Rendimento real das famílias portuguesas com maior queda da OCDE no início do ano

[Alfred E. Neuman]

DreamWorks: Risky business
The IPO was great for the company, but investors may want to stay home and read a book.

Monday, November 1, 2004
By Eric Hellweg, CNN/Money contributing columnist


BOSTON (CNN/Money) - "You oughta be in pictures!" The come-on works for starlets and silver-screen dreamers, but how about investors?

Investors got a rare chance to buy shares in a Hollywood IPO last week, when DreamWorks Animation went public.

As far as opening weekends go, DreamWorks's debut was a big success -- shares were trading up 40 percent. For early investors and employees, it was the feel-good hit of the fall.

But what about the rest of us? Now that the stock is available, at a forward price/earnings ratio in the mid-30s, what should investors make of this Hollywood powerhouse?

The two rules: Money and hits

First, investors need to remember who makes money in Hollywood. Producers get rich. Movie stars get rich. Even a few directors and screenwriters get rich. Investors? Well, that's why you need to look beyond the Tinsel Town glamour of a property like DreamWorks.

Though the company founded by David Geffen, Jeffrey Katzenberg, and Steven Spielberg makes money in a number of different ways (through DVD releases, merchandise, etc.), the revenue is directly tied to one or two releases each year.

Which leads me to the second rule: Hollywood is a hits business, and you are only as good as your next hit. As DreamWorks has proven in the past, one misstep has immediate and large consequences for the company's outlook. (Think "The Prince of Egypt," "Road to El Dorado," "Sinbad," "Spirit" -- OK, I'll stop. "Father of the Pride" on TV. Stop.)

DreamWorks reported net income of $120.7 million for the first six months of this year, thanks largely to the success of "Shrek 2." But it lost $114.7 million during the first half of 2003, when titles didn't fare as well as hoped.

"This is even more of an issue for DreamWorks Animation than Pixar, as DreamWorks Animation's track record is not nearly as pristine as Pixar's," writes Richard Greenfield, an analyst with Fulcrum Global Partners, in a research note issued after the IPO.

These are not cyclical companies; these are not conglomerates. They succeed or fail based on the tastes of the public, and you can't argue with those tastes. That said, there's a lot to like about DreamWorks, despite its less-than-perfect track record for successful films. "Shrek 2" is the highest-grossing animated film to date, and the company operates with roughly a 37 percent net profit margin. Not too shabby.

The competition

But let's look at DreamWorks's direct competitor. Pixar has had hit after hit after hit, thanks to its leader, John Lasseter, a true storyteller and a gifted manager of talent. Its name is now a recognizable brand of quality.

Pixar also earns net margins of 53 percent. It has no debt. Pixar must hand over half its profits to Disney, but that relationship will end with Pixar's first release in 2006. When that happens, even if it re-ups with Disney under different terms, its financials will get a whole lot better.

Despite my preference for Pixar, I have to caution any potential investors that both Pixar and DreamWorks are very, very expensive right now. Pixar is near its 52-week high in anticipation of the Nov. 5 release of its movie "The Incredibles," which has received favorable buzz. DreamWorks is riding on its post-IPO momentum and the home video and DVD release of "Shrek 2," also scheduled for Nov. 5.

That's how these stocks will likely operate for the foreseeable future: big run-ups in anticipation of hot releases, followed by cool-down periods. That's not a ride for everyone.

[Alfred E. Neuman]

IPOs are back -- with a difference

The pace has picked up, as has the quality. Are any of the market's new IPOs right for you?


October 29, 2004: 6:03 AM EDT
By Jacqueline S. Gold, CNN/Money contributing writer


NEW YORK (CNN/Money) - It may be more boomlet than tsunami, but there is no question the market for initial public offerings is on a tear.

With Shopping.com's (Research) strong debut Tuesday, pricing at $18 and closing up 60 percent, the online price comparison firm became the biggest first-day gainer for an IPO since JetBlue went public in April 2002.

DreamWorks Animation (Research) followed Wednesday with a $28-a-share offering that jumped 38 percent to $38.75 in its first day of trading Thursday.

