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Magna Bags GM Contract – Analyst Blog

Zacks Market Commentaries — Wed, 25 Nov 2009 15:00:00 +0000

Magna International (MGA) has reported that it has won a contract to make the new generation of frames for General Motors’ (MTLQQ) full-size light-duty pickups and sport utility vehicles despite their disputed relationship over the Opel deal. According to Magna, the new third generation of frames would replace GMT 900, which is the frame for Chevrolet’s Suburban, Tahoe and Silvarado models.

Magna will manufacture the frames at its Cosma unit in St. Thomas, Ontario, and the Saltillo plant in Mexico. The St. Thomas plant has been manufacturing frames for General Motors (hereafter, GM) since 1999 and the Saltillo plant currently builds the GMT 900. The Canadian auto parts maker has not disclosed the value of the deal. Magna’s relationship with GM has suffered over the former’s acquisition of the Opel/Vauxhall business in Europe from the latter.

GM had granted a preliminary approval to sell a 55% stake in Opel to Magna, backed by Russia’s Sberbank. However, the Detroit-based automaker scrapped the deal recently in order to retain the unit. GM had been in a dilemma while choosing Magna as the preferred bidder for Opel. The German Government preferred Magna as it had promised not to close any of the four Opel plants in the state.

The Magna deal was supported by a €1.5 billion ($2.15 billion) German Government-backed bridge loan. However, GM was afraid of losing Opel's technology to the Russian car industry. Thus, if Magna had won the deal, GM may have lost Russia’s increasingly important market for its models, such as Chevrolet. Secondly, it also feared losing the Opel engineers, who are integral to GM's overall strategy.

Magna and Sberbank were planning to manufacture Opel cars in Russia with the biggest automaker in the nation – Gaz Group – jointly owned by the tycoon Oleg Deripaska and Avtovaz (partly owned by France’s Renault).
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Earnings Preview for AutoZone – Analyst Blog

Zacks Market Commentaries — Tue, 24 Nov 2009 19:30:31 +0000

AutoZone (AZO) is expected to release its sales and earnings results for the fiscal first quarter before the opening bell on Dec 8. The Memphis, Tennessee-based retailer of automotive replacement parts reported a 3.1% year-over-year fall in its profit to $236.1 million or $4.43 per share for the fourth quarter of its fiscal 2009 ended Aug 29, 2009.

With this, AutoZone has managed to come close to the Zacks Consensus Estimate profit of $4.45 per share. For the first quarter, Zacks Consensus Estimate for the company is $2.68 per share, a decline of 40%, compared to the recorded earnings in the previous quarter.

AutoZone is one of the nation’s leading specialty retailers of automotive replacement parts and accessories, operating in the Do-It-Yourself (DIY) retail, Do-It-for-Me (DIFM) commercial and other customer markets. As of Aug 29, 2009, the retailer had 4,229 stores in 48 states, the District of Columbia and Puerto Rico in the U.S. and 188 stores in Mexico.

The company uses its significant cash flow to open new stores every year and maintain a mid-single-digit square footage growth rate. In fiscal 2009, the company opened 140 new stores in the U.S. and 40 in Mexico. AutoZone is also focused on growing same-store sales by expanding private label offerings, which now account for 25% of sales.

AutoZone is the leader in the DIY retail market in the U.S. with a 13% share. The average age of cars on the road is rising, which is raising the demand for auto parts necessitated by greater repair needs. In the DIFM commercial segment, the retailer has a meager 1.3% market share. However, management is of the belief that the company can increase its share in the segment by focusing on improving marketing initiatives to boost sales.

Nevertheless, AutoZone has a high degree of reliance on its private label brands, which could mar its performance in the commercial business. Consequently, the company could face increased costs on account of higher staffing levels at the stores on top of rising occupancy costs. Further, several of AutoZone’s vendors have merged in recent years. This could materially affect the prices at which the company purchases its products.

Thus, we maintain our Neutral recommendation on the stock.
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CX Completes EURUS Construction – Analyst Blog

Zacks Market Commentaries — Tue, 24 Nov 2009 18:28:38 +0000

CEMEX, S.A.B. de C.V. (CX) announced the installation of the 167 wind turbines in the EURUS wind farm, which was completed on Nov 15, 2009 in Juchitan, Oaxaca, Mexico. EURUS has a capacity of 1.5 megawatts (MW) each built with ACCIONA Windpower technology. The wind farm represents an investment of US$550 million (approximately €367 million Euros). EURUS has 250 MW of power production capacity.

Cemex has been the promoter of this project developed by the joint venture between Cemex and ACCIONA. Part of the energy generated by EURUS will supply approximately 25% of Cemex's energy needs in its Mexican cement plants. ACCIONA financed, constructed and manages the wind farm.

The installation of wind turbines in the park was initiated in July 2008 and the wind turbines were connected to the electrical grid in February 2009. After the conclusion of the assembly of the wind turbines, the wind farm will be operative.

EURUS is located in Juchitan, in the Southern Mexican State of Oaxaca in a 2,500 hectare area in the Tehuantepec Isthmus, an area well-known for its wind resources.

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.

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Mexico Sets Spectrum Auction Rules – Analyst Blog

Zacks Market Commentaries — Tue, 24 Nov 2009 15:20:15 +0000

The Mexican government has finally announced the bidding rules to kick off the upcoming wireless spectrum (radio bandwidth) auction in the country. The Mexican telecom regulator Cofetel released details of radio-electric spectrum to be offered to the qualified bidders through two separate auctions. However, no specific date of the auction has been announced.

In the first auction, Cofetel will offer nine blocks of frequencies ranging from 1850 to 1990 megahertz (MHz) across eight of Mexico’s nine wireless operating regions including the capital Mexico City. The regulator will also offer seven blocks of spectrums between 1710 MHz and 2170 MHz band in the second auction which will cover all nine operating regions.

Technical specification of the two acutions will be released between Jan 6 and Jan 8, 2010. Interested bidders need to get approval from the Mexican antitrust watchdog Federal Competition Commission (CFC). Eventual winners at the second auction (1710 MHz and 2170 MHz) will get nationwide coverage and secure the necessary bandwidth frequency that supports 3G wireless services, enabling a wider range of advanced services (high-speed transmission of voice, data, and video).

The impending spectrum auction, which was announced in late 2007, was delayed due to prolonged negotiations between the CFC, Cofetel and the Mexican Communications and Transportation Ministry. The auction is aimed at fostering growth of incumbent operatros while opening the door for new wireless entrants which will enable more competitive services in the country.

With approximately 74% mobile penetration, the Mexican wireless market still offers ample opportunity for growth vis-à-vis the other major markets in Latin America. Despite the economic headwinds, the country’s cellular market continues to grow at a respectable pace. Through its largest subsidiary Telcel, America Movil (AMX) dominates the Mexican wireless market with roughly 72% share facilitated by its well-known brand, extensive distribution network and nationwide coverage.

Spanish telecom giant Telefonica’s (TEF) Movistar is the second-largest player in the Mexican wireless market with 20% share. Movistar is desperately seeking more bandwidth capacity to roll out 3G services in Mexico City which will enable it to more effectively compete with Telcel.

Both America Movil and Telefonica will be the principal bidders in the forthcoming spectrum auction. The other leading participant in the bidding war is expected to be Mexico’s largest media company Grupo Televisa (TV) which is gearing up to offer wireless services in Mexico through its cable unit Cablevision. Moreover, smaller domestic mobile operators like Grupo Iusacell and NII Holdings’s (NIHD) Latin American mobile unit Nextel Mexico may also bid at the auction.

The upcoming spectrum auction is designed to open the Mexican wireless telephony market to more competition and reduce monopolistic trends in this industry. Moreover, it will further boost mobile phone demand in Mexico driven by the wider access to advanced data applications enabled by 3G technology. This will help operators to lure subscribers by offering premium applications (including bundled services) on high-speed network, thereby creating opportunity to boost data revenue growth.
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Novavax, Inc. (NVAX) Prices Offering Of Common Stock

QualityStocks — Tue, 24 Nov 2009 15:06:53 +0000

Novavax, Inc. priced an offering of common stock at $3.30 per share. The company is offering 6.8 million shares and estimates that net proceeds to the company will be $21 million after underwriting expenses and other costs. Piper Jaffray & Co. and Lazard Capital Markets LLC are underwriting the offering, and can offer an additional [...]

Money Supply on Fire, Spreads to Gold

Frank Holmes — Tue, 24 Nov 2009 06:00:00 +0000

While in San Francisco to speak at the Hard Assets Investment Conference, I sat down with Dow Jones MarketWatch reporter Laura Mandaro to discuss the topic on a lot of investorsrsquo; minds these days mdash; gold. I highlighted some factors for Laura, including the effect rising money supply can have on gold prices. Money supply is on fire in the E-7 and G-7 mdash; theyrsquo;re just printing awayhellip;Unless money supply shrinks dramatically in the G-20 countries and interest rates rise dramatically in the G-20 countries, I think gold is going to go through its 1980 inflation-adjusted price levels. E-7 is a classification wersquo;ve created for the emerging worldrsquo;s most-populous countries ndash; the well-known BRIC countries (Brazil, Russia, India and China), plus Indonesia, Pakistan and Mexico. We believe that demographics are a key growth driver for developing countries, and that by monitoring the E-7, we gain valuable insights and can be early in spotting important new trends. All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. #09-821

TV to Launch Wireless Service – Analyst Blog

Zacks Market Commentaries — Mon, 23 Nov 2009 20:02:53 +0000

Grupo Televisa S.A. (TV) has decided to explore the wireless communications market. Televisa is the largest media company in Mexico as well as in the Spanish-speaking world. Its cable TV subsidiary Cablevision will start providing mobile phone services in Mexico from the first quarter of 2010. Televisa has already started its own telecom business. On May 9, 2007, the Mexican Ministry of Communication and Transportation granted Cablevision permission to offer fixed telephony services through its network. As of now, Cablevision offers digital cable television services, broadband Internet connection, high-definition television services and video-on-demand products.

Televisa is a dominant force in the Mexican media business. The company is almost a monopoly with around 70% of the Mexican open television market. Televisa has a stable customer base in many different areas, including television broadcasting, pay television network, publishing, and radio. Cablevision will try to leverage this long-established customer base to explore its new wireless services venture. Furthermore, Televisa has been expanding to more stable and developed markets in the U.S. and in Europe.

The Mexican wireless services market is highly competitive. America Movil S.A.B. de C.V. (AMX) is the dominant player in this market commanding approximately 70% share. Telefonica S.A. (TEF) is the other major competitor. Mexican cable operator Megacable also decided to enter this market in early 2010. Cablevision already provides data and long-distance services solutions to carriers and other telecommunications service providers through its fiber-optic network in Mexico and the U.S.
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DrStockPick.com Stock Report! 11/23/09, HCEI, MILR, OCCF, MITK, IGLB, CX

Dr. Stock Pick — Mon, 23 Nov 2009 18:31:49 +0000

Dr Stock Pick HOT News & Alerts! _______________________________________ FREE Daily Stock Alerts From DrStockPick.com _______________________________________ Monday Nov 23, 2009 DrStockPick.com Stock Report! ************************************************************** Healthy Coffee International, Inc. (Other OTC: HCEI.PK) has established offices in Australia, New Zealand, Japan, Canada, Pilipinas, Sweden, UK, and many more countries to achieve the company’s short term goal of $1 million a month in sales. Healthy Coffee [...]

The Best Energy Investments in the World

Contrarian Profits — Mon, 23 Nov 2009 15:00:37 +0000

Brian Hunt, editor in chief of Stansberry’s free online investment digest, a href="http://www.thedailycrux.com/"The Daily Crux/a, interviewed Marin [Katusa, Casey Research]to get his take on where oil prices are headed for the long-term... the regions where investors and traders should focus their dollars... and some of his favorite energy companies with massive upside.

Exponential Growth, Finite World – Analyst Blog

Dirk Van Dijk — Fri, 20 Nov 2009 21:27:04 +0000

I want to talk about the challenge of exponential growth in a finite world. This is a concept that while on its surface seems easy to get, most people don’t fully grasp it.

Any growth rate that is positive will lead to a doubling in size eventually -- the higher the growth rate, the quicker the doubling. A quick "back of the envelope" method of figuring it out is known as the rule of 70. If you divide a growth rate into 70, it will roughly give you the time for something to double. Thus if something is growing at 2% a year, then it will double in about 35 years, at 5% only 14 years, etc. If you want to be more precise, you can always use your Y^x button on your calculator, but the rule of 70 will do for this discussion.

Clearly, exponential growth is what we are looking for when we invest -- better known as compound interest -- and it is vital to anyone’s financial health that they stay on the right side of it. People who get on the wrong side -- for example, by carrying a credit card balance -- are eventually headed towards financial oblivion. If that is you, then your best investment is probably not one of the stocks or ETFs that I recommend, it is paying down you damm Visa bill.

It is also why I try to watch the downside when I make investment decisions. It is far more important to avoid 50% losses than it is to have a 50% gain. After all, if you had a 50% gain in one year, but in the next year you suffered a 50% loss, at the end of two years that dollar would have turned into just $0.75 -- a 25% loss.

However, far more important to the world is the dark side of exponential growth. Let's start with the obvious one: population growth. The table below comes from Wikipedia, but is based on UN data. Note that from 1750 to 1800, the world population grew from 791 million to 978 million -- an increase of 187 million, or 0.4% per year. From 1850 to 1900, it grew from 1.262 billion to 1.650 billion -- an increase of 388 million or at 0.53% per year.

Thus, even very small growth rates can result in some very large increases extended long enough, and as the base grows, the absolute increase gets larger each year even if the rate of increase stays the same. Now look at what has happened more recently. From 1950 to 1999, world population increased by 3.457 billion, more than doubling from 2.521 billion, an increase of 1.78% per year. Lately we have seen a slowdown in the growth rate; from 1999 to 2008 it was just 1.29% per year, but that has meant an increase of 729 million in just nine years, or 92% of the entire world population in 1750.

Looking forward, the U.N does see a further reduction in the rate of growth, to just 0.68% per year, or almost back down to the growth rate in the very earliest days of the Industrial Revolution. But the base is so much larger, the absolute increase is 2.2 billion, or almost the world population of 1950. The effect is that a long-term graph of world population looks like a picture of a rocket launch. And unless you believe in the Mayan calendar or the equally silly "end times" nonsense, this is going to cause some very big problems (not that the end of the world in 2012 wouldn't be a very big problem on its own).

Now look at where the growth is coming from. The combined populations of North America (Mexico is included in the Latin American numbers, so basically the US and Canada) and Europe are actually expected to fall from the current 1.069 billion to 1.020 billion. All of the growth is coming from Asia, Africa and Latin America.

The only thing that can keep up with exponential growth is something that itself grows exponentially. Fortunately, the one thing that grows exponentially at a very fast rate is computing power, which in turn allows for technological advances. So far, technology has managed to hold off the worst of the problems that one might expect. After all, this analysis is not exactly original. It was first made by Thomas Malthus back before world population hit the 1 billion mark.

However, you can eat potato chips, not computer chips. One of the things that technology has done is level the playing field, so that people in Asia and eventually Africa will have the same shot at success as people in the U.S. and Europe. They can see how we live, and surprise, surprise -- they would prefer to live the way we do, and are increasingly able to do so. As they do, the economic growth opportunities will be huge.

That is why I like the emerging markets story so much. However, given the challenges of trying to research foreign firms who might be best positioned to take advantage of these trends, it probably makes sense to use ETFs such as the I-shares MSCI Emerging Market Fund (EEM) or more country-specific variants like the Claymore China Small Cap ETF (HAO) or the Wisdom Tree India Earnings ETF (EPI).

One of the things that has been absolutely key to our ability to have so much higher living standards today than back in, say, 1850 is that we use a lot more energy.

So let’s take a look at energy consumption per capita (the data I’m using comes from here if you want to investigate further). In 2005, people in North America used the equivalent of 8157.9 kilograms of oil per year (kgoe/y) per person, up from 7942.9 kgoe/y in 2000. Thus while our rate of increase in energy consumption was just 0.54% per year, it was on a high base so the absolute increase was 215 kgoe/y over that time.

Now look at Asia (excluding the Middle East). In 2000, they were using 865.2 kgoe/y, and by 2005 it was up to 1051.5 per year. That is an increase of 3.98% per year, or to go back to the rule of 70, it means that if it keeps up Asia’s energy consumption per capita will double by 2022. Combine that with a population that is expected to grow at 0.6% per year, and Houston, we have a problem.

However, note that the absolute increase in energy use per capita in Asia was just 186 kgoe/y, or just 86.5% of the increase in North America, despite the far higher growth rate. However, if the relative growth rates continue, that will not last. If we extrapolate out the growth rates of 2000 to 2005 then by 2015, Asia’s per capita consumption will grow to 1,553.0 kgoe/y, an increase of 501.5, while the absolute increase in North America will be "only" 451.4 kgoe/y.

Put another way, right now we use 7.76x as much energy per person as in Asia (keep in mind these figures include relatively rich countries like Japan and South Korea, as well as basket-cases like Burma and Bangladesh), and by 2015 that ratio will fall all the way down to 5.54x as much.

Now, the peak year for actual oil discovery in the world was in 1964, and as you pump oil out of the ground it is gone. Once you reach the point where you have pumped half the original oil in a field, it is basically impossible to increase the annual output from that field without causing serious damage that eventually results in that oil being trapped forever. Most of the currently producing fields are past their peak. As the International Energy Agency (IEA) found last year:

"Output from the world's oilfields is declining faster than previously thought, the IEA said in its annual report. Without extra investment to raise production, the natural annual global crude oil depletion rate is 9.1%. The findings suggest the world will struggle to produce enough oil to make up for steep declines in existing fields, such as in the North Sea, Russia and Alaska. The effort will become even more acute as prices fall and investment decisions are delayed. Even with investment, the annual rate of output decline is 6.4." (See here for full story.)

Now the situation is better for natural gas (NG) than it is for oil, but eventually that will run out as well. However, we have much more time thanks to the new shale plays here in the U.S. We need to shift to more usage of NG as a bridge towards the eventual goal of producing most of our energy from renewable sources like wind and solar. But given the tiny fraction of the world’s energy they now represent, we will need many years of very fast growth in them to make a substantial dent in world energy needs.

Natural gas also has the benefit of being located here in North America, rather than in rather unstable and hostile areas of the world, the way oil is.

The U.S. cannot continue to run massive trade deficits with the rest of the world. The trade deficit is the source of our external debt, not the fiscal deficit. Our external debt is now (as of 6/30/09) at $13.454 trillion -- up from just $7.744 trillion five years ago. That is a growth rate of 11.7% per year, and is clearly not sustainable (that might be overstating it since it is a gross number; we do hold some debts of other countries that offsets it in part). Still, even if the net growth rate is half that amount, it is clearly unsustainable, and is one of the reasons the dollar is going to be under long-term pressure.

Putting this all together it seems clear to me that the price of energy must continue to rise over the long term. Companies that are going to be able to increase their production of oil, such as Petrobras (PBR) are going to be exceptionally well positioned.

While natural gas should see a big growth in demand, it is not a perfect substitute for oil. Still, big gas producers like EnCana (ECA) have a very bright long-term future. I would also note that what I am saying about oil also holds true for other commodities. Energy and commodities are going to be the real stores of value and of wealth over the next few decades.
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Grainger Boosted by Acquisitions – Analyst Blog

Zacks Market Commentaries — Thu, 19 Nov 2009 21:10:14 +0000

W.W. Grainger Inc. (GWW) reported a 3% year-over-year drop in October sales. (October this year had one less selling day compared to October 2008.) The company benefited from a 2% positive contribution from the businesses in Japan and India, 1% from the acquisition of Imperial Supplies and 2% from favorable foreign currency translation. Excluding the impact of acquisitions and currency exchange, Grainger’s daily sales in October were down 8% from last year.

The company witnessed a 7% decline in daily sales in the U.S., as demand remained weak across all end markets. These results include sales from Imperial Supplies, which the company acquired in mid-October. Excluding this acquisition, U.S. daily sales were down 8%.

In the Canadian (Acklands-Grainger) division, daily sales were up 5% due to favorable foreign exchange. However, the division’s daily sales were down 7% in local currency due to continued weakness in the Canadian economy.

Sales of Grainger’s other businesses increased 177%, primarily driven by incremental sales from acquisitions in Japan and India, along with sales growth in Mexico, Puerto Rico, China and Panama.

Grainger anticipates November sales to be flat or up modestly from last year’s level. The company expects sales to be in a range of down 2% to up 1% for the fourth quarter. Full-year sales are expected to come in 9% to 10% below the 2008 level. The company forecasts fourth quarter EPS of $1.13-$1.23 and full-year EPS of $5.10-$5.20.

Further, Grainger provide guidance for 2010. The company is forecasts 2010 revenue to be up 4%-9% year-over-year. Earnings for 2010 are anticipated in the range of $5.30 to $5.80 per share. Grainger expects a 3% sales contribution and 5 cents per share of earnings growth from acquisitions made in 2009.

Acquisition

Grainger announced an all-cash acquisition of Alliance Energy Solutions. The company expects the acquisition to be accretive to earnings by approximately 1-2 cents per share in 2010.

Alliance Energy Solutions is a provider of turn-key energy-efficient retrofits. Grainger said that this is its first service-based acquisition in the U.S. With this acquisition, Grainger can provide value added services to complement its deep product line around lighting products. The company did not disclose other terms of the deal.
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Kimber Resources Inc. (KBX) Updates Mineral Resource Estimates

QualityStocks — Wed, 18 Nov 2009 17:47:49 +0000

Kimber Resources Inc. issued an update on the resource potential of its gold and silver mine at its 100% owned Monterde mine in the Sierra Madre region of Mexico. The company said that the base case total mineral resource estimate for the Carmen deposit was 700,000 ounces of gold and 37 million ounces of silver. [...]

Costco Wholesale Corporation – Growth And Income – Zacks Rank Buy

Alex Kolb — Wed, 18 Nov 2009 05:00:00 +0000

Costco Wholesale Corporation (COST) recently posted October net sales of $5.68 billion, a 7% increase over last year's $5.30 billion. Comparable sales spiked 5% year-over-year.

