Movers: Merrill Lynch, Freddie Mac, Fannie Mae, Visa, Morgan Stanley, Adobe Systems

Stocks in the headlines on Wednesday

From Standard & Poor's Equity Research

Merrill Lynch (MER) falls 4.32 to 42.31 on news a Merrill unit sued XL Capital, a unit of bond insurer Security Capital Assurance, alleging the company is attempting to avoid its financial obligations of up to $3.1 billion under seven credit default swaps.

The Office of Federal Housing Enterprise Oversight eased capital requirements for Fannie Mae (FNM) and Freddie Mac (FRE), allowing them to pump up to $200 billion into the U.S. mortgage market. The regulator said it was lowering to 20% from 30% the amount of extra capital the companies had been required to hold after their accounting irregularities, and will consider further reductions.

Visa (V) closes around 56.50, after reaching a high of 69, on its first day of trading. Its IPO was priced at 44, above the expected range of 37-42. The world's largest credit card network sold 406 million class A shares, making this the largest IPO in history.

Morgan Stanley (MS) posts better-than-expected $1.45, vs. $2.17 a year ago, first quarter EPS from continuing operations on 17% drop in consolidated revenue.

Adobe Systems (ADBE) posts $0.48, vs. $0.30 a year ago, first quarter non-GAAP EPS on 37% revenue rise. Says its first quarter non-GAAP EPS target range was $0.44-$0.46. Sees second quarter revenue of $855-$885 million, non-GAAP operating margin of approximately 39%, EPS of $0.45-$0.47. Reaffirms fiscal year 2008 revenue growth target of about 13%, non-GAAP EPS of $1.86-$1.92.

Ericsson (ERIC) falls 1.83 to 17.56 after the company's mobile-phone venture with Sony (SNE), Sony-Ericsson, warned of a first quarter sales shortfall due to slower growth in European markets.

Thornburg Mortgage (TMA) is down 1.19 to 1.79 after it reaches an agreement with a number of its lenders to restructure its obligations and reduce its future margin-call exposure. S&P reiterates hold.

3Com (COMS) schedules a shareholder vote on the existing terms of its pending sale to Bain Capital Partners. S&P thinks the share-price volatility reflects the failure to come to new terms that would be more likely to receive government approval. Maintains hold.

Discover Financial Services (DFS) posts $0.50, vs. $0.54 a year ago, first quarter EPS from continuing operations on higher loan loss provisions, higher interest expense. S&P reduces target, maintains hold.

Capital Corp. of the West (CCOW) falls 4.96 to 5.70 on news it delays filing its Annual Report on Form 10-K for 2007. It says it determined that certain of its loans required an adverse classification, substantially greater provision for possible loan losses, primarily due to rapid decline in real estate values in California's Central Valley in the fourth quarter 2007. Says it had material weaknesses in its credit/lending and accounting functions.

SI International (SINT) is down 5.06 to 19.44. It cuts first quarter EPS guidance to $0.24-$0.27 on revenue of $128-$130 million from previous guidance of $0.31-$0.35 on revenue of $133-$141 million. Notes program delays in the funding and start of several new key programs. It now sees 2008 EPS of $1.40- on revenue of $560-$580 million.

Monster Worldwide (MNST) expects total non-GAAP operating expenses for first quarter to be in the range of $327-$333 million, above current market view, reflecting "significant"