Replies to post #6135 on Sector Investing

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Major Market 6 Month Charts and SOX and BKX Industry Indices included because of the importance of these indices to the market overall:

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From Briefing.com: 4:34PM Merix beats by $0.07, guides Q3 revs above consensus (MERX) 7.84 +0.61 : Reports Q2 (Nov) earnings of $0.03 per share, $0.07 better than the Reuters Estimates consensus of ($0.04); revenues rose 42.8% year/year to $61.7 mln vs the $61.2 mln consensus. Co issues upside guidance for Q3, sees $0.00-0.04 vs. $0.00 consensus; sees Q3 revs of $87-91 mln vs. $83.96 mln consensus.

4:06PM Fairchild Semi announces sale of its LED and LED display product lines (FCS) 17.13 +0.22 : Co announces the sale of its LED and LED display product lines to Everlight Electronics. Fairchild will retain its optocoupler and infrared product lines. The cos have agreed not to disclose the financial terms of the sale. Co says "By divesting these LED and display products, Fairchild is continuing to sharpen its focus on its core businesses."

4:20 pm : A bullish interpretation of minutes from the FOMC's most recent meeting helped the market's major averages breach the trading range that had left them encircling the flat line for most of the year's first session. While a lower than expected manufacturing read extinguished early buying action, investors chose to focus upon the Fed's assertion that the number of rate rises "probably would not be large" and that inflation remains contained.

From 2:00 ET (the time at which the minutes were released) until the bell, buying was broad-based and took all ten of the economic sectors higher. Alongside a 3.1% surge in the price of crude, Energy (+4.5%) occupied the leadership seat all day. While its gain had not been sufficient in countering selling pressure in the early going, a 1.7% jump in the Financial sector and a 2.0% rise in Technology lent muscle to the broader market's advance. Banks had exerted a market-dragging decline intra-day, but clues from the Fed that the end to its current monetary tightening cycle is nearing helped the industry fully erase its loss and rise to a market-leading gain. The Treasury market similarly took a bullish cue, and the yield curve's slight steepening, following last week's inversion, further helped to underpin a sense of bullishness from which rate-sensitive pockets of the market benefited.

Despite crude's run, the Consumer Discretionary sector managed to post a 1.0% gain. Retail had presented a particular challenge, but similarly rose with the afternoon rally. In particular, General Motors (GM 18.94 -0.48) and Wal-Mart (WMT 46.22 -0.58) challenged that industry. Bank of America's target price cut took the former issue south, while the world's largest retailer's assertion that December same-store sales should rise 2.2% -- the low end of its previously-forecasted +2-4% range for the vital holiday period -- sent it to a two-month low. While WMT's decline also weighed heavily upon the Consumer Staples sector (+0.6%), broad-based buying and earnings-induced strength in Walgreen's (WAG 45.41 +1.15) helped it climb. Such wide-spread buying action helped even transportation issues, which had languished on account of the energy price action, and enabled the Industrials (+0.6%) sector to clear the flat line.

Surges across the Technology board can be largely credited with today's advance, and, particularly, with the Nasdaq's outperformance. Healthcare, which spent the session on positive turf, further contributed to the indices' stances. The Dow's pharmaceutical trio - Johnson & Johnson (JNJ 61.51 +1.41), Merck (MRK 32.75 +0.94), and Pfizer (PFE 23.72 +0.40) - demonstrated relative strength on the heels of JNJ's analyst upgrade. That industry teamed with particular strength in biotechs and healthcare distributors in driving the sector's solid 1.3% rise.

With respect to the December ISM Index, the four-month low reading of 54.2 (consensus 57.5) still reflects growth, but at a decelerated rate that dampened the early bullishness with which 2006 launched. However, the extent to which the Fed hikes interest rates remains this year's stock market's biggest concern; hope gleaned from the FOMC's minutes that the tightening end is near stole the afternoon spotlight and eclipsed the effect of suggested economic slowing.DJ30 +129.91 NASDAQ +38.42 SP500 +20.51 NASDAQ Dec/Adv/Vol 1209/1906/2.01 bln NYSE Dec/Adv/Vol 833/2529/1.91 bln

11:07AM Intel confirms new brand identity (INTC) 24.98 +0.02 : THe co formally unveiled a new brand identity today that represents a significant milestone in the co's history and further signifies the co's evolution to a market-driving platform solutions co. The key technologies behind the co's platform focus include the microprocessor, chipset and software that together enhance system performance and improve the overall user experience.

10:01AM Flextronics appoints Michael McNamara as CEO (FLEX) 10.37 -0.07 :

9:08AM On The Wires : Lexar Media (LEXR) introduced new additions to its lineup of high-performance USB flash drives, as well as enhancements to existing products, at the 2006 International Consumer Electronics Show... Genesis Microchip (GNSS) aannoucnes that Skyworth Optical & Electrical, China's third-largest TV manufacturer and a major television exporter, has designed Genesis Microchip's FLI8532 into its new high-definition 32-inch and 37-inch LCD TV models 32FL6G, 32FL6U1, 37FL6G and 37FL6U1, all of which are now available in China... Silicon Image (SIMG) annoucnes the release of the SiI 9020, the first discrete HDMI transmitter chip specifically for the mobile market.

Western Digital (WDC) announces it has doubled the capacity of its next-generation 10,000 RPM WD Raptor enterprise Serial ATA hard drive to 150 GB and has increased the performance of the popular drive with additional features for server and networked storage applications.

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From Briefing.com: 4:20 pm : Though caught within a tight trading range from open until close, the equity market's major averages managed to sustain positive footing following yesterday's broad-based, Fed-induced rally with which they rang in 2006. Gains were modest, but buyers nonetheless dominated trading.

Nine of the ten economic sectors closed higher. Extending yesterday's 2.0% run, the Technology sector served as the broader market's best source of support and further substantiated the Over Weight rating Briefing.com maintains on the sector. A surging internet consulting and services industry teamed with relative strength in the communication equipment, semiconductors, and electronics industries in driving a weighty 1.1% gain. On a related note, rising Google (GOOG 445.56 +10.33) shares, following an analyst upgrade and another price target hike, helped to underpin a sense of bullishness across the tech board -- while fueling the Nasdaq's outperformance. Prolonged pharmaceutical strength helped Healthcare register a market-lifting 0.8% gain, and an upped price target on, and positive analyst comments regarding, Colgate-Palmolive (CL 55.56 +0.65) aided the Consumer Staples sector (+0.2%) in clearing the flat line. Solid earnings from Monsanto (MON 80.86 +0.26), meanwhile, helped pull the Materials sector (+0.6%) north.

Rocky energy price action served as somewhat of a bearish backdrop today. The commodity surged to a two-month high yesterday, pulled back this morning, but eventually returned from the red and closed at $63.10 per barrel. At the same time, its rise did little to spark aggressive buying within the Energy sector (+0.5%). Traders may have stuck closer to the sidelines considering Tuesday's 4.5% jump an ahead of the EIA's inventory stats that have been postponed until tomorrow. The crude action joined particular weakness in home improvement retail in stunting the Discretionary sector (0.0%). J.P. Morgan downgraded Lowe's (LOW 66.24 -0.83) shares, and its citation of a cautious outlook on the macro housing environment sent Home Depot (HD 40.46 -0.78) spinning in sympathy. While automakers' December same-store sales reports were dismal, a market that appeared to have expected worse sent the auto industry north. Apparel also emerged as a pocket of Discretionary support.

Just as gains were modest, so were losses. The Financial sector (-0.2%) stood solo in the red, and a halving of its intra-day decline helped the indices close at the high end of the session's range. Ultimately, though, the submerged status of the marker's most influential sector capped an overall advance. Banks, which rallied yesterday following a bullish interpretation of the December 13 FOMC minutes, lost steam on account of Citigroup's (C 48.44 -0.85) downgrade. Bank of America cited industry concerns; as a result, one of the S&P's heaviest issues slumped and took its peers down with it. Strength in insurers and a somewhat steepening yield curve, following last week's inversion, helped limit the sector's slide. Since the release of yesterday's minutes, which said the number of remaining rate hikes would "probably not be large," the spread between the two and 10-year notes has widened nearly six basis points.

Separately, today's economic calendar delivered an expected 2.5% increase in November factory orders. Strong aircraft orders were behind the rise; excluding transportation, orders were flat.
DJ30 +32.74 NASDAQ +19.72 SP500 +4.66 NASDAQ Dec/Adv/Vol 1159/1891/1.95 bln NYSE Dec/Adv/Vol 951/2401/1.83 bln

4:15PM Xilinx raises December quarter sales guidance (XLNX) : Co announces that Dec qtr sales are expected to increase approx 11-12% sequentially driven by broad based end market strength and strong sales growth in North America, Asia Pacific, and Europe. This is an increase from prior guidance of up 4-8% sequentially, given on Dec 7.

4:05PM Palm announces its Treo 700w Smartphone is available on the Verizon Wireless network (PALM) 33.95 +0.90 : PALM says the Treo 700w is the first Microsoft Windows Mobile-based Treo smartphone on the Verizon (VZ) EV-DO Network; phone and network offer high-speed wireless data access for email, Web browsing and downloading MSFT Office documents.

2:36PM C-COR.net announces it is comfortable with the Q2 First Call revenue and earnings estimates (CCBL) 5.45 +0.41 : CCBL reported that for 2Q06, it is comfortable with the First Call estimates in terms of revenues and earnings. CCBL expects to meet non-GAAP earnings as well as revenues, which is within the guidance that the co had given for revenues.

10:04AM NVIDIA climbs into new-3-1/2 year territory as it surpass the November high of 38.50 (NVDA) 38.80 +0.59 :

8:47AM Silicon Image delays earnings release to Feb 16 (SIMG) 9.89 : Co will report earnings on Feb 16, normally reports Q4 EPS in late Jan. Co is delaying "in order to allow its newly appointed financial management sufficient time to complete its analysis of the financial results for 2005, including its analysis of deferred tax assets as of December 31, 2005".

11:36 am Tweeter Home Entertainment Group (TWTR)

5.39 -0.06: Less than a week after outlining a number of material weaknesses in its internal controls, Tweeter Home Entertainment Group wasted little time in reminding Wall Street about one of its strengths sales. Tweeter, which sells audio and video equipment in stores under the Hillcrest, Showcase and other brands, said total Q1 revenues rose 4% to $267 mln, up from $258 mln a year ago and above the Reuters Estimates consensus of $260.3 mln.

While 4% growth isn't earth shattering by any means, as competitors like Best Buy (BBY) and Circuit City (CC) have recently enjoyed quarterly revenue growth of 10.4% and 16.5%, respectively, it could be a step in the right direction for a company trying to get back in the black. Tweeter has posted a loss in seven of its last nine quarters, with its seasonally strong fiscal first quarter acting as the company's only profitable period.

According to CEO Joe McGuire, management is very pleased with their ability to not only achieve sales momentum from last quarter but also maintain a stable gross margin rate. McGuire added that, "Consumer excitement about digital television is proving to be a significant traffic driver in our stores," as revenue from flat-panel television sales grew 47%, compared to a year ago with a 64% increase in unit sales. Further, Tweeter finished the quarter with approximately $130 mln of inventory on hand, better positioning the company for the month of January, which has become an important month for TV sales.

While Tweeter wont to release its full results for the quarter until Jan. 26, with Reuters estimating earnings of $0.26 per share, today's better than expected sales results may underscore managements ongoing efforts to improve product offerings, which should enable a return to profitability over the next 18-24 months.

--Brian Duhn, Briefing.com


11:36 am Tweeter Home Entertainment Group (TWTR)

5.39 -0.06: Less than a week after outlining a number of material weaknesses in its internal controls, Tweeter Home Entertainment Group wasted little time in reminding Wall Street about one of its strengths sales. Tweeter, which sells audio and video equipment in stores under the Hillcrest, Showcase and other brands, said total Q1 revenues rose 4% to $267 mln, up from $258 mln a year ago and above the Reuters Estimates consensus of $260.3 mln.

While 4% growth isn't earth shattering by any means, as competitors like Best Buy (BBY) and Circuit City (CC) have recently enjoyed quarterly revenue growth of 10.4% and 16.5%, respectively, it could be a step in the right direction for a company trying to get back in the black. Tweeter has posted a loss in seven of its last nine quarters, with its seasonally strong fiscal first quarter acting as the company's only profitable period.

According to CEO Joe McGuire, management is very pleased with their ability to not only achieve sales momentum from last quarter but also maintain a stable gross margin rate. McGuire added that, "Consumer excitement about digital television is proving to be a significant traffic driver in our stores," as revenue from flat-panel television sales grew 47%, compared to a year ago with a 64% increase in unit sales. Further, Tweeter finished the quarter with approximately $130 mln of inventory on hand, better positioning the company for the month of January, which has become an important month for TV sales.

While Tweeter wont to release its full results for the quarter until Jan. 26, with Reuters estimating earnings of $0.26 per share, today's better than expected sales results may underscore managements ongoing efforts to improve product offerings, which should enable a return to profitability over the next 18-24 months.

--Brian Duhn, Briefing.com

10:07 am Google: Bear Stearns upgrades Peer Perform to Outperform. Target $550. Upgrade reflects firm's long term belief in the fundamentals & the burgeoning Google Ecosystem. They believe the co is in the midst of nurturing its own Ecosystem, much like MSFT and IBM did in the past. The firm says that the co's Ecosystem has 5 main attributes: GOOG's size is developing new sectors as a derivative; GOOG's direction & partners should have a resounding effect on existing companies; the Ecosystem should act as selfreinforcing to the co; GOOG's hardware competency is underrated, and a significant advantage; and the Ecosystem growth should create an economic "lift" for GOOG.

10:04 am Computer Prgms & Syst: Leerink Swann initiates Outperform. Data from a recent AHA survey leads them to believe this underpenetrated market segment is likely to accelerate spending on clinical I.T. near term, as rural hospitals hope to achieve better patient care and higher levels of profitability, which they think could lead to positive earnings revisions by CPSI, driving share price outperformance.

09:46 am Kennametal: KeyBanc Capital Mkts / McDonald upgrades Hold to Buy. Firm is saying they are confident that the newly appointed C.E.O. Carlos Cardoso will focus on executing the strategy that has made KMT a mkt leader in the cutting tools and engineered components.

09:45 am Mahanagar Telephone Nigam: Goldman Sachs downgrades In-Line to Underperform . Downgrade is based on 1) B.S.N.L.'s surprise reduction to fixed-line monthly tariffs to Rs180 from Rs250 previously, which may pressure MTE to do so also and 2) potential 16% downside risk to their D.C.F. valuation. They believe their earnings estimates & valuation face significant downside risk from potential reduction to fixed-line monthly rentals.

09:44 am Sunrise Assisted: Citigroup initiates Buy. Target $44. Firm believes the "private pay" senior living sector fundamentals continue to improve evidenced by increasing occupancy and better pricing/sector margins. Demand growth for senior living is currently outpacing new capacity additions.

09:43 am California Pizza: KeyBanc Capital Mkts / McDonald downgrades Aggressive Buy to Buy. Target $40 to $40. Downgrade reflects the impact of stock-based compensation expense on EPS and growing concerns over the sustainability of outsize comparable same store sales performance.

09:35 am Progenics Pharm: Brean Murray reiterates Strong Buy. Target $30 to $30. Firm is saying that remaining near-term catalysts include release of final, confirmatory Phase 3 data of subcutaneous M.N.T.X. in advanced medical illness by this month, initiation of a Phase 2 trial with oral M.N.T.X. in more than 100 patients by 1H06, and receipt of an S.P.A. and subsequent Phase 3 initiation in P.O.I. in mid-2006.

09:33 am SiRF Technology: Longbow initiates Neutral. Firm is saying they expect strong growth in the Global Positioning System market based on their survey work and the low penetration rate of GPS devices across various platforms. However they think that at 38x CY06 EPS, SiRF's valuations are towards the expensive end even after accounting for its growth prospects.

09:32 am Superior Well Services: RBC Capital Mkts initiates Sector Perform. Target $33. Firm believes SWSI is an attractive candidate for small cap portfolios, particularly on any pull-back to the low $20's driven by: 1) their positive view on the pressure pumping market into 2007 - SWSI is the only small/micro cap pressure pumping pure-play; 2) Organic prospects should allow SWSI to grow its business above the industry average; and 3) Strong management team.

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From Briefing.com: 4:20 pm : Closing the week with an average 3.2% gain, the equity market's major averages continued 2006's streak today. A mixed interpretation of the December employment report triggered some intra-day melee, but buyers ran back post-lunch and carried the market to a fourth straight day of advances.

Each of the ten economic sectors finished on positive ground. A 2.3% surge in the price of crude futures was the Energy sector's gain, with which it closed the week 6% higher. While the energy price action drove that sector, it did little to dampen buying across the broader market. Speaking of commodities, gold futures rose to the highest closing price in 25 years, and helped incite surges across the Materials sector (+1.2%). It was Technology that retained the spotlight today, though; on account of still-surging semiconductors, soaring communication equipment issues, and an altogether general extension of bullishness across the board, Tech rose a weighty 1.4% and continued the 2006 Tech theme. The SOXX index jumped 2% -- up 8% on the week -- and the Nasdaq hit a four and a half year high. Some upbeat corporate news helped to extend the sector's recent rally. Goldman Sachs upped its price target and profit estimates on Google (GOOG 465.15 +13.91) and Yahoo (YHOO 43.20 +1.67) shares, and The Wall Street Journal ran an article discussing those companies' partnership with Briefing.com recommended holding Motorola (MOT 24.47 +0.95) - an example of their efforts to reach consumers beyond the traditional PC. Signifying strong end-market demand, Samsung asserted that it will raise DRAM contract prices by 10%. Garnering particular attention was IBM's (IBM 84.95 +2.45) announcement that it plans to freeze its $48 billion pension plan in 2008. Hardware rallied, and that stock led the Dow, which also hit a four and a half year high today. A lone sore spot was Microsoft (MSFT 26.91 -0.08), which declined following an analyst downgrade.

With respect to the jobs data, investors took somewhat of a mixed interpretation. For a market focused upon the interest rate environment, a lower than expected rise in December non-farm payrolls supported the argument that the Fed may end its current monetary tightening cycle sooner than later. Futures trade jumped, and the indices ran upon the market's launch. However, the consideration of November's upside revision, which essentially puts today's data in-line with what had been expected, served as a tempering factor. A greater than expected uptick in hourly earnings was an additional offsetting element; although the rise was unalarming, that caveat nonetheless fanned inflation concerns. As a result, the Treasury market spent another session submerged and bond traders further flattened the yield curve. The rate-sensitive Financial sector took a bearish cue, but banks reversed course and pushed the influential sector to a supportive 0.5% gain.

Aside from the four and a half year highs hit by the S&P 500, the Dow, and the Nasdaq this week, the NYSE Composite, S&P Financial, Oil Services, S&P Midcap, and Russell 2000 also touched historic highs.DJ30 +77.16 NASDAQ +28.75 SP500 +11.97 NASDAQ Dec/Adv/Vol 1037/2020/2.29 bln NYSE Dec/Adv/Vol 843/2450/1.77 bln

4:32 pm Weekly Wrap

The Fed presented the stock market with a late Christmas present. It was good enough to lead to a fundamental shift in the outlook, and the S&P was up every day this week.

The Fed's December FOMC minutes were released on Tuesday afternoon. The The minutes stated that "views differed on how much further tightening might be required" and that "policy decisions going forward would depend to an increased extent on the implications of incoming economic data."

In other words, several more rate hikes are by no means guaranteed. Market talk went from a fed funds rate of 5% or more later this year to expectations that the Fed might halt the rate hikes at 4 1/2% or 4 3/4% over the next several months.

The S&P 500 index surged 20 points on Tuesday.

The implication that the Fed might be nearing the end of the rate hike cycle is a very important fundamental issue. Higher rates would threaten economic growth in the latter half of 2006, and would lower the relative value of stocks in valuation models.

The market response was rational. It also carried through the week.

The S&P index gained another 5 points on Wednesday, was up fractionally on Thursday, and posted a 12 point gain on Friday. All of this was possible because of the revised perceptions on Fed policy.

The Friday gain was due in part to a lower-than-expected 108,000 increase in December non-farm payrolls. This suggests weaker economic growth than expected, but at this time that is a positive for stocks because it adds to the argument that the Fed will soon stop raising rates. The key inflection issue for stocks is the interest rate outlook, not the economic outlook, and everything will be viewed through that perspective.

Other economic data this week were mixed. December auto sales were disappointing, but sales at retail chains were slightly better than expected for the important month of December.

There were only a few earnings reports. Walgreen, Monsanto, and Accenture had good reports. Oil was up on the week and crude closed above $64 a barrel. That was considered tolerable, however, especially as natural gas prices continued their recent plunge.

The focus will shift to fourth quarter earnings reports over the next couple of weeks, but the underlying tone has clearly improved since late December. This is due entirely to the revised expectations about the outlook for Fed policy.

 
 Index      Started Week Ended Week Change %Change YTD  
 DJIA         10717.50    10959.31  241.81   2.3 % 2.3 %  
 Nasdaq        2205.32     2305.62  100.30   4.5 % 4.5 %  
 S&P 500       1248.29     1285.45   37.16   3.0 % 3.0 %  
 Russell 2000   673.22      699.39   26.17   3.9 % 3.9 %  
 

09:20 am Motorola (MOT)

23.52: Yahoo (YHOO) and Google (GOOG) are singing "Hello Moto" inking deals with the Schaumburg-based handset manufacture looking to give consumers more access to their respective Internet services. Both companies signed new partnerships and services agreements with Motorola in an attempt to extend services beyond desktop PCs to handsets and TVs. Motorola, the world's second largest handset maker, is betting on Google's success, anticipating consumers will pay more for phones directly linked to the top-ranked search engine. Separately, Motorola signed an exclusive 10-year agreement with Eastman Kodak (EK), making it easier for consumers to print, view, and share photos taken on their digital cameras.

Motorola, which continues to gain share against rival Nokia (NOK), will provide a one-click access to Google's search services on its handsets capable of transmitting data. Yahoo is looking to provide consumers mobile access to their Yahoo email, address book, calendar, and instant message services. Both companies have signed deals in the past, but the new agreements raises the bar in terms of access for consumers.

The trend of "everything digital, everything portable" is the basis for our bullish view on the Technology sector, driving growth from semiconductors to consumer electronics products. Motorola, a suggested holding in our Active Portfolio, continues to produce iconic, must-have handsets that enable consumers to integrate all aspects of their digital lives. The partnership with Yahoo and Google makes complete sense for Motorola hoping to sell more higher-end devices that command higher selling prices by offering wide-ranging access, services, and functionality.

If the linkage helps to drive Internet access, it will boost consumer demand for data-services offered by wireless operators, which carries a hefty profit margin. Motorola said it would begin offering the Google services by the end of March, but stated each wireless carrier would announce plan details. Yahoo is expected to announce its new Yahoo Go suite of services today at the CES show in Las Vegas, which will allow consumers all their personalized Yahoo services across different devices. Yahoo said Nokia plans to install the Yahoo Go on its new handsets. Yahoo Go TV service is expected to be released last this year. Motorola remains one of our preferred names within the Technology sector, executing well on the top and bottom line.

--Kimberly DuBord, Briefing.com


09:14 am Accenture Ltd (ACN)

29.68: After the bell last night, Accenture reported Q1 (Nov) earnings of $0.36 per share, two cents better than the Reuters Estimates consensus of $0.34. One of the world's biggest consulting and IT services firms attributed another strong quarterly performance to improved operating margins and record net revenues, with growth across all five operating groups and all three geographic regions. Total revenues rose 11.8% year/year to $4.17 bln, matching Wall Street's consensus. Revenue from its consulting services, which accounted for 62% of its overall business, rose 8% year/year to $2.58 bln, while Outsourcing revenue, which makes up the remaining 38% of Accenture's total top line, surged 18% to $1.59 bln.

In addition to achieving double-digit increases in both its top and bottom lines, Accenture upwardly revised its fiscal 2006 EPS forecasts to the range of $1.52 to $1.57 (consensus $1.53) due to discounted share repurchases and redemptions in Q1. In fact, since new bookings of $5.5 bln checked in at their highest level in seven quarters, management feels confident that they are on the right trajectory to achieve net revenue growth of 9-12% this year. With regard to Q2, management guided GAAP diluted EPS of $0.33-0.35 (consensus $0.35) but sees Q2 revenues of $4.0 bln to $4.15 bln -- a range which is below the $4.24 bln consensus.

Nonetheless, the company's ability to return cash to shareholders through share buybacks and its first ever payout of a quarterly dividend in Q1 bodes well for a company that has gained strong momentum since shares bottomed out last April. The stock has since soared over 40% to a new 52-week high and is up more than 6.0% in pre-market trading.

-- Brian Duhn, Briefing.com

09:09 am IBM (IBM)

82.50: As part of its ongoing global retirement plan strategy shift, IBM said on Thursday that it plans to freeze its $48 billion defined benefit pension plan and expand its 401(k) savings plan for employees. The Armonk, New York-based technology company said it will stop the accrual of new benefits in its defined benefit pension plan and fully preserve all retirement benefits that employees will have earned as of December 31, 2007. The shift to the more predictable cost structure of a 401(k), or defined contribution, plan will affect both existing employees and new hires, but not the 125,000 current U.S. retirees, former employees with vested benefits, or employees who retire prior to January 1, 2008.

Under its redesigned 401(k) plan - the largest in the country with more than $26 billion in assets - IBM said participants will receive a dollar-for-dollar match on the first 6% of pay deferred and a 4% automatic company contribution, for a total of 10% of pay annually.

"We are taking these actions to better control retirement expenses," said Randy MacDonald, IBM senior vice president, human resources. "We also believe these are prudent and balanced steps at a time of uncertainty and conflicting legislative and regulatory directions about defined benefit retirement plans in the Unites States."

As a result of these pension plan changes, IBM will record a one-time pre-tax charge of $270 million in the fourth quarter of 2005. However, the company expects the U.S. plan changes, which will become effective in January 2008, along with 2006 retirement plan changes under consideration in several other countries, will result in worldwide retirement-related expense savings of $450 to $500 million for 2006 and between $2.5 and $3 billion for 2006 through 2010, based on year-end 2005 pension assumptions.

--Richard Jahnke, Briefing.com

09:54 am Xyratex: RBC Capital Mkts upgrades Sector Perform to Outperform. Target $17 to $17. Upgrade is based on the improved near-term assumptions in the storage infrastructure segment due to the accelerated perpendicular recording media rollout; and the likelihood that our FY06 estimates for the storage infrastructure segment will prove conservative due to 60% of Xyratex's full year guidance being related to current purchase orders. Firm says their expectation that a more conservative adoption of S.A.S versus Fibre Channel drives will occur, which should lead to a slower degradation in NetApp rev in relation to the Dot Hill sourcing agreement. Firm also says lower tax rate estimates as a result of storage infrastructure, which operates in a 0% tax rate region, will become a higher percent of Xyratex's financials.

09:53 am Talk America: Needham & Co initiates Buy. Target $12. The firm says that TALK shares trade at only 3.4x 2006 EBITDA, which represents a significant discount to the group average. Assuming that Tall's margins begin to improve and the co moves towards positive EBITDA in 2006, they anticipate that TALK's valuation could benefit from a sustainable multiple expansion scenario.

09:52 am Peabody Energy: Stifel Nicolaus reiterates Buy. Target $90 to $90. Firm also raises 2006 E.P.S. est to $4.65 from $4.50 (consensus $4.43). The firm favors BTU's larger and more diverse coal reserve base as well as its superior track record of meeting earnings expectations,

09:51 am Nokia: Piper Jaffray reiterates Outperform. Target $21 to $21. Firm is saying monthly channel checks continue to indicate stronger trends for NOK in North America. Also, firm raises their tgt on MOT to $25 from $23, saying that checks inidicate that MOT posted strong North American sell-through trends during Dec. Regarding QCOM, firm says checks indicated an improving mix of 1xEV-DO chipsets and higher handset ASPs in the North American handset market, and their checks and discussions with industry contacts indicate strong trends for WCDMA handset sales. Firm also raises their ests for RFMD.

09:50 am Steak n Shake: CL King upgrades Accumulate to Strong Buy. Target $21. Firm is saying they believe the risk/reward is very compelling at current levels with the potential for better than 25% upside over the coming year.

09:49 am Abercrombie: UBS reiterates Neutral. Target $62 to $62. Firm ups price target due to concerns that earnings guidance may disappoint at the Detroit Auto Show next week. Firm also cuts their ests for AXL and LEA.

09:48 am Borg Warner: KeyBanc Capital Mkts / McDonald downgrades Aggressive Buy to Hold. Downgrade is due to concerns that earnings guidance may disappoint at the Detroit Auto Show next week. Firm also cuts their ests for AXL and LEA.

09:44 am CancerVax: Adams Harkness upgrades Reduce to Mkt Perform. Firm is saying they believe that the recent discontinuation of Canvaxin and restructuring announcement, and the resulting effect on the stock price, have played out in full.

09:42 am TETRA Tech: Hibernia Southcoast Capital upgrades Hold to Buy. Target $43. Upgrade follows TTI guidance. Firm says previous expectations for profit contributions from both the Fluids and Well Abandonment and Decommissioning divisions were substantially below the co's guidance for FY06. TTI is benefiting from pricing and international demand for its Fluids division products. Firm says the WA&D division profit contribution should be positively impacted by increased oil and gas production by TTI's Maritech subsidiary, which completed several mature oil and gas property acquisitions during FY06. Additionally, the firm notes WA&D results during FY06 should benefit from hurricane-related work and G.O.M work deferred during property sales in 2003 and 2004.

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From Briefing.com: 4:22PM Komag raises Q4 rev guidance (KOMG) 39.20 +0.34 : Co raises their Q4 rev guidance; sees Q4 revs of $190.8 -192.6 mln vs. $186.3 mln consensus. Co says the expected increase in the revenue was due to strong demand throughout the quarter and the Company's ability to install, qualify and produce product on new equipment ahead of the prior schedule. The co expects net margin for the fourth quarter to approx 17% to 18%, consistent with prior guidance. Co says with all of the equipment for the first capacity expansion now installed, the co expects available media production capacity for the first quarter of 2006 to approx 31 mln disks. Co says current customer demand for Komag disks appears strong, which together with the increased capacity could lead to increased rev in the first quarter of 2006, over the fourth quarter of 2005.

4:12PM Cascade Microtech sees Q4 EPS of $0.11 vs $0.19 consensus; sees revs $17.7 mln vs $19.7 mln consensus (CSCD) 12.40 -1.07 : Co sees Q4 EPS of $0.11 vs $0.19 consensus; sees revs $17.7 mln vs $19.7 mln consensus. This is below guidance provided on October 26, 2005, for revenue of $18.8-$20.0 mln and diluted EPS of $0.15-$0.20. The revenue shortfall was caused by delays in orders and shipments in the Company's Engineering Products Division, primarily in Japan. The earnings shortfall was primarily due to the lower revenue.

4:20 pm : The major indices closed relatively unchanged, again demonstrating their resilience in 2006 considering broad-based consolidation efforts weighed on sentiment throughout most of the session. Stocks opened sharply lower, as Alcoa (AA 29.60 -0.97) kicked off the earnings season last night with a disappointing quarterly report, sparking worries that profit growth is slowing and leaving investors little incentive to hold onto recent market gains. As of yesterday's close, the Dow, S&P and Nasdaq were already up 2.7%, 3.4% and 5.1%, respectively, for the year -- surpassing all of last year's gains, leading many to believe that stocks may have moved too far too fast. Nonetheless, as the day wore on it became apparent that Alcoa's 16% year/year decline in Q4 earnings should not be considered a harbinger of a poor quarter overall. We at Briefing.com still expect aggregate Q4 operating earnings for the S&P 500 to rise about 13% over the previous year.

With regard to sector strength and weakness, Materials turned in the day's worst performance following Alcoa's earnings miss and a Q4 profit warning from Phelps Dodge (PD 146.58 -7.97). Health Care was the most influential leader to the downside, as weakness in drug and HMOs offset a late-day rebound in biotech, while Consumer Staples and Industrials also showed relative weakness. Despite a sell-off in Treasuries and subsequent rise in borrowing costs, the rate-sensitive Financial and Utilities sectors closed flat. The 10-yr note closed down 14 ticks to yield 4.42% as the first of about $100 bln of U.S. debt to be auctioned off over the next month (e.g. $13 bln of 5-yr notes tomorrow) raised supply concerns.

Energy, though, extended its year-to-date leading 6.1% gain as concerns over Iran's nuclear plans initially prompted a rebound in oil prices. Consumer Discretionary also traded higher as retail got a boost following Home Depot's (HD 41.80 +0.98) proposed $3.2 bln bid for Hughes Supply (HUG 45.61 +7.06), which plays into our belief that 2006 will be a big year for M&A activity. A 1.2% surge in homebuilding provided additional sector support after D.R. Horton (DHI 40.33 +0.38) said Q1 net sales orders rose 19% to a record $3.2 bln. Eking out a small gain was Technology, which turned positive going into the close. The sector (and Nasdaq) benefited primarily from upbeat comments out of Apple Computer (AAPL 80.86 +4.81), highlighted by news that Q1 revenues are now expected to reach $5.7 bln (consensus $5.04 bln). Chip stocks, as an analyst upgrade helped Advanced Micro Devices (AMD 34.93 +1.68) hit a new 52-week high, also provided a lift. BTK +0.6% DJ30 -0.32 DJTA -0.5% DJUA +0.1% DOT -0.3% NASDAQ +1.63 NQ100 +0.1% R2K +0.7% SOX +0.7% SP400 +0.3% SP500 -0.46 XOI +1.0% NASDAQ Dec/Adv/Vol 1298/1739/1.97 bln NYSE Dec/Adv/Vol 1520/1837/1.73 bln

3:02 pm General Motors (GM)

2.13 -0.28: GM is making news again with its plan to cut prices on approximately 80% of its cars and trucks. Additionally, Jerry York, an advisor to Kirk Kerkorian's Tracinda Corp., is calling upon the company to do more to return to prosperity.

At this juncture, neither of the aforementioned news items is doing much to help GM's stock. Sure, the York plan lays out a number of constructive steps - reduce payments to GM directors, cut senior management salaries substantially, and reduce salaries or wages for rank and file workers proportionally - but it also diminishes what is arguably the only attractive investment attribute for GM right now. Specifically, the plan also calls for cutting GM's $2.00 annual dividend by 50%. Such a move would save GM roughly $570 million a year, but in the process, it would also erode the interest in GM by income-oriented investors.

The five principles for success outlined by York include the following:

Be realistic about market share and revenue expectations, and gear the cost and expense structure accordingly
Offer fewer, better products that will sell at higher net wholesale prices
Take a "clean sheet of paper" approach to the business
If something isn't part of the core business or can't make money, sell or close it
Articulate a sense of purpose by setting financial goals and milestones for the next three years
Granted GM was up 8.0% on Monday following a Goldman Sachs upgrade, but if the York plan was really the elixir that it seems to be for investors, we'd expect there to be a stronger response, particularly since it was also indicated that Kerkorian is interested in reacquiring the 12 million shares he sold for tax purposes at the appropriate time, and possibly, 12 million additional shares. Instead, the market is reacting as if York's plan isn't anything it didn't already know.

As for GM's price cut announcement, the timing is certainly ironic as it underscores GM's struggles to defend its market share with regularly-priced vehicles. At the same time, it highlights another key concern for this company - and that is the concern that GM's promotional activity is conditioning consumers to expect lower prices. In other words, with inflation trends firming, GM seems to be creating a dangerous environment of deflation for itself and its U.S. counterparts.

We intimated Monday that near-term sentiment may be changing for GM, which has surged 21% since Dec. 29 when it hit a low of $18.33. Be that as it may, with the likely possibility that GM's dividend will be cut, the investment outlook continues to be a dour one for investment-minded individuals.

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

1:09 pm Apple Computer (AAPL)

81.30 +5.25: At the Macworld Expo, Apple Computer's Chief Executive Steve Jobs announced that the company's retail stores generated $1.0 billion in quarterly revenue for the first time ever during the fiscal first quarter (Dec.). Additionally, it was noted that Apple sold a whopping 14 million iPods, as well as 1.25 million Macintosh computers. The company is scheduled to conduct a conference call on January 18, following the release of its earnings report, at which point further details regarding the quarter's performance will be disclosed.

As the preliminary Q1 results reflect, iPod sales continue to grow and remain a driving force behind AAPL shares. In its most recent annual report, for the 2005 fiscal year ended September 30, iPod sales soared 248% on a year-over-year basis. That unit's sales accounted for one-third of the company's overall net sales, and catalyzed a 68% rise in overall revenue. Between FY02, the year during which the first iPod rendition launched, and the most current year-end, Apple's net income has soared nearly 2,000%. During that time, earnings per share grew 1,600%.

On the day of iPods introduction, AAPL shares closed at a price of $18.14 per share. The stock now trades at $81 and is up 11.0% this year alone.

--Lisa Beilfuss, Briefing.com

12:30 pm Supervalu (SVU)

34.07 +1.25: Shares of Supervalu rose more than 5% early Tuesday after the Minneapolis-based grocery retailer and food wholesaler posted third quarter results ahead of analysts' expectations. For the period, the company earned $75.2 million, or $0.53 per share, compared with $64.9 million, or $0.46 per share, in the same quarter last year. However, excluding charges of approximately $6.4 million, or $0.04 per share, related to growth initiatives and costs to terminate recent talks to acquire Albertson's Inc. (ABS), profits were flat with last year's results and seven cents better than the Reuters Estimates consensus.

Supervalu reported net sales of $4.7 billion, up from $4.6 billion a year earlier. That was slightly better than the consensus estimate of $4.63 billion, as both retail and supply chain sales showed improvements during the quarter. Third quarter retail sales increased 1.9% from the prior year period to $2.5 billion, due in large part to new store openings, offset by higher store closings at Save-A-Lot. However, comparable store sales were negative 0.9%, with positive comparable store sales at company operated Save-A-Lot stores.

Retail operating earnings were a record $104.5 million, or 4.2% of revenue. Sales for supply chain services were up 4.4% at $2.2 billion, as the acquisition of a third-party logistics services business in February of 2005 and new growth offset customer attrition. Segment operating earnings for the period fell to $53.9 million, or 2.4% of revenue, from $59.5 million, or 2.8% of revenue, primarily reflecting the costs associated with technology investments and new produce initiatives.

The company also issued upside guidance for fiscal 2006 with diluted earnings estimated to be in the range of $1.89 to $1.94 per share, which includes approximately $0.43 related to the plan to sell 20 Pittsburgh stores, start-up costs related to growth initiatives, and losses resulting from Hurricane Katrina. Excluding those charges, earnings are expected to be between $2.32 and $2.37 per share, compared with the consensus EPS estimate of $2.14.

--Richard Jahnke, Briefing.com

12:23 pm Tiffany & Co. (TIF)

41.00 +1.05: Combined with an increased full-year profit forecast, Tiffany & Co. this morning announced a 6% increase in net sales during the November 1 through December 31, 2005 holiday period. On a constant-currency basis, net sales rose 9%.

Fueled by strong sales across its Asian markets, and also due to continued strength in in U.S. retail sales, worldwide comparable store sales grew 6% on a constant currency basis. As we noted at the time of Tiffany's most recent earnings report, the company has been successfully turning around its Japanese operations, driving comparable store sales, and delivering margin improvement despite cost headwinds.

The turnaround in Japan, which accounts for a quarter of overall sales, continues to be a focal point. Over the holiday period, comparable store sales there rose 7%; last year, sales in Japan fell 7% on a same-store basis. On its conference call, Tiffany noted that online shopping became available to Japanese consumers during the period. In other Asia-Pacific markets, same-store sales rose 11% on top of last year's 5% gain. Separately, a decline in London sales was behind a lower than expected 3% increase in European comps.

In the U.S., an increase in the average amount per transaction helped drive a 6% increase in comparable store sales. According to the company, holiday sales growth was spread among many jewelry categories but continued the year's trend of being skewed toward higher price points. In addition, Tiffany noted a increase in men's jewelry sales. Chief Executive Michael Kowalski asserted that diamond jewelry sales continue to be especially strong, largely due to increased wholesale diamond sales.

The luxury retailer said it now anticipates full-year 2005 earnings of $1.60-1.62 per share, up from a prior forecast of $1.55-1.65. The figure excludes any additional tax benefits related to repatriation provisions. Per the Reuters Estimates consensus, analysts are expecting Tiffany to deliver $1.64 in FY05 EPS. For FY06 Tiffany is projecting 10% net sales growth, at least 12% growth in earnings before income taxes, and diluted EPS of $1.77 to $1.82.

Although Briefing.com has held an Underweight rating on the Consumer Discretionary sector since April of 2004, we continue to view Tiffany as a bright spot that is poised to demonstrate relative strength amid a slowdown in discretionary spending. Currently, TIF shares trade at 25.0x expected FY05 earnings, which is roughly in-line with its five-year average.

--Lisa Beilfuss, Briefing.com

09:29 am Phelps Dodge (PD)

154.55: Phelps Dodge, one of the world's leading copper producers, slashed its earnings guidance for the fourth quarter due to a slew of special items, production shortfalls of copper and molybdenum, and losses on metal price hedging. PD took its earnings guidance range of $4.15-4.40, issuedin October, down to $1.00-$1.30 per share. Special charges in the quarter now total $2.05 per share, up considerably from its previous forecast of 23 cents. The comparative range is $3.05-$3.35 - well below the current consensus estimate of $4.72 per share.

Phelps stated fourth quarter copper production was 613 mln pounds, 7 mln pounds below the low end of its previous guidance. Copper prices during the fourth quarter averaged $1.95 per pound on the London Metal Exchange and $2.03 per pound on the New York Commodity Exchange, while fourth quarter guidance was based on a projection of $1.80 per pound. Production of Molybdenum, a metal used to strengthen steel making it less susceptible to corrosion and rust, was 14.5 mln pounds, 1 mln pounds below the low end of its target range.

The updated guidance takes into account several special items, including taxes on cash repatriation in its South American operations, charges associated with the sale of its specialty chemicals units and its North American magnet wire assets. Phelps anticipates ending the year with a cash balance of $1.9 bln, which is $400 mln below October guidance, with the difference going to postretirement medical and life insurance benefit obligation, environment obligations, and additional taxes. Its price protection program installed last year to secure sales on 50% of projected 2007 copper output suffered higher operating costs after copper prices rose higher than the company expected in Q4.

Phelps, a suggested holding in our Active Portfolio, is expected to release earnings January 27th. The combined negative effects of its price protection programs and several one-time items will surely take the wind out of its shares, which have been rising in lock-step with copper prices. Our positive view on the stock is based on the continued strength in copper prices, PD's financial position, and the stock's discounted valuation. Today's revision took the market by surprise, sending shares down 10% in pre-market activity. We will be reviewing our position on the stock following today's news.

--Kimberly DuBord, Briefing.com

09:14 am Applebee's (APPB)

22.49: After Monday's close, Applebee's International reported same-restaurant sales for the month, quarter, and year-end periods. Additionally, the restaurant chain issued profit guidance for the current quarter as well as for its 2005 and 2006 fiscal years.

In December, system-wide same-restaurant sales rose 1.7% - more than three times the Briefing.com consensus estimate. Comparable sales for franchise restaurants increased a better than expected 2.3%, while same-store sales at company restaurants unexpectedly fell 0.2%. Applebee's attributed the decline in company restaurant sales to a 5.0-5.5% decrease in guest traffic. The company noted the same factor upon reporting disappointing same-store sales for November. A higher average check helped serve as an offsetting factor, and, versus November, same-restaurant sales were up across the board.

Marking the 30th consecutive quarter of same-store sales growth, Applebee's posted a 1.0% increase in Q4 system-wide sales. Comparable sales at franchise stores rose 1.6%, but company stores saw a 0.9% decrease. For the 2005 fiscal year, same-restaurant sales grew 1.8% on a system-wide basis, rose 2.7% for franchise stores, and fell 0.9% in company stores. Applebee's noted that, for the 13the straight year, more than 100 new restaurants were opened.

Applebee's said fourth quarter (Dec.) diluted earnings per share should now check in at $0.27, which is in line with the Reuters Estimates consensus. The company anticipates approximately $1.30 in EPS for the full-year, which is a penny ahead of Wall Street's forecast and excludes a Q3 impairment charge that is expected to be dilutive by three cents per share. For FY06, the company foresees EPS between $1.43-1.47, which translates to year-over-year growth of about 12% (the consensus estimate is pegged at the high end of that range). With respect to same-restaurant sales, Applebee's expects to report 2-3% growth in FY06 system-wide sales, with the first half of the year reflecting lower sales than the latter half. Applebee's is slated to announce its Q4 and FY05 earnings results following the bell on February 8.

Briefing.com has maintained an Underweight rating on the Consumer Discretionary sector since April of 2004, as the effects of rising interest rates and higher energy costs are expected to impact discretionary spending.

--Lisa Beilfuss, Briefing.com

08:59 am Wyeth (WYE)

47.52: After the close Monday, Wyeth offered initial guidance for the 2006 fiscal year. The Madison, New Jersey-based pharmaceutical company estimated profits in the range of $2.97 to $3.07, ex-items. The estimate excludes potential restructuring charges, but includes the expensing of stock options, which represents about $0.12 to $0.15. If these expenses were excluded, 2006 earnings would be in the range of $3.09 to $3.22 per share, versus the current Reuters Estimates consensus of $3.14.

Meanwhile, net revenue for the upcoming year is expected to grow in the mid to upper single-digit range and gross margin is expected to be in the range of 71% to 73%.

"This 2006 earnings projection represents an increase targeted at 10% over 2005," said Wyeth's Chairman, President, and CEO Robert Essner. "Our expectations for 2006 reflect solid ongoing operating performance driven both by revenue growth and cost control."

Wyeth previously announced that earnings for 2005 would be in the range of $2.63 to $2.73 per share, including options expensing. Excluding these costs, 2005 earnings were estimated to be between $2.80 and $2.90, below the consensus estimate of $2.94. However, on Monday, the company said it expects actual results to slightly exceed the upper end of the range. Based on the news, shares of Wyeth are trading slightly higher in pre-market action.

--Richard Jahnke, Briefing.com

08:55 am Alcoa (AA)

30.57: Alcoa's fourth quarter profits were negatively impacted by higher costs and plant disruptions that eroded the benefits of higher aluminum prices. Alcoa stated average aluminum prices rose 12% in the quarter to $2,177 a ton. Aluminum is expected to average roughly $2,094 per ton this year - up 10% from 2005 levels. Alcoa's shares have moved materially since bottoming in September, but a 16% plunge in fourth quarter profits sent shares tumbling in European trading.

Officially kicking off the fourth quarter earnings season, Alcoa reported net income declined to $224 mln, or $0.26 cents per share, from $268 mln, or $0.30 per share a year prior, despite a 12% rise in sales to $6.67 bln. A raw aluminum price gain of 22% was lost to inflated costs, totaling $93 mln, that resulted from plant shutdowns caused by the hurricanes, unplanned repairs at a plant in Australia, and a worker strike in Spain. Excluding non-recurring items, profit from continuing operations was $0.35 per share - two cents below expectations.

Rising energy and chemical costs, including caustic soda used to extract aluminum from bauxite, eroded the benefit of higher aluminum prices. Alcoa does not anticipate a sharp spike for input prices in the year ahead; therefore, it hopes ongoing restructuring and productivity efforts will improve the bottom line. Inflationary pressures weren't limited to just rising energy and raw material costs, as total costs and expenses rose at 2x the rate of sales.

We continue to recommend investors steer clear of Alcoa, which continues to suffer from classic manufacturing costs pressures. Profits will likely remain restrained despite a positive outlook for aluminum prices due to high input and energy costs, rising interest rates, the dollar strengthening, and excess production. As we have stated previously, the metal markets in the first half of 2006 will mirror 2005 given the tight market conditions between supply and demand. Given the uncertainties and margin pressure, we prefer the likes of Phelps Dodge (PD) and Inco (N) given their attractive valuations.

--Kimberly DuBord, Briefing.com

09:44 am OmniVision: Robert W. Baird reiterates Neutral. Target $20 to $20. The firm says their checks indicate momentum is coming back for OVTI: a design win for the upcoming Xbox 360 camera attachment, limited quantity shipments to Nokia, while new C.O.B 1.3mp sensor could provide an opportunity to regain some traction in the 1.3mp mobile phone mkt.

09:43 am Mediacom Comm: Goldman Sachs downgrades In-Line to Underperform . Firm is saying they believe regional and particularly highly levered smaller M.S.Os will be marginalized with increased competition. The firm sees limited share price appreciation unless EBITDA growth returns to low double digits.

09:42 am DepoMed: Oppenheimer initiates Buy. Target $11. Firm is saying the current treatments for many large diseases are far from perfect, creating opportunities to modify delivery platforms to drive increased market acceptance of existing drugs. DEPO appears well positioned to fill this void. Firm says DEPO may be at an inflection point with two products launched to the market. This transition validates the co's technology while bringing in cash from low-risk royalty arrangements.Firm believes there is approx $5-6/share value in the combination of Glumetza ($1), Proquin XR ($2), and cash/technology ($3) to support the long-term share price.Firm says the upside to DEPO comes potentially from a developmental 2x/day version of Neurontin (gabapentin). Current regimens of 3x/day generated prior sales approaching $2 billion. Firm says they believe that, if successful, this drug has $250 mln-$500 mln sales potential. They believe that program is worth $6/share.

09:40 am Golden West: Moors & Cabot upgrades Hold to Buy. The firm says their optimism for the stock is highlighted by 2 factors which include: portfolio growth and likely N.I.M expansion in 06.

09:39 am Dril-Quip: Lehman Brothers initiates Overweight. Target $61. Firm believes the co is well positioned to benefit from the unfolding expansion in offshore markets and in particular the secular growth in the subsea business that they expect to continue through the end of the decade.

09:38 am Tollgrade: Ferris Baker Watts downgrades Buy to Neutral. Target $11.5. Firm is saying they expect the co to report 4Q05 results within mgmt guidance for earnings in a range of negative $0.04 to positive $0.09 per share on revenue of $13-$17 mln.

09:36 am Alkermes: Oppenheimer initiates Neutral. Firm is saying they see fair value in the $20-$25/share range, and the Vivitrol uncertainty leaves them looking for better entry points. Firm cites improving drug delivery but caution on Vivitrol. They believe that the risk profile does not make the current price a compelling entry point for investors.

09:34 am TGC Industries: Sanders Morris Harris reiterates Hold. Target $9 to $9. Firm is noting that TGE announced that it is fielding a sixth crew. The crew is headed for the Rockies and will be using the fourth ARAMSAIRES instrument set that TGE recently acquired. Firm says TGE is now running four crews on turnkey and two on contract. Turnkey could offer attractive upside beyond their forecast. Firm says the backlog remains strong.

09:32 am Willbros Group: Hibernia Southcoast Capital upgrades Hold to Buy. Target $23. Upgrade is due to the strong end market demand for the company's services, combined with the fact that the note issuance proceeds should allow WG to continue to grow its backlog.

09:31 am MGM Mirage: Nollenberger Capital initiates Buy. Target $50. The firm says the primary reasons for investment in MGM shares include 1) synergies to be realized through the merger of MGM and Mandalay Resort Group; 2) margin concerns in 3Q05 are likely to be short lived, particularly if; 3) Las Vegas visitor and spending trends remain robust into 2006; and 4) long-term growth prospects provide a timeline of visible growth.

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From Briefing.com: 4:20 pm : The market opened sharply lower, as soaring oil prices weighed on sentiment, while traditional pre-earnings season uncertainty underpinned additional nervousness throughout the session, closing seven out of ten economic sectors in negative territory. The threat of possible UN sanctions on Iran regarding their nuclear ambitions coupled with more violence in Nigeria acted as the day's biggest distractions, reminding investors that the supply-demand balance for oil remains extremely tight as crude futures climbed to three-month highs at $66.30/bbl (+$2.38). While oil's 3.7% surge and gains across the energy complex were a windfall for Energy, helping extend its year-to-date gain to over 10% and playing into our Overweight rating on the sector, the absence of leadership from more influential sectors weighed on the proceedings from start to finish.

To wit, Technology was weak across the board as analyst downgrades on Advanced Micro Devices (AMD 32.86 -1.27) and Applied Materials (AMAT 19.76 -0.39) weighed heavily on chip stocks, clouding an upcoming Q4 report from Intel Corp (INTC 25.52 -0.27). Financial was another sore spot for the bulls after Q4 earnings disappointments from Fifth Third Bancorp (FITB 38.44 -0.49) and Wells Fargo (WFC 62.69 -0.56) kicked off the quarter's biggest reporting period for the banking group on a sour note. Health Care was also in focus after Boston Scientific (BSX 23.86 -1.34) sweetened its bid for Guidant (GDT 76.22 +5.38) to $27 bln, but BSX's latest amendment raised questions for shareholders over the value of GDT in the face of increasing legal scrutiny about its heart devices.

Even though manufacturing activity showed that the economy remains in good shape, as evidenced by a better than expected 0.6% rise in Dec. industrial production to a record level and a strong 20.1 read on the Jan. Empire State index, the Industrials sector failed to take notice. Analyst downgrades on Tyco International (TYC 26.19 -0.93), Ingersoll-Rand (IR 39.38 -0.99) and Robert Half International (RHI 37.58 -1.85) contributed to the bulk of sector-wide anxiety. United Parcel Service (UPS 74.98 +0.48) was one bright spot after being upgraded at CSFB but was the only transportation component to close higher.

Joining Energy in the plus column were Materials and Utilities. The latter benefited from an afternoon rebound in Treasuries, as speculation that tomorrow's CPI data will not surprise the market with inflation concerns helped knock the yield on the 10-yr note (+06/32) down to 4.32%. BTK -0.2% DJ30 -63.55 DJTA -1.4% DJUA +1.3% DOT -0.5% NASDAQ -14.35 NQ100 -0.6% R2K -0.7% SOX -1.6% SP400 -0.4% SP500 -4.68 XOI +1.8% NASDAQ Dec/Adv/Vol 1936/1163/1.72 bln NYSE Dec/Adv/Vol 2151/1186/1.60 bln

5:15PM Jabil Circuit announces acquisition of Celetronix (JBL) : Co announces it has exercised its purchase option to acquire all of the outstanding stock of Celetronix, a privately-held India-based manufacturer of electronic products. The incremental purchase price for the acquisition is expected to be approx $155 mln plus the assumption of approx $30 mln of net debt.

4:38PM Yahoo! misses by a penny; guides revs in-line (YHOO) : Reports Q4 (Dec) earnings of $0.16 per share, excluding non-recurring items, $0.01 worse than the Reuters Estimates consensus of $0.17; revenues ex-TAC rose 36.1% year/year to $1.07 bln vs the $1.07 bln consensus. Co reports OIBDA of $459 mln vs $452-$482 mln guidance. Co issues in-line guidance for Q1, sees Q1 revs ex-TAC of $1.040-$1.100 bln vs. $1.09 bln consensus; sees Q1 OIBDA of $410-440 mln. Co issues in-line guidance for FY06, sees FY06 revs ex-TAC of $4.6-$4.85 bln vs. $4.8 bln consensus; sees FY06 OIBDA of $1.915-$2.055 bln.

4:25PM Intel misses by $0.03, light on revs; provides Q1 and Y06 outlook (INTC) 25.54 -0.25 : Reports Q4 (Dec) earnings of $0.40 per share, $0.03 worse than the Reuters Estimates consensus of $0.43; revenues rose 6.3% year/year to $10.2 bln vs the $10.56 bln consensus. Co issues downside guidance for Q1, sees Q1 revs of $9.1-9.7 bln vs. $10.05 bln consensus. Co issues in-line guidance for FY06, sees FY06 revs of $41.1-42.3 bln vs. $42.33 bln consensus; co expects gross margins of 57% +/- a few points. Q4 gross margin was 61.8%, slightly below co's updated expectation of 63%, +/- 1 (Street Expectation was 61.1%), primarily due to lower than expected revenue, a slight shift in the overall product mix to non-microprocessor products, and some inventory valuation adjustments to reflect lower unit costs. The effective tax rate of 29.1% was below the expected rate of 31% primarily due to tax benefits for export sales and estimated R&D tax credits. Revenue in Asia Pacific region was essentially flat sequentially while revenue in the Americas region was sequentially lower; results primarily reflect lower than expected demand for desktop products among certain OEM customers.

4:23PM IBM beats on EPS, misses on revs (IBM) 83.00 : Reports Q4 (Dec) earnings of $2.11 per share, excluding a $0.10 charge, $0.17 better than the Reuters Estimates consensus of $1.94; revenues fell 11.7% year/year to $24.43 bln vs the $25.51 bln consensus. Co reports global service revs of $12 bln; reports gross margin of 44.1%; reports global service bookings of $11.5 bln.

4:02PM Emulex ships 10 millionth InSpeed Port (ELX) 21.15 -0.25 : Co announces that it has surpassed the 10 millionth shipped InSpeed embedded storage switch port. ELX products, which began shipping in May 2002, have secured embedded design wins with eight of the top ten storage providers, and is now shipping at over two times the rate of all Fibre Channel fabric switch ports from all vendors combined.

