Good news on the job front: U.S. non-farm payrolls added 308,000 new jobs in March -- the fastest climb in four years. That blew past economists' estimates for 123,000 new jobs.
One month does not make a trend, and unemployment -- which is measured by a different survey -- actually rose to 5.7% from 5.6%, but, at the very least, this is definitely welcome news for anyone in the job market.
We hope you enjoyed our April Fool's gag yesterday. We know we did. Until next year, we'll try to stay on the up-and-up. Have a great weekend!
In today's Motley Fool Take:
- Tyco's Kozlowski Walks
- Shameless Plug: Money Advisor
- The Sun Also Rises
- Quote of Note
- XM Takes Off
- Discussion Board of the Day: XM Satellite Radio
- Intel's Red Herring
- More on Fool.com Today
Tyco's Kozlowski Walks
By Rich Smith
In this election year, let the news go forth: One vote can make a difference -- in a courtroom, at least. Last week, rumor had it that there was a single dissenting juror on the panel deciding the fates of former Tyco International
Everyone else on the jury, it was said, was more than willing to send these two corporate bigwigs to the slammer. But a lone voice in the legal wilderness, known only as "Juror No. 4," refused to be convinced of their guilt.
Unfortunately for No. 4, dissenting views are not always welcomed with open arms, even in this land of free speech. It now appears that No. 4 was threatened or coerced yesterday to throw in his vote with the majority and convict Messrs. Kozlowski and Swartz.
For Superior Court Judge Michael Obus, that was the last straw. A mistrial seemed likely in any event, if the jury could not get together on their decision. But if someone was tampering with the jurors, that fatally tainted the jury process.
So one way or another, the dissenting voice won out today. The judge in the case declared a mistrial and, as a result, Messrs. Kozlowski and Swartz are free men -- for the time being, at least. Prosecutors are almost certain to retry the pair. It was likely that a failure of the jury to agree on the executives' guilt would result in retrial. With the added time to refine their case, knowledge of what points seemed to strike home with the jurors, and a preview of the defense teams' legal strategies, prosecutors often find they have stronger cases on retrial than during the first go-around.
But if the mistrial ultimately resulted from jury tampering, and not from any flaw in their case, that is certain to get the prosecution fighting mad. Certainly mad enough to spend hundreds of thousands more in taxpayer dollars to fund the retrial. And hopefully, mad enough to make sure they nail their case next time.
The taxpayers of New York, and investors around the country, deserve no less.
Fool contributor and former Carroll County, Md., prosecutor Rich Smith has prosecuted felony theft before, but never anything on the scale of the $600 million allegedly looted in the Tyco scandal. He has no beneficial interest in any of the companies mentioned in this article.
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The Sun Also Rises
By Alyce Lomax (TMF Lomax)
Hold on to your hats. Sun Microsystems
The upshot? Microsoft will pay Sun a $1.6 billion settlement fee related to the lawsuit, which settled around Sun's Java software; there will be a "broad cooperation agreement" between the two longtime technology rivals. The high-profile lawsuit lodged by Sun against Microsoft has been linked to the latter company's antitrust problems -- including the recent skirmishes with the European Union.
Although a figure like $1.6 billion may boggle the mind, for Microsoft, it's not that big a deal. After all, the company sits on more than $50 billion in cash, stashed for issues such as this one. So, settling what surely has been a thorn in its side certainly calls for a bit of relief.
But what of Sun? It claims that the customer wins now. Both companies say more details are forthcoming on their "new relationship." Whatever that means, investors seem bullish now that Sun is no longer distracted by the lawsuit, nor saddled with the legal fees -- and it gets much-needed cash in its coffers. But for many investors, the most important question seems to be: Will it be able to get back to business?
Coinciding with the news of the settlement is word that Sun will cut 9% of its workers (that's 3,300 eclipsed laborers) due to continued weak sales. In fact, Sun said it's expecting to post a steep loss, as well as a 7% drop in sales. While the "new relationship" between Microsoft and Sun and the compatibility between the Java and .NET standards are good things, whether this saves the day for Sun is hardly a question with an easy answer.
However, Fool contributor Tim Beyers brought up an excellent point during discussion on this breaking news today -- the need for a kinder and gentler Scott McNealy, considering many have wondered if all the anti-Microsoft sentiment ultimately crippled Sun.
For example, think of the improved outlook for Apple
Sometimes, in business, one of the most important rules of survival may be to swallow one's pride, and decide, "If you can't beat 'em, join 'em."
Alyce Lomax does not own shares of any of the companies mentioned.
"You can only be young once. But you can always be immature." -- Dave Barry
XM Takes Off
By Alyce Lomax (TMF Lomax)
Is that the sound of ka-ching? XM Satellite Radio
Does this spell Sirius trouble?
Now, XM Satellite Radio boasts 1.68 million subscribers. It expects to have 2.8 million subscribers by the end of this year. In comparison, Sirius Satellite Radio
If anything is particularly heartening about today's news, it's the idea that despite the lack of the holiday bump that it had back in December, XM is still proving a strong lure to consumers. What could be helping is the fact that XM is factory-installed in more than 80 2004 car models.
