If all goes as planned, on Monday the first private, manned spaceflight will be launched in the Mojave Desert by a small company called Scaled Composites. SpaceShipOne is expected to reach an altitude of 50,000 feet and travel three times the speed of sound. Will this be a breakthrough for private aerospace firms? Will consumer space travel become a booming business?
Hold onto your investing dollars for now. The U.S. space shuttle travels at about 25,000 miles per hour to break through the Earth's gravitational pull and orbit at 150 miles above Big Blue. SpaceShipOne will only reach 2,220 miles per hour before being dragged back to Earth by gravity. There's still a long way to go.
In today's Motley Fool Take:
- United's Loss, Airlines' Gain
- Wanted : Foolish Writers
- Yahoo! Blows Off Businesses
- Discussion Board of the Day: Where Is Ford's Traction?
- Red Hat Rundown
- Quote of Note
- Wormy Mobile Phone Future
- More on Fool.com Today
United's Loss, Airlines' Gain
By Salim Haji
United Airlines' (OTC BB: UALAQ.OB) failure to secure a $1.6 billion loan guarantee may be a major setback for the company, but it is a big step in the right direction for the airline industry overall.
For too long, United and other carriers such as USAirways with uncompetitive costs structures have been propped up by a variety of government supports. As Herb Kelleher, CEO of Southwest Airlines
The ATSB was created to provide financial stability and liquidity for the industry after 9/11 -- not to provide long-term financial support to struggling airlines. In addition, according to its charter, any airline must prove that receiving a loan guarantee is "a necessary part of maintaining a safe, efficient and viable commercial aviation system in the United States."
United's application does not meet that criteria. Even here in Denver, where United is the dominant carrier with a 60% share of the market, keeping the airliner in business is not seen as critical to the viability of Denver International Airport. The mayor's office released a statement today noting that "In the unhappy event that United is not able to reorganize successfully, there could be some dislocation, but we would hope it would be temporary because it would be our expectation that other carriers would want to pick up those jobs."
As I wrote in March, a number of low-cost carriers, including Motley Fool Stock Advisor standout JetBlue Airways
The result of this decision is that United -- like most other companies -- will be forced to go out to the credit markets and pay the appropriate risk premium for debt. To stay in business, it will have to find more ways to cut costs while maintaining customer service. Otherwise, it will simply be decimated by the superior business models of the low-cost carriers. While often painful to the losing companies and their employees, fair competition is the foundation of America's dynamic and entrepreneurial market-based economy. The airline industry is ultimately no different than any other.
More Fool Airlines coverage:
- United Grounded?
- Delta's Holding Pattern
- Southwest has Earned Peanuts
- Optimistic About Ted
- Is Jet Blue the Next Southwest?
Motley Fool Contributor Salim Haji lives in Denver and does not own shares in any of the companies mentioned.
Wanted: Foolish Writers
Do you read the Fool's content and say to yourself, "I could have written that!" Do you post thoughtful arguments on our discussion boards? Do you have an opinion on everything from Amazon.com to Wal-Mart? Then we're looking for you. We're seeking the best and brightest minds out there to contribute to Fool.com. We're taking applications for both full-time positions and freelance Fools. Visit jobs.fool.com and check out the listings under Editorial and Writing.
Yahoo! Blows Off Businesses
By Alyce Lomax (TMF Lomax)
As the old song goes, you've got to know when to walk away, and know when to run. Yahoo!
Yep, that flies in the face of last week's move by Time Warner's
It's arguable that both companies are playing to certain strengths. Though AOL's consumer-oriented Internet service may have had its share of struggles lately, its AIM program has enjoyed deep penetration and continued popularity, which has indeed funneled its way into the corporate world.
While I recently questioned whether most at-work AIM activity is really directly related to internal functions and corporate wheeling and dealing, for AIM the numbers suggest there's reason to take the chance. (However, one thing that should be mentioned is AIM's market share did slip just a tad last August; and there's a question whether its corporate move might help alleviate that erosion.)
On the other hand, according to CNET, Yahoo!'s chief information officer said that given Yahoo!'s strength in the consumer market, it made sense to discontinue selling corporate IM.
As has been recently pointed out, the heavyweight competition in this coveted area is difficult to ignore. Besides AIM's first-mover benefits and popularity with both casual and business users, there's IBM's
While Google is a formidable rival for Yahoo! in the consumer arena, when it comes to the consumer, Yahoo!'s in its best element. (Case in point, when I wrote about Yahoo!'s answer to Gmail earlier this week, it sparked some lively emailed defenses of Yahoo! Mail's functionality. In addition, a few Foolish readers have opted to air their feelings about the new interface and storage limits on our Yahoo! discussion board, where you, too, can toss your two cents.)
