It's late Friday afternoon, but nobody stops working here at The Motley Fool. We have a meaty Motley Fool Take for you with thoughts from David Gardner on Louis Rukeyser being ousted from PBS, oil companies sliding, Nike clearing us hurdles, a ton of tax tips, and a whole lot more. So, let's get moving.
Have a great weekend, everybody!
In today's Motley Fool Take:
Oil Stocks Sinking
When it comes right down to it, the rapid and significant rise in oil stocks didn't make a whole heck of a lot of sense. Baker Hughes (NYSE: BHI), for example, rose more than 60% from September through this past week. Noble Drilling (NYSE: NE) has nearly doubled. Precision Drilling (NYSE: PDS), Anadarko (NYSE: APC), and FOOL 50 component Schlumberger (NYSE: SLB) are each up by more than 50%. In fact, among the big drillers, only Halliburton (NYSE: HAL), with its uncertain asbestos liabilities, seems to have tread water.
What's been strange about the rapid rise is that none of the economic undergirdings that would normally call for better times for drillers seems to be in place. The global economy seems to be stumbling along, keeping demand levels relatively low. Both North America and Europe had unusually mild winters, crude oil prices are still significantly lower than they were a year ago, air travel is at decade lows, and several oil producing countries are in the midst of severe economic crises. None of this portends a thriving oil services industry.
Well, it took some time for anyone to bother to inform the stocks of these companies, but early this morning Baker Hughes management let the market in on what should have been a poorly kept secret: profits for the upcoming quarter are going to be light. Surprise. At time of publication, Baker Hughes was down more than 4%.
Truth be told, we here at the Fool are generally pretty pleased when stocks do not react or overreact to short-term issues, and oil services as an industry is extremely healthy, with a few well-capitalized players and high barriers to entry. So while we doubt that the oil services companies' medium-term performance is going to justify the frothy stock performance of late, this is an industry that still bears extremely sound fundamentals.
Tax Countdown: 24 Days
A Ton O' Tax Tips
The world of taxes is full of itty-bitty rules that, if you know them, could save you big bucks. Did you pay interest on a student loan in 2001? Pay margin interest, an IRA custodial fee, or other investment expenses? Perhaps you spent a lot of time on the road for a charitable cause. Or maybe you could just use a tax break so you get something back for raising your ungrateful kids. These are just some of the many deductions and credits explained in our list of 20 Tax Tips. For more tax-shrinking hints, check out The Motley Fool Tax Guide.
Nike Just Does It
Swoosh, there it is. With the analysts setting the bar for Nike (NYSE: NKE) to earn $0.45 a share this past quarter, the athletic footwear and sportswear maker cleared the hurdle with a penny to spare.
For Nike, it's as important to know where it hit as well as where it missed. With revenue inching 4% higher to $2.3 billion for the fiscal third quarter, it was a mixed bag. Its bread and butter -- domestic footwear sales -- clocked in 7% higher than last year's showing. However, revenue in Europe took a dip.
Looking beyond the top line, Nike's fundamentals also come in laced and unlaced fashions. On the upside, the company is coming to grips with its global inventory problems. Last year, its disastrous implementation of i2's (Nasdaq: ITWO) supply chain management system created overstocks that fueled discounted clearances. Now, however, the company is starting to get its production under control and gross margins are turning higher.
On the downside, orders aren't growing as quickly as management would like. With Nike looking to win back slices of market share that it has surrendered to rivals like Reebok (NYSE: RBK), a 6% hike in undelivered orders isn't up to snuff by Wall Street's standards.
Add up the good and the bad and the market digested the news with a negative bias, sending the shares initially lower. But maybe a history lesson is worth noting here. Last year, Nike reported strength in 11 of its 12 operating divisions. The segment that stood alone was stateside athletic footwear sales, which eventually dragged the rest of the company lower. Could the fact that it's that same domestic segment turning higher a sign of good things to come? Swoosh.
