For the private equity space, it's been a mixed bag this week. The good news is that the $17.1 billion acquisition of Harrah's Entertainment got done (the largest casino deal in history). The buyers included TPG and Apollo Global Management LP.

But there was some bad news too -- it looks like Blackstone (NYSE: BX)'s proposed buyout of Alliance Data Systems (NYSE: ADS) is on the rocks.

So, in this environment, it's understandable that Wall Street is jittery with buyout deals. Just look at the pending buyout of Clear Channel Communications (NYSE: CCU).

As it looks forward to the shareholder vote on the tumultuous $19.5 billion, $39.20 a share takeover offer from Bain Capital Partners LLC and Thomas H. Lee Partners LP, Clear Channel Communications Inc. (NYSE: CCU) reported strong second-quarter earnings from its roadside billboard business. Overall revenue rose to $1.8 billion, up 5% from 2006, and net income climbed from $48 million to $68.6 million. Diluted EPS before discontinued operations was $.42, up from $.34 from 2006 but below the $.44 projected by analysts surveyed by Thompson.

Clear Channel Outdoor Holdings (NYSE: CCO), of which CCU owns 90%, continued to drive the corporate earnings with net income up 45% to $68 million and EPS of $.19 vs $.14. The radio segment, which CCO is in the process of selling off, was up only 1%.

The company's stock has followed the general market trend in the past few days, off $1.35 from its $38.20 month high, but on the rebound today.

The expanding credit spreads between corporate bonds and treasuries, and in particular between junk bonds and treasuries, have also led arbitrage spreads to widen. Deals that will be financed and closed have spreads that warrant investors' attention. There may be some easy money to be made as a result.

Deals worth looking at, according to Barron's , include:

• Alltel Corporation (NYSE: AT) trading for $67.80 with take-out price of $71.50-12% annualized rate of return.
• Clear Channel Communications (NYSE: CCU) trading for $37.70 with take-out price of $39.20-10% annualized rate of return.
• First Data Corporation (NYSE: FDC) is selling for $32.65 and has a take-out price of $34-for an 18% annualized return.
• Harrah's Entertainment Inc (NYSE: HET) is selling for $85.25 and has a take offer of $90-14% annualized rate of return.
• Tribune Company (NYSE: TRB) is trading at $29.50 with a take-price at $34-30% annualized return.
  
• The most attractive arb play from a return perspective is Tribune but that deal also carries the most risk. Tribune already has a considerable amount of debt and is attempting to add more debt and use the company's ESOP plan to close the deal. In addition, the fundamentals of the newspaper industry continue to remain not very good.

Use the widening arb spreads to make some nice money. Cash available to finance these deals is still aplenty. Lending terms are simply coming back to the planet earth, as sensible lending covenants are re-introduced.

MOST NOTEWORTHY: ValueClick, Inc (VCLK), aQuantive, Inc (AQNT), Cigna Corp (CI), Warner Music Group (WMG), Clear Channel Communications, Inc (CCU) and Medtronic, Inc (MDT) were today's more notable downgrades:

• Baird cut ValueClick Inc (NASDAQ: VCLK) to Neutral from Outperform, citing the FTC inquiry.

• aQuantive (NASDAQ: AQNT) was downgraded to Sell from Buy after the company was acquired by Microsoft (MSFT) and because aQuantive no longer trades on fundamentals. Kaufman and Gabelli also cut aQuantive to Hold from Buy.

• Cigna (NYSE: CI) was downgraded at Prudential to Neutral from Overweight on valuation.

• Warner Music Group's (NYSE: WMG) downgrade to Sell from Neutral at Pali Research was based on the lower industry outlook, which Pali believes revenues are likely to fall at least 10% for the industry in 2007, along with the company's release schedule.

• Bear Stearns downgraded Clear Channel Communications (NYSE: CCU) to Peer Perform from Outperform on the acceptance of the higher bid.

• Medtronic Inc (NYSE: MDT) was downgraded to Underweight from Equal Weight at Morgan Stanley...

OTHER DOWNGRADES:

• Georgia Gulf Corp (NYSE: GGC) was downgraded to Sell from Hold at Matrix USA.

• Stifel cut Core Laboratories (NYSE: CLB) to Hold from Buy.

