24/7 Wall St.

Big Price Movers In S&P 500 For Q1 2008 (MSFT)(GOOG)(AAPL)(INTC)(C)(AIG)(VZ)

The largest losers among the big companies in the S&P 500 for the first quarter were:

Microsoft (MSFT) down 21.6%, Google (GOOG) down 36.7%, Apple (AAPL) down 27.8%, Intel (INTC) down 22%, Citigroup (C) down 29.3%, AIG (AIG) down 26.6%, Verizon (VZ) down 17.9%, Schering-Plough (SGP) down 22.1%, Merck (MRK) down 23.4%, Wachovia ((WB) down 31.7%, United Health (UNH) down 40.9%, Merrill Lynch (MER) down 26.3%, Marathon Oil (MRO) down 23.6%, EMC (EMC) down 22.8%, Amazon (AMZN) down 24.7%, Valero (VLO) down 30.1%, Fannie Mae (FNM) down 34.9%, CME Group (CME) down 30.1%, WellPoint (WLP) down 50.7%, Motorola (MOT) down 42.6%, Lehman (LEH) down 42.3%. Spint (S) down 51.1%, Best Buy (BBY) down 23%, Freddie Mac (FRE) down 25.3%, and NYSE Euronext (NYX) down 30.4%.

The largest winners among the big companies in the S&P 500 in the first quarter were:

Wal-Mart (WMT) up 9.7%, Devon Energy (DVN) up 17.3%, Yahoo! (YHOO) up 24.6%, Burlington Northern (BNI) up 10.5%, XTO Energy (XTO) up 18.2%, EOG Resources (EOG) up 33.2%, Calgene (CELG) up 28.6%, Chesapeake Energy (CHK) up 16.1%, CSX (CSX) up 28.6%, and Nucor (NUE) up 16.2%.

Douglas A. McIntyre

NYTimes: Huffington Value Compared To 24/7 Wall St. Analysis

In today's New York Times an article on The Huffington Post says that the company is looking for a valuation of $200 million. That would be $53 per unique visitor based on Nielsen figures of 3.7 million for February.

The paper mentions that if the Huffington internal numbers of 14 million unique visitors is used, the valuation per unique visitor is closer to $15.

The $15 seems much more reasonable, but so does using outside figures like those Nielsen supplies. That would give Huffington a value of $56 million. The 24/7 Wall St. valuation for the company is $70 million. The $15 multiple is more more likely, especially since the audience figures for Huffington are likely to fall sharply after the November election.

Douglas A. McIntyre

Dell Slashes & Burns, Right In Its Back Yard (DELL, AMAT)

Dell Inc. (NASDAQ: DELL) has announced additional actions in its previous restructuring in its attempt to smooth its operating model, rationalize its operations and improve profitability and cash flow.  In short, costs are coming down and many high-paid Austin workers are going to be out on the street.

Michael Dell has called this a $3 billion annualized savings opportunity over the next three years to drive both productivity and efficiency.  The actions will occur during Fiscal 2009 and beyond and are meant to accelerate growth in five focus areas: global consumer, enterprise, notebooks, small and medium enterprise and emerging countries, while improving profitability and cash returns.

Dell is based in Round Rock, Texas, what is now just thought of as another Austin suburb.  If you can believe it, Dell will close its desktop manufacturing facility in Austin, Texas.   The company also reaffirmed its previously announced plans to reduce global employee headcount by at least 8,800 and related operating expense.  In the last nine months of fiscal 2008, it reduced headcount by 3,200, excluding acquisitions.

Further cost cuts are coming, including design, manufacturing & logistics, materials, and operating expenses and benefits are expected to be realized in the second half of this fiscal year.   Those stock options haven't been millionaire-makers for quite some time anyway.

It is also reviewing its current financial services ownership structure and is undertaking a strategic assessment of ownership alternatives for that part of the business. That primarily focuses on the U.S. consumer & small/medium business revolving credit financing receivables and operations, but may also include commercial leasing; although it notes that it is possible this will result in no change to the structure it expects to complete in Q3 of the current fiscal year.

Taking a closure maneuver of this size and magnitude is often met with public criticism.  Making those drastic cuts in your home town is a total slash and burn operation.  This almost sounds a lot like practicing live fire plane drops of Daisy Cutters, in your own back yard.

Austin housing probably just got cheaper.  Applied Materials (NASDAQ: AMAT) probably gets its pick of the working litter now. 

Jon C. Ogg
March 31, 2008

Jon Ogg produces the Special Situation Investing Newsletter and he can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Lehman Intends $3 Billion Capital Raise in Preferred Sales (LEH)

Lehman Brothers Holdings Inc. (NYSE: LEH) has just announced that it has "responded to investor interest" with the intent to offer to offer 3,000,000 shares of Non-Cumulative Perpetual Convertible Preferred Stock with a $1,000 per share offer.  That's $3 Billion.

It also expects to grant an overallotment option to purchase up to 450,000 additional shares of the Preferred Stock to the extent the underwriter sells more than 3,000,000 shares of the Preferred Stock in the offering. 

The proceeds from this offering are designated as being used to bolster its capital and increase financial flexibility.  The non-cumulative dividend rate, conversion rate and other terms have not yet been determined.

The Non-Cumulative Perpetual Convertible Preferred Stock, Series P, carries a par value of $1.00 per share and a liquidation preference of $1,000 per share.  Lehman Brothers Inc. itself will act as the sole book-running manager, and this offering will be made under Lehman Brothers Holdings' existing shelf registration statement filed with the SEC.

Lehman closed down 0.6% at $37.64, and shares are down 6% at $35.19 in after-hours trading.  Its 52-week trading range is $20.25 to $82.05.

Jon C. Ogg
March 31, 2008

Jon Ogg produces the Special Situation Investing Newsletter and he can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Cell Genesys Scores Takeda Deal (CEGE)

Cell Genesys, Inc. (NASDAQ: CEGE) has announced a global alliance with Takeda Pharmaceutical Company Limited in Japan.  The companies will develop and commercialize Cell Genesys' GVAX immunotherapy for prostate cancer, which is the company's lead product candidate.  It is also currently in Phase 3 clinical development studies.

For exclusive worldwide commercial rights to for prostate cancer, Takeda is paying Cell Genesys $50 million upfront with additional milestone payments totaling up to $270 million.  The additional payments relate to regulatory approval and commercialization for prostate cancer in the U.s., E.U., and in Japan.

Takeda will pay tiered double-digit royalties based on net sales in the United States and it will pay flat double-digit royalties based on net sales in all other regions.  Takeda will also pay from here on out for all external development costs associated with the ongoing Phase 3 studies of GVAX immunotherapy for prostate cancer.  Takeda will also pay for all additional development costs and all of the commercialization costs.  Cell Genesys will maintain manufacturing and supplies of the product and will retain rights to co-promote GVAX immunotherapy for prostate cancer in the United States.

