Recap of Saturday, July 28

Our panelists give you the scoop on all the inside business information before you hear it anywhere else in The Informer segment:

Qwest (Q)

Bob Lenzner (national editor): The chairman of Qwest, Joe Nacchio, has been selling his stocks since the beginning of the year, about $150-$175 million worth. He's been selling it from 45 all the way down to the 30's. And guess what, they just reported a $3 billion loss. The stock looks incredibly vulnerable -- selling at 82 times earnings. Now Nacchio only has $17 million in stock to his name. The people who know what's going on with the company are dumping their stock.

Quentin Hardy (senior editor): Joe's never made it a secret that's he's planning on moving on. It's a phone company that used to be US West but it's got the worst territory in the U.S. And then the data guys say it's a data company with all the problems that follow a data company. I think Joe is smart that he's selling.

Hewlett-Packard (HWP)

Hardy: Stock sales were down again for Hewlett-Packard this week. CEO Carly Fiorina is right to blame the environment: there's no demand right now. But if you want a diversified portfolio, you have to have something in tech. Hewlett-Packard looks like it's a survivor and Fiorina is telling the street when there's trouble. That's good.

Leigh Gallagher (staff writer): The PC markets are reporting negative growth. I would stay away from it.

Lenzner: Wait till HWP sells at 15 times earnings.


Peter Newcomb (senior editor): Britain's big music company, EMI, had a big scandal last week. The company has been a buyout target for the last eighteen months. The management is a disaster. It's run by a husband and wife duo, Ken and Nancy Berry. Nancy is a complete nightmare. They're now getting a divorce. The shareholders are upset. The stock is now trading at a steep discount.

Hardy: This is like their yard sale. They're going to sell their company. Most people sell their car or house, they're going to sell their company.

Barr Laboratories (BRL)

Gallagher: Barr Laboratories is a company you'll start hearing more about in the next couple of weeks. They're going to start selling a generic version of Prozac. After getting over its legal hump, the stock is at $84 right now. It's trading at 66 times last year’s earnings. It could go even higher.

Lenzner: But pretty soon everyone will be able to offer a generic version of Prozac. The price is going to drop 90%, which is what always happens when these drugs come off their patent.

Gallagher: That may be true, but history shows that the first generic tends to lead the market and maintains it.

Hardy: It's a commodity business and you have to know how to manage a commodity business.

Makers & Breakers

• Viacom (VIAB)

Rob Black, GLB Investment Mgmt.: Maker: This is a Nickelodeon, pre-teen company. You've got MTV and CBS, who's gone from worst to best with Survivor. Who's going to compete with that?

Jim Clash, (associate editor): Maker: I would have liked this stock even more had we done it before they had this earnings announcement. The stock went up 8% but I'm still a Maker. This is the preeminent cash maker of the entertainment companies and they've got a $300 million advertising deal with Procter and Gamble.

Jim Michaels (editorial vice president): Breaker: This company should concentrate on its earnings. Sumner Redstone, the guy who founded this company doesn't seem to be interested in his business as much as he should be. Thumbs down.

• Wal-mart (WMT)

Black: Maker: Wal-mart is like a very expensive car. It's a Corvette, not a Chevette. JC Penny's, Sears, K-Mart, they all want to be a Wal-Mart.

Michaels: Breaker: Sears was once the Wal-mart of retail stores. But things change. there's a difference between a great company and a great stock. at 38 times earnings, it's a great company but not a great stock.

Clash: Breaker: I agree with Jim. At 38 times earnings, it's not a great stock but it is a great company.

• Medtronic (MDT)

Black: Maker: This company makes pace makers. Dick Cheney just had a Medtronic pacemaker implanted into his chest. As we grow older our hearts get weaker and slower and we're going to need products like these.

Clash: Maker: This thing is buying back shares, which is always a good sign. It's dropped 20% this year so you're getting a pretty good deal. The P.E. is I think 38 -- but the health P.E. is 56 so you're getting a discount.

Michaels: Breaker: This company has sales of $5 billion and a market capitalization of $50 billion. It's much too risky for me. I wouldn't touch it.