• Advanced Micro Devices (NYSE:AMD) rose 10.6% yesterday. The firm announced a private debt offering of $500 million of senior notes. This morning's news saw FBR Research raising its price target to $9 from $8, while maintaining a "market perform" opinion

• Goldman Sachs (NYSE:GS) reiterated its "buy" rating on CVS Caremark (NYSE:CVS), saying the shares are cheap at current levels.  The firm said at $30, CVS is selling at just 10.6 times 2010 estimates, below a two year, 14x average, with long-term growth of 13% anticipated

• Reports said Blackstone (NYSE:BX) plans to acquire Birds Eye Foods, the largest US frozen-vegetable company, for over $1.3 billion in an all-cash deal

• Tenneco (NYSE:TEN) priced a 12 million share offering at $16.50 per share for $187 million

• Sears Holding (NASDAQ:SHLD) reported a third quarter loss of 81 cents, less than the $1.09 loss expected, on better-than-expected revenues of $10.19 billion

• Dick's Sporting Goods (NYSE:DKS) reported third quarter earnings of 16 cents a share, ahead of estimates by 7 cents as revenues of $990 million topped expectations of $961 million.  The company said it expect fourth-quarter earnings of 41 cents to 46 cents a share

• Children's Place (NASDAQ:PLCE) reported in-line earnings of $1.38 on in-line revenues of $463 million. Comparable sales fell 2%

• Williams-Sonoma (NYSE:WSM) third quarter beat by 11 cents as earnings posted at 16 cents and revenues exceeded estimates at $729 million

• Dell (NASDAQ:DELL) announced plans to enter the smartphone business, in partnership with China Mobile and Claro. Its first product, the Mini 3, will be designed around Google's (NASDAQ:GOOG) Android operating system

• Disney (NYSE:DIS) reported fiscal fourth quarter results after yesterday's close, with earnings ex-items coming in 5 cents a share better-than-expected at 46 cents. Revenues of $9.87 billion came in well ahead of Zacks estimates of $9.18 billion

• McDonald's (NYSE:MCD) addressed its plans to open 1,000 additional restaurants next year, and provide an image makeover to the rest.  The firm set targets for average annual sales growth of 3-5% and average annual operating earnings growth of 6-7%

• Abercrombie and Fitch (NYSE:ANF) reported third quarter non-GAAP earnings of 30 cents a share, well above Zacks estimates of 20 cents, as revenues of $765.4 million topped Zacks estimates of $763 million

• The rue21 IPO of 6,765,437 common shares was priced at $19.00 per share. The stock will trade on the NASDAQ with the symbol RUE

• Goldman Sachs (NYSE:GS) upgraded Goodyear Tire (NYSE:GT) shares to "buy"

Chicago, IL – October 19, 2009 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: International Business Machine (IBM), Accenture (ACN), Intel Corp. (INTC), Google Inc. (GOOG) and Advanced Micro Devices (AMD).

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Here are highlights from Friday’s AnalystBlog:

IBM Exceeds & Raises Outlook

International Business Machine’s (IBM) third-quarter 2009 earnings exceeded the Zacks Consensus Estimate by one cent. As a result of expense management, net profit improved by 14% to $3.2 billion, while earnings per share rose 18% to $2.40 per share. This compares to a profit of $2.8 billion or $2.04 per share in the year-ago period. Net margins increased 250 basis points to 13.6%.

Profitability in the quarter was fueled by higher gross profit margin, which improved to 45.1% from 43.3% in the year-ago quarter led by improved margin in the Services and Software segments. IBM has benefited from the growing focus on these high margin businesses. This has allowed the company to expand its gross margins for 20 of the past 21 quarters. Moreover, the company benefited from lower interest expense, which fell 46.9% from the year-ago period.

IBM remained focused on its cost-cutting initiatives, as a result of which third quarter operating expenses fell 11% year-over-year. SG&A expense decreased 11.2% to $5.0 billion and RD&E expense decreased 8.4% to $1.4 billion from the year-ago period.

Total revenue was in line with the Zacks Consensus Estimate, although it declined 6.9% (down 5.0% when adjusted for currency) to $23.6 billion from the year-ago quarter. We remain cautious about currency fluctuation, which is taking a toll on revenue and may be critical to earnings growth over the next two years.

Overall, sales were down across all segments. However, IBM benefited from market share gains in its Hardware and Software segments in the quarter. The company reported improved revenue from its branded middleware products that include WebSphere, Information Management, Tivoli and Lotus products, which increased 2% year over year. As a result, the decline in the company’s Software segment was the lowest of all segments and fell just 3% year over year in the quarter.

