Microsoft Corporation (NDAQ: MSFT) executives met with Yahoo Inc. (NDAQ: YHOO) today to discuss the proposed takeover offer, according to people familiar with the matter. This would be the first such meeting since Microsoft made its unsolicited buyout offer was made and subsequently rejected. The meeting was not so much a negotiation as an attempt by Microsoft to outline its vision for Yahoo and attempt to smooth over the troubled relations between the two technology giants. So, will this talk help increase the likelihood of a Yahoo acquisition or is it still far fetched?

The talks reportedly covered the impact of such a takeover and were described as mostly a listening session for Yahoo with no financial advisors present. Microsoft reportedly indicated that it wanted very little disruption of Yahoo’s business, but believed the two companies could compete better against rival Google (NDAQ: GOOG) as one unit. Clearly, the combined company would prove to be a big competitor in not only paid search but also Google’s newest venture in display advertising. In fact, the threat was so large that Google was reportedly considering taking action to break up the bid.

Yahoo has held similar meetings with other potential suitors, including Time Warner (NYSE: TWX) and News Corp (NYSE: NWS), in order to thwart Microsoft’s takeover attempt. But Microsoft has been sticking to its guns and rumored to even be considering nominating its own slate of directors to Yahoo’s board to help push the deal through. Meanwhile, the value of Microsoft’s offer is quickly declining, as their shares have dropped nearly 12%, but the technology giant has refused to raise the offer until it gets a good look at Yahoo’s books. It is likely that Microsoft is looking for revenues in paid search and display advertising most closely in order to determine how much it could accredit its own earnings.

In the end, there is no word from either company about the success of the meeting. As of now, Yahoo’s rejection of Microsoft’s $44.6 billion bid stands and there is no word that prominent executives even showed up at the meetings. Investors and analysts will have to wait to see if there is any future progress made by these two companies towards making a deal become reality. However, YHOO and MSFT are definitely two stocks worth watching in the meantime!

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Enzon Pharmaceuticals (NDAQ: ENZN) shares rose today after activist investor Carl Icahn disclosed a 6.93% stake and suggested that the pharmaceutical company explore strategic alternatives in a Schedule 13D filing with the SEC. The billionaire financier insisted that management conduct a comprehensive review of strategic transactions that could enhance shareholder value. In particular, Icahn suggested the company consider monetizing certain assets like royalty streams and under-performing products through either a spin-off or sale of the company as a whole.

Not surprisingly, shares rose today on news of Carl Icahn’s involvement as many coat-tail investors tried to buy a stake next to the legendary activist. However, many analysts also see potential in Icahn’s involvement. Recently, the company swung to a profit on lower expenses and improved revenues. The bulk of its earnings came from the gain on the sale of its Nektar equity assets of $13.8 million and a $6.7 million gain from the repurchase of 4.5% convertible notes at discount to par. But notably, operating income also came in at $870,000 compared to a loss of $11.64 million in 2006.

Carl Icahn also has had a lot of success in the biopharmaceutical industry. Some of his other successes include ImClone (NDAQ: IMCL) which is up substantially, MedImmume which was acquired, and Biogen (NDAQ: BIIB) which recently put itself up for sale. Many are speculating that the activist investor will try to unlock value by cashing in on royalty streams to fund share buybacks that should increase EPS and subsequently the stock’s price (assuming the multiple remains the same). This activist strategy has worked in countless other cases and should unlock value in this case as well.

In the end, this is great news or Enzon shareholders as it could mean substantial value being unlocked over the short term. However, a lot depends on management willingness to explore these alternatives as any proxy battle could be both expensive and drawn out. Luckily, Carl Icahn is well known (and feared) among corporate circles so management should agree to at least consider the options. Combined, these factors make ENZN a stock worth watching!

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Conseco, Inc. (NYSE: CNO) shares have been halved during the past 52 weeks and at least one large investor insists that the stock is substantially undervalued in a Schedule 13D/A filing with the SEC. The insurance holding company’s shares dropped after it fell under scrutiny for improperly reporting benefits and liabilities for insurance products. In fact, it will have to restate nearly three years of financial results that it says may have overstated shareholder equity by $15 million to $35 million.

Steel Partners, which owns an 8% stake, believes that Conseco is trading well below its intrinsic value. As a result, it announced the nomination of two candidates to the Conseco’s board of directors to unlock this value by pushing the company to explore strategic alternatives. These measures could include spinning off or selling business units, executing major stock buybacks, or finding a merger partner.

