The release of the X-Men movie this summer may be the first impetus convincing investors to buy into Marvel Enterprises this year, but it certainly won't be the last.

Marvel Chief Executive Peter Cuneo told individualinvestor.com Tuesday that the company will announce a 50/50 joint venture with Sony Pictures for the licensing of its live-action Spider-man movie during the first week in May.

The event, slated for May 3 in Los Angeles, will bring together all the potential licensees and drive what Cuneo expects to be ``huge (licensing) activity'' over the subsequent six months that will drive those revenues higher. ``The overall licensing on Spider-man will possibly be triple what we did for X-Men,'' he says.

Sony won't release Spiderman until late 2001, so investors will mainly focus on the live-action X-Men movie, which Twentieth Century Fox will release on July 14. The $100-million budget film, which stars Patrick Stewart, Halle Berry and Rebecca Romijn-Stamos, already has Internet chat rooms buzzing from the downloadable trailer's special effects.

But the two films are linked in that Marvel needs the licensing revenues from Spider-man this year to pick up where X-Men left off. Most of the X-Men licensing was recorded last year, and Cuneo warned during the first quarter conference call and again in our interview that Marvel's first quarter licensing revenue is ``going to be very light'' (about $1.4 million for X-Men) as a result.

Reason to worry? We think not. Management is showing that it has the vision to drive new growth into Marvel's business model, so rather than be cautious about the first quarter results, we urge investors to take a longer-term perspective by keeping in mind that this will be Marvel's break out year.

Cuneo also expects the company to announce three to four new live-action movie deals with its famed super heroes in the next month and a half. How much that could boost licensing revenues this year is uncertain.

``Licensing income is the hardest thing to predict,'' adds Cuneo, just because it's difficult to time when the big deals will go down. Some of Marvel's big licensing deals so far include trading cards from Topps Co., video games from Activision Inc., and apparel. It also has an X-Men television show due out this fall.

The X-Men action figure line and other movie-related merchandize from Marvel's core Toy Biz division also provide a major growth opportunity. Cuneo expects the X-Men line can do between $50-$75 million this year, which would more than offset the expected slowdown in World Championship Wresting products.

As if that all weren't enough, Cuneo says Marvel is looking at several distribution deals to deliver its content of characters to popular Internet portals to help build the brand. An announcement related to the Internet initiative could come within the next two to three months. Other movies already in development include The Hulk, The Fantastic Four, and Blade 2. Those, too, will have licensing strategies developed.

Bottom Line: First quarter may be a bit bumpy on revenue, but we (Individual Investor) remain bullish on Marvel shares and continue to rate them a ``Buy.''

Updated on February 24, 2000 with MVL at $5.63.Recommended on December 11 at $6.69.

Source: Craig Schneider, Invidual Investor

[Updated 3/09/2000]