WhatsApp Deal a Kik for Messaging Startups

NEW YORK (The Deal) -- Facebook's  (FB) blockbuster, $19 billion purchase of WhatsApp has focused attention on the increased value of mobile messaging.

Buying WhatsApp has both offensive and defensive elements, as UBS  (UBS) analyst Eric Sheridan noted. Facebook gains a popular messaging platform with more than 450 million users per month, which Facebook founder and CEO Mark Zuckerberg said he expects to eventually hit 1 billion.

Zuckerberg also keeps WhatsApp's horde of subscribers out of the hands of competitors such as Yahoo! (YHOO) or Google (GOOG).

A range of global upstarts provide variations of mobile messaging over the Internet. Hong Kong-based Tencent operates messaging apps WeChat and Weixin, the latter focused on the Chinese market. Subscribers can make audio and video calls, and exchange photos. Combined, WeChat and Weixin had more than 270 million users at the close of the third quarter, growing nearly 125% from the same period a year earlier. Tencent, which trades on the Hong Kong Stock Exchange, reports fourth-quarter numbers on March 19. Dutch messaging company Nimbuzz has 120 million users and gains 4.5 million per month, according to its website. The company has backing from Mangrove Capital Partners and South African media group Naspers. The company offers free voice and video calls over its broadband app, but charges for calls to phones. Line Corp. of Tokyo has 340 million users for its free call and messaging app and said it expects to reach 500 million users this year. "Line has really been pushing games," SNL Kagan analyst Seth Shafer said. Within the games, users can purchase extra lives, or turns. Line also sells stickers that subscribers use to adorn messages. Some have featured star soccer players in Mexico.

Stock quotes in this article: FB, YHOO, GOOG, ZNGA, QCOM, UBS 

Founded in 2009 at the University of Waterloo in Canada, Kik Interactive Inc. has more than 100 million users. The company has integrated a Web browser into its app. Zynga  (ZNGA) has developed some games for the company.

Kik closed a $19.5 million investment in April 2013, and has received funds from Foundation Capital, RRE Ventures, Spark Capital and Union Square Ventures.

Mountain View, Calif., social media company TangoME Inc. has 160 million members for its calling and messaging app. Its backers include Draper Fisher Jurvetson and Qualcomm's (QCOM) venture arm, among others. The company closed a $40 million round in April 2012.

Tango launched a partnership with Spotify AB in Oct. 2013 that allows users to share music. While companies have experimented with games, ads and other ways of monetizing their services, SNL's Shafer noted that only WhatsApp has introduced an annual fee. The introduction of games could make messaging companies attractive to some suitors, he added. The strategy for making money from messaging apps is a work in progress. Still, more deals may follow if Zuckerberg's bold move makes other large Internet groups feel defensive.

Stock quotes in this article: FB, YHOO, GOOG, ZNGA, QCOM, UBS 

Trish Regan: Pot industry 'Dazed and Confused'

This column marks the USA TODAY debut of Trish Regan, anchor and editor-at-large for Bloomberg TV. Trish was named one of the most popular business news anchors last year by BusinessInsider.com and has worked at CNBC, CBS and CBS MarketWatch.

OK. So, maybe Dazed and Confused isn't the pot classic that Up in Smoke is, but the cult coming-of-age film set in the '70s featured enough grass to rank as Rolling Stone's No. 2 "Stoner Movie of All Time." More important, Dazed and Confused seems to perfectly capture the reaction to Friday's announcement from the Justice and Treasury Departments aimed at addressing the biggest challenge facing the almost-legal marijuana industry today — lack of access to banks.

Banks have refused to do business with marijuana dispensaries operating within the bounds of state laws for fear of being prosecuted themselves. Federal law classifies marijuana as a Schedule 1 drug on par with heroin, which means a bank doing business with a marijuana shop can be accused of money laundering and racketeering. This has left dispensaries in the 20 states and Washington, D.C., that allow marijuana distribution in a challenging position; they can't let their bankers know how they make money.

