As soon as Richard Parsons gave up his CEO role in January, remaining chairman of Time Warner Inc. (NYSE: TWX), the smart money bet that his tenure would be short-lived. After all, he had turned over the fun part of the job to Jeffrey Bewkes.
Today, at the annual shareholder meeting, Parsons said he would likely give up his role as chairman after this year. This will mean Bewkes gets the chairman title affixed to his CEO tag. In fact, his contract stipulates being able to become chairman.
This is more than a title change. It will consolidate the decision-making power and the public's perception of who is in charge with Bewkes. It may even allow Bewkes to more expeditiously get Time Warner Cable Inc. (NYSE: TWC) out of the structure.
For Parsons, it will mean a fresh start. He has long been thought of as a candidate for Mayor in New York City. Handing the chairmanship of Time Warner over to Bewkes would allow Parsons to pursue that.
IMAX (NASDAQ: IMAX) really missed Wall Street's expectations. In its latest earnings release, issued on Monday, the company said that its net loss per share doubled to $0.25 for the first quarter compared to the 2007 quarter when the net loss was $0.12 per share. Revenues were $23.5 million, a 12% decline.
While that performance is bad enough in itself, it was also below expectations with the bottom line missing by $0.11. Yikes! Revenues were likewise a disappointment. Even with all the snazzy content from studios such as Time Warner (NYSE: TWX), Viacom (NYSE: VIA), Disney (NYSE: DIS) and DreamWorks Animation (NYSE: DWA), IMAX is having a tough time getting its stock out of the single digits. Management is hoping that a stronger slate for the rest of the year will have a positive impact.
Maybe it will, maybe it won't. IMAX is a stock I have no interest in buying. The company sports a negative book value at the moment, and the stock's past performance has been pretty terrible. I have to concede, however, that on a shorter-term period, the stock has been strong -- in fact, it is not too far from a 52-week high.
As one can imagine, many are speculating that IMAX has a great future ahead of it as the company transitions to digital platforms (this article at USATODAY.com provides an excellent summary of the bull argument, as well as issues IMAX has had with financing). Also, I'm sure many are speculating about a potential sale of the company at some point.
Hey, I'm not going to necessarily rain on the long-term thesis for IMAX, but I have to be honest and say that I'd have to see a breakout from here and some better numbers next quarter to even think about starting a position.
Disclosure: I own shares in Disney; positions can change at any time.
Is there any content company not interested in dealing with Apple's (NASDAQ: AAPL) iTunes platform? According to Portfolio.com, media conglomerate Time Warner (NYSE: TWX) would like to see its HBO programming distributed on Apple's best-of-breed digital service. An announcement of a deal could be forthcoming very soon.
While some many question the move since HBO is a premium subscription service and could conceivably lose some of its allure, I think it is smart strategy. Digital distribution isn't going away, and HBO needs to be part of every platform, even iTunes. Plus, imagine the possibilities to really cash in here. What if the finale of The Sopranos had been sold on iTunes before it aired? Little experiments like this would not only be valuable in terms of testing contemporary theories about distribution paradigms in the 21st century, but they might also be profitable.
Perhaps the key element of this story is that it seems as if Time Warner was able to convince Apple that its content is worth more than the typical iTunes price point of $1.99. This is important because price elasticity will ultimately determine the overall value of a content library. Apple would, of course, like to charge the bare minimum to the users of its hardware, but where does that leave an HBO? No, HBO would be smart in starting as high as possible in terms of price and then adjusting after a full analysis.
I look forward to seeing this agreement announced, and if it is, I think HBO will not only make some money with Apple, but it will find that the pay-cable channel's brand equity will be boosted in the bargain. Some iTune users might actually be prompted to subscribe. HBO is known as a home for quality programs -- I loved the old Tales From the Crypt series -- and it may soon be known as an iTunes top seller.
Disclosure: I don't own shares in any company mentioned here; positions can change at any time.
Apple Inc. (NASDAQ: AAPL) was the big winner among only four that had appreciated. The following indicates commonly used metrics for tracking and comparing stocks.
Reviewing the stocks in order of lowest to highest P/E ratio (TTM):
It is interesting to note that only two of the eight have a below market P/E ratio, while only two are average. On the other hand, four are double the average and beyond, which leads me to believe the overall market consensus is that it is still very early in the game for these stocks and their futures are yet to be determined. The P/E ratios of the four are also the most volatile as are the stock prices.
I honestly thought Time Warner's (NYSE: TWX) Speed Racer would take the top spot over the Mother's Day weekend at the domestic box-office marketplace. Thankfully, I was wrong, since I own shares in Marvel Entertainment (NYSE: MVL).
