Google Inc. (NDAQ:GOOG) reported first-quarter profits that surged on increased advertising revenue from its search segment, which continues to outperform rivals Yahoo and Microsoft. Total revenues rose 63% as the company announced its plans to expand into new products and types of advertising. This has resulted in increased spending, however, which rose from $336.6 billion in the fourth quarter to $596.9 billion in the first quarter of this year. Moreover, shareholders will have to deal with the $3.1 billion acquisition of DoubleClick earlier this month, although Google believes this will immediately begin adding to their bottom line.

In an interview CEO Eric Schmidt speculated that Google's growing efforts to broker advertisements that appear in newspapers, radio, and television would become a significant portion of their overall revenues starting in 2008. Many analysts have suggested that Google needs such a boost in order to sustain its momentum, as the company's rate of growth continues to slow. This quarter's 63% growth compares to 67% in the fourth quarter and 79% in the first quarter of 2006. But for now, the company's continued dominance in the search market (controlling 55.8% of all search queries) continues to keep investors happy. The question is: just how long?

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Griffin Land & Nurseries Inc. (NDAQ:GRIF) shares moved up marginally today after Mario Gabelli disclosed a 31.1% stake in the company and expressed his concerns that the company's share repurchase plan was not moving along quickly enough. Gabelli said that he realizes it's due to options exercised, but at a minimum the company should have bought enough shares back to offset the dilution. Moreover, he noted that the value of the company is materially above where the stock is selling, so he remains somewhat miffed at the glacial speed of the company's share repurchase. The letter also says that Gabelli "looks forward to discussing the notion of harvesting our real estate assets". What this means remains to be seen. Meanwhile, if the company meaningfully increases its share repurchase plan, it could mean significant value being returned to shareholders. This makes GRIF a stock worth watching!

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eSpeed Inc. (NDAQ:ESPD) shares moved down 7.66% today after the company released a statement saying that it sent a letter on April 19, 2007 to Terry Smith of Tullett Prebon plc stating that the board of directors has been formed by its controlling stockholder, Cantor Fitzgerald, that it is not interested in selling its controlling interest in the company to Tullett, in terminating its arrangements with eSpeed on terms proposed by Tullett in recent letters, or in proposing alternative terms to Tullett. More, the company said it is not in a position to pursue Tullett's acquisition proposal because such a proposal cannot be consummated without the consent of Cantor Fitzgerald - the company's controlling stockholder.

The company also commented on other demands made by activist shareholders. They stated that they cannot take any of the following actions without Cantor's express approval: (1) convert Cantor's Class B common shares into Class A common shares, (2) undertake any business combination with another entity, or (3) terminate the perpetual clearing, technology and other arrangements with Cantor and its affiliate BGC Partners. While the board is fully aware of its fudiciary duties, it has determined that it is unable to do anything without Cantor's approval. This leaves few alternatives for activist investors who continue to hold large stakes in the company, including WC Capital and Chapman Capital. They can put additional materials on the proxy, but with Cantor controlling the majority of the votes, it will be very difficult to make any meaningful changes. At this point, all shareholders can do is wait for a response from the hedge funds or perhaps another higher offer by Tullett that would be high enough for Cantor to consider.

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The Topps Company, Inc. (NDAQ:TOPP) shares moved up marginally beyond the company's buyout premium amid shareholder and director criticism over its merger agreement with Tornate at $9.75 per share. Today, board director and 6.4% stakeholder Arnaud Ajdler reiterated his beliefs in a March 14th letter that the existing proposed merger is not in the best interest of the company's stockholders because the per share merger consideration is wholly inadequate and does not provide full and fair value to the company's stockholders.

The board director also let shareholders know of a part of the story that nobody else outside of the board knew. First, Topps did not solicit comments from Timothy Brog, John Jones, or Ajdler (board members opposing the proposal) or make available to them drafts of the merger proxy before filing it with the SEC. Secondly, there was a third bidder for the company (Bidder C) that proposed a purchase price that was $1 per share more than the current offer, not contingent on financing, had the potential to be raised even higher since this company was a strategic buyer. Third, the board of directors opposed a share buyback or special dividend to instead opt for a sale, stating it would be the best way to maximize shareholder value. Yet, the most recent share buyback program that was approved by the board had a top price of $10.62 per share. How can management and the board recommend paying up to $10.62 per share, but then approve a merger for $9.75 saying that it maximizes value? Finally, the company did not adequately shop itself as it suggested in its press releases. The merger proxy indicates that it only approached three financial buyers before entering into a deal with Tornate. The statement also makes it clear that Topps never approached Bidder C - its main competitor that had expressed interest in the company even before the announcement of a transaction with Madison Dearborn and Tornante.

