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By Jason Stipp | 02-23-2012 01:00 PM

Who's Making Lemonade?

How some firms are striving to make the best out of less-than-ideal circumstances.

Jason Stipp: I am Jason Stipp for Morningstar and welcome to the Friday Five.

The markets have served up plenty of lemons over the last few years, but who is making lemonade?

Morningstar markets editor Jeremy Glaser is here to give us the rundown.

Thanks for joining me, Jeremy.

Jeremy Glaser: You're welcome Jason.

Stipp: So what do you have for the Friday Five this week?

Glaser: Well, this week we're going to take a look at T-Mobile, at Greece, Darden, travel, and finally at privacy.

Stipp: So T-Mobile certainly had some bad news, ... a crate of lemons in a recent deal they tried to get done. What are they doing about it?

Glaser: Deutsche Telekom, which is the parent Company for T-Mobile, was trying to get rid of the unit. They didn't think that the U.S. wireless market had room for a smaller player. They didn't think there was going to be a lot of growth and profit there. So they tried to sell it to AT&T, and AT&T was eager to their spectrum, was eager to get those customers. But unfortunately, regulators were not as eager to let that combination go through. When the deal fell through, as part of it, T-Mobile got about a $4 billion or so termination fee as well as some spectrum from AT&T.

This week we heard from them that they are going to use that money to build out their 4G LTE network, and they are going to use it to strengthen their core services to really try to make a better go at it as a smaller player, because it seems like the regulators are not going to allow any combinations among the existing players right now.

So I think they are trying to make the best of what was a bad situation for them, trying to build up their customer relationships, trying to get those higher data speeds in order to get the higher-value postpaid customers. I think it's going to be a long road for them. These are investments that are going to take years if not decades to pay off, but it's certainly good to seem them have a long-term strategic plan instead of just sitting on this big pile of money wondering what to do.

Stipp: On the global scale, I don't know if there is a bigger lemon today than Greece. Is any one making lemonade out of that big mess over there?

Glaser: I don't know if any one is making lemonade from Greece quite yet, but I think we're starting to get out, maybe, the press to get some of the juice out of the lemon. At least the European Union is trying to make some of those first steps.

I think what we saw this week was the framework of a deal to get that second bailout done. Now there are still some things that need to happen. We need to see some more austerity measures passed by the Greek Parliament--something that, as we've seen before, can sometimes be easier said than done.

But I think that private creditors have finally agreed to take that big swap, to take that big cut on their Greek debt. I think that was absolutely crucial, to admit that you are not going to get a 100 cents on the dollar, even though the so-called "voluntary" debt default wasn't really quite that voluntary. I think one German banker described it as about as voluntary as a confession during the Spanish inquisition. But I think having that out there, saying, "OK, look, this is what's going to happen with this private debt, here's how we're going to try to get Greece back into growth"--the EU is hoping to get back to GDP growth in 2013. Even if that's a little bit optimistic, I think they are trying to put the framework in place to have these transfers keep coming into Greece in order to get the economy back on stable footing.

A lot of pitfalls could be in the road ahead. I think this is not a story that's going to suddenly go away because of the second bailout. It just buys some time. But I think the fact that they are able to get the deal done, and it didn't completely collapse, is a good sign.

Stipp: During the downturn and even amid... the recovery, we saw that consumers could be lemons for consumer companies, including restaurants. Restaurants are one of those things where consumers have to be somewhat confident before they spend money. Are we starting to see some results, though, that some restaurants are now able to make lemonade?

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