• Krafting a Cadbury deal. Cadbury (CBY) rejected a £10.2B ($16.7B) acquisition offer from Kraft (KFT) yesterday, saying the bid 'fundamentally undervalues' the company and paving the way for possible counteroffers, including from rivals Hershey (HSY) and Nestle (NSRGY.PK). The offer was a 31% premium to Cadbury's Friday close, and Kraft said it remains committed to reaching a deal. However, analysts suggested Kraft may have to raise its offer as much as 40% to get Cadbury to accept. KFT -2.3%, CBY +41% premarket (7:00 ET). (Read Kraft's press release (.pdf))
• U.K. mobile phone merger. Earlier this morning, Deutsche Telekom (DT) and France Telecom (FTE) announced plans to join their U.K. operations in a 'merger of equals,' surpassing Telefonica (TEF) as Britain's largest mobile phone operator. The joint venture will have 30M customers, control 38% of the U.K.'s highly competitive mobile market and generate £4B ($5.7B) of savings. Separately, Telefonica reached an agreement to expand its strategic alliance with China Unicom (CHU), giving the Spanish firm a stronger foothold in the world's largest mobile phone market. (Read the Deutsche Telekom press release)
• G-20 keeps banking reform alive. Over the weekend, G-20 finance ministers and regulators announced new, tougher guidelines that would force banks to raise billions more in capital over the coming months. Full details are not yet finalized, but central bank governors and bank supervisors from 27 countries said they would present concrete proposals by the end of this year. (Read the G-20's plans for strengthening the financial system (.pdf))
• AIG continues to shed units. AIG (AIG) may be looking to take its time on the sale of some major assets, but it's open to quick sales of smaller units. Case-in-point: Saturday's agreement to sell an asset-management division to Hong Kong tycoon Richard Li's Pacific Century Group for $500M, below the $800M price tag potential bidders were discussing several months ago. In its press release, AIG said the deal 'provides fair value' for the unit. Meanwhile, Chinatrust Financial has reportedly outbid rivals by offering $2.4B for AIG's Taiwan Nan Shan Life unit. AIG had targeted the unit to bring in $2B.
• Pro-Linux group closes in on MSFT patents. The Open Invention Network, a group which supports open-source software and includes such giants as IBM (IBM) and Sony (SNE), is nearing an agreement to acquire 22 of Microsoft's (MSFT) patents in an effort to avoid any legal threats that could discourage the adoption of Linux. Microsoft has suggested in the past that the Linux operating system may violate some of its patents. The patents are currently held by Allied Security Trust, which bought the patents from Microsoft earlier this year.
• Abu Dhabi challenges chip firms. Abu Dhabi's Advanced Technology Investment Co. [ATIC] agreed to buy Chartered Semiconductor Manufacturing (CHRT) for $1.8B in cash yesterday. ATIC's second major investment in the industry, the deal will allow its semiconductor joint venture to better compete with Taiwan's leading contract-chip manufacturers, including Taiwan Semiconductor Manufacturing (TSM) and United Microelectronics (UMC). (Read ATIC's press release (.pdf))
• WTO ruling gives Boeing fans ammo. After the WTO's preliminary ruling that Airbus received illegal subsidies from European governments, pro-Boeing (BA) lawmakers in the U.S. are pushing the Pentagon to keep the ruling in mind for its $40B tender to supply tanker planes. However, upside implications of the ruling may be limited, as "we live in a glass house of global subsidies" and future WTO victories may be harder to come by following the U.S. provision of billions of dollars to banks and automakers.
• Google shelves European book plan. Bowing to pressure from European publishers, Google (GOOG) said it will remove all copyright-protected European books from its book scanning program. Google also promised to put two non-U.S. representatives on the governing board of the Books Rights Registry, which will oversee Google's settlement with publishers. Shares +1% premarket (7:00 ET).
• OPEC happy with oil prices. Ahead of tomorrow's OPEC meeting, Saudi Oil Minister Ali al-Naimi said the oil market is in 'good shape' and 'everybody likes' the current price. The group is expected to leave output quotas unchanged. Taking advantage of the production cuts is Russia, which is surpassing Saudi Arabia in oil exports for the first time since the Soviet Union’s collapse.

