Stock Watch

In a move that unites two prominent casualties of the financial crisis, CIT Group Inc. (NYSE: CIT) ended a prolonged search by naming John Thain, the former chief of Merrill Lynch & Co., as its new chairman and chief executive officer.

Thain, who left Bank of America Corp. (NYSE: BAC) 13 months ago amid controversy over its takeover of Merrill, will have his hands full rebuilding CIT, an embattled commercial lender that nearly collapsed in 2009.

CIT still operates under restrictions that were imposed after receiving $2.3 billion in funding under terms of the Troubled Asset Relief Program (TARP).  Those measures include being banned from the commercial paper market, its traditional source of funding.

If the rich truly have gotten richer during the current financial unpleasantness - as some pundits allege - members of the moneyed set have been smart enough to avoid flaunting their new wealth with a rash of high-end purchases.

Lately, however, this seems to be changing: The luxury markets led a January surge in the retail sector - a surge that could mean new opportunities for investors astute enough to grab for the golden ring.

The Statue of Liberty is one of the most recognizable American icons in the world.

And as she towers 305 feet above Ellis Island, what's Lady Liberty wearing? Copper - 60,000 pounds of it.

Clearly, copper's big in art. It's also a key metal that keeps the world economy humming. Copper consumption has grown at an average annual rate of 4% since 1900. China and India - which some analysts describe as the combined market of "Chindia" - where one of every three human beings resides, needs loads of this element to meet its modernization requirements for electricity and infrastructure.

Copper is also used in today's currency, where most U.S. coins are actually 92% copper, and 8% nickel.

But there's no denying that, given the choice, nearly everyone prefers gold. It's valuable, it's seductive and it's mystical.

Ancient kings fought wars to amass it. Yet, for thousands of years, its most enduring role has arguably been in the form of money - as a store of value.

That's because fiat-paper-currency experiments have never lasted, and always ended badly.

Increasingly, followers of the Austrian School of Economics are nostalgic for gold to regain its former glory, perhaps "backing" a new international currency.

But despite gold's much longer history as true money, some believe that copper - the much humbler metal - could be positioning itself to upstage gold.

To find out more about the forces that will transform copper into the "New Gold," read on...

At MarketClub our mission is to help you become a better trader. Our passion is creating superior trading tools to help you achieve your goals — no matter which way the markets move — with objective and unbiased recommendations not available from brokers. The Trader’s Toolbox posts are just another free resource from MarketClub. — “There are four [...]

"Compared to a year ago, the risk level in the bank is lower. 2010 will be a challenging year and the work to bring down the risk level will continue. Given that the global macro economy continues to develop positively without substantial divergence, particularly in Latvia and Ukraine, a profit for the full-year 2010 is feasible."

span style="font-weight: bold;"How To Read GDP Reports/spanbr /A country’s Gross Domestic Product, or GDP, is one of the most accepted and widely recognized metrics for gauging the level of activity in an economy. Yet there are many pitfalls in analy...

Thanks to the creative mind of the writer Rudyard Kipling ,once upon a time there lived the python Kaa. Somewhere in the jungles this was. Kaa was large and frightful. He could hypnotize the Bandar-log monkeys with just his hissing. The B...

Or, what would happen if we "Let Bush Be Bush". Recall the 2001 and 2003 tax cuts were written to expire, for the most part, in FY2011. The impact of extending those cuts (along with some others) is strikingly depicted in this Figure from the Center for Budget and Policy Priorities (h/t Brad Delong).

Figure 1 from Ruffing and Horney, CBPP, Dec. 16, 2009.

Ruffing and Horney describe the method of calculation of the "Bush-era tax cuts" portion thus:

Through 2011, the estimated impacts come from adding up past estimates of all changes in tax laws — chiefly the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA), the 2008 stimulus package, and a series of annual AMT patches — enacted since 2001. Those estimates were based on the economic and technical assumptions used when CBO and the Joint Committee on Taxation (JCT) originally "scored" the legislation, but the numbers would not change materially using up-to-date assumptions. Most of the Bush tax cuts expire after December 2010 (partway through fiscal 2011). We added the cost of extending them, along with continuing AMT relief, from estimates prepared by CBO and JCT.[14] We did not assume extension of the temporary tax provisions enacted in ARRA. Together, the tax cuts account for $3.4 trillion of the deficits over the 2009-2019 period. Finally, we added the extra debt-service costs caused by the Bush-era tax cuts, amounting to $1.9 trillion over the period and an astonishing $350 billion in 2019 alone.

