Blockbuster offers $1 billion-plus for Circuit City

Blockbuster Inc (BBI.N), the No. 1 U.S. movie rental chain, said on Monday it has offered to buy electronics retailer Circuit City Stores Inc (CC.N) for about $1 billion to $1.3 billion in cash.



Blockbuster said it made the unsolicited approach in February, offering $6 to $8 per share. That represents a premium of 54 to 105 percent over Circuit City's closing share price of $3.90 last week, although the troubled retailer's stock traded above $21 last year.

Blockbuster Chief Executive and Chairman Jim Keyes, a former 7-Eleven CEO hired last year with a mandate to turn around Blockbuster, made the offer in a February 17 letter to Circuit City Chief Executive Philip Schoonover, but Blockbuster said Circuit City had so far failed to provide due diligence.

Keyes in the letter said the "new" Blockbuster would be "the most convenient source for media entertainment." Keyes has shifted Blockbuster from a heavy emphasis on online DVD rental to enticing customers through a variety of in-store and electronic offerings, including more emphasis on DVD sales.

Blockbuster said it made the proposal public, "because it believes the shareholders of Circuit City should have the opportunity to participate in determining the destiny of the company."

The combination would result in an $18 billion global retail company that would be "uniquely positioned to capitalize on the growing convergence of media content and electronic devices," the company said in its statement.

"We believe the combination will result in a compelling consumer proposition that will drive significant revenue and margin enhancements as well as costs synergies," Keyes said.

Circuit City was already talked of as a takeover target. Its shares have crashed to multiyear lows in the past year, as it has posted losses.

It has made store changes, including replacing more than 3,000 workers with lower-paid employees -- a move that disrupted its business and upset sales.

Circuit City had an average of 166.5 million shares in its most recent quarter. Its shares closed at $3.90 on the New York Stock Exchange on Friday.

Circuit City and Blockbuster were not available immediately for comment.

Samsung boss 'may quit' due to allegations

Samsung Group chairman Lee Kun-hee said Friday that he will consider structural and management changes -- including his own position -- over a corruption scandal that has rocked South Korea's biggest industrial conglomerate.


Lee Kun-hee has led Samsung Group for 20 years.

1 of 2 "I will deeply think about reshuffling the corporate management structure and the management lineup, including myself," Lee told reporters after a second round of questioning by an independent counsel probing allegations of bribery and other wrongdoing.

Asked if that meant he would resign, Lee said he "will think about it."

The independent counsel, sanctioned by South Korea's National Assembly and former president, began its probe in January. Investigators have until April 23 to collect evidence.

Kim Yong-chul, a former top lawyer for Samsung, claimed in November that the conglomerate had 200 billion won ($205 million) in a slush fund and used it to bribe prosecutors and judges.

He also alleged that Lee's wife, who heads a Samsung art museum, used some of the money to buy expensive paintings from abroad.

Samsung denied Kim's allegations when they were raised.

Lee, 66, was summoned the first time a week ago and questioned for almost 11 hours. Friday's questioning lasted about five hours.



Lee also said he assumed blame for the scandal and would "take full responsibility, either morally or legally," in remarks similar to ones he made upon emerging from questioning last week.

Samsung Group is a massive conglomerate consisting of dozens of businesses. It has interests in industries including electronics, shipbuilding, construction, insurance and leisure.

Lee, who has led the group for 20 years, is credited with turning Samsung Electronics Co., its flagship enterprise, into a top global brand. His late father established the conglomerate 70 years ago.

Besides the slush fund, bribery and art claims, investigators are looking into long-simmering allegations of murky dealings involving the family-run group's complex ownership structure.


South Korean conglomerates, known as "chaebol," have long been accused of influence-peddling as well as dubious transactions between subsidiaries to help controlling families evade taxes and transfer wealth to heirs.

Special prosecutors questioned Lee's wife for more than six hours last week. His son, an executive at Samsung Electronics, brother-in-law and senior Samsung Group officials have also endured hours of questioning.

