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From Briefing.com: 4:21PM Network Appliance beats by $0.03; issues upside Q3 & FY06 guidance (NTAP) 28.31 +0.50:NTAP reports Q2 non-GAAP EPS of $0.21 vs $0.18 consensus; revs rose 29% YoY to $483.1 mln vs $476.7 mln consensus. NTAP sees Q3 EPS of $0.20-0.21 vs $0.20 consensus; sees Q3 revs up 25-28% YoY, or roughly $515.9-528.3 mln vs $519.3 mln consensus. NTAP sees FY06 $0.77-0.80 vs $0.76 consensus; sees revs up 26-28% YoY, or roughly $2.01-2.05 bln vs $2.02 bln consensus.

8:32AM Broadcom chosen by Fujitsu Siemens Computers (BRCM) 46.07 :Co announces that Fujitsu Siemens Computers has selected two Broadcom HyperTransport-based server I/O chips for incorporation into FSC's PRIMERGY RX220 rack servers.

Close Dow -11.68 at 10674.76, S&P +2.20 at 2187.93, Nasdaq +1.19 at 1231.21: Spending the day within a narrow trading range that kept the indices surrounding the flat line, the market's majors were troubled by unexpected drawdowns in crude and gasoline supply and stunted by a pair of Dow components. Although the market opened on the upside and was seemingly unfazed by a slight uptick in core CPI, American Express' (AXP 5.09 -0.84) assertion that Wall Street's expectation for 25% earnings growth in Q4 is "far too high" catalyzed a bearish air that General Motors' (GM 21.28 -1.33) 18-year low exacerbated. AXP's announcement perhaps provided investors reason to secure some of the Financial sector's recent 10.8% run, and widespread selling thus spurred a session-dragging 0.5% loss. Despite a second consecutive day of strength within the Treasury market, which took the 10-year (+20/32) down to a 4.48% yield, the spread between 2 and 10-year notes remains at its narrowest since 2001, a factor that may have contributed to banks' relative weakness. With respect to bonds, better than expected net foreign purchases in September, which reflected robust demand for U.S. assets, boosted that market. Healthcare's 0.4% decline also weighed heavily; the sector was especially affected by tumbles in Abbott Labs (ABT 40.59 -0.88) - which released results of an unsuccessful study - and Pfizer (PFE 21.35 -0.54) - which the Wall Street Journal discussed in terms of the looming generic drug challenges it faces. Largely due to GM, the Discretionary sector (-0.2%) spent the day in the red, but an upbeat earnings report and accompanying guidance from homebuilder DR Horton and relative strength in retailers limited the sector's slide. A 1.7% rise in crude ($57.75 per barrel), which the EIA's latest inventory stats spurred, led to a session-leading 2.1% gain in the Energy sector. At the same time, the market at large demonstrated resilience to the energy price action, perhaps due to the fact that crude remains near four-month lows and especially revealed by the retail rise and relative strength in the Dow Jones Transportation Average. Utilities lent a 0.8% gain, while a better than expected headline read of Tyco's (TYC 28.55 +1.15) fiscal Q4 earnings report helped Industrials notch 0.4%. Matching that gain was Technology, best supported by Apple (AAPL 65.06 +2.78), following reports that the company may raise iTune prices, and by Yahoo (YHOO 40.03 +2.38). For their part, YHOO sthares soared after the Wall Street Journal article reported that Yahoo, AOL, and MSN are selling out on advertising months in advance - and that surging demand is allowing hefty rate increases. With respect to the October CPI report, the core rate checked in at +0.2% - in-line with the read economists had expected but breaking the six-month trend of benign 0.1% increases. It's Briefing.com's view that the slight uptick is not cause for concern at this juncture, and the market appeared to similarly interpret the data. Total CPI similarly rose 0.2% (consensus 0.0%), and reflected the slowest rise in consumer prices in four months.NYSE Adv/Dec 1599/1718, Nasdaq Adv/Dec 1226/1800

9:44AM Sigma-Aldrich (SIAL) Goldman Sachs upgrades Underperform to IN-LINE. Goldman Sachs upgrades Sigma-Aldrich; given improved mkt conditions and strengthened business fundamentals, firm believes SIAL is well positioned to achieve its 7% organic growth goal.
9:41AM Advanced Micro (AMD) Legg Mason reiterates BUY. Target $26 to $30. Legg Mason raises their Advanced Micro target following co's analyst day, as they are more comfortable with their rough AMD EPS approximation, ex-Spansion.

