As if the stock market weren't enough to keep you awake at night, there's the little matter of Feb. 1, 2019. On that day, there's a chance a mile-wide asteroid could strike Earth and obliterate life as we know it. Seriously.
Fortunately, the odds are very small that "2002 NT7" will actually hit us, but with so much at stake, scientists aren't taking any chances. Should future calculations indicate 2002 NT7, or any other asteroid, is on a collision course with Earth, we need a way to deflect it.
While some are considering nuclear warheads, Russian researcher Boris Kartogin suggests a giant laser could be used to thwart a killer asteroid. Others say it would take nothing more than a coat of paint on half the rock -- which would change the amount of heat it radiates, thus altering the orbital path. (If that turns out to be the best course of action, maybe we could send corporate criminals to do the job, since they're so good at glossing things over.)
We'll stick with worrying about the stock market, which continued the unusual volatility of last week by zooming ahead about 5% today.
In today's Motley Fool Take:
Execs Take Earnings Oath
When Delphi (NYSE: DPH) filed its quarterly earnings report a couple of weeks ago, it marked the beginning of a new era. Not for the automotive parts supplier, but for the entire U.S. stock market. Delphi, you see, became the first company to file a report that was personally guaranteed by top management. (Unfortunately, it wasn't a money-back guarantee.)
In the wake of the too-numerous-to-mention accounting scandals, the SEC has ordered that chief executives and finance officers of hundreds of large corporations vouch for the accuracy of their companies' filings and face personal liability for any wrongdoing. The officers must sign a statement of oath that says, among other things, that "no covered report contained an untrue statement of a material fact." In short, says SEC Chairman Harvey Pitt, "We are demanding that CEOs and CFOs swear that the numbers they've reported in their financial reports are correct and that they've left nothing important out."
The requirement won't kick in until Aug. 14 for most of the companies, and some have not yet been able to abide by it. Thankfully, the SEC will soon be providing a list of which companies have and have not complied. In the meantime, you can read about the new policy on the agency's website.
The overriding question here, of course, is whether this will serve as a deterrent to accounting fraud. It can only help. Before, CEOs and CFOs were protected from personal liability. Now, at the very least, they may be required to hand back gains from stock sales and bonuses in the period following false or misleading earnings reports.
Bottom line: It's another positive step.
"You gain strength, courage, and confidence by every experience in which you really stop to look fear in the face. You are able to say to yourself, 'I have lived through this horror. I can take the next thing that comes along.' You must do the thing you think you cannot do." -- Eleanor Roosevelt
No Answers to the Qwest-ion
"[T]he company may conclude that the company recognized revenue inappropriately with respect to the transactions identified in the initial analysis and other optical capacity sales, and that the amount of the additional revenue adjustments may be significant."
Now that's something you don't want to hear from your friendly neighborhood investor relations department. But that's what Denver, Colo.-based telecom Qwest (NYSE: Q) announced last night (thankfully, after The Simpsons). The monopoly local phone-service provider in 14 states will restate its financial reports from 1999-2001 because it may have inappropriately booked $1.16 billion in revenue. Oops.
Qwest is insisting that this was an error in judgment, one that was discussed both with inside and outside accountants. We might be willing to give a company with a reputation for clean accounting the benefit of the doubt. But not Qwest, which is currently under criminal investigation for its accounting practices. And once again we ask the question: Whatever happened to the concept of outside accountants insisting on the pessimistic case for company financials?
Will this be the final cleaning-of-house for Qwest, or the bale that broke the camel's back? The Securities and Exchange Commission is investigating the company for selling capacity on its fiber-optics network to other carriers, and then repurchasing similar amounts -- which is like a smoker giving up buying packs of cigarettes and instead buying singles from a buddy. A month ago, the company fired Joseph Nacchio as its chairman, and replaced him with Dick Notebaert, who once headed up another Baby Bell, Ameritech.
The company is also backing off revenue projections made in April for $18.4 billion in sales for 2002. In a conference call this morning, Qwest officials said they would provide guidance when it releases quarterly results on Aug. 8. "I've heard people predict we're hitting the bottom for the past few quarters and there's been a lot of errors. When I look at the general economy, I don't feel confident making any predictions about recovery," said Notebaert.
