AOL: You've Got Bills!

Ever considered taking investing advice from your U.S. senator? We haven't either, but a recent study done for the Journal of Financial and Quantitative Analysis makes the case that our senators may be doing all right for themselves in the market.

A mock portfolio that mimicked stock purchases of 62 senators who invested in stocks from 1993-1998 showed our erstwhile representatives besting the stock market by a total of 0.85% per month. A portfolio containing the stocks senators sold would have trailed the market by 0.12% per month.

That's not bad. One can only wonder how well they would have done if they had The Motley Fool's best stock picks each and every month.

In today's Motley Fool Take:

AOL: You've Got Bills!
Discussion Board of the Day: Time Warner
Leapin' Lehman!
Shameless Plug: TMF Money Advisor
3M Makes More Money
Quote of Note
More on Fool.com Today

AOL: You've Got Bills!

By Alyce Lomax (TMF Lomax)

Has Time Warner's(NYSE: TWX) America Online service come up with an ominous new message to pipe up upon email download? (Remember "You've got mail"? Most of us probably do, considering AOL's past as "Internet training wheels.") Get ready for "You've got bills!" News agencies report today that AOL plans to launch a bill-paying service.

Do you pay a whole bunch of bills online, keying onto different websites with different user names and passwords? Through the proposed AOL services, users will be able to aggregate all such bills (at least, from the companies that allow them to pay online) through their AOL account. They'll receive email alerts when bills come due, for example, and the service will retain sites and the passwords for easy payment surfing.

Of course, I don't really think that the service will literally proclaim in a loud voice that "You've got bills!" -- I was just joking on that aspect (talk about anxiety!). I do think, though, that the whole idea of the bill-paying service is another value-added service for subscribers.

And that's the whole point here: stopping the flow of AOL defectors. After all, people have been shedding Internet training wheels in favor of cheaper and/or higher speed solutions. In January, Fool Rex Moore reported that AOL finally moved to address the bargain-bin ISPs, after having lost more than 2 million subscribers last year alone.

Companies like EarthLink(Nasdaq: ELNK), United Online(Nasdaq: UNTD), and Microsoft's(Nasdaq: MSFT) MSN all vie with AOL. So do those purveyors of high-speed DSL or cable Internet -- which all bundle Internet costs with their existing bills, I might add -- such as Verizon(NYSE: VZ), SBC(NYSE: SBC), Comcast(Nasdaq: CMCSA), and Cox(NYSE: COX).

AOL's definitely seen better times -- like before it merged with Motley Fool Stock Advisor pick, Time Warner. Back then, most Internet users were newbies, welcoming an easy and entertaining way to navigate the mysterious World Wide Web. Let's call it the Google-ization of our society just for kicks -- now, many of us have racked up a few geek points at least, having grown up and moved out of AOL's nest into high-speed Internet and self-navigated Web browsing.

As the space continues to evolve, the next few years should be interesting as stock watchers observe ISPs compete not only on price and speed, but also through the myriad ways they can ease or enrich users' lives. AOL's bill-paying service may not be enough to woo more people to the service, but perhaps it will be among the reasons to stay.

Alyce Lomax does not own shares of any companies mentioned.

Discussion Board of the Day: Time Warner

Is this a brilliant idea? Do you think this might help bring more subscribers or keep existing ones? Or is AOL just floundering as it looks for ways to keep its subscribers from defecting? Talk to other Fools about the issues at hand on the Time Warner discussion board.

Le aping Lehman!

By Alyce Lomax (TMF Lomax)

Lehman Brothers (NYSE: LEH) marked the first of the big investment banking firms scheduled to report earnings this week, setting quite a hefty precedent with its first-quarter numbers. Having doubled its net profit while leaving analysts' projections in the dust, the stock leapt, and pulled up shares of other brokerage firms as well.