And Google Inc. (Research), the firm that helped spawn the latest IPO wave by going public in August at an apparently steep $85 a share, is still going strong, closing Thursday at $193.30.

There are good reasons the mini-boom is happening now, according to people who follow and invest in IPOs.

Pent-up demand from companies waiting to go public since the tech market collapsed in spring 2000 has at long last forced underwriters to reduce IPO prices to more realistic levels.

In addition, the memory of the Internet implosion has vastly improved the quality of companies trying to raise cash by going public. These two factors together have created a spate of high-quality IPOs at reasonable prices, the experts say. And investors are welcoming them with open wallets.

According to Thomson Financial, 198 companies have gone public so far this year, raising $38 billion. That compares to just 86 deals worth $16 billion in all of 2003.

Of course, 2004 can hardly touch the supernova years of 1996, when 873 companies went public, issuing shares worth $54 billion, and 1999, when 512 IPOs raised $63 billion.

But the new issues this year can claim to be more than just ideas on paper, as many IPOs of the go-go era turned out to be.

"A lot of people were left holding the burning carcasses of those companies," said Ben Holmes, managing partner of Protégé Funds, a Boulder, Colo.-based firm that invests in new issues. "We've learned a lot in the last few years. The market has become more selective."

While a steady stream of companies is going public -- six IPOs debuted in a single day this week compared to five in the entire first quarter of 2003 -- there are also 160 in the pipeline. That means the boom is unlikely to end any time soon.

Sal Morreale, who tracks new issues for Cantor Fitzgerald in Los Angeles, likes Arlington Tankers, an oil shipping company that is expected to go public later this year.

"Energy companies are doing very, very well," he noted. He also likes China Netcom, another entrant on the current IPO docket.

Richard Peterson, a market strategist with Thomson Financial, says investors should keep their eyes on Mechel Steel, set to go public next week. He thinks the company is well positioned to benefit from consolidation in the steel industry.

And Protégé's Holmes calls Portalplayer, a Santa Clara, Calif.-based maker of chips for gadgets like MP3 players, "a monster."

He also likes Sybari Software, which makes spam-fighting technology; Fidelity National Information Services, a provider of back office services to financial firms; and Bluelinx Holdings, an Atlanta-based distributor of building materials.

While most everyone agrees that the companies coming to market now are more likely to succeed than their go-go era counterparts, investing in IPOs is still not for everybody. Investors should view new issues as a small, high-risk part of their portfolio, analysts said, and should be ready with an exit strategy.

"An IPO is a vastly different company than what people traditionally invest in," warned David Menlow, president of IPOfinancial.com, an independent IPO research firm based in Millburn, N.J. "A lot of companies don't transition well from private to public. Investors have to think about timing the market."

Biotechs are particularly risky, warned Holmes, who recommends that the relatively inexperienced stick to safer IPOs, like those of regional banking companies.

"You can't buy a bad one," he insisted. "They are the safest things out there." He also likes restaurant chains.

This year's wave of IPOs can give investors -- even green ones -- some reassurance. Most of 2004's new issues are still at their IPO price or above, with only 25 stocks down more than 10 percent, according to Menlow.

The boomlet in new issues generally indicates that economic growth is respectable and also can signal an upturn in merger and acquisition activity, he noted.

"Investors are feeling more bullish about the economy," Menlow added. "We're running on very different fundamentals today."





Links referenced within this article

Shopping.com's
http://money.cnn.com/quote/quote.html?s ... &symb=SHOP
Research
http://cnnfn.multexinvestor.com/Reports ... icker=SHOP
DreamWorks Animation
http://money.cnn.com/quote/quote.html?s ... e&symb=DWA
Research
http://cnnfn.multexinvestor.com/Reports.aspx?ticker=DWA
Google Inc.
http://money.cnn.com/quote/quote.html?s ... &symb=GOOG
Research
http://cnnfn.multexinvestor.com/Reports ... icker=GOOG




Find this article at:
http://money.cnn.com/2004/10/29/markets ... /index.htm