Normally we reserve signs of the impending apocalypse for Fridays, but today's developments are just too good to pass up. First, William Shatner has released an album -- the long-anticipated follow-up to his 1968 Transformed Man recording. Could anything possibly outshine his spoken rendition of "Lucy in the Sky With Diamonds"? Early reviews are that it's "interesting musically."

Also today, the state of Florida opened for early voting -- a measure put into place after the debacle of the 2000 presidential election. Exit polls at noontime showed your candidate up 17 million to 261. And you thought you were going to lose big?

Beam us up, Scotty!

In today's Motley Fool Take:

Big, Bad Amazon


Rick Aristotle Munarriz (TMF Edible)

Why is everyone so afraid of Amazon(Nasdaq: AMZN)? I mean, sure, the leading online retailer made brick-and-mortar crybabies out of companies such as Toys "R" Us(NYSE: TOY) and Target(NYSE: TGT) before they decided to let Amazon run their dot-com storefronts. On Thursday Amazon's wave of fear stuck again with Netflix(Nasdaq: NFLX) sacrificing near-term earnings growth by shaving $4 off its basic monthly subscriber rates because it heard that Amazon was ready to ramp up a similar service. Blockbuster(NYSE: BBI) followed with its own price cut on Friday.

Netflix CEO Reed Hastings appeared on The Motley Fool Radio Show over the weekend and shed some light on the events that led to his company's cutthroat pricing strategy in an exclusive interview. Two weeks ago the company heard that Amazon was going to enter the DVD-rentals-by-mail business in a few quarters. When other sources confirmed the rumor, Netflix figured that its best defense would be the proactive margin-munching price cut.

While the market pounded the stock on Friday -- Netflix shares surrendered just more than 40% of their value -- it's a move that Hastings sees as strategically necessary. Amazon is more than just a pioneer in e-commerce and a major seller of DVDs. Through its site it also owns the eyeballs of many movie buffs that a Netflix clone would be perfect for. Netflix can still turn a profit at $17.99, and this consumer-friendly move may very well double the company's customer base next year from its current head count of 2.2 million subscribers.

Hastings is serious about vanquishing Amazon before it becomes a threat. Blockbuster can afford to treat its online service as a loss leader to fend off obsolescence, but Amazon won't stick around if there isn't money to be made. Netflix is even delaying its launch into the United Kingdom until next year so it can devote its efforts to solving the matter at hand. It will also wait until 2005 to reveal the details of how it plans to team up with TiVo(Nasdaq: TIVO) to enter the video on demand market. Right now, those may be seen as distractions when Netflix simply wants to grow its stateside DVD rental market quickly.

Once considered a niche player by Blockbuster, the popularity and profitability of Netflix proved to be too rich to ignore. Showing that it is willing to sacrifice high margin profitability for the sake of high-profile popularity should be enough to scare Wal-Mart(NYSE: WMT) out of the rental game. It may also spook some potential entrants -- including Amazon.

Longtime Fool contributor Rick Munarriz has been a Netflix subscriber -- and investor -- since 2002. He is part of the Rule Breakers analytical team that will be looking to unearth the next Netflix early in its growth cycle.

Wanted: Foolish Writers

Do you read the Fool's content and say to yourself, "I could have written that!" Do you post thoughtful arguments on our discussion boards? Do you have an opinion on everything from to Wal-Mart? Then we're looking for you. We're seeking the best and brightest minds out there to contribute to We're taking applications for both full-time positions and freelance Fools. Visit, and check out the listings under Editorial and Writing.

Google Ogles Your Hard Drive


Rich Duprey

The company that revolutionized the search of the Internet has now revolutionized searching your hard drive. Google's(Nasdaq: GOOG) new Desktop Search utility is an incredibly powerful program that will keep track of that morass of documents, emails, instant messages, and web pages currently residing in your computer.

If you looked at it at some point, Google will remember it. This also raises the hackles a bit if you're in any way concerned about privacy on your computer. For example, if you IM someone, the conversation evaporates into the ether when you close the window. With the new utility, that conversation is preserved. It also bypasses user names and passwords, permitting someone to read Outlook and Outlook Express emails sent or received by someone else.

