Marlon Brando has died. The acclaimed and eccentric actor, who made famous the roles of Don Corleone in The Godfather, Colonel Kurtz in Apocalypse Now, and, of course, Stanley Kowalski in A Streetcar Named Desire, passed away in Los Angeles at the age of 80.
Reportedly, the man who once made $4 million for 10 minutes of acting in 1978's Superman spent the latter years of his life with millions in debt (run up defending his son of a homicide charge), living mostly on residuals from his films, Social Security, and a Screen Actors Guild pension.
In today's Motley Fool Take:
- Apple's iMac Attack
- Shameless Plug: Quarterlife Conference
- The Reluctant Multimillionaire
- Discussion Board of the Day: Airlines
- Patience Is Profitable
- Quote of Note
- More on Fool.com Today
Apple's iMac Attack
Sure, I've argued in the past that Apple's stock has gotten a bit frothy, but I'm willing to cut Cupertino a little slack on this particular stumble. After all, Apple has a tiny, but loyal following in the computer market. To judge by the angry email that flows my way whenever I criticize Jobs and Co., most Mac fans would crawl over a mile of gravel and broken glass in order to get their new machines - or bask in their glorious leader's presence. A few weeks' wait is not going to send them to Microsoft
The real problem is that the iMac line hasn't been selling. Last quarter, I wrote about the fact that Apple's real sales savior wasn't a computer at all, but the iPod. What I didn't have time to mention then was that the iMac sales has been the firm's preeminent laggard, with sales dropping 20% for the first half of the year.
By contrast, high-end PowerMacs saw a 21% rise, PowerBooks surged 32%, and iBooks notched a 26% gain. Can the new-generation iMac turn this around? Perhaps, but since Apple's other products are better sellers, it should be no hardship for the firm to push them for a few weeks until the new iMacs come online.
Shareholders, however, need to keep their eyes on the entire picture. Apple stock has walloped the market over the past few months, but it sports a P/E ratio of 65, the kind of premium normally reserved for fast-growing newcomers or faultless juggernauts, and Apple, despite its recent successes, is neither of those.
Fool contributor Seth Jayson owns shares of Ceradyne, but no other company mentioned.
Shameless Plug: Quarterlife Conference
Are you a quarterlifer in need of financial advice? If so, join Fool co-founder Tom Gardner and senior writer Dayana Yochim for a lively workshop on paying down post-college debt, avoiding financial pitfalls, and investing for the future.
The workshop is part of the Quarterlife Conference, which will meet Aug. 20-22 at the Marriott's Georgetown University Conference Center in Washington, D.C. For details, visit the event website.
The Reluctant Multimillionaire
It seems like only yesterday that DVD rental specialist Netflix
The answer isn't as easy as 3 million, naturally. With the early adopters signed up and the game turning to market penetration, the road doesn't get any easier.
What is apparent is that many of the fears put up by the company's critics proved to be unfounded. There was a time when some feared that retailing juggernauts like Wal-Mart
Video on demand (VOD) was supposed to expose Netflix's mail-delivered model as a snail-paced dinosaur. However, while the cable companies continue to make strides in broadening their selection and incorporating more flexible viewing features, there seems to be plenty of VO but not enough of the D.
The prospects are even dimmer for movie studios like Time Warner
So maybe it's time to let Netflix walk the red carpet proudly amid the flashbulbs of the cynical paparazzi. It's earned the spotlight. The stock proved to be a great trade for Stock Advisor readers last year, with the stock nearly tripling between the buy and sell recommendations. But it better not rest on its laurels.
The company closed out the June quarter with just 3% of its subscribers on free trials. I can't recall it ever being that low. The initial reaction may be that it's a blessing for Netflix to find 2,024,000 merrily paying customers. It clearly vindicates the product and, just as important, given the company's recent price hike, its value. But having just 69,000 more users taking the company up on the free trials isn't that comforting.
Why? Because that's where the future growth will come from. While Netflix was able to grow its user base by 82% over the past year, and it's only logical to expect that pace to slow with every passing year, one is left to color in the degree of that gradual decline.
A year ago, the company had 46,000 users kicking its virtual tires. So 69,000 temporary freeloaders is an improvement, but only to the tune of 50%.
The beacon of hope is that the rest of the country will follow the San Francisco Bay Area's lead. While it is the company's home turf, signing up 7.6% of the area households is impressive. Market penetration everywhere else is at just 1.8%, but climbing.
So keep a cautious eye on that beacon, but don't be surprised if it winds up becoming yet another spotlight worth shining on the company.
For a great read on the current state of Netflix, check out this week's column by Daniel Hong.
Longtime Fool contributor Rick Munarriz singled out the stock in the October 2002 edition of TMF Select, which later evolved intoMotley Fool Hidden Gems. It was a memorable call, given the fact that the stock was bottoming out at a split-adjusted $5.45 a share at the time. Rick has been a Netflix customer -- and shareholder -- since 2002.
Discussion Board of the Day: Airlines
After being denied government loans for the third time, United Airlines will have to make deep cuts to wages, jobs, and benefits to exit bankruptcy. Will the beleaguered airline cut pensions, leaving the government with the tab? If so, would it trigger other ailing airlines to do the same? Share your views with other Fools on our Airlines discussion board.
Patience Is Profitable
Benjamin Graham, father of value investing, once said, "In the short-term the market is a voting machine, in the long-term, a weighing one." This little pearl of wisdom is something every investor should understand before plunging into the market. Let me illustrate.
It was about this time three years ago, in the midst of a bear market that had brought shares of powerful tech companies like EMC
At around $47 per share in 2001, Harley's price-to-earnings ratio was near 36, normally too high for my tastes. However, I was convinced my analysis was sound (I hoped), and I held for more than two years, collecting a tiny dividend, while the stock went nowhere. Graham's wisdom was my only solace as I watched Mr. Market ignore my favorite motorcycle maker. Operationally, the company was doing great. Earnings per share had more than doubled, and free cash was up 53% since my purchase.
Still, it took Mr. Market nearly three years to catch on. The stock, trading at $50 per share in late January 2004, has since risen to $62, up 23% in just five months. My investment went from a 7% total return (including dividends) to 32% while I just watched. Ironically, because of the tremendous earnings growth of the last few years, Harley's stock is cheaper, based on P/E, than when I bought it, despite the run-up.
Incidentally, dividends provide an important source of return when the stock prices are stagnant. Just ask Altria
Implicit in Graham's statement is the idea that over time, the market will value a company for its intrinsic value. If you do a thorough analysis of a company, and trust your intrinsic value estimate, you can wait for Mr. Market to come around, and maybe collect some cash dividends along the way.
Fool contributor Chris Mallon owns shares of Harley-Davidson, Altria, and Anheuser-Busch through his private investment partnership.
Quote of Note
"True individual freedom cannot exist without economic security and independence. People who are hungry and out of a job are the stuff of which dictatorships are made." -- Franklin D. Roosevelt
More on Fool.com Today
David Gardner's Finding Financial Independence reflects on freedom and retirement this Fourth of July.... In The Joy of Cash, Whitney Tilson explains why he's holding a great deal of cash today.... Seth Jayson reconsiders his fondness for the purveyor of scripted smack-downs in Inside the Cage With WWE.
In other news:
- How Much House Can You Buy?
- InfoSpace Goes for the Prize
- Research In Motion Slowing
- Muscle in Wyeth's Pipeline
For a list of all our stories from today, see our Today's Headlines page.