At Denver Relief, a dispensary in Denver where the smell of cannabis permeates the room, workers undertake elaborate measures to ensure that the money they collect from pot sales doesn't smell. "There's no reason to rub somebody's nose in it," explains Ean Seeb, who runs the facility. Seeb places his cash in a sealed bag, in a separate safe, in a separate room — all in an attempt to keep it "clean." If a bank gets one whiff of his so-called dirty money (and yes, money smells when surrounded by pot), his account will be shut down. Seeb is on his second account, while many of his pot colleagues have churned through as many as five banks in the last year.

Friday's moves by the Justice and Treasury Departments gave many hope that the Feds were making significant changes to add! ress this banking problem. Instead, the memos show that the industry is still dealing with a basic issue: Despite all the changes to state laws, popular support and President Obama's recent remark that he considers marijuana no more dangerous than alcohol, marijuana is still 100% illegal under federal law. So, it's no wonder you might be dazed and confused listening to the reactions that followed the release of the memos.

Aaron Smith of the NCIA (that's the National Cannabis Industry Association for those who aren't in the know) seemed quite pleased, telling local media he was "grateful" for the announcements. Ethan Nadelmann of the Drug Policy Alliance was also optimistic telling me, "Banks will be able to make money."

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But, the Colorado Bankers Association calls this guidance a red light for banks, stating, "At best, this amounts to 'serve these customers at your own risk,' and it emphasizes all of the risks."

"Dazed and Confused" seems to perfectly capture the reaction to the announcement from the Justice and Treasury Departments aimed at addressing the biggest challenge facing the almost-legal marijuana industry today -- lack of access to banks.(Photo: Thinkstock)

Where does this leave the fledgling multi-billion dollar industry? Very much where it's been.

Although marijuana entrepreneurs are increasingly comfortable starting businesses under permissive state laws and a federal "look the other way" policy, the federally regulated banking system needs certainty.

Banks are supposed to be conservative. Between the additional red tape associated with servicing a pot shop and the threat of a new admin! istration! reversing policy, the downside risks are too significant. Despite the industry's hopeful reaction, the view of the Colorado Banker's Association is likely far closer to that of your average bank president.

If the Obama administration can't truly effect change, why is it warming to the idea of marijuana legalization? Cynics might argue the president is trying to establish the Democratic Party at the forefront of the marijuana movement ahead of this year's elections. With an increasing number of states looking to legalize marijuana, this could be the issue that brings younger, liberal Americans to the voting booths in swing states this November.

In the meantime, I'd recommend dispensaries continue working hard to keep their money smelling clean.

Cheerios says no to Monsanto

General Mills (ticker: GIS ) announced late last week that it would be making Cheerios GMO-free. The move is one of the first major responses by an American company to address the growing consumer concern over GMOs. If this is the beginning of a trend, the impact on seed-technology companies like Monsanto (MON) could be substantial.

The start of something bigger

In the grand scheme of things, the removal of GMOs from Cheerios amounts to a nearly negligible amount of seed products amid the massive Monsanto offerings. Furthermore, oats, the primary ingredient in Cheerios, are remarkably inexpensive in the crop-product world. The bigger and more worrisome issue for Monsanto is that this may be the first of many such decisions by major food producers in response to consumer demand for GMO-free products.

GMOs are found in more than 80% of American food products, but for the most part go undetected by the average American consumer. While there have been no major direct and undisputed scientific studies indicating health issues related to the consumption of GMOs, a substantial subset of American consumers have taken issue with the prevalence of GMOs in food products. Attempts to pass legislation requiring the labeling of food products containing GMOs have so far been unsuccessful in both California and Washington state, but the move by General Mills to willingly remove GMOs from Cheerios will likely bring the issue back to the forefront of the public eye.

The resulting impact of GMO labeling on Monsanto could be huge, and similar results could be expected if major food manufacturers continue to willingly remove GMOs from their products, regardless of mandated labeling.