From a geographic perspective, revenue was down 5% in the North American region and 6% in growth markets, but dropped 12% in the EMEA (Europe, Middle East and Africa).

Weak IT spending pulled down revenue, and we do not expect a recovery this year. IBM did not provide any comment on the IT spending environment, but said that the economy is improving. Moreover, IBM’s rival Accenture (ACN) has refrained from predicting a full recovery in business spending. Intel Corp. (INTC) also expects corporate spending to remain weak until 2010.

Weak recovery in technology spending has made it hard to win new business. As a result, IBM reported a drop in signed services contracts, which fell to $11.8 billion, a decrease of 7% from the year-ago period. Thus we remain concerned on the company’s long-term customer wins. Signings in Consulting and Systems Integration and in Integrated Technology Services decreased 16%. The estimated services backlog on Sept. 30 was $134 billion.

The balance sheet continues to be strong as IBM delivered $11.5 billion in total cash and marketable securities, compared to $12.5 billion in the previous quarter. The company reported cash flow from operations (excluding Global Financing receivables) of $4.4 billion, with free cash flow of $3.4 billion. Debt was reduced by $4 billion in the quarter.

2009 EPS Outlook Raised

The company raised its earnings outlook for fiscal 2009, the second time this year, and now expects full-year earnings of at least $9.85, up from the previous forecast of $9.70. This is above the Zacks Consensus Estimate of $9.77 per share.

IBM expects to return to revenue growth in the fourth quarter. Management stated that IBM is well on course to deliver an EPS of $10 to $11 in 2010. The company also expects 2009 pre-tax income for its software and services businesses to grow at double-digit rates and reach around $8 billion.

IBM has been growing its profits and stands to benefit from cost-cutting measures, strong liquidity position, operational efficiency, substantial free cash flow and earnings momentum. We believe that IBM is fundamentally a sound company with a strong market position. Thus we remain optimistic on the company’s long-term growth and expect it to post stronger results in 2010.

We expect further upside on IBM’s share price and advise stockholders to wait for a favorable exit point. Until then we remain Neutral on IBM.

Earlier this week, IT giants, Google Inc. (GOOG), Advanced Micro Devices (AMD) and Intel Corp. all reported better than expected results due to the improving economy. We expect the year 2010 to be a good year for the IT sector as a whole, due to improving demand and better tech spending.

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Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

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About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=5518.

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The Dow Jones industrial average closed above the 10,000 level for the second-successive day, edging up 47 points, or 0.5%.  The S&P 500 index edged up 4 points, or 0.4% and the tech-heavy Nasdaq composite ended the day virtually flat.  The gains in the Dow average were led by Microsoft (NASDAQ:MSFT) whose shares jumped 2.9%.  The Windows 7 is slated for release on October 22.

Among energy stocks, Chevron (NYSE:CVX) and ExxonMobil (NYSE:XOM) shares climbed 1.6% and 1.5%, respectively, as crude prices jumped to their highest levels of the year.  Meanwhile, the US Department of Energy said gasoline stockpiles fell 5.2 million barrels per day last week, well below expectations of 700,000 decline.

Pfizer (NYSE:PFE) rose 1.7% after it completed its acquisition of Wyeth.

Nevertheless, weakness in financial sector shares, off 0.6%, hurt sentiment even as Goldman Sachs (NYSE:GS) reported estimate-topping numbers.  Citigroup's (NYSE:C) strong trading returns were overcome by increasing consumer loan losses.  Citi's (NYSE:C) CEO Vikram Pandit warned, "US consumer credit remains the number one issue affecting our near-term results." JP Morgan (NYSE:JPM) CEO Jamie Dimon warned that level of loan losses are likely to remain high. 

Tech shares also failed to advance, even as IBM (NYSE:IBM) raised its earnings outlook and reported numbers that were above Street projections.  Advanced Micro Devices' (NYSE:AMD) narrower-than-expected loss and the return of its core chip-making operations to profitability failed to lift sentiments either.  However, Google's (NASDAQ:GOOG) better-than-expected results were helped by return to sequential quarterly growth, a 5% increase in average cost-per-clicks over the second quarter, and a positive impact from the declining dollar.  Shares in Google (NASDAQ:GOOG) rose 3.6% in after-hours trading as CEO Eric Schmidt noted, "While there are a lot of uncertainties about the pace of [the] economic recovery, we believe the worst of the recession is behind us and now feel confident about investing heavily in our future."

Today's expected results include a number of significant results from companies such as Bank of America (NYSE:BAC), Genuine Parts (NYSE:GPC), General Electric (NYSE:GE), and Mattel (NYSE:MAT). Also reporting are: Halliburton (NYSE:HAL) and First Horizon National (NYSE:FHN).

