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Recap of Saturday, Nov. 23:Delta Air Lines; ING Group

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

David Asman: Now for the news you're only going to hear from Forbes, it is time for the Informer with: Elizabeth MacDonald - she is back, along with senior editor Bruce Upbin, staff writer Chana Schoenberger, and senior editor Brett Pulley. Brett, you have a story that's on the cover of Forbes about Disney (DIS). Tell us about that.

Brett Pulley, senior editor: Well, the story is talking about how a comeback is underway at Disney. ABC is clearly on the right track early in the season. Just a few nights ago, they had 26 million viewers for The Bachelor.

David Asman: But ABC has not been doing well recently.

Brett Pulley, senior editor: ABC has been in terrible shape. But, the fact of the matter is that it now has 8 Simple Rules, a sitcom that can anchor their lineup. They're finding some shows that can anchor the lineup, so things look good for them. They've invested heavily in theme parks, which positions them for whenever tourism does rebound. They'll be in good shape.

David Asman: Elizabeth, what do you think?

Elizabeth MacDonald, senior editor: But aren't you a little spooked about their $15 billion in debt? Don't you find that a bit frightening for this stock?

Brett Pulley: They do have a lot of debt. The fact of the matter is, they have pledged to lower the debt over the next 18 months. They haven't said how much. The other thing is, yes they pay $5 billion to acquire Fox Family last year, but they're starting to digest that acquisition and finding some value in it, some unrealized value.

David Asman: Elizabeth, let's go to Sears (S). My dad got his clothes there, what do you think of it?

Elizabeth MacDonald: Well, there is the great Web site called, I would urge viewers to log on. They can give you a heads up on quality of earnings problems, and Sears has a big one. They've got about a billion dollars in negative operating cash flow. That's a huge problem. Stock Diagnostics says only 10 companies in the last 5 years had approached these levels of negative cash flow. And although the stocks went to about $10, Sears is trading at about $24. I can see it dropping.

David Asman: Chana, what do you think about Sears?

Chana Schoenberger, staff writer: They just bought Lands' End. They were trying to have a high-end strategy. What do you think about that? Is that good or bad?

Elizabeth MacDonald: Well, that's a great acquisition, sure. And I think Sears Canada is looking to pick up Martha Stewart's line too. And I think Sears is making some smart moves there, but if they don't refinance their debt, they're in big trouble.

David Asman: They're still selling cheap stuff in a market where people like cheap stuff.

Elizabeth MacDonald: Right, I would watch them through the holidays and get out of the stock if you own it.

David Asman: Chana, you've got news about us baby boomers?

Chana Schoenberger: There are about 76 million baby boomers out there. They are getting older as a generation, so what this means is, they're going to have various effects on the economy. One of the biggest ones is on real estate. Now, baby boomers are not, obviously, old enough to move into any sort of health care real estate now. But, as their parents are moving into these assisted living places, they are going to be inheriting a huge amount of money. A couple of companies betting on this are Ventas (VRTS) and Health Care Property Investors (HCP).

And the reason is, they're getting about $10 trillion from their parents over the next 18 years as their parents move into these properties. So, what this means is that companies like those are going to do very well because the baby boomers themselves are going to live in places like that.

David Asman: Bruce, what do you think?

Bruce Upbin, senior editor: I think it's a plus. It's just that living facilities have had a sketchy run. There have been some shady operators, but once you get those out of the way, you might have some solid stocks.

David Asman: Bruce, let's stay with you. Eliot Spitzer, the attorney general for the state of New York has been "Mr. Clean," the guy that has been going after all the corruption on Wall Street. Is he really "Mr. Clean?"

Bruce Upbin: No. We've got a terrific story in the current issue of Forbes that disproves much of that and points out much of the shadier and sketchier tactics used, which border on illegal or unethical. He's already filed civil suit against several telecom executives for steering underwriting business to banks that gave them high IPOs. There's no law that expressly prohibits that.

David Asman: What about Merrill Lynch (MER)? He's gone after them in a big way.

Bruce Upbin: He's hurt the stock badly. The stock went down 20 percent in the six weeks after. These guys are not going anywhere. Once the financial markets recover, what we find…

Elizabeth MacDonald: What's unethical about that?

Bruce Upbin: He exaggerated and misrepresented a lot of the evidence in his case against Merrill Lynch. And he used the court public opinion to nail them when laws prohibit that as well.

Elizabeth MacDonald: I think there was a vacuum created on the federal level and Eliot Spitzer stepped in. Yes, I have a problem with states sort of advocating these rights away from the federal government and stepping in here, but I just wonder who is going to do it.

David Asman: Bottom line is that Wall Street is probably going to outlive Eliot Spitzer.

Bruce Upbin: He's got big political ambitions, but yeah, Wall Street will outlive him.

Makers and Breakers

Delta Air Lines (DAL)

Mike Norman, Contrarian Update: MAKER

I wish I was here a couple days ago, it would have been great. The stock was up 15 percent Thursday. I like it very simply because this is an economic play. I think we're back in an environment of economic growth here. I think the airlines have been hammered down. Delta's coming out with a low cost airline. I think that is a brilliant idea and it's going to go up against Jet Blue and these other low cost carriers.

Jim Michaels, vice-president: BREAKER

The interesting thing I can say about Delta is that it's got to go more slowly than some of the other airlines. That's a Breaker.

Elizabeth MacDonald, senior editor: BREAKER

All the little airlines liquor bottles and Dramamine in the world wouldn't get me near this woozy stock. Their earnings were really bad. Billions in losses. I say, stay away.

David Asman: Ok. Two against one. Quick rebuttal.

Mike Norman, Contrarian Update: It's a contrarian play. Absolutely that's been priced into the stock. It's one of the reasons why you have to buy it right now.

ING Group NV (ING)

David Asman: All right, let's talk about financial services, ING Group. You're buying a foreign company, so it's an ADR, why?

Mike Norman, Contrarian Update: MAKER

And, I picked this out because of you, David, because I know how much you love European stocks. I'm bullish on the Euro. I think this is a play on the Euro and by the way, the outlook towards Europe right now is as gloomy and as pessimistic as what it was towards the United States in July and September. This is a wonderful Contrarian play.

Elizabeth MacDonald, senior editor: MAKER

I'm a Maker on the stock. They just went through restructuring. They cleaned the balance sheets to the Enron exposure and their bearings bank, which was bad. Little weary though, of their complicated foreign filing. They trade as an ADR. I'm weary of that, but I'm a Maker.

David Asman: Jim?

Jim Michaels, vice president: MAKER

I will never underestimate the abilities of the Europeans to screw the system up. However, I do like the stock. Nice yield. Good PE. It's a cheap stock.