The plans for the Sears service, called Alphaline Entertainment, first came up about six months ago.  The aim is to allow the Sears and K-Mart customers to download movies on the same day as they are released on DVD.  The service plan is to allow portable media players and mobile phones along with HD TV and Blu-ray Disc players downloads.

Sonic acquired DivX and already offers online movies through CinemaNow with Best Buy Co. (NYSE: BBY).  Netflix Inc. (NASDAQ: NFLX) and others are already dominating this space as well.  Wal-Mart Stores Inc. (NYSE: WMT) acquired Vudu for movie downloads as well earlier this year, although Wal-Mart has kept Vudu as separate of a brand as it could be and there is no mention of Wal-Mart anywhere on the Vudu.com website.

Sears is hoping that this is going to be free money for the company and its shareholders.  Unfortunately, as the space becomes more crowded each day there may be fewer and fewer differences among services out there.  When Movie Gallery opened near Blockbuster locations, all that happened was that the two brick and mortar movie rental giants cannibalized each other that much faster.

JON C. OGG

Rovi is acquiring Sonic and the two have signed a definitive agreement for Rovi to buy the company in a stock and cash transaction with an enterprise value of $720 million.

The deal came to $14.17 per Sonic share ahead of any share price adjustments, and the companies noted that this was a 38.2% premium to Sonic’s 30 day average per share as of December 21.

The companies note: “Rovi, a provider of next generation guidance solutions including TotalGuide, discovery, metadata, advertising and networking technologies and Sonic, a provider of digital video processing, playback and distribution technologies, both leaders in the digital entertainment industry, together will bring an end-to-end solution that enables integration across the ecosystem. The acquisition of Sonic will enable Rovi to broaden its solutions to content owners, device makers, retailers and operators.” Sonic goes back to the Roxio days.

Sonic shareholders may elect to receive either $14.00 or 0.2489 shares of Rovi common stock. Cash consideration paid in the exchange offer will equal 55% of the aggregate value paid in the exchange offer and stock consideration issued in the exchange offer will equal 45%, with shares of Rovi common stock being valued at $56.24.  Sonic directors and senior management, who own approximately 11.2% of Sonic’s total equity, have agreed with Rovi to tender their shares and to vote any remaining shares that they own for the merger.

Sonic shares are up 25% at $14.01 and Rovi shares are down only about 2.6% at $56.82.  Rovi has a considerable market cap advantage here at almost $6 billion versus $683 million from Sonic.

We have already seen two law firms announce those “investigations” over possible fiduciary duty violations, and those are often precursors for class action suits.  What the case will be is that the company is worth more on a standalone basis and on a combined basis.  Sonic shares traded in a range of $15 to $20 for much of the 2003 to 2007 period.  It has virtually no debt and more than $50 million in cash assets.  Unfortunately, it has had declining revenues and that went to $104.3 million for its fiscal March-2010 year-end.  Thomson Reuters has estimates of $147.58 million for March-2011 and also has estimates of $257.47 million in March-2012.

If an alternative bidder does not arise, then the deal may not get juiced.  It will be interesting to see if a higher deal will head its way in the form of a hostile rival buyout.

JON C. OGG

Ascent Solar Technologies, inc. (ASTI) is down more than 8% today after the company announced after market a secondary offering of shares.

Cisco Systems, Inc. (NASDAQ: CSCO) posted slight gains yesterday, but is down significantly today on heavy volume after its CEO projected slow growth for “the next several quarters.” At $20.47, the stock is close to its 52-week low of $19.82.

China Grentech Corporation Limited (NASDAQ: GRRF) is one of today’s biggest movers. Shares of GRRF have increased more than 25% to $3.65 (relative to a 52-week range of $1.51-$5.35) after an impressive 3Q earnings report after yesterday’s close.

Dendreon Corporation (NASDAQ: DNDN) is up nearly 7% premarket on heavy volume.

Juniper Networks Inc. (JNPR US) is down 8.7 percent, mostly on the CSCO news.

Sonic Solutions (NASDAQ: SNIC) gained more than 7% after market close yesterday, those gains have held so far. The stock, at $11.10, is trading within a 52-week range of $6.76-$14.02.

Watson Pharmaceuticals Inc. (WPI US) has taken a moderate loss premarket after announcing its second-largest holder would be selling more than 10 million shares. Shares of WPI are trading within a 52-week range of $35.08-$52.01.

American International Group Inc. (NYSE: AIG) was mostly known, but Prudential plc (NYSE” PUK) has confirmed that it is walking away from the $35.5 billion offer for AIG’s AIA; now AIG will have to consider a resale process with open bids or it will have to conduct an IPO of the unit to monetize its sale. AIG shares are up 0.8% at $34.50.

Amgen Inc. (NASDAQ: AMGN) may have a new blockbuster on its hands.  The world’s largest biotech is trading up after it received FDA clearance for Prolia, its injectable bone strengthening drug.   Shares are up 5.3% at $53.45 versus a 52-week range of $49.21 to $64.76.

