The Democratic Party rolls out the release of its biggest product tonight in Boston. Don't forget to tune in to John Kerry's speech at about 10:00 p.m. to cement your opposition to his presidential candidacy, reinforce your commitment to it, or to help you decide if you're on the fence. President Bush will have his big moment next month, and you can weigh both options. The most important thing is to get engaged. As we saw in the last presidential election, every vote really does count.
In today's Motley Fool Take:
- Krispy Kreme: Full of Holes?
- Discussion Board of the Day: Krispy Kreme
- AMD's PC Jab
- Warren Buffett's Wife Dies of Stroke
- RealNetworks' Sour Apple Note
- Quote of Note
- Shameless Plug: TMF Money Advisor
- Nortel on Hold
- More on Fool.com Today
Krispy Kreme: Full of Holes?
Among other negative thoughts, in some circles, the Krispy Kreme controversy that has been building over recent months has stirred up some legitimate concern about management's honesty -- and trustworthy management is one thing Fools insist on when choosing investments.
For example, in May TheWall Street Journal uncovered a previously undisclosed tidbit that shareholders definitely would have liked to have known: specifically, that one of the sellers in one of the franchise repurchases was CEO Scott Livengood's ex-wife, whose stake was valued at $1.5 million.
Ouch. That doesn't exactly sound like livin' good, if you mean compared with naughty. And surely they knew better than that. These days -- to the benefit of shareholders everywhere -- corporate governance and full disclosure are in, and everybody's on the lookout to end conflict-of-interest scenarios where insiders prosper behind the scenes. While shareholders have certainly been gazing at Krispy Kreme with an uncertain eye for months, information like that means it's getting hard to maintain a sweet disposition toward the stock.
Here at the Fool, following the initial earnings warning fuss, my colleague Bill Mann penned a commentary where he kept the urge to say "I told you so" in check, though he did raise questions about whether the whole fuss was really over a temporary craze such as low-carb dieting or other aspects more damaging. (Meanwhile, recent news of a so-sweet line of frozen drinks might have backed up some conspiracy theories that the "me-too" carbohydrate complaint contained some smoke-and-mirrors tactics, especially considering that for some time, Krispy Kreme seemed insulated against the trend.) Today's news from the SEC implies there is something rotten in Winston-Salem.
For now, it's no wonder that Krispy Kreme might leave a bad taste. Though some might argue that now's the time to buy, the question is increasingly raised that the "Hot" light might really translate into "too hot to handle."
Fools recently dueled over the outlook for Krispy Kreme, one of the few blotches in the portfolio of Motley Fool Stock Advisor picks. Check out the arguments, pro and con:
Alyce Lomax does not own shares of any of the companies mentioned.
Discussion Board of the Day: Krispy Kreme
What do you think of today's news of the SEC probe? Do you trust Krispy Kreme's management now? Talk it over with other Fools on the Krispy Kreme discussion board.
AMD's PC Jab
AMD landed a solid punch in its long-term bout with Intel
Of course, whether this latest shot just stings or delivers real hurt is unclear. I'm guessing Intel will have no trouble making the standing eight count. Still, it's as though AMD has rewritten the role of Brando's Terry Malloy, finally becoming a contender. After years of getting mercilessly beaten up in the ring, the little guy's constant jabs have finally given Intel the business equivalent of a swollen eye. (Heck, the beating has been so punishing there's even speculation that Dell
More than anything, the jab should force the top chipmaker to cut prices to protect its 80% share of the PC market. Of course, Intel easily has the resources to do so, but you can't fault AMD for taking a swing. For one, the PC market is growing rapidly, and market share gains earned now are likely to carry over in a down period. Second, the low end of the PC market competes mostly on price, so Intel's brand is unlikely to provide much cover here. Finally, cheap models account for roughly 20% of desktop and laptop sales, and a good number of those will be sold during the upcoming Christmas shopping season.
So, yeah, AMD is taking its shot at the title seriously. But the firm has displayed a glass chin in the past, and there's no reason to think Intel can't come back with a haymaker of its own.
For more Fool coverage of AMD's brawl with Intel:
- AMD's earnings prove it's in fighting shape.
- Intel had a big quarter but missed its own estimates and then couldn't get chips out the door in time.
