Forbes on Fox Recap: TI, Masco
Our panelists give you the scoop on all the inside business information before you hear it anywhere else in The Informer segment:
David Asman, host: Lisa DiCarlo, JetBlue Airlines — about to go public.
Lisa DiCarlo, Forbes.com senior editor: JetBlue is a great airline. I think investors should get in on this right away. They are an ultra efficient airline. They fly only one kind of plane, which cuts down on cost.
David Asman: But I remember people saying Pan Am was the ultra efficient airline.
Lisa DiCarlo: This is a completely different story. 60% of JetBlue's tickets are sold on the internet, which saves an great deal of money.
Bob Lenzner, national editor: It's a great airline but the question is what are the big airlines going to do to JetBlue if they start to do too good.
Lisa DiCarlo: It's an interesting point. Delta has already undercut them on some prices to Florida.
Elizabeth MacDonald, senior editor: Are they going to take Southwest's (LUV) reputation?
Lisa DiCarlo: My view is that they really are the next Southwest.
David Asman: But Lisa is it really safe to own an airline stock right now?
Lisa DiCarlo: Sure. JetBlue when they go public in the next couple of weeks. Southwest is good. Some of the regionals and smaller ones like Frontier are good also.
David Asman: Okay, let's move on. Bruce Upbin, wireless stocks, what have you got?
Bruce Upbin, senior editor: Wireless stocks are ridiculously cheap right now. According to some analysts, Sprint PCS (PCS), AT&T Wireless (AWE), and Nextel (NXTL) will triple or quadruple in the next twelve months. These companies have caught the cold and are effecting companies like Qwest (Q) and Global Crossing (GX).
David Asman: But Bob, there is a reason why these stocks are so cheap right?
Bob Lenzner: Well, everyone thinks there's this pervasive gloom ahead.
Elizabeth MacDonald: And plus don't they have a major subscriber base and that's what really would drive the value of this stock.
Bruce Upbin: Yes. One analyst I talked to said one subscriber's value is somewhere around $18 or $29 a share. And it's trading for $7 right now.
David Asman: Okay, Elizabeth what have you got?
Elizabeth MacDonald: Washington Mutual (WM) is the nation's largest thrift and most widely held stock by institutions. 2000 institutions own 80% of its share. But investors may see some more volatility in this stock in the coming year. It's taken some huge write-offs for its securitization of its mortgage loan portfolio.
David Asman: Should we all be calling the people who control our mutual funds and tell them dump this stock?
Elizabeth MacDonald: Yes. Bob Olstein did an accounting seminar this week with Salomon Smith Barney and he said some of the brokers were saying, 'We're going to dump.'
David Asman: Okay we have to leave it at that. Bob Lenzner, FCC rules about to change?
Bob Lenzner: They're probably going to raise the cap on households from 35% to 50%, which means the big networks will be able to buy more television stations.
David Asman: We should mention that the parent company of Fox will be able to play into this as well.
Bob Lenzner: Fox and other networks will now be able to buy cable networks. You'll be able to own a cable and a television station in the same city.
David Asman: Is this good or bad for television and communication industries?
Bob Lenzner: I think consolidation is going to happen anyway but don't count on it happening right away because cable companies have too much debt. They're not making money.
Makers & Breakers
Texas Instruments (TXN)
Steve Pendergast, Salomon Smith Barney: MAKER
Texas Instruments manufactures the chips that make everything from cellphones to PDA's. And we're anticipating the economies turn and Texas Instruments to follow.
Jim Michaels, editorial vice president: BREAKER
I think this is a splendid company but I wouldn't buy it at this price. One thing we've learned from the tech stock bubble are that these big tech stocks are cyclical. You're asking me to pay a hundred times this year's earnings and something like 40 or 50 times next year's earnings. I don't think it's a good buy at this price.
Pete Newcomb, senior editor: MAKER
I like it. DSP is real technology. It's not smoke and mirrors. I think the next application is going to be in retail. I think it'll be a big business for them.
Masco Corp. (MAS)
Steve Pendergast: MAKER
Masco Corp. is the largest building company in the country. They sell products like Delta faucets and Bear Paints. Their earnings estimates have just started to go up and that's when you want to buy a company like this.
Pete Newcomb: BREAKER
You could've bought the stock 4 years ago and you'd be underwater right now. Since then I've heard a lot about the chairman's art collection and little about their top - line growth.
Jim Michaels: BREAKER
Do you know who made the faucets and toilet mechanisms in your house? I don't. I think the power lies with the big builders who are increasingly taking over the building industry with the big retailers like Home Depot (HD). It's a good little company but it's amply priced.
David Asman: Okay Steve. You got two hits so defend yourself.
Steve Pendergast: Well, Masco sells their products to companies like Home Depot. And Masco's presence in the building industry is significant. In fact, they're rolling out a new initiative called Insulation Services and if we're right it could double their sales.