September jobs growth was weaker than Wall Street anticipated. The Labor Department today said the U.S. economy added 96,000 jobs last month. Economists polled by CBSMarketWatch had anticipated payrolls to grow by some 138,000. The unemployment rate remained at 5.4%.

The bad jobs news comes on the eve of the second presidential debate tonight, providing fodder for Democratic challenger John Kerry. Payrolls have risen 1.8 million over the last 13 months, but they are still down about 800,000 since President Bush took office in 2001. He could be the first president since Herbert Hoover to preside over an economy that had no net job growth -- which may not matter if you believe the president has little control over the economy anyway.

The market at any rate didn't like the news. The Nasdaq dropped the most of the major indexes, falling 1.3%.

In today's Motley Fool Take:

Can AMD Unseat Intel?


Bill Mann (TMF Otter)

Advanced Micro Devices (NYSE: AMD) continues to plug away at microprocessor rival Intel's(Nasdaq: INTC) lead, which once seemed insurmountable.

In its report on third-quarter 2004 results, AMD swung from a year-ago loss of $31 million to a profit of $43.8 million, or $0.12 per share. This comes at a time when companies in every element of the semiconductor market seem to be streaming to the confessional with bad news, most recently Magma Design Automation(Nasdaq: LAVA), Zoran Corporation(Nasdaq: ZRAN), and Credence Systems(Nasdaq: CMOS). AMD's improved performance comes at a time when there are no tailwinds to be found.

AMD reported a 34% rise in sales of processors over the same quarter last year. Processors account for a little more than half of the company's total revenues. For comparison, Intel's own forecasts in processors calls for growth from 4-5%, a number that may prove, if anything, optimistic. As we noted in July, one of the major drivers for AMD's re-emergence (maybe I should say re-re-re-emergence) is that for the first time it is AMD and not Intel that is driving one of the key chip-design movements. In this case Intel announced that it would offer a chip based on AMD's Opteron 64-bit processors. In its conference call, AMD noted that its 64-bit chip sales had doubled, and now make up more than a third of all computer chip sales.

Significantly, a substantial drop in flash memory sales, particularly to the mobile phone industry and large customers like Nokia(NYSE: NOK), impacted overall revenues. AMD's sales of memory chips decreased by more than 20% In this case, AMD was not able to withstand overall industry weakness.

But flash memory isn't the core of AMD's product offerings, microprocessors are. Ask AMD in which segment that they'd prefer to see industry-beating growth, and they'll take microprocessors every time and twice on Saturday.

AMD has managed to snatch defeat from the jaws of victory more times than its shareholders would care to remember. This time, though, it seems that AMD has managed to take a bite out of Intel, and the numbers bear this out in stark relief.

See also:

Bill Mann owns none of the companies mentioned in this article.

Discussion Board of the Day: Tax Strategies

Is it too early to plan for the 2005 tax season? What are some great last-minute moves you can do before 2004 is over? All this and more in the Tax Strategies discussion board. Only on

Alcoa's Groundhog Quarter


Roger Nusbaum

Alcoa (NYSE: AA) kicked off the earnings season yesterday with its third-quarter numbers, reporting earnings of $0.34 per share, in line but estimates. But the aluminum giant also reported revenues for the quarter of $5.97 billion, disappointing the consensus of $6.13 billion.

A top-line disappointment should not be a surprise for followers of Alcoa. For the last three quarters, the company has let investors down by missing on the bottom line. This trend of missing one estimate or another has been a constant, even though aluminum prices continue to trade higher. I admit I'm a little confused.

Revenue grew 13% over the third quarter of 2003, yet earnings only grew by 3%. Does this confuse you?

Management cited several factors for the shortfall. Hurricane Ivan caused the Jamalco refinery to shut down, there was a strike at the Becancour, Quebec, smelter (I get a hoot out of the word smelt), and a plant in Pennsylvania had a fire. If it weren't for bad luck, Alcoa would have no luck at all. Investors seem to be taking the report in stride, though, as shares are up almost 1.5% in trading so far today.

Back in early July, I wrote an article recapping the second quarter and arguing that after another earnings disappointment, even with aluminum at a then multi-year high, it made sense to avoid the stock.

Was that right? Yes and no. Alcoa outperformed the S&P 500 since then, but very slightly lagged the Materials Sector SPDR (ASE: XLB). If you bought this stock three months ago, you assumed single-stock risk without the benefit of outperforming the sector. Typically, you would buy an individual stock that you believe gives you a chance to outperform. Why take the risk if you won't beat the group?

The thing that concerned me back then was that the report should have been great because of the high spot price of aluminum and ever-increasing demand from China. Instead, the results were not great and the comments were tempered. Looking forward, not much has changed at the company. Management is guarded and the spot price for aluminum is about 8% higher than it was three months ago. One new threat could be the price of oil. Typically energy costs are a factor for stocks in the materials sector.

This analysis was a very simple one. Occasionally, stock selection can be this simple. Bad answers to common sense questions can help you avoid stocks destined to lag.

Fool contributor Roger Nusbaum is an investment manager and wildland firefighter in Prescott, Ariz. At press time, neither he nor his clients owned any stocks mentioned.

Quote of Note

"If you cannot get rid of the family skeleton, you may as well make it dance." -- George Bernard Shaw

Sun Drops the Gloves


Seth Jayson (TMF Bent)

Sun Microsystems (Nasdaq: SUNW) shareholders have one less headache to medicate thanks to management's wise decision to settle its patent infringement litigation with crusty old Eastman Kodak(NYSE: EK). Earlier this month, a federal jury found that Sun's ubiquitous Java software violated patents Kodak had previously acquired from Wang Laboratories. (Stop your snickering. You'll get us both fired.)

Why is this wise? Because the $92 million payoff looks pretty cheap compared with the billion dollars Kodak was pushing the jury to consider. That would have eaten nearly a tenth of the firm's top line.

As described, the patented processes sound awfully vague: methods of inter-program communication for identifying common file types. It may remind some of us tech nerds of the drawn-out fight between Microsoft and former plugin tsar, Eolas Technologies. Had the patent office not invalidated the Eolas claim, firms as diverse as Apple(Nasdaq: AAPL), Macromedia(Nasdaq: MACR), Red Hat(Nasdaq: RHAT), and others may have had substantial fixes to make or checks to write.

No surprise that in this era of FUD and counter-FUD, both sides are declaring victory. Kodak gets to flex its muscles for the public and snarl a warning to the whole tech world. Meanwhile Sun skips away with barely a shiner, pointing out that the hush money is just a drop in their bucket.

As a player in the open-source community, Sun will likely take its share of blows from purists who would have preferred that the firm go down swinging. Patent cases like these are one of the few times that the big money sees support from the Linux types -- at least until they drop the gloves and pay up. But investors should be glad that management just limited the damage. Often, it's better to be happy -- or even just satisfied -- than right.

For related Foolishness:

Seth Jayson has applied for patents on breathing, eating, and other innovative functions. Make your checks out to cash, please. At the time of publication, he had positions in no company mentioned. View his stock holdings and Fool profile here. Fool rules are here.

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