Sunday, May 11, 2008

Trading Alerts: Monday, May 12, 2008

American Technology Corp (ATCO-$1.93) late Friday posted share-net loss of 7 cents, wider than the First Call dual-analyst estimate of $(0.03) a share. The maker of hailing and warning acoustic products for the military attributed the decrease in profit margins to lower sales associated with the transition to a new Long Range Acoustic Device (LRAD) product line (launched in late March).

Bally Technologies Inc (BYI-$35.66) will release its third-quarter fiscal 2008 results after the market closes on Monday. Analysts surveyed by FactSet Research expect the gambling equipment company to report fiscal third-quarter earnings of 47 cents a share, on average. On April 18, citing "a very attractive valuation, as well as continued solid business fundamentals," Deutsche Bank gaming analyst, Bill Lerner,
upgraded the shares to "BUY" from "HOLD." Investors should be watching margins, for management signaled back in February that it expected improvement in game sales and operations compared to 2007.

After the close of trading, China Security & Surveillance Technology Inc (CSR-$19.05), a supplier of digital surveillance technology, said its president, Shufang Yang,
resigned effective Tuesday with "plans to pursue other opportunities outside of the security industry."

Circuit City Stores Inc (CC-$5.08) on Friday gave in to pressure from activist shareholders, essentially
putting itself up for sale and agreeing to nominate dissident directors to its board.

Shares of Dr Pepper Snapple (DPS-$25.24) fell flat in their Wall Street debut, trading in New York on Wednesday at a lower-than-expected $25 a share. But when investors finally warm to the beverage maker's story, chances are
the stock will bubble up, said columnist Andrew Barry in a Saturday Barron’s online story.

Farmer Bros Co (FARM-$22.58) reported an
operating loss for its third-quarter ended March 31, 2008, of $1.0 million, compared with an operating loss of $2.2 million in last year's third. The coffee roaster said profit margins continue to be pressured by volatility in green coffee prices, higher fuel costs and increasing costs for packaging supplies.

FedEx Corp (FDX-$90.37)
cut its earnings guidance for fiscal fourth-quarter by fifteen cents, blaming continuing increases in fuel costs. The Memphis-based shipping company said it now expects profits in the range of $1.45 to $1.50 per share for the three months ended May 31, 2008.

Fluor Corp (FLR-$183.97) should report a profit of $1.26 a share in the first quarter on a 27.4 percent Y/Y gain in sales of $4.64 billion, according to analysts surveyed by FactSet Research. The engineering and construction company is expected to show a 36.9 percent Y/Y gain in share-net,
fueled by global demand for energy, infrastructure, mining, and basic materials. The Company closed FY 2007 with $30.2 billion in backlog--and investors will be watching for hints of any slowdown in spending by customers in the aforementioned sectors.

Will Google Inc (GOOG-$573.20) and Yahoo! Inc (YHOO-$25.93) come together on
a search advertising partnership? The two companies have been discussing an agreement under which Google would deliver some ads alongside Yahoo’s search results.

Hawk Corp (HWK-$16.95), a friction products supplier (brakes, clutches and transmissions)
increased its full year 2008 guidance for pre-tax income from continuing operations to between $21.0 million and $23.0 million, an increase of between 7.7 percent and 18.0 percent compared to 2007 pre-tax income from continuing operations of $19.5 million. The Company expects to benefit from improved operating leverage due to increased sales volumes and continued operating improvements through the balance of 2008.

Iomega Corp ($3.83), the Zip drive maker being acquired by data storage systems provider EMC Corp (EMC-$15.96) for $3.85 a share, late Friday reported
net income of $1.95 million, or 4 cents a share, a penny below the mean estimate of analysts polled by Thomson Reuters. Revenue for the quarter ended March 30 rose 26 percent to $95.9 million, helped by climbing external hard disk drive product(s) revenue, versus the mean estimate of 92 million its first-quarter profit rose.

On April 1, LDK Solar Co (LDK-$37.05)
lowered its profit outlook and raised its revenue guidance for the first-quarter of 2008 ended March 31, due to the Chinese New Year holidays and severe snowstorms. The maker of multicrystalline photovoltaic wafers now estimates fully diluted earnings to be in the range of $0.40 to $0.44 per ADS. Wall Street is not as optimistic, expecting LDK to report profit of 39 cents a share following the close of trading on Monday. Investors should watch for the impact of polysilicon pricing and increasing competition in the wafer segment on gross margin.

Nutritional supplements maker Mannatech Inc (MTEX-$6.42)
swung to a loss of $2.3 million in its first quarter, sunk by lower North American sales and litigation costs.

