Management stated that the impact of global slowdown led to the year-over-year decline, but the business environment is improving.

On a segment basis, Electronics Marketing (EM) sales came in at $2.44 billion, down 9.8% year over year (down 8.0% when adjusted to exclude the impact of changes in foreign currency exchange rates). The rate of revenue decline moderated in the reported quarter and management is encouraged by pace of bookings for this segment in recent months.

Technology Solutions (TS) generated sales of $1.92 billion, up 6.9% year over year (up 10.5% when adjusted to exclude the impact of changes in foreign currency exchange rates), driven by growth in Americas and Europe, Middle East and Asia (EMEA).

The company recently acquired a controlling interest in Vanda Group from Hutchinson Whampoa Limited in a strategic move to expand its presence and customer base across China. The transaction will provide the Technology Group with a strong foothold in the banking and financial sector, where Vanda's flagship product, VisionBanking Suite, is a well-known solution.

Operating margin came in at 2.46%, compared to 2.26% in the previous quarter. Net income declined 33.9% year over year to $67.2 million. Earnings per share (EPS) of 44 cents easily beat the Zacks Consensus Estimate of 34 cents.

During the reported quarter, Avnet generated $6.2 million of cash flow from operations. As a result, Avnet ended the quarter with $987 million of cash and cash equivalents and net debt (total debt less cash and cash equivalents) of $20 million.

Going forward, management expects revenues between $4.10 billion and $4.70 billion in the second quarter of fiscal 2010. Earnings per Share (EPS) are expected between 52 cents and 60 cents.

Earlier, rival Arrow Electronics (ARW) reported a small profit and provided a disappointing forecast. Profit narrowed significantly at Arrow due to restructuring charges. The company provided a conservative guidance for the fourth quarter, due to limited visibility.

Though the early signs of recovery improve business sentiments, IT spending is yet to pick up. The recovery is expected to be slow and steady and visibility is not clear - at least in the near-term. Orders are yet to return to normal levels.

Most of the growth for the company is coming from low margin Asian region.

We would like to be on sidelines before becoming positive on Avnet, Inc.

Based in Phoenix, Avnet is one of the largest distributors of electronic components, computer products and embedded technology serving customers in more than 70 countries worldwide.

Chicago, IL – October 14, 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: Las Vegas Sands (LVS), Wynn Resorts Ltd. (WYNN), MGM Mirage (MGM), Advance Auto Parts (AAP) and O’Reilly Automotive (ORLY).

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Here are highlights from Tuesday’s Analyst Blog:

Macau Casino Growth Threatened?

The explosive growth of the casino industry in Macau may be threatened as the government of Macau − the Chinese gambling Mecca − is considering ways to impose restrictions on age, number of tables and locations of casinos.

Yesterday, government officials of Macau met with six major casino operators including Las Vegas Sands (LVS) and Wynn Resorts Ltd. (WYNN) and a casino jointly operated by MGM Mirage (MGM) and local businesswoman/tycoon Pansy Ho, concluding that limitless expansion of the Macau gambling sector may be harmful to the society. Significant expansion of the gambling business in Macau has encouraged corruption, addiction and prostitution in that area.

The government is considering regulations like raising the entry age limit for casinos to 21 years from 18 years, limiting the number of tables per casino and modifying zoning laws to compel slot machine halls away from residential areas and into commercial zones.

Advance Auto Targets E-Commerce

Advance Auto Parts (AAP) has launched its own e-commerce website, AdvanceAutoParts.com, to sell its products online for the first time since its dissolution with Phoenix-based auto retailer CSK Auto during the first quarter of 2009. The website will allow customers to purchase more than 100,000 parts and accessories. It will also allow free shipping on purchases of $75 or more as well as free in-store pickup.

The Roanoke, VA-based auto retailer previously operated a similar website called PartsAmerica.com in partnership with CSK Auto. However, it had to close down the website after CSK was acquired by Springfield, MO-based auto retailer O’Reilly Automotive (ORLY). At that time, Advance Auto only operated an online merchandise lookup feature.

In 2007, Advance Auto targeted e-commerce as a potential growth channel. The company now aims to take it to the next level. Last month, the company opened an e-commerce office in Campbell, CA, near Silicon Valley. The headcount in the office (currently constituting 20 employees) will be doubled as the company ramps up the new website.

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The Pier Shops at Caesars is a 282,000 square feet shopping center in which Taubman owns a 77.5% stake. The company considers net operating income from the property to be insufficient to repay its $135 million non-recourse mortgage debt. Thus, it will write down book value of the asset by $106 million to $111 million, out of which Taubman has a share of about $100 million to $105 million.

