Company Report: AET, ING, WLP, HWP, AMZN, LU, MOT, FLEX, More

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M&A Earnings/revenue Analyst actions Offerings/stock actions Miscellany

U.S. health insurer Aetna(AET) climbed 4 1/16, or 6.5%, to 66 3/4 after CNBC reported it is in talks to sell its financial services and international business units to Dutch financial services company ING Groep(ING) for up to $9 billion. Aetna rejected a bid by ING and WellPoint Health Networks (WLP) to buy Aetna for $10 billion in March. ING Groep edged up 3/16 to 60 5/16, while WellPoint dropped 1 13/16 to 72 5/8.

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Dow component Hewlett-Packard (HWP) dropped 4 3/8 to 120 1/8 despite announcing an agreement with Amazon.com (AMZN) to supply the online retailer with 90% of its hardware and related systems. Amazon.com also lost ground, falling 3 7/16, or 6.6%, to 48 5/16.

H-P's fellow tech Dow dweller IBM (IBM) also fell, ending the session down 3 9/16 to 107 3/8.

Mergers, acquisitions and joint ventures

Dean Foods(DF) lost 3/8 to 30 3/8 after it announced it will buy Land O'Lakes' Upper Midwest fluid milk operations. The companies also agreed to form a joint venture to market and license certain value-added fluid and cultured dairy products to further expand and leverage the Land O'Lakes brand name nationwide.

Both agreements include long-term licensing arrangements for use of the Land O'Lakes brand name. The transaction, which is subject to regulatory review, is expected to close on or about July 1. Terms of the deal were not disclosed.

Lucent(LU) lost 1/2 to 57 1/4 after it agreed to acquire privately held fiber optical networking equipment maker Chromatis Networks in a stock deal valued at $4.5 billion. According to the deal's terms, Lucent, which already holds about a 7% interest in Chromatis, would pay 78 million of its shares for the company, based on Lucent's closing price yesterday of $58.19.

For more on this story, see coverage from TheStreet.com/NYTimes.com joint newsroom.

Motorola(MOT) dropped 2 3/16 to 94 1/4 after it said it entered a $30 billion outsourcing deal with Flextronics International(FLEX). Flextronics popped 4 3/8, or 8.7%, to 54 7/16. The terms call for Flextronics to make parts for Motorola's wireless phone, two-way pager and wireless infrastructure. Motorola has also agreed to pay $100 million for an equity instrument which is eventually convertible into 11 million shares of Flextronics.

For more on this story, see coverage from TheStreet.com/NYTimes.com joint newsroom.

Royal Dutch Shell (RD) will sell its Australian-based coal business to Anglo American (AAUK) for about $850 million in a deal that puts Anglo back into the Asian coal market. Anglo American inched up 1/4 to 43 3/8 and Royal Dutch gained 7/8 to 62 7/16.

Shell said the final price for the business could reach $900 million, depending on final adjustments on completion of the deal, but Anglo said these would be minor. The agreement is expected to be completed by the end of June. Shell did not say how it would use the proceeds.

Schlumberger(SLB) sailed up 2 5/8 to 73 5/16 after it signed a Memorandum of Understanding with Baker Hughes under which Schlumberger's surface seismic business Geco-Prakla would join with Baker Hughes'(BHI) Western Geophysical seismic unit to form a new venture called Western Geco. Baker Hughes rose 2 1/8, or 6.2%, to 36 1/4.

In connection with the formation of the venture, Schlumberger will pay Baker Hughes $500 million in cash. Schlumberger will own 70% of the joint venture, and Baker Hughes, 30%. The deal, which is expected to close before the end of the year, is subject to completion of a definitive agreement, and to regulatory and board approvals.

Sonera(SNRA), a telecom operator, rose 13/16 to 50 7/16 after it agreed to make a $200 million investment in Powertel(PTEL) and Eliska Wireless Ventures I. Powertel popped 4 13/16, or 6.1%, to 83 13/16. The $125 million investment in Powertel boosts its interest in the company to 11.8% from 9.1%, while a $75 million investment gives it a 30.1% stake in Eliska.

