CBS Corp. (NYSE: CBS) announced Thursday it has signed a deal to buy CNet Networks Inc. (NASDAQ: CNET) for $11.50 a share in cash. CNet operates not only the CNET site, but also ZDNet, GameSpot.com, TV.com, mp3.com and others. The deal values CNet at about $1.8 billion and push CBS to among the 10 most popular Internet companies in the United States. CBS shares are down 2.9% in premarket trading while CNET shares are of course up over 42% to $11.31.
IAC/InterActiveCorp (NASDAQ: IACI)'s Ask.com has bought Lexico Publishing Group LLC, the parent of Dictionary.com, Thesaurus.com and Reference.com among other sites. Earlier this year, Lexico already agreed to be sold to Answers Corp (NASDAQ: ANSW), but the latter couldn't secure the necessary funds. Now, Lexico sold itself to Ask.com, for an undisclosed amount, although the number people are throwing around is $100 million. Could this acquisition help IACI gain -- even a little -- on market leader Google?
United Airlines (NASDAQ: UAUA) and Continental Airlines Inc. (NYSE: CAL), dropping ideas of a merger, are now talking about forming an alliance to still gain some benefits of working together. United appears relentless in its attempts to help its bottom line through a merger or an alliance. While talking to Continental about an alliance, it is still negotiating with US Airways Group (NYSE: LCC).
Yesterday, Palm (NASDAQ: PALM) had to add $25 million to its losses for last quarter due to a write down in the value of auction-rate securities. Public companies are likely to have to do more of that as they report their first-quarter numbers. A number of individuals will also get brokerage statements that will show that each dollar they have in the instruments is now worth as little as 80 cents.
The bonds produced by the auction-rate market have been considered the equivalent of cash since the market began in 1985. The auctions were run frequently by big banks, so getting money in and out of the paper was easy. But, late last year and early this year, the banks that made the market in the instruments effectively shut the system down. Part of their role was to take excess securities in each auction and hold them until the next set of trading They could sell them then. But, in a tight credit market, banks did not want to hold the paper on their balance sheets.
Now the SEC and Financial Industry Regulatory Authority want to know if brokerage firms and banks marketed the auction-rate securities as cash equivalents while knowing that they were not. According toThe Wall Street Journal: "Brokers had pitched auction-rate securities as liquid, super-safe investments with interest rates slightly superior to those of conventional money-market funds. Now investors are asking why they weren't warned about the possibility of failed auctions."
The entire value of auction-rate investments now in the market is nearly $360 billion. Most of those securities are not trading now, so companies and individuals cannot get their money out. That may make for one, very large class action suit or a series of smaller ones by investors who want their "cash."
Douglas A. McIntyre is an editor at 247wallst.com.
When you're a small country stacked right up against the mighty U.S., you tend to take pride in any success by a fellow countryman. Such is Canada's fate, and if you ask any Canadian, he will be able to name you all the Canadian actors who made it in Hollywood. Similarly, ask about successful companies and Canadians will proudly mention Research in Motion Ltd. (NASDAQ: RIMM). Indeed, the company did not disappoint this afternoon when it reported that fiscal fourth-quarter profit and sales more than doubled.
The BlackBerry maker earned $412.5 million, or 72 cents per share, up from a profit of $187.4 million, or 33 cents per share, in the same period a year earlier. Revenue more than doubled to $1.88 billion from $930 million. This beat expectations of 70 cents per share and sales of $1.86 billion. And that's not all. A key figure, subscriber base, was boosted as RIM shipped about 4.4 million of its smartphones and added 2.2 million new subscriber accounts during the quarter, bringing its total subscriber base to more than 14 million. Sure enough, the company also projected profit and sales for this quarter above analysts' estimates. One cause for concern is RIM's contracting gross margin as the company relies more on hardware sales.