Regency Square is an 820,000 square feet shopping center housing leading fashion retailers like Macy’s Inc. (M), J. C. Penney Co. Inc. (JCP) and Sears Holding Corp. (SHLD). Taubman anticipates cash flow from the property to be hurt by the decline in its net operating income and necessary capital expenditures. It is accordingly writing down book value of the asset by $55 million to $58 million to approximately $30 million.

Taubman owns, develops, acquires and operates regional and super-regional shopping centers throughout the U.S. and Asia. Retail shopping centers spanning over 400,000 square feet of gross leaseable area (GLA) are generally referred to as regional shopping centers, while those with GLA in excess of 800,000 square feet are called super-regional shopping centers. A large number of these shopping centers are strategically located in major metropolitan areas, including Los Angeles, San Francisco, Denver, Detroit, Phoenix, Miami, Dallas, Tampa, Orlando and Washington DC.

Based in Phoenix, Arizona, Avnet is one of the world’s largest distributors of electronic components and computer products. MosChip provides high performance multimedia and connectivity solutions for consumer, industrial and computing applications.

According to the deal, Avnet’s Electronics Marketing unit will distribute MosChip products throughout Asia. The distribution agreement spans Australia, China, India, Korea, Hong Kong, New Zealand, Taiwan and Southeast Asia. MosChip products include Network Appliance Processors and co-processors, audio / video processors, USB and PCI / PCI Express connectivity semiconductors.

Last month, Avnet reported weak fourth-quarter results as its top line remained challenged by adverse business conditions amid the global economic slowdown. The company’s organic growth continues to be lackluster and it continues to expand only through acquisitions.

Although both bookings and billings increased during the period and backlog was up for the first time in several quarters, rival Arrow Electronics (ARW) maintained that the weakness in top line is yet to bottom out and visibility still remains limited. In particular, business conditions in Europe remain challenging.

Management stated that growth in Asia continues to offset sales decline in other regions. Business in Asia is associated with lower selling prices and lower costs. While this might help margins in the short term, it would not be sustainable until Avnet sees some strength in the high-margin Americas and EMEA regions.

The company had previously reduced its annual dividend payout to $0.70 per share from $1.00 declared earlier, significantly down from $2.07 in 2008. The move is aimed at conserving liquidity in the current credit-constrained market.

In response to the continued economic downturn and rapidly deteriorating industrial real-estate fundamentals, ProLogis had already stopped all new initiatives and early-stage developments. The company is currently concentrating on increasing its liquidity and deleveraging its balance sheet through asset sale.

ProLogis owns and manages interests in over 2,500 distribution facilities, service offices, and properties spanning 475 million square feet (including properties under development) of space. During the first quarter of 2009, the company sold its operations in China and Japan to affiliates of GIC Real Estate, the real-estate investment arm of the Government of Singapore Investment Corporation.

During the second quarter, ProLogis sold about 136 properties with an average age of 20 years. Spanning across 14.2 million square feet, the properties were located in markets like Chicago, Houston, Dallas, Atlanta, Memphis, Northern and Southern California, Seattle, Portland, Phoenix, Washington DC and Northern New Jersey.

ProLogis is the best-positioned industrial REIT in the current scenario. However, we maintain our Neutral recommendation on the stock in view of the overall decline of the industrial real estate sector.

Consequently, EPS plunged 26.7% year over year to $0.55, despite a 7% decline in total operating costs. However, it did surpass the Zacks Consensus Estimate of $0.54. On a reported basis, the company announced a net loss per share of $3.64, compared to EPS of $0.42 in the prior-year quarter.

Management expects EPS for the first quarter 2010 in the range of $0.30 to $0.35, and fiscal year 2010 in the range of $1.60 to $2.00.

Although a well-run company, Meredith is not immune to the secular downturn in the print media industry, which has been exacerbated by sluggish economic growth and an increase in paper costs. Publishing revenue continues to fall (down 4.7% to $283.4 million).

Publishing advertising revenue fell 9.5% in the quarter, and management expects it to decline in the mid-single digit range for the first quarter of 2010.

However, looking at the yearly trend, the second half of 2009 fared better than the first half on account of performance improvement measures taken by management. Magazine advertising fell 12% in the second half, an improvement over an 18% drop in the first half. Online advertising jumped to 7% in the second half from a decline of 14% in the first half.

Broadcasting revenue is also plummeting (20.8% to $62.5 million) led by 55% decline in automobile advertising, along with weakness in the Phoenix and Las Vegas markets, and the absence of political advertising. Broadcasting advertising revenue is currently pacing down nearly 25% for the first quarter of 2010.