GVAX immunotherapy for prostate cancer is currently in two Phase 3 clinical trials, VITAL-1 and VITAL-2, in advanced prostate cancer patients. It is also under FDA FAST TRACK designation and both trials have completed Special Protocol Assessment agreements.

The company currently estimates that there will be sufficient events to trigger the final analysis for VITAL-1 in the second half of 2009. Patients are continuing to enroll in the VITAL-2 trial at nearly 100 clinical sites in North America and Europe. Cell Genesys has targeted the completion of enrollment for VITAL-2 with approximately 600 patients in the first half of 2009.  It then expects there will be sufficient events to trigger the pre-planned interim analysis in the same time frame.

The options may say it all.  The JANUARY-2010 $2.50 CALLS last traded at $1.30, which is greater than a 50% premium for a slightly out of the money call.  In fact, buying a JANUARY-2010 $2.50 straddle would cost more than owning the stock.  No wonder the open interest isn't all that high.

Some may argue that this undermines the value of the prostate cancer treatment's value on a fully-rolled-out basis if it reaches full approval and is a success because this has blockbuster potential.  Others will argue that this gets its liquidity back in line with its long-term debt.  Shares of Cell Genesys closed down under 1% at $2.35 today, and the 52-week trading range is $1.78 to $7.30.  Its market cap is a mere $185 million. 

Jon C. Ogg
March 31, 2008

Jon Ogg produces the Special Situation Investing Newsletter and he can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

The 52-Week Low Club (SGP)(MRK)(MO)

Schering-Plough (SGP) Bad news on key cholesterol drug marketed with Merck. Shares fall to $14 from 52-week high of $33.81.

Merck (MRK) Pulled down for the same reason. Sells off to $36.82 from 52-week high of $61.62.

Altria Group (MO) Stock down because of spin-out of international unit. Falls to $21.95 from 52-week high of $87.81.

Ampex Corp (AMPX) Files Chapter 11. Drops to $.38 from 52-week high of $20.83.

Secure Computing (SCUR) Brokerage firm downgrade. Moves off to $6.27 from 52-week high of $10.54.

Citrix (CTXS) Companies like this and VMWare (VMW) suffering from concerns about growth of vitualiztion software busiess.

Douglas A. McIntyre

Wall St. Votes Against Big Apple (AAPL) iPhone Prediction

A Wall St. research firm suggested that Apple (NYSE: AAPL) would sell 45 million iPhones in 2009 which would bring in $11.7 billion, according to Silicon Alley Insider. Investors don't think so. Apple's shares are flat today, under $144. That is well down from their 52-week high of nearly $203.

Some of the reasons given for the prediction by Piper Jaffray's Gene Munster are the upcoming introduction of a 3G version of the iPhone and expansion into new foreign markets.

There are slightly more than one billion handsets sold worldwide. Nokia (NYSE: NOK) has 40% of the market. Samsung and Motorola (NYSE: MOT) each have about 12% and Sony Ericsson has roughly 10%.As large markets like the US and Europe hit saturation levels, overall growth of the market is slowing.

The single biggest hurdle to Apple hitting its number is the extent to which the competition is putting handhelds which compete with the iPhone into the market. LG has recently launched its LH2300 Touch Web device. Nokia has introduced its new S90 smartphone and news reports say it is designing handsets with the goal of picking up market share in the high end of the US where is has not done well.

Research In Motion (RIMM) is also moving into the "iPhone" segment. Computer World recently called the RIM 9000 a "cheap knock-off" of the iPhone. RIM will sell some of these, but the figure may be modest.

Unlike the digital media player market which the iPod entered in 2001, the handset market is much more mature and has many more well-funded global companies anxious to defend their forts.

The iPhone may do well, but Wall St. is not convinced it will be the kind of financial contributor to the company that the iPod has been

Douglas A. McIntyre

SPAC IPO FILING: Fintech Acquisition Corp. (TBBK)

Fintech Acquisition Corp., a SPAC, or special purpose acquisition company, has filed to come public via an IPO. The filing shows a target of $100 million. Each $10 unit will consist of unit of one unit of common stock and a warrant with a $7.50 strike price. The sole underwriter is UBS Investment Bank. The company has applied to trade on The American Stock Exchange.

Fintech was organized by TBBK Acquisitions, a wholly-owned subsidiary of The Bancorp, Inc. (NASDAQ: TBBK), a financial holding company. As an indirect subsidiary of a financial holding company, Fintech is limited to financial activities. Their target will consist of established financial technology business companies that provide data processing, storage and transmission services, databases and payment and payment processing services in support of businesses in the financial services industry and are in need of redirection.

Fintech will utilize the experience of Chairman and CEO, Betsy Cohen and President, Frank Mastrangelo. Betsy Cohen has 37 years of experience and current acts as CEO of Bancorp.

We cover issues regarding SPAC's and other IPO's, back door plays into IPO's, restructurings, spin-offs and more on our open email distribution list.

Rachel Lopez
March 31, 2008

Cell Therapeutics, Ready To Tap Financing (CTIC)

Cell Therapeutics (NASDAQ: CTIC) has filed an open mixed securities shelf registration for up to $150 million.  This will allow it to sell debt securities, common stock, preferred stock, and warrants. 

Last Tuesday, the company announced progress in beginning Phase III testing for its non-Hodgkin's lymphoma treatment. Friday, the company filed its annual report.

Shares have showed no reaction to the filing, with a 0% change, sitting at $0.66.  The 52-week range is $0.47 to $7.56 and its current market cap is only $62.5 million.

Rachel Lopez
March 31, 2008

Trivial Pursuit, Now All Hasbro's (HAS)

Hasbro, Inc. (NYSE:HAS) has finally purchased all of the intellectual property rights related to the Trivial Pursuit brand from Horn Abbot Ltd. and from Horn Abbot International Ltd.  Hasbro paid out an aggregate purchase price of some $80 million to the Horn Abbot companies for the intellectual property rights. 

This isn't going to change much about the game itself, but now Hasbro will get to keep everything from the gross sales of the Trivial Pursuit games.  Hasbro has developed and marketed Trivial Pursuit under a license agreement from the Horn Abbot companies since 1983.  If you trust the Wikipedia numbers, 88 million copies had sold in 17 languages as of 2004.

You should try playing Trivial Pursuit in Spanish against Spaniards who won't let you translate anything besides the Spanish you know... and then winning.

This won't change much about the game itself, although now Hasbro can take it any direction it wants with more offshoots than it already has and can keep all of the pie pieces.