Company Description

Costco Wholesale Corporation operates an international chain of membership warehouses, mainly under the "Costco Wholesale" name. The company currently operates 562 warehouses, including 409 in the United States and Puerto Rico, 77 in Canada, 21 in the United Kingdom, 7 in Korea, 6 in Taiwan, 9 in Japan, 32 in Mexico and 1 in Australia. Costco also operates Costco Online at www.costco.com and at www.costco.ca in Canada. The company plans to open an additional five new warehouses (including the relocation of one warehouse to a larger and better-located facility), prior to the end of calendar 2009.

Recent Events

In recent news, it was reported that Costco will stop carrying Coke products due to a dispute over prices as the retail giant is trying to win over customers with low prices, while Coca-Cola Co. (KO) is working hard to maintain profits amid a recessionary environment.

Solid Sales

Costco recently posted October net sales of $5.68 billion, a 7% increase over last year's $5.30 billion. Comparable sales spiked 5% year-over-year.

Competitive Income

In early October, the company declared a quarterly dividend of 18 cents per share, which was paid out on November 6. The dividend translates into an industry-leading yield of 1.2%.

Bullish Forecasts

Analysts polled by Zacks are upbeat on earnings. For the fiscal year ending August 2010, the Zacks Consensus Estimate of $2.87 per share was increased from $2.71 over the past 60 days. For the following year, Zacks analysts are calling for $3.22 per share, up from the 2 months-ago level of $3.00.

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Goldcorp Expands in Mexico – Analyst Blog

Zacks Market Commentaries — Tue, 17 Nov 2009 20:31:24 +0000

The world’s second largest gold producer by market value, Goldcorp Inc (GG) is acquiring gold miner Canplats Resources Corp for about C$238 million ($229 million) to establish a network of satellite mines around its Penasquito gold project in Mexico. Each Canplats share would be exchanged for 0.074 of a common share of Goldcorp and an interest in a new exploration company.

The offer values Canplats at about C$3.60 ($3.46) per share based upon the closing price of Goldcorp shares on Nov. 13. The offer represents a premium of about 41% over the C$2.55 million ($2.45 million) closing price of Canplats shares. The transaction is expected to close in January 2010.

The Boards of Directors of both Goldcorp and Canplats have approved the deal. However, a two-thirds majority of Canplats outstanding shareholders are required to vote in favor of the offer for it to conclude. Canplats has agreed to pay a termination fee of C$7.2 million ($6.92 million) if the transaction is not completed.

To increase mining and exploration activities and expand gold reserves, Goldcorp, like the largest gold company in the world and its major rival Barrick Gold (ABX), is acquiring junior gold companies. Goldcorp plans to acquire and spin off all of Canplats' assets -- except its Camino Rojo project -- into a new gold-exploration company. Goldcorp will retain a 9.9% interest in the new spin-off, while existing Canplats shareholders will own the remaining 90.1%. The new company will hold interests in certain early-stage exploration properties located in the Durango and Chihuahua states of Mexico and C$10 million ($9.6 million) in cash.

Camino Rojo is located near Goldcorp's Penasquito mine, which is expected to reach commercial production next year. The acquisition has expanded Goldcorp’s Mexican asset base. In its last quarter results, Goldcorp had raised its 2009 production outlook and chopped its cost guidance for the full-year 2009. Gold production for 2009 has been raised to 2.4 million ounces from the 2.3 million ounces projected in July.

Goldcorp has also lowered its forecast for 2009, bringing the total cash costs to about C$312 ($300) an ounce, which includes revenue from silver and copper byproducts, from C$380 ($365) an ounce forecast in May. Goldcorp is developing new mines to benefit from higher prices for gold.

However, the company is exposed to foreign exchange risk as it pays most costs in local currencies and sells metal in US dollars, hurting profits when currencies such as the Mexican peso and Canadian dollar rise, in spite of the company selling more gold at higher prices.
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Bristow Group Inc. – Value – Zacks Rank Buy

Tracey Ryniec — Tue, 17 Nov 2009 05:00:00 +0000

Bristow Group Inc. (BRS) has surprised on estimates 3 out of the last 4 quarters by an average of 10.50%. The company is trading at 11.7x forward earnings.

Company Description

Bristow Group is one of the largest providers of helicopter services in the world. Its primary customers are in the offshore energy industry in the North Sea, Nigeria, the Gulf of Mexico, Australia, Brazil, Russia and Trinidad. The company provides transportation, maintenance and search and rescue services.

Bristow Surprised by 39.39%

On Nov 4, Bristow Group reported its fiscal second quarter and surprised on the Zacks Consensus Estimate by 26 cents per share. Earnings per share rose 19.5% to 92 cents from 77 cents in the year ago period. Analysts were expecting just 66 cents.

Revenue was virtually unchanged from the second quarter of 2008 at $291.6 million compared to $291.7 million in 2008.

While the operating environment is still challenging in the energy industry, the company saw good operating results in Latin America, Nigeria and Australia during the quarter.

In Australia, the company won new business from several customers and also implemented cost cutting measures which boosted results. Nigeria is also a challenge because of the political environment.

Results in the Gulf of Mexico also fell from the previous quarter but the company said it wasn't as impacted as some of its competitors due to an upgrade in its air fleet which allowed it to serve projects further offshore in deeper water.

Bristow is expecting a turnaround in the energy industry, and therefore its business, by next year.

Zacks Consensus Estimates Jump

Given the big beat in the fiscal second quarter, covering analysts have been scrambling to raise estimates.

The fiscal third quarter Zacks Consensus is up 2 cents in the last week to 70 cents per share. The fiscal 2010 consensus also rose to $2.94 from $2.84 per share in the last 7 days with 2 out of 8 analysts raising during that time.

Value Fundamentals

Bristow Group is a Zacks #1 Rank (strong buy) stock. It has a price-to-book of 0.93. The company has a solid 5-year average return on equity (ROE) of 11.86%.

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NuStar Closes Public Offering – Analyst Blog

Zacks Market Commentaries — Mon, 16 Nov 2009 16:02:45 +0000

NuStar Energy L.P. (NS) announced the closing of its 5,750,000 common units of public offering, representing $52.45 per unit limited partner interest. Of this, 750,000 units were sold to underwriters. Total net proceeds from the public offering were $289 million, including the additional common units sold.

The partnership expects to use the proceeds of the public offering for general partnership purposes, including potential future acquisitions and growth capital expenditures. Net proceeds include the general partner’s − NuStar GP Holdings LLC (NSH) − proportionate capital contribution of $6.15 million. Pending the use of the proceeds for other purposes, the partnership intends to apply some or all of the net proceeds to reduce outstanding borrowings under its revolving credit facility.

NuStar Energy L.P. is a publicly traded limited partnership, with 8,417 miles of pipeline, 82 terminal facilities, four crude oil storage tank facilities and two asphalt refineries with a combined throughput capacity of 104,000 barrels per day. One of the largest asphalt refiners and marketers in the U.S. and the second largest independent liquids terminal operator in the nation, NuStar has operations in the United States, the Netherlands Antilles, Canada, Mexico, the Netherlands and the United Kingdom.

Read the full analyst report on "NS"
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Zacks Investment Research

Stable Authoritarianism

Robert Amsterdam — Mon, 16 Nov 2009 14:47:34 +0000

From time to time, La Russophobe forwards us links to what they are publishing. This posting on subnational authoritarianism in particular is quite interesting. Writing in the Russian Analytical Digest, Vladimir Gelman argues that the processes of political recentralization of...

NVAX, PWRM, DrStockPick.com Stock Report! Novavax Inc. and Power 3 Medical Products Inc.

Dr. Stock Pick — Mon, 16 Nov 2009 14:13:53 +0000

Dr Stock Pick HOT News & Alerts! _________________________________________ FREE Daily Stock Alerts From DrStockPick.com _________________________________________ Monday November 16, 2009 DrStockPick.com Stock Report! NVAX, PWRM ************************************************************** NVAX, Novavax Inc. NVAX is a clinical-stage biotechnology company, creating novel vaccines to address a broad range of infectious diseases worldwide, including H1N1, using advanced proprietary virus-like-particle (VLP) technology. The company produces potent VLP-based recombinant vaccines utilizing new and [...]

Zacks Bull and Bear of the Day Highlights: Infosys, Myriad Genetics Inc., American International Group, Citigroup, Bank of America – Press Releases

Zacks Market Commentaries — Mon, 16 Nov 2009 13:55:18 +0000

For Immediate Release

Chicago, IL – November 16, 2009 – Zacks Equity Research highlights Infosys (INFY) as the Bull of the Day and Myriad Genetics Inc. (MYGN) the Bear of the Day. In addition, Zacks Equity Research provides analysis on American International Group (AIG), Citigroup (C) and Bank of America (BAC).

Full analysis of all these stocks is available at http://at.zacks.com/?id=5506

Here is a synopsis of all five stocks:

Bull of the Day:

We are upgrading Infosys (INFY) to an Outperform rating with a target price of $57. Through the ongoing economic downturn, the company has invested in Research & Development as well as intellectual property-based solutions. It continues to focus on large deals targeted at organizational transformation where there is a dearth of vendor talent.

The company continues to win new customers and manages to keep its order book healthy. It is increasing its presence in the emerging markets of Mexico, Brazil, China and India from where an increasing proportion of revenue can be sourced in the coming years.

Finally, its solid balance sheet and cash flow generation provides support to our estimates.

Bear of the Day:

Myriad Genetics Inc. (MYGN) reported first quarter fiscal 2010 earnings of 31 cents per share, which was below the Zacks Consensus Estimate by a penny. The company had earned 25 cents per share in the year-ago period.

Myriad Genetics spun off its therapeutics business in July 2009 to focus on molecular diagnostics going forward. Although the molecular diagnostics business is performing well, we remain concerned about the slowdown in revenue growth in recent quarters.

The competition confronting Myriad Genetics products in the biotechnology and genetics testing field is also a concern. We have an Underperform rating on the stock.

Infosys Technologies (INFY) – Bull of the Day

Zacks Market Commentaries — Mon, 16 Nov 2009 05:00:00 +0000

We are upgrading Infosys (INFY) to an Outperform rating with a target price of $57. Through the ongoing economic downturn, the company has invested in Research & Development as well as intellectual property-based solutions. It continues to focus on large deals targeted at organizational transformation where there is a dearth of vendor talent.

Finally, its solid balance sheet and cash flow generation provides support to our estimates.Zacks Investment Research

Nov 13: Trade Decifit Up – Economic Highlights

Zacks Market Commentaries — Fri, 13 Nov 2009 15:06:15 +0000

The Trade Deficit decreased to $36.5 billion in September from $30.8 billion in August. September exports increased by $3.7 billion to $132.0 billion, offset by the increase in imports by $9.3 billion to $168.4 billion. The Commerce Department provided the September figures of the trade balance of the U.S. relative to selected trading partners, in billions of dollars, with surpluses in Hong Kong ($1.9), Australia ($0.9), Singapore ($0.3), and Egypt ($0.3). Deficits were recorded, in billions of dollars, with China ($22.1), OPEC ($7.9),the European Union ($5.5), Mexico ($4.6), Japan ($4.1), Venezuela ($2.0), Nigeria ($1.9), Canada ($1.5), Korea ($0.8), and Taiwan ($0.7).

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Zacks Investment Research

Zacks Analyst Blog Highlights: Hewlett Packard Company, 3Com Corporation, Cisco Systems Inc., Wal-Mart Stores Inc. and GlaxoSmithKline, plc – Press Releases

Zacks Market Commentaries — Fri, 13 Nov 2009 12:30:00 +0000

For Immediate Release

Chicago, IL – November 13, 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: Hewlett Packard Company (HPQ), 3Com Corporation (COMS), Cisco Systems Inc. (CSCO), Wal-Mart Stores Inc. (WMT) and GlaxoSmithKline, plc (GSK).

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Here are highlights from Thursday’s Analyst Blog:

Hewlett-Packard to Acquire 3Com

Hewlett Packard Company (HPQ) is planning to take over networking gear maker 3Com Corporation (COMS). The acquisition, valued at $2.7 billion, enables HP to challenge networking leader Cisco Systems Inc. (CSCO) on its own turf.

HP’s current networking products, sold under the ProCurve brand, generate around $1 billion in annual sales (less than 1% of the company’s total revenue). The product line lacks competitive data center switches, which makes it hard to take market share from well-entrenched Cisco.

3Com's expertise is in networking products for data centers, which supports HP's ProCurve networking equipment. Although the company has seen better times, it has been beefing up its portfolio by utilizing its design capabilities in low-cost China. The company is, therefore, in a position to compete aggressively on price. 3Com’s challenges include its poor brand value in American and European markets and its weak position in these geographies.

The HP-3Com combination is therefore an ideal fit, in our opinion. If the deal closes, HP will acquire a new capability overnight, strengthen its position in China and grow at its competitor’s expense. 3Com will benefit from HP’s superior brand value and find a broader market for its new products.

Wal-Mart Sales Up in U.S., Europe

Wal-Mart’s net sales recorded a growth of 1.1% year over year to $98.7 billion, as a 1.2% expansion in Wal-Mart's U.S. segment coupled with a 1.6% increase in the International segment was partially offset by 0.7% decline in the Sam’s Club segment. The growth in International sales was driven by robust performance in the U.K., Mexico and Brazil, but was limited by unfavorable currency fluctuations.

The retailing behemoth, widely considered as a barometer of the country’s economy, said U.S. same-store sales dipped 0.5% year-over-year, while that for Sam’s Club rose by 0.1%.

Glaxo Reports Higher Revenues

GlaxoSmithKline, plc (GSK) reported third quarter income of 92 cents per American Depository Share (ADS), 3 cents below the Zacks Consensus Estimate. The company reported earnings of 94 cents in the year-ago period.

Third quarter 2009 revenue increased 3%, with growth being driven by strong performances in emerging markets (up 25%), Japan (up 19%) and Consumer Healthcare (up 8%). We were pleased to see growth in Consumer Healthcare revenue despite the global slowdown.

Meanwhile, US sales continued to be impacted by generic competition with revenue declining 12%. Sales of products like Imigran (down 74%), Lamictal (down 21%) and Requip (down 30%) and Wellbutrin XL (down 81%) kept declining.

Pharmaceutical product revenue increased 2% with sales being driven by Advair/Seretide (up 5%) and Relenza. Relenza benefited from continued orders from several governments for stockpiling.

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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.

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Zacks Investment Research

Telefonica Tops on Lighter Sales – Analyst Blog

Zacks Market Commentaries — Thu, 12 Nov 2009 18:05:41 +0000

Telefonica (TEF) reported third-quarter 2009 results with earnings per ADS of US$1.88, comfortably beating the Zacks Consensus Estimate of US$1.49. The Spanish telecom giant reported net income of €1.99 billion (US$2.85 billion), down 0.6% year over year, due to lower sales as a result of the beleaguered economy, especially in Spain.

Revenue

Consolidated revenue fell 5.7% year over year to €14.1 billion (US$20.2 billion). Revenue was impacted by weak contributions from domestic and European markets due to the recession. Latin America contributed 40% of the group revenues followed by Spain at 35% and Europe at 25%.

Result by Segments

Telefonica Espana

The company’s Spanish revenue declined 8.9% to €4.9 billion (US$7 billion), impacted by a reduction in mobile termination rates (inter-operator fees) and the economic downturn. Wireline business revenues fell 9.4% year over year to €2.9 billion (US$4.1 billion) while revenue from wireless operation declined 6.4% to €2.3 billion (US$3.3 billion).

Telefonica Europe

Revenue from Europe declined 5.5% year over year to €3.5 billion (US$5 billion), especially due to lower revenue from the UK operation. Reported revenue from O2 UK (the company’s UK wireless operation and highest contributor to European sales) was €1.7 billion (US$2.4 billion), down 7% over the year-ago quarter, due to competition and termination rate cuts. Revenue from Germany increased 5.5% while in the Czech Republic they declined 15.7%.

O2 UK continues to struggle, with declining revenues as the operator faces intense competition, especially from its biggest rival Vodafone (VOD). Competition is set to intensify in the British mobile market as the other two major carriers Deutsche Telekom (DT) and France Telecom ((FTE) have finalized an agreement to merge their UK operations. The integrated company will dethrone Telefonica as the largest wireless carrier in the UK.

Telefonica Latin America

Revenue from Latin America, which has been the principal growth engine for Telefonica in the past quarters, also fell 2.3% year over year to €5.6 billion (US$8 billion). This is due to revenue declines across key markets such as Brazil, Argentina and Chile. Revenue in Brazil (the largest market) declined 8.9% year over year to €2.2 billion (US$3.1 billion), due to weaker contribution from its Brazilian subsidiaries, Vivo and Telesp.

Telefonica continues to lead the Brazilian wireless market with approximately 30% market share. The company recently made an all-cash bid to acquire Brazilian telecom operator GVT Holding SA in an effort to expand its presence in the lucrative Brazilian telecom market.

Subscriber Results

At the end of the third quarter, total customer access points reached approximately 268.6 million, up 6.6% year over year. Subscriber accretion was driven by healthy growth in wireless, broadband and Pay TV services.

Total retail broadband access grew 9.8% year over year to 13.2 million, boosted by the rapid adoption of bundled services (dual or triple play service packages). Total wireless access reached 205.9 million, with roughly 5 million net additions made during the quarter, driven by contributions from Brazil, Germany, Mexico and the UK. Pay TV access was 2.5 million, up 15.1% year over year.

Spain exited the quarter with 47.3 million access lines and 24 million wireless customers. Total customer access in Latin America reached 163.7 million with nearly 3 million net additions in the quarter. Europe registered 48.6 million accesses (up 8% year over year), with the mobile customer base growing 7.3% year over year to 43.5 million.

Outlook

Telefonica has reaffirmed its financial guidance for 2009 as it expects continued increases in consolidated revenues with annual OIBDA growth projected in the range of 1 - 3%. Annual operating cash flow growth is expected in the range of 8 - 11%. Capital expenditure for 2009 is projected below €7.5 billion (US$10.2 billion), lower than 2008 level, as the company is increasingly focused on reducing spending to improve cash flow generation.

The company remains committed to expanding its 3G wireless business as it has reportedly begun a commercial roll-out of its HSPA+ technology based 3G mobile broadband network in Spain that offers peak downlink speeds of 21 megabits per second. Telefonica is also set to conduct 4G network trials in six countries across Europe and Latin America during the next six months.

Telefonica has expanded its handset portfolio with the recent launch of Palm Inc’s (PALM) Pre smartphone in the UK, Spain, Ireland and Germany. The company is also aggressively pursuing expansion initiatives into other emerging markets as it recently strengthened its foothold in China through an increased stake holding in China Unicom (CHU).

The company’s dominant position in the Spanish telecom market, attractive growth prospects in Latin America and healthy dividend payouts remain positive factors for investment considerations. However, we remain cautious with regard to Telefonica’s declining wireline business, aggressive acquisition strategy and highly leveraged balance sheet.
Read the full analyst report on "TEF"
Read the full analyst report on "VOD"
Read the full analyst report on "DT"
Read the full analyst report on "FTE"
Read the full analyst report on "PALM"
Read the full analyst report on "CHU"
Zacks Investment Research

DrStockPick.com Stock Report! 11/12/09, HCEI, MIL, MNTA, PSS, PALM, EPAY

Dr. Stock Pick — Thu, 12 Nov 2009 17:40:33 +0000

Dr Stock Pick HOT News & Alerts! _______________________________________ FREE Daily Stock Alerts From DrStockPick.com _______________________________________ Thursday November 12, 2009 DrStockPick.com Stock Report! ************************************************************** Healthy Coffee International, Inc. (Pinksheets:HCEI) announced the addition of Mr. Michael Sharp to its team of sales leaders. A native of Florida, Mr. Sharp has over 20 years of combined experience in the network marketing business, [...]

Wal-Mart Sales Up in U.S., Europe – Analyst Blog

Zacks Market Commentaries — Thu, 12 Nov 2009 16:15:45 +0000

Wal-Mart Stores Inc. (WMT) reported strong fiscal third-quarter earnings of 84 cents per share, which surpassed the Zacks Consensus Estimate of 81 cents. Earnings grew 9.1% year over year from 77 cents recorded in the year-ago quarter, and exceeded management’s guidance of 78 cents to 82 cents per share.

Wal-Mart’s net sales recorded a growth of 1.1% year over year to $98.7 billion, as a 1.2% expansion in Wal-Mart's U.S. segment coupled with a 1.6% increase in the International segment was partially offset by 0.7% decline in the Sam’s Club segment. The growth in International sales was driven by robust performance in the U.K., Mexico and Brazil, but was limited by unfavorable currency fluctuations.

The retailing behemoth, widely considered as a barometer of the country’s economy, said U.S. same-store sales dipped 0.5% year-over-year, while that for Sam’s Club rose by 0.1%.

Customers battered by the worst recession in decades are shopping more often in discount department stores such as Wal-Mart, as opposed to non discount-oriented retailers. However, the company remains affected by rising unemployment, which has adversely affected consumers' disposable incomes.

For the first nine months of the fiscal year, the company generated a robust free cash flow of $3.6 billion, compared to $2.3 billion in the year-ago period, primarily due to improved inventory management.

Moving forward, Wal-Mart lifted its guidance for the full year ending January 2010 after better-than-expected quarterly results, and now expects to post earnings of $3.57 to $3.61 per share, up from $3.50 to $3.60 per share predicted earlier. The Zacks Consensus Estimate, derived from 22 covering analysts, is currently pegged at $3.58 per share.

For the fourth quarter of the fiscal year, earnings are expected to range between $1.08 and $1.12 per share, in-line with the Zacks Consensus Estimate of $1.12. Same-store sales for Wal-Mart U.S. in the fourth quarter are expected to be flat, +/- 1%, while Sam’s Club same-store sales during the same period are also forecasted to be flat, +/- 1%.
Read the full analyst report on "WMT"
Zacks Investment Research

Zacks Analyst Blog Highlights: Southern Copper Corporation, Logitech International, Cisco Systems Inc., Microsoft Corp. and Koninklijke Philips Electronics NV – Press Releases

Zacks Market Commentaries — Thu, 12 Nov 2009 12:55:28 +0000

For Immediate Release

Chicago, IL – November 12, 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: Southern Copper Corporation (PCU), Logitech International (LOGI), Cisco Systems Inc. (CSCO), Microsoft Corp. (MSFT) and Koninklijke Philips Electronics NV (PHG).

