Filed under: International markets, Earnings reports, Deals, Private equity, Technology, Israel

Gilat Satellite Networks (NASDAQ: GILT), a small Israeli company that develops and produces very small aperture terminals for satellite-based communications networks, posted very strong earnings today.

Gilat’s Chief Executive Officer and Chairman of the Board Amiram Levinberg stated, “The quarterly and annual results show a thriving core business, with record quarterly and annual revenues. We met our management financial objectives for 2007 with double digit revenue growth of 14% and, excluding the non-cash impairment, an expansion of our operating margin to 6.2% and net income margin to 7.9%.”

“Our GNS business unit has grown by winning massive projects in Africa, Eurasia and Latin America. In the U.S., Spacenet, has successfully penetrated the government market with new deals in this sector as well as in its core customer base of enterprises. In the fourth quarter, we introduced our SkyEdge II, an advanced VSAT platform based on next generation technology. The product has already begun to receive high market acceptance and enhances our technology leadership in the market. Based on this technology platform, our strong position in the international market and our successful penetration into new markets in the U.S., we are well positioned to continue our growth and meet our management financial objectives for the coming year.”

Gilat has been mentioned as a takeover target. As my friend Zack Miller wrote at IsraelNewsletter, “Competition in the satellite industry is heating up. Media companies, along with cable and wireless companies, have declared their desire to enter the satellite communications market. Instead of building an entire division dedicated to this, some of these companies are looking to either partner with, or acquire,an existing firm with good sales distribution. Gilat, with its focus on emerging markets and strong balance sheet, could be a good acquisition candidate.”

While an M&A of some sort continues to be an option, with the numbers the company reported today along with their outlook for the rest of ‘08, this might be a company that would be better off going it alone for the time being, continuing to grow earnings and holding out for a much higher valuation.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer’s fund has a position and owns stock in GILT and is long the stock. He has no positions in any other stock mentioned as of 2/21/08.

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Filed under: Before the bell, International markets, Earnings reports, Analyst upgrades and downgrades, Deals, Cisco Systems (CSCO), Market matters, Penney (J.C.) (JCP), Safeway Inc (SWY), Economic data, Federal Reserve

U.S. stock futures were higher this morning, looking to extend Wednesday’s rally following the Federal Resereve’s comments that the Fed’s focus should remain on helping the economy, even at the expense of inflation. Still, the As the Fed has lowered its economic forecast, it seems committed to spurring growth.

Stocks had another roller-coaster session on Wednesday. Stocks started the day with declines following further signs of inflation and a non-encouraging housing report, as well as oil trading near $100 a barrel. The market then reversed course, especially after the Fed released the minutes from the last policy meeting that indicated the Fed is ready for further rate cuts. That boosted stocks and they completed higher with the Dow industrial closing 90 points higher, or 0.73%, the S&P 500 adding 11 points, or 0.83%, and the Nasdaq composite rising20 points, or 0.91%.

Several economic indicators are due out this day.

• At 8:30 a.m. EST, weekly jobless claims are due.
• January leading indicators will be reported at 10:00 a.m., along with manufacturing in the Philadelphia region for February.

Oil prices held near $100 a barrel Thursday ahead of the government’s weekly report on crude inventories at 10:30 a.m. EST. Overnight, oil hit a record, pushing briefly past $101 per barrel, as investors poured more cash into crude and other commodities as a hedge against inflation and as possible rate cuts could further weaken the dollar. Precious metals such as gold and silver also hit records.

Overseas, Asian markets finished higher with Japan’s Nikkei 225 closing up 2.84%. Main European markets have also gained this morning, trading up around 1.5% even as the EU cut growth expectations.

Some companies reporting earnings this day include Safeway (NYSE: SWY), which is expected to report fourth-quarter earnings of 68 cents a share and J.C. Penney (NYSE: JCP), which is expected to report $1.74 a share.