Overall, it appears as if the company's board has violated its fudiciary responsibilities by ignoring superior bids and failing to maximize shareholder value. With the current stock price trading above the buyout premium, it appears as if most investors are hoping that the merger will fall though and other bids will be examined. This makes TOPP a stock worth watching!

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eSpeed Inc. (NDAQ:ESPD) shares moved up $1.13, or 11.71%, to $10.87 today after the company's takeover offer for Cantor was rejected. Meanwhile, Chapman Capital disclosed a 9.3% stake in the company and demanded consent to replace eSpeed directors at the company's 2007 annual meeting. The hedge fund also reiterated its demands that the board immediately retain an independent auditor to review the Joint Services Agreement, compel the conversion of all Class B common shares into Class A common stock, and engage an investment bank to maximize shareholder value via an auction of the company.

Robert L. Chapman, Jr., Managing Member of Chapman Capital, commented, "Chief Executive Howard Lutnick's three-kingdom reign over Cantor Fitzgerald, eSpeed and BGC Partners appears so infested with potential conflicts of interest and incestuous inter-company transactions that a completely new set of corporate governors may be required to exterminate any vermin from eSpeed's board room. Chapman Capital finds it astonishing that Mr. Lutnick may believe he retains the residual credibility necessary to bedazzle a new group of investors in the proposed BGC Class A concoction after stupefying eSpeed Class A shareholders with years of underperformance and apparent disrespect."

Regarding Chapman Capital's demand for the immediate auction of eSpeed, Mr. Chapman stated, "The non-return of 24 straight business days of telephone calls from eSpeed's largest Class A owner is something one might have expected from multi-kingdom conflicted tyrants such as Hollinger International's Conrad Black, but not someone as conscious of his public reputation as Mr. Lutnick. Moreover, today's disclosure of the seemingly impulsive rejection of Tullett Prebon Plc's premium acquisition proposal has done nothing but heighten our concerns that Napoleonic behavior continues to be condoned by eSpeed's director fiduciaries."

In the end, if the hedge fund is successful in obtaining seats on the company's board of directors, it is likely that there will be some kind of a process to explore a sale of the company. Until then, investors and shareholders have to wait to see if the company will take action to eliminate some of the barriers to making this happen. Regardless, this is definitely a stock worth watching!

View past eSpeed articles

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Marsh & McLennan (NYSE:MMC) shares continued their rise today moving  up an additional 1.78% after jumping 3.5% yesterday on rumors of a private equity bid. The WSJ said, however, that a person familiar with the company's thinking said nothing is in the works. Notably, the company is in the process of turning itself around after CEO Michael Cherkasky cut costs and restructured the business since taking over in October 2004. As part of this turnaround, the company sold off its Putnam Investments division for $3.9 billion late last year and reported healthy earnings last quarter. But despite these changes, the company continues to trail the S&P 500 index even after its move this week. This has caused many investors to remain skeptical as to the company's long-term ability to provide predictable returns to investors. While a buyout is nothing more than a rumor at this point, MMC is definitely a stock worth keeping an eye on!

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EBay Inc. (EBAY) announced that its quarterly earnings and sales came in higher than expected by Wall Street, pushing the company's shares up nearly 3%.

Spansion (SPSN) shares dropped 20% after the chipmaker posted a wider quarterly loss and outlined a restructuring plan. The company said it would be facing weaker prices for its flash chips due to competitive pressures.

Novellus Systems Inc. (NVLS) shares dropped 2.8% after the company forecast second quarter earnings of 42 cents to 45 cents per share.

E-Trade Financial Corp. (ETFC) cut its 2007 forecast due to a reduction in customer trading amid market volatility. The company forecast FY2007 earnings of $1.55 to $1.75 compared to analyst estimates of $1.62 to $1.78 per share.