It's also a little disconcerting when you type in a word or phrase to search on the Internet and the first hits that come back are those stored on your computer. For example, I typed in "Google" on the company's home page, and it returned results showing there were 18 results stored on my computer, followed by the usual hits for news and web pages. It works the same if you have the Toolbar installed on your browser.

Yet even when you're searching the 'Net, prying eyes outside of your household can't see your hard drive. It's not a window into the soul of your computer, as it doesn't share the contents with its servers or other users. Unless you give it permission to do so.

Once you get past the privacy concerns and the creepiness of its search capabilities, you realize just how powerful -- and fast -- this thing really is. Forget Microsoft's(Nasdaq: MSFT) search function built into Windows; this is light-years ahead of files and folders. The results are formatted in a style familiar to anyone who has used Google, with the title of the document a highlighted hyperlink, a snippet from the document with your search text boldfaced, and the path where the document is located similar to a website's URL.

The only thing I wished for was that the path had been a link as well to take me to the folder where the document was located. That way it would make it an easy process to delete any unwanted, unneeded, or unnecessary documents it found. Still, since it provides the path, I can track it down and delete it. But harking back to the "creep factor," it doesn't actually delete it from Google. The title, description, and path are still there, and by clicking on it you get a message saying, "The file cannot be found. This may happen if you renamed or deleted this file." To get it gone, you need to perform a few more steps, but it finally disappears into the memory hole.

Undoubtedly other search engines such as Yahoo!(Nasdaq: YHOO) will offer similar capabilities soon. America Online(NYSE: TWX) plans to introduce one later this year, along with a browser that runs on Internet Explorer technology, and Ask Jeeves(Nasdaq: ASKJ)recently acquired technology that allows it to do so too. Apple(Nasdaq: AAPL) will also introduce one for the Macintosh OS as the Google program is not compatible with it.

Privacy concerns and creepiness aside, ogling your hard drive with Google can be a real boon to storing, filing, and finding information.

Fool contributor Rich Duprey likes to ogle Krispy Kreme doughnuts. He does not own any of the stocks mentioned in this article.

Discussion Board of the Day: Health and Nutrition

Are you happy about the trend toward less misleading labeling? Do you always scrutinize nutrition facts before consuming a product? Talk to other health-conscious Fools on our Health and Nutrition discussion board.

Mattel's Barbie Blues


Alyce Lomax (TMF Lomax)

Are toys in time-out? Today, Mattel(NYSE: MAT) echoed Hasbro(NYSE: HAS) in reporting earnings that were a bit of a bummer. In addition, the prognosis may not be too good for the upcoming holiday season.

Mattel, a Motley Fool Inside Value pick, reported net profit down 5.2% at $255.9 million, or $0.61 per share, with net revenues down 2% at $1.67 billion. The company's important Barbie brand's sales fell by 13%. Another important and well-known product line, Hot Wheels, suffered a 3% decrease in sales. There were better fortunes for Mattel's Fisher-Price and American Girl brands, with sales that increased 7% and 9%, respectively.

"As consumers respond to economic uncertainty, many retailers have been reluctant to take inventory risk for the holiday season," the company said in its press announcement. In its conference call, Mattel management blamed high oil prices and retailers' concerns about how shoppers will react to economic concerns this coming holiday season, implying that retailers are reluctant to stock too much toy inventory what with the questionable consumer outlook.

Of course, there are also fewer toy retailers in the space this year. Although it recently became apparent that the new king of toys, Wal-Mart(NYSE: WMT), won't be such an aggressive price-cutter this year (for more on this issue, click here), this year FAO Schwarz is a non-entity, and KB Toys is crippled. Toys "R" Us(NYSE: TOY) is still kicking, though it recently let investors know about the possibility that it might simply get out of toy sales altogether.

Even though Mattel isn't alone in these woes, given Hasbro's own worrisome outlook, Mattel faces some challenges of its very own. Barbie's flagging popularity has been well-known for a while now. The Fool's own Bill Mann recently pointed out that Disney's(NYSE: DIS) got magical appeal for little girls through its popular Disney Princesses line.

