There's nothing like finishing off the week with a good duel. And this week, we have two. First, W.D. Crotty and Seth Jayson square off over XM and Sirius Satellite Radio. Then Rick Munarriz takes on Bill Mann, arguing it's not time to sell the doughnuts -- or Krispy Kreme -- just yet.
Two writers. Two opinions. Duel on!
In today's Motley Fool Take:
- Martha Surges on Perjury
- Shameless Plug: Motley Fool Champion Funds
- Some Yum! Sum
- Discussion Board of the Day: Fools Fighting Fat
- Microsoft Puts on a Happy Face
- Quote of Note
- PCs Get Booted
- More on Fool.com Today
Martha Surges on Perjury
By Bob Bobala (TMF Bobala)
News services reported today that a government witness who testified in the Martha Stewart obstruction of justice trial has been accused of perjury. Martha Stewart Living Omnimedia's
Yes, the stock surged 18% on just the rumor that this news was coming out. It ended the day up about 10%. Ridiculous, you say? Absurd? We couldn't agree more.
The witness is a forensic scientist and ink expert who works for the Secret Service, and happens to also be named Stewart -- Larry F. Stewart, no relation to Martha. But you'd think Mr. Stewart was the smoking gun that not only was going to get Martha off but triple her company's profits over the next year.
Neither will happen.
"We are quite confident that the false testimony will have no impact on the convictions of Martha Stewart and Peter Bacanovic, for both factual and legal reasons," Manhattan U.S. Attorney David Kelley said at a news conference.
Mr. Stewart's testimony related to a worksheet prepared by Bacanovic, who was Martha's broker. But Bacanovic was cleared on the only charge related to the worksheet -- that he added an "@60" notation, presumably to support Martha's assertion that she had an order in to sell her ImClone
It doesn't matter. The story doesn't change. Martha was convicted on all charges, including obstruction of justice and making false statements. She'll be sentenced on June 17 and likely serve a year in jail.
But even if that didn't come to fruition, even if through some Hail-Mary pass this allowed for a successful appeal, does it warrant an 18% jump in MSO's stock price? Unless you are a day trader, you likely -- and rightly -- stayed away from this one. Nothing fundamentally changed in the company today. There isn't any greater visibility on future earnings or revenue than there was yesterday.
The manic speculation does, however, raise one important consideration for Martha the company. Can it thrive without its chief domestic goddess? The market's reaction today apparently indicates it thinks she needs to be out at the forefront for the company to succeed. That's a debatable point. But it's certainly one investors should seriously consider anytime a prospective investment is so dominated by the face of its executives. Would Microsoft
Nonetheless, David Gardner, who has been holding Martha Stewart Living Omnimedia in Motley Fool Stock Advisor since Nov. 2002, thinks the company has gotten short shrift. So far, he's garnered nice returns while being patient and letting Martha's travails run its course. That's the type of behavior we all could learn from in our own investing.
Bob Bobala doesn't own any of the companies mentioned in this article, though he could use some good floral arrangements.
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Some Yum! Sum
By Rick Aristotle Munarriz (TMF Edible)
We launched our Motley Fool Income Investor newsletter last year on the assumption that investors are looking to pad their capital appreciation with a steady flow of dividends. From assuring stable ownership to dissuading share dilution, returning earnings regularly to loyal investors has its advantages. Kinder tax treatment and companies like Microsoft
Shares of Yum! traded lower on the news, supposedly because investors were hoping for a meatier distribution, but that's a narrow-minded perspective. I mean, if you're talking cash-rich companies like Microsoft, Cisco
In initiating the payout, management also earmarked $300 million to repurchase shares and another $350 million to pay down its borrowed burden. Do investors really want that money going to them instead? Sure, you tack on that $650 million to the roughly $120 million the company will pay out over the next year in dividends, and the stock would yield better than 7%. That would certainly draw attention, but it would ultimately make for a riskier investment.
To its credit, Yum! has been paying down debt and buying back stock pretty much since PepsiCo
Longtime Fool contributor Rick Munarriz thinks that Taco Bell uses too many adjectives and not enough Chihuahuas in its advertising campaigns. He does not own shares in any companies mentioned in this story.
Are you addicted to the drive-through? Does the rising cost of gas mean that you should limit those late night Taco Bell treks? What separates a fad diet from one that works? All this and more -- in the Fools Fighting Fat discussion board. Only on Fool.com.
By Phil Wohl
Seeing Scott McNealy of Sun Microsystems
When I turned my computer on this morning I did a double take when I saw that Microsoft is at it again. This time, the target of a long-overdue, former "Evil Empire" hug is another archrival: Oracle
In an effort to "boost developer productivity," Microsoft and Oracle will partner to integrate Oracle Database with Microsoft Visual Studio .NET 2003. The move is expected to smooth the flow between Oracle-based applications and the Microsoft Windows platform.
With lawsuit after lawsuit staring Microsoft in the face, it has decided to put on a smile and get along with its sworn enemies instead of being drained with court costs and potentially material settlements. I might even start to believe that the Red Sox will play the Cubs in the World Series this year if Microsoft and Big Blue -- IBM
Bill Gates, Microsoft's chairman and brainchild, recently foretold of a "quiet revolution in digital communication and collaboration" at a company-sponsored CEO summit. To tell you the truth, Microsoft is as quiet as about 1,000 of those leaf-and-grass blowers that landscapers use to clean up.
It seems that Microsoft is partnering with everybody. It also just started selling the most recent version of its Office program for Apple Computer's
Microsoft has been taking the necessary steps to maximize productivity and earnings, including saving about $80 million on recent employee benefit cuts. By partnering with former bitter rivals, Microsoft is taking the steam out of the monopoly theories and positioning itself quite well to be a prominent tech stock for years to come.
Fool contributor Phil Wohl spent more than 12 years on Wall Street and now concentrates his writing on more fictional characters. He has no stake in any firm mentioned above.
"The superior man is modest in his speech, but exceeds in his actions." -- Confucius
PCs Get Booted
By Tim Beyers
Around the globe, consumers are ditching their personal computers (PCs). And, believe it or not, that's good news.
Market researcher Gartner Group
All told, Gartner expects nearly 100 million PCs to be replaced this year, with global computer shipments to top 186 million, a 13% increase over 2003. The replacement cycle also appears to be accelerating, with 120 million units due to be unplugged in 2005 to make room for new machines. The roughly 220 million replacements this year and next would outpace the total swapped out in 1998 and 1999, during the run-up to Y2K.
Like the first quarter, spring and early summer is expected to be especially hot for PC retailers, according to Gartner. Second-quarter shipments are expected to rise more than 14% from the same period last year. Of course, not every retailer will be affected equally. For example, Dell has been increasing its market share lead over HP, while Apple Computer
So, just how good is this news? Good, but let's not get giddy. It's highly unlikely that a renewed appetite for PCs indicates a broader long-term recovery that will bring the computer industry back to its go-go, pre-recession levels. Remember: The PC is nearly 30 years old. That's ancient in tech terms.
It seems more likely to me that Gartner's data confirms what others have long hypothesized: That hawking PCs is no longer a growth business, but a maturing, cyclical industry that more closely resembles auto manufacturing than other tech businesses.
Fool contributor Tim Beyers knows people who name their PCs. Hey, he loves his Mac, too, but has enough trouble keeping his kids' names straight. Tim owns no interest in any of the companies mentioned, and you can view his Fool profile here.
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