Jon C. Ogg
March 31, 2008

Jon Ogg produces the Special Situation Investing Newsletter and he can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Biotech Busine$$ Daily (BNT, TEVA, BPAX, NCST, RPRX, VRTX)

Bentley Pharmaceuticals Inc. (NYSE: BNT) will be purchased by Teva Pharmaceutical Industries (NASDAQ: TEVA) for $360 million. Bentley shareholders will receive $15 per share and an undisclosed amount of shares in CPEX Pharmaceuticals, a drug-delivery Bentley spin-off. Bentley sells about 130 products in Spain and the transaction will allow Teva to meet its strategic Spain target. Bentley is up 15% to $15.70 on a 52-week range of $8.06 to $15.89. Teva is up marginally, almost 2% to $46.81 on the announcement. Their 52-week range is $35.90 to $50.00.

BioSante Pharmaceuticals, Inc. (NASDAQ: BPAX) announced Friday they are to begin Phase III late stage studies for their “Viagra for Women” treatment, LibiGel, which attempts to remedy a loss of libido in women. Shares are not stimulated, down by $0.55, a 12% drop, to $4.13. The 52-week range is $2.05 to $8.00.

Nucryst Pharmaceuticals Corporation (NASDAQ: NCST) up over by over $0.60, a whopping 60% jump, to $1.64 in mid-day trading on new news. Friday, the stock dropped $0.50 to a new 52-week low. This volatile infection and inflammation biotech company has a 52-week range of $1.01 to $1.85.

Repros Therapeutics (NASDAQ: RPRX) reported some interim safety results from its ongoing One-Year open label study of its Proellex(R) for the indicated treatment of uterine fibroids.  Its shares are up 2.4% today.  We just covered this one in our weekly "10 Stocks Under $10" subscriber newsletter this morning ahead of the news.  It's still under that $10.00 threshold, for now.

Vertex Pharmaceuticals Inc. (VRTX) and their hepatitis C competitor, Schering-Plough, released clinical data on their respective drugs today. Schering-Plough’s drug, boceprevir, did not stack up to Vertex’s previously presented similar clinical data, hinting that Schering-Plough may not be as big as a competitor in the market as previously expected. Paired with positive results on Vertex’s drug, the stock is up almost 20% to $22.34 in mid-day trading. The 52-week range is $19.99 to $22.61.

Rachel Lopez
March 31, 2008

Monsanto Acquires European Seed Company (MON)

Monsanto Company (NYSE: MON) has just announced that it has signed a definitive agreement to acquire De Ruiter Seeds Group B.V., in The Netherlands.  This is a Dutch-holding company that owns and operates De Ruiter Seeds.  The total transaction value was placed at 546 million Euros, or more than $800 million depending on currency exchange rates after backing out the net debt.

Monsanto has been an acquirer of many smaller seed companies in the U.S. and internationally.  The company expects this to build upon vegetable seed business as well as to enhance its growth in the protected-culture segment, which is listed as the fastest-growing space within the vegetable seeds industry.  This acquisition of De Ruiter is expected to help transform Monsanto's vegetable seed platform into a $1 billion revenue business by 2012.

As a reminder, Monsanto reports earnings this week.  We just did an earnings preview for it and another ag-player.

Monsanto shares are down some 2.5% today at $111.36.

Jon C. Ogg
March 31, 2008

Jon Ogg produces the Special Situation Investing Newsletter and he can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

AMD (AMD) Takes On More Water

AMD (NYSE: AMD) is trading off today and is not much above its 52-week low. The reason may be a note out of JP Morgan picked up at Barron's. The analysis sees AMD missing its guidance and revises down the bank's estimates for EPS.

No one should be surprised. The company has not been talking up its quarter. AMD still issues fairly worthless press releases almost every day, but CEO Hector de J. Ruiz has not been very visible.

If AMD misses the first quarter and guidance is poor, the stock could slide to under $4. At that point, the company might even get itself sold to Nvidia (NASDAQ: NVDA) or another company that would like a toe-hold in the x86 market.

Douglas A. McIntyre

Exxon Mobil's Thai Unit, Up For IPO (XOM)

Reuters ran a pretty interesting article regarding Exxon Mobil Corp. (NYSE: XOM) today that really hasn't gotten much coverage.  Apparently, its Esso (Thailand), its unit of Exxon Mobil in Thailand, plans to raise up to $454 million (14.3 billion Thai Baht) in an initial public offering in April.  Esso (Thailand) is 87.5% owned by Exxon Mobil and the final IPO price and share count will be set on what is April 24 as of today.  It also looks like about 9.6% of the total shares sold will be sold by the Thai Finance Ministry, which will dilute its percentage ownership. The use of proceeds will be used mostly to repay debt.

After seeing this we dug around for some additional data and wanted to see how this compares to the entire company and what the ramifications could be.  This listing was apparently required under an agreement made in the 1990's which allowed the oil company to build a refinery in Thailand.  We frequently cover spin-offs, divestitures, break-ups, IPO's and more in our own open email distribution list.

The operations of Esso (Thailand) is a complex refinery with a capacity of 177,000 barrels per day, and its 2007 results were a net profit of 7.05 billion Thai Baht on sales of almost 200 billion Thai Baht.  Phatra Securities was listed as the financial adviser and lead underwriter for local market share placement and trading in Thailand, and Morgan Stanley was not as the lead underwriter for foreign markets.

If you've ever been to Thailand in recent years, you'll know that the streets are packed full of cars, scooters, and Tuk-Tuk's.  What is perhaps more interesting is that despite this was under an agreement from old, this could at least get it in the minds of Exxon Mobil Corp. shareholders that the oil giant is willing to look at divesting some units.  We'd urge against falling for that thought too much because the company would probably never want to bust its empire up on its own.  But this will at least be what some investors ponder.

If you want to compare this financially, Exxon Mobil has a market cap of some $460 Billion.  This is only about one-tenth of one-percent of the total size of the company's entire equity value.  Exxon as a whole also generated US$404 Billion in total revenues in 2007.  This is a small drop in the bucket (or barrel).

Jon C. Ogg
March 31, 2008

Jon Ogg produces the Special Situation Investing Newsletter and he can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Did Banks Sell Their Auction-Rate Securities To The Fed? (LEH)(UBS)(C)(MER)(MS)

Over the weekend UBS (NYSE: UBS) said that it would be cutting the value of auction-rate securities in it client's accounts. According to CNN Money "UBS using an internal model to value the securities, will mark them down and inform clients via their online statements. The markdowns will range from a few percentage points to more than 20." Other big banks are likely to follow suit.

UBS held $5.9 billion of  the securities in its own accounts at the end of last year. In all likelihood  there was also billions of dollars of the paper held by Citigroup (NYSE: C), Merrill Lynch (NYSE: MER), Morgan Stanley (NYSE: MS), Lehman (NYSE: LEH), and other large financial firms.

All of those auction-rate securities may be gone from their balance sheets now, in essence passed to the Fed as collateral for cash from the agency. Primary broker dealers borrowed $37 billion from the Fed last Wednesday. Most other days the amounts is probably in the arena. The Fed has also created a $200 billion facility for banks.

