There are two bits of new economic news to tell you about on this Friday the 13th. First, the University of Michigan's Consumer Sentiment Index is indicating Americans' confidence in the future is dipping just a bit after a significant post-Iraq jump.
Also today, the Labor Department's Producer Price Index declined about a third of a percent in May. That index tracks price changes at the wholesale level, which tend to eventually filter down to the retail level.
Mr. Market gathered in all that (and much more) information today, pondered it, and then sent the S&P 500 and Nasdaq down about 1.5%.
Have a great weekend!
In today's Motley Fool Take:
- Oracle Needs Less Spin
- Tom Gardner's Motley Fool Hidden Gems
- Adobe Hits Close to Home
- Discussion Board of the Day: Webmaster's Corner
- Delphi Slashes Forecast
- Quote of Note
- Quick Takes: General Motors, Coca-Cola, Ameritrade, more
- And Finally...
Oracle Needs Less Spin
From his $5.1 billion takeover offer for PeopleSoft
Incidentally, results were "better than expected." However, the world's largest enterprise software company reported just slight gains in revenue and (despite its crowing) only very moderate gains in income.
Fourth-quarter sales (ended May 31) totaled $2.8 billion, up from $2.7 billion last year, while net income was $858 million, or $0.16 per share. Oracle touted its net income as a 31% rise over last year's same quarter (it opens its press release celebrating this). In actuality, net income only rose 4% when backing out last year's investment loss on equities.
And its operating income -- a much cleaner look at results -- rose just 3.6%. Additionally, free cash flow for the year rose only 1.4% to $2.89 billion, while net cash provided by operating activities actually declined 3% year-over-year.
The company's press release begs for much more open discussion of financial results, and less spin.
For the year ended May 2003, Oracle's revenue declined 2% on weakness in new software licenses and services, while operating income fell 4%. Its market remains mired.
Oracle offered to buy PeopleSoft at 28 times its free cash flow, which begs a question: Oracle criticizes only one company in its press release, PeopleSoft, saying, "PeopleSoft's... new license revenues [recently] decreased 39%," adding that it's because Oracle is taking away their major clients. So, why be so eager to buy the company? Or did Oracle just want to throw its competitor off its acquisition plan. (Note the lack of a question mark.)
Tom Gardner's Motley Fool Hidden Gems
If Dad's looking for stock ideas every month, consider getting him a subscription to our brand-new newsletter, Tom Gardner's Motley Fool Hidden Gems.
Adobe Hits Close to Home
It's not a pretty picture. And, no, you can't load it into Photoshop and spruce it up. When Adobe
Why? Well, as the publishing software titan goes, so does the world wide web of content. If graphic design artists aren't scooping up copies of Photoshop or web designers upgrading to the latest version of Illustrator, what hope can one have that the general public is ponying up for Acrobat?
To be fair, Adobe isn't missing by much. By projecting earnings to come in between $0.22 and $0.25 a share on less than $315 million in revenue for the August quarter, it marks the smallest of dips, both sequentially and off the company's earlier guidance.
However, a lot of that upside is coming from the recent launch of Adobe Acrobat 6.0. While the stock got slammed in afterhours trading because of weakness in Adobe's other product lines, would it be inappropriate to raise a glass to toast Acrobat and the PDF files it feeds from?
The format has been around for 10 years now. In a wired world where obsolescence hitches rides on freight trains, it's been a growing constant.
If you surf around many corporate sites to dig into your due diligence, you'll find that more and more companies are issuing their financial releases in PDF form. Well, OK, Microsoft
So, take Adobe's slide in stride. The company isn't going anywhere.
It'll miss the current quarter's profit projections by a few pennies, but it also topped the May period by a few token coppers, too. It also has some more software upgrades slated for fourth-quarter releases, and that's the financial bread and butter for Adobe as companies update their wares.
The sky isn't falling. Besides, Photoshop users know how to turn gray skies into blue.
Discussion Board of the Day: Webmaster's Corner
Do you work with the Web? What do you think of Adobe's bad news last night? Do you like its products? Have any tips for your dot-com peers? All this and more -- in the Webmaster's Corner discussion board. Only on Fool.com.
Delphi Slashes Forecast
Friday the 13th turned out to be unlucky for Delphi
Management now expects second-quarter net income in the $85 million to $95 million range, a full 50% below previous guidance. In addition, it said revenue and operating cash flow would come in at the low end of its forecast. Full-year 2003 guidance follows a similar path.
Delphi CFO Alan Dawes blames the gloomy outlook on lower production from former parent General Motors
The company's warning may foreshadow other such troubles within the industry, because Dawes sees no short-term improvement in the automotive market or the global economy. He also forecasted lower North American and European production volume from automakers.
Though GM, Ford
Potential investors should approach this industry with some caution. Toyota
Quote of Note
"As long as people will accept crap, it will be financially profitable to dispense it." -- Dick Cavett, comedian and television host
Betting that Southerners will lap up float-flavored root beer faster than cheese grits, Coca-Cola
Online discount broker Ameritrade
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Today on Fool.com:
- For updated stories throughout the day, bookmark our ever-changing News section.
- The Bear Scare: The market has spiked, but if you've chosen a sound path, don't deviate because of doomsayers.
- Powerful Payouts: Many investors still underestimate the power of dividends.
- Ameritrade Ups the Stakes: Things are looking up for online discount brokers.
- Doughnuts and Coffee: Krispy Kreme CEO Scott Livengood discusses the business model.
- A Stock for Dad -- National Healthcare Corp.: This long-term health-care company has value written all over it.
- In Fool's School, how news affects stock prices.
- In our Tax Center, new capital gains tax rates.
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