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Submitted by Mr. Tito on Tuesday, January 1, 2008 at 3:36 PM EST 
Year-end Closing price for WWE Stock for 2007: $14.76 IMPLICATIONS: The WWE stock was surging during the first half of 2007, mostly through the Wrestlemania-bump. WWE began to show stock holders some solid cost cutting measures through the combining of the rosters for Pay Per Views, holding firm on wrestler salaries, and then generating higher revenues through 24/7, DVD sales, and through the internet. Additionally, Kane and John Cena's films generated profits to give investors the perception that the WWE was beginning to branch out into other entertainment entities. However, the second half of 2007 was quite different. Chris Benoit's suicide and unfortunate killing of his family ended the first half of 2007 on a bad note and the negative mainstream press for weeks after this sad event put a little bit of scare into investors holding the WWE stock. Subsequent weeks of HGH online list busts added fuel to this fire and the WWE stock went from consistently showing above $17 to being consistently below $16 and possibly peaked the stock for the time being. Add that to the fact that the Condemned, starring one of the WWE's biggest stars of all time in Steve Austin, completely bombed at the box office. Bad press + false hope of branching out = diminished stock. Still, excluding a revenue charge-off of the condemned, the WWE remains sound financially. They have shown strength in cutting costs while showing new means of generating revenue through the internet, DVD sales, and the 24/7 on-demand channel. The stock, for its price, generates a solid dividend ($0.24 per share) and some of the stock's downturn could be attributed to highly fluctuating stock indexes due to the housing/credit situation that has ROCKED financial institution stocks and other big investment firms. The market's uncertainty in predicting Federal Reserve policy has also fluctuated stocks. Overall, the WWE stock, priced at $14.76, could be a decent buy at this time when the WWE is heading into Wrestlemania, the highest revenue peak of the WWE's fiscal year. However, as a polite reader pointed out, the WWE is lacking their biggest merchandise mover in John Cena. Like him or not, he creates excitement for younger fans and has been shown to be a big house show draw. Without him, the WWE could be forced to get creative heading into Wrestlemania (unless he has a timetable for return soon?). But remember, the WWE is always a bad public perception hit away from being a bad stock buy. Benoit's killings plus the HGH busts were bad hits on the WWE in 2007. Provided the long history of substance abuse in the WWE and Vince McMahon's risky style of running his business, you never know when the next controversial event may occur. Because of the events of Benoit in late June and the HGH busts thereafter, the stock may have seen its peak at $18.60 and may see a price ceiling of $17 for the future until this company can prove otherwise. With the market, stocks continue to see high fluctuations due to uncertainty that could be 2008. There are fears that credit/housing concerns could cause widespread economic problems and potentially force the economy to see a recession (the last one being in 2001). The issue with housing is that during 2003-2004, interest rates were at historic lows (Federal Funds rate was at 1%!) and many were taking out adjustable rate home loans that shouldn't have. Then, when rates start to go up (Fed increased rate 17 consecutive times to tighten up the money supply to slow down unstable inflation), those with an adjustable rate are suddenly screwed and cannot afford the loan they took out in 2003-2004. Hence the high foreclosure rates and the diminished demand to buy or build houses. With credit problems, not only do you have payment issues with housing, but consumers have been spending beyond their means for years and the personal savings rate has been at historic lows (was negative in November). The threat for a recession is that housing and credit issues, along with high rates of inflation seen lately, could force consumers to spend less and thus cause the Consumer Spending part of Real GDP to decline (and it consists of 70% of GDP!). With a threat of an economic slowdown, the Federal Reserve has been cutting interest rates (Fed Funds rate was 5.25% in August and is currently 4.25% through December) in hopes of spurring economic growth and easing credit pressures to divert an economic slowdown. The market loves rate cuts (which could be keeping the down above 13,000) and time will tell whether we are heading into a recession or not. November's consumer spending was high despite the historically high levels of inflation seen that month. Enough with the economics lessen... Point being, if a recession occurs from various economic factors, the market should downturn and the WWE stock may go down with it. However, it's hard to sense how much a recession hurts the WWE, for they've had decent business during a recessionary period (see 2001 and 1990-1991). Plus, the WWE is heading into their best time for growth and people value their entertainment. A recession wouldn't change individual behavior patterns for their entertainment needs. More on the luxury side of things. A recession is not guaranteed for 2008. Some indicators suggest it, some do not. Consumer Spending has to tank in early 2008, as it has not to end 2007, for there to be a recession. The fact that the Dow stays afloat above 13,000 shows investors hedging bets that the resilient economy will weather the housing/credit storm (many predicted a recession to end 2006/begin 2007 and it did not happen!). WWE stock is worth a look... but I'd also suggest looking into banking stocks, which as one analyst I saw, suggested that they are 25% undervalued based on housing loans rocking their financials in 2007. Have a great 2008... and just chill, till the next episode! WrathofTito@Yahoo.com LoPForums.com - It's FANTASTIC! All you need is BLOG! *NEW GALLERY* New AMAZING Candid Photos of Karen Angle on BLTS! WOW!
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