The weak economy has prompted Meredith to diversify and add significant revenue streams beyond traditional advertising by leveraging its brands through strategic alliances. The company recently expanded the scope of its multi-year licensing agreement with Wal-Mart Stores for the design, marketing and retailing of home products based on the ‘Better Homes and Gardens’ (BHG) brand. In fiscal year 2009, Wal-Mart doubled the number of BHG brand products to more than 1,000, and will also launch the products in Canada in the second half of calendar year 2009. Brand licensing revenue rose 14% in fiscal year 2009.

In addition, MDP is taking initiatives to enhance its online presence. The company's flagship websites include BHG.com and Parents.com; the Real Girls Media Network, an online social women’s network; and Mixingbowl.com, an online social community interested in cooking.

Most recently, Meredith launched Meredith Women's Network, the first brand network comprising premium websites covering mostly women-related topics. We expect online revenue to become a more meaningful contributor in the next couple of years.

We maintain a Hold rating on the stock.

After 15 years of litigation, The New York State Court of Appeals – the highest court in the state – ruled against Taubman and upheld the plea of local activists on environmental grounds. In view of the court ruling, the company would probably have to write off over $150 million invested in the project.

The recent court order forbids Taubman to develop a high-end mall at the site and leaves it with three options – a) accepting defeat and selling the land; b) contemplating a mixed-use development; or c) re-appealing against the court order. A spokesperson said that the company is currently evaluating all options before taking a final call on the decision.

Taubman owns, develops, acquires and operates regional shopping centers throughout the US. A large number of these shopping centers are strategically located in major metropolitan areas, including Los Angeles, San Francisco, Denver, Detroit, Phoenix, Miami, Dallas, Tampa, Orlando and Washington DC.

The Oyster Bay project had been a continuous drag on the company’s earnings. During the fourth quarter of 2008, Taubman recorded $116 million as impairment charges for the project due to continued delay and uncertainty regarding completion of the project.

Taubman has a high quality roster of high-end and specialty retailers at its malls and commands some of the highest rents in its sector. High-end and specialty retailers have been the hit hardest in the current recession and this trend will continue through at least the end of this year.

The recent spate of unfavorable court rulings would also add to the woes of the company. However, we think Taubman is better positioned than many peers due to its clean balance sheet and minimal debt maturities. We reiterate our Hold rating of the company.

Recently, on July 2, 2009, the company announced that it would lay off 1,400 employees or about 3% of its headcount this month at its publishing division. Gannett announced that each of its markets will complete its own downsizing plan depending on local conditions.

On July 9, 2009, the Courier-Journal newspaper operating in the Louisville market laid off 44 employees, or 7% of its work force, as part of the company’s downsizing plan. Earlier, 51 employees were laid off in December 2008. The Arizona Republic newspaper operating in Phoenix lowered its headcount by 100.

The company also started executing its plans to eliminate 106 full-time and 19 part-time positions at its six New Jersey newspapers because of the depressed economy. Last year in December, the company reduced more than 200 positions at its New Jersey newspapers. The Cincinnati Enquirer, another newspaper operating in Cincinnati, announced a layoff of 101 employees.

Like Gannett Co., other newspaper companies like Washington Post Company (WPO), E.W. Scripps Company (SSP), McClatchy Company (MNI), Journal Communications (JRN), News Corporation Limited (NWS) and The New York Times Company (NYT) are all struggling to survive in the turbulent economy. The overall industry outlook appears gloomy with no sign of improvement near term as advertising demand worsens and readers migrate to the Internet and alternative media.

The Zacks Rank for GCI stock is #4 (Sell). Yesterday the stock closed at $3.19.

ProLogis Inc. (PLD), a publicly traded real investment trust (REIT), has recently sold most of its industrial buildings in North America for $561 million. The company had been marketing most of these assets for sale since late 2008 and expects to realize $200 million in net proceeds from the disposal. ProLogis further expects to sell an additional $96 million worth of properties in North America in the second half of 2009.

In response to the economic realities of constrained credit and rapidly deteriorating industrial real estate fundamentals, ProLogis had earlier stalled all new ventures and early-stage developments. The company is currently concentrating on increasing its liquidity and de-leveraging its balance sheet through sale of assets.

ProLogis is currently selling about 136 properties with an average age of 20 years. Spanning across 14.2 million square feet of space, the properties are located in various markets such as Chicago, Houston, Dallas, Atlanta, Memphis, Northern and Southern California, Seattle, Portland, Phoenix, Washington DC and Northern New Jersey. The blended stabilized cap rate is expected to be 8.89%.

With the recent transaction, ProLogis has generated $840 million from asset sales in 2Q09. The company had earlier received $151 million from contributions of stabilized properties to the ProLogis European Properties Fund II (PEPF II) and $128 million from the sale of a property in Japan. The company sold its Japanese property to GIC Real Estate (GIC), the real estate investment arm of the Government of Singapore Investment Corporation. In 1Q09, GIC had acquired all ProLogis properties in China and a part of its Japanese property fund interests for $1.3 billion.

