Motley Fool Money - Motley Fool Money: 06.25.2010

Episode Date: June 25, 2010

​What will the financial reform bill mean for investors? Will Kinnect technology connect for Microsoft?  Will technical glitches hurt the new iPhone's reception?  On this week's Motley Fool Money Radio Show, we discuss those stories, share three stocks on our radar, and talk with Ted Turner biographer Bill Burke.   Learn more about your ad choices. Visit megaphone.fm/adchoices

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Welcome to Motley Fool Money. Thanks for being here. I'm your host Chris Hillen. I'm joined by Motley Fool Senior Analyst, Seth Jason, James Early, and Shannon Zermerich. Guys, happy weekend. Happy weekend, Chris. On this week's show, Apple releases the latest iPhone.

Amazon releases a new price on the Kindle, and will a Supreme Court ruling release Enron's Jeff Skilling from prison? We'll tackle those topics, get an inside look at media mogul Ted Turner and share a few stocks on our radar. But we began on Capitol Hill. Early Friday morning, the House and Senate agreed on a financial reform compromise that is expected to pass and be signed into law by President Obama. Among the highlights, the bill sets up a new Consumer Financial Protection Bureau

to safeguard borrowers. Most derivatives would be traded on public exchanges, not in private side deals, and the government would be given the power to seize and close down large failing firms in an orderly fashion. Shannon Zimmerman, obviously, there's a lot there, but what did you think of the bill and what does it mean for the average investor? I think the bill looks great on paper, but the rules that will govern how it is implemented will make all the difference. And we're seeing that right now in terms of the health care reform legislation as well, and that's

where the rubber meets the road. So if you think that the crafting of the legislation was a sausage factory, the rulemaking is the real sausage factory. And it's going to come out looking like hash. To me, the thing to watch is the language that Blanche Lincoln submitted around the derivatives reform piece that was going to require institutions to spin off their derivatives unit. It turns out that it's a sensible thing, but it's open to loophole abuse. Banks will be allowed to hedge portfolio risk. But hedging risk is more art than science. And I imagine Wal Street would be quite artful and avoiding the intent there.

Yeah, one person's hedge is another one's just. rampant bet. James Early, what did you think? My big concern is with payday lenders now more regulated, they're going to my best financial stock. I'm kidding. I don't invest with them. I do think the bottom line here is that banks are going to pass these costs along to their consumers at the end of the day.

Some interesting notes, I think, with proprietary trading, that's going to be a big wiggle area. It's very hard to define in terms of banks not being able to do that. 3% of bank capital and hedge funds are private equity. That's another big wiggle area. Derivatives, medium wiggle area, excuse me. But bottom line is, will this stop? the next financial crisis? I don't think so.

No, there's always another way to create one of those. Let's try to remember the giant picture. What this is supposed to do, well, it was supposed to do a lot of things, but one of the major points of this bill was to try to take large banks, for the most part, who are by default now protected by the U.S. government and make sure they are not doing so many things that they will explode without somebody worrying about it. And as Shannon said, this bill doesn't guarantee that we have that protection. will be in the details, and it will all be in how this is interpreted by the various regulatory

bodies who now need to come up with rules to try and satisfy the legislation. Yeah, the much-a-hout financial innovation that consumers are supposed to enjoy, but we don't really. But they're quite innovative when it comes to avoiding any kind of meaningful reform, and it could just be that this is another how-to guide for toothless watchdogs. So on a scale of 1 to 10, 10 meaning this is going to radically change the way Wall Street does business, one being it's going to be business-as-us-us-us-us-us-us-us-us-us-us-us- Where do you think this will fall out, Shannon? So I want to be not cynical and somewhat optimistic.

And so I'm going to say a 6.5. And I'm going to say that because it is, you know, it's an election year. And now the march to November begins. And if, you know, folks can really sort of seize on the populist ire at Wall Street and make an issue of this, then maybe it will be reformed with teeth. If not, I don't have much hope. James Early? Negative one, Chris.

Wow. Squeeze a water balloon and just bulges somewhere else. Are you that cynical? I am. Wow. And look at me. Where does Seth go with this one? I was going to say seven.

Lucky seven. Really? I think it all depends, but I think there, I believe we can do it. Yes, we can. Wow, I've heard that someplace. We're off to a weird start here where Seth is the optimist, the biggest optimist in the room. In your face, everybody. It's bizarreo, multi-full money.

