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Tuesday, November 17, 1998
"The greatest investors are often outstanding human beings, insofar as they exemplify the highest achievement in one or more human characteristics like patience, diligence, perceptiveness, and common sense." -- David and Tom Gardner, The Motley Fool Investment Guide
Amazon.com of All Things Retail
Taking yet another step to expand its presence in the world of Internet retailing, Amazon.com <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AMZN)") else Response.Write("(Nasdaq: AMZN)") end if %> today started hawking videos and digital video disks (DVDs) as well as a new line of holiday gift products. The Seattle-based online book retailer took on the likes of CDnow <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CDNW)") else Response.Write("(Nasdaq: CDNW)") end if %> and N2K's <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NTKI)") else Response.Write("(Nasdaq: NTKI)") end if %> Music Boulevard site when it started offering CDs earlier this year. Now it is butting heads with online video specialists such as Reel.com, a subsidiary of Hollywood Video parent Hollywood Entertainment Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: HLYW)") else Response.Write("(Nasdaq: HLYW)") end if %>, and other Internet stores selling general merchandise.
The Amazon video store opens shop with a selection of more than 60,000 titles plus about 2,000 DVDs, some of which will be offered at a discount. The move into video retailing had been anticipated since the company acquired Internet Movie Database Ltd. (www.imdb.com) in April. In the new gifts area, products include personal electronics, computer and video games, "gear and gadgets," and toys. Unlike the discounts the company offers on books, Amazon.com's gift items are priced in the middle of the market, with more emphasis on convenience and information than price alone.
Keith Schorsch, general manager of the gift service, told The New York Times that customers kept asking the company to point them to the Amazon.com of other merchandise beyond books and music. "We would rather be the Amazon.com of all of the things our customers want to buy," he said.
Elsewhere in online retailing, computer products retailer Buycomp.com is changing its name to Buy.com and now selling books, videos, music, games, and other consumer products, giving Amazon a run for its money. Buy.com plans to acquire online book, video, and game retailer SpeedServe Inc. from Ingram Entertainment. Not to be left out, Kmart <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: KM)") else Response.Write("(NYSE: KM)") end if %> yesterday launched a music website (www.musicfavorites.com) carrying more than 100,000 CD and cassette titles. Meanwhile, Staples <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SPLS)") else Response.Write("(Nasdaq: SPLS)") end if %> is teaming up with Yahoo! <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: YHOO)") else Response.Write("(Nasdaq: YHOO)") end if %> to sell office products online.
News to Go
The Federal Open Market Committee meets today in Washington, raising anticipation that Alan Greenspan & Friends will further cut interest rates following last month's surprise move to lower the discount rate by 25 basis points to 4.75% from 5% and reduce the federal funds rate by 25 basis points to 5% from 5.25%.
Drug store chain Rite Aid <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RAD)") else Response.Write("(NYSE: RAD)") end if %> announced it will acquire Eli Lilly & Co.'s <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LLY)") else Response.Write("(NYSE: LLY)") end if %> PCS Health Systems subsidiary for $1.5 billion in cash. In addition, Lilly will retain $100 million in cash from PCS, a leading pharmacy benefits manager that oversees almost 300 million prescriptions a year. Rite Aid expects the acquisition to be accretive to earnings in the first full year of operation.
Enterprise software company PeopleSoft <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PSFT)") else Response.Write("(Nasdaq: PSFT)") end if %> late yesterday said it has formed Momentum Business Applications Inc., a research and development company designed to accelerate the company's efforts in areas such as e-business, analytic applications, and industry-specific software products. PeopleSoft, which will make an initial investment of $300 million in the new firm, plans to distribute one Momentum Class A common share for each 50 shares of PeopleSoft common stock sometime around year-end.
Managed care company Humana Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HUM)") else Response.Write("(NYSE: HUM)") end if %> is in talks to acquire the struggling health-care division of Prudential Insurance Co. of America for about $1 billion, The Wall Street Journal reported. This comes three months after a deal for Humana to acquire United HealthCare <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: UNH)") else Response.Write("(NYSE: UNH)") end if %> fell apart.
Insurance and financial services company Allmerica Financial Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AFC)") else Response.Write("(NYSE: AFC)") end if %> raised its offering price for the 16.8% of property and casualty insurer Citizens Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CZC)") else Response.Write("(NYSE: CZC)") end if %> that it doesn't already own to $33.25 per share in cash. Citizens gained $1/16 yesterday in advance of the news before trading was halted.
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Yi-Hsin Chang (TMF Puck), Writer
Jennifer Silber (TMF Amused), Editor
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