Sprint, Clearwire cross lines; pilots call U.S. Air, UAL deal 'last resort'; Microsoft, Yahoo! carry on alone

By Aaron Hochman-Zimmerman

New York, May 7 - Rising oil prices left a slick for stocks to slide lower as Sprint Nextel Corp. and Clearwire Corp. struck a deal to combine their WiMAX platforms.

Stocks of both companies were slightly lower, but the deal gave rise to further rumors about a sale of Sprint to Deutsche Telekom AG, or perhaps the re-division of Sprint and Nextel.

Airline stocks dropped as the pilots all but waived off the deal between UAL Corp. and U.S. Airways Group Inc.

Shares also fell for both halves of the former comedy duo Yahoo! Inc. and Microsoft Corp. as the two began to plan for their separate futures.

Even after announcing record-setting sales, Take-Two Interactive Software Inc. saw neither a rise in share value nor a better offer from one-time suitor Electronic Arts Inc.

Enzon Pharmaceuticals Inc. managed to better its stock price ever so slightly as it announced it was dividing its company.

Meanwhile, the Dow Jones Industrial Average was damaged to the tune of 206.48, or 1.59%, to close at 12,814.35, while the Nasdaq Composite Index gave back 44.82, or 1.80%, to finish at 2,438.49.

The S&P 500 was lower by 25.69, or 1.81%, to close at 1,392.57.

Telecoms on same frequency

Telecom providers Sprint Nextel and Clearwire combined their WiMAX data transfer businesses under the name Clearwire.

Sprint (NYSE: S) shares dropped just $0.03, or 0.33% to $9.16.

Clearwire (Nasdaq: CLWR) shares were down by $0.24, or 1.46%, to finish at $16.22.

The deal between the two also includes a $3.2 billion combined investment from tech players Comcast Corp., Google Inc., Intel Corp. and Time Warner Cable Inc.

The deal is expected to be completed in the fourth quarter with Sprint expected to own 51% of the new company, which may preserve its position as a target for Deutsche Telekom, owner of T-Mobile USA Inc.

Shares of Deutsche Telekom (NYSE: DT) lost $0.22, or 1.24%, to end the day at $17.59.

However, Sprint may be looking to cut loose Nextel either before or instead of a deal with Deutsche Telekom, the Wall Street Journal reported on Monday.

As of yet, no companies have been heard chirping for Nextel.

Take-Two takes sales record

In technology, shares of Take-Two slid by $0.09, or 0.34%, to $26.26 as it reported that its "Grand Theft Auto IV has surpassed all-time entertainment records for day one and week one sales by dollar value," according to a company press release.

Take-Two sold six million copies, which beat analysts' predictions by one million.

Take-Two has long said that it would not entertain merger offers until after the release of the game.

Still, investors have not heard from potential buyer Electronic Arts since Take-Two rejected its $2 billion offer before the April 29 release of the game.

Shares of Electronic Arts (Nasdaq: ERTS) fell by $0.07, or 0.13%, to close the day at $52.11.

Microsoft, Yahoo! walk separate paths

Also in the tech world, after the deal between Microsoft and Yahoo! evaporated, the market has been full of questions and even more speculation about where the two will go from here.

Microsoft (Nasdaq: MSFT) shares dropped $0.49, or 1.65%, to $29.21 as chairman Bill Gates re-emerged after the Yahoo! tussle to serenely say Microsoft would find success on its own.

"We put a lot of effort in talking with Yahoo and the conclusion was reached that we should pursue our independent paths," Gates said in Tokyo.

However, market rumblings of Microsoft's interest in the social networking site Facebook bubbled up on Wednesday.

Meanwhile, Yahoo!, the other half of the abandoned deal, may have shareholders who are still eager for a proxy fight.

Now that Microsoft is gone, they will have until May 15 to nominate new directors.

Yahoo! (Nasdaq: YHOO) shares slipped just $0.08, or 0.31% to $25.64.

Pilots call deal 'last resort'

After the flight attendants took their own shots at the deal between U.S. Airways and United Airlines on Tuesday, shares of airlines were on their way down as the deal received flak from Steve Wallach, chairman of the United Master Executive Council of the Air Line Pilots Association, in a statement to the press.

"We are aware of continued speculation in the media of a possible merger between United Airlines and US Airways and have serious concerns that the highly touted financial benefits to be derived from such a merger are unlikely to be achieved because these benefits are based on assumptions that have no basis in reality," he said.

"We therefore believe that a merger with U.S. Airways should be a last resort and not a first choice for United," Wallach added.

Shares of United (Nasdaq: UAUA) sank $0.33, or 2.33%, to $13.82.

Shares of U.S. Airways (NYSE: LCC) gave up $0.69, or 8.59%, to close at $7.34.

Enzon breaks into biotech, oncology

On a down day, investors approved of Enzon Pharmaceuticals' spin off of its biotechnology business.

Enzon (Nasdaq: ENZN) shares added $0.09, or 0.98%, to close at $9.26.

"By separating these unique businesses into two focused companies, the opportunities for both the specialty pharmaceutical business and the biotechnology business could be substantially enhanced and greater value could be created than under the current structure," said chairman, president and chief executive officer, Jeffrey Buchalter in a press release.

Enzon expects to be able to finance the deal with $150 million in cash on hand.

The deal is expected to be completed in the fourth quarter.

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