2:54 pm Fifth Third Bancorp. (FITB)

38.35 -0.58: For the fourth quarter, Fifth Third Bankcorp delivered $0.60 in earnings per share. Versus the year ago period, EPS nearly doubled and net income rose 89%. The company's return on average assets (ROA) and equity (ROE) also grew solidly on a year-over-year basis. The bank, however, fell three cents short of analysts' estimate for the first time in at least 26 quarters. On a sequential basis, net income, ROA, and ROE declined.

For the full year, EPS grew 3% to $2.77, four cents below the consensus estimate. Versus 2004, both ROA and ROE declined. Chief Executive George Schaefer, Jr. asserted that revenue and net income trends were significantly below expectations entering the year. Offsetting strong loan growth were disappointing deposits in the first half of the year; meanwhile, the flattening yield curve posed a particular challenge. Resulting declines in securities portfolio returns eclipsed the effects of growth in core banking activities. Spread-based revenues, which represent the largest portion of the company's income statement, were flat on a year-over-year basis. The bank attributed margin compression throughout 2005 to the decrease in the net interest rate spread.

With respect to deposits, Fifth Third saw a strengthening trend, credited to retail transaction account growth and commercial customer additions, during the back half of the year. The 1Q05 acquisition of First National was a beneficial factor and contributed to an 11% rise in total transaction deposits and a 12% increase in total core deposits, which include consumer time deposits. That merger similarly helped produce an 18% jump in total loan and lease balances.

Fifth Third's long-term focus rests upon improving the balance sheet's risk profile and delivering more consistent returns on invested capital. The company indicated that it believes 2006 will provide opportunities to optimize returns on recent investments and improve efficiency in light of current revenue trends.

According to Reuters Estimates, analysts expect the bank to deliver a Q1 (Mar) profit of $0.68 per share.

--Lisa Beilfuss, Briefing.com

2:16 pm Continental Airlines (CAL)

17.48 -1.99: Continental Airlines on Tuesday reported a fourth quarter loss of $1.58 per share. That figure excludes the net effect of about a dollar in special one-time items, and translates to a loss of $128 million on the company's bottom line. According to Reuters Estimates, analysts had expected the company to post a loss of $1.85 per share. Although Continental surpassed the consensus estimate by a large margin, its shares have dropped over 10% in the wake of its report.

As one can see, the airline remains highly unprofitable. That fact, and the realization that Continental faces ongoing competitive pressures, has rightfully overshadowed the better than expected quarterly report.

Rising fuel costs continue to plague bottom lines across the industry and high labor costs remain a burden. For Continental, a 57.6% jump in the cost of fuel and related taxes drove a 13% increase in operating expenses over the year-ago period.

In discussing competition-related issues, Chief Executive Larry Kellner pointed towards JetBlue's (JBLU) infiltration of its Newark hub. Also, he asserted that rivals Delta (DAL) and United Airlines (UAL) enjoy "bankruptcy advantages" that Continental does not. Wage and benefit reductions over the year allowed Continental to avoid bankruptcy and have helped fund the international expansion that is key to the company's recovery, but which is also seeing increased competition. Kellner stated that Delta is using its bankruptcy advantage to move into Continental's international markets. United, he said, is flush with exit financing cash and enjoys greatly reduced costs. Over the quarter, Continental's international markets accounted for one-third of total passenger revenue.

Continental did not issue specific profit/loss guidance, although CNBC reported that the airline's CEO said he expects a "significant" loss in the first quarter. According to Reuters Estimates, the Q1 (Mar.) consensus estimate is pegged at a loss of $0.48 per share.

Briefing.com has maintained an Overweight rating on the Industrials sector for over two years. Because of soaring costs for fuel and labor that plague the carriers, though, we view the airline industry as a dark patch. Our preference within the sector lies in the rail, aerospace and defense, and industrial equipment arenas.

--Lisa Beilfuss, Briefing.com

1:26 pm McDonald's (MCD)

34.59 +0.12: McDonald's checked in with another encouraging sales update that validated its position as a recommended holding in Briefing.com's Active Portfolio. Additionally, the Dow component provided fourth quarter earnings guidance that qualifies as a positive surprise versus the current consensus EPS estimate of $0.46.

Specifically, McDonald's reported that global comparable sales were up 5.0% in December, highlighted by comparable sales increases of 4.4%, 4.6%, and 5.9%, respectively, in the U.S., Europe, and Asia/Pacific, Middle East and Africa ("APMEA"). The Briefing.com Benchmark consensus estimate for global comparable sales was 3.6%. For the quarter, global comparable sales increased 4.2% on top of a 5.1% increase in the year-ago period.

The comparable sales increases in December were attributed to the popularity of its signature breakfast menu and premium chicken offerings in the U.S., its Monopoly promotion and everyday value menu and premium products in Germany, and initiatives to provide locally relevant menu options and everyday value in APMEA.

In conjunction with the sales update, McDonald's noted that its fourth quarter earnings are expected to be about $0.48 per share, including a combined $0.03 per share of negative impact from foreign currency exchange rates and expense related to asset impairment, primarily in South Korea. According to Reuters Estimates, the consensus figure of $0.46 included those charges, so the guidance from McDonald's equates to two cents of upside. That isn't a huge surprise, but to be sure, it falls on the right side of things and reflects the company's ongoing track record of operational success with its Plan to Win and reinforces our bullish view of McDonald's and its stock.

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

10:30 am Wells Fargo Corp. (WFC)

62.88 -0.37: Wells Fargo, the nation's fifth largest bank, on Tuesday said its fiscal fourth quarter earnings rose 10%, but missed Wall Street's target due to declining mortgage earnings and the impact of higher personal bankruptcies. For the latest quarter, the San Francisco-based company earned $1.93 billion, or $1.14 per share, compared with $1.79 billion, or $1.04 per share, a year earlier. Analysts, on average, were expecting the company to post earnings of $1.15 per share.

Revenue for the period increased 4.0% from a year ago to $8.49 billion versus the consensus estimate of $8.46 billion. Top-line growth was offset by a $77 million decline in equity gains and $127 million increase in losses on the sale of debt securities from the previous year, the company said. Furthermore, the impact of rising interest rates took its toll on the bank's mortgage portfolio, as home mortgage revenue declined $178 million to $1.15 billion. Excluding Home Mortgage, revenue of other remaining businesses grew 7% year/year.

As previously disclosed, the bank said that it recorded credit losses of $171 million, or $0.07 per share, during the quarter due to increased personal bankruptcy filings ahead of the new, more stringent laws that went into effect October 17, 2005. Although Wells Fargo, as well as other banks, were bruised by the surge in filings, the company believes the new law will be a net positive in the long-run as it will likely reduce the rate of consumer bankruptcy filings.

Despite the reduction in earnings from higher bankruptcies, the company still posted double-digit earnings growth during the period, reflecting the strength of its diversified business. Even though mortgage earnings were impacted by rising rates and a flattening yield curve, other businesses such as regional banking, commercial banking, corporate banking, and private client services continued to demonstrate solid growth. Average loans of $305.7 billion in the quarter increased 9% from last year, with average commercial and real estate loans up 13%. Although interest rates continued to trend upward during the period, net interest income increased 9% from year ago and net interest margin remained essentially flat, contracting by only 4 basis points to 4.84%.

Based on the lower than expected results, shares of Wells Fargo fell slightly in early morning trading. However, as noted in Briefing.com's Market Weight rating on the Financial sector, more diversified banks such as Wells Fargo continue to be better positioned than smaller, regional banks and thrifts and mortgage finance companies in the face of a near flat yield curve.

--Richard Jahnke, Briefing.com

09:16 am Boston Scientific (BSX)

25.20: The Guidant (GDT) bidding war continued on Tuesday as Boston Scientific Corp. increased its offer to acquire the embattled medical device maker. Boston Scientific's improved offer of $80 per share, or approximately $27 billion, comes after Guidant accepted an increased $24.2 billion offer from rival Johnson & Johnson (JNJ) last Friday. The announcement of Guidant's acceptance of JNJ's bid turned aside a larger bid of about $25 billion from BSX, in favor of a deal that has already cleared antitrust review.

The amended offer, which will expire at 5:00 pm on January 17, 2006, unless Guidant's board declares the improved offer superior to JNJ's, also includes a revised agreement between Abbott (ABT) and BSX for Guidant's vascular intervention and endovascular businesses. Abbott has agreed to pay BSX $4.1 billion for the businesses, up from $3.8 billion, and increased its loan from $700 million to $900 million.

Under the amended agreement, BSX will pay $42.00 in cash and $38.00 in Boston Scientific common stock, subject to a collar. The revised offer represents a significant premium of $3.3 billion, or $9 per share, over the latest purchase price proposed by JNJ, as well as JNJ's original bid of $25.4 billion which was lowered in November because of increasing safety concerns and litigation over Guidant's implantable heart devices.

In a statement, BSX said, "Our $80 per share offer for Guidant is compelling... We are providing Guidant shareholders with certainty of completion, significant upside potential and substantially more value today than the JNJ transaction. By any objective measure, our offer is clearly superior to Johnson & Johnson's."

As the bidding war between BSX and JNJ continues to heat up, it is clear that both companies are extremely interested in gaining access to the $10 billion market for pacemakers and defibrillators. However, while the ongoing battle continues to be favorable for Guidant shareholders who will benefit from the escalating purchase price, it has raised questions for shareholders in BSX and JNJ over the value of Guidant in the face of increasing legal scrutiny about its heart devices.

--Richard Jahnke, Briefing.com

08:50 am Freeport-McMoran (FCX)

60.75: Owner of the world's largest gold mine and the second biggest copper mine, Freeport-McMoran's fourth quarter profits surged on higher production and gold and copper prices. Net income more than doubled, rising to $478.3 mln from $227.6 mln in the prior year. On a per share basis, earnings were $2.22 - surpassing consensus by a whopping 46 cents. Total sales skyrocketed 61.1% to $1.49 bln, reflecting higher sales volumes and prices.

The company's Grasberg mine, operated by FCX's Indonesian mining unit, produced record sales of 468.4 mln pounds of copper and 1.1 mln ounces of gold, up 12% and 78%, respectively, over the prior year. Total cash flows were $669.5 mln in the quarter and $1.55 bln for the year. Capital expenditures totaled $143.0 mln. Freeport spread the wealth, spending over $500 mln in dividends and share repurchases, along with paying down debt by $700 mln. Average realized copper prices in the quarter were $2.02 per pound, up 41% year/year, while gold prices averaged $494.01 per pound, up 14% year/year.

Overall, the quarter looks quite strong at first glance. We continue to like the story due to Freeport's mix of assets and its strengthening balance sheet. The stock trades at 17.8x forward earnings and 2.6x price-to-net asset value.

--Kimberly DuBord, Briefing.com

08:39 am Boeing (BA)

69.48: The figures are in, and much to the market's surprise, Airbus beat out Boeing in total orders for the fifth straight year. Surging December orders closed what was a record year for the commercial aviation industry. Boeing was expected to beat out Airbus this year, propelled by the huge success of its 787 widebody, but to no avail. Total net orders for Airbus came in at 1,055 planes, compared to Boeing with 1,002. Airbus delivered 378 planes, 30% more than the Chicago-based company, along with record earnings and operating profits above its target of 10%.

2005 was a record year for the industry on surging orders for more fuel efficient planes from low-cost, and Asian, carriers, contending with record oil prices. The combined tally for both Airbus and Boeing come to 2,057 orders, beating the previous high of 1,631 in 1989. Due to the success of Boeing's widebody fuel-efficient 787 Dreamliner, most were expecting Boeing to pull ahead of Airbus. After the conglomerate reported 687 orders to date as of November, consensus estimates for the full year were roughly 900. The upside for Airbus, which sold 918 aircraft, came from its new A320 single-aisle family of planes, which hold 100 to 220 passengers and are used mostly by low-cost carriers.

According to the International Air Transport Association, airlines worldwide increased sales 10% in 2005, including a 7.1% jump in traffic. Airbus closed the year with a total backlog of 2,177 planes, while Boeing had 1,809 - enough to keep both companies busy for a while. With most thinking orders peaked in 2005, the question becomes, what will 2006 look like for the industry?

We remain onboard with Boeing on the basis of its raised delivery guidance, backlog strength, possible margin expansion, operational performance, and robust cash flow. The company is firing on all cylinders. In addition, under new leadership, we hope to see Boeing further leverage its strong market position in the midst of this bull cycle in commercial aviation.

--Kimberly DuBord, Briefing.com

08:28 am Alcoa (AA)

28.95: With pension plan liabilities being a major overhang for many companies these days, we're seeing an increase in the number of companies that are looking to stem that liability by freezing, or ending, their defined benefit pension plans altogether. Alcoa is the latest company to join those ranks, as the Dow component announced today it will eliminate its defined benefit pension plan for most new U.S. salaried employees effective March 1, 2006. The company noted, however, that the change will not affect current employees or retirees, who will continue to participate in their current defined benefit pension and defined contribution savings plans.

Not surprisingly, the retirement savings option Alcoa will offer new salaried employees is a defined contribution plan, otherwise known as a 401(k) plan. Under the Alcoa plan, the company will make a contribution of 3.0% of salary and bonus and match the first 6.0% an employee contributes to their plan.

A key difference between the two retirement plans is that, under a 401(k) plan, the employee is responsible for managing their own investment allocations. Moreover, employees must elect to set aside a specific percentage of their paycheck each period to build their savings. Such a plan sounds good in theory, but in practice, people find it harder to save for retirement when the money has to come directly out of their paycheck and they can see the difference between their take-home pay before the retirement contribution and after it.

If someone is disciplined enough, or capable enough, of contributing the maximum to a 401(k) plan, it can be a lucrative proposition - provided they also make the right investment decisions along the way. The latter is the other part of the equation that isn't easy either. From a corporate standpoint, when companies shift from a defined benefit plan to a defined contribution plan, it stems their liabilities and improves their long-term profit picture. However, the shift also increases the risk of a retirement savings shortfall for employees who may not be disciplined enough to save money for a 401(k) plan and/or savvy enough to make the right investment decisions.

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

10:39 am CV Therapeutics: Citigroup initiates Hold. Target $30. Firm believes investor expectations for Ranexa and ACEON should moderate downside pressure on the stock. They also do not expect significant near term appreciation since upside surprise to estimates is only possible if the ongoing MERLIN study shows positive data in late 06/early '07.

10:38 am Penn Natl Gaming: Nollenberger Capital upgrades Neutral to Buy. Target $37. Firm believes the primary growth driver for PENN over the next several years is the placement of gaming machines at its Penn National Racetrack in P.A., likely in late 2007. They believe their daily win expectations for machines in Pennsylvania may prove conservative.

10:37 am bebe stores: Brean Murray downgrades Hold to Sell . Downgrade follows what firm views as an unwarranted recent run-up based on hopes of an early turnaround. They are also reducing our estimates, driven by continued limited visibility, what they view as extremely difficult comparisons, a continued missing fashion sense and a market shift away from bebe's fashion focus.

10:36 am Natl Med Health: Sun Trust Rbsn Humphrey reiterates Buy. Target $33 to $33. Firm is also making NMHC their top mid/small cap pick for 2006 tied to what they view as building momentum in the core business, a meaningful cross-selling opportunity, solid balance sheet and cash flow characteristics, a strong management team and compelling valuation.

10:35 am Neustar: WR Hambrecht downgrades Buy to Hold. Downgrade is based on valuation, as they believe Street ests must go up considerably higher from here for multiples to expand further. However, they believe catalysts required to generate upward estimate revisions of this magnitude will be limited or pushed out until 2H06 or FY07 at the earliest.

10:34 am UNUMProvident: Banc of America Sec reiterates Buy. Target $23 to $23. BofA raises their tgt on UNM given the firm's increased confidence in sales and earnings growth, which is based, in part, on their most recent proprietary sales survey, showing sales improvement in 2Q05 and 3Q05 is likely to continue in 4Q05.

10:33 am McDonald's: Friedman Billings reiterates Outperform. Target $36 to $36. Firm ups price target following stronger than expected December same-store sales, with the U.S., Asia-Pacific, the Middle East, and Africa beating consensus estimates (consensus estimates are provided by Briefing.com). They say the biggest surprise for the month of December was Europe, which posted strong same-store sales in Germany, France, and Russia.

10:32 am Sepracor: Am Tech/JSA Research initiates Buy. Target $64. The firm is keen on the co and its business model long-term, and given the recent stock reprieve, believe that the current valuation continues to represent an attractive entry point for investors looking to capitalize on a specialty pharmaceutical name with stability in its current product offering and a relatively robust pipeline, including a new product launch in the coming years.

10:31 am Boston Scientific: Prudential reiterates Neutral. Target $30 to $30. Price target cut follows the co's bold new proposal of $80/share for GDT. Firm says the new BSX offer is higher than JNJ's original offer of $76/share. They also note that original JNJ offer has already been approved by GDT shareholders, and they would be surprised if JNJ raised its offer beyond its original $76/share offer. They believe the new offer is dilutive for BSX on a cash basis through at least 2010.

[ReturntoSender]

From Briefing.com: 5:05PM Advanced Micro resumes trading... now trading 35.80 after-hours (AMD) 34.15 +1.29 :

4:41PM Advanced Micro beats by 19 cents, issues Q1 guidance (AMD) : Reports Q4 (Dec) earnings of $0.45 per share, excluding non-recurring items, $0.19 better than the Reuters Estimates consensus of $0.26; revenues rose 45.4% year/year to $1.84 bln vs the $1.65 bln consensus. AMD reports Q4 gross margin 46.4% vs 42.9% street expectations. Co expects Q1 sales to be "flat to slightly down" seasonally from 4Q05 (Q1 consensus $1.404 bln); if achieved, this would approach a 70% increase from comparable sales in 1Q05.

4:56PM Lam Research beats on top and bottom lines (LRCX) 38.32 +0.70 : Reports Q2 (Dec) earnings of $0.55 per share, $0.17 better than the Reuters Estimates consensus of $0.38; revenues rose 11.6% year/year to $358.2 mln vs the $342.7 mln consensus. New orders recorded in backlog increased 24 percent sequentially to $403 mln.

4:36PM QLogic beats by $0.03 (QLGC) 36.06 : Reports Q3 (Dec) earnings of $0.38 per share, excluding non-recurring items, $0.03 better than the Reuters Estimates consensus of $0.35; revenues rose 11.4% year/year to $129.2 mln vs the $124.6 mln consensus.

4:15PM NVE Corp reports Q3 results (NVEC) : Reports Q3 (Dec) earnings of $0.13 per share before taxes, may not be comparable to the single analyst estimate of $0.07; earnings after taxes were $0.09. Revenues rose 2.0% year/year to $2.6 mln vs the $2.7 mln single analyst estimate.

4:11PM Seagate Tech reports; guides Q3 & FY06 above consensus (STX) : Reports Q2 (Dec) earnings of $0.57 per share, including $20 mln for stock based compensation and a $6 mln charge, may not be comparable to the Reuters Estimates consensus of $0.56; revenues rose 24.5% year/year to $2.3 bln vs the $2.2 bln consensus. Co issues upside guidance for Q3, sees EPS of $0.55, excluding stock based compensation vs. $0.45 consensus; sees Q3 revs of $2.25 bln vs. $2.06 bln consensus. Co issues upside guidance for FY06, sees EPS of $2.20-2.25, excluding stock based compensation vs. $1.98 consensus.

4:15 pm : From start to finish, Wednesday's stock market languished in negative territory. Despite several recovery attempts, the indices were unable to survive the effects of disappointing Q4 reports - and Q1 guidance - from tech titans Intel (INTC 22.54 -2.98) and Yahoo (YHOO 35.19 -4.92). A 3% drop in Japan's Nikkei exacerbated the early bearish sentiment that pervaded today's session, and a pullback in crude catalyzed a sharp, market-dragging drop in the Energy sector.

Leadership failed to emerge, and seven of the ten economic sectors levied losses. Twelve percent declines in both Intel and Yahoo shoved the Tech sector nearly 2% lower in the early going and fostered the Nasdaq's underperformance. With respect to their reports, the former checked in below Wall Street's profit and revenue expectations and simultaneously issued downside revenue guidance for the current quarter. Yahoo also fell short of analysts' estimates, and its in-line outlook proved a disappointment. While those reports will not determine the outcome of the current earnings season, the disappointing results and accompanying outlooks feed concerns over the earnings growth rate deceleration that will likely occur during 2006.

IBM (IBM 83.83 +0.83) offered some countering support following its better than expected earnings, gross margin, and bookings results. Optimism ahead of Intel rival Advanced Micro's (AMD 34.34 +1.48) report helped send semiconductors back toward the unchanged mark. Just when the Tech sector started to improve, though, an 0.8% reversal in the price of crude futures incited aggressive selling across the Energy sector. Commodities in general experienced consolidation: Gold futures lost 1.8%. Respective declines of 3.4% in diversified metals and 2.8% in steel left the Materials sector 1.1% lower. The crude action did benefit one area of the market, though. Underpinning the effect of Southwest Airlines' (LUV 16.77 +0.90) solid earnings report upon the airlines industry, lower oil prices helped send the Dow Jones Transportation Average 1.0% higher.

The influential Financial sector lent muscle to the challenges posed by Energy and Tech. With earnings season in focus, some uninspiring reports from banks weighed heavily. In particular, J.P. Morgan's (JPM 39.28 -0.43) light revenues bogged down the sector as well as the Dow; Northern Trust's (NTRS 51.14 -1.40) lower than expected earnings contributed to weakness in the space. With the narrowing interest rate spread drawing increased attention, today's yield curve, which vacillated between flat and slightly inverted, served as a further overhang. Separately, Charles Schwab's (SCHW 14.68 -0.30) disappointing results and some nervousness ahead of Merrill Lynch's (MER 69.50 -0.64) report left brokers as an additional sore spot.

On the economic front, this morning's CPI report garnered the most attention. With the 0.2% rise in December's core rate expected, there was little impact on either the stock or bond markets. Further, the up-tick is essentially ambiguous in terms of its implication on the Fed's tightening proclivities. In one sense, the increase signifies a firming trend because December marked the third consecutive 0.2% rise following five straight 0.1% increases. That increase is not substantial enough, though, to cause alarm and is in-line with 2005's year-over-year gain. The market also received November net foreign purchases data (which checked in at $89.1 billion) and the Fed's Beige Book, but both went largely overlooked by equity and Treasury traders alike.DJ30 -41.46 NASDAQ -23.05 SP500 -5.00 NASDAQ Dec/Adv/Vol 1592/1448/2.29 bln NYSE Dec/Adv/Vol 1837/1475/1.69 bln

10:53 am JP Morgan Chase (JPM)

39.52 -0.19: The Financial sector maintained the spotlight on Wednesday as a host of banks, led by JP Morgan Chase, reported seemingly respectable results. Specifically, the nation's third largest bank said fourth quarter earnings rose 62% as investment banking fees and gains in commercial lending, retail banking and wealth management offset weaker trading revenue and the impact of higher bankruptcy filings.

Before Wednesday's open, JPM reported quarterly earnings increased to $2.7 billion, or $0.76 per share, compared with $1.67 billion, or $0.46 per share, in the same period last year. On an operating basis, which excluded a $208 million litigation-related charge and $77 million for merger expenses, the company earned $2.6 billion, or $0.73 per share. Analysts expected JPM to earn $0.72 per share, excluding non-recurring items.

Revenue, meanwhile, fell short of expectations. In the fourth quarter, total revenue increased 5.6% to $13.68 billion, but missed the Reuters Estimates consensus of $14.35 billion. Furthermore, a 5% decline from the $14.5 billion recorded in the third quarter has amplified the softer than expected top line performance.

By segment, investment banking earnings were up a modest 1%, and down 38% sequentially, at $664 million, as lower trading results offset higher investment banking fees. Investment banking fees rose 8% during the quarter to $1.2 billion - the highest level in 5 years - led by stock underwriting and advisory fees. Net revenue of $3.2 billion was flat year/year, while equity underwriting revenues of $458 million were up 88% from last year, driven by strength in Asia and Europe. In contrast, fixed income markets revenue was down 28% versus last year to $1.1 billion, due to weak trading results. Overall, trading revenue declined 24% to $851 million, resulting from poor positioning in U.S. interest rate and commodities markets.

In other segments, retail financial services earnings rose 4% to $803 million; card services earnings fell 41% to $302 million - due in large part to increased bankruptcies; commercial banking earnings rose 14% to $289 million; treasury and security services earnings rose 107% to $300 million, and asset and wealth management earnings rose 30% to $342 million.

Despite the soft top line results, fueled by weaker than expected trading results, JPM's fourth quarter performance was respectable and continues to reflect the broad strength of its businesses. Although the narrowing spread between short and long term interest rates has pressured profits, particularly in the company's deposit and lending operations, JPM's diversified business model continues to position it, and other larger banks, well in the current business climate, as noted in our Market Weight rating on the Financial sector.

--Richard Jahnke, Briefing.com

10:37 am Charles Schwab (SCHW)

14.95 -0.03: On November 15, 2005, Charles Schwab warned, saying its fourth-quarter results would be two cents lower than third-quarter earnings of $0.16 per share, as management eliminated fees, boosted advertising spending and recorded charges for job cuts at U.S. Trust. The news sent shares 3.5% lower, shaving $722 mln from the largest U.S. discount brokerage's market cap. This morning, the company reported Q4 (Dec) earnings of $0.14 per share, in line with previously lowered forecasts and the First Call consensus, but a penny shy of an adjusted Reuters Estimates consensus of $0.15. Nonetheless, net income for the quarter was $187 mln, an impressive 253% increase from a year ago as disciplined expense management led to margin improvements, marking the fourth best quarter in Schwab's history.

Total revenues rose 11.3% year/year to $1.18 bln, exceeding the $1.17 bln consensus, as clients brought $9.0 bln in net new assets to the company in December alone -- the seventh straight month of net new assets in excess of $6.0 bln. Net new client assets during the quarter were $15.5 bln while total assets reached a record $592 bln, up 15% from a year ago; the total number of accounts equaled 1.7 mln with the number of clients enrolled in Schwab Private Client and Schwab Advised Investing hitting 60,000, up 8% sequentially. For fiscal 2005, net new assets totaled $75 billion, 49% higher than 2004, while total client assets reached a record $1.199 trillion by year-end, up 11% from year-end 2004.

While SCHW shares are up 2.1% on the year, hitting a 52-week high on January 9th, the stock has underperformed its online brethren so far in 2006. E*Trade Financial (ET) and Ameritrade (AMTD) are up 6.2% and 6.8%, respectively, having provided more of a punch behind the AMEX Securities Broker/Dealer Index's (XBD) 4.2% year-to-date advance. We currently have a Market Weight rating on Financial, but view diversified banks (i.e. BAC, C and JPM) and components within the investment bank & brokerage group (i.e. GS and MS) as being well-positioned to benefit from an increase in M&A activity.

Among the online brokers, we believe E*Trade, which trades at a lower multiple of 20.5x forward earnings, versus loftier forward P/E multiples of 26.5x and 27.6x for SCHW and AMTD, respectively, presents a compelling value proposition. E*Trade is expected to grow earnings an industry-leading 14%, as it gains economies of scale (e.g. via acquisitions) to lower costs and offset the impact of falling commissions, and executes on the aggressive pursuit of gathering assets and diversifying revenue streams from a more affluent clientele. To wit, E*Trade's price/earnings-to-growth ratio stands at a more attractive 1.49 versus PEG ratios of 2.11 and 3.98 for SCHW and AMTD, respectively.

(Disclosure: Briefing.com has a business relationship with Charles Schwab, E*Trade, and Ameritrade).

--Brian Duhn, Briefing.com

09:28 am Southwest Airlines (LUV)

15:87: Despite a totally unexpected TSA security fee assessment and a 38.8% increase in hedged fuel costs per gallon, Southwest Airlines posted its 33rd consecutive year of profitability. For the fourth quarter, the nation's No. 6 airline said net income rose 54% year/year to $86 mln, or $0.10 a share, which included unrealized losses associated with derivative instruments. The inclusion of $24 mln in additional 2005 federal airport security expenses due to a retroactive evaluation by the Transportation Security Administration (TSA) -- an assessment management believes is improper and plans to vigorously contest -- also raises questions as to whether Q4 EPS of $0.10 is comparable to the Reuters Estimates consensus of $0.13.

Total operating revenue rose 20% to a record $1.99 bln, exceeding the $1.92 bln consensus, as Southwest benefited from aggressive expansion and strong demand for travel. Revenue passenger miles (RPMs) increased 15.3% as compared to a 7.6% rise in available seat miles (ASMs), resulting in a 4.6 point increase in load factor to 69.6%. Unit revenues grew 11.7% with only modest fare increases, reaffirming the leading U.S. low-cost air carrier's Low Fare Leadership

Based on current strong traffic and revenue trends, Southwest expects January's load factor and unit revenue to exceed year ago levels but notes that a shift in the Easter holiday to April (from March last year) will have an impact on Q1. Management also said its 2006 outlook is "favorable" and that they remain poised to add over 30 aircraft in 2006 for an estimated 8% available seat mile growth.

According to the Air Transport Association, the U.S. airline industry posted $32.3 bln in cumulative net losses from 2001 through 2004, amid high fuel prices, low fares and a surplus of seats, and expects a $10 bln net loss for 2005. Fortunately, Southwest is over 75% hedged with fuel prices capped at $36 per barrel for Q106, over 70% hedged for the rest of 2006 at $36 per barrel and over 60% hedged in 2007 at $39 per barrel, positioning the company for continued profitability.

Southwest shares are down 3.4% in 2006, with the bulk of this year's decline coming Tuesday as oil prices soared 3.7% to over $66 per barrel. Faring much worse, however, has been the Amex Airlines index (XAL), which is down 11.9% for the year and which has closed lower in six consecutive sessions.

--Brian Duhn, Briefing.com

09:18 am IBM (IBM)

83.00: To everyone's surprise it wasn't Intel that beat, but Big Blue. Still reeling from a heightened SEC investigation, IBM took the lead from Intel (INTC) and Yahoo! (YHOO), posting a better than expected profit figure despite missing on revenues. IBM, the world's largest seller of computer services and the number two software company behind Microsoft (MSFT), reported a 13% rise in profits to a record $3.19 bln, or $2.01 per share. Sales declined 12% to $24.4 bln - missing analysts' projections of $25.6 bln. Excluding a ten cent charge, earnings came in 17 cents better than the Reuters Estimate consensus.

The upside in earnings was achieved not on the revenue line, but through cost savings, restructuring, and product mix. In a move IBM hopes will save $3 bln through 2010, the company froze pension benefits for its 320,000 workers. This was the second consecutive quarter IBM disappointed on the top line. However, IBM did state mid-year its focus was on cost cutting and expense management, rather than sales growth. Gross margins came in at 44.1% - well above the consensus of 41.5%.

Global Services revenues, the key organic growth engine for IBM, declined 5% (1% on a constant currency basis) to $12 bln on falling demand in Europe. Standouts were the 16% sequential revenue growth in Integrated Technology Services. IBM Service gross margins widened by 310 basis points to 27.4%. Backlog was flat year/year, but declined by $2 bln (-1.8%) sequentially to $111 bln. The Hardware segment reported revenues of $6.9 bln (ex-PC), which were up 6% year/year, with gross margins expanding to 42.1% from 37.1% last quarter. The Microelectronics business saw the strongest growth, up 48% year/year on the back of the zSeries, pSeries, and total storage product sales. Global service booking were slightly ahead at $11.5 bln. Software revenues were flat year/year, but up 3% quarter/quarter to $4.6 bln.

With IBM's fourth quarter - seasonally its strongest - now under its belt, there are few catalysts for shares in the near-term. The highlight from the quarter was the strength in the Middleware business, with solid regional growth coming from the Americas and 20% growth from Emerging Markets - similar to what Oracle (ORCL) reported in its November quarter. Management did not provide guidance for the March quarter, but targets double-digit earnings growth. Considering the restrained top line growth rates, the outlook for IBM rests on its ability to drive margins. We continue to prefer technology-related stocks with exposure to the consumer product market integrated into the theme of everything digital, everything portable - the basis for our Overweight rating on the Technology sector.

--Kimberly DuBord, Briefing.com

09:09 am Yahoo! (YHOO)

40.11: Shares of Yahoo slipped in pre-market action, falling more than 11%, after the Internet search giant reported lower than expected fourth quarter earnings and issued first quarter guidance that disappointed some investors. After the close on Tuesday, Sunnyvale, California-based Yahoo said net income for the fourth quarter was $683 million, or $0.46 per share, compared to $373 million, or $0.25 per share, in the year ago period. Excluding special items, earnings were $247 million, or $0.16 per share - a penny lower than the consensus EPS estimate of $0.17.

Revenues, excluding traffic acquisition costs, climbed 36% year/year to $1.07 billion, in line with the average analyst estimate. By segment, Yahoo's marketing services business accounted for 88% of gross revenue, with sales up 40% during the quarter at $1.3 billion. Conversely, the company's search-advertising business grew at a slower rate, due in part to higher traffic acquisition costs, or fees paid out to distribution partners. Those fees, which are often seen as a gauge of the company's search-advertising business, increased 9% from the previous quarter.

For the current quarter, Yahoo forecasted sales, ex-TAC, between $1.04 and $1.1 billion, versus the consensus estimate of $1.09 billion. In addition, the company expects to earn between $410 and $440 million in operating income before depreciation and amortization. For the full year, the company expects to earn $1.92 to $2.06 billion in operating income on sales between $4.6 and $4.85 billion. According to Reuters Estimates, analysts are expecting the company to earn $0.76 per share on sales of $4.8 billion.

All in all, the results from Yahoo weren't as bad as the market reaction suggests. Instead, they simply didn't live up to expectations that had gotten too high. As a result, the technology stock is getting punished by short-term selling interest that has been exacerbated by Intel's disappointing report. We wouldn't necessarily rush to buy today's dip in Yahoo given the current sentiment in the marketplace, but if you are a long-term investor who owns Yahoo, there isn't any alarming reason in the latest results to abandon the position.

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

--Richard Jahnke, Briefing.com

08:46 am Intel (INTC)

23.15: A trifecta of technology-related earnings results hit the wires after the bell on Tuesday. The market went in expecting a record revenue quarter from Intel, but instead the chip giant not only missed estimates by three cents, but also lowered forecasts. The market reacted swiftly to this clearly disappointing quarter, with the entire Street taking down estimates and several firms lowering expectations. Intel's debased forecasts cast a shadow over the entire semiconductor industry, sending tech stocks lower from Asia to Europe.

Intel, which makes 80% of the world's processors, posted quarterly profits and revenues below expectations, as the chipmaker suffered from weaker demand for desktop processors. This news also sent shares of the number one PC manufacturer and Intel's largest customer, Dell (DELL), lower, along with Apple Computer (AAPL). Intel acknowledged it lost market share to rival Advanced Micro Devices (AMD) in the quarter, punctuated by weaker than expected holiday demand. The bright spot was the continued robust growth in servers with the Opteron. Net income rose 16% to $2.45 bln, or $0.40 per share, from $2.12 bln, or $0.33 a year earlier. Sales rose 6.3% to $10.2 bln. Analysts had expected a profit of $0.43 and revenues of $10.56 bln.

Intel magnified the downside by lowering guidance, which is sure to cause an abrupt halt to the recent rally in the SOX Index, which is up 8.1% to date. Intel's forecasts included higher expenses and a higher tax rate. It anticipates first quarter revenues of $9.1-$9.7 bln - the midpoint of the guidance would represent an 8% sequential decline, which is more than the seasonal decline of 5%. Intel also stated it would no longer provide mid-quarter updates.

The market was anticipating a strong quarter for Intel. These results were a huge disappointment with a slew of issues from market share losses, lingering capacity constraints, and weaker PC demand, all playing their part. Shares will likely take a considerable hit. Still, don't count Intel out just yet. We'd argue longer-term investors should take advantage of considerable weakness (i.e. low $20s) as Intel now becomes a second half 2006 story. Intel's fate rests on the success of its new products, including new dual-core processors which are hoped to spark renewed demand for desktops, along with new digital consumer products, and Intel's new 65-nm process technology. Shares are trading at 15.6x forward earnings compared to AMD at 75.9x.

--Kimberly DuBord, Briefing.com

09:41 am Nationwide: Bernstein downgrades Outperform to Mkt Perform. Target $47. Downgrade is based on valuation. The firm sees limited upside to their $47 tgt. More importantly, they feel mgmt has been moving too slowly with respect to improving the co's ROE. The firm feels recent comments from mgmt suggest the co's action plans in both regards are too moderate to drive significant improvement in ROE, raising doubt that a meaningful share price catalyst will emerge. Separately, given industry trends, they feel NFS will eventually need to merge with another life insurer to take advantage of capital and expense efficiencies.

09:40 am Cynosure: Needham & Co initiates Buy. Target $25. The firm says that the co has the most complete line of light-based aesthetic therapy devices in the industry and offers innovative combination products that provide practitioners with greater treatment flexibility. In addition, the firm says the co has targeted the rapidly emerging aesthetic spa mkt by building a dedicated sales force to address it and by introducing new products that are especially appealing to these mkts. The firm believes that CYNO is still in rapid growth mode following a successful turnaround by its new mgmt team.

09:39 am Intel: Needham & Co downgrades Buy to Hold. Downgrade follows disappointing 4Q05 results. The firm finds it hard to identify enough high volume, high margin mkts for INTC to replace its traditional lucrative PC /server mkts that fueled its success since the 1980's. The firm says that in many ways, INTC is beginning a multi-year process to re-invent itself, and they think investors should avoid chasing INTC until some progress is evident.

09:38 am Genesis Microchip: Stanford Research downgrades Buy to Hold. Firm believes a loss of sales momentum, and the impact of upcoming seasonal-driven weakness, will produce a pullback in shares for the next quarter or two, adding that shares would likely trade near 15x, or as low as $15 and they would not commit new funds to GNSS shares until after results are out for Dec and the outlook for March is clearer.

09:38 am Restoration Hrdwr: Morgan Keegan downgrades Outperform to Mkt Perform. Downgrade follows co's cut of Q4 EPS guidance. Firm says the primary factor behind reduced Q4 EPS is deferred rev, which impacted Q4 EPS guidance by $0.06.

09:33 am Volterra Semi: CE Unterberg Towbin downgrades Market Perform to Underperform . While fundamentals for VLTR likely bottomed in the Sept qtr, going into the seasonally weaker Q1 and Q2 for computing and graphics, firm thinks the co's performance will likely be sub-par. Also, the stock currently trades at 45x 2006 EPS, and firm thinks it has priced in a scenario that is overly optimistic.

09:29 am Yahoo!: Am Tech/JSA Research downgrades Buy to Hold. Amtech transfers coverage and downgrades YHOO to Hold from Buy following a disappointing quarter with weak guidance, and based on: 1) downward earnings revision on guidance, 2) anticipated improvements in search monetization now later than expected, 3) expecting rapid decline in premium service ARPU and 4) valuation is fair based on growth outlook. They see limited upside to the stock in the near-term.

09:29 am Adolor: WR Hambrecht reiterates Buy. Target $18 to $18. The firm says that ADLR is one of their top biotech picks for 06, as they expect shares to be driven by a series of key catalysts that include: 1) positive Entereg data from study #314 for postoperative ileus in Feb/March; 2) submission of POI data to the F.D.A in June and potential approval by YE06; and 3) positive Phase 3 Entereg data for chronic opiod-induced bowel dysfunction in YE06.

09:25 am TETRA Tech: Ferris Baker Watts downgrades Buy to Neutral. Firm believes their revised 2006 earnings estimate could support a stock price of $38--$40 per share, which is only 1%--6% above TTI's current price.

09:22 am Salesforce.com: WR Hambrecht reiterates Buy. Target $34 to $34. Price target change is following co's Winter '06 product launch, as they came away from the event more bullish about the company's growth prospects. Despite their bullish outlook for the company, they would not be aggressively buying shares at current levels, but would recommend a buying on weakness approach.

[ReturntoSender]

From Briefing.com: 4:39PM Xilinx report EPS, includes items, beats on revs, guides Q4 revs in line (XLNX) 29.79 +0.99 : Reports Q3 (Dec) earnings of $0.23 per share, includes $25.3 mln charge, $9.5 mln gain, not comparable to the Reuters Estimates consensus of $0.27; revenues rose 26.5% year/year to $449.6 mln vs the $442.1 mln consensus. Co issues in-line guidance for Q4, sees revs up 1-5% sequentially, equates to Q4 revs of $454-472 mln vs. $464.00 mln consensus.

4:32PM Microchip beats by a penny; guides Q4 above consensus; boosts dividend 18.8% to $0.19 (MCHP) : Reports Q3 (Dec) earnings of $0.33 per share, $0.01 better than the Reuters Estimates consensus of $0.32; revenues rose 14.4% year/year to $234.9 mln vs the $234.1 mln consensus. Co issues upside guidance for Q4, sees EPS of $0.34 vs. $0.32 consensus; sees Q4 revs of $242 mln vs. $238.02 mln consensus.

4:30PM Motorola beats by a penny, guides Q1 in line (MOT) 24.35 +0.74 : Reports Q4 (Dec) earnings of $0.35 per share, excluding non-recurring items, $0.01 better than the Reuters Estimates consensus of $0.34; revenues rose 18.0% year/year to $10.43 bln vs the $10.46 bln consensus. Co issues in-line guidance for Q1, sees EPS of $0.27-0.29 excluding $0.02 stock option expense vs. $0.28 consensus; sees Q1 revs of $9.3-9.5 bln vs. $9.33 bln consensus. Co reports Q4 gross margin of 31.5% vs 32.4% street expectation. Co reports Q4 Mobile Device shipments of 44.7 million units.


4:26PM MIPS Techs beats by $0.04, ex items (MIPS) : Reports Q2 (Dec) earnings of $0.10 per share, excluding non-recurring items, $0.04 better than the Reuters Estimates consensus of $0.06; revenues rose 5.6% year/year to $16.4 mln vs the $15.6 mln consensus.

4:20PM Freescale Semi beats by $0.07; issues in line Q1 rev guidance (FSL) 26.85 +0.46 : Reports Q4 earnings of $0.45 per share, $0.07 better than the Reuters Estimates consensus of $0.38; revenues rose 4% year/year to $1.48 bln vs $1.48 bln consensus. FSL reports gross margins of 45.4% vs 43.9% single analyst est. Co sees Q1 revs $1.435-1.535 bln vs $1.48 bln consensus. Gross margins for the Q1 are expected to be slightly up from the operational level reported in the fourth quarter of 2005, excluding the benefit of the Delphi reversal and the impact of stock option expense related to FAS 123.

4:19PM Synaptics reports $0.03 above consensus, ex-items; guides Q3 revs in-line (SYNA) : Reports Q2 (Dec) earnings of $0.27 per share, excluding non-recurring items, $0.03 better than the Reuters Estimates consensus of $0.24; revenues fell 14.1% year/year to $48.6 mln vs the $48.4 mln consensus. Co issues in-line guidance for Q3, sees Q3 revs of $42-45 mln vs. $43.78 mln consensus. Rev guidance was based on expected seasonal declines following the holiday period. Co also believes that revs in the June quarter could be up sequentially from March quarter levels although their visibility beyond the March quarter is limited.

4:05PM California Micro reports $0.01 above consensus (CAMD) : Reports Q3 (Dec) earnings of $0.11 per share, excluding non-recurring items, $0.01 better than the Reuters Estimates consensus of $0.10; revenues rose 10.0% year/year to $19.6 mln vs the $19.2 mln consensus. According to Robert V. Dickinson, president and CEO, "I'm pleased to report that we achieved record revenue and unit shipments for the second consecutive quarter. Revenue from both our mobile handset products and from our personal computer and digital consumer electronics products increased sequentially and year-on-year." He also noted that bookings were $16.4 million, down from the record $20.0 million posted in Q2, and that design wins totaled 306, down from 353 in Q2.

4:20 pm : Stocks rebounded nicely following two days of consolidation as broad-based buying spurred by upbeat corporate news (e.g. earnings, dividend increases, M&A activity) helped stocks regain some upside traction amid above-average volume. A recovery in overseas markets, especially a 2.3% rebound in the Nikkei 225 following a two-day decline of nearly 6% which had many worried about a pending collapse, also calmed investors' nerves before the opening bell.

With regard to sector strength, Energy turned in the day's best performance, as Schlumberger (SLB 114.87 +6.55) raising its dividend 19% and a late-day surge in crude oil prices (+1.5%), coupled with upgrades (and ensuing record highs) on Halliburton (HAL 71.75 +1.73) and Baker Hughes (BHI 72.47 +3.89), played into our Overweight rating on the sector. Materials turned in the next best performance but the sector's 1.0% surge did not have as much of an impact on the overall market as did strength across the board in Technology. Tech got a huge boost from gains from several chip stocks, spurred by Advanced Micro Devices' (AMD 37.13 +3.76) strong Q4 earnings and improved margins as well as several analyst upgrades within the semiconductor space. Not even conservative guidance from Apple Computer (AAPL 79.03 -3.45), which prompted shareholders to keep knocking the stock from historic highs, could prevent the tech sector from extending its year-to-date gain to over 4.0%.

Consumer Discretionary also posted a solid gain, as investors welcomed reports that Walt Disney (DIS 26.24 +1.02) -- a suggested holding in Briefing.com's portfolio for active investors -- is in "serious discussions" to acquire Pixar Animation Studios (PIXR 58.87 +1.61). Upgrades in the retail group (i.e. EBAY, BBY and SKS) also added support which helped offset weakness in homebuilding. Weaker than expected Dec. housing starts and building permits, suggesting that the housing industry is leveling off, motivated investors to temporarily look past strong earnings reports from DHI and BZH and consolidate the group's 4.6% year-to-date surge.

Health Care was also been in focus following better than expected Q4 earnings from Pfizer (PFE 24.96 +0.87), which also increased its dividend 26%, and UnitedHealth Group (UNH 60.19 -1.03), which initially sold off on the news but recovered into the close, lending credence behind our promising outlook for HMOs. Despite the Philly Fed unexpectedly falling to 3.3 -- the lowest reading since last June and well below expected expansion of 13.0 -- Industrials got a lift from Union Pacific (UNP 85.02 +6.44), which hit an all-time high after handily beating expectations and providing upbeat comments about 2006.

Financial, however, failed to inch back into positive territory as quarterly disappointments from Washington Mutual (WM 43.33 -1.08) and BB&T Corp (BBT 41.08 -0.83) overshadowed Merrill Lynch's (MER 72.05 +2.20) impressive Q4 report and 25% dividend hike. Perhaps also weighing on the sector were concerns about a flattening yield curve, as the yield on 10-yr note (-10/32) rose to 4.37% amid a sharp decline in jobless claims to a very low 271,000 (consensus 315K) and renewed threats from Osama Bin Laden about terrorist attacks inside the U.S. BTK +0.6% DJ30 +25.85 DJTA +2.6% DJUA +0.8% DOT +1.4% NASDAQ +22.17 NQ100 +0.8% R2K +1.6% SOX +3.1% SP400 +1.3% SP500 +7.11 XOI +1.5% NASDAQ Dec/Adv/Vol 944/2095/2.32 bln NYSE Dec/Adv/Vol 990/2318/1.76 bln

4:54 pm Merrill Lynch (MER)

72.05 +2.20: The stock market still has a long way to go to reach the highs it hit in 2000, but if you looked only at the latest earnings report from Merrill Lynch, you might not know the difference. The $26.0 billion in net revenue posted by the investment bank in 2005 was within 1.0% of the full year revenue record the firm set in 2000. Stating the obvious, business is very good for Merrill Lynch.

The market's appreciation for the latter point is reflected in Merrill Lynch's stock, which hit a new 52-week high on Thursday following the firm's year-end earnings report that carried more than a few references to record results. To wit, net earnings of $5.2 billion for the year were a record; net earnings per diluted share of $5.27 were a record; pre-tax earnings of $7.4 billion were a record; and its pre-tax profit margin of 28.5% was a record. Impressively, despite an 8.0% increase in headcount, the firm's compensation expense fell to 47.8% of net revenues in 2005 from 48.3% in 2004, while non-compensation expenses were essentially unchanged.

The firm's operating momentum was evident in the fourth quarter as net earnings per diluted share jumped 27% to $1.51 on a 15% increase in net revenues to $6.78 billion. Separately, its 18.2% annualized return on average common equity was the highest quarterly figure in five years.

Merrill Lynch closed the year with a book value of $35.98, a 9.0% increase from the end of 2004. Based on Thursday's closing price, MER trades with a price-to-book ratio of just 2.0 versus competitors Goldman Sachs (GS), Morgan Stanley (MS), and Lehman Bros. (LEH), which sport price-to-book ratios of 2.42, 2.28, and 2.43, respectively. Accordingly, an argument can be made that Merrill Lynch is a value play in its industry, which we continue to believe is poised to do quite well in 2006 as merger and acquisition activity continues to increase.

Goldman Sachs (GS) holds the most favor for us from a fundamental standpoint and we like Morgan Stanley (MS) for its turnaround potential. Overall, though, Merrill Lynch's results validated our favorable view of the investment banks and did little to alter its own investment appeal.

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

2:23 pm Beazer Homes (BZH)

78.28 +0.69: Beazer Homes USA (BZH), one of the nation's largest homebuilders, reported strong quarterly results on Thursday, even as the housing market continues to experience a return to more normalized levels of activity.

The Atlanta, Georgia-based builder earned $90 million, or $2.00 per share, for the quarter ended December 31, 2005, up from $70 million, or $1.57 per share, a year earlier. Total revenue rose 21.3% to $1.11 billion, versus the year-ago $912 million, as an increase in closings bolstered results. Those numbers topped the consensus estimate of $1.97 on revenue of $1.05 billion, according to Reuters Estimates.

Beazer closed sales on 3,829 homes during the period, up 7.1% from a year earlier, as increases in the Southeast, Central, and Mid-Atlantic regions offset weakness in the Midwest and West regions. The company's backlog totaled 9,276 homes with a sales value of $2.78 billion. That represents a year/year increase of 10.1% and 18.3%, respectively. Furthermore, the company got 3,872 new orders in the quarter, up 9.2% from a year ago.

Given its current level of backlog, combined with expectations for further competitive advantages for large public builders, the company said it expects fiscal 2006 earnings to meet or exceed $10.50 per share. Analysts, however, had forecast EPS of $10.64 per share.

--Richard Jahnke, Briefing.com

12:31 pm eBay (EBAY)

47.33 +2.89: After the close on Wednesday, online auctioneer eBay said fourth quarter profits increased 36% and revenue rose 42% on strong year-end spending trends, but offered a disappointing forecast for the upcoming year. Shares of the company, in turn, traded higher during the regular trading session as investors focused on the better than expected quarterly results. eBay's report comes in the wake of a similar disappointing report by Internet bellwether Yahoo (YHOO) on Tuesday. In contrast, though, Yahoo shares fell more than 12% on Wednesday as a result of the news.

For the fiscal fourth quarter, eBay posted earnings of $279.2 million, or $0.20 per share, compared with $205.4 million, or $0.15 per share, a year earlier. On a pro forma basis, the company earned $340.1 million, or $0.24 per share - two cents better than the Reuters Estimates consensus of $0.22 and about 50% higher than the year-ago figure. Revenue, which rose to $1.33 billion, also beat Wall Street's estimates, as the company's payments business grew 48%, led by PayPal.

New listings on eBay increased 35% to 546.6 million, while total listings rose 33% from a year ago to about $1.9 billion. Gross merchandise value, or the total value of all successfully closed items on EBay's sites, climbed 22% year/year to $12.0 billion. Meanwhile, the number of eBay active users increased to a record 71.8 million in the fourth quarter, up about 28% over the number of active users reported in the same quarter last year.

Amid concerns of slowing growth, the San Jose-based company said it expects first quarter earnings, ex-items, of $0.22 to $0.23 per share on revenue between $1.365 and $1.38 billion. That, however, fell short of analysts' expectations for EPS of $0.24 and revenue of $1.39 billion, according to Reuters Estimates. eBay also forecasted fiscal year 2006 earnings of $0.96 to $1.01 per share, compared with Wall Street's estimate of $1.01 per share. Full year revenues were projected to be in the range of $5.7 to $5.9 billion, below the consensus estimate of $5.93 billion.

Overall, eBay's latest results continue to reflect the company's solid performance as expectations for Internet stocks remain exceedingly high. While its first quarter and full year forecast were below analysts' targets, the outlook still reflects robust growth for the maturing company.

--Richard Jahnke, Briefing.com

12:23 pm Home Depot (HD)

41.77 +0.08: During its annual meeting with analysts, Home Depot today unveiled its aggressive 2010 growth targets while also guiding 2006 revenues above Wall Street's estimates. In 2000, Home Depot also announced strategic targets that, by 2005, had resulted in 76% growth of its overall business.

Through targeted annual compounded sales growth of 9-12%, driven by 400-500 new store openings, the world's largest home improvement retailer expects to deliver annual earnings per share growth of 10-14% over the next five years. Its FY05 fiscal year ends January 29, at which point Home Depot expects to announce a profit of $2.64-2.67 per share. Applying its long-term target, the company should register between $2.90 and $3.04 in 2006 earnings per share. While these figures reflect a solid performance, high expectations leave them on the disappointing side relative to consensus estimates of $2.70 and $3.04, respectively. Separately, Home Depot asserted that, assuming the Hughes Supply acquisition closes near the end of its fiscal first quarter or during the beginning of its second, its top line should grow a better than expected 14-17% during FY06.

Home Depot also announced a 50% rise in its Q4 dividend (to $0.15 per share), marking the 76th consecutive quarter the company has paid a cash dividend. The increased payment will translate to an annual dividend of $0.60 in FY06, which marks a 50% jump and equates to a 20% EPS payout. Our Page One column this morning addressed the idea that further dividend increases will be one of the more important underpinnings for the market in 2006.

Additional five-year strategic targets for Home Depot include a 50-100 basis point expansion in its operating margin, cumulative operating cash flow of $50 billion, and $17-20 billion in cumulative capital expenditures.

The company plans on extending its leadership position to become the largest diversified wholesale distributor as well as the number one player in the services arena. Home Depot sees a $410 billion opportunity in the professional market, and intends to maintain its focus upon its growing Home Depot Supply segment. By the end of the decade, the company expects 1,500 Supply centers to account for 18-19% of overall sales. The aforementioned acquisition of Hughes Supply speaks to its focus on the supply segment. With respect to its services business, Home Depot expects that that unit will generate 5-6% of its top line. The company foresees a $110 billion market opportunity there, and has identified the increasing "do-it-for-me" trend as the driver of double-digit growth in that area.

Part of its vision includes dramatically increasing its direct-to-consumer channels, which it believes has the potential to be a $1.0 billion business by 2010.

--Lisa Beilfuss, Briefing.com

11:00 am Pfizer (PFE)

24.69 +0.60: Pfizer, the world's largest drug maker, on Thursday said fourth quarter profits fell due to increased generic competition, but the performance of new drugs and accelerated cost savings helped it top Wall Street's estimates. For the period, the drug maker said it earned $2.73 billion, or $0.37 per share, compared with $2.83 billion, or $0.38 per share, in the year ago period. Excluding non-recurring items, the company earned $0.51 per share, versus $0.58 per share a year earlier. Analysts, on average, were expecting $0.42 per share.

New York-based Pfizer attributed the better than expected results to better revenue performance in the Human Health segment and operating expense savings, combined with the acceleration of the "Adapting to Scale" cost savings to $800 million in 2005, which was double the goal for the year. Fourth quarter revenue fell 9% to $13.59 billion, with U.S. sales down about 16% as a result of the loss of exclusivity for key medicines and faltering sales of its arthritis treatment Celebrex. Meanwhile, Human Health, the company's largest division, generated sales of $11.66 billion, down 11% worldwide and 18% in the U.S. Consumer Health sales, in contrast, rose 5% to $1.04 billion worldwide, growing 3% in the U.S.

In the Human Health segment, a series of patent expirations, which included epilepsy treatment Neurontin and hypertension drug Accupril, continued to drive the top-line decline. In addition, uncertainty relating to Celebrex and the suspension of Bextra further contributed to the soft results. Sales for Celebrex itself slipped 53% to $472 million during the quarter, while Neurontin and Accupril sales declined 71% and 74%, respectively.

On a positive note, revenue for cholesterol drug Lipitor was up 3% to $3.36 billion during the quarter. Sales for the world's best selling drug were up more than 12% for the year. As an aside, Pfizer prevailed in a U.S. court decision involving a patent challenge to Lipitor, thus protecting its exclusivity until June 2011.

Despite the year/year decline in revenue and earnings, investors responded the to better than expected results by lifting shares more than 2% in early trading. Pfizer shares have gone from $40 to $20 over the past three years. For 2005, the stock fell about 10%. Although we have a Market Weight rating on the Health Care sector, we favor growth industries such as Managed Care over Pharmaceutical, which continues to suffer from increased volatility and uncertainty. Pfizer said it will provide guidance at its upcoming meeting with analysts on February 10th.

