Bronco Drilling Company (NDAQ: BRNC) shares continued their decline after ISS Governance Services recommended a vote against the proposed merger with Allis-Chalmers Energy. The shareholder advisory service concluded that given the relatively strict sales process, increase in EBITDA estimates for the peer group, and a valuation analysis of the company, shareholders should vote against the proposed transaction.

The announcement by ISS Governance is a welcome message for Third Avenue Management - an activist shareholder that has been fighting the merger since its announcement. The 23.4% shareholder expressed its belief that the offer was undervalued several times in Schedule 13D filings with the SEC and may now have enough support to prevent the merger. Supporters include 12.8% holder Wexford Capital and 6.1% holder Alpine Associates.

Bronco Drilling Company provides contract land drilling and workover services to oil and natural gas exploration and production companies. As of February 29, 2008, the Company owned a fleet of 56 land drilling rigs, of which 45 were marketed and 11 were held in inventory. Bronco also owned a fleet of 59 workover rigs, of which 49 were operating and 10 were in the process of being manufactured. The Company also owned a fleet of 70 trucks used to transport its rigs.

Shares of Bronco Drilling dropped $0.09, or 0.56%, to $15.86 per share.

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Time Warner Inc. (NYSE: TWX) sharesholders are growing increasingly impatient after the company announced yet another sharp drop in second quarter earnings. Net income at the media company fell 22 cents per share, while sales rose 5.2 percent to top analyst estimates.

AOL housed the majority of the problems this quarter. The internet service provider lost 604,000 web access subscribers while ad sales rose just 2 percent to $530 million. AOL shifted its focus on ad sales as the dialup ISP market began to shrink. Unfortunately, the move came just as online advertising peaked and now growth is hard to come by in the industry. Luckily, the unit's third-party ad network and revenue partnership with Google offset much of the losses.

AOL's publishing group also came up short this quarter. Time Inc. reported a 9 percent drop in advertising revenue as print advertising moves towards the online markets. In fact, the only bright spot in the quarter was the cable teleivion and film businesses that managed to drive growth in the quarter. All of this has investors wondering just when the company will be broken up so that true value can be unlocked.

CEO Jeff Bewkes recently announced his plans to get rid of Time Warner Cable and focus on TV and film instead. The executive merged the Warner Brothers and New Line studios to lower costs and said he was open to selling AOL back in May. Since then, parties like Microsoft have expressed interest, but there have been no late-stage conversations. The ability to sell off the cable division stake along with a sale of AOL should generate enough cash to satisfy shareholders.

Time Warner shares dropped sharply lower at open before recovering for a small profit.

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Cablevision Systems Corporation (NYSE: CVC) shares jumped sharply today after the media company announced that it is considering a range of strategic options to unlock shareholder value. Among other things, the Dolan-owned firm is considering a spin-off of its cable-television business, Madison Square Garden sports unit, or its Rainbow Media TV networks. The company also said that it plans to pay a quarterly dividend or buyback shares in an effort to boost the stock price.

Cablevision faced some harsh criticism this past year after it spent the earnings from its New York-area cable service by buy the Sundance Channel and Long Island's Newsday newspaper. Activist investors, including Gamco Investors, demanded that Dolan stop doing deals and share the proceeds with shareholders instead - advice that is finally being taken to heart. The move to spin-off certain segments may also make Cablevision cheaper for the Dolan family to acquire outright as they have attempted to in the past.

Cablevision operates cable programming networks, entertainment businesses and telecommunications companies. As of December 31, 2006, the Company served approximately 3.1 million basic video subscribers in and around the New York City metropolitan area. Through its wholly owned subsidiary, Rainbow Media, Cablevision owns interests in and manages numerous national and regional programming networks, the Madison Square Garden sports and entertainment businesses, and cable television advertising sales companies.

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Retailers may not get the boost they are looking for after reports surfaced that consumer spending increases were offset by higher prices. Inflation-adjusted consumer spending declined 0.2% in June, according to the Commerce Department. This means that companies like Wal-Mart Stores (NYSE: WMT) and Target Corporation (NYSE: TGT) may not have realized the benefits of the tax rebates, which have instead flowed into the hands of mining and energy companies behind the higher costs.

Inflation rose 0.8% this month, which is the largest increases since February 1981's reading of 1 percent. The problem the government now is that its tax rebate program is failing and the Fed may be forced to raise rates, which could further erode the credit problems in the U.S. The Fed is expected to keep rates unchanged, but pressure by the government to make the rebate programs work may force them to hike rates at least a little to ease inflation.

Retailers are now left between a rock and a hard place. A rise in interest rates would likely reduce consumer spending in the long-run because loans would be more expensive. However, it would enable them to enhance their profit margins since the cost of goods would presumably move lower. However, if interest rates do not rise, inflation will remain a pressure on margins and consumer spending may take awhile to turn around. In the end, it may be awhile before retailers recover.

