From the desk of Thom Buschman:

Maybe I shouldn’t be saying this as a financial writer that needs business news as well as people caring about business news – but every time I see a Microsoft Corp. (NASDAQ: MSFT)/ Yahoo! Inc. (NASDAQ: YHOO) / Carl Icahn (if he had a ticker it would be PROXY) story I want to throw-up.

Yes, I know that Microsoft is an important company (after all, I am typing this article on a laptop running Windows, though in the interest of full disclosure my desktop runs Linux) – it has a market capitalization of $275 billion thanks to its stronghold on the desktop environment and office suites, while maintaining impressive footholds in the video game console market and internet search (speaking of internet search, yes Microsoft is getting clobbered by Google Inc. (NASDAQ: GOOG) and has long been an also ran at third place by market share – but third place is still third place, and we are talking about searching the bloody internet, not third place in home blender sales).

I also know the interesting synergies/hopes to actually compete effectively in the internet sector’ raised by Microsoft combining with Yahoo (which is also getting clobbered by Google, the difference is that Yahoo doesn’t have an operating system or other software to fall-back on).

What annoys me to no end in the coverage of this strange dance – which seemed dead until every Bloomberg/WSJ/MSN Money/CNNMoney/MarketWatch reporter’s wet dream came true and billionaire trouble-maker Carl Icahn got involved and injected new life into the story (I mean deal… well, actually I mean story) – is the endless repetitive coverage and analysis of events from every angle and non-angle.

A simple search of Google News (which, incidentally, shows how Microsoft and Yahoo are getting clobbered by Google in search) lists 2,524 recent news articles on the possibility of a deal – everything ranging from the shareholder pressure, the likelihood of the recent pact turning into a full-blown merger, to Icahn’s trackrecord, to Microsoft CEO Steve Ballmer’s trackrecord, to the always slightly annoying (even if true – and yes I recognize the irony of me calling this annoying even though I have done it repeatedly in this article) reminders that Google makes a Microsoft/Yahoo combination irrelevant, to Google’s glee at the lack of success/distraction so far.

Every reporter needs to take a breath and stop reporting on the ‘maybe merger’ until an actual merger occurs (which it probably will) – and then they can begin the endless process of analyzing the terms of the deal, the synergies, the challenges ahead, Google’s response/dominance, Icahn’s reaction, Ballmer’s negotiating style, Yahoo CEO Jerry Wang’s legacy, and the new interior decorating of Yahoo’s former headqauarters, to name just a few stories.

Pacific Ethanol Inc. (NDAQ: PEIX) shares more than doubled over the past two days after releasing an extremely bullish earnings report. Analysts had predicted that the company would lose about 9 cents per share, but after a 96 cent noncash charge it actually made 6 cents per share. Obviously, these results surprised shareholders and caused the sharp rise we've seen over the last two days.

Pacific Ethanol producers and sells ethanol and its co-products and provides transportation, storage, and delivery of ethanol through third party service providers in the western United States. Many of the company's customers are integrated oil companies and gasoline marketers who blend ethanol into gasoline. It also supplies ethanol to its customers through its own facilities or with ethanol produced in bulk form other producers.

The ethanol industry has exploded recently as the government continues to incentivize the usage of ethanol in gasoline. The idea is to eventually reduce dependence on foreign oil by using a greater amount of alternative biofuels. However, the move has also drawn sharp criticism as food prices have risen sharply with no slowdown in oil prices. The reality is that this move is a result of the dollar decline and not ethanol.

Among the highlights for the quarter was a 63% increase in net sales, a 58% increase in gallons sold, reduced SG&A as a percentage of net sales, 159% EBITDA growth, and the startup of its Burley, Idaho plant. The company also announced that it was able to partially offset the rise in corn prices through a $2.2 million gain in derivatives trading. However, its gross margin still declined to 9.7% from 15.4% during the same period last quarter.

In the end, the results handily beat shareholder expectations and sent shares far higher on the week.

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Lowe's Companies, Inc. (NYSE: LOW) shares moved sharply lower after the home improvement retailer announced lower profits on a dip in sales. The company said its first quarter profits fell 18% and it forecasts more declines amid a continued slump that has significantly slowed consumer spending.

The Home Depot (NYSE: HD) also fell sharply on the news as they also announced that they expect a fall in profits as the housing slump continues. However, improvements in international operations for the company, particularly in Mexico, may help absorb some of the impact.

