Market Talk

So this headline crossed the Tape a few minutes ago:

Sara Lee Likely To Break Up Co Into 2 Businesses – Sources

So, what’re they going to call them? Sara and Lee?

Ba-ruum-chee!

That’d be better than the names Motorola gave to the two businesses created from its split: Motorola Mobility and Motorola Solutions. Sure, they both get a share of the Motorola name, which is iconic. But Mobility and Solutions? Awful.

Can you imagine Sara Lee Solutions?

- Deal-making has been coming back, with another spate of deals and potential deals announced yesterday, but with one notable difference, John Curran writes at Time’s Curious Capitalist blog. “The big difference is, this merger-fest probably won’t result in higher stock prices.”

- “The Fed may need to do something to shock markets into believing that it is serious about reversing the decline in (inflation) expectations,” Ryan Avent notes at The Economist’s Free Exchange blog. “Without a firm commitment to an eye-popping number, markets may simply believe that the Fed will pull the plug on the purchases before the job is done — a belief that will undermine the impact of the purchases.”

- “What’s the bear case on QE2?” ponders Minyanville’s Todd Harrison. “Think Rocky Balboa at the end of the first movie; there ain’t gonna be no rematch, and there ain’t gonna be no QE3,” Harrison notes. “That’s the risk for policymakers. It’s the next to last bullet (and you know where the last one is pointed).”

- Hewlett-Packard (HPQ) maintains “emulating Apple is not part of our strategy,” but it wouldn’t hurt H-P to focus on excellence in user experience, Digital Daily blogger John Paczkowski says. “Because if it nails that and then ‘doubles down’ on webOS as promised, we could see some very interesting things coming out of H-P in the months ahead.”

- Apple shares dropped as much as 5.6% Tuesday before closing down 1.5%. Rumors swirled in the morning that Apple COO Tim Cook could become the new Hewlett-Packard chief. But that rumor was quickly dismissed.

- CNet’s Software Interrupted blog points out that Google (GOOG) has acquired 23 companies so far this year, compared with none for Microsoft (MSFT). That means MSFT, already fighting what many consider a losing battle in search, is also losing out in top start-up technologies like mobile and social networking, as well as foregoing some of the best talent available.

- To the delight of nerds across the country, it turns out that Apple’s (AAPL) new Apple TV can be hacked just like an iPhone, iPad and iPod Touch, a popular group of hackers announced last night on their blog. The group, known as the “Dev-Team,” have for the past few years been finding ways to run unauthorized software on AAPL’s popular mobile devices.

- The churn among Yahoo’s (YHOO) executive ranks continues, as Jimmy Pitaro, VP of Media, is expected to leave the company soon, reports All Things D blogger Kara Swisher. “Adding Pitaro to the pile will only increase pressure on [CEO Carol] Bartz…to show investors that Yahoo has a clear plan amidst the executive turmoil.”

- AOL goes on a spending spree, scooping up TechCrunch, one of the most influential blogs in Silicon Valley, as well as Web video-syndication company 5min Media.

- Two wins later, Jason Gay says its time for NY Jets QB Mark Sanchez to give up his blanky.

A bidding war for 3Par and a big ArcSight buyout are two reasons investors are hoping for more tech M&A (and getting it, with IBM announcing intentions this morning to buy Netezza for $1.7 billion).

Our DJ colleague Brendan Conway sits down with Ken Allen, portfolio manager of T. Rowe Price’s Science & Technology Fund, who discusses potential M&A activity and shows how mobile computing and software trends could prove more important for the stocks. Allen also considers some of the strategies Apple (AAPL) should be considering in the future.

SAP agreeing to buy fellow software maker Sybase (SY) for $5.8 billion, prompts footnoted.org blogger Michelle Leder to sift through SY’s filings and look for any pre-merger signals.

Sure enough, a proxy last month reveals Sybase CEO John Chen would receive a post-deal payday of $30 million, with the bulk coming in stock options, restricted stock and stock appreciation rights. That number, which is based off SY’s closing price on Dec. 31 of $43.40, actually rises to $42M considering the premium SAP is paying, she calculates.

SAP will pay $65 for each Sybase share, a 56% premium on Tuesday’s closing price.

“Now, granted, Chen has been at Sybase for a long time, so while the number is a big one, it’s not nearly as offensive as some other deals we’ve seen where a newly installed CEO collects millions for a few months on the job,” Leder says. She also notes CFO Jeff Ross and three other executives will make $8 million each from the deal, compared to $5.7 million detailed in the proxy.

Sybase shares were recently up 14% at $64.27; SAP down 0.8% at $44.56.

Many assume Palm’s future is either buyout or bankruptcy.

