• Accenture (ACN) stock up 4% after posting $0.60 EPS vs. estimate of $0.56.
• Activision (ATVI) again guided earnings higher.
• Altus Pharmaceuticals (ALTU) traded down almost 20% after it reacquired ALTU-238 development and commercialization rights for North America from Genentech, an end to the development pact.
• Array BioPharma (ARRY) traded down almost 20% after it announced initial results from a Phase II study comparing its monotherapy with temozolomide in the first-line treatment of advanced melanoma showed no apparent difference in efficacy for the primary endpoint.
• Athersys (ATHX) and Angiotech announce authorization of Phase I stem cell trial for heart attacks.
• Bear Stearns (BSC) expected to post first loss.
• Blackstone (BX) plans to sell a $9 Billion CMBS offer backed by Hilton Hotels in Q1 2008.
• Cheesecake Factory (CAKE) had a 10% stake taken by activist Nelson Peltz.
• Electronic Clearing house (ECHO) getting acquired by intuit for $17.00 per share.
• FedEx (FDX) $1.54 EPS vs. $1.50 estimates (had been lowered) but next quarter $1.15-1.30 vs. $1.38 est.; $6.40 to $6.70 for year bvs. $6.47 estimate.
• Herman Miller (MLHR) $0.72EPS Vs. estimate of $0.59; stock rose about 10%.
• Indevus Pharma (IDEV) trading down about 5% on a non-approvable letter from the FDA for VALSTAR NDA supplement (submitted May 2007).
• Intuit (INTU) paying $131 Million for ECHO.
• LDK Solar (LDK) $0.37 EPS on $157M revenues vs. $0.37/$143.22M est.; Q4 guidance $0.40-$0.41 on $180-$185M revenues vs. $0.41/$167.5M est.; stock indicated down 5%.
• Leggett & Platt (LEG) stock down about 5% on lower guidance.
• Local.com (LOCM) announced a strategic partnership with IAC/Interactive’s Citysearch; stock trading up 7% on news.
• Nike (NKE) traded up 3% after $0.71 EPS on $4.3 Billion revenues vs. estimates $0.66/$4.3B.
• Oracle (ORCL) traded up 6% after beating earnings and giving slightly higher guidance; sees enterprise spending lasting into 2008.
• Pier 1 (PIR) -$0.11 EPS vs -$0.24 estimate.
• Research-in-Motion (RIMM) reports earnings after the close today.
• Rite Aid (RAD) indicated down about 5% after posting loss.
• Ruths Chris (RUTH) gave an earnings warning.
• Smart Modular Tech (SMOD) $0.18 EPS vs. $0.17 estimate.
• Steelcase (SCS) $0.30 EPS vs. $0.28 estimate.
• Superior Offshore (DEEP) signed a letter of intent with a strategic partner for ownership of a DP-III deepwater construction and dive support vessel expected to be delivered in late 2008.
• Tribune (TRB) buyout supposedly set to close today.

Jon C. Ogg
December 20, 2007

If the deal breaks apart it will be a brutal blow to TRB shareholders. Shares are down 6% today, but the offer to take the company private has kept the stock fairly high. Over the last six month TRB shares are up 10%. Those of rival Gannett (GCI) are off 35%.

In the absence of a buy-out, it would not be hard to imagine a correction from the current price of $31.41 down to $20.

Douglas A. McIntyre

Broadcast revenue fell 13.3% to $96 million

Douglas A. McIntyre

Yahoo! and Google (GOOG) are also setting up newspaper networks, but if the large chains can get the papers in the ten largest markets to join their alliance, it may deal a blow to the attempts of online companies to sell advertising on behalf of the chains.

Why pay Yahoo! a piece of the action if the online advertisers will deal with papers directly?

Douglas A. McIntyre

But there are many other mergers out there that have misleading merger-arb spreads that are indicative of potential trouble as far as a closing at all or at least a risk of the stated merger price being sent to a reduced buyout price. Almost all of these mergers are different than the ones from September that we deemed at risk.

