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PEPSICO INC., $57.74, New York symbol PEP, increased its offer to buy its two main bottlers: Pepsi Bottling Group Inc. (New York symbol PBG) and PepsiAmericas, Inc. (New York symbol PAS). Both have now accepted PepsiCo’s offer, which is worth $7.8 billion. To put this in context, PepsiCo earned $1.7 billion, or $1.06 a share, in the second quarter of 2009. PepsiCo already owns 33% of Pepsi Bottling Group and 43% of PepsiAmericas. The company first offered to buy these bottlers last April for a total of $6 billion in cash and shares, but they rejected this amount as insufficient. In response, PepsiCo launched the new bid, which is a 30% increase over its first offer. The deal should close later this year, or in early 2010, and will give PepsiCo control over 80% of its North American beverage volumes. By consolidating plants and administrative functions, the company feels it can lower its annual costs by $300 million by 2012. That should add $0.15 a share to its annual earnings. Owning these bottlers will also make it easier for PepsiCo to launch new products, and react more quickly to changing consumer tastes in different regions....

GANNETT CO. INC. $6.26 (New York symbol GCI; Conservative Growth Portfolio, Consumer sector: Shares outstanding: 232.4 million; Market cap: $1.5 billion; Price-to-sales ratio: 0.2: WSSF Rating: Average) will start selling an online edition of USA Today, its flagship newspaper, in August. The company already sells an electronic version of USA Today through Amazon.com’s Kindle e-book reader service. Online newspapers face strong competition from free Internet news sources. But USA Today aims to use exclusive content to attract online subscribers. As well, unlike the print version, the online edition will publish a weekend edition. Moreover, online publishing is cheaper than printing and delivering newspapers, so Gannett needs fewer subscribers to earn a profit on this project. Gannett is a buy.

INTUITIVE SURGICAL, $222.53, symbol ISRG on Nasdaq, jumped almost 31% this week after it reported improved results in the latest quarter. Intuitive makes the “da Vinci,” a computerized surgical system. Guided by a miniature camera connected to a 3-D monitor, surgeons use the da Vinci to operate by remotely manipulating tiny robotic arms. This is safer and far less invasive than regular surgical techniques, and helps cut a patient’s recovery time and post-operative discomfort. It also reduces scarring and infection risk. The da Vinci system is used in heart surgeries, prostatectomies and hysterectomies, among other procedures. In the three months ended June 30, 2009, Intuitive’s revenue rose 18.9%, to $260.6 million from $219.2 million a year earlier. Earnings climbed 21.9%, to $62.4 million, or $1.65 a share, from $51.2 million, or $1.32 a share. These results beat analysts’ expectations of $1.25 a share in profits on revenue of $230 million....

AMAZON.COM INC., $77.63, symbol AMZN on Nasdaq, has cut the price of its Kindle 2 e-book reader by $60 U.S. The unit now sells for $299 U.S. (The Kindle is only available in the United States.) The company’s larger Kindle DX, which it plans to start shipping later this summer, is still $489 U.S. Kindle users can download files from Amazon’s Kindle store, which contains over 300,000 books. Most bestsellers and new releases are just $9.99 U.S. each. Users can also download leading U.S. and international magazines and newspapers, as well as over 1,200 blogs. Because of strong demand for the Kindle, Amazon has been able to negotiate better prices from manufacturers. The price cut should spur more sales and downloads....

AMAZON.COM $77.97 (Nasdaq symbol AMZN; SI Rating: Extra Risk) (206-266-1000; www.amazon.com; Shares outstanding: 428.9 million; Market cap: $33.5 billion) recently unveiled the Kindle DX, a new version of its Kindle 2 electronic reader. The Kindle DX has a 9.7-inch display. That’s about 2.5 times bigger than the Kindle 2’s screen, and makes it easier to read pages that are more detailed than those found in most books. These include newspapers, magazines, textbooks and business documents. As well, the Kindle DX’s memory will hold up to 3,500 books. That’s more than double the Kindle 2’s capacity. Amazon.com is still a buy.

MASTERS ENERGY, symbol MSY on Toronto, has officially been taken over by ZARGON ENERGY TRUST, $15.95, symbol ZAR.UN on Toronto. Zargon was able to get a majority of Masters’ shareholders to vote in favour of its cash-and-unit offer at a meeting last week. Masters shareholders will get $0.37 a share in cash, plus 0.0957 of a Zargon unit. (The unit portion is based on the 1.475 million new units Zargon is issuing as part of the offer.) At Zargon’s current price, that’s worth a total of $1.90 per Masters share, a gain of over 64% from before the offer. In all, buying Masters will cost Zargon $41.4 million. Masters will add 1,275 barrels of oil equivalent per day to Zargon’s production. Zargon now expects its production to average 10,200 barrels per day this year....

