Morning Update

"It is not enough to be busy; so are the ants. The question is: What are we busy about?" - Henry David Thoreau

Morning News of Note:

• TM GM F DCX: Ranking the Most-Reliable Cars Lexus Tops J.D. Power Survey, But Mercedes, VW Struggle; A Strong Showing for GM Auto makers are getting better at building cars that last, according to the latest J.D. Power & Associates survey of vehicle reliability. That includes some major Detroit brands that have struggled to overcome consumer concerns rooted in past quality problems. As it has for 11 years, Toyota Motor Corp.'s Lexus brand ranked first in J.D. Power's Vehicle Dependability Study, which surveys consumers about problems with three-year-old vehicles. The top-ranked car in the survey was the 2002 Lexus LS 430, Lexus's top-of-the-line sedan. (Full Story) WSJ
• GOOG: For Soaring Google, Next Act Won't Be as Easy as the First Moves to Search Video, Books Raise Hackles as Owners Of Copyrights Complain An Angry Letter From NBC Google Inc. has prospered by letting people search the Internet. Its official ambition is much bigger: to search all of the world's information. But the farther Google ventures beyond the Web, the tougher the road gets -- as its dealings with some big TV companies show. Late last year, Google started recording TV programs aired in the San Francisco area without asking permission from program owners. In January Google released a test search service (video.google.com) that lets users search for a keyword -- say, "Michael Jackson" -- and view still images and partial transcripts from TV shows mentioning that keyword. (Full Story) WSJ
• BAC: Bank of America Agrees to Buy MBNA for $35 Billion Bank of America Corp., the second- largest U.S. bank by assets, agreed to buy MBNA Corp. for about $35 billion in stock and cash to challenge Citigroup Inc. and JPMorgan Chase & Co. in credit cards. The Charlotte, North Carolina-based bank plans to cut 6,000 jobs after the purchase, it said in a PR Newswire release today. Bank of America will swap 0.5009 share and $4.125 for each share of Wilmington, Delaware-based MBNA. That values MBNA at $27.50 a share, Bank of America said. (Full Story) Bloomberg
• MSFT: Microsoft Said to Be in Talks to Buy Adware Developer For the last two weeks, Microsoft has been in talks to buy a private Silicon Valley company, a move that underscores just how eager Microsoft is to catch up with Google, the search and advertising giant. The company that Microsoft has pursued is controversial: Claria, an adware marketer formerly called Gator, and best known for its pop-up ads and software that tracks people visiting Web sites. The Gator adware has frequently been denounced by privacy advocates for its intrusiveness. (Full Story) NY Times
• MWD: Morgan Stanley may divest asset mgmt unit - TheDeal.com (53.32 ): TheDeal.com is speculating that Morgan Stanley might be next to divest it's asset mgmt unit. Citigroup's swap of its asset mgmt business with Legg Mason has put a lot of pressure on rivals to separate their retail sales forces from their asset mgmt businesses. While recent deal speculation has focused on a sale of Morgan Stanley's Dean Witter unit, some analysts and bankers are promoting a less probable but equally compelling option: a sale of the firm's asset mgmt business.

Market Comments: The market opened slightly higher this am, but trading will likely be muted until after the Fed meeting. I expect another 25 bps hike and the same "measured" language in the wording-- no surprises.

Market Wrap

I thought today's market action was pretty constructive, considering yesterday's strength. The market pulled back slightly, and volume levels were moderate. Breadth was mildly positive and put/call ratios were neutral.

Some notable standouts included: CME, ELOS, IMGC, JAH, SOLD, and INFY just to name a few.

Tomorrow is the last day of the quarter. Normally I would expect this to bolster stocks, but we also have the FOMC meeting tomorrow. While I don't know anyone who is expecting any surprises to come out of the meeting, gaming the market's reaction is always a coin toss. Add to that the tendancy of most traders' unwillingness to make big bets ahead of a holiday weekend and I think we will have to wait until next week for the market to show its true colors.

Morning Update

"The more we do, the more we can do; the more busy we are, the more leisure we have." - William Hazlitt

Morning News of Note:

• CEO UCL CVX: U.S. Doesn't Need To Block Cnooc Bid -- The Threat Is Enough There is no good reason for Washington to block the bid by Chinese oil company Cnooc Ltd. to buy Unocal Corp. But it won't have to. The Sturm und Drang on the Potomac ensures Chevron Corp. is likely to win this takeover battle and make the matter moot. Consider: A Cnooc purchase of Unocal isn't a threat to U.S. energy security. (Full Story) WSJ
• TSCM: TheStreet Closes Research Unit TheStreet.com Inc. closed its research and brokerage unit, citing the firm's slow profit growth and shifting dynamics in the brokerage industry. In a press release Tuesday, the online financial news company said Independent Research Group LLC spent more than twice the amount it generated in revenue during 2004. The unit currently employs 40 people on Wall Street (Full Story) WSJ
• ATHR BRCM: Wi-Fi's Promise May Elude Investors WIRELESS NETWORKING, or Wi-Fi--the same technology you use at Starbucks and airports to surf the Web from your laptop--is about to morph into a kind of go-anywhere, connect-anywhere networking. That could mean the beginning of the end for now-standard computer networks. "The wired desktop will disappear in our lifetimes," says Craig Mathias, Principal with research firm the Farpoint Group in Ashland, Mass. (Full Story) BARRONS
• GDP: U.S. Economy Grew 3.8% in First Quarter, Survey Says The U.S. economy grew at a 3.8 percent annual rate from January through March, faster than previously estimated, as companies built up inventories, economists surveyed by Bloomberg News said before a government report today. The estimate for the government's final report on first- quarter gross domestic product, the sum of all goods and services produced in the U.S., compares with the 3.5 percent rate reported on May 26 and 3.8 percent in the fourth quarter. (Full Story) Bloomberg
• AAPL: Apple Upgrades IPod and ITunes Apple Computer Inc. released new software Tuesday designed to make it easier for users to listen to the increasingly popular, but largely unstructured podcast offerings. Apple, which also announced color screens for its iPod digital music players, said the new iTunes software comes with a podcast directory that lists more than 3,000 free audio programs. It also sports a new menu and the ability to automatically send new episodes of podcasts to the user's computer. (Full Story) Washington Post

Market Comments: The market is roughly flat in the early going, despite a very positive GDP report. 1Q GDP was revised higher at +3.8%, while the price component came in lower at +2.9% (benign inflation). Oil is also lower again on a higher-than-expected rise in crude inventories. This should help stocks build on yesterday's gains.

long BRCM

Morning Update

"Business more than any other occupation is a continual dealing with the future; it is a continual calculation, an instinctive exercise in foresight." - Henry R. Luce

Morning News of Note:

• GOOG: At $300 a Share, Google Looks Pricey and Still Irresistible David Edwards, a financial analyst with American Technology Research, wants to believe in Google. But how do you embrace a stock that has more than tripled in 10 months and cracked the $300-a-share barrier so quickly since going public that much of its growth potential seems already built into the price? In early May, when Google was trading for $236, Mr. Edwards sent a note to clients of his firm, a group that includes wealthy individuals and money managers, recommending that they buy Google stock. (Full Story) NY Times
• AMD INTC: Advanced Micro Sues Intel Over Customer `Coercion' Advanced Micro Devices Inc., the second-largest maker of chips for personal computers, sued larger competitor Intel Corp., claiming it used financial threats and cash offers to drive away dozens of customers. Intel coerced 38 companies including Dell Inc., Sony Corp. and Toshiba Corp. with ``old-fashioned threats, intimidations and `knee-capping''' to exclude Advanced Micro, the Sunnyvale, California-based company said today in a copy of the filing on its Web site. (Full Story) Bloomberg
• Consumer Confidence: U.S. Consumer Confidence Rose to 105.8 in June; Survey Shows An improving labor market and rising incomes lifted consumer confidence in June for a second straight month. The Conference Board's index was expected to rise to 104, the highest since February, according to the median forecast in a Bloomberg News survey of 59 economists. The index was 102.2 in May. (Full Story) Bloomberg
• AAPL: Apple's iTunes phone to launch tomorrow? - CNET (37.10 ) According to CNET, French newspaper giant Le Figaro has a piece saying the iTunes-compatible phone being developed by Apple and Motorola will finally launch tomorrow, with at least one American phone carrier agreeing to support it. The phone, which allows people to download songs to their computer and transfer them to the phone, has run into some opposition from carriers that want people to download music through their networks. According to Reuters, Cingular Wireless has been considering using the iTunes phone.
• EASI: Engineered Support announces $76 mln order from U.S. Army (35.35 +0.03) Co received orders totaling $76.2 mln from the U.S. Army for the production of 5,902 Tactical Quiet Generator sets. The orders are releases under three existing long-term contracts with the Army. The generator sets are slated for delivery through fiscal 2006 and until mid-fiscal 2007.