Chicago, IL – October 9, 2009 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: International Business Machines (IBM), Microsoft (MSFT), Oracle (ORCL), Intel (INTC) and Advanced Micro Devices (AMD).

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513

Here are highlights from Thursday’s Analyst Blog:

IBM Faces Antitrust Hurdle

International Business Machines (IBM) has been charged by the Computer and Communications Industry Association (CCIA), a non-profit trade group organized by IBM’s rivals Microsoft (MSFT) and Oracle (ORCL). The allegation is directed at its Mainframe computer business, which is taking revenues and pressurizing profits of its competitors by withdrawing the license access to customers using non-IBM hardware operating systems.

The U.S. Justice Department (DOJ) is investigating the allegations against IBM for its conduct in the Mainframe business. Some smaller companies in the banking, government and health care sector develop technologies that would allow the software to run on cheaper hardware. Thus, to freeze competition, IBM has combined its mainframe operating systems with hardware and acquired startup Platform Solutions Inc.

Moreover, it has been alleged that IBM has curbed license of its mainframe operating systems to users of Hercules, which is an open-source software that allows IBM's mainframe operating systems to run on Intel (INTC) and Advanced Micro Devices (AMD) devices.

Last year, IBM acquired Platform Solutions, which complained to European regulators about IBM's restriction on the usage of its mainframe operating software on non-IBM computers.

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Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: http://at.zacks.com/?id=5517

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=5518.

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The acquisition would transfer the majority holding from Singapore investment agency, Temasek (Moody’s rating Aaa) to ATIC (Abu Dhabi’s sovereign rating Aa2).

Analysts differed on how the acquisition would affect Advanced Micro Devices (AMD), which had earlier united with ATIC to form Globalfoundries. Although Chartered and Globalfoundries will continue to operate as separate entities, increased scale of operations could result in cost synergies. Since AMD includes Globalfoundries in its consolidated results, the deal could shorten its road to profitability.

The deal would also open up Globalfoundries to several big customers, such as Microsoft Corp. (MSFT), Broadcom Corp. (BRCM), Marvell Technology Group (MRVL) and Texas Instruments (TXN). Its end market exposure would rise with the addition of communications and gaming to the computing and select consumer space.

Opinions are divided on whether the acquisition would bring significant technology enhancements. While the deal should bring some benefit in general, we don’t expect it to be adequate to overcome competition. The foundry space is dominated by Taiwan Semiconductor Manufacturing Co. (TSMC) and United Microelectronics (UMC), which together serve around two-thirds of the total market.

While TSMC has strong customer relationships with the likes of Intel Corp. (INTC), Qualcomm (QCOM), NetLogic Microsystems (NETL) and NVIDIA Corp. (NVDA), which have brought it to the number one position, UMC is the most commonly selected second source.

AMD management reconfirmed that there would be no breach of the x86 licensing agreement with Intel. They also expressed optimism regarding probable cost benefits from superior scale of operations.

The 30-share Dow Jones industrial average rose 56 points, or 0.6%, to 9,497.34 and the S&P 500 index added 9 points, or 0.9%, to 1,025.39, its highest close in 11 months.  The tech-heavy NASDAQ added 19 points, or 0.94%, to close at 2,037.77 points. On the New York Stock Exchange, advancing issues outpaced those that declined three to one on volume of 1.32 billion shares.  However, a jump in the CBOE Vix volatility measure, which rose 1.4% to 25.62, added a note of caution to the upbeat mood.

Dollar’s plunge to an 11-month low was also due to a Monday release from the United Nations, which again called for less dependence on the greenback as the premier global reserve currency. Indications that China would diversify some of its interests into gold also hurt the dollar, although the size of China's reserves mitigates against much impact.  Nevertheless, the news helped gold prices.  This morning's news indicated Barrick Gold (NYSE:ABX) is planning to raise up to $3.5 billion through a new share offering priced at $36.95 per share.

Yesterday, General Electric (NYSE:GE) was the leading gainer on the DJIA after being upgraded by JP Morgan (NYSE:JPM).  Costco (NASDAQ:COST) advanced 2.3% after two brokerages upgraded the stock. Among tech issues, IBM (NYSE:IBM) retreated 0.3% after it was downgraded; however, the firm noted it is "well ahead" of its 2010 earnings target of $10-$11 per share.  Advanced Micro Devices (NYSE:AMD) surged 14.6% as Barclays Capital (NYSE:BCS) upgraded the shares to "outperform."  AIG (NYSE:AIG) shares slumped 10.5% after Credit Suisse (NYSE:CS) downgraded the stock to "underperform," noting "little to no value for common equity" remains.