In deal news, Reed Elsevier PLC, the owner of the Lexis Nexis information service, said Thursday it will buy U.S. data services firm ChoicePoint Inc. (NYSE: CPS) for $4.1 billion in cash.

Citigroup has upgraded Cisco Systems (NASDAQ: CSCO) from Hold to Purchase, upping the target price from $25 to $27. CSCO shares are up more than 2.6% in premarket trading.

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Filed under: Deals, Microsoft (MSFT), Yahoo! (YHOO), Marketing and advertising

Microsoft Corp. (NASDAQ: MSFT) will start a proxy fight for Yahoo! Inc. (NASDAQ: YHOO) “unless Yahoo reverses course and enters into talks’ regarding its $44.6 billion unsolicited offer,” according to The New York Times‘ DealBook blog. I’ll believe it when I see it.

First of all, proxy battles are a gigantic pain in the butt. The bigger the deal, the bigger the hassles. There are lawyers, proxy solicitation firms and deal PR firms to pay. M&A reporters at the major media outlets have to be wooed. It takes forever.

Yahoo’s board probably won’t meet until June. Plenty of things can happen between now and then. Probably, the only reason why Microsoft is even considering a proxy fight is because Yahoo does not have a staggered board, meaning all of its directors are up for renomination this year.

Investors need to remember that the media loves to hype potential battles like proxy battles even if the chances of them actually happen are quite remote.

Freelance writer Jonathan Berr edits the blog Ketchup and Eggs.

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Filed under: Deals, Competitive strategy, Employees, Delta Air Lines (DAL)

The conventional wisdom is that labor unions in the US are close to dead and no longer have much influence on the managements of huge companies. Tell that story to the boards at Northwest (NYSE: NWA) and Delta (NYSE: DAL). Disagreement at the pilot’s union might undermine a merger between the two airlines.

According to The Associated Press ,“the pilots unions have agreed on a comprehensive joint contract, but they are unable to concur to how seniority for the 12,000 pilots would work under a combined carrier.”

The dubious theory behind airline mergers is that putting two carriers together saves money, but concessions to labor to get a deal done might undermine that. It is also not clear that a newly combined airline can avoid the customer service problems early in the process. These troubles often drive customers away.

While the industry looks at a number of business combinations, pilots and other unions are pushing their agendas. The message is easy. If you want a merger, it is going to cost you.

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

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Filed under: Deals, Consumer experience, Delta Air Lines (DAL)

With the rumored Delta (NYSE: DAL) / Northwest (NYSE: NWA) merger hanging fire [subscription required], customers of both companies may well wonder what the impact will be on their hard-earned frequent flyer miles. The answer seems to be both good and bad.

The good side is that traditionally when airlines have merged, the frequent flier miles were carried over, allowing customers to choose among an increased number of flights and destinations. There is no reason to believe this merger will be any different.

However, as travel guru Peter Greenberg cautions in his blog, airlines merge in part to take advantage of more efficient operations; i.e., fuller flights. Fuller flights mean a diminution of available seats for frequent flyers. He recommends, and I concur, that you not wait to redeem what you can.

I also suspect it’s not a coincidence that United is going to begin charging for a second checked bag, a trend I anticipate to swiftly become the industry standard. Might airlines next allow customers to redeem frequent flyer miles to cover baggage costs in order to sop up frequent flyer miles at a bargain price??

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Filed under: Deals, Marketing and advertising

Last month, I reported that Martha Stewart Living Omnimedia (NYSE: MSO) was actively seeking an acquisition to diversify beyond its core Martha Stewart brand.

Now the company has found what it hopes is it’s missing piece, and is set to acquire superstar chef Emeril Lagasse’s [subscription required] media and licensing empire for $45 million in cash and $5 million in stock, according to the Wall Street Journal.

The purchase price will include the rights to Emeril’s television programs, syndicated episodes of the “Emeril Live” show on the Food Network, cookbooks and Emeril’s websites, and licensing deals from All-Clad cookware, W

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

Bill Gates says Microsoft (NASDAQ: MSFT) will chase the search business whether it buys Yahoo! (NASDAQ: YHOO) or not. He says that the company’s mighty tech arsenal will allow it to improve the efficiency of its search results and that it can take a more massive share of the market based on that alone.

