If you look at some of our headlines this week, you might think we're a tawdry mix here at The Motley Fool. For example, on Wednesday we let the world in on our Rule Maker Portfolio's Fiendish Plan. Yesterday, we were Investing in Sin Stocks and Nailing the Homebuilders. Ouch. And you thought we'd lost our edge.

This week's sign of the impending apocalypse: MSNBC is negotiating with Jesse Ventura to host his own TV show after he finishes his stint as governor of Minnesota. "The Body" is back.

In today's Motley Fool Take:

Dell Stretches Its Lead

Maybe it's time to start thinking inside the box. Dell(Nasdaq: DELL) did what Dell does best, keeping analysts happy with few surprises and bigger chunks of market share to close out Q3.

Last month, analysts hoped for $8.9 billion in revenue for the period, when Dell guided them toward $9.1 billion and expressed comfort with the $0.21-a-share earnings target.

Like a lemonade stand in the middle of the desert, Dell has been a sight for sore eyes in a dry, grainy, uncool industry. Only, in this case, it's no mirage.

You've heard the computer hardware industry horror stories before. Companies don't want to make the necessary capital investment to upgrade their systems. Consumers are pinching pennies at home. Yet along comes Dell, reporting a 22% revenue swell, while fatter margins produced earnings growth of 31% for the quarter.

The rest of the sector has not been as fortunate. Hewlett-Packard(NYSE: HPQ) and Compaq are fumbling for the keys to the honeymoon suite. Gateway's(NYSE: GTW) eMachines called; it wants its flawed business model back. And will someone knock on Apple's(Nasdaq: AAPL) dressing room door again? It's spending way too much time trying to pretty itself up, when it should be on stage by now.

It's no wonder Dell saw a 28% spike in overall product shipments for the period, while the rest of the industry cried uncle with a meager 2% increase. The company is painting an upbeat picture for the holidays, with product shipments expected to climb by 10% sequentially.

Dell is looking for fatter margins, too. It sees Q4 revenue coming in 20% higher than last year's showing, with earnings soaring by 35%. The competition? Not even close. Dell is still moving faster, leaving its rivals will little choice but to eat its dust. Remember, it's still a desert out there.

Discussion Board of the Day: Dell Computer

What is Dell doing right? Can the competition learn? And if they do learn, will Dell still find a way to come out on top? All this and more -- in the Dell Computer discussion board. Only on Fool.com.

Starbucks Brews Success

People love their coffee. That's a glaringly obvious conclusion following Starbucks'(Nasdaq: SBUX) announcement of its fiscal year-end results. The coffee king had a piping hot year, and hopes to keep the magic brewing.

Its revenues grew 24% to $3.3 billion for the year. Same-store sales improved 6%, which isn't surprising to anyone who's watched it put up solid comps gains month after month this year. (And last year... and the year before.)

It earned $215.1 million in fiscal 2002, ahead of the previous year's earnings by 18.7%. Excluding one-time charges and gains, the company earned $218 million, or $0.55 a diluted share, versus last year's $0.46.

The company's free cash flow improved year over year, though only marginally as it used its cash from operations (as usual) to pay for its extensive global expansion. The already-minimal long-term debt became even more so, declining around 12%. Net and gross margins were largely unchanged.

Fiscal 2002 was a great year for the coffee retailer. Looking ahead, Starbucks faces some lofty self-set expectations over the next few years. It has projected sales growth of 20% per year and earnings growth of 20% to 25% for the next three to five years. It intends to add 1,200 more stores next year, while keeping comps growth of 3% to 7%.

Building new stores and maintaining sales at the old ones is a delicate balance, but so far it has walked that particular tightrope with agility. At the close of fiscal 2005, it expects to be churning out lattes at 10,000 locations worldwide.

To achieve all this, the company will have to operate almost flawlessly. Starbucks has proven itself an innovative company, capable of returning outstanding results one on top of the other. It's not completely far-fetched, then, to believe it can do what it's set out to do. However, current sore spots, like the troubled Starbucks Japan, will need to be corrected and contained.

Investors are used to getting perfection from Starbucks. With shares currently trading at a substantial premium to next year's earnings growth, they'll continue to demand the best. Let's hope Starbucks can deliver.