All right, let's move on to the big macro. GDP rose 2.7% in the first quarter of this year, and that's lower than the 3%, the Commerce Department had estimated a month ago. The housing market took a step back as housing starts in May fell 17%. And on Thursday, the Senate killed legislation that would have extended unemployment benefits to 900,000 people. James Ehrlich, what's your big macro headline of the week? Chris, one thing about economics, it's a social science, meaning what's important is not reality, but expectations. And we had the worst new home number since 1963. Obviously, the expiration of The tax credit was largely to blame for that, but home builder stocks actually went up a bit on the news, which could be a very good sign that the market thinks the worst has already passed.

So I'm going to be positive on that. Wow, come on. Existing home sales looked terrible, and that was still under the tax credit regime. And right now, so we're seeing the housing market fall apart at a time when, thanks to the scatter-branded European economies, everyone's buying treasuries, which is lowering mortgage rates here. mortgage rates are at historical lows and we're seeing home sales at record lows, that's some pretty bad news. And it gets even worse

now with this unemployment benefit thing. These guys are scolding everybody and they're punishing a group of people who actually need some support. I'm really against dead beatery as for governments, but I think that at a time when you've got a deflationary spiral, perhaps

you're on the edge of it, this is not the time to preach fiscal austerity. So does he get called Sven this time around? I'm thinking about that. I'm thinking about that. It's unconscionable that the unemployment benefits have not been extended. Go get a job when you've got unemployment almost 10%. It's, well, unconscionable is the nicest word I can think of to characterize that.

You're listening to Motley Fool Money. We're going through some of the big stories this week. This week in BP, a federal judge has rejected the White House's attempt to delay a removal of the deep water drilling moratorium. BP has already spent over $2.3 billion. on the cleanup so far. And this week, the stock hit not just a new 52-week low, it hit a new 14-year low. Seth Jason, you're a BP shareholder.

How are you holding up? Oh, I'm fine. I'm fine. I got a lot of dividends. And as I mentioned before, I bought a basket of stocks in this area. Overall, I'm up on this entire affair. But, you know, this case was interesting. I kind of thought it would come to this.

It's sort of in-your-face, President O'Chavez. And the reaction from the White House was pretty funny. It was the judge says, you can't do this. And they said, well, we're just going to say we can do it again. I side with the engineers who were part of the report who said, you know, we really didn't say six-month moratorium. This moratorium was a public show. It was to say, hey, we're doing something. I don't think they really considered the economic damage they were doing to the Gulf by shutting off all of that drilling.

And so I think it was ill-thought-out. And so those stocks in companies that playing that space really didn't move up much on this news because they're still wondering, investors are still wondering how this is going to shake out with challenges and everything. And until that is figured out, probably there won't be any movement in those stocks. I think in the week ahead, or maybe the weeks ahead, Anna Darko, you're going to hear that name more and more often is their level of culpability is being called into question. And they're pushing back, of course, and BP's saying, uh-uh, it's time for you to pony up as well. Yeah, this was BP's partner in the well-owned.

minority stake and they're, and not surprisingly, they're saying, hey, you screwed it up, we're not going to pay. I don't know if they'll pull that off. Good luck to them. Coming up, Enron is back in the headlines and Toy Story 3 gives Disney 110 million reasons to smile. Stay right here. You're listening to Motley Fool Money. Things in life are free, but you can give them to the birds and bees. I want money. Welcome back to Motley Full Money. Chris Hill here in the studio. with Seth, Jason, James Early, and Shannon Zimmerman, as we dig into some of the companies making headlines this week.

Guys, little company you might have heard of, called Apple. On Thursday, released the iPhone 4, and by the end of the day, it was sold out at Best Buy, while Walmart and Radio Shack were looking to restock as quickly as possible for the weekend. Well, you can get the iPhone 4 at Walmart? Yes. That is hip.

All this, despite numerous reports on tech websites of various glitches with the new model. Shannon Zimmerman, I believe as soon as the show is over, you're running out to buy your new iPhone 4. In fact, I'm leaving right now because I got to go. And I forgot. At lunchtime, I was going to buy you a pair of latex gloves. You could wear while you're using it so that you don't short out the antenna and cause it to drop connection. That's very thoughtful of you, Seth. What did you think, Shannon, when you saw the news, the good and the bad?