Yahoo, Time Warner closing in on AOL deal

Yahoo Inc and Time Warner Inc are "closing in" on a deal where Yahoo would merge with Time Warner's AOL Internet unit, brushing aside Microsoft's bid for Yahoo, a source familiar with the talks said on Wednesday.

The source confirmed a Wall Street Journal story saying Yahoo would receive a cash investment from Time Warner in exchange for a 20 percent stake in the combined Yahoo-AOL business. The deal would exclude AOL's fading dial-up Internet access business and value AOL at about $10 billion.

A deal with Time Warner and AOL would be part of a multi-pronged strategy by Yahoo in which it would outsource Web search advertising operations to Google Inc, the source said.

Separately, The New York Times reported that Microsoft and Rupert Murdoch's News Corp are in negotiations on making a joint bid for Yahoo. That merger would join Yahoo, Microsoft Corp's MSN and News Corp's MySpace, the paper said.

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(Reporting by Eric Auchard

Boeing's Dreamliner hits more turbulence

Investors shake off the latest delay in the rollout of its much-anticipated 787




When Boeing Company announced Wednesday yet another delay in the production of its upcoming 787 commercial jet, company executives moved fast to convince Wall Street and its customers that it could deliver on its promises.

The hard sell worked - for now. Boeing stock surged 4% in trading Wednesday after the details of the delay - the third major slip in the production of the 787 - emerged and investors breathed a sigh of relief that the news, which they had expected, was not worse. Had Boeing announced a longer setback, company shares would likely have taken a beating.

But Boeing (BA, Fortune 500) doesn't have much room for error. Nothing short of the company's future in commercial jets is at stake with the 787, also known as the Dreamliner, as it battles archrival Airbus for control of the commercial skies.

The Dreamliner marks Boeing's first all-new airliner since the 777 in 1994. With its lighter weight, more streamlined design and efficient engines from Rolls Royce and General Electric (GE, Fortune 500), the Dreamliner is projected to be 20 percent more fuel efficient than comparably-sized aircraft. The materials used, chiefly the super-durable carbon-fiber composite, are projected to save 30 percent in maintenance costs

Airlines and airline leasing companies have ordered 892 Dreamliners, worth $145 billion at the list price, since it was made available for sale in 2003. That's a record for a new commercial jet - and evidence of how badly the industry badly needs and wants this plane.

Boeing can't afford any more delays. The latest production push puts the Dreamliner 15 months behind its original schedule. In the last six months, due to 787 delays and the loss of a major contract to competitors, Boeing's stock price has slipped almost 22 percent. If the company fails to hit its new schedule, expect a drubbing.

Company officials reassured investors Wednesday that no more delays are expected. The aircraft's maiden flight is now slated for the fourth quarter of this year. Deliveries of planes to Northwest (NWA, Fortune 500), Continental (CAL, Fortune 500) and other airlines signed on to buy them should begin in the third quarter of 2009, with 25 of the jets expected to be delivered by the end of 2009. That compares to 109 deliveries under the prior plan.

Pat Shanahan, a Boeing vice president who heads up the 787 program, told analysts during a conference call Wednesday morning that problems with partners supplying parts for the 787, ranging from metal fasteners to large sections of the fuselage, are at the root of the delays. Since January, when Boeing announced its last schedule slip, Shanahan has dispatched manufacturing experts to factories all over the world to solve the problems.

But Shanahan isn't guaranteeing that the necessary fixes have been made. "The issue is the capability in the supply chain to do the things that we need to have done, that's the untested part of this program," Shanahan told analysts. "That is where our energy and attention is."

The delays are worst for those airlines that are banking on the plane, which can fly the distance of a jumbo jet but has the capacity of a mid-size aircraft (about 250 passengers), to open up new routes. All Nippon Airways, the first customer for the 787 with 50 planes on order, is hoping to offer new routes in Asia - and isn't happy about the wait.