In addition to proceeds from sale of assets, ProLogis had received $345 million of secured debt financing during 2Q09. With the new capital, the company addressed all its debt maturities in 2009 and reduced its corporate debt by over 25% ($2.7 billion) from September 30, 2008 levels.

ProLogis is the best positioned industrial REIT in the current scenario. Its recent efforts to de-leverage further make us confident of maintaining our Buy rating and a favorable outlook for the company.

Roger Nusbaum says he isn’t convinced that the current three-month-old stock rally is more than a brief respite from a longer-term secular bear market.

But that isn’t stopping the portfolio manager at Phoenix-based Your Source Financial from seizing opportunities when they present themselves. Nusbaum last week increased his clients’ exposure to the iShares Dow Jones U.S. Technology ETF (NYSE: IYW).

His client portfolios still generally have around 20% in cash. At one point last fall, that was up to 25% in cash. It was the largest amount on a percentage basis that Nusbaum has ever held out of circulation, he says.

“I’m skeptical for a whole host of reasons that a new cyclical bull market has started,” said Nusbaum. “The extent to which the Fed and Treasury have printed money, issued debt and are monetizing some of that debt makes for a very unattractive proposition.”

Also, he sees another enormous wave of repossessions coming. “That’s very scary,” said Nusbaum, who points to recent research by economist and fund manager John Hussman as evidence.

Playing For The Long Term

Despite his own rather stark short-term views, Nusbaum says he feels it’s important to stick to the facts when investing. For him, that means using all sorts of different fundamental factors to evaluate where markets are in any given economic cycle.

He also incorporates a broad technical indicator into his investing toolbox. Nusbaum watches where prices are at any given time for the S&P 500 relative to its 200-day moving average. When the blue chip benchmark is above that level, as it is now, he notes that market conditions are generally positive.

“Despite my concern over market fundamentals going forward, I’m sticking with a disciplined approach,” said Nusbaum. “Instead of trying to guess when markets will turn, I listen to what the market is telling me. And right now, the 200-day moving average on the S&P is indicating that demand is becoming healthier.”

So he’s lightening up on his cash positions in corners of the market that look most appealing to him. One of those is tech, which Nusbaum has been underweighting for quite awhile. “Tech usually has more volatility than the broader market,” he said. “So increasing our weightings there slightly actually will allow our clients to get more bang for their buck as markets turn around.”

Nusbaum added: “This current rally may be a head fake. But even by moving a bit more into tech, we’ve still got about a three-quarter weight [under] the S&P 500.”

And by moving from an extreme underweight to a slight underweight position, he says, “allows me to keep more in cash with the rest of the portfolio in case I’m wrong about a turnaround in the market.”

The point of such a move, says Nusbaum, is to remain flexible enough to retain long-term risk-reward profiles for his client portfolios and not resort to trying to outguess the market.

Taking A Top-Down Approach

Nusbaum starts by carving up the S&P 500. He underweights or equal-weights the 10 major sectors in the index. Those decisions are based on where he perceives markets are in terms of economic cycles and other geopolitical factors in the world.

“I believe in taking a top-down strategy. And the most important decision in that process is when to be in the market and when to be out of the market. For that decision, I rely on the 200-day moving average for the S&P 500,” said Nusbaum.

He then drills into each sector once an overall investment theme is formulated. For example, despite the recent comeback by financials, Nusbaum says he can’t build a very strong fundamental case for owning many banks. “So I own only individual stocks right now in financials. It’s a situation where unless you’re looking to make short-term trades, financial ETFs are just too broad right now,” he said.

Nusbaum has slight overweights in telecom, utilities and materials. He’s using funds such as the Vanguard Telecom Services ETF (NYSE: VOX), the iShares S&P Global Utilities Index (NYSE: JXI) and the iShares S&P Global Materials Index (NYSE: MXI) for part of those exposures. With commodities, his target weight is 4-5%. He’s using the SPDR Gold Shares (NYSE: GLD) and the PowerShares DB Agriculture ETF (NYSE: DBA) to cover that corner of the market.

“Over time, I can see inching our commodities exposure up an additional 2%. But in the near term, I have no plans to do so,” said Nusbaum. “And that’s not a technical decision, it’s a purely fundamental one.”

Despite the tremendous run by commodities in this decade, he says that equities still present the most potential for outperformance over the longer term. “Every 30-40 years, we have decades like this where equities really do poorly relative to other asset classes,” said Nusbaum. “We’ll probably run into another down period in 30-40 years.”