Tribune (NYSE:TRB) $34 buyout from Sam Zell and employees….
Shares reached almost $30.50 yesterday and today’s $29.90 is representative of a 13.7% merger-arb spread for a merger that shareholders have already approved.  24/7 Wall St. has given our own prediction for a buyout price that Sam Zell would likely offer if financing gets tight in this LBO-OPM (leverage buyout, other peoples money) offer.  We are looking at updating this in our New Media/Old Media subscriber letter next week.

PHH Corp. (NYSE:PHH) $31.50 buyout……
With a near-50% merger-arb spread consider this one toast or revised far lower or maybe only even by one of the buyout partners.  The Blackstone (NYSE:BX) buyout is supposedly to be revisited momentarily, although JPMorgan and Lehman that were financing a portion of the deal have (as of last look) maintained a $750 million shortfall on the debt portion here.  General Electric (NYSE:GE) was Blackstone’s buyout partner and the deal as originally intended was going to send the fleet services group (corporate car and truck fleets) to GE and the mortgage business to Blackstone. 

Genesco (NYSE:GCO) $54.50 buyout……
The $1.5 billion footwear acquisition that had been agreed to in June was scheduled to close last month, but would-be acquirer Finish Line (NASDAQ:FINL) and investment bank UBS stalled on the deal because of concerns over Genesco’s financial performance after the $54.50 buyout deal was announced.  At $45.40 there is a 20% merger-arb spread.  24/7 Wall St.’s belief is that Finish Line is in no position to do the deal whether it "states uncomfort and concerns" or not.

3Com (NASDAQ:COMS) $5.30 buyout…..
3Com’s buyout is not at risk over shareholder revolts nor over financing.  This one is at risk over China’s Huawei holding a stake after the Bain Capital buyout over "national security concerns" because many US and partner government agencies still relying on 3Com’s communication equipment. Senators are reviewing the deal and saber rattling here.  Boy, those must be some old systems.  24/7 Wall St. is reviewing this one now for the Special Situation Investing Newsletter since at $4.86 this has only a 9% merger arb-spread for an at-risk deal on a company that management can’t fix on its own.

Cumulus Media (NASDAQ:CMLS) $11.75 management-led buyout…..
The $1.3 Billion MBO agreement announced on July 23, 2007 has been a quiet one.  When announced this was almost a 40% premium.  At $10.12 today, there is still a 16% merger-arb spread.  The Board of Directors approved the deal and recommended that shareholders vote for it, but the financing from Merrill Lynch Global Private Equity and Merrill Lynch Capital Corporation "could" be up for interpretation.  Jim Cramer actually called this a takeover candidate before the MBO was announced.  Cumulus is also a name 24/7 Wall St. has under review for its New Media Old Media subscriber newsletter.

Jon C. Ogg
November 1, 2007

Jon Ogg produces the subscriber-based Special Situation Investing Newsletter where we cover buyout candidates, restructurings, spin-offs, and more.  We recently issued our "Small Cap Internet Watch List" PART 1 of 2 that showed a list of smaller web related properties we think could be acquired under the right circumstances, and we even listed which predator companies could or would acquire them under the right circumstances.

Net income attributable to common shareholders fell 5.8 percent to $152.8 million from $162.2 million a year ago.

Revenue fell 4.1 percent to $1.28 billion. Publishing division ad revenue dropped 9 percent because of a slowdown in real estate, national and classified ad sales.

Those numbers would appear to be bad, but perhaps not bad enough to drive off the TRB buyers.

The shares are up over 3% at $28.44.

Douglas A. McIntyre

Get a Free Subscription to the 24/7 Wall St. New Media Newsletter and follow investment views on companies like Google, The Tribune, AT&T, Comcast, News Corp and others.

