Today was a big day for Whole Foods Markets Inc. (NASDAQ: WFMI) as it had its court date regarding the merger with Wild Oats Markets Inc. (NASDAQ: OATS) and reported quarterly earnings after the close. As of 5:47 p.m., WFMI stock is up 10.1% in after-hours trading.

Chronologically then:

The question before the court today was whether these two companies constitute a unique market, as clearly they both compete with several other companies that sell organic foods, some as large as the world's biggest retailer, Wal-Mart Stores Inc. (NYSE: WMT). However, if Wild Oats acts as a constraint on Whole Foods, then a combined company would have greater pricing power. Key to the FTC case (which filed the suit against the $565 million merger) is an e-mail sent by Whole Foods CEO in which he says the deal would enable the company to "avoid nasty price wars." Mackey was also found leaving messages on Yahoo! message boards.

After the close this afternoon, Whole Foods also reported third-quarter earnings. While profit slipped 8.9% in the most recent to 35 cents per share, it beat analysts estimates of 33 cents per share. Sales were 13% higher during the quarter reaching $1.51 billion, a little short of the $1.54 billion estimated by analysts. The organic grocer was hit by costs on new stores. Whole Foods spent $15 million on preopening and relocation costs.

Key metric same-store sales rose 7% -- impressive, but less than the 9.9% jump a year ago. CEO John Mackey noted that comparable sales so far in the fourth-quarter have stabilized, as indicated from July 7.6% same-store sales growth. Next year, Mackey said he expects to open even more stores. As for the merger, he was hopeful it would be approved.

By 6:12 p.m., WFMI shares are up 8.3% in after-hours trading to $40.10.

Monday July 30

• Verizon Communications Inc (NYSE: VZ) to report Q2 earnings; conference call at 8:30am. Analysts will look at Verizon's marketing strategy [particularly for FiOS], infrastructure improvements, and operating expenses. Above-average debt remains a blemish, but Wall Street will overlook that if Verizon registers impressive subscription and market share statistics, and demonstrates that its fiber optic-based FiOS Internet/TV network roll-out timetable for major markets remains on schedule.
• Monster Worldwide Inc (NASDAQ: MNST) to report Q2 earnings; conference call at 10am. Monster is expected to register adequate, albeit decelerating revenue growth in Q2 compared to Q1, hence the grade for the company's performance may hinge on analysts' projection regarding the likely revenue scenario moving forward.

Tuesday July 31

• Federal District Court Hearing to decided whether to approve the FTC's application for injunction blocking the proposed merger between Whole Foods Market Inc (NASDAQ: WFMI) and Wild Oats Markets Inc (NASDAQ: OATS).
• FDA 8am Gastrointestinal Drugs and Drug Safety and Risk Management Joint Advisory Committee Hearing on Biogen Inc's (NASDAQ: BIIB) Tysabri for Crohn's Disease.
• RegenRX Pharmaceuticals (AMEX: RGN) to update on its clinical trials program at 4:30pm.

Wednesday August 1

• PDUFA date for GlaxoSmithKline (NYSE: GSK) / POZEN Inc's (NASDAQ: POZN) Trexima for migraine headaches.
• Teva Pharmaceuticals (NASDAQ: TEVA) to report Q2 earnings; conference call at 8:30am.
• Sales Conference Calls: Ford Motor Company (NYSE: F) at 1pm; General Motors Corporation (NYSE: GM) at 2pm
• Starbucks Corporation (NASDAQ: SBUX) to report Q3 earnings; conference call at 5pm. After recent sluggish stock performance, some analysts see Starbucks snapping back in the quarters ahead: Starbucks is expected to add a breakfast sandwich at 4,000 stores/coffee houses, which could increase per-store revenue by $70K annually.

Thursday August 2

• Eastman Kodak Company (NYSE: EK) to report Q2 earnings; conference call at 11am. Note that the volatility in Kodak is elevated going into its earnings report.

Friday August 3

• Procter & Gamble Company (NYSE: PG) to report Q4 earnings; conference call at 8:30am.

