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Strategies & Market Trends : Roger's 1998 Short Picks -- Ignore unavailable to you. Want to Upgrade?

To: Market Tracker who wrote (7235)	4/18/1998 12:42:00 AM
From: Pancho Villa	Respond to of 18691

Another Monday Mega-Merger? by Bethany McLean Surprise, surprise! Who said this bull is getting tired? The market was all angst and no action throughout the morning, but it made a big last minute push and charged into previously uncharted territory. The Dow closed up 90.93, to 9167.5, the S&P closed up 14.55, to 1122.72, and the NASDAQ closed up 8.36, to 1866. I guess all the indices decided that they had the weekend to rest, relax, and recuperate. Me too! Here's what we've been following: ANOTHER MONDAY MEGA-MERGER?... What dragged the Dow higher? A mere rumor: AIG and American Express. A money manager said in Business Week's "Inside Wall Street" column that an AmEx/AIG merger made sense. The market listened: AmEx climbed $4 1/4, contributing 18 points to the Dow's rise. Okay, so it's a big rumor. But Gene Marcial (the column's author) doesn't have a great track record at takeover prediction. Another problem: Do you see either Hank Greenberg or Harvey Golub taking the back seat? Of course, they could share (which would make the Weill/Reed combo look positively peaceful). What would be easy is the name: American Express International. Beautiful, if I do say so myself. IT WAS LOVE AT FIRST SIGHT.... between the aging bull market and fresh young faces Broadcom and ARM. Broadcom, which makes high speed chips for cable modems (Internet play! Did you hear me? I said INTERNET!), offered its shares up this morning at $24 (more than double the expected price). They skyrocketed to $70 before closing at $53 5/8. A mere 123% rise (institutional investors who snagged shares at $24 and flipped them at the top are no doubt smiling). ARM, which makes chips used in cell phones and hand-held computers, was a bit more subdued (it's British, okay?). Its ADRs opened at around $29 and closed at $42 1/2. (Topping off a good week for Apple, one of ARM's biggest investors.)ÿ Now, should I say something cynical and nasty? Like that on Monday, investors may realize that Broadcom, which is now priced at 670 times 1998's earnings, isn't the stock of their dreams? Nah. It's the weekend. Let's hold onto our illusions. SPEAKING OF LOVE.... It's springtime! Even in Canada. So Canadian Imperial Bank of Commerce and Toronto Dominion want to have a $15 billion wedding. It would make them somewhere around the 20th biggest bank in the world (ranked by market cap), ahead of US Bancorp and Sumitomo, BUT BEHIND Royal Bank of Canada/Bank of Montreal, which announced their merger back in early 1998. CIBC/TD also would become the second biggest discount broker in the world--second to Charles Schwab, of course, BUT AHEAD of Fidelity. Is it true love for CIBC and TD, or are they each others' consolation prizes? Whatever: The merger also would mean that two of the top 25 banks in the world are Canadian. And in February, for the first time in 10 years, Americans made more overnight trips to Canada than Canadians did to America! There must be some meaning in all this. Loose Change So Sun Microsystems talked about the tough times in Asia. Wonder what IBM, which gets lots of revenues and profits from the A-place, will have to say when it announces on Monday.... Life really isn't fair. Even for Wall Street darlings. Last night, Excite reported that it lost less money than the Street expected! But today, the market reacted to CNBC reports that venture capitalists wanted to sell some XCIT, and knocked it down $15 13/16. All the search engine stocks slid in sympathy. Doesn't anyone remember that we invest for the next (or the next or the next) millennium?... I think my favorite analyst rating has toÿ be "attractive."ÿ (That's what Bear Stearns slapped on Tommy Hilfiger today.) It's not a buy, it's not a hold--in fact, it's not anything at all! Maybe it'sÿ like saying "oh, he's nice."...ÿ Hambrecht & Quist reported that earnings doubled compared with the same quarter last year and beat expectations by 33%. As of today's close HQ's market cap is just under $1 billion. Such a tasty tidbit for some potential acquirer.... Are the car companies running out of gas? GM announced an 11% drop in first-quarter profit, mainly because Latin American and Asian earnings plummeted 64%. And superstar analyst Maryann Keller at Furman Selz downgraded Ford.... So Cendant said it fired Cosmo Corigliano, former CFO of CUC, who resigned last week. Huh? Guess the message is "Embarrass us and we'll embarrass you." Oh, and Cendant and ABI said they're still merging.... Laura Ashley, the money-losing fashion retailer--think flowery frocks, headbands, and country style stuff--is trying again to restructure itself. You know, I went through a Laura Ashley phase (mercifully, a brief one), but it REALLY wasn't me. My friends found it highly amusing. ÿÿÿÿ ------------------------ ÿÿÿÿ SUBSCRIPTION INFORMATION ÿÿÿÿ ------------------------ TO SIGN UP FOR STREET LIFE, point your browser to: ÿÿÿÿÿÿÿ fortune.com TO SIGN OFF FROM STREET LIFE, point your browser to: ÿÿÿÿÿÿÿ fortune.com For detailed sign-up, sign-off information, e-mail: ÿÿÿÿÿÿÿ dailymail@pathfinder.com. For a Free Trial issue of FORTUNE MAGAZINE, point your browser to: cgi.pathfinder.com or call our toll-free number: ÿÿÿÿÿÿÿ 800-621-8000 For a daily in-depth report on the news and trends that affect your finances, check out the Money Daily on the Web at moneydaily.com Thank you for signing up for Fortune's Street Life!

