MOST NOTEWORTHY: International Rectifier, Wolseley and ProLogis were today's noteworthy downgrades:

• Citigroup downgraded shares of International Rectifier (NYSE: IRF) to Sell from Hold after checks in Asia indicated LCD TV display weakness outside Sony/Samsung and signs of slowing China consumer demand.
  
• Morgan Stanley downgraded shares of Wolseley (OTC: WOSLY) to Underweight from Equal Weight to reflect a more negative outlook for the company's Nordic business and U.S. housing starts.
  
• Banc of America cut ProLogis (NYSE: PLD) to Neutral from Buy on long-term growth concerns given the economic slowdown.

OTHER DOWNGRADES:

• Polypore International (NYSE: PPO) was lowered to Neutral from Overweight at JP Morgan.
  
• Symantec (NASDAQ: SYMC) was downgraded to Market Perform from outperform at Friedman Billings.
  
• Frontier Financial (NASDAQ: FTBK) was downgraded to Underperform from Market Perform at Keefe Bruyette.

MAJOR PAPERS:

• Alain Dassas has been named CFO of Nissan Motor Company (NASDAQ: NSANY), filing a position that has remained open for four years, reported the Wall Street Journal. Dassas runs the Formula One race car team at Renault, which has a 44% stake in Nissan.

OTHER PAPERS:

• Goldman Sachs Group (NYSE: GS), Morgan Stanley (NYSE: MS), Citigroup Inc (NYSE: C), Lehman Brothers Holdings (NYSE: LEH) and JP Morgan Chase and Company (NYSE: JPM), The banks involved in the underwriting of the TXU Corporation (NYSE: TXU) buyout by Kohlberg Kravis Roberts and TPG, have offered to pay the $1B breakup free to convince the private equity buyers to back out, according to the U.K. Times.
• GlaxoSmithKline (NYSE: GSK) is currently looking for someone to succeed CEO Jean-Pierre Garnier, who will retire next May, and investors are thought to want a CEO that will 'radically overhaul' the company and possible break it up, reported the Guardian.
• The Seattle Times reported that Boeing Company (NYSE: BA) is expected to announce that the first flight of its 787 Dreamliner jet will be delayed at least until late October, according to an inside source.

WEBSITES:

• Herb Greenberg noted in his MarketWatch blog yesterday that International Rectifier Corporation (NYSE: IRF) disclosed on Friday after the market close how it was committing fraud by having a subsidiary hide products already booked as revenue in "off-books warehouses."

The always-insightful Herb Greenberg raises an interesting point in his latest Weekend Investor column for the Wall Street Journal: "Face it: Nobody cares much about accounting scandals anymore."

He uses the situation at International Rectifier (NYSE: IRF) as an example. After the company reported that it had fired its chief financial officer, the stock went up. The shares are currently trading at about the same price they were at before the company reported "accounting irregularities" on April 9.

Investors may have be correctly predicting that the accounting issues aren't huge -- any restatement of earnings may not be material enough to effect the value of the company.

But that's not really the point. As Greenberg writes, "Still, the market's indifference to possible fraud, no matter the size, is astounding -- especially since, at times, aggressive behavior reflects a company's culture."

Now that is precisely the point. I'm with Jim Cramer on this one: When a company's CEO or CFO resigns unexpectedly, sell the stock. If a company announces "accounting irregularities" and the stock doesn't tank on the news, take it as an opportunity to get out: Shooting first and asking questions later would have saved investors a lot of pain at companies like Enron, WorldCom, and, for you history buffs out there, Zzzz Best and Crazy Eddie.

The market appears to have developed an indifference to early warning signs of fraud, and that inefficiency could provide savvy investors with a chance to hop off the bus before it heads into a ditch.

DOW JONES & COMPANY (NYSE: DJ)

Could it happen? Could News Corporation (NYSE: NWS) pull its offer? They could, and the fear is absolutely there. That's why the stock has fallen. For one, the Bancroft family, which controls the majority of Dow Jones' shares, hasn't formally accepted Rupert Murdoch's $5B, $60 a share offer. And no one else has come forward with a competing bid. But it does seem that both sides are moving together in the same direction. Okay, but somebody should make up their mind -- either way -- and stop fiddling around.

EXPEDIA INC (NASDAQ: EXPE), IAC/INTERACTIVECORP (NASDAQ: IACI)

Barry Diller is back at it. The chairman and CEO of IAC/InteractiveCorp, who is also chairman of the board and a senior advisor to Expedia, is working to take online travel firm Expedia private at $30 a share. Part of any deal will involve Expedia's TripAdvisor being spun off with about 400 jobs being lost in that shuffle.

PENN NATIONAL GAMING INC (NASDAQ: PENN)

After many, many laps around the track, this race is over, as race track and casino operator Penn agreed to be acquired today by Fortress Investment Group LLC (NYSE: FIG) and private equity firm Centerbridge Partners. All cash, baby, in a deal worth $8.9B that includes $2.8B of assumed debt. Everyone to the Winner's Circle.

