Is it feast or famine on Wall Street or what? Whew! Not only has it been a huge week in earnings, but today alone was enough to make a Fool's head spin. Then again, how often do we get to talk about Apple Computer, Intel, Yahoo!, Google, and IBM all in one day?
News is news, but looking back over 25 years, even today might seem like just so much noise. Execution is important, but real wealth is built gradually, over time. Read on to see what a certain genius has to say on the subject of accumulating wealth. There are a few choice words from Albert Einstein, too.
In today's Motley Fool Take:
- Do You Yahoo! or Google?
- Quote of Note
- The Wrath of Linux
- Discussion Board of the Day: Apple Computer
- Shameless Plug: Motley Fool Income Investor
- More Fool News
- And Finally
Do You Yahoo! or Google?
More people are still Yahooing, with the company announcing in its earnings release yesterday that it had the most unique visitors to its U.S. sites in Dec. 2003 (over 111 million).
While keeping its focus on "great products equal a great business," Yahoo!
Leading up to the Yahoo! results, there was quite a bit of giddiness about how good the numbers and guidance would be. So, investor disappointment was inevitable as the stock price declined -- which was also the case with the reports from Apple
Yahoo! has made strides with its subscription businesses, such as with job listings, dating, email, and DSL services. There are close to 5 million paid subscribers, with expectations for 7 million to 7.5 million by the end of 2004. It has also entered a joint venture to create an auction site in China with Sina
Yet, Yahoo! is still a marketing company, which means it is absolutely critical that it dominate search. This means a full-scale attack on Google. After all, estimates are that privately held Google could raise $4 billion in an IPO (Yahoo! has $2.5 billion in the bank).
So far, Yahoo! has demonstrated strong execution on search. The integration of Oveture seems to be ahead of plans and its relationship with Microsoft
It is no secret that Microsoft is developing its own algorithmic search platform, which could jeopardize the Overture relationship (but this could still be a year away). Amazon.com
Yahoo!, however, appears to be the most formidable competitor. The first strike appears to be the first quarter, as Yahoo indicated it will introduce a wide array of search features among its properties -- and, yes, dump Google as a partner.
Quote of Note
"If you want to make enemies, try to change something." -- Woodrow Wilson
The Wrath of Linux
The SCO Group
SCO claims that residual bits of the UNIX operating system -- which it owns -- exist in Linux. SCO wants every Linux user to pay up for this alleged use of its intellectual property, and the firm is threatening to sue anyone who doesn't pony up. This week, SCO took its threats to the U.K., France, and Italy.
In response, Linux-heads, who developed the operating system to liberate themselves from exactly this type of corporate bullying, have been calling for the head of SCO CEO Darl McBride on a platter. Corporations like IBM and Novell
But this week, SCO's rivals went on the offensive. Novell released papers to support its claim that it still owns the UNIX code in question. And Novell also began a well-publicized program that offers its Linux customers protection should they be sued by SCO.
Then SCO's three-front war exploded into a lopsided battle royale. A consortium of Linux developers called the Open Source Development Labs (OSDL) launched a $10 million legal fund to protect any Linux user from SCO's courtroom hounds. The OSDL's roster includes: Cisco
If SCO thought threat-born licensing fees would provide a quick boost to the bottom line, it looks to have miscalculated. As fellow Fool Tom Taulli noted last month, SCO has tried to cast its lawsuits in apocalyptic terms. But with the entire computing world putting its money behind Linux, it appears that, for SCO, the apocalypse is now.
Discussion Board of the Day: Apple Computer
Did you get to check out Apple Computer's quarter? What did you think? Are you pleased or do you have concerns over the company's gross margins? Does Apple really have what it takes to be a major player in mainstream personal computing? Discuss all this and more -- in the Apple discussion board. Only on Fool.com.
In a deal worth an estimated $58 billion, J.P. Morgan Chase
All told, the three would manage more than $3 trillion in assets. To put this in perspective, the entire U.S. gross domestic product stands at about $11 trillion.
That's a whole lot of cabbage parked in just three companies. Do the words "too big to fail" ring in anyone else's ears?
Both Bank One and J.P. Morgan have fairly acquisitive pasts. Bank One sent its management team packing in 1999 after performing miserably following a merger with First Chicago. J.P. Morgan's merger with Chase Manhattan has perhaps predictably failed to produce the economies of scale that management sold to investors as benefits.
In the deal, J.P. Morgan will get a Midwest-centric branch system to complement its network on the East Coast. It will also get about another $500 million in private banking assets under management to go along with its $24 billion portfolio. And it will take over one of the largest credit card operations in the country. (My card's purple.)
The Chicago Tribune ran a fairly insightful piece on the merger, noting that it also furthers the career of Bank One's current CEO Jamie Dimon. By most accounts, Dimon has done a good job cleaning up the mess he found when he arrived at Bank One (its recent implication in the mutual fund scandal notwithstanding), but he's an East Coaster and Citibank alumnus. People in the Midwest have wondered nearly since his arrival what he would do to get back to New York. The most bandied-about theory was that he'd engineer a takeover by Citigroup.
But J.P. Morgan may be a more logical choice. CEO William B. Harrison has been thought for some time to be looking to retire and will do so in 2006 under terms of this agreement. A look at Dimon's contract shows that he stands to benefit from the change in control to the tune of several million dollars. But there won't be much change of control, as Dimon will take over the captain's chair of the combined company upon Harrison's departure.
This combination is a continuation of the merger trend started by Bank of America's takeover of FleetBoston
Albert Einstein called compound interest the "greatest mathematical discovery of all time." Frankly, we're adherents to string theory and never really understood a word the man said. Still, who are we to argue with Einstein? Point being, getting paid a dividend and having that dividend compound and grow over the course of years is the best way to build wealth known to man -- all men (and women, for that matter). Mathew Emmert gives you the best of the best income investments each month in his Motley Fool Income Investor. Give it a try.
Mor e Fool News
- IBM Sees Strong 2004
- Intel: The Good, Bad, and Hopeful
- Time Warner's Got Game
- RadioShack's Jazzed
- Sportsman's Guide Scores Big
- H&R Block Party?
For all of today's stories, see Today's Headlines.
Rick Aristotle Munarriz knows a thing or two about music -- and computers. Today, he argues that Apple's forays into digital music have others wanting in. See what he's talking about in Apple: A Space Odyssey. Robert Brokamp, meanwhile, harkens back to the dustbowl days in Fallow Finances. Around here we think of Robert as Johnny Money-for-Retirement Seed. OK, that's stupid, but still ... don't plant your own financial bulbs in barren ground.
Bob Bobala, Robert Brokamp, Sam Edwards, Paul Elliott, Mathew Emmert, Jeff Hwang, Seth Jayson, LouAnn Lofton, Alyce Lomax, Bill Mann, Selena Maranjian, Dave Marino-Nachison, Rex Moore, Rick Munarriz, Reggie Santiago, Tom Taulli, Dayana Yochim