Our single biggest complaint is one that no one else seems to focus on: ZERO BARRIERS TO ENRTY for any company which wants to compete.  Groupon did not invent social media.  It did not invent coupons.  It also did not invent email.  At the end of the day, the only unique thing we can find about the Groupon business model is the amount of cash it burns generating new daily deals for its customer base. A site called Restaurant.com had already been doing this exact same service for quite some time before Groupon got off the ground. 

Google Inc. (NASDAQ: GOOG) tried to acquire Groupon for $6 billion or $7 billion or something that would have really punished the company according to analysts, but Groupon walked away wanting far more capital.

The original filing was for up to $750 million, but that appears to now be a bit lower.

We are concerned about the company only just recently changing its revenue recognition model.  There is something called ”ex-TAC revenues” for search engines and that is to eliminate traffic acquisition costs from the revenue because otherwise the gross revenues look far higher and real underlying profit margins go right out the door.

We can sit here and join in on the Groupon IPO all day, but there is really nothing left to say.  Whether Groupon comes out at $10 billion, $12 billion, or more… We just can’t get there mentally to give this one a “thumbs up” for IPO investors and for post-IPO investors. 

We have also noted that Daily Deals Ads are now headed to advertise on blogs.
IPO bubbles are being formed according to industry analysts.  As far as competition goes, we have noted over and over how easy it is to compete.  Local.com Inc. (NASDAQ: LOCM) already went after Groupon for very little money. Also, here is a whole wave of public companies which can compete on the cheap with Groupon.

Here are just some of the media summaries in the last 24 hours:

• The New York Times: Groupon May Value Itself in I.P.O. at Close to $12 Billion… preparing for an investor road show for its planned initial public offering, with a valuation sharply below initial expectations.
• Wall Street Journal: Groupon Scales Back IPO.. scaling back plans due to market volatility… now expected to seek a valuation of less $12.5 billion, down from roughly $20 billion.
• @herbgreenberg on Twitter: our pal and all things $GRPN @rakeshlobster a says that “even at 12b Groupon” will still be overvalued.

The best quote out there by far is being attributed to an analyst named Brian Blair: “This is actually a Groupon on the Groupon IPO. You get it at half price.”

JON C. OGG

The news out this morning from Local.com is that the online business listing and directory service company is acquiring Screamin’ Media Group, a company which operates Screamin’ Daily Deals online.  The target is based in San Juan Capistrano, California and was founded in early 2010.  What is interesting is that it claims hundreds of thousands of subscribers and it offers deals from thousands of local merchants in 14 markets throughout the U.S.

Some of the markets that Screamin’ Daily services are Los Angeles, Orange County, Salt Lake City and San Diego; and the company also recently launched travel deals for its subscribers.  The company’s unaudited revenues in 2010 were listed as being roughly $2.4 million, yet the first half of 2011 has seen some $4.4 million in revenues.

What Local.com expects is to leverage its reach of over 20 million consumers each month through its flagship property plus a distribution network of over 1,400 regional media sites.  If it can pull this off, Local.com can become a force.  We have continually had this company as one emerging web property to watch because it fits right in that sweet spot of targeting the local search for businesses.  With the number of companies wanting to target local deals, local traffic, local search, and everything else local, it is Local.com which may be able to bridge that gap.  Today’s deal is only one growth opportunity that the company can undertake around the United States.

The acquisition is valued at $12.5 million in cash, stock and debt, but Screamin’ Media Group can receive up to an additional $20 million “if certain financial performance criteria are met during the two-year period following the closing.”

Local.com shares are currently up about 12% at $4.25 and the 52-week trading range is $3.17 to $7.55.  Before the effects of today, the market capitalization is listed as $90.6 million and its 2010 revenues were $84.1 million.

As far as another company which can likely accomplish some of the same… a $59 million valued company called SuperMedia Inc. (NASDAQ: SPMD), which prints Yellow Pages and which has SuperPages.com.

