Daily Archives: April 4, 2008

Microsoft Could Walk Away From Yahoo!, Or Drop Offer (YHOO, MSFT)

The heat between Microsoft (NASDAQ: MSFT) wanting to acquire Yahoo! (NASDAQ: YHOO) may be cooling.  Or it may just be a negotiating tool to show Jerry Yang that he’s up the creek with no paddle if Microsoft just quits its offer.

The talk is now all over after-hours that Microsoft may be reevaluating its buyout offer for the #2 search player.  This is after the companies met earlier this week to no avail.  The report is being tied to Dow Jones Newswire although this started coming out all over that this might want to still be considered as hearsay.

Microsoft (NASDAQ: MSFT) shares are up almost 2% to $29.70 in after-hours trading and Yahoo! (NASDAQ: YHOO) shares are down nearly 5% to $27.01 in after-hours trading.

We have covered this on numerous angles before.  But the angle that Jerry Yang better be taking into consideration is what angle shareholders are going to put his head into the guillotine at if he lets the offer die.  Yang and $30 YHOO on its own is a long ways off.  Shareholders have been more than frustrated.  His head will roll over this and his "Chief Yahoo!" title will change to "Chief SNAFU." 

You can join our open email distribution list to hear about other mergers, private equity, secondaries, IPO’s and more.

Jon C. Ogg
April 4, 2008

Jon Ogg produces the Special Situation investing Newsletter; he does not own securities in the companies he covers.

Posted on: April 4, 2008 – 3:50 pm in Internet, Mergers and Buy Outs, Rumors, ,

The 52-Week Low Club (FHN)(DMAN)(MESA)(RVBD)

First Horizon Natl (FHN) Analyst cuts regional bank stocks. Down to $13.67. from 52-week high of $41.46.

Demandtec (DMAN) Issues poor outlook for the year. Sells off to $6.65 from 52-week high of $20.55.

Mesa Air Group (MESA) Airlines sell off on high fuel costs. Drops to $1.35 from 52-week high of $8.02.

Riverbed Technology (RVBD) Poor Q1 outlook. Down to $12.71 from 52-week high of $52.81.

Douglas A. McIntyre

Posted on: April 4, 2008 – 2:58 pm in HI/LOW, , , ,

Next Version Of Microsoft (MSFT) Windows–Next Year

Those PC users who hate Vista will be happy to hear that Microsoft (NASDAQ: MSFT) plans to release its new version of the Windows OS next year.

According to Reuters "The software giant has been aiming to issue more regular updates of the operating system software that powers the majority of the world’s personal computers."

The news may be welcome for Microsoft investors. Vista has been criticized for having bugs, working poorly with non-PC hardware like printers, and operating slowly on low-powered computers. Apple (AAPL) has begun to market, with some success, its own OS created for the Mac as an alternative to Vista on PCs.

Microsoft is probably losing some revenue growth and getting a series of black eyes while Vista is its lead product. The solution may be just a few quarters away.

Douglas A. McIntyre

Posted on: April 4, 2008 – 1:12 pm in Software, ,

WuXi PharmaTech Secondary Filing Pressures Stock (WX)

WuXi PharmaTech (Cayman) Inc. (NYSE: WX) has filed for a secondary offering of ADR’s in the US for 10,126,800 shares, or 11,645,820 if the overallotment option is used.  The underwriting managers are listed as Credit Suisse and JPMorgan.

WuXi PharmaTech is a Chinese outsourced medical development company for biotech, pharmaceuticals, and medical devices.  It does research and development with operations in China and in the U.S.  More specific services are as follows: laboratory services consisting of discovery chemistry, service biology, toxicology, pharmaceutical development, analytics, device testing, and other related contract R&D services.  It also provides manufacturing services that focus on advanced intermediates, active pharmaceutical ingredients, and biologics-based manufacturing, testing and related services.  The company acquired AppTec Laboratory Services, Inc., in January 2008, and had previously focused primarily on chemistry operations, providing services to more than 80 pharmaceutical and biotechnology customers.

