Analyst upgrades:

• Jefferies upgraded shares of Ensco International (NYSE: ESV) to Buy from Hold on valuation as they find the company's long-term EPS growth and potential upside from the GOM/Mexico jack-up market compelling.
  
• Friedman Billings upgraded Juniper (NASDAQ: JNPR) to Outperform from Market Perform following the better-than-expected Q2 report. The firm raised Juniper's target to $29 from $27.
  
• Friedman Billings upgraded shares of Southwestern Energy (NYSE: SWN) to Outperform from Market Perform on valuation following the recent weakness. Southwestern's target was raised to $43 from $40.
• Chipotle Mexican Grill (NYSE: CMG) was upgraded to Neutral from Underperform at Merrill.
  
• Merrill also upgraded Delta (NYSE: DAL) to Buy from Neutral.

Analyst downgrades:

• Baird downgraded Crocs (NASDAQ: CROX) to Neutral from Outperform following the company's weak Q2 report and guidance.
• Merriman cut Nautilus Group (NYSE: NLS) to Sell from Neutral to reflect the company's dependence on the consumer home fitness market at a time when consumer spending trends are weakening. The firm believes shares are overvalued and could potentially decline to the $4.00-$4.50 level.
• E.W. Scripps (NYSE: SSP) was downgraded at JP Morgan to Neutral from Overweight.
  
• HSBC lowered Daimler AG (NYSE: DAI) to Neutral from Overweight.
  
• Epicor Software (NASDAQ: EPIC) was downgraded to Hold from Buy at KeyBanc.

MOST NOTEWORTHY: National Semi, E.W. Scripps and Dell were today's noteworthy upgrades.

• Deutsche Bank upgraded shares of National Semiconductor Corp (NYSE: NSM) to Buy from Hold as it expects the company to benefit from a rebound in margins and revenue through 2008.
• Bear upgraded E.W. Scripps (NYSE: SSP) to Outperform from Peer Perform based on strength in the network cable market and third party interest in potentially acquiring Scripps Networks Interactive.
• Morgan Stanley upgraded Dell (NASDAQ: DELL) to Overweight from Equal Weight based on the company's competitively priced systems and a broader product portfolio.

OTHER UPGRADES:

• Goldman Sachs added Apple (NASDAQ: AAPL) to its Conviction Buy List.
• The firm also raised Arcelor Mittal (NYSE: MT) to Buy from Neutral and added shares to the Pan-European Buy List.
• Nasdaq (NASDAQ: NDAQ) was upgraded at Merrill to Buy from Neutral.

MOST NOTEWORTHY: Salesforce.com, First Marblehead and The E.W. Scripps Co were today's noteworthy upgrades:

• Jefferies upgraded shares of Salesforce.com (NYSE:CRM) to Buy from Hold following the company's Q1 results and recommends accumulating shares on any weakness from concerns around a slowdown in bookings. They believe that while bookings growth slowed in Q1, CRM's growth remains stellar and its market opportunity remains large.
  
• Friedman Billings upgraded First Marblehead (NYSE:FMD) to Market Perform from Underperform. The firm believes most of the bad news is reflected in shares and that there are early indications of "thawing" within the private student loan ABS market.
  
• Lehman upgraded the E.W. Scripps Co (NYSE:SSP) to Overweight from Underweight and expects the upcoming July 1st split of Scripps Networks Interactive from Scripps will give the company strategic opportunity by separating high growth cable from traditional newspapers and broadcasting.

OTHER UPGRADES:

• ING upgraded Royal Dutch Shell (NYSE:RDS.A) to Buy from Hold and StatoilHydro (NYSE:STO) to Hold from Sell.
  
• Cost Plus (NASDAQ:CPWM) was raised to Market Perform from Underperform at JMP Securities.
  
• Wachovia upgraded Level 3 (NASDAQ:LVLT) to Market Perform from Underperform.

Manic Monday meet Twisted Tuesday.