Customers holding auction-rate securities which they cannot sell may be vexed at the financial firms which started the market and then closed it down. The brokers and banks did not want to take on the risk of supporting the auctions with there balance sheets. Those firms have a way out through the Fed's door, exchange auction-rate paper which is below par for cash.

The institutions, corporations, and individuals holding the paper are stuck.

Douglas A. McIntyre

American Water Works Sets IPO Terms... $1.6 Billion For Starters (AWK)

American Water Works Company, Inc. has finally sets its pricing range in its latest SEC FILING today.  This was the fifth such amendment to the original filing in 2007.  The mostly regulated water utility will still trade under the proposed ticker "AWK" on the NYSE.

The initial pricing terms are putting this in a range of $24 to $26 per share, for 64 million shares.  In our last update, we noted the underwriters were as follows:  Goldman Sachs, Citi, Merrill Lynch all listed as lead underwriters; Credit Suisse, JPMorgan, Morgan Stanley, and UBS; and co-managers listed as Edward Jones, Janney Montgomery Scott, Societe Generale, Wachovia Securities, Boenning & Scattergood, Cabrera Capital Markets, HSBC, Stanford Group Company, and The Williams Capital Group.

We will covering this one routinely via our open email distribution list.  At the mid-point of the range, this IPO would yield gross proceeds of $1.6 Billion.

Jon C. Ogg
March 31, 2008

Jon Ogg produces the Special Situation Investing Newsletter and he can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Merck & Schering-Plough Face Cholesterol Firing Squad (MRK, SGP)

Usually drug companies look forward to presenting data on their drugs and medical treatments.  The the American College of Cardiology meeting was this weekend, and the findings and recommendations are worse than bad. 

Shares of Schering-Plough Corp (NYSE: SGP) and Merck & Co (NYSE: MRK) are being hit sharply this morning.  Doctors at this prominent medical meeting recommended that patients try older cholesterol drugs before trying these companies' newer medicines.

Vytorin and Zetia generate roughly $5 Billion in annual sales and many have questioned the overall results of these for several months.  Doctors are now recommending older statins in high doses, followed by other treatments before putting clients on these drugs.  So these will be garnered to a last line of defense drug group, which will effectively kill the sales if doctors on the local level follow this recommendation.

So far, we have seen Schering-Plough downgraded at both Lehman Brothers and at Goldman Sachs.  Lowering cholesterol doesn't seem to matter if the arterial plaque still builds up.

Schering-Plough shares had been hit by almost 30% since the questions had started coming out about the efficacy of the drugs.  That was before the drop today.  Shares of Schering-Plough Corp (NYSE: SGP) are down 22% pre-market at $15.08 and shares of Merck & Co (NYSE: MRK) are down 10% at $39.70 in pre-market trading this Monday. 

Jon C. Ogg
March 31, 2008

Citi Restructures Itself, Well Sort Of (C)

Citigroup Inc. (NYSE: C) is making some organizational changes today.  The troubled financial and banking supermarket has announced a reorganization of Citi's structure with what it hopes to achieve greater client focus, connectivity, and clear accountability.

Citi has established more of a regional structure to bring decision-making closer to clients, and leaders of the geographic regions will have the authority to make decisions at the local level.  Each geographic region will have a single chief executive officer who reports to CEO Vikram Pandit.

 

Teresa A. “Terri” Dial has also been appointed as CEO of Citi Consumer Banking in North America and named Global Head of Consumer Strategy, reporting directly to Citi Chief Executive Officer Vikram Pandit.  This will help to effect a split of the card unit from its banking operations.

Could a regional break-up come instead of a unit break-up?  Highly unlikely.  Could this lead to a separate card business down the road?  Possibly.

Shares of Citi closed at $20.83 Friday and pre-market indications aren't giving this any great marks nor any poor ones so far.  Shares are indicted flat, although that may change as we get within two-hours of the market open. 

Jon C. Ogg
March 31, 2008

Jon Ogg produces the Special Situation Investing Newsletter and he can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Top 10 Pre-Market Analyst Calls (GFIG, GU, HTZ, MBT, NSM, PM, SGP, TOC, TIBX, VOD)

These are not all of the calls we are seeing this morning, but these are the top analyst calls we see affecting shares in pre-market trading this Monday morning:

• GFI Group (NASDAQ: GFIG) started as Market Perform at KBW.
• Gushan Environmental Energy (NYSE: GU) downgraded to Neutral from Buy at Piper Jaffray.
• Hertz Global (NYSE: HTZ) downgraded to Neutral from Buy at UBS.
• Mobile Telesystems (NYSE: MBT) raised to Outperform at Credit Suisse.
• National Semiconductor (NYSE: NSM) started as Market-weight at Thomas Weisel.
• Philip Morris International (NYSE: PM) started as Overweight at Lehman.
• Schering-Plough (NYSE: SGP) downgraded to Equal-weight from Overweight at Lehman Brothers.
• Thomson (NYSE: TOC) downgraded to Hold from Buy at Deutsche Bank.
• TIBCO Software (NASDAQ: TIBX) downgraded to Underperform from Hold at Jefferies.
• VODAFONE (NYSE: VOD) downgraded to Underweight at Morgan Stanley.

Jon C. Ogg
March 31, 2008

Aloha Airlines: A Canary In The Coal Mine? (AMR)(NWA)(DAL)

Aloha Airlines went into Chapter 11 last week. That was not enough. Now the carrier says it is ending passenger service after 60 years of operation.

Aloha is small and flies in only one market, but the reasons for its demise still had to do with falling ticket prices forced down by competition and risking fuel prices.

It is no coincidence that carriers like AMR (NYSE:AMR), Delta (NYSE:DAL), and Northwest (NWA) are near their 52-week lows. Someone, somewhere thinks that one or more of these airlines won't make it, at least in its current incarnation. And, that would probably not be a bad bet.

One of the reasons, perhaps the sole reason, that Northwest (NWA) wants to merge with Delta (DAL) is because of perceived cost savings, Whether those are real or not doesn't seem to matter. There is a desperation to the push to combine airlines which is a sign that management does not see any other way out of the current toxic environment.

But, mergers may not save anyone. The industry may have to go through a Chapter 11 filing or two. It happens to airlines about once a decade. Why should this time be any different?

Douglas A. McIntyre

Has Wal-Mart (WMT) Lied To Us?

Most large corporations amplify the distrust that the common man has for them by making misstatements from time to time. It is Wal-Mart's (WMT) turn in the gauntlet of public opinion.

The world's largest retailer seems to be making claims that shoppers who hit its stores will save $2,500 a year. It may have taken a room full of math professors to come to that number, and Wal-Mart thinks it is right.

