Our panelists give you the scoop on all the inside business information before you hear it anywhere else in The Informer segment:
David Asman, host: Bob Lenzner, you think Tyco (TYC) has some fancy reporting going on?
Bob Lenzner, national editor: The conglomerates imploded in the 1970's and they're imploding again here. Tyco is $75 billion in debt. They shouldn't have bought CIT six months ago. Now they're selling it. They made 350 acquisitions last year for $8.8 billion. It's not going to go bankrupt like Enron, but it's imploding.
David Asman: So your advice is if you have it, sell it?
Bob Lenzner: Yes, I talked to a very respectable investor and he said, "Bob, you can't tell if this is worth $10 or if it's worth $30."
David Asman: Victoria, how does insider trading play into what's going on at companies like Tyco (TYC) and Enron (ENE)?
Victoria Murphy, senior reporter: Insider trading has always been a red flag for investors. It usually means that these executives know something we don't. And typically, we find out about these things 10 days after they do. There's another thing they're doing now including Enron and Tyco and that is, they don't have to disclose figures till fiscal year plus 45 days. And because they're selling it back directly to the company it's not on the public market. So investors are in the dark.
Elizabeth MacDonald, senior editor: This is a growing problem. There are some 450 companies that have done it recently. Sure, executives unload shares for personal reasons but when you see huge amounts being dumped and you only find out a year after the fact, that's a big problem.
David Asman: There is a way you can find insider trading. Go to yahoo.com, click on "Finance", then enter the stock symbol you'd like to see and finally click, "Insider". Okay, Dennis Kneale, tell us about IBM.
Dennis Kneale, managing editor: Lou Gerstner came in, knew nothing about computers but turned this company around its deathbed. Now Lou's stepping aside and another executive is coming in and here's the problem. When Lou came in he appointed 4 or 5 new executives who helped him bring this company up. Now we are turning the company back to the 30 or so old guys who got it into trouble in the first place.
Victoria Murphy: I see your point, but IBM is in a good place right now in terms of services. Is it really that bad?
Dennis Kneale: Services and revenue actually had a decline for the first time in years.
David Asman: Elizabeth, what's going on with Peoplesoft (PSFT)?
Elizabeth MacDonald: Peoplesoft is taking part in a very bizarre investment strategy. What Peoplesoft did was they shoved about a third of their research and developnent (R&D) costs for a new blockbuster software package onto an off-balance sheet R&D shell. Does this mean that Peoplesoft stock will get hurt with more direct R&D spending? I think that's a legitimate question.
Makers and Breakers
Waste Management (WMI)
John Maloney, M&R Capital Management: We're value investors. We watch assets, earnings and cash-flow. That's why we like Waste Management (WMI), which is the number one hauling and disposer of waste in the country. This is a cash-flow story. They have $1 billion dollars in free cash-flow in 2001.
Matt Schifrin, senior editor: BREAKER
Every company is under a microscope now. If you look at the financials for this company there are pages of lawsuits. I would avoid this company.
Bill Baldwin, editor: MAKER
I like the assets this company has. They have 600 waste dumps. That's a wonderful thing to have because the rest of the world is just waking up to the fact that recycling is wasteful, and waste dumps are good for the environment.
Merck (MRK)
John Maloney, M&R Capital Management: Merck (MRK) is selling at a 20% discount to the S&P and its peer group and that's usually known to be an excellent entry point. The stock is down from the mid 80's to the high 50's. They're going to have a flat year in 2002 based on patent expirations and generic competition. We think in 2003, you're going to have double digit growth.
Bill Baldwin, editor: MAKER
I like this stock. A lot of nail biting though because of the disappearing pipeline, especially since some of their patents are coming off. But I think there's something good here. They have an anti-anxiety drug coming out soon and that'll be very good for nervous investors worried about the market.
Matt Schifrin, senior editor: MAKER
I like this one also. I think there's a merger soon for this company. I think the Medco spin-off is good for shareholders.
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