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Opening Bell: 4.3.06

Alcatel Jumps on Plan to Buy Lucent in $13.4 Bln Swap (Bloomberg)
It's official; they're merging. 8,800 jobs will be cut, Lucent's Patricia Russo will be the first female CEO of a large French company, and nothing says bubble like Alcatel, the acquirer, jumping 8.8% on the news. The merger will be judged, obviously, on cost savings, which are possible given the bloat that these two aging giants must have -- at least they didn't say synergies. All in all, pipes are back. Om Malik notes the return of second-rate optical stocks, whose shares have surged in the past few months -- at least they're not calling them internet backbone companies.
Microsoft's Big Year (Barron's)
Will this finally be the year of Ol' Softy. After basically flatlining since 2001, Barron's thinks the company may be back. Of course, they've been on the brink of being back before, but this time Barron's means it. The case for the company is based on an upcoming product release cycle, the biggest in the company's history, and renewed IT spending among corporations. It's a bold argument, as the magazine calls the company a growth stock once again. At the same time, the company seems to be poorly run. Product delays, which have always been part of their reputation, seem to be getting worse, and it's unclear that when (if?) the new Vista operating system will be released, it will have enough features to drive a rapid upgrade cycle. Remember when people were waiting in line on midnight the night before Windows 95 was released? Could you imagine anyone doing that on a cold night this coming January?
Capex Revival, For Real This Time? (WSJ)
Here's an argument we've heard a lot in the last year: When the consumer finally weakens because their credit card is tapped out, and their home stops rising in value so they can't use it as an ATM anymore, capital expenditure will make up for the loss and save the economy. But will companies actually start investing, or is this just wishful thinking? After several years of saving money, there has been a tickup in hiring and investment, with capex expected to grow by 6.5% this year, slightly higher than the recent average. Still, it looks spotty and the article is only able to cite a handful of examples, like Hasbro buying a puzzle maker (so?), or Guess re-modeling 30 of their stores. Hmm... capex rebound, maybe not so much.
Euronext looking for partner (Telegraph)
Stock exchange merger mania may continue, as Euronext may be the next suitor to try for LSE's hand. Both Australia's Macquarie, and more recently the Nasdaq, have been rebuffed when proposing to London. We'll be really disappointed if, in ten years, we don't have one single, global, 24-hour, 7-days a week electronic exchange that doesn't list every publicly available stock, bond and commodity. So from our perspective, get mergin' quick.

Readers Flocks to Newspapers' Online Sites (AP)
Unique visitors to the newspapers' online sites jumped by over 20% in 2005, with page views up over 40%. It sounds like good news for the fishwraps, most of whom realize by now that the internet will in some way or another affect their future. One problem that the newspapers are discussing is how they can sell advertising across multiple papers' websites, which may have some benefits, but doesn't sound like a real big deal. When these companies start realizing that registration requirements reduce their readership, and that it doesn't make sense to block off the archives, when search engine traffic could be huge, we might start believing that there's something behind their online strategies.
G.M. to Sell Majority Stake in Finance Unit (NYT)
It's a common refrain that GM has become a profitable bank that happens to be in the money-losing car business as well. If it were only true, it might be a microcosm of the entire US economy, which mainly seems to have expertise in financing these days. But of course there's a big caveat when it comes to GM -- the bank is deeply tied to their money-losing car operations. There's a reason that GMAC bonds carry the same junk rating as the rest of the enterprise. The deal, which may be announced today, would raise over $8 billion, in a majority sale of the unit. Yes, it's a major cash infusion; it's also less than the company's entire loss last year. Ah, it's official now.
Wal-Mart Same Store Sales Weak (WSJ)
This time the retail bellwether whipped out the "late Easter" excuse, to explain why same store sales growth came in around 1.3%, the low end of their forecasts. We didn't know that plastic easter eggs were such a big part of their business. It should be noted, that while analysts looks for rationalizations on why things went awry (poor advertising?), trying to read the one-month tealeaves is a fools game. The numbers also don't say much about profitability, inflation, volume, and how many new stores they opened, all of which is more important than this number.
Death by Smiley Face: When Rivals Disdain Profit (NYT)
The Times looks at a new breed of startups that, shockingly, don't charge money for their services, like the overexposed Craigslist. The article accepts the argument that because Craigslist doesn't charge for the majority of their listings, they must not be really interested in making money -- despite the fact that the company makes a lot of money by charging in a few key areas, like NYC job listings. To say that a company like Craigslist is forgoing profits assumes that they could be just as successful as a paid service, which is unfathomable. Their popularity is due, almost entirely, to the fact that they're free. If there's any constraint on their profits, it's not some allergy to money, it's the fact that it's a highly competitive area to make money in. Maybe the writer was just mislead by the .org after their name.
Chinese Communists Protect Virtual Property (The Register)
Well, we guess they're not really communists anymore, still it's nice to see them standing up for private property rights, if only in cyberspace. A man, an employee of an online gaming firm, was fined 5,000 Yuan, for seizing control of several players virtual selves, and then selling their goods. While this undoubtedly seems bad, probably illegal, doesn't it take away from the legitimacy of the virtual world if they can't enforce their own laws? Just wondering.