Earnings: Tuesday Before Open

• Smithfield Foods (SFD): FQ1 EPS of -$0.56 misses by $0.01. Revenue of $2.7B (-14%) vs. $2.8B. (PR)

Today's Markets

Markets are up across the globe.

Electronics manufacturing is one of the large industries in the small city state of Singapore. The government's policies so far have been successful in attracting foreign capital and companies to invest in this sector.

There are four Singapore ADRs that are traded in the NASDAQ market.The following is a brief overview of these stocks:

Last week (7.2.09), XLNX lowered its guidance to -5.5% below Street expectations. A press release stated that the shortfall was due to "supply constraints on certain Virtex-5 devices that are in high demand." We noted that the high demand was consistent with recent data, esp surrounding China 3G infrastructure, and also noted that the Virtex-5 was manufactured at the 65nm node, which only accounted for 11% of UMC's revs. We reasoned that 65nm was a mature process, and thus yield issues were unlikely. This morning, a DigiTimes article, citing UMC's CFO Chi Tung Liu, confirms this.

Thus we reiterate our positive stance on several names:

The Chinese stimulus package announced in November last year has started impacting demand for consumer electronics products. Statistics released by the Chinese government indicate a 15.2% increase in May retail sales, the highest in four months. This, in turn, is pushing up demand for semiconductors used in cell phones, TVs and other electronic gadgets. During the course of the past one month, the top four foundries have turned more optimistic, citing higher Chinese demand and strength in consumer and computing markets.

Taiwan Semiconductor Mfg. Co. Ltd. (TSM) (Analyst Report), the largest semiconductor foundry, went back on its decision to cut capex spending in 2009. The company raised its capex estimate from $1.5 billion to $1.9 billion, similar to 2008 levels. It also decided to increase R&D headcount by 360 and design technology headcount by another 90. While the company's profitability could look like a positive in comparison to peers, TSMC continues to suffer the impact of a stronger Taiwanese dollar. This impacts profitability and makes it less competitive. Considering the given situation, one does wonder whether the headcount additions were not the result of last month's labor unrest rather than management's immediate plans to make R&D investments.