According to the company, it was retail presence as well as an expanded product line that included enhanced smartphones with cameras and music-playing capabilities, like the Curve, that helped boost sales. While such features put it in competition with Apple Inc. (NASDAQ: AAPL)'s iPhone, Apple was already adding improved features to the iPhone to attract business customers, so it seems competition was inevitable. RIM plans to have even more products with more features to appeal to consumers. Despite the competition, according to different research firms, both RIM and Apple are increasing their market share in the smartphone segment for now, mostly at the expense of Palm Inc. (NASDAQ: PALM).
And if you think RIM has reached a saturation point, let me remind you that two-thirds of its customers are in North America. There is still a big world to expand to out there. In fact, global expansion has already contributed to its performance in the fourth quarter.
It's no surprise RIMM shares are up some 4.7% in after-hours trading.
Research from ChangeWave shows thatResearch In Motion (NASDAQ: RIMM)'s BlackBerry still holds the lead in the smartphone business, but Apple (NASDAQ: AAPL) is marking important inroads. Palm (NASDAQ: PALM) continues to be in a bad spot.
The data is from a check of almost 4,000 consumers interviewed from March 17 to March 24. According to the research, the RIM BlackBerry maintains its huge lead among consumers with 42% of the market while second place Palm continues a two-year decline in its share and now holds 16% . This was the seventh-consecutive ChangeWave survey in which Palm's market share has dropped.
Apple's market share is now up to 9%, extraordinary given the short time the iPhone has been in the market.
In terms of people being "very satisfied" with their handsets, the poll shows Apple with a rating of 79%. RIMM comes in at 54% and Palm at 22%. Of those planning to buy a smartphone in the next 90 days, 35% plan to buy the Apple product.
Research In Motion appears to be holding its own in what is a fast-growing market for smartphones. The iPhone continues to be a once-in-generation product. Palm is toast.
Douglas A. McIntyre is an editor at 247wallst.com.
The ARS market has thrust its poisoned tentacles in another direction. After raising interest costs for issuers and wiping out the formerly "safe" cash holdings of individual investors, the Wall Street Journal reports that frozen ARS accounts have hit tech companies as well.
Specifically, the Journal lists $855.7 million worth of ARS holding on the books of these five tech companies, listed as follows:
These companies and others will probably need to write down the value of these securities unless the ARS market unfreezes. If there is an industry that's unscathed by this problem, I'd like to know. But for those who've invested in companies whose cash is frozen in these ARS accounts, there are many restless nights ahead.
Auction-rate securities were supposed to be cash equivalents. Individuals and companies could move in and out of them in a day. The financial instruments have existed since 1985. In an auction, any imbalance in securities bought and sold were picked up by banks and brokerages and sold at the next event. These auctions went on as often as several times a week.
The problem with the market is that when banks started to run low on money, they pulled their commitments to run the auctions, the market fell apart, and the securities do not trade. Because they are illiquid, their values are falling.
Many companies put cash into auction-rate paper to get a slightly higher yield than with government securities. The firms even put the money on their balance sheet as cash equivalents. Now that practice is haunting them.
Several technology firms are stuck with these investments. According toThe Wall Street Journal, Monster (NASDAQ: MNST) had $357 million of this paper at the end of last year. Palm (NASDAQ: PALM) had almost $75 million at the end of February. The companies are going to have to write-down some of the value of this capital which will affect their earnings.
The problem cannot really be blamed on the companies. The market for he paper is over 20-years-old and has functioned like clockwork until recently. It does raise the specter of lawsuits against the banks and brokerages who made the market. They positioned these securities as cash and then pulled the plug on the auctions.
It is one more headache for financial companies in trouble, but in this case, they probably deserve it.
Douglas A. McIntyre is an editor at 247wallst.com.
Once thought to be extremely safe, action rate securities have proved difficult to sell in this credit crisis. Tech companies are big holders of them and are taking charges left and right, including MetroPCS Communications Inc (NYSE: PCS), Palm Inc (NASDAQ: PALM) and Earthlink Inc (NASDAQ: ELNK), according to the Wall Street Journal.
