The energy that will be produced by EURUS is estimated to be sufficient to power a Mexican city of half a million inhabitants, reducing CO2 emissions by approximately 600 thousand metric tons each year, which is approximately 25% of the total emissions generated by such a community.
 
EURUS will be one of the largest wind farms in the world and the second largest in terms of emissions reduction registered under the Clean Development Mechanism of the United Nations (Kyoto Protocol). It will also have one of the largest emission reduction indexes per installed capacity in the world.
 
The wind farm represents a major contribution towards the global effort that Cemex is making to reduce its emissions footprint and to become more sustainable.

Company Description

Avnet distributes electronic components and computer products to customers in 70 countries worldwide. It also provides services such as supply-chain and design-chain services, logistics solutions, product assembly, device programming, computer system configuration and integration and technical seminars to allow its customers to operate efficiently.

Avnet Surprised By 29.41% in the Fiscal First Quarter

On Oct 29, Avnet reported better than expected fiscal first quarter 2010 results. It beat the Zacks Consensus Estimate by 10 cents. Earnings per share were 44 cents compared to the consensus of 34 cents. This was under the year ago period, however, which saw 67 cents.

Revenue fell 3.1% to $4.36 billion compared to the year ago period. The Electronics Marketing segment was the weaker segment with revenue falling 9.8% to $2.44 billion from the fiscal first quarter of 2009.

The Technology Solutions segment saw improvement as revenues rose 6.9% compared to last year.

Like every business, the company is still being impacted by the global recession but it saw growth rates rise sequentially which is improving confidence.

Second Quarter Guidance

Sales are expected to be between $4.1 billion and $4.7 billion in the second quarter with normal seasonality in the Technologies Segment and slightly better than normal in the Electronics Marketing segment.

Earnings per share are expected in the range of 52 cents to 60 cents per share assuming the average Euro to U.S. Dollar currency rate is $1.48 to 1.00 euro.

Zacks Consensus Estimates Rise

In the last month, analysts have raised both the second quarter and fiscal 2010 estimates. The second quarter Zacks Consensus Estimate jumped 6 cents to 56 cents.

The 2010 Zacks Consensus rose 13.7% to $2.08 from $1.83 with 10 out of the 11 covering analysts raising during the last 30 days.

Value Fundamentals

Avnet is a Zacks #1 Rank (strong buy) stock. It is trading with a price-to-book of 1.43. The company has a solid 5-year return on equity (ROE) of 10.82%.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service.

Zacks Investment Research

Deutsche Boerse and SIX Swiss Exchange have announced that they are buying out Dow Jones’ one-third stake in Stoxx for a consideration of 206.1 million euros, or $306 million.

Following the transaction’s completion, which is due to take place early next year, Deutsche Boerse will have a controlling stake in Stoxx of 50 percent plus one share and will fully consolidate it for accounting purposes.

In addition, SIX and Deutsche Boerse will set up a new entity to perform index calculations, in which SIX will own 50 percent plus one share.

According to a Stoxx press release, the transaction will allow both Deutsche Boerse and SIX to significantly expand their positions in the international index business, complementing their established DAX and SMI index families.

The sale could be a precursor to the long-rumored sale of Dow Jones Indexes. The Wall Street Journal reported in August that News Corp. was considering selling the venerable index provider, which has annual revenues of approximately $130 million to $170 million.

Data from a phase II trial that is studying Nexavar for the additional indication of breast cancer was presented at the ongoing 15th European CanCer Organisation and 34th European Society for Medical Oncology Multidisciplinary Congress in Berlin.

The trial on 229 patients studied the effect of Nexavar along with Roche’s chemotherapy agent Xeloda (capecitabine) compared to chemotherapy alone. Patients in the trial had locally advanced or metastatic breast cancer and had not received more than one chemotherapy previously.

Patients receiving Nexavar along with chemotherapy witnessed a 74% improvement in overall survival without the disease progressing. Additionally, the median progression free survival for the combination showed statistically significant results (6.4 months vs. 4.1 months) compared to chemotherapy alone.

