Filed under: Google (GOOG), Microsoft (MSFT), Yahoo! (YHOO), News Corp’B’ (NWS)

The best defense is a good offense. If Yahoo Inc. (NASDAQ: YHOO) does not like Microsoft (NASDAQ: MSFT)’s buyout offering price of $31 per share and Microsoft insists this is a fare price, then Yahoo should turn the tables on the software giant and buy its internet search and advertising assets at a similar valuation. Since it is smaller, it should cost less. If this is too big for Yahoo to swallow, then they could do it with a partner — would Mr. Murdoch have an interest in this? Or maybe Mr. Diller or Mr. Malone would?

Another possibility would be to forget about an acquisition strategy and think merger!

The idea I like best is for Microsoft to spin out its internet assets and merge them with Yahoo’s. I think this approach would add value to Microsoft, the cash machine, and create a new, larger, independent internet competitor for Google Inc. (NASDAQ: GOOG). If it were independent from Microsoft, it may also facilitate on the deal’s acceptance as far as antitrust issues are concerned. If Murdoch’s News Corp (NYSE: NWS) took an interest, then MySpace could be added to the mix. It would be a very strong company.

Sheldon Liber is the CEO of a small private investment company and the design and research principal for an architecture & planning firm. Disclosure: I do not own shares of GOOG, MSFT, NWS or YHOO.

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Filed under: Deals, Google (GOOG), Microsoft (MSFT), Yahoo! (YHOO), Stocks to Buy

The soap opera known as Microsoft (NASDAQ: MSFT) and Yahoo! (NASDAQ: YHOO) looks like it is going to continue as Yahoo!’s board of directors rejects Microsoft’s $44.6 billion bid. This is part of the game that investment bankers affectionately call “posturing”. There are no other bidders for Yahoo! currently, but Microsoft desperately wants Yahoo!. Actually, Microsoft desperately needs Yahoo!.

So, what in the heck is going on here? Yahoo! shares fell to $19.18 after it reported disappointing numbers for the December 2007 quarter and forward guidance was ugly. Yahoo! has been struggling for a few years as Google (NASDAQ: GOOG) has been eating its and all other competitors’ lunch.

I spent 16 years in the investment banking world and when it came to valuing IPO’s, mergers and / or acquisitions, the very first question all parties involved would ask is “what are the comparables?” If company A wants to offer its IPO, we valued the IPO based on current public values of competitors, including price-earnings ratio, price-to-book value, price-to-sales, operating margins vs. industry comps, etc. Picture yourself looking to buy a home. The first thing you look at is the square footage comparison, neighborhood and other vital pieces of information of homes sold in your price range. It’s the comps. Same in the investing world.

So, why would Microsoft offer a price that is 67 times Yahoo!’s 2008 consensus earnings per share estimate for 2008? Consensus is for 2008 earnings per share of 46 cents. No one pays a 67 P/E ratio, especially for a company that has posted 5 straight declining quarters.Right? Wrong.

Google has blazed the trail in the search engine and on-line advertising/marketing sector. Google owns a market share of 76% and it’s a growing sector to boot. Get that important point down because it’s critical to Microsoft’s thinking: Google is TAKING MARKET SHARE IN A GROWING MARKET. That’s a double whammy. According to industry scorekeeper comScore, Yahoo!’s market share is 15%, and Microsoft’s at 3.9%, for a combined 19%, still one quarter the size of Google.

The sector is still posting growth rates of 40-45%, and international is even stronger. Microsoft knows it must act quickly and decisively if it intends to be any kind of player. Yahoo! also knows it and will act stubbornly, basically posturing for a better price than the $31 per share offer.

Microsoft realizes the sector is so profitable and so vast and IT WILL pay up for Yahoo!. if it has too. Heck, applying the same 67 multiple as a comp to Google’s consensus 2008 estimate of $20.15 per share, Microsoft clearly is stating that Google is worth $1,350 per share.

