DJIA 8811.77 -159.93 (-1.78%) S&P 500 1094.58 -17.70 (-1.59%) Nasdaq 1749.75 -23.50 (-1.33%) Value Line ndx 932.21 -13.25 (-1.40%) 30-Year Bond 106 22/32 +21/32 5.66% Yield
Interactive entertainment software developer THQ Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: THQI)") else Response.Write("(Nasdaq: THQI)") end if %> tacked on $2 1/2 to $25 3/4 after signing a ten-year exclusive agreement with privately held Titan Sports Inc. to produce World Wrestling Federation (WWF) electronic games in conjunction with toy manufacturer JAKKS Pacific <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: JAKK)") else Response.Write("(Nasdaq: JAKK)") end if %>. According to THQ, the first WWF games are scheduled to be released in late 1999 and the partnership plans to produce at least two WWF titles annually thereafter. The deal fills the void in THQ's product line produced when it lost the rights to make World Championship Wrestling games in March to rival Electronic Arts <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ERTS)") else Response.Write("(Nasdaq: ERTS)") end if %>. It's unclear how the deal will affect rival Acclaim Entertainment <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AKLM)") else Response.Write("(Nasdaq: AKLM)") end if %>, which continues to hold the rights to WWF games until November 1999. No doubt the Fool's THQ message boards are probably in on the action and have further information on the deal and what it means to the company.
Vienna, Virginia-based MicroStrategy Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MSTR)") else Response.Write("(Nasdaq: MSTR)") end if %> jumped $9 1/8 to $21 1/8 after the company sold 4 million shares in an initial public offering at $12 per share, which was above the expected price range of $8 to $10 per share. The offering included 160,000 shares sold by certain shareholders and represented approximately an 11.5% stake in the firm. MicroStrategy develops enterprise decision support systems (DSS) software, which can be used to search and analyze detailed database information. The information can then be delivered through push technology via the Internet, e-mail, or wireless communications systems. The company, which has seen its top line grow 67% annually over the last five years, has an impressive client list including General Motors <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GM)") else Response.Write("(NYSE: GM)") end if %>, MCI Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MCIC)") else Response.Write("(Nasdaq: MCIC)") end if %>, and Kmart Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: KM)") else Response.Write("(NYSE: KM)") end if %>.
Online bookseller Amazon.com <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AMZN)") else Response.Write("(Nasdaq: AMZN)") end if %> moved up $8 3/8 to $62 1/2 after launching its music store on the Web at 1 a.m. today, offering about 100,000 CD titles at discounted prices. The news isn't new, though; this has been in the works and has been publicly known for a while. Perhaps the bears realize that the company is building core competencies that can be applied to businesses with trillions of dollars in worldwide sales each year. A small proportion of those sales would be huge, even if the margins would be thin. The next stop for the Amazon.com distribution train may be video cassettes, building on its acquisition of privately held Internet Movie Database Ltd. in April. Fools in Atlanta and Los Angeles can listen in on Tom Gardner's discussion with Amazon.com CFO Joy Covey on the first broadcast of The Motley Fool Radio Show this Saturday.
QUICK TAKES: News Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NWS)") else Response.Write("(NYSE: NWS)") end if %> rose $15/16 to $24 1/2 after the parent of the Fox TV network and 20th Century Fox movie studios agreed to sell its TV Guide properties to United Video Satellite Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: UVSGA)") else Response.Write("(Nasdaq: UVSGA)") end if %> for $800 million in cash and 30 million United Video shares. United Video gained $1 1/2 to $38 1/2... Number 4 U.S. air carrier Northwest Airlines <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: NWAC)") else Response.Write("(Nasdaq: NWAC)") end if %> added $1 1/16 to $39 15 1/16 even though automakers General Motors <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GM)") else Response.Write("(NYSE: GM)") end if %> and Chrysler <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: C)") else Response.Write("(NYSE: C)") end if %> reportedly are close to an agreement to form a small start-up airline for their employees' use, which could threaten Northwest's dominant position at its Detroit hub... Eagle Hardware & Garden <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: EAGL)") else Response.Write("(Nasdaq: EAGL)") end if %> advanced $1 1/4 to $20 1/4 on renewed speculation that the home improvement products retailer will be taken over by rival Lowe's Companies <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LOW)") else Response.Write("(NYSE: LOW)") end if %>.
