In a move that many investors have wanted, General Electric (NYSE: GE) just came out and said that it is mulling over the potential spin-off of its consumer and industrial division.

According to MarketWatch, "The conglomerate said shareholders will receive stakes in the new entity covering ts appliances, lighting and industrial units."

This is great news for investors and may be a precursor for other large conglomerates that have seen their stock prices stagnate for more than six years, to start spinning off divisions in order to unlock value for shareholders.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer's fund has no position in any stock mentioned, as of 7/10/08.

Cadbury Schweppes Plc (NYSE: CSG) will be spinning off its U.S. beverage unit soon after failing to find a buyer for the division, according to the company. Included in the spinoff will be popular brands Dr. Pepper and 7-UP, which will join other brands. The spinoff has been decided after seven months of fruitless searching by the British-based food giant to find a buyer for the unit.

Cadbury will soon be listing its U.S. drinks unit on the NYSE under a different ticker after finding that U.S. consumers are not choosing its products, opting apparently for competitive beverages from Coca-Cola, Inc. (NYSE: KO) and Pepsico, Inc. (NYSE: PEP) among other drinks. Investment analyst Martin Deboo said from London that "They (Cadbury) wouldn't refuse any sensible offer, but the uncertainty around credit markets has to clear before bidders will come forward." In other words, the credit crisis that has semi-gripped parts of the U.S. economy made potential buyers cinch up those purse strings. As a result, no serious bidders ever emerged over the summer, much to the chagrin of Cadbury's management.

At this time, Cadbury's U.S. drinks division is pegged at a $14 billion value, and although a spin-off is not exciting to anyone, it's required lest Cadbury continue to allow the suboptimal U.S. performance drag its overall financials down. The spinoff won't be completed before the second calendar quarter of 2008, according to Cadbury CEO Todd Stitzer. Earlier this year, Cadbury rejected an offer of about $13 billion from a private equity group comprised of the usual suspects: Blackstone Group LP, Kohlberg Kravis Roberts & Co. and Lion Capital LLP. Oh well -- it missed the boat and now has no buyers, so off to the NYSE it goes.

Morgan Stanley (NYSE: MS) opened at $65.54. So far today the stock has hit a low of $64.94 and a high of $67.19. As of 10:55, MS is trading at $65.26, up $0.65 (1.0%).

After hitting a one-year high of $90.95 in June, the stock has plunged to scrape a new year low of $61.50 last week. Shares are soaring today after the company announced plans to sell a minority interest in its MSCI unit through an initial public offering later this year. Technical indicators for MS are bearish and steady, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.

For a bullish hedged play on this stock, I would consider a September bull-put credit spread below the $55 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk and leverage returns. For this particular trade, we will make a 7.5% return in just 2 months as long as MS is above $65 at September expiration. MS would have to fall by more than 15% before we would start to lose money.

MS hasn't been below $55 all year and has shown support in the low 60's recently. This trade could be risky of the financial sector has not stopped falling, but even if that happens, this position could find some support right around $60.

Brent Archer is an options analyst and writer at Investors Observer.
DISCLOSURE: At publication time, Brent neither owns nor controls positions in MS.

There is no holiday break for the rumor mill as word of many a company's activity is bantered about.



BUILD-A-BEAR WORKSHOP INC (NYSE: BBW)

As the stock shot up 14% the other day, it was revealed that the warm and fuzzy big bear hired Lehman Brothers to "explore strategic alternatives." Some analysts think an LBO is what will happen, and range the valuation at from $34 to $36. Very recently the company reduced its second quarter per share profit expectations to 7 cents to 10 cents, down from 15 cents to 19 cents, because of slow sales at stores that have been opened for at least a year. Here's a bear to be bullish on.


COUNTRYWIDE FINANCIAL CORPORATION (NYSE: CFC)

It's troubled times for the nation's largest mortgage lender. Earlier in the week the shares began to fall when it was revealed that they may be a part of a government investigation into subprime loans. It certainly doesn't help that three former company executives pleaded guilty to conducting insider trading in shares of Countrywide. The heat is on.


