If you picked up a copy of The Wall Street Journal today, you saw the start of a new, colorful era. Yes, the stodgy old paper is now incorporating color into its design, as well as a new layout with more graphics. (By the way, drop by our Fool Perks area where you can sign up for free trial subscriptions to the Journal, Investor's Business Daily, and other nifty things.)
There is no question that we at The Motley Fool embrace change, especially when it comes to shaking up the Wall Street establishment. However, just as the Andy Griffith Show was never the same after it started appearing in color, we're afraid the new-look Journal will soon lose its edge. Soon, Opie will grow up and the whole thing will succumb to Mama's Family in the ratings.
The Motley Fool 50 was colored red today, as it fell back about three-quarters of a percent.
In today's Motley Fool Take:
Merrill Lynch (NYSE: MER) has taken a huge credibility hit this week. As we reported yesterday, it was one of the nine banks accused in a lawsuit for participating in "a far-ranging, multi-layered scheme designed to conceal Enron's financial condition, while they and the Enron insiders were able to continue the illusion of profitability."
Today, the New York state attorney general's office issued a court order "requiring immediate reforms" in Merrill's investment counseling service. This followed an investigation that uncovered a "shocking betrayal of trust" as Merrill counseled clients to buy stocks it thought were poor investments.
Two sections of the press release clearly show the outrageousness of analysts' conflicts of interest:
For example, one analyst made highly disparaging remarks about the management of an internet company and called the company's stock "a piece of junk," yet gave the company, which was a major investment banking client, the firm's highest stock rating.
And, addressing the real victims of this practice:
...The communications show how individual investors were harmed. A research analyst complained about giving a buy rating to a poor investment: "I don't think it is the right thing to do. John and Mary Smith are losing their retirement because we don't want a client's CEO to be mad at us."
Don't expect it to end here, because the attorney general has subpoenaed other firms as well. The time for change has long past, and we applaud New York for taking these actions.
"When you live on cash, you understand the limits of the world around which you navigate each day. Credit leads into a desert with invisible boundaries."
-- Anton Chekhov, Russian author, 1893
Philadelphia Inquirer columnist Jeff Brown had no idea what he was in for when, needing a few extra words to fill out one of his columns, he half-jokingly solicited entries for the First Annual Philadelphia Inquirer Cheapskate Contest.
What followed were more than 300 suggestions from cheapskates around the country. Sure, there were the usual entries boasting of re-using dirty Ziploc bags, cutting one's own hair, and dining on road-kill deer (only if it's warm when found, of course).
But the winner had to fulfill Brown's criteria: "The top cheapskate entry would have to be eye-opening, clever, and detailed. Most important, like any successful scientific experiment, it would have to be repeatable -- something others could emulate. It would have to be useful to many. And it would have to be truly cheap -- yet demonstrating a mind-set that could be applied to anything. As I read the entries, I also decided the grand prize could only go to one that was morally sound."
As Fools on the Living Below Your Means discussion board know, it's hard to pick just one winner. So Brown named winners in several categories, including "Most Questionable From a Health Standpoint" (the man who cools his drink cans in the toilet tank) and "Least Valuable From a Monetary Standpoint" (the man who extends the life of his turn-signal bulbs by signaling only when there's traffic).
The overall winner was retired Army metallurgist Peter Nowalk of Willow Grove. Nowalk is a frugal flosser (sound familiar, LBYMers?). He saves $5.06 a year by implementing his homegrown looping method and sterilizing the unused ends for further use. He gets about 14 days out of a 10-inch piece of floss.
Our frugal Fool hats go off to you, Mr. Nowalk. We're going to stick to rinsing out Ziploc baggies here at Fool HQ.
Deductions for the Self-Employed
Self-employed individuals are allowed to claim a percentage of the amount paid during the tax year for insurance that's for medical care for themselves, their spouses, and their dependents as an adjustment to income. The allowable deduction for health insurance of self-employed individuals is:
2001: 60%
2002: 70%
2003 and thereafter: 100%
The deduction, however, may not exceed the taxpayer's earned income derived from the trade or business with respect to which the plan providing medical care is established. Also, the deduction is not available to those eligible to participate in subsidized health plans maintained by their employers or their spouse's employers.