JON C. OGG

One warning we have made is that everyone may be competition ahead. Just a few are Google Inc. (NASDAQ: GOOG), Amazon.com Inc. (NASDAQ: AMZN), Travelzoo Inc. (NASDAQ: TZOO), ReachLocal, Inc. (NASDAQ: RLOC), Local.com (NASDAQ: LOCM), and more.  The social couponing website said that it now has over 7,000 employees offering more than 1,000 daily deals, and it offers those to more than 83 million subscribers in 43 countries.  More statistics are as follows:

• Revenue rose from $3.3 million in the second quarter of 2009 to $644.7 million in the first quarter of 2011; 2010 revenue was over $713 million.
• Gross profit in 2010 was $279.9 million versus $270 million for the first quarter of 2011; the net income appropriate for common holders was a loss of -$456 million in 2010 and -$146.5 million for the first quarter of 2011.
• It expanded from five North American markets as of June 30, 2009 to 175 North American markets and 43 countries as of March 31, 2011.
• It increased its subscriber base from 152,203 as of June 30, 2009 to 83.1 million as of March 31, 2011 and the number of merchants featured in its marketplace from 212 in the second quarter of 2009 to 56,781 in the first quarter of 2011.
• Groupon sold 116,231 Groupons in the second quarter of 2009 compared to 28.1 million Groupons in the first quarter of 2011.  The company also noted that has sold over 70 million “Groupons” since its inception in just 30 months.
• Employees grew from 37 as of June 30, 2009 to 7,107 employees as of March 31, 2011.

The only underwriters so far as listed as Morgan Stanley, Goldman Sachs, and Credit Suisse.  As of March 31, 2011, Groupon had some $208.68 million in cash and cash equivalents.  The latest valuation we have seen is somewhere in the $20 billion range.  Whether or not you trust that value is something we will let you decide upon for yourself.

There are a few things that investors need to know here.  There is a CEO letter attached from Anrew Mason that notes, “Our customers and merchants are all we care about…..” and then it also notes, “We don’t measure ourselves in conventional ways.”  Whoops, that may not work for investors and valuation.

The letter goes on to note… “There are three main financial metrics that we track closely. First, we track gross profit, which we believe is the best proxy for the value we’re creating. Second, we measure free cash flow—there is no better metric for long-term financial stability. Finally, we use a third metric to measure our financial performance—Adjusted Consolidated Segment Operating Income, or Adjusted CSOI. This metric is our consolidated segment operating income before our new subscriber acquisition costs and certain non-cash charges; we think of it as our operating profitability before marketing costs incurred for long-term growth.”

Experian Hitwaise also just sent us over some key statistics….

• Groupon.com was the 64th most visited site in the US (out of 1mm+) for the week ending May 28th.
• It captured 14 million+ total US visits for the week ending May 28th.
• The market share of US visits was up 564% comparing last week versus the same week in 2010.
• Groupon captured 76% of visits among a category of 81 Group Buying sites for the week ending May 28th.
• Searches for “groupon” in the US have increased 462% comparing last week vs. same week in 2010.

Also noted by Experian Hitwise was the following: Regarding the Expedia.com deal – Group Buying sites sent 5% of visits to Travel sites last week. That represents a 16% increase in referral traffic from Group Buying sites to Travel sites comparing last week vs. same week in 2010.

The full S-1 IPO filing is here.

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JON C. OGG

YRC Worldwide, Inc. (NASDAQ: YRCW) is living up to a death sentence and Baidu Inc. (NASDAQ: BIDU) is showing how fast the Chindia growth trade can die. Lastly, we are seeing these death trades in Groupon-like shares of Local.com Corporation (NASDAQ: LOCM), Rediff.com India Limited (NASDAQ: REDF), and in Sify Technologies Limited (NASDAQ: SIFY).

SIRUS XM Radio Inc. (NASDAQ: SIRI) is now up 8% at $2.075 today and shares hit a new 52-week high of $2.09.  We have even seen about 175 million shares trade with more than two and a half hours until the close.  We noted some slowing growth headwinds, but Gabelli maintaining its BUY stance may be the culprit for today’s rally.  We had been very bullish after this one was battered into a penny stock and then we remained bullish as the fundamentals got better and better.  Our view changed, however, as the stock approached $2.00 and frankly, today’s move seems baffling.  We have said a new breed of shareholders would be needed to run this higher, and it seems that is what is happening despite caution from us and others about its  value.