"The figure represents the company’s calculation of its overall impact on an American household, not the average savings for Wal-Mart shoppers, and this has led an influential watchdog group to recommend that the campaign be fixed or halted," according to The New York Times. So, do families who shop at Wal-Mart save more than families who do not? Unclear.

It is less expensive to shop at Wal-Mart than at Tiffany (TIF) and the selection is better. But, it may not be less expensive than Target (TGT). The calculus may be a little misleading, but that really has not been proved.

Wal-Mart is implying that if everyone came to its stores they would be better off in terms of their household budgets. Most people who work for watch-dog groups can probably afford to shop at CostCo (COST), so how would they know?

Stuff at Wal-Mart is cheap whether people want to shop there or not. Trying to negate or confirm the dollar amount is like chasing your tail. Seekers of the truth should have better things to do.

Douglas A. McIntyre

Apple (AAPL): The No.1 Brand In The Galaxy

A new piece of research shows that Apple (AAPL) has the largest impact of any global brand. Reuters writes that "The poll by online magazine brandchannel.com asked its readers to identify the brands with the greatest impact on their lives, and say how they affected readers' behaviour and their view of the world."

Microsoft (NASDAQ:MSFT) turned up as the brand most respondents would like to see "revamped". The poll covered 2,000 people in 107 countries.

The data shows how fleeting the force of well-regarded fame can be. In 2000, Apple was a company with a niche PC, the Mac. Much of the company's rise to respect is due to the iPod, which has sold 140 million units since it was introduced in 2001. The product now comes in zillions of colors and incarnations.

The success of the iPod has allowed Apple to make the audacious move of entering the cellular handset market with the iPhone. It has done this despite competition from much large companies with brands which have been in the market for over a decade, especially Nokia (NOK), Motorola (MOT), and Samsung.

Getting to the top is one thing. Staying there is another. Apple will almost certainly need a new product line to hold its spot. It is in a good position to go into the fruit business.

Douglas A. McIntyre

Yahoo! (YHOO) Chases The Women's Vote

Yahoo! (YHOO) has started another business which Microsoft (MSFT) can shutter when it buys the big web portal.. Yang & Company are starting a site aimed at women ages 25 to 54. According to The Wall Street Journal "it a key demographic underserved by current Yahoo properties."

That may be because it is overserved elsewhere and women have only so much time to spend on the internet each day, save agoraphobics.

Large womens magazines which include properties with loyal following like Vogue, Good Housekeeping, Women's Day, and Allure have had websites for years. NBC owns large women's website iVillage. What can Yahoo! offer that is not already in the market?

Nothing.

Douglas A. McIntyre

As Money Flees Equity Funds "Dry Powder" Moves To Sidelines

A mystery wrapped in an enigma. Money is cashing out of equity funds at an alarming rate. Much of that goes into money markets funds. If the stock market ever goes up again, that liquid capital could come back and fuel a rally. But when? And, in the meantime, does investment capital continue to pull out of stocks?

According to the FT, a study from Emerging Portfolio Fund Research shows that $100 billion was taken out of equity funds in the first quarter. Most of that came out of funds with stock investments in the US and Europe. While the withdrawals may hurt equity fund company earnings, it hurts the stock market much more. As investors yank money to the sidelines, funds have to sell stocks to supply the capital for people to cash out. That, in turn, helps drive markets further down. But, a stock rally might bring that money back.

Every silver lining has a cloud. The falling performance of equity funds will further withdrawals which could easily extend into the second and third quarters. Doom without a prophet.

The optimist's view of this is based on the perverse notion that, once markets begin to move up, cash from money markets will flood into the market to chase the rising value of stocks. The trouble with this reasoning is that investors have be burned by several sucker rallies over the last year, and they may not be so quick to follow the next caravan. Capital could slip into Treasuries or corporate bonds.

Theories are good until practice proves them wrong. Investors are not anxious to return to the stock markets.

Douglas A. McIntyre

Media Digest 3/31/2008 Reuters, WSJ, NYTimes, FT, Bloomberg

According to Reuters, the Treasury Department will announce a proposed major overhaul of the US financial regulatory system.

Reuters writes that Yahoo! (YHOO) introduced Shine, a site for women.

Reuters writes that the Apple (AAPL) brand is the one which has the most impact on world consumers according to a new survey.

The Wall Street Journal writes that IAC/Interactive (IACI) faces a number of market challenges now that it has won a case giving CEO Barry Diller the right to break-up the company.

The Wall Street Journal writes that Lehman (LEH) lost $350 million in a fraud and will sue Japanese company Marubeni.

The Wall Street Journal writes that a medical panel found that cholesterol drugs sold by Merck (MRK) and Schering-Plough (SGP) were no more effective than older, less expensive drugs.

The Wall Street Journal writes that US stock markets are doing better than most exchanges in other countries.

The Wall Street Journal reports that Google (GOOG) and DoubleClick now dominate the ad serving market.

The New York Times writes that several groups have attacked Wal-Mart's (WMT) claims about how much it saves consumers.

The New York Times writes that the number of people using food stamps will hit a record this year.

The New York Times reports that Wall St. is nervous that there will be another financial catastrophe involving debt instruments which have not gotten into trouble yet.

The FT writes that investors have pulled almost $100 billion out of equity funds in the first quarter.

Bloomberg writes that Citigroup (C) will separate its credit card unit from its consumer bank.

Douglas A. McIntyre

Asia Markets 3/31/2008 (LFC)(CHU)

Markets in Asia were down.

The Nikkei fell 2.3% to 12,536. Hitachi was down 5.3% to 591. KDDI was down 4.7% to 609000.

The Hang Seng fell 1.9% to 22,840. China Life (LFC) was down 4.1% to 26.8. China Unicom (CHU) was down 3.7% to 16.3.

The Shanghai Composite sold off 3% to 3,473.

Data from Reuters.

Douglas A. McIntyre

How Banks Will Make Huge Money On Fed Borrowing (C)(JPM)(BAC)

Banks are going to the Fed and getting money at 2.5% and putting it onto their balance sheets.

What do the big money centers do with the money? They make investments in high-yield instruments. Or, put it into their proprietary trading operations. A bank that takes in $10 billion could make a $1 billion return on that over the course of a year, perhaps more, by "playing the spread" on the dirt cheap cash from Bernanke & Company.

The game the banks are playing at the expense of tax-payers due to inexpensive money from the Fed is outstanding for investors who hold stock in the firms. It could be one of the best money-making opportunities that companies like Citigroup (NYSE:C), JP Morgan (NYSE:JPM), and Bank of America (NYSE:BAC) have had in years. And, it is an opportunity which exists independent from the issues of their write-downs in mortgage-backed paper and LBO debt which they cannot syndicate.

