Today (around 1 p.m.) ValueClick's (NASDAQ: VCLK) stock is up a healthy 15% to $34.50. Back in January, the stock was trading at about $23.

Of course, the betting is that this online advertising operator will get scooped up like its peers, such as aQuantive (NASDAQ: AQNT), 24/7 Real Media (NASDAQ: TFSM), and DoubleClick. Hey, why not?

The problem is that the mega cap internet players such as Microsoft (NASDAQ: MSFT), Yahoo (NASDAQ: YHOO) and Google (NASDAQ: GOOG) have already made deals in the space. Instead, the suitors that are left can't really muster the premium pricing. These companies include the likes of IAC/InterActieCorp (NASDAQ: IACI) and Time Warner (NYSE: TWX).

While Microsoft or Google may want to bulk up even more, the fact remains that this is pure speculation. In fact, ValueClick is a hodge-podge of different sites and is more a technology play. It's like 24/7 Real Media, which didn't snag a big premium on its deal.

So, as always, investors need to be very careful on this one.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

MOST NOTEWORTHY: ValueClick, Inc (VCLK), aQuantive, Inc (AQNT), Cigna Corp (CI), Warner Music Group (WMG), Clear Channel Communications, Inc (CCU) and Medtronic, Inc (MDT) were today's more notable downgrades:

• Baird cut ValueClick Inc (NASDAQ: VCLK) to Neutral from Outperform, citing the FTC inquiry.

• aQuantive (NASDAQ: AQNT) was downgraded to Sell from Buy after the company was acquired by Microsoft (MSFT) and because aQuantive no longer trades on fundamentals. Kaufman and Gabelli also cut aQuantive to Hold from Buy.

• Cigna (NYSE: CI) was downgraded at Prudential to Neutral from Overweight on valuation.

• Warner Music Group's (NYSE: WMG) downgrade to Sell from Neutral at Pali Research was based on the lower industry outlook, which Pali believes revenues are likely to fall at least 10% for the industry in 2007, along with the company's release schedule.

• Bear Stearns downgraded Clear Channel Communications (NYSE: CCU) to Peer Perform from Outperform on the acceptance of the higher bid.

• Medtronic Inc (NYSE: MDT) was downgraded to Underweight from Equal Weight at Morgan Stanley...

OTHER DOWNGRADES:

• Georgia Gulf Corp (NYSE: GGC) was downgraded to Sell from Hold at Matrix USA.

• Stifel cut Core Laboratories (NYSE: CLB) to Hold from Buy.

• UBS downgraded Intuit Inc (NASDAQ: INTU) to Neutral from Buy.

• Occidental Petroleum Corp (NYSE: OXY) was removed from Goldman's Conviction Buy list.

• Friedman Billings downgraded downgraded CapitalSource, Inc (NYSE: CSE) and Countrywide Financial Corp (NYSE: CFC) to Market Perform from Outperform.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

MOST NOTEWORTHY: Microsoft (MSFT), Sony Corp (SNE), Adobe Systems Inc (ADBE) and the cable sector were today's noteworthy upgrades:

• DA Davidson upgraded Microsoft Corp (NASDAQ: MSFT) to Buy from Neutral, as the firm is no longer concerned the tech giant will acquire Yahoo! (YHOO) following the recent acquisition of aQuantive, Inc (AQNT).

• HSBC upgraded shares of Sony Corp (NYSE: SNE) to Overweight from Neutral to reflect improving profitability at Sony's electronics business.

• Pacific Crest upgraded Adobe Systems (NASDAQ: ADBE) to Outperform from Sector Perform to reflect the strong CS3 outlook and growth in new areas such as mobile.

• Citigroup upgraded their cable sector view as they continue believe cap ex will remain at elevated levels at a time when the marginal cable investor is likely more willing to forego near-term FCF growth to achieve robust EBITDA growth. Along with the raised sector view, Citigroup upgraded Time Warner Cable (NYSE: TWC) and Comcast Corp (NASDAQ: CMCSA) to Buy from Hold. The firm believes investors can benefit from owning both EchoStar Communications (DISH) and cable equities...

