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Recap of Saturday, Nov. 2:Capital One; Caremark Rx

Our panelists give you the scoop on all the inside business information before you hear it anywhere else in The Informer segment:

David Asman: Bruce, let's start with you. Is there a new life for cell phones?

Bruce Upbin, senior editor: Yes. A lot of cell phone stocks have been beaten down but there's still a reason to be optimistic about them. Consumers are getting rid of their old phones and replacing them with newer models. Two companies to look for are Nokia (NOK) and Motorola (MOT).

Victoria Murphy, senior reporter: My concern is that Microsoft is entering this field and they're not signing up with Nokia. Instead they're signing up original equipment manufacturers. I think this could be a problem.

David Asman: Okay, let's move on to Citigroup (C). Chana, you think restructuring might be a problem for this company?

Chana Schoenberger, staff writer: Citigroup came out with word this week that they will divide their research and individual investor brokerage into different divisions. A lot of industry people think this is a good move, but I think it's just smoke and mirrors. I don't think it's going to do anything to change the structure of the market at all.

Joanne Gordon, staff writer: I want to know what it's going to cost investors for Citigroup to restructure. Are we going to see restructuring costs?

Chana Schoenberger: Citigroup hasn't said how much it's going to cost them. But analysts say it's going to cost Wall Street about $2 billion over five years.

David Asman: Okay, let's move on to Joanne Gordon. Books are still selling, right?

Joanne Gordon: I think books are going to make for great gifts this holiday season. The fundamentals of Barnes and Noble (BKS) say this company is doing well. The 600 stores' sales are rising. The key here is videogames. Barnes and Noble has a spin-off videogame retailer called Game Stop. This is a nice diversity play.

David Asman: Victoria, let's talk about specific video games. How will they sell this holiday season?

Victoria Murphy: Video game sales are up 50 percent this year. And that's thanks to all the new game consoles like Xbox and Playstation. And that sparks the video game selling. Companies like Electronic Arts (ERTS), Activision (ATVI) and THQ Inc. (THQI) seemed to be immune to the economic downturn but that may not be case. THQ came out with lowered than expected numbers and with the holiday season coming up, these companies may not do as well as expected.

Chana Schoenberger: Also, the new hot product this year seems to be DVD burners. People who are really into electronics might be buying those instead of the video games.

Makers & Breakers

Capital One (COF)

Bob Hill, Shenandoah Asset Management: MAKER

Capital One is the strongest growing credit card company out there. Their earnings are growing about 20 percent a year. This company is a survivor.

Elizabeth MacDonald, senior editor: BREAKER

Regulators have asked Capital One to boost its reserves. I think that's a red flag. Also, consumer confidence is down. Yes, their earnings are good, but I'm a breaker on this stock.

Jim Michaels, editorial vice president: BREAKER

This stock is not cheap and at this rate of inflation I don't want to take on that risk of consumer debt. I'll pass on this one.

Bob Hill: I think for this industry, Capital One is the best in its group. The insiders have taken action and the chairman of the group bought a hundred and fifty thousand shares recently. That's the trigger that this company will survive.

Caremark Rx (CMX)

Bob Hill: MAKER

This is a prescription benefit management company supporting the HMO's. Again, this company has strong earnings and the insiders have stepped up.

Jim Michaels: BREAKER

Except there was a lot of insider selling earlier this year, close to the present price. So the insiders are sending mixed signals. There's a lot of turmoil in the health industry and this stock is not cheap.

Elizabeth MacDonald: MAKER

The earnings for Caremark Rx (CMX) are coming in strong and it is near its 52-week high. I'm going to go out on a limb and say that Congress will pass a medicare prescription drug benefit in the future. And that will help companies like Caremark Rx.