• UBS downgraded Intuit Inc (NASDAQ: INTU) to Neutral from Buy.

• Occidental Petroleum Corp (NYSE: OXY) was removed from Goldman's Conviction Buy list.

• Friedman Billings downgraded downgraded CapitalSource, Inc (NYSE: CSE) and Countrywide Financial Corp (NYSE: CFC) to Market Perform from Outperform.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

The board of directors at Clear Channel Communications (NYSE: CCU) finally decided to endorse a $19.35 billion buyout package that is nearly identical to the one it rejected last month. Bain Capital (founded by Republican presidential hopeful Mitt Romney) and Thomas H. Lee Partners won with an offer of $39.20 per share, up from the $39 offer the board rejected in April.

A vote of two-thirds of shares will be required to approve the deal and, with the support of the company's major investors, it appears to be a shoe-in. But I wonder why the deal finally got done. The very minor changes to the terms don't seem like they should have been enough to make the deal a good one for shareholders if it wasn't before.

This may be a case of the "sunk-cost fallacy" or perhaps Clear Channel's management and the private equity firms had became "pot-committed." Like a poker player who has already dumped most of his chips into the pot and finds it difficult to fold, both sides had spent so much time and money working on the deal that it may have been inevitable.

MAJOR PAPERS:

• The 19.4B sale of Clear Channel Communications Inc (NYSE: CCU) to Bain Capital and Thomas H. Lee Partners is expected to proceed quickly as major shareholders Highfields Capital Management and Fidelity Investments are expected to agree to a new proposal raising the sale bid by 20 cents to $39.20 a share, reported the Wall Street Journal.
• Last month stent implants in the U.S. fell 15% to 71,200 from April 2006, signaling that they may no longer be a strong growth area for the medical industry, reported the Wall Street Journal.
• A new EU law that would slash the roaming charges for mobile phone calls by Europeans when they are traveling on the continent is expected to cut into the profits of companies including Vodafone Group (NYSE: VOD), France Telecom ADS (NYSE: FTE), and Telefonica SA ADS (NYSE: TEF) , reported the Financial Times.

OTHER PAPERS:

• EMI Group (OTC: EMIPY) has opened its books to rival Warner Music Group (WMG), setting up a four-way bidding war, reported The Business.
• New explorations by PetroChina Company Limited's (NYSE: PTR) parent company, China National Petroleum Corp, have found that the Jidong Nanpu Oilfield in Bohai Bay may have more reserves than previously estimated, reported China Daily.

MAJOR PAPERS:

• The Wall Street Journal (subscription required) reported that Wal-Mart Stores (NYSE: WMT) is helping to bring eBay Inc's (NASDAQ: EBAY) Skype "to the masses," by selling Skype Internet calling phone gear in the electronics section of its stores.
• The Wall Street Journal's "BreakingViews" section speculated that a merger between General Electric Company's (NYSE: GE) NBC and Yahoo Inc (NASDAQ: YHOO) would "make industrial sense."
• The Financial Times (subscription required) reported that the Bancroft family, which control a majority of the voting shares of Dow Jones and Company Inc (NYSE: DJ), is split over the idea of meeting with News Corporation (NYSE: NWS) Chairman Rupert Murdoch to discuss his $5B offer for Dow Jones.
• The Financial Times reported that Internet jewelry retailer Blue Nile Inc (NASDAQ: NILE) is launching operations in Europe.

OTHER PAPERS:

• According to the Sunday Telegraph, Rio Tinto (NYSE: RTP) has hired Morgan Stanley to help defend itself in the event of an unsolicited takeover approach.
• The Sunday Telegraph reported that Clear Channel Communications Inc (NYSE: CCU) is expected to put its international poster business up for sale for as much as $3.2B.
• The Telegraph reported that rival groups are looking to stop Alcoa Inc's (NYSE: AA) hostile bid for Canadian aluminum producer Alcan Inc (NYSE: AL).
• The Economic Times reported that Polo Ralph Lauren Corporation (NYSE: RL) is in talks with "leading Indian business houses including the Tatas," according to sources.
  

WEBSITES:

• DigiTimes.com reported that the ATI Radeon HD that was just introduced by Advanced Micro Devices Inc (NYSE: AMD) has fallen short of expectations in terms of price, performance and energy efficiency.

