Well, today's the day. According to the Sacramento Bee, 10 million voters are expected to turn out and decide the political fate of Gov. Gray Davis. In fact, California expects more voters in its first-ever gubernatorial recall election than in any non-presidential skirmish in the state's history.
Surprised? Don't be. After all, normal elections cater to citizens who want to vote for a candidate. Give people someone to vote against, and you tap into a whole new market. Maybe we should consider that in our next Foolish poll.
In today's Motley Fool Take:
- We Want Our Cable Internet
- Shameless Plug: Savings Center
- JetBlue Splits
- Quote of Note
- Microsoft Looks Smarter
- Discussion Board of the Day: Microsoft
- More Fool News
- And Finally...
We Want Our Cable Internet
Are you tired of having the option of only one cable Internet provider and needing to pay $49.95 a month for services? There's no other choice for many homes in the country, but yesterday's ruling by a San Francisco court could change this, increasing cable Internet competition and bringing lower prices. Eventually.
A U.S. Court of Appeals ruled against the Federal Communications Commission (FCC) and its plan to allow cable companies to exclude competition from cable networks. The new ruling demands that cable operators allow competitors on their networks, something many Internet service providers (ISP), including Earthlink
Five companies control 75% of the cable Internet subscribers in the country. That doesn't sound anti-competitive until you realize that, in most cases, consumers had no choice but to go with one of the five and no other. Much like past telecommunications rulings, opening lines to competitors would introduce lower prices along with additional choices.
The FCC is not trying to prevent this out of cruelty. Its argument for keeping cable lines in the hands of owners is simple (if unproven): It believes exclusivity encourages more spending for cable buildout and network enhancement. If competitors are allowed access, the FCC argues, cable owners are less likely to spend money on networks.
Thing is, this argument has at least one big hole. Even if a cable company allows competitors on its network, it will maintain the network just the same to keep and increase customers. Competitors will pay the cable owner for usage, and providing consumers a choice in service providers should bring additional subscribers to the fold.
The country's largest cable provider, Comcast
Changes will not come about -- not by law -- anytime soon, however, because the FCC vows to appeal yesterday's decision, saying the ruling damages the country's ability to develop a nationwide broadband policy. Additionally, the FCC is not required to enforce a ruling if it deems it more harmful than beneficial, and in this case it does.
Legalities aside, yesterday's ruling is a positive public relations step for ISPs seeking access to cable, and it may encourage cable owners to start accepting more competitors, setting up their own partnerships rather than risk being told later what to do.
According to Leichtman Research Group, the largest cable Internet operators are Comcast with 4 million cable modem subs as of March 30; AOL Time Warner, 2.6 million; Cox
Shameless Plug: Savings Center
There's a new $20 bill on the way -- and it's in color. If you have some extra Andrew Jacksons hanging out in your wallet and you're looking for a smart place to park them, drop by our Savings Center, which offers guidance on how to save for emergencies and short-term goals, as well as special interest rates for Fools.
JetBlue Splits
Last night, upstart airline JetBlue
Maybe Neeleman was too tired to repeat the statement he made last October when the company announced another three-for-two split: "JetBlue has a history of solid financial performance," he said at the time. "We believe our low cost structure together with our preferred product and customer service provide the foundation for delivering long-term value for our stockholders."
Why is this worth pointing out? Simply as a reminder that:
-
A company splits its stock because it has gone up.
-
A company's stock goes up because the company has performed in such as way as to encourage investors to pay progressively more, over time, for its shares.
- Investors pay progressively more for a company's shares because they believe the company will continue to perform in such a way as to continue to encourage investors to pay progressively more, over time.
Well, you get the idea. And that's pretty much the whole idea. There are, admittedly, some emotional and technical benefits to splitting shares -- we discuss those in our FAQ --- but they certainly have no effect on business performance and have more to do with boosting short-term investor confidence and increasing liquidity.
Perhaps we're just mincing words here. But Neeleman's latest statement tells us next to nothing about his thoughts on JetBlue beyond that it was time to do something about the share price. (Stock-price management, while perhaps fashionable, rarely creates long-term value of any kind.)
His previous comment, at least, serves as a reminder for why management believes the company performs well and should be expected to do so in the future. Investors, like managers, should be ever focused on the latter.
Randy Befumo said all this much more effectively in a 1996 article, updated in 2002, that is highly recommended reading.
Quote of Note
"It's kind of fun to do the impossible." -- Walt Disney
Micro soft Looks Smarter
Putting most of your eggs in one basket can get you scrambled, especially if that basket happens to be Microsoft
While LookSmart will still provide paid text ads to popular online destinations like About.com and Terra's
At least LookSmart was honest about its situation. Over the summer, in its 10Q filing, the company revealed that Microsoft was testing out alternatives to LookSmart's services.
Contextual advertising, in which targeted text ads are sold and then displayed on relevant search result pages and content sites, is big business. It's so meaty that Yahoo!
Because of Microsoft's monopolistic tendencies (and whether that is deliberate or simply because quality wins in the free market is a debate for another day), it will be interesting to see if Microsoft goes with a rival provider or simply develops an in-house solution.
As far as business models go, you've got to love sponsored searches. The advertiser wins because it reaches the appropriate audience. The site displaying the ad comes out ahead as it reaps the fruit of significant yet unobtrusive marketing that will ultimately kill the dreaded pop-ups once and for all.
That's why even a small fry like LookSmart was able to land ad money from the likes of Wal-Mart
Sponsored searches work. Ironically enough, LookSmart's success is why its days are numbered with Microsoft. Yes, you can be too good for your own good. You can even look too smart -- if you're LookSmart.
Discussion Board of the Day: Microsoft
Is Microsoft right to pull the plug on its relationship with LookSmart? What do you think of sponsored text ads? Too much? A better alternative than pop-up and banner ads? All this and more -- in the Microsoft discussion board. Only on Fool.com.
More Fool News
For a list of all our stories from today, see Today's Headlines.
And Finally...
Need a total portfolio makeover? Tom Jacobs is at your service with Screening Eye for the Stock Guy. You're probably saying to yourself: Jacobs? Who needs Jacobs? Even my broker can find stocks with low P/Es. Not so fast, says Bill Mann in What's a High P/E? And since we're talking to ourselves, anyway, Do We Really Need Ads for Money?
Contributors:
Bob Bobala, Robert Brokamp, Paul Elliott, Mathew Emmert, Jeff Fischer, Tom Jacobs, Jeff Hwang, LouAnn Lofton, Alyce Lomax, Bill Mann, Selena Maranjian, Dave Marino-Nachison, Rex Moore, Rick Munarriz, Matt Richey, Reggie Santiago, Dayana Yochim
