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
- Discussion Board of the Day: Yahoo!
- Genentech on a Tear
- Save for the Unexpected
- Nike Nabs Converse
- Quote of Note
- Quick Takes: Sportsman's Guide, Pepsi, Rambus, more
- And Finally...
Yahoo!'s Your Daddy
Like its ubiquitous yodeler, Yahoo!
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
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 Fool.com.
Genentech on a Tear
Biotech drug maker Genentech
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
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
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 Fool.com, 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
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
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
Small-cap outdoor goods retailer Sportsman's Guide
Shares of Pepsi
Bad day (and we don't mean "bad hair day," although it did get a haircut) for Igen
Investors couldn't get their hands off Logitech
Digital Theater Systems
Today on Fool.com:
- For updated stories throughout the day, bookmark our ever-changing News section.
- The Plight of the Middle Class Poor: Is the middle class down for the count? What to do if the economy has you worried.
- The Lowdown on Royalty Trusts: Want income? How does a 20% yield grab you?
- In Fool's School, the perils of international investing.
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