InFocus Corporation (NDAQ:INFS) may find itself under increased pressure during the next few months as Caxton Associates disclosed a 11.2% stake in the company in a Schedule 13D/A filing with the SEC; this is up from the 9.9% stake that it first disclosed in October of 2006. While the activist hedge fund offered no additional insight in this filing, they did provide a detailed overview of their plans in their initial Schedule 13D filing in October in which they said:

"The Reporting Persons believe that the intrinsic value of the Company, and the amount a strategic or financial buyer would pay to acquire the Company, is significantly greater than the current market value of the Common Stock.  The Reporting Persons believe that this gap in value has resulted from the implementation by the Company's Board of Directors (the "Board") of a flawed business plan that has been detrimental to shareholder value. The Reporting Persons accordingly believe that the following steps should be taken promptly in order to preserve and maximize shareholder value:

1. The Reporting Persons believe that the Company's poor performance is the result of mistakes made by management and the Board's failure to grasp the strategic realities of the environment in which the Company operates.  At this time, we believe that the Company's operating management is capable of effectively executing the Board's strategic vision should it be given adequate guidance and oversight.  We do not, however, believe that the Board, as currently constituted, is providing the necessary strategic thinking.  Therefore, we believe that, unless significant changes are made promptly, changes in the Board are in the best interests of all shareholders.

2. The Board should include individuals with strong ties to large shareholders, as well as industry, legal and/or financial markets expertise, which have a firm grasp of the realities of the markets in which the Company operates.  Unless significant changes are made, the Board should be restructured to consist of Mr. Ranson, at least two individuals drawn from among the Company's largest shareholders, and other independent directors with relevant industry backgrounds.

3. As part of the Company's announced exploration of strategic alternatives, the Board should develop an operating strategy that not only protects and enhances the hard asset value of the Company, but also will allow the Company to be cash flow positive under any foreseeable circumstances.  The Board should immediately work with management to develop a business plan that, among other things, permits revenue growth only at a reasonable cost, fixes or exits money-losing operations, and leverages the Company's valuable brand name franchise and considerable intellectual property assets.  This new business plan should be assessed against other available alternatives, including the possibilities of a sale or restructuring of the Company.

The Reporting Persons continue to examine all of their options with respect to the possibility of taking actions that they believe will enhance shareholder value, including the option of actively seeking to replace members of the Board."

This increased stake illustrates Caxton's continued committment to enhance shareholder value. And with an 11% stake in the company, they are in a better position to force management to make changes - even if it comes down to a proxy battle. Currently, the stock is off of its $3.00 October highs sitting at right around $2.70 per share. While much uncertainty remains, Caxton's actions may foreshadow further pressure being put on the company in the future. This makes INFS a stock worth watching over the next few months.

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BEA Systems, Inc. (NDAQ:BEAS) moved higher today on renewed speculation that the company could be a takeover target. Suntrust analysts said today that Hewlet-Packard Co. (NYSE:HPQ) could buy the company. Despite the fact that the stock has a PEG of 1.65 (above the industry average 1.39) and trades well above enterprise value, buyout rumors continue to surround the enterprise software provider.

Past speculation has centered around a deal with Oracle Corporation (NDAQ:ORCL), which is perhaps one of the most logical suitors. BEA's market cap of just over $5 billion represents only 5.4% of Oracle's market cap, while the acquisition would add new product lines and synergistic customers to Oracle's existing infrastructure. Moreover, we already know that Oracle is not adverse to buying companies, after their laundry list of recent acquisitions.  Either way, BEA is definitely a stock to keep an eye on as the possibility of a buyout remains.

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The Brinks Company (NYSE:BCO) may see some changes made to its board and company direction in the near future after Pirate Capital LLC sent yet another letter, in a Schedule 13D/A filing, to the company expressing its interest in obtaining two seats on the company's board. The activist hedge fund also reiterated the their requests that the company retain an investment bank to examine strategic alternatives, and questioned the company's stated plans to pursue acquisitions.

Pirate Capital also threatened a proxy contest if the board did not act on its requests immediately, saying in their letter that "unless the board acts with a renewed sense of duty, we will not be able to avoid an expensive and lengthy proxy contest." The 8.5% holder then validated their threat by filing a Schedule 14A proxy statement, nominating two of its own candidates to the company's board of directors in the next annual shareholders meeting. Currently, Brink's board consists of eleven members with four of them up for re-election at the next annual meeting. Pirate Capital is targeting two of these four seats, which are held by directors who will not be seeking re-election at the next annual meeting.

Finally, Pirate Capital commended MMI Investments detailed analysis of possible strategic alternatives for the company, which included an LBO, sale to a strategic suitor, tax-free split-up of the company, leveraged recapitalization, or another significant stock repurchase. MMI also noted that their analysis put the intrinsic value of Brinks at around $70 per share or higher. Combined, these two dissident shareholders account for nearly 20% of the company's outstanding shares - giving them significant leverage in any proxy contest. Consequently, Brinks will probably be forced to give up two board seats to Pirate, which would likely result in at least some measures to increase shareholder value.

