Priceline Recovers After OpenTable Buy, and Alibaba Weakness Hurts Yahoo!

The three things you need to know on June 16.

Jun 16, 2014 at 11:00PM

The Dow Jones Industrial Average (DJINDICES:^DJI) inched up 5 points to start the week amid unchanged political tension in Iraq. Let's take a look at what else happened on Monday.

Priceline reserves OpenTable for $2.6 billion
Snagging a Friday night table for two in the West Village? Not so easy. Buying restaurant reservation website OpenTable (NASDAQ:OPEN) for $2.6 billion? Priceline Group (NASDAQ:PCLN) just made it look easy. The stock of the online travel agent dipped last Friday, but it rebounded Monday on news that the company will pay $103 per share in cash for OpenTable.

So what's the plan? Priceline earns commissions on reservations made on its own website and Kayak (which it bought last year for $2.8 billion), and OpenTable helps 15 million diners each month pick available seats at 31,000 restaurants nationwide. OpenTable will remain an independent business, so when you make that special anniversary date dinner at Nobu using OpenTable, you know who's benefiting.

The takeaway is that the deal sparked some serious investor excitement about an "acquisition binge." Shares of Yelp, GrubHub, and Groupon popped on hopes that they also might be bought in the near future.

Alibaba weakness hurts Yahoo! shares
The giant Chinese e-commerce website Alibaba is going public in the U.S. stock markets later this year, so it filed a standard update to U.S. regulators on how it's doing. The online retailer, auction house, and payments all-in-one website reported that its sales growth slowed last quarter and its profit margin is down. You know who's upset? Marissa Mayer, Yahoo! (NASDAQ:YHOO) CEO, is.

Alibaba is Yahoo!'s favorite child. Yahoo! wisely invested in Alibaba in the early 2000s, when it was only a little baby Internet website. That beautiful baby blossomed into an Internet commerce profit power valued at as much as $200 billion, so Yahoo!'s 23% stake is worth a pretty penny. The IPO will be a huge payday (Yahoo!'s own Katie Couric will be all over the news coverage), but Monday's report downgraded analysts' estimates on Alibaba's value, and therefore Yahoo!'s payday. Yahoo! fell 5.8% Monday.

The takeaway is that you don't want to miss this IPO. The Internet is tightly regulated cyberspace in China, where Twitter, Facebook, and Google all tread carefully so as not to ruffle the Communist Party's feathers. It's also where Alibaba is dominating e-commerce and bound to make billions in profits. The U.S. is blushing that the company chose its stock markets to host its stock, and Yahoo! is earning the exclamation point in its name with its nervousness/excitement for the event.

Industrial production gain concludes winter slowdown
The number of the day is 0.6%. That's how much U.S. industrial production gained by in May, topping economists' expectations of a 0.5% rise. It wasn't production for the finale of Game of Thrones that boosted U.S. manufacturers, but rather a 1.5% jump in car manufacturing and a 1.3% boost in mining production that did the trick.

The takeaway is that before you stop reading this section because you don't think industrial production is fun, keep in mind that manufacturing has risen at an impressive 5.4% annualized pace since February. And after the winter weather slowdown hurt U.S. consumers and producers, Wall Street was happy to see manufacturing figures that show the winter hit is now history.

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4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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