--Richard Jahnke, Briefing.com

10:14 am Adv. Micro Devices (AMD)

37.11 +3.74: The market was anticipating a strong result from AMD after Intel confessed to losing market share to its smaller rival and missing analysts' forecasts. There has been a debate brewing over just how much share AMD has been able to garner. Its fourth quarter results clearly signal that Intel may be losing more share than its willing to admit. Fourth quarter net income for AMD grew to $95.6 mln, or $0.21 per share. This compares to a loss last year of $30 mln, or $0.08 per share, resulting from losses in its former memory chip business and costs related to early debt retirement. Excluding non-recurring items, earnings surpassed consensus by 19 cents.

Revenues surged 45.4% to $1.84 bln, which included the Spansion flash memory business AMD spun off in an IPO in December. Sales also exceeded analysts' expectation of $1.65 bln. These results come just a day after Intel's shares lost almost three dollars following fourth quarter results and guidance that disappointed the Street. For AMD, it sang a different tune with sales of chips used in servers, PC, and notebooks jumping 79% to $1.3 bln. The strongest regions were the Americas, Europe and China with average sales prices rising 6 % in the quarter. The quarter was outstanding by many accounts from the top to the bottom line with gross margins expanding to 46.4% - well above consensus of 42.9%.

AMD's CEO Hector Ruiz targets 25-30% share of the market by 2009 and expects the chip maker to grow at 2x the rate of the PC market of 10%. During the conference call, management stated AMD's total market share for PC and server chips is 15.3%. This compares roughly to 12% in the previous quarter and 9% last year. With seasonal first quarter weakness expected, AMD expects sales to be "flat to slightly down" sequentially, but that would still represent a 70% year/year increase. Ruiz admitted he was concerned about possible overcapacity in the industry, as both companies ramp up production, possibly leading to a pricing war.

AMD, which has the first mover advantage with its new server and laptop chips, has clearly positioned itself well to gain market share and drive growth. AMD's success has caught Intel off guard, but don't expect the world's largest chip manufacturer to take this turn of events lying down. Intel is sure to use its size and market dominance to its advantage, which could result in rough seas ahead. Despite the strong showing from AMD, the stock was downgraded this morning by several analysts who cited peaking margins, concerns over excess supplies, and valuation. The stock trades at 48.1x forward earnings compared to Intel at 17.1x.

--Kimberly DuBord, Briefing.com

09:43 am Harley-Davidson (HDI)

51.90 +0.27: For the twentieth consecutive year, Harley-Davidson delivered record revenue, earnings, and motorcycle sales. On 6.5% top line growth, full-year 2005 earnings per share were $3.41 and up 13.7% from the year-ago period. According to the Reuters Estimates consensus, analysts had expected $3.38 in FY05 EPS. The company shipped 3.7% more motorcycles during the year, and worldwide retail sales of namesake motorcycles rose 6.2%. Strength in overseas sales, particularly 20% increases in Europe and Canada, were behind the rise. The company noted that retail sales were much stronger during the back half of the year, aided by enhanced existing models and the introduction of several new motorcycles for the 2006 model year.

The manufacturer also reported record top and bottom line results for the fourth quarter, registering $1.34 billion and $0.84 per share, respectively. Harley-Davidson's Q4 EPS translated to 18% year-over-year growth and surpassed Wall Street's forecast by two cents. Q4 marked the 28th consecutive time the company has trumped analysts' expectations. Motorcycle revenue, which accounted for 80% of overall sales in 2005, increased nearly 10% in Q4. International Harley-Davidson motorcycle sales rose 13% during the quarter, and its other business segments - parts and accessories and general merchandise - also saw solid increases versus last year.

Indicating that it believes its prospects for retail growth remain strong, Harley-Davidson said it expects 11-17% annual EPS growth in 2006. That translates to approximately $3.79-4.00 in EPS, the low end of which is a dime ahead of the current consensus estimate. A wholesale unit growth rate in the range of 5-9% is expected, and the company's 2006 Harley-Davidson motorcycle shipment target remains in the range of 348,000-352,000 units. With respect to its other business units, the company foresees the rate of growth in its parts and accessories segment surpassing that of its namesake motorcycle unit in the long term.

At roughly 13.5x the company's estimated 2006 earnings, HDI trades at a discount to the market multiple of 16.6x. While Harley's overall growth has slowed, and the market has discounted a new operating environment that includes slower top-line growth, its stock remains a suitable investment for value-oriented individuals seeking exposure to consumer companies with global brand leadership.

--Lisa Beilfuss, Briefing.com

09:23 am Unitedhealth Group (UNH)

61.22: Unitedhealth Group on Thursday reported an 18% increase in fourth quarter earnings as growth in premiums outpaced escalating medical costs. Net income for the quarter climbed to $870 million, or $0.65 per share, up from $739 million, or $0.54 per share, a year earlier. Excluding market launch expenses for the Medicare Part D prescription drug benefit program, fourth earnings of $0.67 per share exceeded the average analyst estimate of $0.65 per share.

Revenue grew 14.6% year/year to $12.05 billion, driven by higher premiums. That figure also topped Wall Street's forecast of $11.67 billion. The acquisition of PacifiCare Health Systems, which was completed on December 20, 2005, contributed approximately $440 million in revenue to overall fourth quarter results. As previously stated, Unitedhealth Group expects the merger to be accretive by $0.05 per share in 2006 and anticipates $200 to $250 million in cost synergies by 2008.

The latest results were further highlighted by a lower medical cost ratio and improved operating margin. The medical cost ratio, which measures medical costs as a percentage of premiums and fees, declined 90 basis points year/year to 78.2%, despite a modest rise in medical costs. Operating margin, meanwhile, expanded 11.9% from 11.3% in the same quarter last year.

Unitedhealth Group also raised its fiscal 2006 earnings forecast to $2.85 to $2.90 per share, including stock based compensation, up from its previous guidance of $2.82 to $2.85. That, however, may not be comparable to the current consensus estimate of $2.91.

With continued solid performance across its businesses, Unitedhealth Group has demonstrated exceptional bottom-line growth in recent quarters and has topped profit expectations for 30 consecutive quarters. Its stock price, accordingly, has risen in stride. In 2005 shares of the company gained more than 43%. Looking ahead, continued growth should be supported by the recent acquisition of PacifiCare, as well as the opportunity presented by Medicare Part D, which took effect on January 1, 2006. Briefing.com currently holds a Market Weight rating on the Health Care sector, with managed care stocks, and UNH in particular, seen as a pocket of strength.

--Richard Jahnke, Briefing.com

09:19 am Apple Computer (AAPL)

81.20: Despite record breaking first quarter revenues and profits, Apple is shining less brightly Thursday morning after the company's forecasts left much to be desired. Net income rose to $565 mln, or $0.65 per share, from $295 mln, or $0.35 cents per share, the year prior. The comparable figure surpassed consensus by three cents. Sales swelled 65% to $5.75 bln. Yet, Apple's conservative guidance, prompted by a seasonal drop-off in demand for iPods and product transition for the iMac to Intel-based processors, resulted in a fiscal Q2 (Mar) earnings forecast of $0.42 per share on revenues of $4.3 bln. This falls below Wall Street's expectations of $0.50 per share and revenues of $4.83 bln.

The market shouldn't be surprised Apple is taking a conservative tone for guidance - something the company is known for - considering seasonal declines are likely for iPods and given the Mac transition. Apple's management stated that it's too early to determine how consumers will react to the transition to the new, faster Intel-based PCs that do not start shipping until February. In the quarter, Apple sold a whopping 14 mln iPods - representing a 207% year/year increase over the prior year. Management stated sales of the new iPod nano were "stunning." PCs shipped totaled 667,000, up 7%, with Mac sales exceeding expectations.

Considering the parabolic rise in Apple's shares over the last year, the stock is ripe for a pause. It also could be said that AAPL is priced for perfection. We think the bears are not seeing the apple through the orchard here. Any weakness caused by Apple's conservative guidance represents an opportune time for long-term investors to step in and buy one the brightest growth stories in the technology sector.

--Kimberly DuBord, Briefing.com

08:52 am Walt Disney (DIS)

25.20: Fueled by lengthy negotiations between the two companies, speculation has been mounting that Disney may buy Pixar. Both sides said they wanted to get a distribution deal done by year-end, but clearly, that didn't happen. Disney's current distribution agreement with Pixar ends in June with the release of "Cars." Expectations for what a renewed distribution deal might look like spread to the possibility that Disney's Robert Iger and Pixar's Steve Jobs would extend the deal a step further into an outright purchase. Moreover, the belief that Pixar needs to get something signed to prepare its marketing and distribution campaign for its 2007 movie schedule has simply added to the speculation. Today, the Wall Street Journal confirmed Disney is in serious talks to acquire Pixar Animation Studios.

Shares of Pixar in Europe are already on the rise. The deal being discussed calls for a purchase price of $6.7 bln - a small premium to Pixar's current stock market value. An all-stock deal would make Steve Jobs the largest individual shareholder in Disney. An all-cash deal is unlikely given Disney's comments on targeting an "A" credit rating. One of Iger's main goals after taking the helm in October has been to repair the damaged relationship between the two companies, after frosty relations between Iger and Michael Eisner threatened the lucrative relationship. The WSJ stated a deal is still in the "sensitive" stage with both parties "haggling" over price. The parties could still settle on just a distribution deal..

There are pros and cons for both scenarios. If Disney buys Pixar it becomes the film animation studio for Disney, a key profit center for the company. Disney would likely agree to leave the current structure unchanged in order not to impact Pixar's successful corporate culture. A deal also puts Jobs on Disney's board. Adding a visionary like Jobs gives Iger an ace in the hole in merging content with distribution. It also enables Disney to leverage Pixar's creative talent through all of its distribution channels from consumer products to television and theme parks. The downside: a possible talent exodus, share dilution for Disney, geographically unsuited (Pixar in Emeryville and Disney in Anaheim), and management distraction for Disney, which already has an aggressive growth strategy laid out.

Clearly, the market views a deal as good news for both companies as shares have been moving higher as speculation rises. We continue to feel Disney offers a strong investment opportunity based on its standing as the best content play out there, married with its considerable marketing muscle, international distribution capabilities, and premier world-wide brand equity. We remain committed to the stock, a suggested holding in our Active Portfolio, due to its double-digit earnings growth, visibility, strong cash flow generation, and seasonal strength. Growth catalysts include margin acceleration at its film and theme parks, a strong box office schedule, ABC ratings, syndication of TV shows, and TV DVD sales for successful shows.

--Kimberly DuBord, Briefing.com

09:33 am Chaparral Steel: Ferris Baker Watts initiates Buy. Target $42. Firm notes that despite the competitive nature of the global steel industry, the co is a low-cost domestic producer of steel, serving mkt segments that are less susceptible to competitive pricing pressures, has an established management team with a solid strategy to grow its business, and generates high ROIC with strong free cash flow.

09:32 am Concurrent: Needham & Co upgrades Buy to Strong Buy. Target $3. Firm cites two primary reasons for the upgrade: First, the stock price has approx 50% appreciation to their tgt price. Second, and far more interestingly, they believe 2006 will see a sharp increase in V.O.D. capital spending by several major U.S. cable M.S.Os.

09:31 am SeaChange: Needham & Co upgrades Hold to Buy. Target $10. Firm believes 2006 will see a sharp increase in V.O.D. capital spending by several major U.S. cable T.V. operators. They believe the chief impetus to higher V.O.D. spending in 2006 will be Time Warner Cable's (TWX) Startover service.

09:30 am Synovus: Prudential upgrades Neutral to Overweight. Target $30 to $30. They believe that the outlook for Synovus is good, and that fourth quarter earnings provided a basis for higher expectations going forward.

09:29 am Apple Computer: Prudential reiterates Neutral. Target $67 to $67. The firm notes that AAPL mgmt stated that iPod supply/demand was in balance, exiting Q1. Prudential thinks that the lack of backlog, combined with the absence of new Q2 iPod introduction, could result in a pronounced seasonal unit decline in the March quarter (1st in history).

09:28 am Intel: Prudential reiterates Underweight . Target $19 to $19. Firm believes there is a fundamental shift in the P.C. M.P.U. industry and believe AMD will continue to take share. As a result, they believe that INTC may have miscalculated in its '06 rev growth forecast for up 6% to 9% YoY. They are modeling 3% top line growth for INTC which assumes INTC loses another 500 bps to AMD in '06.

09:27 am Imclone: UBS reiterates Buy. Target $40 to $40. Firm has updated Eribitux valuation to 2006 sales and updated their operating margin adjustment for U.S. sales. They now value Erbitux at $32.30/share (from $29). They say the most important near-term catalyst is PACCE trial results for P-Mab expected at Jan 26 AMGN investor day.

09:26 am Essex: CE Unterberg Towbin upgrades Market Perform to Buy. Target $25 to $25. Since firm's downgrade 6 months ago, the stock has drifted, and they believe the entry point is favorable and a number of positive catalysts are possible over the coming months. Firm continues to believe the co is very well positioned to benefit from the ongoing robust spending by the Intelligence Community on the War on Terror as well as the co's ability to make smart acquisitions.

09:25 am Mannkind: WR Hambrecht upgrades Sell to Hold. Upgrade is based on continued development progress for Technosphere Insulin, favorable Phase 2b data for the product reported earlier this week, as well as an expected upcoming Exubera approval. In addition, firm says that investors who have enjoyed a near-term trading opportunity should find NKTR shares relatively cheap just a week before the Jan 27 PDUFA date, whereas the MNKD PDUFA date, if ever, remains several years away. Firm says their view on MNKD is genuinely neutral - negative on valuation and competitive positioning, but very positive on inhaled insulin, which makes NKTR their top pick for 2006.

09:24 am El Paso: Calyon Securities reiterates Buy. Target $15 to $15. Firm's new price tgt is based on a 6.9X E.V. to 2007 est EBITDA multiple plus $1 per share for the N.P.V. of N.O.Ls. The increase is driven by a $100 mln increase in their EBITDA est, a slightly higher E.V. to EBITDA multiple, and debt reduction. They note that in their view, the E&P turnaround is complete. Management could not have been more clear in their disclosures over the past two days, and they believe it will be difficult for previously skeptical investors to continue forecasting flat reserves through 2007.

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From Briefing.com: 4:27 pm Weekly Wrap

The stock market was hammered this week by two factors. First, there was disappointment over guidance given in key earnings reports. Second, there was concern over the situation with Iran and the implications for oil prices.

Oil prices hit first. The S&P 500 index fell 5 points on Tuesday after the Monday holiday. The main cause was a jump in oil prices to over $67 a barrel after veiled threats from Iran that oil supplies would be disrupted if the international community attempted to interfere with its nuclear plans.

Then the earnings problems began. After the close on Tuesday, Intel reported fourth quarter profits three cents below expectations. Revenue was also less than expected. Worse, the company said that first quarter revenue would be far less than current Wall Street estimates. That afternoon, Yahoo also said that fourth quarter profits and revenue were below expectations. Guidance for the first quarter was viewed as disappointing.

Intel and Yahoo dragged the market down on Wednesday. The Nasdaq dropped 23 points and the S&P 500 another 5 points.

The news after the close on Wednesday wasn't quite as bad. Advanced Micro Devices had a blowout report. But Apple Computer also gave disappointing guidance for the first quarter. The company beat profit estimates for the fourth quarter but the stock nevertheless slid on Thursday. The situation was similar for eBay, which reported good profits but said revenues this quarter would be below prior expectations.

Earnings reports Thursday morning included good numbers from Pfizer, Merrill Lynch, UnitedHealth, and Harley-Davidson. That helped the S&P rebound 7 points that day, but the better tone didn't last long.

On Friday, the market caved. This time it was Motorola, Citigroup, and General Electric that presented disappointing outlooks and earnings. Oil also shot up to close at $68.48 a barrel on continued concerns about the Iranian situation as well as new threats from al-Qaeda. The S&P plunged 24 points.

The economic news this past week wasn't bad. December industrial production was up 0.6%. Housing starts dropped sharply. Consumer sentiment was up, and new claims for unemployment down sharply. The December core rate of CPI came in at 0.2%, in line with the prior two months and indicating steady inflation rates. Overall, it was a mixed bag that had marginal impact on the stock market.

It was clearly the worrisome guidance that caused the majority of the decline this week. Earnings reports for the fourth quarter were fine. They are on track for 13% growth over the fourth quarter from the year before. But the market is adjusting to the reality that earnings growth can't continue at the strong rate of the past two and one-half years. Earnings growth this year will probably slip to 7% and perhaps even lower.

This is largely a matter of the market adjusting to the reality that has been long anticipated. The earnings trends aren't bad. Intel, Yahoo, and eBay, for example, are all doing very well from a business standpoint. So are banks and industrial firms. But there are always concerns when a slowdown is occurring, and this week those concerns slammed the overall market.

The Briefing.com view is that the market adjustment is understandable. The guidance was in fact disappointing. But the market often hits turbulence during the early portion of earnings season and the bigger picture trend in earnings is still good. The market may very well steady later in the month and even rebound as earnings season starts to wind up in February.

The situation in Iran is more of a wild card. It presents a risk that is very hard to quantify. That could derail the first quarter outlook for the stock market even more than the adjustment to a more reasonable earnings outlook for 2006.

 
 Index      Started Week Ended Week  Change  %Change  YTD  
 DJIA         10959.87    10667.39  -292.48   -2.7 % -0.5 %  
 Nasdaq        2317.04     2247.70   -69.34   -3.0 %  1.9 %  
 S&P 500       1287.61     1261.49   -26.12   -2.0 %  1.1 %  
 Russell 2000   708.44      704.60    -3.84   -0.5 %  4.7 % 
 

9:12AM MIPS Techs tgt rasied to $11 at Adams Harkness (MIPS) 7.73 : Adams Harkness is raising their tgt on MIPS to $11 from $8 after the co reported earnings. Firm says as MIPS executes on its market opportunities in the digital consumer and communications segments, they expect strong financial performance and expect the stock to move higher.

11:27 am Citigroup (C)

46.24 -1.70: Like a number of other banks this week, Citigroup reported its fourth quarter and year-end results. In turn, like many of those same banks, it talked about net interest margin compression and a surge in consumer bankruptcy filings that occurred prior to more stringent bankruptcy laws going into effect in October. Unlike other banks, Citigroup hasn't fared too well following its report. The market, though, has reason to be disappointed in Citigroup.

While fourth quarter net income of $6.93 billion, or $1.37 per share, was up 30% from the year-ago period, the result included a $2.1 billion after-tax gain from the sale of its asset management business to Legg Mason. Excluding that item and results from discontinued operations, income from continuing operations was $4.97 billion, or $0.98 per share. That was down 3.0% from the year-ago period and its EPS result was two cents shy of analysts' average estimate according to Reuters Estimates.

Income from continuing operations was aided by the after-tax release of $375 million from Worldcom/Research litigation reserves, a $248 million gain on the sale of Nikko Cordial stock, and a $57 million gain on the sale of its European Card Acceptance business. Those items, though, were essentially offset by charges for a one-time accounting change cost, and increases in reserves for consumer bankruptcy filings and previously disclosed legal matters.

The aforementioned bankruptcy filing issue cut into Citigroup's U.S. credit card business, which suffered approximately $120 million pre-tax of reduced interest and fee revenue. The bank's trading and investment banking operations, however, were a bright spot. Equity trading revenue was up 39% and investment banking revenue rose 3.0%, highlighted by a 25% increase in advisory revenues that hit record levels. Citigroup ended 2005 as the top underwriter of stocks and held the number two position in completed global mergers and acquisitions.

The latter rankings aside, the pace of profit growth at Citigroup is disappointing and won't necessarily pick up easily as heightened competition from its peers and the compression in net interest margin that stems from the flattening yield curve are creating a challenging environment.

At 11.9x trailing twelve month earnings, Citigroup trades at a 15% discount to its 5-year historical average. In turn, with the added announcement today that the company's board approved an 11% increase in the quarterly dividend to $0.49 per share, it sports an attractive dividend yield of 4.24%. Accordingly, it holds ample appeal for value-oriented investors seeking an income component with their stock holdings. However, Citigroup isn't as ideally suited for the active investor as we thought it was when we added it to our Active Portfolio in August 2004 and we will be removing it today. Since its inclusion, Citigroup is up 6.8%, including dividends.

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

09:57 am Schlumberger (SLB)

119.47 +4.60: Less than 24 hours after announcing the approval of a two-for-one stock split and increasing its quarterly dividend 19% to $0.25 per share (on a pre-split basis), upbeat news continued to flow out of Schlumberger like a geyser of black gold. Surprise, surprise, the world's largest oilfield services company said Q4 profits doubled, beating the most optimistic of Wall Street forecasts, as earnings of $1.05 per share, excluding non-recurring items, checked in nine cents better than the Reuters Estimates consensus.

Operating revenues surged 31.2% year/year to $4.02 bln, again surpassing expectations (consensus $3.88 bln), as Oilfield Services revenue rose 30.0% year/year to $3.57 bln. According to Chairman and CEO Andrew Gould, one of the most respected executives in the oil industry, "The very strong activity that we have seen in the fourth quarter resulted in new record levels of oilfield revenue and net income for Schlumberger." At Oilfield Services, sequential growth in the Eastern Hemisphere was greater than the growth in the U.S. for the second straight quarter, confirming increased activity, improved equipment utilization and stronger prices in those markets. The pent up demand within the international markets, supporting volume and pricing gains, plays into our Overweight rating on Energy.

Gould went on to note that shortages of people and equipment across the industry will place a high premium on reliable suppliers (like SLB) while the technology needed to improve the productivity of a limited personnel base will be in high demand. He also said that "exploration activity, where Schlumberger has an unmatched portfolio of services, will show a large increase in 2006" and continue for a number of years. As a result, management expects top line growth in fiscal 2006 to be similar to the 25% growth experienced in 2005; analysts were expecting revenue this year to grow about 18%.

Shares of Schlumberger, which trades at 35.4x forward earnings, have already surged 18% this year alone. Competitor BJ Services (BJS) -- a suggested holding in our portfolio for active investors, which has tacked on 11%, sports a forward P/E multiple of 20.2x.

--Brian Duhn, Briefing.com

09:43 am General Electric (GE)

34.07 -0.61: The world's second largest business by market value reported its smallest quarterly profit since 2004 after exiting its insurance business to focus more on higher growth markets. After some confusion over the exclusion of the insurance business, the fact GE missed analysts' revenue estimate by more than a billion dollars took the market by surprise and weighed on stock futures. Revenues rose 3% to $40.7 bln compared to the consensus view of $42.39 bln. Despite the top line miss, GE's earnings per share came in right on target with consensus estimates, assisted by a lower tax rate and share count. For the year, total orders rose 10%, equipment backlog grew 5% to $24 bln, and Client Services backlog increased 15% to $87 bln. GE closed the year with considerable financial flexibility, which will enable it to continue to strengthen its growth businesses.

In December, GE guided revenues to $42 bln+, so the question put to management on its conference call was where the billion dollar miss came from? GE stated the difference was due to the following: $300-$400 mln in forex, $400-$500 from less than expected asset sales, and the rest from its plastics business due to price and volume mix.

Organic revenues rose 8% for both the quarter and the year. All six business units delivered double-digit earnings growth. Notable revenue growth came from Consumer Finance (+14%), Infrastructure (+11%), and Health Care (+5%). Commercial Finance and Infrastructure combined accounts for over half of GE's total segment profits. Both businesses showed margin acceleration with Commercial Finance accelerating to 24.5% from 20% last quarter. Revenues from its non-financial unit rose 3%, with weaker results in plastics and aircraft engines. NBC Universal was hurt by poor television ratings. The Olympics should help push the top line for NBC in the first quarter.

Considering the breadth and size of GE's business, the market focuseson its outlook for the global economy. CEO Jeffery Immelt stated, the "current economic environment remains positive...with continued strong growth in Asia and developing markets" - a key growth area for GE. Further, it anticipates "mid-single digit growth in the Americas and slow growth in Europe." GE's Q1 and FY06 guidance was roughly in-line with what the market was expecting. For Q1, it sees earnings of $0.38-$0.40 (consensus $0.39) and FY06 EPS of $1.91-$2.02 (consensus $1.98).

GE's cash flow is up an astounding 42% this year to $21.6 bln, which GE used to raise its dividend for the 30th straight year and to expand its buyback program from $15 bln through 2007 to $25 bln through 2008. We continue to like GE due to its high quality and predictable nature of earnings and strong, flexible financial position. GE will be able to achieve the multiple expansion that has eluded it through driving revenue growth within its long-cycle businesses. Over the longer-term, it will be the industrial areas, like aircraft engines and power turbines, that will bring good things to life for GE.

--Kimberly DuBord, Briefing.com

09:20 am KeyCorp (KEY)

33.13: While many on Wall Street remain concerned about banks suffering from compressed net interest margins, KeyCorp's Q4 report should alleviate some of those worries. Compared with last year's comparable quarter, taxable-equivalent revenue rose by $132 mln, reflecting strong commercial loan growth, higher fee income, growth in core deposits and an improved net interest margin, which rose to 3.71% from 3.63% a year earlier. Lending income rose 7% from a year ago to $748 mln while fee income rose 17% to $561 mln.

Net income was $296 mln, resulting in earnings of $0.72 per share that were five cents better than the Reuters Estimates consensus. This was the 11th straight quarter KeyCorp has beaten analysts' expectations.

KeyCorp's solid Q4 results were attributed to management's success in growing revenue, which rose 11% year/year to $1.31 bln, as well as an improved business mix and stronger credit risk profile. Management issued upside guidance for the first quarter, saying it now sees earnings of $0.67 to $0.71 per share (consensus $0.66). For fiscal 2006, Cleveland-based KeyCorp sees earnings of $2.80 to $2.90 per share (consensus $2.80).

While we maintain a Market Weight rating on the Financial sector, a money center bank like KeyCorp, which also complements its commercial banking and consumer finance businesses with investment banking products and services, warrants consideration for long-term investment value. To that end, KeyCorp's board approved an increase in the quarterly dividend to $0.345 from $0.325. The bank has increased its dividend for 41 consecutive years, a trend that bodes well for income-oriented investors who may be concerned about slowing economic growth and earnings deceleration in 2006.

--Brian Duhn, Briefing.com

09:05 am Capital One Financial (COF)

85.52: After the close Thursday, Capital One Financial Corp. reported a 44% jump in fourth quarter profits, aided by the recent acquisition of Louisiana-based Hibernia Corp. For the quarter, the credit card issuer said it earned $280 million, or $0.97 per share, up from $195.1 million, or $0.77 per share, a year earlier. The acquisition of Hibernia, which was completed in November, contributed approximately $30.6 million to net income for the period. The results beat analysts' average estimate of $0.95, according to Reuters Estimates.

Quarterly revenue increased to $2.7 billion from $2.31 billion in the same period last year. Net interest income, or profits from loans and deposits, rose to $1.04 billion from $784.6 million, while non-interest income increased to $1.67 billion from $1.52 billion in the year ago period.

Capital One, which generates substantial earnings from its loan portfolio, said managed loans at the end of the quarter totaled $105.5 billion, up $25.7 billion, or 32%, from the prior year. That includes organic growth of $4.4 billion and approximately $16.3 billion of loans acquired through Hibernia.

For fiscal 2006, Capital One said it expects its managed loan loan portfolio to grow between 7% and 9%. Furthermore, the company projected full year earnings in the range of $7.40 to $7.80 per share - in line with the Reuters Estimates consensus of $7.68 per share. With the acquisition of Hibernia completed, the outlook for Capital One should become more clear as the company focuses on integrating and re-branding the bank, as well as efforts to increase the revenue contribution from fee-based businesses. Briefing.com currently has a Market Weight rating on the Financial sector. However, a more positive stance is limited by the current yield curve effect, a slowdown in mortgage demand, and increases in loan-loss reserves.

--Richard Jahnke, Briefing.com

08:18 am Motorola (MOT)

24.35: A small miss on revenues and in-line guidance left the market wanting more from Motorola, a suggested holding in Briefing.com's Active Portfolio. The Schaumburg-based company closed the fiscal year setting a new record in revenues, which rose 18% year/year to $10.4 bln, but were still below consensus of $10.6 bln. Earnings came in a penny ahead of expectations at $0.35 per share, but then again MOT has topped consensus for all of 2005. While the market may be disappointed, our positive opinion on the stock still rings true. The motormomentum continues, as Motorola's market position continues to improve within the high-end and emerging markets.

MOT shipped a record 44.7 mln handsets in the quarter, 40% year/year increase. Yet, due to supply constraints, it was unable to fill all of the demand. Management anticipates this should not be an issue going forward. The worldwide success of Motorola's handsets, in particular the Razr, which is now the best selling clamshell in the world, has propelled the company's share of the global handset market. This quarter, Motorola gained another 3 points. Average selling prices came in ahead of expectations, up 3% sequentially, which the company believes will remain strong in Q1 due to new product launches.

As of the July quarter, management stated it will no longer provide EPS guidance, but will provide other information for investors. This is the second time this week a major technology company announced the end to quarterly guidance. From management's perspective, it shifts the market's focus from near-term results to the company's longer-term growth targets. While we acknowledge the street does get caught up with meeting, or actually beating, those consensus estimates each quarter, the lack of quarterly guidance limits visibility into the company's operations.

In-line guidance did little to offset the slight miss on revenues. Motorola sees Q1 earnings of $0.27-$0.30 per share, excluding two cents in stock options versus consensus of $0.28 on revenues of $9.3-$9.5 bln - right on par with what the market's expectations for $0.28 and $9.33 bln, respectively. Management expects continued share gains in the handset market and a less than seasonal decline in handset units in Q1. Overall, the fourth quarter was a solid quarter, but with the success of its new handsets, the market was expecting a blowout. Capacity issues were likely the main cause, but we recommend investors focus on the bigger picture of continued market share gains, rising ASPs, margin expansion, and accelerating earnings.

--Kimberly DuBord, Briefing.com

10:25 am Renovis: Needham & Co reiterates Buy. Target $20 to $20. Firm saying Renovis merits greater attention from investors, given the co's successful execution of the SAINT trials to date, as well as expected upcoming newsflow which will further highlight progress of lead drug candidate, Cerovive. Firm says Renovis' 4Q05 highpoint was the announcement by partner AstraZeneca (AZN) of the interim safety review of 1,597 patients, which gave a "go ahead" signal for the Phase 3 SAINT II Cerovive trial.

10:24 am F5 Networks: JMP Securities downgrades Mkt Outperform to Mkt Perform. Target $60. Firm saying that while F5's Dec quarter results were above expectations and the co issued above consensus March quarter guidance, they believe the co's Dec quarter results indicate that it is facing increased risk.

10:22 am Beazer Homes: Credit Suisse downgrades Neutral to Underperform . Target $67 to $67. The firm says that with mix proving a negative in the coming year, pricing power minimal and major markets for BZH (Denver, Las Vegas, New Jersey, Phoenix, the Inland Empire, Sacramento and Washington D.C.) materially changing over the last six to nine months, they believe the valuation premium currently assigned to the co is unjustified. Ultimately, they expect fundamentals to win out over share buybacks.

10:21 am Harmonic: Brean Murray downgrades Strong Buy to Hold. Brean Murray downgrades HLIT to Hold from Strong Buy and suspending their tgt following Q4 results, as they have lost their confidence that the company can gain its fair share of the 2006 spend by the domestic satellite operators to upgrade local markets to HD. Firm is are also cutting their 2006 EPS view to $0.16 from $0.42. Firm no longer believes Harmonic will get fair share of satellite business.

10:20 am Genesis Microchip: CE Unterberg Towbin downgrades Buy to Market Perform. CE Unterberg downgraded GNSS to Mkt Perform from from Buy. The product transitions within both the L.C.D monitor business and D.T.V will likely dampen rev growth for GNSS through much of 2006, in their view, as new lower priced components are replacing older higher A.S.P products.

10:19 am Allscripts: Caris & Company downgrades Above Average to Average. Caris downgrades MDRX to Average from Above Average. The firm says that GE is now "officially" able to mkt its competitive solution to IDX clients, and in turn MDRX will pay at least a 50% lower royalty to IDX on TouchWorks sales.

http://biz.yahoo.com/mu/story.html

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From Briefing.com: 4:16PM Advanced Micro intends to offer approx $500 mln of its common stock (AMD) 35.47 -0.23 : Co announces it intends to offer an aggregate of approx $500 mln of its common stock. AMD also intends to grant the underwriter a 30-day option to purchase an additional aggregate of approx $75 mln of its common stock to cover overallotments, if any. MER will be the sole underwriter for this offering. AMD intends to use approx $226 mln of the net proceeds from this offering to fund the redemption of up to 35% of the aggregate principal amount of its 7.75% Senior Notes due 2012 and the balance of the net proceeds for capital expenditures, working capital and other general corporate purposes, including the possible repayment of indebtedness.

4:03PM KLA-Tencor withdraws offer for August Technology (KLAC) 51.77 +0.15 : Co annoucnes it has withdrawn its February 2005 offer to acquire August Technology (AUGT) for $11.50 per share in cash. The co noted its disappointment that the two companies were unable to enter into substantive discussions and reach a final agreement.

4:20 pm : While gains remained moderate Monday, equities rebounded from sharp selling action that sunk Friday's market. Buyers eyed bargains left in the wake of last week's average 2.6% drop in the indices, and some positive news on the corporate front helped provide incentive to snatch them.

The ten economic sectors stood in split fashion for most of the session. Despite retreats in prices across the energy complex, the Energy sector (+1.1%) managed to attract further buying interest and led the advancers. Oil services stocks paved the way higher, as SLB enjoyed follow-through interest following its much better than expected fourth quarter report, and as investors optimistically await result from BJS. As a side note, the latter is one of Briefing.com's suggested holdings for active investors, and is scheduled to report prior to Tuesday's open. Although declines in energy prices were a positive for the broader market today, the fact that supply-related geopolitical concerns (Iran) persist worked to somewhat undercut the declines' effects.

Largely to the credit of a soaring brokerage industry, Financials were stocks' strongest source of support. Upside profit results from Dow component American Express (AXP 51.47 +0.07) were released ahead of schedule and, especially in light of some recent disappointments across both the sector and the Dow, lent further muscle. Along that line, Bank of America (BAC 53.94 -0.25) fell $0.08 short of analysts' earnings estimate this morning. Its subsequent decline was kept in check, though, as investors perhaps acknowledge that Wall Street's estimates on many stocks are too high amid a decelerating earnings growth environment, and that BAC remains attractive on account of its growth prospects, dividend yield, and valuation.

Benefiting from across-the-board jumps in metal stocks, Materials (+1.3%) was also a bright spot today. Following its GE-induced plunge on Friday, Industrials (+0.2%) recovered; Utilities (+0.1%) also closed higher. Facing relative weakness in drug retail, which surging Albertson's shares helped to offset, the Consumer Staples sector ended the day on the flat line. This morning, the grocer agreed to a $17.4 billion buyout led by CVS (CVS 26.67 -0.46), Supervalu, and private equity firm Cerberus. The Discretionary sector similarly closed unchanged. The auto industry led today's S&P, following a much better than expected Q4 report alongside details of an aggressive turnaround plan from Ford (F 8.33 +0.43), but declines across the retail arena and the aforementioned oil overhang challenged its effect.

While buying efforts were generally modest, selling action was even more so. A wavering Technology sector finished 0.3% lower and led the laggards; Intel (INTC 21.37 -0.39) was the primary culprit, and its extended weakness eclipsed some relative strength across the semiconductor industry. Recovered Yahoo (YHOO 34.20 +0.46) and Apple (APPL 77.64 +1.55) shares were particular sources of support that helped limit the sector's slide, however. Reports that the U.S. Supreme Court denied Research in Motion's (RIMM 64.25 -2.37) petition to review a patent infringement ruling added to the Nasdaq's rocky day, but rebounding GOOG shares helped counter that challenge. With respect to RIMM's woes, the news served as a bullish cue for rival Palm (PALM 33.61 +0.41).

Today's economic front featured just a slightly lower than expected read on leading indicators. Investors within both the stock and bond markets essentially overlooked the dated (December) data, though, and remain focused upon the week's housing data and Q4 GDP report. DJ30 +21.38 NASDAQ +0.77 SP500 +2.33 NASDAQ Dec/Adv/Vol 1388/1645/1.93 bln NYSE Dec/Adv/Vol 1206/2077/1.64 bln

12:45PM Varian Semi receives follow-on orders from major Taiwanese foundry for its VIISta single wafer high current ion implanters (VSEA) 47.93 -0.22 : Co announces it has received multiple follow-on orders for its VIISta HC single wafer high current ion implanter from a major foundry in Taiwan. The tools are expected to ship to production fabs in this quarter.

10:27AM Applied Micro and Nimbus Data Systems establish strategic partnership for I.P storage reference designs (AMCC) 2.79 +0.00 : The co and Nimbus Data Systems announce the establishment of a strategic partnership to develop I.P storage reference designs for leading server and storage O.E.Ms. These new products will enable AMCC's customers to accelerate their development of industry-leading iSCSI storage systems built around AMCC's embedded PowerPC processors and Nimbus storage software.

11:50 am Research In Motion (RIMM)

65.19 -1.43: Shares of Research in Motion traded lower on Monday after the U.S. Supreme Court turned down a petition by the maker of the popular Blackberry email device to review a patent infringement ruling against the company. Resultantly, the high court's refusal to hear the appeal in the long running infringement case could result in an injunction to stop U.S. Blackberry sales and service.

In 2002, patent holding firm NTP Inc. successfully sued RIMM over the intellectual property rights over the company's Blackberry communication device. Although RIMM and NTP subsequently reached an agreement to settle the dispute, whereby RIMM would pay NTP $450 million for past damages related to the technology infringement and a license to continue selling the handheld device, an impasse was reached in June when NTP failed to uphold the terms of the agreement. RIMM, subsequently, looked for a federal appeals court to enforce the agreement; however, the lower court concluded that RIMM infringed on NTP's patents and that the companies did not have a valid enforceable settlement.

An injunction against RIMM would effectively shut down U.S. Blackberry sales and service, and significantly disrupt the company's overall operations. While this remains a real threat and is negative news for RIMM shareholders, the company will likely be forced to settle with NTP for as much as $1 billion, according to some analysts. Conversely, competitors such as Palm (PALM) and Motorola (MOT) should benefit from any disruption in sales and service for the company's popular handheld device, as continued uncertainty surrounding the pending legal settlement remains a significant overhang.

--Richard Jahnke, Briefing.com

10:56 am Walt Disney (DIS)

25.34 -0.38: This story should be titled "Finding Pixar." A year ago, the market was speculating Disney might lose its lucrative distribution deal with Pixar amid frosty dealings between Eisner and Jobs. Today Disney's board plans to meet to consider buying Pixar Animation Studios (PIXR) - a considerable turn of events. After just four months on the job, Robert Iger is close to magically turning Disney's animation studio back into the showcase it used to be.

While a deal has yet to be announced, Reuters reported Monday morning that Disney's board of directors is meeting to consider the deal, which would give Steve Jobs a predominant position on Disney's board. Certainly not a wallflower, Jobs's presence will likely shake things up at the studio, which may not be a bad thing considering his leadership and visionary qualities. A source familiar with the matter said it is not clear whether the board was prepared to vote on a proposed merger.

In an unrelated matter, Disney may also be near a deal to sell its ABC radio unit. Iger has certainly been busy fulfilling promises he has made after taking over as CEO. The New York Times reported Disney is close to a deal to sell its ABC Radio unit to Citadel Broadcasting (CDL) for $3 bln. After receiving numerous offers, DIS selected Citadel's offer and began negotiations. Iger has long promised to rid Disney of these non-core assets, which have been a drag on shares.

We have long said a deal with Pixar would be a feather in Iger's cap, not to mention a perfect fit for both companies. The market has reacted overwhelmingly positive to a possible animation merger. While the numbers floating around are still purely speculative, the deal is worth a potential $7 bln - Disney's largest in a decade. If the merger does not come to fruition, we would likely see a distribution deal at a minimum. Disney is firing on all cylinders with ABC producing top rated shows, and attendance rising at its theme parks. Our near-term concern remains possible dilution caused by an all stock deal. With all that we know at this point, we remain committed to the stock as a suggest holding in our Active Portfolio.

--Kimberly DuBord, Briefing.com

10:44 am Energizer Holdings (ENR)

54.19 +4.76: Energizer Holdings on Monday reported mixed results for its fiscal first quarter as higher raw material costs and unfavorable pricing offset modest top-line growth. For the quarter ended December 31, 2005, the St. Louis-based company said it earned $120.5 million, or $1.77 per share, compared with $120.4 million, or $1.60 per share, a year earlier. Excluding a $3.1 million, or $0.05 per share, charge for the restructuring of the company's European supply chain, earnings were $1.82 per share. The results, however, were helped by a lower amount of shares outstanding versus the year ago period.

Revenue for the period increased $6.5 million, or 0.07%, to $882.4 million. At the same time, gross profit declined $6.8 million as unfavorable pricing and higher product costs outweighed an increase in sales volume. Analysts, on average, were expecting the company to post earnings of $1.45 per share on sales of $891.93 million, according to Reuters Estimates.

Higher sales in both the North America and International Battery segments were partially offset by lower sales in the Razors and Blades segment. North America battery sales rose 2% to $395.8 million, while international sales increased 4% to $270.5 million, despite unfavorable currency impacts and unfavorable pricing. In the Razor and Blades segment, sales fell 5% to $216.1 million compared to the same quarter last year, with currencies accounting for approximately $7.3 million of the decline. On a constant currency basis, though, sales were down 2% year/year as sales for the Quattro franchise increased 30%. However, declines in older technology products more than offset the increases.

The company said it expects to see benefits from its battery price increase, but higher material costs and the shift to larger package sizes are likely to offset at least a portion of any favorable pricing in the near term. Like other consumer products companies, Energizer has been under increased pressure to manage rising material costs in an extremely price sensitive environment. Although recent cost savings have supported results, margins could come under added pressure as slowing profitability in the battery segment, which accounts for about 70% of sales, outpaces improvements in the Schick business.

--Richard Jahnke, Briefing.com

10:37 am Ford (F)

37.24 +6.19: On August 4, 2003, The Sports Authority and Gart Sports Company, the largest and second largest U.S. sporting goods retailers, respectively, completed a merger that created the nation's largest full-line sporting goods chain. Today, the 19-year old company now operating 398 stores nationwide, which was initially acquired by Kmart (now Sears Holdings Corp) in 1990 (only nine stores in six states) and then spun-off in 1995 (136 stores in 26 states), agreed to go private in a buyout for $37.25 per share. The cash and debt deal worth about $1.3 bln, tabled by private equity firm Leonard Green & Partners LP and certain members of Sports Authority's senior management, represents a 20% premium to TSA's Friday's closing stock price of $31.05.

While the board of directors has unanimously approved a privatization, which would give TSA greater flexibility to accomplish its long-term goals, a deal expected to close in this year's second quarter is still subject to shareholder approval as well as other customary closing conditions. According to special committee chairperson Gordon Barker, "This transaction, which will provide Sports Authority's shareholders with an immediate and substantial cash premium for their investment in the Company, reflects the success of the merger and integration of the Company's predecessors Gart Sports and The Sports Authority." In accordance with the merger agreement, TSA will also be conducting a market test over the next 20 days to make sure the proposed deal is the best available for shareholders.

Acting as financial adviser for Sports Authority in connection with the merger transaction is Merrill Lynch (MER), underscoring our partiality to the investment bank & brokerage group as the most compelling investment opportunity within the Financial sector. With the volume of M&A activity surpassing the $1.0 trillion barrier in 2005 for the first time since 2000, strong balance sheets, CEO confidence, and the desire to increase efficiency and economies of scale through acquisition efforts, we expect 2006 to be another strong year of consolidation activity that is spearheaded by public and private entities alike.

--Brian Duhn, Briefing.com

10:00 am Nike (NKE)

83.41 -0.79: Taking the market by surprise Monday morning, Nike announced the resignation of chief executive officer, William Perez, after less than a year on the job. Due to "differences" with founder and chairman Phil Knight, Perez said Nike would be best suited if he resigned. The move comes only weeks after Nike said global orders of shoes and clothing for delivery between December and April rose at the slowest pace in two years due to weaker demand in Western Europe and Asia.

Perez, who took over for Nike's founder Phil Knight as CEO in December 2004, was initially selected over longtime co-presidents, Mike Parker and Charlie Denson, due to his experience at SC Johnson for building global brands and businesses. Parker, which developed the Nike Air shoe, will now take over as CEO, effectively immediately. Denson will take over sole responsibility of the brand.

Nike citied "differences" between Knight and Perez as the reasons behind the split. The baton exchange comes only weeks before the Olympics begin in Turin, Italy - a sporting event that provides an international showcase for Nike's products. In June, soccer fans will tune in worldwide to watch the World Cup with the opening game held on Adidas' turf in Munich, Germany. With Nike and Adidas holding roughly one-third share each of the European football market, both companies will face off head-to-head in competition for consumers' dollars this summer. Adidas is not only the official sponsor, but also clothes some of soccer's biggest stars, including England's David Beckham.

Nike's shares rose to a high of $91.54 in December, but have subsequently fallen off after the disappointing future orders results. As we have stated previosuly, we think Nike will remain on the winning team due to its market-leading innovation, multi-dimensional offering in both performance and lifestyle products, unequalled marketing prowess, and operational efficiencies all driving returns, but that we would prefer to wait for a pull back. Early indications show the stock trading down on the news. While the change will cause some management distraction, Parker, a long-time insider, appears better suited for the job.

--Kimberly DuBord, Briefing.com

09:12 am Albertson's (ABS)

24.11: A group of investors, including Supervalu Inc. (SVU) and CVS Corp. (CVS), on Monday agreed to purchase food and drugstore operator Albertson's for a total value of approximately $17.4 billion in cash, stock, and assumed debt, including the settlement of the Albertson's Hybrid Income Term Security units. Under the terms of the agreement, Albertsons' shareholders will receive $26.29 per share, representing a 9% premium over the company's closing price of $24.11 on Friday. That includes $20.35 in cash and a fixed exchange ratio of 0.182 shares of Supervalu stock for each share of Albertson's.

The deal comes about a month after negotiations between the companies were terminated on antitrust concerns, as well as a request by Albertson's for Supervalu's board to provide more stringent guarantees to ensure the closing of the deal. Albertson's, the nation's second largest traditional grocery store, owns and operates the Jewel, Acme, and Shaw's grocery stores and Sav-on Drugs and Osco Drug stores.

Under the renewed deal, Minneapolis-based Supervalu will acquire approximately 1,124 operating stores for about $6.3 billion in cash and stock and the assumption of $6.1 billion in Albertson's debt. The transaction makes Supervalu the second largest supermarket chain in the U.S. behind Kroger Co. (KR). CVS will pay about $2.9 billion for 700 stand-alone Sav-on and Osco Drug stores, as well as Albertson's ownership interests in the drug store real estate. Meanwhile, the remainder of the consortium, led by Cerberus Capital Management, will acquire 655 operating stores and 100% of the distribution centers and offices in Albertson's Dallas/Fort Worth division, and in the Florida, Northern California, Rocky Mountain, and Southwestern regions.

Given the increased competition and price pressures brought on by Wal-Mart (WMT), consolidation in the industry has been viewed as a necessity for the industry, as it would allow companies to better leverage overhead expenses and increase operational profitability in the near term. However, in the long run Wal-Mart's low price model will continue to put pressure on companies in this space. Briefing.com currently has a Market Weight rating on the Consumer Staples sector.

--Richard Jahnke, Briefing.com

09:04 am Ford (F)

7.90: In case reports of a comprehensive restructuring initiative weren't enough to ease shareholder anxiety over the weekend, Ford Motor Company has stunned Wall Street this morning after handily beating forecasts. Still facing a worrisome financial crisis in North America, margin compression tied to rising healthcare costs, market share erosion and bankruptcy uncertainty, analysts expected the nation's No. 2 auto maker to post just a penny of profit in the fourth quarter. However, after excluding multiple "special items" related to a $1.4 bln gain from the Hertz sale, a $1.3 bln impairment charge and personnel reduction charges, Q4 (Dec) earnings of $0.26 per share checked in $0.25 better than the Reuters Estimates consensus.

As expected, Ford's North America automotive operations continued to suffer, but a pre-tax loss of $143 mln was substantially reduced from the $470 mln lost in Q404. The company's Premier Automotive Group also continued to incur losses but reported a "pre-tax" profit of $46 mln, compared to a pre-tax loss of $255 mln in the year-ago period, due to the impact of new Land Rover products. Profitability in South America, Europe and Asia Pacific also helped Ford improve its overall bottom line.

Total automotive sales rose 7.6% year/year to $41.82 bln, better than the $37.68 bln consensus, as worldwide automotive revenue for 2005 rose 5.0% to $154.5 bln. According to Ford Chairman and Chief Executive Officer Bill Ford, "We accomplished many things in 2005, including the successful launch of the new Ford Fusion, Mercury Milan and Lincoln Zephyr, introduction of the company's new innovation initiative, completion of the sale of Hertz, and an agreement with the UAW to help reduce rising health care costs."

While Ford did not provide a financial outlook for 2006, executives are expected to present details at 10:30 ET of its "Way Forward" restructuring plan that will reportedly trim up to 30,000 jobs and eliminate at least 25% of its annual car- and truck-making capacity by closing 10 plants, as management keeps working to improve its business in each and every region.

Following declines of 47% and 8% in 2005 and 2004, respectively, Ford shares closed Friday up 2% for the year and are already up more than 5% in pre-market trading.

--Brian Duhn, Briefing.com

08:57 am Bank of America (BAC)

44.19: On the heels of a disappointing result from Citigroup, Bank of America's earnings came in even lower, as a surge of bankruptcy filings and rising interest rates weighed heavily in the fourth quarter. A new bankruptcy law that went into effect October 17th resulted in a windfall of credit losses to the tune of $524 mln - exceeding the company's own forecasts. Changes in practices for overdraft charge-offs and over limit credit card fees cut pre-tax profits by $320 mln. Net income fell to $3.77 bln, down from $3.85 bln in the prior year.

On a per share basis, earnings came in a full eight cents below what the market had been expecting. Revenues rose an anemic 3.2% $14.37 bln, versus the consensus estimate of $14.59. The disappointment was compounded further by a weak trading quarter. The bright spot in the quarter was commercial loan growth of 10% with average total loans rising 13% to $537 bln. There were over half a million Americans that filed for bankruptcy protection in the week before the law went into effect, which makes it more difficult to wipe off debts, compared to less than 30,000 in prior year, according to Lundquist Consulting. Bank of America's charge-offs in Q4 (basically bad loans) grew to $1.65 bln - up 43% quarter/quarter and 95% year/year!

Not only was BAC facing the bankruptcy issue, but the variance between long-term and short-term rates has narrowed considerably over the last year compressing margins. Rising interest rates are narrowing the spread between what banks pay on deposits and charge for loans, known as net interest margins. Bank of America's net interest margin contracted even further than most we've seen this quarter to 2.82% from 3.18% a year earlier. BAC, which paid $34.2 bln to acquire MBNA, will be able to offset some of the narrowing spread by charging higher interest rates for credit cards.

The market had been anticipating a challenging quarter for the consumer-weighted banks on the bank of the record level of bankruptcy filings. While today's results were less than ideal, the effects from the bankruptcy law change were one-time in nature. Actually, the legislative changes make it more difficult to file bankruptcy in the future, which will only help BAC going forward.

BAC shares already took a considerable hit on Friday following Citi's report. We would suggest investors take advantage of any further downside pressure today on the back of today's miss, as the stock remains a solid investment considering its growth prospects underpinned by recent acquisitions, an attractive dividend yield of 4.5%, and valuation. The stock is trading at 10.0x earnings - a 26% discount to the sector average.

--Kimberly DuBord, Briefing.com

10:28 am KB Home: JMP Securities downgrades Strong Buy to Mkt Outperform. Target $102 to $102. Given the sales trends seen by builders that have pre-announced orders for the December quarter, firm believes it is prudent at this time to adjust their estimates for KBH assuming the co will also see some of this slowdown in its orders in coming quarters. Similar to all builders, they also assume the co may face some margin pressure in 2H06 as pricing power decelerates and the use of incentives picks up. Firm cuts their FY06 & FY07 EPS ests.

10:28 am Altiris: Needham & Co upgrades Hold to Buy. Target $23. Upgrade is based on firm's view that 2006 should be a better year for margins and earnings growth after a transitional 2005. Firm believes the co's Q4 report will reflect continued fundamental improvement and stability in its relationship with HPQ. Looking forward, the firm believes continued OEM channel stability and incremental opportunities with its new virtualization product could drive better growth and margin expansion in 2006. Firm establishes a $23 target based on a 23x multiple.

10:26 am Pulte Homes: JMP Securities downgrades Strong Buy to Mkt Outperform. Firm believes that entering the 4Q05 earnings season, the housing market is weakening further. Given the more uncertain environment of the last few months, they are not expecting builders to raise guidance for 2006.

10:25 am DCP Midstream: KeyBanc Capital Mkts / McDonald initiates Buy. Target $30. Firm notes that the partnership is sponsored by DUK, (a 50/50 joint venture between DUK and COP) and is primarily engaged in the gathering, processing and transportation of natural gas. They est 2006 earnings at approx $1.01/unit and forecast a forward distribution rate in excess of $1.50/unit. Their price tgt and forward distribution assumption imply a yield to investors of approximately 5.50%.

10:24 am Google: Stanford Research upgrades Hold to Buy. Firm is noting that after last Friday's sell-off GOOG now trades in-line with YHOO. Firm believes that given GOOG's superior growth and sustained operational improvements, it should trade at a premium.

10:23 am Isle of Capri: Brean Murray reiterates Sell . Target $23 to $23. Firm believes the co's announced $85 mln upgrade in Kansas City lacks a visible return and underscores their view that many of its properties suffer to a greater extent than other operators when a market becomes more competitive, resulting in greater capital spending and lower returns than other operators we follow. They continue to recommend that investors own PENN or ASCA rather than ISLE.

10:04 am AC Moore: Dougherty & Company upgrades Neutral to Buy. Upgrade follows co's updated guidance, as they believe the perceived earnings potential at the co will provide support to the stock near current levels.

10:03 am Pacific Energy: Credit Suisse initiates Outperform. Target $36. The firm says that the co leveraged to the attractive crude oil mkt in California, offering both pipeline and storage capacity. The firm also says that the co offers a strong presence in the Rocky Mountains, with the ability to move crude from Canada through all the major refineries in the region.

10:00 am Exelon: Prudential reiterates Neutral. Target $54 to $54. Firm believes that with favorable recommendations from F.E.R.C., I.C.C. Staff and A.L.J., approval of the procurement auction appears likely. They say interveners appear desperate by requesting the I.C.C. to postpone its decision and FERC to reconsider its auction endorsement.

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From Briefing.com: 4:40PM Zarlink Semi beats by $0.02 (ZL) 2.14 -0.02 : Co reports Q3 EPS of $0.01 vs ($0.01) Reuters consensus; revs of $37.4 mln vs $36.71 mln Reuters consensus. Co sees Q4 EPS guidance of $0.00 - 0.01 vs $0.00 consensus.

4:31PM Amkor reports filing of purported class action lawsuit (AMKR) 5.26 +0.15 : Co announces that a purported securities class action lawsuit was filed on Jan 23, 2006 in the United States District Court for the Eastern District of Pennsylvania against Amkor and certain of its current and former officers. The plaintiff claims to represent purchasers of Amkor securities during the period from Oct 27, 2003 through July 1, 2004. The complaint alleges that defendants made materially false statements regarding the co's financial condition and seeks unspecified damages. The co believes the claims are without merit and will defend against them vigorously.

4:08PM UTStarcom signs expansion contract to supply NetRing Optical Transport solution to Chunghwa Telecom in Taiwan (UTSI) 7.02 : Co today announced an agreement to supply its NetRing 10000 multiservice optical transport products to Chunghwa Telecom Co., Ltd., a leading telecom service provider in Taiwan. Chunghwa Telecom intends to utilize UTStarcom's NetRing solution to deliver high-density, high-speed broadband services, including voice, data, and video, to subscribers throughout Taiwan in support of its MultiMedia on Demand service. "This announcement represents an expansion on a contract the two companies announced in May 2004, bringing the total dollar amount in contracts with Chunghwa Telecom to approximately $40 million in just over one year," said Joe Ye, general manager of UTStarcom Taiwan.

4:07PM UTStarcom to supply NetRing Multiservice Optical Transport solutions to RailTel in India (UTSI) 7.02 -0.26 : Co announces that it will supply its industry-leading NetRing 600 and 2500 optical transport solutions to RailTel of India Corporation, a wholly owned subsidiary of the Indian Railways. RailTel oversees a nationwide Indian railway network of more than 10,000 kilometers of track and approximately 11,000 trains per day.

4:05PM Corning reports Q4 in line, issues in-line Q1 guidance (GLW) 24.25 : Reports Q4 (Dec) earnings of $0.22 per share, in line with the Reuters Estimates consensus of $0.22; revenues rose 16.2% year/year to $1.2 bln vs the $1.21 bln consensus. Co issues in-line guidance for Q1, sees EPS of 0.21-0.23 vs. $0.22 consensus; sees Q1 revs of $1.20-$1.25 bln vs. $1.23 bln consensus.

