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From Briefing.com: 4:31PM NVIDIA beats by $0.06, ex-items (NVDA) 34.78 :Reports Q3 (Oct) earnings of $0.42 per share, excluding $0.06 anticipated litigation settlements charge, $0.06 better than the Reuters Estimates consensus of $0.36; revenues rose 13.2% year/year to $583.4 mln vs the $581.6 mln consensus. NVDA reports gross margin 39.1% vs 37.8% street expectation.

4:05PM Avanex reports $0.01 below consensus, ex-items; guides Q2 revs below consensus (AVNX) :Reports Q1 (Sep) loss of $0.10 per share, excluding non-recurring items, $0.01 worse than the Reuters Estimates consensus of ($0.09); revenues rose 15.2% year/year to $41.2 mln vs the $42.7 mln consensus. Co issues downside guidance for Q2, sees Q2 revs of $41-45 mln vs. $45.46 mln consensus.

Close Dow +6.49 at 10546.21, S&P +2.06 at 1220.65, Nasdaq +3.74 at 2175.81: The market found its footing after lunch, taken higher by some broad-based buying efforts. Though the indices managed to close with modest gains, they were well pared during the final half hour of trading. Lacking much market-moving news, the corporate and economic fronts left investors without any strong catalysts. The EIA's latest energy inventory report sat center stage but had little effect on overall trading -- except for within the Energy sector, that is. Much better than expected builds in crude and gasoline initially sparked a sharp decline in crude futures contracts; in turn, the Energy sector fell to a market-dragging loss. The unexpected drawdown in distillate supply perhaps stole the focus, however, and reversed the sector's course. The paring of its loss lifted a lid off of the indices, but its late return to the red took the market back down. The absence of spirited leadership also kept gains in check. Joined by nine other sectors on positive ground, Utilities (+0.9%) led the way higher. A 0.5% gain extended by Financials, to the credit of brokers and banks, served as the market's strongest crutch. Although the Treasury market spent the session submerged and pushed the 10-year down 22 ticks and up to a 4.64% yield, rate-sensitive banks offered 0.7%. Technology clung to a 0.1% gain, supported by semiconductors but dragged by Cisco (CSCO 17.75 +0.11) ahead of its Q3 report due out this evening. First Data (FDC 40.50 -1.94), which issued downside FY05 guidance this morning, was the sector's sorest spot. An adverse court ruling in Maine for prescription benefit managers knocked Healthcare, but relative strength in Boston Scientific (BSX 25.90 +0.60) and Pfizer (PFE 22.16 +0.25) helped the sector climb 0.2%. The former issue announced FDA approval of a new spinal cord device today, while the latter won a Norwegian patent challenge over Lipitor. Despite slashed guidance from Pepsi (PEP 58.05 -0.05), Consumer Staples (0.3%) closed higher. A drop in General Motor (GM 24.63 -1.23) shares, pertaining to reports that the Pension Benefit Guaranty Corp. may demand a chunk of profits from a potential sale of GMAC, weighed upon the Discretionary sector. Weakness in McDonald's exerted further pressure; the stock fell on news that an influential shareholder is urging an IPO of about 65% of the restaurant's stores. However, upgrade-induced rises in Home Depot (HD 40.80 +0.24) and Limited (LTD 21.34 +0.82) shares, as well as an upside Q3 report from Federated (FD 68.85 +4.94), countered the challengers and left the sector 0.1% higher.NYSE Adv/Dec 1774/1507, Nasdaq Adv/Dec 1648/1350

1:45PM Altair Nanotechnologies: Congress to Fund $2.5 Million in Energy and Water Development Appropriations for ALTI's Nanoscience Research (ALTI) 2.44 +0.11:Co announces it has been designated to receive an additional $2.5 mln in Federal grant funding during 2006-2007 for the continued development of nanotechnology, nanosensors, and nanomaterials research, development and deployment.

9:33AM Qiao Xing secures orders worth $70 mln for Pocket PC Mobile Phone Handsets that run on Microsoft's Windows Mobile 5.0 Operation System (XING) 6.62 +0.39:Co announces its major operating subsidiary CEC Telecom, had recently received orders worth $70 mln from its distributors in the China market for pocket PC mobile phone handsets. ''With the implementation of the higher-end product strategy, which started in the third quarter of 2005 and has been marked by the launch of a series of multimedia phones, the average gross profit ratio of CECT's product portfolio has gone up, as planned. It is expected that with the introduction of pocket PC phones and more multimedia phones in the fourth quarter, the average gross profit ratio of the new product portfolio would increase further to beat 20%."