• Lewis may face SEC probe. Bank of America (BAC) CEO Ken Lewis may come under SEC scrutiny for failing to disclose mounting Merrill Lynch losses. Lewis had testified in February that the Treasury and Federal Reserve strongly pressured him to stay quiet on potential problems with the deal, a claim that both Bernanke and then-Treasury chief Paulson deny. Even if Lewis had been under government pressure, he was still required by law to disclose the potential losses to his shareholders. New York AG Cuomo suggested the SEC "appears to have been kept in the dark" about talks between Bank of America and the Fed and Treasury, while the SEC says it is now "actively reviewing the disclosure."
• Gov't plans for possible Chrysler bankruptcy. As Chrysler nears its deadline to cut its costs and reach a Fiat tie-up, the Treasury is preparing a bankruptcy filing out of 'due diligence.' As of yesterday afternoon, Chrysler was nearing a labor deal with its Canadian union and had substantially completed negotiations with the United Auto Workers as well. Chrysler's lenders and the Treasury have been going back and forth about the terms of a possible debt swap. However, some sources say Chrysler is preparing to file for bankruptcy as early as next week, regardless of whether it reaches a deal with lenders or Fiat.
• Fed opens up its books on Bear. The Federal Reserve provided more details on its efforts to shore up the financial system and the accompanying jump in its balance sheets. The Fed's combined assets hit $2.25T as of Dec. 31, a sharp rise from $1.33T a year ago. Of the $74B in assets the Fed took on from Bear Sterns and AIG (AIG), the Fed had an unrealized loss of $9.6B as of Dec. 31. The value of the Bear Sterns commercial mortgage holdings owned by the Fed was written down by 28% to $5.6B, and residential loans were written down by 38% to $937M.
• Madoff investors sue JPMorgan. Florida investors filed a lawsuit against JPMorgan Chase (JPM), claiming the bank 'entered into a conspiracy' with Bernie Madoff after learning his returns were false in September 2008. The investors lost $12.8M in Madoff's Ponzi scheme. According to the complaint, JPMorgan 'quietly liquidated its entire $250M cash position' with a fund that invested in Madoff while continuing to provide fee-generating services to Madoff's business.
• Morgan may spin-off trading unit. Morgan Stanley (MS) may make major changes to its biggest proprietary-trading desk, including spinning it out into a hedge fund or opening up the unit to outside investors. Sources don't expect a quick decision on the matter and say Morgan may choose to leave the unit unchanged. However, Morgan has already eliminated several proprietary-trading desks since the financial crisis began, in part because of the repercussions of the government's intervention in the financial industry.
• HSBC closes Japan units. HSBC (HBC) will close its equity research and trading businesses in Japan, laying off around 40 workers and moving the equity operations to Hong Kong. Several other banks have recently retreated from the world's second-largest economy, including UBS (UBS), Goldman Sachs (GS) and Citigroup (C).
• NYSE, Deutsche Borse resume talks. Deutsche Borse and NYSE Euronext (NYX) resumed talks on a possible deal, after potential merger discussions were abandoned in December. There are conflicting reports about the nature of the talks; some say the firms are less serious than the first time around and are unlikely to see a near-term tie-up, while at least one business publication reported the talks are in an advanced stage already and a deal could be struck in a few weeks.
• Promotions, Kindle boost Amazon. Amazon (AMZN) beat quarterly earnings expectations (see details below) as Kindle sales picked up and online shoppers were drawn to low prices on Amazon's website. Though some analysts have worried how deep discounting will affect Amazon's bottom line, the company reported operating margins for the quarter of 6.6%, among the highest in recent years.
• Microsoft hit by PC slump. Microsoft (MSFT) met expectations for quarterly earnings (see details below) but fell short on revenue, posting a 5.6% drop from the year before, its first ever decline in quarterly revenue. Four of Microsoft's five business divisions recorded lower sales, which executives blamed on a general pullback in PC spending by both consumers and businesses. The company expects the rest of the calendar year to 'remain very challenging.'
• EU passes rating rules. The EU approved new rules to create European oversight for ratings agencies. The rules primarily aim to avoid conflicts of interest in the ratings process and to improve the way agencies rate debt. They also demand some increased disclosure to ensure agencies understand the risks of the debt being rated.
• Moody's warns on U.K. finances. The pound fell against the yen, euro and dollar after Moody's said the U.K.'s finances are 'deteriorating rapidly' and the government is taking 'risks.' Moody's and S&P are reviewing the U.K.’s AAA sovereign credit rating after the government said the nation’s debt will reach £1.4T ($2.05T) over the next five years.
• U.K. GDP shrinks. The U.K. economy shrank a larger-than-expected 1.9% in Q1, the third consecutive quarter of output declines and the largest quarterly decline since 1979.
• Jobless claims rise. Initial Jobless Claims rose to 640K, up from last week's 613K (revised) and in-line with estimates. Continuing claims rose 93K to 6,137,000.
• Home sales dip. Existing home sales fell to 4.57M in March from 4.72M last month, short of the 4.7M expected by economists. NAR chief economist Lawrence Yun noted that first-time buyers seem to be returning, but sales in the upper price ranges remain stalled.

Earnings: Friday Before Open

• American Electric Power Company (AEP): Q1 EPS of $0.89 beats by $0.08. Revenue of $3.5B (+0%) in-line. Reaffirms full-year guidance. (PR)
• Ford (F): Q1 EPS of -$0.75 beats by $0.48. Revenue of $24.8B (-42.7%) vs. $22B. Says it's still on track to meet or beat financial targets, including breakeven or better in 2011. On track to reduce costs by $4B in 2009. Q1 cash burn $3.7B. Shares +14.7% premarket. (PR)
• Honeywell (HON): Q1 EPS of $0.54 in-line. Revenue of $7.57B (-14.9%) in-line. Full-year guidance in line. (PR)
• ITT Industries (ITT): Q1 EPS of $0.72 beats by $0.14. Revenue of $2.56B (-8.9%) in-line. Full-year guidance in line with expectations. (PR)
• Metavante (MV): Q1 EPS of $0.39 beats by $0.01. Revenue of $427M (+0.5%) in-line. (PR)
• Schlumberger (SLB): Q1 EPS of $0.78 beats by $0.05. Revenue of $6B (-4.6%) in-line. "We do not see any significant recovery in North American gas drilling before 2010." (PR)
• Xerox (XRX): Q1 EPS of $0.05 beats by $0.01. Revenue of $3.55B (-18%) in-line. Sees Q2 EPS of $0.10-0.12 vs. $0.14. (PR)

