Hacked By-Turka

Dow Closes Down 121, Nasdaq Drops 30

NEW YORK (AP) -- Stocks tumbled after Wal-Mart Stores Inc. said higher gasoline prices curbed customer spending. The news sent many retail stocks lower, while government data showing a larger-than-expected jump in inflation also dampened investor enthusiasm.

According to preliminary calculations, the Dow Jones industrial average fell 120.93, or 1.14 percent, to 10,513.45.

Broader stock indicators also lost ground. The Standard & Poor's 500 index fell 14.53, or 1.18 percent, to 1,219.34, and the Nasdaq composite index fell 29.98, or 1.38 percent, to 2,137.06.

Wall Street is facing increasing evidence that high energy prices, spurred by record crude oil futures, are nipping consumer spending. Wal-Mart stock drooped after the company blamed lower quarterly revenues on higher gasoline prices. Shares of other retailers, including Target Corp., Home Depot Inc. and Limited Brands Inc. dropped as well.

"We are starting to see the bite from some of the risks that have been lurking in the background, like oil," said Hans Olsen, managing director and chief investment officer at Bingham Legg Advisers. "I think it's going to continue to be tougher for this market to do anything positive."

Investors also fretted over the latest reading of the Labor Department's Consumer Price Index, which rose 0.5 percent in July -- the biggest increase in three months and larger than the 0.4 percent hike economists had expected. With food and energy prices removed, "core" CPI rose 0.1 percent.

By Michael J. Martinez

Hewlett-Packard Profits Fall, Beat Views

SAN JOSE, Calif. (AP) -- Hewlett-Packard Co.'s fiscal third-quarter earnings beat Wall Street expectations as the personal computer company's sales improved and its printer business remained strong amid a major corporate restructuring.

The Palo Alto company's earnings, however, fell sharply due to tax adjustments from the repatriation of $14.5 billion in foreign earnings.

For the three months ended July 31, HP earned $73 million, or 3 cents per share, compared with $586 million, or 19 cents per share, in the same period last year.

Excluding $988 million in adjustments related to the cash repatriation, HP earned $1.06 billion, or 36 cents per share, compared with profit of $728 million, or 24 cents per share, in the third quarter of fiscal 2004.

Sales rose 10 percent, to $20.8 billion, from $18.89 billion in the third quarter of fiscal 2004.

On a pro forma basis, the results easily beat Wall Street estimates. Analysts were expecting the company to post earnings of 31 cents per share on sales of $20.47 billion, according to a survey by Thomson Financial.

"I'm encouraged by what we have achieved to date, and we are focused on driving further performance improvements," Chief Executive Mark Hurd said.

For the first nine months of fiscal 2005, excluding special items, HP earned $3.21 billion, or $1.10 per share, on sales of $63.78 billion. In the same period of fiscal 2004, HP earned $2.84, or 92 cents per share, on sales of $58.52 billion.

The results were announced after markets finished regular trading. Earlier, shares of HP fell 39 cents to close at $23.70 on the New York Stock Exchange. They fell 39 cents in after-hours trading.

Over the past 52 weeks, HP has traded between $16.73 and $25.07.

It's been a tumultuous year for HP, a Silicon Valley pioneer that was started in a Palo Alto garage in 1938.

HP's board ousted CEO Carly Fiorina in Feburary and hired Hurd, who was running NCR Corp., in late March. The new chief executive almost immediately started undoing his predecessors changes while embarking on his own reorganization.

In recent months, Hurd has annuled Fiorina's shotgun marriage of HP's PC and printer divisions. He also has reorganized the company's sales force and ended a deal in which HP resold Apple Computer Inc.'s iPod music players.

The biggest move, however, came in July, when he announced plans to cut 14,500 jobs and overhaul HP's retirement plan in a restructuring that he said will save the company $1.9 billion a year and bring its costs closes to its competition.

With a products ranging from digital cameras, televisions and PCs to servers, printers and services, some have questioned whether HP is too big to manage effectively. Hurd has said he is still studying the company's overall strategy.

By Matthew Fordahl

Economy Looking Strong Despite Inflation

WASHINGTON (AP) -- Consumer inflation shot up in July as rising gasoline prices pinched drivers' wallets from coast to coast. But the rest of the economy kept pushing forward with industrial output rising and housing construction staying at a supercharged level.

A flurry of reports Tuesday depicted a country that so far is withstanding this year's surge in energy prices, helped by a continued boom in housing activity, the economy's strongest sector.

