U.S. stock futures were lower this morning, indicating stocks could start the day with losses, a day after the worst session in years. While Goldman Sachs is set to release results, many eyes will focus on the Federal Reserve as it meets Tuesday. The market is betting on a rate cut soon, although perhaps not this meeting. Meanwhile, the Labor Department will release August Consumer Price Index. As global stock markets followed Wall Street's lead with losses of their own, oil prices took another dip to about $92 a barrel.

Goldman Sachs (NYSE: GS), one of the few independent brokers left after Lehman's demise and one that is now mentioned as a possible "next" will release its fiscal third-quarter earnings before the bell. Goldman's troubles have not been as deep as other financial companies, but no one expects Goldman to have stellar earnings.

Barclays PLC (NYSE: BCS) confirmed Tuesday that it is interested in acquiring some assets of Lehman Brothers (NYSE: LEH).

And as expected, American International Group Inc. (NYSE: AIG) was hit by a wave of downgrades by credit-rating agencies. The new ratings are all still considered investment grade,but this only adds to the pressure on AIG as it seeks billions of dollars to strengthen its balance sheet. AIG stocks is sinking another 42% in pre-market trading.

Standard & Poor's also downgraded Washington Mutual (NYSE: WM)'s credit rating to junk status, citing the deteriorating housing market. WaMu shares are slipping yet another 15% in pre-market trading.

Staying with financials problems, General Electric Co. (NYSE: GE) shares hit a five and half year low on concern over its financial arm.

Beleaguered Napster (NYSE: NAPS) shareholders got a nice surprise today. That is, Best Buy (NYSE: BBY) agreed to buy the online-music operator for $2.65 per share. On the news, the stock price surged 86%. Although, it's still a relatively small deal – amounting to about $121 million.

Something else: Napster already has about $67 million in the bank.

All in all, it looks like a good move for Best Buy. After all, the music CD market is evaporating.

For the most part, Napster has about 700,000 subscribers (there is a monthly fee), which should get a nice boost from the huge distribution of Best Buy. In fact, the platform could eventually allow for other digital offerings, such as videos.

Of course, there is tremendous competition in the space, such as from Amazon.com (NASDAQ: AMZN) and Apple (NASDAQ: AAPL). However, Best Buy can certainly find creative ways to bundle products and services -- making things compelling for its customers.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He is also the founder of BizEquity, a valuation website

Here are some highlights from this past week's earnings coverage from BloggingStocks:

• Abercrombie & Fitch Co. (NYSE: ANF) posted solid Q2 results despite touch economic conditions.
• Apollo Management LP swung to a net loss on a write down and litigation, but is on track for an IPO.
• Cree Inc. (NASDAQ: CREE) beat analysts' expectations and raised its revenue guidance.
• Dr Pepper Snapple Group Inc. (NYSE: DPS) beat earnings estimates and raised its full-year guidance.
• 4Kids Entertainment Inc. (NYSE: KDE) widened its Q2 net loss more than analysts had anticipated.
• Kohl's Corp. (NYSE: KSS) topped Q2 expectations and raised its full-year guidance.
• Lions Gate Entertainment Corp. (NYSE: LGF) unexpectedly swung to a Q1 profit as revenues soared.
• Macy's Inc. (NYSE: M) beat Q2 expectations despite lower sales, and warned of weakness ahead.
• Napster Inc. (NASDAQ: NAPS) Q1 net loss matched the previous quarter and the year-ago loss.
• Nordstrom Inc. (NYSE: JWN) beat Q2 expectations despite a drop in earnings and lowered its guidance.
• Sirius XM Radio Inc. (NASDAQ: SIRI) CEO predicted post-merger earnings next year.
• Thomson Reuters Corp. (NYSE: TRI) Q2 profit fell while revenue soared, but still missed estimates.
• UBS (NYSE: UBS) dismal Q2 results were accompanied by speculation of breaking up the bank.
• Wachovia (NYSE: WB) revised its Q2 loss to include auction rate securities settlements.

Also, Jim Cramer warns against bearishness on the financials and also suggests that the collapse of commodities will buoy earings.

