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From Briefing.com: 6:01PM Flextronics Enter Into Outsourcing Relationship (FLEX) 10.38 +0.21 : Flextronics and Juniper (JNPR) announced a global outsourcing relationship whereby Flextronics will provide a portion of new product introduction, manufacturing, and logistics services on a worldwide basis for Juniper's security and networking products.

4:17PM Lam Research beats by $0.12, beats on revs (LRCX) 44.94 +2.49 : Reports Q4 (Jun) ongoing earnings of $0.96 per share, $0.12 better than the Reuters Estimates consensus of $0.84; revenues rose 20.2% year/year to $525.6 mln vs the $507.1 mln consensus.

5:12PM Market Internals (MKTIN) : The Dow increased 1.96% closing at 11011, the Nasdaq was up 1.83% to finish at 2081, and the S&P was up 1.86% to finish at 1260. Leading sectors included: airlines +8.2%, steel +5.1%, computer and electronic retail +4.9%, diversified metals and mining +4.9%, asset management and custody banks +4.8%. Lagging sectors included: IT consulting and services -15.8%, Internet software and services --6.4%, specialized finance -2.4%, soft drinks -0.15%, health care supp --0.04%. Today's movement came from higher volume (NYSE 1865, vs. closing avg of 1712; Nasdaq 2406, vs. 2026), with higher advance/decline ratios (NYSE 2846/468; Nasdaq 2336/697, and with mixed new high/new low ratios (NYSE 76/55, Nasdaq 56/89).

4:28PM Juniper Networks reports in-line Q2 revs, does not report EPS due to additional charges for stock compensation expense (JNPR) 14.14 -0.18 : Reports Q2 (Jun) revenues rose 15.1% year/year to $567.5 mln vs the $567.2 mln consensus. "The Audit Committee of the Company's Board of Directors is conducting an independent investigation regarding stock options. Although the investigation is not complete, and the committee is continuing its review of the matters, the committee has reached a preliminary conclusion that the actual measurement dates for financial accounting purposes of certain stock option grants issued in the past differ from the recorded grant dates of such awards. Accordingly, the Company believes it will record additional non-cash charges for stock-based compensation expense, but is not yet able to determine the amount of such charges or the resulting tax and accounting impact of these actions or which periods, if any, would require restatement. Accordingly, the company is not providing detailed GAAP or Non-GAAP financials for the quarter ended June 30, 2006. In addition, the Company will not file its quarterly report on Form 10-Q for the quarter ended June 30, 2006 until after completion of the investigation, and the Company does not expect the investigation to be completed until after the date the Form 10-Q is required to be filed."

4:24PM Openwave Systems guides revs lower, reschedules July 29 analyst day to Nov. 2006 (OPWV) 7.24 : OPWV says it expects fiscal Q1 2007 revenues will be flat to modestly below the prior quarter. Fiscal Q1 consensus is for revs of $100 mln, vs. $91 mln in fiscal Q4. Co says it's completing its annual operating plan for fiscal 2007, and will present key aspects of the plan at the rescheduled Analyst Day.

4:18PM Intersil reports Q2 results in-line; guides Q3 in-line (ISIL) 23.95 +1.14 : Reports Q2 (Jun) earnings of $0.30 per share, in line with the Reuters Estimates consensus of $0.30; revenues rose 34.9% year/year to $187.6 mln vs the $186.4 mln consensus. Co issues in-line guidance for Q3, sees EPS of $0.32 vs. $0.32 consensus; sees Q3 revs of $193.2-197.0 mln vs. $195.88 mln consensus.

4:15PM Novellus beats by 3 cents (NVLS) 24.43 +0.85 : Reports Q2 (Jun) earnings of $0.42 per share, $0.03 better than the Reuters Estimates consensus of $0.39; revenues rose 24.4% year/year to $410.1 mln vs the $408 mln consensus. Gross margin was 49.9% vs 49% guidance.

