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Closing Bell: Sabre Holdings


How does a billionaire celebrate his 87th birthday? If you're Kirk Kerkorian, you play tennis at your Beverly Hills mansion, share a small cake, and launch a $7.9 billion takeover. The 57% owner of MGM Mirage (MGG), Kerkorian will become gambling's biggest player if his bid for Mandalay Resort Group (MBG) is approved by state and federal regulators, as expected. Kerkorian would control about 10 of the 17 largest casinos on Sin City's famed Strip.

But Kerkorian's deal-making may not end there: His 73%-controlled Metro-Goldwyn-Mayer (MGM) is in talks with Sony Entertainment (SNE) that could lead to a $5 billion bid for the studio. General Electric's (GE) NBC Universal unit and Time Warner (TWX) are also said to be interested in MGM and its library of 4,000 films, including the James Bond franchise. As for Kerkorian, he's likely to buy stock to help MGM Grand buy Mandalay just weeks after the casino issued a special dividend that netted its majority share-holder $1.4 billion. "Kirk is not a man who likes to sit on a lot of cash," says one associate.

Corrections and Clarifications

"Roll them bones" (In Biz This Week, June 28) should have said that Kirk Kerkorian was paid an extraordinary $1.4 billion dividend by Metro-Goldwyn-Mayer studio, not MGM Mirage casino.

The Federal Trade Commission's popular do-not-call list has reined in telemarketers, but a similar registry won't work for junk e-mail, the agency says. On June 15, the commission told Congress that spammers would ignore the list or, worse, use it to mine e-mail addresses. "You're spammed if you do, spammed if you don't," said FTC Chairman Timothy Muris. The FTC wants government and industry to create a system to authenticate the source of e-mail, which would prevent spammers from evading filters. Internet service providers already are exploring ways to verify an e-mail's sender, but a solution could be years away.

A feud with the Justice Dept. over its attempted acquisition of rival PeopleSoft (PSFT) doesn't appear to be hurting database giant Oracle's (ORCL) ability to turn a profit. In the fiscal quarter ended May 31, revenues were up 8.3%, to $3.08 billion, while net income grew 15%, to $990 million. Thanks to an increase in high-margin businesses like software subscriptions, Oracle's operating margin hit 46%, a record. Chief Executive Lawrence Ellison predicts it will keep growing as Oracle's business is "reshaped." One area with room for improvement: new applications sales, which dropped 6.1%. A takeover of PeopleSoft would bolster Oracle's applications business, but Justice is suing to block the deal. And even if it prevails in the federal trial now under way in San Francisco, Oracle still must win over PeopleSoft shareholders.

Boeing's (BA) defense business has overcome scandal and archrival Lockheed Martin (LMT) to supply the U.S. Navy with the next-generation submarine-hunting airplane. The initial development contract is for $3.9 billion, but the deal could be worth up to $15 billion. The first delivery of the so-called Multi-Mission Maritime Aircraft program isn't expected until 2009, with production not revving up until 2013. In the meantime, the award should boost morale at Boeing's $27 billion Integrated Defense Systems. The unit recently lost a multibillion-dollar Air Force contract to build aerial refueling tankers after it admitted to possessing nearly 40,000 pages of proprietary Lockheed documents.

The bankruptcy clouds are growing more ominous at Delta Air Lines (DAL). Adding to labor woes and sky-high fuel costs, the Atlanta airline is facing more competition from low-cost carriers. On June 16, Independence Air, a startup based at Dulles International Airport outside Washington, D.C., launched cut-rate service on some Delta routes. That's one reason Delta will reduce flights at its low-cost unit, Song, in September. Delta Chief Executive Gerald Grinstein continues to warn about the risk of bankruptcy and has hired consultants to fix Delta's debt-ridden balance sheet. Still, his cost-cutting may be too late.

-- Goodyear (GT) delayed the release of its quarterly results.

-- Bond trading results helped lift Bear Stearns' (BSC) quarterly profits by 24%.

-- China's Commerce Ministry ruled that Corning (GLW) dumped optical fiber products in China.

Shares of Sabre Holdings (TSG) rose 10% on June 15, to $27.97, after the travel technology outfit said second-quarter profits will be "significantly better" than earlier Wall Street forecasts of 29 cents to 34 cents a share. Even its once-troubled Travelocity Web siteis profitable.


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