Filed under: Deals, Products and services, Microsoft (MSFT), IAC/InterActiveCorp (IACI)

When Ask.com’s mapping service was just getting up to speed as a very workable product, the company decided to jettison its in-house mapping service and instead install Microsoft Corp.’s (NASDAQ: MSFT) own mapping service. Ask.com company parent InterActive Corp. (NASDAQ: IACI) apparently decided to cut some costs in the day and age of hyper-competition with Google, Inc. (NASDAQ: GOOG) and Microsoft and just outsource a great product that was taking up too many resources with too tiny to show for it.

Microsoft’s Virtual Earth technology is now powering Ask.com mapping service. It should not be seen as defeat for Ask.com, as Microsoft’s offering is superior in nearly each way from my experience (and most likely, cheaper to license instead of maintaining an in-house product). This brings up an important question: is Ask.com in cost-cutting mode temporarily or permanently? The search engine and portal has seen its global market share sit pretty idle for the last year, as has Microsoft. Google, meanwhile, has slightly increased its search marketshare, Let’s face it — Ask.com, like those others, makes it’s money in search (with smaller peripheral income sources of course).

Where is Ask.com’s future revenue going to come from? Search advertising? Shopping commissions? All of the above? If Yahoo, Inc. (NASDAQ: YHOO) is possibly going to outsource its search to Google, what’s stopping Ask.com from using Google’s technology as well? That would literally pit Microsoft and Google as bulls racing towards each other. But if Ask.com is fretting over the continuance of its mapping product, search can’t be that far behind. Then, the Ask.com brand will be the only thing left.

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Filed under: International markets, Deals, Law, Competitive strategy, Coca-Cola (KO), Japan

It was announced this day that soft drink giant Coca Cola (NYSE: KO) had settled an almost 8-year-old lawsuit today for $137.5 million. The case originated back in October of 2000, and alleged that the company had artificially boosted its strike price in 1999.

According to the lawsuit, back in late 1999 Coca Cola applied pressure to some of its bottlers to buy unnecessary beverage concentrate. By adding “hundreds of millions of dollars” to the books, the company was allegedly able to report much higher sales volumes to its shareholders and keep its stock price artificially inflated. This practice is typically referred to as “channel surfing”.

Despite the fact that the company decided to settle, there was definitely no admission to any wrongdoing. A company representative stated that the decision to go ahead and settle out was merely a move meant to avoid any length and drawn out legal battle, and by no means should be viewed as any admission of guilt in the charges.

This isn’t the first time that the soft drink company has been under fire, and back in 2005 they settled charges similar to these with the Securities Exchange Commission (SEC). In this situation, the company was under fire for shipping excess concentrate to Japan between 1997 and 1999, the same activity that was under scrutiny in the current legal investigation. Once again, the company admitted no wrongdoing, and this time wasn’t forced to pay any fines, only to concur to never again commit any future securities violations and maintain tight internal controls on sales.

So check your historical buys of Coca Cola and see if you could be effected by today’s settlement. It applies to anyone that purchased shares of the company between Oct 21, 1999 through March 6, 2000.

Also be aware, that while the court system has given this settlement a preliminary approval, it will review the terms on October 20 to determine the fairness of the settlement agreement.

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Filed under: Deals, China, Oil

By all accounts, China’s demand for oil will continue to grow at a rapid clip (the country is already the #2 consumer in the world). Of course, there will also be a large need for oil services.

To this end, CNOOC (NYSE: CEO)’s oil services division, China Oilfield Services Ltd, has agreed to buy Awilco Offshore for $2.5 billion.

As should be no surprise, China Oilfield’s business is ramping, and with Awilco, which is based in Norway, there will be a nice boost. The company posted $203.5 million in revenues last year. What’s more, it has seven oil rigs in operation and six being developed.

Thus, in all, China Oilfield’s rig fleet will go from 15 to 22, which is certainly a large deal. Basically, there is an extreme shortage right now. More importantly, rigs are apt to produce significant cash flows for the next couple years as daily lease rates can be as much $600,000.

So far in today’s trading, CNOOC’s shares are down marginally by $0.54 to $170.45.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

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

The Microsoft Corp. (NASDAQ: MSFT) — Yahoo Inc. (NASDAQ: YHOO) merger dance is not quite over yet.

In an open letter to his fellow long-suffering Yahoo shareholders, billionaire Carl Icahn disclosed that he has spoken “frequently” with Microsoft CEO Steve Ballmer; “frequently” over the past week about Yahoo. Ballmer indicated to Icahn that the world’s largest software company would still be interested in doing a deal … with one catch.