The CBPP article amalgamates several sets of tax provisions. Seeing the impact of extending individual provisions can be seen in this excerpt from Table 5-1 of the CBO's recent Budget and Economic Outlook (Jan. 26, 2010).

Excerpt of Table 5-1 from CBO's recent Budget and Economic Outlook (Jan. 26, 2010).

One can also see these numbers graphically in a nifty little interactive facility the CBO has put up here. Below, I've shown a snapshot of the CBO baseline deficit (black) and what happens when EGTRRA and JGTRRA are extended.

Snapshot of Interactive Graph, with CBO baseline (black) and EGTRRA and JGTRRA extended (purple).

Note that the President's Budget does propose allowing the tax cuts on upper income households to lapse; the estimated increase in revenues shown in Table S-8 (page 164) of the Budget. The addition of revenues is estimated at $41.4 billion in FY2011, and $137.4 billion in FY2020.

I would welcome a public debate of my thesis that risk-free bond speculation suppresses the rate of interest and destroys capital in the process. I have challenged neo-classical economists who still consider the open-market operations of the Fed as a ‘refined tool to manage the national economy’. I want them, instead, to see in open-market operations the cancer of the economy responsible for the withering of the world’s prosperity. So far my challenge has fallen upon deaf ears. Words: 2863

HANGZHOU, China–(BUSINESS WIRE)–China Jo-Jo Drugstores, Inc. (OTCBB:CJJD) (“Jo-Jo Drugstores” or the “Company”), which operates a retail pharmacy chain in the People’s Republic of China, today announced its financial results for its fiscal third quarter ended December 31, 2009. Fiscal Third Quarter 2009 Highlights Revenues increased 29.1% period-over-period to $14.9 million Gross profit increased 43.4% period-over-period to $4.8 million Income [...]

What a delight it would be to have some inflation! Yes, dear reader, that’s the real reason that fiscal stimulus appears to work. That is, that’s the reason inflation can sometimes boost employment. It creates inflation. And inflation lowers wages. Lower wages make it cheaper to hire people. And they make US output more competitive [...]

Economic Recovery: Demanding More Purchasing Power originally appeared in the Daily Reckoning. The Daily Reckoning, a FREE daily e-letter, offers a "uniquely refreshing" perspective on the global economy, investing, and today's markets.

Regardless of the validity of Kudlow#8217;s political-market connections here (and they are questionable), this is a comment sentiment among many traders in the market today. It is likely that the stocks he mentions in the below video will most likely react in the way that he predicts.img src="http://feeds.feedburner.com/~r/ElectionStocks/~4/KIFrnXPYIso" height="1" width="1"/

$HAS (gap and extended) - hogs the light when there were only 2 stocks on the scan! The other, $BBEPimg src="http://feeds.feedburner.com/~r/Delicious/zignalscharts/~4/IPcqS28V4VY" height="1" width="1"/

Could the commodity and equity rallies have ended? Has a change been triggered by a resurgent dollar, meaning its purportedly strong negative correlation with gold and commodities continues to drive the process? But if so, would this also not signal the end of the reflation and carry trades? Would it not also mean that contractionary [...]

Beginning of the End originally appeared in the Daily Reckoning. The Daily Reckoning, a FREE daily e-letter, offers a "uniquely refreshing" perspective on the global economy, investing, and today's markets.

Spain’s incumbent telecom carrier Telefonica (TEF) is planning to expand its stake in China Unicom (CHU), the second-largest Chinese wireless carrier. The Spanish telecom giant expects to gradually increase its share in the Chinese company to further boost its foothold in the world’s largest mobile market.

