Wednesday, December 13, 2006


The WSJ reports that the long-awaited consolidation of the airline industry is heating up, with UAL (UAUA) and Continental Airlines (CAL) holding talks on a possible merger and another carrier emerging as the tgt of an unsolicited takeover offer. UAL, parent of United Airlines, and Continental have been engaged in exploratory talks on a business combination for several months, but the discussions have taken on new urgency since US Airways (LLC) made a hostile bid for Delta Air Lines four weeks ago. Among the industry's smaller players, AirTran (AAI) is poised to launch an offer for Midwest Air (MEH), signaling that consolidation pressure has extended beyond the industry's behemoths. Airlines outside the US also are attracting more takeover interest. Australia's Qantas last night rejected a takeover bid of roughly $8.6bn from a group of investors that includes private-equity firm Texas Pacific Group and Macquarie Bank of Australia.

"Tracking the Numbers"column reports that investors looking for information about Qiao Xing Universal Telephone (XING), would learn that stock analysts expect earnings to rise and rate the shares a Buy. What they may not learn, however, is that the co paid the analysts' research firms tens of thousands of dollars in cash or stock to write those reports. As paid-for research firms, also known as sponsored-research or issuer-paid research firms, they receive fees from various sources, including co's seeking analyst coverage of their stock. One of the 2 research firms that rate Qiao Xing has been paid $33K for 4 reports since May'05, while the other owns about $20K of stock in the co.

Barron's Online out saying that some investors see a new kind of memory chip windfall in shares of Qimonda (QI), up 28% since the co spun out of Infineon (IFX) in mid-Aug. Qimonda could well displace Micron this year as the 3rd-largest maker of DRAM chips, say analysts. If that occurs, the co would trail only S-Korean giants Samsung and Hynix in the mkt for DRAM chips. After beating analysts' profit and sales ests in its 1Q as a public outfit on Nov. 14, Qimonda has convinced investors it has the right products and technology for a memory mkt primed to repeat itself. Vista software is coming out next year and DRAM supply is tight, and that could mean strong prices and rising profits. "Back in the early '90s, Micron [stock] went up a lot in price b/c ppl underestd the demand [for PCs and for DRAM]," says Robert Turner, of Turner Investment Partners. "That could be where we're headed with Qimonda."

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