The Brink’s Company (NYSE: BCO) shares rose 1.4 percent today after the security company announced that it would spin off its home security unit in order to appease a growing number of dissident shareholders. The news comes after enormous pressure from activist shareholders Pirate Capital and MMI Investments, both of whom planned proxy contests to overtake the board if changes were not implemented. The company has finally agreed with the activists after completing a review of its strategic options with the help of the Monitor Group and Morgan Stanley. The Brink’s Home Security unit is one of the largest and most successful residential alarm companies in North America and the spin-off should unlock substantial value for shareholders who have been struggling to realize value in their investment.

“Today’s announcement, which is the culmination of a comprehensive and thorough review of the strategic options available to the company, further demonstrates the board’s commitment to enhancing shareholder value,” said Michael T. Dan, chairman, president and chief executive officer of The Brink’s Company. “Both BHS and Brink’s, Inc. are market leaders that outperform their respective peers on almost every operating metric. As separate publicly traded entities, each company should benefit from enhanced management focus, more efficient capitalization and increased financial transparency. In addition, shareholders will have a more targeted investment opportunity, and incentives for management and employees will be more closely aligned with company performance and shareholder interests. Given these advantages, we are confident that this transaction will enable BHS and Brink’s, Inc. to more quickly realize the valuations they deserve. I commend the employees of both BHS and Brink’s, Inc. for their hard work and dedication in building these two great businesses. I am confident that both companies will continue to create value for their shareholders, employees and customers.”

The spin-off will convert Brink’s into two separate publicly traded companies:

1. The Brink’s Company includes the businesses of Brink’s Inc., the world’s premier provider of secure transportation and cash management services. The company has approximately 54,000 employees at operations in more than 50 countries, had 2007 revenues of approximately $2.7 billion and operating profit of $223.3 million.
2. BHS, which has approximately 3,600 employees, is one of the largest and most successful residential alarm companies in North America. In 2007, BHS had revenues of approximately $484 million and operating profits totaling $114.2 million. BHS operates in all 50 states, the D.C. and several markets in two western providences in Canada. BHS’s ability to provide an outstanding customer service experience as awarded by J.D. Power and Associates, has created a loyal customer base that includes approximately 1.2 million systems under monitoring contracts. Through its dedication to high quality customer service, BHS maintains one of the highest subscriber retention rates among major residential alarm companies.

Brink’s also reached an agreement with activist hedge fund MMI Investments whereby one of their nominees will be supported as a director at the 2008 annual meeting while another director of theirs will be nominated at BHS following the spin-off. In return, MMI has agreed to withdraw its request to nominate any directors at the next annual meeting. Combined, these events represent yet another victory under the belt of activists and should result in substantial value creation for shareholders that many estimate as high as 40% to 50% premium. These factors make BCO a stock that is definitely worth following over the next few months!

Related Companies
Protection One, Inc. (PONE)
Tri-S Security Corporation (TRIS)
Isonics Corporation (ISON)
Security With Advance Technology Inc. (SWAT)
Security Intelligence Technology, Inc. (SITG)
Group 4 Securicor plc (GFS)
Protection One Alarm Monitoring, Inc.
Argyle Security, Inc. (ARGL)
IDO Security, Inc. (IDOI)
Secure Fortress Plc

Oracle Corp. (NASDAQ: ORCL) said today that the U.S. Department of Justice and Federal Trade Commission approved early termination of the Hart-Scott-Rodino review period for its acquisition of BEA Systems Inc (NASDAQ: BEAS). Early termination means the Justice Department completed the review in advance of the 30-day maximum period allowed under antitrust law.

BEA has a special meeting of its stockholders planned for April 4 in order to vote on the merger. Though getting U.S. regulatory approval clears a major hurdle, the transaction still requires BEA stockholder approval and European Union regulatory permission.

Oracle said it agreed to buy BEA for $19.375 per share in January after earlier offers from Oracle were spurned for being too low, such as last year's $17 per share offer that valued the company at $6.7 billion. The current offer is worth approximately $8.5 billion.

The real question is, will the deal actually add value for Oracle now that it will probably be completed? Oracle said it expects only expects BEA to add one to two cents per share to adjusted earnings in the first year after the deal closes. Oracle has been on a spending spree in the last few years with CEO Larry Ellison spending more than $25 billion buying competitors like PeopleSoft, Siebel Systems and Hyperion Solutions.