The companies concluded a $1 billion stake purchase in each other’s stock in October 2009. Per the agreement, Telefonica bought roughly 694 million shares in China Unicom while China Unicom purchased 40.7 million Telefonica shares. With the completion of this share-swap transaction, Telefonica’s stake in China Unicom increased to 8.06% from 5.38%. Telefonica plans to eventually expand its stake to 10%.

Additional stake purchase in China Unicom has further consolidated Telefonica’s position as the largest overseas investor in the Chinese company. South Korea’s largest wireless operator SK Telecom (SKM), which was the second-largest investor in China Unicom with a 3.8% share for three years, divested its stake back to the Chinese operator in November 2009 for roughly $1.3 billion.

Telefonica is increasingly focused on expanding into additional emerging markets as it contends with a matured domestic market along with weak economic conditions in its key markets. China, the home to approximately 722 million mobile users, represents Telefonica’s biggest opportunity outside its core European and Latin American markets.

Telefonica entered China in 2005 through its investment in fixed-line operator China Netcom, which was acquired by China Unicom in early 2009 following the restructuring of the Chinese telecom industry in late 2008. Telefonica’s major rival Vodafone (VOD) has a 3.3% stake in China Mobile (CHL), China’s largest wireless carrier.

The expanding collaboration between Telefonica and China Unicom benefits both operators in the form of significant technological and operational synergies. Both these carriers operate their 3G networks based on the popular WCDMA technology. This enables them to jointly develop WCDMA based wireless services. Moreover, the companies may also collaborate for future technology upgrades such as the development of 4G technology.

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

Smith International Inc. (SII), a major oilfield services company, expects to spend approximately $350 million on acquisitions in this quarter, following the company’s last year’s $700 million-plus stock issue. In addition to acquisition initiatives, the company also intends to deploy this fund to pay down its debt level.

Smith has been quite active in recent days with an increasing trend in the North American drilling scenario, coupled with stable prices for the company’s products and services. There were 2 analysts covering the stock who had increased their 2010 estimates in the last 7 days. Over the last 30 days, 10 analysts have raised estimates for 2010 while only 5 analysts moved in the opposite direction.

We have long admired Smith for its well-run operations and cyclical leverage. Smith is currently pursuing a growth strategy by focusing on unconventional reservoirs, strengthening its global deepwater as well as environmental solutions offerings and acquisitions. In the last quarter, Smith had completed acquisitions with total transactional costs of approximately $60 million.

Given the recent increase in North American drilling activity, we think this year will be positive for Smith. However, we remain cautious on the outlook for natural gas drilling activity until there’s a real and material return in industrial demand. Fundamentals of the natural gas market have a direct bearing on drilling activities in North America, as the predominant majority of E&P activities in this region are natural gas focused.

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

Last week, Berkshire Hathaway Inc. (BRK.A, BRK.B) announced the issue of $8 billion notes in connection with the previously announced acquisition of Burlington Northern Santa Fe Corporation, or BNSF (BNI). Following this announcement, rating agency Standard & Poor’s (S&P) stripped the company of its AAA ratings.

S&P downgraded the rating to AA+ from AAA, citing concerns that the $8 billion issue of debt will strain the Berkshire’s capital adequacy. The rating was placed on credit watch last November when the plans for rail acquisition were announced. The outlook for the rating remains stable.

In March of last year, Fitch downgraded Berkshire’s Insurance and Investment company's issuer default rating by one notch to AA+. The rating actions were on concerns of the company’s exposure to derivative contracts tied to equity and credit markets. The rating agency is also concerned about the acquisition, and has placed Berkshire on a negative watch list.
 
Following the March downgrade, Moody’s in April also made a similar move by downgrading the long-term issuer rating of Berkshire to Aa2 from its top Aaa.

The rail acquisition will also add another $10 billion of existing debt in the books. It might further create a strain on cash flows and capital.

JPMorgan, a unit of JPMorgan Chase & Co. (JPM) and Wells Fargo Securities, a unit of Wells Fargo & Co. (WFC) will manage the issue. The securities are mostly short-term debt, including two-year fixed-rate notes at 65 basis points over Treasuries, three-year fixed-rate notes at 85 basis points over Treasuries and five-year fixed-rate notes at 95 basis points over Treasuries.

