Market Minute: Facebook IPO Scammers Arrested; Warren Buffett's Portfolio

Arrests are made in a scam involving Facebook's stock, and Warren Buffett tweaks his stock holdings.

Another day, another record. The Dow Jones industrial average rose 60 points yesterday, ringing up its 20th record close this year. The S&P 500 gained 8, and the Nasdaq rose 9.

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Lots of investors feel like they were suckered by Facebook's (FB) much ballyhooed IPO last year, but none like a New Zealand man who bought Facebook stock that didn't exist. Bloomberg Businessweek reports that federal officials in New Jersey have charged three men with scamming the foreign investor into paying $3 million for shares he never received, and another $3.5 million in a different scheme. The three men could face up to 20 years in prison for wire fraud, and a fine of $250,000.

Warren Buffet's company, Berkshire Hathaway (BRK-A, BRK-B), is out with the quarterly changes to its investment portfolio. It increased its holdings in IBM (IBM), Wells Fargo (WFC) and Walmart (WMT), but sold its entire stakes in General Dynamics (GD) and Archer Daniels Midland (ADM).

Walmart's quarterly earnings and sales came in slightly below expectations. After the close, J.C. Penney (JCP) is expected to post another loss.

Shares of Cisco System (CSCO) are set to pop after the technology bellwether reported better-than-expected sales and earnings. That's seen as a good sign for corporate spending on technology in general.

More manufacturing problems for Boeing (BA). The aerospace giant says engines made by General Electric (GE) for some 777 models are defective and need to be replaced. This comes just as Boeing is near completion of a battery fix for the 787 "Dreamliner"; that mishap prompted the grounding of the entire fleet.

Southwest Airlines (LUV) is returning some profits to shareholders. It's quadrupling its quarterly dividend to 4¢ a share from a penny, and it plans to buy back more stock.

And Tesla Motors (TSLA), which has been red-hot of late, plans to raise 830-million in a secondary stock offering. It will use the proceeds to repay an Energy Department loan ahead of schedule.

-Produced by Drew Trachtenberg

5 Companies Getting Burned By Facebook
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Market Minute: Facebook IPO Scammers Arrested; Warren Buffett's Portfolio

1. Activision Blizzard (ATVI)

Life was easy when everyone was playing Guitar Hero. Facebook has reinvented the way game-hungry masses spend their time, logging into Facebook to tend to virtual farms, mafia campaigns, or item-finding experiences.

It's not a surprise that the traditional video game industry has been struggling for three years. Market leader Activision Blizzard doesn't even make Guitar Hero games anymore, and its World of Warcraft player count has been steadily declining over the past year. Call of Duty is still a growing franchise, but that can't last forever.

As traditional game companies are struggling, Zynga (ZNGA) -- which accounts for 18% of Facebook's revenue -- is thriving.

Diehard gamers are still firing up their consoles and are toting around their portable gaming systems. The problem is that mainstream gamers -- the casual players who didn't live and die by every franchise's latest release -- have moved on to casual and social diversions. They're free or nearly free, and the viral magic of Facebook connecting friends as players made it possible.

2. Google (GOOG)

Few will suggest that Google is in trouble. The world's most valuable Internet company is worth more than twice the market cap that Facebook is commanding. However, Big G is nervous.

Google's bread and butter business remains paid search, and what happens when folks stop trekking over to whenever they need to launch a query? If asking friends or simply relying on Facebook's own search box is easier, won't that hurt Google?

There are other ways that Facebook is having an impact on Google.

Google's YouTube may be the world's hottest video-sharing website with more than 800 million monthly visitors, but Facebook also allows its more than 900 million unique monthly users to upload clips on its site to share. We also have Gmail, Google's popular email platform. A lot of people are just sending private messages through Facebook that would normally go through traditional email.

3. Angie's List (ANGI)

Subscribers turn to Angie's List for unbiased reviews. Members pay dues to have access to customer reviews for local service providers. Need a handyman who can fix a pocket door? Is your clogged drain not clearing with your plunger? Who can tutor you daughter for her upcoming college entrance exam?

Angie's List prides itself on the vetted and unbiased opinions that can be found on its site. Well, as fate would have it, these are the same things that can be effectively tackled for free by posting a request as a status update on Facebook.

4. American Greetings (AM)

Remember when shelling out a few bucks for a greeting card was the most cost-effective way to commemorate a special occasion?

Well, thanks to Facebook, offering up birthday wishes or congratulatory acknowledgements is simply a Facebook posting away. Is it cold? Is it impersonal? It doesn't matter. It works. American Greetings has done its part to beef up its digital presence, but analysts still see earnings growth going the wrong way here this fiscal year.

5. Shutterfly (SFLY)

Facebook has also changed the way we consume photographs. We're no longer printing them out, and that's bad news for Shutterfly. The company turns digital snapshots into prints, photo books, and other customized merchandise.

Facebook is a hotbed for the sharing of photos, and that is something that has intensified since its recent acquisition of Instagram.

Shutterfly has managed to grow nicely even as Facebook ascends, but the perception that Facebook is turning Shutterfly and its peers into an elephant's graveyard exists.

All five of these companies may have cheered Facebook's plunge below its $38 IPO price on Monday, but their business models still have to reckon with the beast that the undisputed champ among social networks has become.

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