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What May Pump Up Westinghouse


Inside Wall Street

WHAT MAY PUMP UP WESTINGHOUSE

Now that the Presidential elections are out of the way, investment manager Mark Boyar is gearing up for a big switch in the market. "Money will begin to flow out of areas that have become overpriced and into stocks that are undervalued," says Boyar, who heads a New York investment firm that specializes in companies with unrecognized intrinsic value. The out-of-favor stocks, he expects, "will be in, and the current hits will be out."

A stock in Boyar's "in" category: Westinghouse Electric (WX)--one of the worst-performing components of the record-breaking Dow Jones industrial average for the past two years. Although the Dow has rocketed up 20% this year, Westinghouse has edged up only 7%, to 18 a share. It's barely half of its high of 35 in 1990.

In the next few months, Boyar thinks the stock will climb to the mid-20s. In 12 to 18 months, he sees it rising to 35--solely on the company's business potential. Boyar bought into Westinghouse after it acquired CBS for $5.4 billion in November, 1995.

Westinghouse is the kind of company, he notes, that "you nurture and hold for a longer period because of its huge, still-unrecognized assets." Westinghouse, which sold off some assets earlier this year, agreed in October to acquire Infinity Broadcasting for $3.8 billion in stock in order to widen its reach in the radio business. With CBS and Infinity, notes Boyar, Westinghouse is building up a radio-and-TV empire that he believes in three to five years will become the leader in broadcasting.

Westinghouse is looking into splitting the company in two: broadcasting and industrial operations. Here's how Boyar sees events unfolding:

Westinghouse will first sell or spin off to shareholders its industrial businesses, valued at more than $4 billion. These include power generation and temperature-control equipment.

As for CBS, Group W radio, and Infinity Broadcasting--which Boyar says are worth "conservatively" $13 billion--they will become Westinghouse's core business. "Westinghouse should then command a higher market valuation."

Once Westinghouse achieves that goal, he says, the TV-and-radio network will become an "attractive takeover target--whether CEO Michael Jordan wishes it or not--for the likes of MCA," Seagram's film-and-entertainment unit. Argues Boyar: "Such valuable long-term assets make Westinghouse a priceless play over the near term."BY GENE G. MARCIALReturn to top

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