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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