Happy Halloween! As ghoulish and ghastly as our Scary Stories may be, sometimes the truth is more frightening than fiction.
MSNBC, for example, reports that vampire bats in Mexico have been killing cows and sucking their blood. What's worse? "We have documented, in indigenous communities, that they will feed on humans," according to Steve Walker, executive director of Texas-based Bat Conservation International.
Killing weeds in the yard lately? A new study finds that atrazine, one of the world's most popular weed killers, could be causing amphibian creatures to change sexes. Oh, and it's commonly found in water. Scientists are still testing the chemical on very slimy humans.
Finally, Fox has reached a new low (is it possible?) with this reality TV show. In Married by America, viewers will match contestants and vote on which couples should get hitched.
Yes, we're haunted as well.
In today's Motley Fool Take:
- Pitt and Webster Must Go
- Quote of Note
- eBay Exudes Confidence
- Shameless Plug: Meet the Freaks
- Trick or Treat Down Wall Street
- Discussion Board of the Day: The Motley Fool Take
- Quick Takes: ExxonMobil , Albertson's , Wal-Mart, more
- And Finally...
The New York Times reported this morning that Public Company Accounting Oversight Board's new chairman, William Webster, told them he headed the audit committee of US Technologies (OTCBB: USXX.PK), now pennies from destitution and drowning in lawsuits, when it "voted to dismiss the outside auditors ... after those auditors raised concerns about internal financial controls."
Webster further said he told SEC Chairman Harvey Pitt twice during the pre-vote process. Pitt did not tell the four other SEC commissioners who would vote on Webster's appointment and assured Webster it would "not pose a problem." Last Friday, the commissioners appointed Webster in a 3-2 vote along party lines.
Three days later, Webster called Pitt to say he had heard of a governmental investigation into possible fraud by the CEO. Still no problem for Chairman Pitt.
The Times article appeared in this morning's paper. At 10:00 a.m., the Times reported that Pitt asked the inspector general to review the Webster appointment [Friday morning, Nov. 1: Subsequent reports indicate that other SEC Commissioners, not Pitt, requested the investigation].
There are five possible explanations for Pitt's astonishing behavior:
1. He honestly believed there was no issue and that Webster was qualified to serve, despite his being in charge of an audit committee doing, what the textbooks will call, the signature act of the Enron era.
2. He thought it would never come out.
3. He thought it would come out, but it wouldn't make a difference, either because the public wouldn't care or it would be after the election, and perhaps Congress would be in Republican hands.
Now, you can call me paranoid, but this is a very real possibility, too:
4. Pitt knew it would come out and that he and/or Webster would have to go. Then he would never have to appoint someone who's really qualified, like John Biggs, and further preserve his future earnings power and collegial relations when he returns to representing accountants as a private-sector lawyer (which may now be sooner, rather than later).
How would that work? Remember President Nixon's Supreme Court nominees Haynsworth, Carswell, and -- finally, when everyone was tired out --Rehnquist, who altered the face of American law (for better or worse, depending on your view) more than any of the others ever would've? Or President Reagan with Bork, Ginsburg, and then Kennedy. We'll just keep sending you people until you give up and accept someone worse, either politically or intellectually (sorry for the stab at Kennedy, but that's the verdict of legal minds on both sides).
In this cynical view, Pitt -- and anyone above him calling the shots, if any -- figures: What's the risk? They (meaning we individual investors) will never get John Biggs, so let everyone exhaust themselves.
For all four possibilities, the conclusion is the same: Pitt lacks the ethical standards and judgment to serve as the leader of the governmental body charged by law to "protect investors and maintain the integrity of the securities markets" (taken from the SEC's website, by the way). He is either incompetent or evil. This is far, far beyond politics.
He must go. Immediately. Sooner would be better.
Webster deserves some credit for coming forward, but not much. It all seems a bit too disingenuous for the former federal judge and FBI and CIA director. He, too, must go. That he could think, for one moment, that he's qualified to exercise this responsibility, given his role at US Technologies, shows a capacity for ethical and judgmental lapses that do not serve the American investing public. The fact that he did not take himself out of the running, but rather thought disclosure to Pitt was enough, reveals he has spent too much time in the high-level, public-private revolving door club, where it's all about faulty discretion and mutual protection.
At the very least, it shows why his ignorance of accounting matters far more than his law-enforcement experience.
