Fool.com: Notes From Fool Radio [Special] June 26, 2002

The Motley Fool Radio Show from NPR is a weekly one-hour mix of Foolish commentary, interviews, phone calls, games, and special Fool features.  On each week's show, Tom and David Gardner interview CEOs and celebrities and offer up The Motley Fool Take on some of the week's business news. Here are some highlights from our recent show. And you can always tune in to Fool Radio online at npr.org.

Tom Gardner on the insider trading controversy surrounding Martha Stewart:

"I know that a lot of people think this insider trading scandal is bad news for Martha Stewart and her company, but I think that in the long term this actually could be good news for Martha Stewart shareholders. The controversy may actually force the decoupling of the individual Martha Stewart from the overall company. Now, that can be a painful process, but is any public company really going to succeed if it relies entirely on one person to carry its brand name forward? If that were true of a company like Ralph Lauren, I don't think it would be anywhere as big as it is today."

David Gardner on tough times for Intel, Dell, AMD, Gateway and Apple:

"If you were to build a portfolio out of Intel, Dell, AMD, Gateway, and Apple, and you wanted to make it a safe portfolio, Intel and Dell would make up that portfolio.  The combined market capitalizations of Intel and Dell are worth more than 20 times the combined market caps of AMD, Gateway, and Apple."

Tom Gardner on paying down credit card debt:

"If you're out there and you're carrying debt on your credit cards at interest rates above 10%, then you're making a big mistake. The best investment you can make is to pay down that credit card."

On each week's radio show, Tom and David get down to business with a CEOs of some of America's biggest companies. In this installment, JetBlue CEO David Neeleman discusses a variety of topics, and explains why JetBlue is in the black. 

On JetBlue doing more with less:

"Because we have a common fleet -- every one of our aircraft are the exactly the same. We don't have to reserve crews for 10 different aircraft types... Our technicians work on only one aircraft. Our gates are all configured for one type of aircraft. So it's much more efficient. Then we use technology to a great degree. We have the highest percentage of bookings on the Internet of any U.S. carrier -- over 60% of our bookings are done online."

On the future of Amtrak:

"I think what happens in Amtrak is that you have so many politicians wanting Amtrak to serve their smaller communities that it drains off all their profits. If Amtrak could just focus on the routes that really make them money then it could be a successful venture."

On allowing pilots to carry guns in the cockpit:

"It's not a good idea. We should really focus on fortifying the cockpit doors. There's no reason pilots should ever open that door and they shouldn't be playing around with firearms in the cockpit."

Tom and David make a trip to the Fool School to demystify the mysterious and explain the seemingly inexplicable. In this week's edition, the Fools talk about the shady business practice of stuffing the channel:

Tom: Let's take an imaginary company that we'll call Glowlight Mugs Inc. The company makes mugs that are lit from the bottom by small red lights, a product that appeals mainly to 11-year-olds... but also to you, 36-year-old brother Dave. Glowlight distributes promotional mugs via fast-food chains, but the bulk of its business comes via sales to big retail stores and warehouse clubs.

David: OK, so -- bad economy -- I'm guessing business isn't going great?

Tom: You're right. Let's say that no one's really buying Glowlight Mugs' gimmicky product. Sales are slowing, earnings are drying up. Glowlight shareholders are unhappy. So management decides it has to do something, anything, to -- shall we say -- "improve" its numbers.....So Glowlight Mugs manufactures and mails out thousands more mugs than its retailers were ordering. Instead of just fulfilling those orders, Glowlight sends scads of them, and then shamelessly -- and quite legally, according to generally accepted accounting principles -- books those deliveries as SALES.

David: And not just sales but earnings as well! If it's indeed profitable to manufacture and sell these mugs, the company can claim big earnings, too. But the ultimate problem is that these mugs end up not being sold at retail... And many of them may never sell at all.

Tom:  So when Glowlight Mugs Inc. stuffs the channel -- the company may look good in the short-term but it's not gonna look so good in the long-term.... When all those mugs get returned to sender then the sender has a lot of explaining to do in terms of those financial statements

Fool Radio Wants You

Do you want to participate on this week's Motley Fool Radio Show? Do you have a question or comment about Martha Stewart, the declining stock market, or any of the other big stories of the week? The Fool phones are always open, toll-free at 866-NPR-FOOL. That's 866-677-3665. Or you can email us at radio@fool.com.


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