Here at The Motley Fool, we tend to be skeptical of intraday reports that the market is up (or down) "amid this, amid that, or amid the Redskins' demoralizing overtime loss to New York's football Giants."
But today it seems a lock that stocks sold off on investor concerns over the dollar's tumble to multi-year lows vs. the yen based on comments made at this weekend's G-7 meeting.
Currency valuations are important and influence the markets both directly -- when foreign investors, in this case primarily those in Asia, withdraw capital from U.S. markets -- and indirectly through the economy. So, the dollar bears watching.
Above all, however, investing is all about long-term planning; big decisions shouldn't be made amid intraday noise. It's not easy, but stay poised in the pocket.
In today's Motley Fool Take:
- Grasso's Exit Just the Beginning
- Quote of Note
- AOL's Coda
- Discussion Board of the Day: Time Warner
- CarMax Zigs and Zags
- Shameless Plug: Motley Fool Visa Card
- And Finally...
Grasso's Exit Just the Beginning
The New York Stock Exchange has named a new interim chairman and CEO. John Reed's appointment, however, is but the first drop in a torrent of change that will hit the venerable institution in the coming months.
Reed, the former Citigroup
Thus, about half the NYSE's directors are now in hot water, and on their way down the drain. USA Today says 12 Wall Street executives on the board will be gone by the end of the year -- victims of a new reform plan being pushed by fellow board member and Goldman Sachs
Paulson's plan remedies the biggest sickness in the NYSE's structure: The very firms the exchange is supposed to regulate are helping run it.
In an op-ed piece in yesterday's New York Times, Muriel Siebert -- the head of Siebert Financial
In short, we'll know the NYSE is sincere when it operates the same way it wishes its member institutions would.
Quote of Note
"If it is not right, do not do it; if it is not true, do not say it." -- Marcus Aurelius
In music, coda signifies the concluding movement of a piece. And that's exactly what Time Warner
After three years of declining CD sales, enough is enough. The five major labels may soon become four -- and possibly only three, if Vivendi
Yes, it's not just hungry indie artists who want to sign record deals these days. The labels want to sign off on contracts, too: exit strategies.
The EMI deal, which would be paid mostly in cash, would help Time Warner reduce its debt load and also stem off the fiscal drain of an industry with no real turnaround in sight. More than 60 million people are reportedly downloading MP3 song files for free and even now as the industry turns litigant, there are few guarantees that the file swappers will come back as buyers. Even online specialists like RealNetworks
But there is value in the Warner Music library. Between Madonna, Linkin Park, Missy Elliott, and Red Hot Chili Peppers, the label has an enviable roster of artists. It's only a matter of finding ways to monetize musical distribution in a new age that values a blank recordable CD over a prerecorded one. That won't be an easy task.
You can't blame Time Warner for wanting out. But if EMI -- or any other remaining label -- ever finds a way to make it work, this will be a time when garage band Picassos change hands at garage sale Picasso prices.
Discussion Board of the Day: Time Warner
First, Time Warner drops the AOL name. Now, it might be looking to shed its music business. Is Time Warner doing the right thing? Are the days of the diversified entertainment conglomerate coming to an end? All this and more -- in the Time Warner discussion board.Only on Fool.com.
CarMax Zigs and Zags
Auto retailer CarMax
CarMax earned $39.6 million for the period ended August 31, vs. $31.7 million in the prior year's quarter. Per share, the company netted $0.37 compared to $0.30. Included in 2002's Q2 results was a charge of $1.3 million, or $0.02 a share, related to the company's separation from consumer electronics firm Circuit City
Total revenues improved by 14% to $1.2 billion. Used-car sales, which make up the bulk of CarMax's business, shot up 20% to $939 million. Comparable store sales for used vehicles by unit grew by 6%, while new-car comps declined by 9%.
The company's net income growth translated solidly to its cash flow statement, with cash from operations rising 27%. Its capital expenditures more than doubled to $83 million from $40 million, reducing free cash flow to $35 million through the first six months of the year. In the same time frame last year, CarMax generated $53 million in free cash flow.
This isn't troubling, however, as CarMax is spending more to grow its business. The retailer's ambitious goal is to double its annual sales to $8 billion by fiscal year 2007. It plans to get there by leveraging overhead expenses, keeping comparable store sales growth strong, and adding as many as 44 new stores.
More immediate is the company's current (third) quarter. Because of below-plan sales in early September, and disruptions from Hurricane Isabel, CarMax now expects to earn $0.19-$0.21 a share, below analysts' expectations for $0.22. However, it expects to compensate for some of the lost sales from Isabel, and predicts earnings for Q4 of $1.11-$1.16, ahead of its previous outlook of $1.00-$1.10.
Investors responded to the lukewarm Q3 guidance by sending shares of CarMax down around 3% to $34 and change. Still, shares have climbed upward since a March 52-week low of $12.45, helping shareholders handily beat the S&P 500.
While investors expect near-perfection from CarMax at this point, they're still likely to get it as long as the company's full-year guidance holds, making their disappointment only temporary.
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Today on Fool.com:
Mathew Emmert stars in The Dividend Shuffle, where he deftly discusses the purpose of building an income-producing portfolio. Speaking of skill, deal maker Barry Diller's InterActive Corp. this morning announced its acquisition of Hotwire.com. And at the other end of the skill spectrum, high-flying newcomer JetBlue's Privacy Violation is raising questions about the company and its stock.
And today in sports, Amazon Plays Ball.
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