The Brits are once again proving they're way ahead of us in culinary delights. First came shepherd's pie, then fish & chips... and now a fungus that looks like meat and tastes like chicken. Consumed in the U.K. since 1965, this comestible is just now hitting U.S. markets. Developed by a subsidiary of Anglo-Swedish pharmaceutical giant AstraZeneca (NYSE: AZN), the meat substitute known as mycoprotein is marketed as Quorn (pronounced kworn). Kwhy? Less fat and calories, more fiber.
Quorn is made into a variety of products, such as chicken-like nuggets and even an alternative to ground beef, but none of us here at Fool HQ (at least none of us sitting near The Motley Fool Take's editor) has ever tried it. After all, it's a fungus! And we don't mean mushroom fungus either. "It has as much to do with mushrooms as you and I have to do with salamanders," Michael Jacobson, the executive director of the advocacy group Center for Science in the Public Interest said in this article on CNN.com. "We all know what a mushroom looks like. This ain't it." Amen.
Could this fungus be the next big thing in the States? Is there money to be made here, or will it flop? We have no idea, but you might ask our friends at Fool U.K.
The Motley Fool 50 is suddenly feeling queasy. The index lost about half a percent today when we threatened to feed it only Quorn.
In today's Motley Fool Take:
It's a Bad, Bad WorldCom
Shares of WorldCom (Nasdaq: WCOM), already near a seven-year low, were knocked back over 10% today on word of an inquiry by the Securities and Exchange Commission (SEC). The telecommunications company, which includes the WorldCom Group as well as long-distance arm MCI Group (Nasdaq: MCIT), notified shareholders after the bell yesterday.
The SEC's request (which is available on WorldCom's website) asks for several pieces of information, including accounting procedures associated with goodwill and a pre-tax charge in the third quarter of fiscal 2000. Also at issue are loans made to CEO Bernie Ebbers and other executives. Ebbers, who has received some $200 million in loans from his company, reportedly told CNBC he was facing margin calls due to WorldCom's falling stock price. The loans were a better alternative than liquidating other assets, he said.
The WorldCom news follows on Monday's revelation that the SEC is also probing fellow telecomm Qwest Communications (NYSE: Q). Both companies, of course, say they will fully cooperate, and both say they aren't guilty of any wrongdoing. But theirs is a gloomy picture, and both managements' attention needs to be focused on business in these trying times, and not on SEC probes.
Pigging Out on Plastic
Did you pay off your credit card balance in full last month? If you did, high five! But statistics show that the guy in the next cubicle most likely slacked off on his credit fitness regime.
A nationwide survey conducted by the Cambridge Consumer Credit Index reveals that more than half of Americans didn't pay off their credit card balances in February. Thirty seven percent of those folks paid less than half the outstanding balance, and 3% couldn't afford to make any payment at all.
Those may seem like bummer stats, but a closer look at the survey results shows that Americans are becoming more cautious about taking on debt, especially compared to previous months. According to Cambridge's senior economist, Allen Grommet, "Underlying the totals the survey indicates that consumers are attempting to use less credit each month than the month before, since the holidays, and even though they are falling short of their goals they keep trying."
But like any diet or exercise regime, the fatty fruits of temptation ("Honey, there's a sale at Sears!") are always beckoning. Though Americans are sticking to their credit diet right now, many are just counting the days until they can pig out on plastic. The survey measures individual intentions on debt for the past month, the next month and for six months from now. In March, just 15% or respondents plan to take on more debt, and 85% plan to make an effort to pay off debt their debt. But over the next six months, 39% of Americans plan to take on more debt to make a major purchase such as a car, education, appliance, or medical procedure.
As always, when it comes to the perils of plastic, we Fools encourage restraint.
GE, IBM, and Cisco Join Disclosure Fest
General Electric(NYSE: GE), IBM (NYSE: IBM), and Cisco Systems (Nasdaq: CSCO) have all increased financial disclosures recently to dispel concerns and maintain investor confidence.
