tri

Analyst upgrades:

• Citigroup upgraded Cooper Industries (NYSE: CBE) to Hold from Sell to reflect improving macro indicators and a belief negative earnings revisions are unlikely going forward. The firm raised its target price to $37 from $28.
  
• Royal Bank of Scotland upgraded Siemens (NYSE: SI) to Buy from Hold on expectations the company will benefit from an economic recovery.
  
• Banc of America/Merril upgraded State Street (NYSE: STT) to Buy from Neutral and raised their price target to $50 from $40 following stress test results that show the company does not need additional capital. The analyst said the news "clears one of the bars on capital concerns."
  
• Teradata (NYSE: TDC) was raised to Market Weight from Underweight at Thomas Weisel.
  
• Target (NYSE: TGT) was lifted to Overweight from Neutral at JP Morgan.
  
• Diageo (NYSE: DEO) was upgraded at UBS to Neutral from Sell.

Analyst upgrades:

• Goldman upgraded Gerdau AmeriSteel (NYSE: GNA) to Buy from Neutral and has a $5.50 target on shares. Shares were upgraded due to the potential impact from infrastructure spending. Note that Goldman downgraded Steel Dynamics (NYSE: STLD) and Olympic Steel (NYSE: ZEUS) to Neutral from Buy.
  
• Banc of America/Merrill upgraded Coca-Cola Enterprises (NYSE: CCE) to Buy from Neutral and raised the price target to $18 from $15. The firm the strong Q1 report gives them greater confidence in shares.
  
• Roth Capital upgraded Halozyme (NASDAQ: HALO) to Buy from Hold due to increased clarity into Roche programs, the discontinuation of the chemophase program, and progress on insulin delivery.
• American Movil (NYSE: AMX) was raised to Overweight from Neutral at JP Morgan and to Hold from Sell at Citigroup.
  
• Barclays (NYSE: BCS) and Lloyds TSB Group (NYSE: LYG) were upgraded at HSBC to Overweight from Neutral.

The timing of the Thomson-Reuters merger could not have been worse as many of their biggest customers on Wall Street are struggling. Now, Thomson Reuters Corporation (NYSE: TRI) is trying to make the best of a bad situation. Investors may like what they are seeing today but they won't over the long term.

Shares of Thomson Reuters are trading up even though the financial information company reported disappointing earnings. The stock is rallying following an earlier sell-off. Revenue was $3.13 billion, a 73% rise but short of the $3.32 billion analysts surveyed by Bloomberg News expected. The results benefited from the merger. Earnings were $172 million, or 22 cents per share, down from $375 million, or 58 cents per share a year earlier.

Chief Executive Tom Glocer told reporters that financial services markets "are likely to remain challenging through at least the end of the year." That means that big clients are going to be asking for big discounts. Bloomberg, my former employer and the company's biggest rival, has usually been able to resist this temptation.

Merrill Lynch & Co. (NYSE: MER) may wind up selling its 20% stake in Bloomberg L.P., the parent of Bloomberg News, to Mike Bloomberg.

Bloomberg, whose personal fortune is estimated by Forbes magazine at $5 billion, can easily afford the buy back the 20% stake in his company that he does not already own. Given its financial condition, Merrill better hope that the New York mayor is willing to open his check book. Other media companies are not going to shell out big bucks for a minority stake in the company where I worked for seven years. This is especially true given that many of Bloomberg's biggest customers in Wall Street are cutting spending given the uncertainties in the world's financial markets.

Maybe the private equity players would be willing to pay up provided that they could see an exit strategy through an IPO. I don't see that happening either. Bloomberg, which the Wall Street Journal says has the right of first refusal for the sale, likes being a private company because it enables it to march to the beat of its own drummer. That was especially true when Mike Bloomberg ran the show.

Who is the boss of Bloomberg News?

During my career there, there was no question that Matthew Winkler was in charge. My colleagues laughed hysterically when I told them I asked Winkler about his bow ties during my interview with him before I was hired. Bloomberg's editor-in-chief is not known for his sense of humor. Good thing I didn't bring up bow ties -- which he wears every day -- again.

That's why I found the appointment of former Wall Street Journal top editor Norman Pearlstine as Bloomberg's chief content officer so curious. Does this mean that Pearlstine, who was Winkler's boss at the Journal, will supervise him again? What exactly does a chief content officer do that's different than an editor-in-chief? I am not sure of the answers to those questions and neither is the New York Times.

