Motley Fool Hidden Gems Investing - Motley Fool Money: 03.07.2014

Episode Date: March 7, 2014

Costco disappoints.  Safeway makes a deal.  And SkullCandy skyrockets.   Our analysts discuss some of the week's business news and share three stocks on their radar.  Plus, author Brad Stone talks about his book, The Everything Store:  Jeff Bezos and the Age of Amazon.  Learn more about your ad choices. Visit megaphone.fm/adchoices

Chris Hill, joining me in studio this week from Motley Fool One, Jason Moser from Motley full supernova, Matt Argersinger, and for Million Dollar Portfolio, Ron Gross. Good to see you, gents, as always. Hey, how are you? Good to be here. We've got the latest on the music industry, the grocery industry, and a hot IPO to boot. We've got the greatest technological advancement of 2014. And as always, we'll give you an inside look at the stocks on our radar. But we begin this week with the big macro. The February jobs numbers came out Friday morning. Ron, higher than expected, 175,000 jobs added.

The unemployment rate ticked up slightly to 6.7%. What'd you make of the numbers? I like it. I think we look pretty good. I think we can comfortably say we've resumed moderate job growth. It continually happens. This came in a little bit lower than the average over the last 12 months, which was close to about 190, 189, 189,000, but still strong. I love to see that overall employment number, that U-6 we sometimes talk about, tick down, though the wacky math made the actual employment rate tick up, but I think overall, this continues us on the right track. It means the Fed will continue to taper back that stimulus. I think things look good.

Yeah, and Matty, we also had revisions upward of the numbers that we saw in December and January. Right, and as we talked before the show, and Mac, our producer, rightly pointed out, that's really the numbers you want to focus on, because these numbers are so preliminary all the time, and no one pays attention to the revised numbers, which usually tell the stronger story because there's more data behind them. I also think that we've had so many weather-related issues the past few months, the fact that we did have a strong number in February, and revisions up from the previous months, is a good sign.

Jason? Yeah, well, Ron said wacky math, and Matty made a good point about the revisions. I think those are both very valid points that people ought to ... And he also said we're taking economic advice from our producer, Matt Greer. Hey, who else? Who else? That's a topic for another time. I think those are a couple of points that are really worth noting, because at the end of the day, it's not these numbers, I think, that matter so much, but how the Fed really reacts to them. I mean, interest rates are obviously

still virtually zero. It's very accommodative monetary policy today. And even to get back to a normal 3% to 4% Fed funds rate, it's going to take a couple of years to even really get there with just some moderate bumping of rates during these meetings. So, jobs coming back is great. I think a lot of people are still feeling the economic pinch of the last couple of years. And savings rates are at all-time lows. People are still not really able to save a lot of money. And I think that when you have that situation where people are really just trying to get by, even though unemployment is trending better, it's still a tough situation out there.

What a downer. Normally, we look to you for that kind of pessimism. Yeah, right. Alright, let's get to some of the companies in the news. Shares of Costco down slightly this week after second quarter profits fell 15%. And Ron, maybe more concerning, this is the third straight quarter that Costco has underperformed expectations. That is true. I cannot deny that. However, I think everything's fine. If we adjust for a one-time tax benefit, which occurred last year, profits were down less than 5%.

So, better than the 15, but still down. I acknowledge that. It's been a difficult retail season all the way around. Holiday season was tough. Weather is tough. They had a little bit of margin weakness. They've been hurt by foreign currency translation. Same-star sales internationally were 0% growth, but if you take out the foreign currency, we're up 7%. So, it kind of masks some of the strength that they are actually seeing. Overall, retention rates continue to be very strong, which is the bread and butter of their membership model, which is one of the main reasons you should be investing in Costco, and I think things still look good. Kind of nice to see that at no point