Pirate Capital's letter says it best: "We do not understand how the Board remains so determined to pursue an acquisition when two of Brink's largest shareholders have independently questioned that course and requested the retention of an investment bank to explore alternatives. The Board's concern should be the interests of its shareholders ... We would welcome an invitation by the Board to meet our two nominees, and we hope that a proxy contest can be avoided so that the Board can remain focused on what is most important; finally putting to rest the enduring undervaluation of BCO shares." Clearly there is a disconnect here between management interests and shareholder interests. And with a combined ~20% stake in the company, these two activist hedge funds have a good chance at enforcing changes to unlock shareholder value and help BCO back up into the $70 range. This makes Brinks a stock worth watching over the next few months.

Read Pirate Capital's Letter to The Brinks Company

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Franklin Templeton Investments announced that they decreased their stake in Taro Pharmaceuticals Ltd. (OTC:TAROF) today from 13% to 11.9% in a 13D/A filing with the Securities and Exchange Commission. The investment fund said it was concerned with the effect on the value of its investment management clients’ investment in TARO, along with the failure of the company to timely file its financial statements for the fiscal year ended December 31, 2005 and the consequential delisting of the ordinary shares from The Nasdaq Global Select Market (formerly "TARO").

Templeton also said that they have met with other shareholders to discuss ways in which they could recoup their losses through conventional or legal means. On October 18, 2006, lawyers for this group sent a letter to the company demanding that it immediately setup a shareholders' meeting to discuss the situation. On December 24, 2006, the group's lawyers sent another letter to the company demanding that they exercise all of their rights against officers of the company, against members of the audit committee, against the company’s internal auditor, against members of the board of directors and against any other person in order to recover their damages and losses incurred by their acts and omissions that fall under any contract or law. Specifically, the fund noted the following:

• Breach of duty of care pursuant to section 252 of the Companies Law.
• Breach of duty to act with proficiency and in a reasonable manner pursuant to section 253 of the Companies Law.
• Breach of fiduciary duty pursuant to section 254 of the Companies Law.
• Breach of the duty to act upon discovery of a deficiency pursuant to section 257 of the Companies Law.
• Breach of statutory duties pursuant to section 63 of the Civil Wrongs Ordinance.
• Breach of the employment agreements with Mr. Kevin Conley and the other employee who was a member of the Company's financial team.

Under section 196 of the company law, Taro has 45 days to respond to this request. If these actions result in a successful lawsuit, it could provide grounds for a larger class action lawsuit that would help recoup losses for the larger investment community. Read more about the issue here. Meanwhile, the stock's delisting and low price has led to speculation that Taro may be a buyout target by a larger pharmaceutical player looking to get into the OTC pharma and API markets. Although this is a long-shot given the company's lack of financials, it remains a possibility in the medium to long term.

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The Home Depot, Inc. (NYSE:HD) surprised investors this morning by announcing the resignation of Chief Executive Officer Robert Nardelli. The "mutually-agreed" resignation comes after many dissident shareholders voiced concerns over the company's stock performance and corporate transparency. These concerns peaked during the company's last annual meeting, in which Nardelli angered investors by monotonously reading a written statement and then refusing to answer any shareholder questions. Meanwhile, there was also disappointment with the company's lackluster performance, especially in comparison to Lowe's Companies, Inc. (NYSE:LOW). Investors noted that LOW's revenues grew by 130% compared to HD's 78%, while LOW's ROA increased 52% compared to HD's nearly flat increase. On a more fundamental level, Lowe's customer service rating also rose to 78 from 75, while HD's decreased to 67 from 75 during the same time period. Combined, the company's performance and lack of corporate transparency ultimately caused the uproar that led to this resignation.

Investors are still concerned, however, over the CEO's estimated $210 million retirement package which includes a cash severance payment of $20 million, deferred stock awards valued at about $77 million and options with an intrinsic value of about $7 million; earned bonuses and long-term incentive awards of about $9 million; 401(k) and other benefit programs currently valued at roughly $2 million; previously earned and vested deferred shares with a value of $44 million; the present value of retirement benefits currently valued at about $32 million; and the payment of $18 million for other entitlements under his contract, which will be paid over a four year period. The company said that Vice Chairman Frank Blake will replace Nardelli.

Home Depot's stock rose $1.32, or 3.29%, to $41.49 on the news in today's trading session.