Normally when companies hear shareholders mutter the words “strategic alternatives” they quickly install poison pills and resist as much as possible. However, Conseco surprisingly agreed to consider the voluntary nomination of Steel Partners representatives for election to the board of directors. This voluntary nomination would greatly speed up the entire process and allow shareholders to realize significant appreciation over the short-term.

Situations like these are very common for Steel Partners, who prefers to find stocks depressed from (relatively) non-material regulatory issues and restore them to intrinsic value. The most likely of the strategic alternatives is a leveraged share buyback that would allow Conseco to increase its EPS, which (at the same multiple) should increase its share price. Other alternatives like a spin-off or buyout are also possibilities that force investors to reprice shares accurately.

In the end, this is all good news for Conseco shareholders. A strong activist investor and a willing board of directors creates a great opportunity to unlock shareholder value for everyone involved. It will be interesting to see just how quickly the company can act, but this is definitely one worth watching closely over the next few months!

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Bear Stearns (NYSE: BSC) can handle the credit markets but rumors are another story. Rumors surfaced early this week that the investment bank was facing liquidity concerns and shares fell sharply. The next day, CEO Alan Schwartz told CNBC that the rumors were absolutely not true and the company had sufficient liquidity. Unfortunately, shareholders failed to believe the firm and shares dropped over 30 percent today- sparking some very real liquidity concerns.

The dramatic drop in Bear Stearns share price forced the firm to seeking backing in the event that it has a real liquidity crisis. The firm announced that it reached an agreement with J.P. Morgan (NYSE: JPM) and the Federal Reserve that will provide it with secured funding for an initial period of up to 28 days. J.P. Morgan also said that it is working closely with Bear Stearns on securing permanent financing or other alternatives for the troubled Bear Stearns.

“Bear Stearns has been the subject of a multitude of market rumors regarding our liquidity,” said Schwartz. “We have tried to confront and dispel these rumors and parse fact from fiction. Nevertheless, amidst this market chatter, our liquidity position in the last 24 hours had significantly deteriorated. We took this important step to restore confidence in us in the marketplace, strengthen our liquidity and allow us to continue normal operations.”

Investors and analysts remain divided as to whether or not there are really problems at Bear Stearns. Some view this new plan as a bailout and a last-ditch effort to save the investment bank. Meanwhile, the firm itself insists that it is simply securing additional funds just in case its share price keeps dropping and it experiences a liquidity crisis. The truth is that it is a little bit of both. The rumors turned out to be the cause of the problems.

Investment banks rely on their own stock to secure loans in swap agreements while they leverage their market cap to obtain financing. Now that Bear Stearn’s stock is in the poor house, the loans they backed with stock in the past may now need some hard cash. These additional capital requirements may be too much for the firm to handle, which is why it was forced to seek this additional line of credit from J.P. Morgan and the Federal Reserve.

In the end, this story goes to show just how powerful some rumors are in the marketplace as they can actually turn into fact. The one thing investors can look forward to at this point is that rumored buyout- now that BSC stock is so cheap it could be much more likely at these levels. Combined, these factors make BSC a stock worth watching!

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Take-Two Interactive (NDAQ: TTWO) may have to do a double-take after Electronic Arts (NDAQ: ERTS) launched a hostile $2 billion tender offer directly to its shareholders. The $26 per share offer is four percent higher than TTWO’s closing price yesterday and a 64 percent premium to the pre-takeover price. Electronic Arts says the bid will expire at midnight on April 11th - the day after Take-Two’s annual shareholders’ meeting. So, is this a deal worth taking for TTWO shareholders?

Take-Two’s real value lies in its Grand Theft Auto video game series that has sold more than 65 million copies, making it one of the most valuable franchises in videogame history. The company is expected to release the next version of the blockbuster series on April 30th and has insisted that it will talk to EA afterwards. Take-Two believes that EA’s buyout attempt as well as reported interest by others is simply an attempt to buy a franchise on the cheap.

Unsolicited takeover offers like these have become increasingly common as larger companies seek to add valuable brands to their portfolio rather than retain key executive. However, these offers can be difficult as investors tend to hold out for a better offer until the last second while boards negotiate a deal behind the scenes if majority shareholder support is in place. This situation is no different and illustrates the clear value of Take-Two’s franchise game.

