This Week's 5 Smartest Stock Moves
If you're feeling good about the market, you're not alone. Take my hand as we go over some of this week's more uplifting headlines.
Revenue climbed 19% to $108.5 million, and earnings per share soared 67% to $0.30. Analysts were only expecting a profit of $0.23 a share. A 16% increase in subscribers and an increase in average monthly revenue per account work wonders this very scalable business model.
However, the real reason why Ancestry.com makes the cut this week is because the company is buying smaller rival Archives.com in a $100 million deal.
Archives has 380,000 members paying $39.95 a year for access to its smaller database of records. Is Ancestry.com overpaying here? Probably. But it's still a smart deal, because Ancestry.com charges $155 for an entire year of access, and shorter plans are more expensive on a per-month basis. The average revenue generated by Ancestry.com's nearly 1.9 million premium accounts is $18.49 a month.
Whether it plans to keep Archives as an entry-level service or combine its membership bases, Ancestry.com has effectively taken out a low-balling competitor.
2. Float like a Shutterfly
Shutterfly (NAS: SFLY) is cashing in on the bankruptcy of Eastman Kodak. The fast-growing provider of personalized photo-based products is paying $23.8 million for Kodak Gallery, the online photo-sharing site that Kodak was hoping would be a goldmine of photofinishing business.
It didn't turn out that way. People share pictures, but buying prints is so 1997.
Shutterfly was the only bidder drawing fewer than a million unique monthly visitors, but it had 75 million registered users. If Shutterfly can market its coffee-table-quality photo books, T-shirts, and even keepsake cases to Kodak Gallery's largely dormant user base, the deal will pay off quickly for Shutterfly.
3. Sirius vs. Stern
Sirius XM Radio (NAS: SIRI) is giving buyers of secondhand cars another reason to sign up to its satellite radio service.
Sirius XM is working with Hyundai dealers to offer buyers of used cars with previously installed receivers three-month trials of the premium radio service.
It's a win-win-win. Car buyers get three months of free Sirius or XM, depending on the cars they're buying. Dealers get a royalty for drivers that take Sirius XM up on its offer and convert into paying customers. Sirius XM, naturally, cashes in on the incremental subscriber at a lower acquisition cost than usual.
Sirius XM has been setting up these arrangements with automakers for a couple of years, but every new deal counts.
This isn't a traditional basketball video game that will compete against NBA Live 13 and NBA 2k13 by the time the new NBA season rolls around. This is a game that will specialize on rhythmic dribbling and ball-handling skills using a real basketball.
Yes, this item seemed like a shoo-in for this week's "dumbest moves" list. How many parents want their kids dribbling a basketball in the house? How many gamers have hardwood or tile flooring in the room where their Xbox consoles are? This game's going to be murder to play on shag carpeting!
However, I ultimately think this is a great move for Majesco. For starters, this is the game publisher that has succeeded in the past with female-centric titles like Zumba Fitness and Cooking Mama. Diversifying into a unique realm -- a sports-themed rhythmic timing game -- that will appeal largely to male gamers makes a lot of sense.
The game will also be exclusive to the Xbox system, so it can use the Kinect motion-based controller to register complete body moves. For a company that's been relying on the fading Nintendo for way too much of its revenue -- 86% in its previous quarter -- hopping into the hottest-selling console is a smart move.
5. Mr. Green with the Kindle stick
Amazon.com (NAS: AMZN) had a blowout quarter. Net sales rose by a better-than-expected 34%, and the leading online retailer's profit of $0.28 a share was four times what the pros were projecting.
Where Amazon truly earns a spot on this week's list is its ecosystem's exclusivity. As Amazon pointed out in last night's earnings release, 130,000 in-copyright books are exclusive to the Kindle Store. Sure, that's mostly vanity-press stuff from authors who couldn't find conventional publishing. However, there are a few gems in there, and 16 of Amazon's 100 best-selling e-books during the quarter are part of the exclusive catalog.
At the time this article was published The Motley Fool owns shares of Ancestry.com and Amazon.com.Motley Fool newsletter serviceshave recommended buying shares of Amazon.com and Ancestry.com. The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story. Rick is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.