Motley Fool Money - Motley Fool Money: 04.26.2013

Episode Date: April 24, 2013

Apple reports big earnings but fails to impress investors.  Netflix surprises and its stock soars.  And a fake tweet causes a flash crash.   Our analysts discuss those stories and weigh in on the latest earnings from Coach, Yum! Brands, and Procter & Gamble.   And CNBC host Becky Quick previews the Berkshire Hathaway annual meeting.     Learn more about your ad choices. Visit megaphone.fm/adchoices

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Welcome to Motley Fool Money. Thanks for being here. I'm your host Chris Hill. Joining me in studio this week for Motley Fool Income Investor, James Early, and for a million-dollar portfolio, Charlie Travers, and Ron Gross. Good to see you, gentlemen. Good to see you, Chris. Earnings Paloza continues.

We've got the latest results from Apple, Coach, Procter & Gamble, Netflix and more. CNBC host, Becky Quick, is our guest this week. We'll get her thoughts on the upcoming Berkshire Hathaway annual meeting. And as always, we've got a few stocks on our radar. Before we begin, I should mention we are taping the show a little early this week, just as public companies have annual meetings. We are having our annual meeting for the Motley Fool this week. So if huge news breaks late on Thursday or Friday, and we're not talking about it, that's why. Let's start with Apple. Second quarter results had some big. numbers, Ron. They sold 37.4 million iPhones, 19.5 million iPads, posted a profit of 9.5 billion,

but profit was down. Margins are getting squeezed. Well, there we go. Next company. No, yeah, exactly right. So they produced 12.5 billion dollars of cash flow in one quarter. That's an amazing feat. That's ridiculous. However, as investors like to look at guidance and expectations. They did beat expectations, which were nice, but next quarter's guidance is weak. Margins came in weak, which has been a constant fear of investors about Apple. And they've put off when the next new product is coming. Some had hoped for a late summer new product. Now we're looking at September and perhaps then again into 2014 for one or two more, which nobody, people get impatient. They don't like to see that. So, you know, being a consumer electronics product

company is, it's not easy because you constantly have to come up with the next big thing. If you believe in a post Steve Jobs world, Apple can do that. I think the stock is a streaming buy. If you have questions, then, you know, as we've seen, the stock sells off and people stay away. I'm a big believer, and I think stock is very cheap here. Let me follow that, Ron. This is the thought I keep coming back to. Just what more worlds are left for Timothy to conquer here? Timothy? It's sort of like the rental car has been handed back to him with the gas run out,

the oil needs to be changed, and he needs a tire rotation. I mean, it's got good products, but what's next? So I think there's a lot of things that are next that can build on the ecosystem, because the ecosystem is what differentiates them from just your everyday electronics company. But whether it's the TV, which will come, I believe, or the watch, which some people are excited about, some people aren't, or the iPhone 5S and then the iPhone 6. the cheaper iPhone went to China.

There's many things that they can do. Another big part of the story is that they finally agreed to do some things with their cash and increase their dividend, increase their stock buyback a lot. Does that signal desperation? I think, you know, before they reported, it's interesting. I say, you know, Apple's not the kind of company that is just going to give the people what they want and announce some stuff with their cash just to appease people because they're having a bad quarter.

But then they went and did this. Despite you. Despite me. I do believe they did it because they wanted to do it and they thought it was the right thing. and they had Einhorn breathing down their neck. I do think this gets value investors more interested. Income investors like yourself, more interested, creates a new market for the stock.

I'm a believer. Charlie, speaking of big numbers, $50 billion additional dollars going to a share buyback program, it was just over a year ago, you on our daily podcast, Market Foolery, you sort of saw this coming. Yes, so when they first announced they're going to buy back stock,

and initiate a dividend. This is March 2012. How do you guys know? Remember this? I went back to the archives. They are all available online. And I gave it a listen. A little something called research, change.

I said at the time that we have to watch Apple and make sure that they maintain their consumer focus and do not start pandering to Wall Street. And I think increasingly they are starting to do the latter. And the story here is becoming much more about financial engineering and an appropriate capital structure on the balance sheet than it is about innovation in the products. and I think they're losing their focus a little bit. That said, I'd never object to buying back stock when it's cheap or increasing a dividend if you've got the cash flow to do it. But I think they've lost control of the story. What washed up has been? I won't necessarily go that far.

