Motley Fool Money - Motley Fool Money: 01.18.2013

Episode Date: January 18, 2013

Facebook unveils a new search engine.  Intel's profits fall.  And General Electric's earnings rise.  Our analysts discuss those stories and share three stocks on their radar.  Plus, we talk about the Detroit Auto Show with Reuters Detroit Bureau Chief Paul Lienert. Learn more about your ad choices. Visit megaphone.fm/adchoices

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app, which makes it so much easier to stay on track. And you can get unlimited expert help at no extra cost, even on nights and weekends during tax season. Visit turbotax.com to get matched with an expert today, only available with TurboTax full service experts. Everybody needs money. That's why they call it money. From Fool Global Headquarters, this is Motley Fool Money. Welcome to Motley Fool Money. Thanks for being here. I'm your host, Chris Hill, and joining me in studio this week. From Motley Full Inside Value, Joe Mager, from Motley Fool Income Investor, James Early, and for a million-dollar portfolio, Ron Gross. Gentlemen, good to see you as always.

How you do, Chris. Oh, we got a big show. We've got earnings from Intel, GE, and a whole lot of big bank. Thanks. We're going to head to Detroit for a report on the North American International Auto Show. And as always, we've got a few stocks on our radar. But we are going to begin today with big technology. Shares of Intel down Friday morning after reporting fourth quarter earnings. And James, the headline on CNN's website. Intel profits sinks 27 percent on dreadful PC sales. That's not a happy headline. That's not a happy headline. No, it is not. Intel is, it actually is a recommendation of my income investor service, so it doesn't make me any

any happier to see that. In a sense, it's the same news, different quarter to some degree Intel has been bumping down as profit guidance. PC sales are declining now. Kind of your typical lumbering tech giant, it reminds me a little bit. This is sort of an unduly ridiculous analogy, but around here, Chris, we have the C&O Canal, which connects the Chesapeake Bay to basically Lake Erie, and it was built by generations of workers so a horse could pull a boat all the way there, and by the time they finally got done building it, the railroad got invented. So nobody needed this anymore. It's not that extreme with Intel, but they built their whole system around microprocessors. And they got blindsided by the tablets and the phones, and ARM is basically eating their lunch.

In the growth area, there's still a dominant player. Just the growth is where it's at with technology. Joe, what do you think of this? Because, I mean, to James's point, they are the dominant player in the space. They have a lot of cash. And yet, I mean, you look at all of their divisions, chip sales rose only in data center chip sales. all other divisions fell. It's a classic canal microprocessor play.

I think we've all, it's the old story that every investor knows. Yeah, I think James is spot on. And I was a little surprised. Data Center was only up 6% in the year. And this is supposed to be the business that's really kind of lifting these guys up. That's definitely troubling. And Intel spent about $9 billion in acquisitions in 2011. So when you see revenue falling in 2012 by about 1, 2%, that's also troubled.

James, would you call this a value play instead of a growth play at this point? It's riskier. It's definitely riskier. The big question has been, can Intel or how can Intel get some kind of a stake in the tablet market? You know, their chips are great. They just use too much power. They say they're close. But if they do, you know, in five years, Intel could totally dominate ARM. If not, not. You know, it's more of a, it's a binary play. Yeah, I mean, this isn't like a best buy where they're just totally behind the eight ball. There is a real business here, and they do have shots to get in the game. game on mobile. But if you're Qualcomm or Arm Holdings, aren't you looking at Intel maybe for the

first time ever and thinking, oh, you know what? They're not bulletproof. It's like that point in Rocky 4 where the Russian starts bleeding. Intel has a lot of money, though, Chris. I mean, they're like 10 times bigger than ARM. It reminds me a little bit of Netscape Navigator and Internet Explorer. At first, everything was all Netscape Navigator in terms of browsing, and then Internet Explorer just kind of started with like a 2% market share and just muscled them out. Boy, Netscape, Rocky 4, Canal analogy. We are off to a big start here.