“We can afford to make large investments in the engineering and marketing that needs to get done. We will do that with or without Yahoo,” stated Gates in an interview with Reuters. For a very smart man, Gates sounds dumb.

Microsoft currently has about 11% of the search market in the US. Its global piece is even smaller. Not only does Google (NASDAQ: GOOG) have a much bigger share, it is also improving its technology as swiftly, if not more quickly, than Redmond.

Gates may have been asked to make his comments to signal to Yahoo! that it will not raise its offer. It only needs the search portal so much. It can reach its goal on its own.

But behind shut doors, Gates knows better.

Douglas A. McIntyre is an editor at 24wallst.com

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Filed under: Deals, Good news, Google (GOOG), Yahoo! (YHOO), Nokia Corp. (NOK)

Nokia Corp. (NYSE: NOK) and Google, Inc. (NASDAQ: GOOG) are partnering more than before as the world’s largest cellphone maker announced last Tuesday it will now be installing Google as the primary tool in the “Nokia Search” application that will eventually ship with almost each Nokia phone sold worldwide. This is a big win for Google, already the world’s most-used search company.

To begin with, Nokia will set Google up as the search engine used when customers of such handsets like the Nokia N96, Nokia N78, Nokia 6210 Navigator and Nokia 6220 classic perform searches from their handsets. Eventually, Nokia customers in over 100 countries — and in 40 languages — will have access to Google search on all those handsets.

And therein lies the power Google has over information on this planet. IIkka Raiskinen with Nokia stated, “This integration grants our consumers the capability to use the innovative search technologies, which have made Google almost synonymous with Internet search.” There you have it — Google’s market leadership translated into a big opportunity in the global wireless arena. It’s true that competitor Yahoo, Inc. (NASDAQ: YHOO) is also heavily marching into wireless, but with that company’s identity crisis right now, Google stands to rule the wireless market as well as the PC desktop.

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Filed under: Deals, Industry, Middle East, Politics

Qatar has begun to take a stake in Credit Suisse (NYSE: CS) and indicated that it is part of a program to put $15 billion into banks in the US and UK. “We have a relation with Credit Suisse and we bought some of the stock from the market, actually, but I can’t say what percentage because still we’re in the process,” the Arab country’s prime minister told Bloomberg.

Qatar might get a chance to invest every last dime of its fund. While banks have written off some of their subprime exposure, they still have billions of dollars of structured investments on their balance sheets. They also face potential write-downs on credit card holdings and corporate LBO loans which could drop in value if the credit markets remain largely frozen.

With more losses almost certain, many massive banks will have to face what they will do if sovereign funds from Asia and the Middle East want to provide them with billions of dollars to rescue them in exchange for big percentages of ownership. Congress has objected to some of these investments as partial takeovers of the most important banks in the US.

Unless the federal government wants to come up with the money, though, its objections are hollow.

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

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Filed under: Deals, Bad news, Industry

Huge mini-bond insurer Ambac (NYSE: ABK) is considering breaking itself into two pieces. One, which would handle its portfolio of municipal bonds could keep its high credit rating. The other piece would keep its structured financial investment in securities including subprime instruments. The second part of the company may be almost insolvent.

According to The Wall Street Journal, “Bond insurers in current weeks have become ground zero in the global credit crisis because the companies contractually have concurred to stand behind billions of dollars in securities underpinned by U.S. subprime mortgage loans.”

While it is clear why this is good for cities and states whose bonds are insured by the company because that keeps their high credit ratings, it is less clear why it benefits Ambac’s common stockholders. If the operation is broken into two parts, who owns the valuable piece and who owns the worthless piece? In the end, stockholders who have already seen 80% of the market value in Ambac disappear as its shares have fallen, might get very little.

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

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