Thursday, June 07, 2007

Paperstand (takeover tgts: RATE, ANSW, WBMD, KNOT)

Barron’s Online speculating, which co’s among the online publishers might be the next wave of merger tgts. Potential tgts include Bankrate (RATE), (ANSW), WebMD (WBMD) and The Knot (KNOT), all of which have editorial content that could be more desirable as Google (GOOG) and Microsoft (MSFT) try to sell more ads all over the Web using the two ad networks they just bought, DoubleClick and aQuantive. What good Internet co’s have in common are businesses in which individuals engage in highly specific activity and they have some substantial scale in that business. Bankrate and The Knot are relatively cheap and have desirable audience demographics, say investors and analysts. In addition, both co’s would be easy for a large media or Web co to buy, with mkt caps of $776m and $600m, respectively. "You're seeing a lot of consolidation in the [Internet content mkt] driven by the competitive dynamic between Google and Microsoft and Yahoo (YHOO), as well as seeing Big Media co’s establishing a presence on the Internet," says Heath Terry, of Credit Suisse. "After the wave of acquisitions of ad network co’s, the inventory of smaller content co’s is likely to become more valuable." The hottest area of growth right now in Internet advertising are specialized Websites, says one NY-based portfolio manager. "More and more of the audiences these sites cater to are going to get their information online over time," he says.

“Inside Scoop” section reprots that Kaydon’s (KDN) new President, CEO and Chmn, James O’Leary, has bought $400K worth of shares in his co, as the bearings maker's stock is on a roll. O'Leary now owns 120K shares of Kaydon. Robert W. Baird's Peter Lisnic says, "I think we're still clearly favorably disposed toward Kaydon. And that is b/c it does have above-avg growth prospects relative to other industrial co’s, we think." He underscores Kaydon's opportunity in the wind-energy mkt. Michael Painchaud, of Market Profile Theorems, says the buy, "net-net, is probably going to be a positive," moving Kaydon into the neutral range on his insider model.

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