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Sapient Corporation (NASDAQ: SAPE) provides business, marketing and technology consulting services. The firm's design and implementation expertise are used by information-based businesses and government agencies with needs in e-commerce, customer relationship management, high volume transaction processing, online supply chain development and knowledge management. Clients include BP (NYSE: BP), Harrah's Entertainment (NYSE: HET) and Verizon Communications (NYSE: VZ).

The firm pleased investors late last month, when it reported Q4 EPS of seven cents and revenues of $155 million. Analysts had been looking for five cents and $146.7 million. Management also guided Q1 revenues to $155 million, versus consensus of $146.75 million.

Paris Hilton, who rose to fame as an heiress, is less than 3% the heiress she could have been. Her grandfather, Hilton Hotels patriarch Barron Hilton is leaving 97% of his $2.3 billion personal fortune to charity, leaving approximately $69 (what an appropriate number!) million available for everyone else, including Paris.

According to the Los Angeles Times, "The contribution to the Conrad N. Hilton Foundation, to come from the sale of Hilton Hotels Corp. and the pending sale of Harrah's Entertainment Inc. after the money is placed in a trust, is the largest in the foundation's history and will bring its value to about $4.5 billion."

But don't feel too bad for Paris. Even if she won't really be much of an heiress, she has already built her own empire based on her grandfather's wealth -- well, that and going to jail and such.

But still, it's refreshing to see Barron Hilton giving his money to people who deserve it. It's hard to imagine anyone less deserving than Paris Hilton, and maybe this will encourage her to stop acting like such a spoiled brat.

Today's announcement that Citigroup (NYSE: C) will take $49 billion worth of Structured Investment Vehicles (SIVs) onto its balance sheet suggests to me that its new CEO is following a path I wrote about earlier this week -- the first step of which is to take a big bath write-down fast. I think Citi stock will fall further before hitting bottom -- say $15.

Why is Pandit doing this? First, investors give a new CEO a chance to put all his predecessor's mistakes in the past through a write-down -- which generally includes closing businesses and firing staff. Second, Pandit probably realized that the alternative -- a fire sale of securitized assets (the average net asset values of SIVs tumbled to 55% from 71% a month ago and 102% in June) -- would be the lesser of two evils.

Nevertheless -- Pandit's move came with pain attached. Bloomberg News reports that two hours after Citi's announcement, Moody's Corp. (NYSE: MCO) lowered its credit ratings to Aa3, the fourth-highest level, from Aa2, saying "capital ratios will remain low." Citi's capital ratio is likely to tumble far below its target -- causing it to take further capital preservation moves. Specifically, its Tier I capital ratio is likely to hit 6.8% by the end of this year from 7.32% on September 30 -- far short of its 7.5% target.

Expect more unpleasantness -- like a cash dividend cut -- as Citi stock continues to tumble. But I think if it hits $15, it may be worth considering an investment.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He owns Citigroup shares and has no financial interest in Moody's securities.

The development of new information technologies leads to fresh opportunities for businesses to expand and serve their customer bases. There is a Cambridge, Massachusetts firm that rides the crest of the IT wave, helping companies take full advantage of those opportunities.

Sapient Corporation (NASDAQ: SAPE) provides business, marketing and technology consulting services. The firm's design and implementation expertise are used by information-based businesses and government agencies with needs in e-commerce, customer relationship management, high volume transaction processing, online supply chain development and knowledge management. Clients include BP (NYSE: BP), Harrah's Entertainment (NYSE: HET) and Verizon Communications (NYSE: VZ).

The markets moved significantly lower today as the dollar continued its free fall on news that China diversified its foreign currency holdings.

Over the last five years, the U.S. dollar has lost about 32% of its value compared to the euro (see chart below). What does this mean for you? Well, it means that 32% of the rise in the price of oil is due to the weak U.S. dollar. It means if you want to travel internationally, it is going to cost you about 1/3 more than it would have five years ago.

