MAJOR PAPERS:

• According to Yahoo! Inc (NASDAQ: YHOO), the Wall Street Journal reported that a severance plan investor Carl Icahn said is "excessively expensive" would come into play if Icahn is successful in his plan to take control of the company's board; Yahoo! maintained that the plan is structured to prevent Yahoo! from altering or dismantling it while under a proxy challenge.
• The Financial Times reported that Lehman Brothers Holdings Inc (NYSE: LEH) almost reached a strategic deal with a group of Korean financial institutions as part of its recent capital raising initiative, and the investment bank may still sign an agreement with the Korean companies this year, inside sources said.
• According to the Financial Times, Merrill Lynch & Co Inc (NYSE: MER), UBS AG (NYSE: UBS) and Citigroup Incorporated (NYSE: C), which are most exposed to MBIA Inc (NYSE: MBI) and Ambac Financial Group Inc (NYSE: ABK), are facing further write downs of up to $10B after the bond insurers lost the battle to keep their triple A credit ratings in tact.
• A source familiar with the matter told dealReporter that Barnes & Noble Inc (NYSE: BKS) is conducting due diligence, but has not established whether it will competitively bid for Borders Group Inc (NYSE: BGP). Should Barnes & Noble indicate real interest, the biding process could be delayed, the source said.

• The Detroit News reported that Ford Motor Company (NYSE: F), in an effort to keep up with changing consumer demand in the U.S., is assembling a plan that will shift entire truck plants to car production.

Borders Group, Inc. (NYSE: BGP), the arch-rival of bookseller Barnes & Noble, Inc. (NYSE: BKS), is struggling mightily. It may not go away, but it seems that there's a good chance that it will continue its business imperatives under new owners. According to a press release issued by the company, as well as this AP article, the company appears to want to sell itself at this point because, to be blunt, management appears to have failed at its job of preserving and growing shareholder value; it also has failed against online entities such as Amazon.com, Inc. (Nasdaq: AMZN) and other retailers such as Wal-Mart Stores, Inc. (NYSE: WMT). Why, as I write this, the stock is down 39%, and it is below $5 per stub. Yikes! I've been feeling pain with some of my financial stocks lately, but I feel bad for Borders shareholders, that's one torturous drop in value.

The retailer just isn't doing well; in fact, it decided to drop its dividend payout because it no longer can afford it. I'm sure shareholders were expecting such a move, but when it happens, it's always such a slap in the face. Borders is having cash issues, management doesn't seem to be confident in its current business structure, it missed earnings estimates, revenues are down, etc. Funny thing is, I actually prefer the shopping atmosphere of my local Borders store over my local Barnes & Noble outlet. Can't always go by personal experience, I guess.

Well, if one wants to speculate, one could buy some lottery tickets -- I mean, shares -- in Borders Group. I won't. Yes, catalysts could come down the line for the company, but for now, the market seems to be telling investors that this is one to stay away from.

Disclosure: I don't own any of the companies mentioned here; positions can change at any time.

MOST NOTEWORTHY:

• Borders Group was downgraded to Sell from Neutral at Goldman Sachs, as the firm believes a merger with Barnes & Noble Inc (NYSE: BKS) is less likely following the FTC's decision to oppose the Whole Foods Market Inc (NASDAQ: WFMI) and Wild Oats Markets Inc (NASDAQ: OATS) deal.
• Cache was downgraded to Hold from Buy at Soleil, as the firm recommends staying on the sidelines until execution improves. Merriman also downgraded shares, to Neutral from Buy, to reflect the company's outlook for the remainder of FY07. Merriman believes upside may be limited until Cache can show consistently improved sales and earnings results.
• Gilead Sciences was downgraded to Hold from Buy at Deutsche Bank and to Neutral from Outperform at Credit Suisse citing high expectations for the company and little room to beat Street estimates.

• Merrill Lynch downgraded shares of Adams Respiratory Therapeutics Inc (NASDAQ: ARXT), Par Pharmaceutical Companies Inc (NYSE: PRX) and Sepracor Inc (NASDAQ: SEPR) to Neutral from Buy.
• First Albany downgraded shares of Volterra Semiconductor Corporation (NASDAQ: VLTR) to Buy from Strong Buy.
  
• ThinkEquity downgraded shares of Cree Inc (NASDAQ: CREE) to Sell from Accumulate.
• Morgan Keegan downgraded shares of Panera Bread Company (NASDAQ: PNRA) to Market Perform and Outperform following weak same-store-sales and guidance.