General Electric's fourth quarter profits came in higher than expected. Shares up 3% Friday morning. Ron, I think a lot of people think of G.E. for the jet engines, the wind turbines. But GE Capital, the finance arm, is really driving this boat. For a long time, it was driving the boat, and it still has a big piece. It's about a third right now of revenues and operating profits. But they've been making a real concerted effort to pull that back. in and shrink that part of the business. And the industrial side is really doing quite well now.

All the industrial segments turned in good numbers. Profit was actually up 13% if we adjust for some non-operating type earnings like from the pension plan. So they're doing a real good job of shrinking GE. And the strength in the industrial segment perhaps is a nice bellwether for the economy. So good numbers from them. Why is it so embarrassing to be a bank, though? I guess it's part of my question. Obviously during the financial crisis, it was embarrassing. isn't it doing a little better for them? It is, but I think they didn't want to be so heavily reliant on a, you know, a quarter by quarter, or even for whatever time period you want, they wanted to really get back to their

industrial roots. This is a $230 billion company, and I'm not saying that they are like Wall Street banks in the way that Wall Street banks can be pretty opaque in terms of their balance sheet. I don't think it's like that at all. And yet- It is kind of like that, actually. Well, where I was going was, this company seems almost too big to be attractive. to invest in. I'm not just talking about the stock performance, which is just sort of lumbered

along over the last few years, but it really just seems like, I don't know, Ron. Is this something that is at all attractive to you as an investor? You know, it's really kind of the blue chippiest of kind of blue chips, just kind of this bellwether stock. A lot of people used to like it for the dividend, which is still about three and a half percent, let's call it. It got cut back back in the day, 2009, which was a big deal for investors. They were very unhappy to see that, especially those who owned it's solely for the dividend yield. So, you know, it's not a tremendous growth stock or anything, but it's going to lumber along with the economy and the market in general.

And just for perspective, the standard gripe is it's so big and complicated. Nobody has any idea what's going on. True. And I mean, it's following GE. It's kind of company that investment bankers love because, you know, you break it up a little, you put it back together, you break it up, you know, it's a never-ending cycle. On last week's show, we talked about the FAA's inquiry into Boeing's 787 Dreamliner. And in airline parlance, we have an opportunity The Dreamliner has been grounded. It was deemed not safe to fly until the fire risk in the batteries has been resolved. And Joe, this is the first time since 1979 that the FAA has grounded a fleet of commercial aircraft. Yeah. Yeah, I mean, it's definitely a black eye for Boeing. And we talked about this on the show.

But for perspective, only about half of Boeing's revenue comes from commercial airplanes. And within that commercial side, there are a lot of different planes that they service. So it's not like the game is over for them, and that's why the stock hasn't reacted in a very sharp way. That said, I think when you look at the ridiculous delays on the Dreamliner and the poor PR and poor execution with this, that at large, you have to look at this business and definitely question management's capability. Would you fly in a Dreamliner? I would. So pretend you had to go Australia. The standard ticket is $2,000. What would your price be for a Dreamliner?

I would take it. I'd have my wife fly on the 747. pay full fare for a dreamer? I do it for half price. Last week, one of the things you mentioned, Joe, was the fact that right now there are 50 dreamliners that are out there. Of course, they're all on the ground. But there's a backlog of more than 800 that have been ordered. At what point do some of the airlines that have ordered these planes start to go, you know what? Thanks, but no thanks. We're going to talk to the people over at Airbus. Well, the 787 is a huge leap forward in terms of airplanes, so they're

happy to wait. And a way to think of it is, well, it's probably going to take years for them to fill my order. But then, they'll have already figured out all these ginks. eBay's fourth quarter revenue up 18%. The shares this week hit their highest point since 2004. So having just hammered you slightly on Boeing, I will now allow you to take a victory. All right. Yeah. Well, this is a killer quarter. Ebase is firing on all cylinders. When you cut into the numbers, what especially looks good is that on the marketplace side, growth in a number of users has accelerated for six straight quarters. Mobile is booming. They're doing very well with PayPal. A pretty happy Gerald.