4:20 pm : Follow-through bargain hunting after Friday's excessive decline, exacerbated late in the day by further deterioration in crude futures, helped investors grapple with a mixed batch of earnings reports. Eight out of ten economic sectors closed higher as above-average volume provided some reassurance behind the session's broad-based moved to the upside.

Of the five Dow components that posted quarterly results today, DuPont (DD 39.26 -0.29) was the only one to report better than expected earnings. However, copper prices hitting record highs helped Phelps Dodge (PD 148.91 +5.56) -- a suggested holding in Briefing.com's portfolio for active investors -- lead Materials to the session's best performance, offsetting DuPont's ensuing downside FY06 guidance.

McDonald's (MCD 35.85 +0.14), another suggested holding, merely matched analysts' forecasts, but investors took into account that MCD raised guidance a week ago, sending shares to an intraday 52-week high and helping Consumer Discretionary turn in the day's second best performance. Strength in retail, after Target (TGT 54.25 +1.50) implied Jan. comps will hit the high end of guidance, as well as media, amid reports that Disney (DIS 25.99 +0.47), another holding, is very close to a deal to buy Pixar (PIXR 57.57 -0.70), provided additional sources of sector support.

Industrials were also in focus following in-line reports from 3M Co. (MMM 74.20 -1.50) and United Technologies (UTX 56.45 +1.98), but 3M's uninspiring outlook was no match for an revenue growth across all of UTX's divisions. Strength in railroads, following strong Q4 earnings from Burlington Northern Santa Fe (BNI 74.80 +3.17), a suggested holding, and aerospace, following Northrop Grumman's (NOC 62.08 +1.32) solid Q4 report.

Financial also provided some upside leadership, following upbeat analyst remarks regarding American Express' (AXP 52.82 +1.38) Q4 report (yesterday) while Consumer Staples benefited from analyst upgrades on Wal-Mart (WMT 45.72 +0.47) and Coca-Cola (KO 40.90 +0.40). Even though Texas Instruments (TXN 30.69 -1.01) missed overly optimistic revenue forecasts, strength in semiconductor coupled with gains in storage and hardware, following strong Q4 earnings from EMC Corp (EMC 13.65 +0.39) and Lexmark (LXK 51.08 +5.18), respectively, helped Technology close higher.

Health Care, however, nearly erased what little gains the sector has made in 2006, as Johnson & Johnson (JNJ 59.36 -1.83) hit a 52-week low following lighter than expected Q4 sales and downside Q1 guidance. Energy also lost ground, failing to recover from a late-day sell-off in crude oil (-1.5%) which removed leadership from this year's best performing sector but in turn sidelined a key inflation concern for 2006, given the commodity's effect on the duration of Fed policy tightening. BTK +0.4% DJ30 +23.45 DJTA +2.4% DJUA +0.8% DOT -0.1% NASDAQ +16.78 NQ100 +0.6% R2K +1.4% SOX +1.0% SP400 +0.9% SP500 +3.04 XOI -0.2% NASDAQ Dec/Adv/Vol 1017/2003/2.12 bln NYSE Dec/Adv/Vol 1095/2204/1.86 bln

10:05AM Interphase SlotOptimizer selected by Fujitsu for PRIMEPOWER servers (INPH) 5.20 +0.54 : Co announces that Fujitsu Limited has selected the new Interphase SlotOptimizer 554GB PCI/PCI-X Quad-Port Gigabit Ethernet Adapter for its PRIMEPOWER family of Solaris O.S. and S.P.A.R.C-based servers. The combination of PRIMEPOWER and the Interphase SlotOptimizer Quad-Port Gigabit Ethernet cards matches the performance and high availability requirements of a wide range of applications, from the enterprise to the workgroup.

10:01AM Dell announces next-generation notebooks can be customized to connect with Vodafone in select European countries (DELL) 30.53 +0.31 : Co announces it will bring Vodafone's third generation wireless broadband technology to DELL's notebook customers in the UK, France and Germany. With its build-to-order capability, DELL aims to expand customers' wireless connectivity options by delivering built-in access to Vodafone's high-speed wireless data network in these countries. This new service will mean users will have readily available access to email, Internet and servers through the Vodafone mobile broadband data network.

3:11 pm Brinker Intl. (EAT)

39.80 +1.22: Checking in a penny ahead of analysts' expectations, Brinker International delivered $0.56 in profit per share for its fiscal second quarter. The figure, which excludes a dime in stock-based compensation expenses and a penny in one-time restructuring charges, reflects 21% year-over-year EPS growth.

In-line with projections and primarily driven by a 2.2% increase in total same-restaurant sales, Brinker's total revenue rose approximately 11% during the quarter. On a relative basis, the restaurant operator's Chilli's and Maggiano's concepts performed best. Versus the year-ago period, Macaroni Grill demonstrated the most improvement. At 71.5%, the company's gross margin held steady over the year-ago period. Its operating margin, meanwhile, expanded 86 basis points to 6.52%.

Assuming comparative restaurant sales growth of 3-4%, Brinker foresees a profit of $0.63-0.65 per share in its fiscal third quarter. That range excludes six cents in stock-based compensation expenses. According to Reuters Estimates, Wall Street's current Q3 earnings expectation is pegged a penny below the low end of Brinker's forecast. Bracketing the consensus estimate of $2.39, the company estimates EPS of $2.36-2.41 for the full-year (June). That projection similarly excludes the effect of stock-based compensation charges, which, if included, would be dilutive by about $0.27-0.29. Brinker's guidance translates to year-over-year EPS growth of approximately 8.5% for Q3 and 10% for FY06.

At 16.9x estimated full-year earnings, EAT shares trade at a discount to the peer group average multiple of 19.1x. At the same time, McDonald's (MCD) shares are priced at a similar discount. Within the restaurant space, Briefing.com continues to favor McDonald's, as we believe it possesses the characteristics that will enable it to exhibit relative strength against a backdrop of decelerating consumer spending. MCD similarly delivered solid earnings results today, and has been a member of our recommended portfolio for active investors since December 2005.

--Lisa Beilfuss, Briefing.com

2:43 pm Kimberly-Clark (KMB)

58.82 -0.89: The parent of Kleenex, Huggies, and Scott, to name a few brands, delivered fourth quarter EPS of $0.95. Kimberly-Clark's result, which excludes $0.16 in charges related to competitive improvement initiatives, the repatriation of overseas earnings, and an accounting change, matched analysts' forecast. On a year-over-year basis, earnings rose about 3%. Including the aforementioned items, diluted net income declined 14% versus last year.

Net sales rose 2.8% to $4.01 bln. The company's personal care and consumer tissue segments, each of which account for about 40% of sales, are Kimberly-Clark's core businesses. With respect to the former, a modest increase in net selling prices across most regions caused a 2.4% rise. However, in North America, sales across the division were essentially flat, as some of the price increases, which were implemented during Q3, were reversed in response to a competitor's move. In addition, the decline in sales of Kotex feminine care products worked to offset volume gains in other brands. Sales across the consumer tissue segment rose 4.8%, with higher volume driving a 10% increase in the North American region.

European markets continue to pose a particular challenge for the company. Before the effect of currency, European personal care sales slid 10%, while consumer tissue sales declined 1%. The company noted that pricing did not improve in Europe, and that it continues to respond to competitive activity.

Discussing the "tough environment" it faces, management indicated the the company absorbed cost inflation of about $400 million over the course of 2005, more than double the level that had been expected.

For the current quarter, Kimberly-Clark expects to report a profit of $0.90-0.93 per share, the high end of which falls two cents short of Wall Street's average estimate. The company's 2006 outlook calls for EPS of $3.85-3.95 (consensus $3.96), on 3-5% volume-driven revenue growth. Separately, the company expects a dividend increase in the high single, low-double digit percentage range that will be effective in April. Its share buyback efforts continued during Q4, bringing the total amount repurchased in FY05 to 24.3 million shares at a cost of $1.5 billion. The company plans to repurchase $750 million more in 2006.

KMB shares currently trade at 15.5x trailing twelve month earnings - a slight discount to their 17.7x five-year average.

--Lisa Beilfuss, Briefing.com

1:35 pm McDonald's (MCD)

35.90 +0.19: Managing Wall Street's expectations isn't an easy thing to do, but few companies do it as well as McDonald's. That wasn't always the case, but under the stewardship of former CEO Jim Cantalupo, now deceased, McDonald's effectively re-set the market's growth expectations for the company. If you think that isn't important, consider that shares of MCD, a suggested holding in Briefing.com's Active Portfolio, have tripled since hitting a low of $12.12 on March 12, 2003.

An improved operating performance has been the catalyst for McDonald's, which now seems to be making a habit of exceeding expectations. The fourth quarter was no exception. Granted it will be reported today that the company's profit of $0.48 per share was in line with the consensus EPS estimate, but bear in mind that McDonald's raised that guidance on January 17. We took the occasion then to reiterate our positive view of the stock, and with the actual result out today, we see no reason to alter the opinion.

For the full year, McDonald's net income increased 14% to $2.04 per share while total revenues increased 7.0% to $20.46 billion. Global comparable sales, meanwhile, rose 3.9% with the company's U.S. business setting the pace. Importantly, though, its European operations continue to show progress, having registered a 2.6% increase in comparable sales on top of a 2.4% increase in the prior year.

Management reiterated its long-term growth targets that include an expectation for systemwide sales and revenue growth of 3-5%, annual operating income growth of 6-7%, and annual returns on incremental invested capital in the high teens. Reflecting its solid performance and focus on bolstering shareholder returns, McDonald's added that it plans to repurchase $1.0 billion worth of stock in the first quarter. Some activist shareholders, like William Ackman of Pershing Capital, think McDonald's can do even more to unlock value. That may be true, but overall, it is fair to say that investors have been able to feast on McDonald's solid operating performance for the last three years.

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

12:56 pm Lucent (LU)

2.49 -0.01: Early Tuesday, Lucent Technologies reported a quarterly loss due to declining sales and the effect of a large litigation charge. For the first quarter, the communications equipment maker posted a net loss of $104 million, or ($0.02) per share, compared with a year ago profit of $174 million, or $0.04 per share. However, backing out charges for a bankruptcy court judgment related to litigation with Winstar Communications, the company earned $0.06 per share - four cents better than the Reuters Estimates consensus of $0.02.

On the top line, revenues fell 12% from the year ago period to $2.05 billion, due primarily to lower sales in the U.S. and China. On a year/year basis, networking revenue decreased 15.7%, while worldwide services fell 1.5%. Despite the decline in revenue, the company maintained reasonable gross margin performance. Specifically, gross margin for the quarter was 42%, as compared to 42% a year earlier and 46% in the previous period. Operating expenses, meanwhile, increased to $940 million, up from $665 million last year and $810 million in the fourth quarter.

As previously announced, Murray Hill, New Jersey-based Lucent anticipates annual revenues will be essentially flat or increase in the low single-digits for 2006, down from its previous forecast of an increase in the mid-single digits. The company did note, though, that it expects revenue performance to improve in the second half of the year as its continues to strengthen its position in next-generation networks.

While Lucent's optimistic revenue outlook represents a potential catalyst for shares, the company's ongoing struggles to generate strong top line growth and improve operations continue to cloud prospects. Though it remains focused on improving productivity and building new market opportunities, namely in its mobility segment, its efforts have not translated into meaningful results. At the current price level, Lucent shares, which have been dead money for some time, are trading at 16.6x forward earnings, compared with 18.3x for rival Cisco Systems (CSCO).

--Richard Jahnke, Briefing.com

11:36 am United Technologies (UTX)

55.75 +1.28: United Technologies, headquartered in Hartford, Connecticut, on Tuesday reported higher fourth quarter earnings that matched Wall Street's estimates, as sales increased across all business segments. The Dow component, which manufactures Otis elevators, Pratt & Whitney aircraft engines, and Carrier air conditioners, said it earned $721 million, or $0.71 per share, excluding the effect of an accounting change. That represented an 18% and 16% year/year increase, respectively.

Revenue for the period grew 14.5% to $11.3 billion, reflecting 9% organic growth and contributions from recent acquisitions, namely Kiddle and Rocketdyne. The results topped analysts' expectations for revenue of $11.17 billion. By segment, sales increased 55.6% in Fire & Security, 32.6% in Sikorsky, 20% in Pratt & Whitney, 12.8% in Carrier, 6.5% in Hamilton Sundstrand, and 2.6% in Otis.

During the latest quarter, the company repurchased $421 million of its common stock, bringing its fiscal year total to $1.18 billion. As it remains focused on enhancing shareholder value, the company expects to continue the current share repurchase rate into the current year taking the total to about $1.5 billion.

On the back of the strong quarterly results, UTX maintained its fiscal 2006 earnings guidance of $3.20 to $3.55 per share. According to Reuters Estimates, analysts are currently forecasting earnings of $3.52 per share. With an exceptional year behind it, the company has a lot of momentum heading into the current year. As such, investors should continue to look for solid performance as business conditions remain favorable.

--Richard Jahnke, Briefing.com

10:44 am DuPont (DD)

38.96 -0.59: Lower fourth quarter profits, coupled with warnings for the first quarter, have sent the Dow Industrial lower in early trading. DuPont closed out 2005 with net income of $153 mln, or $0.16 per share, compared to $0.28 per share earned in the prior year. Per share figures actually topped consensus estimates by three cents, but what the market couldn't get passed was the downside guidance for Q1 and FY06 that indicates anemic growth, once again, for DuPont.

The Gulf hurricanes had a greater than expected impact, disrupting operations and ramping commodity costs. Worldwide volumes declined 4%. Excluding the effects from the hurricanes, volumes were flat. It's unclear at this point whether price increases DuPont is putting through to offset commodity prices is having an effect on volumes. DuPont would argue they are not.

For the first quarter, DuPont guided earnings to $0.70 per share, well south of the consensus estimate of a dollar. The company cited agricultural segment sales declines due to lower volumes in crop pesticides, competitive pressures, and seasonal declines. Performance Materials & Coatings will continue to be impacted by the effects of the Hurricanes, with its DeLisle titanium dioxide plant, damaged by Hurricane Rita, not expected to resume full operations unit April 2006.

DD completed the first round of share repurchases, reducing its shares outstanding by 8% - assisting per share results this quarter. DuPont's investors have been patient with its stock price languishing for a year. At this point, there are few catalysts for shares with the exception of lower natural gas prices - a key feedstock for DD. The second half of the year may be brighter, but at this point it's just too early to tell. For the full year, DD sees EPS of $2.60, well below consensus of $2.83. Management indicated its guidance was based on expectations of higher cost inventories coming through and less favorable currency, despite earnings accretion achieved through continued buybacks. The stock trades at 13.7x.

--Kimberly DuBord, Briefing.com

10:30 am Johnson & Johnson (JNJ)

59.70 -1.49: In the midst of a fight with Boston Scientific (BSX) over medical device maker Guidant Corp. (GDT), Johnson & Johnson posted higher fourth quarter profits as strong demand in its Medical Devices and Diagnostics business offset slowing growth in Pharmaceutical sales. Excluding special items, the diversified health care company earned $2.2 billion, or $0.73 per share, compared with $2.0 billion, or $0.67 per share, in the fourth quarter last year - in line with Wall Street's estimate.

On the top line, sales were crimped by increased generic competition for its prescription drugs, as well as safety concerns over its anemia treatment Procrit and heart failure drug Natrecor. Worldwide sales for the fourth quarter fell 1.1% from the year ago period, despite a 3.7% increase in medical device sales to $4.67 billion. Domestic sales declined 4.2%, while international sales increased 3.1%, reflecting operational growth of 7.5% and a negative currency impact of 4.4%.

In the Medical Devices and Diagnostics segment, sales growth was led by strong demand for Cordis' circulatory disease management products and Cypher's drug-eluting stents. Growth in DePuy's orthopedic joint reconstruction and spinal products also contributed to the strong performance of the segment. Conversely, worldwide pharmaceutical sales of $5.84 billion reflected a decline of 6.1% year/year. Although international sales increased 2.6% during the quarter, domestic sales fell about 10.2% as results for several key drugs were negatively impacted by generic competition. Strong demand for such notable drugs as Risperdal and Topamax helped to ease the financial pain, but JNJ continues to be pressured by a host of patent expirations. Sales of skin care products, which include Neutrogena, Aveeno, and Clean & clear, as well as nutritional supplements, drove a 2% increase in Consumer product sales.

IJNJ expects first quarter earnings of $1.00 to $1.02 per share on sales growth of 3% to 4%. Analysts, according to Reuters Estimates, had projected EPS of $1.04. For the full year, the company said it is comfortable with the consensus EPS estimate of $3.79 and targeted earnings toward the bottom of its $3.78 to $3.85 range. Sales growth for the year is expected to be between 6% to 8%.

JNJ continues to face a number of forthcoming patent expirations and the increasing threat of generic competition. Furthermore, the ongoing bidding war to acquire Guidant Corp. has clouded near-term prospects, as prices have reached extraordinary levels, despite the safety and legal concerns surrounding Guidant's products.

--Richard Jahnke, Briefing.com

10:18 am Coach (COH)

34.15 +2.08: For its second fiscal quarter, luxury retailer Coach delivered a profit of $0.45 per share. The result, which excludes two cents per share in stock options expenses, matched analysts' estimate and reflects 37.0% year-over-year EPS growth. In its four and a half year history, Coach has not failed yet to either meet or exceed the consensus estimate.

Chief Executive Lew Franfort noted that last quarter's performance continues to reflect the franchise's strength, the vibrancy of the U.S. handbag and accessory market, as well as Coach's position as a gift authority. Versus the year-ago period, the company's top line grew 22% to $650 million. On a comparable store basis, sales rose 20% in the U.S. Management pointed out that Q2 marked the fifteenth consecutive quarter of double-digit comparable store growth in the U.S. In its Coach Japan segment, comparable store sales also jumped 20% in constant currency. Indirect sales, which now exclude the Japan division, increased 26% over the quarter. The company credited handbags and women's accessories for driving its solid results, with specialty collections generating over 60% of its holiday sales.

Aided by sourcing cost benefits and product mix shifts, its gross margin rose 182 basis points to 77.6% over the second quarter. Due to a contraction of selling, general, and administrative expenses as a percentage of sales, Coach's operating margin expanded 235 basis points to 42.1%.

For the second half of the year, the retailer projects earnings growth (before options expenses) of at least 25% - or EPS of at least $0.60. Sales for the back half of the year are estimated to check in around $1 billion. Coach forecasts FY06 (June) profit growth of at least 33% on revenue growth of at least 23%; those rates translate to approximately $1.33 and $2.1 billion, respectively. According to Reuters Estimates, analysts expect the company to book $1.28 in EPS and $2.1 billion in revenues for the full year.

As we noted following its fiscal first quarter report, Coach continues to post results that are characteristic of a growth company and shows no signs of being hurt by a slowdown in consumer spending. Although we maintain an underweight rating on the Discretionary sector, we continue to view Coach as a bright spot that enjoys a more resilient core customer. At 28.7x trailing twelve month earnings, COH shares currently trade at a sharp discount to their five-year historical average of 35.0x, and remain reasonably priced for the growth-oriented investor.

--Lisa Beilfuss, Briefing.com

09:43 am Burlington Northern Santa Fe (BNI)

71.63: The second largest US railroad rolled over estimates with fourth quarter profits rising 24% due to increased freight shipments. Net income grew to $430 mln, or $1.13 per share - an all time quarterly record - compared to $347 mln, or $0.91 per share last year. Shares are rising in the pre-market as comparable earnings came in a dime above consensus. Revenues grew 19.2% year/year to $3.55 bln, as freight revenues soared 18%. BNI put through more than 10% in price increases throughout the year as shipment demand outpaced supply.

The rails have been on a roll as the economy continues to do well. For the first time in years, the rails are garnering pricing power, which is flowing through to higher profits. Just last week, Union Pacific's (UNP) profits nearly tripled, sending shares to a new multi-year high. For the first time, BNI moved more than 10 mln units in 2005, achieving record results by all measures. Fourth quarter freight revenues were comprised of 3% in terms of volumes, 6% pricing, and 9% in fuel surcharges. Return on invested capital has improved considerably, rising to 10.1% from 7.9% last year.

BNSF sees first quarter earnings of $1.00 per share versus consensus of $0.95, indicating a growth rate of 20% from last year. For the full year, it anticipates revenue growth in the 10-13% range, half of which is coming from volume, with the balance from pricing and fuel charges. It sees earnings growth in the mid-teens, despite energy price headwinds with the strongest areas remaining coal and intermodal. BNI has returned over 40% since last June when we added the stock to our Active Portfolio. Our investment premise continues to play out as expected. We remain onboard with BNI.

--Kimberly DuBord, Briefing.com

09:40 am BJ Services (BJS)

41.75 -1.00: The sixth largest oilfield service company reported that first quarter profits skyrocketed 68%, as record energy prices sparked global demand for services that help maximize well output. Net income climbed to $159.7 mln, or $0.48 per share - two cents above consensus. Increased spending by global oil and gas producers has resulted in a windfall for the oil services companies like BJS, along with Schlumberger (SLB) and Baker Hughes (BHI). Rising activity rates and price increases in the US and Canada resulted in, yet again, another record quarter of revenue and earnings for BJ Services.

First quarter revenues swelled 30% to $956.2 mln. The strength in the top line flowed through to the operating line, as expenses declined as a percentage of sales. Operating margins expanded 360 basis points sequentially to 24%, up from 17% in last year's quarter. BJS issued guidance for FY06 of $2.00-$2.10, versus consensus of $2.02, with revenues growing 20-25% year/year to $3.89-$4.05 bln. CEO Bill Stewart stated that demand for pressure pumping and other oilfield work will remain strong "for the foreseeable future."

The quarter further supports our bullish view on the stock and the entire industry, which underscores our selections of BJS, Transocean (RIG), and Grant Prideco (GRP) for the Active Portfolio. The oilfield services stocks have done exceptionally well, rising over 20% to date. With earnings estimates rising, coupled with attractive valuations, our bullish outlook for BJS remains intact. We continue to suggest investors add to positions on any pullbacks.

--Kimberly DuBord, Briefing.com

09:38 am E*Trade Financial (ET)

22.40 +0.28: E*Trade Financial turned in its second consecutive record quarter, beating Wall Street's forecasts for the ninth time in 10 tries. Excluding a one-time benefit of $0.08 from the sale of E*Trade Consumer Finance and one-time acquisition costs of $0.06, the online broker reported Q4 (Dec) earnings of $0.30 per share; the Reuters Estimates consensus was $0.29.

Total net revenues rose 19% year/year to a record $478.9 mln, slightly below the $483.5 mln consensus, as the average commission on a trade fell to $12.95 from $15.75 last year. Despite continued declines in commissions, a trend throughout the online brokerage space for years, it is worth noting that only 20% of E*Trade's total top line now comes from trading. The bulk of of total revenues in Q4 (over 50%) was derived from net interest income, which surged 19% sequentially and 43% year/year to $242.2 mln, as the opening of new banking products helped attract $1.0 bln of new cash. Average margin balances in Q4 grew 94% sequentially and 113% year/year to $4.4 bln while total client assets rose to $178.5 bln in the period.

Following the earlier than anticipated integration of one-time rivals HarrisDirect and BrownCo., management now expects to add about $0.19 a share to fiscal 2006 earnings versus previously forecasted earnings accretion of $0.15. E*Trade's acquisitive nature plays into our Market Weight rating on the Financial sector, in which we favor investment banks like Goldman Sachs (GS) and Morgan Stanley (MS) that stand to benefit from another strong year of M&A activity.

Even though the economy is expected to slow in 2006, E*Trade also presents a favorable risk-reward proposition as ongoing improvements to its business model should help the company hedge against market uncertainty. The company expects to earn between $1.25 and $1.40 per share for 2006 (consensus $1.35) on revenue between $2.2 bln and $2.4 bln (consensus $2.32 bln).

(Disclosure: Briefing.com has a business relationship with E*Trade)

-- Brian Duhn, Briefing.com

09:14 am 3M (MMM)

75.70: Dow Jones Industrial component 3M Co. on Tuesday reported higher profits for the fourth quarter on strong demand in its industrial and electronics-related businesses. For the latest quarter, net income grew to $796 million, or $1.04 per share, excluding the effect of an accounting change, from last year's profit of $720 million, or $0.91 per share. That matched the consensus EPS estimate, according to Reuters Estimates.

Worldwide sales increased 4.6% to $5.3 billion, led by organic growth of 5.1% and particular strength in the Industrial and Electro and Communications segments. On a constant currency basis, sales increased 7.3%, including 2.1% from the acquisition of Cuno Inc. By segment, local currency sales increased 18.2% in Industrial, 10.9% in Electro and Communications, 10.2% in Display and Graphics, 9.7% in Safety, Security, and Protection Services, 3.3% in Transportation, and 0.5% in Consumer and Office. In contrast, Health Care sales, the company's largest segment, were unchanged from the year ago period.

Despite the headwind of raw material price inflation, operating margin expanded to 22.8% during the quarter, from 21.4% a year earlier. Margin improvement was driven by a 4.3 percentage point increase in Electro and Communications and a 2.4 percentage point increase in Display and Graphics.

The diversified technology company issued in-line guidance for the current quarter and fiscal year 2006. For the first quarter, 3M said it expects earnings in the range of $1.12 to $1.16 per share, excluding stock based compensation expense of $0.02. In addition, the company sees fiscal year earnings of $4.61 to $4.76 per share, excluding stock based compensation expense of $0.16. Analysts, according to Reuters Estimates, had forecast EPS of $1.15 and $4.71, respectively. Catalysts for the company continue to be further retooling its business towards higher growth areas. With shares down nearly 6% year-to-date, investors are looking for 3M to better leverage its strong history of product innovation, global manufacturing capabilities, and diverse portfolio to drive long term organic growth.

--Richard Jahnke, Briefing.com

09:07 am Texas Instruments (TXN)

31.70: Texas Instruments, the world's largest maker of mobile phone chips, reported a 34% rise in fourth quarter profits, but its top line came in shy of analysts' expectations. Net income rose to $655 mln, or $0.43, ex-items, which was a penny ahead of consensus. Revenues grew 14% from last year to $3.59 bln, but that was $50 mln short of what the street was anticipating. Shares traded lower in the after-hours, following comments by TI that revenues in the current quarter may miss estimates.

TI, which dominants the wireless and analog semiconductor market, reported flat sequential sales that were slightly below the mid-point of revised guidance due to assembly and testing constraints. Semiconductor sales rose 3% quarter/quarter, with wireless revenues up 4% and DSP up 2% quarter/quarter. TI demonstrated seasonal strength in the handset market led by WCDMA (2/2.5G baseband), GSM chipsets, and OMAP shipments. Analog sales rose 2% quarter/quarter, while the semiconductor category sales rose 7% quarter/quarter.

With bookings up 2% quarter/quarter and a book to bill of 1.05, management forecasts semiconductor revenues are likely to be down in the first quarter by 1.6% at the mid-point of its guidance range of $3.05-3.30 bln and total revenues to be down 9.5% at the midpoint of its guidance range of $3.11-3.38 billion. Expectations have been running high for TI due to the strength of the handset market. TI, like several other tech names, has fallen short of these heightened expectations, but considering its solid bookings and in-line guidance, TI's prospects remain strong, supported by demand for GSM and DLPs used in high-def TV. TI's largest competitor, Qualcomm (QCOM), trades at a premium at 31.4x versus 18.4x for TI due in part to the outperformance of the 3G market worldwide over GSM.

Separately, TI also announced that its Board of Directors has authorized the company to repurchase an additional $5 billion of common stock.

--Kimberly DuBord, Briefing.com

09:56 am Clear Channel Outdoor: Soleil initiates Buy. Target $23. The firm thinks that the co is benefiting from focus on large markets, which derive a relatively high proportion of rev from national advertising where they expect the transition from TV, radio and print more quickly than local advertising, as well as strong operating leverage from transit and street furniture contracts.

09:55 am SI International: BB&T Capital Mkts downgrades Buy to Hold. Firm says the downgrade reflects the stock's current valuation, coupled with their belief that SINT's recent declines in total and funded backlog will make navigating the choppy waters of a continuing resolution even more difficult. SINT's current P/E of 18.4x their 2006 EPS estimate is slightly below the group average of 18.9x.

09:52 am Target: Lazard Captial upgrades Sell to Hold. Firm ups price target based on valuation and their belief that there is limited downside. While they are impressed with many of Target's recent initiatives (such as Thomas O'Brien home, TruTech, Choxie), they think stock is still vulnerable to a slowing fashion cycle and rising gas prices.

09:51 am PetMed Express: Avondale Partners reiterates Mkt Outperform. Target $15 to $15. Firm believes PETS is now benefiting from word-of-mouth referrals which effectively lowers customer acquisition cost. The firm notes that this new characteristic, the holy grail for etailers, should allow PETS to grow faster on the same level of marketing expenditures.They are raising their tgt to $22 on increased EPS outlook through lower C.A.C. With shares up 18% yesterday investors should use likely profit taking to start or add to their positions.

09:50 am Mine Safety: Morgan Keegan downgrades Mkt Perform to Underperform . The firm believes that shares of MSA are more than fully valued at this time due to unrealistic expectations of benefits for the co primarily from potential mining safety legislation. In addition, they believe 2006 consensus estimates are too aggressive and will come down after the co reports in early March.

09:48 am XM Satellite: Janco Partners initiates Accumulate. Target $36. Firm believes that current levels are an attractive entry point for longer-term investors as they expect that the ramp in factory install programs in 2007/2008 will stem market share declines and could provide upside to subscriber expectations. While their DCF analysis suggests a $45 value, they do not see any near-term catalysts which would cause investors to increase subscriber estimates and or ascribe higher multiples to the stock.

09:47 am Affymetrix: UBS reiterates Neutral. Target $45 to $45. The firm says that AFFX dominates the microarrray arena, but execution problems have undercut investors confidence, calling into question the co's competitive position and the mkt outlook. In the firms view, the microarray opportunity is real, but smaller than some prior ests.

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From Briefing.com: 4:48PM Intersil beats Q4 consensus by $0.02, guides EPS higher for Q1 (ISIL) 26.85 +0.91 : Reports Q4 (Dec) earnings of $0.27 per share, $0.02 better than the Reuters Estimates consensus of $0.25; revenues rose 38.2% year/year to $175.6 mln vs the $169.9 mln consensus. Co issues upside guidance for Q1, sees EPS of $0.26-0.27 vs. $0.22 consensus. Co says it expects Q1 revs to be approximately flat with Q4; Reuters Q1 consensus is $165.21 mln.

4:45PM Virage Logic reports in-line; guides Q2 above consensus (VIRL) 11.25 : Reports Q1 (Dec) net of breakeven, excluding non-recurring items, in line with the Reuters Estimates consensus of ($0.00); revenues fell 13.4% year/year to $13.7 mln vs the $13.7 mln consensus. Co issues upside guidance for Q2, sees EPS of $0.2-0.04, ex-stock based compensation vs. $0.01 consensus.

4:41PM Plexus beats by $0.05, beats on revs; guides Q2 EPS above consensus (PLXS) 23.48 -0.43 : Reports Q1 (Dec) earnings of $0.28 per share, $0.05 better than the Reuters Estimates consensus of $0.23; revenues rose 14.2% year/year to $328.3 mln vs the $321.3 mln consensus. Co issues upside guidance for Q2, sees EPS of $0.31-0.36, ex items, vs. $0.25 consensus; sees Q2 revs of $330-345 mln vs. $335.30 mln consensus.

4:36PM Cirrus Logic beats by a penny, ex items; guides in-line (CRUS) : Reports Q3 (Dec) earnings of $0.09 per share, excluding non-recurring items, $0.01 better than the Reuters Estimates consensus of $0.08; revenues rose 9.7% year/year to $48.3 mln vs the $47.6 mln consensus. Co issues in-line guidance for Q4, sees Q4 revs of $41-45 mln vs. $44.73 mln consensus.

4:35PM Silicon Storage beats by $0.06; guides for Q1 (SSTI) 4.98 +0.10 : Reports Q4 (Dec) earnings of $0.08 per share, $0.06 better than the Reuters Estimates consensus of $0.02; revenues rose 12.8% year/year to $133.2 mln vs the $134.5 mln consensus. Co issues guidance for Q1, sees GAAP EPS of 0.07-0.12, which does not appear to be comparable to the $0.00 consensus; sees Q1 revs of $117-132 vs. $121.69 mln consensus.

4:30PM Analog Devices shareholder rights plan terminated (ADI) 38.93 : Co announced today that, as part of the co's continuing efforts to employ best practices in corporate governance, its Board of Directors has voted to terminate the shareholder rights plan (commonly known as a "poison pill") adopted in 1998 and to redeem all outstanding rights under the plan. The co will buy back the rights at the redemption price of $0.0005 per share payable in cash on March 15, 2006 to the holders of ADI's common stock as of the record date of February 24, 2006.

4:29PM PMC-Sierra reports in-line (PMCS) : Reports Q4 (Dec) earnings of $0.07 per share, excluding non-recurring items, in line with the Reuters Estimates consensus of $0.07; revenues rose 1.8% year/year to $77.6 mln vs the $78.5 mln consensus.

4:20PM Sirenza Micro reports in-line, ex items (SMDI) : Reports Q4 (Dec) earnings of $0.08 per share, excluding non-recurring items, in-line with the Reuters Estimates consensus of $0.08; revenues rose 29.5% year/year to $19.5 mln vs the $19.2 mln consensus.

4:19PM Applied Micro beats by a penny, ex items (AMCC) : Reports Q3 (Dec) earnings of $0.02 per share, excluding non-recurring items, $0.01 better than the Reuters Estimates consensus of $0.01; revenues rose 0.4% year/year to $65.2 mln vs the $65.1 mln consensus.

4:18PM Trident Microsystems beats by $0.02, says it sees strong L.C.D. T.V. momentum, guides Q1 revs higher (TRID) 21.46 -0.99 : Reports Q2 (Dec) earnings of $0.17 per share ex items, $0.02 better than the Reuters Estimates consensus of $0.15; revenues rose 22.3% year/year to $40.6 mln vs the $39.4 mln consensus." Co says it saw strong momentum for L.C.D. T.V. from many consumer electronics customers; co adds that several of its top-tier O.E.M. customers appear to have gained market share. Co says that it now expects to beat the typical seasonal effect of the consumer electronics market and generate relatively flat or slightly up revenues in the March quarter (Q1 consensus called for a sequential revs decline to $36.54 mln).

4:16PM Qualcomm beats by a penny; issues in line guidance for Q2; guides for Y06 (QCOM) 47.58 -0.49 : Reports Q1 (Dec) earnings of $0.39 per share, excluding non-recurring items, $0.01 better than the Reuters Estimates consensus of $0.38. QCOM reports MSM chip shipments of 47 mln vs 47 mln guidance. Co issues in-line guidance for Q2, sees EPS of $0.35-0.37 vs. $0.36 consensus; sees Q2 revs of $1.63-1.73 bln vs. $1.73 bln consensus. Co issues downside guidance for FY06, sees EPS of 1.43-1.47, ex items vs. $1.50 consensus; sees FY06 revs of $6.7-7.1 bln vs. $7.04 bln consensus. "Looking forward, we expect continued growth of CDMA2000 1xEV-DO products in North America, Japan, South Korea and Latin America. We remain encouraged by the consumer uptake of WCDMA services in Japan and Europe, and will continue working closely with operators during their ongoing WCDMA and HSDPA network deployment and optimization efforts. We remain well positioned to capitalize on the growth of 3G, thanks to the extensive value chain of partnerships that exists to rapidly bring new innovations to consumers and enterprise customers."

4:15 pm : Lackluster trading left Wednesday's market vacillating within proximity of the flat line for most of the session. A market-dragging drop in the Energy sector, coupled with a sharp decline in December home sales, squelched the early bullish bias and closed the indices with modest losses.

Although crude futures recovered much of their day-long decline, their pullback gave energy traders incentive to take some profits. An unexpected drawdown in crude supply was a bearish factor for the broader market, and the fact that gasoline and distillates inventories rose much better than expected exacerbated selling across the Energy sector (-2.0%). Further reports of solid earnings from energy companies, which today included Amerada Hess (AMH 60.56 +0.42) and ConcocPhillips (COP 63.29 -1.19) were offset, but nonetheless underpin our Overweight rating on Energy. Following disappointing fourth quarter results from Exelon (EXC 57.83 -1.03), the Utilities sector (-1.5%) also levied a weighty loss.

Plagued by a plunge in the homebuilding industry, Consumer Discretionary (-0.5%) similarly suffered selling. This morning, the economic calendar featured data that reflected a 5.7% decline in December existing home sales. While Ryland (RYL 70.40 -4.77) and Centex (CTX 70.80 -2.49) both reported strong quarterly earnings, each posted dismal new order numbers that further corroborated a slowdown in the housing market in the face of rising interest rates.

Behind the early buying action was some news on the M&A front. Confirmation that Disney (DIS 25.45 -0.54) will acquire Pixar (PIXR) for $7.4 billion underscored the idea that cash flow remains strong at many companies and will fuel the strong merger trend throughout the year; at the same time, DIS shares declined and weighed upon the Discretionary sector. As a side note, DIS is a stock that we continue to favor and is a member of our suggested portfolio for active investors. The two-month bidding war for Guidant (GDT 75.29 -1.49) ended with Boston Scientific's (BSX 23.55 -0.45) victory, but the news sent those individual stocks, as well as the trumped Johnson & Johnson (JNJ 58.55 -0.81), lower. Conversely, Abbott Labs (ABT 42.25 +2.19), which will acquire some of Guidant's assets as part of the deal, helped limit the Health Care sector's (-0.1%) slide. Abbott also delivered strong earnings results today, as did HMO WellPoint (WLP 72.85 -0.34).

Leadership was unspirited, and rested almost entirely within the Telecom (+1.6%) and Materials (+0.6%) sectors. Surging Allegheny Technology (ATI 46.93 +2.41) shares, due to its profit report, and Morgan Stanley's increase in 2006-2007 price assumptions on copper, aluminum, zinc, and gold boosted the former. Solid earnings from Bell South (BLS 27.40 +0.48) drove the latter.

Vacillating Technology (+0.1%) and Financial (+0.2%) sectors were in part responsible for the indices' dips in and out of the red. Uneasiness ahead of Qualcomm's (QCOM) report and an earnings-induced drop in Computer Associates (CA 27.74 -1.14) joined extended declines in TXN and AAPL in challenging Tech. The Financial sector, meanwhile, faced a submerged Treasury market and relative weakness across the insurance board. However, both of the market's two most influential sectors managed to regain positive - albeit modestly positive - footing before the bell, at which point the major averages erased much of their late day losses.DJ30 -2.48 NASDAQ -4.60 SP500 -2.18 NASDAQ Dec/Adv/Vol 1659/1375/2.25 bln NYSE Dec/Adv/Vol 1865/1455/1.87 bln

1:02 pm WellPoint (WLP)

73.56 +0.37: WellPoint on Wednesday reported sharply higher profits for its fiscal fourth quarter, led by an increase in medical enrollment, and raised its outlook for the current year. For the quarter, the largest U.S. health insurer said net income rose to $652 million, or $1.04 per share, from $184.5 million, or $0.46 per share, in the same period last year. Excluding a net realized investment loss of $0.01, however, the company earned $1.05 per share. According to Reuters Estimates, the company was expected to post EPS of $1.04.

As of December 31, 2005, medical enrollment totaled approximately 33.9 million members, representing an increase of 6.1 million over the year ago period. That includes 4.8 million members from the acquisition of WellChoice last month. Organically, enrollment increased by about 81,000 members during the fourth quarter, with the bulk of the growth in the State Sponsored and National Accounts businesses.

Operating revenue increased 67.5% to $11.3 billion from $6.7 billion in the prior year, including contributions from Anthem and WellChoice. On a comparable basis, fourth quarter operating revenue increased by $617.6 million, or 5.8% year/year. In the Health Care segment, operating gain increased by $111.7 million, or 14.2%, compared with $784.5 million in the prior year, due in large part to solid membership growth, lower than expected medical costs, and synergies generated through the Anthem-WellPoint merger. The Specialty segment reported an operating gain of $18.0 million, or 18.5%, reflecting strong performance in the company's pharmacy benefit management ("PBM") and behavioral health businesses - a trend that underpins our Market Weight rating on the Health Care sector.

Based on the strong quarterly report, WellPoint raised its earnings guidance for fiscal 2006 to $4.54 per share, up from its previous forecast of $4.51 per share and including $0.20 in stock option expense. In addition, the company sees full year revenue of $57.3 billion. As those estimates include the operations of recently acquired WellChoice, they may not be comparable to the Reuters Estimates consensus for EPS of $4.61 on revenue of $53.31 billion. Nonetheless, investors have responded to the company's solid fourth quarter performance and optimistic outlook for the year by lifting shares during the regular trading session. At the current level, shares are trading at 18.4x trailing twelve month earnings, compared with 23.3x for UnitedHealth Group (UNH)

--Richard Jahnke, Briefing.com

11:38 am Ryland Group (RYL)

71.86 -3.31: Ryland Group, one of the nation's largest homebuilders, on Tuesday posted a 50% rise in fourth quarter profits, helped by higher sales prices and a record number of closings. However, the company said new orders, which is the principal driver for future growth, declined 4.7% in the period, despite a 9% rise in new order dollars. Accordingly, research firm AG Edwards lowered its outlook on the company, prompting a subsequent pullback in Ryland shares.

For the fourth quarter, the Calabasas, California-based builder said net income increased to $162 million, or $3.32 per share, up from last year's profit of $108.7 million, or $2.17 per share - twenty cents better than the Reuters Estimates consensus of $3.12 per share. Revenue, meanwhile, grew 23% to $1.53 billion, fueled by a an 11% increase in contract closings and a 12.6% increase in the average selling price, which rose to $286,000 for the quarter.

Due to the increasing cost of new homes, new order dollars for the period rose to $904.2 million from $830.4 million a year earlier. However, new orders fell to 3,066 units from 3,217 units last year. Elsewhere, homebuilder Centex (CTX) also reported strong quarterly earnings, but like Ryland, the company posted dismal new order numbers - further corroborating a slowdown in the housing market in the face of rising interest rates.

Meanwhile, the latest report from the National Association of Realtors on Wednesday suggests that the Fed's ongoing rate hikes are taking hold in slowing growth in the nation's housing market. According to the report, December existing home sales fell 5.7% to a 6.60 million annual rate. That was was below analysts' expectations of a 6.85 to 6.90 million rate. Accordingly, homebuilder shares are trading down as data points to further declines in the housing market. The Philadelphia Stock Exchange Housing Sector Index, a gauge of 21 homebuilding companies, was down nearly 2% in intraday trading.

--Richard Jahnke, Briefing.com

11:28 am Automatic Data Processing (ADP)

45.59 -0.47: Overall, the employment situation continues to slowly improve, as strong labor productivity partly substitutes for payroll growth. The unemployment rate, however, recently returned to a post-recession low of 4.9% in December. It is perhaps not surprising, then, that Automatic Data Processing, one of the largest payroll processors serving approximately 590,000 clients worldwide, reported a 31% year/year increase in Q2 (Dec) profits, as the number of employees on its clients' payrolls rose more than 2% amid growth in all U.S. market segments.

Excluding a one-time, non-cash charge of $0.02 related to the sale of its $100 mln Brokerage Services' financial print business, second quarter earnings of $0.49 per share actually missed the Reuters Estimates consensus by a penny but were ahead of management's expectations. As a reminder, ADP raised its fiscal 2006 EPS guidance to 22-25% growth on Oct. 26, 2005, following positive results and the trends witnessed in its fiscal first quarter.

Total second-quarter revenues rose 9.3% year/year to $2.15 bln (consensus $2.17 bln), benefiting from particular strength in the Employer Services' business which is expected to maintain double-digit sales growth. Sales results were also particularly strong in National Accounts and Small Business Services. Although year-to-date sales have been weak internationally, Chairman and CEO Arthur F. Weinbach noted in the press release that ADP's pipeline is "solid."

Moving into the second half of the year, Weinbach added, "With our core businesses executing well against plan and the additional revenues from the Dealer Services acquisition, we anticipate about 10% revenue growth for fiscal 2006, up from previous guidance of high single-digit revenue growth." As a result, ADP raised the bottom end of its EPS forecast to $1.93-1.96, representing 23-25% year/year growth, from its prior forecast of $1.91-1.96. "We are increasingly confident in achieving the higher end of the range," Weinbach concluded.

-- Brian Duhn, Briefing.com

10:08 am Netflix (NFLX)

29.74 +5.00: Neflix shares opened sharply higher on Wednesday, gaining more than 15%, after the online movie rental service reported strong earnings and rapid subscriber growth for its fiscal first quarter. For the three months ended December 31, Netflix said it earned $38.1 million, or $0.57 per share, compared with $5.6 million, or $0.09 per share, a year earlier. However, backing out a tax benefit and other one-time items, the company posted earnings of $0.17 per share - two cents better than Wall Street's estimate, according to Reuters Estimates.

On the top line, revenue climbed 36% to a record $195 million, as the number of subscribers grew 60% year/year. Netflix ended the fourth quarter with approximately 4.2 million total subscribers, up from 2.6 million at the end of the same period last year. During the quarter, the Los Gatos, California-based company said gross subscriber additions increased 48% year/year to 1.16 million, while net subscriber additions were 587,000, compared with 381,000 for the same period last year.

Importantly, Netflix's churn rate declined to a record low 4.0%, versus 4.4% last year and 4.3% in the prior quarter, as fewer customers canceled their service - a strong indication of the company's current value proposition for renting movies. At the same time, however, Netflix paid more to attract customers during the quarter as subscriber acquisition costs increased to $40.65 per gross subscriber addition, up from $34.64 a year earlier.

Given its solid performance and continued positive momentum, Netflix lifted its outlook for the current quarter and fiscal year 2006. Specifically, the company expects first quarter revenue to be between $219 and $224 million, versus the consensus estimate of $216.05 million, and full-year revenue of at least $960 million, versus $959.71 million. The company also forecasted ending subscribers of at least 5.9 million for the year, up from its previous estimate of at least 5.65 million. In addition, management reaffirmed its goal to reach 20 million subscribers within the 2010 to 2012 time frame.

Despite lingering concerns over Netflix' business model in the face of emerging technologies, such as video-on-demand and computer download, the company is clearly making progress in the online DVD rental space with its strengthening competitive positioning and broadening consumer appeal. Furthermore, continued innovation and aggressive price promotions have helped to attract/retain customers and drive top line growth.

--Richard Jahnke, Briefing.com

09:43 am BellSouth (BLS)

27.20 +0.28: Shares of BellSouth have moved higher after the company posted better than expected fourth quarter earnings. Excluding non-recurring items, the nation's No. 3 regional phone company reported earnings of $0.53 per share, which beat the Reuters Estimates consensus by nine cents and were up 36% year over year. Total revenue rose 9.2% year/year to $8.66 bln (consensus $8.56 bln), driven by the addition of 204,000 net DSL subscribers and Cingular Wireless customer growth.

Normalized results from continuing operations include BellSouth's 40% proportionate share of Cingular's revenues and expenses. BellSouth and AT&T (T), formerly SBC Communications, are the parents of Atlanta-based Cingular, the nation's largest wireless provider reaching 54.1 mln subscribers. It is worth noting, though, that total revenue was reduced by $48 mln due to billing credits and an estimated 60,000 disconnected access lines related to Hurricane Katrina, leaving BellSouth's total access lines at around 20 mln at year's end. BellSouth estimated in early September that the future cost to restore its hurricane-damaged network would amount to around $400-600 mln. However, those estimates were upwardly revised to around $700-900 mln, as only about $250 mln of the restoration costs are expected to be covered by insurance.

Further, BellSouth finished 2005 with strong operating cash flow of $3.3 bln and a solid balance sheet, as management reduced debt by $3.4 bln in 2005 and repurchased nearly $1.0 bln of its outstanding shares in Q4. In October 2005, the board of directors authorized the repurchase of up to $2.0 bln of common stock through the end of 2007.

Excluding early upside momentum, shares of Bellsouth are relatively flat for the year while competitors AT&T and Verizon Communications (VZ), which are integrating big acquisitions and upgrading their networks, are up 2.0% and 3.9%, respectively.

-- Brian Duhn, Briefing.com

09:27 am ConocoPhillips (COP)

64.48: ConocoPhillips, the third largest US oil company, generated over a billion dollars more in income from continuing operations in the fourth quarter compared to last year. This fact demonstrates just how different the operating environment has become for energy companies. Soaring energy prices have resulted in record profits for producers. COP's per share figure surpassed expectations by four cents, but that masks the true profit growth and cash flow generation taking place - the reason we remain a bull on energy stocks.

Conoco generated $4.7 bln in cash from operations, of which it spent $3.0 in capital projects, paid $429 mln in dividends, reduced debt by $981 mln, and repurchased $759 mln in common stock. Margins on all levels continue to expand. It ended the quarter with a debt to capital ratio of 19%, down sequentially from 21%.

COP produced 1.88 mln barrels of energy equivalents (BOE) per day in the quarter. This figure includes 1.59 mln BOE/day (+4.6% quarter/quarter) from exploration and production and 0.28 mln BOE/day from its LUKOIL investment. Income from the E&P segment grew 6% sequentially and 45% yearly to $2.4 bln, with Midstream income coming in at a lofty $688 mln.

Worldwide refining capacity was only 88% due to its Alliance and Lake Charles refineries remaining shut down after Hurricane Katrina and Rita, respectively. Lower worldwide quarter/quarter refining margins, hurricane impacts, and higher utility and turnaround costs cut into Refining & Marketing income, which came in at $1.0 bln - down from $1.4 bln last quarter.

Conoco is the first of the super-majors to report earnings. These stocks have been moving up in tandem with oil prices, which have been sparked by concerns over Iran's nuclear program. We remain bullish on the oil and gas producers as the energy markets continue to reflect global tensions and tight market conditions. COP is trading at a significant discount to its peers at 6.8x, compared to Exxon (XOM) at 11.8x, Chevron (CVX) at 9.3x, and Occidental Petroleum (OXY) at 9.1x earnings.

--Kimberly DuBord, Briefing.com

09:18 am Colgate-Palmolive (CL)

53.75: The maker of its namesake toothpaste and dishwashing liquid reported Q4 (Dec) earnings of $0.69 per share, which excludes restructuring costs and a gain of $32.9 mln related to the sale of its heavy-duty laundry detergent brands in Southeast Asia to rival Procter & Gamble (PG). After five quarters of merely matching Wall Street's expectations, Colgate-Palmolive beat analysts' forecasts by a penny.

Like many other major companies of late posting lighter than expected sales, Colgate followed suit. Its revenues rose 3.6% year/year to $2.9 bln, but that was slightly below the $2.96 bln consensus estimate. Nonetheless, North America, where Colgate generates about 21% of its overall sales, was strong, as respective sales and unit volume growth of 8.5% and 6.0% were fueled by new product sales and market share gains. Latin American sales, which account for the bulk of Colgate's total top line (24%), grew 16.5% year/year to an all-time record level amid toothpaste market share gains seen in nearly every country in the region.

Further, gross profit margins (ex items) of 56.0% hit an all-time record, improving 100 basis points from a year ago -- the largest quarterly gross profit increase in three years. Helping Colgate get back on track with strong gross profit margin increases was a 2.0% rise in global pricing -- the largest increase in 21 quarters. Combined with a reduction in overhead expenses, improved gross margins allowed Colgate to build its overall profitability while still investing in even stronger levels of advertising behind global toothpaste and manual toothbrush brands, both of which increased their market share to all-time record highs. Global advertising supporting Colgate's brands of $306.4 mln was a fourth quarter record level, led by a strong double-digit increase in worldwide media.

Colgate's stock is about 6% off its 52-week high of $57.15, which was reached on Dec. 16, and shares are down 1.5% so far in 2006. Given the defensive nature of the Consumer Staples sector and our preference for household product stocks in the space, a backdrop of slowing economic growth and earnings deceleration should bode well for a stock like Colgate. Management expects growth momentum to continue throughout the year, returning Colgate to double-digit EPS growth in 2006 as early as Q1.

-- Brian Duhn, Briefing.com

08:59 am Boston Scientific (BSX)

24.00: Boston Scientific on Wednesday announced that it has agreed to acquire medical device maker Guidant Corp. (GDT) for $27 billion, ending a two month bidding war with rival Johnson & Johnson (JNJ). Under the terms of the deal, Boston Scientific will pay $80 per share for Guidant, or $42 in cash and $38 in Boston Scientific common stock.

Johnson & Johnson let a midnight deadline pass without revising its previous offer of $24.2 billion, or $71 per share. As such, Guidant's merger agreement with Johnson & Johnson was terminated, leaving the company in the hands of Boston Scientific. Boston Scientific, accordingly, will pay Johnson & Johnson a $705 million break-up fee owed by Guidant for ending its earlier agreement.

As previously announced, Boston Scientific's offer also includes an agreement with Abbott (ABT) to divest Guidant's vascular intervention and endovascular businesses, as well as certain rights to the company's drug eluting stent program. Under the proposed transaction, which will enable Boston Scientific and Guidant to rapidly secure antitrust approvals, Abbott will pay approximately $6.4 billion in cash to Boston Scientific, including $4.1 billion in purchase price for the Guidant assets, a loan of $900 million, and an agreement to acquire $1.4 billion of Boston Scientific shares.

Upon completion of the merger, which is still subject to antitrust clearance and shareholder approval, Boston Scientific will gain access to the $10 billion market for pace makers and defibrillators. However, given the safety concerns and legal issues surrounding Guidant's products, the value of such a deal remains uncertain for Boston Scientific shareholders.

--Richard Jahnke, Briefing.com

08:53 am Hershey Co. (HSY)

54.10: Higher prices and new products sweetened Hershey's profits by 3.4% in the fourth quarter. Net income grew to $172.8 mln, or $0.70 per share, up from $167.1 mln, or $0.67 per share, last year. Stripping out one-time items and stock based compensation, earnings were a penny over consensus.

New and seasonal products generated 4% of the 6.7% top line growth to $1.35 bln in the quarter. The Pennsylvania-based company released several new products, like the Kissable, in order to increase its overall market share over rival, Mars Inc. Gross margins widened to 39% from 38.7% in the year prior, as SG&A expenses declined a full point to 16.6% of sales.

Rising commodity prices are pressuring the entire industry. Sugar prices from Brazil, the world's biggest producer, continue to rise on increasing demand from the US for sweeteners and the fact that more of the Brazilian crop is being used to make automotive fuels. According to Bloomberg, sugar prices are expected to average 14.74 cents per pound this year, up 46% from 10.03 cents in 2005.

This was a kissable quarter considering the cost headwinds Hershey faced with sugar accounting for 10% of total costs. What the languishing stock price fails to show is Hershey's stable and high quality profit growth. The company reaffirmed FY06 forecasts, aiming to combat the inflationary environment through higher price realizations and operational efficiencies. Its leverage is apparent, as it is forecasting 3-4% sales growth generating earnings per share above its long-term growth goal of 9-11%. We think Hershey remains a solid investment due to its attractive defensive characteristics, including a multiple of 20x earnings and a dividend yield of 1.81%.

--Kimberly DuBord, Briefing.com

08:45 am Xerox (XRX)

14.46: Xerox's fate rests on its ability to drive growth for color digital printing systems improving its overall sales mix towards higher margin products. Color revenues, as a percentage of the overall top line, grew 5% for the year to 32%. Despite a 17% rise in color sales in the fourth quarter, total sales were roughly flat year-over-year. Growth was negatively impacted by a significant product shift towards lower-priced systems. One bright spot was entry level color and office desktop multifunction devices, which fuel post-sales annuities over time.

For the quarter, total revenues fell 2% to $4.25 bln on negative currency and product mix, but rose a point on a constant currency basis. Post-sales and financing revenues, which accounts for 70% of total revenues, were flat ex-currency. Cost controls helped to increase gross margins by 50 basis points to 41.4%. Earnings came in at $0.32 per share, excluding non-recurring items, in-line with the market's expectations. Xerox ended the quarter with $1.4 bln in operating cash flows, leaving it in a strong, flexible financial condition for FY06, which includes plans to buyback $500 mln in stock.

Xerox issued in-line guidance for the first quarter of $0.20-$0.23 per share versus the $0.22 consensus estimate. Also, it reaffirmed guidance for the full year, saying it sees EPS at the "high-end" of $1.00-$1.07 per share versus the consensus estimate of $1.04. The turnaround at Xerox has taken much longer than most expected, as it has failed to show any significant traction in ramping the color segment. If it's able to reach the high end of guidance, that would equate to 14% earnings growth at best. The stock is trading at 13.8x and we would not be a buyer above $14.00 per share.

--Kimberly DuBord, Briefing.com

10:48 am First Cash: JMP Securities reiterates Mkt Outperform. Target $29 to $29. Following Q4 results, as firm believes 20% plus earnings growth will persist, driven by same-store sales and unit growth while improving earnings visibility adds excitement to the story.

10:47 am Pervasive Sftwr: Needham & Co downgrades Buy to Hold. Firm believes any stock price appreciation will come in excruciatingly slow increments. While PVSW can probably grow earnings by constantly squeezing costs in the face of 0-5% rev growth, the firm says the co no longer represents the homerun potential that could have materialized.