For more highlights from this week, see: Wal-Mart, JCPenney, MBIA, Deere, Applied Materials and others

Upcoming quarterly reports include Lowe's (NYSE: LOW), Home Depot (NYSE: HD), Hewlett-Packard (NYSE: HPQ), Target (NYSE: TGT), La-Z-Boy (NYSE: LZB), Saks (NYSE: SKS), BJ's Wholesale (NYSE: BJ), Limited Brands (NYSE: LTD), Barnes & Noble (NYSE: BKS), Burger King (NYSE: BKC), Gap (NYSE: GPS), Heinz (NYSE: HNZ), and Intuit (NASDAQ: INTU).

Visit AOL Money & Finance for more earnings coverage.

Napster (NASDAQ: NAPS), a digital-music-download entity that competes with Apple (NASDAQ: AAPL), Amazon (NASDAQ: AMZN), Wal-Mart (NYSE: WMT) and Yahoo! (NASDAQ: YHOO), cued up its Q1 numbers on Monday after the bell. The top line decreased 6% to $30.3 million. The bottom line showed a net loss of 10 cents per diluted share, same as last year's results. In fact, the company lost a dime per share in the previous quarter. Must be something special about that number. Anyway, according to Briefing.com, Napster missed Wall Street estimates by one penny.

Gross margin for the quarter was flat at 27% when comparing to year-over-year data, but it did represent an increase over the 26% gross margin from the previous quarter. That's got to count for something, right? No, it doesn't. Neither does the press release's promotion of the new MP3 initiative. I could care less. Napster is an equity trading at a very low price, it's racking up losses, and it'll never become a serious threat to Apple and the iPod/iTunes empire. A good investment this is not.

The stock was down 10% in yesterday's after-hours session. I'm not sure where it will close in the regular session today, but Napster isn't where I want to be. There are better ideas out there, Apple certainly being one of them. I know that the stock snapshot shows it has been strong in the last month or so, but I'm not inclined to read too much into that in this particular case. For me, it's about stock price (too low) and brand equity (not powerful enough). Apple and iTunes sing a much better song than Napster, in my opinion...

[Editor's note: At 8:12 a.m. NAPS shares traded 2.7% higher]

Disclosure: I don't own any company mentioned; positions can change at any time.

U.S. stock futures were mixed Tuesday morning following more negative news out of the financial sector: J.P. Morgan announced a $1.5 billion write-down, UBS a loss, while Wachovia and Morgan Stanley are dealing with auction rate securities. However, oil futures declined further to near $113 a barrel, offsetting financial sector woes and pushing stock futures higher. Russia halted its attacks on Georgia, signaling a cease-fire could come near.
[Update 9:09: Seems lower oil wasn't enough to offset financials' concerns and futures now indicate stocks could start flat to lower.]

JPMorgan Chase (NYSE: JPM) said in a filing with the Securities and Exchange Commission that it suffered more substantial third-quarter losses related to the hard-hit mortgage sector than it did in the second quarter and had to take a $1.5 billion write-off on mortgage-backed securities and loans.

UBS AG (NYSE: UBS), one of the hardest hit banks in the subprime mortgage crisis, said Tuesday that it had further losses and writedowns of $5.1 billion during the second quarter of 2008.

Morgan Stanley (NYSE: MS) said late Monday that it will offer to buy back up to $4.5 billion of auction-rate securities from retail clients, following similar announcements from rivals. The broker also said it will make whole any losses suffered by retail clients who bought auction-rate securities through the firm and try to provide liquidity solutions for institutional investors.

Wachovia (NYSE: WB) said Monday it plans to cut 600 more jobs than it previously expected as it works to reduce expenses in the face of staggering losses tied to mortgage debt. It also revised lower its second-quarter loss by $500 million pretax due to auction rate securities settlements.