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 Wednesday’s Analyst Blog:

Southern Copper’s Earnings Jump

Copper production in the quarter improved 1.3% to 120,240 tons from 118,657 tons, driven by higher production at the La Caridad mine in Mexico and the Peruvian mines, on the back of better ore grades. Molybdenum production increased 14.3% to 5,191 tons, compared to 4,541 tons in the year-ago quarter. Higher ore grades and recoveries lead to an increase of 631 tons at La Caridad and 734 tons production at the Cuajone mine in Peru. These increases were partially offset by 715 tons of lower production at the Toquepala mine in Peru due to lower ore grades.

Logitech Acquires LifeSize

Logitech International (LOGI) announced that it has agreed to acquire privately held LifeSize Communications of Austin, Texas for $405 million in cash. LifeSize is a global leader in high definition (HD) video communication solutions, with more than 9,000 video conferencing customers across 80 countries in large enterprises, small-to-medium businesses (SMBs) and public healthcare, education and government organizations.

The acquisition will enable Logitech to extend its leadership in video communication beyond the desktop.

Logitech and LifeSize plan to pursue existing and new relationships with unified communications, collaboration and VoIP industry partners and competitors to drive the development of an open eco-system for interoperable video communication.

LifeSize expects approximately $90 million in revenues in CY 2009, with CY 2010 revenues expected to grow between 40% and 60%. Logitech expects the acquisition to be neutral to slightly positive to its operating income (excluding acquisition-related charges) in FY 2011, ending March 31, 2011, and positive thereafter.

For a long time, videoconferencing was limited to big businesses that could afford to build expensive systems in their conference rooms. But videoconferencing has become more accessible because Internet connections are commonplace, video has become more efficient and the price has dropped for high-definition cameras and displays.

Now, many companies are trying to reach small businesses and individuals that previously used low-quality webcams on PCs. In the previous month, Cisco Systems Inc. (CSCO) announced its intension to buy Tandberg, a Norwegian video communications company, for $3 billion. Tandberg makes smaller and less expensive videoconferencing tools that can be fitted on desks.

Logitech engages in design, manufacture, and marketing of personal peripherals for personal computers and other digital platforms in Europe, the Middle East, Africa, the Americas, and the Asia Pacific. The company was founded in 1981 and is based in Apples, Switzerland. Major competitors include Microsoft Corp. (MSFT) and Koninklijke Philips Electronics NV (PHG).

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Southern Copper’s Earnings Jump – Analyst Blog

Zacks Market Commentaries — Wed, 11 Nov 2009 20:58:23 +0000

Southern Copper Corporation (PCU), one of the leading copper producers in the world, posted net earnings of 37 cents in the third quarter of 2009, better than the Zacks Consensus Estimate of 31 cents. Earnings jumped 78.6% from 21 cents sequentially while it declined 22.3% from 47 cents year on year. The company attributed lower costs for driving earnings. Operating costs decreased 15.8% year over year due to higher productivity.

Copper production in the quarter improved 1.3% to 120,240 tons from 118,657 tons, driven by higher production at the La Caridad mine in Mexico and the Peruvian mines, on the back of better ore grades. Molybdenum production increased 14.3% to 5,191 tons, compared to 4,541 tons in the year-ago quarter. Higher ore grades and recoveries lead to an increase of 631 tons at La Caridad and 734 tons production at the Cuajone mine in Peru. These increases were partially offset by 715 tons of lower production at the Toquepala mine in Peru due to lower ore grades.

Zinc production improved 3.5% during the quarter. The Charcas and Santa Barbara mines in Mexico produced higher ore grades. The refined zinc production was 4.2% higher for the same period as a result of the improved performance of the San Luis Potosi zinc refinery in Mexico.

Revenues of $1.15 billion for the quarter reflected a decline of 20% from the previous year on lower copper prices. Quarter on quarter, revenues increased 40% based on improved copper volumes and prices.

As of Sep 30, 2009, Southernin Copper had debt of $1.27 billion. We are concerned of the company’s high debt with cash and cash equivalent of just $413 million. Southern Copper believes that the copper market outlook remains strong for the next few years and anticipates further improvements in results. The company continues with the development of the Tia Maria project in Peru. The project is expected to increase annual copper production by 120,000 tons and is scheduled to commence operations in 2011. Another ongoing project is the Toquepala concentrator expansion in Peru, which is expected to increase annual output by 100,000 tons of copper per year and 3,100 tons of molybdenum per year, starting 2012. The company also continues the development of the El Arco project in Mexico, which is expected to have an annual production of 190,000 tons of copper and 105,000 ounces of gold.
Read the full analyst report on "PCU"
Zacks Investment Research

A Green Energy Investing Guideline

Investment U — Wed, 11 Nov 2009 16:03:54 +0000

A Green Energy Investing Guideline by Louise Harris, Investment U Research Typically, when investors think about making money from climate change, they think about buying shares of companies that specialize in biofuels or alternative or green energy. But those aren’t the only ways to profit from the green movement. Deutsche Bank Group (NYSE: DB) [...]

United Stationers Inc. – Value – Zacks Rank Buy

Tracey Ryniec — Wed, 11 Nov 2009 05:00:00 +0000

United Stationers Inc. (USTR) has surprised on the Zacks Consensus Estimate 4 consecutive quarters by an average of 28.24% as inventory reduction has boosted the bottom line. The company is trading with a forward P/E of 13.32.

Company Description

United Stationers distributes business products in the United States and Mexico from 65 distribution centers and 30,000 reseller customers.

The company provides over 100,000 items from 1,000 manufacturers, including technology products, traditional office products, janitorial and breakroom supplies, office furniture, and industrial supplies.

United Stationers distribution system allows it to ship overnight to customers in more than 90% of the United States and major cities in Mexico.

United Stationers Surprised by 45.26% in the Third Quarter

On Oct 29, United Stationers reported third quarter results and once again easily surprised on the Zacks Consensus Estimate. Earnings per share were $1.38 compared with the Zacks Consensus of 95 cents per share. The consensus, however, was based on only 1 covering analyst.

Sales fell by 6.8% to $1.25 billion from $1.34 billion. The global recession continues to impact the company's bottom line but there are glimmers of light among various product segments.

The office products and furniture categories saw a slower rate of year-over-year decline compared with the second quarter. The janitorial/breakroom segment saw growth due to H1N1 concerns and more focus by customers on flu-related products.

The weakest segment was the industrial supplies segment which saw sales slow due to distributor destocking and continuing weakness in U.S. manufacturing, oil and gas pipeline and commercial construction spending.

Outlook for 2009

The company has been managing its business during the recession by reducing inventories. United Stationers said it saw some stabilization in its business during the third quarter but is worried about continuing declines in employment and weak manufacturing. However, October sales tracked about even with the year ago period.

Flu-related products continue to give sales a boost.

Zacks Consensus Estimates Rise

Given the fourth big beat in a row, the 1 analyst has moved to raise estimates on the fourth quarter and the full year.

The fourth quarter Zacks Consensus Estimate jumped 9 cents to 85 cents in the last 30 days.

The 2009 Zacks Consensus Estimate jumped 16% to $3.77 from $3.25 over the same period.

Value Fundamentals

United Stationers is a Zacks #1 Rank (strong buy) stock. It is trading with a price-to-book of 1.82. The company also has a strong 5-year average return on equity (ROE) of 14.71%.

Zacks Investment Research

Pride Tops Despite Low Utilizations – Analyst Blog

Zacks Market Commentaries — Mon, 09 Nov 2009 20:28:27 +0000

Pride International Inc. (PDE) reported its third quarter results of 48 cents per share, compared to the Zacks Consensus Estimate of 42 cents and the year-earlier earnings of 82 cents. Before adjusting one-time items, the earnings were 45 cents.

While the earnings came in above expectations, they were significantly lower from the year-earlier level mainly due to lower utilization. The company’s deepwater and midwater fleets were experiencing lower utilization rates due to out-of-service time.

Revenue from Pride’s eight-rig Deepwater fleet was $191.8 million, down approximately 32% sequentially. Deepwater operating earnings also decreased nearly 43% sequentially to $71.8 million. The sequential decrease in revenue was primarily due to lower utilization level. Average dayrate for the Deepwater fleet was $343,200 during the quarter, compared to $338,500 in the last quarter. Utilization of the Deepwater fleet was 76%, compared to 95% in the last quarter and 98% in the year-earlier quarter. As of Sep 30, 2009, the company had 100% of the available rig days in its Deepwater segment under contract in 2009, 98% in 2010, 82% in 2011 and 67% in 2012.

Pride’s Midwater fleet, comprising 6 semi-submersible rigs, reported quarterly revenue of $98.2 million, down nearly 14% sequentially. The decrease was mainly due to out-of-service time. Operating earnings were $25.7 million, down nearly 30% sequentially. Average dayrate in this segment was $264,100, up from $253,800 in the preceding quarter. Utilization in the quarter reduced to 67% from 82% in the last quarter. Currently, the company has 65% of the available rig days contracted in the last quarter of 2009, 67% in 2010, 64% in 2011 and 35% in 2012.

Revenue from Pride’s 7 Independent Leg Jackup rigs – operating in India, the Middle East, West Africa, and Mexico – came in at $72.8 million during the quarter, up nearly 4% sequentially. Operating earnings were $32.6 million, up nearly 8% sequentially. Average dayrate in this segment was $123,100, up from $119,400 in the previous quarter. Utilization in the quarter was 92%, flat sequentially.

Cash balance at the end of the quarter stood at $957.5 million. Pride spent $224 million on capital programs in the quarter. The company expects to incur total capital expenditures in 2009 of approximately $1.2 billion, with an estimated $702 million relating to the construction of four ultra-deepwater drillships. At Sep 30, 2009, the completion of the four-rig program amounted to approximately $1.6 billion in capital expenditures. Debt-to-capitalization ratio at the end of the quarter stood at 22%.

The recently completed spin-off of the shallow-water GoM-focused business fully transforms Pride into a deepwater-centric offshore driller. And this is evidenced by the fact that 77% of the company’s 2009 year-to-date revenue is from its floating rig fleets. While the company’s healthy backlog position offers a high level of earnings and cash flow visibility, a further slowing in the pace of new contracting activity and lower utilization are likely to continue to weigh on the stock.
Read the full analyst report on "PDE"
Zacks Investment Research

Zacks Analyst Blog Highlights: EOG Resources Inc., Grupo Televisa S.A., OGE Energy Corp., Edison International and Dynegy Inc. – Press Releases

Zacks Market Commentaries — Mon, 09 Nov 2009 12:40:14 +0000

For Immediate Release

Chicago, IL – November 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: EOG Resources Inc. (EOG), Grupo Televisa S.A. (TV), OGE Energy Corp. (OGE), Edison International (EIX) and Dynegy Inc. (DYN).

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:

EOG Resources Remains Neutral

EOG Resources Inc. (EOG) reported third-quarter earnings of 81 cents per share, compared with the Zacks Consensus Estimate of 65 cents and a year-ago profit of $2.34. Before adjusting one-time items, earnings were 2 cents per share. Despite an increase in production volumes, earnings were down from the year-earlier level due primarily to significantly lower commodity price realizations.

Total volumes during the quarter increased approximately 4% year-over-year to 195.9 billion cubic feet equivalent (Bcfe), or 2,129 million cubic feet equivalent per day (MMcfe/d), 76% of which was natural gas and 24% liquids. Natural gas volumes decreased 3% year-over-year, led by an approximately 6% decrease in the U.S. volumes to 1,128 MMcf/d, and more than 2% decrease in Canadian volumes to 219 MMcf/d.

Grupo Televisa Reports Mixed Results

Grupo Televisa S.A. (TV), the largest media company in Mexico, reported mixed financial results for the third quarter 2009. Quarterly consolidated net revenue of $970 million was an improvement of 5.5% over the prior-year quarter. However, this was below the Zacks Consensus Estimate of $983 million.

The year-over-year increase in the top-line was mainly attributable to healthy revenue growth in Sky, Cable & Telecom, Programming Exports, Pay television Networks, and Other Business segments, partially offset by a fall in revenue in Publishing and Television Broadcasting segments.

OGE Energy Tops Expectations

OGE Energy Corp. (OGE) reported third quarter earnings per share (EPS) of $1.40, topping the Zacks Consensus EPS estimate of $1.34. However, EPS in the reported quarter came a dime short, compared to the year-ago EPS of $1.50.

Earnings were boosted in the reported quarter by strong results at Oklahoma Gas and Electric Company (OG&E), offset by cooler weather in the OG&E service territory, lower commodity prices in the Enogex midstream pipeline business and an increase in the number of shares outstanding.

Edison Pushes Past Estimate

Edison International’s (EIX) adjusted EPS of $1.09 in the third quarter of fiscal 2009 pushed past the Zacks Consensus Estimate of $1.05 by 4 cents. However, adjusted EPS for the quarter fell short of the year-ago $1.46 EPS.

On a GAAP basis, the company reported quarterly EPS of $1.23, compared to $1.33 in the year-ago quarter. The discrepancy between GAAP and adjusted EPS were due to non-cash accounting benefit from the final regulatory approval to transfer its Mountainview power plant to utility rate base.

Dynegy Sunk on Charges

Dynegy Inc. (DYN) has reported a net loss of $212 million, or 25 cents per share in the third quarter 2009, compared to a net income of $605 million, or 72 cents per share in the year-ago quarter. The net loss in the reported quarter was primarily driven by asset impairment charges and mark-to-market losses. The company recorded mark-to-market losses of $128 million ($78 million after tax), compared to mark-to-market gains of $889 million ($542 million after tax) in the year-ago quarter.

In the reported quarter, however, adjusted earnings rose to $388 million, compared to $269 million in the year-ago quarter. The growth was primarily driven by the sale and assignment of a multi-year power sales contract, higher capacity and tolling revenues and higher realized energy prices in the Midwest.

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Zacks Investment Research

Goldcorp’s Profit Doubled – Analyst Blog

Zacks Market Commentaries — Fri, 06 Nov 2009 15:15:00 +0000

Leading gold producer, Goldcorp’s (GG) adjusted net profit in the third quarter of 2009 more than doubled to 19 cents from last year’s 9 cents on higher gold prices and lower cash costs per ounce of gold. Reported earnings were also higher than the Zacks Consensus estimate of 15 cents.

However, on a GAAP basis, net earnings dropped 62% to 16 cents from 42 cents in the previous year due to a foreign exchange loss of $28.1 million. Revenues were up 25% to $691.9 million from $552.2 million in the previous year driven by a 12% rise in average realized prices to $968 per ounce from $865 per ounce in the year-ago quarter and a 9% increase in gold sales volumes to 601,500 ounces.

Gold production increased by 11% year over year to 621,100 ounces compared with 557,400 ounces in 2008 following higher production at the Red Lake and Porcupine mines in Canada, Wharf mine in US and El Sauzal mine in Mexico. Total cash cost of $295 per ounce of gold reflected a 15% decline from $346 per ounce in the same quarter of the previous year.

Operating expenses increased modestly by $24.3 million year over year, primarily as a result of increases in labour and planned maintenance costs. Long-term debt as of Sep 30, 2009 was $712.2 million, considerably higher than $5.3 million as of Dec 31, 2008. Goldcorp embarked upon external sources to finance its capital expenditure.

However, with cash and cash equivalent of $785.3 million as of Sep 30, 2009, higher debt should not be a major concern for Goldcorp. The Canadian gold miner is the world's second-largest by market value following the Toronto-based largest gold producer, Barrick Gold Corporation (ABX).

Goldcorp has raised its 2009 production outlook and chopped its cost guidance for the full year 2009. Gold production for 2009 has been raised to 2.4 million ounces, from the 2.3 million ounces projected in July. Last month, the company had begun producing metal concentrates at the Penasquito mine in Mexico. The project, which will yield gold, silver, lead and zinc, is on schedule to be commissioned by the end of this year.

Goldcorp has also lowered its forecast for 2009 bringing the total cash costs to about $300 an ounce, which includes revenue from silver and copper byproducts, from $365 an ounce forecast in May. Goldcorp is developing new mines to benefit from higher prices for gold.

However, the company is exposed to foreign exchange risk as it pays most costs in local currencies and sells metal in dollars, hurting profits when currencies such as the Mexican peso and Canadian dollar rise, in spite of the company selling more gold at higher prices.
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Zacks Investment Research

Zacks Analyst Blog Highlights: The DIRECTV Group, Inc., AT&T, Comcast Corporation, Dish Network Corp. and Time Warner Cable Inc. – Press Releases

Zacks Market Commentaries — Fri, 06 Nov 2009 12:30:58 +0000

For Immediate Release

Chicago, IL – November 6, 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: The DIRECTV Group, Inc. (DTV), AT&T (T), Comcast Corporation (CMCSA), Dish Network Corp. (DISH) and Time Warner Cable Inc. (TWC).

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Here are highlights from Thursday’s AnalystBlog:

DIRECTV Falls Short of Estimates

The DIRECTV Group, Inc. (DTV) reported revenues of $5.47 billion in the third quarter of 2009.

On a geographical basis, revenues from United States grew 9% to $4.7 billion due to solid subscriber and average revenue per unit (ARPU) growth. The company added 136,000 net subscribers to its customer base in the United States primarily due to the addition of AT&T (T) as a marketing partner and record demand for company’s premium services. ARPU of $85.32 increased 2.1% as programming package price increases, as well as higher service fees for certain services, were partially offset by more competitive promotions for both new and existing customers.

The company’s business in Latin America also demonstrated solid performance, posting a 16% increase in revenues and expanding its customer base to 162,000. This was driven by continued subscriber growth throughout the region, which more than offset the unfavorable impact related to weaker currencies in countries such as Brazil and Argentina.

Operating margin came in at 12.5% compared to 13.2% in the year-ago quarter. Net income came in at $366 million, essentially flat with the year-ago quarter. Earnings per share (EPS) came in at 37 cents, falling short of the Zacks Consensus Estimate of 39 cents, but up from 33 cents reported in the year-ago quarter due to a 12% reduction in average shares outstanding. These were the result of share repurchases made over the last year.

During the quarter, the company repurchased shares worth $943 million. The company also issued $2 billion of additional debt after retiring $583 million of existing debt and paying down $30 million under DIRECTV’s senior secured credit facility. The remaining outstanding $327 million of senior notes was repurchased in October 2009.

The company generated cash $1.1 billion of cash from operations. Free cash flow came in at $643 million. As of September 30, 2009, the company has cash and equivalents of $3.3 billion and long-term debt of $7.1 billion.

The DIRECTV Group is the world’s leading provider of digital television entertainment services. The company provides digital television service to more than 18.4 million customers in the United States and over 6.1 million customers in Latin America. DirecTV has subsidiaries in Brazil, Mexico and other countries in Latin America. Primary competitors for the company include Comcast Corporation (CMCSA), Dish Network Corp. (DISH) and Time Warner Cable Inc. (TWC).

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Zacks Investment Research

DIRECTV Falls Short of Estimates – Analyst Blog

Zacks Market Commentaries — Thu, 05 Nov 2009 21:44:41 +0000

The DIRECTV Group, Inc. (DTV) reported revenues of $5.47 billion in the third quarter of 2009.

On a geographical basis, revenues from United States grew 9% to $4.7 billion due to solid subscriber and average revenue per unit (ARPU) growth. The company added 136,000 net subscribers to its customer base in the United States primarily due to the addition of AT&T (T) as a marketing partner and record demand for company’s premium services. ARPU of $85.32 increased 2.1% as programming package price increases, as well as higher service fees for certain services, were partially offset by more competitive promotions for both new and existing customers.

The company’s business in Latin America also demonstrated solid performance, posting a 16% increase in revenues and expanding its customer base to 162,000. This was driven by continued subscriber growth throughout the region, which more than offset the unfavorable impact related to weaker currencies in countries such as Brazil and Argentina.

Operating margin came in at 12.5% compared to 13.2% in the year-ago quarter. Net income came in at $366 million, essentially flat with the year-ago quarter. Earnings per share (EPS) came in at 37 cents, falling short of the Zacks Consensus Estimate of 39 cents, but up from 33 cents reported in the year-ago quarter due to a 12% reduction in average shares outstanding. These were the result of share repurchases made over the last year.

During the quarter, the company repurchased shares worth $943 million. The company also issued $2 billion of additional debt after retiring $583 million of existing debt and paying down $30 million under DIRECTV’s senior secured credit facility. The remaining outstanding $327 million of senior notes was repurchased in October 2009.

The company generated cash $1.1 billion of cash from operations. Free cash flow came in at $643 million. As of September 30, 2009, the company has cash and equivalents of $3.3 billion and long-term debt of $7.1 billion.

The DIRECTV Group is the world’s leading provider of digital television entertainment services. The company provides digital television service to more than 18.4 million customers in the United States and over 6.1 million customers in Latin America. DirecTV has subsidiaries in Brazil, Mexico and other countries in Latin America. Primary competitors for the company include Comcast Corporation (CMCSA), Dish Network Corp. (DISH) and Time Warner Cable Inc. (TWC).
Read the full analyst report on "DTV"
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Zacks Investment Research

VGZ, DUSS, DrStockPick.com Watch List! for Thursday November 5, 2009, Vista Gold Corp. and Dussault Apparel Inc., DUSS.OB

Dr. Stock Pick — Thu, 05 Nov 2009 04:02:14 +0000

Dr Stock Pick HOT News & Alerts! _________________________________________ FREE Daily Stock Alerts From DrStockPick.com _________________________________________ DrStockPick.com Watch List! My Picks for Thursday November 5, 2009, are: ************************************************************** VGZ, Vista Gold Corp. VGZ is an international gold mining company based in Littleton, Colorado, with a plus 20-year history of gold exploration, development and operations. ** VGZ reported an update on activities at the Paredones Amarillos [...]