Some shares are being sold by shareholders and some will be used for existing factory expansions and for general corporate purposes.

Facilities in China are as follows:

  • primary China-based facilities include a 630,000 square-foot R&D center in Shanghai Waigaoqiao Free Trade Zone;
  • a 220,000 square-foot process development and cGMP-quality manufacturing plant in Jinshan area of Shanghai;
  • and a 130,000 square-foot R&D center in Tianjin, which is mainly focused on discovery chemistry services.

The AppTec acquisition gave a U.S. presence and know-how in biologics, including three FDA-registered, U.S.-based facilities as follows:

  • a 63,000 square-foot R&D and manufacturing facility in St. Paul, Minnesota;
  • a 46,000 square-foot testing facility in Atlanta, Georgia;
  • and a 75,000 square-foot R&D, testing and manufacturing facility in Philadelphia, Pennsylvania.

Its net revenues and income increases follows:

  • 2005 showed $33.8 million revenues and $6.1 million net income;
  • 2006 showed $69.9 million revenues and $8.9 million net income;
  • 2007 showed $135.2 million revenues and $33.9 million net income;
  • unaudited post-AppTec acquisition results would show revenues of $205.5 million and net income $34.7 million.

WuXi Pharmaceuticals stock is trading down 5% today at $22.30 in early afternoon trading.  Its 52-week trading range is $18.27 to $45.65, and the current market cap is listed as $1.37 Billion.  As of last look on the NYSE short interest, we show the March 2008 short interest listed as just over 2.7 million shares.

To hear about other secondary offerings, IPO’s, special financings, and other special situations you can join or open email distribution list.

Jon C. Ogg
April 4, 2008

Posted on: April 4, 2008 – 12:44 pm in Biotech, Drug companies, Secondary Offering,

GM’s (GM) Plans For Delphi Fall Apart

With sales off nearly 20% in March, GM (NYSE: GM) does not need any more headaches. But, it got one today. The company’s former parts operation, Delphi, is in the process of coming out of Chapter 11. GM was to provide a portion of the financing. Today, the lead investor, Appaloosa Management, walked away.

Appaloosa said that GM’s investment in the project would give it too much influence over Delphi management.

GM may have to take on more of a financial burden to help Delphi to a new exit program.

Investors took it badly, driving down GM shares almost 4% to $20.82.

GM can’t afford many more months like this one.

Douglas A. McIntyre

Posted on: April 4, 2008 – 12:34 pm in Autos,

After Mosaic Earnings, Fertilizer Tastes Better Than Chicken (MOS, MOO)

Shares of Mosaic Co. (NYSE: MOS) are surging pre-market after beating its earnings expectations.  The company posted a record posted a record $520.8 million in net income, translating to $1.17 EPS from $2.15 Billion in revenues.  First Call had estimates at $0.95 EPS.

Mosaic also said that its phosphate selling price would jump over the next three months by up to 48% to $720 per metric ton, up from an average of $487 per metric ton this last quarter.  Its sales volume was maintained at 2.2 to 2.4 million metric tons.

These high prices are more than offsetting cost increases for its raw materials needed to make potash.  The company is benefiting from worldwide demand for for fertilizers and potash.  As the global population grows and as the rest of the world’s living standards rise, the demand for more grown food and agriculture keeps rising and rising.

Mosaic shares are up 8% at $112.90 in pre-market trading right before the open.  its 52-week trading range is $27.25 to $119.78.  The numbers were strong enough that the Market Vectors Global Agribusiness ETF (AMEX: MOO) ETF was even indicated up 3% at the same time.

Soon they’ll be opening all you can eat Chinese buffets all over the world.

Jon C. Ogg
April 4, 2008

Posted on: April 4, 2008 – 8:33 am in Agriculture, Earnings, ,

West Texas Wind Farm Funded (BP, NRG)

Fortis Merchant Banking has successfully closed syndication of a $280 million senior secured financing for Sherbino I Wind Farm LLC.  This west-Texas wind farm is a joint venture owned by BP plc’s (NYSE: BP) BP Alternative Energy North America Inc. and NRG Energy, Inc. (NYSE: NRG).  Interestingly enough, this syndication was oversubscribed with nine banks joining the deal.

