For perhaps the first time in history, someone has received a jail sentence for using an emoticon. When a 19-year-old Frenchman showed up for his drunk driving hearing, he deleted his record at an unattended computer and replaced it with ;) -- a winking smiley face.

The judge, less than amused, slapped him with a three-month suspended prison sentence, a $425 fine, and a suspended drivers license. The man's response? :-O

In today's Motley Fool Take:

J&J's Positive Stent

Prolonged stock market declines are good for something: They make stand-out companies truly stand out. Johnson & Johnson(NYSE: JNJ) is one such company.

J&J reported record fourth-quarter sales of $9.4 billion, up 14.3%. For all of 2002, sales rose 12.3% to $36.3 billion, and net earnings increased 17% to $6.7 billion. Profit margins were all up from last year: gross margin, 71%; operating margin, 26%; net, 18%

Continued strong sales of anemia drugs drove pharmaceutical sales 15% higher last year, to top $17 billion. Drugs are usually the star at J&J, but it may be medical devices this year.

Medical device sales rose 13% to $12.6 billion last year. This spring, J&J expects to launch Cypher in North America, a drug-coated stent that promises J&J the lion's share of a billion-dollar market for at least the intermediate term. Annual stent sales are expected to at least double from $2 billion following the introduction of drug-coated stents.

Management professed comfort with 2003 earnings-per-share estimates of $2.62, up 17% on about 11% sales growth, but it warned against raising estimates. An expected slowdown in drug sales will likely staunch any upside surprises in 2003. At $54 per share, J&J sits at 24.7 times past earnings and 20.6 times 2003 estimates. It's at about 21 times free cash flow (FCF).

Here's annual growth in... 

          Sales   Oper. Inc.   FCF
1999    14.7%     35.6%      17.2%
2000     6.5%     16.8%      27.2%
2001    10.5%     14.9%      36.8%
2002    12.3%     21.1%      25%-30% (est.)

Having grown during an economic downturn (so far) and a stock market collapse, J&J is all the better prepared for the economic upturn that should eventually follow. So, when the market tumbles and you want investment ideas, consider what's left standing.

Quote of Note

"The advantage to being a pessimist is that all your surprises are pleasant." -- Anonymous

Capital Spending Clampdown

Investors wondering about the strength and earnings power of U.S. businesses in 2003 have some new data to plug into their forecast machines.

First, some good news. The companies in the S&P 500 index that have thus far reported fourth-quarter earnings have shown an average year-over-year profit growth of nearly 10%, and the earnings have been 3.7% higher than expectations, according to The Wall Street Journal.

The biggies reporting this week include Citigroup(NYSE: C), Amazon.com(Nasdaq: AMZN), and Johnson & Johnson(NYSE: JNJ).

But a Reuters story, concentrating on the future rather than the past, is pessimistic about the forecasts from these and other companies. Microsoft(Nasdaq: MSFT) and IBM(NYSE: IBM), for example, tied their guidance to a "modest recovery in technology spending," yet neither provided strong evidence that might happen.

Two separate Bloomberg stories paint an even gloomier picture. First, declining revenue has caused telecom giants such as AT&T(NYSE: T) and BellSouth(NYSE: BLS) to cut their fourth-quarter capital spending to the lowest levels in six years. Those cuts obviously affect suppliers such as Lucent(NYSE: LU) and Nortel(NYSE: NT).

Second, there seems to be little chance that business software sales will pick up in 2003, affecting companies such as Oracle(Nasdaq: ORCL), Siebel(Nasdaq: SEBL), SAP(NYSE: SAP), and PeopleSoft(Nasdaq: PSFT). Most of their customers seem to be in the same boat as Cypress Semiconductor(NYSE: CY). "We're going to hold the line on our spending levels," says Director of Applications Russell Dewey, "and try to recover investments we've made."

Unlike vague references to consumer sentiment and a possible war in Iraq, it helps to pay attention to such industry-specific data... especially if you're invested in businesses that supply the companies involved.

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Save More (Simply)

Vow to save more money this year? Most money mavens will tell you to set a goal, figure out how much money it will take to achieve it, and then start socking away your dough. That's fine if you actually make it to Step 2.

Instead, we're going to show you a simpler way -- one that'll painlessly back you into a savings plan. (Sometimes a sneak attack is the best way to jump-start a resolution.) In a few months, you'll look at your savings account balance and wonder where all that extra money came from.

Step 1: Take a pay cut. Yup, you read that right. Successful saving requires giving yourself less money to spend. We promise you won't miss it. Right now, pick a dollar amount you can bear to part with every paycheck -- don't over-think, just come up with a figure. (Go ahead. We'll wait.) Write it down on this handy Save More Kit. Hang it on the fridge or inside the medicine cabinet as a constant reminder of your new-found savings resolve. If you're extra motivated, each week write down how much you would amass if you actually socked away that amount. If you do nothing else, this simple exercise will start you thinking about the power of every dollar you can save.