1:58PM PepsiCo (PEP)
58.37 +0.07: Amid rising cost pressures - specifically from higher raw material, energy, and transportation costs - PepsiCo said Wednesday that it plans to restructure some of its operations to reduce costs, and reaffirmed its earnings guidance for fiscal 2005. Shares, in turn, have trended modestly higher during the regular trading session.

PepsiCo, one of the world's largest food and beverage companies, said it expects to reinvest $0.03 per share of its profits in restructuring and record a pretax charge of $65 million to $85 million. As a result, the company sees full-year EPS of $2.38 to $2.39 per share, down from its previous forecast of $2.41 to $2.41 per share. However, it expects to report core earnings, which exclude charges, of $2.65 per share, matching its earlier guidance and the consensus estimate.

According to Steve Reinemund, PepsiCo's Chairman and CEO, the company "continues to see very good top line momentum, giving us confidence in our outlook for the fourth quarter. At the same time, we are tightening our belts wherever we can to be in position to deal more effectively with continued cost pressures next year." Mr. Reinemund added, "the strong momentum of our business, together with these actions and a strong innovation calendar for 2006, gives us confidence that we will achieve our goal of low double-digit earnings per share growth in 2006."

Although higher costs have undoubtedly weighed on results, particularly in the wake of hurricanes Katrina and Rita, PepsiCo has weathered the storm with vigor and continues to exceed expectations. In the latest quarter (Q3), the company reported earnings, ex-items, of $0.78 per share on sales $8.18 billion - a 12.8% increase from the year ago period. That compared with analysts' expectations for earnings of $0.73 per share and sales of $7.81 billion. While margins for the quarter were crimped by rising costs and the impact of recent hurricane activity, PepsiCo's expanding international presence, ongoing innovation efforts, and focus on controlling costs continue to highlight its long-term prospects.

--Richard Jahnke, Briefing.com

12:48PM Education Management (EDMC)

32.16 +0.19: Helped by increased student enrollment and higher average tuition, Pittsburgh-based Education Management Corp. reported better-than-expected financial results for its fiscal first quarter. Net income for the latest period grew to $14.0 million, or $0.18 per share, from $8.2 million, or $0.11 per share, last year - nine cents better than the consensus EPS estimate of $0.09, according to Reuters Estimates.

Meanwhile, revenue increased approximately 18% from a year ago to $253 million as total enrollment rose 12.6% and average revenue per student increased 5%. The for-profit education company said total student enrollment at the start of the quarter totaled 72,471 students, compared with 66,179 students for the same time last year. Same-school enrollment was up 8.9% to 72,097 students, while the number of exclusively online students increased 62.5% to 4,076.

Operating margin in the quarter improved 139 basis points to 8.2% as costs of educational services declined to $171.4 million, or 67.8% of revenue, from $150.8 million, or 70.6% of revenue. The improvement in operating margin largely reflects lower rent and salary expenses as a percentage of revenue, as well as better utilization. Conversely, general and administrative expenses increased to $59.4 million, or 23.5% of revenue, from $46.5 million, or 21.8% of revenue, due in part to higher advertising spending.

Based on the better-than-expected quarterly results and ongoing progress in its business, EDMC sees EPS of $0.55 for the current quarter, in line with the consensus estimate. Additionally, the company expects full-year earnings of $1.46 per share versus the average analyst forecast of $1.41 per share. While EDMC's performance has been marginal year-to-date, the company's transitioning business model, which supports new program development and increased online initiatives, seemingly points to greater market opportunities and enhanced growth prospects. At the current price level, EDMC's valuation looks attractive relative to its peers given its expanding growth prospects. However, as the labor market continues to improves, investors should be mindful of the counter-cyclical nature of EDMC and other education stocks, as well as increased regulatory issues for the industry. Shares of the company are currently trading at approximately 22x forward earnings with a PEG ratio of 0.94.

--Richard Jahnke, Briefing.com

11:08AM Pride Intl. (PDE)

28.00 +0.38: It comes as no big surprise, at least to us, that the oil and natural gas driller Pride Intl surpassed estimates in the third quarter. Soaring worldwide demand for drilling prompted a 24% spike in revenues, generating earnings of $68.2 mln or $0.40 per share. Excluding non-recurring items, earnings were $0.21 per share, 7 cents ahead of the consensus estimate. High rig utilization rates and the return to service of three rigs resulted in consolidated operating income, excluding losses on an asset sale, of $98.7 mln, which was up a whopping 57% from last year.

