- Pre-Market Indications

Monday, May 19, 2008

Opening View: Yahoo! and Take-Two Interactive Targeted for Takeover

Turning to the equity market, Microsoft (MSFT: View sentiment for MSFTsentiment, chart, options) has reopened talks with Yahoo! (YHOO: View sentiment for YHOOsentiment, chart, options) about a deal that would not involve a full acquisition. The move comes just days after billionaire investor Carl Icahn said he would seek to oust Yahoo's board. In a statement Sunday, Microsoft said it "has raised with Yahoo an alternative that would involve a transaction with Yahoo but not an acquisition of all of Yahoo." However, the company did not specifically rule out a full acquisition.

Also in Monday merger activity, Electronic Arts (ERTS: View sentiment for ERTSsentiment, chart, options) is expected to extend its offer for Take-Two Interactive Software (TTWO: View sentiment for TTWOsentiment, chart, options) after a hostile tender offer failed to get majority support, The Wall Street Journal reported. The original $2-billion offer expired on Friday at 11:59 p.m. Take-Two management and some of the company's shareholders say the company deserves a higher offer, especially following record sales results of Grand Theft Auto IV, which have exceeded $500 million since its launch.

In broker activity, Goldman Sachs upgraded (AMZN: View sentiment for AMZNsentiment, chart, options) to "buy" from "neutral," and added the firm to its conviction buy list. Goldman cited strong revenue growth prospects, as it expects's investor base to widen as growth-oriented investors begin to take note of the shares. "We believe that a long recession could hurt Amazon's stock but help its business model, by removing offline retail capacity and pushing consumers to shop online," the broker added.

Finally, Lowe's Companies (LOW: View sentiment for LOWsentiment, chart, options) reported that fiscal first-quarter earnings slid to $607 million, or 41 cents per share, from $739 million, or 48 cents per share, a year earlier. Analysts, on average, predicted earnings of 40 cents per share for the quarter. Net sales for the quarter fell to $12.01 billion from $12.17 billion a year ago, as same-store sales declined 8.4%. The company expects to open about 23 new stores in the second quarter. In addition, Lowe's expects second-quarter total sales to grow about 1% and same-store sales to fall 6% to 8%.

Opening View: Yahoo! and Take-Two Interactive Targeted for Takeover

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