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In today's Motley Fool Take:
- Intel Tripped Up
- Shameless Plug: IRA Center
- Take-Two and Don't Call Ever
- Quote of Note
- Three Questions for Disney
- Discussion Board of the Day: Disney
- Hello, Harley!
- More on Fool.com Today
Intel Tripped Up
By Tim Beyers
Some earnings reports are so predictable you can set your watch to them. You know the ones I'm talking about: the uber-profitable monsters that always beat Wall Street's estimates. The two titans of computing -- Microsoft
Missed estimates always make for big news on Wall Street, especially when a stalwart like Intel is involved. Predictably, investors dumped Intel shares in after-hours trading, sending the stock lower by 1.5%. Of course, if you asked any of these investors what about Intel's business caused them to suddenly run for the door, the answer is likely to be something like "they reported bad news" or "the stock was going lower; I didn't want to lose money."
Folks, that's a very un-Foolish reaction. Let's take a look at the numbers. Net income for the first quarter was $1.7 billion, or $.0.26 a share, up 86% from the same period a year ago. That's a blowout quarter by almost any measure, except that the Street expected $0.27 a stub. What caused the shortfall? Intel took a $162 million charge against its cost of sales, created when it agreed last month to pay $225 million in a patent infringement settlement with Intergraph
To be sure, there are real reasons for concern over Intel. Heck, I've documented a couple of them, such as its mid-quarter revenue adjustment and its choice to followAdvanced Micro Devices
Predictions aside, what's most important about yesterday's earnings report is the lesson it provides. Part of the job of researching stocks -- and it is work -- requires knowing when news that looks bad is actually good. And vice versa.
So, how do I view Intel's unmet expectations? To borrow from our muse, William Shakespeare, it's much ado about nothing.
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Ta ke-Two and Don't Call Ever
By Bill Mann (TMF Otter)
The monumental ongoing battle that has gone on at Take-Two Interactive
This morning, Take-Two, maker of Grand Theft Auto, one of the most popular video game titles ever, announced yet another management reshuffling, as CEO Jeffrey Lapin stepped down after less than two years in the post. In these two years, Take-Two has bounced from accounting problem to accounting problem. Ashes to ashes, dust to dust, and all that. Lapin came into the post in 2002 with the company in disarray and in need of some cleaning up. He departs as the Securities and Exchange Commission continues investigations amid more massive restatements and is considering taking civil action against the company.
If Take-Two is in the process of developing any new games, may I suggest a title? How about The Recidivist?
As my friend Whitney Tilson has been known to say: "Looks like Herb Greenberg's got another notch in his belt." For more than two years Greenberg has been on the case at Take-Two for what seems like forever. In 2002, the company had to restate seven previous quarters after having to admit that it improperly booked revenues, all while it did a capital raise and insiders sold massive amounts of stock.
That was 2002. This time, Lapin leaves and Chairman Richard Roedel takes over as CEO. This comes simultaneous to a slash in earnings projections, as Take-Two, which forecast just last month that it would earn $0.33 per share for the quarter ending April 30, now says that severance expenses for Lapin and a delay in the launch of The Warriors for Sony's
Oh, OK, I have a better title: Rotten to the Core.
Roedel noted in today's press release that "the senior management additions we announced today are a significant step forward in strengthening our operational focus, which should lead to improved financial results going forward." Certainly, Take-Two has some operational issues, but what investors ought to demand isn't improvements in that regard -- what they need to demand is that the company clean up its act and quit treating all of them as if they are marks.
What does the company do instead? It brings in as president Paul Eibeler, who served in the same role during the last time Take-Two was monkeying with its books. He had left in 2003 to serve as chief operating officer for rival Acclaim Entertainment
How about a sequel? Grand Theft Accountant.
Things are a mess at Take-Two. Is there any reason to believe that the folks who are now installed at the company will treat their shareholders any better, or will this just end badly? The company's scofflaw antics have been outweighed time and time again by knockout titles -- should we expect this to always be the case?
Bill Mann owns none of the companies mentioned in this article.
