Under The Radar News - Monday

by: SA Eli Hoffmann

Munis: Dislocation of a lifetime. Seasoned muni bond investors say current yields -- 16% higher than Treasurys in 30-year debt and 60% higher on two-year notes (!) -- present the opportunity of a lifetime; tax exempt munis usually trade at a 10-20% discount to Treasurys. Prices are being lower by hedge funds who are now forced to sell their holdings to unwind complex bets gone bad.

Too much gloom, or too much hope? While it's possible troubled markets have already bottomed, lending data seem to signal there is more likely excess hope than an overabundance of gloom. Potential credit-crisis losses of $600B could drop U.S. GDP growth another 1.5%.

China Mobile to Apple: We're ready to talk. China Mobile (NYSE:CHL) is not in talks with Apple (NASDAQ:AAPL) to distribute the iPhone, but says it would like to be. Revenue sharing is assumed to be one of the issues holding up talks, which could see Apple gain access to China Mobile's 350 million (!) subscribers.

Gas guzzlers cutback. U.S. drivers are showing the first signs of gasoline thriftiness amid soaring energy prices, with consumption down 1.1% from a year ago -- the biggest drop in 16 years. Fuel-efficient cars and crossover vehicles are getting the nod, while large sedan sales are plummeting.

TV ad execs see strong upfronts. TV marketers expect stronger "upfront" sales this year. "We don't really see a market slowdown in spending at this time," Disney's Mike Shaw says. Cable networks such as Time Warner (NYSE:TWX) are doing their best to erode the dominance of broadcasters such as CBS (NYSE:CBS).

Subprime supplants terrorism. Economists surveyed by the National Association for Business Economists [NABE] say subprime-mortgage and credit-market losses remain the biggest threats to the U.S. economy. 52% pegged subprime/credit woes as their number-one worry; 10% cited inflation while 9% focused on terrorism. Two thirds think interest rates will be lower over the next six months.

Oil nations rethink cuts. OPEC nations may leave output targets unchanged at Wednesday's meeting, despite previous plans to cut production to account for seasonal lack of demand. “Even if OPEC is worried about a drop in demand, they don’t want to be blamed for a recession,” Deutsche Bank's Adam Sieminski says.

ESPN goes big screen. ESPN will collaborate with parent Disney (NYSE:DIS) and Creative Artists Agency to produce and distribute sports films. The move signals ESPN's commitment to remain the “Worldwide Leader in Sports” amid growing competition from web-based video, and retain its $3.50/month subscription premium over most cable channels which charge less than $1. Sports movies are considered among the most challenging to produce.

Tune in for Atari announcement. Sources say Atari (PINK:ATAR) will make a major announcement this morning. One possibility is that gaming guru Phil Harrison will join the company.

RealNetworks may pursue Scrabulous. RealNetworks (NASDAQ:RNWK) may make a play for Facebook app. Scrabulous, which grosses about $25,000/month and has 700,000 players/day. RNWK has licenses from Scrabble creators Mattel (NASDAQ:MAT) and Hasbro (NASDAQ:HAS).

Virgin ponders sale of TV unit. Virgin Media (NASDAQ:VMED) is considering selling its TV channels, which could arouse the interest of BSkyB (BSY), NBC (NYSE:GE) and perhaps the BBC. Analysts estimate the sale could bring in £800M. Virgin has retained Goldman Sachs (NYSE:GS) as an advisor.

Talk with us... or else. The only thing that will prevent Microsoft (NASDAQ:MSFT) from attempting a boardroom coup at Yahoo! (NASDAQ:YHOO) within the next week is if Yahoo agrees to enter formal talks on its $41B bid.

Cablevision bull bails. Cablevision (NYSE:CVC) bull Rich Greenfield says investors should get out, after the company spent $150M for a 35% stake in concert promoter AEG. Greenfield's concerned the move indicates CVC is trying to transform itself into a live events company, and may be part of a string of deals that are likely to frustrate shareholders.

Fore!(ty million). Comcast (NASDAQ:CMCSA) is buying tee-time retailer GolfNow.com for about $40M. The deal seems to be a good mesh with its Golf Channel network. GolfNow says it sold 1.8M rounds last year.

ComScore missed boat: Google's on fire. Bear Stearns analyst Bob Peck thinks SearchIgnite has the inside scoop on Google's (NASDAQ:GOOG) click-through revenue, which it says are up 45% through Feb. 15. February has been very strong.

Ask.com to stay 'special'. Online search site Ask.com (IACI) is not getting rid of its specialized search technology, despite reports to the contrary. A report on Silicon Valley Insider Friday said Ask.com would ditch its Teoma engine and go with generic Google (GOOG) search.

Countrywide: Ouch. An SEC filing reveals Countrywide Financial (CFC) saw a huge jump in overdue payments on ARM mortgages, to 5.4% from 0.6% a year ago. 71% of its borrowers are making only minimal payments, and half of its $87B mortgage portfolio are on homes in California and Florida, the two states hardest hit by the housing slump.

Time to pick up pharmas. Industry experts say the markets have factored all potential bad news into drug stocks, but very few of the positives. Analysts like Merck (NYSE:MRK) and Schering-Plough (SGP), which dropped last month after a study found their joint cholesterol drug Vytorin was no better than Zocor. Other suggestions: Novartis (NYSE:NVS), Abbott (NYSE:ABT), Biogen (NASDAQ:BIIB) and Gilead (NASDAQ:GILD).

Will Verizon make a move on Sprint? With shares of Sprint Nextel (NYSE:S) so low, the time may be ripe for Verizon (NYSE:VZ) to pursue it. Even at a 20% premium, VZ would be paying $450/customer, vs. the whopping $1,860 Cingular paid AT&T Wireless in 2004.

Egg seller sizzles. The average retail price of a dozen eggs jumped 28.3% to $1.68/dozen in 2007, while wholesale prices jumped 58.3% to $0.93/dozen. All good news for somewhat obscure Cal-Maine Foods (NASDAQ:CALM), number-one U.S. fresh shell-egg distributor. Earnings grew 526% last quarter on a sales surge of 62%. Recent restrictions on hens-per-cage and new facilities are also positives.