A little publicity goes a long way

General Mills is making a statement, but only one that it can currently back without suffering any major financial impact. Yes, Cheerios is General Mills' best-selling cereal brand, but the amount of GMOs found in the current formulation of Cheerios is arguably insignificant.! By 'giving in' to consumer demand, General Mills has found a cheap and effective way to receive public attention and free advertising without substantially changing its product offerings.

General Mills is making the GMO-free change only to original Cheerios. The main ingredient in original Cheerios, as mentioned above, is oats, which are already GMO-free, requiring only a change in the sourcing of cornstarch and sugar. Major ingredients in other Cheerios-brand cereals such as Multigrain Cheerios have primary ingredients sourced from corn, wheat, and other more GMO-intensive crops. By making great claims for Cheerios, General Mills may have effectively gained public trust in regards to GMO-free product offerings while diverting attention away from the fact that the majority of its cereals do indeed contain GMOs.

In fact, most of the cereals produced by General Mills as well as most cereals produced by competitors Kellogg (NYSE: K ) and Post Holdings (NYSE: POST ) actually contain a significantly greater percentage of GMOs than Cheerios ever did.

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The takeaway

While the intention of General Mills in making Cheerios GMO free may be in question, the action is still a huge deal in the already-contentious world of GMOs and GMO-labeling. The attention gained will likely sway some Kashi-devoted consumers to try General Mills products.

On its own, the reformulating of Cheerios will have little or no impact on Monsanto and other seed-technology companies. Investors, however, should watch carefully to see if General Mills has started a cascading effect that could turn consumers away from GMOs in general, which could have a much more detrimental influence on Monsanto.

The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produc! ed indepe! ndently of USA TODAY.

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The 4 Stocks That Dominated the Market on Tuesday

February 11, 2014: Markets opened higher on Tuesday anticipating that new Fed Chair Janet Yellen would not announce any significant diversion from current Fed policy. And in another expected development, House Republicans have indicated that they will allow a clean vote on raising the U.S. debt limit, a decision that virtually any threat of a default on the nation's debt. The DJIA closed up 1.20%, the S&P 500 closed up 1.10%, and the Nasdaq Composite closed up 1.03%.

Today's big gainer among the Dow 30 stocks was The Boeing Co. (NYSE: BA). Shares closed up 2.29% at $130.07 in a 52-week range of $74.27 to $144.57. The company and its main rival, Airbus, have both forecast deliveries of new aircraft between now and 2032 at just under $2 trillion. The two companies are wooing customers at the Singapore Airshow this week. Boeing's volume today was about 40% higher than the daily average of around 5 million shares.

Among heavily traded Nasdaq stocks Green Mountain Coffee Roasters Inc. (NASDAQ: GMCR) posted a gain of 7.65% to close at $119.40 after posting a new 52-week high of $120.24. The stock's 52-week low is $42.25. The company's deal with The Coca-Cola Co. (NYSE: KO) continues to boost. Trading volume was nearly double the daily average of around 4 million shares traded.

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Chevron Corp. (NYSE: CVX) rose 1.63% for the day to close at $113.51, in a 52-week range of $109.27 to $127.83. WTI prices closed above $100 a barrel yesterday and traded above that level for most of the day today before closing at around $99.90. Share volume was about 7% below the daily average of around 6 million shares traded.

Dow component Goldman Sachs Group Inc. (NYSE: GS) issued a bullish note on Alcoa Inc. (NYSE: AA) today. Alcoa's shares got a nice boost, but so did Goldman, which owns warehouses where aluminum inventories are alleged to have been held back from delivery. Goldman's shares closed up 1.99% at $164.21 in a 52-week range of $137.29 to $181.13. Volume was about 25% above the daily average of around 3 million shares.

Of the Dow 30 stocks 29 closed higher today while only Cisco Systems Inc. (NASDAQ: CSCO) closed lower.

