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1. Comcast, Where All the Children Are Above Average



reported strong quarterly results on Monday.

Well, you might ask, how do we know the results were strong?

Because, silly, Comcast's results are always strong. Unless it's the end of the year, in which case results aren't just strong, but record-setting.

Let us explain.

When we read Comcast's third-quarter financial results press release this week, it seemed awfully familiar. "Comcast Reports Strong Third Quarter Results," read the headline. Hadn't we read that somewhere before?

Why, yes. After a little bit of rummaging through the Five Dumbest Things Research Laboratory files, we found a stack of Comcast's old quarterly press releases. As we perused them, a pattern soon emerged.

See for yourself:

  • 3Q 2002 "Comcast Reports Strong Third Quarter Results"
  • 2Q 2002 "Comcast Reports Strong Second Quarter Results"
  • 1Q 2002 "Comcast Reports Strong First Quarter Results"
  • 4Q 2001 "Comcast Reports Record Revenue of $9.7 Billion And Operating Cash Flow of $2.7 Billion For 2001"
  • 3Q 2001 "Comcast Reports Strong Third Quarter Results"
  • 2Q 2001 "Comcast Reports Strong Second Quarter Results"
  • 1Q 2001 "Comcast Reports Strong First Quarter Results"
  • 4Q 2000 "COMCAST REPORTS RECORD 2000 RESULTS" from Comcast's Web site
  • 3Q 2000 "Comcast Reports Strong Third Quarter Results"
  • 2Q 2000 "Comcast Reports Strong Second Quarter Results"
  • 1Q 2000 "Comcast Reports Strong First Quarter Results"
  • 4Q 1999 "Comcast Reports Strong 1999 Results"
  • 3Q 1999 "Comcast Reports Revenue Up 23.2% And Operating Cash Flow Growth of 24.3%"
  • 2Q 1999 "Comcast Reports Second Quarter Results"
  • 1Q 1999 "Comcast Reports Strong First Quarter Results"
  • 4Q 1998 "Comcast Reports Strong 1998 Results"
  • 3Q 1998 "Comcast Reports Strong Third Quarter Results"
  • 2Q 1998 "Comcast Reports Strong Second Quarter Results"
  • 1Q 1998 "Comcast Reports Record First Quarter Results"
  • 4Q 1997 "Comcast Reports 1997 Results"
  • 3Q 1997 "Comcast Corporation Reports Record Third Quarter Results"
  • 2Q 1997 "Comcast Corporation Reports Strong Second Quarter Results"

We'll go out on a limb here. Fourth-quarter 2002 results, we forecast, will be strong. They may even set a record.

2. What's Wrong With This Picture?

Gosh. We were certainly excited this week to see

Sprint PCS'


newspaper ads touting $30-a-month wireless calling plans and free phones.

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Until, that is, we went to

Sprint PCS' Web site to see what the coverage was like in the New York City metropolitan area.

We plugged in our zip code, 10005, then followed the signs to the big coverage area map for the New York megalopolis.

And that was where our journey hit a dead stop. As you can see from the map key below, there's one shade of green that represents areas in the Sprint Nationwide PCS Network. There's another shade of green that represents areas off the network. But we're darned if we can tell the difference between those two greens. Look for yourself in the area east of Scranton and Wilkes-Barre, Pa., and see if you can tell them apart.

Wondering if our problem was simply a product of the poor-quality computer monitors at the Research Lab, we called up Sprint PCS to register our concern.

"I can't tell the difference either," said a Sprint PCS spokesman, who thanked us for calling. "It's great feedback for me to get to our dot-com folks and make changes," he said.

Who says all our research is in vain?

Not Easy Being Green
Are you in or out?

3. Off the Books

We've known for some time now that

Vivendi Universal's

(V) - Get Visa Inc. Class A Report

acquisition of Houghton Mifflin was Dumb. But this week we learned just how Dumb it was.

