MOTLEY FOOL TAKE

• Home Equity Loans Gaining Ground
• Mickey's Masseuse
• "The Dow," Demystified
• The $5 Stock Trade
• Overstock Overtaking eBay?
• eBay Hammered
• An Eye Toward Change
• Qualcomm Takes a Breather
• Symantec Better Than Its Word

Home Equity Loans Gaining Ground

Pity the poor credit-card-issuing companies, such as MBNA (NYSE: KRB), J. P. Morgan Chase (NYSE: JPM), American Express (NYSE: AXP), Capital One Financial (NYSE: COF), and Citigroup (NYSE: C). According to a recent BusinessWeek article, the seven top card issuers have been growing at nearly 30% over the last year but are expected to screech to only 19% over the next year.

Well, OK, it's hard to feel sorry for any firm growing at 19%. Still, there are some interesting developments afoot in the usually lucrative arena of credit cards. For one thing, the refinancing boom of the past few years has been taking a toll on card issuers. If you owe, for example, $10,000 on your credit cards, you might, while refinancing your mortgage, borrow an extra $10,000 in order to pay off your card debt. This can make a mountain of sense, since mortgage interest rates tend to be significantly lower than credit card rates.

Now there's more competition, though, as the refinancing boom winds down: home equity loans. That's right: If refinancing doesn't make sense for you right now, you can still pay off that credit card debt -- with a home equity loan. It also features generally lower interest rates. The downside? Well, it's not an instant solution to your debt problems. You'll need to pay off the loan and will have to keep your credit card use in check, lest you accumulate even more debt.

According to the BusinessWeek article, "Morgan Stanley (NYSE: MWD) expects credit-card companies this year to lose some $17 billion in receivables to mortgage refinancing and $89 billion to home-equity loans." How have the issuers been reacting? By squeezing more profits out of existing customers: shortening the initial teaser-rate periods on new cards, promoting variable-rate cards that tend to charge higher rates than fixed-rate ones, and designing lots of rewards programs, among other things. [Hey, if you're looking for a card with an appealing rewards program or low rate, check out our spiffy Fool credit cards. I know from experience that they turn many heads at cash registers.]

Home equity loans are also being widely used to generate money for investing -- more so than they're being used for home improvements, according to a Federal Reserve Board study. This can be effective, but only if your investments perform as you hope. If they go south, you'll still end up with debts to pay. Even if they gain a few percentage points, the interest rate on your loan might exceed that, and you'll still end up with a net loss.

Learn much more about the credit card industry (and its secrets) and how to manage debt effectively in our Credit Center. And read about all things credit-related on our Consumer Credit / Credit Card discussion board.

You can learn more about buying, selling and maintaining a home in our Home Center. Also, visit our Buying or Selling a Home and Building/Maintaining a Home discussion boards, to get some great insights and tips from fellow Fools.

Longtime Fool contributor Selena Maranjian does not own shares of any companies mentioned in this article.

Mickey's Masseuse

Disney's (NYSE: DIS) massive Disney World resort in Florida is about to be smoothed over by new hands -- and I'm not talking about an eventual replacement for retiring CEO Michael Eisner. Rule Breakers stock pick Steiner Leisure (Nasdaq: STNR) announced that it would be opening one of its land-based spas this summer at the Swan and Dolphin hotel resort.

While the hotels are run by Starwood (NYSE: HOT) -- the only hotels within the Walt Disney World complex not owned by Disney itself -- it's a sweet location for Steiner inside the country's top family vacation destination.

The fact that the Swan and Dolphin lures a good deal of convention business should help fill it up during the week while the resort's attractive location within walking distance of the more adult-oriented EPCOT and Disney Studios theme parks should help keep the ideal spa crowd close.

While it's Steiner's role as the floating spa operator for the major cruise lines like Carnival (NYSE: CCL), NCL, and Royal Caribbean (NYSE: RCL) that drew me to initially recommend the stock to Rule Breakers subscribers three months ago -- and it has been kind enough to appreciate by 43% since being singled out -- one can't dismiss the company's land-based business either.

Steiner was already pampering Disney-bound guests as the company running the spas on the Disney Wonder and Disney Magic cruise ships. Yet, just as its chain of spa schools helps educate the trained hands of tomorrow while building out its own certified staff, Steiner has a way of delivering more than one would expect. Proof? It has topped analyst estimates for 10 straight quarters. The cruise industry's resiliency lately makes it more than likely that the streak will to stretch to 11 outperforming periods when it reports its latest financials later this month.

