In science news: A U.S. scientist plans to burn human DNA sequences onto CDs to help doctors better prevent and treat disease. For just $500,000, you can request your very own gene CD. (Or for free, you could steal someone else's on Limewire!) Disclaimer: The Motley Fool strongly discourages stealing human genome maps.
And astronomers have discovered a spherical body in our solar system larger than all objects in the asteroid belt combined. "This new discovery fits right in with our expectation that there should be a handful or two of objects as large as Pluto," astronomer David Jewitt told MSNBC. Anna Nicole Smith responded that she's thrilled scientists are watching the show. "Science is sooooo hot. Old smart guys really turn me on," she said.
In today's Motley Fool Take:
- Senate Roasts SEC
- Quote of Note
- Sears' Softer Side of Earnings
- Shameless Plug: The Motley Fool Stock Advisor
- Campbell: Mmm, Mmm, Bad
- Discussion Board of the Day: Food
- New Financial Tools for Fools
- Quick Takes: J.P. Morgan Chase , Merrill Lynch , WorldCom , more
- And Finally...
Senate Roasts SEC
These are trying times for the Securities and Exchange Commission and its chairman, Harvey Pitt. Already under heavy criticism from various lawmakers for potential conflicts of interest, the agency received a scathing 127-page report yesterday from a Senate committee investigating the Enron collapse.
The report examined the failures of various watchdogs that could have alerted the investing public to Enron's crumbling house of cards: the company's board of directors; its auditor, Arthur Andersen; investment banking firms that aided in obscuring Enron's financial condition; attorneys involved at all levels; Wall Street analysts who continued to recommend the stock; and credit rating agencies who failed to downgrade the energy giant's debt rating.
But the most troubling failure came from the SEC itself. In a letter to Pitt, the committee said his agency "ultimately failed to fulfill its mission to protect investors" in at least three ways:
- It did not review any of Enron's annual reports after 1997, in which it could have discovered "opaque and questionable references to transactions with entities run by the company's own Chief Financial Officer."
- It failed to follow up to make sure Enron met certain conditions and requirements the agency imposed on the company.
- It took a "lackadaisical approach" in its handling of an exemption request that ultimately allowed Enron to receive regulatory benefits it may not have been entitled to.
Not mincing words, the committee said that "some of the enormous losses suffered by workers and investors might have been prevented" had the SEC been on its toes. In short, "The investing public expects and deserves more meaningful protection from the ultimate market watchdog."
Lest we leave now and let the senators off the hook, it's worth noting they played down their own part in Enron's collapse. As The Wall Street Journal notes, "The report doesn't mention, however, the role Congress itself played in limiting the SEC's financial resources during the 1990s, in response to lobbying from corporate interests and the accounting profession."
Unfortunately, there's plenty of blame to go around here. Enron investors and employees were failed by many incompetent or deceitful people.
"There is one thing even more vital to science than intelligent methods; and that is, the sincere desire to find out the truth, whatever it may be." -- Charles Sanders Pierce (1839-1914), mathematician
Sears now says it'll earn between $0.80 and $0.82 a share for the quarter just ended in September, putting it roughly even with last year. Analysts were looking for $0.86 a share. The company reaffirmed its guidance of $5.15 for the fiscal year, though some optimistic analysts had been hoping for $5.27.
This news from the retailer isn't particularly shocking. It posted a worse-than-expected August comps decline last month, on top of weak comps results from July. Further, given Wal-Mart's
The company's also flinching from some self-inflicted pain. It's remodeling and updating many stores, and that upheaval has hurt sales. The disruptions reached their zenith in the third quarter, and should be less of an issue in the future.
The challenge for Sears is to capitalize on its vital fourth quarter, which would keep it on track for a better year, overall, than last year. Store remodels should help, as should the integration of Land's End, which the company bought in June. Clothing and other soft goods have been a sore spot for quite awhile, but the Land's End buy should help significantly.
It's still uncertain whether the environment, at large, will cooperate with Sears. Many industry watchers don't foresee a hardy holiday shopping season. The West Coast ports lockout could affect the retailer's fourth quarter, should it continue, and a war with Iraq could keep already nervous shoppers away from stores.
Rising consumer debt levels and increasing late payments could also hurt Sears, since it gets about 60% of its operating profits from its consumer credit division. It has already seen its receivables and allowances for doubtful accounts rise about 10% in the third quarter.
