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With rumors of bankruptcy swirling, the shares of Hartford Financial Services Group Inc (NYSE: HIG) have plunged over the past few weeks. Hey, if AIG (NYSE: AIG) can implode, why not the others?

Well, the death of Hartford has been greatly exaggerated. Today, the company announced that it received a $2.5 billion capital infusion from Allianz, a mega German financial firm. Despite today's huge drops in the markets, Hartford's shares spiked 16% to $31.88.

The deal is certainly beneficial to Allianz, which gets preferred stock (that converts to common shares at $31 a piece) as well as junior subordinated debentures (there are also warrants to buy $1.75 billion of Hartford at $25.32). Yet, it's still a nice boost for Hartford.

Essentially, Hartford has an extensive portfolio of investments, which have suffered declines (it looks like the recent carnage in hedge funds was a big contributor). In fact, the company believes that there will be a Q3 loss of $8.50 to $8.80 per share.

But, with the capital infusion, Hartford should weather the storm – as well as be positioned to deal with possible credit downgrades (there will be $3.5 billion in excess capital). What's more, there may be opportunities to capitalize on the wreckage. After all, AIG is preparing to sell a large number of assets.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He is also the founder of BizEquity, a valuation website

It appears that the New York Fed is stepping in to help decide whether Citigroup (NYSE: C) or Wells Fargo (NYSE: WFC) will end up buying Wachovia (NYSE: WB). Both banks have made offers. Citigroup says its deal came first. Wells Fargo says its deal is better for shareholders and the FDIC.

According to The Wall Street Journal, "Under the leading plan being discussed Sunday night, Citigroup and Wells Fargo would divvy up Wachovia's network of 3,346 branches along geographic lines." The FDIC would give no backing for Wachovia's assets.

The intervention by the Fed looks a bit more like the government socialism that has basically put the Fed and Treasury in charge of the banking system. In Wachovia's case it may be absolutely necessary. Maybe.

Wachovia's shares had lost 90% of their value before Citigroup made its bid. Because of the toxic assets on it books, Wachovia might have failed the way Washington Mutual did. The government would be left to help pick-up the pieces.

A long legal battle between Citigroup and Wells Fargo could leave Wachovia to fail.

But would its failure be such a bad thing? The FDIC might have to put in a huge sum to protect depositors. Then it could auction off the branch system. The toxic assets might be sold to a vulture fund with some government guarantees.

A lot of people would lose jobs, but is it the Fed's job to keep them employed? No.

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

U.S. stock futures fell Monday morning, indicating a sharply lower open on Wall Street as the world's financial crisis rather than get a boost from the $700 billion rescue plan, seemed to have deepened in Europe. This as well as economic fears depressed world markets. Most major global markets plunged at least over 4%.

Wachovia Corp. (NYSE: WB) -- After a lower court decided in favor of Citigroup (NYSE: C), a state appeals court blocked the ruling late Sunday night, thus tilting the battle over Wachovia in favor of Wells Fargo (NYSE: WFC). Both banks want Wachovia for its deposits and branches. Despite that, WB shares are down about 18% in pre-market trade, WFC's down 2.7% and C's down 3.7%.

Bank of America (NYSE: BAC) -- a subsidiary has agreed to modify loans to tens of thousands of borrowers -- previously Countrywide Financial clients -- in 11 states that would enable them to keep their homes, or even help them move to a new home. If all 50 states were to join, the settlement could provide $8.7 billion in relief to 400,000 borrowers. BAC shares are down 4.3% in pre-market action.

National City Corp. (NYSE: NCC) shares are down over 22% in pre-market action as its debt was downgraded by Fitch Ratings.

No industry has cash flow like the tobacco industry. Making cigarettes costs very little compared to what the consumer pays. With a few plant upgrades, there is not much capital expense. Many tobacco firms have operating margins of 20%.

That made it all the more shocking that Altria Group (NYSE: MO) said it would delay buying UST Inc. (NYSE: UST) because of concerns about the credit market. Altria is considered one of the most stable large companies in the U.S. According to The Wall Street Journal (subscription required), "While attention has been focused on problems in the market for short-term loans or lending between banks, the Altria situation shows that even highly rated companies borrowing money for standard purposes such as acquisitions are having trouble getting funding."

The transaction for UST was valued at just over $10 billion, but the company had $2 billion in revenue and almost $900 million in operating income last year. The firm only has $1 billion in long-term debt.

If the Altria buyout can be scuttled by the credit crisis, any deal can be. More pending M&A transactions may be delayed or killed, even if both companies in a marriage are healthy.

Things has gotten that bad.

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

Google Inc. (NASDAQ: GOOG) and Yahoo! Inc. (NASDAQ: YHOO) agreed to delay their advertising sales partnership while the Justice Department reviews the deal. The news may look like a retreat by Google, but it undermines one of the key reasons Yahoo! gave for staying independent from Microsoft Corp. (NASDAQ: MSFT). Google was going to improve Yahoo!'s revenue.

