Hey, it's Friday! After scaring you to death earlier in the week with news of a potential killer asteroid heading our way, we thought you deserved a lighter introduction to our Take today. Here's the news in a nutshell:
- An upscale London grocery store is advertising "the world's greatest job." Fortnum & Mason says it's willing to pay $54,000 a year... for a chocolate taster.
- Londoner Paul Hunn holds the title as the world's loudest burper. However, he failed to come through in the clutch today in an attempt to better his 118.1-decibel belch (a burp as loud as a pneumatic drill) of a couple of years ago. He blamed a sore throat.
- Two bank robbers were (literally) caught with their pants down by police in Athens, Greece. The burglars were arrested while attempting to change into swimming trunks and blend into the tourist crowd.
- Finally, we offer a Foolish Farewell to William Mallow, who passed away Tuesday at the age of 72. Mallow was a modern-day Ben Franklin, inventing everything from a way to artificially age Scotch Whiskey to a slippery spray that helps control violent crowds by making them slip and fall. His most famous contribution was a method that causes cat litter to clump together around kitty potty, enabling easy cleanup.
The Motley Fool 50 is not yet potty-trained, and leaked away 2% of its value today.
In today's Motley Fool Take:
This morning, Cigna (NYSE: CI) reported second-quarter net income of $214 million, or $1.50 per share, down 15% from last year's $252 million net profit. The health insurer grew revenue 6.6% to $4.97 billion, but an ugly stock market and uglier management error in pricing premiums hurt earnings.
In the second quarter, investment losses cost the firm $67 million, or more than double the $32 million in realized investment losses in the same period last year. Realized losses from sales and impairments of fixed income securities, in addition to lower gains from a sold reinsurance business, contributed to the excess losses.
Though Cigna's rate hikes contributed to revenue growth, the rate increases weren't enough to cover increasing medical costs. CFO Jim Stewart attributed the losses to a rate mispricing error, describing the mistake as an "aberration." Enrollment in the company's insurance plans also dropped about 1% to 14.1 million members.
The company also repurchased about 1.6 million shares of common stock, or a little over 1%, during the second quarter.
Cigna is a large player in one of the economy's most stable industries. However, even a company with Cigna's track record can make mistakes. We hope they have insurance.
"No one is as capable of gratitude as one who has emerged from the kingdom of night." -- Elie Wiesel, accepting the Nobel Peace Prize, Dec. 10, 1986
Lights, Camera, Action
Most of those banking on the summer-movie hype bet on a heated battle between Men in Black 2 and Attack of the Clones for the box-office crown. Few would've wagered on Spider-Man topping the $400 million mark domestically, to become the highest-grossing film since 1999.
On the animated film front, with so many family-friendly releases on the calendar, one might wager that a summer animated release would give Ice Age a run for its money. While Disney's (NYSE: DIS) Lilo & Stitch has fared well so far, it will be hard-pressed to thaw out Ice Age's theatrical take.
Then again, that's Hollywood. It's always full of surprises. Despite ticket prices inching to an all-time high of $5.71 a stub (on average), people have been packing the movie houses this year. That's good news for studio companies. They could use the silver lining, as parent companies such as AOL Time Warner (NYSE: AOL), Viacom (NYSE: VIA), and Sony (NYSE: SNE) are coping with shortcomings elsewhere due to everything from a weaker ad market to a piracy-fueled music industry crisis.
With studios keeping production costs in check and the retail market booming, thanks to the surge in DVD-player sales, it might be even more than just a silver lining. It might prove to be the sun behind the clouds.
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David and Tom Gardner on the Air
On Aug. 4, tune in to CNN Sunday Night at 10 p.m. ET when Fool co-founder Tom Gardner talks to Carol Lin about the Fool's What to Do With Your Money Now and what's up with the stock market.
And as if that weren't enough (and, by golly, don't you think it should be?), catch both David and Tom the very next night at 10 ET as they discuss The Motley Fool Investment Guide for Teens on "The Bloomberg Money Show" on WBBR-AM radio in New York or online at www.bloomberg.com/radio.