4:20 pm : Stocks surged across the board Wednesday as investors rallied around upbeat remarks from Bernanke that implied policy makers may finally take a breather after two years of interest rate increases. Aside from the Fed Chairman's seemingly dovish commentary that sent short sellers fleeing for cover following weeks of market losses, signs of a potential pause pushed bond yields to session lows and allowed equity investors to look beyond a disappointing CPI report, using solid earnings news and another pullback in oil as additional catalysts to get back into a market that was showing signs of being oversold.

At his semi-annual testimony before the Senate Banking Committee, Bernanke acknowledged that "moderation in economic growth" will lead to a "gradual decline in inflation in coming quarters," welcoming news that overshadowed a fourth straight 0.3% rise in core CPI. That left the year-over-year increase at 2.6%, which is well above the Fed's comfort zone of 1.75-2.00%. Be that as it may, Bernanke's commentary superseded a report that typically has the potential to move stocks and bonds in noticeable fashion.

The optimism about a possible pause was further echoed in fed funds futures, which were implying a roughly 90% chance of a 1/4% rate increase to 5.50% on August 8th following the CPI report, but moved back to pricing in only a 68% chance of another hike and are no longer pricing in any tightening at the three FOMC meetings thereafter.

Of the 10 sectors trading higher, the most influential of them all -- Financials -- paced the way to the upside. The sector surged 2.7% and climbed back into positive territory for the year after J.P. Morgan Chase (JPM 42.06 +1.35) said Q2 net income more than tripled and retail banking earnings at Bank of America (BAC 49.01 +0.57) doubled. A decline in borrowing costs provided additional sector support. The yield on the 10-yr note was as high as 5.17% but closed at 5.05% and more than erased yesterday's 16-tick sell-off that lifted the benchmark 10-yr yield to 5.13%.

Health Care also turned in a gain of more than 2.0%. Managed Healthcare -- one of the worst performing industry groups in Q2 -- garnered extra bargain hunting interest after UnitedHealth (UNH 50.66 +2.26) beat analysts' Q2 forecasts on a 57% rise in revenue and increased its full-year profit outlook. Abbott Labs (ABT 45.80 +1.10) topping estimates and raising guidance also helped Health Care nearly halve its 5.0% year-to-date decline.

Technology, which was under pressure early on after Yahoo (YHOO 25.20 -7.04) merely matched forecasts, as Q2 profits fell 80% on lighter than expected sales and the company delayed the much-anticipated release to its search advertisement system, found renewed buying interest. Despite some uncertainty regarding EPS reports from bellwethers Qualcomm (QCOM 36.73 -0.67) and eBay (EBAY 25.93 -0.66) after the bell, Dow component International Business Machines (IBM 76.15 +1.89) beating Wall Street's expectations by a penny helped restore some optimism about tech's growth prospects.

Even Energy, which was under pressure throughout most of the session in sympathy with falling oil prices, and provided an opportunity for investors to rotate into underperforming areas like Tech and Health Care, closed higher. With Bernanke recently saying that "much of the upward pressure on overall inflation this year has been due to increases in the prices of energy," crude oil futures closing below $73 per barrel, following unexpected builds in weekly gasoline and crude oil inventories, was also seen as welcome news for a market reeling from concerns about rising energy prices. DJ30 +212.19 NASDAQ +37.49 SP500 +22.95 NASDAQ Dec/Adv/Vol 713/2326/1.98 bln NYSE Dec/Adv/Vol 477/2839/1.87 bln