Despite these purchases, Oracle has seen mediocre performance, especially in the last twelve-months. Combine this with Ellison's continued divestment from the company - 1 million shares just last month - and Oracle is definitely a hold, not a buy, right now.

Related Companies
Microsoft Corporation (MSFT)
Sun Microsystems, Inc.   (JAVA)
Quest Software, Inc. (QSFT)

Yahoo! Inc.’s (NDAQ: YHOO) recent attempts to convince shareholders that Microsoft Corporation’s (NDAQ: MSFT) bid significantly undervalues the company have yielded very little. However, some people (1, 2) are now beginning to question why they haven’t mentioned a big piece of the puzzle - Yahoo’s stake in Asia. Yahoo’s stake in Yahoo Japan and China’s Alibaba alone are valued at around $11 billion by most analysts. Meanwhile, many others peg the true value much higher given the enormous growth potential in these markets. The search company’s dominance in these markets is well ahead of Microsoft and Google Inc. (NDAQ: GOOG) and could be a good argument for a buyout price higher than $50 billion.

Yahoo’s stake in Alibaba, which stands at around 39 percent, paid huge dividends after being acquired for $1.7 billion in August of 2005. Since then, the company has IPO’d and dramatically grew in market value while also continuing to grow its revenues at a break-neck pace. Interestingly, Alibaba is also concerned about the Microsoft acquisition, saying that it has a “reputation of using monopolistic tactics”. Foreign control of large companies is also a politically sensitive issue for Beijing, which has forced many prospective buyers to cut their stakes or sipmly delay the application process indefinitely.

Yahoo’s stake in Alibaba combined with its 34% of Yahoo Japan represent strategic high-growth investments that are just now starting to pay dividends. The U.S. markets are beginning to slow in online advertising and these Asian markets may by the key to driving future growth. The search company’s substantial investment in this area may only be worth $11 billion now, but it could very well be worth much more in the future as growth picks up. Many are now calling for Yahoo to work these numbers along with their existing calculations in order to come up with a clearly derived $40 per share valuation that they can take to Microsoft and use to negotiate a higher price.

In the end, Yahoo will probably end up being acquired by Microsoft. Management has had many opportunities to turn around the company and it would take a substantial amount of time to reach the $50 billion valuation that Microsoft has offered to pay. So, it is now up to the board to convince shareholders that they deserve a higher price. Whether or not they can do this remains to be seen, but many are now saying that they should attempt to place a higher value on their Asian stakes. Combined, these factors make YHOO a stock worth watching over the next few months!

Related Companies
Microsoft Corporation (MSFT)
Google Inc. (GOOG)
eBay Inc. (EBAY)
Time Warner Inc. (TWX)
QuickLogic Corporation (QUIK)
RealNetworks, Inc. (RNWK)
Hollywood Media Corporation (HOLL)
AT&T Inc. (T)
News Corporation (NWS)
InfoSpace, Inc. (INSP)

Radyne Corporation (NDAQ: RADN) shares spiked yesterday after Monarch Activist Partners voiced their support for Discover Group in its attempt to gain control of two board seats, despite an announcement that the company was already exploring strategic alternatives. The activist hedge funds believe that the company’s management may have an inflated sense of value and may resist reasonable offers made by potential suitors. As a result, they want to appoint their own directors to oversee the process and ensure that the company respects the rights of shareholders. So, is this entire situation one worth watching?

Radyne announced earlier this month that they had retained Needham & Co. as their financial advisor to assist it in exploring strategic alternatives, including a possible sale of the company. The firm had previously assisted the company in evaluating inquires received from time to time from prospective suitors. The company has not yet set any time frame for the conclusion of this process, but many shareholders are hoping that it can be completed within the next 3 to 6 months given that the company is already “in talks with various parties”. Many believe that the offer must come in at a 40 to 50 percent premium in order for current management to even consider selling the company.

Here’s the most recent letter sent by Monarch:

Monarch Activist Partners (Monarch) strongly agrees with your recent announcement to explore strategic options. We hope this news marks the beginning of actions that are more conducive to the best interests of Radyne’s shareholders.

