Anchorage residents claim to have spotted a giant bird the size of a small airplane circling southwest Alaska. Eyewitnesses say the raptor's wingspan extends 14 feet, larger than any flying creature known to exist for 100,000 years.

"He's huge; he's huge; he's really, really big," said local resident John Bouker. "You wouldn't want to have your children out."

Also, today United Airlines parent company UAL(NYSE: UAL)announced bankruptcy is not imminent, as it has made great strides through various cost-cutting measures. Coincidence? We think not....

In today's Motley Fool Take:

Microsoft Earns Respect

Microsoft (Nasdaq: MSFT) may be one of the most underrated companies on the public markets. The software giant issued a blowout earnings report after the bell last night.

Here, in the midst of a record IT spending slowdown, the company grew its revenue by 26% and its pre-tax operating income by 40%. These numbers aren't flukes -- Microsoft hit a home run this past quarter.

The strong growth was, in no small part, due to the company's switch to annual subscription-based pricing of its software, which began in July. Microsoft's large business clients were "motivated" to switch to the subscription plan, or risk facing much higher prices when they renewed their licenses. Such strong-arm tactics caused consternation among many customers, but in the final analysis, they paid up. That's the power of a monopoly, and that's why Microsoft is underrated.

This new annual-fee form of software pricing is a boon for the company, positioning it to deliver very reliable revenues and earnings in the years ahead. Gone are the lumpy results and business uncertainty caused by one-time license fees. Now, whether Microsoft has a major innovation or not, the revenues and earnings keep rolling in. It's an investor's dream come true: a predictable, rising earnings stream.

Looking ahead, Microsoft is calling for fiscal 2003 (ending in June '03) revenue of around $32.4 billion, which would represent growth of 14.2%. Interesting that revenue growth is accelerating. Microsoft's fiscal 2002 revenue growth was 12.1%, which, itself, was higher than fiscal 2001's growth of 10.2%. This is some pretty nifty growth for a company often labeled "mature."

While Microsoft may not be mature, it's still innovating and growing, And with over $40 billion in the bank, it's high time the company returned some of that cash to shareholders. A $1-per-share annual dividend would be a good start, requiring only about one-third of the company's current annual cash flow from operations. At the stock's current value of around $52.50, that would provide a healthy yield of about 1.9%.

With or without the dividend, Microsoft offers a decent value. Free cash flow over the past 12 months amounts to $2.74 per share (a figure that excludes stock option tax benefits). At $52.50, the stock trades for 19 times free cash flow. Then, of course, there's the $9.90 per share of cash and investments on the balance sheet. If we subtract out the cash and investments, the stock trades for only 15.5 times free cash flow. For a company with almost unparalleled dominance, that's a low price to pay.

Quote of Note

"Imagine if every Thursday your shoes exploded if you tied them the usual way. This happens to us all the time with computers, and nobody thinks of complaining." -- Interface guru Jef Raskin, who helped design the first Mac, interviewed in Doctor Dobb's Journal

eBay's Winning Bid

If market domination were an item on the eBay(Nasdaq: EBAY) block, the auction's host would be the only one worthy enough to meet the reserve price. The online marketplace leader did it again. Like it has over the last few quarters, eBay left analyst profit projections in the dust.

Unlike many traditional offline retailers, eBay cleaned house in the back-to-school shopping season -- literally. It's easy to see why the company has been resilient throughout these times of economic uncertainty. Folks have been scouring through their belongings for marketable goods to list, while buyers have come to find flea market bargains. Things have been going so well that one of the fastest growing categories on the site has been the "Everything Else" catchall area. In other words, folks are beginning to hawk stuff that eBay hadn't even thought of yet.

With 160 million listings during the September quarter, the company was able to generate $288.8 million in revenue. Transaction revenue grew by 73% -- stunning. Not only is it rare to see a company of eBay's girth take such giant steps forward, but it's also defying mature growth logic by accelerating its growth rate.

With online payment specialist PayPal fully consumed, the dot-com giant is raising its fourth-quarter top-line guidance, while keeping its earnings outlook roughly in line with Wall Street's $0.22-a-share target. By setting its sights on raking in as much as $381 million in revenue, that's not too far from the $431 million in revenue eBay recorded in all of 2000. That's a meaty accomplishment. Now, where was that bid card?

