Thursday, December 07, 2006


The WSJ reprots that a two-year standoff between News Corp. (NWS) and its second-biggest shareholder, Liberty Media (L), is nearing an end in a deal that will return Liberty to a powerful position in the media sector and solidify News Corp. Chmn Rupert Murdoch's control of his co. Under an agreement, which could be finalized in the next few weeks, News Corp. will buy Liberty's $11bn stake in the media giant in exchange for News Corp's 38.6% stake in satellite-TV firm DirecTV (DTV), some cash and some smaller News Corp. assets.

“Heard on the Street” column highlights Motorola (MOT), that is sitting on more than $14bn in cash and some $3bn generated each year. The co is primarily valued for its popular wireless handsets led by the trend-setting RAZR phone. Motorola derives 2/3 of its sales and profits from its handset division and any cracks in the division's performance add to worries that the global boom in handsets must be slowing. David Eiswert, of T. Rowe, compares Motorola to Cisco. "What jumps out at you is that ppl are giving Cisco the benefit of the doubt, that they have important technology in a field where there are barriers to entry, that they will reinvest and get similar returns in the future," he says. Motorola is trading at about 13.5x consensus ests of ‘07 earnings, compared with more than 20x next year's estd earnings for Cisco.

Barron’s Online discusses Pfizer (PFE), saying that investors have a chance to turn Pfizer's flop into a hit for their portfolios. Investors with a little patience may embrace Pfizer as a value play, assuming the co accelerates cost cuts, hikes its dividend and cuts more deals with other drug makers to fill the gap in its pipeline created by torcetrapib's demise. "Pfizer faces a huge cliff in 2011, but they have time to come up with the answer," says Derek Taner, portfolio manager for the AIM Global Health Care Fund. "Pfizer has a lot of resources." Some investors might consider investing in co’s with rival cholesterol drugs. Torcetrapib's demise has relieved Schering-Plough (SGP) and Avvott (ABT). "There is still a great patient need for effective medicines to treat lipid disorders," says Melissa Brontz, a spokeswoman for Abbott.

“Inside Scoop” section reports that during the first 5 days of the Dec, Baker Brothers plunked down $14.06m to purchase 682K Genomic Health (GHDX) shares in the open mkt on behalf of various funds. Rusty Szurek, general manager of, says that it is notable in itself that Baker Brothers is increasing its Genomic position "on really significant strength." But Julian and Felix Baker also have a strong track record investing in biotech co’s. "They are what in the business we call smart insiders," says Szurek.

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