The approval of Nexavar will open up another avenue for breast cancer treatment, which was the most commonly diagnosed cancer among women worldwide in 2007-2008 (nearly 1.3 million cases) and the second leading cause of cancer-related death among women (about 465,000 deaths).

Nexavar is one of Bayer’s new drugs with huge potential. Its second-quarter sales soared 36% to 147 million Euros. The drug is also being studied for other indications such as lung, ovarian and colorectal tumors. The approval of Nexavar for any of these indications will further boost sales.

Ford’s decision will no doubt be a boon for the Romanian economy, which has been going through tough times. In March, the International Monetary Fund provided the country with $17.1 billion in bailout fund to pull it out of a financial crisis.

Ford plans to manufacture 300,000 automobiles and 300,000 engines in Romania in the next 4 years. It will employ an additional 3,000 staff throughout the country and has invested 12 million Euros ($17.2 million) to train the workforce. The Romanian Government will also invest 143 million Euros ($182 million) through 2012 to support production at the Craiova plant.

The Transit Connect will be priced at 14,000 Euros to15,600 Euros, or $20,000 to $22,000 in Romania and the U.S., respectively. So far, Ford has sold 600,000 Transit Connects globally. We continue to recommend the shares of Ford as Neutral with a target price of $8.

The company is based outside of Berlin in Hennigsdorf, Germany, and has sales offices in Europe and the U.S. With nearly 400 employees serving customers in 65 countries around the world, B.R.A.H.M.S. generated 2008 sales of 75 million Euros or about $105 million. The transaction is expected to be accretive to earnings in 2010.

The news comes a day after diversified US manufacturer Danaher Corp. (DHR) said it would buy two scientific instrument businesses for a total of $1.1 billion.

B.R.A.H.M.S. is best known for its flagship product, Procalcitonin (PCT), a proprietary biomarker for the diagnosis and treatment of sepsis, a potentially life-threatening condition in which a patient’s bloodstream is overwhelmed by bacterial infection.

PCT test has become the gold standard in Europe for early diagnosis of sepsis, which is critical for patient survival, and subsequent monitoring of treatment. It also has diagnostic tests for cardiovascular and pulmonary diseases, as well as intensive care treatments and prenatal screening -- an area in which PerkinElmer Inc. (PKI) is one of the world's leading companies.

The European testing model for PCT is expected to be replicated in the U.S., where almost 750,000 cases occur every year and one-third is fatal. B.R.A.H.M.S. also offers diagnostic tests and instrumentation for thyroid, prenatal, autoimmune and oncology screening in both laboratory and point-of-care settings.

B.R.A.H.M.S. is jointly owned by its senior management and a private equity firm. The deal, expected to close late this month, is subject to regulatory approvals and a customary post-closing purchase price adjustment. B.R.A.H.M.S. will be integrated into the Specialty Diagnostics business within Thermo Fisher’s Analytical Technologies Segment. Thermo rival PerkinElmer has also been active on the acquisition front, announcing several small deals a year.

With annual revenue of $10 billion, Thermo Fisher has more than 30,000 employees and serves over 350,000 customers within pharmaceutical and biotech companies, hospitals and clinical diagnostic labs, universities, research institutions and government agencies, as well as environmental and industrial process control settings. We currently have a Neutral recommendation on the stock.

In the proposed deal, Deutsche Telekom will contribute T-mobile UK, including the unit’s 50% stake in the 3G wireless joint venture with Hutchison, while France Telecom will add its UK broadband Internet business along with the wireless operation. The companies are likely to retain the Orange and T-mobile brands for now to prevent customer defection. A new brand, however, is expected within two years.

The British mobile market is one of the fiercely competitive markets in Europe. Currently, Spanish telecom giant Telefonica’s (TEF) UK subsidiary O2 leads the market with approximately 27.7% share. Vodafone (VOD) and France Telecom’s Orange are the second-and third-largest operators with 24.7% and 21.5% share, respectively. T-Mobile UK is the fourth-largest operator with nearly 16.6 million subscribers and roughly 15% market share. However, the unit contends with declining profit and subscriber erosion.

