Planet Hollywood's Bull's Rebuttal
by Rick Munarriz ([email protected])
Like an aging matinee idol, I think my friend Bill is living in the past. This is not to say that the present is as miserable as he thinks, even with the soft first quarter Planet Hollywood still expects operating cash flow to be in the range of $120 million this year. The recent critical pans have trounced the stock to the point that this quality brand name is selling for just 6-7 times EBITDA (earnings before interest, taxes, depreciation and amortization). But enough about yesterday, let's look at tomorrow.
Planet Hollywood has proven to be an incredible visionary, but a subpar operator. Bill and I both know it. Wall Street knows it. But what I think Bill is forgetting is that now the company knows it, too. That is why it is now leaning on more efficient operators. Bill is quick to knock Cool Planet, but it won't be CEO Robert Earl working the scoops. Dreyer's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DRYR)") else Response.Write("(NYSE: DRYR)") end if %>, the ultimate purveyors of frozen quality and really cool Edy's commercials, will be the ones manning the factory.
When the company decided to enter the toy market it recruited the two best toymakers in Mattel <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MAT)") else Response.Write("(NYSE: MAT)") end if %> for Planet Hollywood Barbie and Hasbro (ASE: HAS) for the movie trivia board game. Movie theaters? AMC. Lodging? Experienced players like Vornado Realty Trust <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: VNO)") else Response.Write("(NYSE: VNO)") end if %>.
Two years from now Bill will probably forget the Cap'n Crunch breaded chicken fingers that turned his stomach -- but he will remember Planet Hollywood. It will be everywhere. Arnold said it best in The Terminator when he muttered, "I'll be back!" Planet Hollywood will be back, in a sequel that will come to blow the original to pieces. Get your shares now, while everyone still thinks this is a one product company, and while those shares still run you the price of a movie ticket.
Next: The Bear Responds