Just as Burger King rolled out its BK Veggie burger earlier this week, now it's McDonald's (NYSE: MCD) that must ask itself "Where's the beef?" The world's largest restaurant chain announced it would miss its March quarter profit targets and that the rest of the year doesn't look much brighter.
It's been a McFlurry of disappointment for the company after closures in Turkey, writing down impaired assets in Latin America, and a more cautious approach to expansion in Japan.
Far removed from the early days of growth potential when Ray Kroc approached the McDonald brothers in California about growing their burger stand, it's not just a case of McDonald's being landlocked in a world where expansion space is getting smaller. Sales are down outside of Europe and North America -- once the crown jewels of the future. While Europe is bouncing back after last year's worries over mad cow disease, the company will be pressed to meet its goal of boosting global system wide sales by 6-7% this year. That will be a tall order and, unless we got our jingles confused, it was actually Burger King that claimed that special orders won't upset them.
Financial commentator Louis Rukeyser has been pulled from PBS's "Wall Street Week With Louis Rukeyser" after 32 years of hosting the show, conjuring up mixed emotions for David Gardner.
My brother and I grew up watching Louis Rukeyser's show because our Dad watched it inveterately every Friday evening as a capper to the week. I think a lot of people's dads did, and like Lou, many of them are about 70 years old right now, which is probably a driving reason behind public television pulling the plug.
His show interested millions of Americans in stock market investing well before this was au courant. He brought wit and wisdom -- and an arrogance he could never help but wear on his sleeve -- to the task. He did at least one great thing: He influenced several million investors toward patience and long-term investing, and was often a commonsense voice of continued bullishness right through the short-term crises that naturally hit the market every five years or so.
On the other hand, his show spent much of its time glorifying what we Fools have always termed the "Wall Street Wise" -- men and women from old-line firms making short-term market predictions and setting price targets under the very conflicts of interest that are now so rightly under attack. Lou rubbed shoulders with the Wise, and all his marketing -- marketing that sold him as a speaker and newsletter writer -- lets you know just that. That was a newsletter I once wrote for, by the way, and later resigned from. So I remember the marketing. You were said to be tapping into Lou's powerful Wall Street network. You were expected to take these people seriously, and a few of them, like Peter Lynch, you darn well should have.
Rukeyser popularized Wall Street -- all that's good about it and all that's bad about it. And even though he never made any stock picks himself, serving primarily as a talk-show host featuring other people, he did bring out his own point of view in his opening oration at the start of every show, delivered sometimes with killer wit, and always truly penned by him.
I can say this: I personally doubt the replacement show will be anywhere near as eccentric.
-- David Gardner
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In a move that evoked a bit of 1990s nostalgia, Applied Materials (Nasdaq: AMAT) announced a 2-for-1 stock split (which has no effect on the value of the stock). Although management feels the semiconductor industry is finally recovering, doesn't it have better things to concentrate on in this still-shaky environment?
Good news from the airline industry today as United Airlines (NYSE: UAL) is recalling 1,300 employees to help support an anticipated increase in its June schedule. Additionally, the world's number-one air carrier will be hiring 900 new workers.
Battered compound-semiconductor maker Cree (Nasdaq: CREE) received a boost from the U.S. government in the form of a $14.5 million contract to develop light-emitting diodes (LEDs) and laser diodes for use in the detection of biological agents such as anthrax. (That was a rather long, comma-less sentence.)
You'll be paying more to mail a letter by this summer -- as much as $0.03 more. The U.S. Postal Service, after being hit with huge anthrax-related expenses, is seeing little opposition to the rate hike.
As Andersen Turns: Citing a "responsibility to our shareholders," Waste Management (NYSE: WMI) is tossing Arthur Andersen as its external auditor, replacing the beleaguered firm with Ernst & Young.
And Finally...
Today on Fool.com: Your most important financial decision is all in your head.... The Fool's School has the basics of buying stocks on margin.... Roy Lewis shares his 20 Foolish tax tips.... Finally, just for fun, go check out our friends at The Onion who have a great spoof about Dell (Nasdaq: DELL) shutting down its operations because it has achieved all its goals and has nothing more to prove.
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