High-tech consumer products company, not, you know, it's a large-cap consumer product somebody, not your growth story of old. Yeah. It's something different now. But when you look at how much they're paying out in dividends as a long-term. time Microsoft shareholder, I'm not anymore, but for a long time I was. This looks a little bit like Microsoft. Now it's more of a value play, it's more of a dividend play. From an investing thesis standpoint, is that the right way to look at Apple today? It's close. It does have a lot of, you know, that feel to it, of, you know, this dividend

paying large cap stock with an amazing balance sheet that produces gobs of cash flow. If they're going to keep declining that cash flow quarter after quarter, I, Who would want to own that stock? It's not priced for that. It is priced for some growth, but not astronomical growth. Procter & Gamble's third quarter profits were up 6% from a year ago. Not a bad quarter, James, but they did lower guidance going into the next quarter. And as we see often guidance often trumps results. That's true, Chris. Procter & Gamble here is kind of like a celebrity who's been on drugs for all this time. And then it finally gets off the drugs, but then people wonder if he's back on the drugs again.

It's had all these issues. These results were okay, but they don't show that Procter & Gamble has ceased struggling long term. Procter & Gamble issue disappointing guidance based on higher marketing spend, and that's going to weigh on them. Nothing was really that complicated, but the question is, can they get this thing moving? It takes a long time to get such a big ship turnaround. I know that you are a fan of the CEO at Procter & Gamble, and it seemed like for a while anyway, they were methodically becoming more focused shedding some of their... divisions. Do you feel like they've gotten away from that? No, they're still doing that.

You know, it's sort of like Unilever did maybe six or seven years ago. You know, they were too spread out and they really focused. PNG is doing the same thing, taking a page out of that playbook. It just takes a long time. And there's no guarantee. This is a competitive space. P&G is priced at the upper end of it. You know, they're betting a lot on these single serve laundry pod. That's all I seem to hear about when I look at their results. It's a huge market. It's little packages. You know, you don't eat them. You just put them in the washing machine and then they dissolve. It's just, it's just, they're great, I guess. Who knew I was doing it wrong? So, yeah, it's going to take time. This is a multi-year thing. This is not a single quarter thing.

First quarter profits for young brands fell 26 percent. Overall, revenue was down as well. And yet, Charlie's shares were up on the results. Why? What's going on? I really called this one wrong. I thought the market was going to hammer them just because the market tends to focus on short-term results. And we were seeing sort of this disappointing guidance coming out of China. It's been absolutely awful for them since December in China, which is a business that accounts for half of their profits. So it's a big deal, even though we associate KFC and Taco Bell as all American brands. Same store sales in China were down 20%. They had some concerns over chicken suppliers, and then it turned into another avian flu scare more recently. And they even said

same store sales in the month of April are going to be down around 30 percent. And I thought that would just absolutely crush the stock. But they did, you know, I think a good job of managing investor expectations. They said during the 2005 bird flu scare that their sales were hurt for about three months before finally rebounding. They said this year they expect to turn positive again once we get out into Q4. We'll see what happens. I'm a little more reserved about that than management is, but I think they know the business better than I do. I was just going to say, do you think that they feel like the worst is behind them in China? I think they are probably saying they're at the bottom of the worst and hope that when they get into May and June, it turns around.

Would you eat at a KFC in China? Absolutely, because I think the source is more at risk if you are a poultry worker than someone eating at a restaurant. Netflix added more than 3 million subscribers in the first quarter and shares were up 20% on Tuesday. Ron, this stock is a freight train. It has more than doubled in 2013 alone. Yeah, it's pretty impressive. I've been a longtime subscriber of Netflix, but I've never been a fan of the stock. Not necessarily because it was a valuation call, but I couldn't see into the future far enough to really figure out where they were going.

And now it seems like they're actually recreating themselves. They're not just a, certainly not a DVD company anymore. And now they're not just a streaming company, but now they're a content company going after the likes of an HBO type model. I don't know where that shakes out. I don't know if one or two good shows makes them this amazing content company or not. But I think they are doing really interesting things, able to increase the subscriber count. I mean, that's great. I think they're going to have to raise prices at some point.

