Tuesday, February 11, 2014

McDonald's Sales Drop, Apple Ends a War, and Hasbro Earnings No Fun to Play With

While we're still aggressively waiting for a cupcake ATM to finally open up near us, investors are getting pumped up for new Fed Chairwoman Janet Yellen's big first official speech on Tuesday -- And the Dow Jones Industrial Average (DJINDICES: ^DJI  ) inched up 8 points Monday in eager anticipation.

1. Winter freezes McDonald's sales
Ronald is frowning, because McDonald's (NYSE: MCD  ) monthly report showed that U.S. sales fell 3.3% in January and restaurant traffic is down 1.6% over the last year. McD's is blaming two culprits: (1) Americans are still being frugal as the economy only slowly improves, and (2) the unhealthy servings of polar vortexes this past winter are keeping warm-blooded customers out of cold plastic seats at McDonald's restaurants.

It's all about the Dollar Menu. Or is it? McDonald's reintroduced its famed Dollar Menu just three months ago in the U.S. as the fancy new "Dollar Menu and More," but the publicity stunt hasn't had any impact on sales. In fact, the McDouble and small fries both now cost more than a dollar, resulting in some unhappy and confused McDonald's patrons walking into stores with four quarters in their pocket.

The takeaway is that investors didn't freak out like someone stole their Happy Meal toy. That's because McDonald's overall global sales were pretty greasy (in a good way) -- Europe has overtaken America as the chain restaurant's largest market and Asian sales rose nearly 6%. Although Ronald warned investors in its recent earnings report that January would be a tough month, the growing foreign appetite for Big Macs saved the Golden Arches Monday.

2. Carl Icahn gives up fight with Apple
Apple's (NASDAQ: AAPL  ) battle with famous superinvestor Carl Icahn is over. The stock titan who is known and feared by all on Wall Street wrote an open letter to Apple shareholders Monday, indicating he will stop fighting for Apple to give shareholders more of its massive $100 billion-plus cash pile. The stock rose 2% now that the Real-Housewives-of-Wall-Street-style feud is over.   What's wrong with too much cash? Icahn's firm owns about $4 billion worth of Apple shares -- and with shares come power. He has insisted that Apple stop wasting its cash reserves generated from years of iPhone and iPad sales and return the moola to shareholders. He's begged for share buybacks (Apple purchases shares, reduces the number out there, and makes the rest all the more valuable). In fact, Icahn wanted $50 billion of buybacks -- and he's going to get $38 billion this year.   The man is satisfied. Plus, an advisory firm reported that Icahn's crusade was not helping the company, it's just creating lots of cheesy headlines for E! and The New York Post. CEO Tim Cook is pumped to have one less Wall Street shark to worry about.  
3. Hasbro got Christmas coal for sales
Hasbro's (NASDAQ: HAS  ) earnings just aren't as fun as the products they make. The toy-creating legend reported Monday that sales nudged down from $130 million to $129 million from a year ago, after its classics My Little Pony and Transformers didn't make it into enough stockings this year. Companies like Hasbro are known to make up to 40% of their annual revenues during the holidays, so bad Christmas news made investors less than jolly.

The takeaway is that Hasbro isn't the only toy company that Santa's elves ignored this year -- rival Mattel (NASDAQ: MAT  ) had a poor holiday season, too, after Barbie and Fisher-Price toy demand shrank. Plus, Hasbro revealed that while physical toys weren't on kids' Christmas lists, games did enjoy a nice 2% sales increase from last year. Time for Monopoly.

Today: New Fed Chairwoman Janet Yellen gives her first speech on the job The NFIB Small Business Survey Fourth-quarter earnings reports: CVS Caremark, Sprint MarketSnacks Fact of the Day: Lego is the world's largest producer of rubber wheels -- more than car tire makers Goodyear or Bridgestone.

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