JP Morgan's eyes on hedge funds; Clear Channel wins speedy trial; monolines take baby steps

By Aaron Hochman-Zimmerman

New York, Feb. 27 - As the equity rally quieted down, JP Morgan & Chase Co. was the subject rumors which suggest it has its eyes on Bank of America Corp.'s prime brokerage operation.

In finance, foreign investment funds were again discussed in the context of a bailout for the monoline insurers.

Elsewhere, Microsoft Corp. made trans-Atlantic headlines as it was hit with a $1.4 fine by the European Union.

Meanwhile Yahoo! Inc.'s shareholders brought seven suits over its refusal of Microsoft's $44.6 billion offer.

In the courts, Clear Channel Communications Inc. will have a speedy trial as it pushes Providence Equity Partners to complete a deal to purchase 56 television stations.

Take-Two Interactive Software Inc. was given cross looks by many market watchers who smell a rat over a raise for management company, ZelnickMedia, conveniently timed with Electronic Arts Inc. buyout offer.

Delta Air Lines and Northwest Airlines sent letters to employees to quell any fears that the concerns of salaried workers would be left out of merger plans.

Still, groups opposed to the consolidation moved no closer to conceding.

The mixed day saw the Dow Jones Industrial Average end up by just 9.36 or 0.07% at 12,694.28, while the Nasdaq Composite Index added 8.79 or 0.37% to finish at 2,353.78.

The S&P 500 gave back 1.27 or 0.09% to close lower at 1,380.02.

JP Morgan hunting for a prime brokerage

JP Morgan (NYSE: JPM) shares took on $0.69 or 1.58% to end the day at $44.41 as rumors swirled about its growing appetite for a prime brokerage operation, a market source said.

"Rumors around: it is from Bear [Stearns]," the source said, "but I am sure it is Bank of America."

"Bank of America might put theirs up," another source said about the bank's brokerage which caters mostly to hedge funds.

Bank of America (NYSE: BAC) shares added $0.16 or 0.37% to $42.88.

Monolines talk with foreign wealth funds

Shares of MBIA Inc. (NYSE: MBI) slipped $0.43 or 2.81% to $14.85 and Ambac Financial Group Inc. (NYSE: ABK) shares lost $0.12 or 0.98% to close at $12.07 as New York State insurance superintendent Eric Dinallo said foreign wealth funds would be considered as potential members of a rescue squad sent to save the monolines.

"It should be interesting because I know Ackman has a huge short position on it," a market source said about Pershing Square Capital Management's William Ackman.

"I know he wrote a letter to Bernanke" about the monolines, he said.

"Somebody's going to step in to these entities," another market source said.

"The market is assuming something is going to take place," he said.

"The real news would be if something didn't happen," he added.

Court to speed Clear Channel sale

Clear Channel Communications (NYSE: CCU) stock was better by $0.38, or 1.12%, to $33.42 as the Delaware Chancery Court decided to expedite Clear Channel's claim against Providence Equity Partners.

Clear Channel hopes to force Providence's Newport Television to complete the purchase of 56 television stations in order for Clear Channel to be acquired by Thomas H. Lee Partners and Bain Capital for $19.5 billion.

Still, Wachovia has shown hesitancy to finance the deal for the 56 stations and it may be just as hesitant towards the buyout, a market source said.

Microsoft busted by E.U. for $1.4 billion

Microsoft (Nasdaq: MSFT) stock dipped by $0.12 or 0.42% to $28.26 as the latest battle in the war between Microsoft and the European Commission ended with a record-setting $1.4 billion fine for the technology behemoth.

The fine was levied for violating a 2004 ruling which required Microsoft to turn over vital pieces of code to rival software firms.

Microsoft is already laying groundwork for similar anti-competition fights with Asian regulators, a market source said.

The fine had little effect on Yahoo! Inc. (Nasdaq: YHOO) or the possible merger between the two.

However, Yahoo! claims its shareholders and managers have been distracted by the unsolicited bid.

Yahoo! said seven suits have been filed against it by its shareholders over Microsoft's offer.

Yahoo! shares added $0.15, or 0.53%, to finish at $28.37.

Take-Two for yourself

Take-Two Interactive Software (Nasdaq: TTWO) slipped just $0.07, or 0.26%, to finish at $26.78 even as suspicion was focused on a steep pay raise for Take-two's management firm ZelnickMedia.

The board of Take-Two approved the new compensation package between the two bids from Electronic Arts (Nasdaq: ERTS).

The bid for Take-two stands at $26 per share.

Stock of Electronic Arts was better by $0.57, or 1.19%, to end the day at $47.36.

Airlines still sitting in chocks

Shares of Delta Air Lines (NYSE: DAL) were lower by $0.91, or 5.72%, to close at an even $15.00, while shares of Northwest Airlines (NYSE: NWA) lost $0.91, or 5.68%, to end the session at $15.10 as both carriers sent memos to their employees addressing the workers concerns.

The memos stated the any combination of airlines would be done with consideration of workers' rights and seniority, a market source said.

The notes were sent the day after the International Association of Machinists and Aerospace Workers has joined up with the Coalition for an Airline Passengers' Bill of Rights to oppose the merger.

Sun sets on MySQL

Sun Microsystems, Inc. (Nasdaq: JAVA) shares were better by $0.18 or 1.03% to $17.70 as it announced on Tuesday its completion of its merger with MySQL AB, the world's most popular open source database, for approximately $1 billion, according to a Sun press release.

"For the first time ever, businesses across the world can standardize on a commercially supported, open source platform that meets their needs for scale, quality and global service," said Jonathan Schwartz, Sun Microsystems' president and chief executive officer, in a news release.

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