"He not busy being born is busy dying." -- Bob Dylan
By Rick Aristotle Munarriz (TMF Edible)
Just when it appeared the pixie dust had settled after Disney's
Disney? What took you so long?
When 43% of the company's shares voted in favor of booting CEO Michael Eisner from the board, I would have thought that taking the time to meet with Dottie in Duluth with her round lot of 100 shares and grievances would have been a no-brainer. This is a time to mend fences, not give dissidents time and cause to add glitter to their "Remember The Alamo" banners for next year's meeting.
Given that Disney dabbles in so many areas, mixed results are a given, but the company has a lot of things working in its favor. Last year's box office hits are working their way through home distribution channels, the ad market is picking up, and theme park turnstiles are clicking again. Why not shout it from the rooftops?
Earlier this week, the company announced that it is looking to grow profits by 40% this fiscal year. Surely, that's good news worth spreading.
Granted, the pension funds will be quick to question Disney's long-term performance. These folks manage serious money and won't be hurling softballs. But delaying the meeting will mean even more and harder questions now that Home on the Range and The Alamohave failed to become multiplex magnets.
Here are three questions I would love to see answered:
When Motley Fool Stock Advisor recommendation Pixar
(Nasdaq: PIXR)walked away from the bargaining table, it was clear that the upstart was asking for too much. What made Pixar think Disney was vulnerable enough to pay its asking price?
ABC must play an important role in Disney's recovery. The fall season schedule needs to be packed with can't-miss hits. How goes it on that programming front?
- Disney is finally adding E-ticket attractions to its latest stateside parks. Why did it take Disney so long to realize that these weren't full-day destinations, and what pre-emptive moves will the company make to ensure that such misjudgments don't happen again?
And, while we're at it, Dottie wants to know when the Magic Kingdom Club will come back.
Longtime Fool contributor Rick Munarriz owns shares in Disney and Pixar. As a matter of fact, he just came back from Disney World last night.
Did you go check out The Alamo or Home on the Range? Do you think Disney took too long to set up the meeting with disappointed pension fund managers? How about growth in fiscal 2005? All this and more -- in the Disney discussion board. Only on Fool.com.
By Alyce Lomax (TMF Lomax)
The company reported first-quarter earnings of $204.6 million, or $0.68 per share, as compared to $186.2 million, or $0.61 per share, in the same quarter the year before. Revenues increased 4.7% to $1.17 billion.
Indeed, Harley said it booked the highest first-quarter retail sales in its history. That's no small feat in the first quarter -- the winter months. Not a bad showing considering the rash of Harley buying this time last year, when net income motored up 55% and earnings increased 56%.
Although Harley didn't alter its outlook for the year, the first quarter showed up investor sentiment in January, when it was tempting to worry that Harley's growth was leveling and that demand for its motorcycles might be stalled, especially after the success of the centennial.
Despite concerns of the effect that so much 100th anniversary Harley hoopla could have on demand, with the economy showing improvement and people lightening up on their wallets, it's a good bet that Harley hasn't had its last hurrah. LouAnn Lofton expounded on the strengths of the Harley brand last year, and navigated the difficult third quarter the company had.
It's hard to argue with her point that the huge ranks of baby boomers contain more than their fair share of weekend warriors who covet Harleys. Furthermore, motorcycles appeal to the younger generation as well. I know a decent number of hobbyist bikers, some you may not expect (a couple who each rode their bikes 30 miles one way to a recent baby shower spring to mind). Many of them aspire to the Harleys that they will one day own.
Signs that sales are back on an upward swing right now is a good argument to say hello to Harley. Despite tough comparisons this year, it's a good bet that Harley will keep on motoring, just like it has for years.
Alyce Lomax does not own shares of Harley-Davidson. In the town where she went to college, bikers motor in from far and wide to the annual "blessing of the bikes," which is quite a sight to be seen.
Hidden Gems purist Paul Elliott takes a look inside small-cap investing in Smart Money, Killer Stocks.... And Bill Mann want you to fight for your rights in Duel-Class Shares, Second-Class Investors.... Last but not least, Robert Brokamp has everything you need to know for your next major move in A Mover's Survival Kit.
In other news:
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