The ‘rare-earths’ is another sector we have been watching in bubble-land.  That call was holding true as the stocks started petering out in mid-March.  As we cautioned, no one knows how much bubbles can inflate… Now we have Molycorp, Inc. (NYSE: MCP) up yet another 8.4% at $77.59.  We heard that Dahlman Rose gave a BUY rating with a $125 target.  Rare Element Resources Ltd. (AMEX: REE) is up 1.2% at $14.02 and Avalon Rare Metals Inc. (AMEX: AVL) is up 2.8% at $9.08, and both of these rare-earth outfits were started with BUY ratings at Dahlman Rose.  Be advised, some extra volatility may be coming Wednesday as CNBC is going to highlight the best companies in the rare-earth sector.

Level 3 Communications, Inc. (NASDAQ: LVLT) is one that seems like a sleeper considering that its revenue rose and that its loss was narrower than expected.   This has a whole new host of shareholders to accommodate now that it is acquiring Global Crossing Ltd. (NASDAQ: GLBC).  Level 3 shares were at $1.44 before the deal was announced, then they jumped to $1.70.  The high print was $1.84 and the high close since has been $1.73.  Shares today are up about 1.2% at $1.66 and volume is 27 million shares.

The Devil’s Metal is living up to its name… iShares Silver Trust (NYSE: SLV) was not supposed to be a cult stock but the speculative trading volume has been so massive in this ETF that it has become the biggest trading vehicle on Wall Street.  The Silver ETF is down by another 4.6% at $40.86 after the margin requirements have been changed.  This was above $48 just late last week.  To show how shocking the move has been, the ProShares UltraShort Silver (NYSE: ZSL) is up 9.2% at $17.38 versus $13.64 just on Friday.

YRC Worldwide, Inc. (NASDAQ: YRCW) continues to be the re-implosion, all over again.  This is on continued news that the restructuring is only going to leave common holders with about 2.5% of the company after the company restructures with creditors, the Teamsters, and debtholders this summer.  But wait, there’s more… YRC also noted further dilution is possible.  Shares are down over 13% at $1.31 and the trading pattern went as follows: $2.06 on Thursday, $1.98 on Friday, and then $1.51 on Monday… to the $1.31 today.

Baidu, Inc. (NASDAQ: BIDU) is taking it on the chin from “The Chindia Slowdown” trade. This ADR is down almost 5% at $140.26 after having just hit a high of $156.04 on last Thursday.  There are two “Groupon Alternatives getting whacked today.  Local.com Corporation (NASDAQ: LOCM) is down 16% at $3.74 on more than 2.7 million shares (about 4-times normal volume) after earnings were treated as a disappointment.  Rediff.com India Limited (NASDAQ: REDF) is another one touted as the ‘Groupon of India.’ It is getting crushed after Sify Technologies Limited (NASDAQ: SIFY) earnings have SIFY shares down 14% at $5.82.  Rediff shares are down 10% at $12.79 on about 2.2 million shares. Rediff was almost challenging $18 just a week ago.

JON C. OGG

First and foremost, Google Inc. (NASDAQ: GOOG) tried to acquire the company but the $6 billion or so offer was said to undervalue the company and no deal was reached.  With recent values being put in the $20 to $25 billion, we just do not expect Google to stay hidden.

Travelzoo Inc. (NASDAQ: TZOO) may have been pounded this week as the stock went from over $100 to under $85.00 this week alone.  What has helped to drive shares before that was the growth of its LocalDeals unit. This was a $66.00 stock at the end of March.

The Knot, Inc. (NASDAQ: KNOT) may have been given a small William boost (or is it really a Kate Middleton boost?), but it has also been migrating for some time to more local deals.

Amazon.com Inc. (NASDAQ: AMZN) did a coupon offer of its own through LivingSocial, which it reportedly invested $175 million in December.  As large as Amazon is, there is no way in hell that Groupon was going to be allowed to not run into the beast of online retail.

Facebook has also jumped on the bandwagon here with deals in a limited city launch of local discounts through prepaid vouchers.  How this ultimately plays out is something we are not certain yet, but one thing is for sure… Those Facebook loyalists would let Mark Zuckerberg put a Facebook logo on their front doors if he’d think about offering it.  OpenTable, Inc. (NASDAQ: OPEN) is up over $110.00 again ahead of next week’s earnings and it has a deal with Facebook. 