Whole Foods Market Inc. (NASDAQ: WFMI) CEO John Mackey deserves the gold medal for understatement for calling his anonymous posts on Yahoo message boards an "error in judgment" in one of the least convincing apologies ever. Monumental stupidity is more like it.

What puzzles me about this issue is why a rich, successful and well-regarded CEO like Mackey would even care about the opinions of a bunch of chat board clowns? Is he really that narcisstic that he needs to constantly prove to his greatness? That's really kind of sad when you think about it.

Mackey now is making shareholders pay the price for his insecurity. The Wall Street Journal reports today that the SEC has launched an informal probe of his conduct. In particular, regulators are going to see if Mackey gave overly optimistic statements on the message boards, the paper said.

A special committee of the board also is investigating the matter, which came to light in part because of the regulatory review of its planned acquisition of Wild Oats Markets Inc. (NASDAQ: OATS) which has encountered stiff opposition.

Mackey, who co-founded Whole Foods, seems to be most sorry that he got caught. Any lower-level executive who did what he did would have been at a minimum reprimanded and possibly fired. Though Mackey says he meant no harm, he still needs to be taught a lesson.

Whole Foods should strip him of any options grants awarded to him this year. Mackey should also reimburse the company for any costs its incurred to defend him. Oh yeah, he should be banned from ever posting information on Yahoo chatrooms even under his own name.

He ought to have better things to do with his time.

MAJOR PAPERS:

• Bear Stearns Companies Inc (NYSE: BSC) says that its two hedge funds tied to subprime loans are basically worth nothing, reported the Wall Street Journal (subscription required).
• An "error in judgment" is what Whole Foods Market Inc (NASDAQ: WFMI) chairman and CEO John Mackey called his anonymous blogging about his company and rival Wild Oats Markets Inc (NASDAQ: OATS) in an apology, reported the Wall Street Journal.
• SEC chairman Christopher Cox wants Congress to tighten its oversight of the $2.4T municipal bond market, the result of increasing complexities in the bond market and lax leadership at a number of firms, reported the Wall Street Journal.

OTHER PAPERS:

• Kohlberg Kravis Roberts is planning to offer $24M to acquire Macy's Inc (NYSE: M), according to Women's Wear Daily (subscription required).
• The U.K. Times reported that Barclays plc (NYSE: BCS) has deided against raising its bid for ABN Amro Holdings (NYSE: ABN).
• Honda Motor Co. (NYSE: HMC) is increasing its production capacity in North America and in other places, in order to meet growing demand for its fuel-efficient cars and to maintain momentum for global growth, reported the Associated Press.

Carrying on in its heralded tradition of misguided editorials, The Wall Street Journal (subscription required) published a real doozie today. According to the piece:

Reading about the covert blogging of Whole Foods CEO John Mackey, we were reminded of a New Yorker Cartoon from some years ago featuring two mutts and a computer. "On the internet," one says to the other, "nobody knows you're a dog."

Apparently U.S. financial regulators don't get the joke. They're responding to Mr. Mackey's anonymous blogging by treating him like a dog -- or more precisely a potential violator of U.S. securities laws, with the bonus goal of scuttling Mr. Mackey's attempted purchase of Whole Foods competitor Wild Oats. The SEC is leaking (as usual) that it has opened an "informal" enforcement probe. Sure, "informal."

As Gary Weiss pointed out, the issue wasn't his blogging, which he didn't do anonymously. He was caught posting on Yahoo!'s message board for Whole Foods (NASDAQ: WFMI) without identifying himself. And his posts appear to have been pretty misleading: He talked down competitor Wild Oats (NASDAQ: OATS) while his company was pursuing its acquisition. It has also been reported that Mackey made predictions about the future stock price of Whole Foods, which is completely inappropriate.

The issue here is that Mackey's posts seem to fly in the face of Regulation FD and in defending him, the Wall Street Journal (or more specifically, its editorial page editors) is taking on that regulation. Shame on them.