Interestingly, Take-Two’s existing board consists of hostile shareholders from a different era. The company’s previous management and board was ousted a year ago by dissident shareholders who installed directors from ZelnickMedia to control the company. It will be interesting to see how shareholders respond to this offer, and more importantly, how the board responds to the offer given their past skepticism in the offer.

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Time Warner’s (NYSE: TWX) AOL may be finally realizing that dial-up internet doesn’t have the brightest future. The popular internet service provider announced today that it purchased social media site Bebo.com for $850 million in an effort to boost its content network. The deal comes after a broad attempt to transform itself from an internet service provider to an advertising-driven content network. So, will this acquisition end up paying off?

Bebo is a social network that caters to the younger demographic with a focus on entertainment - a combination particularly attractive to advertisers. It is also the third largest social networking site, behind MySpace and Facebook by a large margin. However, Bebo is one of the largest social networks in Britain and is ranked number one in Ireland and New Zealand. This international exposure could be just the edge needed to create value.

Social media acquisitions are hard to value for investors. News Corporation’s (NYSE: NWS) purchase of MySpace was a record at the time and ended up paying off- the $580 million purchase is now worth an estimated $15 billion. However, Microsoft Corporation’s (NDAQ: MSFT) $240 million 1.6% stake in Facebook is still seen as overpaying. It turns out the Bebo also shopped itself to other competitors like CBS Corporation (NYSE: CBS), but many thought it was too expensive.

The acquisition fits well into AOL’s new content provider business model. The company has already launched 17 international websites over the last year and has plans to expand to 30 countries by the end of 2008. Bebo is not only the third largest social network in the U.S., but also has international exposure that could synergize well with AOL’s other holdings. Meanwhile, a string of ad-sales companies should enable the company to drive advertising dollars.

In the end, this is good news for Time Warner’s AOL division. It is possible that the company overpaid slightly, but perhaps the international exposure and prominence of Bebo made it worth the price. Regardless, it definitely marks a continued move away from the internet service provider business and towards the much more profitable content provider side of things. Combined, these factors make TWX a stock worth watching!

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Talbots Inc. (NYSE: TLB) announced yesterday that it lost money in the fourth quarter due to a drop in same store sales and charges from the acquisition of J. Jill stores in an 8-K filing with the SEC. For the fourth quarter, Talbots lost over $171 million or $3.23 per share compared to a basically break-even fourth quarter in 2006. Of the $3.23 loss per share, $2.71 was due to a write-down of intangible assets of J. Jill which was purchased in May 2006.

Talbot is specialty retailer and cataloger clothing, specifically children’s and women’s clothing through Talbots Kids and Talbots Misses. The company runs 25 separate catalogs, 140 superstores and 23 outlet stores. Unfortunately for the company, the May 2006 J. Jill acquisition has been less profitable than hoped and necessitated greater write downs because of lower growth and earnings for the brand.

The J. Jill acquisition was designed to update Talbots more traditional lines and drive growth; however, the brand has proved a money drain – not only is growth slower in that line rather than faster than Talbots other brands, but the women’s retail industry as a whole is experience a significant downturn.

The overall health of Talbot stores seem to be in decline with quarterly sales down 8% to $587 million from $638 million. Talbots President and CEO Trudy Sullivan said, “2007 was a difficult year for Talbots, However, we feel very good about the progress we have made, and believe we are well-positioned to succeed in 2008. Despite the challenges of a weak economic environment, we identified and implemented a number of key initiatives to drive improved short- and long-term performance.”

These key initiatives include closing its 78 men’s and children’s stores to focus on its core customer- middle-aged women.
Looking forward, Talbots forecasts 3% revenue growth for 2008 – even assuming “slightly negative” same-store sales growth. To turn the company around, management is going to have to continue closing under performing stores as well as reinvigorate its product offering.

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Fund.com Inc. (OTC: FNDM) set a new world record yesterday after it purchased the domain Funds.com for $9,999,950 in an all-cash transaction, according to an 8-K filing with the SEC. FST Limited decided to part with the domain and associated intellectual property in an purchase agreement dated October 1st of last year, which broke the record previously held by Business.com, which was sold for $7.5 million in 1999. So, what does Fund.com Inc. have planned for this new domain?

According to their 10-K filing with the SEC, Fund.com said that its new web presence will provide customers with free information about investment funds including original, aggregated and community selected articles about the fund industry, statistics on fund performance and other fund-specific detail. The objective is to establish Fund.com as a source of information for individual investors regarding investment funds, including mutual funds, hedge funds, money market funds, exchange traded funds, closed-end funds, commodity funds and other types of pooled investment vehicles.