ReachLocal, Inc. (NASDAQ: RLOC), a fairly recent IPO, saw its shares surge 30% at one point this week after earnings and after it reported a partnership with Google.  Google may have wanted it more for its four key international market presence, but it will be a partner in the search engine’s AdWords system.

Rediff.com India Ltd. (NASDAQ: REDF) has magically resurfaced after having been mostly forgotten by most investors.  The India website has seen its stock effectively triple in just the last 45 days.  The company’s announcement on April 26 that it was launching a “group deals service” in 40 Indian cities called “Rediff Deal Ho Jaye!” has driven shares further.  Last Friday this was a $11.25 stock, but now shares are up around $16.25 and its market cap is about $455 million.

Local.com (NASDAQ: LOCM) was given some attention in December when the Groupon deal was running shares.  It has since had an earnings warning and the shares are still under $5.00 now after having risen to over $6.00 in December.  Another winner at the time was SuperMedia Inc. (NASDAQ: SPMD), which has SuperYellowPages, had doubled at one point in the last weeks of 2010 to over $9.00 but its shares are back down close to $5.00 again.  Both of these were featured by many as “alternatives” that could grow in this space.

Even Wal-Mart Stores Inc. (NASDAQ: WMT) has gotten into the game when it acquired Kosmix for social and mobile commerce initiatives. 

Before you think that Groupon is dead, it isn’t.  It still has loyalists and it is still going to grow whether we have some caution or not.  That doesn’t mean that its valuation will not come under fire.  It also does not mean that Groupon is automatically assured a successful life indefinitely. 

There is literally no barrier to entry for any company with enough reach to compete with Groupon.  Can Groupon claim that it invented coupons? Can it claim that it is the only social networking play out there?  Can Groupon even claim that it invented online coupons?  The answer is no.

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JON C. OGG

Adobe Systems Inc. (NASDAQ: ADBE) Raised to Buy with $35.50 target at BofA/ML.
Advanced Micro Devices, Inc. (NYSE: AMD) Raised to Buy at Nomura; Reiterated Buy at Gleacher with $12 target.
American Capital, Ltd. (NASDAQ: ACAS) Started as Overweight at JPMorgan.
Barclays PLC (NYSE: BCS) Raised to Buy at UBS.
Capstone Turbine Corp. (NASDAQ: CPST) Started as Buy at Merriman.
Dendreon Corporation (NASDAQ: DNDN) Reiterated Buy with $44 target at BofA/ML.
ExxonMobil Corporation (NYSE: XOM) Cut to Equal-Weight at Barclays.
Freeport-McMoRan Copper & Gold, Inc. (NYSE: FCX) Raised to Buy at Stifel.
General Electric Co. (NYSE: GE) Raised to Buy with $23 target at UBS.
Intel Corporation (NASDAQ: INTC) Reiterated Buy with $26 target at Argus; Reiterated Buy and raised target to $27 at Gleacher.
Local.com Corporation (NASDAQ: LOCM) Cut to Neutral at Merriman.
Melco Crown Entertainment Ltd. (NASDAQ: MPEL) Raised to Market Perform at Wells Fargo.
Symantec Corporation (NASDAQ: SYMC) Cut to Underperform at BofA/ML.
Target Corporation (NYSE: TGT) Raised to Buy at Goldman Sachs.
Vodafone Group PLC (NYSE: VOD) Raised to Outperform at Credit Suisse.
Wal-Mart Stores Inc. (NYSE: WMT) Cut to Neutral at Goldman Sachs.

You can join our free daily email distribution list to hear more about analyst upgrades and downgrades, top day trader and active trader alerts, dividend trends, news on Buffett and other investment gurus, IPOs, secondary offerings, private equity, and more.

JON C. OGG

Alcoa Inc. (NYSE: AA) has seen its shares climb back out of a deep hole, returning to the high end of their 52-week range of $9.81-$17.60. The company announced last week that it was restarting production at three of its smelters, creating about 260 new jobs. The company expects to boost production by 137,000 metric tons in 2011.