By region, the eastern hemisphere generated operating income ex-items of $39 mln, up 13% year/year, while the western hemisphere gained 35% to $33 mln. Its floater fleet operated at an astounding 90% utilization - a gain of 18% just from the second quarter. Operating income in this segment has gained 100% over the previous year to $40 mln. Gulf of Mexico dayrates averaged $53,100, rising 22% from $43,400 in Q2 and 67% from last year's period of $31,900. All ten of its jackups located in the Gulf are under contract, as rig rates have continued to rise due to limited rig availably following the hurricanes.

Strong rig demand has resulted in earnings and cash flow acceleration, enabling companies to reduce debt and improve balance sheets. Pride reduced debt by $77 mln to $1.18 bln in the quarter. CEO Louis Raspino characterized the outlook by saying, "We look forward to future earnings growth as our contract backlog rolls over and worldwide rig demand remains strong." Rising E&P cash flows will continue to drive growth in capital expenditures and, in turn, increase pricing power and revenue growth for these companies. The challenges ahead are maintaining costs. Pride said it expects daily offshore expenses to rise from upward pressures in labor rates, along with repair and maintenance costs due to the higher cost of steel and drilling equipment. The outlook for Pride, though, is quite positive due to longer cycle duration and accelerating industry growth. We continue to favor the deepwater segment, the basis for our selection of Transocean (RIG) as a suggested holding in our Active Portfolio.

--Kimberly DuBord, Briefing.com

11:02AM Interpublic Group (IPG)

10.07 -0.40: Profits for the world's third largest advertising agency came up short in the third quarter, as the company lost $101.5 mln or $0.24 per share. This compares to a restated loss from the year-ago period of $501.1 mln, or $1.21 per share. The company is currently under an SEC investigation that encompasses the restatements it made in September of this year. The Q3 results did not come even close to the consensus estimate, missing by a wide margin of $0.16. Investors should steer clear of shares until the investigation is complete and the company has once again demonstrated it ability to sign new accounts.

Third quarter revenues sank 5.1% to $1.44 bln, with lost sales as a result of divestitures accounting for 3.3% of the decline. Declining organic revenues did little to reverse the slide in shares in early trading. Within the first nine months of the year, growth has remained flat. The company expects there to be a "modest decline" for the full year. IPG noted it had to pay out additional cash for professional fees, "a necessary investment to remediate the company's financial control environment and building effect shared services solutions." These payouts are expected to slow next year.

--Kimberly DuBord, Briefing.com

9:45AM McKesson (MCK)

45.75 +0.15: McKesson Corp. on Tuesday reported healthy second quarter results. The prescription drug wholesaler, which has struggled to shift to a new, fee-for-service business model, said that it earned $167 million, or $0.53 per share, compared with $86 million, or $0.29 per share, in the same period last year. Setting aside a gain of $13 million for the sale of its BioServices business, the company would have earned $0.49 per share - two cents better than the consensus EPS estimate of $0.47, according to Reuters Estimates.

Revenue increased 8% from a year ago to $21.6 billion as sales of generic drugs rose 18%. During the third quarter, McKesson continued to benefit from strength in its core drug distribution business. Sales for the division jumped 8% to $20.5 billion while operating profits increased 69% to $252 million from a year earlier. Owing to an increased mix of generics, as well as ongoing progress with manufacturers, operating margin expanded 44 basis points to 1.23%. Meanwhile, the company's medical-surgical and pharmacy automation businesses also posted strong gains, with revenues up 8% and 18%, respectively.

McKesson said that it expects fiscal 2006 earnings, ex-items, of $2.25 to $2.40 per share - in line with analysts' forecast of $2.31 per share. It also projected a higher tax rate of 35% for the year, up from its previous guidance of 32.5%. Separately, McKesson said that it repurchased $224 million of shares during the quarter, completing its previous $250 million authorization. In addition, the company began a new $250 million share repurchase program approved in August in an effort to offset the dilution resulting from the exercise of stock options.

Despite a difficult transition year for prescription drug wholesalers, McKesson delivered solid result for its latest quarter. In addition to its core drug distribution business, the company's growing medical-surgical and provider technologies businesses continues to strengthen its position relative to its peers. With Medicare Part D scheduled to begin January 1, 2006, McKesson is well positioned to improve and expand its product offerings in the near-term as more individuals gain access to drug coverage under the program. However, the company, and the industry, continues to face numerous challenges that include increasing mail order penetration and higher generic utilization, which may impact the longer-term impact of Part D.

