The Federal Open Market Committee (FOMC) held steady on interest rates today and warned the U.S. job market is weakening. The Fed has shaved 5.5% off its federal funds target rate in 13 cuts since January 2001. Today that rate -- which banks charge each other for overnight loans -- stands at 1%, a 40-year low. The FOMC "perceives that the upside and downside risks to the attainment of sustainable growth for the next few quarters are roughly equal."

In other news, a hurricane steamed toward the East Coast, working people into a frenzy from Georgia to Massachusetts. News reports said Alan Greenspan was spotted on a Coast Guard cutter off the shores of Virginia, looking through binoculars, muttering, "Twenty-five basis points, 50 basis points -- how much lower can we go? I'm standing pat for fear we could wipe out the Carolinas."

In today's Motley Fool Take:

Yahoo! and SBC Upgrade

Yahoo! (Nasdaq: YHOO) and the country's second-largest local phone giant, SBC Communications(NYSE: SBC), today announced upgrades to their digital subscriber line (DSL) and dial-up Internet access services.

While AOL Time Warner's(NYSE: AOL) AOL online division and Microsoft's(Nasdaq: MSFT) MSN have been shedding dial-up subscribers quarterly (840,000 made an exodus from AOL last quarter), phone companies that offer DSL have been gaining customers. Yahoo! smartly began discussions to offer DSL (and dial-up) with partner SBC in November 2001, launching the service in September 2002.

Less than a year later, they have 3 million subscribers, with 300,000 signing on just last quarter and a majority arriving through the Yahoo! network. Additionally, lucrative small-business subscribers account for 500,000 of the 3 million clients, prompting new tools aimed at them called SBC Yahoo! DSL Business Edition. (It allows for Web pages, marketing, and customer mailing capabilities, among other business features.)

For consumer surfers, the DSL and dial-up service upgrades mirror many just made by AOL and MSN and offer a few novel ones. Upgrades include new drag and drop features (drag and drop files, pictures, folders, etc., from the Web to your e-mail, IM, etc.); shared browsing (with a new browser) that allows subscribers to remotely browse the same Web pages together in real time; better e-mail and ad-blocking features; and computer-wide antivirus software.

The basic DSL service costs $29.95 a month for a 12-month contract. (It's unclear where the price goes after that -- the companies say it reverts to the "then current and applicable price" -- so, back to $49.95 a month, guys?) Bundling with SBC phone services could lower prices another 30% or so.

If the $29 price lasts, it would not be much higher than AOL's dial-up monthly charge. So far, however, it appears it can't. How many dial-up users are on the sidelines waiting for permanently lower high-speed prices? Tens of millions.

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Shopping for Isabel

Word has it Hurricane Isabel could pack quite a punch, and the run on emergency supplies could mean serious business for retailers on the East Coast. That is, as long as they can keep up with the demand.

Isabel has already had an impact on the marketplace, having cast a cloud on insurance stocks yesterday, though Foolish commentary shed some light on that. However, hatch battening along the coast could result in a retail rush for storm necessities.

On Monday, FEMA issued an alert on the storm, saying that it could hit somewhere between North Carolina and New Jersey by Thursday. The difficulty in pinpointing a hurricane's landing point puts the entire coast on alert.

According to Reuters, Home Depot(NYSE: HD) and Wal-Mart(NYSE: WMT) reported heavy sales of plywood and other items for protection from storm damage; the same goes for other hardware retailers, particularly in North Carolina. Both Home Depot and competitor Lowe's(NYSE: LOW) said they have frozen prices on plywood, which have seen a recent surge.

Wal-Mart's added attraction is that its Supercenter locations also stock groceries, including canned goods. Discount warehouse firms such as Costco(Nasdaq: COST), BJ's Wholesale Club(NYSE: BJ), and Wal-Mart's Sam's Club should also see some brisk sales, since bulk goods are attractive when stockpiling for emergencies.

