Analyst upgrades:

• Citigroup upgraded MEMC Electronic (NYSE: WFR) to Buy from Hold after channel checks indicated solar poly price pressures are easing. The firm added MEMC to its Top Picks Live list and raised its price target on shares to $24 from $15.
  
• FBR Capital upgraded PHH Corp (NYSE: PHH) to Outperform from Market Perform to reflect an improvement in mortgage banking fundamentals and recent management changes at the company. The firm raised its target on shares to $23 from $13.
  
• Deutsche Bank upgraded PerkinElmer (NYSE: PKI) to Hold from Sell on valuation, seeing a balanced risk/reward at current levels. The firm raised its target on shares to $19 from $14.
• Pearson plc (NYSE: PSO) was upgraded to Outperform from Neutral at Credit Suisse.
  
• Dell (NASDAQ: DELL) was upgraded to Conviction Buy from Neutral at Goldman.
  
• Nymagic (NYSE: NYM) was upgraded to Market Perform from Underperform at Keefe Bruyette.

MOST NOTEWORTHY: PHH Corp., VF Corp. and Dialysis Corp. of America were today's noteworthy initiations:

• PHH Corp (PHH) was initiated with an Outperform rating and $25 target at Keefe Bruyette. The firm finds the stock inexpensive at current levels and believes the company's management team is strong and mortgage operations are improving.
  
• Baird is positive on VF Corp's (VFC) sales and EPS growth, brand portfolio strength, and global distribution opportunities. Shares were assumed with an Outperform rating and $90 target.
  
• Stanford started Dialysis Corp of America (DCAI) with a Buy rating and $10 target and believes the company is worth more to a strategic buyer, which they feel could drive revenue per treatment and margins higher.

OTHER INITIATIONS:

• Merrill initiated Sherwin-Williams (SHW) with an Underperform rating.
  
• Vail Resorts (MTN) was assumed with a Buy rating and $59 target at Banc of America.
  
• Goldman started Patterson-UTI Energy (PTEN) with a Neutral rating and $35 target.

Looks like the first trading day of the new year will begin on a positive note as stock futures are drifting higher this morning. Economic data will be the focus during today's session with several indicators like ISM and FOMC are due out throughout the day.

On Monday, the last trading day of 2007, stocks dropped in a light volume. The Dow industrials lost 101 points, or 0.76%, the Nasdaq Composite was down 22 points, or 0.83%, and the S&P 500 declined 10 points. For the year, the Dow gained 6.4%, the S&P 500 3.5% and the Nasdaq 9.8%. As 2007 progressed it seemed that volatility in the market increased as uncertainties about U.S. economy mounted.

Today, investors will await some important economic data.

• At 10:00 a.m. EST, the Institute of Supply Management will release the manufacturing index for December. Economists are expecting the index to decline somewhat from 50.8 to 50.5 according to Briefing.com. While still holding just above 50%, thus indicating an expansion in economic activity, the reading could be the lowest in a year and yet another slower growth data point.
  
• At the same time November construction spending will be reported and is due to decrease again.
• At 2 p.m., minutes from the last meeting of the Federal Reserve's policy meeting will be released. The FOMC voted to cut interest rates by a quarter-point to 4.25% in the last meeting. What investors and economists will be looking for are clues as to what the Fed might do next meetings.

The Blackstone (NYSE: BX) and General Electric (NYSE: GE) buyout of mortgage and vehicle leasing company PHH fell apart. The reason given was lack of available financing. In truth, PHH (NYSE: PHH) is in a business that is currently as far out of favor on Wall Street as an industry can get.

According to Bloomberg, "GE agreed on March 15 to buy PHH, sell the mortgage division to New York-based Blackstone and keep the vehicle-leasing unit. The acquisition price was $31.50 a share." PHH shares currently trade below $18.

The company's third-quarter results were reason enough to cause a buyer to walk. Revenue fell almost 10% to $484 million, and the net loss increased over five-fold to $38 million.

No one should be surprised if the shares go below $15 and stay there for some time.

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

Reports started circulating yesterday that PHH Corporation (NYSE: PHH), an outsource provider of mortgage and fleet management services, which is in the process of being acquired by General Electric Company (NYSE: GE) and The Blackstone Group, is having trouble getting financing as the banks are balking. This is somewhat comical, since both GE and Blackstone have the resources to close this $1.8 billion deal if they really wanted to.

As a reminder, GE Capital, the division acquiring PHH, was one of the great growth stories of the 1980s and early 1990s as Gary Wendt, a Welch lieutenant, built the company up by buying assets that were often left for dead by investors. However, today, GE's finance division is going after businesses that are peaking, not bottoming out.

Another point worth mentioning is how difficult it is for GE to do deals that can have an impact on its performance. With a market capitalization of $411 billion, doing deals $1.8 billion in size is going to have little impact on the colossal company. Although a great company, GE is not a great stock. The PHH transaction shows how difficult it is for this huge company to grow by acquisition and the silliness of it saying it cannot close the transaction because of bank financing.

PHH Corp. (NYSE:PHH) shareholders got a nice surprise today. General Electric Company (NYSE:GE) agreed to buy the company for $31.50 per share. On the news, PHH's shot-up 12%.

PHH is really two businesses: Vehicle fleet management segment, which is what GE is interested in, and a mortgage outsourcing division, which happens to be ranked as one of the top 10 retail originators of residential mortgages in the U.S.

Interestingly enough, the mortgage business is not going to GE. Instead, it will be bought out by the private equity firm Blackstone.

Yes, this is an innovative deal. Moreover, given GE's stature, this hybrid private equity structure may become more common.

In light of the major problems in the mortgage industry, a deal for PHH could have been difficult. But, hey, private equity has the advantage of taking risks and not dealing with public shareholders. In other words, this looks like a win-win for all parties.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.