A 20-year-old Kansas man downloaded the 100 millionth song from Apple Computer's(Nasdaq: AAPL) iTunes Music Store yesterday. By doing so, he won a 17-inch PowerBook, a 40GB iPod, and a gift certificate for 10,000 iTunes songs. It was the least Apple could do. iTune downloads go for $0.99 apiece.

In today's Motley Fool Take:

Marvel Playing the Superhero?


Seth Jayson

With Marvel Enterprises(NYSE: MVL) stock taking a beating over the past few weeks, despite its successful joint project with Sony(NYSE: SNE) in Spider-Man2, plenty of suffering shareholders have been plastering Internet message boards with hopes for some kind of reaction from management.

Many will believe they got one this morning when the licensing powerhouse announced a $100 million share buyback program. Over an 18-month period, Marvel may repurchase shares, which, at today's prices, would account for a bit more than 5% of the company. Longs are cheering, shorts are trying to spin the news as some sign of desperation, but Foolish investors would do well to ignore most of the tumult and take the (real) long view.

What the program really means is that Marvel's cash-churning business model has matured to the point where decisions have to be made. As other Fools have noted, it's good to be Marvelous these days. Money keeps rolling in through licensing characters to the likes of Vivendi(NYSE: V), General Mills(NYSE: GIS), and other Motley Fool Stock Advisor picks Activision(Nasdaq: ATVI) and Electronic Arts(Nasdaq: ERTS). With long-term debt erased a few weeks back and an estimated $200 million in cash to be available by year-end, management has wisely decided to explore uses for that growing stash.

What are the options? Acquisitions? It's tough to imagine a synergistic property out there that can match Marvel's low risk and high profit margins. (Anyway, if one comes along, the share repurchase program can go on hold.) A dividend? Possible, but once that money's paid out, it's gone forever, whereas repurchased stock rewards existing shareholders with higher earnings, and it can always be used for other purposes. Don't get me wrong. I think a dividend is a great idea (and likely someday), but it may be a bit too soon for that.

Here's my idea: Until something better comes along, how about buying a stake in a solid, debt-free entertainment company with growing free cash flow and a 34% return on equity? How about buying it when it looks underappreciated by the Street? Sound good? That's exactly what Marvel decided to do today.

Want more Marvel?:

Fool contributor Seth Jayson likes properly timed stock buybacks as much as properly timed cold beer. He owns shares of Marvel Enterprises but has no position in any other companies mentioned. View his Fool profile here.

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Troubles in Telecom


Alyce Lomax (TMF Lomax)

Today it came to light that Leucadia National(NYSE: LUK), a diversified holding company that operates along the same lines as Warren Buffett's famed Berkshire Hathaway(NYSE: BRK.A), plans to snap up half the shares -- a controlling interest -- of troubled telecom provider MCI. (I know nobody needs any reminder, but MCI, formerly WorldCom, recently emerged from bankruptcy after having had the dubious distinction of being the biggest-ever bankruptcy.)

Leucadia's MO is to swoop in and snap up companies that are out of favor, or even in serious trouble, and infuse them with enough cash to survive for a hoped-for turnaround. Last fall, Leucadia bought another struggling telecom company, WilTel Communications; its other business lines include health-care services, banking and lending, real estate activities, and insurance.

Meanwhile, consider the situation recently facing another telecom company, Citizens Communications(NYSE: CZN). Its specialty is to provide telecom services to customers in rural areas that aren't covered by some of the big telecom heavyweights like AT&T(NYSE: T), Verizon(NYSE: VZ), Sprint(NYSE: FON), and SBC Communications(NYSE: SBC). However, it's not a line of business that's allowing it to ramp up much growth at all; a look at the company's cash flow statement shows a recent scaling back of capital expenditures as it considered its strategy.

Citizens tried to put itself on the sales block but didn't find any takers. Instead of driving itself down into more money-losing ventures like increased acquisitions, it has decided to use its free cash flow to return cash to investors instead. It plans a $2 special dividend and will institute an annual dividend of $1 per share.

Both of these events equal a much better outlook for MCI and Citizens shareholders than often comes to pass in situations like these. Both stocks, of course, gained in this morning's trading.

Each of these events underscore the intrinsic troubles in telecom. My Foolish colleague Bill Mann recently wrote about AT&T's decision to stop marketing new local and long-distance services in some states. Given the heated competition in the telecom arena, he pointed to the salient fact that "Too many companies are competing for too few telecommunications dollars." In addition to competition, there's also the deteriorating influence of new technologies that have bred brand-new rivals, like Voice over Internet Protocol (VoIP).

Investors should beware the temptation to try to call a "bottom" for telecom stocks right now. It's obvious the industry is still troubled. During the long and painful process as telecom companies struggle to survive or thrive, some shareholders may not be so lucky.

Are you interested in reading more about the difficulties in the telecom industry? Take a look at the following articles:

Alyce Lomax does not own shares of any of the companies mentioned.

Discussion Board of the Day: Disney

After three accidents on the same ride at Disneyland, California regulators have moved in to investigate the theme park's unfortunate streak of bad luck. How will this publicity impact Disneyland's ticket sales? Will tourists flock to other popular parks instead this summer? Share your views on our Disney discussion board.

Reading the Tech Bellwether


Ben McClure

Intel's(Nasdaq: INTC) Q2 earnings, out Tuesday after the bell, will tell investors a lot about tech sector prospects. Following a week that saw more than one tech earnings warning, many investors are starting to worry that tech spending, after two strong quarters, is winding down. That worry is pushing down tech stock prices. Intel's Q2 report will either ease or reinforce tech investors' anxieties.

What should Fools be looking for tomorrow from Intel's report? Start with sales growth. If Intel beats the $8.1 billion mark, that could be a sign that businesses plan upgrades and back-to-school PC sales will be healthy. Intel chips are used to power PCs using Microsoft(Nasdaq: MSFT) software, so a sales slowdown at the chip level could foreshadow weakness for the world's biggest software maker.

The second quarter is typically a weak one for technology companies, so higher Q3 guidance will be a welcome sign. Lower guidance could add support to today's Merrill Lynch downgrade on Intel and the chip sector. Merrill slashed its 2005 chip industry sales growth estimates to 6% from 16%.

Keep an eye on Intel's inventory levels, too. Inventory gains could mean that Intel is upbeat about tech sector growth and demand for its new line of processors. On the other hand, recall when the technology bubble burst: a lot of companies aggressively built up inventories and when demand sank got stuck holding unwanted goods. A run-up in Q2 inventories could mean a repeat.

Bad news from Intel could dent Microsoft shares but may also hurt chip makers such as Advanced Micro Devices(Nasdaq: AMD), Texas Instruments(NYSE: TXN), and Novellus Systems(Nasdaq: NVLS); computer makers Dell(Nasdaq: DELL) and Hewlett-Packard(NYSE: HPQ); plus other software makers such as Oracle(Nasdaq: ORCL).

Fool contributorBen McClure hails from the Great White North. Ben owns shares in Dell.

Quote of Note

"Write a wise saying, and your name will live forever." -- Anonymous

More on Fool.com Today

Mathew Emmert warns individual investors against letting emotions rule their decisions in Investors Time Their Beatings.... W.D. Crotty's Bananas: The Next Starbucks shows how Chiquita is trying to innovate and drive profits higher.... In The Perfect Earnings Report, Bill Mann explains why most companies view their earnings reports as another great chance to spin their investors.

In other news:

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