The Dow Jones industrial average is down 85 points to 13,899, rebounding from earlier lows (1:15 p.m.). The market is moving for lots of reasons including Ben Bernanke's pessimistic view of the housing market and a drumbeat of disappointing results from companies including Wells Fargo & Co. (NYSE: WFC) along with comments from home-builder D.R. Horton Inc. (NYSE: DHI) indicating tighter availability of mortgages. Ericsson AB (NASDAQ: ERIC) plunged after reporting worst-than-expected results as did ValueClick Inc. (NASDAQ: VCLK).

I almost forgot to mention skyrocketing oil prices that seem headed to $100 per barrel and beyond, which helped push up the big oil companies including ExxonMobil Corp. (NYSE: XOM).

E.W. Scripps Co. (NYSE: SSP) today announced its intention to ralston the company. (Ralstoning, by the way, is a term I just coined, referring to the climber Aron Ralston who, trapped by a boulder, was forced to cut off his own arm to survive.) The move separates the still-beating heart of Scripps, its cable-TV and internet shopping sites, from the dead meat, newspapers and local television.

The move follows a similar Ralston by Belo Corp. (NYSE: BLC), which recently split its dead tree and television businesses to the satisfaction of its stockholders and a spike in its stock price.

The new Scripps Networks Interactive will include the Food Network, DIY and HGTV, while E. W. Scripps will hold papers including the Rocky Mountain News as well as 10 local TV networks.

Scripps stockholders will receive shares of the new company as dividends, but the operations of both entities will remain in the control of the Edward W. Scripps Trust.

The move by Scripps and Belo could also present opportunities for investors that believe that the newspaper business, while in decline, could still have some value to be wrung out of it. Once cut free from the cable TV business, its stock could quickly fall to an undervalued level.

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Riddle me this investors: is the smart money heading into newspaper stocks? Don't laugh but CNN/Money's Paul La Monica points out that some well-known funds are increasing their stakes in this most hated of sectors on Wall Street.

But before people start loading up on the New York Times Co. (NYSE:NYT), E.W. Scripps Co. (NYSE: SSP), Gannett Co. (NYSE: GCI), Lee Enterprises Inc. (NYSE: LEE) or McClatchy Co. (NYSE: MNI) consider that these shares are down double-digit percentage points because their businesses are floundering. Yes, online advertising revenue is picking up but remember that these companies will get the vast majority of their profit and revenue from dead trees for some time to come.

But has all of the bad news been priced into these stocks? Ariel Capital Management, Wellington Management, T. Rowe Price and Fidelity Management and Research seem to think the stocks have nowhere to go but up, La Monica says.

They are certainly buying low. Can they sell high?

MOST NOTEWORTHY: Select newspaper stocks and Dolan Media were today's noteworthy initiations:

• Banc of America initiated six stocks in the newspaper sector with Neutral ratings: Gannett (NYSE: GCI) was started with a $51.50 target, citing a lack of clarity into the company's acquisition strategy; New York Times (NYSE: NYT) was started with a $21 target, reflecting a lack of clarity into the company's acquisition strategy; E.W. Scripps (NYSE: SSP) was started with a $43 target, as the firm feels the company's Interactive division is a "big question mark" that could drag down company growth; McClatchy Co (NYSE: MNI) was started with a $26 target, as the firm is positive longer-term, but sees downside risk to 2007 consensus estimates; Lee Enterprises (NYSE: LEE) was initiated with a $19.50 target; Gatehouse Media (NYSE: GHS) was started with a $12.50 target.
  
• Dolan Media (NYSE: DM) was initiated with an Outperform rating and $24 target at Piper Jaffray. Piper believes DM's Q3 guidance is conservative given the default rates in July and August and notes the company processes defaults in two of the three highest default rate states. Dolan Media was also started with a Buy rating and $26 target at Merrill Lynch and with a Buy rating and $28 target at Craig-Hallum.