Consumer prices jumped 0.5 percent in July, the biggest increase in three months, but the price pressures came almost entirely from surging costs for gasoline and other energy products.

Outside of the volatile food and energy areas, consumer prices rose a much more modest 0.1 percent in July, reflecting in part the biggest drop in new car prices in 30 years.

Meanwhile, the Commerce Department reported that construction of new homes and apartments totaled 2.042 million units in July. While that was down a slight 0.1 percent from June, it marked the eighth month in the past 10 that housing construction has been above the 2-million mark, reflecting frenzied activity on the part of builders to keep up with record demand.

Even manufacturing, the weakest part of the economy, managed to post a 0.1 percent rise in industrial production in July, according to a Federal Reserve report. Analysts said the gain would have been much stronger except for a drop in mining output reflecting hurricane-related shutdowns of oil platforms in the Gulf of Mexico, and retooling in the auto industry.

"Housing, the strongest part of the economy, is still booming, and manufacturing, the weakest part, should gain strength in coming months," said Mark Zandi, chief economist at Economy.com. "Put it all together and it paints a pretty economic picture of solid growth and low inflation."

The 0.5 percent increase in consumer prices followed two months of price calm, reflecting falling energy costs. However, with oil prices hitting new record highs and gasoline costs surging, energy prices came back with a vengeance in July, jumping by 3.8 percent.

Gasoline prices shot up by 6.1 percent, the biggest increase since April. Analysts said motorists should be braced for another big increase in August since the government reported Monday that pump prices rose nationwide to $2.55 per gallon last week, up 18 cents in a week, the biggest one-month increase in the 15 years of the Energy Department survey.

The Labor Department's CPI report showed that rising prices for gasoline, home heating oil and natural gas have not spilled over into high inflation generally.

"Energy is a killer, but if you don't use it, you're not seeing a whole lot of inflation," said Joel Naroff, chief economist at Naroff Economic Advisors, a consulting firm in Holland, Pa.

Outside of food and energy, so-called core prices rose by a tiny 0.1 percent in July, the third straight monthly increase of this small size.

New car prices, given the attractive incentives auto makers offered last month, actually declined by 1 percent, the biggest drop in this category since January 1975.

So far this year, inflation is rising at an annual rate of 3.5 percent, little changed from last year's 3.3 percent gain, while core inflation, excluding food and energy, is up just 2.2 percent.

Davis Wyss, chief economist at Standard & Poor's in New York, said one reason energy has not had much impact on the overall inflation rate is that it is being offset in part by cheap imports of other foreign goods and the amount of energy needed to keep the country running is less now than during the oil shocks of the 1970s and 1980s.

"Energy just isn't as big relative to the economy as it was 25 years ago," Wyss said.

He predicted the economy will grow at an annual rate of 4.5 percent in the current quarter, far above the 3.2 percent April-June increase, as businesses increase production to restock depleted inventories and home construction remains at high levels.

David Seiders, chief economist for the National Association of Home Builders, said he looked for construction activity to remain strong for the next few months as builders struggle to meet demand. "The market is still very, very strong," he said.

For July, housing construction was up in all parts of the country except the South, which had a decline of 5.4 percent.

Martin Crutsinger

Inflation Worries Push Stocks Lower

NEW YORK (AP) -- A bigger-than-expected jump in inflation worried investors and pushed stocks lower Tuesday, while Wal-Mart Stores Inc. added to Wall Street's oil concerns after it said its customers were feeling the pinch from high gasoline prices.

Investors fretted over the latest reading of the Labor Department's Consumer Price Index, which rose 0.5 percent in July -- the biggest increase in three months and larger than the 0.4 percent hike economists had expected. With food and energy prices removed, "core" CPI rose 0.1 percent.

But Wall Street is facing increasing evidence that high energy prices, spurred by record crude oil futures, are starting to hurt consumer spending. In its earnings report, Wal-Mart said its lighter revenues were due to consumers struggling with gasoline prices, which averaged $2.55 per gallon last week.

In the first minutes of trading, the Dow Jones industrial average fell 5.02, or 0.05 percent, to 10,629.36.

Broader stock indicators also lost ground. The Standard & Poor's 500 index dropped 0.49, or 0.04 percent, to 1,233.38, and the Nasdaq composite index lost 6.06, or 0.28 percent, to 2,160.98.

Bonds rose as stocks moved lower, with the yield on the 10-year Treasury note falling to 4.24 percent from 4.28 percent late Monday. The dollar was mixed against most major currencies, while gold prices fell.

