You could gauge just what kind of
a year it was going to be for mergers
and acquisitions immediately after
2005 got underway. According to
Thomson Financial, the first quarter’s M&A deals were valued at US$308.2
billion—up 17% from the value of
deals announced in Q1 2004.       But don’t expect M&A activity to
wane any time soon. There’s plenty more on the horizon following deals
like Sprint’s whopping US$35 billion
takeover of Nextel… OSI
Pharmaceuticals’ acquisition of
Eyetech… Whirlpool’s US$1.7 billion Next 4 enue created when users click on a
Yahoo listing. More companies…
more advertisers…
more revenues—
a buyout on the
horizon, too?       Speaking of revenues, iVillage is
enjoying significant success. The sec-
ond quarter saw the company boost
revenue by 28% to US$21.1 million,
compared with US$16.5 million in Q2
2004. That beat estimates of US$20.4
million. Its industry peers couldn’t
even muster up any sales growth all,
with numbers contracting 2.5%. It
came as iVillage added 150 new
advertisers to its portfolio, boasted 13
million registered users and monthly
web page views of 391 million.       And while earnings did decline by
US$326,000 compared with an
US$84,000 profit during the same
period a year earlier, that was largely
due to US$1.1 million in the cost of
acquisitions, including Healthology
Inc., HealthCentersOnline Inc. and
iVillage UK, Ltd, as the company con-
tinued to diversify and grow.       For the third quarter, iVillage proj-
ects revenue will exceed Wall Street
estimates of US$21.9 million and fin-
ish between US22 million and US$23
million. That would produce net
income between US$1.5 million and
US$1.6 million (4 cents-per-share). Full-year revenue is likely to fall between US$87 million and US$89
million, which would thrash the total
from fiscal 2003 (US$55.3 million) and
fiscal 2004 (US$66.9 million) and
result in staggering earnings growth
of 206% to around US$9-10 million.
The lower end of that scale would
produce 12 cents earnings-per-share.       For fiscal 2006, earnings growth is
projected to soar 85% and climb 25%
annually over the next five years.       With this strength in the company
and in the industry, coupled with a
current market cap around US$487
million, iVillage could be ripe for a
buyout. Potential suitors include fel-
low female-oriented media group
Lifetime Entertainment, which is a
joint venture between Disney and
Hearst. And with the US equity market looking pretty strong again
after several years of tepid growth,
you can bet that if one of the big boys
buys out iVillage, the company will
sell at a premium.       Currently trading for around
US$6.30, iVillage has solid support
between US$5.90 and US$6.05. With
all that in mind, I’m looking for the
stock to challenge and surpass the
US$7 level on good third quarter
earnings, before testing its 52-week
high of US$7.25 set back on April 26
and pushing higher. A move to that
level would put quick 15% gains in
your pocket. But I think a rise to US$8
is very achievable, which would net
you a 25% gain.       Buy iVillage (IVIL:NASDAQ) under
US$7. M & A   W E A L T H   O P P O R T U N I T Y   -   P A R T   1 A sizzling trend that refuses to cool: Where there’s
a merger, there’s money to be made by Ian L. Cooper, with Erin Beale and Christian DeHaemer iVillage (1-Year Chart) 7.5
7.0
6.5
6.0 4.0 5 Oct           Nov       Dec       05            Feb       Mar       Apr      May          Jun       Jul           Aug      Sep 0 5.5
5.0
4.5 3.5