Market Comments: The market opens up this morning and quickly builds on its early gains. Consumer confidence came in better-than-expected, and the decline in oil back below $60 is helping. Add to that a dose of quarter-end mark-ups and I think the gains will stick.

We have a bit of a debate going on my comments yesterday about whether $60 oil hurts the consumer, so please weigh in below--

long EASI, INTC, GOOG

Morning Update

"Success comes to those who are to busy to be looking for it." - Henry David Thoreau

Morning News of Note:

• C: Heard on the Street: Citigroup Sells Its Asset Management; Will Others Follow? The decision of Citigroup Inc. to largely abandon the asset-management business and beef up its brokerage operation could force other Wall Street firms that select investments for clients while also peddling house-brand investment funds to consider similar moves. On Friday, the New York financial-services company unveiled a long-anticipated plan to swap the bulk of its asset-management business for the brokerage operations of Baltimore-based Legg Mason Inc., plus about $1.5 billion of Legg stock. Citigroup also will provide a $550 million loan to Legg Mason. (Full Story) WSJ
• AAPL: Bites Off the Apple THE IPOD SHOWS WHY Apple Computer is a great company. With elegant hardware and friendly software, Apple's portable player made a profitable business out of digital music -- a trick that had eluded record labels and such erstwhile leaders as Sony, Microsoft, Real Networks, and Napster. In the last year, the iPod has become Apple's best-selling product, bringing in a third of revenues for the Cupertino, Calif., firm. The iPod "halo effect" has lit up interest in Apple's Macintosh computer and Apple's stock (ticker: AAPL). (Full Story) BARRONS
• SKYT MNCP: For a New Cellular Play, Opportunity Is Calling A NEW FORCE IS EMERGING on the U.S. cellular scene. It's Mobile Satellite Ventures, a little-known company that could have a significant impact, despite the widespread perception that the industry is moving toward concentration among just four major carriers: Verizon Wireless, Cingular, T-Mobile and the likely combination of Nextel Communications (ticker: NXTL)and Sprint (FON). Mobile Satellite Ventures received approval from the Federal Communications Commission earlier this year to construct a nationwide wireless network with both satellite and terrestrial components. The existing wireless carriers use earth-based networks. (Full Story) BARRONS
• DOW: Good Chemistry DOW CHEMICAL SELLS its wares to a staggering array of industries -- agriculture, medicine, construction and transportation, to name a few. Its products run the gamut from latex and styrofoam to chlorine and pesticides. Little wonder, then, that the chemical giant's shares rise and fall with the perceived might of the global economy. That's why the past three months have been a downer. (Full Story) BARRONS
• MNST: A Friendly Monster AS THE LEADER IN ONLINE RECRUITMENT, Monster Worldwide controls one of the better Internet businesses and could prove an appealing target for a number of media and Internet giants. That was our premise a year ago in a cover story on Monster ("Work in Progress," Aug. 23, 2004) and it still holds true. The difference now is that Monster shares have appreciated to 27 from 18, giving the company a still-digestible market value of $3.3 billion. (Full Story) BARRONS

Market Comments: The market is set to open fairly flat, following a sharp 2-day selloff at the end of last week. I think that the market will bounce this week into quarter-end (window dressing), but I would use that strength to lighten up or raise some cash. (see my comments from this weekend's Weekly Sentiment Review)

long C, DOW, MNST

Weekly Sentiment Review

Most of the anecdotal indicators I follow, namely the investor surveys, have turned highly bullish. That's a negative development for the contrarian investor, since we like to invest when everyone else is bearish on the market. If everyone is already positive, then it usually means the current rally is getting long in the tooth.

Alternatively, some of the other market indicators I follow, such as short interest figures as well as put/call ratios, are still in neutral territory. That means that these folks, who are betting with real dollars, are still somewhat skeptical and likely still have a healthy dose of bearish bets on their position sheets.

Here is a sample of where some of the indicators stand:

• The bull/bear spread in the Investor's Intelligence survey rose to +34 (54% bulls, 20% bears)
• The bull/bear spread in the AAII survey rose to +28 (47% bulls, 18% bears)
• The bulls on Market Vane are at an 8-month high (70%)
• The Specialist Short ratio is still very low at 0.19
• The Public Short ratio is still high at 0.51 (the "public", including hedge funds, are still doing a lot of shorting)

So, overall I would have to say that my sentiment ranking for the market is neutral. But it is closer to turning bearish since I agree that it is getting late into this rally. I am not taking all of my chips off of the table yet, but would consider lightening up into further strength.

The easy money was made back in late April/early May, when bearish sentiment was at an extreme. I think we need to see some weakness in the market over the next several weeks before looking for another tradable rally.

Morning Update

"To venture causes anxiety, but not to venture is to lose one's self." - Soren Kierkegaard

Morning News of Note:

• Chinese Aquisitions: Heard on the Street: Meet China Inc.: Topping Japan Inc. of 1980s Corporate China Shows Muscle As Host of Global Bids Emerge, Marking Only Start of Deal Flow Four years ago, Goldman Sachs Group was trying to help PetroChina, a Chinese energy company, buy the Indonesian assets of Devon Energy. "At the time, nobody thought we were serious," recalls Johan Levin, co-head of mergers and acquisitions for Goldman Sachs in Hong Kong. Today, by contrast, "the first people on any buy list will be Chinese." In the past week, as two Chinese bids have emerged for companies in the U.S., one in manufacturing and one in energy, everyone is taking Chinese interest seriously. (Full Story) WSJ
• ELY: Callaway Golf Mulls Strategy Shots Amid Industry Downturn, Firm Gets a Buyout Offer; Shares Climb 15% on News Callaway Golf Co. said it is considering "strategic alternatives" for its future as insurance executive William Foley II said that he and a group including buyout firm Thomas H. Lee Partners had proposed taking over the golf-equipment maker. The value of the bid was put at $1.2 billion, according to a person familiar with the matter. Shares of Callaway, which has fallen on hard times amid a downturn in the golf industry and escalating competition, jumped 15% on the news in trading yesterday. (Full Story) WSJ
• 60 Dollar Oil: Oil, Pushing $60, May Rise Further on Fuel Demand Crude oil prices, which rose to $60 a barrel in New York this week for the first time, are more likely to rise than fall next week on speculation increasing fuel demand will drain U.S. inventories, a Bloomberg survey shows. Twenty-four of 50 analysts and strategists surveyed, or 48 percent, said oil prices will advance next week. Sixteen, or 32 percent said they will fall, and 10 forecast little change. (Full Story) Bloomberg
• ENER: Business Week reports that demand for hybrid vehicles is surging and the pros are buying stock in Energy Conversion Devices (ENER), the No. 1 U.S. maker of the nickel metal hydride (NiMH) batteries used in hybrids. ENER stock has soared from $10 in August to $19.69 on June 22. "We see it at 45 in a year,'' says Brion Tanous of Merriman Curhan Ford (MEM ), which has done banking for the battery maker. ENER will "dominate the market for years". Chevron (CVX), through a joint venture with ENER, is bankrolling production and marketing of the NiMH battery, notes Tanous. General Motors (GM) has placed orders for its Chevy Malibu and Saturn Vu hybrids, and by 2007, Tanous expects GM's order to soar. Also, Toyota (TM) plans to produce a Camry hybrid. Under a recent settlement of a patent lawsuit brought by ENER against Matsushita, which makes the battery for Toyota, hybrids made or shipped to America must use U.S. batteries. A special boost for hybrids: the new energy bill's $4,000 tax deduction for a hybrid purchase, up from $500 currently.
• LM C: Citigroup (C) announced that it has signed a definitive agreement under which it will sell substantially all of its Asset Management business in exchange for the broker-dealer business of Legg Mason, approx $1.5 bln of Legg Mason's common and convertible preferred shares, and approx $550 mln in the form of a 5-yr loan facility provided by Citigroup Corporate and Investment Banking. The total value of the transaction is approx $3.7 bln and will result in an after-tax gain to Citigroup upon closing of approx $1.6 bln, both of which are subject to adjustment. Citigroup will hold a conference call and audio Webcast to discuss the transaction at 8:30 ET.

Market Comments: The market is set for a slightly down open, on the heels of yesterday's weak close. This morning's economic reports included a strong durable goods report (+5.5% vs. +1.5% consensus) and the new home sales report (1298k vs. 1320k consensus). I am not expecting a heavy wave of buying ahead of the weekend, and would be happy to see the market just hang in there today.

Market Wrap

Nasty day in the market. If you watch the business news shows or listen to the media, you'll probably only hear about oil hitting $60. Someone savvy might try to throw in the negative rhetoric swirling over China during Greenspan's testimony today as a reason.

