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In today's Motley Fool Take:
- Welcome Back, Potter
- Discussion Board of the Day: British Invasion
- Quote of Note
- Tenet Spreads the Pain
- Motley Fool Stock Advisor
- Investors Ignore Greenspan
- Quick Takes: Biogen, SARS, Wal-Mart, Local news, more
- And Finally...
Welcome Back, Potter
Harry Potter's latest wizard trick? Disappearing -- as in the vanishing act performed by copies of Harry Potter and the Order of the Phoenix flying off the shelves over the weekend. That's jolly good news for Scholastic
All told, Scholastic claims that it sold 5 million copies of the book on Saturday. That's an astounding figure, even if it includes pre-orders that have been building over the past few months. But which retailer is making a killing? If you believe the hype, all of them had an excellent weekend.
Add it up and roughly half of Scholastic's sales came from those three vendors. It's clear that the book retailer as a species is far from dead. Even as Books-a-Million
Sure, Wal-Mart has topped Toys "R" Us
While it's impressive to note that Amazon is outselling the established chains, it's even more significant to consider the strength of the industry as a whole. Sorry, Wal-Mart, this is a niche that has read up on you. Market dominance? Nope. Just settle for a footnote.
Discussion Board of the Day: British Invasion
Were you one of those camping out at midnight to grab one of the first Harry Potter books over the weekend? Did you hurt your back trying to carry the massive book home? All this and more -- in the British Invasion discussion board. Only on Fool.com.
Quote of Note
"Only someone who's been as broke as I was could appreciate how happy I am. I appreciate every day not having to worry about money." -- J.K. Rowling, Harry Potter author, Newsweek
Tenet Spreads the Pain
Shares of Tenet Healthcare
Tenet didn't give an exact number for its second-quarter earnings, but noted that through the first two months of the quarter (April and May), income from continuing operations was $0.02 a share. For the full quarter, analysts were expecting $0.34 a share.
For its third and fourth quarters, the company hopes to make a combined $0.40-$0.50 a share -- below the combined $0.70 analysts were looking for. In the 12-month period beginning July 1, Tenet anticipates earning $0.80-$1.00 a share, a substantially smaller amount than the expected $1.45.
A month after CEO Jeffrey Barbakow -- who was the highest-paid CEO in the country last year, despite Tenet's drop from $50 a share to $12 -- was forced out, the company is realizing that its self-inflicted pain is going to take some serious time to clear up. Namely, Tenet's aggressive Medicare billing practices, which it voluntarily gave up in January of this year, are making it difficult for the firm to adjust to a world where it doesn't get the bulk of its income from those sky-high outlier payments.
Additionally, Tenet is still under multiple investigations, related to those Medicare payments as well as other potential troubles within the company. The Internal Revenue Service also says that Tenet owes $269 million in back taxes and interest, a figure that's more than double what the company expected. Tenet's appealing the ruling.
Increasing costs aren't helping matters, sticking Tenet in the middle of a whirlwind of hurt generated both by industry trends and prior management's poor choices. All this leaves interim CEO Trevor Fetter with a long hard path ahead, as evidenced by his statement that Tenet's "transitional period" will extend into the first half of 2004.
Shareholders can't be certain that all the bad news is out here, a situation that's enough to make anyone feel a bit nauseous.
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Investors Ignore Greenspan
While there's little question that Federal Reserve Chairman Alan Greenspan is one of the most influential figures on the financial markets, apparently not many listen to him when he talks about stock valuations.
According to a study released by the Fed, of the 10 times since 1989 that Mr. Greenspan commented about the level of the markets, only twice was there a significant reaction: In July 1998, the S&P 500 dropped 1.6% when he spoke of "unrealistic forecasts" for corporate earnings, and there was a 2.8% fall in October 1999 when he warned that the market had a history of sharp reversals. Even those drops are relatively minor, and the markets recovered from them rather quickly.
It's interesting to note that Greenspan's famous "irrational exuberance" remarks in December 1996 had little effect, and the market continued to surge forward for more than three years afterward. It's also interesting that the S&P, which had fallen as much as 30%, is still down about 10% from the day he uttered those words. In stark contrast, the much more volatile Nasdaq rose over 150%, then crashed downward more than 50% from that day, and now stands about 18% lower.
The authors of the study, Fed Governor Donald Kohn and economist Brian Sack, said perhaps Greenspan's remarks have been a little too "indirect" to influence investors. "However," they said, "we feel that the more likely explanation is that the market participants simply choose not to strongly update their beliefs about the appropriate valuation of assets based on the chairman's comments." Also, "It is hard to beat what is already priced into the market."
The study did find that Greenspan has much more influence in other areas, especially the bond market. The Federal Open Market Committee meets later this week, and is expected to lower interest rates once again.
Hong Kong is feeling largely unmasked today, as the World Health Organization says SARS is no longer a threat there. With no new cases reported in the past 20 days, the WHO removed the territory from its list of infected areas.
In local news, County Community College will no longer be serving ice water in the Union Cafe, because the person with the recipe has taken a job elsewhere.
Today on Fool.com:
- For updated stories throughout the day, bookmark our ever-changing News section.
- Find Your Next Double: Tom Gardner launches his search for the best hidden gems in the market.
- Your Most Important Financial Decision: No matter what your income, deciding to be content is your most important financial decision.
- Wall Street's Sorting Hat: Rick Munarriz enumerates how CEOs stack up, Harry Potter style.
- In Fool's School, understanding intrinsic value.
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