Nasdaq Stock Market Inc. (NDAQ:NDAQ) is reportedly seeking a deal with the Philadelphia Stock Exchange after its unsuccessful cross-border deal with the London Stock Exchange fell through. A PHLX acquisition would give the NDAQ a strong presence in the rapidly expanding options business. A Wall Street Journal story reported on April 11th that the exchanges have been in talks for months and though no merger news is expected immediately, a deal could be just several week away, citing unnamed sources familiar with the matter. Meanwhile, the CBOT vs. CME vs. ICE buyout battle continues to wage while the NYSE and Euronext merger appears to be all but locked up. Clearly, there is a lot of action going on now amongst the exchanges, which makes them a sector worth keeping a close eye on!

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AVP Inc. (OTC:AVPI) shares moved up $0.06, or 4.8%, to $1.30 today after Diker Management disclosed a 15.8% stake in the company and expressed its concerns over AVP's proposed below-market-price sale of the company. AVP agreed to be acquired by Shamrock Holdings for $1.23 per share, which is significantly below the intrinsic value of the company and a staggering 18% below the prior day's closing price of $1.50! This is almost unheard of in the world of M&A where buyouts typically come at substantial premiums to both the current market prices and 20-day moving averages.

Diker insisted that AVP's future prospects appear very bright. The company's 2006 Form 10KSB said that its revenues grew 38% in 2006 while its gross profit expanded by 80%. Net loss decreased significantly from an $8.96 million loss to nearly breaking even with a $0.34 million loss. Excluding one-time expenses such as the administrative costs while raising money and a redesign of the company's logo, AVP would have been significantly profitable in 2006. The hedge fund said that it expects the company to report strong positive net income of $3 to $4 million in 2007 and substantially higher numbers in 2008. They support this notion by pointing to (1) signed or renewed sponsorship agreements with McDonald's, Hilton, Shick, Nature Valley, and Banana Boat, (2) a schedule of at least 18 events for 2007, up from 16 in 2006, (3) and plans on further reducing operating expenses while expanding revenues.

So, what is the company really worth? AVP is a lifestyle sports entertainment company that focuses on live and televised professional beach volleyball events. The company offers a well positioned business model that compares to Speedway Motors (NYSE:ISCA), World Wrestling Entertainment (NYSE:WWE), and Dover Motorsports (NYSE:DVD). The proposed acquisition of AVP values the company at an enterprise value of $31.8 million, or 1.48x trailing 12 months revenue. The peer group mentioned above trades at an average and median of 3.1x trailing 12 months revenue. This suggests a valuation of $2.38 per AVP share. Moreover, the peer group trades at a median of 9.2x 2008 EBITDA consensus. Applying this multiple to AVP again yields a dramatically higher number - especially if you take into account the fact that the acquirer will be able to remove public company costs!

What can be done? Obviously, shareholders can reject the proposal which is definitely a possibility given Diker's 15.8% stake and the sub par buyout offer. However, for now, the hedge fund is appealing to the company's board of directors to reconsider the proposed offer in hopes that they will repeal it. If they are successful in either of these, we could see a substantially higher buyout offer, or the company remaining a separate entity. Either way, this stock is definitely worth watching!

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NovaStar (NYSE:NFI) announced that it hired Deutsche Bank to help it explore strategic alternatives including a possible sale or other "change of control transaction". The move will make it the latest subprime mortgage specialist to propose relinquishing its independence.

Research in Motion Ltd. (NDAQ:RIMM) said that its fiscal fourth quarter profits surged tenfold from a year ago, when it had a large legal expense, as sales rose 66% on higher demand for the company's BlackBerry wireless devices.

Google Inc. (NDAQ:GOOG) plans to join the battle to deploy voice-based search technology according to a media report on Wednesday. Google released a free experimental service last week called Google Voice Local Search, which allowed users to dial a number and search for businesses in specific cities via voice recognition.

Advanced Magnetics Inc. (NDAQ:AMAG) said its Phase III studies on ferumoxytol, an intravenous iron replacement, met their primary and secondary endpoints. The Cambridge, Mass.-based company said the two studies demonstrate a significant improvement in hemoglobin levels for non-dialysis dependent patients using the drug, compared with oral iron supplements.

CheckFree Corp. (NDAQ:CKFR) confirmed that it has had discussions with an unnamed "large customer" over the possibility of the customer "pursuing an in-house approach" for some of Checkfree's services. Atlanta-based Checkfree added that "there have been no changes to any material customer contracts." Earlier Wednesday, JMP Securities analyst David Scharf said he was fairly certain that Bank of America is planning to transition the payment warehouse portion of its online bill-pay processing to an in-house solution. Scharf said he believed BofA's business accounted for $170 million, or 20% of CheckFree's fiscal 2006 revenue, with bill-pay services accounting for $150 million.

Christopher & Banks Corp.'s (NYSE:CBK) fiscal fourth-quarter net income plunged to $1.93 million, or 5 cents a share, from $6.68 million, or 18 cents a share, a year earlier. The Minneapolis-based women's retailer said net sales for the 14-week quarter ended March 3 increased 5.8% to $134 million, compared with $126.6 million in the 13-week period a year ago. Christopher & Banks expects a first-quarter net income range of 30 cents to 31 cents a share.

