<BREAKFAST WITH THE FOOL>
Monday, January 4, 1999
"Each age has deemed the new-born year
The fittest time for festal cheer." -- Sir Walter Scott
An Orwellian Euro?
George Orwell's prediction of a unified Europe just came true -- 15 years after 1984 -- with the adoption of a single European currency called the euro. As of January 1, banks and stock exchanges in 11 Western European countries now carry out non-cash transactions in euros -- local currencies, however, will remain in use until January 1, 2002, when euro notes and coins make their debut. The euro, valued at $1.16675 when the European Commission fixed conversion rates at midday December 31, began trading today.
The euro has been billed as a challenge to the dominance of the U.S. dollar (and the Japanese yen) in world trade and finance that could change the global balance of power. Certainly, the European monetary union (EMU) creates a capital market as large as the U.S. backed by one currency. But if a sum is as great as its parts, the parts absent from the euro lovefest -- known collectively as Euroland -- are Sweden, Denmark, and, most notably, Britain, which are more reluctant to relinquish their sovereignty. Plus, some critics say that the currency unification has been a rushed job and that economies in the 11 member countries are still incredibly fragmented.
Euroland comprises 292 million inhabitants, compared with the 268 million Americans. But U.S. bond and equity markets dwarf Euroland's, and the U.S. gross domestic product (GDP) is still larger: $8.1 trillion in 1997 versus $6.2 trillion, However, 18.8% of the world's exports come out of Euroland, while 14.1% originate from the U.S. The 11 nations that have adopted the euro are: Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain. They have agreed to cede their monetary policy to the European Central Bank in Frankfurt and submit to a pact that limits their ability to build up debts or deficits.
News to Go
Local phone company Bell Atlantic <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BEL)") else Response.Write("(NYSE: BEL)") end if %> is in talks to acquire wireless communications company AirTouch Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ATI)") else Response.Write("(NYSE: ATI)") end if %> in a deal valued at roughly $45 billion in stock. Add AirTouch to the pending merger between Bell Atlantic and GTE Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GTE)") else Response.Write("(NYSE: GTE)") end if %> and you'd have a nationwide wireless network rivaling those of AT&T <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: T)") else Response.Write("(NYSE: T)") end if %> and Sprint <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FON)") else Response.Write("(NYSE: FON)") end if %>.
AT&T <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: T)") else Response.Write("(NYSE: T)") end if %> has changed how it will integrate Tele-Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: TCOMA)") else Response.Write("(Nasdaq: TCOMA)") end if %> in its planned acquisition by keeping TCI's cable operations separate from its anchor long-distance business, The Wall Street Journal reported. AT&T plans to use TCI's cable lines to provide local phone and high-speed Internet service to up to 22 million homes in the U.S., bypassing the Baby Bells.
Online brokerage firm E*Trade Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: EGRP)") else Response.Write("(Nasdaq: EGRP)") end if %>, which finished 1998 at $46 25/32, said it will split its stock on a 2-for-1 basis after the close of trading January 29. The company said keeping its stock price at a level comparable to those of its competitors will help to enlarge its base of shareholders.
Credit card transactions processor First Data Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FDC)") else Response.Write("(NYSE: FDC)") end if %> announced it will close its Innovis credit-reporting unit (formerly Consumer Credit Associates), cut 150 jobs, and take an after-tax charge of $130 million in the fourth quarter. The company decided that "the investment and the effort required to make Innovis' technology platform commercially competitive would not provide the necessary return on our investment dollars."
Staffing and business consultant Modis Professional Services <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MPS)") else Response.Write("(NYSE: MPS)") end if %> said it will eliminate some 290 jobs -- or 8% of its workforce -- close 23 branches, and take an after-tax charge of up to $30 million. The company expects earnings per share, before charges, to "meet or exceed" analysts' forecasts for the fourth quarter and full-year 1998.
Air bag and space and defense products maker TRW Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TRW)") else Response.Write("(NYSE: TRW)") end if %> might try to acquire LucasVarsity Plc, the world's second largest auto brakes maker, reported London's Sunday Times. TRW would then spin off its auto unit with LucasVarsity, valued at about $4.6 billion.
Audio Book Club <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: KLB)") else Response.Write("(NYSE: KLB)") end if %> is set to announce today its acquisition of Columbia House Audiobook Club from Columbia House Co., a joint venture between Sony Corp.'s <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SNE)") else Response.Write("(NYSE: SNE)") end if %> Sony Music Entertainment Inc. and Time Warner <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TWX)") else Response.Write("(NYSE: TWX)") end if %>, according to The Wall Street Journal. The acquisition would more than double Audio Books's revenue to about $50 million and add about 600,000 new members to its current number of 400,000.
More Foolishness
A look back at 1998: Tom Gardner reflects on the year's highlights in Fooldom... The Rule Breaker Portfolio (formerly called the Fool Portfolio) stomped the S&P 500 and 100% of all mutual funds... 1998 winners and losers, Internet mania, and a timeline of the year's most newsworthy events... Plus Foolish resolutions for the new year.
-- Thursday's Evening News
-- Fool Community