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FOOL PLATE SPECIAL
An Investment Opinion
by Dale Wettlaufer
GE Invests in CNET
CNET Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: CNWK)") else Response.Write("(Nasdaq: CNWK)") end if %> gained another $3 7/16 to $48 9/16 after surging $12 1/8 to $45 1/8 yesterday. The big news is that General Electric's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GE)") else Response.Write("(NYSE: GE)") end if %> NBC unit will invest $26 million in CNET for a 5% stake in the company, and that it will will take a 20% stake in the company's Snap! Internet content aggregator site. Throughout the Internet sector, companies reacted to the news that GE is making a strategic move to stake out a place on the Internet. Yahoo! <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: YHOO)") else Response.Write("(Nasdaq: YHOO)") end if %> jumped $8 1/2 yesterday, and Excite <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: XCIT)") else Response.Write("(Nasdaq: XCIT)") end if %> picked up $3 1/4 and added another $1 1/2 to $66 1/2 this morning. Amazon.com <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AMZN)") else Response.Write("(Nasdaq: AMZN)") end if %>, which is linked into many of these content aggregator/search engine sites, benefited from the GE move, too, as it gained $5 yesterday and this morning gained another $4 to $55 1/4, no doubt as the result of a nasty-looking short squeeze.
That GE would shrug off its forgettable and costly experience with the GEnie online service and move into the online area again is an outgrowth of what it has been doing across its network television lineup. CNBC and MSNBC have already shown the value of integrating online offerings with network television offerings. NBC now wants something more generic, or more wide-ranging, than a narrowly defined website to go with a niche network. Granted, Snap! is a pretty generic, low-budget copy of Yahoo!, but GE will be taking over all operating expenditures for the site. That relieved CNET's shareholders, as Snap! has been a cash leech.
Pundits hailed the investment as watershed event. After all, if GE is getting into the Internet, the Internet must be for real. However, GE has been on the Internet for a while, but the investment could possibly be interpreted as a watershed event for content aggregators in general. Strategically, it's pretty much a given that any television network needs a general presence on the Internet, and not just some lame website that tells you all about the network's head anchor and what time to watch the network's most popular sitcom. An Internet site has to bring value to the network's viewers and will someday be an integral part of the media interface between a network and its viewers. After all, a network is a content producer and aggregator that just uses a different medium than does an Internet content aggregator and producer. When bandwidth constraints melt away, it will be hard to separate one medium from the other. However, this is priced into things like Amazon.com and Yahoo!. This may not have been priced into CNET, which has been struggling with the Snap! service. But it's not really a paradigm-busting investment -- it's the natural progression of "the media."
Walt Disney Co. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: DIS)") else Response.Write("(NYSE: DIS)") end if %> rose $1 7/8 to $118 3/8 after announcing that shareholders have approved the entertainment company's previously announced 3-for-1 stock split, for which the company has set June 19 as the record date.
Ameritrade Holding Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: AMTD)") else Response.Write("(Nasdaq: AMTD)") end if %> gained $1 3/4 to $28 1/2 after the online trading firm announced that its customer base has more than doubled in six months to 217,000 accounts from 98,000. CEO Joe Ricketts said he expects "tremendous growth ahead of us."
Diving and marine construction services company Ceanic Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: DIVE)") else Response.Write("(Nasdaq: DIVE)") end if %> soared $2 13/16 to $18 1/4 after announcing it has agreed to be acquired by subsea contractor Stolt Comex Seaway S.A. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SCSWF)") else Response.Write("(Nasdaq: SCSWF)") end if %> for around $222 million, or $20 per share, in cash. That's a 29.5% premium over Ceanic's closing price yesterday.
Interconnect products manufacturer Parlex Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PRLX)") else Response.Write("(Nasdaq: PRLX)") end if %> jumped $2 1/2 to $15 3/4 after announcing it expects a record level of shipments this quarter and projects results will be "in line" with company expectations.
Battery manufacturer Electric Fuel Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: EFCX)") else Response.Write("(Nasdaq: EFCX)") end if %> surged $3/4 to $4 15/16 after its consumer battery division yesterday announced a new zinc-air disposable battery that will offer enough power for a typical user to run an analog cellular phone for up to a week and a digital cellular phone for up to a month.
Online database services company FactSet Research Systems <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FDS)") else Response.Write("(NYSE: FDS)") end if %> advanced $1 11/16 to $32 9/16 after reporting third quarter earnings of $0.30 a share, up from $0.22 for the year-ago period. The mean analyst estimate listed in First Call was $0.28.
