What a week! Besides the entertainment value of Warren Buffett's annual lovefest in Omaha -- don't miss Chris Edmonds' coverage of America's most surreal annual meeting this week -- we have the continuing spectacle of the AT&T (T) - Get AT&T Inc. Report- Comcast (CMCSK) -and-friends fight, maybe, over MediaOne Group (UMG) .
MediaOne's board accepted AT&T's $54 billion offer (plus debt) over the weekend and gave Comcast notice that it would consider a higher bid from them until Thursday. Comcast is scurrying around, trying to put together a multiplayer bid with its newfound friends (and strange bedmates!)
, the most interesting part of which will probably be the proposed dismembering of MediaOne among the bidders.
My take: Comcast can make this a more expensive and painful deal for AT&T, but it can't win. AT&T has made it clear with its initial high bid that it's willing to pay -- and overpay -- whatever it takes to get MediaOne. I also have some questions about the division of the spoils among Comcast and its buddies, if they should prevail
Microsoft isn't eager for AT&T to get a tighter hold on broadband than it already has, but participation by Microsoft in this deal will surely stir the beast we call Washington to action -- not exactly good timing for the legally challenged Microsoft. And since a chunk of MediaOne would be only a partial solution for America Online, it's even harder to see why buying a chunk of MediaOne would be a good use of Steve Case's cash hoard. (At the end of 1998, that deep pocket held about $1.5 billion and is surely larger today. AOL could use its generally strong balance sheet to borrow plenty more, but to what gain for shareholders?)
The latest after-lunch gossip on the Street has it that AOL has dropped out. I hope so.
And for what it's worth, this cameo as Comcast's partner seems to me like a much better opportunity for Microsoft co-founder Paul Allen, who's been on the cable-acquisition trail lately, than for Microsoft (which is, of course, already an investor in Comcast itself). Friendly hands, etc.
Opportunities for amateur arbs abound here, but -- despite my guess that AT&T will prevail -- look awfully dangerous. AT&T has dribbled down to about 135 since the deal was announced -- could the Street be worried about the balance-sheet implications of AT&T's offer? -- and Comcast has wiggled up only a little to about 67. MediaOne continues to wobble around 80.
Sounds to me like even the arb pros can't figure the odds on this one.
Cramer said something
here the other day that's really important and bears repeating. To paraphrase, JJC said that at
, we leave to the dead-tree gang the coverage of companies
; we're not interested in the soap operas of individual companies per se, but in those companies' stocks: where they're going and why.
That's absolutely true, and important to remember as you peruse these electronic pages.
That's much on my mind because when I came in around 5 this morning and sat down to jump between my favorite start-the-day Web sites and my daily scan of the pile of papers I find by our mailbox every morning, I stumbled across two stories in today's
Wall Street Journal
that illustrate that soap-opera-like aspect of the affairs of so many tech companies these days.
Both were fascinating, but neither helped much in the assessment of what's likely to happen, near term, to the stock prices of the companies.
One story related
CEO Rob Glaser's talk, in advance of the official announcement at the company's annual
, beginning Wednesday in San Francisco, of Real's long-awaited "jukebox" software. This will allow PC users to copy all or parts of selected audio CDs to their PCs' hard disks, then play them back through the RealJukebox application. This will no doubt raise the hackles of the record companies, who have gone into full-panic mode over the explosion of .MP3 files, digital music that can already be downloaded over the Internet and played on any sound-capable PC.
(Users of RealJukebox seem to me to be engaging in a classic "fair use" exercise, but look for the
Recording Industry Association of America
to jump on this with all its many feet, except for those it sticks in its mouth in the process.)
Anyway, no word in the
story on how this is likely to affect RealNetworks in the market. Not to play the soap-opera game, I think it's going to give RealNetworks' stock a nice bump, which will then be widely misunderstood as just the market's reaction to its other news at this week's conference.
The second episode of
All My Companies
was a story on the same page about Kim Polese's company,
(MRBA:Nasdaq), finally getting its IPO to market Friday, with a first-day triple up to 60 3/4.
Marimba has been cruising on dazzlingly effective PR, if not much else, for three years now, since Kim and three colleagues who'd worked on the development of Java at
left to build real-world applications with Java technology. Originally, Marimba announced it would be a big player in "push," but when that market proved to have neither meaningful revenues nor legs, the company went through a period of "redefinition." It emerged from that as a vendor of tools, principally Castanet, designed to help corporations proliferate new releases of software down to individual users' PCs.
This is a real need and a real market -- albeit with several successful players and products already in place, such as
Norton Ghost. The issue is whether Marimba and Java bring anything special to the table -- and to a certain extent, how focused Marimba really is on this, its second-choice market.
Kim has been a dazzlingly effective lightning rod for publicity for Marimba. She's widely known and liked (including by me) in the business, where she has been as ubiquitous on industry panels as she has been in the pages of popular magazines. That's a big part of the job of a CEO today -- more power to her. But devising the right strategy and setting up the means of executing it count, too, and there are many in the industry (again, including me), who marvel at the bye into the finals that Kim's high profile has bought for Marimba.
Where's the beef? Beats me.
Given this market's mania for "Internet" stocks, broadly defined, and Polese's PR skills, Marimba may well hold onto its fat new $1.4 billion market cap -- up another 18% at midday today to about $1.65 billion. But is there much meat on the bone? Is Marimba likely to be able to sustain that value, as customers -- which have been added so fast that Marimba couldn't even list them in its offering documents, the company told investors during its pre-IPO road show, according to the
-- look at the software more closely?
That's what investors need to know. And what we try to deliver every day here at
I want to be crystal clear here that I am
ragging on the
for running these two stories and many more like them. I love the
, have a lot of friends I admire there, and just like everyone else in the business, read it religiously before I begin my workday. It's one of the must-reads, and that's unlikely to change anytime soon. Heck, the
an institution, a force of nature; criticizing it would be like criticizing gravity or Canadian cold fronts.
My point isn't whether the
should run these stories -- it should, and millions of us lap them up -- but whether those stories can be a primary source of information for investing in the stocks of the companies covered by the
For me, the answer is no. That coverage fails to meet the logician's "necessary and sufficient" test: It's certainly important, even necessary, but it's not sufficient.
Enough of the soapbox. Back into this exciting week.
Jim Seymour is president of Seymour Group, an information-strategies consulting firm working with corporate clients in the U.S., Europe and Asia, and a longtime columnist for PC Magazine. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. At time of publication, neither Seymour nor Seymour Group held positions in the companies discussed in this column, although positions can change at any time. Seymour does not write about companies that are consulting clients of Seymour Group, or have been in recent years. While Seymour cannot provide investment advice or recommendations, he invites your feedback at