Wednesday, February 26, 2014

'Threes!' Update Hits: Next Card Display Tweaks and The Ability to Skip Signing Added

<Amazon Deal Onlinep> Threes! [$1.99] has been glued to the top of its charts since release, and for good reason. It's an absolutely fantastic game, that has been ridiculously popular in our forums. Forum members have been sharing strategies, deconstructing the game, and even building bots that play it. It's been an incredibly phenomenon to watch unfold, and one I'm sure developers Greg Wohlwend and Asher Vollmer couldn't have possibly predicted when they were originally coming up with concepts for the game.

If you don't have it yet, you really should get it. If you do have it, rush on over to the App Store and download the latest update if your phone hasn't automatically grabbed it yet. It's got two major quality of life improvements for serial Threes! players. First off, you can skip signing your name at the end of every game, to get right back in to your Threes! combining action. Additionally, a "+" now appears next to the upcoming card if it's going to be more than three.

The "+" is going to be awesome, as previously when a white card was up next you hoped it was a three, but it could be a bunch of different numbers that can really mess up your board state. The new "+" display will hopefully make late game Threes! a little less frustrating as now players will know for sure if they're getting a one, a two, a three, or something more than that.

2 Threats to's Future Growth

When a company is expected to grow earnings by 40% plus over the next several years, any threat to this earnings growth should be carefully considered by investors. Though NASDAQ: Buy ( AMZN ) seems to want to be everything to everyone, there are at least two major threats that could hurt this company's potential.

A well-known issue everyone seems to ignore
There should be little doubt that one of the prime reasons many people shop online is to avoid paying sales tax at the point of sale. Though some believe that Amazon's competitive advantage is convenience, the economy of the last several years has taught many people to watch every dollar they spend.

It just makes good sense that if a consumer can buy the exact same product from Amazon and avoid paying sales tax they will do so. To combat this challenge, companies like Wal-Mart Stores ( ) are willing to continually cut prices to compete with their online counterparts. Though size clearly plays a part, Wal-Mart's U.S. sales growth came in at just 2.4% in the company's last quarter.

With over 4,000 locations domestically, Wal-Mart is probably a better proxy for the domestic marketplace than Amazon. However, there should be little doubt that the ability to avoid sales tax by purchasing on Amazon is hurting the physical retailers' sales.

Though some might believe sales tax won't be an issue, it's hard to ignore the obvious slowdown in Amazon's overall sales growth in concert with more states requiring sales tax be charged to its customers. Currently, 19 states require Amazon customers to pay sales tax. Not coincidentally, Amazon's worldwide trailing 12 month sales growth has slowed sequentially from 29% in the fourth quarter of 2012, to 24% in the fourth quarter of 2013.

As Amazon continues to expand, more states will certainly require sales tax to be collected, or a nationwide online sales tax may become law. This sales tax issue is a huge competitive difference between a company like NASDAQ: eBay ( EBAY ) and Amazon.

Most of eBay's sellers generate less than $1 million in out-of-state revenue, which would exempt them from collecting sales tax under the current version of the bill. In short, eBay could become a haven for tax avoiding customers.

With more than 60% of Amazon's revenue coming from general merchandise and electronic sales, this might be the most significant threat facing the company today.

A Prime concern
A second threat to Amazon's future actually comes from one of the company's most popular features. Amazon Prime members pay $79 per year for many benefits including free two-day shipping and streaming of thousands of instant video titles, this could change in the future.

Amazon has suggested that the Prime service may be too expensive to maintain the $79 annual price. If the company raised the price by $20 to $40 as has been suggested, Amazon could lose a significant portion of its membership.

In fact, a poll by Bizrate Insights of 200 customers found that 46% thought that the existing $79 price for Amazon Prime was too high. It's not hard to imagine these customers choosing to cancel their membership if Amazon goes through with a price hike of at least 25%.

eBay would seem to be a natural destination for jilted Prime members. The company offers a discount on seller's fees if they offer free shipping and meet certain criteria. Though eBay may not show the same type of revenue growth as Amazon, the company's Marketplaces business has consistently grown users at a double-digit rate, and its fixed price merchandise volume increased by 19% on a year-over-year basis.

In addition, if shoppers are looking for convenience, Wal-Mart's vast number of locations in everyday low prices could draw Prime members back into the stores. Wal-Mart could also one up Amazon at its own game by using its store locations as mini shipping warehouses.

Amazon claims that its Prime service has "millions of members." Imagine these customers having to choose whether to pay a higher annual price for Prime, while simultaneously having to pay sales tax on their purchases where they did not before. For a stock that still trades at a forward P/E ratio of more than 180, a continued slowdown in the company's revenue growth could mean the recent hit to the stock price is only the beginning.

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