Instead, Marvel's blockbuster Iron Man, which is distributed by Viacom (NYSE: VIA), grabbed the honors. According to estimates at Boxofficemojo.com, Iron Man grossed more than $50 million while Speed Racer drove away with about $20 million, good for second place. Yes, these are estimates, but I'll tell you what, my friends any changes to them later on won't alter the tale of Marvel beating the bigger studio. News Corp.'s (NYSE: NWS) new film, What Happens in Vegas, took in a similar amount to Racer and is currently pegged in third place. While first place is a lock, it's possible that second and third positions will be changed. Sony's (NYSE: SNE) Made of Honor and General Electric's (NYSE: GE) NBC Universal comedy Baby Mama were fourth and fifth, respectively.
This was Iron Man's second weekend, and I couldn't be more pleased by its performance. Hopefully, the picture is on its way to grossing at least $250 million domestically; subsequent weekends will get tougher for Marvel as more summer flicks open and gobble up screens and mindshare. For now, though, the company is a superhero. I just hope that the new Hulk, which will be opening soon,is a lot better than the one put out a few years back. For coverage on Marvel's latest earnings report, check out Sheldon Liber's recent piece.
Disclosure: I own shares in General Electric and Marvel; positions can change at any time.
Disney (NYSE: DIS) reported earnings earlier in the week, and once again, Bob Iger pleased Wall Street with the media company's latest results (for a look at the numbers and an options-trading idea for Disney, see Brent Archer's recent piece about the Mouse). They more than beat expectations, but as a Disney shareholder, I'm somewhat blase about the whole affair. Sure, Iger is being feted as a CEO wunderkind who has successfully steered the S.S. Disney into prosperous financial seas after taking the wheel over from failed captain, Michael Eisner. But, you know, I've owned Disney for ten years now, and I just don't like the price action of the stock -- it hasn't gone anywhere since the last split back in 1998. And, I can't say that the stock performed spectacularly this week post the earnings win.
I think Iger needs to start worrying about the stock. Yeah, he'd probably tell me something like "I'm busy leveraging the Disney brand to differentiate its content from other media concerns to drive increases in returns on capital and earnings per share -- the stock will take care of itself." Ha! The stock has done nothing. Iger should pay attention to the sad long-term range that symbol DIS has been in for what seems like an eternity. Here's my suggestion -- double the dividend, Bob. You can do it.
A look at the company's most recent 10Q (for the quarter ended March 2008) shows an interesting cash-flow story. Okay, cash from operations for the last six months came in at $3.3 billion. Capital expenditures and acquisitions together equaled $759 million. Dividends were $664 million. Add $759 million and $664 million together and you get $1.4 billion. I think there's a lot of breathing room there, Bob. In fact, if you brought dividends up to an even $2 billion, you still would have covered cap-ex and acquisition costs. And remember, Disney pays an annual dividend, so that $664 million was for the whole year! Imagine if you spread $2 billion out over four quarters. You could easily double it, Bob. In fact, a check of the most recent 10K shows that cash flow has been excellent the last few years. Disney, by my calculations, could have supported a much higher dividend back in 2005!
I mean, revenues increased 16% to about $8.8 billion, but earnings per share went up like crazy, coming in at $0.91 per diluted share versus $0.27 per diluted share a year ago -- that's more than three times as much as the comparable period's results! As you can imagine, there's a little catch. The stellar appreciation is due to a gain in a transaction with Liberty Media. According to a piece at CNBC, News Corp. earned $0.30 per share after adjustments, which was a penny shy of Wall Street's expectations.
So, News Corp. kind of had a so-so quarter. I think the top-line growth was pretty good even if bottom-line performance wasn't as nice as that special gain made it seem on the surface. Plus, News Corp. is working with some cool assets. Cable programming continues to score thanks to the strength of Fox News Channel, an important platform for the conglomerate which contains valuable brand name pundits such as Bill O'Reilly and Sean Hannity. News Corp. leverages the channel to drive growth in its other cable properties; in fact, Fox Business Channel is trying to make a name for itself and it definitely benefits from synergy with Fox News.
Overall, the cable programming segment delivered a 17% increase in operating income while Fox News saw its operating profit go up by 11%. The television segment increased its profits by over 50%, and the Fox network just about doubled its bottom-line base. Other parts of News Corp. didn't do as well, such as filmed entertainment -- this segment's profit took a dive to the tune of 36%. However, don't blame one of my favorite shows, Family Guy -- DVD sales of this hot property was a positive driver.
