Fool.com: Starrgate or Stockgate? (Fribble) September 18, 1998

Friday, September 18, 1998

Starrgate or Stockgate?
by Bob Bobala [email protected]

We Fools like to say we're interested in a market of stocks rather than the stock market. Accordingly, we don't care to conjecture much about how the Starr Report and President Clinton's troubles affect the market as a whole. The impact is impossible to gauge, and if anything, it's just a minor blip in the cosmos.

Given that, however, I've had a heck of time reading the Starr Report from the perspective of an investor. After all, a couple of my stocks show up prominently in this whole "salacious" mess. Forget the aggregate market; there have been a few specific companies that have played a major role in this debacle. You never know what kind of impact the brouhaha is going to have on them.

Gap Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GPS)") else Response.Write("(NYSE: GPS)") end if %>, of course, is the standout. As we all know by now, on February 28, 1997, Monica Lewinsky showed up at the White House "wearing a navy blue dress from the Gap," which would lead to -- well -- let's just say a presidential explosion of forensic evidence.

What publicity! Is this why Gap's stock recently rose 20%? Or did it contribute to the 20% downturn in August? In last month's Q2 conference call, a Gap representative said: "We cannot confirm or deny whether Time magazine was right in its allegation about the [Monica Lewinsky] dress being a product from the Gap." Oh, the uncertainty of the market! Will Gap restock the dress? Discontinue it? Will the public buy it? Get out the pollsters.

Another player in this spicy, er, indigestible affair, has been Starbucks <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SBUX)") else Response.Write("(Nasdaq: SBUX)") end if %>. Former Clinton aid George Stephanopolous, who after the Starr Report's release learned that the first illicit liaison began in his office, had originally downplayed the president's association with Lewinsky. Stephanopolous said Lewinsky didn't stand out among any of the other White House interns. He'd seen her at Starbucks on a few occasions, but that was about it.

Aha! Now we know why SBUX got sliced in half this summer. The coffee maker's rep was tarnished by its tawdry customers. Well, I'll go on record right here and now and say this: I've been to the Starbucks Monica frequented. I worked two blocks away from it, and I'm pretty certain no one's had sexual encounters with the president there. So, Washingtonians, please don't be afraid to frequent that SBUX location. We need to get those same-store sales up and hope the stock will rebound.

Finally, although neither is specifically mentioned in the Starr Report, one can imagine that either Papa John's International <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PZZA)") else Response.Write("(Nasdaq: PZZA)") end if %> or Pizza Hut, a subsidiary of Tricon Global Restaurants <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: YUM)") else Response.Write("(NYSE: YUM)") end if %>, may have played an important role in the fiasco. It was during the federal government shutdown in the fall of 1995 that Clinton and Lewinsky first got to know each other. How? Lewinsky said the president "suggested that she bring him some slices of pizza." That testimony is corroborated by footnote 175 of Starr's report: "The President and Ms. Lewinsky (as well as others) appear in eight White House photographs taken on November 17; in three of them, the President is eating pizza."

Whoa, what a photo opportunity for the lucky pizza company! You can bet that this could bring on another legal squabble between Papa John's and Pizza Hut, which is already suing the former contending that PZZA's "Better Ingredients. Better Pizza." advertising campaign is "false and misleading." Talk about false and misleading. Perhaps one of these companies should ask the president or Lewinsky to be a spokesperson. Imagine the new revenue stream! They'd just better hope the presidential pizza wasn't ordered from Domino's.

Now, I haven't read the whole report, so for all I know there's some raunchy details in there over Big Macs and McDonald's Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MCD)") else Response.Write("(NYSE: MCD)") end if %>, too. Unlike Ken Starr, though, I'll spare you that. But check your stocks, Fool. Who knows what kind of impact this scandal is having on them.

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