Author: philg

“Lockheed Martin to Buy Sikorsky for $9 Billion” is a Wall Street Journal story about how one defense contractor bought another. The actual cost to Lockheed Martin is only $7.1 billion due to some tax law complication. Sikorsky annual revenue is $6.5 billion per year. That makes the company worth 1.21 revenue.

Being a defense contractor is supposed to be crazy profitable, but 1.1X revenue is less than the 1.8X average for the S&P 500 (chart). Uber is trading for about 100X revenue (Fortune). Can it truly be the case that coordinating rides is worth seven times as much in aggregate as being a core member of the military-industrial complex?

This other WSJ article says that there are only $150 million in “annual synergies” from combining the two companies. It also notes that the new Lockheed/Boeing long-range bomber will cost $80 billion (why not buy Airbus A380s and toss bombs out the side?). An inset video features Lockheed CEO Marillyn Hewson talking about the challenges of running her enterprise. (It is too bad that there isn’t a comment section; Ellen Pao could log in and remind fellow readers that “If Marillyn Hewson had been a guy, she could have had a really successful career.”)

What do readers think? Is it truly possible that collecting tens of billions of tax dollars for decades-old designs, such as the Black Hawk, is not more profitable than the latest Silicon Valley fad?

Related:

• 2009 posting about Sikorsky’s Chinese factory, with a comment on a Teamsters strike against Sikorsky during an intense phase of the Iraq/Afghanistan war
• 2008 post about a twin-rotor experimental Sikorsky (still not commercialized)
• 2014 posting about a $1.24 billion budget for four Sikorsky helicopters
• New York’s Port Authority spends $15,500/hour to fly Sikorsky S-76s around

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This from some researchers at Georgia Tech:

We are seeking pilots to volunteer for a study examining how meteorological information displays affect pilot weather decision-making. Fixed-wing licensed pilots and currently enrolled student pilots who are at least 18 years of age and live in the US are eligible to participate.

As you know, adverse weather conditions in aviation can lead to delays, deviations, and even accidents. As a result, Atmospheric Technology Services Company, LLC and the Georgia Institute of Technology are conducting a study on how different weather display technology influences pilot decision-making. As a participant in this study, you will be asked to complete an online demographics questionnaire regarding your flight experience, ratings, and other items. Following the demographic questionnaire, the participant pilots will be asked to evaluate various weather scenarios. The study will take no more than one hour to complete. We hope that you will consider participating and assisting us in learning more about weather display technology. Participation will assist us in learning more about weather display technologies with the goal of improving aviation safety.

If you would like to participate in this study, please type the web address (URL) shown below into the address bar of your Internet browser:

www.atscwx.com/met_info

For more information about this study, contact:

Dr. Rick Thomas
Georgia Institute of Technology
(404) 894-6066
dplflightstudy@psych.gatech.edu

Mr. Dan J. Rusk
Atmospheric Technology Services Company
(405) 325-0056, X24
met_info@atscwx.com

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Our Museum of Fine Arts got hold of 50,000 “found” photographs and decided to display 300 of them in an exhibition titled “Unfinished Stories.” The curators decided to create a special ghetto area for snapshots depicting dark-skinned subjects and call it “African American Experience.” The rest of the exhibition featured light-skinned subjects.

Related:

• protests over loaner kimonos at the MFA (Boston Globe)
• don’t forget to see Hokusai before it closes August 9!

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With women already serving as CEOs of some of our nation’s largest corporations, e.g., IBM and HP, and soon to be serving as CEO of the federal government, one might argue that the era of white male privilege is behind us. But on the other hand, Donald Trump seems to be getting a lot of press. Aside from the fact that he is a white guy, why would Americans care to hear about what he is doing/saying?

Trump is pretty rich, of course, but he would probably have been richer if he had taken the money he got from his successful dad and parked it in an S&P 500 index fund (analysis). And he has used the U.S. bankruptcy court system to skip out on paying back creditors four times (Forbes). We scold the Greeks for not paying their debts but we celebrate Trump despite his abuse of bondholders. We look for business tips from a guy who could have been richer by staying home, smoking dope, watching TV, and playing Xbox. Does Trump’s success prove the wisdom of the movie Being There?

Louise (the former housekeeper, watching Chance on television): It’s for sure a white man’s world in America. Look here: I raised that boy since he was the size of a piss-ant. And I’ll say right now, he never learned to read and write. No, sir. Had no brains at all. Was stuffed with rice pudding between th’ ears. Shortchanged by the Lord, and dumb as a jackass. Look at him now! Yes, sir, all you’ve gotta be is white in America, to get whatever you want. Gobbledy-gook!

