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  • Microsoft talks tough. On its FQ3 earnings call, Microsoft (NASDAQ:MSFT) rehashed its threat to wage a proxy war to take over buyout target Yahoo (NASDAQ:YHOO), but also sent a clear signal that it may just walk away. "The strongest argument that I’ve heard on why we should increase our bid, simply that we can afford to, is not one that I favor. We’ve yet to see tangible evidence that our bid substantially undervalues the company. In fact we see the opposite. Yahoo continues to lose search share and profitability continues to decline year-on-year... Unless we make progress with Yahoo towards an agreement by this weekend, we will reconsider our alternatives..." including, "taking the offer to Yahoo shareholders or to withdraw our proposal and focus on other opportunities both organic and inorganic," VP Chris Liddell said.
  • U.S. new home sales (.pdf) fell 8.5% in March to 526K, the lowest since 1991, falling short of 580K consensus. February's reading was revised lower to 575K from 590K. Inventory climbed to 11 months from 10.2 months, the highest reading in 30 years. The median new-home price is down 13.3% from a year ago to $227,600. Durable goods orders (.pdf) dipped 0.3%, but much-watched orders of civilian capital goods excluding aircraft were flat, rebounding from a 2% drop last month. New unemployment claims fell by 33K last week to a two-month low of 342K, surprising economists who were expecting 375K.
  • Merrill/TPG talk. Merrill Lynch (MER) and private-equity group TPG are discussing closer ties, including a possible capital injection. TPG offered Merrill as much as $3B last fall, but wanted to nominate a board member and meet with management frequently; Merrill ended up raising capital from a group led by Temasek of Singapore and the Kuwait Investment Authority.
  • Genentech sheds $200M lawsuit. Genentech's (DNA) Q1 earnings increased by $190M to $980M after the California Supreme Court reversed a $200M punitive damages ruling awarded to the City of Hope for a breach of contract related to unpaid drug royalties. Genentech still has to pay the $300M judgement for breach of contract.
  • Yahoo opens up, partners with CNET. Yahoo (YHOO) announced a previously outlined move to open its portal to third-party developers, which will enhance Yahoo with social-networking functionality. CNET (NASDAQ:CNET) and Yahoo also announced a three-year partnership in which CNET will become Yahoo's major provider of tech news, and the two will sell ads on each others sites.
  • Delta/Northwest merger gets friendly reception. Lawmakers were quite receptive to the pending merger of Delta (NYSE:DAL) and Northwest (NWA), but said other potential mergers (i.e. UAL/CAL and AMR/LCC?) worried them more.
  • Honda hanky panky? Japan's tax bureau accuses Honda (NYSE:HMC) of evading $1.3B in taxes.
  • Sun scoops up chip designer. Sun (JAVA) is buying Montalvo Systems' assets, which designed but never produced an energy-efficient multicore CPU that would rival those of Intel (NASDAQ:INTC) and AMD (NYSE:AMD). Venture capitalists sunk more than $73M into Montalvo, which is thought to have sold for a paltry $5M.
  • AOL traffic jumps 15%. Traffic to AOL sites grew by 15% in Q1 to 56.5M unique visitors. AOL went free in 2006. With its content garnering more eyeballs, all AOL needs to do is to figure out how to boost its lagging ad revenues.
  • Investors eye RBS insurance business. A private-equity consortium is considering a bid for Royal Bank of Scotland's (NYSE:RBS) insurance assets, including Direct Line and Churchill, which it put up for sale this week. They could go for up to £10B.
  • Essar Steel looks like it will bid on Esmark's (ESMK) Wheeling-Pittsburgh Steel, joining Russian steelmaker Severstal.
  • 3G BlackBerry delay. Sources say Research In Motion (RIMM) may delay the launch of its much-anticipated 3G BlackBerry it is developing for AT&T (NYSE:T) from June to August.
  • NTT DoCoMo (NYSE:NTT) said it will repurchase 2.1% ($1.4B) of its outstanding shares.
  • DryShips takes control of Ocean Rig. DryShips (NASDAQ:DRYS) bought another 28.5M shares of Ocean Rig ASA, giving it a 66.67% stake in Ocean Rig and effective control of the company. Shares gained 2.2% in AH trading.

