Take-Two stands strong; Disney won't buy AOL; confidence in XM, Sirius deal; small progress for airlines

By Aaron Hochman-Zimmerman

New York, March 12 - So quickly after its arrival, the market began to lose enthusiasm for the $200 billion cash injection from the Federal Reserve.

Still, investors holding positions in Sirius Satellite Radio Inc. and XM Satellite Radio Holdings Inc. were enthusiastic as their stocks were better after the chiefs of both companies exuded confidence over the prospect of a completed deal by the end of the month.

Elsewhere in the media world, speculation over what Time Warner Inc. will do with AOL drew a preemptive "no thanks" from Walt Disney Co.

Delta Air Lines Inc. and Northwest Airlines Corp. shares were lower, but mild progress was reported from renewed talks between the pilots.

Take-Two Interactive Software Inc. is holding its ground ahead of a new game release as Electronic Arts Inc. provided no indication it would raise its offer.

Deals from financial sector were hit with lowered expectations as First Charter Corp.'s chief asked for patience during what may be a long federal approval process for its deal with Fifth Third Bancorp.

Meanwhile, TierOne Corp. said it cannot be sure if its deal with CapitalSource Inc. will go through at all.

The Dow Jones Industrial Average ended lower by 46.57, or 0.38%, at 12,110.24, while the Nasdaq Composite Index lost 11.89, or 0.53%, to finish at 2,243.87.

The S&P 500 put back 11.88, or 0.90%, to close at 1,308.77.

Take-Two holds ground during call

Shares of Take-Two (Nasdaq: TTWO) tacked on $0.26, or 1.05%, to close the day at $24.91 as a source confirmed that during its earnings call on Tuesday chairman Strauss Zelnick said he has no intention of accepting Electronic Arts' (Nasdaq: ERTS) $26 per share offer.

Strauss believes the bid undervalues Take-Two and its assets, the source said.

Also during the call, the video gamer revised its earning projections for 2008. The company now expects yearly profits of $1.55 per share rather than $1.35 per share.

"We are pleased with Take-Two's stronger than expected top and bottom line results for the first quarter," Zelnick said in a press release.

"Our performance benefited from a diverse range of hit titles in the first quarter, and we are eagerly awaiting the release of Grand Theft Auto IV in the second quarter. We believe that our extraordinary creative assets and improving operational efficiency will be sources of significant value for shareholders as the interactive entertainment industry moves further into the current growth cycle."

Still, the ambiguous departure of major Take-Two shareholders OppenheimerFunds and Fidelity on Tuesday signaled to some that the $26 per share offer would not increase.

Prospect News has also reported that many were wary of the timing of a sizable pay raise for Take-Two's management firm, ZelnickMedia, which came between the two bids from Electronic Arts.

Shares of Electronic Arts added $0.11, or 0.23%, to end at $47.23.

AOL may shop dial-up business

Also in technology, shares of AOL's parent company Time Warner (NYSE: TWX) lost just $0.08, or 0.54%, to close at $14.76 as rumors mounted that AOL will have to make some changes.

AOL feels its well-known portal is not enough to sustain itself against internet big dogs like Google Inc. and Microsoft Corp. which have or are looking for major advertising networks.

Other changes at AOL may include a campaign to sell off its increasingly antiquated dial-up internet service.

But according to the Associated Press on Wednesday, Disney's (NYSE: DIS) chief executive officer, Robert Iger, is not interested.

Iger made those comments even though he is looking to expand his company's online reach into new entertainment media.

Disney shares gained $0.22, or 0.71%, to end the session at $31.41.

Clear skies for satellite radio merger

In less terrestrial media, shares of XM Satellite Radio (Nasdaq: XMSR) picked up $0.45, or 4.06%, to finish at $11.54, while shares of Sirius Satellite Radio (Nasdaq: SIRI) were better by $0.13, or 4.73%, to close at $2.88 as Sirius' chief executive officer Mel Karmazin radiated assurance about the eventual success of the proposed $4.2 billion merger.

Karmazin drew his confidence for a close to the deal by the end of March from comments by Federal Communication Commission chairman Kevin Martin who said the agency expects to rule on the consolidation within that timeframe.

The Department of Justice also has the option to step in with an attempt to shut down the deal, but XM Satellite Radio chairman Gary Parsons said that there is likely some coordination between the FCC and Justice Department.

Cloud cover lifting over airline deal

Northwest Airline (NYSE: NWA) stock dropped $1.98, or 16.19%, to $10.25 while Delta Air Lines stock (NYSE: DAL) stock descended $1.98, or 16.35%, to $10.13 as the Minneapolis Star Tribune reported mild progress in talks between the pilots' unions Tuesday night.

However, the pilots unions are still at loggerheads over certain issues and no further talks are currently scheduled between the two sides of the merger.

Talks are scheduled for the unions to meet individually. The Northwest pilots will continue talks through Friday. The Delta pilots will meet sometime before Friday.

TierOne makes no promises

TierOne (Nasdaq: TONE) shares were better by $1.15, or 10.68%, to close at $11.92 as it asserted that it makes no guarantees regarding the completion of its merger with Capital Source (NYSE: CSE), according to a market source.

CapitalSource's stock added $0.05, or 0.37%, to finish at $13.72.

Claiming pressures on the financial sector, TierOne recently reported an annual loss of $12 million during 2007.

First Charter, Fifth Third slow and steady

Elsewhere in the financial sector, shares of First Charter (Nasdaq: FCTR) lost $0.81, or 2.89%, to end at $27.21 as it claimed its $1.1 billion or $31 per share deal with Fifth Third (Nasdaq: FITB) is still anticipated in the second quarter, a market source said.

Shares of Fifth Third were worse by $1.06, or 4.39%, to close at $23.06.

The deal is currently under review of the Federal Reserve which is expected to take some time, a market source said.

Even First Charter's chief executive officer acknowledged the subprime crisis has heightened the Federal Reserve's suspicions about banking deals which may delay approval, the source said.

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