Analyst Upgrades

• Citigroup upgraded 3M Company (MMM) to buy from hold on expectations the company will deliver superior financial returns over the next 9 to 12 months and on valuation. The firm raised its target on shares to $92 from $84.
• Deutsche Bank upgraded CA Inc. (CA) to buy from hold as it believes cloud computing could accelerate the company's growth over the next 2 to 3 years. The firm raised its target on shares to $28 from $22.
• Wells Fargo upgraded Cooper Companies (COO) to outperform from market perform as it believes that the company has largely eliminated its execution risks while its new products should enable it to grow more quickly than the market.
• BioMarin (BMRN) was upgraded to buy from hold at Collins Stewart.
• Liquidity Services (LQDT) was upgraded to outperform from perform at Oppenheimer.
• RealNetworks (RNWK) was upgraded to neutral from underweight at JPMorgan.

Google (NASDAQ: GOOG) makes it easier to search for websites, e-mail messages, passages from books and videos. Where you haven't heard much about Google's search capabilities -- or Google in general -- is the music business.

But, that's about to change. On Wednesday, the search giant announced that it was partnering with music services such as Pandora, Lala, News Corp's (NASDAQ: NWS) MySpace, and Rhapsody by RealNetworks (NASDAQ: RNWK) to help users find, listen to and ultimately buy music on the web.

RealNetworks (NASDAQ: RNWK) is profitable again! The online media company that provides music and other entertainment cut its way into the black, getting rid of the costs that were getting in the way. It wasn't much of a profit, only $1.5 million for the third quarter, not even a full cent per share, but it's a hell of a lot better than the $4.5 million loss it sustained in the third quarter of 2008.

Revenue fell 8% last quarter to $140.3 million, just shy of the analyst average of $140.9 million. This trend is likely to continue through the fourth quarter. Music, technology product and game revenues were down. The profit was instead eked out of the supply chain and headcount.

Analyst upgrades:

• FBR Capital upgraded Ann Taylor (NYSE: ANN) to Outperform from Market Perform to reflect a recovery in the missy sector and the company's product improvement. The firm raised its target on shares to $19 from $13.
• Roth Capital upgraded Marvell Tech (NASDAQ: MRVL) to Buy from Hold based on product cycle strength in wireless and Ethernet, HDD share gains, and a return of PC growth. Target is $22.
• Goldman upgraded Colgate (NYSE: CL) to Buy from Neutral citing valuation and expectations for a pick-up in unit growth. The firm raised its price target to $85 from $83. Note that Goldman downgraded Clorox to Neutral from Buy.
• Cadbury (NYSE: CBY) was upgraded to Neutral from Underweight at HSBC.
• Garmin (NASDAQ: GRMN) was upgraded to Buy from Underperform at BofA/Merrill.
• Qwest (NYSE: Q) was upgraded to Market Weight from Underweight at Thomas Weisel.

In an interesting move, RealNetworks (NASDAQ: RNWK) has decided that it wants to kick off another potential controversy with Apple's (NASDAQ: AAPL) iPhone and its applications (apps).

RealNetworks has developed an app for the iPhone that will bring the company's Rhapsody music service (a pay-to-listen service) to the iPhone and the iPod touch. The question is, will Apple allow the company to do this? RealNetworks has stated that it will submit its application for Apple's approval this week.

Analyst upgrades:

• Jefferies upgraded shares of Safeway (NYSE: SWY) to Hold from Underperform on valuation as they believe the company's pricing pressure and sluggish sales trends are now priced in. The firm raised its target to $23.50 from $21.
  
• Merrill upgraded Pfizer (NYSE: PFE) to Buy from Underperform citing attractive dividend yield and stabilizing businesses.
  
• Banc of America upgraded shares of Apollo Group (NASDAQ: APOL) to Neutral from Sell and raised APOL's target to $60 from $48 on valuation as they see a balanced risk/reward at current levels.
• Nucor (NYSE: NUE) was raised to Overweight from Equal Weight at Morgan Stanley.
  
• Citrix Systems (NASDAQ: CTXS) and Symantec (NASDAQ: SYMC) were upgraded to Overweight from Neutral at JP Morgan.
  
• Keefe Bruyette upgraded Jefferies Group (NYSE: JEF) and Bank of America (NYSE: BAC) to Market Perform from Underperform.

Analyst downgrades:

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.

Rhapsody, a music download service owned by Real Networks (NASDAQ: RNWK) and Viacom (NYSE: VIA), will make yet another run at Apple Inc.'s (NASDAQ: AAPL) iTunes. According to Reuters, "Digital music seller Rhapsody is launching a $50 million marketing assault on Apple's iTunes, offering songs online and via partners including Yahoo Inc. (NASDAQ: YHOO) and Verizon Wireless."