Sears (NYSE: S) doesn't want to be left out. On Monday evening, the department store said in a press release that last weekend saw increased demand for power generators. It also mentioned a list of helpful storm-related items like wet vacs, sump pumps, waterproof clothing, cordless power tools, and chainsaws.

Nobody's looking forward to this storm, but signs indicate that East Coast residents appear to be preparing for the worst while hoping for the best. Meanwhile, some retailers may post some robust sales from a stormy September.

Quote of Note

If you can count your money, you don't have a billion dollars." -- J. Paul Getty

Will Sun Also Rise?

Feeling the competitive heat in servers and software from IBM(NYSE: IBM), Microsoft(Nasdaq: MSFT), Dell(Nasdaq: DELL) and a host of others, Sun Microsystems(Nasdaq: SUNW) announced today a new strategy designed to move its emphasis from hardware to software and to systems integration. It brings down prices and uses the subscription and per employee licensing model.

The Sun Java Desktop System -- a more boring but sensible name than the project's code name Mad Hatter ("I'm late, I'm late, for a very important date...") -- runs on open-source operating systems Linux and offers an applications suite to replace the familiar Windows package. It will join everything-Web to middleware and applications server and more.

To worm its way into the Windows world, the Sun system can work on any PC capable of running Microsoft Office 2000. Companies can license the system for $100 a year per employee, but this reportedly could go as low as $50 annually. The company also plans to upgrade its StarOffice productivity suite and also introduce Java Enterprise System server software.

All the plans together further the shift from a business based on higher-end Unix language servers (and hopes that the Java language alone will allow the Sun God to Rule the World) towards practical and affordable integration of hardware and software systems. No longer will a manager work a single product line. Sun will organize globally to provide solutions. (Where have they been?)

The intense competition in enterprise (a fancy term for "business") software and hardware leads the non-industry-expert investor to one conclusion and two questions. First, prices will fall, which won't help profit margins anywhere. Second and third, does it make sense to own the struggling number two or three or worse in industries characterized by rapid technological change, or will Sun be the Apple of the enterprise world, innovating its way back to some occasional success in a world dominated by others?

Sun closed yesterday at $3.86, with a $12.5 billion market cap and $11 billion enterprise value (EV) -- its $3 billion in cash and short-term securities (another $2.7 billion in long-term) doubles its total debt -- representing a market cap to free cash flow (FCF) multiple of 19 and EV/FCF of 17 (though lower if you include the long-term securities). These are higher multiples than we see for cash rich, debt free, and at least somewhat growing Microsoft. The valuation presents substantial risk.

If the shares were cheap, one might jump on the prospects for a turnaround, but it's tough to see a margin of safety here. Sun is a bet not just on Sun or some rising tide of business capital investment, but more on Linux inroads against Windows and plenty of price-cutting competition. With any sign that the Sun will rise again, the shares could participate in a turnaround, but the potential return from here doesn't outpace the risk. For now, it's for the speculator or industry expert only to consider whether Sun will play Sun City.

Discussion Board of the Day: Sun Microsystems

Will Sun Microsystems and its customers wake up and smell the Java? And are there turnaround prospects for an investor to buy with a margin of safety? Please join our investors, including those knowledgeable on the tech side of the Sun, on our Sun discussion board. Only on Fool.com/

And Finally...

Is it better to give or to receive? That depends on what it is. But you certainly don't want receivables growing faster than sales. Tom Jacobs explains why that's A Red Flag to Watch. More importantly, is it better to Google or to eBay? For the answer to that one, David and Tom Gardner turn to cyberspace's head auctioneer, eBay CEO Meg Whitman in -- you guessed it -- Google vs. eBay.

Contributors:
Bob Bobala, Robert Brokamp, Paul Elliott, Mathew Emmert, Jeff Fischer, Tom Jacobs, Jeff Hwang, LouAnn Lofton, Alyce Lomax, Bill Mann, Selena Maranjian, Dave Marino-Nachison, Rex Moore, Rick Munarriz, Matt Richey, Reggie Santiago, Dayana Yochim