MOST NOTEWORTHY:

• Lehman downgraded shares of Barclays(NYSE:BCS)to Equal Weight from Overweight as they believe the uncertainty of more write-downs will weigh on the stock.
  
• Ladenburg Thalmann downgraded shares of Merrill Lynch (NYSE:MER) to Sell from Neutral as they believe disruptions in cash and hedge markets will result in lower than expected earnings. The firm lowered MER's EPS estimates and target to $39 from $49.
  
• Goldman cut Akamai (NASDAQ:AKAM) to Sell from Neutral based on valuation and competitive pressures.

• Merrill downgraded Semtech (NASDAQ:SMTC) to Sell from Neutral.
  
• Piper downgraded CDC Corp (CHINA) to Neutral from Buy.
  
• American Electric Power (AEP) was lowered at Jefferies to Hold from Buy.

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Goldman Sachs cut Akamai Technologies (NASDAQ:AKAM) to "sell" from "neutral", according to MarketWatch. The financial site also reports that Lehman Bros.cut Barclays (NYSE:BCS) to "equal weight" from "overweight."

Oppenheimer initiated Apple (NASDAQ:AAPL) with a rating of "outperform" and a price target of $235, according to Briefing.com. The news service also reports that Ladenburg Thalman downgraded Lehman (NYSE:LEH) and Merrill Lynch (NYSE:MER) to "sell" from "neutral".

Douglas A. McIntyre is an editor at 247wallst.com.

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Goldman Sachs has added Amazon (NASDAQ: AMZN) to its "conviction buy" list, according to MarketWatch. The financial website also reports that Goldman Sachs lifted its view on U.S. semiconductors to "attractive" from "neutral."

Citigroup downgraded Akamai (NASDAQ:AKAM) to "hold" from "buy," according to Briefing.com. The news service also reports that Citigroup upgraded Texas Instruments (NYSE: TXN) from "hold" to "buy."

Douglas A. McIntyre is an editor at 247wallst.com.

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• PDUFA date for Genentech, Inc. (NYSE: DNA) and Roche Holding Ltd. (OTC: RHHBY)'s supplemental Biologics License Application for Herceptin for label expansion to include AC followed by docetaxel in treatment of adjuvant HER2+ breast cancer.
• PDUFA date for Shire plc (NASDAQ: SHPGY) and New River Pharma's supplemental New Drug Application for Vyvanse (NRP-104) treatment of Attention Deficit Hyperactivity Disordre, or ADHD, in adult patients 18-55 years old; the drug is already approved for pediatric ADHD ages 6-12.
• Verizon Communications Inc. (NYSE: VZ) to report Q earnings; conference call at 8:30am.
• Tyson Foods, Inc. (NYSE: TSN) to report Q2 earnings; conference call at 9:00am.

• Two-day FOMC meeting beginning at 8:30am.
• PDUFA date for Merck & Co., Inc. (NYSE: MRK)'s New Drug Application for Cordaptive (MK-0524A) adjunctive therapy to diet for treating elevated LDL Cholesterol, low HDL Cholesterol and elevated triglycerides levels.
  
• PDUFA date for Sucampo Pharmaceuticals, Inc. (NASDAQ: SCMP)'s supplemental New Drug Application for dose of 8mg treatment of Irritable Bowel Syndrome with Constipation; already approved for Chronic Idiopathic Constipation at 24ug dosage.
• BP plc (NYSE: BP) to report Q1 earnings; conference call at 10:15am.
• United States Steel Company (NYSE: X) to report Q1 earnings; conference call at 2:00pm.

• Second day of two-day FOMC meeting.
• Kraft Foods, Inc. (NYSE: KFT) to report Q1 earnings; conference call at 8:00am.
• Akamai Technologies, Inc. (NASDAQ: AKAM) to report Q1 earnings; conference call at 4:30pm.
• Starbucks Corporation (NASDAQ: SBUX) to report Q2 earnings; conference call at 5:00pm.

• PDUFA date for Discovery Laboratories, Inc. (NASDAQ: DSCO). On Nov 16, 2007, FDA established May 1, 2008 as its target date to complete its review of Surfaxin New Drug Application for prevention of Respiratory Distress Syndrome in premature infants.
• Comcast Corporation (NASDAQ: CMCSA) to report Q1 earnings; conference call at 8:30am.
• Exxon Mobil Corporation (NYSE: XOM) to report Q1 earnings; conference call at 11:00am.