THE STEAK N SHAKE COMPANY (NYSE: SNS)

Two Texas investment groups, HBK Investments and Lone Star Funds, who between them own about 9.5% of the company, are said to be interested in digesting the whole dang thing. The 490 restaurant chain that has operations in 20 states just saw their most recent quarterly profit drop 30% from the previous year, as same store sales fell 4.7%. Gentlemen that they are though, they'll only pursue the sizzle if the board cooks it up with them.



STILL FLYING AROUND


WENDY'S INTERNATIONAL INC (NYSE: WEN)

They say they may want to sell the company, and the latest firm to gobble up shares is Tudor Investment, purchasing a 6.1% stake.


TD AMERITRADE HOLDING CORPORATION (NASDAQ: AMTD)

Jana Partners and S.A.C. Capital Advisors, who have about an 8.4% combined ownership of AMTD, are keeping the pressure on for the firm to partner up with another brokerage firm, and have now formalized their demands.



BUZZ


DJO INCORPORATED (NYSE: DJO): MMI Investments purchased 9.4% of the company's shares. When they buy in, they usually see the company acquired...Pride International Inc (NYSE: PDE): Spin off of foreign assets, or a possible takeover, has attracted interest...Legg Mason Inc (NYSE: LM): Pershing Square Capital, whose activist leader William Ackman has tried to push around McDonald's Corporation (NYSE: MCD) and Wendy's, has taken a 1.5% share of the company.

Tyco International Ltd. (NYSE: TYC) hosts its analyst meetings Tuesday to showcase its new spin-off companies. Late last week we saw trading begin in the two spin-offs on a when issued basis:

The Tyco Healthcare unit is named Covidien Ltd. and is trading under a when-issued ticker (NYSE: COV) or on most symbols as "COV-WI"; Covidien traded down 0.5% to $46.25 yesterday.

The Tyco Electronics"unit is appropriately named Tyco Electronics and trades as (NYSE: TEL) or "TEL-WI"; Tyco Electronics closed down 4.25% yesterday at $37.15.

The remaining company for all of the security and fire company is remaining Tyco International Ltd. and keeping the "(NYSE: TYC)" ticker; shares traded down 0.67% to $34.09 yesterday.

Like every network before it Walt Disney Co.'s (NYSE:DIS) ABC is trying to squeeze every nickle out of a hit show. Investors, though, shouldn't expect too much from the spin-off of "Grey's Anatomy."

Spin-offs have a mixed track record. General Electric Co.'s (NYSE:GE) NBC tried to capitalize on the success of "Friends" with "Joey", a mediocre sitcom that failed to excite audiences. The "CSI:Crime Scene Investigation" and "Law and Order" shows are successful because they have different casts. Of course, some of the most popular shows of all time were spin-offs including "The Jeffersons," "Mork and Mindy" and "Lou Grant" got their start from other shows.

But these shows are ancient history. These days, shows based on characters from other programs are rare, which is why ABC's bet on "Grey's Anatomy" is interesting.

The new show will feature Dr. Addison Montgomery-Shepherd, a popular "Grey's Anatomy" character played by Kate Walsh, The Wall Street Journal said. Basing a show on a flawed obstetrician is a good idea. ABC obviously is aware of the popularity of TLC's "A Baby Story." If it's good it will attract advertising dollars and give the network a profitable franchise.

But it's far from a slam dunk.

"Grey's Anatomy" came quite close last week to "jumping the shark" with its ridiculous two-part episode featuring a ferry crash. The main character Meredith Grey fell into the cold water after being rescued by McDreamy. Come on? Does anyone not think she's going to survive? I mean it's too late to change the name of the show.

Sally Beauty Holdings Inc. (NYSE: SBH) is a newly traded stock which was spun off from Alberto-Culver Company (NYSE: ACV). Sally is an international specialty retailer and distributor of professional beauty supplies.