Why the venture thinks it will have real success is anyone's guess. Downloading to Verizon Wireless phones is not exactly the kind of novelty that is likely to draw customers. The service will have one important new feature, though. Rhapsody subscribers have not been able to play their music on iTunes. Under the new push, that will change.

Memo to Rhapsody: The horse has already left the barn. Keeping the service off of the iPod for so long has helped iTunes move into a unassailable position.

Real Networks, which dominated the multimedia market with its Real Player from the late 1990s until about five years ago, was slaughtered by Apple when it offered a device coupled to a music store with the launch of the iPod.

There is no catching up now. The race is over.

Douglas A. McIntyre is an editor at 247wallst.com.

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

• Applied Materials Inc. (NASDAQ: AMAT) Q2 profits declined on a glut of flash memory chips.
• Bally Technologies Inc. (NYSE: BYI) beat Q3 expectations and offered full-year guidance.
• Barclay's (NYSE: BCS) reported a big Q1 loss on credit-related write-downs.
• Constant Contact Inc. (NASDAQ: CTCT) saw big increases in Q1 revenues and in its customer base.
• Deere & Co. (NYSE: DE) Q2 profits rose on international demand, but results just missed estimates.
• Fluor Corp.'s (NYSE: FLR) strong Q1 results are a signal for the energy sector, says Jim Cramer.
• Freddie Mac (NYSE: FRE) Q1 loss widened on the housing slump, but not as much as forecast.
• IndyMac Bancorp Inc. (NYSE: IMB) narrowed its loss but predicted it wouldn't see a profit in 2008.
• LDK Solar Co. Ltd. (NYSE: LDK) Q1 earnings topped forecasts and it raised its outlook.
• MBIA Inc. (NYSE: MBI) reported a larger-than-expected Q1 loss due to write-downs.
• Mindray Medical International Ltd. (NYSE: MR) beat Q1 expectations and raised its full-year guidance.
• Nuance Communications Inc. (NASDAQ: NUAN) Q2 earnings were in line with analysts' expectations.
• ON Semiconductor Corp. (NASDAQ: ONNN) beat Q1 expectations and raised its Q2 revenue forecast.
• RealNetworks Inc. (NASDAQ: RNWK) beat Q1 estimates and announced share buybacks and a spin off.
• Salary.com Inc. (NASDAQ: SLRY) missed Q1 forecasts, leading to analysts' downgrades.
• Sykes Enterprises Inc. (NASDAQ: SYKE) beat Q1 estimates and raised its Q2 and full-year forecast.
• Syniverse Holdings Inc. (NYSE: SVR) beat Q1 expectations on strength in "messaging and mobil data."
• Toll Brothers Inc. (NYSE: TOL) warned of lower Q2 profits and more "challenging times" ahead.
• Website Pros Inc. (NASDAQ: WSPI) reported flat earnings despite soaring revenues and operating income.

RealNetworks (NASDAQ: RNWK) delivers digital information and entertainment. The firm's RealPlayer product downloads and streams audio, video, and other multimedia content. Its RealOne software and subscription service provides access to news, sports and entertainment content. Its Rhapsody digital music service delivers more than 1 billion songs per year. Its RealArcade is one of the largest casual games destinations on the Web. The company also assists businesses with tools for creating, delivering, and licensing digital content. Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT) and Yahoo (NASDAQ: YHOO) are competitors.

The firm pleased investors last week, when it reported Q1 EPS of two cents and revenues of $147.6 million. Analysts had been looking for a loss of three cents and $141.6 million. Management also guided Q2/FY08 estimates above consensus views, announced a $50 million share repurchase program and said it intended to spin off its global casual games business. Kaufman Brothers reiterated its "buy" rating on the shares and boosted its price target to $9.

Priceline (NASDAQ:PCLN) is up 13% on strong earnings.

RealNetworks (NASDAQ:RNWK) is up 8% on a solid quarter.

AIG (NYSE:AIG) is trading down 7% on a bad quarter and plans to raise $12.5 billion.

Nvidia (NASDAQ:NVDA) is off 3% after posting a worse-than-expected quarter.

Stocks may trade differently in the pre-market than they do in the regular session.

Douglas A. McIntyre is an editor at 247wallst.com.

