Microsoft Corporation (NDAQ:MSFT) reportedly beat out Google (NDAQ:GOOG) in securing a minority stake in social networking giant Facebook. The software maker agreed to invest $240 million for a minority stake that values the site at $15 billion. The two companies also expanded their existing advertising agreement.

The agreement comes after substantial lobbying by both Microsoft and Google for a prized stake in the very closely held Facebook. The company will use Microsoft's existing advertising platforms in order to handle deals in new markets as well as the U.S. market. The software maker recently scaled up its technology investment and owns several new technologies aimed at brokering advertising over the web.

There is some concern that the valuation of Facebook is far to great to justify; however, it is important to remember that Microsoft is only buying a stake - not the whole company. Microsoft may be willing to overpay for a variety of reasons - chiefly, the commercial implications of a relationship with the social networking giant. Others believe that Facebook may go the way of Friendster who went bust due to difficulties monetizing its audience.

In the end, this is good news for Microsoft shareholders as it is a deal with one of the fastest growing and largest social networks in the world. This makes MSFT a stock worth watching!

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Merrill Lynch (NYSE:MER) shocked investors today after it announced a steep loss in the third quarter resulting from a $7.9 billion writedown on its fixed-income trading business. The investment company's first quarterly net loss since 2001 totalled $2.24 billion and sparked concerns about the company's risk management policies.

The losses stemmed from collateralized debt obligations (CDOs), subprime mortgages and management's misvaluation of the assets. The big surprise was the firm's $32 billion exposure to CDOs at the end of the second quarter - am amount that is much higher than expected. The firm also wrote down losses from its corporate restructuring business, although they were not nearly as severe.

Standard & Poor's cut Merrill's credit rating on notch to A+ calling the net loss "startling" and the scale of the writedowns "staggering". The company also experienced downgrades from Moody's Investors Service and Fitch. Combined, these cuts may increase the firms cost of capital and ipact its earnings.

Meanwhile, Merrill insists that it is financially secure and comfortable with its liquidity but the bank warned that conditions could become even more secure in the future due to liquidity. It is worth noting, however, that Merrill was the only one of the five biggest investment banks to swing to a quarterly loss - all the others were able to better weather the storm.

These losses have led to speculation that the bank could even become a buyout target for someone like Warren Buffet - who was rumored to have an interest in Bear Stearns not long ago. The firm's stock is certainly cheap at these levels while the brand and reputation is still relatively in tact. Combined, these factors make MER a stock worth watching!

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Transmeta Corporation (NDAQ:TMTA) shares are up over 200 percent today on news that the company finally struck a deal with Intel (NDAQ:INTC) to settle all claims between them and to license its patent portfolio for use in current and future Intel products. The move follows several years of patent disputes between the two companies related to processor design.

"We are very pleased to have reached this agreement with Intel," said Les Crudele, president and CEO of Transmeta. "We believe that this arrangement will create value for Transmeta stockholders both by realizing immediate financial value for our intellectual property rights and by supporting our technology development and licensing business going forward."

The agreement grants Intel a perpetual non-exclusive license to all Transmeta patents and applications now and during the next ten years. Transmeta will also transfer technology and grant Intel a non-exclusive license to its LongRun and LongRun2 technologies along with any future improvements. However, Intel will not be able to sue Transmeta for developing and licensing these technologies to third parties.

So, why are shares up so much today? Well, the new agreement calls for Intel to make an initial $150 million payment to Transmeta as well as to pay Transmeta an annual license fee of $20 million for each of the next five years. Given the fact that the company's current market cap (even after today's jump) is $140 million, this is great news for shareholders and investors. The move also removes any concerns about selling its microprocessors and technologies in the future.

In the end, Transmeta is potentially still undervalued given the magnitude of this deal that promises to result in a payment greater than its existing market cap plus ongoing royalties for ten years. It also removes a legal cloud that has been impacting the company's shares for some time now. Combined, these factors make TMTA a stock worth watching!

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Children's Place Retail Stores Inc. (NDAQ:PLCE) announced that they have hired Lehman to explore strategic alternatives, according to a press release put out by the company. The move comes after the company lost more than half of its value amid accounting problems and falling same-store sales. Shareholders are hoping that this review will result in a transaction that will jump the shares.

