From the terrorist attacks last Sept. 11 through Aug. 30 this year, the Dow Jones Industrial Average (DJIA) dropped 9.81%. It hasn't been a good year by any stretch of the imagination, but some long-term perspective helps: According to Dow Jones, which tracks the DJIA's performance at the onset of national security events, the Dow has returned 17,213% since the USS Maine exploded on Feb. 15, 1898.
Oh, to have enough longevity to be wheeled into a cocktail party one day and boast 17,000% returns in your portfolio...
The Motley Fool 50 gained about 1% today.
In today's Motley Fool Take:
- AOL Doesn't Ad Up
- Quote of Note
- Are You Ready for Some Football?
- Discussion Board of the Day: 77's Foolish House of Pigskin
- Doing the Management Shuffle
- Shameless Plug: Choose Stocks With The Motley Fool
- Jack Welch's Very Golden Years
- Quick Takes: J.P. Morgan Chase, ExxonMobil, Nextel Communications, more
- And Finally...
AOL Doesn't Ad Up
The online unit at AOL Time Warner
If you're interested in the numbers, full-year advertising and commerce revenues will come in around $1.7 billion, but there's even a 5% downside risk to that. Good thing the rest of the company is doing better; overall, look for full-year revenue growth in the 5% to 8% range.
So is the online ad market still declining? The answer is probably "no." AOL's press release blames the shortfall on "continued softness in America Online's advertising business," not the ad market in general. A quick spot check of our sources confirms there really hasn't been an industry-wide decline in the past few months.
Instead, America Online's troubles seem to be specific to its own business and may be the result of the timing of contracts and renewals. If that's true, and if advertisers are renewing at lower rates, we can expect the current revenue projections to be more the norm, rather than just a dip.
Quote of Note
"When I despair, I remember that all through history the way of truth and love has always won. There have been tyrants and murderers and for a time they seem invincible, but in the end, they always fall -- think of it, always." -- Mahatma Gandhi
Are You Ready for Some Football?
It's that time of the year again. The National Football League has kicked off the 2002 season, and investors are looking beyond the gridiron. No, we're not talking about what to do with your fantasy football league now that the Redskins are packing some offensive firepower.
Football is big business. Sure, you might know that Disney's
That's right. Last night, pro football returned to Houston, as the Texans took on in-state rival the Dallas Cowboys. That's a brand new line of team gear waiting to be scooped up, even beyond the Lone Star State. You also had a few marquee players such as Drew Bledsoe and Ricky Williams change teams in the off-season. That means new jerseys for fans to stock up on. The divisions were reconfigured, which might not appear to mean much on the surface, until you consider that the contrarian at the office who always roots against the home team by showing up with rival merchandise may have a new shopping list this season.
In other words, it might be a good time to be a sporting goods retailer. With the baseball strike woe lifted and the new basketball season on the horizon, it's not as if football needs to carry the ball alone. So for the country's leading retailers such as The Sports Authority
The Sports Authority hasn't been as fortunate. It had to put off a secondary stock offering after it widened its loss estimate for the current quarter. While that's usually a bad omen, releasing the demons for future guidance markdowns, the stock has fallen to the point of trading at just seven times next year's consensus profit targets.
Growth or value, the opportunities in the sporting goods sector are there. If the discretionary dollar bounces back sooner than expected, guess who will be doing the happy celebratory dance in the end zone?
Discussion Board of the Day: 77's Foolish House of Pigskin
Bummed about Jevon Kearse breaking his foot yesterday? Did Priest Holmes and his four touchdowns yesterday put an end to the myth of his amazing last season as a fluke? Heads or tails? What's the difference between a pork rind and some pigskin? All this and more -- in the 77's Foolish House of Pigskin discussion board. Only on Fool.com.
Doing the Management Shuffle
Under scrutiny from just about everyone on Wall Street, the nice folks on Capitol Hill, the SEC, and our own Bill Mann, Citigroup
While addressing the company's woes at a financial services conference Friday, Citigroup's chief Sandy Weill, promised to, "... nip the things we did wrong," according to reports from Reuters. Looks like Carpenter's the first "nip."
