MOST NOTEWORTHY: Super Micro Computer, Corning and Vertex Pharmaceuticals were today's noteworthy initiations:

• Merriman believes Super Micro Computer (NASDAQ: SMCI) is a unique value in the Data Center sector and thinks it could trade to a range of $10-$12 in the near-term. Shares were initiated with a Buy rating.
  
• Citigroup started Corning (NYSE: GLW) with a Hold rating and $23.50 target. The firm sees limited upside given the risks to LCD glass demand.
  
• Vertex Pharmaceuticals (NASDAQ: VRTX) was assumed with an Overweight rating and $57 target at Thomas Weisel, as they are positive on its telaprevir opportunity.

OTHER INITIATIONS:

• Lehman reinitiated Cablevision (NYSE: CVC) with an Equal Weight rating.
  
• Silicon Motion (NASDAQ: SIMO) was initiated at Cowen with an Outperform rating.
  
• Brinks (NYSE: BCO) was initiated with a Positive rating at Susquehanna.

Shareholders of Cablevision Systems Corp. (NYSE: CVC) must be scratching their heads over the company's $650 million purchase of Newsday from Tribune Co., the latest in a long series of baffling moves by the Dolan family, which controls the New York-based cable company.

The theory -- if you want to call it that -- is that Cablevision would be able to market the newspaper to its customers and that the company would be able to add additional content to its cable news channel. This makes no sense. People have stopped reading newspapers in droves. The only way that they would even consider subscribing is if Cablevision practically gave the newspaper away. Newsday could have struck an alliance with the cable channel to share content without the paper changing hands; these sort of deals happen all of the time.

Maybe advertisers will be more interested in Newsday now that Cablevision will be able to bundle ad space in the paper and its website along with cable commercial time. The problem, though, is that residents in Long Island have a plethora of media choices including the New York Times, New York Daily News and The New York Post. Like the readers, the only way that advertisers that aren't in the newspaper now would consider doing business with Newsday would be with steep discounts.

MAJOR PAPERS:

• The Wall Street Journal reported that a spokesperson for New Corporation (NYSE: NWS) said the company has dropped out of the bidding for Tribune Co's (NYSE: TXA) Newsday. This leaves Cablevision Systems Corporation (NYSE: CVC) as the apparent winner of the auction.
• According to people familiar with the matter, the Wall Street Journal reported that American International Group Inc's (NYSE: AIG) airplane-leasing unit is considering a split from the company. The people said International Lease Finance Corp have grown "increasingly concerned" the company will be hurt by AIG's financial troubles.
• Royal Dutch Shell Plc (NYSE: RDS.A) and Spain's Repsol YPF SA (NYSE: REP) are pulling out of one of Iran's biggest gas projects, the $10B-plus development of phase 13 of South Pars, the world's largest gas field, the Financial Times reported.

WEB SITES:

• Bloomberg reported that HSBC Holdings Plc (NYSE: HBC) set aside a smaller-than-forecast $3.2B for bad loans in the U.S. The bank also said its Q1 profit was higher than Q107.

Stock futures were higher early Monday morning as the dollar strengthened and oil prices retreated. Investors may be coming into the market looking for bargains as a result of the recent selloff, meanwhile digesting news of a profit warning from FedEx, upbeat outlook from HSBC and Cableivision may be close to buying Newsday.

On Friday, stocks tanked after oil kept setting new highs, passing the $126 per barrel level. Losses from American International Group -- a Dow component -- also contributed to the bearish sentiment as many had hoped financials were on their way to a recovery. The Dow industrials lost 120 points, or 0.94%, the Nasdaq Composite declined 5 points, or 0.23%, and the S&P 500 declined 9 points, or 0.67%.

