Murdoch Sees $5 Billion Potential in Dow Jones Company (DJ:NYSE)

By Ann Sosnowski & Bryan Bottarelli

ReVisiting the PowerShares WilderHill Clean Energy (PBW:AMEX)

Diligent Investor
News Corp. and Murdoch received lukewarm reviews when it bought Myspace.com for $580 million in 2005. Today, it’s at the center of NWS’ $500 million Fox Interactive Media group, and is probably the most successful social networking site in the world.

Trading Tactics
When I noticed that the PBW hit a new 52-week high yesterday, I shot a quick instant message to Sara to re-visit this basket of companies that we’re both bullish on…

Wow, Dow Jones Company (DJ:NYSE) had all of us fooled. Even me. Regardless of knowing that the company was still entertaining competitive bids from other possible buyers, I thought Rupert Murdoch’s seduction was complete. But no dice.

DJ announced today that it is in talks with Ronald Burkle concerning his bid for DJ and The Wall Street Journal. If you remember, Burkle is one of the billionaire investors that bid for Tribune Company (TRB:NYSE) before the company decided that Sam Zell’s cash was worth more.

One of the highlights of Burkle’s possible bid from comes in the form of a proposed employee stock-ownership plan.

Also, without saying as much, the company is sure willing to hear from other interested bidders after Murdoch’s $5 billion bid has scared away most interested parties. After all, who would pay that much money for a company so rife with debt?

The head honcho at the Independent Association of Publishers’ Employees (IAPE), Mr. Steven Yount, says that the union representing the 2,000 Dow Jones employees has drafted proposals to a dozen potential bidders, including Rupert Murdoch, to petition for any competitive bids to counter Murdoch’s.

The New York Times announced prominently in an article on Monday that the Bancroft family and its representatives, including Leslie Hill, a member of the Board of Directors, dislike Rupert Murdoch and his News Corp. (NWS:NYSE) association for the cultural sensationalism that it represents… and they’d much rather someone with a lot less media attention and partisanship than Mr. Murdoch.

Many bids, including the partnership bid between Pearson PLC (PSO:NYSE) and General Electric (GE:NYSE) a few weeks ago, have silently expressed that the value they pin on DJ and its Wall Street Journal falls short of the value that Murdoch places on it.

But believe me, $5 billion is not much to Murdoch, whose company currently holds assets of $62 billion and annual revenues of $28 billion.

Of course, News Corp. and Murdoch received lukewarm reviews when it bought Myspace.com for $580 million in 2005. Today, it’s at the center of NWS’ $500 million Fox Interactive Media group, and is probably the most successful social networking site in the world.

Then again, Myspace was growing extensively when Murdoch paid $580 million for it. Even though it was considered a flash in the pan, another fad Internet idea (even by a few colleagues of mine), time has shown that Myspace was actually undervalued at its purchase price.

The Wall Street Journal and Dow Jones is a different story. One of many in a fledgling industry that’s being taken over by Internet savvy media companies, DJ has $508 million in debt. Its quarterly earnings year-over-year are at –63.30%.

But who better to bring the newspaper and the Bancroft family into the future than Murdoch? He has the know-how to bring the company into the light, increase advertising revenue, and increase its online presence.

It’s not the current valuation that Murdoch puts on the table to buy companies. It’s what his vision entitles him to value the company. And if Murdoch believes paying $5 billion is a good deal, he knows why it’s a good deal. Any other company or investor will most likely drive the company into the ground.

If you ask me, Murdoch is a surefire winner for this deal. I just wish the Bancrofts could see that and retire happily.

Trading Tactics
A “Quiet” New 52-Week High: Re-Visiting the PowerShares WilderHill Clean Energy (PBW:AMEX)

When I name stocks like Applied Materials (AMAT:Nasdaq), Cree (CREE:NASDAQ), and Cypress Semiconductor (CY:NYSE), you probably think that these are all names that had their glory days back in the 2000 bull market.

And when I say names like First Solar (FSLR:Nasdaq), Kyocera (KYO:NYSE), Suntech Power Holdings (STP:NYSE), and SunPower (SPWR:Nasdaq), you probably think these are companies that are developing “green energy” technologies that are years away from practical application.

You see, all of the companies listed above are part of the PowerShares WilderHill Clean Energy (PBW: AMEX). The PBW is a basket of stocks engaged in the business of the advancement of cleaner energy and conservation – and it’s an ETF that Material Profits editor Sara Nunnally and I have followed for quite some time.

When I noticed that the PBW hit a new 52-week high yesterday, I shot a quick instant message to Sara to revisit this basket of companies that we’re both bullish on – and to discuss the future movements of this powerful ETF.

I asked her, “Hey Sara! Our old favorite, the PBW, hit a new 52-week high today. Think it’ll keep moving higher?”

“Hey Bryan. Well, let me put it this way. The world’s smartest investors are literally piling into renewable energy. These investors are the top 1% -- the same venture capitalists who changed the world by getting in early on the Internet, computers and software. Today, they are using that very same know-how to transform the global market for energy. Vinod Khosla is the money man behind Google, Genentech, and Sun Microsystems. His net worth is reported at $1 billion. So far he has invested in 26 renewable energy companies. John Doerr made his first billion with early investments in companies like Netscape, Amazon, and Google. Now he’s set aside $100 million for his “greentech” technologies -- in addition to the $50 million he’s already invested in renewable energy. So in short, yes, I continue to be very bullish.”

Sara and I both agree. If you’re not yet invested in the renewable energy sector, the PowerShares WilderHill Clean Energy (PBW:AMEX) is a great way to gain exposure to this powerful sector by owning a comprehensive basket of various renewable energy companies in one easy-to-follow investment. The new 52-week high signals further upside, so I strongly consider adding this ETF to your portfolio!