Tuesday, April 03, 2007

Paperstand (GOOG, BID, UNM)

According to the WSJ, Google (GOOG) is furthering its ambitions to move beyond online advertising with a multiyear contract to sell television commercials that will appear through satellite-TV provider EchoStar (DISH). Under an arrangement to be announced today, Google will sell TV ad spots through an online auction system, with advertisers bidding the amount they are willing to pay per thousand households that view each commercial. Google will send the commercials of the winning bidders to EchoStar, which will then insert them in an unspecified number of daily blocks in the TV programming it delivers to the roughly 13m households that subscribe to its Dish service.

“Heard on the Street” column out positively on Sotheby’s (BID), saying that art-loving investors who might not be raising a bid paddle at the co’s coming spring sale are betting on the auctioneer's stock instead. "When ppl make money, they want to put it in things that will appreciate in value, and that's art," says Richard Rosen, of J&W Seligman. "This is an irreplaceable, one-of-a-kind franchise with huge barriers to entry," he adds. Sotheby's makes most of its money from fees it charges buyers and sellers, a lucrative but cyclical mkt it enjoys in a veritable duopoly with closely held rival Christie's. Sotheby's costs, such as salaries and travel budgets for its globe-trotting art specialists, are mostly fixed, so a little rev growth translates into a big boost in earnings. For example, rev in ‘06 grew 29% to $665m, while earnings jumped 70% to $107m. "In the up-part of the art-mkt cycle, those incremental dollars fall almost straight to the bottom line," says Rommel Dionisio, of Wedbush. He has a Buy rating on the stock. The co's sizable net-cash position, high growth rate, pricing power and new global strategy to boost sales provide strong fundamentals for the stock.

Barron’s Online “Inside Scoop” section reports that Relational Investors has just upped its stake in Unum Group (UNM), less than a month after Relational said it would keep an eye on the insurance brokerage's turnaround efforts. Relational reported boosting its stake in the insurance provider to 25.7m shares, or a 7.5% stake, up from the 21.3m shares, or 6.2% stake. In its initial filing, Relational said Unum's stock is undervalued b/c of the co's history of "repeated, significant, one-time reserve and settlement charges against reported earnings, poor operating results and poor forecasting." Ken Squire, of 13D Monitor, says Relational "has a reputation for being long-term value investors who actually go in and enhance shareholder value."

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