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MIVA, Inc. (NDAQ:MIVA) announced a deal with Google Inc. (NDAQ:GOOG) today in an 8-K filing with the SEC. The search marketing company said it reached an agreement with Google on December 28th in which they agreed to exclusively utilize Google’s WebSearch and AdSense Services for approved websites and applications. MIVA is well known for the search engine marketing, pay-per-click service, e-commerce offerings, and whitelabel toolbars. This new agreement with Google replaces an existing one with Yahoo! Inc. (NDAQ:YHOO), which will be terminated on January 27th. Although no specific financial details were disclosed in the 8-K filing, the deal presumably offers better terms than the Yahoo! deal. MIVA's stock rose $0.42, or 11.8%, to $3.80 on high volume today after the 8-K filing was released.

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Carrier Access Corporation (NDAQ:CACS) said revenue for the fourth quarter is expected to range from $12.3 million to $12.5 million, versus the consensus of $16.2 million.

Con-way Inc. (NYSE:CNW) said Q4 earnings from continuing operations are expected to be between 72 cents and 76 cents per diluted share. The company had previously provided earnings guidance for the 2006 fourth quarter of between 81 cents and 87 cents per diluted share. The consensus is $0.79.

Witness Systems (NDAQ:WITS) announced preliminary revenue estimates for the fourth quarter and year ending December 31, 2006. Revenue is estimated to approximate $63 million for the fourth quarter and $220 million for the year 2006. The consensus is $58.24 million and $211.8 million. For 2007, the company expects adjusted revenue, excluding hardware sales, to be in the range of $250-$255 million, versus the consensus of $246.8 million.
 
AngioDynamics Inc. (NDAQ:ANGO) reports Q2 EPS of $0.15, two cents above the consensus. Revenues came in at $24.4 million versus the consensus of $24 million. They foresee a FY07 EPS of $0.65, versus the consensus of $0.61, with FY07 revenues of $103 million versus the consensus of $106.7 million.

Immucor Inc. (NDAQ:BLUD) reports Q2 EPS of $0.20, two cents better than estimates. Revenues came in higher at $54.4 million versus the consensus of $51.4 million. They foresee the FY07 EPS of $0.75 to $0.78 versus prior guidance of $0.69 to $0.74 and the consensus of $0.76, and FY07 revenues of $214 to $218 million versus prior guidance of $204 to $212 million versus the consensus of $215 million.
 
Hot Topic Inc. (NDAQ:HOTT) said December sales fell more than five percent. The company announced that as a result of the lower than expected December sales performance, it now estimates net income for the fourth quarter of 2006 will be in the range of approximately $0.20 to $0.22 per diluted share versus previous guidance of $0.33 to $0.38 per diluted share. The consensus is $0.33.

MAIR Holdings Inc. (NDAQ:MAIR) found itself under increased scrutiny today after 5.3% holder Riley Investments expressed concern that the company was not receiving fair value for its subsidiary Mesaba Airlines in connection with Northwest Airlines' (OTC:NWACQ) bankruptcy/acquisition. While talks between the two companies are still in very preliminary stages, Riley expressed concerns that relationships between the two companies might jeopardize shareholder interests.

The hedge fund changed its filing status from 13G to 13D today, issuing a letter to management explaining their position:

"Riley Investment Management holds approximately 5.2% of the outstanding shares of MAIR Holdings. As we have previously discussed, we are aware of acquisition discussions between Northwest Airlines and Mesaba Airlines, a wholly owned subsidiary of MAIR, and have noted Northwest’s most recent amended Schedule 13-D. We believe the $145 million claim amount proposed by Northwest is grossly inadequate. We believe that Lloyd Miller, who holds approximately 4.56% of the MAIR stock, Palmyra Capital Advisors which holds approximately 1.8% along with several other shareholders, share our concerns.

We believe that for meaningful discussions on claim values or acquisition values to occur between Northwest Airlines and Mesaba, it is necessary that MAIR’s independent shareholders participate. Northwest, MAIR’s largest shareholder with approximately 28% of the outstanding shares (not 39.5% as claimed in Northwest’s 13-D filing), has a clear conflict of interest in the negotiation process and the current MAIR directors may have long-standing relationships with Northwest due to its stake in the Company. To assure fairness in both substance and procedure, it is imperative that the interests of other significant shareholders are actively involved in the negotiation and approval of any transaction. The board cannot assume that Northwest will negotiate for the company or its shareholders’ best interests. Nor can it be assumed that, if the company’s shareholders are asked to approve any transaction with Northwest, Northwest, as a MAIR shareholder, will vote its shares in the best interest of the company or the company’s disinterested shareholders. Shareholders of MAIR should remember that Doug Steenland, president of Northwest Airlines, appears to have ignored similar conflict of interest issues when he served on the board of MAIR during the negotiation of Mesaba’s current ASA and also oversaw MAIR’s $30 million investment into Mesaba. Both the ASA and $30 million investment were completed less than three weeks prior to Northwest Airlines filing for bankruptcy and under Mr. Steenland’s watch as a MAIR board member.

