In my previous post on the Allied-Ares merger arbitrage opportunity, I introduced a topic which I realized I’ve never quite talked about here on The Curious Investor. As I intend this blog for both beginning investors and seasoned investors alike, here’s a run down on the concept of merger arbitrage.

What is arbitrage? Rigorously speaking, arbitrage is the practice of taking advantage of a price differential between two markets which allows the arbitrageur, or person taking advantage of the arbitrage, to obtain a risk-less profit.

Technically speaking, an arbitrage refers to a situation where the same asset sells for a different price in two markets. For example, a textbook in the UK selling for $20 and a textbook in the USA selling for $100. The arbitrageur would buy the UK textbook and simultaneously sell the USA textbook and pocket the $80 difference.

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In a filing with the SEC, Sun Microsystems Inc. (JAVA) announced to cut its headcount by 3,000 or 10% over the next 12 months, given the delay in getting European Commission clearance for its merger with Oracle Corp. (ORCL).  Sun said that the job cuts will affect all of the company’s major regions, including North America, Europe, Asia and emerging markets. The company expects to incur $75 – $125 million in restructuring charges over the next several quarters. The company said it will record the majority of the charges in the second and third quarters of fiscal 2010.  Oracle, the largest software company, had proposed the acquisition of Sun Microsystems for $7.4 billion ($9.50 a share), which has been slowed by an ongoing antitrust review in Europe and the company is still waiting for clearance by the European Commission.  The delay in approval from the ...

Despite earlier this week announcing disappointing first-quarter results, Oracle Corp. (Nasdaq: ORCL) says it expects its second quarter will be stronger. However, many analysts are skeptical, as the company’s attempted takeover of Sun Microsystems Inc. (Nasdaq: JAVA) has not gone as smoothly as planned.

Oracle reported revenue for the three months ended Aug. 31 fell 5%, to $5.05 billion. Analysts were expecting $5.2 billion of sales.

Net income rose 4% to $1.1 billion, or 22 cents a share, by Generally Accepted Accounting Principles (GAAP), but the company leaned heavily on support contracts and cost cutting to maintain profitability. The world’s second-largest software maker blamed the drop on declining overseas sales and a stronger U.S. dollar.

“Oracle’s results were impacted by the reduced value of foreign currencies when compared to U.S. dollars, reducing Q1 GAAP earnings by $0.02 per share,” the company said. “Without this impact, Oracle’s Q1

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The BREW (Binary Runtime Environment for Wireless) technology platform is getting increasing acceptance among global broadband service providers. BREW is a proprietary technology solution developed by Qualcomm Inc. (QCOM). This is a mobile handset platform supporting both high-end feature-rich smart-phones as well as low-end ordinary mobile phones that are intended to drive several wireless data applications. BREW technology enables mobile service providers to generate revenues from different value-added services. BREW solutions will help customers to access 3D mobile games, social networking, ring-tones and other productivity tools.   As of now, BREW has been commercially deployed by more than 60 carriers in over 25 countries. Qualcomm claims that the platform generated more than $2 billion revenues for the application developers as of March 2009. Verizon Wireless (VZ) is so far the largest telecom operator that deployed BREW mobile platform. Last July, the carrier renewed its BREW contract with ...

In a filing with the Securities and Exchange Commission yesterday, International Business Machines (IBM) reiterated its fiscal 2009 profit outlook of at least $9.70 per share. Management also said that IBM was well on course to deliver earnings of $10 to $11 per share in 2010.

With significant operating leverage, the company expects to continue expanding margins, helped by about $3.5 billion of savings from cost-cutting initiatives in 2009.

Shares of the company rose in early trading hours to $118.18 after closing at $117.46 on Friday on the New York Stock Exchange.

IBM expects to release third-quarter results on Oct. 15. The Zacks Consensus Estimate is pegged at $2.38 a share for the quarter and $9.77 for the full year, exceeding the company’s guidance of $9.70. Zacks estimates assume approximately 13.6% earnings growth and 2.1% sales growth.