Sure, there's likely a school of thought that might be concerned that Yahoo!'s missing out on an important, possibly growing niche. However, given AIM's sheer numbers and IBM's early advantage in providing communications services to corporate users, it probably makes sense for Yahoo! to focus on its strong suit and stay out of this one.
Catch up on your Yahoo! reading. Check these out if you're looking for some weekend reading:
- Relive the triumph of Yahoo!'s last quarterly earnings report.
- Read about its British VOIP initiative.
- Contemplate its recent foray into video on demand.
Alyce Lomax does not own shares of any companies mentioned. Her messenger of choice is AIM and its running man.
Discussion Board of the Day: Where Is Ford's Traction?
Shares of Ford Motor
Red Hat Rundown
By Seth Jayson
If Red Hat
On Monday, the problem was that CFO Kevin Thompson abruptly left for the non-reason "other interests." The market slapped the stock, probably because rats fleeing sinking ships have often been known to cloak their motives as "other interests." There's no evidence of shenanigans at Red Hat, but fear is enough.
Today's problem is a little thing called reality. Red Hat turned in a great-looking quarter, even if the press release does a bit of irksome obfuscation. Revenues were up 53% over the prior-year period, to $41.6 million. Gross margin surged to 80% over last year's 68%. SG&A plus equity-based compensation dropped 4% as a portion of sales. That kind of improvement led to earnings of $0.05 per share, against last year's penny. Heck, it even generated $25 million in free cash flow.
So, what's the big problem? Why did reality bite? Because hyperperformance like that can't keep a stock afloat when it's already priced beyond perfection. When a stock carries a P/E above 160, investors will jump ship for just about any reason. The small, $1.4 million difference between actual revenues and analyst expectations is getting the blame today.
Maybe investors are just readjusting their sights as it becomes clear that Linux doesn't exempt a firm from the laws of nature. With big, savvy competitors like HP
Interested in more Fool coverage of the Linux industry?
- Don't say we didn't warn you about Red Hat.
- Learn why Linux bad-boy SCO Group
(Nasdaq: SCOX)is sinking.
- Will the old-school behemoths step on Red Hat?
Fool contributor Seth Jayson thinks the best thing about Linux is that it's pretty much free. He wonders if the folks at Red Hat worry about that. He owns no stock in any companies mentioned. View his Fool profile here.
Quote of Note
"Man is so made that he can only find relaxation from one kind of labor by taking up another." -- Anatole France
Wormy Mobile Phone Future
By W.D. Crotty
"Can you hear me now?" That annoying Verizon
Panda Software is reporting the first computer worm to infect a cell phone. That's right. Those expensive cell phones, with all the features, now come with a worry -- security. If small screens and too many features to learn were not enough, now outside forces could make your phone as big a nuisance as, say, your personal computer (PC).
Your standard cell phone is not open to a worm (a computer virus that can duplicate itself). But smartphones from Nokia
Hackers have been attacking Microsoft's
The first worm is not destructive, just annoying. It shortens battery life (please, not that!) by constantly searching for Bluetooth wireless devices.
What the first worm does is notify the hacker community that smartphones are vulnerable. If they take the bait, many of the security concerns that plague PCs will plague smartphones. Yikes! High-margin smartphones might find mass appeal hard to achieve.
Symbian is prepared for security problems. For example, since 2002, it has had an agreement with software security firm Symantec
While today's problem is wormy, Nokia is probably still happy with its offer to buy a majority interest in Symbian. Microsoft has proven there is gold in operating systems -- even with worms in the world.
Want a closer look at Nokia? Here is a duel that word-master Seth Jason and I did recently.
Contributor W.D. Crotty owns stock in Verizon. While gathering data for this story, W.D. Crotty found links to the group taking credit for this worm. Given its reputation, would you go to their website?
More on Fool.com Today
In The Terrible Teens, Dayana Yochim tells parents that it's time for "The Talk" -- the money talk, that is.... Whitney Tilson's Investors as Pecking Pigeons provides insight into investor irrationality.... Experts study the trade-offs consumers make to buy what they truly want in Salim Haji's Trading Down to Trade Up.... In Janus Humanus, Rick Munarriz considers forgiving the reformed mutual fund company.
In other news:
- Tough Times in New York
- Lockheed's Weight Problem
- Six Flags at Half-Staff
- What's Lurking Behind the Drywall?
For a list of all our stories from today, see our Today's Headlines page.