CBS (NYSE: CBS), the famous broadcaster that competes with Disney's (NYSE: DIS) ABC, News Corp.'s (NASDAQ: NWS) Fox, and General Electric's (NYSE: GE) NBC, reported Q2 earnings on Thursday after the bell. If you judged the performance solely by the profit drop, you would have no choice but to feel sorry for CBS. The media company made an adjusted 8 cents per share. Last year at this time, CBS pulled in an adjusted 49 cents per share.

But the market looked past the significant income decline and instead seemed to focus on the fact that management beat Wall Street's expectations by a penny, according to Earnings.com estimates. Shares of CBS were up over 7% during yesterday's after-hours session.

CBS Corporation (NYSE: CBS) lost money in the third quarter (to see the data, you can click here to link to a pdf file). The loss was huge. Would you believe the red ink was equal to $18.58 per share from continuing operations? If you're a shareholder, you're probably shuddering at this point. But hold on, we're talking loss from a GAAP point of view. On an adjusted basis, excluding various charges (including the effect of the CNET purchase), CBS took in $0.43 per diluted share from continuing operations. According to my earnings preview, analysts were looking for a number around $0.40 per share. That's more like it. Yet, there's another angle to the CBS story that won't be so reassuring. And that angle has to do with cash flow.

You see, CBS really promotes its dividend. For a dividend to be considered safe and strong, it needs to be backed by free cash flow. Well, during the third quarter, CBS produced no free cash. It used $38 million for its corporate activities. Before anyone panics, management was quick to point out that, for the nine-month period, free cash flow was a positive $1.4 billion. CBS paid out about $524 million in dividends. So, that should allow for some comfort. Still, for a company that likes to base itself on returning value to shareholders, that does give me pause. Yes, it's only one quarter, but we are stuck in an awful economy right now, and the advertising outlook seems pretty challenged going forward. The Wal Disney Corporation's (NYSE: DIS) ABC, General Electric Company's (NYSE: GE) NBC, and News Corp.'s (NYSE: NWS) Fox are all in the same boat. Management does explicitly state in the earnings release that it's going to keep a strong eye on costs. I hope so. I also hope it'll keep a strong eye on the ratings of its television shows and continue to look for programming that can keep the cash coming. CBS has done well during the opening weeks of the new season.

Can CBS' content win the day and justify the stock's current yield? That's the big question. Since CBS' stock sports a yield of over 11%, the market is basically saying that bad things are to come. But, if management can sustain the dividend, then the yield can be considered a huge asset at this point. I'd be willing to give CBS the benefit of the doubt over the long term, but if you're thinking of trading the stock, I'd have a firm exit strategy in mind and use a tight stop. Wall Street has been in a very fickle mood lately, so anything can happen to stock prices at any moment. Executive chairman Sumner Redstone is very confident in the company. I'm not sure how big an endorsement that is, but it's something, at least, right?

Disclosure: I own Disney and GE; positions can change at any time.

This post is one in a series on prominent company nicknames. See all 25, and share your thoughts and memories about the Tiffany Network below in the comments.

If CBS Corp.'s (NYSE:CBS) nickname The Tiffany Network were newly coined, I'd speculate that it referred to the long history of Tiffany's, and how the current CBS viewing public had probably begun shopping there back in the '20s. If the company has a more recently gained nickname, it would be the silver (-haired) network, due to the skewing of its viewership toward the geezer crowd.

In reality, the Tiffany moniker hearkens back to the CBS of radio's heyday and the early days of television. With the likes of Edward R. Murrow reporting from London during the Blitz, Orson Wells scaring the bejebus out of listeners with his broadcast of The War of the Worlds, the hit multi-cultural comedy I Love Lucy, and the iconic western Gunsmoke, the network's reputation for quality was once as glittering as one of Tiffany's diamond-pavéd bracelets.

How the mighty have fallen. CBS, with debacles such as the Katie Couric news anchor stint, now lags behind Fox in weekly ratings.

The Tiffany Network is part of a massive entertainment company with fingers in television (66% of revenues), radio (remember radio?) (12%), outdoor advertising (16%), and publishing (6%). Yes, those are all very 20th century businesses. The question troubling current investors is just how the company will move into the 21st century without swapping all its diamonds for rhinestones?

Some people are so eager for Microsoft Corp. (NASDAQ: MSFT) to buy Yahoo! Inc. (NASDAQ: YHOO) that they will do anything to make it happen -- even spread rumors to gullible members of the media. I pity the investors who bought Yahoo!'s stock on this rumor.

Earlier today, TechCrunch's Michael Arrington reported that the talks were back on but also noted that "The information we have is thin, but what one source is saying that Microsoft is talking a price lower than the $33." Thin? So even Arrington was not sure whether he was being told the truth. Interesting.

CNET's Dawn Kawamoto refuted TechCrunch's post, arguing that all Microsoft wanted to do was "sweeten its previous offer" of a partial buyout of Yahoo!'s search business, citing "one major investor who has been in contact without parties."