Dot Hill Systems Corp. (NDAQ:HILL) said it now expects a first-quarter loss of 13 cents to 15 cents a share on revenue of $53 million to $54 million. The Carlsbad, Calif.-based provider of storage systems previously forecast a per-share loss of 20 cents to 23 cents a share on revenue of $46 million to $49 million. Dot Hill said the increased forecast is largely due to higher-than-expected revenue and margin contribution from its largest OEM customer.

TLC Vision (NDAQ:TLCV) shares move dup over 9% today after the company announced that it would repurchase $125 million worth of its own shares at prices not less than $5.75 and not more than $6.25. The repurchase was initially proposed along with other strategic alternatives by Glenhill Advisors and will be financed through a combination of cash and borrowing. The move also provides a healthy boost to Glenhill's position, which paid around $4 to $5 for its 14% stake in the company. This is yet another instance where shareholder activism caused change that helped the company unlock value in its shares! Meanwhile, shareholders are also watching the company as it embarks on larger changes that the hedge funds proposed to its overall strategy and restructuring. Combined, these factors make TLCV a stock worth following!

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Vonage Holdings, Inc. (NYSE:VG) shares dropped more than 10% this week after a federal court ruled Friday that the company stop signing up new customers in connection with a patent dispute with Verizon Communications Inc. (NYSE:VZ). The courts found in March that Vonage infringed on three of Verizon's patents, including those related to retrieving voicemail and terminating voice calls from someone using an Internet-based telecommunications network to a traditional network. While Vontage plan on appealing the ruling, concerns are mounting about the long-term viability of the non-profitable Vonage.

New customers are the lifeblood of telecom providers who typically record high customer churn rates. Vonage said in court that it loses about 50,000 customers per month, which means that in a year roughly a quarter of the company's customers could leave the company if it were prevented from adding new subscribers. In the end, patent infringement penalties, customer defection, and increased cost from workarounds could cause Vonage bond-holders to exercise a $250 million put on notes issued in December of 2005. If this put is exercised, the bond-holders could call for payment in December 2008 which could pose a significant problem for the company. Assuming that the put is exercised, the company could face a significant liquidity event if the bonds are repaid in cash or swapped equity. Combined, Vonage is looking at some serious problems that need to be addressed before a higher stock price can be justified. However, if the company can find its way out of this mess through an acquisition or court ruling, it would mean significant share appreciation over the short-term. This make VG a stock worth watching!

Embarcadero Technologies, Inc. (NDAQ:EMBT) shares rose more than 2% today after the company announced a definitive merger agreement with private equity firm Thoma Cressey Bravo in a transaction worth $7.20 per share, or $200 million, in cash. We first mentioned this company back in mid-March when the company has trading at around $6.60 per share, representing a 9% gain in under one month! Chapman Capital had been pressuring the company to put itself up for sale in order to unlock shareholder value. The hedge fund that averaged in the low $6 range said it would support the transaction. eSpeed Inc. (NDAQ:ESPD) is another company that the hedge fund is currently targeting as a potential buyout target.

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Pier 1 Imports, Inc. (NYSE:PIR) shares moved down marginally after Elliott Associates and Elliott International disclosed a 5.5% stake in the company and expressed their concerns over the company's pace of cost-cutting and restructuring actions over the past two years. In a letter to the company, the hedge fund said that the company should "right-size" itself by closing down a significant number of stores, lease part or all of the corporate headquarters, and add new independent members to the company's board of directors. If executed properly, Elliott believes that this strategy will yield immense value to shareholders by creating a leaner, profitable company to better compete in the future.

The hedge fund believes that the Pier 1 should close down a significant number of stores because the company operates significantly more stores than its home furnishings retail competitors in a business that they believe will begin to scale back soon after a rapid expansion between 2000 and 2006. Moreover, Elliott believes that the company's recent accelerated expansion has led to significant levels of cannibalization and a meaningful number of highly unprofitable stores. Consequently, the hedge fund recommends closing around 250 to 300 underperforming stores as quickly as possible, returning their store count to no more than 1,000 stores.

Elliott is also concerned about the company's growing expenses. They noted in their letter than as Pier 1's store count has grown, so has its level of SG&A expense. Since 2002, SG&A expenses have increased 43% while the company's top-line has only grown seven percent. By reducing the company's store count, Elliott believes that the company will be able to reduce their SG&A expenses to 2002 levels while lowering their expenses as a percent of sales.

Finally, the hedge fund concluded its letter by recommending that the company add new independent directors to its board to assist in a turnaround. While they did not recommend any specific directors, they are likely seeking to simply add members that would be willing to pressure the company to implement any turnaround changes more quickly that the current pace. Overall, this company is definitely one worth watching - if any of these changes are implemented, it could mean significant share appreciation over the medium to long term.

