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Non-Tech : Philip Morris - A Stock For Wealth Or Poverty (MO) -- Ignore unavailable to you. Want to Upgrade?

To: md1derful who wrote (3628)	4/10/1999 8:19:00 AM
From: Theo Karantsalis	Read Replies (2) \| Respond to of 6439

OK, I'm back! Forward from Dave to me: Theo: I am not a subscriber to SI but some things you might want to pass on. I called Director of Investor Relations Mr. Mike Kenney (phone # 917-663-3428) last week. He stated that MO is repurchasing between 200K and 700K shares daily...Mentioned that on the legal front he expected MO to take a more aggressive approach..I got the impression, the possibility of being more proactive (sue first and or counter sue)..stated that more passive approach was advise provided from legal team in the past does not now appear to be working as effectively....I asked him what the company was going to enhance shareholder value and he stated that there were plans in work around the fall time frame but he was not allowed to disclose also stated that the company as a history of increasing dividends..(No details provided by typically 10%)..I asked him if they were in talks with the feds to which he stated NO.....I asked him why no insider buying...He stated that most of the Execs have significant amount of net worth invested in company due to long length of service thus no additional buying....He stated that most of his counterparts were....Could not by law provide specific comments about on going lawsuits but said he was a little concerned about Memphis case due to the "bundling" of plaintiffs....Also called Steven Parrish VP Corporate Affairs late last week...Believe it or not he returned by call and left a voice message...I returned his call a few days later but he was on travel....If any insight is provided, I will forward.

To: md1derful who wrote (3628)	4/10/1999 8:20:00 AM
From: Theo Karantsalis	Read Replies (1) \| Respond to of 6439

MO Crashing and Burning? Is tobacco giant going up in smoke? by Ann Coleman (TMF AnnC@aol.com) Alexandria, VA (April 9, 1999) -- The Dow's Bad Boy, Philip Morris (NYSE: MO), has taken a beating since the beginning of the year. It was excluded from this year's Foolish Four but is still in quite a few folks' Foolish Four portfolios that were started at various times last year, and they are not happy campers. Let's take a look at Philip Morris's prospects. Not that I have a crystal ball, mind you, but there are some pretty obvious things to consider when trying to decide if it is time to bail out. Every man-made rule has its exceptions. Flip Mo may be at least a partial exception to the rule that it is earnings that drive price. But even though it is tempting to blame the company's recent dive on the successful tobacco lawsuits, doubts about earnings have also figured into the picture. Recent price increases to help pay for the settlement between the tobacco industry and 46 states have reduced US tobacco consumption, and the possibility of increased federal taxes and regulation have threatened earnings growth as well. Of course, there are lots of other countries in the world just full of people waiting to be addicted, and this has not gone unnoticed by US tobacco companies. I am not going to go into the politics or morality of selling an addictive and deadly substance to people who can't read the warning labels, if there even are warning labels. (You'd never guess which side I'm on, would you?) No, let's not go down that road. It's been done. Let's just look at this from the standpoint of an investment. The company is rolling in dough. Analysts are estimating a 13% increase in earnings next year (although if the fears mentioned above come to pass, there would be the possibility of earnings estimates revisions). Flip Mo has dropped 40% from its high last November. Right now the company is selling very near its 12-month low, with a P/E of 15 and a dividend yield of 5.2%. Compare that with Procter and Gamble (NYSE: PG), selling at a P/E of 37 with a dividend yield of 1.02%. Could it get worse? Oh, sure. Three years ago the company was selling for less than $30 (price adjusted for a 3-for-1 split in early 1997). But then again, it is hard to imagine how much lower the company can go. Even with the whole tobacco division valued at 0, one can make a pretty good case that the rest of the company is worth more than it is selling for right now. If I were a Philip Morris shareholder, I would be hoping that the company would spin off the tobacco division and that some deep pockets would take the tobacco portion private. How realistic that scenario is, I don't know, but it would certainly liberate the non-tobacco businesses and be a boon to stockholders. Meanwhile, the company increased its dividend last year and is now yielding more than my money market fund. That kind of payout will attract buyers when they are reassured that the company is not going to be put out of business by the cloud of second-hand smoke hanging over it. I probably won't be one of them, but then again, a 5% return (and the possibility of a spin-off) is tempting even to one who is about as antismoking as you can get. Those who are less scrupulous might well jump in with both feet at some point, dragging the price back up to merely cheap. Monday: How did some investors get into this mess? What happened to the Foolish Four's protective mechanism? Fool on and prosper!