• Take-Two Interactive Software, Inc. (TTWO) shares plunged yesterday (Monday) after Electronic Arts Inc. (ERTS) withdrew its bid for the maker of the popular Grand Theft Auto 4 video game. Take-Two shares shed $5.32, a decline of 24%, to close at $16.57. But Ben Feder, Take-Two’s chief executive, said in an interview yesterday the company is “very, very happy to stay independent,” The Associated Press reported.

• Steelmaker Nucor Corp. (NUE), a recent feature in Money Morning’s “Buy, Sell or Hold” column, raised its third quarter earnings target, The Wall Street Journal reported. Due to improved performance and recent acquisitions, Nucor upped its project to $2.15 – $2.20 per share from an earlier estimate of $1.80 – $1.85 per share. Nucor’s recent acquisitions include scrap purchaser SHV North America and Harris Steel Group Inc.

• Electronics retailer Best Buy Co. Inc. (BBY) announced yesterday (Monday) that it would purchase Napster Inc. (NAPS) in a deal valued at $121 million. Best Buy’s acquisition includes Napster’s roughly 700,000 subscribers, its Web-based customer-service platform and mobile capabilities, MarketWatch reported.

• Target Corp. (TGT) and the Major League Baseball’s Minnesota Twins announced a deal that will put the second-largest U.S. discount retailers name on the new ballpark that is expected to be ready in time for the 2010 season, Bloomberg News reported. It’s the second sports venue contract for the Minneapolis-based Target, which already has its name on the arena of the National Basketball Association’s Minnesota Timberwolves.

• Oil prices closed below $100 a barrel for the first time in six months Monday, tumbling more than $5 as the outlook for both the global and domestic economy darkened. Light, sweet crude for October delivery fell $5.47 to settle at $95.71 a barrel on the New York Mercantile Exchange – the first time crude has settled under $100 a barrel since March 4.

• Wilbur Ross, chairman and CEO of WL Ross & Co. LLC, said in an interview with CNBC that as many as a thousand banks could fail in the coming months. “I do think a lot of the regional ones will (close), just as they did in the last savings and loan crisis in the 1990s,” Ross said.

• Hewlett-Packard Co. (HPQ) announced yesterday (Monday) that it plans to cut over 24,000 jobs as part of its takeover of Electronic Data Systems (EDS). The cuts represent about 7.5% of the two company’s combined workforce, MarketWatch reported. The restructuring should result in an ultimate $1.8 billion in annual savings.

Source: Global Investing Roundups Tuesday, September 16th, 2008

• U.S. retailer American Eagle Outfitters (AEO) announced yesterday (Tuesday) that second-quarter earnings fell to $59.8 million, or 29 cents a share, from $81.3 million, or 37 cents a share for the same period the year prior, MarketWatch reported. Despite the drop, American Eagle stock gained 55 cents, an increase of 4%, to close at $14.29 the day of the announcement.

• Darden Restaurants Inc. (DRI) warned investors that quarterly profit would not meet expectations due to a drop in traffic at its chain restaurants such as Red Lobster and the Olive Garden, Reuters reported. Darden stock dropped over 12% with a decline of $4.01 to close at $28.25 yesterday (Tuesday).

• Crude oil for October delivery gained over $1 to cross the $116 per barrel threshold yesterday (Tuesday) on the threat of Hurricane Gustav disrupting supply chains and continued unrest in Georgia. “Prices surged because Gustav appears to be strengthening as it moves toward the Gulf,” Michael Fitzpatrick, vice president for energy risk management at MF Global Ltd. (MF) in New York told Bloomberg News. “The news from Georgia is also helping send prices higher. Tension is ratcheting up instead of cooling down.”

• The U.S. Federal Deposit Insurance Corp. had 117 banks on its “problem list” of banks in its quarterly report released yesterday (Tuesday). It’s the highest level since mid-2003 for the list and up from 90 banks in the first quarter, Bloomberg News reported. “Quite frankly, the results were pretty dismal, and we don’t see a return to the high earnings levels of previous years any time soon,” FDIC Chairman Sheila Bair said at a news conference.

• Hewlett-Packard Company (HPQ) yesterday (Tuesday) completed its $13 billion acquisition of Electronic Data Systems Corp. (EDS), a move expected to increase competition with rival IBM Corp. (IBM). The EDS acquisition is H-P’s largest since the company bought Compaq Computer for $19 billion in 2002, according to MarketWatch.

• Citigroup Inc. (C) will pay nearly $18 million in refunds and settlement charges for taking $14 million from customers’ credit card accounts from 1992 to 2003, The Associated Press reported yesterday (Tuesday). Citi will issue refunds to the 53,000 customers and will pay $3.5 million in damages and civil penalties to the state of California.

• GT Solar International Inc. (SOLR) said yesterday (Tuesday) that it swung to a $5.1 million profit for the quarter ended June 28. The company lost $5 million over the same period last year. Revenue nearly quadrupled from $15.4 million in 2007, to $57.1 million.