I mean, this is an expensive business to run. They don't necessarily have the balance sheet to do that. I think they're going to have to raise prices. I don't know how elastic, how consumers will respond to that. It will be interesting to see if a dollar two or three per month makes a difference. So I think the company is doing really great things. As far as the stock goes, I still can't figure it out. It seems like that is the Achilles Hill, though, the whole notion of raising prices.

Obviously, they had the debacle a year and a half ago or so when they tried to do that. But there was a survey out this week from a research firm that said two-thirds of subscribers said, hey, if the fees go up, we're going to leave. Charlie, we've talked about this battle for the living room before. When you look across the landscape and you've got obviously Netflix and Hulu, but even Amazon with their prime offering, that sort of thing, it seems like one of those situations where no matter what happens, it seems like it's going to be a win for the consumers. Oh, it's a total win for the consumers. And you have more choices than ever to watch what you want, when you want. and because of that, I think this is why we are seeing a strategic shift in Netflix's direction that Ron referenced.

I think being a pure streaming provider of syndicated content that multiple providers can put into your living room is a no-moat, no-margin business in the long run. And that's why we're seeing them create their own exclusive content, because that's the only way they have something that's worth paying for that you can't get somewhere else. The question is, is the content business great shakes itself? It's a tough business. It's also a tough business. All your cash up front for your development and paying the actors, and then you have an uncertain return once it goes live. So, Ron, safe to say that if you weren't a fan of the stock in the 90s, given the run-up its head, it's not something you're rushing out to buy right now. As I said, I think I like what they're doing.

They're doing some really interesting stuff, and they've put some of the problems of the past behind them, but I can't see clear enough into the future to make the bet. Coming up, we've got an early frontrunner for corporate partnership of the year. You're listening to 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 it, so don't buy ourselves stocks based solely on what you hear. Welcome back to Motley Full Money, Chris Hill here in studio with James Early, Charlie Travers, and Ron Gross.

Some unexpected drama on Tuesday afternoon when the Dow suddenly dropped more than 150 points. The Twitter account belonging to the Associated Press was and a fake tweet was posted about an attack on the White House. Ron, obviously, things got sorted out pretty quickly. The Dow recovered. It ended up in the plus column for the day. But this seems like one of those things that indicates computers might have a little bit too much trading control. That's true.

This brings up a lot of bigger picture issues about cybersecurity and cyberterrorism. That, quite frankly, I think, is a little bit scary. It was just a seven-minute issue or eight-minute issue in this particular case, but it had the potential to be much bigger. And yes, computers, a lot of the drop was driven by computers that actually go out and search the internet and search press releases for certain bits of news and then trade on it, and it causes these so-called flash crashes. It's my hope that individual investors like us wouldn't even know that that happened because they're not sitting in front of their computer screen watching the market tick up and down at any given moment. and it was kind of just a non-event for folks like us. But, you know, for traders out there, it's a big deal.

It serves them right. I think the computer people. I think we need to make an algorithm that pounces on fake tweet-induced flash crashes. Then we could profit. So more computers. When you say weed, you mean like us? You and me, right? Shares of coach up 10% on Tuesday after third quarter profits were up. The company also increased the dividend by 13%.

It seems like this company's bouncing back a little bit, or at least the stock is. Right. And I think the perception of the company is reversing as well. The stock crashed from in the high 70s down into the high 40s over fears that competitors like Michael Coors were going to start eating into their North American handbag market share, which has really been their core business for a long time. As it turns out, the coach brand is a lot more durable than the skeptics would have thought. Their earnings were up 10%. As you mentioned, they hiked the dividend. I like all that.

And China sales were up 40%. So as we look out over what coach is doing, this is really a global fashion brand. They've had a lot of success in Japan and China. They are just now getting their feet wet in Europe, Latin America, in the Middle East. So I think they have years of growth ahead of them. Leather suspenders, did they make this yet? Belts and wallets. Okay.