Guide to estimating the fraud factor in whatever you hear about Trump:

• article from 2011 about how Donald Trump supposedly paid $100 million for a 20-year-old Boeing 757 (FAA registration; formerly belonged to Paul Allen)
• article from 2011 on how Fedex was buying 20-year-old 757s for $10 million
• article from 2014 on how you could buy “a used 757 already converted to VIP configuration … for as little as $20 million” or build one up with a fresh/custom interior for $28-35 million

[Separately, maybe Trump’s four bankruptcies support the idea that Greece shouldn’t keep begging for bailouts from the IMF and Europe. Stiff the fools who lent the cash, but keep the fun stuff that the cash paid for!]

Finally, could it be that Americans love watching Trump parade on TV because they say “That’s exactly what I would do if I had a rich dad”?

 

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The latest AOPA Pilot magazine arrived today. Some interesting stuff…

The Icon A5 seaplane gets a good review as a flying machine. I want serial number 500!

An Atlanta-based doctor explains why he likes to fly a little airplane to Haiti and treat patients:

There are no insurance companies or hospital administrators to deal with, no reports to write, and no forms to fill out. There are only patients in need of care, and the focus is on healing. “This is what drew me to medicine in the first place,” Rizor said. “At home, it’s easy to forget that.”

Bell Helicopter is laying off 1,100 employees, “more than 15 percent of the workforce.” This announcement comes shortly after United Technologies said that they wanted to unload Sikorsky. Bell and Sikorsky got fat off U.S. military contracts while Airbus Helicopters, formerly “Eurocopter”, invested in new designs and is now the worldwide market leader (with a big recent push into China). If you want to stay competitive in the global economy, it is important to remember that the French and Germans do more than simply shovel cash into the Greek furnace!

Unlike Obamacare, where state and federal governments run web sites that have a monopoly on customers in particular states (at a cost of $2 billion/year?), the FAA has for decades had a system in which at least two private companies could interface to their computer systems and offer weather briefings and flight plan filing to pilots. The FAA would pay each company according to how many weather briefings it delivered because each one saved the Feds from answering a phone call. The contracts came up for renewal recently. When the dust settled, the FAA pulled the interface from the smallest company, Data Transformation Corporation, left the interface in place with the 70,000-employee Computer Sciences Corporation, and added an interface for Lockheed Martin, the 112,000-employee government contractor (Lockheed Martin previously won a contract to become the monopoly provider of telephone weather briefings, taking over work that had been done by civil servants). Lesson: Go Big or Go Home if you’re working with the federal government!

As is typical, a portion of the magazine is devoted to the “Charlie-Foxtrot” of getting planes converted to comply with ADS-B. The glorious plan is to have everyone in the system in 2020, almost exactly 25 years after it would have been technically feasible (GPS became “fully operational” in 1995). Personally I think the most exciting product in this area is the Lynx NGT-9000 transponder, about $10,000 installed. It has a little screen to show nearby traffic and weather, pulled from the ADS-B In feed. If this can fit in the same panel space as the standard Garmin transponders in older Cirrus aircraft then it seems as though it would be the best way to move into the 2020s.

Note: Oshkosh starts on Monday and that’s traditionally when a flood of product announcements occurs.

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“Halle Berry faces ex-boyfriend Gabriel Aubry in secret trial over child support” is a potentially interesting family law case. The Toronto Sun notes:

In the filing, her lawyer stated, “There is no case, no law, no logic that says a healthy, active man gets to simply live off child support that the wealthier mother earns.”

The child currently yields $192,000 per year in tax-free profits for the father (nearly all of the child’s actual expenses are paid for directly by the mother), which would be $3.46 million over 18 years.

There are a few questions raised by this event:

• When this much cash is at stake, why is the trial secret? Shouldn’t young people have an opportunity to learn about this part of the law and how it works? (“When young people ask me about the law as a career,” said one litigator, “I tell them that in this country whom they choose to have sex with and where they have sex will have a bigger effect on their income than whether they attend college and what they choose as a career.” — Introduction chapter)
• Is being a man a bar to working as a child support profiteer? Lawyers we interviewed for the California chapter didn’t think that a woman would have any trouble collecting $192,000 per year after a one-night encounter with a high-income man. It was easy to find courthouse records in Massachusetts for similar outcomes where a “healthy, active woman” was collecting roughly the same amount (an Ivy League grad got about $144,000/year plus free housing and all child-related expenses paid)
• If the judge rules that the male child support profiteer can’t collect $3+ million tax-free, and it holds up through the inevitable appeal, will female child support profiteers in California be at risk?