On the face of it, the action by the banks would seem to be fine. But, in many ways it is not. One place that the money from the Fed is not going is to consumer and small business banking customers who need to re-finance mortgages, make capital expenditures, or add pay-roll to growing operations.

The Fed has a great deal of leverage now. It does not have to hand the money to big money center operations without strings attached. It could insist that some of that capital flow to consumer lending. But, that is not what is going on, which is fabulous news for bank stockholders.

Douglas A. McIntyre

Will Financial Stocks Make New Lows? (C)(JPM)(LEH)(MER)(WM)(WB)(MS)(WFC)

There has been some misplaced optimism that financial stocks bottomed earlier this month based on the notion that much of the bad news about write-offs had come out. Mid-month, the Fed increased the amount of money available to banks to $200 billion. The collateral the agency is willing to take is not of a much higher grade than wall paper.

Last week, unexpectedly, financial shares took a terrible turn South. Among the really large companies in the group most were off 10%. Lehman (NYSE: LEH), Washington Mutual (NYSE: WM), Merrill Lynch (NYSE: MER), and Wachovia (NYSE: WC) were down much more. As money moved into 10-year Treasuries at a rapid pace, Wall St. was signaling that it wanted out of the sector. Something is still rotten in De mark.

Oppenheimer downgraded earnings estimate for a number of companies in the sector last week. There are still rumors that Lehman is in trouble. The market's move into Treasuries may have something to do with that. The news that Lehman was bilked out of $250 million is not likely to help the shares.

Citigroup (NYSE: C) is now back below $21. If it drops another $3, it would breach its low. Wachovia is only slightly above its period low. Merrill (NYSE: MER) is close. And, Lehman fell every day last week.

Goldman Sachs estimates that US financial companies will eventually have credit losses of $460 billion. Only $120 billion of that has been written off already. Wall St. is concerned that there will be another Bear Stearns-like (NYSE: BSC) event. If most of the banks and brokerages make lows this upcoming week the majority of traders see something extremely bad coming.

The disaster which began last summer has not reached, to any great extent, the  home equity loan markets, money market pools. or the derivative credit swaps market. It only takes one more explosion to bring on another crisis.

Douglas A. McIntyre

Can Best Buy Earnings Save Its Stock? (BBY, CC)

On Wednesday we’ll get to see earnings out of Best Buy Co. Inc. (NYSE: BBY). The estimates from First Call are $1.65 EPS on $13.18 billion in revenues.  Next quarter estimates are $0.39 EPS on $8.58 billion in revenues. Estimates for fiscal Feb-2009 are $3.35 EPS on $43.08 billion in revenues.  These numbers may change by Wednesday morning.

Best Buy Co.’s 52-week trading range is $38.75 to $53.90. Analysts have an average price target north of $52.00 and shares closed at $40.56 on Friday.  Year-to-date, its shares are down close to 25%. We recently noted a Banc of America downgrade in the stock.

Normally we'd say to watch Circuit City (NYSE: CC) as well, but that company is so far imploded that a great Best Buy number would be interpreted as at Circuit City's loss and a bad report from Best Buy would just imply things are bad there too.

One note that we'd like to point out is that while the stock is close to a 52-week low, these prices are close to lows not seen since mid-2005.  If $40.00 doesn't act as a base for this electronics and appliances retail giant, then seeing this test $35.00 is not out of the realm of possibilities.  Much weak consumer spending should be factored in already, but Wall Street has been very bad in recent months of pricing in good news or bad news ahead of time.

Jon C. Ogg
March 30, 2008

Jon Ogg produces the Special Situation Investing Newsletter and he can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Agriculture Earnings Duel: Mosaic vs. Monsanto (MOS, MON, MOO)

This week we'll get to see two important earnings reports out of agriculture leaders.   Wednesday we’ll get to see earnings out of Monsanto Co. (NYSE: MON). Two key calls of late are that Goldman Sachs raised its sector expectations for the group with key earnings visibility.  Jim Cramer has also been staying high on agriculture. 

The estimates from First Call on Monsanto Co. (NYSE: MON) are $1.69 EPS on $3.56 billion in revenues.  Next quarter estimates are $1.29 EPS on $3.69 billion in revenues. Estimates for fiscal Aug-2008 are $3.18 EPS on $11.04 billion in revenues.  Monsanto did just recently guide higher because its stock had come off of highs considerably.  Analysts have an average price target of $139.00, and Monsanto's 52-week trading range is $53.95 to $129.28.  Since the end of 2007, Monsanto shares are up about 3%.  Its market cap is now roughly $62 Billion.

Friday we’ll get to see earnings out of Mosaic Co. (NYSE: MOS). The estimates from First Call are $0.95 EPS on $1.92 billion in revenues.  Next quarter estimates are $1.55 EPS on $2.55 billion in revenues. Estimates for fiscal May-2008 are $3.90 EPS on $9.01 billion in revenues. Estimates for fiscal May-2009 are $7.40 EPS on $12.23 billion in revenues.  Analysts have an average price target north of $122.00 and Mosaic Co.’s 52-week trading range is $25.95 to $119.78.  Since the end of 2007, Mosaic shares are up about 11%.  Its market cap is now almost $47 Billion.

On Monday, the USDA gives the Clarence Beeks crops report showing total numbers of acreage expected to be planted, and this may create many last minute revisions to each earnings report for anything tied to agriculture suppliers from seed to machinery to transportation.  As these companies are key contributors to the cop growers, these agriculture firms should already have at least a rough estimate of what is likely.  Lastly, investors may want to watch the Market Vectors Global Agribusiness ETF (AMEX: MOO) as the key ETF in the sector.  Of the total estimated percentage of the ETF's assets, Monsanto comprises 8.4% of assets and Mosaic comprises 8.5% of the assets.

Jon C. Ogg
March 30, 2008

Jon Ogg produces the Special Situation Investing Newsletter and he can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Research In Motion, This Week's Earnings Spotlight (RIMM, AAPL, PALM)

On Wednesday afternoon we’ll get to see earnings out of Research In Motion Ltd. (NASDAQ: RIMM). The estimates from First Call are $0.70 EPS on $1.85 billion in revenues.  Next quarter estimates are $0.74 EPS on $1.99 billion in revenues. Estimates for fiscal Feb-2009 are $3.46 EPS on $9.18 billion in revenues.  All of these estimates may be slightly different by the time that earnings actually get here, and they may very well be different with slight revisions on Monday.  We' follow up with more chart and options analysis as Wednesday afternoon approaches.

Despite woes of many other cellular phone companies, R-I-M raised its guidance very late in February.  It said it sees roughly 14 million subscribers for the quarter end.  It also put revenue expectations in the $1.80 to $1.87 Billion and its sees $0.66 to $0.70 per share diluted; First Call had estimates at the time as $1.85 Billion revenues and $0.69 EPS. 