Hang on, James. They'll get there. Sure not. No time. Waste management's first quarter earnings were kind of a mixed bag. But James, I'm assuming there was some good news in there because shares hit their highest point since the 1999. Yeah, you know, I'm not a chart guy, Chris, but this, if you look at the chart for waste

management, it's just struggled to hit 40 bucks, 40 bucks over and over and over, and it's pretty much there again, which is good. This is a slow recovery we're going to see here. It sort of proxies the U.S. economy, in my mind. Trash volumes were down after the real estate bubble of crash. Construction generates trash. They're getting back waste management raised their tipping fees for other people to use their landfills like 5 to 7%, which is a positive sign because margins had been under pressure before.

Not a sexy story. It's not a sexy stock, but it's a very consistent company that I still feel is undervalued for the long haul. Before we get to the stocks on our radar, guys, after an exhausting day of sitting on the couch and fighting the forces of evil in the video universe of Call of Duty, a guy or gal can work up one heck of an appetite, and fortunately help has arrived. Microsoft and Pizza Hut have teamed up to launch a new, your pizza app so that gamers can order a pizza directly from their Xbox consoles and have it delivered to their home. Yes, you can also get wings and breadsticks, and there's a 15% discount

being offered through May 6th. Genius. It is genius. Charlie, you're an Xbox owner. Can we count on you to do a little research on behalf of the show? I can promise on behalf of the show because I personally have no interest whatsoever. Yeah, right? In trying this out because I am an Xbox live member.

I watch a lot of video, play some games. So I will test this out because I think it's more convenient than getting on my laptop and making an order. It would seem like the same demographic, right? Right. You know, just the same kind of guy sitting playing video games wants a pizza. All kidding aside, this seems like it is nothing but upside for Pizza Hut. It seems like just a total win, no downside whatsoever for that company. Total incremental revenue, yeah.

We can start a business, same idea, except we actually pick your lock and come in and feed you the pizza. You don't even have to get up. You do nothing at all. I'm in. That sounds labor intensive. All right. In the time we have left, let's get to the stocks on our radar. Ron, Gross, you are up first.

Looking at dynamic materials, tick a symbol, boom, B-O-O-O-M. Really? Yeah, that's the only reason I like it. That's strong. They report next week. We actually own this in a million-dollar portfolio. We have it on hold right now, but I really love the company. I need to see companies increase capital spending, industrial output increasing,

and that could get me really interested in the stock once again. So they make explosives? They make like metalwork. I'm just basing that off the ticker. They use explosives to weld metal together. for things like shipbuilding or the energy industry oil and gas pipelines. It creates a very strong bond that doesn't corrode. This sounds like the kind of company a really smart 12-year-old boy would come up with.

No, no, no, no. Let's not use regular welding. What if we used explosives? James, what's your stuff? GenTechs, G-N-T-X is the ticker. These guys make auto-dimming rear-view mirrors. This is an income investor recommendation, excuse me, and a Motley Fool Pro recommendation, I believe.

These guys have basically the bulk, almost all. the market for this. Auto-dimming rearview mirrors are increasingly the standard. I think 20-30 percent now. If cars have them, it's going to be 40, 50 percent in another couple of years, and they're just growing, growing, growing, and they're just growing, growing, so simple business, but I like it. They pay a nice dividend, had good earnings, but I still see upside.

Do you have that on your car? I do have that on my car. I think you have the ability to turn it off if you don't want it to auto-dim, but it almost, does it really matter? Does it help? It saves you work, right? You don't have to flip the little thing. Oh, yeah, it's true.

I forgot about the little thing. You forgot about flipping the thing. It's been so long, hasn't it? That's right. Yeah, nice. He's too busy texting while driving. Charlie Travers, what's your stock? Western Union, ticker is WU. They are the global leader in country-to-country money transfer. The stock is cheap, trading it eight times trailing earnings, and you get a yield over 3%, which I like as well. I think the market is concerned about technology disrupting their business.

I don't think that's the case. I think they are working with banks and mobile operators around the world to keep on the technology curve and not be disintermediated. And what kind of pizza are you? going to order this weekend when you're testing the new Create Your Pizza Xbox. I am a large, deep dish pepperoni lovers guy from Pizza Hut. All right. Ron Gross, James Early, Charlie Travers. Guys, thanks for

being here. Oh, that was a time when I would call it love if I got me a gig for 50 bucks. Coming up, CNBC host Becky Quick will have a preview of the upcoming Berkshire Hathaway annual meeting. Stay right here. You're listening to Motley Full Money.