did they blame weather for their results. I always appreciate that. Safeway is the second largest grocery chain in America, but its stock is about to come off the public markets. Safeway is being bought by the private equity firm Cerberus in a deal worth $9 billion. Jason, Cerberus bought Albertsons, which was fifth largest Now, Safeway, we were talking about this earlier. This is a tough industry that really seems to only be getting tougher. Yeah, no question there. I mean, if you wonder why Safeway's stock isn't getting some big premium to today's stock price,

well, I mean, it's because it doesn't deserve it. I mean, this company's sales over the last five years have fallen at a 4% annualized rate. So it's not like they're lighting the world on fire. But to your point, it is a very tough industry. And so, consolidation on this side of the grocery business was certainly expected to the extent that you have your Targets and Walmarts out there that are getting more grocery shoppers into their stores. And so, this isn't a focus on the high-end Whole Foods market. Safeway is a bit more focused on the value-oriented consumer. And so, this is going to give the combined entity the scale and distribution to compete more with that value-oriented offering. And so, for consumers, it ought to work out pretty well. It'll probably bring prices down a little bit, give them a little bit more offering.

It wouldn't shock me at all if at some point maybe Cerberus sort of loaded this company up with a little bit more debt and spun it back to the public markets in the next five or ten years. But either way, I think that consumers will do okay from this. And for Safeway stockholders, it's probably just close the book and move on. All right. News from the music industry. Shares of Pandora fell this week after announcing in its earnings report that it will stop revealing stats on listenership on a monthly basis. And Spotify, the European music streaming company, is talking with banks about raising a credit facility, a move that many, Matt, are interpreting as a step towards an IPO here in the U.S. Let's start with Pandora, though. It's almost like they got dinged for

saying we're going to stop reporting listener stats on a monthly basis. I don't own shares of Pandora. I think that's probably a good move for them. They're going to be doing it on a quarterly basis. Right. Initially, I looked at that and said, oh, wait, are they going to stop reporting one of their key metrics? No, no, no. They're just moving to a quarterly reporting schedule, which is fine. I mean, it takes us away from the schizophrenic short-term data movements that all of us focus too much on. But the numbers were actually really good. And their active listener number, which was over 75 million in February, that was up sequentially and year-over-year. So, there are more active users of Pandora, just not as many listening

hours, which were down a little bit sequentially, but up year-over-year. Again, with Pandora, they're going after a really huge pie. It's a $17 billion radio ad market. So, now we've got Spotify, which I do think is a legit competitor. They just bought Echonest, or they're buying Echonest, which is a music intelligence company. They're going to compete with Pandora on the listener preference and choice technology. But it's a huge ad market that they're both going after. And I think Pandora's got such a huge lead with its listener account. It's in 1,000 devices. They're getting into the automotive market, which is where they want to be, which is going to compete with Sirius. And again, get them more into the terrestrial

radio market. So, very excited about Pandora. I think at a $7 billion market cap, still has a lot of upside. Where does iTunes Radio factor into all of this? That was a very big question about six months ago. So, I'm six months late, is that what you're saying? I just think it's been remarkable that Pandora's held up as much as it has, given iTunes Radio. I just think it says to me that Pandora's got a superior product, a superior experience. I think it's a little bit of behavior here, though, because as someone who had Pandora on my phone,

my girls like to listen to Pandora in the car, just they have the Disney station, whatever. So, at some point, I'm going to prove my laziness here, At some point, the Pandora app on my phone logged out, which required me to log back in. And I was like, I don't have time to do that. I'm driving. I don't have time. So then I click over to the iTunes radio. I click over to the iTunes radio app.

And I find a little Disney station they have there. Started playing it. It's great. It's intuitive. It asks what you like. You can add things to your iTunes watch list so I can sort of buy some songs for the kids every now and then. I mean, I think that a lot of that is just changing consumer behavior. And people who are used to Pandora and like it, there's no reason to switch.

