with that name at Ford got a little bit of a bonus, because that's a great name. But tell me about that, and then sort of help me understand what's going to move the needle for automakers in terms of midsize trucks versus larger trucks.

Let's take the first first, okay? There were two brand-new full-size trucks on display at the show. One was the Nissan Titan, which is the first time this puppy's been redesigned in 10 years. Probably won't be on the street until late this year or early next year, but all I can say is it's about time they got this thing redesigned if they ever hope to get competitive. To the F-150 Raptor, this truck isn't going to be on the market for probably another 18 months, But Ford wanted to capitalize on some of the momentum it's got going from the launch of its standard 2015 F-150. And, Chris, you know that's the one with the aluminum body panels that's up to 700 pounds lighter than its predecessor.

Light enough so Ford's been substituting much smaller engines to help boost the fuel economy. That was the twist I was talking about on the Raptor. This new Raptor that's probably going to debut as a 2017 model. is going to be 500 pounds lighter than the previous Raptor, which I think Ford last sold in 2014. It's going to have more horsepower than that model, which means more than 400 horsepower, but get this. Instead of a gigantic 6.2-liter V8, it's going to have a twin-turbo 3.5-liter V6, one of Ford's so-called EcoBoost engines. So that should be an interesting piece of machinery to drive. If you are Ford Motor or GM or any of the big automakers, when you're looking at

your line of trucks, from the standpoint of the business, obviously you want everything you produce to sell well. But what really matters the most? Is it simply a matter of price point, and you want the biggest, most expensive trucks to be just getting off the lot as quickly as possible, or is it more nuanced than that? It is much more complicated than that, but let me try and simplify with a couple of broad points. What the manufacturers discovered was that Americans not only like trucks, but they like trucks loaded. The fact that there's been relatively easy credit has persuaded a lot of people to perhaps buy a little bit more than what they could afford. So they're buying higher trim levels. That means an F-150 titanium or a

Chevrolet Silverado High Country. The average selling price at the dealer for these big loaded trucks is over $40,000. That sounds insane, doesn't it? To me, but like I said, I'm not a truck guy. Last week, you were at the Consumer Electronics Show in Las Vegas. Once again, the auto industry was out in force. I read that Audi actually had a self-driving car drive itself from San Francisco to Las Vegas for CES. You were there. What caught your attention? Self-driving cars were part of the buzz at the show, and then connected cars were also part of the buzz. Audi, in fact, did demonstrate an A7 that had been converted to semi-autonomous driving. So it could self-drive itself on certain stretches of freeway.

It could pass automatically. It braked and, you know, accelerated and steered automatically in these situations. It rotated. Audi rotated several journalists through there. Sadly, I was not one of them. But the running joke I heard from some of the other auto writers at the show was everybody felt a lot safer when it was in automatic mode as opposed to when one of the journalists was driving. Cool figure. And yet, I wonder about how often people will utilize that option, because just like Americans have a love affair with trucks, in general terms, Americans have a love affair with driving.

I mean, there really is nothing like getting out on the open road and driving the car yourself. I'm not saying that people won't from time to time put it on autopilot, for lack of a better term. But when you look at driverless cars, sort of full-on, point-to-point driverless cars, are you convinced that a majority of people are going to go that route? No, I am not. And I think even the most optimistic forecasts I've seen that go out maybe 20 years say anywhere from maybe 10% to 20% of the vehicle population that's sold around 2035 could be either fully autonomous or semi-autonomous. But let me back up a step. You're absolutely right. People do love to drive their cars.

And at least here in the U.S., we live in a country with lots of open roads and big highways. And, you know, it's a fun place to drive, by and large. What I think we're going to see first, the first rollout of these cars from somewhere between 2020 and 2025 is going to be in cities where traffic congestion is a problem. In special uses, we've heard terms like robo-taxis, for instance, in New York City. We will see specially equipped automated vehicles that can be used by the blind, the elderly, disabled folks, people who otherwise would never be able to drive. You know, they're only going to spend their time as a passenger at best.

So this is going to maybe provide some mobility and some freedom to people who, you know, are now pretty restricted in terms of transportation. That's not a bad thing. Take me riding in the car, car. Take me riding in the car, car. take you riding in my car car i'll take you riding in my car more with paul leinert after this you're listening to motley fool money you're listening to motley fool money talking with paul leinert auto industry expert for thompson reuters let me ask you about a couple of ceos because last year

at this time when you and i were talking mary barra was the toast of the show it was her first week as CEO of General Motors, GM had just won Car of the Year and Truck of the Year. And then, as we now know from the benefit of hindsight, 2014 turned out to be the year of recalls for GM. You saw her this week. How is the industry regarding Mary Barra at this moment? Because I have to assume that at least part of the way she is regarded as someone with a huge task on her hands. Mary Barra is a remarkable woman, and the consensus, at least in Detroit, seems to be that she's done a remarkable job, both in terms of keeping the company together during some very difficult times last year, and the fact that she managed to hang on to her own

job in what had to be one of the most difficult years any auto CEO has faced in a long time. The recalls, particularly with the faulty ignition switches and dozens of people dying in GM cars with those bad switches, has to be a nightmare for anybody. And when you consider she's a brand new CEO, that was a lot of stuff to heap on her plate. And I think she, so far, has done an admirable job of dealing with it, dealing with the negative publicity, doing all the right things, including setting up the Victims' Compensation Fund. She's been on the job for a year. Mark Fields has been CEO at Ford Motor for less time than that, and obviously he had some big shoes to fill with Alan Mulally stepping down. So I know it is very early in his tenure, but do you have a feel for how he's doing so far? You know, I like Mark.