When it raised its subscriber targets shares were at $104.55 after the pop from the news.  Shares closed Friday at $115.34.  R-I-M sits well above key longer-term moving averages as its 200-day moving average was $94.34 on Friday and the 50-day moving average was $98.81 as of Friday.  Those levels should ratchet slightly higher by Wednesday.  Analysts have an average price target north of $136.00.

Despite Palm Inc. (NASDAQ: PALM) not imploding after its earnings a week ago, it is becoming farther and farther behind as a competitor as far as Wall Street is concerned.  The thought had been that Apple Inc. (NASDAQ: AAPL) was going to release its 3G version of the iPhone later in the year.  Now some data points to May.  If this does come out in May, it will be a challenge now that Apple has opened its apps development to outside teams.  But if that doesn't come out until Q3 or later then R-I-M will have another dominant two quarters of being the smart phone leader on the enterprise level.  As far as whether or not Apple's 3G iPhone will ever truly challenge the enterprise space, that opinion varies wildly.

Jon C. Ogg
March 30, 2008

Jon Ogg produces the Special Situation Investing Newsletter and he can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Apple (AAPL): 3G iPhone A Month Out

One of the things that has kept some consumers from buying an Apple (NASDAQ: AAPL) iPhone is that it only runs on AT&T's (NYSE: T) 2.5G network. That makes the device's connection to the internet slow.

Now, the research arm of a major firm, Bank of America, says that the Apple iPhone 3G product will be out in a few weeks. According to AppleInsider "financial analyst Scott Craig points to channel investigations which show an iPhone capable of faster, third-generation cellular Internet access produced in small numbers in May."

The product would not only bring in consumers who want a handset with a faster connection. It could help Apple crack the business market. Most RIM (NASDAQ: RIMM) Blackberry products already have 3G capacity. Apple is targeting the Blackberry as it tries to take a piece of the enterprise market.

A 3G version of the iPhone could boost sales significantly and help Apple's numbers in the June quarter and beyond. It would be the largest single change in the handset since its release.

Douglas A. McIntyre

UBS (UBS) To Mark-Down Value Of Auction-Rate Securities

In a move that will bloody a number of its customers, UBS (UBS) will mark down the value of auction-rate securities held by its customers. According to The Wall Street Journal the bank "began on Friday to lower the values of so-called auction-rate securities held by its clients, a move that will be a jolt to customers who had been told they were investing in a "cash alternative."

The action could drop the value of some of the paper by as much as 20%. Other banks are likely to follow UBS's example

The auction-rate securities has held by individual investors, institutions, and some corporations who list them on their balance sheets as "cash equivalents". At the end of the first quarter,the public companies in this pool may have to take large write-offs for their holdings which will hit P&Ls.

There is a strong case to be made that the banks and brokerages which marketed auction-rate paper did so by saying that they were nearly as safe as cash. The auction-rate market traded well from 1985 until late last year. At that point troubled financial companies were not willing to keep the market liquid by buying excess securities from one auction and selling them in the next. This role as "specialists" kept the market operating smoothly.

There will almost certainly be a rash of lawsuits now from institutions and corporations. They will argue that the financial companies who "made the market" in auction-rate paper had an obligation to keep it trading if the securities were offered to investors as being as liquid as Treasuries.

If the auction-rate market continues to deteriorate, the lawsuits can go on as investors lose more with each passing quarter.

Douglas A. McIntyre

Barry Diller Gets Wish To Hammer IACI (IACI) Shareholders

Barry Diller and John Malone went after one another in court over whether Diller could get shareholders in IAC/Interactive (IACI) to approve breaking the company into five piece. Each would be traded as a public company. Malone's Liberty Media (LCAPA) said that the voting rights it had given Diller for its shares did not extend to the level which would allow them to be voted for dismantling the company.

The entire matter was pushed into the Delaware courts, and Diller won. According to MarketWatch "Vice Chancellor Stephen Lamb ruled Friday that "Liberty has failed to demonstrate that Diller has breached or threatened to breach any contractual duty he owes to Liberty," according to Lamb's 78-page opinion."

For shareholders, it is a Pyrrhic victory. IACI shares trade near a 52-week low at $20.49. The were above $40 in February of 2007. Revenue growth at the company's big HSN operation has been very modest. Operating income at the unit fell last year. The firm's Lending Tree operation has been badly damaged by the current downturn in housing. IACI's media operations, which include Ask.com, are too small to compete with operations like AOL and MSN.

Diller may have won in court, but it did nothing for his shareholders.

Douglas A. McIntyre

Northwest (NWA) To Push Deal, Cause Pilot Strike

Northwest (NWA) could not get pilots in line for a merger with Delta (DAL), so it is going to try to move forward without them. It can get ready for a pilot's strike that could cost hundreds of millions of dollars in revenue.

Northwest and Delta have been talking merger for several months. The pilots at the airlines have not been able to agree on seniority of a combined pool of fly-boys and this has held up the deal. Northwest wants none of that. According to The Wall Street Journal, NWA's "jumpstarted deal wouldn't include terms of a combined pilot labor agreement and the salary enhancements previously foreseen."

A married-up company can watch a pilot's strike take it down the drain.

The benefits of merging airlines is hardly clear anyway. Fuel costs will stay high, so there is little benefit there. Combining customer service means putting together computer reservations systems, Glitches in this process almost always anger customers and probably drive them to other carriers. Cutting employees like mechanics who are parts of unions causes the remaining workers to push for higher compensation.

Competing airlines usually try to use the mess created to pick up unhappy passengers.

Man the picket lines. The merger is probably going through.

Douglas A. McIntyre

Fraud Hits Lehman (LEH)

Lehman Brothers has been the victim of fraud to the tune of $250 million. According to The Wall Street Journal "swindlers used forged documents from one of Japan's biggest trading companies."

The money taken was for loans to a Japanese medical company secured by certificates from Marubeni, a large Japanese trading company.

Douglas A. McIntyre

Cramer Speculates on Dialysis Drug (AMAG, XCR)

On tonight's MAD MONEY on CNBC, Jim Cramer said he had a speculative biotech stock.  His pick in the sector is AMAG Pharmaceuticals, Inc. (AMAG) because of its soon to be approved  ferumoxytol, a newer and better intravenous iron treatment for kidney disease patients on dialysis.    Cramer thinks there are many reasons to like this one:

• ferumoxytol should be approved later in the year;
• he thinks a secondary has put pressure on it, although that gives it more cash to stabilize the stock;
• has its own strong sales force;
• was given an untimely and unwarranted analyst downgrade;
• will perform better than existing drugs on the market;
• a competing biotech drug received negative FDA comments on safety, yet that isn't AMAG's issue; and he thinks this can expand the market from $400 million annually to much higher.