International Home Foods <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IHF)") else Response.Write("(NYSE: IHF)") end if %> added $1 5/8 to $24 3/4 as the maker of such college student staples as Chef Boyardee pasta and Bumble Bee tuna was upgraded by BT Alex. Brown to "strong buy" from "buy"... Inktomi Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: INKT)") else Response.Write("(Nasdaq: INKT)") end if %> gained another $4 1/2 to $40 1/2 after doubling yesterday following its initial public offering of 2.25 million shares at $18 per share... Cancer and autoimmune disease therapeutics developer Medarex Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MEDX)") else Response.Write("(Nasdaq: MEDX)") end if %> rose $7/16 to $6 3/4 after a fund formed by privately owned investment firm Bay City Capital and various business interests of the Pritzker family offered to acquire up to a 22% stake in the company for about $44.4 million.
Internet content aggregator Infoseek Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SEEK)") else Response.Write("(Nasdaq: SEEK)") end if %> picked up $1 15/16 to $28 after launching its updated Home Page Center for creating individual home pages on the Web. The company also acquired the assets of privately owned 280 Inc., a developer of online community technologies, for $800,000 in cash... Financial planning and tax preparation firm Gilman + Ciocia <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: GTAX)") else Response.Write("(Nasdaq: GTAX)") end if %> rose $2 to $17 1/8 after Janney Montgomery Scott reiterated its "buy" rating on the stock... Infant and toddler clothing manufacturer Gerber Childrenswear <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GCW)") else Response.Write("(NYSE: GCW)") end if %> moved up $1 1/2 to $14 1/2 after the firm sold 3.6 million shares in an initial public offering today at $13 per share.
Telecommunications equipment installer Able Telcom Holding Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ABTE)") else Response.Write("(Nasdaq: ABTE)") end if %> advanced $5/8 to $15 7/16 after reporting fiscal Q2 EPS of $0.19, beating the Street's estimate of $0.16... Disposable filter and fluid clarification systems maker Pall Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: PLL)") else Response.Write("(NYSE: PLL)") end if %> added $1 9/16 to $21 5/8 after Cowen & Co. upgraded the company to "strong buy" from "buy"... Electrical cable manufacturer Belden Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: BWC)") else Response.Write("(NYSE: BWC)") end if %> moved up $1 7/16 to $33 3/4 after saying it will repurchase up to $18 million of its own shares... Dentsply International <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: XRAY)") else Response.Write("(Nasdaq: XRAY)") end if %> gained $7/8 to $24 7/8 after the dental equipment manufacturer's board increased its stock buyback plan to 1.5 million shares from the previously announced 500,000 shares.
Communications powerhouse MCI Communications <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MCIC)") else Response.Write("(Nasdaq: MCIC)") end if %> fell $1 1/2 to $48 5/8 on news that it is being sued by Britain's No. 2 phone company Cable & Wireless <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CWP)") else Response.Write("(NYSE: CWP)") end if %> to make sure MCI follows through on the planned sale of its Internet backbone business (which carries traffic for Internet service providers) to C&W, which slid $1 7/16 to $33 13/16. The U.K. telecom company is concerned that MCI may seek other bidders for its backbone and other related businesses in its efforts to win government approval of its proposed acquisition by WorldCom <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: WCOM)") else Response.Write("(Nasdaq: WCOM)") end if %>, which today lost $1 13/16 to $42 1/4. Because the European Union's competition commissioner last week said the sale to C&W would not be enough to satisfy antitrust concerns, the thinking is that MCI may renege on the deal with C&W to get a better price for the backbone business and anything else it may be forced to sell. C&W claims it has exclusive rights to bid on any other assets MCI plans to sell. Although the backbone business, which C&W has agreed to buy for $625 million, represents a considerable chunk of MCI's Internet business, competitors such as Sprint <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FON)") else Response.Write("(NYSE: FON)") end if %> and GTE <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GTE)") else Response.Write("(NYSE: GTE)") end if %> say the sale would still leave the combined MCI WorldCom dominating the Internet business -- GTE points out that investment bankers have priced MCI's Internet business at more than $4 billion. Sprint dipped $1 7/8 to $70 3/4, and GTE was cut $1 7/16 to $57 1/4.