First-quarter net income for Lehman Brothers came in at $670 million, or $2.21 per share, as compared to $301 million, or $1.15 per share in the same quarter last year. Analysts were anticipating net income of $1.66 per share. Net revenue soared 84% to $3.14 billion.

Foolish colleague Rick Munarriz suspected as much yesterday, as he outlined the string of investment banks reporting earnings. Others on the roster for the coming week include Bear Stearns(NYSE: BSC), Goldman Sachs(NYSE: GS), and Morgan Stanley(NYSE: MWD). In addition to renewed interest in the stock and bond trading, which made up a large portion of Lehman's revenues, there have been increased merger and acquisitions activity as well as initial public offerings.

Meanwhile, online brokerage Charles Schwab(Nasdaq: SCH), a Motley Fool Stock Advisor pick, reported some pretty upbeat numbers for February, with client daily average trades up 53% from last year (though they're down 20% from January). Last month, discount brokerages like Ameritrade(Nasdaq: AMTD)reported bullish numbers. (And if you're one of those self-directed investors considering a discount brokerage, don't forget to take a look at our Broker Center.)

None of this is any great surprise, given the recovering economy and renewed interest in the stock market. Indeed, Lehman's robust numbers give good reason for investors to suspect a string of similar reports this week.

However, many investors already anticipated this type of success as trends improved over the last year. The above-noted firms are all trading near their 52-week highs. Investment banking firms are profiting from the recovery, and investors who placed that bet over the last couple years, when things were bleak, are happy ones indeed. At this point, though, whether record-breaking numbers like Lehman's are sustainable or a leap of faith remains an issue. After all, some possible chinks in the economic recovery remain, including a continued weak job outlook.

Alyce Lomax does not own shares of any of the companies mentioned.

Sh ameless Plug: TMF Money Advisor

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3M Makes More Money

By Rick Aristotle Munarriz (TMF Edible)

Do the three M's in 3M(NYSE: MMM) stand for Making More Money? It might appear that way after the industrial giant revised its 2004 outlook higher yesterday. The company is now looking to earn between $3.52 and $3.62 a share this year. Back in January, those targets stood at a range of $3.46 to $3.52 per share. Talk about leaving investors a Post-it note with a smiley face.

3M has a way of sticking to you. How can you not like a company that has hiked its quarterly dividend for 46 consecutive years? That kind of consistency simply cannot be ignored. Moreover, the stock has doubled over the past five years -- after nearly doubling in the five years before that.

And the revised profit outlook stacks up well against last year's $3.02 a share -- which was in itself a decent uptick from the previous year's $2.50. While a good chunk of that improvement can be attributed to currency translations -- as the company's presence overseas gives it more bang for the falling buck -- any number of global conglomerates haven't produced as well with the same fiscal tailwind.

Investors pay up for that kind of consistency, and 3M may not appear cheap at 30 times last year's free cash flow. Even with the earnings bumped higher for 2004, the company's forward P/E is still a bit over 20. No, that's not exactly cheap for a mature blue chip. General Electric(NYSE: GE),Home Depot(NYSE: HD), and Merck(NYSE: MRK) all have earnings multiples in the high teens. Why pay more for 3M?

Because it's worth it. You're just not going to find a company that has been growing its dividend distributions every year for nearly half a century in the closeout bin.

Longtime Fool contributor Rick Munarriz uses Scotch tape and Post-it notes -- but he does not own shares in any companies mentioned in this story.

Qu ote of Note

"Do the right thing. It will gratify some people and astonish the rest." -- Mark Twain

Mo re on Fool.com Today

Two months ago, David Forrest debated shorting a stock he felt had risen too far, too fast. Now he's back to revisit that storied stock, which has fallen to half of its 52-week high. Get the scoop in Stocks at the Extremes, Take 2.... And Dayana Yochim, our resident guru on personal finance, has some dire news about the financial awareness of today's youth. They may be living for the moment, but their future is cooked. Find out more in The Kids Aren't Alright.

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