Bad news for those looking for work: Things don't appear to be getting better.
U.S. companies laid off more than twice as many workers in October than in September. All told 171,874 people were axed, with the auto industry dismissing 28,363 workers, retail selling 21,169 folks down the river, and the telecommunications industry hanging up on 21,030 more.
It was the highest volume of layoffs for the year. Job reductions have reached 1.04 million so far in 2003.
While harsh, the layoffs aren't exactly unexpected. October typically carries the most downsizing as companies cut costs at the end of the fiscal year.
Of course, The Motley Fool is here to help. Currently, we are accepting applications for both writers and editors. Visit jobs.fool.com and see the announcements under Editorial and Writing. Hey, it's the least we can do.
In today's Motley Fool Take:
- The Best Gillette Can Get
- Shameless Plug: Motley Fool Hidden Gems
- Market Mishandles Marvel
- Quote of Note
- Atari Bounces Back
- Discussion Board of the Day: Wal-Mart
- More Fool News
- And Finally...
The Best Gillette Can Get
Shares of Gillette
On an 11% gain in third-quarter sales to $2.4 billion, Gillette earned net income of $416 million, or $0.41 per share, up 24% from the same quarter last year. Analysts had sought $0.36 per share. Cost efficiencies helped balloon profits, as did a 1% lower effective tax rate, but the largest boost came from a weak U.S. dollar.
The decline in the dollar accounted for nearly 50% of Gillette's 11% sales growth, and backing out currencies and a lower tax rate, third-quarter earnings would have been flat with last year. We wrote in May that Gillette and other large internationals, such as Coca-Cola
Currency gains aside, management deserves credit for lowering company costs while simultaneously taking market share in highly competitive markets (the company has even sued Schick). Gillette's blades and razor sales rose 17%, topping $1 billion, as the Mach3 (and the new Mach3 Turbo Champion) continued to storm Europe. Gillette's newer blade for Women, called Venus, grew sales 15% in "constant dollars," a tribute to strong marketing. Along with Sensor3, all main Gillette blades gained market share.
The company's oral care unit -- namely Oral-B -- grew sales 3% to $328 million, while profits rose 6% to $64 million (there's decent margins in toothbrushes). Gillette's battery division -- represented by Duracell -- grew sales 7% to $514 million, while profits surged 35% to $105 million. The August blackout in North America contributed to strong sales.
Despite a strong third quarter, management did not increase fourth-quarter expectations (yet), perhaps indicating that -- given lower taxes, a new Mach3 rollout, and blackouts -- the earnings jump was an anomaly. In the fourth quarter, the company is currently expected to earn $0.36 per share (the same amount Wall Street had expected for this past quarter) on higher revenue of $2.7 billion.
For the nine months ended September, Gillette's free cash flow is up 36% to $1.5 billion. With an enterprise value of about $36 billion, the stock trades at 17 times likely 2003 free cash flow of $2.1 billion. That multiple values Gillette below the market average, making it more attractive. At $34, it trades at 23 times expected 2003 earnings per share, slightly richer than peer Procter & Gamble
At 17 times forward free cash flow and with a 2% yield, the stock offers a margin of safety alongside reasonable-to-attractive long-term upside. Gillette may be one to sock away in your two-year-old's education fund or in your retirement account (assuming you don't already own it via an S&P 500 index).
Shameless Plug: Motley Fool Hidden Gems
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Market Mishandles Marvel
Total revenues came in at $84.54 million, a hair ahead of the prior period's $84.38. Gasp! Is Marvel losing its juice? Is the lowly comic-book-company-turned-licensing-powerhouse running out of steam?
Take a breath, people. And then take a closer look at Marvel's results.
Marvel's toy business, which the company's smartly starting to outsource, was at the heart of this sales "disappointment." In last year's Q3, we were in full Spider-Man swing, with everyone and their grandma snapping up Spidey toys and action figures like nobody's business. As a result, toy revenues were just $23 million this quarter, vs. $44 million last year. Further, toy sales from this summer's movies, like The Hulk, are now included in Marvel's licensing revenues, since they were outsourced.
Speaking of Marvel's licensing revenues, that's what the market should be celebrating today. The company's licensing sales climbed 67% to $41.6 million for the quarter. Through the first nine months of the year, licensing revenues are $148.3 million -- nearly triple last year's amount over the same period.
Motley Fool Stock Advisor subscribers have certainly enjoyed watching Marvel transform itself. Since David Gardner first recommended it in July 2002's issue, Marvel has soared 471%. David re-recommended it in Dec. 2002, and had you waited to buy then, you'd be sitting on only a 256% gain.
The good times aren't over yet for Marvel. It has a stable of thousands of characters just waiting for their shot at the big screen. And next year, moviegoers will have Spider-Man 2, Blade 3, The Punisher, and the Fantastic Four to enjoy. That spells more fun for Marvel, and its shareholders.
Quote of Note
"If a man does his best, what else is there?" -- General George S. Patton
Atari Bounces Back
Take a look at the stock charts of video game software developers Electronic Arts
Now take a look at the chart of the current No. 2 independent video game publisher, the once-legendary Atari
During the second quarter, some of those things changed.
Atari completed a $131 million stock offering, as part of a $200 million recapitalization. As a result, Atari has $27 million in cash and zero debt going into the holiday quarter. The stock bounced from $1.78 on March 31 to close at $3.97 before the company announced earnings Monday afternoon.
Atari's second quarter loss was mitigated by the strength of Enter the Matrix, based on Time Warner's
For the coming holiday quarter, Atari expects sales to more than triple from $60.6 million in the second quarter to between $215 million and $235 million, with further contributions from Dragon Ball Z and new arrivals such as Terminator 3 and Mission Impossible. The company also expects to earn from $28 million to $36 million, or between $0.23 and $0.30 per share for the quarter.
We won't see Atari's big-time games Driver 3 and Unreal Tournament 2004 until the fourth quarter. But the turnaround looks to be underway, and management reaffirmed its full-year revenue and earnings guidance. After hours, the stock continued its own rebound, rising 4% to $4.12.
Discussion Board of the Day: Wal-Mart
Do you think traditional food retailers are doomed? Will discount department stores swallow what warehouse clubs leave behind? Is it too inconvenient to do your supermarket shopping at Sam Walton's place? All this and more -- on the Wal-Mart discussion board. Only on Fool.com.
Mor e Fool News
- Charter Grows Broadband
- EOG Resources A-OK
- Sport Chalet Swings Away
- IGT: The Biggest Winner
- Microsoft, IBM Put Intel Outside
For all of today's stories, see Today's Headlines.
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