MAJOR PAPERS:

• The Wall Street Journal (subscription required) reported that John Mackey, the CEO of Whole Foods Market Inc (NASDAQ: WFMI), used a pseudonym to blog about his company on Yahoo message boards for eight years, including panning rival Wild Oats Markets Inc (NASDAQ: OATS), which Whole Foods is trying to buy.
• Carl Icahn's American Real Estate Partners new offer of $37.25 a share for Lear Corp. (NYSE: LEA), supported by the Lear board, has been rejected by proxy advisory firm Institutional Shareholder Service, reported the Wall Street Journal.
• Barron's Online's (subscription required) "Inside Scoop" column reported that two institutional investors, Buckingham Capital Investment and Morgan Stanley, have sold about 3.2M shares of Build-A-Bear Workshop Inc (NYSE: BBW), as they feel the company won't get much more of a premium as a takeover target, if private equity is still even interested at all.
• JP Morgan Chase and Company (NYSE: JPM) and Goldman Sachs Group Inc (NYSE: GS) have obtained key roles advising Apollo Management on its expected IPO, reported the Financial Times (subscription required).

OTHER PAPERS:

• According to representatives from Congress, exclusivity deals like Apple Inc's (NASDAQ: AAPL) multi-year iPhone contract with phone provider AT&T Inc (NYSE: T) trap customers, forcing the users to stay with the providers as long as they want to continue using certain devices, reported AppleInsider.com.

The CEO of Whole Foods Markets Inc. (NYSE: WFMI) is proving to have an ability, rare among CEOs, to hang himself with his electronic words. The Wall Street Journal reports that between January 2000 and last August, John Mackey used the name "Rahodeb" -- an anagram of his wife Deborah's name -- to make nearly 1,400 posts at Yahoo! Inc. (NASDAQ: YHOO) Finance message boards designed to pump up Whole Foods' stock and denigrate that of its then-rival Wild Oats Markets Inc. (NASDAQ: OATS).

My favorite Rahodeb quote was used to cut Wild Oats down to size. He often criticized Perry Odak, Wild Oats' former CEO, who resigned last year. "While Odak was trying to figure out the business and conducting expensive 'research studies,' to help him figure things out, Whole Foods was signing and opening large stores in OATS territories," Rahodeb wrote in 2005. "Odak drove off most of the long-term OATS natural foods managers" and brought in executives who "didn't know too much about the natural/organics industry or their customers."

Meanwhile Mackey also made use of e-mail to make comments that made him look bad. His comments about the competitive impact of his proposed Wild Oats merger suggest to the government that the merger's intent is to raise consumer prices.

The FTC has sued to block Whole Foods (NASDAQ: WFMI) acquisition of Wild Oats (NASDAQ: OATS) on anti-trust grounds, and has compiled some pretty compelling evidence that Whole Foods CEO John Mackey wanted the deal for anti-competitive reasons.

In emails to members of his company's board before the deal was announced, Mackey talked about the need to "eliminate forever" the possibility that another chain could challenge Whole Foods' dominance in the industry, and also talked up the acquisition as a way to "avoid nasty price wars."

Mr. Mackey responded to the allegations the way any good executive would -- he blogged about it. He quoted several of the emails mentioned by the FTC:

It is no secret and not even a surprise that Whole Foods Market Inc.(NASDAQ: WFMI) became such a large success. Anyone who is into natural foods knows the story well. Problem is, Whole Foods is often referred to as "Whole Paycheck" because its prices are significantly higher than comparable goods elsewhere. And yet, shopping in a Whole Foods store, it is easy to realize that much of this demand is seemingly inelastic as the stores are packed and the register lines full.

Now enter Kroger Co. (NYSE: KR). Kroger used to be just another one of the many grocery stores out there. After years, the food retailer has finally figured out that not only could it carry many of the same organic and natural foods that Whole Foods does, but that it could also do it at a lower cost. To top it off, Kroger also figured out that the profit margins were better than the ones on other packaged goods of lower quality and price.