Challenges to Amazon.com's Growth Strategy

Amazon.com (NASDAQ: AMZN  )  has plenty of opportunity to continue growing revenue at double-digit rates for the foreseeable future. However, it is important to acknowledge the significant challenges that exist in Amazon.com's pursuit of further market share gains from established retailers such as Wal-Mart (NYSE: WMT  ) and Target (NYSE: TGT  ) . Profitability pressures have forced Amazon.com to consider price increase to its wildly popular Prime service, and this could be the first of many challenges facing the company in the near future.

Past failures will not be the last
Amazon.com has a great track record of innovating and reshaping the consumer experience. While the company has used this success to deliver tremendous revenue growth, it is unlikely that every venture will be a success. While it is a distant memory, Pets.com was an Amazon.com-backed company that is often considered one of the biggest flops of the dot-com bubble.

More recently, Amazon.com invested $175 million in LivingSocial to enter the daily deal business. While LivingSocial still exists today, the outcome for Amazon.com was not much better than Pets.com given that the company wrote off almost its entire investment in LivingSocial in late 2012.

Each time Amazon.com expands its e-commerce empire, there's the risk of failure. Management has taken years to fine tune the AmazonFresh grocery delivery concept to avoid a repeat of the fate of Webvan, one of the most notable dot-com failures in history. However, what does it mean to Amazon.com investors if grocery delivery service simply cannot be attractive to consumers relative to brick-and-mortar competitors while also being profitable?

Competition will not sit still
While Amazon.com has accumulated significant market share thanks to a great customer experience and disruptive e-commerce business model, it is naive to think that competitors are not devising plans to combat Amazon.com's ongoing growth. Some of these strategies will fail, like Best Buy's price-matching guarantee to combat "showrooming" this holiday season, but others will have success.

With hundreds of retailers fighting for market share, there will be plenty of competition. Wal-Mart is a great example; the company is testing same-day delivery including grocery delivery services. If Wal-Mart can effectively match the services offered by Amazon.com, Wal-Mart may have an advantage as e-commerce continues to evolve given its existing scale. Target, grocery stores, pharmacies, and other retailers are also working to find new ways to add the convenience of same-day delivery and in-store pickup of online orders. 

A looming price war
Assuming competitors can match Amazon.com's interface, selection, and delivery speed, the next threat to the company is a price war. Given Amazon.com's long-standing preference to accumulate market share rather than generate profits, a price war could put a dent in Amazon.com's business. The chart below illustrates how a wide range of competitors generates more operating income than Amazon.com:

AMZN Operating Income (TTM) data by YCharts

With significantly higher operating incomes, these companies have the ability to fight back with lower prices as a defense against Amazon.com's ongoing growth. This is particularly true for Wal-Mart, which consistently generates operating income margins above 5% while investing in an e-commerce platform and same-day delivery services that rival those of Amazon.com.

Amazon.com has already acknowledged the limitations it faces in its quest to provide unparalleled price, selection, and customer service; the recent announcement of a planned increase in Prime subscription fees from $79 to somewhere in the $99-$119 range means that Amazon.com is starting to feel the squeeze from its low-margin model. Further pressure from a price war may impair Amazon.com's ability to grow.

Is Amazon.com still a buy?
There is certainly risk associated with an investment in Amazon.com. A failed expansion into a new market, competition, and lack of flexibility due to lower operating margins are all concerns to monitor. Future evidence that any of these challenges might impact Amazon.com's long-term growth should be very seriously considered in evaluating an investment in the company.

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However, Amazon.com's core strengths and significant room for growth are unparalleled. Without the baggage of brick-and-mortar store costs, Amazon.com has been able to maintain a high growth rate for years. Until there is strong evidence that a competitor can create a more compelling value proposition for customers in terms of selection, price, fast and free shipping, and overall experience, it is likely that Amazon.com will continue on its growth trajectory.

