The Motley Fool Take on Wednesday, May 1, 2002
AOL Overthrows Overture

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It seems like something straight out of a Simpsons script, but it really happened.

In Monroe, Washington, yesterday, armed bandits broke into a Starbucks (Nasdaq: SBUX) coffee shop and forced employees to open the safe. The contents apparently weren't enough to buy more than a few cups of Mocha Coconut Frappuccino, however, so the thieves immediately began thinking of ways to increase their loot.

And, thus, for the next 30 minutes, they served coffee, lattes, and cappuccinos to drive-thru customers. After collecting enough cash (and a half-hour was plenty with the price of Starbucks products), the thieves calmly got in their vehicle and drove away... and haven't been heard from since.

We wonder how many customers received correct change.

In other news, it's a big day here at the Fool as we release the first part of our Motley Fool Manifesto. We are declaring May Day on the financial markets, and are launching an effort to change things to benefit the individual investor. Please give it a read; we think it's pretty important stuff.

It was a decent day for The Motley Fool 50, as our index moved almost 1% higher.

In today's Motley Fool Take:

AOL Overthrows Overture

Where's the crescendo in the overture? Shares of search engine specialist Overture (Nasdaq: OVER) created investor cacophony and fell 33% today as it was passed over by AOL Time Warner (NYSE: AOL). America Online instead will be handing over the reins for its stateside search functions to Google. It's a trying chapter in what was one of the few feel-good dot-com stories.

Overture proved to be a profitable visionary when it started out as GoTo.com. At a time when Internet content providers were pricing out ads by volume, GoTo rolled out performance-based paid listings. Advertisers would bid on search keywords and the site would list them based on who would pay more for the potential click-through. While skeptics questioned the ethics of paid listings, GoTo was transparent in letting everyone know how much each company was paying for the click. GoTo was never the biggest, but it was the profitable standout.

Now that Google has introduced its performance-based AdWords Select service -- with Overture weighing the legal ramifications of the copycat move -- America Online found a tempting alternative for sponsored search links. It's still a shock to the system. Last week, Yahoo! (Nasdaq: YHOO) extended its agreement for performance-based text ads with Overture despite relying on Google's traditional search technology. With Overture producing solid first-quarter results and now upping its second-quarter profit guidance, investors figured that Google and Overture could live together in harmony.

Apparently not. The search for peace appears fleeting now -- but you can always bid for it on either Google or Overture.

Discussion Board of the Day: AOL Time Warner

What does AOL stand to gain in the move to Google? If sharing the playing field was good enough for Yahoo!, why didn't it work for America Online? All this and more -- in the AOL Time Warner Discussion Board. Only on Fool.com.

Securities Industry Investigations Broaden

New York State Attorney General Eliot Spitzer recently investigated the practices of major investment banks and found that analysts at big name brokerages such as Merrill Lynch were publicly praising companies they do business with -- while privately panning them. The world was shocked. Shocked!

Frankly, it's a little shocking that so many people were shocked. The existing conflicts of interest at investment banks have long concerned us here at the Fool, and for years we've pointed out how individual investors can't be served well under such systems. It wasn't even a secret known just to us -- it was more a matter of the emperor wearing no clothes, while those who worked for and around him enjoyed the embarrassing display.

So enter Eliot Spitzer and friends. Kudos to them for launching this investigation, which may lead to changes for the better for us small investors. Some have asked where the Securities and Exchange Commission (SEC) was all this time, and why a state government had to lead this charge. The cynical might wonder whether SEC Chairman Harvey Pitt, who formerly defended the securities industry and major corporations, has some conflicting allegiances of his own. But whether out of a sense of internal mission or external pressure, the SEC is now getting more involved in the matter. Good!

After announcing its own formal inquiry into the issue last week, the SEC has sent letters to a handful of major investment banks, asking them to voluntarily hand over various records. The SEC is also flexing its federal muscle, expressing concern over states' investigations (several states have been conferring with New York, exploring what actions they themselves might take). The SEC sees it as a national matter that needs federal oversight. Many in the securities industry are backing the SEC.

Read more about this unfolding story in The Wall Street Journal (subscription required, free trial available to Fools), The New York Times (free registration required) and The Washington Post (nothing special required). And learn more about other important SEC initiatives on your behalf at the SEC website.

Ken Lay's Wife Sets Up Shop

Enron's stock may not be worth much, but the former CEO's bright-yellow pair of metal fighting cocks might be. At least that's what his wife hopes.

Linda Lay, wife of ex-chief executive Ken Lay, is opening an antique and secondhand store that will feature some of the Lays' personal property. The boutique will be called Jus' Stuff (possible slogan: "We sold our souls, now we're selling our stuff"), and will hawk artwork, couches, a mahogany bed, a reproduction of an antique desk, and, of course, the fighting cocks.

This led us to speculate what else might turn up in the inventory of Jus' Stuff (possible ad campaign: "10% off to people who lost their 401(k)s and can't retire"). So, here are the top items we'd like to see in the storefront window:

14. Enron stock certificates, framed and matted

13. Patents for energy-efficient appliances that Enron bought up and locked away

12. Hotline telephone connected to the Cayman Islands Better Business Bureau

11. Battery-powered laugh machine that Enron execs used when discussing shareholders

10. Humble pie, � la mode

9. A racy home video, starring Linda "Love" Lay

8. Collections of souvenir silverware from restaurants and souvenir towels from hotels

7. Actual set of blindfolds worn by Andersen auditors

6. Posters from Enron's short-lived "Got Gas?" ad campaign

5. The photos from their vacation in India with the Cheneys

4. The jester cap and books Ken was given after appearing on some investing radio show

3. The cabana boy

2. Graven image of Khutspa, the god of "getting away with it"

1. Shredded paper -- lots of it

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Quick Takes

Walter Hewlett may now have to resort to a celebrity boxing match against Carly Fiorina on the Fox network, and she'll probably whip him there, too. Yesterday, a Delaware court tossed out dissident shareholder Hewlett's lawsuit against Hewlett-Packard (NYSE: HWP), with the judge ruling CEO Fiorina did not buy votes or mislead shareholders about the details of the HP merger with Compaq (NYSE: CPQ). The decision now clears the way for the $18-billion acquisition.

With his company's stock price hitting a multi-year low, Ed Zander is stepping down as president and chief operating officer of Sun Microsystems (Nasdaq: SUNW). Zander becomes the fourth high-ranking executive to leave the company in the last several weeks.

Cisco Systems (Nasdaq: CSCO) has agreed to buy up the shares it doesn't already own of Hammerhead Networks and Navarro Networks for $258 million in stock. The networking and telecommunications giant says the deals will result in a one-time charge of $0.02 per share.

Adobe Systems (Nasdaq: ADBE) says sales are strong for its new version of digital photo imaging Photoshop software. In addition, the company reiterated second-quarter guidance.

Investors saw a lot to like in Comcast's (Nasdaq: CMCSK) first-quarter earnings results. The country's third-largest cable operator reported a loss of $0.09 per share, a figure that includes non-operating, non-cash charges of $0.33 per share. In addition, sales and cash flow came in better than expected.

And Finally...

Today on Fool.com: The Motley Fool announces May Day with six declarations for best market practices.... Bill Mann asks if McDonald's still cuts the mustard and takes a look under the golden arches.... Guest columnist Whitney Tilson writes about avoiding investing traps.... Fool co-founder David Gardner shares his love for the Fool Community.

Bob Bobala, Robert Brokamp, Jeff Fischer, Tom Jacobs, Bill Mann, Selena Maranjian, Rex Moore, Rick Munarriz, Reggie Santiago, Dayana Yochim

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