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S&P Picks and Pans: Google, Avaya, CDW

Analyst opinions on stocks making headlines Monday

From Standard & Poor's Equity ResearchGoogle Inc. (GOOG)

Reiterates 3 STARS (hold)

Analyst: Scott Kessler

According to unconfirmed reports from the New York Times and Wall Street Journal, the Federal Trade Commission is closely scrutinizing Google's proposed $3.1 billion purchase of DoubleClick. We are not surprised, given the notable criticism of the transaction levied by prominent Internet and media companies and privacy groups. Although we understand these concerns, we do not expect them to scuttle the pending deal. We think Google would consider additional privacy measures to complete the transaction. We note that Google garners very limited revenues from display advertising, which is DoubleClick's focus.

Avaya Inc. (AV)

Reiterates 3 STARS (hold)

Analyst: Ari Bensinger

According to unconfirmed reports in the Wall Street Journal, Avaya is in talks with private equity firms and strategically interested partners to sell all or part of the company. This report follows Avaya's decision to cancel its May 31 investor update conference. We view Avaya's extensive installed base in the legacy private branch exchange arena and its large services support business as attractive assets in what we forecast to be a sizable IP telephony market. We are raising our 12-month target price by $3 to $17, 26 times our 2007 EPS estimate, at the high end of peer price-to-earnings multiples.

CDW Corp. (CDWC)

Reiterates 3 STARS (hold)

Analyst: Dylan Cathers

Shares of this marketer of computer products and services are up this morning after an unconfirmed report in the Wall Street Journal Online that a group of private equity firms, led by Madison Dearborn Partners, is considering a buyout of CDW. Shares have been increasing rapidly since early April, as the company has made great strides after reorganizing its salesforce, and has benefited from increased sales of networking equipment and laptop computers. But we think positives are somewhat offset by CDW's continued investment in its salesforce, and lower average selling prices.

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