MAJOR PAPERS:

• People with the matter said that Ken Wilson, The Goldman Sachs Group Inc's (NYSE: GS) most senior financial-institutions broker, will temporarily exit the firm, the Wall Street Journal reported, in an effort to advise Treasury Secretary Henry Paulson on how to resolve the country's banking crisis.
• The American Federation of State, County, and Municipal Employees, a union with a stake in Citigroup Incorporated (NYSE: C) called for the financial services company to break itself up. The Financial Times reported that the demand will almost definitely be rejected by Citigroup.

OTHER PAPERS:

• Treasury Secretary Henry Paulson's plan for rescuing Federal National Mortgage Association (NYSE: FNM) -- Fannie Mae -- and Federal Home Loan Mortgage Corporation (NYSE: FRE) -- Freddie Mac -- calls for the creation of a new regulatory agency that would seek to assert more stringent control over the banks and lessen the damage they could cause to the American financial system, the New York Times reported.
• The Daily Telegraph reported that BP Plc (NYSE: BP) blocked a $1.8B dividend payment to its Russian partners in the TNK-BP joint venture.

WEB SITES:

• According to paidContent.org, now that its cash on hand exceeds its market cap, speculation that Napster Inc (NASDAQ: NAPS) could be a takeover target heated up.

With the plunge in the equities markets, there are certainly some compelling opportunities. Just look at Napster Inc. (NASDAQ: NAPS), an online music operator. The company has $69.8 million in the bank and a market cap of $66.4 million. Yes, Wall Street is valuing the business at below zero.

Well, hedge funds are taking notice (this is a according to Bloomberg.com). For example, Eminence Capital LLC has increased its equity stake to a cool 9%. This is usually the first step in forcing a company to sell out.

One possibility is for Napster to go private. However, this will probably not carry much of a premium.

Instead, I'm sure the hedgies want Napster to get an offer from a strategic player, such as RealNetworks (NASDAQ: RNWK). Oh, and another possibility is JDS Capital Management Inc., which owns eMusic.com. Keep in mind that the firm purchased one million shares of Napster in Q1.

Actually, Napster controls about a majority of the U.S. online music subscription market. The problem: it's a niche market.

So, with hedge funds swarming, it's going to be tough for Napster to ignore things. In fact, in Friday's trading, the company's shares spiked 27% to $1.39 as the rumors buzzed.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

Shares of Napster (NASDAQ: NAPS) rose more than 27% on Friday on speculation that the online seller of MP3s could be a takeover target at its current depressed share price.

The bullish case is easy to understand. The Napster name and site must be worth something and, before Friday's run-up, the company had a market cap of $52.1 million and $69.8 million in cash. Given Napster's iconic status as the beginning of music piracy, it's hard to imagine that the stock could be so cheap. Wouldn't the brand be worth something to anyone in the music download business? It's instantly recognizable and it would take many millions in advertising to create such a brand from scratch.

So I'm in complete agreement with the shareholders and analysts -- this company should be sold, and such a move would likely generate tremendous value for shareholders. But there's another side: as a stand-alone public company, Napster is a ticking time bomb.

Here are some highlights from this past week's earnings coverage from BloggingStocks:

• Agilent Technologies Inc. (NYSE: A) beat Q2 expectations and offered Q3 and full-year guidance.
• Barnes & Noble Inc. (NYSE: BKS) widened its Q1 loss but maintained its full-year profit forecast.
• Campbell Soup Co. (NYSE: CPB) Q3 profit rose due to the sale of Godiva, but shares tumbled.
• Fluor Corp. (NYSE: FLR) beat Q1 expectations and offered rosy full-year guidance.
• Gamestop Corp. (NYSE: GME) posted record Q1 earnings but offered weak Q2 and full-year guidance.
• Hewlett-Packard Co. (NYSE: HPQ) posted strong Q2 results in the wake of its announced EDS acquistion.
• Hot Topic Inc. (NASDAQ: HOTT) Q1 loss widened due to declines in same-store sales.
• Kenexa Corp. (NASDAQ: KNXA) beat Q1 expectations and raised its full-year guidance.
• Medtronic Inc. (NYSE: MDT) posted flat Q4 earnings despite strong sales, and missed full-year estimates.
• Napster Inc. (NASDAQ: NAPS) narrowed its loss and exceeded analysts' Q1 epectations.
• Ross Stores Inc. (NYSE: ROST) Q1 profits rose on same-store growth and a real estate settlement.
• Staples Inc. (NASDAQ: SPLS) swung to a modest Q1 profit after two quarterly losses.
• Target Corp. (NYSE: TGT) Q1 profits slipped but came in ahead of analysts' estimates.
• Tween Brands Inc. (NYSE: TWB) Q1 profit was hurt by a one-time charge but still beat expectations.