The merger of T-mobile UK and Orange UK will radically change the competitive landscape in the British mobile market. The combined entity would dethrone Telefonica’s O2 UK as the largest wireless operator in the UK with roughly 37% market share and cumulative subscriber base of approximately 28.4 million.

The combined network assets will create significant cost synergies that may exceed 4 billion Euros ($5.7 billion), mostly through reduced operating and capital expenditure. The consolidated entity with greater scale, larger coverage markets and distribution network will operate and compete more efficiently while sharing the expenditure associated with future network upgrades.

In order to achieve merger synergies, the joint venture plans to invest up to 800 million Pounds ($1.3 billion) for network restructuring and streamlining operations. The merger is likely to be accretive to free cash flow and earnings from 2010 and 2011, respectively.

Shantha Biotech has been a prominent player in the vaccine segment for quite some time. It works with several international agencies like the UNICEF in the Asia Pacific, Africa and Latin America. The company is expected to post sales of $90 million in 2009. The deal should be beneficial to both the companies. While Shantha Biotechnics has the resources to produce quality vaccines at cheap rates, being the largest company entirely dedicated to vaccines, Sanofi has the financial strength and rich experience.

Shantha Biotech has a strong pipeline for vaccines, including a rotavirus vaccine (expected to be launched in 2012), a conjugated typhoid vaccine and an HPV vaccine. These vaccines could become major revenue earners for the company on approval.

Sanofi-Aventis possesses one of the world’s leading vaccine operations, with total sales of 2.86 billion Euros in 2008, an increase of 3% over the previous year. Sales in the second quarter were 712 million Euros, representing about 9.5% of the company's total revenue. In addition to existing products, Shantha Biotech’s developmental-stage vaccines would complement Sanofi Pasteur's current portfolio.

The current outbreak of the swine flu pandemic can prove to be a major opportunity for vaccine manufacturers. All major players in the vaccine segment are busy conducting human tests for H1N1 vaccines. Companies like Sanofi Pasteur, GlaxoSmithKline (GSK), Novartis (NVS), Baxter International (BAX) and AstraZeneca (AZN) are all vying to get their vaccines to the market at the earliest.

Sanofi-Aventis is the biggest producer of flu medicines. The approval of H1N1 vaccine would enable the company to post strong revenue growth.

Intelligent power grids, or smart grids, are based on the conventional power grids which transport electricity from large power plants to individual households. However, digital technology allows individual households or businesses to manage their electricity more efficiently, allowing them to receive, or deliver back to the grid, electricity from other sources like wind or solar power facilities, or even from batteries in electric cars.

According to studies, more than a billion tons of carbon dioxide (CO2) emissions could be abated with intelligent power networks by 2020. Smart Grids are essential for integrating renewable power sources into power networks and for ensuring stable power supplies from solar and wind energy.

Overall, the Smart Grid market has three primary components: Smart Metering (intelligent billing), Grid Intelligence (the grid infrastructure and its controls) and Utility IT (intelligent data management). Siemens is active in all three areas and is already the global market leader for grid intelligence.

Smart Grids have enormous growth potential worldwide. They are, for example, a prerequisite for reaching the EU’s 20-20-20 climate goals aimed at reducing CO2 emissions by 20% and increasing the share of renewable energies in the European grid by 20% by 2020. In addition, Smart Grids are included in many of the economic stimulus programs throughout the world.

The US government plans to invest around 3 billion Euros here in the coming years. Siemens expects to receive orders worth around 15 billion Euros from these programs by 2012. Out of these, 40% or roughly 6 billion Euros is likely to be for green technologies from the Siemens Environmental Portfolio.

A slew of companies across the globe are pushing to secure their share in this projected growth market, ranging from blue chips like Siemens, General Electric Co. (GE) and Cisco Systems Inc. (CSCO) to various start-ups offering related components and services.

Energy-efficient and flexible power grids are a key cornerstone for the launch of electric cars on a broader scale, as they can be designed to meet specific needs for the supply, demand and storage of electricity.

Volkswagen AG, Europe’s largest automaker by sales, said in July that it would launch an electric version of its upcoming New Small Family car in 2013. Other auto makers, including Nissan Motor Co. Ltd and General Motors Co., are also pressing ahead with developing fully electric cars for the mass market. 