• Mining giant Rio Tinto PLC (RTP) announced a 55% jump in first-half profit, boosted by its takeover of Alcan Inc. and strong Chinese demand. “While the equity markets are currently focused on downside risks, we believe there are potential offsets on the upside based on continued strength in commodity demand, low inventory levels and a supply side which continues to face multiple constraints,” Chairman Paul Skinner said in a statement. “The group continues to perform strongly, and the outlook remains positive.”

Source: Global Investing Roundups Wednesday, August 27th, 2008

The PPI report will undoubtedly rekindle the inflation-versus-recession debate (with more than a few comments about stagflation thrown in for good measure).

While the wholesale inflation gauge (PPI) provides another look into how escalating food and energy prices are impacting the economy, the most recent moves in oil and gas may not be factored in for another month or two.

On an optimistic note, gasoline prices historically peak around Memorial Day and then fall throughout the remainder of the summer. As we’ve said here a number of times before, don’t expect that pattern to repeat itself this year [Indeed, please click here to check out a related story in this issue of Money Morning that details our expectation that oil-and-gasoline prices are headed even higher].

In this column four weeks ago, we told you to ignore a U.S. Energy Department forecast that gasoline prices at the pump would reach $3.73 a gallon before falling. In fact, I said flat out that the Energy Department was wrong. And Money Morning Investment Director Keith Fitz-Gerald shortly thereafter reiterated that belief that the Energy Department’s prediction was way off the beam. And how right we were – that price already has been surpassed and consumers in some parts of California and Hawaii are paying in excess of $4.00 a gallon.

Less than two weeks ago we actually boosted our target price for oil to $225 a barrel (remember that Keith Fitz-Gerald, now Money Morning’s investment director, was probably the first investment guru to predict triple-digit oil prices).

As noted, however, much of this won’t be reflected for a couple of weeks.

Wednesday’s release of the minutes from the last Fed meeting should provide investors with a bit more insight into the mindsets of central bank policymakers and just how likely they will be to stand pat on interest rates: In one of the most aggressive rate-cutting campaigns in the central bank’s history, policymakers have pared the benchmark Federal Funds rate seven times since mid-September. Investors expect the Fed to sit tight (and hold off on further rate activity) at least through the summer months.

More retailers will report this week [Target Corp. (TGT), The Home Depot Inc. (HD) but few surprise are expected at this point in an earnings cycle that – except for the discounters – has been full of disappointing retail-sales reports.

The Money Morning Story SNAFU

When they received their daily e-letter last Monday, sharp-eyed Money Morning readers noticed something peculiar about this column.

It seemed familiar.

There’s a very good reason they felt that way. They were right.

Due to a technical problem, and some human error, the column we’d put together for Monday’s newsletter was inadvertently replaced by the afore-mentioned April 14 story in which we’d told you that the Energy Department’s optimism about summer gasoline prices was wrong.

We replaced that story on the Web site with the correct piece – a warning about the week’s upcoming retail-sales reports, but we heard about the mistake. As we deserved to.

As bad as we felt about the mistake, we still found several positives. First and foremost, we were reminded yet again that we have a loyal following that reads our work closely and carefully – and for the most part enjoys and benefits from what we do.

And if you all had to read one of our “old” stories a second time, I’m happy to say that it was a strongly worded prediction piece that proved us correct.

Market Matters

Over that past year-plus, the subprime debacle and related credit crisis have prompted discussions about “disaster,” “devastation,” “tragedy,” and “catastrophe.” Homeowners were unable to afford their houses, institutions faced significant asset write-downs, hard-working folks lost jobs, and investors watched portfolio values decline. While these financial consequences undoubtedly have been traumatic for many, the events of the past two weeks can serve to lend some perspective. The death toll in Myanmar has reached about 80,000 with another 50,000 people still missing. Likewise, in China, where the earthquake eventually may take over 50,000 lives as well. Somehow, missing quarterly earnings by a few cents simply does not seem quite as significant.

Speaking of…earnings season plugged along and the results to date have given some analysts (the slightest) reason for optimism. As the week began, about 90% of Standard & Poor’s 500 Index companies had reported and 62% actually beat expectations. While average quarterly earnings have plummeted by over 17% on a consolidated basis, the results looked far stronger once the financial firms were removed from the equation.

Without that struggling sector, first-quarter profits actually increased by more than 7%. Retailers took center stage this week as Wal-Mart Stores Inc. (WMT) proved again that discounters are benefiting from the current consumer nervousness. However, while Macy’s Inc. (M) and JC Penney Co. Inc. (JCP) suffered from weak sales, their results (and guidance) bested Street projections. Sony Corp. (ADR: SNE) rebounded as TVs and cameras moved back onto consumer shopping lists. Bond insurers MBIA Inc. (MBI) and Freddie Mac (FRE) reported wider losses, while UK-based HBSC Holdings PLC (ADR: HBC) realized higher profits.

