It was twenty years ago today... well not exactly, but it was 1987 and five of the world's most influential musicians came together to record a b-side for George Harrison's "This Is Love" single. Harrison , along with Tom Petty, Bob Dylan, Roy Orbison, and ELO's Jeff Lynne, recorded "Handle with Care" and created supergroup history. You may not remember the Traveling Wilburys, or even have known those artists were involved, but in 1988 their album Traveling Wilburys Vol. 1 reached #3 on the Billboard albums chart and sold more than 2 million copies.

For more than 10 years that album along with the follow-up two years later, have been unavailable. This summer Rhino Records, an imprint of Warner Music Group (NYSE:WMG), will re-release both Traveling Wilburys albums as well as bonus video material in a special reissue set. It's an interesting re-issue for this summer, not because it does not deserve to be re-issued, but because it is part of the re-issuing of George Harrison's post-Beatles career by his estate (here is the press release).

Warner caught a lucky break with these reissues because most of Harrison 's material reverted to EMI (he was originally with the London-based label as a Beatle and a solo artist). It was assumed that these two albums also reverted, but those assumptions were obviously wrong.

This reissue will do quite well because it was a collaboration between five talents and received such high praise upon its initial release. By comparison Harrison's solo material was often hit or miss.

MAJOR PAPERS:

• On Friday, the Wall Street Journal reported that a number of firms have been eyeing Kroger Co (NYSE: KR) on the expectation that the company will soon begin exploring a leveraged buyout with the help of investment bank Goldman Sachs Group Inc (NYSE: GS).

OTHER PAPERS:

• The New York Post reported that Warner Music Group Corp (NYSE: WMG) may look to merge with EMI Group plc ADR (OTC: EMIPY) by appealing directly to the music labels shareholders.
• According to the Sunday Express, Dow Chemical Company (NYSE: DOW) is set to receive a bid of $52-$58 per share, valuing the company at $50B, from a consortium of Middle Eastern investors and American buyout firms.
• The U.K. Telegraph reported that the Royal Bank of Scotland is preparing to delay any rival offer for ABN Amro Holdings (NYSE: ABN) until after Barclays plc ADS (NYSE: BCS) reveals its bid for the company.
• From BusinessWeek's "Inside Wall Street" section:
• Oppenheimer oil guru Fadel Gheit says rumors have resurfaced that Exxon Mobil Corporation (NYSE: XOM) may go after oil and gas company Devon Energy Corporation (NYSE: DVN).
• Napco Security Systems Inc (NASDAQ: NSSC) is hoping GatewayX, a new product introduced in January, will spark a rebound.
• Seed and crop-protection company Syngenta AG ADS (NYSE: SYT) looks to have upside ahead, due to brisk demand for corn to make ethanol is boosting farmers' need for Syngenta's products to fight field pests.

MOST NOTEWORTHY: Warner Music Group Corp (WMG), Red Robin Gourmet Burgers, Inc (RRGB) and Berkshire Hathaway Inc (BRK.A) were some of today's notable upgrades:

• Pali Capital upgraded shares of Warner Music Group Corp (NYSE: WMG) on valuation.

• Matrix USA upgraded Red Robin Gourmet Burgers Inc (NASDAQ: RRGB) to Hold from Sell on valuation.

• Berkshire Hathaway Inc (NYSE: BRK.A) was upgraded to In Line from Underperform at Fox-Pitt, Kelton.

OTHER UPGRADES:

• UBS upgraded ARM Holdings plc (NASDAQ: ARMHY) to Buy from Neutral as the firm believes the company will be a significant beneficiary of the acceleration in 3G handset adoption in 2007.

• Wachovia upgraded Pactiv Corp (NYSE: PTV) to Outperform from Market Perform on valuation.

• Baird raised Patterson Companies (NASDAQ: PDCO) rating to Outperform from Neutral.

• BMO Capital raised UCBH Holdings, Inc (NASDAQ: UCBH) rating to Outperform from to Market Perform.