“Steve made it abundantly clear that, due to his experiences with Yahoo! during the past several months, he cannot negotiate any transaction with the current board,” Icahn stated. “If a new board were elected, he would be interested in discussing a major transaction with Yahoo!, such as either a transaction to buy the “Search” function with huge financial guarantees or, in the substitute, purchasing the whole company. He said that Microsoft would be willing to enter into discussion immediately if the new board that has been nominated were elected.”

In a separate press release, Microsoft underscored Icahn’s statement, adding that despite talking with Yahoo!’s board since last year, the company decided that it cannot reach an agreement with the current board. Can you say trial balloon?

That’s a huge “if” of course. Getting rid of a sitting board of directors is something that’s difficult for even for the likes of Icahn. But Yahoo shareholders are so angry at Chief Executive Jerry Yang that the momentum in this fight is certainly on Icahn’s’ s side. Moreover, Microsoft shareholders are chomping at the bit for the Redmond, Washington company to do something to compete against Google Inc. (NASDAQ: GOOG). Wall Street is cheering the news, sending Yahoo shares soaring more than 10%.

The exuberance, though, may not last, because takeover battles move in fits and starts. Odds are that Microsoft and Yahoo will join forces eventually. It’s just a question of how.

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

The war of words between Yahoo (NASDAQ: YHOO) and dissident shareholder Carl Icahn is intensifying. Last week, Yahoo attached a PowerPoint-style presentation to an SEC filing, bizarrely raising questions about Icahn’s track record as a stock picker.

Now Icahn is back with a new letter, issued as a press release titled Icahn Issues Open Letter to Shareholders of Yahoo. Icahn confirmed that he has been in frequent communication with Microsoft (NASDAQ: MSFT) CEO Steve Ballmer over the past week. Icahn wrote that “Steve made it clear to me that if a new board were elected, he would be interested in discussing a major transaction with Yahoo!, such as either a transaction to purchase the “Search” function with big financial guarantees or, in the alternative, purchasing the whole company. He said that Microsoft would be willing to enter into discussion immediately if the new board that has been nominated were elected.”

Lest you think Icahn is blowing smoke, Microsoft followed up with a response to Icahn’s statement issued five minutes later, saying, “We confirm, however, that after the shareholder election Microsoft would be interested in discussing with a new board a major transaction with Yahoo!, such as either a transaction to buy the “Search” function with massive financial guarantees or, in the substitute, purchasing the whole company.”

This should sway a lot of investors over to Icahn’s side in the proxy fight. With its stock having been a weak performer over the past five years, the company is clearly in a position where it needs to be considering strategic alternatives. Microsoft has made it clear that it isn’t interested in working with the current board on a possible deal and it’s in the best interests of shareholders that the company be represented by people who are willing to do what’s right for them.

I think we have the ability to begin the countdown to CEO Jerry Yang’s departure to spend more time with his family and charitable endeavors. The market seems to concur, with the stock up almost 10% MOnday.

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Filed under: Deals

It’s been a good year for APP Pharmaceuticals Inc. (NASDAQ: APPX), as the stock price has climbed from $10 to $23.50. This day there was some extra good news: Fresenius SE, the largest intravenous drug developer in Europe, has concurred to shell out $3.7 billion for the company (there will also be $940 million in assumed debt). In today’s trading, APP’s stock is up 32%.

It’s a great day for Soon-Shiong who founded APP in 1996 and still owns a whopping 80% of the company.

APP is a leader in developing generic injectable pharma products, such as for acute care and specialty clinic applications. In the company’s latest quarterly report, revenues increased 6% to $148.1 million and adjustable net income was $22 million, or $0.14 per share. What’s more, the company received final FDA approval on four products: Polymixin B Sulfate, Caffeine Citrate Oral Solution and Irinotecan Hydrochloride. There was also a product launch for Cefepime Hydrochloride.

However, investors of Fresenius aren’t so happy. The company’s shares dropped about 10% in Germany. Essentially, there are concerns about valuation as well as the capability to finance the deal, which will involve mostly debt. Yet, if Fresenius wants to enter the U.S. market, it really has no choice but to pay a premium.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar On the internet Guide to Decoding Financial Statements. He also operates MergerBook.com.

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Filed under: Deals, General Electric (GE), Blackstone Group L.P (BX)

NBC Universal, which is a part of GE (NYSE: GE), has apparently agreed to shell out $3.5 billion for the Weather Channel. The deal involves a partnership with two marquee private equity firms: Bain Capital LLC and Blackstone Group LP (NYSE: BX).