• SEC Advisory Committee to meet at 9:00am on Improvements to Financial Reporting.
• PDUFA Date for The Medicines Company (NASDAQ: MDCO) New Drug Application, NDA for Cleviprex for treatment of Hypertension.
  
• PDUFA Date for Akorn, Inc. (NASDAQ: AKRX) for Akten Ophthalmic Gel, an ocular anesthesia.

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MOST NOTEWORTHY:

• Deutsche Bank upgraded shares of UBS AG (NYSE: UBS) to Buy from Hold after the company announced further write-downs and plans to boost capital.
  
• Jefferies upgraded shares of Ansys (NASDAQ: ANSS) to Buy from Hold as they like the Ansoft (NASDAQ: ANST) acquisition and feel yesterday's sell-off creates an attractive entry point.
  
• AstraZeneca (NYSE: AZN) was raised to Neutral from Underweight at JP Morgan following the positive Crestor study results.

• Piper raised Akamai (NASDAQ: AKAM) to Buy from Neutral.
  
• Goldman upgraded Hansen Natural (NASDAQ: HANS) to Buy from Neutral.
  
• Vertex Pharma (NASDAQ: VRTX) was raised to Market Perform from Underperform at Wachovia and to Outperform from Neutral at Baird.

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MOST NOTEWORTHY: Limelight Networks, Diebold and Charles & Colvard were today's noteworthy upgrades:

• Jefferies upgraded shares of Limelight Networks (NASDAQ: LLNW) to Hold from Underperform on valuation and believes it impossible to know what will happen to the company from here. On the downside, Jefferies notes a permanent injunction means the business is nearly worthless, but on the upside, is the possibility of sale to Akamai (NASDAQ: AKAM) or a large telecomm service provider.
• Baird raised Diebold (NYSE: DBD) to Outperform from Neutral citing expectations of a higher bid from United Technologies (NYSE: UTX).
• Merriman upgraded shares of Charles & Colvard (NASDAQ: CTHR) to Buy from Neutral on valuation, as they believe the current share price does not account for the potential wholesale value of the company's manufactured inventory and method patent. They believe Charles & Colvard is a potential acquisition target.

OTHER UPGRADES:

• Goldman raised Eaton (NYSE: ETN) to Conviction Buy from Neutral and added Royal Caribbean (NYSE: RCL) to its Conviction Buy List.

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Akamai Technologies (NASDAQ: AKAM) is recently up 89cents to $34.29 on unconfirmed takeover chatter. AKAM offers services for accelerating content and business processes online. AKAM March 35 calls have traded 191 times on transaction volume of 6,671 contracts. AKAM March 40 calls have traded 84 times on transaction volume of 3,233 contracts. AKAM March option implied volatility of 48 is below its 26-week average of 54 according to Track Data, suggesting decreasing price fluctuations.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

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MOST NOTEWORTHY:

• William Blair initiated American Public Education (NASDAQ: APEI) with an Outperform rating, as they believe the company is still in the early stages of its growth.
  
• Gabelli believes Micrus Endovascular (NASDAQ: MEND) can sustain its rapid growth in the coming years and does not expect it to remain independent in the medium-to-long term. The firm started shares with a Buy rating.

• Carrizo Oil & Gas (NASDAQ: CRZO) was initiated with a Neutral rating at JP Morgan.
  
• Goldman initiated Akamai (NASDAQ: AKAM) with a Neutral rating.

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Wal-Mart (NYSE: WMT) is trading down almost 4% on weak January same-store sales.

Cisco (NASDAQ: CSCO) is off over 8.5% on weak guidance.

EDS (NYSE: EDS) is down over 6.5% due to poor earnings.

Akamai (NASDAQ: AKAM) is up over 3.6% on numbers that beat forecasts.

Level 3 (NASDAQ: LVLT) is trading up almost 3% on strong earnings.

Douglas A. McIntyre is an editor at 247wallst.com.

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Akamai (NASDAQ: AKAM) closed at $29.72 Tuesday.

AKAM offers services for accelerating content and business processes online. AKAM will report Q4 EPS on February 6.

Think Equities says: "Share price more than fully reflects perceived industry risks, and recent levels of pessimism (and speculation) surrounding the company are unwarranted."