The purpose of this letter is to address the February 13, 2008 13D filing by the Discovery Group LLC, a beneficial owner of close to ten percent of the company. We urge the board to amicably resolve Discovery’s request and appoint the two nominees to the Board immediately. Despite the announcement to explore strategic options we believe management potentially has an inflated sense of value that can be delivered under their tutelage and may resist reasonable offers given the company’s current position and marketplace conditions. Most importantly, a costly and protracted proxy contest does nothing to benefit shareholders and only furthers the rift between management and the company’s most significant owners. If the strategic alternatives process is open and fair, the Board and shareholders can only gain by appointing Discovery’s nominees.

We hope you give this request your full consideration.

In the end, this is all great news for RADN shareholders who have been suffering with subpar returns for some time now. Since the company is already in talks, we can assume that there are many buyers that are interested in the firm. The real question is how high management expectations are set. If Discovery is able to install its own board members, then there is a high likelihood that we will see a sale. Otherwise, it will be interesting to see what kinds of offers come in and how management responds to them. Regardless, this is definitely a company that is worth watching during the next few months!

Related Companies
Comtech Telecomm Group (CMTL)
Globecomm Systems, Inc. (GCOM)
Motorola, Inc. (MOT)
ViaSat, Inc. (VSAT)
CalAmp Corp. (CAMP)
Blonder Tongue Labs, Inc. (BDR)
Harris Corporation (HRS)
Harmonic Inc. (HLIT)
KVH Industries, Inc. (KVHI)
Arris Group, Inc. (ARRS)

Netflix, Inc. (NDAQ: NFLX) shares spiked more than ten percent today after the company raised its first quarter and full year outlook on the heels of interest income and the completion of its $100 million stock buyback program. The online movie rental company also boosted its subscriber targets despite increased competition from companies like Amazon.com, Inc. (NDAQ: AMZN), Apple Inc. (NDAQ: AAPL) and its main competitor Blockbuster Inc. (NYSE: BBI). So, is this a trend that the company can maintain or a simple one-time blip amid a declining industry?

Netflix continues to benefit from a very favorable competitive landscape as well as improved cost-efficiencies across subscriber acquisition and overall marketing expenditures. This landscape will likely intensify in the comping year with digital downloads, but these offerings shouldn’t impact the DVD rental market for at least another few years. Netflix also announced a new popular program that allows subscribers unlimited streaming of about 6,000 movies and television episodes from their computer at no additional charge - a service that is quickly gaining popularity.

Netflix announced that the two main factors behind the raise in its net income was favorable interest income as well as its share buyback program. The movie rental company completed its share $100 million share buyback program announced earlier this year in record time. It repurchased 3.8 million shares of common stock at an average price of $25.96 per share, net of expenses. Meanwhile, the firm received higher interest income from its investments not related to the activities the company. It is unclear exactly how hight this impact was, but it will be interesting to see in their next quarterly report.

In the end, Netflix is proving that it has some staying power versus its steep competition. The guidance today not only showed increased operating efficiency in the fourth quarter (profits out-pacing revenues), but also a number of new subscribers that will help its bottom line. This company was a pioneer of online movie rentals and continues to impress investors as it works on new ways to compete against brand new competition from some of the world’s largest tech giants. Combined, these factors make NFLX a stock worth watching!

Related Companies
Blockbuster Inc. (BBI)
Movie Gallery, Inc. (MOVIQ)
GameZnFlix, Inc. (GMFX)
Video City, Inc. (CDVY)
Apple Inc. (AAPL)
West Coast Entertainment (WCEC)
Culture Convenience Club Co.
West 49, Inc. (WXX)
ChoicesUK plc (CHUK)
SHICHIE Co. Ltd.

Sybase, Inc. (NYSE: SY) shares rose marginally after the software-maker agreed to to boost its share buyback program as part of an agreement with one of its largest shareholders. The firm announced a $300 million self-tender offer at prices between $28 and $30 per share and will use its best efforts to complete approximately $82.9 million in additional open market repurchases prior to the completion of their 2009 annual meeting. The shareholder, Sandell Asset Management, will in turn drop its bid to takeover the board and limit its future acquisition of stock. So, should you ad some Sybase to your stock portfolio?

