Sara Lee Offers to Buy Earthgrains

UAL wants to end deal to buy US Airways; Avanex cuts guidance amid lower telecom spending; plus other stocks in the news

Sara Lee offered to acquire Earthgrains Co. (EGR ) for $40.25 cash per share. The deal is valued at $2.8B, including debt assumption. Earthgrains sees better than expected $0.34 Q1 EPS. S&P downgraded.

Avanex (AVNX ) cut the Q4 revenue guidance to $18M, citing worse than expected deterioration in the domestic telecom capital spending.

UAL Group (UAL ) announced it has entered talks with US Airways (U ) to terminate its merger deal prior to the August 1 deadline. UAL doesn't think it would win antitrust approval on terms that make sense for the airline.

Prudential downgraded Federated Department Stores (FD ) to hold from buy.

Needham downgraded Commerce One (CMRC ) to hold from buy.

Lightbridge (LTBG ) expects Q2 revenues of $45M-$46M, about 8%-10% short of previous guidance, due largely to a decline in non-strategic hardware sales.

Morgan Stanley DW downgraded KPMG Consulting (KCIN ) to neutral from outperform.

Merrill upgraded Asyst Technology (ASYT ) to near-term buy from accumulate.

Merrill upgraded Siebel Systems (SEBL ) to near term accumulate from neutral, and maintains long term buy.

Needham downgraded Saba Software (SABA ) to hold from buy.

Navigant International (FLYR ) sees $0.38 Q2 EPS, about $0.08 below the consensus estimate, citing the sluggish economy, a decline in business travel, and an increase in shares outstanding.

Prudential downgraded Oak Technology (OAKT ) to hold from buy.

Prudential downgraded Walt Disney (DIS ) to hold from buy.

Walter Industries (WLT ) ups the Q2 EPS guidance to $0.29-$0.32, 23% higher than prior guidance.

Allied Capital (ALD ) says it has elected a cash option to complete its previously announced acquisition of

Sunsource Inc. (SDP ). Allied will pay $10.375 per Sunsource share.

CIBC World reiterates buy on Astoria Financial's (ASFC ) price.

Turnstone System (TSTN ) sees a $12M-$13M Q2 net loss from operatins on revenue of about $4.5M. Turnstone will take a charge of $500,000-$600,000 in Q2 for a 20% workforce reduction, and about a $34M-$38M charge for excess inventory.

Pacific Growth believes Infocus 's (INFS ) Q2 results will come in lower than expected and cut the estimates to reflect lack of visibility.

Primus (PKSI ) sees a $0.30-$0.35 Q2 loss on revenues of about $6.5M, citing continued purchasing delays by current and prospective customers as IT capital spending has virtually come to halt.

Sipex Corp. (SIPX ) will cut its workforce by about 15%, and will shut down its manufacturing operations for some period during Q3.

Synquest Inc. (SYNQ ) sees a $0.22-$0.24 Q4 loss vs. a year ago's $0.15 loss. Synquest says current economic uncertainty has prolonged sales cycles, and delayed customer purchase decisions.

Minnesota Mining (MMM ) sees $1.10-$1.14 Q2 EPS from operations on a slight sales rise, citing continuing weakness in the U.S., an increasing slowdown in European and Asia Pacific economies, and negative impacts from a strong U.S. dollar. 3M will cut its workforce by 5,000.

TMP Worldwide (TMPW ) agreed to acquire Hotjobs.com (HOTJ ) in a deal valued at about $460M. Terms: 0.2195 TMP share per Hotjobs share.

Art Technology (ARTG ) cut the Q2 guidance to a $0.17-$0.19 Q2 loss from operations on $34M-$35M revenue, and set a reorganization including a workforce reduction of about 20%. CS First Boston cut estimates.

Captec Net Lease (CRRR ) agreed to be acquired by Commercial Net Lease Realty (NNN ). Terms: 0.4575 Commercial Net Lease share for 0.21 shares of new class of Captec preferred stock, 9.0% Series A non-voting preferred stock, and $1.27 cash for each Captec share.

David Tice of Behind the Numbers thinks NVIDIA (NVDA ) is headed for a fall. Tice questioned how NVIDIA's pricey graphics chip ($399) will fare against cheaper alternatives, not to mention the massive slowdown in the PC market: Barron's.

Insight Health (IHSC ) agreed to be acquired by J.W. Childs Associates and Halifax Group (HFXNY ) in partnership with management for $18 cash per share.

Priority Health (PHCC ) sees Q2 EPS from operations $0.04-$0.06 below consensus estimates, citing the delay of key products, tightening gross margins and reduction in interest income. The company sees several Q2 non-recurring charges.

Some investors suggest that short of a takeover of AG Edwards (AGE ) -- which doesn't seem any more likely under non-Edwards family CEO -- there's little upside in stock: The Wall Street Journal

Benchmark Electronics (BHE ) revised its Q2 sales forecast to $315M-$320M, and revised its cash EPS to $0.12-$0.14 (exclusing restructuring charges). Benchmark sees Q3 revenues, and EPS comparable to Q2 , citing the continued slowdown in the technology marketplace.

Roche licensed the rights to ICN Pharmaceutical's (ICN ) developmental compound, Levovirin, second-generation drug for the treatment of hepatitis C.

Infineon Technology (IFX ) says it will proceed with a public offering of up to 60M newly-issued shares.

Primedia (PRM ) will acquire EMAP USA from EMAP plc (EMAPF ) for $515M. Primedia will become the second largest U.S. consumer magazine publisher.

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