After 468 straight days of rain in the Mid-Atlantic, the sun came out briefly today, pulling many back from the ledges at Fool HQ. Then the clouds returned.
Martha Stewart and Sammy Sosa continued to dominate headlines with rumors circulating that Martha showed Sammy how to cork a bat -- with a decorative twist, no less. Now, the executive editor and managing editor of the venerable New York Times have resigned in the wake of the Jayson Blair scandal.
Meanwhile, many in the financial media are talking about the Dow trying to sustain 9,000 -- as if it's some kind of magical number. What is it with nice, big round numbers? Why are we so preoccupied with them?
In today's Motley Fool Take:
- Make More Money
- Quote of Note
- AOL Keeps Its Books
- Discussion Board of the Day: AOL Time Warner
- European Rate Cut Helps
- The Motley Fool Credit Center
- Quick Takes: Martha Stewart Living Omnimedia, Ford, Xerox, more
- And Finally...
Make More Money
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Quote of the Day
"Money is better than poverty, if only for financial reasons." -- Woody Allen
AOL Keeps Its Books
AOL Time Warner
The media giant would have used the proceeds from the sale to chip away at its big, honking debt load of nearly $30 billion. CEO Richard Parsons has been and continues to be smartly focused on paying down AOL's debt. The company's been trying to generate cash for the effort by selling off non-core businesses. That's where the potential publishing division disposal came in.
AOL (one of David Gardner's Motley Fool Stock Advisor holdings) recently completed a sale of 50% of Comedy Central for $1.2 billion, and is still looking at shedding its Atlanta sports teams. It also may put its music manufacturing business up for sale, which is valued at about $1 billion. And in the fall, AOL hopes to spin off part of its cable unit. It has said it will use the first $2.1 billion in proceeds from the offering for debt reduction.
The publishing unit didn't represent a huge chunk of money, or a significant part of its debt reduction plans, compared to other assets the company's selling or trying to sell. Further, because of last week's resolution of the Netscape lawsuit, Microsoft
For these reasons, it isn't particularly troubling, or even surprising, that AOL is holding onto its book business. It doesn't signal a move away from its stated goal to shrink debt.
Discussion Board of the Day: AOL Time Warner
Is a breakup in AOL's future? There's talk once again of Time Warner spinning off the online unit, and our Fools are talking about it on the AOL Time Warner discussion board. Only on Fool.com.
European Rate Cut Helps
Today, the European Central Bank (ECB) finally relented to broad-based pressure for reduced interest rates, cutting its benchmark rate by 50 basis points (0.5 percentage points). This move, which many expected, brings the key European rate to 2.0%, its lowest level since World War II.
This long overdue decision to relax rates will provide much-needed stimulus to the European economy, which lately has been teetering on the verge of recession. While lower rates are not by any means the cure for all that ails Europe (e.g., overly high taxes, costly social safety nets, etc.), the increased liquidity will at least provide some modest boost to struggling European businesses. Fact is, any measure to prevent outright recession is worthwhile.
So why did the ECB wait so long to lower rates, you ask? Because the European bank has been too busy fighting the old war against inflation, failing to realize that the new war is against recession-induced deflation. Lately, European inflation has been declining, recently clocking in at 2.1%. In a weak economy, falling inflation is to be expected. Weakening economic demand causes prices to fall, which is why recessions are inherently disinflationary. The key for central banks is to make sure that demand doesn't dry up to the point of outright deflation. That's why today's decision by the ECB should be considered a positive.
And not just a positive for Europe, but for the entire global economy. A healthy Europe will provide better demand for imports from around the world, including those of American corporations.
The Motley Fool Credit Center
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 Motley Fool Credit Center, and learn how to make credit work for you.
As predicted, Martha Stewart has surrendered her roles as chairman and CEO of Martha Stewart Living Omnimedia
In other media drama, The New York Times'
Six former bigwigs at Xerox
Today on Fool.com:
- For updated stories throughout the day, bookmark our ever-changing News section.
- Are You an Irrational Investor?: Jeff Fischer says many of us are, and that drives the stock market to lows and highs.
- 4 Stocks to Watch: David and Tom Gardner are keeping an eye on these quality companies.
- Duel: Ketchup vs. Mustard. Rick Munarriz battles with condiments. Can he beat himself?
- McKesson's former CEO is indicted.
- In Fool's School, what does it mean when a brokerage says it's "initiating coverage" on a particular stock?
Bob Bobala, Robert Brokamp, Mathew Emmert, Jeff Fischer, Tom Jacobs, LouAnn Lofton, Bill Mann, Selena Maranjian, Rex Moore, Rick Munarriz, Matt Richey, Reggie Santiago, Kate Southerland, Dayana Yochim