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MASTERS ENERGY, $1.65, Toronto symbol MSY on Toronto, jumped over 40% this week after it received a friendly $41.4-million takeover offer from ZARGON ENERGY TRUST, $13.54, symbol ZAR.UN on Toronto. To fund the purchase, Zargon plans to pay out a maximum of $5.7 million in cash. It will also issue up to 1.49 million trust units. Zargon is offering Masters shareholders a cash option and a units-plus-cash option. Under the cash option, Zargon will pay $1.83 for each Masters common share tendered until it reaches its maximum cash payout. Any remainder will be paid in Zargon units. Under the second option, each Masters common share may be exchanged for 0.12 of a Zargon unit. This option will also be pro-rated according to Zargon’s unit and cash maximums....

WELLS FARGO & CO., $8.61, New York symbol WFC, has cut its quarterly dividend by 85.3%, to $0.05 a share from $0.34. The new annual rate of $0.20 yields 2.3%. The lower dividend will save the bank $5 billion a year. To put that in context, it earned $2.7 billion, or $0.70 a share, in 2008. (Its 2008 earnings included $9.9 billion of pre-tax writedowns and other charges related to its purchase of financial services company Wachovia on December 31.) The savings should help Wells Fargo cope with higher loan defaults during the recession. Wells Fargo is making good progress integrating Wachovia into its own operations. Wells Fargo’s management still feels the merger will cut the combined company’s annual expenses by $5 billion. Wells Fargo has already written down most of Wachovia’s troubled loans and securities, so any further charges should be manageable. The company has also received $25 billion under the U.S. government’s Troubled Asset Relief Program....

AMAZON.COM $62.35 (Nasdaq symbol AMZN; SI Rating: Extra Risk) (206-266-1000; www.amazon.com; Shares outstanding: 428.6 million; Market cap: $26.7 billion) has unveiled a thinner, faster and lighter version of its Kindle electronic reader. The Kindle 2 has seven times more storage than the first Kindle, as well as sharper images and a longer battery life. The Kindle 2 also has a text-to-speech feature that lets users listen to books or newspapers read by a computer-generated voice. The Kindle 2 costs $359 U.S., the same price as the first Kindle. (Kindle is only available in the U.S.)...

INDIGO BOOKS & MUSIC INC. $12 (Toronto symbol IDG; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 24.5 million; Market cap: $294 million; Price-to-sales ratio: 0.3; SI Rating: Extra Risk) aims to take advantage of the growing popularity of the Apple iPhone and other smart phones, as well as electronic book-reading devices. It will soon launch shortcovers.com, a new web site that will let users download free and paid electronic content from books, newspapers, magazines and blogs. The electronic book market is small compared to Indigo’s traditional book business. But Indigo hopes this new service will become as successful as Amazon- .com’s Kindle e-book reader, which accounts for over 10% of Amazon’s sales. Indigo is a buy.

AMAZON.COM, $63.26, symbol AMZN on Nasdaq, unveiled a thinner, faster and lighter version of its Kindle electronic reader this week. The Kindle 2 has over seven times more storage than the first Kindle, as well as sharper images and a 25% longer battery life. The new battery lasts up to four days on a single charge and recharges in four hours. The Kindle 2 also has a text-to-speech feature that lets users listen to books or newspapers read by a computer-generated voice. The Kindle 2 will begin shipping in two weeks, on February 24, at $359 U.S. each, the same price as the first Kindle. (Kindle is only available in the U.S.)...

SYMANTEC CORP., $15.33, symbol SYMC on Nasdaq, rose over 13% this week after it reported earnings that exceeded analysts’ consensus estimates. In the three months ended January 2, 2009, Symantec’s earnings, excluding one-time items, rose 20%, to $350.2 million from $291.7 million a year earlier. Earnings per share rose 27.3%, to $0.42 from $0.33 on 3.8% fewer shares outstanding. The latest earnings beat consensus forecasts of $0.34 a share. Sales fell slightly, to $1.51 billion from $1.52 billion. In the latest quarter, the computer security software maker saw sales of its consumer products and its data-storage and server-management services each rise 1.2%, partly offsetting a 3.8% decline in security and compliance software. International sales fell 5.8%, partly due to the strong U.S. dollar. However, despite a weak economy, U.S. sales rose 6.5%. Earnings rose despite the fall in overall sales, largely due to cost-cutting measures. Symantec is still a buy....

NORTHBRIDGE FINANCIAL CORP. $38.40, symbol NB on Toronto, rose over 26% this week after Fairfax Financial Holdings, symbol FFH on Toronto, announced that it will make an offer to acquire the shares of Northbridge it does not already own. Fairfax hopes to complete the transaction in the first quarter of 2009. Fairfax, which currently has a 63.1% interest in Northbridge, is offering $39 a share in cash for a total of $686 million to obtain the 36.9% interest outstanding. We recommended Northbridge as a buy at $31 in the most recent issue of Stock Pickers Digest. That’s when we pointed out that the chance of a Fairfax takeover of the company added to its appeal....

AMAZON.COM $35.84 (Nasdaq symbol AMZN; SI Rating: Extra Risk) (206-266-1000; www.amazon.com; Shares outstanding: 428.8 million; Market cap: $15.4 billion) reports that in the three months ended September 30, 2008, profits rose 47.5%, to $118 million or $0.28 a share from $80 million or $0.19 a share a year earlier. Revenues rose 30.7%, to $4.3 billion from $3.3 billion. Despite the improved results, Amazon has now lowered its 2008 sales forecast to between $18.5 billion and $19.5 billion, down from $19.4 billion to $20.1 billion previously. The company anticipates a weakening economy and slower consumer sales for the rest of this year at least. Amazon continues to win market share by lowering prices — and it has kept profit margins high with its heavy investments in cost-cutting infrastructure. We feel its long-term growth prospects remain strong....

I still feel that government efforts now underway are likely to solve today’s financial crisis. However, these steps come at a price. My best guess is that we’ll see much higher inflation as a result of all this newly supplied liquidity, probably in the early part of the next decade. You should keep this inflationary potential in mind, but it’s a mistake to try to profit from it by loading up on Resources stocks. That’s partly due to the drawbacks of these stocks. They do provide a handy hedge against inflation. Before that coming bout of inflation arrives, however, you can expect highly volatile stock markets, volatile resource prices, and corporate breakdowns in the Resources sector. You should spread your investments out across most if not all of the five main economic sectors. But I plan to err on the side of too little rather than too much resource exposure in the next few years....

AMAZON.COM $71.54 (Nasdaq symbol AMZN; SI Rating: Extra Risk) (206-266-1000; www.amazon.com; Shares outstanding: 425.9 million; Market cap: $30.5 billion) has purchased bookoriented, social-networking website www.shelfari.com. Shelfari lets users catalogue online the books they own or have read. It also lets users organize book groups, plus post profiles of their literary tastes. Readers with similar interests can then interact and share book recommendations. Amazon’s investments in increasingly popular social-networking websites will complement the company’s Kindle electronic ebook reader, launched in November, 2007. Users can download newspapers, magazines and books to the Kindle. Amazon.com is a buy.