But the market was actually fairly flat most of the day. It wasn't until the last couple of hours of trading that the market started selling off. And oil has been hovering near $60 for days now.

So the technician in me thinks part of it is as simple as the fact that when the market took out the 1210-level on the S&P 500, which has been support for several days in a row, the selling accelerated. Don't kid yourself and not think that there are tons of hair-trigger sellers out there who place stops at levels like this, and sell as soon as those stops are triggered.

Now that doesn't help you very much to figure out where the market will go tomorrow or the next day, but if you follow the internals of the market intra-day like me, the late day sell-off was more due to technical levels than the high price of oil.

Quote of the Day

"In the takeover business, if you want a friend, you buy a dog." - Carl Icahn

Morning News of Note:

• MOT: Motorola's Modernizer CEO Zander Shakes Up VPs, Pushes Cool Phones and Vows To Leave Rivals in the Dust In recent years, Motorola Inc. had reason to be prouder of its past than its present. The company, based in Schaumburg, Ill., built some of the first car radios, provided walkie-talkies for U.S. soldiers in World War II, enabled astronauts on the moon to talk to earth and led the development of cellphones. In 1996, when it introduced the hugely popular StarTAC cellphone, Motorola controlled more than half the global cellphone market. (Full Story) WSJ
• E-Commerce Decline: Internet Scams, Breaches Drive Buyers Off the Web, Survey Finds A deluge of online scams and breaches of financial databases are taking a toll on electronic commerce, a survey from research firm Gartner Inc. shows. In a disturbing message for online retailers and bankers, more than 42% of online shoppers and 28% of people who bank online are cutting back on their activity because of "phishing" attacks and other assaults on sensitive data, according to a May survey of 5,000 U.S. online consumers by Gartner, scheduled for release today. (Full Story) WSJ
• WFMI: Whole Foods May Get Trimmed LATELY THE STOCK OF Whole Foods Market is looking a bit like an over-baked soufflé. Shares in the growing natural and organic foods retailer are up a whopping 165% since Barron's Online wrote favorably about the company in August 2002. In the past 12 months alone, the stock has outdone the Standard & Poor's 500 Index by roughly 25 percentage points. But its lofty valuation may encourage investors to get out of the kitchen. (Full Story) BARRONS
• CEO UCL UVX: CNOOC Offers $18.5 Bln for Unocal, Tops Chevron Plan CNOOC Ltd., China's third-largest oil producer, offered to buy Unocal Corp. for $18.5 billion in cash, topping the price Chevron Corp. agreed to pay for the U.S. oil and gas company. CNOOC bid $67 cash per Unocal share, or $1.5 billion more than Chevron's cash and stock plan, the Beijing-based company said in a statement today. San Ramon, California-based Chevron's agreement is ``highly likely'' to be completed while CNOOC faces ``an extensive'' regulatory process in the U.S., Chevron said. (Full Story) Bloomberg
• RIMM: More NTP Patents Are Rejected, Says BlackBerry Maker Research In Motion Ltd. said the U.S. Patent and Trademark Office rejected two more NTP Inc. patents, providing more ammunition for the BlackBerry maker as it wages a high-stakes legal battle with NTP. Seven of the eight NTP patents under review by the patent office have now been rejected and a ruling on the remaining patent under review is expected soon, said Research In Motion, or RIM. (Full Story) WSJ

Market Comments: The market is set for a flat open, and closed flat on the day yesterday also. More consolidation, which is healthy. When the market is in a position to pullback or selloff, and instead merely moves sideways, it is usually bullish in that it sets the market up nicely for another push higher. This is what I have been expecting to see as we approach quarter-end.

Long-term interest rates remain low, the dollar is stable, and there have been no big earnings warnings (at least, not yet). Greenspan speaks today, and will likely address things like China-US trade, etc.

Quote of the Day

"Economists' unanimaty that bad business is ahead is the most reassuring news possible. It's very unlikely that this will be the one time they're right." - Malcolm Forbes

Morning News of Note:

• MSFT NOK: Microsoft Aims to Be Top Seller Of Smart-Phone Software in 3 Years Microsoft Corp. aims to become the top seller of software in the fast-growing "smart-phone" market within three years, said Ya-Qin Zhang, a top executive in the software giant's mobile business. Dominance in software for smart phones - upgraded wireless handsets that handle functions like Internet surfing, email and videogames - has so far eluded Microsoft. (Full Story) WSJ
• GOOG: Google Denies Attempt to Match PayPal Service Google Inc.'s chief executive Tuesday denied reports that the online search engine leader was gearing up to compete directly with EBay Inc.'s pioneering PayPal service, but acknowledged some kind of electronic payment product was in the works. Eric Schmidt did not give details about the project but said it wouldn't trespass on PayPal's turf. "We do not intend to offer a person-to-person, stored-value payments system," Schmidt said. (Full Story) LA Times
• F: Ford Plans to Cut 5% of Salaried Work Force The Ford Motor Company said Tuesday that it would cut 5 percent, or about 1,700, of its white-collar jobs in North America. It also said it would no longer give bonuses to managers or make matching contributions to the 401(k) plans of salaried employees. Ford also lowered its yearly earnings forecast to $1 to $1.25 a share, compared with a previous forecast of $1.25 to $1.50 a share, saying it expected sluggish vehicle sales to continue. (Full Story) NY Times
• PG: co's Indian unit may begin selling Crest toothpaste this yr; would compete with UL and CL for shr of est IR$35bln Indian toothpaste mkt; est Indian toothpaste mkt to gorwth 15% in coming yrs -- Financial Express
• SIRI: Sirius Satellite Radio Inc. signed an agreement to broadcast British Broadcasting Corp.'s Radio 1 music channel. Financial terms weren't disclosed. Sirius plans to broadcast Radio 1, which has a weekly audience of more than 12 million in the U.K., in a time-shifted format, so that U.S. listeners will hear programs at the same time of day they are broadcast in the U.K. Radio 1 plays a mix of pop, rock, R&B and hip-hop music, and also features live broadcasts. Sirius plans to make the channel available later this summer.

Market Comments: The market was down only slightly again yesterday. This is positive, as it leaves a 2-day, light-volume pullback which helps the market work off its overbought condition. I still think the market will remain strong into quarter-end. Energy stocks were all lower yesterday, despite record high oil prices. I think it was just some profit taking, but I expect most of these companies will report great earnings for the quarter.

Quote of the Day

"Never shrink from doing anything which your business calls you to do. The man who is above his business may one day find his business above him." - John Drew

Morning News of Note:

• NUE IPS: Nucor Says Profit To Hit Lower End Of Forecast Range Nucor Corp. said its second-quarter results would come in at the lower end of its earnings forecast, in a sign that steel minimill companies are starting to feel the same softening market conditions as are larger, integrated steelmakers. Another minimill operator, Ipsco Inc. of Lisle, Ill., lowered its second-quarter earnings forecast, too, and, like Nucor, cited factors including weak demand and declining scrap prices. Declining prices for scrap, which minimill operators use as a primary raw material to make steel, limits the premium steelmakers can pass on to customers. (Full Story) WSJ
• Cable Co's Going Private: Cable Systems' New Weapon In Phone Battle: Going Private As they beef up for battle against telephone giants, a growing number of cable-TV systems are deciding that one way to get stronger is to buy out their public stockholders and go private. The move by the Dolan family to privatize Cablevision Systems Corp., announced yesterday, partly reflects its recognition that the company needs to be much more nimble as it jostles with Verizon Communications Inc., the phone company that's preparing to launch television service in Cablevision's backyard, according to a person familiar with the proposed $7.9 billion transaction. (Full Story) WSJ
• MSFT: Microsoft believes it can sell 10 mln Xbox 360 consoles in first 12-16 months - BBC (25.11 )
• PG: Procter & Gamble comments on Gillette acquisition - SEC Filing (54.25 -0.17) The dilutive impact of the Gillette (G) acquisition is expected to reduce P&G earnings by $0.25-0.35 per share in the first year following closing, and $0.05-0.10 per share in the second year following closing. In the third year following closing, the acquisition is expected to add $0.01-0.05 per share.
• TGT: Target expects June comps to be 'somewhat above planned range' of a 4-6% increase (54.90 +0.48)

Market Comments: The market opens down slightly this morning, as the prospect of oil prices hitting $60 dominates the headline. High oil prices are seen as a tax on the economy, and thus many strategists are predicting that if oil prices stay high, it will result in slower GDP growth going forward. Also, it could result in higher inflation readings than we have seen of late.