AMAZON.COM $74.71 (Nasdaq symbol AMZN; SI Rating: Extra Risk) (206-266-1000; www.amazon.com; Shares outstanding: 428.6 million; Market cap: $32.0 billion) is a pioneer in online book retailing, with 4.7 million titles, as well as DVDs and music. Other products, ranging from electronics and computer games to toys, make up 42% of sales. Amazon Web Services lets online sellers market on its web sites. In the three months ended December 31, 2008, Amazon’s revenue rose 18.2%, to $6.7 billion from $5.7 billion a year earlier. Electronics sales were particularly strong, gaining 46%, to over $1.7 billion. North American sales make up 54% of total revenue, and rose 18%. International sales, which account for the remaining 46%, rose 19%. Earnings rose 8.7%, to $225 million, or $0.52 a share, from $207 million, or $0.50. Amazon holds cash of $3.7 billion, or $8.64 a share. The Kindle electronic book reader continues to be a strong seller for Amazon. The company recently released the Kindle 2. It’s still the size of a paperback and sells for $359 U.S. (Like the first version, Kindle 2 is only available in the U.S.) Kindle 2 is thinner, faster and lighter than the first Kindle, and has a longer battery life and more storage. Kindle downloads account for over 6% of sales of the 230,000 titles available on Amazon.com in both electronic and paper versions....

CGI GROUP INC., $10 (Toronto symbol GIB.A) is eligible to bid on upcoming U.S. government contracts for computers, software and technology services. The government has earmarked $50 billion U.S. for computer upgrades over the next five years. CGI’s long history of dealing with U.S. government agencies should help it win new contracts under this program. Buy. INDIGO BOOKS & MUSIC INC., $11 (Toronto symbol IDG) reports that its new Shortcovers web site, which lets users download free and paid electronic content from books and magazines, has attracted customers from over 150 countries. Unlike rival bookseller Amazon.com, which requires customers to buy its Kindle electronic-book reader in order to download books and periodicals, Indigo’s customers can view downloads on a wide variety of cellphones and other devices. This should give Indigo an advantage. Buy....

SONY CORP. ADRs $22 (New York symbol SNE; Conservative Growth Portfolio, Manufacturing & Industry sector; ADRs outstanding: 1 billion; Market cap: $22 billion; Price-to-sales ratio: 0.3; WSSF Rating: Above Average) has struck a new alliance with Internet search engine Google. Sony hopes the new arrangement will spur sales of its Sony Reader electronic book device. Over the past few years, Google has converted several million books into electronic form. Under this new deal, users of the Sony Reader can download titles from Google for free, but only books whose copyrights have expired. Still, that’s over 500,000 titles. This deal should help Sony’s device compete with the popular Kindle book reader from online bookseller Amazon.com. Sony is a buy. FAIR ISAAC CORP. $14 (New York symbol FIC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 48.8 million; Market cap: $683.2 million; Price-to-sales ratio: 0.9; WSSF Rating: Average) is changing its corporate identity to FICO. (FICO is an acronym for Fair Isaac Corp.) Fair Isaac is still the company’s legal name, but it will now be known as FICO. Its ticker symbol is unchanged....

AEROPOSTALE INC., $25.23, symbol ARO on New York, reported higher sales and profits this week. Notwithstanding the weak economy, the teen-clothing retailer took market share from its rivals, mainly on the strength of its lower prices. During the quarter, Aeropostale posted positive same-store sales, while rivals The Gap and American Eagle saw their same-store sales drop. In the three months ended January 31, 2009, Aeropostale’s revenue rose 16.7%, to $690 million from $591.3 million a year earlier. Same-store sales rose 6%, and online sales jumped 88%, to $41.4 million from $22 million, as more Christmas shoppers chose to make their purchases through the Internet. Aeropostale also added 86 new stores, which brings it to a total of 914. It operates 28 stores in Canada. Aeropostale’s wide variety of clothing, low prices and aggressive promotions continue to drive up the company’s sales. Its earnings rose 5.4%, to $68.2 million, or $1.02 a share, from $64.7 million, or $0.96 a share. Higher holiday sales were offset by markdowns, which lowered profits....