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

The on again, off again merger speaks between Delta (NYSE: DAL) and Northwest (NYSE: NWA) have started again according to the Financial Times. They’re being driven by an up-turn in fuel costs and a potential down-turn in traffic. The pilot’s union, which had blocked earlier attempts at a merger, may be left on the sidelines for now. The boards of the two companies believe that they’re bargaining for the survival of their respective companies.

While the last set of talks broke down in February, according to the FT, “Executives at Minnesota-based Northwest have since put pressure on their counterparts at Delta to proceed without the pilots’ support.”

A merger won’t help with fuel costs and unions are not prone to give in to job cuts, raising the issue of strikes. Yet the large airlines feel that they must act even if it only saves them a dime. Most of the huge airlines have huge debt loads and falling cash-flow. Mergers often cause problems with customer service while the parties try to mesh their reservations systems and IT.

If fuel costs keep marching up and a deep recession keeps people off planes, Northwest and Delta can go into Chapter 11 as a combined company instead of separately.

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

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Filed under: Deals, Google (GOOG), Microsoft (MSFT), Yahoo! (YHOO), Market matters, Stocks to Buy, Cramer on BloggingStocks

TheStreet.com’s Jim Cramer states that by showing the company won’t pay up for Yahoo!, Ballmer removed a risk to his own stock.

The large rap against Microsoft (NASDAQ: MSFT) (Cramer’s Take) was that it would overpay to purchase Yahoo! (NASDAQ: YHOO) (Cramer’s Take).

A number of analysts have been quite vocal that Microsoft would end up paying $34 for this, and that’s been a heavy lid on Mister Softee in what has been a darned good tech run, one that has led to many breakouts or near breakouts although seasonality’s a real problem.

This weekend’s news that Steve Ballmer would rather walk away than pay up — I think that’s the succinct way to put it — is great news for MSFT shareholders. Yahoo! is probably having a dog-awful quarter, especially if Google (NASDAQ: GOOG) (Cramer’s Take) has seen a click slowdown. This, of course, is all self-inflicted, as I believe Yahoo!’s initiatives and personnel changes should have led to some growth or share take.

Either walking away or keeping the bid around here would drive MSFT higher, I believe, given that the stock was in the mid-$30s when it made its bid.

Seems like a good risk/reward.

RELATED LINKS:

• Microsoft Sends Yahoo! Merger Ultimatum
• Upgrade Sends Yahoo! Shares Higher

Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com’s sites and serves as an adviser to the company’s CEO. At the time of publication, Cramer had no positions in the stocks mentioned.

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Filed under: Deals, Private equity, JPMorgan Chase (JPM), Washington Mutual (WM), Housing

Washington Mutual (NYSE: WM) may be rescued from the situation that its low capital base threatens the company’s future. According to The Wall Street Journal, “private-equity firm TPG and other investors are close to a deal to invest $5 billion.”

Washington Mutual may have to take the money, but it is awful news for the value of the company’s shares. There had been rumors that JP Morgan (NYSE: JPM) might purchase the company, but those will now end.

Since the bank’s current market cap is only $9 billion, the investment represents big potential dilution. The company’s shares now trade at just over $10. On a straight dollar-for-dollar basis, the new capital would take the share price below $7, a 52-week low. Even if some of the money comes in as convertible preferred, the company’s shareholders are facing a capital table which will push shares down.

The news is another example of investors losing three quarters of their money in a financial company due to the subprime crisis and then losing more when a private equity company or sovereign fund offers new capital. It is superior than Chapter 11 though.

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

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Filed under: International markets, Deals, Novartis AG ADS (NVS)

Just announced this morning, global drug manufacturer Novartis (NYSE: NVS) is offering to purchase a minority stake in the world’s largest eye-care firm, Alcon (NYSE: ACL), by buying the stake from food conglomerate Nestle (OTC: NSRGY).

Essentially, the deal is to happen in two parts. The first stage appears to be a buy of a 25% stake in Alcon for around $11 billion. This purchase comes with an option to buy an additional 52% stake for about $28 billion.

Novartis will pay $143.18 a share for the buy of the 25% stake. The option to buy the 52% stake will come at a fixed share price of $181 and can come between 2010 and 2011.

From a statement on Nestle’s website, the food maker plans to use the proceeds to reduce debt and the cash will also “support opportunities for profitable growth in line with the group’s nutrition, health and wellness orientation.”

Zack Miller is the managing editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund.

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Filed under: Before the bell, Analyst upgrades and downgrades, Deals, Microsoft (MSFT), Yahoo! (YHOO), Apple Inc (AAPL), Delta Air Lines (DAL)

After pressuring Yahoo! Inc. (NASDAQ: YHOO)’s board over the weekend, threatening it with a proxy fight and a lower offer, the portal company has finally responded to Microsoft (NASDAQ: MSFT)’s constant digs. Yahoo! stated Monday it doesn’t oppose a deal with the giant software maker but wants a better deal than the current $41 billion cash-and-stock offer. The deal was worth more originally, but has declined in value due to Microsoft’s shares decreasing in value. As of 7:47 a.m., YHOO stock is down over 2.3% while MSFT stock is up over 1.3%.

Apple Inc. (NASDAQ: AAPL) was upgraded by Thomas Weisel from Market Weight to Overweight and the price target was upped from $188 to $195.
Also, T-Mobile has slashed the price of the basic 8 gigabyte iPhone in Germany to 99 euros ($155) from 399 euros, perhaps trying to get rid of this model ahead of the expected launch of a new third-generation model at the end of June. The 16 gigabyte version will continue to cost 499 euros.