Crude oil futures continued to decline from Friday's record highs, but still remained in the mid-$60 range -- high enough to keep gasoline and heating oil prices near record levels. A barrel of light crude was quoted at $66.05, down 22 cents, on the New York Mercantile Exchange.

In one of the few bright spots of the session, investors welcomed the Commerce Department's report on home construction. For July, the number of housing projects started fell slightly to an annualized 2.042 million units, but housing permits issued reached a 21-year high.

Yet investors focused on Wal-Mart and its warnings of future troubles. While the Dow component's earnings beat Wall Street's profit forecasts by 2 cents per share, its revenues missed estimates. The company warned that its third-quarter earnings would be lower than expected, again blaming high gas prices for eating into consumers' spending money. Wal-Mart lost $1.10 to $48.

Fellow Dow industrial Home Depot Inc. fell 47 cents to $41.14 despite reporting a 14 percent jump in quarterly profits that beat Wall Street's expectations by 3 cents per share on strong revenues. The company, apparently avoiding the energy pinch felt by Wal-Mart and other retailers, also increased its profit forecasts for the rest of the year.

Computer maker Gateway Inc. posted a quarterly profit for the first time in three years, but also cut its profit and sales forecasts for the rest of the year. That led analysts at Bear Stearns to cut their rating on the company to "underperform" from "peer perform." Gateway tumbled 16 percent, or 63 cents, to $3.26.

Delta Air Lines Inc. surged 19 percent, or 26 cents to $1.65 after it sold its Atlantic Southeast Airlines unit to SkyWest Inc. for $425 million in an effort to stave off bankruptcy. SkyWest climbed $1.83, or 8.3 percent, to $23.87.

The Russell 2000 index of smaller companies fell 3.08, or 0.46 percent, to 662.56.

Overseas, Japan's Nikkei stock average rose 0.48 percent. In afternoon trading, Britain's FTSE 100 was down 0.14 percent, Germany's DAX index gained 0.41 percent, and France's CAC-40 climbed 0.36 percent.

By Michael J. Martinez

JPMorgan, TD Settle 'Megaclaims' Suit

NEW YORK (AP) -- Two banks agreed on Tuesday to pay at least $420 million to settle their parts of the "Megaclaims" lawsuit filed by Enron against 10 banks, alleging they "aided and abetted fraud" and could have prevented the energy trader's collapse.

JPMorgan Chase & Co. agreed to pay $350 million in cash to Enron Corp. and Toronto Dominion Bank agreed to pay $70 million. The companies also will forgo certain claims in Enron's bankruptcy proceedings while agreeing to pay more money to Enron for the ability to pursue others.

Enron said the bankruptcy claims that are part of the JPMorgan settlement have a value of $660 million, and that the settlement with JPMorgan could reach up to $1 billion. Toronto Dominion agreed to forgo claims value at almost $56 million, while paying $60 million to allow claims valued at $320 million that the company transferred to third parties.

New York-based JPMorgan said it does not expect its settlement, which is subject to the approval of the bankruptcy court, to have a "material adverse impact" on earnings.

"With today's agreement, we have put behind us another significant piece of our Enron exposure," said William B. Harrison Jr., JPMorgan's chairman and CEO, in a prepared statement.

JPMorgan agreed in June to pay $2.2 billion to Enron shareholders to settle its part of a class-action lawsuit, after initially turning down a chance to settle for significantly less.

Earlier this month, Canadian Imperial Bank of Commerce agreed to pay $250 million in the Megaclaims suit, while also agreeing to a $2.4 billion settlement -- the largest so far -- in the class-action lawsuit.

Enron said the settlements announced Tuesday bring payments in the Megaclaims case to $735 million. In addition, banks have agreed to forgo or pay to pursue claims valued at around $3 billion.

Financial institutions still to settle the Megaclaims suit include Barclays PLC, Citigroup Inc., Credit Suisse First Boston Inc., Deutsche Bank AG, and Merrill Lynch & Co

July Inflation Jumps on Higher Gas Prices

WASHINGTON (AP) -- Consumer prices shot up in July, reflecting higher prices for gasoline and other energy products while output at the nations' factories, mines and utilities slowed sharply.

The Federal Reserve reported that industrial production rose just 0.1 percent last, the weakest showing in three months. Output increases at factories and utilities slowed after big gains in June while mining output actually fell.

The overall increase was below what economists had been expecting but they are still looking for solid gains for the rest of the year as factories boost production to restock depleted store inventories.