As the Times opines, "the move suggests that Bloomberg, whose fortunes have been buoyed by the selling of its hugely profitable data terminals to brokerage firms and investment banks, plans to expand the journalism side of its business."

MOST NOTEWORTHY: Full House Resorts, Starent Networks and Capital Trust were today's noteworthy initiations:

• Morgan Joseph said Full House Resorts Inc.'s (AMEX: FLL) valuation does not reflect the present value of its tribal management contract with the FireKeepers Casino. Shares were initiated with a Buy rating and $3.50 target.
• Starent Networks Corporation (NASDAQ: STAR) was assumed with an Overweight rating at Thomas Weisel. The firm said STAR offers a compelling risk/reward profile given strong gross margins and expanding operating margins.
• Keefe Bruyette initiated Capital Trust Inc. (NYSE: CT) with a Market Perform rating and $30 target, and believes the expected deterioration of commercial real estate fundamentals is likely to remain a headwind for valuations of the shares.

OTHER INITIATIONS:

• Thomson Reuters Plc. (NASDAQ: TRIN) was started at UBS with a Neutral rating.
• Piper initiated Heritage-Crystal Clean Inc. (NASDAQ: HCCI) with a Buy rating and $20 target.
• Goldman Sachs initiated The Sherwin-Williams Company (NYSE: SHW) with a Neutral rating.

MOST NOTEWORTHY: Schering-Plough, Vodafone and Tibco were today's noteworthy downgrades:

• Goldman downgraded Schering-Plough (NYSE: SGP) to Neutral from Buy following the panel discussion suggestion that doctors cut use of Vytrorin, Zetia. Shares were also cut at Lehman to Equal Weight from Overweight and at Cowen to Neutral from Outperform.
  
• Morgan Stanley lowered Vodafone (NYSE: VOD) to Underweight from Overweight as they believe the European Commission will aggressively lower mobile termination rates to cost to improve competition.
  Jefferies downgraded shares of Tibco (NASDAQ: TIBX) to Underperform from Hold as they believe the economy will catch up with the company in the coming months.

OTHER DOWNGRADES:

• Goldman removed Ryanair (NASDAQ: RYAAY) from its Conviction Buy List.
  
• Thomson (NYSE: TOC) was cut to Hold from Buy at Deutsche Bank.
  
• Broadpoint downgraded Omniture (NASDAQ: OMTR) to Buy from Strong Buy.

Dow Jones & Company, Inc. (NYSE: DJ)'s Wall Street Journal (a.k.a., Rupert's Rag, a.k.a. The Towel) occupies a unique spot in the media firmament. As I pointed out earlier in the year, it changed its format and now looks to me like a Holiday Inn bath towel. And since it appears that News Corp (NYSE: NWS) has finally won over enough Bancrofts to take control, I am officially changing this column's name from Towel Talk to Rupert's Rag, which will continue to offer a perspective on its news and views.

Reuters reports on an internal memo at The Rag, which confirms that "The Bancroft family has accepted. Dow Jones will be part of News Corp."

Details of which Bancrofts accepted and which did not will no doubt be forthcoming. The New York Times (permalink) reports that family members and trusts representing about 32% of the shareholder vote indicated they would support Murdoch's offer.

In a sign of the increasing importance of high-end financial blogs, Reuters Group Plc (NASDAQ: RTRSY) is starting a new network of the sites. Or, it could be that the Reuters business development people have down time because of its upcoming purchase by Thomson Corp. (NYSE: TOC).

The offer that Reuters is making to a number of high-end blogs is that it will link to the participating sites from Reuters.com, offer free access to selected Reuters Headlines (RSS or Headline Wizard) and Reuters Video Player to publish Reuters News, and get 30% of an advertising program that the big financial services company will manage.

In return, each blog agrees to execute contracts with comScore and NetRatings to assign its traffic to Reuters.com. NetRatings ranks Reuters.com as the No.7 financial website with unique visitors of 6.1 million in May.

Reuters may be trying to match blog initiatives at media outlets including FT.com, WSJ.com, and AOL.com.

Either Reuters has a very high regard for financial blogs or it needs to pump up its audience ratings.

Disclosure: 24/7 Wall St. was approached by Reuters about this opportunity.

Douglas A. McIntyre is a principal at 24/7 Wall St.

