Stocks finished the week with a whimper, all the major indexes declining in a shortened session ahead of the Fourth of July holiday. The market's closed tomorrow, and so is The Motley Fool Take, which will return on Monday, sunburned and sick to its stomach after eating too many hot dogs, but ready to take on the rest of the summer.
In today's Motley Fool Take:
- WorldCom Shareholders Get Relief
- Quote of Note
- Wait and See on EMC
- Cash In On Credit Month
- Cooking Out the Foolish Way
- Discussion Board of the Day: Recipes/Cooking
- Quick Takes: Siebel Systems, Apple Computer, Boston Scientific
- And Finally...
WorldCom Shareholders Get Relief
The meek may inherit the earth, but the complainers are going to have to settle for $250 million. Of course, that's substantially more than they had yesterday.
Under a settlement forged by the Securities and Exchange Commission, common equity shareholders of WorldCom will receive $250 million in stock when the company emerges from bankruptcy. The SEC said that the agreement would allow the victims of the massive fraud committed at WorldCom to participate in the potential upside of the reorganized company, to be called MCI.
This may or may not be palatable to the folks who have formed the various stockholder groups and organized various lawsuits, protests, and boycotts. One group suggested that the reorganization plan be "50% debt reduction, where the bondholders would get 50% ownership of the new company and the current stockholders would be given 50% equity in the new firm." This same group complained that the bondholders have completely dominated the bankruptcy committees.
The settlement amount is nowhere near what the stockholder group requested. It also remains to be seen just how the shares are allocated, since the fraud and damages took place over the course of years. As such, we will have to see whether they accept the settlement levels or press for more. But as the plan is offered now, old WorldCom shareholders will have defied the odds. After all, in almost every bankruptcy, the equity shareholders get nothing.
Now, it would be nice if the SEC sent some of the settlement money over to the shareholders of AT&T
Quote of Note
"Most people would sooner die than think; in fact, they do so." -- Bertrand Russell, 1872 - 1970), British philosopher, mathematician, and writer
Wait and See on EMC
Network storage giant EMC
With a market cap of $24 billion, EMC is already No. 1 in data storage hardware. Nonetheless, the company has faced stiff competition from Network Appliance
Meanwhile, BMC, though an established business software maker boasting $1.3 billion in trailing 12-month sales and 40% free cash flow margins last quarter, struggled in the storage software market, and exited the space in March. With corporate CTOs and CIOs favoring "safe" big-name software vendors, even BMC can't compete with more established vendors EMC, IBM
Investors scrounging the computer technology trash heap for companies with attractive valuations and prospects might be tempted by EMC. However, at 33 times -- gulp -- trailing free cash flow and with a negative return on invested capital the last two years, EMC is priced for the dizzy growth of years past.
Even when business capital spending resumes -- and it will -- it will have to do so at astonishing rates to justify the risk inherent in EMC's current valuation. Higher margins from its software business, if well managed, could juice the benefits of any revenue increase, but at current prices the stock must be viewed as a speculation. (Do you agree? Our Community considers the BMC deal and all things EMC on our nifty discussion board.)
Cash In On Credit Month
Managing your credit well may mean thousands of dollars in your bank account -- not your banker's -- over a lifetime.Since July is Cash In On Credit month at The Motley Fool, let us help you do just that. Learn tips on how to protect your good name and using your credit Foolishly.
Cooking Out the Foolish Way
All set for your Fourth of July cookout? Your family and friends are on the way. The cooler's stocked. You've warned your nephew to steer well clear of lit firecrackers. This time. But if you haven't had a chance to check out your holiday spread, look out: It's been invaded by an army of -- no, not ants -- ticker symbols!
Can you imagine a better way to celebrate this joyous slice of Americana than by approaching this year's cookout from a stock lover's perspective? OK, you probably can. But humor me. It's a holiday!
Fire up the grill and what have you got? Some Oscar Mayer hot dogs? That's Kraft
If you're cooking for vegetarians don't worry, Gardenburger (OTC: GBUR) trades publicly, and if you're going with Morningstar Farms veggie burgers and wieners, both hail from the Kellogg
Of course, it wouldn't be a cookout without the condiments. We all know about Heinz
And when it's time to wash it all down, Coke
So what are you waiting for? Dig in and eat. The ticker symbols are getting cold.
Discussion Board of the Day: Recipes/Cooking
Got cookout plans this holiday weekend? Any food ideas to share? Is it wrong to dye your bread rolls red, white, and blue? All this and more -- in the Recipes/Cooking discussion board. Only on Fool.com.
Because of the costs associated with launching a new device, Boston Scientific
Today on Fool.com:
- For updated stories throughout the day, bookmark our ever-changing News section.
- Banking on Synovus: Mathew Emmert has a bank stock that will reward your interest.
- Retire on $125,000: You needn't save much for retirement when your money compounds.
Bob Bobala, Robert Brokamp, Paul Elliott, Mathew Emmert, Jeff Fischer, Tom Jacobs, LouAnn Lofton, Bill Mann, Selena Maranjian, Rex Moore, Rick Munarriz, Matt Richey, Reggie Santiago, Kate Southerland, Dayana Yochim