Berkshire has wide-ranging businesses from jewellery to home décor, from candies to insurance. But the rail acquisition, one of the biggest to date, will make the company increasingly complex. Moreover, there remains a cloud of skepticism over the succession of Warren Buffett, who is 79.

Valued at $34 billion, the acquisition is expected to close this month, after shareholders’ approval.

Read the full analyst report on "BRK.A"
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Zacks Investment Research

I believe equity markets (and riskier assets in general) are in the midst of a 10-15% correction that plays out within one quarter, which is normal, not at the onset of the next financial avalanche, which lasts many quarters. There was never any question that the extraordinary policy maneuvers of 2009 would begin to be unwound [...]

Equity Market Correction a One Quarter Event originally appeared in the Daily Reckoning. The Daily Reckoning, a FREE daily e-letter, offers a "uniquely refreshing" perspective on the global economy, investing, and today's markets.

We maintain our Neutral rating on Alkermes, Inc. (ALKS) with a price target of $11.50.

Alkermes is a drug delivery biotech company which uses its proprietary specialized drug delivery technologies to develop drugs for the treatment of central nervous system (CNS) disorders, alcoholism and diabetes.

Alkermes has two approved products on the market. Its lead product, Risperdal Consta (or simply Consta), was developed for the treatment of schizophrenia and bipolar disorder. The drug is marketed worldwide by Johnson & Johnson (JNJ) and manufactured by Alkermes. Alkermes also receives royalty revenues on Consta sales.

Risperdal Consta is the longer-lasting injectable version of Johnson & Johnson's schizophrenia drug Risperdal (risperidone). The drug is approved in over 75 countries worldwide and marketed in over 50 countries, but the US is clearly the key market.

The other approved product at Alkermes is Vivitrol, for the treatment of alcohol dependence. Apart from these two marketed products, Alkermes has a candidate under US Food and Drug Administration (FDA) review. In July 2009, the FDA accepted the New Drug Application (NDA) for exenatide once-weekly which is being co-developed by Alkermes, Eli Lilly (LLY) and Amylin Pharmaceuticals, Inc. (AMLN) for the treatment of type II diabetes.

Exenatide once-weekly is an injectable formulation of Amylin’s Byetta (exenatide). Byetta is an injection administered twice daily. Exenatide once-weekly has enormous market potential in the $13 billion type II diabetes market. A response from the FDA should be out in the first quarter of 2010 (action date: March 5, 2010).

We believe that its approval may get delayed due to safety concerns surrounding glucagon-like peptide-1 (GLP-1) molecules like exenatide. Specifically, fears of pancreatitis and new fears of thyroid cancer associated with the use of GLP-1 molecules lead us to believe that the FDA may want to see additional data before it grants approval. Investor focus will remain on the approvability of exenatide once-weekly going forward.

Alkermes has other interesting products in its pipeline, which are in early to mid-stage development. The candidates under development include ALKS 27 for chronic obstructive pulmonary disorder (COPD), ALKS 29 for alcohol dependence, ALKS 33 for addiction, ALKS 36, a co-formulation of an opioid analgesic and RDC-1036 for the treatment of pain. The successful development and commercialization of these candidates should boost the company’s top-line.

Estimate Revisions Trend

Two of the 10 analysts covering the stock for the fourth quarter of fiscal 2010 (ending Mar 31, 2010) have raised their earnings estimates over the last 30 days, while none moved in the opposite direction. This means that majority of the analysts have not revised their estimates for the next quarter, and the revisions are marginal.

Furthermore, three of the 9 analysts covering the stock for fiscal 2011 (ending Mar 31, 2011) raised their earnings estimates over the last 30 days, while none moved in the opposite direction. This means that majority of them have not revised their estimates for the next fiscal year, and the revision is marginal here, as well. As a result of the lack of strength and magnitude in estimate revisions, our short-term as well as long-term recommendations on the stock remain Hold (Zacks Rank #3) and Neutral, respectively.