Mattel plans a strategy for stimulating Barbie sales, such as an advertising campaign featuring popular young actress Hilary Duff and an American Idol line. (I wondered whether these choices might be a little mature to attract the Barbie crowd, but then again, it's hard to ignore Mattel's historical marketing know-how.) In the company's conference call, management said that Barbie market share has stabilized in the U.S.

Any investor can tell that the next several months could be painful because of consumer discomfort and tightening of purse strings, not to mention retailers' own reticence to carry too much inventory, although one might hope that holiday spirit might save the day. However, looking further forward, given Mattel's efforts to reinvigorate the Barbie brand, investors might wonder whether it's all been a fluke, or, after all these years, Barbie's finally getting a little old.

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

Intel on the Outs?


Rich Duprey

In yet another devastating body blow to the company, Intel(Nasdaq: INTC) announced it would be canceling its 4-GHz Pentium chip. The semiconductor bellwether said it was switching gears, changing its focus from increasing microprocessor clock speed to a more ephemeral measurement of performance in multitasking, security, and multimedia.

Archrival Advanced Micro Devices(NYSE: AMD) had previously shifted its focus away from ever greater clock speeds in 2001, and Intel's decision ends 25 years of clock speed improvement that has seen the speed of its microprocessors increase by 750 times. It's a move Intel says it has been preparing for all along.

It might be more believable had not the company been touting the fact that it would be soon releasing a 4-GHz chip, or if it had not had similar miscues and changes of direction all year long. Fool contributor Tim Beyers has made a career this year of tracking Intel's missteps, mistakes, and flubs. Let's see:

  • At a time when AMD is hitting on all cylinders and gaining market share, Intel was announcing disappointing third-quarter numbers.
  • It delayed the introduction of a laptop computer chip.
  • A manufacturing flaw in one of its newest chipsets could cause computers to crash.

I could go on, but it becomes too painful after a point. The current announcement seems to recognize that it has finally reached a hurdle too high. When the Pentium 4 was released in February, Intel said it would release a 4-GHz version by year's end. That was then pushed back to March 2005 when it said it had concerns about meeting customer demand. Canceling the 4-GHz goal altogether is a realization that, as IBM(NYSE: IBM) has noted, sacrificing power efficiency for the sake of speed no longer makes sense. Undoubtedly, this puts an end to rumors of the 65-nanometer, 10-GHz "Nehalem" Pentium 8 chip.

To replace the chip, Intel will instead offer a 3.8-GHz chip with a twin billing of memory known as "cache." Cache stores frequently used data in a location that helps the computer access it faster, rather than having to search the main memory banks. But this is not without its own set of problems. The larger, dual-core chip may be more expensive to make, and it may not be able to sell them at an equivalent price.

It would, however, help Intel use its expanded capacity. Having spent some $20 billion on 90-nanometer and 300-millimeter chip designs over the last four years, it is faced with a weaker-than-expected PC market. The company has warned investors it will take an underutilization charge when it reports fourth-quarter earnings later this year. Yet the larger size requires Intel to produce more silicon wafers, thus spreading out the costs over a larger number of chips. It could help stabilize margins.

Without question, Intel is a giant struggling in a changing landscape. IBM and Sun Microsystems(Nasdaq: SUNW) already make dual-core chips; AMD has proven a formidable adversary; and even Texas Instruments(NYSE: TXN) holds sway in the mobile phone market.

Fool contributor Rich Duprey holds sway with Coors Light and Krispy Kreme doughnuts. He does not own any of the stocks mentioned in this article.

Quote of Note

"The man who is swimming against the stream knows the strength of it." -- Woodrow Wilson

More on Today

In How to Achieve 20% Yields, Mathew Emmert says that double-digit yields are elusive but can be had by long-term investors.... How can yesterday's biotech winners lead you to today's top performers? Charly Travers asks in Biotech's 5-Baggers.... In Marsh's 2nd Annual Massive Fraud?, Bill Mann reports that a year later, the company is at the center of another scandal.... Can short interest help you pick winners? Jim Schoettler asks in Coming Up Short.

In other news:

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