The question of the week on Fool.com was: Are you an irrational investor? Jeff Fischer asked it in his Thursday column. Are we in the midst of some irrational exuberance? Whitney Tilson said as much today. Jeff thinks it's a natural part of the market. What do you think? Community members can duel on our Fool on the Hill discussion board.
The major market indexes were mixed today, with the Nasdaq falling over 1% and the Dow and the S&P nearly flat, on this our sixth day of Stocking Up for Summer.
In today's Motley Fool Take:
- Oracle Wants PeopleSoft
- Quote of Note
- Intel's Immune to SARS
- Shiny, Happy People
- Marveling at The Hulk's Marketing
- Discussion Board of the Day: Marvel
- Quick Takes: McDonald's, New York Stock Exchange, Wal-Mart, more
- And Finally...
Oracle Wants PeopleSoft
To call Larry Ellison brash is about as obvious as calling Funny Cide the fan favorite for this weekend's Belmont Stakes. And yet, with today's unsolicited bid for PeopleSoft
Just this past Monday, PeopleSoft announced that it would be buying smaller rival J.D. Edwards
That was apparently enough to spur Ellison and crew to action. Oracle offered $16 in cash per share this morning in what amounts to a $5.1 billion hostile bid for PeopleSoft. According to Ellison, PeopleSoft CEO Craig Conway talked to him last year about combining the two companies' business software units, but a structure for the deal couldn't be agreed on. As of press time, PeopleSoft was still formulating a public response to Oracle's offer.
Ellison sent a letter to PeopleSoft's board, informing them that he'd like to discuss the bid. However, Oracle is moving ahead quickly and will start its tender offer for shares this coming Monday. With PeopleSoft shares jumping to $18 and change today, Oracle may have to sweeten its bid to convince shareholders.
The big loser here may end up being J.D. Edwards, which is exactly as Oracle wants it. Assuming Oracle completes the PeopleSoft acquisition, it could then prevent the J.D. Edwards deal. Oracle discreetly pointed to this possibility in its press release announcing the bid.
Ellison himself would later allude to it in a conference call. He called the PeopleSoft/J.D. Edwards deal "a very risky merger" and said that Oracle's $16 offer is a "much safer road for the PeopleSoft shareholder." In a nod to what a CEO should say in order not to appear so hostile, though, Ellison said of the J.D. Edwards deal, "... We are certainly interested." Yeah, right.
Does Oracle really want PeopleSoft? Or does it just want to prevent the merger of two rivals that would surpass it once combined? Doubting Oracle's motivations here isn't unfounded. Oracle shareholders can't feel good, though, about what appears to be a very impetuous (and expensive) move. But then again, that's what you get when Larry Ellison's at the helm of your company.
Quote of the Day
"If the Internet turns out not to be the future of computing, we're toast. But if it is, we're golden." -- Larry Ellison
Intel's Immune to SARS
Intel's dominance has allowed it to continue to profit through one of the largest stock market -- and tech market spending -- declines in history, and now things may finally be settling down. Or up. Intel has set the stage for 2003 to perhaps be its best year since 2001. So far, that is; there's a ways to go yet.
Management stated in its mid-quarter update last night that second-quarter sales are on track to land between $6.6 billion to $6.8 billion, refining earlier guidance of $6.4 billion to $7 billion, and leaving no doubt that results will easily top last year's $6.3 billion in second-quarter sales.
The news brought a sigh of relief, partly because Intel watchers feared results would be dampened by the SARS outbreak in the Asia-Pacific region. Nearly 40% of Intel's sales occur in the region, and another 8% are derived in Japan, so Intel's reassurance added hope for the remainder of the year, especially the second half.
In contrast to troubled competitor Advanced Micro Devices
The company will report full results on July 15, when earnings of $0.13 per share are expected -- up 44% from last year. For the year, a 20% rise in earnings to $0.61 per share is currently the average estimate. The $22 stock trades at 36 times the estimate. With $5 billion in trailing free cash flow, Intel has a multiple to free cash flow of about 28, a premium to the S&P. Investors are betting on much stronger cash flow in years ahead.
Shiny, Happy People
Or dour, depressed people... Hey, that's what it takes to make the world go 'round, no? Rest assured, The Motley Fool's Community is a microcosm of the world, except there seems to be a higher percentage of smarter folk. We're continually amazed at all we learn on our discussion boards -- almost every subject from stock investing to taxes to how to find a job to how to quit smoking is covered, every day, in every way. Check it out and take advantage of our free trial offer.
Marveling at The Hulk's Marketing
Moviegoers anxiously anticipating The Hulk have only two more weeks to wait. The movie opens June 20, and the marketing machine behind it is already stomping around full force, sure to create lots of green for everyone involved.
The merchandising opportunities for a comic-book-based character like Marvel's
Marvel, which has itself been a smash hit for David Gardner in the Motley Fool Stock Advisor, is sure to make wads of cash from its Hulk licensing. The licensing program for the movie is the largest the company has ever undertaken for a film -- yes, even larger than the Spiderman push. Lining up more than 300 licensees across the globe, you'll be hard-pressed not to encounter The Hulk's green visage again and again this summer.
A Hulk video game has already been released and, of course, Hulk action figures are available. At 7-Eleven
For Marvel shareholders, The Hulk holds great promise. According to David Gardner, it should help propel the company's net income and cash flow past the $80 million mark for 2003.
Discussion Board of the Day: Marvel
David Gardner says he's blown away by the sheer amount of Hulk merchandise out there... especially Hulk-branded peanut butter Ritz Bits! Discuss it with him and other Fools on our Marvel discussion board. Only on Fool.com.
Changes are afoot at the New York Stock Exchange. Its board approved measures that should help bring the NYSE's corporate governance practices more in line with those adhered to by public companies. Its top three officials will be prevented from sitting on listed companies' boards, and their salaries will also be disclosed. Additionally, there will be changes concerning who can sit on the Exchange's own board of directors.
The SEC may increase its regulatory oversight for credit ratings agencies like Moody's
Today on Fool.com:
- For updated stories throughout the day, bookmark our ever-changing News section.
- Rating the Low-Cost Brokers. ShareBuilder, BUYandHOLD, and FOLIOfn are the Big Three. Which is best?
- Have we created another stock market bubble? Sky-high valuations have Whitney Tilson worried.
- In Fool's School, beginners choosing stocks.
- In our Tax Center, the details and pitfalls of the child tax rebate.
Bob Bobala, Robert Brokamp, Mathew Emmert, Jeff Fischer, Tom Jacobs, LouAnn Lofton, Bill Mann, Selena Maranjian, Rex Moore, Rick Munarriz, Matt Richey, Reggie Santiago, Kate Southerland, Dayana Yochim