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

"I believe that the SEB-executives serious and systematic violated the Bank's internal rules to the limits of economic crime, and that this may have caused the consumers an estimated loss of one billion Swedish kronor," ha says

We downgrade our recommendation for Novatel Wireless Inc. (NVTL) to Neutral, which means the stock should perform in line with the broader market. The company is facing intensifying competition for its core embedded solutions for wireless access.

In addition to its traditional rival, Sierra Wireless (SWIR), Novatel is facing significant challenges from newly launched products by large manufacturers, including Qualcomm Inc. (QCOM) and L.M. Ericsson (ERIC). Qualcomm has launched its Gobi chipset that combines broadband modem technology for high-speed 3G networks (both EV-DO and HSPA) with GPS functionality. The Gobi solution has significantly captured embedded solutions market share from Novatel.

The market for broadband wireless access solution is emerging rapidly in terms of technological innovation and demand. Although Novatel has developed a niche in its MiFi mobile intelligent hot spot, we anticipate increased competition in the near future. Qualcomm, Huawei Technologies, and ZTE are on the verge of introducing their own version of intelligent mobile hot spots. Novatel has also hinted at sequential demand weakness in the fourth quarter of 2009 for its MiFi product line.

Nevertheless, Novatel has generated a record high level of free cash flow and significantly improved its gross margin. In addition, the company has a very strong balance sheet, capable to support its long-run business endeavors. Management has taken a decision to extend the MiFi platform with new features and functionality, as well as building a MiFi ecosystem through organic development and strategic partners.

According to our assessment, all these positive factors are already reflected in the current valuation, leaving little room for above-market gains.

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

Magellan Petroleum Corp. reported net income of $1.6 million, or $0.03 per share, in the second fiscal quarter ending 12/31/2009. This was a strong improvement from the net loss of $525,000 or $0.01 per share, in the same quarter of 2008. The company also reported revenues of $9.7 million in the most recent quarter, [...]

MICROS Systems, Inc. (MCRS) reported revenues of $225.6 million in the second quarter of fiscal 2010, down 4.6% from a year ago but almost flat sequentially.

On a segment basis, hardware revenues came in at $45.8 million, down 17.7% year over year. Software revenues came in at $30.5 million, down 19.084% year over year. Service revenues came in at $149.4 million, up 4.3% year over year.

Most customers are either in the hospitality or specialty retail industry. Consumer spending is not expected to improve significantly unless job creation accelerates.

Gross margin for the quarter came 55.4%, up from 51.6% in the prior quarter. Operating expenses came in at 35.9% compared to 35.3% in the year-ago quarter. Operating income came in at 19.5% compared to 17.9% in the year-ago quarter.

Net income came in at $29.0 million or 36 cents per share compared to a net income of $27.3 million or 34 cents in the previous quarter. This easily beat the Zacks Consensus Estimate of 32 cents.

As of December 31, 2009, MICROS had cash and investments of $531.5 million, an increase of $6 million from the September 30 quarter. During the quarter, MICROS purchased 160,000 shares for $4.6 million. The company still has $2 million left in its repurchase program.

At the end of the quarter, inventory was $37 million, a decrease of $2 million from the last quarter. The decrease is due to the corporate inventory reduction programs. Deferred revenue was $118.4 million, down by $23.4 million from the end of the September quarter.

Management reiterated its guidance for 2010 and expects business conditions to improve. Revenue is projected at $910 million. Earnings per share are projected between $1.39 and $1.40.

Last month, management stated that it would acquire TIG Global, one of the leading interactive marketing companies. Headquartered in Washington, DC, TIG Global serves the online needs of a diverse portfolio of clients located around the world.

Management expects that this acquisition will allow the company to offer complete end-to-end solutions to hotel customers for distribution placement, marketing of hotel rooms, and alternative distribution platforms. Management stated that TIG Global’s leading technology and focus on the hospitality and travel industry makes TIG an ideal partner for MICROS.

