The nation's largest cellular telephone provider was born today after Verizon Communications (NYSE: VZ) agreed to purchase Alltel for approximately $28.1 billion. The deal will help Verizon's wireless business surpass that of AT&T Wireless to take a strong lead.

The deal also represents one of the quickest flips in history as Alltel's private equity owners just completed buying the company last fall for about $27.5 billion. The result was a fast $600 million profit in just about a year. The consortium had reportedly been sitting on huge debt-related losses and were pushing hard to sell.

Under the terms of the deal, Verizon will acquire the equity of Alltel for $5.9 billion and assume $22.2 billion in debt. The transaction is slated to be completed by the end of the year. The move caught investors by surprise given the fact that it was rejected in the past due to Vodafone's resistance - a parter with Verizon Wireless.

The move also positions Verizon increasingly as a wireless business as opposed to a wireline business and is a logical fit. Both companies share the same cellular technology, CDMA, and Alltel services areas that are not serviced by Verizon. This positive spin helped push shares of Verizon up some five percent on the day.

In the end, this move underscores that the wireless industry is no place for independent telecom providers. It is the giants that thrive in this arena and even private equity funds are starting to realize that they cannot compete. It will be interesting to see how this affects others in the sector.

Related Companies
Sprint Nextel Corporation (S)
Qwest Communications International Inc. (Q)
General Communications, Inc. (GNCMA)
Starbucks Corporation (SBUX)
Level 3 Communications, Inc. (LVLT)
Covad Communications Group, Inc. (DVW)
CenturyTel, Inc. (CTL)
Iowa Telecommunications Services, Inc. (IWA)
DISH Network Corp. (DISH)

Yahoo Inc. (NDAQ: YHOO) has suddenly turned into one of the most active dealmakers in its bid to reduce the pressure from shareholders. A whirlwind of new deals were announced today with advertising partners ranging from Wal-Mart Stores (NYSE: WMT) to CBS Corporation (NYSE: CBS). Meanwhile, the company is desperately trying to strike a deal with Microsoft in leiu of an outright acquisition.

Shareholders like Carl Icahn are still not satisfied and are demanding a sale of the company. Many are not impressed that it took Yahoo this long to "rewrite" the company and turn it around. After all, if management was so confident in the company then why has the stock been stagnant for so long? To many investors, it comes down to a vote of confidence. Management still faces a lot of opposition that could prove difficult to qwell without a sale.

According to many shareholders, Yahoo must overcome a large (and growing) gap with Google in the search market in order to win back investors. And that might take a little longer than most shareholders are willing to wait...

Related Companies
Google Inc. (GOOG)
International Business Machine Corp. (IBM)

Yahoo Inc. (NDAQ: YHOO) leaders continue to contradict themselves as shareholders become increasingly fed up. Court documents revealed today that Yahoo had rebuffed a partnership with Google Inc. (NDAQ: GOOG) just one day before Microsoft Corporation's (NDAQ: MSFT) bid on anti-trust concerns.

"We are focused on long-term value creation rather than short-term gains," read a statement prepared for Yahoo executives. "Short-term analysis of the revenue for potential of outsourcing monetization may not take into account the longer term impact on the competitive market if search becomes an effective monopoly."

These comments come in sharp contrast to Yahoo's later position, during Microsoft talks, that it was conducting a test with rival Google to sell its search ads. The 180 was part of a strategy by Yahoo to seek alternatives for its business rather than selling out at Microsoft's $31 per share offer.

Now, shareholders are increasingly wondering whether or not Yahoo executives were honestly ever considering the Microsoft offer, or whether they simply will not sell out at any price. The news also comes just after several lawsuits aimed at pushing the transaction through by law or overtaking the board.

Related Companies
Google Inc. (GOOG)
International Business Machine Corp. (IBM)

Wachovia Crop.’s (NYSE: WB) poor results combined with the ouster of CEO Ken Thompson is fueling speculation that the firm could be for sale very soon, with analysts tagging JP Morgan Chase & Co. (NYSE: JPM) as the most likely suitor.

