Winnebago Industries, Inc. (NYSE: WGO) shares fell sharply today after the recreational vehicle maker announced disappointing earnings. The company saw its third quarter profit dive 73% as higher gas prices, tigher consumer credit, and a softer economy drove motor home sales into the ground.

"The motor home market has changed significantly in the past year, with dramatic declines in the past few months," CEO Bob Olson said in a statement. "Discretionary purchases have declined in the United States as the country is faced with unstable fuel prices, consumer confidence at 16-year lows and a tighter credit environment."

Olson also noted that the industry has seen a decrease in motor home sale sof more than 26% for the first four months of this year and a stead decline of more than 30% in both March and April, which are typically stronger months for recreational vehicles. To help combat the declines, the company plane on closing its Charles City factor and restructure itself.

Many investors should have seen this coming with gas prices skyrocketing higher and recreational spending in general on the decline. However, shares in the company still dropped sharply by 5.69%. The stock is already down some 30% so far this year as many expect things to get far worse before they get any better.

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Huntsman Corporation (NYSE: HUN) shares fell sharply today after Hexion Specialty Chemicals said it may not follow through with its promise to purchase the company. Hexion decided not to pursue the purchase amid Huntsman's deteriorating financial condition that has many investors worried. At least one analyst has reduced his target from $28 to $15 per share amid the crisis that has sent shares plummeting.

The move to cancel the merger comes after Huntsman posted an 84 percent drop in first-quarter profits as it saw raw material and feedstock costs soar to record highs as the U.S. dollar weakened further. Sharp increase in raw material costs have been hitting many companies hard that have not hedged their bets. So far this year, Huntsman shares have slipped some 19 percent and they dropped a further 38 percent during today's trading.

Huntsman President and Chief Executive Peter Huntsman said his company would "vigorously enforce" its rights under the original deal and "seek to consummate the merger on the agreed terms". Analysts do not expected a renegotiated deal price at this time, and expect prolonged litigation to add to the uncertainty of the stock. As a result, Huntsman's shares fell sharply on the day.

Huntsman Corporation shares are trading down $8.12, or 38.93%, to $12.74 on the news.

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Goldman Sachs (NYSE: GS) has managed to surprise investors and avoid the credit crisis once more. The Wall Street powerhouse managed to book $2.1 billion in profit, which topped forecasts and sent shares higher. A sharp decline in leveraged loan activity was offset by a surge in equity underwriting as more companies looked to raise money during the quarter. Asset management and securities services also helped to make a spectacular quarter.

The investment bank noted that its net earnings for the second quarter came in at $4.58 per share, which was loser than the $4.93 per share a year ago, but higher than Wall Street's $3.42 per share estimate. Goldman Sachs also reported revenues that were 7.5% lower to $9.42 billion, but that also topped analyst estimates of $8.74 billion. Shares were already some 10% higher on the week but mobed up marginally on the news.

The impressive results came at the heels of a huge los at rival Lehman Brothers (NYSE: LEH) and at a tough time for investment banks in general. Lehman announced a $2.8 billion second-quarter loss while its management tried to calm investors concerned about a Bear Stearns style collapse on the horizon. Meanwhile, Morgan Stanley is expected to see its profit plunge some 60% from a year earlier.

In the end, Goldman Sachs continues to impress analysts and beat other competitors in the investment banking arena. This should also give them an edge in the future as they are able to attract and retain some of the best personnel in the industry thanks to the steep cuts elsewhere. It will be interesting to see where all of these banks are left when the market eventually recovers and they are looking to hire once again...

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Sirius Satellite Radio (NDAQ: SIRI) and XM Satellite Radio Holdings (NDAQ: XMSR) drew one step closer to consummating their planned merger yesterday after a key U.S. regulator expressed support for the 16-month-and-coming deal. FCC Chairman Kevin Martin confirmed published reports that he would support the transaction provided that the companies agreed to a series of conditions.

There had been concern that the merger between the two satellite radio giants would eliminate the possibility of any competition and create a monopoly. As a result, the companies are being forced to agree to a series of conditions including making 24 radio channels available for noncommercial and minority programming. In addition, the companies have to cap prices, provide interoperable radios and offer programming on an a la carte basis.

Martin's decision will likely remove the last remaining regulatory hurdle in one of the most length and heavily criticized decisions in the history of M&A. The Justice Department has already stated that competition from traditional and high-definition radio, iPods and MP3 players already presented a clear competitive environment. As a result, the merger no longer faces any antitrust hurdles.

Shares of both companies rose on the news.

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Yahoo Inc. (NDAQ: YHOO) shares dropped off a cliff today after the search company shunned Microsoft Corporation (NYSE: MSFT) completely in favor of a deal with Google Inc. (NDAQ: GOOG) instead. Management may have finally found a way out of the situation, but shareholders clearly disapproved of the new deal. Shares plummeted nearly 5 percent on the news as a Microsoft deal is now completely out of the picture.

The only hope remaining for some shareholders is Carl Icahn's continued involvement. The activist shareholder had been pushing for a deal with Microsoft and even nominated his own directors to the board in order to effect change. The aging investor isn't known for giving up either, so it should be a fight until the end. Investors don't have to look back too far to see that fact- he had to try twice to effect change in Motorola!

However, the fact remains that most proxy contests end up failing. Moreover, Microsoft has not indicated that it would still be interested in a deal even if Icahn did take over the company. The only thing that is for certain is that the Google deal would be voided if Icahn does win control over the search giant. This fact could put a strain on his popularity with institutional investors as a loss of a Google and Microsoft deal would put Yahoo back to step 1.

