Fried-Day (and not a moment too soon):
: Sources with good lines into Galoob Toys have been saying for months that the hobbled toy maker has been in talks to sell itself to
and that those talks may have intensified. The maker of Micro Machines, Pound Puppies and
dolls has been operating in the red for more than a year, forcing its stock to trade at or near three-year lows. The hope, if there is any, has been tied to the company's much ballyhooed license to produce toys tied to the next three
movies. Irony of ironies, if Galoob does sell out, the deal with
may have been Galoob's undoing.
As part of that deal, Galoob must pay Lucasfilm $140 million in three unequal installments after the first movie is released next year. In return, Lucas received warrants to buy up to 20% of Galoob at $15 per share, which means Lucas doesn't make money until the stock is above 15.
Unfortunately for Galoob, its stock hasn't seen 15 for more than a year; it currently trades at 7 1/2. And with just $30 million in the bank as of the end of last quarter, it's unclear how the company will come up with the money to pay Lucasfilm. Enter the possibility of a takeover (or takeunder?) by Hasbro, which also has a license to produce toys for the new
. I called officials at both companies seeking comment. They were said to be on the phone at the time. The subject matter was disclosed. Neither returned my call.
Baan-Baan, anyone?: The knock on Dutch software giant
used to be that it relied on aggressive accounting to make its numbers. Now it just seems that business stinks. At least that's the word from officials of
, whose business is to install enterprise resource-planning software (for such things as payroll, accounts receivable, human resources, etc.) made by companies like Baan. In a conference call with analysts yesterday, they said the entire market for the so-called ERP software has slowed. But they specifically mentioned Baan, saying that there has been a "noticeable deceleration" in its licenses.
If Baan is getting battered, what about its longtime direct rivals,
? They may not be faring much better. Yesterday
Credit Suisse First Boston
analyst George Gilbert, who had considered himself SAP's biggest booster, downgraded the stock to a hold, saying that "pricing is eroding" faster than had been expected and that "growth is expected to dip" in the second half of the year. With its stock at 60 times earnings, he figures there's simply too much risk. Gilbert pulled the plug on Peoplesoft in July and simply stopped covering Baan long before that.
What took him so long on SAP? "I think we've all been in denial for awhile," Gilbert told me yesterday, adding, "I think there's more reality yet to come."
Finally, from the book,
The Perfect Storm
: "There's a certain amount of denial in swordfishing. The boats claw through a lot of bad weather, and the crews generally just batten down the hatches, turn on the VCR and put their faith in the tensile strength of steel. Still, every man on a sword boat knows there are waves out there that can crack them open like a coconut ... Once you're in the denial business, though, it's hard to know when to stop. Captains routinely overload their boats, ignore storm warnings, stow their life rafts in the wheelhouse and disarm their emergency radio beacons. Coast Guard inspectors say that going down at sea is so unthinkable to many owner-captains that they don't even take precautions."
We interrupt this program with a bulletin: The country's biggest investment banks agreed to loan
Long Term Capital
$3.5 billion. A spokesman for the group said, "We thought they were investing in swordfish."
Herb Greenberg writes daily for TheStreet.com
. In keeping with the editorial policy of
, 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 firstname.lastname@example.org. Greenberg also writes the monthly "Against the Grain" column for