Charlotte-based Wachovia is facing some major trouble due to its mortgage market exposure, largely a result of its ill-timed 2006 acquisition of specialty ARM lender Golden West Financial Corp. Though the deal was designed to expand Wachovia into more of the West, its real result was Wachovia buying a huge amount of mortgages at the peak of the housing market. Even Thompson eventually admitted the purchase of Golden West was a bad move given its timing – though by citing only the timing, Thompson seems to ignore the underlying risk of the mortgage debt even without the “mortgage meltdown.”

In the wake of the acquisition, Wachovia has cut its dividend by 41% while being forced to dilute equity by issuing $8 billion worth of new shares.

Several analysts, including those at Merrill Lynch and Deutsche Bank, see JP Morgan as having an interest in buying the faltering bank because Wachovia has a strong presence in the Southeast – an area JP Morgan CEO James Dimon has expressed an interest expanding in.

Even so, there have been no known material talks of a sale by anyone at Wachovia with anyone at JP Morgan, leaving some analysts saying a deal remains unlikely – at least for now.

Regardless of a sale, expect more executive heads to roll at Wachovia – which, given the stock’s performance, seems a long-time coming.

Related Companies
Bank of America Corp. (BAC)
U.S. Bancorp (USB)

Petroleo Brasileiro SA (NYSE: PBR), known as Petrobras, announced a discovery in the Gulf of Mexico today. The diversified oil and gas company confirmed the discovery of hydrocarbons in ultra-deep waters in the Central Gulf of Mexico. The Stones #3 well, located in Block WR 508, found oil in multiple sandy lower tertiary reservoirs and is 25% owned by Petrobras. Future drilling and assessment activities are planned to define size and viability.

These results confirm the potential of significant oil reserves in these reservoir in the Gulf of Mexico, where Petrobras operates the Cascade and Chinook fields which at the present are in the production development and facility construction phase. Petrobras will be the pioneer company, both in ultra-deep waters in Lower Tertiary reservoirs and in using an FPSO type platform in the region, the production of which is slated to go online in June 2010.

In this same area, Petrobras also holds 25% stakes in the Saint Malo field. This field is operated by Chevron and is in the assessment and extension exploratory drilling phase. Also, studies are being done to select the production development project for Saint Malo. These discoveries help the company diversify its holdings and enhances the value of its Exploration and Production project portfolio in deep waters in the Gulf of Mexico.

Petrobras also announced its first quarter results today, which came in ahead of expectations. Consolidated net income rose 68% year-on-year thanks to a decline in operating expenses and the reduced appreciation of the Brazilian Real currency. The increase in oil and gas production and the upturn in oil and oil product prices also contributed to the improved performance. EBITDA climbed 26% year-on-year as production edged up 2%.

Meanwhile, Petrobras also saw its market cap increase 69% year-on-year due to oil and gas discoveries in the pre-salt layer, the new exploratory frontier, and potential production growth. Ironically, one of its biggest problems was obtaining offshore support vessels from companies like Transocean Inc. (NYSE: RIG), which have been booked for years in advance following the rapid run-up in oil prices in recent months - a bullish sign for these companies.

Interestingly, Petrobras also saw a significant decline in its US volume as the economic crisis worsens. This caused a sharp drop of 14.96% in its international sales volume, but was also helped down by the sale of its Bolivian refineries. This means that domestic refiners in the US are likely to continue to see problems in the near future. Luckily, Petrobras was able to offset this with strong growth in domestic sales volume.

Lehman Brothers analyst, Paul Cheng, also raised his price target for Petrobras to $62 per share. He maintains his "equal weight" rating on the company, saying also that he expencts the first quarter to come in at $1.02 and full year 2008 to come in at $5.10.

Dell Inc. (NDAQ: DELL) shares surged higher today on stronger than expected earnings. The PC-maker announced sales of $16.1 billion, which exceeded analyst estimates of $15.7 billion. Revenues in Asia jumped 19% as overseas sales finally topped those in the U.S. for the first time. The only unit that didn't see an advance in sales was the desktop PC market, which continues to struggle.

Michael Dell has attributed the gain to a new turnaround fueled by a retail-driven sales strategy. The company has added 13,000 retail outlets in the world's 20 largest economies over the past year to help it expand beyond the United States. Dell abandoned its strategy of selling only over the phone and internet, which led to its recent recapture of market share from competitor Hewlett Packard.