Grupo Aeroportuario Descends – Analyst Blog

Zacks Market Commentaries — Wed, 04 Nov 2009 21:30:19 +0000

Last week, Grupo Aeroportuario del Pacifico, S.A.B. de C.V. (PAC) reported gloomy results for the third quarter ended September 30, 2009.

During the quarter, revenues declined 4.8% year over year and reached MXN$40.2 million. The decrease was primarily due to the decrease in aeronautical revenues. Revenues from aeronautical services declined 5.8% and reached MXN$37.8 million, mainly as a result of a decline of MXN$42.4 million in passenger charges, which was offset by an increase in airplane landing fees and airplane parking fees. Non-aeronautical service declined 1.3% to MXN$2.3 million.

Cost of services declined 22.4% to MXN$56.1 million; as a percentage of revenues, cost of services decreased 560 basis points. Per workload unit ("WLU"), cost of services declined MXN$6.1 million from MXN$44.3 million in the third quarter of 2008 to MXN$38.2 million in the third quarter of 2009.

As a result of the decrease in total revenues, the cost of government concession taxes decreased 4.7%, while the technical assistance fees increased 3.3%.

Operating income increased 1.8%. EBITDA increased 3.3%, due to the higher rate in decrease of costs as compared to the decrease in revenues.

Net income decreased 18.0%, MXN$68.8 million lower that the figure reported in the third quarter of 2008, mainly due to the decline in revenues caused by lower passenger traffic.

Airlines all over the world are facing difficulties, particularly in Mexico and primarily due to the outbreak of swine flu during the last several months. Moreover, declining business and leisure travel is affecting airlines' business to a larger extent.

The Mexican economy could face a tight monetary period in the upcoming quarters as the Bank of Mexico recently lowered its benchmark interest rate by just 25 basis points to 4.5%, reducing the scope for further rate cuts. The Mexican economy is rapidly slowing down and the trend is likely to continue in the short term. Thus, it certainly would be a difficult year for PAC, Grupo Aeroportuario Del Sureste SA de CV (ASR), and Grupo Aeroportuario del Centro Norte S.A. de C.V. (OMAB).
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Zacks Investment Research

The Andersons Inc. – Value – Zacks Rank Buy

Tracey Ryniec — Tue, 03 Nov 2009 05:00:00 +0000

The Andersons, Inc. (ANDE) is scheduled to report third quarter earnings after the bell on Nov 4. Despite a slowdown in the agriculture sector analysts are bullish on the quarter and expect 2009 year over year earnings growth of 23.80%.

Company Description

The Andersons is an agribusiness company operating with five business segments: Grain and Ethanol Group; Rail Group; Plant Nutrients Group, Turf & Specialty Group and Retail Group.

The company has operations in 14 states including Puerto Rico and also has rail equipment leasing interests in Canada and Mexico.

Zacks Consensus Estimates Rise

The Andersons has missed on estimates 3 out of the last 4 quarters but analysts are bullish ahead of the Nov 4 third quarter results as both the quarterly and full year estimates have been rising.

The third quarter Zacks Consensus Estimate climbed 3 cents to 39 cents in the last 30 days.

The full-year Zacks Consensus Estimate is up 1 penny to $2.22 over the last month.

Grain Was the Standout Segment in the Second Quarter

Revenues fell to $811 million from $1.1 billion in the second quarter of 2008 but with sky high fertilizer prices in 2008, year over year comparisons will be hard to make. Two thirds of the income in the second quarter of 2008 came from the Plant Nutrient Group.

The grain business, however, had its third best second quarter mainly due to good space income. The ethanol business was also profitable in the quarter.

Economic conditions slammed the Rail Group as rail traffic fell sharply. Income fell to $0.6 million from $4.9 million in the year ago period.

In the second quarter results, the company believed the worst of the price declines in the nutrient group were behind it. We'll find out this week with the third quarter results.

Value Fundamentals

The Andersons is a Zacks #1 Rank (strong buy) stock. It has a forward P/E of 14 and a price-to-book of 1.47. The company has a stellar average 5-year average return on equity (ROE) of 16.66%.

Additionally, the company also pays a dividend with a current yield of 1.10%.

Zacks Investment Research

Home Shopping Latino, Inc. (HSPG.PK) Taps into Hispanic Market with Shopping Channel

QualityStocks — Mon, 02 Nov 2009 18:41:32 +0000

Home Shopping Latino Inc., doing business as Viva Telecompras, is an all Spanish language TV channel and online shopping website. The company will broadcast from Miami, Florida and expand its market via airtime and website broadcasts. The network will sell products provided by third-party wholesalers such as beauty care, vitamins, and in particular gemstones and [...]

Newmont’s Profit Picking Up – Analyst Blog

Zacks Market Commentaries — Fri, 30 Oct 2009 15:00:00 +0000

Gold producing company Newmont Mining Corporation (NEM) recorded a net income of 79 cents per share in the third quarter, beating the Zacks Consensus Estimate of 60 cents. Year on year, earnings grew by a robust 88% on strong gold and copper prices as well as lower costs.

Revenues for the quarter climbed 50% to over $2 billion, driven by a 29% rise in gold sales to $1.6 billion and about a fivefold increase in copper revenues to $396 million. Newmont sold 1.7 billion ounces of gold in the quarter, up 15% year over year. The company sold 141 million pound of copper compared with 44 million pound in the same period of the previous year.

On a regional basis, gold sales were slightly above expectations as higher-than-expected sales at Yanacocha in Peru, Batu Hijau in Indonesia and Australia were partially offset by lower sales in Nevada. However, costs applicable to sales per ounce were lower than expected in Nevada, Australia, Peru and Indonesia, partially offset by higher costs at Ahafo in Ghana and at La Herradura in Mexico. For full year 2009, the company anticipates total gold sales of 5.2 to 5.4 million ounces, at $400 to $440 per ounce. During the third quarter, gold sales at Nevada were 505,000 ounces at costs applicable to sales of $541 per ounce.

Gold sales at Yanacocha in Peru were 285,000 ounces at costs applicable to sales of $294 per ounce. The company increased its 2009 gold sales outlook to 1.0 million - 1.05 million ounces from 0.975 million − 1.02 million ounces estimated earlier at Yanacocha. The company also increased its 2009 outlook for costs applicable to sales to $300 − $320 per ounce from the previous guidance of $290 − $310 per ounce, primarily due to higher royalties and workers' participation costs.

Gold sales during the third quarter in Australia/New Zealand were 289,000 ounces at costs applicable to sales of $526 per ounce. Newmont lowered its sales guidance expectation to 1.4 and 1.5 million ounces from its previous expectation of 1.5 to 1.6 million ounces in Australia/New Zealand, primarily related to lower expected gold sales at Boddington on the back of a delay in start-up. Costs of sales are expected at $500 to $520 per ounce, up from the initial guidance of $460 to $500 per ounce.

Gold and copper sales at Batu Hijau in Indonesia were 93,000 ounces and 64 million pounds, respectively, at costs applicable to sales of $178 per ounce and 50 cents per pound, respectively. Gold and copper sales from this mine are expected at 225,000 ounce to 250,000 ounce and 210 million pounds to 230 million pounds, respectively, in 2009.

Due to an assumed higher gold price than copper, the company lowered its expected costs applicable to sales for gold to be $200 to $220 per ounces from $280 to $320. Gold sales at Ahafo in Ghana were 136,000 ounce at costs applicable to sales of $446 per ounce. At Ahafo, Newmont maintained its gold sales guidance of 500,000 ounces to 525,000 ounces and costs applicable to sales between $425 and $450 per ounce in 2009. For the full year 2009,

Newmont expects gold sales to be about 5.2 million ounces, at the lower end of the previously estimated range due to the extended start-up of Boddington mine. For 2009, Newmont expects gold sales of 1.9 and 2.0 million ounces at Nevada, up from the initial guidance of 1.8 to 2.0 million ounces. The company has narrowed its outlook for 2009 costs applicable to sales to between $400 and $425 per ounce for gold from $535 to $575 per ounce.

For 2010, Newmont expects gold production to improve 5% to 10%, primarily as a result of higher production from Boddington in Australia and Batu Hijau in Indonesia, partially offset by lower production in Nevada and Yanacocha in Peru. The company also expects 2010 costs applicable to sales to be modestly higher by about 5%, partially as a function of higher expected energy costs and adverse changes in exchange rates.

We maintain our Neutral recommendation on the stock.
Read the full analyst report on "NEM"
Zacks Investment Research

Approval for Merck-SGP Merger – Analyst Blog

Zacks Market Commentaries — Fri, 30 Oct 2009 14:15:22 +0000

Recently, Merck (MRK) and Schering-Plough (SGP) received approval from the US Federal Trade Commission (FTC), the Swiss Competition Commission and the Canadian Competition Bureau for their proposed merger. However, the transaction has yet to receive approval from other regulators, including China and Mexico.

The deal was approved by the European Union antitrust regulators last week. Shareholders of both the companies have already approved the deal in August. Merck expects to close the proposed merger by year end.

The FTC approval has come with the condition that both companies will sell some assets. As a result, Schering-Plough has agreed to sell its rolapitant drug, meant to be used for the treatment for nausea and vomiting in chemotherapy patients to Opko Health Inc.

In addition, Merck agreed to sell its interest in Merial Ltd, an animal health joint venture, to its French partner, Sanofi-Aventis (SNY). In September 2009, Merck had already sold its interest in Merial to Sanofi-Aventis. The FTC decision was taken to avoid Merck from becoming a dominant player in the markets for animal-health and anti-nausea drugs.

As a reminder, earlier this year Merck had decided to acquire Schering-Plough in a $41.1 billion deal, which would create the world's second-largest producer of prescription medicines, with about $42 billion in annual sales. The merged company would be placed behind Pfizer (PFE), which acquired Wyeth for $68 billion.

Merck is faced with significant patent challenges over the next four years while Schering has relatively little exposure to patent expirations through 2013. We feel that the deal is a clear attempt by Merck to address certain impending patent issues and pipeline failures. Merck is also contending with softening sales of some of its key drugs including Gardasil that have hampered earnings in the last few quarters.

Given the minimal product overlap and relative ease in combining the cholesterol business, we would expect the combination to provide significant synergistic opportunities with combining sales, marketing, research and other back-office functions. The deal should also help geographically diversify revenue sources as Schering currently has about 70% of revenues coming from overseas, versus only 44% for Merck.
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Zacks Investment Research

AMX Tops, Subscriber Growth Dips – Analyst Blog

Zacks Market Commentaries — Thu, 29 Oct 2009 16:45:00 +0000

America Movil (AMX) reported results for third-quarter 2009 with earnings per ADS of 86 cents edging past the Zacks Consensus Estimates of 85 cents while increasing 22.6% from the year-ago earnings per ADS of 70 cents. Net profit surged 50.6% year over year to 18.7 billion pesos (US$1.4 billion) or 0.57 pesos per share. This healthy growth was fuelled by higher revenue and lower financing costs which fell 82.5% year over year due to gains stemming from favorable exchange rate swings.

Revenue & EBITDA Latin America’s largest wireless carrier continues to register a double-digit revenue growth as evident from the 16.9% year over year increase in consolidated revenue in the quarter to 99.8 billion pesos (US$7.5 billion), driven by 19.5% growth in service revenue. Revenue growth was supported by healthy business momentum across 3G wireless and broadband Internet businesses.

Consolidated EBITDA for the quarter was 40.4 billion pesos (US$3.1 billion), up 15.9% year-over-year, while EBITDA margin equated to 40.5%, stable year over year. Subscriber Trend Healthy earnings for the quarter was partially offset by a deceleration in subscriber growth, especially due to lackluster contribution from the core Mexican operation as overall economic conditions remain challenging.

The company registered 4 million new wireless subscriber additions in the quarter, reflecting a sharp decline from 7.3 million reported the year-ago quarter. Total wireless subscriber base increased to 194.3 million (up 12.6% year over year) with the Brazilian and US operations being the major contributors. Brazil continues to lead the growth with 1.8 million net additions followed by US with 712,000 and Mexico with 280,000 additions.

The economic recovery in Brazil boosted strong subscriber accretion in the quarter. Fixed-line customer base reached 3.8 million. Results by Key Markets Mexico, America Movil’s largest market, posted 5.2% year over year growth in revenues that reached 35.6 billion pesos (US$2.7 billion) driven by strong data revenue growth. Mexican ARPU (average revenue per user) declined marginally year over year while churn (customer switch) remained flat.

Revenue from the Brazilian operation, the other major market, increased 4.6% year over year while churn increased from the year-ago quarter. Brazilian ARPU fell 10.1% year over year. Revenue for the Argentina, Paraguay and Uruguay cluster increased 18.4% year over year while ARPU and churn both increased from the year ago quarter. The company’s US operation (Tracfone) posted 13.8% year over year revenue growth while churn increased from the prior year quarter.

Revenue increased year over year across Chile , Ecuador and Peru while declining in Columbia and Panama cluster. Opportunities & Challenges America Movil remains committed to improve service offerings to its customers as the company continues to invest aggressively to expand its GSM based cellular networks in Latin America.

Momentum is also building up for 3G services as increased penetration of 3G data services catapulted data revenue growth by 58% in the third quarter. The company’s 3G services now cover 70% of the population in its coverage markets in Latin America . Leveraging its 3G network, the company launched iPhone 3GS in July 2009 in six countries across Central and South America.

America Movil’s 3G network has already covered 16 major Mexican cities with 60% penetration of the population expected through 2009. America Movil’s prospects in wireless are also likely to be boosted by its low priced prepaid wireless services (“Straight Talk") which is being sold through Wal-Mart (WMT) in the US.

The company’s Tracfone US subsidiary is currently offering a $45 monthly unlimited calling plan which is aggressively positioned against the plans offered by other major low-cost carriers such as MetroPCS (PCS), Leap Wireless (LEAP) and Sprint (S). Although America Movil has a commanding position in the Mexican wireless market, it is gradually losing market share due to stiff competition from the Spanish telecom giant Telefonica (TEF).

Additionally, America Movil remains significantly challenged by the intensely competitive Brazilian wireless market. While we remain encouraged by the company’s sustainable earnings power, consistent revenue growth and increased penetration of 3G data services, we are concerned about the competitive and regulatory issues across Latin America which may continue to constrict subscriber growth levels moving forward.
Read the full analyst report on "AMX"
Read the full analyst report on "TEF"
Read the full analyst report on "PCS"
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Read the full analyst report on "LEAP"
Read the full analyst report on "WMT"
Zacks Investment Research

Stericycle Tops Zacks Estimate – Analyst Blog

Zacks Market Commentaries — Thu, 29 Oct 2009 15:45:02 +0000

Waste management service provider Stericycle Inc. (SRCL) earned 55 cents in the third quarter, beating the Zacks Consensus Estimate by 2 cents. Earnings were up about 24% year-over-year, while it improved 9% sequentially on higher revenues and margins.

Revenues showed an increase of 7.5% year over year to $46.5 million helped by recent acquisitions, which added $19.3 million in the quarter. Stericycle completed six acquisitions during the first nine months of this year, which included the recently acquired Healthcare Waste Solutions’ operations in Minnesota and Wisconsin, besides Omni Medical Waste in Grand Rapids, Michigan.

Operating costs decreased to 52.7% of total sales in the quarter from 55.6% in the same period of the previous year following which gross profit expanded to $140.9 million from $123.0 million in the same quarter last year. As a percent of revenue, gross profit improved to 47.3% from 44.4% in the year-ago quarter. However, selling and administrative expenses increased to 18.9% of total sales in the quarter from 18.1% last year.

At quarter end, Stericycle’s cash and cash equivalent was $14.3 billion. With total debt of $768,041, Stericycle‘s debt to capital ratio improved to 40% in the quarter from 49% in the previous quarter. The company’s net cash position (long-term debt including current portion less cash) is a surplus of $812 million or $9.35 per share, which is a huge positive associated with the stock.

Stericycle is currently the largest waste management company in Canada, Mexico , Ireland and the UK , and is gaining scale in Argentina. The company entered the Canadian, Irish and UK markets through the purchase of large local competitors and developed an initial footprint in Mexico and Argentina through joint ventures.

The competitive dynamics in these markets are similar to the U.S. as the company is typically competing against many small regional entities as opposed to a handful of large companies. American Ecology Corp. (ECOL) and Waste Management Inc. (WMI) are Stericycle’s major competitors.
Read the full analyst report on "SRCL"
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Zacks Investment Research

Tara Minerals Corp. (TARM.OB) is “One to Watch”

QualityStocks — Wed, 28 Oct 2009 14:32:23 +0000

Tara Minerals Corp. is a US-based resource company mainly focused on searching, acquiring, exploring and developing high-quality non-precious metals and minerals projects with potential for economic commercial value. Currently, the company has a 100% interest in the Pilar de Mocoribo, Don Roman and Lourdes, Centenario, and Las Nuvias mining properties. All of Tara Minerals’ properties [...]

Bemis Posts Higher Profits – Analyst Blog

Zacks Market Commentaries — Tue, 27 Oct 2009 22:30:01 +0000

Bemis Company, Inc. (BMS) reported third quarter earnings of 48 cents per share, above the Zacks Consensus Estimate of 39 cents and year-ago EPS of 43 cents. Earnings growth in the quarter was primarily driven by strong operating performance in the Flexible Packaging business, helped by improved sales mix and successful cost controls by the company.

Quarterly sales dropped 8.7% year over year to $898.9 million. The second quarter acquisition of the South American rigid packaging operations of Huhtamaki Oyj contributed 1.9% to the third quarter sales. This was more than offset by a negative currency translation effect of 3.6%. The remaining 7.0% decline in sales came from lower volumes and selling prices, partially offset by improved sales mix.

Sales in the Flexible Packaging segment were down 7.5% compared to last year, as positive contribution from acquisition and improved sales mix were more than offset by lower unit volumes, decline in selling prices and unfavorable foreign currency translation impact. However, the segment posted a 24% improvement in operating profit, reflecting successful cost management and increased sales volumes in value-added product lines.

Pressure Sensitive Materials segment sales fell 14.6% due to lower volumes in all the product lines and a negative foreign currency translation effect. The segment’s operating profit was down 66.7% as a result of lower volumes and unfavorable currency effects.

During the quarter, Bemis signed a definitive agreement to acquire the Food Americas operations of Alcan Packaging from Rio Tinto plc (RTP), for $1.2 billion. Bemis will acquire 23 Food Americas flexible packaging facilities in the U.S., Canada, Mexico, Brazil, Argentina and New Zealand. The acquisition, which is expected to close by the end of 2009 or early 2010, will be accretive to the company’s earnings in 2010.

In order to raise capital for the acquisition, Bemis issued of $800.0 million of public bonds. The company raised another $203 million through a public stock offering of 8.2 million common shares. As a result, the company’s debt-to-capitalization ratio stood at 40.4% at the end of the reported quarter, compared to 26.3% at the end of the previous quarter.

Based on its year-to-date operating performance, Bemis raised its earnings guidance for the full year. The company now expects 2009 EPS in the range of $1.81-$1.86, compared to the previous guidance of $1.68-$1.75. For the fourth quarter, the company anticipates EPS between 40-45 cents, compared to 33 cents reported in the fourth quarter of previous year.
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Another Reason Oil is Headed Higher

QualityStocks — Tue, 27 Oct 2009 19:43:20 +0000

People have been scratching their heads wondering why the price of oil has held up relatively well this year in the face of a global slowdown and decreased energy demand in the United States. Fundamentalists will point to continued strong demand for oil from emerging markets like China and decreasing oil output from non-OPEC producing nations [...]

Difficult Year for Mexican Airlines – Analyst Blog

Zacks Market Commentaries — Tue, 27 Oct 2009 15:15:20 +0000

Grupo Aeroportuario del Sureste, S.A.B. de C.V. (ASR) announced results for the three-month periods ended September 30, 2009. For the third quarter of 2009, total passenger traffic declined year-over-year by 13.86%. International passenger traffic declined 19.01% while domestic passenger traffic declined by 8.36%.

On April 28, 2009 the World Health Organization announced the outbreak of the H1N1 Influenza in Mexico . As a result, total year-over-year passenger traffic declined 2.1% in April, 50.7% in May, 28.4% in June, 16.7% in July, 12.8% in August and 10.7% in September.

The 19.01% decline in international passenger traffic resulted mainly from a decline of 20.23% in international traffic at the Cancun airport. The 8.36% decline in domestic passenger traffic resulted mainly from declines of 13.94%, 11.33%, 18.12%, 32.50% and 38.06% at the Merida , Veracruz , Villahermosa , Cozumel and Tapachula airports, respectively.

Net income declined 27.01% to MXN$170.74 million from MXN$233.91 million in the previous quarter. Earnings per common share for the quarter were MXN$0.57, or earnings per ADS (EPADS) of US$0.42. This compares with earnings per share of MXN$0.78, or EPADS of US$0.58 for the same period last year.

Total revenues declined 2.67% year-over-year to MXN$714.7 million. This was mainly due to declines of 3.09% in revenues from aeronautical services principally as a result of the 13.86% decline in passenger traffic and 1.85% in revenues from non-aeronautical services, principally as a result of the 0.20% decrease in commercial revenues.

Total operating costs and expenses decreased 2.23% year over year. Operating margin for the quarter declined to 38.95% from 39.22% in the same quarter last year. This was mainly the result of declines of 2.67% in revenues, which more than offset a decrease of 2.23% in costs during the period.

Airlines all over the world are facing difficulties, primarily due to the collapse of the global economy. Declining business and leisure travel is affecting airlines' business to a larger extent.

Moreover, the Mexican economy could face a tight money period in the upcoming quarters as the Bank of Mexico recently lowered its benchmark interest rate by just 25 basis points to 4.5%, reducing the scope for further rate cuts. The Mexican economy is rapidly slowing down and the trend is likely to continue in the short term. Thus, it certainly would be a difficult year for ASR, Grupo Aeroportuario del Pacifico, S.A.B. de C.V. (PAC) and Grupo Aeroportuario del Centro Norte S.A. de C.V. (OMAB).
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ACIP Recommends Glaxo’s Cervarix – Analyst Blog

Zacks Market Commentaries — Mon, 26 Oct 2009 19:29:53 +0000

GlaxoSmithKline (GSK) recently received a positive recommendation from the U.S. Centers for Disease Control and Prevention's (CDC's) Advisory Committee on Immunization Practices (ACIP) for its cervical cancer vaccine, Cervarix. The CDC has recommended that Cervarix should be given to girls and young women to protect against cervical pre-cancers and cervical cancer caused by oncogenic human papillomavirus (HPV) 16 and 18.

