MAJOR PAPERS:

• In a move to help turnaround its troubled business, General Electric Company (NYSE: GE) will sell or divest its appliance division, and could expect to receive between $5B and $8B for the unit, according to the Wall Street Journal. Potential buyers appliance makers BSH Bosch & Siemens Hausger of Germany and Haier Group of China, as well as private equity firms and Controladora Mabe, GE's partner in Mexico.
• The Wall Street Journal also reported that Comcast Corporation (NASDAQ: CMCSA) will acquire Plaxo, a networking Web site, in an effort to increase its range of services. Terms of the deal were not disclosed.
• To help improve its Ask.com search engine, the Wall Street Journal reported that IAC/InterActiveCorp (NASDAQ: IACI) will buy the Lexico Publishing Group, which owns Dictionary.com, Thesaurus.com and Reference.com.

WEB SITES:

• Citing the New England Journal of Medicine, Bloomberg reported that migraine headache medicines, including Merck & Co Inc's (NYSE: MRK) Maxalt and GlaxoSmithKline Plc's (NYSE: GSK) Imitrex caused potentially fatal reactions in at least 11 people. The Journal said people using "triptans," an older class of migraine drugs, could develop serotonin syndrome, which may cause fever, shock, vomiting and rapid heartbeat.

MAJOR PAPERS:

• The Wall Street Journal reported that an alliance of cable, Internet and chip titans will announce plans to invest $3.2B in a company that will deliver Web access for laptops and cellphones using WiMax. The venture, valued at over $12B, includes Sprint Nextel Corporation (NYSE: S) and Clearwire Corporation (NASDAQ: CLWR) and will be backed by Comcast Corporation (NASDAQ: CMCSA), Time Warner Cable Inc (NYSE: TWC), Intel Corporation (NASDAQ: INTC) and Google Inc (NASDAQ: GOOG).
• According to people familiar with the matter, Robert Verrone, one of the most zealous commercial real-estate lenders during the industry's boom, will leave Wachovia Corporation (NYSE: WB) within the next week, the Wall Street Journal reported.

WEB SITES:

• Bloomberg reported that the Department of Justice is probing whether UBS AG (NYSE: UBS) helped clients evade American taxes. In an e-mailed statement, the firm said one senior bank employee was "briefly detained" by authorities.
• Bloomberg also reported that Vallejo, California's city council voted to go into bankruptcy. Officials said that after talks with labor unions failed to win salary concessions from police and fire fighters, the city does not have enough money to pay its bills.
• According to a rumor, TechCrunch reported that the Yahoo Inc (NASDAQ: YHOO) board of directors yesterday authorized Yahoo chairman Roy Bostock, rather than CEO Jerry Yang, to call Microsoft Corporation (NASDAQ: MSFT) CEO Steve Ballmer about re-starting negotiations.

MAJOR PAPERS:

• The Wall Street Journal said the $19B privatization of Clear Channel Communications Inc (NYSE: CCU) was near collapse as the private-equity firms behind the deal and the banks financing it failed to resolve their differences over terms of the credit agreement, people familiar with the matter said.
• Comcast Corporation (NASDAQ: CMCSA) and Time Warner Inc (NYSE: TWX) are in talks to fund a new nationwide wireless company that would be operated by Sprint Nextel Corporation (NYSE: S) and Clearwire Corporation (NASDAQ: CLWR), and use WiMax technology, reported the Wall Street Journal. Intel Corporation (NASDAQ: INTC) and Google Inc (NASDAQ: GOOG) may also help with funding.
• The Wall Street Journal also reported federal regulators are handing out warnings to banks due to their exposure to development loans and commercial real-estate construction. Sources believe Corus Bankshares Incorporated (NASDAQ: CORS) is facing trouble in the near future due to increasing scrutiny by regulators and the fact that much of the fallout in the condo sector has yet to be felt by banks.
• Some banks in the government-sponsored Federal Home Loan Banking system want to guarantee municipal infrastructure projects, the Financial Times reported, thus fulfilling the role traditionally taken by monoline insurance groups such as MBIA Inc(NYSE: MBI).

