The Wall Street Journal reports that Microsoft (MSFT) is positioning itself for a new run at Yahoo's (YHOO) search business and has approached media firms, including Time Warner (TWX) and News Corp. (NWS), about joining it in a deal that would effectively lead to Yahoo's breakup. The WSJ also reported that Yahoo pushed to sell itself to Microsoft for about $33 a share in mid-May, weeks after the tech giant dropped its bid. S&P reiterates buy on YHOO.

Merrill Lynch downgrades General Motors (GM) to underperform from buy, cuts price target to $7.

Oppenheimer cuts estimates for Merrill Lynch (MER), maintains underperform.

Blockbuster (BBI) announces that it has decided to withdraw its proposal to acquire Circuit City (CC). Following the announcement, CC reiterates that its previously announced exploration of strategic alternatives to enhance shareholder value is an active and ongoing process.

Family Dollar Stores (FDO) posts better-than-expected $0.46, vs. $0.40 a year ago, third quarter EPS on flat same-store sales, 2.9% higher total sales. Sees fourth quarter same-store sales up 4%-6%, $0.30-$0.35 EPS. Now sees fiscal year 2008 EPS of $1.58-$1.63.

UnitedHealth Group (UNH) says in second quarter its risk-based businesses produced lower level of gross margin than expected, it experienced continuation of pressures it saw in the first quarter, sees $0.64-$0.66 second quarter adjusted EPS. The company settles a federal class action lawsuit relating to its historical stock options practices, to pay $895 million into settlement fund. Now sees 2008 adjusted EPS of $2.95-$3.05 on revenues in $81 billion range, prior to consideration of cash payments for litigation settlements; UNH previously projected $3.55-$3.60 2008 EPS.

Apollo Group (APOL) posts $0.91, vs. $0.81, third quarter non-GAAP EPS on 14% revenue rise. Total degreed enrollment grew by 11%.

Aladdin Knowledge Systems Ltd. (ALDN) sees second quarter revenues of $26.0-$26.5 million, GAAP EPS of $0.01, non-GAAP EPS of $0.04. It says second quarter revenues fell short of expectations primarily due to weaker global economy, several anticipated customer orders slipping from the second quarter. It cuts 2008 revenue forecast to $112-$120 million, GAAP EPS to $0.36-$0.44, excluding one-time expenses related to recent acquisitions. Sees $0.48-$0.56 non-GAAP 2008 EPS.

Starbucks (SBUX) announces that it will close about 600 underperforming company-operated stores in U.S. market and now expects to open fewer than 200 new U.S. company-operated stores in fiscal year 2009. Pre-tax charges related to store closures include about $200 million of asset write-offs to be recognized in third quarter fiscal year 2008. Projects $120-$140 million for lease termination costs and future lease obligations, nearly all of which will be recognized in fourth quarter fiscal year 2008 and first half of fiscal year 2009.