In a mixed market this afternoon, one commentator suggested that investors would look to the Internet bellwether for "cues on whether to start buying again." While Yahoo!'s earnings may be noteworthy for companies struggling to make a buck via Internet revenues and advertising, we hardly think the rest of the investing world should hinge their decisions on the company's results. If you're investing in paper and health care, what do you care what Yahoo! does?
Don't get caught up in this "ready, set, go" mentality as earnings season begins.
In today's Motley Fool Take:
- Microsoft's Out of Options
- Discussion Board of the Day: Microsoft
- Bulls See What They Want
- Quote of Note
- Buy Buffett on eBay
- Motley Fool Stock Advisor
- Quick Takes: Altria, Intel, Capital One
- And Finally...
Microsoft's Out of Options
Beginning in September, Microsoft
As a source of motivation, stock options are overrated. Perhaps they offer an incentive to stick around until fully vested, but options rarely enhance performance -- even less so when they are woefully out of money. Realistically, how many employees even remember their respective strike prices?
What's worse, far too many companies, when faced with a plunging stock, go ahead and adjust their strike prices downward (the dreaded "repricing") or replace existing grants altogether with lower-priced options. To what effect? The only certainty is that shareholders wind up with the short end of the stick with unexpected dilution of an already devalued investment.
You could argue that granting workers actual shares of stock fosters a situation where a company's stock could potentially sink to pennies and the employees still come out ahead. Maybe, but the expense of restricted stock grants is recognized up front and at least they work to motivate and retain workers. Can the same really be said about options?
Microsoft was set to expense stock options in fiscal 2004 anyway, but this is still a gutsy move. Hopefully, other companies in the option-heavy tech space will follow Mr. Softy's example. Who knows? Maybe the "option pass" will become the play to call in the corporate huddle.
Discussion Board of the Day: Microsoft
Do you think that Microsoft is right to roll out its Stock Awards program? Is the company simply buying time until it does something with its $46 billion cash hoard? All this and more -- in the Microsoft discussion board. Only on Fool.com.
Bulls See What They Want
Sometimes investors see what they want to see. A case in point is today's up-and-down trading in Cisco Systems
The networking king jumped more than 4% in early trading after a Dutch newspaper reported that CEO John Chambers expects an IT market recovery within two to four months. For Nasdaq apologists, this was just the pronouncement they'd been waiting for. Tech bulls stampeded into Cisco, riding the stock to a new 52-week high of $19.55.
By noon, however, the stock was back below $19 after a Cisco spokesperson cautioned that Chambers' comments had been misinterpreted. Apparently, what he actually said was that companies will renew their IT spending two to four months after their businesses turn up (no comment on when that might be). This is essentially what Chambers has been saying for several quarters.
Somehow, on this great-news-turned-no-news, Cisco managed a nearly 1% gain on the day. Investors apparently have no qualms paying 32 times expected 2003 earnings and 29 times guesstimated 2004 earnings. Again, sometimes investors just see what they want to see.
Quote of Note
"Let not the sands of time get in your lunch." -- National Lampoon, "Deteriorata"
Buy Buffett on eBay
Pull out your pocketbooks, people. Your dream of dining alongside Berkshire Hathaway
Watch Warren butter his roll. Watch him sip on a Coke
The honor and pleasure of eating with the Oracle of Omaha won't come cheap, though. As of last check, the highest bid on eBay is up to $27,000. Whew! You best hurry, too. The auction closes tomorrow at midnight eastern time.
In the quirky world of eBay, though, there are usually substitutes, and this auction is no different. Instead of shelling out twenty large, you could instead have lunch with Warren Buffett's self-proclaimed "evil twin." That one's going for $7.50.
Or how about just having lunch with this person instead of Warren Buffett for $50? He/she is offering to meet anywhere, at any time, in Manhattan, and will donate proceeds to a New Jersey soup kitchen.
If you don't have an extra $30,000 sitting around for a lunch date, or the idea of paying to eat with two Buffett substitutes isn't your thing, then consider learning about deep value another way, with Tom Gardner's Motley Fool Hidden Gems newsletter. It focuses specifically on sussing out solid but overlooked companies at bargain prices.
Motley Fool Stock Advisor
If you're interested in advice that's geared toward average investors instead of rich hotshots, check out David and Tom Gardner's newsletter, Motley Fool Stock Advisor. Each issue features a Tom and David tête-à-tête, during which they explain their stock ideas.
Today on Fool.com:
- For updated stories throughout the day, bookmark our ever-changing News section.
- A Sweet-Sounding IPO: Digital Theater Systems' offering could make some noise.
- Mid-Year Financial Resolutions: Have you kept your promises for 2003? It's not too late to get back on the wagon.
- In Fool's School, socially responsible investing. How to put your money where your conscience is.
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