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The Dow Chemical Company (NYSE:DOW) shares moved up $2.63, or 5.91%, to $47.10 in early trading today after takeover rumors surfaced in the London's Sunday Express. The British tabloid reported that Middle Eastern investors have put a package together with U.S. buyout firm KKR in what would be a $52 to $58 per share bid. KKR would reportedly put up half of the bid with investors from Saudi Arabia, Kuwait, Bahrain, Qatar, United Arab Emirates and Oman would put up the rest.

The company declined to comment on the rumors, but noted tha this is a follow-up to a report by the same newspaper in London that was widely dismissed by industry analysts as lacking any substance. The first rumors came back in February, when the Sunday Times reported that private investors were interested in bidding for the company in a deal that could be worth up to $60 per share. Analysts both now and then note that any unsolicited deal for Dow would likely be treated as very hostile by management as a breakup of the company wouldn't make much sense given the company's stated strategy. So, while the situation may be worth watching, take this optimism with a healthy dose of reality!

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Dell Inc. (NDAQ:DELL) said it received a Nasdaq non-compliance notice after delaying its Form 10-K filing with the SEC for the year end February 2nd. The company announced last week that it wouldn't file its annual report on time because it hasn't finished an internal investigation into its past accounting practices.

Dow Chemical Co. (NYSE:DOW) said that it still has no interest in a leveraged buyout, discounting the latest unsourced media report saying that a group of PE firms and investors were close to announcing a $50 billion buyout offer.

Marathon Oil Corp. (NYSE:MRO) said its first-quarter refining and wholesale marketing margins will be flat vs. last year, despite stronger market indicators for the refining sector in the U.S. Gulf Coast and the Midwest. In an interim earnings report, Marathon said the types of crude its refineries process are being priced at a wider premium against West Texas Intermediate crude delivered at Cushing, Okla.

Masco Corp. (NYSE:MAS) that Chairman and Chief Executive Richard Manoogian will transition from CEO to executive chairman in July. Manoogian has recommended to the board that Chief Financial Officer Timothy Wadhams become CEO in July, the Taylor, Mich.-based manufacturer of home improvement and building products. The board is expected to consider the recommendation in the next few months.

Mosaic Co. (NYSE:MOS) reported third-quarter net earnings of $42.2 million, or 10 cents a share. During the same period a year ago, the company posted a net loss of $71.6 million, or 19 cents a share. There were 440.9 million shares outstanding during the quarter compared with 383.6 million last year. The Plymouth, Minn.-based producer of concentrated phosphate and potash crop nutrients reported revenue of $1.28 billion, up 19% from $1.07 billion. The results include an after-tax gain of $21 million, or 5 cents a share, on extinguishment of debt.

New York & Co. (NYSE:NWY) signed an exclusive agreement for Inter Parfums Inc. (IPAR) to design and manufacture a line of personal care products. New York & Co. hopes the line of products will increase market penetration, and expects this project to increase items per transaction and grow sales in a high-demand category.

Northfield Laboratories Inc. (NDAQ:NFLD) reported a third-quarter net loss of $6.1 million, or 23 cents per basic share, compared with a net loss of $6.4 million, or 24 cents per basic share, during the year-ago period. As a development stage company, the Evanston, Ill.-based biotechnology company doesn't generate revenue.

99 Cents Only Stores (NYSE:NDN) late Monday said fourth-quarter same-store sales rose 2.9% from the year-ago period, as total sales rose 9.4% to $277.9 million. Retail sales for the quarter ended March 31 were $267.2 million, up 9.2%, the City of Commerce, Calif.-based company said.

Cascade Corp. (NYSE:CAE) reported fiscal fourth-quarter net income rose 24% to $10.2 million, or 80 cents a share, from $8.27 million, or 63 cents a share, a year earlier. The Fairview, Ore., manufacturer of forklift parts said revenue for the quarter ended Jan. 31 rose 9.7% to $118.9 million from $108.4 million a year ago.

Chordiant Software Inc. (NDAQ:CHRD) forecast fiscal second-quarter earnings of 11 cents to 16 cents a share on revenue of $31 million to $33 million. Analysts polled by Thomson Financial are expecting, on average, a per-share profit of 3 cents on revenue of $26.5 million.

DivX Inc. (NDAQ:DIVX) said it expects fiscal first-quarter revenue and pre-tax earnings to come in above its previous forecast. The San Diego-based company now expects revenue of $19.8 million to $20.2 million and for pre-tax earnings to be flat to up sequentially. DivX had previously forecast first-quarter revenue of $17.3 million to $19.3 million and for pre-tax earnings to be flat to slightly down when compared with the fourth quarter.

Pioneer Natural Resources (NYSE:PXD) jumped nearly 10% on Wednesday amid speculation that the company will spin off some of its assets in an effort to boost their stock price. The rumors took off after the company announced that it would consider creating a Master Limited Partnership - or MLP - for some of its exploration and production assets. Many analysts believe that a spin off has the potential to unlock significant value and raised their price targets for the company.

Spin offs not only provide the parent company with excess cash, but the new entity also provides a great opportunity as spin offs generally outperform the overall market during their first year. The excess cash at the parent company can then be used for share buybacks, special dividends, or other methods to unlock shareholder value. While no definitive announcement has been made, this is definitely a stock worth watching as any spin off could mean significant share appreciation for PXD shareholders!

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