The 110-foot walkway, suspended over a busy public street, will connect two parts of a nudist resort. Which parts? Get your mind out of the gutter!
Architects say design elements on the "Bridge of Thighs" will provide privacy for users -- something about shielding body parts with intersecting triangles and planes. Again, mind... gutter. Knock it off! No word on whether Nike's stadium streaker plans to blitz across the overpass.
With a fear of both heights and exhibitionism, the FOOL 50 plans to steer clear of the Desert Shadows Inn Resort and Villas.
In today's Motley Fool Take:
- Cisco's Down, But Not Out
- Quote of Note
- The SEC Gets Busy
- Shameless Plug: Two for the Price of One
- Fund Managers Fumble
- Discussion Board of the Day: Cheesecake Factory
- Quick Takes: Delta, Sotheby's, eBay , more
- And Finally...
Sometimes being the tech barometer for the economy at large is an unenviable position. That's the spot Cisco Systems
The networking company reported second-quarter results last night, but more importantly for many, gave its outlook for the coming months. To put it bluntly, it ain't pretty.
Cisco's sales were down 2% to $4.7 billion from the year-ago quarter. That marks the eighth consecutive quarter beset by stagnating revenues.
Third-quarter sales are expected to be flat or down as much as 3%, sequentially. Q3 is traditionally the company's slowest, but the forecasted weakness is based on continued corporate spending delays. With abundant political and economic uncertainty, businesses just aren't investing in technology again. Cisco doesn't see an immediate reversal of that trend, either.
It wasn't all gloom and doom for the company, though. It earned $991 million, 51% ahead of the $660 million earned in last year's Q2. Excluding items, Cisco netted $0.15 a share, up from the year-ago's $0.09 and ahead of expectations by two cents.
Cisco is operationally solid -- particularly in the face of a harsh landscape. There was no margin deterioration, and the company's gross margin actually increased to 70.4% -- up from Q1's record 69.3%, and way above last year's 62%. Net margins improved, as well, to 21% from the year-ago quarter's 13.7%.
Like a prizefighter shedding excess weight, Cisco is lean and ready to fight. According to CEO John Chambers, the company's been gaining market share over the last year, while its competitors' sales have declined dramatically. If that's the case (and given its monster margins), Cisco is poised for a knockout.
"A great nation cannot abandon its responsibilities. Responsibilities abandoned today return as more acute crises tomorrow." -- Gerald Ford
Our friends at the Securities and Exchange Commission (SEC) have been busy lately, even during this period of leadership transition.
Yesterday, the Commission voted to invite public comment on its proposal to require the mutual fund industry to create a self-regulatory organization. We applaud the idea of seeking public comment, but wonder whether requiring foxes to set up a henhouse-monitoring bureau is really the best solution. Apparently, the mutual fund industry doesn't want to regulate itself and wishes the SEC would do it, while the SEC would rather leave it to the industry.
Meanwhile, the Commission postponed its vote on Regulation Analyst Certification (Reg AC) until tomorrow. The proposed rule would require Wall Street analysts to certify that they actually believe what they write in research reports. (This is meant to address recent scandals involving analysts who seemed to write what others wanted to hear -- all to get their kids into a prestigious private school, or just to advance their careers.)
The mutual fund industry, despite heavy lobbying, received a blow last month when the SEC adopted a new rule requiring the disclosure of proxy votes on behalf of shareholders (something the Fool has supported in several recent columns). This should shed welcome light on a dark corner, as mutual funds are often major shareholders in public companies, yet they have kept secret how they vote on company issues. And according to Reuters, "About half of all U.S. households owned shares in mutual funds in May 2002, down slightly from a year earlier, but far ahead of the 1992 level of 27% and 1982's 11%."
Meanwhile, SEC chairman nominee William Donaldson has a big interview with the Senate Banking Committee today. We hope they question his opposition to Regulation Fair Disclosure two years ago. Fools have embraced Reg FD because it prohibits companies' old nudge-nudge, wink-wink practice of offering valuable inside information to Wall Street analysts, but not the public. If Donaldson doesn't like the idea of small investors having equal access to material information about the companies they own, that's a bad sign.
Keep up with SEC developments on its website.
We've bundled our best sources for stock ideas: the annual Stocks 2003, and our monthly gem The Motley Fool Select. It's a classic combo like Oreos with milk or Butch Cassidy and the Sundance Kid.
Last month, Standard & Poor's released its Indices Versus Active Funds Scorecard, a quarterly report on how many highly compensated mutual fund managers actually beat the index.
The Scorecard doesn't just present numbers. It also accounts for "survivorship bias" (i.e., funds that were liquidated or merged into other funds), compares fund performance to the proper index (instead of, for example, comparing a small-cap fund to a large-cap index), and factors in the size of funds (a $10 billion fund affects the average more than a $10 million fund).
So, what's the score? Who beat whom over the three-year period ending Dec. 31, 2002? The results are in:
In seven of the nine style categories (large-, mid-, and small-cap funds, broken into growth, value, and blend), the average actively managed fund lost to its respective index. The margin of difference ranged from 53.5% of large-cap blend funds underperforming the S&P 500 to 87.5% of small-cap growth funds losing to the S&P/BARRA 600 Small-Cap Growth index.
- The two groups of funds that did beat their indexes were large-cap value funds (with 36.5% underperforming the S&P/BARRA 500 Value index) and large-cap growth funds (posting a razor-thin victory, with 49.4% of the funds underperforming the S&P/BARRA 500 Growth index).
Keep in mind that 2000 through the end of 2002 was the worst three-year period for the U.S. stock market since 1941. Wall Street "wisdom" used to be that during such market downturns, indexing would flop, since it would take "experts" to find the jewels among the rubble. However, even during a long bear market, mutual fund managers have trouble beating an index.
Are you impressed with Cheesecake Factory's
The headline said: "Gold falls, stocks up as Powell addresses UN." That's the weight Secretary of StateColin Powell carried as he tried to convince the U.N. Security Council that Iraq is hiding weapons of mass destruction. The evidence, he said, is "irrefutable and undeniable."
In the face of lengthening lines and frantic frustration at America's airports, Delta Air Lines
For the first time in two years, more people were hired than fired in the U.S. service sector. In addition, the Institute for Supply Management's index of non-manufacturing business rose for the 12th straight month. Most pundits believe this is further evidence the country won't slip back into a recession.
In local news, rat poison orders at Ledbetter's Seed & Feed expanded for the third month in a row. This closely watched indicator is a sign the local economy is picking up, according to county agent Hank Kimball. "In leaner times, most folks around here don't poison the rats," he said. "They'd rather bake them into a nice varmint pie."
Today on Fool.com:
- For updated stories throughout the day, bookmark our ever-changing News section.
- Tonight: Reebok tackles Nike. Everyone's favorite office linebacker takes down Nike's streaker.
- Whitney Tilson explains why digesting fast-food stocks may offer future profitability.
- Forget the numbers! Bill Mann says if you want to learn about companies and their prospects, watch 'em.
- Piece of Cake: Cheesecake Factory offers up a slice of sweetness, reporting a delicious close to 2002.
- In Fool's School, the two most important questions for investors.
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