It looks like there is some chance the partnership will not happen at all. That would justify the fact that Yahoo!'s stock is down by more than half from its 52-week high. Yahoo! indicated that the wait might be short. "The companies have agreed to a brief delay in implementing this agreement to continue our ongoing discussions with the (U.S.) Department of Justice," Yahoo! said in a statement. "We have had discussions with regulators and look forward to responding to their questions about this agreement."

The trouble is that Justice can take its own time. It's under no pressure to give an answer in short order. The news also begs the question of whether the two companies will wait for antitrust reviews in the EU and Canada.

Each day that passes without Yahoo! having a sales relationship in place with Google is a day its earnings do not recover.

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

So, Take-Two Interactive (NASDAQ: TTWO) has had enough of arbitrage. According to reports, management decided that it will remain an independent entity after all. You'll recall that the software publisher was being courted by Electronic Arts (NASDAQ: ERTS). That relationship never panned out. Take-Two said "give us more money, EA." And EA apparently said "no way." It was interesting while it lasted. And if you had sold out of Take-Two when the offer was made oh-so-long ago, you made money. Hopefully you aren't still holding the shares.

I don't know why Take-Two didn't decide to cash out, especially when it was becoming apparent that the economy was headed for a severe downturn. I mean, you would think that executives in a company such as this would have more information than I do and would have known where things may have been headed, or at least have a strong indication. Let's face it: Take-Two is an investment/trading idea based on the notion, in part at least, that it's going to be taken out at some point. Otherwise, you've got one big intellectual property, Grand Theft Auto, to get excited about. Now, truth be told, I know and you know that the company has a little more than just that. There's BioShock, for one thing. But this is the perception on Wall Street, and it's a hard one to fight. And since I already own Activision Blizzard (NASDAQ: ATVI), I don't think, at this juncture at least, I'd want to invest in a second game-software publisher. I'd be going for a shorter-term trade. That line of thinking kind of makes me wonder why management didn't decide to trade out of Take-Two months ago. Oh, I forgot. Greed. Hey, greed might be good, but it isn't always smart.

I don't think Take-Two will remain independent forever. It'll be bought out sometime in the future. Someone will want Grand Theft Auto. Will EA come back to the table? That's a strong possibility. Maybe Microsoft Corporation (NASDAQ: MSFT) or Sony Corporation (NYSE: SNE) will make a bid. Doesn't matter who it is, it'll happen. Just not now, maybe. However, I personally wouldn't consider entering Take-Two's shares until they drop much further from current levels. Below $9 a share would be a cool price.

Disclosure: I own Activision Blizzard; positions can change at any time.

When IHOP acquired Applebee's to form DineEquity (NYSE: DIN) back in July of 2007, I wrote this:

Maybe IHOP can work some magic and turn the chain around, but it might be difficult. The company is financing the entire acquisition with debt, and may not be so quick to provide the face lift the restaurants so badly need.

But then again, IHOP's revenue in 2006 was lower than it was in 2002. So maybe this is a case of two drunken sailors trying to hold each other up. There's nothing much to get excited about for shareholders of either company.

Since then the stock has gone from around $60 per share to $16, and Robinson Humphrey analyst Christopher O'Cull wrote in a note to investors that turning around Applebee's and refranchising stores to pay down debt is hardly an easy bet: "Even in a favorable economic environment this plan would be difficult to execute with little precedent within the restaurant industry. Now, given the weakening consumer backdrop coupled with tightening credit conditions this task will prove even harder." More ominously, O'Cull warned that if the company is unable to refranchise stores quickly, it may have to reduce its debt load "in a fashion that would be materially dilutive to equity holders." And with the stock price in the toilet, the timing couldn't be worse.

I don't take too much credit for being skeptical of the deal: betting on the failure of a large scale acquisition is like betting on Tiger Woods to make the cut at a Hooters Tour event.

A good rule of thumb that will save you from a lot of disaster: when a company you own announces a major acquisition, sell the stock.

And you thought it would be easy. Nothing ever is. Citigroup Inc. (NYSE: C) has issued a statement recently saying "Wachovia Corp. (NYSE: WB)'s agreement to a transaction with Wells Fargo & Co. (NYSE: WFC) is in clear breach of an Exclusivity Agreement between Citi and Wachovia. In addition, Wells Fargo's conduct constitutes tortious interference with the Exclusivity Agreement."

The exclusivity agreement also guarantees that Wachovia will not enter into a transaction with a third party, including any discussions or negotiations. Moreover, it "provides that the parties would be irreparably harmed by any breach of the agreement..." Citi claims it has also been providing liquidity support to Wachovia Bank since Monday's announcement.