Lately, we've seen some considerable pushback from major shareholders on private equity deals. Yes, these investors want to maximize their returns. In fact, key investors like Fidelity have a fiduciary responsibility to do so.

As a result, we are seeing a tug-a-war and shareholders seem to have an edge. Just look at the Clear Channel (NYSE: CCU) deal. Despite two increases in the bid, the buyout deal still had to be delayed and may not get done.

There's an excellent piece on this in Bloomberg.com. Basically, the focus is on the mighty Fidelity, which has $1.4 trillion in assets. Yes, that's a lot of leverage.

This does not mean deal activity will diminish. There's simply too much money in private equity funds (that is, they get paid by putting money to work).

Rather, it's good news for individual shareholders who -- over the years -- had little choice but to leave money on the table.

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

MAJOR PAPERS:

• The Wall Street Journal (subscription required) reported that Clear Channel Communications Inc (NYSE: CCU) has said "no" to a new offer from Thomas H. Lee Partners and Bain Capital Partners to buy the company, saying shareholders had no interest.
• The Financial Times (subscription required) reported that One Equity, a private equity firm affiliated with JPMorgan Chase & Co (NYSE: JPM), has approached EMI Group (OTC: EMIPY) about a takeover which could value the British music company at more than $6B, according to sources.

OTHER PAPERS:

• The New York Post has learned that Microsoft Corporation (NASDAQ: MSFT) has asked Yahoo Inc (NASDAQ: YHOO) to re-enter formal negotiations.
• The New York Post has learned that Westwood One Inc (NYSE: WON) has hired UBS to help identify potential buyers as the company anticipates putting itself up for sale next month.

WEBSITES:

• A ChangeWave survey of 3,489 people revealed that 9% of the respondents are likely to buy the Apple Inc (NASDAQ: AAPL) iPhone when it comes out in June, reported Seeking Alpha.
• According to CNBC Champ Thomas Ko on MSN Money, IMAX Corporation (NASDAQ: IMAX) should benefit from what he anticipates will be a record opening for Spider-Man 3.

MAJOR PAPERS:

• Barron's (subscription required) "Weekday Trader" advises avoiding Boston Scientific Corporation (NYSE: BSX) despite its recent rally.
• Barron's "Weekday Trader Extra" reported that the Bain Capital Partners and Thomas H. Lee Partners increased $39 a share offer for Clear Channel Communications Inc (NYSE: CCU) is not guaranteed to succeed, with Barron's saying $42 a share or higher likely would.
• Lockheed Martin Corporation (NYSE: LMT) and Northrop Grumman Corporation (NYSE: NOC) said that parts of the Coast Guard's "Deepwater" modernization program are under investigation by the Justice Department, reported the Wall Street Journal (subscription required).
• According to the Financial Times (subscription required), citing a comprehensive independent study from IHS, Iraq may hold twice as much oil in its reserves as previously thought.

OTHER PAPERS:

• The Business reported that Barclays plc ADS (NYSE: BCS) may have identified several ways of offering a higher price for ABN Amro Holdings (NYSE: ABN), the Dutch bank it is trying to acquire, according to sources.
• The National Security Council, or NSC, has called for "special scrutiny" of VodafoneGroup plc ADS's (NYSE: VOD) takeover of Hutch-Essar, which may further delay the deal, reported the Economic Times.

WEBSITES:

• Macrumors.com reported, citing Reuters, that AT&T Inc (NYSE: T) COO Randall Stephenson said the Apple Inc (NASDAQ: AAPL) iPhone is on target for a late June launch.

MAJOR PAPERS:

• Time Warner Inc (NYSE: TWX) senior executives are considering reducing the company's cable-TV holdings over time, reported the Wall Street Journal.

OTHER PAPERS:

• The $27B private equity buyout of Clear Channel Communications Inc (NYSE: CCU) is in greater jeopardy as the California Public Employees' Retirement System, or CalPERS, said yesterday that it plans to vote against the deal, reported the New York Post.
• According to diplomatic sources in Beijing, Iran and North Korea are working to "deepen cooperation" on the countries nuclear weapons technology, reported the Telegraph.
• India's Economic Times reported that Mid-sized Indian pharmaceutical companies including Orchid Chemicals, Strides Arcolab, Glenmark Pharma, Granules India, Shasun Chemicals and Plethico Pharmaceuticals are all looking for acquisitions in Russia, Europe and the United States.