Earnings: Thursday After Close

• Amazon.com (AMZN): Q1 EPS of $0.41 beats by $0.10. Revenue of $4.89B vs. $4.76B. Sees Q2 revenue of $4.3-4.75B vs. $4.61B consensus. Says "Kindle sales have exceeded our most optimistic expectations," but no numbers. Shares +3% premarket. (PR)
• American Express (AXP): Q1 EPS of $0.32 beats by $0.20. Revenue of $5.93B (-18.1%) vs. $6.45B. Consolidated provisions of $1.8B vs. $1.2B last year "primarily reflecting additions to the lending credit reserves in view of increased write-offs and past due loans." Tier-1 ratio 14.8%. "While we did see some recent improvement in early delinquency rates, overall credit indicators reflected rising unemployment levels and the broad-scale weakness in the economy. Based on current indicators, we expect Q2 U.S. lending write-off rates on a managed basis to rise between 200 and 250 bps over Q1 levels. We expect an additional increase of 50 bps or less in Q3, before leveling off during Q4." "If permitted by our supervisors and if supported by the results of the stress assessment, we intend to repay the government investment of preferred shares and warrants." Shares +8.9% premarket. (PR)
• Amgen (AMGN): Q1 EPS of $1.08 misses by $0.07. Revenue of $3.31B (-8.4%) vs. $3.63B. Full-year guidance in line with expectations. Shares -2.5% AH. (PR)
• Burlington Northern Santa Fe (BNI): Q1 EPS of $1.05 beats by $0.09. Revenue of $3.42B vs. $3.68B. Shares +2.1% AH. (PR)
• CF Industries (CF): Q1 EPS of $1.23 beats by $0.52. Revenue of $681M (+2%) vs. $479M. Shares +4.1% AH. (PR)
• Chartered Semiconductor Manufacturing (CHRT): Q1 EPS of -$0.26 beats by $0.16. Revenue of $244M (-37.2%) vs. $240M. Sees Q2 EPS of -$0.09 to -$0.05 vs. consensus of -$0.35, and revenue of $321-333M vs. $269M. Shares +15% AH. (PR)
• Chubb (CB): Q1 EPS of $1.43 beats by $0.05. Shares +0.7% AH. (PR)
• DeVry (DV): FQ3 EPS of $0.70 beats by $0.03. Revenue of $392M (+34.7%) vs. $388M. Shares +0.7% AH. (PR)
• Host Hotels & Resorts (HST): Q1 EPS of $0.10 misses by $0.01. Revenue of $882M (-16.2%) in-line. Will sell 60M shares for cash for operations and to pay down debt. Shares -4.3% AH. (PR)
• Interactive Brokers (IBKR): Q1 EPS of $0.30 misses by $0.16. Revenue of $312.5M (-51.3%) vs. $422.5M. "Our strict risk controls have not completely immunized us from the secondary effects of the financial crises as our results have been largely impacted by competitive pressures on spreads. Exchange listed options are one of the few life rafts still afloat and more and more traders are trying to hold onto it." Shares -12.8% AH. (PR)
• Juniper Networks (JNPR): Q1 EPS of $0.17 in-line. Revenue of $764M (-7.1%) in-line. Shares +7.2% AH. (PR)
• KLA-Tencor (KLAC): FQ3 EPS of -$0.34 misses by $0.08. Revenue of $310M (-48.5%) vs. $300M. Shares -1.6% AH. (PR)
• MEMC Electronic Materials (WFR): Q1 EPS of $0.01 beats by $0.03. Revenue of $214M (-49.7%) vs. $217M. Won't provide guidance due to limited visibility. Shares -1.9% AH. (PR)
• Microsoft (MSFT): FQ3 EPS of $0.39 in-line. Revenue of $13.65B (-5.6%) vs. $14.09B. "We expect the weakness to continue through at least the next quarter." Shares +3.9% AH. (PR)
• Mohawk Industries (MHK): Q1 EPS of -$1.55 vs. consensus of -$0.85. Revenue of $1.21B (-30.5%) vs. $1.38B. Shares +7.1% AH. (PR)
• Netflix (NFLX): Q1 EPS of $0.40 beats by $0.09. Revenue of $394M vs. $391M. Sees full-year EPS and revenue in line. Shares -6.7% AH. (PR)
• Riverbed Technology (RVBD): Q1 EPS of $0.11 beats by $0.01. Revenue of $88.5M (+21.2%) vs. $85.12M. Shares +5.3% AH. (PR)
• SunPower (SPWRA): Q1 EPS of $0.05 misses by $0.19. Revenue of $214M (-21.8%) vs. $269M. Sees full-year EPS of $1.25-1.75 vs. $1.90. Shares -7% AH. (PR)
• Western Digital (WDC): FQ3 EPS of $0.30 beats by $0.18. Revenue of $1.59B (-24.6%) vs. $1.48B. Shares +2% AH. (PR)
• YRC Worldwide (YRCW): Q1 EPS of -$2.63 misses by $0.73. Revenue of $1.5B (-32.7%) vs. $1.61B. Shares +1.4% AH. (PR)