Yeah, to me, there are a number stories in here. And the big story is actually the upgrade of the operating system, which came out earlier. and I actually have on my 3GS. I think that, like I say, I am going to go give one, and I'm excited that it's going to be faster and sleeker. And, you know, I don't like to make calls that much anyway. So the reception problem is really not that much of a problem for me. That's true.

He's over there. He's always playing four square on that thing. That's right. That's right. But, Seth, what about this? I mean, there have been these reports on Gizmodo and other tech websites. I thought this was a small thing being blown out of proportion, and I'm not sure it's not still.

But there's an awful lot of good-looking data. the people who were posting these videos weren't just your run-of-the-mill internet cranks. They were holding the phone in various positions and turning it and videotaping the results. Often, some of them with speed meters measuring the download speeds capable by the phone in the various positions. And what it looks like is Apple moved the antenna to the outside of the phone. Well, any time you touch an antenna with something else that conducts electricity like your sweaty hand, you can change the performance of that antenna. and in the case of the iPhone, unfortunately,

it looks like you can shut it down to very low levels indeed. Now, this is fixable if you bridge the contacts. There are spaces where there are pieces that aren't supposed to touch each other. It's fixable if you give Apple $29 more. You can give Apple $29 to put one of those weird iPhone condoms on it. You can cover that up with scotch tape so you don't bridge it, or you can wear leather work gloves when you use your iPhone. Oven mitts?

Just walk around wearing sunbits. Or actually, there are emails on. online where people have responses from Apple, including one that's purportedly from Steve Jobs, and they're telling the people get this, you're holding your phone wrong. You're holding your phone wrong. I don't think that's really a Steve Jobs email. The ironic thing, though, is that this was an effort on Apple's part to address what's been the chief complaint about the iPhone since it was first launched, that the call quality is quite bad. So this was an innovative move to address that and backfired.

A year from now, what are we more likely to be talking about? Is it iPhone? Exactly. Exactly. Or does Google have a shot to take some of the market share with the Android? No, people, you know what? This is a, if anybody else did this with a phone that's got this much hype, they would be crucified. But since its Apple, everyone's going to say, what's the big deal?

They're held to a different standard, a lower one. Earlier in the week, Amazon dropped the price of the Kindle by nearly 30%. And Barnes & Noble quickly dropped the price of its e-reader, the unfortunately named Nook. Shannon Zimmerman, Amazon stock dropped a couple of points when this was announced. So how much is this going to affect their revenue? Goodbye, E-reader. I know we have a disagreement on this, Seth, but I do think the iPad is going to eat into that market share. And it's a commodity play at this point at that price point.

And there's only down to go, and I don't really see. That's why I don't think it's goodbye e-reader. When they're that cheap, people can afford to have. Well, that may be. That may be. Goodbye E-reader as a source of operating. profit, probably. I'm not sure it was ever meant to be that. This has become much more of a Razors and Blades model. And I was joking before the show that when Schick started selling

razors really cheap, I bet there were stockholders who said, oh my God, I'm out of this. Yeah, but we have a disagreement is whether or not the iPad can be a sufficient e-reader. I know that you can't read it outside when you're on the beach. I understand that. And the battery life is so much shorter. I think that if the price point is low enough, I think people will read on the iPad, but I don't think you take away. I think the iPad will be more popular, but it'll be more popular because people want to mess with Foursquare and watch videos and things. People who really want to

read, I think, are still going to seek out e-readers. Six months, the Kindle is going to be the biggest babe repellent you've seen, black and white, tiny little screen compared to the color iPad. I like to read. I'm not in the coffee shop so that somebody can say, hey, he spent $800 about that shiny thing. Oh, I love him.

You know what has a really great interface? Paper book. They don't, though. That's the thing. They don't. They don't. They work well. I have converted. Did so many, Kindles work great in the sun, too. That's the thing. You can't read an iPad in the sun. Everybody I know who said, you know, I love a book so much, and then they've played with my Kindle, has ended up buying a Kindle.

Yeah, but, I mean, the sand? What about the sand factor? The sand factor? What about the bathroom? And I still have that really old crappy Kindle, but it still works really well for reading. All right, guys, Enron is back in the news. The Supreme Court ruled this week that prosecutors overreached in their conviction of Jeff Skilling, the former president of Enron. in using a federal law that makes it a crime to deprive others of one's, quote, honest services.

