Looks like the French are still getting fried in the States.

First, restaurants in three U.S. House buildings renamed french toast "freedom toast" and started serving "freedom fries." Now, French-owned hotel chain Sofitel has replaced French flags with the stars and stripes in front of all its eight U.S. locations as a "precautionary measure" to protect employees.

We can't wait to hear what becomes of kissing... zut alors!

In today's Motley Fool Take:

J&J : The Last Blue Chip?

Have you noticed how the term "blue chip" has faded from use over the past few years? The idea that certain large companies have a permanent place of sturdiness and longevity seems to have disappeared over the course of this bear market, and understandably so.

One of the few companies still fit to carry the "blue chip" badge is Johnson & Johnson(NYSE: JNJ). The company's just-released 2002 annual report is a testimony to its enduring greatness.

Noteworthy accomplishments in 2002 include:

  • 70th consecutive year of rising sales;
  • 18th year of double-digit earnings growth;
  • 40th year of increased dividends;
  • Share repurchases of $6.4 billion, or 3.4% of outstanding shares;
  • Return on invested capital of 35.6%, a record high;
  • Maintained rare "triple A" credit rating.

Precious few companies do this good a job of growing the business while also returning value to shareholders via dividends and share buybacks. In addition, J&J earns high marks for its conservative issuance of stock options, which caused shareholder dilution of only 1.4% in 2002.

Despite J&J's solid 2002 business performance, its stock fell 9.1% (7.8% including dividends). Nevertheless, it isn't cheap yet. Free cash flow (FCF) in 2002 was $6.95 billion (after adjusting for a one-time, $750 million pension plan investment), or $2.30 per share. At yesterday's close of $54.68, that puts J&J at 23.8 times FCF -- a 28% premium to the S&P 500's average price-to-free cash flow ratio of 18.6.

J&J isn't overvalued, but it's no bargain, either.

So, take your time and read J&J's annual report. If the stock of this great company ever dips below 20 times FCF, it becomes a potentially great investment. The price you pay matters -- even when you're buying one of the few remaining true-blue blue chips.

Quote of Note

"No one ever attains very eminent success by simply doing what is required of him; it is the amount and excellence of what is over and above the required that determines the greatness of ultimate distinction." -- Charles Kendall Adams (1835-1902), historian and author

Neither Gem Nor Star

Embattled TV programming-guide provider Gemstar-TV Guide(Nasdaq: GMSTE)reported this week it will restate $111 million in revenues it booked in the past. In other words, the company claimed revenues it shouldn't have.

Additionally, former CEO Henry Yuen and CFO Elsie Leung have agreed to testify before the Securities and Exchange Commission sometime within the next few weeks. Yuen and Leung stepped down in ignominy last year after Rupert Murdoch's News Corp. (NYSE: NWS), which held a 42% stake in the company, got fed up with their management. In March of 2002, then-president Peter Boylan left when Gemstar announced it would write down more than $5 billion of goodwill from its purchase of TV Guide.

But the real bombshell came last summer. Gemstar sued former customers Scientific Atlanta(NYSE: SFA) and Echostar(Nasdaq: DISH) for patent infringement when they released comparable technologies to Gemstar's. So assured of victory was Yuen that he continued accruing royalties from the two companies. To call this "aggressive accounting" is a substantial understatement. Pity poor Yuen when Gemstar lost the case. All those accruals had to be reversed, sounding the death knell for his management of the company.

After News Corp. essentially assumed management control of Gemstar, the company fired the original auditors (who did what?!) and began reviewing past accounting. This announcement marks the second restatement this year. This is to be expected, as a company that has played aggressively in one area, generally speaking, has shaded the laws of GAAP and common sense elsewhere, as well. There may be more restatements.

Plenty of folks call Gemstar a bargain these days. Certainly, the fact that they've dumped their shady management team improves the company's suitability for investment alone, and TV Guide, despite improvements in digital programming data, remains a cash cow. But it's concerning that Yuen and Leung remain employees of the company, and that Leung remains on the board of directors. In fact, Gemstar yesterday expressed "disappointment" that the SEC had to enforce a subpoena on Yuen and Leung, who were instructed by the company to cooperate.

The story's not over yet, and more may be found in Gemstar's receivables cesspool that will cause shareholders pain. Gemstar, at this point, is a poster child for the motivation for executives to lie, cheat, and steal. After all, unless Yuen is thrown in jail or stripped of his stock (both highly unlikely), he will still be unbelievably rich, based in no small part on his ability to lie.

Shameless Plug: Get a Broker

If you want to buy stocks, you're going to need a broker. And who wouldn't want to own stocks? There is no place over the past 100 years where your long-term savings would have fared better than the stock market -- not in bonds, not in real estate, not in gold, and certainly not in Beanie Babies. Our Broker Center makes it super-easy to pick the right broker for you, so check it out!