OTHER UPGRADES:

• Bear Stearns upgraded Tiffany & Co (NYSE: TIF) to Outperform from Peer Perform.

• RBC Capital raised American Eagle Outfitters (NYSE: AEO) to Outperform from Sector Perform.

• Sepracor Inc (NASDAQ: SEPR) was raised to Neutral from Underperform at Cowen.

• ING upgraded BP plc (NYSE: BP) to Buy from Hold.

• Valero Energy Corp (NYSE: VLO) was added to Goldman's Conviction Buy list.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

If anyone wonders why Microsoft (NASDAQ: MSFT) paid $6 billion for aQuantive (NASDAQ: AQNT), they need look no further than the report from Leichtman Research Group for first quarter 2007. In these three months alone, 3 million people joined the broadband revolution. Read that as 3 million more potential YouTube visitors, Second Life devotees, advertisees. This represents almost 6% growth in this quarter alone, bringing the total of U.S. broadband subscribers to 56.2 million.

Of that audience, 55% buy through their cable company, while the telephone industry pulls in 43%. For this quarter, though, the telephone side accounted for 51% of the growth. In fact, the telephone companies have led cable in acquisitions in each of the last 10 quarters.

Leading the pack overall is AT&T (NYSE: T) with 12.8 million subscribers, followed closely by Comcast (NASDAQ: CMCSA) at 12 million. Verizon (NYSE: VZ) and Time Warner Cable (NYSE: TWC) both have more than 7 million subscribers. Others with over a million are Cox, Charter, Cablevision, Qwest (NYSE: Q) and Embarq. Top performer for the quarter? AT&T, with almost 700,000 new subscribers.

Recent mergers between traditional and online advertising firms suggest a deep flaw in the advertising business -- a flaw exposed by Google Inc. (NASDAQ: GOOG)'s evidently unstoppable technology edge. How so? While traditional advertisers deliver open-loop systems, Google delivers a closed-loop solution.

The reason that online advertising is growing is because it offers a closed-loop solution -- a notion that I first described in Net Profit. By contrast, TV and newspaper advertising is an open-loop system -- one in which a company pays to reach a viewer without getting any specific feedback on whether the advertising money leads to increased sales.

By contrast, a closed-loop solution measures the specific response to the advertising dollar -- tracking whether a user clicks on an ad and whether that clicking leads to an online purchase. I call it a solution because it lets the advertiser measure the extent to which advertising expense leads to increased sales. The closed-loop solution's ability to measure return on advertising is an enormous breakthrough for advertisers.

As everybody knows, Google's algorithm for linking tiny text advertising to Internet search has boosted the online advertising business. According to the Wall Street Journal [subscription required], those search-related ads now account for 40% of the $20 billion U.S. internet ad market. And internet-ad sales overall have nearly tripled in the past five years -- to 7% of the $286 billion overall U.S. ad market -- up from 3% in 2002.

Moreover, Google's success is coming out of the hide of TV and newspaper advertisers. For example, in 2006 General Motors Corp. (NYSE: GM) cut its TV ad spending 15% to $1.38 billion and reduced its newspaper advertising 60% to $232.1 million. Meanwhile, GM's online spending rose 16% to $130 million.

Back in the 1990s, a group of online ad players -- like Mediaplex, DoubleClick and 24/7 -- sported multibillion dollar market caps. Of course, it did not take long for the bubble to burst.

Funny enough, the conventional wisdom was that we would never see these kinds of valuations again.

Well, never say never.

Microsoft Corp. (NASDAQ: MSFT) is going to pay $6 billion for aQuantive Inc. (NASDAQ: AQNT) and Google Inc. (NASDAQ: GOOG) is buying DoubleClick for $3.1 billion.