Computer disk drive maker Western Digital Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: WDC)") else Response.Write("(NYSE: WDC)") end if %> was spun for a $3 5/8 loss to $11 7/8 after saying late yesterday that it expects a fiscal Q4 loss of more than $100 million due to pricing pressures and lower unit volumes for its desktop hard drives. The results will be "substantially short" of the Street's expectations, the company said. Further, the loss will result in a technical default of the firm's bank line of credit at the end of the quarter.
Lattice Semiconductor <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: LSCC)") else Response.Write("(Nasdaq: LSCC)") end if %> fell $7 1/16 to $29 7/16 after the maker of ISP programmable logic devices said it expects a 20% sequential decline in revenues and a 30% sequential decline in net income in fiscal Q1. The company said its "turns" business from European and North American clients will not be enough to offset declining demand for its products in Japan and Asia. However, the company remains "optimistic" about its long-term prospects. Bear Stearns and Morgan Stanley Dean Witter both cut their ratings on the company this morning.
Supply chain management software provider Manugistics Group <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MANU)") else Response.Write("(Nasdaq: MANU)") end if %> was dumped $3 1/16 to $21 5/8 after reporting a fiscal Q1 loss of $0.32 per share compared with earnings of $0.09 per share a year ago. The firm had warned of an operating loss last month. The company said it will focus more intensely on its sales efforts, professional services and consulting businesses, and recently rolled out sales and marketing initiatives to improve its financial performance during the rest of the fiscal year.
Read-Rite Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: RDRT)") else Response.Write("(Nasdaq: RDRT)") end if %> slid $7/16 to $7 7/8 after the maker of magnetic recording heads for rigid disk drives said "difficult" industry conditions and declining demand for its products will result in sequentially flat fiscal Q3 sales. However, cost-cutting efforts should result in a Q3 loss less than the $1.29 per share loss in Q2. The Street had been expecting a loss of $0.49 per share.
Cigar maker Consolidated Cigar Holdings <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: CIG)") else Response.Write("(NYSE: CIG)") end if %> was torched for a $15/16 loss to $11 3/4 after doing an about-face and rescinding its prior forecast that fiscal 1998 earnings would top fiscal 1997 results by more than 20%. Instead, the firm said high inventory levels of premium brand cigars at retailers and wholesalers make it difficult to project its future results. The firm also warned that earnings in fiscal Q2 will fall below the $0.43 per share earned last year and the $0.50 per share expected by analysts surveyed by First Call.
Semiconductor maker Texas Instruments <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TXN)") else Response.Write("(NYSE: TXN)") end if %> lost $2 3/4 to $53 1/8 after the Wall Street Journal reported that IBM <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: IBM)") else Response.Write("(NYSE: IBM)") end if %> plans to compete with the company in the market for digital signal processors (DSPs) by offering technical data to its clients in the hopes of garnering orders for custom-made chips. Fellow DSP maker Analog Devices <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ADI)") else Response.Write("(NYSE: ADI)") end if %> also fell $1 3/16 to $24 11/16 on the news.
Premiere Technologies <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: PTEK)") else Response.Write("(Nasdaq: PTEK)") end if %> tumbled $4 7/16 to $10 after the provider of 800-based and conference calling services said it expects to report after-tax fiscal Q2 earnings of between $0.09 and $0.13 per share, which is below the Street's forecast of $0.28 per share. The company's estimate does not include about $17 million in charges related to financial difficulties of a customer and a strategic partner in 800-based services, lower-than-expected revenues from its voice messaging business, and other unanticipated costs. Prudential Securities downgraded the company to "hold" from "buy."
United Technologies <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: UTX)") else Response.Write("(NYSE: UTX)") end if %>, maker of Carrier air conditioners and Otis elevators, slumped $1 3/4 to $89 3/16 after an Air Force general told Aviation Week & Space Technology that the firm's Pratt & Whitney engines may be replaced on the F-15E fighter jet in favor of power plants made by General Electric <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GE)") else Response.Write("(NYSE: GE)") end if %>.
Data storage management systems developer MTI Technology Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: MTIC)") else Response.Write("(Nasdaq: MTIC)") end if %> slipped $1 21/32 to $8 23/32 after warning that its fiscal Q1 EPS will come in below analysts' expectations of $0.18 due to top line weakness in the firm's European operations and delays in shipping its Gladiator 3600 fibre channel product.
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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
Editing |