Analyst upgrades:

• Keefe Bruyette upgraded MetLife (NYSE: MET) to Outperform from Market Perform as they believe the company's capital and liquidity profile are very solid relative to this week's sell-off.
  
• The firm also upgraded shares of MSCI (NYSE: MXB) to Outperform from Market Perform on valuation as they believe near-term challenges are already priced into shares.
  
• Burlington Northern (NYSE: BNI) was raised to Overweight from Neutral at JP Morgan based on valuation and strong pricing outlook.
• Costco (NASDAQ: COST) was upgraded to Buy from Neutral at Goldman.
  
• Pali Capital lifted Virgin Mobile (NYSE: VM) to Neutral from Sell.
  
• Merrill upgraded Pall (NYS: PLL) and Xcel Energy (NYSE: XEL) to buy from Neutral.

Analyst downgrades:

• Oppenheimer downgraded shares of Trimble Navigation (NASDAQ: TRMB) to Perform from Outperform as they believe the company's Engineering and Construction division is facing a challenging period due to the credit market strain.
  
• Stephens downgraded Seacoast Banking (NASDAQ:SBCF) to Underweight from Equal Weight as they believe a dilutive capital raise is possible given future losses from real estate credits in coastal Florida.

I've seen it many times: a cool product that finds few customers. That seems to be the case with Helio's mobile phones. Basically, customers didn't want to pay premium prices for such things as access to MySpace and other new-fangled features.

It's a tough lesson (and expensive). SK Telecom and EarthLink (NASDAQ: ELNK) formed Helio as a joint venture in 2005 with start-up capital of $440 million. SK Telecom invested an additional $270 million in the venture last year.

Yet, in the end, Helio turned out to be a big dud. That is, the company sold out for a measly $39 million to Virgin Mobile USA (NYSE: VM). In fact, the space is full of dead companies, such as Disney Mobile and Amp'd Mobile.

I had a chance to interview Frank Dickson, the co-founder and chief research officer of MultiMedia Intelligence. According to him:

Honestly, the merger is a desperate move. Overall, the MVNO (Mobile Virtual Network Operator) model makes sense in a limited number of situations. For example, if a cable MSO wants to leverage its customer base and offer triple or quadruple play offering, there is a clear distinctive competency and the MVNO route makes sense.

Since its IPO last year, the shares of Virgin Mobile USA Inc. (NYSE: VM) have imploded -- going from $15.69 to a low of $1.90. The stock has lifted somewhat lately though, and is now trading at $3.43.

Actually, the company has confirmed that it is talking with Helio -- majority owned by SK Telecom (NYSE: SKM) -- about a possible merger.

Both companies are known as mobile virtual network operators (MVNOs), which means that they provide cell services by using another carrier's infrastructure. Unfortunately, the MVNO model has been extremely difficult to pull off (in fact, there have been several high-profile blow-ups in the space, such as Amp'd).

So will a combination help things?

To get some perspective on things, I had a chance to interview Frank Dickson, who is the Chief Research Officer at MultiMedia Intelligence. According to him:

Wireless companies like Sprint (NYSE: S) and Virgin Mobile (NYSE: VM) are ailing. Yet, at the same time, there are several new entrants into the space, such as Apple (NASDAQ: AAPL) and Google (NASDAQ: GOOG).

So, what's going on? Well, I had a chance to interview Frank Dickson, who is a wireless expert and the Chief Research Officer at MultiMedia Intelligence.

What's your take on Sprint? Is the industry undergoing some disruptive changes?

We are seeing some disruptive changes on a macro scale. They are not the cause of Sprint's problems though. The problem with Sprint is self-inflicted, much of which finds its roots in the Nextel merger.

What we have seen of late is a huge movement towards cellular operators becoming bandwidth providers. Voice is quickly becoming a commodity application running over their networks. All the major carriers have announced all the voice minutes that you can eat for $99. Sprint one upped with a super buffet of voice, data, and messaging for $99. The constituencies that most hate the term "dumb pipe" are ironically the entities that are driving the bandwidth provision competition as differentiation based on service offering gives way to price competition.