But, man, if that thing logs out of your phone there and you have to re-log in and you're lazy like I am, I don't know. Maybe that's the catalyst. One more thing I'll quickly say about it, too, is that you do have Pandora, which is focused 100% on the idea of radio and music discovery. Apple, iTunes, radio, again, it's one small part of a very, very large company trying to do a lot of different things. So, usually in my assessment, the one that's focused is the winner. But you raised an interesting point, which is the automobiles. And it seems like that's going to be one thing to watch in this industry, whether it is Pandora or Spotify or iTunes radio. Because I think that to the extent that any one of them can really get a foothold in vehicles over the next five years, that's going to be massive.

Because that's something that traditional radio is obviously dominates, but is rightfully terrified of. And Sirius has done a very good job of that to this point. Yeah, I quickly interviewed the CFO of Pandora, Mike Herring, at CES a couple months back, and he said automotive is the number one place that they're focused on. Coming up, we had a hot IPO on Friday. Should you jump into the stock or run away as fast as you can? We'll answer that question. This is Motley Fool Money.

Welcome back to Motley Fool Money. Chris Hill here in studio with Jason Moser, Matt Argesinger, and Ron Gross. RadioShack and Staples both down big this week, and not just because of bad earnings, Ron. RadioShack is closing about 25% of its locations. Staples is closing 10% of its locations here in North America. Let's start with RadioShack, because this is just ... Yes, let's. It's just ... I mean, this is just getting ugly.

So, in December, I made this crazy prediction that Amazon would acquire RadioShack and use it as showrooms and service centers and delivery centers. As we get closer to the $200 million market cap of RadioShack, that crazy prediction may end up coming true. Who's to say? RadioShack and Staples, to me, are two totally different situations. RadioShack, the world, as I've said with JCPenney, the world does not need RadioShack. They've tried their best to reinvent themselves. They're trying again now, closing underperforming stores, which pretty much is all of them, but closing 1,100 stores, refocusing the concept and the display. They've tried that before with mobile phones. There's just too many ways you can get the stuff that

RadioShack sells, and I just don't think it's going to work in the end. One thing about Staples, though, is that Staples, one of the challenges they appear to have is their footprint. Say what you will about RadioShack, but it seems like, if nothing else, they have smaller store footprints than Staples. And one of Staples' big challenges is sort of that back of the store where they've got furniture and reams of paper. Just stuff. Just stuff. And I mean, we have, in my neighborhood, two Staples within a mile and a half of each other.

There's too many stores. I'd love to see, though, that almost 50% of their business has now moved to online. That makes sense to me. Not a non-competitive business. I mean, everyone from Walmart to Amazon is also in their business. But I think you need to pair back, reduce the number of stores, continue focusing online, and get that right mix. Because I think the world can use Staples. It is a viable concept. But I'll also remember that ink and paper are two things that Staples, OfficeMax, Office Depot thrived on for years. They got great margins from those. And guess what? We're just not printing as much and using as much paper as we did just even four or

five years ago. So, that's a big problem for them. We have Silicon Valley's first pure tech IPO of the year on Friday. Coupons.com raised over $1 billion with their IPO. Jason, the stock IPO did $16 a share. It almost immediately shot up to the high 20s. Do I have this right? This is a company that provides digital coupons for consumers? Chris, I think you summed it up nicely. Is this madness, or is there actually a business here? Well, this is like the sun. I know I shouldn't be looking at it. I should just look away, but I can't help it. When I saw this IPO and the stock's reaction, essentially

doubling its first day of trading, I thought, wow, it's just coupons, right? We've made a lot of fun of Groupon and LivingSocial and those kinds of models. And so, I did a little bit of research in the business to understand what the differentiation was there. And it is a little bit different. I found some interesting numbers in there. And just to put some context around it for you. So, in 2013, domestically speaking, there were 315 billion total coupons distributed. Now, that represented about $510 billion. Now, of those 315 billion coupons, only about $2.8 billion were redeemed, representing a value of about $3.5 billion. And so, there is this big market opportunity out there of a lot of coupons. And that's all these