10:43 am W&T Offshore: Harris Nesbitt upgrades Neutral to Outperform. Target $32 to $32. Firm believes that with the purchase of Kerr-McGee's Gulf of Mexico shelf properties, WTI is poised to increase production (+80%) and reserves (+74%), become the third-largest acreage holder on the GOM shelf, and increase its 2P/3P reserves by 3-fold. With the addition of oil and gas hedges at strong commodity prices and the high PV nature of GOM assets, they expect the transaction to be accretive to earnings and cash flow in 2006.

10:30 am Astec Industries: Robert W. Baird downgrades Outperform to Neutral. Firm also downgrades BUCY to Neutral from Outperform, saying that while they remain optimistic about the fundamental outlook, they believe the market may have already discounted stronger financial performance. The stock's recent run, its current valuation, and their view of peak earnings potential signal to them that the risk/reward profile has become more balanced.

10:22 am Ultra Petroleum: Harris Nesbitt reiterates Neutral. Target $70 to $70. Firm ups price target following the co's reported year-end proved reserves of approximately 2.02 Tcfe, representing a 32% increase from the prior year reserve estimate of 1.53 Tcfe. They note that the co has more than doubled its inventory in Wyoming to over 2,800 locations, resulting in an inventory life of +17 years at the current drilling rate. They estimate the co will have spent about $290 mln in 2005 and produce ~72 Bcfe, yielding a ~785% reserve replacement ratio.

10:21 am 3M Company: Longbow downgrades Buy to Neutral. Downgrade follows Q4 results, firm is saying 5% growth is no longer sufficient. With top line growth likely to continue at the low end of targeted range and opportunities for margin expansion diminishing as Healthcare Division continues to suffer from generic competition in Pharmaceuticals and price competition in Personal Care, they believe EPS growth is likely to decline to low double digits.

10:18 am Headwaters: Adams Harkness downgrades Buy to Hold. Firm says there is more Sec. 29 risk here as they see the first signs of customers beginning to curtail production_nothing more, nothing less. They think the shares are range-bound until the Sec. 29 overhang begins to work itself out.

10:18 am Applebee's: Morgan Keegan upgrades Mkt Perform to Outperform. Target $22 to $22. Upgrade is based on the belief that comps and traffic trends bottomed in Dec and could likely post an improving trend through 2006, leading to better than expected operating performance and potential share price appreciation.

10:16 am Jacobs: Sanders Morris Harris reiterates Buy. Target $76 to $76. Firm is encouraged that several important lagging mkt segments appear poised for impressive growth, namely PharmaBio, Federal Programs, Buildings, and Infrastructure. The firm says these particular mkt segments have the ability to deliver strong bookings in a recovery phase.

10:13 am Zions Bancorp: Sanders Morris Harris reiterates Buy. Target $80 to $80. Firm continues to believe that ZION's share price has yet to fully reflect its expanding market share and solid growth opportunities given its strong position in many of the nation's fastest-growing marketplaces.

http://finance.yahoo.com/mp?u

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From Briefing.com: 4:16 pm Weekly Wrap

It took all week, but the market recouped almost all of the losses incurred last Friday. The uptrend this week was accompanied by mixed earnings and economic reports.

Almost 50% of the S&P 500 companies have now reported. The reports this quarter are not as upbeat relative to expectations as in recent quarters. The total year-over-year increase in operating earnings for the S&P 500 in aggregate is on track for 13% growth. That is no higher than the forecast before the reports came out. In recent quarters, earnings have been above expectations by 3% to 5%.

This quarter, 63% of companies have beaten expectations. In recent quarters, that percentage has been in the 67% to 70% range. The 19% of companies reporting below expectations is also larger than in recent quarters.

Very few large companies have reported revenue significantly above expectations, and many have come in below Wall Stret forecasts. Guidance for upcoming quarters has also been a problem. Many large companies have been guiding revenue expectations lower for 2006.

Overall, the reports are uninspiring.

Yet, the market has taken the news reasonably well. The market plunged last Friday on realizations that 2006 expectations were too high. Now, the market is coming to terms with the outlook and finds it reasonably good, if not spectacular.

The economic news this past week was also mixed. Fourth quarter real GDP was up at just a 1.1% annual rate. That was well below the 3.5% growth rate for 2005 as a whole, and the 4.4% rate of 2004.

The data wasn't a huge surprise, however. The weakness was due in large part to a drop in spending on durable goods (autos) after a surge the previous two quarters, as well as a temporary drop in government spending. Consumption of nondurables and services remained on a solid growth path, and investment was up at a 12.2% annual rate. Most economists therefore expect a rebound in growth in the first quarter as the durables and government weakness won't be in the upcoming numbers.

Nevertheless, the lower fourth quarter growth signals that 2006 overall growth is likely to ease to the long-term trend of 3%. A more moderate rate of growth in the economy is consistent with the lowered revenue guidance given by many large firms.

The outlook for Fed policy has not changed. A 1/4% rate hike is still expected at the Tuesday meeting, and the fed funds rate futures are pricing in another such hike before July. Oil prices closed this week a bit over $67 a barrel. That is unchanged from the week before.

The market is adjusting to the realization that economic and earnings growth will slow in 2006. The strong growth of recent years simply can't continue. Valuations are reasonable, and decent earnings growth still leaves room for the market to move higher this year, but expectations are constrained. Risks still exist that the Fed will raise rates too high, or that oil prices will spike higher. The S&P is up 3% for the year already, but it may struggle to post further significant gains through the first half of the year.

 
 Index      Started Week  Ended Week  Change  %Change  YTD  
 DJIA         10667.39     10907.21   239.82    2.2 %  1.8 %  
 Nasdaq        2247.70      2304.23    56.53    2.5 %  4.5 %  
 S&P 500       1261.49      1283.72    22.23    1.8 %  2.8 %  
 Russell 2000   704.60       732.22    27.62    3.9 %  8.8 %

4:20 pm : Another solid round of earnings reports catalyzed a pervasive bullish sentiment Friday. A lower than expected read on fourth quarter GDP growth did little to temper buying action, and appeared to take a back seat to the corporate front today.

Dow components Microsoft (MSFT 27.77 +1.27) and Proctor & Gamble (PG 59.75 +0.93) were the session's highlights. The former delivered strong profits and issued reassuring guidance that supported both the Tech sector (+1.0%) and the broader market. Surging Broadcom (BRCM 69.87 +11.15) shares, following its blowout Q4 results, lent significant upside and underpins our Overweight rating on the sector. On account of BRCM and KLA Tenecor (KLAC 54.17 +0.16), which also reported better than expected earnings, semiconductors soared.

Up 1.9%, the Energy sector led. Amid continued geopolitical tensions, (i.e., Iran and Nigeria) supply concerns drove the price of crude 2.3% higher. Along with that factor, further indications of oil companies' profitability drove buyers to the Energy sector. Last night, Haliburton (HAL 78.95 +3.80)delivered strong earnings, followed by Chevron (CVX 60.77 +0.55) this morning. Health Care (+1.2%) also contributed to the market's advance. The health care equipment industry ran following Styker's (SYK 50.55 +6.22) earnings news, as did healthcare suppliers after Milipor (MIL 71.34 +5.90) reported. Pfizer (PFE 25.99 +0.94) was the muscle behind the rise; the company announced approval for its Exubera drug, and was also featured in Barron's today. Boston Scientific (BSX 21.55 -1.60) was the sector's weakest link - following its receipt of an FDA warning letter and on account of disappointing earnings from Guidant (GDT 73.73 1.53).

Homebuilders fared well after this morning's housing data, and a subsequent rise in the home furnishing industry took the Consumer Discretionary sector to a 0.4% gain. New home sales rose a surprising 2.9% last month; declines are still expected in the months ahead, but the report nonetheless served as another bullish factor for equities today. Proctor & Gamble's fiscal Q2 results stirred buying across the Consumer Staples (+0.8%) sector, and surging steel stocks were behind a 0.9% rise in Materials. On a related note, Mittal Steel (MT 34.13 +1.83) made a $2.27 billion cash bid for Arcelor SA this morning.

With respect to the GDP data, the economy grew 1.1% during Q4; economists had expected a 2.8% increase. Stock investors shrugged off the report, though. A sharp drop in auto sales was largely responsible for the miss relative to the consensus estimate, and we expect to see a rebound in Q1. Also, the fact that the data is dated helped investors get over the surprise. Anecdotally, the "soft" Q4 GDP report could actually serve as a source of support as it feeds the argument the Fed, after its Jan. 31 FOMC meeting, will have reason to pause its tightening activities. Ultimately, the market's attention rested upon the solid earnings front.DJ30 +97.74 NASDAQ +21.23 SP500 +9.89 NASDAQ Dec/Adv/Vol 1238/1758/2.24 bln NYSE Dec/Adv/Vol 1174/2085/1.94 bln

10:24 am PortalPlayer: Kaufman Bros upgrades Hold to Buy. Target $28 to $28. The firm believes that this rating is justified given the earnings momentum headed into 2006. More significant in their thinking is their belief that PLAY now represents a very attractive acquisition candidate. Their analysis suggests PLAY could be acquired at a significant premium to their $40 price tgt. A deal above this value could still be accretive to a larger acquirer such as BRCM or INTC, both of which, in their opinion, have reasons to be interested in PLAY's business.

10:23 am Citizens: Bear Stearns upgrades Peer Perform to Outperform. Firm is noting that the stock is trading near its 52-week low and its 8.3% dividend yield is close to its high since the co instituted its current high-yield dividend policy in 3Q04. Firm believes that fundamentals support strong free cash flow generation, and believe that additional share repurchases are likely in the near-term.

10:19 am Packeteer: Harris Nesbitt downgrades Outperform to Neutral. Target $14 to $14. Firm thinks the stock will open as much as 20% higher today following its strong 4Q earnings, but they don't believe the upside from there to their new $13 tgt is sufficient to warrant their highest rating.

10:17 am Sierra Wireless: Avondale Partners upgrades Mkt Perform to Mkt Outperform. Upgrade is following Q4 results, given traction with both Sprint (S) EV-DO and Cingular (BLS; T) HSDPA deployments, and the potential upside driven by embedded module deals with Hewlett-Packard (HPQ) and Lenovo.

10:16 am Andrew: Needham & Co upgrades Hold to Buy. Upgrade is following Q1 earnings. Firm continues to believe that the downward margin trajectory the co has experienced for several quarters appears to have finally reversed and the demand outlook for the co's products appears solid.

10:15 am MEMC Elec: Needham & Co upgrades Buy to Strong Buy. Firm believes that WFR is an attractive investment for the following reasons: 1) Solid financial position that will enable them to be profitable and grow their business unlike several competitors. 2) Favorable mkt conditions in the semiconductor and solar cell industry that include strong demand from both markets; increasing capacity utilization favoring ASPs; shortage of polysilicon favoring ASPs; and consolidation in the industry favoring suppliers that are qualified for 300 mm diameter substrates (WFR being one); 3) New management strategy focusing on profitability, market-share and technology

10:13 am Scopus Video Networks: Needham & Co initiates Buy. Target $9. Firm believes the main drivers, beyond the obvious analog-to-digital transition, are 1) TelcoTV as the new competitive entrant, possibly followed by new wireless networks, 2) HDTV channel growth, and 3) targeted advertising combined with personalized TV services.

10:11 am hi/fn: Avondale Partners upgrades Mkt Perform to Mkt Outperform. Firm says that SHW reported Q4 EPS -- on an apples/apples basis -- of $0.64 versus $0.49, a gain of 31%, demonstrating the co's distribution strength through its powerful retail system and its constant focus on improving margins.

10:08 am Constellation Energy: Deutsche Securities upgrades Hold to Buy. Target $65.5. The firm says that in light of the recent weakness (off 3.2% since Jan 23, versus the UTY being off 2.9%) and their tgt of $45.50 per share for FPL, they believe CEG represents an attractive opportunity for investors willing to withstand mkt volatility and patience.

10:06 am Robt Half: CL King downgrades Strong Buy to Neutral. Target $42. Firm says co's results were solid, but margins were below expectations because of expansion costs, primarily at Protiviti. They note that Protiviti's Q1 revs will be flat to down slightly from Q4. Thus, the potential for a strong upside surprise over the short term seems limited.

10:04 am Sunpower: Am Tech/JSA Research upgrades Hold to Buy. Target $45. Upgrade follows the co's solid results in Q4. More importantly, firm is encouraged by mgmt's guidance in terms of manufacturing ramp and available silicon supply. While firm expects that solar stocks will be volatile in the near-term, they also expect the volatility to trend towards higher-highs and higher-lows, providing compelling long-term returns.

09:51 am Openwave: WR Hambrecht reiterates Buy. Target $24 to $24. Target change represents 22x firm's new CY:07 EPS est of $1.12. This multiple is more or less in line with the peer group, despite the co's higher earnings growth profile (+23%) in 2007. They believe investors will be happy with the improvement in cash flow due to better collections effort, margin expansion above expectations, and significant deal signings during the qtr which indicate that mgmt's vision of offering an integrated application solution is gaining traction with customers. These positive developments support their view that underlying fundamentals will continue to improve in 2006, leading to multiple expansion and further share price appreciation.

12:56 pm McKesson (MCK)

53.86 +1.73: Shares of McKesson Corp. traded higher on Friday, gaining more than 4%, after the prescription drug wholesaler beat analysts' third quarter profit and sales expectations. Furthermore, the company raised its outlook for the full year, due to the strong growth in generic pharmaceuticals and continued progress in its business.

In the third quarter, McKesson earned $193 million, or $0.61 per share, compared with $144 million, or $0.49 per share, in the year ago period. That included a $37 million pre-tax gain in Pharmaceutical Solutions related to an anti-trust settlement and a $15 million pre-tax charge in Medical-Surgical Solutions to expense a pre-paid licensing agreement. Excluding non-recurring items, the company would have earned $0.49 per share. Revenues for the period were up 9% to $22.6 billion, driven by solid growth in all business segments. According to Reuters Estimates, the company was expected to post earnings of $0.52 per share on revenue of $22.6 billion.

By segment, Pharmaceutical Solutions revenue increased 9%, aided by strong sales of generic drugs and new and expanded distribution agreements in the U.S. Excluding the $37 million anti-trust settlement, operating profit was up 11% year/year. In Medical-Surgical, revenues rose 11%; however, operating profits fell 67%, to $8 million, as a result of the $15 million charge in the division. Provider Technologies revenue were up 21%, led by a 38% jump in software and software systems sales. Profit for the division climbed 36% to $38 million.

Given McKesson's quarterly performance and strong momentum across all of its businesses, the company lifted its earnings target for fiscal 2006. The company now expects to earn $2.21 to $2.46 per share, well ahead of the Reuters Estimates consensus of $2.27. Furthermore, the company forecasted fourth quarter earnings of $0.65 to $0.70 per share. That was in line with the consensus EPS estimate of $0.68. The latest results reflect the company's continued progress, and further underscores Briefing.com's Market Weight rating on the Health Care sector. As McKesson continues to benefit from growth in higher margin generic drugs, as well as the potential opportunity afforded by the new prescription drug benefit plan, formally know as Medicare Part D, the company should continue to gain momentum.

--Richard Jahnke, Briefing.com

10:42 am Boston Scientific (BSX)

22.00 -1.15: Boston Scientific revealed late Thursday that federal regulators have issued the company a warning letter related to its quality control systems, as well as recent product recalls. The letter received from the U.S. Food and Drug Administration expresses concerns over the medical device maker's procedures in detecting defects and responding to quality control complaints at six of its plants. Furthermore, the agency cited continuing regulatory problems at three facilities it inspected last summer, which reviewed the manufacture of such leading products as the Taxus and Liberte drug-eluting stents.

Accordingly, the FDA said it will not approve any pre-market applications for devices to which the concerns in the letter are reasonably related until the outstanding issues are resolved. While the result of the warning could impact a number of newer products, it may also upset the pending acquisition of Guidant Corp. (GDT), as the company tries to gain shareholder and antitrust approval. According to Prudential Securities, the warning may impact the Guidant acquisition in a few ways: federal regulators may delay approval of Guidant's products upon completion of the acquisition; Guidant's board may reconsider Boston Scientific's $27 billion bid, potentially in favor of rival Johnson & Johnson's latest offer; and in the event Boston Scientific's stock price falls below the collar of $22.62, the value of the current offer for Guidant will decline.

Meanwhile, Guidant Corp. on Friday reported lower sales and profits for its fiscal fourth quarter, as it continues to grapple with recent product recalls and legal scrutiny. For the period, the Indianapolis-based company said earnings from continuing operations were $85 million, or $0.25 per share, compared with last year's profit of $124 million, or $0.38 per share. Sales fell $140 million, or 14%, to $828 million. The results, which reflect the impact of product recalls and merger-related expenses, fell short of Wall Street's estimate for earnings of $0.27 per share, but topped expectations for revenue of $828.2 million.

For the quarter, Guidant said worldwide implantable defibrillator sales declined 19% year/year to $372 million, with U.S. sales down approximately 23%. Worldwide pacemaker and coronary stent sales were also down significantly during the period, falling 24% and 6% from the year ago period, respectively.

On top of Boston Scientific's recent regulatory issues, the pending acquisition of Guidant continues to draw concerns from many investors as product performance remains a challenge in the face of product recalls. Even if the pending merger receives antitrust and regulatory approval, Boston Scientific will have to clear a number of hurdles to capitalize on the $10 billion cardiac rhythm market. Based on the news, shares of both BSX and GDT are trading lower.

--Richard Jahnke, Briefing.com

10:02 am Chevron (CVX)

60.22: Chevron, the second largest oil company in the US, reported a 20% rise in fourth quarter profits on record energy prices. Chevron closes what was a record year for the industry, generating more than a billion dollars in profits over FY04, despite the worst hurricane season on record that caused lower production, costly repairs, and operational disruptions.

Fourth quarter net income rose to $4.1 bln, or $1.86 bln, from $3.4 bln or $1.63 per share last year - surpassing expectations by three cents. CVX's top line, which is dominated by the upstream exploration and production segment, swelled to $53 bln. The 26% rise in sales and other operating revenues was derived mainly through higher prices for crude, natural gas, and refined products - not to mention the integration of the Unocal assets.

Upstream revenues rose 46% to $3.2 bln, again, mainly attributed to higher energy prices. In the US, the average price per barrel rose $14 to $52 per barrel, with international prices rising to more than $50/barrel. Worldwide oil-equivalent production grew 11% from the fourth quarter of 2004, including strong volumes out of the Canadian oil sands and a new service agreement in Venezuela. Downstream earnings, which include refining, marketing, and transportation, were $808 mln, down 25% year/year due to lower refining margins, hurricane carryover effects, and other items.

Chevron ends the year in a strong financial position. Its debt ratio has declined to 17% from 20% last year and it has a cash balance of $11.1 bln. Chevron expects average worldwide oil-equivalent production of 2.5 mln barrels/day to increase to 2.7-2.8 mln in 2006. The expected increase is mainly attributed to the addition of the Unocal assets to offset normal field declines.

We expected a strong earnings season from the super-majors given the market environment. We remain long-term energy bulls given the positive risk/reward profile for stocks, underscored by strong earnings and cash flow momentum and attractive valuations. We favor stocks with the best production profiles, which includes CVX. Chevron trades at 7.9x forward earnings, compared to Exxon (XOM) at 6.7x, ConocoPhillips (COP) at 6.7x, and Occidental Petroleum (OXY) at 9.0x.

--Kimberly DuBord, Briefing.com

09:44 am Stryker Corp. (SYK)

47.51 +3.18: Hoping to prevent a knee-jerk reaction similar to the one that rocked shares of Stryker Corp. when it missed forecasts by a penny last October, the maker of knee and hip implants last night posted results that matched Wall Street's expectations. The company reported Q4 (Dec) net earnings of $185.7 mln, or $0.45 per share. Excluding special non-recurring items, Stryker grew earnings 21.5% year/year to an adjusted $0.48 per share, which was in line with the Reuters Estimates consensus and stood true to the 20%+ profit growth shareholders have grown to love for so long. Management, in turn, projected diluted net EPS for 2006 of $2.02, a healthy 21% year/year increase but below the consensus estimate of $2.09, which was based on the company's prior FY06 EPS guidance of $2.10.

Total revenue rose 10.6% year/year to $1.28 bln, which was just shy of the $1.29 bln consensus. Worldwide sales of Orthopaedic Implants were up 7.6% year/year to $738 mln, based on higher shipments of reconstructive (hip, knee and shoulder), trauma, spine and micro implant systems. Worldwide sales of MedSurg Equipment rose 16.4% from a year ago to $475 mln, based on higher shipments of powered surgical instruments, operating room equipment, and endoscopic products.

Even though management's outlook for 2006 continues to be optimistic regarding underlying growth rates in orthopaedic procedures, we're still not fully convinced Stryker Corp. can weather a much tougher pricing environment that management confessed in October would be a factor going forward. Thus, the potential for increased pricing pressure on Orthopaedic Implants products in the U.S. and certain other foreign markets, Japan in particular, coupled with safety investigations that continue to entangle the medical device industry, suggests investors should stand pat on orthopedics and wait until more progress can be seen.

-- Brian Duhn, Briefing.com

09:26 am SanDisk (SNDK)

70.68: Shares in the world's largest marker of flash memory cards for electronics took a hit on concerns price reductions will cut into profits. SanDisk announced plans to reduce prices by 25-30% in the first quarter to boost sales in several new products. Lower average selling prices for flash memory, used in consumer electronic products from handsets to digital phones, continue to decline. With shares having tripled over the last 12 months we would be sellers as the fundamentals are starting to show signs of deterioration.

Fourth quarter profits rose 71% to $133.9 mln, or $0.68 per share, from $78.3 mln, or $0.42 per share, a year earlier - topping analysts' expectations by a dime. Revenues rose 37% to $750.6 mln. But the key number to focus on was gross margins, which contracted to 40% from 44% in the third quarter, as SNDK now becomes a volume-based, rather than a price-based flash manufacturer. The average price per megabyte of memory sold was down 40% in the fourth quarter from last year.

Analysts will react in kind and slash earnings estimates for the company in the quarters ahead. The outlook for NAND flash remains strong given the end market demand. However, with capacity ramping in FY06 from the Intel/Micron joint venture and Hynix, the pricing environment will remain tenuous. SNDK is betting the price reductions will spark demand for higher density removable storage devices this year. With contracting prices and market share, the outlook for SNDK looks less than promising at this juncture.

--Kimberly DuBord, Briefing.com

09:19 am Microsoft (MSFT)

26.50: After Thursday's closing bell, Microsoft reported second quarter earnings in-line with expectations. The market was anticipating softness on the revenue line due to production constraints for the newly launched Xbox 360 game console. The top line rose 9% year/year to $11.84 bln - the highest quarterly revenue figure in its history. The key takeaway was that this was basically an in line report and guidance. Overall, it was solid quarter with no surprises for MSFT - something tech investors will take to heart.

Net income grew 5% to $3.65 bln, up from $3.46 bln in the same quarter last year. Excluding a one cent tax benefit, earnings came in at 33 cents, topping the Reuters Estimate by a penny. Operating income declined 2% to $4.66 bln, reflecting higher marketing and promotional expenses, which swelled to 22.7% of sales from 19.6% last year, resulting from the launch of several new products, including the Xbox 360 and SQL Server.

The company shipped 1.5 mln Xbox machines in the quarter. Sales in the Home & Entertainment segment, which includes the game console, rose 13% to $1.56 bln. Stronger than expected PC sales in the quarter boosted sales of Windows by 8.3% to $3.46 bln. MSN revenues fell 2.1% to $593 mln due to competitive pressures from rival Google (GOOG) and Yahoo! (YHOO). Microsoft reported broad-based strength and generated a 14% rise in revenues within the Server and Tools segment, including a 20% hike in sales of the SQL Server.

Microsoft returned over $8.5 bln to shareholders through dividends and share buybacks. Looking at the all important guidance, revenues are expected to be in the range of $10.9-$11.2 bln with earnings of $0.32-$0.33 per share in the first quarter. The estimates are in-line with consensus of $0.33 and $11 bln, respectively.

If there is a year to own Microsoft, this would be it. The Redmond-based company has a big product year ahead of it, including SQL servers and Office 12 not to mention a new flagship OS. After four years of waiting...and waiting...Microsoft plans to release its new operating system, Vista, this year. It's critical for MSFT to keep this '06 deadline. The company is forecasting revenues for the year ending June 30th of $44.0-$44.5 bln vs. consensus of $44.19 bln. Operating income is expected to be in a range of $17.9 bln to $18.3 bln, including $361 mln for Q1 settlement charge. It sees earnings, ex-items, of $1.29 to $1.32 per share, again right on target with expectations.

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

--Kimberly DuBord, Briefing.com

09:15 am Procter & Gamble (PG)

58.82: Dow component Procter & Gamble reported Q2 (Dec) earnings of $0.72 per share. Excluding $0.03 in one-time dilution expenses from its acquisition of Gillette, second quarter earnings of $0.75 checked in six cents better than the Reuters Estimates consensus. Beating Wall Street forecasts is nothing new for the world's largest consumer products company, as P&G has beaten expectations in 20 of the last 21 quarters. On the minds of investors, though, is just how effectively the Cincinnati, Ohio-based company will integrate its largest-ever acquisition. Management stated that they are making "very strong progress on both the revenue and cost synergies and remains on track with its three year revenue and cost synergy commitments."

Strong top line growth enabled P&G to exceed earnings expectations in what management had anticipated would be the most difficult cost quarter of the fiscal year. Net sales rose 27% year/year to $18.34 bln, versus the $18.22 bln consensus, as unit volume increased 27%. P&G's Health Care business delivered 31% volume growth, Beauty volume increased 9%, and Fabric Care and Home Care delivered strong volume growth of 7%. In fact, every business segment except Snacks and Coffee, which was adversely impacted by Hurricane Katrina, delivered mid-single digit or higher organic volume growth. Every geographic region also delivered organic growth, with developing regions growing organic volume in the mid-teens.

In its second quarter, P&G repurchased $3.5 bln of stock as part of its previously announced Gillette share buyback program. The buyback brought the cumulative value of shares purchased under the program to $12.0 bln and P&G expects to repurchase about $20 bln in total under the program and complete the program by mid-calendar year 2006.

As a result of P&G's robust innovation pipeline and good progress incorporating Gillette's businesses - Blades and Razors and Duracell and Braun - management raised their outlook for fiscal 2006. For Q3, the company sees EPS of $0.58-0.61, which includes $0.02-0.03 in one-time dilution expenses and may not be comparable to the $0.60 consensus. For FY06, management projects EPS of $2.58-2.62, which includes $0.09-0.11 in one-time dilution expenses and also may not be comparable to the consensus, which stands at $2.59.

Either way, a backdrop of slowing economic growth and earnings deceleration should bode well for a stock like P&G. Currently, we have a Market Weight rating on the Consumer Staples sector, but favor the household products industry in that space.

-- Brian Duhn, Briefing.com

09:02 am KLA-Tencor (KLAC)

54.01: After the close Thursday, KLA-Tencor said its second quarter earnings fell from a year earlier on lower revenue, but still beat Wall Street's estimate. For the latest quarter, the semiconductor equipment supplier earned $77 million, or $0.38 per share, compared with $122 million, or $0.61 per share, in the same period last year. Excluding stock-based compensation charges, earnings were $102 million, or $0.50 per share - three cents better than the Reuters Estimates consensus of $0.47.

Revenue for the period fell 8% year/year to $533 million. However, the results beat analysts' estimate of $468.15 million. KLAC reported ending the quarter with approximately nine months of product-related shipment and revenue backlog. In terms of geography, Korea, China, and Singapore, combined, represented 32% of orders, compared with their historical average of 20%. Japan also demonstrated relative strength, accounting for 21% of orders, versus its historical average of 20%. Conversely, the U.S. was 17% of orders and Europe was 12% of orders, lower than their historical average of 25% and 15%, respectively.

Looking to the fiscal third quarter, KLAC forecasted earnings in the range of $0.54 to $0.57 per share on revenue of $500 to $510 million. In addition, the company expects bookings of approximately $540 million in the quarter, driven by increased consumer optimism and continued strong demand for consumer electronics - a trend that underpins our Overweight rating on the Technology sector. As it continues to grow revenue and shipments, the company is looking to deliver 60% to 70% margin.

Despite the drop in second quarter profits, investors remained focused on KLAC's better than expected results and positive guidance, lifting shares higher in early trading. Over the past year, shares have gained nearly 20%, and are up about 9% since the beginning of the year. At the current level, the stock is trading at 26.6x forward earnings.

--Richard Jahnke, Briefing.com

08:45 am Broadcom (BRCM)

73.01: Broadcom, which makes chips used in iPods and handsets, said fourth quarter profits almost tripled. Net income surpassed all expectations, soaring to $194.8 mln, or $0.50 per share, from $71.1 mln, or $0.20 per share earned last year. Sales skyrocketed 52% to $820.6 mln. That wasn't all.

This fabless semi solutions company caught the Street by surprise, forecasting Q1 sales of $870 mln, more than $100 mln above analysts' estimates. This equates to sales growth of as much as 59% over last year.

The quarter was dictated by strong growth across multiple segments from mobile multimedia devices, satellite boxes, gigabyte switches, DSL modems, and Bluetooth chips. The shares rocketed in the after-hours, punctuated by the announcement of a 3-for-2 stock split and a $500 mln share repurchase. Analysts will be in a frenzy to revise guidance upward to match the company's forecasts.

Broadcom's appeal is its broad-based portfolio of products that will drive strong revenue growth and improve profitability. Its chip sets, which are used in Motorola's (MOT) Razr, Palm's Treo, and Apple's iPods, make it easier for products to be multifunctional. We continue to think the stock should be a core holding for 2006. Broadcom's mission of "Connecting everything" fully integrates into our theme within the Technology sector of everything portable, everything digital. The risks include a shift in product mix towards lower end margin markets, inventory builds, or competitive pressures.

--Kimberly DuBord, Briefing.com

08:08 am Mittal (MT)

73.38: The world's largest steelmaker made an unsolicited cash bid to buy Arcelor SA for 18.6 bln euros ($22.7 bln). The transaction would transform the industry, giving billionaire owner Lakshimi Mittal more than 10% control over the world's steel market - 3x its closest rival.

The Rotterdam-based Mittal bid 28.21 euros per share for Arcelor, roughly 3.5x EBITDA. The stock jumped 35% to 30.11 euros in Madrid. Mittal has also agreed to sell Canada's Dofasco Inc. to Germany's ThyseenKrupp AG. The deal, if closed, would be the biggest ever in the industry, creating a company with 320k employees and annual revenues of more than $6 bln. The steel industry is notoriously fragmented, therefore the combination would make economic sense. Observers do not anticipate any regulatory hurdles.

Mittal became the largest North American steel maker after buying International Steel Group in April of last year for $4.5 bln. Mittal has been on a buying spree, picking up steel mills from South Africa to Poland, since 1993. The deal would give Mittal greater price control with the world's largest industrial consumers. Advisers on the deal include Goldman Sachs (GS), Citigroup (C), CSFB (CSR), and HSBC (HSBC).

--Kimberly DuBord, Briefing.com

[ReturntoSender]

From Briefing.com: 4:20 pm : Monday's market reflected investors' wait-and-see stance ahead of a busy week in terms of both earnings and economic news. The major indices spent the session in flat line vacillation mode, and trading volume was notably lower than last week's.

The Energy sector led the session. Ahead of tomorrow's OPEC meeting, that area of the market received added attention. According to the Associated Press, the cartel has ruled out any change in production at its meeting this week, but oil ministers from Venezuela and Saudi Arabia said Monday that it has a consensus to cut output in March. The price of crude futures ($68.40 per barrel) gained 1.1% today, and helped drive buyers to the sector. A record fourth quarter earnings report from Exxon Mobil (XOM 63.12 +1.83) was also behind the rise, and strong results from Smith International (SII 44.35 +1.62) added more momentum. Those companies' reports underpin the Overweight rating that Briefing.com maintains on Energy. Refiners fared particularly well ahead of reports from SUN and VLO due out this week.

Largely to the credit of the hardware industry, the Technology sector advanced 0.5%. After declining about 17% over the past two weeks, Apple (AAPL 75.17 +3.14) attracted bargain hunters and was the particular bright spot. Relative weakness in semiconductors, due to some profit taking, capped the sector's advance. Materials (+0.2%) also closed higher, and Industrials finished on the flat line.

While gains, outside of Energy's, remained contained, losses were similarly limited. Due to weakness in pharmaceuticals, following a disappointing earnings report from Schering-Plough (SGP 19.60 -0.48), Healthcare (-0.5%) levied the weightiest loss. The biotech industry was also a sore spot, and Boston Scientific's (BSX 20.80 -0.83) extended decline pressured the equipment group. Ahead of tomorrow's FOMC meeting and accompanying policy statement, the market's most rate-sensitive areas reflected traders' cautious sentiment. Banks kept the Financial sector (-0.2%) in the red, and wide-spread selling took Utilities (-0.6%) lower. Investors within the stock and bond markets alike fully expect a 25 basis point hike in the fed funds rate, but there is less certainty over the Fed's policy statement. The market expects just one more rate increase following tomorrow's, and will attempt to glean confirmation of such in the statement's wording. Our forecast calls for two more rate hikes over the course of the next two meetings, after which the tightening cycle will pause. With respect to financials, brokers helped limit the downside.

Some broad-based selling sent the Consumer Staples sector (-0.4%) south, but Wal-Mart (WMT 46.40 +0.56) shares offered support. This morning, the world's largest retailer announced a preliminary 4.7% gain in January same-store sales. That figure, which is at the high end of its forecast, follows its disappointing December same-store sales gain. The rise in January suggests there was an accelerator effect from gift card spending that is likely to show up in the same-store sales results from other retailers. After Wednesday's close, the industry will begin to announce its January data. An encouraging fiscal Q2 report from Sysco (SYY 32.48 +1.91) lent further upside within the Staples sector.

Along with upgraded Gap (GPS 18.07 0.69) shares, General Motors (GM 24.19 +0.39) was the Discretionary sector's (-0.2%) strongest crutch. Upon reports that Citigroup (C 46.83 -0.04) is working with Cerberus Capital in offering $11.5 billion for its GMAC business, the stock jumped. On a related note, Wachovia (WB 54.75 +0.35) is also reportedly interested in making a bid. Further to the M&A front, Arcelor rejected Mittal's (MT 35.69 +1.43) unsolicited $23 billion cash proposal, and Fairmont Hotels (FHR 44.24 +0.42) will be acquired by Kingdom Hotels and Colony Capital for $3.9 billion in cash.

The economic calendar featured two items. Personal income was up 0.4% (consensus 0.4%); personal spending rose 0.9% (consensus 0.8%). As the data generally matched expectations, and because the Q4 GDP figures have already been reported, the markets essentially overlooked the data. Investors remain focused upon tomorrow's FOMC and OPEC meetings and Friday's employment report.DJ30 -7.29 NASDAQ +2.55 SP500 +1.48 NASDAQ Dec/Adv/Vol 1629/1487/1.94 bln NYSE Dec/Adv/Vol 1702/1592/1.66 bln

4:09PM Zoran beats by $0.08, guides Q1 above consensus (ZRAN) 20.99 +0.60 : Reports Q4 (Dec) earnings of $0.23 per share, excluding non-recurring items, $0.08 better than the Reuters Estimates consensus of $0.15; revenues rose 46.2% year/year to $109.3 mln vs the $105.1 mln consensus. Co issues upside guidance for Q1, sees EPS of $0.10-0.12, ex-items vs. $0.10 consensus; sees Q1 revs of $103-106 mln vs. $100.10 mln consensus.

10:25 am Schering-Plough (SGP)

19.78 -0.30: Drug maker Schering-Plough on Monday reported a fourth profit, reversing a year-ago loss, due to lower income taxes and strong growth of key products, such as arthritis drug Remicade and hepatitis treatment Peg-Intron. However, shares of the company are trading lower as the latest results fell short of analysts' expectations.

For the fourth quarter, the Kenilworth, New Jersey-based company earned $104 million, or $0.07 per share - a penny shy of the Reuters Estimates consensus of $0.08 per share. Last year, the company posted a loss of $856 million, or ($0.58) per share, which included an $807 million charge for taxes on foreign profits returned to the United States. Global sales for the fourth quarter rose 6% to $2.32 billion, but fell slightly below analysts' target of $2.38 billion.

On the top line, Prescription Pharmaceuticals, which exclude the cholesterol joint venture with Merck & Co. (MRK), increased 10% to $1.9 billion. Performance in the segment was led by sales of Remicade, which rose 19% to $251 million, and Peg-Intron, which rose 55% to $214 million. Among other products, sales of cancer treatment Temador grew 7% to $160 million, while sales of allergy drug Clarinex were down 14% to $139 million as it continues to experience reduced market share in a declining market. Meanwhile, cholesterol joint venture sales, which includes Vytorin and Zetia, totaled $755 million, up 89% year/year. In Consumer Health Care, sales decreased 9% to $198 million, due in large part to lower sales of Claritin-D and increased restrictions on other OTC products containing pseudoephedrine. Animal Health sales fell 4% to $220 million, reflecting lower sales of cattle products and an unfavorable impact from foreign exchange.

As the company continues its turnaround, "moving from survival mode into thrive mode," it believes the strength and breadth of its drug portfolio and cholesterol franchise will drive long term performance, despite a competitive health care environment and the impact of patent expirations. Looking to the first quarter, analysts are expecting Schering-Plough to earn $0.14 per share on revenue of $2.49 billion, according to Reuters Estimates. Last year, the company posted earnings of $0.09 per share on revenue of $2.37 billion.

--Richard Jahnke, Briefing.com

10:13 am Wal-Mart (WMT)

46.77 +0.93: Wal-Mart's latest weekly sales summary was short on detail, but long on importance for the broader market.

Recall that Wal-Mart had been forecasting a 3-5% increase in January same-store sales, but with January 27 marking the end of its measurement period, Wal-Mart now expects January same-store sales to be up approximately 4.7%. For Wal-Mart's final week, it was noted that food comparative sales were stronger than general merchandise, that average ticket drove the comp sales, and that the Northeast was its strongest region.

Several conclusions can be drawn from Wal-Mart's same-store sales performance in January and they are as follows:

Consumer spending was steady in January and it should ultimately be revealed that the deceleration in Q4 GDP growth was an aberration
Following Wal-Mart's disappointing 2.2% increase in December same-store sales, the uptick in January suggests there was an accelerator effect from gift card spending that is apt to show up in the same-store sales results from other retailers
Wal-Mart's success will continue to come at the expense of traditional grocers (i.e. SWY, KR, ABS, SVU)
The pullback in energy prices has provided spending relief for the low- to middle-income consumer
In retrospect, the 2005 holiday selling season will be viewed as having been solid given the tough comparison to the prior year
Wal-Mart's news has provided a lift to the retail sector and other discount-oriented retailers such as Kohl's (KSS), TJX Cos. (TJX), and its biggest competitor, Target (TGT). At its current level, Wal-Mart trades at 18.3x trailing twelve month earnings, which is roughly a 40% discount to its 5-year historical average and underscores the value proposition we highlighted on our bargain Hunting page last October.

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

09:35 am Exxon Mobil (XOM)

61.29: As expected, the world's largest oil company reported another blowout quarter. Exxon's fourth quarter profits rose 27% on record oil and natural gas prices to $10.7 billion, setting a new all-time record as the most profitable company in US history.

Net income swelled to $10.7 bln, or $1.71 per share, reflecting higher price realizations and improving refining and marketing margins. Excluding a gain from a lawsuit, per share profits were $1.65 per share - 20 cents above analysts' projections. Exxon's profits rose 8% from the September quarter, as revenues rose 20% to $99.7 bln - larger than the GDP of Sweden and Taiwan, according to Bloomberg. Rising demand for oil and gas, coupled with disruptions from the hurricanes, catapulted prices to new record levels in the quarter. The average profit for refining crude into distillates (gasoline, heating oil, jet fuel) widened to a record high of $11.00 per barrel.

Exxon increased its capital investment program in the quarter bringing the yearly tally to $17.7 bln, up 19% over 2004 levels. With cash flows rising to $11. 9 bln, Exxon also distributed $6.8 bln in dividends and share purchases in the quarter totaled $23.2 bln for the full year, up 56%. Oil-equivalent production declined by 1%. But, stripping out the hurricane impacts, divestments and entitlement effects, production rose 2% driven by a 30% rise in Africa, offsetting declines in Europe, Asia, and the US. Liquids production rose to 2,629 thousands of barrels per day, up 6% net of hurricanes, while natural gas production fell marginally due to fields declines, hurricanes, and divestments.

On January 1, long-time CEO Lee Raymond retired, and was replaced by Rex Tillerson who looks to capitalize on high energy prices by expanding output in Russia, Africa and SEAsia. Exxon also hopes to increase its refinery capacity, which is second only to Chevron (CVX). Exxon is the fourth of the super-majors to report a record quarter. For Exxon, as well as the industry, 2006 will be all about reserve replacement and production growth, achieved either through the drill bit or M&A activity. 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 buy and hold.

--Kimberly DuBord, Briefing.com

09:26 am Sysco (SYY)

30.57: For the second straight quarter, Houston-based Sysco Corp. missed Wall Street's expectations. Net earnings at North America's leading foodservice marketer and distributor fell 12.2% year/year to $204.2 mln, as the company reported Q2 (Dec) earnings of $0.33 per share. The Reuters Estimates consensus was $0.35.

Results contained $0.04 for incremental stock-based compensation, which analysts included in their estimates after management said in their previous earnings release (Oct. 31) that stock-option expenses for fiscal 2006 would range from $90-110 mln, reducing earnings by $0.14-0.17 over the year. Also weighing on Sysco's bottom line were higher operating expenses. In particular, there was an additional $13 mln spent on fuel, as well as an increase in sales and marketing personnel to serve key customers that helped boost sales.

Revenues rose 8.7% year/year to $7.97 bln, topping the $7.89 bln consensus estimate and returning to Sysco's historical performance levels. Also, gross profit margins increased 21 basis points in Q2 - the largest increase in the last 14 consecutive quarters - due to an improved customer mix. Sysco's industry has endured a variety of challenges in the past several quarters, especially in terms of fuel costs and the effects of food cost inflation. However, by remaining focused on long-term goals Chairman and CEO Richard Schnieders believes it has "executed on the basic building blocks of our business and positioned ourselves for future success."

Sysco shares are currently trading near a 52-week low of $29.98, which was reached on Nov. 7, 2005, but are off just 1% for the year compared to a 4.4% year-to-date decline for rival Performance Food Group (PFGC), the nation's No. 3 foodservice distributor. While both SYY and PFGC are expected to grow earnings 13% over the next five years, SYY has the better risk-reward proposition between the two, as PFGC's high price-to-earnings growth ratio of 2.17 ("PEG") does not justify its richer forward P/E multiple of 28.5x. Sysco trades at 20.9x forward earnings of $1.46 per share and has a PEG ratio of 1.48.

--Brian Duhn, Briefing.com

09:07 am Eastman Kodak (EK)

26.37: Eastman Kodak on Monday reported a narrower fourth quarter loss, helped by strong demand for digital products and services, as well as a tax settlement with the Internal Revenue Service. For the period, Kodak posted a net loss of $52 million, or ($0.18) per share, compared with a loss of $59 million, or ($0.20) per share, in the year ago period. The results, which include a $283 million after-tax restructuring charge, were offset in part by a tax benefit stemming from the settlement with the IRS, and may not be comparable to the Reuters Estimates consensus of $0.39 per share.

Revenue for the period rose 12% year/year to $4.2 billion, led by a 45% increase in the sale of digital products and services. Digital sales were $2.64 billion, representing approximately 54% of total revenue. That marked the first time in the company's history that digital revenue surpassed traditional. Over the past two years, Kodak has been aggressively expanding its digital portfolio as demand for traditional film continues to decline.

Separately, the company announced that Robert Brust, Kodak's Chief Financial Officer and Executive Vice President, plans to retire when his contract expires at the end of January 2007.

Looking to 2006, the company expects total revenue growth between negative 2% and positive 4%, with digital revenue growth of 16% to 22%. As it continues to make progress in its digital transformation, it expects to increase digital earnings to a range of $350 million to $450 million, with total earnings from operations of negative $900 million to negative $1.1 billion. The outlook largely reflects the company's ongoing restructuring actions as it continues to strengthen its position in digital products and services. While Kodak shares fell more than 25% in 2005, they are up about 12% since the beginning of the year.

--Richard Jahnke, Briefing.com

08:59 am Smith International (SII)

42.73: Smith International, an oil and gas services company out of Houston, reported a 53% hike in fourth quarter profits on strong sales of drilling equipment. High energy prices have resulted in a flush of spending across the global energy patch, as producers look to increase reserves. Activity in the quarter was driven by robust drilling activity associated with the seasonal breakup period in Canada, along with increased activity in the Middle East and Latin America that increased demand for the company's diamond drill bits and tubular products. Following on the heels of strong results from its competitors, this was Smith's strongest quarter in terms of revenue and earnings growth on a sequential basis.

Net income rose to $88.6 mln, or $0.44 per share, on revenues of $1.53 bln. Excluding a non-recurring charge, earnings rose 60% yearly and 20% sequentially, coming in two cents ahead of what the market was expecting. The top line rose 26% over the prior year and 9% over the September quarter driven by land-based drilling activity in North America, favorable mix in the US offshore market, and higher price realizations. Outside North America, the strongest area was offshore production and exploration spending in West Africa - a theme we keep seeing reiterated over and over. This is a high growth area for E&Ps and a reason we like Transocean (RIG), as it currently has the largest percentage of rigs (16) that are operating, or are en route to the area.

The fourth largest oilfield services company forecasted the earnings momentum will continue due to improved pricing, product volumes, and further operating margin expansion, which has topped 30% for the past two quarters. For FY06, it sees earnings in a range of $2.00-2.10 per share - above the current consensus estimate of $1.97 per share. A higher level of planned E&P investment will likely deliver strong earnings growth across the entire oilfield service industry. This fact underscores our reasoning behind holding BJ Services (BJS), Grant Prideco (GRP), and Transocean as suggested holdings in our Active Portfolio. SII trades at 28.4x current earnings, compared to the Oil Services Index (OSX) at 29.2x.

--Kimberly DuBord, Briefing.com

08:44 am Mattel (MAT)

14.78: Mattel reported fourth-quarter net income of $279.2 mln, or earnings of $0.69 per share. Excluding a tax benefit of $0.11, operating earnings from the nation's No. 1 toy maker checked in at $0.58 per share, nine cents better than the Reuters Estimates consensus of $0.49. However, according to Chairman and CEO Robert A. Eckert, Mattel "continued to experience extensive cost pressures and sales declines in the Barbie brand," which offset much of the growth Mattel experienced throughout its portfolio.

Total revenues fell 0.4% year/year to $1.84 bln, coming in shy of the $1.89 bln consensus. Worldwide gross sales for the Mattel Brands Girls and Boys business unit were down 6% year/year to $1.06 bln as an 11% decline in worldwide sales for its Barbie brand offset a 12% increase in American Girl branded products sold directly to consumers. Worldwide sales for the Fisher-Price Brands business unit rose 6% year/year to $694.8 mln due to strong international sales but were overshadowed by a 7% decline in sales for the Wheels category, which includes the Hot Wheels, Matchbox and Tyco R/C brands, and a 13% decline in sales for the Entertainment business, which includes Games and Puzzles (eg. Scrabble, UNO and Outburst).

Separately, Mattel generated strong cash flow and the balance sheet remained healthy with approximately $1 bln of cash at year-end, which led to the authorization of a $250 mln increase to its existing share buyback program, reflecting management's confidence in Mattel's future profitability and ongoing commitment to return value to shareholders.

Mattel shares are off 6.6% so far this year compared to a 2.8% year-to-date rise for the S&P 500 and a 6.6% gain for rival Hasbro (HAS), which is scheduled to report Q4 earnings on February 6. Both companies fall under the Consumer Discretionary sector, which is currently rated Underweight by Briefing.com.

--Brian Duhn, Briefing.com

09:45 am Gap Inc: Banc of America Sec upgrades Neutral to Buy. Target $23. Upgrade is based on the firm's belief that at the current valuation the risk reward is compelling. They see limited downside and expectations in the stock. Yet, they see 3 potential scenarios, which they think should lead to improvement in the '07/'08 time frame: 1) business improves given current initiatives, least likely; 2) changes in sr divisional leadership drive improvement, or; 3) the lack of scenarios 1 or 2 ultimately leads to more dramatic senior mgmt changes.The firm says that admittedly, one may need to be patient here, and time may be the biggest risk, but they like the fact that from here, good news is good news and bad news should be viewed as potential good news.

09:44 am Cott: UBS reiterates Reduce . Target $11.5 to $11.5. Firm believes the co's growth outlook will remain challenged in 2006 due to 1) ongoing execution issues, 2) higher costs, 3) aggressive marketing and innovation efforts by branded players, and 4) volume impact of price increases given price sensitivity of P.L. Firm prefers TAP over COT.

09:43 am Affymetrix: Global Crown Capital downgrades Neutral to Underweight . Target $34. Downgrade is based on what they perceive as limited potential for share price appreciation over the next 3-6 months. In their opinion, FY-06 rev guidance leaves no room for underperformance in consumables growth. In addition, recent gross margin guidance fell significantly below their previous expectations.

09:42 am Asyst: Am Tech/JSA Research upgrades Hold to Buy. Target $12. As the semi equipment industry is rebounding in order growth, firm believes that ASYT should also benefit from strong orders and rev growth. While the mis-steps of late 2003 in the FPD business translated to an unprofitable year in 2004, firm says mgmt has demonstrated operational improvements through 2005, and they think that ASYT has regrouped and is poised for profitability in 2006.

09:36 am Schick Technologies, Inc.: CL King reiterates Strong Buy. Target $38 to $38. Target change is based on firm's projection of the co's digital dental x-ray and CEREC C.A.D/C.A.M revs will remain strong given the low mkt penetration that both of these technologies have achieved to date relative to their mkt potential and given the benefits provided by both technologies.

http://biz.yahoo.com/mu/short.html

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From Briefing.com: 4:23PM Powerwave beats by $0.02, ex items (PWAV) : Reports Q4 (Dec) earnings of $0.17 per share, excluding non-recurring items, $0.02 better than the Reuters Estimates consensus of $0.15; revenues rose 65.4% year/year to $258.7 mln vs the $262.2 mln consensus.

5:30PM Powerwave earnings update (PWAV) : Co's as reported Q4 EPS of $0.15 actually includes a $0.02 charge. Excluding all items, EPS of $0.17 is comparable to $0.15 consensus. We have edited earlier story to reflect comparable actual.

4:41PM Adaptec beats by 7 cents (ADPT) : Reports Q3 (Dec) earnings of $0.03 per share, excluding non-recurring items, $0.07 better than the Reuters Estimates consensus of ($0.04); revenues fell 16.8% year/year to $77.8 mln vs the $76.2 mln consensus.

4:37PM Asyst beats by $0.06, ex items; guides Q4 EPS above consensus, revs in-line (ASYT) : Reports Q3 (Dec) earnings of $0.10 per share, excluding non-recurring items, $0.06 better than the Reuters Estimates consensus of $0.04; revenues fell 33.8% year/year to $106.8 mln vs the $110.8 mln consensus. Co guides for Q4, sees EPS of $0.08-0.12 vs. $0.07 consensus; sees Q4 revs of $110-120 mln vs. $117.54 mln consensus.

4:29PM ATML reports Q4 EPS of $0.11, vs ($0.01) consensus; revs were $425.2 mln, vs $428.2 mln :

4:05PM Pixelworks announces resignation of CFO (PXLW) 5.69 +0.34 : Co reported that Jeff Bouchard, Vice President, Chief Financial Officer and Corporate Secretary, has resigned from Pixelworks as he has accepted the position of Chief Financial Officer of a private high-technology company in Silicon Valley. His resignation is effective February 10, 2006.

4:20 pm : What was widely expected to be a cautious day of trading, in anticipation of bidding farewell to Alan Greenspan's 18-year reign as Fed Chairman with a 14th consecutive 1/4% fed funds rate hike (to 4.50%), ended the same way it began, in negative territory.

Even though a second straight change was made to the FOMC policy statement's wording, signaling that the series of "measured" 1/4% rate hikes that began in June 2004 has now ended, mention that "some further policy firming may be needed" to keep economic growth and inflation balanced weighed on sentiment. That ambiguity, along with the statement that "Although recent economic data have been uneven, the expansion in economic activity appears solid," was more hawkish than investors hoped for and strongly suggests that another rate hike is coming at the March meeting. Despite modest market weakness and turning in the day's worst performance among the three major averages, the S&P enjoyed its best January since 2001.

Of the split industry leadership that dictated much of the late-day choppiness, Technology paced the way to the downside. Profit-taking in semiconductor offset an intraday 52-week high on Microsoft (MSFT 28.15 +0.15) following its patent case victory. Energy was also an influential leader to the downside as a pullback across the energy complex weighed heavily on the sector as did consolidation in Valero Energy (VLO 62.43 -0.77), last year's best performing S&P constituent (+128%) which beat forecasts but not by as much as many expected.

Consumer Discretionary was also weak, playing into why we've had an Underweight rating on the sector since April 2004, as losses in homebuilding and media were accompanied by discouraging Q4 guidance from Goodyear Tire (GT 15.64 -3.12). Consumer Staples lost ground as a cautious FY06 outlook from Altria (MO 72.34 -1.57) overshadowed a strong report from Archer Daniels Midland (ADM 31.50 +2.76) which has sent ADM shares to a historic high.

Materials, though, held onto a modest gain as strength in gold, steel and an analyst upgrade on Alcoa (AA 31.50 +0.97) help offset a 64% drop in Q4 profits from Phelps Dodge (PD 160.50 -1.60), a suggested holding in our active portfolio which had rebounded of late as copper prices continued to hit historic highs. Health Care also clung to a slight gain, as strength in HMOs, ahead of President Bush's State of the Union address, barely offset losses in the drug group, as Merck's (MRK 34.50 +0.04) better than expected report lost momentum into the close.

Separately, consumer confidence in January rose a stronger than expected 106.3, the highest level since mid 2002, but since the data don't correlate well with spending trends, the report was largely dismissed ahead the FOMC's wording. Jan. Chicago PMI checked in at 58.5, slightly below forecasts and a Dec. read of 61.5, but was overshadowed in anticipation of tomorrow's more influential national ISM manufacturing index. Also, a 0.8% rise in the Q4 employment cost index was also overlooked in favor of seeing how the text of the policy directive would set the table for Ben Bernanke, as he steps in as the new Fed Chairman tomorrow. BTK +0.9% DJ30 -35.06 DJTA +0.3% DOT +0.3% NASDAQ -0.96 SOX -1.4% SP500 -5.12 XOI +0.2% NASDAQ Dec/Adv/Vol 1411/1636/2.08 bln NYSE Dec/Adv/Vol 1534/1758/1.77 bln

12:48PM Marvell and Kyocera Wireless initiate strategic alliance to enable W.L.A.N/cellular convergence (MRVL) 68.26 -0.60 : The co and Kyocera Wireless (KYO) announce a strategic alliance to incorporate the co's W.L.A.N technology and chipsets into a dual-mode Wi-Fi/CDMA handset platform.

1:23 pm Kellogg (K)

42.97 -0.71: With a fourth quarter profit of $0.47 per share, Kellogg checked in a penny ahead of Wall Street's expectations. Compared with the year-ago period, EPS rose about 4.4%. Excluding the effect of one extra shipping week in 2005, the company noted that Q4 EPS grew approximately 16%.

The company's top line remained virtually unchanged, with its $2.39 billion in revenues falling slightly short of the $2.41 billion consensus estimate. Kellogg's internal sales, which exclude the effects of foreign-currency translation and differences in the number of shipping days, reflected 6% growth. The company is segmented into four geographic divisions. North America accounts for about 68% of total revenues and sales there grew 2.4%. With solid growth across its North America Retail Cereal (+8%), Retail Snacks (+8%), and Frozen and Specialty Channels (+8%) businesses, internal sales for Kellogg North America grew 8%. International sales fell 4%, but rose 3% on an internal sales basis.

As a result of its FY05 performance, Kellogg raised its FY06 guidance. Excluding the estimated effect of a stock-based compensation expense, EPS of $2.52-2.57 is anticipated. That translates to approximately 7-9% year-over-year EPS growth. According to Reuters Estimates, analysts are expecting Kellogg to deliver a profit of $2.54 per share. The company acknowledged that it will face significantly higher fuel, energy, and benefit costs, but that it will execute additional cost saving initiatives. In the fourth quarter Kellogg's gross margin contracted 130 basis points to 43.6%, while its operating margin declined 90 basis points to 14.4%. The company expects its gross margin to expand during 2006, however, due in part to price increases taken in 2005.

Because of the headwinds of a strengthening dollar, higher packaging and raw material costs, and the threat of generic competition, we maintain a Market Weight rating on the Consumer Staples sector. The industry groups we prefer in the sector are hypermarkets, drug store retailers, and household products. Kellogg trades at 16.8x estimated earnings, which is relatively in-line with competitor General Mills (GIS) and the sector multiple.