We are going back to the future. So what does this all mean?

I had a chance to interview Dana Ghavami, who is the CEO of CheckM8:

How about some background on your company?

CheckM8 has been in the business of online ad technologies for seven years. We service many leading online publishers and are backed by leading institutional investors, including SoftBank and CCI of Dentsu. The company is US-based, with offices in New York and R&D facilities in Israel, in addition to sales and support offices in the UK, Spain, and Sweden. Customers include leading online publishers: Business Week, Nielsen, Sports Illustrated, Terra Networks, Washington Post, amongst many others. Our first product, called the Rich Media Manager, released four years ago, allows publishers to produce and manage premium ad formats for maximum-CPM opportunities online. Our flagship AdVantage product released two years ago allows publishers to manage their end-to-end ad, inventory, rich media needs in a single platform.

Does the Microsoft deal for aQuantive make sense in light of the high valuation?

We're looking at an industry that's going to drive $60B of advertising by 2010 and be the future medium of consumers and advertisers. So, if I had a major stake (like Microsoft) and the competition (Google) was one step ahead, I'd pull that kind of trigger too in hopes of having one of the seats at the small and priceless roundtable in the not-so distant future. These companies are looking at making multiples of what they're paying today in the foreseeable future.

Do you think we'll see more consolidation in the space, such as with ValueClick and private companies?

Very likely. However, the big media companies are increasingly looking for integrity and independence with their digital ad infrastructure and rapidly running out of options. At some point, there won't be enough established
and proven solutions to manage their critical needs and building their own solutions is not a practical option. Therefore, the need for reputable and trustworthy independent solutions will continue to exist.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

I have been writing about aQuantive (NASDAQ: AQNT) for the past several months and thought that Microsoft (NASDAQ: MSFT) would buy them. It is, for a very hefty premium. Members of my website are thrilled as they got involved at $19 and MSFT is paying $66.50, or north of $6 billion in cash.

Who's next? With a garbage-like company 24/7 Real Media (NASDAQ: TFSM) being bought for $650 million -- which proves the rising-tide-lifts-all-boats theory -- ValueClick (NASDAQ: VCLK) is the last strong public player in the space. TFSM by the way is being paid a minuscule premium for its shares as compared to AQNT. My previous firm ThinkEquity Partners worked extensively with TFSM and they have been hoping for a buyer the past couple of years.That aside, VCLK is the one to focus on now.

ValueClick is headquartered in suburban Los Angeles and is a recognized leader in the website marketing/advertising/digital marketing sector, right behind AQNT. ValueClick is experiencing growth in the 30-35% sustainable range, similar to aQuantive. The most important factor is ValueClick is among the leaders in the new-age digital media space.

New-age digital media is a space that neither Google (NASDAQ: GOOG) nor Microsoft could master with their own research and development efforts -- they had to acquire it. Old-time advertising companies can play in the space around the fringes, but they do not have the necessary proprietary technology needed to dominate or impress their customers. They were buyers of the technology from ValueClick, aQuantive and DoubleClick.

The space is red hot and will continue so as traditional corporations keep moving bigger and bigger pieces of their advertising budgets to the internet. Congratulations to Microsoft -- they got this one right!!

Georges Yared is the CIO of Yared Investment Research where he explores more growth stock ideas.

While it's certainly a red flag that 3,009 options contracts were traded on aQuantive Inc. (NASDAQ: AQNT) yesterday (32 times the trailing daily average), it's also the case that the smart money was already on aQuantive. After DoubleClick was purchased by Google for a whopping $3.1 billion, our writers were quick to point out that aQuantive was a good bet to follow -- Georges Yared posted about aQuantive's attractiveness on April 16, and Brent Archer followed up the same day surmising that Microsoft Corp. (NASDAQ: MSFT) might overbid on the advertising company.