NYSE Euronext Inc (NYSE: NYX) will look to increase its stakes in India's National Stock Exchange and the country's Multi Commodity Exchange, the Business Standard reported, once foreign ownership rules are eased. NYSE Euronext also intends to partner with the two Indian exchanges in order to help them develop their business.
WEB SITES:
Business Week reported that Brian Marckx of Zacks Investment Research said Bristol Myers Squibb Company (NYSE: BMY) may be an attractive takeover candidate for a larger pharma such as Pfizer Inc (NYSE: PFE) or France's Sanofi-Aventis SA (NYSE: SNY), both of which have been partners with Bristol on some of its products.
Palm (NASDAQ: PALM) is recently up 20 cents to $4.75.
PALM is expected to report Q4 EPS after the close tonight. RBC Capital says: "Recent stumbles suggest PALM is not out of the woods yet, and is still facing deep challenges."
PALM's overall option implied volatility of 82 is above its 26-week average of 60 according to Track Data, suggesting larger risk.
Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
A new study shows that Pfizer (NYSE: PFE)'s cancer drug Sutent may be linked to more instances of heart failure than previously thought. Some 15% of patients suffered heart failure when taking Sutent, according to results from a small study, a higher rate than the 8% previously recognized.
After already raising its offer for Rio Tinto (NYSE: RTP), a senior executive on Wednesday said BHP Billiton (NYSE: BHP) would have to raise it "considerably" to lure the miner into talks from the latest offer of 3.4 BHP shares for every RTP share -- a deal at worth around $147.4 billion.
While Research In Motion (NASDAQ: RIMM) co-CEO Jim Balsillie declined to give details about future product plans, he said his company may bring out a touchscreen version of its BlackBerry if customers want it. Of course, this was in direct response to Apple Inc. (NASDAQ: AAPL) iPhone, which has won praise for its innovative touchscreen control. RIM would introduce devices based on HSDPA. RIM customers experienced service disruption Monday and an early investigation indicated a problem caused by a recent upgrade aimed to increase capacity.
Research-In-Motion (NASDAQ:RIMM) sells one of the most popular smartphones in the world. The Blackberry does well because it allows business people to have an easy system that makes their e-mail portable. The software and hardware make the product an absolute necessity for many professionals.
All of that is well and good until the Blackberry systems fail. Yesterday, RIM's system was down. That took away all of the reasons for owning the device, at least for a day. It also gave competition from companies like Nokia (NYSE:NOK) and Palm (NASDAQ:PALM) a little foot in the door to convince business users that the Blackberry may not be the most reliable device on the market.
With customers who want 24-hour service, having the system down is monumentally frustrating. Similar problems have happened before. But if RIMM can't improve reliability, it leaves itself vulnerable to a host of customer defections.
Douglas A. McIntyre is an editor at 247wallst.com.
Research firm Canalys released its fourth quarter shipment data on the smartphone industry. The bottom line? Apple Inc. (NASDAQ: AAPL)'s iPhone is now in second place in the U.S.'s smartphone market. Globally, it's in third place.
Nokia Corp. (NYSE: NOK) remained the global market leader, shipping 60.5 million smartphones last year. While its shipments grew 69% in the fourth quarter, its smartphone market share declined year-over-year from to 53% from 54%.
Research in Motion Ltd. (NASDAQ: RIMM) shipments grew 121% globally compared with a year before, as did its share of the market, growing from a 9% to over 11%.
Then Apple swooped into the third place, pushing Motorola Inc. (NYSE: MOT) to fourth place, and capturing 6.5% of the global market, despite starting to sell iPhones (very) late in the second quarter.
Canalys also estimated "that Apple took 28% share of the fast growing US converged device market in Q4 2007, behind RIM's 41%, but a long way ahead of third placed Palm on 9%." [converged devices==wireless handsets and smartphones]
That was hardware.In software, Apple also made strides. While Canalys estimates, "Symbian had a 65% share of worldwide converged device shipments, ahead of Microsoft on 12% and RIM on 11%," in North America, Apple pushed Microsoft (NASDAQ: MSFT) to third place with a 21% share and took second place with 27%. RIM was the clear leader with 42%.
