bloggingbuyouts

Microsoft Corp. (NASDAQ: MSFT) may try to buy Yahoo! Inc. (NASDAQ: YHOO) again, but it does not want the whole company. It finds the search business useful as part of its battle with Google (NASDAQ: GOOG). The content portal business does not have much attraction, and Redmond wants a company like Time Warner (NYSE: TWX) to pick up that piece. According to The Wall Street Journal, Microsoft "approached other media companies in recent days about joining it in a deal that would effectively lead to Yahoo's breakup."

The new deal just might work. Yahoo! dropped below $20 yesterday, putting its stock back where it traded before the first buy-out offer. The No. 2 search company's shares reached as high as $33. Investors, especially Carl Icahn, are steamed that Yahoo! did not grab all of that extra money.

Even if Microsoft cannot find a partner to take the Yahoo! content business, it may move ahead. It only has 10% of the US search business. Yahoo! has about 20% and Google around 60%.

Microsoft still needs Yahoo!, and with its stock down by a third, Yahoo! needs a buyer.

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

More states have filed charges against Countrywide (NYSE: CFC) for aggressive marketing and giving loans which were highly risky. Washington and California have joined Illinois in the actions.

Up until now, Bank of America (NYSE:BAC), which is buying Countrywide, has been sticking to its story that it will close on its purchase of the mortgages company. The media has written a million times that the big money center bank might pull out of the deal. That actually became a bit more likely with the new states' actions.

According to The Wall Street Journal, Kurt Eggert, a law professor at the School of Law at Chapman University said, "Countrywide could be required to give back its profit on all those loans and conceivably give back houses on which it has foreclosed." Since that number could be well into the billions of dollars, the potential damages are rising fast.

Countrywide could spend tens of millions of dollars on legal fees and countless hours in court over the next several years. That has become much clearer in the last few days.

BAC would be better off to let CFC go out of business and just buy its assets. Maybe the bank never intended to close the deal. Maybe that was its plan all along.

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

Overnight, Belgian newspaper De Standaard wrote that, based on its sources, Warren Buffett backs an InBev buy-out of Anheuser-Busch (NYSE: BUD).

Is it any wonder? BUD can try to greatly improve its earnings on its own, but with 50% of the US beer market, that may be hard. It can hope that buying the piece of Mexican brewer Grupo Modelo that it does not already own will help profits. More likely it will increase debt or dilute current shareholders.

BUD's problem is that its shares may never see $60 again. They have risen above that on the InBev offer. A look at the company's long-term shock chart shows it has never been this high before.

If Buffett makes his backing of the InBev offer public, most of the BUD investors are likely to follow. He will have done all of them a favor.

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

Reports are that the heated merger talks between United (NASDAQ: UAUA) and US Air (NYSE: LCC) have hit a wall. Both airlines are probably still talking to AMR (NYSE: AMR), Continental (NYSE: CAL), and any puddle-jumper with a single-engine plane that they can find.

The airline industry got another dose of electric-shock therapy yesterday when JetBlue (NASDAQ: JBLU) said it would defer delivery on a number of new Airbus jets. Of course, if the airline doesn't make it, the delivery could be dodged altogether.

Managers at United and US Air have probably decided that thousand of hours talking about mergers will not save them. With oil at $130, putting together two airlines is not unlike lashing two drowning men to a leaky raft. Neither will be lonely, but both will still die.

Continued at 24/7 Wall St.

Some of the fat cats in the Senate think that the Sirius Satellite (NYSE:SIRI) merger with XM Satellite (NYSE:XMSR) might be OK if the combined company would give up a large portion of its spectrum. According to The Wall Street Journal, these legislators would propose that the firms "divest as much as half of their combined radio spectrum as a condition of their proposed merger."

Although it is not clearly articulated, the reason for the proposal is so that the US government could, if it wanted to, sell that spectrum to another party to start a new satellite radio company. Even that option would allow the government to view XM plus Sirius as something short of a monopoly.

The Senate and the FCC actually know better than to push their deal. Over the year-and-a-half that the merger has been pending, the two companies have gone from being in bad financial share to being in a dire set of circumstance. Each company has well in excess of $1 billion in debt. Neither has ever made a dime and their losses last quarter were not encouraging.

Continued at 24/7 Wall St.

Time Warner (NYSE:TWX) plans to spin-off its cable company, Time Warner Cable (NYSE:TWC), to shareholders. In the process, the parent will get a payment of $9.25 billion as part of a one-time dividend. It will also let most of its debt go to the cable company, improving the balance sheet by a factor which should matter to shareholders.