He believes that the U.S. economy is most of the way through its recovery process following the bear market that lasted from mid-2007 up to this March. “If we’re most of the way through the worst of the downturn, a long-term plan of owning a lot of commodities doesn’t make a whole lot of sense,” said Nusbaum.

He expects inflation to heat up, but not necessarily to hyper-levels as some pundits are suggesting. His own belief is that the U.S. will see prices rise on average of around 5-6% on an annualized basis in coming years.

“Although inflation might become more uncomfortable in the future, we’re not at the point where people need to worry. It’s likely that inflation rates will become a little uncomfortable – but not in the hyperinflation range,” said Nusbaum.

In addition to being underweight equities, he’s also underweight fixed income. Nusbaum believes prices on Treasuries are too high right now. “We don’t try to trade fixed income for capital gains. We try to use it to offset portfolio volatility. With that type of an approach, it makes sense for us to wait until prices come down,” said Nusbaum.

He’s also underweighting corporate issues. “Despite the bounce-back by stocks, the fixed-income market is still broken. So I’m not willing to make big bets on corporate issues in order to gain higher yields at this point,” said Nusbaum.

-- This report was submitted by IndexUniverse.com's Murray Coleman.

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Here are highlights from Friday's Analyst Blog:

Investors Seek to Make Owners Rent

In some select markets, even with foreclosures still looming, bidding wars are actually occurring.

In Phoenix for example, a large supply of foreclosed families who can no longer qualify for a loan has spurred investor interest to turn as many of these families as possible into rent-paying tenants in the very homes they used to own. The bidding war is generally from absentee buyers (investor or vacation properties), which currently represents 4 out of 10 homes sold in the Phoenix metropolitan area as of April. This is about double the level experienced for 2007.

Homes that sold originally for $225,000, now have been sold for $80,000-110,000. Great news for the investor, unless the population contracts.

Similar antidotal data appears to be occurring in the California markets of such as Carlsbad, Oceanside and Vista, but only at much higher prices in the $350,000-400,000 range.

For the banks such as (but not limited to) Citigroup (C), Bank of America (BAC), Wells Fargo (WFC), US Bancorp (USB), JPMorgan Chase (JPM), their respective Other Real Estate Owned (OREO) levels may not expand as these homes sell, but we would expect the need for additional substantial write-offs and provisions from the valuation of these sold homes has been cut more than in half.

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About Zacks Equity Research

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

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

Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: http://at.zacks.com/?id=2677

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=4580.

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

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

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

The S&P/Case-Shiller Home Price Indexes continued to set record declines in March 2009, according to new data released by S&P.

The S&P/Case-Shiller U.S. National Home Price Index fell 19.1% in Q1 2009 over year-ago levels, the largest drop in the index's 21-years of back-tested data. 

The more widely used 10-City and 20-City Composites dropped 18.6% and 18.7% respectively, according to S&P's statement about the latest figures for the indexes.

The average home price in the nation is now down 32.2% from its peak in Q2 2006, and home prices have retreated to levels last seen in Q4 2002.

Phoenix, Las Vegas and San Francisco posted the worst year-over-year returns, declining 36%, 21.2% and 30.1%, respectively. Denver did the best, falling just 5.5% year-over-year.

Home prices in Phoenix are now down 53% from peak levels in June 2006.

Three cities managed monthly gains in March, with prices rising in Charlotte (0.3%), Denver (0.1%) and Dallas (0.0%). Elsewhere, however, the pace of the decline was brutal, with home prices in Minneapolis dropping 6.1% in March alone; in Detroit, prices retreated 4.9%.

Although the S&P/Case-Shiller Home Price indexes kept dropping in February, some good signs did appear.

For the first time in 16 months, the benchmarks' fall didn't set new records, according to the latest monthly results released on Tuesday. That was seen as at least some sign of progress for the heavily depleted housing market.

Nearly all of the major metro areas followed by the index, which benchmarks existing single-family home prices across the country, showed improvement from January.

"We will certainly need a few more months of data before we can determine if home prices are finally turning around," said David Blitzer, chairman of S&P's index committee, in a statement.

All 20 metro areas covered by the indexing series produced a monthly decline in February. However, some 16 of the 20 metro areas saw an improvement in their monthly returns compared with January. "Furthermore, this is the first month since October 2007 where the 10- and 20-City composites [benchmarks] did not post a record annual decline," added Blitzer.

Still, average U.S. home prices are at similar levels to where they were in the third quarter of 2003. From the peak in mid-2006, the 10-City Composite Index was down 31.6% and the 20-City Composite was down 30.7% through February 2009.

From the U.S. housing market's peak through February 2009, Dallas has suffered the least. Average home prices in that metropolitan market were down 11.1% from peak levels in June 2007. Meanwhile, Phoenix was down 50.8% from its peak in June 2006.

