Vultures circle WaMu; Deutsche Telekom may call on Sprint; pilots renew seniority talks; Pharmion closes

By Aaron Hochman-Zimmerman

New York, March 7 - Stocks were thrown back as the Department of Labor reported a loss of 63,000 jobs from non-farm payrolls in February.

The shock was slightly mitigated by the Federal Reserve's decision to increase of its term auction facility to $100 billion.

Meanwhile, Microsoft Corp.'s Steve Ballmer said his company would make room for Yahoo! Inc. if its bid is successful, giving Yahoo priority over any competing operations that Microsoft is currently involved with.

International Business Machines Inc. assured the world it has no designs to involve itself in a tussle for a large company like Microsoft and Yahoo!

Rumors in the telecom sector suggested that Deutsche Telekom AG, the owners of T-Mobile, may come calling for Sprint Nextel Corp.

Struggling Washington Mutual Inc. was the subject of other whispers as some in the market believe WaMu may fall into another banks' crosshairs.

Union representatives of the pilots of Delta Air Lines and Northwest Airlines agreed to further talks, but the pension insurer raised doubts about whether it would allow the airline merger.

France's Infogrames Entertainment SA published its offer for control of video game pioneer Atari Inc.

Also, Pharmion Corp. announced it closed its $2.9 billion acquisition by Celgene Corp.

The Dow Jones Industrial Average ended lower by 146.70, or 1.22%, at 11,893.69, while the Nasdaq Composite Index gave back 8.01, or 0.36%, to finish at 2,212.49.

The S&P 500 fell 10.97, or 0.84%, to close at 1,293.37.

Hunting party for WaMu

Shares of Washington Mutual (NYSE: WM) dropped $1.05, or 8.93%, to close at $10.71 as market watchers wondered if it would be the next victim of the mortgage crisis.

A market source suspects a hunting party is forming to snag WaMu in the same vein as Bank of America's grab of Countrywide Financial Corp.

The source sees the scenario playing out between, perhaps JPMorgan, and the Federal Reserve.

"...The Fed gives the buyer, maybe JPMorgan, the nudge" or some behind-the-scenes assurance that JPMorgan will be taken care of, then: "[WaMu] shareholders get JPMorgan [stock] at some discount to current WaMu trading price ... The winners here are WaMu preferreds and its debt holders," he said.

Microsoft would make room for Yahoo!

Yahoo! (Nasdaq: YHOO) stock tacked on $0.33, or 1.15%, to end the day at $29.03 as Microsoft's (Nasdaq: MSFT) chief executive officer Steve Ballmer said any existing Microsoft affiliates will be shut down or consolidated if they are made redundant by a successful bid for Yahoo!

Shares of Microsoft added $0.30, or 1.09% to close at $27.87.

Meanwhile, IBM (NYSE: IBM) will likely meet its 2010 earnings goals, said chief executive officer, Sam Palmisano, according to the New York Times.

Yet, Palmisano also said his company will not enter the market to make a large acquisition, such as Yahoo!, but rather focus on smaller purchases.

IBM's typical acquisitions range in size from tens of millions of dollars to several hundred million dollars, the report said.

Shares of IBM added $1.42, or 1.26% to close at $113.94.

Deutsche Telekom has Sprint's number?

Sprint Nextel (NYSE: S) shares were better by $0.21, or 3.09%, to end the day at $7.01 as rumors continued to run about a takeover by Bonn, Germany-based Deutsche Telekom (NYSE: DT), which also owns T-Mobile.

Deutsche Telekom stock slipped $0.07, or 0.38%, to $18.18.

On Tuesday, Deutsche Telekom announced the purchase of Siemens's wireless modules business as part of a leveraged buy out, according to a company press release.

Pilots renew talks, new detractor enters

Delta Air Lines (NYSE: DAL) stock dropped $0.61, or 4.52%, to close at $12.89 and shares of Northwest Airlines (NYSE: NWA) fell $0.73, or 5.27%, to finish at $13.13 as the Pension Benefit Guaranty Corp. put another obstacle in the flight path of the airline merger.

The pension insurer requested being part of the discussions between the passenger carriers in order to determine if the new entity will have the assets to cover outstanding pensions.

However, the heads of the unions representing each company's pilots agreed to more talks to make another attempt to blend the two seniority ladders.

Infogrames has pole position for Atari bid

Shares of Atari (Nasdaq: ATAR) ended unchanged at $1.66 as its majority stakeholder, Lyon, France-based Infogrames Entertainment SA, announced its offer to buy the rest of the outstanding shares for $1.68 per share, according to a press release.

A special board committee of the New York-based video game producer will review the offer.

Pharmion closes with Celgene

Pharmion (Nasdaq: PHRM) shares were better by $1.17, or 1.64%, to end at $72.32 after it announced it has closed its $2.9 billion deal for cash and stock with Celgene (Nasdaq: CELG).

Shares of Celgene added $1.83, or 3.33%, to finish the session at $56.76.

The deal amounted to $72 per share.

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