Energy-efficient, resource-conserving Smart Grids are part of the Siemens Environmental Portfolio, which generated a quarter of its total sales in fiscal 2008.

Siemens is a German industrial conglomerate with interests in information services, automation and controls, medical equipment, power generation, transportation systems, automotive electronics, lighting and many other areas. With a focus on electronics and electrical engineering, the company is a major multinational with over 430,000 employees in more than 190 countries.

We currently have a Neutral recommendation on Siemens.

Brilinta significantly reduced the mortality rate from cardiovascular events, myocardial infarctions and strokes without increasing major bleeding, which is a side-effect of Plavix. However, the frequently reported side-effects of Brilinta included slower heart rhythms and dyspnoea.

Brilinta is an investigational oral anti-platelet treatment being developed for acute coronary syndrome (ACS). Results from the 18,624 patient PLATO (A Study of Platelet Inhibition and Patient Outcomes) trial were presented at the European Society of Cardiology congress and published in the New England Journal of Medicine (NEJM).

The data on Brilinta look compelling and could help the product gain market share from Plavix once launched. Sanofi-Aventis recorded 2.6 billion Euros from Plavix sales last year, which implies huge potential for Brilinta upon approval. Management is touting the potential benefits of Brilinta relative to Plavix and Eli Lilly’s (LLY) Effient, including its rapid onset and offset and reliable efficacy.

With Plavix scheduled to lose patent protection in the U.S. in 2011, AstraZeneca could benefit if it succeeds in bringing Brilinta to market before Plavix goes generic. The timely approval and launch of Brilinta could help the drug maintain market share and reduce patient switching to generic Plavix. AstraZeneca is looking to file for approval in both the U.S. and the EU in the fourth quarter.

It will now be possible for Siemens to build Israel’s first commercial solar farm in the region between the Dead Sea and the Red Sea. The company will handle project management including engineering and construction of the photovoltaic plants. It has signed a framework agreement to build plants with a total output of 40 megawatts (MW). The first project will be construction of a plant with an output of up to 4.9 MW at Kibbutz Ketura, in the southern desert of Israel.

Areva Power was founded in 2006 and is headquartered at Kibbutz Ketura/Eilat. This subsidiary of Global Sun Power Ltd. has 20 employees. The equity investment in Areva is aimed at strengthening the Siemens’ environmental portfolio. Last year, Siemens’ environmental technologies generated sales of 19 billion Euros, roughly one-fourth of the company’s total revenue.

By 2010, Siemens plans to increase the share of environmental technologies to around 25 billion Euros. It is investing in Areva through its equity investment company Siemens Project Ventures GmbH (SPV).

Together with its partners, SPV has been involved worldwide in the development of infrastructure projects, particularly in the energy, transport and telecommunication sectors. SPV is a Group company of Siemens Financial Services GmbH (SFS), an international provider of financial solutions in the business-to-business area.

Major competitors of Siemens include ABB Ltd. (ABB) and General Electric Co. (GE). We currently have a Neutral Recommendation on the stock.

This 3G handset will have a high-resolution WVGA touch screen and incorporate a slide-out QWERTY keyboard. It will be available in select markets from October for 500 Euros.

Traditionally, all Nokia handsets have used the Symbian operating system, which is now fully controlled by Nokia. However, the Symbian system has lost charm for mobile phone users and become outdated compared to open source operating systems like Linux, Google Inc.’s (GOOG) Android and the licensed system of Microsoft Corp.’s (MSFT) Windows Mobile. A wireless handset based on the Maeme 5 operating system will allow users to run more than a dozen application windows at the same time.

N900 will have multitasking feature for applications together with web browsing (Mozilla-based Internet browser) that will support Adobe System Inc.’s (ADBE) flash software. This smart-phone will have ARM Cortex-A8 processor and 1GB of application memory. N900 also contains a 5-megapixel camera and 32GB of storage facility. Storage capacity will be expandable up to 48GB through a microSD memory card.

