So, it's come to this. We're a society on the brink, where even a sausage race isn't safe anymore. Yesterday, a player from the Pittsburgh Pirates clocked one of the Milwaukee Brewers' sausage mascots with a bat during the traditional sausage race between innings at the ballgame. A hot dog was felled, too. Charges are pending. And you think you've got problems because your stocks were down today.

In today's Motley Fool Take:

Yahoo!'s Your Daddy

Like its ubiquitous yodeler, Yahoo!(Nasdaq: YHOO) always draws a crowd -- and great expectations. That's why the market let out a collective groan last night when the leading online portal reported second-quarter profits merely in line with Wall Street expectations.

There were positives to be sure. The quarter was the company's fifth consecutive showing of profit, something that seemed unfathomable once the ad market dried up and left Yahoo! chasing eyeballs for sport. Even more impressive, Yahoo! rode its new services, fees, and listings business model to this quarter's double-digit revenue gains.

Make no mistake, Yahoo! is a dot-com survivor. And, yes, earnings more than doubled to $0.08 per share on $321 million in revenues for the June quarter -- and that may have been in line with public expectations -- but let's cut to the chase, shall we? Yahoo! had more than tripled off its single-digit lows since September.

The stock isn't exactly cheap. Remember when Disney(NYSE: DIS) was mulling a buyout? Disney thought the company overpriced then -- at less than half yesterday's close. Honestly, isn't paying more than 75 times trailing free cash flow, even if it is $261.5 million, a dicey proposition?

Going forward, $250 million in operating profits (on $1.285 billion in revenues) puts you in the middle of the company's range for the full year. Impressive. Still, paying more than 15 times revenue on a younger, nimbler Yahoo! may have felt like a good idea in the golden, bubble days, but not now. Yahoo! may well be a better company today, but a better investment? Not likely.

Discussion Board of the Day: Yahoo!

Is Yahoo! overpriced or do the improving fundamentals justify the stock's present price? Is the company depending too heavily on sponsored listings to bring home the bacon? Hey, what's up with the Google IPO? All this and more -- in the Yahoo! discussion board. Only on

Genentech on a Tear

Biotech drug maker Genentech(NYSE: DNA) knocked the chromosomes off its Q2 earnings, announcing GAAP EPS of $0.25 vs. a loss last year.

Quarterly product, royalty, and contract revenues jumped 23% to just under $800 million. Highlights include more good news from breast cancer treatment Herceptin and non-Hodgkins lymphoma drug Rituxan, whose profits Genentech shares at an undisclosed rate with Idec Pharmaceuticals(Nasdaq: IDPH). Sales climbed 32% to $363 million and 15% to $109 million, respectively, against last year's Q2.

The company's stock doubled in the month following May 16th's $37.90 close on news that its Avastin drug candidate for colon cancer increased patient survival times. Genentech expects FDA approval next spring, and if it gets the green light, Avastin will be the first-to-market drug that works by cutting off the blood supply to tumors. (To learn more about this method, read our interview with the head of the Angiogenesis Foundation and take a look at how the playing field looked then.) Because Avastin's mode of operation could theoretically apply to many solid tumor types and billions in revenues, investor expectations for Genentech exploded.

The company is the leading monoclonal antibody drug maker in the world today, which is sweet. Tufts Center for the Study of Drug Development research shows that biologic drugs such as monoclonal antibodies have a higher rate of achieving FDA approval than other drug types that enter human trials -- 20% vs. 10%. That alone means greater potential return on investment, but Genentech has been trouncing even that rate of late. Not only that -- if an approved monoclonal antibody drug does succeed (and not all do), it fears less generic competition because it's tougher and more expensive to make than a traditional small molecule drug.

Genentech's shares certainly reflect not only success, but great expectations. Today, they go for 84 times trailing-12-month free cash flow (we don't yet know the free cash flow numbers for Q2), pricier even than fellow biotech pioneer Amgen(Nasdaq: AMGN), and against no growth in free cash flow from 2001 to 2002.