Sandell Asset Management had been concerned about the company’s large cash position. Sybase noted that it had about $735 million in worldwide cash, with between $225 million and $250 million of free cash. However, restricted cash and long-term investments reduce this amount to around $700 million in available cash balance. Looking ahead, the company estimated that it would need working capital in the United States of about $85 million and $115 million outside of the United States. Clearly, this is excess cash that could be leveraged elsewhere to deliver value for shareholders rather than sit in a bank account.

So, is this buyback a good deal for shareholders? The current agreement calls for purchasing at a significant premium to the current market price. The premium currently stands at around 9.5 percent and could rise higher, since the additional $82.9 million buyback is not tied to a specific price. There are also many other benefits brought on by a share buyback program given that it will reduce the number of outstanding shares by over 10 percent. Since it was financed out of cash on hand and not earnings, the reduction should boost the earnings per share. Some of this may be priced into the stock, but it is still a benefit worth mentioning.

Sybase is also quickly turning itself around after being left for dead not long ago. The software-maker announced record earnings in 2007 with a 17 percent increase in revenues and 26 percent increase in net income, which indicates that it has been improving its profit margins. Meanwhile, the company is continuing to take a larger portion of the database market from competitors like Sun Microsystems who had the opportunity to acquire the company on the cheap not long ago! In the end, these factors all make SY a stock worth watching closely over the next few months!

Related Companies
Microsoft Corporation (MSFT)
International Business Machines Corp. (IBM)
Oracle Corporation (ORCL)
Symantec Corporation (ORCL)
CA, Inc. (CA)
Progress Software Corporation (PRGS)
Novell, Inc. (NOVL)
Pervasive Software Inc. (PVSW)
BMC Software, Inc. (BMC)
Sun Microsystems Inc. (JAVA)

Ford Motor Co. (NYSE: F) is expected to announce sometime next week that its Jaguar and Land Rover brands are being sold to India's Tata Motors Ltd. (NYSE: TTM), according to a British union.

Though Jaguar and Land Rover are both currently owned by Ford, the U.K.-based brands continue to be largely manufactured there. Unite union spokesperson Andrew Dodgshon, said in an interview today that a sale may happen as soon as March 5. Ford already said back in January that Tata was the preferred bidder for the units.

Ford, the world's third biggest automaker behind General Motors (NYSE: GM) and Toyota (NYSE: TM), is selling Jaguar and Land Rover to focus on its core brands after losses of $2.67 billion last year and a record $12.6 billion in 2006. India-based Tata would expand outside the Asian auto markets through the acquisition of such well recognized brands.

More than anything, this sale will help Ford stabilize its financial situation by not only getting a cash influx of around $1.5 billion from the sale but by shedding Jaguar, which Ford has admitted is losing money.

Tata Motors is part of Tata Group, India's biggest conglomerate which includes steel production and consulting services. Tata built the first Indian-designed car and plans to build a $2,500 car later this year. The real importance of this deal in long-run is probably not a milestone on Ford's turnaround but rather a milestone on Tata's path to becoming a major automotive player worldwide. Given the advantages the Indian company has in both the cost of design labor and manufacturing labor, investors in other car companies should be worried.

Related Companies

Honda (HMC)

 

Google Inc. (NDAQ: GOOG) shares are down sharply today after new data from comScore was released showing a decline in the number of web users clicking on ads. The news prompted many analysts to cut their price targets and issue warnings as the vast majority of Google’s revenues comes from its pay-per-click program. However, others insist that these concerns over overblown and that the technology giant will be able to quickly recover thanks to stronger pricing. So, is this a time to sell Google stock or simply a good entry point while shares are cheap?

Google’s AdWords program faces a variety of challenges going forward. comScore reported that Google’s paid clicks dropped 7 percent in January from the previous month and were relatively flat with the same period last year. This is the lowest click-through rate since comScore started reporting the data. Google had indicated some concerns about paid clicks back in the fourth quarter, but blamed the slowdown on technical changes designed to reduce the number of accidental and fraudulent clicks by users. Some analysts believe that these technical improvements should lift conversion rates and lead to stronger pricing.

Google also faces a variety of other issues related to its pay-per-click business. Businesses bidding on keywords are quickly finding that many of them are now priced so higher that they are just breaking even upon conversion. This peak in keyword pricing means that Google’s revenue growth will likely begin to slow as the revenue-per-click peaks. Since this program accounts for around 90%+ of the company’s revenues, this almost certainly will lead to slower growth. Slower growth means a lower multiple, which means a lower stock price despite the same earnings.