Meanwhile, the Labor Department reported that its closely watched Consumer Price Index rose 0.5 percent in July, the biggest increase in three months. In July, overall inflation was driven higher by a big 3.8 percent jump in energy costs.

However, outside of food and energy, prices remained well behaved. The core inflation rate edged up by just 0.1 in July. This price category, which is closely watched by the Federal Reserve, was helped in July by a 1 percent drop in new car prices, the biggest one-month decline in more than 30 years.

In another report, the Commerce Department said construction starts on new homes and apartments fell a slight 0.1 percent in July, a possible sign that the red-hot housing market is beginning to cool off.

The decline left housing construction at a seasonally adjusted annual rate of 2.042 million units last month.

The report on industrial production showed a tiny 0.1 percent gain in output at factories, below the 0.4 percent increase in June. Output at utilities rose by 0.7 percent following a giant 4.6 percent jump in June that reflected a return of hot weather that increased demand for electricity. Output at mines, a category that includes oil drilling, fell by 1.3 percent in July, the second decline in the past three months.

Analysts said the big 0.5 percent overall increase in consumer inflation last month was not as serious as it might first appear because outside of energy, prices remained well contained.

"Energy is a killer, but if you don't use it, you're not seeing a whole lot of inflation," said Joel Naroff, chief economist at Naroff Economic Advisors, a consulting firm in Holland, Pa.

So far this year, inflation is rising at a moderate annual rate of 3.5 percent as the explosion in energy costs has not yet triggered underlying inflation pressures. The core rate of inflation, excluding food and energy, is rising at an annual rate of just 2.2 percent so far this year.

But the soaring costs of fuel could have an adverse impact on the economy ultimately if consumers pressed by this higher expense cut back on their spending elsewhere.

The overall moderation in inflation pressures has allowed the Federal Reserve to keep pushing interest rates up gradually rather than being forced to switch to a more aggressive credit tightening. The Fed increased a key interest rate last week for a 10th time over the past 14 months. Economists expect more interest rate increases to follow.

For July, energy costs shot up by 3.8 percent, with gasoline prices rising by 6.1 percent as the pain motorists have been feeling at the pump was mirrored in government statistics.

Energy costs had fallen in May and June after rising sharply in the previous three months. However, the May and June price declines were reversed in recent weeks as global oil prices shot up to new record highs.

Analysts said motorists can expect more price jumps to come as gasoline pump prices have continued to rise in August with the pump price hitting $2.55 per gallon, the Energy Department reported Monday.

Food costs were up a moderate 0.2 percent in July even though the cost of fruits jumped by 2.8 percent.

The moderation in core inflation in July was helped by a huge 1 percent decline in new car prices, reflecting the attractive discounting automakers provided last month to help clear out a backlog of unsold cars.

By Martin Crutsinger

Agilent to sell chip unit and cut jobs

NEW YORK (Reuters) - Agilent Technologies Inc. (A.N: Quote, Profile, Research) on Monday said it would sell its semiconductor unit and its stake in a lighting technology company for a combined $3.6 billion to focus on its measurement products, driving its stock up 14 percent.

Agilent, a leading maker of scientific testing equipment, also reported quarterly earnings at the high end of Wall Street estimates, with cost-cutting outweighing a drop in sales, and set plans to buy back $4 billion in stock.

Private equity firms Kohlberg Kravis Roberts & Co. and Silver Lake Partners will pay about $2.66 billion for the semiconductor business, while the Dutch company Royal Philips Electronics (PHG.AS: Quote, Profile, Research) will buy out Agilent's 47 percent stake in Lumileds Lighting for about $950 million, plus the repayment of about $50 million of debt from Lumileds.

"Spinning off the semiconductor business is positive for the company," said Patrick Ho, an analyst with Legg Mason. "It makes Agilent a pure play test-measurement company, getting rid of a lower-margin business."

The moves come as Agilent, which makes products that test the efficiency of electronics in everything from mobile phones to medical equipment, attempts to focus strictly on measurement products.

As a result, Agilent expects to trim its costs by $450 million, by eliminating 11 sites -- including both factories and administrative buildings -- and 1,300 related jobs. Agilent currently has about 28,000 employees.

FOCUS ON LESS VOLATILE MARKET

Analysts had previously said the semiconductor unit added volatility to revenue and earnings at Agilent, whose life sciences and chemical analysis businesses are more profitable. Recently, an Agilent executive said the weak unit was not "core" to the company.

Agilent also said plans to spin off its system-on-chip and memory test business at some point next year.