Fortis Merchant Banking structured and underwrote the financing, which is comprised of a construction loan of some $280 million, which will then convert into a 15-year term loan in the amount of $140 million at the commercial operation date.

Fortis acted as the sole bookrunner, and the financing is accompanied by a long-term fixed price gas hedge provided by Fortis Energy Marketing and Trading. The hedge was designed to accommodate wind intermittency risk and provides Sherbino I Wind Farm with greater revenue stability for the term of the hedge.

According to the BP site, the Sherbino wind farm will be completed in stages, with an initial stage consisting of fifty Vestas V-90 3MW turbines.

If you have looked through various reports from 247WallSt.com in our alternative energy index or in our oil & gas index, you will see much coverage on alternative energy ranging from wind to solar to wave power to turbines to fuel cells and so on. 

It no longer matters whether or not global warming is fact or fiction on the business front.  Green energy and renewable energy are mainstream now.  Some projects were viable at $40 oil, but with $100 oil you can do the math.  Imagine if once upon a time committed itself to the mantra, "We just want to sell soft drinks, that bottled water trend isn’t something we are interested in."   

Jon C. Ogg
April 4, 2008

Jon Ogg produces the Special Situation Investing Newsletter; he does not own securities in the companies he covers.

Posted on: April 4, 2008 – 8:12 am in Alternative Energy, , ,

Cisco & Juniper Initiated By FBR (CSCO, JNPR)

Cisco Systems (NASDAQ: CSCO) was started as an Outperform rating this morning at FBR.  The assigned target price was  $31.00 per share.  This follows the UBS downgrade from yesterday morning, which helped send Cisco shares down almost 3% yesterday.

In a separate company call in networking, FBR initiated coverage on Juniper Networks (NASDAQ: JNPR).  The assigned price target was listed as $27.00 per share.

In pre-market trading, Cisco shares are indicated up marginally by 1% this morning.

Jon C. Ogg
April 4, 2008

Posted on: April 4, 2008 – 6:56 am in Analyst Calls, ,

Moody’s Downgrades Countrywide (CFC): What About BAC?

Moody’s cut the credit rating of Countrywide (CFC) to "D" for default, over worries about liquidty.

According to Reuters "The downgrade does not reflect Countrywide’s planned acquisition by Bank of America (BAC)." It does raise, once again, the issue of what BAC is getting.

"However, the downgrade of the bank financial strength rating provides insight into the severity of the Countrywide ratings transition that would likely take place if the proposed Bank of America acquisition would be terminated," Moody’s said according to the Reuters report.

Douglas A. McIntyre

Posted on: April 4, 2008 – 6:50 am in Banking, ,

Top 10 Pre-Market Analyst Calls (ATI, AIV, DELL, GPS, JTX, KSU, NDAQ, PRU, SIRI, AUY)

These are not the only analyst calls impacting stocks, but these are the top analyst calls that 247WallSt.com is focusing on this Friday in pre-market trading:

  • Allegheny Tech (NYSE: ATI) cut to Neutral from Outperform at Cowen & Co.
  • Apartment Investment (NYSE: AIV) Cut to Neutral from Outperform at Credit Suisse.
  • Dell Inc. (NASDAQ: DELL) Cut to Neutral from Buy at Goldman Sachs.
  • Gap Inc (NYSE: GPS) Cut to Neutral from Outperform at Credit Suisse.
  • Jackson Hewitt (NYSE: JTX) Raised to Buy from Neutral at Goldman Sachs.
  • Kansas City Southern (NYSE: KSU) Cut to Neutral from Buy at UBS.
  • NASDAQ OMX (NASDAQ: NDAQ) Started as Neutral at UBS.
  • Prudential Financial (NYSE: PRU) Raised to Overweight from Underweight at Lehman.
  • Sirius Satellite Radio (NASDAQ: SIRI) cut to Neutral from Outperform at Credit Suisse.
  • Yamana Gold (NYSE: AUY) raised to Buy at UBS.