Quote of the Day

"Professionals are people who can do their job when they don't feel like it. Amateurs are people who can't do their job when they do feel like it." - Anonymous

Morning News of Note:

• GOOG: Google's Value? Search Me! ONE OF GOOGLE'S MANY UNIQUE BUSINESS practices is its flat-out refusal to provide Wall Street with any help on how to model the company's future financial performance. Google (ticker: GOOG) offers no quarterly or annual earnings guidance and declines to give any details on the direction the business might take in the months and years ahead. As a result, making forecasts about the company's profits -- and stock price -- involve inherent peril. Last year, for instance, we ran a chart that looked at the attempts of 19 Internet stock analysts to value the stock ("Value Quest," Nov. 29). As it turned out, all of the analysts willing to offer price targets were dramatically too conservative; some were off by 100%. (Full Story) BARRONS
• CVC: Cablevision's Dolans Offer $7.9 Billion for Company The billionaire Dolan family, which controls Cablevision Systems Corp., offered to buy the portion of the company it doesn't already own in a $7.9 billion transaction that would take the company private. Shareholders of Cablevision, the largest cable-television provider in the New York area, would receive $33.50 per share, or 25 percent more than the $26.87 closing price on June 17, the company said in a statement distributed today on PR Newswire. (Full Story) Bloomberg
• GOOG EBAY: Google Said to Plan Rival to PayPal Google is preparing an online-payment system that would compete with PayPal, according to an online retailer who has been approached by Google to take part in the effort. In addition to representing a direct challenge to eBay, which owns PayPal, the largest Internet payment system, the move signals Google's intention to become much more deeply involved in online commerce. (Full Story) NY Times
• AMTD TD: Ameritrade Close to Deal to Buy TD Waterhouse Ameritrade Holdings, the online brokerage firm, was near an agreement late yesterday to purchase TD Waterhouse, another powerhouse in the industry, according to executives close to the deal. The acquisition is expected to be announced as early as today, the executives said. Ameritrade, which is based in Omaha, would become the largest online brokerage firm in the country. (Full Story) NY Times
• WMT: Wal-Mart Stores-WMT sees June comps up 2%-4%

Market Comments: The market is set for a weaker open this morning. Some of this could be what is often referred to as "options expiration hangover", after last Friday's options expiration, as investors reload their puts and hedges, etc. The market has also been up for 5 straight days, a streak that is likely to be broken soon. But I expected any pullback to be benign, and for the market to remain strong into quarter-end.

Quote of the Day

"By trying we can easily learn to endure adversity. Another man's, I mean." - Mark Twain

Morning News of Note:

• ANF: Abercrombie & Fitch Tries To Be Less Haughty, More Nice When Alison Delaney wanted to try on jeans at an Abercrombie & Fitch store in Los Angeles recently, a 20-something employee, his polo collar rakishly turned up, quickly ushered her into a dressing room and said: "Let me know if I can help you with anything." When she left the store 20 minutes later, a pair of $70 jeans in hand, the employee waved and told her to come back soon. That kind of attention might be business as usual at many service-obsessed retail chains, but at Abercrombie & Fitch -- where aloof staffers often acted more like clothes models than sales help -- the pleasantries were a big change. (Full Story) WSJ
• EBAY: PayPal Targets Merchants With New Web-Based Products EBay Inc.'s PayPal electronic-payment processing unit is introducing products targeted at small businesses that want more control over transactions that occur on their Web sites. The San Jose, Calif., company, facing slowing growth for its online auctions in the U.S. and Germany, has outlined efforts to lean more heavily on PayPal, one of the most popular electronic-payment processing services on the Web. PayPal has launched several initiatives this year to generate additional revenue, including forging an alliance with Apple Computer Inc.'s iTunes store. (Full Story) WSJ
• VZ: Verizon Will Try New Strategy To Advance Its Television Plans Verizon Communications Inc. has launched a new strategy in New Jersey for getting bills passed to speed its rollout of television services, following defeats in the Texas and Virginia legislatures. Verizon, the largest phone company in New Jersey, is offering to pay the state's municipalities higher franchise fees in exchange for statewide approval. Under current rules, Verizon has to get approval from individual municipalities to offer television programming. (Full Story) WSJ
• VIA: For Viacom, Breaking Up Isn't Hard to Do VIACOM HASN'T BEEN a blockbuster performer for years, but the media conglomerate may be headed for a turnaround that could make it a hit with investors again. On Wednesday, Viacom's board approved plans, originally announced in March, to split the company. The entity named Viacom would include Paramount Pictures and the faster-growing cable networks like MTV. The other company, named CBS Corp., would include the more mature television networks, TV production houses and radio properties. CBS Corp. also would likely pay an attractive dividend yield. (Full Story) BARRONS
• BAC: U.S. Bank Buys Stake in China Looking to gain access to one of the hottest economies in the world, the Bank of America Corporation said Friday that it had agreed to acquire a 9 percent stake in China Construction Bank for $2.5 billion. For Bank of America, which has made acquisitions of several financial institutions in the United States, including last year's $47 billion takeover of the FleetBoston Financial Corporation, the deal with China Construction is another indication of its plan to expand aggressively overseas. (Full Story) NY Times

Market Comments: The market is set to open higher this morning. This market certainly has not had the type of pullback that I would have expected. I still think the market will rally into quarter-end, but I was hoping to get a better buying opportunity. I may have to pay up for some stocks, as it is not the job of the market to accomodate.

Quote of the Day

"In time of prosperity friends will be plenty; In time of adversity not one in twenty." - James Howell

Morning News of Note:

• GM: Tough Line by Union to G.M. Setting up a potential conflict with General Motors, the president of the United Automobile Workers union said Wednesday that he would not agree to change G.M.'s labor contract before it expires in 2007 or to roll back health benefits for G.M. hourly workers to match the lesser benefits of the company's salaried employees. In an extended interview the union's leader, Ron Gettelfinger, said that while he was willing to make concessions to help General Motors within the terms of their existing contract, the two sides were not yet close to reaching an agreement. G.M., he said, had not presented him with enough information to convince him of the severity of the financial situation. (Full Story) NY Times
• AAPL INTC: (AAPL) computers w/ Intel (INTC) chips also expected to be able to run Windows and Linux, as well as Mac OS, eWeek notes
• TIVO: TiVo plan to offer movie downloads apparently is on track-- CNet (6.96 -0.07) CNet reports that TiVo's plan to offer movie downloads, likely in concert with Netflix, apparently is on track. According to a posting Wednesday on PVRBlog, photos of a TiVo demonstration of movie downloading and uploading video were published on the Web.
• YHOO: Yahoo ramps up 'deep Web' search effort - CNET (36.32 ) CNET reports that Yahoo began testing a service late Wed that allows people to perform simultaneous searches for information contained within subscription-based Web sites. While most search engines crawl the Web and troll freely accessible sites, they cannot get into much of the so-called deep Web, vast amounts of data stored within paid and password-protected sites.

Market Comments: The market opens higher this am, and is beginning another upward creep thus far. We did get a nice dip yesterday, but you had to be pretty nimble to catch it. I increased my long exposure slightly, but would like to get even longer at some point soon. Maybe options expiration this week will give us one more chance. But remember, often the sign of a strong market is one that never gives you a good chance to "get in".

Quote of the Day

"Always listen to a man when he describes the faults of others. Most times, he's describing his own, revealing himself." - Malcolm Forbes

Morning News of Note:

• YHOO: Yahoo Buys Firm That Offers Calls From PC to Phone Yahoo Inc. said it acquired Internet telephony company Dialpad Communications Inc., in a move that will allow it to offer calling between computers and standard telephones. Terms of the deal weren't disclosed. Closely held Dialpad, of Milpitas, Calif., has about 40 employees. It lets consumers make voice calls from their PCs that are routed over the Internet to the conventional telephone network, with unlimited calls within the U.S. and Canada currently costing $11.99 a month. (Full Story) WSJ
• TWX: AOL'S WELL AGAIN Time Warner Cable may have a companion when it goes public sometime next year - America Online. Media giant Time Warner has considered combining its cable unit and AOL into one separate publicly-traded company, according to two sources close to the company. The option is one of many the company is considering for the future of AOL, which still generates plenty of cash even as it bleeds subscribers, and Time Warner is not likely to make a move until it sees if AOL's new plan to offer much of its content for free on the Web can be succesful. (Full Story) NY Post
• GOOG MSFT: Tech Firms Try to Conquer the Globe Google and Microsoft Compete to Offer Navigable 3-D Maps of the Earth A war of the virtual worlds is gearing up between search engine company Google Inc. and software maker Microsoft Corp., as the two tech rivals race to bring competing digital versions of planet Earth onto the World Wide Web. Where traditional, two-dimensional maps are already available online at sites such as MapQuest.com, projects underway at Google and Microsoft will eventually let users click around through immersive and interactive 3-D versions of city streets while sitting at their desktop computers. (Full Story) Washington Post
• AAPL: Apple Computer: Apple store increases wait times for Mac mini - AppleInsider (36.00 ) AppleInsider reports that Apple's online store now lists wait times for the company's Mac mini computer at 6 to 8 business days. For the past two months the Apple store had listed the Mac mini for shipment on "the same business day." An updated Mac mini with double the standard RAM and has been rumored for some time and is expected as part of the company's upcoming summer hardware line.
• Energy: OPEC Gulf Source said OPEC has pact for 2 stage cieling hike of 500k bbls/day; trigger for 2nd hike yet to be agreed upon // Iraqi June output 3.9m bbl/day; exports around 1.45m bbl/day -- Petrologistics // Saudi Oil Minister Ali al-Naimi said he's monitoring demand for oil not prices; reits that refinery invesmtne needed; would need more customers to boost output currently; sees extra capcity from UAW, Kuwait and Saudi if needed // OPEC agred to implement new oil basket; OPEC to meet again in Sept as expected

Market Comment: The market opened higher this am on another bening report on inflation (CPI +0.1% vs. +0.2% consensus), but has since given up those gains due to a rise in oil prices. Yesterday saw another mid-day spike fade by the close. If today is the down day I have been looking for this week, I will likely use it to add (long) exposure to the market.