"The Board of Directors and management team are focused on strengthening the organization and positioning the Company to take advantage of long-term growth opportunities through its Children's Place and Disney Store brands," said chief executive Chuck Crovitz in a statement. "We believe it is in the best interest of the company, our shareholders, and employees to initiate a comprehensive review of strategic alternatives."

Children's Place disclosed last August that its quarterly losses nearly doubled and that its full year profits would fall far below analyst estimates, which led to shares plunging more than 50 percent. Now the company has no long-term debt and is expected to end the year with at least $160 million in cash with a market cap of around $682 million.

In the end, it is likely that the company will at least institute a share buyback or special dividend to rid itself of this spare cash while also perhaps taking on some debt or selling some stores. Many shareholders, however, are hoping that the company will take another route and sell itself entirely, which could easily result in a substantial windfall for shareholders and investors. Either way, PLCE is definitely a stock worth watching!

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The Boeing Company (NYSE:BA) announced third quarter earnings of $1.44 which came in 20 cents better than estimates, according to an 8-K filing with the SEC. Shares moved down, however, on news that the aerospace company's 787 delivery schedule was being pushed back yet again due to parts shortages and production problems.

The aerospace company also revised its 2007 guidance up from $4.95 to $5.15. The improvement came from core business improvements and lower corporate costs. These improvements are also expected to positively impact future quarters and offset the change in delivery schedule. 

"Our focus on growth and productivity is driving strong financial performance across our company," said Boeing Chairman, President and CEO Jim McNerney. "With our record backlog and healthy, growing markets, the tasks at hand are to execute our programs, continue expanding our business base, and become more efficient every day."

Meanwhile, the Airbus vs. Boeing rivalry recently extended into airforce contracts. A key $40 billion contract for a tanker aircraft is up in the air amid a WTO dispute about aerospace subsidies. Airbus products are increasingly in demand by the U.S. government as alternatives to an increasingly limited pool of U.S. aircraft designs.

Overall, Boeings earnings cast additional doubt on the company's ability to carry forward with the 787 delivery schedule without further delays. However, the company has reduced its costs which led to an earnings surprise this quarter and should keep the net about even in the next. Combined, these factors make BA a stock worth watching!

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Amazon.com, Inc. (NDAQ:AMZN) is continuing to party like it's 1999 with shares nearly tripling off of their 52-week lows ahead of their earnings report today. Shares are already up in anticipation of strong earnings after Google, Apple and RIM all reported blowout quarters.

Amazon's two previous quarters showcased blockbuster earnings growth, which has led to high expectations for this quarter leading into the holiday shopping season. Sales in the third quarter benefited from the blockbuster release of the last Harry Potter, which drew many readers to the store.

The majority of today's move, however, appears to be shorts covering before the earnings announcement. The online retailer showed 36.8 million shares sold short at the end of September and this could clearly be crippling if Amazon's earnings turn out to be along the lines of Apple or Google.

In the end, strong revenue growth coupled with improving margins as a result of lower costs and higher third-party mixes have resulted in a strong stock during  the past few months. Whether or not this success is already priced in remains to be seen, but this is definitely a stock worth following!

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Netflix Inc. (NDAQ:NFLX) shares rose more than eight percent today after the company's earnings won over shareholders on Wall Street. The surprisingly strong results eased worries that the company's profits were suffering from a lengthy battle with competitor Blockbuster and as a result of a shrewd price cutting strategy that revived subscriber growth.

Revenue for the third quarter rose 15% from $256 million to $294 million while net income rose to $15.7 million from $12.8 million a year earlier. These numbers were validated by free cash flow growth from $22.3 million to $36.1 million. And last but not least, the online rental company managed to increase its subscriber base a whopping 24% year over year and even raised its guidance for next year to include revenues of $1.2 billion on 7.5 million subcribers.

The online rental space has experienced a lot of competition recently that has caused some concern for Netflix investors. Three months ago, Netflix suffered its first quarterly decrease in subscribers while Blockbuster enlisted 600,000 new online customers. Netflix responded by lowering their price by $1 per month, which expanded its sign-ups without damanging profits as the company was able to spend less on advertising.

Analysts also increased their price targets on the company. Lehman Brothers' Douglas Anmuth increased his target to $24 per share while Banc of America's Brian Pitz kept his target steady at $22 per share. Some analysts are concerned that Netflix's upcoming R&D costs along with signs that the company's growth is sustainable and not just the beginning of another damaging price war.

In the end, this is great news for shareholders but whether or not Netflix can build a sustainable strategy around its price cuts remains to be seen. Regardless, this is definitely a stock to watch over the next few quarters!