Jon C. Ogg
April 4, 2008

Posted on: April 4, 2008 – 6:38 am in Analyst Calls, , , , , , , , , ,

Still Money Out There: JC Flowers And China

JC Flowers and China Investment Corp, which holds about $200 billion in assets, will start a new private equity fund, according to Bloomberg.

Eighty percent of the capital will come from China. At least someone still have money.

Douglas A. McIntyre

Posted on: April 4, 2008 – 6:33 am in Mergers and Buy Outs

Wall St.’s New Superdelegates (GS)(MS)(JPM)(C)(MER)(AIG)

A decade ago, when there were big problems in the financial markets a very small group of people came in for the fix. E. Gerald Corrigan, a man of massive girth and intellect, ran the Federal Reserve Bank of New York. Sandy Weill was at the newly formed Citigroup (C), Hank Greenberg ran the world’s most successful insurance company, AIG (AIG). And, at The New York Stock Exchange sat Dick Grasso, who had worked there for almost three decades. Grasso was so powerful that he could shut down trading with just a few phone calls. He had been through 1987 and 2001.

Grasso, Greenberg, and Weill all claim that, like Hamlet’s father, someone poured poison into their ears while they slept. The evidence of that is either lost or hidden.

In the current crisis, many of he usual suspects have no power to sit at the table when the trouble rains down. Thain, head of Merrill Lynch (MER) and former CEO of NYSE, probably wishes he had never left as co-president of Goldman Sachs (GS). Merrill has been emasculated by losses. John Mack, who has run every large investment bank in the world, now keeps bodyguards so the Morgan Stanley shareholders will not not tar and feather him. The house of Morgan has lost its teeth. At Citi, Weill’s creation, the talk of survival mixes with discussions of breaking the firm into pieces. Just yesterday, John Reed, who helped create Citi a decade ago, said the whole thing was a bad idea.

The government, now run, at least on the financial side by new men, Bernanke and Paulson, has turned to what is left of the better banks and investment houses. Paulson looks to his old home, Goldman Sachs, for aid. James Dimon at the head of JP Morgan was begot by Weill and then sacrificed when Citi was created. He as a healthy balance sheet and a score to settle.

The Buddha-like figure at the center of much of the rescue of Wall St. is Lloyd Blankfein. He has only been CEO of Goldman for a short time. During that period his traders bet that mortgage-back securities would fall apart and made billions of dollars on that bet. This happened at about the same time his sales force was marketing the ill-fated subprime derivatives to customers. Goldman also helped sink Bear Stearns by indicating that it was not confident in doing business with the troubled brokerage. Blankfein is rarely visible and may only come out at night.

For better or worse all of the most troubling aspects of the financial markets will have to be run by Bernanke, Paulson, Dimon, and Blankfein. The first two have the power of the purse-strings. The other two have the only big financial company balance sheets that the Fed and Treasury trust.

In a storm, that is not many people to row the boat.

Douglas A. McIntyre

Posted on: April 4, 2008 – 5:57 am in Economy, , , , ,

Why Did Motorola’s (MOT) Job Cuts Come So Late?

The beatings will continue until morale improves.

Motorola (MOT) cut another 2,600 jobs bringing the total since the beginning of last year to 10,000. According to The Wall Street Journal "Motorola, which is struggling to cope with a sharp plunge in cellphone sales, said it expects to take a first-quarter pretax charge of $104 million resulting from severance costs related to the latest job cuts."

The move is another example of the short-sighted MOT management. It has been clear for some time that the company will sell fewer handsets each quarter until it comes up with products which are more popular with consumers. Why was it not clear that more people had to go when the company looked at its business in mid-2007? The answer is that it was a victory of hope over reason. The senior executives at Motorola believed that business might pick up even though there was no empirical evidence to support that.