Today's Markets

Asia markets closed mixed Friday. Europe has moved higher, while futures are flat.

EVENT: Standard Microsystems Corporation (SMSC) reports FQ3 revenues in line, but FQ4 guidance sharply lower (-37.2% below street) (see conference call transcript).

Actel (ACTL) bottomed on Nov. 20 at $6.92 and now trades around $12, an increase of 70%+.

• WiMAX team unveiled. An alliance of cable and internet providers and chipmakers are poised to unveil a $3.2B WiMAX venture which will give them a two-year jump on rivals Verizon Wireless (VZ) (VOD) and AT&T (T). The partners include Sprint Nextel (S), Clearwire (CLWR), Comcast (CMCSA), Time Warner Cable (TWC), Google (GOOG) and Intel (INTC). The deal is considered a coup for Sprint CEO Dan Hesse. Contributions: CMCSA -- $1.05B; INTC -- $1B; TWC -- $550M; GOOG -- $500M. Sprint has already poured an estimated $5B into its WiMAX bet.
• Chambers cautions. Cisco (CSCO) CEO John Chambers called the company's FQ3 a solid quarter (see below), "given the challenges we are witnessing in the market," but said revenue growth is slowing to 9-10% from a previous 16-17%. Growth of switches sales was just 3%, down from 11% in FQ2.
• Disney defies. Net income rose a strong 22% at Disney (DIS), including 11% theme-park growth. "The parks had an extraordinary quarter when you consider the economic environment," CEO Robert Iger said. He noted a weak U.S. dollar is likely bringing more foreigners into the company's parts.
• Net surges 18% at Total. Total (TOT) said net income rose 18% to €3.6B thanks largely to soaring oil prices, although the company, which reports in euros, doesn't derive the full advantage of high-priced crude. Results slightly exceeded forecasts, and shares were down 1.1% in Paris.
• Gates says he's not looking elsewhere. Bill Gates said Wednesday he's not pursuing any other deals post Microsoft's (MSFT) failed courtship of Yahoo (YHOO). Then again, on Tuesday Gates said he wasn't ruling out alternative partnerships. Recent rumors place it at AOL's (TWX) door. Or perhaps LinkedIn, which yesterday pitched a VC funding round that would value it at a cool $1B.
• Yahoo puts shareholders on short stick. Disgruntled Yahoo (YHOO) shareholders have just 10 days to muster a challenge to the company's management after it finally set the date for its annual shareholder meeting.
• AMD investors grow hopeful. Shares of AMD (AMD) jumped more than 12% on anticipation of a much-awaited restructuring plan investors hope will help it cut costs and once again compete seriously with Intel (INTC). Analysts see AMD separating its design and manufacturing, teaming up with Chartered Semiconductor (CHRT) on the latter. AMD's annual shareholder meeting is tomorrow.
• Fannie gets regulatory boost. Shares of Fannie Mae (FNM) rebounded from a sharp earnings miss to close up almost 9% after Ofheo, its regulator, lowered its capital requirement to 15% from 20%. Fannie boosted credit loss provisions by $3.1B. Fannie said it expects to feast on opportunities created by the subprime crisis.
• Medtronic to cut workforce by 3%. Medtronic (MDT) is ditching about 1,100 employees across the globe. The market for ICDs has yet to fully recover from 2005 recalls.
• Citi gets new investment arm. Citigroup (C) is creating an alternative asset group within its investment bank that will focus on private-equity and infrastructure funds. The move is likely the first in a upcoming flurry of managerial shuffling at the troubled bank. Citi also disclosed the sale of another $2B in preferred shares.
• When it rains... UBS (UBS) is under investigation by U.S. federal authorities. There are allegations it helped clients evade taxes.
• Wachovia increases Q1 loss. Wachovia (WB) nearly doubled it previously-reported Q1 loss to $0.36/share ($708M) from a previous $0.20 ($393M) due to writedowns on a bank-owned life-insurance portfolio. Media reports say aggressive commercial real-estate lender "Large Loan" (Richard) Verrone is leaving the firm.
• Sunny day for Qimonda. Shares of Qimonda (QI) surged 18.5% after it announced a five-year deal with LDK Solar (LDK) that will see the latter supplying it with multicrystalline solar wafers, and on a partnership with German Centrosolar to enter the solar cell market.
• No Saudi depeg. Saudi Arabia says it will not abandon the dollar peg, despite 30-year high inflation.
• Verizon joins undersea network. Verizon (VZ) is helping to construct an undersea internet cable to connect Europe, the Middle East and India. Verizon participates in the network rollouts in order to provide its customers with more stable voice and broadband connections.
• Service sector rebounds. The ISM's service sector index rose to 52 from 49.6, outdoing economist forecasts of a drop to 49.1. An above-50 reading signals growth in the service sector, which accounts for about 70% of the GDP.
• Cablevision stalks Sundance. Cablevision (CVC) is poised to acquire the Sundance Channel from NBS (GE), CBS (CBS), and actor Robert Redford for about $500M. Cablevision also made a $650M bid for Newsday. A purchase would strengthen Cablevision's independent film lineup, although many analysts are bearish on the future profitability of independent films due to a market glut.
• Pop at Pepsi. PepsiCo (PEP) raised its annual dividend to $1.70 from $1.50.