Sears is in the same boat as most other retailers right now, with the tide so low they can see the sand eroding beneath them. For shareholders, that means even more patience, as they drift along for the ride.
If you're interested in advice that's geared toward average investors instead of rich hotshots, check out David and Tom Gardner's newsletter, The Motley Fool Stock Advisor. Each issue features a tête-à-tête between the brothers, during which they explain their stock ideas.
Psst, retailer. There's a clam in my soup! Campbell Soup
It's not just a matter of folks spitting out some funky fungi or the culinary faux pas of diluting ready-to-eat soup with water. For folks allergic to shellfish, spooning the stuff can lead to potentially dangerous side effects.
But what about the folks suddenly allergic to soup stocks? Trading at an eight-year low, soup might make for a yummy fall meal, but it hasn't made for much of an investment. This was supposed to be an all-weather defensive stock, but it's been raining broth and consommé lately. We consider ourselves fortunate: We cashed out on the company earlier this year in our Drip Portfolio.
Analysts expect the company to earn $1.47 a share this fiscal year, but that's its worst bottom-line showing in four years. The top line has been as moribund as the perennial soup-bound fly, too. Over the last five years, annual revenue has been stuck between $6.4 billion and $6.7 billion. Despite new flavors and the introduction of higher-priced bottled soup over the traditional canned products, Campbell is in a rut. Sure, the ready-to-serve market inched 9% higher in fiscal 2002, but most of those gains came at the expense of Campbell's own condensed soup market.
When a turnaround starts taking on the characteristics of still photography, you have every reason to worry. The upside is that we're now entering into Campbell's hearty and meaty season. This is a seasonal business, with the October and January fiscal quarters serving up the strongest results as consumers crave warm soup with nippy weather. But for shareholders, it's already downright freezing in these equity waters.
Campbell Soup isn't the only food stock that's not going down easy. In a sector that was supposed to be a safe haven for conservative investors, producing low-priced consumer nondurable foodstuffs hasn't been all it's cracked up to be. Has the food sector bottomed out? Who are the leaders and laggards? All this and more -- in the Food discussion board. Only on Fool.com.
Wouldn't life be grand if you could get the answers to the following questions:
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Well, if The Motley Fool likes to do anything, it's make your life grander. To that end, we've updated and expanded our roster of financial calculators. We now offer more than 100 (free!) calculators organized under the following categories: credit/budget, home, saving, college, equity credit line, retirement, IRAs, bonds, and auto.
Using financial calculators can prove enlightening. A visit to the "What's it worth to reduce my spending" calculator indicates that a 40-year-old could add $115,000 to her retirement savings by spending $50 less a month at Home Depot, $50 less a month at restaurants, and $2 less a day on coffee (and earning 8% on the savings).
We've also added a new feature: You won't have to re-input all your information each time you use a calculator. Fill out the "Am I saving enough for retirement?" calculator today, pull it up again some other time, and your information will still be there. (The calculators, which are provided by FinanCenter, are pre-populated with default settings. We couldn't help noticing that, for the retirement calculators, the default ages are 37 for one spouse, 23 for the other. Perhaps someone at FinanCenter is having a midlife crisis.)
Financial calculators have their limitations. In many cases, users must make assumptions about tax rates and investment returns a few decades away. Those assumptions will most likely prove wrong. So don't base your retirement plan on a 10-minute tussle with a calculator. However, when it comes to such endeavors as comparing loans, analyzing a budget, and deciding between a taxable and tax-free bond, hard numbers can prove very persuasive.
On the corporate corruption watch: Buford Yates, former director of general accounting for WorldCom, pleaded guilty to helping hide billions in expenses for the bankrupt telecom giant. Meanwhile, USA Today reports investigators have uncovered documents that may implicate Credit Suisse First Boston investment banker Frank Quattrone. The documents could be the "smoking gun" that shows CSFB issued favorable stock ratings in exchange for investment-banking fees.
Various reports say J.P. Morgan Chase
American Airlines parent AMR
In local news, hog-calling champion Hank Hiller will not be back to defend his title at next week's county fair. After mistaking his wife's paint thinner for his homemade moonshine, Hiller can't holler for at least six more months.
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