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The Buzz: Best of WSJ.com's Money Blogs

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[From Deal Journal, MarketBeat and Wealth Report]

Great Scott!

A New GE Metric

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CEO's Use of Superlative

On Earnings Calls Augurs

Ups and Downs of Stock

To learn how 'great' the returns on General Electric stock will be this year, just listen to the company's conference calls.

London-based stock analysts for Morgan Stanley have been tracking GE's stock price against the number of times Chairman Jeffrey Immelt and Chief Financial Officer Keith Sherin use the word "great" or "greater" in investor calls.

They found that as the use of "greatness" rises, so does GE stock. The analysts dub their tool the "greatometer."

In the third-quarter 2002 call, Messrs. Immelt and Sherin said "great" more than 20 times. By the second quarter of 2005, the word appeared about 70 times in an hour-long call. Over that period, GE shares rose 37%, to $36.38, from $26.65.

Then, Messrs. Immelt and Sherin cut back on using "great" for a while. In the call following the third quarter of 2006, the word was uttered only 37 times. GE stock fell 10% over the period.

Following the drop came a great rebound. On Jan. 18, when GE reported its results for the fourth quarter of 2007, there were roughly 80 incidences of greatness, including the "great company," the "great quarter," the "great momentum" and the "great risk management," according to a transcript by Thomson Financial.

Shareholders were feeling great, too: GE shares traded at an average of $40.16 in the fourth quarter.

So how should investors play the greatometer in 2008? The eruption of greatness in the most recent call would seem to be a bullish sign.

"If share prices do really correlate with management optimism, then GE's one-year outlook could be looking up," says Scott Davis, Morgan Stanley's lead GE analyst, who didn't help develop the system and says he relies on his own modeling of the company. On the other hand, GE shares are down so far in '08, and that would seem to augur less "greatness" when GE reports first-quarter results in April.

A GE spokesman prefers to accentuate the positive. "That's great, great, great news for GE investors," he says of the index.

-- Kathryn Kranhold, MarketBeat

wsj.com/marketbeat

When Microsoft

Buys, It's Urgent

When Microsoft proposed its $31 a share takeover of Yahoo, the deal's rich, 61% one-day premium seemed a necessary part of the audacious bid: At a price like that, who could refuse?

Turns out that such brute force is pretty much Microsoft's valuation strategy.

Dealogic data shows that Microsoft hasn't hesitated to reach into its deep pockets for nearly every deal it has done since 2000.

The average one-day premium for tech deals since 2000 is 25%. The average premium for Microsoft's deals during the same time is 43%.

The best example is last year's acquisition of aQuantive, for which Microsoft slapped down $6 billion, or an 85% one-day premium. Microsoft was desperate to compete with Google, which at the time had just agreed to buy advertising powerhouse DoubleClick.

And Microsoft paid $240 million for a 1.6% stake in Facebook, a price Mark Mahaney of Citigroup called high. Microsoft also slapped down $1.1 billion for Norway's Fast Search and Transfer ASA -- a 42% premium.

Some of the other richly priced deals Microsoft has done include the 2001 acquisition of Great Plains Software Inc. for $1.2 billion. Microsoft first offered a 29% premium, and that inflated to 77% by the end of the process.

A Microsoft spokesman said of the Yahoo deal, "Microsoft is a disciplined acquirer, and we believe that our proposal is full and fair."

"When they find a business they are convinced is . . . critical to the evolution of the company, they make sure to understand the impact of paying those premiums," said one banker who has advised the company. Simply put, he said, Microsoft doesn't want to compete for deals.

That is fair. But if every deal is an emergency, maybe Microsoft could save itself a few dollars by buying earlier, for less.

-- Heidi Moore, Deal Journal

blogs.wsj.com/deals

Gentlemen, Start

Your Dishwashers

One of the many ill-considered side-effects of the luxury craze is crossover design. Car makers are suddenly putting their names on watches (Bentley, Ferrari). Watchmakers put their names on cars (Swatch).

What's next? The Porsche kitchen. According to Luxist, Porsche's design group (a unit of Porsche AG) has created the "man kitchen." It has a "sleek and functional design language" that "specifically addresses male customers." True to the idea of a man's kitchen, there aren't any signs of food or eating.

Here is a novel idea. How about luxury companies focus on what they do best?

-- Robert Frank, The Wealth Report

wsj.com/wealth