Citigroup shares plunged about 11% earlier in the day, but are now recovering somewhat, down "only" 9.2%. Meanwhile WB shares remain up around 70% but saw a dip when the Citi statement was issued. WFC shares are about 5% higher.

If this is the case and Citi has "substantial legal rights" here and the $15.4 billion stock swap deal -- $7 per share of Wachovia, or 79% over Thursday close -- between Wells Fargo and Wachovia is terminated, as per Citi's demand, we will definitely see Wachovia shares go lower. Still, regulators might get involved. While Citigroup believes regulators will intervene on its behalf and the FDIC director even said so, that might not be the case as the Wells Fargo deal is superior to the one Citi offered. Not only is Wells Fargo buying all of Wachovia's operations, but it doesn't require FDIC guarantees. Citi was going to buy just the banking operations and required FDIC guarantees.

If the deal with Well Fargo remains, though, Citi will be hurt as the transaction would have propped up its deposit base and improved its balance sheet. Citi stock might decline even further.

I just find it odd that banks are actually fighting over a distressed Wachovia in these times. Perhaps this is a good sign?

Wachovia (NYSE: WB) changed direction early this morning as it left behind an FDIC maneuvered deal with Citigroup (NYSE: C), deciding to hitch up with the Wells Fargo's stagecoach instead. It was announced they have "signed a definitive agreement for the merger of the two companies including all of Wachovia's banking operations."

Wells Fargo (NYSE: WFC) last night presented Wachovia with a signed and board-approved offer to purchase Wachovia Corporation as an intact company and without government assistance in a stock-for-stock merger transaction. Under the Wells Fargo proposal, each share of Wachovia common stock will be exchanged for 0.1991 shares of Wells Fargo common stock, representing a value of $7 per share, based on Wells Fargo's closing stock price on Oct. 2, 2008.

The deal valued at about $15 billion, means Wachovia will combine with the only AAA-rated financial institution in the United States.

IN pre-market activity Wahovia and Wells stocks are up while Citi's is down 10%.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of WFC.

U.S. stock futures are higher, indicating stocks will likely continue their wild ride today, but perhaps end the week on a positive note. All this as Wachovia found another buyer, and ahead of the vote in the House on the bailout plan and payroll data. Economists expect payrolls to have dropped 110,000 in September, while unemployment rate should stay at 6.1%. September non-manufacturing ISM will also be released today.

Wachovia Corp. (NYSE: WB) dumped Citigroup (NYSE: C) and the deal arranged by the FDIC, instead announcing it signed a definitive agreement for a merger with Wells Fargo & Company (NYSE: WFC) that includes all of Wachovia's banking operations. WB shares are jumping 66% in pre-market trading, WFC up 2.4%, C down 6.6%.

UBS (NYSE: UBS) - fitting that on a day when payrolls are expected to show such a big drop UBS said it is cutting another 2,000 jobs at its troubled investment bank and closing most of its commodities business.

Yahoo! Inc. (NASDAQ: YHOO), however, said Thursday it isn't considering job cuts. But the comany continues to struggle in the current environment, looking for ways to further cuts costs and restructure operations. So job cuts may be on the agenda after all. YHOO stock set a new 52-week low of $15.54 Thursday, but this morning is up 2.7% in pre-market trade.

Hewlett-Packard (NYSE: HPQ - option chain) shares are falling today after the computer giant announced it has agreed to purchase LeftHand Networks, a small Colorado firm specializing in data storage. Companies are generally depressed when they make acquisitions, but often times an economic downturn offers a great opportunity to expand. If you think that the stock won't fall by too much, then now could be a good time to look at a bullish hedged trade on HPQ.

HPQ opened this morning at $44.27. So far today the stock has hit a low of $41.95 and a high of $44.30. As of 12:10, HPQ is trading at $43.00, down $1.95 (4.4%). The chart for HPQ looks neutral and S&P gives HPQ a very positive 5 STARS (out of 5) strong buy ranking.

For a bullish hedged play on this stock, I would consider an October bull-put credit spread below the $37.50 range. A bull-put credit spread is an options position that combines the purchase and sale of put 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 5.3% return in just two weeks as long as HPQ is above $37.50 at October expiration. Hewlett-Packard would have to fall by more than 13% before we would start to lose money. Learn more about this type of trade here.

HPQ hasn't been below $39.99 at all in the past year and has shown support around $41 recently.

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 controls a bullish hedged position in HPQ.

Things in the $1.7 trillion Commercial Paper (CP) market have not been great in recent weeks. These month-long loans are suddenly costing CP issuers much more than they have in the past -- for instance on Monday CP rates rose 1.71 percentage points to 3.95%. And during normal CP markets, issuers replace their old loan with new ones -- it's called rolling over the loan. But what if an issuer went to roll over its CP and nobody was willing to play any more? Then the issuer would need to come up with the money from some other source -- and in a big hurry.

