Posting this because CPQ is mentioned "positively" ....
Herb on TheStreet: This Column's Year-End Report: Passes, Failure and Incompletes
By Herb Greenberg
Senior Columnist
12/23/98 6:30 AM ET
Okay, class, it's annual report card time again, and this year, like every year, this column has had its share of bona-fide failures, uncontested winners and a growing list of incompletes.
Success and failure, by this column's standards, are not now and have never been determined exclusively by stock prices, especially over the past year or two, when stocks have often ignored fundamentals. (Sorry, but the words of Paul Jain, the recently indicted chairman of the now-defunct Media Vision, still reverberate in my head. After a series of stinging items in the San Francisco Chronicle version of this column a number of years ago, his company's stock suddenly took off. Jain called me and said something like, "You see, our stock is rising. It means your short-seller friends are wrong." No, they were just early; don't confuse fundamentals and momentum.)
Incompletes
Which is why, this year, we'll start with the list of incompletes, which is longer than ever. For example, this column has quoted skeptics who have raised questions about both Starbucks (SBUX:Nasdaq) and Oakley (OO:NYSE). Starbucks is higher; Oakley is lower. But if Oakley, with its new athletic shoe and expensive new watch, can somehow turn in renewed growth, this column's Oakley items will be deemed (by yours truly) a flaming to-the-principal's-office kinda failure. Similarly, if Starbucks starts turning in quarter after quarter of stellar earnings growth, based on the performance of its stores -- not its tax rate or some other nonoperating issue -- I'll fail myself. (We'll give 'em the benefit of the doubt.)
Ditto for CHS Electronics (HS:NYSE), which has tripled off its lows. Also, the stocks of Data Transmission (DTLN:Nasdaq) and 3Dfx (TDFX:Nasdaq) are both higher, but the fundamentals haven't yet followed.
Then there's Bennett LeBow's Brooke Group (BGL:NYSE), whose stock has doubled after multiple items here suggested that it wouldn't get the windfall from tobacco legislation that analysts expected. As it turns out, it didn't get much of a windfall, but instead sold its key brands to Philip Morris (MO:NYSE). Yet, short-sellers remain short its stock, they say, because the company remains loaded with debt and there are simply too many unknowns related to the Philip Morris deal.
Also incompletes to Marc Cohodes, of Rocker Partners, for his long-term prediction of doom for HMT Technology (HMTT:Nasdaq) (stock high, fundamentals down) and Microchip (MCHP:Nasdaq) (ditto). And an incomplete to banking analyst Charles Peabody for his red flags of trouble that could bring down banks. (He may be right on the fundamentals, but so far the stocks aren't cooperating.)
The most difficult incompletes involve PC stocks and the Internet stocks. I look back at some of this column's Internet insanity items and wonder what I could've possibly been thinking when I wrote them. (Oh, yeah, now I remember: Most of the highest fliers like Amazon (AMZN:Nasdaq) didn't then, and still don't, have earnings!)
As for the PC makers: Just yesterday Ingram Micro (IM:NYSE), the world's biggest PC distributor, and Inacom (ICO:NYSE), another PC distributor, warned of a weaker-than-expected fourth quarter. Until PC makers report disappointing earnings, however, it's still an incomplete.
Failures
Now for the failures, including plenty of columns I'd rather forget: I should be expelled for including scuttlebutt that Intel (INTC:Nasdaq) was considering buying all or part of 3Com (COMS:Nasdaq). (Intel may have been inside, but the only deal Intel did was buy a small 3Com competitor.)
Also worthy of a suspension: questioning whether the SEC would snare Compaq (CPQ:NYSE) on being overly ambitious with its merger-related charges. (If the SEC's witch hunt on this issue had gone in that direction, we presumably would've known by now.)
I award myself an "F" for writing column after column, for years, warning that falling prices of cardiac stents would hurt the profits, and eventually the stock, of Arterial Vascular Engineering (AVEI:Nasdaq). This was clearly a case of a company being saved by selling out before it was too late. (Of course, that puts its buyer, Medtronic (MDT:NYSE), on the watch list.)
Also worthy of a failure, thanks to an acquisition: Yurie Systems, which was riddled with conflicts of interest, and the Learning Co. (TLC:NYSE), which is selling itself to Mattel (MAT:NYSE).
And I should be sent to the corner for my coverage (or lack thereof) of Syquest (SYQT:Nasdaq). "So, why," one column asked, "would anybody own the stock? One large Syquest holder, very much a not-for-attribution type, told me Wall Street's mistake is not factoring in the cash Syquest will get when and if the warrants are exercised. He figures it'll be in the range of around $250 million." Those warrants, it turns out, are what helped bury the company, which has filed for bankruptcy and ceased operations.
Also, failing marks go to Janus Twenty's Scott Schoelzel, who gets dinged for telling this column why he so loved Cendant (CD:NYSE) just before it fell apart. (We'll give him a "C" because in the same column he sang the praises of Dell (DELL:Nasdaq), which remains a winner.)
Finally, I put the dunce cap on my own head for writing that Chrysler investors could be headed for a crash when their company merged with Daimler-Benz to form DaimlerChrysler (DCX:NYSE). The thought, at the time, was that the stock would get whacked by the double whammy of the company issuing new shares related to the merger and the company's deletion from the S&P 500. (Both happened; investors survived.)
Passes
Jeff Matthews of RamPartners gets on the dean's list for commenting here, on the record -- in this column's TSC debut -- that he thought Compaq was stuffing the channel. It was, and its investors paid the price. On the honor roll: Scott Turkel, of TCM Partners, for telling this column's readers about a then-overlooked company called Verity (VRTY:Nasdaq), which he insisted was on the rebound; Roger Lipton, for an astute look at Restoration Hardware (RSTO:Nasdaq) and several other retailers that zoomed on improved fundamentals; Robert Kleinschmidt of Tocqueville Asset Management, who told this column's readers why he was bailing out of Citicorp, now Citigroup (C:NYSE), in the mid-60s, before it fell to the mid-30s; and Robert Levitt, who warned of trouble for REITs if real estate mutual funds were ever forced to start selling shares. (Taken a look at REITs and real estate mutual funds lately?)
This column also gets high marks for asking whether there was "bad news for Baan (BAANF:Nasdaq)" back when the company was at 47; it's now at 10, after a series of missteps. Also high marks to this column for piercing the hype in Heartport (HPRT:Nasdaq), which never quite lived up to its billing (thank you Larry Haimovich, of Haimovich Medical Technology Consultants in San Francisco). And thanks to Howard Rosencrans of H.D. Brous for allowing himself to be quoted here raising questions about Mattel. Also, an "A" to Manny Goldman, now of Merrill Lynch but then of PaineWebber, for sticking by his guns and saying that at 35 Philip Morris was too cheap; it's still shy of his 12-month target of 66 -- tame by today's standards.
Additional high marks for predicting that Galoob would hook up with Hasbro (HAS:AMEX), BankBoston (BKB:NYSE) would purchase Robertson Stephens and USWeb (USWB:Nasdaq) would merge with CKS Group.
I'm sure I've missed plenty, especially on the failure front, and I'm sure you'll let me know loud and clear. (If ya do, I'll include them in my first column of the new year.)
That's my way of saying that until then, I'm outta here. Thanks to this column's many sources for another year of help (I can use all I can get!) and to all of this column's regular readers for making me part of your day.
Happy holidays! |