Sound far fetched? Just ask Microsoft and its investment bankers…I don’t think so…Just ask the management team of Microsoft’s recent acquisition aQuantive…It is actively pushing and encouraging Microsoft’s senior management team to go hard after Yahoo!.

Think Google has some upside from here??? Just ask Microsoft…

Georges Yared writes about great growth stocks today in GameOn Investing

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Filed under: Google (GOOG), Indices, Altria Group (MO), Bank of America (BAC), Chevron Corp (CVX), Countrywide Financial (CFC), News Corp’B’ (NWS), Honeywell Intl (HON)

Is The Dow Jones Industrial Average starting to show its age?

After all, few fund managers benchmark their funds against the best-known barometer of the stock market, though some exchange traded funds (ETFs) do use it. Pundits routinely decry the Dow as being unrepresentative of the broader market for not including Google Inc. (NASDAQ: GOOG) among other reasons. Nonetheless, the Dow usually remains the first to be mentioned in media reports about the stock market, while the S&P 500, the more widely used index, comes in last.

That’s why when the publisher of the Wall Street Journal, which began the index 111 years ago, makes changes, people pay attention. Dow Jones, now owned by News Corp (NYSE: NWS), today announced that Bank of America Corp. (NYSE: BAC) and Chevron Corp. (NYSE: CVX) would replace Altria Group Inc. (NYSE: MO) and Honeywell International Inc. (NYSE: HON), in the Dow, the first changes to the index since April 2004.

The addition of Bank of America is strange given the continued turmoil around the subprime mortgage scandal which has caused shares of financial companies to tumble. Shares of Charlotte-based Bank of America, which agreed last month to buy subprime mortgage poster child Countrywide Financial Corp. (NYSE: CFC) for $4 billion, are down 20% over the past year.

Altria is restructuring, so it’s not surprising that it would get kicked out of the index, but the decision to boot Honeywell is puzzling. Shares of the conglomerate are up 24% over the past year compared with a 9% gain in Chevron. The index keepers argued that the New Jersey company was dropped because it’s the smallest industrial in terms of revenue and earnings. Chevron has been in the Dow twice before and was booted most recently in 1999.

Remember that just because the Dow doesn’t like the stock, that doesn’t mean investors should dislike it as well.

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Filed under: Deals, Competitive strategy, Google (GOOG), Microsoft (MSFT), Yahoo! (YHOO), Time Warner (TWX)

There are only four big web portals. Microsoft (NASDAQ: MSFT) has bid for one of them, Yahoo! (NASDAQ: YHOO). If that deal came through, then the total would drop to three. Yahoo! does not much like the bid Microsoft has made and says it is worth over $40 a share, not the $31 that Microsoft has offered.

According to the Times in the UK, Yahoo! will approach Time Warner (NYSE: TWX) about a tie-up with AOL. The newspaper writes: “It is also understood that one option being explored is to restart merger talks with AOL, the online business owned by Time Warner. “A combined portal business would have many more unique visitors than MSN or Google (NASDAQ: GOOG) have. Since Yahoo! is No. 2 in search, it could extend that franchise with AOL. It would have to work out the fact that AOL gets its search from Google now and that deal could not be broken immediately.

If Yahoo! wants to stay independent, tying up with AOL may be its best option. Time Warner is trying to improve value at the property and owning a stake in Yahoo! might accomplish that goal.

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

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Filed under: Before the bell, International markets, Deals, Google (GOOG), Microsoft (MSFT), Yahoo! (YHOO), Time Warner (TWX), Motorola (MOT), Walt Disney (DIS), Countrywide Financial (CFC), Nortel Networks (NT), Recession

U.S. stock futures were mixed this morning to start the week, but now seem somewhere higher. As several economists think the U.S. is already in a recession, may also believe it will a short and shallow recession. According to Treasuries, the economy may recover within 6-9 months. Meanwhile, however, the euro region has been experiencing slowing growth, with many economists thinking that a euro region slowing will be harder to get out of. High inflation will make it difficult to implement an easing monetary policy. With all that in the background and ahead of a week full of economic data coming out, this morning investors will likely focus on a number of major corporate deals, and for now look for direction.