Yeah, Ron, to that point, we see a lot of companies that are struggling with mobile, but when you consider the fact that mobile transactions doubled year over year for eBay, it really seems like they're just crushing it. They really are. And I think it's still in its infancy, obviously, mobile transactions. And if they can get out there at this stage and be solid in it, I think that the future looks really, really bright. I was curious, Joe, you still like the stock at these levels? I do. It's not cheap. Definitely not the bargain that it was a year and a half ago, but I'm a happy long-term shareholder. Have you ever bought anything on eBay, Ron? Like bidding for something.

Not just the... Yes. Do you remember wacky pack stickers back in the day? Sure. I'm right. They had like... I'm old. I remember those things. So I bought an uncut poster of wacky pack stickers for my brother-in-law's birthday, which is actually, we're celebrating his birthday today as well. It's 50th birthday. Happy birthday, Joe. Happy birthday. Steve Brodo, our man on the other side of the glass, you have to have bought something on eBay. I bought this man. What is that? This is a radio show. People can't actually see what you're holding up. I remember. It's a little Star Wars Imperial Stormtrooper guy, or he's the, I don't know, I don't remember what his role was. He's in the Death Star. He's got that funny little

bowling hat on. He looks irritated, too. He does look mad. He's got a little gun. He sits in the studio and protects me. So I bought him on eBay. You're not getting that kind of insight on Bloomberg Radio. The funny thing is that's actually not even the oddest thing in his studio. Coming up, what will Facebook's latest service mean for its competitors? Details next. You're listening to Motley Full Money. Welcome back to Motley Full Money.

Chris Hill here in studio with James Early, Joe Mager, and Ron Gross. Guys, this week, Facebook unveiled graph search. And what an elegant name that is. A search engine that works within the first. Facebook ecosystem, not on the web. Ron Gross, some people are saying this is a Google killer. What do you think? I think it is not a Google killer, but I think it's important to say this is in such

its infancy. We don't know what it will turn into. It's interesting in its infancy even to be able to search your social network, favorite restaurants of your friends or friends in certain areas, whatever you know, whatever you want. That's interesting. It's no Google killer. You know, Google is into this a little bit with Google Plus.

and search plus your world, they have, it's called. But, you know, you're going out to the web to search on Google. This is, Facebook is not there yet. But what this could be five or ten years from now, if, you know, they make some improvements, could be really interesting. A lot of it depends on what you tell Facebook. You know, a lot of it's going to depend on the like button. A lot of it's going to depend on what you put into your profile.

I would imagine they're going to start asking you questions to make this more robust, and that could get interesting. Joe, when the event was going on, I had a graph up of various stocks, and you could see Google wasn't getting crushed, but Yelp was. And I think the immediate reaction among investors was, wow, this really drives a stake through the heart of Yelp. But since then Yelp has rebounded, and I don't know. I'm sort of, I agree with what Ron said that this is in its infancy. And it seems like a positive step forward. But it's hard for me. me to get my head around how this is going to be some kind of big either game changer or moneymaker for Facebook. Right. So something like Yelp offers a lot more depth in terms of knowledge. So an example, I searched for Thai restaurants on Facebook, right?

How many of my friends have suggestions or likes for D.C. area Thai restaurants? Not a whole lot. And no offense to my friends, but I wouldn't consider them world-renowned restaurant connoisseur. I've met his friends. You're in there. Now, with Yelp, I bounce over there and I search for Thai restaurants in D.C. And there are over 150 restaurants that come up. Each of them usually has hundreds of reviews.

So there's a lot of depth there that I just don't get from polling a couple of my friends on Facebook. I agree that it's interesting, but I think they're a long way from slaying these individual verticals like a trip advisor or Yelp. What does the graph in the name mean? That's an interesting question. I'm going to get this wrong. But if you kind of graph the way searches can done one person to one person, one person to you and another person, then you to him, you enjoy the transit of property I've heard. Yeah, I see.