Quote of Note

"You can say any foolish thing to a dog, and the dog will give you a look that says, 'My God, you're right! I never would've thought of that!'" -- Dave Barry

Guitar Center Turns It Up

Shares of Guitar Center(Nasdaq: GTRC) are trading up today after a go-go growth conference call last night. Management issued rosy financial guidance for the coming year that will undoubtedly lead analysts to raise their revenue and earnings estimates.

Woefully little attention has been given to the company's declining returns on capital, rapidly increasing debt, or bloated inventory situation. Nor has there been discussion of its aggressive promotional tactics, including a current offer of no payments until 2004 for purchases over $299. All signs point to a company that's trying to juice sales at all costs.

But let's not waste too much time with such trivialities as the balance sheet, when there's so much good news to share about next year's income statement. On the call, management pulled back the curtain on its 2003 forecast and wowed analysts with mid-range estimated revenue of $1.26 billion and estimated earnings of $1.25 to $1.35 per share. That would represent revenue growth of about 15% and earnings growth of around 25%.

This higher forecast is premised upon a boost in both gross and operating margins, which would mark a noteworthy departure from the company's multi-year trend of declining margins. Specifically, Guitar Center is calling for gross margins of 26.2% to 26.5% and operating margins of 4.9% to 5.2%, representing an increase of 35 to 45 basis points (0.35% to 0.45%) over that achieved for the trailing 12 months.

Next year's forecast is also based on a plan to roll out 16 to 19 new Guitar Center stores. That's up from an estimated 11 stores added in 2002. The problem with this continued rapid store expansion is that with each new store, returns on capital are declining. Each store requires a massive investment of inventory, which is then turned over very slowly. Guitar Center's inventory turnover ratio of 2.9 is pitifully low compared to a well-run big-box retailer, such as Best Buy(NYSE: BBY), which turns over its inventory 6.0 times per year. Nevertheless, Guitar Center continues with its "growth or bust" ways.

Management isn't oblivious to its inventory problem. The company recently completed a new centralized distribution center, which it hopes will improve its inventory efficiency. Management touts this new distribution center and "reduced freight costs" as the cure for all its ills. We don't buy it. Fools should watch its inventory situation closely because, if inventory continues to grow faster than sales (as it has for five out of the past six quarters), it could spell trouble.

Debt (which is becoming quite high, at 1.3 times equity) is funding the inventory growth. Also, if inventory remains excessive, it could force the company to discount its merchandise in order to move inventory out the door. Such discounting could spoil its hopes of higher gross margins, which are essential to meeting its earnings guidance.

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Quick Takes

Although its "business model got a little messed up," bankrupt WorldCom is still a great company. So says former Hewlett-Packard(NYSE: HPQ) boss Michael Capellas, who was named chairman and CEO of the troubled telecom today.

How did they keep this secret for so long? Gateway(NYSE: GTW), the money-losing computer maker, revealed today that it has been the subject of an SEC investigation for almost two years. The probe is apparently related to a restated earnings report from 2000. As Lehman Brothers analyst Daniel Niles told Reuters, "This puts another cloud on top of investor confidence in the company, because you kind of feel like this is something you should have been told." Yes, kind of.

Two things are troubling Fifth Third Bancorp(Nasdaq: FITB). First, Fifth Third is being investigated by the SEC for a $54 million impaired asset charge in the third quarter. Second, Fifth Third is being barred by the Federal Reserve Bank from making any acquisitions until it conforms to certain procedures regarding financial controls.

ImClone Systems (Nasdaq: IMCL) reported a third-quarter loss of $0.57 per share today. Results were hurt by legal fees and public-relations expenses related to the insider-trading scandal involving former CEO Samuel Waksal.

The local weather forecast calls for darkness this evening, which should extend to about dawn tomorrow.

And Finally...

Today on Fool.com: Bill Mann focuses on dim times at General Electric.... In Fool's School, beware of hot stock tips.... Turn your stock losses into tax savings, in our Tax Center.... Headhunter Nick Corcodilos explains why you shouldn't close doors, even after landing a job.... Post of the Day: Apple.

Bob Bobala, Robert Brokamp, Tom Jacobs, LouAnn Lofton, Bill Mann, Selena Maranjian, Rex Moore, Rick Munarriz, Matt Richey, Jackie Ross, Reggie Santiago, Dayana Yochim