The earnings numbers are bad news for the home building industry that many were hoping would begin to show signs of a recovery. Sales of previously-owned homes, which is about 85% of the housing market, dropped in march for the seventh time in eight months. These are homes that typically trigger home-improvement spending.

The housing market itself continues to suffer from the effects of foreclosures. Tighter consumer spending and lower valuations have led to a spike in foreclosures. Unfortunately, these foreclosures end up lowering the value of surrounding properties in a vicious cycle.

Government aid has been relatively ineffective to date as it tries to bailout homeowners by encouraging lenders to renegotiate mortgages. Many of these homeowners are paying mortgages that are far higher than the value of their home warrants. As a result, they are not necessarily adverse to having their home go into foreclosure.

In the end, it could be awhile before the housing crisis is sorted out and home building companies like Home Depot and Lowe's can return to sustained growth. Investors should keep a close eye on economic numbers for any hints of a turnaround...

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Abercrombie and Fitch Co. (NYSE: ANF) shares jumped in early trading before settling down to its opening levels after the company released missed estimates. The high-end clothing manufacturer may not have hit targets, but it did show improved top and bottom line performance during its first quarter. The conflicted data ended up evening out the stock today.

Abercrombie said it earned $62.1 million, or 69 cents per share, in the first quarter. This was on a three percent increase in same-store sales but a drop in receipts for all other company nameplates. The company said that it plans to trim its expansion plans domestically in order to cut costs during the down economy.

Currently, Abercrombie runs 353 flagship stores and 687 others under various nameplates. It expects to open up 104 new stores as a result of its planned expansion. Currently, its revenues stand at $3.75 billion with $475.7 million in profits. The company is hoping that European operations next year along with new stores in the UK will boost sales and increase profitability.

Shares of Abercrombie & Fitch Co. rose $0.06, or 0.08%, on the earnings news.

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CNET Networks, Inc. (NDAQ: CNET) owns perhaps the most valuable, but underutilized, domain portfolio in the world. CBS Corporation (NYSE: CBS) acquired it at a steep discount today, paying only $1.8 billion for the struggling technology company. The acquisition extend CBS's internet presence and gives it access to some of the most valuable entertainment and news domains in the world - including News.com and TV.com.

"When you can combine the entertainment assets, the news assets, the platforms that are available with technology, the cross advertising opportunities, it just gives us great scale," CBS Chief Executive Leslie Moonves said on a conference call.

The $1.8 billion deal, announced this morning, values CNET at $11.50 per share and represents a 45% premium over yesterday's close. The technology company posted $406 million in revenues for 2007, which means CBS paid about 4.4x revenues for the acquisition. However, the domain portfolio contains the majority of the value. Domains like Cool.com have attracted offers of upwards of $38 million, which means domains like News.com may be worth substantially more.

The acquisition would also help boost CBS's earnings and expects its combined internet unit to reach $1 billion in revenue by 2010 or 2011. Obviously, the cross-advertising between television and internet would be a huge driver of traffic to the newly acquired domains. The move may have surprised many, but it looks to many like a great play at just the right time!

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Wal-Mart Stores (NYSE: WMT) scared Wall Street Tuesday with its cautious predictions for the second quarter, but what is bad for everyone else just might be good for Wal-Mart. This certainly seems to have been true with first quarter results – Wal-Mart had strong sales as a tough economic environment drove consumers on a budget to the company's low-priced megastores.

Though there is justified debate about how far this logic can hold true: at a certain point, consumers are so strapped for cash that their spending on non-essential items will slow to a point that it outbalances the increased purchase of necessities at Wal-Mart. But, despite the doom and gloom on the evening news, it appears that Americans are nowhere near ready to curb their spending or their debt.

For instance, Wal-Mart actually had exceptionally strong consumer electronic sales for the first three months of the year. If anything has changed from then, it is the perception and price of gas. A gallon of gasoline has edged towards or passed $4.00 a gallon, and this symbolic shift may cause consumers to finally put their money where their mouth is by actually controlling spending habits.

If this happens, it will indeed be bad news for Wal-Mart. In the meantime, it seems as if the economy has not changed what people buy but just where they buy it... which is very good news for Wal-Mart.

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New York cable company Cablevision Systems Corp. (NYSE: CVC) beat an offer from Rupert Murdoch’s News Corp. (NYSE: NWS) to buy the newspaper Newsday from Tribune Co. – in a deal that has Cablevision almost certainly overpaying.

