Wednesday, May 2, 2007

Morning Market Comment

First, after a variety of feedback I've reconsidered the whole disclosure thing and will continue to offer opinions, but I will be adding more disclaimers to remind that I can't give individual advice and that my thumbs up or down on stocks are opinions and not recommendations. Thanks for all the feedback.

Stock futures this morning are modestly higher.

Economic data: US mortgage applications rose in latest week-MBA. ADP's non farm payrolls survey is out: ADP-Macroeconomic Advisers See Apr Payrolls +64000. Economists are looking for a gain of 100,000 in this Friday's gubbamint non farm payrolls data. Factory figures still to come our way at 10.

There's deal news today: Late word this morning that the Dolan family will take Cablevision (CVC) private at $36.26 a share, a roughly 20% premium. This is provided that the board of directors says, yes.

Citigroup (C) agreed to acquire financial-services outsourcing company Bisys (BSG) for $1.47 billion.

Dow Jones & Co. (DJ) is up a little less than one percent this morning following its monster surge yesterday. Analyst commentary has been interesting this morning. Lehman downgraded DJ to Under Weight saying it doesn't expect the controlling Bancroft family to accept Murdoch's offer and that no competing bid will be made. Lehman also said sell GCI, JRC, MNI and NYT into strength. In a different twist, Citi's Smith Barney reiterated a buy on Newscorp (NWS) on a bet the deal will fall apart. Citi says it sees a 50% likelihood of the deal going through and that negatives are already priced into NWS. Wachovia also downgraded DJ saying it doesn't expect a competing bid. We've got a fascinating game going on here and a question of whether everything comes down to price. The Bancroft family has steadfastly protected the independence of Dow Jones for a century - are they merely holding out for more money, or do they defend the independence? Along with 35 Bancrofts, there is their supervoting B shares which indeed would block a deal no matter how loudly arbs scream for a deal (yesterday 35% of the DJ float changed hands, no doubt to big players who will push hard for a deal). This is one I will be watching closely, I can't imagine Murdoch doing this without some sort of green light from somewhere within the Bancroft family. While it's tempting to dream of this as the short of the century if the deal falls apart, I think it does come down to price even for the Bancrofts, and $60 could just be the opening salvo.

For those who love to hate Microsoft (MSFT): Dell ends Microsoft's grip on its computers.

Big mover of the morning - Mastercard (MA): Stock already up around 8%.

Needham reminds that Dendreon (DNDN) is just two weeks away from hearing whether its Provenge prostate cancer treatment gets the FDA ok. Needham, in speaking with biotech and academic sources with experience in these matters thinks DNDN gets approval. It reiterates a buy and a $22 target.

Divx (DIVX) and Sohu (SOHU) aren't the only two companies which have disappointed with their results, Garmin (GRMN) is down 4% this morning: UPDATE 1-Garmin quarterly profit rises, revenue below estimates. GRMN was a big on the most active options list in recent days.

See the latest on hedge funds at: There's a great write up on a new frontier for hedge funds.

I am going to enact a repair strategy on the DIVX loss, perhaps through one of this evening's earnings due tonight: EXPD, GNSS, JDSU, LVS, PDLI, PRU, SUN, SYMC, VRSN among others, or with a DJ play. We'll see.

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