Nine of the ten S&P industry groups recorded gains Tuesday , with oil and gas (+2.7%) and basic material shares (+2.1%) leading the list of gainers.  Only healthcare shares registered declines, declining 0.3%.  Crude prices spiked $3.31 to $71.33 on expectations today's OPEC meeting will see no change in the production levels.  Moreover, Goldman Sachs (NYSE:GS) maintained a favorable long-term view on the group, saying there is an "increasing evidence of a stronger-than-expected recovery in global industrial activity."  Chevron (NYSE:CVX) and ExxonMobil (NYSE:XOM) shares gained 2.2% and 2.1%, respectively.  Among basic material issues, Alcoa (NYSE:AA) rose 3.5% to $12.60.

In today's Presidential appearance before a rare joint session of Congress, President Obama will attempt to resuscitate his healthcare reform package and counter the groundswell of centrist opposition, which has driven his ratings to a low 52% point.

According to industry sources, the chips will be used in a wide range of electronics such as game consoles, digital cameras, flat panel TVs and other electronic gadgets starting in April 2010. To meet demand by that period, Toshiba will have to ramp up production. Its customers include IT giants like Apple (AAPL), which has already purchased $500 million worth flash memory chips from Toshiba.

Toshiba currently manufactures chips at its plant in Oita, southern Japan and plans to outsource to expand its production if capacity is insufficient.

According to sources, Toshiba is holding discussion with Singapore’s Chartered Semiconductor Manufacturing Ltd. (CHRT) and Advanced Micro Devices (AMD) to spin off Globalfoundries Inc. and proceed with its outsourcing plan. This will help the company to reduce costs and fulfill customer supply orders.

Last year, Toshiba formed a joint venture with Sony (SNE) and SCEI (Toshiba owned 60% while Sony and SCEI owned 20% each) for the production of high-performance semiconductors, which include the Cell/B.E. processor, the RSX graphics engine and SoCs (System-on-Chip) for applications in digital consumer products. Moreover, to ramp up chip production, it bought Sony’s SoC line for about 90 billion yen ($968 million).

Toshiba competes with International Business Machines (IBM), which has technology alliances with Chartered Semiconductor, Globalfoundries, Infineon Technologies, Samsung Electronics, NEC Electronics and STMicroelectronics (STM) for developing 28 nm chips. In addition, NVIDIA (NVDA) plans to boost its 40nm technology, that is likely to improve margins and help the company take market share from Toshiba.

Toshiba is looking to bid for French nuclear group Areva's power transmission and distribution unit. This new line will help the company enter into a new line of power business for stable revenue and growth that will facilitate cost reduction at its loss-making chip division that has been under pressure due to economic recession.

Shares of Toshiba were up 3.2% to 481 yen outperforming a 1% rise in the benchmark Nikkei average.

Trouble started with the Sony (SNE) laptop battery fiasco back in 2006, which prompted the company to recall over four million units. More recently, management decided to terminate its agreement with Intel (INTC) and use Advanced Micro Devices (AMD) chips instead. We believe this could impair consumer confidence, especially since rumblings of customer dissatisfaction are getting louder.

Further, one of its most successful business strategies is also not working well. Dell used to attract clients by displaying cheap products on the company website. Customers browsing the website would end up spending an additional $2500 on PC accessories.

This scenario is changing rapidly since PCs with enhanced processors and accessories are now easily available at stores. Rivals HP (HPQ), Lenovo (LNVYG) and Acer have also started pricing models at competitive prices, which is increasing competition for the company.

Despite these pressures, Dell refuses to adapt a business model to suit current market dynamics. While most of its competitors have attuned themselves suitably, Dell continues to stick with its supply chain management policy and direct sales model.

Again, management’s decision to cut costs is hurting customer service and product quality. Some customers are of the opinion that rival products are cheaper, more user friendly and come with better customer service.

Employees are also getting increasingly dissatisfied. Some employees believe that the company’s work culture is undergoing sea change, with the fun element receding gradually. Rumor has it that CEO Kevin Collins could soon part ways with Dell. If it loses key executives at this critical juncture, it would be a definite setback for the company.

The picture looks worse when we consider the weakness in recent results and the Securities & Exchange Commission’s (SEC) probe into Dell’s accounting policy. The company should restructure its business model in line with changing market dynamics and focus on employee satisfaction and product quality.

The company is trying to capture the Indian market, which could be an important step in the right direction. We believe that a revival in customer confidence will be the key to Dell’s success in the days to come.

Chicago, IL – July 20, 2009 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Intel Corp (INTC), ARM Holdings (ARMH), Advanced Micro Devices (AMD), Qualcomm (QCOM) and Texas Instruments (TXN).

Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=5513

Here are highlights from Friday’s Analyst Blog:

How Mobile is Intel?

Just as Intel Corp (INTC) has a dominant position in the microprocessor market for computers, ARM Holdings (ARMH) has the most widely used technology in cell phones and other mobile devices. Intel’s desire to go beyond its home ground may be traced to the maturing state of the enterprise type PC market and the much stronger growth rates in cell phones and mobile internet devices.

The higher demand has been driven by a sea change in technologies driving consumer electronics products that have virtually created demand for a completely new species. Consumers now want greater functionality, connectivity, portability, lower power consumption, smaller sizes and all this at a much lower cost.

What Intel wants to achieve requires a paradigm shift. In the PC market it enjoys a special position at system integrators that have for long kept Advanced Micro Devices (AMD) at bay. Being the financially stronger party, it is able to make higher investment in R&D and also see the investment converted to sales.

However, the market is heating up and AMD’s recent alliance should help it generate much needed volumes. What that could mean for the AMD bottom line is a different story. But it should definitely begin to create a larger dent in Intel’s revenues.

The cell phone market is vastly different. Here Intel is in AMD’s shoes, despite its financial strength and ARM processors rule the day. ARM chips are already packaged and sold by the likes of Qualcomm (QCOM), Samsung and Texas Instruments (TXN) and are the processors of choice for nearly 90% of all cell phones on the market today.

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About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: http://at.zacks.com/?id=5517

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=5518.

Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.

Contact:
Mark Vickery
Web Content Editor
312-265-9380
Visit: www.zacks.com 

The higher demand has been driven by a sea change in technologies driving consumer electronics products that have virtually created demand for a completely new species. Consumers now want greater functionality, connectivity, portability, lower power consumption, smaller sizes and all this at a much lower cost.
 
What Intel wants to achieve requires a paradigm shift. In the PC market it enjoys a special position at system integrators that have for long kept Advanced Micro Devices (AMD) at bay. Being the financially stronger party, it is able to make higher investment in R&D and also see the investment converted to sales.

However, the market is heating up and AMD’s recent alliance should help it generate much needed volumes. What that could mean for the AMD bottom line is a different story. But it should definitely begin to create a larger dent in Intel’s revenues.
 
The cell phone market is vastly different. Here Intel is in AMD’s shoes, despite its financial strength and ARM processors rule the day. ARM chips are already packaged and sold by the likes of Qualcomm (QCOM), Samsung and Texas Instruments (TXN) and are the processors of choice for nearly 90% of all cell phones on the market today. Even new operating systems, such as Google’s (GOOG) Android have been specially built to fit in with ARM architecture.

Intel’s problems are not limited to its x86 architecture, which is incompatible with many proprietary cell phones. The company has actually yet to come out with a satisfactory product for the market. The Atom is more of a computing chip, sort of a bridge between the two worlds.

By Intel’s own admission, the company will not be able to make an impression on the cell phone market before the advent of Moorestown. The power savings offered by Moorestown could make the Intel chip more appropriate for the cell phone market. Critics argue that the Cortex A9 from ARM could be shipping by then, which could maintain ARM’s supremacy.
 
However, Intel’s strategy goes deeper. The company has gone beyond handsets to the growing mobile internet devices (MID) market. According to research firm Forward Concepts, MID shipments will grow from 305,000 units in 2008 to 40 million units in 2012. The research firm expects chip companies serving the market to gain big time, growing from $29 million in 2008 to $2.6 billion in 2012.

Intel is expected to be the biggest winner with its x86 microarchitecture. The non-x86 gainers are likely to be Texas Instruments and Qualcomm.
 
Intel has also been developing the Moblin software platform for Atom based netbooks and nettops using open source technology from Linux. The beta version boasts the latest open source graphics technology; social networking (only Twitter and Last.fm at present); Mozilla browser (for Internet access, video embedding and the latest flash plug-in); zoomable media player, and a user interface for connection management.

Moblin will also be of great strategic importance when Intel is ready to enter the handset market through the recently announced Nokia (NOK) alliance.

Meanwhile, Google’s new Android operating system (specially designed for mobile phones) has already been selected for Acer netbooks (scheduled to launch in October this year). Apple (AAPL) has also indicated its intention to introduce its own netbook by the end of this year.

Since Microsoft (MSFT) dominates the netbook market, any competition irrespective of the source will take share from the company. So both Google and Apple can do significant damage.

But the real fear for Microsoft is Chrome’s potential to take over the entire PC market. Chrome will work with chips based on both x86 architecture from Intel (INTC) and Advanced Micro Devices (AMD), as well as ARM chips from ARM Holdings (ARMH). The specific areas targeted by Google include speed and cost, which could hit Microsoft where it hurts. It is claimed that the Google Chrome would boot and give Internet access in a matter of seconds, and would come to the consumer virtually free.