Not so fast, says CEO Jon Rubinstein. In recent interviews with MarketWatch and Financial Times, he tries to paint a relatively rosy picture about Palm’s future. Sure, he acknowledges the difficulties facing the company, but he also claims to have the answers.

In the FT interview, he insists Palm could survive as an independent company, noting its strong product pipeline and potential to license its WebOS operating system to other companies to boost revenue. From Financial Times:

Palm’s revenue warning in February underlined how it is struggling to gain the scale necessary to survive in the highly competitive smartphone market, which is led by Apple’s iPhone.

Mr Rubinstein, however, said he was “bullish” about Palm’s long-term prospects. “I believe Palm can survive as an independent company,” he told the Financial Times. “We have a plan that gets us to profitability.”

He highlighted how Palm had a gross cash position of $592m at the end of its third quarter.

Continue reading…

- “I cannot figure out the thought process behind putting a consumer protection agency into the hands of the Fed,” FusionIQ CEO Barry Ritholtz notes. “This is the same regulatory body that gave a total pass to the non-bank lenders at the heart of the subprime, APR and exotic loan issues.”

- Big banks are bad for the economy just like they were 100 years ago when their powerful influence shaped the financial playing field in their favor, NYT’s Economix blog says. “Just as it did 100 years ago, the consensus on big banks has to change. In this instance, either we break them up, or they will soon break us all.”

- “The longer the economy expands without boosting payrolls, the less likely that expansion is to be sustained,” Economist’s Free Exchange blog says.

- Investors are brushing aside the market’s late January/early February declines and seem focused on brighter times ahead. At least that’s what the latest American Association of Individual Investors survey says, as bearish sentiment fell to 26.2%, the lowest reading since early January and third lowest mark since early 2009, Bespoke points out.

- When Apple (AAPL) CEO Steve Jobs announced lawsuit against HTC for patent infringement, he said in no uncertain terms that competitors should stop stealing their technology. “That’s not the language of a licensing dispute or the beginning of a polite negotiation. That’s the language of a man aggrieved,” Daring Fireball blogger John Gruber writes.

- Facebook CEO Mark Zuckerberg remains in no rush to take his social networking behemoth public. Judging from the stock performance this year of the four big digital giants, Facebook’s not missing out on much upside, Kara Swisher says.

- Huffington Post had a staggering 40M unique visitors last month. “Eyeballs are eyeballs,” Peter Kafka writes. “Next up: Turning them into dollars.”

- Despite Google’s threats to pull out of China, China Unicom (CHU) says it still plans on selling handsets that run GOOG’s Android operating system.

- House approves $15 billion jobs plan.

- Sony’s looking to seriously get back in the game. It’s developing a new collection of portable gadgets that connect to its coming online media service and are designed to compete against Apple’s iPhone and iPad.

- An increase in temp hiring is usually an early sign of recovery, but that trend hasn’t lived up to expectations, so far, in this purported recovery, Financial Armageddon blogger Michael Panzner says.

- EU appears to have a financing package in the works for Greece, but the “main goal seems to be to buy time — hoping for better global outcomes — rather than dealing with the issues at any more fundamental level,” Peter Boone and Simon Johnson write.

- Even as Google (GOOG) continues to grow and faces further antitrust scrutiny, it in no way deserves an Italian court conviction of three executives for privacy violations, Kara Swisher notes. Lesson: don’t get into any legal tangles in Italy.

- Asset allocation looking trickier ahead. “This isn’t a shock, but more of it is probably coming, meaning that a new set of challenges await for managing asset allocation relative to the trend for much of the past 12 months,” James Picerno says.

- “The Republican base is fired up. The Dem base is packing up,” says Robert Reich, former labor secretary in the Clinton administration.

- Apple’s (AAPL) iPad availability may be limited for its expected launch later this month as production delays could lead to tighter inventories, Digital Daily blogger John Paczkowski says.

- Credit default swaps are more toxic than most realize, Yves Smith writes at naked capitalism. “The more we can to contain this product the better, but I am afraid it will take another meltdown to teach us the lesson we should have learned from the last one.”

- “Is it any wonder that Republicans have suggested the bailout of Fannie and its sibling Freddie Mac ‘will almost certainly be the most expensive of the financial crisis’”? FT’s Alphaville says. “And given that the other contenders to that dubious crown include AIG and the US car makers, that’s saying something.”

- AOL continues its radical remake, selling Buy.at – an affiliate marketing company it bought two years ago – to Digital Window. “Another marker in [CEO] Tim Armstrong’s campaign to undo just about every part of the old regime at AOL,” Peter Kafka writes.

- Corporate insiders are sending fairly positive signals about the market, NYT says.

- The best journalism in 2009.

