The Commerce Department's Q4-2007 final revision for GDP came in at +0.6%, but that was in-line and the data is now more than 75-days old. But it does highlight the concerns that the growth rates this quarter just can not be good. It also set the tone for more selling. It just goes to show that it still pays in today's climate to sell when you are feeling good about the market and buy when you feel overly concerned.
The Federal Reserve also auctioned off some $75 billion in treasury securities after receiving bids for some $86.1 billion. This was the first auction of its kind and the next auction is set for April 3. Below are the unofficial closing prices:
If you look at the unusual increase seen in short selling in many of the NASDAQ names from this morning, you might scratch your head. But that's the world we live in.
The US government has been looking into a deal which would allow Chinese interests to buy US telecom equipment company 3Com (NYSE: COMS). That investigation is now being extended, a sign the the transaction could be killed.
According to the FT, The Committee on Foreign Investment in the United States "is studying possible national security implications of the 3Com takeover." Huawei Technologies, a Chinese telecom equipment maker, could end up with intrusion prevention technology used by the US Defense Department..
The investigation pits the needs of investors against concerns of the government. 3Com lost money in the last quarter. The only reason the stock trades at $4.52 is the buyout offer. The stock could easily drop to it recent low of $3.22 if the deal is killed.
Aside from the investor pain that the government could cause, the news opens the door wider to issues of which companies are strategic to US interests and which are not. As sovereign funds from other nations put money into US banks and technology companies the problems are likely to become more complex.
The American government is getting into the business of deciding whether shareholders can get money from some corporate buyouts.
Douglas A. McIntyre is an editor at 247wallst.com.
This morning 3Com (NASDAQ: COMS) announced thatprivate equity firm, Bain Capital, would put it out of its misery and pay $2.2 billion in cash for the company. 3Com has lagged so far behind that it has been painful to watch. 3Com and Cisco Systems (NASDAQ: CSCO) indeed could provide at least two to three chapters in an investing teaching and history book. Here's the CliffsNotes version:
Summer of 1994 was a tough technology environment. Technology had a great run from 1990 through 1994, till summer that is. Valuations contracted and investor fatigue set in for about four to five months. I was traveling through Silicon Valley with a couple of British portfolio managers visiting companies. One day we had a breakfast meeting with then CEO Eric Benamou of 3Com and lunch with a senior VP at Cisco (whose name escapes me). Benamou was an intellectual, a refined man, but did not possess the street smarts necessary for a tech company CEO. He was arrogant and bluntly declared that Cisco's days were numbered and 3Com would acquire any tech company necessary to achieve total domination. OK, great, and we went on to Cisco for lunch.
The senior VP was a classy guy, never said a bad word about any competitor and just explained Cisco's game plan and execution philosophy. Here is the funny part: In July 1994, BOTH companies had a market capitalization of $9 billion.
According to the Wall Street Journal [subscription required] Marlborough, MA-based 3Com Corp. (NASDAQ: COMS) is going private with the help of Bain Capital and Huawei Technologies for more than $2 billion -- or $5.50 a share. 3Com is up 34% to $4.94 in pre-market.
3Com has been hobbled for most of this decade but it has a storied history. Its founder invented Ethernet -- a way for computers to share information. It bought a company that made a very popular modem during the era when people dialed up the Internet on a telephone line. And with this acquisition came a technology which became the Palm Pilot -- a Personal Digital Assistant (PDA) which was an indispensable appendage for dot-commers in the 1990s.
Unfortunately, 3Com's financial position was weak -- it lost $89 million on $1.27 billion in sales in the year ending June 2007 but it generated $58 million in cash. It couldn't maintain its technology lead and it was surpassed by competitors in all its markets.
Universities have been known to take donations from anyone willing to write a check. For those willing to donate significant amounts of money, usually alumni, there's sometimes an atrium, a street or even a building named after them as a tribute. Then renaming the University of Iowa's College of Public Health to The Wellmark Blue Cross & Blue Shield School of Public Health shouldn't turn too many heads. Right?
