Merck Falls amid Questionable Revenue for Prescription Drug Unit

Level 3 gets $500 million in new funds; Mentor Graphics sees breakeven net; plus more of today's stocks in the news

Soundview cut AOL Time Warner 's (AOL ) $27 target to $18, and cut the targets for Clear Channel, Viacom and Disney.

Wells Fargo upgraded Boyd Gaming (BYD ) to buy from market perform. The company notes the stock is rebounding after falling recently with other gaming stocks on the fear of possible terrorism over the July 4th weekend.

SG Cowen reportedly downgraded Waters Corp. (WAT ) to buy from strong buy.

Morgan Stanley cut estimates Veritas Software (VRTS ) and maintains its overweight weighting.

Hummingbird (HUMC ) sees lower than expected $0.25-$0.27 Q4 EPS (adjusted) on sales of $44M-$45M.

Manpower (MAN ) rose after Lehman upgraded to buy from market perform.

Kinder Morgan Energy (KMP ) rose after saying it expects to exceed $0.43 Q2 earnings per unit consensus estimate.

RHBT Financial (RHBT ) was halted at $14.35. The company did not trade on Friday as it announced that it fired president and COO C. Robert Herron, as a result of internal accounting irregularities. The Nasdaq requested more information.

S&P upgraded PayPal (PYPL ) to accumulate from hold after the check cashing company agreed to be acquired by online auctioneer eBay (EBAY ) in a stock deal valued at about $1.5 billion. Terms: 0.39 eBay share per PayPal share. Separately, eBay says preliminary Q2 results are $0.19 EPS (GAAP, pro forma) on revenue of about $266M -- better than expected.

Allegheny Energy (AYE ) cut its 2002 EPS from operations guidance to $2.50-$2.70, citing a weak wholesale market, milder-than-normal weather, and reduced economic activity. The company will cut its workforce by 10%. S&P downgraded to sell from avoid.

Merck (MRK ) says in a SEC filing that it had recorded revenue of more than $12.4 billion from its pharmacy-benefits unit Medco, despite never actually collecting the money, according to The Wall Street Journal. Merrill downgraded to long-term neutral. S&P keeps avoid. Gerard Klauer says buy on weakness.

Prudential reportedly upgraded Gillette (G ) to buy from hold.

Level 3 Communications (LVLT ) inked a pact to sell $500M aggregate principal amount of its 9% junior convertible sub. notes to three institutions: Longleaf Partners Funds, Berkshire Hathaway, and Legg Mason. S&P keeps hold.

Mentor Graphics (MENT ) sees about breakeven 2Q net from operations on revenues in excess of $135M and says several large transactions did not close when expected. S&P downgraded to hold from accumulate. Needham cut estimates. DA Davidson and Wells Fargo reportedly downgraded.

Reliant Resources (RRI ) reportedly filed an amended 2001 annual report, in which it erased $7.9B in revenue from its accounts for the last three years, eliminating the effects of "round-trip" trades.

Entergy (ETR ) sees at least $1.15 Q2 operating EPS, including the impact of weather, vs. the current consensus estimate of $1.11.

Elan (ELN ) is not expected to meet previous $1.55-$1.65 2002 EPS guidance, say people close to the company, and is expected to cut guidance on a July 9 conference call, according to the Financial Times.

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