So, Kawamoto is taking the word of one person to make such a bold statement. This person must be very important if both Microsoft and Yahoo! are willing to confide their most inner-most confidences in him or her. Or maybe not. It's tough to tell. Dow Jones Newswires also denied Arrington's report but added that its sources "indicated the companies might be open to alternative transactions" whatever that means.

Some investors shy away from low priced stocks., but Rick Aristotle Munarriz thinks some stocks under $10 have nice growth potential. Here's his list of five such stocks to consider.

• Alvarion Ltd. (NASDAQ: ALVR) is currently at $8.98; its development trajectory looks impressive if we take into account the fact that it has gained 53% over the past two months. In addition, its quarterly earnings results and its cash-rich balance sheet point to further growth.
• Sirius Satellite Radio Inc. (NASDAQ: SIRI), currently at $2.72, is showing a lot of potential as its subscriber base continues to increase, while reducing its quarterly losses. Munarriz also cites the company's advantages tied to its pending merger with competitor XM Satellite Radio (NASDAQ: XMSR).
• Builders FirstSource Inc. (NASDAQ: BLDR) is currently at $7.48, down from $23 two years ago. Despite the fact that the company's quarterly earnings numbers weren't so good, BLRD was able to gain market share and is nicely positioned for a recovery in the next couple of years.
• Internet Brands Inc. (NASDAQ: INET), currently at $6.48, is seen as a good investment in the current dot-com world. Last week's $1.8 billion decision by CBS Corp. (NYSE: CBS) to acquire CNET Networks (NASDAQ: CNET) could be a sign that we should consider Internet Brands and its high traffic volume. Internet Brands has several pages that have high advertising potential, and should see this pay off in the future, or lead to a possible buyout by one of the major players.
• Natuzzi (NYSE: NTZ) is currently trading at $3.77. The company is facing some trouble related to its declining revenue and profit, but it is has the advantage of a lot of cash on its balance sheet.

MOST NOTEWORTHY: The Department store sector, SanDisk and CNET Networks were today's noteworthy downgrades:

• Goldman downgraded the department store sector to Neutral from Attractive after raising its 2008 oil forecast to $149 from $115, as it believes higher gas prices will impact consumer discretionary spend and sentiment. Goldman downgraded JC Penney (NYSE: JCP) and Nordstrom (NYSE: JWN) to Neutral and also removed Kohl's (NYSE: KSS) from its Conviction Buy List.
  
• JMP Securities downgraded SanDisk (NASDAQ: SNDK) to Underperform from Market Perform based on increased competition in NAND, a potential decline in royalty income, valuation, and lack of catalysts from flash-based solid state drives.
  
• CNET Networks (NASDAQ: CNET) was cut to Neutral from Buy at Banc of America following the tender offer from CBS (NYSE: CBS).

OTHER DOWNGRADES:

• Merrill downgraded Regions Financial (NYSE: RF) to Sell from Neutral.
  
• B. Riley downgraded Exar (NASDAQ: EXAR) to Neutral from Buy.
  
• Albermarle (NYSE: ALB) was lowered to Neutral from Overweight at JP Morgan.

So the big news on Thursday was CBS' (NYSE: CBS) hefty $1.8 billion purchase of CNET (NASDAQ: CNET). Douglas McIntyre already explained why this was such a "weird deal" in an excellent article that you can read here. I'd like to expand on that thinking a bit by asking if it should have been Viacom (NYSE: VIA), as opposed to CBS, in the buying seat.

Remember "old Viacom"? Old Viacom was composed of CBS and "new Viacom", the latter being the Viacom of today. I know, confusing, but that's how things are when a big media conglomerate splits in two. Anyway, there was a general mandate given to both companies, one that basically stated the logic of CBS being an entity that focuses on cash flows and dividend increases while new Viacom would focus on acquisitions to promote capital appreciation of the company's stock. Sure enough, the yield on CBS tells the tale perfectly.

So, I have to ask, what gives? I mean, a check of CBS' latest 10K shows that the broadcaster generated $2.2 billion in operational cash flow in 2007. I think paying $1.8 billion for anything, let alone a questionable asset vis a vis CBS' core media competencies, might be too much given CBS' mission to return a lot of value to shareholders over the long-term in the form of dividends.

The markets got some extra relief today as weekly jobless claims only rose by 6,000 to 371,000. The Philly Fed also showed that manufacturing contracted slower than expected as output fell by 0.7% in April. Below are the unofficial closing prices for major index levels:

• DJIA 12,988.91 +90.53 +0.70%
• S&P500 1,423.28 +14.62 +1.04%
• NASDAQ 2,533.73 +37.03 +1.48%
• 10 Yr Bond(%) 3.8430% -0.0950
• 52-WEEK LOWS
• TOP ANALYST CALLS

China Architectural Engineering, Inc. (AMEX: RCH) enjoyed another massive day as its stock rose another 23% to $10.17 late in the day based on construction, architecture, and engineering needs that will be necessary in China after that earthquake.