What does this mean for investors? Fund.com plans to monetize the web property via online advertising, lead generation and referral fees. One of their subsidiaries, Fund.com Managed Products Inc., will also research and develop intellectual property in the form of fund investment indexes and related index-linked investment products and license these to third parties in consideration for recurring license fees paid to them based on a fixed percentage of assets managed by such their parties using their index-linked investment products.

Who will use this service? Fund.com believes that their target market is a multi-trillion dollar industry as reported by the Investment Company Institute (ICI). Hundreds of billions of dollars flow in and out of funds that receive money from individuals and investment firms. Fund.com believes that third party distribution of funds has largely been undertaken by financial advisors with traditional marketing channels, including in-person client meetings with brokers, so these are all marketing efforts that could be augmented with Funds.com.

In the end, the success of Funds.com remains to be seen after the record-breaking purchase. Regardless, this is definitely a stock that is worth watching over the next few months!

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French bank Societe Generale (EPA: GLE) is not having an especially good day. First, the French police raided its headquarters as part of the continuing investigation of rogue trader Jerome Kerviel - specifically, the police were looking into another SocGen employee who had extensive contact with Kerviel though the exact details of the raid have not been released yet.

Meanwhile, in the U.S. shareholder Phillip Barkett brought a lawsuit against the company on the grounds that it misled investors about its subprime loans as well as didn't take proper precautions against the actions of Kerviel. The Missouri resident who brought the suit owned American Depository Receipts of SocGen and allegedly lost $3,100.

The lawsuit, filed in U.S. District Court in Manhattan seeks to represent all purchasers of SocGen ADRs and all U.S. buyers of the bank's shares on any exchange between Aug. 1, 2005, and Jan. 23, 2008. It states that "[SocGen] thus gave investors no warning about the size of [its] losses," and "SocGen had a 'culture of risk' in which risky trading was tacitly permitted."

These allegations all stem from the shocking $7.5 billion in losses that SocGen, France's second largest bank, announced in January. Amazingly, the bank claims that these trades were carried out without its knowledge by 31 year-old Kerviel who was only a junior trader. These problems have only been exacerbated by recent general problems in the world capital markets which caused SocGen to take further losses in February.

SocGen shares are actually up because today's news, compared to that of the last two months, isn't particularly bad for the company - though shares are still trading more than 50% off their 52 week high.

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Washington Mutual, Inc. (NYSE: WM) shares rose today on speculation that Warren Buffett and Goldman Sachs (NYSE: GS) may be preparing to invest in the company. Shares jumped nearly 20 percent yesterday and continued their rise today after falling to a 12-year low earlier in the week. Many investors believe that the cash-rich Buffett may be looking to buy up some cheap financials at these levels and WaMu is definitely on sale! So, is WM a stock worth watching?

Washington Mutual reported its first loss since 1997 in the fourth quarter after itw as forced to write-down the value of its home mortgage unit by $1.6 billion and set aside $1.5 billion to cover bad loans. The bank also said that it would have to put aside $1.8 billion to $2 billion in loss provisions for the first quarter. Meanwhile, WaMu’s credit rating was lower to BBB from BBB+, bringing it just two steps above junk bond status.

Many analysts and investors are concerned about the company’s large exposure to high-risk markets and loan types that are performing poorly. These loans include home-equity lines of credit that have recently begun to see problems in California and other states hit heavily by the mortgage crisis. However, the Central Banks’ recent plan to inject liquidity in these markets combined with efforts to make mortgages more affordable could end up saving them from much of these losses.

Some are speculating that Warren Buffett has already begun building a stake in the company and plans to eventually merge it with his other large holding - Wells Fargo (NYSE: WFC). The idea may seem nothing more than a dream to some, but any such move could result in substantial value being unlocked for shareholders. WaMu shareholders would receive an ample buyout premium while Wells Fargo would get a cheap acquisition in today’s markets. Clearly, if the economy turns, this could become a great deal.

In the end, this is nothing more than a far-fetched rumor, but it is one that is definitely worth watching. Warren Buffett is one of the most popular investors, so his secrets get out more often than others. Whether or not there is any merit to these rumors remains to be seen, but investors should carefully watch for any Schedule 13D or Schedule 13G filings made by the great investor in WaMu!

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