I see. You know, you can kind of draw a graph and see all the different interconnections, and they kind of add up, if exponentially may not be the right mathematical term, but, you know, quite quickly. And what's going to be interesting is if there eventually is a button that says, you know, you can search on all your friends data. But here, click this button if you agree to be able to be search on friends of friends. and friends of friends of friends. And then you start really at racking up the number of people. Just to wrap up on Facebook, the stock still trades below where it IPOed. What do you think of the valuation, Ron? Is it interesting or you're still waiting? I would say as a value investor, it's not your, certainly your classic value investment.

But if you suspend that for a moment and think about what potentially Facebook could be five or ten years from now, it might be interesting. Most of the big Wall Street banks reported earnings this week, Bank of America and Citigroup's fourth quarters were somewhat dismal. But Joe, both Morgan Stanley and Goldman Sachs, their stocks hit 52-week highs after some pretty strong fourth quarters. And as a Goldman fan, I know, that you're pretty excited about that. Yes, I am. Yeah, I mean, Goldman's just to zoom in, had a great fourth quarter. Return on equity annualized was around 16%, which is kind of pre-financial crisis levels, which is very nice. But, you know, with these banks, you can't look at individual

quarters. You do need to zoom out. And when you're talking about Morgan Stanley and Goldman, I think that things are headed in the right direction for them. We talk about BVA and City. There are a lot of one-time charges here. By one time, what I really mean is a slew of continuous one-off charges that they're dealing with. I think that countrywide acquisition that Bank of America made, that just gets... I heard that didn't work out. That just gets worse and worse with every passing year.

It does. But I do think these banks are going to be in a lot better position a few years out from now. obviously they're taking their lumps right now, but they are systematically putting away a lot of legal trouble, a lot of bad loans, and they're working their way through this very slowly. And the numbers look terrible as a result right now, but five years out, they're going to look a lot better. The one counterbalance, especially on the consumer end, is Dodd-Frank, which is a complicated piece of legislation that kicks in gradually over time. So you have to ask, if Bank of American City are not doing well now, and this is kind of like a mortgage refinance boom time, what happens when that cut-de-lust goes away? And it gets harder to become a consumer bank. They have to make money the old-fashioned way, and unfortunately they're not that good at that. James, one of the other stories that got a lot of headlines this week, J.P. Morgan Chase also reported earnings, and the earnings seem to take a backseat to the fact that, or the news, that Jamie Diamond, the CEO, had his bonus cut in half by the board of directors. They basically said, look, the buck stocks stops with you. You're the CEO.

He got tagged with the London Whale thing, and his bonus got cut in half. What did you make of that? It's a good start. You know, I think the punishment needs to be a lot more severe. I mean, he's a CEO. He's supposed to have CEO like oversight. He didn't. I think it's good.

I think it's good to punish him, but I think we need to start doing that. He's just got no bonus. And, yeah, it's still millions and millions of dollars. Shares of Dell up more than 15% this week on the news. The company is in talks to go private. James, this is something Michael Dell has thought about in the past. why is the time now? Well, Chris, as we all know, some things are easier to do in private.

It just is that way. You know, you've got fewer owners to appease. Dell is in the process of shifting more from personal computers to kind of business stuff like data storage or whatever. In fact, according to the Wall Street Journal, Dell currently describes itself as, quote, an end-to-in technology solutions provider, which means nothing to me. They want to be IBM. They want to be a lot. That is, right? So to become that, apparently it's easier to do it privately.

We'll see. Evaluation, it could be in the mid-teens. Ron, I think you are. So in 2005, I bought Dell at 36. You'd think I'll be made whole when this is all of a sudden done? Mid-teens is not 36, according to my math, but it's at least better than nothing, right? I'll take it. I'll take whatever I can get.

And finally, guys, in 2008, Subway began offering foot-long sub-sandwiches for $5. It became Subway's most successful promotion ever. that is until this week when a customer in Australia posted a photo on Facebook of one of the footlong subs next to a tape measure that shows that the sub is just, in fact, 11 inches long. What? I know. Now, some people... Jared, what are you doing?

