MAJOR PAPERS:

• According to people familiar with the matter, the Wall Street Journal reported that JP Morgan Chase & Co (NYSE: JPM) is in talks about potentially taking a half-interest in Target Corporation's (NYSE: TGT) credit-card operations for about $4B.
• The Wall Street Journal also reported that executives at Microsoft Corporation (NASDAQ: MSFT) met with Yahoo! Inc (NASDAQ: YHOO) executives earlier this week to discuss Microsoft's takeover offer for the company, marking a breakthrough in communication between the two companies.
• HSBC Holdings Plc (NYSE: HBC) wants to expand its operations in sub-Saharan Africa, the Financial Times reported, as the region becomes increasingly significant for the bank's Asian and Indian clients.

OTHER PAPERS:

• Due to its plunging stock price and the expected departure of millions of subscribers this year, sources are speculating about the fate of Sprint Nextel Corporation (NYSE: S). While analysts believe a company such as Deutsche Telekom AG (NYSE: DT) may look to buy Sprint, the Associated Press reported that neither Sprint nor its potential suitors are commenting.

MOST NOTEWORTHY: Northrop Grumman, Groupe Danone and MercadoLibre were today's noteworthy upgrades:

• Oppenheimer upgraded shares of Northrop Grumman (NYSE: NOC) to Outperform from Perform after the Pentagon selected the company over Boeing (NYSE: BA) for the newly designated KC-45A Aerial Refueling Tanker with a potential value of $35B.
  
• Citigroup upgraded shares of Groupe Danone (OTC: GDNNY) to Buy from Hold on valuation, as they believe the sell-off on commodity cost concerns is overdone.
  
• MercadoLibre (NASDAQ: MELI) was raised to Outperform from Sector Perform at RBC Capital, as they believe MELI's long-term thesis is more compelling now vs. six months ago and notes favorable reaction to Mercado Pago v2.0.

OTHER UPGRADES:

• Goldman upgraded Societe Generale (OTC: SCGLY) to Neutral from Sell.
  
• Jefferies upgraded Exelon (NYSE: EXC) to Buy from Hold.
  
• Deutsche Telekom (NYSE: DT) was raised to Neutral from Underweight at JP Morgan.

MOST NOTEWORTHY: Pfizer, Dell, Quest Diagnostics, and Societe Generale were today's noteworthy upgrades:

• Lehman upgraded Pfizer (NYSE: PFE) to Equal Weight from Underweight on valuation.
  
• Friedman Billings raised Dell (NASDAQ: DELL) to Outperform from Market Perform, citing expectations for improved margins next quarter, and valuation.
  
• Quest Diagnostics (NYSE: DGX) was upgraded to Outperform from Neutral by Credit Suisse, which cited valuation.
  
• Lehman upgraded shares of Societe Generale (OTC: SCGLY) to Overweight from Underweight to reflect a potential takeover by BNP Paribas and limited downside.

OTHER UPGRADES:

• Bayer (OTC: BAYRY) was raised to Overweight from Equal Weight by Lehman.
• Deutsche Telekom (NYSE: DT) was upgraded to Hold from Sell by Citigroup.
• Public Storage (NYSE: PSA) was raised to Buy from Hold by Deutsche Bank.
• UBS raised Entergy (NYSE: ETR) to Buy from Neutral.

MAJOR PAPERS:

• In what may be a sign of interest from large media companies looking to delve into the "content delivery space," the Wall Street Journal reported that EdgeCast Networks is set to announce it has raised up to $6M from Steamboat Ventures, The Walt Disney Company's (NYSE: DIS) venture-capital arm.
• Barron's "The Trader" section says they'd stay away from Federal National Mortgage Association (NYSE: FNM), even though the Bush administration's subprime-mortgage freeze program caused the stock to rebound some. Barron's speculates that Fannie should take an earnings hit in the range of $6.4B to $14B.

OTHER PAPERS:

• According to the UK's Telegraph, The Blackstone Group LP (NYSE: BX) is "in the middle" of putting together a consortium to make an offer for Rio Tinto PLC (NYSE: RTP).
• According to the Financial Times Deutschland, Deutsche Telekom AG's (NYSE: DT) T-Mobile is selling less than 700 of Apple Inc's (NASDAQ: AAPL) iPhones a day; this compares to the 10,000 iPhones the unit sold on a daily basis during Christmas.