Yes, that's right, Jeff Skilling, and the phrase, honest services in the same sentence. The court ruled that it violated the Fifth Amendment. Skilling was convicted on multiple charges, though, so he doesn't get his get-out-of-jail card just yet, but this case will return to lower courts. James Early, it sounds like this was possibly another case of Slegal. It is important to know. Skilling is not off. He just this thing, this wire fraud technicality that he was prosecuted under apparently is a no-go with the Supreme Court. There was an issue, too, about the fairness of his trial in Houston.

I think one juror had lost around $50,000 in her 401k because of Enron and on her selection questionnaire had said that she believed Jeff Skilling was, quote, not an honest man. I think she's pretty accurate. I don't know why she's a bad juror. But, yeah, we'll see what happens from here, but it is pretty odd, I think. We live in a weird country. We live in a really weird country. Everybody knows how my... Skilling and the rest of the guys at Enron hid a lot of what, to me, amounts to criminal activity.

It's technically not if you disclose it in footnotes that you know darn well nobody is ever going to read. And that's what a lot of Enron was. And so the moral of the story is in the United States, if you want to steal a lot of money, just do it with a pen. All right. The Electronic Entertainment Expo or E3 conference was held last weekend in Los Angeles, and gamers flocked to see the latest innovation in the gaming industry. One of the ones making headlines, the Microsoft Connect, a game system for the Xbox 360, which employs controller-free motion sensors.

Seth, you're the biggest gamer geek here. I mean, is this your dream come true? I didn't want to connect. This was what was called Project Natal or Natal or however they wanted to. pronounce it for a while. And it's a series of cameras and sensors that sit on a bar in front of your television are hooked up to the Xbox. And I didn't think this would work for anything. I thought it was being over-promised. And now that I've seen the videos of what it can do, I might actually go looking for one of these. Not only can you now play games like bowling or rafting without ever touching

a single controller, it just watches what you're doing and translates your motion to the character on screen. But you can, if say you're watching Netflix on your Xbox, streaming Netflix, you can do this minority report sort of navigation where you're waving your hands in the air and things are moving and then you tap the air and you collect and you make your choices that way. I mean, this looks really, really cool. Also, video conferencing on your big screen TV will be right there. This is some great stuff. That's scary to me too. Yeah, I gave up on gaming whenever a pinball had multi-ball. So I'm not a game. You got to draw the line somewhere. Right. So I'm not a gamer, but all the features that Seth was just talking about there at the end are absolutely amazing. It's some of that magic that Apple always claims to have and does, I think, is being sprinkled on to Microsoft for this product. It looks super cool.

I think they're going to wipe the floor with Sony, and I think Nintendo is going to hang on, but only probably because of that little 3D Game Boy thing they've got going. And finally, Disney executives were all smiles as Toy Story 3 had the biggest opening weekend ever for a Pixar film. Toy Story 3 took in $110 million and is already the sixth highest grossing movie of 2010. this is not only good news for Disney, this is good news for Hasbro and Mattel because they're the ones actually making the toys. I have seen Toy Story 3. Pretty scary?

No, no, it's fantastic. I highly recommend it. Can you see it without having seen one and two? You can, but it's better off if you've at least seen Toy Story 2. I would recommend that. So this is just their way, this is their way of selling more DVDs, really. You know, it's possible to go back and buy 20 bucks in the DVDs. The merchandise is a big thing.

big deal, but I mean, this is also just... I may have to go to this. This sort of lost me on up, even though I loved Doug the Golden Retriever. By the time I got to the dogs flying by planes, I wanted to shoot everybody at Pixar. You've got a friend in me. You've got a friend

in me when the road looks rough ahead and your miles and miles from your nice warm bed. You just remember what your old past is. Or you You've got a friend in me. Yeah, you've got a friend in me.

