The Federal Reserve left key interest rates unchanged today, hoping the low borrowing costs will help the lagging economy. Rates haven't moved since November, when they were cut a half percent. The market remained flat on the news, with the Dow closing up 0.3%, the S&P 500 at 0.7%, and the Nasdaq at 1.2%.
In today's Motley Fool Take:
- Delta's New Tune
- Quote of Note
- AOL Drops Hughes
- Shameless Plug: 60-Second Guides
- Retirement Changes for 2003
- Discussion Board of the Day: Investing for Income
- Quick Takes: Rambus, Verizon, Hershey, Sony, more
- And Finally...
The airlines industry has long struggled to be profitable, and Delta Air Lines
Today, the nation's third-largest carrier announced a bold move as it aims to better compete with successful, profitable rivals Southwest Airlines
Replacing Delta Express, Song will carry its first tune along the East Coast, and is expected to spread over more of the country soon.
Delta expects to spend less than $100 million on the launch. And with simpler pricing systems (one-way fares between $79 and $299), fewer flight attendants, and quick turnaround departures, the new airline is expected to generate a tenth of Delta's income in its first year.
Apparently, Song's jingle is, "If you can't beat your competitors, join them." The airline plans to operate mainly 757s, a move reflecting Southwest's tradition of flying only one kind of plane to reduce costs and complexity. While employees won't sing or crack jokes (like Southwest's), they will be referred to as "the talent," dress more casually, and will be part of the Delta family. And like JetBlue, Song will offer in-flight satellite television.
Rumack: You'd better tell the Captain we've got to land as soon as we can. This woman has to be gotten to a hospital.
Elaine: A hospital? What is it?
Rumack: It's a big building with patients, but that's not important right now.
-- Airplane! (1980), comedy
Shedding more unwanted weight, AOL Time Warner
AOL Time Warner got the stake as a result of a pre-merger deal between AOL and Hughes back in 1999. AOL invested $1.5 billion in Hughes in exchange for convertible preferred stock, paying 6.25% a year for the past three years. Its hopes to promote its Internet service via satellite never really panned out, though.
Those convertible shares became common stock last year. AOL Time Warner reportedly got about $800 million for the stake yesterday. It already has a good use for the money it raised: paying down its $26 billion debt load.
CEO Richard Parsons has made reducing AOL Time Warner's debt a priority ever since he grabbed the reins at the media giant. When the company announced recently that it wants to spin off its cable operations as an IPO, for instance, it said that the first $2.1 billion raised will go to debt reduction. Other non-core businesses also possibly face the chopping block, including its stake in the Comedy Central cable channel, its book publishing division, and the Atlanta Braves baseball team.
Put simply, AOL Time Warner wants cash and wants it fast. Whatever can reasonably go will go.
AOL Time Warner will report fourth-quarter results today after the bell. It's expected that Parsons will lay out in greater detail how he intends to continue reducing the company's debt.
Sixty seconds can take you farther than you think. None of us has enough time to do everything we want, and, unfortunately, we put off too many financial decisions. Have you wanted to open up a brokerage account, sock away some money in a CD, start an IRA, or just get out of debt but not had the time to figure out what to do? Don't be daunted. You can take on all these and many more (are you looking for a mortgage?) quicker than you think. Our 60-Second Guides are here to make it easy, so stop procrastinating.
We're sure that, right after Father Time rang in 2003, you kissed your beau, considered your resolutions, and wondered whether the contribution limit on your retirement account would increase. The good news is... yes. That is, yes, the contribution limits on many retirement accounts will increase this year. Here's the lowdown:
- 401(k), 403(b), 457 accounts, and SARSEPs: The annual contribution limit increases from $11,000 to $12,000 for 2003, and the catch-up contribution limit (for those age 50 and older) increases from $1,000 to $2,000.
- SIMPLE IRAs: The contribution limit increases to $8,000, and the catch-up contribution (again, for the half-centenarians and beyond) to $1,000.
- Traditional and Roth IRAs: For 2003, the limit will stay at $3,000, and the catch-up contribution limit will remain $500.
So, if money is taken out of your paycheck and deposited in a retirement account, and that amount is based on 2002 limits, contact your human resources department and have the amount changed.
Also, remember that it's not too late to contribute to an IRA for 2002, but you only have until April 15. If you'd like to learn more, visit our IRA Center.
Don't know how much you should be saving? Then find out how to retire in comfort.
Last night, Pitney Bowes
Shares of chip designer Rambus
Motion pictures, electronics, and games led the way for Sony's
In local news, County High freshman Josh Rableston had his suspension lifted yesterday. The school board agreed that his report on Lake Titicaca was about a real place after all, and directed Principal Johnson to apologize to the student and take a geography course at the local community college.
Today on Fool.com:
- For updated stories throughout the day, bookmark our ever-changing News section.
- Home Depot's been hammered. Can it rebound? Two Fools duke it out.
- Kraft takes a tumble, thanks to a mediocre forecast.
- Pitney Bowes keeps motoring, err -- metering, ahead.
- From Anna Kournikova's tattoo claim to Philip Morris' name game, Rex Moore takes a humorous look back at the month of January.
- Bill Mann says forcing multinational companies to pay Western wages overseas would be devastating.
- In Fool's School, is there a silver lining to falling stock prices?
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