Sally sells and distributes through over 3,100 stores, mostly in the U.S. Sally's growth might have been held back by its former ownership structure, as Alberto Culver often competed against many of the products that Sally distributes in the hair and beauty care business. This new growth possibility could make Sally attractive now.

Being separated from Alberto will allow Sally to more aggressively target new business and grow faster. As part of the Alberto and Sally break-up, Clayton Dubiller & Rice purchased just below half of Sally's stock.

The company will web-cast a lunch meeting tomorrow at 12:30pm with the investment community. It is worth listening to see what management has to say.

GE announced today the sale of its Advanced Materials Unit to private equity firm Apollo Management LP for $3.8 Billion. GE's Advanced Materials Unit specialized in producing specialized silicon and quartz based products.

After all is said and done, GE will see more than $2 billion in proceeds from the sale. GE is not in dire need of cash to cover losses or debt, so the sale is driven only in part by revenue generation. The other aspect of the sale, and likely the more important one, is that GE's management is beginning to acquiesce to pressure from shareholders and Wall Street (analysts) to consolidate its business lines.

Jack Welch, during the course of his 20-year reign, took GE from $12 billion to roughly $280 billion and along the way took GE from a core line of business to having part of an almost innumerable number of different businesses.

Since he stepped down in 2001 though, the company's share price has languished as management has not quite been able to fill the void of his departure (covered by Victoria Erhart). There has been an outcry that GE needs to shed its non-core businesses and focus on the basic three: Industrials, Entertainment, and Financials.

Though some clamor that GE should take a step further and split the company into the aforementioned components.

Sara Lee Corporation (NYSE:SLE), manufacturers of Ball Park Franks, Jimmy Dean sausage, and Sara Lee fatty baked snacks, has completed the spin-off of its Hanes division to form a separate company, Hanesbrands, (NYSE:HBI), which began trading yesterday, September 6. Current Sara Lee shareholders received one share of Hanesbrands stock for every eight shares of Sara Lee. The Hanesbrands moniker includes some very common names: Hanes underwear, made famous by Michael Jordan in his series of "you have been briefed" ads; Bali and Wonder bras; as well as L'eggs and Just My Size hoisery.

Several years ago, Sara Lee Coroporation management decided to reduce the range of the portfolio of brands that had grown to cover snack foods, beverages, as well as household and body care products, and a line of intmate and casual clothing. One does have to wonder whoever thought it was a good idea to merge fatty snacks with an underwear company in order 'to achieve transformational synergies' or some such business lunacy. Probably best not to think about the image too long.

Approximately 95 million shares of Hanesbrands stock were distributed to Sara Lee stockholders in the transaction. Sara Lee Corporation received $2.4 billion for the stock from Hanesbrands. In its first day of trading, Hanesbrands stock closed at $22.20, up $1.90, with 3.7 million shares trading hands.

Many Time Warner investors mourned when Carl Icahn backed off his takeover campaign. Now many of them are quoted in the Wall Street Journal today as saying that the takeover plans should renewed. Despite management commitment to buying back ever-larger amounts of stock and reducing costs to the nth degree, the stock keeps going down, a 10% decline since Icahn gave up his efforts (he still owns a significant portion of the company's stock).

Time Warner, it seems, has an identity crisis. Is it "a cable stock with a lot of slow-growing baggage around it"? (So says Michael Nathanson, Bernstein Research.) Is it an internet company with the paradoxically slowing magazine and screen programming businesses? (Many analyst bemoan the shift from print to online advertising.) Or, as Bill Nygren from Oakmark Investments says hopefully, is it actually a "great portfolio of media assets" poised to "positively surprise" the Street when AOL exceeds the oh-so-low expectatations?

Either way, it seems the only people who are defending the entity as a whole are CEO Dick Parsons and the few loyal among his management team -- and even Time Warner president Jeffrey Bewkes has been caught grumbling about the lack of synergies available between the diverse media businesses. Maybe, Dick, you should take a look at Peter Cohan's suggestions. It can't hurt to run the numbers.