Step 2: Make saving automatic. As they say, out of sight, out of mind. And so it goes with money earned. Set up a savings account that's separate from your regular checking account, and have some money automatically directed into it. With the account inaccessible by debit card, it'll be less tempting to break in and blow the balance.

Step 3 (Extra Credit!): Supersize your balance with a savings account that earns the most interest. (Check out the rates on Money Market Accounts and Certificates of Deposit with our sponsor, MBNA.)

Step 4: Bask. You deserve it.

Ford's Redlined Results

Red is a popular color for Ford(NYSE: F). Its classic sports car, the Mustang, looks hot in red. So do its rugged F-150 pick-up trucks. The auto maker's earnings are no different, expectedly sporting red once again this year.

The company lost $130 million, or $0.07 a share, in its fourth quarter, including charges. That's narrower than Ford's huge $5.07 billion ($2.81-a-share) loss last year, when it embarked full force into its restructuring plan.

Revenues inched up to $41.58 billion from $40.71 billion during the quarter. Higher vehicle prices offset a 1.2% drop in the number of worldwide units sold.

Stripping out Ford's charges, it turned a profit for the period, earning $150 million, or $0.08 a share. That was enough to top estimates by a penny.

For the entire year, revenues were $162.6 billion, up from $160.8 billion. The company lost $980 million, or $0.55 a share. In 2001, it lost $5.45 billion, or $3.02 a share.

Ford's worldwide automotive division reported a quarterly loss of $191 million, much better than the $803 million it lost a year ago. The credit unit of the company, on the other hand, reported substantially higher profits of $382 million.

It's still a long road ahead for Ford, though, as it seeks to compete more effectively with rival General Motors(NYSE: GM). GM recently reported strong earnings and a gain in market share, while Ford's market share slipped during the year. GM is also winning the price war. Its car and truck prices for 2002 were lower than Ford's, on average, but it moved more vehicles that way.

Ford believes that good things are in store for 2003, however. It expects U.S. demand will be 16.5 million vehicles, and is upping its production accordingly. It now intends to turn out 1.035 million cars and trucks during the first quarter, an increase of 25,000 from its previous production plans. The higher output, coupled with accelerated cost cuts, should result in a $0.20-per-share profit for the first quarter. Analysts were expecting $0.06 a share.

Discussion Board of the Day: Drivers

So, have you pre-ordered your Segway yet? Do you really think it will change the face of transportation, or will it just be an expensive novelty toy? All this and more -- in the Cars and Drivers discussion board. Only on Fool.com.

Quick Takes

All's well that ends Wells. Buoyed by a double-digit spike in revenue and a welcome decline in non-performing assets, Wells Fargo(NYSE: WFC) delivered fourth-quarter profits of $1.5 billion, or $0.86 a share. That leaves the financial services specialist fetching a somewhat reasonable 14 times trailing earnings. But will the company hold up if interest rates start rising? Don't bank on it.

Why? Because new housing starts hit a 16-year high last month. The U.S. Commerce Department is also reporting a ripe 8% uptick in building permits. Sure, new homes need new mortgages, but keep an eye on how the next few months play out, because it wouldn't surprise anyone if the home hunters take a breather if rates begin to climb again.

The friendly skies are still overcast and gray, despite Northwest Airlines'(Nasdaq: NWAC) narrower-than-expected loss. A narrow loss is still a loss, and the company isn't exactly optimistic about the near-term challenges it -- and the industry -- will face. Between the soft economy, higher fuel prices, and the conflict with Iraq heating up, Northwest doesn't see itself back in the black anytime soon. In short, airline investors better heed the sign to buckle their seat belts.

Folks can't seem to get enough newspaper ink on their fingertips. Publisher Knight-Ridder(NYSE: KRI) didn't have to stop the presses on the way to fourth-quarter earnings of $1.16 a share on $759.3 million in revenue. The company credited last month's strong advertising revenue with helping to prop up the quarterly results, and 2003 forecasts call for $3.84 a share.

And Finally...

Today on Fool.com:

  • For updated stories throughout the day, be sure to bookmark our ever-changing News page.
  • With conflict looming in Iraq, here's what stock market investors should consider.
  • Start down the path to perfect credit with a free sneak peek at our new seminar.
  • Is a P/E of 12 too much to pay for fast-food company Yum Brands? Matt Richey explores.
  • San Francisco bans the use of Segways, the human transporters, on its sidewalks.
  • In Fool's School, check out 20 money-saving ideas.

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