Earnings: Tuesday After Close

• Avis Budget Group (CAR): Q1 EPS of -$0.11 misses consensus of flat. Revenue of $1.4B in-line. Shares: -2.7%
• Bidz.com (BIDZ): Q1 EPS of $0.18 beats consensus of $0.15. Revenue of $61.9M vs. consensus $60.6M. Sees Q2 EPS of $0.09-$0.11 vs. consensus of $0.10. Shares: -3.8%.
• Blue Nile (NILE): Q1 EPS of $0.16 beats consensus of $0.14. Revenue of $70.5M vs. consensus of $68.5M. Sees Q2 EPS of $0.15-$0.18 vs. consensus of $0.22, and revenue growth of 0-5%. Shares: -2%.
• Brightpoint (CELL): Q1 EPS of $0.09 misses consensus of $0.12. Revenue of $1.2B vs. consensus of $1.38B. Shares: -6.45%.
• Cisco Systems (CSCO): FQ3 EPS of $0.38 beats consensus of $0.36. Revenue of $9.8B vs. consensus of $9.75B . Shares: +1.1%.
• On Semiconductor (ONNN): Q1 EPS of $0.21 beats consensus of $0.14. Revenue of $422M vs. consensus of $387M. Sees Q2 revenue of $545-560M vs. consensus of $388.65M (!). Shares: +10.4%.
• Papa John's (PZZA): Q1 EPS of $0.30 misses consensus of $0.44. Revenue of $289M vs. consensus of $283M. Sees full-year EPS of $1.68-1.76, better than consensus of $1.69 . Shares: -0.2%.
• Petrohawk Energy (HK): Q1 EPS of -$0.30 misses consensus of $0.16. Revenue of $215M vs. consensus of $202M. Shares: -6.1%.
• Pitney Bowes (PBI): Q1 EPS of $0.66 just beats consensus of $0.65. Revenue of $1.57B vs. consensus of $1.5B. Sees 2008 EPS of $2.80-$2.90 vs. consensus of $2.86, and 2008 revenue growth of 6%-9%. Shares: -0.4%.
• RF Micro Devices (RFMD): FQ4 EPS of $0.01 in-line. Revenue of $222M in-line. RFMD announced a strategic restructuring which will see it reduce its investments in wireless systems like cellular transceivers and GPS solutions in order to focus on core semiconductor component opportunities. Shares: -4.35%.
• Tesoro (TSO): Q1 EPS of -$0.60 misses consensus of -$0.49. Shares: -1.2%.
• THQ Inc. (THQI): FQ4 EPS of -$0.37 misses consensus of -$0.06. Revenue of $187M vs. consensus of $201M. Sees FQ1 2009 EPS of -$0.38 to -$0.42, short of consensus of -$0.18. Sees full-year EPS of $0.95-1.05, short of consensus of $1.18. Shares: -6.6%.
• ValueClick (VCLK): Q1 EPS of $0.19 beats consensus of $0.16. Revenue of $176M vs. consensus of $170M. Sees full-year EPS of $0.81-0.83 up from $0.78-$0.81 vs. consensus of $0.79. Shares: -2.1%.
• Walt Disney Co. (DIS): FQ2 EPS of $0.58 beats consensus of $0.51. Revenue of $8.71B vs. consensus of $8.47B. Shares: +2.7%
• WebMD (WBMD): Q1 EPS of $0.07 beats consensus of $0.05. Revenue of $81.7M in-line. Shares: flat.