OTHER INITIATIONS:

• Think Equity assumed coverage of Intel Corporation (NASDAQ: INTC) and Micron Technology (NYSE: MU) with an Accumulate rating and $26 target and a Buy rating and $18 target, respectively.
• Citigroup started shares of Royal Caribbean Cruises (NYSE: RCL) and Carnival Corp (NYSE: CCL) with Hold ratings.
• SuperValu Inc (NYSE: SVU) was started with a Hold rating and $47 target at Citigroup.
• Rodman & Renshaw initiated shares of Omrix Biopharmaceuticals (NYSE: OMRI) with a Market Outperform rating.

Dow Jones & Co. (NYSE: DJ) expects to reach an agreement to sell itself to Rupert Murdoch's News Corp. (NYSE: NWS), ending a months-long soap opera that's tried the patience of media nerds like myself, according to CNBC's David Faber. No word on the final terms.

Looks like all of the chest pounding and teeth gnashing by Murdoch's many detractors, including members of the Bancroft family which owns Dow Jones, failed to stop the Australian media mogul just as I expected. The Bancrofts had no other choice. Saying "yes" to Murdoch, was much more lucrative and less potentially litigious than saying "no." There is no doubt that minority shareholders would have sued the Bancrofts for turning down Murdoch's $5 billion offer since the stock would have beeen sent into a tailspin from which it would never recover.

Worries about Murdoch are justified. You can expect the complaints about the tycoon's meddling in the Journal's editorial practices to surface in about six months to a year, perhaps sooner. It will be subtle and difficult for most readers to notice but it will happen. Though many Dow Jones journalists are cringing at the thought of working for Murdoch, they have little choice but to put up with him. Dow Jones pays well in an industry famous for paying poorly. Plus, most media companies aren't doing much hiring because of the current business conditions.

Since Dow Jones appears to have gotten a ridiculously high price for its company, Wall Street will wonder why small media companies such as the New York Times Co. (NYSE: NYT), E.W. Scripps Co. (NYSE: SSP), Martha Stewart Living Omnimedia Inc. (NYSE: MSO) and Gannett Co. (NYSE: GCI) can't do the same.

They better come up with an answer quickly.

Try as I might, I 'm not sad that the Bancrofts may lose control of Dow Jones & Co. (NYSE: DJ) to Rupert Murdoch's News Corp (NYSE: NWS).

Though some journalists are arguing that a Murdoch victory would signal the end of civiilization as we know it, at least he'll take an interest in the Wall Street Journal, which is more than could be said about the Bancrofts. They watched idly as incompetent CEOs ran the publishing company into the ground and shareholders not related to them got the shaft.

Would Murdoch be that much worse? Compared with other publishing families, the Bancrofts have shown a remarkable lack of interest in their family business.

Mergers come to sectors in waves and now its media's turn.

There are many companies that would be of interest to either public or private buyers including Gannett Co. (NYSE: GCI), E.W. Scripps Co. (NYSE: SSP) and Martha Stewart Living Omnimedia Inc. (NYSE: MSO).

Shares of Gannett, the largest newspaper publisher, have tanked more than 20% over the past five years as advertisers fled to the Internet. The company, though, has a solid management team that has made many accretive acquisitions.

Scripps has long been a favorite on Wall Street. The company's cable business, which includes the Food Network and HGTV, is great and its newspaper business is no worse off than others, which I realize is faint praise. Its shares are down 13% this year.

Martha Stewart Living, whose shares have plunged 15% this year, has defied the skeptics.

Even though the company recently said its first quarter loss widened, the results did beat Wall Street expectations. Chief Executive Susan Lyne has done a good job in expanding the Stewart brand. The recent prepared food deal with Costco Wholesale Corp. (NASDAQ: COST) seems to have potential.

Other targets include The New York Times Co. (NYSE: NYT), which I've argued before, satellite radio companies XM Satellite Radio Holdings Inc. (NYSE: XMSR) and Sirius Satellite Radio Inc. (NASDAQ: SIRI) and Belo Corp. (NYSE: BLC), which owns the Dallas Morning News along television and radio stations.

