The economy has been tough on everyone these days, but don't sell the farm just yet. And don't sell your family, either -- eBay
The online auction site pulled the Young family's offer to sell itself -- a family of four consisting of TV humor writer Steve Young, his wife, and "two congenial children with an affinity for heart-warming, homemade birthday cards and copiousness, candy-coated smiles for both family and legal benefactors" -- because the auction violated one of the firm's user guidelines, which prohibits the sale of people.
Another eBay no-no, by the way, is the selling of human parts. Guess you'll have to find another way to unload that spare spleen.
In today's Motley Fool Take:
- AOL Under the Knife
- Quote of Note
- Drug Approvals on the Rise
- Shameless Plug: Motley Fool Credit Center
- Schering-Plough Sneezes Again
- Quick Takes: Ford, Adelphia Communications , J.C. Penney, more
- And Finally...
AOL Under the Knife
News has been flowing out of AOL Time Warner
Yesterday, we reported the media company's questionable disclosure of a goodwill writedown. Now there's news that AOL will spin off part of its cable operations in this year's second quarter, along with plans for more layoffs and further cost-cutting for the America Online division.
First, AOL will sell part of its Time Warner Cable stake in an initial public offering. Chief Financial Officer Wayne H. Pace didn't disclose what percentage would be sold, but he did say the cable operations are worth at least $6 billion. The first $2.1 billion generated from the offering is earmarked to pay down the company's debt. AOL hopes the spinoff will create a freestanding cable company capable of rapid growth through stock-financed acquisitions.
AOL also has big plans for its America Online division -- big cost-cutting plans, that is. The division has become a sore spot over the last few years, as declining advertising revenues have combined with stagnating membership to slow overall growth.
America Online's will cut its massive $1 billion marketing expense (you didn't think sending out a bazillion software CDs was free, did ya?), and other expenses face the knife, too. The company's negotiating new computer network contracts in an attempt to save money, for example.
Further jobs will be eliminated, though the exact number wasn't disclosed. Pace did say, however, that out of 18,000 employees, the bulk work in customer relations, and only about 6,000 to 7,000 make up the company's "core head count." Another 3,000 to 4,000 work in international operations.
Pace described 2003 as a "reset" year for America Online. That may be putting it lightly.
It should be interesting to follow the storylines as they play out over the next year. How much will AOL get for the cable offering? Will more cost-slashing heal America Online? Will the goodwill writedown affect its debt rating? We'll just have to wait and see.
"The whole world steps aside for the man who knows where he is going." -- Anonymous
A report by Lehman Brothers suggests that at least 30 novel drugs, including seven biological products, could be approved for the market in 2003. Last year, only 25 new products were approved.
Between 1995 and 2001, an average of 45 new drug marketing authorizations were filed annually, about 50% above 2003 expectations. So there's still a relative shortfall of new drugs being filed. This dearth has received plenty of worried press, including laments that biotech has let us down. However, since research and development spending hasn't slowed, improvement is likely to arrive again, given patience. No industry can run on high-gear nonstop.
Companies in the hot seat this year -- that stand to gain the most or disappoint -- include GlaxoSmithKline
Overall, the FDA weighs safety against progress and speed. Patients benefit when new drugs get to market quickly, but only if they're safe. Caution causes delay in approving many drugs.
Credit can be your best friend or your worst enemy. And you know what they say... Don't turn your back on your enemies. Friends may come and go, but enemies accumulate. So it's time to address that big elephant in the closet -- your credit. We've got your back! Visit our new Motley Fool Credit Center, and learn how to make credit work for you.
The company says 2002 profits will be 35% to 40% lower than it previously thought, thanks to an even sharper-than-expected decline in sales of Claritin. The world's top antihistamine was relegated to over-the-counter status in December, but management -- thinking doctors would continue writing prescriptions for the drug during the "market transition period" -- shipped enough of it to meet anticipated demand. Prescriptions fell sharply, however, and now the company is unsure how much product might be returned for refunds. Thus, the fourth-quarter results will reflect a decision to completely write off all the Claritin that remains with wholesalers.
That will drop earnings from the anticipated $1.58 per share for 2002 to the $1.40 to $1.42 range. Meanwhile, 2003 earnings projections of $1.00 to $1.15 per share remain intact.
When Schering first warned about lagging Claritin sales, it caused quite an uproar. The announcement was preceded by a 15% drop in the stock price, prompting an SEC investigation into whether the company had tipped analysts and large investors before the official warning. CEO Richard Kogan announced his resignation six weeks later.
After all the turmoil, Schering's share price, while off only 3% in afternoon trading, sits uncomfortably near a five-year low.
Timothy Werth, formerly director of accounting for Adelphia Communications, pleaded guilty to securities fraud today for his role in cooking the books of the now-bankrupt cable company. He's now expected to cooperate as prosecutors press on against founder John Rigas and his sons, Timothy and Michael.
Although the unemployment rate remained steady at 6% in December, figures out from the Labor Department today show 101,000 Americans lost their jobs last month. There are now 3.2 million people who've been out of work for 15 weeks or longer.
Retailer J.C. Penney
In local news, thousandaire Bobby-Joe Jenkins donated $100 toward the new restroom facilities at the county library. Giddy librarians promised to name the toilet wing "Jenkins' Johns."
Today on Fool.com:
- Rick Munarriz congratulates investors on their tenacity and strength.
- Microsoft forays into "smart" watches.
- What does Tommy Mottola's sudden departure from Sony mean for the music industry?
- UCBH Holdings has found a profitable and growing niche in the Chinese holding base.
- In preparation for tax season, here's a list of records you need before you start.
- In Fool's School, look to this investor for inspiration.
Bob Bobala, Robert Brokamp, Jeff Fischer, Tom Jacobs, LouAnn Lofton, Bill Mann, Selena Maranjian, Rex Moore, Rick Munarriz, Matt Richey, Jackie Ross, Reggie Santiago, Dayana Yochim
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