According to The Wall Street Journal, "Time Warner could use its windfall to cut its debt further, buy back shares or make an investment."

Leaving aside the big debt which the cable company will have to handle, well over $23 billion, Time Warner will be left with cash and an odd assortment of businesses.

One of the key legs will be the magazine operations, which are not growing due to movement of advertising dollars out of print. The company will have its cable programming businesses like CNN and Turner. They have done well, and there is no reason to believe that the trend will change. The TWX studio operations run in a cycle, depending, at least to some extent on whether the movies produced do well.

Continued at 24/7 Wall St.

Carl Icahn is known as much for his mistakes as his successes. His process for making money is based on forcing management to do the right thing. He cannot, however, control the forces of the fates and furies, the trends which wreck businesses or old decisions which can come back to haunt the living.

Most notable among Icahn's recent errors are Blockbuster (NYSE:BBI), a movie rental chain which is part of the Stone Age of media, and Motorola (NYSE:MOT), where the handset operation died so quickly that it did not even make it to the door of an emergency room.

Now, Icahn's latest gambit, a play to get Yahoo! (NASDAQ:YHOO) to sell-out to Microsoft (NASDAQ::MSFT) for $33, may have gone off track. Microsoft is no longer interested. So says Steve Ballmer, the Genghis Khan of the software world.

Continued at 24/7 Wall St.

Barnes & Noble (NYSE:BKS), the No.1 bricks and mortar bookseller, is looking at a buyout of No.2 player Borders (NYSE:BGP). Neither company has done especially well as readers have turned to Amazon (NASDAQ:AMZN) and other places to buy books online. While both of the book chains have web sales operations, they are not large enough to offset the trend to stay out of stores. Adding to their troubles is the fact that younger Americans do not read, perhaps because they don't know how.

According to The Wall Street Journal, "Barnes & Noble has about 20% to 22% of the retail book market, while Borders controls 10% to 12%." Since the companies are taking a shellacking from online rivals, The Justice Department may show them some mercy.

A merger won't solve any problems. It may allow for some management and distribution costs to be pulled out. Weak stores can be closed. But the market is wise. Over the last two years, Amazon's shares are up about 130%. BKS is off close to 20% and BGP is down closer to 70%.

Continued at 24/7 Wall St.

The skulduggery of banks who want out of LBOs is already widely known, and expected. Big financial companies have tried to put the legs out from under a deal to take Clear Channel (NYSE:CCU) private, and now appear ready to take a powder on the contract to buy-out Bell Canada (NYSE:BCE).

Leaving aside the ethics of the matter, although that is hardly fair, the $51.8 billion which was offered for BCE was expensive. It was, according to the Guinness Book Of World Records and other sources, the largest deal of its kind, ever.

Now, banks, including Citigroup (NYSE:C), which does not have much of a reputation left at any level, want better terms including higher interest rates. According to The New York Times "The negotiations over the Bell Canada buyout began to fray late Friday."

Article continues at 24/7 Wall St.

It is about the time that Electronic Arts (NASDAQ:ERTS) is expected to extend its hostile bid of Take-Two Interactive (NASDAQ:TTWO). Take-Two has argued that it is worth much more than the EA offer. Two things would say that the argument is not true.

First, although the new Take-Two "Grand Theft Auto IV" video game launch was extraordinarily successful, it failed to move the company's stock up. Second, no company other than EA has offered a dime for the company. That may be because Take-Two's recent earnings have been lackluster. It also may arise from the fact that very few companies can get the kind of economies of scale that EA can get from buying another video game company.

All of this should convince the EA management that its best bet is to do what Microsoft (NASDAQ:MSFT) did with Yahoo! (NASDAQ:YHOO). Redmond simply walked away and watched the stock of its target fall. Then, lawyers and raiders crawled all over the company.

Continued at 24/7 Wall St.

What a fabulous defense. The Yahoo! (NASDAQ:YHOO) board has written Carl Icahn about his plan to run his own slate of directors in a proxy war. The portal's governing body reasons that because Icahn was not in any of its meetings and did not attend negotiations with Microsoft (NASDAQ:MSFT) that the billionaire can't understand why Yahoo! is worth more than $33 a share.

In a letter run in The Wall Street Journal, Yahoo! writes that the company's board "remains the best and most qualified group to maximize value for all Yahoo! stockholders."

