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In today's Motley Fool Take:
- The Case for Eisner
- Discussion Board of the Day: Disney
- McDonald's Downsizes Fries
- Shameless Plug: Motley Fool Visa Card
- WorldCom's Ebbers Surrenders
- Quote of Note
- More on Fool.com
e Case for Eisner
By Rick Aristotle Munarriz
How warm was the City of Brotherly Love to Disney
With various individual and institutional investors vowing to vote against Eisner's board re-election, maybe I should try on some contrarian mouse ears for a change.
The time to come down hard on Eisner and its chummy board may have already run past its expiration date. That venom in 2002 could have been lethal, considering the company's mismanagement of ABC's brief tenure at the top, its failure to brace for a tourism slump, and the scandalous accusations of favoritism leveled at the board.
Things have improved since then, with the shares nearly doubling since its 2002 lows. With the insultingly weak Comcast
The blockbuster success of Pirates of the Caribbean: The Curse of the Black Pearl gives Disney the ideal synergistic franchise -- one that can promote its theme park business as well as its live-action studio. Theme parks chief Jay Rasulo has been a welcome addition, with Disney acknowledging that new top-notch attractions are the drivers of growth across its parks, resorts, and cruise businesses.
Yes, there will be a large amount of abstentions and nay votes cast today, but it's not likely to be enough to catapult Eisner from the company's board. The narrowness of the margin will bear watching. It may send a message. There are some legitimate beefs from the dissidents over compensation levels and the hierarchy of power. However, Eisner's got a strong ally right now -- time.
David and Tom Gardner have some different thoughts on the matter today. Be sure to read them in Time for Eisner to Go?
Longtime Fool contributor Rick Munarriz owns shares in Pixar and Disney.
Where does Disney go from here? Are you a backer of Roy Disney Jr., or do you favor Michael Eisner? All this and more -- in the Disney discussion board. Only on Fool.com.
McDonald's Downsizes Fries
By Alyce Lomax
As a nation, we're often all about getting more while paying less. Unfortunately, that trend has been most prevalent in our expanding waistlines. In a nod at the current trend towards healthy eating, news agencies report today that McDonald's
Most people Super Size as a way to shell out a few cents more to get more fries or cola -- more "value," supposedly. However, media attention to the growing problem of obesity in this country has led many to believe that those ever-greater portions are a big part of why Americans are wearing ever-larger clothing sizes.
Despite the growing media focus on our eating habits, McDonald's has been hitting a happy medium with its restaurants lately. When Dave Marino-Nachison took a look at the company's sales numbers in early February, he pointed out that McDonald's menu mix is appealing to its old demographic and also reeling in customers with its healthier options, including salads.
McDonald's is not the only fast-food name that's been inspired to submit menu changes related to new public attention on fast food. Wendy's
However, maybe the downside of being the granddaddy of fast food is that you become an icon, and sometimes a negative one. The term "Super Size" has become part of pop culture lingo, which probably doesn't go over too well in McDonaldLand. Meanwhile, according to USA Today, the term has gotten even more flak recently, with the upcoming documentary "Super Size Me," which explores the health effects of the director's switch to an all-McDonald's diet for a month. "Grimace," for sure.
Although McDonald's denied the move had anything to do with the unflattering documentary, one might wonder about any public relations fallout from the film, which is due for release this spring. Never fear, though. For those of you who like your Super Sized fries, what will soon be the high end of fry size, the large, is six ounces -- only one ounce shy of the Super Sized version.
So, this move seems less about healthy eating and more about unhealthy image. After all, moderation and Super Sizes don't really go hand in hand.
Alyce Lomax does not own shares of any companies mentioned. She has wondered for years what food "Grimace" was supposed to represent.
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WorldCom's Ebbers Surrenders
By Bill Mann
Former WorldCom CEO Bernard Ebbers has surrendered to federal authorities in New York. He is charged with being the maestro of a massive conspiracy to defraud at WorldCom. His indictment came within hours of testimony from Scott Sullivan, who was CFO during much of the period in question when WorldCom inflated its earnings, assets, and sales. When all was said and done, the fraud exceeded $11 billion, and WorldCom stock, once valued at close to $200 billion, evaporated.
Sullivan's testimony was considered key. He was indicted in the summer of 2002, along with several other financial officers at the company. All of the others -- Betty Vinson, Troy Norman, and Buford Yates -- pleaded guilty and said that the conspiracy to hide WorldCom's true performance started at the top levels of the company: Sullivan and Ebbers. Sullivan agreed to plead guilty to slightly reduced charges, and will spend as many as 25 years in prison. He's also compelled to disgorge all gains he received as part of the fraud.
If this last condition is applied to its fullest extent, we may finally see a fraud penalty worth something. I'm surely not the only investor who's sick to death of executives who are charged with or implicated in wrongdoings at their companies being able to keep vast amounts of ill-gotten wealth. If the penalty actually becomes "we're taking away all your money," then justice, finally, might be served in these cases.
When we find out that former Freddie Mac
Back to Ebbers and WorldCom. Along with Enron, Tyco
As we've seen with the Enron investigation, building a case against the top folks in corporate conspiracies is incredibly difficult. Just last month, Enron's Jeffrey Skilling finally saw the inside of a courtroom, following plea bargains late last year from former CFO Andrew Fastow. The kingpin in the Enron case, Ken Lay, has yet to be charged.
It's been just as difficult to build the WorldCom case. Even though everyone "knew" that Ebbers was fully aware of the wrongdoings, there was very little hard evidence upon which to try him. Sullivan, for his part, refused to implicate Ebbers. So investigators continued to build their case against Sullivan, and once they had enough evidence to convict him on the more serious charges, they convinced him to turn.
Sullivan's spent the last 18 months free on bond living in a house in Florida so opulent that it had a special storage room just for fur coats. I don't think that his next residence will have the same je ne sais quoi.
Bill Mann owns no companies mentioned in this story.Qu
ote of Note
"We are not retreating, we are advancing in another direction." -- General Douglas MacArthur
More on Fool.com Today
Are Disney CEO Michael Eisner's magical days numbered? His fate lies in the hands of Disney shareholders, who are meeting in Philadelphia as we speak. What's all the fuss about? David and Tom Gardner highlight the issues in Time for Eisner to Go?.... Want to save the world, eh? Motley Fool Hidden Gems editor Paul Elliott has a couple of tips for socially responsible investing. Go on, find out what all the talk is about.... Bill Mann profiles one company that can do no wrong, and one that can do no right. Check it out in A Tale of Two Companies.
In other news:
- California Pizza Kitchen's New Recipe
- Toys "R"n't Going Quietly
- AutoZone Keeps Revving
- SCO Digs a Deeper Hole
- Natural Food Power
For a list of all our stories from today, see our Today's Headlines page.