Google is also dealing with increasing fraudulent activity. Some businesses are clicking on competition ads in order to raise their marketing costs and reduce their conversions. A recent report by ClickForensics found that 28 percent of all clicks were fraudulent, which is up from 19.2 percent in 2006. This compares to an industry rate of 16.6 percent, which may prompt some advertisers to switch their campaigns to Yahoo Publisher or MSN Adcenter until Google can fix the problem. However, it can be a hard problem to fix and so far Google has just been refunding money to keep advertisers happy.

In the end, Google faces a variety of problems with its primary source of revenues. The recent slowdown in paid clicks may be attributable to a broader economic slowdown, but the reality is that its other businesses will inevitably slow down as well. The stock has already dropped substantially off of its high as investors slowly come to this realization, but it may face further declines unless the company finds a way to incease or diversify its revenues. Combined, these factors make GOOG a stock worth watching!

Related Companies
Microsoft Corporation (MSFT)
Yahoo! Inc. (YHOO)
Baidu.com, Inc. (BIDU)
CNET Networks, Inc. (CNET)
International Busines Machines Corp. (IBM)
QuickLogic Corporation (QUIK)
Time Warner, Inc. (TWX)
Answers Corporation (ANSW)
Apple Inc. (AAPL)
EarthLink, Inc. (ELINK)

TLC Vision Corporation (NDAQ: TLCV) woke up to an interesting note from the founder and former chief executive of its arch rival LCA-Vision Inc. (NDAQ: LCAV)- he purchased 5 percent of the company and wants to be CEO! Dr. Stephen Joffe blasted the company for the more than 60 percent drop in TLCV’s shares over the past year, which he called “a self-inflicted wound” and “a byproduct of bad decision-making by the board and management”. The LasikPlus founder then proposed joining the board as executive chairman or chief executive to implement strategic and business model changes for the troubled company. So, is this a development that makes this stock one worth watching for your portfolio?

Dr. Joffe was one of the founders of the laser vision correction industry and was reportedly already in talks about joining the company to implement his strategy and effect a turnaround to restore value in the troubled franchise. These talks ultimately fell through and now the large shareholder is just trying to protect his sizable investment from poor strategy and capital decisions being made by the company. For example, recent Dutch auctions offered unhappy shareholders securities worth roughly three times the price of shares trade at today. The board accomplished this with an enormous mountain of debt and interest costs that could eliminate profitability for many years ahead.

Dr. Joffe also makes several other arguments in his letter to the board. Here’s a complete copy:

Thank you for calling me back yesterday, I appreciate your time and your effort to explain away the more than 60 percent drop in TLC’s shares over the past year. Frankly that loss in value is a self-inflicted wound–a byproduct of bad decision-making by the board and management.

On top of the list of ill-conceived judgments is the board’s decision to buy off many of its critics with a disastrous Dutch auction that offered unhappy holders roughly three times the price the shares trade at today. To accomplish this, management and the board burdened the corporation with an enormous mountain of debt and interest costs that could sharply suppress, if not eliminate, profitability for many years to come.

TLC is part of an industry that is still in its infancy. As a matter of principle, I want to see TLC succeed and prosper because of the life-changing difference it can make in the lives of patients.

Yet we are already more than 40 days into calendar 2008, and I seriously question whether TLC has the right strategy, the right people, or the right business model to survive and succeed in the years ahead. I am not the only major shareholder who is deeply disturbed by these concerns.

Currently I am still a significant holder of TLC’s shares, but unlike other troubled shareholders, I understand the economics and challenges of the laser vision correction business from the standpoint of a manager and operator. I founded LCA-Vision, TLC’s largest competitor, and as chairman and CEO I was directly responsible for that company’s enormous success, until my departure in February 2006.

Right now, my intention is to protect my already sizeable investment in TLC. Before the board’s abrupt decision to initiate the disastrous Dutch auction, we were in serious discussions about my joining TLC to oversee the turnaround. Consider this letter a formal request to renew those discussions. I believe all shareholders stand to benefit from my extensive experience as one of the founders of the laser vision correction industry.