The guys will be back later in the show to talk about the stocks that are on their radar. But coming up, a conversation with bestselling author Bill Burke about one of the most successful and entertaining leaders in the media business, Ted Turner. Stick around. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. I'm your host, Chris Hill. This week, the United Nations set up a special committee to focus on global poverty and to improve human welfare. The committee is made up of high-profile leaders like Microsoft founder Bill Gates, Nobel Peace Prize winner Muhammad Yunus, and the focus of this week's interview, CNN founder, Ted Turner. Bill Burke has served as president and CEO of the Weather Channel companies,

president of TBS, and general manager of Turner Classic movies. So when Ted Turner wanted some help writing his own story and sharing it with the world, the choice was pretty simple. The result is Call Me Ted, a bestseller selected by U.S. USA Today as a Best Business Book of 2009. I had the chance to sit down with Bill Burke a few months ago, and here's some of that conversation. I think when a lot of people think of Ted Turner, they think of sort of the more obvious

public moments, something involving CNN, Jane Fonda, being in an Atlanta Braves game, maybe even America's Cup sailing, that sort of thing. Give me a snapshot of what he was like before that, before he became this. sort of iconic business and sporting figure. What was he like? Well, he's always been a little different, and it starts with his childhood. He had a very, like a lot of highly successful people or unusual people who made a mark on the world.

He had a very difficult childhood. His father was an interesting but very complicated guy, an entrepreneur himself, who built a billboard company. But his father was an alcoholic, probably bipolar, definitely abusive. and Ted was, we talk about it in the book, Ted was mistreated quite a bit as a child. His father was drafted into World War II. They left with Ted's younger sister, who was a baby at the time, and Ted was four years old and put in a boarding school.

When he was four. Four years old, abandoned, essentially. They came back. Ted was, went to military schools, had similar treatment at those schools. Would come home in the summer, get screamed at by his dad. Meanwhile, his younger sister developed lupus, which turned into encephalitis, had to this terrible agonizing disease died when she was 17 years old. Ted's only sibling.

His parents divorced. And his father was grooming him to take over the billboard company when he called Ted one day and said him selling the business. And Ted said, how could you do this? You've been quitting on me. You've been grooming me to take this over. And he said, well, no, I'm overextended. I can't handle it.

Maybe they'll have a job for you. Maybe they won't. Ted got an apology letter a few days later. Two days after that, his stepmother called and said his father had killed himself. How old is he at this point? So Ted's 24 years old. His father's 53. Ted's whole life has revolved around sort of taking over his father's position.

And while most people, after the tragic death of a parent, would mourn for the next six months, Ted spent the next six days undoing the sale of the billboard company and flew out to Minneapolis where this big shot billboard baron was ready to do this deal. And Ted talked him out of it and did some clever things we described in the book. And at 24, it took over his dad's billboard company. And so his formative years were very difficult, very challenging. but after that the pop psychology would suggest, and I tend to believe it,

that the rest of his life has been to prove to his dad that he could do it. Well, yeah, one of the things that does come through in the book is just how intensely competitive he is. It shows up in business, and we'll talk a little bit about that, but one of the things that really stands out for me is the sailing. I mean, we tell a story in the book. He took up sailing. He says this.

He's not a very good athlete. He's, you know, this great-looking guy. who fills a room, but he says, I can't throw a ball. I don't run in a straight line very effectively. And he actually took up boxing when he was in high school because he said he could take a lot of punishment. But then they banned high school boxing. So he had to find a sport. And sailing was... That's why you took up boxing because you could take the hits? That's what he said. And I believe it. And so sailing came along and he realized it was something that didn't require the same kind of physical skills, but was more strategic and mental. And

he was a terrible sailor when he started. When he was a kid, they called him Turnover Ted, because he was always capsizing. But he stayed at it and stayed at it and stayed at it. And as he says, I wasn't losing those races. I was learning how to win and got better and better. And as he was building this huge company, he spent every weekend sailing and was determined everything he did. He wanted to be the best, and the best was the America's Cup.

And he had some really humiliating defeats on the way to eventually winning in 1977. And it's in everything he does. If you spend time with him now, you go out to Montana and you fish all morning. He goes in one direction, you go on the other, you come back at lunch, he wants to know how many you caught, and he wants to catch more. And he usually does. There was one time I actually got him, and it was a very quiet lunch that day. But he competes at everything.