Nokia is the world leader in the high-end smartphone market but the company has been losing ground to fierce competition in recent times. According to Gartner Inc, Nokia’s share fell to 45% in the second quarter from 47.5% in the year-ago period. Meanwhile, Research In Motion (RIMM) grew its market share to 18.7% from 17.3% in the year-ago quarter and Apple Inc. (AAPL) gained 13.3% from a mere 2.8% in the prior-year quarter.

Nokia’s adoption of the Linux-based operating system is aimed to protect its leadership position in the smartphone market. Earlier this month, the company signed a deal with its former arch rival Microsoft Corp., to incorporate the mobile version of MS-Office software suite in Nokia handsets.

Investors see Hungary becoming “significantly” less risky, allowing for further reductions in interest rates, central bank Deputy Governor Ferenc Karvalits said. “Over the past few months, international risk appetite has improved significantly, the risk assessment of the region and Hungary has stabilized, and this allows for further easing of monetary conditions,” Karvalits said in an interview on Kossuth Radio today.

The Magyar Nemzeti Bank lowered its benchmark interest rate by half a percentage point to 8 percent on Aug. 24 as it works to jolt the economy out of its worst recession in 18 years. The bank has shaved 1.5 points off the key rate since July as confidence rises in the first European Union nation to get a bailout. Hungary received 20 billion euros ($28.5 billion) in an emergency loan from the International Monetary Fund, the EU and the World Bank.

The country has a “good chance” to finance its budget deficit from the market and may not need the next installment of the IMF loan, Karvalits said. The forint weakened 0.3 percent against the euro and was trading at 268.82 at 7:48 a.m. in Budapest.

You see, one of the principal reason why Hungary is in such a mess is that as inflation shot up in the months leading up to the crisis Hungary chose to loosen its peg against the Euro. At the time, the rationale seemed wise albeit very bold. In an environment where investors were willing to take risk (i.e. hunting for yield) their objectives could be aligned with that of public authorities in the sense that the former got their yield whereas the latter got the nominal appreciation needed to keep inflation in check.

It did not work quite like that.

As the crisis hastened its grip on global markets and as its locus steadily moved to Eastern Europe the Hungarian Forint plummeted and lay bare the country's vulnerabilities in the context of balance sheet (on the liability) side denominated in Swiss Francs. The result was that Hungary crashed into a recession unable to tweak monetary policy downwards because of a fear that this would scythe the Forint and thus essentially bankrupt scores of households and companies. On the other, the government also had (and has) difficulties raising funds on international capital markets.

Now however things appear to have changed at least for a moment and Hungary's central seem poised to take advantage of the relatively benign market conditions to lower interest rates to support its ailing economy. The underlying idea is simple. If you believe that risk aversion is to stay low, the Forint should not be sensitive towards the lowering of nominal interest rates since after all the carry remains plentiful. In this way, my view is that Hungary's central bank is trying to claw back the control over monetary policy by locking in a lower interest rate for the Forint. The key question which we should be asking ourselves however is of course whether Hungary could actually be forced to raise rates further down the road to defend the Forint. Clearly, bets are being made inside Hungary at the moment that this is not the case.

This is very interesting in a practical as well as a theoretical sense as I have discussed for example in this post about carry trade and global monetary policy. More recently, Edward Hugh mused on the same topic (more or less) invoking the idea of the (eternal) triangle of monetary policy in an open economy context.

In the case of the Central Europe "four", Poland and the Czech Republic opted for maintaining their grip on monetary policy, thus accepting the need for their currency to "freefloat" and move according to the ebbs and flows of market sentiment. As it turns out this decision has served them remarkably well, since the real appreciation in their currencies which accompanied the good times helped take some of the sting out of inflation, while their ability to rapidly reduce interest rates into the downturn has lead to currency depreciation, helping to sustain exports and avoid deflation related issues.

The other two countries (Hungary and Romania), to a greater or lesser degree prioritised currency stability, and as a result had to sacrifice a lot of control over monetary policy, in the process exposing themselves to the risk of much more violent swings in market sentiment when it comes to capital flows. Having been pushed by the logic of their currency decision towards tolerating higher inflation, they have seen the competitiveness of their home industries gradually undermined, and as a consequence found themselves pushed into large current account deficits for just as long the market was prepared to support them, and into sharp domestic contractions once they were no longer disposed so to do.