Without much economic news, investors will focus on the dollar and oil prices. After breaking the $126 per barrel level Friday and settling at $125.96, oil prices retreated Monday in Asia as the dollar strengthened against the euro and yen. Of course, the retreat is relative and oil has been trading around $125.34 recently.
And for the first time since December 2005, futures traders are turning bullish on the dollar, according to Bloomberg. According to two measures of currency trading, it seems traders expect further dollar appreciation, and not only that, that the rally will hold.

The Wall Street Journal, which is owned by News Corp. (NYSE: NWS) is reporting that News Corp. has withdrawn its bid for Newsday (subscription required). Rupert Murdoch's News Corp. was unwilling to match the $650 million bid offered by Cablevision (NYSE: CVC). New York Daily News owner Mort Zuckerman had also bid on Newsday.

Besides being higher, Cablevision's bid is likely to face fewer regulatory hurdles, considering Murdoch's and Zuckerman's New York holdings. But, according to the Journal, the bid could prompt some pushback from investors who question the the strategic rational for the deal. Cablevision could bundle Newsday subscriptions with other broadband and phone services it offers in the New York area.

Tribune Co. (NYSE: TXA), current owner of Newsday, recently reported that first-quarter revenue and circulation was down, as newspapers continue to struggle. Cablevision also reported a first-quarter loss of 11 cents per share.

Rainbow Media Holdings, a Cablevision Systems Corporation (NYSE: CVC) programming subsidiary, announced today that it will acquire 100% ownership of the Sundance Channel. Sundance is currently owned by NBC Universal, which is owned General Electric (NYSE: GE), and Showtime Networks, which is owned by CBS Corporation (NYSE: CBS), as well as various entities controlled by Robert Redford.

The exchange will be valued at approximately $496 million and consists of a tax-free exchange of 12.7 million GE shares held by Rainbow and given to General Electric and cash given to CBS and Redford entities for their interests.

Sundance began in 1996 under the direction of Robert Redford, with the goal of creating a channel that brings dedicated viewers while promoting artistic freedom of expression through various films, series, and documentaries. It now reaches some 30 million subscribers and with the acquisition, Sundance will join Rainbow's portfolio of channels, including AMC, IFC and WE.

Jon Ogg produces and edits the Special Situation newsletter for 247WallSt.com.

Cablevision (NYSE: CVC) is considering buying Long Island newspaper Newsday. Jared Kushner, a rich young publisher who owns the small weekly The New York Observer may also be involved. As far any anyone knows, the Observer has never made any money.

According to Reuters, the bid would be above the $580 million already offered by New York Daily News owner Mort Zuckerman and Rupert Murdoch's News Corp (NYSE: NWS), which owns the New York Post.

Cablevision's board has already hurt its shareholders. The company's controlling shareholders, the Dolans, made a cash offer of $36.26 for the company in mid-2007. That was just before cable companies began to report weaker earnings due to increasing competition from phone operators like Verizon (NYSE:VZ). CVC now sells for $23,

There are no savings for Cablevision if it buys a newspaper. If it makes an offer in partnership with the Observer, the NY-based paper is so tiny that any cost cutting would be meaningless.

The reasons behind the Post and Daily News offers have some sense to them. By combining with another large daily paper which has overlapping geographic distribution, the chances of taking out tens of millions of dollars in costs per annum are excellent.

Putting a cable company with a daily newspaper does not make Cablevision shareholders a dime. With the newspaper industry faltering, it may actually cost them a great deal of money.

Douglas A. McIntyre is an editor at 247wallst.com and author of the Ten Stocks Under $10 letter.

MAJOR PAPERS:

• According to people familiar with the matter, the Wall Street Journal reported that an investor group that includes Harbinger Capital Partners is expected to report a raised stake in The New York Times Company (NYSE: NYT). The raised stake is expected to be close to matching the 19% stake owned by the Sulzberger family.
• The Goldman Sachs Group Inc (NYSE: GS) has been spared many of the problems of the subprime mortgage crisis, but other areas where it's involved, such as investment banking and leveraged loans, are hurting the firms profitability, the Wall Street Journal reported.