Alcoa’s outlook for 2011 is positive as well, as aluminum on the London Metal Exchange, LME, reached a two-and-a-half-year high on January 4th of $2,485/metric ton. Prices are expected to climb higher as automakers look to increase fuel economy. Reducing a car’s weight will require more aluminum and less steel, and that’s good for the aluminum industry.

The coal mining business, though, is taking a hit from the flooding in Queensland, Australia. Peabody Energy (NYSE: BTU) has said that it expects 2010 EBITDA to be near the middle of its forecast range of $1.7-$1.9 billion. The previous estimate was $1.9 billion. The rains will eventually stop and the mines will re-open. The question remains how long will that take, and will the price for coal continue to rise once the mines re-open. At least one estimate for metallurgical coal has the price rising in the second quarter of 2011 to $250/metric ton, about 20% higher than today’s price. That should be good news for coal miners everywhere, not just in Australia.

Fashion house Liz Claiborne Inc. (NYSE: LIZ) lowered its outlook for the second half of 2010 and the fourth quarter, from an $80 million operating profit to a range of flat to a -$10 million loss. The company blames the weather and very competitive pricing. The weather will change, of course, but the competitive pricing will remain a factor for the apparel business.

Local.com Corp. (NASDAQ: LOCM) reported that it posted an EPS loss of -$0.04 on revenue of $19.9 million, far short of its guidance for revenue of $22-$23 million and EPS of $0.20-$0.21. The company attributed the loss to a reduction in advertising revenue from Yahoo Inc. (NASDAQ: YHOO). Competition for local advertising will heat up even more in 2011, as start-ups like Groupon, Foursquare, and others, like Amazon.com (NASDAQ: AMZN) and Ebay Inc. (NASDAQ: EBAY) compete even harder for local businesses’ advertising dollars.

SuperMedia Inc. (NASDAQ: SPMD) reported earnings yesterday and owns the online SuperPages.com website, a business listings site featuring the types of targeted ads that Google would want for itself.  SuperPages uses the Bing map service from Microsoft Corporation (NASDAQ: MSFT).

Local.com Corp. (NASDAQ: LOCM) is another target company of Google’s  new local search initiative.  This is a company that we and some others had thought could end up being acquired, but Google is taking the ‘grow your own’ approach here.  Local.com shares closed down 2.5% at $4.32 and volume was light today.  This company also has a micro-cap market capitalization.  Local.com also has a link to phone numbers, address, the  website, a brief description and a Bing map from Microsoft Corporation (NASDAQ: MSFT).

A larger competitor is AT&T Inc. (NYSE: T), via its YellowPages.com.  You knew that had to be there somewhere.  This is almost a microcosm of AT&T, so there is effectively no impact here on AT&T on a financial basis.  The YP.com site offers the same data of phone, address, a place for reviews, and a Navteq “Bing” map from Microsoft Corporation (NASDAQ: MSFT).

Yahoo! Inc. (NASDAQ: YHOO) is another target in the same.  While AOL Inc. (NYSE: AOL) may seem like a target here as well, AOL uses the Google search and the AOL SEARCH pages say “enhanced by Google” under the logo and by the search box.

Alexa has the following traffic rankings in the United States for these companies:

• SuperPages.com #285
• Local.com #306
• YellowPages.com #189
• CitySearch.com #338

To keep all of our searches relevant and identical for comparison, the search was based upon Domino’s in zip code 77008.

Google’s Place search will include a photo, and review or a rating from sites like CitySearch or Yelp.  Frankly, after the Google phone initiative this is almost no surprise.  Ditto after the Google street view; double-ditto after Google Earth and Google Maps and Google’s navigation.  All of these other local search businesses already have Google as a competitor because so many searches are conducted right directly into Google’s general search functions.

If you have caught on by now, all search is the target when it comes to Google.  Maybe this is a relatively new initiative .  The reality is this is just a refined initiative that it has already been involved in.

JON C. OGG

Arris Group Inc. (NASDAQ: ARRS) still has a $1 billion market cap, but this name has been brutally punished over the last month from $12.00 to under $8.50 this morning.  The $8.41 low of the trading day barely broke under the 52-week low as the range had been $8.42 to $13.75.  Avondale cut its rating on Friday a few weeks after it missed earnings and guided lower for quarter ahead.  As it makes equipment for the broadband communications sector, investors have other companies with more solid predictability to choose from.