Pounds. Dollar. Million a pound. Pound. Welcome back to Motley Fool Money. I'm Chris Hill. On May 4th, tens of thousands of investors will descend upon Omaha, Nebraska for the Berkshire Hathaway Annual Meeting, the highlight of which will be the Q&A session with Warren Buffett and Charlie Munger. And once again, one of the moderators for that session is our guest this week. She's one of the hosts of CNBC's Squawk Box. Becky Quick, could you talk with you again? Hey, Chris, it's great to be here with you. Two years ago, when you and I spoke, the big question going into the Berkshire Hathaway meeting centered around David Sokel, Warren Buffett's longtime lieutenant, who resigned suddenly. And that seems like a distant memory now, particularly when you consider what a great past 12 months it's been for Berkshire Hathaway. The shares have performed quite well over the last year. When you prepare to head to Omaha, what do you think is the big question going into this year's annual meeting. You know, Chris, I've been thinking about that because I'm just getting to the point

where I really start preparing and thinking about what's happened over the last year and trying to figure out what the most important questions are to be asked on that panel. And I think the biggest has to be the Heinz acquisition. This was just announced a few months ago. It's a $23 billion acquisition. And even though we're used to seeing big acquisitions coming from Buffett and Munger, this is a biggie and this is a different one because this time he teamed up with private equity, 3G. His friend Georgie Paul is there. This is a really not a traditional

Buffett acquisition. Normally, they would never go in with partners in the past. They've talked about how they don't like private equity and they don't like how they load companies up with debt. This is different on a lot of levels. And I think people probably have some questions as to whether Buffett is changing his style. So I think there are going to be a lot of questions that focus around that. And just try and get at what he sees in Heinz, why he would do a deal that's so out of

character for him. It also seems like the Heinz acquisition has people engaging in a greater level of speculation about what's going to be next. Buffett is referring on a pretty regular basis about his elephant gun. He's looking to make more acquisitions. And even though the Burlington Northern acquisition was a larger one just in terms of, you know, the billions of dollars involved, it seems like the Heinz one has people now looking at sort of Heinz-like entities. albeit smaller ones, and just thinking in terms of like consumer brands, family owned, that sort of thing, you know, a company in this area, McCormick, the spice company, gets floated from time to time. Do you think that when Buffett thinks about his next acquisition, do you think that the Heinz acquisition essentially is more of a roadmap as to where he's likely to go next? You know, that's a really good question.

We've been asking ourselves the same thing, just because it was out of character. And I have to say, like, that parlor game of trying to figure out who next, the dynamics changed so drastically the minute that Heinz press release came out. Because consumer products, everybody knows that he likes things like this, but it certainly changes just the perspective of where he may be coming, what he might be doing. And the idea that if he could partner up, well, that changes the dynamomics a lot. You're right about the elephant gun. He mentions that every time we talk to him, particularly about acquisitions, he mentioned it when we talked to on the Day of the Heinz acquisition, again, that it's reloaded and ready to go already.

You know, they've got $20, 30 billion in cash on hand that they can dole out at any point because the insurance businesses at Berkshire kick off just a massive amount of cash float. They have to find something to do with that. In the past, it's been easy to watch where he was tracking things in the stock market. You know, IBM was one of their big recent purchases, or the big recent purchases, where they bought a massive stake in IBM. But this really made people sit down and say, huh, maybe we need to refigure things. I don't know what the answer is, but we're certainly hoping we'll find out at the Berkshire Annual Meeting.

I'm not going to suggest that he's going to go out and buy a large Wall Street bank, but it does also seem one of my colleagues who's reminding me of this, that Warren Buffett has a pretty significant interest in big Wall Street banks, particularly Wells Fargo among them. What do you think he sees in the banks that, because frankly, a lot of individual investors look at Wall Street banks and say, you know what, I'm not interested because there's a whole part of that business that I don't really understand. I can't really wrap my head around.

Is there something that Buffett sees that others don't, or is part of it that he's Warren Buffett and in some cases he's getting a better deal than the average investor on the street can get? I think it's multiple answers on that. First of all, in terms of actually buying another Wall Street bank, I think he would take huge issue with that. He would say no way because of his experience with Solomon Brothers. That was a miserable experience for him.