Edward's account here is important since it alerts us to the fact that it was only at the very end that e.g. Hungary opted for float because it was believed that it would make the inflation problem go away. At that point however, the structural imbalances and essentially damage were already embedded in the system of course. Nevertheless, it is unequivocally the fact that Hungary, at the moment, is attempting to benefit from the relative benign market conditions which means that risk aversion remains relatively subdued.

Elsewhere in Market Land ...

If our little trip to Hungary suggests that risk is on, if only a little bit and potentially in the case of Hungary news elsewhere suggest that the waters are more choppy. Of course, none of this is earth shattering by any means of the word, but since much, if not everything, seems to be revolving around China at the moment it seems worthwhile to dwell at recent news on how China are expected to "tweak" its hitherto lax lending policies to skim the worst of the mounting bubble (quote below from Bloomberg).

China’s banking regulators are “tweaking” lending policies to remove “froth” from the system while growth remains the top priority for policymakers, according to Royal Bank of Scotland Group Plc. The goal is to manage risk exposure among banks and asset quality by checking lending from going into A-shares traded on the mainland and properties, Wendy Liu, Hong Kong-based head of China research at RBS ABN Amro, said in a report dated yesterday.

(...)

The banking regulator sent draft rule changes to banks on Aug. 19 that would require lenders to deduct all existing holdings of subordinated and hybrid debt sold by other lenders from supplementary capital, said the people, who have seen the document and declined to be named as the matter is private. This may cut lending by as much as 700 billion yuan ($102 billion), China International Capital Corp. said Aug. 24.

Of course, the main bias of the Chinese stimulus program and thus the authorities' objective remain one of promoting growth through the expansion of domestic investment and, one would assume, consumption. As RBS ABN Amro's Wendy Liu is quoted of saying; "policymakers have a far greater tolerance for asset-price appreciation over the medium term than before". That sounds about right to me even if I am no sage, at all, on China.

What is interesting in the case of the recent news from China was also the following piece by Bloomberg whose headline (Yen Strengthens as China Policy Concern Spurs Demand for Safety) makes a direct link between policies in China and risk sentiment in the market and thus also the movement of the Yen and the USD (remembering of course the narrative that repatriation of profits may ultimately be the main driver of the Yen at the moment).

The yen rose for a third day against the euro in the longest stretch of gains since July on concern Chinese production curbs would slow economic recovery, fanning demand for the relative safety of Japan’s currency. The currency gained versus major counterparts including the pound on speculation Japan’s exporters are repatriating earnings to take advantage of a new tax law. A government report today may show a faster contraction in the U.S. economy than previously estimated.

“We have talks from China cutting back expanding, trying to sort out the balance sheet and prevent too much reckless lending,” said Peter Frank, a London-based currency strategist at Societe Generale SA. “But domestic factors, like capital repatriation, are driving yen’s strength right now.”

Whether there is a history to be made here is debatable, but one thing is certain. China seems to have decidedly taken center stage in the global market discourse. Finally and essentially as a small footnote, yours truly took notice of the fact that despite the decidedly positive sentiment in the core of Europe at the moment on the back of the Q2 GDP print and upbeat confidence readings in Germany, aggregate retail sales continued their steady decline.

Whether all this signifies that risk is "on" or "off" I will allow the reader to decide for themselves. Personally, I am still bearish, but it is difficult to deny that the relative calm and positive environment that has prevailed since spring seems rather strong. I would expect sentiment to change once we return to "normal" in Q4 once the elections in Germany and Japan have been resolved and, more importantly, once OECD stimulus packages start to wane. Most importantly however, there is the situation in Southern and Eastern Europe still loom as the most likely harbringers of, if you will, black swans in which case risk almost surely would be off.

Quarterly net sales declined 13.6% year over year to $2.7 billion due to the pass-through of lower overall dairy commodity costs, despite positive contributions from acquisitions and volume growth in Fresh Dairy Direct and modestly lower sales in the WhiteWave-Morningstar business.