Discussion Board of the Day: eBay

Addicted to eBay? What did you think about the report? All this and more -- in the eBay discussion board. Only on

Top 10 Signs of a Rebound

David Braverman, senior investment officer of Standard & Poor's, told BusinessWeek the economy may be rebounding, and the U.S. stock market "may have finally made a bottom." We've come to the same conclusion, since many have loosened their belts and are returning to normal routines. So here, now, are our:

Top 10 Signs a Rebound Is Near

10. Al Roker is back up to six meals a day.

9. Shaquille O'Neal shot a free throw.

8. Brokerage houses are calling phone companies to get their numbers relisted.

7. Former ImClone CEO Sam Waksal issued "buy" recommendations to his celebrity friends.

6. Shredding machine makers have doubled production.

5. Jack Welch resumed construction of his pyramid outside GE headquarters.

4. Mary Meeker Fan Club is gaining traction again.

3. Sporadic sock puppet sightings.

2. Martha Stewart's ready to make license plates instead of table settings...

1. There's a spike in business at Krispy Kreme, which has historically contributed to many bottoms.

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Sears' Shocking Surprise

Wowee, it smarts to be a Sears(NYSE: S) shareholder at the moment. The company's ugly third-quarter earnings sent the stock nose-diving 32% yesterday to early 1990 levels.

At issue is the company's shocking earnings shortfall. Usually, we don't pay much attention to that whole "meet-or-beat" game, but in this instance, it warrants discussion. A mere 10 days ago, Sears announced it would earn between $0.80 and $0.82 a share. The retailer stunned the Street by earning only $0.59, or $189 million.

What's the problem? Shoppers aren't paying their Sears-branded credit card bills on time. Because of the surprisingly high delinquencies in its credit division, the retailer had to load up its allowance for uncollectible accounts by $189 million for the quarter -- the main drag on its bottom line. The credit division makes up about 60% of its operating profits and has been seen as something of a bright spot during the company's retail woes.

Well, bright spot no more. Chief Executive Officer Alan Lacy recently fired the head of the credit division, Kevin Keleghan, for what Lacy dubbed a "loss of credibility." After Keleghan took his knickknacks out the door in a cardboard box, Lacy dug around in the division and discovered the delinquency trends were worse than he thought.

It's troubling that the finding surprised the CEO. Transparency is a huge concern for investors right now. Of course, we can't go so far as to speculate Keleghan hid anything from Lacy or other executives. But for many investors, any hint of impropriety is one too many.

Shares are indeed low at the moment, but this is one "bargain" to pass up. Sears was already struggling in a horrible retail environment, and there's no evidence that either the company or the retail sector is positioned to return a bang-up fourth quarter.

Quick Takes

Ring a bell for Avon(NYSE: AVP). Excluding one-time charges, the direct seller of cosmetics improved third-quarter profits by 10% and saw its shares jump 7% today.

Once-mighty Lucent Technologies(NYSE: LU) says it will ask shareholders to approve a reverse split in order to avoid being delisted by the New York Stock Exchange. Now trading at about $0.70, management wants to push the price up to the $15 to $25 range. A reverse split would have no effect on shareholder value.

United Airlines parent UAL(NYSE: UAL) says it lost $889 million in the third quarter, or $15.57 per share. There was some good news, however, as four of the company's five major unions agreed to wage cuts as part of a recovery program that should save UAL over $1 billion a year.

Delta Air Lines (NYSE: DAL) , which has already eliminated 13,000 jobs, says it will have to cut another 7,000 to 8,000 in order to trim its payroll by 25%.

And Finally...

Today on Bill Mann points a finger at auditors, regulators, and executives as the cause of today's distrust of the market.... Know the tax implications of wash sales.... In Fool's School, why it's beneficial to hold stock in a downturn.

Bob Bobala, Robert Brokamp, Tom Jacobs, LouAnn Lofton, Bill Mann, Selena Maranjian, Rex Moore, Rick Munarriz, Matt Richey, Jackie Ross, Reggie Santiago, Dayana Yochim