The reasoning by the board is flawed to the bone. Whether Icahn or any other shareholder attended meetings is beside the question. Yahoo!'s value in the market before the Microsoft bid was $19. Wall Street placed that value on the company because it had repeatedly put out disappointing results. The bad numbers cost former CEO Terry Semel his job. Yahoo! has less than 25% of the US search market, and that number is falling. To argue that the board understands why the company is worth $37 a share is both arrogant and has no basis in fact.

The other part of the Yahoo! reasoning is based on the idea that management's projections for the next three years create a value for the company well beyond its current share price. This does not take into account that no one believes that Yahoo! can hit the numbers. The Paulson hedge fund, one of the largest shareholders in the portal company, has already said it will back the Icahn bid. So have other owners of the company's stock.

Yahoo!'s board cannot simply dismiss arguments about the value of the company because it has talked in private and come up with higher numbers. "If wishes were horses, all the beggars would ride."

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

It looks like Take-Two Interactive (NASDAQ: TTWO) will sell $500 million worth of its new game "Grand Theft Auto IV" the first week that it is on the market. That is better than most expectations. It will help the company make the case that the buy-out offer larger rival Electronic Arts (NASDAQ: ERTS) has made is too low.

It cannot be said that the news is not good for TTWO. According to The New York Times, "The company is expected to report it sold six million copies of the graphically violent game, 3.6 million of them on the first day."

Electronics Arts has offered $25.74 per share for Take-Two. The company's stock trades about a $1 below that. The good news may push it up some

Continues at 24/7 Wall St.

It's official. At 7:56 PM Saturday night, Steve Ballmer of Microsoft (NASDAQ: MSFT) officially threw in the towel in its bid to acquire Yahoo! Inc. (NASDAQ: YHOO). Now that the details are out, the differences were just too wide. Microsoft took its offer up to $33.00. Yang was holding out for $37.00.

Unless every bit of media and every bit of research was wrong, Yahoo! had no real second bid that would have generated even a "low-$30's" share price. In fact, everything we saw in the "new age of liquidity pressures and softer economics" might dictate the shear size of the real dollars involved would dictate that Yahoo! wasn't even able to even get a "Mid-$20's valuation" from even a consortium of other media giants. At $28.60, Yahoo!'s market cap is roughly $40 BILLION.

Over the last 5-year period, Yahoo! shares barely saw $40.00 and anything over $35.00 was long before the Google (NASDAQ: GOOG) AdSense program came on like an avalanche pouring down the mountain. Jerry Yang's is delusional about the value Internet and web giant, mainly because of that shear size of real dollars at this point. But now on a standalone basis, Yahoo! is just an overvalued Internet behemoth that used to have a bidder

Continued at 24/7 Wall St.

Sprint (NYSE: S) may have found a buyer. The interested party is German phone giant Deutsche Telekom NYSE: DT). DT owns the fourth largest cellular carrier in the US. Sprint has the third largest network, but has struggled to keep subscribers since it bought rival Nextel.

Sprint's shares are trading at $7.81 down from $25 less than two years ago. The firm has had financial troubles because of customers losses and has fallen well behind AT&T (NYSE:T) and Verizon Wireless. Combining Sprint and T-Mobile would create a strong, third competitor in the US market.

Sprint has no solution to building out a 4G network that will allow it to remain competitive a less than a decade from now. Its plans to spend $5 billion on a national WiMax grid have been slowed and perhaps killed by the company's financial and operational problems.

Continued at 24/7 Wall St.

Trying to make sense of all the rumors about Microsoft (NASDAQ:MSFT) buying Yahoo! (NASDAQ:YHOO) and Yahoo! making a search deal with Google (NASDAQ:GOOG) is senseless.. Only three or four people are actually playing the cards and they are all lying to one another. Steve Ballmer may be the biggest liar of all but he controls the most chips.

The only thing for certain is that, once this is all over, Yahoo!'s shareholders will be better off. Either it cuts a deal to outsource search to Google and that gets approved by the government, or Microsoft puts Yahoo!'s long-time shareholders out of their suffering and buys the portal company for $31 a share or something in that neighborhood.

Yahoo! has a chip in the game because it was so poorly run. Ironic, but true. If it had pushed its search business harder five years ago, it might not have been overtaken by Google. If it had not gone through three CEOs over that period, it would be a sign that it had some long-term plan which was working.

Continued at 24/7 Wall St.