Earnings: Wednesday Before Open

• BCE (BCE): Q1 EPS of $C0.57 beats consensus of $C0.53. Revenue of $C4.39B vs. consensus of $4.29B.
• Checkpoint Systems Inc (CKP): Q1 EPS of $0.12 misses consensus of $0.15. Revenue of $210M vs. consensus $200M.
• Cognizant (CTSH): Q1 EPS of $0.34 just beats consensus of $0.33. Revenue of $643M in-line. Sees Q2 EPS of $0.38-0.39, better than consensus of $0.36, and revenue of at least $608M vs. consensus of $708M. Sees full-year EPS of $1.67 vs. consensus of $1.51 and revenue of $2.95B in-line.
• Devon Energy (DVN): Q1 EPS of $2.74 beats consensus of $2.33. Revenue of $2.97B vs. consensus $3.28B.
• DirecTV (DTV): Q1 EPS of $0.32 just beats consensus of $0.31. Revenue of $4.59B vs. consensus of $4.47B.
• Foster Wheeler (FWLT): Q1 EPS of $0.85 beats consensus of $0.73. Revenue of $1.8B vs. consensus of $1.48B.
• GLG Partners (GLG): Q1 EPS of $0.10 beats consensus of $0.08. Revenue of $131M vs. consensus of $120M.
• Marsh & McLennan (MMC): Q1 EPS of $0.46 just beats consensus of $0.45. Revenue of $3B vs. consensus of $2.92B.
• NCR Corp (NCR): Q1 EPS of $0.21 beats consensus of $0.17. Revenue of $1.18B vs. consensus of $1.06B. Sees full-year EPS of $1.52-1.57, better than consensus of $1.51.
• Owens Corning (OC): Q1 EPS of $0.07 beats consensus of $0.02. Revenue of $1.35B vs. consensus of $1.2B.
• Quicksilver Resources (KWK): Q1 EPS of $0.25 in-line. Revenue of $157.5M vs. consensus of $155M.
• Sky West (SKYW): Q1 EPS of $0.47 missses consensus of $0.60. Revenue of $868M vs. consensus of $842M.
• Transocean (RIG): Q1 EPS of $3.71 beats consensus of $3.34. Revenue of $3.11B vs. consensus $3.05B.

Today's Markets

• In Asia, the Nikkei gained 0.38% to 14,102. Hang Seng -2.48% to 25,610. Shanghai -4.13% to 3,579. BSE Sensex -0.19% to 17,339.
• European markets are higher at midday. FTSE +0.62% to 6,253. CAC +0.56% to 5,069. DAX +0.84% to 7,076.
• U.S. futures are down slightly at 7:20 AM. Dow -0.18% to 13,005. S&P -0.18% to 1,418.50. Nasdaq -0.33% to 1,992.50.
• Gold is down 0.66% to $872. Oil is flat at $121.90.

