OK, we know you just want to move on to the news about Google's pending IPO, but as you evaluate that company's prospects, remember, as Tom Gardner put it on Fool.com this week, a business's success is dependent on how focused it really is: Focus! Focus! Focus! As an investor, you need to be focused, too.
In today's Motley Fool Take:
- Ready, Set, Google!
- Discussion Board of the Day: Google
- Gillette's Sharp Quarter
- Shameless Plug: Motley Fool Hidden Gems
- Time Warner Still in AOHell
- Quote of Note
- Daimler Can Do Better
- More on Fool.com Today
Ready, Set, Google!
By Bob Bobala (TMF Bobala)
Googlemania is finally upon us in earnest.
Today, Google registered with the Securities and Exchange Commission for a $2.7 billion public offering. Investors also got their first look at Google's books. The company took in $961.9 million in revenue in 2003 with profits of $106.5 million. Sales were up 177% over 2002, but it's noteworthy that earnings increased just 6%.
And therein lies part of the problem with IPOs. While more information will be forthcoming, Google -- for all its hype -- doesn't have a track record we can easily follow. And while any successful dot-com is a liberating prospect for investors burned by the crash of so many dot-bombs a couple of years ago, caution is always the best recourse when you're considering IPOs. Take it from Steven Mallas, who on Tuesday confessed a litany of IPOs he'd lost money on, particularly on brand names like Fox Entertainment
Google may very well be a great long-term investment. But that doesn't mean you have to jump in as soon as the bell rings. One thing is very likely: When this Internet darling finally holds its coming-out party, speculators are going to jump in. The stock may rocket. But how high it will go and, more importantly, how long it will stay up there, no one knows. Don't forget, Yahoo!
We're all in search of the next Microsoft
Bob Bobala does not own any of the companies mentioned in this article.
Di scussion Board of the Day: Google
How could we resist? What better place to go for the latest Google gossip than the Google discussion board? The board is buzzing. Go on, toss in your two cents and cash out for a whole lot more. Only on Fool.com.
Gillette's Sharp Quarter
By Alyce Lomax (TMF Lomax)
Gillette's earnings rose 43% to $376 million, or $0.37 per share. Sales rose 13% to $2.24 billion, though that figure included 7 percentage points from the weak dollar, something we've been hearing a lot about lately.
Though Gillette cited a continued difficult market for its Duracell batteries, it said that its worldwide market share in razors has held at 72.8%. Meanwhile, its Mach3 and Venus razor products grew 10% in a global market where razor volume has risen 5%. These products compete with Energizer's Quattro razors, as well as Energizer's answer to the female-oriented Venus product, Intuition. Net sales of Gillette's blades and razors increased 16% to $1.04 billion, including an 8% boost from foreign exchange.
If you were reading yesterday, you recall that despite Energizer's robust quarter, its forward view lacked positive sentiment. Judging by Gillette's market share, it's no surprise Energizer's fixing to increase its marketing spending. Energizer's razors and blades segment increased 68%, which represented sales of $214.9 million.
Investors liked what they heard about Gillette, which also has Oral-B dental care in its stable of products. Today's news included the disclosure that Gillette has a succession plan in place if it loses its CEO -- likely a comfort, considering recent rumors that Gillette's chief executive was being wooed by Coca-Cola
The razor wars remain an ongoing concern as these two companies battle to be the name in close shaves. It hasn't been lost on us that the rivalry between these two is a heated one. Gillette hit a new 52-week high today; investors dug the earnings growth, which also benefited from cost cuts, despite its assertion that growth will moderate in the second half of the year. Meanwhile, it's clear we haven't heard the last of Energizer yet.
Alyce Lomax does not own shares of any of the companies mentioned.
Looking for that perfect small-cap investment newsletter? Not to toot our own horn, but we've got the best one in town. Don't take our word for it though. See for yourself! Take a free trial of Motley Fool Hidden Gems just by clicking here.
Time Warner Still in AOHell
By Steven Mallas
One of the biggest issues that can plague a big media conglomerate -- Disney
A standout segment is filmed entertainment. We all know about the Lord of the Rings: The Return of The King cornucopia. How about the continued syndication success of Seinfeld (that certainly isn't about nothing)? Or DVD releases such as Freddy vs. Jason and The Texas Chainsaw Massacre remake (can't wait for all three villains to get in the ring someday).
Operating income rose 92% for filmed entertainment, but the movie and television business is as cutthroat as any of the cast members on The Apprentice -- Disney, Fox
Of course, you can't talk about Time Warner without mentioning the America Online service. The division continues to plague results, and it's having a hard time competing with the likes of EarthLink
The AOL service operating in Europe saw a gain of 38,000 users. Many fantasies have been floated on Wall Street concerning the ditching of the unit; fair enough, considering that the merger hasn't exactly lived up to the ecstatic hype surrounding the concept's inception. Nevertheless, if true synergies could be exploited within the vertical structure of this huge concern, extraction of value might still be feasible. The recent AOL/Road Runner initiative is an example of such considerations.
With summer bringing a new spell from Harry Potter for the multiplexes and a mindset towards debt reduction and careful business management, the frog may have something to sing about after all. Time Warner justifies a serious appraisal by any investor.
Fool contributor Steven Mallas owns shares of Disney.
"All you need in this life is ignorance and confidence; then success is sure." -- Mark Twain
Daimler Can Do Better
By: W.D. Crotty
A 33% plunge in first-quarter earnings notwithstanding, a Daimler release trumpets a 10% increase in operating profit. By all indications, gains at Chrysler and the Commercial Vehicles division helped mask declines at the Mercedes Car Group and Services divisions.
But, as pleasing as that new car aroma is, Daimler's 4.8% operating margins are less rosy when compared to the better-than-8% margins driven home by Toyota
Going forward, management "expects to achieve an improvement in operating profits for the full year compared with 2003 results." Ah, those operating profits just keep popping up. So, what's dragging on net income? "Lower financial results and higher taxes." Because those are real dollars not making it to the bottom line, net income matters -- and it appears headed for another challenging year.
Yet, one more curve in the road will be how Daimler accounts for its investment in Mitsubishi Motors. On April 22, Daimler decided to stop capital funding for its percentage of Mitsubishi. While management expects the net effect to bolster results, that remains to be seen.
When Daimler closed out fiscal 2003, Chrysler had sold fewer cars, lost money, and took a huge restructuring charge. Fortunately, that drag on earnings has been reversed. Unfortunately, with analysts projecting earnings of $3.52 this year, the stock still trades at a forward P/E of 13 times. That's hardly cheap.
By comparison, GM, Ford, and Honda trade at less than 10 times forward earnings. Toyota goes at 14 times. Given the alternatives, you have to wonder why investors are paying so much for earnings-challenged DaimlerChrysler.
Fool contributor W.D. Crotty does not own stock in any of the companies mentioned.
Flush Five to Survive. No, it's not potty-talk, silly. Seth Jayson's got how cash and no debt make for companies that should do well whether the market is about to rally or tank.... And keep those home fires from burning a hole in your heart and wallet. Selena Maranjian has a couple of pointers for When Your House Burns Down.
In other news:
For a list of all our stories from today, see our Today's Headlines page.