Point Blank Solutions Inc. (OTC:DHBT) shares spiked nearly 20 percent earlier this week after it received an unsolicited buyout offer for $5.50 per share over a year after the company began exploring strategic alternatives. New York hedge fund Steel Partners initially approached the company two months ago but made the offer public after a lack of response from the company.

“We are confident that our proposal represents the best strategic alternative available to immediately maximize shareholder value for the Company and its public shareholders,” Warren G. Lichtenstein, Managing Member of Steel Partners stated in the letter. The hedge fund also stressed its extensive experience working with and maximizing the value of other public companies in the defense industry.

Steel Partners' offer comes just a week after its former CEO David Brooks was indicted on various fraud charges along with two other top officials. Brooks pleaded not guilty to sercurities, tax and accounting fraud charges. However, the entire ordeal has left the board in a difficult position trying to overcome the stigma associated with a criminal investigation and several arrests of key officers. This may make it difficult for management to keep the company.

Many shareholders believe, however, that Steel Partners may have to raise its offer to $6.50 to $7.00 in order to attract enough shareholders to make the deal happen. The hedge fund itself also noted that it would be willing to upwardly adjust the offer price to reflect any additional value that it may find through due diligence, so we know that such an adjustment is not out of the question.

Overall, this is great news for shareholders as it could provide them with a windfall of cash along with an escape from the criminal problems facing the company. While Point Blank has been rather keen on a turnaround, it may be difficult to convince shareholders that this turnaround is a better alternative than such a high buyout premium. Combined, these factors make DHBT a stock worth watching!

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Pacific Sunwear of California (NDAQ:PSUN) announced that it has hired Financo Inc. as its financial advisor to explore strategic alternatives for its demo chain of stores. The company said that it would explore alternatives for its demo stores, which sells urban-inspired clothing, and close its One Thousand Steps shoe boutiques. Shares in the company have risen more than eight percent since the original announcement as shareholders applauded the move.

Wall Street has complained for years that the demo stores were a drain on profits at Pacific Sunwear. The 154 demo stores and 9 One Thousand Steps stores combined for form a pre-tax operating loss of $21 million in the first three quarters of fiscal 2007. The demo stores saw its same-store sales decline more than 15% on top of a 17% drop last month. Many investors and analysts believed it was time just to dump the chain.

Pacific Sunwear is now looking to focus on turning around its PacSun change instead of trying to half-heartedly enter any new markets. The PacSun stores posted a 2.7% same-store growth number that outperformed many other teen-orientated retailers like American Eagle and Gap, which reported negative same-store sales for the quarter. The sale of these two chains should provide the company with ample cash to fund a turnaround to boost profitability even more.

Pacific Sunwear may also be a bargain with a price-to-sales ratio of just 0.76, which is less than half that of its competitors. The company's 2.26x book value is also an attractive valuation given that management has taken action to unlock value through the sale of these two chains. If the company can work to turn itself around and swing to a profit on stronger earnings, then this stock could be worth substantially more than it is now - and the sale of these two chains is a step in the right direction.

In the end, Pacific Sunwear still has a long way to go before it can become a successful apparel retailer. Its operating performance is has been very poor while its weak cash situation raises concerns about its outlook. Meanwhile, the company is experiencing very poor top and bottom line growth. This has created a relatively low valuation for the company that could become attractive if it is able to successfully turnaround its PacSun business. Combined, these factors make PSUN a stock worth watching!

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Northwest Airlines Corporation (NYSE:NWA) announced its first results following its exit from bankruptcy and swung to quick profit as it kept fuel and other costs under control. The airliner reported profit of $244 million, or 93 cents per share, compared to an analyst estimate of just 76 cents per share. Shares on the NYSE rose over two percent in early trading.

Northwest also said it was considering spinning off its frequent flier program in a move that would mirror those being considered by other major airlines including US Airways, AMR Corp, and UAL. Northwest CEO Doug Steenland said in a conference call that separating WorldPerks from the parent company "has the potential for significant value creation".

Many industry analysts believe that any move to spin-off frequent flier programs will come after a much-anticipated wave of airline mergers. Executives are worried bout giving up control over a business that has such close ties to their most loyal and active customers. Delta CEO Richard Anderson said, "Frequent flyer candidly needs to be a post-consolidation sort of decision."

In the end, Northwest has announced great earnings and already returned to profitability. The upcoming wave of consolidation should be nice to Northwest shareholders (assuming they are on the selling end) given this growth while any move to spin-off its frequent flier program could provide a windfall for existing shareholders. Combined, these factors make NWA a stock worth watching!

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