Those are the highlights that stuck out at me. As for the stock, I don't see a compelling reason to buy at the moment. News Corp. should do well over time, but it wasn't like these were blowout numbers or anything. I'll wait and see how the company is doing when it reports its fiscal-year stats.
Disclosure: I own shares in Disney; positions can change at any time.
Playboy's (NYSE: PLA) shares are hovering near a 52-week low as I write this. The catalyst, you ask? The sexy company reported some dismal earnings this week. Net sales decreased 8%. The net loss came in at $0.09 per diluted share versus positive net income of $0.04 per diluted share in the previous year's quarter.
Even if you look at some of the adjustments, the Playboy story just isn't a seductive one. And according to a Reuters article, expectations were for a profit of $0.06 per share after adjustments. The net income of each Playboy operating division headed in a downward direction. And publishing, well -- that's been the saddest segment of all for a while now.
I have a question for Christie Hefner: Are you serious about turning your father's company around? Seriously. I've been giving Playboy the benefit of the doubt now for quite some time, and I'm not sure I can do that anymore. I want to, believe me; I'm a guy who has always been in love with the Playboy lifestyle. And, remember, the invitation is always open if you need me to come over to the Mansion to help you generate some new marketing strategies.
World Wrestling Entertainment (NYSE: WWE) stepped into the Wall Street ring on Tuesday -- and lost. The company's stock dropped about 8% at closing on the Q1 earnings release (it did recover a bit during the after-hours session). I'd probably call this profit-taking, although there was one thing about the earnings report that I didn't like: free cash flow.
Let me say first, though, that revenues increased more than 50% to $162.6 million, and that earnings per share rose almost 29% to 27 cents (according to Briefing.com, this matched expectations). This is excellent growth, and it shows the resilience of wrestling as an entertainment brand; sure, many on Wall Street may not take the company seriously, but they're wrong. I enjoyed, by the way, that WWE increased the buy-rates for its Royal Rumble and No Way Out pay-per-view events. Pay-per-view is a very vital part of WWE's operations, in my opinion. And let's not forget a big driver for the quarter -- Wrestlemania XXIV -- which brought in more than million buys.
Unfortunately, free cash tumbled off the mat, decreasing 77%. And, no, the amount generated did not cover the generous dividend that WWE pays. I would really like to see free cash flow do well every quarter since WWE has been a steady dividend-increaser over its time as a public company. Management must focus on the cash-flow statement and make it a priority.
Recently, Jonathan Berr took a look at CBS (NYSE: CBS) and its latest quarterly results. One of the things I found most interesting about the earnings release was the fact that CBS's dividend reputation is very much intact -- management raised the quarterly payout by 8% to $0.27 per share. It can certainly afford to do this as free cash flow was up 25% in the last quarter, and the amount was more than adequate for the dividend. CBS has been pretty good about increasing the payments, but I happened to come across a headline at CNBC that talked about Jim Cramer's concerns about CBS -- he basically would rather the media company focus on growth instead of income.
His point is a good one, and well-taken -- after all, growth is pretty darn exciting. But I think CBS management has been great at sharing the spoils with its stockholders, and I always think it's a neat thing when a media stock yields a decent amount. CBS currently yields 4.5% based on Monday's closing price -- that's a lot bigger than the yields offered by Time Warner (NYSE: TWX) and Disney (NYSE: DIS). Yes, it's a cliché, but shareholders are getting paid to wait, and that's awesome if you intend to hold the stock for a long time. As a Disney shareholder, I can tell you that CBS's yield makes me envious!
I think CBS will turn out to be more than just an income play though. I'm confident the company will grow the price of its stock over time. Granted, major networks aren't what they used to be in this world of cable television, but the landscape continues to change with new digital distribution models popping up all the time, and networks like CBS are looking to participate wherever it makes sense to do so. Considering CBS's ability to generate cash and its willingness to share, I have a feeling capital appreciation will eventually follow the dividend boosts.
Disclosure: I own shares in Disney; positions can change at any time.
Yahoo! (NASDAQ: YHOO) shares traded at $29.70 after hours Friday as it appeared that a buyout deal from Microsoft (NASDAQ: MSFT) was likely. Now that Microsoft has walked away after offering $33, where does the Yahoo! stock price go?
Probably to about $22. Here are the reasons why:
1. Yahoo! traded at $19 the week before the offer.
2. Yahoo!'s earnings for Q1 were only modest. So were its forecasts. No one on Wall Street believes the company's aggressive three-year projections. This actually puts some downward pressure on the stock.
3. Microsoft may come back. Their new offer, probably several weeks off, if they make one, will almost certainly be below its initial $31 price point because Yahoo!'s shares will have fallen. A new MSFT offer will probably be in the $25 to $27 dollar range. This should give the stock some support.
