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NBCi Shareholders Sue GE

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By Rick Aristotle Munarriz (TMF Edible)
April 10, 2001

It's getting harder to be a parent these days. No sooner had General Electric (NYSE: GE) announced its plans to purchase NBC Internet (Nasdaq: NBCI) at a healthy premium yesterday, a shareholder lawsuit was filed to block the family reunion.

GE thought it had the perfect online growth vehicle two years ago when it hooked up with consumer website portal Xoom and CNET's (Nasdaq: CNET) hip Snap.com to translate its content vault online. NBCi was supposed to be that nimble stand-alone speedster that would have otherwise been wasted in GE's massive conglomerate. 

But NBCi never quite caught on the same way that larger portals like Yahoo! (Nasdaq: YHOO) did. Then the market for dot-com stocks dried up. Last year's defections at the top were simply the beginning. Five hundred of the company's 800 employees were let go, and the carnage is not complete. While GE's offer to buy the 39% of NBCi that it did not own for $2.19 a share might appear low, it is still 46% higher than what the market thought the stock is worth.

GE was simply following Disney's (NYSE: DIS) mousesteps. Earlier this year, realizing that a tracking stock in an impoverished sector defeated the purpose of subsidiary liberty, Disney announced a similar repurchase of the minority stake in its online properties that it did not own.

While the NBCi shareholder lawsuit's claim that there was bias in setting a price because of overlap in the board of directors has some degree of merit, having Jack Welch sitting in both boardrooms didn't get NBCi's stock down to where a $2.19 takeout would be a healthy return.

News to Go

There's an Adobe (Nasdaq: ADBE) in the Amazon (Nasdaq: AMZN). Fresh after announcing it would top first-quarter projections, the leading online retailer revealed that it would begin selling nearly 2000 eBook titles that use Adobe's eBook Reader software interface. That doubles Amazon.com's electronic titles from the 2000 Microsoft (Nasdaq: MSFT) Reader compatible titles it presently sells.

Off-price retailer Factory 2-U Stores (Nasdaq: FTUS) announced that bad weather kept shoppers away, leading to a 3.4% drop in same-store sales. The stock is poised to have a little "off-price" action on its own today. Factory 2-U is now looking at a loss, reversing estimates that were calling for a $0.13-a-share profit. 

Orange you glad? Leading wireless handset maker Nokia (NYSE: NOK) became the exclusive provider of 3G (third-generation) network equipment for Orange's Swiss unit. The news sent Nokia's shares higher in Finland and the stock might not be "Finnished" yet.

I spy an earnings shortfall. Surveillance equipment specialist Sensormatic (NYSE: SRM) will miss third-quarter estimates. Profits are now likely to fall in the $0.06 to $0.07 a share range -- just a third of the analyst consensus. With that, forward estimates will self-destruct in five second opinions.

Check out yesterday's Foolish market wrap-up with just one click.

Rick Aristotle Munarriz believes that breakfast is the most important meal of the day. So eat up! His breakfast suggestion today is a honey-lemon seasoned turkey sausage link wrapped in an apple pancake and topped with caramel maple syrup. Rick's stock holdings can be viewed online, as can the Fool's disclosure policy. 

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