WEBSITES:

• LightReading.com reported, citing a source close to the matter, that Sprint Nextel Corporation (NYSE: S) is considering a buyout of Vonage Holdings Corporation (NYSE: VG) and the two have been in talks to attempt to resolve Sprint's patent lawsuit against the VoIP provider.
• Rumors are swirling that "quality problems" may cause Apple Inc (NASDAQ: AAPL) to delay the launch of its upcoming iPhone, according to LoopRumors.com, citing Smarthouse News Australia.

Although Google Inc. (NADAQ: GOOG) remains the talk of the tech world, its stock hasn't inspired much confidence this year from investors, eking out only about a 1 percent gain. Maybe that will change following this week's earnings report.

Google remains seemingly unstoppable, dominating the Internet advertising landscape through its now-famous text ads which many companies are finding far more cost effective than traditional media.

Competitors Yahoo! Inc (NASDAQ:YHOO) and Microsoft Corp. (NASDAQ:MSFT) after several years, are still scrambling to catch up to Google. All of their investments, though, have yet to pay off. Market research data shows that Google increased its lead over its rivals yet again in March.

Google's acquisition of YouTube last year for $1.8 billion in stock and last week's acquisition of Internet advertising firm DoubleClick for $3.1 billion in cash is making the juggernaut even stronger. Add this with Google's deal with radio leader Clear Channel Communications Inc. (NYSE: CCU) announced Sunday and the company is getting its fingers into advertising in any medium.

While investors wait for Google to entrench itself into more advertising areas, industry analysts are expecting Google to report a 44% jump in its first-quarter profit to $3.30 a share this Thursday, with a 63% rise in revenue to $2.49 billion.

Will it match these expectations or beat them?

Check back Thursday at 4:30 EST to find out, as I'll be liveblogging Google's results as they are released in real-time.

MAJOR PAPERS:

• The Wall Street Journal reported that Sallie Mae (NYSE: SLM), the education loan company, has agreed to sell itself for $25B to J.P. Morgan Chase and Co (NYSE: JPM) and Bank of America Corporation (NYSE: BAC).
• The Wall Street Journal also reported that Google Inc (NASDAQ: GOOG) and Clear Channel Communications Inc (NYSE: CCU) have agreed to a multi-year deal in which Google will sell advertising on Clear Channel's 675-plus radio stations.

OTHER PAPERS:

• According to the Daily Mail, Sir Richard Branson's Virgin is planning on taking on Ryanair Holdings plc (NASDAQ: RYAAY) in a air fare war for transatlantic routes.
• Nestle SA ADS (OTC: NSRGY) has reportedly placed a bid to acquire India's Mount Everest Mineral Water, according to the Economic Times.
• The U.K. Times reported that it has emerged that a key BP plc ADS (NYSE: BP) pipeline has been closed for over six months due to suspected corrosion.

MAJOR PAPERS:

• The Wall Street Journal reported that the Nasdaq Stock Market Inc (NASDAQ: NDAQ) is in talks to buy the Philadelphia Stock Exchange, the third largest options exchange in the U.S.
• The Wall Street Journal reported that Kirk Kerkorian wasn't invited to meet this week with DaimlerChrysler AG (NYSE: DCX) as it gets together with bidders for its Chrysler unit.
• Also in the Wall Street Journal, Xstrata will sell its aluminum unit to Apollo Management for $1.5B, higher than expected.

OTHER PAPERS:

• According to the New York Post, citing sources familiar with the matter, the private-equity firms that bought out Clear Channel Communications Inc (NYSE: CCU), Thomas H. Lee Partners and Bain Capital, are weighing their options as they wait for a "crucial" shareholder vote on the deal, which will come next week.

WEBSITES:

• According to Barron's Online's "Inside Scoop" column, Carl Icahn's investment groups reported that in the last two weeks they have increased their Motorola Inc (NYSE: MOT) holdings to 69.1M shares, or a 2.9% stake, from 64.9M shares, or a 2.7% stake.
• DigiTimes.com reported that Samsung is reportedly switching capacity from DRAM back to NAND flash.