AKAM February option implied volatility of 81 is above its 26-wek average of 55 according to Track Data, suggesting larger price fluctuations.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

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Level 3 Communications (NASDAQ: LVLT) is one of the most widely traded and widely shorted stocks of any listed on a U.S. exchange. Average daily volume in the shares is over 41 million, and shares sold short as of mid-December were over 167 million. That is tops of all companies listed on the Nasdaq.

Level 3 would appear to be in a good business. It has 50,000 miles of IP backbone to transport voice, data, and video. It provides services to the country's largest cable and telecom companies.

Level 3 has taken a beating in 2007 falling form $6.80 to just above $3. Wall Street has to wonder how it gets back toward $7.

For starters, the company has to stop making an acquisition a month. The company's Level 3's latest 10-Q lists seven deals. It is not unfair for Wall Street to be concerned about the pace of these purchases, especially since Level 3 does not make money. In the September quarter, the company had an operating loss of $53 million on revenue of $1.061 billion. Level 3 also made $138 million in interest payments on its $6.8 billion in long-term debt.

The company has one large asset it could sell and that may have some real value. It has a content delivery business not unlike that of Akamai (NASDAQ: AKAM). In the last quarter, it brought in about 10% of the company's revenue. A sale of the unit could be used to reduce debt. The value of the business has a much higher multiple than Level 3 itself. LVLT has a sales to market cap ratio of .6x. Akamai's is 20x. Even with an adjustment for Level 3's debt, that is a very big difference. Even at 10x multiple of revenue, the content delivery operation could be worth $1 billion.

Level 3 is going to have to show investors that its M&A days are behind it and that it is willing to focus on the business of charging for use of its broadband "pipe." Being in other lines of work only hurts the shares.

Douglas A. McIntyre is an editor at 247wallst.com.

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For a bearish hedged play on this stock, I would consider a February bear-call credit spread above the $45 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 7.5% return in two months as long as AKAM is below $45 at February expiration. Akamai would have to rise by more than 28% before we would start to lose money. Learn more about this type of trade here.

AKAM has not been above $45 since it fell sharply in July, and shown resistance around $40 over the last month. This trade could be protected by resistance the stock might find at its 200 day moving average, which is currently at $41 and falling.

Brent Archer is an options analyst and writer at Investors Observer. DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in AKAM.

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With the credit crunch, it seems that private equity is losing its luster, right? Maybe not. After all, with better valuations, the opportunities may be looking good.

Today we learned that the vice president and chief financial officer of Internap Network Services (NASDAQ: INAP), David Buckel, is leaving. And, yes, he's exploring opportunities in the private equity space.

Buckel has spent four years at the company, which is an operator of a content delivery network (CDN). Basically, this allows for improved distribution of online content and applications. There are more than 3,500 customers and revenues increased 32.7% to $60.9 million in Q3.

No doubt, this is far from good news for Internap. Keep in mind that the company must compete against fierce rivals, such as Akamai Technologies (NASDAQ: AKAM) and Limelight Networks (NASDAQ: LLNW). In fact, there are some signs of a price war.

So far in today's trading, Internap's stock is down nearly 8% to $10.82.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates DealProfiles.com.

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MAJOR PAPERS:

• According to the Wall Street Journal's (subscription required) "Heard on the Street" column, content firms such as Akamai Technologies (NASDAQ: AKAM) and Limelight Networks (NASDAQ: LLNW) are getting hammered, and there appears to be no letup in sight because while online traffic is up 60% a year over the last few years, those firm's shares are expensive and, says S&P's Scott Kessler, "There's plenty more room for [Akamai and Limelight] to fall."
• TiVo (NASDAQ: TIVO) is looking at a new revenue source -- being paid to give out market research to advertisers, reported the Wall Street Journal. The company plans to announce today that it will add demographic data, including age, income, marital status and ethnicity, about its viewers.
• The Financial Times (subscription required) reported that Ford (NYSE: F) is likely to have to pay any buyer of its Jaguar and Land Rover units because of a $2B pension deficit, according to people close to the situation.

• The New York Times reported that Con Edison (NYSE: ED) was fined $18M for service disruptions in 2006, including the nine-day blackout in western Queens, NY.
• The Associated Press reported that Baidu (NASDAQ: BIDU) is considering listing on the Hong Kong and mainland China stock markets, according to the company's CEO.

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MOST NOTEWORTHY:

• GPC Biotech (NASDAQ: GPCB) was downgraded to Sell from Neutral at Goldman, to Sell from Hold at Deutsche Bank and to Underweight from Overweight at Lehman after the company's phase III trial of satraplatin to treat prostate cancer did not meet its primary endpoint.
  