Dell is also targeted developing countries with cheaper machines. The PC maker is aggressively entering these markets with lower-priced products, which is driving the company's average price down but increasing its overall revenues. The effect on the bottom-line may be somewhat negative, but it appears to be a trade off that many investors are willing to accept.

Finally, Dell has also taken many cost-cutting measures. The company cut 1,000 jobs in the first quarter and plans to trim its expenses by $3 billion annually over the next three years. This will be accomplished through a combination of workforce reductions and a move to lower-cost manufacturers.

"We still have much work to do to restore our competitive position," said Dell on a conference call. "I am encouraged by the acceleration in our growth - you will see much more."

Related Companies
Sun Microsystems, Inc. (JAVA)
Hewlett-Packard Company (HPQ)
Apple Inc. (AAPL)
Silicon Graphics, Inc. (SGIC)
Microsoft Corporation (MSFT)
Palm, Inc. (PALM)
Rackable Systems, Inc. (RACK)
CSP Inc. (CSPI)
Quantum Corporation (QTM)
Lenovo Group Limited (LNVGY)

UAL Corporation (NYSE: UAUA) and US Airways Group (NYSE: LCC) have decided not to merge, according to the chief executives of both airlines. The executives noted that certain issues could significantly dilute the benefits of a merger transaction right now. They admitted that consolidation was necessary in the industry, but is unlikely to happen in 2008. The comments conclude months of merger talks in hopes of combating rising fuel costs.

Rising jet fuel prices have put substantial pressure on airlines, who were already in a fragile financial state. In fact, several airlines had just recently emerged from bankruptcy last year. Since then, several more have entered into bankruptcy. Mostly, these have been regional players like Frontier Airlines and Honolulu Airlines. However, rising fuel costs threaten to put the major carriers at risk if they cannot find a solution.

Mergers are considered healthy in these situations because a larger company is able to realize better economies of scale. That is, one entity purchasing more jet fuel at one time can get a better deal due to the greater quantity. Additionally, the transportation costs and other associated costs are also lowered for the same reason. Combined with rising fares, this could be enough to save many of the airlines now experiencing problems.

The problem is that the pilot unions are often unwilling to work together or accept steep pay cuts. The strong airline unions have been the culprit behind many of the failed talks, including those involving Northwest. UAL and US Airways did not cite these reasons, but media reports have said that opposition from labor unions and the costs of integration were the two key factors behind the decision not to merge.

Ultimately, the decision not to merger could cost both airlines a lot of money if jet fuel prices continue to rise at their current rates.

Related Companies
Northwest Airlines Corporation (NWA)
Delta Air Lines, Inc. (DAL)
Continental Airlines, Inc. (CAL)
AMR Corporation (AMR)
Pinnacle Airlines Corp. (PNCL)
SkyWest, Inc. (SKYW)
JetBlue Airways Corporation (JBLU)
Alaska Air Group, Inc. (ALK)
Republic Airways Holdings Inc. (RJET)

To recap the last two-months in a few lines, Microsoft Corporation (NASDAQ: MSFT) was courting Yahoo! Inc. (NASDAQ: YHOO), but the reality is Microsoft doesn’t want Yahoo so much as it just wants to be able to compete online – which basically means competing with Google Inc. (NASDAQ: GOOG). Well, besides an imminent partnership with Yahoo, Microsoft has long been rumored to want to make a play for Facebook beyond the 1.6% it already bought for $240 million last October.

Bloomberg has released a tiny item saying “Facebook Inc. Chief Executive Officer Mark Zuckerberg has no plans to sell the social-networking site, even if Microsoft Corp. offered $15 billion.” This is based on Zuckerberg’s comments at All Things Digital that, “the goal of the company is to execute on the things we talked about before,'' meaning share information about themselves and their lives more easily.

Despite this, many people have said similar things before about selling – but money talks. News site IDG.NO speculates in “What if Microsoft Bought Facebook?”

“An interesting rumor has surfaced: Microsoft would buy Yahoo Search, then spend a further US$20 billion to buy Facebook. Despite what Mark Zuckerberg says about Facebook remaining independent, it would be difficult to forego that rich an exit.

