Our panelists give you the scoop on all the inside business information before you hear it anywhere else in The Informer segment:
David Asman: We'll start with you Peter Newcomb. AOL Time Warner (AOL), Jerry Levin is out. There's a new guy in. What do you expect?
Peter Newcomb, senior editor: Richard Parsons is a guy they brought in from Dime Savings Bank about 10 years ago. The media made a big deal about this saying that the guys from Time Warner were victorious over the guys from AOL. Think again, don't think so. Bob Pittman, the COO, known for running MTV and Six Flags, is going to be the guy to watch.
Bruce Upbin, senior editor: It doesn't matter who's running this company. It's overvalued and its growth is slowing in the AOL division.
David Asman: All right, Scott. Hughes(GMH), they've got Direct TV. What about the merger?
Scott Woolley, associate editor: The proposed merger of EchoStar (DISH) taking over Hughes always was about fifty-fifty.
David Asman: We should mention Newscorp, our parent company had a stake in this but they pulled out.
Scott Woolley: Well, they may get a second chance. It's likely that regulators are going to shoot this down. It almost looks cursed. This month one of the biggest rural cable companies went bankrupt, fanning fears that rural companies are going to get stuck with just EchoStar.
David Asman: So if the Feds say no deal then maybe Newscorp can come back and buy it at a firesale?
Bruce Upbin: I think the regulators should let this pass by. All too many times, technology passes by the regulator's mentality.
Peter Newcomb: They broke off an Office Depot and Staples merger. Why would they let this one go through? It doesn't make sense.
Scott Woolley: Well, it is the Bush administration. I think they'll be very worried about upsetting their rural base.
David Asman: Okay. Let's move on to Best Buy (BBY).
Victoria Murphy, reporter: Wall Street loves this company and the stock has tripled since January. Now this seems great but same store sales have been going down and they've made a lot of acquisitions. This is a question of valuation and I think it's too high.
Scott Woolley: It's trading at 38 times earnings. If you want to spend that much money buy a real retailer like Wal-Mart.
David Asman: Okay Bruce. You've got casino stocks.
Bruce Upbin: Casino stocks were hammered after the attacks on the World Trade Center and the Pentagon but they've all gone up and surpassed their pre-9-11 stock valuations. Now's not a good time to buy them. You should be getting out if you got in. Vegas is slow and bookers don't know if they're going to fill the rooms during the January through May conventions.
Peter Newcomb: I think people are afraid to fly over there.
David Asman: People are driving now.
Bruce Upbin: Right but the people driving over are not the high rollers.
Makers & Breakers
The Gap (GPS)
Doug Altabef, Matrix Asset Advisors: The Gap (GPS) is a great franchise that has been hit by the perfect storm. Everything has gone wrong for them. Merchandising is off, the economy is weak and the stock has tumbled. Remember buy low sell high. The Gap is low and this is a great time to be looking at this stock.
Jim Michaels, editorial vice president: BREAKER
I think the Gap has lost it and in this business when you lose it, you never get it back.
Jim Clash, associate editor: BREAKER
I agree with Jim. If you're buying Gap now you've got a gap between your ears. It's half of what it was but it's selling at 41 times earnings.
Doug Altabef: In terms of merchandising, they know they have a problem with that. These are the smartest merchandisers there are. They will fix that problem.
David Asman: All right. I will give our guest the last word. Let's move on to your next pick.
Morgan Stanley Dean Witter (MWD)
Doug Altabef: Morgan Stanley Dean Witter (MWD) is a premiere investment banking firm. That business is way off. When it comes back they will get more than their fair share. People aren't buying stocks right now but Morgan Stanley Dean Witter should do very well as the economy begins to recover.
Jim Clash: MAKER
I have to say I like Morgan Stanley Dean Witter. I think it's a great merger. They're trading at 17P which is a good price to buy it right now. They do face some problems but as the economy picks up, so will they.
Jim Michaels: BREAKER
This is in a very competitive business where it's getting harder and harder to compete with companies like Chase and Citicorp, who can bring their own money into the table. I don't see any upside with this stock.
Doug Altabef: They still have the premiere bankers, together with Goldman on the street and they will survive and do well.
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