"These announcements will allow us to focus on this $40 billion (measurement) segment, that is less volatile, and as a result...we will be able to immediately be able to return value to our shareholders," Agilent Chief Executive Bill Sullivan, who started in that position in March, told Reuters.

Using proceeds from these transactions, Agilent, spun off from Hewlett-Packard Co. (HPQ.N: Quote, Profile, Research) in 1999, plans to embark immediately on a $4 billion stock repurchase program. It will also call its $1.15 billion convertible bond debenture, potentially reducing shares outstanding by 36 million.

Agilent said net income rose to $104 million, or 21 cents per share, in the fiscal third quarter ended July 31, from $100 million, or 20 cents per share, in the year-earlier period.

The Palo Alto, California-based company said it was comfortable with its previous fourth-quarter forecasts. It expects revenue of $1.79 billion to $1.89 billion and operating earnings per share of 33 cents to 38 cents.

Analysts expect a profit, excluding one-time items, of 34 cents a share on revenue of $1.85 billion, according to Reuters Estimates.

By Franklin Paul

(Additional reporting by Wei Gu)

Dow Finishes Up 34, Nasdaq Rises 10

NEW YORK (AP) -- Stocks rose slightly Monday as crude-oil prices slid and technology stocks rose.

According to preliminary calculations, the Dow Jones industrial average rose 34.07, or 0.32 percent, to 10,634.38.

Broader stock indicators were also slightly lower. The Standard & Poor's 500 index rose 3.48, or 0.28 percent, to 1,233.87, and the Nasdaq composite index rose 10.14, or 0.47 percent, to 2,167.04.

Wall Street crept forward as oil prices wilted from last week's record highs, falling more than $1 a barrel in mid-afternoon trading. A barrel of light crude settled at $66.28, down 59 cents, on the New York Mercantile Exchange.

Technology was one of the stock market's strongest sectors. Agilent Technologies Inc. rose $3.92 to $30.33 after it said it will sell its chip unit to two buyout firms for $2.66 billion. Apple Computer Inc., Texas Instruments Inc. and Qualcomm Inc. also boosted the sector.

Volume was light. After the market seesawed last week to the barest of gains, the August doldrums descended on Wall Street Monday. With earnings season winding down and no dramatic economic releases for the day, traders had little to motivate them.

"As long as the price of oil remains above $65 a barrel, investors are going to be very guarded and volume low," said Hugh Johnson, chairman and chief investment officer of Johnson Illington Advisors. "The other potentially exciting event is housing prices ... Sales of new homes will be watched very carefully for any signal that the housing bubble is breaking."

Monthly data on existing home sales is due next Tuesday and data on new home sales is due next Wednesday.

By Ellen Simon

CBO Predicts Drop in Budget Deficit

WASHINGTON (AP) -- The federal budget-deficit picture turned brighter Monday as congressional scorekeepers released new estimates showing the level of red ink for the current fiscal year would drop to $331 billion.

The new report by the nonpartisan Congressional Budget Office, which does budget analysis for lawmakers in Washington, gave the latest proof that surging revenues and a steadily growing economy are combining to bring the deficit down from a record $412 billion posted last year. CBO predicts a $314 billion deficit for the budget year starting Oct. 1.

The report is welcome news for President Bush, who has seen the budget situation during his tenure deteriorate markedly from predictions of unending surpluses when he took office in January 2001.

"The CBO report confirms the dramatic improvement in the 2005 deficit picture that the Administration reported last month," said Scott Milburn a spokesman for the White House budget office. "A strong economy fueled by tax relief is generating stronger-than-projected revenues."

The White House foresees a $333 billion deficit for the year that's about to end and a $341 billion deficit for next year.

Last year's deficit was a record in dollar terms, though many previous deficits in the mid-1980s and early 1990s were larger when measured against the size of the economy. The White House and most economists say that the more relevant measure of the deficit is to weigh it against the size of the economy. Measured that way, the latest estimates for this year are slightly worse than recent historic averages.

But Democrats on Capitol Hill were quick to issue warnings about the long-term deficit picture, which will worsen considerably after the Baby Boom generation starts retiring in large numbers after the turn of the decade.

"While this years deficit will be lower than last year's record shortfall, the improvement is likely to be short-lived. Declarations of victory over budget deficits only distract from the disturbing long-term budget outlook," said Kent Conrad of North Dakota, top Democrat on the Senate Budget Committee.