In the end, it is no secret that Yahoo needs to change something in order to get itself out of its current lull. Management believes that a partnership with Google would help increase its revenues. Shareholders believe that a sale to Microsoft represents the bet immediate solution. Overall, it looks like Google is the only clear winner as it has now secured a deal with Yahoo while also eliminating any deal with Microsoft that could boost its competition.

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Citigroup Inc. (NYSE: C) chief executive Vikram Pandit announced plans today to shut down Old Lane Partners. This was a hedge fund group that he co-founded and sold to the bank last year for more than $800 million. A regulatory filing showed that the bank took a first-quarter charge of $202 million to write-down the value of its investment in Old Lane, which contributed to its $509 million hedge fund unit loss during the quarter.

Ousted chief executive, Charles Prince, called the transaction "an investment as much as it is an acquisition" last April when the deal was completed. Many saw the deal as a way to recruit Pandit as well as John Havens, who was promoted in March to head of investment banking, trading and hedge funds. It turns out that the deal wasn't a great investment or acquisition as Citigroup took a dive as a result of hedge fund losses.

At least shareholders can be sure they weren't scammed. Pandit may have received $165.2 million last year for his stake in Old Lane, but he reinvested $100.3 million, after tax, into the fund, according to a regulatory filing. This means that he is on the hook for just as much of the losses as many of the other investors. It appears that this was simply a case of poor timing for Citigroup and poor asset investment choices by Old Lane.

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Krispy Kreme Doughnuts (NYSE: KKD) has been beaten up since its heyday and remains 75% off of its 52-week high. However, the troubled company reported strong earnings on Monday that sent its shares substantially higher and gave investors renewed hope for the future. The question is: Is this a real recovery or just a temporary blip on the radar screen before more declines hit the stock?

Krispy Kreme shares spiked nearly 8% yesterday after the company announced first quarter earnings of 6 cents per share compared to a loss of 12 cents per share during the same quarter last year. However,revenue for the first quarter fell 6.6% to $103.6 million, which is down from $110.9 million a year earlier. The decrease was due to a 10.3% drop in company stores revenues and a 2% drop in supply chain sales.

The increase in earnings is only due to a large write-down last year due to the refinancing on some debt. As a result, shareholders should not take this as any kind of major improvement in cost savings or other measures. Rather, the decline in revenues makes its quite clear that the company continues to face significant problems ahead that may erode shareholder value.

Krispy Kreme continues to feel the pressure from the industry slowdown. The chain opened 28 new stores during the first quarter while seven franchises closed. The company said it expects more franchises to close in the future and "the number of such closures may be significant". However, investors again shrugged off these comments and sent the stock higher after the announcement.

The chain also warned against the effects of higher raw material costs. The jump in food prices has led to a sharp increase in costs that the company may have trouble passing on to its consumers without hurting revenues. The result could be further margin pressures that could adversely effect shareholder value. In the end, it could be another couple of quarters before investors see any real signs of improvement for this company.

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Yahoo Inc. (NDAQ: YHOO) is facing more heat today after Carl Icahn sent another letter to the Board of Directors today expressing disappointment in their lack of a response to his concerns. The activist investor's previous letter had demanded that the troubled search company immediately sell itself to Microsoft in order to best serve shareholder interests. It will be interesting to see how Yahoo responds to this letter:

Dear Roy:

After reading Yahoo!'s press release put out on Friday in response to my letter of that morning, I cannot help but wonder if you even read my letter.

Again, Yahoo! keeps repeating misstatements in the hope it will convince its shareholders that these misstatements are valid. I cannot understand why the Yahoo! board feels so strongly about its "poison pill" severance plan and why it continues to refuse to rescind it. How can you continue to repeat that your severance plan is in the best interests of shareholders and employees? Indeed, Yahoo!'s own compensation advisor called the severance plan "nuts." Is it not true, as the shareholder complaint stated, that Microsoft's CEO earmarked $1.5 billion for employee retention (a benefit you neglected to tell your employees about)? Is it not better to incentivize employees to stay in their jobs than to quit? Instead of just continuing to repeat the mantra that we have made an inaccurate interpretation of your severance plan, why do you refuse to go into detail as to why our interpretation is incorrect? Additionally, a New York paper reported this weekend that "sources close to Microsoft said the severance plan was a 'big issue' when deciding what price they could pay for Yahoo!"

In your press release from Friday, you stated again that I do not have a credible plan for Yahoo! Did you even bother to read my letter, which went into great detail on what measures I would ask the new board to take? Ironically, while you keep inquiring about my plans, it is interesting to note that Yahoo!'s board has been busy reaping great compensation benefits. Indeed, you made approximately $10,000 per week last year -- not bad for a board member. I believe most of your shareholders would be interested in seeing your time sheets -- especially in light of the fact that, in my estimation, most of your so-called "plans" over the last few years have been failures. Remember the old adage -- those who live in glass houses should not throw stones. Perhaps most importantly, under my plan, I would ask the Board to bring in a talented and experienced CEO to replace Jerry Yang and return Jerry to his role as "Chief Yahoo!" It is extremely important to note that Google hired a great operator as a CEO who helped to transform the Company into a giant at the expense of Yahoo! According to publicly available financial information, while Google's income from operations grew 59% per year over the last two years, Yahoo!'s income from operations shrank 21%. What was the board doing over this period? Where was their great "plan"? I believe a new CEO with operating experience might well have had and might still have a very salutary impact on Yahoo! I ask again what your great "plan" has been over the last few years. Why did you permit Google to leave you in the dust?

I outlined a number of questions in Friday's letter. Why don't you do me the courtesy of answering my questions as I have answered yours?

Sincerely yours, CARL C. ICAHN

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