MOST NOTEWORTHY: Dick's Sporting, Ericsson and Deutsche Telekom were today's noteworthy upgrades:

• Citigroup upgraded shares of Dick's Sporting (NYSE: DKS) to Buy from Hold based on valuation, margin expansion and increased visibility.
• Ericsson (NASDAQ: ERIC) was raised to Buy from Hold at WestLB on valuation following yesterday's sell-off. The firm feels investors need to look beyond 2008.
• Lehman upgraded shares of Deutsche Telekom (NYSE: DT) to Equal Weight from Underweight as they believe earnings momentum will be seen in the near-term.

OTHER UPGRADES:

• UBS upgraded Nova Chemical (NYSE: NCX) and Orient-Express (NYSE: OEH) to Buy from Neutral.
• Office Depot (NYSE: ODP) was upgraded to Neutral from Underperform at Credit Suisse.
• Goldman upgraded AON Corp. (NYSE: AOC) to Buy from Neutral.

MAJOR PAPERS:

• According to the Wall Street Journal's "Heard on the Street," as the economy continues to slow and the credit markets face further turmoil, high-profile companies like Countrywide Financial Corporation (NYSE: CFC) and The Home Depot Inc (NYSE: HD) are cutting back on buybacks as their shares drop.
• The New York Times reported that BlackRock Inc (NYSE: BLK) is expected to be the main asset manager for a $75B fund being created by Bank of America Corporation (NYSE: BAC), Citigroup Incorporated (NYSE: C), and JP Morgan Chase & Co (NYSE: JPM) to help stabilize the market fJor asset-backed securities, according to a source. The Bank of New York Mellon Corporation (NYSE: BK) is reportedly a leading contender to be a custodian of the fund.

OTHER PAPERS:

• A ruling in Vodafone Group Plc's (NYSE: VOD) favor may cause Apple Inc (NASDAQ: AAPL) to rethink its business model for the iPhone device. The injunction against Deutsche Telekom AG (NYSE: DT)'s T-Mobile unit may force Apple to "unlock" its iPhones, the UK Times reported.
• Struggling airline UAL Corporation (NASDAQ: UAUA), along with its unit United Airlines, is struggling, but finding a carrier willing to merge may be a problem, BusinessWeek speculated.

Apple (NASDAQ: AAPL) has begun to round up the press for a big news conference next Tuesday. The event will be in London and will probably cover Apple's plans for its iPhone in the UK, France, and Germany.

Apple's PR machine does not know how to do anything small, so it is expected that the company will say that it will "hand a UK sale deal to Spanish Telefonica's O2 UK unit, a German deal to Deutsche Telekom's (NYSE:DT) T-Mobile and a French deal to France Telecom's (NYSE: FTE) Orange."

With the iPhone's price already dropped, sales in Europe can be expected to be strong.

The product, however, has at least two problems as it moves overseas. One is that the phone is currently a 2.5G product while Europe cellular users are, in many cases, already on 3G networks. Apple would need a short time table to get a next-generation product to market.

The other issue with the iPhone is that technology pirates have figured out how to "unlock" the device so that it can work on more than one cellular network. It is too early to say whether this will affect the exclusivity that Apple is seeking from network partners, but it at least raises the question of how easy it will be to force consumers to stay with one provider.

Now it's on to Asia.

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

MAJOR PAPERS:

• Barron's Online's (subscription required) "Weekday Trader" suggest investing in several pharmaceutical names during the stock market woes, including Merck & Co Inc (NYSE: MRK), Eli Lilly & Co (NYSE: LLY) and Schering Plough Corporation (NYSE: SGP).
• Speculation intensified that the Federal Reserve is going to cut interest rates shortly, and moreover, some are suggesting that it already has cut them stealthily, reported the Wall Street Journal (subscription required).
• Sprint Nextel Corporation (NYSE: S) will spend $5B on WiMAX through 2010, reported the Wall Street Journal.
• Wal-Mart Stores Inc (NYSE: WMT) is considering smaller, higher-end stores for introduction early next year, reported the Wall Street Journal.

OTHER PAPERS:

• The CEO of Deutsche Telekom (NYSE: DT) , René Obermann, called for the European mobile phone networks to be consolidated, reported the Independent.
• Citigroup Incorporated (NYSE: C) is believed to be negotiating the purchase of a European pension plan worth about GBP200M, reported the U.K. Times.
• U.S. Treasury Secretary Henry Paulson said the economy and markets are "resilient," and can absorb any losses from the recent market instability, and has not raised the possibility of policy changes to deal with the markets' problems, reported the New York Times.

The New York Times writes that amid all the Apple (NASDAQ: AAPL) iPhone frenzy, the news of the launch of a "game changing" cellular product by T-Mobile may have been lost.

T-Mobile, the US cellular arm of Deutsche Telekom (NYSE:DT), currently runs in fourth place for cell subscribers in the US. Verizon Wireless, AT&T (NYSE: T) Wireless, and Sprint (NYSE: S) are ahead of it.

