"Super Freak" Rick James died last Friday of what authorities deemed "natural causes" -- after 56 years of highly unnatural living. An autopsy Saturday failed to determine the cause of death, though it should be noted that the singer was a diabetic, had a pacemaker, suffered a stroke in 1998, and had a history of cocaine addiction. Rest in peace, Mr. James.

In today's Motley Fool Take:

TiVo Turns It Up


Alyce Lomax

(TMF Lomax)

TiVo (Nasdaq: TIVO) loyalists, rejoice. The cultish digital video recorder (DVR) provider has begun the next phase in its attempts to prove naysayers wrong -- it's delivering price cuts, reducing the cost of some of its units to $99 after rebates. It also started a new advertising campaign and will be available in a wider range of consumer shopping hot spots.

This is all as promised back in March, when the scrappy Motley Fool Stock Advisor pick said it planned $50 million in marketing expenditures to woo more subscribers. In addition to the rebates, which will reduce the 40-hour model to a mere $99, TiVo boxes will soon be available in Costco(Nasdaq: COST), Wal-Mart's(NYSE: WMT) Sam's Club, and CompUSA, in addition to current venues such as Best Buy(NYSE: BBY) and Circuit City(NYSE: CC).

What timing. The rebates and ads will increase TiVo awareness with people who might be considering DVR technology, and of course, such a cheap price could indeed spark more widespread adoption of the TiVo-branded device.

The timing's also good because the price cuts make it more attractive for current TiVo fanatics to load up on more boxes. Last week's FCC decision will allow TiVo users to transfer entertainment media from box to box, a move that many have pointed out will work out well for families or people with vacation homes. (On a recent trip to my family's mountain retreat, I was ready to chuck some remotes when I remembered I couldn't pause the live movie I was watching there.)

TiVo watchers -- and shareholders -- know that somebody opines on the death of TiVo on what seems like a weekly basis. Its recent loss of DirecTV(NYSE: DTV) as an investor, as well as the fact that DirecTV will soon be offering TiVo clones to its subscribers, has been a source of discomfort, given DirecTV's past as a TiVo booster.

And of course, too many price cuts and marketing dollars to fuel subscriber increases takes a bite out of TiVo's sales and profitability.

So an investment in TiVo remains risky, considering these competitive concerns and its failure to secure deals with the big cable companies. However, I still think TiVo has a few tricks left up its sleeve that differentiate it from the encroaching pack of imitators.

Though its rivals have indeed whipped up "me-too" technology, over recent months it's become clear that it's about more than recording and pausing live TV. TiVo's major gift is its forward thinking in envisioning the future of television entertainment -- interactivity and viewer control -- and delivering product upgrades based on that vision.

Alyce Lomax does not own shares of any of the companies mentioned, though she does rely on her TiVo for her weekend TV entertainment.

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Disney's New Mouse


Rick Aristotle Munarriz (TMF Edible)

If Disney(NYSE: DIS) has its way, your next personal computer purchase will find its mouse bearing a likeness to Disney's own Mickey Mouse. Yes, next month Disney will start shipping out kid-friendly PCs, complete with mouse-eared peripherals and bundled with a ton of branded software.

At $950 the price definitely seems steep for a system that young hands may eventually outgrow. However, Disney is offering a $200 gift card good at DisneyStore.com if you preorder before the product's early September launch. If you're enough of a Disneyphile to want this deep-blue computing machine around, you may very well have been spending those $200 at the company's online store over the holidays anyway. So, let's price it at $750 -- with another $17.95 shipping. That's definitely reasonable given the system's specs, but does any of this compute?

Disney has an uphill challenge here. Mattel(NYSE: MAT) had licensed PCs themed to its Barbie and Hot Wheels properties bomb -- and at lower selling prices. Disney is also risking rubbing some of its partners the wrong way. Hewlett-Packard(NYSE: HPQ) is the sponsor of Disney's popular Mission Space attraction, yet the system's printer is a Lexmark(NYSE: LXK). Disney's important relationship with Pixar(Nasdaq: PIXR) is already strained, yet its machines will be powered by Microsoft's(Nasdaq: MSFT) operating system. Pixar is controlled by Apple Computer(Nasdaq: AAPL) chief Steve Jobs.