I talked to him out at the CES show in Las Vegas last week. He's a technology geek. Who knew, huh? And he's had a lot of experience in a lot of different pieces of the business over at Ford. But if anybody is the right person to drive Ford into the 21st century, you know, deeply into connected cars at the moment and eventually into self-driving cars, Fields is probably the guy, and he surrounded himself with some bright, young talent. He could use a few more women up there at the top of the company, but, you know, he's doing what he needs to do so far. Was there any talk this week at the Auto Show about the amount of money that automakers spend on advertising?

And I saw an article earlier this week about Super Bowl ads, and with the Super Bowl coming up and a 30-second spot going for more than $4 million. dollars. And over the past five years, in terms of spending money for Super Bowl ads, three of the top five spenders are automakers, Chrysler, Hyundai, and Volkswagen. And I'm just wondering if there's any discussion within the auto industry about the amount of money being spent on television advertising, even when it's not the Super Bowl, and if it's worth it. There will always be a discussion about is it worth it yes there are enormous sums being spent on the super bowl i don't know what happens in your house or when you get together with your friends to watch that game in my house we spend we we almost never want to tear ourselves away from the tv because often

the ads are far more entertaining than the game itself and there have been some really memorable automotive ads in particular from chrysler so if i if i'm sergio marchionne at chrysler i'm probably thinking, hey, that was money well spent. People are still talking about my brand weeks and sometimes months after a football game. Do you think the people at Ford Motor look at the money they've spent on the Lincoln ads with Matthew McConaughey as money well spent? I asked Mark Fields about that a couple weeks ago when we were doing a story on Lincoln. And he actually brought up the fact that those ads were being parodied on late night TV and Saturday Night Live. And he was laughing, saying, that's not a bad thing. They're talking about my brand. So, you know, you got to

go with that. Any publicity is good publicity. As long as you spell my name right. Exactly. All right. Two more sort of forward-looking questions, and then I'll let you go. It seems like everyone is rightly so focused on the car of the future, but it doesn't seem at this moment that anyone has particularly defined it, particularly when you think about a specific technology emerging as the standard for the car of the future. Am I right on that? And if so, is anyone in the lead at this point? There are several companies in the lead, but you're absolutely correct, Chris.

The standards, if you will, are still in the process of being defined. I think that car companies want desperately to preempt lawmakers and regulators and come up with their own standards that everybody can agree on. They're not there yet, but there's a lot of discussion going on, particularly in Europe, and we'll see if it eventually goes global. The two broad areas when you're talking about cars of the future are connectivity, and by that I simply mean how a vehicle can connect wirelessly to other cars, to the Internet, to the infrastructure, to pedestrians, even to your mobile devices, right,

to keep you connected to what's going on in the rest of the world. And then beyond that, self-driving cars, what we also call autonomous cars, cars that drive themselves. And the first one, the connected car, is the enabler of the second one, the self-driving car. Because if your car is going to be truly autonomous, it needs to be absolutely connected with what's going on around it. And to that end, there are already companies and cars that have begun to adapt some of that technology. We have cars right now that steer themselves. If you start drifting out of a lane, it'll bump you back into your lane. We have cars that brake themselves automatically, cars that accelerate automatically.

Think of adaptive cruise control systems. So far, most of those systems are on more expensive premium models. We're going to see that technology ultimately filter down to, if you will, mass market cars. And you're going to see more of those kinds of systems, those semi-autonomous systems, roll out over the next couple of years because we're not going to have an autonomous car overnight, a self-driving car. We're going to have semi-self-driving cars in different stages, and it'll take five to 10 years.

Talk to me in 10 years, and we'll talk about what we're thinking about the car of the future at that time. All right. I'll get you out of here on this. all the cars, all the trucks you saw this week, was there any feature that you saw that made you think, the next vehicle I buy, I want that to be in it? Gosh, there isn't one, a single one that jumped out at me. I'd be a really happy camper. I drive like 52 of 75 cars a year, okay? I'd be a really happy camper if, no matter what car I was in,

If I could plug my iPod in, it will just work. Believe it or not, we're still not at that point. There's still too many cars where my iPod malfunctions or shuts itself off or whatever. So I'm a simple man with simple tastes. Paul Leinert covers the auto industry for Reuters. Definitely read his stuff. Follow him on Twitter. Paul, always appreciate talking to you.

Thanks for being here. Thank you, Chris. Talk to you next year. That's going to do it for this week's show. Our engineer is Steve Reuter. Our producer is Matt Greer. I'm Chris Hill. We'll see you next week.