9:40AM Applied Bio (ABI) Deutsche Securities initiates HOLD. Target $24. ABI's DNA Sequencing segment (30% of sales) has remained in steady decline since the conclusion of the Human Genome Project, creating a significant drag on organic revenue and profit growth. Although several catalysts remain on the horizon as the transition from whole genome sequencing to directed sequencing (medicinal) occurs, firm does not have great visibility about the potential positive impact.

9:38AM Natl Oilwell Varco (NOV) Calyon Securities initiates ADD. Target $68. Calyon initiates National Oilwell Varco as they believe this new build cycle is leading to strong demand for NOV's products and services that should be sustained for several more years.

9:37AM Argonaut Group (AGII) William Blair upgrades Mkt Perform to OUTPERFORM. William Blair upgrades Argonaut saying the co continues to address many of its legacy issues that have been a drag on earnings results and visibility over the past several years.

9:36AM WebSideStory (WSSI) JMP Securities initiates MKT PERFORM. JMP Securities initiates WebSideStory saying the co has a number of positives, but new entrants could increase pricing pressure, and the impending launch of Google Analytics has the potential to destabilize the Web analytics market.

9:35AM ADTRAN (ADTN) Janco Partners upgrades Mkt Perform to ACCUMULATE. Target $28 to $35. Adams Harkness downgrades ADTN based on two near term concerns: 1) given the three-fold factors of a potential imbalance between DSL port shipments and subscriber net additions, seasonality, and lower backlog this quarter, they are increasingly concerned about ADTRAN's potential to post meaningful revenue growth in excess of guidance; and 2) potential tier-one Opti deployments may be at least several quarters away, mitigating 1H06 revenue growth

3:49PM La-Z-Boy (LZB)
13.01 +1.40: Sluggish retail sales and an unprecedented industry-wide shortage of polyurethane foam, which was a direct result of Hurricanes Katrina and Rita, forced La-Z-Boy to completely reverse previously adjusted estimates (Aug. 22) that called for a smaller profit of $0.17 to $0.21 per share. That revision was attributed to the fierce competition for the consumer's discretionary income in the face of "employee pricing" from auto makers that weakened demand for retail furniture (as an aside, GM announced three days ago that it has reintroduced deep discounts). On October 18, less than two weeks after saying Q2 results would "significantly miss" forecasts, management said it expected a Q2 (Oct) loss of $0.17 to $0.21 per share, including a restructuring charge of about $0.09 to $0.10.

On Wednesday the stock of the world's largest builder of recliners has done anything but sit-n-snooze, as it has surged 12% following the company's fiscal Q2 earnings report. Second quarter net sales fell 12.7% to $454.6 mln, but that was slightly better than the $453.1 mln consensus. The company also posted a loss of $0.12; however, excluding the $0.10 charge related to the closure of a Canadian upholstery facility, a loss of $0.02 checked in five cents better than the Reuters Estimates consensus of ($0.07).

Now that LZB has passed through price increases in the form of surcharges and is now able to obtain 100% of its foam requirements, the lack of which significantly hampered production in Q2, management sees Q3 EPS of $0.14-0.18, well above the consensus estimate of $0.10. Sales, meanwhile, are expected to be flat against the $570 mln generated in last year's third quarter, but that guidance is also more optimistic than the $480.5 mln Wall Street was anticipating.

While upside guidance and significant changes to the company's cost structure over the past two years bode well for La-Z-Boy, the fact that management is still concerned about the macro economic environment, as well as consumer confidence, leaves some cause for concern still that its Q3 outlook may be a bit aggressive. At 33.4x estimated earnings, versus more attractive forward P/E multiples of about 14x for competitors like Furniture Brands (FBN) and Ethan Allen Interiors (ETH), La-Z-Boy's valuation appears stretched. Investors should remain on the sidelines with respect to LZB until further signs of operational progress emerge.

--Brian Duhn, Briefing.com

3:21PM Talbots (TLB)

28.40 +1.24: Talbots on Wednesday reported lower third quarter earnings, due to lower sales and higher costs. Still, the results beat Wall Street estimates. During its latest quarter, the struggling clothing retailer earned $20.0 million, or $0.37 per share, down from $27.2 million, or $0.49 per share, in the prior year period, which included a tax benefit. Excluding the tax benefit, last year's net income was $22.7 million, or $0.41 per share. Talbots was expected to post EPS of $0.36, according to Reuters Estimates.

Following a soft September, the company said store traffic and sales performance improved significantly in the latter part of October. As a result, third quarter sales rose 3.1% to $426.3 million from last year's $413.4 million. Retail store sales were up 2% to $362.6 million while direct marketing sales, which includes catalog and Internet, were up 11% to $63.7 million. Comparable store sales, however, fell 2% from a year ago due to poor customer response to new merchandise as well as a more cautious spending environment.