guys do, is that they do coupons. Now, the neat thing about their model is, you have this coupon coupon app on your phone, and when you download the coupon, Coupons.com gets paid. Regardless of whether you actually use the coupon, although one might believe that if you download the coupon, your chances of using it are substantially higher, and they get paid for that, too. There is an interesting market opportunity out there. I don't know that this is one that you just dismiss entirely. Let's face it, the name probably has something to it, too. It's Coupons.com. It's not too terribly confusing. This is actually one that I'm going to keep Yeah, I was going to say, there's just absolutely no competitive moat to that business,

except they have the coupons.com name website, which is probably a better destination than most. Yeah, at least it's not something stupid like Canoe or something like that. Or RetailMeNot. Oh, wait a minute. Shares of Skullcandy up more than 30% on Friday after fourth quarter results for the headphones maker came in better than expected. Matty, their profits fell 69%. How low were these expectations? I don't know. I'm scratching my skull on this one, too. Sales were down 28% and

somehow there's a few analysts out there saying, well, that wasn't as bad as we thought. Sales were only down 28%. As we discussed before the show, this is the cheap music headphones that people can buy for $25. They work for about three or four months, they stop working, you ditch them, and you buy another pair. They've tried in the past, Skullcandy, to position themselves as a premium sort of electronic headphone. But they just assigned a new deal with Walmart to position their, and so that tells you right there that they're really going after the discount market. I've never been a fan of the company. I just think they're in a commodity business with a very poor brand. That just doesn't help. When most people out

there, if you're looking to buy a set of headphones, you're looking at Sony or Bose, you're going to spend $150 on a pair of headphones that really works, or you can go the Skullcandy route. I agree. I think we're seeing short covering today. I looked at the stock at $7. I passed on it because of a lot of things Matty said, no competitive advantage. I just didn't see it. It's a brand, and to me that's all it is, and that's not good enough in this particular case. Where the stock goes from here, once the shorts are done covering, then the company's got to put up growth, not just better-than-expected losses. So, I'm not buying

it. I just want to meet these analysts who just have these unbelievably low expectations. Guys, finally, I think you could all agree that sometimes it's just hard to wake up in the morning. And fortunately, the good people at the Oscar Mayer Institute for the Advancement of Bacon are here to help. By the way, how do we get on the board of directors of that institute? We need to work on that. They have developed a new app for the alarm clock function of the iPhone, so you can wake up to the smell of bacon. Right now, you can download the app, and it's the sound of sizzling bacon. And then you have to go to a website, which is wakeupandsmellthebacon.com, to apply for

the additional hardware to get the scent of bacon. I was going to say, how do they tap into your old factory senses like that? That's just amazing technology. I don't know. We'll bring in our man Steve Broido from the other side of the glass in just a moment. But I am curious if you could wake up to any scent on a daily basis. I mean, bacon, that's got to make the short list, Ron. Yeah, it has to. How about a really solid cup of coffee with some banana pancakes in the background? Is that good?

It's like coffee, you just set the coffee maker. You're just waiting for the whole breakfast there. No, my mom made some mean French toast in my day. There were mornings when I was growing up when I woke up to that. It was going to be a great day. Wow, man. I'm going to take this 180 degrees the other direction here. I had a ball brewing beer in college, and that's just a really good smell. We just finished up hop slam season here, Whole Foods. It's a good beer that Bell's Brewery makes, and it's a very hoppy, honey-scented beer. I know it's not PC to really drink before noon, but if

I could wake up to the smell of that, I think that'd be pretty cool. Well, and that's the thing. I look at this and I think, well, waking up to the smell of bacon is great, but then I'm just going to want bacon. Right. If only money had a strong scent. At least this just gets me amped to finish my day at work so I can come home and have a beer, right? Steve Reuter, what do you got?

What about the smell of progress, my friend? There it is. Nice. You know, cinnamon rolls are nice, but the smell of progress. We have a winner. Smell of napalm in the morning. Drop us an email, radio at fool.com. What scent would you like to wake up with?