The committee also recommended that the vaccine should be used in 11 and 12 year old girls specifically and in girls and young women who have not yet been vaccinated. Cervarix, which received approval in the U.S. recently, is indicated for the prevention of cervical pre-cancers and cervical cancer associated with oncogenic HPV types 16 and 18 for use in girls and young women (aged 10-25).

The ACIP’s recommendation should help increase adoption of the vaccine, which is slated to hit the U.S. market later this year. Cervarix is approved in 100 countries around the world, including the 27 member states of the European Union, Australia, Brazil, South Korea, Mexico and Taiwan.

The U.S. approval of Cervarix will open up a large market for the product, which recorded £125 million in global sales in 2008. Once launched, Glaxo will compete directly with Merck’s (MRK) Gardasil. Although Merck beat Glaxo to the market, we believe Cervarix comparatively offers a broader base, has more potent protection and could achieve peak sales of approximately £1.5 billion.

The American Cancer Society estimates that about 11,000 women will be diagnosed with cervical cancer and 4,000 women will die from the disease in 2009 in the U.S. Globally, more than 500,000 women are expected to be diagnosed with cervical cancer and 280,000 women to die from it every year.
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Skechers Surpasses Zacks Estimate – Analyst Blog

Zacks Market Commentaries — Fri, 23 Oct 2009 17:25:42 +0000

Skechers USA Inc. (SKX), the designer, marketer and distributor of footwear, recently reported its third quarter results that topped the Zacks Consensus Estimate.

Skechers’ quarterly earnings of 52 cents a share surpassed the Zacks Consensus Estimate of 34 cents, but fell 13.3% year over year from 60 cents delivered in the prior-year quarter. The company returned to profitability after posting a loss of 13 cents in the second quarter of this year.

Net sales for the quarter climbed 0.5% to $405.4 million driven by a high single-digit growth in international business and a double-digit improvement in retail operations as well as robust growth in online business.

The sustained focus on new line of products, opening of additional Skechers retail stores and distribution channels, and the development of new international distribution agreements in India and Mexico, should facilitate the increase in sales and profitability.

The international wholesale business rose by 7% during the quarter, whereas domestic wholesale business fell by 10%. Total domestic and international retail sales surged 20% with a 7% rise in retail same-store sales.

Gross profit jumped 7.1% to $183.7 million, whereas gross profit margin expanded 280 basis points to 45.3% driven by fewer store closures and prudent inventory management. Cost of sales dipped 4.3% to $221.6 million.

Based on superior sales (compared to the previous two quarters), increased retail same-store sales, and growing operations in Brazil, China, Hong Kong and Chile, Skechers remains on track to deliver positive results in the fourth-quarter 2009 and 2010.

During the quarter, Skechers opened five retail stores, and plans to open six more in the remainder of the year with additional 20 to 25 retail stores planned for 2010. At the end of the quarter, the company had 244 company-owned retail stores.

The company also opened nine distributor-owned or licensed Skechers retail stores during the quarter. At the end of the quarter, there were 102 distributor-owned or licensed retail stores.

Skechers ended the quarter with cash and cash equivalents of $246.4 million with total long-term debt of $16.3 million and shareholders’ equity of $716.7 million. Capital expenditure for the quarter was nearly $4.3 million. Management expects capital expenditure for the remainder of the year in the range of $5 million to $7 million.
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Ryder Beats, Remains Challenged – Analyst Blog

Zacks Market Commentaries — Thu, 22 Oct 2009 22:27:00 +0000

Ryder System Inc. (R) reported adjusted earnings per share (EPS) of 50 cents for the third-quarter 2009, exceeding the Zacks Consensus Estimate of 45 cents. However, adjusted EPS declined 60% year over year from $1.26, due to lower earnings from the Fleet Management Solutions (FMS) segment.

The supply chain, warehousing and transportation solutions provider reported adjusted net income from continued operations of $28.2 million, down from $71.2 million a year ago, due to sustained declines in the commercial rental business, full service lease and used vehicle sales in the FMS segment.

Consolidated revenues from continued operations, which declined 20% year over year to $1.26 billion, continue to be affected by lower fuel prices and unfavorable exchange rate swing. Operating revenue, which is revenue excluding FMS fuel and all subcontracted transportation, declined 13% year over year to $1.04 billion.

Following is a snapshot of segment-wise results:

Fleet Management Solutions (FMS):

Revenue from the FMS segment declined 22% from last year to $911.9 million as fuel service sales declined 49%, partly due to declining fuel prices. Contractual revenue (includes full service lease and contract maintenance) declined 3% due to adverse exchange rate movements and fleet reductions by customers as a result of prolonged freight recession. Lower pricing, reduced utilization and a weak economic environment affected commercial rental revenue, which declined 25% year over year. Reported pre-tax earnings from this segment declined 64% from last year to $37.4 million, impacted by lower global commercial rental and global full service lease results coupled with higher pension expense and declined used vehicle revenue.

Supply Chain Solutions (SCS):

Total revenue and operating revenue (revenue excluding subcontracted transportation) both fell 22% year over year to $298.7 million and $249.6 million, respectively. This decline is attributable to decreased automotive and other freight volumes, reduced fuel volume and prices as well as unfavorable currency exchange swing.

Pre-tax earnings fell 4% from last year to $15.1 million as a result of $1.1 million in operating loss associated with European markets. Ryder plans to exit this market by the end of 2009.

Dedicated Contract Carriage (DCC):

The DCC segment posted revenue of $120.6 million, reflecting a 14% decline from the year-ago quarter. Operating revenue (revenue excluding subcontracted transportation) also declined 15% to $116.9 million. These results were impacted by decreased fuel costs and freight volumes. Pre-tax earnings of this segment declined 26% to $9.8 million as result of lower revenue and higher safety and insurance costs.

Ryder provides a comprehensive suit of transportation and supply chain solutions, leveraging its sate-of-the-art technologies, skilled logistics professionals, and proven processes. The company's technologies and solutions improve overall transportation efficiencies in a cost-effective manner while adding value to customers. Ryder was recently selected by the Inbound Logistics magazine (a leading trade magazine) as the top logistics provider in the US.

Ryder continues to win business contracts from major international companies. The company recently sealed a major contract from Shell Oil Company to provide carriage and transportation management service in the Gulf of Mexico region, representing 80% of Shell's oil and gas production in the US. Moreover, Procter & Gamble (PG) awarded Ryder a contract to manage a part of its logistics network in the US and Mexico.

Ryder is reducing capital spending as a measure to cope with the ongoing economic slump. The company has truncated its capital expenditure forecast for 2009 to $550 million from its previous expectation of $940 million. This represents a significant decline from $1.27 billion spent in 2008. Capital expenditure for the first nine months of 2009 was $468.3 million.

The prevailing macroeconomic headwinds coupled with sustained freight recession are expected to continue affecting the company's operating performance of the FMS and SCS segments for the remainder of 2009. Moreover, lease sales and renewals continue to remain under pressure due to sustained fleet reductions by the customers. Commercial rental and used vehicle sales will be negatively affected by the economic volatility.

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Philip Morris Tops, Ups Guidance – Analyst Blog

Zacks Market Commentaries — Thu, 22 Oct 2009 22:06:29 +0000

Earlier today, cigarette manufacturer and marketer Philip Morris International Inc. (PM) reported better-than-expected third-quarter results, benefiting from price increases in some markets. Earnings per share came in at 93 cents, 3 cents above the Zacks Consensus Estimate.

On a year-over-year basis, Philip Morris’ earnings per share was flat (excluding a tax benefit of 8 cents in 2008), while net revenues declined 4.6% to $16.6 billion, attributable to unfavorable currency translations and weak results in the European Union (EU), Eastern Europe and Middle East & Africa (EEMA) markets.

Revenue, Volumes & Margins

On an organic basis (excluding currency and acquisitions), revenues increased 4.1% driven by favorable pricing. Cigarette volume was down almost 3% year-over-year to 219.3 billion units, mainly because of declines in EU, EEMA and Asia. The first two regions were adversely affected by the economic crisis (especially in Spain and Ukraine) and unfavorable comparisons due to a strong third quarter in 2008, while Asian volumes suffered from unfavorable trade inventory movements in Pakistan. This was partly offset by strength in Latin America & Canada, buoyed by the acquisition of Rothmans Inc.

Organic cigarette shipment volume declined 4.0%. Marlboro volumes declined 4.3% due to the cigarette market contracting in the EU and EEMA, primarily from the effects of the economic crisis in Spain and the weakening of the premium segment in Russia and Ukraine. Nevertheless, Philip Morris gained market share in Algeria, Argentina, Belgium, Brazil, Bulgaria, Canada, the Dominican Republic, Egypt, Hungary, Korea, Mexico, Pakistan, the Philippines, Portugal, Russia, Slovakia, Switzerland, Turkey and the Ukraine.

The gross margin remained flat at 25.8%, while the operating margin expanded 62 basis points to 17.5%. Interest expense increased 220% from $69 million to $221 million due to a higher average debt level.

Dividends & Share Buyback

Recently, Philip Morris announced a 7.4% increase in its quarterly dividend to 58 cents per share ($2.32 per share annualized). During the quarter, the company repurchased 31.5 million shares for $1.5 billion.

Guidance

Concurrent with the earnings release, management raised guidance for 2009. Annual earnings are expected to be in the range of $3.20 to $3.25 per diluted share versus previous guidance of $3.10 to $3.20. Guidance includes an unfavorable currency impact of 52 cents per share.

Excluding currency, diluted earnings per share are expected to increase by approximately 12% to 14%, including a pre-tax charge of $135 million ($93 million after-tax or $0.04 per share) related to the Colombian Investment and Cooperation Agreement and excluding the impact of any potential future acquisitions, asset impairment and exit costs, and any other unusual events.
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Amgen Drug Approval Delayed – Analyst Blog

Zacks Market Commentaries — Wed, 21 Oct 2009 19:34:19 +0000

Yesterday, Amgen Inc (AMGN) announced that the US Food and Drug Administration (FDA) delayed the approval of its osteoporosis drug denosumab, with a proposed trade name of Prolia.

In response to the Biologic License Applications (BLA) filed by Amgen in Feb 2009 for Prolia, the Complete Response Letter (CRL) issued by the FDA requested several items, including further information on the design of Amgen's previously submitted post-marketing surveillance program. The FDA has asked the company to develop a strategy to evaluate the risks of Prolia. However, the agency did not ask for further clinical trials, which would have resulted in a longer delay.

Management believes that it can satisfy the queries of the FDA. The company intends to market Prolia for the treatment and prevention of postmenopausal osteoporosis (PMO) and bone loss in patients undergoing hormone ablation for either prostate or breast cancer.

Based on encouraging late-stage results, we believe the candidate, once launched, has the potential to capture a major share of the osteoporosis market. The osteoporosis market represents huge commercial potential with global sales of osteoporosis medication coming in at about $8.4 billion in 2008, including vitamin brands and drugs such as GlaxoSmithKline’s (GSK) Boniva and Merck's (MRK) Fosamax. Osteoporosis affects about 10 million Americans, while nearly 45 million people are at risk globally. Denosumab, a twice-a-year injection, functions differently from the currently available medicines by targeting a protein that activates bone-destroying cells.

We were pleased to hear about the company’s collaboration with GlaxoSmithKline whereby both the companies will share commercialization of denosumab for osteoporosis indications in Europe, Australia, New Zealand and Mexico. Glaxo will be responsible for commercializing denosumab for all indications in countries like China, India, Brazil and Taiwan where Amgen does not have a commercial presence. Glaxo’s strong marketing presence in these areas and expertise in primary care markets should help denosumab capture significant share.

However, we are concerned about the company’s dependence on denosumab for future growth. With all of Amgen’s key products slated to lose patent protection over the next few years, the company has a lot riding on the approval and successful commercialization of denosumab.

Since no new trials are required, we believe denosumab could receive FDA approval by mid-2010. We have a Neutral rating on Amgen.
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ProLogis Expands Global Footprint – Analyst Blog

Zacks Market Commentaries — Tue, 20 Oct 2009 16:33:47 +0000

ProLogis (PLD), a leading global provider of distribution facilities, recently leased about 188,000 square feet of its development portfolio in Japan to global customers, thereby strengthening its position in the market.

About 95,000 square feet were leased to Caterpillar Logistics Services Inc., the logistics division of Caterpillar Inc. (CAT), the world’s largest manufacturer of construction and mining equipment, diesel and natural gas engines and industrial gas turbines. The lessee will occupy space at ProLogis Parc Narita III near Tokyo, Japan.

The company has also leased 93,000 square feet at ProLogis Parc Ichikawa I, a distribution facility near Tokyo, to an unnamed global supplier of office products. This is the sixth such leasing agreement with the lessee, who now occupies approximately 1.2 million square feet across the U.S., Mexico and Japan.

ProLogis owns and manages interests in over 2,500 distribution facilities, service offices and properties spanning 475 million square feet of space. As of June 30, the company had 200.5 million square feet of direct-owned industrial properties – 81.5% of which were located in North America, 14.2% in Europe and 4.3% in Asia.

With nearly 8.5 million square feet of distribution space and 98 acres of land for future development, ProLogis is one of the largest providers of distribution facilities in Japan. Its major customers in the country include Yamato Logistics, diversified producer Daikin Industries, warehouse club chain Costco and leading air and ocean freight firm Kintetsu World Express.
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Coca Cola Reports Modest Results – Analyst Blog

Zacks Market Commentaries — Tue, 20 Oct 2009 16:26:13 +0000

The Coca Cola Company (KO) reported modest results for the third quarter with earnings of 81 cents per share. Earnings were in-line with the Zacks Consensus Estimate and flat year-over-year.

Net operating revenues for the quarter declined 4% year-over-year, driven by a 6% negative impact from currency translation and a 1% adverse impact from a structural change. This was partially offset by 2% increase in concentrate sales and a 1% benefit from pricing and product mix.

Worldwide unit case volume increased 2% in the quarter, aided by a 4% improvement in international unit case volume and 2% growth in the Coca Cola trademark brand. The emerging markets of India and China grew an impressive 37% and 15%, respectively. In addition, strong unit case volume growth was observed in other key markets including Eurasia & Africa, Latin America and Pacific. Europe posted a 2% volume decline, while North American volume declined 4%.

In Europe, volume declined due to the tough macro economic environment. While in North America, in addition to the challenging environment, aggressive competitive pricing within the non-carbonated beverage category added to the decline in volume. Furthermore, in North America, many consumers for health reasons prefer juices and teas instead of soft drinks.

Carbonated soft drink (CSD) case volume increased 1% during the quarter. Non-carbonated beverage (NCB) volume grew 7% driven by strong growth across the portfolio, including juices and juice drinks, sports drinks, teas and water brands. In North America, NCB’s were flat year-over-year.

Gross margins for the quarter contracted 49 basis points (bps) to 63.5% versus 64.0% in the prior-year quarter. The decline was primarily attributable to adverse currency impact of currency translation and impact from structural changes related to bottling investments. The operating margin for the quarter expanded 64 bps to 26.7% versus 26.1% in the prior-year quarter. The increase was attributable to lower selling, general and administration expenses.

The company had cash and cash equivalents of $8.8 billion and a debt-to-capitalization ratio of 17%.

During the first nine months of 2009, the company topped the nonalcoholic ready-to-drink industry in most of its key markets for the ninth consecutive quarter, thereby driving further global volume and market share gains. Management states that its investments in key growth markets such as China, Mexico, India and Brazil contributed to the results.

The company is on track to achieve the $500 million target in annualized savings by 2011 and expects to deliver more than half of the savings by the end of 2009.

Coca Cola also rolled out its 2020 Vision, which is the roadmap for the company to grow along with its worldwide bottling partners. Management stated that the 2020 Vision roadmap is improving clarity and focus of the global business. It therefore expects better utilization of growth opportunities, going forward.
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Harris Wins Major Contract – Analyst Blog

Zacks Market Commentaries — Tue, 20 Oct 2009 16:18:42 +0000

Harris Corp. (HRS) recently won a $419 million Basic Purchasing Agreement contract to supply the U.S. Army with Falcon III AN/PRC-117G multi-band tactical radios & vehicular power-amplifier adapter systems. The initial delivery order under the contract is valued at $165 million. Harris’ Falcon III AN/PRC-117G radios will be deployed by the U.S. Army for missions worldwide to provide next-generation, high-speed tactical satellite network and voice-and-data communications.

Harris has a strong market position in the government communications sector, with a broad product line and an enviable win rate on government contracts (more than 60% historically). The company’s Falcon III tactical radios are being widely used by U.S. Special Operations forces, the U.S. Army and various NATO and “Partnership for Peace" countries. Several industry researches have predicted that tactical radio segment may provide a multi-billion dollar business opportunity to Harris in the next couple of years as overall defense spending is likely to remain firm upgrading the military’s communications infrastructure remains a priority.

According to our assessment, in the near-term, Harris will benefit from higher defense expenditure by the U.S. government coupled with new expansion drives in the Asian, European & African markets. The company has established a solid international dealer network to pursue multiyear contracts throughout these regions. Harris has estimated that international markets represent around $4 billion pipeline opportunity. The company has won large-scale multiyear standardization contracts in Mexico, Australia, Algeria, the U.K., Pakistan, Sweden and Iraq .

On Oct 12, Harris was awarded a potential three-year contract worth $7.5 million to provide technical and support services, including information assurance, development testing, configuration management and training -- for the U. S. Air Force Air Mobility Command's command and control systems. In last July, the company won five domestic contracts for its Public Safety and Professional Communications services.
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Citi May Need to Sell Off Banamex – Analyst Blog

Zacks Market Commentaries — Mon, 19 Oct 2009 22:01:39 +0000

Citigroup Inc. (C) could be compelled to sell its profitable and highly rated Mexican subsidiary Banamex due to a probe expected this week by Mexico’s Supreme Court.

A group of senators has objected that Citigroup’s Mexican subsidiary is in breach of national law since the US government bail-out of the company. National law of Mexico bans foreign governments from owning a stake in domestic banks.

Banamex, or Banco Nacional de Mexico, is one of Citigroup's brightest jewels, and accounts for over $20 billion, or 15% of its global profits.

A number of other foreign-dominated banks operating in Mexico also remain exposed to the same risk, as many foreign governments own stake in them following the global financial crisis. These banks include American International Group, Inc. (AIG), Bank of America Corporation (BAC) and Bank of New York Mellon Corporation (BK), as well as European giant Royal Bank of Scotland (RBS).

However, Banamex has gathered much higher attention and risk, as it is the country’s second-largest bank and is symbolic of Mexican nationalism. Therefore, the politicians have targeted Banamex in an increasingly vociferous campaign to clarify the law and scrutinize the Mexican finance ministry’s dealing in the case.

In March 2009, the ministry passed a ruling stating that Banamex’s status was acceptable because the US government’s stake in the financial institution was circumstantial and impermanent.

However, the senators have contested the ruling by the Supreme Court. In case the decision goes against the ministry, the court has 30 days to decide whether it will examine the case. Consequentially, it might coerce Citi to sell a stake in Banamex or perhaps sell it off entirely.

Though Citi is eager to repay its TARP loans as soon as possible, which would nullify the case altogether, how soon it would be able to do that is quite uncertain.

Furthermore, Mexico’s central bank chief recently joined the escalating debate, arguing that foreign-owned banks, including Banamex, should list on the domestic stock market. This is likely to aggravate an already hot debate over Banamex at a time when the government is coming under increasing pressure to do something about the bank’s legal status.

Citigroup, once the largest U.S. bank by assets, fell behind last year after a series of acquisitions by rivals. The bank has been severely hurt by billions in losses and write-downs of problem loans and toxic assets.

Citigroup's third quarter 2009 loss from continuing operations of 23 cents per share was in line with the Zacks Consensus Estimate. This compares favorably with a net loss of 72 cents in the prior-year quarter. Results for the quarter included $8 billion in net credit losses and an $802 million in net loan loss reserve build.

The U.S. government injected $45 billion in bailout funds into the bank, $25 billion of which was recently converted to a 34% equity ownership stake. Top-level management at the company is conceiving plans to downsize the government's stake in the company through a multibillion-dollar stock offering.

We expect Citigroup to incur higher credit losses in the upcoming quarters as its restructuring process continues. Moreover, the obscurity around the valuation of Citi Holdings will remain a drag on the shares in the near term. As such, we are maintaining our Neutral recommendation on the shares of Citigroup.
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Glaxo’s Cervarix Gets FDA Nod – Analyst Blog

Zacks Market Commentaries — Mon, 19 Oct 2009 21:20:20 +0000

GlaxoSmithKline (GSK) received good news last week with the receipt of approval from the US Food and Drug Administration (FDA) for its cervical cancer vaccine, Cervarix. The vaccine received approval for the prevention of cervical pre-cancers and cervical cancer associated with oncogenic human papillomavirus (HPV) types 16 and 18 for use in girls and young women (aged 10-25).

Last month, an advisory committee of the FDA had voted 12-1 in favor of the efficacy of the vaccine and 11-1 in support of its safety. Cervarix also received approval in Japan for girls aged 10 and above, becoming the first cervical vaccine to gain approval in Japan.

The American Cancer Society estimates that about 11,000 women will be diagnosed with cervical cancer and 4,000 women will die from the disease in 2009 in the US. Globally, more than 500,000 women are expected to be diagnosed with cervical cancer and 280,000 women to die from it every year.

Glaxo has presented very encouraging data against genotypes that account for 70% of cervical cancer cases and management believes that Cervarix may offer protection against several other genotypes that could increase this figure to 80% of cervical cancer cases. Cervarix was found to be highly effective and was well tolerated in the prevention of cervical pre-cancers and cervical cancer related to HPV types 16 and 18, in girls and young women. Types 16 and 18 are the two most common virus types known to cause cervical cancer.