Thanks to a decline in share price following last quarter's growth of "only" 20%, shares of Amazon.com can be purchased at a reasonable price considering the long-term outlook for the company's ongoing growth. 

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Vanguard: Investors Use IRAs As Money Market Parking Lot

Here's a common mistake Individual Retirement Account owners make: They transfer cash from their checking account into an IRA, meaning to go back another day and invest it, but they forget about it.  Guilty!

The problem crops up at tax time when taxpayers are making last minute IRA contributions to cut their tax bills, and max out the prior year's contribution limits. Vanguard Investment Strategy Group found that during tax season (loosely defined as January to April) the percentage of IRA contributions allocated to money market funds increases. The conclusion: Contribution deadlines appear to lead to poor investment decisions in retirement accounts.

Why should taxpayers be paying attention to this now? It's IRA funding time. You have until April 15 to contribute up to $5,500 to an IRA for 2013. If you have the ability to save more, you can go ahead and make your 2014 contribution too—the sooner you get the money in, the longer you have the benefit of tax-deferred (with a traditional IRA) or tax-free  (with a Roth IRA) compounding. If you're 50 or older during the calendar year, you can contribute an extra $1,000 (for a total of $6,500 a year) as a catch-up contribution; do this every year to boost your retirement kitty.

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Looking at contributions for tax year 2012 made in April 2013, Vanguard found that more than two-thirds of these last-minute IRA contributions made to money market funds remained in the money market funds four months later. "What seems like a prudent temporary decision can become an ill-advised longer-term investment choice," Vanguard's IRA Insights report says. At least some folks do slowly get around to moving the money to other investments. The percentage in money market funds 30 days after contributions was a whopping 81%.

So don't let inertia rule. Instead of stashing your contributions in a money market fund, Vanguard suggests taking a page from improvements made in the 401(k) retirement account world. When salary deferrals go into your 401(k) each paycheck, they automatically go into whatever investment options you've preselected–or what your employer has selected as a default if you haven't affirmatively made a choice.  In 2007, the percentage of 401(k) plans using balanced or target date funds as the default option for contributions overtook money market funds, and now more than 80% of plans do it this way, up from just 11% in 2003.

The lesson is to invest in something—other than just a money market fund. For 2013, average total return for Vanguard's largest money market fund (Vanguard Prime Money Market) was a mere 0.02%. Even contributions made into President Barack Obama's newly announced myRAs would get better returns; they're expected to be pegged to the Thrift Savings Plan Government Securities Fund (which had an annual return of 1.47% in 2012). Once the account balance of a myRA reaches $15,000, you'd be required to roll it into a Roth IRA. Then you're on your own—hopefully the money won't just sit in a money market.

 See also: Forbes 2014 Tax Guide

Federal health market surpasses 1M sign-ups

WASHINGTON — Enrollment in the federal health insurance exchange surged in December, with almost half of the 975,000 signing up in the days before a Dec. 24 deadline.

The new numbers, announced by the administrator for the Centers for Medicare and Medicaid Services in a Sunday blog post, bring to 1.1 million the number of Americans who have enrolled through the exchange since it opened Oct. 1.

"As we continue our open enrollment campaign, we experienced a welcome surge in enrollment as millions of Americans seek access to affordable health care coverage," wrote CMS Administrator Marilyn Tavenner.

Average daily enrollments have gone from less than 1,000 in October to 3,800 in November to 40,000 in December. And as the deadline approached, sign-ups were closer to 100,000 a day.

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Tavenner credited improvements in the federal HealthCare.gov website, which was plagued by technical problems from the time it launched Oct. 1 through late November.

As a result of those outages and glitches, the Obama administration twice pushed back the deadline under the 2010 Affordable Care Act — first to Dec. 23 and then to Dec. 24 — to sign up for insurance in order for it to take effect Jan. 1. Major insurers have also extended the deadline for paying premiums on those policies until Jan. 10.