--Lisa Beilfuss, Briefing.com

12:08 pm Nasdaq Stock Market (NDAQ)

41.50 -5.20: After the close Monday, the Nasdaq Stock Market reported fourth quarter profits that beat Wall Street's estimate, aided by strong revenue growth and a slight contribution from the recent acquisition of the Inet ECN. However, shares of the company fell more than 12% in early trading , as investors responded to a weaker than expected forecast for the full year.

For the three months ended December 30, Nasdaq said it earned $16.1 million, or $0.15 per share, compared with $1.6 million, or $0.02 per share, in the year ago period, which included a number of one-time items. Revenue rose 54.3% to $259.5 million from $168.1 million last year. By segment, revenue from market services, which provides transaction-based services and market information services, rose 72% to $200.2 million, while revenue from issuer services increased 14% to $59.3 million. According to Reuters Estimates, the company was expected to post earnings of $0.14 per share on revenue of $235.35 million.

For 2006, the company projected earnings in the range of $0.52 to $0.60 per share, including the impact of Nasdaq's cost reduction program and the integration of Inet. Excluding these expenses, the company expects to earn approximately $0.80 to $0.92 per share, versus the Reuters Estimates consensus of $0.92 per share. While the integration of Inet is likely to cause some near-term disruption, it should help Nasdaq establish a more efficient transaction system and create greater access to various markets in the face of a more dynamic and competitive environment.

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

--Richard Jahnke, Briefing.com

10:37 am Chicago Mercantile Exchange Holdings (CME)

415.00 +11.00: Shares of Chicago Mercantile Exchange Holdings opened higher on Tuesday, gaining nearly 3%, after the company reported a 34% increase in net income and a 24% increase in net revenues for the fourth quarter. For the period, the Chicago-based exchange said net income increased to $76 million, or $2.18 per share, from $57 million, or $1.64 per share, in the year ago period, helped by a more favorable mix of trading volume. Analysts, on average, were expecting the company to post earnings of $2.10 per share.

On the top line, net revenues increased to $233 million, as clearing and transaction fees rose 27%. That reflected a a 33% increase in average daily volume to 4.1 million contracts. Growth in the fourth quarter was led by 49% jump in higher margin foreign exchange product volume to a record 375,000 contracts per day, as well as a smaller proportion of trading volume for lower margin interest rate contracts. CME's rate per contract, a key measure of operating margin, improved to $0.687 per contract versus $0.659 per contract in the previous quarter.

The company also reported record earnings and revenue for the full year. Specifically, net income rose 40% year/year to $307 million, or $8.81 per share, and net revenues climbed 25% to $921 million for the year. The results were driven by the company's strong product diversity and volume growth across the board. For the year, total average daily volume grew 34%, while total volume exceeded one billion contracts for the first time in a single year. The company noted that 70% of the volume was traded electronically compared with 54% last year.

CME's shares have increased more than 11-fold since its initial public offering in late 2002, driven by the company's continued strong performance. Furthermore, momentum has been supported by the recent IPO of cross-town rival CBOT Holdings (BOT), as well as increased interest in publicly traded exchanges amid the New York Stock Exchange's planned merger with Archipelago Holdings (AX). At the current price level, shares are trading at 38.0x forward earnings, compared with 39.9x for BOT. Although a premium multiple is justified given the company's strong track record and comparative growth profile, the stock appears to be richly valued with a P/E-to-growth rate of 2.46. As such, we would recommend existing shareholders take some money off the table to lock in the gains from the stock's healthy run.

--Richard Jahnke, Briefing.com

10:05 am Kraft Foods (KFT)

29.28 -0.72: Kraft Foods delivered $0.56 in fourth quarter earnings per share. The figure, which excludes a dime in exit and implementation costs and impairment charges, exceeded analysts' expectations by two cents.

With net revenues of $9.66 billion, the top line grew 10.0%. Favorable currency and an extra week in the reporting period were beneficial factors. Pricing in multiple categories and positive mix across most of the portfolio also helped fuel the increase. The company is segmented into six divisions and its U.S. Beverages business experienced the most significant year-over-year revenue growth (+23.9%) . U.S. Convenient Meals, U.S. Snacks and Cereals, and Kraft North America Commercial also posted double-digit sales increases. Kraft's U.S. Grocery division placed last with 5.6% revenue growth.

The company emphasized its progress against its Sustainable Growth Plan, and highlighted several factors that contributed to its fourth quarter results. Aggregate dollar market share rose 0.4% across its top 25 U.S. categories - its best quarterly performance in over three years. Positive product mix, strong new product results, solid growth in developing markets, and favorable restructuring results were also cited by Kraft. At the same time, two primary factors offset its progress: higher commodity costs and flat volume.

Kraft said it expects the "challenging environment to continue," but management believes that stronger brand value propositions and aggressive cost restructuring programs will drive improved results this year and beyond. To that end, Kraft announced that it would eliminate about 8,000 jobs, which represents about 8% of its work force, close up to 20 production plants, and reduce its brand portfolio by approximately 10%. Kraft said the cuts would save an additional $700 million in annual costs. It anticipates FY06 EPS to be in a range of $1.88-1.93 (excluding $0.50 in special items), which brackets the $1.90 consensus estimate. Kraft indicated that earnings growth will be skewed towards the back half of the year, as the carryover impacts of higher input costs will affect the first half.

During the quarter, the company declared a quarterly dividend of $0.23 per common shared. Kraft further returned value by repurchasing 13.9 million shares of its common stock - which brought its full-year repurchases to $1.2 billion. KFT shares currently trade at 15.4x estimated full-year earnings, a discount to the Consumer Staples sector's 17.2x multiple.

--Lisa Beilfuss, Briefing.com

09:41 am Phelps Dodge (PD)

158.05 -4.05: Phelps Dodge, one of the world's largest copper producers in the world and a suggested holding in our Active Portfolio, suffered a 64% drop in fourth quarter profits from lower production and hedging-related costs. The company pre-announced earnings and tempered production guidance on January 10th, sending shares down materially on the day. Over the past few weeks, however, shares have rebounded as copper prices set new records on low London Metal Exchange inventories and a Codelco worker strike.

Net income declined to $121.3 mln, or $1.19 per share, from $341.1 mln, or $3.40 per share, in the year earlier. On a comparable basis, excluding $2.01 in net special charges and a loss of $0.40 for discounted operations, earnings were $3.60 per share versus the consensus estimate of $3.28. This compares to PD's (Jan. 10) guidance for EPS to be in a range of $3.05-$3.35 per share. Revenues rose 24% on higher copper prices to $2.26 bln.

The board approved a share repurchase plan of up to $1 bln. However, the company stated it may issue additional special dividends in lieu of share repurchases. While lower molybdenum production and sales are a concern, we remain positive on shares, feeling the company remains well positioned to benefit from the strong underlying copper fundamentals resulting in high copper prices. Further, PD's financial strength and capital returns program should also cushion the effects if copper prices fall sharply.

--Kimberly DuBord, Briefing.com

09:12 am Merck (MRK)

34.46: Merck on Tuesday reported better than expected fourth quarter earnings, helped by strong sales growth of asthma treatment Singulair. For the quarter, the Whitehouse Station, New Jersey-based company earned $1.12 billion, or $0.51 per share, compared with $1.10 billion, or $0.50 per share, a year earlier. If not for the impact of reserving an additional $295 million for Vioxx legal defense costs and restructuring-related charges, the company would have earned $0.64 per share - two cents better than the Reuters Estimates consensus of $0.62.

Worldwide sales totaled $5.8 billion, up a modest 0.3% year/year. Restructuring costs for the quarter were $229 million, which includes site closures and the elimination of approximately 1,100 positions. As part of its global restructuring program announced in November, Merck plans to close five manufacturing facilities and two pre-clinical sites by 2008. In addition, it plans to eliminate approximately 7,000 positions worldwide.

Among its major drugs, sales of Singulair reached $819 million as demand for asthma medications remained strong. That represented 12% growth over the fourth quarter last year. Global sales of antihypertensive medicines, Cozaar and Hyzaar, grew 2% year/year to $782 million. Meanwhile, sales of osteoporosis medicines Fosamax and Fosamax Plus D fell 5% to $789 million, and cholesterol drug Zocor fell 8% to $1.1 billion, as increased generic competition continues to pressure key franchises.

Based on the latest results, Merck offered in-line guidance for the fiscal first quarter. It expects to earn between $0.62 and $0.65 per share, compared with the Reuters Estimates consensus of $0.65. For the full year, the company sees earnings in the range of $2.28 to $2.36 per share, including $0.07 in stock based compensation expense, versus the consensus estimate of $2.36 per share. Despite the positive outlook, the ongoing legal issues with respect to the company's withdrawn painkiller Vioxx remain a significant overhang. As of December 31, the company faces approximately 9,650 lawsuits related to Vioxx after studies linked the drug to increased risk of heart attack and stroke in long term users.

--Richard Jahnke, Briefing.com

09:01 am OPEC Meeting

OPEC has unanimously voted to keep crude production unchanged with output currently running at a 26-year high. The production target will remain 28 million barrels per day, for now. The next meeting takes place in early March. Members agreed that supply is still ahead of demand, but according to Libya's Minister, "geopolitical events are having a big effect on the market." Crude futures have soared over 11% just this month to more than $68 per barrel, resulting in revenues for the cartel that are expected to top $500 billion.

The cartel, which has been meeting in Vienna over the last two days, is producing near capacity as consumption has remained strong and output slows. Tensions over Iran's nuclear program and rebel attacks at oil installations in Nigeria have sent oil prices near $70 per barrel once again. The Irani Minister stated Iran would not cut oil out because of its nuclear initiative, as it has no reason to mix politics with economics.

The 11-member group controls more than a third of the world's crude. Historically, production usually slows in the second quarter in anticipation of rising temperatures in the Northern Hemisphere. Due to the burgeoning economies of India and China, this seasonal effect has been lessened. Saudi Arabia anticipates these economies will spur demand for oil this year.

--Kimberly DuBord, Briefing.com

08:40 am Altria Group (MO)

73.91: The world's largest cigarette marker reported an 18% rise in fourth quarter profits, assisted by higher prices for Marlboro in the US. Net income for Altria, the parent company to Philip Morris and Kraft Foods, grew to $2.29 bln, or $1.09 per share, from $1.95 bln, or $0.94 a year earlier. Altria has surpassed expectations for the last four consecutive quarters, but this quarter, the Street was looking for earnings of $1.17. At this point, we do not have a comparable figure.

Kraft (KFT), which is 85% owned, reported Q4 results on Monday, surpassing expectations with profit growth of 23% to $773 mln. The food company also announced restructuring plans that included cutting 8,000 jobs and 20 plants through 2008.

Philip Morris leveraged the inelasticity of the demand curve in the quarter by raising prices considerably on its Marlboro brand. CEO Louis Camilleri stated the company raised cigarette prices in the US after gaining market share over the number two brand, Reynolds American, to 50.7%. Philip Morris International, which accounts for almost 50% of earnings, benefited from acquisitions in Indonesia and Columbia. Accelerating growth within the global tobacco market is the basis for the slew of bullish ratings on the stock.

Altria's stock has been on a wild ride over the last few months. Shares reached an all-time high on December 15th when the company's tobacco unit won a reversal of $10.1 bln in damages awarded to smokers of "light" cigarettes who claimed the company misled them about health risks. Altria forecasted earnings for FY06 of $4.85-$4.95. This figure includes a bevy of items, including 36 cents in Kraft restructuring charges, an unfavorable currency impact of 14 cents, and 10 cents for lower tobacco income in Spain. Accordingly, the guidance is not comparable to the consensus estimate of $5.48. MO trades at a forward multiple of 13.4x and offers a dividend yield of 4.3%.

--Kimberly DuBord, Briefing.com

10:11 am Atheros Communications: Needham & Co downgrades Buy to Hold. Downgrade is following a "blowout" Q4 and "superb" Q1 guidance, citing valuation. They note that the stock traded to $18+ in the aftermarket, saying that's a P/E multiple of 34. They note that the market cap is touching a billion dollars, or almost 4x estimated 2006 sales, and cash is $174 mln, or over $3 per share. Without higher revenues and EPS, that sounds to them like a full valuation for even a class leader such as Atheros.

10:10 am Radware: Ferris Baker Watts upgrades Neutral to Buy. Target $23.5. Upgrade is following Q4 results. The $0.01 upside to their EPS forecast was primarily due to a better-than-expected gross profit margin, which at 80.7% was 74 basis points above their forecast. They say deal size is up to $70k from $60k during 1H05, and note that customer quality is strong with several large telecommunications and financial institutions identified as major accounts in the quarter.

10:08 am Volterra Semi: Piper Jaffray reiterates Market Perform. Target $11 to $11. Firm believes that over the course of 2006, they believe that both the graphics side and the server/storage business will grow, but that servers will remain the bulk of sales. The stock saw a bottom in Q4 and has performed very well recently; Following the call, they think it appears that visibility on the timing of ramps does seem to be improving, they expect the stock to continue to trade well. They are raising their 2006 est to $0.49 EPS on rev of $75.6 mln, up from $0.47 and $72.1 mln.

10:07 am ITT Educational: Stifel Nicolaus upgrades Hold to Buy. Firm upgrades based on what they believe is a combination of improving fundamental trends and business metrics and a reasonable valuation relative to future growth prospects.

10:05 am Marvell: Am Tech/JSA Research reiterates Buy. Target $66 to $66. Firm believes that that 3-6 months from now, investors will be focused on CY07 estimates as a valuation metric as CY06 hits its mid-point. In their view, MRVL is well-positioned in 6 key growth areas including HDDs, GigE, WiFi, DVD optical drives, power management and VoIP.

10:04 am CRM Holdings: KeyBanc Capital Mkts / McDonald initiates Buy. Target $16. The firm believes the co should be able to generate earnings and rev growth in excess of 20% for the next 3-5 years, given the size of the tgt mkts and potential to expand into other states such as Nevada.

10:03 am Atheros Communications: CE Unterberg Towbin reiterates Buy. Target $15 to $15. Firm says that wirelss momentum continues to build, and new products, such as the PAS/PHS, ROCm and 802.11n WLAN, should provide growth opportunities for 2006 and into 2007.

10:02 am Trident Microsystems: CE Unterberg Towbin reiterates Buy. Target $25 to $25. Firms ups price target based on 30x their CY2007 EPS of $1.05. They believe investors will begin focusing on CY07 EPS power in the next 6 months, i.e., mid 2006, and view a 30x forward multiple as reasonable given TRID's leadership position within the DTV market, and its outlook for rev/eps growth of 84%/131% and 37%/29%, for CY06 and CY07 respectively.

10:01 am Cisco Systems: Miller Johnson upgrades Neutral to Buy. Target $19 to $19. Firm notes that their checks with industry contacts reveals that Cisco's quarter is likely to come in slightly above the high end of guidance or closer to 2% (guidance was flat to up 1%). They believe that given the revenue upside, EPS could come in a penny above consensus, which is currently $0.25. Their checks show that enterprise networking, particularly in the U.S. did well along with high-end routing. Firm raises their FY06 and FY07 ests.

10:00 am Pharmion: Lazard Captial upgrades Sell to Hold. Firm upgrades after the co announced it has in-licensed MGCD0103. While the combination of an HDAC inhibitor with Pharmion's Vidaza is appealing and makes synergistic sense, firm notes the crowded landscape of HDAC inhibitors that are just beginning to enter the clinic, with Pharmion's own admission that its first compound from the collaboration, MGCD0103, may not reach the market until 2009-2010. Firm also says milestone payments and increased R&D expenses wipes out the co's profitability for the foreseeable future.

http://biz.yahoo.com/mu/short.html

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From Briefing.com: 4:39PM ESS Tech beats by $0.08; issues downside Q1 guidance (ESST) 3.99 -0.01 : Reports Q4 (Dec) loss of $0.25 per share, excluding non-recurring items, $0.08 better than the Reuters Estimates consensus of ($0.33); revenues rose 2.3% year/year to $44.1 mln vs the $41.3 mln consensus. Co issues downside guidance for Q1, sees loss of -$0.36-0.38 vs. -$0.31 consensus; sees Q1 revs of $26-30 mln vs. $36.59 mln consensus.

4:35PM Micrel beats by $0.01, guides Q1 revs above consensus (MCRL) 12.48 +0.22 : Reports Q4 (Dec) earnings of $0.11 per share, $0.01 better than the Reuters Estimates consensus of $0.10; revenues rose 9.6% year/year and 4% sequentially to $65.1 mln vs the $66.0 mln consensus. Co issues upside guidance for Q1, sees Q1 revs of $67.1-70.4 mln vs. $66.8 mln consensus. Co says order rates increased nicely on a sequential basis in Q4 resulting in a book-to-bill ratio above one and that this order strength has continued into January.

4:33PM O2Micro misses by a penny, ex items (OIIM) : Reports Q4 (Dec) earnings of $0.07 per share, excluding non-recurring items, $0.01 worse than the Reuters Estimates consensus of $0.08; revenues rose 20.0% year/year to $28.6 mln vs the $29.4 mln consensus.

4:28PM JDS Uniphase reports in-line results; issues in-line guidance (JDSU) : Reports Q2 (Dec) net of breakeven, excluding non-recurring items, in line with the Reuters Estimates consensus of ($0.00); revenues rose 73.4% year/year to $312.9 mln vs the $312.6 mln consensus. Co issues in-line guidance for Q3, sees Q3 revs of $304-321 mln vs. $308.95 mln consensus.

4:19PM Cadence Design beats by a penny, ex items; guides in-line (CDNS) : Reports Q4 (Dec) earnings of $0.29 per share, excluding non-recurring items, $0.01 better than the Reuters Estimates consensus of $0.28; revenues rose 10.3% year/year to $378.4 mln vs the $366.7 mln consensus. Co issues in-line guidance for Q1, sees EPS of $0.19-0.21, ex items vs. $0.19 consensus; sees Q1 revs of $315-325 mln vs. $325.97 mln consensus. Co issues in-line guidance for FY06, sees EPS of $0.96-1.04, ex items vs. $0.97 consensus; sees FY06 revs of $1.4-1.45 bln vs. $1.41 bln consensus.

4:20 pm : Late in the session, the market's major averages breached the tight range that had contained them all day. Relieved that Google's (GOOG 405.00 -27.66) earnings disappointment did not sink Wednesday's market, buyers stepped in and sent eight of the ten economic sectors higher. Strong earnings results from Boeing (BA 71.62 +3.31) supported the market, countered Google's effect, and drove the Dow's outperformance.

Lifted by Boeing, the Industrials sector (+0.8%) led. Honeywell (HON 39.27 +0.85) and Caterpillar (CAT 69.17 +1.27), which also recently delivered strong profit reports, were also influential leaders. Earnings results from those industrial bellwethers underpin our Overweight rating on the sector. Fueled by the biotechnology industry, Healthcare (+0.7%) offered additional leadership. Amgen (AMGN 76.18 +3.29) was the particular bright spot following reports that FDA approval of Roche's competing anemia drug may be delayed until 2009. Largely to the credit of AT&T (T 26.56 +0.61), which was positively featured in the Financial Times today, Telecom jumped 1.1%.

Google's earnings disappointment sat center stage and weighed heavily upon the Technology sector (+0.5%). But as investors acknowledged that the company's earnings miss relative to the consensus estimate was the result of a much higher than expected tax rate, Google shares well pared their losses and lessened the pressure within the sector. A surge in semiconductors was also responsible for the sector's climb and the Nasdaq's clearance of the flat line.

Unexpected rises in January auto sales contributed to afternoon buying efforts. Ford (F 8.68 +0.10), General Motors (GM 24.60 +0.54), and DaimlerChrysler (DCX 58.08 +0.76) each reported gains. Upside earnings from Time Warner (TWX 18.24 +0.71) lent further muscle to the Consumer Discretionary sector (+0.4%). Homebuilders and retailers, however, were offsetting areas. With respect to the latter industry, investors were cautious ahead of the January same-store sales results that will begin to stream in this evening.

Crude's 2.4% drop to $66.31 per barrel underpinned the late-day bias. Although the EIA's inventory report initially had a generally muted effect, traders ultimately focused upon the better than expected builds in crude oil and gasoline supplies. On the flip-side, the data spurred a 1.9% slide in the Energy sector. While that decline weighed heavily, broad-based buying across the rest of the market offset its effect.

On the economic front, The January ISM manufacturing survey fell to 54.8 from 55.6 in December. The read was slightly below expectations, but nonetheless reflects expansion. December construction spending was up a stronger than expected 1.0%. Neither release has had much affect on trade, but the ISM data helped the dollar extend its rise. The market remains focused on Friday's employment data as it, and the data between now and the March 28 FOMC meeting, will help dictate the Fed's next course of action.DJ30 +89.09 NASDAQ +4.74 SP500 +2.38 NASDAQ Dec/Adv/Vol 1401/1642/2.32 bln NYSE Dec/Adv/Vol 1458/1796/1.92 bln

2:18PM Varian Semi announces 3-for-2 split (VSEA) 50.96 +1.43 :

4:15 pm JetBlue (JBLU)

11.18 -1.86: Et tu JetBlue? Since going public in 2002, JetBlue has never reported a quarterly loss - until today. Like so many other carriers, JetBlue endured the vagaries of record high fuel prices and a tough revenue environment (read: competition). The end result was that the airline operator reported a net loss of $42.4 million, or $0.25 per share, for its fourth quarter. Excluding two unusual items, the reported net loss comes to $32 million, or $0.19 per share, versus net income of $1.5 million, or $0.01 per share, in the year-ago period.

The market's disappointment is evident in JetBlue's stock price, but that disappointment has more to do with the company's guidance than its actual result. Despite its extended history of profitability, JetBlue was expected by analysts to lose $0.16 per share in the year-end period. However, it wasn't expected to project a loss for the first quarter and the full year. It did just that, though, noting that it expects to report a negative operating margin between 3% and 5% for the first quarter based on an all in aircraft fuel cost per gallon of $1.92 and a capacity increase of 27-29%. According to Reuters Estimates, JetBlue was expected to post a profit of $0.06 per share in the March quarter and a profit of $0.19 for 2006.

The added source of concern is that JetBlue is now in a position where it will have to increase ticket prices to return to profitability. At first blush, that sounds like a simple solution, but pricing power and the airline industry haven't exactly gone hand-in-hand given the proliferation of low-cost carriers, which helped drive legacy carriers, like Delta, Northwest and United, into bankruptcy with their leaner operating models. Incidentally, United emerged from Chapter 11 bankruptcy today after being under the court's protection for three years.

For JetBlue, its return to profitability doesn't seem assured over the near-term as its capacity increase, and that of other carriers aiming to pick up market share, will limit its success in sustaining the pricing power it needs to eliminate its red ink. Moreover, fuel prices remain at stubbornly high levels in the face of concerns about Iran's nuclear ambitions and show few signs of abating in any meaningful way. With profit prospects for JetBlue up in the clouds, then, investors are better off taking flight with other stocks.

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

3:59 pm Anheuser-Busch (BUD)

41.31 -0.13: Anheuser-Busch on Wednesday reported fourth quarter profits fell 39%, due to rising commodity costs and continued weakness in the domestic beer business. For the period, the St. Louis-based company said it earned $201 million, or $0.26 per share, down sharply from $332 million, or $0.42 per share, a year earlier. Net sales of $3.37 billion remained flat from the prior year period, due to lower domestic bear sales, offset in part by higher sales for international beer.

According to Reuters Estimates, the company, whose brands include Bud Light and Michelob, was expected to post earnings of $0.26 per share on revenue of $3.35 billion. Anheuser-Busch shares traded flat on the lower than expected results; however, investors already accounted for the impact of increased cost pressures following the company's profit warning in November. In addition, with shares underperforming significantly over the past two years, expectations have largely been subdued with demand for domestic beer faltering.

Sales from the domestic beer segment declined 2.3% in the quarter on lower revenue per barrel despite a slight increase in beer sales volume. The decline reflects the deferral of price increases until early 2006, as well as higher promotional activities. Domestic sales volume increased 0.8% to 23.1 million barrels during the period. Meanwhile, international beer volume grew 13.3% year/year to $5.4 million barrels, driven by increased demand for China Budweiser operations, Canada, and Mexico.

In light of sinking demand for domestic brands, a key question for Anheuser-Busch is how it will diversify its portfolio away from the domestic beer business. Furthermore, higher costs resulting from commodity cost pressures from aluminum, glass, and energy continue to crimp profits. Until the company can realign its brands to current trends and improve cost controls, we would stay away from the stock as it continues to trend lower.

--Richard Jahnke, Briefing.com

2:49 pm Flextronics (FLEX)

10.40 -0.06: One thing you can count on when electronics manufacturing services company Flextronics reports its results is that its operating margins will be slim. That's due primarily to the company's high cost of sales as competition in its industry, which is built on the model of saving other companies money, is intense. Accordingly, it was little surprise to see Flextronics' fiscal third quarter operating margins top out at 3.22%.

There were some surprises, nonetheless, in the latest report from Flextronics and they skewed to the negative side of things. Specifically, this was the first time in nine quarters that operating margins didn't improve versus the prior year (3.66%). In addition, Flextronics acknowledged that the transfer of Nortel's manufacturing operation in Calgary had been rescheduled to take place in the June quarter of 2006 versus the March quarter. Consequently, management expects fiscal fourth quarter EPS to be $0.15-0.16 on revenues of $3.5-3.7 billion versus prior guidance of $0.16-0.18 on revenues of $3.6-3.8 billion. According to Reuters Estimates, analysts were forecasting a profit of $0.16 on revenue of $3.70 billion.

This isn't the first time that the company has incurred delays with the transfer of Nortel assets nor is it the first time that the company has disappointed with its guidance. Flextronics lowered its FY06 outlook last April, citing delays, and in October, its guidance for the quarter just reported was well shy of consensus estimates at the time. The latter incident led to a sharp sell-off in the stock from which FLEX has been gradually recovering on the basis that it is apt to benefit from identifiable growth catalysts that include the Nortel integration, the increased installed base of Xbox 360, and cell phone demand.

The latest update from Flextronics is indeed a setback in its rebound bid. However, the market's measured response to the latest disappointment offers some sense that the company's struggles have largely been accounted for in its lagging stock price and that the Nortel issue will prove temporary. That doesn't mean the stock will take off from here, but as we intimated in a recent Bargain Hunting column, a floor of support will be established on the idea that FLEX offers growth at a reasonable price for patient-minded investors.

At its current level, FLEX trades at 14.6x trailing twelve month earnings, which is nearly a 50% discount to its 5-year historical average. With earnings projected to grow 18.8% over the next five years, the corresponding price-to-earnings growth ratio of 0.78 also speaks to the stock's value proposition.

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

1:11 pm Legg Mason (LM)

134.70 +5.00: Legg Mason said that third quarter net income totaled a record $760 mln. However, that included a huge $643 mln after-tax gain on the sale of the firm's brokerage and capital markets operation, which was sold to Citigroup (C) in exchange for its asset management business on December 1, 2005. After excluding all non-recurring items, including $25 mln of transaction-related compensation costs, pro forma earnings were $0.96 per share, six cents shy of what Wall Street was expecting.

Revenues rose 68% year/year to a record $689 mln, exceeding the Reuters Estimates consensus of $552.3 mln, with the majority of the increases attributable to the two businesses purchased during the quarter. Legg Mason also acquired Permal, which closed on November 3, 2005, and added $19 bln to total assets under management (AUM). Combined with the $401 bln in assets attributable to Citigroup Asset Management and the $431 bln in assets attributable to Legg Mason's "legacy" managers, the company's total AUM reached $851 bln.

Investment advisory fees from proprietary funds soared 136% year/year to $282 mln, as performance fee revenues totaled $28 mln (from $19 mln) due largely to those earned by Permal; distribution and service fee revenues were up 72% year/year to $115 mln.

With a sharper focus on making Legg Mason one of the largest asset managers in the world, following the divestiture of its brokerage business, the Baltimore, Maryland-based company also substantially increased its global footprint, as assets managed for non-U.S. clients now exceed $265 bln, or 31% of total AUM. The stability and predictability of asset management fees underscores why asset managers have performed as well as they have despite a rising interest-rate environment that has played into our Market Weight rating on the Financial sector.

Legg Mason shares were up 64.5% in 2005 and are up another 13.7% so far in 2006. While we currently favor Alliance Capital Management (AC) among the list of asset managers and continue to keep a close eye on Franklin Resources (BEN), Legg Mason warrants further consideration for long-term investment value.

--Brian Duhn, Briefing.com

10:38 am Symantec (SYMC)

16.87 -1.51: Shares of Symantec, maker of the popular Norton line of antivirus and security software, traded lower on Wednesday after the company said third quarter profits fell 44%, due to costs related to its acquisition of Veritas. Furthermore, the company offered fourth quarter guidance that fell short of Wall Street's estimate, sending shares plunging more than 8% in early trading.

At the current price, shares of Symantec are trading at 14.8x forward earnings, a discount to 17.1x for McAfee (MFE) and 20.4x Verisign (VRSN). Although transition issues are largely behind the company, increased competitive pressures, particularly from Microsoft (MSFT), are embedded in the current valuation and a key reason why we wouldn't recommend purchase of the stock at this point.

Based in Cupertino, California, Symantec said third quarter profits fell to $91 million, or $0.08 per share, from $163.6 million, or $0.22 per share, a year earlier. That included approximately $166 million of expenses related to the purchase of storage software maker Veritas last July. Excluding this cost and other one-time items, the company said it earned $281 million, or $0.26 per share - a penny better than the Reuters Estimates consensus of $0.25.

Third quarter revenue rose 5% to $1.25 billion, up from $1.19 billion, on a comparable basis. International revenue represented 49% of the top line and grew 8% from the year ago period. The Americas, including the U.S., Canada, and Latin America, grew 2% year/year, while the Europe, Middle East, and Africa region grew 8%. By segment, revenue from Data Protection, Storage Management, Enterprise Security, and Services all demonstrated strong growth. However, Symantec's Consumer business, which represents 26% of total revenue, declined 10% during the quarter as a result of its shift to a ratable revenue recognition model.

Looking to the fourth quarter, the company expects to earn $0.25 per share on revenue between $1.25 and $1.28 billion, lower than the consensus estimate for EPS of $0.26 on revenue of $1.3 billion. For the full year, earnings are forecasted to be $0.99 per share with revenue in the range of $4.95 to $4.98 billion. That compares with the Reuters Estimates consensus of $1.00 per share on revenue of $4.91 billion. In addition, the company expects earnings of $1.14 per share on revenue of $5.4 to $5.6 billion for fiscal 2007, in line with the consensus estimate for EPS of $1.14 and revenue of $5.5 billion.

--Richard Jahnke, Briefing.com

10:00 am Duke Energy (DUK)

28.44 +0.09: Colder weather and asset sales catapulted Duke Energy's profits 69% in the fourth quarter. The largest US utility owner said its earnings rose to $606 mln, or $0.63 per share, over the past year. Duke, which is in the middle of acquiring rival Cinergy (CIN), earned $0.43 cents per share, excluding items, six cents above consensus. Most likely, the company will issue full year guidance for earnings before interest and taxes ("EBIT") on today's conference call.

Operating earnings at its franchise electric segment grew 10% to $279 mln on the back of colder weather trends that increased residential sales 14%, along with strong bulk power marketing results. Transmission segment EBIT was roughly flat at $344 mln, while International Energy grew earnings by 60% on favorable pricing, margins, and positive currency impacts to $97 mln. The company has sold a considerable chunk of its natural gas field service unit, but earnings in the quarter still rose over 30% to $162 mln on higher gas prices and improved sales.

Duke benefited from a substantially lower tax rate of 30.9% versus 35.7% in the prior year caused by the repatriation of foreign earnings. Duke ended the year with cash and short-term investments of $1.05 bln. Its capital structure stands at 48% debt, 50% common equity, and 2% minority interest.

Overall, it was a strong showing from Duke across the board. Duke Energy is a different company than it was a few years back and it will look even more different with the integration of Cinergy. Shares are running slightly ahead of the market in year-to-date returns and trade at a forward multiple of 15.8x. For investors looking for defensive stocks, one of the reasons behind our Market Weight rating on the sector, DUK's dividend yield of 4.37% certainly puts it near the top of the list. Possible catalysts for shares include a dividend hike, asset sales, and a possible resumption of share buybacks.

--Kimberly DuBord, Briefing.com

09:36 am Monster Worldwide (MNST)

42.53: Underscoring the reality that labor demand remains strong, the operator of the world's largest job search web site posted a 56% increase in fourth quarter operating profits. Monster Worldwide's net income increased to $36.5 mln or $0.29 per share. Excluding discontinued operations related to last year's disposal of its Directional Marketing segment, Q4 operating earnings of $0.28 per share matched the Reuters Estimates consensus.

Total revenues rose 24% year/year to a record $267 mln (consensus $264.6 mln), with 84% of the company's top line coming from its Monster division, which grew 30% year/year to $224 mln. The company's Advertising & Communications business contributed $43 mln to total revenue, but was essentially flat with last year's comparable quarter. In North America, the company continued to attract thousands of new customers each month, while deepening its relationships with the nation's largest employers. Overseas, Monster's organic revenue growth rate improved for the second quarter in a row, as its International business grew 46% from a year ago.

Looking to build on its leadership position in 2006, the company's balance sheet remains solid. The $45 mln of free cash flow generated in Q4 brought total 2005 cash equivalents to $182 mln and lifted Monster's overall net cash position to $273 mln, more than double the amount at the end of 2004. Such liquidity bodes well for investors should management continue to return shareholder value in the form of stock buybacks and expand its global footprint via M&A activity. During Q4, the company used $90 mln to acquire JobKorea, the leading online recruitment company in South Korea, and also used $8 mln on share repurchases. For Q1, management sees EPS of $0.26-0.27 (consensus $0.27) on revenues of $278-285 (consensus $280.73 mln). For fiscal 2006, management expects the company to earn $1.21-1.26 per share (consensus $1.24), which includes $0.05 per share for stock compensation expenses, on revenues of $1.16-1.21 bln (consensus $1.18 bln).

--Brian Duhn, Briefing.com

09:14 am Google (GOOG)

432.66: After the close Tuesday, Google said fourth quarter earnings surged 82% as it continued to expand its core search and advertising business. However, the results, excluding the impact of stock option expenses and other charges, fell short of analysts' expectations, as more international revenues were taxed at a higher domestic tax rate. That ended the Internet search giant's continuous record of outperformance since its IPO in late 2004 and has raised concerns over the company's seemingly excessive valuation.

Based on the news, Google shares plunged more than 18% in after hours trading on Tuesday and are expected to open sharply lower. Despite the lower than expected earnings, however, Google continued to demonstrate astounding growth in the most recent quarter. While the stock's valuation, arguably, remains at an excessive level, the reaction to the results is largely over done.

For the fourth quarter, the Mountain View, California-based company said it earned $372 million, or $1.22 per share, compared with $204 million, or $0.71 per share, in the year ago period. Excluding certain charges, the company would have earned $469 million, or $1.54 per share, well below the Reuters Estimates consensus of $1.77. Google attributed the weak bottom line results to a higher than expected tax rate, which increased to 41.8% in the quarter. At the previously forecasted tax rate of 30%, adjusted earnings would have been $1.81 per share - four cents better than the consensus estimate.

Revenue for the latest period totaled $1.92 billion, up 86% from a year ago and 22% from the previous quarter, driven by stronger seasonal trends in the U.S. Traffic acquisition costs, the commission paid to other Web sites in Google's advertising network, was $629 million, or 33% of advertising revenues. Revenues from Google's proprietary sites contributed $1.1 billion, or 57% of total revenues, reflecting an increase of 24% over the prior quarter. Partner sites, through the company's Ad Sense programs, generated $799 million, or 42% of total revenues. That was an 18% increase over revenues generated in the third quarter. Meanwhile, international revenue contributed 38% of total revenue, compared to 35% last year and 39% last quarter. The decline reflects a stronger U.S. dollar as well as stronger seasonal trends in both traffic and monetization in the U.S.

--Richard Jahnke, Briefing.com

09:08 am Allstate (ALL)

52.05: Still reeling from the nation's worst hurricane season ever, Allstate Corp. said after the bell last night that fourth-quarter profits fell 8.8%. The nation's largest publicly-traded property and casualty insurer reported Q4 (Dec) net income of $1.04 bln, or $1.59 per share, but that included after-tax catastrophe losses of $427 mln, $330 mln of which were directly attributed to Hurricane Wilma. Excluding losses and realized capital gains, operating earnings were down about 1% year/year, checking in at $1.49 per share and eight cents worse than the Reuters Estimates consensus of $1.57.

Consolidated revenues rose 0.7% year/year to $8.95 bln. Allstate brand standard auto and homeowners written premium grew 3.5% and 6.3% year/year, respectively, as the auto insurance business generated very good profitability helped by the favorable trends that management continues to see in the frequency and severity of automobile accidents.

Allstate said that it signed a new catastrophe reinsurance agreement that will help significantly reduce its exposure to earthquakes and hurricanes. The agreement covers the entire country, excluding Florida, and has a $2 bln limit on losses in excess of $2 bln. Management also said it is intentionally slowing the writing of new property insurance business in certain markets to limit its exposure to catastrophe losses caused by hurricanes and earthquakes. For fiscal 2006, the company expects to earn $5.60-6.00 per share, which is below the $6.03 consensus estimate.

Despite being hit by three of the 10 most costly natural disasters in U.S. history, Allstate's "ability to be profitable in such a difficult year is a testament to the effectiveness of our strategy," according to Chairman and CEO Edward M. Liddy. Allstate shares were up approximately 7.0% in 2005. The stock is down 3.7% year-to-date, however, amid concerns that that the auto insurance market is getting too competitive. At its current level, the dividend yield on ALL is 2.46%.

-- Brian Duhn, Briefing.com

08:55 am Time Warner (TWX)

17.53: The sleeping giant may not be sleeping any more. The world's largest media company reported 21% profit growth helped by a flick of Harry Potter's wand that led to the fastest sales growth in six quarters. Fourth quarter net income came in at $1.37 bln on revenue growth of 7% to $11.89 bln. Every unit, with the exception of AOL, reported a strong quarter, led by double-digit gains in the Cable unit. Earnings, excluding one-time items, beat the consensus estimates by three cents.

Adjusted operating income before depreciation and amortization, a key metric for media companies, rose 19% to $2.9 bln reflecting a double-digit gain in Filmed Entertainment, Cable, Networks, and Publishing. The standout was AOL, which the company agreed to sell a 5% stake to Google (GOOG). Revenues dropped 8% to $2.0 bln, as AOL lost 625k subs, bringing the total to 19.5 mln US members.

Cable remains the fastest growing unit as TWX added digital phone subscribers (246k in Q4) and high speed Internet clients (265k), generating a 13% increase in revenues to $2.5 bln with profits up 11% to $985 mln. The blockbuster that was "Harry Potter and the Goblet of Fire" drove film revenue and profit growth of 11% and 42%, respectively.

Last year the board authorized a $12.5 bln stock repurchase program that will be in effect until August 2007. To date, the company has purchased 167 mln shares for $3.0 bln. For the year, Time Warner is looking for single digit percentage growth in EBITDA compared to $10.3 bln in 2005. Time Warner's CEO Richard Parsons is facing rising pressure from activist shareholder Carl Icahn to split up the company. We continue to favor the media sector due to its increasing visibility, renewed focus on shareholder returns, and growth prospects for the industry, but the names we prefer are News Corp (NWS/A) and Disney (DIS), both of which are suggested holdings in our Active Portfolio.

--Kimberly DuBord, Briefing.com

08:45 am Boeing (BA)

68.31: After closing what was a record year for Boeing, the skies continue to look bright for the world's second largest plane maker, which has been propelled by its commercial aerospace business. Fourth quarter profits more than doubled on higher plane deliveries, with the per share figure flying past consensus by fourteen cents. Rising demand from discount and Asian carriers seeking more fuel-efficient jets boosted Boeing's deliveries by 9%.

We remain onboard with Boeing on the basis of its raised delivery guidance, backlog strength, possible margin expansion, operational performance, and robust cash flow - the company is firing on all cylinders. In addition, under new leadership, we hope to see Boeing further leverage its strong market position in the midst of this bull cycle in commercial aviation.

For the fourth quarter net income rose to $460 mln, or $0.58 per share. Stripping out a pension charge, adjusted earnings were $0.42 per share. Revenues rose 7% year/year to $14.2 bln with operating margins swelling to 3.8% from 0.2%. Boeing's backlog hit a record of just over $200 bln, representing a 19% sequential and 33% yearly gain, reflecting orders for 1,000 aircraft during the year. The Dreamliner booked 379 orders and commitments, including 291 firm orders. The Commercial Airplane unit's operating margins rose 8.4 points to 5.6% due to higher revenues of $5.9 bln that offset higher R&D costs. The defense unit (IDS) grew sales by 7.0% to $8.1 bln and also showed considerable margin improvement.

Boeing raised its guidance for FY06 to $3.25-$3.45 versus the consensus estimate of $3.32. Its revenues estimate is $60 bln, which is below the $63.0 bln consensus due to a previously disclosed accounting change taking effect this year. For FY07, it sees EPS of $4.10-$4.30 (consensus $4.15) on revenues of $63.5-$64.5 bln. The mid-point of its estimate equates to 25% earnings growth on almost 7% revenue growth. Plane deliveries this year are expected to reach 398 with FY07 deliveries of 440-445, 92% sold out.

--Kimberly DuBord, Briefing.com

10:26 am Powerwave: Needham & Co reiterates Buy. Target $15 to $15. Action follows Q4 results. They continue to believe PWAV is well positioned to benefit from what they think will be continued solid wireless equipment fundamentals in the remainder of 2006, including potential for incremental demand in the second half of the year from possible 3G activity from TMobile U.S.A. and China.

10:21 am bebe stores: Nollenberger Capital initiates Buy. Target $25. Firm believes the BEBE SPORT division is primed for aggressive expansion. They believe the rapid growth of the direct marketing/catalog program (including a separate BEBE SPORT catalog) provides another strong vehicle to drive store traffic.

10:20 am Thoratec: Lazard Captial downgrades Buy to Hold. Firm is citing steep recent appreciation combined with diagnostic division outlook moderation and many new expenses; they are cutting their 2006 and 2007 rev estimates to $225.8 mln and $285.9 mln from $235.0 mln and $294.7 mln, respectively. The firm notes that even after this reduction, their rev forecast remains above management guidance and probably still above consensus.

10:20 am Lifetime Brands: Brean Murray reiterates Strong Buy. Target $27.5 to $27.5. The firm is raising their Street-high 2006 EPS est 10% to $1.65 from $1.50 to reflect the updated guidance the co press-released yesterday to facilitate management's participation in their 2006 Small Cap Investor Conference. The release also confirmed their Street-high 4Q05 EPS est.

10:18 am SigmaTel: Am Tech/JSA Research downgrades Hold to Sell . Downgrade is following Dec qtr results, due to 1) numbers coming down significantly, 2) concerns that Windows Media MP3 players may take longer than expected to gain some traction as a legitimate #2 player in digital music, and 3) their largest customer, CREAF appears to be building inventory with poor sell-through.

10:17 am Google: WR Hambrecht reiterates Buy. Target $480 to $480. Firm is noting that higher than expected taxes, increased sales and marketing costs and expansion across multiple media platforms and International borders have increased costs and decreased EPS. They note that GOOG reported top-line revenue $8.7 mln below their expectations for the quarter, though they were pleased to see traffic acquisitions costs (T.A.C.) as a percentage of revenue were in line with our expectations at 33%. Moving forward, they say increased operating expenses, particularly in sales and marketing, will have a slightly negative impact on operating margins, decreasing margins approximately 1% more than they expected. As Google expands its software and services into International markets and develops a new, end-user multi-platform experience based on the Internet, increased costs and risk are to be expected.

10:16 am Flextronics: Am Tech/JSA Research downgrades Buy to Hold. Target $11. Firm's new price target is 15X their new calendar 2006 EPS est of $0.73. They are downgrading FLEX for three reasons. One, their confidence in management's ability to deliver on new program ramps promised in the Jun-05 quarter for contribution in fiscal 2007 has dropped considerably. Two, margin leverage is not materializing, primarily because of greater than expected startup costs related to vertical integration in new programs and the ODM business. Three, assuming the stock settles at around $10, the stock will be trading at 14X their new calendar 2006 EPS est, which they view as almost fully valued. Looking ahead, they think there is still some risk of est cuts.

10:15 am NCI Building Sys: Sanders Morris Harris reiterates Buy. Target $42 to $42. Firm is saying their optimism for the non-residential construction outlook in 2006 and their expectations that NCS's Q1 performance is developing greater momentum than their initial forecast.

10:14 am Symantec: Punk, Ziegel & Co upgrades Mkt Perform to Accumulate. Target $24. Firm is citing valuation, says that after eight months as a combined company, they believe most of the transition issues are behind it. They say the specter of increased competition, however, is still haunting the co.

[ReturntoSender]

From Briefing.com: 5:01PM KLA-Tencor unveils next-generation E-Beam inspection system (KLAC) 52.64 -0.80 : Co announces the eS32 -- an extension of its mkt-leading e-beam inspection platform. The eS32 enables the industry's widest capture of subtle electrical and small physical defects, which are arising as chipmakers integrate numerous new materials and device architectures into volume production. As a cornerstone of KLAC's complete suite of next-generation inspection solutions for the emerging technology nodes, the eS32 sets new performance standards with advanced features and capabilities that accelerate the detection and resolution of systematic, yield-limiting defects in both front-end-of-line and back-end-of-line applications.

5:00PM QLogic announces 2-for-1 stock split (QLGC

4:28PM Power Integrations beats by $0.06, ex items; guides in-line (POWI) : Reports Q4 (Dec) earnings of $0.24 per share, excluding non-recurring items, $0.06 better than the Reuters Estimates consensus of $0.18; revenues rose 12.9% year/year to $37.9 mln vs the $37.9 mln consensus. Co issues in-line guidance for Q1, sees EPS of 0.15-0.17 vs. $0.17 consensus.

4:23PM Bookham Tech misses by a penny, issues downside Q3 guidance (BKHM) 7.80 +0.84 : Reports Q2 (Dec) loss of $0.19 per share, $0.01 worse than the Reuters Estimates consensus of ($0.18); revenues fell 3.0% year/year to $60.7 mln vs the $59.5 mln consensus. Co issues downside guidance for Q3, sees Q3 revs of $51-54 vs. $58.06 mln consensus.

4:20PM Magma Design misses by a penny, issues in line Q4 guidance (LAVA) 10.46 -0.29 : Reports Q3 (Dec) earnings of $0.09 per share, $0.01 worse than the Reuters Estimates consensus of $0.10; revenues rose 10.7% year/year to $41.3 mln vs the $40.6 mln consensus. Co issues in-line guidance for Q4, sees EPS of $0.09-0.13 vs. $0.12 consensus; sees Q4 revs of $39-43 vs. $41.90 mln consensus.

4:19PM Electronic Arts misses by 4 cents, guides below consensus for Q4 (ERTS) : Reports Q3 (Dec) earnings of $0.86 per share, excluding non-recurring items, $0.04 worse than the Reuters Estimates consensus of $0.90; revenues fell 11.1% year/year to $1.27 bln vs the $1.26 bln consensus. Co issues downside guidance for Q4, sees EPS of $0.06-0.14 vs. $0.15 consensus; sees Q4 revs of $550-600 mln vs. $630.24 mln consensus.

4:18PM AMIS Holdings reports in-line, ex items; guides below consensus (AMIS) : Reports Q4 (Dec) earnings of $0.17 per share, excluding non-recurring items, in-line with the Reuters Estimates consensus of $0.17; revenues rose 13.4% year/year to $139.8 mln vs the $142 mln consensus. Co issues downside guidance for Q1, sees EPS of $0.13-0.15 vs. $0.16 consensus; sees Q1 revs down 2-4% sequentially or roughly $134.2-137.0 mln vs. $140.02 mln co

4:06PM Advanced Analogic files lawsuit against Linear Tech for unfair business practices (AATI) 15.13 +0.05 : Co announces that it has filed a lawsuit against Linear Technology Corporation for unfair business practices, interference with existing and prospective customers, trade libel, as well as a declaration of patent invalidity and non-infringement.

4:20 pm : Stocks opened lower, consolidating a modest portion of yesterday's gains amid renewed profit concerns. However, as fears of more Fed rate hikes mounted and rumors of a possible terrorist threat surfaced, the market deteriorated even further as widespread profit-taking closed virtually every industry to the downside.

Before the market opened, investors were inundated with earnings, weighing mixed reports against a plethora of strong monthly same-store sales figures and paying little attention to the day's only scheduled economic data. Nonetheless, upon further analysis of a preliminary read on Q4 productivity showed a 3.5% rise in unit labor costs, the fastest pace in more than a year, which fueled concern that wage inflation may force the Fed to ward off pricing pressures with additional tightening.

Another report which typically goes unnoticed, especially ahead of the monthly job report, was weekly initial claims. An unexpected decline to 273K, checking in below 300K for a third straight week, confirmed that overall labor conditions remain strong and that Friday's Jan. employment data may show a large gain in payrolls of 225-250K, exacerbating worries that more rate hikes are forthcoming. Combined with speculation surrounding the possible issuance of a specific threat alert, which was quickly quashed by the Dept of Homeland Security, and the bulls found little incentive to buy into diminishing hopes that a widely anticipated March 28 rate hike will be the Fed's last.

With all ten economic sectors closing lower, Technology turned in the worst performance, as losses of more than 1.0% in semiconductor, software, storage and hardware helped erased nearly half of the sector's 3.7% year-to-date gain. Materials, Utilities and Energy, three of the other best performing sectors so far this year, also succumbed to broad-based consolidation. Crude oil futures closing down 2.9% on the day weighed on Energy while a pullback in the year's best performing S&P industry group -- steel -- weighed on Materials. Industrials, yesterday's saving grace, was one of today's most influential sectors to lose ground following downside Q2 guidance from Tyco International (TYC 24.77 -1.33).

Even Consumer Discretionary, despite the retail group's ability to hold onto modest gains following stronger than expected monthly comps from more than 70% of the biggest names posting results, finished in negative territory. A Q4 earnings miss from Comcast (CMCSA 27.02 -0.97) and an analyst downgrade on General Motors (GM 23.52 -0.98) overshadowed huge gains from the likes of Starbucks (SBUX 34.40 +3.04), Gap (GPS 18.56 +0.58) and Federated Dept Stores (FD 69.68 +2.61). DJ30 -101.97 NASDAQ -28.99 SP500 -11.62 NASDAQ Dec/Adv/Vol 2038/1008/2.25 bln NYSE Dec/Adv/Vol 2333/965/1.90 bln

2:26 pm Clorox (CLX)

62.50 +2.54: Clorox today announced $0.55 in fiscal second quarter profit per share that included $0.04 per share in stock-based compensation expenses, surpassing analysts' average estimate by a penny. The company's top line rose 6% during the quarter, highlighted by sales gains of 6% in each of its three business segments - Household North America, Specialty and International. Primarily due to more shipments of home care, institutional, and Latin America products, volume increased 2%. Sales growth outpaced volume growth, though, due to the benefit of price increases and a favorable product mix.

With respect to its Household Group, which accounted for over 46% of total sales, price increases in name-brand laundry and cleaning products helped drive sales growth. For the Specialty Group, which represented about 38% of overall revenues, lower food and cat litter shipments offset increased shipments of GladWare containers, Glad trash bags, and Kingsford Charcoal products.

Like many of its peers, Clorox indicated that higher raw-material costs were a partially offsetting factor. In addition, increased marketing investment to support new products had an offsetting effect. Management added that it feels positive about the initial response to its price increases. Last quarter, Clorox said that any benefit to earnings from those price increases would not be realized until at least the third quarter.

The company reiterated its 4-7% sales growth outlook for its fiscal third quarter. In terms of EPS, Clorox now anticipates $0.68-0.73. According to Reuters Estimates, analysts' estimate is pegged near the midpoint of that range. Q4 sales are expected to rise 3-5%, and the company expects to register $1.04-1.14 in earnings per share. For FY06 (June), Clorox projects 4-6% top line growth. The company upped its full-year EPS forecast to $2.97-3.07, a range that includes an estimated $0.14-0.16 stock-based compensation charge. The FY06 EPS consensus estimate is currently pegged at $2.96. Continued benefits of price increases are expected to factor into the remainder of the year's performance.

CLX shares presently trade at 20.8x estimated full-year earnings, a valuation that falls between forward multiples of 22.8x for Proctor & Gamble (PG) and 19.3x for Colgate-Palmolive (CL). Briefing.com continues to hold a Market Weight opinion on the Consumer Staples sector, but we favor the household products industry in the space.

--Lisa Beilfuss, Briefing.com

1:28 pm Whirlpool (WHR)

86.92 +6.44: Whirlpool shares traded higher on Thursday after the appliance maker reported better than expected quarterly results on strong consumer demand, price increases, and cost controls. The company also forecasted fiscal 2006 earnings that topped Wall Street's estimates and said it expects to complete the proposed merger with Maytag as early as this quarter.

For the fourth quarter, net earnings rose to $126 million, or $1.83 per share, from $97 million, or $1.44 per share, in the year ago period. That was $0.14 better than the Reuters Estimates consensus of $1.70. Sales increased 8.9% year/year to a record $3.95 billion for the period, beating analysts' estimate of $3.84 billion. Excluding the effects of currency translation, sales were still up approximately 8%.

Despite a challenging operating environment, punctuated by higher material and oil-related costs, the company managed to increase earnings and expand operating profit margins by one point in the latest period. Material and oil-related costs rose by approximately $55 million in the quarter. However, strong consumer demand for new product innovations, such as the Duet front-load washer-dryer pair and fast-fill refrigerator, positive price adjustments, and improved cost controls more than offset the impact of rising costs.

For 2006, Whirlpool said it expects new products and productivity savings to continue to drive earnings momentum despite unfavorable cost conditions. The company sees earnings in the range of $7.00 to $7.25 per share, excluding the impact of the proposed merger with Maytag. That represents an increase of 13% to 17% over fiscal 2005 earnings of $6.19 per share. According to Reuters Estimates, analysts are expecting earnings of $6.34 per share. Based on this outlook, Whirlpool shares are trading at about 12.1x forward earnings and offer an enticing investment proposition given the company's strong sales performance and improved operating margin.

--Richard Jahnke, Briefing.com

12:09 pm Royal Caribbean (RCL)

43.66 +2.10: Royal Caribbean Cruises on Thursday reported a narrower than expected loss for the seasonally weak fourth quarter, and offered a positive outlook for the current fiscal year on strong cruise demand and improved energy conservation efforts. In turn, shares of the company trended sharply higher during the trading session, reversing a recent pull-back in the stock.

Despite stubbornly high fuel costs and the worst hurricane season in U.S. history, Royal Caribbean posted its second consecutive year of record earnings, helped by a significantly improved performance in the fourth quarter. For the most recent quarter, the Miami, Florida-based cruise operator reported a loss of $3.6 million, or ($0.02) per share, compared with a year ago loss of $25.8 million, or ($0.13) per share. Revenues for the period grew 6.7% to $1.03 billion from revenues of $964.6 million a year earlier. According to Reuters Estimates, analysts were expecting the company to post a loss of ($0.23) per share on revenue of $1.03 billion.

Gross yields, a measure of total revenues per available passenger cruise days ("APCD"), increased 6.1%, while net yields, or gross yields less commissions, transportation, and other expenses, increased 8.2%, due in large part to a surge in demand for late bookings which drove higher ticket prices. At the same time, gross cruise costs, which include cruise operating, marketing, and selling expenses, and net cruise costs increased 5.3% and 7.6%, respectively. Fuel prices accounted for approximately 7% of the increase in net cruise costs, as non-fuel costs were up only 0.6% due to improved cost controls across the business.

Based on the better than expected results and strong trends for the current "wave season," including solid bookings and price levels, Royal Caribbean expects fiscal 2006 earnings to be in the range of $2.95 to $3.15 per share. That is well above of the Reuters Estimates consensus of $2.93. The company also anticipates net yields to increase between 2% and 4%, and net cruise costs to increase in the range of 3% to 5%. Higher fuel costs are expected to account for approximately 3% to 4% of this increase. For the first quarter, Royal Caribbean forecasted earnings of $0.45 to $0.50 per share, including a legal settlement of $0.16, versus the consensus estimate of $0.54 per share.

Given the healthy demand environment heading into the peak selling season, along with higher pricing, the outlook for cruise companies appears to be strong, particularly for Royal Caribbean, as well as Carnival Corp. (CCL), the world's largest cruise operator.

--Richard Jahnke, Briefing.com

11:58 am CVS Corp. (CVS)

28.60 +0.82: For its fourth quarter, CVS reported $0.48 in earnings per share. Excluding a non-recurring tax benefit and a gain related to a legal settlement, CVS delivered a profit of $0.41 per share. Versus the year-ago period, EPS grew more than 46%.

