Lest you think unconditional love exists only in Matthew McConaughey movies, along comes a saint to disappoint your inner cynic. An Indian holy woman thinks she has found the remedy for Japan's economic blues and is currently on a world hugging tour to prove it.
Reuters reports that all this week thousands of Japanese have crowded a Tokyo hall for a loving embrace from Ammachi, whose hugs are said to bring happiness -- something that many in Japan feel is scarce as their country's turbulent economy throws more people into unemployment and depletes their savings.
"I don't think so many people would come here if the economy were better," said one businessman.
Despite Fed chief Alan Greenspan's upbeat news on the economy today, the major indexes finished near even and could have used a big hug from Ammachi.
In today's Motley Fool Take:
- Criminal Charges for Martha?
- Quote of Note
- FedEx Slows Down
- Discussion Board of the Day: FedEx
- Big Blue's Accounting Clues
- Stock Up for Summer
- Quick Takes: General Motors, Ford, Enron, more
- And Finally...
Criminal Charges for Martha?
Shares of Martha Stewart Living Omnimedia
And so goes the ongoing saga of the crafty businesswoman whom America loves to hate. If anything, you gotta give Martha credit for providing the country with an interesting diversion from terrorist warnings, war with Iraq, SARS, and all those tacky Michael Jackson "documentaries."
But Martha Stewart Living Omnimedia continues to keep its place in the Motley Fool Stock Advisor, because although the business has been feeling some pain due to its famous maven's messes, it's still on solid footing. The company carries no debt and has a chunk of cash.
Yes, total revenues were down about 15% and publishing revenues were off 20% in the most recent quarter, but that doesn't mean that the company's going to be out of favor forever. David Gardner picked Martha for the November issue, and he still believes it's priced cheaply today. Focusing on one's personal distaste for Martha herself may lead investors away from a promising opportunity.
We'll have to keep watching for what happens next in the story that increasingly looks like a bad TV movie of the week. Oh wait, this already was a bad TV movie of the week. Regardless, Martha makes the markets more fun to follow.
Quote of Note
"It has become appallingly obvious that our technology has exceeded our humanity." -- Albert Einstein
FedEx Slows Down
When you need something to get somewhere fast, you can count on Federal Express
The express-delivery giant is rolling out an early retirement option to its seasoned employees as well as a voluntary severance package to everyone else. With the company taking a charge that may amount to as much as $290 million this new fiscal year in order to trim its payroll by as many as 14,000 workers, let's dispense with the formalities and get blunt, shall we?
The term "early retirement" is a euphemistic sham. It's glossy speak for "We want to replace our workers who have achieved higher salaries through years of seniority with cheaper entry-level hires." It sounds pretty, but it's never the goal of someone who, in fact, wants to retire early. If you dream of sipping mimosas with one hand as the other negotiates a game of shuffleboard off the Florida coastline, it won't be handed to you from the cost-cutting personnel office.
Eligible employees will have nearly four months to make their decision on the "retirement" push, while willing participants in the severance package have a late November deadline to chew on.
Nowhere in the FedEx press release are these actions referred to as layoffs. But the truth is out there. The company's domestic express deliveries used to average 3 million packages daily just three years ago. It peaked then, as the economy soured and businesses were hard-pressed to justify paying up for overnight shipping. So let's coin a new phrase today. FedEx didn't announce early retirement or voluntary severance plans last night. They were ransomed layoffs.
Sure. But let's not let this attempt to update Webster's book of definitions throw us off the scent of another trick that FedEx tried to pull. With analysts expecting the company to earn $3.19 a share this fiscal year, it is guiding Wall Street lower. The shipping specialist is now looking to earn between $3 and $3.15 a share this year. But pull back the curtain and you'll see that FedEx missed by more than that.
It's not including the $290 million charge in that figure. That would nick earnings by $0.25 to $0.30 a share. Fine, you say. Corporate America loves to back out those one-time charges. But what about the $100 million to $130 million in savings the company expects to realize this year as a result of the actions that dictated that one-time charge? Isn't FedEx including those gains in its profit forecast? Without those eventual payroll savings, wouldn't earnings be hard-pressed to break over $3 a share this fiscal year?
You don't have to wait overnight to have those answers delivered.
Discussion Board of the Day: FedEx
Where is the parcel industry going, and will it get there on time? Does Tom Hanks' character inCast Away count as one of the ransomed layoffs? All this and more -- in the FedEx discussion board. Only on Fool.com.
Big Blue's Accounting Clues
Shares of IBM
This is far from the first time Big Blue has had to answer for questionable accounting practices. As Whitney Tilson detailed over a year ago in IBM's Accounting Tricks, the company has engaged in aggressive bookkeeping practices since at least 1999. The list includes:
Overly aggressive pension-fund accounting.
Using one-time gains to offset one-time charges.
- Using proceeds from the sale of a business to lower its operating costs, rather than accounting for it as a nonrecurring one-time gain.
Sometimes such tactics are legitimate, but the point is the company engages in aggressive rather than conservative accounting and its methods are hard to follow. This is not the way to do things in a post-Enron world. The issue comes up again and again. Now there's another SEC probe. Just how much can we trust revenue and earnings figures? When will it all end? How will it all end?
Whitney predicted last year that the creative accounting would come back to haunt Big Blue and that the stock price would suffer as a result. Shares are down about 15% since then, roughly matching the S&P 500. Stay tuned.
Stock Up for Summer
As the vacation months officially kick off, we celebrate with an all-out stock barrage here on Fool.com. That's right, we're stocking up for summer. The market was on a tear through the spring, but bear or bull, we're unwavering in our belief that stocks are the best place to grow your long-term savings. Go ahead, make a splash with your investing cash this summer. We have all the tools you need to do just that.
Federal Reserve Chairman Alan Greenspan gave the markets a lift today by putting forth some positive remarks about the U.S. economy. Speaking via satellite to a group of bankers at the International Monetary Conference in Berlin, the word's most fascinating boring speaker said he sees signs of a "fairly marked turnaround" in an economy that has seems to have "stabilized."
Reuters says federal agents have arrested former Enron executive John Forney for his role in the company's "manipulation of energy markets during California's energy crisis." Forney is the third high-level Enron exec so far to be hauled away.
In local news, second-grader Curtis Gilson ate too much candy yesterday afternoon and spoiled his supper.
Today on Fool.com:
- For updated stories throughout the day, bookmark our ever-changing News section.
- How Much Risk Do You Want?: Tom Jacobs shares his portfolio allocation, so you may think about yours.
- Dayana Yochim looks at the pitfalls and promises of inheriting wealth.
- David Gardner on why Netflix's naysayers are a good sign for the company.
- Home price slowdown is good.
- What will you get from Social Security?
- In Fool's School, what's a dividend?
Bob Bobala, Robert Brokamp, Mathew Emmert, Jeff Fischer, Tom Jacobs, LouAnn Lofton, Bill Mann, Selena Maranjian, Rex Moore, Rick Munarriz, Matt Richey, Reggie Santiago, Dayana Yochim