Merrill Lynch & Co., Inc. (NYSE: MER) shares fell sharply today after the troubled investment bank priced its share offering at $22.50. This pricing point suggests that they weren't able to sell shares at the current market price and raises questions about both dilution and the company's ability to maintain its share price. Shares fell sharply before recovering to $23.90 on the news today.

Merrill Lynch told investors yesterday that it would raise $8.5 billion by selling newly issued stock despite the fact that CEO John Thain repeatedly denied that the firm would need to raise more capital. In fact, back in January Thain was quoted as saying, "We're very confident that we have the capital base now that we need to go forward in 2008." Such comments had many investors convinced that such dilution wouldn't occur anymore.

In fact, on April 4th of 2008 he even commented: "In 2007, we lost 8.6 billion dollars after tax, but we raised 12.8 billion dollars in new capital. We raised significantly more capital than we lost. And we did that on purpose so that we could say to the marketplace that we raised more than enough capital. We replaced all the capital we lost. We have plenty of capital going forward, and we don't need to come back into the equity market. The goal is to maintain our current ratings. No more capital raising; I'm sure we have enough capital."

Merrill Lynch needs the capital after unloading more than $30.6 billion in repackaged debt at a fire sale price ealier this month in an attempt to reduce the risk on its balance sheet. Such news only underscores the fact that the financial sector remains exposed to losses that will require more loan loss reserves, more write-offs, and more capital to keep afloat. All of this is bad news for Merrill Lynch and others in the financial sector, except perhaps Goldman Sachs.

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Kraft Foods Inc. (NYSE: KFT) shares surged higher today after it reported strong second quarter earnings and forecasted a strong full year. The world's second largest food-maker announced higher profits thanks to commodities hedging, successful price hikes and the dollar's decline overseas. The news comes half way through the company's three year plan to restructure itself.

Second quarter income increased 3.5 percent to $732 million from $707 million a year earlier. Excluding items, profit beat analyst estimates by 8 cents per share. Meanwhile, revenues also rose some 21 percent to $11.2 billion from $9.2 billion a year earlier. Finally, Kraft now expects to earn at least $1.92 per share in 2008, which is 2 cents higher than its previous forecast and matches analyst estimates.

Kraft earnings benefited the most from a $150 million hedge in grain, which helped it lock in prices for the commodity. Price increases helped the company recoup costs in other areas, such as cocoa, sugar and transportation. Oil prices have climbed 61 percent in the past year, while wheat used in cookies and pizza has risen 27 percent. Some consumers have switched to less expensive brands after the increases, but Kraft still holds a commanding lead in its markets.

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Point Blank Solutions Inc. (OTCBB: PBSO) announced another delay in their annual meeting today, which has some shareholders furious and others grateful. The body armor manufacturer said they need to wait for the Army's IOTV contract award before completing their review of strategic alternatives, which includes a potential sale of the company to some 90 potential parties.

Point Blank has already been awarded with a bridge buy of 150,000 IOTV's for a total of $86.2 million while the Army finishes determining who will win the larger 736,000 IOTV contract. The latter could be worth around $200 million or more, which is more than Point Blank's current market capitalization. Obviously, the award would substantially impact PBSO's valuation to a potential buyer.

However, at least one activist investor is sick of constantly waiting around. Steel Partners, who has been involved with the company since its fraud charges, has been waiting for an annual meeting for over two years and is currently suing the company to hold it. Interestingly, the activist hedge fund is also holding a proxy contest to overtake the board.

"The postponement was a unilateral stunt pulled by a Board in fear of losing an election contest and was designed to block the democratic process, limit accountability and further entrench the Board and management team," said Steel Partners in a regulatory filing. "Ask yourself whether you believe this Board was truly serious about exploring alternatives to maximize stockholder value or whether the Board was more interested in disenfranchising stockholders?  We think the answer is obvious."

Supporters of Steel Partners believe that the hedge fund is simply trying to deliver shareholder value as quickly as possible. However, skeptics believe that they may be positioning themselves to acquire the company on the cheap before any major contract is awarded. After all, it is not uncommon for hedge funds to privatize a company during a turnaround when they are vulnerable and then re-IPO it later on and make bank.

Point Blank also faces problems with its former CEO David Brooks, who is facing criminal charges for fraud. Combined, Point Blank contends that it is facing adverse interests from both of these large shareholders and they say they are simply trying to protect the interest of the thousands of minority shareholders.

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