Additional earnings highlights:
Home Depot, Gap, Lenovo, Air France, Activision, Suntech and others
Ford, Hormel, Limited Brands, Intuitive Surgical, PetSmart and others

Upcoming results to watch for include Borders (NYSE: BGP), Polo Ralph Lauren (NYSE: RL), TiVo (NASDAQ: TIVO), Big Lots (NYSE: BIG), Costco (NASDAQ: COST), Dell (NASDAQ: DELL), HJ Heinz (NYSE: HNZ), Sears (NASDAQ: SHLD), Lions Gate (NYSE: LGF), and Tiffany (NYSE: TIF).

Visit AOL Money & Finance for more earnings coverage.

Napster (NASDAQ: NAPS), a music-download service, reported Q4 and full-year results on Wednesday. I must admit, for a very low single-digit stock, the results seemed pretty cool.

For the fourth quarter, revenues increased about 6% to $30.8 million and the net loss for the quarter came in at $0.10 per diluted share; this was much better than the loss of $0.20 per diluted share seen in last year's comparable quarter, which also included $0.03 attributable to discontinued operations. Briefing.com says this performance beat Wall Street's expectations by three pennies. For the full fiscal year, the top line increased a nice 15% to $127.5 million and the bottom-line loss was $0.38 per diluted share versus a net loss of $0.85 per diluted share in fiscal 2007. Perhaps even more important is the fact that Napster is, according to the release, generating positive cash flow, an achievement the company has kept up for four quarters now.

Of course, the big story this week is Napster's attempt at upping its game against competitors such as Apple (NASDAQ: AAPL), Wal-Mart (NYSE: WMT), and Amazon (NASDAQ: AMZN) by opening a music-download site dedicated to the sale of MP3 tunes (I wrote an post on the subject, and so did Richard Driver). This is meant to broaden the company's appeal by going after consumers who don't necessarily dig the subscription model. I'll tell you, though, it's going to be a long while before Napster supplants the dominance of the iTunes store.

Napster (NASDAQ: NAPS) announced Tuesday that the company has removed all digital rights management technology from its store and will begin selling unprotected MP3 files immediately. Napster has also gained the support and backing from all four of the major record labels on top of existing deals with independent labels. This is something other stores like Apple (NASDAQ: AAPL)'s iTunes Store and Amazon.com (NASDAQ: AMZN)'s MP3 Store have yet to secure.

According to Billboard, Napster will have a similar deal with Sony BMG that it has with Amazon where the label is the seller and the store only receives a commission. In addition, Napster's six million song catalog far outpaces that of any other store. Amazon comes close, but is four million songs behind. Unlike iTunes, though, Napster will not offer a service to allow users to upgrade existing DRM-encoded files to the new DRM-free files.

Napster executives, however, remain committed to the subscription-based model that the store has operated under for the past few years, hoping to utilize the new MP3 files as gateways to introducing customers to subscriptions. Billboard contends that Napster "is gambling that the proliferation of Internet-connected devices -- such as mobile phones, home stereos and eventually car radios -- will some day convince music fans that a monthly subscription to access all the music they want from any device is more compelling than buying it."

At the end of the day, another digital music store offering DRM-free tracks is a good sign for digital growth, digital stores and the music industry. This is particularly evident here since all four major labels have signed on to offer Napster quite a large cache of tracks. The continued hopes for transitions to subscription services might be the next prolonged discussion, as the largest retailer iTunes and Apple have continued to steer clear of that model.