IBM is the leader in the Software, Services and Storage business.

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Several patents previously held by Microsoft (MSFT) are expected to change hands. Microsoft acquired the patents from Silicon Graphics and subsequently sold them to Allied Security Trust (AST) at a private auction. AST is expected to resell the patents to Open Invention Network (OIN). The patents purportedly relate to Linux open source technology, which is the reason for the interest in them.

OIN consists of member companies such as RedHat (RHAT), International Business Machines (IBM), Phillips and Novell (NOVL), which use open source technology in their products. OIM licenses the patents but typically does not resell them.

AST is in the business of acquiring patents from owners, licensing the technology back to them and ultimately selling off the patents. The member firms include big names in the technology space, such as Motorola (MOT), Cisco Systems (CSCO), Sun Microsystems (JAVA), Hewlett Packard Co.

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For Immediate Release

Chicago, IL – August 24, 2009 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Oracle Corp. (ORCL), Sun Microsystems, Inc. (JAVA), International Business Machines Corp. (IBM), Hewlett-Packard (HPQ) and Cisco Systems Inc. (CSCO).

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513

Here are highlights from Friday’s Analyst Blog:

Oracle Gets Approval to Buy Sun

The largest software company, Oracle Corp. (ORCL) announced that the U.S. Department of Justice (DOJ) has approved its proposed acquisition of Sun Microsystems, Inc. (JAVA). The approval from the DOJ was much anticipated.

In June,

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The largest software company, Oracle Corp. (ORCL) announced that the U.S. Department of Justice (DOJ) has approved its proposed acquisition of Sun Microsystems, Inc. (JAVA). The approval from the DOJ was much anticipated.

In June, the DOJ had extended its investigation on the deal to gather more information and further review the effects of the merger on competition for International Business Machines Corp. (IBM), Oracle's biggest database software rival, as well as Hewlett-Packard (HPQ) and Cisco Systems Inc. (CSCO), which compete with Sun in the server market.   The clearance had earlier been delayed due to scrutiny about the licensing of Java, a programming language and software developed by Sun, which is used in IBM’s products. Moreover, issues lingered on Oracle's potential acquisition of Sun's MySQL – an open-source database software, which overlaps Oracle’s own database software.   Oracle had agreed to buy Sun for $7.4

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IBM's (IBM) broad product and services portfolio delivers value to clients through a combination of services, hardware and software. The key verticals for IBM in the Indian market are infrastructure, such as construction and steel; telecom; industrial; energy and utilities. It also witnesses growth in the insurance and banking, travel and transportation, and the government spaces.

We therefore favor IBM for its wide range of products and large international exposure. IBM generates over a billion dollars in revenue from the Indian market. Revenue at IBM was driven by double-digit growth in markets such as India and China, which were up 10.0% in 2008. IBM expects these growing markets to drive revenue and increase growth beyond 2009.

In comparison to the slowing U.S. markets and weak IT spending, the Indian market is still relatively healthy as are other emerging markets. Specifically, the 'BRIC' region ( Brazil, Russia, India and China )

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DrStockPick.com Stock Report!

Wednesday August 19, 2009

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IntegraMed America, Inc. (NASDAQ: INMD), the nation’s leading provider of specialty healthcare services in emerging, technology-focused niches, today announced that The Froedtert and Medical College of Wisconsin Reproductive Medicine Center has begun offering IntegraMed’s Attain(TM) IVF Program - a course of treatment approach that improves patient success with In Vitro Fertilization (IVF).

Mylan Inc. (Nasdaq: MYL) today announced that the company and its subsidiary Mylan Pharmaceuticals Inc. filed a civil lawsuit in the Circuit Court of Monongalia County, W.Va., against the Pittsburgh Post-Gazette, Post-Gazette reporters Len Boselovic and Patricia Sabatini, and others as yet unknown.

Sun Microsystems, Inc. (NASDAQ:JAVA) today announced

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