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In today's Motley Fool Take:
- Pitting Buffett Against Microsoft
- Shameless Plug: Broker Center
- HP's Linux Crush
- Discussion Board of the Day: Linux User's Group
- Martha Washing Done?
- Quote of Note
- More on Fool.com Today
By Seth Jayson
I'm not talking about the European Union, which nibbled the firm for several hundred million bucks this week, but quiet little Minnesota. Yes, the muskies are circling, looking to take a $425 million chomp out of the world's most sued software maker. And to do so, the plaintiff's counsel has cited an email exchange between Microsoft's Jeff Raikes and Berkshire Hathaway's
The courtroom action is just beginning, but we're already beginning to see the plaintiff's strategy. It's an argument that would make Karl Marx tingle with glee.
Here's the gist: Microsoft is too profitable. That's right, folks; the profit margin itself is under fire. According to ZDNet, plaintiffs attorney Richard Hagstrom told the court, "They lied, cheated and deceived to get monopoly-level profits."
Since the term "monopoly-level profits" doesn't appear in any of my business texts, we must turn to the Buffett exhibit. In the 1997 email (pdf file), Raikes and Buffett discuss Microsoft's high profit margins and the company's status as a "toll bridge." After being reported by TheWall Street Journal, the exchange -- especially the phrase "toll bridge" -- has put much of the computer press' undies in a bundle. To judge by the headlines, they figure, this is the smoking gun needed to take down Bill Gates' unholy empire.
The trouble with that argument is obvious: If juries get to decide when profit margins are too high, every business is at risk, including Buffett's beloved Coca-Cola
The reality is that the memo is a complete snoozer. Aside from bragging about Microsoft's potential for 90% gross margins, Raikes reveals nothing that could be construed as anti-competitive, though he certainly had ample opportunity to insert his foot in his mouth when he discussed the vulnerability of Microsoft's technological moat.
I harbor no doubt that Microsoft plays rough with competitors like Apple
Windoze user and Fool contributor Seth Jayson gets really aggravated with Microsoft, honest. But he firmly believes that two wrongs don't make a right. He has no stake in any companies mentioned above. View his Fool profile here.
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HP's Linux Crush
By Alyce Lomax (TMF Lomax)
Don't let that cute little Linux penguin's sort of vacuous gaze fool you -- it might be poised to become a monster. Hewlett-Packard
Just last week, No. 1 computer maker HP announced plans to launch PCs in Asia that utilize Linux on their desktops. That's a huge market indeed. Further, governments in several Asian countries, such as China and Japan, are developing operating systems modeled after Linux. The popularity of Linux in that part of the world has been attributed both to lower costs as well as security concerns.
So, while the open-source operating system Linux remains an underdog, considering the massive hold of Microsoft
As one among several cases in point, Red Hat
Investors yawned off the news today, and that's understandable. While this is an interesting issue and a sign of gaining traction, there is still conjecture as to the ultimate success of Linux. However, news like this shows that HP's willing to look towards the future and make bets on where future growth could be. Considering some of the variables at hand, there seems to be good reason to give Linux some love -- and some thought.
Alyce Lomax does not own shares of any companies mentioned.
Di scussion Board of the Day: Linux User's Group
By Rick Aristotle Munarriz (TMF Edible)
Patient contrarians get it. Eventually. They really wouldn't have it any other way, though. Valuation may be today's popularity contest but successful investing is all about tomorrow's fete. That's why you'll never see me laughing at the grade school genius with the wiry, unkempt hair or the introvert mastering Klingon in the basement. They may go promless but their stock will rise sooner or later.
That's why I was encouraged to see financial newsletter guru Mark Hulbert's "Do you have what it takes?" article on MarketWatch.com
It would be easy to ridicule the loner but Hulbert takes the refreshingly contrarian approach of singling out the merits of bottom-fishing. Yes, it helps that the stock is actually trading higher since its Stock Advisor recommendation. But, you know, sometimes it's pretty cool to see that someone else out there speaks Klingon.
I mean, why is everyone so down on the company that bears Martha's name?
If Martha's largest retail contract was with, say, Williams-Sonoma
OK, maybe I'm kidding about the "thug appeal" part but seriously now, what did Omnimedia lose here? I can't picture some well-to-do soccer mom in the suburbs trashing her Stewart-inspired drapes and curtains makeover, calling it a sham just because Stewart sold some ImClone Systems
Will Omnimedia miss out on a few cable television deals or merchandising contracts? Sure, initially. In the words of the lanky yet lyrically brilliant Ric Ocasek "there is no escape without a scrape." But these tribulations are also setting up the perfect volley for the brand-enshrining spike that comes from a charismatic leader that has assured her status as a media magnet for life.
And that's a good thing.
Longtime Fool contributor Rick Munarriz isn't even sure what the color puce is. He believes Martha will make it through all this yet he does not own shares in any company mentioned in this story.
Qu ote of Note
"The basis of optimism is sheer terror." -- Oscar WildeMo re on Fool.com Today
Is the pharmaceutical industry in for a rude awakening? Bill Mann's got a low-cost, scrappy drug maker that's threatening to upset Big Pharma in Reddy or Not.... Robert Brokamp doesn't want to scare you, but there are some Wretched Retirement Realities you should know about.
In other news:
- Abercrombie's Tasteless Tee
- Viacom's China Push
- Level 3: Looking Up?
- Salton's New Brew
- Valuing a Profitless Company
For a list of all our stories from today, see our Today's Headlines page.