Winslow out for the year

Each time I read another story about Browns' tight-end Kellen Winslow Jr. , I find myself further amazed and less sympathetic. Today's story in the AP confirms that Winslow will miss the entire 2005 season. It further sheds light on his motorcycle accident, revealing that he admitted to "attempting stunts" before crashing into a parking lot curb at 35 mph. Huh?

Is this guy an idiot? I don't think he should have been riding a bike at all, considering he was still recovering from a broken leg last season (he only caught 5 passes before getting injured). But I might have had an ounce of sympathy for him if it was a real accident. But not stunts!

Then he goes on to make idiotic comments like this one: "I'm grown. I still have to live my life," Winslow told the newspaper. "I did know the circumstances behind it, but I'm still learning. I'm young. You think you're invincible. You think nothing's going to happen to you. It was a mistake."

Someone really needs to coach this guy on talking to the media. In the first sentence he says 'I'm grown'. But in the third sentence he says 'I'm young'. Which is it? And who cares? The fact is you get paid a lot of money to take care of your body. You have a clause in your contract that says as much. I hope they take away is $4.4 million bonus. He certainly doesn't deserve it.

Quote of the Day

"It is the character of a brave and resolute man not to be ruffled by adversity and not to desert his post." - Cicero

Morning News of Note:

• HPQ: H-P's New Chief Separates PC Unit From Printer Arm Hewlett-Packard Co. separated its personal computer and printer units just five months after combining them, undoing one of the last acts of former Chief Executive Carly Fiorina. As part of the move, the diversified Palo Alto, Calif., tech company named Todd Bradley, former CEO of handheld-computer maker palmOne Inc., as executive vice president heading its personal-systems group, which includes personal computers, handhelds, monitors and workstations. (Full Story) WSJ
• INTC: Intel Launches Venture Fund To Invest in Chinese Tech Firms Intel Corp., the world's largest maker of computer chips, on Monday said it established a $200 million venture capital fund to invest in Chinese technology companies that develop hardware, software and services. The Intel Capital China Technology Fund will target upstart companies that work with the semiconductor company's products. The technology heavyweight said examples of areas it plans to focus on are cellular communications, broadband applications for consumers, and chip design. (Full Story) WSJ
• IBM: I.B.M. Expands Efforts to Promote Radio Tags to Track Goods Many giants of the computing world, like Microsoft, Oracle, SAP and Sun Microsystems, have been vying to gain recognition as technology leaders in the drive to use radio tags to identify consumer goods. None have been more aggressive than I.B.M., which plans to start yet another marketing salvo today. The company's consulting practice, I.B.M. Global Services, plans to announce that its consultants will begin selling advice on consumer privacy issues related to the use of radio identification tagging of consumer goods. (Full Story) NY Times
• GOOG: Google readying Web-only video search - CNET (282.75 ) CNET reports, citing sources, that Google is expected to unveil a search engine for Web-only video this summer that will let people preview media clips from its Web site. Google's planned service will let visitors find free short-form videos such as the popular "Star Wars" video spoofs. The engine will complement the search giant's existing experimental site that lets people search the closed-caption text of television shows from PBS and CNN, among others, and preview accompanying still images. The new capabilities will let people watch roughly 10 seconds of Web video clips for free before shuttling visitors to the video's host site.
• US Economy: MAN 2Q employment survey of 16000 US employers; 31% plan to increase hiring in 3Q vs 30% in 2Q; 57% expect no chg to staffing levels in coming qtr vs 58% in 2Q; net employment outlook 21%, highest since 1Q01; MAN CEO Jeffrey Joerres said co's hiring but not in big numbers

Market Comment: The market is set to open flat to slightly down, on the heels of this morning's retail sales report that showed that sales fell -0.2% (versus +0.2% consensus). Core PPI prices were also released, coming in less than expected (+0.1% vs. +0.2% consensus). Michael Jackson was also found not-guilty on all counts, but I haven't figured out how we can make any money off of that one.

Are You Proud of Your Job?

I read an interesting article in the USA Today recently about the careers people choose and the prestige that goes along with those professions. The article cites a survey conducted by Harris Interactive that compares the number of people assigning "prestige" to a job today versus back in 1977. Here are some of their findings:

• In 1977, 29% of us assigned prestige to the job of teachers. By 2004, it has risen to 48%. (Teaching was one of the few to show an increase)
• The prestige the public assigns to doctors has slipped from 61% to 52%
• Lawyers have slipped from 36% to 17%
• Priests and ministers from 41% to 32%
• Engineers have slipped from 34% to 29%
• And athletes from 26% to 21%

All of this got me thinking. If you visit a classroom, I suppose you would like to be able to talk about your prestigious job. But for most of my generation, I think we try to define ourselves by our lifestyles and not our careers. I can't really think of anybody who chose their career because of the prestige with which it was associated. I certainly believe that more people are motivated by money.

Maybe I'm just biased because of my own profession as well as the part of the country I live in (very materialistic). Nonetheless, I grew up in the Midwest and understand the virtue of values as well as the next guy. I just see their role in the career decision-making process as diminished at best.

Am I off base here? Let me know what you think--

Market Wrap

As I suspected, today was all about the close. If you had watched the market this morning, you would have seen the Dow ramp up +75 points, and you might have gotten sucked in to thinking the market was breaking out again. But alas, it was a slow fade from then on. The Dow finished with less than a 10 point gain, and volume was lackluster at best.

All in all, still a constructive day. I am betting that more consolidation this week will lead to a good buying opportunity into quarter-end. My colleague at Jim Cramer at TheStreet.com is calling for one big down day this week, exacerbated by expiration, to use as that buying opportunity. Sounds reasonable to me, just don't expect a bell to go off.

Quote of the Day

"You never will be the person you can be if pressure, tension, and discipline are taken out of your life." - James G. Bilkey

Morning News of Note:

• PG: Ad Icon P&G Cuts Commitment To TV Commercials Top U.S. Advertiser Explores New Ways to Reach Viewers; A Product-Placement Surge Procter & Gamble Co., the consumer-goods giant and marketing icon, is sharply cutting how much it commits in advance to buying television commercials next season, according to people familiar with the situation. The move by P&G, the maker of well-known brand items such as Tide, Crest and Pampers, is the latest sign of rapid changes in how companies reach consumers and TV networks and cable channels draw revenue. (Full Story) WSJ
• MO RAI VGR LTR: Tobacco Accord Seems Likelier As Government Cuts Demands Slashing Cost to $10 Billion For Stop-Smoking Program May Help Bring Settlement The move by lawyers for the Justice Department to scale back their demands in a sprawling government antitobacco lawsuit -- to $10 billion from an anticipated $130 billion in funding to help smokers quit -- could bring the sides a step closer to settlement, or at least give the government's case a better chance to survive an appeal. One government witness had suggested a 25-year, $130 billion program to cover all smokers as a potential remedy. But last week, government lawyers substantially scaled back their request, asking Judge Gladys Kessler to force the companies to fund a smoking-cessation program valued at $10 billion over five years. (Full Story) WSJ
• NOK: Nokia Unveils Seven New Phones To Fill Gaps in Product Range Sony Ericsson Introduces Four New Models Nokia rolled out seven new mobile phones on Monday to help address weakness in its product range in North America, where it suffered a drop in market share in the first quarter. The launches take the total number of phones unveiled by Nokia this year to 33, putting the company well on track to exceed its target of 40 new handsets for the full year. (Full Story) WSJ
• MWD: Morgan Stanley Fires Philip Purcell, CNBC Reports Morgan Stanley fired Chairman and Chief Executive Officer Philip J. Purcell, CNBC reported. Purcell will stay on until a replacement is found, and the company has hired an executive recruiter to find one, CNBC said today, citing ``sources close to the situation.'' Resignations on June 10 by nine traders in the structured-products group were ``the last straw'' for the board of directors, CNBC said. (Full Story) Bloomberg
• US Economy: Fed Gov Santomero sees Fed cont to increase rates at a measured pace; neutral interest rate can be in a wide band; recent events dampened his GDP outlook, est 2005 GDP at low end 3.5%-4%; labor mkt suprisingly uneven; sees credit quality risks espically for housing; US trade deficit may cont to widen (Saturday)

Market Comment: The market opens mixed this am (S&P down, Nasdaq up), but is basically flat. I would not be surprised to see the market rally at some point during the day, but it is the close that counts. If the market closes strong, and on rising volume, it would be incrementally bullish. But rememeber, this is an options expiration week, so I would anticipate some volatility day-to-day. There is usually at least one nasty down day on most expiration weeks.