According to the company, its fourth quarter results were driven by healthy sales growth in its retail and Pharmacy Benefits Management businesses, as well as a significant improvement in its gross margin. With respect to the top line, net sales increased about 9% to $9.7 billion. Same-store sales rose 6.7% during the quarter. The inclusion of over a thousand acquired stores contributed a percentage point and one half to that figure. Total pharmacy sales, which represented nearly 70% of the retailer's top line, jumped 6.3%; third party prescription sales accounted for 94% of Q4 pharmacy sales. Front-end same-store sales increased 7.7%.

Solid expense control contributed to margin expansion. On its conference call, management asserted that the most significant drivers were the absence of last year's Eckerd name change events and the continued migration toward generic utilization. The company's gross margin improved 129 basis points to 27.76% while its operating margin rose 232 basis points to 6.20%.

For 2006, CVS forecasts EPS to be $1.54-1.58. Excluding a nickel in stock-based compensation charges, its full-year estimate is $1.59-1.63 and reflects about 17% EPS growth. According to Reuters Estimates, analysts expect the company to register $1.57 in FY06 EPS. Excluding the recently announced Osco acquisition, total sales are estimated to increase approximately 9-11%. The company foresees 5.5-7.5% same-store sales growth in 2006. At mid-year, CVS expects to complete the acquisition of 700 Sav-On and Osco drugstores from Albertson's. The deal is projected to increase CVS's market share in many key areas, particularly in Southern California, and it is expected to be accretive to earnings and cash flow during its first full year.

The drug store retail industry remains one of our favored areas within the Consumer Staples sector. CVS shares presently trade at 18x estimated full-year earnings, a price that is in line with the sector multiple and at a discount to Walgreen's (WAG) multiple of 25.1x earnings.

--Lisa Beilfuss, Briefing.com

11:40 am EW Scripps (SSP)

50.27 +2.02: EW Scripps Co. reported a loss in the fourth quarter due to charges for writing down its Shop At Home business and consolidating newspaper operations in Denver. However, the company's results included strong revenue and profit growth at its television networks and at Shopzilla, the online comparison shopping service that was acquired last June.

For the most recent quarter, EW Scripps posted a loss of $603,000, or nil per share. That compares with net income of $91.3 million, or $0.55 per share, during the same quarter last year. However, the loss includes a $90.6 million write-down for Shop At Home due to ongoing losses and a "longer than previously expected path to profitability," and the impact of consolidating newspaper operations in Denver, which reduced earnings by $0.04 per share. Excluding these costs, the company would have earned $0.54 per share - five cents better than the Reuters Estimates consensus of $0.49.

Revenue for Scripps during the fourth quarter rose 16.5% year/year to $706.8 million, driven by strong results at the company's Scripps Networks division and Shopzilla. At Scripps Networks, which includes HGTV, Food Network, DIY Network, Fine Living, and Great American Country, profits grew 34% to $122 million. Total segment revenue increased 21% to $247 million with advertising revenue up 27% to $202 million. Shopzilla segment profit in the fourth quarter was $20.3 million on revenue of $63.2 million, compared with profits of $5.6 million on $25.1 million in revenue in the prior year period. Conversely, the newspaper division's profit was $55.4 million, down from $69.1 million last year, reflecting higher depreciation expenses for equipment at the Denver operations, as well as higher newsprint prices.

Looking to the first quarter, the company expects to earn between $0.42 and $0.46 per share, excluding stock based compensation, versus the Reuters Estimates consensus of $0.44. In the midst of slowing advertising growth and rising printing costs, business conditions for newspaper publishers remain extremely challenging. However, EW Scripps' focus on diversifying its revenue stream and reducing its dependence on its newspaper business should help strength its position as consumers and advertising spending continues to migrate toward the Internet. As such, the prospects for the company remain favorable compared to its peers.

--Richard Jahnke, Briefing.com

10:54 am Royal Dutch Shell

38.95: It certainly makes headline news to hear that one of the super-majors reported a drop in profits with energy prices at record levels. That is exactly what happened for Royal Dutch Shell, the world's third largest oil and gas company. RD, along with British Petroleum (BP), were two of the worst hit producers by the Gulf hurricanes last year, the fallout of which was still being felt in the fourth quarter.

Net income fell 4% to $4.4 bln with profits, excluding changes in inventory values, rising 3% to $5.4 bln. These results compare to record quarters produced by Exxon (XOM) and Chevron (CVX) of $10 bln and $4.14 bln, respectively. The last of the big five, BP and Total SA (TOT), are expected to report profits of roughly 4 billion each this month.

RD continues to lag its peers in terms of production with Q4 output falling 9% to 3.5 bln barrels of oil equivalent per day, compared to -0.9% for Exxon and a 2.2% drop for BP. The company expects to produce at the lower end of the 3.5-3.8 mln BOE/d range in 2006. Like Exxon, RD aims to boost production with longer-term prospects in Russia, Nigeria, and Malaysia. RD is targeting organic growth (via the drill bit) to boost production, but we wouldn't count a possible acquisition out of the realm of possibilities.

Royal Dutch compounded the downside, announcing a $5 bln buyback program. The market was hoping for a much larger figure, somewhere in the range of BP's buyback of just over 11 billion dollars. We continue to suggest longer-term investors seek exposure to the oil producers with our preference for Chevron or Exxon. Our positive view of Exxon is based on its consistent earnings, leading returns (ROCE), superior financial strength, highly integrated business model, positive earnings momentum, and expectation of aggressive buybacks - topped off by an attractive valuation at 11.1x forward earnings.

--Kimberly DuBord, Briefing.com

09:40 am Pulte Homes (PHM)

38.86: Pulte Homes, one of the nation's largest homebuilders, late Wednesday reported a 28% increase in fourth quarter profits, driven by strong home sales and higher prices. In addition, the Bloomfield Hills, Michigan-based company backed its fiscal 2006 outlook, despite rising mortgage rates and other data indicating a slowdown in the housing market. While sales activity has slowed in the face of these macro challenges, large builders like Pulte Homes continue to perform well and are poised to gain further market share from smaller, more leveraged companies.

For the fourth quarter, Pulte Homes earned $531.7 million, or $2.03 per share, up from $415.2 million, or $1.59 per share, a year earlier. Total revenue rose 24.1% to $5.13 billion, from $4.14 billion. Higher revenues for the period were led by a 9% increase in average selling price to $321,000 and a 17% increase in total home sales to 15,670 homes. The latest results beat analysts' expectations for earnings of $1.97 per share on revenue of $5.14 billion, according to Reuters Estimates.

Net new orders for the quarter climbed to 9,821 from 8,940 homes. The value of the orders, meanwhile, increased to $3.3 billion from $2.7 billion. The company's ending backlog totaled 17,817 homes with a value of $6.3 billion, an increase of 22% and 12%, respectively. Given this strength, the company reaffirmed its forecast for the full year with earnings of $6.00 to $6.25 per share. That compares to the current analyst estimate of $6.09 per share, according to Reuters Estimates.

Separately, Pulte Homes announced that its board of directors authorized a $200 million buyback of its outstanding shares. During the fourth quarter, the company bought back approximately $102 million in stock, leaving roughly $20 million available under its previous authorization.

--Richard Jahnke, Briefing.com

09:30 am Tyco (TYC)

26.10: Profits fell in each of Tyco's four business units in the first quarter. Poor operational performance is exactly what landed Tyco in its current predicament. After much speculation, the company confirmed it was splitting into three separate business units in mid January. Tyco was able to beat the consensus estimate and its own forecast by a penny, with earnings, ex-items, of $0.39 per share. However, the feat was achieved through a lower tax rate. Revenues grew a marginal 1.1% to $9.7 bln.

We recommend investors sit this one out, as there are considerable execution risks as Tyco follows through on the divestiture plans this year. By its own admission, it has over 200 entities to unravel. The company hopes to complete the breakup by the first quarter in 2007. Once again, Tyco lowered the bar with second quarter guidance. It sees EPS of $0.41-0.42 versus the consensus EPS estimate of $0.47. For the full year, it hopes to achieve earnings of $1.85-1.92 versus the $1.89 consensus. Tyco will continue to support shares through buybacks, which will be necessary as we see a rocky road ahead for the industrial conglomerate.

--Kimberly DuBord, Briefing.com

09:26 am Starbucks (SBUX)

31.36: With a profit of $0.22 per share, Starbucks delivered 29.4% EPS growth during its fiscal first quarter. The result includes the impact of stock-based compensation expenses, which were dilutive by $0.02 per share, and compares to the Reuters Estimates consensus of $0.20. The company's top line rose approximately 22% to a record $1.93 billion.

During the month of January, comparable store sales increased 10%. According to the Briefing.com consensus, analysts had expected a 6.9% gain. Handcrafted espresso drinks, including a strong contribution from the new Cinnamon Dulce offerings, continued to drive sales. The company also credited its January same-store sales strength to a record number of gift cards that were activated during the holiday season. The company noted that growth at the 10% level is not sustainable, and that its comparable store sales target remains +3-7% for the remainder of the fiscal year.

For the quarter, double-digit increases in company-operated retail, licensing, and foodservice revenues drove a 21% jump in total U.S. net revenues. On a comparable store basis, sales in the U.S. increased 7%. Similarly solid growth within its international markets resulted in a 25% rise in International total net revenues. International comparable store sales grew 8%. International expansion remains a key element to Starbucks's growth story. On its conference call, management mentioned that Brazil, Russia, and India are among the new markets it is considering entering. Within both geographic segments, a higher number of customer transactions and an increase in the average value per transaction fueled the Q1 same-store sales results.

As a result of its strong first quarter performance, Starbucks upped its FY06 EPS range by a nickel to $0.68-0.70. Excluding the effect of stock-based compensation charges, the company forecasts $0.77-0.79 in profit per share. The low end of that range exceeds the consensus estimate by three cents. For the current quarter, Starbucks foresees EPS of $0.14; for fiscal Q3 and Q4, it anticipates EPS of $0.16-0.17.

SBUX shares trade at 42.6x estimated full-year earnings. We maintain an Underweight rating on the Consumer Discretionary sector, but Starbucks remains a standout in the space as it continues to demonstrate that its customers have not been deterred by higher energy prices and interest rates.

--Lisa Beilfuss, Briefing.com

09:07 am Avon Products (AVP)

28.36: Avon is getting a makeover as part of a multiyear reorganization that could cost as much as $500 mln. The makeover includes workforce reductions and shifting operations overseas. Those efforts cut into Avon's fourth quarter profits, which fell 37% year/year to $183.2 mln or $0.40 per share. Sales grew a slim 3.8% to $2.4 bln and an even slimmer 3% on a constant currency basis. The company continues to face challenges in the US market, not to mention a stronger dollar.

Operating margins contracted 5.4 points to 12.4% with interest expenses soaring to fund borrowing for its share repurchase program. Revenues in the US fell 7% with the number of representatives down 4% compared to the prior year, as profits plummeted 20%. European sales grew 2% while Latin America soared 27%, ex-currency. Asia was notably weak, with sales falling 7% due to a poor quarter in China and Japan. China just recently lifted a ban on direct selling, resulting in less buying from boutiques in anticipation of the change.

Avon confirmed FY06 sales will be unchanged or rise marginally from $8.1 bln last year. The competitive environment remains intense with Avon battling heavyweights likes of Procter & Gamble (PG) and L'Oreal, which are able to sell their wares in discount drug stores, reaching a greater customer base. We remain negative on the stock, but continue to feel its future rests on its ability to expand its international presence, particularly in the emerging markets.

--Kimberly DuBord, Briefing.com

08:59 am Comcast (CMCSA)

27.99: Following on the footsteps of a strong quarter from Time Warner Cable, Comcast missed consensus estimates by six cents. The world's largest cable-television provider reported that net income declined to $133 mln, or $0.06 per share, down from $423 mln, or $0.19 per share, in the prior year. The results were swayed by items below the operating line, as investment and other income declined to $58 mln from $553 mln last year due to a lower level of unrealized investment gains and a positive litigation impact in the prior year. A higher tax rate impacted the comparable per share figure of $0.09. Revenues rose almost 9.0% year/year to $5.41 bln.

The bright side was the net additions of basic and digital cable TV subscribers, along with high-speed Internet and voice service. Cable providers have taken a bundled approached in selling services, capturing higher prices and penetration rates. CMCSA added 40k new basic subs, which were negatively affected by the hurricanes, but that still reverses the preceding quarter's decline of 46k. Comcast has 8.5 mln Internet subs, adding 378k in the quarter, while phone customers grew 79k. Digital cable subs increased by 342k to 9.8 mln. These customers typically pay twice the monthly rate of basic cable of at least $60 per month, and also receive DVRs and high-def cable boxes.

The quarter should be viewed as a one-off, as the outlook for the company remains strong. Operating cash flows grew 8.5% to $2.1 bln with free cash flows gaining 40% to $699 mln. Comcast forecasted cable revenues will rise 9-10% this year. It also anticipates spending $165 per basic cable sub and a total capital expenditure plan of $3.6 bln, in line with last year. The company also announced the board has authorized a $5 bln stock repurchase plan. While this is certainly not apples to apples, CMCSA trades at EV/EBITDA of 10.3x compared to TWX at 7.2x.

--Kimberly DuBord, Briefing.com

08:44 am Phelps Dodge (PD)

161.76: For the second time in two months, Phelps Dodge, one of the world's largest copper producers, will pay out a special dividend as part of its plan to return $1.5 bln back to shareholders. The special dividend will equate to $4 per share, costing the company $406 mln, payable on March 3rd to shareholders of record as of Valentine's Day. PD made a five dollar special dividend payment in December, which cost it $500 mln.

The company also announced that shares will split on a two-for-one basis on February 17th. PD, a suggested holding in the Active Portfolio, earned $1.56 bln last year as copper price reached historical levels. With ample cash on hand, shareholders had been pressuring the company to initiate buybacks. PD followed suit in December, announcing the targeted spending plan. The special dividend payment and split also provides indications of further sustainability of the current copper cycle. CEO Steven Whisler stated, "one of our priorities for cash is to reward shareholders." Separately, PD approved a $550 mln plan to build a copper mine in Safford, Arizona, that is expected to produce 240 mln pounds a year.

We have been long-time copper bulls, adding Phelps Dodge to our Active Portfolio in March of 2004; it has returned 100% to date. Increasing shareholder returns has always been an important aspect for our view on shares and we are pleased to see the board reward its shareholders. Today, our positive outlook remains due to the current tight copper market conditions that have resulted in record copper and molybdenum prices. Phelps Dodge's fourth quarter results released on January 31st did little to alter our view on the stock despite the company's conservative copper outlook. We expect further cost pressures and modest copper output due to mining challenges at its Candelaria mine, but these are issues facing all of the global producers. Shares are trading at a forward multiple of 10.0x.

--Kimberly DuBord, Briefing.com

09:40 am Incyte: Morgan Joseph initiates Buy. Target $8. They note that the co's lead product candidate, DFC, is currently in Phase IIb development as a once-daily oral therapy for HIV. They anticipate positive results from this study, which should become available in 1H07. They also believe the co's CCR2 program, recently partnered with Pfizer (PFE), could translate into substantial revenues in the form of milestones and royalties. They believe newsflow from other internal programs, including novel sheddase inhibitors for cancer (currently in Phase I/II dose-ranging studies) and an oral CCR5 antagonist for HIV (Phase I slated to begin in 1H06), will boost investor interest.

09:39 am Northstar Realty: Banc of America Sec initiates Buy. Firm notes that they believe the co should continue to raise capital, purchase real estate debt and capture profit.

09:38 am Boyd Gaming: Nollenberger Capital initiates Buy. Target $59. The firm says that growth prospects for the co include its mega-casino project, Echelon Place, on the Las Vegas Strip, which they est should add about $9 per share. The firm says that the primary reasons for investment in BYD shares are: 1) favorable Las Vegas local market and Strip demographics; 2) potential multiple expansion based on rising exposure in Las Vegas; 3) a favorable balance of geographically diversified assets; and 4) an attractive share valuation. The firm also initiates PNK with a Neutral.

09:38 am UAL Corp.: Calyon Securities initiates Sell . Target $21. Calyon intiates the new shares of UAL Corp (UAUA) with a Sell and $21 tgt, which they say is based solely on valuation and is not meant to be an opinion on the co's chances of ultimately succeeding. Although they think the shares may temporarily trade up, they believe the market will adjust to the earnings potential and will not value the stock at a 15x P/E to get to the current $40 stock price.

09:36 am Synplicity: Needham & Co downgrades Buy to Hold. Firm nots that the co's modest rev growth rate combined with a substantial earnings headwind as the co's tax rate increases from almost zero in 2005 to 25% in 2006 and likely over 30% in 2007-conspire to make the stock's current valuation challenging. Therefore with the stock having almost doubled from its lows of last year and now trading at 27x their new calendar 2007 pro-forma EPS est of $0.36.

09:36 am Varian Medical: Oppenheimer downgrades Buy to Neutral. The firm says on the heels of the strong oncology orders and solid Q it reported last week, the stock has jumped roughly 10%. In the past three and a half months, VAR has appreciated 50%. Aside from the recent sharp upward move, they believe that the valuation is becoming stretched.

09:33 am BJ's Wholesale: KeyBanc Capital Mkts / McDonald downgrades Buy to Hold. The firm notes that despite the Co's efforts, its general merchandise performance has not increased as they had hoped; negative comps continued in January. Also, the shares are near their former $34 price tgt.

[ReturntoSender]

From Briefing.com: 4:20PM Microchip announces its intention to repatriate foreign earnings (MCHP) 30.06 +0.44 : Co announces that it has decided to take advantage of the temporary incentive available to it under the Americans Jobs Creation Act, and will repatriate $500 mln of its foreign earnings under the provisions of the Jobs Act. As a result, MCHP recorded additional tax expense of $30.6 mln in the quarter ended Dec. 31, 2005, related to its decision to repatriate foreign earnings. Additionally, the co plans to pursue a ruling from a gov taxing authority which could potentially reduce the tax expense related to the repatriation by up to approximately $6.0 mln. If a favorable ruling is received on this matter, MCHP would reduce its tax expense in the period the ruling was received.

4:12PM Diodes reports in-line; guides Q1 revs above consensus (DIOD) : Reports Q4 (Dec) earnings of $0.36 per share, in-line with the Reuters Estimates consensus of $0.36; revenues rose 28.2% year/year to $61.4 mln vs the $60.4 mln consensus. Co issues upside guidance for Q1, sees Q1 rev growth of 16-20% sequentially or roughly $71.2-73.7 mln vs. $62.49 mln consensus.

4:09PM Microvision announces 2006 strategy and organizational changes (MVIS) 3.18 +0.05 : Co announces key aspects of its 2006 business strategy and an organizational realignment and restructuring. These changes include: 1) grow product rev and margins; 2) focus on a vital few OEM product development growth opportunities, particularly in automotive head-up display and 2 consumer display applications; 3) substantially cut the burn rate and reduce the net operating loss by 30%; 4) improve quality and customer satisfaction; and 5) realign and restructure the co to improve organizational effectiveness and culture.

4:07PM Pericom Semi beats by $0.02, ex items; guides (PSEM) : Reports Q2 (Dec) earnings of $0.06 per share, excluding non-recurring items, $0.02 better than the Reuters Estimates consensus of $0.04; revenues rose 36.8% year/year to $26.3 mln vs the $27 mln consensus. Co expects Q3 revs to increase 2-6%.

4:05PM Genesis Microchip selected by LG Electronics for high end LCD tv's (GNSS) 19.15 +0.07 : Co announces that LG Electronics has designed Genesis' recently launched Cortez Advanced video controller into its new 32-inch, 37-inch, and 42-inch LCD TVs. These advanced televisions are available now in Europe, Asia, South and Central America.

4:02PM Rackable Systems grants stock options to purchase 168,500 shares under 2006 new recruit stock option plan (RACK) 34.97 -1.80 : Co granted stock options to purchase an aggregate of 168,500 shares of its common stock to five people who were recently hired by the co. The stock options have a term of ten years, will vest over four years, have an exercise price per share equal to the closing sales price of the common stock on the date of grant, and were granted as a material inducement for these people to join the co.

4:00PM Power-One announces changes to Executive structure (PWER) 12.62 -0.37 : Co announces that as part of its ongoing plans to transition the company to address growing mkt demands, it has separated the roles of Chairman and CEO. Effective immediately, Steven J. Goldman will retain the role of Chairman and William T. Yeates will assume the role of CEO. Additionally, Brad W. Godfrey has been promoted to the position of President and COO.

4:00PM Komag Announces CEO's Retirement Plans and a Search for a CEO Successor (KOMG) 47.92 : Co announces that T.H. Tan, the Co's CEO, has announced his plans for retirement sometime late in 2006 and the Co has started an executive search for a successor. The search has been initiated as part of the Co's succession planning and will include both internal and external candidates.

4:20 pm : On Monday, the stock market's major averages traded within a very narrow trading range that surrounded the unchanged mark. Continuing anxiety over the situation with Iran unnerved the market, and lingering inflation concerns gave investors further reason to stick close to the sidelines.

Over the weekend, the International Atomic Energy Agency (IAEA) reported Iran to the UN Security Council on fears that the country is seeking to enrich uranium with the intention of creating nuclear weapons. The world's fourth largest oil producer's assertion that it will not cooperate with inspections exacerbated the market's concerns that the country may cut its oil supply as a response to sanctions. Even though inventory stockpiles are well supplied, the tight market conditions and near-capacity production leaves little cushion to cover that source of supply. Crude futures spent most of the session on gaining ground; although they reversed late in the day, geopolitical factors remain a bearish backdrop for the broader market. As these concerns continue to support prices that are well above historical levels, we maintain an Overweight rating on the Energy sector (+1.6%), which led trade today.

Uncertainty over the duration of the Fed's tightening cycle was an additional overhang today. In the wake of an ambiguous FOMC policy directive and mixed inflation signals, the latest of which was an up tick in hourly earnings on Friday, we see an increased risk that the Fed will raise interest rates more than had been previously anticipated. To that end, we today modified our Market View to Neutral from Moderately Bullish. At the same time, we note that while earnings growth is expected to slow, valuations continue to represent good value. Due also to very strong levels of corporate cash flow, we hold a neutral rather than bearish outlook on the stock market.

Alcoa (AA 32.02 +1.44), which had been upgraded to Overweight at J.P. Morgan this morning, supported the Dow and took the Materials sector 1.7% higher. Surging steel issues lent further upside. That industry extended its advance upon reports Arcelor is looking into acquiring US Steel (X 61.67 +3.75) in its attempt to fend off Mittal Steel's (MT 35.65 +0.27) hostile bid. Anticipation of consolidation has helped drive the steel industry approximately 32% higher this year; we continue to expect M&A activity to be a supportive factor for the market during 2006. General Motors (GM 23.86 +0.71) also helped buttress the blue chip average, and it limited the Discretionary sector's (-0.1%) decline. GM's Board meeting occurred today, and the stock received some added attention as the market awaits information regarding its potential GMAC sale and dividend change.

Gains, outside of the Energy and Materials sectors, were modest, but losses were similarly well-contained. On account of wide-spread selling, the Healthcare sector was the laggard (-0.9%). The HMO industry was a particular source of weakness following Humana's (HUM 53.60 -1.30) somewhat disappointing fourth quarter earnings report. A 0.5% decline in the Technology sector also weighed heavily. Selling there was also broad-based, but plunging Apple (AAPL 67.46 -4.39) shares were a primary culprit for the sector's, and the Nasdaq's, underperformance. Its fall was largely due to technical factors. Strength in semiconductors lent strong offsetting support.

Today's economic calendar was a blank one, and the earnings front was devoid of much market-moving news. Some upcoming reports may serve as catalysts: after the bell, Disney (DIS), a Briefing.com recommended holding for active investors, will report. Coca-Cola (KO) is slated to announce results Tuesday morning, followed by Cisco Systems (CSCO) after the close of trade.DJ30 +4.65 NASDAQ -3.78 SP500 +0.99 NASDAQ Dec/Adv/Vol 1466/1569/1.80 bln NYSE Dec/Adv/Vol 1310/1971/1.53 bln

11:30AM Plexus announces upward adjustment to EPS (PLXS) 28.75 +0.52 : Co announces it received payment of approx $1.2 mln on February 3, 2006 on an account that had been fully reserved when the co issued its preliminary financial results for the fiscal first quarter ended Dec 31, 2005. Under U.S.-GAAP this subsequent event required a favorable adjustment in the first quarter to the Allowance for Doubtful Accounts Reserve and a consequent reduction in SG&A expense. The after-tax impact on Net Income of this favorable adjustment is $1.2 mln, or the equivalent of $0.03 per share. Accordingly, diluted EPS for the first quarter were adjusted upward from $0.28 to $0.31.

10:01 am Thoratec: Lazard Captial upgrades Hold to Buy. Firm is citing the stock's 26.6% decline in 3 days, likely prompted by a minor decrease in 2006 outlook. While firm would stop short of characterizing THOR as a deep-value idea, as it still trades at 32.5x their 2007 est, the sell-off has brought the stock back to below the level of their last upgrade on Jan 3, while their 2006 outlook has not materially changed.

10:00 am Veeco Instruments: DA Davidson reiterates Buy. Target $23 to $23. Firm is citing improved earnings visibility and the potential for a protracted period of capital investments amongst thin film head manufacturers for H.D.D applications.

09:59 am THQ Inc: Prudential reiterates Neutral. Target $23 to $23. Firm ups target following Q3 results. Firm notes that it was another solid quarter, but says the co's ongoing transition towards a focus on the core-gamer exposes them more towards the weaker areas of the market.

09:59 am McDonald's: Prudential reiterates Overweight. Target $38 to $38. Firm is saying: 1) The fundamentals at the core MCD business remain strong. 2) They think some investors are underestimating the amount of cash MCD will generate, and therefore the amount of stock it could retire over the next 3 years.

09:58 am AVI BioPharma: Rodman & Renshaw upgrades Under Review to Mkt Outperform. Target $11. Upgrade is based on the results of a discounted cash flow analysis of the co's current pipeline, including a potential bioshield contract for both avian influenza and Ebola. Based on their analysis of the pipeline, the news flow expected from the company over the next 6-months, and the potential for continued attention in the avian flu arena, they believe AVII could reach $11 with in the next 12-months.

09:57 am FEI Company: DA Davidson reiterates Buy. Target $303. Firm notes that FEIC has traded up on speculation of a potential takeover by Carl Ziess. While unable to confirm the likelihood of such a combination, firm believes the idea has merit and would overlap nicely with Ziess' leadership in the world of microscopy.

09:56 am Esco Tech: JMP Securities downgrades Mkt Outperform to Mkt Perform. Downgrade is following Q1 results, firm is citing valuation. While they believe the award of another IOU contract is likely, they do not foresee one occurring in the intermediate term, and believe all the good news is currently reflected in ESCO's stock.

09:55 am Hyperion Solutions: Credit Suisse initiates Outperform. Target $42. Firm cites the assumption that the co has the potential to leverage its product cycle and break out of its mid single digit license rev growth range. They believe that acceleration in license rev would also create modest multiple expansion given the potential for upside to earnings.

09:53 am Vion Pharma: Fortis Bank initiates Buy. Target $6. VION is a development stage co focused on the treatment of cancer. The co is conducting a Phase III trial of its lead clinical candidate, cloretazine, in relapsed acute myelogenous leukemia (AML), and is expected to initiate a pivotal Phase II trial in elderly AML patients unfit for standard chemotherapy in Q2. Co believes the elderly AML trial will complete first, and the co will file for FDA approval in 4Q07. Firm's 2011 cloretazine sales estimate of $193M assumes the drug is used in both on-label and off-label leukemia settings.

09:51 am ADVENTRX Pharma: Fortis Bank initiates Buy. Target $6. Firm is saying ANX is developing CoFactor to replace Leucovorin as a potentially safer and more effective biomodulator of 5-FU, in the treatment of front-line metastatic colorectal cancer. The firm says Phase II data suggest the 5-FU/CoFactor combination is significantly less toxic than 5-FU/LV, as well as potentially more efficacious. Based on this clinical profile, the firm believes CoFactor has standard of care potential in the treatment of colorectal cancer, and estimate peak sales could exceed $500 mln.

09:50 am Blue Coat: Avondale Partners downgrades Mkt Outperform to Mkt Perform. Target $48 to $48. Firm is lowering their tgt to $30 from $48 based on a huge earnings miss for the quarter ended Jan 31st. The frim also cites the uncertainty over the reason for the shortfall.

09:44 am ViaSat: CE Unterberg Towbin reiterates Buy. Target $25 to $25. Firm ups target ahead of the co's FQ3 results (2/7), as they expect an in-line report relative to their revenue and EPS estimates of $108.0 mln (consensus $108.1 mln) and $0.26 (consensus $0.26). They believe the co is chasing some large opportunities that could potentially be pushed into FY07. They suspect their full-year forecasts might be aggressive, but continue to believe that overall order momentum supports their FY07 estimates.

2:47 pm Talbots (TLB)

26.21 -1.06: Last March Liz Claiborne (LIZ) made a $17 per share offer for women's apparel retailer, J. Jill Group (JILL), in a letter sent to the company's CEO Gordon Cooke. Much to the dismay of Liz Claiborne, the offer, which represented a 30% premium at the time, was summarily rejected. Liz Claiborne came back with an $18 per share offer in November, but a deal still wasn't reached. Today, news broke that J. Jill's board agreed to a deal, only it isn't doing a deal with Liz Claiborne. Rather, J. Jill agreed to be acquired by Talbots (TLB) for $24.05 per share in cash, which is nearly a 90% premium from where J. Jill was trading at the time of Liz Claiborne's initial offer.

It was little surprise to hear Liz Claiborne express its disappointment that it couldn't get a deal done with J. Jill, but it also made a point of mentioning that it is "financially disciplined and will not overpay." The implication that Talbots overpaid for J. Jill hasn't helped its stock, which is down 4.0% following the acquisition announcement. It is typical for an acquiring company's stock to trade down after a buyout announcement. At the same time, though, when the market feels good about the potential synergies, an acquiring company's stock will get a boost, particularly when the deal is being done in cash versus stock.

The pullback in Talbots, then, doesn't connote the strongest vote of confidence from the market at this stage. The lack of enthusiasm includes, but is not limited to, the following: (1) a concern that Talbots overpaid given the premium versus the LIZ offer (2) the understanding that part of the transaction will be financed under a new $400 million credit facility, which implies an increased interest expense (3) a belief that the deal won't be accretive to earnings until FY07 and (4) the recognition that J. Jill has been struggling operationally - a point borne out in the fact that its operating margins have slipped from 9.43% at the end of 2002 to (-0.9%) through the nine-month period ended Sept. 24, 2005.

From a brand standpoint, we concur that J. Jill is a good fit for Talbots, as each primarily caters to an older target customer (35+) with more classic fashions and multiple sales channels (eg. stores, catalog, Internet ). Neither company, however, has been overwhelming investors lately as each has room for margin improvement. The combination of the two companies could ultimately prove successful, but the margin contraction that has persisted at both companies for several years now suggests the combination is being forged more from a position of weakness than strength. Accordingly, it is understandable that the market doesn't seem too excited by it right now.

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

10:58 am Hasbro (HAS)

20.64 -0.11: The nation's No. 2 toy maker reported quarterly results that raise its profile as an attractive, long-term value proposition. The Pawtucket, Rhode Island based company reported Q4 (Dec) earnings of $0.61 per share, which excluded a tax on repatriating foreign earnings and beat the Reuters Estimates consensus by three cents. Worldwide net revenues rose 1.2% year/year to $1.07 bln, checking in a bit lighter than the $1.11 bln consensus, as continued strength in its U.S. Toys segment struggled to offset lower trading card and board game volume in its Games division -- an area where President and CEO Alfred J. Verrecchia clearly sees an opportunity for improvement this year.

The company recently announced it will combine both the domestic Toys and Games segments into a single North American operation. Revenues in the U.S. Toys segment rose 16% year/year to $306 mln in Q4 amid higher volume and improved product mix, as well as lower advertising and product development costs. The company lauded the success of its line of licensed STAR WARS products.

In addition to growing its top and bottom line in a challenging retail environment, Hasbro continued to strengthen its financial position. The company delivered $497 mln in operating cash flow, liquidity which bodes well for investors should management continue to return shareholder value in the form of share buybacks and dividend increases. Accounts receivables, meanwhile, fell 10% year/year, suggesting the company has improved its collection efforts.

The signing of a five-year licensing deal with Marvel Enterprises (MVL) on January 9th, which gives Hasbro the rights to develop products based on Marvel's globally-known universe of over 5,000 characters (e.g. Spider-Man, Fantastic Four, X-Men, and Captain America), will add $300 mln in sales and bolster fiscal 2007 profits by $0.25 per share in 2007, according to Piper Jaffray.

Significantly higher sales and earnings expectations, coupled with more streamlined operations and improved inventory management, raises Hasbro's appeal versus rival Mattel from a risk/reward standpoint. Both companies fall under the Consumer Discretionary sector, which is currently rated Underweight by Briefing.com.

--Brian Duhn, Briefing.com

09:07 am Hewitt Associates (HEW)

26.35: Hewitt Associates, a leading provider of human resources outsourcing and consulting services, on Monday reported lower first quarter earnings, due in large part to the expensing of stock options, the termination of a contract with Bank of America, and staff reductions. For the period, the Lincolnshire, Illinois-based company said net income declined 7% to $31.5 million, or $0.29 per share, compared with $34 million, or $0.28 per share, in the year ago period. The results included a $3 million pretax expense related to the expensing of stock options, a $10 million charge related to the termination of a contract, and a $7 million pretax charge for employee termination costs. Excluding these costs, the company would have earned $33.9 million, or $0.31 per share - a penny better than the Reuters Estimates consensus of $0.30.

On the top line, Hewitt said net revenues fell 1.1% to $701 million from $709 million a year earlier. Outsourcing revenues declined 3% and consulting revenues increased 6%. Outsourcing segment margin was 8.6% compared to 11.7% in the prior year quarter. The decrease was primarily driven by the contract termination, staff reductions, and higher stock-based compensation expense, partially offset by growth in the benefits business. Meanwhile, consulting segment margin improved to 21.4% from 18.3%, driven by higher revenues and lower operating costs across the segment service areas. This was offset in part by higher stock-based compensation expense.

Looking to the second quarter, Hewitt said it expects a low to mid-single digit decline in total revenue and core earnings in the range of $28 to $31 million. For the full year, the company anticipates revenue to be comparable to fiscal 2005, comprised of a low-single digit decrease in outsourcing and mid-single digit growth in consulting. In addition, it expects core earnings of about $145 to $150 million.

--Richard Jahnke, Briefing.com

08:52 am Humana (HUM)

54.90: There has been considerable anticipation of the Medicare Part D drug prescription plan, which took effect when the clock struck twelve on January 1st. The entire managed care industry has been enjoying rising stock prices on speculation the plan will boost memberships. Humana, the number five health insurer in the US, today said it's "superbly positioned to take advantage of this multi-year growth opportunity." The company took the opportunity in today's Q4 earnings release to raise its revenue guidance for FY06 to $21-22 bln versus $20.8 bln, with non-GAAP EPS expected to be $2.70 - roughly in line with consensus. HUM also tightened its Part D guidance to 1.9-2.2 mln members, from 1.7 mln, but maintained its Medicare Advantage (MA) guidance of 900k-1.1 mln members.

Humana's fourth quarter profits rose 37% to $64.6 mln - a penny ahead of estimates after hurricane exclusions. The real focus was on its commentary regarding growth projections for the Part D enrollment. Humana, the second-largest manager of Medicare coverage behind UnitedHealth Group (UNH), has said that it plans to add 675,000 members by January 1st on increased re-enrollments in its Medicare Advantage Plan. Additionally, it made an $80 mln push to sign up customers for the Part D plan - the largest capital investment amongst the managed care providers.

The fourth quarter was all about getting the company ready for the opportunities ahead in 2006. The launch of Part D has been less than ideal with widespread system glitches and general confusion, raising concerns seniors may opt out of the benefit, which is voluntary. Humana has a lot riding on Part D. In December the company said it anticipates the number of people in its Medicare plans would more than triple in 2006 and coverage would expand from 25 to 46 states.

While it's still early to make any accurate predictions on the success of the plan, Part D offers considerable profit opportunities for the managed care industry in bringing in new enrollees and converting MA plans (Part C). Our favored pick in the group is UNH given its brand name allure. HUM trades at 20.0x earnings, which is in-line with UNH, but higher than WellPoint (WLP) at 16.8x forward earnings.

--Kimberly DuBord, Briefing.co

08:44 am Oil Rises as Iran Pursues Nuclear Program

Crude oil prices rose after Iran stated over the weekend it would pursue a nuclear research program in defiance of the United Nations. Iran, the world's fourth largest producer, stated on February 4th it would resume full scale uranium enrichment, a process used to develop a nuclear bomb, after being referred to the UN Security Council. Oil prices rose in London by more than a dollar to $66.62 per barrel on speculation Iran may retaliate by reducing oil exports, or possibly blockading the Persian Gulf.

The International Atomic Energy Agency voted 27-3 to refer Iran to the Security Council. Iran claims it's pursuing nuclear energy for peaceful purposes. It plans to resume research and will restrict IAEA spot checks in the country. The IAEA requested Iran open its military sites to account for procurement documents for machinery and equipment for its nuclear program. If Iran fails to comply, the Security Council could impose sanctions. The U.S. stated last week it would not pursue sanctions at the current time.

While crude oil prices are still off $70 highs, concerns over the heightened tensions with Iran have kept prices in the upper sixty dollar range. Even though inventory stockpiles are well supplied, the tight market conditions leave little breathing room. OPEC, of which Iran is the second largest producer, is pumping at record levels, trying to build up a cushion in supplies. But with only 1.5 mln barrels per day in spare capacity, Saudi Arabia could not compensate for a halt, or disruption in Iranian production. The standoff with Iran will likely loom over the oil markets for the rest of the year. We remain Overweight energy as geopolitical concerns keep prices well above historical levels.

--Kimberly DuBord, Briefing.com

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From Briefing.com: 4:46PM Aeroflex beats by a penny, ex items; guides Q3 above consensus (ARXX) : Reports Q2 (Dec) earnings of $0.14 per share, excluding non-recurring items, $0.01 better than the Reuters Estimates consensus of $0.13; revenues rose 20.2% year/year to $135.2 mln vs the $132.8 mln consensus. Co issues upside guidance for Q3, sees EPS of $0.15, ex items vs. $0.14 consensus; sees Q3 revs of $140 mln vs. $138.33 mln consensus.

4:30PM Rambus C.F.O. to resign (RMBS) 28.71 -0.45 : Co announced that Robert K. Eulau, Sr V.P. and C.F.O., will resign from Rambus effective March 2, 2006 to pursue another opportunity. Harold Hughes, C.E.O., will serve as interim C.F.O. until a replacement has been found.

4:11PM Cisco Systems beats by a penny (CSCO) : Reports Q2 (Jan) earnings of $0.26 per share, excluding non-recurring items, $0.01 better than the Reuters Estimates consensus of $0.25; revenues rose 9.3% year/year to $6.63 bln vs the $6.62 bln consensus. CSCO reports gross margin 67.9% vs 67% co guidance.

4:43 pm Cisco Systems (CSCO)

18.09: Leading networking company Cisco Systems reported fiscal second quarter results that were slightly better than analysts' expectations. Specifically, its non-GAAP profit of $0.26 per share was a penny above the consensus estimate and revenues of $6.63 billion were a smidgen above the $6.62 billion expected by analysts. The top-line result translated to growth of 9.3% on a year-over-year basis and 1.2% versus the prior quarter.

On a pro-forma basis, Cisco's gross margins were 67.97% in the second quarter compared to 66.86% in the same period a year-ago and 67.33% in its fiscal first quarter.

The initial reaction to the report has been slightly positive, as Cisco didn't provide any blatant disappointments. The stock is trading at $18.61 in the after hours session. The company will be commenting on its business outlook on the conference call, which began a short time ago. Briefing.com, for its part, will be commenting further on the Cisco report, and its outlook, on our Story Stocks page Tuesday morning.

4:00PM FEI Company Terminates Discussions With Carl Zeiss SMT (FEIC) : Co announced that it has terminated discussions with Carl Zeiss SMT, a unit of Carl Zeiss AG regarding the potential acquisition of FEI by Carl Zeiss SMT. The discussions were initiated by Carl Zeiss. According to Vahe Sarkissian, chairman, president and CEO, "We are renewing our focus on generating improved operating results in 2006, building on our market focus and restructuring activities of 2005. Our potential as a leader in tools for nanotechnology is very large, and we are concentrating on taking advantage of that potential, generating positive shareholder returns in the process."

4:20 pm : The major averages were weak across the board as ongoing worries of slowing profit growth prompted broad-based consolidation, closing nine of ten economic sectors lower. For the first time this month, inflation fears weren't cited as a catalyst behind underlying market weakness. Instead, a huge decline in oil prices (-3.1%) actually alleviated some concern that rising energy prices will accelerate and potentially crimp consumer spending. Nonetheless, oil's drubbing incited sellers to lock in some of the profits that have lifted Energy to a sector-leading 11.5% gain, which continues to play into our Overweight rating on the sector. Thus, the absence of Energy's leadership, especially since the sector accounts for the bulk of earnings growth on the S&P, merely added to lingering worries about earnings deceleration and exacerbated the lack of enthusiasm on the part of buyers to get the market back on track.

Turning in the day's second worst performance was Materials, as gold futures plunged in sympathy with oil -- one of the catalysts behind the precious commodity's continued attractiveness as an inflation hedge. Profit-taking in steel as well as diversified metals & mining, two of the year's Top Ten best performing S&P industry groups, also weighed on the sector.

On a positive note, Walt Disney (DIS 26.66 +1.70), a suggested holding in our Active Portfolio, posted strong Q1 (Dec) earnings but was one of only 9 Dow components to finish higher. To that end, the stock's 7% surge was unable to single-handedly lift Consumer Discretionary. Weighing most heavily on the sector was a disappointing FY06 sales forecast from Toll Brothers (TOL 29.55 -1.65) amid softening demand in a number of housing markets. Confirmation that General Motors (GM 22.88 -0.46) agreed to slash its dividend by 50%, especially during a time when so many companies flush with cash are returning value to shareholders in the form of dividend increases -- a source of market support, also weighed on sentiment.

The incentive to lock in profits also pressured Financials, as some investors took money off the table in the brokerage group while others used rising borrowing costs as a reason to stay away from rate-sensitive bank stocks. The 10-yr note closed down 5 ticks to yield 4.56% following a poor 3-yr note auction, which had a poor 22% showing on indirect bidder participation, and a lack of any notable economic data to perhaps set a more positive tone in the Treasuries market.

Technology, however, eked out a small gain and was the day's only sector to finish in the plus column, as investors remained optimistic that Cisco Systems' (CSCO 18.09 +0.26) strong track record of consistency would carry over into Q2 results, which were scheduled for release after the close. Upbeat analyst comments on Motorola (MOT 21.04 +0.51), another suggested holding, and NCR Corp (NCR 38.86 +1.20), as well as a late-day turnaround in semiconductor, also helped offset weakness in software and hardware. BTK -0.7% DJ30 -48.51 DJTA -1.4% DJUA -0.8% DOT -0.5% NASDAQ -13.84 NQ100 -0.3% R2K -1.5% SOX +0.1% SP400 -1.3% SP500 -10.24 XOI -3.4% NASDAQ Dec/Adv/Vol 2070/967/2.13 bln NYSE Dec/Adv/Vol 2185/1072/1.78 bln

3:38PM Texas Instruments issues statement regarding jury award of $112 mln in patent damages (TXN) 30.63 +0.09 : Co announces following a month- long trial in United States District Court in Trenton, New Jersey, a federal jury awarded Texas Instruments (TXN) $112 mln in patent damages for infringement by Globespan Virata, a subsidiary of Conexant Systems (CNXT), of two T.I patents and one Stanford University patent covering DSL modems. "This verdict underscores the value of the intellectual property embodied in the T.I and Stanford patents, and we are gratified with the jury's decision," said Joseph F. Hubach, Senior Vice President and General Counsel of T.I. Remaining to be resolved is an issue relating to whether Globespan's future production of DSL modems will be licensed as a result of its acquisition by Conexant in 2004. Conexant is a licensee of the TI/Stanford patents. If Globespan's production is not licensed, the court can enjoin future manufacture and sales of Globespan products in the U.S. Also to be resolved are Globespan's antitrust claims, which are set for trial in October 2006.

10:41 am Anadigics: Needham & Co reiterates Buy. Target $7 to $7. Firm ups price target following Q4 results, as they like ANAD's growth prospects in both of their key business segments: broadband driven by WLAN and cable set top box markets and the wireless business driven by growth in the GSM/ W-EDGE handset markets. They believe that ANAD's improving EPS will be driven by absorption of fixed costs as capacity utilization of the 6" GaAs fab increases and by a richer product mix.

10:40 am Sirenza Micro: WR Hambrecht reiterates Buy. Target $8 to $8. The firm believes that with the acquisition of Premier Devices (PDI), SMDI has moved to the next level and has now become a major player in the RF market. They believe the acquisition has the potential to substantially increase the co's rev, in addition to being accretive next quarter, along with a strong strategic fit.

10:39 am Lexar Media: WR Hambrecht downgrades Buy to Hold. While firm believes that Toshiba is likely to settle with LEXR for a substantial amount, they believe there is near-term risk in the story with regards to gross margins and profitability in Q1 that cannot be ignored.

10:38 am Daktronics: Janco Partners initiates Buy. Target $38. Firm says DAKT is gaining share in an industry which has seen growth accelerate to high teens to low 20% rev growth over the last several quarters. Their expectations for DAKT are for 20% rev growth over the next several years, which embeds limited expectations for market share gains and could prove conservative should digital billboard demand increase substantially.

10:37 am Occulogix: Rodman & Renshaw downgrades Mkt Outperform to Mkt Perform. Firm also canceling their price tgt. The firm says the co's pivotal trial MIRA-1 failed its primary endpoint and the co highlighted that there was an "anomaly" in the control group. The firm says they believe a further subset analysis might do little to help position rheotherapy for FDA approval. The FDA might ask RHEO to conduct another trial, which has its own risks. The firm says skepticism among the retinal community, especially given the lack of understanding about rheopheresis and its mechanism of action of treating dry A.M.D just got higher.

10:36 am HRPT Properties: Ferris Baker Watts initiates Buy. Target $16. Firm is saying that given HRPT's current dividend yield of 7.9%, the co's investment-grade debt rating and solid capital structure, and its current stock price that approx book value, they believe there is little downside risk to HRP shares. The firm believes continued strengthening of the economy, specifically in the co's major markets, provides some upside to their 2006 FFO per share estimate.

10:35 am AC Moore: Wedbush Morgan upgrades Hold to Buy. Target $14 to $14. Firm believes the co is very focused on addressing several key strategic factors that should result in improved execution and drive sales and margins in 2006 and longer-term. They say this includes merchandising (including roll-out of custom framing), marketing, store operations, payroll, and import buying. believe ACMR should be able to grow 20% longer-term due to a combination of low to mid teens square footage growth, low to mid single digit comps, and opportunities for operating margin expansion.

10:33 am Websense: Wedbush Morgan downgrades Buy to Hold. Firm sees an increasing amount of downside risk given an increasingly competitive U.S. mkt. The firm also says that the risk/reward is neutral at current levels. They believe Web Security Suite bundles are countering commoditization of the core product in the U.S., but attach rates through bundle sales are difficult to ascertain.

4:20 pm William Wrigley Jr. Co. (WWY)

63.50 -1.20: The Wm. Wrigley Jr. Company gave investors something to chew on Tuesday afternoon. The world's largest chewing gum manufacturer reported fourth quarter earnings of $0.52 per share, excluding a dime in restructuring charges, and fell $0.03 short of the Reuters Estimates consensus. The result reflects flat year-over-year EPS growth.

Matching analysts' expectations, global sales rose 15% to $1.1 billion. In addition to strong volume growth within its core business, newly acquired confectionary brands were behind the top line growth and drove revenue in North America. Those new brands were responsible for three-fourths of the region's 37% sales increase; strong performance by Orbit, Extra, and Excel were additional factors. In Wrigley's Europe, Middle East, Africa, and India (EMEAI) segment, unfavorable exchange rates contributed to flat sales results.

While the newest additions to Wrigley's brand portfolio drove revenues, the acquisitions had a dilutive impact on earnings. The items, which include Altoids, Life Savers, and Sugus, are lower margin products. To that end, the company's consolidated gross margin contracted by 510 basis points to 50.0% in the fourth quarter (restructuring costs accounted for 310 basis points of the decline).

As we noted following the company's Q3 report, acquisition-related costs and restructuring charges marred its earnings results. Wrigley's near-term outlook remains undecided, but as the company remains focused on successfully integrating its newly acquired brands and realigning its global supply chain operations, it is positioned to regain momentum and generate stronger growth in the longer-term. Separately, Wrigley increased shareholder value by raising its quarterly dividend 14% to $0.32 per share last quarter. WWY shares trade at 26.3x trailing twelve month earnings, a discount to their 29.8x five-year average.

--Lisa Beilfuss, Briefing.com

1:01 pm Toll Brothers (TOL)

30.02 -1.18: Luxury home builder Toll Brothers on Tuesday lowered its outlook for home sales, due to softening demand in a number of markets, as well as delays in obtaining certificates of occupancy and construction inspections. Toll Brother's warning also fueled broader concerns about an accelerated slowdown in the housing market, pushing the Dow Jones U.S. Home Construction Index down about 2.3%.

Toll Brothers said it expects to deliver between 9,200 and 9,900 homes in the fiscal year, ending on October 31. That is down from a previously lowered forecast of 9,500 to 10,200 homes, as a result of slowing demand in the face of rising interest rates and longer delivery times at many of the company's communities. Toll Brothers will update its earnings guidance during its quarterly conference call on February 23.

For the first quarter ended January 31, the company said new orders declined to 1,572 from 2,209 a year earlier, while the value of the signed contracts fell 21% to $1.14 billion. Total revenue for the period rose 35% to approximately $1.33 billion. However, analysts had forecast revenue of $1.35 billion, according to Reuters Estimates. Toll Brothers ended the quarter with a backlog of 8,635 homes with a value of $5.95 billion, up 22% from a year earlier.

Since Toll Brothers first lowered its outlook in November, shares of the company have plunged about 25%, compared to a 4.7% decline in the Dow Jones U.S. Home Construction Index over the same period. As the housing market, and Toll Brothers in particular, continues to be constrained by rising interest rates and slowing demand, we would refrain from committing new money to the sector at this time.

--Richard Jahnke, Briefing.com

12:57 pm Polo Ralph Lauren (RL)

55.37 -2.10: Polo Ralph Lauren Corporation reported net income of $90.7 million, or $0.84 in diluted earnings per share, for its third fiscal quarter. Its EPS result exceeded Wall Street's expectation by seven cents, and reflects close to 17% year-over-year growth. Aided by a 15% jump in retail sales and a 6% rise in wholesale sales, the retailer's top line rose a better than expected 10.4% to $995 million.

The increase in retail sales was driven by a 7.4% increase in total company comparable store sales. Each of Ralph Lauren's retail formats posted solid growth, with its namesake stores faring best. Inclusion of the company's footwear line and improved performances across the womenswear, childrenswear, full-price menswear, and European businesses fostered the wholesale sales increase. Improvements in full-price sell-throughs and sourcing efficiencies within both the retail and wholesale segments helped the company's gross margin expand significantly.

This month, Ralph Lauren completed the $255 million cash purchase of the Polo Jeans business from Jones Apparel. The company expects the transaction to be dilutive by a nickel per share in fiscal 2006. In fiscal 2007, the acquisition should have a neutral effect upon earnings. After adjusting for that deal, as well as for the closures of the Club Monaco outlet stores and the disposition of the Caban home stores, the company has lowered its FY06 (Mar.) forecast. EPS of $2.80-2.85 is now anticipated versus the previously guided range of $2.85-2.92. The consensus estimate is pegged two cents above the high end of that range. Management noted that its Club Monaco strategy will be dilutive by about a dime in full-year EPS, but that it is an initiative consistent with the company's long-terms efforts to reduce off-price sales and rationalize distribution channels. Excluding $0.15 in stock-based compensation expenses, the retailer expects FY07 EPS to be $3.15-3.25; analysts estimate $3.31.

RL shares presently trade at 19.6x estimated FY06 earnings. The stock trades at a premium to peer companies such as Jones Apparel (JNY), Liz Claiborne (LIZ) and Tommy Hilfiger (TOM), and consequently, it has fallen prone to profit taking following the company's guidance.

--Lisa Beilfuss, Briefing.com

12:43 pm Under Armour (UARM)

32.25 -6.95: Shares of Under Armour traded sharply lower on Tuesday after the maker of performance sports apparel reported better than expected results for its first quarter as a public company, but provided a seemingly disappointing forecast for the current period. With investors' high expectations grounded, the stock, which has tripled since the company went public in late November, fell more than 18% during the regular trading session.

The latest results highlight our concerns that expectations have exceeded fundamentals, leading to stretched valuation levels. Though the pull-back in shares presents a compelling entry point into what is still one of the most exciting growth stories in the branded apparel sector, the comparatively high multiple of 64x forward earnings continues to underscore our neutral position on the stock.

For the fourth quarter, Under Armour reported net income of $7 million, or $0.08 per share, compared with $6.2 million, or $0.15 per share, in the year ago period. The results included the impact of $3.5 million for debt redemption. Without this charge, the company would have earned $0.16 per share - $0.09 better than the Reuters Estimates consensus of $0.07. Revenue rose 25% in the quarter to $87.3 million, from $69.6 million a year earlier, driven by strong demand for the performance apparel and expanding product offerings.

Under Armour also forecasted net income and revenue would increase 20-25% in the current year. That equates to revenue of $337.3 to $351.4 million. Currently, analysts are expecting revenue of $352.53 million and EPS of $0.50, according to Reuters Estimates.

--Richard Jahnke, Briefing.com

10:18 am Activision (ATVI)

14.15 -0.21: Activision on Monday said third quarter profits fell 30% from a year earlier, as a result of weaker than expected market conditions in the U.S. and Europe due to the transition to next-generation gaming systems. The video game publisher also projected a fourth quarter loss and lowered its earnings guidance for the full year. In turn, shares of the company plunged more than 6% in early trading.

For the third quarter, Activision, which publishes such titles as Call of Duty, Tony Hawk's American Wasteland, and Shrek, posted net income of $67.9 million, or $0.23 per share. In the same period a year earlier, the company earned $97.3 million, or $0.35 per share. Meanwhile, revenue rose 20% year/year to $816.2 million from $680.1 million. The results fell short of analysts' earnings expectations, but beat top-line estimates. According to Reuters Estimates, analysts had forecast earnings of $0.36 per share on revenue of $708.19 million.

Based on its disappointing earnings results and weaker than expected market conditions in the third quarter, Activision lowered its outlook for the fourth quarter and fiscal year. For the fourth quarter, the company forecasted a loss of ($0.07) to ($0.09) per share on revenue between $125 and $135 million, down from its previous earnings estimate of $0.05 per share and revenue of $226 million. For the full year, earnings are expected to be in the range of $0.09 to $0.11 per share on revenue of $1.41 to $1.42 billion. Wall Street had forecast earnings of $0.02 per share on revenue of $199.8 million for the fourth quarter, and $0.32 per share on $1.37 billion for the year.

In the midst of a transition to next generation gaming systems, rivals Electronic Arts (ERTS) and THQ Inc. (THQI) also reported lower quarterly earnings and lowered expectations for the current period as they continue to invest actively in product development. While the console transition phase is still expected to create near-term disruptions, the industry, and Activision, is poised for longer-term growth that typically follows the release of new gaming hardware. As a result, investors have reason to continue to hold the stock, but until there is better earnings visibility, we wouldn't be committing new money.

--Richard Jahnke, Briefing.com

09:55 am YUM Brands (YUM)

51.38 +0.21: For its fourth fiscal quarter, Yum! Brands reported $0.81 in earnings per share. That result excluded $0.04 in stock-options expensing, and surpassed the Reuters Estimates consensus by three cents. Chief Executive David Novak acknowledged that FY05 marked Yum's fourth consecutive year of meeting its goal of at least 10% EPS growth, as earnings per share were up 13% prior to special items and expensing stock options. Record store openings in China, Taco Bell's same-store sales performance, and a turnaround at KFC were drivers.

The company's top line rose 4.1% to $2.90 billion during the fourth quarter, slightly shy of analysts' $2.97 billion estimate. Worldwide system same-store sales increased 2%. Fueled by higher same-store sales, revenues were up 4% to $1.82 billion in the U.S. Sales across Yum's International division rose 2% to $658 million. The company's China business, which has been key to its growth story, posted an 8% increase in Q4 sales to $425 million, but operating profit there fell 18% excluding options expense. Yum attributed the weakness to consumer concerns related to avian flu and a seasoning-supplier issue that had surfaced during the second quarter. KFC was the particular drag there.

Yum continues to expect EPS growth of at least 10% for the full-year, primarily driven by global expansion and same-store sales growth of 2-3% in the U.S. That translates to $2.79 in FY06 (Dec.) profit per share, which includes $0.13 per share of option expensing. The company forecasts at least 5% growth in International full-year system sales. For the China division, Yum anticipates system sales growth of at least 22%.