Disney's Dismal Outlook
After the bell yesterday, Walt Disney Co. (NYSE: DIS) reported third-quarter earnings that met analyst estimates with net income of $364 million, or $0.18 per share. However, its stock dropped 8.5% to $15.40 in after-hours trading alone, after the media giant warned that earnings for the fourth quarter would fall short of both the $0.16-per-share analyst estimate and last year's $0.13-per-share fourth-quarter profit.
Revenue for Disney's theme parks and resorts fell 5% from last year to $1.8 billion, as segment operating income dropped 17% to $467 million. The segment, which includes Walt Disney World Resort in Florida and Disneyland Resort in California, accounted for 40% of its operating earnings last year. On concerns of terrorism and economic uncertainty, fourth-quarter reservations at Disney's resorts are down about 10% -- contributing to the company's lowered outlook.
Revenues for Disney's media networks division decreased 10% to $2.1 billion in the third quarter, as its ABC television network continues to show weakness. The network has suffered from lower ratings and, as a result, lower advertising revenues.
In its earnings report, Disney also noted that the company "is in favor of expensing stock options," calling for the adoption of "consistent and clear guidelines" by both the Financial Accounting Standards Board and International Accounting Standards Board. Meanwhile, the company will report the relevant information, providing "supplementary financial tables" in its quarterly reports.
Disney is getting battered in all directions. Declines in consumer confidence and increased terrorism concerns are putting a dent in traffic at Disney's theme parks -- its Walt Disney World Resort in particular. Its ABC television network is struggling in an already-weak advertising market. Disney has a strong brand, but a weak outlook. However, at a little over $15 per share, its stock is nearing a five-year low and may be worth a look.
Discussion Board of the Day: Disney
Disney has a few more shots at claiming the summer crown with today's debut of Signs and next week's Spy Kids sequel. Is the company overcoming its live-action shortcomings? And while Lilo & Stitch has become Disney's highest-grossing in-house animated feature in three years, is it enough to put the company back at the top on the ink-and-paint front? All this and more -- in the Disney Discussion Board. Only on Fool.com.
When word gets out that your company has hired bankruptcy attorneys, watch out. United Airlines (NYSE: UAL) dropped 20% today after confirming a BusinessWeek report to that effect. A spokesman said the attorneys were retained shortly after Sept. 11 last year, but stressed the company is still trying to get things turned around.
The odds are only one in a hundred that your stock mutual fund increased in value last month, says the research firm Lipper. According to a Reuters' story, diversified stock funds dropped an average of 9.4% in July, and are down an average of nearly 20% so far this year.
Data released by the U.S. Labor Department today showed just a slight increase in new jobs in July. That was less growth than expected, and put more downward pressure on the stock market this morning.
The Stanley Works (NYSE: SWK) has pulled an about-face and abandoned plans to move its headquarters to Bermuda. The move would have saved the tool maker some $30 million in U.S. taxes, but management yielded under intense pressure from Congress and cancelled the island trip.
Duke Energy (NYSE: DUK) has discovered dozens more round-trip trades than it first reported, but said they had no material impact on revenue. The company also fired two employees involved in the scam.
In a move that comes as no surprise to many investors, Tyco (NYSE: TYC) Chief Financial Officer Mark Swartz resigned his post yesterday. Swartz was closely associated with former CEO Dennis Kozlowski, who was charged last month with tax evasion.
And Finally...
Today on Fool.com: Rick Munarriz asks if it's too late to save CEOs' tarnished images.... In our Tax Center, Congress gives educators a new deduction for out-of-pocket expenses.... The wash sale rule explained, in Fool's School.
Contributors:
Bob Bobala, Robert Brokamp, Jeff Fischer, Jeff Hwang, Tom Jacobs, Bill Mann, Selena Maranjian, Rex Moore, Rick Munarriz, Jackie Ross, Reggie Santiago, Dayana Yochim
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