Some companies benefit from a weak U.S. dollar long term. Domestic agriculture like corn has been strong recently, and companies like Deere (NYSE: DE) that support agriculture benefit. Also, foreign tourists will find it more attractive to visit the United States as their euros will convert into more dollars. So Disney (NYSE: DIS) or Harrah's (NYSE: HAS) Las Vegas casinos could benefit. A weak U.S. dollar helps jobs domestically, as any company that is exporting will find its goods cheaper for foreigners to buy. But all foreign goods are going to be more expensive for Americans to buy.

According to The Wall Street Journal, "Major properties on the Las Vegas Strip are now offering lavish commitment ceremonies to same-sex couples (though same-sex marriage is illegal in Nevada), as well as special hotel and entertainment packages geared specifically toward gay and lesbian travelers. Some resorts have mandated sensitivity programs to teach employees how to make gay and lesbian travelers feel welcome."

It's hard to imagine what took them so long. By ignoring the gay market, Las Vegas casino operators were failing to capitalize on their perfect market: Single people who like to have fun and, because they tend not to have families to support, have more disposable income. Research also shows that gay men spend 30% more than straight men. If Las Vegas wants to remake itself into a world of pricey cuisine and luxury shopping, this is the market to target -- not coupon-clipping senior citizens.

But why is this just starting to happen now, as most experts say it is? Fear that Bible-trumping prudes would be offended if gay couples were part target market of Las Vegas promoters? If so, that could be the reason for the city's decline in glamor, and utter loss of cultural relevance.

Perhaps targeting the gay community is the beginning of Las Vegas' rebirth.

Most mergers are driven by the notion, sometimes wildly mistaken, that the combination will bring both a competitive advantage. Some pairs of companies, however, seem so intuitively right for one another, no bottom-line considerations should be allowed to interfere with their matrimony. Like a presidential candidate and a lobbyist's pocket, these two belong together.

I read recently that the average Las Vegas visitor leaves behind around $200 in gambling losses. However, in my flights back from Vegas I've noticed that many passengers still have their diamond rings, fine luggage and iPods, which tells me they haven't been wrung completely dry.

For companies such as Harrah's Entertainments (NYSE: HET), that's just opportunity lost, so I have a suggestion for how Harrah's could improve its take. Simply merge with EZCorp (NASDAQ: EZPW), operator of a chain of 82 EZPAWN pawn shops, which offer short-term credit to needy individuals based on personal property collateral, as well as 334 EZMoney stores offering pay advances.

The Texas Pacific Group and Apollo Management are on track to complete their $90 a share buyout of Harrah's Entertainment (NYSE: HET) by the end of the year. According to a report out of New Zealand, TPG, along with its East Asia affiliate Newbridge Castle, is already shopping for an addition to its gaming business.

In August, SkyCity Entertainment Group (NZE: SKC), which owns casinos in Australia and New Zealand, announced it was interested in testing the sale value of some of its assets. Instead, it received an expression of interest in acquiring the entire company. The unnamed suitor is now thought to be TPG.

The two have a history. SkyCity bought its Auckland casino from Harrah's for $20 million in 1998. Since then, SkyCity has fallen on hard times. It netted $98.4 million in 2007, down 18.1% from 2006.

The SkyCity properties would fit nicely with other TPG gaming holdings including Harrah's and London Clubs International, making it a huge player in the worldwide gambling scene.

Following the Dow's steepest one-day climb in four years, stock futures were flat Tuesday ahead of the Federal Reserve's 2:15 p.m. decision on interest rates. The Fed is expected to maintain its benchmark federal funds rate at 5.25%.

Also Tuesday morning, the Labor Department will report on second-quarter productivity and costs; moderated labor costs and increased productivity are expected.

Companies reporting earnings today include Cisco Systems (NASDAQ: CSCO), TXU Corp. (NYSE: TXU), and Harrah's Entertainment (NYSE: HET). Cisco is expected to match earnings estimates of 35 cents a share.

