John Stepek (Money Week UK): Deal making is back!

That was the general reaction from the press when US food giant Kraft launched its first bid for British confectioner Cadbury less than two months ago. Pundits spewed out potential target prices like bingo numbers – £8, no £10, no £12! – and analysts scribbled out scenarios involving white knights and rival bidders from across the globe.

Reality has been a little more disappointing. Despite attempts to talk up the deal, no rival bidders have come forth. And yesterday Kraft came back to the table with an offer that can only be described as – as Cadbury’s board put it – ‘derisory’.

It’s just another sign that there’s a vast gap between conditions in the financial world and those in the ‘real’ world…

Market hopes are stretched far beyond reality The Cadbury / Kraft bid saga shows just how far market hopes

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• Priceline.com (NASDAQ:PCLN) reported adjusted third quarter earnings of $3.45 a share, 55 cents above consensus estimates, on better-than-expected revenues of $730.7 million, ahead of estimates of $$693.97 million on strong summer season travel. The firm provided fourth quarter guidance at about $1.06-$1.16

• Electronic Arts (NASDAQ:ERTS) said it plans to cut 1500 additional jobs. The firm reported second quarter adjusted earnings of 6 cents, a one penny miss, on revenues of $1.15 billion, which slightly topped Street projections of $1.12 billion. The firm forecast 2010 earnings of $0.70-$1.00, topping estimates of 89 cents on revenues of $4.2-$4.4 billion versus estimates of $4.26 billion

• Cadbury (NYSE:CBY) rejected the latest Kraft (NYSE:KFT) bid calling it "derisory"

• Moody's (NYSE:MCO) commented that AIG (NYSE:AIG) will be able to repay its Federal loans

• Wells Fargo (NYSE:WFC) lifted its growth expectations for the semiconductor group following release of third quarter numbers. Intel (NASDAQ:INTC) remained its first

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Companies featured in this edition of the newsletter: ACTC, CHIP, CVM, DKAM, ENZ, IWEB, MBCI, MFGD, PHC

Markets rebounded last week, on the strength of upbeat productivity and manufacturing reports that led to solid gains in all of the major indices. Despite news that the unemployment rate had hit its highest levels in 25 years, the Dow managed to end the week up 310 points, gaining 3.2% on the week to close at 10,023, up 14.2% on the year. The Nasdaq posted a gain of 3.3%, closing at 2112 and extending its yearly gains to 34%, while the S&P 500 and Russell 2000 advanced 3.2% and 3.1% respectively on the week to bring their YTD performance to 18.4% and 16.2%.

Several better than expected economic reports provided buying incentive throughout much of the week, as investors managed to shake off the previous week’s negative bias to send indices into positive territory

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California Pizza Kitchen Inc. (CPKI) recently reported third-quarter 2009 results with a mid-single digit fall in the top-line but a surprise double-digit rise in the bottom-line. Effective cost management and a lower tax rate have driven earnings growth.  The quarterly earnings of 24 cents a share surpassed the Zacks Consensus Estimate by a penny, jumping 20% from 20 cents posted in the prior-year quarter. The casual dining operator now expects fourth-quarter 2009 earnings in the range of 16 cents to 18 cents a share.  California Pizza Kitchen continues to experience fall in the top-line. After declining 2.2% and 3.2% year-on-year in the first and second quarters, respectively, total revenue dipped 5.3% to $164.8 million in the quarter under review.  Restaurant sales slipped 5.7% to $161.2 million, royalties from the Kraft licensing agreement soared 35.2% to $2.5 million, domestic franchise revenue fell marginally by 1% to ...

• Kraft (NYSE:KFT) is due to formalize its Cadbury (NYSE:CBY) bid for about $16.7 billion as the deadline for an offer hits

• Northrop Grumman (NYSE:NOC) announced it is selling its TASC consulting operations to two private equity firms for $1.65 billion

• About $30 billion was the agreed-to valuation which General Electric (NYSE:GE) and Comcast (NASDAQ:CMCSA) placed on the joint venture between NBC Universal and Comcast

• Goldman Sachs (NYSE:GS) upgraded Adobe Systems (NASDAQ:ADBE) to "buy," and lifted its price target to $42

• Goldman Sachs (NYSE:GS) added Lexmark (NYSE:LXK) to its Conviction Sell list

• KBW upgraded Blackstone Group (NYSE:BX) shares to "outperform" with a price target of $18.50

• Windstream (NYSE:WIN) reported third-quarter earnings of 24 cents a share, two cents over Zacks estimates, on revenues of $734 million, below Zacks estimates of $747 million

• DISH Network (NASDAQ:DISH) reported third-quarter earnings of 18 cents, 25 cents under Zacks estimates, on revenues of $2.89