The earnings crunch rolls on, and here are a few of the highlights of this past week's earnings coverage from BloggingStocks:

• Activision Inc. (NASDAQ: ATVI) earnings soared on popularity of Guitar Hero and other game franchises.
• Arch Coal Inc. (NYSE: ACI) beat earnings expectations and offered revised guidance.
• Avon Products Inc. (NYSE: AVP) beat estimates despite lower profits due to restructuring costs.
• Chattem Inc. (NASDAQ: CHTT) beat estimates and raised its guidance.
• Cisco Systems Inc. (NASDAQ: CSCO) met estimates but a weak forecast raised concerns.
• Dionex Corp. (NASDAQ: DNEX) beat estimates on strength in petrochemical and food/beverage markets.
• Electronic Data Systems Corp. (NYSE: EDS) earnings fell, helping to raise concerns about tech stocks.
• Flextronics International Ltd. (NASDAQ: FLEX) beat estimates and affirmed its outlook.
• Gannett Inc. (NYSE: GCI) missed fourth-quarter earnings estimates on lower ad revenue.
• Las Vegas Sands Corp. (NYSE: LVS) missed expectations due to rising construction costs.
• MGM Mirage (NYSE: MGM) forecast it would beat earnings expectations by as much as 10 cents a share.
• Old Dominion Freight Line Inc. (NASDAQ: ODFL) beat revenue estimates and raised its guidance.
• RealNetworks Inc. (NASDAQ: RNWK) warned it would miss first-quarter and full-year expectations.
• Silicon Laboratories (NASDAQ: SLAB) beat expectations and raised its guidance.
• THQ Inc. (NASDAQ: THQI) posted disappointing results that included cancelled game franchises.
• Time Warner Inc. (NYSE: TWX) met estimates and announced restructuring plans (see transcript).
• Unilever (NYSE: UL) fourth-quarter net income tanked on a sell-off of its European frozen food business.
• Walt Disney Co. (NYSE: DIS) posted better-than-expected results on gains in TV and theme parks.

There are those who counterfeit money and those who make near-perfect knockoffs of 21 different Microsoft programs. Well, Microsoft Corp. (NADSAQ: MSFT) pushed an investigation through 22 countries and local law enforcement officials seized software, equipment and records, and made arrests. Microsoft estimates the retail value of the software the operation generated at $900 million.

The buzz over the $44.6 billion unsolicited bid Microsoft made for Yahoo! Inc. (NASDAQ: YHOO) is far from over with new items as well as speculations coming daily. The Financial Times reports that Softbank yesterday said it had no intention of selling its 41% stake in Yahoo Japan. Meanwhile, Trip Chowdhry of Global Equities Research speculated Thursday that Microsoft made the stunning proposal as a way to block a possible alliance between Yahoo and Amazon.com, Inc. (NASDAQ: AMZN).

The Wall Street Journal reports that federal prosecutors, looking into the mortgage businesses, have asked the Securities and Exchange Commission for information on Merrill Lynch & Co. (NYSE: MER).

Yahoo, Inc. (NASDAQ: YHOO), which is going to have an interesting week after last week's unsolicited bid by Microsoft Corp. (NASDAQ: MSFT), is outsourcing its online music business. Instead of operating its own music download service (which apparently has not been very profitable), the company will give that chore to Rhapsody America, operated by RealNetworks, Inc. (NASDAQ: RNWK) and Viacom, Inc. (NYSE: VIA).

Yahoo! will migrate customers of its in-house music subscription service to Rhapsody in the coming months. With RealNetworks and potential Yahoo! owner Microsoft being bitter enemies, it will be interesting to see if this partnership lasts should Microsoft succeed in taking ownership of Yahoo for $44.6 billion.

Does Yahoo! have the chops to do much outside the email, search and display advertising arenas? It has not seen growing profit despite being the world's largest internet property (until recently), but shedding itself of assets like its online music business is in line with the company's recent turns as it concentrates on core businesses and trying to be everything to everyone -- and making money from just a few pieces of its business.

MOST NOTEWORTHY: Vail Resorts, Peabody Energy and EnteroMedics were today's noteworthy initiations:

• Wachovia initiated Vail Resorts (NYSE: MTN) with an Outperform rating and said the company's real estate platform is not being valued at current valuation.
  
• Calyon believes Peabody Energy (NYSE: BTU) is well-positioned to take advantage of tightening global coal fundamentals and rising coal prices. The firm started shares with an Add rating and $70 target.
  
• EnteroMedics (NASDAQ: ETRM) was assumed with a Neutral rating at Cowen, as they believe the company lacks near-term catalysts ahead of EMPOWER results in 2H09.

OTHER INITIATIONS:

• Lehman initiated Akzo Nobel (OTC: AKZOY) with an Overweight rating.
• Bear Stearns started Napster (NASDAQ: NAPS) with an Underperform rating and RealNetworks (NASDAQ: RNWK) with an Outperform rating.