Scripps Networks Interactive will have an estimated $1.4 Billion in annual revenues with some 2,100 employees and will consist of:

• National lifestyle media brands and associated enterprises that operate collectively as Scripps Networks, including television’s HGTV, Food Network, DIY Network, the Fine Living Television Network and Great American Country and their category-leading Internet businesses.
• The new company also would include online comparison shopping services Shopzilla and uSwitch and their associated Web sites.

The E. W. Scripps Company will have combined annual revenues of $1.1 Billion and some 7,100 employees and will include:

• Daily and community newspapers in 17 U.S. markets;
• 10 broadcast television stations clustered among the nation’s largest 50 markets, including six ABC affiliates, three NBC affiliates and one independent station;
• The character licensing and feature syndication businesses operated by United Media;
• Scripps Media Center in Washington D.C., which includes the Scripps Howard News Service.

If you have seen 24/7 Wall St. for very long, or if you have read all the reports out there on what is happening with newspapers, you’ll know that the media sector is looking for ways to get away from newspaper revenues.  Unfortunately, old fashioned newspaper readers are dropping off at a faster clip than smokers.  The next wave of cuts the industry will feel is when newspapers get cut more from many hotel chains that leave them at the front door of each occupied room.

If you enjoy reading about break-ups and other special situations we produce our own "Special Situation Investing Newsletter" for subscribers.  We will be reviewing this for subscribers as the break-up gets closer.  Unfortunately, the company believes this tax-free spin-off will not be completed until the end of the second quarter of 2008.  There is a lot of calendar between now and then, and many more months of bad news out of newspaper companies.  One thing may help papers in 2008: the presidential election.  Depending upon how the valuations are laid out, it is even conceivable that the interactive content unit might have predators looking at it right out of the gate.

The market is reacting with enthusiasm to the Scripps plan.  Shares are up almost 8% at $45.50, back in the middle of its $37.89 to $53.39 trading range over the last 52-weeks.

• What will become of NBC?
• Life gets harder for newspaper companies.
• This follows Belo’s similar plan.
• Journal might not be able to fix itself.
• 24/7 Wall St. thinks Tribune won’t get the full $34 per share.

Jon C. Ogg
October 16, 2007

In the recent past, extending debt or getting better terms often worked. Debt-laden companies like Level 3 (LVLT) and Charter (CHTR) did a good job of it. But, with the credit markets feeling impoverished, refinancing is easier said than done.

McClatchy (MNI) took on a lot of debt to buy rival Knight-Ridder. It did sell off some properties to cut that debt, In its last 10-Q, the company listed almost $2.7 billion in long-term debt. On revenue of $580 million, MNI had operating income of $117 million. Interest expense was just shy of $50.

All of that does not sound so bad. But, in August, the company said that advertising revenue fell 9.2% and total revenue was down 8.4%. To make matters worse. online revenue fell. At most newspaper companies that is the one segment that is moving.up. The August drop was also worse than the year-to-date numbers, which means that the problem could be getting worse.

An 8% drop in revenue would have taken MNI’s revenue in Q2 from $580 million to about $533 million. If costs remained the same in the quarter, operating income would have dropped to $70 million. At that number, the margin for error on a $50 million per quarter interest load looks much worse.

Is a default in the cards? The company does have investments in unconsolidated companies. That could buy some time. But, the company does have debentures due this year.

McClatchy cannot get out from under that fact that newspaper revenues are going to keep falling, whether it is 5% per year or 10% per year. At $19.66, the stock is pennies from its 52-week low. The 52-week high was $44.95.

With the shares trading at less than 70%, some of the trouble is already built into the stock. but, perhaps not all of it.

Douglas A. McIntyre

Here is a short list of the deals that 24/7 Wall St. still think could be in trouble. These deals could be killed or, at least, be renegotiated to a lower price.

Sallie Mae (SLM), which originates and holds student loans is an obvious candidate. Against an offer price of $60, the shares now trade at $48. The New York Times has written that private equity firm J.C. Flowers & Co. plans to seek a lower price. Congress has sent the President a bill which could cut about $20 billion in government subsidies to banks that make student loans, according to the AP. Flowers and its banks could cansider that a "material adverse effect."