Overseas, the Nikkei eked out a 0.04% rise to close at 16,921.77, while the FTSE 100 rallied following Wall Street's gains Monday.

Trump Entertainment Resorts Inc (NASDAQ: TRMP), Donald Trump's casino company, this morning said that following a three-month search, it would conclude its strategic review. Although it has held talks since March with groups of investors that included former Trump Taj Mahal manager Dennis Gomes and Boyd Gaming Corporation (NYSE: BYD), the company said the offers it has received "weren't likely to lead to a transaction."

It seems a little strange that Trump Entertainment couldn't find a buyer, particularly because the market for casinos and their assets is hot. Recent examples of casino sector activity include the in-process $17B acquisition of Harrah's Entertainment Inc (NYSE: HET) and the announced $6.1B acquisition of casino and racetrack operator Penn National Gaming Inc (NASDAQ: PENN) by Fortress Investment Group LLC (NYSE: FIG), a U.S. hedge fund and private-equity firm.

What gives? Why hasn't Trump found a buyer? Sources have speculated that its casinos, located in Atlantic City, NJ, have been struggling in comparisons to Las Vegas "entertainment destinations," a partial smoking ban and competition from new gaming venues in Pennsylvania and New York. Additionally, the announcement that the company would end its efforts to sell comes weeks after CEO James Perry said he would retire and, effective yesterday, would be replaced by COO Mark Juliano.

Trump's Atlantic City casinos are still working on a $250M project to update its gaming floors and add new restaurants, although it hasn't seemed to help. The company posted losses in earnings per share loss and revenue when it reported Q1 results in May. The Trump Taj Mahal Casino Resort, its largest casino, with 786 rooms, is set to open next summer.

The casino company said that while it was ending the initiative to sell the company, it would continue to review other strategic alternatives, including a cost cutting effort. The company laid off Chief Information Officer Virginia McDowell and executive vice president of design and construction, Paul Keller. It doesn't plan to fill these positions.

Trump shares fell nearly 18% this morning.

The expanding credit spreads between corporate bonds and treasuries, and in particular between junk bonds and treasuries, have also led arbitrage spreads to widen. Deals that will be financed and closed have spreads that warrant investors' attention. There may be some easy money to be made as a result.

Deals worth looking at, according to Barron's , include:

• Alltel Corporation (NYSE: AT) trading for $67.80 with take-out price of $71.50-12% annualized rate of return.
• Clear Channel Communications (NYSE: CCU) trading for $37.70 with take-out price of $39.20-10% annualized rate of return.
• First Data Corporation (NYSE: FDC) is selling for $32.65 and has a take-out price of $34-for an 18% annualized return.
• Harrah's Entertainment Inc (NYSE: HET) is selling for $85.25 and has a take offer of $90-14% annualized rate of return.
• Tribune Company (NYSE: TRB) is trading at $29.50 with a take-price at $34-30% annualized return.
  
• The most attractive arb play from a return perspective is Tribune but that deal also carries the most risk. Tribune already has a considerable amount of debt and is attempting to add more debt and use the company's ESOP plan to close the deal. In addition, the fundamentals of the newspaper industry continue to remain not very good.

Use the widening arb spreads to make some nice money. Cash available to finance these deals is still aplenty. Lending terms are simply coming back to the planet earth, as sensible lending covenants are re-introduced.

With higher interest rates and pushback in the debt markets, it's been tougher for the private equity folks to get deals done. Just look at the recent IPO of the Blackstone Group (NYSE: BX). The stock has been, well, like a stone.

But, according to this week's Barron's [a paid service], this may be an opportunity. That is, there may be a way to arbitrage returns.

Huh? Well, many deals have a spread between the buyout price and the current stock price. Why? Since a deal has not been closed, there's a risk of a deal falling through.

With the recent general problems in private equity, there's been a widening of spreads.

