As you know, it's customary on Friday afternoons in Spring to think about... New Year's resolutions! We know you made some, and you've probably slacked off a bit since January. If you'd like to take the weekend to get your finances back on track, re-visit our Financial Resolutions area. Or wait until Monday, and print out the handy-dandy, net worth-enhancing cheat sheets at work. We won't tell your boss.
In today's Motley Fool Take:
- Voting Against eBay
- Quote of Note
- You've Got Microsoft
- Paying for School
- New Nasdaq ETF
- Discussion Boards of the Day: Buying, Building, and Maintaining a Home
- Quick Takes: Dollar Tree, Home Depot, Bank One, more
- And Finally...
It's that time of year when, as a shareholder, you're receiving annual reports and proxy statements in the mail. Hopefully, you're reading each new proposal offered by your companies, forming your opinion, and voting accordingly before the company's annual meeting. I just called in my votes to eBay
The proposal? To increase the number of stock options that eBay may issue to employees, directors, and consultants by 14 million shares, or 56%. Why vote against this proposal? Because eBay has already been one of the most generous (perhaps to excess) issuers of options in the last few years, and this increase would portend more of the same.
Last year, eBay's net option grant to insiders was greater than 4% of its outstanding shares, effectively diluting all common shareholders by that same amount. Yes, shareholders saw their participation in the company's earnings power erased by 4% last year alone. And there's more ahead.
As 2003 started, unexercised stock options held by eBay employees already totaled 12% of the company's outstanding shares. So, there's already big dilution potential coming down the pike. Given this, it's hard, as a shareholder, to vote in favor of still more dilution. So I didn't.
At a time when other companies, including Yahoo!
Granting shares so excessively is suspect because: (1) eBay is a healthy company in an unhealthy economy, and surely attracts plenty of applicants; (2) eBay has $1.5 billion in the bank and counting, and is profitable, so it can pay additional cash to retain employees; (3) eBay is hardly a startup that needs to grant "promising" stock options in "generous" amounts to retain talent.
Additionally, consider the numbers: eBay employs 4,400 people around the globe. If it could grant another 14 million shares of its stock to employees, as it proposes, that would come to 3,181 shares per employee (assuming life were so fair). At current prices, that's $318,000 in gross proceeds per employee. (Net proceeds would be lower based on exercise prices.)
An article on eBay's options on TheStreet.com suggests that the company may be trying to grant options in advance of a possible FASB ruling that companies must expense them. That ruling is about a year from a decision, however, leaving today's dilution issue entirely up to shareholders' votes.
"Information Superhighway is really an acronym for 'Interactive Network For Organizing, Retrieving, Manipulating, Accessing And Transferring Information On National Systems, Unleashing Practically Every Rebellious Human Intelligence, Gratifying Hackers, Wiseacres, And Yahoos'." -- Keven Kwaku
Proving that cats and dogs really can learn to live together, AOL Time Warner
The settlement between the two corporate titans seems unfathomable when you consider that it was just a couple of years ago that the two were brawling over prime real estate. As the landlord, Microsoft was always protective of its operating system. More than just Windows, it was a way for Microsoft to get the masses to embrace its Internet Explorer browser, sign up for Web access through its MSN.com subscriber service, and hold up the virtual string between online Dixie cups with its own instant messaging service.
AOL had everything to lose since the vast majority of new computers came shipped with Microsoft's operating system. Was this a case of antitrust to snuff out AOL's Netscape browser, America Online service, and AOL Instant Messenger? A handshake has silenced the answer as Microsoft will be paying AOL $750 million to settle the private lawsuit and both companies have entered into a new media partnership.
While early morning trading has voted AOL the bigger beneficiary of the deal, let's not assume that there is only one winner. For starters, what's $750 million to Microsoft's $46 billion war chest? And while the agreement calls for AOL to have seven years of royalty-free use Microsoft's browser among other digital pairings, that's just another notch in Microsoft's lipstick case.
The only real loser here is RealNetworks
Then again, that's just how most couples emerge on the way out of the honeymoon suite. Let's see what happens when the pact subsides and the seven-year itch takes over.
From preschool to grad school, tuition happens. That's why we wrote The Motley Fool's Guide to Paying for School: How to Cover Education Costs From K to Ph.D. Discover unexpected ways to lighten the load, from innovative savings plans to new tax breaks. Get your fair share of $95 billion in financial aid. Learn money-saving, tuition-busting tips. Required reading!
The Nasdaq Composite has been the forgotten bridesmaid of stock indexes, with nary an exchange-traded fund on her calling card. (An ETF is a bite-sized version of an index fund that enables investors to buy a portfolio of securities in a single share.) Her pals at the Dow Jones Industrial Average have "diamonds" (DIA) following her every move, the S&P 500 has "spiders" (SPY), and the Nasdaq 100 Index got hitched with "cubes" (and a stylish QQQ ticker symbol).
This week, Fidelity Investments came calling, though, and filed to take the Nasdaq Composite to the ETF altar. It'll be the company's first exchange-traded mutual fund, joining other ETF bearers such as Barclay's, Merrill Lynch, Vanguard and iShares. (To bone up on your ETF know-how, check out our new a 60-second refresher course.
Fidelity Nasdaq Composite Index Tracking Stock (may we humbly suggest the ticker XXX) will seek to match the return of the widely followed benchmark, which includes about 3,600 listed Nasdaq stocks. The ETF is expected to begin trading on Aug. 11, according to Fidelity's filing.
Around here, Fools call the Nasdaq Composite "CiscIntSoft," for the three powerhouse technology companies -- Cisco, Intel, and Microsoft -- that comprise the majority value of the index. Buying shares in one of these companies may be all you need to add that Nasdaq-y element to your portfolio, although the ETF will obviously offer better diversification. You need a brokerage account to buy ETFs anyways.
Though a late-bloomer in ETF land, surely Fidelity sees a bright future in its new union. Assets invested in ETFs reached nearly $95 billion in January, up from $15.6 billion in 1998, according to research posted on Fidelity's own ETF education area.
Before you rush in, remember to check on fees. The Fidelity ETF will have an expense ratio of 0.30% (30 cents per $100 invested). By comparison, expenses for the Nasdaq 100 Trust are 0.20%, and SPDRs (an index mutual fund tracking the S&P 500 Stock Exchange) charge investors just 0.12% annually.
Discussion Boards of the Day: Buying and Maintaining a Home
Is your house falling down around you? Just wish you had a house? Fix it up on our Building / Maintaining a Home board, or learn how to finance, buy, or sell a home on Buying or Selling a Home. You can do it, and you can get it, only on Fool.com.
There's green in them thar trees. Dollar Tree
Taking "Home" remodeling to its most extreme definition, Home Depot
From Home Depot to home cooking, Cracker Barrel parent CBRL Group
Is "One" the loneliest number? It won't be now that Bank One
Today on Fool.com:
- For updated stories throughout the day, bookmark our ever-changing News section.
- Mad, Mad Marketing: Rex Moore measures the level of marketing madness by the number of blades on our razors.
- The New Tax Cuts and You: How much of that $350 billion will end up in your wallet?
- Have a great home-improvement idea? Submit it to our latest contest, and you could win $500!
- In Fool's School, you can learn a lot about a company by minding its 10-K's and 10-Q's.
Bob Bobala, Robert Brokamp, Mathew Emmert, Jeff Fischer, Tom Jacobs, LouAnn Lofton, Bill Mann, Selena Maranjian, Rex Moore, Rick Munarriz, Matt Richey, Reggie Santiago, Dayana Yochim