Looking to the current holiday quarter, Talbots plans to boost its marketing initiatives to help bolster slowing customer traffic. Some of its new initiatives include a multi-tiered sweepstakes, a series of weekly in-store events, and national newspaper advertising. The company noted that it has already begun its enhanced marketing program and will continue it through Christmas. With its program already in place, it feels it is well positioned for the upcoming holiday selling season. Talbots expects fourth quarter EPS in the range of $0.35 to $0.37, which translates to at least a 25% increase over last year's $0.28. Analysts had forecast Q4 earnings of $0.37 per share.

With high gasoline prices and waning consumer confidence weighing on the Consumer Discretionary sector, along with increased competitive pressures from the likes of Chico's (CHS), Ann Taylor (ANN), and J. Jill (JILL), Talbots continues to face numerous hurdles. While planned promotional efforts are expected to help drive customer traffic during the current quarter, merchandising issues and resulting margin pressures are likely to linger. As the company grapples to reignite growth, other specialty retailers present a more favorable investment proposition given current market conditions, including Gymboree (GYMB), a recommended holding in Briefing.com's Active Portfolio.

--Richard Jahnke, Briefing.com

1:56PM American Express (AXP)

49.60 -1.33: During a presentation at the Merrill Lynch Banking & Financial Services Investor conference, American Express CEO Chenault said fourth quarter earnings estimates are "far too high." The current consensus estimate is $0.68 per share. The comments were based on what the CEO saw as a divergence between its growth forecasts and the market's. The difference has to do with the base analysts are using with respect to the recent spin-off of its advisory firm, Ameriprise Financial Services Inc. (AMP) in September. Chenault also suggested the Street was expecting a substantial moderation in spending in Q4, but that marketing and promotion expenditures would remain consistent with Q3 levels of 16%.

The company does not have a good history of communicating well with the Street. Shares took a major hit on the news, but the reaction appears way overdone. Clearly, AXP felt the bar for expectations was set erroneously, and therefore, that it needed to clarify the divergence. The company just released its third quarter results on October 24, with profits rising 17% to a record $1.03 bln. Revenues in Q3 rose 11% to $8.0 bln reflecting record card member spending, an increase in the number of cards and higher lending balances. In order to sustain the growth pace and increase market share, Chenault plans to keep a higher level of marketing and promotional spending.

The financial services company has been driving growth by launching proprietary products, adding bank partners, and organically growing its card base. Its core strategy is spending-centric, not lending-centric, and it is aimed at increasing average spending. Its customers' balances average $11,000 - 5x higher than MasterCard and 4x higher than Visa. It hopes to continue to raise the bar consistently through increasing rewards, offering premium products, and expanding its merchant base to include everyday items. Just last year, AXP signed a deal with McDonald's, so consumers can now buy that Big Mac with their Amex. Billings to date are up 17%.

American Express is scheduled to release Q4 earnings on January 23rd. For the full year, the Reuters Estimate consensus is $2.77 per share on revenues of $25.56 bln, followed by $3.03 in FY06 on revenues of $27.36 bln. The GAAP estimate for the full year is $2.93 per share.

--Kimberly DuBord, Briefing.com

11:28AM DR Horton (DHI)

32.68 +0.37: Despite concerns about a housing slowdown, homebuilder DR Horton reported fourth quarter results that beat Wall Street estimates, and raised its outlook for the coming year. Specifically, the Fort Worth, TX-based company said net income increased 61% to $563.8 million, or $1.77 per share, as consolidated revenue jumped 45.1% to $5.02 billion. Net sales orders climbed to 13,950 homes from 11,105, while the value of the homes increased 33% to $3.8 billion. According to Reuters Estimates, DHI was expected to post earnings of $1.63 per share on revenue of $4.73 billion.

DR Horton, which recorded a record backlog of $5.8 billion, or 19,244 homes, during the latest quarter, raised its earnings guidance for fiscal 2006 to a range of $5.22 to $5.32 per share, versus the consensus EPS estimate of $5.24. In the coming year, it expects to close approximately 58,000 homes and generate revenue in excess $15.5 billion. Previously, the company had projected EPS of $5.00 to $5.05 on about $15 billion in revenue. For the current quarter, DHI reaffirmed its prior earnings target of $0.90 to $0.95 per share. Analysts, however, were expecting EPS of $0.99.

