MOST NOTEWORTHY: Drugstore.com, Sycamore and Aflac were today's noteworthy initiations:

• Kaufman Bros. believes Drugstore.com (NASDAQ: DSCM) is well-positioned for long-term growth and significant margin expansion, led by share gains in the OTC and prestige beauty verticals. The firm started shares with a Buy rating and $3.25 target.
  
• Merriman initiated Sycamore (NASDAQ: SCMR) with a Neutral rating and prefers to be on the sidelines given the company's concentrated customer base and lack of clarity on strategic priorities and ongoing business operations.
  
• SunTrust Robinson expects the Aflac's (NYSE: AFL) cancer insurance policies in Japan to benefit from concerns about the national health system. Shares were assumed with a Buy rating and $79 target.

OTHER INITIATIONS:

• Caris initiated Mylan (NYSE: MYL) with a Buy rating and $18 target.
  
• NetSuite (NYSE: N) was assumed with a Hold rating and $22 target at Deutsche Bank.
  
• Stanford initiated Time Warner (NYSE: TWX) with a Buy rating and $20 target.

NetSuite Inc. (NYSE: N), which develops web-based enterprise resource planning (ERP) software, is making its first acquisition as a public company. That is, the firm is shelling out $26 million for OpenAir.

Founded in 1999, the company develops software that helps services companies to manage projects. Of course, the company uses an on-demand model and has some top-notch partners, such as IBM (NYSE: IBM).

Let's face it, there's much room for efficiency in the services sector. What's more, it's a large market opportunity.

Interestingly enough, NetSuite will invest in the OpenAir software offering for at least the next ten years. No doubt, this will alleviate some of the potential fears of customers.

Although, the acquisition will weigh on future results. NetSuite has increased its 2008 loss estimate from $0.04 per share to $0.04-0.06 per share.

So far in today's trading, NetSuite's shares are down 3% to $22.05.

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.

MOST NOTEWORTHY: California Pizza, Lawson Software and Bare Escentuals were today's noteworthy initiations:

• Oppenheimer initiated California Pizza (NASDAQ:CPKI) with a Perform rating. The firm is neutral on the stock given the company's exposure to California and diminishing returns in new markets.
  
• KeyBanc initiated Lawson Software (NASDAQ:LWSN) with a Hold based on expectations that 1H09 will be challenged by a TTM sales headcount decline and the difficult IT spending environment.
  
• William Blair assumed Bare Escentuals (NASDAQ:BARE) with an Outperform rating. The firm estimates the company owns only a modest single-digit share of the nearly $9B U.S. cosmetics market, making its market opportunity attractive.

OTHER INITIATIONS:

• Citigroup initiated Hess Corp (NYSE:HES) with a Hold rating and $133 target.
  
• NetSuite (NYSE:N) was started with a Sell rating and $14 target at Piper.
  
• Morgan Keegan initiated Berry Petroleum (NYSE:BRY) with an Outperform rating.

According to its conference call, things look good for NetSuite (Nasdaq: N), which offers an on-demand enterprise resource planning (ERP) platform for small and medium size businesses. Yet, it wasn't enough for investors. So far in today's trading, the stock price is down 16% to $18.72.

But, on its face, the Q1 report was strong. Revenues spiked 47% to $34.1 million and the net loss fell from $9.28 million to $2 million.

In fact, NetSuite had more than one million log-ins for the quarter and there were more than 400 new customers. Then again, the company continues to innovate – with new offerings like OneWorld, which is a good fit with multinational companies.

At the same time, NetSuite is striking key deals for distribution. For example, there is a new alliance with BT (NYSE: BT).

No doubt, Wall Street can get jittery – especially in the short run. But, NetSuite likes to say that it is gunning for the "Fortune 5 Million" businesses, which is a multi-billion market opportunity. And despite attempts from competitors – like SAP (NYSE: SAP), which recently scaled back its plans – NetSuite is still positioned nicely.

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.

Nortel (NYSE:NT) is up over 8% on strong earnings.

Force Protection (NASDAQ:FRPT) is trading higher 14% on a new contract from the UK.

Investools (NASDAQ:SWIM) is off almost 26% on news that the SEC is conduting an informal inquiry.

NetSuite (NYSE:N) is down over 15% after posting weak quarterly numbers.

Stocks may trade differently in the pre-market than they do in the regular session.

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

Bessemer Venture Partners, which is the oldest VC firm in the US, has picked many winners such as Skype, VeriSign (NASDAQ: VRSN) and LinkedIn. So, what does the firm like right now? Well, one sector is on-demand business applications.

In fact, this week the firm led a $15 million investment in Intacct, which operates a web-based ERP system. In all, the firm has raised $29 million in the past nine months.

"We focus on small and mid size companies," said Marc Linden, Intacct's CFO, in an interview with me. "It's for those businesses that are graduating from Intuit's (NASDAQ: INTU) QuickBooks. And we estimate the market size at $7 billion."

No doubt, there are some tough competitors, such as NetSuite (NYSE: N). But with such a large market size, there should be room for a variety of players.

And what about the slowing economy? According to Linden, there is "no effect yet." Then again, by using an on-demand model, customers may be looking to Intacct to cut costs.

Tom Taulli is the author of various books, including The Complete M&A Handbook (www.mergerbook.com).

MOST NOTEWORTHY: Jefferies Group, Quality Systems and Techwell were today's noteworthy initiations:

• Friedman Billings initiated Jefferies Group (NYSE: JEF) with a Market Perform citing the difficult underwriting environment and challenging credit market.
  
• JMP Securities initiated Quality Systems (NASDAQ: QSII) with an Outperform rating and $35 target. The firm expects the company's practice management and electronic medical record solutions to benefit from growth opportunities within the ambulatory market.
  
• Techwell (NASDAQ: TWLL) was assumed with an Overweight rating and $14 target at Thomas Weisel, as they expect TWLL to have continued stable revenue growth given its market leadership and increased global security demand.

OTHER INITIATIONS:

• Bernstein initiated NetSuite (NYSE: N) with a Market Perform rating and $23 target.
  
• Keefe Bruyette started Comerica (NYSE: CMA) with a Market Perform rating and $37 target.
  
• BHP Billiton (NYSE: BHP) and Rio Tinto (NYSE: RTP) were assumed at ING with Buy ratings.

The folks at NetSuite (NYSE: N) certainly have good timing. They were able to launch their IPO late last year – before the equity markets came undone.

Now, the company has released its first quarterly report as a public company. Q4 revenues spiked 57% to $31.7 million and there was a net loss of $3.3 million, which was much better than the loss of $8.1 million in the same period a year ago.

NetSuite, which is majority-owned by Oracle's (NASDAQ: ORCL) Larry Ellison, is a provider of web-based business applications. Think of it as filling the gap between Intuit's (NASDAQ: INTU) QuickBooks and mega applications from SAP (NYSE: SAP) and Oracle.

And, it's a big market opportunity. In fact, NetSuite often says that it is focused on the "Fortune Five Million" companies.

But, as is the case with other web-based providers, there is some uncertainty in the marketplace. While NetSuite isn't seeing a fall-off, the company is still providing in-line guidance – with a full-year revenue projection of $153 million to $156 million, which is a 44% increase (on the top end).

Keep in mind that NetSuite had to deal with the severe tech recession of 2001-2002 and was able to actually thrive in the environment. A key reason is that companies were looking for cost-effective solutions.

In today's trading, NetSuite's stock is down 5.62% to $22.17.

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 DealProfiles.com.

MOST NOTEWORTHY: Earthlink, NetSuite and Gramercy Capital were today's noteworthy initiations:

• B. Riley assumed coverage of Earthlink (NASDAQ: ELNK) with a Buy rating and $10.60 target, as they view the leading dial-up and broadband ISP as an attractive value-play.
  
• Citigroup initiated shares of NetSuite (NYSE: N) with a Sell rating, as they believe the current valuation implies the company needs to show significant upside.
  
• Gramercy Capital (NYSE: GKK) was initiated with an Overweight rating at JP Morgan on valuation and dividend yield.

OTHER INITIATIONS:

• Goldman started Fiserve (NASDAQ: FISV) with a Buy rating.
  
• Merrill initiated Yingli Green Energy (NYSE: YGE) with a Buy rating.
  
• Roche (OTC: RHHBY) was assumed with a Buy rating at Societe Generale.