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MiddleBrook Pharmaceuticals (NDAQ: MBRK) shares have dropped substantially from their highs earlier this year, but recently rebounded on news of a $100 million investment. The firm had been the center of buyout speculation for some time as they were in talks with several interested parties; however, the firm opted to take a $100 million capital infusion from Equity Group Investments. The move has many investors speculating the firm may be worth a lot more than it is trading at right now.

Under the terms of the agreement, MiddleBrook will issue EGI 30.3 million shares of common stock and a five-year warrant to purchase 12.1 million shares of common stock with an exercise price of $3.90 per share for an aggregate purchase price of $100 million. The move will bring MBRK's shares outstanding to around 86.31 million and should boost the market capitalization by $100 million to $224 million. This equates to an implied price of $2.60 per share, which pins the current discount at around 16% assuming the company can prove it is worth the same valuation as before the investment.

MiddleBrook will also receive a new chief executive officer that has a lot of experience in the pharmaceutical industry. The news may not be as good as a buyout for shareholders, but it does give new investors a chance to get in at a cheap price with management incentivized to push shares to at least $3.90 per share in order to realize the value of the additional warrants over time. Whether or not that happens remains to be seen, but MiddleBrook pharmaceuticals is definitely a stock to keep an eye on in the meantime.

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Bank of America Corporation (NYSE: BAC) continues to mount a near-parabolic recovery along with much of the banking sector. Investor sentiment has changed rapidly as the government rescued the two largest U.S. mortgage underwriters and signaled a possible end to the problems plaguing the sector - at at least a signal that the peak has passed. So, where are things headed from here?

Bank of America may not be as strong as the recent run-up in share price would have investors believe. The stock topped the list last week for stocks that rose in price but had the largest outflow of money. This means that the price increase that we’ve seen may not really be the vote of confidence that it seems. Meanwhile, Bank of America will also continue to struggle with the mortgages associated with its acquisition of Countrywide Financial.

The government’s bailout of Fannie Mae and Freddie Mac may provide would-be homeowners with more options, but it may not do all that much to stop the rising tide of foreclosures. In fact, just last week we saw a report showing that the rise in foreclosures is anything but over. Meanwhile, it will take awhile for consumers to gain enough confidence to start buying homes in order to increase property values - the other thing that could slow foreclosures.

Many analysts are also not so sure about Bank of America. Stifel Nicolaus & Co cut its full-year profit estimate on the bank, citing concerns about continued deterioration in its consumer loan portfolio. The nation’s second largest bank reported not long ago that its profit fell 41% in the second quarter on losses in its struggling mortgage operations, but still managed to top analyst estimates. However, it had to more than triple its loan loss provisions - that is, money set aside for bad loans.

Accelerating losses in its home equity, domestic credit card, residential mortgage and small business loan portfolio are creating problem for the bank. Meanwhile, cash is flowing out of the stock at a record rate. Only a rise in the stock price is causing investors to look the other way - a mistake that could cost them in the future.

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Garmin Ltd (NDAQ: GRMN) shares dropped more than 20 percent today after the company announced second quarter earnings that missed analyst expectations. The high-flying GPS maker also disappointed investors when it forecasted limited growth for the rest ofthe year and said it was delaying its entrance into the cellular phone market. Many investors are now questioning whether or not this GPS giant can be valued as a growth company in today's environment.

Garmin reported total revenues of $912 million, which is up 23% from $742 million in the second quarter of 2007. Gross margins remained solid at 45.8%, despite the economic slowdown, compared to 48.2% in the first quarter of 2008 and 50.5% in the second quarter of 2008. Operating margins were up 20 basis points sequentially to 26.2% in the first quarter, but were down compared to 32.5% in the second quarter of 2007. And finally, diluted earnings per share increased 21% in the second quarter.

"We are pleased with our financial results for the second quarter given the economic conditions facing the consumer electronics segment," said Kevin Rauckman, chief financial officer of Garmin Ltd. " We also generated $34 million of free cash flow in the second quarter of 2008, resulting in a cash and marketable securities balance of just over $1.0 billion at the end of the quarter." This number is a positive note, but not enough to convince investors...

The forecasts are where investors lost confidence. Garmin anticipates overall revenues in 2008 to hit $3.9 billion and earnings to hit $4.13 per share, including the $0.27 related to the tender of their Tele Atlas NV shares. The company also reiterated growth rates for all of its division, except for the marine segment, where it said that high fuel prices have led it to forecast flat revenues for 2008. Meanwhile, the firm also forecasted a drop in operating margins to 25% as input costs rise and selling prices lower.

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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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