Please respond 5:00 pm (eastern) on Monday the 18th of February 2008, to discuss my joining the company as Executive Chairman or CEO to implement my strategic plan to turnaround and rebuild this formerly valuable franchise for the benefit of all shareholders. I am available to speak with you throughout the upcoming weekend and can be contacted via email at xxxxx or by cell phone on xxxxx or xxxxx.

While I would prefer not to take this effort public, your failure to move forward will force me to take whatever actions are necessary to protect my investment and ensure a timely turnaround of TLC’s business.

In the end, this is great news for TLCV shareholders as Mr. Joffe is an experienced executive that has a lot to offer. Clearly, his involvement with their main competitor will yield valuable information while his turnaround strategy likely will not harm the company any more than it has already harmed itself. Given the unrest of many existing shareholders, the likelihood of his election to the board in the event of a fight are also reasonable high. Combined, these factors make TLCV a stock worth watching over the next few months!

Related Companies
TLC Vision Corporation (TLC)
LCA-Vision, Inc. (LCAV)
NovaMed, Inc. (NOVA)
Vision Group Holdings Limited (VGH)
Eyecare Partners Limited (EPL)
Advanced Ocular Systems, Inc. (AOS)
Continucare Corporation (CNU)
Express Scripts, Inc. (ESRX)
HealthSouth Corp. (HLS)
UCI Medical Affiliates, Inc. (UCIA)

Take-Two Interactive Software, Inc. (NDAQ: TTWO) shares soared today after Electronic Arts Inc. (NDAQ: ERTS) offered to acquire the company for $26 per share, or about $1.9 billion, which is a 64 percent premium over the stock’s prior closing price. The video game maker rejected the offer, calling it a “highly opportunistic” attempt to take advantage of the upcoming release of Grand Theft Auto IV set for April 29th. The company said that it would resume buyout talks after the game’s release, but EA fired back that there can be no certainty in the future that any buyer would pay the same high premium being offered today. So, is this a stock worth watching for your portfolio or is the stock now grossly overpriced?

Activist hedge funds have been pushing Take-Two towards a sale for some time now amid poor financial results, accounting problems, and controversy surrounding violent and sexual content in the company’s games. These hedge funds, which own a combined 46% of the company, were successful in forcing the company to evaluate a sale last March but nothing came of it. Then, billionaire activist Carl Icahn joined the fight back in November - a great invesment in today’s terms! These activists now likely own more than 50% of the company and will definitely vote in the best interests of shareholders if a serious offer is made for the company. They will also take action if the company decides to ignore great bids.

The other key point within this story is that the $26 per share offer was the second one made by EA. The first $25 bid was rejected and never presented to shareholders for reasons unknown (maybe it wasn’t material enough?). This is important because it could mean two things: (1) There are other unannounced potential bidders for the company, and (2) there is a good possibility that the company could hold out for another sweetened offer. Often times, initial offers are low-balled at first to gauge interest and then built up until it meets investor demands. Clearly, EA is interested in Take-Two’s hit titles and it will be interesting to see how much they are willing to pay for them.

Hank Greenburg also points out another interesting point to this story. Electronic Arts sent a letter to Take-Two not long ago arguing that it faces ongoing financial, legal and operating issues and a very intense competitive environment. In fact, EA even said that it would be increasingly difficult for the company to create sustainable shareholder value while it remaisn exposed to considerable risk of value loss. Just recently, EA also commented that once GTA IV ships, Take-Two will again be dependent on less-popular titles and face increasing challenges to compete with larger and better-capitalized competitors. So, all of this begs the question of why they are interested in the company at all?

In the end, it will be interesting to see how activist shareholders respond to this rejected offer given their new found wealth. Investors can bet that they will take action if they believe that the offer represents a fair price in order to unlock value. This is why shares are currently trading above the $26 per share buyout price and why many are so bullish on the stock. Combined, these factors make TTWO a stock worth watching!

Related Companies
Microsoft Corporation (MSFT)
Electronic Arts Inc. (ERTS)
Atari, Inc. (ATAR)
Activision, Inc. (ATVI)
THQ, Inc. (THQI)
Midway Games Inc. (MWY)
Majesco Entertainment Co (COOL)
Navarre Corporation (NAVR)
Konami Corporation (KNM)
Sony Corporation (SNE)