The U.S. stock markets will be closed this Friday during a national day of mourning for former President Ronald Reagan. On that day, Reagan will be eulogized at the National Cathedral in Washington, D.C., in the morning and then buried at sunset in a spot overlooking the Pacific Ocean at his presidential library.
In today's Motley Fool Take:
- Home Depot Eyes China
- Shameless Plug: Money After 40: Building Wealth for a Better Life
- Shareholder Dilution Delusions
- Discussion Board of the Day: Fools Fighting Over Nokia
- McDonald's Stays Warm
- Quote of Note
- More on Fool.com Today
At first, you may not be able to decide if this is just a crazy idea or an idea so crazy that it just might work. Home Depot
In a brief press release, the firm named Bill E. Patterson to head the business development operation. Chairman, President, and CEO Bob Nardelli said, "Based on our success in expanding to international markets, I am confident of the portability of our model to China."
I don't know that I'd be quite so smug. To date, Home Depot's "successful" international operations are found in Canada and Mexico. Consumers in those two countries behave an awful lot like we do here in the U.S. Things are likely to be much different in China.
Both the Chinese citizen and the Chinese landscape lack a lot of the commercial resources that we take for granted on this continent, like the ubiquitous giant car or relatively quick access to the wide arteries that feed strip malls and megastores. And while the Chinese appetite for things like cars and cell phones is pretty well established, you have to wonder if they'll snap up plywood and drywall with the same enthusiasm.
That doesn't mean that the big-box concept is impossible in China. Wal-Mart
Since there are no firm plans for the number of stores, or the format they will take, Home Depot will undoubtedly work hard to figure out exactly what will work for its Chinese operations. I'm betting shoppers on that side of the Pacific will see fewer two-by-fours and lawn tractors and a lot more paint, fixtures, and other finishing products. Either way, this is a development worth watching. If Home Depot can score a hit in China, shareholders will be richly rewarded.
For more Fool coverage of Home Depot:
- Home Depot helps K-Mart
(Nasdaq: KMRT)out of the abyss.
- See how Lowe's
(NYSE: LOW)is keeping the heat on.
- Why you shouldn't doubt Home Depot.
Fool contributor and frequent thumb hammerer Seth Jayson thinks he personally contributed about 10% of Home Depot's revenues last quarter, but he owns no company mentioned. View his Fool profile here.
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Investors generally consider stock buybacks an effective tool for enhancing shareholder value because they reduce outstanding shares, increasing the ownership percentage of existing stockholders. That's great in theory, but as Rich Smith points out in his Symantec
Here's the repurchase breakdown: 234 million shares repurchased for the benefit of stockholders and 237 million shares handed over to employees for a $10.41 loss per share -- a total transfer of $2.5 billion in shareholder wealth to employees. Whatever euphemistic spin management uses to describe this redistribution, it's still a lot of money. Not to mention other issues the company is dealing with related to stock options.
I call attention to Intel only as an example, and don't think for a moment it's the only company that does this. For instance, in 2003 alone, Cisco
Investors shouldn't be deluded by claims of enhancing shareholder value through stock buybacks. The use of shareholder funds to stem stock option dilution is a real cost, one that can't be found in earnings, operating cash flow, or even free cash flow. So the next time one of your companies proclaims its love of shareholders by announcing a buyback, be skeptical, because if deceptively shifting money from owners to employees enhances shareholder value, you have to wonder what destroying it looks like.
Fool contributorChris Mallongets burned up when he sees management waste shareholder dollars. He owns shares of Harley-Davidson through his private investment partnership.
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May's increase may be a bit less exciting than the double-digit same-store increase last month, but it's still nothing to complain about. In total, McDonald's sales jumped 10.2% last month.
In separate news reports, there's word that McDonald's has entered into a Wi-Fi connection deal with SBC. Through the agreement, McDonald's customers who also happen to subscribe to the service will be able to bring their laptops and PDAs into the participating restaurants and hook up to the Internet to surf the Web or check email. To put it into perspective, it's not a huge deal, considering that there are a total of 30,000 McDonald's restaurants across the globe.
The move is reminiscent of other novel ways that McDonald's has been trying to attract and retain customers, though, in the past, we've discussed some of the reasons why McDonald's may not be an optimal placement for Wi-Fi. Using a wireless Internet connection to check on important work certainly seems a bit more conducive to customers of quieter, less messy venues, like Starbucks
Meanwhile, though, McDonald's continues to break out of its high-fat, kid-centric reputation by offering some healthy menu items and different types of entertainment options to attract ever-expanding demographic groups. Many of us are waiting breathlessly to see what the summer -- and the rest of the year -- holds for Mickey D's. Last year's remarkable turnaround certainly will make it tougher for McDonald's to shine this time around, but if May's an indication, healthy customer traffic is still funneling through the Golden Arches.
Alyce Lomax does not own shares of any of the companies mentioned.
Quote of Note
"I hope that when you're my age you'll be able to say, as I have been able to say: We lived in freedom, we lived lives that were a statement, not an apology." -- former President Ronald Reagan
Should we really base an investment's worth on what someone else is willing to pay for it? Mathew Emmert says no, in The Value Proposition.... And Charly Travers shows how you can forecast potential drug sales with just a few simple calculations in Unraveling Biotech Potential.
In other news:
For a list of all our stories from today, see our Today's Headlines page.