Some people, Joe, would say, well, it's one inch. What difference does one inch make? What do you think? Well, in this case, I think what Subway is doing is wrong. However, in certain circumstances, I think it's okay to stretch truth about an inch. when I was on Match.com and my wife and I met on there, I said that I was 510. I'm really 5.9 and a half or so. And after a couple dates, my wife was like, you know, are you really 510?

Because you look more like 5.9. Does she measure? We didn't get to that point, but I was like, no, no, you round up. I think this finally proves that size does not matter. Can we all agree on that? Steve, what do you make of this story? I thought it was the metric system over there. Over where?

In Australia. What's this guy doing? This is ridiculous. You know, joking aside, if you're McDonald's, you have to be thinking that the quarter pounder is next. You have to be thinking that the next step is someone going into McDonald's down. The measurement police are on a way in the quarter pound. It's pre-cooked weight.

It's hard to measure that, though, right? Well, and again, this is one guy in Australia posting on Facebook. It gets all this buzz on Twitter. I mean, this is where social media just crushes consumer-facing companies. No, all publicity is good publicity. You think this is actually hurting Subway? I don't think so. Do you feel deceived as a Subway customer?

Yes, but I hope my wife doesn't feel. But I don't think we're saying this was intentional. I think it has to do with how each individual franchisor store, I should say, bakes its roles. This is a vast conspiracy. You know, 11, 12, you know. If you're eating a big footlong sub for lunch, maybe you should be eating 11 instead of 12. Ron Gross, James Shirley, Joe Vega, guys. We'll see you later in the show.

Up next, we head to Detroit. for a report on the North American International Auto Show. Stay right here. This is Motley Full Money. Take me riding in the car, car, take me riding in the car. Welcome back to Motley Full Money. I'm Chris Hill. The North American International Auto Show kicked off this week in Detroit,

so we're going to talk cars and the businesses behind them. Paul Leinert has spent his career covering the automotive industry for numerous media outlets. He's currently the Detroit Bureau Chief for Reuters. and he joins me now. Paul, thanks so much for spending a few minutes on Motley Full Money. It's a pleasure, Chris. What is your headline so far for the auto show this year? The game here is green. Of money.

Not green technology? Not this year, surprisingly. Not a lot of hybrids and EVs on the show floor, but, man, are there lots of new luxury cars, including luxury performance cars? Is that a surprise to you? Maybe the biggest surprise is the sheer number of them, probably way more than we expected, almost as if we've completely forgotten that gasoline prices have spiked any number of times over the last couple of years. It's like Detroit sure has a short memory, and so do the manufacturers from out of town who come here for the show. I think there are a lot of people who look at electric cars, hybrids, et cetera,

and the basic mindset they have is, well, that's probably going to be big someday, but in the near future, it's just, it's not going to be all that bad. You're an experience pro. When you look at sort of the near-term future for electric cars and hybrids, what does it look like? You know, Chris, the old joke about electric cars is everybody seems to be as long as it's in his or her neighbor's driveway. I actually just started leasing my first hybrid about a year ago. It's not bad.

I get better mileage than I would have in a normal car, but this whole movement toward green seems to be a great idea whose time has not yet come. I know that over in Europe, there have been proposals in Germany where the government is looking at the way to incentivize electric cars is not so much through tax breaks for consumers to go out and buy one, but more along the lines of building the infrastructure and saying, look, we're not going to give you a tax credit to buy an electric car, but we're going to commit billions of dollars over the next five, 10, 15 years to build the infrastructure, build specials. special lanes, just for electric cars, charging stations, etc. Do you think that's what it's going to take here in the United States for electric cars to really take off? They're doing the same thing in China and doing a similar thing in California. And so far, I haven't seen that spark ignite into a full flame anywhere, if you should. You'll pardon the expression. With hybrids, obviously, infrastructure is not so big an issue because you've got the gasoline or in Europe,

the diesel engine as your generator. But pure electric cars have so many limitations beyond the limited range. As you point out, its lack of infrastructure is another issue. The sheer cost of the darn thing. So it seems to be a number of issues that are going to need to get resolved, only one of which is infrastructure. The other thing that Europe is doing perhaps a disincentive, if you will, is they're just a tax fuel at a ridiculous rate. and that in turn kind of makes electric cars look a little bit more attractive. I know that there are a lot of automakers who are experimenting with hybrids, et cetera, but I am curious because it's a stock.