--Richard Jahnke, Briefing.com

9:32AM Pixar (PIXR)

53.60: Shares in Pixar have regained lost ground after taking a nose drive at the end of June, despite the fact the studio does not have a major theatrical release until June 2006 with its highly anticipated film Cars. The performance is being driven by expectations over a possible distribution deal with Disney (DIS). Adding fuel to the stock, the rumor mill is running full tilt on speculation Steve Jobs will sell out to Disney, but of course there is no indication on either from Pixar.

Pixar released third quarter results to much fanfare, blowing past estimates by $0.11. Pixar earned $27.4 mln, or $0.22 per share, on revenues of $45.8 mln. This compares to results from last year of $22.4 mln or $0.19 per share. Jobs attributed the quarter's strength to Pixar's growing library of titles, although industry analysts predict one title in particular led the upside: Finding Nemo. The top line grew by 3%. Lower costs drove margin gains of 160 basis points to 92.1%. As expected, total operating costs declined over the last year, but the trend will be short-lived, as the company ramps up costs ahead of the Cars release.

Critics stand fairly even on either side of the aisle, with equal ratings of Buy, Hold or Sell on the stock. Regardless, shares have rung up an almost 19% gain this year. The bulls base their view on expectations Pixar will ramp up film production to more than just one film per year. Across the aisle, the bears say that the mega-hit, Finding Nemo, is not an indicator of Pixar's future film potential, but more a once-in-a-lifetime experience, resulting in more tempered forecasts.

It's hard to argue against the success Pixar has achieved to date. Thus far, the reports on Cars have been that it's a visually stunning film. The genius of Pixar, though, lies more in its heart. We'll have to see if this newest endeavor can tug at those strings once again. Shares are trading at 35.2x current and 48.9x forward earnings. Since its IPO, the multiple has ranged from 18x to a high of 177x. Headlines will continue to steer shares in the near-term with the greatest risk being a less than favorable distribution deal with Disney. Our money would be on the bigger player in this saga, Disney. The stock remains a suggested holding in our Active Portfolio due to its double-digit earnings growth driven by its Cable and Networks division, and discounted valuation. The stock is entering its seasonally strongest period. Shares are trading at 19.5x - a 36% discount to its historical average.

--Kimberly DuBord, Briefing.com

9:23AM Federated (FD)

63.91: Federated Department Stores, the nation's largest operator of department stores, reported third quarter earnings of $1.78 per diluted share. Headline results included a one-time after-tax gain of $384 mln, or $1.58, from the sale of receivables to Citigroup and after-tax costs of $39 mln, or $0.16, related to the initial stages of integrating the May Company merger, which closed on August 30th. Excluding those items and a $10 mln gain (or $0.03) related to Federated's portion of the Visa/MasterCard antitrust litigation settlement, Q3 (Oct) operating earnings checked in at $0.33 per share, which handily beat the Reuters Estimates consensus of $0.23 and exceeded the high end of management's revised EPS guidance of $0.20-0.25.

Total third-quarter sales, which were previously reported in the company's October same-store sales release and include the May acquisition, rose 64.1% to $5.785 bln. The Reuters Estimates consensus was $5.715 bln. Revenues in October were negatively impacted by the effects of Hurricane Wilma, which caused considerable damage and extensive power outages throughout Florida. In total, 36 Macy's and five Bloomingdale's stores were closed for varying periods throughout October, accounting for the loss of about 1.7% in monthly comps.

For the fourth quarter, management reaffirmed year/year same-store sales growth of 1-2% and Q4 (Jan) EPS of $2.35 to $2.45, excluding integration-related pre-tax costs of $100-150 mln. The addition of nearly 500 stores via the May merger positions Federated better to compete both inside and outside of the department store segment, yet investors should recognize near-term execution risks remain with the ongoing integration of the May acquisition.

Currently, FD is 18% below its 52-week high of $78.05 reached Aug. 1, having retreated on concerns about the impact of high energy prices on consumer spending. On a trailing 12-month basis, FD shares trade at 13.6x earnings, a slight premium to its 10-year historical average of 11.4x. At 12.7x the estimated FY06 EPS consensus of $5.02, the stock appears to look attractive compared to loftier P/E multiples of 24.0x and 36.5x for competitors Dillard's Inc. (DDS) and Saks Inc. (SKS), respectively.