Tribune will get $612 million in exchange for Cablevision acquiring a 97% stake in Newsday plus an additional $18 million in prepaid rent. Tribune will keep a remaining 3% stake in Newsday worth $20 million. The deal values the newspaper at $632 million minus the value of the rent included in the deal.

Newsday had a circulation of 379,613 in the six months through March 31 – nearly 5% less than a year earlier, though the newspaper still had EBITDA of $80 million last year.

Cablevision hopes to use Newsday to increase its ability to advertise in the greater New York City area. Tribune is happy to sell because the company carries $13 billion in debt on the books.

The real question is if Murdoch walked away from the deal last week at $580 million because the economics no longer made sense, what makes Cablevision think they can make the deal work at a higher price tag - $50 million higher?

In the statement announcing the deal, Cablevision said it will generate substantial cash flow from the deal as they leverage Newsday for more local ads and subscriptions – Cablevision shareholders better hope such promises come true.

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Circuit City (NYSE: CC) is taking the first steps towards a potential $1 billion merger bid with Blockbuster (NYSE: BBI) by allowing the video rental chain to conduct due diligence. The electronics retailer also received a letter from activist investor Carl Icahn saying that he is prepared to buy the company if Blockbuster cannot secure its own financing on its own or get shareholder approval. The move sent shares more than 5% higher on the day.

This news is music to the ears of Circuit City shareholders. Blockbuster pledged to purchase the company for no less than $6 per share, subject to due diligence. The fact that a standby offer is now in place by Carl Icahn makes a $5+ bid nearly certain. Speculations are now waiting to hear the results of the due diligence. If no problems are found, shares could rally significantly higher to the $6 per share minimum offer.

Blockbuster's move to acquire Circuit City comes amid a continued turmoil in the movie rental business. Competitor Movie Gallery recently filed for Chapter 11 bankruptcy amid increasing competition from video-on-demand and mail-order services like NetFlix (NDAQ: NFLX). Meanwhile, movie piracy continues to rise at a shocking rate and further eat into margins. Blockbuster is hoping that this diversification into electronics would change things.

In the end, it appears that a deal is relatively certain now given the due diligence agreement and Carl Icahn's standby offer. The price of the deal remains at the top of the list of concerns for shareholders, but this won't be determined until due diligence is completed successfully. Combined, these factors make CC a stock worth watching closely!

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Citigroup Inc. (NYSE: C) CEO Vikram Pandit made the long overdue announcement that he wants to make the bank “fit” by trimming $400 billion in assets. Currently, Citi reigns as the world's largest bank by assets with more than $2.1 trillion on the books compared to Bank of America Corp.'s (NYSE: BAC) $1.74 trillion.

With Citi's shares losing more than half their value over the past year, it is about time that management starts paying attention to who's biggest by market capitalization – not assets on the books. With a market capitalization of about $123 billion, Citi is dwarfed by both Bank of America, at more than $164 billion, and J.P. Morgan Chase (NYSE: JPM), at nearly $158 billion.

In all fairness, current CEO Pandit isn't to blame for Citi's bloated state. When he took over this last December, he inherited the boneheaded legacies of CEOs Sanford Weill and Charles Prince. Pandit has already begun cutting the fat by getting rid of CitiCapital and its $13 billion in assets, selling office buildings, and unloading more than $12 billion of leveraged loans.

Despite these efforts, the total assets sold so far amount to not even $30 billion – to get to $400 billion, he has a long way to go.

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After pulling its offer to purchase Yahoo! Inc. (NASDAQ: YHOO), Microsoft Corporation (NASDAQ: MSFT) not only finds itself with about $40 billion in previously tied-up funds but also needs a new strategy to have a better online presence.

Well, according to the Wall Street Journal, that new strategy might just be purchasing an even hotter Internet property, Facebook. Though neither Facebook nor Microsoft have officially commented on the rumor, the WSJ reported that Microsoft bankers have sent subtle message to see if Facebook would be open to an outright acquisition.

Microsoft already has a small interest in Facebook, purchasing less than 2% of the company last October for a staggering $240 million. Using these multiples, Facebook would be worth at least $15 billion.

Facebook is considered one of the most valuable destinations on the Internet for not only its user growth rates but the time each user spends on the site. With social network, chat, photo sharing and games, Facebook's 70 million active users are incredibly loyal.

Facebook founder Mark Zuckerberg, already one of the youngest self-made billionaires in history according to Forbes, has proven himself a very savvy player – refusing to sell the company in the early stages in favor of building it organically first.

At all of 23 years-old, however, a multi-billion dollar payday might just persuade Zuckerberg to sell.

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