He had to spend a massive amount of his time in New York City trying to get the regulators to not take the entire bank down. He had to go to Congress and testify. That was a really difficult period, and they made it through, and people now look at that as the textbook case for how you go ahead and admit a mistake and try and, not have the entire firm pay for the bad actions of a few bad apples. But that was a really difficult time. This is a man who likes to sleep in Omaha in his own bed every night. So I don't

see him doing anything that's going to be putting him in a position of jumping back in. Now, he did get involved with Goldman Sachs during the financial crisis. Since then, he's also taken on that stake in Bank of America. And the Bank of America stake, that's a situation, which is the latter of the reasons that you just pointed out, where he got a better deal than anybody else was going to be able to get with preferred shares and warrants that were offered in all of this. So that was a different deal. When you look at Wells Fargo, I think he would tell you that that's not a Wall Street bank. I think you would say that that's very different because this is a bank that's heavily focused

on mortgages. It's based out in California. It's not based here. So I think when you talk about Wall Street banks or when you talk about the financials, you probably have to separate them into categories. And in terms of taking an operating stake in a massive Wall Street firm, I don't see him ever doing that. You're listening to Motley Full Money talking with Becky Quick from CnBC about the upcoming Berkshire Hathaway annual meeting. One of the questions that Warren Buffett was asked during that

very lengthy Q&A session that happens every year. Last year he was asked about succession planning. And in his annual letter this year, he in particular called out the great performance, investment performance of Todd Combs, Ted Wechler. Do you think, and I'm again going to ask you to play Mind Reader here. Do you think that he has the transition planned and he's just keeping it to himself or do you think that he is still working it out in his own head? You know, I don't know. I will say that he's been pretty straightforward about the idea that Todd and Ted have done a great job. And when you talk succession with Warren Buffett, you have to split up the jobs that he does. One is to be the CEO of the 80 or show businesses that

make up the conglomerate that is Berkshire Hathaway. The other is to take all the cash that's kicked off by the insurance companies and find ways to reinvest that money and make the most for the shareholders out of that. And Todd and Ted have been there investing, so they'd be following along the lines of the half of his job that is to take all that money and find ways to invest it. He has really, I think, been incredibly impressed with the job that both of them have done, not only the job both of them have done, but the way they've worked together. So I think he's been incredibly happy, and he proved that. He talked about how he was going to be giving them each additional money this year

to put into giving them more money to invest because they've done such a great job. Part of the way they work together, he even set it up that way, that their compensation, part of their compensation comes from how the other one performs as well. So he set up this team partnership, and I think that that has really worked well. I think Todd and Ted really like each other, and I think they all work together. I know they go to lunch often. every week, all of them go together to lunch. And I think that's just part of the camaraderie. Warren has talked an awful lot in the past about his partnership with Charlie Munger.

They've always used each other as sounding boards, and I think it's his idea that when you surround yourself with other like-minded people and when you can use them as a sounding board, that you tend to get the best results. Now, one of the new features at this year's annual meeting, apparently Warren Buffett is is now part of the health craze because one of the new features is the 5K race. And I don't know if you saw the official statement, but announcing the race, Warren Buffett was quoted as saying, the race will be the perfect compliment to the Seas Candies, Dilley Bar and Cherry Coke. Everyone will enjoy while here.

I'm challenging all of our managers to participate. I'm anxious to see who the fastest person in our Berkshire Hathaway family is. First of all, I love that he's linking candy, ice cream, and cherry. Coke with a race, just the notion that people would load up on all of that sugar and then hit the starting line. But I have to ask, are you and your colleague, Andrew Ross Sorkin, going to be participating? No way. No way. I've already been trying because exactly what he did in that letter, where he pointed

out the times that some of his board members have run marathons. You know, Steve Burke's on the board. He pointed out that he's run an incredibly fast marathon. I forget what it is. I think Sue Decker's run a marathon. on when he starts naming times, forget it, you can count me out. I am not going to be involved in that 5K. But it is funny.