Well, and back to the sailing for a second. You said there were some humiliating defeats along the way. He also had a race against his own wife. Yeah, yeah. The marriage was a little shaky at the time, and the final blow was they were racing against each other, and I don't totally understand the rules of sailing, but she made a pass that was technically illegal. And so to draw attention to it, he sort of turned left to, to, bang into her boat. The officials saw it. She was kicked out of the race and Ted gloated

afterwards and she packed her stuff and that was the last day they were together. It's almost hard to believe that marriage didn't last. Exactly. Let's talk about Ted Turner, the businessman. What does it like to work for him? It was a real privilege, to be honest. I mean, I started there in 1992, so Ted was still very much in charge. But it was an interesting transition for me. I was coming out of a business school environment where it's, you know, you're learning more about sort of traditional business practices, and then you go into this place that was like the Wild West. And I was in charge of new business development for the entertainment group, which sounds like a fancy job, but it was just Ted had an

idea in a shower and we'd run the numbers. And one day the next, you didn't know what it was going to be. It was like, we described his policy as ready fire aim. And he coming, you know, one day we're going to buy Paramount. The next day we're going to merge with NBC. We owned Hannah Barbero. We were going to buy Chuckie Cheese. You know, it was just always something. And he was incredibly empowering. One of the things I like to talk about when it comes to Ted is that he's known for taking chances on businesses, but in that he takes chances on people all the time and makes bets on people that, I mean, asking me to write this book, made no sense. I was there for a year working on a business plan for a cable channel, and then he put me in charge of Turner Classic Movies. I was 27.

Year and a half later, I was 29 years old. They made me president of TBS Superstation. Made no sense. But that was the way he did things. And it was like oxygen in the company because everybody felt like they were going places and there were opportunities. And it was a very, Ted describes it as Camelot in the years. Well, it does seem very much like a culture of being in motion, of constantly being in motion. I could see where that would be, on the one hand, very exciting. Are there times, though, when that sort of works against you and it feels sort of frenetic and almost out of control? It felt frenetic and out of control, and I think it rarely worked against us.

In fact, we were competing often. We were the upstarts. We were the smaller cable channels competing with ABC, NBC, CBS, and even some of our cable competitors like USA Network. At the time, they had multiple owners, and we'd compete for packages of movies to run on our network, and they had to wait for the next board meeting to decide whether or not they could buy them. We'd call Ted and show them the numbers, and you'd say, go.

And so the frenetic pace actually was a competitive advantage for us. So it was hard keeping up, but it was a heck of a lot of fun. When we come back, more with Bill Burke on some of Ted Turner's investment hits and misses. Stay right here. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill. We're continuing our conversation that we taped a few months back with Bill Burke, the co-author of Call Me Ted, a best-selling business book about CNN founder, Ted Turner. What do you think Ted Turner would say his greatest?

weakness is from a business standpoint? It's a good question. It's hard for him sometimes to admit. He talks about some of his personal failings with marriages and things like that. He'll say agreeing to the AOL deal. And there, I think, what I see as a weakness in him is also a strength sometimes, which is his loyalty in people and his trust in people. And Ted was at a point in his career when that deal came along where he was already kind

of pushed aside. He was spending a lot of time out in Montana. He admittedly, I was in a meeting with him one time where he said, I don't get this whole internet thing. He's never done an email in his life. And all the smart people around him said to say, well deal made a lot of sense. And he was tired and he was literally, they announced, he announced his divorce with Jane Fonda that week, the week before. So he had a lot going on. He trusted these people and he said yes. And then spent the next two years watching his fortune crumble. So his biggest weakness, I think, was showing too much faith in some of the players in that

deal. Yeah, I was watching an interview that he had done with Charlie Rose. And, and he was watching, and this was in 2004, and he compared America's decision. He said, America's decision to go into Iraq was every bit as bad a decision as DA, a while-time Warner merger. Yes. Yeah, he lost, depending how you want to calculate, he lost about $7 billion in two years. And we were in the back of a car one time, driving around New York, and Ted wants to be the best at everything. So he said, he calls me Billy, unfortunately.

And he said, Billy, you've got to figure this out. I lost more money in a shorter period of time than anyone in history. I said, well, it's kind of hard to quantify that, Ted. He said, well, seven billion in two years. I said, okay, well, let's call that 700 days. He's like, yeah, $7,700. I lost $10 million every day for two years. No one's ever done that before.