Art Technology Group, Inc. (NASDAQ: ARTG) has nothing to do with art but does offer a range of e-commerce software solutions and it is now very close to being worth under $500 million in market cap.  If that occurs, some holders may have to liquidate shares or lighten up on shares and some others may no longer be able to keep the company in their investable universe.  With shares hitting $3.18, that touches the same 52-week low as the range is $3.18 to $4.88.

ATMI Inc. (NASDAQ: ATMI) is in the high-performance materials business to developers in chips, flat-panel makers, and life science sectors.  Despite having beat earnings a month ago, the low of $12.77 today went under the prior 52-week trading range was $12.88 to $22.05.  Despite estimates having been trimmed, growth is still currently projected for 2010 and 2011.

Computer Sciences Corporation (NYSE: CSC) was in a broader 52-week grouping on Friday, so this IT and business processing outsourcing giant is a repeat offender on the 52-week low list.  Friday wasn’t its first 52-week low in a while either.

FormFactor, Inc. (NASDAQ: FORM) is into semiconductor wafer probe card products and its $422 million market cap is not insulating it from the recent slowing of the chip and PC cycle.  The $8.34 trading range this morning broke under the prior 52-week range of $8.45 to $26.08.  This one loses money now and is expected to keep losing money from operations.

Harris & Harris Group, Inc. (NASDAQ: TINY) is one without any fresh news, but as things are becoming more cautious in general investors are not really wanting to endorse a venture capital or incubation company involved in nanotechnology and smaller technology despite the upside potentiality that could exist down the road.  With a low of $3.73 today, its prior 52-week range was $3.80 to $6.75.  The company recently gave a net asset value for itself of $4.51, so this is now at a 17% discount to its NAV if you care about such metrics.  It is also now under the 4.25 million shares secondary offering of late 2009 at $4.75 per share.  Unfortunately, it was also unsure on the IPO market and said it did not need as large of a Silicon Valley presence earlier this year.

Hewlett-Packard Company (NYSE: HPQ) hit $38.61 and is a repeat offender on the 52-week low list after breaking under the old range of $39.33 to $54.75.  Its $91 billion market cap should have the even higher priced 3PAR deal over Dell be nothing more than a line-item.  Unfortunately, investors are still treating the Mark Hurd fiasco as an excuse to keep selling at a time when many of the general spending trends are weakening.

Local.Com Corporation (NASDAQ: LOCM) is generally too small to note, however it is one of the companies that if it ever gets cheap enough is one we think could be acquired.  It is also more of an internet play than a pure technology play.  With more of the larger players focusing on more and more local search, Local.com finds itself in an attractive position even if ad rates may not be what they were before.  Its low of $3.56 this morning went under the old 52-week trading range of $3.61 to $8.85.

Plexus Corp. (NASDAQ: PLXS) is a contract manufacturer for OEMs and other technology companies.  The company recently lost a little over a week of production from a fire at a Romanian facility this month.  The drop to $30.00 this morning has seen some recovery but the shares are still well under the $23.80 to $39.66 prior range.

Power Integrations, Inc. (NASDAQ: POWI) makes high-voltage and analog integrated circuits for energy-efficient power conversion.  Even if the economy slows further, with an $820 million market cap it always could fall into that category of companies still attractive to a larger buyer.  Growth is still expected here in 2010 and 2011 in both revenues and earnings, and it is now close to an at-market multiple of earnings.  The low of $29.36 took out the lows of its prior range of $29.79 to $46.30 over the last year.

Premiere Global Services, Inc. (NYSE: PGI) is another surprise to see hitting 52-week lows.  The communications player is still often classified wrongly by many investors despite its changes in recent years and we still continue to think of it as an attractive roll-up candidate in the ongoing consolidation phase of tech and communications.  Shares have recovered off the low of $5.33 today, but that took out the old 52-week range of $5.35 to $10.64.