The vaccine is approved in 100 countries around the world, including the 27 member states of the European Union, Australia, Brazil, South Korea, Mexico and Taiwan.

The recent US approval will open up a large market for the product, which recorded £125 million in global sales in 2008. Once launched, Glaxo will compete directly with Merck’s (MRK) Gardasil. Although Merck beat Glaxo to the market, we believe Cervarix comparatively offers a broader base, has more potent protection and could achieve peak sales of approximately £1.5 billion.

We believe that the US launch of Cervarix will significantly boost Glaxo’s vaccine segment revenue, which came in at £2.5 billion in 2008. Cervarix should be available in the US later this year.
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Capital Gold Corp. (CGLD.OB) Reports 29% Increase in Revenues and 64% Increase in Net Income for Fiscal Year 2009

QualityStocks — Thu, 15 Oct 2009 18:47:24 +0000

Capital Gold Corp. reported a 64% increase in net income and a 29% increase in revenues for the fiscal year ended July 31, 2009, as compared to the previous year. Royalties represented approximately $41 and $52 of both cash and total costs per ounce sold for the years ended July 31, 2009 and 2008, respectively. [...]

Scorpio Mining Corp. (SPM.TO) Announces Acquisition of Platte River Gold

QualityStocks — Thu, 15 Oct 2009 17:50:03 +0000

Scorpio Mining Corp. (TSX: SPM) is a junior Canadian mining company which is primarily exploring and developing the Nuestra Senora project in Mexico. The company’s property mainly holds silver, but also has been found to contain copper, zinc and lead deposits. The company today announced the proposed acquisition of privately-held Platte River Gold and all of [...]

Grainger Beats, Focuses on Growth – Analyst Blog

Zacks Market Commentaries — Wed, 14 Oct 2009 19:31:52 +0000

W.W. Grainger, Inc. (GWW) reported third-quarter EPS of $1.88 per share. This includes a one-time gain of 37 cents per share from the step-up of its investment in MonotaRO Co. Ltd. after Grainger became a majority owner in September.

Excluding the one-time gain, Grainger’s third quarter EPS was $1.51, which was above the Zacks Consensus Estimate of $1.34, but 15% down from last year’s EPS of $1.77. The company has surpassed market expectations for the seventh consecutive quarter.

The company posted revenue of $1.6 billion, down 13.6% from $1.8 billion in the third quarter of 2008. GWW is experiencing weak demand as the economic slowdown is driving Grainger’s customers to idle or close facilities and delay purchases.

In the United States segment, Grainger witnessed a 14% drop in sales as demand remained weak in all its customer end-markets. After increasing marginally in the second quarter, sales to the government segment declined in the reported quarter, reflecting weakness among state agencies owing to budget cuts.

In the Canada (Acklands-Grainger) segment, sales were down 13%, an improvement compared to the 19% decline in the previous quarter. Sales were down 10% in local currency due to continued weakness in the forestry and natural gas industries, partially offset by growth in the oil and utilities markets.

Sales from Grainger’s other businesses increased 11% during the quarter, primarily due to the incremental sales from India, along with higher sales in China and Panama. Sales in Mexico, which represent 50% of the segment’s revenue, fell 21% due to the unfavorable impact of foreign exchange translation. Mexican sales were up 2% in local currency.

The current economic conditions are not deterring the company from investing in long-term growth. Despite a weakening economy, Grainger continues to concentrate on increasing market share through its market expansion and product-line expansion programs.

Grainger recently increased its stake in MonotaRO to 53%. MonotaRO, which started as a joint venture between Grainger and Sumitomo Corp. in 2000, is a direct marketer of maintenance, repair and operating (MRO) supplies to businesses in Japan, the second largest industrial market in the world. This investment along with the acquisition of full ownership of Asia Pacific Brands India Private Limited, Grainger’s joint venture in India, reflects the company’s commitment to expand its presence in the global markets.

Also, the company remains focused on expanding its product offering and targets having almost 300,000 products in its 2010 catalog. The company said that the product-line expansion contributed $251 million in sales in the third quarter.

Given the company’s strong balance sheet (cash and cash equivalents of $672 million) and the ability to generate positive cash flow (operating cash flow of $508 million in the first nine months), we believe Grainger has adequate financial flexibility to pursue additional growth opportunities.

Acquisition

In a separate announcement, Grainger disclosed an all cash acquisition of Imperial Supplies, LLC from American Capital, Ltd. (ACAS). The company did not disclose the terms of the deal, but said that the acquisition will be accretive to its 2010 earnings by 3-5 cents a share, including product and transportation cost savings.

Imperial, which had sales of $67 million in 2008, is a national distributor of quality maintenance products and aftermarket components for the vehicle and fleet industry.
Read the full analyst report on "GWW"
Zacks Investment Research

AMB Continues Mexico Leasing – Analyst Blog

Zacks Market Commentaries — Wed, 14 Oct 2009 17:14:54 +0000

AMB Property Corp. (AMB), a leading real estate investment trust (REIT), has recently signed leasing agreements for approximately 271,000 square feet in Mexico, signifying the probable redemption of investor confidence across the country.

About 118,000 square feet were leased in Monterrey in northeast Mexico by Arauco Distribucion Mexico, the Mexican subsidiary of Arauco – a wood pulp and forestry enterprise in Chile. As part of its expansion strategy in the Latin American markets, Arauco also leased 120,000 square feet of space in Guadalajara in the western Pacific area of Mexico. Besides the Arauco leases, AMB had leased 33,000 square feet in Monterrey to a premier logistics company in the country.

With the lease, AMB has strengthened its competitive position in the market. In addition, the company has strategically partnered with a single partner in multiple locations in order to increase its flexibility and enhance operational efficiency.

Based in San Francisco, AMB is a leading global owner, operator and developer of industrial real estate in North America, Asia and Europe. By the end of the second quarter, AMB had 156.9 million square feet of operating and development facilities across the globe, out of which 9.8 million square feet were located in Mexico.
Read the full analyst report on "AMB"
Zacks Investment Research

Weatherford Grows Abroad – Analyst Blog

Zacks Market Commentaries — Wed, 14 Oct 2009 16:15:00 +0000

Ahead of the third quarter results, we are keeping our Neutral rating for Weatherford Interntaional Ltd (WFT) shares. This reflects the company’s sound position in the current tentative outlook for the North American market, given its growing presence in the relatively stable Eastern Hemisphere market.

We particularly like the company’s international prospects. Growth would be driven by contract awards in key international markets such as Mexico, Algeria, Russia and the Middle East. We believe that the company will have significantly higher revenue and earnings from international operations compared to its peers over the next few years.

Weatherford has been actively investing in its international growth program over the last few of years, with a spend of $2.3 billion last year and $1.6 billion in 2007. Given this major expansion effort, Weatherford was free cash flow negative in 2007 and 2008, funded largely through the debt markets.

With the major expansion phase largely behind it, the company’s capex needs have reduced − this year’s capex budget is $1.4 billion, of which more than 85% is for the international regions. This should enable it to generate a significant amount of free cash flow this year and next.

Overall, we think Weatherford is in a better position to weather the current downturn than many of its peers in the oilfield service space, given its strong international growth prospect. The key negative, in our view, is the current unfavorable macro backdrop, which is expected to continue drowning out the positives, at least in the near term.
Read the full analyst report on "WFT"
Zacks Investment Research

SYNNEX Corporation – Value – Zacks Rank Buy

Tracey Ryniec — Wed, 14 Oct 2009 05:00:00 +0000

SYNNEX Corporation (SNX) surprised on estimates for the 8th quarter in a row in September as sales grew quarter over quarter. The company is cheap, trading with a price-to-book ratio of just 1.25.

Company Description

SYNNEX distributes IT systems, peripherals, system components, software and networking equipment to more than 15,000 resellers throughout the United States, Canada and Mexico for OEM suppliers such as Hewlett Packard (HP), IBM (IBM), Intel (INTC), and Microsoft (MSFT).

Surprise Streak Continued in the Third Quarter

On Sep 21, SYNNEX reported third quarter results that easily surprised on the Zacks Consensus Estimate by 9.84%. Earnings per share were 67 cents compared to the Zacks Consensus of 61 cents. This was also 1 cent better than the year ago period.

Revenues still saw a year over year decrease of 1.88% to $2.01 billion from $2.05 billion in the third quarter of 2008. The company saw revenue growth quarter over quarter of 10.8%. The quarter was boosted by 17.7% growth in the Global Business Services segment.

Fourth Quarter Outlook

The company believes the market has stabilized since the February quarter and it's optimistic about the rest of the year. Revenues are expected in the range of $2.025 billion and $2.125 billion. Earnings per share are forecast between 72 and 75 cents.

Zacks Consensus Estimates Rise

Given the company's earnings surprise and fourth quarter forecast, covering analysts have been raising estimates over the last quarter. The fourth quarter Zacks Consensus Estimate jumped 3 cents to 75 cents, which is the high end of the company's guidance range.

Full year Zacks Consensus Estimates are up 8 cents to $2.57 per share with 4 out of 5 analysts raising in the last month.

Value Fundamentals

SYNNEX is a Zacks #1 Rank (strong buy) stock. The company has a solid 5-year average return on equity (ROE) of 11.48%.

It is trading with a forward P/E of 11.5 despite the stock being at multi-year highs.

See the 5-year chart below:

Zacks Investment Research

Capital Gold Corp. (CGLD.OB) Boosts Reserve Estimates

QualityStocks — Tue, 13 Oct 2009 15:47:15 +0000

Capital Gold Corp. increased its estimates of gold reserves by 67% over the previous level. The company estimates that the El Chanate open pit mine contains 1.5 million ounces of proven and probable reserves of gold, up from the 913,000 ounces at the previous update. The mine is located in Sonora, Mexico, and is 100% [...]

Zacks Analyst Blog Highlights: AT&T, Sprint Nextel, Deutsche Telecom, MetroPCS and Leap Wireless – Press Releases

Zacks Market Commentaries — Tue, 13 Oct 2009 12:13:57 +0000

For Immediate Release

Chicago, IL – October 13, 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: AT&T (T), Sprint Nextel (S), Deutsche Telecom (DT), MetroPCS (PCS) and Leap Wireless (LEAP).

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 Monday’s Analyst Blog:

AT&T Unveils Pre-Paid Plan

Apart from the U.S., the new unlimited plan covers Mexico, Canada and over 100 countries worldwide. Roaming within the U.S. is free of cost. This prepaid rate plan is about 50% lower than the company’s regular postpaid unlimited (voice and text) service plan.

AT&T offers its prepaid services under the "GoPhone" brand, which does not require the customer to sign long-term contracts and keep a minimum deposit. While the company remains a dominant player in the postpaid market (representing 86% of the company’s total net customer additions), it is struggling to retain customers in the prepaid segment due to more attractive service plans offered by its competition.

The U.S. prepaid unlimited market is characterized by intense price competition as the incumbent players battle to win new customers while retaining the existing accounts. The rationale behind AT&T’s latest move is to respond to the aggressive price plans of its major competitors in this segment.

Sprint Nextel (S) is currently enjoying meaningful traction for its $50 per month unlimited plan (voice, text, data), which was launched in early 2009 by the company’s Boost Mobile prepaid subsidiary. Smaller wireless carriers, such as Deutsche Telecom’s (DT) T-Mobile USA, MetroPCS (PCS) and Leap Wireless (LEAP) are also offering unlimited voice and data plans at cost-effective price points.

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Zacks Investment Research

AT&T Unveils New Pre-Paid Plan – Analyst Blog

Zacks Market Commentaries — Mon, 12 Oct 2009 21:34:10 +0000

AT&T (T) has introduced a new unlimited monthly calling plan for the prepaid wireless market. Starting today, customers subscribing to the company prepaid wireless services receive unlimited voice calls, instant messaging as well as text, picture and video messaging for just $60 a month. However, the plan does not cover iPhone users.

Apart from the U.S., the new unlimited plan covers Mexico, Canada and over 100 countries worldwide. Roaming within the U.S. is free of cost. This prepaid rate plan is about 50% lower than the company’s regular postpaid unlimited (voice and text) service plan.

AT&T offers its prepaid services under the "GoPhone" brand, which does not require the customer to sign long-term contracts and keep a minimum deposit. While the company remains a dominant player in the postpaid market (representing 86% of the company’s total net customer additions), it is struggling to retain customers in the prepaid segment due to more attractive service plans offered by its competition.

The U.S. prepaid unlimited market is characterized by intense price competition as the incumbent players battle to win new customers while retaining the existing accounts. The rationale behind AT&T’s latest move is to respond to the aggressive price plans of its major competitors in this segment.

Sprint Nextel (S) is currently enjoying meaningful traction for its $50 per month unlimited plan (voice, text, data), which was launched in early 2009 by the company’s Boost Mobile prepaid subsidiary. Smaller wireless carriers, such as Deutsche Telecom’s (DT) T-Mobile USA, MetroPCS (PCS) and Leap Wireless (LEAP) are also offering unlimited voice and data plans at cost-effective price points.

MetroPCS continues to be a leading player in the U.S. unlimited prepaid segment with cheap service plans that start as low as $30 per month. Moreover, America Movil’s (AMX) U.S. wireless subsidiary TracFone recently launched a $45 per month unlimited prepaid plan.

The $60 service plan represents a significant discount to AT&T’s current $90 ($3 a day) prepaid monthly unlimited plan, which is more expensive than the competition. While the company’s new unlimited plan is expected to boost opportunities in prepaid, its impact in this price-sensitive market is not expected to be huge given the presence of cheaper and more established competitive price plans.
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Zacks Investment Research

Zacks Analyst Blog Highlights: Ford, Honda, Caterpillar, Boeing and Chevron Corp. – Press Releases

Zacks Market Commentaries — Mon, 12 Oct 2009 12:15:00 +0000

For Immediate Release

Chicago, IL – October 12, 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: Ford (F), Honda (HMC), Caterpillar (CAT), Boeing (BA) and Chevron Corp. (CVX).

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:

Trade Deficit Improves

While the year-over-year improvement in the trade deficit is very good news, the reason for it is not so good. It was a reflection of the overall collapse in world trade, something that makes everyone poorer. As far as the GDP calculations are concerned, it does not make any difference -- a decline in the trade deficit is a decline in the trade deficit -- and it is something that feeds directly into the calculations.

However, it is not like there has been a big surge in people buying domestically produced Fords (F) rather than foreign produced Hondas (HMC). Rather, the fall in imports has been simply fewer people buying cars, period. Currently, for every dollar of goods and services we export, we import $1.24 -- down from $1.38 a year ago, but still way out of whack.

It was not until the price of oil crashed last fall that we started to see real improvement in the overall deficit. Now that benefit is largely gone. While the price of imported oil has a bit of a lag with the prices in the pits, there is clearly a relationship. The price of imported oil bottomed in February at $39.22 and was $64.75 in August. It will most likely go up again in September.

It is somewhat ironic that the most dramatic part of the improvement in the trade deficit came as the dollar dramatically strengthened a year ago in the flight-to-safety trade. The path of the trade deficit has not yet been greatly affected by the path of the dollar, for two major reasons.

First, a very large part (over half) of our trade deficit is due to oil imports, and when the dollar is weak, the price of oil tends to go up to compensate. Second, our biggest single deficit is with China, which has effectively pegged the Yuan to the dollar. In August, the China deficit fell to $20.2 billion from $20.4 billion, but still represented 65.1% of the total deficit. Put another way: in August, our deficit with China was more than our deficits with OPEC, The European Union, Japan and Mexico...combined!

The flight-to-safety dollar trade is now unwinding, and the greenback is almost back to the levels it was at before the fall of the House of Lehman. Over time, this should lead to further improvements in our non-oil trade deficit -- if not with China, then with the rest of the world. It might even indirectly help with the Chinese deficit even though the value of the Yuan is effectively fixed to the price of the dollar.

This would happen at the expense of the Japanese or the Europeans, as the Chinese decide to buy their heavy earth-moving equipment from Caterpillar (CAT) rather than from Komatsu, or airplanes from Boeing (BA) rather than Airbus.

Chevron’s Positive Upstream Update

Chevron Corp. (CVX) released its third-quarter interim update, covering the first two months of the quarter. On the whole, the update is positive, with earnings expected to be higher than in the previous quarter.

The company expects the upstream segment to benefit from an increase in crude oil prices as well as from gains of about $400 million associated with asset sales and tax items. Downstream results are likely to be relatively flat, as it continues to be hurt by weak refining margins. Chevron further said that unfavorable foreign currency movements will affect the segment profitability.

The best part of the update pertained to upstream volumes, highlighting Chevron’s attractive growth profile among the super-majors. The company reported that oil and natural gas production average 2.687 million oil-equivalent barrels per day – better than estimates and nearly 10% above the third-quarter 2008 level. Compared to the second quarter of 2009, production would be up by about a percentage.

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Zacks Investment Research

Trade Deficit Improves – Analyst Blog

Dirk Van Dijk — Fri, 09 Oct 2009 17:14:12 +0000

In August, the monthly trade deficit fell to $30.7 billion from $31.9 billion in July. We got improvement from both sides as exports rose by $0.2 billion to $128.2 billion and imports fell to $158.9 billion from $159.8 billion in July, a decrease of $0.9 billion. This reverses two months where the trade deficit rose slightly.

On the other hand, over the last year the trade deficit is down dramatically. A year ago our imports were $63.6 billion higher than now, at $222.6 billion, and our exports were $33.4 billion higher at $161.7 billion, resulting in a deficit of $60.9 billion.

While the year-over-year improvement in the trade deficit is very good news, the reason for it is not so good. It was a refection of the overall collapse in world trade, something that makes everyone poorer. As far as the GDP calculations are concerned, it does not make any difference -- a decline in the trade deficit is a decline in the trade deficit -- and it is something that feeds directly into the calculations.

However, it is not like there has been a big surge in people buying domestically produced Fords (F) rather than foreign produced Hondas (HMC). Rather, the fall in imports has been simply fewer people buying cars, period. Currently, for every dollar of goods and services we export, we import $1.24 -- down from $1.38 a year ago, but still way out of whack.

As the chart below shows (from http://www.calculatedriskblog.com/), a big part of our overall trade deficit comes from our addiction to foreign oil. The blue line shows the total trade deficit, while the black line shows the oil portion, and the red line shows everything else. Our overall trade deficit actually peaked (or hit bottom, as shown in the graph) at the end of 2005, and then went into a broad valley that lasted until last summer. That actually masked the underlying dynamics, as the non oil deficit actually started about the time the overall deficit first hit the valley floor, but the oil portion of the deficit soared along with the price of oil.

It was not until the price of oil crashed last fall that we started to see real improvement in the overall deficit. Now that benefit is largely gone. While the price of imported oil has a bit of a lag with the prices in the pits, there is clearly a relationship. The price of imported oil bottomed in February at $39.22 and was $64.75 in August. It will most likely go up again in September.

It is somewhat ironic that the most dramatic part of the improvement in the trade deficit came as the dollar dramatically strengthened a year ago in the flight-to-safety trade. The path of the trade deficit has not yet been greatly affected by the path of the dollar, for two major reasons.

First, a very large part (over half) of our trade deficit is due to oil imports, and when the dollar is weak, the price of oil tends to go up to compensate. Second, our biggest single deficit is with China, which has effectively pegged the Yuan to the dollar. In August, the China deficit fell to $20.2 billion from $20.4 billion, but still represented 65.1% of the total deficit. Put another way: in August, our deficit with China was more than our deficits with OPEC, The European Union, Japan and Mexico...combined!

The flight-to-safety dollar trade is now unwinding, and the greenback is almost back to the levels it was at before the fall of the House of Lehman. Over time, this should lead to further improvements in our non-oil trade deficit -- if not with China, then with the rest of the world. It might even indirectly help with the Chinese deficit even though the value of the Yuan is effectively fixed to the price of the dollar.

This would happen at the expense of the Japanese or the Europeans, as the Chinese decide to buy their heavy earth-moving equipment from Caterpillar (CAT) rather than from Komatsu, or airplanes from Boeing (BA) rather than Airbus.

An expansion of our exports is vital to our long-term economic health. Consumption is a far higher percentage of our economy (71%) than it is for the rest of the G7 (average is about 64%). We have not always been an economy that was so lopsided in favor of consumption -- in fact, on average since the end of WWII we have consumption has averaged 64.5% of GDP, but consumption has been an ever-increasing share since the early 1980’s.

If our consumption share were to trend back down to that historical average, and the level that most comparable countries are at, then something else has to increase. It would be nice if it were offset by an increase in business investment as a share of GDP. But where is the incentive for businesses to invest if consumers are spending less?

Remember that capital is by far the most mobile factor of production, so if you answered "cut capital gains taxes" to provide the incentive, that would not work. For starters, they are already greatly preferentially treated, and secondly, they apply as much to investments abroad as here.

If investment is as likely to fall as rise in response to a decline in the consumer as a share of GDP, that leaves either government spending or net exports to pick up the slack. In case you have not noticed, the government debt is a bit on the high side, and we are running a deficit of about $1.8 Trillion, so there is not a lot of room there. If the import side of net exports is constrained by the price of oil, and a pegged Yuan, the only variable that provides much hope is increased exports.

Efforts to bring down the amount of oil we consume but replacing it with domestic sources of energy would also help a great deal, as they would raise investment (say building windmills, or drilling for Natural Gas in North Dakota) as well as reducing our need to import oil. A falling dollar will help stimulate our exports, and should be seen as a good, or at least necessary, thing.

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Zacks Investment Research

Oct 9: Trade Deficit Decreases – Economic Highlights

Zacks Market Commentaries — Fri, 09 Oct 2009 15:31:02 +0000

The Trade Deficit decreased to $30.7 billion in August from $31.9 billion in July. August exports increased by $0.2 billion to $128.2 billion, offset by the increase in imports by $0.9 billion to $158.9 billion. The Commerce Department provided the August figures of the trade balance of the U.S. relative to selected trading partners, in billions of dollars, with surpluses in Hong Kong ($1.3), Australia ($1.2), Egypt ($0.4), and Singapore ($0.3). Deficits were recorded, in billions of dollars, with China ($20.2), OPEC ($6.4),the European Union ($5.4), Japan ($4.3), Mexico ($4.0), Venezuela ($1.9), Nigeria ($1.7), Canada ($1.5), Taiwan ($0.5), and Korea ($0.4).