MOST NOTEWORTHY: Trident Microsystems, Comcast, Level 3 Communications, Ambac Financial and MBIA Inc were today's noteworthy downgrades:

• Jefferies downgraded shares of Trident Microsystems Inc (NASDAQ: TRID) to Hold from Buy and lowered their target to $9 from $20 following the company's mixed quarter as they expect TRID to lose share in the TV market and face increasing price pressure. Shares were also downgraded to Hold from Buy at Deutsche Bank. Oppenheimer lowered Trident to Neutral from Buy, citing disappointing December guidance, delay in TV ramp, and expectations that 2008 will be a peak year for TV chip ramp revenues.
• CIBC downgraded shares of Comcast Corporation (NASDAQ: CMCSA) to Sector Performer from Outperformer following the weak Q3 results to reflect increasing competition in telco video, slower broadband growth and the weakening economy.
• JP Morgan downgraded Level 3 Communications Inc (NASDAQ: LVLT) to Neutral from Outperform following disappointing Q3 results and guidance.
• Friedman Billings downgraded shares of Ambac Financial Group Inc (NYSE: ABK) and MBIA Inc (NYSE: MBI) to Market Perform from Outperform citing lack of near-term catalysts and uncertainty surrounding the credit markets.

OTHER DOWNGRADES:

• Banc of America lowered its rating on Eli Lilly and Company (NYSE: LLY) to Neutral from Buy.
• WestLB downgraded GlaxoSmithKline PLC (NYSE: GSK) to Sell from Add.
• Societe Generale downgraded France Telecom (NYSE: FTE) to Hold from Buy.
• Franklin Resources Inc (NYSE: BEN) was downgraded to Market Perform from Outperform at Friedman Billings and at Keefe Bruyette.

Eric Savitz of Barron's gave a well-needed reminder of how cheap Comcast Corporation (NASDAQ: CMCSA) is over the weekend. The leading cable company, whose stock is down 16% for the year, now sells for a valuation almost equal to that of its slower growing Baby Bell competitors.

It is also interesting, in this period of bankers attempting to market debt and equity for private equity transactions that cannot even cover their interest expense, that Comcast covers its interest expense some five-fold, with it jumping to 6.8x next year.

Comcast's stock has gotten hit on concerns of Verizon Communications (NYSE: VZ) beginning to get some traction on its video deployment, which has slowed down growth of the cable giant. However, Comcast is getting five customers for each one the Baby Bell competitors are getting from the cable company.

Merrill Lynch has a twelve month price target of $38 per share, up from $23 today. Not a bad return for a high quality company that is a cash flow machine.

Comcast Corporation (NASDAQ: CMCSA), the massive cable, telephone and Internet service provider, was mentioned as one heck of a bargain in Barron's Magazine (subscription required), with one article participant labeling it as one of the cheapest 15 stocks in the S&P 500. The combination of strong revenue growth of 18% and strong cash generation could finance a $20 billion buyback, driving the $40 per share, one analyst believed.

However, despite being the number one player in this space, Brian Roberts, Comcast CEO, could be frustrated seeing his other cable brethren potentially making billions, particularly Cox Communications, who went private a few years ago, and Cablevision, who is in the process of going private. While Roberts & Family owns 100% of the voting stock, it only owns around 3 to 4% of the economic shares. The cumulative value of these shares approaches $1b, meaning Roberts could walk away with tens of billions in a successful private equity deal. While shut down for now, the private equity market will not be shutdown forever.

The numbers at Comcast are impressive, now serving 24 million homes versus number two Time Warner who serves 13 million. Comcast also has a presence in 20 of the 25 largest cities in the US.

Will Roberts ever take the private-equity leap, adding more debt on to the $33 billion already on its balance sheet? Most likely not. What has made Comcast the number one player in this space is the Roberts family's wise use of debt. Expect huge share buybacks to be the means for the industry pioneers to increase their ownership in the cable giant. The Roberts family is too risk averse to leverage this gem of a company to the hilt.

MAJOR PAPERS:

• The Wall Street Journal (subscription required) reported that Sprint Nextel Corporation (NYSE: S) is disconnecting about 1,000 customers who have been calling customer service "excessively."
• According to the Wall Street Journal, Apollo Management has raised its offer for Huntsman Corporation (NYSE: HUN) to $28 a share, valuing Huntsman at $6.5B.
• The Financial Times (subscription required) reported that Moody's Corporation (NYSE: MCO), the credit rating agency, will issue a report today criticizing the private equity industry's increasing use of debt to buy companies.
• The Financial Times reported that Dow Jones and Company's (NYSE: DJ) board is reportedly making a final attempt to find a rival bidder for the company to compete with News Corporation (NYSE: NWS), contacting billionaire Ron Burkle.

OTHER PAPERS:

• Virgin Media Inc's (NASDAQ: VMED) bankers have contacted ComCast Corp (NASDAQ: CMCSA) and DirecTV Group Inc (NYSE: DTV) to help "kick-start' an auction for the company, reported The Mail on Sunday.
• The New York Post reported, citing sources, that theme park operator Cedar Fair Entertainment (NYSE: FUN) has contacted private equity firms about the possibility of acquiring the company.