And what does progress smell like? I'm sure it's good, though. Ron Gross, Matt Argesinger, Jason Moser, guys, we'll see you a little bit later in the show. Coming up next, bestselling author Brad Stone will give us an inside look at Amazon.com and its visionary CEO, Jeff Bezos. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill. Amazon.com started out calling itself Earth's biggest bookstore, but under the driving leadership of founder Jeff Bezos, it has become so much more than that today. It is a story captured in great detail by Brad Stone.

He is a senior writer for Bloomberg Businessweek and the author of The Everything Store, Jeff Bezos and the Age of Amazon. Brad joins me from the newsroom at Bloomberg Businessweek. Brad, thanks for taking a few minutes to talk with me. Thank you, Chris. You've covered Silicon Valley and the technology industry for 15 years or so. What got you interested in writing about Amazon? It was really just the opportunity. You know, as I covered Silicon Valley, you know, there have been so many good Google books, Apple books, you know, even Facebook books. And, you know, no one had really written a great Amazon story.

I think, you know, probably because they're secretive, they're remote up in Seattle. And, you know, it's a tough company to crack. And, you know, it was after the introduction of the Kindle and the emergence of Amazon Web Services, the cloud business, you know, where I just realized that this is a company that we all kind of take for granted. You know, it functions a little bit like a utility. You know, you press a button and something arrives at your door. But really what they've accomplished is quite remarkable. And so I set out to tell the story.

Now, prior to founding Amazon, Jeff Bezos was working at a hedge fund on Wall Street. How do you think that experience informed his approach to running Amazon? He learned a lot on Wall Street. He worked for a company called D.E. Shaw. It was a quantitative hedge fund. It's still around, but really Bezos was there in the heyday, in the early 90s. And he learned a lot, particularly from David Shaw, the founder, in terms of secrecy, also hiring generalists and putting them in positions where they can kind of innovate.

Shaw never thought of D.E. Shaw as a financial firm. He thought of it as a technology firm where finance was the first market. And we saw Bezos really take the same DNA and implant it at Amazon, which we all thought of as an online retailer, but really was a technology company whose first market was e-commerce. And so a lot of the same principles, the same hiring practices Bezos took from D.E. Shaw and implanted at Amazon. Now, your book covers everything from Bezos' time before he started Amazon right up to the present day. But I want to focus for a moment on the period of 2000 and 2001, which really seems like an important time,

both for Amazon and for Jeff Bezos. Investors remember that that was the time of the dot-com bubble, and we see that reflected in Amazon stock dropping. But during that time, Bezos has two key meetings with other CEOs. And I hope I'm not reading too much into your telling of these stories, but it really seems like they had very lasting effects on him. And I wonder if you could talk a little bit about each one. The first one is with Lee Scott, who in 2000 is the CEO at Walmart. Right. Yeah, and I think they were significant, and that's why I included them in the book.

This is a sensitive time for Amazon. They lost a billion dollars in 2000. The stock price after Bezos was time man of the year at the end of 1999, the stock price falls all the way into the single digits, and they have to kind of reexamine all the fundamentals of their business. And one of the things that Amazon does is they start approaching big retailers to ask them, you know, can we run your e-commerce operation? So that's why Bezos and some colleagues met with Lee Scott. And, you know, in the meeting, Scott talked about how Walmart doesn't really advertise

on television, how, you know, the advertising strategy is basically low, everyday low prices. Now, at the time, Amazon had pretty low prices, but it wasn't a fundamental principle or a value at the company. In fact, they had been raising prices a little bit to try to make the business model work and he came away from that meeting and and another meeting also influential with costco founder jim senegal and basically you know came back into the organization said we're going to stop spending money on advertising and you know amazon actually didn't wouldn't advertise on tv for another seven years until the kindle and and he and he also said you know even even though we're losing money we can't afford not to have the lowest price and um we've got a we've got

to make low prices, the lowest online price, a key value at the company, and kind of structure the rest of the business around it. And if you kind of draw the line to today, you see that, yeah, those meetings were very influential, and Amazon actually created software to go out and look at competitors' prices and to match them. And that's had all sorts of disruptive effects in retail and on the internet in general. One of the things that struck me about both those meetings, but in particular the one with Jim Sinegal from Costco, is that in that meeting, And very early on, Bezos is hoping to talk about potential partnerships, that sort of thing. And it's clear very quickly that that idea isn't going anywhere.