Delta Air Lines (NYSE: DAL) and Northwest Airlines (NYSE: NWA) are reported by the Financial Times to have revived merger talks. Following the bankruptcies of Aloha Airgroup, ATA Airlines and SkyBus, it only makes sense the airlines would resume talks. Shares of Delta are up 5.7% in premarket trading.

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Filed under: Before the bell, International markets, Earnings reports, Deals, Market matters, Alcoa Inc (AA), Novartis AG ADS (NVS), Washington Mutual (WM), Economic data, Commodities, Oil, Federal Reserve

Stock futures were higher Monday morning as reports of a cash injection into WaMu as well as a large pharma deal hit the news. Also, Monday marks the beginning of earnings season as the first of the Dow companies, Alcoa reports after the close. Investors will be interested to see how corporate profits have fared in the first quarter of 2008 while many economists state the U.S. may have entered a recession during that time.

On Friday, U.S. stocks closed mostly higher despite a dismal March jobs report that showed payroll have declined for the third month in a row while unemployment jumped. Still, while the Dow industrials finished 16 points or 0.13% lower, it registered a weekly gain of 3.2%. The S&P 500 rose 1 point, or 0.08%, Friday for a 4.2% weekly increase, and the Nasdaq Composite added 7 points, or 0.32%, Friday, rising 4.9% for the week.

Without much economic news this day, investors will focus on corporate news:

If last week it was UBS and Lehman Brothers that announced equity deals and helped boost sentiment on Wall Street, this week it is Washington Mutual (NYSE: WM), which according to The Wall Street Journal, is close to a deal to get a $5 billion investment from private equity firm TPG and other investors. As of 6:58 a.m., WM shares are up over 15% in premarket trading.

Meanwhile, a massive $38 billion deal is brewing as Swiss pharmaceutical maker Novartis (NYSE: NVS) stated it will spend about that much in a two-step bid for a majority stake in U.S. eye-care company Alcon (NYSE: ACL). First, itr will initially pay Nestle SA $11 billion or a 25% stake, then have rights to Nestle’s remaining 52% stake, for about $28 billion. Such large deals tend to make Wall Street happy as it shows stability, the ability to borrow and confidence in the future.

Also in focus this day will be the kick off of the first quarter earnings season with Alcoa (NYSE: AA) reporting after the close. Analysts are expecting Alcoa to report earnings of 48 cents per share on revenue of $7.18 billion, compared with 75 cents per share on revenue of $7.9 billion in the same period last year. Despite the price of aluminum climbing 24.5% in the first quarter, Alcoa’s earnings would affected by weakness in the automotive and construction industries, a weaker dollar and higher energy costs.

Oil prices rose Monday as traders anticipate the Federal Reserve to cut rates following the poor U.S. jobs data released Friday. Light, sweet crude for May delivery rose 80 cents to US$107.03 a barrel in electronic trading on the New York Mercantile Exchange by midday in Europe.

Overseas, stocks ended mostly higher in Asia and are rising in Europe mostly due to the resource sector. Goldman Sachs and Citigroup also wrote bullish notes on the sector.

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

Several media outlets are reporting that Yahoo! (NASDAQ:YHOO) will this day reject Microsoft’s (NASDAQ:MSFT) offer for the firm as being too low. According to The New York Times “Yahoo’s response is expected to reject negotiations and explain why Yahoo’s board believes the current offer price is too low.”

The Yahoo! board certainly has guts, but does it have brains? Based on the company’s performance last year and the likelihood that it will have only a modest Q1 performance, it is hard to imagine on what basis it can make its valuation case. While the firm may hope it can get a deal with another world wide web firm, that is far from certain.

Microsoft has indicated that it will lower the price on the deal, but that might give the Yahoo! board more ammunition to make its valuation case. While the company might not be worth more than the $31 offer, a lower offer of, state, $27 might grant Yahoo! to argue that the price is, indeed, too cheap.

Yahoo!’s biggest problem now is the huge distraction that the deal makes for the company’s board and senior management at a time when they cannot afford to grant any missteps in the firm’s performance.

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

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Filed under: Business, World wide web, Features, Windows, Macintosh, Blogging, E-mail, Office, Productivity, Web services, Apple, Google, Microsoft, Shareware, Freeware, web 2.0

How many of the applications you use on a daily basis are web-based as opposed to locally installed native applications? For me, the answer is way more than I ever would have expected.

Had you asked me this question a few years ago, I would have vehemently denied that the future of development is on the web. As much as I could see and comprehend the value of a ubiquitously available web-based application, there’s just no way to approach the level of power and integration (not to mention the ability to be always-available) that is possible with well conceived and developed desktop software.

Of course, back then I didn’t envision that web applications could become as useful as Google Calendar or Remember the Milk. I also didn’t envision that light - yet still useful - versions of these apps would be available from my mobile phone almost wherever I was.

In fact, and much to my surprise, this day most of my personal data this day is tied up in on the internet services: Gmail, Google Calendar, Google Docs, Backpack, Remember the Milk, Facebook, Newsgator, and Evernote to name just a few.

Most of these are probably pretty familiar names, but one is a newcomer in the web space: Evernote. Still in beta, the new version of Evernote contains a full-featured web version, but synchronizes seamlessly with desktop software on either Windows or Mac platforms. And it’s a breath of fresh air.

Continue reading Should software be native or web-based?

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