OTHER PAPERS:

• Cablevision Systems Corporation (NYSE: CVC) is seeking to put a valuation on its Rainbow Media unit, in order to possibly sell it, sources say. In the past, the unit, which consists of several cable channels, has been valued at $3B, but the Dolan family is hoping to obtain a higher price, according to the New York Post. Possible buyers include Liberty Media Corporation (NASDAQ: LCAPA) and News Corporation (NYSE: NWS).
• Elan Corporation (NYSE: ELN) is considering splitting its biopharmaceuticals arm, which markets Tysabri, from its drug technology division, the Sunday Times noted. The potential spin-off could unlock up to $1.5B to share holders.

MOST NOTEWORTHY: The Cable and Satellite Pay TV industry and FPIC Insurance were today's noteworthy initiations:

• UBS assumed coverage of The DIRECTV Group Inc (NASDAQ: DTV) and Comcast Corporation (NASDAQ: CMCSA) with Buy ratings and Time Warner Cable Inc (NYSE: TWC), Cablevision Systems Corporation (NYSE: CVC) and DISH Network Corporation (NASDAQ: DISH) with Neutral ratings.
• Suntrust is positive on FPIC Insurance Group Inc's (NASDAQ: FPIC) valuation and book value growth. The firm initiated shares with a Buy rating and $50 target.

OTHER INITIATIONS:

• Morgan Stanley started Citadel Broadcasting Corporation (NYSE: CDL) with an Equal Weight rating.
• UBS initiated Accuray Incorporated (NASDAQ: ARAY) with a Neutral rating and $11.50 target.
• Credit Suisse reinstated Ternium SA (NYSE: TX) with a Buy rating.

Cablevision (NYSE: CVC), an entertainment and communications company controlled by the Dolan family, is recently down 12 cents to $24.11.

The Dolan family has made frequent attempts over the last four years to implement strategic alternatives at CVC.

CVC March option implied volatility of 43 is above its 26-week average of 29, according to Track Data, suggesting larger price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

MOST NOTEWORTHY: Siemens , Siliconware Precision and Palm were today's noteworthy upgrades:

• Goldman upgraded Siemens AG (NYSE: SI) to Buy from Neutral and views shares as defensive in the current environment.
  
• Merriman upgraded shares of Siliconware Precision (NASDAQ: SPIL) to Buy from Neutral on valuation, as they believe the negative sentiment regarding the U.S. economy is already priced into shares.
• JP Morgan upgraded Palm (NASDAQ: PALM) to Overweight from Underweight citing new smart-phone products expected in 2008 and stronger-than-expected Centro sales.

OTHER UPGRADES:

• Pep Boys (NYSE: PBY) was raised to Neutral from Underperform at Credit Suisse.
• Jefferies upgraded Pioneer Drilling (NYSE: PDC) to Buy from Hold.
• Deutsche Bank upgraded Cablevision (NYSE: CVC) to Buy from Hold.

MAJOR PAPERS:

• The Wall Street Journal reported that in a list released last night by the FCC, Google Inc (NASDAQ: GOOG), Cablevision Systems Corporation (NYSE: CVC) and other "nontraditional" players are set to compete against more traditional wireless companies like Qualcomm Incorporated (NASDAQ: QCOM) and MetroPCS Communications Inc (NYSE: PCS) in the federal government's spectrum auction next month.

OTHER PAPERS:

• Banks that include Merrill Lynch & Co Inc (NYSE: MER) and The Bear Stearns Companies Inc (NYSE: BSC) are reportedly in talks to help bail out struggling bond insurer ACA Capital Holdings, which lost $1B in the most recent quarter, according to two people briefed on the situation and reported by the New York Times; ACA Capital has guaranteed $26B in mortgage securities.
• Executives at Tribune Company (NYSE: TRB) were faced with last-minute questioning from bankers that were reluctant to fund the final portion of the $8.2B deal to take the company private, according to sources close to the company, the Chicago Tribune reported.