Thomson Financial (NYSE: TOC) released its latest data on the global M&A game. No doubt, things are sizzling.

For the first six months of this year, M&A deals surged 62% to $2.7 trillion. In fact, a big boost came in April, which had $641 billion in deals.

While there are lots of strategic combinations, it's no secret that the activity in the private equity space is a big growth driver. About 24.3% of the deals were from private equity sponsors.

With the summer months, I bet we'll see a general slowdown. Besides vacations, dealmakers will need to spend lots of time getting existing deals closed.

So, despite the calls that private equity is about to come to halt, the data doesn't seem to point to it. And, if interest rates remain relatively stable, we could be poised for continued growth in the fourth quarter.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

The Thomson Corp. (NYSE: TOC) locked up its deal to buy Reuters (NASDAQ: RTRSY) for $17.2 billion. The combination gives the new entity 34% of the global financial services information market. Bloomberg has 33%.

The Wall Street Journal said that the deal may face regulatory problems [subscription required]: "The agreement sets the stage for a long battle with regulators to win clearance for a combination that would unite the second- and third-largest providers of financial news and data, behind Bloomberg LP, of New York." Assuming that those can be overcome, one of the losers may be Dow Jones & Co., Inc. (NYSE: DJ). While it still has a tremendous presence in print with The Wall Street Journal, its Dow Jones Newswire terminals may have greater competition. So might the online WSJ.com, which already vies with Reuters online news service. Thomson has products that could improve a Reuters offerings.

Because Dow Jones is nowhere near as large as the new entity, it might find it difficult to match the resources of its competitors, including the number of journalists, sales forces, and completeness of content. Dow Jones had a financial terminal business in Telerate, but it sold that business a decade ago.

If Dow Jones does not take an offer from Rupert Murdoch, it is left with an operation that has relatively small margins that may get even smaller as the print business shrinks.

Little boat, big ocean.

Douglas A. McIntyre is a partner at 24/7 Wall St.

Money & Ethics: How Do You Stack Up?
Do you pocket bank errors? Tell a clerk in a store of an error in your favor? 20 questions in all. Find out what respondents said in Money Magazine's nationwide survey - and whether your responses cut it with our ethicists.
Money and Ethics: How you stack up - Money Magazine


How Safe Is Your Food?
The hamstrung FDA may be unable to prevent a contamination crisis. That powder keg hasn't exploded--yet. But every month there are a surprising number of near misses. In the past few weeks alone, the FDA has issued warnings or recalls for brands of milk, olives, bottled water, bread, prepared fruit trays, melons, oysters, and peanut butter. What can be done?
How Safe Is The Food Supply? - Businessweek
Also: Food Scares


Misbehaving Executives
Time Warner's decision to request the resignation of HBO's chief highlights the pressure public companies are under to respond rapidly when an executive gets into trouble. This follows other recent quick actions by Citigroup, Wal-Mart, CBS and other companies.
One Misstep and They're Out the Door - New York Times


Getting a Discount on Plastic Surgery
Cosmetic surgeries cost thousands of dollars that health insurance doesn't cover. But some health plans are now offering a new type of benefit -- access to a list of plastic surgeons who have agreed to reduce their fees.
Getting a Discount on Plastic Surgery - WSJ.com


10 Pesky Airline Fees to Watch Out For
These days airlines are desperate to raise revenues -- without raising fares. Competition from low-cost carriers is making it tougher for major airlines to increase fares so they make up the difference in fine-print fees. Here are 10 to watch out for. Prepare (your bill) for takeoff.
10 Pesky Airline Fees - SmartMoney.com


Lenders Get Tougher
Lenders have been tightening their standards for issuing loans. Now, some are probing more intently into would-be borrowers' finances, and it's making qualifying for a mortgage difficult -- even if potential buyers have good credit.
Lenders Get Tougher - WSJ.com


Remote Order Taking at Drive-Thru Windows
In an accommodation to evaporating profit margins and demanding consumers, some fast-food stores are outsourcing drive-through order-taking to distant call centers. So the next time you order that burger and fries you may be speaking to someone in another state or country.
'Want fries with that?' could be asked from afar - USATODAY.com


Gaming Web Sites 'Most Viewed' Lists
Popularity contests increasingly decide what people see on the Web. Are Web sites with features like most-popular lists are grappling with how to draw the line between input and manipulation.
Web Sites' Lists Of 'Most Viewed' Too Easy to Game? - WSJ.com