And he spends the rest of his time just focused on learning as much as he can from Jim Sinegal. And again, maybe I'm reading between the lines, but it really seems like he comes away with that from that meeting with Sinegal with some of the seeds of Amazon Prime. because Cinegal is talking about the membership model at Costco and how customer loyalty is everything to them and value providing great value is everything to them. I'm just curious, because you interviewed Cinegal separately. Has he gotten flack over the years for essentially giving Jeff Bezos that idea? Well, you know, I actually wish I could have drawn more of a line

between that meeting in 2001 and Amazon Prime, which emerges in 2005. I don't really think, you know, there was much of a correlation there other than, you know, and this is the point of including those meetings, you know, Jeff really goes to school on everybody he meets. And he learns a lot, you know, from reading and from, you know, meeting with business executives. And, look, he's learning how to be a retailer. And so those meetings are very important. There's no doubt to me that, you know, Amazon Watch, Costco, you know, it's a crosstown rival and learned a lot from it. But, you know, I asked Senegal that.

I said, do you regret meeting with a guy who would become a formidable competitor? And he actually said, you know, that he didn't, that there were, you know, there were no true secrets in retail that everyone stole from each other. And he owned up, he said, you know, at Costco, we stole from every, you know, we stole everything we could and learned from everyone we could, and that's just this business. So he said, you know, he would exchange friendly e-mails with Jeff over the years. The most recent one, he said he got a Kindle and emailed Jeff, and Bezos offered to be his personal customer service representative for the Kindle if he ever had any problems with it. So, you know, clearly, you know, both of those executives got a lot from that meeting.

You're listening to Motley Fool Money, talking with Brad Stone, author of the bestselling book, The Everything Store, Jeff Bezos and the Age of Amazon. John, one of the things that comes across very clearly in your book is what it is like for someone to work for Jeff Bezos, and it is not always a pretty picture. People use words like ruthless to describe his leadership style. Did that surprise you at all? Because I'm a longtime shareholder, and I've got to be honest, it surprised me. But then I realized, you know what, I've never really had a lot of exposure to Bezos other than the odd interview that he does here and there. But did that surprise you that he could be

in some ways very, very tough on employees? Yeah, a little bit. It did, because he's such an affable character in person, you know, and the side of himself that he shows to the public is, you know, we know the gregarious laugh and the well-articulated business principles. But it didn't surprise me because, you know, all these executives are very driven individuals, and they haven't gotten to where they've gotten by suffering fools or allowing their employees to treat their work as a luxury lifestyle. And look, Bezos has built a company with 110,000 employees in just 19 years, and he's done it by being pretty focused and driving everyone

and requiring everybody inside the organization to think big. I mean, that's a mantra there. Everyone's got to bring their A game and invent in their own business. And that's why I think, you know, Amazon, unlike the other first-generation Internet companies like a Yahoo or an AOL, it manages to evolve with the times and really in some areas set the pace. So, you know, sure, ruthless, and maybe he could be a little terrifying to employees. And if you look at the rankings of the best companies to work for, so it's like Glassdoor or in magazines, you know, Amazon's not usually very high, certainly much lower than the other tech companies.

You know, but that said, it's also a company that continues to innovate, you know, 20 years into its life. So it's clearly a leadership style that has been effective. I know that Jeff Bezos talks about his company in aspirational terms, talking about how they want to be the most customer-focused business in the world. And I get that, but he's also proven to be a very tough opponent. I'm curious, who do you think he regards as Amazon's primary competition? Well, I know how he'd answer that question, which is he'd say that Amazon doesn't focus on the competition. It focuses on the customers, and if you chase your competition, then you'll lose your way. But that said, you know, of course, we can't really believe that.