That kind of performance isn't at all goofy -- or Goofy.

Pilates of the Caribbean? The Enchanted Tiki Aromatherapy Room? Face Mountain? Do you pamper yourself with spa services even while on family vacations? All this and more -- in the Favorite Travel Spots/Tips discussion board. Only on Fool.com.

Longtime Fool contributor has been a Steiner customer on the Disney Wonder, and while he does own shares in Disney, he does not own shares in any of the other companies mentioned in this story. He is a member of the Rule Breakers analytical team, seeking out tomorrow's great growth stocks a day early.

"The Dow," Demystified

If it had been created by Charles Peterson, or Victoria Mamigonian, we might see references each night on the news to "The Peterson" or "The Mamigonian." But no, it was Charles Dow.

Created in 1896 by Charles Dow, who also established The Wall Street Journal, the Dow Jones Industrial Average (referred to by those in the know as "the Dow") is an index of 30 major American companies chosen to represent U.S. industry. It's probably the world's best-known index.

The 30 companies that make up the Dow don't change much from year to year. In fact, typically, many years go by with no change at all. Still, every now and then a few companies are ejected from the Dow to make room for some upstarts. Of the original component companies, General Electric is probably the only name familiar to most investors today. Laclede Gas, Distilling & Cattle Feeding, Tennessee Coal & Iron, and American Cotton Oil are no longer the blue chips they once were.

A big shake-up in Dow component companies occurred in October 1999, when Sears (NYSE: S), Union Carbide , Goodyear Tire & Rubber Co. (NYSE: GT), and Chevron [now ChevronTexaco (NYSE: CVX)] were removed so that Home Depot (NYSE: HD), Microsoft (Nasdaq: MSFT), Intel (Nasdaq: INTC), and SBC Communications (NYSE: SBC) could be added. This was a milestone, since Microsoft and Intel were the first additions coming from the Nasdaq Stock Market and not the more venerable New York Stock Exchange.

The Dow is a familiar name to most Americans because it has been used as a market proxy by the media for decades. Until recently, a newscaster might have reported on the state of the entire stock market simply by saying, "The Dow was up 40 points today." It's more common these days for the media to report on other market measures as well, such as the S&P 500 (an index of 500 of the biggest companies around) and the Nasdaq (with about 5,000 companies).

Learn more about the Dow at djindexes.com, which offers a brief history of the Dow and a FAQ about it. Here's a list of the current 30 components.

The $5 Stock Trade

Price wars can be great for consumers but dreadful for the marked-down providers. Just consider the current state of airlines or movie rental chains and you'll know what I'm talking about. So perhaps that's why CS First Boston downgraded shares of Ameritrade (Nasdaq: AMTD) earlier this month after the company launched a limited 12-week test for its new IZone brokerage service, which offers $5 stock trade commissions.

Discount brokers, by definition, offer value-priced equity transactions. Individual investors have been tested in recent years as a market lull spurred consolidation and many brokerages resorted to new fees and layoffs to help counter investing apathy.

Things have started to gradually change in the industry's favor even as investors in discounters like Charles Schwab (NYSE: SCH) and E*Trade (NYSE: ET) find their shares trading below where they were a year ago.

When we spoke with Ameritrade CEO Joe Moglia earlier in the week he defended the IZone test, saying that it was simply a trial balloon and that he didn't expect the company to suffer with its regular accounts migrating to the new bare bones service that offers dirt-cheap trades but little in terms of online research and customer service.

Why not?

"These concerns are overly exaggerated," he claimed, comparing it to General Motors (NYSE: GM) offering Cadillacs as well as Chevy Cavaliers, each line with its own value proposition and set of features.

Rather than folks trading in their Cadillacs for Cavaliers, the emphasis is on the pricing test's potential to win over new accounts. The company closed out the quarter with just over 1.7 million qualified accounts and the industry has evolved beyond the commission schedules.