The latest results follow Toll Brothers' (TOL) announcement last week that it will cut its fiscal 2006 earnings forecast due to softening demand and higher regulatory restrictions. Despite solid fourth quarter sale figures, in which revenue rose 39% year/year to $2.01 billion, the news seemingly validated the market's concerns about the impact of rising interest rates and seemingly signaled a more pronounced slowdown in the once booming housing market.

While DHI's fundamentals remain strong, underlying concerns about rising interest rates and a housing slowdown have restrained the stock and the homebuilding group in recent months. Since peaking in July, shares of DHI have fallen nearly 25%. Consistent with Briefing.com's Underweight rating on the Discretionary Sector, an investment in DHI, as well as other homebuilders, is not well justified as the market's sentiment toward the group remains mired while mortgage rates are anticipated to move higher.

--Richard Jahnke, Briefing.com

9:46AM Analog Devices (ADI)

36.51 -0.58: Analog Devices, which makes processors for handsets, reported a 48% drop in net income resulting from higher taxes and plant closing costs. Net income in the fourth quarter fell to $68.3 mln, or $0.18 per share, from $132.2 mln, or $0.34 per share, earned last year. Excluding items, earnings surpassed forecasts by two cents, coming in at $0.36 per share. Revenues declined from last year, but rose 7% sequentially to $2.39 bln on growth from the communications markets. Yet, the stock dropped in extended trade on Tuesday after it said Q1 revenues would be flat sequentially, missing analysts' expectations. The Norwood, Massachusetts-based company expects first quarter earnings to be $0.31 per share, including five cents in charges for restructuring and expensing stock options. The street was looking for $0.36 before exceptional items.

Additionally, the company announced that it reached a "tentative settlement" with the SEC in a stock-option pricing probe. ADI disclosed in November that the SEC has been looking into options granted to executives, which came before the company reported favorable results. The microchip maker has agreed to pay a $3 mln penalty and re-price options granted to directors. CEO Jerald Fishman will pay a $1 million dollar penalty and unspecified disgorgement according to the company, but he is neither admitting nor denying charges.

Strong growth in cell phones and networking applications drove the quarter with communications applications revenues gaining 18% quarter/quarter, and now representing 30% of total sales. The consumer products area is benefiting from ongoing demand for digital cameras and digital televisions. Sales from both segments led to a 7% sequential increase in net sales to $622 mln. Gross margins improved marginally to 58.3%, but more importantly, days of inventory declined to 14 days from 114 days. Global bookings increased with the exception of Europe. ADI stated that turns orders, or those placed and delivered in the same quarter, remained high, accounting for over half of total sales in the quarter.

We currently hold an Overweight rating on the Technology sector and like what we have seen from many technology companies. ADI's guidance was conservative ahead of the holiday selling season. Higher sales, utilization, mix, and cost savings should drive earnings in the quarters ahead. First Call estimates for earnings growth is 29% for FY06, followed by 19% in FY07. The stock trades at a forward multiple of 22.6x.

--Kimberly DuBord, Briefing.com

9:31AM Abercrombie & Fitch (ANF)

56.89: Just three months removed from missing Wall Street's expectations for the first time ever, Abercrombie & Fitch got its bottom line back on track by beating analysts' forecasts for its third quarter. The teen retailer, which has now surpassed or matched consensus estimates in 35 of 36 quarters, reported a 79% increase in et income to $71.6 mln, which included a one-time charge for an executive severance agreement. Excluding the $0.09 charge, third quarter earnings rang in at an impressive $0.88 per share, $0.08 better than the Reuters Estimates consensus.

Inventories at the end of Q3 were $416 mln, nearly double the $209 mln in the same period a year earlier but up just 14% sequentially versus the more worrisome 60% rise from Q1 to Q2. As a reminder, the large inventory spike in Q2, which W.R. Hambrecht cited as a "necessary evil" if Abercrombie wants to maintain double-digit comps growth, had left many fretting about management's ability to control inventories and contributed to a 30% plunge in ANF shares over the ensuing five weeks. The Q3 results have tempered concerns about rising inventories, especially in denim, potentially creating substantial margin pressure.

This time around, management said gross margins rose 140 basis points year/year to 66.0%, due to improved initial markups and fewer markdowns. Operating margins also improved as distribution, marketing and administrative expenses (as a percentage of sales) also fell. Total revenues increased 35% year/year to $704.9 mln, as strong sales gains in the Hollister brand again provided the bulk of that growth while Q3 same-store sales increased 25%. Based on strong Q3 results, the company raised its fiscal year outlook. Excluding a non-recurring charge, management now sees FY06 earnings of $3.44 to $3.49 per share, well above the Reuters Estimates consensus of $3.30 per share. FY06 revenues are expected to hit $2.7 bln versus the $2.67 bln consensus.