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I’m reading Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money and one thing that is striking is the rise in the value of the currency. Just five years ago, a guy paid 10,000 Bitcoin for a pizza delivery. That’s nearly $3 million at current rates.

The typical non-gold-backed currency moves in the opposite direction. The BLS says that a $1 item in 1913, for example, would cost $24 today due to what a politician would call “healthy inflation” or “currency debasement” depending on whether his or her party happened to be in power.

What are other examples of currencies that have done something similar to Bitcoin?

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The Chattanooga shooting leads me to wonder if it would make sense to change the way that we do military recruiting. Most U.S. government installations these days are fortress-like due to a fear that U.S. citizens (or recently welcomed immigrants) will walk in and start killing federal workers. Since the purpose of the center is to meet with the public, there is no way to make a military recruitment center as secure as a military base (surrounded by fences, open grass, and accessible only through one or two gates). For a U.S. citizen, such as Mohammad Youssef Abdulazeez, the easiest soldiers to find and kill will be the ones who work in a recruiting center.

Why not then use civilian contractors to handle recruiting? Bring in veterans to speak from time to time about what it was like in the military (let’s assume that a veteran is not as attractive target to guys like Mohammad Youssef Abdulazeez). Bring in veterans who are collecting disability benefits so that potential recruits can see what 45 percent of outcomes are like (Boston Globe).

What is the evidence that a private company couldn’t do as well or better at recruiting compared to using active-duty military personnel?

Related:

• Sacramento Bee article on “$100 million in dubious or illegal payments” from a recruiting fund.
• USA Today article on 800 soldiers being investigated for recruiting fraud
• National Guard recruiters in Alaska engaging in “repeated sexual misconduct”

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One of the most common scolds directed at the insolvent Greeks is that their government should become better at collecting taxes. I wonder if that is likely to be any more effective than shouting at an out-of-shape 50-year-old to “get better at running a marathon.”

Heritage Foundation says that currently Greece collects 34 percent of GDP as tax revenue (compare to 44 percent for Sweden, which we can assume is close to the maximum achievable). Why not assume that is as much as can be collected and design a government around that? Singapore shows that it is possible to run an excellent government with 14.4 percent of GDP.

The Greeks supposedly are accustomed to evading taxes? The country could rely primarily on a VAT, which is difficult to dodge (hence its popularity in Europe). Greece could lower its corporate tax rate from 26 percent (much lower than the U.S. (about 40 percent including state taxes)) to 10 percent (compare to 12.5 percent in Ireland), thus encouraging companies to locate in Greece. Greece could just get rid of the taxes that people cheat on, such as personal income tax, and replace them with payroll taxes and property taxes.

Once the government figures out how much it can get residents to hand over reliably, the government can then size itself accordingly (presumably stiffing the Europeans who were dumb enough to extend hundreds of billions of dollars in credit).

In other words, instead of starting from “We need to run all of these programs and spend all of this money,” why not start from “Given that anyone money and people can quickly emigrate to elsewhere in the EU, how much money can we sustainably collect in taxes?”

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“Ralph: A Visible/Infrared Imager for the New Horizons Pluto/Kuiper Belt Mission” is a paper describing the camera that has been feeding us pictures of Pluto.

How does it compare to a Canon, Nikon, or Sony? The thing weighs 10.5 kg and consumes 7 watts of power. A Nikon D810 weighs about 2 kg with a pro lens and has a 2 amp-hour battery at 7 volts. The Nikon battery lasts for about two hours of heavy use so the power consumption is roughly comparable.

Ralph looks through a 658mm lens at a fixed aperture of f/8.7. Nikon makes a nice 600mm f/4.0, but most people wouldn’t use it for everyday snaphots.

The Nikon D810 can take a 7000 x 5000 pixel image in an instant using a CMOS sensor (go Sony!). Ralph captures 5024 x 32 pixels at a time using a CCD sensor, purchased from E2v, an English company. What if you don’t want a little ribbon photo? The spacecraft sweeps through a range of attitudes (spinning, basically) until a picture with a more normal aspect ratio is obtained.

Wikipedia says that the whole mission is supposed to cost about $700 million, about 50,000X the cost of a Nikon D810 and 600/4.

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