Motley Fool Stock Advisor recommendation TiVo(Nasdaq: TIVO) has determined that Janet Jackson's "wardrobe malfunction" during Sunday's Super Bowl halftime show was the most replayed television moment since the company started tracking. There was a 180% increase in viewership at the time as TiVo users replayed the incident again, and again, and again.

So, what's worse? A tawdry halftime show or the fact that people couldn't get enough of it? Actually, the scariest thing for us is that TiVo has this kind of information on us. Bet you never thought you would have so willingly brought Big Brother into your house, did you?

In today's Motley Fool Take:

Pixar's Power Play

By Rick Aristotle Munarriz (TMF Edible)

With shares of Pixar(Nasdaq: PIXR) dipping yesterday after a Barron's column waxed pessimistic on the animation studio over the weekend, maybe now is the time to look under the hood of the company whose Cars release will be the final flick in its partnership with Disney(NYSE: DIS).

There are no fishbones about it. Pixar and Disney failed to hash out a simple distribution agreement by which Pixar would finance and own its releases and Disney would act as distributor, because each wanted more out of the relationship.

Pixar obviously wanted meatier stakes in its next two projects, as well as a little more control over its past creations. There was plenty of room for both parties to come together and extend the partnership while yielding power and percentages to Pixar.

Yes, the breakdown does cap Pixar's earnings potential through its next two releases. There was always the near-term fiscal upside that a new deal with Disney could have improved Pixar's bottom line over the next couple of years. Barron's is right in singling out that a Disney-less future means that Mickey Mouse is unlikely to budge during the final stages of their lame "Donald" duck tenure.

But how can you not be excited about Pixar's future? After all, it was Pixar's fat margins and money-making record that made it a popular Motley Fool Stock Advisor stock recommendation.

And can you blame Pixar for moving on? This was a company creating a quality product but taking in less than half the proceeds. When Disney CFO Tom Staggs announced that Pixar's demands were unreasonable because it would have cost Disney "hundreds of millions of dollars" that it was entitled to, how can you not do the math and see how Pixar will have the last laugh if it laughs alone? Now, it not only has the right to earn more than twice as much as it has in the past, but it also has the flexibility to call its own shots and ramp up its production schedule.

Of course, the concerns are not lost on me. Pixar will have to bankroll its future releases. Pixar had a good thing going with Disney. So what? Unlike most debt-laden movie studios, Pixar sports an immaculate balance sheet with $517 million in cash -- and growing. Financing won't be a problem.

And will it really miss Disney's distribution? Over the past six years, how many times has an in-house Disney feature been the year's top grossing animated release? Once, with Dinosaur in 2000. That ties Disney with Dreamworks (Shrek in 2001) and Fox(NYSE: FOX) (Ice Age in 2002). Pixar has owned the other three years.

Even if you're not much for conference calls, you might want to check out Pixar's when it reports tomorrow afternoon. One thing's for sure -- it's going to be animated.

Discussion Board of the Day: Pixar

Will Pixar make more or less money off its 2006 theatrical release? Why do you think the companies broke off their negotiations? All this and more -- in the Pixar discussion board. Only on

Tyco's Tempting Valuation

Industrial conglomerate Tyco reported strong first-quarter earnings this morning, as the turnaround continues from the mistakes and abuses of the Dennis Kozlowski era.

Revenue rose 9% year over year to $9.7 billion, with every segment posting revenue increases (though foreign exchange provided an overall 7% boost). Operating income jumped 18%, and free cash flow moved up a dandy 23%. In addition, the company paid down $2 billion of its more than $18 billion in debt.

The stock price is up about 70% over the past year, but many feel it is still undervalued as the market takes off points for a scandalous past and that heavy debt load. To get a quick look at its valuation, we sorted out six other large companies classified as "conglomerates" and compared their metrics to Tyco's.

It's interesting that all of the long-term growth estimates are in the same 10% to 13% ballpark, meaning the multiples compare fairly well without adjustments:

Company P/E ratio P/FCF ratio P/Sales ratio Est. 5-yr. EPS growth
Emerson El. (NYSE: EMR) 26.5 40.7 1.9 10%
Fortune Brands (NYSE: FO) 18.2 N/A 1.7 11.7%
General Electric (NYSE: GE) 21.7 28.0 2.5 9.7%
Siemens AG (NYSE: SI) 22.3 26.4 0.8 12%
3M (NYSE: MMM) 26.2 30.2 3.4 11.4%
United Tech. (NYSE: UTX) 20.4 N/A 1.5 12.3%
Tyco (NYSE: TYC) 53.5 15.6 1.4 12.8%

Tyco's P/E ratio is certainly higher than any of the others, but restructuring and non-cash charges have skewed it. As usual, it's more useful to look at the price-to-free cash flow (P/FCF) ratio. There you see the company measures up quite well, with investors assigning it a much lower multiple compared to the rest.

As Tyco continues to execute well, distance itself from Kozlowski, and pay down debt, perhaps Mr. Market will begin rewarding it with a P/FCF multiple more in line with its peers.

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Taser Shocks Shorts

By Jeff Hwang

You might say that Taser International(Nasdaq: TASR) has been on a roll. Following yesterday afternoon's stellar fourth-quarter report, Taser shares are up 10% to over $148 midday, meaning this: If you had bought the stock at its 52-week low of $3.65, you'd be looking at a mere 40-bagger.

The maker of stun guns earned $2.8 million, or $0.56 per share in the fourth quarter, up from $0.02 per share the same quarter last year. Meanwhile, sales almost quadrupled to $10.8 million. And here's the kicker: At last count, more than half of Taser's 2.2 million-share float was sold short.

Not surprisingly, doubters point to Taser's 300-plus trailing price-to-earnings ratio. A recent Barron's article even suggested that the company was approaching market saturation.

But Taser insists that 4,300 law enforcement agencies were either testing or deploying its weapons by the end of 2003, including 800 added during the fourth quarter. More than 500 agencies had committed to full deployment, meaning "one TASER on each of their line level patrol officers."

The story gets better. The company has penetrated just 24% of U.S. law enforcement agencies, and "only 5.2% of the available market of individual officers in the United States." Not only does that leave room for growth in law enforcement, but there's also the U.S. military. And yes, Taser points out, there's the rest of the world.

Based on this, Taser expects revenues to double in 2004, which implies revenues of around $50 million for the current year. And given the fourth quarter's earnings results alone, I think it's a pretty fair assumption that earnings will climb even faster than that.

Back in October, Dave Marino-Nachison thought the stock had some room to run near $51 per share. Last month, Seth Jayson still didn't think Taser shares were unreasonable at $112. But near $150, the picture gets a little muddier.

Given Taser's explosive growth, expanding opportunities, and clear realization of its earnings potential, I can't say that Taser's shares are so richly priced that I'd bail. But if you're looking to buy with a margin of safety, I don't think you'll find a whole of that here.

Quote of Note

"Not everything that can be counted counts, and not everything that counts can be counted." -- Albert Einstein

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