Cleveland was the only metro area having a record monthly decline, returning -5.0%. Besides that metro area, home prices in Charlotte, New York and Washington were the only areas showing larger declines in February than the previous month.

But all 20 major metro areas remained steeped in double-digit declines from their peaks. In fact, 10 of those posted February declines of greater than 30% and seven of those—Detroit, Las Vegas, Los Angeles, Miami, Phoenix, San Francisco and San Diego—in excess of 40%.

On an annualized basis, three metro areas fared the best:

• Dallas dropped 4.5% and turned in the best performance, returning -0.3%

• Denver fell some 5.7%

• Boston lost 7.2%

The three worst-performing cities continue to be from the Sunbelt, all reporting negative returns in excess of 30%:

• Phoenix was down 35.2%

• Las Vegas declined 31.7%

• San Francisco fell 31%

Although the S&P/Case-Shiller Home Prices indexes kept dropping in February, some good signs did appear.

For the first time in 16 months, the benchmarks' fall didn't set new records, according to the latest monthly results released on Tuesday. That was seen as at least some sign of progress for the heavily depleted housing market.

Nearly all of the major metro areas followed by the index, which benchmarks existing single-family home prices across the country, showed improvement from January.

"We will certainly need a few more months of data before we can determine if home prices are finally turning around," said David Blitzer, chairman of S&P's index committee, in a statement.

All 20 metro areas covered by the indexing series produced a monthly decline in February. However, some 16 of the 20 metro areas saw an improvement in their monthly returns compared to January. "Furthermore, this is the first month since October 2007 where the 10- and 20-City composites (benchmarks) did not post a record annual decline," added Blitzer.

Still, average U.S. home prices are at similar levels to where they were in the third quarter of 2003. From the peak in mid-2006, the 10-city composite index was down 31.6% and the 20-city composite was down 30.7% through February 2009.

From the U.S. housing market's peak through February 2009, Dallas has suffered the least. Average home prices in that metropolitan market were down 11.1% from peak levels in June 2007. Meanwhile, Phoenix was down 50.8% from its peak in June 2006.

Cleveland was the only metro area having a record monthly decline, returning -5.0%. Besides that metro area, home prices in Charlotte, New York and Washington were the only areas showing larger declines in February than the previous month.

But all 20 major metro areas remained steeped in double-digit declines from their peaks. In fact, 10 of those posted February declines of greater than 30% and seven of those -- Detroit, Las Vegas, Los Angeles, Miami, Phoenix, San Francisco and San Diego -- in excess of 40%.

On an annualized basis, three metro areas fared the best on an annualized basis:

• Dallas dropped 4.5% and turned in the best performance, returning -0.3%

• Denver fell some 5.7%

• Boston lost 7.2%

The three worst performing cities continue to be from the Sunbelt, all reporting negative returns in excess of 30%:

• Phoenix was down 35.2%

• Las Vegas declined 31.7%

• San Francisco fell 31%

The decline in housing values is really at the core of the current economic troubles. To be more precise, it was the unwarranted rise in those housing values (which are now returning to earth) that was the core problem -- it is just that the pain is felt on the downside of the bubble.

The continuing decline in housing prices will lead to more people being underwater on their homes. That will lead to more foreclosures (and rising unemployment will speed that process along). Those foreclosures will cause more pressure on bank balance sheets.

Since the administration seems intent on being extremely nice to the bankers, it means that there will be more taxpayer money flowing to the coffers of the banks to shore them up. It certainly does not come as a surprise that Citigroup (C) and Bank of America (BAC) are likely to need to raise more capital. However, if recent history is any guide (under both the Obama and Bush administrations), they will probably get it from the government on extremely preferential terms, with the government going out of its way to asset any ownership rights that might protect the taxpayers.

The decline in housing values also means that those still with positive equity in their houses will have less of it, further diminishing retirement nest eggs for millions. This will keep the pressure on for people to try to save out of current income. That is a good thing over the long run, but the savings will come at the expense of consumption, and the lower consumption will further depress the economy.

On the bright side, young people (and renters) may actually be able to afford a house in the near future. They will need a low monthly mortgage payment given the amount of taxes they will have to pay in the future given the debt the country is taking on to make sure that bankers can live in the style that they have become accustomed to.

The Consumer Confidence Index showed optimism, which now stands at 39.2 in April, following 26.9 in March, and its record low of 25 in February.  Consumers short term outlook improved and the employment situation became less pessimistic.  The Present Situation Index increased to 23.7 from 21.9 in March, and the Expectations Index rose to 49.5 from 30.2 in March. 