• O2Micro International Ltd (NASDAQ: OIIM) was upgraded to Buy from Neutral at Oppenheimer citing a possible near-term court settlement with Samsung, which provides significant earnings leverage.

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

MAJOR PAPERS:

• According to the Wall Street Journal's (subscription required) "Heard on the Street" column, JP Morgan Chase and Company (NYSE: JPM) is working on its growth without acquisitions, by bulking up its Hollywood business and its pension-advisory business.
• The Wall Street Journal reported this morning that China's economic-planning agency said it would allow Intel Corp (NASDAQ: INTC) to build a chip plant in the northeastern city of Dalian.
• The Financial Times (subscription required) reported that Citigroup Inc (NYSE: C) has raised its bid for Nikko Cordial by 25.9% to around $13.4B.

OTHER PAPERS:

• CNet.com has learned that Microsoft Corporation (NASDAQ: MSFT) is close to acquiring privately held Tellme Networks, which a deal expected to be completed later this week.
• The U.K. Times reported that Warner Music Group Corp (NYSE: WMG) is struggling to justify raising its bid for rival EMI Group (OTC: EMIPY), because it does not believe it can risk an improved offer without having access to EMI's books.
• According to the Independent, Diageo plc ADS (NYSE: DEO) is expected to bid for Absolut vodka owners Vin & Sprit despite worries about competition.

These are tough times for the music industry. With declining CD sales, a surprising leveling-off in legal downloading, and rampant piracy problems, there have been very few bullish signs for the record industry. The once legendary Tower Records declined into bankruptcy, and publicly-traded music retailers like Trans World Entertainment Corp. (NASDAQ:TWMC) and Handleman Company (NYSE:HDL) have seen their share-prices sink towards all-time lows. Warner Music Group (NYSE:WMG) is trading more than $10 off its 52-week high of $31 per-share.

But in what may be a sign that at least insiders see value in the industry, WMG is currently involved in a takeover fight with the EMI Group of Britain, (LON:EMI) which counts the Beatles among its artists. On Friday, the EMI Group rejected WMG's $4.1 billion takeover proposal, characterizing it as inadequate given the potential for cost-savings.

The combination of one major player making a bid for another major player, and the bid being rejected as too low indicates that industry executives still see value in their industry. Since they do, you may want to look anew at it as well.

Major Papers:

• According to the Wall Street Journal, General Motors Corp. (NYSE: GM) is considering acquiring DaimlerChrysler's (NYSE: DCX) Chrysler Group, but the company would face massive challenges if it were to take over its longtime rival. People familiar with the matter say GM has not ruled out the idea, however.
• Google Inc (NASDAQ: GOOG) launched a new bundle of services targeted at corporations, but CEO Eric Schmidt said the company is not looking to go "head to head" with Microsoft Corp (NASDAQ: MSFT), the Wall Street Journal reported.
• Barron's Online's "Inside Scoop" column wrote that Encore Acquisition Co. (NYSE: EAC) chairman Jon Brumley bought 40,000 shares of the company for $988,000. "Obviously," Brumley said, "we think the stock is going to move higher."
• The Financial Times reported that Morgan Stanley (NYSE: MS) has bought out its local partner in India, JM, for $445M to up its presence in Asia.
• The Financial Times also reported that EMI Group (OTC: EMIPY) is also exploring alternatives to Warner Music Group Corp.'s (NYSE: WMG) $6B takeover bid for the company. According to people familiar with the matter, no offers appear imminent.

Other Papers:

• Investor's Business Daily's "New America" column focused on online business Bankrate Inc. (NASDAQ: RATE). The company is established, credible, its brand name is known, it has no debt and it has over $100M on its balance sheet.

MOST NOTEWORTHY: Progress Energy Inc (PGN), Mattel inc (MAT), Career Education Corp and (CECO) were some of today's notable upgrades:

• JP Morgan upgraded shares of Progress Energy Inc (NYSE: PGN) to Neutral from Underweight citing the company's improving earnings profile.

