Microsoft's Portable Ploy

Not long after he embarked on the 122-mile sixth stage of the Tour de France on Friday, Lance Armstrong fell off his bike. Emblematic of his courage, his perseverance, and his tenacity, the 32-year-old Texan hopped back aboard and rode grittily on from Bonneval to Angers. Now, you might be expecting an analogy, perhaps to a stock that bounced back strong or a positive outlook from amid the lackluster tech industry reports. But then that would be obvious. Have a Foolish weekend.

In today's Motley Fool Take:

Microsoft's Portable Ploy
Shameless Plug: Quarterlife Conference
Rigases Off to Jail
Discussion Board of the Day: China Connection
GE's Optimistic
Quote of Note
Save Like It's 2004
More on Fool.com Today

Alyce Lomax (TMF Lomax)

Portable media is about to go to the next level, with Amazon.com(Nasdaq: AMZN) today announcing that it's taking pre-orders for Microsoft's(Nasdaq: MSFT) Portable Media Centers. These gadgets, which will begin to be available as soon as August, allow users to have music, movies, digital photos, and more rendered portable and on the move.

Did Apple(Nasdaq: AAPL) miss a key opportunity by limiting its iPod to tunes?

Anyone who's been following the digital music player scene knows that one of the major speculations has been whether Apple would expand its iPod's functionality to download and show movies. Steve Jobs has been quoted as nixing the idea, theorizing that people don't want to watch movies on tiny screens.

To my way of thinking, Jobs may be onto something. Digital movie downloads to personal computers haven't even yet hit the mainstream, though some companies, such as Netflix(Nasdaq: NFLX) and RealNetworks(Nasdaq: RNWK) are gearing up to try. (For more on the state of movie downloads, check out Seth Jayson's Take on digital movie piracy today.) Motley Fool Stock Advisor pick TiVo(Nasdaq: TIVO) may very well have the best idea, with its Home Center appealing to mainstream tastes. That is, to allow its users to easily bridge PC to TiVo to the family room TV. That last concept may be the real near-term future of "media centers."

Music, of course, lends itself well to the portable concept, as it's always been a media that went well with multitasking, such as jogging, working, or reading. Portable movies or television seem a harder sell, since that feature doesn't accommodate many activities that require portability, with the exception of perhaps long subway train commutes or airplane flights.

At any rate, Microsoft's Portable Media Centers, which will be manufactured by Creative Labs, iRiver, and Samsung, will have what could be called a steep price tag of $500 (though, as has often been pointed out, Apple's iPod sported what many mocked as a too-hefty price, and it still became a sensation).

These are key times for digital media, and Apple's got more than its fair share of competition, judging by recent product launches by hungry rivals. In the case of all-inclusive portable digital media, though, Microsoft may be jumping ahead of the times too soon.

Alyce Lomax does not own shares of any companies mentioned.

Shameless Plug: Quarterlife Conference

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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.

Rigases Off to Jail

Bill Mann (TMF Otter)

The Discovery Channel has its "Shark Week." I hereby (after the fact) declare this "Jail n' Bail" week at The Motley Fool.

Adding to the parade of hits are the fraud and conspiracy convictions yesterday of former Adelphia (Pink Sheets: ADELQ.PK) CEO John Rigas and his son, former CFO Timothy Rigas. The jury left unresolved the case against another son, Michael Rigas, former operations officer for the company, while acquitting an assistant treasurer, Michael Mulcahey, on 23 counts of fraud and conspiracy. The jury is expected to try again today to resolve its impasse on Michael Rigas.

The verdicts in a Manhattan federal court come on the same day as the indictment in Houston of former Enron Chairman Ken Lay. It also comes as Russian soon-to-be-former-oligarch Mikhail Khodorkovsky cools his heels in a Moscow jail as the company he controls, YUKOS (Pink Sheets: YUKOY), endures raids by Russian authorities and spirals toward bankruptcy. Another two weeks of this, and maybe we'll see some action on Tyco(NYSE: TYC), Cendant(NYSE: CD), and others.

A man can dream, can't he?

The Adelphia story, much like the tale of woe that brought Italian food giant Parmalat to ruin, is a cautionary story of what can happen when a family-run business turns into a publicly traded company. Sometimes it becomes extraordinarily difficult for the family to let things go. Things like the company checkbook. In spite of the reporting and corporate governance requirements, the Rigas family had for all intents about as much restriction on dipping into the company coffers as the House of Saud does with Saudi oil revenues. Company money, our money, what's the difference?

Rigas the elder founded Adelphia more than 50 years ago, growing it into one of the largest providers of cable, broadband, and other communications services. But the Rigas family had a series of complicated financial relationships with Adelphia, which served to almost perfectly intermingle the finances of the family and company. All that remained was to ensure that the Adelphia books didn't show that the Rigas family used the company as their own personal checking account.

In the trial, prosecutors regaled the jury with endless stacks of evidence, showing such things as the Rigases using $1.6 billion in company money to buy securities for their personal accounts and the 22 cars that John and Timothy drove, paid for out of the company till. John Rigas took $1 million in cash per month from the company, with nary a promise to repay it and without having to pay interest.