Oral care upstart Enamelon <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ENML)") else Response.Write("(Nasdaq: ENML)") end if %> failed its check-up today, losing $2 7/16 to $6 1/2 after warning investors that retailers are hesitant in making major stocking commitments for the company's lone product, a calcium and phosphate enhanced fluoride toothpaste. Today's fiscal gingivitis is just another step down for a company whose share price has been in serious decay for the past year -- shares were trading as high as $25 a share last year even before the introduction of its toothpaste. The company is still expecting sequentially higher sales for Q2, but that is no major feat. Enamelon's toothpaste rolled out well into January and the company held back its marketing muscle until just last month, when a coupon campaign was giving the stuff away. With the steep discounts and a $28 million advertising budget this year, the only thing the company is assured of preventing is profits. If the May freebies and the dollar-off repeat purchase coupons didn't stir up enough demand for the company to crack into the lucrative $5 billion a year toothpaste business, even peddling potentially revolutionary "liquid calcium" is going to be challenging for Enamelon and will probably leave cavities in the balance sheet in the short term.
Oil and oil services companies continued to decline with the slide in crude oil prices on concern over an oversupply. Mobil <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MOB)") else Response.Write("(NYSE: MOB)") end if %> dipped $1 3/4 to $75 1/16, Chevron <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CHV)") else Response.Write("(NYSE: CHV)") end if %> fell $1 3/8 to $78 1/16, and Texaco <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TX)") else Response.Write("(NYSE: TX)") end if %> lost $1 7/16 to $56 9/16. Of the oil services firms, Schlumberger <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SLB)") else Response.Write("(NYSE: SLB)") end if %> sank $2 7/8 to $70 13/16; Halliburton <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HAL)") else Response.Write("(NYSE: HAL)") end if %> shed $2 7/16 to $42 1/4; Dresser Industries <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DI)") else Response.Write("(NYSE: DI)") end if %> tanked $2 5/8 to $40 7/8; EVI Weatherford <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: EVI)") else Response.Write("(NYSE: EVI)") end if %> lost $3 1/16 to $39 11/16; Camco International <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CAM)") else Response.Write("(NYSE: CAM)") end if %> tumbled $4 7/8 to $56 15/16; Cooper Cameron <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RON)") else Response.Write("(NYSE: RON)") end if %> slid $2 5/8 to $51 1/4; Tidewater <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TDW)") else Response.Write("(NYSE: TDW)") end if %> was cut $1 1/4 to $33 1/8; Friede Goldman International <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: FGII)") else Response.Write("(Nasdaq: FGII)") end if %> fell $1 7/8 to $28 5/8; and National Oilwell <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NOI)") else Response.Write("(NYSE: NOI)") end if %> dropped $2 3/4 to $30. Separately, Royal Dutch Petroleum <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RD)") else Response.Write("(NYSE: RD)") end if %> lost $1 15/16 to $54 5/16 after its 60% owned subsidiary Royal Dutch/Shell Group announced plans to close a refinery outside of London as heavy competition has driven down profits.
QUICK CUTS: Chemical and life sciences company DuPont <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DD)") else Response.Write("(NYSE: DD)") end if %> fell $2 1/8 to $75 after Salomon Smith Barney cut its Q2 EPS estimate to $1.03 from $1.10 and its full-year EPS estimate to $3.74 from $3.81 due to the strength of the dollar, somewhat slower chemical volume growth, and weak earnings at the company's Conoco unit. Salomon reiterated a "buy" rating with a 12-month price target of $100... General Motors <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GM)") else Response.Write("(NYSE: GM)") end if %> skidded for $2 7/16 to $70 1/4 as another plant was partially shut down in the aftermath of a UAW strike in Flint, Mich... A day after the first-ever jury ruling to award a smoker's family more than $1 million in damages, cigarette maker Philip Morris <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MO)") else Response.Write("(NYSE: MO)") end if %> was smoked for $1 3/16 to $36 3/4; RJR Nabisco <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: RN)") else Response.Write("(NYSE: RN)") end if %> slipped $13/16 to $24 5/8; and BAT Industries <% if gsSubBrand = "aolsnapshot" then Response.Write("(AMEX: BTI)") else Response.Write("(AMEX: BTI)") end if %> was trimmed $9/16 to $19.
