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From Briefing.com: 4:31PM Microchip Technology Reiterates Revenue and EPS Guidance for Third Quarter Fiscal 2006 and Raises Long-Term Gross Margin Guidance (MCHP) :Co stated that it is reaffirming its guidance for net sales and earnings per share for the third quarter of fiscal 2006 ending Dec. 31, 2005. Net sales are expected to be about $234 mln and earnings per share are expected to be about $0.32. No conference call will be held in conjunction with this guidance update. The co plans to announce its financial results for the third quarter of fiscal 2006 after market close on Thursday, Jan. 19, 2006. The co also revised its long-term gross margin guidance to 62% from 60% after an analysis of various elements of its business.

Close Dow -2.56 at 10888.16, S&P +0.02 at 1257.48, Nasdaq -6.66 at 2232.71: A trifecta of better than expected economic data bolstered early buying efforts; however, such strong growth also raised concern about further Fed rate hikes, closing the indices near session lows. Consumer confidence climbed to 98.9, the most in more than two years, from 85.2, the lowest level since Oct. 2003. Such upbeat sentiment was also echoed after Oct. new home sales unexpectedly rose 13% to a record 1.42 mln units (consensus 1.20 mln). Further, Oct. durable goods orders rebounded, rising 3.4% after falling 2.0% a month earlier, reflecting strong business investment -- a major factor that has kept GDP growth above long-term trends for two years. Nevertheless, while such data boosted stocks at the open, helping investors reclaim some of yesterday's broad-based consolidation following seven consecutive upticks for the S&P 500, bond traders thought the data was perhaps a little too strong. As a result, consolidation in the Treasury market, ending a two-day rally in the 10-yr which had pushed yields to their lowest levels in five weeks, closed the benchmark note down 17 ticks to yield 4.47%. Such weakness weighed modestly on the rate-sensitive Financial sector -- an area of strength behind the S&P's roughly 4.0% surge in November. Leadership was also absent in the influential Technology sector, which was weak across the board. Two of the sector's biggest laggards were chipmakers Advanced Micro Devices (AMD 25.55 -0.94), plunging 3.6% amid reports of operating losses at its Spansion unit, and NVIDIA (NVDA 35.45 -2.43), following two analyst downgrades. Energy, which provided some early leadership amid a morning rebound in oil prices, also finished lower as crude oil (-1.5%) and heating oil (-1.9%) fell to four-month lows. Materials, though, was a bright spot after JP Morgan added U.S. Steel (X 45.25 +2.76) to their Focus List, while Health Care also closed higher as upside FY06 guidance helped Express Scripts (ESRX 85.42 +5.53) hit a 52-week high.DJTA +0.2, DJUA +0.4, DOT -0.6, Nasdaq 100 -0.5, Russell 2000 +0.3, SOX -0.6, S&P Midcap 400 +0.4, XOI +0.03, NYSE Adv/Dec 1918/1384, Nasdaq Adv/Dec 1509/1526

11:54AM GameStop (GME)
35.99 +0.81: GameStop on Tuesday reported a loss for its fiscal third quarter due to costs related to its merger with Electronics Boutique. Despite a 28% increase in sales, the company, one of the nation's largest video game and entertainment software retailers, posted a loss of $2.5 million, or ($0.04) per share. Excluding merger-related costs of approximately $18.8 million, it would have earned $0.15 per share - in line with the consensus estimate.

On the top line, GameStop sales were $534.2 million, compared with $416.7 million in the prior year period. However, comparable store sales declined 12% as a result of major titles released in the third quarter last year. Such titles as Grand Theft Auto: San Andreas from Take Two Interactive (TTWO) and Fable from Microsoft (MSFT) helped contribute to tough year/year comparisons.

The Grapevine, TX-based company said third quarter gross margin improved to 33.1% from 28.5% last year, driven by higher sales of used video games as "value-driven customers became a larger factor in the face of rising gas prices and general economic uncertainty." In addition, GameStop noted that it experienced weaker than expected new video game software sales, primarily due to consumers waiting for the recent launch of Microsoft's Xbox 360, as well as the upcoming hardware releases by Sony and Nintendo. It anticipates this trend will continue through the current holiday quarter.

Due to supply limitations for the Xbox 360 and slower new video game software sales, the company expects same-store sales in the fourth quarter to be between flat and up 2% and anticipates used video game sales to continue to support earnings of $0.98 to $1.02 per share. For the full year, GameStop sees earnings in the range of $1.65 to $1.70, excluding merger-related costs, down from its previous guidance of $1.65 to $1.75 per share. According to Reuters Estimates, GameStop is expected to post EPS of $1.02 and $1.70 in the fourth quarter and for the full-year, respectively.

--Richard Jahnke, Briefing.com

9:53AM Gymboree (GYMB)

20.72 +0.72: The market may have its misgivings about the strength of holiday sales, yet it is clear that Gymboree, a suggested holding in Briefing.com's portfolio for active investors, is connecting with shoppers. The latest reminder of that point was provided this morning when the specialty retailer of children's and women's clothing reported a 22.0% increase in comparable store sales for November. That was well ahead of the Briefing.com consensus estimate of +8.3% and a tremendous improvement from the 10.0% decrease in comparable store sales in the year-ago period.