The timing of the entry-level system could have been better. After all, for consumers this is an investment in the Disney brand remaining kid cool at least long enough until the system's specs grow outdated. A decade ago, when Disney's feature animation division was at the top of its game, they would have sold like syrupy hotcakes. But now, after a string of theatrical duds and with Pixar ready to bolt, how will Disney assure that kids want the rat-eared monitor staring back at them when they boot up?

Even Disney looking to sell off the Disney Store units that it hasn't shuttered already speaks volumes as an admission that its own brand isn't enough to sell wares the way it used to.

But golden brands don't bronze overnight. Just as important, Disney has far more in distribution channels and exposure outlets than Mattel ever had. The Disney Dream Desk won't be a nightmare. Yet it's going to take some brand polishing to make this Dream come true.

Longtime Fool contributor Rick Munarriz owns shares in Disney and Motley Fool Stock Advisor recommendation Pixar.

Discussion Board of the Day: Disney

Would you pay $950 for Disney's new mouse-eared starter PC? Is the Disney brand still a valuable asset or a potential liability? Share your views with other Fools in the Disney discussion board.

Through the Earnings Looking Glass


Chris Mallon

Tracking the daily changes in your stock portfolio has never been easier, thanks to online brokers such as Ameritrade(Nasdaq: AMTD) and portfolio trackers on websites such as Fool.com or Yahoo!(Nasdaq: YHOO). Unfortunately, now that we can effortlessly watch stocks move up and down, many of us forget the true purpose of equity investing.

Investing in a stock is ultimately about buying a claim to a future stream of earnings and cash flows, received either directly as dividends or indirectly through capital gains. Therefore, a portfolio is simply a collection of claims to multiple companies' earnings. Few companies distribute all their earnings to shareholders, and in the short run, market prices rarely reflect the full value of a company's earnings. How can investors determine the total earnings attributable to their portfolio holdings?

Here's where the concept of look-through earnings, made famous by Berkshire Hathaway's(NYSE: BRK.A)(NYSE: BRK.B)Warren Buffett, becomes a useful tool. Look-through earnings is a relatively simple concept, rarely used by investors, in which you sum each company's earnings attributable to your shares, calculated by multiplying the EPS times the number of shares you own.

Instead of seeing just a smattering of gyrating stocks, look-through earnings allow us to view our portfolios as holding companies, with a number of partially owned operating subsidiaries. As a simple example, I've come up with the following hypothetical portfolio:

Price Shares Investment EPS P/E LT Earnings
46.89 100 $4,689 $3.01 15.6 $301
(Nasdaq: MSFT)
28.07 100 2,807 0.75 37.4 75
52.87 100 5,287 2.12 24.9 212
85.71 100 8,571 4.66 18.4 466
Total $21,354 20.2 $1,054

From a look-through perspective, we've paid 20.2 times earnings for this portfolio, which has an earnings yield (the inverse of the P/E) of only 4.9%. Whether this portfolio is acceptable, I'll leave up to you, but notice how your portfolio can be seen as a single entity and valued in much the same way as individual stocks.

Look-through earnings put a different perspective on an investment portfolio than maybe you're used to seeing. Yet it's sensible to view a portfolio as a single business, knowing that over time, the intrinsic value of each company's earnings stream will be reflected in the individual stock prices, and therefore the value of your business.

Fool contributor Chris Mallon also likes look-through free cash flows. He owns shares of Microsoft through his private investment partnership.

Quote of Note

"The ultimate measure of a man is not where he stands in moments of comfort and convenience, but where he stands at times of challenge and controversy." -- Martin Luther King Jr.

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In Value Investing 101, Columbia University's Bruce Greenwald shares the three steps of value investing.... Tom Gardner discusses his investing framework in How to Find Great Small Caps.... In Diversifying Your Dividends, Mathew Emmert details some alternatives to last week's dividend-oriented mutual fund pans.... Bill Mann's Oh No! Berkshire Earnings Down! reminds investors to look at bottom-line numbers with a degree of skepticism.

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