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

February 8, 2010 ndash; Analyst Comments ndash; Cowenrsquo;s Rob Stone weighed in this morning on the U.S. Utility-Scale Solar PV segment, reflecting on highlights from PHOTONrsquo;s Third Solar Electric Utility Conference: Key Takeaways middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; There is a growing role for solar in utilitiesrsquo; RPS mix, driven by falling cost ndash; thinks investors may underestimate the near-term size and growth of the U.S. utility PV market middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Growth expected for utility distributed PV, raising confidence in projections in 2010 for morenbsp; than 1GW in the U.S. market middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; The CPUC projects solar will become the largest source of CA RPS generation and in Florida, FPL is positioned to build 700MW of solar over the nextnbsp; three years ndash; pending approval of legislation middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Smaller, 2-20MW PV projects are faster, easier to interconnect and permit and can be financed at a single bank middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Maintains OUTPERFORM on First Solar (Nasdaq:FSLR), SunPower (Nasdaq:SPWRA), STR Holdings (Nasdaq:STRI) and Trina Solar (NYSE:TSL) middot;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp;nbsp; Thinks solar group remains oversold on concerns about German FiT reductions

p According to a target=_blank href=http://www.webmd.com/cancer/pancreatic-cancer/news/20100208/pancreatic-cancer-linked-sodas?page=2WebMD/a today, a new study finds that drinking as little as two soft drinks a week img align=right width=150 src=http://2.bp.blogspot.com/_u_6a99r-bFE/SKaW_boAjTI/AAAAAAAABD4/fW_tey4Nnqk/s400/diet_soda.jpg /appears to nearly double the risk of getting pancreatic cancer. Will the study have any affect on PepsiCo, Inc. (NYSE:PEP) or Coca-Cola ( NASDAQ:COKE) shares? /p pa href=http://thestockmasters.com/node/2019read more/a/p

Magellan Midstream Partners L.P. ([url=http://www.zacks.com/stock/quote/mmp]MMP[/url]), a master limited partnership (MLP), announced robust fourth quarter results, buoyed by higher transportation tariffs and product gains in the pipeline system. The partnership reported earnings per unit (EPU) of 77 cents, surpassing the Zacks Consensus Estimate by 2 cents. In the year-ago period, Magellan earned 51 cents per unit.

Distribution Maintained

Magellan maintained its quarterly distribution of 71 cents per unit ($2.84 per unit annualized), equal to the third quarter as well as year-ago distribution. The distribution will be paid on Feb 12 to unit-holders of record on Feb 2, 2010. 

Petroleum Products Pipeline System

In the Petroleum Products Pipeline System, quarterly operating margin (operating profits before affiliate G&A and D&A expenses) was a record $113.2 million, up 2.8% year over year. The increase reflected higher average transportation rates, higher fees for incremental storage, and lower operating expenses. These factors were partly offset by an $8.1 million decrease in product margin and lower transportation volumes.

Petroleum Products Terminals

In the Petroleum Products Terminals segment, operating margin was a record $33.5 million, up approximately 40.1% year over year. The positive comparison was on account of the effects of expansion projects at the partnership’s terminals, higher storage rates and improved utilization at the partnership’s marine terminals, which were partly offset by higher operating expenses and lower product margin.

Ammonia Pipeline System

The partnership’s Ammonia Pipeline System reported operating profit of $4.9 million (a quarterly record), as against $2.0 in the fourth quarter of 2008. The segment results were favorably affected on account of higher rates, increased volumes and lower expenses. 

2010 Guidance
 
Management expects distributable cash flows for the full year to be approximately $345 million and is targeting annual distribution growth of 4%. Magellan guided towards first-quarter and full-year earnings per unit of 65 cents and $2.66 respectively. The partnership plans to spend approximately $210 million on growth projects in 2010, with expenditures of $30 million in future years required to complete these projects. Additionally, the partnership continues to look out for more than $500 million of potential growth projects in the earlier stages of development.

Estimate Revisions Trend

It was the company’s 1st positive earnings surprise in the past 4 quarters. Magellan has performed poorly during this period, with its average earnings surprise being -25.0%. This implies that the partnership has missed the Zacks Consensus Estimate by 25.0% over the last four quarters.