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Comstock’s Positive Update – Analyst Blog

Zacks Market Commentaries — Wed, 07 Oct 2009 16:30:12 +0000

Yesterday, oil and natural gas firm Comstock Resources Inc. (CRK) provided an operational update about its recently completed third quarter.

Average production was up 9% sequentially to about 184 million cubic feet equivalent per day (MMcfe/d), reflecting the success of Comstock’s enhanced onshore drilling programs. The company drilled a total of 9 wells during the quarter, with a 100% success rate.

This year, Comstock’s drilling programs are focused on developing its Haynesville shale properties in East Texas and North Louisiana . As part of that effort, the company drilled 7 successful wells in DeSoto Parish , North Louisiana during the third quarter (3 wells are in Toledo Bend North field, 3 in the Logansport field and one is in the Mansfield field), which had an average per well initial production rate of approximately 15.6 MMcfe/d. These results were up 23% from the 7 wells that were reported with the second quarter results. Comstock is currently drilling 6 operated horizontal Haynesville Shale wells.

The company plans to report its third quarter financial results on November 2, 2009.

In a separate development, Comstock announced yesterday that it plans to offer $200 million principal amount of senior notes due 2017. The company intends to use the proceeds from the offering to pay back debt under its bank credit facility and for other general corporate purposes.

Frisco, Texas-based Comstock Resources Inc. is an independent oil and gas exploration and production company engaged in the acquisition, exploration, and development of oil and gas properties. The company’s operations are concentrated primarily in four regions in the U.S. : the Gulf of Mexico, East Texas/North Louisiana, Mississippi , and South Texas .

We currently rate Comstock shares as Neutral.
Read the full analyst report on "CRK"
Zacks Investment Research

Hubbell Closes Burndy Acquisition – Analyst Blog

Zacks Market Commentaries — Wed, 07 Oct 2009 16:15:54 +0000

Hubbell Inc.(HUB) announced the closure of the FCI Americas (Burndy business) acquisition yesterday. The company purchased Burndy for $360 million, funded through a combination of the cash on its balance sheet and the liquidation of some of its investments.

Burndy is a manufacturer of connectors, cable accessories and tooling for electrical products. The business currently serves commercial, industrial and utility customers located primarily in the U.S. It generates roughly 25% of sales from Canada , Mexico and Brazil .

The company will continue to operate as a separate unit under Hubbell’s Electrical Products segment. With $225 million in 2008 sales and operating margins in the high teens, the business will be a boon for the company. Management currently expects the business to be acrretive to 2010 results.

In the last quarter, the Electrical segment revenue was down 1.4% sequentially and 21.7% year over year, mainly due to recession-driven weakness across all segments.

The segment generated an operating margin of 7.9%, which was up 98 bps sequentially and down 475 bps year over year. The sequential improvement was due to inventory and workforce reductions implemented in the preceding quarters. The year-over-year decline was related to lower volumes, which also impacted sequential comparisons. Therefore, Burndy’s higher-margin business profile is also a positive.

The Electrical segment serves the non-residential, residential, industrial, utility and other markets. These markets generated 52%, 12%, 28%, 3% and 5%, respectively, of segmental revenue in 2008. The unit has several thousand products for both indoor and outdoor use. The company categorizes these products into wiring, electrical, commercial, industrial, harsh and hazardous-location, high-voltage test and measurement, and lighting products.
Read the full analyst report on "HUB"
Zacks Investment Research

Costco Beats Zacks Estimates – Analyst Blog

Zacks Market Commentaries — Wed, 07 Oct 2009 14:41:14 +0000

Costco Wholesale Corporation (COST), the fifth largest general retailer in the U.S., has reported better-than-expected fourth quarter fiscal 2009 results with net income of $374 million or 85 cents per share, compared to $398 million or 90 cents in the year-earlier quarter. The quarterly earnings well surpassed the Zacks Consensus Estimate of 77 cents per share.

For fiscal year 2009, net income was $1.09 billion or $2.47 per share compared to $1.28 billion or $2.89 per share in the previous fiscal year. The year-over-year decrease in the fiscal results was primarily due to the continuing softness in the U.S. economy, higher employee benefit costs and negative impact of foreign currency translation.

Net sales during the quarter totaled $21.89 billion compared to $22.63 billion in the year-ago quarter, while net sales in fiscal 2009 were $69.89 billion compared to $70.98 billion in fiscal 2008. Although both the quarterly and yearly sales declined year over year, the figures were comparatively better than analysts’ expectations, suggesting an overall improvement in the weak U.S. retail environment.

Furthermore, early signs of a probable recovery in the retail sector also emanated from the monthly sales data of Costco. For the five-week period ended October 4, 2009, Costco’s net sales were $6.85 billion compared to $6.67 billion in the previous year.

Currently, Costco operates 560 warehouses, 407 of which are located in the U.S. and Puerto Rico, 77 in Canada, 32 in Mexico, 21 in the U.K., 9 in Japan, 7 in Korea, 6 in Taiwan and 1 in Australia. The company also operates an e-commerce website called Costco Online. In the remainder of the calendar year 2009, Costco plans to open about six-seven new warehouses, including relocation of existing facilities.
Read the full analyst report on "COST"
Zacks Investment Research

Moody’s Upgrades American Tower – Analyst Blog

Zacks Market Commentaries — Tue, 06 Oct 2009 19:15:09 +0000

Moody’s Investor Services (MCO) has upgraded the rating of American Tower Corp’s (AMT) senior unsecured debt. So far, this paper has been given a “Ba1" rating by Moody’s which implies a junk corporate rating and probability of default rating.

Now Moody’s has raised its rating to “Baa3," implying its lowest investment-grade rating. Major reasons for this debt rating upgrade were the company’s strong operating performance, increased cash flow and reduced debt over the past two years.

American Tower accounts for most of its revenue from long-term (typically 5-10 year) tower leases with major wireless carriers. In addition, the company provides on-site maintenance and servicing of antennas, amplifiers and base-station equipment as it relates to leasing. This generates a strong long-term lease up-cycle.

The revenue generated from leasing and management of such networks is impressive, and over 95% is recurring in nature. Yearly revenue increased 9.4% in fiscal 2008 compared to the previous year. In the first half of 2009, total revenue was $832 million, up 7.2% compared to the prior-year period.

Mobile subscriber growth has significantly expanded the wireless tower industry. We believe, future financials are likely to be propelled by strong demand for wireless voice, broadband wireless data and video networks which require more tower space. Deployments of 3G and emerging 4G networks will also create impressive demand for tower leasing.

American Tower maintains one of the strongest EBITDA margins in the industry. EBITDA margin for the most recent quarter was 68%, well above its peers Crown Castle International (CCI) and SBA Communications Corp (SBAC).

During the first half of 2009, American Tower generated $295 million of free cash flow (cash flow less capital expenditure) compared to $262 million in the prior-year period. The company enjoys stable operating costs. With the tower industry moving forward, operating cash flow is likely to accelerate. As of now, the company has more than $9 billion worth of non-cancelable lease backlog. At the current revenue run-rate, this constitutes approximately 6 years of lease backlog.

In addition, American Tower is quickly expanding its business operations in various emerging markets. Besides Brazil and Mexico, it has taken a major initiative to expand operations in India. Geographic expansion increases the total number of American Tower controlled wireless tower sights to over 26,000. This will generate a sustainable business in the long-run.
Read the full analyst report on "AMT"
Read the full analyst report on "MCO"
Read the full analyst report on "CCI"
Read the full analyst report on "SBAC"
Zacks Investment Research

Vista Gold Corp. (VGZ) Reports Solid Results on Mt. Todd Gold Opportunity in Northern Territories, Australia

QualityStocks — Tue, 06 Oct 2009 15:24:57 +0000

It is often said that the quiet ones are the ones to watch. They go about their business with little noise or capital expense, then all of a sudden “pop” with profit. It is always difficult to spot these companies since they don’t attract much attention. If an investor can spot such a company, however, [...]

DrStockPick.com Stock Report! 10/06/09, S, ARW, LXU, HHS, DUK, NATI

Dr. Stock Pick — Tue, 06 Oct 2009 14:47:43 +0000

Dr Stock Pick HOT News & Alerts! _______________________________________ FREE Daily Stock Alerts From DrStockPick.com _______________________________________ Tuesday October 6, 2009 DrStockPick.com Stock Report! ************************************************************** Sprint (NYSE: S) and Samsung Telecommunications America (Samsung Mobile), the number one mobile phone provider in the United States1, today announced the upcoming arrival of Samsung IntrepidTM smartphone, a dynamic Windows(R) phone that lets the customer [...]

Depomed’s New Shingle Drug (NASDAQ:DEPO)

Jyotsna Ramani — Tue, 06 Oct 2009 14:00:54 +0000

On the very first day of the week, Depomed Inc has come out with good news that their new shingles pain drug has met the study goal. Depomed has announced that they ...

Keryx Cancer Drug Impresses – Analyst Blog

Zacks Market Commentaries — Thu, 01 Oct 2009 15:01:21 +0000

Last week, Keryx Biopharmaceuticals, Inc. (KERX) announced that its renal cancer drug KRX-0401 (perifosine) met both primary and secondary endpoints in a mid-stage trial. KRX-0401 is in-licensed by Keryx from Aeterna Zentaris Inc. (AEZS) in the US, Canada and Mexico. The data was presented at the eighth International Kidney Cancer Symposium in Chicago.

The candidate demonstrated efficacy, safety and tolerability in metastatic renal cell carcinoma (RCC) patients whose disease progressed after failing treatment with both a VEGF (vascular endothelial growth factor) receptor inhibitor and an mTOR (mammalian target of rapamycin) inhibitor. Even though the drug was well-tolerated, the most common adverse events were gastrointestinal discomfort and fatigue.

RCC is the most common of all kidney tumors, accounting for 85% of the cases. The advanced form of the disease is resistant to standard therapies such as radiation and chemotherapy.

The initial treatment in most cases is removal of the kidney by surgery. The five-year survival rate is 60% to 70% in the event of cancer being confined to the kidney. However, the survival rate drops significantly otherwise.

Although several biological therapies for the treatment of advanced metastatic RCC have been approved, the incidence of RCC continues to be on the rise according to the National Cancer Institute. The incidence and mortality rates are more than twice as high in men as in women.

Recently, KRX-0401 was granted orphan-drug status by the U.S. Food and Drug Administration (FDA) for the treatment of multiple myeloma.

We believe that these positive results provide a significant boost to its pipeline as Keryx aims to develop and commercialize pharmaceutical products for the treatment of life-threatening diseases, including renal disease and cancer.
Read the full analyst report on "KERX"
Read the full analyst report on "AEZS"
Zacks Investment Research

Keryx Cancer Drug Impresses – Analyst Blog

Zacks Market Commentaries — Thu, 01 Oct 2009 15:01:21 +0000

Penske Walks Away from Saturn – Analyst Blog

Zacks Market Commentaries — Thu, 01 Oct 2009 14:01:29 +0000

Penske Automotive Group (PAG) has declined to buy the Saturn brand from General Motors (GM), despite nearing the end of the deal. The spokesperson of the Michigan-based second leading automotive retailer in the U.S. has explained that Penske was unable to find a manufacturer to make the Saturn models when GM stops producing them after 2011.

In June, Penske had reached a tentative agreement with GM to purchase the brand. Under the deal, GM had agreed to manufacture three Saturn models beyond 2011, but afterwards Penske was supposed to manufacture the products made by a third-party manufacturer.

Speculation was rife that Penske was discussing the production of Saturn with French automaker Renault or a Chinese automaker to produce Saturn but the company spokesperson has not confirmed either. As Penske failed to reach an agreement with third party manufacturers for Saturn, it had no option but to call off the deal.

It takes several years to design new vehicles or engineer foreign vehicles to meet U.S. standards. Thus Penske would risk having run out of stock once GM stops making the vehicles. Penske spokesperson has revealed that there is a little chance that the talks could be reopened. This has triggered fear among the 350 remaining Saturn dealers around the U.S. that they may go bust.

GM now plans to stop manufacturing Saturn as soon as possible. However, this would involve no layoffs as the company manufactures the brand at facilities that produce other brands as well. Saturns are made at plants in Kansas City, KS, Delta Township, MI and Ramos Arizpe, Mexico. GM has assured that the Saturn owners can go to their dealers for service.

Saturn was officially launched in 1990. After a good year in 2007, the brand’s sales dropped last year as the auto market dried up. Through August, Saturn sales were down 60% compared to first eight months of last year.

We recommend the shares of Penske Automotive as Neutral.
Read the full analyst report on "PAG"
Zacks Investment Research

American Sierra Gold Corp. (AMNP.OB) is “One to Watch”

QualityStocks — Wed, 30 Sep 2009 18:37:31 +0000

American Sierra Gold Corp. is an independent gold exploration company. Headquartered in Reno, Nevada, their focus is on the strategic exploration and potential development of North American properties. Trading on the OTC Bulletin Board, the Company explores in the Sierra gold belt of northern Mexico. This area has a rich history of large gold [...]

IBM Wins Indian Cineplex Deal – Analyst Blog

Zacks Market Commentaries — Wed, 30 Sep 2009 18:06:06 +0000

International Business Machines (IBM) won a three-year contract to provide IT infrastructure and services to Cinepolis, a privately held company based in Morelia, Mexico. The deal was signed in August 2009, but the terms of the contract were not disclosed.

Cinepolis is one of the largest movie theater and multiplex operators in India and will use IBM’s expertise in its IT solutions to roll out 130 new theaters in India over the next 3 years. IBM will provide Point of Sale (PoS), kiosks, server, storage, software, networking and related services to Cinepolis.

IBM's unique Store Roll Out solution will help Cinepolis reduce operating expenses as well as develop and deploy new customer applications. Cinepolis plans to open 500 screens in India by 2016.

IBM is expected to get a boost from this new IT services contracts. We believe this deal to be strategic importance for IBM to grow its foothold in the Communications sector (particularly, Telecommunications, Media and Entertainment). IBM’s Global Services plays an important role in the company’s strategy of providing IT infrastructure, business insight and systems solutions.

The company's diversification in terms of markets, geography and services will continue to facilitate future growth. Moreover, IBM’s restructuring efforts are making headway, resulting in an improved bottom line. The company’s plans to improve efficiencies, strengthen client-facing operations and capture opportunities in high-growth markets.

In addition, IBM has a very strong balance sheet and generated $18.8 billion from operating activities in 2008 through its efficient business model. Over the past six years, IBM generated nearly $65.0 billion in free cash flow. This provides it the financial flexibility required for strategic investments in changing business environments.

The company also has significant recurring revenue. Considering the company’s liquidity and emphasis on profitability, we believe IBM is a safe investment.

With new stimulus packages, investors can expect IT infrastructure projects to increase. Thus we believe IBM is sure to benefit from the growing IT services requirements. IBM’s major competitors providing similar services are Hewlett Packard (HPQ), Dell Inc. (DELL) and Cisco Systems (CSCO).
Read the full analyst report on "IBM"
Read the full analyst report on "HPQ"
Read the full analyst report on "DELL"
Read the full analyst report on "CSCO"
Zacks Investment Research

CEMEX Reduces Debt – Analyst Blog

Zacks Market Commentaries — Tue, 29 Sep 2009 21:42:47 +0000

Yesterday, CEMEX, S.A. de C.V. (CX) completed the global offering of 1,495 million Ordinary Participation Certificates (CPOs), directly or in the form of American Depositary Shares (ADSs). The underwriters fully exercised their options to purchase additional CPOs and ADSs to cover over-allotments.

Out of the 1,495 million CPOs offered, 1,121.3 million CPOs, were sold in the United States and elsewhere outside Mexico, and 373.8 million CPOs were sold in Mexico. The ADSs were offered at a price of US$12.50 per ADS, and the CPOs was offered at a price of MXN16.65 per CPO.

The estimated net aggregate proceeds from the global offering, including proceeds from the exercise of the over-allotment option, were approximately US$1.782 billion. The over-allotment option relating to the Mexican portion of the offering is expected to be completed today. CEMEX intends to use the net proceeds from the global offering to pay down debt and for general corporate purpose.

CEMEX’s huge leverage is an urgent problem. Net debt at the end of the second quarter was US$18,272 million, and is more than 5x the expected EBITDA for 2009.

It is all the more urgent for CX as it is battling leading cement makers like France's Lafarge SA and Switzerland's Holcim Ltd in a difficult market.

CEMEX intends to reduce its net debt by approximately US$3.6 billion in 2009 to reach US$14.3 billion at the end of the year in order to restore financial flexibility as soon as possible and meet its financial commitments. The company is indeed making a huge effort to restore its creditworthiness and adapt itself to new and much more difficult market conditions.
Read the full analyst report on "CX"
Zacks Investment Research

Axial Vector Energy Corp. (AXVC.PK) Management Advisory Team

QualityStocks — Tue, 29 Sep 2009 15:11:08 +0000

Axial Vector Energy Corp., a leader in energy conversion efficiency, is fortunate in that it is run by one of the most seasoned international management and advisory teams, with over a century of combined experience. This is critical in starting and growing a company, obtaining the required capital, locking in the rights to key products [...]

Cervarix a Step Closer to Approval – Analyst Blog

Zacks Market Commentaries — Tue, 29 Sep 2009 14:50:40 +0000

GlaxoSmithKline (GSK) is currently awaiting a response from the U.S. Food and Drug Administration (FDA) for its cervical cancer vaccine, Cervarix. Earlier this month, the company received a favorable recommendation from the US Food and Drug Administration's (FDA) Vaccines and Related Biological Products Advisory Committee (VRBPAC) for Cervarix.

While the advisory committee voted 12-1 in favor of the efficacy of the vaccine, its safety profile got 11-1 in support from the panel. While the FDA is not bound by the advisory committee’s recommendation, it generally follows the suggestion.

Cervarix was found to be highly effective and was well tolerated in the prevention of cervical pre-cancers and cervical cancer related to human papillomavirus (HPV) types 16 and 18, in girls and young women. Types 16 and 18 are the two most common virus types known to cause cervical cancer.

The vaccine is currently approved in nearly 100 countries around the world, including the 27 member states of the European Union, Australia , Brazil , South Korea , Mexico and Taiwan . Glaxo is seeking approval in more than 20 additional countries including the U.S. and Japan .

Approval in the U.S. would open up a very large market for the product, which recorded £125 million in global sales in 2008. Once approved, Glaxo will compete directly with Merck’s (MRK) Gardasil. Although Merck beat Glaxo to the market, we believe Cervarix comparatively offers a broader base, has more potent protection and could achieve peak sales of approximately £1.5 billion.

Glaxo has presented very encouraging data against genotypes that account for 70% of cervical cancer cases and management believes that Cervarix may offer protection against several other genotypes that could increase this figure to 80% of cervical cancer cases.

The American Cancer Society estimates that about 11,000 women will be diagnosed with cervical cancer and 4,000 women will die from the disease in 2009 in the U.S. Globally, more than 500,000 more women are expected to be diagnosed with cervical cancer and 280,000 women to die from it every year.

A response from the FDA on Cervarix should be out shortly. We believe that US approval of Cervarix will significantly boost Glaxo’s vaccine segment revenue, which came in at £2.5 billion in 2008.
Read the full analyst report on "GSK"
Read the full analyst report on "MRK"
Zacks Investment Research

MU, EQLB, PWRM, DrStockPick.com Watch List! for Tuesday September 29, 2009, Micron Technology Inc., EQ Labs Inc., EQLB.PK and Power 3 Medical Products Inc, PWRM.OB

Dr. Stock Pick — Tue, 29 Sep 2009 03:58:45 +0000

Dr Stock Pick HOT News & Alerts! _______________________________________ FREE Daily Stock Alerts From DrStockPick.com _______________________________________ DrStockPick.com Watch List! My Picks for Tuesday September 29, 2009, are: ************************************************************** MU, Micron Technology Inc. MU together with its subsidiaries, engages in the manufacture and marketing of semiconductor devices worldwide. Its products include dynamic random access memory (DRAM) products that provide data storage and retrieval, which include [...]

Noble Lacks Near-term Catalysts – Analyst Blog

Zacks Market Commentaries — Mon, 28 Sep 2009 18:06:00 +0000

Texas-based Noble Energy (NBL) is an independent oil and gas exploration and production (E&P) company with high-grade hydrocarbon assets across the U.S. and several international locations. Noble's U.S. onshore assets provide stable performance, while the offshore assets in the deepwater Gulf of Mexico offer significant growth opportunities over the medium to long-terms. The international operations of the company – with core positions in Equatorial Guinea and Israel – are a source of a low-cost, long-term production base; they do not require huge maintenance capital and diversify the overall portfolio.

Noble has a strong balance sheet with sufficient liquidity and financial flexibility. Management maintains a disciplined investment approach. They have been sensibly allocating resources to long-term development projects, which are vital for its future growth and to living within generated cash flows.

Going forward, the ongoing major development projects in deepwater Gulf of Mexico, Equatorial Guinea and Israel will create substantial value for Noble shareholders. However, the present unfavorable macro backdrop remains a concern and might overshadow the positives, at least in the near term.

We expect Noble shares to perform in line with its large E&P peers in the absence of near-term catalysts. As such, we maintain our Neutral recommendation for the company.

Read the full analyst report on "NBL"
Zacks Investment Research

Good News for Keryx – Analyst Blog

Zacks Market Commentaries — Fri, 25 Sep 2009 18:05:33 +0000

Yesterday, Keryx Biopharmaceuticals Inc. (KERX) announced positive long-term results from an open-label extension trial of its kidney drug, Zerenex. This oral, iron-based compound treats elevated serum phosphorous levels (hyperphosphatemia) in patients with end-stage renal disease (ESRD) on dialysis.

Results revealed that serum phosphorous was well-controlled under the drug’s effect. The mid-stage trial involved 29 patients in Taiwan who were followed for a year. Prior studies of the drug did not exceed 28 days.

The study also indicated that Zerenex could maintain phosphorus content at a normal level when used over an extended period of time. Additionally, signs of potential iron overload in the blood were not displayed. Zerenex is expected to enter a late-stage study at the end of the year.

As per data from the US Renal Data System, America has nearly 485,000 ESRD patients. This is projected to rise to about 785,000 by 2020. The majority of ESRD patients require dialysis.

The US market for phosphate binders to treat hyperphosphatemia in ESRD patients exceeded $600 million in 2008. It has registered an approximate growth of 25% per annum over the last five years.

The growing dialysis care market has hemodialysis as the most preferred method of treatment in this segment. The other mode of treatment peritoneal dialysis finds favor with a much lesser number of dialysis patients.

The acquisition of Renal Care Group by Fresenius Medical Care (FMS) and acquisition of Gambro by DaVita (DVA) has changed the competitive landscape of the dialysis industry. The two companies now dominate the dialysis services sector.

The positive news regarding Zerenex comes close on the heels of Keryx’s candidate KRX-0401 being granted orphan-drug status by the US Food and Drug Administration for the treatment of multiple myeloma. KRX-0401 is in-licensed by Keryx from Aeterna Zentaris Inc. (AEZS) in the U.S., Canada and Mexico.

The news about the positive long-term data from Zerenex had a positive impact on Keryx’s share price, sending it to a new 52-week high of $3.33 on Wednesday morning. It however ended the day at $2.69 on Nasdaq.

Read the full analyst report on "KERX"
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Read the full analyst report on "FMS"
Read the full analyst report on "AEZS"
Zacks Investment Research

AutoZone Meets Zacks Estimate – Analyst Blog

Zacks Market Commentaries — Wed, 23 Sep 2009 19:13:28 +0000

AutoZone (AZO) reported a 3.1% year-over-year fall in its profit to $236.1 million or $4.43 per share for the fourth quarter of its fiscal year ended August 29, 2009. However, excluding the additional week in last year's fourth quarter results, the profit increased from $227.9 million, or $3.63 per share. The company has also managed to come close to the Zacks Consensus Estimate profit of $4.45 per share.

Gross profit as a percentage of sales remained 50.3%, the same as the year-ago level. While gross margin was positively impacted through continued leverage of distribution costs due to improved efficiencies and lower fuel costs, it was offset by a shift in merchandise sales mix to lower margin products. Operating expenses as a percentage of sales increased to 31.6% from 31.4% last year.

However, excluding the impact from last year's additional week, operating expenses as a percentage of sales were flat compared to last year. Leverage from increased sales was largely offset by continued investments in the enhanced hub stores and an acceleration of its store maintenance program.

Sales for the quarter increased 4.5% to $6.8 billion, while domestic same-store sales were up 4.4%. Operating profit increased 4.6% on an operating margin of 17.3%.

For fiscal 2009, net income increased 2.4% to $657 million, while earnings per share increased 16.8% to $11.73 from $10.04. Excluding last year's extra week, net income increased 5% from $625.8 million and earnings per share increased 19.7% from $9.80. Excluding results from last year's additional week, sales increased 6.6% to $6.82 billion from the prior year and operating profit increased 7.2% to $1.18 billion.

AutoZone's inventory rose 2.7% from the comparable period of last year. However, inventory per store declined 1.4% to $500,000 from $507,000 last year. Net inventory -- merchandise inventories less accounts payable -- decreased on a per-store basis to $20,000 from $25,000 last year. The company believes the continued refinement of its hub and satellite store network heading into the new fiscal year will continue to help mitigate inventory growth while accelerating late model parts coverage.

Share Repurchase Program

AutoZone repurchased 3.8 million shares of its common stock for $587 million during the fourth quarter at an average price of $154 per share. For the fiscal year, the company repurchased 9.3 million shares of its common stock for $1.3 billion at an average price of $140 per share.

Store Openings

During the fourth quarter, AutoZone opened 58 new stores, closed one store, and replaced three stores in the U.S. and opened 20 stores in Mexico. As of August 29, 2009, the company had 4,229 stores in 48 states, the District of Columbia and Puerto Rico in the U.S. and 188 stores in Mexico.

Financial Position

AutoZone had cash and cash equivalents of $92.7 million as on August 29, 2009. Total debt amounted to $2.73 billion as on that date. The company had a stockholder deficit of $433 million as on the above period. In fiscal 2009, AutoZone had a net cash flow of $673 million before share repurchases and changes in debt.

We continue to recommend the shares of AutoZone as Outperform.
Read the full analyst report on "AZO"
Zacks Investment Research

T, PWRM, ABT, CVAT, VZ, CSRH, TSPG, FLIR, DrStockPick.com Stock Report!

Dr. Stock Pick — Wed, 23 Sep 2009 18:48:54 +0000

Dr Stock Pick HOT News & Alerts! _________________________________________ FREE Daily Stock Alerts From DrStockPick.com _________________________________________ Wednesday September 23, 2009 DrStockPick.com Stock Report! T, PWRM, ABT, CVAT, VZ, CSRH, TSPG, FLIR ************************************************************** T, AT&T, Inc. T is a premier communications holding company. Its subsidiaries and affiliates - AT&T operating companies - are the providers of AT&T services in the United States and around the world. T [...]

The Real Price of Gold

Adrian Ash — Wed, 23 Sep 2009 18:31:31 +0000

pemTwo charts and three measures of gold’s “real” price today…/em/p pGOLD’S CURRENT price-tag of $1,000 an ounce suggests big doubts over the US Dollar, its domestic economy, and its status as the world’s No.1 reserve currency./p pOr so we guess after 10 years of watching it quadruple from two-decade lows. But gold investors (old, new and everywhere) should note that this decade’s bull market in bullion is about much more than the greenback./p pHere are three ways of judging what you might call the “real price of gold” instead./p p style="text-align: center;"strong#1. The Global Gold Index/strong/p pGold has risen against all world currencies since the start of 2001, very nearly tripling on average and hitting record highs against everything bar the Japanese Yen. (Tokyo gold buyers are#8230;/p

RockTenn Company – Value – Zacks Rank Buy

Tracey Ryniec — Wed, 23 Sep 2009 05:00:00 +0000

RockTenn Company (RKT) has surprised on the Zacks Consensus Estimate 3 out of the last 4 quarters and has posted record earnings in both the first and third quarters. Can the company do it again when it reports fourth quarter in November?

Company Description

RockTenn manufactures packaging products, bleached and recycled paperboard and merchandising displays. The company has over 200 facilities located in 26 states, Canada, Mexico, Chile and Argentina.

Analysts Bullish on Fiscal Fourth Quarter

The company recently exhibited some pricing power after saying in late July that the paperboard and container board pricing had stabilized in the prior weeks. On Aug 10 it announced a $40 per ton price increase on all grades of coated and uncoated recycled paperboard effective Sep 10.

Since the third quarter report in July, which saw the company report record earnings, the fourth quarter Zacks Consensus Estimate has jumped 40% to $1.19 from 85 cents.

The full-year 2009 Zacks Consensus Estimate climbed 88 cents to $4.61 per share in the last two months.

RockTenn is scheduled to report fiscal fourth quarter 2009 earnings on Nov 10.

RockTenn Posted Record Earnings Per Share in the Third Quarter

On July 27, RockTenn reported fiscal third quarter earnings that surprised on the Zacks Consensus Estimate by 61.80%. Earnings per share were $1.44 compared to the Zacks Consensus Estimate of 89 cents. This also easily bested last year's third quarter earnings of 70 cents.

Sales fell 8.7% to $703.9 million from $771 million in the third quarter of 2008.

However, the company saw improvement quarter over quarter as total tons shipped rose 5.7% compared to the second quarter. Consumer and corrugated packaging operations performed better than expected.

Value Fundamentals

RockTenn is a Zacks #1 Rank (strong buy) stock. The stock is attractively valued, with a forward P/E of 10.71. It is trading with a price-to-book ratio of 2.45.

The company also has a solid 5-year average return on equity (ROE) of 11.65%. As an added bonus, the company also pays a dividend with a current yield of 0.80%.

Zacks Investment Research

Snapshot Observations on the Global Economic Crisis

Robert Amsterdam — Tue, 22 Sep 2009 18:59:51 +0000

CNN Money is running an interesting feature by David Goldman entitled "10 countries, 10 solutions" which details the particularities of the global economic crisis facing 10 key countries. In typical old-media fashion, the layout makes no sense from a user-friendliness...

Coca-Cola’s Secret Ingredient To Success Revealed

Investment U — Tue, 22 Sep 2009 14:26:29 +0000

Coca-Cola’s Secret Ingredient To Success Revealed Tony Daltorio, Investment U Research Today, let’s talk about a company that has: The most widely recognized brand name in the world. A 10% share of the entire global market for non-alcoholic beverages. A monopoly on the very definition of a multinational corporation. If you guessed The Coca-Cola Company (NYSE: KO), then you’d be right. Don’t [...]

Solanex Management, Inc. (SLNX.OB) Expands Previously Signed MOU for Oil Sand Extraction Technology

QualityStocks — Mon, 21 Sep 2009 13:03:44 +0000

The Board of Solanex Management Inc. announced that Solanex has expanded the territories for the sub-license in their Memorandum of Understanding (MOU) for technology leasing rights for sales, marketing and distribution to a Pyrolitic Hydrocarbon Gasification System and a Liquid Extraction Systems. Additionally, the exclusive territories have been expanded to include the country of Mexico. [...]

Behold, The Power Of Cheese… And Chocolate

Investment U — Fri, 18 Sep 2009 14:43:35 +0000

Behold, The Power Of Cheese… And Chocolate Tony Daltorio, Investment U Research The typically sleepy world of food makers woke up this week to the loud sounds of Kraft’s bold takeover offer for Cadbury. Cadbury, the confectionery company that makes Britain’s best known chocolate, has sold cocoa and chocolate since John Cadbury founded it in the [...]

Repsol Strikes Gold in Venezuela – Analyst Blog

Zacks Market Commentaries — Mon, 14 Sep 2009 22:15:31 +0000

Repsol YPF S.A. (REP) recently found a huge gas resource in shallow waters of the Gulf of Venezuela. The largest integrated oil and gas company in Spain said that the offshore field had an estimated area of 33 square kilometers and was 60 meters deep.

Along with its exploration partner Italy's Eni SPA (E), Repsol estimates that the discovery could hold between 7 and 8 trillion cubic feet of gas. This equals to more than five years of gas consumption in Spain.

While the two companies will have a 32.5% interest each in all future productions, Venezuela's state-owned oil company Petroleos de Venezuela SA would hold a 35% stake.

Repsol is targeting stable production growth driven by pipeline projects in Venezuela, Trinidad and Tobago, Libya, Bolivia, Argentina and Ecuador. Long-term growth is expected to come from opportunities in Trinidad and Tobago, Algeria, the US Gulf of Mexico, Libya and Saudi Arabia.

However, a challenging operating and contractual environment in Venezuela may create obstacles for developing new gas reserves. The Venezuelan government also maintains that any new gas development should be directed to heavily subsidized prices in the domestic market. This could have a negative impact on Repsol’s earnings visibility.

Apart from this, we are also concerned about the company’s declining reserves, very low reserve lives and rising costs. Consequently, we maintain our Neutral recommendation.

Read the full analyst report on "REP"
Read the full analyst report on "E"
Zacks Investment Research

No Improvement in GWW’s Top-line – Analyst Blog

Zacks Market Commentaries — Mon, 14 Sep 2009 21:15:04 +0000

W.W. Grainger Inc.’s (GWW) sales for the month of August were down 13% compared to last year. This was slightly narrower compared to the 14% decline in July. The company continues to witness weak demand in all its end-markets and geographies. The economic slowdown is driving Grainger’s customers to idle or close facilities and delay purchases, thereby affecting the company’s top-line growth.

Grainger witnessed a 14% decline in U.S. sales, same as in July. Sales were down in all the end-markets. After increasing marginally in the second quarter, sales to the government segment declined in single digits in the first two months of the third quarter, reflecting weakness among state agencies owing to budget cuts.

In the Canadian (Acklands-Grainger) division, sales were down 8%, an improvement compared to the 19% decline in the month of July. Sales were down 5% in local currency due to continued weakness in the forestry and mining industries, which was partially offset by growth in the construction, utility and mining markets.

Sales from Grainger’s other businesses increased 16% in August, compared to 5% growth witnessed in the previous month. This was driven by driven by sales growth in Puerto Rico, China and Panama, along with the incremental sales from India. Sales in Mexico fell 20% due to the unfavorable impact of foreign exchange translation. Mexican sales were up 3% in local currency.

Grainger anticipates higher sales in September, compared to that in July and August. However, the monthly sales are expected to be lower compared to the prior-year level. We forecast an 11% decline in sales for the full year.

We maintain our Hold recommendation on Grainger.
Read the full analyst report on "GWW"
Zacks Investment Research

Zacks Bull and Bear of the Day Highlights: Tyco International, Valero, Textron, Outboard Marine and Walmart – Press Releases

Zacks Market Commentaries — Mon, 14 Sep 2009 14:15:04 +0000

For Immediate Release

Chicago, IL – September 14, 2009 – Zacks Equity Research highlights Tyco International (TYC) as the Bull of the Day and Valero (VLO) the Bear of the Day. In addition, Zacks Equity Research provides analysis on Textron (TXT), Outboard Marine (OM) and Walmart (WMT).

Full analysis of all these stocks is available at http://at.zacks.com/?id=2676

Here is a synopsis of all five stocks:

Bull of the Day:

We are initiating coverage on Tyco International (TYC) shares with an Outperform rating and $36 target price.

The company's third-quarter results benefited from the improvement in key metrics like account growth, average revenue per user and the disconnect rate, which helped sustain recurring revenues.

Tyco is increasing capital expenditure on Research & Development at its two new centers in Shanghai and Bangalore, which are focused on developing products tailored to respective local markets. The company is aggressively pursuing its restructuring program and expects to realize tangible benefits in 2010.

Bear of the Day:

We reiterate our Underperform rating for Valero (VLO) shares as a combination of weak demand, excess production capacity and narrowing crude quality spreads are expected to weigh on near-term margins.

In addition to the near-term margin issues, commissioning of new refineries and extension projects indicate future struggle as global demand for almost all fuel products (except gasoline) is trending down.

The medium to long-term outlook also remains cloudy, with unfavorable regulatory changes (growing biofuel mandates) weighing on demand growth and limiting margin gains. Being the largest independent refiner, Valero remains particularly exposed to this unfavorable macro backdrop.

Wells Fargo Widens Remittance Ambit – Analyst Blog

Zacks Market Commentaries — Thu, 10 Sep 2009 20:30:09 +0000

Wells Fargo & Company (WFC) announced the expansion of its money transfer program to the Internet, making it easier for customers to send money to family members living in Mexico, India and other South Asian countries.

The ExpressSend remittance service was introduced in 2007 at the bank's branches and over the phone.

The transferred money can be collected from the branches of specified overseas banks and at their automated teller machines. Customers using the service online will continue to receive detailed information on how and where the money is being sent including the associated fee, the foreign exchange rate and the foreign exchange margin. The margin is the estimated revenue the bank earns on the conversion.

Wells Fargo said transaction fees will be discounted or even waived for customers sending money from eligible Wells Fargo checking and savings accounts. Money through the new service will arrive in Mexico, El Salvador and Guatemala on the same day it is sent and on the next business day in China, India, Vietnam and the Philippines.

The expansion will fulfill customers’ desire for anytime, anywhere banking, providing them with the flexibility and convenience of conducting their financial transactions whenever they want.

Wells Fargo reported second quarter net income of 57 cents per share. The company reported that the Wachovia merger is on track and expects to realize $5 billion of annual merger-related savings upon completion of the integration. During the latest reported quarter, 39% of the combined revenue came from Wachovia. With the combined resources, Wells Fargo will be in an even better position to satisfy its customers’ financial needs.

We maintain a Neutral recommendation on the shares of Wells Fargo.
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Glaxo Moves Ahead With Cervarix – Analyst Blog

Zacks Market Commentaries — Thu, 10 Sep 2009 20:00:58 +0000

Yesterday, GlaxoSmithKline (GSK) received a favorable recommendation from the US Food and Drug Administration's (FDA) Vaccines and Related Biological Products Advisory Committee (VRBPAC) for its cervical cancer vaccine, Cervarix.

While the advisory committee voted 12-1 in favor of the efficacy of the vaccine, its safety profile got 11-1 in support from the panel. While the FDA is not bound by the advisory committee’s recommendation, it generally follows the suggestion.

Cervarix was found to be highly effective and was well tolerated in the prevention of cervical pre-cancers and cervical cancer related to human papillomavirus (HPV) types 16 and 18, in girls and young women. Types 16 and 18 are the two most common virus types known to cause cervical cancer.

The vaccine is currently approved in nearly 100 countries around the world, including the 27 member states of the European Union, Australia, Brazil, South Korea, Mexico and Taiwan. Glaxo is seeking approval in more than 20 additional countries including the U.S. and Japan.

Approval in the U.S. would open up a very large market for the product, which recorded £125 million in global sales in 2008. Once approved, Glaxo will compete directly with Merck’s (MRK) Gardasil. Although Merck beat Glaxo to the market, we believe Cervarix comparatively offers a broader base, has more potent protection and could achieve peak sales of approximately £1.5 billion.

Glaxo has presented very encouraging data against genotypes that account for 70% of cervical cancer cases and management believes that Cervarix may offer protection against several other genotypes that could increase this figure to 80% of cervical cancer cases.

The American Cancer Society estimates that about 11,000 women will be diagnosed with cervical cancer and 4,000 women will die from the disease in 2009 in the U.S. Globally, more than 500,000 more women are expected to be diagnosed with cervical cancer and 280,000 women to die from it every year.

A response from the US FDA on Cervarix should be out shortly. We believe that US approval of Cervarix will significantly boost Glaxo’s vaccine segment revenue, which came in at £2.5 billion in 2008.

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Census Bureau: Poverty Rising – Analyst Blog

Dirk Van Dijk — Thu, 10 Sep 2009 19:20:36 +0000

Today the Census Bureau released its report on incomes, poverty and health insurance coverage for 2008. Most of it was (not surprisingly) bad news. Here are some of the highlights (lowlights?):

The U.S. Census Bureau announced today that real median household income in the United States fell 3.6 percent between 2007 and 2008, from $52,163 to $50,303.
The nation’s official poverty rate in 2008 was 13.2 percent, up from 12.5 percent in 2007. There were 39.8 million people in poverty in 2008, up from 37.3 million in 2007.
The number of people without health insurance coverage rose from 45.7 million in 2007 to 46.3 million in 2008,
In 2008, the earnings of women who worked full time, year-round was 77 percent of that for corresponding men, not statistically different from the 2007 ratio.
The real median earnings of men who worked full time, year-round declined by 1.0 percent between 2007 and 2008, from $46,846 to $46,367. For women, the corresponding drop was 1.9 percent, from $36,451 to $35,745.
Income inequality was statistically unchanged between 2007 and 2008, as measured by shares of aggregate household income by quintiles and the Gini index. The Gini index was 0.466 in 2008. (The Gini index is a measure of household income inequality; 0 represents perfect income equality and 1 perfect inequality.)
Between 2007 and 2008, the number of people covered by private health insurance decreased from 202.0 million to 201.0 million, while the number covered by government health insurance climbed from 83.0 million to 87.4 million. The number covered by employment-based health insurance declined from 177.4 million to 176.3 million.
The number of uninsured children declined from 8.1 million (11.0 percent) in 2007 to 7.3 million (9.9 percent) in 2008.

A 3.6% drop in the real median household income is huge. While there were some minor increases in 2004 to 2007, real median incomes are still lower than they were in 2000. Keep the $50,303 number in mind the next time discussions of banker bonuses come up. The poverty rate greatly underestimates the number of people in poverty, but even with the very conservative definition, 13.2% of the population in poverty -- more than one in eight -- is scandalous.

Why do I say that the official poverty rate understates poverty? Because the formula was set up back in the early 1960’s and was based on the percentage of income spent on food. Since then, the relative price of food has plummeted, while the cost of other necessities like shelter, health care and education has skyrocketed.

Frankly, I am surprised that the number of uninsured did not rise more than it did, given that most health insurance in the country is tied to employment and unemployment rose significantly over the course of 2008. However, the worst job losses for the year were at the very end.

I would expect that the number of uninsured will jump again in 2009. A big reason that the number of total uninsured did not rise further was the expansion of the S-Chip program for children. Without the drop in uninsured children due to the program, the increase in total uninsured would have been more than twice what it was. "Socialist" medicine, also known as Medicare, Medicaid and the VA, has managed to pick up the slack and provide coverage to those who are losing their private sector coverage.

It was good to see that the Gini index did not increase further -- it is the best single measure out there of income inequality, and the U.S. is already off the charts by developed country standards. With a Gini coefficient of 0.466, the distribution of income in the U.S. far more closely resembles that of China, Mexico and Rwanda than it does that of Canada, the UK or Australia. Our Gini index is twice that of Sweden, which has the world’s flattest income distribution. The highest level of inequality in the world is Namibia at 0.707. We are actually closer to Haiti (0.592) than we are to Canada (0.320). To see the international comparisons check here.

With half the households in the U.S. earning $50,303, it means that half the population can only afford to shop at discounters like Walmart (WMT) or Family Dollar (FDO). They have to spend on staples and necessities, not on discretionary items.

People in the lower half of the income distribution are far less likely to have health insurance coverage. If not provided by the job (low-wage jobs are much less likely to provide insurance than high-income jobs), how are they supposed to buy coverage when the average individual family plan costs $12,000 a year?

The result is that they will only get health care when they show up at the emergency room, which is a very expensive way to care for people. They also probably wait until they are very sick to seek treatment; thus problems that if caught early could have been solved with an Rx for antibiotics result in hospital stays. The only other option for them is death, and an estimated 20,000 people die each year in this country from easily treatable conditions because they have no health insurance.

With more than 25 years of experience as an analyst and portfolio manager, Dirk van Dijk is Zacks’ Chief Equity Strategist. He also manages the new long-term investing service, Strategic Investor">Strategic Investor.

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