The operating momentum at Gymboree is plainly evident and continues to underpin our support for the stock, which is up 56% since being added to the Active Portfolio.

In conjunction with the comparable store sales report, Gymboree raised its fourth quarter and full-year EPS guidance. The company also boosted its fourth quarter comparable store sales expectations, saying it sees gains in the positive mid-single digits versus last year and prior guidance for a gain in the low to mid-single digits.

Gymboree had boosted its Q4 and full-year guidance as recently as November 3, so the latest guidance marks its second increase in less than a month. To that end, Gymboree expects fourth quarter earnings per share to range from $0.40-0.42 (consensus $0.39) and full-year earnings per share to be $0.80-0.82 per share (consensus $0.82). The company had previously expected EPS of $0.37-0.39 and $0.77-0.81, respectively.

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

9:22AM Calpine (CPN)

$1.25: With its stock price at multi-year lows, barely over a dollar per share, Calpine is shaking things up, announcing the departure of its CEO and CFO. The Board of Directors stated the departure of Peter Cartwright, Calpine's Chairman, President and Chief Executive Officer, and Executive Vice President and Chief Financial Officer Robert Kelly, are "essential to better address Calpine's financial challenges and to provide a new direction for the company."

The San Jose, California-based company has reported losses in eight of the past eleven quarters. Calpine, which owns the biggest network of gas-fired power plants, has been in the process of selling off assets to pay down debt, which currently stands at $17 bln. On November 23, a judge barred Calpine from spending $400 mln to buy fuel for its generators. According to Bloomberg, the Delaware Chancery Court Judge ruled Calpine violated agreements with bondholders by using proceeds of asset sales to buy gas. Calpine will likely have to repay $313 mln for fuel purchases that have already taken place.

Calpine is likely to continue to face legal challenges and resistance by debt holders as it tries to maintain liquidity, reduce debt, and meet collateral requirements through proceeds derived from asset sales and operations. As a gas-fired generator, Calpine also has a considerable disadvantage compared to other operators which can run dual-fired plants using coal and/or nuclear assets. The market is betting against Calpine's recovery. The short interest on the stock is currently 208 mln shares, or 38% of its float. We continue to think the power markets will improve next year on rising demand from a growing economy, coupled with more normalized capacity. We currently have a Market Weighting on the Utility Sector, as we suggest investors maintain exposure due to the defensive characteristics of utility stocks as earnings growth is expected to slow in 2006.

--Kimberly DuBord, Briefing.com

9:06AM Express Scripts (ESRX)

79.89: Express Scripts, one of the nation's largest pharmacy benefit managers (PBMs), on Tuesday issued fiscal 2006 earnings guidance that surpassed analysts' expectations. The St. Louis, MO-based company said it expects earnings in the range of $3.10 to $3.22 per share, which includes $0.10 in stock option expense, driven by growth in generic utilization and home delivery. According to Reuters Estimates, analysts were expecting EPS of $2.99.

Express Scripts said that the positive outlook for the year reflects the strength of its core business and the success of its business model. The key drivers of growth include increased generic drug use, home delivery, specialty pharmacy, preferred formulary compliance and lower drug purchasing costs. In addition, the impact of the new Medicare prescription drug benefit, formally known as Plan D, which will take place on January 1, 2006, is expected to foster growth.

Although Briefing.com holds a Market Weight rating on the Health Care sector, it is our view that PBMs will benefit from the new Medicare opportunity and continue to retain a leadership position in the sector. Since the beginning of the year, ESRX shares have more than doubled. With improving medical cost trends and the potential impact of Plan D, the prospects for Express Scripts remains promising. At the current price level, shares are trading at approximately 26.7x forward earnings.

--Richard Jahnke, Briefing.com

8:51AM Gold Strikes $500

Gold prices reached a record high in London, reaching over $500 per ounce for the first time since February of 1983. Considering inflation is nowhere near the backbreaking 12% rate seen back then, the historic rise in the yellow metal is being supported by a combination of factors. Holding the greatest significance is the increasing demand, particularly out of Asia. Gold prices are also being underpinned by the commodity's status as a hedge against inflation.

Investors are looking to spread their risk against inflation, a slowing US economy, and concerns over the value of the US dollar, which together are driving demand for gold as an alternative investment. Additionally, the view that central banks are more willing buyers than sellers is further supporting prices after Russia's central bank said it may double its gold reserves, along with the central banks in South Africa and Argentina. Central banks in the US and Europe hold roughly one fifth of the world's gold reserves.

Demand for gold jewelry has also been a main driver of prices. Jewelers, which account for almost three quarters of demand, increase buying in the third quarter in anticipation of the wedding season in India, followed by holiday demand for Christmas gifts. India is the world's largest consumer of gold. The rise and strength of the Asian economies, namely China and India, has created a wealth effect, which has led to rising demand for the metal at a time when production is falling. Seasonal demand sparked price momentum in the third quarter, which is expected to continue. Pierre Lassonde, President of Newmont Mining (NEM), who has been an accurate predictor of gold prices in the past, recently said the price may rise to more than $1000 per ounce in the next five to seven years as Asian demand outstrips supply.