A Microsoft Corp. (NASDAQ: MSFT) acquisition of Yahoo! Inc. (NASDAQ: YHOO) makes tons more sense than Google Inc. (NASDAQ: GOOG) buying Dow Jones & Co. (NYSE: DJ). Thomson Corp. (NYSE: TOC) or private equity players are the likely suitors for Reuters Group Plc. (NASDAQ: RTRSY).

Microsoft could combine its struggling search business with Yahoo!'s, which isn't struggling as badly. The dull MSN portal would benefit from being integrated with Yahoo!'s superior content. Moreover, Microsoft would gain the ability to market its products to millions more new users.

Even if this happens, the integration wouldn't be easy. With a market capitalization of more than $38 billion, Yahoo! would be a big acquisition to digest even for a gigantic company such as Microsoft. Combined, these companies would pose a formidable challenger to Google.

David Faber of CNBC just reported that News Corp. (NYSE: NWS) made an unsolicited offer of $60 per shares to buy Dow Jones & Co. (NYSE: DJ). DJ shares are trading up over 57% to about $57. DJ shares have since been halted.

Dow Jones is the parent of the Wall-Street Journal.

Newspaper companies such as NYT, SSP, GCI, MNI, TRB are trading higher following the story.

MAJOR PAPERS:

• The Wall Street Journal had news on EW Scripps (NYSE: SSP), Dell Inc (NASDAQ: DELL), Wal-Mart Stores Inc. (NYSE: WMT) and Congress.

• E.W. Scripps is considering splitting off its newspaper operations. It owns papers in 18 markets, which account for about 30% of company revenues.
• The head of Dell's commercial business group will retire in March and the unit will be divided into two separate businesses.
• Wal-Mart said the number of workers enrolled in its health plan increased slightly this year.
• The House of Representatives passed a $2.10 increase in the federal minimum wage, to take place over the next two years in three 70 cent increments.

• The Financial Times reported that Cerberus is considering a $36B offer for Equity Office Properties (NYSE: EOP).

OTHER PAPERS:

• The Detroit Free Press reported that Valeo (OTC: VLEEY) will not rule out buying Visteon Corp. (VC) or parts of Delphi Corp. (OTC: DPHIQ).
• Website GameDaily.com wrote that Viacom Inc's (NYSE: VIA) MTV Networks is in talks to acquire 1Up.com from Ziff Davis Media.
• The Investor's Business Daily's "New America" column wrote that Visa's plans to go public should take some of MasterCard Inc.'s (NYSE: MA) advantage in the stock market.

In late December, Avista Capital Partners agreed to pay $530 million for the Star Tribune, less than half of what McClatchy paid for it in 1998. The deal comes amid growing concerns about the future of newspapers, which are facing competition from the Internet. But in spite of the ugly long-term outlook for newspapers, they may make an interesting investment for now.

For starters, Avista is purchasing the newspaper for 6.5 times its cash flow. Newspapers don't have the large capital expenditure requirements that many more booming businesses do. The industry is in decline, but it's still making money. I'm reminded of a profound statistic that I first read about in Jeremy Siegel's book The Future for Investors: Since 1957, railroad stocks have outperformed airlines, trucking, and the S&P 500.

This is of course not attributable to dramatic growth in the railroad industry. Rather, most investors saw that the companies were in decline and the share prices were driven down, and then provided a good return. The moral of the story: valuation matters. Most stocks are a good deal at the right price.

Are newspapers the new railroads? There are numerous similarities. Railroads were replaced by airplanes and trucks, but the railroad stocks were the better investment. Newspapers are being replaced by the Internet, but that in no way means that Internet stocks are better buys. Here's a quick look at some of the bigger newspaper stocks:

• Gannett (NYSE:GCI): Owner of 91 daily newspapers, including USA Today. The also own around 1,000 non-daily publications. Trades at around 11 times cash flow.
• E.W. Scripps (NYSE:SSP): Owns some newspapers, but also television stations, including HGTV and the Food Network. Also owns Shopzilla.
• Tribune (NYSE:TRB): Trades at around 8 time cash flow. Owns 11 daily newspapers, the Chicago Cubs, television stations, and other media interests.