• Lehman upgraded shares of Mattel Inc (NYSE: MAT) to Equal Weight from Underweight with a $26 target, citing increased traction at retail stores for Barbie as well as expectations for 10% earnings growth.

• Career Education Corp (NASDAQ: CECO) was upgraded to Neutral from Underperform at Credit Suisse as they believe general start growth will bottom in 4Q/1Q and that its University division will return to positive start growth in 3Q07.

OTHER UPGRADES:

• Pacific Growth upgraded shares of Marvell Technology Group ltd (NASDAQ: MRVL) to Buy from Neutral to reflect the aggressive transfer of the Intel (NASDAQ: INTC) cell phone foundry business.

• Both Soleil Securities and Bank of America upgraded Warner Music Group Corp (NYSE: WMG) to Buy from Hold with a $23 target in order to reflect the company's improved fundamentals; they believe Warner's balance sheet restructuring bodes well for earnings.

• Merrill Lynch upgraded JetBlue Airways Corp (NASDAQ: JBLU) to Buy from Neutral on valuation.

• Diamond Offshore Drilling Inc (NYSE: DO) was added to Goldman Sachs' Conviction Buy List.

• CIBC upgraded Wells Fargo & Co (NYSE: WFC) to Sector Outperformer from Sector Performer, citing valuation and the $8 billion in excess capital in the coffers.

• Wachovia upgraded Fossil, Inc (NASDAQ: FOSL) to Outperform from Market Perform.

• HSBC upgraded Sony Corp (NYSE: SNE) to Neutral from Underweight.

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

MAJOR PAPERS:

• According to the Wall Street Journal (subscription required), four months after acquiring YouTube, Google Inc (NASDAQ: GOOG) is struggling to find allies in the television business.
• The Journal's "Heard on the Street" column focused on Mylan Labs (NYSE: MYL), which it said could have "room to run" depending on a key court battle with Pfizer Inc (NYSE: PFE) which it may learn the results of any day.
• According to the online edition of Barron's (subscription required), the Street isn't giving enough credit to GlaxoSmithKline (NYSE: GSK), which has an industry-leading pipeline and profits poised to increase in 2008.
• The Financial Times (subscription required) reported that Wal-Mart Stores (NYSE: WMT) is pressuring its suppliers to better represent women and minorities on the teams that handle Wal-Mart's business.
• The Financial Times also reported that Warner Music Group (NYSE: WMG) has made peace with independent record labels, which could clear the way for the company to make a $6B bid for EMI Corp (OTC: EMIPY).

OTHER PAPERS:

• Investor's Business Daily's "New America" column mentioned Sina Corp (NASDAQ: SINA) positively, saying Sina is the top search engine in China, beating both Google Inc and Yahoo Inc (NASDAQ: YHOO). With e-commerce gaining momentum in the country with a larger population than any other, Sina and analysts have very high hopes for increasing advertising sales in the next two years.

Stock futures are lower early in the morning, setting the stage for a similar start for stocks, ahead of consumer price index that is due an hour before the market open. Stocks started lower yesterday as well, but the Dow Jones industrial average closed at yet another record level, while other major indexes reached their highest level in more than six years.

At 8:30 a.m. EST, January consumer price index, or CPI, will be reported by the government. CPI is a measure of inflation at the consumer level. Economists surveyed by Briefing.com expect the CPI to have risen 0.1% in January after increasing 0.4% December. Core CPI, a measure that take out the more volatile food and energy prices, is expected to have risen 0.2% compared to a 0.1% rise the month before.

While last week at his testimony in Congress, Fed Chairman Bernanke said he sees inflation pressures are easing, the CPI measure always focuses the market's attention.

At 10:00 a.m., January leading indicator will be reported and at 2:00 p.m., the minutes from the latest FOMC meeting in January will be released.