YUM shares presently trade at 18.6x estimated FY06 earnings, a premium to rival McDonald's 16.7x forward multiple. McDonald's remains our favored stock within the casual restaurant space, and is a recommended holding in our suggested portfolio for active investors.

Separately, Yum reported January 2006 same-store sales. U.S. blended same-store sales increased 5%, with Taco Bell (+11%) faring best and Pizza Hut (-4%) performing worst.

--Lisa Beilfuss, Briefing.com

09:42 am General Motors (GM)

23.23 -0.11: The pretense for GM's announcement Tuesday morning is to say categorically, "we are all in this together." As we expected, the automaker announced it will cut its cash dividend by fifty percent. The move is seen as a goodwill gesture to the United Auto Worker's Union ("UAW") in order to garner the necessary concessions for the 2007 contract negotiations. Shareholders are not the only ones taking a hit, as GM's senior leadership will be taking salary and compensation cuts, including a 50% cut for CEO Rick Wagoner.

As part of its North American turnaround plan, GM announced a slew of actions aimed at reducing costs. These include revising the health-care benefit plan for salaried retirees, which is expected to reduce its liability by about $4.8 bln and cut annual health-care expenses by almost $900 mln before tax. These are necessary actions GM must take in order to get its cost structure in line in order to compete globally in this intensively competitive environment.

GM announced significant salary reductions for GM's chairman and senior leadership, as well as a 50% reduction in compensation for outside board members. The move is a clear sign to the UAW that it will not be the only one feeling the cost-cut burden. Many expected GM wouldn't cut the dividend unless it was confident it would receive the concessions necessary.

Overall, the news today was a modest positive for GM's shares, which were up in pre-market trading. While news of a dividend cut certainly makes headlines, it would have been bigger news if GM didn't cut the dividend considering its level of cash burn. The reduction is part of a psychological move to align all participants in GM's recovery. All of today's actions are necessary for GM to lower its cost structure. The next step is for GM to sell GMAC and settle the Delphi situation.

We would argue the pace of cuts has been slow (to put it mildly) and that GM still has yet to demonstrate it has the vehicles consumers want to buy. Today's news was a first step, but GM continues to face Himalayan-esque problems and this news does little to change our bearish view on GM's fundamental outlook. Still, we would concede the downside risk at this juncture appears limited. The question regarding GM's future will not be answered in terms of quarters, but instead in terms of years.

--Kimberly DuBord, Briefing.com

09:07 am Boston Scientific (BSX)

21.62: Boston Scientific on Tuesday said fourth quarter profits rose from a year earlier, despite lower sales of its coronary stent systems. Specifically, the medical device maker, which recently won a bidding war with Johnson & Johnson (JNJ) for Guidant Corp. (GDT), earned $334 million, or $0.40 per share, compared with $297 million, or $0.35 per share, in the year ago period. However, excluding special charges, the company would have earned $340 million, or $0.41 per share. Analysts, on average, had expected earnings of $0.42 per share, according to Reuters Estimates.

Net sales for the fourth quarter, which the company pre-announced in January, fell 3.8% year/year to $1.54 billion from $1.6 billion. Worldwide coronary stent sales totaled $640 million, down from $730 million a year earlier. Sales of Taxus stent systems were down 12% to $606 million, with U.S. sales down almost 21% to $398 million.

Boston Scientific said it plans to announce financial guidance for fiscal 2006 after the completion of its merger with Guidant. The pending acquisition, which will provide the company access to the $10 billion market for pace makers and defibrillators, is expected to foster sales growth and help reverse negative momentum in the company's stock. Shares of Boston Scientific are down nearly 40% over the past year and are trading near 52-week lows.

--Richard Jahnke, Briefing.com

09:00 am Coca-Cola (KO)

40.94: Coke's fortune rests on its ability to sell soft drinks, which account for more than 80% of total sales, compared to less than 20% for Pepsi. This mix continues to favor Pepsi in terms of growth prospects. Still, Coke's fourth quarter showed a solid improvement in key areas, as Coke's turnaround remains on track. New product introductions, innovation, and brand extension will be key areas on which to capitalize for Coke in the effort to accelerate growth for the 120 year-old company.

Coke reported fourth quarter revenue growth of 7% to $5.55 bln, slightly ahead of expectations, reflecting a 4% increase in gallon sales, 3% pricing and mix benefit, and offsetting a 1% negative currency impact. Profits declined 28% to $864 mln due to a $188 mln expense in repatriating overseas profits, but excluding items, per share profits of 46 cents topped analysts' estimate by two cents.

Worldwide case volume growth of 4% continues to be driven by growth in the Emerging Markets - namely China, Russia, Turkey and Brazil. North America delivered a solid 3% rise, while Germany finally recovered posting a mid-single digit growth rate for the first time since 2003. Southeast Asia and Northwest Europe were notably weak in the quarter. The non-carbonated and water segments remain the driving force, growing 12% and 17%, respectively, compared to soft drinks which were up a mere 2%.

Coke's turnaround remains on track. The bigger question is whether investors will have the patience to ride it out. The stock is hovering near multi-year lows, trading at 18x forward earnings, which is well below its historical multiple of 27.9x. From this perspective, we continue to like KO on a risk/reward basis.

--Kimberly DuBord, Briefing.com

08:51 am Walt Disney (DIS)

24.96: Theme parks were the leading contributor to Disney's first quarter results, which surpassed expectations by fifteen percent. Overall, it was a solid quarter with 6% earnings growth and each division performing as expected. The parks division continues to be a steady profit center for Disney, up an impressive 51% to $375 mln as attendance, lodging, and restaurants were all up on promotional activity surrounding the 50th Anniversary of Disneyland, along with contributions from Euro Disney and Hong Kong Disneyland.

Net income in the quarter rose to $734 mln, or 37 cents per share, on revenue growth of 2.2% to $8.85 bln. After a tax benefit and asset sales, earnings per share came in a nickel above consensus. The film unit continues to be a drag on Disney, with profits tumbling 60% to $128 mln. Disney did face tough comparisons in this unit and we should see a second half recovery with the release of the second installment of Pirates of the Caribbean and the new Pixar release, Cars.

Separately, Citadel Broadcasting Corp. (CDL) has agreed to merge with Disney's ABC radio unit, gaining 22 stations and a piece of the network in a deal valued at $2.7 bln. Disney will own 52% of the newly formed Citadel Communications and will receive as much as $1.65 bln in cash as part of the deal.

The solid quarter underscores our positive view on the company, as Disney is clearly refocusing for the future. We expect double-digit operating growth this year. At 17.8x, Disney represents a strong investment at current levels.

--Kimberly DuBord, Briefing.com

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From Briefing.com: 4:41PM Axcelis Tech beats by $0.04, ex items; guidance (ACLS) : Reports Q4 (Dec) earnings of $0.01 per share, excluding non-recurring items, $0.04 better than the Reuters Estimates consensus of ($0.03); revenues fell 1.7% year/year to $92.9 mln vs the $90.1 mln consensus. Co guides for Q1, sees Q1 revs of $90-100 mln vs. $90.31 mln consensus.

4:30PM Planar Systems adopts new shareholder rights plan (PLNR) 13.95 -0.05 : Co announces that its Board of Directors adopted a Shareholder Rights Plan to replace the previous plan that expired Feb 1, 2006. The replacement plan includes a so-called "TIDE" provision requiring a committee of independent directors to meet at least once every 3 years to determine whether the plan remains in shareholders' best interests. The plan will not prevent a takeover, but is designed to encourage anyone attempting to acquire the co to first negotiate with the Board of Directors and to guard against abusive or coercive tactics that might be used in an attempt to gain control of the co without paying all the shareholders a fair price for their shares.

4:26PM Avanex beats by $0.04, ex items; guides in-line (AVNX) : Reports Q2 (Dec) loss of $0.06 per share, excluding non-recurring items, $0.04 better than the Reuters Estimates consensus of ($0.10); revenues fell 13.8% year/year to $36.1 mln vs the $35.9 mln consensus. Co issues in-line guidance for Q3, sees Q3 revs of $36-40 mln vs. $39.76 mln consensus.

4:24PM TTM Tech beats by $0.02 and issues upside Q1 guidance (TTMI) 10.63 +0.55 : Reports Q4 (Dec) earnings of $0.15 per share, excluding $0.31 in valuation allowance charges, $0.02 better than the Reuters Estimates consensus of $0.13; revenues rose 3.4% year/year to $63.1 mln vs the $62.1 mln consensus. Co issues upside guidance for Q1, sees EPS of $0.16-0.20 vs. $0.12 consensus; sees Q1 revs of $67-70 vs. $61.26 mln consensus.

4:23PM Carrier Access beats by $0.01 (CACS) 5.40 -0.08 : Reports Q4 (Dec) earnings of $0.02 per share, $0.01 better than the Reuters Estimates consensus of $0.01; revenues rose 31.2% year/year to $21.1 mln vs the $20.9 mln consensus.

4:20 pm : Concerns over inflation, Fed tightening, Iran, earnings growth, and the yield curve continue to hang over the equity market, but investors found reasons to buy today. Cisco (CSCO 19.44 +1.35) delivered better than expected earnings after yesterday's close, and news that Pfizer (PFE 26.44 +1.50) may divest its lower-margin consumer health care business lent further upside. In addition, the market took a bullish cue from extended price declines across the energy complex.

The notion that Cisco did not disappoint, as has been the case with a number of Tech companies, gave the market an early boost. The communication equipment industry surged, and bargain hunters lifted the sector a market-leading 1.9%. The hardware and semiconductor groups were also particularly strong following analyst upgrades on Dell (DELL 31.55 +1.86) and Applied Materials (AMAT 20.19 +0.69) shares. Led by Pfizer, Health Care (+1.2%) was a strong force behind the market's rise. The Financial sector's late-day advance (+0.7%) lent further momentum. The Treasury market spent the day on negative turf, largely due to rumored comments out of former Fed Chief Greenspan yesterday. The yield curve remained inverted, and uncertainty over the length of the Fed's tightening cycle continues to bother the market. However, even banks benefited from the broad-based buying action.

Minutes before the closing bell, the Energy sector (+0.1%) rebounded. That action sent the indices to their best levels of the session. The economic front featured just one item, which was a mixed bag from the Department of Energy. Crude supply unexpectedly dropped, but gasoline inventory increased more than two times the forecasted build. Given the implication that higher gasoline inventories should translate into lower prices at the pump for consumers, the latter point was a supportive factor for the broader market. While extended energy price declines incited profit taking across the Energy sector, it too was lifted by wide-spread buying. We remain bullish on the sector, and very strong earnings reports from our portfolio pick Grant Prideco (GRP 45.93 -2.52) and Diamond Offshore (DO 79.85 -0.23) underpin that view.

The Discretionary sector benefited by the energy price action, as well as from strong same-restaurant sales data from McDonald's (MCD 36.38 +0.19). The company, another one of our portfolio picks, reported its 33rd straight month of global comps growth. Due to news that Univision (UVN 34.26 +3.72) may put itself up for sale, broadcasting and cable surged. On a related note, reports that Carl Icahn has advanced his Time Warner (TWX 18.50 +0.14) break-up plan helped send Telecom 1.7% higher.

General Motors (GM 21.95 -0.86) was one of the market's worst performers today. Deutsche Bank downgraded the stock to Sell from Hold and cut their target to $17 from $22, citing continued disappointment in the limited cash savings targeted by the company's current restructuring efforts. Related issues also trended lower, but were more than offset by advances across the broader market.DJ30 +108.86 NASDAQ +22.02 SP500 +10.87 NASDAQ Dec/Adv/Vol 1291/1769/2.20 bln NYSE Dec/Adv/Vol 1380/1918/1.79 bln

1:07 pm Cigna (CI)

120.86 +1.13: Health insurer Cigna Corp. on Wednesday reported a 60% drop in fourth quarter earnings, due to large gains from special items in the year ago period, but still beat Wall Street's estimate. Specifically, the Philadelphia-based company said net income fell to $224 million, or $1.78 per share, from $558 million, or $4.16 per share, a year earlier. Adjusted income from operations, which exclude one-time items, were $249 million, or $1.98 per share, compared with a year ago profit of $323 million, or $2.41 per share. On that basis, the latest results were $0.33 better than the Reuters Estimates consensus of $1.65.

Fourth quarter revenues slipped 3% year/year to $4.21 billion, but topped the consensus estimate of $4.03 billion as Cigna's healthcare, group disability and life, and international operations generated stronger than expected results. In Health Care, premiums and fees were flat from a year earlier at $2.62 billion, while segment earnings were down 30%. The decline reflects the effects of lower membership as well as higher operating expenses. The Disability and Life segment, meanwhile, reported a 10% increase in premiums and fees to $548 million due to continued solid results and strong customer persistency. Earnings for the segment declined 4% to $52 million, however, as the company experienced higher disability claims and more normal mortality results in the life insurance business.

Looking to the first quarter and fiscal year 2006, Cigna forecasted financial results below analysts' expectations. For the current quarter, the company said it expects EPS in the range of $1.65 to $1.80 versus the consensus estimate of $1.86. Cigna also sees earnings of $7.25 to $7.70 per share for the full year. That compares to the Reuters Estimates consensus of $7.85 per share. Based on current expectations, Cigna shares are trading at 15.4x forward earnings, compared with 17.6x for Aetna (AET) and 19.9x for Unitedhealth Group (UNH). Briefing.com currently has Market Weight rating on the Health Care sector, with managed care stocks seen as a pocket of strength.

--Richard Jahnke, Briefing.com

12:26 pm Univision (UVN)

33.74 +3.20: According to The New York Times, Spanish-language broadcaster Univision Communications is considering a plan to put itself up for sale. Long considered an attractive takeover target, as advertisers continue to invest more and more of their budgets into luring a booming Hispanic consumer base with campaigns in Spanish, such a deal has yet to be consummated since Univision has commanded such a large price tag for so long.

The Los Angeles-based company, with a market cap of $10.4 bln, currently trades a 5.7x trailing twelve month sales. That compares with much lower price-to-sales multiples of 2.0x, 1.9x, 1.7x and 0.9x for media giants News Corp (NWS.A), Time Warner (TWX), Walt Disney (DIS) and CBS Corp (CBS), respectively. Disney and News Corp are suggested holdings in our Active Portfolio.

Since Univision has seen its television audiences grow even as ratings for the top four U.S. networks erode under pressure from competing media outlets such as the Internet and video games, it's only a matter of time until larger cable companies fully embrace the importance of meeting the needs of such a lucrative market. According to the U.S. Census Bureau, the nation's Hispanic population is expected to triple over the next 50 years, growing from 36 mln to 103 mln and accounting for almost 25% of the total population, nearly double today's figures.

While Time Warner may want to look at acquiring Univision, today's announcement from financier Carl Icahn could stall potential talks as TWX explores Icahn's proposal of spinning off Time Warner Cable as one of four separate entities. News Corp may also look into it but would possibly have to sell a station in order to take it on, according to CNBC. Disney is another possible candidate, according to CNBC, but currently has its hands full trying to complete a $7 bln deal for Pixar Animation (PIXR) while CBS Corp is another possibility but could find it difficult trying to absorb a company half its size. General Electric (GE), whose NBC network acquired smaller rival Telemundo in 2002 for $2.7 bln, should not be ruled out as a potential acquirer either. It is worth noting that, while Telemundo enjoyed 22% of the Spanish-language prime-time audience in 2002, its market share dropped to 16% within a year.

According to JP Morgan, though, acquiring Univision simply might not be worth the risk for many large media companies. Univision, whose 28 television stations, 60+ affiliate stations and more than 1,200 cable affiliates that address the needs of roughly 98% of U.S. Hispanic households, is what JP Morgan considers a "unique and scarce asset." Nonetheless, the brokerage firm also believes most large-cap media companies might be better off expanding their presence in Hispanic media organically instead of paying top dollar for Univision, especially considering the poor M&A track record of entertainment conglomerates as a whole.

--Brian Duhn, Briefing.com

12:09 pm IAC/InterActive Corp. (IACI)

27.99 +0.33: In the wake of the spin-off of its travel business Expedia, IAC Interactive on Wednesday reported better than expected profits for the fourth quarter, helped by performance at Home Shopping Network, Ticketmaster, and online personals service Match.com. IACI shares, in turn, are trading higher in the regular session, as the company's growing position in a number of market categories and improving business continues to strengthen its long-term investment appeal after years of sluggishness.

For the fourth quarter, the Internet media conglomerate posted net earnings of $113.1 million, or $0.33 per share, up from a year-ago loss of $45.9 million, or ($0.13) per share. Excluding special items, however, the company earned $180.1 million, or $0.52 per share, compared with $157.9 million, or $0.41 per share, a year earlier. That topped the Reuters Estimates consensus of $0.46.

Revenue for the period rose 45% year/year to $1.79 billion, slightly better than the consensus estimate of $1.78 billion. Growth in the quarter was led by the company's two largest segments, Retailing and Services. In Retailing, revenue grew 42% from a year earlier to $940.9 million, driven primarily by the inclusion of Cornerstone Brands, which was acquired last April, and strong online demand. Home Shopping Network booked modest revenue growth, with higher sales in the ready-to-wear and home fashions categories, offset by lower sales in Jewelry. Services revenue, which rose 46% to $475.5 million, was led by strong concert and sporting event sales at Ticketmaster and solid growth at LendingTree from increased loan closings. Membership and Subscription, meanwhile, reported revenue of $261.8 million. That is up 8% from the year ago period, due to record revenue in Personals and improved performance in Vacations.

--Richard Jahnke, Briefing.com

10:12 am Pepsico (PEP)

57.47 +0.61: Pepsico on Wednesday reported higher fourth quarter profits that matched Wall Street's estimates, driven by strong top-line growth across all of its businesses. Despite elevated input cost pressures, the world's No.2 soft drink maker said net income for the quarter increased to $1.1 billion, or $0.65 per share, from $985 million, or $0.58 per share, a year earlier. The quarter benefited from an extra week of results, but was offset by pre-tax charges totaling $83 million related to previously announced restructuring actions to reduce costs in its operations.

Overall revenue increased 14.7% year/year to $10.1 billion, with global servings volume up over 9%. Analysts, on average, were expecting revenue of $9.5 billion, according to Reuters Estimates. Pepsico's largest division, Frito-Lay North America, reported $3.2 billion in revenue, up 13% from a year ago. Growth in the segment was driven by strong volume gains in the Lay's, Cheetos, and Santitas brands, as well as the impact of an extra reporting week. In Pepsico Beverages North America, revenue increased 13% to $2.6 billion on higher volumes, led by strong gains in non-carbonated beverages, including Gatorade sports drinks, Aquafina, and Propel fitness water. Meanwhile, Pepsico International booked $3.7 billion in revenue, an increase of 16% over the prior year period, with volume growth of 5%. For the quarter, snack volume grew 13%, while beverage volume grew 12%, with double-digit growth for both carbonated and non-carbonated soft drinks.

Pepsico expects to continue its strong performance in fiscal 2006. For the upcoming year, the company forecasted earnings of at least $2.93 per share, along with mid single-digit volume and revenue growth. That compares with analysts' expectations for earnings of $2.93 per share and revenue of $33.85 billion. In spite of a challenging cost environment, Pepsico's strong momentum, continued investment in the marketplace and productivity initiatives, and favorable product mix highlight its long-term investment appeal, as compared to rival Coca-Cola (KO).

--Richard Jahnke, Briefing.com

10:04 am Time Warner (TWX)

18.34 -0.02: Last year, Sumner Redstone, the founder and controlling shareholder of Viacom, said that the age of the diversified media conglomerate was over, saying the breakup of the business was essential to dealing with a changing industry landscape. On January 1st, the separation of the "old" Viacom into CBS Corporation (CBS) and "New" Viacom, Inc. (VIA.B) was complete. Last night, financier Carl Icahn stepped up his campaign to do the same with Time Warner, calling for the media giant to split into four separate companies.

Icahn, who along with his allies are believed to own shares and options equal to about 5% of TWX stock, is accusing Time Warner of mismanagement, noting in a report compiled by investment bank Lazard Ltd. (LAZ) that management's "lack of a clearly defined strategy and a short-term focus" has cost shareholders a total of $40 bln.

While Time Warner has already sold off its music division and intends to float shares in its cable TV subsidiary in an effort to return value to shareholders, Icahn believes much more must be done to unlock the true worth of a company whose value far exceeds its stock price. To that end, Icahn also wants Time Warner to increase its share repurchase program to $20 bln from $12.5 bln, noting that such measures could lift TWX's stock price to $26.57, nearly 50% higher than where the stock has traded over the past couple of years. In fact, one of the few things Time Warner CEO Dick Parsons and Icahn actually do see eye to eye on is the fact that TWX shares have languished, still trading at roughly the same level they were in the spring of 2002.

Since then, nearly every strategic decision, especially concerning the AOL business, has been wrong according to Bruce Wasserstein, the head of Lazard. Wasserstein noted that Time Warner should have moved sooner into Internet-based telephone services and didn't capitalize on the surge in Internet advertising. "Time has not been friendly to Time Warner," added Wasserstein who along with Icahn believes that the need for changes at TWX is urgent.

While we continue to favor the media industry due to its increasing visibility, renewed focus on shareholder returns, and growth prospects, the names we prefer are Walt Disney (DIS), which recently agreed to merge its ABC radio unit with Citadel Broadcasting Corp. (CDL), and News Corp. (NWS.A), which has $5 bln in cash available to continue returning value to shareholders in the form of stock buybacks. Both companies are suggested holdings in our Active Portfolio.

--Brian Duhn, Briefing.com

09:50 am Grant-Prideco (GRP)

46.50 -1.95: Grant Prideco, the world's largest manufacturer and supplier of oilfield drillpipe, is reaping the benefits from robust activity across the energy patch. The Houston-based company continues to set new records with each quarter, ending Q4 with record-setting revenues of $388.7 mln on continued strong market activity. Net income more than doubled to $78.4 mln, compared to $28.6 mln in the prior period, surpassing estimates by two cents.

Strong revenue growth and pricing power expanded operating margins to 24%, up 400 basis points year/year. GRP's results only strengthen our outlook for the company, a suggested holding in our Active Portfolio, as backlog increased another 10% to $813.6 mln and indicates strong earnings momentum in 2006. The stock trades at 18.8x FY06 estimates of $2.58 and 15x FY07 estimates of $3.21, a considerable discount to larger-cap peers that include Cooper Cameron (CAM), National-Oilwell Varco (NOV), and Smith Intl (SII).

--Kimberly DuBord, Briefing.com

09:19 am Dean Foods (DF)

38.63: Dean Foods Company announced that net income in the fourth quarter fell 17% year/year to $71 mln due to challenges caused by two major hurricanes and the resulting dislocation of energy and packaging costs. Analysts were expecting a 16% year/year decline. Adjusted operating margin was 6.38%, down 45 basis points from a year ago and below the 18-month average of 6.6%. On an adjusted basis, the Dallas-based dairy king reported earnings of $0.54 per share, which matched the Reuters Estimates consensus.

Net sales rose 4% year/year to $2.7 bln, which were slightly better than the $2.63 bln consensus due to strong sales growth at the Dairy Group and WhiteWave Foods. Dairy Group revenue rose 3% to $2.3 bln, due primarily to a 1.4% increase in fluid milk volumes, but sales increases were offset somewhat by the pass through of lower dairy commodity costs to customers. The WhiteWave Foods division posted strong sales growth of 10% and achieved notable milestones toward the consolidation and integration of its businesses, which bodes well heading into 2006 but the segment only accounts for about 11% of Dean's total top line.

Consistent with its previous guidance for 2006, management expects consolidated net sales of approximately $10.5 bln (consensus $10.67 bln). Because the dilution from accelerated vesting of restricted stock offsets the accretion from the repurchase of 9 mln shares in Q4, the company simply reiterated its 2006 EPS guidance of $2.20 to $2.25 before stock option expense. Deducting stock option expense of approximately $0.10 per share results in EPS guidance of $2.10 to $2.15, representing year/year growth of 15-18%. For Q1, the company expects to report adjusted EPS of between $0.39 and $0.41, a year/year increase of 5-11%, but below analysts' consensus estimate of $0.42. The company currently has $19 mln remaining under its repurchase authorization.

Shares of Dean Foods currently trade at 18x estimated FY06 earnings of $2.15 per share, a slight premium to the Consumer Staples sector's 17.3x forward multiple; competitor Kraft Foods (KFT) trades with discounted forward P/E multiples of 15.3x and 14.5x estimated FY06 and FY07 earnings. Both DF and KFT have posted modest gains of 2.6% and 3.0%, respectively, so far in 2006 compared to a year-to-date decline of 1.3% for the Market Weight rated Consumer Staples sector.

-- Brian Duhn, Briefing.com

09:09 am Diamond Offshore (DO)

80.08: We received our first look at the operating environment for the offshore drillers this morning and Diamond Offshore didn't disappoint. Fourth quarter earnings skyrocketed nine-fold to $106.9 mln as producers ramped up spending to capitalize on record energy prices. Pro-forma earnings were 62 cents per share, 16 cents above what the market forecasted. The top line expanded by 55% to $368.2 mln as dayrates soared on robust drilling market conditions.

The tightening market conditions have pushed dayrates up to record levels with the drillers operating near 100% utilization levels - a rare occurrence in the industry. Diamond, which mainly operates in the mid-water segment, saw average dayrates in the quarter for high-specification rigs rise 93% to $181,000 per day. The windfall of capital spending occurring within the industry is causing a shortage in rigs, particularly in the offshore market, which in turn is giving the drillers significant pricing power. We have long foreseen this accelerating spending as producers look to increase production and reserves. The industry, which typically suffers from a lack of visibility, is experiencing longer-term, multi-year contracts - a sign the market could extend into 2008.

DO's results underscore our bullish view on the oil services industry and we look for a similarly strong result from its main competitor Transocean (RIG), which is a suggested holding in our Active Portfolio. We continue to prefer RIG due to its premier fleet of offshore deepwater assets, strong earnings momentum, significant operating leverage and improving capital structure.

--Kimberly DuBord, Briefing.com

08:57 am Pfizer (PFE)

25.18: In a brief press release issued on Tuesday, Pfizer said it plans to explore strategic alternatives for its Consumer Healthcare business ("PCH"), which includes brands like Rogaine hair-growth treatment and Listerine mouthwash. These alternatives could include retaining, spinning off, or selling the division.

According to the company, "The objective of the review is to unlock the value of the business for Pfizer shareholders at a time when market valuations are attractive for large, high-quality consumer businesses. PCH is a leading global consumer healthcare business with a portfolio of well-known, growing brands."

Pfizer's consumer products division reported sales of $3.88 billion last year, representing approximately 7.5% of overall revenue. Though the business provides a steady source of revenue for the company, consumer products in general command lower margins than patent-protected prescription drugs due to strong competitive pressures in the over-the-counter market. As such, many large pharmaceutical companies have refocused their research and marketing efforts on prescription drugs, including Bristol-Myers Squibb (BMY), which sold its consumer products business to Novartis (NVS) last year.

Pfizer said it will provide a comprehensive overview of its business and financial strategy, as well as elaborate on alternatives for its consumer products business, at its analyst meeting on Friday, February 10. In addition, the company is scheduled to provide fiscal 2006 and fiscal 2007 guidance at the meeting.

--Richard Jahnke, Briefing.com

08:45 am Cisco Systems (CSCO)

19.01: It has been a volatile ride for Cisco's shareholders, as the market readjusted growth expectations for the world's largest maker of networking equipment. The stock, which is trading at a discount to its peers and the market, may have gotten the spark it needed on unexpectedly optimistic commentary from CEO John Chambers. Cisco sees Q2 revenue growth of 10-12%, or roughly $6.81-$6.93 bln versus the consensus estimate of $6.91 bln, on order growth of 10-15%. The guidance, coupled with an upside in first quarter results, has set an optimistic tone for stock futures.

Net income fell 1.8% to $1.38 bln on stock-option expenses. The pro-forma figure of 26 cents topped consensus by a penny. Revenues also came in a hair better, increasing 9.3% to $6.63 bln, up over one percent from last quarter. Orders showed accelerating momentum in the quarter, with year/year growth in the mid-teens beating the company's guidance of 10-14%. Strength in the US led the rise with orders gaining 20% year/year, coupled with a 20% increase in the Emerging Markets. The book-to-bill ratio, which measures demand, exceeded 1.0 - an atypical occurrence in this quarter.

Gross margins remained steady from last quarter, expanding by 110 basis points to 67.9% from the year-ago period. Deferred revenues also increased, which speaks to stronger demand. Cisco appears to be gaining some traction across all of its business units. Network switches, which are Cicso's highest margin products, rose 12% to $2.67 bln. Cisco has been losing market share in routers to Juniper (JNPR), a trend that has been weighing on the stock, but in this quarter routers rose 7% to $1.42 bln as more customers bought the $1 mln CRS-1 routers that deliver faster voice, video, and data. The number of customers grew from 28 to 40 in Q1, including Comcast (CMCSA) and Telstra (TLS). The advanced technology unit, which will include Scientific Atlanta (SFA), a former holding in our Active Portfolio, grew 5% to $1.28 bln. Cisco expects the $6.9 bln SFA acquisition to be accretive next quarter.

The upside in Q1 earnings, stronger than expected order growth, a book-to-bill over 1.0, and an increase in deferred revenues together indicate revenue growth is gaining momentum. At 17.5x forward earnings, CSCO represents a strong investment on a risk/reward basis as we look for further top line acceleration as the year progresses.

--Kimberly DuBord, Briefing.com

09:41 am Ameron Int'l: Matrix Research upgrades Buy to Strong Buy. Firm is citing strong demand for oilfield piping and construction products, driving very strong economic performance. They see further upside in the stock at this level.

09:40 am NBTY Inc: Matrix Research downgrades Hold to Sell. Firm is citing that business trends are declining and they believe the stock is more than fully valued at this level; also softening demand in the higher-margin European operations and accelerating demand in the low-margin wholesale operations are driving deterioration of NOPAT.

09:39 am ViaSat: Needham & Co reiterates Buy. Target $29 to $29. The firm says they continue to like ViaSat as a strong mix of a healthy defense business benefiting from the trend towards a more networked military, and a commercial business in which the co is a leader in enterprise-focused satellite solutions, as well as next generation broadband satellite solutions. They believe the co's heavy investment in the consumer broadband area starting to pay dividends as evidenced by the substantially higher units sales and improving profitability in the last two quarters. The firm says perhaps more significantly, the co's opportunities in defense business with M.I.D.S, M.I.D.S-J.T.R.S and encryption products appears as large as it been in the co's history.

09:38 am Cheesecake Factory: Bear Stearns downgrades Outperform to Peer Perform. Firm says that although CAKE reported a solid 4Q, they are lowering their FY06 and FY07 estimates primarily due to slower than expected square footage growth related to new unit opening delays. They now think the co is shifting back to a period of missing estimates, as they do not think the impact of the square footage growth slowdown is well understood. Their target year-end 2006 25x P/E multiple on their new pre-option '07 estimate of $1.52 implies a stock price of approximately $38.

09:37 am MasTec: Needham & Co reiterates Buy. Target $11 to $11. Firm is saying they are bolstering their thesis of low valuation and recovering financial performance to reflect a simplified, more profitable business model with greater strategic opportunity. The firm says despite a solid run-up since initiating in June, valuation remains modest compared to the improving industry and company outlook.

09:36 am Endo Pharm: WR Hambrecht upgrades Hold to Buy. Target $32. Firm believes the recent correction, lowered guidance, and lowered expectations for generic OxyContin may be masking positive underlying fundamentals of Lidoderm Rx trends and the likelihood of approval and launch of Oxymorphone contributing to rev growth in H2:06 and EPS growth in FY:07. With ENDP shares now trading at just 16x their 2006 EPS est of $1.75 (a 20% discount to the specialty pharmaceutical group), with realistic downside around $1.50 if ENDP loses generic OxyContin, investors should conclude that a 17x multiple on worst case 2006 suggests ENDP has limited downside.

09:35 am Google: Am Tech/JSA Research downgrades Buy to Hold. Downgrade due to the following: 1) they are more cautious on expenses in the near-term, 2) cap-ex outlook is uncertain -- will likely be much greater than most expect and 3) they see risk to Internet business models on regulatory uncertainty regarding net neutrality vs. tiered broadband services. They say they cannot predict the outcome on net neutrality and do not see resolution within the next 12-months. Firm notes that they are equally concerned with regulatory uncertainty for YHOO and reiterate their Hold rating.

09:33 am Multi-Fineline: FTN Midwest upgrades Neutral to Buy. Firm citing the recent improvement in North American market share for Motorola (MOT), opportunities for increased profitability at elevated utilization, and what they believe to be conservative guidance.

09:32 am Nucryst Pharma: Canaccord Adams initiates Buy. Target $13. Firm saying they believe that the co, which completed its I.P.O in Dec 2005 and is gaining Street exposure, is poised for long-term future growth. They base this on its platform of nanocrystalline silver technology, and a strong, growing rev stream from its wound care franchise. Firm says this rev should act as a valuable subsidy for the co's therapeutic franchise plans.

[ReturntoSender]

From Briefing.com: 5:17PM Oracle issues Q3, Q4 and FY06 guidance (ORCL) 12.69 +0.12 : Co issues guidance for Q3 (Feb), sees Q3 (Feb) GAAP EPS $0.13-0.16 which includes various charges and is not comparable to consensus; sees Q3 revs of $3.45-3.49 bln vs. $3.45 bln Reuters Estimates consensus. Co issues guidance for Q4 (May), sees Q4 GAAP EPS of $0.21-0.23, which includes various charges and is not comparable to consensus; sees Q4 (May) revs of $4.385-4.546 bln vs. $4.35 bln consensus. Co sees FY06 GAAP EPS of $0.60-0.62, which is also not comparable to consensus; sees revs $13.9-14.1 bln vs $14.04 bln Reuters consensus. Co sees Q3 new software lic revs $1.086-1.13 bln, sees Q4 new software lic revs $1.726-1.887 bln.

4:31PM Credence: AMD selects Sapphire ATE System for end-to-end test of next-generation processors (CMOS) 8.84 : Co announced that Advanced Micro Devices (AMD) has chosen Credence's Sapphire ATE platform as its test system of record. AMD will use the Sapphire platform for all of its advanced processors testing requirements, from development and characterization through high-volume production test. Early collaboration efforts with AMD resulted in an AMD Opteron processor-based workstation controller option for the Sapphire platform, achieving up to 40 percent improvement in test efficiency.

4:20 pm : Despite a lack of notable market-moving catalysts, stocks gradually continued where they left off last night -- in rally mode. However, follow-through buying momentum spurred largely by the last big batch of [better- than-expected] earnings, which had set the stage for the market's biggest two-day rally since October 2005, petered out into the close, as sentiment became mixed and the major averages closed in split fashion.

Blue chips like Aetna (AET 99.27 +3.15), Coca-Cola Enterprises (CCE 20.09 +0.63) Electronic Data Systems (EDS 25.71 +0.20), Marriott (MAR 67.64 +1.53), Prudential (PRU 75.31 -0.33), and News Corp (NWS.A 16.48 -0.28), a suggested holding in our Active Portfolio, all reported earnings that exceeded expectations. With guidance for Q1 and Q2 failing to impress investors and validating an expected deceleration in earnings growth, raised Q4 EPS guidance from Best Buy (BBY 52.96 +4.13) also offered some comfort.

Providing additional support throughout most of the day were a couple of economic reports that typically go unnoticed. One showed that companies increased wholesale inventories twice as much as expected while an initial claims report, which checked in below the 300K level for a fourth straight week, reiterated that labor conditions remain strong. The re-issuance of the 30-yr bond at 1:00 ET, which grabbed a strong indirect bidder participation of 65.4% following the first auction ($14 bln worth) of its kind in five years, also provided some relief, easing some of the fears that foreign demand for dollar-denominated assets was waning.

Nonetheless, at the end of the day, uncertainty related to Fed policy, which plays into why we recently lowered our Market View to Neutral from Moderately Bullish, returned to the forefront of investors' minds as the reality of earnings season coming to a close leaves the number of catalysts going forward few and far between.

Of the six sectors holding onto gains, Industrials turned in the best performance, led by a 1.6% rise in 3M Co (MMM 72.12 +1.12) and Honeywell (HON 39.52 +0.50), which hit an intraday 52-week high, playing into our Overweight rating on the sector. Utilities and Financial also showed relative strength, getting a boost following a late-day revival in bonds which inched yields a bit lower. The latter got an extra lift after AIG (AIG 67.12 +0.74) reached a resolution with the Justice Dept. and SEC.

4:10 pm Research In Motion (RIMM)

69.62 +0.97: Research In Motion, maker of the popular Blackberry communication device, on Thursday said that it has developed and tested a "workaround" that would keep its service running if a court imposes an injunction against the company in the current patent dispute with NTP Inc. RIMM said it has incorporated the workaround designs into a software update called Blackberry Multi-Mode Edition that would support normal Blackberry operations without infringing on any of NTP's patent claims.

Although RIMM remains intent on settling the matter with NTP and believes its has strong legal grounds to speak against an injunction, the company said it developed the new software as an alternative to avoid potential disruption to U.S. Blackberry sales and service. "RIMM's workaround provides a contingency for our customers and partners and a counter balance to NTP's threats," said Jim Balsillie, Chairman and CEO at Research In Motion. He added "This will hopefully lead to more reasonable negotiations since NTP risks losing all future royalties if the workaround is implemented."

RIMM's workaround strategy provides assurance for existing customers frightened of a potential halt to their service, while bolstering the company's bargaining power with NTP for a possible settlement. However, NTP will likely challenge the legal merits of the workaround, which could prolong the ongoing litigation between the two companies. While RIMM's workaround contingency quells near-term concerns of an injunction, the company's prospects will remain in question until a settlement is made and the legal overhang is put to rest.

--Richard Jahnke, Briefing.com

2:41 pm American International Group (AIG)

66.90 +0.52: American International Group on Thursday announced that it has reached a settlement with federal and state regulators that will require the company to pay $1.64 billion. The settlement, which covers a host of regulatory issues, including improper accounting practices and missed payments to state workers' compensation funds, will result in an after-tax charge of approximately $1.15 billion in the fourth quarter.

Consequently, shares of AIG trended higher during the regular trading session, as the resolution of the claims against the company seemingly marks an end to a troublesome period for the storied insurance giant, and eliminates a considerable overhang on the stock. We currently have a Market Weight rating on the Financial sector and favor larger, more diverse banks. However, we also believe the insurance group still holds investment appeal given its defensive characteristics.

Separately, after a comprehensive review of its loss reserves in its property and casualty insurance operations, AIG said it will take a fourth quarter charge of approximately $1.10 billion to increase its net reserve for loss and loss expenses of approximately $1.69 billion. That includes $870 million for asbestos and environmental exposures and $820 million for other exposures. The increase represents about 3% of the company's total general insurance loss and loss expense reserves.

AIG also expects to incur a $150 million fourth quarter charge for additional losses from Hurricane Katrina and other third quarter catastrophes. That is an increase of about 9.4% from its previous estimate. The company noted that costs related to Hurricane Wilma will be approximately $400 million in the quarter.

--Richard Jahnke, Briefing.com

1:57 pm Marriott International (MAR)

67.69 +1.58: Marriott International delivered record fourth quarter earnings per share of $1.07, which surpassed Wall Street's expectations by nine cents. Versus the year-ago period, EPS jumped 35%. The hotel operator credited strong worldwide economic expansion and lodging industry strength for its performance. Revenues jumped 16% to $3.6 billion.

International systemwide comparable RevPAR (revenue per available room), which is the barometer of health in the hotel industry, rose 11.0% in constant currencies. In both its North America and International segments, systemwide comparable RevPAR similarly rose 11.0%. Increases in the average daily rate and occupancy were driving factors. Strong growth in timeshare interval sales and in base and franchise and incentive fees also benefited the top line.

For the full-year, Marriott reported record earnings. Chief Executive J.W. Marriott, Jr., asserted that Marriott expects 2006 to be another outstanding year, as U.S. industry supply growth should remain modest while lodging demand continues to strengthen. North American RevPAR is forecasted to increase 8-10%, 80% of which should be rate-driven. The hotel chain foresees 13-15% total fee revenue growth, which translates to $1.165-1.185 billion. Management noted that new accounting rules for the timeshare industry come into effect this year, and estimates a dilutive, one-time, non-cash impact of $0.50-0.53 per share in 1Q06. Excluding that effect, and excluding stock-based compensation expenses, Marriott anticipates profit per share of $0.70-0.76 for the first quarter and $3.08-3.18 for the full-year. According to Reuters Estimates, the consensus estimates are pegged at $0.68 and $3.20, respectively.

At 21.7x expected FY06 earnings, MAR shares trade at a discount to competitors Hilton Hotels (HLT) and Starwood Hotels (HOT). HLT shares are priced at 23.9x forward earnings, while HOT trade at 28.0x forward earnings.

--Lisa Beilfuss, Briefing.com

1:42 pm Prudential Financial (PRU)

75.37 -0.27: After the close Wednesday, Prudential Financial reported a 19% increase in fourth quarter profit, despite a loss in its investment division due to the impact of a large legal expense. The financial services giant also reaffirmed its full year profit outlook of $5.40 to $5.60 per share, in line with analysts' expectations of $5.57 per share. However, that is based on the assumption that the S&P 500 Index will rise 8% for the year.

In the most recent quarter, financial services profit climbed to $377 million, or $0.78 per share, from $317 million, or $0.64 per share, a year earlier. Operating earnings were $524 million, or $1.06 per share, compared with $488 million, or $0.96 per share, in the year ago period. That included expenses of $267 million, or approximately $0.40 per share, related to an ongoing investigation in the company's retail brokerage business. Without the charge, operating earnings would have been $1.46 per share - $0.23 better than the Reuters Estimates consensus. Fourth quarter revenue rose 11.8% year/year to $5.82 billion, slightly below the consensus estimate of $5.85 billion.

The investment division reported a loss of $4 million in the quarter, compared with operating income of $111 million in the year ago period, due in large part to the increased legal costs. The company also said increased expenses in the quarter, including costs incurred to expand distribution and client servicing capabilities for the division's retirement business, more than offset a decrease in transition costs associated with the integration of the retirement business acquired from Cigna. Meanwhile, operating income for the insurance division was up 23% to $365 million, helped by lower occupancy costs and staff reductions. The international division reported operating income of $378 million for the quarter, up more than 50% from year earlier. The company said the results benefited $44 million from investment income associated with a single joint venture.

Given the relatively mixed results and current valuation levels, the near-term prospects for Prudential remain modest. As such, we would not commit new money at this time. At the current level, the stock is trading at 15.6x trailing earnings, compared with 11.5x for Citigroup (C) and 11.9x for MetLife (MET).

--Richard Jahnke, Briefing.com

11:51 am Applebee's (APPB)

23.67 -0.10: For its fourth quarter, Applebee's International reported a 16% decline in net earnings that translated to a profit of $0.27 per diluted share, which matched the Reuters Estimates consensus. Revenues rose 10.7% to $300.2 million.

Higher costs weighed upon the bottom line and offset the sales growth. Total cost of company restaurant sales, as a percentage of sales, increased 304 basis points to 78.97%. As had been previously reported, system-wide comparable store sales increased 1.0% during the quarter. Comparable sales for both company and franchise restaurants declined, though. Management noted that sales during the month of January were better, but also said that it recognizes the fact that a four-week period is a time frame not long enough to declare a sustainable improvement in trends.

Applebee's acknowledged the external challenges it faced, but was still disappointed with its performance during the year. Higher energy costs and rising interest rates adversely affected the consumer that is at Applebee's core. At the same time, though, consumer spending is holding up and bright spots do exist. Competitor Brinker (EAT), which is the parent company of several casual restaurant concepts that include Chili's and Maggiano's, upped its guidance for the current quarter and full-year yesterday. Brinker also reported stronger January same-store sales. At the fast-food end of the spectrum, McDonald's (MCD) similarly reported very strong same-store sales on Wednesday. MCD remains our favored stock in the space, and is a recommended holding in our suggested portfolio for active investors.

Applebee's indicated that its 2006 initiatives include more rapid innovation of its food, advertising evolution, and leveraging its key points of differentiation with consumers. Applebee's reaffirmed its full-year guidance, saying it expects $1.43-1.47 in earnings per share, a range that brackets the current consensus estimate. The range excludes the impact of stock compensation expense. APPB shares currently trade at 16.3x expected FY06 earnings, a valuation that is in-line with MCD's forward multiple as well as the sector's forward multiple.

--Lisa Beilfuss, Briefing.com

11:35 am XM Satellite Radio (XMSR)

26.17 +1.56: XM Satellite Radio on Thursday announced a three-year, $55 mln deal with Oprah Winfrey to launch a new satellite radio channel called "Oprah & Friends." XM Satellite shares, in turn, have climbed more than 7% during the regular trading session as investors have responded favorably to the news amid heavy competition from rival Sirius Satellite Radio (SIRI), which recently signed a five-year $500 million deal with Howard Stern and an 11-year deal with Major League Baseball.

The channel, which will debut in September, will feature programming on fitness, health, self improvement, home, and current events from popular personalities from "The Oprah Winfrey Show" and O, The Oprah Magazine. In addition to regular segments hosted by such personalities as Bob Greene, Dr. Mehmet Oz, Dr. Robin Smith, Marianne Williamson, and Nate Berkus, the new channel will also feature an exclusive weekly radio show with Oprah Winfrey and Gayle King.

While both XM Satellite and Sirius have been actively investing in operations and adding exclusive programming to bolster subscriber growth, they have been incurring large losses and have not yet reached profitability. As these investments continue to weigh on the bottom line, we would remain on the sidelines until the profit outlook becomes more clear.

--Richard Jahnke, Briefing.com

10:40 am Whole Foods Market (WFMI)

68.12 -3.93: Whole Foods Market last night reported a diluted profit of $0.40 per share, which was up 17% from the year-ago period. That profit included stock-based compensation expenses of $0.01 per share. Analysts were expecting Whole Foods to post a profit of $0.41, but it is unclear if their estimates included the stock-based compensation expense. Driven by a 15% increase in weighted average square footage and 13% same-store sales growth, the company's top line expanded 21.8% to $1.67 billion. Average weekly store sales hit a record high, and the company noted that its same-store sales result marked its ninth straight quarter of double-digit growth.

The grocer continues to believe that it will produce earnings growth through sales rather than through significant margin leverage. New stores generally have lower gross margins and higher direct stores expenses than more mature stores. Versus the year-ago period, gross margins slipped seven basis points to 34.5%.

On its conference call, the company asserted that it will continue to put its cash to work in funding growth and added that excess cash will be returned to shareholders. Last quarter, WFMI paid approximately $17 million to shareholders in cash dividends.

Whole Foods reaffirmed its fiscal 2006 (Sept.) guidance, saying it sees sales growth of 18-21% driven by comparable store sales growth of 8-11%; earnings per share are anticipated to grow slightly less than 18-21%. According to Reuters Estimates, analysts' average estimates are $5.68 billion and $1.41, respectively. Management noted on its conference call that it is moving away from issuing detailed quarterly guidance, as it wants the focus to shift to longer term goals.

WFMI shares currently trade at 49.5x estimated FY06 earnings. Shares of its rival in the specialty grocer space, Wild Oats Markets (OATS), also trade at a sharp premium to the Consumer Staples sector multiple of 17.3x FY06 earnings.

--Lisa Beilfuss, Briefing.com

10:21 am Best Buy (BBY)

52.63 +3.80: Shares of Best Buy are making a notable mover after the nation's largest consumer electronics chain raised its fourth quarter profit forecast due to strong revenue results for the holiday period. Best Buy attributed strong revenue momentum and the improved outlook to a better than expected promotional environment, tighter expense controls, and increased gift card spending.

Since we highlighted Best Buy in our Stock Swap column last December, and suggested that investors accumulate shares based on the company's strong underlying fundamentals and attractive valuation levels, the stock has climbed more than 18%, including today's gains. While the first quarter, when the company grew EPS by 85% year/year, will likely present tougher comparisons, we remain optimistic about the potential for further price appreciation given the company's solid long-term growth prospects.

For the three months ending February 25, Best Buy projected earnings from continuing operations of $1.25 to $1.30 per share, up from its previous guidance of $1.06 to $1.16 per share. That exceeded Wall Street's estimate of $1.16 per share and represents an increase of approximately 23% from last year's profit of $1.04 per share. For the full year, the company forecasted earnings in the range of $2.24 to $2.29, versus the consensus estimate of $2.13 per share. The new guidance reflects a 29% increase over earnings from continuing operations of $1.75 per share for fiscal 2005.

The improved outlook for the the quarter also includes a same store sales gain of 6% to 7%, compared to the range of 3% to 5% that Best Buy previously estimated. The company credited the growth to strength in flat panel TVs, portable audio products such as MP3 players, notebook computers, and video game systems. Furthermore, an increase of approximately 20% in gift cards issued during the holiday season also contributed to the strong revenue results.

--Richard Jahnke, Briefing.com

10:09 am News Corp. (NWS.A)

15.68 -0.16: As is the case with most conglomerates, News Corp's second quarter had some good and some bad, but this media giant, unlike many others, continues to work. Operating profits nearly doubled year/year to $694 mln with the per share figure exceeding estimates by a penny on asset sales and strength in cable networks. Revenues of $6.6 bln were up marginally year/year. The highlights included a 15% rise in cable network programming profits, driven by strong ratings for Fox News Channel and FX on the success of Nip/Tuck, which drove affiliate fees and advertising revenues, along with impressive progress at its satellite businesses.

The Filmed Entertainment division delivered operating income of $299 mln despite difficult comparisons due to last year's release of Star Wars Episode IV. The Newspapers division suffered a decline in operating profits on lower circulation. The satellite businesses, Sky Italia and Star, are now finally entering the profitability phase after years of capital investment. Sky is on its way to delivering the first full year of profitability. The Television unit is also reaping the benefits of stronger programming and ratings, with operating profits up 20% this quarter.

Net-net, it was a solid quarter with News Corp continuing to execute well on its growth strategies. We retain our positive view on the stock, a suggested holding in our Active Portfolio, and will take a more in depth look at the quarter on our Large Cap page on Monday.

--Kimberly DuBord, Briefing.com

09:15 am Electronic Data Systems (EDS)

25.51: In the midst of a turnaround, Electronic Data Systems on Wednesday said fourth quarter profits more than doubled as recent layoffs and other cost cutting initiatives outweighed modest revenue growth. The technology services company also issued mixed guidance, stating that first quarter earnings would fall below analysts' expectations, but full year results would be stronger than expected. On account of the overall positive report and progress in completing its turnaround amid deteriorating revenue, EDS shares traded sharply higher in pre-market action.

For the fourth quarter, EDS earned $112 million, or $0.21 per share, up from $53 million, or $0.10 per share, a year earlier. On a pro forma basis, which excludes discontinued operations, stock options expense, and restructuring costs, the company earned $131 million, or $0.25 per share - two cents better than the Reuters Estimates consensus of $0.23. Quarterly revenue, meanwhile, rose 1.3% year/year to $5.15 billion versus the consensus estimate of $5.10 billion. GM revenue for the period decreased 10% to $463 million, while non-GM revenue rose 3%.

EDS said it signed $5.3 billion in contracts during the quarter, up 45% from a year earlier. New contracts for the period included a $500 million IT services contract with global retailer Royal Ahold as well as an IT services contract with United Airlines. Given its progress, both financially and competitively, the company said it expects to earn $0.10 to $0.15 per share, ex-items, on revenue between $4.7 and $4.8 billion. That compares with Wall Street's estimate of $0.21 per share on revenue of $4.97 billion, according to Reuters Estimates. For the full year, EDS anticipates EPS of $1.05 to $1.15 and revenue of $20 to $20.5 billion, versus the consensus estimate for EPS of $1.01 and revenue of $20.1 billion.

--Richard Jahnke, Briefing.com

09:08 am General Motors (GM)

21.99: The goodwill gesture GM made this week in slashing its dividend and cutting senior management compensation raised expectations the automaker would be able to garner the necessary concessions from the UAW. Today, however, The Wall Street Journal reported that negotiations between GM, Delphi and the United Auto Workers union may have hit a snag, "raising doubts" about a possible settlement over the fate of the auto parts company's workers. The UAW is hoping to soften the blow for the Delphi workers without provoking a strike or squeezing too much cash out of GM, according to the article.

The Journal stated a setback came this week when UAW negotiators did not show up to make an expected presentation on how GM can reduce its workforce. These plans were expected to include early retirements and buyouts options. Even though GM spun off its parts unit in 1999, it retains responsibility for many of Delphi's workers. The automaker was aiming to return some of the workers to GM, but the UAW appears concerned over how long GM is willing to subsidize worker compensation, which could be cut by more than 60%.

Delphi is expected to ask a U.S. bankruptcy court to void its union contracts on February 17th - a move that the UAW says, if taken, could prompt a strike and effectively cripple GM. The current UAW contract does not expire until 2007. GM has stated it targets 30,000 UAW jobs for elimination over the next 5 years as it attempts to restructure its North American operations. The Delphi issue and possible sale of GMAC remain the key issues on the table for GM at this point. The stock will likely continue to be news-driven until some resolution is achieved. We continue to believe there is no investable thesis to own GM, but concede the downside below $20 appears limited.

--Kimberly DuBord, Briefing.com

07:52 am Aetna Inc. (AET)

96.12: Aetna, the third largest US insurer, bested estimates for the fourth quarter as profits rose 41% on strong membership gains. Net income grew to $423 mln, or $1.42 per share. Stripping out non-recurring items, the per share figure of $1.26 exceeded estimates by three cents as revenues climbed 13.5% to $6 bln. After a whirlwind rise over the last two years, the result should go a long way in stating AET's case for further upside in the quarters ahead, particularly as its cost ratio declines.

The managed care industry has far exceeded the market's returns and looks poised to do so again this year, as medical cost trends decelerate and membership rises driven in part by the prescription drug plan Part D. Aetna has been able to lower its medical costs further than its peers, enabling the company to pass the savings to customers, wooing new enrollment through specialty services. In the quarter, Aetna's medical plan enrollment rose 8% from the prior year to 14.8 mln.

Aetna forecasts medical membership to grow this year by 900,000 to 1 mln, up from its prior range of 800,000 to 900,000, including a gain of 575,000 in the first quarter. Aetna's CEO John Rowe, who has increased the company's market value by more than $23 bln in five years, is set to retire on February 14th and will be replaced by current President, Ronald Williams. Aetna is looking for full year earnings in the range of $5.42-$5.48 per share, well within the consensus of $5.46. Overall, Aetna posted a solid result. With shares trading at a discount to the group at 17.x, we think AET remains a strong investment for 2006.

--Kimberly DuBord, Briefing.com

10:33 am Zebra Tech: Miller Johnson upgrades Neutral to Buy. Target $42 to $42. The firm says product introduction delays are largely resolved, the Paxar litigation threat is pushed out until 2007, and the co appears to be gaining traction in RFID tagging programs.

10:33 am TEKELEC: Robert W. Baird upgrades Neutral to Outperform. Target $15 to $15. Firm believes fundamentals remain intact and new CEO Frank Plastina has a strong financial background and will make prudent financial decisions about division/product rationalization to enhance Tekelec's margin profile. They would buy stock at current levels as fundamentals are intact, but expect financial improvements to be realized late 2006 and in 2007.

10:31 am MasTec: Ferris Baker Watts initiates Buy. Target $16. The firm believes that the increasingly competitive nature of the residential telecommunications business will force carriers to increase investment in their networks in order to offer enhanced services. With MTZ's strong brand recognition and customer relationships, they believe that the co is well positioned as a high-value solutions provider in the network infrastructure market.

10:29 am HNI Corp.: BB&T Capital Mkts downgrades Buy to Hold. Firm continues to believe HNI's revenue growth will outpace the two industries in which the company competes. Moreover, they believe HNI mgmt will continue to demonstrate its industry-leading operational prowess. However the firm says, with EPS growth set to slow to mid-teens from the mid-20% range in FY'05, they believe current all-time-high multiples are unsustainable.

10:23 am Cubic: Needham & Co downgrades Buy to Hold. Firm believes the modest improvement in CUB's transportation business, the biggest drag on earnings last year, and continued solid showing from the defense business is priced into the shares, which have climbed 23% since in less than two months. They believe further upside in the stock over the near term will be challenging.

10:22 am Watts Ind: Needham & Co downgrades Buy to Hold. Firm is saying their enthusiasm is tempered by the +20% run up in the stock yesterday and by the fact that the is stock trading at roughly 19x their F2006 EPS estimate and 10x their F2006 EBITDA estimate. They are waiting for an entry point at more attractive long-term multiples. They believe the positive trends in the wholesale markets, led by a strong non-residential construction market, will help offset a slowing residential/retail market.

10:20 am Chattem: BB&T Capital Mkts downgrades Buy to Hold. Based on uncertainties around the outlook for near-term fundamentals as well as non-fundamentals (particularly options costs, which the company has not yet guided on), they have lowered their FY'06 EPS forecast to $2.20 from $2.37.