Google can make this happen, since it is using open source software from Linux, and its own revenues are dependent on advertisements rather than technology. The cost of Windows 7, to be launched in October this year, is currently expected to be similar to Vista.

Add to this the cost of MS Office and other applications, without which the computer would not be very useful. Chrome is also expected to come with security enhancements that would simplify virus-fighting activities.

Microsoft may have anticipated this move while launching Bing, its new search engine directly pitted against Google. Some critics opine that Google is falling behind in online display advertisements that include both images and text. This is an important segment within online advertising and is expected to outgrow the plain text area over the next few years. Google may have to pull up its socks if it wants to protect its revenue base.

We also believe that Google would need to make arrangements with leading PC makers such as Hewlett Packard (HPQ), Dell (DELL), Acer and others who currently use windows for the bulk of their products. Given that some Ubuntu (Linux-based operating system) models are already available, everyone is likely to weigh their options carefully. The battle could end up in a big war, especially if Microsoft is able to take share from Google in the online advertising area.

Although financials have been a drag this week, Thursday saw the sector recording gains after a three-day losing streak and leading the list of gainers among the 10 S&P 500 industry groups with an advance of 2.5%.  Discover Financial Services (NYSE:DFS) rose 4% after reporting a less-than-anticipated growth in bad loans.  Lincoln National (NYSE:LNC) jumped almost 7% after it was upgraded by Credit Suisse (NYSE:CS).  Bank of America (NYSE:BAC) surged 4.9% and JP Morgan (NYSE:JPM) added 4.4%.  However, a WSJ report said there was a possibility that General Electric (NYSE:GE) may choose to spin off its financial unit rather than accept the burden of government oversight of its non-financial operations, sending its shares down 1.5%.  However, volume remained light at 1.1 billion. 

The Department of Labor's report yesterday showed number of people collecting unemployment benefits after the initial week recorded its biggest decline since November 2001.  New jobless claims, however, were up slightly as expected. 

With massive treasury auctions due next week, Treasury prices declined, sending yields higher. The Treasury has announced plans to sell a record $165 billion debt next week, including $31 billion 13-week, $30 billion 26-week, $40 billion 2-year notes, $37 billion 5-years and $27 billion 7-years, to help fund stimulus spending. However, traders are increasingly getting worried that massive government spending could push food and energy prices higher, and eventually lead to inflation.  As protection against a possible inflationary spiral and US dollar weakness, traders have bid up crude and other commodity prices, even as demand remains weak. Goldman Sachs (NYSE:GS), however, recently advised oil prices could hit $95/barrel by late 2010.  Further pressuring the outlook for inflation, No one expects the supply train to dwindle soon.
 
Utilities gained 2.2% yesterday as investors sought higher-yielding investments.  Healthcare stocks rose 2.2% as traders picked up defensive plays.  Technology stocks declined after Needham & Co. downgraded SanDisk (NASDAQ:SNDK) to "underperform," citing weakness in the NAND flash sector. SanDisk (NASDAQ:SNDK) shares plunged 6.1%, and Advanced Micro Devices (NYSE:AMD) fell 5.6%; Broadcom (NASDAQ:BRCM) was off 3.2%.  After the market close, Research in Motion (NASDAQ:RIMM) reported better-than-expected results, but gave an outlook at the low end of Street targets. 

Today being the end of the two day "quadruple witching" period, which marks the June expirations of stock futures and options with positions rolled into September contracts, trading is expected to remain volatile. CarMax (NYSE:KMX) is due to report quarterly earnings.

Chicago, IL - June 19, 2009 - Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Abercrombie & Fitch (ANF), Advanced Micro Devices (AMD), Intel (INTC), Hewlett-Packard (HPQ), and Dell (DELL).

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Here are highlights from Thursday's Analyst Blog:

Abercrombie Remains Focused

More consumers are trading down to cheaper alternatives on everything from food to staples to apparel, and many continue to avoid buying premium brands. In response, several retailers are lowering prices or shifting merchandise to capture sales from those customers seeking merchandise with lower price points

This environment has been especially difficult on Abercrombie & Fitch (ANF) which is well-known for its premium fashion brands. The specialty retailer is routinely reporting monthly same-store sales in the -20% area. A big reason for the company's weak results is that management refuses to chase its competitors down the path of lower prices. Abercrombie remains committed to protecting its premium brands while it waits for industry conditions to improve.