Oil prices fell this morning to below $59 a barrel ahead of the weekly inventory report due at 10:30 as forecasts of warmer-than-average weather in the United States could cause further lower demand. It's the third straight day oil falls.

Overseas, the Bank of Japan raised its benchmark interest rate to 0.5%, the highest in a decade, after the world's second- biggest economy expanded at the fastest pace in three years. The yen retreated, however, as the BoJ said further rate hikes would be done gradually. The Bank of England, on the other hand, kept the bank rate at a five-year high this month.

In corporate news:

Hewlett-Packard Co. (NYSE:HPQ) shares are down nearly 1% in pre-market trading despite reporting fiscal first-quarter income and revenue that topped analysts' estimates as it continues to gain market share from Dell. Analysts were expecting H-P to beat expectations by even more.

MOST NOTEWORTHY: YRC Worldwide Inc (YRCW), AutoLiv Inc (ALV) and Chevron Corp (CVX) topped today's lists of downgrades:

• YRC Worldwide Inc (NASDAQ: YRCW) was downgraded by Credit Suisse to Neutral from Outperform and to Underperform from Neutral at Baird, both citing valuation.

• AutoLiv Inc (NYSE: ALV) was downgraded to Sell from Hold at Citigroup with a $55 target to reflect North American production schedules concerns as well as the possibility of a slower-than-anticipated share buyback program.

• Chevron Corp (NYSE: CVX) was downgraded to Sell from Hold at Deutsche Bank with a $65 target, citing valuation.

OTHER DOWNGRADES:

• Pali Capital downgraded Warner Music Group Corp (NYSE: WMG) to Sell from Neutral, with a $19 target. The firm believes estimates are too aggressive and Warner shares are now overvalued.

• JP Morgan downgraded shares of Electronic Arts Inc (NASDAQ: ERTS) to Neutral from Overweight, citing valuation.

• Sanders Morris downgraded Playboy Enterprises (NYSE: PLA) to Hold from Buy, as they believe there is little visibility in the marketplace as to the timing of a Time Warner-based (TWX) SVOD agreement. The broker thinks management will issue below the consensus' 2007 guidance, or none at all, which they think will trigger bearish sentiment.

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

Last summer, there was a potential deal in which EMI Group would merge with Warner Music Group Corp. (NYSE:WMG). The potential deal crumbled because of regulatory complications, which can be tough in Europe.

This week, another deal fell apart. This time, EMI rejected a bid from the private equity firm, Permira Advisers LLP.

Why? EMI stated its rationale in a press release: "The EMI Board has not received an offer that fully reflects the prospects for and value of the company and which it could recommend to shareholders."

It was not happy news for EMI shareholders, who wanted a deal. When it fell apart, the stock price plunged 10% in the London Stock Exchange.

It seems that if EMI wants a high price, it probably won't get it from a private equity firm. Rather, the company will need to sell to a synergistic partner. That's why Warner Music was an ideal suitor and offered a lucrative price.

But until the regulatory situation gets more favorable, don't expect a high bid for EMI.

Tom Taulli is the author of various books, including the Complete M&A Handbook and operates DealProfiles.com.

Skype, long the darling of VOIP newbies like me, is nothing if not a bandwagon-jumper. The company, acquired by eBay last September, has never stayed true to its phone calling roots, dabbling in everything from instant messaging to voicemail to videocasting. And we know it: everybody's doing ring tones.

The latest bandwagon, straight from the playbooks of the rest of the phone calling world: music downloads. Today Skype signed agreements with a number of the music biggies, including Warner / Chappell Music, EMI Music Publishing, and Sony / ATV Music Publishing. These agreements will allow Skype to distribute many of its ringtones "lawfully" (was it unlawful before, I wonder?) from artists like Madonna, Depeche Mode, and the Red Hot Chili Peppers.

So I've got to know: how long before Skype launches a campaign where they play some hip-shaking song from the most commercially over-exposed group on television, the Black-eyed Peas? I predict it won't be long.