Simply unbelievable. What's left of Adelphia is soon to face the auction block, perhaps to be sold off in parts. Microsoft(Nasdaq: MSFT) co-founder Paul Allen, controlling shareholder of Adelphia rival Charter Communications(Nasdaq: CHTR), has said that Charter is interested in bidding, as are Comcast(Nasdaq: CMCSA)(Nasdaq: CMCSK) and Time Warner(NYSE: TWX). This in spite of the nearly $1 trillion in legal claims against Adelphia that are yet to be resolved, and in spite of the fact that, even in bankruptcy protection, the company's operating margins and cash flows are among the most anemic in the industry.

If the company cannot be auctioned, it will likely try to emerge from bankruptcy with its major creditors owning the vast majority of the reorganized company. Holders of Adelphia's common stock are nearly guaranteed to get nothing in the reorganization or the auction -- they're at the bottom of the pile.

There isn't some hard-and-fast rule here. After all, there are some dynamite family-controlled companies, Berkshire Hathaway(NYSE: BRK.A)(NYSE: BRK.B) and Comcast among them. But if you are going to invest in a company that has a dominant, controlling shareholder who runs the company, it becomes even more important that you are dead-on sure that you can trust both the business judgment and ethics of that shareholder. It's not easy, but ask the former Adelphia shareholders what can happen if you get it wrong.

Bill Mann owns shares of Berkshire Hathaway. Shareholder-friendly management is one of the key elements of analysis that his colleague Mathew Emmert looks for in companies he recommends in Motley Fool Income Investor. Take a free trial today!

Discussion Board of the Day: China Connection

Investing in China is clearly not for the timid. The few pure plays have been volatile performers. Are you ready to invest in China? What do you need to know? What are the economic and political risks? All this and more in the China Connection discussion board.

GE's Optimistic

Mark Mahorney

It's not easy to write a short article about the behemoth bellwether conglomerate that is General Electric(NYSE: GE). The company of companies is a major player in every sector it does business in. And what many analysts and investors wanted to know from the company today was how its corporate customers were spending, which is considered an important economic indicator.

To study GE's financials is an exercise in macroeconomics, literally. Good news from the company for its second-quarter earnings report released this morning was a catalyst for the major indexes after a lackluster week filled with warnings from tech land. Letdowns came from Siebel Systems(Nasdaq: SEBL), PeopleSoft(Nasdaq: PSFT), VeritasSoftware(Nasdaq: VRTS), ConexantSystems(Nasdaq: CNXT), Emulex(NYSE: ELX), and a raft of lesser names. But another way to look at this is that the warnings didn't include the less volatile mega-market-cap companies on par with GE.

The synopsis is that the company's numbers came in better than expected, and Chairman Jeff Immelt spoke positively about the economy, saying, "This is the best economy we've seen in years." Orders grew 13%. GE reported net earnings of $3.9 billion, or $0.38 per share, which were flat compared with a year earlier but beat consensus estimates by a penny. Revenue rose 11% to $37.04 billion, beating consensus estimates for $35.99 billion.

GE's so optimistic about the future, in fact, that it narrowed its guidance for the year to $1.55 to $1.60 a share. And the company said it expects 2005 to be back on track with its historic norm of better than 10% revenue growth per year.

I wouldn't worry too much about the warnings this week. If GE says the future is bright, it's smart to listen.

Fool contributor Mark Mahorney doesn't own shares of any companies mentioned.

Quote of Note

"Take calculated risks. That is quite different from being rash." -- George S. Patton

Save Like It's 2004

Dayana Yochim (TMF School)

Twelve thousand dollars is so last year. If that's all you're planning to put in your 401(k), 403(b), or 457 account, you might want to check your calendar.

Right after Father Time rang in 2004, Uncle Sam celebrated by increasing contribution limits on retirement savings accounts. In case you were distracted by the fireworks and flowing bubbly, here are this year's limits:

401(k), 403(b), 457 accounts, and SARSEPs: The annual contribution limit in 2004 is $13,000. For those 50 and older, you can make a catch-up contribution of $3,000.
SIMPLE plans: The contribution limit is $9,000, and the catch-up contribution (again, for the half-centenarians and beyond) is a cushy $1,500.
Traditional and Roth IRAs: For 2004, the limit will stay at $3,000, and the catch-up contribution limit will remain $500.

Is your paycheck already stretched too thin to take out more? Consider the new realities of retirement. Motley Fool Rule Your Retirement pro Robert Brokamp fears that too many of us are operating under old assumptions about retirement. As he told David and Tom Gardner in a recent interview, those who base their savings strategies on how their parents retired are in for a few rude surprises. Sure, we may be living longer than any previous generation, but few companies today offer pensions, and systems such as Social Security just were not built to sustain people for 30 years.

Upping your contributions now will not only secure a sweeter future but also reward you with tax savings today.

If you have money taken out of your paycheck and deposited in a retirement account, and that amount is based on 2003 limits, contact your human resources department and have the amount changed. Take a moment right now and open an IRA (we show you how). If you're behind on your savings, "catch-up contributions" can go a long way to building a more beautiful retirement. If you're 50 and up, go ahead and invest like your age.

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James Early asks if AutoZone and Advance can rev up your engine in The Auto Parts Wars.... Jeff Hwang says the legalization of slots in Pennsylvania is far more fascinating than it would appear on the surface in The Magnitude of Pennsylvania's Slots.... In The China Syndrome, Rick Munarriz brushes up on the potential rewards of investing in China.... Look for solid performers that lack a natural buying constituency, says Zeke Ashton in Beautiful, Not Boring.... Tim Beyers asks Oprah to be his broker in Oprah, Investment Guru.

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For a list of all our stories from today, see our Today's Headlines page.