There are just about always new stocks hitting 52-week lows despite what the broad tape indicates on any given day.  When you see many names in related sectors hitting 52-week lows, it becomes impossible to not recognize a trend.  Many of these companies are reaching levels that the valuation is becoming very attractive.  Unfortunately, technology buyers generally like to buy growth over attractive valuations.  There is also that ongoing belief that companies hitting 52-week lows are doomed to keep hitting 52-week lows.

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JON C. OGG

Cablevision Systems Corporation (NYSE: CVC) is worth 20% more on its own after the spin-off of Madison Square Gardens in a report, according to Barron’s this weekend.  Based on the way the market was at the close of the week, we’d give this a 3% premium open on a static basis on Friday, and over 4% if the markets are indicated higher.  The article listed a consolidated value of close to $28.00, and remember… even though the premium could not be justified today or in any real world dollars now, this was on old $36 Dolan buyout attempt that got blocked.

CIT Group, Inc. (NYSE: CIT) is up against the ropes and the situation could come to a head this week as most feel it near implosion and as creditors are already making even more fresh moves against CIT.  It traded above Thursday’s lows all of Friday despite the weekend fears.  We would note that a search of options trading showed that the OCT-2009 $1.00 PUTS were the most active with more than 72,000 contracts trading hands.  This continues to be a top day trader alert stock and we feel that a definitive outcome of its future is going to become a demand here sooner than later.  This could be the crucial week for CIT’s future as a stock under the “CIT” ticker.

Local.com Corp. (NASDAQ: LOCM) just went on the radar last week for takeovers in Internet-Land.  The problem is that a press release claiming that Microsoft was buying it was a hoax.  But… we listed this one in recent months as one Internet engine that is growing and focuses in that ‘go-local’ space where so many larger engines have just failed to get entrenched.  The company has an interesting advertising platform based around this as well, and the company would be a solid bolt-on deal with only an $83 million market cap after last week’s 20%+ gain.

Radvision Ltd. (NASDAQ: RVSN) lost roughly one-third of its value last week.  Cisco is its top customer with roughly 40% of its attributed revenues, and Cisco’s acquisition of Tandberg could effectively leave Radvision sniffing glue. We saw at least four firms downgrade the stock last week: Cantor Fitzgerald, RBC Capital Markets, Morgan Keegan, and Oscar Gruss. The Israel-based firm said last week: “RADVISION is in the process of assessing the effect of this proposed transaction on its business over the short and long term and any opportunities it may create.”  In short, it is scrambling as Cisco is its largest customer and RADVISION’s IP is in a range of Cisco’s videoconferencing solutions.  This week will be key to see how traders treat this considering that it closed under its open on both Thursday and Friday but still closed Friday above the intra-day lows of both Thursday and Friday.

The Mosaic Company (NYSE: MOS) is actually set to report earnings on Monday after the closing bell.  Estimates from First Call are $0.35 EPS on $1.54 billion.  The bar is set very low here.  Only three months ago, this one was expected to earn close to $1.00 EPS and only 2 months ago it was expected to post almost $0.50 EPS.  Top fertilizer and agriculture players keep lowering guidance, and over 100% from the late-2008 lows it is still one-third of its price during the Summer-2008 peak agriculture days.

Wells Fargo & Company (NYSE: WFC), Warren Buffett’s biggest bank bet, appears to have pre-earnings season PUT OPTION buying heading into the stock.  On Friday alone in the October-2009 PUTS, there were 89,835 contracts traded of the $24 PUTS versus an open interest of 125,676 contracts and there were 115,055 contracts traded of the $27 PUTS versus an open interest of 102,018 contracts.  The stock has been peaking at the $28+ level, so we would attribute this to downside protection rather than anything sinister.

Yum! Brands, Inc. (NYSE: YUM) is expected to post $0.58 EPS on $2.8 billion in revenues on Tuesday according to Thomson Reuters estimates.  Estimates have come down over the last quarter and its stock has not participated in the rally despite a dividend boost and share repurchase authorization.  As the recession is ending or getting less and less bad, the interest in the fast food sector and casual dining just has not been there in the last quarter.  That being said, we’ll consider using Yum! as a proxy stock to see how traders and investors treat it for the pre-reporting analysis of the sector rather than make any bold decision ahead of time.

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JON C. OGG
October 4, 2009