Northstar Neuroscience, Inc. (NDAQ: NSTR) shares are up sharply today after a large shareholder offered to purchase the company. Tang Capital Partners announced its offer to acquire the company at $2.25 per share in cash today, sending shares more than 22 percent higher on the day. The announcement was revealed in a Schedule 13D/A filing with the SEC.

"As Northstar's largest shareholder, holding approximately 18% of Northstar's outstanding common stock, we have spent considerable time analyzing Northstar and its options. We strongly believe that the best course of action for Northstar and its shareholders is for Northstar to be acquired in a transaction that represents a significant premium to its current market price," said the hedge fund.

"However, the window for consummating any such transaction is limited; if the Board is to prevent further erosion of Northstar's value, it must act quickly. Accordingly, this non-binding proposal is contingent on our receipt of a positive response on or before July 9, 2008 and Northstar entering into a binding definitive merger agreement on or before July 23, 2008.

"Our proposal provides Northstar shareholders an immediate and certain path to a premium, all-cash transaction that will eliminate future market risk as well as the risk of future erosion in value. We believe that the vast majority of other Northstar shareholders will agree and expect this proposal to be readily approved by them. We encourage Northstar's Board to work with us to finalize a definitive merger agreement and bring the transaction to a shareholder vote as quickly as possible.

"We value the input of the Board and management when considering Northstar's strategic alternatives and have tried on several occasions to have constructive, confidential discussions with management regarding these alternatives. So far, management has been unwilling to entertain such discussions except under conditions that would make it impossible for us to protect the value of our significant investment in Northstar. We have made this proposal now because of our belief that this is the only remaining path to protect that investment."

This is great news for shareholders as the buyout price represents a substantial 50% premium to the going market price before the announcement was made. Whether or not the company agrees remains to be seen, but it appears that shareholders are bullish on the prospects at this point. Still, shares are trading substantially below the buyout premium at just $1.84 per share.

Related Companies
Cyberonics, Inc. (CYBX)
EnteroMedics Inc. (ETRM)
St. Jude Medical, Inc. (STJ)
Medtronic, Inc. (MDT)
Somanetics Corporation (SMTS)

H&R Block Inc. (NYSE: HRB) announced that it swung to a quarterly profit and surpassed analyst estimates. The tax preparer sold off its Option One mortgage servicing business to billionaire Wilbur Ross in April and forecast a full-year profit that was also higher than the market was expecting by a long shot.

Many traders had positioned themselves for poor results earlier this month, sending the stock some 10% lower on June 20th. Specifically, they expressed concerns about the company's guidance, saying the cash-poor households may start doing their own taxes rather than paying H&R Block to do them.

However, many contrarians were able to make a mint from this trade. There have been many economic slowdowns in the past, but professional filing of taxes has tended to be recession resistant. After all, many filers use professional tax preparers in order to access their refunds more quickly than otherwise possible.

Notably, H&R Block even managed to increase its U.S. retail client base by 3.8 percent while its number of international clients grew by 6.1 percent with particularly strong growth in Canada. The company said it was confident that it would realize significant gains in earnings per share through 2011.

In the end, however, it was the value of the dollar that helped the most. More than half of the revenue increase and a third of the profit increases from the international business resulted from favorable exchange rates when compared to the U.S. dollar. However, with continued weakness in the United States, this disparity should continue to grow.

Related Companies
Jackson Hewitt Tax Service (JTX)
Pre-Paid Legal Services, Inc. (PPD)
PRG-Schultz International, Inc. (PRGX)
Intuit Inc. (INTU)

KB Home (NYSE: KBH) shares dropped after the nation's largest homebuilder announced that its losses widened in the second quarter. Weaker sales and falling home prices led to a 55 percent drop in revenues as the company also booked charges related to the lower value of unsold homes, joint venture deals and land option contracts.

KB Home reported a net loss of $255.9 million, or $3.30 per share, compared to a loss of $148.7 million during the same time a year ago. Meanwhile, revenues plunged to $639.1 million from $1.41 billion a year ago, driven down by lower housing and land sale revenues.

"Despite substantially lower home prices, relatively low interest rates and an abundance of choices, potential new home buyers remain reluctant to purchase a home," Mezger said in a statement. "But as housing affordability continues to improve, we expect todays hesitant buyers to become a healthy source of demand for new homes, fueling the eventual housing market recovery."

The problem is so large at this point that some rental rates are higher than mortgage rates for like-kind properties! Still, people prefer to pay rent instead in order to avoid paying money on a property that is going to decline in value. This simply emotional fear has been causing a very real decline as inventories continue to rise.

Foreclosures have risen substantially over the past few months, and very few buyers are stepping in to purchase houses on the cheap. This environment of high supply and low demand has forced down prices for simple economic reasons. The problems won't be resolved either until buyers start to step in and purchase inventory.

When will buyers step in? That's the million dollar question for home buyers and companies like KB Home alike...

Related Companies
Centex Corporation (CTX)
D.R. Horton (DHI)
Pulte Homes, Inc. (PHM)
M.D.C. Holdings, Inc. (MDC)
Lennar Corporation (LEN)
NVR, Inc. (NVR)
Orleans Homebuilders (OHB)