I was just going to say, that's why I'm asking you. Yeah. You know, I think that they definitely look at, you know, Walmart. I mean, it seems every holiday season we get a little tit-for-tat price war, but the company's falling all over themselves to make sure that they're not being outpriced on some popular items. And on devices, you know, it's clearly that Google is in the crosshairs. I mean, Amazon has forked the Android operating system, so it runs Google's platform, but then it customizes it, and it features the Bing search engine from Microsoft,

which tells you pretty much all you need to know. It wants to use Google, but it doesn't want to advantage it. So they're very strategic in that regard. You know, Apple, too, because the Kindle Fire tablets are going right up against the iPads. And then on the cloud business, I mean, clearly there's a rivalry, a budding rivalry with IBM. And they've hustled for some of the same customers, including the CIA. And both companies kind of taking shots at each other. And as a journalist, you kind of see when IBM is getting ready to make a public announcement about its cloud business,

you end up hearing from an Amazon PR person, And, hey, just so you know, here's all of our information. So they've clearly got IBM on the radar. I think it's a testament to how varied Amazon is today in 2014 that, you know, it's got all these rival groups in all these different businesses. So Amazon's a company that competes with a lot of players right now. There are moments during the book that you illustrate when Jeff Bezos is either seen as stepping away from the day-to-day operations or maybe caught up in other initiatives that he's interested in, like SpaceX. How involved is he right now in the day-to-day running of this company? Right.

I think there's only really one moment where he really contemplated stepping aside, and that's 1999, 2000, when he has his first kid, and where there's a sort of philosophy in Silicon Valley that you need experienced managers. And Amazon kind of experimented with that, and then Jeff decided he really wanted to run the company. My sense is, while he does have these other hobbies, including running a space company, Blue Origin, and buying the Washington Post, he's very involved day to day. You know, Amazon's his job. He's got a duty to shareholders. My sense is that he's running Amazon for years, decades to come, and he just turned 50. It'll be interesting if he does, if and when he does step aside, you know, it'll be interesting because, you know, as we've seen with Tim Cook at Apple, you know, shareholders don't necessarily give as much leeway to the new guy. And Amazon's a business that has been run for growth, you know, without profits, in some cases losing money. And it's not clear that anyone other than Jeff Bezos could get away with that. All right, last question, and then I'll let you get back to the newsroom. What is the future of this company?

Where is it going? Or is the better question to ask, where is it not going? Well, I mean, I titled it the everything store for a reason. The ambition is limitless, and it's not just a store, really. It's the everything company. So it's the e-commerce business, which has a manifest destiny to expand around the world. It has a long way to go. It has not cracked, you know, probably two-thirds of the world.

So there are markets like Russia or, you know, Brazil or really China where they're a relatively small player, where they have a lot of work to do, either with homegrown services or via acquisitions. Then there's the device business. You know, Jeff wants to, you know, be where his customers are. And right now they've got a reader and a tablet. Well, they've got a lot of work to do. They're working on a TV set-top box, and they need to come out with a phone. And you can tell that they're going to do it because they've created the Amazon App Store

and all these other services that tell you they've kind of set the table for an Amazon phone. So I think that's coming. And then you've got the enterprise services business, which there's a ton of room for growth. It's one of Amazon's fastest-growing businesses, and it seems like the opportunity is kind of endless because the world is shifting to the cloud. So I guess the short answer is we're not going to be able to really describe Amazon easily anymore. It was the online retailer at one point, but that description is really out of date. It is a New York Times bestseller for a reason.

It is a fascinating read. You can buy it on Amazon, but you can also buy it at other places as well. It is the everything store, Jeff Bezos and the Age of Amazon. Brad Stone, thanks for being here. Thank you, Chris. Coming up, we'll give you an inside look at the stocks on our radar. This is Motley Fool Money. As always, people on the program may have interest 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, Matt Argersinger, and Ron Gross. Guys, before we get to the stocks that are on our radar, I want to thank one of our members sitting in on the show today, James Wu, making the drive around the Beltway to come visit us. So, thank you, James, for hanging out here at Fool Global headquarters. Alright, we'll bring in Steve Broido with a question. But we've got enough time, Ron. You can fire one right back at him. Should I talk really slowly?

