Next week on Martha Stewart Living: How to give that dark, dank cell a festive fall makeover. An assistant to Stewart's broker pled guilty today to making false statements to an investigator -- a misdemeanor -- and plans to testify against the home-improvement diva.
The news doesn't bode well for Stewart, who continues to deny insider-trading allegations and claim her broker sold shares of ImClone on a standing order when they fell below $60.
Here's a tip, Martha. Liven up that orange jumpsuit with a decorative snapdragon corsage. We hear the ladies love flowers.
The Motley Fool 50 didn't wear a corsage today and was down over 2%.
In today's Motley Fool Take:
- No Chemistry for Dow
- Shameless Plug: The Motley Fool's Best-Kept Secret
- Dell's Well
- Discussion Board of the Day: Dell Computer
- Rethinking CEO Salaries
- Quote of Note
- Quick Takes: ARM Holdings , Guidant , General Motors , more
- And Finally...
Beleaguered Dow Chemical
The country's second-largest chemical manufacturer is hurting thanks to higher prices for oil and other commodities it needs. Weakened demand for its raw materials in the United States isn't helping, either.
Things looked better for Dow as recently as July. Back then, the company expected a solid third quarter and saw earnings above the second quarter's $0.26. Oh, how things changed in the dog months of August and September.
Dow's problems are symptomatic of larger issues, namely current manufacturing weakness in the economy. Echoing what the company reported today, the Institute for Supply Management (ISM) said that manufacturing activity dropped in September for the first time in eight months. ISM's index of business activity declined to 49.5, down from August's 50.5 reading and below economists' expectations of 51.0. A reading above 50 signifies growth; below 50 means contraction.
ISM surveys the purchasing managers at more than 350 companies responsible for buying raw materials. Simply put, they aren't buying, and companies like Dow are feeling it. Other chemical and raw material producers have also warned about their third quarters in the last few weeks.
As if that's not enough, oil prices have risen more than 40% this year, and oil futures are trading near 19-month highs. Dow uses oil to make many of its products. The omnipresent threat of war with Iraq and the effects in the Gulf of Mexico from tropical storms Isidore and now Lili are causing oil prices to rocket up.
That means a one-two punch for Dow, which has been hanging on the ropes now for two years. Don't expect things to improve much for the company in the coming months. Manufacturing wasn't exactly rocking along in the U.S. before September, and there's no evidence that it'll spring back anytime soon. Should we go to war, oil prices will remain frothy for some time to come. All that translates into continued weakness for Dow.
We're not about hype at The Motley Fool, especially when it comes to choosing stocks. You'll never get an email from us saying "Buy now! Hot stock! Triple your money guaranteed!" Those types of things make us gag.
But we are in the business of choosing and evaluating stocks, and we've quietly put together a product that does just that. The Motley Fool Select is quite possibly our best-kept secret. Every month, our writers churn out analysis on companies that are worthy of investment consideration. Subscribing to Select may feel like joining an exclusive club, but this is one secret we don't mind letting out -- sometimes.
Maybe Steven, the arguably annoying Dell
The world's leading direct seller of computers is looking to produce $9.1 billion in revenue for its fiscal third quarter. That's a significant $200 million more than analysts were expecting. The company also expressed its comfort with Wall Street's $0.21-a-share earnings target for the period.
Coming on the heels of yesterday's broad market rally, Dell's healthy outlook is the kind of tonic to keep the bullish days coming. But this shouldn't be taken as a sign that the personal-computing sector is ready to bounce back.
It's all Dell, baby. Between the successful push to expand overseas and last month's announcement to team up with Lexmark
Dell is the one doing it right. It's been consistently profitable through these lean years of corporate spending. While that was once the company's bread and butter, it has been able to expand the menu over the years. If Dell is getting along nicely now, what will happen when the economy actually gets better?
OK, Steven, we get the point. We're getting a Dell.
What's Dell doing right, and does it mean good things for companies like Intel? Will people really buy Dell printers? All this and more -- in the Dell Computer discussion board. Only on Fool.com.
The average CEO pay package at major American corporations is estimated to be between $10 million and $25 million, according to several sources. We recently covered The Conference Board's thoughtful recommendations for corporate governance reform, which included restructuring executive compensation. Fools should rejoice that discussion of CEO salaries continues.
According to an article in The Seattle Times, William J. McDonough, president of the New York Federal Reserve Bank and possible successor to Alan Greenspan, decried the fact that while 20 years ago the average CEO earned 42 times what the average production worker did, the average CEO today earns 500 times what the average employee does. McDonough noted, "I find nothing in economic theory that justifies this development... I can assure you that we CEOs of today are not 10 times better than those of 20 years ago."
One explanation for the current state of affairs is that companies have little choice but to up payments, given a short supply of talented top managers. This defense is offered by, among others, compensation consultants hired by CEOs -- who have a vested interest in propelling packages ever higher, since they get a cut of them.
The Post article quoted Jeff Sonnenfeld, associate dean of the Yale School of Management, saying "What's disturbing is that so many companies paying astronomical rates have performed poorly." It also quoted best-selling business author and thinker Jim Collins, who said, "We looked at 75 years of company data [for 1,435 major corporations over five years] and never found the slightest correlation between executive compensation and company performance."
Is any real change afoot? Maybe. The recent blow-ups of many high-profile companies with highly compensated CEOs have certainly weakened arguments for steep compensation. Here's hoping for a return to rational pay packages.
"Always acknowledge a fault. This will throw those in authority off their guard and give you an opportunity to commit more." -- Mark Twain (1835-1910)
Just 10 weeks ago, ARM Holdings
Shares of Guidant
Today on the Corruption Channel: Former Enron CFO Andrew Fastow was charged with fraud, money laundering, and conspiracy for his role in hiding the company's massive debt. Meanwhile, Global Crossing Chairman Gary Winnick -- in an attack of sympathy -- said he would donate $25 million to employees who lost retirement savings when his company went bankrupt.
September sales figures are in for the Big Three auto makers. General Motors
In local news, the County League softball season came to an early end yesterday when Rufus Gunther's prize Yorkshire hog, Sally, escaped from her pen and tore up the field while rooting for truffles. Mount Pilot and North Fork, tied with four wins apiece, were declared co-champions.
Today on Fool.com: Is eBay's business heading for the bargain basement?... Bill Mann comes out in defense of General Dynamics.... In Fool's School, let's talk multiples.... Our Community discusses a favorite pastime -- torturing telemarkets!... Today's Post of the Day: the best way to choose stocks.
Bob Bobala, Robert Brokamp, Tom Jacobs, LouAnn Lofton, Bill Mann, Selena Maranjian, Rex Moore, Rick Munarriz, Jackie Ross, Reggie Santiago, Dayana Yochim