"We are extremely disappointed," as spokesman for the Japan-based airline said Wednesday. "We still have no details about the full delivery schedule, and we would urge Boeing to provide us with a 120% definitive schedule as soon as possible."

Yahoo not opposed to Microsoft deal at right price

Yahoo not opposed to Microsoft deal at right price
Reuters
Published: Monday, April 07
NEW YORK (Reuters) - Yahoo Inc is not opposed to Microsoft Corp's bid for the Web media company, as long as it is at the right price, Yahoo's board said on Monday in a letter to Microsoft Chief Executive Steve Ballmer.

"We have continued to make clear that we are not opposed to a transaction with Microsoft if it is in the best interests of our stockholders," the letter said. "Our position is simply that any transaction must be at a value that fully reflects the value of Yahoo, including any strategic benefits to Microsoft, and on terms that provide certainty to our stockholders."

Yahoo is responding to a three-week deadline issued by Ballmer in a letter to Yahoo on Saturday for Yahoo to agree to Microsoft's $31 a share cash-and-stock offer or risk seeing the bid lowered.







Font:****Yahoo shares slipped 2 percent in premarket trading to $27.80, after closing at $28.36 on Nasdaq on Friday.

Directors of Sunnyvale, California-based Yahoo rebuffed Microsoft's original offer in February, saying it undervalued Yahoo and that it is seeking alternatives.

"Our board has been actively and expeditiously exploring our strategic alternatives to maximize stockholder value, a process which is ongoing," Yahoo's board said on Monday. "All of these actions have been driven by our overarching commitment to maximize stockholder value.

"Our board's view of your proposal has not changed. We continue to believe that your proposal is not in the best interests of Yahoo! and our stockholders."

Yahoo shareholders and analysts say Yahoo's best options are to find an ally to help demonstrate Yahoo is worth more as an independent player, or surprise the market with a strong show in its quarterly results.

The consensus on Wall Street is that no "white knight" will emerge to whisk Yahoo away from Microsoft and its proposed cash-and-stock offer currently valued at $42.2 billion.

Check Out Line: Starbucks’ new brew

Check out the free coffee!

Starbucks will be handing out free 8-ounce samples of its new everyday brew called Pike Place Roast on Tuesday at 9 a.m. Pacific time (noon eastern).

But the free coffee is not just about generosity. Starbucks is counting on the new coffee as one tool to help reinvigorate U.S. traffic, which has been slowing in recent months.

The Pike Place Roast brew is supposed to remind consumers of Starbucks’ early Seattle roots. The company says the coffee has a smoother flavor and finish.

The new brew is one of several steps Starbucks announced last month — including a new customer rewards program and new espresso machines — as it tries to draw customers back amid a weak U.S. economy and competition in the coffee business from McDonald’s.

Motorola to Eliminate

Motorola Inc. said it would cut another 2,600 jobs, bringing to about 10,000 the number the company has eliminated since the beginning of 2007.

Motorola, which is struggling to cope with a sharp plunge in cellphone sales, said it expects to take a first-quarter pretax charge of $104 million resulting from severance costs related to the latest job cuts.

The Schaumburg, Ill., telecommunications-equipment maker said the estimate is composed of $113 million in charges for severance costs, partially offset by $9 million in reversals for accruals from prior periods that are no longer needed, according to a Securities and Exchange Commission filing Thursday.

The layoffs are the first wave of a planned $500 million cost-reduction for this year. "The work-force reductions are intended to make financial resources available for strategic business investment, while better aligning operational costs and expenses with business growth," Motorola said in a statement.

The company said all three of its business segments, as well as various corporate functions, are affected by these plans.

Included in the 2,600 jobs to be cut are 700 being eliminated as a result of Motorola's decision to end mobile manufacturing operations in Singapore by the end of 2008. Also included are 354 jobs in Plantation, Fla., where handsets for use on mobile broadband WiMax networks were being developed.