Dendreon Corp. (NASDAQ: DNDN) -- implied volatility spikes as DNDN rallies on positive FDA results. DNDN is recently up $2.81 to $9.56. The FDA will accept DNDN's Provenge data for prostate cancer. DNDN June call option implied volatility is at 125, puts are at 138 according to Track Data, suggesting larger price fluctuations.

International Rectifier (NYSE: IRF) -- implied volatility increases on Speculation. IRF, a power technology company, is recently up 46 cents to $35. Dealreporter reported that industry sources say IRF is an excellent takeover candidate. IRF June option implied volatility of 39 is above its 26-week average of 34 according to Track Data, indicating larger price fluctuations.

Option volume leaders today are: Dendreon Corp. (NASDAQ: DNDN), Yahoo Inc. (NASDAQ: YHOO), Wal-Mart Stores (NYSE: WMT) and Google Inc. (NASDAQ: GOOG).

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

What sort of device is the world's single largest consumer of electricity? That's right! It's the electric motor. Who makes it their business to minimize energy waste from motors and all manner of other electrical equipment? Well, one of the big names is in El Segundo, California.

International Rectifier (NYSE:IRF) is a leader in power management technology. Its analog, digital and mixed signal integrated circuits, integrated power systems, and components enable electrical devices to operate more efficiently. The firm's products are used in computers, appliances, lighting systems, automobiles, satellites, aircraft and defense systems. Major customers include Cisco Systems (NASDAQ:CSCO), IBM (NYSE:IBM) and Lockheed Martin (NYSE:LMT).

The company surprised the Street last week, when it reported fiscal Q2 EPS of 58 cents and revenues of $354.7 million. Analysts had been looking for 54 cents and $350.7 million. Management also guided Q3 revenues to $347.6 million ($330M consensus). The CEO attributed success to strong customer demand for flat panel TVs and energy-efficient appliances. He also said he was encouraged by the first wave of new business related to the introduction of Microsoft's (NASDAQ:MSFT) Vista. The news boosted the shares past 50-day, 90-day and 200-day moving average resistance into a bullish "flag" consolidation pattern. Stocks frequently exit flags moving in the same direction they were traveling when they entered them. In this case, that would be to the upside.

Brokers recommend the issue with five "strong buys", five "buys" and eight "holds". Analysts see a fifteen percent average annual growth rate, through the next five years. The IRF P/E ratio (22.32), Price to Sales ratio (2.40), Price to Book ratio (1.73), Price to Cash Flow ratio (14.67) and EPS Growth rate (56.76%) compare favorably with industry, sector and S&P 500 averages.

The stock is one of those used to calculate the S&P 400 MidCap Index. Institutional investors hold about 89 percent of the outstanding shares. Over the past fifty-two weeks, IRF has traded between $31.82 and $48.58. A stop-loss of $36.50 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.

MOST NOTEWORTHY: The Gaming sector and CBS Corp (CBS) were the most notable companies on today's initiation list.

• Prudential initiated the Gaming sector with a Favorable rating,
  
• They initiated Boyd Gaming Corp (NYSE: BYD), Town Sports International Holdings (NASDAQ: CLUB), Penn National Gaming (NASDAQ: PENN), Shuffle Master Inc (NASDAQ: SHFL), Steiner Leisure Ltd (NASDAQ: STNR) and Great Wolf Resorts Inc (NASDAQ: WOLF) with Outperform ratings.
  
• Ameristar Casinos Inc (NASDAQ: ASCA), MGM Mirage (NYSE: MGM) and WMS Industries Inc (NYSE: WMS) were initiated with Neutral ratings.
• Underweight ratings were given to International Game Tech (NYSE: IGT), Isle of Capri Casinos Inc (NASDAQ: ISLE), Life Time Fitness Inc (NYSE: LTM), Pinnacle Entertainment Inc (NYSE: PNK) and Trump Entertainment Resorts Inc (NASDAQ: TRMP).

• UBS initiated CBS Corp (NYSE: CBS) with a Buy rating and $38 target, citing valuation, dividends and buybacks.

OTHER INITIATIONS:

• Nollenberger believes International Rectifier Corp (NYSE: IRF) is the way to play the trend for energy efficiency, initiating the company with a Buy rating and $60 target.

• Goldman Sachs resumed coverage of AT&T Inc (NYSE: T) with a Buy rating and Level 3 Communications inc (NASDAQ: LVLT) with a Neutral rating.

• Stanford started EDO Corp (NYSE: EDO) with a Hold rating and $25 target; the firm believes EDO can be a turnaround story in 2007, but they recommend investors to stay on the sidelines until after Q4 earnings given their concerns over the quarter and guidance.

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