Unlike White House estimates released last month, CBO assumes that Bush's tax cuts are allowed to lapse at the end of the decade. Most of the cuts in Bush's signature $1.35 trillion tax relief law enacted in 2001 expire by 2010, but many lawmakers and the White House assume that they will be renewed by then.

Even if the tax cuts were allowed to expire, the budget would still stay in the red through the full 10 years covered by CBO's report.

If the tax cuts are renewed, the deficit picture would worsen by $204 billion in 2011 -- to perhaps $327 billion or so. By 2015, the cost of extending the 2001 and subsequent tax cuts would reach $432 billion.

By CBO's scorekeeping rules, the agency must also assume that the costs of occupying Iraq and Afghanistan will stay at current levels, which probably inflates long-term projections. Congress in May passed an $82 billion measure to provide more war funding, and CBO must assume spending would continue at that rate.

The projection for the deficit at the end of the current budget year on Sept. 30 remains far worse than when Bush took office. At that time, both White House and congressional forecasters projected cumulative surpluses of $5.6 trillion over the subsequent decade.

Instead, deficits returned three years ago after four years of budget surpluses. The chief reason was that forecasters assumed that a surge in revenue in the late 1990s -- fueled in large measure by the stock market boom -- would continue.

The economy hit a recession, the market tumbled and a surge in homeland security spending after the Sept. 11, 2001 terror attacks combined to produce a return to deficits.

In early 2004, Bush said his goal was to cut the deficit in half in five years. Then, the White House forecast the deficit to be $521 billion for the 2004 budget year, and the president said his goal was to see that halved, to about $260 billion by 2009.

By Andrew Taylor

Icahn Wants Time Warner to Shed Cable Unit

NEW YORK (AP) -- Financier Carl Icahn disclosed Monday that he and a group of investors will press Time Warner Inc. to shed its cable TV unit and embark on an aggressive buyback of $20 billion of its own shares.

Icahn, who is known for taking stakes in companies and agitating for strategic changes, said he and three other investors have amassed more than 120 million shares of Time Warner, or about 2.6 percent of the giant media conglomerate, which owns CNN, HBO, Warner Bros. and the country's second-largest cable TV provider.

Earlier this month Time Warner said it planned to repurchase $5 billion of its own shares over the next two years in a bid to raise the company's sagging stock price, but Icahn and his partners believe Time Warner can afford much more dramatic steps to boost the shares.

Icahn said in a statement Monday that while he felt Time Warner has done a "commendable job" managing each of its businesses and announced steps to increase shareholder value, "it has not moved quickly enough and it has not proposed measures which would enhance values to the degree necessary to realize the inherent value" of its assets.

Separation of the cable unit as well as an immediate repurchase of $20 billion in Time Warner shares would push up the price to a level that reflected fair value, Icahn said. His investor group includes Franklin Mutual Advisors, JANA Partners and S.A.C. Capital Investors.

Icahn said he had contacted Time Warner's chief executive, Dick Parsons, and planned to meet with him this week to discuss his views. He said he and his partners also planned to discuss their plans with other large shareholders in the company.

Mia Carbonell, a Time Warner spokeswoman, said: "Our board and our management are committed to creating long-term value for all shareholders, and we have been on a course that demonstrates that commitment."

Time Warner has already said it intends to spin off part of its cable company to shareholders as part of a three-way deal with Comcast Corp., the leading cable company, to acquire the assets of the bankrupt cable provider Adelphia Communications Corp.

Time Warner's shares rose 26 cents to close at $18.50 Monday on the New York Stock Exchange. The shares rose about 4 percent earlier this month after reports emerged of Icahn's interest, but the stock is still down about 5 percent overall this year, and has been stuck below $20 since April 2002.

Many investors have soured on the stocks of major media conglomerates recently as hopes of synergies between the far-flung media properties fade and on concerns about technological challenges like digital piracy and ad-skipping technology.

Viacom Inc., another major media company that owns CBS and MTV, is trying to revive its own flagging share price with a plan to split itself into two separate entities, one based on CBS, the other centered on MTV and other cable channels including VH1 and Nickelodeon. But so far its shares haven't seen a big boost.

News Corp., the media conglomerate controlled by Rupert Murdoch, has also announced a $3 billion share buyback.

Icahn has made a fortune as well as a fearsome reputation for himself by taking stakes in companies and then pressing management to take measures to boost shareholder value. Earlier this year Icahn dropped a bid to sit on the board of Oklahoma energy company Kerr-McGee Corp. after the company agreed to sell its chemical business and spend $4 billion to repurchase nearly 30 percent of its own shares.

?By Seth Sutel