Vodafone AirTouch (VOD) lost 5/8 to 45 13/16 after it signed an agreement with state-owned Telkom Kenya to form Safaricom, a joint venture 40% owned by Vodafone.

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Earnings/revenue reports and previews.

Intimate Brands(IBI) rose 7/16 to 23 9/16 after it said May same-store sales increased 11%.

Litton Industries(LIT) rose 3/8 to 42 15/16 after it reported third-quarter earnings of $1.33 a share, beating the nine-analyst estimate by a penny and up from the year-ago earnings of $1.10 a share. The earnings were excluding a one-time gain on the sale of businesses.

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Analyst actions

This morning, UBS Warburg's Caroline Levy upgraded PepsiCo (PEP) to strong buy from buy and boosted its price target to 51 from 46. Levy said that the company was her top pick in the soft drink space and raved about two recent management changes. PepsiCo slipped 5/16 to 40 11/16.

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Upgrades

Amerada Hess (AHC): UP to strong buy from buy at Deutsche Banc Alex. Brown. Amerada Hess increased 1 7/8 to 66 5/8.

HotJobs (HOTJ): UP to buy from neutral at PaineWebber. HotJobs boosted 1 31/64, or 14.7%, to 11 9/16.

National Computer Systems(NLCS): UP to intermediate-term buy from accumulate at Merrill Lynch. National Computer Systems shed 1 1/16 to 45 7/16.

Seagram (VO): UP to strong buy at SG Cowen; price target: 70. Seagram advanced 5/16 to 47 11/16.

Spectrasite (SITE): UP to buy from hold at Warburg. Spectrasite lifted 3/16 to 16 15/16.

Smithfield Foods (SFD): UP to strong buy from buy at Credit Suisse First Boston. Smithfield Foods climbed 2 1/4, or 10%, to 24 3/4.

Wireless Facilities (WFII): UP to strong buy from buy at Chase Hambrecht & Quist. Wireless Facilities hopped 8 11/16, or 22.6%, to 47 3/16.

Downgrades

Airgas (ARG): DOWN to market performer from outperform at Goldman Sachs. Airgas dipped 1/4 to 5 3/8.

Answerthink Consulting (ANSR): price target DOWN to 35 from 55 at CSFB. Answerthink Consulting decreased 1/16 to 17 11/16.

Cintas(CTAS): DOWN to intermediate-term accumulate from buy at Merrill Lynch. Cintas decreased 1 3/16 to 44.

Ethyl (EY): DOWN to market performer from outperformer at Goldman Sachs. Ethyl remained unchanged at 2 9/16.

MGM Grand (MGG): DOWN to neutral from outperform at Lehman Brothers. MGM Grand declined 1 5/16 to 32 1/2.

Oxford Health Plans(OXHP): DOWN to neutral from buy at Salomon Smith Barney. Oxford fell 2 3/16, or 9.3%, to 21 1/4.

Initiations

Avigen (AVGN): NEW strong buy at ING Barings; price target: 56. Avigen rose 1 3/16 to 29 3/4.

Clear Channel Communications (CCU): NEW buy at SG Cowen; price target: 90. Clear Channel traded up 7/16 to 75.

Gap (GPS): NEW buy at Thomas Weisel; price target: 45.

MGI Pharmaceutical (MOGN): NEW strong buy at U.S. Bancorp Piper Jaffray; price target: 50. Gap lifted 5/8 to 35 1/16.

Paradigm Genetics (PDGM): NEW strong buy at Chase H&Q. Paradigm hopped 1 3/8, or 14.3%, to 11.

Sierra Wireless(SWIR): NEW intermediate, long-term buy at Merrill Lynch. Sierra Wireless improved 2 3/8, or 8.5%, to 30 3/16.

SPX (SPW): NEW strong buy at Warburg; price target: 190. SPX added 3 5/16 to 105 5/16.

StarMedia Network (STRM): NEW buy at CSFB; price target: 29. StarMedia boosted 1 11/16, or 10.4%, to 17 15/16.

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Offerings and stock actions

Barr Laboratories(BRL) rose 1 7/8 to 53 7/8 after it set a 3-for-2 stock split.