Chip and electronics maker Texas Instruments <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TXN)") else Response.Write("(NYSE: TXN)") end if %> lost another $2 7/8 to $49 5/8 after IBM <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IBM)") else Response.Write("(NYSE: IBM)") end if %> announced plans to expand its custom microchip business, which puts it in direct competition with Texas Instruments' most lucrative market... Newmont Gold <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: NGC)") else Response.Write("(NYSE: NGC)") end if %> fell $1 3/4 to $24 and Barrick Gold <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ABX)") else Response.Write("(NYSE: ABX)") end if %> dipped $13/16 to $17 3/8 after Morgan Stanley Dean Witter cut its estimate for gold to $305 an ounce from $320 for 1998 and to $330 from $340 for 1999. The investment bank also lowered Barrick's 12-month price target to $24 from $26 and Newmont's to $36 from $42... Aviation security and related services company International Total Services <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ITSW)") else Response.Write("(Nasdaq: ITSW)") end if %> dropped another $1 1/2 to $10 after warning that it won't meet analysts' estimates for Q1 ending June 30.
Victoria's Secret and Bath & Body Works parent Intimate Brands <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IBI)") else Response.Write("(NYSE: IBI)") end if %> lost $1 1/4 to $27 5/16 after Prudential Securities downgraded its rating on the intimate apparel and personal care products company to "hold" from "buy"... Electronic signal processing components maker Sawtek Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SAWS)") else Response.Write("(Nasdaq: SAWS)") end if %> was trounced for $8 31/32 to $13 9/32 after warning that although it expects "strong" financial results for its third quarter ending June 30, it will be "difficult" for the company to achieve sequential growth for the fourth quarter due to "external factors" outside its control... Creative Technology <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CREAF)") else Response.Write("(Nasdaq: CREAF)") end if %>, maker of the Sound Blaster sound card and software, dropped $2 1/2 to $13 5/8 after announcing that its Q4 (ending June 30) revenues and gross margins will fall short of analysts' estimates.
Integrated circuits assembly equipment company Aetrium Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ATRM)") else Response.Write("(Nasdaq: ATRM)") end if %> plunged $3 15/16 to $7 9/16 after announcing that Q2 earnings will be "significantly below" analysts' expectations due to the continued downturn in the semiconductor equipment market... Circuit-based interconnects maker ADFlex Solutions <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AFLX)") else Response.Write("(Nasdaq: AFLX)") end if %> sank $2 1/2 to $8 1/2 after announcing it expects a Q2 operating loss. Including one-time charges related to the company's cost reduction efforts, it anticipates a loss of $3-$3.2 million... Information technology services company Aztec Technology Partners <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AZTC)") else Response.Write("(Nasdaq: AZTC)") end if %>, skidded $7/8 to $10 1/8 after announcing it has canceled its proposed IPO in the wake of completing its spin-off from U.S. Office Products <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: OFISD)") else Response.Write("(Nasdaq: OFISD)") end if %>, "in light of market conditions and other factors."
Insurance and financial services firm Allmerica Financial <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: AFC)") else Response.Write("(NYSE: AFC)") end if %> shed $4 11/16 to $66 3/4 after announcing that it expects to incur roughly $25.3 million in pre-tax catastrophe losses, including $22.5 million in expected storm losses from its Citizens Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CZC)") else Response.Write("(NYSE: CZC)") end if %> unit, which will reduce Allmerica's Q2 EPS by about $0.28. Citizens' EPS will be cut by some $0.51... Telescopic material handlers manufacturer OmniQuip International <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: OMQP)") else Response.Write("(Nasdaq: OMQP)") end if %> slid $2 3/16 to $19 13/16 after warning of lower-than-expected Q3 earnings. Though it didn't give numbers for Q3, the company said Q4 earnings are expected to be between $0.55 and $0.60 compared with the analysts' mean estimate of $0.58, according to First Call... Automotive window, door, and seating systems maker Excel Industries <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: EXC)") else Response.Write("(NYSE: EXC)") end if %> was rolled down $1 7/8 to $16 7/8 after forecasting that its earnings will fall short of analysts' expectations for Q2 by as much as $0.07 a share and for the year by up to $0.40 a share.
FOOL
ON THE HILL
An Investment Opinion
by
Alex Schay
Gucci's Designs on Asia
He wears the greatest clothes, the best designers Heaven knows.
