Our panelists give you the scoop on all the inside business information before you hear it anywhere else in The Informer segment:
Bruce Upbin, senior editor: The last twenty years have been all about the PC. IBM gave Intel control of the chip monopoly and Intel's been the big winner. In the next twenty years you're going to see a proliferation of devices like handheld, pda's and cellphones. Intel doesn't have that much of a dominance in those products. IBM wants to take back some of that dominance.
Leigh Gallagher, staff writer: It opens the door for other chipmakers like Texas Instruments and National Semi-Conductor.
David Asman: Okay Leigh Gallagher, let's stay high-tech. Adobe, we've got someone on staff, Jason, who's a real pro at this stuff. What have you got?
Leigh Gallagher, staff writer: Adobe (ADBE) is responsible for every file on your desktop that ends in pdf. But it's over-valued right now. The stock has risen 80% since September and it trades at 51 times earnings. The problem is 95% of its revenue is coming from software products that are version 5 or higher. Meaning, they're ancient products that are just getting reinvented every couple of months.
Elizabeth MacDonald, senior editor: Hasn't there been a downturn in publishing software? And there's been heavy insider selling right?
Leigh Gallagher, staff writer: Yes, there's been heavy insider selling and they're tied to the ad market, because most adobe users are creative professionals working in advertising.
David Asman: Okay Elizabeth. We want to talk about Boeing (BA).
Elizabeth MacDonald, senior editor: Boeing's operating cash-flow has plunged to about $110 million from $2 billion last year. Debt is soaring.
David Asman: How much of this is because of the war against terrorism?
Elizabeth MacDonald, senior editor: The U. S. Air Force just gave a $20 billion contract to Boeing. They could've gotten a $12 billion contract from Airbus. They're sticking U. S, tax payers, a bunch of corporate welfare going on.
Bruce Upbin, senior editor: I agree there's turbulence there but we've only got two people to buy airplanes from, Boeing and Airbus. And Boeing is bringing down its exposure to commercial aviation. Long-term, I would buy Boeing.
David Asman: Okay, Chana what have you got for us? Grocery stores?
Chana Schoenberger, staff writer: The grocery industry is about $500 billion. Big companies like Target and Wal-Mart have been targeting this industry and a lot of the bigger chains are looking to buy the smaller chains to beef up their regional networks. The big acquirers we think will be Albertson's (ABS), Kroger (KR), Safeway (SWY) and SuperValu (SVU).
Elizabeth MacDonald, senior editor: As consolidation continues, wouldn't that put pressure on food retailers like Kraft because Wal-Mart can demand more price concessions?
Chana Schoenberger, staff writer: Yes, that's true. Retailers have all the power here and they can demand all the terms they want from the manufacturers.
Makers and Breakers
Patricia Chadwick, Ravengate Partners: MAKER
Citigroup is very broadly diversified. It's a financial services company. These companies usually do really well as the economy starts picking up. So far it hasn't done really well due to Enronitis.
Elizabeth MacDonald, senior editor: MAKER
I like this stock. I would call it the city crown. But I'm still a little concerned with the debt to equity ratio at a 171%. I would still buy this stock though. Earnings are up and revenues are up.
Jim Michaels, editorial vice president: MAKER
I've owned this stock for years and I'm not selling it anytime soon. It's not your grandfather's bank. It's really a financial technology company. I think it's a splendid company.
Patricia Chadwick, Ravengate Partners: MAKER
Tribune is very leveraged to the economy. They've been hard hit recently because L.A., New York and Chicago are their big markets. But now they're starting to pick up.
Jim Michaels, Editorial Vice President: BREAKER
They overpaid for the L.A. Times, which is not a very profitable newspaper. They're in two basically slow growing industries, newspapers and network television.
Elizabeth MacDonald, senior editor: BREAKER
I would rename this company the tribulation company. Their earnings per share over 5 years is -22. Their 1999 earnings were at about $1.5 billion, down to $111 million at the end of 2000.
Patricia Chadwick, Ravengate Partners: It's a cyclical play. It's not necessarily a 20 year hold but I think you're going to get some pretty good earnings leverage over the next 2 years.