When considering an investment in gold, investors need to decide on what type of exposure they are seeking (i.e. real assets or just exposure to gold prices). The various means to buy gold include coins and small bars, exchange-traded gold, gold certificates, gold accounts, gold-oriented funds, or structured products. As is the case with any investment, buyers should be aware of the cost associated with each instrument and the risks.

Investors looking for stocks should seek out the lowest cost producers. Even though companies are benefiting from higher prices, they are also faced with headwinds caused by higher prices for diesel, tires, and explosives. Stocks we continue to like include Barrick (ABX), Meridian Gold (MDG), and Gold Corp (GG). Other stocks highly leveraged to gold prices include Placer Dome (PDG), Kinross (KGC), and Agnico-Eagle (AEM). Newmont Mining remains the go-to stock, as the largest producer and the only gold stock in the S&P 500.

--Kimberly DuBord, Briefing.com

9:58AM Perot Systems (PER) Bernstein upgrades Mkt Perform to OUTPERFORM. Firm thinks upcoming contract signings are prone to serve as positive catalysts, with unrecognized yet quite strong prospects to win a mega-deal this qtr (which could feasibly drive 7 or more percentage points of 2006 rev growth) and solid prospects to win a broad-base of medium-sized deals in the March qtr.
9:58AM Limited (LTD) FTN Midwest upgrades Sell to NEUTRAL. Target $18 to $23. While the recent run in the stock leaves LTD near full-value, firm says the potential for improvement in the Apparel division and easier sales comparisons at Victoria's Secret stores during FY07 makes earnings estimates more achievable.

9:57AM Seattle Genetics (SGEN) Banc of America Sec initiates NEUTRAL. Target $6. Firm notes that the co has an early stage pipeline of monoclonal antibodies being developed for the treatment of various blood cancers, along with a proprietary antibody-drug conjugate technology that it has out-licensed broadly.

9:55AM Peet's Coffee (PEET) Ryan, Beck & Co initiates OUTPERFORM. Target $36. Firm anticipates that strong top-line growth through FY07 will be driven by: 1) overall retail store sales growth of approx 19% per year, led primarily by retail store unit growth; and 2) specialty sales growth of approx 25% per year, led primarily by expansion of the grocery distribution channel.

9:54AM Parallel Petroleum (PLLL) DE Investment initiates BUY. Target $18.5. Firm cites valuation. The firm says the co has already demonstrated its superior capabilities at increasing value by acquiring/consolidating and exploiting its Permian Basin assets. Firm believes there is also significant probable and possible reserve upside potential in Barnett Shale and Wolfcamp play (New Mexico) interests.

9:53AM Hana Biosciences (HBX) Rodman & Renshaw initiates MKT OUTPERFORM. Target $11. Firm believes HBX is poised to deliver significant value for the long-term, risk-oriented investor, based on the company's improving fundamentals. These include: 1) recently released positive Phase 1/2 results for talotrexin in non-small cell lung cancer (NSCLC), 2) the potential to release final results from three clinical trials at the 2006 ASCO meeting, and 3) the potential to launch a reformulated billion dollar anti-emetic in 2007.

9:53AM Nanophase Tech (NANX) Adams Harkness initiates BUY. Target $8. Firm notes that the co has forged early partnerships with multi-billion-dollar industry leaders such as BASF, Rohm & Haas, and Altana Chemie. The co is also in talks with many potential partners/customers at present. Firm believes that NANX is well-positioned to gain from the burgeoning nanomaterials market.

9:51AM BellSouth (BLS) UBS downgrades Buy to NEUTRAL. Target $31 to $30. Firm believes the co's wireline business will face continued margin declines in 2006, driven by increasing competition in local service from alternative providers.

9:50AM Las Vegas Sands (LVS) JP Morgan downgrades Overweight to NEUTRAL. Firm is concerned that as the opening of WYNN draws near, the market will fixate on potential cannibalization at Sands Macau.

9:49AM Nu Skin Enterpr (NUS) Adams Harkness downgrades Buy to MKT PERFORM. Firm is citing valuation for downgrade. The firm had expected NUS to trade sideways until the next catalysts materialize in Q2:06. However, they now expect a negative revision to consensus expectations could provide some near-term downside. The firm says they are stepping to the sidelines until they approach mid-2006 and the next round of positive catalysts.

9:48AM American Pharm (APPX) Wedbush Morgan downgrades Buy to HOLD. Firm also suspends its price target to reflect likely near-term EPS dilution due to the proposed merger. Firm is not officially changing its estimates until the completion of the merger and says it has few insights into the financials of privately-held ABI. However, a preliminary 2006 EPS estimate could be as low as $0.30-$0.35, and 2007 EPS could be as low as $0.65-$0.70. On this basis, the combined company would be trading at 60x 2007 EPS, which would be a large premium to the forward multiples of large-cap biotech cos such as Genentech and Amgen.