You have to wonder what Weill determined Carpenter knew about the seemingly sketchy dealings at Salomon. Did Carpenter approve of, even tacitly, now-departed analyst Jack Grubman's actions? Did he know about Bernie Ebbers's grants of hot initial public offerings? We can't assume Carpenter knew anything, of course, but one thing's for sure: Congress and the New York attorney general want to know who knew what and are working to uncover it.
In the statement announcing the management changes, Weill said, "There are certain industry practices that we should all be concerned about, and although we have found nothing illegal, looking back, we can see that certain of our activities do not reflect the way we believe business should be done."
Well, OK. Citigroup's trying to paint itself as the forerunner of change in a troubled industry. We'll see.
Moving Carpenter out of his position is certainly a positive for the company, though. At least Weill is serious about getting Citigroup through its legal messes and onto a better path. Hopefully, the move represents a desire to have a clean slate from which to make some real changes in its investment banking business, and not a realization that the investment bank's shady way of operating was sanctioned all the way up to the very top.
It'll all come out in the wash, eventually. For now, consider this little management minuet a good thing for Citigroup.
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Jack Welch's Very Golden Years
When a longtime employee retires, it's customary to send him off with a parting gift. A nice watch, perhaps. Maybe a water cooler signed by everyone in the office. Or, if you're former General Electric
According to papers filed in divorce court by Welch's estranged wife, these are just some of the perks Welch receives from GE. Want the dirty details? (We knew you would.)
According to the filing, Jack Welch's lifelong benefits include:
- A $9 million annual pension
- 24-hour access to a Boeing 737 owned by GE (a perk valued at $291,869 a month, according to an expert hired by Mrs. Welch)
- A Central Park apartment (estimated value of $80,000 a month), complete with flowers and food
- A limited-edition 2003 Mercedes-Benz SLR
- Tickets to Wimbledon, Red Sox games, the Metropolitan Opera, and access to VIP seats at sporting events broadcast by GE's NBC
- Cellular phones for five cars
- Satellite television in four homes
- Five computers, complete with technical support
- Dues for three private golf clubs, including Augusta
- Financial planning and tax services
During his last year with GE, Welch earned $16.2 million. He also holds 22 million shares of GE (which, at $28 a share, is worth $616,000,000). The obvious question is: How much more money does this guy need? And how long should current GE shareholders pay the bills for an ex-employee? (If you invest in index funds that try to match the S&P 500, then GE is your largest "holding," since it has the highest market cap in the index. Therefore, index funds must invest in GE proportionately.)
The company claims it still relies on Welch's services once in a while. So add to the aforementioned compensation an $86,000 annual retainer that covers five working days a year. If Welch provides some consulting beyond that, he gets $17,000 a day.
There's no question that Jack Welch was one of the great CEOs of the late 20th century. He helped build GE into one of the most valuable companies in the world by getting rid of underperforming businesses -- which makes such a generous retirement package so curious.
When does compensation turn from a fair trade for services rendered to naked greed? It's hard to argue that this deal doesn't cross that line.
Today's news from the economic front is positive: U.S. wholesalers have reported building up their inventories "at the fastest rate in 20 months in July." While investors generally shouldn't be thrilled to see piles of inventory on a company's books (or at least inventory growth outpacing sales growth), this report suggests that firms are filling their shelves, preparing for increases in orders and an upswing in demand.
Thinking of buying shares of J.P. Morgan Chase
Our friends in Saudi Arabia have delivered a blow to oil companies such as ExxonMobil
According to a Reuters report, our government is giving the ailing pork industry a boost by buying $30 million worth of pork for federal school lunch programs. This is a much bigger-than-usual purchase, and may be followed by additional purchases. Quarterly profits at Smithfield Foods
Today on Fool.com: A few Sirius problems, but XM marks the spot for satellite radio.... Matt Richey profiles Register.com, a neglected stock priced lower than its cash per share.... Citigroup's facing enormous legal and credit liabilities, as management seems to have lost control.... Real estate is your biggest asset.... Choosing a real estate agent, in Fool's School.
Bob Bobala, Robert Brokamp, Tom Jacobs, LouAnn Lofton, Bill Mann, Selena Maranjian, Rex Moore, Rick Munarriz, Jackie Ross, Reggie Santiago, Dayana Yochim