Management has acknowledged that the recession could continue to hurt the retailer's results in the months ahead, but don't look for the retailer to change its pricing strategy. Instead, management plans to survive the difficult economic environment through expense management, seasonal clearance events, and a fewer new store openings. That strategy includes closing poor-performing stores such as its RUEHL stores, all of which are going to be closed by year end.

AMD Playing It "Smarter"

The "asset-smart strategy," as the formation of the new foundry company is referred to, is expected to enable Advanced Micro Devices (AMD) to generate the much-needed volumes of its superior technology products and enjoy the benefits of operating a fabless model. Management focus will now be on developing innovative products.

This is a breather for the company, but a lot depends on execution, in our opinion. AMD is pitted against very strong players, and will have to spend heavily on R&D in order to compete effectively.

The company's pricing strategy necessitates maximum cost containment and efficient operation in order to generate profits. Although the ongoing inventory correction is heavily impacting profitability, the product mix continues to improve. Management stated that the 45nm server products made a mark in Q408, and most of the products shipped in Q1 were 45nm products. This means that AMD is just a step behind Intel (INTC), which completed the transition in the third quarter of 2008.

Management stated that it was on track to bring the AMD product company operating breakeven point to $1.3 billion by the end of the current quarter. The asset-smart strategy is expected to play a key role in this regard. There will also be a significant reduction in manufacturing headcount, as the corporate focus is now expected to shift to R&D and marketing.

AMD's focus on the fast-growing greater China market is paying dividends. The company's Chinese business has grown in leaps and bounds, with the total contribution increasing from 14.5% of sales in 2005 to 44.0% in 2008, an increase of 201.8%.

According to a survey by Gartner in 2007, AMD captured 28% of the Chinese computing market by the second quarter of 2007. The research firm reported AMD growth across desktops, notebooks and servers. According to the research firm IDC, AMD has secured a very strong position in the desktop segment, which comprises two-thirds of the regional PC market.

The company has also established relations with local leaders such as Lenovo and TCL, as well as global leaders such as Hewlett-Packard (HPQ) , Acer and Dell (DELL). According to analysts at IDC, this two-pronged strategy is clearly going as expected, because most of the OEMs are showing an increasing preference for AMD over Intel processors for products being shipped into China.

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Yesterday, Wall Street responded with a yawn to Obama Administration's announcement that 10 of the largest banks could repay $68 billion of government bailout cash.  Although Treasury Secretary Geithner, appearing before the Senate Appropriations Committee, noted the repayment of the bailout money was a sign of "financial repair," stocks swung back and forth in a narrow range, signaling the much-expected announcement from the Treasury packed few surprises.  Technology stocks, buoyed by Texas Instruments' (NYSE:TXN) better-than-expected earnings and sales outlook, pushed Nasdaq higher while the Dow Jones Industrial Average and broad based S&P 500 index ended the day mixed.  The Tech-heavy Nasdaq rose 17.73 points, or 0.96%, to close at 1860.13.  The DJIA slipped about 0.1% to close at 8,763.06.  The S&P added 0.4% to close at 942.43. 

Some big financial institutions have been eager to escape increased federal involvement and the restrictions that come with being part of the Troubled Asset Relief Program.  Although the Treasury did not name the banks cleared to pay back the TARP funds, the ten institutions quickly confirmed they have been allowed to exit the government's financial assistance program.  Morgan Stanley (NYSE:MS), American Express (NYSE:AXP), JPMorgan Chase (NYSE:JPM), Goldman Sachs (NYSE:GS), Bank of New York Mellon (NYSE:BK), BB&T (NYSE:BBT), Capital One (NYSE:COF), Northern Trust (NASDAQ:NTRS), State Street (NYSE:STT) and US Bancorp (NYSE:USB) were cleared to pay back the rescue funds.  Commenting on the move, JP Morgan Chase & Co (NYSE:JPM) CEO Jamie Dimon noted, "Paying back TARP at this time is the right thing for JPMorgan Chase, and it's the right thing for our country."  Financial sector shares edged up 0.4%, with American Express (NYSE:AXP) topping the list of gainers on the DJIA with a 5% jump, as traders were relieved that the industry's rising rates of card delinquencies and the potential for increased attendant loan losses had not prevented government approval of its repayments.

Following Texas Instruments' (NYSE:TXN) improved guidance, semiconductor shares rallied with Advanced Micro Devices (NYSE:AMD) closing up 3.1%, Intel (NASDAQ:INTC) rising 3.4%, and National Semiconductor (NYSE:NSM) closing up 4.4%. According to a Bank of America (NYSE:BAC) analyst note, Microchip Tech (NASDAQ:MCHP) has been witnessing improved China orders.  BofA raised its price target on the company to $23.

