follow me on Twitter
« More Comments on Apple's Earnings | Main | Latest Market Comment »
October 22, 2008
CETV Analyst Meeting Convenes Amid Stock's Carnage
I am heading to NY Thursday morning to attend CETV's annual analyst meeting which convenes at noon. CETV has long been my favorite stock (since 2001) offering a combination of growth, value, and superb management. However, over the last four months the stock has been an absolute disaster. First, investors lost confidence in advertising growth rates causing multiple contraction. Second, the dollar rallied leading to estimate issues in US dollars. Third, Russia invaded Georgia. Fourth, emerging markets stocks succumbed to the credit crisis. Fifth, and most worrisome, this week, emerging markets economies and currencies began/accelerated a downward spiral.
I have missed the sentiment shift and the risk of deteriorating fundamentals. I also did not anticipate how easily the credit crisis would spill over to emerging markets currencies and economies. I thought that emerging markets economies, which undeniably were in good shape, and not overleveraged would be able to hold up reasonably well. Yesterday, the market voted no. Now we will see if the reality gets as bad as the markets are assuming.
Against this backdrop, CETV will put up a brave front and strong defense....
....Local currency advertising growth has held up so far but visibility is clearly dropping by the day. Weak currencies will pressure results but some savings will accrue on the expense and capital spending side. The company is in a strong financial position. The great record of day-to-day execution by management means that the company will continue to invest and build its enviable position as the dominant TV company in Central and Eastern Europe.
There is really not much the company can do except keep its nose to the grindstone and weather the storm. This is still a dynamic growth business. P&G, Coca Cola, and Phillip Morris have all noted strength in emerging market when reporting on current business trends. These are the types of companies that buy the bulk of the advertising CETV's stations sell.
A massive long-term disconnect exists between the current stock price and the prospects for local currency advertising growth in the company's markets. This will be the message of the analyst meeting and the upcoming 3Q08 conference call. But until visibility for stability emerges the stock will be a tough go. CETV remains my favorite media stock. I know said that every $5-10 down since $100.
While in NY, I'll also be appearing at TheStreet.com's 2009 Money Making Strategies Investment Conference on Saturday.
Posted by Steve Birenberg at October 22, 2008 03:38 PM in CETV
1 CETV HAD A VERY IMPRESSIVE MEETING YESTERDAY AND SURELY APPEARS TO BE WELL SITUATED TO WEATHER THIS PERFECT STORM LONG TERM .CETV APPEARED TO HAVE A GREAT TEAM,A VERY GOOD MODEL, SIGNIFICANT FLEXIBILITY ND A REASONABLE BALANCE SHEET.
2HOWEVER,THE FUTURES POINT TO A ANOTHER CRASH THIS MORNING.FUNDAMENTALS DO NOT SEEM TO MATTER IN THIS MARKET AT ALL.THE BEST COMPANIES SEEM TO BE HIT HARDER THAN MOST. AT THIS LATE DATE,IS THERE ANY WAY TO MITIGATE THE CARNAGE THROUGH SELLING/BUYING SHORTS/BUYING OPTIONS ETC.CERTAINLY,THIS IS A ONCE IN A LIFETIME CRISIS
THAT IS WIPING OUT TREMENDOUS VALUE IN THE MARKETS.MY GREATEST CONCERN IS THAT IN 1929 STOCKS HAD MULTIPLE LEGS DOWN DESPITE STRONG INTERMITTANT RALLIES. EVENTUALLY,MOST STOCKS LOST BETWEEM 85 TO 95% IN VALUE. WITH AN ACTIVE FED AND TREASURY DEPARTMENT,DO YOU THINK THERE IS ANY CHANCE OF THIS SCENARIO REPEATING THIS TIME?
I continue to think that a depression scenario will occur but the situation seems to deteriorate on a daily basis. The risk grows that the markets for stocks, bond,s and currencies exacerbates the economic problems leading to the doomsday scenario. I am not sure what breaks the downward spiral but of we can break the spiral then many stocks including CETV are massively undervalued. I still think it is to late to sell and options are too expensive insurance unless you worry about the Dow going to 5000-6000. I am beginning to suspect that we will just lose downward momentum on low volume as opposed to the capitulation that everyone is looking for. Keep an eye on currencies early this week as weakening in the dollar will be bullish for stocks.
Posted by: Steve at October 26, 2008 10:18 AM