3:14PM Bond Watch: Session Ends Stronger on Fed Expectations (BONDX) : The bond market held the strong gains into the close, liking comments from Fed chief Bernanke as players consider that the end of long rate hike season is in sight, while the new chief also sees growth slowing & inflation being contained. The shorter maturities were knocked around pretty good, while the 2-10-yr yield spread cut a wide swath but ultimately ended the session about where it came in. The yields on the 10-yrs were knocked off to below 5.050% as the 2-yrs saw a push to 5.098%. Thurs should follow similar action as the market sees some mid-tier data along with a Bernanke do-over at the House financial committee. The FOMC minutes hit, but there is not much to be expected there on the heels of the Fed testimony. "The one & done camp is leading the way here," notes one long time player adding, "for the moment, anyway." Core CPI was up 0.3% for the 4th consecutive month while the headline number reported inline. Housing starts were worse than expectated at 1850K (consensus 1900K) as were building permits at 1862K (consensus 1920K). The buck was beaten up badly on Bernanke's testimony after getting a little boost on the core inflation number. The euro has spiked up to 1.2609 from a session best 1.2458 (not seen since Apr 27th) while the yen did better at 116.62. The dollar index is way down at 86.44 (-0.57). Spot gold grabbed some shine jumping to 642.15 (+9.10) while Sep's soon-to-be front month crude oil contract is off at 74.85 (-0.41). Tomorrow brings initial jobless claims, leading indicators, Philly Fed & on the Fed front the markets will get the minutes to the Jun FOMC meeting along with more Bernanke. The 10-yr is currently +19/32nds yielding 5.053% (for more bond commentary click here).

12:13 pm Southwest Airlines (LUV)

17.35 +1.41: Southwest Airlines said its second quarter profit more than doubled from a year ago, helped by higher fares and the use of options to hedge its exposure to significantly higher fuel prices. Based on the announcement, shares of the Dallas-based company were up sharply, gaining more than 9% during the regular trading session.

For the most recent quarter, the low-cost carrier said it earned $333 million, or $0.40 per share, up from $144 million, or $0.18 per share, a year earlier. Excluding gains from its hedging activities, the company earned $0.33 per share - largely exceeding the Reuters Estimates consensus of $0.26 per share. Revenue totaled $2.45 billion, up 26% from a year ago and better than the consensus estimate of $2.31 billion. Southwest attributed the increase in revenue to strong demand for its service as competitors reduced capacity, which resulted in higher occupancy rates. The company also boosted revenue by increasing fares four times this year.

Given the current healthy revenue environment, Southwest sees earnings momentum continuing into the fiscal third quarter and expects to exceed its earnings growth target of 15% for the full year. The company said third quarter bookings are strong and the rise in operating costs, excluding fuel, are expected to be lower than the 4.9% increase in the second quarter.

Meanwhile, as higher fuel costs continue to weigh on the industry, Southwest said it is over 73% hedged for the remainder of the year at approximately $36 per barrel. Jet fuel costs for the third quarter, however, are expected to be well above the last year's cost of $0.95 per gallon and exceed the $1.42 per gallon recorded in the second quarter. In the longer term, the company's exposure to fuel costs will increase, with its hedging cover falling to 65% in 2007 at $41 per barrel; 38% in 2008 at $40 per barrel; 34% in 2009 at $44 per barrel; and 12% in 2010 at $61 per barrel.

--Richard Jahnke, Briefing.com

11:27 am Manpower Inc. (MAN)

63.30 +1.40: Shares in Manpower Inc. were higher Wednesday after the employment services company showed a little muscle and said it saw second quarter earnings of $0.91 per share, $0.11 better than the Reuters Estimates consensus of $0.80.

The Milwaukee-based international company, whose stock has gained almost 30% in the last 52 weeks, said revenues rose 9.5% year over year to $4.44 billion versus consensus of $4.29. The company issued in-line guidance for the third quarter, seeing earnings per share of $0.98 to $1.02 versus $1.01 consensus.

The Labor Department's lackluster employment report for the month of June had cast doubt on expectations for the company in the latest period, but Wednesday's results calmed those concerns. The company, which has a market cap of about $5.43 billion, said during a call with analysts that it continues to see growth in the U.S., but that the majority of momentum is from Europe and Asia. Company executives said they expect to see continued improvement in the company's overall profit margin.

At about 20x trailing 12-month earnings, the stock - which has seen gross margins soften a bit over the past few quarters, but operating and net margins hold their ground - is within the range of the industry average and continues to look attractive at current levels. Manpower's network of 4,400 offices in 72 countries and territories enables the company to meet the needs of 400,000 clients per year.

--Christine Marie Nielsen, Briefing.com

11:16 am Ryland Group (RYL)

36.43 +1.61: The Ryland Group on Tuesday reported a lower second quarter profit, but beat analysts' expectations as revenue increased 3.2%. The latest results sent shares of the Calabasas, California-based homebuilder more than 5% higher in early market activity. Other major builders, such as DR Horton (DHI), Toll Brothers (TOL), and KB Home (KBH), also traded higher.

For the quarter, Ryland posted earnings of $94.8 million, or $2.03 per share, compared with $104.3 million, or $2.10 per share, in the year ago period. Total revenue rose to $1.2 billion from $1.16 billion last year, as an 8.5% increase in the average price of a home offset a 5.8% decline in the number of closings. Analysts on average were expecting the company to earn $1.93 per share on revenue of $1.21 billion, according to Reuters Estimates.

Meanwhile, Ryland said new orders for the quarter plunged nearly 40% to 3,023 units, or $890.9 million, from 4,988 units, or $1.48 billion, in the year ago period. While new home orders have slipped in recent months, many homebuilders have lowered their their financial projections for the year, citing rising interest rates, negative new order trends, and higher cancellation rates. Ryland is forecasting full-year earnings of $7.75 and $8.25 per share, in line with the consensus estimate of $7.99 per share.

Amid difficult selling conditions for homebuilders due to rising interest rates and slowing demand, Ryland shares have plunged nearly 50% since the start of the year. At the current level, shares of the company appear cheap at 4.6x this year's projected earnings. However, as highlighted in our Ask An Analyst column, we would avoid the stock as we remain concerned that earnings estimates for the company and other homebuilders will be subject to further downward revisions, with the housing market continuing to show signs of a slowdown.

--Richard Jahnke, Briefing.com

10:59 am UnitedHealth Group (UNH)

48.40: After reeling from questions over the timing of stock options grants and industry fallout over pricing dynamics and higher costs, shares of UnitedHealth tumbled at the end of May. But today is another day and the market is warmly welcoming UNH's second quarter results, sending shares soaring in early trading. Also adding to the fanfare was news that the company expects accelerating earnings per share given seasonal trends in Medicare in the second half of the year .

While convoluted and confusing due to the commencement of Medicare Part D and the PacifiCare acquisition, UNH reported a better than expected quarter. The second largest US health insurer earned $974 mln or $0.70 per share compared to $770 mln or 58 cents in the prior year's period and analysts' expectations of $0.68. Revenue jumped 57% to $17.92 bln propelled by the acquisition - in line with consensus estimates. Operating margins rose to 9.1% from 8.4% in the first quarter but were still down from 11% last year.

UNH said it reached over 4 mln new customers in the first six months of the year through employer health programs, senior and government services and specialty product lines. All eyes were on the medical care ratio, reflecting medial costs as a percentage of premium revenues, that fell by 50 basis points sequentially to 82%. The strong quarter fortified management's expectations of 15% earnings growth in FY07, above the 2006 outlook of $2.91 to $2.95 per share. UNH trades at a forward multiple of 17.4x, compared to other managed care providers Aetna (AET) at 14.4x, Cigna (CI) at 12.4x, Coventry Health (CVH) at 16.4x, WellPoint (WLP) at 16.6x, and Humana (HUM) at 20.4x.

--Kimberly DuBord, Briefing.com

10:53 am JPMorgan Chase (JPM)

42.52 +1.81: Be forewarned, it will take you a while to read through the earnings press release from investment bank JPMorgan Chase. In an effort to spare you some brain cells, here is a brief synopsis of the key takeaways:

The investment banking business was strong as it generated record fees, paced by equity and debt underwriting
Performance-based compensation triggered a 35% jump in noninterest expense for the investment banking business. Noninterest expenses overall fell 14% from the prior-year period. Excluding a rash of items, they would have risen $657 million, or 6.1%, but that is palatable given a 15% increase in net revenue for the quarter
The credit environment was extremely favorable as the provision for credit losses was down 31% from the prior year (management doesn't expect such favorable activity to continue)
Higher deposit and loan balances were offset by narrower spreads earned on loans and deposits; managed net interest margin for its Card Services business slipped to 8.66% from 8.83%
The mortgage banking business was a weak spot and drove an 11% decline in net income for the Retail Financial Services segment. All other business lines - Investment Banking, Card Services, Commercial Banking, Treasury and Security Services, and Asset and Wealth Management - delivered hefty, double-digit percentage gains in earnings versus last year
Altogether JPMorgan Chase reported second quarter net income of $3.5 billion, or $0.99 per share, versus $1.0 billion, or $0.28 per share, last year. The sharp increase was influenced by the absence of a litigation reserve charge of $1.2 billion taken last year, as well as $565 million in after-tax gains from non-recurring items that were offset somewhat by $358 million in after-tax expenses related to merger costs and Treasury portfolio positioning.

Excluding items, JPMorgan Chase indicated that earnings of $0.94 per share were comparable to the consensus EPS estimate of $0.87.

The upside surprise from JPMorgan, along with clear signs of progress with its merger integration efforts, have provided a nice boost to its stock today, which is up 17% since we profiled it on our Bargain Hunting page in October. While the trading environment could grow more challenging in the months ahead, and JP Morgan should do even more to get costs down, we believe its stock still affords investors a good value opportunity. At the current price, it is trading at 1.33x book value, which is a discount to competitors like Citigroup (2.05x), Bank of America (1.75x), and Wachovia (1.75x).

--Patrick J. O'Hare, Briefing.com

10:38 am Unisys Corp. (UIS)

5.69 -0.46: Information technology consulting company Unisys Corp. Wednesday said employee reductions costs and a decrease in service and technology orders resulted in a second-quarter loss of $0.57 per share, including a $141.2 million pre-tax charge. Revenues fell 2.0% year over year to $1.41 billion versus consensus of $1.45 billion.

The company has said it expects total work force cuts of 5,500 to bring it annual savings of more than $325 million by the second half of 2007. Unisys expects to cut another 1,300 jobs in the third quarter and believes the repositioning effort will significantly enhance its profitability and competitiveness over the long term.

With negative earnings, the company does need to do something. The company is trading in the upper portion of its 52-week range as expectations for a turnaround begin to loom, but investors would be best to let this company indicate its fixes are working before they get involved.

--Christine Marie Nielsen, Briefing.com

10:28 am Abbott Laboratories (ABT)

45.89 +1.19 Abbott Laboratories strongly beat consensus estimates for the second quarter, reporting EPS of $0.62 versus the $0.57 estimate. For both these results and the estimates, one-time charges and Guidant-related acquisition costs were excluded. The results are particularly positive for two reasons: margin expansion and higher guidance for the full 2006 year.

The first is that the quarter shows extremely strong margin expansion over the year ago quarter. Although total revenue for the second quarter of 2006 was less than that of a year ago, net income was sharply higher, at $946.7 million versus the year ago income of $877.1 million (both excluding one-time charges). The higher net income is primarily due to higher gross margins, as this quarter showed gross margin of 56.5%, a sharp increase from the year-ago period of 52.4%. Driving the higher gross margins is a larger percentage of the high margin branded drugs as a percentage of total revenue.

Also positive in this quarter's report is the raised guidance for the full 2006 year. Abbott now expects full year EPS of $2.49 to $2.53, up from previous guidance of $2.46-2.52. Consensus estimates for the full year before the raised guidance is $2.47.

All of these results are strong confirmation of the long term investment premise we set forth for Abbott Labs as one of the current stocks followed by the Ahead of the Curve column.

-- Robert V. Green, Briefing.com

10:03 am Yahoo! (YHOO)

26.97 -5.27: Shares of Yahoo Inc. fell sharply after the Internet giant reported second quarter sales that missed analysts' expectations, and said it will delay the release of its new online advertising platform. The stock, which is down about 32% since the start of the year amid increasing competition from rival Google Inc. (GOOG), slipped more than 18% in early market activity and is sitting at a new 52-week low.

For the most recent quarter, Yahoo posted earnings of $164 million, or $0.11 per share, including $73 million of stock-based compensation expense, net of tax, recorded under the fair value method. Last year, the Sunnyvale, California-based company earned $755 million, or $0.51 per share, which included $7 million of stock option expense and a one-time gain for the sale of its stake in Google. The result matched analysts' estimate of $0.11 per share, according to Reuters Estimates.

Revenues for the quarter totaled $1.58 billion, up 26% from $1.25 billion last year, as marketing services revenue grew 27% and fees revenue increased 19%. Excluding traffic acquisition costs, or the commissions paid to advertising partners, revenues increased 28% to $1.12 billion. That was slightly below analysts' target of $1.14 billion.

Although the latest results, along with the delay in releasing new advertising software, were not what investors had hoped for, Yahoo maintained its outlook for the full year and issued in-line guidance for the fiscal third quarter. The company said it still expects revenue of $4.60 to $4.85 billion for the year, versus the consensus estimate of $4.78 billion. For the current quarter, it sees revenue between $1.11 to $1.12 billion, in line with analysts' forecast of $1.19 billion.

(Disclosure: Briefing.com has a business relationship with Yahoo!)

--Richard Jahnke, Briefing.com

09:50 am American Standard (ASD)

39.60: Air conditioning, plumbing products and automotive braking systems company American Standard Cos. Inc. indicated Wednesday that a drop in its bath and kitchen sales resulted in a slight miss in its financials for the latest period.

The company, which has a market cap of about $8.05 billion, said it had second-quarter earnings of $0.92 per share, excluding non-recurring items. That was $0.01 worse than the Reuters Estimates consensus of $0.93. Revenues rose 8.6% year over year to $2.99 billion versus consensus of $2.99 billion.

The company issued in-line guidance for the third quarter, seeing earnings per share of $0.80 to $0.85 versus $0.84 consensus. The company also issued in-line guidance for the full year of 2006, seeing earnings per share of $2.70 to $2.80 versus $2.76 consensus. Fred Poses, chairman and CEO, said growing strength of the commercial part of its air conditioning business, higher truck builds and the improving performance of its bath and kitchen business will enable the company to offset increasing commodity and energy costs.

The N.J.-based manufacturer Friday declared a regular quarterly dividend of $0.18 per share. The company said it will pay the dividend on Sept. 20 to shareholders of record Sept. 1.

The company has a history of returning cash to shareowners through share repurchases and its quarterly dividend. Also making it look solid is the fact that it's on track to achieve 2006 cash-flow targets of $835 to $860 million in net cash provided by operating activities and $575 million to $600 million in free cash flow.

At about 16.4x trailing 12-month earnings, the stock is trading at a slight premium to the industry average. Price dips should be viewed as potential entry points.

--Christine Marie Nielsen, Briefing.com



09:38 am General Dynamics (GD)

68.35: The first wave of earnings reports from the defense contractors continue to annihilate expectations. Following in the tracks of United Technologies (UTX) yesterday, General Dynamics, the largest maker of armored vehicles, reported a three cent upside as second quarter profits rose 24%. Earnings from continuing operations increased to $420 mln, or $1.03 per share as the Iraqi war increased demand for troop transports, weaponry and spare parts.

The quarter was driven by near 30% revenue growth in the Aerospace and Combat Systems groups, yielding total revenue growth of 15.5% to $5.93 bln. Operating margins improved in four of five of its business segments, resulting in an overall 40 basis point improvement to 10.9%. General Dynamics, which also makes Gulfstream business jets, benefited from the ongoing wars in Iraq and Afghanistan and subsequent increased demand for Stryker troop transports and battlefield radios. In April, it won a $464 mln award to build 306 new 8-wheel Stryker vehicles. Its funded backlog grew by $1.3 bln sequentially.

The ongoing growth cycles in the aerospace and defensive industries underscore our Overweight rating on the Industrial sector. The military's operations and modernization and refurbishment efforts continue to drive a positive outlook for the defense contractor. Increasing Army weapons outlays in particular raise expectations for General Dynamics, which produces high-performance armament systems. With two quarters now in the bag, this Falls Church, Virginia-based company took the opportunity to raise full year earnings expectations to $4.15 per share vs. consensus of $4.14.

--Kimberly DuBord, Briefing.com

09:05 am Bank of America (BAC)

48.44: Bank of America Corp., a company we recently featured in our Stock Swap column, said second quarter profits climbed 18% to $5.48 billion, from $4.66 billion a year earlier, driven by strong momentum across its businesses and the acquisition of MBNA Corp. On a per share basis, the Charlotte, North Carolina-based bank earned $1.22, which excludes merger and restructuring charges of $0.03. The result was twelve cents better than the Reuters Estimates consensus of $1.10 per share.

Revenues for the period surged 25.3% from a year ago to $18.52 billion, helped by stronger fees from its investment banking and capital markets businesses. Corporate and investment banking revenues climbed 16% to $5.72 billion, while wealth and investment management increased 9% to $1.96 billion. Capital management revenue jumped 52% to $10.48 billion, as revenue from card services increased 163% to $5.47 billion due to the addition of MBNA Corp.

The company said net interest income rose 14% to $8.93 billion, helped by loan growth and increases in asset-liability management activity, offset by lower core deposits and spread compression. The net interest yield increased 5 basis points to 2.85%. Meanwhile, non-interest income was up 38% year/year to $9.6 billion, due to higher card income, as well as continued strength in service fee income and increases in trading account profits and investment banking income.

In spite of a difficult interest rate environment, Bank of America's latest performance demonstrates its diverse revenue sources and strong execution. Given the strong momentum across its businesses, including investment banking, the company appears well positioned for future earnings growth. As such, it remains one of our favorite companies within the Financial sector, which we currently have a Market Weight rating on.

--Richard Jahnke, Briefing.com

08:44 am St. Jude Medical Inc. (STJ)

32.27: Shares in St. Jude Medical Inc. were poised to open near unchanged Wednesday after the cardiovascular medical device creator and distributor indicated its financials had a steady rhythm, with the company seeing second quarter earnings of $0.38 per share, in-line with a Reuters Estimates consensus of $0.38.

While the company said revenues rose 15.1% year over year to $832.9 million versus the $814.1 million consensus (with unfavorable foreign currency translation comparisons decreasing second quarter sales by about $6 million), it also issued downside guidance. St. Jude said it sees earnings per share of $0.36 to $0.39 in the third quarter versus $0.40 consensus. The company also issued downside guidance for the full year of 2006, seeing earnings per share of $1.49 to $1.55 versus $1.57 consensus.

St. Jude's stock saw some gains Tuesday after the Food and Drug Administration approved two of its defibrillators for treating patients with potentially fatal heart arrhythmias and heart failure.

Briefing.com currently has a Market Weight rating on the health care sector, as its defensive-characteristics in a rising interest rate environment are being overshadowed by concerns over the rising cost of health care and intensifying competition among managed care providers. And at about 30x trailing 12-month earnings, the stock is also looking a little pricy to its closest competitors.
--Christine Marie Nielsen, Briefing.com



08:27 am IBM (IBM)

74.26: Considering the level of pessimism within the technology sector, even a lackluster report from IBM lifted shares. Big Blue posted its second quarter results after the bell on Tuesday and despite pockets of weakness, the tech bellwether was able to beat expectations by a penny. The upside came from the software segment driven by its middleware brands, WebSphere and Tivoli, generating 5% top line growth to $4.2 bln and pre-tax margins of 24.2%, up 410 basis points. In addition, overall profitability greatly improved, as it was up 110 basis points sequentially and 160 basis points yearly, demonstrating IBM's success in reducing operating costs.

The downside came from its two biggest segments, hardware and services. The hardware segment, excluding the divested PC business, posted mixed results due in part to product transition. Revenues rose 3% to $5.1 bln driven by microelectronics (game console chips) and zSeries servers. Services bookings, an indicator of future revenues, declined 34% year/year to $9.6 bln, calling into question management's target of mid-single digit service revenue growth in the second half.

Overall, IBM reported net income of $2.02 bln or $1.30 per share on revenue growth of 1% to $21.9 bln, net of the divested PC business. Meager top line growth is nothing new at IBM, but despite a hazy outlook for IT spending and an increasingly competitive global environment, management reiterated its target of double-digit earnings growth for the full year. Shares are trading at 12.8x trailing earnings vs. a 5-year average of 20.5x.

--Kimberly DuBord, Briefing.com

09:36 am Check Point Sftwr: ICAP reiterates Sell . Target $16.5 to $10.5. Firm cuts price tgt after the co reported Q2 earnings and revenue that were both a touch lower than consensus expectations. The firm noted higher operating expenses, particularly S&M and R&D due to the addition of new personnel, adversely impacted margins.

09:35 am Nevada Gold and Casinos: Merriman Curhan Ford upgrades Neutral to Buy. Firm ups rating saying while the co has posted lackluster results over the past 18 months, they see evidence indicating a turnaround as well as significant share value at current levels. The firm says believes the co has navigated cathrough a good deal of this transition and is poised to begin to deliver solid earnings growth again, and has undervalued assets and additional management depth.

09:33 am Simple Tech: Needham & Co reiterates Buy. Target $6 to $10. Firm raises price tgt following the preannounced Q2. The firm says they believe that the co is well positioned to grow revenues driven by strength in Flash products to O.E.MS and External Hard Disk Drives to the consumer market. They believe that STEC is a gross margin growth story, which will be driven by Flash O.E.M product growth.

09:32 am IBM: ICAP reiterates Sell . Target $73 to $60. Firm cuts price tgt noting the co reported 2Q earnings that were a penny better and matched the Street's expectation for revenue, which was bolstered by a much stronger than exp. Global Services performance. The firm says software improved slightly but guidance across all metrics was a bit weaker than expected.

09:29 am CB Richard Ellis: Credit Suisse initiates Outperform. Target $32. Firm initiates saying their diligence suggests recent trends in sales and leasing transaction volumes, prices, and sizes continue at above trend levels. Combined with market share gains, the firm says these trends should drive CB's rev and earnings above current market expectations.

09:28 am CBL & Assoc: UBS initiates Buy. Target $44. Firm initiates saying although CBL faces more challenges than some of its peers, they believe it has been mispriced. The firm says CBL consistently delivered FFO growth. The firm says they believe recent underperformance represents an opportunity and any sustained N.A.V discount may attract M&A interest.

09:27 am Dvlps Divers Realty: UBS initiates Buy. Target $61. Firm initiates saying despite competitive acquisition environment DDR has continued to grow, either through creative deals or the opportunistic Coventry funds. The firm says above-average F.F.O growth is supported by growing merchant building gains and a robust development pipeline of $1 bln+ through 2009.

09:27 am FormFactor: Cowen & Co initiates Outperform. Firm initiates saying following a bumpy ramp of a new mfg. facility last year, FORM is no longer capacity constrained and is poised to extend its lead into adjacent markets with a slew of new products. The firm notes the strong DRAM cycle the reason to play. The firm says they have been hoping to catch FORM shares lower in this market but their resilience underscores the powerful story that's hard to find fault with. THe see see 20% upside relative to the mkt. over the next 12 months.

09:25 am Yahoo!: Deutsche Securities downgrades Buy to Hold. Target $30. Firm downgrades saying expect the stock to be range-bound in the upper 20s/$30 through 2H 2006. The firm says while the fundamental growth story at Yahoo! looks respectable, the stock catalyst of the search monetization launch has been pushed out to early '07 limiting upside.

09:23 am Forest Labs: RBC Capital Mkts reiterates Sector Perform. Target $46 to $48. Firm ups price tgt following earnings. The firm says they remain encouraged by Forest's recent in-licensing activity, the potential for additional share repurchases, and most importantly, the recent Lexapro patent suit win.