Last week, U.S. stocks closed with heavy losses following worries about the economy and credit crisis. Overseas, stocks have declined in Asia and Europe Monday.

Without any economic data due out today, investors will examine Yahoo! Inc. (NASDAQ: YHOO)’s reaction to Microsoft Corp. (NASDAQ: MSFT)’s unsolicited bid to buy the portal giant for $31 a share or $44.6 billion. According to reports, Yahoo’s board is set to reject Microsoft’s offer with speculations about that Google Inc. (NASDAQ: GOOG) is somehow working behind the scene. Still, Microsoft could try and take its offer to shareholder. If the board claims Microsoft’s current bid undervalues the company, some analysts believe Microsoft is prepared to offer as much as $35 per share for Yahoo.

Other reports, specifically from The Times of London, suggest that as Yahoo! is looking to defend itself, it may look to hold merger talks with Time Warner (NYSE: TWX)’s AOL. Other possibilities include the afforementioned Google and Disney (NYSE: DIS).

Meanwhile, the Wall Street Journal is reporting that as the wireless industry has experienced slow growth, Motorola Inc. (NYSE: MOT) and Nortel Networks Corp. (NYSE: NT) are in talks to join their wireless-infrastructure units to create a venture with sales of about $10 billion. This is unrelated to Motorola’s separate evaluation about its handset division.

Also, Countrywide Financial Corp. (NYSE: CFC) says it will “expand programs to help borrowers manage their mortgage payments regardless of the type of subprime loan they have or whether they have already fallen behind on payments.”

Finally, oil prices were volatile Monday, pushed higher by Venezuelan President Hugo Chavez’s threat to cut off sales to the United States, but weighed down by continued worries about a U.S. recession.

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Filed under: Earnings reports, Bad news, Industry, Allstate Corp (ALL), Options, Loews Corporation (LTR)

Allstate Corp. (NYSE: ALL) stock is declining this morning after competitor Loews Corp. (NYSE: LTR) reported a fourth-quarter profit, excluding investments, of 81 cents per share, 26 cents below analysts’ forecast of $1.07 per share. LTR blamed the disappointing earnings on a 50 percent decline in profit at its CNA Financial Corp (CNA) insurance affiliate, which could be a bad sign for ALL. If you think this stock won’t be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on ALL.

After hitting a one-year high of $63.73 in May, the stock has hit a new one-year low today. This morning, ALL opened at $46.56. So far today the stock has hit a low of $45.30 and a high of $46.60. As of 11:05, ALL is trading at $45.89, down 68 cents (-1.5%). The chart for ALL looks neutral and improving, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.

Continue reading Allstate (ALL) slips on Loews (LTR) earnings

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Filed under: Citigroup Inc. (C), JPMorgan Chase (JPM), American Express (AXP), Bank of America (BAC), Centex Corp (CTX), Merrill Lynch (MER), MasterCard Inc’A’ (MA), Federal Natl Mtge (FNM), Goldman Sachs Group (GS), Morgan Stanley (MS), Wachovia Corp (WB), Washington Mutual (WM), Toll Brothers (TOL), Wells Fargo (WFC), SLM Corp (SLM), Bear Stearns Cos (BSC), Recession

Judging by my latest emails, everybody wants to know “how should I play the financial sector right now?” Let me make it real simple for you: avoid this entire sector at all costs. Don’t buy them and don’t short them, at least not yet. I’ve been repeating the same thing over and over since December, so while I know this will leave many unsatisfied, nothing much has changed in two months. In fact, the recent downgrade concerns over bond insurers MBIA (NYSE: MBI) and Ambac Financial (NYSE: ABK), student lender Sallie Mae (NYSE: SLM) and more importantly, prime mortgage lender Fannie Mae (NYSE: FNM), means the situation has gone from bad to worse. Yes, we still risk economic disaster and that’s when defaulting consumers could really hurt credit card companies American Express (NYSE: AXP) and Mastercard (NYSE: MA).