Weekly Sentiment Review

The market was relatively flat last week. I was a little early in my call that I thought the market would take a breather, soon after reaching overbought levels. Sometimes strong markets get overbought and stay that way. (By overbought, I am referring to the technical indicators like stochastics and oscillators)

Still, the pause last week was healthy, and I think this week could unfold similarly. We have options expiration this week, which often leads to increased volatility also. I still think the market could have another push higher into quarter-end, but I do not expect it to extend much beyond that.

Typically rallies in a trading range market last in the 4-6 week range. We are roughly 4 weeks into this current rally, and will be around 6 weeks at quarter end. Sentiment has moved from the bearish levels I was highlighting back in late April/early May into more neutral territory. Here is where some of the indicators stand today:

• The bull/bear spread in the Investor's Intelligence survey has moved back to +30 (it bottomed at (+14)
• The bull/bear spread in the AAII survey has bounced to +26 (it bottomed at -25)
• The bulls on Market Vane are back at 68% (matching this year's high)

So the advisor surveys are back to reflecting fairly bullish sentiment, but the put/call ratios have not yet flashed the same levels of caution. I suspect it will take some more rallies to get the put/call ratios in similar bullish territory. At that point, with everyone back in the bullish camp, it will be time for us to raise some cash, get defensive, and wait for a pullback and another good buying opportunity. Such is life in a rangebound market. At least...that's how I see it.

Quote of the Day

"Keep a definite goal of achievement constantly in view. Realize that work well and worthily done makes life truly worth living." - Grenville Kleiser

Morning News of Note:

• NOK INTC: Nokia, Intel Plan to Collaborate On Wireless Technology WiMAX Alliance Will Concentrate On Mobile Applications; No Money to Change Hands Nokia Corp. and Intel Corp. said they will collaborate on the development of WiMAX, a wireless technology that is touted as an alternative way to deliver both stationary and mobile Internet access at high speeds. The alliance between Nokia, the world's biggest cellphone maker, and Intel, the No. 1 maker of computer chips, is aimed at refining WiMAX for mobile applications, a field where the technology faces stiff competition from mobile data networks based on cellular technology. The companies said they will jointly develop WiMAX technology for laptop computers, mobile devices and network base-stations. (Full Story) WSJ
• INTC: Intel Raises Its 2Q Revenue Forecast Buoyed by stronger-than-expected demand for the chips in notebook computers, Intel Corp. boosted its second-quarter revenue forecast in the latest sign that the semiconductor industry is gaining strength. Intel, the world's largest semiconductor company, said Thursday it expects sales to be between $9.1 billion and $9.3 billion for the period ending July 2. That's an improvement from its April prediction of between $8.6 billion and $9.2 billion. (Full Story) Washington Post
• Trade Deficit: U.S. Trade Deficit Probably Widened in April, Bloomberg Survey The U.S. trade deficit probably widened in April, led by rising imports of oil and consumer goods, economists said before a government report today. The shortfall in trade of goods and services grew to $58 billion, according to the median estimate of 68 economists surveyed by Bloomberg News, from the previous month's $55 billion. The deficit reached a record $60.6 billion in February. (Full Story) Bloomberg
• C: Citigroup Inc., the world's biggest financial-services company, agreed to pay $2 billion to settle investor claims that the firm helped Enron Corp. inflate profit and hide debt, lawyers for Enron shareholders said. The accord, the largest Enron-related settlement so far, resolves shareholders' claims that New York-based Citigroup helped Enron executives manipulate the energy trader's finances to hide billions in debt in off-the-books partnerships, investors' lawyers said today in a release.
• MSFT: Microsoft planning music subscription service - CNET (25.51 ) -Update- According to CNET, citing sources, Microsoft is planning to bolster its own online song store with a new subscription service later this year. The software giant launched its song download store, similar to Apple's iTunes store, last Sept. The Microsoft MSN-branded service did not include a subscription plan at that time, focusing instead on selling individual songs online and through Windows Media Player. But Microsoft is now working with record labels and copyright holders in preparation for launching its subscription-based component. (Briefing.com note: Look for potential weakness in music subscription plays including RNWK and NAPS)

Market Comments: The market opened fairly flat this morning. Intel gave an upbeat mid-quarter update last night, but it looks like a 'sell on the news' reaction. The stock is down 2% so far, and the semi index (SOX) is also down slightly. Intel has had a great run over the last few weeks, so I am not suprised by today's action. I still like the stock.

Quote of the Day

"Spurts don't count. The final score makes no mention of a splendid start if the finish proves that you were an also ran." - Herbert Kaufman

Morning News of Note:

• Housing Market: Housing Market Sizzles, But the Stocks Are Less Forgiving The housing market is red-hot. And so are the earnings and stock prices of the firms that build them. But some valuation measures suggest investors remain wary of the sector. Last month, Toll Brothers Inc., of the Philadelphia suburb of Horsham, said net income during its fiscal second quarter ended April 30 more than doubled, thanks to rising prices and strong demand. D.R. Horton Inc., of Fort Worth, Texas, the largest home builder in the U.S. based on market value, recently said net income rose 56% in its fiscal second quarter. Miami-based Lennar Corp., the third-biggest builder, reported a 39% rise in its fiscal first-quarter profit. (Full Story) WSJ
• SBUX: Starbucks to Lift Stake to 51% In Southern-China Venture Starbucks Corp. said Thursday it agreed to increase its stake in its southern-China operations to 51% from 5%. Under the deal, Starbucks will increase its ownership in Coffee Concepts (Southern China) Ltd., a joint venture between Maxim's Caterers Ltd. and the Seattle-based coffee company. Hong Kong conglomerate Jardine Mathieson Holdings Ltd. has a substantial stake in Maxim's Caterers. No financial details were available. (Full Story) WSJ
• TIVO: TiVo Is Extending Its Mobile Service To More Devices TiVo Inc. said it expanded its mobile service to include pocket personal computers and mobile phones running on Microsoft Corp.'s Windows software. The digital-video-recording pioneer rolled out the mobile service, TiVoToGo, earlier this year at the Consumer Electronics Show, allowing customers to transfer video content from their TiVo boxes onto their laptops. Expanding the capability to additional mobile devices is "a natural progression," said Jim Denney, TiVo's director of product marketing. (Full Story) WSJ
• INTC: Intel 2nd-Quarter Revenue May Meet Highest Forecast Intel Corp., the world's biggest computer-chip maker, may say today that second-quarter revenue will reach the company's most-optimistic forecast because of a surge in sales of laptop chips. At least nine analysts including UBS AG's Thomas Thornhill and Credit Suisse First Boston's Michael Masdea boosted their revenue predictions in the past month, to an average of $9.1 billion. Santa Clara, California-based Intel in April predicted sales of $8.6 billion to $9.2 billion. (Full Story) Bloomberg
• TIF: Tiffany & Co-TIF will not get bid from Richemont-FT Today, luxury goods group Richemont ruled out selling its stake in British American Tobacco, ending the rumors that it would make a bid for the jewelry retailer TIF. Johann Rupert, Richemont's CEO said on the matter, "We have no intention of selling BAT shares, [and] if we are not going to sell BAT it will follow that we will not borrow $5B to buy a company."

Market Comments: The market is set to open flat to down this am. Investors will be listening closesly to Greenspan's testimony this morning for hints about further interest rate hike as well as comments about the "froth" in the housing market. This is becoming a hotly debated topic, and I plan on devoting some attention to it soon.