Pete Cunningham, Canalys senior analyst, said that "Apple has shown very clearly that it can make a difference and has sent a wakeup call to the market leaders." At the same time he warned that "a broad, continually refreshed portfolio is needed to retain and grow share in this dynamic market."
MOST NOTEWORTHY: Siemens , Siliconware Precision and Palm were today's noteworthy upgrades:
Goldman upgraded Siemens AG (NYSE: SI) to Buy from Neutral and views shares as defensive in the current environment.
Merriman upgraded shares of Siliconware Precision (NASDAQ: SPIL) to Buy from Neutral on valuation, as they believe the negative sentiment regarding the U.S. economy is already priced into shares.
JP Morgan upgraded Palm (NASDAQ: PALM) to Overweight from Underweight citing new smart-phone products expected in 2008 and stronger-than-expected Centro sales.
OTHER UPGRADES:
Pep Boys (NYSE: PBY) was raised to Neutral from Underperform at Credit Suisse.
Jefferies upgraded Pioneer Drilling (NYSE: PDC) to Buy from Hold.
Deutsche Bank upgraded Cablevision (NYSE: CVC) to Buy from Hold.
JP Morgan upgraded Halliburton (NYSE: HAL) from Neutral to Overweight.
Palm (NASDAQ: PALM) was also upgraded at JP Morgan from Underweight to Overweight. PALM shares are trading up over 9.5% in premarket action after closing up over 11% Friday.
UBS downgraded American Express (NYSE: AXP) from Buy to Sell. Shares are down some 1.5% in premarket trading.
Soleil downgraded Yahoo! (NASDAQ: YHOO) from Buy to Hold.
Walt Disney (NYSE: DIS)'s 3-D movie Hannah Montana & Miley Cyrus: Best of Both Worlds Concerttopped movie box offices, raking in $29 million for the biggest opening over a normally slow Super Bowl weekend, according to studio estimates on Sunday. Lionsgate's The Eye took the No. 2 slot at U.S. and Canadian box offices with a $13 million weekend. The No. 3 movie was romantic comedy 27 Dresses with $8.4 million.
General Motors Corp. (NYSE: GM) will introduce a new hybrid full-size pickup -- the 2009 GMC Sierra -- and a concept hybrid truck -- GMC Denali XT -- this week at the Chicago Auto Show, betting that pickup drivers have been itching to jump on the hybrid bandwagon.
Palm, Inc. (NASDAQ: PALM), the dazed and confused mobile smartphone manufacturer, released Q2 numbers yesterday after the market's close, showing an expected loss for its most recent quarter. The company saw a $9.63 million loss ($0.09 per share) on quarterly revenues of just over $349 million as smartphone competitors, higher than expected warranty costs and shipping delays all influenced the company's performance. In the year-ago quarter, Palm made a net profit of $12.77 million on just over $392 in revenue.
And it gets worse, as Palm gave dismal guidance for the quarter in progress. The once-giant handheld PDA company admitted to seeing losses in the range of $30 million ($0.31 per share) for the current quarter on revenue expectations of $310 million to $320 million. Investors understandably did not like what they heard, driving down Palm's share price from Tuesday's close of $5.93 to $5.35 in after-hours trading.
What's next for Palm? After starting to sell the lower-price Palm Centro (a $99 smartphone) in its Q2 period and canceling the Foleo miniature notebook portable computer (if that's what it was), the company's CEO, Ed Colligan, has some shoring up to do or he'll be skating on thin ice in 2008. Wait, he already is. Stating that "It's a transformational time so things could be a bit lumpy, but we'll do our best to manage through that," Colligan must make some radical moves in 2008 or be shown the door. Investors aren't patient when it comes to one disappointing quarter after another in an industry expected to continue growth for the next several years.
Before the bell: Futures higher as investors await data
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