To: Market Tracker who wrote (7235)	4/18/1998 3:22:00 AM
From: Investor-ex!	Read Replies (2) \| Respond to of 18691

Market Tracker, What is it with this stock market and certain companies that sell books and/or records on the web? These are highly competitive, relatively low-margined businesses, and always will be. It doesn't matter where that business is conducted. IMO, the internet will ultimately make little difference. Yes, the market will expand some, but at the moment, the best possible outcome for any one of these companies is that they somehow manage to steal market share from one another. This KTEL thing is perfectly emblematic of a completely silly sector in a decidedly silly stock market. This is almost too funny. What's the big deal, don't nearly all of the established retailers in the US have web sites too? Why aren't they considered "internet" companies as well? At least AMZN, CD-NOW, etc. are brand-new, internet-conceived enterprises, with no previous history (or earnings), and as such it makes some very small amount of sense to label them as "internet" companies. KTEL has been flooding the airwaves with its ads for decades, hawking greatest-hits albums, Slim Whitman, Boxcar Willie, et al. Now they are suddenly thrown into the "internet" category simply because they declare intent to offer their wares via the web? Complete, unadulterated insanity. I truly can't wait to see what's next. That analyst is right, though -- sort of. On a comparative basis, KTEL is as undervalued as an internet company could be, now that it suddenly has become one. But as usual, the truth is not that KTEL is undervalued, but that the other stocks in its newly-found sector are grossly overvalued. Internet retailing is going to be the most competitive environment imaginable. Margins will be so thin that only those entities extremely well-managed and offering truly unique or proprietary products will come anything close to achieving reasonable, sustainable margins. At best, the internet is but an additional (albeit theoretically cost-effective) distribution channel. And the fact is, all players ultimately have approximately same potential in this channel. This is like bidding up the first companies that installed toll-free order numbers! The coming inevitable internet shakeout, especially among retailers, will pale in comparison to any previous craze/crash-and-burn cycle. However, with KTEL's tiny float and no options with which to hedge, one would have to have his head examined if he shorted it, for now anyway. A final thought: try to think up every mail-order company with a household name. Using K-TEL logic, they're ALL undervalued! Ronco/Popeil (pocket fisherman, bamboo steamer, vegematic, ginsu knives, etc.) -- no stock, has web-site. Sessions (record albums like KTEL) -- no stock, has web-site. Swiss Colony (X-mas chow) -- no stock, beautiful web-site. Columbia House (record club) -- no stock, has web-site. IMO, a screaming IPO candidate. Think of the membership lists alone -- what a hype tool that would be! Of course, their problem is they give away way too many albums. No why do you suppose they do THAT? Lands End (upscale clothing) -- stock symbol LE, has web-site. Why doesn't this stock have a PE of 200? Others, anyone? Some of these guys should go public -- with the right promotion they can all be highly successful internet stocks, too! :o)