Upcoming Releases
GDP-Q1 Advance Estimate (04/29 at 8:30 AM EST)
FOMC Policy Statement (04/29 at 2:15 PM EST)
Initial Claims (04/30 at 8:30 AM EST)
Personal Spending (04/30 at 8:30 AM EST)
ISM Manufacturing Index (05/01 at 10:00 AM EST)

The Phoenix-based company's earnings per share for the quarter stood at 77 cents, 13 cents ahead of the consensus estimate. The quarter experienced a 26% rise in sales, which amounted to $876.1 million.

Despite the quarter's results, shares of the company are down more than 15% today.

APOL is Zacks #3 Rank ("Hold") stock.

Apollo Group Inc (APOL) shares are trading on an unusually high volume. Meanwhile, the Phoenix-based company's shares plunged over 6% at $67.43 this afternoon.

Apollo Group Inc (APOL) shares are trading on an unusually high volume today. The Phoenix-based company's shares fell more than 3% at noon.

More ugly real estate news came out Tuesday as the S&P/Case-Shiller U.S. National Home Price Index in December showed its largest quarterly fall in the 21-year history of the indexing series. 

The drop-off in the final quarter of 2008 by the benchmark – which covers all nine U.S. census divisions – represented an 18.2% decline from the same period a year ago. S&P reported that the 10-City and 20-City composite indexes also set new records, with annual declines of 19.2% and 18.5%, respectively.

With completed December data, S&P is now saying that domestic home prices have been falling nationwide for two straight years, covering 2007 and 2008. 

"The broad downturn in the residential real estate market continues,” said David Blitzer, chairman of the index committee at Standard & Poor’s, in a statement. “There are very few, if any, pockets of turnaround that one can see in the data."

The picture remained bleak in December as all of the 20 metro areas covered by the indexes were reporting annual declines. In fact, eight of those areas had negative rates exceeding 20%. And looking at annualized data, some 13 of the 20 metro areas have been reporting consecutive record declines since December 2007.

Breaking down the data on a monthly basis shows a similar trend. All of the metro areas had at least four consecutive months of negative returns in the past two years. As of December, the average U.S. home price was at a similar level as in the third quarter of 2003. From the housing market's peak in the second quarter of 2006, average home prices are down 26.7%.

Still, some bright spots did show up, although few and far between. Five metro areas -- Boston, Denver, Los Angeles, San Diego and Washington, D.C. -- saw some improvement. Those areas' rates of decline were less in December 2008 than in the previous December.  Also, Detroit showed a slight improvement in monthly returns, but fell harder in 2008 on an annualized basis.

The most recent index data through December also reported that:

• The seven worst-performing cities in terms of year-over-year declines continue to be from the sunbelt, reporting negative returns in excess of 20%. Phoenix was down 34.0%, Las Vegas reported -33.0% and San Francisco fell 31.2%.
• Denver, Dallas, Cleveland and Boston faired the best in terms of annual declines down 4.0%, 4.3%, 6.1% and 7.0%, respectively.
• Dallas was down just 8.6% from its peak in June 2007, while Phoenix is down 45.5% from its peak in June of 2006. Eighteen of the 20 metro areas were in double-digit declines from their peaks, with half of the metro areas posting declines of greater than 20% and four of those (Las Vegas, Miami, Phoenix and San Francisco) in excess of 40%.

More ugly real estate news came out Tuesday as the S&P/Case-Shiller U.S. National Home Price Index in December showed its largest quarterly fall in the 21-year history of the indexing series. 

The drop-off in the final quarter of 2008 by the benchmark—which covers all nine U.S. census divisions—represented an 18.2% decline from the same period a year ago. S&P reported that the 10-City and 20-City composite indexes also set new records, with annual declines of 19.2% and 18.5%, respectively.

With completed December data, S&P is now saying that domestic home prices have been falling nationwide for two straight years, covering 2007 and 2008. 

"The broad downturn in the residential real estate market continues,” said David Blitzer, chairman of the index committee at Standard & Poor’s, in a statement. “There are very few, if any, pockets of turnaround that one can see in the data."

The picture remained bleak in December as all of the 20 metro areas covered by the indexes were reporting annual declines. In fact, eight of those areas had negative rates exceeding 20%. And looking at annualized data, some 13 of the 20 metro areas have been reporting consecutive record declines since December 2007.

Breaking down the data on a monthly basis shows a similar trend. All of the metro areas had at least four consecutive months of negative returns in the past two years. As of December, the average U.S. home price was at a similar level as in the third quarter of 2003. From the housing market's peak in the second quarter of 2006, average home prices are down 26.7%.

Still, some bright spots did show up, although few and far between. Five metro areas—Boston, Denver, Los Angeles, San Diego and Washington, D.C.—saw some improvement. Those areas' rates of decline were less in December 2008 than in the previous December. Also, Detroit showed a slight improvement in monthly returns, but fell harder in 2008 on an annualized basis.