Net sales in the Fresh Dairy Direct segment declined 16.0% as the company passed some of the lower dairy costs to customers but was partially offset by continued volume growth. Raw milk prices were 41% lower compared to the prior-year.

Net sales at WhiteWave-Morningstar fell 4.6% to $622 million, attributable to slower category growth and the company’s exit from a food service business in the Silk brand and some private label organic milk business in the U.K. The decline was partially offset by volume gains, especially in the yogurt and cottage cheese categories.

Net sales of Horizon Milk rose in low single-digits due to higher pricing and continued distribution expansion. International Delight and Land O’ Lakes also grew modestly in low single-digits.

Moreover, the company entered into an agreement to acquire the Alpro division of Vandemoortele N.V. during the quarter. The deal was fixed for a transaction price of approximately 325 million euros and was completed early in the third quarter. Alpro is the European leader in branded soy-based beverage and food products with strong brands like Alpro soya and Provamel. Alpro has five manufacturing facilities in Belgium, United Kingdom, France and Netherlands and employs approximately 750 people. Management believes that the acquisition provides great opportunity for the company to expand into new markets across the European Union. Hence, the acquisition establishes Dean Foods as a global leader in the soy-based beverages and food products, with leading brands and over $1 billion in combined retail sales.

Following the earnings release, management raised its guidance for fiscal 2009. Annual earnings are now expected to be at least $1.60 per share, roughly 20% above year-ago levels. Previous guidance was $1.55 per share.

Although commodity costs continue to be favorable, management is concerned about the continued competitive activity in fluid milk operations and is cautious regarding diminished commodity favorability in the future. Earnings for the third quarter are expected to be $0.30 per share.

Further, Daimler Financial Services posted lower earnings due to the increased cost of risk. Earnings were also reduced by lower interest rates for discounted non-current provisions as well as currency-exchange rate movements. However, declining earnings was mitigated by the measures taken by the company to reduce costs and improve efficiency following the onset of the global economic crisis.

Consolidated revenue in the quarter shrank 25% to $27.9 billion (euro 19.6 billion). The company sold 391,500 cars and commercial vehicles worldwide, a 31% decline from a year earlier.

Mercedes-Benz Cars segment sold 287,243 vehicles, a decrease of 19%. Revenue in the segment fell 18% to $15 billion (euro 10.6 billion). However, the segment posted a significant 24% rise on a quarter-over-quarter basis, partially due to the full availability of the GLK compact sport-utility vehicle and the launch of the new E-Class model.

Daimler Trucks segment unit sales decreased by 56% to 54,134 vehicles. However, its market share increased almost everywhere. Sales fell 43% to $6 billion (euro 4.2 billion).

Mercedes-Benz Vans segment significantly increased its unit sales compared with the first quarter to 41,871 vehicles but was far behind the prior-year period (78,629 vehicles). Consequently, revenue in the segment tumbled 12% to $2 billion (euro 1.5 billion).

Daimler Buses segment sold 8,300 buses and chassis, a 25% fall from last year. This was due to lower demand for chassis in Latin America amid the recession. In addition to the ongoing contraction of markets in South America, Daimler encountered a sharp drop in demand in Mexico compared with the prior-year period, whereas unit sales in the U.S. increased. In Europe, the segment's city-bus business remained stable, while demand for coaches fell. This segment’s sales dropped 17% to $1.56 billion (euro 1.1 billion).

Daimler Financial Services contract volume remained almost flat at $85.8 billion (euro 60.3 billion) compared to last year. However, new business decreased by 16% in the segment to $9.2 billion (euro 6.5 billion).

For 2009, Daimler anticipates total unit sales to fall significantly from 2008 level of 2.1 million vehicles. Total revenue will accordingly drop from 2008 level of $136.4 billion (euro 95.9 billion). However, the company has undertaken measures to cut costs and avoid additional expenditure amounting to $5.7 billion (euro 4 billion). Besides reducing labor costs, these actions include lowering fixed costs and further streamlining organizational structure.

We continue to recommend DAI as Hold with a six-month target price of $40.50.