There's yet more trouble today for telecom equipment maker Nortel Networks (NYSE: NT). The company announced that its sequential revenues for the current quarter will likely decline 16%, not the 10% previously forecast. At the same time, the company announced it would draw on a $1.75 billion credit facility, which it had hoped to extend after its April 10, 2002 expiration. However, it couldn't do so after failing to reach agreement with three of the 27 banks required for approval.
The company's press release stated that it "will be in compliance with all credit facility covenants as of March 31, 2002." Great. Translation: "We're not starting to default this quarter, but stay tuned."
Nortel is desperately cutting jobs and conserving cash against the hoped-for day when their large telecom customers may again spend more money. Its cash more than doubled in 2001 over 2000, but its long-term debt increased 3.5 times, before the latest $1.75 billion addition.
Like Lucent Technologies (NYSE: LU), Nortel's stock trades are in the doldrums. Yesterday's close of $3.58 is a level not seen for decades. Some investors undoubtedly eye the telecom-equipment sector, waiting for the revenue bottom and banking on companies that would profit from increased capital spending. But even if there is some recovery in customer spending and Nortel and Lucent are alive to see it, their share counts -- 3.2 billion and 3.42 billion shares, respectively -- are so large that it would take enormous demand to provide any meaningful appreciation.
The mighty have fallen, but there's nothing to prevent them from falling farther.
Tap into the Fool's best stock ideas with Motley Fool Select. Each month will bring you in-depth coverage that cuts through the clutter and highlights promising companies. Subscribe for a full year and get our Industry Focus 2002 report for free -- a $49 value.
Abbott Laboratories (NYSE: ABT) gave investors reasons to smile today, reporting an 18% increase in first-quarter revenues over year-earlier levels, to $4.2 billion. Net income came in at $854 million. The company also filed for approval of D2E7, a rheumatoid-arthritis drug that was part of Abbott's Knoll acquisition last year.
Privately held Levi Strauss announced sad news today, that it's closing most of its U.S. production facilities in order to be able to compete more effectively. Retooling itself in many ways, the 149-year-old company is introducing new designs aimed at younger consumers -- such as its "Skinner" and "Offender" lines.
Level 3 Communications (Nasdaq: LVLT), according to a Wall Street Journal article (subscription required), is rumored to be mulling over acquiring some beleaguered competitors, possibly including Global Crossing. Level 3 CEO Jim Crowe noted, "All capacity is not created equal." He added, "A lot of capacity is illusory. It's partly built or it's in the wrong place -- that is why some of it is going for pennies on the dollar. Nobody is investing at all. But in six months, the market will change from surplus to shortage." The Journal added, "[Crowe] also notes that companies like his with proven track records -- and no bankruptcy-court filings -- may fare better with telecom customers."
Saudi oil minister Ali al-Naimi is offering encouraging words to those alarmed by skyrocketing gas prices and Saddam Hussein's plans to halt oil exports for a month to protest Israel's activities in the West Bank. Per a Reuters story, al-Naimi has said, "I believe there is no threat to the reliability of worldwide oil supplies, and the reliability of Saudi Arabian supplies in particular."
Pharmaceutical giant Merck (NYSE: MRK) has announced plans to simplify its half-century-old patient assistance program that offers free medications to low-income people who cannot otherwise afford them. Other drug companies have been stepping up to help out lower-income folks, as well.
As Andersen Turns: U.S. prosecutors have secured an agreement from David B. Duncan, Arthur Andersen's (fired) chief auditor in Houston for its Enron account, to plead guilty to obstruction and cooperate with ongoing investigations.
Today on Fool.com: Once left for dead, the remaining dot-com stocks are creeping back into favor.... With cash to burn and a bulging pipeline, Human Genome Sciences has never been in better shape.... Learn which documents the IRS wants you to keep, and for how long, in Fool's School.
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Bob Bobala, Robert Brokamp, Jeff Fischer, Tom Jacobs, Bill Mann, Selena Maranjian, Rex Moore, Rick Munarriz, Dayana Yochim
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