Tuesday, August 01, 2006

Notablecalls - Paperstand

The Wall Street Journals "Heard on the Street" column discusses Walt Disney (DIS), saying that in his first 10 months on the job, Disney CEO Robert Iger launched into a frenzy of deal making and corporate reshaping that helped drive the stock price more than 20% higher. Now, as the dust settles, investors have shifted their gaze to next year, and some don't like what they see, prompting a string of analyst downgrades and est tweaks. But while the bears have flagged a variety of concerns, from tough earnings comparisons at Disney's theme parks to the rising cost of sports rights, a number of swing factors in the next year could come to the rescue. Among them: a recent round of cost-cutting at Disney's movie studio, the blockbuster performance of "Pirates of the Caribbean" and a shift in the amortization of the co's deal with the NFL. Kathy Styponias, of Prudential, says the current consensus is missing these fundamental factors. She recently bucked the bearish trend with an Overweight rating. "There is significant upward bias to Disney's F'07 growth rate," Ms. Styponias said. Ms. Styponias believes the stock will continue to outperform for three reasons: No other entertainment conglomerate has articulated its strategy as well as Disney; the co has a strong focus on ROIC; and there are few alternatives to put money to work. Janna Sampson, a portfolio manager at Oakbrook Investments, which manages about $1bn and holds 645K Disney shares for its clients, adds, "The stock was so depressed at the end of Michael Eisner's term that the rebound just brought us back to the realm of normality, rather than taking us to any level of concern."

The CNET reports that AMD (AMD) is still making strides in the server mkt at Intel's (INTC) expense as the larger co waits to see if a new processor can reverse its slide. AMD on Mon said it increased its share of the x86 server processor mkt to 25.9%, a number confirmed by Mercury Research's Dean McCarron, who tracks mkt share figures. Intel now holds 72.9% of the overall mkt for x86 processors, while AMD has 21.6%.

According to the WSJ, IBM (IBM) is expanding its use of AMD chips, a boon to AMD as rival Intel steps up a counterattack. IBM was the first big maker of server systems to adopt AMD's Opteron microprocessor, introduced in Apr'03. The computer maker initially focused only on high-performance applications, while competitors such as Hewlett-Packard (HPQ) and Sun Micro (SUNW) pushed Opteron more widely. At an event in NY today, however, IBM is announcing five new servers for mainstream business applications that will use a new version of the Opteron expected in several weeks. The announcement follows Dell's decision in May to adopt Opteron for high-end systems. IBM, Dell and H-P say they also plan to use a new Intel chip, code-named Woodcrest, that increases the performance of the Intel Xeon line that is most widely used in low-end servers. But some computer users continue to demand Opteron. "Clearly there are customers that have asked us for this processor capability, and we listened to the marketplace," said Susan Whitney, general manager of IBM's System X product line.

DigiTimes reports, citing sources at Taiwan notebook maker, that Dell (DELL) will launch a wide-range of AMD notebooks in the 4Q, targeting all mkt segments from low end to high end and offering models that use AMD Sempron and Athlon 64 processors, as well as Turion 64 x2 CPUs. The first AMD-based models, which will likely be launched in late Oct or early Nov, will be 15.4" notebooks manufactured by Quanta Computer for the consumer notebook mkt. Then, Dell will introduce 17" AMD-based models at the end of the year.

Barron's Online reports that Altria Group (MO) CEO Louis Camilleri recently unloaded $2.8m in shares of the co. Ben Silverman, director of InsiderScore.com, notes that whenever investors see selling on historic strength like Camilleri, "that's a good-time to take a look at whether you as an investor feel it's time to take profits."

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