Freddie Mac (NYSE: FRE) and Fannie Mae (NYSE: FNM) shares are finding themselves under increased pressure as concerns about liquidity continue to mount. Many regulators are now calling for government intervention in order to save the government-subsidized entities and preserve the struggling housing market from a larger collapse. Unfortunately for shareholders, federal bailouts are only aimed at saving the company and not necessarily its shareholders.

A government takeover of both organizations is among several options being weighed by the Bush Administration. Officials may push for the firms, which own or guarantee almost half of the $12 trillion in home loans in the United States. Such a government takeover is likely to make the common stock of each company worthless, since paying off shareholders with taxpayer dollars may present a problem to perhaps everyone in the USA (minus those shareholders).

Fannie Mae has lost about 80 percent of its value during the past year while Freddie Mac has tumbled more than 85 percent during the same time. The reason is simply because many of these loans are going bad and requiring the companies to come up with capital that they are unable to raise. The government is expected to wait until these losses hit some $77 billion before it would be compelled to start a rescue.

Others insist that a government bailout would be unlikely because the two institutions have some $1.5 trillion in un-pledged assets and access to the debt market. Some insist that Fannie Mae would have to lose $40 billion immediately and Freddie Mac would have to lose $37 billion immediately in order to be considered insolvent. Housing prices would have to decline 40% nationally and delinquencies would have to rise as much as 10 fold to 12 percent to reach critical levels, according to these analysts.

In the end, there is still a lot of uncertainty as to whether or not the two housing market giants are in trouble. If they are, however, it is clear that shareholders will likely lose out in the event of a bailout. The only people that can hope to get their money back would be bond holders.

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Rohm and Haas Company (NYSE: ROH) shares surged over 65 percent today after rival Dow Chemical (NYSE: DOW) agreed to purchase the company for $15.3 billion. The $78 per share takeover deal includes funds from a Kuwaiti sovereign wealth fund and Warren Buffett's own Berkshire Hathaway. The 74 percent premium may seen hefty to some shareholders, but Dow Chemical executives insist that the strong brands and technologies make the premium worth paying.

The acquisition represents Dow Chemicals' efforts to expand higher-margin specialty chemical markets, which can help protect it from the ups and downs of basic chemical sales. Recently, the company has been struggling with the performance of its basic businesses due to increases in raw material costs that it has tried to pass on to consumers. This deal will make Dow the largest specialty chemical and advanced materials company in the world.

So, just how much will this magic deal help Dow in the future? Well, some analysts are expecting a big boost. Before the deal, analysts have been expecting Dow to earn around $3.50 per share in 2010 and 2011 during the industry trough, but now they are expecting around $4.50 per share. Meanwhile, in 2015 when dow forecasts the peak, EPS is expected to exceed $10 per share. Meanwhile, Dow expects to realize pretax annual cost synergies of at least $800 million per year.

In the end, many investors view this as a very positive move and do not believe that Dow overpaid. The company has entered into a higher-margin business, which should boost growth and earnings multiples. Meanwhile, the move also helps the company realize cost benefits through economies of scale.

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The car market may be hurting in the United States, but sales in Europe are booming for at least one U.S. company. General Motors (NYSE: GM) reported record sales of nearly 1.2 million vehicles in Europe for the first six months of the year. Sales grew 58% in Eastern Europe and 60% in Russia, which offset a weaker market in Spain and Italy.

General Motors has been struggling in the United States recently thanks to a slowdown in the housing market and consumer spending. The result has been an environment where consumers are pinching pennies and loans are difficult to obtain even for qualified buyers. As a result, GM has cut many jobs and taken other measures to reduce costs to salvage its earnings.

The Wall Street Journal also published an interesting piece today pointing out the only way for General Motors to emerge from this mess may be bankruptcy. The automaker is not only too large right now, but also employs too many people in too strong of a union. These are problems that aren't easy to circumvent, especially when it needs $15 billion just to make it to 2010.

General Motors shares are down more than 70% during the past 52-weeks and continue to struggle. European sales may be doing very well these days, but the market is simply too small to make a material difference. And a turnaround in the way it operates in the United States may be too costly to undertake and too difficult with unions.

