Talk about whitewash -- we're still recovering here at Fool HQ. Mother nature pounded the Washington, D.C., area with 16 to 25 inches of snow, depending upon exactly where you were situated. A few of us made it into the office today to produce your daily content, with most of our writers working remotely -- thank goodness for telecommuting.
Snow blind or not, we do want to highlight some planned changes in our investing strategies area: Today, we announced the end of our real-money portfolios. You can find out all about this programming decision in a letter from David and Tom Gardner and in an in-depth FAQ written by Jeff Fischer in our Rule Breaker Portfolio space. There is much to read there, so we'll let you take it all in, after you read today's Motley Fool Take, of course:
- Options Battle Escalates
- Quote of Note
- Wal-Mart's Winning Year
- Shameless Plug: The Motley Fool Select
- Reuters Buys Multex
- Discussion Board of the Day: Real Estate & REITs
- Quick Takes: American Greetings, Bowne, Campbell Soup, more
- And Finally...
Options Battle Escalates
Well, this is certainly interesting. Just as the Financial Accounting Standards Board (FASB) was set to consider forcing companies to account for stock options as an expense, 40 members of Congress are stepping forward in an attempt to quash the idea.
The lawmakers are concentrated in and around the technology-rich districts of California's Silicon Valley -- home of such firms as Intel
Now, we're not going to suggest that the representatives are being unduly influenced by contributions from companies opposing the change. There are, after all, reasonable arguments for both sides (see Dueling Fools: Should Stock Options Be Expensed?).
But others, such as former SEC chief accountant Lynn Turner, are not being so kind. "This is the clearest indication that for certain members of Congress," he told USA Today, "their votes are for sale every day of the year.'' Ouch.
The 40 lawmakers know they're stepping into a tough brawl. They are facing pressure from their colleagues in the Senate, for instance. John McCain (R-Ariz.) and Carl Levin (D-Mich.) have sponsored a letter urging the FASB to forge ahead and require the expensing of options.
In addition, some influential companies that once opposed the idea are now reversing course. Accounting firm Ernst & Young, stung by the disclosure it helped set up options-related tax shelters for Sprint
The board will take up the issue during a closely watched meeting next month.
Quote of Note
"The world is wearied of statesmen whom democracy has degraded into politicians." -- Benjamin, Earl of Beaconsfield Disraeli (1804-1881)
Wal-Mart's Winning Year
The world's hugest retailer, Wal-Mart
It earned $8 billion for the year, ahead of the previous year's $6.7 billion by 20%. That's impressive growth for any company, but it's even more so for one as large as Wal-Mart. In its fourth quarter, the retailer's net income grew by 15.5% to $2.5 billion. On a per-share basis, it earned $1.81 for the year and $0.57 for the quarter. Free cash flow grew a whopping 69%.
Sales for the year ended Jan. 31 jumped 12.3% to $244.5 billion. To give that number some perspective, consider that it translates into average daily sales of around $670 million. Even by Wal-Mart's supersized standards, that's astonishing to think about.
Fourth-quarter sales grew at a slower 10.7% to $71 billion. Total comps for the period improved by 2.7%, while for the year, they were up 5.1%. Wal-Mart had difficulty meeting its own comps expectations during the holiday season, and the relatively low quarterly figure reflects that.
The Dow component hopes that comps begin to strengthen soon, starting in February. Yesterday, it said that over the last week it is "on track" to meet its comps gain of 2% to 4% for the month. Sales were boosted in February's second week by both duct tape and lingerie. Yes, you read that right. But before you get scandalous thoughts of Americans trying to emulate Joe Millionaireloser Sarah's foray into bondage flicks, remember that last week hosted both a terror warning and Valentine's Day. Stopping by to stock up on duct tape -- and grab a little something sheer and lacey at the same time -- therefore makes perfect sense.
Looking ahead, Wal-Mart predicts earnings for the current fiscal year will be $2.00-$2.05 a share. That would mean earnings growth between 10.5% and 13%. Should the economy pick up, it is likely to do even better, though, and that's reason to celebrate. Someone pass the skimpy nighties and duct tape, please.
Shameless Plug: Motley Fool Select
The Motley Fool Select is the mother lode of new stock ideas, exhaustively researched by our top investment analysts and translated from financial-ese into crisp, clear English. We pinpoint research on quality companies with current market values that are at a discount to their underlying economic value. If you sign up before the end of the month, you'll receive our special report on shorting stocks, as well as two free issues.
Reuters Buys Multex
Investment research consolidator Multex
Today's buyout price gives Multex a market value of about $235 million, but it also holds $50 million in cash, giving the deal an enterprise value of $185 million. That's about two times its $92 million in 2002 sales, and 16 times its 2002 EBITDA (earnings before interest, taxes, depreciation, and amortization) of $11.5 million. Multex lost $7.4 million last year, and is expected to be slightly above breakeven this year.
Reuters, meanwhile, is suffering declining sales, recorded its first annual loss, and warned today that the first half of 2003 would not usher in a recovery. It now expects to cut 3,000 jobs (rather than 1,000) by 2005. Today's acquisition offers a small ray of sunshine. Multex will give Reuters lucrative access to the investment research community at a time when the industry is undergoing change. Change means opportunity. Investment firms may soon be required to provide third-party research and Multex is angling for a piece of that large pie.
It does not appear that Reuters is overpaying for Multex, implying that the stock was undervalued -- at least to an acquiring company -- at $4.50 per share. Reuters can scale Multex to increase its value. So, could peers be "cheap" as well? TheStreet.com
Discussion Board of the Day: Real Estate & REITs
Looking to spice up your portfolio's income potential with Real Estate Investment Trusts? What are the risks? Why are the yields so juicy? All this and more -- in the Real Estate & REITs discussion board. Only on Fool.com.
Does anyone have some "Get Well" greeting cards handy? Despite this being the industry's seasonal peak, American Greetings
It's getting chilly in here. At least, that was the reason communication specialist Bowne
Uniform maker Cintas
M'm! M'm! Done! Looking to use microwaves to make some waves in the soup space, Campbell Soup
When your products deal in industrial whitewashing and pest elimination, you better make sure no one smells a rat in your financials. Ecolab
Today on Fool.com:
- For updated stories throughout the day, bookmark our ever-changing News section.
- Broken Bonds: Mathew Emmert says looking for love in the bond market could leave you brokenhearted.
- Joe Millionaire's New Million: Advice for the new couple on what to do with their sudden windfall.
- Mall Brawl: Taubman, Simon battle. Shareholders are caught in the crossfire.
- In Fool's School, calculating gains and losses. Don't forget to factor in commissions!
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