However, in the context of the recent fourth quarter outperformance, estimates for the current quarter (first quarter of 2010) have been trending up with the quarterly Zacks Consensus Estimate going up by 8 cents (from 55 cents to 63 cents) in the last 7 days alone. Overall, 6 of the 7 analysts covering the stock raised their projections during that time, with no downward revisions. Despite the positive revisions, the Zacks Consensus Estimate for the March quarter is still below the company guidance of 65 cents.

But the challenging operating scenario for pipeline operators, weak near- to medium-term outlook for petroleum products expenditure and Magellan’s premium valuation continues to temper our view. As such, our short-term recommendation on the stock is Hold (Zacks Rank #3), meaning that Magellan is expected to relatively in line with the overall market during the next 1-3 months. Therefore, the investors should maintain their current position in the stock over this time period.

 

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

China Jo-Jo Drugstores Inc. operates through its affiliates as a retail pharmacy chain in China. The company today announced its financial results for the third quarter ended December 31, 2009, posting increases in revenues, gross profit and income from operations. The company posted revenues at $14.9 million, up 29.1 percent from the year prior, which [...]

AppliedMicro (AMCC) reported revenues of $53.7 million in the third quarter of fiscal 2010, up 9% sequentially and up 13% year over year.

Product revenues increased 10% sequentially. Processor revenues were $28.0 million, up sequentially. Transport revenues were $22.7 million, sequentially up 7%, and licensing revenues were $3 million.

On a geographical basis, sales to North America accounted for approximately 34% of total revenues. Europe contributed 17% of total sales while Asia contributed 49%. There was one subcontractor that represented more than 10% of total revenues – Hon Hai.

Gross margin came in at 60.2% compared to 58.6% in the September quarter, driven by improved overhead absorption and other cost-reduction activities undertaken by management. Operating margin came in at 1.6%.

Operating expenses came in at $31.5 million, up from $29.2 million incurred in the second quarter. The increase was primarily due to higher-than-anticipated costs related to upcoming product tapeouts, higher costs related to cost-reduction activities and higher sales and marketing expenses.

AppliedMicro earlier announced that it would reduce its workforce by 11% as part of its restructuring plan. Management expects to incur an employee severance charge of approximately $1.3 million – $1.7 million in 2010.

Management had also chalked out a restructuring plan to reduce costs and improve operational efficiency by integrating its global operations. This integration is expected to reduce operating expenses by taking advantage of a global cost structure. Management expects that the restructuring plan will reduce its ongoing net operating expenses by approximately $1.5 million annually.

Net income came in at $2.6 million or 4 cents per share, compared to a net income of $1.3 million or 2 cents in the previous quarter. This easily beat the Zacks Consensus Estimate of one cent per share.

AppliedMicro ended the quarter with cash, equivalents and investments of approximately $202 million on December 31, 2009, an increase of $4.3 million from the September quarter, due to higher cash generated from operations and a decrease in working capital. Capital expenditures for the quarter were approximately $1.3 million.

During the quarter, the company repurchased approximately 1.1 million shares. Share count for the March quarter is expected to be approximately 67.5 million. Earnings per share are projected around 5 cents – 6 cents.

Going forward, management expects that gross margin came in at 62.5%, plus or minus 0.5 point. Operating expenses are projected to come around $33 million, plus or minus $0.5 million, higher than the third quarter, due to payroll taxes.

Meanwhile, the company changed its name to AppliedMicro from Applied Micro Circuits Corporation. Management believes that the new name reflects the company’s drive for breakthrough energy efficiency and cost optimized semiconductor devices.

We believe the company is well positioned to enter a period of sustainable revenue growth as new products move in for production at key OEMs and industry supply chain challenges get ironed out with signs of economic recovery.

Headquartered in San Diego, California, AppliedMicro is a leading provider of high-bandwidth integrated circuits (ICs) for optical telecom networks.