I said, congratulations, Ted. How does he measure his success, though? I mean, it's, he strikes me as someone who, on the one hand, is interested in success and money is an easy way to calculate it, but he seems like someone where success is more than just money. Yeah, definitely more than money. Often quantifiable, though. He likes the fact that he owns 2 million acres of land. He, you know, was worth $10 billion. There are things that are measurable for him. When you fish, he caught 12, you caught eight. He likes to measure things. But also, if you ask him, his most proud legacy,

it's creating CNN. And while he's not entirely happy with the way CNN has evolved in recent years, he counts on that as his biggest legacy for really exposing the world to news. He, I think, can fairly take some credit for easing some of the tensions during the Cold War, covering Tiananmen Square. I mean, really meaningful things. That, to him, I think, is what he's most proud of. And today it's his philanthropy from the UN Foundation to the nuclear threat initiative, to work he's doing on climate change. Those are the things he's most proud of. And having five kids that are, you know, productive adults. Yeah, his philanthropic work, certainly his work when it comes to the environment, where does that

come from? Is that rooted in his past, or is that something that's just sort of evolved for him over time? It's definitely evolved. He was in the outdoors a lot as a kid, and a lot of that was being off on his own. There was a man named Jimmy Brown, who's very prominent in the book, who was an African-American guy that his father had hired actually to maintain his boat, and he wound up being Ted's surrogate father, basically. And they'd spend hours fishing and frog gigging, which I'd never heard of, but it's basically stabbing frogs. I guess out of it. I think that requires a large stick. Less fun for the frog. But he spent a lot of time in the outdoors. So he's always been fascinated with the outdoors, but never very active in environmental causes.

And then in the middle of his life, spent a lot of time with people like Jacques Cousteau, who really opened his eyes. John Denver, they got pretty close. Carl Sagan. So he spent a lot of time around some really thought-provoking people and realized at the same time he was building his wealth and then was in a position to actually do something. And so it was definitely an evolution over the course of his life. And now that he's out, of a full-time business other than his restaurants, which are pretty good business. He's spending most of his time on his philanthropy. What do you think he considers to be his greatest investment?

I think he would probably say his dumbest investment is the AOL-Time Warner. But is it the launch of CNN or is there something prior to that? Well, you use the word investment. In terms of his legacy and something that's ongoing that really changed the world, CNN would be on that list. I think if it's a pure investment, the acquisition of the MGM, ultimately the NGM library, what happened was he bought all of MGM and then quickly realized he couldn't afford all of MGM and had to sell back the working studio to Kirk Corian who sold the tomb in the first place.

So when it was happening, it was an embarrassment. There was a cartoon one time that showed Ted leaving Hollywood in a barrel, you know, and everybody laughed at him. And shortly thereafter, TNT was launched, which is a multi-billion-dollar asset. Years later, we launched Turner Classic Movies. probably one of the greatest investments in Hollywood history. Similarly, Hannah Barbera, which people thought he overpaid for, and six months later we started the Cartoon Network, which is an incredible asset. So I think it's those kind of investments in content. He bought

the Atlanta Braves for $10 million in the early 70s, so I'd probably put those on the list. Well, and speaking of baseball, that's how I first got to know, Ted Turner, was through the Atlanta Braves. you're involved in a baseball team of your own. I am. The Portland Sea Dogs, the beloved team up in Maine. That's right. My father in retirement started a AA franchise in Maine. We used to be the Marlins' AA affiliate, and we're now the Red Sox

affiliate, which is a nice place to be the last several years and two hours from Boston. We've produced a lot of guys who've made it up to the Red Sox, and there's nothing more fun than a warm summer night. The games in April aren't so much fun. Yeah, well, I'm also from Maine, so I remember being excited that, there was going to be a franchise and slightly mystified when it launched and it was the Marlins affiliates. I got a hat from my mom, which, you know, the Marlins colors with the Portland Sea Dog. So, yeah, it definitely fits better to be with the Red Sox.

Has Ted given you some advice when it comes to baseball? No, he hasn't. He's funny. You know, when he bought the Braves, he didn't know a thing about baseball. He saw the Braves as programming for TBS. And he quickly learned about baseball and got up to speed on it. But he's not involved with the Braves anymore. today and he always asked how the sea dogs are doing but he you know it's funny when you ask about advice i have learned a ton from ted but it's never been hey kid let me tell you this he's not that kind of guy he's not to put his arm around your shoulder and you know give you advice kind of person you learned by osmosis and by hanging out with him he's not necessarily a teacher there was an article one time

that described me as ted turtor's protege and i saw him a couple days later he's like protégé huh i didn't know i had any of those and he wouldn't think of it that way He is 71 years old now. We talked about the restaurants that he's involved in, but every once in a while you hear something about him wanting to maybe seize control of CNN again. Is there a next act in his business life? And if so, what do you think it is? I think the answer is yes.

