In the first of what will likely be ongoing announcements from newspaper publishing and media companies, The New York TimesCo.(NYSE: NYT) says it's seeing advertising weakness due to the war in Iraq.

This isn't unexpected, with several large companies pulling or toning down ad messages in the last two weeks. This hasn't affected earnings yet, but Gannett(NYSE: GCI), Knight-Ridder(NYSE: KRI), and The Washington PostCo.(NYSE: WPO) have seen the same softening. And with a prolonged and messy war more and more probable, advertising weakness will likely continue and even accelerate.

In today's Motley Fool Take:

Quote of Note

"I'm trying to decide if I should listen to less radio, or more; read less papers, or more. The news is bad -- it is the job of the news to be bad, of course; every paper might as well run 100-point headlines every day that say, 'Things Suck, Thousands Die' -- but that has an unnerving quality lately. Put simply: no one is in control, except for people who shouldn't be in control." -- James Lileks, columnist for the Minneapolis Star Tribune

Fund Questions Six Holdings

The nation's largest public pension fund is making six companies very uncomfortable today.

The California Public Employees' Retirement System (CalPERS) says the half-dozen need to clean up their acts with regard to corporate governance. CalPERS, with assets totaling $131 billion, counts the six among its 1,800 holdings. Here's the list, along with an extremely simplified version of the pension giant's concerns. For greater detail, read the press release and accompanying PDF file.

Xerox (NYSE: XRX)
CalPERS mailed a letter to Xerox Chairman and CEO Anne Mulcahy asking that the copier company expand its board by three independent directors and split the position of chairman and chief executive officer.
Concerns: Current board consists of the same members who oversaw Xerox during a significant accounting scandal and strategic missteps. Nominating committee is less than 100% independent.

Gemstar-TV Guide (Nasdaq: GMSTE)
Outgoing CEO Henry Yuen and CFO Elsie Leung were granted severance packages totaling $22 million and $7 million, respectively. The two retained their board seats and together will swap a total of about 20 million stock options for some 8 million restricted shares and 9 million new options.
Concerns: A classified board that is only 17% independent and no nominating committee. The prior CEO is the current chairman.

JDS Uniphase (Nasdaq: JDSU)
"A lack of financial discipline" in buying up other companies caused the fiber-optics specialist to land at the bottom of CalPERS' economic value-added (EVA) evaluation.
Concerns: While much of the current board structure meets CalPERS' core governance principles, the acquisition strategy and capital management give concern about the oversight and vision at the board level.

Manugistics (Nasdaq: MANU)
Concerns: The business-software designer has a lack of separation between the chairman and CEO and no lead director. That has left the nine-member board with clear issues of independence.

Midway Games (NYSE: MWY)
Concerns: The video game maker's board lacks separation of CEO and chairman and has no lead independent director. Only three of the 11 board members are independent.

Parametric Technology (Nasdaq: PMTC)
Has ignored CalPERS' repeated requests to meet and discuss performance and governance concerns.
Concerns: Each board member was paid 100,000 options or more "in recognition of extensive work during fiscal year 2001," at a time when Parametric's stock declined 41%.

CalPERS says these six companies will be "the primary focus of its corporate governance activism in the upcoming proxy season."

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Silencing Telemarketers

Sick of that infernal phone ringing? A national do-not-call list is coming to the rescue.

The Federal Trade Commission announced that starting July 1, it will roll out a national do-not-call list to block many sales calls. Consumers can then register to be on the list for free by phone or online.

According to news reports, West Coasters will be the first to enjoy interruption-free dinners. The program will then spread until it's activated nationwide by late August.

In September, telemarketers will have to check the list every three months. Consumers who get calls by perps will be able to file complaints by phone or online. Fines for violators could reach up to $11,000 for each unsolicited call, and violators will be towed, er, fined starting in October. To keep the peace and quiet, consumers will have to renew their registration every five years. Mark your calendars!

Of course, there's the requisite outrage over the new system (mostly by the Direct Marketing Association, which says this will devastate its members' businesses and affect the economy). And then there are the exemptions. If you bought, leased, or rented from a company within the past 18 months, they can call you. Same goes if you have inquired or applied for something from the company during the past three months. Charities, surveys, and calls on behalf of politicians also are exempt.