In fact, it was the company's December quarter surge in net interest revenues -- not commission and clearing fees -- that drove the discount broker's profits higher. But even beyond the Fed's helping hand on that front, discount brokers have evolved into more well-rounded financial institutions. It was not an accident when Toronto Dominion Bank (NYSE: TD) acquired Waterhouse Securities a few years ago. Folks who trade online are a lucrative market for other financial products and they are usually smart enough to go the deep discount route with their online brokerage accounts.

That doesn't mean that we're entering the age in which trading commissions are seen as loss leaders. However, with eyeballs glued online worth so much these days, the $5 stock trade may be something that more than just penny-pinching investors can applaud.

Are you looking to trade online? Have you checked our Broker Comparison Table lately? Who is the best discount broker for you? All this and more -- in the Discount Brokers discussion board. Only on Fool.com.

Longtime Fool contributor Rick Munarriz relishes the power and free will of the online investing experience. He does not own shares in any of the companies mentioned in this story and he is a member of the Rule Breakers analytical team, seeking out the next great growth stock early in its stage of defiance.

Overstock Overtaking eBay?

Ah, the glories of competition. We have for years been lauding eBay's (Nasdaq: EBAY) business model as one of the most elegant in existence. That the company is able to conduct billions in commercial transactions without ever taking on a single penny of inventory is simply awesome. That eBay's massive network of buyers and sellers makes the company's moat as wide and deep as any I've ever seen without the benefit of government or natural monopoly is simply fantastic. eBay is the default place to buy and sell goods online. eBay's biggest competition, including Yahoo! (Nasdaq: YHOO) Auctions and Amazon 's (Nasdaq: AMZN) zShops, seems almost desultory by comparison.

Indeed, eBay's biggest threat to its own success is eBay.

But that didn't stop Overstock.com (Nasdaq: OSTK) from mounting an assault earlier this year, trying to attract some of the power sellers at eBay who had begun to chafe as a result of their perception that the gigantic auction site had become unresponsive to their needs. And, boy, did eBay just hand Overstock.com some ammunition.

This past weekend, eBay announced that it was raising prices for listings and other services, such as its online stores, which are popular with power sellers, by as much as 60%. Immediately, the message boards at eBay heated up over the size of the increase. Some sellers fumed that they were taking their business elsewhere. And thanks to Overstock.com, they actually have a viable "elsewhere" to go. Overstock.com's shares screamed higher yesterday, and then again today as the company announced that its auction count had risen by more than 50% in the wake of eBay's announcement.

That's a huge loss for eBay, right? Not really. The Overstock.com press release failed to mention a raw number of listings. A quick look at the site tells me that there are currently about 31,000 ongoing auctions, a good number to be sure, but fewer than the number of items available in just the "Asian antiques" category on eBay. So while the gain may have been huge for Overstock.com, the loss is at this point a blip for eBay. Still, the situation creates an unquestionable opportunity for Overstock.com, and it's capitalizing. It's cutting its own listing fees, and it will give a $10 credit to anyone registering or visiting Overstock.com's auction site on the day that the eBay increase goes into effect.

The gain will be short-lived, though, if auctions on Overstock.com don't generate the same, or similar, net revenues to sellers. Reaching that point requires buyers to consider Overstock.com as a viable alternative to eBay in numbers large enough to generate a bid flow similar to eBay's. If Overstock.com's business dries up because of poor selling numbers, many of its hard-won power sellers are likely to swallow their pride and head back over to the biggest game in town.

Bill Mann owns none of the companies mentioned in this story.

Overstock.com is a selection from the first issue of the Motley Fool's Hidden Gems newsletter. Not too shabby. For the latest great investing ideas, take a trial subscription today! A one-month look is absolutely free.

eBay Hammered

When you always outperform, investors always expect you to outperform. And when you disappoint, investors are going to be extra disappointed.

After the bell yesterday, eBay (Nasdaq: EBAY) reported fourth-quarter earnings, and came up a tad short of expectations. The online auction giant saw fourth-quarter revenues jump a healthy 44% to $935.8 million, driving net income growth of 44% to $205.4 million, or $0.30 per share. On a pro forma basis, the company earned $0.33 per share -- a penny short of the analyst estimate.

The company's outlook was also light. eBay forecast first-quarter earnings before items of $0.34 to $0.35 per share on revenues of $1.01 billion to $1.03 billion, well short of the analyst estimate for earnings of $0.40 per share on $1.05 billion in revenues. The company also said that it expected fiscal 2005 earnings of $1.48 to $1.52 per share on revenues of $4.25 billion to $4.35 billion. That, too, is short of the analyst estimate of $1.61 in earnings for the year on $4.37 billion in revenues.