Fool contributor Tim Beyers was never a contender, unless you're talking about the 1980s arcade game Punch Out. He threw a wicked virtual right hook. Tim owns no stake in any of the companies mentioned, and you can view his Fool profile here.
Warren Buffett's Wife Dies of Stroke
Susan T. Buffett, the wife of Berkshire Hathaway
RealNetworks' Sour Apple Note
Sometimes people just can't take a hint. Software company RealNetworks
Both RealNetworks CEO Rob Glazer and Apple CEO Steve Jobs have admitted that selling songs for below a dollar a pop yields little profit at best. Each company has its own model of generating profits from downloadable music. For Apple, this entails selling the highly lucrative iPods. RealNetworks wants to make money by selling subscriptions to its Rhapsody service, where subscribers pay a flat $9.95 fee a month for unlimited streaming and an additional $0.79 per song purchased.
Thus Harmony is just a slap in the face for Apple. Current iTunes Music Store (iTMS) customers will have no strong incentive to switch stores. Rhapsody will also face an uphill battle in trying to win over new iPod users, especially when access to the iTMS comes conveniently packaged with the iPod. For all its controversy, Harmony does not hit Apple where it hurts -- it does not enable iPod clones to play iTMS songs.
However, Apple will still be upset by this move. If it had intended for the iPod and iTMS to be unlocked, it would have done so earlier, on its own terms. RealNetworks has forced Apple's hand early, and Apple will probably seek to stop RealNetworks by either legal or technological means. The latter is easily implemented. Apple can simply issue a firmware upgrade that doesn't allow Harmony to be downloaded when a user fires up iTunes, and Harmony would become merely background noise.
Ultimately, RealNetworks' audacious move may help to open up the digital music industry, which Apple dominates. However, tangible benefits to RealNetworks are still uncertain pending Apple's response, especially if Apple were to seek legal recourse. RealNetworks is already embroiled in an antitrust suit filed against Microsoft
Fool contributor Tim Goh still listens to music on his trusty Discman. He does not own any stake in the companies mentioned.
Quote of Note
"Force without wisdom falls of its own weight." -- Horace, Roman poet and satirist
Shameless Plug: TMF Money Advisor
Every once in a while, we all need a little help from our friends. That gets to heart of what it is to be Foolish, and is a big reason why The Motley Fool exists in the first place. But sometimes a community doesn't quite do it, and we need a little one-on-one. That's where TMF Money Advisor comes in. Take an advisor for a spin for free. It can't hurt, and it sure can help.
Nortel on Hold
News brief: I am not anti-Canadian. That was my favorite of the retorts I received after my July 7 article on Nortel Networks
And the third rule of two is: No Newfie jokes.
To recap: I noted that Nortel was in the midst of having to restate several years' worth of financial statements, and earlier this year the company had fired the chief executive who was supposed to clean the place up "for cause." The company has brought some new, hard-nosed folks in to strip out the old. But fiddling with the numbers was so ingrained at Nortel that until the company completes its restatement I just don't think that any outside investor can be sure that there isn't more bad news hiding somewhere.
In other words, guardese de las cucarachas. Where there is one problem, plenty more may be lurking in the dark. This isn't anti-Nortel. It's caution, the willingness to let a few high-risk points pass you by until you're more sure the company has no more bad news on the way. Accounting problems are sort of like cigarette smoke -- they linger and can stink the joint up for years after you quit smoking. So when a company drops clue after clue that it doesn't know what things as basic as profit margins are going to look like after it finishes its restatements, this might be a good thing to take into account.
What happened in the interim three weeks is pretty simple -- Nortel's management came out and stated that they were not achieving its stated profit margin goal of the mid-40% range. The result has been brutal, with the stock having dropped more than 23%. That's just the way it is. Nortel's management is still cleaning up, they're dealing with creditors and a lousy -- though if Verizon's
There's plenty of time to jump back into Nortel. Let 'em tidy up first.
Bill Mann owns none of the companies mentioned in this article.
More on Fool.com Today
In Retire Your Way -- Or Don't, Robert Brokamp lists some factors that dictate when you decide to retire.... Bill Nygren names the best and the brightest value investors in Nygren's Master List.... After tackling the fatty five, Tim Beyers looks at another low-carb outcast in Waiting for Weight Watchers.... Selena Maranjian's Is This Bud for You? highlights a stock that tastes great and is filling for your portfolio.
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For a list of all our stories from today, see our Today's Headlines page.