A Tyco Turnaround

When Tyco(NYSE: TYC) talks, people snicker. It's only natural, given the company's recent history of accounting irregularities, tax evasion tactics, embezzlement, and a collapsed house of cards built on questionable acquisitions.

Last night, the conglomerate warned it would miss profit targets for this fiscal year. Its looking to earn between $1.40 and $1.50 a share, while the company was comfortable with projections as rich as $1.75 a share just a few months ago.

Tyco will take another accounting hit in the March quarter, due to its European fire and security business. However, it's sticking to cash-flow estimates of between $2.6 billion to $3 billion this year. Free cash flow (FCF) may clock in as high as $1.85 billion, in line with the $482 million in FCF it produced in Q1.

That prices the company at 15 times this year's projected FCF (or a heftier 25 times, once you tack on the company's net debt to arrive at its more telling enterprise value), but you have to consider that these returns are taking place during its reorganization. The company offers an impressive collection of industry leaders and niche specialists that should show dramatic improvement once Tyco finishes its asset sales, and morale and direction return to the conglomerate's various subsidiaries.

Do we believe Tyco? Some argue that you can only lose credibility once. Bill Buckner could've gone on to field thousands of routine grounders, and he would still be remembered for the one that got away. History may not be any kinder to Tyco. It will take time before some money managers buy back in, if only to save face when they have to mail out quarterly fund reports and type in Tyco, and all that the name implies, to their base of unsophisticated yet headline-savvy investors.

That doesn't mean that you have to wait that long. You are only accountable to you.

Disgraced ex-CEO Dennis Kozlowski is long gone. So is every single member of the board of directors that served during the company's accounting scandals. With every quarter of meaty cash flow, the company distances itself from its incredulous past.

Discussion Boards of the Day: Tyco, Turnaround/Value Investing

Tyco investors are pondering everything from the merits of jail time to the company's eclectic collection of properties over on the Tyco discussion board. Do you think the company's a worthy turnaround story now? With so many stocks beaten down over the past few years, are there diamonds in the rough among the fallen? All this and more -- in the Turnaround/Value Investing discussion board. Only on Fool.com.

Quick Takes

The Commerce Department reports that retail sales fell 1.6% for the month of February. That's the worst showing in 15 months, and a significant drop from January's revised gain of 0.3%. Economic forecasters had been expecting a decline of only 0.5%. Weakness was widespread across all categories, with home-and-garden supply stores putting up the worst declines.

Schering-Plough (NYSE: SGP) and its CEO are in hot water with the SEC. Regulators may file civil charges against the company and CEO Richard Jay Kogan for violating Reg FD, which is supposed to prevent firms from leaking information to select investors ahead of the public.

James Gandolfini's contract dispute with AOL Time Warner's(NYSE: AOL) HBO just got messier. Filming for the fifth season of The Sopranos was set to begin March 24, but according to reports, the network told cast members their Jersey accents and mob hits are on hold indefinitely. Gandolfini currently earns $400,000 an episode and wants at least a million. HBO's offering $800,000. Fans hope they can work something out so the fifth season doesn't get whacked.

General Motors (NYSE: GM) is taking steps to shore up its severely underfunded pension plan. At the end of 2002, the plan was underfunded by a whopping $19.3 billion. Today, GM said it contributed 149.2 million of its Hughes Electronics(NYSE: GMH) stake to its U.S. employees benefit plans. The $1.24 billion contribution cuts GM's retained economic stake in Hughes from 30.7% to 20%. The move should also cut its pension expenses by $100 million a year. Hey, every little bit helps.

Did Miami Vice or Nash Bridges create $8 billion worth of wealth for Don Johnson? According to tabloid reports, the star was stopped at a border checkpoint last November as he passed from Germany into Switzerland with a briefcase containing stocks, bonds, and credit notes totaling a fat $8 billion. Johnson says it belonged to a passenger and contained only bank statements. Sounds like a case hot enough for Sonny Crocket himself.

And Finally...

Today on Fool.com:

  • For updated stories throughout the day, bookmark our ever-changing News section.
  • Zeke Ashton explains how to nose out potential risk in your portfolio.
  • If Isis Pharmaceuticals' upcoming trial results are positive, its stock could soar. Jeff Fischer weighs the possibilities.
  • Save on homeowners insurance -- raise your deductible, and don't make small claims.
  • Schwab's trading volume falls, and the brokerage warns about Q1.
  • 2002 Feste Awards! The very best the Fool Community has to offer, as voted on by YOU, the members -- today, in Hot Topics.
  • In Fool's School, tips for researching potential investments.

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