The transaction has weathered the credit crunch — as well as survived a gestation period that has gone on for most of 2008. But, in the end, it looks like NBC got a nice deal (keep in mind that it looked like the Weather Channel tried to snag $5 billion or so).

The Weather Channel has extensive distribution (#3 in the US). What’s more, there will be synergy with NBC’s digital weather property, Weather Plus. Oh, and NBC has lots of experience integrating cable companies, such as Bravo and Sci Fi.

Even though, perhaps the most important part of the deal is weather.com, which gets 36+ million one-of-a-kind visitors per month. This ranks it as the #15 site on the internet. No doubt, NBC can leverage its advertising — as well as other websites — across this virtual real estate.

Finally, the Weather Channel transaction points to a possible new model for private equity; that is, partnering with strategic buyers. It’s a good way to deploy capital but also get cost/revenue synergies.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

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Filed under: Before the bell, Analyst reports, Analyst upgrades and downgrades, Deals, Apple Inc (AAPL), Walt Disney (DIS), Merrill Lynch (MER), Merck and Co (MRK), News Corp’B’ (NWS)

Before the bell: Futures blended as oil drops, ahead of earnings season kickoff

According to the New York Post Friday, Merrill Lynch (NYSE: MER) is in talks to sell its 20% stake in Bloomberg L.P. back to New York City Mayor Michael Bloomberg. The post cited anonymous sources. But Merrill will likely not end its cash raising efforts there and could also try to sell its 49% stake in investment manager BlackRock (NYSE: BLK). Selling different assets, could bring some $50 billion to cash-strapped Merrill.

APP Pharmaceuticals (NASDAQ: APPX) shares are up nearly 32% to $23.50 in premarket trading after Germany’s health-care giant Fresenius said it’s going to buy it for up to $4.6 billion, or $29 a share, depending if certain financial targets are met. This marks Fresenius attempt to enter the U.S. market.

Apple Inc. (NASDAQ: AAPL) is set to launch its next generation iPhone Friday. The 3G, or third-generation, phone will be cheaper and faster than its predecessor and could expand Apple’s reach to many more countries that rely on that technology. Apple has set a target to sell 10 million iPhones in 2008, and already sold 1.79 million in the first quarter. Analysts have so far kept their target on Apple, such as Lehman reiterating its Overweight on the stock.

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Filed under: Before the bell, Earnings reports, Deals, General Electric (GE), General Motors (GM), Market matters, Alcoa Inc (AA), Anheuser-Busch Cos (BUD), Oil

U.S. stock futures were mixed early Monday morning after the long holiday weekend to begin a week that is also set to kick off second quarter corporate earnings. While oil weakness and the dollar strength helped the mood on the Street, there is much concern over earnings.

U.S. stocks ended blended on a short trading day Thursday. The Dow Jones Industrial Average climbed 73 points, or 0.65%, but it wasn’t enough to pull it out of bear-market territory it fell into during last week. The S&P 500 also climbed 1 point, or 0.11%, but the Nasdaq composite fell 6 points, or 0.27%, on Thursday.

No economic data is scheduled for release Monday, so investor will likely continue to focus on energy prices while expecting the beginning of earnings season. Oil prices fell more than $2 a barrel Monday to just over $143 a barrel as the dollar strengthened. Still, the dollar is expected to resume its decline and as Mideast tensions continue, traders don’t anticipate oil to decline much further.

Meanwhile, investors in general don’t anticipate corporate America to deliver good earnings. The season will officially kick off Tuesday, when Alcoa Inc. (NYSE: AA) reports after the close. General Electric (NYSE: GE), reports Friday. The question seems to be more how bad results will be, and if they would signal a bottom from which stocks could recover.

In other corporate news, InBev announced Monday it will attempt to remove Anheuser-Busch (NYSE: BUD) entire board as after the latter rejected its $46 billion bid. InBev wants Anheuser to respond within 10 days.

NBC Universal, a unit of General Electric (NYSE: GE) and two partners stated Sunday they have reached a deal to purchase The Weather Channel from Landmark Communications Inc. While financial terms weren’t disclosed, anonymous sources put the price tage at $3.5 billion in cash. NBC was joined in the deal by the private equity firms The BlackStone Group LP and Bain Capital LLC.

Meanwhile, the Wall Street Journal reported that General Motors (NYSE: GM), the automaker that two analysts last week said is in need of cash, is preparing to cut thousands of additional white-collar jobs and is mulling whether to sell or close more brands.

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