Our panelists give you the scoop on all the inside business information before you hear it anywhere else in The Informer segment:
David Asman: Let's begin with Dennis.
Dennis Kneale, managing editor: I can't believe what's happened with Merrill Lynch (MER). A law firm has filed an amended lawsuit that is so thick. It's a total of ten thousand pages against 45 Wall Street firms. So this is only the beginning of the end for Wall Street. But for Merrill Lynch, I think this is the end for the firm.
David Asman: But it has paid a hefty fine. Quentin, let's move on to you.
Quentin Hardy, Silicon Valley bureau chief: There's a new story on Dell (DELL). It's actually our cover story. They've conquered PC's and they're well saturated. Now they're moving up into the higher end products where the margins are still good. That means mainframes, that means storage. If you want to be in tech, this is a company to watch.
David Asman: Dennis, do you want to be in tech?
Dennis Kneale: Yes I do want to be in tech but there's a problem with Dell. As you move up into the higher end, you need services in handholding and Dell doesn't do that. And they're not good at it.
David Asman: Okay let's move on to you Mike. Harley Davidsons, we love the bikes, what about the company?
Mike Ozanian, senior editor: Harley Davidson (HDI) has been goosing their numbers by saying their pension plan returns are at 10.5%.
Chana Schoenberger, staff writer: Wait, Harley was our company of the year. Aren't they a great company?
Mike Ozanian: Great company but they have another problem. They're also financing 31% of their sales. Up from 21% the year before.
David Asman: So the company is good but the accounting standards are lousy?
Mike Ozanian: Sell the stock. It sells for 31 times this year's earnings.
David Asman: Okay, Chana Schoenberger. Let's talk fashion.
Chana Schoenberger: Jones Apparel (JNY) is our style stock. At first glance the stock doesn't look good but when you look closer you see that Jones Apparel has a great style cycling system. We think they have a great balance sheet and will buy out their competitors.
Dennis Kneale: This is a company with really good fundamentals and it's cheap. They've got some really good brand names and that matters more than ever right now.
Makers and Breakers
Ocean Energy (OEI)
David Asman: Alan, back in August you recommended Ocean Energy. Since then it's gone up 10%. Is it up for another rise?
Alan Ackerman, Fahnestock & Co.: MAKER
I think Ocean Energy is up for another rise. It's got a target of thirty or better. It's a take-over candidate. Ocean Energy is one the world's leading exploration companies. I think they're building good inventory and good earnings.
Jim Michaels, editorial vice president: MAKER
I'd like to give you hard time but I won't with this pick. There aren't a lot of companies that you know are going to have higher earnings next year. Even if natural gas prices stay low, they're going to make more money.
Luisa Kroll, associate editor: MAKER
I'm going to agree as well. Management of this company has done a really good job. They've gotten costs really under control. And they've got some of the lowest costs in the sector.
David Asman: It's trading close to its 52-week high, right?
Alan Ackerman, Fahnestock & Co.: I think it's on its upside and Wall Street is just beginning to learn their story.
Washington Mutual (WM)
Alan Ackerman, Fahnestock & Co.: MAKER
Washington Mutual is the largest United States S & L. It has $240 billion in assets. They acquired Dime Savings, which added another $14 billion in assets. Earnings ought to grow at 10% a year for the next several years.
Luisa Kroll: BREAKER
The sector has been performing very well for the past few years on low interest rates. As soon as those rates start to increase, this stock is going to take a hit. Also, because of these huge acquisitions, this company has eaten up a lot of companies. We still don't know how they're going to integrate them.
Jim Michaels: MAKER
Luisa, I like your analysis. It's very good. I admit this dog has some fleas, but all dogs have some fleas. This stock is cheap and I think all those negatives are reflected in the price. I think it's a buy.