Seagram Gives Clear Hints That It May Sell Its Wine and Spirits Biz, and Why HMT Is the Ultimate Duh!

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The Tuesday trounce:

More Seagram sizzle:

The speculation, for what seems like forever, has been that

Seagram

(VO) - Get Report

will spin off its wine and spirits business into a separate publicly traded company. Lewis Perdue, whose

Wine Investment News

(

www.wineinvestmentnews.com) focuses on the growing list of publicly traded companies, says his sources insist the company is talking with its advisers and bankers about such a deal. The supporting evidence came deep in an 8-K filed last week in conjunction with its pending acquisition of

Polygram

(PLG) - Get Report

finally conceded what anybody with half a brain knew: that its business is lousy. Last week we

told you how Jon van Bronkhorst, the company's chief of business development and former head of sales, quietly quit to take a post as an analyst at

Merrill Lynch

. (The company announced his arrival but not his departure.) And shortly before that, we noted how the thin-film media maker hadn't publicly disclosed what it told a reporter in Oregon -- that it was temporarily slowing production at its two plants and idling workers for two weeks. Oh, and then there's the miserable performance by

Western Digital

(WDC) - Get Report

and

Iomega

(IOM)

, two of its largest customers in an industry that is doing horribly.

So, it really shouldn't have been a surprise that the company said its first-quarter earnings will fall below the fourth quarter (something you don't want to see with a growth stock), or that its revenues will be about $56 million -- around $30 million lighter than analysts had been expecting. The company blamed "many factors, including overall industry conditions." Duh!

But don't worry, HMT assures investors that "even at these lower revenue levels" it'll remain profitable. (How comforting!) Fine, but what would happen if HMT hadn't capitalized expansion costs? (Gee, do ya think it wouldn't have ever looked as profitable as it did?) And what happens if biz doesn't improve and the company has to start writing off those expenses? (Gee, do ya think going forward it won't be a profitable as it claims it'll be this quarter?) And why did VP Michael Russak sell 45,000 shares last month at prices ranging from $11.72 to $13.44, around the time the company was in New York trying to keep a positive spin on its story? (Gee, do ya think he's just smart or a good timer? HMT traded at around 8 1/2 before trading was halted yesterday.) And with a shortfall of more than $30 million, don't ya think the company knew about this sooner, and could have preannounced sooner? (Gee, yeah, but maybe they thought they could get from here to there without there really being too much of a problem.)

Oh, and if you're an HMT investor and you think this is just a blip, the company says it remains committed to delivering its products at "favorable market prices." Translation: Don't expect margins to widen anytime soon.

How about that Iomega:

It couldn't beat

Nomai

, a French competitor that was undercutting the price of its bread-and-butter Zip disks with cheap knockoffs, so yesterday it agreed to buy it. Yep, this is the same Nomai it accused of making shoddy merchandise that "may cause damage" to the Zip. Yep, this is the same Nomai that lost $7 million last year. Yep, the same Nomai whose fourth-quarter sales were 25% below a year earlier.

And, yep, this is the same Iomega that only two weeks ago warned that it may be in violation of its loan covenants. Yep, the same Iomega that expects to have a negative cash flow. Uh-huh, the same Iomega that appears to suddenly be struggling to survive.

So, what's it doing paying a rich two times sales for a company that, after the deal, will stop making the fake Zip disks?

Iomega's chief legal counsel, Laurie Keating, says Iomega likes Nomai's engineering capabilities, manufacturing capacity and new-product pipeline. Maybe, but it's clear that both companies didn't like the uncertainty and costs surrounding the Nomai litigation. The only question: Who had whom over what barrel? Hint: Nomai's big investors, including its CEO, weren't the ones to walk away any poorer.

(And this note: For the first time since I've been writing about the company an Iomega exec -- albeit the attorney -- actually took my call and answered my questions. Either the company really does think the worst is over, or it needs all the friends it can get. )

Travelogue:

Was

Hershey Park

all the honorable JJC made it out to be? Let's just say he obviously didn't go on a hot, muggy Saturday when every major company in Central Pennsylvania was holding its company picnic there. And he obviously didn't get stuck in one of the few remaining rooms available in the region last weekend, which happened to be 15 minutes away at a

Doubletree

in Harrisburg -- a Doubletree that was filled with in-need-of-little-sleep 13-year-olds in town for a four-state soccer tournament. But the two-year-old Wildcat, which surely must be one of this country's fastest and most intense wooden coasters, was worth the wait, if not the trip. Sadly, however, this aging coaster enthusiast's stomach and nerves ain't what they used to be.

Herb Greenberg writes daily for TheStreet.com

. In keeping with the editorial policy of

TSC

, he does not own or short individual stocks. He also does not invest in hedge funds or any other private investment partnership. He welcomes your feedback at herb@thestreet.com. Greenberg also writes the monthly "Against the Grain" column for

Fortune.