Over the past couple weeks, I've attended several conferences, such as Warrillow and Digital Hollywood. Of course, a big topic is New Media – and how it will somehow kill Old Media.

But, it seems that Old Media is still alive and well. In fact, this week we've seen some key media deals; that is, CBS' (NYSE: CBS) $1.8 billion deal for CNET Networks (NASDAQ: CNET) and Comcast's (NASDAQ: CMCSA) $175 million purchase of Plaxo.

Funny enough, yesterday I had breakfast with a big-wig from Comcast (from the ecommerce division). While he said that his revenue line was still modest – compared to the rest of the organization – it was still growing at a rapid clip.

He was also a big fan of email marketing and mentioned that experimentation was critical (and, with Plaxo, I think he'll need a lot of creativity to make the deal work). Yet, he also extolled the virtues of synergy ... between Old and New Media.

If anything, I think Old Media can bring some discipline to web properties. For example, CNET is a bloated organization and could use some aggressive cost cuts.

Oh, and Old Media still has a ton of money to throw around. So I suspect we'll see lots more dealmaking.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

CNet Networks (NASDAQ: CNET) closed at $7.94 Wednesday.

CBS (NYSE: CBS) announced it agreed to buy CNET for approximately $1.8 billion, or $11.50 a shares. CBS says the acquisition will make CBS one of the 10 most popular Internet companies in the United States.

CNET overall option implied volatility of 50 is below its 26-week average of 55 according to Track Data, suggesting decreasing price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

TheStreet.com's Jim Cramer says the value guys threw this party, so respect the hosts.

Sometimes you just feel beaten into being positive. You just say, "OK, enough, I will accept the positives as they are being put out, not as I believe they are."

That's how I felt yesterday about Freddie Mac (NYSE: FRE) (Cramer's Take). The company put out financials yesterday that looked better than expected, and for once I didn't question whether they were.

I didn't because the earnings from so many of the feckless players -- the Fannies (NYSE: FNM) (Cramer's Take), the Washington Mutuals (NYSE: WM) (Cramer's Take) the MBIAs (NYSE: MBI) (Cramer's Take) and the Ambacs (NYSE: ABK) (Cramer's Take) -- are all being greeted with a bizarre positive response, so bizarre that I bought into the "better than expected" rhetoric because I don't want to fight the value guys who are in control right now.

Elsewhere on the site, Doug Kass has been putting up some very strong arguments that numbers from the likes of Freddie are less than meets the eye.

The Associated Press reports that CBS Corp. (NYSE: CBS) is buying CNet Networks Inc. (NASDAQ: CNET) for $1.75 billion. This $11.50 a share deal is a 45% premium over Wednesday's closing price

CNet's Web sites include News.com, TV.com, Mp3.com, MySimon and GameSpot. And CBS expects to use CNet to tap into the Internet advertising market. This deal raises the question of whether any CBS competitors will decide to get into the game of buying Internet content companies.

Here are three possible targets:

• TheStreet.com (NASDAQ: TSCM) - This provider of business, investment and ratings content has $65 million in sales and a market cap of $236 million.
• TechTarget (NASDAQ: TTGT) - This provider of online content for buyers and sellers of corporate information technology (IT) products has $95 million in sales and a $531 million market cap.
• WebMD Health Corp (NASDAQ: WBMD) - This provider health information services to consumers, physicians and other healthcare professionals, employers and health plans has $332 million in sales and it's market capitalization is $1.7 billion

I think traditional media companies buying Internet ones could become a trend. It would only take two more such deals to make it one.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in the securities mentioned.

Before the bell: Futures higher as investors await data

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).

CNET (NASDAQ:CNET) is up over 45% on news of a buy-out from CBS (NYSE:CBS).

Sina (NASDAQ:SINA) is up about 10% on an analyst upgrade.

Barclays (NYSE:BCS) is off 3% on weak earnings and high write-offs.

Ctrip.com (NASDAQ:CTRP) is off 8% over worries about the impact of the earthquake in China on its business.

Douglas A. McIntyre is an editor at 247wallst.com and author of Ten Stocks Under $10.

CBS (NYSE: CBS), a television network, is buying CNET (NASDAQ: CNET), a collection of technology websites. Other than the fact that the deal makes no sense, it is perfect.

CBS is even paying a premium for the privilege of owning a company that no one else seemed to want. Jana Partners and other activist investors have been pushing for a sale or break-up of CNET, but the news must be beyond the wildest dreams. CNET is up almost 50% on word that CBS will pay $11.50 for a stock which was trading at under $8.

Management's case for the buy-out is that "The acquisition will make CBS one of the 10 most popular Internet companies in the United States, with a combined 54 million unique users per month, and approximately 200 million users worldwide," according to the company.

However, CNET has had trouble making money on its large audience of internet users, to some extent because those readers are spending time with online tech blogs. The firm does have a large software download business, but quarterly statements do not indicate that it is a large or profitable business.

Perhaps no one will ever understand the CBS motives. The company is controlled by Sumner Redstone, who has done odd things before.

Douglas A. McIntyre is an editor at 247wallst.com.