As a result, eBay shares traded down 11.7% to $91 per share in after-hours trading.

Though the numbers didn't quite make expectations, the business is still growing rapidly. eBay's international business led the way, with net transaction revenues surging 64% to $344.3 million -- almost matching the $362.7 million in net transaction revenues the company recorded in the U.S. Meanwhile, the PayPal payments business posted net transaction revenue growth of 53% to $200.2 million.

Total gross merchandise volume (GMV), the value of the items successfully traded on eBay, rose 39% to $9.8 billion during the quarter. eBay Motors, by far eBay's largest trading category (as we discussed a couple of months ago in "Investing in Car Culture"), continued to outpace overall growth, with annualized GMV climbing 48% to $11.1 billion.

At 60 times 2005 earnings, eBay's stock still carries a premium valuation. That said, there isn't much wrong with the actual business. Last week, the company announced a hike in its listing fees (see "eBay, Hike, and Other 4-Letter Words"), hoping to capitalize on its network advantage over auction competitors such as Yahoo! (Nasdaq: YHOO), Amazon.com (Nasdaq: AMZN), and upstart Overstock.com (Nasdaq: OSTK).

Yesterday, eBay also announced a two-for-one stock split, payable February 16.

For more on eBay, check out:

Fool contributor Jeff Hwang owns shares of both eBay and Overstock.com.

An Eye Toward Change

The big news in network news is the passing of the torch. Late last year, 21-year veteran Tom Brokaw stepped down from NBC Nightly News. And now that General Electric (NYSE: GE) unit NBC Universal has said goodbye to its anchor, Viacom 's (NYSE: VIA) own elder statesman, Dan Rather, is preparing to leave CBS Evening News in March.

NBC had long prepared for its transition, even going so far as to have Brokaw's replacement, Brian Williams, share the broadcast. But CBS's intentions still seem up in the air, at least based on comments from CBS Chairman and Viacom President Leslie Moonves at a recent news conference.

Moonves is apparently considering all kinds of changes to the look and feel of CBS's nightly news. Options reportedly include using multiple anchors, hiring Katie Couric of NBC's Today show, and even bringing in Jon Stewart, the star of Comedy Central's The Daily Show. The underlying idea, Moonves indicated, is to go for a younger crowd.

Although innovation is a good thing, one has to wonder whether it's wise to tinker too much. Sure, cable news outlets such as Fox Entertainment 's (NYSE: FOX) Fox News Channel and Time Warner 's (NYSE: TWX) CNN have nibbled away at the networks' viewership. But network news, whose audience share fell by 23% between 1993 and 2001, has done a better job hanging onto its viewers than have the networks themselves -- their audience plunged by 42% over the same period, according to the Project for Excellence in Journalism. What's more, CBS Evening News remains a cash cow: For 2003, the program was projected to have generated $159 million in revenue for parent company Viacom.

The nightly news broadcasts may indeed need some updating. But to paraphrase Brokaw, one of their advantages is that they give the impression (and maybe it's just an illusion) of a single source of authority amidst a cacophony of media voices. Katie Couric may be likeable, but that likeability may not translate when she's delivering hard news rather than the human-interest and entertainment stories that are the norm on the Today show. And Jon Stewart is a funny guy, but putting a fake newsperson on a real news show could be an exercise in self-mockery. Viacom would be wise to proceed cautiously when changing CBS Evening News.

Fool contributor Brian Gorman is a freelance writer in Chicago. He does not own shares of any companies mentioned in this article.

Qualcomm Takes a Breather

Boy, tough crowd.

After closing out 2004 with a nice boost in tech share prices, investors seem to be working through a post-holiday hangover. Several companies have come out with positive earnings releases, but future growth targets that don't seem to satiate the market. For example, extreme makeover alumnus Motorola (NYSE: MOT) sang a sweet song to investors, but then got spanked for "soft forward guidance."