WEB SITES:

• Barron's Online's "Inside Scoop" reported that analysts are not convinced that the deal with Citadel is enough to save E*Trade Financial Corporation (NASDAQ: ETFC), as it does not eliminate E*Trade's $12.4B second-lien mortgage exposure, and the company could potentially face further customer attrition, which many think will continue to pressure the shares.

MOST NOTEWORTHY: The restaurant sector, American Semiconductor and First Solar were today's noteworthy initiations:

• Friedman Billings resumed coverage of Cheesecake Factory (NASDAQ: CAKE) and Yum! Brands (NYSE: YUM) with Outperform ratings and a $30 target and a $46 target and Applebee's (NASDAQ: APPB) with a Market Perform rating and $25.50 target.
  
• American Superconductor (NASDAQ: AMSC) was initiated with a Buy rating and $33 target at Jefferies, as they believe repeat orders for wind turbine electrical systems could drive rapid revenue growth from 2008-2010.
  
• CIBC resumed coverage of First Solar (NASDAQ: FSLR) with a Sector Performer rating, as they believe shares are already pricing in the company's 2009 EPS potential.

OTHER INITIATIONS:

• Morgan Stanley resumed coverage of Cablevision (NYSE: CVC) with an Underweight rating.
  
• US Steel (NYSE: X) was initiated with a Sector Performer rating and $117 target at CIBC.
  
• JP Morgan started SunPower (NASDAQ: SPWR) with an Overweight rating and Evergreen Solar (ESLR) with a Neutral rating.

Legendary fund manager Mario Gabelli thinks that price for the Cablevision Systems Corp. (NYSE: CVC) buyout is way too low, and he has some independent backing. According to The Wall Street Journal, ISS Governance Services, one of the leading proxy advisory firms to institutional investors, said in a report Friday that "the theoretical target price for Cablevision, by a number of analysts, is much higher than the current offer price."

Gabelli's funds own over 8% of Cablevision. While the company's shares trade below $35, Gabelli says they are worth $50.

The fight between the powerful fund manager and the Dolan family, which founded Cablevision and plans to take it private, is going to get messy and will probably end up in court. Gabelli probably has one of two goals in pushing the Dolans on the deal's price. The first would be to get them to increase their buyout offer. The other would be to bring a third party like Comcast Corp. (NASDAQ: CMCSA) to the table to make a higher bid of its own.

The Dolans have tried to take the company private twice before. Each time the deal has floundered on price.

The founding family may have a card up its sleeve. The value of cable companies has fallen sharply in recent months on increased competition from satellite TV and broadband and video offerings from the big telecom companies. Shares in Comcast have fallen from $30 earlier this year to $24.

For the Dolans, an interesting defense of their bid goes like this: the value of cable companies is falling, so actually we are overpaying to take our company private.

Douglas A. McIntyre is a partner at 24/7 Wall St.

Best Buy (NYSE: BBY) September volatility elevated as expected into 9/18 EPS.

• BBY is expected to report EPS on 9/18.
  
• RBC Capital Mkts says, "our price target of $61 is based on approximately 17 times our FY09 EPS estimate of $3.60."
  
• BBY September option implied volatility is at 41. BBY over all option implied volatility of 32 is near its 26-week average of 30 according to Track Data, suggesting flat outer month risk.

Cablevision (NYSE: CVC) volatility flat into 10/24 CVC shareholder merger vote.

• CVC, a leading entertainment & communications company controlled by the Dolan family, closed at $34.62.
  
• The Dolan family's proposal of taking CVC private at $36.26 a share will be voted on at special meeting of CVC shareholders on 10/24/07. CVC has secured its board and its special committee approval.
  
• CVC December call option implied volatility is at 22; puts are at 27, near its 26-week average of 23 according to Track Data, suggesting non-directional price risks.

Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.