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• Kraft (NYSE:KFT) reported third quarter earnings of 55 cents a share on revenues of $9.8 billion, beating Zacks estimates of 48 cents, but slightly below revenue projections of $10.24 billion

• MedcoHealth Solutions (NYSE:MHS) reported third quarter earnings of 75 cents ex-items, 4 cents above Zacks estimates, on revenues of $14.80 billion, up from estimates of $14.71 billion

• Miller Tabek upgraded entertainment stocks such as CBS (NYSE:CBS), Entravision (NYSE:EVC), News Corp. (NASDAQ:NWS), Viacom (NYSE:VIA.B), and Disney (NYSE:DIS) from "neutral" to "buy"

• Disney (NYSE:DIS) said China approved its plans for a $3.5 billion theme park in Shanghai, set to open in 2014 at the earliest

• Time Warner (NYSE:TWX) reported third quarter earnings of 61 cents a share, ahead of Zacks estimates of 52 cents.  Revenue of $7.14 billion was almost inline with Zacks estimates.  The firm said it sees full-year earnings of at least $2.05

• Garmin (NASDAQ:GRMN) reported third quarter earnings

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Kraft Foods (KFT) reported strong second-quarter results with earnings of 55 cents per share, above the Zacks Consensus Estimate of 48 cents. Quarterly earnings were also up 61.8% year-over-year. However, net revenues for the quarter declined 5.7% year-over-year to $9.8 billion, primarily due to the unfavorable negative 5.6% impact of foreign currency and a negative 0.6% impact from divestitures. Organic revenues increased 0.5%, driven by a 0.7% gain from volume and mix, which was partially offset by negative 0.2% from pricing. In the North American segment (KNAC) sales declined 2.5% year-over-year as gains in U.S. Convenient Meals (5.0%), and U.S. Beverages (1.5%) were fully offset by the declines in U.S. Cheese 10.3%, U.S. Grocery 3.0%, U.S. Snacks 3.3% and Canada & North American Foodservice 4.9%. In the International segment, net revenues in the European Union decreased 11.5% while the top-line in developing markets contracted 8.4%....

Kraft Foods Inc. (KFT), a leading manufacturer and marketer of packaged food and grocery products worldwide, announced its plans to invest about €15 million (approximately $20 million) to establish a new biscuit research and development (R&D) center in Saclay , France , a suburb of Paris . The new facility is expected to serve as the company's European Center of Expertise for Biscuits. The primary focus being on innovation and new product development for many of Europe's most loved biscuit brands, including LU, Mikado, Oreo, Prince, Saiwa and TUC. The facility will also be responsible for bringing forward major biscuit technology platforms for the European market and beyond. The new R&D center, once completed will add to the other 11 existing Kraft Foods R&D centers that support its businesses around the globe. The new center that is scheduled to open during the first half of ...

• Wynn Resorts (NASDAQ:WYNN) said an initial public offering of the firm's Macao operations was priced at the top end of its expected range. The company plans to sell a 25% stake in the unit, at HK$10.08 per share, for a total of $1.6 billion

• Goldman Sachs (NYSE:GS) upgraded Nike (NYSE:NKE) to buy with a target price of $75. The company reported fiscal first quarter earnings of $1.04 per share, up from last year's $1.03 and beat Zacks estimates of 99 cents a share. Revenues fell 12% to $4.8 billion from $5.4 billion a year earlier

• Toyota (NYSE:TM) announced plans to recall 3.8 million vehicles due to potential accelerator pedal problems from floor mats

• Disney (NYSE:DIS) announced publishing unit plans for DisneyDigitalBooks.com, a new subscription-based web service

• Hewlett-Packard (NYSE:HPQ) said it is planning to merge its PC and print operations

• Sony (NYSE:SNE) announced plans to unveil its new Playstation3 game

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• This morning’s reports say the Government of Singapore Investment Corp has reduced its stake in Citigroup (NYSE:C) to less than 5% through open market sales

• The CEO of Cadbury (NYSE:CBY) noted "complementary elements" of Kraft (NYSE:KFT) and Cadbury, but said he would still advise rejecting the deal at the current $16 billion bid

• Oracle's (NASDAQ:ORCL) CEO noted dangers of the European regulatory delay of its proposed $7 billion acquisition of Sun Microsystems (NASDAQ:JAVA), saying Sun Micro is currently losing about $100 million a month

• AMR (NYSE:AMR) announced a 30 million common and $250 million convertible senior notes offering

• Louisiana-Pacific (NYSE:LPX) said it is planning a public offering of 18 million shares of its common stock

• TJX (NYSE:TJX) said its board approved a $1 billion share buyback, reflecting 6.2% of the company's outstanding shares

• Microsoft's (NASDAQ:MSFT) Bing search engine managed to grab more share from Google (NASDAQ:GOOG), reaching 9.3% of

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