Wednesday, March 28, 2007


The WSJ reports that DoubleClick is exploring a sale, and is already in active talks with Microsoft (MSFT), among other potential suitors. The co is using investment bank Morgan Stanley to help sound out its options, including a possible stock-mkt listing. The co is majority-owned by Hellman & Friedman, which since purchasing DoubleClick in ‘05 for approximately $1.1bn, has sold off a number of divisions and reshaped the business. Hellman is seeking at least $2bn for DoubleClick, and it remains an open question whether the firm will choose to complete a deal.

“Heard on the Street” column out saying that reinsurers that sold hurricane coverage last year won the wager; they pocketed hefty premiums, paid few claims and watched their share prices rise. Now, some are moving to reduce their risk by buying or merging with rivals. The main argument for consolidation: increasing pressure on reinsurers to limit their exposure to any one type of disaster by selling a more diversified range of policies. With the US hurricane season kicking off in roughly 2 mo’s, the time for action might be now. According to the article, Scor (SCO) plans to launch a hostile tender offer for Converium (CHR) next month to gain more mkt power and broaden its risk portfolio. Analysts and industry veterans alike believe the incentives to consolidate will endure. "I think this will extend out for more than just a year or two," said Bill Yankus, of Fox-Pitt. Other dealmakers mentioned include ENH and MXRE.

Barron’s Online positively out on Broadcom (BRCM), whose stock is down 26% in the last 12 mo’s. With all awful developments now behind it (investigations, MOT warning), Broadcom can welcome incoming CFO Eric K. Brandt with a stunning balance sheet consisting of $2.8bn of cash and marketable securities, no debt and a cash flow statement that added $721m last year. The recent drama has left Broadcom shares at a reasonable P/E multiple of 21x ‘08's projected earnings, near its lows over the last 2 years, as CEO Scott A. McGregor leads the co's advance into the fastest-growing mkt for semiconductors, the cellphone. "They continue to be very strong in executing plans to enter new chip mkts, and they consistently out-engineer many other chip co’s," says J.P. Morgan chip analyst Shawn Webster, commenting on why he initiated coverage of Broadcom in late Feb with the equivalent of a Buy rating.

“Inside Scoop” section reports that one director at Johnson Controls (JCI) has made a $6m bet that there is still upside to the co’s stock price. Eugenio Clariond made his latest purchase on March 23, when he paid $3m to purchase 31K shares of Johnson Controls. The latest buy came just 5 weeks after another $3m purchase on Feb. 14. Ben Silverman, of, says that Clariond's $6m splurge is a "bullish bet on the co being able to boost its building efficiencies and power-solution businesses as the automotive business deals with industry problems."

According to the DigiTimes, citing Samsung Electronics' semiconductor business president Chang-Gyu Hwang, the overall memory mkt which includes DRAM and NAND flash should head towards more positive prospects in the 2H07 with DRAM demand expected to warm up while NAND flash shortages are about to arrive in the mentioned time frame.

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