[SLUG] FoolWatch Weekly Digest: How to Be an Income Investor

[The Motley Fool]

Title: The Motley Fool: FoolWatch Weekly Digest

EDITOR'S PICKS FOR WEEK OF 11-14-2003 How to Be an Income Investor Investing in Preferred Stocks 5 Stocks You Can Understand Wireless Wars: Who Wins? 6 Tips to Good Credit 4 Home Improvement Solutions ADVERTISEMENT BY Ameritrade Looking for a discount broker? Try Ameritrade. Join Ameritrade for a $10.99 flat rate on your Internet equity trades. Plus, open you account today for 5 weeks of COMMISSION-FREE trading. "If you're lazy about funding your retirement, I know someone who can relate. A Fool writer -- known for dispensing sound financial advice -- admits to never having contributed to his (or her... I'm not telling) 401(k). At any job." Dayana Yochim, "Financial Blunders Confessed" » Red Hat Is Red Hot by Jeff Fischer (TMF Jeff) Like Yahoo! (Nasdaq: YHOO), Netscape, and Google, Red Hat's (Nasdaq: RHAT) history can be traced to a university student. In 1991, Finnish student Linus Torvalds created a software operating system (OS) based on the Unix system booming at the time. He made his OS source code publicly available and allowed the public to add to and improve on the software, so long as all the code remained public. The operating system was called Linux. As the popularity of Linux grew, entrepreneurs had the idea of packaging the OS and adding improvements, upsells, and technical support in order to form a business around it. This is how Red Hat came to life. This year, it'll see more than $100 million in revenue. Linux is praised for flexibility, stability, and, of course, its ability to be tweaked by others. Red Hat's Linux is popular because the company employs a large team of open source programmers to produce a version of Linux that is stable, powerful, scalable, has added features, and is backed by support. The software can also be cheaper to run than competing systems. Red Hat has until recently sold OS platforms aimed at two main markets: (1) Red Hat Linux for the retail consumer (the personal or small-business user), and (2) Red Hat Enterprise Linux for the big-money commercial or enterprise market. According to IDC research, Linux is the world's fastest-growing server OS (really, what other competition is out there growing against Microsoft (Nasdaq: MSFT)?). Enterprise sales account for a vast majority of Red Hat's revenue. The company recently ended its Red Hat Linux consumer line (increasing near-term risks), in favor of an open source Fedora software project that will receive less support (lower costs). Meanwhile, new versions of Red Hat's Enterprise Linux products are released approximately every 12 to 18 months, because deployment of enterprise software is a larger task for corporations, and updates are not undertaken as frequently. Investors know software can be a high-margin business blessed with regular product renewals and upgrades, which bring revenue from the same customers in an annuity fashion (if not quite annual). Linux has its place -- and it is a growing place -- in the market, and Red Hat has top-brand recognition. The trends suggest long-term market acceptance, which should translate into steady revenue growth for Red Hat. But is there any value to be had in the shares? To get the rest of Jeff's analysis, which includes a look at Red Hat's financials, see the original article. Avoiding Identity Theft What to do to protect your credit (and money) -- and how to get the bad guys. 7 Traits of a Good Real Estate Agent Agents stand to make thousands. Here's how to get your money's worth. ADVERTISEMENT BY Ameritrade Looking for a discount broker? Try Ameritrade. Join Ameritrade for a $10.99 flat rate on your Internet equity trades. Plus, open you account today for 5 weeks of COMMISSION-FREE trading. Not A Subscriber To This Newsletter? You should be - signup is a breeze! Don't use just any credit card - get a Fool Card! The program has all the features we recommend: no annual fee, low rates, cash back ...if you like cash. Learn more. SUBSCRIPTION SERVICES: Subscribe, unsubscribe, change format, suspend delivery ADVERTISEMENT BY Try Ameritrade MORE NEWSLETTERS FoolWatch Weekly Investing Strategies Investing Basics Personal Finance SIGN UP NOW! Did you enjoy this? Forward it on to a friend! Legal Information. Copyright © 1995-2003 The Motley Fool. All rights reserved. Email Powered by IronPort Systems

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