This is the first time they're doing this 5K race. This time it's on the Sunday. The annual meeting takes place on Saturday. But as you know, the entire weekend is this big Lala-Palooza, that 40,000-plus Berkshire Hathaway's shareholders descend on Omaha. And it's got a real party atmosphere to it. It's different than most shareholder meetings. They have a cocktail party at Borsheims, the jewelry store there,

They have a barbecue at the Nebraska Furniture Mart. So there are these series of events that are all around it that are designed to try and get people in the mood. Shareholders get a discount when they shop at any of the local Berkshire Hathaway operations, like at Borsheims or at the Nebraska Furniture Mart. This is the newest one is the Brooks Athletic Shoes. And I guess Brooks presented for the first time at the annual meeting last year. They showed up and displayed there, and they sold something like 150,000 pairs of shoes last year. Wow.

So this time they're tying it in with this 5K race on Sunday morning. And again, I'm going out there for five days, and you wouldn't believe the timetables that you keep where you're up at 4 o'clock in the morning and you're still running at midnight. So no, I am definitely not doing 5K race, especially because I don't want to be counted on my score. I haven't ever show up anywhere.

Coming up, more with Becky Quick, including a round of buy-seller hold. This is Motley Full Money. Welcome back to Motley Full Money, talking with CNBC host Becky Quick. Let's talk about some non-Berkshire Hathaway items. We are just a couple of weeks away from the one-year anniversary of Facebook's IPO. And as of the taping of this interview, the shares are more than 30% lower than where the stock IPOed.

It's trailing the market over the past year by around 45%. And I'm just curious, when you look at Facebook, what do you think? of the company and sort of its growth prospects because on the one hand, I think everybody looks at the number of people who are on Facebook and it's just such a huge, gaudy number that nobody wants to dismiss it. On the other hand, and I'm just speaking for myself, it seems like the comparisons to past growth stock stories don't really hold up in the sense that, you know, People who are looking to maybe compare it to Amazon in the early days of Amazon, even when it wasn't profitable, it was growing that revenue in such a way that people had to pay attention to it. Where do you think Facebook is as a company right now?

You know, I go back and forth on this because like you, I'm somebody who has a Facebook account, and I have to admit I don't use it all that often. So I always think when they throw out these numbers of users, yeah, I'm one of those users. and I don't even remember my password, so I'm probably on the site less than every other month. And so from that perspective, I'm a skeptic. However, I would never count out Mark Zuckerberg. I think he's pretty incredible, and I think that he has revolutionary ideas. I think he will continue to come up with revolutionary ideas. I would not count this guy out any more than I would, Jeff Bezos.

and if they can figure out a way to crack the mobile ad strategy, find a way to actually make money on what people are looking at on their BlackBerry screen or their iPhone screen or their Android screen, whatever screen it may be, I think that could be something that finally convinces some of the skeptics on Wall Street. So I get it, I'm kind of with you from the perspective of, yeah, you know, maybe we thought too much of this coming out, but at the same time, I would never bet against Mark Zuckerberg.

In your copious free time, you are also a contributor to Fortune Magazine. And one of the issues that you've written about in the past is the Internet sales tax. And obviously, this is great for consumers if they're not paying Internet sales tax. But on the flip side, you have states that are missing out on literally billions of dollars in revenue. And from an investor standpoint, you have these jobs. giant companies like Amazon and eBay who are highly involved in this issue and have significant interest in it. Where do you think all of this is going?

I think there's going to be a tax. There's already stuff that's been moving through the Senate and the House, and I think eventually you will have some sort of a tax. At a national level? At a national level or a state level. It will be a national law that will require some sort of collection by these online retailers. This isn't a new tax. People look at this as, oh, we're already so heavily tax. This isn't a tax. This is just a tax that online retailers have been able to avoid collecting. You as the consumer

are still required to pay it. And one of the ways the states have gotten a little smarter about this, New Jersey, where I live, for instance, a year or two ago, started requiring people to, on their IRS form, talk about how much they bought online, and to fess up, give some sort of a dollar amount, and then pay the sales tax yourself. So I think if more states start adopting, that attitude, it's one that will change pretty quickly because personally, I hate it. I hate that I have to figure out at the end of the year how much I've spent online and go ahead and pay that money or lie on some tax documentation. I mean, since I've been writing about this, I've been pretty careful to try and keep track

of things. And the nice thing is Amazon actually will keep track for you. You can go back and look at everything you bought last year on Amazon, what it costs, and then figure out how much sales tax you order your state. But are you kidding me? That's a headache. And online retailers will complain about how they don't want to be doing this, but I, as a consumer, don't want to be doing this either.