To bring you up to speed: As noted in

a previous report from the research lab, the French media and telecommunications conglomerate Vivendi Universal last year bought Houghton Mifflin as part of then-CEO Jean-Marie Messier's plan for global domination. But in a housecleaning that swept Messier out the door, Vivendi Universal also decided it would sell the recently acquired Houghton Mifflin, publisher of

Curious George

and other books.

On Thursday, Vivendi announced it was selling Houghton Mifflin for 1.75 billion euros, including the assumption of debt.

Hmm. Let's go back to the 2001 press release in which Vivendi Universal announced the purchase of Curious George and friends. The price then, including debt, was $2.2 billion. At today's exchange rates, that was 2.2 billion euros; back then, it was 2.6 billion euros.

In other words, Vivendi Universal lost somewhere between 20% to 30% of its investment in a year.

Buy high, sell low. The first rule of investing.

Vivendi rewrites business strategy

4. Surgical Strikes Back

Thank goodness that brokerage firms have expressed a desire for analysts to engage in critical, independent research on publicly traded companies.

If only those publicly traded companies shared the same desire.

We call your attention to

United Surgical Partners International


, the owner-operator of surgical facilities.

As reported by Herb Greenberg on our Columnist Conversation

, USPI made it perfectly clear on a Wednesday conference call how it deals with people who are skeptical about the company's business prospects: It cuts them off.

It all happened when short-seller Marc Cohodes, a shareholder in Inc.

( TSCM), publisher of this Web site and others, was granted an opportunity to ask a question on the call. Here's how it went, according to the Research Lab's unofficial transcript of the call (which, sports fans, differs slightly from Greenberg's unofficial transcript):

    Operator: Our next question comes from the line of Marc Cohodes from Rocker Partners. Please go ahead. Marc Cohodes: Hello. Thanks for taking my call. I'm sort of new to this -- new to this story. And it seems like there's an awful lot of moving parts in a very regulated business. And given your leverage and all these issues that are out there, if you have facilities that are well-run and doing well, why do you need to keep levering up to grow? Why are you so actively engaged in this rollup strategy if everything's well? That's question one. Question two, why would you want to be part of a drill where doctors have business arrangements with some of these facilities? That always leads to problems. Why, why would you engage in behavior like that? Those are my first two questions. USPI CEO Donald Steen: It sounds more like a speech. We gave the information on our positive cash flow from operations. And we are generating and will generate enough cash flow from operations to fund our operations, our routine capital expenditures, our construction projects that are under way, and our future de novo startup facilities. Cohodes: Well, that's not true -- Steen: unintelligible Cohodes: -- You still need to raise money. You sold stock and you're leveraged in doing this. The cash you're generating just covers your, your maintenance of these things. I mean, if I had a business that was allegedly growing as fast as yours, why keep buying, especially out-of-control areas like Spain? Steen: Operator, could you cut that call off. I mean, he won't let me answer the question. So we can take the next question, please.

So there you have it. Did Cohodes make a speech? Maybe, but so have bullish analysts countless times on conference calls, without company executives commenting on the obvious. Was Cohodes trying to cover too many points in too short a time? Yes, but bulls are guilty of that, too. Was he jarringly confrontational? Yes, but balance that against all the analysts you've heard who are embarrassingly obsequious.

Sooner or later, companies will have to acknowledge that they have critics. Now might be a good time.

5. Harvey Har Har

Speaking of open debate, how about that Harvey Pitt and William Webster?

Our favorite part of this unfolding story is how one of the things the Pitt-led

Securities and Exchange Commission

is devoted to is disclosure. As in Regulation FD, for fair disclosure. As in

a boatload of new rules, proposed this Wednesday, to improve companies' financial disclosures as mandated by the Sarbanes-Oxley Act.

So what does Pitt fail to do, evidently? Disclose a wee problem that Webster, the anointed head of a new accounting oversight board, had when he was overseeing a single company's accounting.

If a hero ain't nothing but a sandwich, disclosure ain't nothing but a Demi Moore movie.