Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

Businessweek Archives

Movies On Pc Could Make This Stock Boffo


Inside Wall Street

MOVIES ON PC COULD MAKE THIS STOCK BOFFO

Want to watch a film on your computer? That day may come sooner than expected--probably by October. That's when Image Entertainment plans to roll out its optical laser product: video CD-ROMs--sometimes called CD-ROM: The Movie. Some pros have started buying into Image, a major producer of laserdisks, which is 41%-owned by financier John Kluge.

"CD-ROM: The Movie will provide affordable video products for computer applications, the market for which is potentially explosive," says Steven Christenson, director of research at Dallas Research & Trading. The rumor is that Image will soon sign contracts with studios for rights to recreate their films on CD-ROM. Already, Image makes and distributes laserdisks of movies for Walt Disney, Orion Pictures, Playboy Home Video, and Tur- ner Home Entertainment.

Presumably, Image Entertainment Chairman and CEO Marty Greenwald will get the same studios to sign up for CD-ROM videos. Talk is that The Terminator, Dances With Wolves, The Silence of the Lambs, and RoboCop will be among the first movies on CD-ROM.

Apart from Kluge, big Image stakeholders include Disney, which owns warrants to buy 6% at $6 a share, and Twentieth Century Fox, which also owns warrants to buy 6% of the stock. Japanese giants Mitsubishi Electrical Industrial and Mitsui each own stakes of less than 5%.

SOLO ROLE. Christenson thinks the stock, now at 8, up from 5 in February, "is substantially undervalued." Image, he says, is the only pure equity play in video laserdisks--larger versions of CDs, encoded with both visual and audio effects. And soon, Image will be the sole stock play in CD-ROM movies.

Image, which distributes more than 5,000 laserdisk movie titles to some 2,500 outlets in North America, will market the CD-ROMs in video stores, in music stores, and through PC makers. "CD-ROM: The Movie should have an immediate, positive contribution to Image's revenues and should account for 50% of sales in three years," says Christenson.

Without the CD-ROM product, he sees Image making 25 cents a share this year on sales of $67 million vs. 1993's loss on revenues of $60 million. In 1995, assuming CD-ROMs kick in 11 cents a share, he sees 73 cents on a volume of $89 million. He thinks that with the type of stakeholders involved, Image is a potential takeover target worth $20 a share.GENE G. MARCIAL


LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus