Analyst Upgrades

• Air Products (APD) to buy from hold at Deutsche Bank.
• Zimmer (ZMH) to outperform from neutral at RW Baird.
• SunPower (SPWRA) to buy from hold at Jefferies.
• Brocade (BRCD) to buy from hold at Wunderlich and at ThinkEquity.
• Duke Energy (DUK) to neutral from underperform at BofA/Merrill.
• NewStar Financial (NEWS) to outperform from market perform at Keefe Bruyette.
• Hormel Foods (HRL) to hold from sell at Soleil.
• Inspire Pharma (ISPH) to hold from sell at Duncan-Williams.
• Alnylam (ALNY) to buy from neutral at Roth Capital.
• Weight Watchers (WTW) to equal weight from underweight at Morgan Stanley.
• Raytheon (RTN) and Toreador Resources (TRGL) to outperform from sector perform at RBC Capital.

How are readers finding the news? Well, increasingly, the answer is Facebook. The social networking site, which boasts well over 350 million registered users, is now the fourth largest referral source of traffic to online news destinations. Almost a year ago, only 0.5% of traffic to news and media sites came from Facebook. Today, that level is 3.5%, according to data from Web analytics firm Experian Hitwise.

Only Google (GOOG), Yahoo! (YHOO) and MSN (MSFT) send more traffic to news sites. Google News, a subset of the search engine giant, failed to keep pace with Facebook, despite the fact that it exists specifically to send Internet users to media outlets. Only 1.39% of referrals came from this source.

According to a published report in The Wall Street Journal , the Associated Press (AP) and Yahoo! (YHOO) are close to a deal that could drive up the price on AP stories distributed through Yahoo!'s news site.

The ever-popular "people familiar with the matter" told The Journal that the deal would include tighter restrictions, which would drive the price of the content higher. This deal could bring about a resolution in the "increasingly urgent issue in the media industry" of determining how news organizations and Internet outlets can co-exist. Some publishers feel that the Internet portals "unfairly profit from their work and cost them tens of millions of dollars in revenue."

The New York Times (NYT) reports today that newspapers dominate the news creation business.

This is an interesting twist -- instead of touting readers or paid circulation or ads or total revenue, it's talking about production. It's almost as if Ford (F) were to announce: "We make more cars than anyone else." Who the hell cares if they sell any, right? What's important is production, not sales! For the Times, and print media in general, it feels like yet another attempt to justify its existence and "prove" that it is more valuable than the more cost-effective and nimble online outlets.

Often, we confuse winning with being the best. This isn't always the case. There are plenty of ways to get ahead when you don't have the top product on the market. The smoke-filled backroom meetings may be a thing of the past, but the net effect lingers. This is exactly what went down, according to a Reuters report, when Microsoft (MSFT) had a chat with News Corp (NWS).

Microsoft suggested a relationship with News Corp which would involve the latter's yanking its news sites from Google (GOOG) ... for a fee, of course. This would cost the search engine giant -- which is also a news aggregation giant -- access to some hefty publications, including the Wall Street Journal, the Sun and the New York Post.

The mega pharmaceutical merger between Wyeth (NYSE: WYE) and Pfizer (NYSE: PFE) is one step closer to becoming official today after overwhelming approval by Wyeth shareholders.

The shareholder vote to sell Wyeth to Pfizer was not even close. Around 98% of shareholders voted to approve the sale, which is expected to happen by the end of the year.

The industry standard in journalism, The New York Times, is revisiting the issue of charging for online content.

New York Times (NYSE: NYT) Chairman Authur Sulzberger, Jr., told a Stony Brook (N.Y.) University audience Thursday that the company is considering "incremental" charges for website users, while keeping most of its site free, Bloomberg News reported.

If it takes a good man to admit when he's wrong, then I'm up there.

My error: the speed of the decline of print newspapers. They're not dropping slowly: they're dropping like flies. And the metro dailies appear to be among the weakest: Detroit, Philadelphia, Chicago, San Francisco, Seattle, Denver. Who's next?

A journalism colleague called from Washington, D.C.: his reporter sister was laid off in Denver, whose ex-college roommate, the editor, got the axe in Seattle, and on and on it goes.

The big error in news/editorial conference rooms (and in this space, I might add): the failure to anticipate the speed of the decline of revenue. It's crumbling, due to the internet and the pronounced recession. (And here's hoping it's just a pronounced recession.) The online operations of many print dailies are doing OK-to-good, but the problem is they've started from such a low base and the ad market has become so fragmented/dispersed on the web that the web sites can't increase revenue fast enough to support the increasing losses from the print daily. The solution? Obviously, stop the print bleeding. In other words, shut down the print newspaper. And down they go. It is so sad. As noted earlier, some print dailies will survive with niches/specialization, but their overall operations will be smaller, due to the considerably lower gross annual revenue (at least initially) on the web.

Shares of the Washington Post Company (NYSE: WPO) are trading in the red this morning after the company reported that its fourth quarter profit dropped by a massive 77%. Net income came in at $2.01 per share, verse $8.71 per share in the same period last year.

As I noted in the earnings preview yesterday, the company's flagship newspaper and its magazine division (Newsweek Magazine) have been hit hard with losses in advertising revenue, and both had a dismal 2008 year. The company's newspaper division lost $14.4 million in the fourth quarter and had a $192.4 million operating loss for the entire 2008 year. Its newspaper division had a slight profit of $10.9 million in the fourth quarter, but on a full year basis it posted a loss of $16.1 million.

It is pretty obvious to investors that the Internet has accelerated the decline in print newspaper readership. It is also clear that the Internet is contributing to business model changes (and in many cases outright news/editorial budget reductions) at print magazines.

However, that the Internet would also compel changes in broadcast network news -- and in particular, the nightly network newscast -- might be viewed as less obvious. But that, in fact, appears to be the case.

Already dealing with a cable/satellite channel explosion that's decreased their viewership due to audience fragmentation (basically people have more channel choices), network news now must increasingly cope with the reality that adults tuning in have already seen and/or read about on the web the day's top news stories by the time the nightly newscast airs.

This post is part of a series where personal finance expert Dan Solin looks at money secrets that help the rich stay rich. See them all.

Bad news sells. Good news is boring.

Inside media types will tell you that they are guided by this basic rule: If it bleeds, it leads.

The financial media is no exception.

There is a steady drumbeat of news about a "deep recession" or even another "great depression." How many times in recent months have you read about the "market crash" or the "financial meltdown," all meant to convince you that it really is different this time?

Is it really?

In September 1998, Newsweek carried a major story about an "unprecedented" worldwide "economic convulsion."

Fortune predicted "a fundamental change in the world's economic condition" in September 1998. Time Magazine, in June 1970, opined that we were in "the worst economic conditions since the Depression."

A "panic on Wall Street" was headlined by the Philadelphia Inquirer in October 1987.

The list is endless.

As the newspaper industry is assaulted by bloggers on one side and readers' decreasing willingness to pay for content on the other, the industry in searching for the right model.

Current trends show companies like the New York Times (NYSE: NYT) lowering or removing the "pay wall" between users and content. The NYT recently discontinued its Times Select section, which required subscription fees, and since then, traffic to parts of the site that previously required payment has increased greatly.

So, it's not surprising to read an article today in PaidContent.org that claims similar success with a change in the model at the Financial Times' website. PaidContent.org reports claims by staff at FT.com that admit to traffic and registration increases due to a recent change in the subscription structure.

"FT.com now allows readers coming in from blogs and other aggregators to read five stories a month for free and another 30 for free upon registering with the site," says PaidContent.org. After that, users would have to pay up.

The result?

In my day job as an analyst, I hear time and time again the conspiracy theorists, claiming that "the big guys" are out to get us, making it impossible to make money in the market. While insider buying is a good divining stick when analyzing companies, the idea that the institutions and insiders are just sitting, crouching in waiting, to sucker us into making investments decisions just to swipe our money is ludicrous.

While there are certainly cases of misdeed or asymmetrical information, this is not the case. Playing fields are generally level for all parties. That's what the SEC, FINRA and many governing bodies are there for -- to protect investors.

So, I find it interesting to read, on a couple of accounts, about Oscar Pistorius, the double amputee sprinter making a go at qualifying for the 2008 Olympics in China. The NY Times ran a story today that cites that the amazing sprinter may hold an unfair advantage with his prosthetics and may subsequently be disallowed to compete.

Why, amidst the re-emergence of Cold War tensions and the grinding down of individual liberties in Russia, was Putin named as Person of the Year? Read the article. But more than anything else, Time cites that Putin "stands, above all, for stability-stability before freedom, stability before choice, stability in a country that has hardly seen it for a hundred years."

Fine. But what does this mean for Russian markets?

Well, the FT article -- written by Douglas Helfer, manager of the HSBC GIF Russia Equity fund -- states that "Russian equities have underperformed most global emerging market peers by a wide margin this year due in large part to the uncertainty surrounding the current election cycle."

Russia is facing just the second transition of power since the Soviet Union fell more than 15 years ago, so investors have a reason to be skittish. That said, since Putin arrived in power, between January 2000 and March this year, the MSCI Russia index was up by 1,200%.

As my colleague Aaron Katsman is fond of saying, Giddyup.

Zack Miller is the managing editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund.

MOST NOTEWORTHY: Hershey Foods, Cognos, Resmed and Artes Medical were today's noteworthy downgrades:

• Hershey (NYSE: HSY) was downgraded to Underperform from Peer Perform at Bear Stearns. Bear believes the new CEO will be under intense pressure to improve operating performance, which will likely lead to higher R&D and marketing spending.
  
• Cognos (NASDAQ: COGN) was downgraded to Equal Weight from Overweight at Morgan Stanley following the acquisition by IBM (NYSE: IBM).
  
• ABN Amro lowered its rating on Resmed (NYSE: RMD) to Hold from Buy on valuation following the recent rally.
  
• Cowen downgraded Artes Medical (NASDAQ: ARTE) to Neutral from Buy following the company's disappointing Q3 report.

OTHER DOWNGRADES:

• Merrill downgraded Target (NYSE: TGT) to Neutral from Buy.
  
• Goldman downgraded Gatehouse Media (NYSE: GHS) and NewStar Financial (NASDAQ: NEWS) to Neutral from Buy.
  
• Bernstein downgraded Rio Tinto (NYSE: RTP) to Market Perform from Outperform.