Facebook is one of several social networks, second only to MySpace and growing rapidly. But while MySpace is still larger, it is the flow of information through Facebook, and the social engagement of its members that makes it important.

Purchasing Facebook would give Microsoft access to over 60 million captive, and very social users, who could potentially be used to drive the growth of Live Search -- as well as access to all of their information, and in some cases their entire social lives.

Robert Scoble suggests that this would allow Microsoft to lock Google out of a huge chunk of internet information.

Buying Facebook might give Microsoft a small temporary boost. On the other hand, more than 140 million copies of Windows Vista with an Internet Explorer search box directed right to Microsoft Live Search haven't helped much. And Microsoft hasn't really been able to capitalize on user volume of existing services such as Hotmail or MSN instant messaging.

But let's step back a little. Microsoft hasn't detailed its plans yet, and a talk of its plans relating to Facebook is mostly rumor and conjecture. Still, if I were Google, I wouldn't worry too much just yet.”

Microsoft Corp. (NASDAQ: MSFT) co-founder, former CEO, recent “Chief Software Architect,” and world’s richest person for 13 years Bill Gates is not known for his investing so much as his business leadership – he didn’t invest in Microsoft, he built it. Nonetheless, Bill Gates is a pretty savvy guy, and he presumably has very savvy guys managing his investments (with a best friend like Warren Buffett, one would hope at least).

Obviously Gates’ wealth comes from Microsoft, but he has made a significant effort over the years to diversify his holdings through his private fund Cascade Investment LLC. In a recent The Motley Fool piece, some of Cascade’s holdings were examined:

•    Berkshire Hathaway (NYSE: BRK.A)
•    Canadian National Railway (NYSE: CNI)
•    Otter Trail (NASDAQ: OTTR)
•    Republic Services (NYSE: RSG)
•    Six Flags (NYSE: SIX)

Berkshire Hathaway is not surprising, given Gates’ relationship with Buffett, and the good sense for anyone, regardless of whether you personally know the Oracle, of investing in the company.

Cascade also seems to have a penchant for unglamorous businesses like railroads, Canadian National Railway, and trash disposal, Republic Services – both of which have done well for Cascade over the last 12 months, returning 7% and 13% respectively.

To investigate Cascade yourself, look for its 13-F filing with the SEC.

Barron's recently ran an interesting story on an activist hedge fund we follow called The Chilren's Investment Fund. The article interviewed founder Christopher Hohn, who unveiled some very interesting points and gave unparalleled insight into one of the most profound activist hedge funds in today's markets.

Hohn acts very similar to Warren Buffett in that he purchases hard-asset companies that are well-positioned and enjoy a near-monopoly, where there is a high barrier to entry, and which are under-researched and undervalued. The difference is that this investor likes to look for situations where poor management is undervaluing the firm.

The Children's Fund is well known for pushing management to pursue shareholder-friendly activities like share buybacks and special dividends designed to unlock value. Indeed, he has also seen great success by saving companies like Deutsche Borse from bad takeover attempts that undervalue the company.

Another important question answered in the interview was how such an innocent name - The Children's Fund - was assigned to such an aggressive hedge fund. It turns out that Hohn's wife wanted a fund that could help the poor, so this fund donates a portion of its profits to a non-profit organization that helps children in developing nations.

The rest of the interview can be read here.

But the big question is then: What stocks does the Chilren's Investment Fund own now? A quick look at their recent Schedule 13F-HR filing with the SEC shows a portfolio of just nine stocks - some popular and some unknown. The hedge fund's largest holding - not surprisingly - is in Union Pacific Corp., while CSX Corporation comes in second place. However, there are also many unknown names like Martin Marietta Matls on the list.

Here is the complete list:
1. Transalta Corporation (TAC)
2. Sterlite Inds India Ltd (SLT)
3. CSX Corporation (CSX)
4. CME Group, Inc. (CME)
5. Martin Marietta Matls Inc. (MLM)
6. Mastercard Inc. (MA)
7. Nymex Holdings Inc. (NMX)
8. Union Pacific Corp. (UNP)
9. Vulcan Materials Co. (VMC)