To ensure the fair treatment of the company’s shareholders, any deal between Northwest and the company or its subsidiary should be approved by a majority of the company’s disinterested shareholders. We hope you concur. We are offering to play a constructive role in this process in the effort to receive fair value for our ownership of Mesaba. Because we represent a significant percentage of MAIR’s outstanding stock not held by Northwest and are not conflicted with regard to the negotiations with Northwest, we believe our participation would improve the negotiating process. We note there are currently three vacancies on the board and wish to enter into immediate discussions regarding placing our representatives on the board. 

Given the announcement by Northwest of its plans, and the need for a timely response, we would be interested in meeting with you soon to discuss our views. If you prefer, we will seek to include other significant holders in such a meeting.

If our concerns are not addressed, we reserve our rights to protect our interests and those of other holders by all reasonable methods, including intervention in the Mesaba or Northwest bankruptcy proceedings, or seeking to convene a shareholder meeting which would amend the MAIR bylaws to require approval by holders not affiliated with Northwest, and possibly also seek to enlarge the MAIR board in a manner that would let shareholders fill the new seats created by the expansion.

We hope that we can resolve these concerns amicably in the interest of all shareholders." (Read More)

Clearly there is a strong relationship between MAIR and Northwest that might be reason enough for an independent shareholder committee to evaluate the value of Mesaba in the event of a buyout. This deal is one worth following closely, as any deal would mean significant share appreciation for MAIR and perhaps even Northwest.

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Alltel Corporation (NYSE:AT) jumped over 4% in today's trading on rumors that the company could be the subject of a bidding war between private equity groups and other interested parties. Rumors began after the Wall Street Journal broke the news that various private equity groups were exploring the possibility of leveraged buyout of Alltel. While an Alltel spokesman refused to comment, the WSJ said that the company was attractive due to its low debt and strong balance sheet - enabling its bidders to utilize a substantial amount of debt in the event of a leveraged buyout.

Meanwhile, Stifel Nicolaus added to the conversation by noting that a buyout has been a key part of the company's strategy since it spun off its wire line assets earlier this year. The analyst also said they believed the company was a very attractive takeover target not only for private equity, but also larger competitors Verizon Wireless (NYSE:VZ) and Sprint/Nextel (NYSE:S). Overall, Stifel Nicolaus said it valued the company's shares as high as $85 in the event of a leveraged buyout, and would continue to retain its buy rating on the stock with a price target of $68 per share.

In the end, we know that Alltel could see a bidding war between private equity and other larger carriers; it would be a strategic acquisition for larger competitors like Verizon or Sprint, while it's low debt makes it attractive to private equity groups with deep pockets. Combined, these factors make for an interesting story that is definitely worth following in the coming months!

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Cypress Semiconductor (NYSE:CY) found itself under pressure today from Chapman Capital, which holds around 1% of the company's stock. The well known activist hedge fund sent a letter to the company's board demanding that they consider split off their Sun Power (NYSE:SPWR) stake and attempt to sell their core business via a leveraged buyout (LBO). Chapman said that based on prior estimates that the company obtained, along with their current cash position and Sun Power stake, the company's stock is worth $22 per share - a 35% premium over the current market price.

Since Chapman's stake was under 5%, he chose to issue this recommendation via a press release. The letter is rather lengthy (read it here), but here's the synopsis:

"Chapman Capital L.L.C. today announced that it has notified the Board of Directors of Cypress Semiconductor Corporation (NYSE: CY) of its recommendation that Cypress reorganize via a split-off and subsequent going-private LBO transaction. A letter dated today from Robert L. Chapman, Jr., Managing Member of Chapman Capital, has been sent to Cypress's full Board of Directors and is attached hereto.

Mr. Chapman commented, 'Like other significant owners of Cypress Semiconductor, Chapman Capital has recommended that its Board of Directors re-engage Credit Suisse to effect a corporate reorganization that separates Cypress's core semiconductor operations from its controlling stake in SunPower Corporation.' Regarding Chapman Capital's growing concerns regarding relatively immaterial Cypress share ownership by its Board of Directors, Mr. Chapman stated further, 'Cypress's core semiconductor business, which Mr. Rodgers founded nearly 25 years ago, deserves a much higher valuation than what it was ascribed the day Mr. Rodgers took it public two decades ago. Mr. Rodgers has stated publicly, 'you and I are going to make as much money as fast as we can on this.' Cypress's Board of Directors, despite their insignificant percentage ownership of Cypress, should expect that we are going to hold Mr. Rodgers to this promise.'"

The letter presents solid arguments for a $22 per share price as well as evidence that the M&A market still exists for companies like CY. Combined, these factors make Cypress a stock definitely worth watching into 2007. The stock moved up over 3% today on the news.

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