If you bought aQuantive after being told that it (along with Apple Inc (NASDAQ: AAPL) was one of the two stocks to buy for Dow 14,000? You'd be up 77% today along with the rest of the lucky aQuantive shareholders. You got another chance when Larry Schutts pegged aQuantive as one of the "industry's best known practitioners" a few days ago (he recommended it much earlier in February). Back in February, Georges Yared also wrote three posts recommending the stock, before the company reported quarterly financial results, after it reported a great quarter, and also after ValueClick Inc (NASDAQ: VCLK) reported, claiming both are stocks to own.

Surely, a lot of pundits were picking aQuantive as a potential good buy once DoubleClick was sold, but it's worthwhile to note it's not the only time our writers have been right. Want a couple of other companies our bloggers have been hot for lately? Try ValueClick Inc (NASDAQ: VCLK) -- blog, or Crocs Inc. (NASDAQ: CROX) -- blog, two stocks that have all the BloggingStocks folks up late at night dreaming of big, big things.

Illegal insider trading has been rather active recently. When an offer was made for Dow Jones (NYSE: DJ) by News Corp (NYSE: NWS), I mentioned some odd option activity. It wasn't long before the SEC was investigating and a Hong Kong couple was investigated. Some estimates of the insider trading show that about 50% of buyouts and mergers have illegal activity.

This morning aQuantive (NASDAQ: AQNT) is up about 77% to 63.64 on a buyout from Microsoft (NASDAQ: MSFT). It took me about 5 minutes to dig up some "unusual" activity. If you look at the June 40 calls (QBT FH) there is some "interesting activity."

A call option gives the purchaser the right (or option) to buy a stock at a set price. Each option contract gives the right to buy 100 shares of stock. For easy comparison to stock prices, option prices are always quoted in cents per share.

This morning Microsoft Corp. (NASDAQ: MSFT) announced that it's buying aQuantive Inc. (NASDAQ: AQNT) for $6 billion, an 85% premium to its market price. Why is this deal happening? To compete with Google Inc. (NASDAQ: GOOG).

Last year my firm conducted a client-sponsored study of the email marketing industry. The top performing company in that research was AQNT. After interviewing the senior executives there, it became clear that email marketing offers a compelling benefit for a corporate advertiser -- the ability to measure return on advertising.

The reason Microsoft wants this ability is to help it compete with GOOG for online advertising dollars. That's because AQNT's technology enables companies to track what happens to their spam. Specifically, AQNT's Avenue A service targets emails depending on observed online behavior.

Microsoft Corp. (NASDAQ: MSFT) is paying an 85% premium to buy online advertising firm aQuantive Inc. (NASDAQ: AQNT). Yes, that's 85%. It is the price for being late to the dance.

After missing out on both DoubleClick and 24/7 Real Media (NASDAQ: TFSM), Microsoft had few options left if it wanted a presence in the internet advertising brokerage business -- the intersection where markets buy ads and place them on websites. The companies in this business have huge amounts of data on internet use patterns.

So, Microsoft will pay about $6 billion for a company that had $143 million in revenue last quarter and an operating profit of $20 million. Doesn't Steve Ballmer keeps saying he won't over pay for anything? Before the DoubleClick deal with Google Inc. (NASDAQ: GOOG), aQuantive sold below $30, so the real premium can actually be viewed as well over 100%.

Being so late, and paying so much is a huge strategic blunder, but it is the price for waiting

Douglas A. McIntyre is a partner at 24/7 Wall St.

Main market news here.

Microsoft Corp. (NASDAQ: MSFT) announced it is buying online ad agency aQuantive Inc. (NASDAQ: AQNT) in a $6 billion cash deal, in what could be argued as overpaying. The deal is for $66.50 a share, an 85% premium over Thursday's close for aQuantive. It almost seems like a desperate move by Microsoft as it tries to follow the recent deals from Google Inc. (NASDAQ: GOOG) and Yahoo! Inc. (NASDAQ: YHOO). AQNT shares are up 78.4% in pre-market trading (8:36 a.m.).