What do Whole Foods Market Inc. (NASDAQ: WFMI) and Sirius Satellite Radio Inc. (NASDAQ: SIRI) have in common? What do Wild Oats Markets Inc. (NASDAQ: OATS), Borders Group Inc. (NYSE: BGP) and Google Inc. (NASDAQ: GOOG) have in common? I'll give you a hint -- they all want to merge with some other company in their field. But the mergers are all very different.

Give me a break, one cannot compare the proposed merger between Whole Foods and Wild Oats to that of Sirius and XM Satellite Holdings Inc. (NASDAQ: XMSR). I know many Sirius and XM investors will lash out at me for this, but come on people! Sarah Gilbert made a very good case yesterday why the merger of the trendy food stores doesn't have antitrust issues: "There is a plentiful supply of organic and natural produce and other products available at both small local cooperatives and farmer's markets and large supermarket chains," least of all Wal-Mart Stores Inc. (NYSE: WMT).

Sirius and XM? Now that's a different story altogether. They are the only two satellite radio companies. There are no smaller competitors, or large competitors with a small market share. That's all there is -- Sirius and XM. Sure, the argument that the market includes iPods, internet and HD radios is very creative and may even work, but let's call it what it is -- a desperate attempt by the two companies to get their merger approved. They've even hired a lobbying firm.

Pretend we're still living in the 1960s for a minute, and imagine someone warning of a monopoly on organic and natural food. Everyone around laughing and pointing... Now cut to 2007 and the headline in the Wall Street Journal: "The FTC plans to file a lawsuit to block Whole Foods' $365 million purchase of Wild Oats over antitrust concerns..."

From steel to sustainably-farmed wheatgrass, this is how far we've come in our ability to monopolize something. Way to go U.S. of A.!

For the record, I think the Whole Foods Market Inc (NASDAQ: WFMI) acquisition of Wild Oats Markets (NASDAQ: OATS) is a good thing. There is a plentiful supply of organic and natural produce and other products available at both small local cooperatives and farmer's markets and large supermarket chains -- in my opinion, tofu makers are not going to be outrageously squeezed. They're providing their products to enough outlets that it's hard for me to believe Whole Foods (even were it an evil monopolistic type of corporation) would create any pricing pressure. The FTC's blockage is on concerns of anticompetitive forces; will local chains like New Seasons and little scrappy cooperatives end up getting squeezed out? I can't imagine. If anything, the entrance of bigger fish like Wal-Mart Stores, Inc (NYSE: WMT), Safeway Inc. (NYSE: SWY) and Kroger (NYSE: KR) are far more likely to create problems for organic and natural food suppliers than the kinder, gentler (and much, much smaller) Whole Foods.

But that's just my opinion, and investors have sent the stock down quite a bit on the news, $1.54 or 3.6% to $40.15. As for me, I'm putting in a 'buy' order right now.

With concerns over an economic slowdown and its proposed takeover of Wild Oats, Paul Tracy now believes that Whole Foods Market Inc. (NASDAQ:WFMI) is "cheaper than at any time in years."

The editor of StreetAuthority Market Advisor notes, "Its shares have continued to slip, falling 6% since the beginning of March. Some of this decline is due to fears of a consumer slowdown, which has hit numerous stocks in the retail industry."

However, he notes that based on his analysis, Whole Foods should remain relatively immune to any such slowdown. He observes, "The company primarily caters to a wealthier clientele, and that its customer base tends to be more resilient during economic slowdowns."

Another factor in the recent decline, he suggests, has to do with the company's proposed takeover of rival Wild Oats, a deal that had been well-received by Wall Street.

As was reported by several of us here at Blogging Stocks a few weeks ago, Whole Foods Market (NASDAQ:WFMI)looks to purchase one of its largest competitors, Wild Oats (NASDAQ:OATS). This has been the speculative rumor in the niche grocery merchandising field for a few years and it finally came to pass. Whole Foods sees newly intense competition in the health food market from competitors like Trader Joe's and others. My guess -- it does not want to lose mainstream grocery customers to the likes of discount food retailers Target Corp. (NYSE:TGT) and Wal-Mart Stores, Inc. (NYSE:WMT).