Investors, however, will want to shop around for better growth opportunities within the underperforming retail space. Although FD could receive a near-term boost on its better than expected results, concerns about its merger integration and increasing competition from other retailers (i.e. discounters) leave current earnings prospects in doubt. As an aside, Briefing.com has maintained an Underweight rating on Consumer Discretionary since April 2004. In the ensuing period, the discretionary sector has increased 2.1% versus a gain of 7.9% for the S&P 500.

--Brian Duhn, Briefing.com

8:35AM AIG, Inc. (AIG)

65.85: The world's biggest insurer will once again restate five years of earnings in order to fix errors in its income tax and balance sheet accounting. The company estimated that it had underestimated earnings by roughly $500 mln from 2000 through the first half of 2005. AIG cut profits by a whopping $3.9 bln in May.

AIG forecasts third quarter net income will be about $1.7 bln after costs from the Gulf hurricanes. Even though the restatement is a fairly small amount, it certainly does little to inspire investor confidence. A company-wide culture of oversight was the basis for why New York Attorney General Eliot Spitzer filed a fraud suit, alleging a range of improper accounting practices involving investment income overstatement, incorrectly valuing assets, and covering up underwriting losses. The insurer is still reeling from the scandals, which led to former CEO Maurice "Hank" Greenberg being forced out of the company.

Today, AIG said the restatement stemmed from the same inadequacies in oversight that first prompted the initial restatement. The 10% cut in profits back in May was to correct transactions that hid losses and understated liabilities. It also included a change on how AIG accounted for the fair-market value of derivatives.

The news follows an announcement from MBIA, the world's largest bond insurer, on Tuesday that it would restate seven years of earnings. AIG did not indicate whether Q3 results would be lower or higher than the reported $3.24 bln in net income for the period. Despite mounting costs from the Gulf hurricanes, which were the industry's most expensive disaster in US history, AIG has clawed its way back from $50 and is now basically flat on the year. Katrina cost AIG $1.03 bln, with Rita hitting the coast less than a month later and costing another $200 mln.

--Kimberly DuBord, Briefing.com

2:20PM Cummins (CMI) Longbow downgrades Buy to NEUTRAL. While they are not changing their preliminary 2007 projections of $8.25 for now, firm's rising concern about the profile and results for 2006 combined with the recent strength in the stock suggests that further strong stock performance may be difficult to achieve with mounting fundamental barriers for 2006.
2:19PM Fisher Scientific (FSH) Robert W. Baird upgrades Neutral to OUTPERFORM. Baird upgrades FSH after the co reported solid Q3 results with revs in line, EPS ahead of expectations, and provided preliminary 2006 guidance.

2:18PM Vertex Pharm (VRTX) Leerink Swann initiates OUTPERFORM. Leerink Swann initiates VRTX saying that after many failures, the co's productive discovery engine may finally have produced a winner in VX-950 (hepatitis C virus protease inhibitor). Firm believes that VX-950 is one of the few compounds in the collective pipeline of the biotech industry that could potentially change medical practice, in a large market setting.

2:18PM Management Ntwrk (TMNG) Kaufman Bros downgrades Buy to HOLD. Target $3. Kaufman downgrades TMNG following Q3 results with lower guidance than the firm had expected. Firm also cites uncertainty in timing for signing of large deals and associated revenue recognition.

2:17PM Playboy (PLA) CSFB initiates OUTPERFORM. Target $17. CSFB initiates PLA with an Outperform saying PLA could be at the front end of a fundamental upturn, driven primarily by the co's "new media" business segments. The firm says Playboy has transformed into a global entertainment co (higher growth) that delivers content across virtually every platform from a traditional magazine publisher (relatively slow growth).

2:17PM 1-800 CONTACTS (CTAC) KeyBanc Capital Mkts / McDonald downgrades Hold to UNDERWEIGHT. KeyBanc downgrades CTAC based upon a setback in the co's battle to resolve the issue of doctor specific brands. They say it is clear from the earnings release that CTAC is preparing to wage another fight â€" either legal, legislative or both. While firm believes that CTAC has an excellent chance to prevail in the courts or Congress as they did through the enactment of the Fairness to Contact Lens Act, they think the effort could prove costly to CTAC both financially and strategically.

2:16PM Equity One (EQY) KeyBanc Capital Mkts / McDonald downgrades Aggressive Buy to BUY. Target $27 to $26. KeyBanc downgrades EQY following Q3 results that fell below their expectations with lowered guidance.

2:14PM Comtech (COGO) JMP Securities upgrades Mkt Perform to STRONG BUY. JMP Securities upgrades Comtech based on the pullback in the stock and continuing strong fundamentals.