San Diego stadium sponsor Qualcomm (Nasdaq: QCOM) was next in the whipping line last night when it reported its quarterly numbers. In its first fiscal quarter of 2005, Qualcomm beat expectations by earning $513 million on $1.4 billion in revenue, up 46% and 15% year over year, respectively. So what's the bad news? The company expects revenue to be roughly in line in the next quarter, and earnings will take the normal, seasonal dip. Also, the company sees 2005 shaping up for something in the neighborhood of 20% revenue growth and a 10% earnings increase.

So I guess ho-hum just doesn't cut it anymore. In Qualcomm's case, however, investors have to admit they've been a little spoiled lately. The wireless giant went on a tear last year and turned in blockbuster growth thanks largely to a pickup in phone sales -- mostly of the fancy 3G kind. The stock responded, and shares appreciated 60% in 2004 before factoring in a little dividend as well. So it shouldn't be all that surprising to see shares shed a few bucks as the party winds down.

Overall, I'd call the unimpressive guidance and subsequent stock fluctuation a non-event. Qualcomm is still firing on all cylinders and is sitting on $8 billion in cash and equivalents even after shelling out $176 million to acquire three companies this quarter. WCDMA (wideband code-division multiple access) royalty share has gone up again, to 32% of its total royalties from all flavors of its patented CDMA technology. The company also tends to be conservative with guidance, and the wireless market tends to pull a few surprises -- just as it did in 2004.

The important metrics to watch with Qualcomm are those tied to the continued proliferation of 3G networks. The pace of the uptake of WCDMA networks, particularly in Europe, as well as the continued growth of Qualcomm's favored CDMA2000 with operators Verizon (NYSE: VZ) and Sprint PCS (NYSE: FON) will be the core drivers of growth in the near future. Later in the year, some more interesting stories may emerge, such as the development of MediaFLO USA, a subsidiary that will operate a nationwide wireless "media casting" network based upon its technology.

For related Fool analysis, see:

Fool contributor Dave Mock keeps his vintage Magic 8-Ball on hand when it comes to forward guidance. He owns shares of Motorola but has no position in Qualcomm, though he has authored its first corporate biography -- The Qualcomm Equation.

Symantec Better Than Its Word

Internet security company Symantec (Nasdaq: SYMC) reported its earnings for fiscal Q3 2005 and the first nine months of fiscal 2005 yesterday. But Wall Street was under-whelmed. Strong as Symantec's numbers were, the company seems to be suffering from the same curse that felled eBay (Nasdaq: EBAY), Qualcomm (Nasdaq: QCOM), and Yahoo! (Nasdaq: YHOO) last night. Having trained the Street to expect its expectations to be blown completely out of the water, any failure to do so -- or to do so by a wide enough margin -- sparks a sell-off.

In Symantec's case, the sell-off was relatively restrained. After-hours trading saw the company's stock fall just a couple of percent. But was even that justified?

Not to this Fool's mind. On the contrary, not only is Symantec's business firing on all cylinders -- revenues rose 41% quarter-on-quarter and earnings per share just a bit less than that at 38% -- but the company also appears to be holding true to its word and finally putting a lid on the stock options cookie jar. When we last checked in on Symantec six months ago, the company was running a bit behind schedule on this front. It had just come off a year of considerable stock dilution, and perhaps old habits die hard, but fiscal Q1 2004 had Symantec clocking in at 5.1% annual stock dilution. Six months later, the company has dialed that back to about 3.4%.

What's more, Symantec's earnings release did not mention the company making any stock buybacks. Granted, the company didn't release a cash flow statement with its earnings announcement, so it's hard to be sure whether it spent money to buy back its stock. But it appears that Symantec may no longer be doling out stock options like mad with one hand and buying them back with wads of cash with the other in a frantic attempt to mask the dilution. Once Symantec files its 10-Q, we'll be able to confirm that the company's holding the line on dilution.

Now where Symantec becomes "better than its word" is on earnings. Back in July, the company predicted GAAP profits of $1.48 (which equates to $0.74 post-stock-split). Yesterday, it raised that estimate by more than 8% to $0.80.

Put all that together and I really don't see why Wall Street punished the company even as mildly as it did yesterday. More profits and less dilution? That's a recipe for investing success.

Yesterday's good news aside, Symantec is poised to engage in a bit of "good" dilution as part of an anticipated merger with Veritas (Nasdaq: VRTS). Read about that in:

Fool contributor Rich Smith has no position in any of the companies mentioned in this article.

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