10 Things Your Wedding Planner Doesn't Want You To Know
Here are the 10 things wedding planners won't tell you about your big day.
10 Things Your Wedding Planner Won't Tell You - SmartMoney.com


Forbes 2008 Political Candidate Tracker
Since the dawn of the age of the political advertisement, successful presidential candidates have largely been those who've most effectively sold themselves like soap powder or toothpaste. That's no secret. But now, Forbes.com has decided to put those traits to a test.
Forbes '08 Tracker - Forbes.com
Gallery: Most Trustworthy Candidates
Gallery: Most Boring Candidates

Stock futures are indicating a lower start for stocks today, falling ahead of the CPI report and after weak earnings from Dow components and retails giants Wal-Mart and Home Depot.

Yesterday, news of DaimlerChrysler (NYSE: DCX) selling 80% of Chrysler to a private equity firm Cerberus dominated the headlines. But sentiment seems to become more cautious and some investors may be seeking quality as once again the Dow Jones Industrial Average was up, the Nasdaq and S&P 500 down.

Today, earnings have already affected futures, but there is one very important piece of data coming out at 8:30 a.m., before the market opens -- CPI. Consumer Price Index, or prices at the consumer level, is a measure of inflation and will continue to give investors indications as to the Fed's possible future policy. So far, despite the apparent signs of slowing growth, inflation remained a concern and the Fed kept rates at the same level. Some still hope for a rate cuts by the end of the year as prices at the wholesale level seemed to have moderated, others believe inflationary pressures are still too strong.

• For April, CPI is expected to rise 0.5% after a 0.6% in March. Core CPI, which excludes the volatile food and energy prices is forecast to have risen 0.2% compared to a 0.1% increase the month before.
• At the same time, the NY Empire State manufacturing survey for May is due.
• Also today, the National Association of Home Builders will release its housing market index.

Corporate:
Wal-Mart Stores Inc. (NYSE: WMT) reported an 8% first-quarter net income increase to $2.83 billion, or 68 cents a share, with revenue up 8.5% to $86.41 billion. Analysts, on average, were expecting earnings of 68 cents a share on revenue of $86.94 billion, according to Thomson Financial. Going forward, Wal-Mart sees comparable-store sales improving and second-quarter earnings from continuing operations between 75 cents and 79 cents a share. WMT shares declined in Europe.

The Home Depot, Inc. (NYSE: HD) reported a 30% net income drop in first-quarter to $1.05 billion, or 53 cents a share. Sales rose 0.6% to $21.6 billion. Analysts had been expecting earnings of 59 cents a share and revenue of $21.83 billion, according to data complied by Thomson Financial. Home Depot said that the home improvement market is expected to remain soft in 2007 and for earnings to come in at the low end of its guidance range. HD shares are declining 3.9% in pre-market trading (7:25 a.m.).

Financial companies might continue to be under pressure today if the CPI report shows higher inflation and lower possibility of a rate cut this year.

The Thomson Corp. (NYSE: TOC) agreed to buy Reuters Group Plc (NASDAQ: RTRSY) for 8.7 billion pounds ($17.2 billion), creating the biggest financial news and information company.

Overseas, Asian markets closed lower and European stocks are also lower. Europe's economy expanded 0.6% in the first quarter, more than forecast as corporate investment offseting the effects of higher euro and a German sales- tax increase.

The British newspaper, The Independent, reports that Reuters is a heart beat from being sold to Thomson (NYSE: TOC). According to its report, the "Reuters Founders Share Company, the trust that acts as guardian to the editorial independence of Reuters Group Plc" is prepared to approve the deal. Reuters has been independent since it was founded in 1850.

Thomson's bid sent the Reuters (NYSE: RTRSY) ADRs from below $60 to over $77. While the premium is nowhere near the one that News Corp (NYSE: NWS) has offered for Dow Jones (NYSE: DJ), Thomson is family controlled, and the Reuters CEO would run the combined company.

A combined Thomson/Reuters would have a share of the financial news delivery business that would only be matched by privately-held Bloomberg.

The merger of the two financial news and information giants could put Dow Jones in a bit of a bind. Its revenue would be dwarfed by larger competitors, and a rejection of the News Corp. offer could end up looking short-sighted.

But Dow Jones's management has made mistakes before.

Douglas A. McIntyre is a partner at 24/7 Wall St.