We talk about a decent amount on this show and at the Motley Fool in general. I'm curious your take on a company like Tesla. You know, I know Elon Musk. I've talked to him any number of times. The guy is a great entrepreneur. He's a visionary. He obviously has struck gold, couple of times with PayPal, obviously with Tesla. He seems to be bucking the trend, at least

in green tech, and specifically automotive green tech, where a lot of other companies seem to be struggling. He seemed to have got it right in, to a lot of people's surprise, including mine. You're listening to Motley Full Money talking with Paul Leinert, Detroit Bureau Chief for Reuters, as we analyzed the Big Auto Show in Detroit this week. Ford and General Motors, to the extent that there is a clash of the Titans in the United States. It seems to be those two companies. I'm curious what you see when you look at them competing with one another. What stands out to you? Does one at this point in time have the edge over the other? I wouldn't give either company the edge. They both have. Each has its own strengths and each has its own weaknesses.

And maybe the common weakness at both companies is there probably still is too much old things. thinking and old processes, if you will. Both companies, each company takes a different approach to product and product development. The one area where you're going to see them clashing at the Detroit show is in big pickup trucks. General Motors is just getting ready to roll out its new Chevrolet Silverado at GMC Sierra. Ford's new F-series is still a year away from production, but they decided they could not let the GM challenge go unanswered. So they're showing a concept for an Atlas. So once again, they're going head to head right on the floor of Kobo Hall.

I know that obviously trucks are big sellers, and from a bottom line standpoint, they're high margin items. But is there something that I guess, and I'm thinking primarily with investors in mind, when you're looking to sort of judge the health of truck sales, Is there anything in particular you look at? General Motors actually, when they first pulled the wraps off these trucks last month, and that was, what percentage of your full-size pickup trucks sell for $35,000 and up?

The answer just shocked me in both cases. It was two-thirds. Wow. Thirds of these trucks are going out the door for more than $35,000. Can you imagine the margins on those things? They've got to be enormous. I would think so, because it doesn't cost a half. of a lot more to build a $40,000 truck than it does to build a $20,000 truck.

One of the things that gets attention every year at the Auto Show beyond sort of the big splashy rollout of cars and trucks are the technologies, the gadgets within the cars. In some cases, it could just be a concept car, but I'm curious at this year's Auto Show in Detroit, Was there one new technology that really caught your attention? Not a new technology per se, but maybe the most intriguing little technical corner to me was a corner of the BMW stand, where they have their new I-series cars on display, and this is a whole new, if you will, a sub-brand for BMW. They're green car brand, so they have hybrids and pure electric, say backs, large sports cars.

But what's neat about this is they're developing a whole package. not just about the power drain or the styling. They're developing apps and digital services. The whole green tech vision that they're developing. It's starting in Europe, but they're going to roll these things into North America, too. So they're kind of teasing them with North American potential customers here at the auto shows. Well worth taking a closer look at if they come to your town. One of my colleagues here at the Motley Fool did a test drive of Tesla.

and one of the things that caught my attention, he did a whole video around it, and what caught my attention was the fact that built into the car was a 17-inch screen. It was essentially like having an iPad built into the dashboard. And I'm just curious, given all your experience and given the last few years where one of the big issues around driver safety has been texting and driving, those seem to be almost at odds with one another, On the one hand, we don't want people texting and driving. On the other hand, at least one automaker is building more and more complicated and larger gadgets within the car.