The most recent index data through December also reported that:

• The seven worst-performing cities in terms of year-over-year declines continue to be from the sunbelt, reporting negative returns in excess of 20%. Phoenix was down 34.0%, Las Vegas reported -33.0% and San Francisco fell 31.2%.
• Denver, Dallas, Cleveland and Boston fared the best in terms of annual declines, down 4.0%, 4.3%, 6.1% and 7.0%, respectively.
• Dallas was down just 8.6% from its peak in June 2007, while Phoenix is down 45.5% from its peak in June of 2006. Eighteen of the 20 metro areas were in double-digit declines from their peaks, with half of the metro areas posting declines of greater than 20%, and four of those (Las Vegas, Miami, Phoenix and San Francisco) in excess of 40%.

Company Description

Republic Services provides environmental services including solid waste collection, transfer, disposal, and recycling. RSG's operating units provide solid waste services for commercial, industrial, municipal, and residential customers. Republic Service employees about 35,000 employees, serving markets in 40 states and Puerto Rico.

Recent Events

Republic Services recently announced its completion a merger with Allied Waste Industries. The combined company will be based in Phoenix and will trade under Republic Services name.

RSG said the merger creates a company with expected pro forma annual revenue of approximately $9 billion and a total market capitalization of approximately $8 billion. The new company is expected to generate more than $150 million in pre-tax annual synergies by 2011.

"Today marks an exciting new beginning for Republic Services and the entire environmental services industry," said Jim O'Connor, Chairman and Chief Executive Officer of Republic Services. "We are looking forward to combining the best practices, complementary assets and experienced executives from two great companies to enhance our leadership position. This is an outstanding opportunity for us to better serve our customers, provide enhanced opportunities to our employees and create shareholder value."

Strong Quarter

In late October, Republic Services posted third quarter revenue of $834.0 million, rising 3.4% from the year-prior total. Net income of $88.7 million, or 48 cents per share, topped the previous year's $67.0 million, or 35 cents per share.

Republic Services declared a regular quarterly dividend of 19 cents per share, which was paid out on January 16, 2009.

RSG offers an industry-leading dividend yield of 3%. The company's return on equity (ROE) of 26% more than the doubles the industry average of 11%.

The company's fourth quarter and year-end results will be available on February 27.
"RSG" Free Stock Analysis: Buy? Sell? Hold?
Zacks Investment Research

The S&P/Case-Shiller 10-City Home Price Index decreased 2.2% in November, following a  2.1% percent in October, and fell 19.1% over the year. The S&P/Case-Shiller 20-City Home Price Index decreased by 2.2% in November, following a 2.2% decrease in October,  and decreased by 18.2 % over the year. This is the 28th consecutive month residential real estate has fallen, which started August 2006, as home prices have retrogressed to early 2004 levels. All of the 20 cities in the composite have continued to exhibit negative annual declines and monthly drops, while the severest declines were located the Sunbelt with indication the Pacific Northwest and Mid-Atlantic South is not immune to the overall demise in the housing market. Over the past month, Phoenix fell most over the month, by 3.4%, and over the year had decreased the most, by 32.9%.

Upcoming Releases
FOMC Policy Statement (01/28 at 2:15 PM EST)
Initial Claims (01/29 at 8:30 AM EST)
Durable Orders (01/29 at 8:30 AM EST)
New Home Sales (01/29 at 10:00 AM EST)

The S&P/Case-Shiller 10-City Home Price Index decreased 2.1%  percent in October, following a 1.9% decrease in September and fell 19.1% over the year, which is a record annual decline.  The S&P/Case-Shiller 20-City Home Price Index decreased by 2.2% in October and decreased by 18 % over the year, also a record annual drop.  Home prices have retrogressed to 2004 levels.  All of the 20 cities in the composite have continued to exhibit negative annual declines and monthly drops, while the severest declines were located the Sunbelt with indication the Pacific Northwest and Mid-Atlantic South is not immune to the overall demise in the housing market.  Over the month, Detroit showed the largest monthly change by 4.5% (year over year drop of 20.4%).  Over the past year, Phoenix has decreased the most, by 32.7%, contributing were a 3.3% drop in October and a 3.5% drop in September.

This from Money Morning:

The U.S. housing market is already being pounded by the “perfect storm.” And the outlook for the New Year is for the stormy weather to continue – and probably to get worse.

As if a locked-up credit market and tidal waves of foreclosures weren’t already enough, we’re now watching unemployment climb and consumer confidence plunge.

But even when the housing market is taking on water, there are ways to stay afloat. Indeed, investors nimble enough to maneuver can even make money.

The watchword on this…

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