Ooo... from his head down to his feet
Halston, Gucci, Fiorucci
-- Sister Sledge, "He's the Greatest Dancer"
Well, at least one of those fashion names -- not made famous by the Sister Sledge song of the '70s -- has managed to endure, and that's Gucci Group NV <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GUC)") else Response.Write("(NYSE: GUC)") end if %>. The stock danced $1 higher to $52 today after the company reported fiscal Q1 EPS of $0.72 versus $0.78 a year ago, which was above the IBES mean estimate of $0.65. Unlike other global fashion concerns, Gucci has always been involved in the making of all manner of luxury goods, insulating the firm from any single fashion faux pas that may occur. Total revenues in the quarter slipped 1.4% to $250.7 million compared to last year, but gross profit margins increased a point to 63.8% buoyed by surging watch and clothing sales, which offset slow Asian demand for handbags, shoes, and other accessories.
The goal, of course, for global fashion companies is not mass consumption, but a careful balance between the maintenance of brand image and ubiquity. The major players have realized that to continue to be leaders in the business (ten years down the road) requires a global branding strategy that can be leveraged into non-core areas through licensing. The primary risk inherent in such a strategy is damaging a brand by over-exploitation. Part and parcel with maintaining the quality of a fashion brand is the patient upkeep of the "price-value position."
With the mid-1980s serving as a poignant reminder of Gucci's unhealthy proliferation into the dreaded "mass market," the firm has yet to change its prices in markets where severe currency depreciation has taken place -- that is, Malaysia, Indonesia, the Philippines, and Thailand. The company also has held the price line in Hawaii and Hong Kong -- its two most significant Asian-Pacific markets outside Japan, accounting for roughly 20% of total sales. Staying firm on prices has helped the company's margins while simultaneously maintaining the strength and exclusivity of its brand in the mind of the all-important Asian consumer.
Many strong consumer franchises have taken the downturn in certain Asian economies as an opportunity for investment, in order to pave the way for higher future returns. At the end of March, Seattle-based coffee chain Starbucks <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SBUX)") else Response.Write("(Nasdaq: SBUX)") end if %> announced plans to focus on long-term investment and expand into Asia despite the region's financial turmoil. The company hopes to derive 10% of its revenues from the region by the year 2000 when it plans to have 200 units ready to serve-up Frappuccinos. Global beverage powerhouse Coca-Cola <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: KO)") else Response.Write("(NYSE: KO)") end if %> reported at about the same time as Starbucks that it viewed the economic turmoil in Asia as a "short-term situation" and that recent events had not changed the soft-drink giant's optimistic outlook for the region. With roughly 70% share of the carbonated drink market and an October Gallup poll reporting that 8 out of 10 of China's 1.2 billion inhabitants recognize the Coke brand, investment decisions are easier for Coke than most other players.
Taking advantage of the current climate in Asia has been a central element of Gucci's recent strategy as well. With the help of solid earnings before interest and taxes (EBIT) margins of 23% combined with rapid working capital turnover and modest capital expenditures, Gucci manages to throw off substantial sums of free cash -- to the tune of $1.58 per share. The company has used this money to buy out some of its foreign franchisees in a strategy that aims to secure control of its interests in anticipation of an Asian market recovery. In mid-May Gucci bought out its Korean franchisee Sung Joo International, which came on the heels of its acquisition of a 51% stake in its Taiwan franchisee and another outright buyout of its Guam franchisee.
Considering Gucci's strong brand recognition and market position, as well as its revenue growth capacity in the 15% per year range for 1999 and beyond, investors may want to take a closer look at Gucci's products and markets region by region, and determine whether or not its relative undervaluation is still warranted.
Company/Ticker Price PE 1Yr PE2Yr Donna Karan (DK) $14 1/8 42.8 14.9 Gucci (GUC) $52 17.6 15.4 Guess (GES) $5 3/16 7.6 6.9 Nautica(NAUT) $27 7/8 17.3 14.5 Polo Ralph Lauren (RL) $28 1/4 23.7 20.5 Tommy Hilfiger (TOM) $59 7/8 20.4 16.8
Please see the Motley Fool's Conference Calls page for call information and links to synopses.
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Contributing Writers Yi-Hsin Chang (TMF Puck), a Fool Brian Graney (TMF Panic), Fool Two Alex Schay (TMF Nexus6), Fool, too Dale Wettlaufer (TMF Ralegh), Final Fool
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