Cascade Financial (CASB) climbed 1, or 15.4%, to 7 1/2 after it said it will repurchase up to 5% of its shares.

NRG Energy (NRG) moved up 1 5/8, or 10.8%, to 16 5/8 after Salomon Smith Barney priced 28.17 million shares at $15 each, below the estimated $16 to $18 range. The company is a wholly owned unit of Northern States Power (NSP), one of the largest independent power generators in the U.S. Northern States Power slipped 1/8 to 22 1/8.

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Miscellany

AT&T's(T) cable unit's programming will include a hard-core adult movie channel as part of an agreement that could leave the telecom company with a hefty portion of the movies' profits, reported The Wall Street Journal. According to the Journal, AT&T's cable division is facing pressure to produce results after using billions to upgrade its networks for new digital fare. AT&T lost 3/4 to 34 5/8.

Calvin Klein said it would bring a lawsuit against Warnaco(WAC) for alleged trademark infringement. Warnaco lost 1 5/8, or 19.6%, to 6 11/16. Calvin Klein also plans to terminate its jeans and underwear agreement with the clothing maker.

Farming and construction equipment maker Deere (DE) dropped 3 11/16, or 8.2%, to 41 9/16 after it said president and COO Robert Lane was elected CEO, a move that had been expected for several months.

ECI Telecom(ECIL) climbed 1 13/16, or 7.2%, to 27 1/8 after its fully owned subsidiary, InnoWave ECI Wireless Systems, was chosen by Global Village Telecom in Brazil to supply fixed wireless access systems, enabling GVT to deliver advanced Internet, data and telephony services to residences and businesses in south and central Brazil. Reuters said the deal is valued at up to $165 million.

ECI Telecom is offering GVT long-term financing. In conjunction, ECI Telecom has decided to invest up to $35 million in GVT's parent company, GVT Holding NV, in convertible subordinated notes.

Kmart(KM) edged up 7/8, or 11.5%, to 8 1/2 after it signed Charles Conaway, former president of CVS (CVS) to a five-year contract as its chairman and chief executive. Conaway succeeds Floyd Hall, who is retiring. CVS' current chairman and CEO, Thomas Ryan, will take on the additional duties of president.

For more on this story, see coverage from TheStreet.com/NYTimes.com joint newsroom.

LifePoint Hospitals(LPNT) lost 1 15/16, or 5.8%, to 21 7/16 after it announced that its chairman and chief executive, Scott Mercy, died in an airplane accident yesterday. The company named DeWitt Ezell its interim chairman. Day-to-day operations of the company will continue to be led by Jim Fleetwood, the company's president and COO.

Microsoft(MSFT) is set to respond today to a plan modified by the government to divide the software giant into two companies. The stock lost 13/16 to 62 9/16. The response could be the last before a federal judge makes a final decision on the matter. The Justice Department and 17 states on Friday brought the revised plan, which included comments from District Court Judge Thomas Penfield Jackson, who has been presiding over the antitrust case. The proposed split would create two companies: One company would offer the Microsoft Windows applications and another would focus on Microsoft Internet Explorer and Office products. A decision could come later this week.

Network Solutions (NSOL) moved up 1 13/16 to 147 13/16 after it stated that it will offer free and discounted Web addresses to the Chinese government, as an act of goodwill.

Pfizer(PFE) added 3/8 to 44 9/16 despite news it was sued by a Florida man who was prescribed a Pfizer drugs called Cardura for hypertension. The man claimed the pharmaceutical company failed to warn users about serious risks related to the drug.

The purported class-action suit seeks emergency notification to all Cardura users about scientific research in March that found the drug was less effective than a standard diuretic pill in preventing certain consequences of heart disease. Pfizer currently markets Cardura as an alpha blocker. The study found that while Cardura was as effective as a diuretic in preventing heart attacks and mortality, patients who took Cardura during a trial had a greater chance of suffering congestive heart failure or stroke than those who took a diuretic.

RadioShack (RSH) slid 3/16 to 42 5/8, despite that lavish display down on Broad Street, on its first day of trading after changing its name from Tandy. The name change is part of Tandy's plan to gain investor recognition by focusing on the RadioShack brand name.

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