But while we've been publicly very skeptical of the company's valuation for a while, it's clear that long-term shareholders don't care. They are most likely smiling -- and not selling.

Save for the Unexpected

Here at, we spend a lot of time talking about investing in the stock market. But that's for your long-term savings -- money you won't need for at least five years, right? Right! What about those unpredictable zingers life throws at you at the worst times? Why, that's why you need a stash of short-term savings. Let us tell you how to start saving today.

Nike Nabs Converse

In a move that's sure to tick off sneaker purists, Nike(NYSE: NKE) will acquire old-school rival Converse for $305 million, plus the assumption of certain liabilities. The deal, which closes a difficult chapter for Converse, positions Nike to grab a bigger piece of the mid-priced market.

Ironically, when Converse, a blacktop favorite since 1908, fell on rough times in the 1980s and 1990s, it largely had Nike to blame. After all, who but Nike charmed the next generation of ballers with expensive, technology-driven kicks? Remember, it was "Air" Jordan who eclipsed Chuck Taylor as the go-to name in basketball shoes.

The rest is history. Clean lines and cult status couldn't compete with Nike's high-priced and ostentatious offerings, and Converse filed for bankruptcy in January 2001. By April, private investors had acquired the venerable Converse assets.

Out of nowhere, fashion came to Converse's aide, as "retro" styles took off. Kids clamoring for stripped-down classics from "authentic" brands sent revenues soaring to $205 million in 2002 from the prior year's $149 million. Net income grew to $18.6 million, vs. 2001's $5.8 million.

Last year, Converse filed papers with the SEC for an initial public offering. Instead, the company will operate as a subsidiary of the much larger Nike. (Nike booked $10.7 billion in revenues for fiscal 2003, compared to Converse's $205 million.)

Good for Nike. For a company that's been battling a rejuvenated Reebok(NYSE: RBK), Converse offers a relatively safe entry into the lower-priced shoe market. And while Nike's paying for the honor, had Converse gone public first, the price tag might have been a whole lot higher.

Converse, meanwhile, gets the benefit of Nike's deep marketing pockets, as well as its production and distribution machine. Not to mention, just reward for its private investors.

Looks like a win/win to us.

Quote of Note

"I have spent most of the day putting in a comma and the rest of the day taking it out." -- Oscar Wilde, 1854-1900, Anglo-Irish playwright and author

Quick Takes

Small-cap outdoor goods retailer Sportsman's Guide(Nasdaq: SGDE) pitched 10% higher after upping second-quarter guidance, saying it expects $0.10 to $0.11 in earnings per share, up big from the $0.08 estimate. The Fool started positive coverage of this stock more than 100% ago (and featured it in Tom Gardner's Motley Fool Hidden Gems), but even after doubling, Sportsman's Guide trades at only about 7 times free cash flow.

Shares of Pepsi(NYSE: PEP)popped higher after reporting another quarter of double-digit earnings growth on 6.8% revenue gains. For several years, the Frito-Lay and Gatorade owner has made it look easy.

Rambus (Nasdaq: RMBS) ran higher after the dismissal of a lawsuit going back to 1991 that suggested Rambus tricked the industry into adopting technologies on which it held patents (that just sounds like "business"). The company also announced availability of its new XDR memory, formerly called Yellowstone, through Toshiba and Elpida. Tom Jacobs just analyzed Rambus.

Bad day (and we don't mean "bad hair day," although it did get a haircut) for Igen(Nasdaq: IGEN) after an appeals court upheld a mere $18 million of its original $505 million award won against Roche Holding LTD. The diagnostics maker also ended its licensing agreement with Roche -- with the court's permission ("Thanks!").

Investors couldn't get their hands off Logitech(Nasdaq: LOGI) quickly enough, smashing the mouse and keyboard maker after it cut first-quarter operating income guidance by half. The culprits? Competition and weak retail demand.

Digital Theater Systems (Nasdaq: DTSI) drummed up a booming gain from its $17 offering price, proving there's life in the IPO market for promising companies. DTS, a surround-sound technology leader, raised more than $60 million before fees. We introduced DTS yesterday.

And Finally...

Today on

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