Happy Birthday to Rosa Parks, who turns 89 today. The greatness and diversity of our country is never lost on us: Ms. Parks shares a birthday with Dan Quayle and Clint Black. Ahh, America.
Jeers to former Enron CEO Ken Lay for dissing the U.S. Senate and opting not to testify on Capitol Hill today. The world is waiting, Ken.
Cheers to the New England Patriots (and St. Louis Rams) for providing us with one of the great Super Bowls, and actually winning it. We knew you had it all the way. Investors can learn a lot from your pluckiness.
We don't believe any of those freaky statistics indicating the Dow heads downward in years the American Football Conference wins the Super Bowl. Our confidence was not boosted today as the Dow and The Motley Fool 50 Index both fell more than 2%, but the Pats fans in the office hardly took notice. "We Are the Champions" is still ringing in their heads. It's a song they've never been able to sing before.
In today's Motley Fool Take:
The Tyco Takedown
Since when did fiscal prudence go out of fashion? We have always taken our Get Out of Debt mantra seriously around here so it may have come as a bit of a shock to see shares of Tyco International (NYSE: TYC) open 11% lower this morning after announcing that it would be buying back $4.5 billion in short-term commercial paper.
With headlines like "Tyco Shares Tumble on Debt Buyback" on CBSMarketwatch, one would think that a conglomerate looking to put its $4 billion in year-ahead free cash flow to good use by paying down debt should be applauded rather than slammed by Wall Street.
Unfortunately, Tyco also confirmed reports today that over the last three years it had made over 700 acquisitions worth $8 billion that it had not publicly announced. However, Tyco Chief Financial Officer Mark Swartz said that Tyco did disclose these acquisitions in the company's SEC filings and its annual reports. Nevertheless, the issue again raised questions about Tyco's accounting and disclosure practices.
Even before bashing Enron was cool, Tyco was hounded by allegations of accounting irregularities. Portfolio manager and newsletter cynic David Tice had been pounding the company's balance sheet practices for years. The company defended itself to the market's liking but Enron has made many weary of anything remotely suspect.
Tyco has grown through acquisition. If the synergy felt right and the net result would be accretive to the bottom line, Tyco would heap it onto its buffet plate. But indigestion caught up with the company last month as Tyco announced that it would be splitting itself into four separate companies. With everything from acquisition-related accounting practices to a $20 million payment to an outside director under the analytical microscope, Tyco's tab has come due. It's not prudence that's on trial. It's gluttony.
You too can be like Tyco, and we mean that in the good way. But how do you begin to pay down your debt? How do you set up a fiscal game plan and stick to it? Is it possible to live a lifestyle that allows for breathing space beyond your paycheck? All this and more -- in the Budgeting and ever-popular Living Below Your Means Discussion Boards. Only on Fool.com.
Glitz, Schmoozing, and Deep Thoughts
New York City and the Waldorf-Astoria Hotel have been hosting the annual gathering of the World Economic Forum (WEF), which usually takes place in Davos, Switzerland. More than 2,500 of the world's most powerful people are attending and the theme of this year's meeting is "Leadership in Fragile Times: A Vision for a Shared Future."
Here are just a few interesting tidbits:
- Many CEOs fork over about $25,000 each in annual dues and about $6,000 per participant to attend the annual meeting.
- Ken Lay, former CEO of Enron (OTCBB: ENRNQ), was "disinvited" after his company imploded. "Because at the moment the company went into bankruptcy, they did not fit anymore the criteria of our membership," said WEF president Klaus Schwab.
- Some 40% of the participants are CEOs, and about 30% of the rest are, according to one report, "idealists."
- Some attendees and expected attendees: U2 singer Bono, Archbishop Desmond Tutu, actor Ossie Davis, supermodel Naomi Campbell, Grameen Bank founder Muhammad Yunus, Cisco CEO John Chambers, Amazon.com CEO Jeff Bezos, Boeing CEO Phil Condit, Microsoft's Bill Gates, Hewlett-Packard CEO Carly Fiorino, Colin Powell, Kofi Annan, George Soros, Charlie Rose, and hundreds of other world leaders, CEOs, and celebrities.
- Lehman Brothers paid Elton John a reported $1 million to perform at a private party for 200 WEF attendees.
- The meetings are being held in Manhattan to show post-9/11 support for the city, but the heavy security surrounding events is ironically keeping many tourists and shoppers away from businesses.
If you'd like to learn more, The New York Times is covering the proceedings (registration required), as are Time and Newsweek.
Super Bowl Ads Pop Quiz
Before we talk about the advertising, let's get a couple of things out of the way. First and foremost, we're thankful that the game itself was actually better than the ads. Also, who didn't get a lump in their throat during the halftime show when the banner containing names of the Sept. 11 victims collapsed down behind U2, and lead singer Bono displayed the American flag lining in his jacket?
And now, to the ads. A USA Today focus group liked one of the Bud Light ads the best.... the one where the man dives onto the bed lined with satin sheets, and scoots right on out the window. The lamest was a Taco Bell ad, where the guy excitedly shows off his new steak quesadilla.
While most of the other Super Bowl spots were clever, many advertisers fell short in one crucial area: getting viewers to actually remember their product or service. With that in mind, we've set up a little quiz for you. Here a few ads that ran yesterday. What were they advertising?
- While conducting a "scientific" test, a researcher blows a dart into the neck of a participant.
- A chainsaw-wielding robot battles a mini-refrigerator.
- A small car and an SUV battle for the same parking spot.
- A monkey is fired for his lack of entertainment skills.
- Hank Aaron, thinking of his home-run record, disrupts Barry Bonds' batting practice.
