Bob Sellers: Welcome everyone to this edition of Informer. David Asman is off this week. Luisa Kroll, let's start with you. What's your informer item?
Luisa Kroll, associate editor: Yahoo! (YHOO) had quite a volatile week. Two things happened, there was a lot of bad news about online advertising and one of their biggest shareholders dumped a lot of stock. Later in the week, it had a really great rally as a couple of analysts upgraded saying the stock had bottomed out. Don't believe it! You really can't bet on this stock until online advertising comes back.
Joanne Gordon, staff writer: I still think Yahoo! is still dependant on advertising. I like to see acquisitions like HotJobs that bring in new revenue streams, but right now that's not enough to overshadow the slumping ad market.
Bob Sellers: Okay Joanne, let's stay with you. What's your Informer item?
Joanne Gordon: Michaels Stores (MIK) has been called the Rodney Dangerfield of the retail sector -- it gets no respect! Earnings per share were up 233 percent for the first half on overall revenue of $1.2 billion. It isn't even Michaels's best season. Wait until the holidays.
Bob Sellers: What about a slowing economy?
Joanne Gordon: It doesn't matter. Crafts are like the latte of the hobby industry. It's an addiction and it's a cheap thrill.
Victoria Murphy, senior reporter: I'm with Joanne. I was a little skeptical of the cocooning effect, but it seems to be panning out.
Joanne Gordon: It all comes down to operations with this company. They're starting to install a new computer system that will help with inventory and make sure that full priced items are on the shelf when the customers are there. I think they're on target for the holidays.
Bob Sellers: Okay, let's move on to Victoria Murphy. Inform us.
Victoria Murphy: I'm pushing for USA Interactive (USAI). Barry Diller has pieced together this e-commerce empire. Half of their revenues are coming from the Home Shopping Network. The other half is coming from majority stakes in online sites like Expedia, Ticketmaster and Hotels.com. And there's still a lot of room for growth in these sites, especially Expedia.com, where now only 10% of flights are booked online.
Luisa Kroll: I love Barry Diller and I would bet on him. My only concern is if he's distracted with all the stuff going on with Vivendi.
Bob Sellers: Bob, Vivendi ring a bell?
Bob Lenzner, national editor: Vivendi stock has gone from $75 to $12. Bronfman, the Vice Chairman of Vivendi, thinks this stock will be worth $25 once they sell a bunch of assets.
Victoria Murphy: I'm a little skeptical because Bronfman, the Vice Chairman has rode this stock all the way down. So why should we trust him now?
Bob Lenzner: Actually they didn't ride the stock all the way down. They just sold about a third of their holdings much higher for about $2.5 billion.
Makers and Breakers
Beckman Coulter (BEC)
Dan Veru, Palisade Capital Management: MAKER
Beckman Coulter is a leader in all the markets that it serves. It either has a No. 1 or No. 2 market share. But here's why I really like it. 66 percent of its revenues come from the sale of the chemicals they use that go into the actual experiments.
Jim Michaels, editorial vice president: BREAKER
I don't think this stock is cheap. With this market and this vulnerability, I wouldn't buy it at this price.
Dan Veru: At 14 times earnings, it's a discount to its growth rate currently. The markets, which are hospitals, are really getting a return on the investments that they're making.
Mike Ozanian, senior editor: BREAKER
I don't like this company either because they're sacrificing their future to make the its present situation look better. They're selling its receivables, which is money its customers owe it. They're doing this to pay down current debt. Secondly, it has $24 million in hedge losses. That's 20 percent of its pre-tax income.
Terex (TEX)
Dan Veru: MAKER
Terex is a leader in the earth moving equipment business. As the industrial part of the market begins to recover, so should Terex's business.
Mike Ozanian: BREAKER
I think this company has one of the bloodiest balance sheets I've seen. It has consumed more cash than it produced. Things are getting worse by the minute for this company. A year ago it had $2.80 of earnings to cover each dollar of interest payment. That's down to $1.30 now.
Jim Michaels, editorial vice president: MAKER
This company is a work in progress. It's not the same company it was five years ago. I like the stock. Their recent acquisition of the German company DeMag is good for them. I like this company.
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