MOST NOTEWORTHY: Glu Mobile, American International and Federated Investors were today's noteworthy downgrades:

• Deutsche Bank downgraded Glu Mobile (NASDAQ: GLUU) shares to Sell from Hold after channel checks indicated that licensing costs are rising sharply for the mobile rights to popular content.
  
• Morgan Stanley cut American International (NYSE: AIG) to Equal Weight from Overweight citing expectations for larger than expected CDS losses vs. management's forecast.
  
• UBS downgraded Federated Investors (NYSE: FII) to Neutral from Buy citing reduced attractiveness for money markets given yield.

OTHER DOWNGRADES:

• Virgin Mobile (NYSE: VM) was downgraded to Market Weight from Overweight at Thomas Weisel and to Sell from Neutral at Merrill.
  
• Oppenheimer cut ORBComm (NASDAQ: ORBC) to Perform from Outperform.
• PNC Financial (NYSE: PNC) was downgraded to Market Perform from Outperform at Keefe Bruyette.

Fremont General (NYSE:FMT) is off 12% on news of management resignations.

Freddie Mac (NYSE:FRE) is off 3% on fears that it may have to raise more capital.

Take-Two Interactive (NASDAQ:TTWO) is up 3% on news it may get a tender offer from Electronic Arts (NASDAQ:ERST).

Virgin Mobile (NYSE:VM) is down 31% on news of a quarterly loss.

Sigma Designs (NASDAQ:SIGM) is down 12% on missing earnings.

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

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

MAJOR PAPERS:

• Northrop Grumman Corporation (NYSE: NOC) won a $40B contract to turn Airbus jets into "flying gas stations" for U.S. military aircrafts, the Wall Street Journal reported, breaking The Boeing Company's (NYSE: BA) lock on the market.
• Royal Bank of Canada (NYSE: RY) is expected to launch the first covered bond from the country next week, the Financial Times reported. The bank is targeting a benchmark-sized issue worth $1.4B-$4.2B.
• The Financial Times also reported that Indian conglomerate Tata has concluded an agreement with Virgin Mobile USA Inc (NYSE: VM) to launch a cellular phone brand in India. The brand, called Virgin Mobile in India, would target young Indians under a franchise agreement with Tata Teleservices.

WEB SITES:

• Bloomberg reported that former JP Morgan Chase & Co (NYSE: JPM) Vice Chairman Donald Layton is expected to be named E*Trade Financial Corporation's (NASDAQ: ETFC) new CEO. In an interview, Layton said he may consider a sale of the troubled online brokerage if it "made sense" for shareholders.

MOST NOTEWORTHY: Cisco Systems, Virgin Mobile and Polo Ralph Lauren were today's noteworthy downgrades:

• JP Morgan downgraded shares of Cisco Systems Inc (NASDAQ: CSCO) to Neutral from Overweight following its Q2 results, as they believe the company's international exposure is not enough to offset slowing in North America and Europe. Shares were also downgraded to Neutral from Outperform at Baird, citing the meaningful slowdown in fundamentals.
• Lehman downgraded Virgin Mobile USA Inc (NYSE: VM) to Equal Weight from Overweight based on reduced visibility following its Q4 report.
• Polo Ralph Lauren Corporation (NYSE: RL) was lowered to Hold from Buy at Citigroup, as they believe the company is facing fundamental challenges in key markets and a lack of visibility on the Japanese market. They see more upsideelsewhere.

OTHER DOWNGRADES:

• Bear Stearns downgraded BT Group Plc (NYSE: BT) to Peer Perform from Outperform.
• Think Equity lowered Napster Inc (NASDAQ: NAPS) to Accumulate from Buy.
• UBS downgraded Elbit Systems Ltd (NASDAQ: ESLT) to Neutral from Buy.