WHERE THE HELL DO THESE "EXPERTS"(READ IDIOTS) COME FROM?
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'If you're out, stay out' of
AOL-TWX
Weatherly's Hyman weighs in on latest merger
delay
By David B. Wilkerson,
CBS.MarketWatch.com
Last Update: 4:55 PM ET Nov 13, 2000
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As America Online and Time Warner fight another
round with federal regulators, Barry Hyman has this
advice for investors with no shares in either company
who are thinking about jumping in:
Don't do it.
Hyman, chief investment strategist at Weatherly
Securities, says there's just too much uncertainty right
now about AOL's (AOL: news, msgs) proposed $120
billion acquisition of Time Warner (TWX: news, msgs)
.
Last Thursday, the Federal Trade Commission said it
will delay its decision on the deal for as long as three
weeks while it seeks further reassurance that the new
entity won't block competition. At issue is the extent to
which AOL-Time Warner will allow rival Internet
service providers and rival programmers full access to
its cable pipes.
The deal will probably still get done, says Hyman,
because AOL is desperate to close it, and because,
thanks to monstrous breakup fees, backing out would
cost either company billions of dollars.
But Hyman cautions that with every additional demand
from the FTC, the deal is being robbed of the synergies
that make it logical.
"If it gets to the point where the prerequisite would be
the sale of Time Warner Cable," he said, "or ensuring
open access to a point that makes a merger nonsensical,
then the deal doesn't make much sense.
"Because then, all we're looking at, potentially, is Time
Warner with an Internet portal."
If the deal is rejected, Hyman recommends heavy buying
of Time Warner shares.
"If you want to choose one (AOL) or the other, I would
say choose Time Warner, because it has a 25 percent
upside valuation within a year anyway," thanks to the
significant cash flow from its cable networks, cable
systems, publishing and motion pictures.
Hyman puts the fair value of Time Warner at about $90
a share in 12 months.
AOL is easily "the more vulnerable" of the two
companies should the deal not come off, and a stock that
is almost $50 from its 52-week high of $95.81 - set
Dec. 13 - would take another freefall, Hyman said. |