No, not that slowly. What's the stock on your radar this week? It's a radar stock. It's Arcos Dorados, which in Spanish means ... Golden Arches. Golden Arches. The exclusive franchise rights for Latin America and the Caribbean. We own the stock in Million Dollar Portfolio. We've moved it to hold a little bit ago because A, they're slowing store growth, and B, the situation in Argentina and Venezuela is rather dicey. The economy is really troubled there. So, we want to see what the earnings and guidance looks like next week when they report guidance.

And the ticker symbol? A-R-C-O. Steve, question about Arcos Dorados? I still don't understand what this company does. Sure. They franchise McDonald's in Latin America and the Caribbean. They have about 1,990 stores, a little less than 2,000 McDonald's franchises, and some own stores as well. It was, in fact, those Golden Arches.

Okay, just making sure. I thought there might be different ones. When's the last time you, my friend, have eaten at a McDonald's? And if so, what did you eat? This morning. And what did you have? The egg McMuffin? Sausage McGriddle

Egg and cheese It was some good breakfast And yet I detect a hint of regret in Steve's voice More shame Matty, what's your stock? I've got AeroVironment AVAV, one of the leading makers of drones It's a company my team and Supernova

We're talking a lot about We know Facebook made a move this past week to get into the drone business, more of providing global Wi-Fi. But this company is interesting. On the defense side, they're one of the top contractors for drones. Obviously, we know there's a lot of interest in this for the commercial market as well, especially from Amazon. Jeff Bezos, who wants to try to use drones to deliver goods. So, a company I like. It's less than a billion in market cap. I think it's got a lot of upside. Steve? I mean, where will drones logically come into play in the next five years?

I don't see them delivering packages. Is it going to be surveying land? Is it aerial photography? What am I really doing with these drones? Great question. I think the number one thing is going to be two things, imaging and security. So imaging, corporations or major agriculture businesses can use them to sort of do surveys and things like that, or for security reasons. So my question to you, if Steve Broido had a drone, what would he use it for?

Finding Olive Garden restaurant. There it is. He's seeing blood off his eyes. You would just send it out on a Monday morning and have it report back on Friday, right? I would. Jason, what do you got this week? Yeah, this is a company I've been looking into this week. Pretty interesting story.

It's called Chegg. I know it sounds like maybe a bad title for a horror movie, but it's actually a company. Ticker is CHGG. New IPO from August of last year. a company that initially focused on renting mostly, but renting and selling college textbooks. But what they've done from there is they've developed really a tech platform, more or less, to help students essentially from the high school stage all the way throughout the college stage, going from figuring out what college you may want to go to, searching for scholarship opportunities,

sort of helping you understand how the process works. Obviously, the textbook part of it still comes into play here. Also, linking you in through internships when you are either in school or finishing with school. So, it's an interesting company. I like the fact that they're moving over to digital textbooks, which is a higher margin product. Still a founder involved with the company. But the interesting part of this company is the management story here. They have a couple of guys from Activision, Blizzard and Netflix working there, so I'm going to keep looking into it. Steve?

What is the URL? The URL? Is it just cheg.com? I believe if you just Google Chegg, it'll take you where you need to go. You're going to be checking out some textbooks? We're running short on time, so I'm trying to keep this in mind. My question for you will be very simple. Given what we know now about your affinity for Olive Garden,

what do you think about the new Olive Garden logo, Steve? I've not seen it yet, so that is the first place I'm going. His drone hasn't flown over yet. That is correct as well. That is going to do it for this week's show. The show is mixed by Rick Engdahl. Our engineer is Steve Broido. Our producer is Matt Greer.

I'm Chris Hill. Thanks for listening. We'll see you next week.