Acxiom (ACXM) The database management company has an offer from Silver Lake and ValueAct Capital in which the firms would pay Acxiom shareholders $27.10 a share to take the company private. The shares trade at $22. The company announced an 88% decrease in income from operations last quarter. Earlier this month, the company cut 265 people.

PHH (PHH) Blackstone (BX) said it is working with investment banks in an effort to seek more debt funding for the buyout. But, the deal is in trouble since banks sent revised terms for the takeover. The stock is trading at under $25. When the deal was announced, it hit $31.52.

The Tribune Company (TRB) Sam Zell, the leader of this buy-out, keeps insisting that the deal will close. But, the company’s revenue keeps falling and was off over 5% in August. The buyout, for $8.2 billion, will leave the company awash in debt, even though it is selling non-core assets like the Chicago Cubs to improve the balance sheet. The shares trade at $28, after hitting $34.28 when the purchase plan was announced.

Myers (MYE)  The rubber and plastic manufacturer recently said its $1.1 billion acquisition by a private equity arm of investment bank Goldman Sachs will likely be delayed until the fourth quarter. Income from operations dropped in the June quarter from $7.1 million last year to $2.5 million in 2007. Shares trade at $19.75 against a post-deal announcement high of $22.73.

Reddy Ice (FRZ) Shares now trading at $26.50 after hitting $32.31 on buyout news. The AP wrote that Reddy Ice planned $1.1 billion buyout by GSO Capital Partners LP encountered turbulence, when Morgan Stanley objected to amendments to the deal saying they violated conditions of the bank’s loans.The Fool wrote that the company’s recent weak results, coupled with the tightening credit markets, led GSO to renegotiate parts of the transaction already.

Penn National Gaming (PENN) The racetrack and casino operator agreed in June to a $67-a-share buyout by Fortress. The Wall Street Journal recently pointed out that shares of several buyout targets are also reflecting an increased degree of caution, including Penn. Net income and EPS at the company both fell in the June quarter. With the stock at $59, investors are not indicating much confidence in an offer that is $8 higher.

United Rental (URI) The equipment rental company agreed to to sell itself to affiliates of private equity firm Cerberus Capital Management for $4 billion. But, the SEC is investigating the company over accounting issues. Operating income rose 12% in the June quarter, but the SEC issue could allow Cerberus a way out. Shares trade at $31.45 against a post buy-out high of $35.56.

Douglas A. McIntyre can be reached at douglasamcintyre@247wallst.com. He does not own securities in companies that he writes about.

Retail advertising revenues decreased 6.0% with the largest declines in the department stores and home furnishings categories, partially offset by improvements in the health care and restaurants.

National advertising revenues fell 3.7%, with declines in auto, financial and resorts.

Classified advertising revenues decreased 18.2% total. Read these and you know they have to hate Craig’s List:  Real estate -24%; Help wanted -19%; automotive -14%.  The only bright spot was, of course, Interactive Revenues at $22 million and up 11%.

Circulation revenues were Down 5.4% due to single-copy declines and continued selective discounting in home delivery.

Broadcasting and entertainment group revenues in July were flat at $147 million as a decrease in television revenues was offset by increased revenues at the Chicago Cubs and Tribune Entertainment.  Television revenues fell 3.7%, with lower automotive, movie and political advertising, partially offset by strength in the telecom/wireless and health care categories.

What is puzzling is just why on earth Sam Zell even wants to buy (or actually invest in controlling interest) Tribune.  We noted earlier this week that even with shareholders approving the deal that Sam Zell will likely lower his offering price.  It won’t necessarily be by choice either, because if you were a banker would you loan that vast sum of cash to finance a deal when the underlying business is eroding this fast? 

The carnage continues across the board and as small as Interactive revenues are they cannot offset the onslaught against print media.  This company better go out and start buying up more ‘interactive’ plays where it can.  The long hard truth is that newspaper readers are falling off faster than smokers in nursing homes.  Sad, but true.

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.