T-Mobile's new phones allow customers to make regular calls on the cell network, but have a WiFi feature set up to make free internet calls within WiFi hot spots. Even when on the internet consumers "still get call hold, caller ID, three-way calling and all the other features."

It is a classic case of whether form beats function. The iPhone has a tremendous set of features, but only works on the AT&T Wireless 2.5 G network, a step down from 3G-enabled handsets. The T-Mobile product offers the potential of huge savings.

T-Mobile may be taking a risk by offering a phone where its customers can make some of their calls for free, but that is what you do when you are in fourth place.

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

MAJOR PAPERS:

• Barron's Online's "Weekday Trader" section said that Bankrate Inc (NASDAQ: RATE), Answers Corporation (NASDAQ: ANSW), WebMD Health Corp (NASDAQ: WBMD) and The Knot Inc (NASDAQ: KNOT) may be the next preferred takeover targets for Google Inc (NASDAQ: GOOG) and Microsoft Corporation (NASDAQ: MSFT).
• The Wall Street Journal reported that Brad Tierney is interested in Dow Jones and Company (NYSE: DJ), which in talks with News Corporation's (NYSE: NWS) Rupert Murdoch for a possible $5B sale.
• According to the Wall Street Journal, citing a person close to the deal, Deutsche Telekom (NYSE: DT) will acquire the Orange Netherlands unit of France Telecom for about EUR1.3B, and simultaneously sell Ya.com for EUR320M to them.
• The Financial Times reported that three separate research teams showed the embryonic stem cells can be created by reprogramming some of the genes in adult mice skin cells, without creating an embryo. The news will be well-received by opponents of embryonic stem cell research, but scientists said it is too early to tell if the technique can be used with human cells.

OTHER PAPERS:

• The Herald Sun reported that a new $237B Chinese state-owned investment fund may be interested in acquiring natural resources company BHP Billiton Limited (NYSE: BHP), according to Bell Potter research chief Peter Quinton.

"Investors have shied away from the big telcos in recent years because of concerns that their traditional businesses were shrinking," notes George Putnam III, an expert in uncovering turnarounds.

But now, he explains, "After years of concern about the cable companies invading their turf, the big telecoms are now well positioned to fight back."

In his The Turnaround Letter, the advisor looks at seven leaders in the global telecom space, all of which he says represent global leaders, with dominant positions in their local markets and the "potential to grow steadily by expanding the services they offer."

AT&T (NYSE: T) Putnam notes, gained control of Cingular Wireless due to its merger with Bellsouth. The renamed AT&T Wireless, he says, will account for about 35% of AT&T's revenues.

The advisor observes, "In addition to a strong wireless presence, AT&T is rolling out fiber-based landline services. With revenues expected to be north of $120 billion in 2007 and substantial operating cash flow, AT&T is a force to be reckoned with." Further, he notes, the dividend was just raised for the 22nd consecutive year, and the company is expected to repurchase roughly $7 billion worth of stock in 2007.

MAJOR PAPERS:

• The Wall Street Journal reported that XM Satellite Radio Holdings Inc (NASDAQ: XMSR) is being sued by members of the National Music Publishers Association over XM receivers with the XM+MP3 service, which allows listeners to store songs they hear on XM onto their players. The suit is charging XM with "unlawfully reproducing and distributing copyrighted music without paying appropriate royalties."
• The Wall Street Journal speculated that the most plausible course of action for Cadbury Schweppes ADS (NYSE: CSG) confectionery operations would be a merger with Hershey Company (NYSE: HSY), which the article said would be "tasty for investors."
• General Electric Company (NYSE: GE) said it would launch a $1.14B takeover bid for leasing firm Sanyo Electric Credit, marking a potential windfall for major shareholder Goldman Sachs Group Inc (NYSE: GS). Sanyo Credit agreed to the offer which will run from Monday to May 9, reported the Financial Times.

OTHER PAPERS:

• According to India's Economic Times, Google Inc (NASDAQ: GOOG) is open to acquiring Indian technology companies with "interesting technologies." The company already said it would invest in two Indian early stage venture capital funds last month.
• The Economic Times also reported that Tata Group is in talks about buying a stake in Deutsche Telekom ADS's (NYSE: DT) business unit, T-Systems, citing a report from German business weekly Focus Online.

MOST NOTEWORTHY: Netflix Inc (NFLX) was the most notable downgrade on the first trading session of the week.

• Roth Capital downgraded Netflix Inc (NASDAQ: NFLX) to Sell from Hold, on the belief that the competitive threat of Blockbuster (NYSE: BBI) will not likely diminish in the near-term.