With the economy brightening, the fact is that XM could be taking off with the pent-up demand for new wheels. And summertime road trip radio could spread the word about the cool factor of the service. Also, consumers who might not otherwise consider the medium might get a taste of XM later this year when it becomes available to passengers of JetBlue
Meanwhile, there are certain factors at work that, of course, could alter the landscape for satellite radio at large, including FCC-mandated changes. While Sirius is lagging XM, the possibility that the runt of satellite radio could sign Howard Stern for unfettered naughtiness has been discussed as a possible catalyst for a shift in subscriber choices.
This year is a crucial one for the future of satellite radio. The word is out, and this is the year when all of us are more likely to encounter someone who has it, has heard it, or is considering getting it. And when it comes to momentum powered by word of mouth -- the best advertising of all -- XM's growing subscriber base still places it ahead of the game.
Alyce Lomax does not own shares of any companies mentioned.
What do you think? Can XM hit its subscriber goal by the end of 2004? If you're a Sirius fan, why do you think it will become more of a contender? Talk to other interested Fools on the XM Satellite Radio discussion board. Only on Fool.com.
Intel's Red Herring
By Bill Mann (TMF Otter)
I note with no mild bemusement the juxtaposition between Barrett's primal scream on options and the news that the options grant he received for 2003 doubled from 2002, up to 1.35 million options. Let's see, at $27 per share, does that equal a "truckload?" Maybe a "boatload?"
Just as it did in 1993, Intel is leading the charge, along with companies like Cisco Systems
Let's start with this from Barrett: "Even China is getting into the act, officially encouraging the use of stock options as part of its five-year economic plan just as FASB is preparing to impede their use in the U.S." It's time to take off the tinfoil hat and recognize that no one at FASB has said "don't use options." This is moronic.
Here's something else -- we're talking about accounting. Not "jobs," not "competitiveness." Accounting. Would Barrett like to hold up China's accounting standards as the paragon of transparency? No? If options make economic sense when they're poorly measured, they'll make economic sense when they're measured more robustly. End of story.
(Somewhere in the distance, a dog barked.)
That was just an hors d'oeuvre for the trial lawyers' objection. The real irony in the title is that Barrett was front and center in 1995 pushing to get what's most well known as the "Safe Harbor Act" passed. The act basically makes it incredibly difficult to successfully sue a company for saying something misleading, just so it says so within the confines of safe harbor. Here's what I love about this, though. If there's a lobby in Washington that has enormous power, it's that of the trial lawyers. If they were salivating over the "opportunity" that stock options accounting would offer, we'd be hearing a bunch of sanctimony coming from their folks. So far, not a peep from the Association of Trial Lawyers of America -- which is not one to leave nickels laying on the ground.
Barrett implores FASB to "get back to the basics of accounting principles based on cash, not imaginary expenses." I love this. We're not indicting stock options, we now need to lump accrual accounting in its entirety. OK, Craig. Also fine. Intel's capital expenditures should now be moved to the income statement, as should all of the money you spend to buy back stock to offset dilution from stock options. Doesn't sound like a good plan? How about this? Let's just get rid of the division between the financial reports companies provide to shareholders, and the ones they provide to the IRS.
Barrett recently noted that "many accountants feel that options are not a true expense, despite FASB's view." Trouble is none of these "many accountants" happen to run any of the Big Four accounting firms. On March 17, the CEOs of PricewaterhouseCoopers, Deloitte & Touche, Ernst & Young, and KPMG all signed a letter to the House Subcommittee on Capital Markets expressing their support for FASB, stating, "We continue to support the view that the fair value of all employee stock options should be reported as compensation expense." Ernst & Young, by the way, audits Intel's books.
But my favorite is Barrett's disclosure that Intel grants more than 95% of its options to the rank and file, not to executives, and that its top five employees get less than 2% of all options. Jack Adamo, editor of Jack Adamo's Insiders Plus, noted that this is a "clever but shop-worn device" to claim the democratic nature of options grants. "It sounds goods until you do the math. That shows that 71,730 of Intel's employees get an average of 14 of every 1,000,000 stock options issued, whereas the top 5 executives get an average of 4,000 each. That ratio is 293 to 1."
Intel's compensation policies are not at issue here, save for Barrett's grab at rectitude. What needs to be remembered is this: The only entity that has threatened to reduce the broad nature of Intel's stock options program is Intel. Not FASB -- their issue is measurement, not behavior modification.
Bill Mann owns none of the companies mentioned here.
Is Disney CEO Michael Eisner's new book a case of bad timing or a chance for perfect comedic timing? Read on with Rick Munarriz in Trashing Eisner's "Camp".... And the issue of stock option expensing sure is coming to a head. Whitney Tilson has some not-so-nice words for the band of CEOs hanging on old system at the expense of shareholders. Find out more in Coaltion of the Greedy.... Looking for overseas investment ideas? Look no further than India, according to Martin Hutchison. Hey, don't take our word for it. Read for yourself in India: Emerging for Your Dollars.
In other news:
- CNET's Encore
- Wal-Mart, Sun Vs. Microsoft
- Shutting the Gate(way)
- American Eagle Eyes Summer
- Disconnecting AT&T Wireless
For a list of all our stories from today, see our Today's Headlines page.