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1. Oracle Comes in Out of Nowhere to Scoop up the Sun!

By Paul Rubillo
7:58 a.m. EDT

Today's news of a



acquisition by



is quite a surprise, and leave it to Larry Ellison to announce the deal on the day



is set to report earnings. My guess is that there will be little commentary from IBM's management on today's big story. I'm wondering if Sun's management relaxed their concerns about the due-diligence time factor for the Oracle deal to come about so quickly after the failed IBM negotiations. Market not liking the deal for Oracle so far, with the stock down nearly 6% in the premarket.

Long IBM on our "Recommended" list

2. Palm (PALM) in Double Digits

By Alan Farley
8:00 a.m. EDT



is trading over 10 this morning, after a BoA/Merrill upgrade. The stock has been trying to clear resistance at 10 since an exceptionally strong recovery stalled just under that level in February. The longer-term chart shows another hurdle around 10.35. Once that level is breached on a closing basis, momentum could kick in and set off a strong rally.

More technical comments and annotated chart




3. HPQ Should Now Buy STEC

By James Altucher
8:54 a.m. EDT

The next deal:



should buy



. I last recommended STEC in November in the 4's, and sadly I just took profits in the 8's so I no longer own it. That said, STEC is the leader in Solid State Drives and is the only supplier of these drives to



high-end laptops.

SSDrives are the future of drives, and HPQ needs to get into the space.

The company would quickly gain a huge edge on all of its competitors, which are 24 months-plus behind the eight ball, increase margins for desktop and laptop PCs.

Analysts think that STEC is trading for only 11x forward earnings, but my guess is its more like 8x, taking into account that AAPL always ends up gaining market share faster than people think.

4. Yahoo! Will Be a Good Long -- In Three Quarters

By Eric Jackson
10:20 a.m. EDT

I've had a love-hate relationship with



for nearly three years now. I led an activist campaign against the company in 2007 encouraging it to make a number of changes (from a new CEO to revamping the board to restructuring and simplifying the operations) to better take advantage of its many strengths (strengths Yahoo! still retains to this day, including its tremendous brand and traffic).

Unfortunately, I (and other shareholders) was only successful in helping to effect one important change: a new CEO after Terry Semel stepped down thanks to a large "against" vote at the June 2007 annual meeting.

I sold my Yahoo! stake last September at $20 after being frustrated by the "status quo" message coming out of the board and management at last August's shareholders' meeting. With the exception of Icahn and his associates, the Yahoo! board is substantially the same as it has been for the past five years, when the company sagged behind



and others.

I think Carol Bartz seems to be saying and doing all the right things since she came aboard (with the exception of offering a bounty to employees who turned in other employees for leaking news to the press). She's cutting and consolidating in a way that Yahoo! has desperately needed for years. Just last week she sold off the Korean Gmarket stake to



and could still monetize other Asian assets.

Yet, even without the headwinds of the ad market, she has a lot of work still ahead of her in restructuring -- and she still is overseen by a terrible board of directors. The Yahoo! bulls seem to overlook how real organizational and cultural change takes time.

Yahoo! has a lot of upside -- in three quarters -- but after Bartz has more time to clean things up.

5. Pepsi Earnings and Acquisitions

By Scott Rothbort
2:08 p.m. EDT




decided to announce its quarterly results three days premature as part of its concurrent announcement of the acquisition of both of its related bottling companies --

Pepsi Bottling Group



Pepsi Americas


. As a result we will not be covering the PEP earnings call on Thursday as previously planned. However, I thought that a few words are in order with respect to the actual earnings release.

PEP was expected to earn 67 cents on revenues of $8.28 billion. Instead the soft drink and snack manufacturer earned 72 cents on revenues of $8.26 billion. Excluding benefits from mark to market on hedges net of restructuring charges the company earned 71 cents.

Volumes in the beverage business continue to be under pressure, declining 6% during the period. Despite small volume declines in the food divisions, revenues and operating profits rose in that segment.

My initial reaction is that the approximate $6 billion acquisition of PBG and PAS is a strategic and operational win for PEP. I would note that as part of the deal PEP will obtain close to $1.2 billion of cash from these two bottlers and assume $6.4 billion of debt. As the deal is for cash and stock, for shares not already owned by PEP, the capital implications of the acquisitions need to be more closely examined. Thus, I plan on doing more work on the combination of these three companies.

Long PEP (only in a personal charitable trust)

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