Motorola is almost certain to have more job cuts. Wall St. is guessing that the company only shipped 30 million handsets in the first quarter, In 2007, the cell phone division did $19 billion in revenue and lost over $1 billion. The sales in that operation could fall to $15 billion or less and the operating loss could double.

Motorola still has far too many people. The sooner it admits that, the better.

Douglas A. McIntyre

Posted on: April 4, 2008 – 5:27 am in Consumer Electronics,

News Corp (NWS) Finds Out Social Networks Are Bad Businesses

News Corp (NWS) is likely to miss revenue targets at its internet division, Fox Interactive. According to TechCruch, the company may be short as much as $100 million on its $1 billion forecast for the current fiscal year. The unit may only break-even.

News Corp will re-organize the operation and push out a number of the executives who handle revenue. But, that does very little for the company. What they have discovered is that social networks like their MySpace operation, have very, very limited revenue potential.

Social networks, especially the larger ones like Facebook and MySpace, have tens of millions of users and billions of pageviews. But, the visitors to the sites cannot be broken into simple categories. Which of the people who have a profile on MySpace are big investors? Which ones play golf? Who is going to buy a new car or take out a mortgage? The answer is that there is no effective system to organize social network users into discrete groups.

While companies like Yahoo! (YHOO) and Time Warner’s (TWX) AOL may be having some problems, they at least can organize their content so that marketers can put their messages in front of people who are likely to be interested in their services. Yahoo! and AOL both have financial sections with millions of visitors a month. They have classified sections for jobs and cars, and sections for sports, news, and games.

What is most telling about the News Corp numbers is that MySpace, which has an audience of well over 80 million unique visitors a month, draws will under $1 billion in revenue. Yahoo!, with 136 million monthly visitors, will bring in over $7 billion in revenue this year.

Social networks are not a good business. The internet is not likely to be a large operation at News Corp if it is built around MySpace. And, Facebook is not worth the $15 billion value which investors recently gave it in a recent round of investment.

Period.

Douglas A. McIntyre

Posted on: April 4, 2008 – 5:16 am in Internet, , ,

Chasing A Top In Nike (NKE)

Nike Inc. (NYSE: NKE) is one of the ubiquitous brands of today’s world.  As long as it keeps doing what it is doing now and as long as it keeps its endorsements strong, it’s in a great place.  Frankly, I love the brand Nike from knowing that a certain size has always fit in shoes to knowing that a certain size always works in the shirts to knowing that its quality is high and it won’t embarrass you at a country club or out on Main Street.   

An article in this week’s "Inside Wall Street" in Business Week accounted for a 1% pop in after-hours trading Thursday. Business Week still moves stocks.  But when you look at the stock price target offered up is and then compared it around to other targets from other analysts, you might wander if there is much value to the stock.

The article points to magical Goldman Sachs target that has been raised to $71 from $67 in the last 6-months.  The article talks about the close having been $67.97.  That was Wednesday’s close.  Thursday shares closed up 1.3% at $68.90 and traded up to $69.65 in after-hours trading.  If you got the after-hours print you could expect about a whopping 1.8% return before any transaction fees to Buy and Sell.  If you got Thursday’s closing price, then you’d be expecting a 2.95% gain before fees to buy and sell.  And if you got the magical Wednesday cut-off piece of $67.97, then before buy/sell fees you’d have a whopping 4.2% gain if that $71 target comes.  The average target on Wall Street is slightly over $72.00.

Frankly, a Certificate of Deposit or CD from a risky FDIC-chartered bank that needs capital is a better reward.  BankRate.com is advertising a 4.20% yield CD from Countrywide with FDIC insurance.  You are insured by the Feds and as long as the bank doesn’t implode then you get the CD interest.  If Nike heads south or has a factory problem or has any supply constraints of raw materials or supplier/contract issues, it will take fire immediately.  Add in Nike’s 1.3% dividend and we’re still talking about showing up to the batters box with the little game night kids bats they give out at pro-baseball games.

