This press release from Bloomberg came out at 1300 hours. Still waiting for some positive comments from CDNW.
CDnow Stake of 5.3% Taken By Slim, Mexico's Richest Businessman
Washington, May 10 (Bloomberg) -- Carlos Slim Helu, one of the wealthiest businessmen in Mexico, added to his Internet holdings through the acquisition of a 5.3 percent stake in online music retailer CDnow Inc.
An investment group that includes Slim and his family's holding company, Grupo Carso SA, filed a Schedule 13G with the U.S. Securities and Exchange Commission saying they hold 947,000 CDnow common shares. Their stake in the Fort Washington, Pennsylvania, company has a current market value of $17.5 million.
The Slim family portfolio already includes controlling stakes in Telefonos de Mexico SA, the largest telephone company in Mexico, and Prodigy Communications Corp., a White Plains, New York, company that provides access to the Internet. Purchasing CDnow shares gives the family a stake in one of the Internet's most promising retail sectors, an analyst said.
''We see the overall growth of the online music business as a compelling opportunity,'' said Robert Martin, an analyst at Friedman, Billings, Ramsey & Co. Inc., based in the Washington suburb of Arlington, Virginia. ''CDnow is well positioned as a premier online music merchant with 2 million customers.''
Unlike many Internet stocks, CDnow shares have struggled this year. After trading as high as 24 15/16 in early February, CDnow shares traded as low as 13 1/4 on April 19. The shares rose 1 3/4 to 18 1/2 in recent trading.
The company's merger with N2K Inc., completed in mid-March, may have contributed to the decline in CDnow's shares, Martin said. Investors and analysts adopted a wait-and-see attitude to determine whether CDnow would prosper after the merger, Martin said.
Buying Opportunity
The decline of CDnow shares provided a buying opportunity for those who didn't have reservations. Slim and Grupo Carso's stake in CDnow crossed the 5 percent threshold on April 29, according to the SEC filing, suggesting that Slim and his affiliates were buying when CDnow shares languished earlier in the month.
Officials at CDnow couldn't be immediately reached for comment.
Grupo Carso officials didn't return calls seeking comment about whether the investment group bought its CDnow stake as a strategic investment, or as a short-term deployment of excess cash.
''Sometimes their investments are long term and strategic in nature and sometimes the investments are just for their short- term purposes,'' said Alex Ryshawy, an analyst in the New York office of Paribas who follows Grupo Carso.
Grupo Carso had cash totaling 5.6 billion pesos ($602 million) at March 31, 1999, according to Ryshawy. The company has routinely puts such funds to work by purchasing bonds and stocks, such as last year's acquisition of shares in Apple Computer Inc.
Notably, the investment group that purchased CDnow shares doesn't include Carso Global Telecom SA, the Slim affiliate that owns a 63 percent stake in Prodigy. The investment group does include Grupo Carso's retail affiliate, Grupo Sanborns SA.
Grupo Sanborns owns two department store chains in Mexico, including Sears Roebuck and Sanborns, Ryshawy said. It also owns Mix-Up, a chain of 49 brick-and-mortar music stores.
May/10/ 99 13:01 |
