This Week's Five Smartest Stock Moves
By Rick Aristotle Munarriz,The Motley Fool
If you're feeling good about the market, you're not alone. Take my hand as we go over some of this week's more uplifting headlines.
1. Two Wrongs Can Make a Right
You know that Wall Street likes an all-stock deal when the target company soars by more than the original 56% premium -- because the buyer's stock is also off to the races.
Level 3's (LVLT) $1.9 billion deal for Global Crossing (GLBC) makes sense. It's true that both companies have been profitless, and there isn't a single analyst out there that expects either company to turn a profit on its own this year or next.
The deal won't make the combined company profitable overnight, but there are potential synergies in shaving costs and sharing Rolodexes.
2. Subtraction Through Ad Diction
Deal seekers looking to score a deal on a new Kindle will get a break next month when Amazon.com (AMZN) puts out an ad-supported Wi-Fi model for $114.
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The catch to the $25 discount is that the Kindle will incorporate ads into its screensavers. There will also be promotions offered on the bottom of the e-reader's home page -- though never on any of the books, magazines, or blogs.
The deal examples were all Amazon-specific, including half-priced gift cards, MP3 bargains, and audiobook deals. As an owner of a regular Kindle, I wouldn't mind opting in to those kind of promotions. Another neat thing about the promos is that it will get bargain hunters to spend more time on their Kindles.
Some bloggers were quick to criticize the $114 price point. Why not the more compelling $99 dive into the double digits? However, Amazon knows what it's doing. Making the ad-supported models too cheap would kill its full-priced business.
3. Until It Reaps
Sirius XM Radio (SIRI) is launching another limited-run channel tomorrow for owners of activated Sirius or XM receivers. "Metallica Presents: Big 4 Radio" will feature the heavy metal musings of Metallica, Anthrax, Slayer, and Megadeth.
It may not be your cup of bourbon, but read on. The commercial-free tribute station will have a two-week run on receivers, but it will stream for nearly four weeks through Sirius XM's website and smartphone apps. Those options will also be getting a dedicated Metallica channel for an extended run after that.
Sirius XM sells stand-alone online subscriptions or charges receiver-based subscribers $2.99 a month for access. It is creative thinking like this that enhances the value of the smartphone offerings that will help Sirius XM milk more money out of the average listener.
4. Chipotle Goes East in More Ways Than One
Chipotle Mexican Grill (CMG) has settled on a test market for its new Asian dining concept. Washington, D.C.'s Dupont Circle will be getting the first ShopHouse Southeast Asian Kitchen this summer, adapting many of the successful traits of its namesake Mexican chain to quick-service Asian dishes.
I like the fact that Chipotle's going nearly 1,700 miles away from its Denver base to make sure it gets an impartial reaction. I also like that Chipotle is cooking up a sister concept now -- while its flagship chain still has several more years of heady growth in its future -- rather than waiting for its burrito-rolling concept to mature.
5. Bing's Cherry on Top
Bing continues to gain ground on Big G. Microsoft's (MSFT) Bing powered 30% of the country's searches last month, according to Internet traffic tracker Hitwise.
Microsoft obviously wouldn't be here without the outsourcing deal it struck with Yahoo! (YHOO) , but the real surprise here is that Yahoo! isn't exactly fading away as Microsoft's search gains ground. The two sites combined for just 24% of the search market back in August.
Now all we need is for Microsoft to begin running a profitable online business. Chunky quarterly deficits in the pursuit of eyeballs is so 1999.
Microsoft is a Motley Fool Inside Value pick. Chipotle is a Motley Fool Rule Breakers and Motley Fool Hidden Gems selection. Amazon.com is a Motley Fool Stock Advisor recommendation. Yahoo! is a Motley Fool Global Gains selection. Motley Fool Options has recommended a diagonal call position on Microsoft. The Fool owns shares of Chipotle, Microsoft, and Yahoo!. Alpha Newsletter Account, LLC owns shares of Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.
Longtime Fool contributor Rick Munarriz is an optimist at every turn. He does not own shares in any of the stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.
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