STORY: Insurers adjust deadlines in response to HHS

One sign the site is working better, Tavenner wrote, is that 83,000 people were using the site at the same time on Dec. 23. That's far more than the original number federal officials cited Nov. 30, when they announced the site had been fixed.

The federal exchange sign-ups are just one metric of the health care law's success, however. The administration has yet to provide a December update on the 14 states running their own exchanges. While California, New York, Washington, Kentucky and Connecticut have performed well, others are still struggling.

Potentially m! illions of Americans have had their existing insurance plans canceled because the plans failed to meet the minimum standards under the law. Earlier this month, White House officials said only 500,000 people who had their insurance canceled had not obtained new coverage.

The numbers fall short of administration projections that more than 3.3 million would be enrolled through federal and state exchanges by the end of the year. And unless the administration can sustain the rate of sign-ups in the days before Christmas, it will also fail to meet the goal of 7 million it said would buy insurance before the March 31, 2014, deadline in order to avoid a 2015 tax penalty.

That's important because the law depends on young and relatively healthy people to pay premiums in order to subsidize expensive health care for older Americans.

"We are in the middle of a sustained, six-month open enrollment period that we expect to see enrollment ramp up over time, much like other historic implementation efforts we've seen in Massachusetts and Medicare Part D," Tavenner wrote.

Rising Debt Keeps Older Americans Working Longer

Older Americans now shoulder a heavier debt burden, and it’s forcing them to stay in the labor force longer and delay claiming of Social Security. So found a research paper released by the Center for Retirement Research at Boston College.

The impetus of the study, written by Barbara A. Butrica and Nadia S. Karamcheva, was to ascertain whether indebted older adults would continue to work to settle their obligations, or claim Social Security sooner if they are unemployed or not earning enough to pay off their loans. Overwhelmingly, the researchers found, debt-burdened older workers are choosing to stay in the workforce longer rather than claim Social Security benefits as soon as they are eligible.

Before they came to that conclusion, Butrica and Karamcheva outlined some fairly startling statistics on household debt in the U.S. and how it’s increased in recent years. Citing data from the Federal Reserve System’s Board of Governors, the typical debt-encumbered family owed $70,600 in 2007, a significant jump from the $23,300 number charted back in 1989. By 2010, the median value of household debt was $70,700, with debt payments accounting for roughly 18 percent of their disposable income.

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Those nearing retirement, in particular, are now more likely to not only carry debt, but have a heavier burdenas well. Between 1998 and 2010, the percentage of adults between 62 and 69 with any type of debt rose from 48 percent to 62 percent. What’s more, the median value of per-person indebtedness climbed from $19,000 to $32,100 in 2010. Accordingly, the average debt-to-asset leverage ratio increased from 10 percent to 18 percent.

The Impact

As these debt-burdened pre-retirees prepare for retirement, what are they more likely to do: work longer, or claim Social Security sooner? Their solution, according to Butrica and Karamcheva, is to stay employed and thus postpone claiming Social Security.

Here are the numbers:

Other factors that weigh heavily in the decision to remain employed into their 60s and beyond is the amount of debt (an increase of $10,000 ups the likelihood of working by 0.7 percentage points and reduces the chance of claiming Social Security by 0.3 percentage points) and whether that debt comes in the form of a home mortgage. Nearly 65 percent of homeowners with mortgages are still working at age 64 compared to 54 percent of those without mortgages. Moreover, 50 percent of homeowners with mortgages have yet to claim Social Security by age 65, while only 35 percent of those without mortgages have not collected Social Security benefits.

Overall, having debt reduces the probability of fully retiring by 22 percent and the chance of claiming Social Security benefits by 14 percent.

The study’s authors conclude that working longer can bolster retirement readiness, especially for those with debt. However, they also point out that age and ill health could prevent many older Americans from working for a lengthier stretch. For those with debt, that may mean selling their homes, taking out a reverse mortgage or declaring bankruptcy. Optimally, pre-retirees should enter their retirement years debt-free.