In our view, Wall Street already discounts an expected loss of 19 cents a share when MBIA Inc (MBI-$9.43) reports its first-quarter numbers before the market opens on Monday. What do investors really want to know? Does the bond insurer have
enough assets and liquidity to meet maturing liabilities and to post collateral in the event of downgrade from credit rating agencies. In an open letter to shareholders, MBIA Chairman and Chief Executive Officer, Jay Brown, wrote he continues to believe the company "has adequate equity capital to get through this crisis."

McDermott Int’l (MDR-$53.90) is expected to report earnings of 58 cents a share on sales of $1.48 billion in the first-quarter, on average, according to nine analysts surveyed by Thomson Reuters. Last month, the engineering and construction company
cautioned Wall Street of business delays in its Offshore Oil & Gas Construction Segment for the 1Q:08 ended March 31. More than one-half of planned offshore working days for major construction vessels were unproductive, primarily due to harsh weather in certain parts of the Asia-Pacific and Middle East regions.

As the only remaining major independent player in the market for Graphic Processing Units used in PCs, NVIDIA Corp (NVDA-$22.53) is well positioned to benefit from increased graphics requirements. However,
product related transitional issues are pressuring gross margins, according to Zacks Equity Research. Analyst Steve Biggs, CFA, is lowering his estimates for full fiscal year 2009 to $1.33 a share.

News Corp (NWS-$19.35)
unexpectedly withdrew a $580 million offer for Long Island newspaper Newsday, three days after its chairman, Rupert Murdoch, said talks with owner Tribune Company were in a "pretty advanced stage.''

Standard & Poor's
cut the corporate credit rating of Pitney-Bowes Inc (PBI-$37.54) and its subsidiaries to 'A' from 'A+.' Last week, the provider of mail processing equipment and integrated mail solutions posted better-than-expected first-quarter results, helped by strength at its mailstream services segment.

Expect Radian Corp (RDN-$5.43) to post a loss of $2.13 a share in the first-quarter, according to analysts polled by Thomson Reuters. On May 2, Fitch Ratings
withdrew its ratings on the company and its mortgage insurance and financial guaranty subsidiaries because Radian "had not provided it with adequate information to maintain credible ratings."

Repros Therapeutics Inc (RPRX-$8.83) posted a
wider first-quarter loss on higher spending for clinical development programs, including pivotal Phase 3 clinical trials for Proellex, which is being studied for the treatment of symptoms associated with uterine fibroids.

Santarus, Inc (SNTS-$2.50) needs
to reduce its dependence on its Zegerid line of products, which are a combination of a proton pump inhibitor and one or more antacids used to treat gastrointestinal disorders, and should try to boost growth through the in-licensing or acquisition of suitable candidates, according to Zacks Equity Research. Analyst Jason Napodano, CFA, is maintaining a Hold rating with a target price of $3.00 a share.

Analysts, on average, are expecting Sprint Nextel Corp (S-$9.38)
to post a profit of 2 cents per share on sales of $9.41 billion, according to a poll by Thomson Reuters. Investors will be looking for any variance emerging on subscriber, ARPU and churn trends in the wireless carrier’s earnings report.

Stewart Information Services Corp (STC-$24.50), a real estate information and title insurance provider, said Friday its losses during the first quarter were
larger than originally reported because of a previously missed charge of $4.6 million.

Valspar Corp (VLR-$2187) should report anemic Y/Y second-quarter profit growth of about 5 percent, posting share-net of 42 cents, on average, according to analysts surveyed by FactSet Research. J.P. Morgan Securities
lowered share-net visibility of the paint and coatings maker on April 11, citing a short-term risk to sales prospects due to the weakness in the residential and commercial construction markets. Owing to higher raw material costs, investors should expect a drop in margins, too.

Virgin Mobile USA Inc (VM-$3.16) and Helio LLC, two cellphone companies that offer service through re-sell agreements with Sprint Nextel Corp., are in
advanced merger discussions and could announce a deal in coming weeks, people familiar with the matter said on Friday.

Winn-Dixie Stores, Inc (WINN-$17.29) plans to file its financial results with the Securities and Exchange Commission on Monday, May 12. Two analysts polled by Thomson Reuters expect the Florida-based grocer to record a third-quarter profit of 21 cents a share on sales of $1.71 billion. Shareholders should watch to see if rising food prices are adversely impacting traffic and/or effect of promotional events and Easter holiday shopping on operating margin and sales, respectively.

Editor David J. Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

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