And you're right. States need the revenue, so they're going to find ways to come after you on it. I think there should be an exemption. I think eBay has a point. But, look, if you're selling more than a million dollars and stuff over the Internet, you're not some Joe Schmo who's selling from your garage or your attic. You're a real retailer. And there are stores on Main Street who would say the same thing.

Look, I want to be exempted, too, because I didn't sell that much. But they don't get the exemption, so I don't know why you should get one on. online as well. Now, I do think it's complicated. There are over 10,000 tax jurisdictions if you looked at every municipality and every zone that wants to claim something. But there's a way to make it easier if you had, let's say, a state sales tax for each of the 50 states. That's pretty basic. Then the states can figure out how to split up that money. We will wrap up with a round of buy-seller hold. Some believe this digital form of currency is the next big thing in the world of payment systems. Sell. Fell, you're talking Bitcoin, right? Bitcoin.

You beat me to the punch. Oh, I have to admit, I've read a lot about this trying to figure it out. Man, does it seem weird? Did the fact that the Winklevi twins got involved in it, was that the tipping point for you? No, it wasn't. It was like the Winkle Vye being involved. I'll be honest, that did it for me. Once I saw that they totally jumped on board, I thought, well, now this is completely dubious.

I mean, I think I've never quite understood the gold bugs either. People are hoarding gold waiting for the end of the world. world, but Bitcoin's even weirder. I mean, if you're looking for some fiat currency, it's not going to matter once the entire electrical grid shuts down. You're not going to be able to track how much Bitcoin is there or anything else around it. I don't get it. This is increasingly becoming a technology problem in the United States. Buy seller hold a national ban on texting while driving. Totally. Buy, buy, buy, buy. I'm really trying to break myself of my habit of even looking even at a red light anymore. It's so dangerous.

You've seen the ads where they started showing you, this was, you know, this 23-year-old's last text that he was sending as he drove off the road and was killed. I mean, that's, it's such a common-sense approach, and it's so important, and it's not just teenagers. It's all of us. I am completely in favor of this. The damages from Hurricane Sandy are an estimated $50 billion, but there are some encouraging signs of a comeback. Buy-seller-hold, the Jersey Shore. Bye. And let me tell you a quick story on this, Chris.

we bought a place on the Jersey shore two weeks before Sandy hit. Oh. My first mortgage payment, we're in Beach Haven on Long Beach Island, and this is right next to Holgate, which was completely wiped out. The damage was extensive. Our house was damaged, but not nearly as badly as some of our neighbors. It's a heartbreaking story, but we've been down there all winter following the recovery, and I was just down actually last weekend and was amazed at how much progress had been made.

Now, there's still a long way to go. but it's really encouraging to see some of the small businesses that have worked so hard and that have spent so much time. And if you are in a position of being able to get near the Jersey Shore or anywhere on the Long Island coast, on the Long Island Shore, or anywhere on the Connecticut coast, I would just say do what you can to help out these business owners who are there because a lot of them lost everything in Sandy. And the insurance coverage, flood insurance, I was a total newbie on this, doesn't cover much of anything. So these are people who have clawed back, who have done the money, work themselves to try and rebuild these businesses and anything you can do to help them out.

It would be greatly appreciated. And finally, this is one of the most highly rated apps in the iTunes App Store, buy seller hold, the CNBC alarm clock app. Bye, baby. You can have any of us wake you up. You know, it was a lot of fun, some of the work that we've done with us to put it together. And I think it's cool. You can have Rick Santelli wake you up in the morning if you want to have Paro,

yeah, Jim Kramer. Yeah, so you want to wake up slower? You want to wake up fast, and you can pick it. You can have anybody there to wake you up every morning. I think it's a great application. It is the best way to get a jump on the business news of the day. She's the host of CNBC's Squabox. Becky, thanks, and have a great time in Omaha.

Chris, thanks for your time. I hope to talk to you again soon. That's going to do it for this week's Motley Fool Money. We'll see you next week.