So, it looks like the on-again, off-again California recall is on again. Today, a federal appeals court rejected a prior panel decision to postpone the gubernatorial recall election scheduled for -- that's right, October 7. Boy did this thing get out of hand. We're not surprised to see Arnold and friends smiling, but even Gov. Gray Davis reportedly cheered the decision.

If not exactly cheering the decision, David Gardner does suspect that Dick Grasso can be replaced -- and for some number of millions less. If you ask us, the sooner the NYSE and all its listed companies start "looking at it like that," the better.

In today's Motley Fool Take:

Verizon's Distress Call

The bell has rung and Verizon(NYSE: VZ) is down for the count -- or at least down for the day. The country's largest phone company called up investors this morning to say that 2003 results would ring short of expectations, putting the blame on weak demand, costs associated with labor negotiations, and increased regulation.

Earnings per share of $2.56 to $2.60 are the new mantra for 2003, cut down from the previous party line of $2.70 to $2.80. The company did not touch revenue guidance, which holds steady at $67.5 billion, flat with last year. You might ask, why a drop in earnings while revenue holds steady?

Partly because Verizon is seeing increased demand for wireless services, where it now expects to add 4.5 million subscribers in 2003, topping earlier estimates of 4 million. However, the local phone business suffers when consumers switch to wireless packages and, in some cases, ditch the landline. The end result is lower overall profitability for the phone companies that need to maintain expensive land networks.

To counter a hit on margins, Verizon is on track to cut $1 billion from 2003 capital expenditures, to about $12 billion, and annual labor costs will decline significantly following a new five-year contract, signed last month, with unions representing 35% of Verizon's workforce.

The company, which is one of the most widely held stocks in America, needs to save all the money it can. Verizon labors under net debt of approximately $48 billion, and while it created about $10 billion in free cash flow last year, it paid out 40% of that in a dividend. Today, the stock yields 4.4%, in line with most peers.

Speaking of peers, those guys took it on the chin this morning, too, because many analysts believe weak demand at Verizon, especially in local services, will likely prove the case industrywide.SBC Communications(NYSE: SBC), BellSouth(NYSE: BLS), and even long-distance giant AT&T(NYSE: T) were all crunched some.

This industry's giants struggle to show net growth, and that may not change anytime soon, hence the higher dividend yields.

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Weak-Dollar Medicine

Saturday's meeting of G7 finance ministers and Central Bank governors in Dubai concluded with a call for "more flexibility in exchange rates... based on market mechanisms." Big deal, right?

It's absolutely a big deal when the G7 finance leaders unanimously sign off on an ideal -- market-determined currency rates -- that will inevitably produce a weaker U.S. dollar.

Specifically, the G7 statement is a reprimand against Japan's practice of selling yen and buying dollars to hold down the value of its currency as a way to support cheap Japanese exports. In the wake of this announcement, Japan appears to have stepped back from its currency intervention, allowing the dollar to fall versus the yen and thereby other currencies as well.

A weakening dollar has a couple of positive benefits. For one, a weak dollar makes American-produced goods cheaper to foreign buyers, thereby fueling American exports and, significantly, American jobs to support those exports. In addition, to the extent that America's strong dollar has been responsible for a U.S.-centric world economy, a weaker dollar will help to restore a more balanced global demand profile by increasing the purchasing power of non-dollar currencies.

Be warned, however, that the weak-dollar prescription will likely come at a price. These implications are possible, if not inevitable:

1. A weaker dollar will buy less overseas, which means foreign goods will become more expensive to Americans. In other words, weak dollar policy is inflationary, making it a natural extension of Alan Greenspan's anti-deflation campaign. In turn, inflationary pressures will put upward pressure on interest rates as bond investors demand extra return for lost future purchasing power.

2. As the dollar slides, the U.S. will be a less attractive home to foreign investors because of the currency risk of holding depreciating dollars. Because of this currency risk, foreign investors will demand a higher rate of return, which will likewise create upward pressure on interest rates.

3. Because of the upward pressure on interest rates associated with (1) and (2), the stock market -- and especially stocks with rich valuations based on future growth -- could be vulnerable due to the depressing effect of higher interest rates on the present value of future profits. Higher interest rates would also stand to hurt the housing market.

Of course, the degree to which these weak-dollar consequences are manifested is entirely dependent on how far and how fast the dollar falls. And that's anyone's guess.

A smooth and orderly descent in the dollar could result in a manageable reflation to the U.S. economy, along with greatly improved balance across the world's other economies. On the other hand, any sort of sharp fall in the value of the dollar or associated sharp increase in interest rates could cause some real problems. Let's hope for the former -- but be prepared for the latter.

Quote of Note

"Reality is merely an illusion, albeit a very persistent one." -- Albert Einstein

Microsoft, Mass. Settle Tab

Microsoft (Nasdaq: MSFT) and Massachusetts have settled a nine-month long legal tangle over the attorneys' fees and costs generated in the state's anti-trust fight against the computer giant. The federal judge with the alliterative name you just have to love, Colleen Kollar-Kotelly, awarded the state far less than it had hoped for.

Microsoft will pay $967,014.52 to reimburse Massachusetts for its attorneys' fees. The state originally billed the company for $2,012,377.72.

Kollar-Kotelly doesn't have much love for Massachusetts, likely stemming from the state's still-standing appeal of her November 2002 approval of Microsoft's agreement with the Justice Department. Massachusetts is the only state still holding out for harsher penalties on Microsoft.

In her ruling, the judge said that Massachusetts' sloppy record-keeping was part of its downfall here. She characterized the award as "generous," and took Attorney General Tom Reilly to task for the state's "deficient documentation and lack of explanation." Had she been provided with adequate records, Kollar-Kotelly likely would have ordered Microsoft to pay at least an additional $322,721. Ouch.

Not surprisingly, both sides claimed victory, with Massachusetts focusing on Microsoft finally paying its bill, and Microsoft celebrating the judge's decision to reduce the plaintiff's claims by more than half.

They'll get a chance to square off again on Nov. 4, when oral arguments begin in federal court for Massachusetts' appeal of the Justice Department's settlement with Microsoft. The state isn't expected to fare much better then than it did here.

Discussion Board of the Day: Recipes/Cooking

Hey, what's for dinner? Have any special dishes or food prep tips that you would like to share with your fellow Fools? Like to invest in food and restaurant stocks or just like to eat? All this and more -- in the Recipes/Cooking discussion board. Only on Fool.com.

And Finally...

Ignore the old wives tales and Beatles songs; money changes everything. At least that's what our Dayana Yochim (her again?) seems to imply in Money = Happiness. Not buying it? Well, Tom Jacobs counters, "High yield doth not investing happiness make." Doth not taketh our word for it (we're hardly taking it ourselves!), it's right there in the first line of his Dividends: High Yield or Smoke?

Contributors:
Bob Bobala, Robert Brokamp, Paul Elliott, Mathew Emmert, Jeff Fischer, Tom Jacobs, Jeff Hwang, LouAnn Lofton, Alyce Lomax, Bill Mann, Selena Maranjian, Dave Marino-Nachison, Rex Moore, Rick Munarriz, Matt Richey, Reggie Santiago, Dayana Yochim