With the holiday season upon us, it's time to launch our Foolanthropy 2003 charity drive. As in past years, we've found five very Foolish organizations worthy of your donations not only this season but all year long. David Gardner has all the details.
By and large, it's been a good year for investors. We hope you'll join us in investing in the lives of those less fortunate. You can contribute through Jan. 11, 2004. This year, in addition to what we each give personally, The Motley Fool will donate $10 for every investing newsletter purchased as a gift.
In today's Motley Fool Take:
- Oracle Sees Future Bright
- Discussion Board of the Day: Amgen
- A Ma Bell for Music
- Quote of Note
- Wal-Mart's Holiday Worries
- Shameless Plug: Broker Center
- More Fool News
- And Finally...
Oracle Sees Future Bright
No. 2 software developer Oracle(Nasdaq: ORCL) reported improved earnings, sales, and free cash flow last night after market close for its Q2 ending Nov. 30. The stock rose 2.2% to $12.98 after hours and held fast in morning trading.
Revenues climbed nicely. Software sales were up 15%, service revenues down 10%, and total revenue up 8% to $2.5 billion. New software license revenues jumped 13%, and product support revenues vaulted 17%. The dollar's decline contributed more than half the combined total, but the overall results are still a step up from the 2% or so year-over-year revenue gains of the last several quarters.
Management, meanwhile, was guardedly optimistic for increased business software spending in 2004, noting its 2003 growth in all software lines and in the Americas, Europe, and Asia, and projecting that its greatest 2004 opportunity lies next year in the Americas. Responding to concerns that the software database business may become a commodity and face increased pricing pressure, management conceded it faced intense pricing competition but observed one major opportunity ahead.
The company projects sales growth from its new 10g product, saying it's the first database and application server designed to run on a grid of low-cost computers, rather than one expensive mainframe. Oracle is seeing good returns from its backing of products that run on Linux
Whether at roughly 19 times trailing-12-month free cash flow, Oracle is a value or pricey depends not only on growth but on what it intends to do with $8.1 billion in cash and equivalents. Execs say that they plan to keep share buybacks low for now, preferring to conserve cash for the PeopleSoft acquisition or others.
Bear in mind, most acquisitions reduce shareholder value. Unless extremely knowledgeable about software markets, individual investors might be advised to sit this one out.
Discussion Board of the Day: Amgen
Biotech has had a blockbuster year, but it's cooled off a bit lately. Do you think bellwether Amgen might be an attractive buy at today's prices? Will the biotech sector blaze through next year like it blazed through the 1990s? Make your voice heard on this and other biotech-related chatter over on the Amgen discussion board. Only on Fool.com.
A Ma Bell for Music
Apple Computer (Nasdaq: AAPL) once again sparked a revolution when it launched its iTunes music store in April. Listening to the sound of profits, a rash of companies is gunning for the online music market, including Wal-Mart(NYSE: WMT), Dell(Nasdaq: DELL), Amazon.com(Nasdaq: AMZN), Sony(NYSE: SNE), Hewlett-Packard(NYSE: HPQ), and Roxio(Nasdaq: ROXI). The result: a frightening display of real-time commoditization.
This was clear yesterday when software giant Microsoft(Nasdaq: MSFT) and digital media provider Loudeye(Nasdaq: LOUD) announced a new service that allows just about any company to set up a sophisticated music store. The $30 million barrier to entry -- the price of building an online store -- has melted away.
This does not mean Apple's business model will go bust. In fact, Apple readily acknowledges that selling online music is a loser. Rather, it makes money if there is something else to sell, such as iPod digital music players.
But the market clearly thinks Loudeye is on to something. The company's stock surged more than 32% after the announcement of the joint venture with Microsoft. At first blush, it might seem like a valuation acid trip given the miniscule revenues.
But assuming online music is a commodity, it makes sense to outsource it to a company like Loudeye. In a way, Loudeye is a music utility, collecting a fee based on usage. So expect a variety of more deals for Loudeye, which should keep the stock buzzing.
Quote of Note
"In skating over thin ice, our safety is in our speed." -- Ralph Waldo Emerson
Wal-Mart's Holiday Worries
Wal-Mart (NYSE: WMT) , in its weekly recorded same-store sales update, said yesterday that it now expects comps to trend towards the lower end of its 3%-5% forecast. The gloomy news from the world's largest retailer casts another shadow over the prospects for a prosperous holiday season for U.S. retailers. (Wal-Mart cast the first shadow when it released Q3 earnings and raised questions about the financial health of the American shopper.)
Economists have been calling for holiday sales to rise 5%-7% over last year, which was one of the weakest shopping seasons in decades. So far, though, it's been touch and go for retailers, as early winter storms have blanketed parts of the country with snow for two weekends in a row.
The news of Saddam Hussein's capture prompted some analysts to predict that consumer confidence and spending will go up as a result. Holiday shoppers may be happy that the dictator's in American hands, but whether that will actually translate into spending more cash (Yay, we captured a war criminal! Let's buy more toys for the kids!) remains to be seen.
Wal-Mart noted that fewer shoppers strolled its aisles last week compared to last year, supporting the idea that people are shopping closer and closer to Christmas. The retailer's results also exclude gift cards, which aren't counted in sales until they're redeemed.
We still have some time to go, so it seems premature to declare it a bust just yet, however troubling Wal-Mart's words may be.
Shameless Plug: Broker Center
Nobody pays retail anymore. At least that's what they say. We say that, given the choice, nobody wants to pay more than they have to. And that goes double for stock trades; after all, that commission you save doesn't go out the window and into Starbucks, but into your portfolio (and then into Starbucks?). Once there, it compounds right along with the rest of your investments. To find the precise broker that's right for you, head on over to our Broker Center.
More Fool News
- Don't Jump Off Pier 1
- Oil Down, Gas Up
- Motorola Gets New CEO
- J. Jill Doesn't Thrill
- Lennar Has Its Day
For all today's stories, see Today's Headlines.
And Finally...
We never imagined that Tom Jacobs would go quietly into the night. You know, Tom -- I'm off to Eastern Europe to write sonnets and build ships in bottles -- Jacobs? Today, he gives us High Risk, High Reward. Love him while you got him. David Nierengarten -- like Tom Jacobs, just harder to spell -- pipes up with Biotech's Next Phase. It's a must for biotech investors, but no Tom Jacobs (sorry, David, he'll be gone in a few days). While they stock up the U.S.S. Latvia, check out what Dayana Yochim has to say about taking control of your finances in Your Time, Your Money.
Contributors:
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