Shares of ValueClick Inc. (NASDAQ: VCLK) jumped 8.5% in premarket trading (8:41 a.m.) following the deal.

Intuit Inc. (NASDAQ: INTU) shares are up 11.11% in pre-market trading (8:09 a.m.) after it posted a third-quarter profit surge of 23%, cracking $1 billion in quarterly sales. Excluding one-time charges, the company would have reported net income of $1.13 per share or revenues of $1.15 billion (a 21% jump compared to last year's period), beating the $1.08 per share average estimate by analysts surveyed by Thomson Financial and the $1.12 billion in expected revenues.

British Airways (NYSE: BAB) misbehaved and admitted to it. While reporting a net loss of 124 million pounds in its final quarter, the company revealed it has set aside 350 million pounds (US$690 million; €510 million) to pay possible fines for its admitted anticompetitive behavior. The company discussed long-haul fuel surcharges with rivals. Investors, not surprising, weren't happy sending shares down 4% in London.

AppleGate, that's what they now call the false reported delays in the iPhone. Apple Inc. (NASDAQ: AAPL) shares have suffered a momentary lapse due to the report, wiping $4 billion in market cap before the stock recovered following the retraction. Engadget, our sister blog responded to the allegations against it. Not only that but Michael Arrignton of Techcrunch defended Engadget's decision to publish the story, and even bitter rivals Giszmodo did. There are still many unanswered questions regarding the original fake/false email that was sent. Some suspect that more than a harmless prank, it could have been an intentional foul play with vested interest in the outcome. It is eerily odd that a day after the false report, the FCC approval for the iPhone was announced and the stock rose nearly 2% and continues to gain another 0.9% in pre-market trading (8:24 a.m.).

Green gets in your eyes? Exxon Mobil Corp. (NYSE: XOM) gave more than $2 million in 2006 to groups, that Greenpeace says, are global warming skeptics. Yet, ExxonMobil constantly tries to convince us it is becoming more climate-unfriendly. While the company cut its donations to such groups by more than 40% from 2005, it still funds about 40 "skeptic groups."

Online marketing is a hot topic, but the Internet is a specialized medium and success in that arena requires expert help. One of the industry's best known practitioners is headquartered in Seattle, Washington.

aQuantive Inc. (NASDAQ: AQNT) is a digital marketing services and technology company, which aims to help clients acquire, retain and grow customers across all digital media. Its Digital Marketing Services division provides Web site development, interactive marketing, creative development and branding. The Digital Marketing Technologies unit offers advertisers online campaign management, search engine marketing and Web site optimization tools. The Digital Performance Media segment buys blocks of online media advertising to resell on a targeted basis. The aQuantive client list includes Adobe Systems Inc. (NASDAQ: ADBE), Kellogg Co. (NYSE: K), McDonald's Corp. (NYSE: MCD), Pepsico Inc. (NYSE: PEP), Procter & Gamble Co. (NYSE: PG), Nike Inc. (NYSE: NKE) and Walt Disney Co. (NYSE: DIS).

The firm became the object of acquisition speculation, after Google Inc. (NASDAQ: GOOG) and Yahoo! Inc. (NASDAQ: YHOO) recently strengthened their respective Web positions by purchasing aQuantive digital marketing rivals. Client Microsoft Corp. (NASDAQ: MSFT) has been mentioned as a possible suitor.

The market spent most of the day in the red finally pulling into a mixed close. It was a reminder to some traders that the market can still go both ways. With the recent run-up we have seen and new highs and records being broken going back to 1927, one should remember caution as the market can go both directions and may be due for a correction soon.

The NYSE had volume of 2.7 billion shares with 1,309 shares advancing while 1,927 declined for a loss of 37.06 points to close at 9788.03. On the NASDAQ, 1.9 billion shares traded, 1,255 advanced and 1,779 declined for a small loss of 0.80 to 2571.75.