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VMWare Inc. (NYSE: VMW) announed this morning that its co-founder and chief executive, Diane Greene, is leaving the company. Ex-Microsoft executive, Paul Maritz, is set to replace her as the head of one of the most popular technology companies in the market. Predictably, the stock moved down $13 - or 25% - on the news.

VMWare also took the opportunity to lower its financial expectations for the year, since the stock was already going to be down on news of the departure. The company said it expects revenues for the full year of 2008 to come in modestly below the previous guidance of 50% growth over 2007; however, the company did not update its guidance with specific numbers for Q2.

VMWare was one of the hottest IPOs ever one Wall Street before the economy turned south last year. The company is a provider of virtualization solutions from the desktop to the data center. The company's suite of virtualization solutions addresses a range of information technology problems that include infrastructure optimization and desktop management.

Many investors are now wondering whether or not the drawdown today went too far. The departure of Ms. Greene was a long time in coming due to a lot of friction between VMWare and its former parent company EMC. Greene had had a lot of leeway within the company because VMWare was somewhat of a golden egg for the company. However, her failure to perform caused friction.

Some investors are bullish on news of new blood within the executive ranks. Meanwhile, the growth prospects for VMWare remain relatively strong despite the slowdown in technology spending on the part of corporations. The technology itself is used to reduce costs and improve performance, which is why the company used the word "modest" in its statement.

In the end, it will be interesting to see just how much VMWare can fall before investors take into account future growth and realize its relatively low valuation - for a tech company - of 68x earnings. Some are even saying that it could become an eventual takeover target for a larger business technology firm looking to move into the high growth virtualization arena.

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Microsoft Corporation (NDAQ: MSFT) said today that it might revive takeover talks with Yahoo Inc. (NDAQ: YHOO) if billionaire activist Carl Icahn's campaign to takeover the board is successful. Icahn is quickly building momentum ahead of a Yahoo annual meeting scheduled for next month after he promised to oust the board and chief executive Jerry Yang in order to pursue a sale. The billionaire activist has already won support from several hedge funds and is expected to put up a fight.

Icahn insists that Yahoo must combine with Microsoft in order to effectively compete against Google and has already won backing from large holders, including T. Boone Pickens, and John Paulson. The reason, according to many, is that any campaign by Carl Icahn generally draws a great deal of support given his popularity as an activist. Shareholders also clearly appear to be supporting him as shares rose sharply today on the news.

Microsoft originally offered around $44.6 billion for Yahoo, which comes in at $31 per share. That's 62% more than the search company's stock price before the takeover talks. However, the company rejected the offer saying that it was worth more because of its growth prospects and strong presence in Asia. Unfortunately, conditions have worsened since then and many investors are wondering if they can even get that much from Microsoft anymore.

Carl Icahn has nominated nine directors to replace Yahoo's board, including himself, Mark Cuban, and Frand Biondi Jr. The annual meeting is currently scheduled for August 1st, but it would not be uncommon for the meeting to be delayed if the existing board feels that they will lose the vote. It will be interesting to see what becomes of this situation...

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NVIDIA Corporation (NDAQ: NVDA) shares tumbled today after the graphics processor maker warned that its second quarter may suffer. Shares plunged more than 30 percent after the company issued revenue and gross margin warnings and blamed the problems on weak demand, delayed production of new products and price cuts. The news comes ahead of its quarterly earnings along with that of many other companies operating in the sector.

NVIDIA said that it now expects its second quarter revenues to range between $875 million and $950 million with gross margins also expected to be lower than internal expectations. This compares to a prior revenue forecast of $1.01 billion by analysts. The company also said that it would take a charge of $150 million to $200 million in the second quarter to cover anticipated warranty, repair, and return costs associated with a defect on some of its chips.

Shares of NVIDIA rival Advanced Micro Devices, which owns ATI, fell 3.7 percent on the forecast. Others weren't safe either as the Philadelphia semiconductor index fell as much as 2.7 percent in early trading before recovering to trade down just 0.5 percent right now. The industry as a whole has been experiencing problems as consumer spending has weakened - particularly on high-end computers and graphics cards needed for gaming and graphics design purposes.

Shares of NVIDIA Corporation fell $5.52, or 30.12%, to $12.60 per share on the news.

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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.

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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.

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