MICROSOFT + YAHOO = KAPUT
YAHOO + GOOGLE = ?
APPLE - STEVE JOBS = ???
After another volatile Wall Street session, Dylan labels Thursday "a big fiasco," with the lion's share of the blame going to the Microsoft-Yahoo crash-and-burn. Any possible deal has been aborted for the second and -- very likely -- last time. Yahoo blames Microsoftfor rejecting the deal at its own offered price.
The implosion comes as no surprise to Karen Finerman, who, just last week, remarked that if you wanted to go long on Microsoft, the best course was to short Yahoo.
Adami at one time considered Microsoft and Google good buys, but says that it's all "panned out." However, Yahoo may be an "interesting" buy at this point, with its bargain $22 price.
"They have no plan!" Macke rants on Yahoo's vague new business strategy somehow involving outsourcing operations to Google, and offers a piece of advice for Yahoo: "Disband quietly."
Najarian turns attention away from the big headline to one of the day's unnoticed players: Apple . For no overt reason, other than hushed uncertainty over the health of chief Steve Jobs, AAPL shed 4% from its previous close. Karen also hints that the most likely cause for Apple's dip is Jobs' health: "If there was ever a company in America right now that is so dependent on one key man, I think Apple is it." Macke agrees and adds, "If [Jobs] leaves for any reason, Apple is in trouble."
IS WALL STREET DONE CLEANING HOUSE?
The Dow rallied momentarily Thursday following a Lehman shake-up in which CFO Erin Callan is ousted after only six months. Karen Finerman is outraged. She calls the company's behavior "absolutely disgraceful" and that it "threw her under the bus" even though she had little to no involvement in the company's long-standing problems.
Adami thinks Lehman is "worth a trade," going long with an upside of $26 or $27, even with the risk they could open tomorrow at $19.
Macke lambastes Lehman for being "dilutive," after starting the week at $32, then selling a third of the company, ousting its CFO and throwing blame around, all while its stock continues its downward spiral.
Even with its stock volatility, Najarian believes you should keep an eye on Lehman's Put options, as they continue to hold onto previous levels. Even as the stock drop, the July 15 Puts expand. "You might want to have some puts to protect, if you decide to go for the bottom."
Dylan asks whether Lehman could be an attractive purchase for another firm and Adami scoffs at the notion, saying it would only be worth buying as a trade and even goes so far as calling an integration of Lehman with anyone else "a disaster."
The Lehman shake-up is only the latest plot twist in an ongoing drama, following Bear Stearns , Merril Lynch and Citigroup (which itself just shut down its Old Lane Partners hedge fund to increase assets).
THIS BUD'S NOT FOR YOU
Nobody wants to dance with InBev, according to Dylan. A day after being offered $65 a share by the Belgian beer company, Anheuser-Busch says they are instead talking to Mexico's Grupo Modelo about a possible tie-up. Adami says if you like beer, Sam Adams from The Boston Beer Company is the tastier choice. Najarian's take is that if there's a deal, it's under $65 -- in other words, any deal is with someone else. "The King of Beers" is only making things difficult for itself in the long run, says Macke. And Adami's magic number is $85: "That's the level you want to own it, not before."
EXXON MOBIL LEAVING RETAIL GAS BUSINESS
Even though it is the one gas company showing the least growth relative to oil prices, Exxon Mobile has decided to shutter 822 of its retail pump stations. Macke believes Exxon is ditching a hassle it doesn't need, as its retail operations constitute only a tiny part of the energy giant.
BUY BANKS, SELL ENERGY?
Strategists, including those at Morgan Stanley, are advising buying bank stocks and dropping energy. Finerman fancies the move. Najarian -- not so much. "The energy story's not over," says he.
Najarian points out increasing options activity with both Boyd Gaming and Frontier Oil, and expects some type of action within the next six days.
ANOTHER BROKER BOMBSHELL?
Guest Bill Fleckenstein, President of FleckensteinCapital offers his take on financials and whether there will be more writedowns and shakeups when earnings season starts. Fleckenstein admits to uncertainty: "The problem with financials is that statements are useless because of the accounting." In the immediate future, Fleckestein is looking to make money shorting tech, as more people pile into those stocks with overconfidence of their risk factor.