Where do you see all of this going? And Chris, I think you just nailed kind of the crux. That 17-inch touchscreen display on the center console of the Tesla Model S is really fascinated testers. I myself drive maybe 50, so I get to see and play with a lot of the new hardware. I've played with the latest versions of Ford's My Touch System, Cadillax Q, their infotainment system, touchscreen. All of them have serious issues with them. Call me an old dog, but I like the feel of a rotary knob or something I can latch on to. You know, that gives me some kind of sensory feedback.

Cadillac's trying to address that issue with so-called haptic feedback. In other words, you get a little touch under your fingers. when you hit the control. My big issue is you still have to take your eyes off the road for too long to fiddle with these things. My gut feeling is ultimately we're going to have to go to voice recognition to make these systems work effectively without jeopardizing the driver and the passengers. You're listening to Motley Full Money talking with Paul Liner, automotive industry pro

for Reuters and others, but right now for Reuters. I know that you have experience in China. You're well-versed in that market. And as investors, when we look at China and the automotive landscape, GM and its partner over there have a huge lead, particularly relative to Ford. What are some of the other players in that market that investors should keep their eyes on? Volkswagen, absolutely. They are still the market leader. I would say Volkswagen and GM are probably the two foreign powers over there, and they're both partnered with some very powerful local partners.

partners, but Volkswagen's bringing everything in its arsenal to China. The Audi brand's been established there for decades. Volkswagen's bringing its cheaper brands, not with the China, particularly Scoda, their Czech affiliate. But they're also bringing the upscale stuff, too, like Bentley. So Volkswagen, more importantly, is bringing all of its hybrid and green car technology to its local partners, which include Shanghai Auto and First Auto up in the north. So if you see the Chinese begin to pull out in front of the other guys in terms of application of electric vehicle technology and hybrids, it's in large part because they're foreign partners. Partners like GM and Volkswagen have been working with them to develop that and get them up to speed. You mentioned that you test drive 50 to 75 cars a year.

I am curious, though, what was the first car you ever owned? Are we talking new or used? My very first new car, I think I was 21 years old, was an American Motors Gremlin. Oh, my. And it was appropriately named. I believe it was John Stewart who made the joke that the Gremlin was invented so that the Pinto wouldn't feel as bad about itself. The industry legend was that the designer, a guy named Dick Teague, drew it on the back of an air-sick bag, also appropriate. I know right now you are the Bureau Chief for Reuters,

but one of your jobs in the past was co-authoring an automotive column with your wife entitled He Drove She Drove. And we're still married. And you're still married. I was going to say, for all of the jokes that have been made over the years about men and women drivers and sort of husbands and wives driving, I mean, what's the secret to? your success because I'll just speak for myself. I know that when I'm driving and my wife is in the car, let's just say she's not always thrilled with how I'm driving for different reasons when the

opposite is at play. That's also the case. I mean, give me some tips here. I will leave you with two brief thoughts in this regard. Number one, Anita Leinard is the only journalist I'm aware of who has ever test driven a car using a pot of meatballs in the back seat as a... Now, wait a minute, hold on. What was she testing and what was the car? Well, I want to say it was a Lexus of some kind that she was testing the smoothness of the ride. Let's wrap up with a round of buy-seller hold. Tech companies like Google and research in motion have been working on this. Buy-seller-hold driverless cars. Hold. Why is that?

Not ready for prime time. Works for me. This is something you don't see as much of these days. Buy seller hold the future of manual transmission. It's got a relationship with most of the major automakers. Buy seller hold the future of Sirius XM satellite radio. Buy, although I must admit. I think that's an indication right there, isn't it?

Yes, I'm a cheap guy. What can I say? But you know what? I carry my iPod with me everywhere, so I pretty much got that covered. This is something that some of the newer models can do for you. Buy-seller Hold, Paul Linert's parallel parking abilities. Buy, bye, bye.

Now, is that something where you have a slight edge over your wife, Anita? I'm not going to go there, Chris. I want to stay married for 36 years as opposed to the current 35. And finally, you've covered the auto industry your entire career, buy-seller hold, by the end of this century, flying cars. Oh, come, I'm giving you 87 more years, Paul. I'm a huge fan of science fiction. If you ask me about hydrogen, I'm completely the opposite, flying. He is one of the best in the business at covering the automotive industry.

