Morning Update

"One of the secrets of life is to keep our intellectual curiosity acute." - William Lyon Phelps

Morning News of Note:

• DWA: In DreamWorks Earnings Woes, A Bigger Problem Sales of 'Shrek 2' DVD Suggest Format Is Peaking As Hollywood Profit Center DreamWorks Animation SKG slashed its earnings forecasts for the second time in as many months, flagging a fundamental problem for all of Hollywood: The highly profitable DVD market seems to be maturing more quickly than expected. DreamWorks yesterday significantly scaled back its earnings guidance for both the second quarter and the year because of unexpectedly high returns of "Shrek 2" DVDs by retailers. At the same time, DreamWorks called off a $500 million secondary stock offering it had planned. (Full Story) WSJ
• DIS: Disney Explores Multistep Plan For Radio Spinoff, Cash Pullout As Walt Disney Co. explores the fate of its roughly $3 billion radio station and network group, the company is considering a multistep process to both extract cash and structure a tax-free spinoff to Disney shareholders, according to people briefed on the company's plans. Disney has debated for years the role of radio in its media conglomerate, but Chief Executive Officer Michael Eisner has resisted any dramatic change at the unit, which consists of 71 stations and a separate radio network that reaches 4,500 affiliate stations with programming including ABC News Radio and ESPN Sports Radio. (Full Story) WSJ
• INTC: EU officials raid Intel, others U.S. chipmaker Intel Corp., computer makers and distributors were raided by European Commission and local officials on Tuesday as part of an ongoing investigation into possible antitrust violations, a spokesman for the European Union executive said. "DG Competition officials, accompanied by officials from national competition authorities are conducting inspections of several premises of Intel Corp. in Europe as well as a number of IT firms manufacturing or selling computers," spokesman Jonathan Todd said. (Full Story) Washington Post
• TGT: Target co expects July sales to be in line with planned 4-6% increase (57.21 +0.28)
• Mad Money Stocks: Last night on Mad Money: Jim says we need to "learn to love the bull" Cramer is bullish on AA, YHOO, ABT, UNH, and DGX... Sees OSUR and MDRX as possible takeover canidates. As part of Jim's "Buy Tech Now" thesis he recommends MOT.

Market Comments: The market opens down slightly this am. PEP reported good earnings this am, and DNA reported strong results last night. Both stocks are up so far. INFY tempered its guidance a bit, and this high-flyer is down $6.

long INTC, UNH, DNA, PEP