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Check out these related stories on ThinkAdvisor:

Low Chesapeake Production Growth Trumps Capital Spending Cuts – Maybe

Shares of Chesapeake Energy (NYSE: CHK) were trading down handily after the company announced a 20% cut in capital spending for 2014. But the company still expects production overall to grow 2% to 4%.

The company under CEO Doug Lawler has been focusing on boosting output from its most profitable oil and natural gas assets as it continues to cuts costs such as the Eagle Ford shale play in Texas and Utica shale region of Ohio. Chesapeake is the bigger operator in that area.

Chesapeake expects to spend $5.2 billion to $5.6 billion on new wells and related facilities, down from roughly $7 billion in 2013. Net of 2013 asset sales, Chesapeake sees overall oil production growing 8% to 10%, with 44% to 49% output gains in natural gas liquids and 4% to 6% growth in natural gas.

It sees production costs falling 10% to $4.25 to $4.75 per barrel of oil equivalent while general and administrative costs will fall 25%.

Chesapeake’s operations have been hit by the winter’s cold temperatures, Lawler said on a conference call Thursday. Its average daily oil and natural-gas output in December was well below expectations because of “weather challenges,” he said. The problems have extended into January.

Chesapeake is the second-largest natural gas producer in the United States. It got into trouble during the 2008 financial crisis after then-CEO Aubrey McClendon expanded the company too fast and gas prices collapsed. The stock fell as much as 78%, and shareholders revolted against McClendon’s management style and extravagance. McClendon left the company in 2013.

Since McClendon left, Chesapeake has been pruning assets and cutting staff and costs to improve results. The company will report fourth-quarter results on February 26.

The news sounded good just looking at the raw data. Nonetheless, the shares were down $1.81, or 6.9%, to $24.40. The shares were up 63% in 2013 and are off nearly 10% this year. They’re still down 64% from their 2008 peak. Thursday’s reaction is one that looks to be an instance where investors think that companies have to spend more money to make more money.

Hotel management firm warns of credit breach

White Lodging, a company that manages hotels for nationwide brands such as Marriott, Holiday Inn and Sheraton, is investigating a possible data breach at 14 properties.

The suspected credit and debit card breach occurred between March 20 and Dec. 16 at restaurants, lounges and other food and beverage outlets at those properties, the company said in a statement this afternoon.

The hotels, which White Lodging manages under agreements with the owners, are located in various cities, including Chicago, Austin, Denver and Indianapolis. White Lodging runs as a separate entity from the hotel brands.

Guests who didn't use their credit cards at the outlets or who charged items directly to their room accounts were not affected, the company said.

At one hotel, the Radisson Star Plaza in Merrillville, Ind., the breach could have gone beyond food and beverage outlets and into the property management system that manages guests' credit card information.

White Lodging, which is based in Merrillville and manages 169 hotels, says it immediately contacted federal law enforcement officials and initiated a review of all its other properties. It also contacted the financial institutions that issue the credit and debit cards. Those institutions are increasing their fraud monitoring or reissuing cards, the company said.

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"We continue to work with investigators and the credit card companies," the company said in its statement.

The U.S. Secret Service said it is investigating the matter.

The company said that the information that was compromised could have included names printed on credit or debit cards, the actual numbers, the security codes and expiration dates.

"Guests who used or visited the affected businesses during the nine month-period and who used a credit or debit card to pay their bills at the outlets might have had such information compromi! sed and are encouraged to review their statements from that time period," the company said.

Visa, MasterCard, American Express and Discover do not hold customers liable for unauthorized charges if they report them in a timely manner.

White Lodging will offer affected customers one year of complimentary identity protection services.

Marriott, which had nine properties affected, including two under its Renaissance brand, said in a written statement that it was working closely with White Lodging as they investigate the breach.