The University of Iowa is contemplating whether to rename its College of Public Health after the philanthropic arm of Blue Cross & Blue Shield in exchange for a $15M donation, USA Today reports. This has sparked debate on where universities should draw the line when accepting corporate gifts.
MOST NOTEWORTHY: IBM Corp (IBM), Amazon.com, Inc (AMZN), Hewlett-Packard Co (HPQ), Universal Technical Institute (UTI) and 3Com Corp (COMS) were some of today's noteworthy upgrades:
Goldman upgraded IBM Corp (NYSE: IBM) to Buy from Neutral to reflect the company's valuation creation moves, as the firm believes IBM's accelerated buyback program and pension expense reduction will be accretive to earnings.
Despite ThinkEquity's belief that the company was faltering, Amazon.com (NASDAQ: AMZN) customers have grown in size and accelerated their purchases. The upgrade to Accumulate from Source of Funds was based on Amazon.com's increase of market share in core categories.
AG Edwards upgraded Hewlett Packard (NYSE: HPQ) to Buy from Hold based on higher estimates, continued share gains and the evidence that HPQ has continued its cost cutting abilities.
BMO Capital upgraded shares of Universal Technical Institute (NYSE: UTI) to Market Perform from Underperform following the company's Q1 results.
3Com (NASDAQ: COMS) was upgraded to Hold from Sell at Matrix USA based on the company's improving balance sheet ..
Now that 3Com (COMS) has purchased the rest of its H3C joint venture in China from Huawei Technologies for $882M, what could be up next for network equipment operator 3Com?
Try being bought-out itself.
It's almost paradoxical to state that a company that recently made a major purchase is a setting itself up to be acquired, but that may very well be the case with 3Com given the increasing amounts of money available in capital markets, and the characteristics unique to this particular potential deal. Sources say potential bidders for 3Com could include established companies, or possibly, although less likely, a private equity player, or possibly a company/private equity combination.
What's generating the deal buzz? A purchase of 3Com may make considerable sense for an existing company operating in/near that space, and that also views 3Com as a suitable fit, both operationally and in terms of market characteristics. Analysts say that 3Com may make sense for a Juniper (JNPR) and Nortel Networks (NT).
Also, previously there were reports that private equity firms were interested in Huawei's H3C stake: a private equity player may be interested in the total 3Com package now, but analysts say the more likely bidder, if one occurs, would come from a publicly listed company.
MOST NOTEWORTHY: Notable companies from today's downgrade list include the New York Stock Exchange (NYX) and Nokia (NOK).
JP Morgan downgraded the New York Stock Exchange Group Inc. (NYSE:NYX) to Neutral from Overweight based on valuation; they also foresee potential integration issues with Euronext.
Nokia Corp. (NYSE:NOK) was downgraded to Hold from Add at West LB.
OTHER DOWNGRADES:
YRC WorldWide Inc. (NASDAQ:YRCW) and Arkansas Best Corp. (NASDAQ:ABFS) were downgraded at Stephens to Underweight from Equal Weight, citing the deteriorating Less-Than-Truckload environment.
Bear Stearns downgraded 3Com Corporation (NASDAQ:COMS) to Peer Perform from Outperform citing increased execution; Lehman Brothers downgraded 3Coms (COMS) to Underweight from Equal Weight.
After reaching $100 a share in 2000, it's been mostly torture for shareholders of 3Com as it spiraled lower and lower. But today, the stock got some juice, increasing 12.58% to $5.01.
A report from Bloomberg indicates that the company is a possible takeover target. The theory is that one or more private equity firms will make a bid of $7 per share.
Apparently, the big interest is in 3Com's joint venture with Huawei Technologies Co. This has been a key growth driver.
But, with the recent big buyout deals – such as the takeover of Freescale – there are now a lot of rumors swirling. For the most part, rumors are just that. So, as always: investors beware.
Tom Taulli is the author of various books, including the Complete M&A Handbook and operates InvestorOffering.com.
The US government has been looking into a deal which would allow Chinese interests to buy US telecom equipment company 
This morning 
Analysis provided by Joseph Lazzaro of 
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