This problem is spooking General Electric Company (NYSE: GE) and other companies in the CP market. GE has $90 billion worth of CP and it could be in trouble if it can't roll it over. By the end of today it should have a total of $34 billion in cash. How so? Yesterday it raised $3 billion from Warren Buffett and it expects to sell $12 billion in common equity this morning -- at $22.25 a share, which is a 9% discount to yesterday's closing price and the same as the strike price of Buffett's GE warrants. (By diluting current shareholders at a below market price, this high cost of capital signals trouble.) GE reported $19 billion in cash at the end of June.

This $34 billion leaves GE $56 billion in the hole if it needs to replace all $90 billion of its CP. The New York Times interviewed anonymous analysts who said GE has enough cash on hand to make up this $56 billion -- possibly from credit lines with banks which represent money that could be borrowed in the event of an emergency. Many consumers with home equity lines of credit have found that they can't get the cash when they want it.

U.S. stock futures were flat to lower Thursday morning following the senate approval of its version of the $700 billion bailout package. Meanwhile, the Federal Reserve said it was considering a rate cut. Following all the economic data released Wednesday indicating the U.S. is in a recession, this isn't surprising. The ECB is also meeting today to consider its move. Today, the Labor Department will report weekly initial jobless claims and the Commerce Department will release August factory orders. Regulators also extended the ban on short-selling shares of some 800 financial companies.

UBS (NYSE: UBS), which has been hard hit by the credit crisis, said Thursday it expects to return to profit in the third quarter after four quarters of losses. The bank has substantially reduced its exposure to U.S. commercial and residential mortgages. The bank wrote down more than $40 billion and raised close to $30 billion.

Mosaic (NYSE: MOS) shares are down about 20% in pre-market trading after it missed analyst estimates when it reported its fiscal first-quarter earnings.

Marriott International (NYSE: MAR) was expected to report earnings of 32 cents a share in the third quarter. The company reported 34 centsearnings per share excluding an 8 cents adjustment.

The story of ImClone Systems Inc. (NASDAQ: IMCL) in its endeavor to sell itself surely feels by now like a never-ending saga, with twists, derisive comments from management and even a mystery. I guess that with Carl Icahn at the helm it's not surprising; he would always try to get the best price he could.

After Icahn announced nearly a month ago that ImClone has a mystery suitor that would pay $70 a share to Bristol-Myers Squibb (NYSE: BMY)'s offer of $60 a share, today the mystery was unraveled and the suitor revealed. (I must admit I was somewhat skeptical, almost thinking this was some sort of tactic by Icahn to get to BMY, but he was serious.) While Pfizer Inc. (NYSE: PFE) has been the name most tossed around as the likely candidate, another name that's been cited -- Eli Lilly and Co. (NYSE: LLY) -- turned out to be the one.

As it was, after a rival buyer was revealed, Bristol indeed increased its bid for ImClone to $62 per share last week, but since Icahn insisted the unnamed large pharma company was willing to pay much more, he exchanged some very colorful comments with Bristol's chief.

The Wall Street Journal finally reported this afternoon it is Lilly that is in advanced talks to acquire ImClone for about $6.1 billion. There's no doubt Lilly would benefit from ImClone's one and only product, Erbitux -- a lucrative cancer drug. Also, as Lilly sees its drugs come off patent, and with its own poor pipeline of cancer drugs -- not to mention its recent troubles getting new drugs past the FDA -- this acquisition would make sense.

The deal's deadline is tonight. If Lilly indeed issues a formal offer, I bet Icahn hopes Bristol would increase its offer as not only does BMY already own about 17% of ImClone, it also co-markets Erbitux, and is simply seen by many as the natural buyer. I doubt we've seen the last of this story.

Venture capitalists (VCs) are supposed to take the long view of things. Even fast-growing companies like Cisco (NASDAQ: CSCO) and Google (NASDAQ: GOOG) can take awhile to get traction. Of course, it's worth the wait as the returns can be staggering.

But there's now a big problem for VCs: even if their portfolio companies are doing well, there are few opportunities to cash out. Simply put, the key exit markets – IPOs and mergers & acquisitions – are in deep freeze.

Just take a look at the latest statistics from Dow Jones VentureSource. For Q3, VCs got only $4.75 billion in exits from IPOs and M&A deals. This represents a 66% plunge from the same period a year ago.

Interestingly enough, the only VC-backed company to go public in Q3 was Rackspace Hosting (NASDAQ: RAX), and this deal was fairly lackluster.

In fact, at the current pace, it appears that this year will be the worst for IPOs and M&A deals – that is, since the dot-com bust.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He is also the founder of BizEquity, a valuation website