I do not think it's CNN or anything, frankly, in the media business. He made that comment recently, and it was picked up a lot of places. I think he was just trying to get a rise out of whatever the audience was that day. He's really sort of turned the corner on the media business. he is spending a lot of time on alternative energy. When I first started working on the book with him about four years ago, I said, you know, if you were a young guy starting out today, what would you go into? And he said, alternative energy.

And naively, I said, well, why is that? And he looked at him, he said, because it's the biggest business opportunity in the history of mankind, that's why. And so he's actually spent a lot of time with Boone Pickens. And if you think about a guy like Ted, not only has you have resources and a platform to speak on the subject, he also owns two million acres of land. He owns a million acres in New Mexico alone, and much of which is ideal for solar. A lot of the land in Montana and even Argentina could be ideal for wind.

So there's a lot of interesting opportunities just with his own properties. Is he the largest private landowner in the U.S.? Yes. Wow. Which, yeah, a quantifiable achievement. There you go, quantifiable. He's got that. He's got the losing $10 million a day for two years.

You got it. And he's the largest owner of bison, 50,000 head of bison. So put that on the list, too. Right, but he also owns a restaurant that serves bison. Yes. That's self-interest. He'll say, I reached the conclusion that to save the bison, we had to eat them. And so what he has tried to do is create more of a market for bison so that other ranchers will use their properties to raise bison.

And actually, the price has gone up since he has worked on that. Call me, Ted, the New York Times and Wall Street Journal, bestseller. It's Out in Paperback, co-author Bill Burke. Thanks so much for being here. Thank you. It was a pleasure. As always, people on the program may have interests in the stocks they talk about. Don't buy or sell stocks based solely on what you hear. I'm Chris Hill, and back in the studio with me, our trio of senior analysts, Seth Jason, James Early and Shannon Zerman.

Guys, it's time again. Time to focus on the stocks that are on our radar. Seth Jason, we'll start with you. Time to look at Microsoft. Mr. Softie. I'm speaking in typo. cash flow yield, free cash flow yield, 9, 10% right now. This video game stuff isn't much of a needle mover yet,

but I think it has great potential in the future. Windows 7 is doing okay, and the new office suite is out. Always drives a lot of revenue. It just looks fairly cheap, and it is a company that has put out so much cash flow over the years, and we'll continue to do so that is probably a great kind of,

I don't know, geyser-type dividend play, which is the kind of thing everyone in this room loves. Yes. And the ticker? MSF-T. James Early? Chris, you probably know what I think of ketchup, right? Not much.

It's toxic waste. Yeah, it has added sugar, and if a product has added sugar, I'm generally not at that party. But Heinz is a nice company that I do like. H&Z is a ticker, just to raise its dividends, 7.1%. Lots of cash flow here of 59% return on equity, which is really nice, and 11% valuation upside by my model. This products are selling really well overseas, where it has a lot of non-cetchup offering. too. Is 59% return on equity? That seems real. Is that a way above average for stock? It's very, very

nice. Yeah. Well, yeah, that's the thing. You can either have a lot of return or very low equity to reach that fraction. But hey, it's still good because we are equity owners, basically, as owners of the business. Shannon Zerran? My stock this week is Apollo Group, tickers APOL. It's online educator for profit. University of Phoenix is the school that it's most closely associated with. Just looking at the valuation profile, it's been beaten down hard, trading it about 11 times earnings where its five-year average is about 22, even cheaper in terms of its three-year cash flow. There is some headline risk surrounding the company right now, including a class action

suit that it thought it was getting off the hook of, but apparently it's not. So it may be beaten down for a reason, but I'm giving a close look. Okay. Shannon Zimmerman, James Early, Seth Jason. Guys, thanks for being here. You're welcome. Thank you, Chris. Thanks also to our special guest this week, Bill Burke, co-author of Call Me Ted, the best-selling

biography of Ted Turner. If you missed any part of the show, you can find it at our website, motleyfoolmoney.com. You can also get a copy of our free report, the Motley Fool's top stock for 2010. All that and much more at motleyfulmoney.com. Our engineer is Steve Broido. Our producer is Matt Greer. I'm Chris Hill. Thanks for listening. We'll see you next week.