Quote of the Day

"Our business in life is not to get ahead of others but to get ahead of ourselves-- to break our own records, to outstrip our yesterdays by our today, to do our work with more force than ever before." -- Stewart B. Johnson

Morning News of Note:

• Credit Cards: The Days of Credit-Card-Only Issuers May Be Numbered The nation's independent credit-card companies may not be independent much longer. A slowdown in the growth rate of the credit-card business is putting new pressure on card issuers that focus mostly on the business of peddling plastic. As a result, investors and analysts are betting that a wave of consolidation may spell the end of a business model that has been key in the evolution of the credit-card industry. Known in the industry as "mono-line" companies, they include MBNA Corp., Capital One Financial Corp., Providian Financial Corp., and Metris Cos. Unlike other credit-card operations that are tucked into banking behemoths such as J.P. Morgan Chase & Co., Citigroup Inc. and Bank of America Corp., the mono-line issuers don't have significant banking operations. (Full Story) WSJ
• TWX: AOL's Plan to Move Content To Free Site Is a Risky Reversal America online became the Internet's biggest business by charging people a monthly subscription fee for its service. Now, faced with mounting customer defections, it is gambling it can do better by giving away many of its features. Hoping for a bigger piece of the fast-growing online advertising pie, AOL later this month will unveil a revamped AOL.com Web site, offering free access to many of the features once available only to AOL's paying subscribers -- such as news, Internet radio, videos of music concerts and articles from magazines published by AOL's sister publications at Time Inc. (Full Story) WSJ
• TIVO MSFT: TiVo (TIVO), Microsoft (MSFT) and Intel (INTC) announced a nationwide upgrade to the TiVoToGo service, enabling people for the first time to move TiVo content stored on a Microsoft Windows XP-based PC onto Windows Mobile-based Portable Media Centers powered by Intel Mobile Media Technology as well as newer Windows Mobile-based Smartphones and Pocket PCs. Select American Airlines (AMR) customers will be among the first to try out the latest summer travel technology with free Portable Media Centers -- which they'll be able to keep -- loaded with TiVo content via a chartered flight on June 8, 2005, hosted by American Airlines, TiVo, Microsoft and Intel.
• TXN: Texas Instruments narrows Q2 range; EPS now above consensus -Update- Co now sees Q2 EPS of $0.27-$0.30, vs prior guidance of $0.25-$0.29 (consensus $0.27); sees revs $3.12-3.24 bln, vs prior guidance of $3.00-$3.24 bln (consensus $3.14 bln). Co says its updated estimates reflect growing demand across a broad range of its Semiconductor products, as well as seasonal growth in its educational calculators.
• YHOO FON: Yahoo! Inc-YHOO launches enhanced mobile email service with Sprint-FON The service will give users the ability to manage their email on a mobile device & will cost $2.99 a month.

Market Commentary: The market opened up slightly this morning, after yesterday's nasty reversal. The market was exceptionally strong intraday yesterday, but gave back all of its gains and closed in the red for the day. Volume ran a little higher than the previous day, qualifying as a distribution day. This is probably a result of the fact that the market is a little extended, and in need of some consolidation.

Quote of the Day

"The rung of a ladder was never meant to rest upon, but only to hold a man's foot long enough to enable him to put the other somewhat higher." -- Thomas H. Huxley

Morning News of Note:

• WM PVN: WaMu Has Deal To Buy Providian For $6.45 Billion Seeking to plug a big hole in its consumer business, Washington Mutual Inc. agreed to buy credit-card company Providian Financial Corp. in a cash-and-stock deal valued at $6.45 billion, or about $18.71 a share. The acquisition will turn WaMu into one of the nation's largest credit-card issuers at a time of heightened competition in the maturing business. After years of explosive growth that has put more than 900 million general-purpose cards in circulation, credit-card issuers are finding it difficult to add new customers. (Full Story) WSJ
• GM: GM Plans a New Lineup of Vehicles Auto Maker Is Set to Unleash Seven-Passenger Wagons; Tweaking SUV Gas Mileage Under pressure to revive sales, General Motors Corp. is about to unleash an important element of its turnaround effort: A slew of new, better-looking vehicles. But in a market where the big players are launching new models almost every month, Chief Executive Rick Wagoner and his product czar, Vice Chairman Robert Lutz, face a stiff challenge to persuade investors that the cars, trucks and crossovers GM has coming can reverse a trend that has taken GM's U.S. market share to 26% today from 47% in 1976. (Full Story) WSJ
• DEO AED: Diageo Aids Pernod's Allied Bid In a move that could give a big boost to Pernod Ricard SA's about £7.4 billion ($13.49 billion or ?10.97 billion) bid to buy Allied Domecq PLC, Diageo PLC agreed to buy two key brands from Pernod -- and pledged not to join a potential rival bidder for the liquor maker. The Diageo-Pernod pact is a big round of brinkmanship in the heated contest for Allied. Divvying up Allied's spirits portfolio marks the last major round of consolidation of the global liquor industry, and is one of the biggest takeover fights going on now. (Full Story) WSJ
• GOOG: Google Insiders Search for Profits INSIDERS AT Google have been raking in the dough from this high-flying stock's phenomenal performance. Since the beginning of the year, co-founders Sergey Brin and Larry Page each have sold two million shares of the Internet search engine company's stock through automatic sales, taking in over $400 million each. Page still holds about 37,000 shares of Google, while Brin still owns 49,000 (see Inside Scoop, "Google and Autodesk Execs Still Selling," April 22). But the founders aren't the only ones who are plugging in "megabucks" in their Google searches. (Full Story) BARRONS
• US Economy: Fed Chairman Greenspan said bond yields are falling vritually everywhere due to globalization, doesnt expect yields to change soon; creidble that long rates signaling a weak economy; pension demand doesnt explain falling yields but not sure what inverted yeild curve might mean; no single cause for unusual bond prices; central bank buying had modest yield effects; hedge funds already picked the low hanging fruit; hedge fund industry could temporarily shrink, trading strategies may disappoint; protectionism and rigid economies are worrisome; US uses savings exceptionally efficiently; CNY revaluation wont shrink US deficit (Monday)
  

Market Commentary: The market opened strong this morning, on the heels of benign comments from Greenspan. The Chairman did not make any remarks that would upset the markets, nor did he take the opportunity to dispel rumors that the Fed is nearing a "pause" in its current rate hike cycle.

Quote of the Day

"Think of yourself as on the threshold of unparalleled success. A whole clear, glorious life lies before you. Achieve! Achieve!" -- Andrew Carnegie

Morning News of Note:

• AAPL INTC: Apple Is Poised to Shift To Intel as Chip Supplier Move Could Open Door To More-Powerful Macs; Cutting Long Ties to IBM Apple Computer Inc. and Intel Corp., long on opposite sides of one of technology's biggest divides, appear finally to be coming together. Apple, of Cupertino, Calif., has begun briefing some partners about plans to begin shifting its Macintosh computer line next year to Intel chips, according to industry executives and people familiar with the briefings. Apple has said it expects to announce the move today, these people said. The move would be a major change in strategy for Apple and a high-profile win for Intel, of Santa Clara, Calif. (Full Story) WSJ
• MSFT: Microsoft Agrees to Give Rivals Free Access to Software Microsoft Corp. agreed to give rival software firms free access to some of its software codes and full operability on its Windows-based servers, European regulators said Monday. The announcement is part of Microsoft's last-ditch effort to meet a June 1 deadline set by regulators to comply with last year's antitrust ruling. Under that ruling, Microsoft was fined ?497 million ($610.2 million) and ordered to produce a stripped-down version of its Windows operating system and license some of its source codes to run servers. (Full Story) WSJ
• EBAY: Time to Bid On: eBay The online auction colossus is expanding briskly and eyeing some big opportunities. With the stock down 35% this year, a nice rebound could be in store. LAST WEEK, EBAY HIT THE BID. In a deal designed to boost the online auction giant's flagging domestic growth rate, eBay agreed to pay $620 million in cash to acquire Shopping.com, which operates an online shopping-comparison service. It was the latest in a series of moves that have dramatically expanded eBay beyond its original business of providing an online auction market for collectibles. Via its 2002 acquisition of PayPal, for instance, eBay became a key provider of online payment services, competing with the credit-card companies. (Full Story) BARRONS
• PLD CDX: ProLogis Buys Catellus to Boost Distribution Centers ProLogis, a real estate investment trust owning warehouses and distribution centers, agreed to buy Catellus Development Corp. for $4.9 billion, the largest U.S. property transaction of the year so far. The price includes debts owed by San Francisco-based Catellus, ProLogis of Aurora, Colorado, said in a statement today. Catellus shareholders will be able to opt for a mix for ProLogis stock and cash or be paid a total of about $3.5 billion in cash. (Full Story) Bloomberg
• WM PVN: Washington Mutual to Buy Providian for $6.45 Billion Washington Mutual Inc., the biggest U.S. savings and loan, will buy credit-card issuer Providian Financial Corp. for $6.45 billion in stock and cash. Washington Mutual will pay the equivalent of $18.71 per share for San Francisco-based Providian, a 4.2 percent premium to the stock's closing price on June 3, Seattle-based Washington Mutual said in a statement today. Washington Mutual will pay for the acquisition through a combination of its own stock and cash. (Full Story) Bloomberg

Market Commentary: The market is opening fairly flat this morning. There aren't a lot of big economic reports this week. The big event will be Intel's mid-quarter update, as well as comments from Fed Chairman Greenspan this week. I continue to favor long positions, and would use pullbacks this week to add to positions.

