Here's an investment angle for you. How about a company that makes germ-resistant steel?
The coating works especially well on "high-touch" areas such as door handles and kitchen appliances, as well as in heating, ventilation, and air-conditioning systems. After the initial test period, the material could be used in hospitals, food preparation factories -- in short, anyplace where germs aren't welcome.
Tough room, ladies and germs!
In today's Motley Fool Take:
- Time Warner's Big Hits
- Shameless Plug: Motley Fool Hidden Gems
- Let the Deals Begin
- Quote of Note
- Best Buy Pays You
- Discussion Board of the Day: Video & PC Games
- More Fool News
- And Finally...
Time Warner's Big Hits
Entertainment conglomerate Time Warner
Most studios would kill to have Time Warner's multi-year win streak. At Warner Brothers, the Harry Potter and Matrix franchises are producing mega-results. The same goes for New Line and their Lord of the Rings.
With $1.6 billion in international receipts, Warner Brothers led all studios last year. In July this year, the company crossed the $1 billion international sales mark earlier than ever before -- and for the sixth time.
Franchise movies can be extremely profitable. The Matrix Reloaded, a May 2003 release with an estimated budget of $127 million, grossed $281 million domestically and $727 million worldwide. Even better for shareholders, The Matrix: Revolutions will be released in November.
This is going to be a great year for Time Warner's movie divisions. So will 2004. A November release for Matrix: Revolutions and December's Lord of the Rings: The Return of the Kings means revenues will spill over into 2004 along with Harry Potter and the Prisoner of Azkaban. That trio is as close to a sure thing as any studio has ever had.
People wanting to find fault with Time Warner will note the last movie in the Lord of the Rings trilogy will be released in 2003. That is a big loss. But the revenue from that movie will continue through 2005 with releases to rental, cable, and TV. Movies are increasingly a business with a long revenue cycle.
The studio divisions are obvious strong spots at Time Warner. But the overall company is stronger than you'd think given a stock that plunged from $95.81 in December 1999 to $9.90 in February 2003. Free cash flow of $3.9 billion is impressive, and even a debt-to-equity ratio of 0.46 is less than Disney's
Time Warner has a strong engine in movies and a lot of other world-class assets. If nothing else, its upside potential, especially after all the restructuring, is getting harder and harder to deny. That was something David Gardner recognized when he recommended the stock for Motley Fool Stock Advisor in August of 2002.
Shameless Plug: Motley Fool Hidden Gems
Last time this many people were getting small, Steve Martin had a balloon wrapped around his head -- and his hair was dark! Let's face it, small caps are hot. Fools know that fads come and go, but when it comes to stock investing, solid fundamental analysis never goes out of style. That's the foundation of Tom Gardner's approach to investing and to his Motley Fool Hidden Gems. See what the buzz is about for free.
Let the Deals Begin
The price tag -- $1.7 billion -- is a clear sign of serious interest in the content management space. Let's face it, corporate America is inundated with data. With new federal legislation, like Sarbanes-Oxley and the HIPAA privacy regulations for healthcare, companies must manage data in a structured way (just ask Frank Quattrone about the importance of storing and managing data).
But this is only part of the story. Hardware companies are rethinking their strategies and as a result, looking at software. IBM
Put plainly, consolidation in content management is inevitable. Hardware companies such as Network Appliance
The targets? Prospects will share the attributes of Documentum -- solid technology and market share. And only a handful make that cut: FileNet
Let the deals begin.
Quote of Note
"If everything seems under control, you're just not going fast enough." -- Mario Andretti
Best Buy Pays You
Consumer electronics giant Best Buy
Income investing fell out of vogue in the 1990s. After all, any company with no better use for its cash than to pay it out to investors -- especially with the economy so strong and so many new business avenues seemingly available -- must have been short on ideas.
In fact, some business are, and should be, perfectly fine with doing just that. Companies in steady-growth industries with strong free cash flow that pay regular dividends -- Tootsie Roll
In the end, the reasons companies do or don't offer dividends are as varied as the companies themselves. You can bet software giant Microsoft
In Best Buy's case, however, this looks like good news. Especially, since the company also discussed plans to continue growing and to continue eking out better performance. It also plans to begin buying back shares, which will boost per-share earnings (mathematically, at least).
One might interpret the move as a sign that growth is slowing -- over time, with large companies that don't make major acquisitions, it almost always does. But Best Buy is performing well, improving margins, and successfully ditched its struggling Musicland division. By paying a dividend, management appears focused on delivering for customers and investors.
Discussion Board of the Day: Video & PC Games
Who do you think will own the holiday season when it comes to video games? What about the consoles? Can the GameCube survive against the PS2 and Xbox? What would you do if you were THQ? All this and more -- in the Video & PC Games discussion board. Only on Fool.com.
Mor e Fool News
For all today's stories, see Today's Headlines.
From reading his columns, you'd think Tom Jacobs a modest and humble man. You'd think. We will give him this: Today, he warns of hubris and of taking your eye off the ball when the market gets moving in Bull Market Genius. From there, head to our own Motley Fool founders David and Tom Gardner's sit-down with CEO Terry Semel in Yahoo!'s Turnaround. And finally, off to Dayana Yochim's Nice Girls Don't Ask. Then take a break. You've earned it.
Bob Bobala, Robert Brokamp, Paul Elliott, Mathew Emmert, Jeff Fischer, Jeff Hwang, Tom Jacobs, LouAnn Lofton, Alyce Lomax, Bill Mann, Selena Maranjian, Dave Marino-Nachison, Rex Moore, Rick Munarriz, Reggie Santiago, Dayana Yochim