GE's latest annual report disclosed details of its special purpose entities (SPEs), the same kind of off-balance sheet creatures that tripped up Enron. GE revealed $56.41 billion in SPE assets at the end of 2001, a 37% increase over 2000. The report said that "these entities do not engage in speculative activities of any description, are not used to hedge GE or GE Capital Services positions, and under GE integrity policies, no GE employee is permitted to invest in any sponsored special-purpose entity." The latter is a reference to the Enron's Andrew Fastow, who owned pieces of the SPEs and negotiated on both sides of the table. SPEs are not inherently evil, but GE has decided it may take more than footnotes to persuade investors that its SPEs are nothing special.
IBM provided more financial information in its annual report as well, allowing investors to identify more clearly how certain one-time events such as gains from sale of real estate, intellectual property, and business units affect earnings. Investors have questioned increased earnings that are due to one-time events and do not necessarily reflect stronger ongoing business operations.
Cisco Systems disclosed details of Andiamo Systems, one of several in-house startups staffed by on-leave employees. Andiamo is developing a data storage switch, and Cisco loaned it $42 million with a promise of up to $142 million more. The parents secured 44% ownership and committed to buy the rest for $2.5 billion from the 200 employees if certain performance milestones are met. Controller Dennis Powell told The Wall Street Journal that the company's financial statements have included Andiamo research and development expenditures since it was started a year ago.
All three companies are widely held and held up as examples of great companies. Let's hope their moves are not short-term responses to Enron but promises to lead the way in disclosure from here on.
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There's a new kid on the trading block. Homebuilder WCI Communities (NYSE: WCI) went public today. Priced at $19 a share and opening at $22.60, the homemaker's open house party couldn't come at a better time. With rock-bottom borrowing rates leading to a surge in home hunters, the real estate sector is living up to its location, location, location adage. But with rates expected to inch up this year will this be a happy home or a full house?
Another industry that is in demand right now is defense. With military spending on the rise, the Initial Public Offering carpet also rolled out kindly for Anteon (NYSE: ANT). Scooping up ANT like a hungry aardvark, the underwriters upped the initial offering price from as low as $15 to $18 last night before the market took over this morning, opening yet another $3 higher.
Calpine (NYSE: CPN) is looking to get recharged. The power producer is scaling back its spending plans, slicing billions in outlays over the next two years. Today the company announced that it would be reducing turbine purchases. Earlier this year the company had postponed the build out of 34 new power plants.
While Lucent (NYSE: LU) invented the touch-tone to speed up the dialing process, it seems the company won't be ringing up profits anytime soon. The company warned that it wouldn't achieve positive cash flow until fiscal 2003. With weaker sales on the horizon the company is backing off its earlier projections that called for double-digit top-line sequential growth during the current quarter. Kind of makes one miss the days of the rotary dial, don't it?
Wireless market leader Nokia (NYSE: NOK) is hosing down its first-quarter outlook, though it's not the slow cell phone stronghold that is tripping up the Finnish giant. Nokia is expecting network infrastructure sales to tumble by 25% over last year's levels. It had earlier pegged the downturn only in the high teens. Rotary dial, where art thou?
As Enron Turns: In today's nerve-splitting episode, while Enron (OTCBB: ENRNQ) shares are fetching roughly two bits in the open market -- literally and figuratively -- the stock is having a much healthier afterlife in the auction market. A sale on eBay (Nasdaq: EBAY) that concluded this morning for an Enron stock certificate, brought in a high bid of $27.01. The description indicates that the stock itself is "generally iron wrinkle free." Unfortunately, the same can't be said for Enron itself.
And Finally...
Today on Fool.com: Which online advertising companies are ripe for recovery? Tom Jacobs has the scoop.... Warren Buffett shreds corporate America's lack of integrity in his annual letter. Bill Mann takes a closer look.... What lessons have we learned from investing in technology growth stocks?.... The new tax laws could be worth $500,000 to you. Seriously.... A penny stock avoided is many pennies saved.
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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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