Apple Inc. (NASDAQ: AAPL) is back to the speculators playing games.  We ran down the volume yesterday, but it looks like over half of its implied trading volume equivalent is being used in speculative options for exposure rather than traders paying $260 per share.

Arena Pharmaceuticals, Inc. (NASDAQ: ARNA) is trading higher after it announced a notification of a tentative September 16th FDA Advisory Committee Meeting to review its lorcaserin for weight management.  Shares are up 5.5% at $3.22 versus a 52-week range of $2.70 to $5.93.

Canadian Solar Inc. (NASDAQ: CSIQ) is seeing its shares hit hard this morning. The stock is down some 18% at $9.70, which is close enough to its 52-week low of $9.21.  The shares are down because of an accounting investigation, which is not what any investors ever want to see.

DivX, Inc. (NASDAQ: DIVX) is being acquired in a stock and cash deal by Sonic Solutions (NASDAQ: SNIC).  DivX holders would receive $3.75 in cash and 0.514 shares of Sonic common stock for each share of DivX they hold.  DivX is up 29% at $9.01 versus a 52-week range of $4.76 to $8.90.  Sonic Solutions (SNIC) is indicated lower but has yet to trade.

Monsanto Co. (NYSE: MON) is trading higher after the stock was raised to the Conviction Buy List at Goldman Sachs.  The research report said that the flow of bad news is out and it has already been one of the worst S&P stocks so far this year.  Shares are trading up 3.5% at $50.50 in active pre-market trading.  Just to show how bad it has been, the 52-week range is $48.16 to $87.40.

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

JON C. OGG

ARM Holdings (ARMH) Started as Overweight at Barclays.
ASML Holding (ASML) Started as Overweight at Barclays.
Boston Scientific (BSX) Started as Outperform at Baird.
Clorox (CLX) Raised to Outperform at Oppenheimer.
Goodrich (GR) Started as Outperform at Oppenheimer.
Infineon (IFX) Started as Overweight at Barclays.
Lazard (LAZ) Started as Outperform at Oppenheimer; removed from Goldman Sachs Conviction Buy List.
Saks (SKS) Raised to Buy at Deutsche Bank.
Sonic Solutions (SNIC) Raised to Outperform at William Blair.
Vical (VICL) Started as Overweight at Thomas Weisel.

JON C. OGG

• ADC Telecom (ADCT) Cut to Neutral at Baird; Cut to Market Perform at FBR.
• Autoliv (ALV) Cut to Hold at Deutsche Bank.
• Caterpillar (CAT) Cut to Neutral at JPMorgan.
• FormFactor (FORM) Cut to Perform  at Oppenheimer.
• General Maritime (GMR) Cut to Neutral at JPMorgan.
• G-III Apparel Group (GIII) Cut to Market Weight at Thomas Weisel.
• Mirant (MIR) Cut to Equal Weight at Lehman.
• Sonic Solutions (SNIC) Cut to Neutral at JPMorgan.
• Target Corp. (TGT) Cut to Neutral at Credit Suisse.
• Top Ships (TOPS) Cut to Underweight at JPMorgan.
• Washington Mutual (WM) Cut to Sell at Piper Jaffray.
• Zimmer Holdings (ZMH) Cut to Neutral at Piper Jaffray.

Jon C. Ogg
July 23, 2008

Revenues posted yesterday for last quarter were $29.5 million, under the $33.7 million estimates.  It also sees revenues the coming quarter in a $30 to $33 million range, under the $34.7 million estimate.  Sonic is not reporting full results as part of its ongoing option review, is delinquent in SEC filings, and it stated that prior results cannot be relied upon.  It seems shareholders aren’t relying on anything here out of the company except for the sell button.

Shares closed down 25% at $7.80 on over 4.4 million shares, a 4+ year low and on more than 10-times normal trading volume.  As a reminder, this is the old Roxio digital media software provider.

Jon C. Ogg
August 24, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Atherogenics (AGIX)…. Keeps drifting lower. $140 million implied cash on the books, but negative liquidity with the debt.  Maybe it’s easier to be in the parachute business.

CalAmp (CAMP).. Customer issues hurting earnings results, and shareholders.

Gaming Partners (GPIC)… Not all casino suppliers are doing well, even if the company customers are.

Healthcare Realty (HR)… This is and was surprising.  Now you have to wonder if that 8% divdend is going to be real.

JDS Uniphase (JDSU)… Dark fiber, is it 2000 all over again?

JAPAN SMALLER CAP FUND (JOF)… this was surprising, even though we usually leave funds off the list.

Shoe Pavilion (SHOE)… must have Digger selling the shoes or it must be smelly feet.

Sonic Solutions (SNIC).. lower revenues, a Roth downgrade, and breaking the sound barrier the way the test pilots did before Chuck Yeager made it.

Jon C. Ogg
May 18, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.