We recently covered a speculative portable dialysis device maker (in prototype and development stage) on our "10 Stocks Under $10" called Xcorporeal, Inc. (AMEX: XCR) which has risen in the last two weeks since being included.  We have also reviewed some of the lower-tier dialysis names for this as well.

We would note that this AMAG traded at $56.00 after an upgrade just in early February and shares closed under $40.00 Friday.

Jon C. Ogg
March 28, 2008

Jon Ogg produces the Special Situation Investing Newsletter and he can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Investools Files Shelf Registration (SWIM)

Investools Inc. (NASDAQ: SWIM) has filed to sell up to 3,083,178 shares of common stock in an open shelf registration.  None of the shares are going to the company as this was filed on behalf of the selling shareholders that were the owners of thinkorswim.  This will allow the thinkorswim owners to sell any, all, or none of the shares if they so choose.

At today's prices, this would represent north of $33 million.  Investools market cap is $730 million.  At $11.06 and a $9.29 to $18.23 trading range, this offering is just a small drop in the bucket.

We frequently cover such issues around private offerings, management buyouts, private equity and more in our open email distribution list where we preview certain issues that will be in our twice-monthly Special Situation newsletter for our our subscribers.

Jon C. Ogg
March 28, 2008

Jon Ogg produces the Special Situation Investing Newsletter and he can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

The 52-Week Low Club (MPG)(MTG)(WLP)(APOL)(WOOF)

Maguire (MPG) Possible sale of the company fails. Shares sell down to $12.42 from 52-week high of $38.08.

MGIC (MTG) Company closes common stock offering, dilution. Stock off to $9.60 from 52-week high of $67.05.

Wellpoint (WLP) Dowgrade from Lehman. Sells down to $43.02 from 52-week high of $90.

Apollo Group (APOL) Misses quarterly numbers. Down to $39.41 from 52-week high of $81.68.

VCA Antech (WOOF) No real news. Just drifting down. Hits low of $26.55 from 52-week high of $46.23.

Douglas A. McIntyre

Corel Holder Wants To Take It Private (CREL, CAPA)

Corel Corp. (NASDAQ:CREL) has announced today it has received an unsolicited proposal from Corel Holdings, L.P., which is controlled by an affiliate of Vector Capital Corporation, the holder of 69% of Corel's outstanding common shares.

The Vector affiliate has proposed to make an offer to acquire all of Corel's outstanding shares that it currently does not hold at a price of $11.00 cash per share in US Dollars.  We would note that before the stock was halted, shares were trading at $10.80 and the stock has a 52-week trading range of $6.94 to $14.37.  Vector has stipulated that the offer would be conditional upon satisfactory confirmatory due diligence and Corel's existing credit facility remaining in place following the consummation of any transaction, among other things.

Corel's Board of Directors has formed a Special Committee of independent members of the Board consisting of Ian Giffen, Steven Cohen and Daniel Ciporin.  The group will assist in evaluating and responding to the proposal and other related strategic considerations.  Corel said it will not provide further comments at this time but will provide updates as further information becomes available. There is also the pre-packaged statement that there can be no assurance that a transaction will be completed or, if completed, of its terms, price or timing.

We frequently cover such issues around private offerings, management buyouts, private equity and more in our open email distribution list where we preview certain issues that will be in our twice-monthly Special Situation newsletter for our our subscribers.

Corel is a leading developer of graphics productivity and digital media software whose offerings include WordPerfect, CorelDraw, Painter, and more.  We'd also note that Vector Capital recently had attempted to acquire Captaris, Inc. (NASDAQ: CAPA).  That was one we covered as having not gone through today. 

If you look above at the buyout offer versus where this one has traded, it doesn't look like this deal is an assured slam dunk that will be approved.  That answer won't be known until the firm makes a response.

Jon C. Ogg
March 28, 2008

Jon Ogg produces the Special Situation Investing Newsletter and he can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

Optimer Pharmaceuticals Files $100 Million Shelf (OPTR)

Optimer Pharmaceuticals, Inc. (NASDAQ" OPTR) has filed an open shelf registration last night with the SEC that will allow it to sell up to $100 million in any of the following types of securities:  Common Stock; Preferred Stock; Debt Securities; Warrants; Units.

The company is focused on discovering, developing and commercializing anti-infective products, and initial development efforts are to treat gastrointestinal infections and related diseases where current therapies have limitations.  The company currently has two late-stage anti-infective product candidates, OPT-80 and Prulifloxacin.

OPT-80 is the lead product candidate and is an antibiotic that is currently in two Phase III registration trials for the treatment of Clostridium difficile-infections, also known as Clostridium difficile-associated disease, the most common nosocomial diarrhea. Prulifloxacin is an antibiotic that is currently in two Phase III trials for the treatment of infectious diarrhea in travelers, a community-acquired infection often caused by a broad range of bacteria.  The company developing additional product candidates using its proprietary technology, including its OPopS drug discovery platform.

We frequently cover secondary offerings and other issues around IPO's that include back door plays into IPO's, spin-offs, restructurings, recapitalizations, and more in our open email distribution list.

Optimer shares are down 1.4% at $6.21 today, and its 52-week trading range is $5.90 to $10.42.  Its current market cap is $172.95 million.

Jon C. Ogg
March 28, 2008

Jon Ogg produces the Special Situation Investing Newsletter and he can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.

ETF Launch: iShares MSCI Israel (EIS, ISL)

There is a new ETF that has launched and it is geared for US investors to invest in Israel. iShares MSCI Israel Capped Investable Market Index Fund (NYSE: EIS) seeks to track the MSCI Israel Capped Investable Market Index.

This index measures the performance of the equity markets in Israel an is designed as a custom, free float adjusted market cap weighted index thats measures broad based equity market performance in Israeli stocks traded primarily on the Tel Aviv Stock Exchange. The Underlying Index's three largest industries were health care, financials and materials.

There are very few actual closed-end funds or ETF's that are solely based on Israel, although some do include Israeli stocks in the region.  The First Israel Fund Inc. (AMEX: ISL) has fewer than 5 million shares outstanding and trades about 24,000 shares on an average day.

• Africa: The Final Emerging Market Frontier... GAF, EZA, TRAMX

Jon C. Ogg
March 28, 2008

ETF Launch: iShares MSCI Turkey (TUR, TKF)

There is a new ETF that has launched and it is geared for US investors to invest in Turkey.  iShares MSCI Turkey Investable Market Index Fund (NYSE: TUR) seeks to track the MSCI Turkey Investable Market Index. 

The index measures the performance of Turkish stocks and is a free float adjusted market cap weighted index.  It is designed to measure broad based equity market performance in Turkey and consists of stocks traded primarily on the Istanbul Stock Exchange. The Underlying Index's three largest industries were health care, financials and materials.

Turkey is also a difficult location for US investors to make investment bets.  Turkish Investment Fund Inc. (NYSE: TKF) is one of the few vehicles curre