Crude prices went beyond $70 per barrel on hopes a stronger economy will lift demand.  Dollar prices continued to remain under pressure.  Although concerns linger over the state of the world economy, commodities have recorded sharp gains recently as investors have increasingly turned towards crude to hedge against a weak dollar.  Yesterday's $35 billion auction of 3-year Treasuries met with strong demand, however, as a yield of 1.96% topped expectations, and the bid-to-cover ratio equaled 2.8%. Today's calendar is for $19 billion in 10-year notes, with $11 billion 30-years slated for tomorrow.  However, investors remain concerned that rising short-term interest rates will squeeze banking industry's net interest margins, in a sector that has already seen a 73% price run-up over the past three months.

Meanwhile, late Tuesday, the Supreme Court rejected an appeal from three Indiana state funds, consumer groups and others, clearing the way for the sale of most of Chrysler's assets to Italy's Fiat Group SpA. 

Afternoon sentiment will reflect release of the Fed's latest take on regional economic conditions, revealed in its Beige Book at 2:00 AM ET. The report is likely to recount the well-aired areas of economic weakness, namely, depressed housing markets, soft consumer demand, deteriorating employment opportunities, and downward price pressures. Indications of an economic recovery's "green shoots" of growth may help boost sentiment.

Among S&P industry groups, financials were the leading gainers, rising 3.4% as traders took reports of a failed Latvian bond auction in their stride.  A Bernstein upgrade of Goldman Sachs (NYSE:GS) to "outperform" also helped financials and the effects of the failed bond auction were nowhere to be seen.  Bernstein suggested Goldman's capital strength will allow the firm to consolidate its position further in fixed income, currency and commodity markets. Fifth Third Bancorp (NASDAQ:FITB), which has been asked by regulators to raise $1.1 billion as part of the stress tests, reported sale of $1 billion common shares and said it is on track to raise the required amount. Keycorp (NYSE:KEY) jumped 20% after RBC Capital Markets cited the stock a "top pick." Today's reports suggesting the FDIC is pushing for an executive shuffle at Citigroup (NYSE:C) may imperil CEO Pandit's tenure, and provide another reason for firms to shun government funds and rush to pay back TARP monies.

Basic material shares continued their advance, rising 2.1%, with Alcoa (NYSE:AA), up 6.2%, leading the list of gainers on the DJIA.  Improved demand scenario, especially from China, helped the advance in Alcoa shares. Oil and gas sector shares gained 2.1%. Among stocks from the sector, Chevron (NYSE:XOM) and Exxon Mobil (NYSE:CVX) led the gainers as crude prices surged 4.1% to $68.81, a seven-month closing high. Bullish analysts at Goldman Sachs (NYSE:GS) upped their forecasts for crude to $85 per barrel in 2009 and $95 in 2010.

Technology stocks advanced 1.5%, helped by prospects for new product launches and analyst upgrades. Apple (NASDAQ:AAPL) rose after the iPhone-maker's profit and share-price target was increased by Oppenheimer. Some reports suggested CEO Steve Jobs was expected to return from his medical leave by month's end.  Citi (NYSE:C) raised Google (NASDAQ:GOOG) price target to $580 from $450, on expectations that second quarter results will meet estimates and the company will report better results next year. Advanced Micro Devices (NYSE:AMD) said the company expects fourth quarter sales to improve from a year ago, helped by better economic conditions. Intel (NASDAQ:INTC) announced plans to purchase Wind River Systems (NASDAQ:WIND) for an all-cash deal valued at $884 million.

Dismal retail sales numbers in May, with an estimated 75% of retailers falling short of targets, posting an estimated 8.6% average drop in same-store-sales, however, could not check the rally. Costco (NASDAQ:COST) reported a 7% drop, versus estimates of a 6.4% decline; Target (NYSE:TGT) comparable-sales fell 6.1% versus expectations of a 4.3% drop; Saks (NYSE:SKS) disappointed with a 26.6% sales fall versus an anticipated 14% drop; Macy's (NYSE:M), however, was slightly ahead of expectations with its 9.1% decline, less than the 9.3% anticipated.

Maverick Capital Management Holdings Analysis

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Even before this buyout news had been made, Zacks senior equities analyst Abdul Saleh had this to say in his most recent research report on Broadcom: "[G]rowth in the traditional wireline business is expected to slow down in the second half of the year, [and] gross margin is estimated to decline as the company continues to ramp up sale of new products to new and existing customers."  Shares of BRCM remain a Hold.

Zacks senior analyst Ken Nagy, CFA, who covers AMD, is quoted thusly about the company in his latest report: "We remain bullish about this stock, but prefer to take a wait-and-see approach for the time being."  We will check to see if this cash infusion will be enough for the analyst to upgrade his rating of AMD looking ahead.