So, according to this piece out on Reuters, Napster (NASDAQ: NAPS) is in a fighting mood. It recently created an MP3 download site that contains over six million tunes. Apple (NASDAQ: AAPL) has been doing gangbuster business for years with its iTunes juggernaut, so it only stands to reason that from now until doomsday there will be initiatives aimed at stealing a little bit of the big guy's thunder. Whether it's Amazon (NASDAQ: AMZN) or Wal-Mart (NYSE: WMT), Apple will always have challengers.

Question is, does this matter? Should Steve Jobs and his Apple shareholders be shuddering in their collective boots? Probably not, although any competition should be taken seriously, I suppose. I grant you that Napster is a recognizable name when it comes to web-based music commerce (heck, Napster started all the peer-to-peer ruckus way back when), and that six million compositions represents an awesome depth of musical inventory, But come on, Apple has staked out one of the most vital components of a successful business: unmatched brand equity.

Simply put, Apple's brand in music downloads is as powerful and iconic as Coca-Cola's brand is in soft drinks. Yes, the Napster service, according to the article, will have an important competitive component, namely the ability to transfer songs to other devices, including the iPod. Napster, as many of you probably know, markets a subscription-based service, but you can bet that management will now concentrate on this download asset.

MOST NOTEWORTHY: China Petroleum & Chemical, Syniverse and Allegheny Tech were today's noteworthy upgrades:

• Deutsche Bank upgraded China Petroleum & Chemical Corporation (NYSE: SNP) to Buy from Hold on valuation following the recent sell-off.
• ThinkEquity upgraded Syniverse Holdings Inc (NYSE: SVR) to Buy from Accumulate citing growth from further price reductions and adoption of new technologies that will drive transaction volumes.
• Allegheny Technologies Incorporated (NYSE: ATI) was raised to Buy from Neutral at Goldman.The firm upgraded Allegheny based on valuation, low stainless steel inventories, and nickel price stabilization.

OTHER UPGRADES:

• Napster Inc (NASDAQ: NAPS) was upgraded to Outperform from Peer Perform at Bear Stearns.
• Goldman raised Raytheon Company (NYSE: RTN) to Neutral from Sell.
• Johnson Controls Inc (NYSE: JCI) was upgrade to Buy from Add at Calyon.

MOST NOTEWORTHY: Cisco Systems, Virgin Mobile and Polo Ralph Lauren were today's noteworthy downgrades:

• JP Morgan downgraded shares of Cisco Systems Inc (NASDAQ: CSCO) to Neutral from Overweight following its Q2 results, as they believe the company's international exposure is not enough to offset slowing in North America and Europe. Shares were also downgraded to Neutral from Outperform at Baird, citing the meaningful slowdown in fundamentals.
• Lehman downgraded Virgin Mobile USA Inc (NYSE: VM) to Equal Weight from Overweight based on reduced visibility following its Q4 report.
• Polo Ralph Lauren Corporation (NYSE: RL) was lowered to Hold from Buy at Citigroup, as they believe the company is facing fundamental challenges in key markets and a lack of visibility on the Japanese market. They see more upsideelsewhere.

OTHER DOWNGRADES:

• Bear Stearns downgraded BT Group Plc (NYSE: BT) to Peer Perform from Outperform.
• Think Equity lowered Napster Inc (NASDAQ: NAPS) to Accumulate from Buy.
• UBS downgraded Elbit Systems Ltd (NASDAQ: ESLT) to Neutral from Buy.

Napster (NASDAQ: NAPS) -- the mother of all file-sharing services that in 10 years' time has found itself one among many digital-music services struggling for its very survival -- is hoping its new move will attract more users. Today, Napster CEO Chris Gorog said the company is shifting to MP3 downloads free of digital-rights-management software [subscription required], or DRM.

The move is expected to occur sometime in the second quarter, but Napster has yet to finalize the arrangements with some of the four major music companies - Sony Corp. (NYSE: SNE), Warner Music Group, EMI Group and Vivendi SA's Universal Music Group. The final three on this list recently began selling MP3s on the download service available through Amazon.com (NASDAQ: AMZN). Sony has yet to report plans to sell its tracks as MP3s, but is reportedly expected to come forward soon.