Stocks moving today included Countrywide Financial Corporation (NYSE: CFC) which rose $2.77 (7%) to $41.28 as congress debates mortgage reforms. Research in Motion (NASDAQ: RIMM) moved up $6.93 (5%) to $146.76 on analyst comments. AK Steel Holding Corporation (NYSE: AKS) rose $2.96 (9%) to $35.02 on a takeover bid which lifted the industry. The bid helped United States Steel Corporation (NYSE: X) gain $4.85 (5%) to $110.63. aQuantive, Inc. (NASDAQ: AQNT) jumped $3.51 (12%) to $33.22 on earnings.

In options there were 4.6 million puts and 5.7 million calls traded for a put/call open interest ratio of 0.82. Among the most active options today were Pfizer (NYSE: PFE) which saw heavy volume on the May 25 calls (PFEEE) with over 217,000 options trading. The June 22.50 calls (PFEFX) also traded over 37,000 calls and this unusually high option volume is likely due to the dividend PFE pays tomorrow. Cisco Systems (NASDAQ: CSCO) options were active on the May 30 calls (CYQEF) and the May 27.50 calls (CYQEY) both moving over 65,000 options trading. The June 30 (CYQFF) strike was almost as active crossing on the June 30.0 with over 62,000 calls. There will be some disappointed option traders as CSCO is trading 5% lower in the aftermarket after reporting earnings.

Kevin Kersten is an Options Analyst with InvestorsObserver.com. Do you have any deadwood in your portfolio? Check out the 18 Warning Signs That Tell You To Dump A Stock.

Disclosure note: Mr. Kersten owns and or controls a diversified portfolios of long and short positions that may include holdings in companies he writes about.

The markets sold off mid-session as oil and semiconductors were weaker and traders took profits in what has been a very good April. There is an old saying on the street Sell in May and go way. Since the beginning of April the Dow is up 5.7% and typically summer months have not made the gains the rest of the year has.

The NYSE had volume of 2.9 billion shares with 884 shares advancing while 2,398 declined for a loss of 77.63 points to close at 9,627.73. On the NASDAQ, 2 billion shares traded, 927 advanced and 2,151 declined for a loss of 32.12 to 2,525.09.

Wm. Wrigley Jr. Company (NYSE: WWY) gained $3.83 (7%) to $58.88 as it reported net income up 28%. aQuantive (NASDAQ: AQNT) dropped $1.86 (-6%) to $30.61 on a downgrade. Radio Shack Corporation (NYSE: RSH) rose $1.35 (5%) to $29.07 on earnings. International Securities Exchange Holdings (NYSE: ISE) rose $20.97 (46%) to
$66.69 on a buyout. Ionatron (NASDAQ: IOTN) rose $1.06 (21%) to $6.15 on a navy contract.

In stocks with unusual option activity, Procter & Gamble (NYSE: PG) saw volume on the May 65 calls (PGEM) with over 24,000 options trading. Marvell Technology Group (NASDAQ: MRVL) saw over 20,000 contracts on both the May 17.50 calls (UVMEW) and the June 17.50 calls (UVMFW). Dell Computer (NASDAQ: DELL) saw heavy volume on the May 25 puts (DLQQE) with over 22,000 options trading. First Data (NYSE: FDC) exchanged volume on the August 25 puts (FDCTE) with over 20,000 options trading. In options, there were 4 million puts and 4.6 million calls traded for a put/call open interest ratio of 0.86.

Kevin Kersten is an Options Analyst with InvestorsObserver.com. Do you have any deadwood in your portfolio? Check out the 18 Warning Signs That Tell You To Dump A Stock.

Disclosure note: Mr. Kersten owns and or controls a diversified portfolios of long and short positions that may include holdings in companies he writes about.