The company will also review the way it recognized some expenses and its writedown of goodwill, and announced that it would not meet the Aug. 14 SEC deadline for certifying results. No word on whether there will be a rearranging of deck chairs.
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From the Top, Boys
If you get tapped to run a media empire, don't gloss over the bull's-eye on your back. Entertainment CEOs have replaced Spinal Tap's drummer as the poster children for displacement, given the series of executive shuffles over recent weeks. Over the weekend, German media titan Bertelsmann AG announced that CEO Thomas Middelhoff was stepping down.
Translate "stepping down" into "walking the plank," and you come to realize that Middelhoff saw plenty of others on the way down. AOL Time Warner (NYSE: AOL) and Vivendi (NYSE: V) have joined Bertelsmann in the corporate beheadings. These executives have been blasted for past acquisitions. While it's typically a fair shot, one has to wonder if "scapegoat" is now one of the many hats worn by media leaders.
If you don't have the wealth to control your own fate in this business, like USA Interactive (Nasdaq: USAI) and Vivendi CEO Barry Diller or Viacom (NYSE: VIA) CEO Sumner Redstone, be afraid. The secure CEO is becoming an endangered species. Even Disney's (NYSE: DIS) Michael Eisner seems vulnerable, a notion that seemed almost laughable a couple of years ago.
But, no, that's not funny at all. That's entertainment.
Discussion Board of the Day: Great Movies
Entertainment stocks are being weighed down, despite the strong box-office summer. So, cutting to the chase, what's good out there? Is Road to Perdition that good? Is Austin Powers Goldmember that bad? All this and more -- in the Great Movies Discussion Board. Only on Fool.com.
Long-distance giant WorldCom, now in bankruptcy protection, has arranged to transfer about 2 million of its wireless phone customers to other service providers. The company is looking to shut down its unprofitable wireless unit.
In related news, Verizon Wireless, the nation's largest wireless telephone company and a joint venture between Verizon Communications (NYSE: VZ) and Britain's Vodafone Group (NYSE: VOD), announced that its total customer base increased by 723,000, considerably more than the 300,000 expected by analysts. Verizon is one of the firms welcoming former WorldCom customers with open arms.
The Washington Post reports that the National Association of Securities Dealers (NASD) is moving to restrict the practice of "flipping." (For the uninitiated, flipping is when someone gets shares of an initial public offering and sells them within hours or days -- as soon as they pop up in price, as shares often do when they begin trading.) Small investors were often discouraged by investment banks from flipping shares with the threat of penalties, while large investors, like pension or mutual funds, were not. The NASD is looking for small and large investors to be treated the same in regard to flipping rules.
Sony (NYSE: SNE) has lost a lawsuit in Australia centered around its PlayStation entertainment system. The company was ticked off at Sydney resident Eddy Johnson, who had modified his console to play imported and copied games. Johnson was also making money by selling the modification to others. A Federal court ruled in favor of Johnson and against Sony's complaint of copyright violation. Sony is mulling over an appeal.
Global retailing titan Wal-Mart (NYSE: WMT) announced that recent sales are not booming as much as expected. The company also pointed out that customary comparisons between current sales and those from the same period last year aren't exactly fair, since last year many consumers had a $300 tax "rebate" (really just an early distribution) to spend, as part of the government's plan to spur the economy.
Treasury Secretary Paul O'Neil, who has been criticized recently for doing a lot of traveling abroad while the economy sinks (most notably, touring Africa with U2 musician Bono), has become a bit more visible lately. O'Neil appeared on TV this past weekend, offering encouraging words like, "My conviction is this: The U.S. economy is without any doubt the strongest economy in the world."
And Finally...
Today on Fool.com: Selena Maranjian says don't throw up your hands -- disasters can yield benefits.... Rick Munarriz writes that debt-free companies trading near cash levels present a valuable upside for investors.... Where to put your college money, in Fool's School.
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