In fact, there are 10%+ spreads on such marquee companies like First Data Corp. (NYSE: FDC), Alltel Corp. (NYSE: AT), Alliance Data Systems Corp. (NYSE: ADS), and Harrah's Entertainment (NYSE: HET).

These firms have top-tier private equity sponsors. And, in terms of reputation, it would not be good for them to walk away. So while the financing costs may be higher, I still think private equity firms will work pretty hard to get these deals done.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

The development of new information technologies leads to fresh opportunities for businesses to expand and serve their customer bases. There is a Cambridge, Massachusetts firm that rides the crest of the IT wave, helping companies take full advantage of those opportunities.

Sapient Corporation (NASDAQ: SAPE) provides business, marketing and technology consulting services. The firm's design and implementation expertise are used by information-based businesses and government agencies with needs in e-commerce, customer relationship management, high volume transaction processing, online supply chain development and knowledge management. Clients include BP (NYSE: BP), Harrah's Entertainment (NYSE: HET), Novartis (NYSE: NVS), Sony (NYSE: SNE), Staples (NASDAQ: SPLS), United Parcel Service (NYSE: UPS) and Verizon Communications (NYSE: VZ).

The firm pleased investors last week, when it reported Q1 EPS of one cent and revenues of $121.3 million. Analysts had been looking for a penny and $117.4 million. Management also guided Q2 revenues to $126 million ($122.61M consensus). RBC Capital Markets and UBS subsequently declared the issue a "buy" and issued price targets in the $9.25-$10.00 range. The stock popped into a bullish "flag" formation on the news. Prices frequently exit flags moving in the same direction they were traveling when they entered them. In this case, that would be to the upside.

Brokers recommend the issue with two "strong buys," four "buys," four "holds" and two "sells." Analysts see a 72% growth rate, through the next year. The stock's Price to Sales ratio (2.37), Price to Book ratio (4.58) and Sales Growth rate (39.0%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 61% of the outstanding shares. Over the past 52 weeks, SAPE has traded between $4.35 and $8.26. A stop-loss of $6.60 looks good here.

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

Late last year, Penn National Gaming (NASDAQ: PENN) tried to buy Harrah's (NYSE: HET). But, in the end, private equity firms TPG and Apollo Management won the deal.

Ironically enough, now Penn has decided to go private. The deal is valued at about $5.73 billion and the buyers include Fortress Investment Group LLC (NYSE: FIG) and Centerbridge Partners LP. There will also be a repayment of $2.8 billion in existing debt.

While casinos generate lots of cash flows, it's still not easy to pull off a buyout deal. A big problem is dealing with the mind-numbingly complex gambling laws. In other words, it should take at least a year to close the Penn transaction.

Although, at 10 times EBITDA, the deal has a reasonable valuation.

On the news of the transaction, Penn's stock climbed 21.92% to $62.35. The buyout offer is $67.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

It is not a secret that casinos have been investing a lot of resources into catering to their Asian clients, but should it be acceptable for them to actively and aggressively try to pull Asians into their gaming facilities? According to any article from The New York Times, the recent promotional blitz by Las Vegas toward the Asian community has created emotions ranging from concern to downright extreme anger.

There are basically two ways in which Las Vegas casinos are able to lure in and keep the business of wealthy Asian (mostly newly rich Chinese) and Asian-Americans. One is by creating an enjoyable experience inside the casinos. Second is targeted advertising to the Asian demographic.

The first method strives to create an "Asian friendly" environment inside casinos. This method is one that I have absolutely no problem with what-so-ever. The first and most important rule of thumb in running a successful business is to "know your customer," and casinos can not be blamed for spotting the tremendous amount of cash inflows from their Asian clients and creating a more "user friendly" environment.

The second method involves special societal-based advertising campaigns. This is where the slippery slope of ethics begins, and I for one, have a hard time blaming the casinos for their marketing campaigns. The article gives example of Las Vegas and Atlantic City casinos using advertisements in Asian dialects; advertisements placed in community newspapers in nearby cities; and mailers written in a recipient's native language.