MOST NOTEWORTHY: Dominion Resources (D), Syniverse Holdings (SVR), Research in Motion (RIMM), Verizon Communications (VZ) and Comcast (CMCSA) were the noteworthy upgrades today:

• Jefferies upgraded shares of Dominion Resources (NYSE: D) and raised their target to $90 from $68 as the firm believes shares are fairly valued based on assumed higher spark spreads in New England.

• Syniverse Holdings (NYSE: SVR) was raised to Peer Perform from Underperform at Bear Stearns after its Q1 report.

• Credit Suisse upgraded Research in Motion (NASDAQ: RIMM) and raised their target to $145 from $100 as the firm believes the company will benefit from smart phone market growth and improving international traction. However, FBCO still believes RIMM's increasing exposure to the consumer market will continue to pressure margins.

• Prudential said Verizon Communications (NYSE: VZ) is showing signs of improving revenue growth and accelerating FiOS TV subscriber additions, as well as continued dominance in wireless, and upgraded shares to Neutral from Underweight.

• Matrix USA raised Comcast Corp's (NASDAQ: CMCSA) rating to Hold from Sell on valuation...

OTHER UPGRADES:

• Goldman upgraded Danaher Corp (NYSE: DHR) to Buy from Neutral with an $81 target.

• NTT DoCoMo (NYSE: DCM) was upgraded to Outperform from Neutral at Credit Suisse.

• Bear Stearns raised Ingersoll-Rand's (NYSE: IR) rating to Peer Perform from Underperform.

• Needham upgraded Sigma Designs (NASDAQ: SIGM) to Buy from Hold with a $28 target.

• Wachovia raised Innkeepers USA Trust (NYSE: KPA) rating to Market Perform from Underperform.

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

MAJOR PAPERS:

• Barron's Online's (subscription required) "Weekday Trader" wrote that there is currently little to get revved up about with Harley Davidson Inc (NYSE: HOG), as its fundamentals have deteriorated, leaving little upside for the stock over the next year, according to Citigroup Analyst Greg Badishkanian.
• The Wall Street Journal (subscription required) reported that Bristol-Myers Squibb Company (NYSE: BMY) will name James Cornelius, who has been interim CEO since last September, as the permanent CEO of the company.
• Comcast Corp (NASDAQ: CMCSA) is pushing into Web TV, a space currently being dominated by Google Inc's (NASDAQ: GOOG) YouTube, reported the Wall Street Journal.

OTHER PAPERS:

• According to the Detroit Free Press, Chrysler Group suitors must submit new bids next week to make the cut and continue talks with DaimlerChrsyler AG (NYSE: DCX); one or two "preferred bidders" are expected to emerge.
• The L.A. Times reported that employees of Fremont General Corp (NYSE: FMT) are suing over losses on company stock in their retirement plans which they say should have been foreseen and prevented.

Down from its 2000 high of nearly $100 a share to $20 in recent trading, Jason Jovine believes the time has come for long-term buy and hold investors to buy Time Warner, Inc. (NYSE:TWX).

The editor of The Tycoon Report asks, "This stock went down over 80% in the last seven years! What in the world happened?"

One primary factor was the market itself. Indeed, we all remember the bear market phase beginning in 2000. Another factor was its sector. Jovine notes, "Anything related to technology had led the market to its peak in the 1990's, and anything related to technology from 2000 on was to get severely punished regardless of the company or its earnings."

In addition, the advisor points to the merger with AOL as part of the problem. "This merger was announced near the stock's high," he explains. "After that, of course, we had the terrorist attacks on 9/11 and the accounting scandals which later followed."

Now, however, he sees the company's problems as being in the past. He says, "I believe that the stock has been punished enough and is now a very good buy."

He notes, "Overall revenues last year rose by over 4%. In their family of companies -- including AOL, HBO, Time Warner Cable, Turner Broadcasting System, New Line Cinema, Warner Bros. Entertainment, and Time Inc. -- the growth mainly came from Time Warner Cable and their networks, where revenues increased 34% and 7% respectively."

Meanwhile, he points to the stock's price to earnings ratio at about 12.5. He says, "Just as a point of comparison, Comcast (NASDAQ:CMCSK) has a p/e of about 32. In other words, you are paying a lot more for the earnings of Comcast than you are for Time Warner's. I know that they do not have the same exact business models, but I still believe that Time Warner is undervalued at this price, and the comparison is still valid."

As to future prospects, he adds, "I think that Time Warner will either exceed or come in on the high end of their earnings projections when their next earnings announcement comes out in early May; stay tuned."

The stock, he concludes, is best suited for those with a long-term horizon. He says, "In my view, investors should buy the stock and hold it. This is an investment."

For more stock picks from the leading financial newsletter advisors, visit Steven Halpern's free website, TheStockAdvisors.com.

