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In today's Motley Fool Take:
- Oracle Ups Offer
- Quote of Note
- Coca-Cola Comes Clean
- Discussion Board of the Day: Coca-Cola
- CalPERS Slams eBay
- Motley Fool Visa Card
- Quick Takes: EDS, Eastman Kodak, Local news, more
- And Finally...
Oracle Ups Offer
"I'm really serious!" cries software maker Oracle
The financial press by and large assumes that Ellison is playing the spoiler to the proposed merger of PeopleSoft, noted for its human resources software, and J.D. Edwards
PeopleSoft's response -- in full-page ads in such expensive media outlets as The New York Times -- gives much ammunition to that view. After all, any synergies from a PeopleSoft-J.D. Edwards joinder would threaten Oracle's effort to sell to businesses its own versions of those companies' software under the Oracle label. But it's also credible that Ellison believes that acquisitions provide the only possible growth option for Oracle.
Ellison certainly feels the pressure -- if not from his own alleged ego, then from Oracle shareholders. The software business is tough. As Jeff Fischer recently pointed out, Oracle's growth is slight, just 2% year over year for the last two quarter, though it has continued to turn those revenues into free cash flow at a 29% free cash flow margin for the last 12 months. But the prospects for increased growth are limited. Gartner Research projects a 9% rise in business software spending this year, hardly the stuff to make investors pant. Even 9% assumes that you're a company that's hitting the averages, which Oracle is not.
Costphobic execs are willing to invest, if at all, only in software that is sine qua non to the business (network testing, say) or that delivers a speedy return on investment, such as business intelligence (BI) software, which is one of the few software growth areas.
BI software allows managers to analyze their corporate databases and present business information in a scorecard format. Oracle offers business intelligence products, but the leader is Cognos
We agree with those who expect massive consolidation in the software world, and will go out on a limb that Ellison and Oracle will absorb -- not merely annoy -- other companies, if not PeopleSoft. And it's a good bet that at least one of the BI software companies will find itself a target of an Oracle or SAP in the next year, too.
Quote of Note
"I am Sir Oracle, and when I ope my lips, let no dog bark!" -- William Shakespeare, The Merchant of Venice. Act i. Sc. 1
Coca-Cola Comes Clean
So much for Coca-Cola
The pop star is coming clean with some brow-raising concerns of a Frozen Coke test market promotion three years ago that seems to read out of a Dilbert strip.
The allegation by former manager-gone-whistleblower Matthew Whitley seemed far-fetched at first. Why would some members of the company's fountain division hire an outside consultant to spend $10,000 to buy up Burger King value meals with Frozen Coke add-ons in a Richmond, Va., test market?
That there is now a Frozen Coke machine at your local Burger King is why. It's been big business for Coca-Cola as the frozen novelty has given the world's largest soft-drink company two revenue streams within the country's second-largest burger chain.
While the company's audit committee was quick to dismiss many of Whitley's claims of hiring bias and some -- but not all -- accusations of accounting irregularities, it is admitting to influencing the results in Richmond.
While Coca-Cola is countering with the fact that some test markets dated back to 1998, and that the order for expanding the Frozen Coke service chainwide was in place before the Richmond tests were doctored, take that with a grain of sodium benzoate. Why would the company have the need to go Whopper-crazy in Richmond, and why would it admit to disciplining the responsible employees in 2001 if it didn't matter?
Coca-Cola did it. The company was ashamed about it, but chose to bury the incident internally rather than go public with the details when it happened. That can't help the next time it has to butt heads with Pepsi
Brands have to earn their golden polish every day. That's hard to do when integrity goes flat.
Discussion Board of the Day: Coca-Cola
Is this Frozen Coke fiasco meaningless, or will it have serious ramifications for the king of pop? Does this open the door for Frozen Pepsi? What's with all the new colors and flavors of soda being rolled out lately? All this and more -- in the Coca-Cola discussion board. Only on Fool.com.
CalPERS Slams eBay
One of eBay's
The California Public Employees' Retirement System (CalPERS) is the country's largest public pension fund and holds nearly $22 million worth of eBay stock. With the online auctioneer looking to increase the number of employee stock options it may issue by 56%, CalPERS clamped down and said it would vote against the proposal at the upcoming shareholders' meeting. (You can read more about how the proposal would hurt shareholders in this Jeff Fischer column.)
Not only that, the fund is calling eBay to task for its proposal to ratify PricewaterhouseCoopers as its auditor. PwC has performed consulting services for eBay in the past, and CalPERS -- staying consistent with its stance on other companies in which it invests -- will vote against the proposal.
And finally, it will vote against the only member of eBay's audit committee who's up for reelection this year, Dawn Lepore, because it chooses to "actively oppose the election of any director who, while sitting on the company's Audit Committee, approved retaining an external audit firm when that firm also provides consulting or internal audit services to a company."
We agree with CalPERS's stance, and call attention to investors and company officers alike the corporate governance section of the fund's website.
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"EDS Unveils Strategic Direction," said the press release. That direction, however, involves laying off 2% of its workforce, or about 2,700 people, and taking a $450 million charge. EDS
George Washington University law professor John Banzhaf, who orchestrated the legal groundswell against Big Tobacco, has his sights set on another target now: fast-food companies. According to an article in USAToday.com, Banzhaf will deliver letters tomorrow to the heads of several fast-food chains, demanding that they post warning notices in their restaurants alerting the public to fast food's "addictive" constitution. He characterized the move as a "first step" towards filing a lawsuit.
In local news, county council member Cletus Huckle was sentenced to three months in jail for participating in activities that fostered picture-taking.
Today on Fool.com:
- For updated stories throughout the day, bookmark our ever-changing News section.
- Sell Us a Stock Contest: Tell us about your favorite stock and win a free year of Tom Gardner's Motley Fool Hidden Gems.
- Printing for Profit: Banta Corp. may bore Wall Street, but potential investors should take another look.
- Pros and Cons of 529s: They're all the rage for college savings, but is a 529 savings account for you?
- McDonald's Addictive: The fight against fast food gets nastier.
- Former HealthSouth CEO Richard Scrushy is suing his fellow directors.
- In Fool's School, pet health insurance. Don't let Fluffy cost you thousands.
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