Our panelists give you the scoop on all the inside business information before you hear it anywhere else in The Informer segment:
David Asman: Dennis Kneale, tell us about WorldCom (WCOM).
Dennis Kneale, managing editor: It's going to be a minor miracle if this company can avoid Chapter 11 Bankruptcy. They're creaking under $30 billion in debt. The chairman of WorldCom, Bernie Ebbers is a telecom hero. And now he's just eaten more than he can digest and the FCC is going after him. They're looking in claims that WorldCom might have overstated revenue by several million dollars. The allegation is that WorldCom did this by overcharging their customers and not taking write offs on that bad credit.
David Asman: Anyone willing to stand up for this company?
Elizabeth MacDonald, senior editor: They have this weird $341 million loan and I don't know if that money is ever going to come back into the company.
David Asman: Okay, Victoria let's talk about VeriSign (VRSN). They're the company that you have to pay money to if you want your own Web site, right?
Victoria Murphy, senior reporter: That's right. They're in charge of the domain name registries. This is an internet darling that can swing $6.5 billion market cap on sales of 998 last year. That's 30% revenue and has historically been the company's cash cow but it's shrinking.
Dennis Kneale, managing editor: There's a new company called NewStar that's competing with VeriSign with something called it's dotbiz. However, I think all those Web sites that are registered will continue to pay these guys and the company should do fine.
David Asman: Okay, let's move on to Stanley Works (SWK). That's a good solid company, right Elizabeth?
Elizabeth MacDonald, senior editor: This company's inventory is rising and their customers are taking way too long to pay their bills. Also, Stanley Works is going to incorporate itself in Bermuda. That's angered Congress because it's a tax evading scheme. It just doesn't look good for the company.
Dennis Kneale, managing editor: But let me just remind everyone that you want to invest in a company with a lower tax. You want that money not to go to the government, who's going to waste it, but to go into rebuilding the business. We should like taxing evading schemes.
David Asman: Okay, Jerry let's move on to you. Luxury cars are getting a little cheaper?
Jerry Flint, columnist: Cheaper luxury cars are driving customers out of Detroit. We've lost Oldsmobile. We nearly lost Mercury. There has to be a new reason for existence in these American brands. Hopefully, they can find it.
David Asman: Victoria, are Mercedes now cheap enough for you to buy one?
Victoria Murphy: Not cheap enough for me. What about those luxury cross-over cars Jerry? Do they entice you? The Chrysler.
Jerry Flint, columnist: They're not out yet. They're interesting but the competition is making them too.
Makers and Breakers
Ross Margolies, Salomon Brothers Asset Management: MAKER
Safeway is one of the most dominant supermarket chains in the country. Sales have slowed and people are worried that Wal-Mart is going to take over the entire industry. In reality, this is a company that's going to grow into the mid-teens for sure. It's trading at thirteen and a half times earnings.
Mike Ozanian, senior editor: BREAKER
This company doesn't give me anything to munch on. They have no dividend and that's the only reason why I would really go into a stock like Safeway.
Elizabeth MacDonald, senior editor: MAKER
Its annual earnings growth per share has been around 20%. That's pretty decent compared to the industry average, which has been at .2% It's trading at a cheap P.E. of 18 times earnings.
Comverse Technology (CMVT)
Ross Margolies: MAKER
Comverse Technology is the leading software company for voicemail on your cell phone. They have just under $7 of cash per share and they're trading at around 12, 13.
Elizabeth MacDonald, senior editor: BREAKER
It's pricey at 46. Earnings have plummeted. In 2001, year end earnings were a fifth of what they were in 2000.
Mike Ozanian, senior editor: BREAKER
This company has an ugly, ugly balance sheet. It's taken $20 million in write-offs in the last 9 months. Stay away from this stock.
Ross Margolies: I disagree totally on the technology. They have a huge market share and the balance sheet is almost all cash. So I really like it.