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

China Mobile (CHL), the world’s largest mobile operator by subscribers, is reportedly warming up to launch up to 30 new smartphone models in 2010 that are designed to run on the carrier’s home-grown TDSCDMA 3G standard. The devices (called “Ophones") are being developed using the company’s proprietary “Open Mobile System (OMS)" smartphone operating system based on Google’s (GOOG) open-source Android software platform.

Moreover, China Mobile has revealed its plans to build more than 80,000 3G base stations in 2010 to cover all Chinese regions with its 3G TDSCDMA network. The carrier exited 2009 with 5.51 million 3G subscribers and 87,000 3G base stations and currently has 100,000 base stations in aggregate.

Despite its strong market position, China Mobile faces the threat of market share erosion due to stiff competition from its peers China Unicom (CHU) and China Telecom (CHA) as they both operate internationally acclaimed technology-based 3G networks.

Leveraging the widely popular WCDMA standard based 3G network, China Unicom launched iPhones (3G & 3GS) in mainland China in October 2009, offering it a significant competitive edge over China mobile. Moreover, China Unicom is marketing its customized Android handsets (called “Uphones"), which have been designated as a major national project by the Chinese government.

Ophones represent China Mobile’s answer to iPhone. The company has collaborated with leading handset vendors such as Motorola (MOT), LG, Samsung, HTC and Dell (DELL) for its Ophone project. China Mobile has already developed 266 TD-SCDMA handset models through these collaborations.

China Mobile introduced the first Ophone by Motorola in December 2009, which is being positioned to target the carrier’s high-end subscribers. The company plans to spend RMB150 million (US$22 million) over the 2010-2011 timeframe on design and development of Ophones. China Mobile expects the relatively low-priced Ophones (compared to iPhone) to drive demand for its less-mature TD-SCDMA technology based 3G services in China and boost subscriber base.

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American Axle and Manufacturing (AXL) returned to profitability in the fourth quarter of 2009 after reporting losses since the first quarter of 2008. The company has posted a net income of $8.3 million or 14 cents per share (before special items), compared to a loss of $42.6 million or 83 cents per share (before special items) in the fourth quarter of 2008.

American Axle also surpassed the Zacks Consensus Estimate of 11 cents per share for the quarter. The company has achieved transformational improvements in its cost structure, operating flexibility and capacity utilization. 

Net sales in the quarter slipped 8% to $464 million, driven by lower production volumes (7%) for the North American light truck and SUV programs that the company currently supports for GM and Chrysler due to lower production of mid-sized light truck programs. 

Annual Results

In 2009, American Axle reported a narrower loss of $66 million or $1.25 per share (before special items), compared to $214.6 million or $4.63 per share in 2008.

Net sales dipped 25% to $1.5 billion, driven by lower production volumes (30%) for the North American light truck and SUV programs that the company currently supports for GM and Chrysler due to their extended production shutdowns on account of their bankruptcies. The company has estimated the reduction in sales and operating income resulting from these shutdowns to be approximately $304 million and $95 million, respectively

However, American Axle’s content-per-vehicle (measured by the dollar value of its product sales supporting GM's North American light truck and SUV programs and Chrysler's Heavy Duty Dodge Ram pickup trucks) in 2009 increased to $1,403 from $1,391 in 2008.

Financial Position

American Axle had cash and cash equivalents of $178.1 million as of December 31, 2009, compared to $198.8 million as on December 31, 2008. Long-term debt amounted to $1.07 billion as of December 31, 2009, reflecting a debt-to-equity ratio of 1.9.

In 2009, American Axle had a net cash flow of $17.3 million from operating activities in sharp contrast to an outflow of $163.1 million in 2008. Meanwhile, capital expenditures remained almost flat at $141.5 million in the year.

Outlook

For 2010, American Axle anticipates sales in the range of $1.9–$2.1 billion, representing an annual sales growth of approximately 25%–40% on a year-over-year basis. This is based on the assumption that the Seasonally Adjusted Annual Rate of light vehicle sales in the U.S. increases from 10.4 million vehicle units in 2009 to a range of 11.0 million–11.5 million vehicles in 2010. Based on the sales projection, the company expects to be profitable for the year and generate positive free cash flow assuming capital spending in the range of 4%–5% of sales.

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