Earnings: Thursday After Hours

  • Altria Group (NYSE:MO): Q1 EPS of $0.37 in line. Revenue of $4.41B vs. consensus of $3.83B. Shares fell 1.8%.
  • AmeriCredit (ACF): FQ3 EPS of $0.31 beats consensus of $0.21. Revenue of $639M vs. consensus of $630M. Shares climbed 6.8%.
  • Amgen (NASDAQ:AMGN): Q1 EPS of $1.12 beats consensus of $1.04. Revenue of $3.61B in line. Sees 2008 EPS of $4.00-4.30 vs. consensus of $4.18, and 2008 revenue of $14.2B-14.6B vs. consensus of $14.51B. Shares gained 0.2%.
  • American Express (NYSE:AXP): Q1 EPS of $0.84 beats consensus of $0.81. Revenue of $7.19B in line. Shares gained 4.54%.
  • Baidu.com (NASDAQ:BIDU): Q1 EPS of $0.67 beats consensus of $0.60. Revenue of $81.9M vs. consensus of $75.39M. Sees Q2 revenue of $111-114M vs. consensus of $101M. Shares gained 2.2%.
  • Chartered Semiconductor (CHRT): Q1 EPS flat beats consensus of -$0.01. Revenue of $388M vs. consensus of $368M.
  • Cheesecake Factory (NASDAQ:CAKE): Q1 EPS of $0.21 in line. Revenue of $393.8M vs. consensus of $396.3M. Shares gained 0.6%.
  • Chubb (NYSE:CB): Q1 operating EPS of $1.65 vs. consensus of $1.54. Shares fell 2.3%.
  • CNet Networks (CNET): Q1 EPS of -$0.04 in line. Revenue of $91M vs. consensus of $94M. Sees Q2 EPS flat vs. consensus of $0.01, and revenue of $100-104M vs. consensus of $103M. Sees 2008 EPS of $0.03-0.04 vs consensus of $0.07, and revenue of $440-460M vs. consensus of $444M. Shares gained 1.2%.
  • Genworth Financial (NYSE:GNW): Q1 EPS of $0.56 misses consensus of $0.63. Revenue of $2.75B vs. consensus of $3.01B. Sees 2008 EPS of $2.25-2.65 vs. consensus of $2.64. Shares fell 4.3%.
  • Ingram Micro (NYSE:IM): Q1 EPS of $0.37 misses consensus of $0.39. Revenue of $8.58B vs. consensus of $8.87B. Sees Q2 EPS of $0.34-0.37 vs. consensus of $0.37, and revenue of $8.5-8.75B vs. consensus of $8.56B. Shares fell 1.6%.
  • Interactive Brokers (NASDAQ:IBKR): Q1 EPS of $0.66 beats consensus of $0.50. Revenue of $529M vs. consensus of $436M. Shares gained 6.75%.
  • KLA-Tencor (NASDAQ:KLAC): FQ3 EPS of $0.67 beats consensus of $0.63. Revenue of $602M vs. consensus of $586M. Shares gained 0.8%.
  • McAfee (MFE): Q1 EPS of $0.43 misses consensus of $0.45. Revenue of $370M vs. consensus of $352M. Sees Q2 EPS of $0.42-0.47 vs. consensus of $0.37, and Q2 revenue of $360-375M vs. consensus of $352M. Sees 2008 EPS of $1.85-1.95 vs. consensus of $1.93 and revenue of $1.435-1.535B vs. consensus of $1.48B. Shares fell 1.7%.
  • MEMC (WFR): Q1 EPS of $0.84 misses consensus of $0.85. Revenue of $501M in line. Sees Q2 revenue of $540-570M vs. consensus of $566M. Shares fell 3.65%.
  • Microsoft (MSFT): FQ3 EPS of $0.47 beats consensus of $0.44. Revenue of $14.45B vs consensus $14.5B. Sees Q4 EPS of $0.45-0.48, lower than consensus of $0.48, and revenue of $15.5-15.8B vs. consensus of $15.56B. Sees 2008 EPS of $2.13-2.19, better than consensus of $1.87, and revenue of $66.9-68B vs. consensus of $60.18B. Shares fell 5%.
  • NetGear (NASDAQ:NTGR): Q1 EPS of $0.39 misses consensus of $0.43. Revenue of $198M vs. consensus of $204M. Sees Q2 revenue of $195M-200M in-line. Shares fell 11.1%.
  • Rackable Systems (RACK): Q1 EPS of $0.06 misses consensus (1 estimate) of $0.27. Shares fell 2.1%.
  • Rambus (NASDAQ:RMBS): Q1 EPS of -$0.12 misses consensus of -$0.06. Revenue of $40M in line. Shares fell 2.4%.
  • Riverbed Technology (NASDAQ:RVBD): Q1 EPS of $0.11 beats consensus of $0.10. Revenue of $73M vs. consensus $74M. Shares gained 1.7%.
  • Synaptics (NASDAQ:SYNA): FQ3 EPS of $0.35 in-line. Revenue of $79M vs. consensus of $78M. Sees FQ4 revenue of $90-95M vs. consensus of $88M. Shares fell 8.4%.
  • Vale (NYSE:RIO): Q1 EPS of $0.41 misses consensus of $0.52. Revenue of $8.05B vs. consensus of $8.74B. Shares fell 5%
  • Western Digital (NASDAQ:WDC): FQ3 EPS of $1.23 beats consensus of $1.09. FQ3 revenue of $2.1B vs. consensus of $2.05B.
  • YRC Worldwide (NASDAQ:YRCW): Q1 EPS -$0.81 not comparable to consensus of -$0.25. Revenue of $2.23B in line. Sees Q2 EPS of $0.30-0.40, better than consensus of $0.33.

Earnings: Friday Morning

  • Ericsson (NASDAQ:ERIC): Q1 net income of 2.6B kronor ($446M) misses consensus of 2.89B. Sales of 44.2B kronor beat consensus of 42.3B. Net profits fell 55%, but shares soared 22% after the company maintained its 2008 outlook and said cost-cutting measures are on track.
  • Honda Motor (HMC): Net profit fell 86% to ¥25.43B ($243.7M), its worst drop in 10 years. Sales fell 1% to ¥3.056T. Operating profit fell 33% to ¥168.84B. Analysts said Honda's forecast represents a worse-case scenario. "The company booked all of its losses now as it expects a difficult year," a Mizuho executive said, but added, "The stronger yen and higher incentives in the U.S. will hurt them this year."

Today's Markets

  • Asia Friday: Nikkei +2.38% to 13,863. Hang Seng -0.64% to 25,517. Shanghai -0.71% to 3,558. BSE Sensex +2.25% to 17,098.
  • In Europe, markets are broadly higher at midday. FTSE +0.28% to 6,068. CAC +1.09% to 4,983. DAX +1.11% to 6,897.
  • U.S. futures are up at 6:50 AM. Dow +0.48% to 12,893. S&P +0.52% to 1,393. Nasdaq +0.4% to 1,928.
  • Gold is down 0.18% to $888. Oil is up 1.44% to $119.17 a barrel.

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