He is the Detroit Bureau Chief for Reuters. Paul Liner, thanks so much for being here. My pleasure. 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 ourselves stocks based solely on what you hear.

I'm Chris Hill, joining me in studio once again, Joe Magar, James Early, and Ron Gross. Guys, before we get to the stocks on our radar, On the other side of the glass with our man, Steve Brunner, today, special guest, Major Mitch Rubinstein, coming up from Marine Corps Base Quantico to hang out at the Fool today. Thank you, sir. He also blogs for us on the full blog network, which means, among other things, he's an incredibly productive person. He's contributing way more. He has no downtime. He has no downtime whatsoever.

Let's get to the stocks on our radar. Ron, you're up first, and Steve will hit you with a question. All right, Steve. I got Regis Corp, RGS, an operator and franchisible. of hair salons, a very mismanaged company, actually. And so this is an activist play. An activist investor came in, took three board seats, trying to sell off some underperforming assets, turn the business around, replaced management.

If they can get the job done, it looks really undervalued here. Steve, question for Ron about Regis? Does every hair salon have to expand into the spa services, all these bells and whistle? Can you just get your haircut or do it? I need my nails done and all sorts of stuff. Sure. Well, these guys are like super cuts. and master cuts, so it sounds like they're perfect for you.

Yeah. Where do you get your haircuts, Steve? Haircutter, usually. All right. So this is right up here, out of it. James Early, your stock? Chris, I'm going with Tech Stainer. This is a stock I've loved often.

I've loved consistently. I've mentioned my love for it off and on here. The ticker is TGH. This is an income investor recommendation. They lease intermodal shipping containers. These are these big metal boxes you see on boats or on trains and on trucks. And this leasing business has been growing at about two and a half times a rate of GDP. It just makes a lot of sense.

They're the big dog in industry, so it makes it easier for them to ship containers back and forth without having to move empty containers back and forth. You can ship full loads if you have a bigger network worldwide. And the thing I really like about is these things double as modular homes after they're used to ship things. People buy them for a couple thousand bucks. Ride the rails.

They're only 330 square feet, but you can combine them together. It's kind of like this eco-recycling motif. Steve, question for James? Is it even possible to compete in this space? It sounds awfully complicated and large. There are a few big players, and then a lot of the shipping companies own their own stuff. But if you ship back and forth between the U.S. and China, you're basically shipping full containers from China to the U.S.,

and you have to ship the empty containers back to China, which is costly. So if you can plug into a bigger network, it's more cost-effective. Now, Steve, sorry, when you were asking about competition in the space, were you talking about the intermodal transportation space or the hobo? The hovo, well, actually, intermodal, but hobo is a very interesting space. It's a cut-throat. It's fragmented, though, the hovo industry. Joe Mager, we got a minute left.

Your stock this week. It'll take 30 seconds to that. Amazon, I'm guessing we've all heard of it. They report next week. Specifically, what I'm looking out for are gross margins and volume. If they move volume of around 40%, I'd be very happy with that. And if they post gross margins near 26% again, which they did last quarter, it was a big surprise. a big surprise. I would be very happy with that. I think that might happen because they've

been expanding their ad network recently. I think that's a great opportunity for them and definitely high margin, much higher margin than the retail model has been. Steve? Who came up with Amazon Prime and can we hire that guy? Because that thing is amazing. Yes, it is. I assume that was Jeff Bezos or one of the guys at the company. But part of the inspiration for Prime actually was the success at Costco. And they basically ripped that off from them. All right. Ron Gross. James Early. Joe Meager. Guys, thanks for being here. Thanks for our special guest this week. Paul Linerd from the Detroit Bureau of Reuters. That's it for this edition of Motley Full Money. Our engineer is Steve Broido. Our producer is Matt Creer. I'm Chris Hill. Thanks for listening.

We'll see you next week.