Talk about selling your soul. Salon reported today that American Idol winner Kelly Clarkson has pretty much given her entire future career to the producers of this summer's insanely popular Fox show.
According to a contract posted on the Internet (if it's on the Net, you gotta believe it, right?), the show's production company, 19 Group, owns the "names, likenesses, voices and personal histories of the Idol finalists, 'in or in connection with' the show, forever," and it can do whatever it wants with them, no matter how damaging or humiliating. Further, if the contestants talk about the contract or inner workings of the show, they're liable for damages "in excess of $5 million."
"Fame! We want to live forever," as the old TV theme song goes. We want someone to remember our names. But in the end we're just prisoners of lawyers, production companies, and Celine Dion.
The Motley Fool 50 is a total sell-out. Today, fearful for its career and future earnings, the index only rose about half a percent.
In today's Motley Fool Take:
- J.P. Morgan Chastened
- Quote of Note
- Plans for Hershey Sale a Dud
- Shameless Plug: Love the Ones You're With
- Oracle's Murky Outlook
- Yahoo! Plays Catch-Up With eBay
- Discussion Board of the Day: Yahoo!
- Quick Takes: AOL Time Warner, General Mills, Kodak, Nike, more
- And Finally...
J.P. Morgan Chastened
Think back a few years. What seemed more sensible than investing in venerable U.S. financial services giants? The picture wasn't as rosy as it may have appeared, though.
From a 52-week high of $52 per share, Citigroup
What's going on? Well, think about all the financial crises and scandals we've heard about lately: Argentina, Enron, Global Crossing, and so on. Big banks have loaned money to these troubled entities, and defaults are far from a remote possibility. (In some cases, these financial services firms also helped scandal-ridden companies devise some of their schemes.)
Another shoe dropped today when J. P. Morgan Chase issued an earnings warning, explaining that its numbers will come in lower than expected due to, among other things, the company's over-involvement in the telecommunications bubble. (Some actually expect there to be no earnings for the quarter.) As one analyst reportedly said, "This is beyond embarrassing for the company." Adding insult to injury, both Standard & Poor's Ratings Services and Fitch Ratings downgraded the company's debt rating, noting "sustained weakness" in some core operations and expected continuation of "challenging conditions."
The upshot for Foolish investors is that while you may think these financial giants sport attractive stock prices now, there may be more pain ahead. Even now-attractive dividend yields may fall, if the firms are forced to reduce dividends. Stay tuned for quarterly earnings reports, which are out in a few weeks. Perhaps even wait a few more quarters to see how things shake out. Remember that if J. P. Morgan has made bad loans and is suffering in this environment, its peers are likely in exactly the same boat.
Quote of Note
"A bank is a place where they lend you an umbrella in fair weather and ask for it back when it begins to rain." -- Robert Frost
Plans for Hershey Sale a Dud
Hershey Foods Corp.
There was no shortage of sweet tooths for the company. According to The Wall Street Journal, gum dealer Wrigley
The directors of the Hershey Trust, whose sole beneficiary is the Milton Hershey School for disadvantaged students, claimed they wanted to diversity the trust's portfolio, more than half of which is in Hershey stock. Any financial planner worth his weight in suspenders will tell you that's too much reliance on one company.
So, to some degree, the trustees were just doing their jobs: They were protecting the financial future of the Hershey school in case the Hershey company stumbled. However, they did turn down an offer from the company to buy half the trust's shares at a premium and purchase the rest at market prices over the subsequent three to five years. A spokesman for the trust would not say whether the trust will reconsider the offer.
The potential sale of the company caused an uproar, due to the company's importance to Pennsylvania and its storied place in the history of American business.
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Oracle's Murky Outlook
Even Larry Ellison's ego can't pull Oracle
Oracle's been looking for its bottom for several quarters now, with the continued hope that each upcoming quarter will get better. That hasn't happened yet, and whether or not the company's first-quarter results, announced late yesterday, will signify that turnaround is an open question.
Its revenues dropped in the first quarter from $2.24 billion to $2.03 billion. Sales of new software licenses, an important measure of the company's strength, declined 23% for the quarter to $549 million.
Net income sagged 33% to $342.7 million, or $0.06 a share. Included in that number is a loss of $80.6 million from its investments in other companies, primarily Liberate Technology. Liberate's stock has nose-dived 85% this year. No one's immune to poor investment choices!
Oracle continued to keep costs in check, though. Operating expenses dropped by about 5% to $1.45 billion. It reduced its workforce during the quarter by about 600. It may eliminate another 600 in its second quarter, if necessary. It has managed to keep its results from deteriorating even further over the last year by becoming more efficient, which is perhaps the only sort-of-good news in the midst of its continued difficulties.
Oracle said it expects its second quarter to be even weaker, with sales 4% to 7% below last year's levels. Beyond that, it doesn't know what to expect, and neither should shareholders.
Yahoo! Plays Catch-Up With eBay
It's time to sell the junk filling up your closet, and you're in luck. All day today, Yahoo!
Meanwhile, Yahoo! has tried to flesh out its portal, but its auction listings just haven't caught on like its other services. There was a time when all listings were free at the Internet giant. Yet, even then, Yahoo! Auctions couldn't compete with the breadth of eBay's offerings. Buyers flocked to sellers. Sellers flocked to buyers.
What's worse, the site's liberal listing policy cheapened the quality of more legitimate offerings. Losing the war on both quantity and quality, Yahoo! bit the bullet and began to charge listing fees -- making sure it was considerably cheaper than eBay's rates. Fees haven't improved the number of featured listings, but at least they can be taken more seriously.
So, in a valiant effort to win some market share, Yahoo! returns to its free listing day. Yes, eBay has done this from time to time, too. Even in this gimmick, Yahoo! follows eBay's lead.
Time is ticking. Yahoo! hears it all too clearly, as it wonders how things could've played out had it been a first mover in this recession-proof industry. The company struck early in Japan, and it's doing well there. But, alas, not in the U.S.
As eBay celebrates that it's one of the few dot-com stocks to sidestep an implosion, Yahoo! grapples with the prospect of implementing fees into its premium services.
Is optimism cut out for the auction block? If so, for today, at least, the listing's free.
Discussion Board of the Day: Yahoo!
Do you participate in online auctions? What can Yahoo! do to catch up with eBay? All this and more -- in the Yahoo! discussion board. Only on Fool.com.
Reports are circulating that some big AOL Time Warner
The second half of 2002 is turning out to be a pretty picture for Kodak
Athletic shoe maker Nike
In local news, county officials reversed their decision to ban pets from the annual Founders' Day parade. In order to avoid last year's tragedy, however, dogs and cats must now march at opposite ends of the procession.
Today on Fool.com: The Rule Maker Portfolio plays doctor with Becton, Dickinson.... Whitney Tilson casts a wary look at two troubled industries.... You don't need a lot of money to begin investing, 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