• Microsoft talks tough. On its FQ3 earnings call, Microsoft (MSFT) rehashed its threat to wage a proxy war to take over buyout target Yahoo (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 (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 (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 (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 (INTC) and AMD (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 (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 (T) from June to August.
• NTT DoCoMo (NTT) said it will repurchase 2.1% ($1.4B) of its outstanding shares.
• DryShips takes control of Ocean Rig. DryShips (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 (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 (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 (AXP): Q1 EPS of $0.84 beats consensus of $0.81. Revenue of $7.19B in line. Shares gained 4.54%.
• Baidu.com (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 (CAKE): Q1 EPS of $0.21 in line. Revenue of $393.8M vs. consensus of $396.3M. Shares gained 0.6%.
• Chubb (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 (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 (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 (IBKR): Q1 EPS of $0.66 beats consensus of $0.50. Revenue of $529M vs. consensus of $436M. Shares gained 6.75%.
• KLA-Tencor (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 (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 (RMBS): Q1 EPS of -$0.12 misses consensus of -$0.06. Revenue of $40M in line. Shares fell 2.4%.
• Riverbed Technology (RVBD): Q1 EPS of $0.11 beats consensus of $0.10. Revenue of $73M vs. consensus $74M. Shares gained 1.7%.
• Synaptics (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 (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 (WDC): FQ3 EPS of $1.23 beats consensus of $1.09. FQ3 revenue of $2.1B vs. consensus of $2.05B.
• YRC Worldwide (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 (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.

For sale or not for sale? Bear Stearns' (BSC) new CEO Alan Schwartz said that while the company does not need to do a deal, "we have always said we will consider strategic alternatives." There are also reports Citic may increase its stake in Bear, or even look to acquire the company.

Internet

• Nintendo Co Ltd (NTDOY), NTT East Corp and NTT West Corp [NTT East/West] (NTT)have officially announced that they will jointly promote the connection of NTT East/West's optical fiber [FTTH] service, FLET'S Hikari, and Nintendo's Wii. Nintendo places Wii's current Internet access ratio at about 40 percent, which is lower than the broadband penetration of over 50 percent. Under the agreement, the companies will open a joint call center and offer FFTH line installation in tandem with Wii setup for Internet access.

TRANSCRIPT SPONSOR

Chartered Semiconductor Manufacturing (CHRT)
Q2 2007 Earnings Call
July 26, 2007, 8:30 PM ET

It is also the fourth largest foreign exchange trading center, and is rated as the most business-friendly economy in the world. The economy had an estimated growth rate of 8.2% for the second quarter of 2007. Almost ten million tourists visited Singapore last year. The government also legalized gambling in 2005.

I built a simple stock screen to identify companies with multiple characteristics common to the persistent wave of buyouts we have been seeing, and the results are included below.

I was happy when I logged on to the Internet Monday morning and learned that a company I purchased on Friday was a buyout target, and its price was up 7% (not a bad return for one business day).

The Wall Street Journal reports Chartered Semiconductor Manufacturing CEO Chia Song Hwee said his firm 'isn't a takeover target, and nor is it in talks with any potential buyer,' in an interview on Friday. This follows Chartered Semi's Q1 earnings release the day prior, in which it reported a 76% decline in net income to $5.3 million ($0.01/ADS), and a 10.6% drop in revenues to $345.3m. The Journal notes speculation of a takeover began in March when Temasek Holdings -- the state-owned investment arm of Singapore and a 60% Chartered Semi shareholder -- made an offer for chip tester and assembler STATS ChipPAC Ltd. In Chartered Semi's earnings press release, Mr. Chia said, "... we are seeing resumption of growth across several of our customers and applications [in Q2]" and "... we are expecting wafer shipments to grow approximately 15% sequentially," however, due to lower 90nm wafer shipments to the computer sector, "we expect Chartered revenues and revenues including our share of SMP to be essentially flat sequentially."

He shifted to Buy ratings from Neutral on Taiwan Semicondcutor (TSM), Chartered Semiconductor (CHRT), Siliconware (SPIL) and Hong Kong-listed ASM Pacific; he moves to Neutral from Sell on Semiconductor Manufacturing International (SMI) and a pair of Taiwan-listed companies, Via and SiS.

Heyler offers five reasons for his more bullish stance.

He sees similar trouble following at the other fabs, including United Microeletronics (UMC) and Chartered Semiconductor (CHRT). In response, Whittington has cut his ratings on both Taiwan Semi and Chartered to Average from Above Average. (He doesn’t officially cover UMC.)

Bullish calls: