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From Briefing.com: 5:50PM Nanometrics announces intention to restate financial statements (NANO) 10.64 -0.44:Co announces it will restate its financial statements for fiscal year 2004 and the first six months of fiscal 2005 to revise the accounting for certain post-sale warranty services. Because changes in prior period accounting will affect results of the recently completed third fiscal quarter, the results being reported today are preliminary. Preliminary results for 3Q05 reflect revs of $14.0-$14.5 mln vs consensus of $15.33 mln.

5:35PM Western Digital beats by $0.04 (WDC) 11.35 -0.46:Reports Q1 (Sep) earnings of $0.33 per share, excluding non-recurring items, $0.04 better than the Reuters Estimates consensus of $0.29; revenues rose 7.3% year/year to $1.01 bln vs the $0.99 bln consensus.

5:24PM Conexant beats by $0.02; guides above consensus (CNXT) :Reports Q4 (Sep) net of breakeven, excluding non-recurring items, $0.02 better than the Reuters Estimates consensus of ($0.02); revenues rose 8.8% year/year to $214.9 mln vs the $207.8 mln consensus. Co issues upside guidance for Q1, sees loss of $0.01 vs. $0.00 consensus; sees Q1 revs of $225 mln vs. $218.83 mln consensus.

5:21PM Intl Rectifier reports in-line; guides (IRF) :Reports Q1 (Sep) earnings of $0.41 per share, excluding non-recurring items, in-line with the Reuters Estimates consensus of $0.41; revenues fell 3.1% year/year to $272.6 mln vs the $273 mln consensus. Co issues guidance for Q2, sees Q2 revs of $275.3-283.5 mln vs. $282.60 mln consensus.

5:20PM Gateway beats by a penny; reaffirms (GTW) :Reports Q3 (Sep) earnings of $0.04 per share, $0.01 better than the Reuters Estimates consensus of $0.03; revenues rose 11.4% year/year to $1.02 bln vs the $1.01 bln consensus. Co reaffirms FY05 rev guidance of $3.9-4.0 bln vs $3.9 bln consensus.

5:17PM Microsoft beats by a penny; guides Q2 below consensus; FY06 in-line (MSFT) :Reports Q1 (Sep) earnings of $0.31 per share, including stock based compensation, excluding $0.02 RNWK settlement charge, $0.01 better than the Reuters Estimates consensus of $0.30. Gross Margins came in at 87.1%. SQL servers generated 15% rev growth. Co issues downside guidance for Q2, sees EPS of $0.32-0.33 vs. $0.35 consensus; sees Q2 revs of $11.9-12.0 bln vs. $12.26 bln consensus. Co issues in-line guidance for FY06, sees EPS of 1.28-1.32 vs. $1.31 consensus; sees FY06 revs of $43.7-44.5 vs. $44.43 bln consensus.

4:22PM Magma Design reports in-line; guides Q3 in-line (LAVA) :Reports Q2 (Sep) earnings of $0.10 per share, in line with the Reuters Estimates consensus of $0.10. Co issues in-line guidance for Q3, sees EPS of $0.08-0.12 vs. $0.11 consensus; sees Q3 revs of $38-42 mln vs. $40.88 mln consensus.

4:21PM JDS Uniphase sees Q1 rev above midpoint of guidance (JDSU) :From today's 8-K: "Company expects revenue for its first fiscal 2006 quarter to be above the midpoint of the guidance issued by management on September 1, 2005. At that time, the Company expected fiscal 2006 first quarter revenue to be $250 million, plus or minus $10 million."

4:10PM Lexar Media and Samsung Extend and Renew Strategic Supply and License Agreements (LEXR) :Co announces that it and Samsung Electronics Co., Ltd. have agreed to a significant extension and renewal of their strategic supply and license agreements. The new agreement extends the supply agreement for an additional five year term, through March 2011, expands the range of products covered by the original agreement and improves the overall terms of purchase for Lexar.

Close Dow -115.03 at 10229.95, S&P -12.48 at 1178.90, Nasdaq -36.24 at 2063.81: The indices never gained any traction Thursday and ultimately broke down in the afternoon amid disappointment that there wasn't any follow-through to the rally earlier in the week that was spurred by the nomination of Ben Bernanke to replace Alan Greenspan as Fed Chairman.The tone was set prior to the start of trading as news that General Motors (GM 27.19 -1.98) received a subpoena from the SEC relating to various issues, including its pension accounting, cast a pall on the futures market and overshadowed another large batch of better than expected earnings news. The latter development aside, tentative Q4 guidance from several companies capped the market's enthusiasm for the Q3 results. Verizon (VZ 30.76 +0.17) and ExxonMobil (XOM 55.60 -0.60) were winning standouts in the early-going after reporting their earnings results, but like the broader market, faded in the afternoon sell-offs.The drop in XOM contributed to a 1.8% decline in the Energy sector. Following a larger than expected build in natural gas supply, energy prices pulled back for part of the session, yet crude and gasoline futures ended up closing higher for the day. The energy price action weighed on the retailers. Along with GM and weakness in the homebuilders, the retailers paced a 1.9% drop in the Consumer Discretionary sector. Technology levied a weighty 1.1% loss, roiled by Baidu.com' (BIDU 70.35 -10.70) earnings report and significant declines in semiconductors, networking, and hardware. Separately, Verizon's modest gain helped limit the Telecom sector's (-0.2%) slide. Materials had been supported by Dow Chemical (DOW 45.20 +0.35), which beat Q3 expectations before the bell, but the sector still posted a 0.8% loss. After Aetna (AET 83.80 +2.10) delivered upside earnings, HMOs recovered and held Healthcare higher. Sharp declines in pharmaceuticals and biotechs won out, though, and the sector slipped 0.5%. While leadership never emerged today, relatively modest losses in the Financial sector (-0.39%) kept things from looking even worse in the broader market. A pair of positive earners - Countrywide Financial (CFC 30.57 +0.27) and Moody's (MCO 54.39 +0.25) - along with optimism ahead of reports from MetLife (MET 50.60 +1.23) and Franklin Resources (BEN 88.68 +0.96) supported the sector but ultimately could not combat a 2.5% drop in American Express (AXP 48.90 -1.24). Separately, Treasuries halted their week-long decline, as oversold conditions and a sharper than anticipated decline in durable orders ushered bond traders back to the table.DJTA -1.63, DJUA -1.30, DOT -1.06, Nasdaq 100 -2.02, Russell 2000 -2.12, SOX -2.72, S&P Midcap 400 -1.75, XOI -2.28, NYSE Adv/Dec 879/2389, Nasdaq Adv/Dec 702/2316

1:42PM FormFactor: Korean Patent Court reverses Korean intellectual property office ruling on certain claims of two FORM patents (FORM) 24.02 -1.00: -Update- Co announced the Korean Patent Court issued an oral ruling holding invalid certain claims of two of four Korean Patents asserted by FORM against Phicom Corporation. Following normal practice, the basis for the ruling was not given and a written opinion explaining the ruling would typically be expected in one to three weeks. FORM is asserting against Phicom two other Korean Patents that the Korean Intellectual Property Office has confirmed valid over Phicom's challenges, which Phicom has appealed. These two patents are not affected by today's Patent Court ruling. FORM's issued U.S. patents, including the four patents that the Company is asserting against Phicom in federal court in Oregon are also not affected by the Patent Court decision. "We are awaiting the written decision from the Patent Court to understand and evaluate the substantive merits of the ruling and to finalize plans for an appeal."

10:41AM MathStar IPO prices; development stage semiconductor company (MATH) 6.00 :MathStar prices its IPO at $6. The co is a development stage developer of a new class of semiconductor, called field programmable object arrays, or FPOAs. Its FPOAs are high-performance, reprogrammable integrated circuits based on its proprietary silicon object technology. The co says its FPOAs process logic functions at a clock rate up to 1 GHz, which is 2-4x faster than current commercially available programmable logic devices. It believes its FPOA chips offer better performance than ASIC or FPGA chips. As a development stage co, MATH has virtually no revenue and has not yet commercialized any products. In Q1, the co expects to produce a new version of its FPOA chip and begin selling the chip to customers. The co has a strategic agreement with Honeywell (HON) to introduce its FPOA technology to the aerospace market. Honeywell has selected the co's FPOA technology for use in digital signal processing systems it designs for space-based applications... Briefing.com Note: Development stage tech cos are tough to predict, but you may want to keep it on the radar. Feltl & Co. is the lead underwriter for this 4 mln share deal.

9:44AM MGM Mirage (MGM) KeyBanc Capital Mkts / McDonald downgrades Buy to HOLD. KeyBanc downgrades MGM following Q3 results, saying while they remain sanguine with the co's long-term story, they note that recent business conditions, an uncertain consumer spending environment and more difficult match-ups going forward force them to adopt a more conservative investment posture toward the shares and ultimately await a more attractive entry point.
9:43AM Threshold Pharma (THLD) Morgan Stanley initiates OVERWEIGHT. Target $17. Firm says their discussions with numerous urology experts suggest that TH-070 is active in benign prostatic hyperplasia and has a high probability of replicating positive previous data in Phase II/III trials that are currently under way. If it does, they believe the co will both grow the BPH mkt and take meaningful share.

9:42AM Lucent (LU) Deutsche Securities downgrades Buy to HOLD. BMO Nesbitt downgrades LU following below expectations Q3 results, citing the low quality of earnings; saying ex pension income they expect the co will only earn about 5 cents a share. They also note that the guidance provided on the call indicates that rev growth is slowing and that pension income will be less in 2006, and the underlying operating performance of the co is more transparent.

9:41AM Cogent (COGT) JMP Securities upgrades Mkt Underperform to MKT PERFORM. Firm believes the stock's recent price retrenchment combined with an improving fundamental outlook, now makes it an attractive investment opportunity. They think the co is one of the best-positioned in the Homeland Security sector by virtue of its strategic focus on high growth, high margin and high dollar value biometrics mkts. They believe these factors should substantiate the stock's premium valuation relative to others in the sector.

9:39AM United Micro (UMC) Needham & Co downgrades Buy to HOLD. Although the overall business environment seems to be more positive and picking up, they are not seeing the strength out of UMC as they had hoped for. They say utilization rates for UMC are still low as compared to others in the industry, particularly TSMC & SMIC, and despite sequential increases in numbers from the second quarter, they weren't as positive as they had expected, due in large part to margins which got "squeezed". Firm is concerned that their business model may not be working as it has in the past.

9:39AM Lear (LEA) Calyon Securities upgrades Sell to NEUTRAL. Target $26. Although they continue to question LEA's long-term fundamentals, they believe most of the bad news is already discounted into the stock. However, firm says rising debt levels will mean LEA will be faced with higher debt-servicing costs and the possibility of another credit rating downgrade. If this is the case, they believe the co's dividend policy will come under increased scrutiny and expect a dividend cut announcement following the mid-November board meeting is highly probable.

9:37AM Diodes (DIOD) CE Unterberg Towbin upgrades Market Perform to BUY. They say that following the recent secondary offering, DIODs cash position has improved markedly to over $6/ share up from $2/ share at the end of Q2. They believe that the co will eventually use this to bolster its Analog initiatives, but in the near term it will enable the co to augment its Capital expenditure budget.

9:36AM Janus Capital (JNS) UBS upgrades Reduce to NEUTRAL. Target $13 to $17. While they are still struggling a bit with valuation on current ests, given the ongoing positive trends as well as expense reductions in 2006 & 2007, they think the valuation looks more reasonable.

3:32PM Wendy's (WEN)
45.26 -1.74: Wendy's International reported third quarter earnings of $0.61 per share, which included special gains and charges, leaving many wondering if the figure was actually comparable to the Reuters Estimates consensus of $0.57. Less than three minutes later, as market participants also digested unenthusiastic comments from CEO Jack Schuessler and a lowered FY05 EPS outlook, shares, which were already down on the day, slipped 1.7% further into negative territory. Management said it was "disappointed" with the company's overall results but remains focused on improving top-line growth, particularly at its Wendy's and Baja Fresh brands.

Total revenues rose 5.1% year/year to $960.6 mln, better than the $948.1 mln analysts had anticipated. However, the bigger influence typically linked to depicting performance trends among restaurants are same-store sales figures, which investors already knew. On October 5, Wendy's pre-announced a 5.0% decline in Q3 same-store sales versus the Briefing.com Benchmark Consensus of -1.7%. Franchise comps decreased 5.5% (consensus -1.5%) and Baja Fresh comps decreased 4.1% (consensus -0.3%) while comps at Tim Hortons Canada and Tim Hortons US increased 3.6% (consensus +4.0%) and 4.7% (consensus +6.4%), respectively.

While encouraged by the progress of strategic initiatives at Wendy's, as management moves forward with plans to sell certain real estate assets, close underperforming stores and sell selected company-owned stores to franchisees, it doesnt appear such improvements will come soon enough. Based on lower-than-expected sales at Wendy's, including the impact of lost revenues and increased expenses related to hurricanes that have negatively impacted year-to-date earnings by about $0.02 per share, the company now sees FY05 EPS of $2.12 to $2.15 (consensus $2.19). That equates to a 3-4% year/year increase, which is below the 7-10% year/year EPS growth that was expected with previous FY05 earnings guidance of $2.20 to $2.26 per share. Anticipated costs in Q4 related to the upcoming Tim Hortons IPO and lower store development goals (i.e. 425-450 new restaurants in 2005 compared to an original goal of 510-560) also contributed to the company's third earnings warning in as many quarters this year.


--Brian Duhn, Briefing.com

3:24PM Biogen-Idec (BIIB)

38.46 -1.55: Biogen Idec shares drifted sharply lower on Thursday after the Cambridge, Massachusetts-based company reported third quarter results below analyst expectations. For the most recent quarter, Biogen posted earnings of $27 million, or $0.08 per share, compared with $37 million, or $0.10 per share, a year earlier. Before various charges, the company would have earned $0.36 per share versus $0.37 per share last year - well below the consensus EPS estimate of $0.43.

The quarter included an $88 million charge for merger-related costs, a $27 million charge for severance and relocation expenses, and a charge of $21 million related to the sale of two manufacturing facilities.

Driven by sales of Avonex and Rituxan, total revenue increased 10% from a year ago to $596 million. The consensus estimate for the latest quarter was $618.61 million. Sales of Avonex, Biogen's therapy for multiple sclerosis, rose 8% to $375 million (vs. $390 mln. consensus), while sales of Rituxan, for its part, climbed 14% to $182 million (vs. $179 mln. consensus). The company co-promotes Rituxan, a treatment for B-cell non-Hodgkin's lymphomas, with Genentech (DNA). All U.S. sales of the drug are recognized by Genentech; Biogen records its share of the pretax co-promotion profits on a quarterly basis. U.S. net sales of the drug were $456 million during the quarter, as reported by Genentech.

Importantly, the company issued fiscal 2006 EPS guidance of $1.95 to $2.10, in line with the average analyst estimate of $1.98. In addition, the company said it anticipates 2006 capital expenditures will be in the range of $200 to $275 million. The outlook assumes the return of Tysabri to the market in mid-2006, as well as the launch of Rituxan in rheumatoid arthritis. Tysabri, a treatment for multiple sclerosis that is co-marketed with Elan (ELN), was pulled from the market in February after two patients using the drug were linked with the rare brain disease know as PML, or progressive multifocal leukoencephalopathy. Both companies have recently conducted a medical review of the drug, and are seeking regulatory approval for reinstatement.

As a result of the halted sales of Tysabri and uncertainty over its reinstatement, shares of BIIB are down nearly 45% year-to-date. On top of that, the stock lost as much as 4% during the regular trading session on account of the lower-than-expected results for the third quarter.

--Richard Jahnke, Briefing.com

3:06PM Waste Management (WMI)

28.76 +1.21: Shares of Waste Management, the nation's largest collector of garbage, have moved noticeably higher in a day accented by broad-based selling pressure. The Houston-based company reported that third-quarter net income slid 29% year/year to $215 mln, or $0.38 per share, including asset impairments of $61 mln, restructuring charges of $19 mln related to previously announced job cuts and other extraordinary items. Also weighing on profits were lost revenue and increased operating expenses related to hurricanes Katrina and Rita, which shaved about a penny per share off the company's bottom line.

However, after backing out the plethora of special charges totaling $30 mln, or $0.07 a share, Q3 (Sep) EPS grew 12.5% year/year to $0.45, $0.02 better than the Reuters Estimates consensus of $0.43 and a nickel above last year's results. Revenue rose 3.1% year/year to $3.38 bln, basically matching the $3.4 bln consensus, but internal revenue growth from yield on base business exceeded 2.0% for the third straight quarter, reaching a five-year high of 2.7%.

Providing additional buying interest in WMI has been the approval by the company's Board of Directors to increase the quarterly dividend 10% to $0.22 per share. While higher dividend payments remain one of the cornerstones of Waste Management's capital allocation program, investors have embraced the Board's authorization for management to return up to $1.2 bln annually to shareholders in the form of cash dividends and stock buybacks.

Even though WMI shares have jumped 4.0%, the stock still trades below its December 31, 2004, closing price of $29.32. At 18.7x forward earnings, WMI's P/E multiple is still below those of its two largest competitors Allied Waste Industries (AW) and Republic Services (RSG), which trade at 22.5x and 19.7x forward earnings, respectively.

--Brian Duhn, Briefing.com

1:51PM Pulte Homes (PHM)

35.90 -1.12: Amid growing concerns of a nationwide housing bubble, Pulte Homes reported better than expected quarterly results on continued strong housing demand, and raised its earnings forecast for the full-year. The homebuilder, based in Bloomfield Hills, MI, said earnings from continuing operations increased 50% to $387.7 million, or $1.47 per share, from $259.1 million, or $0.99 per share, in the year-earlier period. Analysts were expecting earnings of $1.39 per share, according to Reuters Estimates.

During the latest quarter, revenue surged 29.8% to $3.84 billion, surpassing the consensus estimate of $3.77 billion. Pulte said domestic homebuilding revenues increased 32% to $3.7 billion, as unit settlements rose to 11,747 homes from 9,669 homes a year ago. The results also reflect a 9% increase in average selling price to $317,000 per home. Domestic net new home orders for the period rose 19% to 12,062 homes, while the value of those homes increased 33% to $4.0 billion. Pulte's backlog at the end of the quarter was valued at $8 billion for 23,666 homes, compared with $6.4 billion for 20,400 homes last year.

Given the strength of its performance year-to-date, the company raised its outlook for the full year with EPS of $5.35 to $5.45. Pulte had previously projected earnings of $5.00 to $5.25 per share. According to Reuters Estimates, analysts expect full-year earnings of $5.32 per share on revenue of $14.77 billion. Additionally, the company announced that its Board of Directors increased its stock repurchase authorization by $100 million.

Despite rising interest rates and persistently high energy prices, Pulte, as well as other large homebuilders, continue to report strong quarterly results. However, investors' increasing focus on negative trends has weighed on the sector in recent months, creating a notable disconnect between industry fundamentals and the performance of industry stocks (a topic that was discussed in Briefing.com's Looking Ahead column on Oct. 25, 2005). While business continues to be strong for homebuilders, particularly for larger builders like Pulte, the market's perception is that the industry has reached a peak. As such, homebuilding stocks have suffered from the anticipated decline in housing demand/growth, despite consistently solid quarterly results.

Although the housing market is likely to cool as rates remain on the rise, it continues to be Briefing.com's view that mortgage rates would have to approach the mid/upper 6.0% level to significantly constrain the still strong market fundamentals.

--Richard Jahnke, Briefing.com

12:47PM Verizon (VZ)

30.81 +0.24: Verizon's shares are finally enjoying some upward momentum following a better than expected third quarter result on record growth in wireless and solid contributions from wireline. Verizon's share have been on a slow, steady decline after peaking in November just above $42.00 per share. Going into the quarter, the market was expecting Verizon to post an in-line report, at best, as the company had to lower prices in order to compete for wireless subscribers. Verizon earned $1.87 bln, or $0.67 per share, with normalized earnings coming in two pennies ahead of consensus at $0.66. The top line also bested estimates, growing 5% per annum to $19.04 bln.

Accentuating the strong quarter report was Verizon's upbeat forecasts. Verizon fine-tuned estimates for the full year, saying it anticipates revenue growth between 5.5% to 5.8%, which translates to $75.20 to $75.41 bln. This compares with consensus at $73.57 bln.

Verizon Wireless, which is partly owned by Vodafone group, generated revenue growth of 14.2% year/year to $8.4 bln. The wireless business accounts for roughly 45% of total revenues. EBITDA was $3.02 bln for Wireless with margins of 41.5%. Cellular customers grew by 1.9 mln subscribers, for a total of 49.3 mln. Cingular Wireless remains the largest carrier in the US, after its acquisition of AT&T Wireless, with 51.4 mln subs. Verizon, though, is quickly closing the gap. Customer losses slowed to 1.3% of the subscriber base, down from 1.5%. This rate is referred to as churn. ARPUs, or the average revenue per subscriber, which provides an indication of the profitability of each subscriber, fell by 2.8% to $50.13. This compares to Sprint Nextel (S) at $65.00 per month, on churn of 2.1%.

Wireline revenues were roughly flat at $9.45 bln, with EBITDA of $3.50 bln. Revenues from the broadband and other high-value wireless services added 4.6% to APRUs to $51.61 per month for its wireline customers. Broadband and high capacity data services generated $2.2 bln in data revenues, up 10% from last year's period. Wireline network access service was $3.1 lbn, up 3%, while long-distance grew 2.3% to $1.1 bln. Subscribers of high-speed Internet services, including DSL and FiOS service, grew by 389,000 to 4.5 mln subs. The company recently launched FiOS, which is a next-generation fiber-optic based service. There will be a more in-depth article on Verizon appearing today in Briefing.com's Ahead of the Curve column.

---Kimberly DuBord, Briefing.com

11:39AM American Electric Power (AEP)

36.78 +0.12: American Electric Power, one of the nation's largest electric utilities, on Thursday reported higher third quarter earnings, excluding non-recurring items, helped by favorable weather which resulted in higher sales to retail customers and increased wholesale margins. For the latest quarter, the Columbus, Ohio-based company said it earned $387 million, or $0.99 per share, compared with $530 million, or $1.34 per share, for the same period last year. However, on an ongoing basis, earnings were $370 million, or $0.95 per share, versus $318 million, or $0.80 per share - $0.14 better than the consensus estimate of $0.81. Quarterly revenue was down 13% to $3.3 billion from $3.8 billion a year earlier.

AEP said the increase in third quarter earnings reflects the improved gross margins from its utility operations, which reported higher electricity sales to retail customer sectors and increased margins from off-system sales. In addition, the company benefited from the recent sale of its interest in the unprofitable natural gas operations at Houston Pipe Line. Ongoing earnings from utility operations rose $19 million to $378 million, which was partially offset by an increase in operating and maintenance expenses, higher fuel costs, and higher depreciation expenses. Gross margins from off-system sales, or sales to other utility systems, were up $69 million from last year to $203 million.

The company also raised its full-year earnings forecast to $2.55 to $2.65 per share from its prior range of $2.30 to $2.50. Analysts' full-year EPS target stands at $2.52. AEP said the revised guidance anticipates continued growth in retail and wholesale sales, offset somewhat by higher O&M costs. For 2006, the company issued EPS guidance of $2.50 to $2.70, compared with the consensus estimate of $2.59. O&M costs are expected to be flat with the current year.

Shares of AEP, which have retreated in the past month amid rising interest rates, have traded relatively flat during regular trading, despite the upbeat quarterly report. Since the beginning of the year, the stock has gained more than 11%. Shares are currently trading at 14.6x forward earnings.

--Richard Jahnke, Briefing.com

11:35AM Coca-Cola Enterprises (CCE)

18.87 -0.58: On September 8 Coca-Cola Enterprises warned that third quarter earnings would miss the Wall Street EPS forecast of $0.51, as weak category demand, slow retail trends, and unseasonable weather continued to weigh on volume expectations in Europe, which accounts for about 35% of the company's profit. That day the stock fell more than 9% before a Lehman Brothers downgrade (to Equal Weight from Overweight) 12 days later shaved an additional 1.6% off CCE's share price a pullback matched yesterday heading into its Q3 (Sep) earnings report.

Sure enough the nation's #1 soft-drink bottler, responsible for 20% of Coca-Cola's (KO) worldwide beverage sales, turned in a disappointment this morning. Third quarter EPS totaled $0.40, including expense items of $0.07 related to restructuring costs in North America and asset write-offs associated with property damage from Hurricane Katrina. Excluding those non-recurring items, Q3 earnings of $0.47 per share merely matched the "revised" Reuters Estimates consensus.

Total revenues rose 4.8% year/year to $4.89 bln, topping an expected $4.82 bln, as difficult conditions in Europe were offset by a combination of improved volume and pricing in North America. Management said it successfully reorganized its North American operations into six business units during the quarter, creating benefits through a stronger field level focus on the marketplace and its customers. Nevertheless, sugar coating investors' appetites via potential cost savings and improved administrative efficiencies can only sweeten so many a mouth when the market also has to digest discouraging guidance.

Since sales disruptions and higher costs related to recent hurricanes will continue to have a financial impact in the fourth quarter, the Atlanta-based company lowered its fiscal 2005 EPS outlook to between $1.27 and $1.30, down from a previously adjusted low-to mid-$1.30 per share range and below the $1.31 consensus. Coca-Cola Enterprises also cited higher polyethylene terephthalate (PET) packaging costs and higher fuel prices two other vital concerns behind the Lehman downgrade on September 20.

CCE shares are off 3.0%, hovering just above a 52-week low of $18.46. Shares of rival Pepsi Bottling Group (PBG 27.72 +0.02), which posted in-line quarterly results a month ago, are little changed.

--Brian Duhn, Briefing.com

10:10AM ExxonMobil (XOM)

56.88 +0.68: Just how big is big? Try generating profit of $9.92 billion in one quarter. That's exactly what ExxonMobil, the world's largest publicly traded oil company, did last quarter. Profit soared 75% on soaring energy prices. Net income was $1.58 per share compared to $5.68 bln or $0.88 per share last year. It's certainly a bull market environment when an oil producer can withstand three hurricanes in the quarter and still produce a record quarter. Revenues surged 32%, topping the $100 bln mark for the first time. We continue to suggest an overweight weighting in the energy sector with preference for the oil services, drillers, and equipment companies. Still the E&Ps retain their allure as value generators for the long term. Exxon is one of those stocks investors should just buy and hold.

The quarter encompassed the effects of a volatile industry environment that resulted from the hurricanes impacting prices and margins. Excluding a $1.62 bln gain from restructuring its stake in a Dutch pipeline business, earnings were $1.32 per share, below the consensus estimate of $1.39. The weakness came from its upstream segment on lower volume and US gas realizations. Upstream earnings, ex-items, were $5.729 mln, up 45% from last year. On an oil-equivalent basis, production decreased by 4.7% from last year's period. Excluding the impacts of both Hurricanes Katrina and Rita, production declined 1%. Liquids production came in at 2.447 thousand of barrels per day, slightly lower year/year. New fields production in West Africa was able to stem declines from maturing fields, hurricanes, and maintenance activities. Natural gas production declined to 7,724 mcfd (millions of cubic feet per day). All the majors are showing little improvement in driving volume growth, which ConocoPhillips' CEO attributed to the issue of access.

US E&P was $1,671 mln, lower than forecasts as oil and gas production volumes were impacted by the hurricanes. Exxon did not provide details in the press release. In a similar picture painted by COP Wednesday, downstream earnings were boosted by higher refining margins, offset partially by weaker marketing margins. Earnings for Exxon were $2.128 mln, up $727 mln from last year. Chemicals were modestly disappointing as expected. Exxon spent $4 bln in capital and exploration projects in the quarter, bringing its year-to-date total to $12.4 bln. This represents a 16% rise in spending from 2004 which mainly went to delivering new supplies to the market. Overall, the miss may be viewed as mildly disappointing as it was not a big surprise. The market will focus on the lack of volume growth, but we will need to hear details on the conference call for more insight.

--Kimberly DuBord, Briefing.com

10:02AM Baidu.com (BIDU)

71.16 -9.89: Baidu.com continued its momentum during the third quarter with strong revenue growth and increased traffic, but higher expenses led to lower than expected bottom-line results. The China-based Internet search provider - which went public this past summer to much acclaim - reported net income of $1.1 million, or $0.03 per share, well below the average analyst estimate of $0.06. Earnings rose 189% from a year ago, although declined 29% from the previous quarter due to stock-based compensation costs, increased server depreciation expenses, and higher bandwidth costs in connection with the opening of a new data center.

Third quarter revenue increased 27% from the prior quarter to $11.0 million, as the number of active online marketing customers jumped to over 53,000 - an increase of 29% sequentially. Online marketing revenues were $10.6 million, reflecting a gain of 28.7% from the previous quarter. Traffic acquisition costs - or revenue shared with partner Web sites - totaled $0.7 million, or 6.4% of total revenues. Last year such costs accounted for 9.4% of total revenue.

As a result of higher expenses, including a 59% sequential rise in research and development costs, the sharp rise in quarterly revenue did not manifest itself on the bottom-line. Depreciation expenses of servers and other equipment increased 63.6% sequentially to $1.0 million, while bandwidth costs rose 66.0% to $0.8 million, mostly due to the data center expansion. Additionally, selling and marketing expenses climbed 22.7% from the previous quarter to $2.4 million, as the company increased spending to strengthen its sales and distribution network and increased promotion efforts.

Baidu expects fourth quarter revenue of $12.6 to $13.1 million. According to Reuters Estimates, analysts had projected revenue of $11.35 million.

Although Baidu reported higher third quarter profits from a year ago, the results did not uphold the high expectations underlying the company's hefty valuation. Reminiscent of the late 1990's Internet boom, Baidu's stock has climbed as high as $153.98 since its IPO at $27 per share, given investors' strong interest in the prospects of China's Internet search market. However, despite the company's strong prospects, valuation remains a significant concern. At the current price level, Baidu's market cap is nearly $2.5 billion - an exorbitant level that seemingly anticipates continued robust growth for many years.

--Richard Jahnke, Briefing.com

9:42AM Black & Decker (BDK)

77.01 -1.00: Black & Decker has grown its earnings at, or above, 18% for 13 consecutive quarters and has beaten Wall Street's forecasts 14 straight times. Adhering to the mantra "If it ain't broke, don't fix it" the nation's #1 maker of power tools and home improvement products has done it again, as strong demand for brand name lasers and DEWALT saws helped keep both streaks intact.

Third quarter net earnings from continuing operations rose 28% to $1.72 per share, $0.05 better than the Reuters Estimates consensus of $1.67. Total sales were a bit lighter than the expected $1.61 bln, but still rose a healthy 22.9% year/year to a record $1.58 bln, driven by sales increases in all three of its major segments for the eighth straight quarter.

Despite facing continued raw material inflation and challenging comparisons to year-ago results, the Power Tools and Accessories segment, which accounts for roughly two-thirds of total sales, led the charge again with 31% sales growth. Porter-Cable and Delta Tools brands, which were acquired from Pentair (PNR) in October 2004, contributed 17% to sales. The Fastening and Assembly Systems segment increased sales 6% for the quarter, as price increases and volume leverage offset commodity cost pressure, while continued demand for Price Pfister faucets helped the Hardware and Home Improvement division.

Black & Decker sees Q4 EPS of $1.85-1.90 (consensus $1.88) and FY05 EPS of $6.82-6.87 (consensus $6.79), as strong support from retail partners for new products is expected to drive a mid-single-digit rate of sales growth through the end of the year. Management also believes they can convert at least 90% of net earnings to free cash flow for fiscal 2005.

BDK shares are currently off about 12% year-to-date but trade at just 11.6x forward earnings, a more attractive multiple than forward P/E's of 22.4, 14.5, and 14.3 for competitors Snap-On Inc. (SNA), American Standard (ASD) and Stanley Works (SWK), respectively.

--Brian Duhn, Briefing.com

9:11AM Phelps Dodge (PD)

126.40: Phelps Dodge, a suggested holding for active investors, has gained almost 30% year to date driven by bullish copper fundamentals. The stock tends to be quite volatile as the market swings in and out of favor with copper prices. We retain our positive position on shares due to the strong demand for copper at a time when copper inventories remain quite tight. Additionally, demand from China, which is the world largest copper consumer, remains strong. Most economists forecast China's GDP growth will be in the 9% range for this year and next. The tightness is further strained by the continued supply disruptions from worker strikes, mining operational problems, and environmental constraints globally. Due to PD's sensitivity to copper prices, consensus estimates continue to be raised. While the third quarter wasn't without issues, we feel there remains further upside in this stock. The last copper bull cycle lasted ten years from 1987 to 1997 with demand falling off after the Asian Crisis in mid-1997.

As expected, robust market fundamentals for copper and molybdenum catapulted earnings for the world's second largest producer. Phelps Dodge reported consolidated net income of $366.1 mln, or $3.61 per share, up 25% from last year to $292 mln, or $2.96 per share. Excluding non-recurring items, earnings per share were $4.36, surpassing consensus estimates by a whopping 32 cents!

Sixty-eight percent of PD's sales are derived through its mining operations with the remaining coming from specialty chemical, wire, and cable sales. Total revenues grew 27% over last year to $2.35 bln, of which mining was $1.8 bln - a rise of 31%. Net income, before special items, grew 45% to $626.9 mln. Operating margins widened by 370 basis points to 33.7%. PD realized $1.704 per pound in copper prices and $30.74 per pound in molybdenum prices. Higher production costs, lower sales volumes, and higher exploration and research expenses were offsetting factors. Copper production came in at 304.2 thousand tons, a decline of 17.3k tons from last year, with sales of 303.4k tons. Molybdenum production grew to 16.4 mln tons, up 8%, with sales of 14.8 mln tons. Phelps Dodge Industries reported net income of $17.0 mln on revenues of $500.1 mln, up 17%.

What Phelps does with its cash horde has been a main topic in the markets. Finally answering shareholders' calls, the company last week announced a program to return $1.5 bln to stockholders through a $5.00 special dividend and plans $1 bln in additional share buybacks and/or special dividends next year. Soaring metals prices has created a windfall of cash, allowing PD to substantially pay down debt. Debt to capital has decreased to 9.8% from 14.3% in June and 18.3% at the end of 2004.

--Kimberly DuBord, Briefing.com

8:34AM General Motors (GM)

29.17: "With regard to the stock, share performance will be steered by headlines, creating a volatile trading environment."

The statement above was part of our conclusion to a Story Stock discussing the lousy third quarter earnings report from General Motors and announcement that it had reached an agreement with the UAW to cut health care costs by $15 billion. Today the headlines aren't good as they are littered with reports that GM has received a subpoena from the SEC on matters including its financial reporting concerning pension and other post-employment benefits ("OPEB"), certain transactions between it and Delphi, the company's recovery of recall costs from suppliers and supplier price reductions or credits, and any obligation it might have to fund pension and OPEB costs in connection with Delphi's Chapter 11 bankruptcy filing.

The Dow component also noted in an 8-K filing that General Motors Acceptance Corp. ("GMAC") has received SEC and federal grand jury subpoenas in connection with the investigations into the insurance industry and loss mitigation insurance products such as finite risk insurance. This news could delay GM's plan to sell a majority stake in GMAC since any prospective buyer will be performing added due diligence to understand GMAC's connection to the insurance industry investigation.

Reportedly, the headline regarding the SEC subpoena stirred concerns in foreign markets that GM itself might file for bankruptcy protection. The company has been quick to dispel such talk and, in the process, offered a reminder that it hasn't been accused of any wrongdoing. That point notwithstanding, this latest headline is something that neither the market nor GM's shareholders needed to see as "investigations" just feed a sense of uncertainty regarding their eventual outcome. That uncertainty is reflected in the negative disposition of the futures market ahead of the opening bell and a near 4.0% dip in GM's stock in pre-market trading.

This headline doesn't alter Briefing.com's moderately bullish outlook for the stock market, but it reinforces our belief expressed in June that investors should steer clear of GM's stock.

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

8:05AM Corning (GLW)

17.96: Corning, the largest maker of liquid crystal display glass, reported a visually stunning quarter, characterized by strong top line growth, improved margins, and better than expected earnings. Net income grew to $203 mln or $0.13 per share. There were many moving parts to the quarter. Excluding special charges, earnings per share were $0.26 - five cents ahead of consensus. Sales were up 4% sequentially and 18% yearly to $1.18 bln as higher sales of flat panels used in televisions and displays drove revenues for Corning. Margins widened by 400 basis points from the second quarter to 46%.

With conservatism abounding on Wall Street, it was no surprise that management gave a tempered outlook. For Q4 it sees earnings of $0.21 to $0.23 per share on revenues of $1.18-$1.24 bln. Corning indicated demand should be strong again in Q4, but said the rate may slow a bit due to new fab ramps by its customers. It forecasts a 3-10% sequential increase in LCD glass volume and gross margins of 43-45%. Addressing reports of excess inventories, management indicated it was comfortable with the current TV panel inventory level in the marketplace, which it feels is appropriate for a year/year double-digit growth rate and strong seasonal demand in Q4. While the adoption rate is still low, Corning forecasts LCDs will account for 10% of the global TV market this year, rising to 20-25% by 2007. GLW's December estimates were right on target with the consensus of $0.22 and $1.21 bln, respectively.

The upside demonstrated Corning's considerable earnings power, driven by the vast improvement in gross margins and strong display revenue growth. Gross margins jumped to 45.9%, well above the company's guidance of 41-42%. Display Technologies posted an 18% rise in sales to $489 mln. LCD glass volumes increased 22% from the second quarter and 73% over last year's period. With a negative impact due to currency, pricing for the quarter was flat. Net income for the display unit rose 49% to $363 mln in one quarter. Its 50% venture with Samsung Corning Precision, which manufacturers LCD glass substrates, grew volumes by 22% quarter/quarter with earnings up 35% to $114 mln. Telecom unit sales fell marginally to $398 mln due to lower FTTP hardware and equipment sales, offsetting an uptick in optical fiber volume. Environmental Technologies and Life Sciences unit sales were relatively flat.

GLW ended the quarter with $2.4 bln in cash, exceeding debt by more than $300 mln. During the quarter, Corning received a ratings upgrade from Moody's on its long-term debt and outlook to Baa3 and stable, respectively. The company plans to reduce debt to below two billion by year end. The stock has gained 53% this year and now trades at 22.5x forward earnings.

--Kimberly DuBord, Briefing.com