And no, mothers-in-law are not included on the list.

Hilton's Reservations

Last night, Hilton(NYSE: HLT) warned it would miss profit targets this year. It will barely break even in the first quarter, and it's now guiding analysts down to the high $0.30 EPS range for all of 2003.

You can blame it all on RevPAR. No, that's not a golf-playing priest. RevPAR stands for revenue per available room -- the best benchmark of performance in the lodging industry, as it factors in both occupancy rates and what guests actually pay.

The airline industry loves to talk about load factors, but they're meaningless if you don't know what the average passenger pays. On the flipside, computer industry players that dish out average selling prices provide an incomplete picture without knowing how many units have been sold at those levels. How much does a hotel milk off each available room? That's RevPAR -- a great figure.

Well, not so great for Hilton. The company's RevPAR took a dip this year, and that's coming off last year's depressed levels. While the company sees that metric improving as the year wears on, that's based on a quick end to the war in Iraq, which is certainly not a given anymore.

Hilton runs more than just its namesake chain. Its portfolio includes Hampton Inn, Doubletree, and Embassy Suites. In sum, the company owns, manages, or franchises more than 2,000 hotels. That's one heavy Monopoly box!

PricewaterhouseCoopers predicts that general RevPAR will take a 1.5% hit over the first half of the year. Also troubling is that cancellations outpace new reservations right now. Hilton is faring worse, looking at a 3% to 4% drop in RevPAR in the March quarter. Between folks staying close to home and companies holding off on corporate travel for financial reasons, Hilton's suggestion that RevPAR won't dip by more than 2% for the year may be overly optimistic.

Empty rooms prompt discounting. A lot of empty rooms and a lack of convention business translate into even deeper discounting. That might mean good news for you, if you're planning a getaway, but it's not good news for Hilton.

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Quick Takes

The University of Michigan's consumer confidence index fell again, marking the third straight month of decline. The final reading for March was 77.6, the lowest since September 1993. In February, the index showed 79.9. However, the final number's an improvement from the 75.0 reading in mid-month. The Commerce Department also announced that consumer spending was flat for the month of February, matching January's results. Durable goods spending, though, dropped 2.2%, tacking on more weakness to January's 4.9% slide.

Another Citigroup(NYSE: C) executive is under fire. Kevin McCaffrey, former head of U.S. stock research, is under NASD investigation. McCaffrey was analyst Jack Grubman's boss. The NASD alleges that McCaffrey didn't properly supervise Grubman and knew that Grubman was maintaining ratings on stocks based only on Citi's investment-banking relationships. McCaffrey denies any wrongdoing and faces fines and a possible lifetime ban from working in the securities industry if found guilty.

Makeup company Avon(NYSE: AVP) is prettying up expectations for its first quarter. Because of strong overseas growth, it now expects to earn $0.41 a share, a penny ahead of estimates. It also raised its long-term sales projections from 10% to 12%-13%, based on a new product line geared to younger customers.

Prudential Financial (NYSE: PRU) is selling its specialty car insurance division, THI Holdings, to Nationwide Mutual for $138 million in cash, which represents a pretax loss of $30 million in the unit's book value. Prudential will also distribute dividends of $3.8 million when the deal closes. The company is exploring options for the remainder of its home and car insurance business in its quest to focus on life insurance, money management, and pensions.

Chris Rock has some choice words for Internet "journalist" Matt Drudge, whose website reported Thursday that studio execs from DreamWorks had encouraged the comic to lay off Bush criticism while promoting his new movie Head of State. Rock retorted today, "I don't know Matt Drudge. I never met Matt Drudge. But if I see Matt Drudge, I'm going to take my red-blooded American foot and put it up his un-American ass for trying to disrupt the opening of my movie...."

And Finally...

Today on

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  • For all its problems on Opening Day, baseball is still America's pastime. Bob Bobala takes a look inside the numbers.
  • Embedded with the 101st NYSE Division, Rex Moore reports from the front lines.
  • Whitney Tilson evaluates two companies' chances of bouncing back.
  • Jeff Fischer learns his own lesson after a second look at LendingTree's numbers.
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  • In Fool's School, what's a "street name"? No, it's not gang-related.
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