Quote of the Day

"More people should learn to tell their dollars where to go instead of asking where they went." -- Roger W. Babson


Morning News of Note:

• AAPL: Apple, iPod Users Reach a Settlement Over Faulty Batteries Apple Computer Inc.'s iPod portable-music player is a cultural icon beloved by music fans, save for one flaw: The rechargeable but nonreplaceable batteries in many early models didn't last nearly as long as advertised, leaving some consumers fuming. Now, Apple has effectively acknowledged the flaw, by agreeing to replace some iPods and give other consumers up to $50 in cash or credit on Apple purchases. The offer is part of a proposed settlement of a class-action lawsuit in San Mateo County, Calif. (Full Story) WSJ
• DELL: Dell plans to introduce premium PCs - Financial Times (40.60 ) The FT reports that Dell said it planned to introduce a new brand of "premium" PCs aimed at the high-end consumer mkt, a departure from the co's traditional emphasis on low prices and customer value. The new line of desktop and notebook PCs would be geared to the "mass luxury mkt" that wanted more powerful computers for music, video and games. Prices for the new line, to be introduced later this year, would range from $1,200 to $3,500.
• Energy: EU Energy Commissioner Andris Piebalgs said he will urge OPEC to boost production at meeting next wk; said EU will also seek to help EU energy co's raise investment in oil producing nations
• Fund Flows: equity funds rptd net inflows $1.402bln wk end 6/1, etf inflows 75% of total equity inflows; tech funds rptd net inflows for second consec wk, first time since 11/17/04; taxable bond funds rptd net inflows $1.502bln, incl $976m into HY bond funds, lgst since 9/3/03; money mkt funds rptd outflows $6.801bln -- AMG Data
• PEET: Peet's Coffee - next Starbux - BusinessWeek (29.82 +0.88) The BW discusses Peet's Coffee & Tea (PEET), saying that Michael Moe was one of the few analysts who had pegged Starbucks as a buy in '01, when it was just $14 a share. It has since rocketed to $54. Moe, now CEO of ThinkEquity, says he has found a new Starbucks in the making: Peet's Coffee. Coffee fans love choices, and Peet's is yet another in the hot specialty coffee mkt, says Moe, "with its own group of loyal fans, a la Starbucks." But Peet's is tiny next to Starbucks. And Peet's stock, now $29, sells at 36x estd '05 earnings of $0.77 a share, vs Starbucks' 45x earnings. Based on its fast earnings and sales growth, Peet's stock could double in 2 years, says Moe. ThinkEquity analyst Nicole Miller says Peet's aims to be the gold standard in specialty coffee, based on its deep-roasting process of Arabica beans. Peet's expects to add 23 stores this year. Kristine Koerber of JMP sees '06 earnings of $0.93 a share. (Briefing note: Peet's mkt cap stands at $406 mln)

Market Commentary: The market opened down this morning on the heels of a weaker-than-expected payroll report. The economy only added 78,000 jobs last month, versus expectations for something closer to +175,000. But these reports tend to be volatile from month to month, so I wouldn't put too much emphasis on any single month. I still think the economy is on solid footing, and likely emerging from a breif "soft patch" in the first quarter.

Quote of the Day

"Rule No. 1: Never Lose Money. Rule No. 2: Never forget Rule No. 1." -- Warren Buffet

Morning News of Note:

• G: Judge Orders Gillette To Cease Campaign Of Hair-Raising Ads Gillette Co. must cease advertising its vibrating M3Power razor as being capable of raising hairs so that they can be sliced more effectively, a federal judge ruled. Rival razor maker Energizer Holdings Inc. had sought a preliminary injunction in U.S. District Court in Connecticut that would force Gillette to change some of its advertising and promotional materials. U.S. District Judge Janet C. Hall agreed in part to Energizer's request, saying that the Boston company would need to stop claiming that the M3Power could "change the angle of hair in relation to the skin" or "extend or lengthen hair" in a significant way. (Full Story) WSJ
• Wireless Households: Cutting the Phone Cord Isn't as Popular as Once Predicted Two years ago, when Frank Roberts moved into a new home in Somerville, Mass., he figured his family no longer would need a traditional fixed-line phone. He thought the cellphones he and his wife used all the time would be more than sufficient. He guessed wrong. The couple, who have an 18-month-old son, quickly ran over their monthly allotment of cellphone minutes. Worse, their grandparents could never understand them when they called, because of echoes and choppy connections on the cellular network. (Full Story) WSJ
• EBAY SHOP: EBay Agrees to Purchase Shopping.com EBay, the online marketplace, said on Wednesday that it had agreed to buy Shopping.com, an online comparison shopping site, for $620 million. The move comes amid a slowdown in eBay's revenue growth, especially in the United States and is seen as a way for the company to increase traffic and sales on its site. EBay said it would pay $21 a share for Shopping.com, a 20 percent premium to its closing price of $17.44. (Full Story) NY Times
• Geopolitical Summary: President Bush will nominate Rep Christopher Cox (R, CA) as Chairman to SEC replacing Donaldson (AP)... Blair urged not to scrap EU Constitution vote after the Netherlands and France rejected the new framework (Bloomberg)... Commerce Secretary Gutierrez made his first trip to China saying that protection of intellectual property rights are "not up for negotiation"... Three separate bombings in Iraq kill at least 20, including top municipal council leader... Israel frees 398 Palestinians as part of cease-fire deal.
• US Economy: MNST May employment index 134 from 131 in Apr, new all time high; rising comser need for social services and child care

Market Commentary: The market rallied yesterday on the weak prices paid component of the ISM Survey as well as Dallas Fed Pres. Fisher's remarks on CNBC that the Fed is in the "8th inning" of this rate hike cycle. I still have some long exposure to the market, but not in a meaningful way. I would like to see us work off the current overbought condition a little more. But I continue to scan for breakouts, which seem to be popping up more and more. Happy Trading--

Quote of the Day

"What's money? A man is a success if he gets up in the morning and gets to bed at night and in between does what he wants to do." --Bob Dylan


Morning News of Note:

• GM: G.M. to Offer Big Discounts Just for June General Motors will announce a major sales promotion for June that will offer customers the same discounts as G.M. employees for most of the company's 2005 model cars and trucks, people with knowledge of the plan said. The strategy is expected to be announced on Wednesday along with sales results for May. It could lead to hundreds or thousands of dollars of additional discounts on some vehicles. (Full Story) NY Times
• Rising Rates: As Rates Rise, Winners and Losers Emerge THE HIGH-PROFILE GURUS who are the public faces of Wall Street's top investment banks apparently agree on one thing: The Federal Reserve will continue to raise short-term interest rates for the foreseeable future. Several strategists interviewed by Barron's Online say they expect the Fed to continue making regular 0.25% hikes in the federal funds rate at least through its November meeting. At that time, they expect short-term rates to sit at 4%, up from the current 3%. Some think Greenspan & Co. will stop there. On Tuesday, futures markets were pricing in a fed funds rate of 3.5% to 3.75% by the end of the year. (Full Story) BARRONS
• SBC: SBC Cuts High-Speed Internet Price 25% to Add New Customers SBC Communications Inc., the largest U.S. provider of high-speed Internet access on digital subscriber lines, cut the price for its standard DSL service by 25 percent to add more customers. SBC, the second-largest U.S. telephone company, lowered the price for DSL service with a maximum download speed of 1.5 megabits per second to $14.95 from $19.95, the San Antonio-based company said in a statement. Atlanta- based BellSouth Corp.'s comparable DSL service sells for as little as $32.95. (Full Story) Bloomberg
• China Cell Phones: China Spurns Homegrown Phones As Cellular Market Grows, Western Firms Get Most of the Profit The Chinese cell phone market is growing like gangbusters and boasts an impressive 330 million subscribers. Mobile-phone sales are expected to rise 11 percent this year, and Western phone giants such as Motorola Inc. and Nokia Corp. are ringing up profits from the boom. So why are China's own cell phone makers floundering? (Full Story) Washington Post

Market Commentary: The market is up big this morning after Dallas Fed President Richard Fisher made comments on CNBC that the "Fed is in the 8th inning" of this current rate hike cycle. That means they could be done raising rates sooner than most strategists anticipate. The bond market also rallied big on the news, sending the 10-year Treasury yield below 3.90%.