OTHER DOWNGRADES:

• Deutsche Telekom ADS (NYSE: DT) was downgraded to Sell from Hold at Citigroup following the company's profit warning.

• LECG Corp (NASDAQ: XPRT) was downgraded by William Blair to Underperform from Outperform following the company's disappointing guidance.

• Symantec Corp (NASDAQ: SYMC) was downgraded to Source of Funds from Accumulate at ThinkEquity.

• Stephens downgraded Covenant Transport Inc (NASDAQ: CVTI) to Equal Weight from Overweight based on the timing of a turnaround.

• Bear Stearns downgraded shares of MGM Mirage (NYSE: MGM) to Peer Perform from Outperform citing valuation.

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

MAJOR PAPERS:

• Barron's Magazine (subscription required) highlighted a number of possible M&A targets, along with a few stocks it believes to be undervalued:
• M&A is expected to continue in Europe: possible large cap targets include Barclays (NYSE: BCS), Deutsche Telekom (NYSE: DT), Deutsche Bank (NYSE: DB), ABN Amro (NYSE: ABN), Volkswagen (OTC: VLKAY), Koninklljke (NYSE: KPN) and Swisscom (NYSE: SCM); possible small-mid cap targets include Hellenic Telecom (NYSE: OTE).
  
• There may still be upside in shares of Xerox (NYSE: XRX), says James Benson, a partner and securities analyst at Harris Associates.
• Shares of YRC Worldwide (NASDAQ: YRCW) may be undervalued by as much as 50%, says Barron's "Bottom Line," which writes that shares could climb above $60.
• The Wall Street Journal (subscription required) featured an article on Pfizer's new CEO and his strategic plan.
• Pfizer's (NYSE: PFE) new CEO, Jeffrey B. Kindler, is preparing to detail his strategic vision for the company that will likely involve more job cuts.
• Hewlett-Packard (NYSE: HPQ) is claiming a nanotechnology research breakthrough that would bring big benefits in performance.
• According to a Nomura report, Sony Corp (NYSE: SNE) will reach only 75% of its global target for PlayStation 3 sales this fiscal year through March.
• The New York Times had an article highlighting the possibility of New York funding stem cell research.
• New York Governor Eliot Spitzer called for the passage of a $2B 10-year bond initiative for research and development, at least half of which would be set aside to pay for stem cell research.
• Citigroup (NYSE: C) may shorten its name to Citi and drop its umbrella logo.

OTHER PAPERS:

• The UK Times wrote that Ford (NYSE: F) may have trouble selling its Aston Martin unit after potential buyers found problems in the divisions books while doing due diligence.
• El Pais wrote that Fidel Castro is in "very grave" condition after three failed operations and complications from an intestinal infection known as diverticulitis.

Stock futures are slightly lower this morning (7:46 a.m.), indicating a similar open for stock ahead of a week full of economic data, namely inflation indicators, as well as retail and housing industry indicators.

Since today there are no major economic reports due other than Treasury budget at 2:00 p.m. Eastern, market could lack direction.

Earnings season still isn't over and this week a few Dow companies are still due to report earnings, Wal-Mart Stores, Inc. (NYSE:WMT), Home Depot Co. (NYSE:HD) and Hewlett-Packard Co. (NYSE:HPQ).

In Corporate New:

Reporting quarterly results today are including Tyson Foods Inc. (NYSE:TSN) with an expected per-share loss of 4 cents for the fourth quarter, and Dick's Sporting Goods, Inc. (NYSE:DKS) with analysts expecting 5 cents per share for the third quarter.

Another fallout from the options scandal, this time it's KB Home (NYSE:KBH) CEO Karatz who will be retiring because of errors in dating option grants.

International Business Machines Corp. (NYSE:IBM) is joining Citigroup Inc. (NYSE:C) in a bid to take a majority stake in China's Guangdong Development Bank. Citigroup has put in a bid of US$3 billion (€2.33 billion) for 85% of Guangdong Development Bank.

The Wall Street Journal reported that Gannett Co. (NYSE:GCI) has put a preliminary bid for rival Tribune Co. (NYSE:TRB). Maurice Greenberg, the former chairman of the insurance giant American International Group (NYSE:AIG), has also expressed interest in the company.

Also expected to move today:

Deutsche Telekom (NYSE:DT) CEO, Kai-Uwe Ricke , resigned. The company named Rene Obermann, who has led the company's T Mobile wireless division. DT shares rose in Frnakfurt.

Novartis (NYSE:NVS) said a three-month delay is needed by the FDA to review new data the company submitted on oral diabetes drug Galvus from more than 1,000 patients. NVS shares fell in Frankfurt.