We do not like to bash other reports or other reporters or analysts out there and that isn’t the point.  But if we are all chasing this sort of expected return, then we’ll all be calling each other Commerade and we might even start believing the Labor Department has its economic numbers right and that there is no core inflation.

Nike’s market cap is now north of $34 Billion.  I’s a mature company that still grows and is a growth company outside the U.S. in emerging markets.  But it is a mature company.  When we covered this around last earnings it looked fairly priced.  Even though it has risen since, now it still just looks fairly priced with a potential topping-out phase either in place or coming up soon.

Nike gained more than 30% in 2007, roughly 16% in 2006, gave a slight negative return in 2005, and gave an above 30% return in 2004.  Unless there is a massive wave of price target upgrades, it’s safer to wait for a good pullback on a news item or outside event on this one.  A prudent speculator might even say, "Just Don’t!"

Jon C. Ogg
April 4, 2008

Jon Ogg produces the Special Situation Investing Newsletter; he does not own securities in the companies he covers.

Posted on: April 4, 2008 – 5:01 am in Apparel,

Verizon (VZ) And AT&T (T) Go After Cable And WiMax

Now that AT&T (T) and Verizon Wireless have picked up oodles of spectrum at the FCC auctions, investors want to know what all that money went for. The answer is that both companies plan to build ultra-fast wireless networks, known as 4G. That is bad for the cable companies and firms like Sprint (S) and Clearwire (CLWR) who hope to build their own over-the-air national broadband system.

The two largest cellular providers in the US, AT&T and Verizon, have a huge advantage in deploying 4G. Each has over 60 million customers. Sprint is having customer service problems which is making it hard to hang onto its 50 million. Sprint plans to roll-out a WiMax fast broadband service nationally in about two years. But, the company cannot come up with the $5 billion to get that done. Proponents of WiMax including Intel (INTC) and Motorola (MOT) have not stepped up with the funds.

The biggest loser in a 4G world may be cable companies. Large firms like Comcast (CMCSA) and Time Warner Cable (TWC) count on home broadband business for a large portion of their revenue. If a competing service becomes available over the air, switching could be very attractive for many consumers. Today, for customers to have wireless access to cable broadband they have to use WiFi which only has a range of a few hundred feet The AT&T and Verizon Wireless products would work almost everywhere near big and modest-sized cities.

The 4G system is coming. AT&T and Verizon have already made their critical investment by buying the necessary spectrum from the FCC. They have cable and WiMax in their cross-hairs and the capital to change the way fast internet is used.

Douglas A. McIntyre

Posted on: April 4, 2008 – 4:57 am in Wireless, , , , , , , ,

Northwest (NWA) Raises Fares, But Will Anyone Pay Them?

The management at Northwest (NWA) knows when it is in a pickle. Fuel prices are moving up and passenger traffic is likely slowing as the recession keeps people off airplanes. The only way to make some of that up is through higher ticket prices. But, that won’t work.

Northwest and other big carriers, most of them saddled with debt and troubled by crude hanging out at $100, have watched this week as Aloha Air and ATA have filed for bankruptcy and stopped operations.

According to The Wall Street Journal "The move is the latest by a major carrier to trim service and pile extra fees on customers as relentless growth in the cost of fuel threatens the industry’s attempt to put a half-decade slump and a round of bankruptcies behind it."

The trouble is that, in a bad economy, getting people to pay more is a losing tactic. Potential passengers who have to pay more will fly less. This even applies to the business traveler. At some point his company, faced with a tough economy, holds him off as many customer trips as possible.

While the airlines are faced with problems, they are not insurmountable. With possible bankruptcies at larger carriers looking more likely in the second half, the airlines are going to have to go to their employees for help, In Chapter 11, lay-offs are not just likely, they are a certainty. Asking workers to come in fewer hours would cut costs significantly at companies which have tens of thousands of employees. It would also allow the carriers to aggressively cut the number of routes which they fly, taking out those they are not highly profitable.

It is also time for the airline companies to go see their lenders. Better now than when the bankruptcy papers are being walked into court. Chapter 11 filings often leave banks with cents on a dollar. Extending debt over a longer period at least offers some chance of being made whole.