Board directors and corporate execs again played “Let’s Make a Deal” as CBS Corp. (CBS) announced its intent to buy CNET Networks Inc. (CNET); Hewlett-Packard Co. (HPQ) made overtures toward Electronic Data Systems Corp. (EDS); General Electric Co. (GE) is reportedly putting its long-time appliance biz up for auction; and billionaire stakeholder Carl Icahn pushed for Yahoo! Inc. (YHOO) management to reopen talks with Microsoft Corp. (MSFT). Analysts often welcome merger news and consider it a positive sign of a rebounding business climate. Research in Motion Ltd. (RIMM) shares soared this week on news that its newest Blackberry creation will soon hit the market; and Merck & Co. Inc. (MRK) received a major victory when a Texas appeals court overturned a Vioxx verdict that, initially, awarded $32 million in damages.

Goldman Sachs Group Inc. (GS) apparently enjoyed the limelight (and the stir its analysts caused) two weeks ago. Last week, the investment bank was at it again, forecasting that crude prices will rise to $141 a barrel during the second half of 2008. Oil surged to about $128 a barrel late last week as gasoline prices soared to over $3.75 a gallon – just a week before the widely-traveled Memorial Day weekend.

The deal would form the second-largest group in the lucrative but highly competitive IT services market and help HP mount an assault on IBM’s leadership in the sector. But HP’s shares fell by around 10% on the news.

Will the deal work?

HP boss Mark Hurd didn’t emphasise the “significant” cost savings, so investors concentrated on the fact that EDS is a relatively low-margin and low growth business, said Lex in the FT. But therein lies opportunity. HP is aiming to bulk up its small services business, especially in EDS’s top area of large IT outsourcing contracts, and HP has both the required capital and scope to take short-term losses in return for longer-term profits.

Hurd managed to give rival PC maker Compaq’s margins a significant boost when he inherited it after taking over from his ousted predecessor, said Rob Cox on Breakingviews.

Another potential difficulty is the likely culture clash. Poor integration management hit HP when Compaq was taken over, as Robert Cyran said on Breakingviews. “Whether HP can repeat the good parts of the Compaq acquisition” – the improved profitability in Hurd’s tenure – “without the bad remains to be seen.”

HP: 12m change –2%

EDS: 12m change –14%

Source: Hewlett Packard Sets its Sights on IBM

• Cablevision Systems Corp. (CVC) announced Monday that it bought Long Island daily newspaper Newsday for $650 million, a deal Cablevision hopes will profit through cross marketing and advertising in cable and newspaper operations, Reuters reported. Cablevision – which also owns TV networks AMC and IFC, venues such as Radio City Music Hall and Madison Square Garden and sports teams New York Knicks and New York Rangers – recently announced it would buy the Sundance Channel for $496 million.

• Brazil’s government announced it will launch a sovereign wealth fund and offer more than $12.8 billion in tax cuts to boost the economy, Bloomberg reported. Called the Productive Development Policy Package, the plan hopes to increase exports and bolster infrastructure.  “We need to invest more and better,” Trade Minister Miguel Jorge said in a speech yesterday (Monday). “Investing better is nothing but taking a big leap in terms of the quality of our industrial matrix.”

• Oil prices hit a record high for the sixth straight trading day yesterday (Monday), before receding slightly. Light, sweet crude for June delivery jumped to a new record of $126.40 a barrel on the New York Mercantile Exchange, the Associated Press reported. Retail gas prices rose to a record $3.718 a gallon according to a survey of stations by AAA and the Oil Price Information Service.

• Consumer prices in China for the month of April were 8.5% higher than last year, the country’s National Bureau of Statistics reported. April inflation was driven by a 22.1% jump in food prices, the Associated Press reported.

• Despite a jump in revenue and subscribers, XM Satellite Radio Holdings Inc.(XMSR) reported a first-quarter net loss of $129.3 million, compared with loss of $122.4 million year ago. Revenue was $308.5 million, up 17% from a year ago. The company picked up 355,000 new customers through deals with auto manufacturers. It lost 51,000 retail customers. XM ended the quarter with 9.3 million subscribers.

• Shares of Research in Motion Ltd. (RIMM), maker of the popular BlackBerry device, climbed 7% yesterday (Monday) after the firm revealed its new 3G version. The stock gained $9.20 to close at $141.97. The BlackBerry Bold will be released later this summer, MarketWatch reported.

• Shares of Electronic Data Systems Corp. (EDS) soared 28% before having trading suspended late in the day yesterday (Monday). The tech stock gained $5.27 to close at $24.13 on news reports that Hewlett-Packard Co. (HPQ) could be announcing plans to buy the business solutions tech firm.

• An announcement that Clear Channel Communications Inc. (CCU) was trying to come to a settlement with banks that backed out on its planned $19.4 billion privation sent the stock up almost 10% yesterday (Monday). Shares gained $2.87 to close at $32.87.