- Britney Spears looks fabulous over several decades.
- A giant rat gasps for air near a subway stop.
- Man with hilarious walk: chest and head remain steady while bottom half goes crazy.
- "Pitch puppets" are fired, because product sells itself.
- The ultimate race: men vs. horse vs. race car.
We'll have the answers for you below, so keep reading today's Take!
Shameless Plug Dept: Fight the Taxman
The Taxman is coming, the Taxman is coming! But you can fight him off with The Motley Fool Tax Guide 2002. Now, there's no need to really get belligerent, but your money is your money, and you're entitled to keep as much of it as you can. Legally. We can help.
Have you bought a car recently? We didn't think so. The big three carmakers all announced declines in January sales, over year-earlier levels. General Motors (NYSE: GM) reported a 13% slump, Ford (NYSE: F) posted a 12.6% decline, while Chrysler, the U.S. arm of DaimlerChrysler AG (NYSE: DCX), reported sales off just 9%. The slumps are blamed on, among other things, the curtailment of 0%-financing promotions.
Arthur Anderson has hired former Federal Reserve chief Paul Volcker to head its internal reform initiatives. CEO Joseph Berardino, quoted in USA Today, said that, "Recruitment of the widely respected Volcker as the unsalaried chairman of a new independent oversight board and the changes in Andersen's audit services were the first steps in what will be an ongoing campaign to restore public confidence."
Moore's Law is being violated by the semiconductor industry. The law, which has held for more than three decades, expects the number of transistors on a microchip (which are tied to chip speed) to double every 18 months, but chip designs have recently been exceeding that pace. Intel's (Nasdaq: INTC) fastest Pentium 4 chip clocks in at 2.2 gigahertz, while the company has revealed it's tinkering with a module that can reach 10 gigahertz. Learn more at The New York Times (free registration required).
Book her, Dan-o! Barnesandnoble.com (Nasdaq: BNBN), the online bookstore of parent company Barnes & Noble (NYSE: BKS) and Bertelsmann A.G., finally has a leader. After about two years of Stephen Riggio as acting CEO, Marie J. Toulantis, who has been serving as president and chief operating officer, has just been named to the post. Ms. Toulantis has recently noted that the company is shifting its focus from revenue growth to profitability.
Hugh Hefner, speaking about his magazine and company, Playboy Enterprises (NYSE: PLA), is saying, "We're back. We're hot." The company, run by his daughter, Christie, is expected to report its third consecutive year of red ink, following a few profitable years in the '90s. The firm purchased several explicit cable-TV networks last year, in an attempt to revise its soft-core image. Read more at The New York Times (free registration required).
Farewell to Sheldon Allman, 77, who has passed away. Allman sang the theme song to "Mr. Ed" and composed many other theme songs, including that of "George of the Jungle."
President Bush -- help us out here, wouldja? Following the Enron (OTCBB: ENRNQ) scandal, there appears to be widespread support for a stronger Securities and Exchange Commission (SEC). The SEC had asked for a budget of more than $500 million for next year, but the Bush administration is only planning a 4% increase, for a total of about $456 million.
As Enron Turns: In today's episode, former Enron CEO Ken Lay suddenly tells Congress that he's changed his mind and will not be testifying before them today. (Two other top execs do the same.) This comes on the heels of shady revelations regarding Chewco, an Enron partnership. Sez The Washington Post, "In the Chewco story are examples of huge profits improperly claimed by Enron and individual enrichment by Enron insiders. In three years, a $125,000 investment by a second-level financial executive and his domestic partner ballooned into a $10.5 million payoff, plus other lucrative fees."
Answers to Super Bowl Ads Pop Quiz
Okay... here are the answers to our Super Bowl ad quiz from above:
- Quizno's Subs
- Bud Light (Anheuser-Busch (NYSE: BUD))
- Cadillac Escalade EXT (General Motors (NYSE: GM))
- E*Trade (NYSE: ET)
- Charles Schwab (NYSE: SCH)
- Pepsi (PepsiCo (NYSE: PEP))
- Anti-smoking message - American Legacy Foundation
- Levi's
- Lipton Brisk Tea (Unilever (NYSE: UL))
- Visa
We're guessing the Britney Spears-Pepsi ad did pretty well in this quiz, and the Quizno's commercial may have done the best job of introducing a lesser-known company to the world.
Just remember these companies spent nearly $2 million for each 30-second spot. If you can't remember their product, their ad guys didn't do a very good job. Which brings us to the question: What in the heck is "mLife," anyway -- and was it smart for AT&T Wireless (NYSE: AWE) to spend roughly $10 million yesterday to promote it?
I'll Take Sam Donaldson to Block
Want to play our Fool Radio game of Follywood Squares and talk with one of America's favorite journalists? Do you have some pre-Valentine's Day advice you'd like to give on the subject of relationships and money? Got a financial question you want to ask? Fool Radio wants to hear from you. The Fool Radio phone lines are always open toll-free at 866-NPR-FOOL, 866-677-3665.
And Finally...
Today on Fool.com: How much emphasis should an investor put on relative strength?... Tom Jacobs is getting really Boring, but it's a good thing.... Bob Bobala is still hyperventilating from the Patriots' win in the Super Bowl, but he says if the Pats can beat the Rams, you can beat the market.... Help us find some of the most valuable posts on our discussion boards and you could win $500.
Contributors:
Brian Bauer, Bob Bobala, Robert Brokamp, Jeff Fischer, Tom Jacobs, Bill Mann, Selena Maranjian, Rex Moore, Rick Munarriz, Dayana Yochim
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