It was rally time on Wall Street today with all the major market indexes shooting well into positive territory. The Nasdaq won the race, leaping over 2%. It's a good beginning to the first full week of trading this year, but don't get caught up in it, especially if you were on the sidelines. One day does not make a market, and you have a lifetime of investing ahead of you, right?
In today's Motley Fool Take:
- Siebel Smiles
- Need a Broker?
- Buffett-ize Your Finances
- Quote of Note
- Dude, Where's My Car Stock?
- Discussion Board of the Day: Car Buying
- More Fool News
- And Finally
Fourth quarter revenue guidance was bumped to $365 million from previous expectations of approximately $345 million. An important metric to watch with software firms -- license revenue -- is now expected to rise to $150 million in Siebel's fourth quarter, nicely above estimates of about $130 million, and 35% higher than third quarter results.
License revenue numbers indicate how well a software firm is growing its client base by signing new contracts. Renewal and service revenue accounts for most other revenue. With $1 billion in annual sales, Siebel is a leading seller of customer service software, called customer relationship management (CRM) ware. Sales have declined since 2001, but with today's news, it appears corporate spending is starting to pick up again.
"Across the board we saw an improved business climate for investing in information technology," Siebel's CEO, Thomas Siebel, said in this morning's conference call. The company is witnessing improvements in Asia, Europe and the Americas. In fact, the fourth quarter was Siebel's best operating quarter since the first quarter of 2002.
We mentioned earlier that today's news was "good-to-mixed." It's mixed because Siebel's fourth quarter guidance given last October appeared modest, so topping those numbers, while nice, wasn't as surprising as it could have been. Additionally, Siebel reminded everyone that one quarter does not a trend make; there's no guarantee this strength will carry into the new year. In fact, quarter one will likely see a seasonal downtick.
From quarter four 2002 to quarter one 2003, sales declined from $394 million to $333 million. Meanwhile, last quarter's $355 million is still well below 2002's quarter four results, but at least it's a step in the right direction. Many such steps are needed. The $15 stock trades at 35 times its $0.43 per share in trailing free cash flow -- a 25% premium to the industry average. Why so high? Perhaps because management expects operating margins to improve all year due to steps taken in 2003, and with that, the free cash flow multiple should contract.
However you cut it, investing in information technology (IT) companies near the bottom of a spending cycle, as now may be, makes much more sense than buying at the top of a cycle, when share prices are rich and year-over-year comparisons very difficult.
Need a Broker?
Whether it's your very first broker or you're switching to a new one, The Motley Fool's Broker Center has all the tools you need to get the job done.
Buffett-ize Your Finances
Quick, without cheating, what's the current balance in your 401(k) (or other work retirement account)? How much money is currently in your checking account? What did you spend on food last week?
Stumped? (We'll assume so by that blank stare.) Then it's time to Buffett-ize your finances!
There's no better model of a competent, hands-on CEO than Warren Buffett. Here's a guy who can practically recite his company's annual report -- and five years' worth of his personal checkbook entries -- verbatim. And we're only partly kidding. In one interview, Buffett recalled puzzling over a $4 income item on his latest tax return. A $4 item! By a guy who is worth about $40 billion!
Today, take the 15 to 20 minutes required to begin a self audit. Use your computer, checkbook, abacus, and all those under-used fingers and toes to add up your major assets and liabilities (fancy terms for what you own and what you owe). Simply write down the balances of the following items:
- Checking account
- Savings accounts (includes money market accounts, CDs)
- Brokerage accounts
- Retirement accounts (including IRAs, old 401(k)s, that secret Bahamian stash)
- Home equity (if you own a home)
- Short-term debt (credit cards, student loans, auto loans)
- Long-term debt (mortgage)
Now see if you can answer these questions:
- Is your net worth increasing?
- Is your debt growing or shrinking?
- Are you shocked by what you see? Appalled? Elated?
If you can't determine what direction your money is going (up, down or haywire), use this simple money rundown as a starting point for your personal audit and repeat next month when you have a baseline for comparison.
While the fire of Buffett is burning inside of you, start improving your shareholder's (or family's, in this case) long-term value. For the next month we're offering free access to TMF Money Advisor, where you can get an analysis of your personal balance sheet and one-on-one advice from an independent source.
Quote of Note
"The art of investing in public companies is... simply to acquire, at a sensible price, a business with excellent economics and able, honest management. Thereafter you need only monitor whether these qualities are being preserved." -- Charlie Munger
Dude, Where's My Car Stock?
Auto shows are often more "show" than "auto." Car manufacturers angle for headlines with concept cars that never see the light of day and claims of market domination that -- like a road trip on an empty tank -- ultimately fall short. However, there was a lot to get excited about at Detroit's 2004 North American International Auto Show over the weekend.
While the automotive industry has been giving itself away since General Motors
With the economy showing signs of life and auto sales closing out 2003 in revved-up fashion, 2004 might be just the ticket for the leading carmakers. So it's only natural to see a little spunk in Detroit this week as GM introduced a new 2006 model convertible that will be priced below $20,000, Honda
GM's Hot Button promotion is equally encouraging. Giving away 1,000 cars over the next few weeks may seem like a desperate measure for GM, but it's actually not. Only folks who try the company's OnStar wireless communication service will be eligible to win. In other words, GM crafted an aggressive campaign to move a premium add-on service. That's confidence.
The company still has to tackle its debt-laden balance sheet, but this new attitude sure beats the rear-view mirror checking we've seen in recent years. Might the perpetual key fumbling be over? It might just be time for investors to give the autos a test drive.
Discussion Board of the Day: Car Buying
Are you ready to buy a new car in 2004? Have you checked out our articles on savvy car buying? Is now the best time to buy? All this and more -- in the Buying and Maintaining a Car discussion board. Only on Fool.com.
More Fool News
And for a list of all our stories from today, see our Today's Headlines page.
Mathew Emmert says if you're looking for love in the bond market, you could end up broken hearted..... Selena Maranjian has another valuation tool.... And you can still contribute to our Foolanthropy charity drive for 2003.
Bob Bobala, Robert Brokamp, Sam Edwards, Paul Elliott, Mathew Emmert, Jeff Fischer, Jeff Hwang, LouAnn Lofton, Alyce Lomax, Bill Mann, Selena Maranjian, Dave Marino-Nachison, Rex Moore, Rick Munarriz, Reggie Santiago, Dayana Yochim