Since the company released better than expected Oct. comps on Nov. 3, the stock has gained about 6.0%, but still trades at a huge discount to its July high of $74.10. ANF trades with an attractive forward multiple of about 16.4x based on the company's upwardly revised guidance that translates to expected year/year EPS growth of approximately 35%. ANF presents a favorable total risk/return proposition and remains well positioned to benefit from what Briefing.com believes will again be a solid season of holiday spending. Separately, Gymboree (GYMB), which is another specialty retailer, is a suggested holding in Briefing.com's portfolio for active investors.

--Brian Duhn, Briefing.com

9:05AM Borders Group (BGP)

19.70: Borders Group, hurt by weak sales and increased store investments, reported a wider loss for its fiscal third quarter. The Ann Arbor, Michigan-based bookseller said it lost $14.1 million, or ($0.20) per share, compared with a loss of $1.1 million, or ($0.01) per share, in the year-ago period. The latest results include a charge of $0.02 related to the company's planned program of store remodels.

Last month, Borders warned that weaker than expected same-store sales would negatively impact quarterly earnings, and withdrew its earnings forecast for the crucial holiday quarter. The company projected a loss of ($0.16) to ($0.20) per share, down from its earlier prediction of a loss between ($0.08) and ($0.12) per share announced in August.

Sales for the period totaled $840.9 million, up slightly from $838.6 million in the prior year. Same-store sales - a measure of sales at stores open at least a year - fell by 0.02% at Borders superstores and by 5.2% at the Waldenbooks specialty retail segment, which includes Waldenbooks, Borders Express, and Borders Outlet stores. Third quarter sales at domestic Borders superstores increased 1.6% from a year ago to $572.9 million. Led by strength in backlist titles, comparable sales in the book category were up 3%, however, music sales declined by approximately 15% on a comparable store basis.

Looking to the fourth quarter, Borders projects earnings of $1.60 to $1.80 per share, which includes the impact of an estimated charge of $0.04 to $0.05 per share. In August, the company had predicted fourth quarter earnings in the range of $1.80 to $1.90 per share. According to Reuters Estimates, analysts are expecting adjusted EPS of $1.72. The company also issued in-line guidance for the full year, with earnings expected in the range of $1.28 to $1.47 per share, including anticipated costs of $0.11 to $0.12, versus the consensus estimate of $1.45 per share.

Given Borders' continued cost pressures associated with remodeling its stores, along with difficult discretionary spending trends heading into the holidays, near-term earnings visibility remains clouded. Although BGP shares are cheap relative to its peers, such as Barnes & Noble (BKS) and Amazon.com (AMZN), the discounted valuation is warranted. With difficult macro-conditions, operational hurdles, and sagging sales weighing on the company, investors should remain on the sidelines until Borders' story becomes more clear.

--Richard Jahnke, Briefing.com

8:33AM Tyco (TYC)

27.40: Tyco's fourth quarter results topped analysts' expectations by two cents, but the underlying business environment still remains quite challenging for the industrial conglomerate. Organic growth, a true measure of business trends, slowed sequentially to 2%. Profitability took a major turn for the worse due to previously announced legal issues and cost escalation in metals and commodities. Gross margins slid 30 basis points quarter/quarter and 210 year/year to 33.7%. There were many moving parts to the quarter, including a tax rate of 1% and numerous one time items, which trimmed EPS from continuing operations by six cents. Excluding items, earnings were $0.48 per share on anemic revenue growth of 0.4% y/y to $10.03 bln.

The stock has fallen from its heights reached in January of $36 per share after several downward revisions over the past year have tested shareholders' patience in this turnaround story. These results did little to encourage a more optimistic view of the company. Net income rose to $917 mln, or 44 cents per share, from $454 mln, or 22 cents per share, bolstered by tax credits. Operating profits declined in three of its four major businesses. The Electronics business should be generating stronger revenue trends at this point in the cycle, but organic growth was a mere 3% and margins contracted by 160 basis points to 14% due to higher commodity prices.

Organic growth in the promising Health Care unit came to an abrupt halt, falling from 8% last quarter to just 1%, as revenues declined in its retail business. Tyco continues to shore up its balance sheet, but growth trends remain pallid. Tyco is forecasting earnings for the first quarter of FY06 to range between $0.42 to $0.44 per share, compared to consensus at $0.45. We currently have an Overweight rating on the Industrial sector but would steer investors toward the more growthy areas that include the rails, aerospace, construction, and industrial equipment.

--Kimberly DuBord, Briefing.com