"Since this impacts customers of Marriott properties, we want to provide assurance that Marriott has a long-standing commitment to protect the privacy of the personal information that our guests entrust to us, and we will continue to monitor the situation closely," the company said.

"As you can imagine, the privacy and security of our guest information is very important to Starwood, and we are working closely with White Lodging as they conduct their investigation," Starwood Hotels and Resorts, parent company of Westin and Sheraton, said in a statement. "The breach appears to have affected food and beverage outlets at the hotels and to our knowledge, the system that manages hotel guests' credit card information was not affected at either of our properties."

InterContinental Hotels Group, parent company of Holiday Inn, which had two properties affected, said it too was cooperating with White Lodging.

"IHG is committed to protecting the privacy and personal information of our guests," the company said. "IHG is in communication with White Lodging, who continues to provide updates on the investigation to their business partners, as well as to consumers via their website."

This latest incident comes as a number of major retailers have had to deal with their own security attacks.

Millions of people who shopped at Target Nov. 27 through Dec. 15 could have had their credit and debit information and other personal data compromised.

Th! e affecte! d hotels in the White Lodging incident are:

Marriott Midway, ChicagoHoliday Inn Midway, ChicagoHoliday Inn Austin Northwest, AustinSheraton Erie Bayfront, Erie, Pa. Westin Austin at the Domain, Austin Marriott Boulder, BoulderMarriott Denver South, DenverMarriott Austin South, Austin Marriott Indianapolis Downtown, IndianapolisMarriott Richmond Downtown, Richmond, Va.Marriott Louisville Downtown, Louisville, Ky.Renaissance Plantation, Plantation, Fla.Renaissance Broomfield Flatiron, Broomfield, Colo.Radisson Star Plaza, Merrillville, Ind.

Stocks extend January slide, hit by weak earnings, emerging markets turmoil

Bloomberg News

U.S. stocks fell, sending the Standard & Poor’s 500 Index to its worst January since 2010, as earnings reports at Amazon.com Inc. and Mattel Inc. disappointed investors and turmoil in emerging markets continued.

Amazon slumped 11% after the world’s largest Web retailer reported profit and sales that trailed analysts’ estimates. Mattel Inc. sank 12% after a drop in Barbie sales weighed on results. Google Inc. jumped 4%, pacing gains in technology shares, after sales topped estimates on growing advertising spending during the holiday season.

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The S&P 500 retreated 0.7% to 1,782.43. The index fell 0.4% over the past five days for a third week of losses, the longest streak since May 2012. The Dow Jones Industrial Average dropped 149.76 points, or 0.9%, to 15,698.85, the lowest in almost three months. About 7.8 billion shares changed hands on U.S. exchanges Friday, 25% above the three-month average.

“It seems investors can expect increased volatility and more modest returns as the year unfolds,” Terry Sandven, chief equity strategist at U.S. Bank Wealth Management, said. He helps oversee $112 billion. “We need earnings to drive the market to meaningfully higher levels and to do that you need an improving economy. We’ll get a better read on that over the next week.”

The S&P 500 fell as much as much as 1.2% Friday to 1,772.26, approaching its lowest level since Dec. 18.

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“The bulls are defending their turf,” Ryan Detrick, senior technical strategist at Schaeffer’s Investment Research in Cincinnati, said. “When you see those December lows start to hold tough, that’s the bulls starting to sink their teeth in and defend.”

The S&P 500 fell 3.6% in January, its first monthly decline since August, as emerging-market currencies slumped amid signs China’s economy is slowing. While the benchmark has retreated in January 24 times since 1950, the gauge ended the year lower than its Jan. 31 reading in only 11 of those years, according to data compiled by MKM Partners. A lower start to the year resulted in a full-year decline for the index 58% of the time.

The S&P 500 last fell to start the year in 2010, when the gauge rallied 17% in the next 11 months to finish the year with a 13% gain.

A report Friday showed consumer spending climbed more than forecast in December even as incomes stagnated. Household purchases, which account for about 70% of the U.S.