• Deutsche Bank downgraded shares of Akamai Technologies (NASDAQ: AKAM) to Hold from Buy on valuation following the recent rally as they believe concerns around slowing growth, margins and capital efficiency will limit upside.
  
• Qwest Communications (NYSE: Q) was downgraded to Sector Performer from Outperformer at CIBC and to Neutral from Overweight at JP Morgan following the company's disappointing Q3 results.
  
• Jefferies downgraded shares of Shutterfly (NASDAQ: SFLY) following the better-than-expected Q3 results due to valuation.
  
• Piper downgraded shares of LDK Solar (NYSE: LDK) to Market Perform from Outperform, as they expect higher blended poly cost for the company due to tightening scrap poly supply and increased competition.

• Maxwell Technologies (NASDAQ: MXWL) was downgraded to Underperform from Market Perform at JMP Securities.
  
• UBS downgraded Estee Lauder (NYSE: EL) to Sell from Neutral.
  
• Merrill downgraded CommScope (NYSE: CTV) to Neutral from Buy.
  
• Under Armour (NYSE: UA) was downgraded to Underperform from Market Perform at Raymond James.
  
• RBC Capital downgraded Beckman Coulter (NYSE: BEC) to Sector Perform from Outperform.

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MOST NOTEWORTHY:

• Oppenheimer upgraded shares of Motorola Inc. (NYSE: MOT) to Buy from Neutral on valuation, and is positive on the company's free cash flow generation.
  
• Wachovia raised Paccar Inc. (NASDAQ: PCAR) estimates to Market Perform from Underperform based on better-than-expected European performance.
  
• Citigroup upgraded shares of Pacific Sunwear (NASDAQ: PSUN) to Buy from Hold as they believe the demo division divestiture and improving product execution in core PacSun stores could drive accelerating EPS growth.
  
• Citigroup also upgraded shares of Talbots Inc. (NYSE: TLB) to Hold from Sell on valuation but remains concerned about the company's long-term outlook.
  
• Roth Capital upgraded RightNow Technologies (NASDAQ: RNOW) to Buy from Hold, as they are encouraged by RNOW's Q3 results and raised guidance and believes the worst is behind the company.

• Goldman added Pfizer (NYSE: PFE) to its Conviction Buy List.
  
• Thomas Weisel upgraded Akamai (NADAQ: AKAM) to Overweight from Market Weight.
  
• Lehman upgraded Harley Davidson (NYSE: HOG) to Equal Weight from Underweight.
  
• Gabelli upgraded Coca-Cola Enterprises (NYSE: CCE) to Hold from Sell.

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Akamai

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The Internet is a busy place and sometimes the traffic patterns can stand in the way of business efficiency. There is an outfit in Cambridge, Massachusetts that runs interference for big clients, keeping their Web performances up to proper corporate standards.

Akamai Technologies (NASDAQ: AKAM) provides services for the delivery of enterprise Internet content. Through its network of some 15,000 servers in nearly 70 countries, Akamai analyzes and manages Web traffic, transmitting client content through the server geographically closest to the consumer. The company also offers audio and video streaming services, business intelligence and content targeting applications, as well as on demand pay-as-you-go extra capacity to avoid network congestion during periodic spikes in traffic. Clients include Adobe Systems (NASDAQ: ADBE), FedEx (NYSE: FDX) and XM Satellite Radio (NASDAQ: XMSR).

The stock rose last week, on word the firm had launched a service to boost the speed and quality of e-mail, voice over IP services and file transfers within an organization. The service also speeds up access for employees using wireless and remote fixed-line networks. Akamai said expanding companies need such services, as employees and business partners become more dispersed. AmTech Research subsequently initiated the stock with a "buy" and a $50 price target.

Brokers recommend the issue with four "strong buys", seven "buys", ten "holds" and one "sell". Analysts expect a 30% average annual growth rate, through the next five years. The AKAM Price to Book ratio (4.75), Sales Growth rate (51.79%), EPS Growth rate (328.57%), Operating Margin (20.09%) and Net Profit Margin (14.26%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 89% of the outstanding shares. The stock is one of those used to calculate the S&P 500, the Nasdaq 100 and the AMEX Internet Indexes. Over the past fifty-two weeks, it has traded between $27.75 and $59.69. A stop-loss of $29.50 looks good here. Note that the firm is expected to report third quarter results on October 24th, after the close.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.

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