4. Yahoo! could outsource some of its search functions to Google (NASDAQ: GOOG) and potentially save hundreds of million of dollars in personnel. Google does a better job of making money from search ads, so a transaction with the search company could also improve revenue. This should help keep Yahoo!'s share price from collapsing. There is a chance the the federal government would view a deal between the two largest search companies as anti-competitive.
5. There is still a chance the Yahoo! could do a transaction with News Corp (NYSE: NWS) for MySpace or Time Warner (NYSE: TWX) for AOL. It is tough to handicap what this would do to the Yahoo! shares.
Look for the Yahoo stock to settle at $22 in the next week.
Douglas A. McIntyre is an editor at 247wallst.com.
Since last year's summer movie preview featured mostly sequels and adaptations, this year's preview has been expanded to include more than just potential "blockbusters." The following is a chronological list of not only the most hyped film fare of the summer, but other noteworthy smaller entries, and a short commentary on each.
5/2 - Iron Man, Viacom (NYSE: VIA)'s Paramount Pictures The first of two big Marvel Entertainment (NYSE: MVL) adaptations of the summer, the Robert Downey Jr. led Iron Man has been getting a ton of hype and critical acclaim. This is the second year that a comic book adaptation has kicked off the summer, following last year's Spider-Man 3, which grossed over $150M over its opening weekend.
5/9 - Speed Racer, Time Warner (NYSE: TWX)'s Warner Bros. Another big-budget adaptation of a generations-old cartoon. Last year's Transformers was, to my surprise, a huge success, so maybe Speed Racer, in the capable directing hands of the Wachowskis, can be as well.
So, Mr. Softy CEO Steve Ballmer couldn't take the heat anymore. For all his talk about walking away and hostile bidding, he decides to try and make nice with the Yahoo! (NASDAQ: YHOO) board by apparently raising his offer. This man must feel that Microsoft (NASDAQ: MSFT) desperately needs the internet portal (it doesn't). While Yahoo! is definitely a prime force on the 'net, I have to say that, in my opinion, Ballmer should've just stuck to his tough guns and left Yahoo! at the table. But, according to this AP item, The New York Times has indicated that the original $31 per share offer has possibly been increased by "several dollars," this according to that old standby "unnamed sources." The article even indicates that $35 is potentially feasible.
I've got to believe that most Microsoft shareholders will feel aggravated by this. The goofy dance that has been going on between Ballmer and Yahoo!'s CEO Jerry Yang has been, to say the least, trying. I mean, who wants to see Microsoft spend all that money on a company that may or may not properly synergize with Mr. Softy's core competencies. Isn't focusing on the cash-cow operating-system monopoly of more importance? Isn't theOffice franchise worth increased attention? What about the success of the Xbox 360 -- why would Ballmer want to now get sidelined integrating the Yahoo! brand when the Xbox brand is starting to show mega long-term promise? These are the things that went through my mind when I first heard of the Microsoft bid. I mean, seriously, I can't believe $50 billion is now conceivably on the table as a bid for the portal. Sure, Yahoo! is valuable, but probably to another, more suitable company; as an example, I didn't think a combo between Time Warner's (NYSE: TWX) AOL and Yahoo! was that off the wall.
The way I see it, Microsoft is an innovative software company that should concentrate on increasing its free cash flow to grow dividends over time and to make selective, smaller acquisitions that don't require leaps of faith when it comes to integration. I thought Ballmer believed what he said when he stated that Microsoft doesn't need Yahoo! But, I guess Google (NASDAQ: GOOG) is getting under his skin, and his ego would have been too bruised if he failed in his quest to win over the Yahoo! board. Whatever; I still like Microsoft stock on a long-term basis, but I really would have liked it if the most famous software giant in the world didn't take on the risk of owning Yahoo!
Disclosure: I don't own shares in any of the companies mentioned here; positions can change at any time.
As soon as Richard Parsons gave up his CEO role in January, remaining chairman of Time Warner Inc. (NYSE: TWX), the smart money bet that his tenure would be short-lived. After all, he had turned over the fun part of the job to Jeffrey Bewkes.
Is there any content company not interested in dealing with 
About a month ago I posted 
I honestly thought 
Playboy
World Wrestling Entertainment
Here are some highlights from this past week's 
Here are some highlights from this past week's 
Comfort Zone Investing: One thriving area of real estate: Apartments
Just how high will U.S. gasoline prices rise?
Nordstrom and Kohl's post smaller-than-expected Q1 profit declines