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Delphi Corporation (OTC:DPHIQ) announced that it's emergence from bankruptcy would be postponed until 2008, according to an 8-K filing with the SEC. The bankrupt auto parts maker said it wants to push back the continued hearing on its disclosure statement two weeks so that it can incorporate potential plan changes.

"Delphi is continuing to work toward emergence as soon as possible and anticipates that the schedule will facilitate emergence during the first quarter of 2008," the company said in the SEC filing. The delay is reportedly due to longer-than-expected negotiations with former parent General Motors as well as several of its key investors including Appaloosa Management.

Delphi filed its reorganization plan on September 6th after much negotiation following its October 2005 bankruptcy. The plan calls for the funding consortium to purchase $800 million in convertible preferred shares and approximately $175 million in common stock of the reorganized company. The investors also are committed to purchasing any unsubscribed common shares after a $1.575 billion rights offering that will be made availale to shareholders.

Delphi's common stock shareholders will be able to get a pro-rata share of 1.48 million shares of new common stock; transferrable rights to buy 45.6 million of the 147.62 million total shares for $1.75 billion; five year warrants to purchase an additional 5% of common shares; and nontransferrable rights to buy about $572 million of shares at $45 per share.

In the end, many are looking forward to seeing Delphi emerge from bankruptcy as it could mean great opportunities to profit. The interesting provisions in this bankruptcy plan also make it very interesting for institutional investors who want a piece of the action. Combined, these factors make Delphi a stock worth watching!

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A majority holder in Ameristar Casinos Inc. (NDAQ:ASCA) announced yesterday that they would undertake and continue to evaluate strategic alternatives that may become available with respect to their holding in the company, according to a Schedule 13D/A filing with the SEC. Shareholders are hoping that these alternatives will unlock value in the company and jump the somewhat stagnant stock price.

The Estate of Craig H. Neilsen, which now ows a 55.2 percent stake in the company, said that since the passing of Craig Neilson they have begun evaluating strategic alternatives for their holdings. These could including a merger or business combination, a transfer or disposition of a material amount of assets, or an open market transaction in the company's common stock.

Currently, nothing is set in stone as the group continues to evaluate its strategic alternatives. According to the filing, "There is no assurance whether or when any transaction may result from the Co-Representatives' ongoing review and evaluation." Fortunately, however, it sounds like the shareholder will not be simply selling its shares en masse on the open market.

In the end, there are a lot of possibilities here with the shareholder that now holds a majority stake in the company. Selling all of its shares on the open market would not be a prudent move, so it is likely that the group will attempt a private placement or a strategic transaction that would unlock value in the company's shares (like a merger). Regardless, this is definitely a stock worth watching while this situation unfolds!

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A large Magellan Health Services (NDAQ:MGLN) shareholder demanded that the heathcare company authorize a special one-time dividend of $478 million or $12 per share, according to a press release put out by the activist hedge fund. Shareholders are hoping that the activist hedge fund can unlock value and jump the company's somewhat stagnant shares.

Shamrock Activist Value Fund, which owns a 4.6 percent stake in the company, said in a letter to the board that they believe a return of excess capital at this time would be well received by at least half of the shareholders they surveyed. All surveyed believe that the current balance sheet is sub-optimal and is suppressing shareholder value although they differ on preferred methods of returning capital (namely, special dividends vs. share repurchase).

"We believe that the Board has the opportunity to dramatically improve shareholder value by taking immediate action to optimize the Company's balance sheet," said fund manager Arik Ahitou. "The Company's current forecast projects $12 million of debt and approximately $315 million of unrestricted cash at year end."

Magellan does not agree, saying, "We believe it is prudent to maintain our current capital position. In addition, our cash needs for the business are fairly significant in '07. Given the current incremental usage of cash for a new business and our active acquisition review, we have decided at this point in time not to implement any capital deployment strategies this quarter but we will continue to review and assess this possibility on an ongoing basis as we have stated to you previously."

In the end, the company has access to $1.25 to $1.5 billion in capital from cash on hand and available debt capacity which gives it the financial flexibility to leverage its balance sheet and return some of this capital to shareholders. Clearly, the company will then have enough left over from its credit lines to pursue acquisitions and keep costs under wraps. Whether or not the activist hedge fund pushes this further remains to be seen, but this is definitely a stock worth watching!

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