But thanks to the lack of transparency in this industry, there’s simply no way to accurately judge how bad things really are and as I learned the hard way, accurately gaming disaster is next to impossible.

The good news is that if I had to guess, I’d say the chances of a true disaster are slim. Given that this seems to be an increasingly popular view, many of these financial stocks have been punished to the point of exhaustion. And just as I wouldn’t buy them, I wouldn’t short them here either. Despite the seemingly steady stream of negative news, the risk of further damage to shareholders and the overall market crashing all around them, broker stocks like Goldman Sachs (NYSE: GS), Bear Sterns (NYSE: BSC), Merrill Lynch (NYSE: MER) and Morgan Stanley (NYSE: MS) have basically stopped going down. They haven’t bounced much either, but the nation’s three largest banks Bank of America (NYSE: BAC), Citigroup (NYSE: C) and JP Morgan (NYSE: JPM) have managed that feat, with all three bouncing considerably off their lows.

Continue reading How to play the financial sector right now

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Filed under: Industry, Competitive strategy, eBay (EBAY), General Motors (GM), Options, Technical Analysis

eBay Inc. (NASDAQ: EBAY) stock is falling this morning after the company announced on Friday that it will list the entire inventory of General Motors (NYSE: GM) used-car segment. In addition, both GM and EBAY will develop marketing and other offerings designed to drive leads and sales to GM dealers. In theory, this should help out EBAY, but the stock is lower today as investors don’t think it is good enough news to overcome the slumping economy. If you think this stock won’t be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on EBAY.

After hitting a one-year high of $40.73 in October, the stock hit a one-year low of $25.64 in January. This morning, EBAY opened at $28.04. So far today the stock has hit a low of $27.60 and a high of $28.11. As of 11:00, EBAY is trading at $27.88, down $0.19 (-0.7%). The chart for EBAY looks bearish but improving, while S&P gives the stock its highest 5 STARS (out of 5) strong buy rating.

Continue reading eBay to list GM preowned inventory

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Filed under: Next big thing, New York Times’A’ (NYT)

Why do I have a Facebook account? First of all, I write about social media. Second, many people have asked me, “Are you on Facebook?”

So yes, I really had no choice in the matter.

However, after I setup my account, I wanted to delete it. The main reason was a change in email. Unfortunately, I couldn’t figure it out and as a result, I have two accounts.

Interestingly enough, I’m not alone. That is, according to a piece in the NY Times, it appears that it is not easy to delete an account. In fact, even when you figure out how to do so, the process can be cumbersome - and the data may still be on the servers.

Basically, I think this underscores the importance of being careful with social networks. In other words, don’t necessarily assume that your information will be private. And if you want to make some changes, it may prove to be a big pain.

More importantly, a social network may not add much to your productivity (if anything, it may be mostly a “time suck”). As for me, I rarely go to my profile, because I’m not sure what the benefits are.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates DealProfiles.com.

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Filed under: Major movement, Analyst reports, Deals, Rumors, Industry, Oracle Corp (ORCL), Options, salesforce.com inc (CRM)

Salesforce.com (NYSE: CRM) shares are higher today after a Piper Jaffray analyst reiterated his Buy rating and $70 price target on the stock, citing increased user satisfaction and the potential of higher revenues with the company’s adoption of the AppExchange program. But the real excitement on the Street stems from rumors that the CRM has approached Oracle (NASDAQ: ORCL) with a $75 a share sale offer. If you think that the company won’t fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on CRM.

After hitting one-year low of $37.24 in August, the stock hit a one-year high of $65.52 in December. CRM opened this morning at $53.06. So far today the stock has hit a low of $53.06 and a high of $55.90. As of 11:25, CRM is trading at $54.76, up $3.89 (7.7%). The chart for CRM looks bearish and steady, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.

Continue reading Salesforce.com (CRM) soars on buyout rumors

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