- The smart phone market is “a waltz of elephants,” making it hard for standalone players, like Palm, to succeed, Henry Blodget says. “In order to have a chance, Palm’s products had to be so obviously superior to all available alternatives that people would hear about them and seek them out,” he says. “Alas, they aren’t.”

- For AIG, a $9 billion quarterly loss looks almost graceful. “”Depending on your perspective, the results were either a significant improvement compared with the same period a year ago or quite irksome indeed, given the $100m in bonuses paid to 200 AIG staff,” FT’s Alphaville says.

- Twitter’s ad platform may come sooner than you expect, MediaMemo blogger Peter Kafka reports.

- Paul Krugman discusses core inflation.

- Jeremy Grantham’s early calls prove to be right, but also costly.’

- Lawmakers question the GMAC rescue. Gee, I wonder why. Three bailouts later, GMAC’s still the only bank where the government now owns a majority stake.

- Former BofA CEO Ken Lewis left with about $83 million in pension and insurance benefits, stock and other compensation, WSJ reports, citing a securities filing.

- “Rather than demonize the CDS market and blame it for Greece’s current woes, let’s place the blame firmly where it belongs — with Greece itself, and its profligate ways.” Reuters blogger Felix Salmon says.

- Madoff whistleblower book: Harry Markopolos claims he uncovered State Street fraud, had thoughts about killing Madoff

- This may be the best show on television.

- Deflationary winds kicking up? Core CPI slips into negative territory for first time since 1982. “It’s hard to overlook the fat that negative monthly readings for this data series are extraordinary rare,” James Picerno says. “For the sake of economic stability, let’s hope it stays that way.”

- With Goldman Sachs’ (GS) image under attack, spokesman Lucas van Praag’s tough talk has only served to “alienate potential allies and enablers in the press and project a supercilious institutional arrogance which only serves to confirm the unflattering portrayals offered up by the firm’s detractors,” the Epicurean Dealmaker blog says.

- “High volatility in sentiment is a clear sign of utter confusion on the part of market participants and creates a landscape that is ripe for dramatic moves in either direction,” the Pragmatic Capitalist writes.

- Fed’s discount rate hike has more to do with technical reasons than a policy shift, former Dallas Fed president Bob McTeer says.

- Barclays scooped up a lot of talent throughout the financial crisis, according to LinkedIn data.

- Matt Taibbi’s latest account of the financial crisis misses one key point that no one wants to talk about: we could be in a depression without government intervention, Andrew Leonard writes. Still, reflecting on current bank profits, banks’ resistance to regulation and inability of government to do anything about it, “I’m beginning to come around to the view that maybe it would have been more effective to just blow everything up and start all over.”

- Deal activity has gotten off to a sluggish start in 2010, but investment bankers remain busy keeping up with secondary offerings, DealBook reports.

- Bottom line to this economy recovery is job growth. “The good news is Washington is working on it,” S&P’s Howard Silverblatt says. “The bad news is Washington is working on it.”

- Record bank profits may be tough to come by as the Fed starts raising rates.

- Tiger made the world stop from 11:00 to 11:15 this morning. How’d he do? Bill Simmons says the press conference was “a borderline train wreck.”

- All the recent chatter concerning the Fed’s exit strategy is puzzling, Tim Iacono says. Maybe it’s “simply a way for policymakers to generate confidence that might not otherwise be there.”

- Keep an eye on cumulative breadth, number of stocks moving up and down on a given day, for clues about future market performance, Bespoke Investment Group says.

- Despite the aughts being a lost decade for the stock market, 401(k) savers did ok, at least according to Fidelity Investments. “But unless market performance picks up in this decade even dedicated 401(k) savers could come up short in their retirement savings,” LA Times’ Walter Hamilton says.

- Google’s (GOOG) $2 million donation to Wikipedia “cements a kind of symbiotic relationship” between the two companies, Mathew Ingram writes at GigaOm. “For better or worse, it sounds like Wikipedia and Google will be joined at the hip for some time to come — not just because of the money, but because the relationship benefits both sides equally.”

- Obama administration’s tolerance of AIG is just astounding, Yves Smith says.

- Backlash against Google Buzz has reached a new level. A class action law suit has been filed in San Jose (CA) federal court alleging Google (GOOG) acted illegally when its new social networking tool shared personal data without consent, according to SF Chronicle blog.

- Greece should approach the IMF, former IMF chief economist Simon Johnson says. “Our baseline view is still that the IMF’s role will be only ‘technical,’ but behind the scenes the prospect of greater IMF engagement (and even a standby loan) is a powerful card that Greece should threaten to play.”

- Wall Street’s bailout hustle – Taibbi’s latest missive.

- Chris Dodd plans to introduce a new bill next week to overhaul financial regulation.

- The pilot that crashed a small plane in Austin posted an anti-government manifesto and may have targeted IRS offices after a tax dispute.