If investors don't rise up in anger and demand Pitt's head and Webster's speedy exit, then we are complicit in this crime against the public. Call or write your congresspersons immediately, and tell your neighbors.
If you want to catch up on the unfolding drama, we have it all at The Motley Fool. Check out the SEC Fights for Funding and the second part of Bill Mann's The Great PR Caper. The New York Times story is available online (free subscription required).
"What fearful shapes and shadows beset his path, amidst the dim and ghastly glare of a snowy night! With what wistful look did he eye every trembling ray of light streaming across the waste fields from some distant window! How often was he appalled by some shrub covered with snow, which, like a sheeted spectre, beset his very path! How often did he shrink with curdling awe at the sound of his own steps on the frosty crust beneath his feet; and dread to look over his shoulder, lest he should behold some uncouth being tramping close behind him! And how often was he thrown into complete dismay by some rushing blast, howling among the trees, in the idea that it was the Galloping Hessian on one of his nightly scourings!" -- Washington Irving, The Legend of Sleep Hollow
Meg Whitman has never lacked confidence, that's for sure.
Two years ago, the eBay
Whitman also stuck with guidance for this year's fourth quarter and said full-year free cash flow would come in around $300 million, or more than 50% higher than 2001. Even better, 2003 free cash flow could grow 67% to $500 million.
One of the major sources of growth over the next five years will come from overseas operations, which have already been profitable for four consecutive quarters. "I really didn't know how universally relevant this model was," Whitman told Reuters. "I didn't know if it would take off in places like Brazil and Argentina and Germany." But take off it did, and now Whitman expects the international division to exceed the size of U.S. operations sometime after 2005.
The management team is presenting an extremely rosy picture, but it's hard to be skeptical. eBay has performed as close to flawless as a company can, time after time meeting or exceeding what it promised. In short, there's simply nothing to complain about, business-wise.
Yes, the stock is trading at about 55 times next year's earnings. But how many companies are growing free cash flow by 67% year over year? Other than granting more employee stock options than it should, there's just not much we don't like about eBay.
Ever wonder where all the freaky Fools hang out? The Motley Fool's Community is a microcosm of the real world, except there seems to be a higher percentage of ghouls, goblins, and witches. We like to keep it interesting. Check it out, and take advantage of our free trial offer.
Did you know that you can don your favorite costume and go trick-or-treating through the corporate headquarters of publicly traded companies?
Well, you can. It's a free country. Just don't expect any candy. Security is more than welcome to usher you out. If you're lucky, you can find your way to Investor Relations for an annual report or two.
Still, in an ideal, free sweets world, we can't help but wonder what appropriate treats would be doled out at some of the more newsworthy companies today. Here's a sample. Your actual confection collection may vary.
AOL Time Warner
Enron -- Too easy. You've got a grab bag assortment of Zero bars, Airheads, and Dum Dums.
So, that's Good & Plenty enough for now. You can put your wax fangs and Pixy Stix away. But if you've got more, share them with the Fool Community at the The Motley Fool Take discussion board.
We've been putting out "The Take" for months now. Do you like it? Is it a Trick? A Treat? All this and more -- in the The Motley Fool Take discussion board. Only on Fool.com.
Today was not the day to have gas. ExxonMobil
The gross domestic product (which has nothing to do with what a baby can do to a diaper) rose at an annualized rate of 3.1% for the July-September quarter. More than half of the growth was attributed to car sales (which account for 4% of the nation's economy). In other economic news, disposable incomes rose 2.7%; the four-week moving average of applications for unemployment benefits declined by 3,500 to 401,750; and the personal savings rate dropped to 3.7 % of disposable income from 4% in the second quarter.
In local news, Ms. Candy Lace was arrested today because she charged money for her tricks and treats.
Today on Fool.com: Rick Munarriz has candy on his mind, in the Drip Port.... Tom Jacobs meets High-Yield Guy and the Inner Gambler, two types of investors.... CNBC could spice things up a bit -- here's one Fool's suggestion.... In Fool's School, how many colleges should junior apply to?... In Hot Topics, does index fund investing make it more difficult for new companies to attract capital?... And the Post of the Day: Why these Fools joined the military.
Bob Bobala, Robert Brokamp, Tom Jacobs, LouAnn Lofton, Bill Mann, Selena Maranjian, Rex Moore, Rick Munarriz, Matt Richey, Jackie Ross, Reggie Santiago, Dayana Yochim