Gilead Sciences Inc. (GILD) shares moved marginally higher after the company announced first-quarter results that surpassed analysts' expectations. The company also backed its 2007 product revenue and earnings forecast.

Avici Systems Inc. (AVCI) shares fell 27% after the company said it was transitioning away from core router development to focus on its new product iniative. The company also said that it swung to a quarterly profit and declared a special cash dividend of $2 per share.

Yahoo Inc. (YHOO) shares dropped 11.8% on triple the normal volume after the company's profits dropped 11% on higher operating costs as it spent more to compete with Google. The results disappointed analysts and investors who expected better profit and sales figures in light of a new upgraded ad feature known as Panama.

ASML Holding (ASML) shares moved up 5% after the company said first-quarter profit nearly doubled as it shipped more machines used to make chips for mobile phones and iPods.

Carrington Laboratories (CARN) shares rose almost 8% today after the company announced supply and patent license agreements for at least 10 years with Primus Pharmaceuticals Inc.

Avanir Pharmaceuticals (AVNR) shares rose over 300% after the company announced positive top-line results from its Phase III clinical trial evaluating the investigational drug Zenvia in diabetic neuropathic pain.

Claxson Interactive Group, Inc. (OTC:XSONF) shares moved down 4.26% today after Black Horse Capital Advisors disclosed an 8.4% stake in the company and revealed the disturbing details of a March 23rd proposed transaction in which Claxson and its controlling shareholders indicated their desire to purchase the remaining minority shares at $10.50 per share - below the current price of $11.25.

The problem arises when we see that Claxson announced the sale of certain Pay TV assets to Turner Broadcasting for $235 million along with the sale of Ibero American Radio Chile to the Prisa Group for $75 million. The hedge fund noted that the closing of these two transactions and the interim cash flow generation will likely produce a net cash position (afer paying all the remaining holders of company debt) that will significantly exceed the offer price. Furthermore, the proposed transaction does not compensate minority shareholders for Claxson's remaining valuable assets. These amount to an even higher price well above the $10.50 per share offer price. Consequently, the hedge fund recommended that the Special Committee in the board of directors should reject the offer as inadequate. If the offer is rejected and a higher offer is made, it could mean significant appreciation for shareholders. this makes XSONF a stock worth watching!

Point.360 (NDAQ:PTSX) announced yesterday that it had entered a merger agreement with DG FastChannel, Inc. (NDAQ:DGFC). Under the terms of the agreement, DGFC will acquire Point.360's spot advertising distribution business, and Point.360 will spin off its remaining businesses to its shareholders. DGFC will also be assuming up to $7 million in Point.360's debt while providing it with $3 million in cash for the working capital of the other business.

As a result of the spin-off, Point.360 shareholders will continue to own shares in the New 360, which focuses on high definition and standard definition mastering, sophisticated computer graphics, data conversion and video, film and media asset management services. The existing Point.360 senior management will stay with the new company that will be basically debt free and generating revenues of about $45 million to $50 million with EBITDA around $4 million to $6 million during the next 12 months. This is great news for shareholders as they will not only receive a payment from DGFC, but also shares in a new spinoff - which tend to outperform the overall market in their first year. This makes PTSX a stock worth watching!

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BCE Inc. (NYSE:BCE) share moved up $1.98, or 6.17%, to $34.05 today after the company announced that it began discussions with a group of Canadian pension funds in connection with its review of strategic alternatives. The announcement confirmed rumors that have already brought the stock up about 26% since March 29th. Many analysts warn that any buyout may not come at much of a premium to the current market price while the downside if a deal falls through could be quite steep.

The company confirmed that it was in talks with the pension consortium consisting of Canada Pension Plan Investment Board, Caisse De Depot et Placement Du Quebec and Public Sector Pension Investment Board; however, the company restated its dismissal that it was working with KKR or private equity funds on a possible deal. Overall, BCE may not be the best stock to purchase right now as the premium is too high; however, it could be a shorting target if a deal falls through or a buyout target if other bidders surface that would be willing to push up the price. Either way, this is a stock that is worth watching!

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