It appears the monopolistic era of the cable company is coming to an end. As the Baby Bells complete the build out of their networks to carry voice, video and data, they are also going to the FCC and saying there is an alternative to the cable companies.

Kevin Martin, the FCC chairman, is defending a proposal to limit the number of pay television subscribers a cable company can reach at 30 percent, saying telephone companies that deploy video would also be capped at that level, according to Reuters.

"We are trying to create a regulatory environment that promotes competition in a lot of these services. What we have seen is that cable prices have increased by about 100 percent since 1996," FCC Chairman Kevin Martin told reporters after testifying at a House telecommunications and Internet subcommittee hearing.

The entire cable industry has been built on being a monopoly. However, this era is now coming to an end. If the Baby Bells cannot compete head on with the cable companies, then regulators will help.

It is important to start listerning to what the cable CEOs say during conference calls about business. Comcast's stock got hit after its recent call due to forecasting higher capex. This surprised the investment community. Higher capex might be a sign that network upkeep is costing more than expected, which possibly means a lower return on investment.

MAJOR PAPERS:

• The Wall Street Journal (subscription required) reported that Kohl's Corp (NYSE: KSS) may form a multi-year deal with Elle for an exclusive line of clothing.
• The Journal also reported that Comcast Corp (NASDAQ: CMCSA) is expected to announce an online video deal with Facebook.
• The Barron's Online (subscription required) "Weekday Trader" column highlighted Citrix Systems Inc (NASDAQ: CTXS), which it said could rise to $40 a share or more from its current $31. The company is a play on the success of Microsoft Corporation's (NASDAQ: MSFT) Vista Operating System.

OTHER PAPERS:

• According to the BBC News, Vodafone Group ADR (NYSE: VOD) is offering News Corporation's (NYSE: NWS) MySpace in the UK through its subscribers' mobile phones.
• The Economic Times wrote that EMC Corporation (NYSE: EMC) has bought India's privately-held enterprise data security company Valyd Software for an undisclosed sum.
• The Chicago Tribune reported that Chicago real estate magnate Sam Zell has entered the bidding for the Tribune Company (NYSE: TRB).

Note: The Daily Option Update is provided by Options Specialist Paul Foster of theflyonthewall.com.

Volatility Index S&P 500 Options-VIX down .47 to 10.49 after FOMC leaves rates unchanged at 5.25%

Comcast Corp. -(NASDAQ:CMCSK) option prices reveal subtle risks as expected into 2/1 EPS. Comcast will report EPS before the open on 2/1. Comcast February 45 straddle is priced at $2.30, above its theoretical value of $1.96 according to Track Data, suggesting increasing near term price fluctuations risks into EPS.

Google Inc.-(NASDAQ:GOOG )February option implied volatility elevated as expected into EPS. Google will report EPS after the close tonight. American Technology says "expect a solid report after close; Flat stock may reflect lower expectations." Google call option volume of 84,845 contracts compares to put volume of 54,692 contracts. Google February option implied volatility of 45 is above its 26-week average of 34 according to Track Data, suggesting larger price risks.

Option volume leaders today were: Altria Group Inc. (NYSE: MO), SanDisk Corp. (NASDAQ:SNDK), Citigroup (NYSE:C), Bristol Myers Squibb (NYSE:BMY) and Microsoft Corp.(NASDAQ:MSFT).

"Cash is the lifeblood of any business," says Roger Conrad. "And few companies have the robust vital signs of Comcast Corp. (NASDAQ: CMCSK), which the editor of The Utility Forecaster calls "America's cable king."

The advisor was particularly impressed with the firm's third quarter results, noting that its "historically robust growth rates" have accelerated even further, with revenue surging 22%, cash flow 25% and operating income 46%.

With the acquisition of assets from a bankrupt Adelphia this year, Conrad notes, the firm has expanded its basic cable customer rolls to 24 million and its network reach to more than 40 million homes. That expanded base, he predicts, will set the stage for more upselling to broadband Internet, telephone, and digital cable service (now more than 50% of the overall base).

He says, "Many see communications as a life-and-death struggle between telecom and cable giants." On the contrary, he notes, the "robust" performance of Comcast "paints the picture of an increasingly profitable industry."

With its rising cash flow stream and its "first meaningful earnings" of 58 cents per share in the latest quarter, the advisor rates Comcast a buy up to $40.

For those seeking income, he points out that the stock doesn't pay a dividend. But there is another option; Conrad recommends the Comcast 5.85% Notes of 01/15/10, which have a yield to maturity of 5.3%.

He sees little interest rate risk i the issue and the possibility of capital gains "as the company's credit rating is increased in coming years."