Renegotiation with worker’s unions and banks may be the only thing that saves airlines and it is not such a bad thing for employees and lenders, especially given the alternatives.

Douglas A. McIntyre

Posted on: April 4, 2008 – 4:40 am in Airlines,

Bad News For Vista: Microsoft (MSFT) Keeps XP

Vista, the new OS from Microsoft (MSFT) was supposed to be so good that every customer and business using Windows would want to upgrade as soon as possible. But, a number of critics of Vista say that it has bugs, does not help PCs work with other machines like printers, and runs badly on lower-powered machines.

Apple (AAPL) has also been aggressively marketing its OS beyond its usual Mac base to see if it can pick-up Microsoft customers. Since a number of software experts like the Apple product better, the approach is probably meeting with some success.

In the face of all of this Microsoft has elected to keep its old OS, Windows XP, alive. According to The Wall Street Journal this is being done to help users of low-powered machines and will keep XP on the market for another two years. That would be about the time that Redmond introduces that OS version that comes after Vista.  Consumers and business would be happy to skip a generation of Microsoft operating system software and take a look at the next product. At least keeping XP offers the chance of stopping customers from leaving altogether.

Give the people what they want, even if it hurts.

Douglas A. McIntyre

Posted on: April 4, 2008 – 4:26 am in Software, ,

Microsoft (MSFT) And Yahoo! (YHOO) Meet

Microsoft (MSFT) and Yahoo! (YHOO) management met this week to discuss a possible merger. Redmond made it clear that it would not raise its bid, according to The Wall Street Journal. Everyone left the room and that was the end of it.

It is astonishing that Microsoft does not abandon its bid, at least for now. Yahoo! has had several difficult quarters. If Microsoft walks away, the shares in the portal almost certainly drop from $28 to $19, where they traded a few weeks before the offer.

The move would force institutional owners of Yahoo! to pressure the board for a deal and would raise the specter of a number of lawsuits. Employees with Yahoo! stock options might see their gains erased. Suddenly the rank-and-file at the company might view the buy-out as a good idea.

Microsoft has almost nothing to lose by walking away. Nothing prevents it from coming back, and its current approach is getting it nowhere.

Douglas A. McIntyre

Posted on: April 4, 2008 – 4:17 am in Mergers and Buy Outs, ,

Media Digest 4/4/2008 Reuters, WSJ, NYTimes, FT, Bloomberg

According to Reuters,US non-farm pay-rolls are likely to fall by 60,000.

Reuters reports that Fed official are playingt down rate cut expectations.

Reuters writes that the ex-ceo of UBS (UBS) wants to breakup the bank.

Reuters reports that News Corp (NWS) has reorganized its internet division.

The Wall Street Journal reports that Microsoft (MSFT) and Yahoo! (YHOO) meet about Redmonds proposed buy-out but made no progress.

The Wall Street Journal writes that Motorola (MOT) will cut 2,600 more jobs.

The Wall Street Journal writes that Northwest (NWA) is raising its fare and fuel fees.

The Wall Street Journal reports that News Corp’s MySpace has begun a music store to compete with Apple (AAPL).

The Wall Street Journal writes that China’s sovereign-wealth fund pledged to increase transparency.

The Wall Street Journal writes that Microsoft will continue to sell its old OS, Windows XP.

The Wall Street Journal reports that Verizon (VZ) and AT&T (T) will use their new spectrum to create super-fast wireless broadband.

The New York Times writes that some investors are buying distressed mortgages and securities in companies that may file Chapter 11.

The FT writes that John Reed, one of the creators of the new Citigroup (C), thinks that creating it ten years ago was a mistake.

The FT writes that there has been a surge of borrowing from the Fed by primary dealers.

Bloomberg writes that the Fed has signaled more cuts due to market stresses.

Douglas A. McIntyre

Posted on: April 4, 2008 – 2:50 am in Press Digest, , , , , , , , ,