In an effort to reach the increasingly health-conscious grocery consumer, both discount chains have stepped up offerings of healthy items and particularly organic grocery items. More and more consumers are discovering that many mainstream, processed foods are filled with unhealthy chemicals and they are now demanding more healthy eating options. As a result, Target in particular is stepping up its efforts to attract that consumer (more so than Wal-Mart, in my experience so far). That puts the more niche but growing retailers like Whole Foods and Wild Oats in the somewhat-cloudy crosshairs of the $52 billion Target and $380 billion Wal-Mart.

I do believe, however, that while the customer demand for more healthy foods will not only continue but rise over time, smaller (but still huge) retailers like Whole Foods and Trader Joe's will continue to attract a certain kind of shopper who almost flat-out refuses to buy groceries of any kind at mass merchants. The thing is -- Whole Foods is going to become one of those mass merchants with the Wild Oats purchase. Will that dilute the brand?

As Peter reported yesterday afternoon, Whole Foods Markets Inc.
(NASDAQ:WFMI) is prepared to acquire its rival, Wild Oats Markets (NASDAQ:OATS), for $18.50 per share. It will mark the 19th and largest acquisition for Austin-based WFMI in its history.

In an accompanying statement, WFMI chairman and chief executive noted that "The growth opportunity in this category has led to increased competition from many players, most of whom are not dedicated natural and organic foods supermarkets, but are considerably larger than we are..." Methinks he could be alluding to that lone half-aisle containing soy milk and Kettle Chips at my neighborhood Wal-Mart Stores (NYSE:WMT) Supercenter? Or the increasing presence of organic offerings at Kroger (NYSE:KR) and Safeway (NYSE:SWY) locations?

Privately owned Trader Joe's has also become quite a force to be reckoned with in the world of natural grocers, with more than 250 locations. Hip and surprisingly affordable, it is my natural grocer of choice. But the Trader Joe's I've visited lack the expansive deli offerings, fresh sushi, or impressive wine selections available at WFMI.

MOST NOTEWORTHY: Seagate Technology (STX), Analog Devices inc (ADI) and Whole Foods Market Inc (WFMI) were some of today's notable upgrades:

• AG Edwards upgraded Seagate Technology (NYSE: STX) to Buy from Hold citing improving fundamentals as the company ramps 1.8" drives in the first quarter, with a potential Apple (AAPL) qualification, and market share gains in notebooks.

• ThinkEquity upgraded Analog Devices Inc (NYSE: ADI) to Accumulate from Source of Funds, with a target of $38, as they believe the improvement in bookings are sustainable; Citigroup also upgraded Analog Devices, to Buy from Hold, to reflect the company's earnings expectations.

• William Blair upgraded Whole Foods Market Inc (NASDAQ: WFMI) to Outperform from Market Perform based on valuation and the benefits of the Wild Oats Markets (NASDAQ: OATS) acquisition; HSBC upgraded shares of Whole Foods to Neutral from Underweight, with a $52 target, and UBS upgraded shares to Buy from Neutral based on the acquisition.

OTHER UPGRADES:

• Prudential upgraded Goldcorp inc (NYSE: GG) to Neutral from Underweight citing the increase in gold prices and a potential increase in Penasquito mine reserves.

• Stifel upgraded QMed Inc (NASDAQ: QMED) to Buy from Hold on improved revenue visibility.

• IHOP Corp (NYSE: IHP) was upgraded at Raymond James to Outperform from Market Perform with a $64 target.

• Bernstein upgraded Commerce Bancorp Inc (NYSE: CBH) to Outperform from Market Perform.

• Stereotaxis Inc (NASDAQ: STXS) was upgraded to Neutral from Sell at Goldman Sachs following its better-than-expected fourth quarter.

• RBC upgraded Labopharm Inc (NASDAQ: DDSS) to Outperform from Sector Perform.

• Morgan Stanley upgraded National Semiconductor Corp (NYSE: NSM) to Overweight from Equal Weight citing improving fundamentals and valuation.

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